DEF 14A 1 corning_def14a.htm DEFINITIVE PROXY STATEMENT

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SCHEDULE 14A
 
(Rule 14a-101)
 
INFORMATION REQUIRED IN PROXY STATEMENT
 
SCHEDULE 14A INFORMATION
 
Proxy Statement Pursuant to Section 14(a) of the
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  CORNING INCORPORATED  
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2015 Proxy Statement
and Notice of Annual Meeting
of Shareholders












 
 
 
  

    
      
 
 
      
     

Thursday, April 30, 2015

The Corning Museum of Glass
One Museum Way
Corning, NY 14830




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Dear Fellow Shareholder:

I hope you will join Corning Incorporated’s Board of Directors, senior leadership, and other stakeholders at our 2015 Annual Meeting in Corning, New York, on April 30 at 11 a.m. Eastern Time. The Annual Meeting is your chance to hear directly from leadership about Corning’s 2014 performance and our expectations for 2015. More importantly, it is your opportunity to ensure that your voice is heard. Shareholders will vote on the annual election of directors and the ratification of the appointment of Corning’s independent registered public accounting firm for 2015, in addition to providing an advisory vote on the 2014 compensation for our named executive officers.

The following pages contain the formal notice of meeting and the proxy statement. I encourage you to sign and return your proxy card or vote by telephone or Internet prior to April 30 so that your shares will be represented and voted at the meeting.

Maintaining the trust of our stakeholders is vital to Corning’s success. We regularly engage directly with investors to ensure we understand their views on our corporate governance and executive compensation structures. Last year, we implemented several changes to our compensation program in response to prior feedback, and the response was extremely positive. We remain committed to keeping the communication channels open with our shareholders, and disclosing information clearly in our proxy statement and related documents.

As part of our commitment to strong corporate governance, we also welcomed two new independent directors to our Board: Donald W. Blair, executive vice president and chief financial officer for NIKE, Inc., and Daniel P. Huttenlocher, vice provost and dean at Cornell University. Mr. Blair brings extensive financial expertise and management experience at the international, operational, and corporate levels. Dr. Huttenlocher brings expertise in technology innovation and commercialization, and experience developing next-generation products and services. You can find a full list of our directors and their qualifications beginning on page 20.

Of course, the primary way we earn your trust will always be our performance. I’m pleased to report that Corning had an outstanding year in 2014. We grew sales and profits. We exceeded our expectations for synergies from the integration of Corning Precision Materials. We launched new products, and we honored our commitment to return cash to shareholders. Thanks to outstanding execution by our global employees, we have entered 2015 as a bigger, stronger, and more agile company.

I look forward to sharing more details at the Annual Meeting. Meanwhile, I encourage you to submit your vote.

Thank you for your investment in Corning and your participation in our governance process.

Sincerely,

Wendell P. Weeks
Chairman of the Board, Chief Executive Officer and President

CORNING INCORPORATED - 2015 Proxy Statement     3



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Notice of 2015 Annual Meeting
of Shareholders

 

Thursday, April 30, 2015

11:00 a.m. Eastern Time

Corning Museum of Glass, located at One Museum Way, Corning, New York 14830

TO OUR SHAREHOLDERS

You are invited to attend Corning Incorporated’s 2015 Annual Meeting of Shareholders to be held at the Corning Museum of Glass located at One Museum Way, Corning, New York 14830, on Thursday, April 30, 2015 at 11:00 a.m. Eastern Time.

Items of Business

1.       Election of all 14 directors named in our proxy statement to our Board of Directors for the coming year;
2. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm;
3. Approval, on an advisory basis, of our executive compensation;
4. A shareholder proposal, if properly presented at meeting; and
5. Transaction of any other business properly brought before the meeting or any adjournment.

Record Date

You may vote at our 2015 Annual Meeting if you were a shareholder of record at the close of business on March 2, 2015.

Your vote is important to us. Please exercise your shareholder right to vote.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on April 30, 2015: our Proxy Statement, 2014 Annual Report and other materials are available on our website at www.corning.com/2015_proxy.



Sincerely,

Linda E. Jolly
Vice President and Corporate Secretary
March 17, 2015

4     CORNING INCORPORATED - 2015 Proxy Statement



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Welcome to the Corning Incorporated
2015 Annual Shareholders Meeting


Vote Right Away

Your vote is very important. Whether or not you plan to attend the Annual Meeting, please promptly submit your proxy or voting instructions by Internet, telephone or mail in order to ensure the presence of a quorum. You may also vote in person at our Annual Meeting. If you are a shareholder of record, your admission ticket is attached to your proxy card. If your shares are held in the name of a broker, nominee or other intermediary, you must bring proof of ownership with you to the meeting.

By telephone By Internet using a smartphone or tablet By mail By Internet using a computer

Dial toll-free 24/7
1-800-652-8683

Scan this QR code 24/7
to vote with your mobile device
(may require free software)

Cast your ballot, sign
proxy card
and send by mail

Visit 24/7
www.investorvote.com/glw


VISIT OUR ANNUAL MEETING WEBSITE


www.corning.com/2015_proxy
Review and download this Proxy Statement and our Annual Report.
      Sign up for electronic delivery of future Annual Meeting materials to reduce Corning’s impact on the environment.
 

Corning is providing these proxy materials in connection with our Annual Meeting. This proxy statement, the accompanying proxy card and Corning’s 2014 Annual Report were first mailed to shareholders on or about March 17, 2015. As used in this proxy statement, “Corning,” the “Company” and “we” may refer to Corning Incorporated itself, one or more of its subsidiaries, or Corning Incorporated and its consolidated subsidiaries.

CORNING INCORPORATED - 2015 Proxy Statement     5



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Table of Contents

Proxy Statement Summary       8
 
General Information About Corporate Governance and the Board of Directors 12
 
Corporate Governance 12
Board Leadership Structure 13
Lead Independent Director 13
Management Succession Planning 13
Risk Oversight 13
Committees 14
       Audit 14
       Compensation 14
       Corporate Relations   14
       Executive 14
       Finance 14
       Nominating and Corporate Governance 15
Board and Shareholder Meeting Attendance 15
Director Independence and Transactions Considered in Independence Determinations 15
Policy on Transactions with Related Persons 16
Compensation Committee Interlocks and Insider Participation 17
Other Matters 17
Ethics and Conduct 17
Communications with Directors 17
 
Proposal 1 Election of Directors 18
 
Board of Directors’ Qualifications and Experience 18
Board Nomination and Renewal Process 19
2015 Nominees for Director 20
 
Director Compensation 26
 
2014 Director Compensation 26
Other 26
2014 Director Compensation Table 27
 
Stock Ownership Information 28
 
Stock Ownership Guidelines 28
Beneficial Ownership of Directors and Officers 28
Beneficial Ownership of Corning’s Largest Shareholders 29
Section 16(a) Beneficial Ownership Reporting Compliance 29
 
Proposal 2 Ratification of Appointment of PriceWaterhouseCoopers LLP
as Independent Registered Public Accounting Firm
30
 
Fees Paid to Independent Registered Public Accounting Firm 30
Policy Regarding Audit Committee Pre-Approval of Audit and Permitted Non-Audit Services of
Independent Registered Public Accounting Firm 31
Report of the Audit Committee 31

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Proposal 3 Advisory Approval of Executive Compensation       32
 
Advisory Vote to Approve Executive Compensation (Say on Pay) 32
Say Pay Proposal 32
 
Compensation Discussion and Analysis 33
 
Executive Summary 34
Company Performance Highlights 34
Executive Compensation Program: Structure and Highlights 36
Executive Compensation Program Details 40
Compensation Governance 44
Compensation Committee Report   46
Compensation Tables 46
       Summary Compensation Table 46
       Grants of Plan Based Awards 49
       Outstanding Equity Awards at Fiscal Year-End 51
       Option Exercises and Shares Vested 54
Retirement Plans 54
Non-Qualified Deferred Compensation 56
Arrangements with Named Executive Officers 57
 
Proposal 4 Holy Land Principles Shareholder Proposal 61
 
Frequently Asked Questions About the Annual Meeting and Voting 62
 
Code of Ethics 66
 
Incorporation by Reference 66
 
Additional Information 66
 
Appendix A 67
 
Corning Incorporated and Subsidiary Companies Reconciliation of
Non-GAAP Financial Measures to GAAP Financial Measures 67

CORNING INCORPORATED - 2015 Proxy Statement     7



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PROXY STATEMENT SUMMARY


This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

Corning Incorporated 2015 Annual Meeting of Shareholders

Time and Date

11:00 a.m. ET on Thursday, April 30, 2015

Place

The Corning Museum of Glass, One Museum Way, Corning, New York 14830

Record Date

March 2, 2015

Voting

Shareholders as of the record date are entitled to one vote per share on each matter to be voted upon at the 2015 Annual Meeting of Shareholders (the Annual Meeting).

Attendance

If you plan to attend the Annual Meeting, you must be a shareholder of record on the record date and be prepared to show proof of ownership as described on page 62 of this proxy statement.


Proposals that Require Your Vote

      Board Vote
Recommendation
      More
Information
  
  Proposal 1   Election of directors FOR all of the director nominees 18
  Proposal 2 Ratification of appointment of independent registered public accounting firm   FOR 30
  Proposal 3 Advisory vote to approve the Company’s executive compensation FOR   32  
  Proposal 4 Shareholder proposal AGAINST 61

Your vote is important to us. Please exercise your right to vote.

2014 Performance Highlights

2014 was one of the strongest years in Corning’s history. Our core net sales exceeded $10 billion for the first time in the Company’s history, with 29% core sales growth, and 22% core earnings improvement from a year ago. We have now produced two full years of quarterly year-over-year earnings growth. Our 2014 performance highlights include:

Core net sales were $10.2 billion*, a 29% increase from $7.9 billion in 2013, marking a record year in sales performance for the company. GAAP sales were $9.7 billion.

Core earnings per share were $1.53*, a 24% year-over-year improvement compared with last year’s core EPS of $1.23*. GAAP earnings per share were $1.73.

Successful integration of Corning Precision Materials Co., Ltd. resulted in pre-tax synergies of more than $100 million, which exceeded the Company’s original expectations.

Increased shareholder distributions. In December, we announced a 20% increase in the Company’s dividend and a new $1.5 billion share repurchase program.

Over the last four years, Corning has returned approximately $7.4 billion to our shareholders through share repurchases and dividends.

*These are non-GAAP financial measures. Appendix A to this proxy statement contains a reconciliation of these non-GAAP measures to our audited GAAP financial statements.


8     CORNING INCORPORATED - 2015 Proxy Statement



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Proxy Statement Summary


Governance Highlights

Corning is committed to maintaining good corporate governance as a critical component of our success in driving sustained shareholder value. The Board of Directors continually monitors emerging best practices in governance to best serve the interests of the Company’s shareholders. Our practices include:

     

Annual election of all directors

      

Majority vote standard in uncontested elections

 
 

Each director must be elected by a majority of votes cast

 

Active shareholder engagement

 
 

Corning regularly engages with its shareholders to better understand their perspectives

 

Independent Lead Director

 

Independent Board Committees

 
 

Each of the Audit, Compensation, Nominating and Corporate Governance, and Corporate Relations committees is made up of entirely independent directors

 

Executive sessions of independent directors held at each regularly scheduled meeting

 

Stock ownership guidelines for directors and named executive officers

 
 

Significant requirements strongly link the interests of management and the Board with those of shareholders

 

Prohibition on pledging and hedging for directors and executives

 
 

Company policies prohibit our directors and executives from pledging or hedging or trading in derivatives of the Company’s stock

 

Clawback policy

 
 

Executives’ incentives are subject to a clawback that applies in the event of certain financial restatements

 
       


Proposal 1 Election of Directors

The following 14 directors are being nominated for election to a one-year term:

Director Nominees

  Name       Age       Director
Since
      Occupation       Other Public
Company Boards
      Committee
Memberships*
  Donald W. Blair
  Independent Director
57 2014 Executive Vice President and Chief
Financial Officer, NIKE, Inc.
None Audit
Finance
  Stephanie A. Burns
  Independent Director
60 2012 Retired Chairman and Chief
Executive Officer, Dow Corning
Corporation
GlaxoSmithKline plc. Audit
Kellogg Company Chair, Corporate      
  Relations
  John A. Canning, Jr.
  Independent Director
70 2010 Chairman, Madison Dearborn
Partners, LLC
Exelon Corporation Executive
Finance
Nominating
      and Corporate
Governance
  Richard T. Clark
  Lead Independent Director
69 2011 Retired Chairman, President and
Chief Executive Officer,
Merck & Co., Inc.
ADP, LLC Compensation
  Executive
Nominating
and Corporate
Governance

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Proxy Statement Summary



   Name       Age       Director
Since
      Occupation       Other Public
Company Boards
      Committee
Memberships*
Robert F. Cummings, Jr.
Independent Director
65 2006 Vice Chairman of Investment
Banking, JPMorgan Chase & Co
Viasystems Group, Inc. Executive
W. R. Grace & Co. Chair, Finance
Nominating
and Corporate
Governance
James B. Flaws 66 2000 Vice Chairman and Chief Financial
Officer, Corning Incorporated
None Executive
Finance
Deborah A. Henretta
Independent Director
53 2013 Group President of E-Business,
Procter & Gamble Company
None Audit
Corporate Relations      
  Daniel P. Huttenlocher
Independent Director
55 2015 Dean and Vice Provost,
Cornell University’s New York City
Tech Campus
None Audit
Finance
Kurt M. Landgraf
Independent Director
68 2007 Retired President and Chief
Executive Officer,
Educational Testing Service
Louisiana-Pacific Chair, Audit
Corporation Compensation
Executive
Kevin J. Martin
Independent Director
48 2013 Counsel,
Squire Patton Boggs LLP
None Corporate Relations
Nominating
and Corporate
Governance
Deborah D. Rieman
Independent Director
65 1999 Executive Chairman,
MetaMarkets Group
None Audit
Chair,
Compensation
Hansel E. Tookes II
Independent Director
67 2001 Retired Chairman and Chief
Executive Officer, Raytheon
Aircraft Company
Ryder Systems, Inc. Compensation
NextEra Energy, Inc. Executive
Harris Corporation Chair, Nominating
  and Corporate
    Governance
Wendell P. Weeks 55   2000 Chairman, Chief Executive
Officer and President,
Corning Incorporated
Merck & Co., Inc. Executive
   
Mark S. Wrighton
Independent Director
65 2009 Chancellor and Professor of
Chemistry, Washington University
in St. Louis
Cabot Corporation Audit
Brooks Automation, Inc. Finance
 

*Committee memberships as of February 5, 2015.

Our Board unanimously recommends that shareholders vote FOR all of our director nominees.

Proposal 2   Ratification of Appointment of Independent Registered
Public Accounting Firm

As a matter of good corporate governance, we are asking our shareholders to ratify the appointment of PricewaterhouseCoopers LLP as our independent public accounting firm for 2015.

Our Board unanimously recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2015.

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Proxy Statement Summary


Proposal 3 Advisory Approval of Executive Compensation

We solicit an annual advisory vote on our executive compensation. Our Board of Directors requests that shareholders approve the compensation of our Named Executive Officers (NEOs), as disclosed in this proxy statement. This includes the Compensation Discussion and Analysis, the Summary Compensation Table and the supporting tabular and narrative disclosure on executive compensation.

Our key compensation principles are as follows:

Provide a Competitive Base Salary:
Base salaries provide a form of fixed compensation and are reviewed annually by the Compensation Committee using salary surveys, internal equity and performance as discussed in the “Compensation Peer Group” section.

Pay for Performance:
Executive compensation should be tied to performance and contribution to both short-term and long-term corporate financial performance and shareholder value.

Team-Based Management Approach:
Corning uses a team-based management approach, so 100% of incentives awarded to NEOs are contingent on achieving a common set of goals for Corning’s consolidated financial performance or the performance of Corning stock. Internal equity within our NEO group is also important.

Incentive Compensation Should be a Greater Part of Total Compensation for More Senior Positions:
As employees assume more responsibility and have greater opportunity to affect Company performance and shareholder value, an increasing share of their total compensation package is derived from variable incentive compensation. More than 80% of our NEOs’ total compensation is variable.

The Interests of our Executive Group Should Align with Shareholders:
Through the use of stock options and restricted stock units, and robust stock ownership guidelines, we align the long-term interests of our NEOs with those of our long-term shareholders.

The Compensation Discussion and Analysis portion of this proxy statement contains a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions, including 2014 Company performance, focusing on the compensation of our NEOs. We believe that we have created a compensation program deserving of shareholder support. Accordingly, we are asking for shareholder approval of the compensation of our NEOs as disclosed in this proxy statement. See “Proposal 3 – Advisory Approval of Executive Compensation” and “Compensation Discussion and Analysis” for more information.

Our Board unanimously recommends a vote FOR the resolution approving the compensation of our Named Executive Officers.

Proposal 4 Holy Land Principles Shareholder Proposal

A shareholder proposal was submitted by the Holy Land Principles, Inc. regarding employment matters in Israel. The Board has considered the proposal, and believes adopting the shareholder proposal is unnecessary in light of the Company’s demonstrated commitment to equal employment opportunity without regard to age, race, color, gender, national origin, religion, sexual orientation, gender identity or expression, disability, veteran status or any other protected status.

Our Board unanimously recommends a vote AGAINST the resolution adopting the shareholder proposal.

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General Information About Corporate Governance and the Board of Directors


Corporate Governance

Our Board of Directors recognizes that our corporate governance practices must continually evolve to appropriately balance the interests of the Board, shareholders, and management to effectively serve our shareholders, customers, employees, and the communities in which we do business. Supporting that philosophy, we have adopted many leading corporate governance practices, including:

Practice     Description     More
Information

BOARD COMPOSITION AND ACCOUNTABILITY

Independence

A majority of our directors must be independent. Currently, 86% of our directors are independent, and each of our Audit, Compensation, Nominating and Corporate Governance, and Corporate Relations committees consist entirely of independent directors.

p. 15

Skills and Qualifications

 

The composition of our Board represents broad perspectives, skills, experiences, and knowledge relevant to our business.

