DEFC14A 1 d671788ddefc14a.htm DEFC14A DEFC14A
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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.    )

Filed by the Registrant                                                         Filed by a Party other than the Registrant    

Check the appropriate box:

 

   Preliminary Proxy Statement
   Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(E)(2))
   Definitive Proxy Statement
   Definitive Additional Materials
   Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

ASHLAND GLOBAL HOLDINGS INC.

 

 

(Name of Registrant as Specified in Its Charter)

N/A

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

No fee required

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

  (1)

Title of each class of securities to which transaction applies:    N/A

 

 

  (2)

Aggregate number of securities to which transaction applies:    N/A

 

 

  (3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):    N/A

 

 

  (4)

Proposed maximum aggregate value of transaction:    N/A

 

 

  (5)

Total fee paid:    N/A

 

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  (1)

Amount Previously Paid:    N/A

 

 

  (2)

Form, Schedule or Registration Statement No.:    N/A

 

 

  (3)

Filing Party:    N/A

 

 

  (4)

Date Filed:    N/A

 

Notes:


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LOGO

 

Ashland Global Holdings Inc.

50 E. RiverCenter Blvd.

Covington, KY 41011

January 2, 2019

Dear Ashland Global Holdings Inc. Stockholder:

On behalf of your Board of Directors and management, I am pleased to invite you to the 2019 Annual Meeting of Stockholders of Ashland Global Holdings Inc. The meeting will be held on February 8, 2019, at Noon (EST), at Hotel du Pont, 42 West 11th Street, Wilmington, DE 19801.

The attached Notice of Annual Meeting of Stockholders and Proxy Statement describe the business to be conducted at the meeting. Also included are a BLUE proxy card and postage-paid return envelope. BLUE proxy cards are being solicited on behalf of the Board of Directors of Ashland.

You are urged to read the Proxy Statement carefully and, whether or not you plan to attend the meeting, to promptly submit a proxy: (a) by telephone or the Internet following the easy instructions on the enclosed BLUE proxy card or (b) by signing, dating and returning the enclosed BLUE proxy card in the postage-paid envelope provided.

Your vote will be especially important at this year’s annual meeting. As you may have heard, Cruiser Capital Advisors, LLC (together with affiliated investment funds led by Mr. Keith Rosenbloom) (“Cruiser”) has provided notice of its intent to nominate a slate of four nominees for election as directors at the meeting in opposition to your Board of Directors’ recommended nominees.

Your Board of Directors does not endorse any of the Cruiser nominees and unanimously recommends that you vote FOR the election of each of your Board of Directors’ nominees using the enclosed BLUE proxy card. Your Board of Directors strongly urges you not to sign or return any White proxy card sent to you by Cruiser. If you have previously submitted a White proxy card sent to you by Cruiser, you can revoke that proxy and vote for your Board of Directors’ nominees and on the other matters to be voted on at the meeting by using the enclosed BLUE proxy card. Only your last-dated proxy will count, and any proxy may be revoked at any time prior to its exercise at the annual meeting as described in the attached Proxy Statement.

Your vote is extremely important no matter how many shares you own. If you have any questions or require any assistance with voting your shares, please contact Ashland’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders may call toll-free: 1 (877) 456-3402

Banks and Brokers may call collect: 1 (212) 750-5833

We appreciate your continued confidence in Ashland and look forward to seeing you at the meeting.

 

Sincerely,

LOGO

William A. Wulfsohn

Chairman and Chief Executive Officer


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LOGO

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To our Stockholders:

Ashland Global Holdings Inc., a Delaware corporation, will hold its Annual Meeting of Stockholders on February 8, 2019, at Noon (EST). The Annual Meeting will be held at the following location and for the purposes listed below:

 

Where:

  

Hotel du Pont, 42 West 11th Street, Wilmington, DE 19801.

Items of Business:

  

(1)     Election as directors of the 11 nominees named in the accompanying proxy statement for one-year terms expiring at the next annual meeting of stockholders and until their successors are duly elected and qualified;

  

(2)     To ratify the appointment of Ernst & Young LLP as independent registered public accountants for fiscal 2019;

  

(3)     To vote upon a non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion; and

  

(4)     To consider any other business properly brought before the Annual Meeting.

Who Can Vote:

  

Only stockholders of record at the close of business on December 10, 2018 are entitled to vote at the Annual Meeting or any adjournment of that meeting.

 

  

You can vote in one of several ways:

LOGO   

Visit the website listed on the enclosed BLUE proxy card to vote VIA THE INTERNET

LOGO   

Call the telephone number specified on the enclosed BLUE proxy card to vote BY TELEPHONE

LOGO   

Sign, date and return the enclosed BLUE proxy card in the postage-paid envelope provided to vote BY MAIL

LOGO   

Attend the meeting to vote IN PERSON

 

If you are a participant in the Ashland Employee Savings Plan (the “Employee Savings Plan”), the Ashland Union Employee Savings Plan (the “Union Plan”), the International Specialty Products Inc. 401(k) Plan (the “ISP Plan”) or the Pharmachem Profit Sharing Plan (the “Pharmachem Plan”) (together “the Plans”), your vote will constitute voting instructions to Fidelity Management Trust Company, who serves as trustee of the Plans (the “Trustee”), for the shares held in your account.

If you are a participant in any of the Plans, then the independent tabulator for the Plans (the “Plan Tabulator”) must receive all voting instructions, whether given by telephone, over the Internet or by mail, before 5:00 p.m. (EST) on February 5, 2019. You may not vote your shares in the Plans in person at the Annual Meeting.

Please note that Cruiser Capital Advisors, LLC (together with affiliated investment funds led by Mr. Keith Rosenbloom) (“Cruiser”) has provided notice of its intent to nominate a slate of four nominees for election as directors at the meeting in opposition to your Board of Directors’ recommended nominees. You may receive solicitation materials from Cruiser, including proxy statements and White proxy cards. Ashland is not responsible for the accuracy of any information provided by or relating to Cruiser or its nominees contained in solicitation materials filed or disseminated by or on behalf of Cruiser or any other statements Cruiser may make.


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Your Board of Directors does NOT endorse any of the Cruiser nominees and unanimously recommends that you vote FOR the election of each of your Board of Directors’ nominees by using the enclosed BLUE proxy card. Your Board of Directors strongly urges you not to sign or return any White proxy card sent to you by Cruiser. If you have previously submitted a White proxy card, you can revoke that proxy and vote for your Board of Directors’ nominees and on the other matters to be voted on at the meeting by using the enclosed BLUE proxy card. Only your last dated proxy will count, and any proxy may be revoked at any time prior to its exercise at the annual meeting as described in the attached proxy statement.

 

By Order of the Board of Directors,

PETER J. GANZ

Senior Vice President, General Counsel and Secretary

Covington, Kentucky

January 2, 2019


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TABLE OF CONTENTS

 

     Page  

PROXY SUMMARY

     (i)   

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

     1  

BACKGROUND TO THE SOLICITATION

     7  

ASHLAND COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     9  

ASHLAND COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF ASHLAND

     10  

PROPOSAL ONE - ELECTION OF DIRECTORS

     12  

Board of Directors

     12  

Director Nominees

     15  

Compensation of Directors

     25  

Director Compensation Table

     25  

FY 2018 Director Compensation Review

     27  

Annual Retainer

     27  

Restricted Stock Units

     27  

Initial Equity Grant

     28  

Stock Ownership Guidelines for Directors

     28  

Corporate Governance

     29  

Governance Principles

     29  

Board Leadership Structure

     29  

Oversight of Ashland’s Executive Compensation Program

     30  

Compensation Committee Interlocks and Insider Participation

     31  

Board’s Role of Risk Oversight

     31  

Director Independence and Certain Relationships

     31  

Related Person Transaction Policy

     32  

Section 16(a) Beneficial Ownership Reporting Compliance

     33  

Communication with Directors

     34  

Attendance at Annual Meeting

     34  

Executive Sessions of Directors

     34  

Stockholder Recommendations for Directors

     34  

Stockholder Nominations of Directors

     35  

Committees and Meetings of the Board of Directors

     37  

EXECUTIVE COMPENSATION

     40  

Compensation Discussion and Analysis

     40  

Compensation Committee Report

     57  

Summary Compensation Table

     58  

Grants of Plan-Based Awards

     60  

Outstanding Equity Awards at Fiscal Year End

     63  

Option Exercises and Stock Vested

     66  

Pension Benefits

     68  

Non-Qualified Deferred Compensation

     73  

Potential Payments upon Termination or Change in Control

     75  

AUDIT COMMITTEE REPORT

     84  

PROPOSAL TWO - RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

     86  

PROPOSAL THREE - NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION PAID TO ASHLAND’S NAMED EXECUTIVE OFFICERS

     87  

MISCELLANEOUS

     88  

Proxy Solicitation

     88  

Stockholder Proposals for the 2020 Annual Meeting

     88  

Other Matters

     90  

APPENDIX A: Supplemental Information Regarding Participants

     A-1  

APPENDIX B

     B-1  

Use of Non-GAAP Measures and Non-GAAP Reconciliations

     B-1  

Forward-Looking Statements

     B-6  


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PROXY SUMMARY

This proxy summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting. For more complete information regarding Ashland Global Holdings Inc.’s fiscal 2018 performance, please review the Annual Report on Form 10-K for the fiscal year ended September 30, 2018.

Annual Meeting Information

 

Date & Time:

 

  

February 8, 2019 Noon (EST)

 

Address:

 

  

Hotel du Pont

42 West 11th Street, Wilmington, DE 19801

 

Record Date:

 

  

December 10, 2018

 

Voting:

   Stockholders as of the Record Date are entitled to vote.

Voting Matters

Stockholders are being asked to vote on the following matters at the Annual Meeting:

 

     

Board’s
Recommendations

 

  Proposal One. The election of 11 director nominees that possess the necessary qualifications to provide guidance to the Company’s management (page 12)

 

   FOR ALL of your
Board’s Director
Nominees

 

  Proposal Two. Ratification of the appointment of Ernst & Young LLP as independent registered public accountants for fiscal 2019 (page 86)

 

   FOR

 

  Proposal Three. A non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers (page 87)

   FOR

 

 

 

 

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Director Nominees

The table below summarizes information about each of your Board’s director nominees. The eleven nominees receiving the greatest number of the votes cast for their election shall be elected. See pages 15 to 24 for complete biographical information for each of your Board’s nominees. Your Board of Directors recommends that you vote FOR each of your Board’s director nominees.

 

 Name

  Age     Director
Since
   

Primary Occupation

  Independent     Committee
Memberships

 Brendan M. Cummins

    67       2012    

Former Consultant to The Valence Group; Former Chief Executive Officer of Ciba Specialty Chemicals

 

      AC;
G&N
(Chair)

 William G. Dempsey

    67       2016    

Former Executive Vice President of Global Pharmaceuticals at Abbott Laboratories

 

      AC;
EHS&Q;
G&N

 Jay V. Ihlenfeld

    67       2017    

Former Senior Vice President of 3M Company

 

      AC;
EHS&Q

 Susan L. Main

    60       2017    

Senior Vice President and Chief Financial Officer of Teledyne Technologies Incorporated

 

      AC
(Chair);
G&N

 Jerome A. Peribere

    64       2018    

Former President and Chief Executive Officer of Sealed Air Corporation

 

      Comp;
EHS&Q

 Craig A. Rogerson

    62       N/A    

Chairman, President and Chief Executive Officer of Hexion Inc.

 

      N/A

 Mark C. Rohr

    67       2008    

Chairman and Chief Executive Officer of Celanese Corporation

 

      AC;
EHS&Q

 Janice J. Teal

    66       2012    

Former Group Vice President and Chief Scientific Officer for Avon Products Inc.

 

      EHS&Q
(Chair);
Comp

 Michael J. Ward

    68       2001    

Retired Chairman of the Board and Chief Executive Officer of CSX Corporation

 

      Comp;
G&N

 Kathleen Wilson-Thompson

    61       2017    

Executive Vice President and Global Chief Human Resources Officer of Walgreens Boots Alliance Inc.

 

      Comp;
EHS&Q

 William A. Wulfsohn

    56       2015    

Chairman of the Board and Chief Executive Officer of Ashland Global Holdings Inc.

 

   

Committees:

 

AC – Audit Committee

  EHS&Q – Environmental, Health, Safety and Quality Committee

Comp – Compensation Committee

  G&N – Governance and Nominating Committee

 

 

 

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Please note that Cruiser Capital Advisors, LLC (together with affiliated investment funds led by Mr. Keith Rosenbloom) (“Cruiser”) has provided notice of its intent to nominate a slate of four nominees for election as directors at the meeting in opposition to your Board of Directors’ recommended nominees. You may receive solicitation materials from Cruiser, including proxy statements and White proxy cards. Ashland is not responsible for the accuracy of any information provided by or relating to Cruiser or its nominees contained in solicitation materials filed or disseminated by or on behalf of Cruiser or any other statements Cruiser may make.

Your Board of Directors does NOT endorse any of the Cruiser nominees and unanimously recommends that you vote FOR the election of each of your Board of Directors’ nominees by using the enclosed BLUE proxy card. Your Board of Directors strongly urges you not to sign or return any White proxy card sent to you by Cruiser. If you have previously submitted a White proxy card, you can revoke that proxy and vote for your Board of Directors’ nominees and on the other matters to be voted on at the meeting by using the enclosed BLUE proxy card. Only your last dated proxy will count, and any proxy may be revoked at any time prior to its exercise at the annual meeting as described on page 3 of this proxy statement.

Performance and Compensation Summary

Fiscal 2018 Performance

Fiscal 2018 was a year of progress on Ashland’s value creation plan. This growth is being driven by specific actions we have taken to sustain and grow Ashland’s premium mix while also improving competitiveness. The execution of our plan contributed to the Company’s positive results:

 

   

Net income was $114 million compared to $28 million in fiscal 2017.

 

   

Adjusted EBITDA increased by 20%, to $683 million, compared to $570 million in 2017.

 

   

Sales rose 15%, to $3.74 billion, with double-digit increases in profitability coming from all three reportable segments (Specialty Ingredients, Composites, and Intermediates and Solvents).

 

   

Specialty Ingredients’ operating income totaled $314 million, compared to $233 million in fiscal 2017, while Adjusted EBITDA grew to $574 million compared to $493 million in fiscal 2017. Operating income margin within Specialty Ingredients was 12.7 percent, up 220 basis points from the previous year. Adjusted EBITDA margin within Specialty Ingredients was 23.2 percent, up 100 basis points from the previous year. This increase was achieved through aggressive pricing actions, multiple product launches to improve product mix and profitability, targeted volume initiatives to drive positive absorption, and reduced spending.

 

   

Within Composites, full-year operating income was $73 million, compared to $67 million for the prior year. Adjusted EBITDA increased to $95 million, up from $89 million in fiscal 2017.

 

   

Within Intermediates and Solvents (“I&S”), operating income was $31 million compared to an operating loss of $12 million in fiscal 2017. I&S increased Adjusted EBITDA to $61 million, up from $26 million in the prior year.

As part of the EBITDA margin acceleration program, Ashland is on track to achieve its target of $120 million in total run-rate savings by end of calendar 2019.

The market recognized our progress to deliver enhanced shareholder value—during fiscal 2018 our stock price increased 28%. We expect continued improvement in fiscal 2019 and beyond as we realize the benefits from the EBITDA margin acceleration program and become a pure-play specialty chemicals company following the divestiture of our Composites business and butanediol (BDO) manufacturing facility in Marl, Germany.

 

 

 

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EBITDA and Adjusted EBITDA are non-GAAP measures and are reconciled to net income for Ashland and operating income for each segment in Appendix B.

Ashland’s Compensation Program at a Glance

Our executive compensation program is designed to create a pay-for-performance culture by aligning compensation to the achievement of our financial and strategic objectives and our stockholders’ interests. We strive to provide our NEOs with a compensation package that is aligned with the median of our Compensation Peer Group, with the expectation, based on a comparison to executives in the Compensation Peer Group and a review of other competitive market information, that above-target performance will result in above-median pay and below-target performance will result in below-median pay. The Compensation Committee annually reviews the base salaries and the annual and long-term target opportunities of our NEOs to determine whether these programs competitively reward our NEOs for their services.

2018 Key Compensation Decisions

Base Salary:

 

   

The Compensation Committee did not increase the base salary of Mr. Wulfsohn.

 

   

The Compensation Committee approved merit increases to base salary for Messrs. Willis, Ganz and Silverman and Ms. Schumann, as well as additional increases to base salary for Mr. Silverman and Ms. Schumann in connection with their assumption of expanded responsibilities.

Annual and Long-Term Incentive Metrics and Goals:

 

   

Mr. Wulfsohn’s annual and long-term target incentive opportunities did not increase.

 

   

The Compensation Committee decreased Mr. Silverman’s annual and long-term target incentive opportunities to further align Mr. Silverman’s overall compensation with competitive practices and his internal peers.

 

   

Ms. Schumann’s long-term target incentive opportunity increased by 10 percentage points, and will increase by an additional 50% to align her compensation with Messrs. Willis and Ganz.

 

   

Beginning with the fiscal 2018 performance period, the Compensation Committee used Adjusted EBITDA and Free Cash Flow as annual incentive metrics. These are non-GAAP measures and are reconciled to the applicable GAAP measurements in Appendix B.

 

   

Our fiscal year 2018 Adjusted EBITDA and Free Cash Flow targets were set above our fiscal 2017 actual results.

Additional Information

For additional information, please see the proxy statement below.

 

 

 

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PROXY STATEMENT

ASHLAND GLOBAL HOLDINGS INC.

Annual Meeting on February 8, 2019

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

 

Q:

What matters will be voted on at the Annual Meeting?

 

A:     

  

(1)    

 

Election of 11 directors to your Board of Directors to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. Your Board unanimously recommends that you vote FOR the election of all of your Board’s nominees: Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld, Susan L. Main, Jerome A. Peribere, Craig A. Rogerson, Mark C. Rohr, Janice J. Teal, Michael J. Ward, Kathleen Wilson-Thompson and William A. Wulfsohn;

  

(2)    

 

Ratification of Ernst & Young LLP (“EY”) as Ashland’s independent registered public accountants for fiscal 2019; and

  

(3)    

 

A non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.

 

Q:

Why am I receiving this proxy statement?

 

A:

Ashland Global Holdings Inc. (“Ashland” or the “Company”) is delivering this proxy statement and the accompanying proxy materials, including a BLUE proxy card, to you in connection with the solicitation of proxies by and on behalf of your Board of Directors, for use at the Annual Meeting, which will take place on February 8, 2019, and at any adjournments and postponements thereof. This proxy statement is intended to assist you in making an informed vote on the proposals described in this proxy statement. This proxy statement and the accompanying BLUE proxy card and other materials are first being mailed on or about January 2, 2019 in connection with the solicitation of proxies on behalf of your Board of Directors.

 

Q:

Have other candidates been nominated for election at the Annual Meeting in opposition to the Board’s nominees?

 

A:

Yes. Cruiser, a stockholder of the Company, has notified the Company of its intent to nominate a slate of four nominees for election as directors at the Annual Meeting in opposition to the nominees recommended by your Board of Directors. Your Board of Directors does not endorse any of the Cruiser nominees and recommends that you vote FOR the election of each of the nominees proposed by your Board of Directors by using the BLUE proxy card accompanying this proxy statement. Your Board of Directors strongly urges you not to sign or return any White proxy card sent to you by Cruiser.

 

Q:

What are the recommendations of the Board of Directors?

 

A:

Your Board of Directors recommends that you vote your shares on your BLUE proxy card as follows:

 

   

FOR the election of the directors nominated by your Board of Directors;

 

   

FOR the ratification of EY as Ashland’s independent registered public accountants for fiscal year 2019; and

 

 

 

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FOR the approval, on a non-binding advisory basis, of the compensation paid to Ashland’s named executive officers.

Your Board of Directors strongly urges you not to sign or return any proxy card sent to you by Cruiser.

 

Q:

Who may vote at the Annual Meeting?

 

A:

Stockholders of Ashland at the close of business on December 10, 2018 (the “Record Date”) are entitled to vote at the Annual Meeting and any adjournments or postponements thereof. As of the Record Date, there were 62,612,967 shares of Ashland Common Stock outstanding. Each share of Ashland Common Stock is entitled to one vote.

 

Q:

Who can attend the Annual Meeting?

 

A:

All Ashland stockholders on the Record Date are invited to attend the Annual Meeting, although seating is limited. All attendees will be required to provide a government-issued current form of photo identification. If your shares are held in the name of a broker, bank or other nominee, you will need to bring a proxy or letter from that nominee that confirms you are the beneficial owner of those shares in order to enter the Annual Meeting.

 

Q:

What shares are included on the enclosed BLUE proxy card?

 

A:

If you are a registered stockholder of Ashland as of the Record Date, the enclosed BLUE proxy card represents all shares of Ashland Common Stock that are registered in your name as well as any shares you hold in the dividend reinvestment plan (the “DRP”) administered by EQ Shareowner Services (“EQ”) for investors in Ashland Common Stock. If your shares are held through a broker, bank or other nominee, your broker, bank or other nominee has enclosed a BLUE voting instruction form for you to use to direct it how to vote the shares held by such broker, bank or other nominee. Please return your completed BLUE voting instruction form to your broker, bank or other nominee. If your broker, bank or other nominee permits you to provide voting instructions via the Internet or by telephone, you may vote that way as well. If you hold shares in the Employee Savings Plan, the Union Plan, the ISP Plan, or the Pharmachem Plan, the Trustee for such plans will separately send you proxy materials together with a voting instruction form for you to use to direct it how to vote, and may also provide the opportunity for you to vote by telephone or by Internet.

 

Q:

What does it mean if I receive more than one BLUE proxy card on or about the same time?

 

A:

It generally means that you hold shares registered in more than one account. In order to vote all of your shares, please sign, date and return each BLUE proxy card or voting instruction form in the postage-paid envelope provided or, if you vote via the Internet or telephone, please be sure to vote using each BLUE proxy card or voting instruction form you receive.

If Cruiser proceeds with its previously announced alternative director nominations, we will likely conduct multiple mailings prior to the Annual Meeting so that stockholders have our latest proxy information and materials to vote. We will send you a new BLUE proxy card with each mailing, regardless of whether you have previously voted. The latest-dated proxy you submit will be counted, and, if you wish to vote as recommended by your Board of Directors, then you should only submit BLUE proxy cards.

 

Q:

How do I vote my shares?

 

A:

We encourage all stockholders to submit proxies in advance of the Annual Meeting by telephone, by Internet or by mail. Sending your proxy by any of these methods will not affect your right to attend and vote at the Annual Meeting in person or by executing a proxy designating a representative to vote for you at the Annual Meeting.

 

 

 

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If you are a registered stockholder as of the Record Date, you can vote (i) by following the instructions on the enclosed BLUE proxy card to vote by telephone or Internet, (ii) by signing, dating and mailing the enclosed BLUE proxy card in the postage-paid envelope provided or (iii) by attending the Annual Meeting and voting by ballot in person. We urge you to use the enclosed BLUE proxy card to vote FOR your Board’s nominees.

If you hold shares through a broker, bank or other nominee, that institution has enclosed a BLUE voting instruction form for you to use to direct it how to vote those shares held by such broker, bank or other nominee. Your ability to vote by telephone or over the Internet depends upon your broker, bank or other nominee’s voting process. Please follow the instructions on your BLUE voting instruction form carefully.

Even if you plan to attend the Annual Meeting in person, we encourage you to vote your shares by submitting your proxy in advance of the Annual Meeting. If you hold your shares through a broker, bank or other nominee and would like to vote in person at the meeting, you must provide a “legal proxy” issued in your name from the institution that holds your shares.

 

Q:

How do I vote my shares in the DRP?

 

A:

The enclosed BLUE proxy card represents all shares of Ashland Common Stock that are registered in your name as well as any shares you hold in the DRP administered by EQ for investors in Ashland Common Stock. Therefore you may vote your DRP shares (together with your shares of Ashland common Stock) (i) by attending the Annual Meeting, (ii) by following the instructions on the enclosed BLUE proxy card to vote by telephone or Internet or (iii) by signing, dating and mailing the enclosed BLUE proxy card in the postage-paid envelope provided. We urge you to use the enclosed BLUE proxy card to vote FOR your Board’s nominees.

