DEF 14A 1 corning3168461-def14a.htm DEFINITIVE PROXY STATEMENT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.            )
 
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Check the appropriate box:
 
[   ]        Preliminary Proxy Statement
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[X]   Definitive Proxy Statement
[   ]   Definitive Additional Materials
[   ]   Soliciting Material Pursuant to §240.14a-12

  Corning Incorporated  
  (Name of Registrant as Specified In Its Charter)  
 
       
 
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Our Values

Corning is guided by an enduring set of Values that define our relationships with employees, customers, and the communities in which we operate.

Quality    Integrity   Performance    Leadership
 

Total Quality is the guiding principle of Corning’s business life. It requires each of us, individually and in teams, to understand, anticipate, and surpass the expectations of our customers.

Integrity is the foundation of Corning’s reputation. We have earned the respect and trust of people around the world through more than a century of behavior that is honest, decent, and fair.

Providing Corning shareholders a superior long-term return on their investment is a business imperative. This requires that we allocate our resources to ensure profitable growth, maintain an effective balance between today and tomorrow, deliver what we promise, and tie our own rewards directly to our performance.

 

Corning is a leader, not a follower. Our history and our culture impel us to seek a leadership role in our markets, our multiple technologies, our manufacturing processes, our management practices, and our financial performance. The goods and services we produce are never merely ordinary and must always be truly useful.

 
Innovation Independence The Individual
 

Corning leads primarily by technical innovation and shares a deep belief in the power of technology. The company has a history of great contributions in science and technology, and it is this same spirit of innovation that has enabled us to create new products and new markets, to introduce new forms of corporate organization, and to seek new levels of employee participation.

Corning cherishes — and will defend — its corporate freedom. That independence is our historic foundation. It fosters the innovation and initiative that has made our company great, and will continue to provide inspiration and energy to all parts of our network in the future.

We know that in the end the commitment and contribution of all our employees will determine our success. Corning believes in the fundamental dignity of the individual. Our network consists of a rich mixture of people of diverse nationality, race, gender, and opinion, and this diversity will continue to be a source of our strength.




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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 2017 Annual Meeting in Corning, New York, on April 27 at 11 a.m. Eastern Time.

The Annual Meeting is your chance to hear directly from leadership about Corning’s 2016 financial performance, our progress against our Strategy and Capital Allocation Framework, and our expectations for 2017 and the future. It is also one of your opportunities to participate in our corporate governance process. Shareholders will vote on the annual election of directors and the ratification of Corning’s independent registered public accounting firm for 2017. They will also provide advisory votes on the 2016 compensation for our named executive officers and the frequency with which we hold advisory votes on executive compensation.

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 27 so that your shares will be represented and voted at the meeting.

Your voice really matters. You‘ll recall that we implemented changes in 2015 in response to your feedback, including adopting the principles of the Shareholder-Director Exchange protocol to help formalize our shareholder engagement process. As part of our commitment to soliciting feedback, we engaged in extensive outreach to shareholders in 2016. We met with approximately two-thirds of our top-50 shareholders (which represent 40% of our outstanding shares) and discussed a variety of topics, including corporate governance and compensation matters.

Of course, our performance remains one of the most important ways we earn your trust. We are proud of our achievements — particularly the progress we have made against our Strategy and Capital Allocation Framework. We strengthened our portfolio with strategic acquisitions and the realignment of Dow Corning. We launched new products and gained traction with customers on key growth initiatives. And we delivered significant value for shareholders through share repurchases and dividend increases of 12.5% in 2016 and 14.8% for dividends to be paid in 2017.

I look forward to sharing more details at the Annual Meeting. 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





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Notice of 2017 Annual
Meeting of Shareholders


 
      Thursday, April 27, 2017      
 
11:00 a.m. Eastern Time
 
The Corning Museum
of Glass
One Museum Way, Corning, New York 14830
 
   
 
www.corning.
com/2017-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.
 

ITEMS OF BUSINESS

1. Election of all 13 directors to our Board of Directors for the coming year;
2. Approval, on an advisory basis, of our executive compensation;
3. Advisory vote on the frequency with which we hold advisory votes on our executive compensation;
4. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm;
5. Re-approval of the material terms of the performance goals under our 2012 Long-Term Incentive Plan, as required by Section 162(m) of the U.S. Internal Revenue Code, as amended; and
6. Transaction of any other business properly brought before the meeting or any adjournment.

RECORD DATE
You may vote at our 2017 Annual Meeting if you were a shareholder of record at the close of business on February 27, 2017.
Your vote is important to us. Please exercise your right to vote.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on April 27, 2017: our Proxy Statement, 2016 Annual Report and other materials are available on our website at www.corning.com/2017-proxy.

Sincerely,

Linda E. Jolly
Vice President and Corporate Secretary
March 17, 2017

VOTE RIGHT AWAY
Your vote is very important. Even if 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 mobile Internet By mail By Internet

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 the proxy card
and send by mail
Visit 24/7
www.investorvote.
com/glw
Our Proxy Statement, the accompanying proxy card and our 2016 Annual Report were first distributed or made available to shareholders on or about March 17, 2017. 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.