 

18

Lead Independent Director

Our Corporate Governance Guidelines require a Lead Independent Director position with specific responsibilities to ensure independent oversight of management whenever our CEO is also the Chair of the Board.

13

Annual Management Succession
Planning Review

 

Our Board conducts an annual review of management development and succession planning.

 

13

Director Tenure Policies

Our director tenure policy requires a director to retire at the annual meeting of shareholders following the director’s 74th birthday. In addition, a director is required to submit an offer of resignation for consideration by the Board upon any significant change in the director’s principal employment or responsibilities.

19

Director Overboarding Policy

 

We have a policy to help provide confidence that our directors are not overextended. Our director overboarding policy requires a director to submit an offer of resignation for consideration by the Board if the director becomes overboarded. Any director who is not serving as CEO of a public company is expected to serve on no more than four public company boards (including our Board), and any director serving as a CEO of a public company (including our CEO) is expected to serve on no more than two public company boards (which includes our Board).

   

SHAREHOLDER RIGHTS

Annual Election of Directors

 

All directors are elected annually, which reinforces our Board’s accountability to shareholders.

   

Majority Voting Standard for
Director Elections

Our By-Laws mandate that directors be elected under a “majority voting” standard in uncontested elections. Each director must receive more votes “For” his or her election than votes “Against” in order to be elected.

Director Resignation Policy

 

An incumbent director who is not re-elected must promptly offer to resign. The Nominating and Corporate Governance Committee will make a recommendation on the offer and the Board must accept or reject the offer and publicly disclose its decision and rationale.

   
Single Voting Class

Corning common stock is the only class of voting shares outstanding.

No Poison Pill

We do not have a poison pill.


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General Information About Corporate Governance and the Board of Directors


Board Leadership Structure

We do not have an express policy as to whether the roles of Chair of the Board and Chief Executive Officer (CEO) should be combined or separated. Instead, our Board, through our Nominating and Corporate Governance Committee, annually assesses its leadership structure and determines which leadership structure best serves the interests of Corning based on the circumstances. However, if the Chair and CEO roles are combined, our Corporate Governance Guidelines require that we have a Lead Independent Director to complement the Chair’s role, and to serve as the principal liaison between the non-management directors and the Chair.

Currently, our Chair and CEO roles are combined. In February 2015, as part of our annual review and assessment of our leadership structure, corporate governance and succession planning, the Board determined that the current leadership structure is working well, as it facilitates effective communication, oversight and governance of the Company while allowing independent decision-making as appropriate. We believe that having Mr. Weeks serve as Chair and CEO demonstrates to our investors, employees, suppliers, customers and other stakeholders that the Company is under strong leadership, with a single person setting the tone and having primary responsibility for managing our operations.

The Board believes that the current leadership structure – under which five of the six Board committees are chaired by independent directors, and our Lead Independent Director assumes certain responsibilities on behalf of the independent directors – remains the optimal board leadership structure for the Company and our shareholders.

As recently announced, Richard T. Clark was re-elected effective February 5, 2015, to the role of Lead Independent Director of the Board by the independent directors.


Lead Independent Director

Our Lead Independent Director is elected annually by the independent, non-management directors.

The Lead Independent Director’s regular duties include:

approving Board meeting agendas;
in consultation with the Chair and the independent directors, approving Board meeting schedules to ensure there is sufficient time for discussion of all agenda items;
approving the type of information to be provided to directors for Board meetings;
presiding at all meetings at which the Chair is not present including executive sessions of the independent directors (which are held after every Board meeting) and apprising the Chair of the issues considered;
serving as liaison between the Chair and the independent directors;
making himself available for consultation and direct communication with the Company’s shareholders;
calling meetings of the independent directors when necessary and appropriate; and
performing such other duties as the Board may from time to time designate.

Our current Lead Independent Director, Richard T. Clark, performs the following additional duties:

regularly meets with the CEO after regularly scheduled Board meetings to provide feedback on the independent directors’ deliberations; and
regularly speaks with the CEO in between Board meetings to discuss matters of concern, often following consultation with other independent directors.


Management Succession Planning

One of the primary responsibilities of the Board is to ensure that Corning has a high-performing management team in place. On an annual basis, the Board conducts a detailed review of management development and succession planning activities to maximize the pool of internal candidates who can assume top management positions without undue interruption.


Risk Oversight

Corning has a comprehensive risk management program that engages the Company’s management and Board. The Company uses an Enterprise Risk Management program (ERM) modeled on the COSO II framework. (The Committee of Sponsoring Organizations (COSO) provides thought leadership and guidance on internal controls, enterprise risk management and fraud deterrence. The COSO II internal control framework was released in May 2013). The program utilizes (1) a Risk Council composed of Corning management and staff to aggregate, prioritize and assess risks including financial, operational, business, reputational, governance and managerial risks; and (2) a Compliance Council, which reviews the Company’s compliance with laws and regulations of the countries in which we conduct business. Management provides reports on the Company’s ERM process and its top risks periodically to the Audit, Finance and Corporate Relations Committees, as well as annually to the Board. The Compliance Council reports directly to each of the Audit Committee and Corporate Relations Committee.

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General Information About Corporate Governance and the Board of Directors


Additionally, the full Board provides risk oversight through its review of: potential risks which could negatively impact the proposed budget and plan; the Company’s strategic framework and any risks that may negatively impact it; the proposed rationale and risks involved in significant investment or divestiture actions by the Company; and the Company’s current research and development projects and associated risks related to such projects. The full Board also engages in periodic discussions regarding risks with our CEO, chief financial officer, general counsel, chief compliance officer, and other company officers, as it deems appropriate.

The Board’s risk oversight also occurs by Board Committees, as described above and in each Committee’s charter. You can review our Committee Charters on our website at http://www.corning.com/investor_relations/corporate_governance/board_committees_charters.aspx.


Committees

The Board has the following Committees and Committee composition as of the date of this proxy statement.

Committee    Primary Responsibilities    Number of
Meetings in 2014
Audit(1) Assists the Board of Directors in its oversight of (i) the integrity of Corning’s financial statements, (ii) the independent registered public accounting firm, and (iii) Corning’s compliance with legal and regulatory requirements; 10
Approves the appointment of Corning’s independent registered public accounting firm;
Reviews the effectiveness of Corning’s internal control over financial reporting, including disclosure controls;  
  Reviews the quarterly and annual financial statements;  
Discusses company policies with respect to risk assessment and risk management;
Oversees the independent registered public accounting firm’s qualifications, independence and performance;
Reviews the results of Corning’s annual audit; and
Determines the appropriateness of fees for the independent registered public accounting firm.
Compensation(2) Reviews Corning’s goals and objectives with respect to executive compensation; 7
Evaluates the CEO’s performance in light of Corning’s goals and objectives;
Determines and approves compensation for the CEO and other officers of Corning;
  Reviews and approves employment, severance and change in control agreements for the CEO and other officers of Corning;
Recommends to the Board the compensation arrangements with respect to non-management directors;
Oversees Corning’s equity compensation plans; and
  Makes recommendations to the Board regarding non-equity incentive and equity incentive plans.
Corporate
Relations
Focuses on the areas of employment policy, public policy, external communications and community relations in the context of the business strategy of Corning.   5
Executive Serves primarily as a means of taking action requiring Board approval between regularly scheduled meetings of the Board. The Executive Committee is authorized to act for the full Board on matters other than those specifically reserved by New York law to the Board. 5
Finance

Monitors present and future capital requirements of Corning;

6

Reviews all potential material transactions, including mergers, acquisitions, divestitures and investments in third parties;

Reviews capital expenditure plans and capital projects;

Monitors Corning’s cash management plans and activities;

Reviews Corning’s tax position and strategy;

Reviews and recommends for approval by the Board Corning’s dividend policy, declaration of dividends, stock repurchases, and short and long term financing transactions;

Reviews strategies for managing financial, economic and hazard risks including hedging strategies, insurance programs and other risk management processes;

Reviews and monitors Corning’s credit rating;

Reviews funding actions for Corning’s pension programs; and

Reviews Corning’s financial plans and other financial information that Corning uses in its analysis of internal decisions.


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General Information About Corporate Governance and the Board of Directors


Committee    Primary Responsibilities    Number of
Meetings in 2014
Nominating
and Corporate
Governance

Identifies individuals qualified to become Board members and reviews candidates recommended by shareholders, and recommends to the Board director nominees to be proposed for election at the annual meeting of shareholders;

5
 
 

Determines the criteria for selecting director nominees;

Monitors significant developments in the regulation and practice of corporate governance;

Develops and recommends to the Board corporate governance guidelines;

Assists the Board in assessing the independence of directors;

Identifies Board members to be assigned to the various committees;
Oversees and assists the Board in the review of the Board’s performance;
Reviews transactions between Corning and related persons that are required to be disclosed in our filings with the SEC; and
Reviews activities of Board members and senior executives for potential conflicts of interest.
(1) The Board of Directors has determined that all members of the Audit Committee satisfy the applicable audit committee independence requirements of the New York Stock Exchange (NYSE) and the Securities and Exchange Commission (SEC). The Board also determined that Mr. Landgraf, Mr. Blair and Dr. Wrighton have acquired the attributes necessary to qualify them as “audit committee financial experts” as defined by applicable SEC rules.
(2) The Board of Directors has determined that all members of the Compensation Committee satisfy the applicable compensation committee independence requirements of the NYSE and the SEC.


Board and Shareholder Meeting Attendance

The Board of Directors met seven times during 2014. Each incumbent director attended at least 75% of the meetings of the Board and standing Committees on which the director served during 2014, with the exception of Mr. Clark, whose attendance fell slightly below the 75% threshold as a result of meetings missed due to the illness and death of a family member. Despite his unavoidable absence, Mr. Clark continued to perform the lead independent director responsibilities, while another independent director chaired the executive sessions of independent directors.

All of our then-serving directors attended our 2014 Annual Meeting of Shareholders. The Board has a policy requiring all directors to attend all Annual Meetings of Shareholders, absent extraordinary circumstances.



Director Independence and Transactions Considered in Independence Determinations

Independent oversight bolsters our success. Our Board has determined that each of our non-employee directors qualifies as “independent” in accordance with the listing requirements of the New York Stock Exchange (NYSE), applicable U.S. Securities and Exchange Commission (SEC) rules and the Company’s director qualification standards.

Of our 14 directors, 86% are independent. Mr. Flaws and Mr. Weeks are not independent because they are executive officers of Corning. Previously, the Board concluded that under the NYSE listing requirements, Dr. Burns could not be considered independent until three years following her retirement as an executive officer of Dow Corning Corporation, an independently managed company in which Corning holds an equity interest but is not controlled by Corning, nor consolidated in our financial statements. Dow Corning is not a subsidiary of Corning. Dr. Burns retired from Dow Corning in December 2011, and has had no ongoing professional relationship with the company. In its February 2015 review, the Board determined that Dr. Burns qualifies as “independent” under the NYSE listing requirements, applicable SEC rules, and the Company’s director qualification standards.

The NYSE listing requirements state that no director may be qualified as “independent” unless our Board affirmatively determines that the director has no material relationship with Corning. The Board considers all relevant facts and circumstances when making independence determinations, including application of the following NYSE criteria, any of which would bar a director from being determined to be “independent”:

the director or an immediate family member is, or has been within the last three years, an executive officer of Corning;
the director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from Corning, other than director and committee fees and pension or other forms of deferred compensation for prior service;
the director or an immediate family member is a current partner or employee of a firm that is Corning’s internal or external auditor (and in the case of the family member, such person personally works on Corning’s audit), or at any time during the past three years the director or the family member was a partner or employee of such firm and personally worked on Corning’s audit;

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General Information About Corporate Governance and the Board of Directors


the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of Corning’s present executive officers at the same time serve or served on that company’s compensation committee; and
the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, Corning for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues.

In addition, in accordance with NYSE listing requirements, in determining the independence of any director who will serve on the Compensation Committee, our Board considers all factors specifically relevant to determining whether a director has a relationship with Corning that is material to that director’s ability to be independent from management in connection with fulfilling his or her duties as a Compensation Committee member, including but not limited to the source of compensation of such director, including any consulting, advisory or other compensatory fees paid by Corning to the director, and whether such director is affiliated with Corning or any of its subsidiaries or affiliates.

Further, directors who serve on the Audit Committee each must satisfy standards established by the SEC which provide that to qualify as “independent” for purposes of committee membership, audit committee members may not accept directly or indirectly any consulting, advisory or other compensatory fees from the Company other than their director compensation, and they may not be affiliates of Corning.

Our Corporate Governance Guidelines require the Board to make an annual determination regarding the independence of each of our directors. In making its independence determinations, the Board considered transactions that occurred since the beginning of 2012 between Corning and entities associated with our independent directors or members of their immediate family.

In making director independence determinations, the Board reviewed and discussed information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to Corning and Corning’s management. The Board’s independence determinations included reviewing the following:

Mr. Cummings is an employee of JPMorgan Chase & Co. (JPM). He is not a JPM Section 16 executive under the SEC rules. JPM and its affiliates provide various investment banking services including underwriting, commercial lending, banking, and other financial advisory services, including provision of credit facilities to Corning and its affiliates. Corning has had a relationship with JPM for many years prior to both Mr. Cummings’ service as a director to the Company and his employment with JPM. Mr. Cummings is precluded from participating in the services provided by JPM to Corning or the fees Corning pays to JPM. He has no involvement in Corning’s decision as to what services JPM provides to the Company. Mr. Cummings has no personal interest in, nor does he receive any personal benefit from Corning’s business relationship with JPM. Corning’s payments to JPM and its affiliates for these services constituted less than the greater of $1 million, or 2% of JPM’s consolidated gross revenues in each of the last three years. Additionally, Mr. Cummings is a non-management director of W.R. Grace & Co. (WRG). WRG conducts business in the ordinary course as a supplier or purchaser of goods or services with Corning and Dow Corning Corporation. During the previous three years, payments to or from each of these entities constituted less than the greater of $1 million, or 2% of such entities’ consolidated gross revenues in each of those years.
Each of Mr. Canning, Mr. Clark, Mr. Martin, Mr. Tookes, Ms. Henretta and Drs. Burns, Huttenlocher and Wrighton is or was, during the previous three years, a non-management director or employee of a company or organization that did business with Corning at some time during those years. The business relationships were ordinary course dealings, and no Corning director had a personal interest in, or received a personal benefit from, such relationships. Payments or contributions to or from each of these entities constituted less than the greater of $1 million, or 2% of such entities’ consolidated gross revenues in each of those years.

In determining that each of the relationships set forth above are not material, the Board considered the following additional facts: that such relationships arise only from such director’s position as an employee or director of the relevant company with which Corning does business; that such director has no direct or indirect material interest in any of the transactions; that such director had no role or financial interest in any decisions about any of these transactions; and that such a relationship would not bar independence under the NYSE listing requirements, applicable SEC rules or Corning’s director qualification standards.

Based on all of the relevant facts and circumstances, the Board concluded that none of the director relationships mentioned above constituted a material relationship with Corning that represents a potential conflict of interest, or otherwise interferes with the exercise by any of these directors of his or her independent judgment with respect to Corning.



Policy on Transactions with Related Persons

The Board of Directors has adopted a written policy requiring that any transaction: (a) involving Corning; (b) in which one of our directors, nominees for director, executive officers, or greater than 5% shareholders, or their immediate family members, have a direct or indirect material interest; and (c) where the amount involved exceeds $120,000 in any fiscal year, be approved or ratified by a majority of independent directors of the full Board or by a designated committee of the Board. The Board has designated the Nominating and Corporate Governance Committee with responsibility for reviewing and approving any such transactions.

In determining whether to approve or ratify any such transaction, the independent directors or relevant committee must consider, in addition to other factors deemed appropriate, whether the transaction is on terms no less favorable to Corning than those involving unrelated parties. No director may participate in any review, approval or ratification of any transaction if he or she, or his or her immediate family member, has a direct or indirect material interest in the transaction.

We did not have any transactions requiring review and approval in accordance with this policy during 2014.

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Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee is now, or was during 2014, an officer or employee of the Company. No member of the Compensation Committee had any relationship with the Company or any of its subsidiaries during 2014 pursuant to which disclosure would be required under applicable rules of the SEC pertaining to the disclosure of transactions with related persons. None of the executive officers of the Company currently serves or served during 2014 on the board of directors or compensation committee of another company at any time during which an executive officer of such other company served on Corning’s Board of Directors or Compensation Committee.



Other Matters

Corning is headquartered in a small community in upstate New York. Throughout its history, the Company has routinely made contributions to civic, educational, charitable, cultural and other institutions that improve the quality of life and increase the resources of the surrounding community, making it more attractive to employees. In a small community, inevitably employees, including executives and their spouses, have relationships with the non-profit organizations that receive such contributions from the Company. The company’s philanthropic activities are done both directly and indirectly through its philanthropic arm – The Corning Incorporated Foundation (the Foundation).

Corning makes annual contributions to the Foundation. We believe in being an active corporate citizen and the Foundation directs its efforts toward the communities where Corning Incorporated operates, promoting educational and social progress that improves the quality of life for all. Grant activity is aimed at five areas: education, culture, community, health and human services and disaster relief. In 2014, Corning donated $6 million to the Foundation. During the year, the Foundation disbursed approximately $5.6 million of which over 60% was directed toward public education institutions including the Corning Painted Post Area School District and Corning Community College.