 

Q:

How will the Trustee of the Employee Savings Plan, the Union Plan, the ISP Plan and the Pharmachem Plan vote?

 

A:

Each participant in the Employee Savings Plan, the Union Plan, the ISP Plan or the Pharmachem Plan may instruct the Trustee on how to vote the shares of Ashland Common Stock credited to the participant’s account in each plan. In the case of the Union Plan, the ISP plan and the Pharmachem Plan, such instructions will additionally be applied to a proportionate number of shares of Ashland Common Stock held in all other plan participants’ accounts for which voting instructions are not timely received by the Trustee (the “non-directed shares”). In the case of the Employee Savings Plan, each participant may separately instruct the Trustee on how to vote a proportionate number of non-directed shares. Each participant who gives the Trustee any such instruction acts as a named fiduciary for the applicable plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Your vote must be received by the Plan Tabulator, before 5:00 p.m. (EST) on February 5, 2019. You may not vote your shares in such plans in person at the Annual Meeting.

 

Q:

Can I change my vote once I vote by mail, by telephone or over the Internet?

 

A:

Yes. You have the right to change or revoke your proxy (1) at any time before the Annual Meeting by (a) notifying Ashland’s Secretary in writing at 50 E. RiverCenter Boulevard, Covington, KY 41011, (b) returning a later dated proxy card or (c) entering a later dated telephone or Internet vote; or (2) by voting in person at the Annual Meeting. Your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting. Any changes or revocations of voting instructions to the Trustee of the Employee Savings Plan, the Union Plan, the ISP Plan or the Pharmachem Plan must be received by the Plan Tabulator, before 5:00 p.m. (EST) on February 5, 2019.

 

 

 

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If you have already voted using a White proxy card sent to you by Cruiser, you have every right to change your vote and we urge you to revoke that proxy by voting in favor of your Board of Directors’ nominees by signing, dating and returning the enclosed BLUE proxy card in the postage-paid envelope provided or following the instructions on your BLUE proxy card to vote by telephone or via the Internet. Only the latest-dated validly executed proxy that you submit will be counted – any proxy may be revoked at any time prior to its exercise at the Annual Meeting.

 

Q:

Who will count the vote?

 

A:

Representatives of First Coast Results, Inc. will tabulate the votes and will act as the inspector of election.

 

Q:

What constitutes a quorum?

 

A:

As of the Record Date, 62,612,967 shares of Ashland Common Stock were outstanding and entitled to vote. A majority of the shares issued and outstanding and entitled to be voted thereat must be present in person or by proxy to constitute a quorum to transact business at the Annual Meeting. If you vote in person, by telephone, over the Internet or by returning a properly executed proxy card, you will be considered a part of that quorum. Abstentions and broker non-votes (if any), as described below, will be treated as present for the purpose of determining a quorum.

 

Q:

What vote is required for the election of directors?

 

A:

Cruiser has notified Ashland of its intent to nominate a slate of four alternative nominees for election as directors at the Annual Meeting in opposition to the nominees recommended by your Board. As a result, assuming such nominees are in fact proposed for election at the Annual Meeting and such nominations have not been withdrawn by Cruiser on or prior to the tenth day before we mail the Notice of Annual Meeting accompanying this proxy statement, the election of directors will be considered a contested election and, as provided under Article V of Ashland’s Certificate of Incorporation, directors will be elected on a plurality basis. This means that the 11 director nominees receiving the greatest number of votes cast ‘for’ their election will be elected.

It will NOT help elect the nominees recommended by your Board if you sign and return White proxy cards sent by Cruiser even if you vote to ‘withhold’ with respect to Cruisers directors using Cruiser’s White proxy card. In fact, doing so will cancel any previous vote you cast on a BLUE proxy card sent to you by Ashland. The only way to support your Board’s nominees is to vote FOR your Board’s nominees on the BLUE proxy card. ONLY THE LASTEST-DATED PROXY WILL BE COUNTED.

In the event that Cruiser withdraws its nominees on or prior to the tenth day before we mail the Notice of Annual Meeting accompanying this proxy statement, we will disclose such withdrawal to our stockholders and, as provided under Article V of Ashland’s Certificate of Incorporation, the affirmative vote of a majority of votes cast with respect to each director nominee will be required for the nominee to be elected. A majority of votes cast means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that director nominee.

 

Q:

What vote is required for approval of each other matter to be considered at the Annual Meeting?

 

A:

(1)

Ratification of independent registered public accountants — The appointment of EY will be ratified if votes cast in its favor exceed votes cast against it.

 

  (2)

Non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers — The non-binding advisory resolution approving the compensation

 

 

 

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paid to Ashland’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, will be approved if the votes cast in its favor exceed the votes cast against it.

 

Q:

What is a broker non-vote?

 

A:

A broker non-vote occurs when brokers, banks or other nominees holding shares for a beneficial owner have discretionary authority to vote on “routine” matters brought before a stockholder meeting, but the beneficial owner of the shares fails to provide the broker, bank or other nominee with specific instructions on how to vote any “non-routine” matters brought to a vote at the stockholders meeting.

Under the rules of the New York Stock Exchange governing brokers’ discretionary authority, if you receive proxy materials from or on behalf of both Ashland and Cruiser, brokers, banks and other nominees holding your account will not be permitted to exercise discretionary authority regarding any of the proposals to be voted on at the Annual Meeting, whether “routine” or not. As a result, there will be no broker non-votes by such brokers, banks or other nominees. If you do not submit any voting instructions to your broker, bank or other nominee, your shares will not be counted in determining the outcome of any of the proposals at the Annual Meeting, nor will your shares be counted for purposes of determining whether a quorum exists.

However, if you receive proxy materials only from Ashland, brokers, banks and other nominees will be entitled to vote your shares on “routine” matters without instructions from you. The only proposal that would be considered “routine” in such event is the proposal for the ratification of the appointment of EY as Ashland’s independent registered public accountants for fiscal 2019. A broker, bank or other nominee will not be entitled to vote your shares on any “non-routine” matters, absent instructions from you. “Non-routine” matters include the election of directors and the approval, on a non-binding advisory basis, of the compensation paid to Ashland’s named executive officers.

Consequently, if you receive proxy materials only from Ashland and you do not submit any voting instructions to your broker, bank or other nominee, your broker, bank or other nominee may exercise its discretion to vote your shares on the proposal to ratify the appointment of EY. If your shares are voted on this proposal as directed by your broker, bank or other nominee, your shares will constitute broker non-votes on each of the other proposals. Broker non-votes will count for purposes of determining whether a quorum exists, but will not be counted as votes cast with respect to such proposals.

 

Q:

How will my shares be voted if I submit a BLUE proxy card but do not specify how I want to vote?

 

A:

If you submit a validly executed BLUE proxy card or voting instruction form but do not specify how you want to vote your shares with respect to a particular proposal, then your shares will be voted in line with the Board’s recommendations with respect to any such proposal, i.e., (i) FOR the election of your Board’s 11 director nominees, (ii) FOR the ratification of EY and (iii) FOR the non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.

As of the date of this proxy statement, your Board of Directors knows of no business other than that set forth above to be transacted at the Annual Meeting, but if other matters requiring a vote do arise, it is the intention of Mr. Wulfsohn and Mr. Ganz, as the individuals to whom you are granting your proxy on the BLUE proxy card, to vote in accordance with their best judgment on such matters.

 

 

 

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Q:

What should I do with the White proxy cards sent to me by Cruiser?

 

A:

Cruiser has notified Ashland of its intent to propose its own director nominees for election at the Annual Meeting. We do not know whether Cruiser will in fact nominate individuals for election as directors at the Annual Meeting or solicit proxies. The nominations made by Cruiser have NOT been endorsed by your Board of Directors. The Company is not responsible for the accuracy of any information contained in any proxy solicitation materials used by Cruiser or any other statements that they may otherwise make.

Your Board of Directors does not endorse any of the Cruiser nominees and recommends that you disregard any White proxy card or other solicitation materials that may be sent to you by Cruiser. Voting to “WITHHOLD” with respect to any of Cruiser nominees on any White proxy card sent to you by Cruiser is not the same as voting “FOR” your Board’s nominees, because a vote to “WITHHOLD” with respect to any of Cruiser’s nominees on its White proxy card will revoke any previous proxy submitted by you. If you have already voted using a White proxy card sent to you by Cruiser, you have every right to change it and we urge you to revoke that proxy by voting in favor of your Board’s nominees by using the BLUE proxy card to vote by telephone or by Internet or by signing, dating and returning the enclosed BLUE proxy card in the postage-paid envelope provided. Only the latest-dated validly executed proxy that you submit will be counted — any proxy may be revoked at any time prior to its exercise at the Annual Meeting by following the instructions under “Can I change my vote once I vote by mail, by telephone or over the Internet?” on page 3. If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor, Innisfree M&A Incorporated, toll-free at 1 (877) 456-3402.

 

Q:

How will broker non-votes and abstentions be treated?

 

A:

Ashland will treat broker non-votes as present to determine whether or not there is a quorum at the Annual Meeting, but they will not be treated as entitled to vote on any “non-routine” matters. Abstentions will also be treated as present for the purpose of determining quorum but as unvoted shares for the purpose of determining the approval of any matter submitted for a vote. This means that broker non-votes and abstentions will have no effect on whether any of the proposals pass.

Accordingly, we urge you to promptly give instructions to your broker to vote FOR your Board’s nominees by using the BLUE voting instruction card provided to you by your custodian.

 

Q:

Where can I find the voting results of the meeting?

 

A:

We intend to announce preliminary voting results based on our proxy solicitor’s advice, at the Annual Meeting. We expect to report preliminary results based on the preliminary report of the Independent Inspector of Elections on a Current Report on Form 8-K filed with the SEC within four business days following the Annual Meeting, and final results as certified by the Independent Inspector of Elections as soon as practicable thereafter. You can obtain a copy of the Form 8-K from our website at http://investor.ashland.com, by calling the SEC at 1-800-SEC-0330 for the location of the nearest public reference room or through the SEC’s EDGAR system at http://www.sec.gov.

 

Q:

Who can I contact if I have questions or need assistance in voting my shares, or if I need additional copies of the proxy materials?

 

A:

Please contact Innisfree M&A Incorporated, the firm assisting us in the solicitation of proxies, toll-free at 1 (877) 456-3402. Banks and brokers may call collect at 1 (212) 750-5833.

 

 

 

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BACKGROUND TO THE SOLICITATION

On October 27, 2017, Cruiser sent a letter to Peter J. Ganz, our Senior Vice President, General Counsel and Secretary, informing him that Cruiser intended to nominate a slate of three alternate nominees (the “Prior Cruiser Nominees”) for election as directors to the Board at the 2018 Annual Meeting in opposition to the nominees recommended by your Board.

During October and November 2017, the Company’s management and representatives of Cruiser discussed potential director candidates, including the Prior Cruiser Nominees. Consistent with the steps your Board regularly takes to refresh and strengthen its membership composition and to ensure it has the right mix of experience and capabilities, the Company also retained Russell Reynolds Associates, an experienced executive search firm that provides professional assistance and advice on director searches, to identify and evaluate independent director candidates, including nominees recommended by stockholders, for consideration by the Governance and Nominating Committee (the “G&N Committee”) and then the Board. As a result of these discussions and its evaluation of director candidates, the Company nominated Jerome A. Peribere, who was recommended by Cruiser, for election to the Board at the 2018 Annual Meeting.

On January 25, 2018, Mr. Peribere was elected to the Board at the 2018 Annual Meeting. Mr. Peribere’s election marked the second time in the last five years that the Company has nominated a director recommended by a stockholder.

On July 16, 2018, Cruiser again sent a letter to the Board, suggesting the addition of two new directors to the Board and the hiring of Dr. Bill Joyce as an advisor.

On July 23, 2018, Cruiser disclosed in a Schedule 13D filing that, together with its affiliates, it had beneficial ownership of approximately 2.3% of the Company’s outstanding common stock.

On September 12, 2018, the Board met and discussed the matters raised in Cruiser’s letter to the Board dated July 16, 2018 and evaluated, with the assistance of Russell Reynolds Associates, director candidates suggested by Cruiser in the letter based on their relevant backgrounds, skills and expertise.

On October 23, 2018, Cruiser sent a letter to Peter J. Ganz, Senior Vice President, General Counsel and Secretary, William A. Wulfsohn, Chairman and Chief Executive Officer, and Brendan Cummins, Chair of the G&N Committee, informing them that Cruiser intended to nominate a slate of four alternative nominees (the “Cruiser Nominees”) for election as directors to the Board at the 2019 Annual Meeting in opposition to the nominees recommended by your Board.

On October 25, 2018, Cruiser announced in an amendment to its Schedule 13D filing stating its intention to nominate the Cruiser Nominees to stand for election as directors to the Board at the Company’s 2019 Annual Meeting. Cruiser also disclosed that, together with its affiliates, it had beneficial ownership of approximately 2.5% of the Company’s outstanding common stock.

On November 20, 2018, Cruiser sent a letter to William A. Wulfsohn, Chairman and Chief Executive Officer, Barry Perry, Lead Independent Director and Brendan Cummins, Chair of the G&N Committee, restating its intent to nominate the Cruiser Nominees to stand for election to the Board at the Company’s 2019 Annual Meeting.

On November 14, 2018 and December 10, 2018, the G&N Committee and the Board met and discussed the composition of the current Board and reviewed and evaluated the Cruiser Nominees. As part of this review, with the assistance of Russell Reynolds Associates, the G&N Committee and the Board considered:

 

   

the relevant skills, achievements and experience of the Cruiser Nominees;

 

 

 

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that the Board, as currently constructed, is independent and diverse and has a broad range of experience and expertise in chemicals, research and development, finance, and other disciplines and industries that are relevant and important to the Company’s business and continued success at this important period in its transformation into a premier global specialty chemicals company; and

 

   

that, including Mr. Peribere, five of the Company’s directors have joined the Board within the past three years, and four have joined since the beginning of 2017.

Following its review and evaluation, the G&N Committee determined not to recommend the Cruiser Nominees and to instead recommend the Company’s existing directors (other than Barry W. Perry) as nominees to be included in the Board’s slate of director nominees for the 2019 Annual Meeting, in light of the fit of their backgrounds, skills, achievements and experiences with the Company.

Consistent with the Company’s director retirement policy set forth in the Corporate Governance Guidelines, Barry W. Perry, having reached his 72nd birthday, will retire from the Board as of the 2019 Annual Meeting and will not stand for reelection to the Board. Consequently, the Board determined to temporarily decrease the size of the Board to ten directors effective as of the 2019 Annual Meeting and to initiate a search for one new independent director.

From December 10, 2018 to December 25th, 2018, the Board conducted a search for a new independent director candidate. During this search, Ashland had extensive discussions with several significant stockholders and received input on potential director candidates for election to Ashland’s Board at the 2019 Annual Meeting. As a result of those discussions, Mr. Rogerson was identified as an experienced leader in the chemicals industry and as a potential director nominee to add to Ashland’s current director slate. The G&N Committee met with Mr. Rogerson, considered Mr. Rogerson’s significant prior finance and specialty chemical company experience and determined that he possessed qualifications and skills that would further enhance the strength of Ashland’s Board. On December 26, 2018, the Board met and discussed:

 

   

the status of the ongoing director search;

 

   

Mr. Rogerson’s track record of managing complex, global specialty chemical company portfolios and operational experience; and

 

   

that, following the 2019 Annual Meeting, if Mr. Rogerson is elected, six of Ashland’s 11 directors will have joined the Board within the past three years and five will have joined since the beginning of 2017.

After consideration of the potential director candidates by the G&N Committee and the Board, both the G&N Committee and the Board approved the nomination of Mr. Rogerson for election to the Ashland Board at the 2019 Annual Meeting. In light of Mr. Rogerson’s nomination, the Board determined to maintain the size of the Board at eleven directors following the 2019 Annual Meeting.

Based upon the Company’s criteria for nominations of directors to the Board and the unanimous recommendation of the G&N Committee, the Board unanimously determined to nominate Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld, Susan L. Main, Jerome A. Peribere, Craig A. Rogerson, Mark C. Rohr, Janice J. Teal, Michael J. Ward, Kathleen Wilson-Thompson and William A. Wulfsohn to serve until the 2020 Annual Meeting and not to nominate any of the Cruiser Nominees to be included in the Board’s slate of director nominees for the 2019 Annual Meeting.

 

 

 

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ASHLAND COMMON STOCK OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS

The following table sets forth information with respect to each person known to Ashland to beneficially own more than 5% of the outstanding shares of Ashland Common Stock as of October 31, 2018.

 

Name and Address of Beneficial Owner

   Aggregate Number of
      Shares of Common      
Stock Beneficially
Owned
        Percentage of Common      
Stock Beneficially  Owned*

The Vanguard Group

       5,299,344  (1)       8.48 %

100 Vanguard Blvd.

Malvern, Pennsylvania

 

        
        

BlackRock, Inc.

       5,268,006  (2)       8.43 %

55 East 52nd Street

New York, New York 10022

 

        

 

 

*

Based on 62,487,188 shares of Ashland Common Stock outstanding as of October 31, 2018.

 

(1)

Based upon information contained in the Schedule 13G/A filed by The Vanguard Group (“Vanguard”) with the SEC on February 12, 2018, Vanguard beneficially owned 5,299,344 of Ashland Common Stock as of December 31, 2017, with sole voting power over 32,657 shares, shared voting power over 7,600 shares, sole dispositive power over 5,262,794 shares and shared dispositive power over 36,550 shares. Vanguard reported its beneficial ownership on behalf of itself and the following wholly owned subsidiaries: Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd.

 

(2)

Based upon information contained in the Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) with the SEC on January 29, 2018, BlackRock beneficially owned 5,268,006 shares of Ashland Common Stock as of December 31, 2017, with sole voting power over 4,984,689 shares, shared voting power over no shares, sole dispositive power over 5,268,006 shares and shared dispositive power over no shares. BlackRock reported its beneficial ownership on behalf of itself and the following direct and indirect subsidiaries and affiliates: BlackRock Life Limited; BlackRock Advisors, LLC; BlackRock (Netherlands) B.V.; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock Investment Management (Australia) Limited; BlackRock Advisors (UK) Limited; BlackRock Fund Advisors; BlackRock Asset Management North Asia Limited; and BlackRock Fund Managers Ltd.

 

 

 

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ASHLAND COMMON STOCK OWNERSHIP OF

DIRECTORS AND EXECUTIVE OFFICERS OF ASHLAND

The following table shows, as of October 31, 2018, the beneficial ownership of Ashland Common Stock by each Ashland director and each Ashland executive officer named in the Summary Compensation Table of this proxy statement and the beneficial ownership of Ashland Common Stock by the directors and executive officers of Ashland as a group.

Common Stock Ownership

 

Name of Beneficial Owner

   Aggregate
Number of
Shares of
Common Stock
    Beneficially     
Owned
     Percentage of
Common Stock
Beneficially
Owned
  

 

William A. Wulfsohn

     208,705      *    (2)(3)(4)

J. Kevin Willis

     105,310      *    (1)(2)(3)(4)

Peter J. Ganz

     82,005      *    (2)(3)(4)

Anne T. Schumann

     20,734      *    (1)(2)(3)(4)

Keith C. Silverman

     6,660      *    (1)(2)(3)

Brendan M. Cummins

     0      *    (2)

William G. Dempsey

     4,573      *    (2)(5)

Jay V. Ihlenfeld

     3,702      *    (2)(5)

Susan L. Main

     2,719      *    (2)(5)

Jerome A. Peribere

     1,883      *    (5)

Barry W. Perry*

     57,013      *    (2)(5)

Craig A. Rogerson**

     0      *   

Mark C. Rohr

     59,063      *    (2)(5)

Janice J. Teal

     19,206      *    (2)(5)

Michael J. Ward

     134,232      *    (2)(5)

Kathleen Wilson-Thompson

     2,719      *    (2)(5)

All directors and executive officers as a group (18 people)

     729,011      1.16%    (1)(2)(3)(4)(5)

 

 

*

Consistent with Ashland’s director retirement policy set forth in the Corporate Governance Guidelines, Mr. Perry will retire from the Board as of the 2019 Annual Meeting and will not stand for reelection.

**

Mr. Rogerson is a director nominee and does not beneficially own any shares of Ashland Common Stock.

As of October 31, 2018, there were 62,487,188 shares of Ashland Common Stock outstanding. None of the listed individuals owned more than 1% of Ashland’s Common Stock outstanding as of October 31, 2018. All directors and executive officers as a group owned 729,011 shares of Ashland Common Stock, which equaled 1.16% of the Ashland Common Stock outstanding as of October 31, 2018. Shares deemed to be beneficially owned are included in the number of shares of common stock outstanding on October 31, 2018, for computing the percentage ownership of the applicable person and the group, but shares are not deemed to be outstanding for computing the percentage ownership of any other person.

 

  (1)

Includes shares of Ashland Common Stock held under the Employee Savings Plan by executive officers: as to Mr. Willis, 17,710 shares; as to Ms. Schumann, 1,332 shares; as to Mr. Silverman, 1,076 shares; and as to all executive officers as a group, 20,600 shares. Participants can vote the Employee Savings Plan shares.

 

  (2)

Includes grants of restricted stock units and restricted stock units acquired from the fiscal 2016–2018 Long Term Incentive Performance Plan to executive officers that vest within 60 days of October 31, 2018, and common stock units and/or restricted stock units (share equivalents) held

 

 

 

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by executive officers in the Ashland Common Stock Fund under Ashland’s non-qualified Deferred Compensation Plan for Employees (the “Employees’ Deferral Plan”) or by directors under the non-qualified Deferred Compensation Plan for non-employee directors (the “Directors’ Deferral Plan”): as to Mr. Wulfsohn, 46,351 units; as to Mr. Willis, 41,206 units; as to Mr. Ganz, 7,967 units; as to Ms. Schumann, 4,836 units; as to Mr. Silverman, 3,588 units; as to Mr. Dempsey, 2,690 units; as to Dr. Ihlenfeld, 1,819 units; as to Ms. Main, 836 units; as to Mr. Perry, 55,130 units; as to Mr. Rohr, 52,180 units; as to Dr. Teal, 17,323 units; as to Mr. Ward, 132,349 units; as to Ms. Wilson-Thompson, 836 units; and as to all directors and executive officers as a group, 372,122 units. Mr. Cummins, as a non-U.S. resident, is not eligible to defer U.S.-based compensation and therefore holds 16,437 restricted stock units, payable solely in cash, directly and not through the Directors’ Deferral Plan.

 

  (3)

Includes shares of Ashland Common Stock with respect to which the executive officers have the right to acquire beneficial ownership within 60 calendar days after October 31, 2018, through the exercise of stock appreciation rights (“SARs”): as to Mr. Wulfsohn, 58,874 shares; as to Mr. Willis, 32,207 shares; as to Mr. Ganz, 33,530 shares; as to Ms. Schumann, 1,295 shares; as to Mr. Silverman, 638 shares; and as to all directors and executive officers as a group, 131,000 shares through SARs. All SARs included in this table are reported on a net basis based on the closing price for Ashland Common Stock as reported on the New York Stock Exchange (“NYSE”) Composite Tape on October 31, 2018. All SARs are stock settled and are not issued in tandem with an option.

 

  (4)

Includes restricted shares of Ashland Common Stock: as to Mr. Wulfsohn, 31,037 shares; as to Mr. Willis, 13,045 shares; as to Mr. Ganz, 11,173 shares; as to Ms. Schumann, 8,163 shares; and as to all executive officers as a group, 63,418 shares.

 

  (5)

Includes 1,883 restricted shares of Ashland Common Stock for each of the non-employee directors, except for Mr. Cummins who received 1,883 restricted stock units in lieu of 1,883 restricted shares (discussed in footnote 2 above).