              2     CORNING 2017 PROXY STATEMENT



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5 Proxy Statement Summary
 
14 Corporate Governance and the Board of
Directors
14    Corporate Governance
15 Board Leadership Structure
15 Lead Independent Director
16 Management Succession Planning
16 Risk Oversight
17 Committees
17               Audit
17               Compensation
17               Corporate Relations
17               Executive
17               Finance
18               Nominating and Corporate Governance
18 Board and Shareholder Meeting Attendance
18 Director Independence
19 Policy on Transactions with Related Persons
19 Compensation Committee Interlocks and Insider
       Participation
20 Other Matters
20 Ethics and Conduct
21 Lobbying and Political Contributions Policy
21 Communications with Directors
21 Corporate Governance Materials Available on
       Corning’s Website
 
22 Proposal 1
Election of Directors
22 Board of Directors’ Qualifications and Experience
23 Board Nomination and Renewal Process
24 Shareholder Nominations of Director Candidates
24 2017 Nominees for Director
32    Director Compensation
32 2016 Director Compensation
34 2016 Director Compensation Table
 
35 Stock Ownership Information
35 Stock Ownership Guidelines
36 Beneficial Ownership of Directors and Officers
37 Beneficial Ownership of Corning’s Largest
       Shareholders
37 Section 16(a) Beneficial Ownership Reporting
       Compliance
 
38 Proposal 2
Advisory Vote to Approve Executive
Compensation (Say on Pay)
38 Say on Pay Proposal
 
39 Compensation Discussion & Analysis
40 Executive Summary
41 Company Performance Overview
44 2016 Executive Compensation Program Overview
46 2016 Executive Compensation Program Details
50 Compensation Peer Group
51 Compensation Program Governance
53 Compensation Committee Report
54 2016 Compensation Tables
54               2016 Summary Compensation Tables
57               2016 Grants of Plan Based Awards
59               Outstanding Equity Awards at 2016 Fiscal
                     Year-End
62              Option Exercises and Shares Vested in
                     2016
62 Retirement Plans
64 Nonqualified Deferred Compensation
65 Arrangements with Named Executive Officers


CORNING 2017 PROXY STATEMENT     3              



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              4     CORNING 2017 PROXY STATEMENT



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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.

 
      Annual Meeting
of Shareholders
     
 
  Date and Time
April 27, 2017, 11:00 a.m. (ET)
 
Place
The Corning Museum
of Glass
One Museum Way
Corning, New York 14830
 
Record Date
February 27, 2017
 
Admission
See the instructions
contained in “Frequently
Asked Questions about
the Meeting and Voting”
on page 80.
 
 
On March 17, 2017, we
posted on our website at
www.corning.com/2017-
proxy, and began mailing
to shareholders who
requested paper copies,
this proxy statement,
the accompanying
proxy card and our
2016 Annual Report.
 

Proposals That Require Your Vote

Proposal         Board Vote
Recommendation
        More
Information
1

Election of directors

For Each Nominee

page 22

2

Advisory vote to approve the Company's executive compensation

For

page 38

3

Advisory vote on the frequency with which we hold
advisory votes on executive compensation

Every Year

page 69

4

Ratification of appointment of independent registered
public accounting firm

For

page 70

5

Re-approval of the material terms of the performance
goals under our 2012 Long-Term Incentive Plan as
required by Section 162(m) of the U.S. Internal Revenue
Code

For

page 74

Business Information – Who We Are

Corning is one of the world’s leading innovators in materials science. For more than 165 years, Corning has applied its unparalleled expertise in specialty glass, ceramics and optical physics to develop products that have created new industries, transformed people’s lives and unleashed significant new capabilities. Our innovation approach delivers long-term value for Corning and its shareholders.

Our reportable segments are as follows:

Reportable
Segments
        2016 Core
Net Sales %
        Segments Description

Display
Technologies

manufactures glass substrates for flat panel liquid crystal displays (LCDs)

Optical
Communications

manufactures carrier and enterprise network components for the telecom and data center industries

Environmental
Technologies

manufactures ceramic substrates and filters for automotive and diesel emissions control

Specialty
Materials

manufactures glass, glass ceramics, and crystals tuned for specific applications including mobile covers

Life Sciences

manufactures glass and plastic labware, equipment, media and reagents to provide workflow solutions for scientific applications



CORNING 2017 PROXY STATEMENT     5              



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Our 2016 Performance Highlights

Net Sales Earnings per Share Cash Flows From
Operating Activities
2016 GAAP Results $9,390
million
$3.23
(diluted)
$2,521
million
Core Performance Measures $9,710
million
Core Net Sales
$1.55
(diluted)
Core EPS
$2,769
million
Adjusted Cash Flows From
Operating Activities

Core Performance Measures. We utilize certain financial measures and key performance indicators that are not calculated in accordance with GAAP to assess our financial and operating performance. Core Net Sales, Core Earnings per Share (Core EPS), and Adjusted Operating Cash Flow are non-GAAP financial measures utilized by our management to analyze financial performance without the impact of items that are driven by foreign exchange rate volatility and events that do not reflect the underlying fundamentals and trends in the Company’s operations. We began utilizing Core Performance Measures in 2013 in response to the fact that our LCD glass business, and therefore our net income and cash flow translations, was significantly impacted by foreign currency exchange rate volatility. Our Core Performance Measures use constant Japanese yen-to-U.S. dollar and constant South Korean won-to-U.S. dollar exchange rates to remove the volatility of currency fluctuations, and exclude the often-volatile mark-to-market valuations of the hedging contracts we use to mitigate the impact of changes in currency exchange rates on our earnings and cash flows. We have hedged approximately 70% of our projected yen exposure through 2022. Our Core Performance Measures are used by management to obtain a clearer view of Corning’s operating results, and accordingly form the basis for our compensation performance metrics. Non-GAAP measures are not an alternative, or a replacement, for financial results determined in accordance with generally accepted accounting principles. Please see Appendix A to this proxy statement for a reconciliation of the non-GAAP measures we use in this proxy statement to our audited GAAP financial statements.

              6     CORNING 2017 PROXY STATEMENT



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Proxy Statement Summary

Strategy and Capital Allocation Framework

In October 2015, we announced our Strategy and Capital Allocation Framework (the Framework). Communicating our strategy and capital stewardship objectives to our shareholders and the broader investment community is critically important and we designed the Framework to provide investors with a foundation to understand our resource allocation decisions.