Corning’s direct giving includes annual contributions to various cultural and educational institutions locally in Corning, New York, and internationally. Locally, the Corning Museum of Glass (CMoG) – the world’s leading glass museum – is the largest benefactor of support from Corning. Wendell P. Weeks (chairman, CEO and president), James B. Flaws (vice chairman and CFO), David Morse (executive vice president and chief technology officer), Jeffrey W. Evenson (senior vice president and operations chief of staff), and Mark S. Rogus (senior vice president and treasurer) serve on the CMoG board of trustees. In 2014, Corning provided cash and non-cash contributions of services to CMoG of approximately $32 million. Corning has provided approximately $109 million for expansion and improvement of facilities used by CMoG and owned by Corning. The expansion and construction is expected to be completed in early 2015.

Corning has provided financial support to the Alternative School for Math and Science (ASMS), a private middle school located in Corning, New York, with an advanced curriculum focusing on science and math, since its formation in 2004. Currently, children of Corning employees represent approximately 50% of its enrollment. In 2014, non-cash contributions totaled approximately $1.3 million and cash contributions totaled $288,000. Mark S. Rogus (senior vice president and treasurer), Christine M. Pambianchi, (senior vice president, Human Resources), and Kim Frock Weeks (spouse of Wendell P. Weeks, our chairman, CEO and president) serve on the ASMS board of trustees. Ms. Frock Weeks also serves as administrative head of school at ASMS, but receives no salary or benefits in this role. Corning will likely make additional contributions to ASMS in the future. Corning also provides financial support for educational institutions internationally. In 2014, Corning Precision Materials donated approximately $5 million to support a local K-12 school in Asan, South Korea.



Ethics and Conduct

We are committed to conducting business lawfully and ethically. All of our directors and NEOs, like all Corning employees, are required to act at all times with honesty and integrity. Our Code of Conduct covers areas of professional conduct, including conflicts of interest, the protection of corporate opportunities and assets, employment policies, non-discrimination policies, confidentiality, vendor standards and intellectual property, and requires strict adherence to all laws and regulations applicable to our business. Our Code of Conduct also describes the means by which any employee can provide an anonymous report of an actual or apparent violation of our Code of Conduct.

We will disclose any future amendments to, or waivers from, any provision of our Code of Conduct involving our directors, our principal executive officer, principal financial officer, principal accounting officer, controller or other persons performing similar functions on our website within four business days following the date of any such amendment or waiver. No such waivers were sought or granted in 2014.



Communications with Directors

Shareholders and interested parties may communicate concerns to any director, committee member or the Board by writing to the following address: Corning Incorporated Board of Directors, Corning Incorporated, One Riverfront Plaza, Corning, New York 14831 Attention: Corporate Secretary. Please specify to whom your correspondence should be directed. The Corporate Secretary has been instructed by the Board to promptly forward all correspondence (except advertising, spam, junk mail and other mass mailings, product inquiries and suggestions, resumes, surveys or any unduly hostile, threatening or illegal materials) to the relevant director, committee member or the full Board, as indicated in the correspondence.

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Board of Directors Qualifications and Experience

Our Board is composed of accomplished professionals with diverse areas of expertise including, leadership, finance and investing, industry experience, technology, research and development, innovation, commercial, international business, operations, government, higher education, science, marketing, manufacturing, management, and entrepreneurship. We believe that the broad range of skills, knowledge, opinions and fields of expertise represented on our Board is one of its core strengths.

We believe our directors’ wide range of professional experiences and backgrounds, education and skills has proved to be of significant value to the Company, and we intend to continue leveraging this strength.

The following table describes key characteristics of our business and experiences of our Board.

Key Competencies
Leadership
Industry Experience
Financial, Investment, and/or Banking Experience
Technology, R&D, Innovation and/or Entrepreneurial/Commercial
Experience
International Experience
Academia, Law, Government, Politics or Regulatory Experience
Other Factors
Independent Director
Audit Committee “Financial Expert” per the SEC rules
Total Public Company Boards (including Corning) 1 3 2 2 3 1 1 1 2 1 1 4 2 3
Board Committees*
Audit C
Compensation C
Corporate Relations C
Executive C
Finance C
Nominating and Corporate Governance C

*     Committee membership as of February 5, 2015; “C” denotes the Chair of the committee.

Leadership. These directors have CEO or other senior officer experience, and a demonstrated record of leadership qualities, which includes a practical understanding of organizations, processes, strategy, risk and risk management and methods to drive change and growth.

Industry Experience. These directors have experience in or directly relevant to our major businesses, which fosters active participation in, the development and implementation of our operating plan and business strategy. They have valuable perspectives on issues specific to the Company’s business.

Financial, Investment, and/or Banking Experience. These directors posess an acute understanding of finance and financial reporting processes. Accurate financial reporting and robust auditing are critical to the Company’s success.

Technology, R&D, Innovation and/or Entrepreneurial/Commercial Experience. These directors provide valuable perspectives on developing and investing in new technologies, skills critical to Corning as a science, technology, and innovation company.

International Experience. Corning’s future success depends, in part, on our success in growing our businesses outside the United States. Our directors with global business or international experience provide valued perspective on our operations.

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Proposal 1 Election of Directors


Academia, Law, Government, Politics or Regulatory Experience. These directors have strong critical thinking and verbal communications skills as well as diversity of views. Legal, government and regulatory experience is relevant to the Company as industry regulations can be critical to the financial welfare and growth of the various businesses.

In addition, our Board’s composition represents a balanced approach to director tenure, allowing the Board to benefit from the experience of longer-serving directors combined with fresh perspectives from newer directors:

Tenure on Board Number of
Director Nominees
More than 10 years 4
5 to 10 years 3
Less than 5 years 7


Board Nomination and Renewal Process

The Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become Board members and making recommendations on director nominees to the full Board. When identifying and selecting director nominees, the Nominating and Corporate Governance Committee considers the impact a nominee would have on the Board’s balance of professional experience, background, viewpoints, skills and areas of expertise. Additionally, the Committee considers input from the Board’s self-evaluation process to identify the backgrounds or skill sets that are desired and future needs of the Board in light of anticipated director retirements under our Board tenure policies – recognizing that the appropriate mix of director competencies and experiences evolves over time. We believe that our diverse mix of directors allows the Board to engage in candid and challenging discussions, in service of the best decisions for the Company and its shareholders. The Nominating and Corporate Governance Committee also considers diversity of race, gender and national origin of potential director candidates.

The Board maintains the following tenure policies (contained in our Corporate Governance Guidelines) as a means of ensuring that the Board is regularly renewed with fresh perspectives:

Tenure Policies
Mandatory Retirement      Directors must retire at the annual meeting of shareholders following the director’s 74th birthday
Change in Principal Employment      Directors must offer to resign upon any significant change in principal employment or responsibilities

We had the following changes in our Board since our 2014 Annual Meeting:

Departures Additions
John Seely Brown - Resigned in April 2014 due to meeting the mandatory retirement age Donald W. Blair - Appointed in July 2014; identified by independent search firm;  brings substantial financial and international expertise
  Daniel P. Huttenlocher - Appointed in February 2015; identified by independent search firm; brings extensive experience in technology innovation and commercialization

The Nominating and Corporate Governance Committee has retained an independent search firm to assist in identifying director candidates, and will also consider recommendations from shareholders. If you wish to nominate a candidate, please forward the candidate’s name and a detailed description of the candidate’s qualifications, skills and experience, a document indicating the candidate’s willingness to serve and evidence of the nominating shareholder’s ownership of Corning’s shares to: Corporate Secretary, Corning Incorporated, One Riverfront Plaza, Corning, New York 14831. A shareholder wishing to nominate a candidate must also comply with the notice requirements described on page 65.

The Board does not have a specific policy regarding consideration of gender, ethnic or other diversity criteria in identifying director candidates; however, the Board has had a longstanding commitment to, and practice of, maintaining diverse representation on the Board.

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2015 Nominees for Director

After considering the recommendations of the Nominating and Corporate Governance Committee, the Board has set the number of directors at 14 and nominated the persons described below to stand for election. Each of Messrs. Canning, Clark, Cummings, Flaws, Landgraf, Martin, Tookes and Weeks, Drs. Burns, Rieman and Wrighton, and Ms. Henretta were elected by Corning’s shareholders at the 2014 Annual Meeting. Mr. Blair and Dr. Huttenlocher were appointed by Corning’s Board of Directors on July 15, 2014 and February 3, 2015, respectively. All of the nominees have consented to being named in this proxy statement and to serve as director if elected. The Board believes that each of these nominees is qualified to serve as a director of Corning and the skills and qualifications of each nominee that were considered by the Board are included with the nominee’s biographical information. Equally important, the Board believes that the combination of backgrounds, skills and experiences has produced a Board that is well-equipped to exercise oversight responsibilities for Corning’s shareholders and other stakeholders.

Our Board unanimously recommends that shareholders vote FOR all of our director nominees.

If elected by our shareholders, the 14 director nominees will serve for a one-year term expiring at our 2016 Annual Meeting of Shareholders. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal.

All of our director nominees are currently members of our Board. Each has been recommended for election by our Nominating and Corporate Governance Committee and approved and nominated for election by our Board.

Below is biographical information about our director nominees. This information is current as of March 1, 2015, and has been confirmed by each of our director nominees for inclusion in our proxy statement.

Donald W. Blair

   Age: 57
Director Since: 2014
Executive Vice
President and
Chief Financial
Officer, NIKE, Inc.
     

Skills and Qualifications:

Expertise in finance and management

Executive leadership experience

Experience in international business and finance

     

Committees:

Audit

Finance

Current Public Company Directorships:

None

Public Company Directorships Held During the Past 5 Years:

None

 

Mr. Blair was elected executive vice president and chief financial officer of NIKE, Inc. in 1999. Prior to joining NIKE, he served 15 years at PepsiCo, Inc. in a number of senior executive-level corporate and operating unit financial assignments, including chief financial officer roles for PepsiCo Japan (based in Tokyo) and Pepsi-Cola International’s Asia Division (based in Hong Kong). He began his career in 1981 as an accountant with Deloitte Haskins & Sells.

Mr. Blair brings 34 years of financial expertise and management experience at the international, operational, and corporate levels. He also has proven experience in developing and implementing strategies for delivering sustainable, profitable growth. Mr. Blair’s financial expertise and audit experience are valuable assets to our Finance and Audit committees.

 

Stephanie A. Burns

Age: 60
Director Since: 2012
Retired Chairman and
Chief Executive Officer
Dow Corning Corporation

Skills and Qualifications:

Global innovation and business leadership experience

Significant expertise in scientific research, issues management, science and technology leadership and business management

Committees:

Audit

Corporate Relations

Current Public Company Directorships:

GlaxoSmithKline plc.

Kellogg Company

Public Company Directorships Held During the Past 5 Years:

None

 

Dr. Burns has nearly 32 years of global innovation and business leadership experience. Dr. Burns joined Dow Corning in 1983 as a researcher and specialist in organosilicon chemistry. In 1994, she became the company’s first director of women’s health. She was elected to the Dow Corning Board of Directors in 2001 and elected as president in 2003. She served as chief executive officer from 2004 until May 2011 and served as chair from 2006 through 2011.

Dr. Burns brings significant expertise in scientific research, issues management, science and technology leadership and business management to the Board, as well as skills related to her Ph.D. in organic chemistry. She is the past honorary president of the Society of Chemical Industry and was appointed by President Obama to the President’s Export Council. Dr. Burns is a former chair of the American Chemistry Council.


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Proposal 1 Election of Directors


John A. Canning, Jr.

  

Age: 70
Director Since: 2010
Chairman
Madison Dearborn
Partners, LLC

     

Skills and Qualifications:

Experience in private equity investing, including reviewing financial statements and audit results and making investment and acquisition decisions

Has insight into economic trends important to our business

Law degree

Experience in banking and managing investments

     

Committees:

Executive

Finance

Nominating and Corporate Governance

Current Public Company Directorships:

Exelon Corporation

Public Company Directorships Held During the Past 5 Years:

None

 

Mr. Canning co-founded Madison Dearborn Partners, LLC in 1992, serving as its chief executive officer until he became chairman in 2007. He previously spent 24 years with First Chicago Corporation, most recently as executive vice president of The First National Bank of Chicago and president of First Chicago Venture Capital. Mr. Canning is trustee and chairman of several Chicago-area non-profit organizations. He is a former commissioner of the Irish Reserve Fund and a former director and chairman of the Federal Reserve Bank of Chicago.

Mr. Canning brings 34 years of experience in private equity investing, including reviewing financial statements and audit results and making investment and acquisition decisions. As a former director and chairman of the Federal Reserve Bank of Chicago, he has insight into economic trends important to our business. In addition to his business experience, he also has a law degree and is a recognized leader in the Chicago business community. Mr. Canning’s experience in banking and managing investments make him a valued member of our Finance Committee.

 

Richard T. Clark

Age: 69
Director Since: 2011
Retired Chairman,
President and Chief
Executive Officer
Merck & Co., Inc.

Skills and Qualifications:

Broad managerial expertise, operational expertise and deep business knowledge

Extensive experience in the issues facing public companies and multinational businesses

Committees:

Compensation

Executive

Nominating and Corporate Governance

Current Public Company Directorships:

ADP, LLC

Public Company Directorships Held During the Past 5 Years:

Merck & Co., Inc.

 

Mr. Clark joined Merck in 1972 and held a broad range of senior management positions. He became president and chief executive officer of Merck in May 2005 and chairman of the board in April 2007. He transitioned from the chief executive officer role in January 2011 and served as Merck board chairman through November 2011. He was president of the Merck Manufacturing Division (June 2003 to May 2005) of Merck Sharp & Dohme Corp. (formerly known as Merck & Co., Inc.) He serves on the advisory board of American Securities LLC, a private equity firm. He is chairman of the board of Project Hope and a trustee of several charitable non-profit organizations.

As the former chairman, president and chief executive officer of a Fortune 100 company, Mr. Clark brings broad managerial expertise, operational expertise and deep business knowledge, as well as a track record of achievement.

 

Robert F. Cummings, Jr.

Age: 65
Director Since: 2006
Vice Chairman of
Investment Banking
JPMorgan Chase & Co.

Skills and Qualifications:

Extensive investment banking experience including finance, business development and mergers and acquisitions

Knowledge in the areas of technology, telecommunications, private equity and real estate

Committees:

Executive

Finance

Nominating and Corporate Governance

Current Public Company Directorships:

Viasystems Group, Inc.

W. R. Grace & Co.

Public Company Directorships Held During the Past 5 Years:

None

 

Mr. Cummings was appointed vice chairman of Investment Banking at JPMorgan Chase & Co. in December 2010, where he advises on client opportunities across sectors and industry groups. Mr. Cummings began his business career in the investment banking division of Goldman, Sachs & Co. in 1973 and was a partner of the firm from 1986 until his retirement in 1998. He served as an advisory director at Goldman Sachs until 2002.

Mr. Cummings’ Board qualifications include more than 30 years of investment banking experience at Goldman Sachs and JPM, where he advised corporate clients on financings, business development, mergers, and acquisitions and other strategic financial issues. Additionally, he brings knowledge in the areas of technology, telecommunications, private equity, and real estate to the Board.


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James B. Flaws

   Age: 66
Director Since: 2000
Vice Chairman and Chief
Financial Officer
Corning Incorporated
     

Skills and Qualifications:

Managerial experience in control, financial, treasury and business development functions

Broad experience in financial, investor relations and supervisory roles

Deep experience with and understanding of Corning’s business

     

Committees:

Executive

Finance

Current Public Company Directorships:

None

Public Company Directorships Held During the Past 5 Years:

None

 

Mr. Flaws joined Corning in 1973 and served in a variety of controller and business management positions. He was elected assistant treasurer of Corning in 1993; vice president and controller in 1997 and vice president of finance and treasurer in May 1997; senior vice president and chief financial officer in December 1997; executive vice president and chief financial officer in 1999; and to his current position in 2002. Mr. Flaws is a director of Dow Corning Corporation.

Since joining in 1973, Mr. Flaws has held a wide range of management positions across Corning’s control, financial, treasury, and business development functions in specific line business units, as well as at corporate-wide levels. As a result of his diverse responsibilities over more than 40 years, he has very broad experience in many financial, investor relations, and supervisory roles within the company, including leading the spinoff of Corning’s health care businesses into two separate publicly traded companies in 1996 and overseeing many mergers and acquisitions by the company. Mr. Flaws played an important role in Corning’s recovery from the impact of the telecom industry collapse in 2002. Mr. Flaws led the process for Corning’s acquisition of Samsung Corning Precision Materials in 2013.

 

Deborah A. Henretta

Age: 53
Director Since: 2013
Group President of
Global E-Business,
Procter & Gamble

Skills and Qualifications:

Significant experience in business leadership and operations, P&L responsibility

Skilled in brand building, marketing and emerging market management

Committees:

Audit

Corporate Relations

Current Public Company Directorships:

None

Public Company Directorships Held During the Past 5 Years:

None

 

Ms. Henretta has 30 years of business leadership experience across both developed and developing markets, as well as expertise in brand building/ marketing, philanthropic program development and government relations. She joined Procter & Gamble (P&G) in 1985. In 2005, she was appointed President of P&G’s business in ASEAN, Australia and India. She was appointed group president, P&G Asia in 2007 and group president of P&G Global Beauty Sector in June 2013. In February 2015, she was appointed group president of P&G E-Business.

Ms. Henretta was a member of Singapore’s Economic Development Board (EDB) from 2007 to 2013. She contributed to the growth strategies for Singapore, and was selected to serve on the EDB’s Economic Strategies Committee between 2009 and 2011. In 2008, she received a U.S. State Department appointment to the Asia-Pacific Economic Cooperation’s Business Advisory Council. In 2011, she was appointed chair of this 21-economy council, becoming the first woman to hold the position. In that role, she advised top government officials, including President Barack Obama and former Secretary of State Hillary Clinton. Ms. Henretta currently serves on the Board of Trustees for Cincinnati Children’s Medical Center as well as on a number of university advisory committees, including those for her alma maters St. Bonaventure University School of Journalism and Syracuse University’s Newhouse School of Public Communications.