 

 

 

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PROPOSAL ONE – ELECTION OF DIRECTORS

BOARD OF DIRECTORS

Eleven directors are proposed to be elected at the Annual Meeting to serve until the 2020 Annual Meeting and until their successors are duly elected and qualified. The 11 individuals nominated by your Board for election as directors at the 2019 Annual Meeting are Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld, Susan L. Main, Jerome A. Peribere, Craig A. Rogerson, Mark C. Rohr, Janice J. Teal, Michael J. Ward, Kathleen Wilson-Thompson and William A. Wulfsohn. The G&N Committee believes that all 11 of your Board’s nominees will be available to serve as directors upon election and unanimously recommends that stockholders vote FOR them at the Annual Meeting using the enclosed BLUE proxy card.

On November 14, 2018 and December 10, 2018, the G&N Committee and the Board met and discussed the composition of the current Board and reviewed and evaluated the Cruiser Nominees. As part of this review, with the assistance of Russell Reynolds Associates, the G&N Committee and the Board considered:

 

   

the relevant skills, achievements and experience of the Cruiser Nominees;

 

   

that the Board, as currently constructed, is independent and diverse and has a broad range of experience and expertise in chemicals, research and development, finance, and other disciplines and industries that are relevant and important to the Company’s business and continued success at this important period in its transformation into a premier global specialty chemicals company; and

 

   

that, including Mr. Peribere, five of the Company’s directors have joined the Board within the past three years, and four have joined since the beginning of 2017.

Following its review and evaluation, the G&N Committee determined not to recommend the Cruiser Nominees and to instead recommend the Company’s existing directors (other than Barry W. Perry) as nominees to be included in the Board’s slate of director nominees for the 2019 Annual Meeting, in light of the fit of their backgrounds, skills, achievements and experiences with the Company.

Consistent with the Company’s director retirement policy set forth in the Corporate Governance Guidelines, Barry W. Perry, having reached his 72nd birthday, will retire from the Board as of the 2019 Annual Meeting and will not stand for reelection to the Board. Consequently, the Board determined to temporarily decrease the size of the Board to ten directors effective as of the 2019 Annual Meeting and to initiate a search for one new independent director.

From December 10, 2018 to December 25th, 2018, the Board conducted a search for a new independent director candidate. During this search, Ashland had extensive discussions with several significant stockholders and received input on potential director candidates for election to Ashland’s Board at the 2019 Annual Meeting. As a result of those discussions, Mr. Rogerson was identified as an experienced leader in the chemicals industry and as a potential director nominee to add to Ashland’s current director slate. The G&N Committee met with Mr. Rogerson, considered his significant prior finance and specialty chemical company experience and determined that Mr. Rogerson possessed qualifications and skills that would further enhance the strength of Ashland’s Board. On December 26, 2018, the Board met and discussed:

 

   

the status of the ongoing director search;

 

   

Mr. Rogerson’s track record of managing complex, global specialty chemical company portfolios and operational experience; and

 

   

that, following the 2019 Annual Meeting, if Mr. Rogerson is elected, six of Ashland’s 11 directors will have joined the Board within the past three years and five will have joined since the beginning of 2017.

 

 

 

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After consideration of the potential director candidates by the G&N Committee and the Board, both the G&N Committee and the Board approved the nomination of Mr. Rogerson for election to the Ashland Board at the 2019 Annual Meeting. In light of Mr. Rogerson’s nomination, the Board determined to maintain the size of the Board at eleven directors following the 2019 Annual Meeting.

Cruiser has notified Ashland of its intent to nominate a slate of four alternative nominees for election as directors at the Annual Meeting in opposition to the nominees recommended by your Board. As a result, assuming such nominees are in fact proposed for election at the Annual Meeting and such nominations have not been withdrawn by Cruiser on or prior to the tenth day before we mail the Notice of Annual Meeting accompanying this proxy statement, the election of directors will be considered a contested election and, as provided under Article V of Ashland’s Certificate of Incorporation, directors will be elected on a plurality basis. This means that the 11 director nominees receiving the greatest number of votes cast ‘for’ their election will be elected. “Withhold” votes will be counted for purposes of determining if there is a quorum at the Annual Meeting for this vote, but will not be counted as votes cast.

Your Board does not endorse any of the Cruiser nominees and recommends that you disregard any White proxy card that may be sent to you by Cruiser. Voting to “withhold” with respect to any of Cruisers nominees on its White proxy card is not the same as voting FOR your Board’s nominees, because a vote to “withhold” with respect to any of Cruiser’s nominees on its White proxy card will revoke any previous proxy submitted by you. If you have already voted using a White proxy card sent to you by Cruiser, you have every right to change it and we urge you to revoke that proxy by voting in favor of your Board’s nominees by using the BLUE proxy card to vote by telephone or by Internet or by signing, dating and returning the enclosed BLUE proxy card in the postage-paid envelope provided. Only the latest-dated validly executed proxy that you submit will be counted—any proxy may be revoked at any time prior to its exercise at the Annual Meeting by following the instructions under “Can I change my vote once I vote by mail, by telephone or over the Internet?” on page 3. If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor, Innisfree M&A Incorporated, toll-free at 1 (877) 456-3402.

In the event that Cruiser withdraws its nominees on or prior to the tenth day before we mail the Notice of Annual Meeting accompanying this proxy statement, we will disclose such withdrawal to our stockholders and, as provided under Article V of Ashland’s Certificate of Incorporation, the affirmative vote of a majority of votes cast with respect to each director nominee will be required for the nominee to be elected. A majority of votes cast means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that director nominee. Abstentions will not be counted as votes cast either for or against the nominees.

Pursuant to Ashland’s Certificate of Incorporation, any nominee who is serving as a director at the time of an uncontested election who fails to receive a greater number of votes “for” his or her election than votes “against” his or her election shall submit an offer to resign from the Board no later than two weeks after the certification of the stockholder vote. Pursuant to the Board of Directors’ resignation policy in Ashland’s Corporate Governance Guidelines (published on Ashland’s website (http://investor.ashland.com)), the Board will decide, through a process managed by the G&N Committee, whether to accept the resignation within 90 days following the date of the stockholder meeting. The Company will then promptly disclose the Board’s decision and reasons therefor. As a condition to his or her nomination, each person nominated by the G&N Committee must agree in advance to abide by the policy. All 11 of your Board’s director nominees have agreed to abide by the policy.

If you submit a validly executed BLUE proxy card or voting instruction form but do not specify how you want to vote your shares with respect to the election of directors, then your shares will be voted in line with the Board’s recommendation with respect to the proposal, i.e., FOR the 11 nominees proposed by your Board and named in this proxy statement. Should any of your Board’s

 

 

 

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nominees be unable or unwilling to stand for election at the time of the Annual Meeting, the proxies named on the BLUE proxy card may vote for a replacement nominee recommended by the Board of Directors, or the Board may reduce the number of directors to be elected at the Annual Meeting. At this time, the Board knows of no reason why any of the Board’s nominees would not be able to serve as a director if elected.

 

 

The Board of Directors unanimously recommends a vote FOR ALL the following nominees
at the 2019 Annual Meeting: Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld,
Susan L. Main, Jerome A. Peribere, Craig A. Rogerson, Mark C. Rohr, Janice J. Teal,
Michael J. Ward, Kathleen Wilson-Thompson and William A. Wulfsohn.

 

 

 

 

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DIRECTOR NOMINEES

 

 

  BRENDAN M. CUMMINS

 

 

LOGO

 

Principal Occupation:

Former Consultant to

The Valence Group; Former

Chief Executive Officer of

Ciba Specialty Chemicals

 

Director Since: 2012

Age: 67

  

Professional Experience:

Mr. Cummins served as a global strategic advisor to, and on the senior executive panel of, The Valence Group, a specialist mergers and acquisitions firm, from 2010 until May 2012. Prior to that position, Mr. Cummins served as Chief Executive Officer for Ciba Specialty Chemicals (“Ciba”) from 2007 to 2008 and as Chief Operating Officer from 2005 to 2007. From 1974 to 2005, Mr. Cummins held a variety of international and senior management positions with Ciba.

 

Education:

Mr. Cummins is an Associate and Fellow of the Institute of Company Accountants, is a Fellow of the Association of International Accountants and received a Diploma in Company Direction from the Institute of Directors in 2010. He also completed a management development program at Harvard in 1989.

 

Other Company Boards:

Mr. Cummins serves as a board member of Perstorp Group of Sweden and is a member of the Remuneration Committee, and serves on the boards of Tom Murphy Car Sales Ltd in Ireland and Nanoco Group PLC based in Manchester UK where he is a member of the Audit Committee and the Remuneration Committee. He served until February 2014 as a board member of SolarPrint Ltd.

 

Non-Profit Boards:

Mr. Cummins currently serves as a board member of Respond Support Ireland, a community support charity organization. He also served as Chairman of The Viking Trust Ltd in Waterford City, Ireland from 2012 until July 2016, and as Chair of the Audit Committee and member of the Planning Committee of Waterford City and County Council until the first quarter of 2016.

 

Director Qualifications:

As the former Chief Executive Officer of a major chemical company and a chemical industry consultant, Mr. Cummins brings significant management and chemical industry experience and knowledge to the Board in the areas of international business operations, accounting and finance, risk oversight, environmental compliance and corporate governance.

 

Board Committees:

*  Audit

*  Governance and Nominating (Chair)

 

 

 

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  WILLIAM G. DEMPSEY

 

 

LOGO

 

Principal Occupation:

Former Executive Vice

President of Global

Pharmaceuticals at Abbott

Laboratories

 

Director Since: 2016

Age: 67

  

Professional Experience:

Mr. Dempsey held various executive positions with Abbott Laboratories from 1982 until 2007, including, Executive Vice President of Global Pharmaceuticals from 2006, Senior Vice President of Pharmaceutical Operations from 2003 and Senior Vice President of International Operations from 1999. He has previously served as Chairman of the International Section of the Pharmaceutical Research and Manufacturers of America (PhRMA) and as Chairman of the Accelerating Access Initiative, a cooperative public-private partnership of UNAIDS, the World Bank, and six research-based pharmaceutical companies.

 

Education:

Mr. Dempsey holds a Bachelor of Science degree in accounting from DePaul University.

 

Public Company Boards:

Mr. Dempsey currently serves as Chairman of the Board of Hill-Rom Holdings, Inc., where he is Chair of the Mergers and Acquisitions Committee. In the past five years, Mr. Dempsey has served on the boards of Landauer, Inc., Hospira, Inc. and Nordion Inc.

 

Non-Profit Boards:

Mr. Dempsey is a member of the Board of Trustees for the Guadalupe Center in Immokalee Florida.

 

Director Qualifications:

As former Executive Vice President of Global Pharmaceuticals at a public company, Mr. Dempsey brings significant experience within the pharmaceutical industry, as well as knowledge in the areas of finance, accounting, international operations and corporate governance. He also brings significant experience gained from service on the boards of other public companies.

 

Board Committees:

*  Audit

*  Environmental, Health, Safety and Quality

*  Governance and Nominating

 

 

 

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  JAY V. IHLENFELD

 

  

 

LOGO

 

Principal Occupation:

Former Senior Vice President

of 3M Company

 

Director Since: 2017

Age: 67

  

Professional Experience:

Dr. Ihlenfeld served as the Senior Vice President, Asia Pacific, for 3M Company, a leader in technology and innovation from 2006 until his retirement in 2012. Dr. Ihlenfeld has held various leadership positions during his 33-year career at 3M Company, including Senior Vice President, Research and Development from 2002 to 2006, Vice President of its Performance Materials business and Executive Vice President of its Sumitomo/3M business in Japan.

 

Education:

Dr. Ihlenfeld holds a Bachelor of Science degree in chemical engineering from Purdue University and a Ph.D. in chemical engineering from the University of Wisconsin.

 

Public Company Boards:

Dr. Ihlenfeld is a director of Celanese Corporation, where he serves on the Compensation and Management Development Committee and is the chair of the Environmental, Health, Safety, Quality and Public Policy Committee.

 

Non-Profit Boards:

Dr. Ihlenfeld is a director of the Minnesota Orchestra.

 

Director Qualifications:

As a former Senior Vice President of a global science company, Dr. Ihlenfeld brings significant management and chemical industry experience to the Board, as well as knowledge in the areas of international operations, leadership development and succession, environmental compliance and safety, risk oversight and M&A evaluation. He also brings significant experience gained from service on the board of directors of another public company.

 

Board Committees:

*  Audit

*  Environmental, Health, Safety and Quality

 

 

  SUSAN L. MAIN

 

  

 

LOGO

 

Principal Occupation:

Senior Vice President and

Chief Financial Officer of

Teledyne Technologies

Incorporated

 

Director Since: 2017

Age: 60

  

Professional Experience:

Ms. Main is Senior Vice President and Chief Financial Officer of Teledyne Technologies, a leading provider of sophisticated instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems, since November 2012. Prior to that, she was Vice President and Controller of Teledyne, a position she held for eight years. From 1999-2004, Ms. Main served as Vice President and Controller for Water Pik Technologies, Inc. She also held numerous financial roles at the former Allegheny Teledyne Incorporated in its government, industrial and commercial segments.

 

Education:

Ms. Main holds a bachelor’s degree from California State University, Fullerton.

 

Public Company Boards:

Ms. Main serves on the Board of Garrett Motion Inc., where she serves on the Audit and Nominating and Corporate Governance committees.

 

Director Qualifications:

As the Senior Vice President and Chief Financial Officer of a public company, Ms. Main brings significant management and public company financial experience and knowledge to the Board in the areas of finance, accounting, operations, risk oversight and corporate governance.

 

Board Committees:

*  Audit (Chair)

*  Governance and Nominating

 

 

 

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  JEROME A. PERIBERE

 

  

 

LOGO

 

Principal Occupation:

Former President and Chief

Executive Officer of

Sealed Air Corporation

 

Director Since: 2018

Age: 64

  

Professional Experience:

Mr. Peribere was the President and Chief Executive Officer of Sealed Air Corporation (“Sealed Air”) from March 2013 until his retirement in December 2017. Prior to this position, he served as the President and Chief Operating Officer of Sealed Air. Prior to joining Sealed Air, Mr. Peribere worked at The Dow Chemical Company (“Dow”) from 1977 through August 2012. Mr. Peribere served in multiple managerial roles with Dow, most recently as Executive Vice President of Dow and President and Chief Executive Officer, Dow Advanced Materials, a unit of Dow, from 2010 through August 2012.

 

Education:

Mr. Peribere graduated with a degree in business economics and finance from the Institut D’Etudes Politiques in Paris, France.

 

Public Company Boards:

Mr. Peribere currently serves as a board member of Xylem Inc. where he serves on the Finance, Innovation & Technology Committee and chairs the Leadership Development and Compensation Committee. Mr. Peribere previously served as a director of Sealed Air and BMO Financial Corporation.

 

Director Qualifications:

As the former President and Chief Executive Officer of Sealed Air and former Executive Vice President of Dow and President and Chief Executive Officer of Dow Advanced Materials, Mr. Peribere brings significant management and chemical industry experience and knowledge to the Board in the areas of finance, international business operations, safety, environmental compliance, risk oversight and corporate governance. He also brings significant experience gained from service on the board of directors of other public companies.

 

Board Committees:

*  Compensation

*  Environmental, Health, Safety and Quality

 

 

 

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  CRAIG A. ROGERSON

 

  

 

LOGO

 

Principal Occupation:

Chairman, President and Chief Executive Officer of Hexion Inc.

 

Age: 62

  

Professional Experience:

Mr. Rogerson is the current Chairman, President and Chief Executive Officer of Hexion Inc. Prior to this position, Mr. Rogerson served as Chairman, President and Chief Executive Officer of Chemtura Corporation (“Chemtura”) from December 2008 until April 2017. In March 2009, Chemtura filed a petition of voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code and successfully completed its financial restructuring in November of 2010. Prior to joining Chemtura, Mr. Rogerson served as President, Chief Executive Officer and Director of Hercules Incorporated (“Hercules”) from December 2003 until November 2008 when Hercules was acquired by Ashland. Mr. Rogerson joined Hercules in 1979 and served in a number of management positions before leaving the company to serve as President and Chief Executive Officer of Wacker Silicones Corporation in 1997. In May 2000, Mr. Rogerson rejoined Hercules and was named President of its BetzDearborn Division in August 2000. Prior to being named Chief Executive Officer of Hercules in December 2003, Mr. Rogerson held a variety of senior management positions with the company.

 

Education:

Mr. Rogerson received a Chemical Engineering degree from Michigan State University.

 

Public Company Boards:

Mr. Rogerson is a director of PPL Corporation where he serves on the Audit and Executive Committees and chairs the Compensation, Governance and Nominating Committee. Mr. Rogerson previously served as a director of Chemtura Corporation and Hercules.

 

Non-Profit Boards:

Mr. Rogerson currently serves on the boards of the American Chemistry Council, the Society of Chemical Industry, and the Pancreatic Cancer Action Network. He also serves on the Advisory board of the Michigan State University Chemical Engineering & Materials Science College.

 

Director Qualifications:

As the President and Chief Executive Officer of a specialty chemicals company, Mr. Rogerson brings significant management and chemical industry experience and knowledge to the Board in the areas of finance, international business operations, safety, environmental compliance, risk oversight and corporate governance. He also brings significant experience gained from service on the board of directors of other public companies.

 

 

 

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  MARK C. ROHR

 

  

 

LOGO

 

Principal Occupation:

Chairman and Chief

Executive Officer of

Celanese Corporation

 

Director Since: 2008

Age: 67

  

Professional Experience:

Mr. Rohr is Chairman and Chief Executive Officer of Celanese Corporation, a technology and specialty materials company. He has served in these roles since April 2012. Prior to that position, he held several executive positions with Albemarle Corporation, a specialty chemical company, including Executive Chairman of the Board (2011-2012), Chairman of the Board (2008-2011), Chief Executive Officer (2002-2011) and President (2000-2010). Before joining Albemarle, he served with Occidental Chemical Corporation as Senior Vice President.

 

Education:

Mr. Rohr holds Bachelor of Science degrees in chemistry and chemical engineering from Mississippi State University.

 

Public Company Boards:

Mr. Rohr previously served as the Executive Chairman and Chairman of the Board of Albemarle Corporation.

 

Non-Profit Boards:

Mr. Rohr serves on the Executive Committee of the American Chemistry Council and the Advisory Board of Mississippi State University College of Arts and Sciences. He is the Chair of City Year Dallas, serves on the boards of Commit! and the Holdsworth Center, both focused on addressing the needs of public education, and is the past campaign chair of United Way Metropolitan Dallas.

 

Director Qualifications:

As a current Chairman and Chief Executive Officer of a leading technology and specialty materials company and former Chairman of the Board and Chief Executive Officer of a leading chemical company, Mr. Rohr brings significant management and chemical industry experience and knowledge to the Board in the areas of finance, accounting, international business operations, safety, environmental compliance, risk oversight and corporate governance. He also brings significant experience gained from service on the board of directors of other public companies.

 

Board Committees:

*  Audit

*  Environmental, Health, Safety and Quality

 

 

 

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  JANICE J. TEAL

 

  

 

LOGO

 

Principal Occupation:

Former Group Vice

President and Chief

Scientific Officer for

Avon Products Inc.

 

Director Since: 2012

Age: 66

  

Professional Experience:

Dr. Teal served as the Group Vice President and Chief Scientific Officer for Avon Products Inc., a direct seller of beauty and related products, from January 1999 to May 2010. Prior to that position, Dr. Teal served as Vice President of the Avon Skin Care Laboratories, where she led the bioscience research and skin care teams.

 

Education:

Dr. Teal holds a doctorate degree and a Master of Science degree in Pharmacology from Emory University Medical School, a Pharmacy Degree from Mercer University and was a Post-Doctoral Fellow at the New York University Medical Center Institute of Environmental Medicine.

 

Public Company Boards:

From 2003 until 2011, Dr. Teal served on the Board of Directors of Arch Chemicals, Inc., where she served on the Audit Committee and the Corporate Governance Committee.

 

Director Qualifications:

As former Group Vice President and Chief Scientific Officer of a leading personal care company, Dr. Teal brings significant scientific and personal care industry experience and knowledge to the Board in the areas of research and development, marketing, safety and risk oversight. She also brings significant experience gained from service on the board of directors of another public chemical company.

 

Board Committees:

*  Environmental, Health, Safety and Quality (Chair)

*  Compensation

 

 

 

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  MICHAEL J. WARD

 

 

LOGO

 

Principal Occupation:

Retired Chairman of

the Board and Chief

Executive Officer of

CSX Corporation

 

Director Since: 2001

Age: 68

  

Professional Experience:

Mr. Ward is the retired Chairman of the Board and Chief Executive Officer of CSX Corporation, a transportation supplier, where he served in that position from 2003 to 2017. Prior to that position, he was President of CSX Transportation, the corporation’s rail unit.

 

Education:

Mr. Ward holds a Bachelor of Science degree from the University of Maryland and a Masters in Business Administration from the Harvard Business School.

 

Public Company Boards:

Since January 2016, Mr. Ward has served on the Board of Directors of the PNC Financial Services Group, Inc., where he serves on the Nominating and Governance Committee and Personnel and Compensation Committee. He also serves on the Board of Directors of Contura-Energy Inc., serving on the Nominating and Governance Committee, Compensation Committee, and Safety Committee. From January 2003 until May 2017, Mr. Ward served as Chairman of the Board of Directors of CSX Corporation, where he also served as Chairman of the Executive Committee.

 

Non-Profit Boards:

Mr. Ward is the Chair of City Year Jacksonville, the Hubbard House Foundation and Edward Waters College Foundation. He is also on the Boards of the United Way of Northeast Florida, Gen Wow, Jacksonville Civic Council, and One Love. He is a trustee of the Michael Ward and Jennifer Glock Foundation.

 

Director Qualifications:

As a retired Chairman of the Board and Chief Executive Officer of a major transportation company, Mr. Ward brings significant experience and knowledge to the Board in the areas of finance, accounting, business operations, safety, environmental compliance, risk oversight and corporate governance. He also brings significant experience gained from service on the board of directors of another public company.

 

Board Committees:

*  Governance and Nominating

*  Compensation

 

 

 

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  KATHLEEN WILSON-THOMPSON

 

 

LOGO

 

Principal Occupation:

Executive Vice President and

Global Chief Human

Resources Officer of

Walgreens Boots Alliance Inc.

 

Director Since: 2017

Age: 61

  

Professional Experience:

Ms. Wilson-Thompson is Executive Vice President and Global Chief Human Resources Officer at Walgreens Boots Alliance Inc., the largest retail pharmacy, health and daily living destination across the USA and Europe. Prior to this, she was Senior Vice President and Chief Human Resources Officer for Walgreens since 2010. Prior to her role at Walgreens, she held several positions of increasing responsibility in the operations and legal departments at Kellogg Company. She left Kellogg as Senior Vice President of Global Human Resources to join Walgreens. She also worked as Vice President and Staff Counsel of litigation and banking law for Michigan National Corporation.

 

Education:

Ms. Wilson-Thompson holds a bachelor’s degree from the University of Michigan, and a Juris Doctorate and an LLM, Master of Laws, in corporate and finance law from Wayne State University.

 

Public Company Boards:

Ms. Wilson-Thompson has served as a director of Vulcan Materials Company since 2009, and currently is the chair of the Safety, Health and Environmental Committee and serves on the Compensation Committee.

 

Non-Profit Boards:

Ms. Wilson-Thompson serves on the Board of the University of Michigan Alumni Association, is on the boards of the Skills for Chicagoland’s Future, and the Taylor Wilson Thompson Family Foundation, and is a trustee for the NAACP Foundation.

 

Director Qualifications:

As the current Executive Vice President and Global Chief Human Resources Officer of a large retail pharmacy company, Ms. Wilson-Thompson brings significant experience and knowledge to the Board in the areas of business operations, safety, executive compensation, risk oversight and corporate governance. She also brings significant experience gained from service on the board of directors of another public company.

 

Board Committees:

*  Environmental, Health, Safety and Quality

*  Compensation

 

 

 

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  WILLIAM A. WULFSOHN

 

 

LOGO

 

Principal Occupation:

Chairman of the Board and

Chief Executive Officer of

Ashland Global Holdings Inc.