Leadership Priorities through 2019
Focus Portfolio and Utilize Financial Strength

Focus Portfolio: Deliver strong financial performance and capital stewardship
   
          Improve ROIC
Create new sales and profit streams
Seek upside for cash distributions, eg., potential transactions outside focus areas

Utilize Financial Strength: Deploy $26-$30B Cash Through 2019
   
          Deliver >$12.5B to shareholders including >10% annual dividend increases
Invest ~$10B in our growth and sustained leadership
Target Debt/Target EBITDA* » 2x (i.e., BBB+ rating)

Since the introduction of our Framework, we have:
• Returned $6B to Shareholders
• Realigned Our Interest in Dow Corning
• Advanced Focused Portfolio Growth Initiatives

* Target Debt to Target EBITDA, see Appendix A for definitions

Focusing Our Portfolio: The Framework focuses our portfolio on a set of reinforcing capabilities with strong interconnections. Our best-in-the-world capabilities include three core technologies (glass science, ceramics science, and optical physics), four manufacturing and engineering platforms (vapor deposition, fusion, extrusion, and precision forming), and five market-access platforms (optical communications, display, mobile consumer electronics, automotive, and life sciences vessels). We direct 80 percent or more of our resources to opportunities that combine these capabilities. We believe this approach reduces the cost of innovation, increases our likelihood of success, and creates higher barriers to entry for our competitors. Focusing our portfolio also means we may make strategic acquisitions that enhance our product portfolio or increase our market reach, as well as divestitures that deliver value for shareholders.

FOCUSED PORTFOLIO: HIGHER SUCCESS RATE, LOWER COSTS, AND BETTER COHESION

CORNING 2017 PROXY STATEMENT     7              



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Proxy Statement Summary

Utilizing Our Financial Strength: We expect to generate and deploy $26 to $30 billion through 2019. We will invest $10 billion to grow and maintain our market leadership positions. We also plan to distribute more than $12.5 billion to our shareholders through share repurchases and annual dividend increases of at least 10 percentage points annually. Note that, in June 2016, we increased the amount we expect to distribute to shareholders from our original plan of $10 billion, which underscores our confidence in Corning’s future operating cash flows.

2016-2019 CAPITAL ALLOCATION MODEL


(1) In June 2016, Corning updated its Strategy and Capital Allocation Framework to reflect the realignment of its interest in Dow Corning: eliminating ~$800M in dividends; adding $4.8B in cash; raising Total Funds Available to $26-$30B; and increasing shareholder returns to more than $12.5B
(2) Target Debt to Target EBITDA, see Appendix A for definitions
(3) Total Funds Available range assumes benefits/risks of current hedge ratio through 2022

Performance against the Framework: Since introducing the Framework, we realigned our interest in Dow Corning Corporation in our portfolio, which created significant value for shareholders, including unlocking $4.8 billion in cash. We strengthened our position in Optical Communications with two acquisitions to expand our access to various segments of the telecommunications market. We also entered into a joint venture with Saint-Gobain Sekurit to develop automotive glazing solutions.

Our focus on innovation continued in 2016, resulting in the launch of new products and traction with customers on key growth initiatives, including:

Expanding our cover-glass portfolio with Vibrant® Gorilla®Glass, which enables high-resolution designs for smartphones, tablets, and notebooks; Gorilla®Glass 5, which offers superior drop performance versus its predecessor and competitive technologies; and Gorilla® Glass SR+ for wearable devices.
Leveraging our competitive advantages and market-leading products to continue to win business in the optical market, with customer commitments and demand that support the capacity expansions now underway.
Winning business in the automotive sector for both substrates and our new gas particulate filters. We anticipate that our gas particulate filters will increase our sales opportunity by a factor of 3-to-4 per vehicle.
Expanding the opportunities for Corning Gorilla Glass in the automotive market. The 2016 Paris Auto Show featured a curved console and instrument panel, and our Gorilla Glass-enabled concept car was lauded as one of the highlights of the Consumer Electronics Show in January 2017.
Technical and commercial progress on Corning Iris™ glass.

              8     CORNING 2017 PROXY STATEMENT



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Proxy Statement Summary

Since introducing the Framework, we have distributed approximately $6 billion to shareholders through share repurchases and dividends. Our Board approved a new $4 billion share repurchase authorization in December 2016, and annual dividend increases of 12.5% in 2016 and 14.8% in February 2017, as part of our ongoing commitment to return cash to our investors.

The Framework has paid off from a financial perspective, as well. Between October 2015 (when we introduced the Framework) and December 2016, Corning had total shareholder return of approximately 50% versus 14% for the S&P 500 Index (both dividend adjusted).

 
    Since 2012,    
Corning has returned nearly
$15 billion
to shareholders.
 
  
  We intend to return
more than
$12.5 billion
to our shareholders
from October 2015
through 2019.
 
 


  









ANNUAL DISTRIBUTIONS TO SHAREHOLDERS (in $ millions)
     



ANNUAL DIVIDENDS PER COMMON SHARE AND INCREASE OVER PREVIOUS YEAR



CORNING 2017 PROXY STATEMENT     9              



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Proxy Statement Summary

Our Director Nominees

All directors are independent with the exception of Mr. Weeks.

Name and Primary Occupation      Age        Director
since
       Committee Memberships*      Other Public 
Company Boards    
Donald W. Blair
Retired Executive Vice President and
Chief Financial Officer, NIKE, Inc.
58 2014
Audit
Finance
0
Stephanie A. Burns
Retired Chairman and Chief Executive Officer,
Dow Corning Corporation
62 2012
Audit
Corporate Relations
(Chair)
2
John A. Canning, Jr.
Chairman,
Madison Dearborn Partners, LLC
72 2010
Executive
Finance
Governance
0
Richard T. Clark
Retired Chairman, Chief Executive Officer
and President, Merck & Co., Inc.
70   2011  
Compensation
Executive
Governance
  1
Robert F. Cummings, Jr.
Retired Vice Chairman of Investment Banking,
JPMorgan Chase & Co.
67 2006
Executive
Finance (Chair)
Governance
1
Deborah A. Henretta
Retired Group President of Global E-Business,
Procter & Gamble Company
  55 2013
Audit
Corporate Relations
3
Daniel P. Huttenlocher
Dean and Vice Provost,
Cornell Tech
58 2015
Audit
Finance
1
Kurt M. Landgraf
Retired President and Chief Executive Officer,
Educational Testing Service
70 2007
Audit (Chair)
Compensation
Executive
1
Kevin J. Martin
Vice President, Mobile and Global Access Policy,
Facebook, Inc.
50 2013
Corporate Relations
Governance
0
Deborah D. Rieman
Retired Executive Chairman,
MetaMarkets Group
67 1999
Audit
Compensation (Chair)
1
Hansel E. Tookes II
Retired Chairman and Chief Executive Officer,
Raytheon Aircraft Company
69 2001
Compensation
Executive
Governance (Chair)
3
Wendell P. Weeks
Chairman, Chief Executive Officer and President,
Corning Incorporated
57 2000
Executive (Chair)
2
Mark S. Wrighton
Chancellor and Professor of Chemistry,
Washington University in St. Louis
67 2009
Audit
Finance
2