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Proposal 1 Election of Directors


Daniel P. Huttenlocher

   Age: 55
Director Since: 2015
Dean and Vice Provost,
Cornell University’s New
York City Tech Campus
     

Skills and Qualifications:

Experience in technology innovation and commercialization

Extensive experience as an international computer science researcher

Leadership experience

Investment experience

     

Committees:

Audit

Finance

Current Public Company Directorships:

None

Public Company Directorships Held During the Past 5 Years:

None

 

Dr. Huttenlocher has served as the dean and vice provost at Cornell University’s New York City Tech Campus since 2012. From 2001 to 2012, he held a variety of academic positions at Cornell, including dean of the Computing and Information Science Department and professor of Computer Science and Technology Management. Prior to joining Cornell, Dr. Huttenlocher served as chief technology officer at Intelligent Markets, Inc., and as a principal scientist at Xerox Palo Alto Research Center. He currently serves as a director on the board of trustees of the John D. and Catherine T. MacArthur Foundation where he is chair of the investment committee and is also a member of the budget and compensation committee and the nominating committee.

Dr. Huttenlocher holds a Ph.D. in computer science and a Master of Science degree in Electrical Engineering from the Massachusetts Institute of Technology and a Bachelor of Arts degree in Computer Science and Psychology from the University of Michigan. Dr. Huttenlocher brings to the board extensive experience in technology innovation and commercialization, and expertise in developing next-generation products and services.

 

Kurt M. Landgraf

Age: 68
Director Since:
2007
Retired President and Chief
Executive Officer
Educational Testing Service

Skills and Qualifications:

Extensive executive management experience in public companies, non-profit entities, higher education and government

Financial expertise

Operations skills and experience

Specialized knowledge including technology, transportation, education, pharmaceuticals, health care, energy, materials and mergers and acquisitions

Committees:

Audit

Compensation

Executive

Current Public Company Directorships:

Louisiana-Pacific Corporation

Public Company Directorships Held During the Past 5 Years:

None

 

Mr. Landgraf retired as president and chief executive officer of Educational Testing Service (ETS), a private non-profit educational testing and measurement organization, on December 31, 2013. Mr. Landgraf had served in that position since 2000. Prior to that, he was executive vice president and chief operating officer of E.I. Du Pont de Nemours and Company (DuPont), where he previously held a number of senior leadership positions, including chief financial officer.

Mr. Landgraf was selected for his wealth of executive management experience in public companies, non-profit entities, higher education, and government. He brings to the Board his financial expertise and operations skills and experience, represented by his positions at ETS and DuPont. Mr. Landgraf’s other areas of specialized knowledge include technology, transportation, education, finance, pharmaceuticals, health care, energy, materials, and mergers and acquisitions.


CORNING INCORPORATED - 2015 Proxy Statement     23



Table of Contents

Proposal 1 Election of Directors


Kevin J. Martin

   Age: 48
Director Since:
2013
Counsel
Squire Patton Boggs LLP
     

Skills and Qualifications:

Extensive knowledge of regulatory environment

Legal skills and expertise

Specialized knowledge of telecommunications and information technology industries

Experience in private equity investing

     

Committees:

Corporate Relations

Nominating and Corporate Governance

Current Public Company Directorships:

None

Public Company Directorships Held During the Past 5 Years:

None

 

Mr. Martin is counsel at Squire Patton Boggs LLP in the Washington law firm’s Technology and Communications practice.

Mr. Martin has nearly two decades experience as a lawyer and policymaker in the telecommunications field, including his tenure as chairman of the Federal Communications Commission (FCC) from March 2005 to January 2009. Before joining the FCC as a commissioner in 2001, Mr. Martin was a special assistant to the president for Economic Policy and served on the staff of the National Economic Council, focusing on commerce and technology policy issues. He also served as the official U.S. government representative to the G-8’s Digital Opportunity Task Force. In 2013, he was elected to the Board of Directors of Electronic Recyclers International, a private electronics recycler.

Mr. Martin brings deep experience to the board in the telecommunications, economics, governmental and legal arenas.

   

Deborah D. Rieman

Age: 65
Director Since:
1999
Executive Chairman
MetaMarkets Group

Skills and Qualifications:

Expertise in information technology, innovation and entrepreneurial endeavors

Ph.D. in mathematics

Experience in technology development, marketing, business development and support, investor relations and investing

Committees:

Audit

Compensation

Current Public Company Directorships:

None

Public Company Directorships Held During the Past 5 Years:

Keynote Systems

 

Dr. Rieman has more than 27 years of experience in the software industry. Currently, she is executive chairman of MetaMarkets Group. Previously, she was managing director of Equus Management Company, a private investment fund. From 1995 to 1999, she served as president and chief executive officer of Check Point Software Technologies, Incorporated. Dr. Rieman is a former director of Keynote Systems, Tumbleweed Communications Corp and Kintera Inc.

Dr. Rieman brings significant expertise in information technology, innovation and entrepreneurial endeavors to the Board and skills related to her Ph.D. in mathematics. She is also the former president and chief executive officer of a software company specializing in security and has experience in technology development, marketing, business development and support, investor relations and investing.

 

Hansel E. Tookes II

Age: 67
Director Since:
2001
Retired Chairman and Chief
Executive Officer
Raytheon Aircraft Company

Skills and Qualifications:

Extensive experience in operations, manufacturing, performance excellence, business development, technology-driven business environments and military and government contracting

Education, training and knowledge in science and engineering

Committees:

Compensation

Executive

Nominating and Corporate Governance

Current Public Company Directorships:

Ryder Systems Inc.

NextEra Energy, Inc.

Harris Corporation

Public Company Directorships Held During the Past 5 Years:

BBA Aviation plc.

 

Mr. Tookes retired from Raytheon Company in December 2002. He joined Raytheon in 1999 and served as president of Raytheon International, chairman and chief executive officer of Raytheon Aircraft and executive vice president of Raytheon Company. From 1980 to 1999, Mr. Tookes served United Technologies Corporation as president of Pratt and Whitney’s Large Military Engines Group and in a variety of other leadership positions.

Mr. Tookes provides extensive experience in operations, manufacturing, performance excellence, business development, technology-driven business environments, and military and government contracting. He also brings his science and engineering education, training and knowledge to the Board. Mr. Tookes’ industry expertise includes aviation, aerospace and defense, transportation and technology.

24     CORNING INCORPORATED - 2015 Proxy Statement



Table of Contents

Proposal 1 Election of Directors


Wendell P. Weeks

   Age: 55
Director Since:
2000
Chairman, Chief Executive
Officer and President
Corning Incorporated
     

Skills and Qualifications:

Wide range of experience including financial management, business development, commercial leadership, and general management

Experience in many of Corning’s businesses and technologies

Experience as chief executive officer

     

Committees:

Executive

Current Public Company Directorships:

Merck & Co., Inc.

Public Company Directorships Held During the Past 5 Years:

None

 

Mr. Weeks joined Corning in 1983. He was named vice president and general manager of the Optical Fiber business in 1996; senior vice president in 1997; senior vice president of Opto Electronics in 1998; executive vice president in 1999; and president, Corning Optical Communications in 2001. Mr. Weeks was named president and chief operating officer of Corning in 2002; president and chief executive officer in 2005; and chairman and chief executive officer on April 26, 2007. He added the title of president in December 2010.

Mr. Weeks brings deep and broad knowledge of the company based on his long career across a wide range of Corning’s staff groups and major businesses. Mr. Weeks has 31 years of Corning experience including financial management, business development, commercial leadership, and general management. His experiences in many of Corning’s businesses and technologies, and 10 years as chief executive officer, have given him a unique understanding of Corning’s diverse business operations and innovations.

 

Mark S. Wrighton

Age: 65
Director Since:
2009
Chancellor and Professor of
Chemistry,
Washington University in
St. Louis

Skills and Qualifications:

Expertise in materials and research interests in the areas of transition metal catalysis, photochemistry, surface chemistry, molecular electronics, and photoprocesses at electrodes

Executive leadership experience

Committees:

Audit

Finance

Current Public Company Directorships:

Cabot Corporation

Brooks Automation, Inc.

Public Company Directorships Held During the Past 5 Years:

None

 

Since 1995, Dr. Wrighton has been chancellor and professor of Chemistry at Washington University in St. Louis, a major research university. Before joining Washington University, he was a researcher and professor at the Massachusetts Institute of Technology, where he was head of the Department of Chemistry from 1987 to 1990, and then provost from 1990 to 1995. Dr. Wrighton served as a presidential appointee to the National Science Board from 2000 to 2006, and chaired that Board’s audit and oversight committee during that time. He also is a past chair of the Association of American Universities, The Business Higher Education Forum and the Consortium on Financing Higher Education, and continues as a member of these organizations. He was elected to membership in the American Academy of Arts and Sciences and the American Philosophical Society, and he is a Fellow of the American Association for the Advancement of Science.

Dr. Wrighton is a professor, chemist and research scientist with expertise in materials and research interests in the areas of transition metal catalysis, photochemistry, surface chemistry, molecular electronics, and in photoprocesses at electrodes. Under Chancellor Wrighton’s leadership, Washington University has grown significantly in academic stature, research enterprise, infrastructure, student quality, curriculum and international reputation. In addition to his executive leadership, Dr. Wrighton brings to the Board his vast scientific knowledge and understanding of complex research and development issues.


CORNING INCORPORATED - 2015 Proxy Statement     25



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Director Compensation


The Company uses a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board, as described below. Members of the Board who are employees of the Company are not compensated for service on the Board or any of its Committees.

Directors may elect to defer all or a portion of their cash compensation. Amounts deferred may be paid in cash or stock, as applicable, and while deferred may be allocated to (1) an account earning interest, compounded quarterly, at the rate equal to the prime rate of Citibank, N.A. at the end of each calendar quarter, (2) a restricted stock unit account, or (3) a combination of such accounts. At December 31, 2014, six directors had elected to defer compensation.


2014 Director Compensation

Annual Retainer          $60,000
Lead Independent Director Retainer

Lead Independent Director receives an additional retainer of $25,000 per year.

Committee Chair Retainer

Committee Chairs receive an additional retainer of $15,000 per year. Beginning in 2015, the annual retainer for the Audit Committee Chair will be $20,000.

Board and Committee Meeting Attendance

$1,750 for each Board meeting, committee meeting or special session attended. (Each two-day Board meeting typically consists of three Board sessions and two committee meetings for each director.)

Annual Equity Grants

Each non-employee director annually receives a form of long-term equity compensation approved by the Compensation Committee. Non-employee directors generally receive their awards at the February meeting. If, however, a non-employee director is appointed between the February meeting and December 31, then that director will receive his/her pro-rata award shortly after joining the Board.

   

In 2014, Corning issued 7,692 shares of restricted stock (with a grant date value of approximately $135,000) to each non-employee director under the 2010 Equity Plan for Non-Employee Directors. These restricted shares are subject to forfeiture and are not available for transfer or exercise until six months after the date of a director’s retirement or resignation.


In 2014, the directors below performed these roles:

Name Role During 2014
Dr. Burns Corporate Relations Chair
Mr. Clark Lead Independent Director
Mr. Cummings                      Finance Chair
Mr. Landgraf Audit Chair
Dr. Rieman Compensation Chair
Mr. Tookes Nominating and Corporate Governance Chair   

 

Non-employee directors are reimbursed for expenses (including costs of travel, food, and lodging) incurred in attending Board, committee, and shareholder meetings. While travel to such meetings may include the use of Company aircraft, if available or appropriate under the circumstances, the directors generally use commercial transportation or their own transportation. Directors are also reimbursed for reasonable expenses associated with certain other activities related to their role, including participation in director education programs.


Other

Corning has a Directors’ Charitable Giving Program pursuant to which a director may direct the Company to make a charitable bequest to one or more qualified charitable organizations recommended by such director and approved by Corning in the amount of $1,000,000 (employee directors) or $1,250,000 (non-employee directors) following his or her death. We fund this program by purchasing insurance policies on the lives of the directors. However, we are under no obligation to use the proceeds of the insurance policies to fund a director’s bequest and can elect to retain any proceeds from the policies as assets of Corning and use another source of funds to pay the directors’ bequests. In 2014, we paid a total of $18,627 in premiums and fees on such policies for our current directors. Because the charitable deductions and cash surrender value of life insurance policies accrue solely to Corning, the directors derive no financial benefit from the program, and we do not include these amounts in the directors’ compensation. Generally, one must be a director for five years to participate in the program. In 2014, Messrs. Cummings, Flaws, Landgraf, Tookes and Weeks and Drs. Brown, Rieman and Wrighton were eligible to participate in the program.

Directors are also eligible to participate in the Corning Foundation Matching Gift Program for eligible charitable organizations. This Program is available to all Corning employees. The maximum matching gift amount available from the Foundation for each participant in the Program is $7,500 in any calendar year.

Corning also pays premiums on directors’ and officers’ liability insurance policies covering directors.

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Director Compensation


2014 Director Compensation Table

 Name(1) Fees Earned or
Paid in Cash(2)
      Stock
Awards(3)
      All Other
Compensation(4)
      Total
 Donald W. Blair $ 69,500 $      61,882      $      7,500       $      138,882 
 John Seely Brown 46,250 44,998 0 91,248 
 Stephanie A. Burns 127,500 134,995 0 262,495 
 John A. Canning, Jr. 130,000 134,995 7,500 272,495 
 Richard T. Clark 135,750 134,995 7,500 278,245 
 Robert F. Cummings, Jr. 146,750 134,995 0 281,745 
 Deborah A. Henretta 130,000 134,995 0 264,995 
 Kurt M. Landgraf 157,250 134,995 1,000 293,245 
 Kevin J. Martin 124,750 134,995 0 259,745 
 Deborah D. Rieman 146,750 134,995 0 281,745 
 Hansel E. Tookes 148,500 134,995 0 283,495 
 Mark S. Wrighton 130,000 134,995 7,500 272,495 
(1) Mr. Blair joined the Board in July 2014. Dr. Brown retired from the Board in April 2014.
(2) Includes all fees and retainers paid or deferred pursuant to the Corning Incorporated Non-Employee Directors’ Deferred Compensation Plan.
(3) The amounts in this column reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards of restricted stock granted pursuant to the 2010 Equity Plan for Non-Employee Directors. Assumptions used in the calculation of these amounts are included in Note 19 to the Company’s audited financial statements for the fiscal year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 13, 2015. There can be no assurance that the grant date fair value amounts will ever be realized. The total number of award shares outstanding each Director had as of December 31, 2014 is shown in the table below. Total stock holdings for directors as of December 31, 2014 are shown in the “Beneficial Ownership of Directors and Officers” table.
(4) The amounts in this column reflect charitable donation matches made by Corning Foundation’s Matching Gift Program.

The following are the total number of award shares outstanding each Director had as of December 31, 2014:

 Name       Award Shares
Outstanding at
December 31, 2014
Options
Outstanding at
December 31, 2014(1)
 Donald W. Blair 2,836   0
 John Seely Brown 0       0
 Stephanie A. Burns 26,127 0
 John A. Canning, Jr. 34,743 1,323
 Richard T. Clark 27,555 0
 Robert F. Cummings, Jr. 50,279 11,872
 Deborah A. Henretta 11,558 0
 Kurt M. Landgraf 48,550 9,868
 Kevin J. Martin 17,099 0
 Deborah D. Rieman 85,206 14,888
 Hansel E. Tookes 72,456 14,888
 Mark S. Wrighton 43,906 6,775
(1) No options were granted to non-employee directors in 2014.

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Stock Ownership Information


Stock Ownership Guidelines

Stock ownership disclosed in this proxy statement includes shares directly or indirectly owned, and shares issuable or options exercisable that the person has the right to acquire within 60 days. We believe our stock ownership guidelines for our directors and executive officers are aligned with shareholders’ interests because the guidelines reflect equity that has economic exposure to both upside and downside risk.

All directors and named executive officers (NEOs) are expected to achieve the required levels of ownership under our stock ownership guidelines within five years of their election or appointment. All directors and NEOs who have been such for five years or more currently comply with our guidelines.

Directors CEO Other NEOs
5X Annual Cash Retainer 6X Base Salary 3X Base Salary


Beneficial Ownership of Directors and Officers

The following table shows, as of December 31, 2014, the number of shares of Corning common stock beneficially owned and the aggregate number of shares of common stock and common stock-based equity, including stock options and RSUs that will vest or become exercisable within 60 days, as applicable, held by each director and NEO; and all directors, Section 16 officers and NEOs as a group.

        Shares Directly or
Indirectly Owned(1)(2)(3)
        Stock Options
Exercisable
Within 60 Days
        Restricted
Share Units
Vesting Within
60 Days
        Total Shares
Beneficially
Owned
        Percent
of Class
     
 DIRECTORS  
 Donald W. Blair 2,863 0 0 2,863
 Stephanie A. Burns 26,127 0 2,363 28,490
 John A. Canning, Jr. 94,743 1,323 0 96,066
 Richard T. Clark 27,555 0 0 27,555
 Robert F. Cummings, Jr. 130,279 11,872 0 142,151
 Deborah A. Henretta 11,558 0 0 11,558
 Kurt M. Landgraf 48,550 9,868 0 58,418
 Kevin J. Martin 17,099 0 0 17,099
 Deborah D. Rieman 120,456 14,888 0 135,344
 Hansel E. Tookes II 82,456 14,888 0 97,344
 Mark S. Wrighton  44,906 6,775 0 51,681
 
 NAMED EXECUTIVE OFFICERS
 Wendell P. Weeks 715,640 (4) 1,619,847 127,989 2,463,476
 James B. Flaws 275,074 774,558 64,199 1,113,831
 James P. Clappin 38,106 352,550 29,026 419,682
 Lawrence D. McRae 88,627 376,260 36,484 501,371
 Kirk P. Gregg 158,429 528,813 36,569 723,811
 
 ALL DIRECTORS, SECTION 16 OFFICERS AND NEOS
 As a group (23 persons) 2,733,135 (5)(6) 5,066,680 418,954 7,612,177 0.61%
(1) Includes shares of common stock subject to forfeiture and restrictions on transfer, granted under Corning’s Incentive Stock Plans.
(2) Includes shares of common stock subject to forfeiture and restrictions on transfer, granted under Corning’s Restricted Stock Plans for non-employee directors.