 

Director Since: 2015

Age: 56

  

Professional Experience:

Mr. Wulfsohn is Ashland’s Chairman of the Board and Chief Executive Officer. Prior to this position, Mr. Wulfsohn served as President and Chief Executive Officer of Carpenter Technology Corporation from July 2010 to December 2014. Mr. Wulfsohn also served as a Director for Carpenter Technology Corporation beginning in April 2009. Prior to joining Carpenter Technology Corporation, Mr. Wulfsohn served as Senior Vice President, Industrial Coatings at PPG Industries. Before joining PPG Industries, Mr. Wulfsohn served as Vice President and General Manager for Honeywell International. Previously, Mr. Wulfsohn worked for Morton International/Rohm & Haas, beginning as a director of marketing and subsequently as Vice President and Business Director. Mr. Wulfsohn began his professional career with McKinsey & Company.

 

Education:

Mr. Wulfsohn holds a chemical engineering degree from the University of Michigan and a Masters of Business Administration degree from Harvard University.

 

Public Company Boards:

Mr. Wulfsohn is a director of PolyOne Corporation, where he serves on the Audit and Compensation Committees. Within the past five years, Mr. Wulfsohn also served as a director of Valvoline Inc. and on the Board of Directors of Carpenter Technology Corporation.

 

Director Qualifications:

As the Chairman and Chief Executive Officer of Ashland and as the former President and Chief Executive Officer of Carpenter Technology Corporation, a leading specialty materials company, Mr. Wulfsohn brings significant experience and knowledge to the Board in the areas of finance, accounting, business operations, management, manufacturing, safety, environmental compliance, risk oversight and corporate governance. Also, as former Senior Vice President of Industrial Coatings at PPG Industries and an executive at other chemical companies, Mr. Wulfsohn brings considerable specialty chemicals management and manufacturing experience to the Board. He also brings significant experience gained from service on the board of directors of other public companies.

 

 

 

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COMPENSATION OF DIRECTORS

Director Compensation Table

The following table is a summary of compensation information for the fiscal year ended September 30, 2018, for Ashland’s non-employee directors. Mr. Wulfsohn, Chairman of the Board and Chief Executive Officer, receives no compensation as a director of Ashland. Mr. Rogerson is a director nominee and has not received any compensation as a director from Ashland.

 

Name

   Fees Earned or
Paid in Cash (1)
($)
     Stock
Awards (2)
($)
     All Other
Compensation (3)
($)
     Total
($)
 
(a)    (b)      (c)      (d)      (e)  

 

Brendan M. Cummins

  

 

 

 

115,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

225,000

 

 

           

 

William G. Dempsey

  

 

 

 

100,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

210,000

 

 

           

 

Jay V. Ihlenfeld

  

 

 

 

100,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

210,000

 

 

           

 

Susan L. Main

  

 

 

 

113,611

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

223,611

 

 

           

 

Jerome A. Peribere*

  

 

 

 

68,334

 

 

  

 

 

 

252,562

 

 

  

 

 

 

0

 

 

  

 

 

 

320,896

 

 

           

 

Barry W. Perry***

  

 

 

 

146,806

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

256,806

 

 

           

 

Mark C. Rohr

  

 

 

 

100,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

210,000

 

 

           

 

George A. Schaefer, Jr.**

  

 

 

 

38,334

 

 

  

 

 

 

0

 

 

  

 

 

 

5,000

 

 

  

 

 

 

43,334

 

 

           

 

Janice J. Teal

  

 

 

 

115,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

225,000

 

 

           

 

Michael J. Ward

  

 

 

 

100,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

210,000

 

 

           

 

Kathleen Wilson-Thompson

  

 

 

 

100,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

210,000

 

 

 

 

*

Mr. Peribere joined Ashland’s Board on January 25, 2018.

 

**

Mr. Schaefer retired from the Board on January 25, 2018.

 

***

Consistent with Ashland’s director retirement policy set forth in the Corporate Governance Guidelines, Mr. Perry will retire from the Board as of the 2019 Annual Meeting and will not stand for reelection.

 

(1)

For Ms. Main, the amount provided reflects the annual retainer for membership on Ashland’s Board as well as the annual retainer for services as chair of the Audit Committee, pro-rated to reflect Ms. Main’s assumption of the role of chair of the Audit Committee as of January 25, 2018. For Mr. Perry, the amount reflects the annual retainer for membership on Ashland’s Board as well as the annual retainer for services as Lead Director, taking into account (on a pro-rated basis) the increase in the Lead Director retainer effective as of January 25, 2018, as described further below. For fiscal 2018, Messrs. Perry and Ward and Dr. Teal deferred all or a portion of their fees into the Directors’ Deferral Plan. Mr. Perry deferred $110,104, Mr. Ward deferred $100,000, and Dr. Teal deferred $115,000.

 

(2)

The values in column (c) represent the aggregate grant date fair value of restricted stock unit awards granted in fiscal 2018 computed in accordance with FASB ASC Topic 718. These restricted stock unit awards do not require assumptions in computing their grant date fair value under generally accepted accounting principles. The number of restricted stock unit awards received is rounded to the nearest whole share. Other than Mr. Cummins, each continuing non-employee director received a grant of 1,453 restricted stock units of Ashland Common Stock in the Directors’ Deferral Plan on January 25, 2018.

 

 

 

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Mr. Cummins received a grant of 1,453 restricted stock units directly on January 25, 2018. The grant date fair value per share of each restricted stock unit was $75.71 per share of Ashland Common Stock. Mr. Peribere joined the Board on January 25, 2018 and, in addition to the restricted stock units, also received an on-boarding grant of 1,883 restricted shares with a grant date fair value of $142,562, which was based on the grant date fair value of $75.71 per share of Ashland Common Stock.

 

(3)

For Mr. Schaefer, this amount consists of a charitable match, pursuant to Ashland’s charitable match program for directors. Under its director charitable match program, Ashland provides a matching donation of 50%, up to a maximum matching contribution of $5,000, on an annual basis for contributions by directors to accredited two-year junior, community or technical colleges, four-year institutions of higher learning, and graduate and professional schools.

The following table identifies the aggregate number of unvested stock awards for each non-employee director outstanding as of September 30, 2018. Mr. Schaefer retired on January 25, 2018 and did not have any shares of restricted Ashland Common Stock or unvested stock units on September 30, 2018.

 

Name

   Shares of
Restricted Ashland
Common Stock
(#)
     Unvested
Restricted Stock
Units of Ashland
Common Stock
(1)
(#)
 

 

Brendan M. Cummins

  

 

 

 

0

 

 

  

 

 

 

16,437

 

 

     

 

William G. Dempsey

  

 

 

 

1,883

 

 

  

 

 

 

1,466

 

 

     

 

Jay V. Ihlenfeld

  

 

 

 

1,883

 

 

  

 

 

 

1,466

 

 

     

 

Susan L. Main

  

 

 

 

1,883

 

 

  

 

 

 

1,466

 

 

     

 

Jerome A. Peribere

  

 

 

 

1,883

 

 

  

 

 

 

1,466

 

 

     

 

Barry W. Perry

  

 

 

 

1,883

 

 

  

 

 

 

1,466

 

 

     

 

Mark C. Rohr

  

 

 

 

1,883

 

 

  

 

 

 

1,466

 

 

     

 

Janice J. Teal

  

 

 

 

1,883

 

 

  

 

 

 

1,466

 

 

     

 

Michael J. Ward

  

 

 

 

1,883

 

 

  

 

 

 

1,466

 

 

     

 

Kathleen Wilson-Thompson

  

 

 

 

1,883

 

 

  

 

 

 

1,466

 

 

 

 

(1)

Includes credit for reinvested dividends allocated since the grant date for all directors. For all directors other than Mr. Cummins, the restricted stock units vest one year after date of grant. Mr. Cummins’s restricted stock units vest as described below under “Restricted Stock Units” of this proxy statement.

Ashland’s non-employee director compensation program is designed to attract and retain highly qualified directors and align their interests with those of our stockholders. The G&N Committee reviews the director compensation program on an annual basis and recommends proposed changes for approval by the Board. As part of this review, the G&N Committee considers the significant amount of time expended, and the skill level required, by each non-employee director in fulfilling his or her duties on the Board, each director’s role and involvement on the Board and its committees and the market compensation practices and levels of our peer companies.

 

 

 

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FY 2018 Director Compensation Review

During its annual review of the non-employee director compensation program in January 2018, the G&N Committee considered an analysis prepared by the Compensation Committee’s independent consultant, Deloitte Consulting LLP, which summarized non-employee director compensation trends and pay levels at the same peer companies used to evaluate the compensation of our named executive officers. Following this review, and after considering the advice of Deloitte Consulting LLP about market practices and pay levels, the G&N Committee recommended, and the Board approved, the following changes to our non-employee director compensation program:

 

   

The annual retainer for the Lead Independent Director increased by $10,000 to $35,000, effective immediately following approval.

 

   

The on-boarding grant of 1,883 restricted shares of Ashland Common Stock for new directors was eliminated, effective after the grant to Mr. Peribere.

Annual Retainer

Ashland provides annual retainers of (a) $100,000 for each director, (b) an additional $35,000 for the Lead Independent Director, (c) an additional $20,000 for the Chair of the Audit Committee and (d) an additional $15,000 for other committee chairs. Non-employee directors may elect to receive part or all of each annual retainer in cash, in shares of Ashland Common Stock, or as deferrals through the Directors’ Deferral Plan.

The directors who make an election to defer part or all of any annual retainer may have the deferred amounts held as common stock units (share equivalents) in a hypothetical Ashland Common Stock fund or invested under the other available investment options under the plan. The payout of the amounts deferred occurs upon termination of service by the director. Directors may elect to have the payout in a single lump sum or in installments not to exceed 15 years. For amounts deferred before January 1, 2005, upon a “change in control” of Ashland (as defined in the Directors’ Deferral Plan), deferred amounts in the directors’ deferral accounts will be automatically distributed as a lump sum in cash to the director. For amounts deferred on and after January 1, 2005, such amounts will be distributed pursuant to each director’s election and valued at the time of the distribution.

Restricted Stock Units

Ashland provides an annual award of deferred restricted stock units in the Directors’ Deferral Plan with a grant date value of $110,000 (pro-rated as applicable for less than a full year of service).

In 2018, each continuing non-employee director (other than Mr. Cummins) received the deferred restricted stock units in the Directors’ Deferral Plan. The deferred restricted stock units vest one year after date of grant and are settled in accordance with each director’s deferral election. Dividends on deferred restricted stock units are reinvested in additional restricted stock units. Upon a “change in control” of Ashland, the restricted stock units immediately vest. Prior to being awarded restricted stock units, directors can elect to have part of his or her vested units invested under the available investment options under the plan other than the Ashland Common Stock fund and/or paid in cash after the director terminates from service.

Mr. Cummins, as a non-U.S. resident, is not eligible to participate in the Directors’ Deferral Plan. Therefore, he received an annual award of restricted stock units directly, which may not be sold, assigned, transferred or otherwise encumbered until the earliest to occur of: (i) retirement from the Board of Directors, (ii) death or disability, (iii) a 50% change in the beneficial ownership of Ashland or (iv) voluntary early retirement to enter governmental service. His annual award will continue to be granted directly (and not through deferral).

 

 

 

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Initial Equity Grant

Mr. Peribere received an on-boarding grant of 1,883 restricted shares upon election to Ashland’s Board. The restricted shares may not be sold, assigned, transferred or otherwise encumbered until the earliest to occur of: (a) retirement from the Board, (b) death or disability of the director, (c) a 50% change in the beneficial ownership of Ashland or (d) voluntary early retirement to enter governmental service. As discussed above, the G&N Committee eliminated the on-boarding grant for future directors, effective after the grant to Mr. Peribere.

Stock Ownership Guidelines for Directors

The Board of Directors considers Ashland Common Stock ownership by directors to be of utmost importance. The Board believes that such ownership enhances the commitment of directors to Ashland’s future and aligns their interests with those of Ashland’s other stockholders. The Board has therefore established minimum stock ownership guidelines for non-employee directors which require each director to own the lesser of (i) 23,500 shares or units of Ashland Common Stock or (ii) Ashland Common Stock having a value of at least five times his or her base annual cash retainer of $100,000. Each newly elected director has five years from the year elected to reach this ownership level.

As of September 30, 2018, each of Ashland’s current non-employee directors had attained the minimum stock ownership levels, except for (a) Mr. Dempsey, who joined the Board in 2016 and will not be required to meet the minimum stock ownership guidelines until 2021; (b) Dr. Ihlenfeld, Ms. Main and Ms. Wilson-Thompson, who joined the Board in 2017 and will not be required to meet the minimum stock ownership guidelines until 2022; and (c) Mr. Peribere, who joined the Board in 2018 and will not be required to meet the minimum stock ownership guidelines until 2023.

 

 

 

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CORPORATE GOVERNANCE

Governance Principles

Ashland is committed to adhering to sound corporate governance practices. The documents described below are published on Ashland’s website (http://investor.ashland.com). These documents are also available in print at no cost to any stockholder who requests them. Among the corporate governance practices followed by Ashland are the following:

 

   

Ashland has adopted Corporate Governance Guidelines. These guidelines provide the framework for the Board’s governance of Ashland and include a general description of the Board’s purpose, director qualification standards, retirement and resignation policies and other responsibilities. The Corporate Governance Guidelines require that at least two-thirds of Ashland’s directors be independent, as defined by Ashland’s Director Independence Standards (the “Standards”), which incorporate the independence requirements of the SEC rules and the listing standards of the NYSE.

 

   

On December 4, 2018, the Board adopted an amendment to the Corporate Governance Guidelines providing that the Chair of each of the Compensation Committee and G&N Committee shall rotate at least once every four years.

 

   

Ashland also requires compliance with its global code of conduct which applies to all of Ashland’s directors and employees, including the principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. The global code of conduct promotes honest and ethical conduct, compliance with applicable laws, rules and regulations, prompt reporting of violations of the code and full, fair, accurate, timely and understandable disclosure in reports filed with the SEC. Ashland intends to post any amendments or waivers of the code (to the extent applicable to Ashland’s directors and executive officers) on Ashland’s website or in a Current Report on Form 8-K.

 

   

Each of Ashland’s Board Committees has adopted a charter defining its respective purposes and responsibilities. Ashland has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act.

 

   

Only independent directors, as defined in the Standards, may serve on the Audit Committee, G&N Committee, Compensation Committee and Environmental, Health, Safety and Quality Committee (the “EHS&Q Committee”) of the Board.

 

   

The Board, and each Committee of the Board, has the authority to engage independent consultants and advisors.

Board Leadership Structure

Ashland combines the roles of Chairman of the Board and Chief Executive Officer, which is balanced through the appointment of a Lead Independent Director. The Board believes that combining the positions of Chairman and Chief Executive Officer provides clarity of leadership and is in the best interests of Ashland and its stockholders at this time. The Board believes that the use of a Lead Independent Director provides appropriate independent oversight of management. Independent oversight has been further assured by having only one member of management on the Board. The non-management directors regularly meet alone in executive session at Board meetings.

The Lead Independent Director is an independent director selected annually by the G&N Committee and approved by the Board. Mr. Perry is currently the Lead Independent Director. Consistent with Ashland’s director retirement policy set forth in the Corporate Governance

 

 

 

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Guidelines, Mr. Perry will retire from the Board as of the 2019 Annual Meeting and will not stand for reelection. In addition to the duties of all Board members, the Lead Independent Director:

 

   

Coordinates with the Chairman of the Board to determine the appropriate schedule of meetings;

 

   

Places any item he or she determines is appropriate on the Board’s agenda;

 

   

Directs that specific materials be included in Board mailings and works with the G&N Committee, as appropriate, to assess the quality, quantity and timeliness of the flow of information from management to the Board;

 

   

Directs the retention of consultants and advisors to report directly to the Board;

 

   

Coordinates with the G&N Committee to oversee compliance with Ashland’s Corporate Governance Guidelines and to recommend appropriate revisions thereto;

 

   

Coordinates and develops the agenda for, and moderates executive sessions of, the Board’s independent directors and acts as principal liaison between the independent directors and the Chairman of the Board and Chief Executive Officer on sensitive matters; and

 

   

Works with the G&N Committee to recommend the membership of the various Board Committees and Committee Chairs.

Oversight of Ashland’s Executive Compensation Program

The Compensation Committee is responsible for the approval and administration of compensation programs for executive officers and certain other employees of Ashland. The Compensation Committee is composed of independent directors (as defined in the Standards). In making compensation decisions, the Compensation Committee considers, among other things: Ashland’s compensation philosophy, its financial and operating performance, the individual performance of executives, compensation policies and practices for Ashland employees generally, and practices and executive compensation levels of peer and similarly sized general industry companies.

The Compensation Committee’s primary responsibilities are to:

 

   

Ensure that the Company’s executive compensation programs are competitive, support organizational objectives and stockholder interests, and emphasize the pay-for-performance linkage;

 

   

Review, evaluate and approve on an annual basis, the goals and objectives of the Chief Executive Officer. The Compensation Committee annually evaluates the Chief Executive Officer’s performance in light of these established goals and objectives, and based on these evaluations, the Compensation Committee sets the Chief Executive Officer’s annual compensation, including base salary, annual incentives and long-term incentives;

 

   

Review and approve compensation of all key senior executives and certain elected corporate officers; and

 

   

Approve any employment agreements, consulting arrangements, severance or retirement arrangements, change in control agreements, and/or any special or supplemental benefits or provisions covering any current or former executive officer of Ashland.

For further information about the responsibilities of the Compensation Committee, see “Committees and Meetings of the Board of Directors - Compensation Committee” on page 38.

The Compensation Committee may form and delegate authority to subcommittees with regard to any of the above responsibilities.

 

 

 

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In determining and administering the executive compensation programs, the Compensation Committee takes into consideration:

 

   

Recommendations of the Chief Executive Officer and the Chief Human Resources and Information Technology Officer regarding potential changes to executive officer compensation based on performance, competitiveness, personnel and organizational changes, regulatory issues, strategic initiatives and other matters;

 

   

Information provided by the Human Resources function at Ashland; and

 

   

Advice of an outside, independent, executive compensation consultant on all aspects of executive compensation, including comparison to the practices and executive compensation levels of peer and general industry companies.

The Compensation Committee meets in executive session for a portion of each of its meetings.

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee for fiscal 2018 were Barry W. Perry (Chair), Jay V. Ihlenfeld (through January 25, 2018), Jerome A. Peribere (beginning January 25, 2018), George A. Schaefer, Jr. (through January 25, 2018), Janice J. Teal, Michael J. Ward and Kathleen Wilson-Thompson. There were no impermissible interlocks or inside directors on the Compensation Committee.

Board’s Role of Risk Oversight

The Board of Directors has oversight responsibility with respect to Ashland’s risk management processes. This includes working with management to determine and assess the Company’s philosophy and strategy towards risk management and mitigation. Management is responsible for the day-to-day management of risk, and they report periodically to the Board and to specific committees on current and emerging risks and the Company’s approach to avoiding and mitigating risk exposure. The Board reviews in detail the Company’s most significant risks and whether management is responding consistently within the Company’s overall risk management and mitigation strategy.

While the Board maintains the ultimate oversight responsibility for risk management, each of the various committees of the Board has been assigned responsibility for risk management oversight of specific areas. In particular, the Audit Committee maintains responsibility for overseeing risks related to Ashland’s financial reporting, audit process, internal controls over financial reporting and disclosure controls and procedures and for the global ethics and compliance program. The Audit Committee also has oversight responsibility related to Ashland’s key financial risks. The EHS&Q Committee assists the Board in fulfilling its oversight responsibility with respect to environmental, health, safety, product compliance and business continuity risks. In setting compensation, the Compensation Committee monitors and evaluates the compensation and benefits structure of the Company, including providing guidance on philosophy and policy matters and excessive risk-taking. Finally, the G&N Committee conducts an annual review of nominees to the Board and is charged with developing and recommending to the Board corporate governance principles and policies and Board Committee structure, leadership and membership. On December 4, 2018, the Board adopted an amendment to the Audit Committee Charter, giving the Audit Committee responsibility for reviewing and assisting the Board in its oversight of the Company’s capital allocation framework, including prioritization, significant decisions and risk considerations relating to the Company’s financial resources, capital structure and investments and uses of cash.

Director Independence and Certain Relationships

The Board of Directors has adopted the Standards to assist in its determination of director independence. To qualify as independent under these Standards, the Board must affirmatively determine that a director has no material relationship with Ashland, other than as a director.

 

 

 

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Pursuant to the Standards, Ashland’s Board undertook a review of director independence in November 2018 and December 2018. During this review, the Board considered relationships and transactions between, on the one hand, each director or nominee, any member of his or her immediate family, and his or her affiliates, and on the other hand, Ashland and its subsidiaries and affiliates. As provided for in the Standards, the purpose of the review was to determine whether any such relationships or transactions were inconsistent with a determination that the director or nominee is independent.

As part of its assessment of Mr. Rogerson’s independence, the Board evaluated the ongoing pension payments Mr. Rogerson receives in respect of his former employment at Hercules, which was acquired by Ashland in 2008. Hercules’ pension obligations were assumed by Valvoline as part of the 2017 spin-off of Valvoline from Ashland. Mr. Rogerson receives approximately $200,000 annually pursuant to a qualified defined benefit plan and a non-qualified supplemental early retirement plan in respect of his former employment at Hercules.

As a result of the review, Ashland’s Board affirmatively determined that Messrs. Cummins, Dempsey, Peribere, Perry, Rogerson, Rohr and Ward, Dr. Teal, Dr. Ihlenfeld, Ms. Main and Ms. Wilson-Thompson are each independent of Ashland and its affiliates. Mr. Wulfsohn, Ashland’s Chief Executive Officer, is the only director determined not to be independent of Ashland. In addition, the Board has affirmatively determined that all members of the Audit Committee and Compensation Committee are independent under SEC rules and the listing standards of the NYSE.

In the normal course of business, Ashland had transactions with other corporations where certain directors are executive officers. None of the transactions were material in amount as to Ashland and none were reportable under federal securities laws. Ashland’s Board has concluded that the following relationships between Ashland and the director-affiliated entities are not material pursuant to the Standards, and the G&N Committee has determined that the transactions are not “Related Person Transactions,” as defined in the Related Person Transaction Policy:

Jerome A. Peribere, a director of Ashland, was the President and Chief Executive Officer of Sealed Air Corporation (“Sealed Air”) until his retirement in December 2017. During fiscal 2018, Sealed Air paid Ashland approximately $2,415,988 for certain products and/or services. Ashland did not purchase any products or services from Sealed Air.

Craig A. Rogerson, a director nominee of Ashland, is the Chairman, President and Chief Executive Officer of Hexion Inc. (“Hexion”). During fiscal 2018, Ashland paid Hexion approximately $16,221,000 for certain products and/or services primarily related to the Composites business and Hexion paid Ashland approximately $651,000 for certain products and/or services.

Mark C. Rohr, a director of Ashland, is the Chairman and Chief Executive Officer of Celanese Corporation (“Celanese”). During fiscal 2018, Ashland paid Celanese approximately $2,384,000, and Celanese paid Ashland approximately $5,202,000, for certain products and/or services.

There are no material proceedings to which any director, director nominee or executive officer of Ashland is a party adverse to Ashland or any of its subsidiaries or has a material interest adverse to Ashland or any of its subsidiaries.

There are no family relationships between any director of Ashland, executive officer of Ashland or person nominated or chosen to become a director or executive officer of Ashland.

Related Person Transaction Policy

Federal securities laws require Ashland to describe any transaction since the beginning of the last fiscal year, or any currently proposed transaction, in which (i) Ashland was or is to be a participant, (ii) the amount involved exceeds $120,000 and (iii) in which any related person had or will have a direct or indirect material interest. Related persons are directors and executive officers, nominees for director and any immediate family members of directors, executive officers or

 

 

 

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nominees for director. There have been no transactions since October 1, 2017, nor is there any currently proposed transaction, in which (i) Ashland was or is to be a participant, (ii) the amount involved exceeded or will exceed $120,000 and (iii) any related person had or will have a direct or indirect material interest. Ashland is also required to describe its policies and procedures for the review, approval or ratification of any Related Person Transaction.

Pursuant to Ashland’s written Related Person Transaction Policy (the “Policy”), the G&N Committee is responsible for reviewing the material facts of all transactions that could potentially be “transactions with related persons.” The Policy covers any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, (2) Ashland is a participant and (3) any related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). Transactions between Ashland and any firm, corporation or entity in which a related person is an executive officer or general partner, or in which any related persons collectively hold more than 10% of the ownership interests, are also subject to review under the Policy.