* Audit = Audit Committee; Compensation = Compensation Committee; Corporate Relations = Corporate Relations Committee; Executive = Executive Committee; Finance = Finance Committee; Governance = Nominating and Corporate Governance Committee

              10     CORNING 2017 PROXY STATEMENT



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Proxy Statement Summary

Governance Highlights

Corning is committed to maintaining strong corporate governance as a critical component of 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.

In the last two years, we have enhanced our governance in the following ways:

amended our by-laws to adopt proxy access to allow a mechanism for long-term shareholders to submit director nominees; 
adopted the principles embodied in the Shareholder-Director Exchange (SDX) Protocol; and 
enhanced our public disclosures regarding political spending and lobbying activities.

The Corporate Governance section beginning on page 14 describes our governance framework, which includes the following:

Annual election of all directors 
Majority vote standard for the election of directors in uncontested elections 
Active shareholder engagement to better understand investor perspectives
A Lead Independent Director
Independent board committees, with all committees (except the Executive Committee) consisting entirely of independent directors
Executive sessions of independent directors held regularly
Robust stock ownership guidelines for directors and named executive officers
Prohibition on pledging, hedging or trading in derivatives of the Company’s stock for directors and employees
Clawback policy for executive incentive compensation in the event of certain financial restatements



Shareholder Communication

Communicating our Framework to our shareholders and the broader investment community is critically important and is effected through quarterly earnings conference calls and materials, Securities and Exchange Commission (SEC) filings, Investor Day, investor conferences, our website at www.corning.com and other electronic communications. In addition, executives routinely engage with shareholders and organizations interested in our performance or business practices through meetings and calls.

We discuss a wide range of strategic topics with a broad group of shareholders, and we continued this practice in 2016.

In 2016, as part of this shareholder outreach program, we met with shareholders representing approximately 40% of our outstanding shares. In these meetings, we heard many constructive comments on strategy, capital allocation, governance, compensation, shareholder communications, and shareholder proposals. We learned through these meetings that our shareholders generally approved of our Framework. These shareholders also were generally supportive of our executive compensation program and the direct linkage of financial metrics in our incentive plans to our Framework. As in previous years, shareholders were not prescriptive about compensation plan design. Instead, they were more interested to see that the results and outcomes delivered by the incentive plans were aligned appropriately with Corning’s performance and had appropriately incented our executives to deliver on our Framework. Additionally, after considering shareholder input, in 2016 we (a) began providing semi-annual disclosure on www.corning.com regarding our political contributions and lobbying activities and (b) added the three-year modifier to the cash performance unit component of our executive long-term incentive plan described on page 13. Outreach discussions in the fall focus on corporate governance matters, and discussions in the spring tend to focus on issues related to the proxy statement. We also conduct general “off-season” outreach to the governance teams at our most significant investors. In the fall of 2015, our Board adopted the principles embodied in the Shareholder-Director Exchange (SDX) Protocol as a guide for effective, mutually beneficial engagement between shareholders and directors, which now guides our shareholder outreach activities.

CORNING 2017 PROXY STATEMENT     11              



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Proxy Statement Summary

Commitment to Sustainability

We believe that a commitment to positive environmental, social and governance-related business practices strengthens our company, increases our connection with our shareholders, and helps us better serve our customers and the communities in which we operate. We also see in these commitments new ways of creating additional value for our shareholders, our employees, our customers, and the wider world. As part of our corporate risk management process, the Board and our management also monitor long-term risks that may be impacted by environmental, social and governmental events.

Among the ways in which Corning has demonstrated its commitment to sustainability include:

In 2016, Corning’s commitment to positive environmental, social and governance-related business practices resulted in it receiving an “AA” rating by MSCI ESG Research, Inc., placing Corning among the top 20% of companies in our industry.
For over forty years, Corning has been a leader in developing clean-air technologies.
Over the last ten years, Corning has increased its own energy efficiency by a double-digit percentage and expanded its use of renewables. In recognition of this progress, the U.S. Environmental Protection Agency has awarded Corning the ENERGY STAR® Partner of the Year for the last three years. Corning was recognized in 2016 for its Sustained Excellence, an additional honor given to companies that have earned Partner of the Year status for at least three consecutive years.
Corning cares for its employees and the people it serves through robust diversity, social responsibility, safety and health, and supply chain transparency processes.
Corning deepened its commitment to strong corporate governance practices through the adoption, in 2015, of the SDX Protocol for shareholder communications and engagement.
A score of 100 on the Human Rights Campaign Corporate Equality Index for twelve consecutive years.

Please visit www.corning.com/sustainability for more information.

Executive Compensation Highlights

As shown below, approximately 89% of our CEO’s target total compensation and 79% of the other Named Executive Officers’ (NEOs) target total compensation in 2016 was variable and depended on Corning’s operating performance and stock price.

Target Total Compensation

CEO       ALL OTHER NEOs

              12     CORNING 2017 PROXY STATEMENT



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Proxy Statement Summary

Our Incentive Compensation Performance Metrics

Our goals for annual and long-term incentives focus on the key drivers for executing our Framework and creating and sustaining long-term shareholder value: cash generation, profitability and revenue growth.