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Stock Ownership Information


(3) Includes shares of common stock held by JPMorgan Chase & Co. as the trustee of Corning’s Investment Plans for the benefit of the members of the group, who may instruct the trustee as to the voting of such shares. If no instructions are received, the trustee votes the shares in the same proportion as it votes the shares for which instructions were received. The power to dispose of shares of common stock is also restricted by the provisions of the plans. The trustee holds for the benefit of Messrs. Weeks, Flaws, McRae, Clappin and Gregg all executive officers as a group the equivalent of 11,471; 0; 6,148; 2,109; 0; and 22,487 shares of common stock, respectively. It also holds for the benefit of all employees who participate in the plans the equivalent of 16,715,539 shares of common stock (being 1.33% of the class).
(4) Includes 704,169 shares held by a revocable trust of which Mr. Weeks is the beneficiary, and he currently has no voting authority over these shares.
(5) Does not include 34,982 shares owned by the spouses and minor children of certain executive officers and directors as to which such officers and directors disclaim beneficial ownership.
(6) As of December 31, 2014, none of our directors or executive officers had pledged any such shares.


Beneficial Ownership of Corning’s Largest Shareholders

The following table shows those persons known to the Company to be the beneficial owners of 5% or more of the Company’s common stock as of December 31, 2014. In furnishing the information below, the Company has relied on information filed with the SEC by the beneficial owners.

 Name and Address
 of Beneficial Owner
Number of
Common Shares
Beneficially
Owned
Percent of
Class(1)
 The Vanguard Group   69,111,582(2)            5.39%
 100 Malvern Blvd.
 Malvern, PA 19355                                     
(1) Reflects shares beneficially owned by The Vanguard Group (Vanguard), according to a Schedule 13G filed by Vanguard with the SEC on February 11, 2015, reflecting ownership of shares as of December 31,2014. Vanguard has sole voting power with respect to 2,220,113 shares and sole dispositive power with respect to 67,202,718 shares and shared dispositive power with respect to 2,090,864 shares. According to the Schedule 13G, Vanguard beneficially owned 5.39% of our common stock as of December 31, 2014.
BlackRock, Inc. 67,721,286(1)               5.3%
55 East 52nd Street                                            
New York, NY 10022                                                 
(1) Reflects shares beneficially owned by BlackRock, Inc. (BlackRock), according to a Schedule 13G filed by BlackRock with the SEC on February 3, 2015, reflecting ownership of shares as of December 31,2014. BlackRock has sole voting power and sole dispositive power with respect to 67,660,468 shares and shared voting power and shared dispositive power with respect to 60,818 shares. According to the Schedule 13G, BlackRock beneficially owned 5.3% of our common stock as of December 31, 2014.


Section 16(a) Beneficial Ownership Reporting Compliance

SEC rules require disclosure of those directors, officers, and beneficial owners of more than 10% of our common stock who fail to timely file reports required by Section 16(a) of the Securities Exchange Act of 1934 during the most recent fiscal year. Based solely on review of reports furnished to us and written representations that no other reports were required during the fiscal year ended December 31, 2014, all Section 16(a) filing requirements were met.

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Table of Contents

Proposal 2 Ratification of Appointment of Independent Registered Public Accounting Firm


The Audit Committee evaluates the selection of our independent auditor each year and has selected PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for 2015. PwC has served in this role since 1944. The Audit Committee concluded that many factors contribute to the continued support of PwC’s independence, such as the oversight of the Public Company Accounting Oversight Board (PCAOB) through the establishment of audit, quality, ethics, and independence standards in addition to conducting audit inspections; the mandating of reports on internal control over financial reporting; PCAOB requirements for audit partner rotation; and limitations imposed by regulation and by the Audit Committee on non-audit services provided by PwC. The Audit Committee preapproves all audit and permitted non-audit services that PwC performs for the Company, and it approves the audit fees associated with the engagement of PwC. All services provided to Corning by PwC in 2013 and 2014 were pre-approved by the Audit Committee in accordance with the policy.

In conjunction with the mandated rotation of the PwC's lead engagement partner, the Audit Committee and its chairperson are directly involved in the selection of PwC's new lead engagement partner. In considering continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm. The Committee has determined that such a rotation would likely cause significant disruption to the Company without a providing any significant benefit. The members of the Audit Committee and the Board believe that the continued retention of PwC to serve as the Company's independent registered public accounting firm is in the best interests of the Company and its investors.

As a matter of good corporate governance, the Board submits the selection of the independent audit firm to our stockholders for ratification. If the selection of PwC is not ratified by a majority of the shares of common stock present or represented at the annual meeting and entitled to vote on the matter, the Audit Committee will review its future selection of an independent registered public accounting firm in light of that vote result. Even if the selection is ratified, the Audit Committee in its discretion may appoint a different registered public accounting firm at any time during the year if the committee determines that such change would be appropriate.

Corning expects representatives of PricewaterhouseCoopers LLP to be present at the Annual Meeting and available to respond to questions that may be raised there. These representatives may comment on the financial statements if they so desire.

Our Board unanimously recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015.


Fees Paid to Independent Registered Public Accounting Firm

Aggregate fees for professional services rendered by PwC in 2013 and 2014:

2013 2014   
Audit Fees $        7,207,000                $ 9,353,000
Audit Related Fees 439,000   1,487,000
Tax Fees 1,223,000   1,606,000
All Other Fees 33,000   358,000
Total Fees $ 8,901,000  $ 12,805,000

Audit Fees. These fees are composed of professional services rendered in connection with the annual audit of Corning’s consolidated financial statements, including the audit of the effectiveness of internal control over financial reporting, and reviews of Corning’s quarterly consolidated financial statements on Form 10-Q that are customary under auditing standards generally accepted in the United States. Audit fees also include statutory audits of Corning’s foreign jurisdiction subsidiaries, audit of new information technology systems, tax related audit support, comfort letters, consents for other SEC filings and reviews of documents filed with the SEC.

Audit-Related Fees. These fees are composed of professional services rendered in connection with due diligence pertaining to acquisitions, the acquisition of an equity company, procedures to translate certain financial statements for foreign subsidiaries, employee benefit plan audits, agreed-upon procedures and the implementation of a new accounting policy.

Tax Fees. These fees are composed of statutory tax compliance, preparation and assistance for Corning’s foreign jurisdiction subsidiaries, expatriate tax return compliance, other tax compliance projects and assistance in preparing a tax advance pricing agreement.

All Other Fees. These fees are composed of an information technology security assessment and a fee relating to licensing technical accounting software from the independent registered public accounting firm and a fee to subscribe to certain benchmarking studies published by the independent registered public accounting firm.

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Table of Contents

Proposal 2 Ratification of Appointment of Independent Registered Public Accounting Firm


Policy Regarding Audit Committee Pre-Approval of Audit and
Permitted Non-Audit Services of Independent Registered Public
Accounting Firm

The Audit Committee has adopted a policy for pre-approval of audit and permitted non-audit services by Corning’s independent registered public accounting firm. The full Audit Committee approves annually projected services and fee estimates for these services and other major types of services. The Audit Committee chairman has been designated by the Audit Committee to approve any services arising during the year that were not pre-approved by the Audit Committee and services that were pre-approved, but for which the associated fees will materially exceed the budget established for the type of service at issue. Services approved by the chairman are communicated to the full Audit Committee at its next regular meeting. For each proposed service, the independent registered public accounting firm is required to provide supporting documentation detailing said service and confirm that the provision of such services does not impair its independence. The Audit Committee regularly reviews reports detailing services provided to Corning by its independent registered public accounting firm.


Report of the Audit Committee

The purpose of the Audit Committee is to assist the Board of Directors in its general oversight of Corning’s financial reporting, internal controls and audit functions. The Audit Committee operates under a written charter adopted by the Board of Directors. The directors who serve on the Audit Committee have no financial or personal ties to Corning (other than director compensation and equity ownership as described in this proxy statement) and are all “financially literate” and “independent” for purposes of the New York Stock Exchange listing standards. The Board of Directors has determined that none of the Audit Committee members have a relationship with Corning that may interfere with the members’ independence from Corning and its management.

The Audit Committee met with management periodically during the year to consider the adequacy of Corning’s internal controls and the objectivity of its financial reporting. The Audit Committee discussed these matters with Corning’s independent registered public accounting firm and with the appropriate financial personnel and internal auditors. The Audit Committee also discussed with Corning’s senior management and independent registered public accounting firm the process used for certifications by Corning’s chief executive officer and chief financial officer that are required for certain of Corning’s filings with the SEC. The Audit Committee met privately with both the independent registered public accounting firm and the internal auditors, both of whom have unrestricted access to the Audit Committee.

The Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm. Management is responsible for: the preparation, presentation and integrity of Corning’s financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and evaluating any change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States, as well as expressing an opinion on the effectiveness of internal control over financial reporting.

During the course of 2014, management updated the documentation, and performed testing and evaluation of Corning’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation, and it provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management, internal audit and the independent registered public accounting firm at each regularly scheduled Audit Committee meeting. At the conclusion of the process, management provided the Audit Committee with, and the Audit Committee reviewed a report on, the effectiveness of Corning’s internal control over financial reporting. The Audit Committee also reviewed: the report of management contained in Corning’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC; as well as PricewaterhouseCoopers LLP’s Report of Independent Registered Public Accounting Firm included in Corning’s Annual Report on Form 10-K for the year ended December 31, 2014 related to its audits of the consolidated financial statements and financial statement schedule, and the effectiveness of internal control over financial reporting.

The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by SAS 114, “The Auditor’s Communication with Those Charged with Governance,” and Public Company Accounting Oversight Board Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting That is Integrated with an Audit of Financial Statements.” In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and discussed with them their independence from Corning and its management. The Audit Committee has considered whether the provision of permitted non-audit services by the independent registered public accounting firm to Corning is compatible with the auditor’s independence.

Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors and the Board of Directors approved that the audited financial statements be included in Corning’s Annual Report on Form 10-K for the year ended December 31, 2014.

The Audit Committee:

Kurt M. Landgraf, Chair
Donald W. Blair
Deborah A. Henretta
Daniel P. Huttenlocher (recused from approval, as new Committee member)
Deborah D. Rieman
Mark S. Wrighton

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Table of Contents

Proposal 3 Advisory Approval of Executive
Compensation


Advisory Vote to Approve Executive Compensation (Say on Pay)

Our Board of Directors requests that shareholders approve the compensation of our Named Executive Officers (NEOs), pursuant to Section 14A of the Securities Exchange Act of 1934, as disclosed in this proxy statement, which includes the Compensation Discussion and Analysis, the Summary Compensation Table and the supporting tabular and narrative disclosure on executive compensation.

This vote is advisory and not binding on the Company, but the Board of Directors values the opinions that shareholders express in their voting and will consider the outcome of the vote in determining our executive compensation programs.


Say on Pay Proposal

Our management team and the Board strive to balance near-term results with long-term shareholder value through thoughtful investments in research and development. Accordingly, we maintain a “pay for performance” philosophy that forms the foundation for all decisions regarding executive compensation made by the Compensation Committee. In addition, our compensation programs are designed to facilitate strong corporate governance.

The Compensation Discussion and Analysis portion of this proxy statement contains a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions, including 2014 Company performance, focusing on the compensation of our NEOs. We believe that we have created a compensation program deserving of shareholder support.

For these reasons, the Board of Directors recommends that shareholders vote in favor of the resolution:

RESOLVED, that on an advisory non-binding basis, the total compensation paid to the Company’s Named Executive Officers (CEO, CFO and three other most highly compensated executives), as disclosed in the proxy statement for the 2015 Annual Meeting of Shareholders pursuant to Section 14A of the Securities Exchange Act of 1934, including the Compensation Discussion and Analysis and the supporting tabular and related narrative disclosure on executive compensation, is hereby APPROVED.

Our Board unanimously recommends a vote FOR the resolution approving the compensation of our Named Executive Officers.

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Table of Contents

Compensation Discussion & Analysis


This Compensation Discussion and Analysis (CD&A) focuses on the 2014 compensation of our Named Executive Officers (NEOs) and how this compensation aligns with our pay for performance philosophy.

Our NEOs in fiscal year 2014 were:

 Named Executive Officer Role Tenure in role    Total years of service   
 Wendell P. Weeks       Chairman, Chief Executive Officer (CEO) and President       10 Years as CEO       32 Years
(8 years as CEO/Chairman)
 James B. Flaws Vice Chairman and Chief Financial Officer 17 Years as CFO 42 Years
 James P. Clappin President, Corning Glass Technologies 9 Years 35 Years
 Lawrence D. McRae Executive Vice President, Strategy and Corporate Development 15 Years 29 Years
 Kirk P. Gregg Executive Vice President and Chief Administrative Officer 17 Years 22 Years


CD&A Table of Contents

To assist shareholders in finding important information, we call your attention to the following sections of the CD&A:

 Executive Summary 34 
 Company Performance Highlights 34 
 Executive Compensation Program: Structure and Highlights 36 
 Shareholder Engagement and Program Updates in 2014 39 
 Robust Compensation Program Governance 40 
 Compensation Peer Group 42 
 2014 Financial Performance Peer Group 43 
 Compensation Tables 46 

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Table of Contents

Compensation Discussion & Analysis


Executive Summary


Executive Compensation Philosophy

At Corning, we believe the commitment and contributions of our employees determine our success. Our compensation program is designed to attract and retain the most talented employees within our industry segments and to motivate them to perform at the highest level, thereby aligning their goals with those of long-term shareholders and ensuring that we create sustainable growth in profitability, sales and cash flow. Our leaders must possess deep technical understanding in our core technologies as well as broad business, commercial and leadership experience. In order to attract, retain and motivate this caliber of talent, the Compensation Committee (the Committee) is committed to promoting a performance-based culture that motivates executives by tying rewards to measurable financial metrics that support the creation of long-term value for our shareholders.


Business Overview

Corning is one of the world’s leading innovators in materials science. For more than 160 years, Corning has applied its unparalleled expertise in specialty glass, ceramics, optical physics and process engineering to develop products that have transformed people’s lives. Today, Corning’s products enable diverse industries such as consumer electronics, telecommunications, transportation, and life sciences. With a culture that prizes innovation, Corning competes in a global environment in which we drive industry leading technologies across each of our business segments:

  Business Segment       % of 2014
Core Net Sales
      Primary Products       Primary Competitors
  Display Technologies 43 % Glass substrates for LCD flat panel televisions, computer monitors, laptops, and other consumer electronics, advanced optics and specialty glass solutions for a number of industries Asahi Glass Co. Ltd.
Nippon Electric Glass Co. Ltd.
  Optical Communications 26 % Optical fiber, cable, and hardware and equipment for telephone and Internet communication networks Prysmian Group
TE Connectivity Ltd.
  Specialty Materials   12 % Cover glass for consumer electronics, advanced optics, and specialty glass solutions for a number of industries Asahi Glass Co. Ltd.
Nippon Electric Glass Co. Ltd.    
  Environmental Technologies 11 %   Ceramic substrates and diesel filters for emission control systems   Ibiden Co., Ltd.
NGK Insulators Ltd.
  Life Sciences 8 % Glass and plastic labware, as well as label-free technology, media, and reagents for cell culture, genomics, and bioprocessing applications Thermo Fisher Scientific, Inc.


Equity Investments

In addition to the business segments outlined above, we also have a number of equity investments, which contribute significantly to the Company’s overall performance. We became the 100% owner of Samsung Corning Precision Materials Co., Ltd. (SCP), on January 15, 2014 and beginning with the first quarter of 2014 we began to consolidate SCP (now known as Corning Precision Materials Co., Ltd., or CPM) fully into our results. The largest of the remaining equity investments is Dow Corning Corporation (DCC), an independently managed company that was formed in partnership with Dow Chemical in 1943. Our 2014 reported core net sales do not include Corning’s share of DCC’s $6.2 billion in sales, which was over $3 billion. Senior management of Corning supports stewardship of these companies, and the size, complexity and contribution of these equity investments are significant for Corning and its shareholders.


Company Performance Highlights


Note Regarding Core Performance Measures

Throughout this CD&A we refer to our core net sales, core EPS and adjusted operating cash flow, which are non-GAAP financial measures. These core performance measures remove the impact of changes in the Japanese yen and Korean won exchange rates versus the US dollar, as well as other special items that do not reflect the ongoing operations of the Company. Please see the section titled “Program Updates in 2014 – Shift to Core Performance Measures” on page 39 of this CD&A and the section titled “Core Performance Measures” on page 37 of our 2014 Annual Report on Form 10-K for additional information about our core performance measures and why we use them. Appendix A to this proxy statement contains a reconciliation of these non-GAAP measures to our audited GAAP financial statements.

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Compensation Discussion & Analysis


2014 Business Environment and Company Performance

2014 was an excellent year for Corning. In the fourth quarter, we delivered our ninth consecutive quarter of year-over-year core EPS growth, along with the highest core net sales in Corning’s history. For the full year 2014, core EPS increased approximately 24% over 2013 as the Company advanced a number of strategic initiatives, including: (1) continuation of the positive momentum in Display Technologies, (2) integration of Corning Precision Materials (formerly SCP) and capture of the related synergies, (3) growth of core net sales and profits in our non-Display segments, and (4) returning cash to shareholders.

Total Shareholder Return (TSR)


Total Shareholder Returns: Corning delivered total shareholder return (TSR), of 31.2%, more than double the S&P 500 index total returns, consisting of stock price appreciation plus reinvestment of dividends paid throughout the year. This performance placed us in the top quartile of the S&P 500 Index and in the top decile of our compensation peers for the year.