Under the Policy, Ashland’s directors and executive officers are required to identify annually, and on an as-needed basis, potential transactions with related persons or their firms that meet the criteria set forth in the Policy, and management is required to forward all such disclosures to the G&N Committee. The G&N Committee reviews each disclosed transaction. The G&N Committee has discretion to approve, disapprove or otherwise act if a transaction is deemed to be a Related Person Transaction subject to the Policy. Only disinterested members of the G&N Committee may participate in the determinations made with regard to a particular transaction. If it is impractical to convene a meeting of the G&N Committee, the Chair of the G&N Committee is authorized to make a determination and promptly report such determination in writing to the other G&N Committee members. All determinations made under the Policy are required to be reported to the full Board of Directors.

Under the Policy and consistent with SEC regulations, certain transactions are not Related Person Transactions, even if such transactions exceed $120,000 in a fiscal year. Those exceptions are:

 

   

Compensation to a director or executive officer which is or will be disclosed in Ashland’s proxy statement;

 

   

Compensation to an executive officer which is approved by the Compensation Committee and would have been disclosed in Ashland’s proxy statement if the executive officer was a “named executive officer”;

 

   

A transaction in which the rates or charges involved are determined by competitive bids, or which involves common, contract carrier or public utility services at rates or charges fixed in conformity with law or governmental authority;

 

   

A transaction that involves services as a bank depository of funds, transfer agent, registrar, indenture trustee or similar services; and

 

   

A transaction in which the related person’s interest arises solely from the ownership of Ashland Common Stock and all stockholders receive the same benefit on a pro rata basis.

Section 16(a) Beneficial Ownership Reporting Compliance

Pursuant to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s directors and certain executive officers are required to report, within specified due dates, their initial ownership of the Company’s Common Stock and all subsequent acquisitions, dispositions or other transfers of interest in such securities, if and to the extent reportable events occur which require reporting by such due dates. The Company is required to

 

 

 

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identify in its proxy statement whether it has knowledge that any person required to file such a report may have failed to do so in a timely manner. Based on that review, all of the Company’s directors and all executive officers subject to the reporting requirements satisfied such requirements in full during fiscal 2018.

Communication with Directors

The Board of Directors has established a process by which stockholders and other interested parties may communicate with the Board. Persons interested in communicating with the Board, or with a specific member or Committee of the Board, may do so by writing to the Lead Independent Director in care of the General Counsel of Ashland, 50 E. RiverCenter Boulevard, Covington, KY 41011. Communications directed to the Lead Independent Director will be reviewed by the General Counsel and distributed to the Lead Independent Director as well as to other individual directors, as appropriate, depending on the subject matter and facts and circumstances outlined in the correspondence. Communications that are not related to the duties and responsibilities of the Board, or are otherwise inappropriate, will not be forwarded to the Lead Independent Director, although all communications directed to the Board will be available to any director upon request.

Attendance at Annual Meeting

Ashland has a policy and practice of strongly encouraging all directors to attend the Annual Meeting. All of Ashland’s then current directors attended the Annual Meeting held on January 25, 2018.

Executive Sessions of Directors

The non-employee directors meet in executive session at each regularly scheduled meeting of the Board, and at other times as they may determine appropriate. The Audit and Compensation Committees of the Board meet in executive session during every regular committee meeting. Other Board committees meet in executive session at the discretion of the committee members.

Stockholder Recommendations for Directors

The G&N Committee considers director candidates recommended by other directors, employees and stockholders, and is authorized, at its discretion, to engage a professional search firm to identify and suggest director candidates. Written suggestions for director candidates should be sent via registered, certified or express mail to the Secretary of Ashland at 50 E. RiverCenter Boulevard, Covington, KY 41011. Such suggestions should be received no later than September 1, 2019, to be considered by the G&N Committee for inclusion as a director nominee for the 2020 Annual Meeting. Suggestions for director candidates should include all information required by Ashland’s By-laws and any other relevant information, as to the proposed candidate. The G&N Committee selects each director nominee based on the nominee’s skills, achievements and experience. The G&N Committee will review all director candidates in accordance with its charter and Ashland’s Corporate Governance Guidelines, and it will identify qualified individuals consistent with criteria approved by the Board of Directors. The G&N Committee shall select individuals as director nominees who exhibit the highest personal and professional integrity, who have demonstrated exceptional ability and judgment and who shall be most effective in serving the interests of Ashland’s stockholders. Additionally, the G&N Committee shall seek director candidates who exhibit the following personal and professional qualifications: (1) significant experience in the chemical industry; (2) product or process innovation experience; (3) international business expertise; (4) diverse experience in policy-making in business, government, education and/or technology, or in areas that are relevant to Ashland’s global business and strategy; (5) an inquisitive and objective nature, practical wisdom and mature judgment; and (6) the ability to work with Ashland’s existing directors and management. Individuals recommended by stockholders in accordance with these procedures will be evaluated by the G&N Committee in the same manner as individuals who are recommended through other means. In December 2018,

 

 

 

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Ashland had extensive discussions with several significant stockholders and received input on potential director candidates for election to Ashland’s Board at the 2019 Annual Meeting. As a result of those discussions, the G&N Committee met with Mr. Rogerson, considered Mr. Rogerson’s significant prior finance and specialty chemical company experience and determined that he possessed qualifications and skills that would further enhance the strength of Ashland’s Board. Following such determination by the G&N Committee, both the G&N Committee and the Board approved the nomination of Mr. Rogerson for election to the Ashland Board at the 2019 Annual Meeting.

Stockholder Nominations of Directors

In order for a stockholder to nominate a director at an annual meeting who is not otherwise nominated by the G&N Committee, Ashland’s By-laws require that the stockholder must give written notice (as specified below) to the Secretary of Ashland not less than 90 days nor more than 120 days prior to the first anniversary of the date of the immediately preceding annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days earlier or more than 60 days later than such anniversary date, notice by the stockholder to be timely must be so delivered or received not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting and the 10th day following the day on which public announcement of the date of such meeting is first made. Public disclosure may include a press release or be in a public filing with the SEC. The notice must contain the following information:

 

   

as to each stockholder proposing a nominee and any Stockholder Associated Person (as defined below),

  i.

the class or series and number of shares of stock directly or indirectly held of record and beneficially by the stockholder proposing such business or Stockholder Associated Person;

  ii.

the date such shares of stock were acquired;

  iii.

a description of any agreement, arrangement or understanding, direct or indirect, with respect to such business between or among the stockholder proposing such business, any Stockholder Associated Person or any others (including their names) acting in concert with any of the foregoing;

  iv.

a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions and borrowed or loaned shares) that has been entered into, directly or indirectly, as of the date of such stockholder’s notice by, or on behalf of, the stockholder proposing such business or any Stockholder Associated Person, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the stockholder proposing such business or any Stockholder Associated Person with respect to shares of stock of Ashland (a “Derivative“);

  v.

a description in reasonable detail of any proxy (including revocable proxies), contract, arrangement, understanding or other relationship pursuant to which the stockholder proposing such business or Stockholder Associated Person has a right to vote any shares of stock of Ashland;

  vi.

any rights to dividends on the stock of Ashland owned beneficially by the stockholder proposing such business or Stockholder Associated Person that are separated or separable from the underlying stock of Ashland;

  vii.

any proportionate interest in stock of Ashland or Derivatives held, directly or indirectly, by a general or limited partnership in which the stockholder proposing such business or Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner; and

  viii.

any performance-related fees (other than an asset-based fee) that the stockholder proposing such business or Stockholder Associated Person is entitled to, based on any increase or decrease in the value of stock of Ashland or

 

 

 

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Derivatives thereof, if any, as of the date of such notice (sections (i) through (viii), the “Stockholder Information“);

 

   

as to each stockholder proposing such nominee, the name and address of (i) any other beneficial owner of stock of Ashland that are owned by such stockholder and (ii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the stockholder or such beneficial owner (each, a “Stockholder Associated Person“);

 

   

the name and address of each stockholder proposing such nominee, as they appear on Ashland’s books;

 

   

the name and address of the person or persons to be nominated;

 

   

a representation that the stockholder is a holder of record of stock of Ashland entitled to vote in the election of directors and intends to appear in person or by proxy at the meeting;

 

   

a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder;

 

   

a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the stockholder and any Stockholder Associated Person or any of their respective affiliates or associates or other parties with whom they are acting in concert, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder, Stockholder Associated Person or any person acting in concert therewith, were the “registrant” for purposes of such rule and each nominee were a director or executive of such registrant;

 

   

such other information regarding each nominee proposed by such stockholder and Stockholder Associated Persons as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each nominee been nominated, or intended to be nominated, by the Board and a completed signed questionnaire, representation and agreement required by Section 3.02(c) of Ashland’s By-laws;

 

   

a representation as to whether such stockholder intends (a) to deliver a proxy statement and form of proxy to holders of at least the percentage of Ashland’s outstanding capital stock required to approve the nomination or (b) otherwise to solicit proxies from stockholders in support of such nomination;

 

   

a representation that the stockholder shall provide any other information reasonably requested by Ashland; and

 

   

the executed written consent of each nominee to serve as a director of Ashland if so elected.

The chairman of any meeting of stockholders to elect directors and Ashland’s Board may refuse to acknowledge any nomination that is not made in compliance with the procedure described above or if the stockholder fails to comply with the representations set forth in the notice.

 

 

 

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COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors currently has four committees: Audit Committee; Compensation Committee; Environmental, Health, Safety and Quality Committee; and Governance and Nominating Committee. All Committees are composed entirely of independent directors. During fiscal 2018, nine meetings of the Board were held. Each director attended at least 75% of the total meetings of the Board and the Committees on which he or she served. Overall attendance at Board and Committee meetings was 97%. Listed below are the members of each of the four standing committees as of September 30, 2018.

 

Audit

 

Compensation

 

Environmental, Health,

Safety and Quality

 

Governance and

Nominating

 

Brendan M. Cummins

 

 

Jerome A. Peribere

 

 

William G. Dempsey

 

 

Brendan M. Cummins*

 

William G. Dempsey

 

 

Barry W. Perry*^

 

 

Jay V. Ihlenfeld

 

 

William G. Dempsey

 

Jay V. Ihlenfeld

 

 

Janice J. Teal

 

 

Jerome A. Peribere

 

 

Susan L. Main

 

Susan L. Main*

 

 

Michael J. Ward

 

 

Mark C. Rohr

 

 

Barry W. Perry^

 

Mark C. Rohr

 

 

Kathleen Wilson-Thompson

 

 

Janice J. Teal*

 

 

Michael J. Ward

   

 

Kathleen Wilson-Thompson

 

 

 

*

Chair

 

^

Consistent with Ashland’s director retirement policy set forth in the Corporate Governance Guidelines, Mr. Perry will retire from the Board as of the 2019 Annual Meeting and will not stand for reelection.

On December 4, 2018, the Board adopted an amendment to the Corporate Governance Guidelines, providing that the Chair of each of the Compensation Committee and G&N Committee shall rotate at least once every four years.

On December 4, 2018, the Board also adopted an amendment to the Audit Committee Charter, giving the Audit Committee responsibility for reviewing and assisting the Board in its oversight of the Company’s capital allocation framework, including prioritization, significant decisions and risk considerations relating to the Company’s financial resources, capital structure and investments and uses of cash.

Following are descriptions of the primary responsibilities of each committee and the number of meetings held during fiscal 2018. Each committee’s charter is available on Ashland’s website (http://investor.ashland.com).

 

 

 Audit Committee

  

 

Number of Meetings in Fiscal 2018: 9

Summary of Responsibilities

   

Oversees Ashland’s financial reporting process, including earnings releases and the filing of financial reports.

   

Reviews management’s implementation and maintenance of adequate systems of internal accounting and financial controls (including internal control over financial reporting).

   

Evaluates the independence and performance of the independent auditors, who report directly to the Audit Committee.

   

Selects independent auditors based on qualification and independence and approves audit fees and services performed by independent auditors.

   

Reviews the effectiveness of Ashland’s legal and regulatory compliance programs.

   

Discusses the overall scope and plans for audits with both internal and independent auditors.

   

Reviews and investigates any matters pertaining to the integrity of executive management and oversees compliance by management with laws, regulations and the global code of conduct.

 

 

 

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Establishes and maintains procedures for handling complaints regarding accounting and auditing matters.

   

Reviews and oversees Ashland’s capital allocation framework, including prioritization, significant decisions and risk considerations relating to Ashland’s financial resources, capital structure and investments and uses of cash.

   

Reviews Ashland’s enterprise risk assessment and risk management policies, including Ashland’s major enterprise and financial risk exposures and steps taken by management to monitor and mitigate such exposure.

   

Evaluates and recommends actions regarding significant financial issues such as capital structure, dividend policy, offerings of corporate securities, major borrowings, credit facilities, derivatives and swaps policies (including entry into swaps in reliance on the end-user exception), past audits of capital investments, capital projects, commercial commitments and merger, acquisition and divestiture activities.

   

Oversees funding and investment policy related to employee benefit plans.

   

Reviews performance and operation of internal audit, including the head of internal audit, and reviews adverse audit reports.

   

Reviews the Company’s information and cyber security risks and programs.

 

 

 Compensation Committee

  

 

Number of Meetings in Fiscal 2018: 6

Summary of Responsibilities

   

Ensures Ashland’s executive compensation programs are appropriately competitive, supports organizational objectives and stockholder interests and emphasizes pay for performance linkage.

   

Evaluates and approves compensation and sets performance criteria for compensation programs with respect to Ashland’s Chief Executive Officer.

   

Evaluates and approves compensation and sets performance criteria for compensation programs for all key senior executives and elected corporate officers.

   

Oversees the execution of Chief Executive Officer and senior management development and succession plans, including HR-related business continuity plans.

   

Approves any employment agreements, consulting arrangements, severance or retirement arrangements, change in control agreements and/or any other special or supplemental benefits covering any current or former executive officer.

   

Adopts, amends, terminates and performs other design functions for Ashland’s benefit plans.

   

Oversees the implementation and administration of Ashland’s compensation plans.

   

Monitors and evaluates Ashland’s compensation and benefits structure, providing guidance on philosophy, policy matters and excessive risk taking.

   

Oversees regulatory compliance on compensation matters, including Ashland’s policies on structuring compliance programs to preserve tax deductibility.

   

Oversees the preparation of the annual report on executive compensation.

   

Oversees the retention of compensation consultants, independent legal counsel or other advisors and determines independence of the same.

 

 

 Environmental, Health, Safety and Quality Committee

  

 

Number of Meetings in Fiscal 2018: 4

Summary of Responsibilities

   

Oversees and reviews Ashland’s environmental, health and safety, quality and compliance policies, programs, practices and audits and any issues, as well as competitors’ activities and industry best practices.

   

Oversees and reviews environmental, health and safety regulatory trends, including Ashland’s overall compliance, remediation and sustainability efforts.

   

Oversees and reviews product safety and quality trends, issues and concerns which affect or could affect Ashland’s product safety or quality practices, including Ashland’s overall efforts related to product safety and quality.

 

 

 

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Oversees, reviews and receives updates on Ashland’s policies regarding environmental, health, safety and quality compliance and business continuity risks.

   

Reports to the Board concerning implementation of environmental, health, safety and quality compliance policies and assists the Board in assuring Ashland’s compliance with those policies.

 

 

 Governance and Nominating Committee

  

 

Number of Meetings in Fiscal 2018: 4

Summary of Responsibilities

   

Recommends nominees for the Board of Directors and its Committees.

   

Reviews suggested potential candidates for the Board.

   

Recommends desirable size and composition of the Board and its Committees.

   

Recommends to the Board programs and procedures relating to director compensation, evaluation, retention and resignation.

   

Reviews corporate governance guidelines, corporate charters and proposed amendments to Ashland’s Certificate of Incorporation and By-laws.

   

Reviews transactions pursuant to the Related Person Transaction Policy.

   

Assists the Board in ensuring the Board’s independence as it exercises its corporate governance and oversight roles.

   

Oversees the evaluation of the Board.

   

Reviews the process for succession planning for the executive management of Ashland.

   

Reviews all Committee charters.

   

Reviews and makes recommendations to address stockholder proposals.

   

Oversees the administration of the equity plans and awards, solely with respect to non-employee directors.

 

 

 

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) provides a detailed description of our executive compensation philosophy and programs and the compensation decisions made by the Compensation Committee under those programs. This CD&A focuses on the compensation of our named executive officers (“NEOs” or “named executive officers”) for fiscal 2018, who were:

 

Name

  

Position

 

William A. Wulfsohn

  

 

Chairman of the Board and Chief Executive Officer (“CEO”)

 

J. Kevin Willis

  

 

Senior Vice President and Chief Financial Officer (“CFO”)

 

Peter J. Ganz

  

 

Senior Vice President, General Counsel and Secretary

 

Anne T. Schumann

  

 

Senior Vice President, Chief Human Resources and Information Technology Officer

 

Keith C. Silverman*

  

 

Senior Vice President, Global Operations, Quality and Environmental, Health and Safety

 

 

*

Mr. Silverman’s promotion from Vice President to Senior Vice President was effective November 16, 2018, and reflects his additional role as a member of our executive leadership team.

Executive Summary

In this section, we highlight fiscal 2018 performance and key actions that our Compensation Committee took to support our strategic priorities and to effectively align the interests of our NEOs with stockholders.

Fiscal Year 2018 Ashland Performance

Fiscal 2018 was a year of progress on Ashland’s value creation plan. This growth is being driven by specific actions we have taken to sustain and grow Ashland’s premium mix while also improving competitiveness. The execution of our plan contributed to the Company’s positive results:

 

   

Net income was $114 million compared to $28 million in fiscal 2017.

 

   

Adjusted EBITDA increased by 20%, to $683 million, compared to $570 million in 2017.

 

   

Sales rose 15%, to $3.74 billion, with double-digit increases in profitability coming from all three reportable segments (Specialty Ingredients, Composites, and Intermediates and Solvents).

 

   

Specialty Ingredients’ operating income totaled $314 million, compared to $233 million in fiscal 2017, while Adjusted EBITDA grew to $574 million compared to $493 million in fiscal 2017. Operating income margin within Specialty Ingredients was 12.7 percent, up 220 basis points from the previous year. Adjusted EBITDA margin within Specialty Ingredients was 23.2 percent, up 100 basis points from the previous year. This increase was achieved through aggressive pricing actions, multiple product launches to improve product mix and profitability, targeted volume initiatives to drive positive absorption, and reduced spending.

 

   

Within Composites, full-year operating income was $73 million, compared to $67 million for the prior year. Adjusted EBITDA increased to $95 million, up from $89 million in fiscal 2017.

 

   

Within Intermediates and Solvents (I&S), operating income was $31 million compared to an operating loss of $12 million in fiscal 2017. I&S increased Adjusted EBITDA to $61 million, up from $26 million in the prior year.

 

 

 

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As part of the EBITDA margin acceleration program, Ashland is on track to achieve its target of $120 million in total run-rate savings by end of calendar 2019.

The market recognized our progress to deliver enhanced shareholder value—during fiscal 2018 our stock price increased 28%. We expect continued improvement in fiscal 2019 and beyond as we realize the benefits from the EBITDA margin acceleration program and become a pure-play specialty chemicals company following the divestiture of our Composites business and butanediol (BDO) manufacturing facility in Marl, Germany.

 

(In millions)

   2018      2017  

 

Sales

     

 

Specialty Ingredients

  

 

$

 

2,470

 

 

  

 

$

 

2,216

 

 

 

Composites

  

 

 

 

942

 

 

  

 

 

 

779

 

 

 

Intermediates and Solvents

  

 

 

 

331

 

 

  

 

 

 

265

 

 

 

Operating income (loss)

     

 

Specialty Ingredients

  

 

$

 

314

 

 

  

 

$

 

233

 

 

 

Composites

  

 

 

 

73

 

 

  

 

 

 

67

 

 

 

Intermediates and Solvents

  

 

 

 

31

 

 

  

 

 

 

(12

 

 

EBITDA^

     

 

Specialty Ingredients

  

 

$

 

560

 

 

  

 

$

 

462

 

 

 

Composites

  

 

 

 

95

 

 

  

 

 

 

89

 

 

 

Intermediates and Solvents

  

 

 

 

61

 

 

  

 

 

 

19

 

 

 

Adjusted EBITDA*^

     

 

Specialty Ingredients

  

 

$

 

574

 

 

  

 

$

 

493

 

 

 

Intermediates and Solvents

  

 

 

 

61

 

 

  

 

 

 

26

 

 

 

 

*

There were no key adjustments for the Composites or I&S segments in fiscal 2018.

 

^

EBITDA and Adjusted EBITDA are non-GAAP measures and are reconciled to net income for Ashland and operating income for each segment in Appendix B.

Compensation Philosophy and Program Design Principles

Compensation Philosophy and Executive Compensation Program Objectives

Our executive compensation program is designed to create a pay-for-performance culture by aligning compensation to the achievement of our financial and strategic objectives and our stockholder’s interests. We strive to provide our NEOs with a compensation package that is aligned with the median of our Compensation Peer Group, with the expectation, based on a comparison to executives in the Compensation Peer Group and a review of other competitive market information, that above-target performance will result in above-median pay and below-target performance will result in below-median pay. The Compensation Committee annually reviews the base salaries and the annual and long-term target opportunities of our NEOs to determine whether these programs competitively reward our NEOs for their services.

 

 

 

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The primary objectives of our executive compensation program and the guiding principles for setting and awarding executive compensation are:

 

 

 Align the interests of management with our stockholders

  

 

To closely align the interests of management with the interests of our stockholders, a significant portion of the executive’s compensation is equity-based and is linked to building long-term stockholder value through the achievement of the financial and strategic objectives of Ashland.

 

 Provide incentive compensation that promotes desired behavior without encouraging unnecessary and excessive risk

  

 

Incentive compensation should help drive business strategy. The compensation program should encourage both the desired results and the right behaviors. It should help drive business strategy and strike a balance between short-term and long-term performance, while incorporating risk-mitigating design features so that unnecessary or excessive risk is not encouraged.

 

 Attract, retain and motivate executive talent by providing competitive levels of salary and targeted total pay

  

 

Compensation should be competitive with those organizations with which we compete for top talent.

 

 Integrate with our performance management process of goal-setting and formal evaluation

  

 

Target-level goals should be aligned with the annual operating plan and be considered stretch yet achievable, based on an annual assessment of business conditions for the performance period.

Elements of Compensation and Link to Company Performance

Primary Compensation Elements

We have three primary elements of total direct compensation—base salary, annual incentive and long-term incentive. Our long-term incentive is delivered through Performance Units (“PUs” or “Performance Units”), Stock Appreciation Rights (“SARs”) and Restricted Stock Units (“RSUs”).

 

 

 

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The majority of our NEOs’ compensation is performance-based and not guaranteed. The following table summarizes the key elements of our executive compensation program and describes why each element is provided:

 

    

 

Base Salary

 

 

 

Annual Incentive

 

 

 

PUs

 

 

 

SARs

 

 

 

RSUs

 

 

Who Receives

 

 

 

All NEOs

 

When Granted / Received   Reviewed annually   Annually for prior year performance   First quarter annually

 

Form of Delivery

 

  Cash   Equity
Type of Performance   Short-term emphasis   Long-term emphasis
Performance Period   Ongoing   1 Year   3 Years
How Payout is Determined   Compensation Committee judgment based on review of market and other factors   Formulaic; Compensation Committee verifies performance before payout   Formulaic; Compensation Committee verifies performance before payout   Stock price on exercise/vest date
Most Recent Performance Measure   N/A   Adjusted EBITDA* and FCF* with a safety modifier   Adjusted Earnings per Share* & relative Total Shareholder Return (“TSR”)   Stock price appreciation
What is Incentivized   Balance against excessive risk taking   Deliver on annual strategic objectives   Deliver on long-term strategic objectives; outperform peers   Increase stock price   Balance against excessive risk-taking and retention 

 

*

Adjusted EBITDA and FCF, in each case, as used for purposes of our Annual Incentive Plan, and Adjusted Earnings Per Share are non-GAAP measures. A reconciliation of these measures to results in accordance with GAAP can be found in Appendix B.