SHORT-TERM INCENTIVE METRICS (CASH)       LONG-TERM INCENTIVE METRICS (CASH PERFORMANCE UNITS)
(One year performance period) (Average of three one-year performance periods and subject to a
three-year ROIC modifier*)
   
 

(Applicable to 100% of PIP and 25% of GoalSharing for NEOs)

Core Net Sales:

Growing sales both organically through innovation and through acquisitions is critical to our short-term and long-term success.

Core Earnings per Share (Core EPS):

Core EPS is our key measure of profitability. Corning generally budgets for share repurchases in establishing its target Core EPS measures.

Adjusted Operating Cash Flow less CapEx:

Generating strong positive cash flow enables our ongoing investment in innovation and returns to shareholders.

* Return on Invested Capital (ROIC)

CPU payouts will be increased or decreased based on Corning’s ROIC improvement over the three-year performance period to more closely align compensation outcomes with our Framework, reflecting our commitment to invest in areas that will result in profitable growth.




Year Short-Term Cash Incentives Earned for NEOs Long-Term Cash Incentives Earned (CPUs) for NEOs
2016 Performance Incentive Plan: 85% of target payout
Goalsharing: 5.96% payout*
Average of 2016, 2017, and 2018 performance
88%, TBD, TBD—3-year average: TBD**
2015 Performance Incentive Plan: 67% of target payout
Goalsharing: 5.69% payout*
Average of 2015, 2016, and 2017 performance
100%, 88%, TBD—3-year average: TBD
2014 Performance Incentive Plan: 123% of target payout
Goalsharing: 6.75% payout*
Average of 2014, 2015, and 2016 performance
121%, 100%, 88%—3-year average: 103%

* As a percentage of base salary.
** With the 2016-2018 performance cycle, we also added a three-year return on invested capital (“ROIC”) modifier (± 10%) to our CPUs, reflecting our commitment to invest in areas that will encourage Corning’s growth.

CORNING 2017 PROXY STATEMENT     13              



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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, as shown in the following chart.

Practice       Description
Board Composition and Accountability
Independence A majority of our directors must be independent. Currently, all of our directors but one (or 92%) are independent. With the exception of our Executive Committee, each of our Board committees consists entirely of independent directors. See page 18.
Skills and qualifications The composition of our Board represents broad perspectives, skills, experiences, and knowledge relevant to our business. A matrix of relevant skills can be found on page 22.
Lead Independent Director Our Corporate Governance Guidelines require a Lead Independent Director with specific responsibilities to ensure independent oversight of management whenever our CEO is also the Chair of the Board. See page 15.
Succession planning review   Our Board conducts an annual review of management development and succession planning. See page 16.
Director tenure 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. See page 24.
Director overboarding We have a policy to help provide confidence that each of our directors is able to dedicate the meaningful amount of time necessary to be a highly effective member of the Board. Absent approval by the Nominating and Corporate Governance Committee, a director who is not serving as CEO of a public company may serve on no more than four total public company boards (including our Board) and a director serving as the CEO of a public company (including our CEO) may serve on no more than two total public company boards (including our Board). In February 2016, Mr. Weeks sought approval from the Nominating and Corporate Governance Committee to join the board of Amazon.com, Inc., which was approved after a careful assessment of the commitments required. 
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.
Proxy access Eligible shareholders may include their nominees for director in our proxy materials.

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Corporate Governance and the Board of Directors

Practice Description
Director resignation policy     Any incumbent nominee for director who does not receive the affirmative vote of a majority of the votes cast in any uncontested election 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.


Board Leadership Structure

The Board regularly considers the issue of board leadership in committee meetings and meetings of the independent directors. As the Board reviews its leadership structure, it considers a variety of factors, with a particular focus on those listed on page 22 of this proxy statement. If the Chair and CEO roles are combined, our Corporate Governance Guidelines require that the independent directors annually appoint an independent director to serve as Lead Independent Director. The Lead Independent Director has significant authority and responsibilities with respect to the operation of the Board, as described below under the heading “Lead Independent Director.”

The Company’s Corporate Governance Guidelines provide that the Board must annually review whether the role of Chairman should be a non-executive position or combined with that of the CEO. Early in 2017, the Board determined that, at the present time, a combined Chairman and CEO supplemented by a strong Lead Independent Director continues to provide the appropriate leadership and oversight and ensures effective functioning of management and Corning generally.

Richard T. Clark was re-appointed, effective February 1, 2017, to the role of Lead Independent Director of the Board by the independent directors.

Lead Independent Director

Our Lead Independent Director is appointed annually by the independent directors.

The Lead Independent Director’s regular duties include:

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);
leading the Board’s oversight of Corning’s Framework;
facilitating the annual CEO performance review and management succession planning reviews;
participating in conversations with the Company’s shareholders;
serving as liaison between the Chair and the independent directors;
approving Board meeting agendas and schedules;
approving the type of information to be provided to directors for Board meetings;
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:

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

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Corporate Governance and the Board of Directors

Management Succession Planning

One of the Board’s primary responsibilities is ensuring that Corning has a high-performing management team in place. The full Board has responsibility for management succession planning. As noted above, our Lead Independent Director facilitates, on an annual basis, the review and approval by the Board of succession and management development plans for the CEO and other senior executives to maximize the pool of internal candidates who can assume top management positions without undue interruption. To assist the Board, the CEO annually provides an assessment of senior managers and their potential as successor CEO, as well as individuals considered potential successors to certain senior management positions.

Risk Oversight

Our Board recognizes the importance of effective risk oversight in running a successful global business and in fulfilling its fiduciary responsibilities to Corning and its shareholders. While the CEO and other members of our senior leadership team are responsible for the day-to-day management of risk, our Board is responsible for ensuring that an appropriate culture of risk management exists within the Company and for setting the right “tone at the top,” overseeing our aggregate risk profile and monitoring how the Company addresses specific risks, such as financial, operational, business, reputational, governance and managerial risks.