Key Operational Measures

 

Core net sales growth: Core net sales increased by 29% year-over-year
Core EPS growth: Core earnings per share increased by 24% year-over-year, capping 9 consecutive quarters of core EPS growth
Adjusted Operating Cash Flow: Increased by 13% year-over-year

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Compensation Discussion & Analysis


Return of Capital to Shareholders

Returning Value to Shareholders: In 2014, Corning repurchased $2.6 billion of outstanding common shares. Additionally, in December 2014, we announced a 20% increase in our common stock dividend, beginning in the first quarter 2015, and a new $1.5 billion share repurchase program. Since 2011, when we announced expectations of increased free cash flow, we have increased the dividend 140% (from $0.05 per share per quarter to $0.12) and repurchased 18% of our outstanding common shares.

Executive Compensation Program: Structure and Highlights

In order to ensure compensation is aligned to long-term value creation, we believe a well-structured program must balance near-term financial results with building long-term value through thoughtful investments in innovation and process engineering.

To that end, our compensation program provides a number of forms of executive compensation, each tailored to encourage an aspect of the Company’s performance that the Committee believes is important for driving long-term shareholder value. Given the strategic importance of growing sales in our non-Display businesses, we include a revenue measure in both our short-term and long-term incentive programs while continuing to place the most emphasis on profitability and cash generation goals.

The following is an overview of the components of the 2014 program.

Summary of Corning’s Executive Compensation Program

Key Pay
Elements

               Short-Term/Annual Incentives               

Long-Term Incentives

 
Form of
Compensation
Delivered
  Performance
Incentive
Plan (Cash)
  Goal Sharing
(Company-Wide
Unit Plan;
Paid in Cash)
  Cash Performance Units
(CPUs)
   
 
     Equity Incentives:     
Restricted Stock
Units (RSUs) &
Stock Options
 
 
Performance
Metrics
  75% Core EPS
25% Core Net Sales
  Weighted
Average of
Business Unit
Plans
  60% of LTI Target, based on:
●  70% Adjusted Operating 
   Cash Flow
●  30% Core Net Sales
  40% of LTI Target:
●  25% RSUs
●  15% Stock Options

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Compensation Discussion & Analysis


We believe these features offer the following benefits:

Clear, measurable and challenging goals: We base our performance objectives on the results of a rigorous goal-setting process that relies on both business-driven bottom-up and corporate top-down budgets.

Performance targets are set using core performance measures. Beginning in 2013, we reduced our economic risk to a weaker Japanese yen and Korean won by executing hedges that protected us from the impact of exchange rates rising above 93 Japanese yen and 1100 Korean won to the U.S. dollar, and moved to provide core performance measures in addition to GAAP financial measures to provide a clearer view of the Company’s core operating results to our investors. Our core performance results are stated at a constant yen-to-U.S. dollar exchange rate of 93 and a constant won-to-U.S. dollar exchange rate of 1100 to remove the volatility from currency fluctuations, allowing more clarity and transparency on the operating drivers of our financial results and performance-based compensation measures.

Our incentive plans also require targets to be exceeded by a meaningful margin before payouts increase significantly. This element discourages imprudent risk-taking, creates a strong incentive to set reasonable and challenging goals, and fosters strong focus on achievement of the annual business plan.

Our rigorous goal setting process is demonstrated in the following measures for our short- and long-term incentive plans*:


2014 PIP Measures
(Short Term Incentive)

2014 CPU Measures
(Year One of Three-Year Average Plan)
(Long Term Incentive)

Core Net Sales Goal
(Weighted 25%)

Core EPS Goal
(Weighted 75%)

Core Net Sales Goal
(Weighted 30%)

Adjusted Operating Cash
Flow Goal (Weighted 70%)

   

Achievement %

   

Core Net
Sales
(in $M)

   

% of 2013
Core Net
Sales

   

Core Adjusted
EPS
(in $M)

   

% of 2014
Plan

   

Core Net Sales
(in $M)

   

% of 2013

   

Adjusted
Operating Cash
Flow
(in $M)

   

% of 2014
Plan

200 %    $    10,303    115 %         $   1.71         112 % Capped at 150%
150 % $ 9,855   110 % $ 1.68 110 % $    10,303 115 %          $     3,373          112 %
125 % $ 9,407 105 % $ 1.65   108 % $ 9,855 110 %   $ 3,253 108 %
TARGET 100 %     $ 9,317   104 %   $ 1.53 100 %   $ 9,317     104 % $ 3,012   100 %
75 % $ 9,228 103 % $ 1.37 90 %   $ 9,228 103 % $ 2,771 92 %
  50 % $ 8,959 100 % $ 1.22 80 % $ 8,959 100 % $ 2,530 88 %
0 % $ 8,601 96 % $ 1.14 75 % $ 8,601 96 % $ 2,410 80 %
 
*

2014 core net sales goal and comparison to 2013 include 50% of Corning Precision Materials sales, to represent Corning’s share of sales prior to the acquisition of SCP in January 2014.


Substantial variable and ‘at risk’ compensation: Approximately 87% of the CEO’s target total compensation* and 80% of the other NEOs’ target total compensation* is variable and impacted by operating or stock price performance.

*

Target total compensation includes base salary and target short- and long-term incentives

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Compensation Discussion & Analysis


Structural alignment with long-term shareholders: Each of our NEOs is subject to robust stock ownership guidelines that require them to accumulate and hold a significant number of Company shares as long as they remain employed with us.


  Chief Executive Officer 6X Base Salary  
  NEOs other than the CEO 3X Base Salary  


Performance Results Against Targets

The following tables compare the targeted goals of each performance plan with 2014 actual results, compared with the prior years, and the percentage of target opportunity earned under each plan.

2014 2013
  Measure       Actual
% increase
vs. ’13 Actual
      Target
% increase
vs. ’13 Actual
      Actual       Target
  Core EPS  $ 1.53  $ 1.53  $ 1.23 **  $      1.15   
+24.4 % +24.4 %
  Core Net Sales (millions)  $ 10,217  $ 9,317 *  $      7,948 N/A
+28.6 % +17.2 %
  Adjusted Operating Cash Flow (millions)  $ 3,121  $ 3,012  $ 2,768  $ 2,677
+12.8 % +8.8 %
* Revenue target for 2014 was established including 50% of Corning Precision Materials
** Core EPS was not used as a metric for compensation plan purposes in 2013. For comparison purposes only, the comparable result would have been $1.19 with an adjustment to exclude an unbudgeted gain resulting from a change in pension accounting.

Compensation Element

Performance
Target

Actual Results

Target
Opportunity

Earned Award

 

Annual
Cash
Bonus
Plans

Performance Incentive
Plan (PIP)
Core EPS (75%)
Core Net Sales (25%)
 
GoalSharing
 

$1.526
$9,317 million
 
Average of 99 unit
plans


$1.531
$10,217 million
 
6.75%

CEO: 140%*
Other NEOs:
75%-90%*
 
5%*

123% of target

6.75%

 

Long-Term
Incentives

Year 1 of
3 Years
 

Cash Performance
Units (CPUs)
Adjusted Operating
Cash Flow (70%)
Core Net Sales (30%)


 Year One of Three:
$3,012 million
$9,317 million


 
 $3,121 million
$10,217 million

CEO: $4.2 million
Other NEOs:
$1.2 million -
$2.1 million

Year 1: 121%
Year 2: TBD
Year 3: TBD
3 Yr average: TBD

*

As a percentage of year-end base salary

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Compensation Discussion & Analysis


Key Operational Accomplishments Leading to Strong Performance Results:

2014 Goals 2014 Achievements

Continue the positive momentum in Display Technologies

  

LCD glass volume was higher than expected driven by TV sales and larger average screen size

Price declines moderated throughout the year

We advanced new glasses for growing high-performance display market

Integrate Corning Precision Materials and execute on our synergy plan

The integration of Corning Precision Materials has resulted in core pre-tax synergies in 2014 well in excess of our $90 million target and enabled $350 million in capital spending to be avoided

Grow sales and profits of our other segments

Our non-Display segments grew sales and NPAT approximately 10% year-over-year

Optical Communications and Environmental Technologies both realized increased sales - up 14% and 19%, respectively, compared with 2013

Significant manufacturing efficiencies realized and strong spending controls in staff groups

Return Cash to Shareholders

We announced a 20% increase in the quarterly dividend in December 2014, effective in 2015

We completed the $2 billion share repurchase program announced in late 2013 and announced a new $1.5 billion repurchase program



Shareholder Engagement and Program Updates in 2014

Strong Say on Pay Results. At our 2014 annual meeting of shareholders, our Say on Pay proposal received support from nearly 96% of votes cast, a significant improvement over 2013.

Though encouraged by the strong show of shareholder support for our compensation program, we nevertheless continued to engage extensively with our shareholders in 2014 in order to ensure we fully understand the factors shareholders consider to be the most important when evaluating our executive compensation program.

At our 2014 annual meeting of shareholders, our Say on Pay proposal received support from nearly 96% of votes cast, a significant improvement over 2013.


Ongoing Shareholder Engagement. Before our 2014 annual meeting and continuing into the fall of 2014, we engaged with more than 70% of our top 50 institutional shareholders, including meetings with more than 30 institutional shareholders that collectively represented more than 40% of our outstanding shares. We learned through these meetings that our shareholders were generally supportive of our executive compensation program but did offer ideas to refine and improve the program. Major shareholders were not prescriptive about plan design. Instead, they were more interested to see that the results and outcomes delivered by the plans were aligned appropriately with performance. Investors appreciated the new caps we instituted in our short-term incentive program. Additionally, although investors supported our shift to a multi-year performance approach in the long-term incentive plan, they also encouraged us to continue to look at metrics covering a longer time horizon, which we will continue to evaluate over time.

Program Updates in 2014

Shift to Core Performance Measures: Beginning in 2014, we refined the metrics used for annual bonus plan and long-term incentive plan performance targets by adopting the use of “core performance” metrics, rather than “adjusted GAAP” metrics. As a reminder, Corning began reporting core performance measures to investors early in 2013, and most investors are now using these measures to assess our operating performance. At the time we began using core performance measures, incentive targets for 2013 had already been set. Rather than resetting the 2013 targets, we moved to core performance measures for our incentive compensation program beginning in 2014. With this move, the metrics for our annual bonus plan and long-term incentive plan performance targets are based on core performance measures, which are aligned with what we share with investors, rather than the adjusted GAAP metrics used previously.

These core performance measures remove the impact of changes in the Japanese yen and Korean won exchange rates with the US dollar, as well as other special items that do not reflect the ongoing operations of the Company. Since a substantial portion of Corning’s operations are denominated in Japanese yen and Korean won, fluctuations in the exchange rate between the US dollar and these currencies can significantly impact the Company’s financial results. Core performance measures present our results using constant currency rates to eliminate these fluctuations. Additionally, Corning has hedged a significant portion of its exposure to these currencies, and changes in value of the derivative positions are excluded since they can create large quarterly swings in our GAAP results based on foreign exchange fluctuations that are outside of the control of management. Other items excluded from core performance measures are either deemed to be outside of managements’ control or are non-recurring (and often non-cash) changes that could create unintended or unbudgeted windfalls or penalties if they were included.

The Committee decided in advance that the following additional items would be excluded from operating cash flow results for compensation plan purposes: special one-time dividends from equity ventures, cash proceeds or outflows from realized balance sheet hedges, currency fluctuations (other than Japanese yen) outside of budget, non-operating gains/losses from discontinued operations and restructuring/impairment charges. Details of these adjustments may be found in Appendix A. This approach allows our employees and executives to focus on improving operational performance, while taking special actions in a timely manner, as appropriate, to benefit the Company and its shareholders.

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Compensation Discussion & Analysis


Updated Performance Measures in the Short- and Long-term Plans: In 2014, our annual cash bonus plan (PIP) measures were core EPS (weighted at 75%) and core net sales (weighted at 25%) due to the importance of focusing on both profit and revenue growth. Measures for Cash Performance Units (CPUs) in the long-term incentive plan were modified in 2014 to include the average of three one-year performance periods with 2014 performance measures being adjusted operating cash flow (weighted at 70%), and core net sales (weighted at 30%). The use of these performance measures (improving profitability, sales and cash flow) focuses attention on the key drivers for sustaining and/or creating long-term shareholder value.

Increased the Percentage of Performance-based Compensation: We increased the weighting of the CPUs for 2014 long-term grants from 50 percent to 60 percent of the total long-term incentive opportunity to increase the amount of performance-based compensation in the long-term incentive plan.

Extended the Performance Horizon for the Long-term Incentive Plan: We increased the performance period for CPUs in the long-term incentive plan from a one-year performance period followed by an additional two years of vesting to a three-year performance period based on the average of three one-year performance periods, which are set annually in the multi-year cycle.

Capped the Short-term Incentive Plan: Beginning in 2014, we introduced caps to our PIP, which will come into play if the core EPS profitability goal is budgeted to be lower than the prior years’ actual core EPS. We will cap PIP at 150% of target (versus our normal maximum of 200% of target) if Corning’s TSR for that year is positive. If Corning’s TSR is negative for such year, the bonus opportunity will be capped at 100% of target.



Robust Compensation Program Governance

Corning has rigorous and robust program governance with respect to its executive compensation plan:

Compensation program that closely aligns pay with performance over both the short- and long-term

Mix of cash and equity incentive payouts tied to short-term financial performance and long-term value creation (over 80% of total compensation for NEOs is “at risk”)

CEO total compensation is targeted within a competitive range of the Compensation Peer Group median

Significant NEO share ownership requirements (6x salary for CEO, 3x salary for other NEOs)

New caps on payout levels for annual incentives in a budgeted down-cycle year

History of demonstrated responsiveness to shareholder concerns and feedback, and ongoing commitment to shareholder engagement

Anti-hedging and pledging policies

Robust clawback policy

No excise tax gross-ups for all officer agreements entered into after July 2004

Limited and modest perquisites that have a sound benefit to the Company’s business

No tax gross-ups or tax assistance on perquisites

No repricing of underwater stock options without shareholder approval

Independent compensation consultant



Executive Compensation Program Details

Our key compensation principles are as follows:

Provide a Competitive Base Salary: Base salaries provide a form of fixed compensation and are reviewed annually by the Committee using salary surveys, internal equity and performance as discussed in the “Compensation Peer Group” section. Market benchmarks are used as a reference point, but internal equity within our NEO group is also important. Salary increases for all NEOs except Mr. Clappin averaged 3.2%, in line with increases for US based salaried employees. Mr. Clappin received a 5.4% increase recognizing the increased scope of his role following the Corning Precision Materials acquisition.

Pay for Performance: Executive compensation should be tied to performance and contribution to both short-term and long-term corporate financial performance and shareholder value.

Team-Based Management Approach: Corning uses a team-based management approach, so 100% of incentives awarded to NEOs are contingent on achieving a common set of goals for Corning’s consolidated financial performance or the performance of Corning stock.

Incentive Compensation Should be a Greater Part of Total Compensation for More Senior Positions: As employees assume more responsibility and have greater opportunity to affect Company performance and shareholder value, an increasing share of their total compensation package is derived from variable incentive compensation. More than 80% of NEOs’ total compensation is variable.

Interests of Our Executive Group Should be Aligned with Shareholders: Through the use of stock options and restricted stock units, and robust stock ownership guidelines, we align the long-term interests of our NEOs with those of our shareholders.

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Compensation Discussion & Analysis


Equity Awards

We believe it is important to deliver a portion of compensation in equity to align NEOs with shareholders and create a tie to the future market performance of Corning stock. Corning provides two forms of long-term equity awards: RSUs which represent 25% of the annual long-term incentive target value, and stock options which represent 15% of the target value. Target value amounts are established by the Committee for each NEO with the number of RSUs determined based on the stock price on the date of grant and the number of stock options determined using a Black-Scholes valuation. RSUs are granted at the end of March and cliff vest three years from the grant date. Options are granted at the end of March, April and May, cliff vest three years after the grant date, and have a 10-year term.

Mr. McRae and Mr. Clappin each received a grant of 36,000 and 12,000 shares of restricted stock, respectively, in February 2014, in recognition of their leadership of the successful completion of the SCP acquisition, which added approximately $2 billion in annual sales, $350 million in incremental profit before special items, and approximately $500 million in additional cash flow to Corning.

No other discretionary programs or arrangements are currently in effect with respect of any other NEOs.


Employee Benefits and Perquisites

Employee Benefits: Our NEOs are eligible for the same employee benefit plans in which all other eligible U.S. salaried employees participate. These plans include medical, dental, life insurance, disability, matching gifts and qualified defined benefit and defined contribution plans. We also maintain non-qualified defined benefit and defined contribution retirement plans with the same general features and benefits as our qualified retirement plans for all U.S. salaried employees affected by tax law compensation, contribution and/or deduction limits.

In addition to the standard benefits available to all eligible U.S. salaried employees, the NEOs are eligible for the following benefits and perquisites:

Executive Supplemental Pension Plan (ESPP): We maintain a non-qualified ESPP for approximately 25 active participants, including all of the NEOs. In 2006, we capped the percentage of cash compensation earned as a retirement benefit under the ESPP at a maximum of 50% of final average pay for 25 or more years of service. The definition of pay used to determine benefits includes base salary and annual cash bonuses. Long-term cash or equity incentives are not included and do not impact retirement benefits. Executives must have 10 or more years of service to be vested under this plan. All of the NEOs are currently vested under this plan. For additional details of the ESPP benefits and plan features, please refer to the section entitled “Retirement Plans”.

We maintain an ESPP to reward and retain the long-service individuals who are critical to executing Corning’s innovation strategy.

While we seek to maintain well-funded qualified retirement plans, we do not fund our nonqualified retirement plans.

Executive Physical and Wellness: All executives are eligible for an annual physical exam in addition to wellness programs sponsored by the Company for all employees.

Other Executive Perquisites: In 2014, we provided the NEOs with home security and modest, capped personal aircraft usage. Each NEO is responsible for all taxes on any imputed income resulting from this program.