Overall Pay Mix

As illustrated in the charts below, we place a significant emphasis on performance-based compensation (annual and long-term) so that a substantial percentage of each NEO’s total direct target compensation is contingent on the successful achievement of our financial and strategic goals, in accordance with our compensation philosophy.

Fiscal Year 2018 Total Direct Compensation Mix

 

 

 

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USE OF COMPARATOR PEER GROUPS

The Compensation Committee primarily uses two comparator groups as part of its executive compensation process. The “Compensation Peer Group” is used to assess the competitiveness of our NEOs’ compensation and the “Performance Peer Group” is used in limited circumstances in evaluating our stock performance.

Compensation Peer Group

The Compensation Committee considers relevant market pay practices, among other factors, when setting executive compensation to enhance our ability to recruit and retain high-performing talent. In assessing market competitiveness, the compensation of our NEOs is reviewed against executive compensation at a number of companies with which we compete for executive talent. Factors used to determine the companies included in the analysis and how the data is used is set forth below:

 

 Considerations used to choose peer group

  

   How we use the peer group information

  Comparable revenue size

 

  Global operations

 

  Chemical industry

 

  Market capitalization

  

    Input in developing base salary ranges, annual incentive target opportunities and long-term incentive awards

 

    Assess competitiveness of total direct compensation

 

    Determine form and mix of equity

 

    Input to designing compensation plans, benefits and perquisites

Our Compensation Committee annually reviews the Compensation Peer Group and determines, with input from its independent consultant, whether any changes are appropriate. During this annual review, the Compensation Committee considers whether the Compensation Peer Group companies remain appropriate from a business and talent perspective.

The fiscal 2018 Compensation Peer Group used for market assessment of compensation included the following companies:

 

Company   Revenue
($M)
    Company   Revenue
($M)
 

 

Huntsman Corporation

 

 

$

 

10,198.0

 

 

 

 

FMC Corporation

 

 

$

 

3,330.9

 

 

 

Eastman Chemical Company

 

 

$

 

9,375.0

 

 

 

 

International Flavors & Fragrances Inc.

 

 

$

 

3,306.7

 

 

 

Westlake Chemical Corporation

 

 

$

 

7,765.8

 

 

 

 

Ashland Global Holdings Inc.

 

 

$

 

3,260.0

 

 

 

Olin Corporation

 

 

$

 

6,034.2

 

 

 

 

Albemarle Corporation

 

 

$

 

2,910.8

 

 

 

Celanese Corporation

 

 

$

 

5,858.0

 

 

 

 

Cabot Corporation

 

 

$

 

2,717.0

 

 

 

RPM International Inc.

 

 

$

 

5,176.2

 

 

 

 

A. Schulman, Inc.

 

 

$

 

2,535.7

 

 

 

Axalta Coating Systems Ltd.

 

 

$

 

4,241.9

 

 

 

 

H.B. Fuller Company

 

 

$

 

2,202.8

 

 

 

Platform Specialty Products Corporation

 

 

$

 

3,657.2

 

 

 

 

NewMarket Corporation

 

 

$

 

2,140.0

 

 

 

Polyone Corporation

 

 

$

 

3,525.3

 

 

 

 

W.R. Grace & Co.

 

 

$

 

1,687.8

 

 

Additionally, competitive pay data was gathered from the Towers Watson CDB General Industry Executive Compensation Survey. The data from the survey is scoped to Ashland’s industry and adjusted to Ashland’s revenue size.

Performance Peer Group

Our Compensation Committee utilizes the entire S&P 500 index as our performance peer group (the “Performance Peer Group”). We believe the Performance Peer Group is an appropriate

 

 

 

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measure of our relative TSR, reflects Ashland’s performance compared to the broader stock market and provides transparency to our investors and incentive plan participants. Our Performance Peer Group is used solely for assessing relative TSR performance for our PUs.

FISCAL YEAR 2018 COMPENSATION STRUCTURE DECISIONS

Our Compensation Committee reviews the base salaries and the annual and long-term target opportunities of our NEOs annually to determine whether these programs competitively reward our NEOs for their services based on a comparison to executives in the Compensation Peer Group and a review of other competitive market information.

Overview of CEO Compensation for fiscal 2018

 

CEO Compensation in fiscal 2018

•   No increase in base salary

•   No increase in annual target incentive compensation opportunity

•   No increase in long-term target incentive compensation opportunity

Base Salary

The Compensation Committee considers each NEO’s experience, proficiency, performance and potential to impact future business results, the NEO’s behavior measured against key competencies and corporate values as well as competitiveness in the market, in making base salary decisions.

When evaluating Mr. Wulfsohn’s base salary in its annual review, the Compensation Committee reviewed the market data provided by its compensation consultant and, in executive session without management present, recommended no change to Mr. Wulfsohn’s base salary.

The Compensation Committee reviewed the market data provided by its compensation consultant as well as the merit increase recommendations submitted by Mr. Wulfsohn. Based on the information provided, the Compensation Committee approved increases for Messrs. Willis, Ganz and Silverman and Ms. Schumann. Increases for Messrs. Willis and Ganz reflected the Company’s standardized annual review process. Mr. Silverman’s base salary increase for fiscal 2018 reflected an increase based on his assumption of manufacturing responsibilities earlier in fiscal 2018, as well as an increase, effective May 2018, following consideration by Mr. Wulfsohn and the Compensation Committee of Mr. Silverman’s increased responsibilities for global operations and worldwide supply chain as well as his positioning compared to competitive practice. Such increase was also adopted in connection with a decrease in Mr. Silverman’s annual target incentive compensation opportunity and long-term target incentive compensation opportunity as described in the section entitled “Compensation Discussion and Analysis—Fiscal Year 2018 Compensation Structure Decisions—Annual and Long-Term Incentive Target Opportunities” of this proxy statement. Ms. Schumann’s increase was the second increase in a two-year process, to reflect her expanded responsibilities in connection with her appointment as Chief Human Resources Officer.

Base salary increases for Messrs. Wulfsohn, Willis, Ganz and Silverman and Ms. Schumann, effective April 2018 and, for the additional increase for Mr. Silverman, May 2018, were as follows:

 

NEO

   FY2017 Base Salary
($)
     FY2018 Base Salary
($)
     Increase
(%)
 

 

William A. Wulfsohn

  

 

 

 

1,189,000

 

 

  

 

 

 

1,189,000

 

 

  

 

 

 

0.0

 

 

J. Kevin Willis

  

 

 

 

580,700

 

 

  

 

 

 

598,150

 

 

  

 

 

 

3.0

 

 

Peter J. Ganz

  

 

 

 

539,950

 

 

  

 

 

 

561,550

 

 

  

 

 

 

4.0

 

 

Anne T. Schumann

  

 

 

 

420,000

 

 

  

 

 

 

470,000

 

 

  

 

 

 

11.9

 

 

Keith C. Silverman*

  

 

 

 

300,000

 

 

  

 

 

 

438,000

 

 

  

 

 

 

46.0

 

 

 

 

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*

Mr. Silverman received his first base salary increase effective April 1, 2018. Mr. Silverman received another increase effective May 13, 2018.

Annual and Long-Term Incentive Target Opportunities

Each year, the Compensation Committee reviews the annual and long-term target incentive opportunities to ensure alignment with our compensation philosophy and competitive practice. Annual and long-term target incentive opportunities for Messrs. Wulfsohn, Willis and Ganz remained the same for fiscal year 2018. Ms. Schumann’s annual target incentive opportunity remained the same and her long-term target incentive opportunity increased by 10 percentage points. Ms. Schumann’s long-term incentive target will increase to 150% effective fiscal 2019 to more closely align her compensation with that of Messrs. Willis and Ganz. Effective May 13, 2018, Mr. Silverman’s annual target incentive opportunity was decreased by 10 percentage points, and his long-term target incentive opportunity was decreased by 5 percentage points effective fiscal 2019. These adjustments, along with his base salary increase, align Mr. Silverman’s overall compensation with his peers within the company and competitive practice.

 

NEO

   FY2017
Target
Annual
Incentive
(% of Base
Salary)
     FY2018
Target
Annual
Incentive
(% of Base
Salary)
     Target
Annual
Incentive
Change
(%)
    FY2017
Target LTI
(% of Base
Salary)
     FY2018
Target LTI
(% of Base
Salary)
     Target LTI
Increase
(%)
 

 

William A. Wulfsohn

  

 

 

 

120

 

 

  

 

 

 

120

 

 

  

 

 

 

0

 

 

 

 

 

 

400

 

 

  

 

 

 

400

 

 

  

 

 

 

0

 

 

 

J. Kevin Willis

  

 

 

 

90

 

 

  

 

 

 

90

 

 

  

 

 

 

0

 

 

 

 

 

 

225

 

 

  

 

 

 

225

 

 

  

 

 

 

0

 

 

 

Peter J. Ganz

  

 

 

 

75

 

 

  

 

 

 

75

 

 

  

 

 

 

0

 

 

 

 

 

 

150

 

 

  

 

 

 

150

 

 

  

 

 

 

0

 

 

 

Anne T. Schumann

  

 

 

 

75

 

 

  

 

 

 

75

 

 

  

 

 

 

0

 

 

 

 

 

 

90

 

 

  

 

 

 

100

 

 

  

 

 

 

10

 

 

 

Keith C. Silverman

  

 

 

 

75

 

 

  

 

 

 

65

 

 

  

 

 

 

(10

 

 

 

 

 

90

 

 

  

 

 

 

90

 

 

  

 

 

 

0

 

 

FISCAL YEAR 2018 INCENTIVE PLAN DESIGNS AND PERFORMANCE-RELATED PAYOUTS

Annual and Long-Term Incentive Metrics and Goals

Based on a review of the annual and long-term financial goals, operational plans, strategic initiatives and the prior year’s actual results, the Compensation Committee annually approves the financial performance metrics that will be used to measure performance in our annual and long-term incentive arrangements as well as the relative weighting that will be assigned to each metric.

 

 

 

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The Compensation Committee then approves threshold, target and maximum performance levels for each performance metric. The Compensation Committee seeks to establish corporate performance goals that are challenging yet attainable. For our fiscal 2018 Annual Incentive Plan and Long-Term Incentive Performance Plan (“LTIPP”), the Compensation Committee approved the following performance metrics in November 2017 for the reasons noted below:

 

    Performance Metric   

Reason for Selection

LOGO

Annual Incentive Plan

 

 

Adjusted Earnings Before Interest Depreciation and Amortization (“EBITDA”)*

  

 

An indicator of Ashland’s

•      Profitability

•      Ability to optimize cash flow and stockholder value

    
 

Free Cash Flow (“FCF”)*

  

•      An important indicator of Ashland’s ability to optimize cash flow and value

    
 

Total Preventable Recordable Rate (“TPRR”)

  

•      Reflects the importance of safety matters within Ashland

 

 

LOGO

LTIPP

    
 

Adjusted Earnings per Share (“EPS”)*

  

•      An indicator of the profitability of Ashland

    
 

Relative Total Shareholder Return (“TSR”)

  

•      Measures performance against our Performance Peer Group and stockholder value creation

 

 

*

Adjusted EBITDA and FCF, in each case, as used for purposes of our Annual Incentive Plan, and Adjusted EPS are non-GAAP measures. A reconciliation of these measures to results in accordance with GAAP can be found in Appendix B.

Beginning with the fiscal 2018 performance period, Adjusted EBITDA and Free Cash Flow replaced operating income for incentive compensation and working capital efficiency as the annual incentive plan metrics, which we believe more closely supports the key objectives reflected in our annual operating plan.

Adjustments to Reported Financial Results

The Compensation Committee reviews our financial performance following the end of the fiscal year and determines the financial performance score. The Compensation Committee retains the authority to adjust our reported financial results for items causing significant differences from assumptions contained in our plan. This year’s adjustments include restructuring and severance costs for significant business model redesign events, variance to target for corporate legacy pension income and environmental expense, foreign exchange variance outside a 5% corridor, and unusual or non-recurring gains or losses. The Compensation Committee has adopted a set of guidelines to help it evaluate potential adjustments. Adjustments to reported financial results are intended to better reflect executives’ line of sight and ability to affect performance results, align award payments with decisions that support the annual operating plan, avoid artificial inflation or deflation of awards due to unusual or non-recurring items in the applicable period and emphasize long-term and sustainable growth.

 

 

 

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Fiscal Year 2018 Annual Incentive Plan

Fiscal Year 2018 Annual Incentive Plan Design

For fiscal 2018, our NEOs, including the CEO, participated in our annual incentive plan, which is designed to reward executives for the achievement of EBITDA growth and for delivering value through FCF, with an additional safety modifier (“TPRR”) for overall employee safety performance.

Consistent with our focus on establishing stretch target level incentive plan goals, our fiscal 2018 Adjusted EBITDA and FCF targets were set above our fiscal 2017 actual results.

Our fiscal 2018 goals for each metric are:

 

Performance Levels

   Adjusted EBITDA
($, thousands)
     FCF
($, thousands)
     Payout Curve
(%)
 

 

Threshold

  

 

 

 

512,100

 

 

  

 

 

 

155,800

 

 

  

 

 

 

50

 

 

 

Target

  

 

 

 

650,000

 

 

  

 

 

 

222,000

 

 

  

 

 

 

100

 

 

 

Maximum

  

 

 

 

698,800

 

 

  

 

 

 

244,200

 

 

  

 

 

 

150

 

 

TPRR, the rate of injuries per 100 employees in a work year, is used as a safety modifier that may modify the total percentage of the annual incentive target amount earned by adding or deducting up to 10 percentage points based on Ashland’s TPRR performance. The safety modifier may not increase the incentive paid above 150% of target. For fiscal 2018, we set our TPRR targets at lower levels than our fiscal 2017 targets, as we continue to emphasize our focus on safety matters within Ashland.

 

TPRR Goals

Target

15% Improvement over Three-Year

                     Rolling Avg.                    

  

Neutral

No Adjustment

  

Unacceptable

25% Increase over Three-Year

Rolling Avg.

 

.51 or less

  

 

.52—76

  

 

.77 or greater

Fiscal Year 2018 Annual Incentive Performance

The table below shows the adjusted fiscal 2018 performance compared to the pre-established financial performance targets:

 

Metric

   Weighting     Target
(thousands)
     Adjusted
Performance
(thousands)
     Payout (% of
Target)
    Combined Weighted
Payout (% of Target)
 

 

Adjusted EBITDA*

  

 

 

 

80

 

 

 

$

 

650,000

 

 

  

 

$

 

688,000

 

 

  

 

 

 

139.0

 

 

 

 

 

127.4

 

 

FCF**

  

 

 

 

20

 

 

 

$

 

222,000

 

 

  

 

$

 

197,100

 

 

  

 

 

 

81.2

 

 

 

*

See Appendix B for a reconciliation of Adjusted EBITDA to Net Income.

 

**

See Appendix B for a reconciliation of FCF to cash flows provided by operating activities from continuing operations.

Our fiscal 2018 TPRR was .64 resulting in no adjustment to the combined weighted payout.

 

 

 

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Fiscal Year 2018 Annual Incentive Payout

Based on the performance outlined above, our Compensation Committee approved the following annual incentive awards for our NEOs:

 

NEO

   Annual Incentive
Target Amount
($)
     Percent of Annual Incentive
Target Earned
(%)
     FY2018 Annual Incentive
Award Value
($)
 

 

William A. Wulfsohn

  

 

 

 

1,426,800

 

 

  

 

 

 

127.44

 

 

  

 

 

 

1,818,314

 

 

 

J. Kevin Willis

  

 

 

 

538,335

 

 

  

 

 

 

127.44

 

 

  

 

 

 

686,054

 

 

 

Peter J. Ganz

  

 

 

 

421,163

 

 

  

 

 

 

127.44

 

 

  

 

 

 

536,729

 

 

 

Anne T. Schumann

  

 

 

 

352,500

 

 

  

 

 

 

127.44

 

 

  

 

 

 

449,226

 

 

 

Keith C. Silverman*

  

 

 

 

277,860

 

 

  

 

 

 

127.44

 

 

  

 

 

 

354,105

 

 

 

*

Mr. Silverman’s fiscal 2018 target annual incentive was pro-rated during the year. Through May 12, 2018, his incentive was calculated at 75% and from May 13, 2018 through the end of the fiscal year was calculated at 65%. His base pay used to establish the target annual incentive was also pro-rated at $365,000 through May 12, 2018 and $438,000 from May 13, 2018 through the end of the fiscal year.

Long-Term Incentive Plan

LTI Plan Design

Our Long-Term Incentive Plan (“LTI”) for our NEOs is composed of 50% PUs, 25% SARs, and 25% RSUs. We grant executives a mix of equity awards to provide an effective balance between performance and retention. This design aligns the executives’ interests and long-term strategies with the interests of stockholders. LTI targets are expressed as a percentage of base salary and, in the case of PUs and RSUs, are converted to a number of shares using the average of closing prices of Ashland Common Stock for the twenty business days ended September 30 of the applicable fiscal year. The number of SARs granted is determined as described below.

PUs—Long-Term Incentive Performance Plan

Our Long-Term Incentive Performance Plan (“LTIPP”) is designed to reward executives for achieving long-term performance that meets or exceeds adjusted EPS financial performance targets, as modified by relative TSR performance.

PUs vest at the end of the three-year performance period and the NEOs will earn a number of shares based upon achievement of the performance metrics during the performance period. Upon vesting, PUs convert into shares of Ashland Common Stock on a one-for-one basis. Grants under the LTIPP are not adjusted for, nor entitled to receive, cash dividends during the performance period.

SARs

SARs are considered “at risk” since they have no value unless our stock price appreciates during the term of the SAR. SARs expire on the tenth anniversary plus one month from the date of grant and vest over a three-year period as follows—50% vest on the first anniversary of the grant date and 25% vest on each of the second and third anniversary of the grant date. No dividends are payable on SARs. The number of SARs granted is based on the Black-Scholes value calculated using the 20-day average closing price of Ashland Common Stock prior to fiscal year end. At the time of exercise, the holder will be entitled to receive shares of Ashland Common Stock for each share subject to a SAR with a fair market value equal to the excess of the fair market value per share of Ashland Common Stock at the time of exercise over the price per share of Ashland Common Stock at the time of grant.

RSUs

RSUs provide strong retentive value, while still providing alignment with stockholder value creation. Our annual RSU grants generally vest in equal installments on each anniversary of the

 

 

 

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date of grant over a three-year period. Dividend equivalents are accrued on outstanding RSU awards at the same time and at the same rate as dividends are paid to stockholders. Dividend equivalents on RSUs are only payable if the underlying RSU award vests. At the time of vesting, one share of Ashland Common Stock is issued for each RSU and any accrued dividend equivalents are paid as additional shares of Ashland Common Stock.

Fiscal Year 2018-2020 LTIPP Design

In November 2017, the Compensation Committee reviewed and approved the performance metrics and target performance levels for the fiscal 2018-2020 LTIPP.

PUs for the fiscal 2018-2020 LTIPP will be earned based on adjusted EPS and relative TSR performance compared to goals established at the beginning of the three-year performance cycle. The adjusted EPS target is 15 percent growth relative to reported adjusted EPS for fiscal 2017. Adjusted EPS is a non-GAAP measure, and reconciliation of this measure to results in accordance with GAAP can be found in Appendix B.

 

Performance Level

   Adjusted
EPS Achieved

(CAGR)
  Award Earned
(as a % of Target)

 

Threshold

    

 

 

 

5

 

%

   

 

 

 

25

 

    

 

 

 

10

 

%

   

 

 

 

50

 

 

Target

    

 

 

 

15

 

%

   

 

 

 

100

 

    

 

 

 

20

 

%

   

 

 

 

150

 

 

Maximum

    

 

 

 

25

 

%

   

 

 

 

200

 

Adjusted EPS is measured for each of the three years of the performance period and on a cumulative three-year basis. Adjusted EPS Cumulative Annual Growth Rate (“CAGR”) performance for fiscal 2018, fiscal 2019, fiscal 2020, and cumulative fiscal 2018-2020 is equally weighted at 25% for each of these periods. Each annual measurement period is calculated independently and there is no opportunity to revise previous years’ calculations. Relative TSR is calculated by measuring the change in the market price of stock plus dividends paid over the performance period, and is measured over the three-year period and used as a modifier to the earned adjusted EPS score.

The total award earned based on the adjusted EPS score will be modified (up or down) based on Ashland’s three-year relative TSR performance as follows:

 

    TSR Performance Relative to the  S&P 500    

   Adjustment to Earned Award

 

At or Below 25th Percentile

  

 

Decreased by 25%

 

In between 25th and 75th Percentile

  

 

No Adjustment

 

At or Above 75th Percentile

  

 

Increased by 25%

Equity Awards Granted in Fiscal Year 2018

Fiscal Year 2018 Equity Grant

We typically grant annual equity awards during the first quarter of each fiscal year. The equity grant date is never selected or changed to increase the value of equity awards for executives.

 

 

 

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The Compensation Committee approved the annual grants shown in the table below in the first quarter of fiscal 2018.

 

NEO

  Target
FY2018
Equity
Award
(as a
% of
Base
Salary)
    Target
FY2018
Equity
Award
($)
    Target
FY2018 -
2020 PU
Award
($)
    Target
FY2018 -
2020 PU
Award
(#)
    SAR
Award
($)
    SAR
Award
(#)
    RSU
Award
($)
    RSU
Award
(#)
 

 

William A. Wulfsohn

 

 

 

 

400

 

 

 

 

 

 

4,756,000

 

 

 

 

 

 

2,378,000

 

 

 

 

 

 

37,350

 

 

 

 

 

 

1,189,000

 

 

 

 

 

 

103,500

 

 

 

 

 

 

1,189,000

 

 

 

 

 

 

18,700

 

 

 

J. Kevin Willis

 

 

 

 

225

 

 

 

 

 

 

1,306,600

 

 

 

 

 

 

653,288

 

 

 

 

 

 

10,300

 

 

 

 

 

 

326,644

 

 

 

 

 

 

28,450

 

 

 

 

 

 

326,644

 

 

 

 

 

 

5,150

 

 

 

Peter J. Ganz

 

 

 

 

150

 

 

 

 

 

 

809,900

 

 

 

 

 

 

404,963

 

 

 

 

 

 

6,400

 

 

 

 

 

 

202,481

 

 

 

 

 

 

17,650

 

 

 

 

 

 

202,481

 

 

 

 

 

 

3,200

 

 

 

Anne T. Schumann

 

 

 

 

100

 

 

 

 

 

 

420,000

 

 

 

 

 

 

210,000

 

 

 

 

 

 

3,300

 

 

 

 

 

 

105,000

 

 

 

 

 

 

9,150

 

 

 

 

 

 

105,000

 

 

 

 

 

 

1,650

 

 

 

Keith C. Silverman

 

 

 

 

90

 

 

 

 

 

 

270,000

 

 

 

 

 

 

135,000

 

 

 

 

 

 

2,150

 

 

 

 

 

 

67,500

 

 

 

 

 

 

5,900

 

 

 

 

 

 

69,000

 

 

 

 

 

 

1,100

 

 

In addition, in light of the Valvoline spin-off, on November 15, 2017, Mr. Silverman was granted a retention award consisting of 3,800 RSUs. This grant vests 50% on the first anniversary of the date of grant and 25% on each of the second and third anniversaries of the date of grant.

Valvoline Retention Bonus Payment

Due to the strategic business decision to separate the Valvoline business from Ashland’s specialty chemical businesses, in November 2015 Ashland granted a retention bonus in the amount of $479,700 to Mr. Silverman. The terms of the agreement required Mr. Silverman to remain employed with Ashland six months after the Final Distribution of Valvoline, and Mr. Silverman received payment of this bonus in accordance with its terms in fiscal 2018.

FISCAL YEAR 2019 COMPENSATION DECISIONS

In November 2018, the Compensation Committee approved a cost reduction modifier to the fiscal 2019 Annual Incentive Plan for certain senior leaders, including the NEOs. This cost reduction modifier is intended to provide senior leaders with an incentive to achieve pre-determined cost reduction goals for the year. Participants’ annual incentives can be modified from -20% to +20% depending on cost reductions achieved.