Our Board oversees our enterprise risk management (ERM) program as a whole. The Board exercises this oversight responsibility directly and through its committees. The Board provides risk oversight through its review of potential risks that could negatively impact the proposed budget and plan; approval and ongoing review of Corning’s Framework and any risks that may negatively affect it; review and approval of the rationale and risks involved in proposed significant investment or divestiture actions; evaluation and approval of the compensation of our CEO and other senior executives, and monitoring of the Company’s current research and development projects and associated risks related to such projects, including safeguards to manage information technology and cyber risks, among others. The 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.

Corning’s ERM program is aligned to the COSO II framework and 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; (2) an internal audit department; and (3) a Compliance Council, which reports directly to each of the Audit Committee and Corporate Relations Committee and reviews the Company’s compliance with laws and regulations of the countries in which we conduct business. Management reports periodically to the Board on the Company’s ERM policies and procedures and to the Audit, Finance, and Corporate Relations Committees on our top risks. Management also provides a comprehensive annual report of top risks to the Board.

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Corporate Governance and the Board of Directors

Committees

The Board has the following committees as of the date of this proxy statement.

Committee        Primary Responsibilities
Audit(1)

Number of Meetings
in 2016: 10
 
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
Approves the appointment of Corning’s independent registered public accounting firm, oversees the firm’s qualifications, independence and performance, and determines the appropriateness of fees for the firm
Reviews the effectiveness of Corning’s internal control over financial reporting, including disclosure controls and procedures
Reviews the results of Corning’s annual audit and quarterly and annual financial statements
Monitors company policies with respect to risk assessment and risk management
Compensation(2)

Number of Meetings
in 2016: 6
Establishes Corning’s goals and objectives with respect to executive compensation
Evaluates the CEO’s performance in light of Corning’s goals and objectives
Determines and approves compensation for the CEO and other Company officers
Recommends to the Board the compensation arrangements for non-management directors
Oversees Corning’s equity compensation plans and makes recommendations to the Board regarding incentive plans
Corporate
Relations
Assists the Board in fulfilling its oversight responsibility by reviewing Corning’s strategies and policies in the areas of public relations and reputation, employment policy and employee relations, political activities, public policy, and community responsibility. These areas include:

Number of Meetings
in 2016: 5

-Corporate identity, investor relations, media relations, and product liability
-Safety and health policies; code of conduct; values; human resource and industrial relations strategies; and internal communications strategies
-Political activities and relationships with significant governmental agencies in the countries in which the Company operates
-Environmental policies, charitable contribution strategies, and significant projects undertaken to improve communities where Corning has significant operations and employees

Executive

Serves primarily as a means of taking action requiring Board approval between regularly scheduled meetings of the Board, and is authorized to act for the full Board on matters other than those items specifically reserved by New York law to the Board
Number of Meetings
in 2016: 6
Finance

Number of Meetings
in 2016: 9
Reviews all potential material transactions, including mergers, acquisitions, divestitures and investments in third parties
Reviews capital expenditure plans and capital projects
Monitors Corning’s short- and long-term liquidity
Reviews Corning’s tax position and strategy
Reviews and recommends for approval by the Board Corning’s Framework, declaration of dividends, stock repurchase programs, and short- and long-term financing transactions
Reviews strategies for managing financial and economic risks, including hedging strategies and insurance programs

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Corporate Governance and the Board of Directors

Committee        Primary Responsibilities
Nominating and
Corporate
Governance(3)

Number of Meetings
in 2016: 5
 
Determines the criteria for selecting and assessing director nominees, identifies individuals qualified to become Board members, reviews candidates recommended by shareholders, and recommends to the Board director nominees to be proposed for election at the annual meeting of shareholders
Monitors significant developments in the regulation and practice of corporate governance
Assists the Board in assessing the independence of directors and reviews transactions between Corning and related persons that are required to be disclosed in our filings with the SEC
Identifies Board members to be assigned to the various committees
Oversees and assists the Board in the review of the Board’s performance
Reviews activities of Board members and senior executives for potential conflicts of interest
(1) The Board of Directors has determined that each member of the Audit Committee satisfies the applicable audit committee independence requirements of the New York Stock Exchange (NYSE) and the SEC. The Board also determined that each member of our Audit Committee is financially literate and Mr. Landgraf, Mr. Blair, Dr. Burns and Dr. Wrighton are “audit committee financial experts” within the meaning of the applicable SEC rules.
(2) The Board of Directors has determined that each member of the Compensation Committee satisfies the applicable compensation committee independence requirements of the NYSE and the SEC.
(3) The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee satisfies the applicable nominating committee independence requirements of the NYSE.

Board and Shareholder Meeting Attendance

The Board of Directors met 6 times during 2016. Attendance at Board and committee meetings averaged 98% in 2016, and each incumbent director attended at least 88% of the meetings of the Board and committees on which the director served.

All of our directors attended our 2016 Annual Meeting of Shareholders. The Board has a policy requiring all directors to attend our Annual Meeting, absent extraordinary circumstances.


Director Independence

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 NYSE, applicable SEC rules and the Company’s director qualification standards.

Mr. Weeks is not independent because he is an executive officer of Corning. All twelve of our other directors (92%) are 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 the NYSE criteria, which would bar a director from being determined to be “independent.”

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 2014 between Corning and entities associated with our independent directors or members of their immediate family.

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Corporate Governance and the Board of Directors

In making director independence determinations, the Board reviewed and discussed information with regard to each director’s business and personal activities as they may relate to Corning and Corning’s management. In making its independence determinations, the Board considered that each of Mr. Cummings, Mr. Martin, Ms. Henretta and Drs. Huttenlocher and Wrighton is or were, during the previous three years, an employee of a company or organization that did business with Corning at some time during those years. The Board also considered that Corning’s business relationships with each such company or organization were ordinary course/arm's length dealings, no Corning director had a personal interest in, or received a personal benefit from, such relationships, and any 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 is 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 business relationships or transactions; that such director had no role or financial interest in any decisions about any of these relationships or transactions; and that such a relationship does 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 the full Board or a designated Board committee to approve or ratify 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. The Board has delegated to the Nominating and Corporate Governance Committee the responsibility for reviewing and approving any such transactions.