The Committee believes that a well-managed program of limited personal aircraft use, given the limited commercial flight options available in the Corning, New York area, provides an extremely important benefit at a reasonable cost to the Company. We closely monitor business and personal usage on our planes and seek to keep all personal usage at a low percentage of total usage. Annual personal aircraft usage caps under this program (both hours and absolute dollar value) are established by the Committee for each NEO. The established cap for the CEO was 100 hours and $165,000 and approximately half this level or lower for other NEOs. Actual utilization falls well below these caps. For additional details, refer to footnotes relating to “All Other Compensation” included with the Summary Compensation Table.

Relocation and Expatriate-Related Expenses: As part of our global mobility program, our policies provide that employees who relocate at our request are eligible for certain relocation and expatriate benefits to facilitate the transition and international assignment, including moving expenses, allowances for housing and goods and services, and tax assistance. These policies are intended to recognize and compensate employees for incremental costs incurred with moving and/or with living and working outside of an employee’s home country. The goal of these relocation and expatriate assistance programs is to ensure that employees are not financially advantaged or disadvantaged as a result of their relocation and/or international assignment - including related taxes. During fiscal 2014, Mr. Clappin continued his leadership of the Display Technologies segment and was based in Tokyo, Japan. As a result of this continued long-term assignment, Mr. Clappin was eligible for expatriate benefits afforded to all eligible employees under this program. These expenses are detailed in footnote 5, section (iv) to the Summary Compensation Table.

Executive Severance: We have entered into severance agreements with each NEO. The severance agreements provide clarity for both the Company and the executive if the executive’s employment terminates. By having an agreement in place, we avoid the uncertainty, negotiations and potential litigation that may otherwise occur in the event of termination. The agreements are competitive with market practices at many other large companies and are helpful in retaining senior executives. Additional details can be found under “Arrangements with Named Executive Officers”.

Executive Change in Control Agreements: The Committee believes that it is in the best interests of shareholders, employees and the communities in which the Company operates to ensure an orderly process if a change in control of the Company were to occur. The Committee believes that it is important to prevent the loss of key management personnel (who would be difficult to replace) that may occur in connection with a potential or actual change in control of the Company. We have thus provided each NEO with change-in-control agreements (separate from the severance agreements described above). The change-in-control agreements generally have a double trigger severance provision (i.e., the executive’s employment must be terminated following a change in control) to receive any benefits. Additional details about the specific agreements can be found under “Arrangements with Named Executive Officers”.

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Compensation Discussion & Analysis


In 2012, the Committee approved updated forms of agreements for all corporate officers entering into change-in-control agreements after July 2004, which contain no provision for gross-ups for excise taxes, and cap severance and other benefits at 2.99 times base salary plus target bonus, with cash severance for most officers limited to 2 times base salary plus target bonus. The current NEOs have grandfathered agreements that were entered into prior to July 2004.


Compensation Peer Group

Our peer group for compensation purposes is different from the group of companies that our businesses compete with and that should be considered for financial performance comparison purposes.

The Company currently participates in and uses three general executive compensation surveys for NEO positions: Mercer Executive Survey, Towers Watson Executive Survey, and Equilar Top 25 Survey.

With respect to the three general surveys, the identity of the individual companies comprising the survey data is not considered by the Compensation Committee in its evaluation process. In addition to the three general surveys, we also use proxy data obtained from service providers, such as Equilar, to review compensation levels of NEOs at companies in a variety of manufacturing and service industries that are similar in size or have similar characteristics to Corning (the Compensation Peer Group).

Corning is a diversified technology company with five reportable business segments.

The majority of our businesses do not have identifiable U.S. peers. Most of our businesses compete with non-U.S. companies in Asia and Europe, or privately held companies that do not provide comparable executive compensation disclosure. The majority of our key customers are non-U.S. companies or extremely large U.S. companies that would not be appropriate compensation peers for Corning.

In attempting to identify peer companies for compensation purposes, Corning must look to globally diversified companies or innovation companies in other industries to find companies of similar size and complexity (when viewed in terms of revenues, net income, market capitalization, assets and number of employees).

Corning’s reported core net sales of $10.2 billion are median for revenues of our Compensation Peer Group. However, Corning’s number of employees and market capitalization are above the median, and its net income and total assets approach or are in the top quartile depending on the measure.

Percent Rank, Corning versus Compensation Peer Group

Corning uses the Compensation Peer Group solely as a reference point, in combination with broader executive compensation surveys, to assess the NEO’s target total direct compensation (i.e. salary, target bonus, plus the grant date fair value of long-term incentives). Our goal is to position target total direct compensation for our CEO within a competitive range of the Compensation Peer Group median. Beyond the CEO, external data serves as a reference point, with internal equity in relation to the CEO being a more important consideration in establishing a base salary and target total direct compensation for the other NEOs.

2014 Compensation Peer Group

Advanced Micro Devices, Inc. Cummins Inc. Medtronic, Inc. QUALCOMM, Inc.
Agilent Technologies, Inc. Danaher Corporation Monsanto Company Rockwell Automation, Inc.
Applied Materials, Inc. Dover Corporation Motorola Solutions, Inc. TE Connectivity Limited
BorgWarner, Inc. Eaton Corporation PLC NetApp, Inc. Texas Instruments Incorporated
Boston Scientific Corporation Harris Corporation PPG Industries, Inc. Thermo Fisher Scientific, Inc.
Broadcom Corporation Juniper Networks, Inc. Praxair, Inc.

Median target total direct CEO compensation among in the Compensation Peer Group was determined to be $9.8 million and 75th percentile total direct CEO compensation was $12.0 million, compared with Corning total direct CEO compensation, at target, of $10.1 million.

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Compensation Discussion & Analysis


2014 Financial Performance Peer Group

Our largest competitors and most relevant financial performance peers are not U.S. companies. Therefore, the relevant companies for financial performance comparison purposes are not the same as those in the Compensation Peer Group we use for compensation benchmarking.

The following table contains certain financial performance data of Corning and each of our business segments, compared with our largest competitors who publicly disclose their financial results in each of those segments, including sales and net profit after taxes compound annual growth rates (CAGR). Overall, we performed well in 2014 in virtually all of our business segments.

   Display Technologies Segment Sales (CAGR) NPAT (CAGR) TSR @ 12/31/14 (annualized)
      1 Yr       3 Yr       1 Yr       3 Yr       1 Yr       3 Yr     
Corning Incorporated 29 % 11 % 22 % -2 % 31 % 24 %
Display Technologies Segment 63 % 17 % 11 % -10 %
 
Asahi Glass Co. Ltd. 2 % 4 % -1 % -45 % -7 % 0 %
Nippon Electric Glass Co. Ltd. 1 % -10 % -42 % -40 % 2 % -8 %
 
Environmental Tech Segment Sales (CAGR) NPAT (CAGR) TSR @ 12/31/14 (annualized)
1 Yr 3 Yr 1 Yr 3 Yr 1 Yr 3 Yr
Corning Incorporated 29 % 11 % 22 % -2 % 31 % 24 %
Environmental Segment 19 % 3 % 44 % 16 %
 
Ibiden Co., Ltd. 2 % 2 % 3 % 23 % -8 % 7 %
  NGK Insulators Ltd. 25 % 13 % 69 % N/A 26 % 42 %
 
Optical Communications Segment Sales (CAGR) NPAT (CAGR) TSR @ 12/31/14 (annualized)
1 Yr 3 Yr 1 Yr 3 Yr 1 Yr 3 Yr
Corning Incorporated 29 % 11 % 22 % -2 % 31 % 24 %
Optical Communications Segment 14 % 9 % 18 % 11 %
 
Prysmian Group -2 % -3 % -25 % N/A -17 % 19 %
TE Connectivity Ltd.(1) 4 % -1 % 41 % 16 % 17 % 30 %
 
Life Sciences Segment Sales (CAGR) NPAT (CAGR)   TSR @ 12/31/14 (annualized)
1 Yr 3 Yr   1 Yr 3 Yr   1 Yr 3 Yr
Corning Incorporated   29 %   11 %   22 % -2 % 31 %   24 %
Life Sciences Segment 1 % 13 % -5 % 13 %
 
Thermo Fisher Scientific, Inc.(2) 29 % 13 % 48 % 23 % 13 % 42 %
 
Specialty Materials Segment Sales (CAGR) NPAT (CAGR) TSR @ 12/31/14 (annualized)
1 Yr 3 Yr 1 Yr 3 Yr 1 Yr 3 Yr
Corning Incorporated 29 % 11 % 22 % -2 % 31 % 24 %
Specialty Materials Segment 3 % 4 % -17 % 30 %
 
Asahi Glass Co. Ltd. 2 % 4 % -1 % -45 % -7 % 0 %
Nippon Electric Glass Co. Ltd. 1 % -10 % -42 % -40 % 2 % -8 %

Data Source: Capital IQ / Bloomberg / Company reports

Corning Incorporated data is based on core performance measures, which are non-GAAP measures. The reconciliation between GAAP and these non-GAAP measures can be found in Appendix A.

NPAT for all competitors defined by Capital IQ “Net income excl. extra items.”
All data and calculations are in local currency.

N/A indicates CAGR is not applicable due to loss in prior comparison period.

(1) TE Connectivity’s comparable Network Solutions Segment Results: Sales (CAGR) 1Yr = -4%, 3Yr = -9% Operating Income (CAGR) 1Yr = 22%, 3Yr = -20%

(2) Thermo Fisher Scientific, Inc.’s results include its 2014 acquisition of Life Technologies Corporation.

CORNING INCORPORATED - 2015 Proxy Statement      43



Table of Contents

Compensation Discussion & Analysis


Compensation Governance


Role of Compensation Consultant

The Committee has the authority to retain and terminate a compensation consultant, and to approve the consultant’s fees and all other terms of such engagement. During 2014, the Committee directly retained an executive compensation expert from Frederic W. Cook & Co., Inc. (FWC) as its independent consultant, after its previous consultant of more than 10 years retired.

In 2014, FWC attended all Committee meetings. FWC advises the Committee on all matters related to NEO and director compensation and assists the Committee in interpreting the consultant’s data as well as data and recommendations received from the Company.

The Company has engaged Compensation Advisory Partners LLC (CAP), Shearman and Sterling, LLP (S&S) and Towers Watson (TW) to assist management with various executive compensation matters.

The Committee conducted an independence review of FWC and each of CAP, S&S and TW pursuant to SEC and NYSE rules, and concluded that the work of each firm for the Company did not raise any conflicts of interest concerns. FWC provides no services to the Company other than the services rendered to the Committee.


Role of Executive Management in the Executive Compensation Process

Corning’s senior vice president (SVP), Global Compensation and Benefits, working closely with other members of Corning’s Human Resources, Legal and Finance departments, is responsible for designing and implementing executive compensation and discussing significant proposals or topics impacting executive compensation at the Company with the Committee. The SVP, Global Compensation and Benefits, formulates each element of the targeted total compensation recommendations for all of the NEOs and reviews the recommendations for each of the other NEOs with the CEO. The NEOs do not recommend or suggest individual compensation actions that benefit them personally.

The CEO may propose adjustments he deems appropriate prior to submission to the Committee. Recommendations for the CEO’s compensation are not discussed or reviewed with the CEO prior to the Committee’s review and the CEO is not present when the SVP, Global Compensation and Benefits, reviews the CEO compensation recommendation with the Committee.

The Committee receives management’s recommendations for the compensation plan performance metrics and sets the final targets for the year.

The CEO, Chief Administrative Officer and SVP, Human Resources, are invited to attend Committee meetings. The CFO historically has attended the annual Committee meeting to review the CD&A and the portion of the February meeting when performance metrics are reviewed.


Compensation Risk Analysis

In February 2015, our Compensation Committee reviewed the conclusions of a risk assessment of our compensation policies and practices covering all employees, which is conducted annually by a cross-functional team with representatives from Human Resources, Legal and Finance. Our Compensation Committee evaluated the levels of risk-taking that potentially could be encouraged by our compensation arrangements, taking into account the arrangements’ risk-mitigation features, to determine whether they are appropriate in the context of our strategic plan and annual budget, our overall compensation arrangements, our compensation objectives and our Company’s overall risk profile. Identified risk-mitigation features included the following:

The mix of cash and equity payouts tied to both short-term financial performance, mid-term financial performance and long-term value creation;
The time vesting requirements in our long-term incentive plans, which help align the interests of employees to shareholders;
The use of financial performance metrics that are readily monitored and reviewed;
The rigorous budget and goal setting processes that involve both top-down and bottom-up analyses;

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The use of common performance metrics for incentives across Corning’s management team and all eligible employees with corporate results impacting the compensation of all Corning employees;
Rigorous goal setting in our annual incentive plan that is intended to avoid imprudent risk-taking to achieving cliff goals;
Capped payout levels for annual incentives, including sales commission plans and cash performance unit awards;
Our robust stock ownership, clawback, anti-hedging and anti-pledging policies for NEO’s and other employees; and
Multiple levels of review and approval of awards, including Compensation Committee approval on all officer compensation proposals.

Our Compensation Committee concluded that we have a balanced pay and performance executive compensation program that does not drive excessive financial risk-taking. We believe that Corning does not use compensation policies or practices that create risks that are reasonably likely to have a material adverse effect on the Company.


Clawback Policy

We have a policy that gives the Compensation Committee the sole and absolute discretion to make retroactive adjustments to any cash or equity-based incentive compensation paid to certain executive officers and other key employees where such payment was based upon the achievement of certain financial results that were subsequently the subject of a restatement. The Committee has discretion to seek recovery of any amount that it determines was received inappropriately by these individuals.


Anti-Hedging Policy

We have a policy that prohibits any member of the executive group or any director from selling or buying publicly traded options on Corning stock, or trading in any Corning stock derivatives. Additionally, these individuals may not engage in transactions in which he or she may profit from short-term speculative swings in the value of Corning stock utilizing “short sales” or “put” or “call” options.


Anti-Pledging Policy

We have a policy that prohibits any member of the executive group or any director from holding Corning stock in a margin account or pledging Company securities as collateral for a loan.


Tax Deductibility of Compensation

In general, the Company intends to structure its incentives to qualify as deductible performance-based compensation. However, the Committee maintains the flexibility to pay incentive compensation or other compensation, that does not meet the requirements specified under Section 162(m) and is not deductible. The tax deductibility of other components of compensation, including base salaries above $1 million, time-based restricted stock units and the taxable value of executive benefits and perquisites, is potentially limited under current tax rules.


Accounting Implications

In designing our compensation and benefit programs, we review the accounting implications of our decisions. We seek to deliver cost-effective compensation and benefit programs that meet both the needs of the Company and our employees.

CORNING INCORPORATED - 2015 Proxy Statement     45



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Compensation Discussion & Analysis


Compensation Committee Report

The Compensation Committee of the Board of Directors (the Committee), which is composed entirely of independent directors, is responsible to the Board of Directors and our shareholders for the oversight and administration of executive compensation at Corning. The Committee approves the principles guiding the Company’s compensation philosophy, reviews and approves executive compensation levels (including cash compensation, equity incentives, benefits and perquisites for officers) and reports its actions to the Board of Directors for review and, as necessary, approval. The Committee is responsible for interpreting Corning’s executive compensation plans and programs. In the event of any questions or disputes, the Committee may use its judgment and/or discretion to make final administrative decisions regarding these plans and programs. It is our practice that all compensation decisions affecting a corporate officer must be reviewed and approved by the Committee. Additional details regarding the role and responsibilities of the Committee are defined in the Committee Charter, located in the Corporate Governance section of the Company’s website.

The Committee has reviewed and discussed the foregoing CD&A with management. Based on our review and discussions with management, we recommended to the Board of Directors that the CD&A be included in this proxy statement and in our Annual Report on Form 10-K for the year ended December 31, 2014.

The Compensation Committee:

Deborah D. Rieman, Chair
Richard T. Clark
Kurt M. Landgraf
Hansel E. Tookes II


Compensation Tables


Summary Compensation Table

The following tables, narrative and footnotes discuss the 2014 compensation of the Chairman, Chief Executive Officer and President, the Chief Financial Officer and the other three most highly compensated executive officers, who collectively are referred to as the NEOs.

(a) (b) (c ) (d) (e)(1)   (f)(2) (g)(3) (h)(4) (i)(5) (j)
  Named
Executive Officer
Year   Salary   Bonus   Stock
Awards
Option
Awards
  Non-Equity
Incentive Plan
Compensation
  Change in
Pension
Value And
Nonqualified
Deferred
Compensation
Earnings
  All Other
Compensation
  Total  
Wendell P. Weeks 2014   1,261,923   0     1,750,004   1,037,315      3,991,718         4,346,119         647,382      13,034,461  
Chairman, Chief 2013 1,223,615 0 1,750,002 1,747,499 5,717,784 0 $ 774,963 11,213,864
Executive Officer and                                                                  
President 2012     1,197,308     0       1,749,994     1,668,623       6,265,910         1,193,672       $ 572,297       12,647,804  
James B. Flaws 2014 948,923 1,500,000 (6) 875,002 518,653 1,979,218 1,648,692 222,899 7,693,385
Vice Chairman and 2013     921,462     1,500,000 (6)     874,995     873,749       2,848,929         0         233,943       7,253,077  
Chief Financial Officer 2012 901,731 1,500,000 (6) 874,997 834,314 3,118,847 1,970,034 174,533 9,374,456
James P. Clappin 2014     641,692     0       710,592     296,377       1,137,400         1,423,940         1,848,935       6,058,936  
President, Corning
Glass Technologies
Lawrence D. McRae                                                                  
Executive Vice President,   2014     647,615     0       1,131,792     296,377       1,137,400         1,901,017         64,591       5,178,793  
Strategy and Corporate 2013 626,769 0 499,995 499,287 1,630,367 0 75,261 3,331,679
Development 2012     612,885     0       500,006     476,749       1,783,427         1,237,468         62,315       4,672,849  
Kirk P. Gregg
Executive Vice President 2014 668,231 0 499,992 296,377 1,156,210 1,480,993 130,274 4,232,077
and Chief Administrative   2013     648,769     0       499,995     499,287       1,649,030         0         118,071       3,415,151  
Officer 2012 634,885 0 500,006 476,749 1,805,264 1,747,802 133,278 5,297,985
(1) The amounts in column (e) reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards of restricted stock units and restricted stock awards granted pursuant to the Corporate Performance Plan. In addition to restricted stock units granted under the Corporate Performance Plan, Messrs. McRae and Clappin received a special grant of restricted stock of 36,000 and 12,000 shares respectively on February 5, 2014 to recognize their significant contributions in the acquisition of Corning Precision Materials beyond their normal responsibilities. Assumptions used in the calculation of these amounts are included in Note 19 to the Company’s audited financial statements for the fiscal year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 13, 2015. This same method was used for the fiscal years ended December 31, 2013 and 2012. There can be no assurance that the grant date fair value amounts will ever be realized.