The Compensation Committee also approved an amendment to the fiscal 2019 Annual Incentive Plan to increase the maximum payout opportunity from 150% to 200% of target. After a careful review of market data, including our Compensation Peer Group, with the assistance of the independent compensation consultant, it was determined that a 200% maximum opportunity is more closely aligned with competitive practice. In addition, the increased maximum provides flexibility to recognize outstanding individual performance and safety goal achievement that may otherwise be limited by the current cap on annual incentive payouts. Importantly, the required level of financial performance needed to achieve a maximum payout has been increased over prior years and is intended to require extraordinary performance relative to plan.

In addition, in December 2018, Ashland’s Compensation Committee and Board each determined that, consistent with our focus on aligning compensation with the achievement of our financial and strategic objectives and our stockholders’ interests, LTIPP awards granted beginning in November 2019 will be earned based on achievement of performance goals linked to a return on capital metric for the applicable performance periods (among other performance goals).

CORPORATE GOVERNANCE

Maintaining Best Practices Regarding Executive Compensation

Our Compensation Committee intends to compensate our NEOs consistent with the objectives and design principles previously outlined. We have adopted the following compensation

 

 

 

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practices, which are intended to promote strong corporate governance and alignment with stockholder interests:

Compensation Committee Practices

 

 Independence of Committee Members

  

The Compensation Committee members satisfy the NYSE independence standards, are “non-employee directors” under SEC rules and satisfy the requirements of an “outside director” for purposes of the Internal Revenue Code of 1986, as amended (the “Code”).

 

 Independent Compensation Consultant

  

The Compensation Committee retains and annually reviews the independence of its compensation consultant.

 

 Annual Risk Assessment

  

The Compensation Committee conducts an annual risk assessment of our executive, management, and sales incentive compensation plans and designs plans and programs so they are aligned with our compensation philosophy and do not encourage excessive risk taking.

 

 Compensation at Risk

  

We grant a high percentage of at-risk compensation. We believe this is essential to creating a pay-for-performance culture.

 

 Mitigate Undue Risk

  

We mitigate undue risk in our compensation program by instituting governance policies such as capping potential payments under our incentive plans, instituting clawback provisions, utilizing multiple performance metrics, including absolute and relative metrics, striking a balance between short- and long-term incentives and adopting stock ownership requirements.

 

 Stock Ownership Guidelines

  

The Compensation Committee has adopted stock ownership guidelines that are the lesser of the dollar value of a multiple of base salary or a fixed number of shares of Ashland Common Stock: (i) five times base salary or 235,400 shares for the CEO, (ii) three times base salary or 56,500 shares for the CFO and for the General Counsel and Secretary, and (iii) two times base salary or 20,700 shares for the Chief Human Resources and IT Officer and Senior Vice President, Global Operations, Quality and EHS. The executive officer must achieve compliance with the guidelines by the fifth anniversary of the officer’s appointment. All executive officers are in compliance with the guidelines.

 

 Clawback Policy

  

We have the right to seek recoupment of all or part of annual cash incentives or PUs if there is a restatement of our financial statements for any such year which results from fraud or intentional misconduct committed by an award holder.

 

 Anti-Hedging and Pledging Policy

  

We prohibit our executive officers from hedging or pledging Ashland securities.

 

 ”Double triggers” in Change in Control Agreements

  

The NEOs and other executive officers do not receive change in control cash severance unless their employment is terminated without cause (or by the executive for good reason) within a specified period following a change in control.

 

 

 

 

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 No Tax Gross-Ups on Change in Control Benefits

  

The NEOs and other executive officers are not entitled to tax gross ups in the event that their change in control benefits are subject to the “golden parachute” excise tax under the Code.

 

 Equity Incentive Compensation Plan Best Practices

  

Our Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan includes many best practices, such as minimum vesting periods and absence of single-trigger vesting and liberal share recycling provisions.

 

Consideration of Fiscal Year 2018 Advisory Vote on Executive Compensation

The Compensation Committee regularly reviews the philosophy, objectives and elements of our executive compensation programs in relation to our short- and long-term business objectives. In undertaking this review, the Compensation Committee considers the views of stockholders as reflected in their annual advisory vote on our executive compensation proposal. At our 2018 Annual Meeting, stockholders approved our executive compensation proposal by an overwhelming majority (approximately 96.8%). Based on the Compensation Committee’s review and the support of our executive compensation programs received from stockholders, the Compensation Committee maintained the core elements of our executive compensation programs in fiscal 2018.

Decision Making Process and Role of Executive Officers

The Compensation Committee is responsible for the approval and administration of compensation programs for executive officers and certain other employees of Ashland. The Compensation Committee frequently reviews Ashland’s compensation practices, and its decisions take into consideration, among other things, Ashland’s compensation philosophy, its financial and operating performance, individual performance, practices and compensation levels of peer companies and the voting guidelines of certain proxy advisory firms and stockholders. In making compensation decisions, the Compensation Committee uses several resources and tools, including competitive market information, and reviews accumulated and potential equity holdings.

When making individual recommendations to the Compensation Committee for the other NEOs on base salary, annual incentive and long-term compensation, the CEO considers the relative importance of the executive’s position within the organization, the individual tenure and experience of the executive, individual performance and the executive’s contributions to Ashland’s financial and operating results.

Management also plays an important role in the process of setting compensation for executives, other than the CEO. The CEO, and in certain instances other executives, in consultation with the Compensation Committee’s independent executive compensation consultant and the Chief Human Resources and IT Officer, develops compensation recommendations for the Compensation Committee’s consideration.

Role of the Compensation Committee and Independent Adviser

Our Compensation Committee has the authority to obtain advice and assistance from advisors and to determine their fees and terms of engagement. In fiscal 2018, the Compensation Committee directly engaged Deloitte Consulting LLP (“Deloitte” or the “compensation consultant”) to serve as the outside advisor on executive compensation matters and to review Ashland’s executive compensation program. Deloitte’s aggregate fees for executive and director compensation services in fiscal 2018 were $255,000.

In addition to the compensation services provided by Deloitte to the Compensation Committee, Deloitte affiliates provided certain services to Ashland at the request of management

 

 

 

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consisting of (i) tax services and other tax-related services, (ii) auditing services, (iii) reporting assessments and (iv) assistance in preparation of executive compensation tables for Ashland’s fiscal 2017 proxy tables. Ashland paid $9.2 million to Deloitte affiliates in fiscal 2018 for these other services. The Compensation Committee believes that, given the nature and scope of these projects, these additional services provided by Deloitte affiliates do not raise a conflict of interest and do not impair Deloitte’s ability to provide independent advice to the Compensation Committee concerning executive compensation matters.

OTHER COMPENSATION AND TAX MATTERS

Equity Treatment Post-Separation of Valvoline

As discussed in Ashland’s proxy statement for fiscal 2017, on May 12, 2017 (the “Distribution Date”), Ashland distributed to its stockholders 170,000,000 shares of Valvoline Common Stock as a pro rata dividend (the “Final Distribution”). In connection with the Final Distribution and pursuant to the terms of the applicable equity compensation plans, equity awards held by Ashland officers, directors and employees that were outstanding on the Distribution Date were adjusted with the guiding principle of maintaining approximately the same value immediately before and after the Final Distribution. Awards were converted using an equity adjustment ratio (the “Equity Adjustment Ratio”) to convert the number of stock-based Ashland awards held immediately before the Final Distribution to a new number of stock-based awards held immediately after the Final Distribution. A similar adjustment was made to the strike price of outstanding stock appreciation rights (“SARs”). The Equity Adjustment Ratio was calculated using the quotient of the closing price of Ashland Common Stock on the Distribution Date and the 10-day Volume Weighted Average Price (“VWAP”) of Ashland Common Stock following the Final Distribution. Accordingly, unless otherwise noted, all equity information and related stock prices in this proxy statement have been converted using the Equity Adjustment Ratio. All other terms and conditions of the grants remained the same unless otherwise noted.

Retirement Benefits

The combination of tax-qualified and non-qualified retirement plans is designed to assist the NEOs in building savings for retirement over the term of their employment.

The Company’s Employee Savings Plan is a tax-qualified vehicle to provide retirement benefits to the NEOs and their families. The benefits in these plans are available to most U.S.-based employees. The benefits are funded through trusts and are separate from the assets of Ashland and by law are protected from Ashland’s creditors.

The benefits that may be provided under the tax-qualified plans are limited by the Internal Revenue Code of 1986, as amended (the “Code”). These plans, standing alone, do not provide sufficient retirement income to the NEOs when compared to their pay as an active employee. To make up for this gap in potential replacement income in retirement, Ashland offers the NEOs non-qualified retirement plans that complement each other and the tax-qualified plans.

The Employee Savings Plan contributions are also limited by law, which means their potential Ashland matching contributions are also limited. Therefore, Ashland has an unfunded, non-qualified defined contribution plan that provides a contribution equivalent to a base contribution of 4% and a Company match of 4% on annual incentive compensation paid and eligible earnings in excess of limits established under Code Section 401(a)(17) not permitted in the Employee Savings Plan.

Ashland also has employee deferral plans that allow the NEOs to annually make a separate deferral election so that the NEOs and other senior leaders can save amounts from their own pay in addition to amounts they are allowed to save in the savings plans.

 

 

 

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In addition, certain NEOs have accumulated benefits under certain qualified and non-qualified pension plans previously sponsored by Ashland but that have been transferred to Valvoline.

For a description of these plans, see the narratives to the “Non-Qualified Deferred Compensation” and “Pension Benefits” tables in this proxy statement.

Executive Perquisites

Ashland provides the NEOs and other selected executives with financial planning services (including tax preparation). All the NEOs except Mr. Silverman participated in the financial planning program. Messrs. Wulfsohn, Willis and Ganz and Ms. Schumann are additionally eligible for a reimbursement of up to $5,000 a year for services performed relating to an executive physical; however, none of these executives participated in this program in fiscal year 2018. In addition, Ashland pays life insurance premiums on behalf of the NEOs and provides certain charitable matching donations pursuant to various Company programs, in each case, on the same terms as such premiums are paid and contributions are made with respect to Ashland employees generally. In addition, in connection with his move from interim housing in Covington, Kentucky, moving expenses and a gross-up on those expenses were paid to Mr. Wulfsohn on the same terms as applied to all other employees. Mr. Wulfsohn’s primary office location has been moved to Wilmington, Delaware, as part of the process of relocating our headquarters.

The Compensation Committee reviews the perquisites provided to executive officers as part of their overall review of executive compensation. The Compensation Committee has determined the perquisites serve a useful business purpose, as such expenditures allow the executives to be more effective in their duties and the types and amounts are well within the appropriate range of market practices.

A detailed description of the cost of these perquisites is included in the “Summary Compensation Table” section of this proxy statement.

Severance Pay Plan

The NEOs are covered by the Severance Pay Plan that provides benefits in the event of a covered termination in the absence of a change in control. A covered termination is the direct result of the permanent closing of a facility, job discontinuance or other termination action of Ashland’s initiative as determined by Ashland. The plan excludes certain terminations such as termination for cause and voluntary resignation.

A detailed description of this plan is included in the “Potential Payments upon Termination or Change in Control” section of this proxy statement.

Change in Control Agreements

Each of Messrs. Wulfsohn, Willis and Ganz and Ms. Schumann has entered into a change in control agreement that sets forth the economic consequences and entitlements for termination without cause or for good reason after a change in control. The primary purpose of these agreements is to align executive and stockholder interests by enabling the executives to assess possible corporate transactions without regard to the effect such transactions could have on their employment.

A detailed description of these agreements is included in the “Potential Payments upon Termination or Change in Control” section of this proxy statement.

Tax and Accounting Implications of Compensation

Tax and accounting implications are considered, but they are not the only factors considered in developing our compensation program.

 

 

 

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Prior to the enactment of the Tax Cuts and Jobs Act on December 22, 2017, Section 162(m) of the Code limited deductibility of certain compensation to $1 million per year for the Chief Executive Officer and the three other named executive officers (other than the Chief Financial Officer) who were the highest paid and employed at year end. If certain conditions were met, performance-based compensation may have been excluded from this limitation.

The Company’s annual and long-term incentive plans generally have been structured with the intent of enabling the Compensation Committee to grant compensation that constitutes performance-based compensation under Section 162(m) of the Code, if the Compensation Committee determined to do so. However, the Compensation Committee may have from time to time approved payments that could not be deducted in order to maintain flexibility in structuring appropriate compensation programs in the interest of stockholders.

The Tax Cuts and Jobs Act includes a number of significant changes to Section 162(m), such as the repeal of the performance-based compensation exemption and the expansion of the individuals subject to the provision (for example, by including the Chief Financial Officer and certain former named executive officers). As a result of these changes, except as otherwise provided in the transition relief provisions of the Tax Cuts and Jobs Act, compensation paid to any of our named executive officers generally will not be deductible in the fiscal year starting October 1, 2018 or a later fiscal year, to the extent that it exceeds $1 million per year. The Board of Directors and the Compensation Committee reserve the right to provide compensation to our executives that is not deductible, including when necessary to comply with contractual commitments, or to maintain the flexibility needed to attract talent, promote retention or recognize and reward desired performance.

Generally, under GAAP, compensation is expensed as earned. Equity compensation is expensed in accordance with ASC Topic 718, which is generally over the vesting period.

 

 

 

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed the Compensation Discussion and Analysis appearing on pages 40 through 56 of this proxy statement and discussed it with management. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Ashland’s Annual Report on Form 10-K for fiscal 2018 and Ashland’s proxy statement for its 2019 Annual Meeting of Stockholders. This report is provided by the following independent directors who comprise the Compensation Committee:

  COMPENSATION COMMITTEE
  Barry W. Perry, Chair
  Jerome A. Peribere
  Janice J. Teal
  Michael J. Ward
  Kathleen Wilson-Thompson

The Compensation Committee Report does not constitute soliciting material and shall not be deemed to be filed or incorporated by reference into any other filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Ashland specifically incorporates the Compensation Committee Report by reference.

 

 

 

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SUMMARY COMPENSATION TABLE

The following table is a summary of compensation information for the last three fiscal years, the most recent of which ended September 30, 2018, for Ashland’s Chief Executive Officer, Chief Financial Officer and each of the other three most highly compensated executive officers in fiscal 2018.

 

Name and Principal Position

(a)

  Year
(b)
    Salary (1)
($)

(c)
    Bonus (2)
($)

(d)
    Stock
Awards (3)
($)

(e)
    Option
Awards (4)
($)

(f)
    Non-Equity
Incentive

Plan
Compen-

sation (5)
($)

(g)
    Change in
Pension

Value
and Non-
Qualified
Deferred
Compen-

sation
Earnings (6)
($)

(h)
    All Other
Compen-

sation (7)
($)

(i)
    Total
($)
(j)
 

W. A. Wulfsohn

    2018       1,189,000       -       3,830,428       2,030,670       1,818,314       -       275,617       9,144,029  

Chairman of the Board

and Chief Executive

Officer

    2017       1,174,342       -       3,086,896       1,335,247       1,371,012       -       250,350       7,217,847  
    2016       1,188,462         9,023,648       1,502,240       1,105,248       -       219,939       13,039,537  
                 
                 

J. K. Willis

    2018       600,256       -       1,055,853       558,189       686,054       -       107,108       3,007,460  

Senior Vice President

and Chief Financial

Officer

    2017       584,621       -       854,833       367,536       502,195       -       46,225       2,355,411  
    2016       579,404       -       3,293,050       421,152       404,821       1,808,337       30,497       6,537,261  
                 
                 

P. J. Ganz

    2018       550,335       -       656,064       346,293       536,729       -       95,510       2,184,931  

Senior Vice President,

General Counsel and

Secretary

    2017       533,496       -       533,042       227,315       389,128       -       94,746       1,777,727  
    2016       538,744       -       2,572,054       255,840       313,680       -       91,416       3,771,734  
                 
                 

A. T. Schumann

    2018       444,039       -       338,283       179,523       449,226       -       71,281       1,482,352  

Senior Vice President,

Chief Human Resources

and Information

Technology Officer

    2017       400,806       -       232,267       98,779       302,684       -       36,846       1,071,382  
    2016       391,927       -       1,707,719       112,832       227,065       260,189       30,429       2,730,160  
                 
                 
                 

K. C. Silverman

    2018       356,519       479,700       477,284       115,758       354,105       -       46,280       1,829,646  

Senior Vice President,

Global Operations,

Quality and EHS

                 
                 

 

 

  (1)

Due to the timing of pay periods, the executives were paid an additional pay period in fiscal 2016 for services performed in fiscal 2015. In addition, Mr. Willis’s base salary reflects Ashland’s repurchase of vacation days in accordance with Ashland’s vacation day sell option.

 

  (2)

Due to the strategic business decision to separate the Valvoline business from Ashland’s specialty chemical businesses in November 2015, Ashland provided a retention bonus in the amount of $479,700 to Mr. Silverman. The terms of the agreement required Mr. Silverman to remain employed with Ashland six months after the Final Distribution of Valvoline, and Mr. Silverman received payment of this bonus in accordance with its terms in fiscal 2018.

 

  (3)

The values in column (e) for fiscal 2018 represent the aggregate grant date fair value of fiscal 2018-2020 LTIPP and RSU awards computed in accordance with FASB ASC Topic 718. The assumptions made when calculating the amounts for column (e) with respect to LTIPP and RSU awards are found in Note Q to the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018 (the “2018 Form 10-K”) and the grant date fair values can be found in the footnotes to the Grants of Plan-Based Awards table in this proxy statement. For LTIPP awards, the grant date fair value is based on target levels, which is the

 

 

 

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assumed probable outcome of performance conditions. The grant date fair values of fiscal 2018-2020 LTIPP awards assuming the maximum level of performance are as follows: Mr. Wulfsohn, $5,149,071; Mr. Willis, $1,419,958; Mr. Ganz, $882,304; Ms. Schumann, $454,938; and Mr. Silverman, $296,399.

 

  (4)

The values in column (f) for fiscal 2018 represent the aggregate grant date fair value of SAR awards computed in accordance with FASB ASC Topic 718. The assumptions made when calculating the amounts for column (f) are found in Note Q to the Notes to Consolidated Financial Statements included in the 2018 Form 10-K and the grant date fair values can be found in the footnotes to the Grants of Plan-Based Awards table in this proxy statement.

 

  (5)

The values in column (g) for fiscal 2018 represent the amounts earned with respect to annual incentive awards under the 2018 Annual Incentive Plan.

 

  (6)

Ashland’s non-qualified deferred compensation arrangements do not provide above-market or preferential earnings; therefore, for fiscal 2018 the amounts in column (h) represent only the one-year change between September 30, 2017 and September 30, 2018 in the present value of accrued benefits under qualified and non-qualified defined benefit plans previously sponsored by Ashland but that have been transferred to Valvoline. Only Mr. Willis and Ms. Schumann participate in the defined benefit plans. These plans are more fully discussed in the narrative to the Pension Benefits table in this proxy statement.

The present values at September 30, 2017 and September 30, 2018 were calculated based on the earliest age that a participant could receive an unreduced benefit (see the discussion under the Pension Benefits table in this proxy statement regarding the earliest retirement age under the various plans). For Mr. Willis and Ms. Schumann the change in pension value was $(179,100) and $(48,058), respectively.

 

  (7)

Amounts reported in column (i) for fiscal 2018 are composed of the following items:

 

     W. A.
Wulfsohn
($)
    J. K. Willis
($)
    P. J. Ganz
($)
    A.T.
Schumann
($)
    K. C.
Silverman
($)
 

Employee Savings Plan Match (a)

     20,146           22,000           22,000           16,859           26,304      

Life Insurance Premiums (b)

     2,322           1,242           2,322           2,322           1,242      

Ashland Contribution to Non-Qualified Defined Contribution Plan (c)

     182,532           64,704           52,422           35,322           16,286      

Charitable Giving Match (d)

     3,950           3,850           3,100           3,445           2,448      

Tax Reimbursement for Moving Expenses (e)

     23,803           -           -           -           -      

Other (f)

     42,864           15,312           15,666           13,333           -      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     275,617           107,108           95,510           71,281           46,280      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

  (a)

The amounts in this row represent the contributions by Ashland to the accounts of each of the named executive officers in the Ashland Employee Savings Plan.

 

  (b)

The amounts in this row represent the value of life insurance premiums paid on behalf of the named executive officers.

 

  (c)

The amounts in this row represent the contributions by Ashland to the account of the named executive officers pursuant to the Non-Qualified Defined Contribution Plan.

 

  (d)

The amounts in this row represent the matching charitable contributions by Ashland made pursuant to various Company programs which are generally available to all employees.

 

  (e)

The amounts in this row represent the tax gross-ups provided on the same basis to all employees in connection with relocations.

 

  (f)

The amounts in this row represent the amount of aggregate incremental cost to Ashland with respect to any tax and financial planning services. Other than Mr. Wulfsohn, none of these items exceeded the greater of $25,000 or 10% of total perquisites as a category for any named executive officer. Mr. Wulfsohn’s moving expenses, which were provided on the same terms as provided to all other employees, totaled $27,471 and are included in the $42,864 amount above.

 

 

 

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GRANTS OF PLAN-BASED AWARDS

The following table sets forth certain information regarding the annual incentive awards, SARs, RSUs and Performance Units awarded during fiscal 2018 to each of the named executive officers.

 

         

Estimated Possible Payouts

Under

Non-Equity Incentive Plan
Awards (1)

    Estimated Future Payouts
Under Equity Incentive
Plan Awards (2)
    All
Other
Stock
Awards:
Number
of
Shares
of Stock
    All Other
Option
Awards:
Number of
Securities
Underlying
    Exercise
or Base
Price of
Option
   

Grant
Date

Fair
Value of
Stock
and

Option

 
Name  

Grant

Date

    Threshold
($)
   

Target

($)

    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
    or Units
(#) (3)
    Options
(#) (4)
    Awards
($/Sh)
    Awards
($) (5)
 

(a)

  (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)     (k)     (l)  

W. A. Wulfsohn

      285,360       1,426,800       2,140,200                
    11/15/2017             9,338       37,350       74,700             2,574,536  
    11/15/2017                   18,700           1,255,892  
    11/15/2017                     103,500     $ 67.16       2,030,670  
                     

J. K. Willis

      107,667       538,335       807,503                
    11/15/2017             2,575       10,300       20,600             709,979  
    11/15/2017                   5,150           345,874  
    11/15/2017                     28,450     $ 67.16       558,189  
                     

P. J. Ganz

      84,233       421,163       631,744                
    11/15/2017             1,600       6,400       12,800             441,152  
    11/15/2017                   3,200           214,912  
    11/15/2017                     17,650     $ 67.16       346,293  
                     

A. T. Schumann

      70,500       352,500       528,750                
    11/15/2017             825       3,300       6,600             227,469  
    11/15/2017                   1,650           110,814  
    11/15/2017                     9,150     $ 67.16       179,523  
                     

K. C. Silverman

      55,572       277,860       416,790                
    11/15/2017             538       2,150       4,300             148,200  
    11/15/2017                   1,100           73,876  
    11/15/2017                   3,800           255,208  
    11/15/2017                     5,900     $ 67.16       115,758  

 

 

(1)

The dollar amounts in these columns represent the potential annual incentive payouts under the 2018 Annual Incentive Plan for fiscal 2018. The actual dollar amounts earned will be paid in December 2018 and are included in column (g) in the fiscal 2018 row of the Summary Compensation Table in this proxy statement.

 

(2)

The amounts in these columns represent potential payments under LTIPP awards for the fiscal 2018-2020 performance period granted under the Amended and Restated 2015 Ashland Global Holdings Inc. Incentive Plan (the “2015 Incentive Plan”).

 

(3)

RSU grants made on November 15, 2017, to Messrs. Wulfsohn, Willis and Ganz and Ms. Schumann, and the grant of 1,100 RSUs to Mr. Silverman, were made pursuant to the 2015 Incentive Plan and vest in equal installments on each annual anniversary of the date of grant over a three-year period. The grant of 3,800 RSUs to Mr. Silverman on November 15, 2017 was made pursuant to the 2015 Incentive Plan and vests 50% on the first anniversary of the date of grant and 25% on each of the following two anniversaries of the date of grant.