In determining whether to approve or ratify any such transaction, the Board or relevant committee must consider, in addition to other factors deemed appropriate, whether the transaction is on terms no less favorable to Corning than transactions 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 2016.


Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee is now, or has ever been, an officer or employee of Corning. No member of the Compensation Committee had any relationship with Corning or any of its subsidiaries during 2016 pursuant to which disclosure would be required under applicable rules of the SEC pertaining to the disclosure of transactions with related persons. No Corning executive officer currently serves or served during 2016 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.

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Corporate Governance and the Board of Directors

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, our employees, including executives and their families, inevitably have relationships with the non-profit organizations that receive such contributions from the Company.

The Company undertakes its philanthropic activities both directly and indirectly through The Corning Incorporated Foundation (the Foundation), a separate 501(c)3 organization. We believe in being an active corporate citizen and the Foundation directs its grant making toward the communities where Corning operates, enabling initiatives in five areas: education, culture, community, health and human services, and disaster relief. In 2016, Corning donated $3 million to the Foundation, and the Foundation disbursed approximately $4.5 million, of which approximately 41% was directed toward initiatives supporting education, including grants made under the Corning Incorporated Foundation Matching Gifts program.

Corning’s direct giving includes annual contributions to both local and international cultural and educational institutions. Locally, the Corning Museum of Glass (CMoG) – the world’s leading glass museum – is the largest recipient of the Company’s support. Wendell P. Weeks (chairman, CEO and president), David Morse (executive vice president and chief technology officer), Jeffrey W. Evenson (senior vice president and chief strategy officer), and Mark S. Rogus (senior vice president and treasurer) serve on the CMoG board of trustees. In 2016, Corning provided cash and non-cash contributions of services to CMoG of approximately $41.4 million.

Corning provides 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. Currently, children of Corning employees represent approximately 58% of its enrollment. In 2016, non-cash contributions totaled approximately $1.4 million and cash contributions totaled $320,000. 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.


Ethics and Conduct

We are committed to conducting business lawfully and ethically. Our directors and NEOs, and all Corning employees, are required to act at all times with honesty and integrity. We have a comprehensive Code of Conduct that applies to all Corning directors and employees that 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.

We also have a supplemental “Code of Conduct for Directors and Executive Officers” that includes policies calling for strict observance of all laws applicable to our business, that requires directors and executive officers to avoid any conflict between their personal interests and the interests of the company in dealing with suppliers, customers, and other third parties, and which imposes standards upon certain conduct in their personal affairs, including transactions in securities of the Company, any company affiliate, or any unaffiliated organization. Each director and executive officer is expected to be familiar with and to follow these policies to the extent applicable to them. Any employee can provide an anonymous report of an actual or apparent violation of our Codes of Conduct. We will disclose any future amendments to, or waivers from, any provision of our Codes 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 2016.

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Corporate Governance and the Board of Directors

Lobbying and Political Contributions Policy

Corning encourages employees to participate in political activity on a personal basis. However, any use of Corning funds, property, resources or employee work time for U.S. political purposes — for example, to any U.S. political party, candidate or government official – is subject to Corning’s Lobbying and Political Contributions Policy and must be approved in advance by Corning’s Government Affairs office. Any contact with members of the U.S. Congress on behalf of Corning, or any Corning contribution to U.S government officials or payment related to these officials, must be approved by and coordinated through Corning’s Government Affairs office. Our policy can be found at www.corning.com/political-contributions.


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 Board has instructed our Corporate Secretary to review correspondence directed to the Board and, at the Corporate Secretary’s discretion, to forward items that are appropriate for the Board’s consideration.


Corporate Governance Materials Available on Corning’s Website

In addition to our Corporate Governance Guidelines and Director Qualification Standards, other information relating to Corning’s corporate governance is available on the Investor Relations – Governance – Downloads section of our website at https://www.corning.com/worldwide/en/about-us/investor-relations/board-download-library.html including:

Audit Committee Charter
Compensation Committee Charter
Corporate Relations Committee Charter
Finance Committee Charter
Nominating and Corporate Governance Committee Charter
Code of Conduct for Directors and Executive Officers
Code of Ethics for Chief Executive Officer and Financial Executives
Corning Incorporated By-Laws
Our Code of Conduct
Political Contributions and Lobbying Policy
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Proposal 1
Election of Directors 

Board of Directors’ Qualifications and Experience

Our Board is composed of accomplished professionals with diverse areas of expertise. We believe that the broad range of skills, knowledge, and opinions represented on our Board is one of its core strengths. Moreover, 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 competencies and skills of our directors.

All directors other than Mr. Weeks are independent. Mr. Clark is the Lead Independent Director.

 
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 businesses, which fosters active participation in developing and implementing our operating plan and business strategy. They have valuable perspectives on issues specific to Corning’s business.
     
Financial, Investment, and/or Banking Experience
These directors possess an acute understanding of finance and financial reporting processes. Accurate financial reporting and robust auditing are critical to Corning’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 ability to grow our businesses outside the United States. Our directors with global business or international experience provide valued perspective on our operations.
         

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 Corning as industry regulations can be critical to the financial welfare and growth of our various businesses.

   
Audit Committee Financial Expert
As defined by applicable SEC rules
         

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Proposal 1 Election of Directors

2017 BOARD COMMITTEES

 
Board Committees*
Audit C
Compensation C
Corporate Relations C
Executive C
Finance C
Nominating and Corporate Governance C

* Committee membership as of February 1, 2017; “C” denotes the Chair of the committee.


Board Nomination and Renewal Process

The Nominating and Corporate Governance Committee has the authority to recommend director nominees to the Board of Directors for approval. The Committee takes into account the Company’s current needs and the qualities needed for Board service, including

experience and achievement in business, finance, technology or other areas relevant to Corning’s activities;
reputation, ethical character and maturity of judgment;
diversity of viewpoints, backgrounds and experiences;
absence of conflicts of interest that might impede the proper performance of the responsibilities of a director;
independence under SEC and NYSE rules;
service on other boards of directors;
sufficient time to devote to Board matters; and,
ability to work effectively and collegially with other Board members.