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(2) The amounts in column (f) reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of stock option awards granted pursuant to the Corporate Performance Plan. Assumptions used in the calculation of these amounts are included in Note 19 to the Company’s audited financial statements for the fiscal year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 13, 2015. There can be no assurance that the grant date fair value amounts will ever be realized.
(3) The amounts in column (g) reflect the sum of annual short term incentive payments and earned cash performance units. All of the annual cash bonuses paid to the NEOs are performance-based. Cash bonuses are paid annually through two plans: (i) GoalSharing; and (ii) the Performance Incentive Plan. Awards earned under the 2014 GoalSharing plan were 6.75% of each Named Executive Officer’s year-end base salary and paid in February 2015. Awards earned under the 2014 Performance Incentive Plan were based on actual corporate performance compared to the core EPS and core net sales goals established for the plans in February 2014. Based on actual performance, each of the NEOs earned PIP awards equal to 123% of their annual target bonus opportunities (established as a percentage of year-end base salary). Cash awards earned under the PIP for 2014 will be paid in March 2015. The following table indicates awards earned under the GoalSharing Plan and the PIP reflected in column (g) above:
          Named Executive Officer      Year End Base
Salary
     2014
PIP Target
     Actual 2014 PIP
Performance
Results
(% Tgt.)
     2014
PIP $ Award
     Actual 2014
GoalSharing
Performance
     2014
GoalSharing
Award
  
Wendell P. Weeks     $      1,284,000         140 %              123 %             $     2,211,048         6.75 %           $     86,670     
James B. Flaws 964,000 90 % 123 % 1,067,148 6.75 % 65,070
James P. Clappin 660,000 75 % 123 % 608,850 6.75 % 44,550
Lawrence D. McRae 660,000 75 % 123 % 608,850 6.75 % 44,550
Kirk P. Gregg 679,000 75 % 123 % 626,378 6.75 % 45,833
      

CPU Awards under the 2014 CPP are based on actual corporate performance compared to the established performance goals averaged over three years (2014, 2015 and 2016). The goals for 2014 were adjusted operating cash flow (70%) and core net sales (30%). Goals for 2015 were established in February 2015 and goals for 2016 are yet to be established. While the final award amount is unknown, as it is based on the average of the three years, the table below reflects the target amount of CPUs and the prorated awards earned on the basis of the 2014 metrics which are reflected in column (g) above:


          Named Executive Officer      2014 CPU
Target Award
     2014 CPU
Performance
Results
     Prorated Earned
CPU Award
Based on
2014 Performance
(Year One
of Three)
     Prorated Earned
CPU Award
Based on
2015 Performance
(Year Two
of Three)
     Prorated Earned
CPU Award
Based on
2016 Performance
(Year Three
of Three)
  
Wendell P. Weeks $     4,200,000       121 %              $     1,694,000        TBD TBD
James B. Flaws 2,100,000 121 % 847,000 TBD TBD
James P. Clappin 1,200,000 121 % 484,000 TBD TBD
Lawrence D. McRae 1,200,000 121 % 484,000 TBD TBD
Kirk P. Gregg 1,200,000 121 % 484,000 TBD TBD
(4) The amounts in column (h) reflect the increase in the actuarial present value of the NEO’s benefits under all defined benefit pension plans established by the Company determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. Although column (h) is also used to report the amount of above market earnings on compensation that is deferred under the nonqualified deferred compensation plans, Corning does not have any above market earnings under its nonqualified deferred compensation plan, also referred to as the Supplemental Investment Plan. In 2014, the discount rate used to value the actuarial liability decreased 75 basis points from 4.75% to 4.00% and mortality assumptions were updated. Together these changes in actuarial assumptions resulted in an increase in present value of pension benefits without any material change to the underlying benefit programs. Discount rate changes over the past several years have resulted in significant year-to-year fluctuations in the present value of pension benefits as shown below:
          Named Executive Officer      2014 Present
Value in
Pension
Benefits
     2013 Present
Value in
Pension
Benefits
     2012 Present
Value in
Pension
Benefits
     2011 Present
Value in
Pension
Benefits
  
  Wendell P. Weeks $     22,572,362 $     18,226,243 $     19,866,606 $     18,672,934
James B. Flaws 20,833,513 19,184,821 21,303,404 19,333,370
James P. Clappin 8,633,886 ---------------------------Not an NEO----------------------------
Lawrence D. McRae 9,501,949 7,600,932 8,018,800 6,773,332
Kirk P. Gregg 11,266,446 9,785,453 10,666,897 8,919,095
Valuation Discount Rate 4.00 % 4.75 % 3.75 % 4.75 %

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Compensation Discussion & Analysis


(5) The following table shows “All Other Compensation” amounts provided to the NEOs. Capped personal aircraft usage and home security are the only perquisites offered to the NEOs. The value of the personal aircraft rights in the table below reflects the incremental cost of providing such perquisites and is calculated based on the average variable operating costs to the Company. Hourly rates are developed using variable operating costs that include fuel costs, mileage, maintenance, crew travel expense, catering and other miscellaneous variable costs. Fixed costs that do not change based on usage, such as pilot salaries, hanger expense and general taxes and insurance are excluded.
          Named Executive Officer        Year      Company
Match on
Qualified
401(k) Plan
     Company
Match on
Supplemental
Investment
Plan
     Value of
Personal
Aircraft
Rights
(i)
     Value of
Home
Security
Costs
     Expatriate
Benefits
     Other(ii)      TOTALS   
Wendell P. Weeks 2014    $    9,468       $    185,953    $    62,221 $    384,422 (iii) $   0 $   5,319 $   647,382
2013 9,468 200,144 56,143 502,938 (iii) 0 6,270 774,963
2012 9,262 78,446 87,356 391,865 (iii) 0 5,368 572,297
James B. Flaws 2014 14,203 102,527 86,877 11,472 0 7,819 222,817
2013 14,203 108,853 91,592 11,472 0 7,822 233,942
  2012 13,894 49,440 81,414 23,378 0 6,407 174,533
James P. Clappin 2014 7,101 60,889 43,097 0 1,720,103 (iv) 17,745 1,848,935
Lawrence D. McRae 2014 16,055 0 36,745 11,472 0 319 64,591
2013 15,746 0 47,719 11,472 0 324 75,261
2012 15,437 0 23,154 23,355 0 368 62,315
Kirk P. Gregg 2014 10,222 38,868 69,393 11,472 0 319 130,274
2013 10,200 41,161 54,913 11,472 0 324 118,071
2012 10,000 18,513 78,272 23,355 0 3,139 133,278
(i) This program is tracked on a December 1 to November 30 year.
(ii) These amounts include cost attributable to executive physicals, including associated travel costs, an annual Board gift, and contributions made under the Corning Foundation Matching Gift Program.
(iii) This reflects company-paid expenses relating to personal and residential security benefitting Mr. Weeks and, through association, his family. Beginning late in 2014, these costs have declined from the levels of recent years, and are expected to decline further in 2015. Mr. Weeks’ personal safety and security are of vital importance to the company’s business and prospects, and the Board considers these costs, and the associated expense reduction program to be appropriate. However, because these costs can be viewed as conveying a personal benefit to Mr. Weeks, there are reported as perquisites in this column.
(iv) This reflects expenses pursuant to our standard global mobility program in connection with Mr. Clappin’s assignment in Tokyo, Japan as President, Corning Glass Technologies. Amounts listed include standard expatriate benefits related to housing related costs ($212,193), cost of living related allowances ($111,054), home leave ($9,279), as well as tax equalization and host country tax payments ($1,387,477). Tax equalization expenses arise from additional taxes payable in respect of Mr. Clappin’s compensation as a result of his residency in Japan as well as U.S. taxation. The policies in our global mobility program are designed to enable us to relocate talent where needed throughout our global business.
(6) Mr. Flaws was paid a retention payment of $1.5 million in each of 2012, 2013 and 2014 for his agreement to stay at the company past his anticipated retirement date to allow for staggered NEO retirements and successions. The payment made in April 2014 represents the final payment to Mr. Flaws from this retention arrangement approved by the Committee in July 2012, and no further retention arrangements are in place or planned.

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Compensation Discussion & Analysis


Grants of Plan Based Awards

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
(a) (b) (c) (d)(1) (e)(1) (f)(1) (g) (h) (i) (j) (k)
  Named
Executive
Officer
  Award   Grant
Date
  Date of
Committee
Action
  Threshold   Target   Maximum   All Other
Stock
Awards:
Number
of Shares
of Stock or
Units
  All Other
Option
Awards:
Number of
Securities
Underlying
Options
  Exercise
or Base
Price of
Option
Awards
  Closing
Market
Price on
Date of
Grant
  Grant Date
Fair Value
of Stock
and Option
Awards
 
Wendell P. Performance                                        
Weeks Incentive Plan n/a $   0 $   1,797,600 3,595,200
GoalSharing Plan n/a 0 64,200 128,400
  Cash Performance
Units 2/5/14 2/5/14 0 4,200,000 (2) 6,300,000 (3)
Time-Based
Restricted Stock  
Units 3/31/14 2/5/14 84,054 20.82 1,750,004 (4)
Stock Options 3/31/14 2/5/14 42,027 20.82 20.82 $   342,388 (5)
Stock Options 4/30/14 2/5/14 41,846 20.91 20.91 $ 347,462 (5)
Stock Options 5/30/14 2/5/14 41,080 21.30 21.30 $ 347,464 (5)
James B. Performance
Flaws Incentive Plan n/a 0 867,600 1,735,200
GoalSharing Plan n/a 0 48,200 96,400
Cash Performance
Units 2/5/14 2/5/14 0 2,100,000 (2) 3,150,000 (3)
Time-Based
Restricted Stock
Units 3/31/14 2/5/14 42,027   20.82 875,002 (4)
Stock Options 3/31/14 2/5/14 21,013 20.82 20.82 $ 171,190 (5)
Stock Options 4/30/14 2/5/14 20,923 20.91 20.91 $ 173,731 (5)
Stock Options 5/30/14 2/5/14 20,540 21.30 21.30 $ 173,732 (5)
James P. Performance
Clappin Incentive Plan n/a 0 495,000 990,000
GoalSharing Plan n/a 0 33,000 66,000
Cash Performance
Units 2/5/14 2/5/14 0 1,200,000 (2) 1,800,000 (3)
Time-Based
Restricted Stock  
Awards 2/5/14 2/5/14 12,000 (6) 17.55 210,600
Time-Based
Restricted Stock
Units 3/31/14 2/5/14 24,015 20.82 499,992 (4)
Stock Options 3/31/14 2/5/14 12,008 20.82 20.82 $ 97,828 (5)
Stock Options 4/30/14 2/5/14 11,956 20.91 20.91 $ 99,275 (5)
Stock Options 5/30/14 2/5/14 11,737 21.30 21.30 $ 99,274 (5)
Lawrence D. Performance
McRae Incentive Plan n/a 0 495,000 990,000
GoalSharing Plan n/a 0 33,000 66,000
Cash Performance
Units 2/5/14 2/5/14 0 1,200,000 (2) 1,800,000 (3)
Time-Based
Restricted Stock
Awards 2/5/14 2/5/14 36,000 (6) 17.55 631,800
Time-Based
Restricted Stock
Units 3/31/14 2/5/14 24,015 20.82 499,992 (4)
Stock Options 3/31/14 2/5/14 12,008 20.82 20.82 $ 97,828 (5)
Stock Options 4/30/14 2/5/14 11,956 20.91 20.91 $ 99,275 (5)
Stock Options 5/30/14 2/5/14 11,737 21.30 21.30 $ 99,274 (5)

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Table of Contents

Compensation Discussion & Analysis


Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
(a) (b) (c) (d)(1)   (e)(1) (f)(1) (g) (h) (i) (j) (k)
   Named
Executive
Officer
   Award    Grant
Date
   Date of
Committee
Action
   Threshold    Target    Maximum    All Other
Stock
Awards:
Number
of Shares
of Stock or
Units
   All Other
Option
Awards:
Number of
Securities
Underlying
Options
  
Exercise
or Base
Price of
Option
Awards
   Closing
Market
Price on
Date of
Grant
  
Grant Date
Fair Value
of Stock
and Option
Awards
  
Kirk P. Gregg Performance
  Incentive Plan n/a 0 $ 509,250 $ 1,018,500
GoalSharing Plan n/a 0 33,950 67,900
Cash Performance
Units 2/5/14 2/5/14 0 1,200,000 (2) 1,800,000 (3)
Time-Based
Restricted Stock
Units 3/31/14 2/5/14 24,015 20.82 499,992 (4)
Stock Options 3/31/14 2/5/14 12,008 20.82 20.82 $   97,828 (5)
Stock Options 4/30/14 2/5/14 11,956 20.91 20.91 $ 99,275 (5)
Stock Options 5/30/14 2/5/14 11,737 21.30 21.30 $ 99,274 (5)
(1) The amounts shown in columns (d), (e) and (f) reflect the award amounts under (i) the Company’s 2014 PIP (ii) 2014 GoalSharing Plan and (iii) the CPUs under the 2014 Corporate Performance Plan. Awards under these plans are paid in cash. If the threshold level of performance is not met, the payout will be 0%. If the target amount of performance is met for GoalSharing and PIP, the payout is 100% of the target award. If the maximum level of performance is met for GoalSharing and PIP the payout is 200% of the target award. PIP and GoalSharing are based on the individual’s 2014 year-end base salary and bonus target.
(2) This amount reflects the target value of CPUs that were approved for such NEO on February 5, 2014 under the 2014 Corporate Performance Plan. Actual awards earned for these cash units may range from 0-150% of the target award, based on average performance over three performance years (2014, 2015, 2016) and will be payable in February 2017.
(3) This amount reflects maximum (150% of target) amount of CPUs that were approved for such NEO on February 5, 2014 under the 2014 Corporate Performance Plan. Actual awards earned for these cash units may range from 0-150% of the target award, based on average performance over three performance years (2014, 2015, 2016) and will be payable in February 2017.
(4) This amount reflects the total grant date fair value computed in accordance with FASB ASC Topic 718 of stock awards granted in calendar year 2014 pursuant to the 2014 Corporate Performance Plan, and, after considering footnote (5) below, corresponds to the amounts set forth in column (e) for 2014 of the Summary Compensation Table. Stock awards vest 100% three years after grant date.
(5) These amounts reflect the total grant date fair value computed in accordance with FASB ASC Topic 718 of stock options granted in calendar year 2014 pursuant to the 2014 Corporate Performance Plan, and corresponds to the amounts set forth in column (f) for 2014 of the Summary Compensation Table. Stock options vest 100% three years after grant date.
(6) Mr. McRae and Mr. Clappin each received a special grant of restricted stock on February 5, 2014 to recognize their significant contributions in the acquisition of Corning Precision Materials beyond their normal responsibilities. These grants are reflected in column (e) of the Summary Compensation Table.

50     CORNING INCORPORATED - 2015 Proxy Statement



Table of Contents

Compensation Discussion & Analysis


Outstanding Equity Awards at Fiscal Year-End

The following table shows stock option awards classified as exercisable and unexercisable as of December 31, 2014. The table also shows unvested restricted stock awards assuming a market value of $22.93 a share (the NYSE closing price of the Company’s stock on December 31, 2014).

Option Awards Stock Awards
(a) (b) (c) (d) (e) (f)(2) (g)(3)
   Named
Executive
Officer
   Grant
Date
   Vesting
Code(1)
   Number of
Securities Underlying
Unexercised Options
Exercisable
   Number of
Securities Underlying
Unexercised Options
Unexercisable
   Option
Exercise
Price
   Option
Expiration
Date
   Number of
Shares or Units
of Stock That
Have Not Vested
   Market Value of
Shares or Units
of Stock That
Have Not Vested
  
Wendell P. Weeks 12/07/05 A             161,500                          0             $ 21.08 12/6/2015          337,250               $    7,733,143     
01/02/06 B 80,750 0 19.68 1/1/2016
02/01/06 C   80,750 0 24.72 1/31/2016
12/06/06 A 136,500 0 21.89 12/5/2016
01/02/07 B 68,250 0 18.85 1/1/2017
02/01/07 C 68,250 0 20.86 1/31/2017
12/05/07 A 153,500 0 24.92 12/4/2017
01/02/08 B 76,750 0 23.37 1/1/2018
  02/01/08 C 76,750 0 24.61 1/31/2018
12/02/09 D 65,333   0 17.82 12/2/2019
01/04/10 D 65,333 0 19.56 1/4/2020
02/01/10 D 65,334 0 18.16 2/1/2020
01/03/11 D 67,551 0   19.19 1/3/2021
02/01/11 D 57,131   0 22.69 2/1/2021
03/01/11 D 58,842 0 22.03 3/1/2021
01/03/12 C 0 111,835 13.04 1/3/2022
02/01/12 C 0 113,049 12.90 2/1/2022
03/01/12 C 0 112,439 12.97 3/1/2022