 

(4)

The amounts in column (j) represent the number of SARs granted to named executive officers under the 2015 Incentive Plan in fiscal 2018. All SARs were granted at an exercise price of $67.16 per share, the closing price of Ashland Common Stock as reported on the NYSE on November 15, 2017.

 

(5)

The dollar amounts in column (l) are calculated in accordance with FASB ASC Topic 718 and assume (i) payment of Performance Unit awards at target using a Monte-Carlo simulation valuation to

 

 

 

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incorporate the relative TSR modifier ($68.93 per unit), as valued at the end of the fourth fiscal quarter; (ii) valuation of all SARs using the Black-Scholes valuation model ($19.62 per SAR granted on November 15, 2017); and (iii) the grant date fair value of $67.16 per RSU granted on November 15, 2017. For further information on the Black-Scholes model and related stock price assumptions utilized during fiscal 2018, see Note Q to the Notes to Consolidated Financial Statements in the 2018 Form 10-K.

Long-Term Incentive Performance Plan—Performance Units

Performance Unit awards, granted under the LTIPP, are granted to certain key employees. These awards are long-term incentives tied to Ashland’s adjusted earnings per share (EPS) and modified by the relative total shareholder return (TSR) over the performance period. Awards are granted annually, with each award covering a three-year performance period.

After the beginning of the performance period, performance hurdle, target and maximum objectives are established for the performance period. The initial number of Performance Units awarded is based on the employee’s salary. For a description of the fiscal 2018-2020 LTIPP, see the section entitled “Compensation Discussion and Analysis—Fiscal Year 2018 Incentive Plan Designs and Performance Related Payouts—Long-Term Incentive Plan” of this proxy statement. For a description of the circumstances under which the Performance Units may be entitled to accelerated vesting, see the section entitled “Potential Payments upon Termination or Change in Control—SARs/Stock Options, Incentive Compensation, Restricted Stock/Restricted Stock Units and Performance Units” of this proxy statement.

Stock Appreciation Rights

Ashland’s employee SAR grants are designed to link executive compensation with increased stockholder value over time. In determining the number of SARs to be granted annually to key employees, a target number of shares for each employee band level is established. All SARs are granted with an exercise price equal to the fair market value of Ashland Common Stock on the date of grant. Vesting of SARs occurs over a period of three years, as more fully described in footnote (1) to the “Outstanding Equity Awards at Fiscal Year-End” table in this proxy statement. SARs are not re-valued if the stock price declines below the grant price. For a description of the circumstances under which the SARs may be entitled to accelerated vesting, see the section entitled “Potential Payments upon Termination or Change in Control—SARs/Stock Options, Incentive Compensation, Restricted Stock/Restricted Stock Units and Performance Units” of this proxy statement. For a description of the material aspects of the program, see the section entitled “Compensation Discussion and Analysis—Fiscal Year 2018 Incentive Plan Designs and Performance Related Payouts—Long-Term Incentive Plan” of this proxy statement.

Restricted Stock Units/Restricted Stock

Ashland’s RSU grants are designed to link executive compensation with increased stockholder value over time. In determining the number of RSU awards to be granted annually to key employees, a target number of shares for each employee band level is established. All RSU awards are granted with a price equal to the fair market value of Ashland’s Common Stock on the date of grant. Vesting of the annual grant of RSU awards occurs over a period of three years, as more fully described in footnote (2) to the “Outstanding Equity Awards at Fiscal Year-End” table in this proxy statement.

The Compensation Committee may award RSU or RS awards to named executive officers. RSU/RS awards are intended to reward superior performance and encourage continued employment with Ashland. For vesting periods applicable to RSU/RS awards granted to named executive officers, see footnote (2) to the “Outstanding Equity Awards at Fiscal Year-End” table in this proxy statement.

RSU/RS awards may not be sold, assigned, transferred or otherwise encumbered during the restricted period. Dividend equivalents are paid on the RSUs/RS in the form of additional RSUs/RS

 

 

 

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subject to the same vesting requirements. The terms of the RSUs are generally the same as RS, except RSUs will not have voting rights and will not be counted as outstanding shares. For a description of the circumstances under which the RSUs/RS may be entitled to accelerated vesting, see the section entitled “Potential Payments upon Termination or Change in Control—SARs/Stock Options, Incentive Compensation, Restricted Stock/Restricted Stock Units and Performance Units” of this proxy statement. For a description of the material aspects of the program, see the section entitled “Compensation Discussion and Analysis—Fiscal Year 2018 Incentive Plan Designs and Performance Related Payouts—Long-Term Incentive Plan” of this proxy statement.

 

 

 

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table sets forth certain information regarding SARs, Performance Units and RSUs/RS held by each of the named executive officers as of September 30, 2018.

 

    Option Awards     Stock Awards  

Name

(a)

  Number of
Securities
Underlying
Unexercised
Options
Exercisable

(1)
(#)
(b)
    Number of
Securities
Underlying
Unexercised
Options
Unexercisable (1)
(#)

(c)
    Equity
Incentive
Plan
Awards;
Number  of
Securities
Underlying
Unexercised
Unearned
Options

(#)
(d)
    Option
Exercise
Price

($)
(e)
    Option
Expiration
Date
(f)
    Number
of Shares
or Units
of Stock
That
Have Not
Vested (2)
(#)

(g)
    Market
Value of
Shares or
Units of
Stock

That
Have Not
Vested (2)
(#)

(h)
    Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have  Not
Vested (3)
(#)

(i)
    Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares,  Units
or

Other
Rights That
Have Not
Vested (3)

($)
(j)
 

W. A. Wulfsohn

    -          103,500  (4)      -          67.16       12/15/2027          
    59,186       59,187  (5)      -          57.96       12/16/2026          
    80,868       26,958  (6)      -          59.41       12/18/2025          
    86,637       -            62.33       2/28/2025          
              96,293       8,075,162      
                  74,077       6,212,089  
                 

J. K. Willis

    -          28,450  (4)      -          67.16       12/15/2027          
    16,291       16,292  (5)      -          57.96       12/16/2026          
    22,670       7,559  (6)      -          59.41       12/18/2025          
    24,672       -          -          59.95       12/12/2024          
    25,426       -          -          47.63       12/13/2023          
    4,940       -          -          46.65       6/3/2023          
    5,462       -          -          37.37       12/14/2022          
    2,307       -            29.50       1/2/2022          
              31,217       2,617,848      
                  20,471       1,716,658  
                 

P. J. Ganz

    -          17,650  (4)      -          67.16       12/15/2027          
    10,076       10,076  (5)      -          57.96       12/16/2026          
    13,770       4,593  (6)      -          59.41       12/18/2025          
    14,125       -          -          59.95       12/12/2024          
    13,937       -          -          47.63       12/13/2023          
    29,193       -          -          37.37       12/14/2022          
    6,216       -            29.50       1/2/2022          
              22,396       1,878,153      
                  12,709       1,065,818  
                 

A. T. Schumann

    -          9,150  (4)      -          67.16       12/15/2027          
    -          4,379  (5)      -          57.96       12/16/2026          
    -          2,025  (6)      -          59.41       12/18/2025          
              13,409       1,124,473      
                  6,031       505,757  
                 

K. C. Silverman

    -          5,900  (4)      -          67.16       12/15/2027          
    -          1,836  (5)      -          57.96       12/16/2026          
    -          848  (6)      -          59.41       12/18/2025          
              6,448       540,764      
                  3,280       275,066  

 

 

(1)

The numbers in columns (b) and (c) relate to SARs which vest over a three-year period measured from the date of grant. Fifty percent vest on the first anniversary of grant, 25% vest on the second anniversary of grant and 25% on the third anniversary of grant.

 

(2)

The numbers in column (g) and the dollar values in column (h) represent the number of PUs granted with respect to the fiscal 2016-2018 LTIPP performance periods that were converted to RSUs in September 2017, the number of shares of RS outstanding under the Executive Performance Incentive and Retention Program (“EPIRP”) and other unvested RSUs/RS.

EPIRP Design

On October 5, 2015, the Compensation Committee approved the EPIRP for certain NEOs. The philosophy behind this program was to provide an additional incentive to remain employed by

 

 

 

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Ashland in the critical period up to and immediately following the Final Distribution of Valvoline. The EPIRP also provided increased alignment between executives and stockholders by providing equity-based compensation that vests based on both relative TSR and the participant’s continued service. The program also required the successful final separation of Valvoline from Ashland in order to vest and therefore motivated participants to successfully position both Ashland and Valvoline as independent publicly traded companies.

As of the beginning of fiscal 2018, only 1/6 of the original maximum grant to each of the applicable NEOs remained outstanding, in the form of time-vested restricted shares. These shares vested in November 2018 for Messrs. Willis and Ganz and Ms. Schumann, while Mr. Wulfsohn’s remaining EPRIP award will vest in November 2019.

LTIPP and EPIRP

The number of RSUs earned for the fiscal 2016-2018 LTIPP awards was determined by the Compensation Committee in September 2017 and vested in November 2018. These RSUs do not earn dividends or dividend equivalents.

The number of RS earned for the EPIRP was determined by the Compensation Committee in September 2017. The RS earned pursuant to the EPIRP will continue to accrue dividends which vested or will vest at the same time as the underlying award.

The number of RSUs earned from the 2016-2018 LTIPP performance period and the number of RS earned from the EPIRP (and the dividends earned on the grants of the EPIRP as of September 30, 2018) for each NEO is set forth in the table below:

 

Name

   2016-2018 LTIPP -
RSUs earned
     EPIRP - RS
Earned
     EPIRP - RS
Dividends Earned
 

W. A. Wulfsohn

     26,688        29,806        1,231  

J. K. Willis

     7,476        12,526        519  

P. J. Ganz

     4,572        10,729        444  

A. T. Schumann

     2,039        7,841        322  

K. C. Silverman

     866        N/A        N/A  

Unvested RSUs

The following paragraphs list the unvested RSUs as of September 30, 2018 for each named executive officer. Unless otherwise noted, the RSUs vest in equal installments on each annual anniversary of the date of grant over a three-year period. Dividend equivalents are accrued on outstanding RSU awards at the same time and at the same rate as dividends are paid to stockholders. Dividend equivalents on RSUs are only payable if the underlying RSU award vests. At the time of vesting, one share of Ashland Common Stock is issued for each RSU and any accrued dividend equivalents are paid as additional shares of Ashland Common Stock.

For Mr. Wulfsohn, the amounts reported in columns (g) and (h) also represent:

 

  (i)

6,780 RSUs remaining from a grant of 20,341 RSUs on November 18, 2015; and 289 RSUs earned from dividends;

 

  (ii)

12,242 RSUs remaining from a grant of 18,363 RSUs on November 16, 2016; and 323 RSUs earned from dividends; and

 

  (iii)

18,700 RSUs granted November 15, 2017; and 234 RSUs earned from dividends.

For Mr. Willis, the amounts reported in columns (g) and (h) also represent:

 

  (i)

1,915 RSUs remaining from a grant of 5,744 RSUs granted on November 18, 2015; and 87 RSUs earned from dividends;

 

  (ii)

3,390 RSUs remaining from a grant of 5,085 RSUs on November 16, 2016; and 89 RSUs earned from dividends; and

 

 

 

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  (iii)

5,150 RSUs granted November 15, 2017; and 64 RSUs earned from dividends.

For Mr. Ganz, the amounts reported in columns (g) and (h) also represent:

 

  (i)

1,161 RSUs remaining from a grant of 3,484 RSUs granted on November 18, 2015; and 58 RSUs earned from dividends;

 

  (ii)

2,135 RSUs remaining from a grant of 3,202 granted on November 16, 2016; and 58 RSUs earned from dividends; and

 

  (iii)

3,200 RSUs granted November 15, 2017; and 40 RSUs earned from dividends.

For Ms. Schumann, the amounts reported in columns (g) and (h) also represent:

 

  (i)

534 RSUs remaining from a grant of 1,601 RSUs granted on November 18, 2015; and 36 RSUs earned from dividends;

 

  (ii)

942 RSUs remaining from a grant of 1,412 granted November 16, 2016; and 25 RSUs earned from dividends; and

 

  (iii)

1,650 RSUs granted November 15, 2017; and 21 RSUs earned from dividends.

For Mr. Silverman, the amounts reported in columns (g) and (h) also represent:

 

  (i)

220 RSUs remaining from a grant of 659 RSUs granted on November 18, 2015; and 15 RSUs earned from dividends;

 

  (ii)

377 RSUs remaining from a grant of 565 RSUs granted on November 16, 2016; and 10 RSUs earned from dividends;

 

  (iii)

1,100 RSUs granted November 15, 2017; and 14 RSUs earned from dividends; and

 

  (iv)

3,800 RSUs granted November 15, 2017 that vests 50% after one year and 25% at each of the second and third year anniversaries of the grant; and 47 RSUs earned from dividends.

 

(3)

The numbers in column (i) represent the estimated performance units granted through September 30, 2018, under the LTIPP for the fiscal 2017-2019 performance period and the fiscal 2018-2020 performance period. The estimated number is computed assuming that the target performance goals are achieved. The dollar amounts in column (j) correspond to the performance units identified in column (i). For LTIPP units, the dollar value is computed by converting the performance units to shares of Ashland Common Stock on a one-for-one basis. The number of LTIPP shares is then multiplied by the closing price of Ashland Common Stock of $83.86 as reported on the NYSE on September 28, 2018. Payment, if any, under the LTIPP will be made in cash for the fiscal 2017-2019 performance period and shares of Ashland Common Stock for the fiscal 2018-2020 performance period. Due to rounding of the fiscal 2017-2019 performance units after application of the Equity Adjustment Ratio to the nearest whole performance unit for purposes of this table, dollar values may not match exactly.

 

(4)

These numbers relate to SARs granted on November 15, 2017, that vest over the three-year period referenced in footnote (1) above.

 

(5)

These numbers relate to SARs granted on November 16, 2016, that vest over the three-year period referenced in footnote (1) above.

 

(6)

These numbers relate to SARs granted on November 18, 2015, that vest over the three-year period referenced in footnote (1) above.

 

 

 

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OPTION EXERCISES AND STOCK VESTED

The following table sets forth certain information regarding the value realized by each named executive officer during fiscal 2018 upon the exercise of SARs and the vesting of Performance Units and RSUs/RS.

 

     Option Awards      Stock Awards  
    

Number of Shares

Acquired on Exercise (1)

    

Value Realized on

Exercise (1)

    

Number of Shares

Acquired on Vesting (2)(3)

    

Value Realized on

Vesting (2)(3)

 
Name    (#)      ($)      (#)      ($)  

(a)

   (b)      (c)      (d)      (e)  

W. A. Wulfsohn

           63,591        4,577,714  
           

J. K. Willis

           22,832        1,562,274  
           

P. J. Ganz

           15,398        1,058,773  
           

A. T. Schumann

     16,666        237,149        4,732        320,986  
           

K. C. Silverman

     9,933        284,778        2,077        140,813  

 

 

  (1)

The amounts in column (b) include the gross number of shares acquired on exercise of SARs. The amounts in column (c) represent the value realized on exercise.

 

  (2)

For Messrs. Wulfsohn, Willis, Ganz and Silverman and Ms. Schumann, the amounts in column (d) include 43,479; 12,232; 7,092; 1,439 and 3,186 shares of Ashland Common Stock, respectively, received in settlement of the fiscal 2015-2017 LTIPP. For all executives except Mr. Wulfsohn, the dollar amounts in column (e) represent the value of the fiscal 2015-2017 LTIPP (computed by multiplying the number of shares awarded by $67.10, the closing price of Ashland Common Stock as reported on November 13, 2017, the date the performance units vested). For Mr. Wulfsohn, the dollar amount in column (e) represents the value of the fiscal 2015-2017 LTIPP (computed by multiplying the number of shares awarded by $72.39, the closing price of Ashland Common Stock as reported on January 30, 2018, the date the performance units vested). The weighted score for the 2015-2017 LTIPP was 109.15%.

 

  (3)

The amounts in columns (d) and (e) also include the following RSU/RS vestings:

(i) Mr. Wulfsohn received 6,205.062 shares with the value included in column (e) using the Ashland Common Stock closing price of $70.75 on November 16, 2017; he received 6,966.967 shares with the value included in column (e) using Ashland Common Stock closing price of $70.16 on November 20, 2017; and he received 6,941 shares with the value included in column (e) using the Ashland Common Stock closing price of $72.39 on January 30, 2018;

(ii) Mr. Willis received 2,030 shares, with the value included in column (e) using the Ashland Common Stock closing price of $67.10 on November 13, 2017; he received 1,718.325 shares with the value included in column (e) using the Ashland Common Stock closing price of $70.75 on November 16, 2017; he received 4,887 shares, with the value included in column (e) using the Ashland Common Stock closing price of $70.76 on November 17, 2017; and he received 1,965.772 shares with the value included in column (e) using the Ashland Common Stock closing price of $70.16 on November 20, 2017;

(iii) Mr. Ganz received 1,151 shares with the value included in column (e) using the Ashland Common Stock closing price of $67.10 on November 13, 2017; he received 1,080.634 shares, with the value included in column (e) using the Ashland Common Stock closing price of $70.75 on November 16, 2017; he received 4,887 shares with the value included in column (e) using the Ashland Common Stock closing price of $70.76 on November 17, 2017; and he received 1,188.831 shares with the value included in column (e) using the Ashland Common Stock closing price of $70.16 on November 20, 2017;

 

 

 

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(iv) Ms. Schumann received 528 shares, with the value included in column (e) using the Ashland Common Stock closing price of $67.10 on November 13, 2017; she received 477.312 shares with the value included in column (e) using the Ashland Common Stock closing price of $70.75 on November 16, 2017; and she received 541.719 shares with the value included in column (e) using the Ashland Common Stock closing price of $70.16 on November 20, 2017; and

(v) Mr. Silverman received 224 shares, with the value included in column (e) using the Ashland Common Stock closing price of $67.10 on November 13, 2017; he received 190.923 shares with the value included in column (e) using the Ashland Common Stock closing price of $70.75 on November 16, 2017; and he received 224.033 shares with the value included in column (e) using the Ashland Common Stock closing price of $70.16 on November 20, 2017.

 

 

 

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PENSION BENEFITS

The following table shows the actuarial present value of the named executive officers’ (other than William A. Wulfsohn, Peter J. Ganz and Keith C. Silverman) accumulated benefits under certain qualified and non-qualified pension plans previously owned by Ashland but that have been transferred to Valvoline, calculated as of September 30, 2018. Messrs. Wulfsohn, Ganz and Silverman were not eligible to participate in the Pension Plan, the Excess Plans or the SERP (as defined in footnote 1) when those plans were sponsored by Ashland since those plans were closed to new employees on January 1, 2011. On September 30, 2016, these plans were frozen to future benefit accruals and on September 1, 2016, the sponsorship of these plans was transferred to Valvoline LLC. Please see the narrative to the Pension Benefits table below for further information.

 

Name (a)

 

Plan Name (1)

(b)

  Number of Years
Credited Service (2)
(#)

(c)
  Present Value of
Accumulated Benefit
($)

(d)
    Payments During
Last

Fiscal Year
($) (e)
 

J. K. Willis

  Ashland Hercules Pension Plan   27 years 9 months     1,036,937           -  
  Valvoline Excess Benefit Pension Plan   27 years 9 months     480,493           -  
 

Valvoline Supplemental Early Retirement

Plan for Certain

Employees

  20 years     3,511,211           -  
       

A. T. Schumann

  Ashland Hercules Pension Plan   16 years     657,413           -  
  Valvoline Excess Benefit Pension Plan   16 years     314,822           -  
 

Valvoline Supplemental Early Retirement Plan

for Certain Employees

  17 years     -           -  

 

 

  (1)

The Ashland Hercules Pension Plan (the “Pension Plan”), which is now sponsored by Valvoline, is a tax-qualified plan under Section 401(a) of the Code. The Valvoline Excess Benefit Pension Plan (the “Valvoline Excess Plan”) and the Hercules Inc. Employee Pension Restoration Plan (the “Hercules Excess Plan” and together with the Valvoline Excess Plan, the “Excess Plans”) are non-qualified plans that are coordinated with the tax-qualified plan. The Valvoline Supplemental Early Retirement Plan for Certain Employees (the “SERP”) is a non-qualified plan. The material terms of each of these plans are described in the narrative below. The Pension Plan, the Excess Plans and the SERP are now sponsored and maintained by Valvoline.

 

  (2)

The maximum number of years of credited service under the SERP is 20 years. The number of years of service for the SERP is measured from the date of hire. The number of years of service under the Pension Plan and the Excess Plans is measured from the date the named executive officer began participating in the Pension Plan through September 30, 2016, the date the plans were frozen.

Assumptions

The present values of the accumulated benefits were calculated as of September 30, 2018, based on the earliest age a participant could receive an unreduced benefit. For Mr. Willis and Ms. Schumann, age 62 is the earliest age that an unreduced benefit is available under the qualified Pension Plan and the applicable non-qualified Valvoline Excess Plan because their benefits are calculated under the traditional annuity pension formula. The programs were closed to new employees on January 1, 2011.

 

 

 

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Mr. Willis has a benefit in the qualified Leveraged Employee Stock Ownership Plan (the “LESOP”). The LESOP was completely allocated on March 31, 1996, and no additional benefits are accruing. The LESOP and the qualified Pension Plan are in a floor-offset arrangement. The value of the shares allocated to a participant’s LESOP offset account reduces the value of the participant’s Pension Plan benefit. A participant may elect to transfer his or her LESOP offset account to the Pension Plan at the time of his or her termination in order to receive an unreduced Pension Plan benefit. The calculations in the Pension Benefits table assume that the named executive officers with a LESOP benefit elect to transfer their LESOP offset accounts to the Pension Plan. On September 30, 2016, the LESOP was amended as described below.

The SERP provides an umbrella (or gross) benefit that is subject to certain reductions. The amount in the Pension Benefits table for the SERP benefit for applicable named executive officers is the net benefit under the SERP, after applicable reductions. The reductions referred to in this paragraph are described in the “Supplemental Early Retirement Plan for Certain Employees (SERP)” section below.

Under the SERP, the earliest age a named executive officer could receive an unreduced benefit is the earlier of age 55 or when the sum of the named executive officer’s age and service equals at least 80, provided that the officer has at least 20 years of service under the plan. Mr. Willis is the only currently employed named executive officer that has at least 20 years of service.

The following table sets forth for fiscal 2018 the valuation method and all material assumptions applied in quantifying the present value of the accumulated benefits described in the Pension Benefits table.

 

   

Qualified Pension Plan

 

Valvoline Excess Benefit Plan

 

Hercules Excess Plan

Discount rate and

mortality assumptions

(no pre-retirement

mortality is assumed)

 

4.30%; RP-2014

Generational Mortality

Tables adjusted to

2006 by removing

impact of projection

scale MP2014 and

then projected

generationally with

the MSS2017 scale

 

8.00%; PPA Mortality at

retirement age,

discounted from

retirement age back to

current age using

ASC715 disclosure rate of

4.16%

 

4.23%; RP-2014

Generational Mortality

Tables adjusted to

2006 by removing

impact of projection

scale MP2014 and

then projected

generationally with

the MSS2017 scale

Present value of qualified

and excess benefits for

SERP determination (no

pre-retirement mortality

is assumed)

 

8.00%; GATT mortality

at SERP retirement

age, discounted from

SERP retirement age

back to current age

using ASC715

disclosure rate of

4.23%

 

8.00%; PPA Mortality at

retirement age,

discounted from

retirement age back to

current age using

ASC715 disclosure rate of

4.23%

 

8.00%; PPA Mortality at

retirement age,

discounted from

retirement age back

to current age using

ASC715 disclosure rate

of 4.23%

Ashland Hercules Pension Plan (Pension Plan)

The Pension Plan is a tax-qualified defined benefit pension plan under Code Section 401(a). The Pension Plan provides retirement income for eligible participants. Beginning in January 2011, the Pension Plan was closed to new participants and to additional credits in the retirement growth account. On March 16, 2016, Ashland’s Board and Compensation Committee froze future benefit accruals under the Pension Plan effective as of September 30, 2016. Additionally, in connection with the separation of Valvoline, sponsorship of the Pension Plan for all participants, including our named executive officers who participate in the Pension Plan, was transferred to Valvoline LLC on September 1, 2016.