In the case of incumbent directors, the Nominating and Corporate Governance Committee will review such directors’ overall service to the Company during their term, including the number of meetings attended, level of participation, quality of performance, and any transactions of such directors with the Company during their term. For those potential new director candidates who appear upon first consideration to meet the Board’s selection criteria, the Nominating and Corporate Governance Committee will conduct appropriate inquiries into their background and qualifications and, depending on the result of such inquiries, arrange for in-person meetings with the potential candidates.

The Nominating and Corporate Governance Committee may use multiple sources for identifying director candidates, including executive search firms, its members’ own contacts, and referrals from other directors, members of management and the Company’s advisors. The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders in the manner described on page 85, and will evaluate such director candidates in the same manner in which it evaluates candidates recommended by other sources. In addition, our by-laws permit a group of up to 20 shareholders who have owned a minimum of 3% of our outstanding capital stock for at least three years to submit director nominees for up to the greater of two directors or 20% of the board for inclusion in our proxy statement. See “How Do I Submit A Shareholder Proposal For, Or Nominate a Director For Election At, Next Year’s Annual Meeting” on page 85 of this proxy statement.

CORNING 2017 PROXY STATEMENT     23              


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Proposal 1 Election of Directors

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.

Board Composition

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:

BOARD TENURE OF OUR 13 DIRECTORS       GENDER OF OUR 13 DIRECTORS
(as of March 1, 2017)  

TENURE POLICIES

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:


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

2017 Nominees for Director

After considering the recommendations of the Nominating and Corporate Governance Committee, the Board has set the number of directors at thirteen and nominated the persons described below to stand for election. All of the nominees were elected by Corning’s shareholders at the 2016 Annual Meeting and have consented to being named in this proxy statement and to serve as director if re-elected. The Board believes that each of these nominees is qualified to serve as a director of Corning in light of their respective skills and qualifications, as further described below. Equally important, the Board believes this combination of backgrounds, skills and experiences creates a Board that is well-equipped to exercise oversight responsibilities for Corning’s shareholders and other stakeholders.

FOR

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


If elected by our shareholders, the thirteen director nominees will serve for a one-year term expiring at our 2018 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.

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Proposal 1 Election of Directors

Below is biographical information about our director nominees.

     
       
  Age   Director Since  
  58   2014  
Committees  
Audit
Finance
Current Public Company Directorships
None
Public Company Directorships Held During the Past 5 Years
None

Donald W. Blair

Retired Executive Vice President and Chief Financial Officer, NIKE, Inc.

Mr. Blair was the executive vice president and chief financial officer of NIKE, Inc. from 1999 to October 2015. Prior to joining NIKE, he served fifteen 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 over 35 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.

 
Skills and Qualifications
Expertise in finance and management
Executive leadership experience
Experience in international business and finance



     
       
  Age   Director Since  
  62   2012  
Committees  
Audit
Corporate Relations (Chair)
Current Public Company Directorships
HP Inc.
Kellogg Company
Public Company Directorships Held During the Past 5 Years
GlaxoSmithKline plc

Stephanie A. Burns

Retired Chairman and Chief Executive Officer, Dow Corning Corporation

Dr. Burns has nearly 34 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 until her retirement in December 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.

 
Skills and Qualifications
Global innovation and business leadership experience
Significant expertise in scientific research, issues management, science and technology leadership and business management



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Proposal 1 Election of Directors

     
       
  Age   Director Since  
  72   2010  
Committees  
Executive
Finance
Nominating and Corporate Governance
Current Public Company Directorships
None
Public Company Directorships Held During the Past 5 Years
TransUnion
Exelon Corporation

John A. Canning, Jr.

Chairman, Madison Dearborn Partners, LLC

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 over 35 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.

 
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
Experience in banking and managing investments


     
       
  Age   Director Since  
  70   2011  
Committees  
Compensation
Executive
Nominating and Corporate Governance
Current Public Company Directorships
Automatic Data Processing, Inc.
Public Company Directorships Held During the Past 5 Years
None

Richard T. Clark

Retired Chairman, Chief Executive Officer and President, Merck & Co., Inc.
Lead Independent Director

Mr. Clark retired from Merck in 2011. He 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. 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.

 
Skills and Qualifications
Broad managerial expertise, operational expertise, and deep business knowledge
Extensive experience in the issues facing public companies and multinational businesses



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Proposal 1 Election of Directors

     
       
  Age   Director Since  
  67   2006  
Committees  
Executive
Finance (Chair)
Nominating and Corporate Governance
Current Public Company Directorships
W. R. Grace & Co.
Public Company Directorships Held During the Past 5 Years
Viasystems Group, Inc.

Robert F. Cummings, Jr.

Retired Vice Chairman of Investment Banking, JPMorgan Chase & Co.

Mr. Cummings retired as vice chairman of Investment Banking at JPMorgan Chase & Co. (JPM) in February 2016. He had served in that role since December 2010, advising 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 that 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 32 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.

 
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



     
       
  Age   Director Since  
  55   2013  
Committees  
Audit
Corporate Relations
Current Public Company Directorships
Meritage Homes Corporation
NiSource, Inc.
Staples, Inc.
Public Company Directorships Held During the Past 5 Years
None

Deborah A. Henretta

Retired Group President of Global E-Business, Procter & Gamble

Ms. Henretta has over thirty 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, group president of P&G Global Beauty Sector in June 2013, and group president of P&G E-Business in February 2015. She retired from P&G in June 2015.

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 former President Barack Obama and former Secretary of State Hillary Clinton.

 
Skills and Qualifications
Significant experience in business leadership and operations, P&L responsibility
Skilled in brand building, marketing and emerging market management


CORNING 2017 PROXY STATEMENT     27              



Table of Contents

Proposal 1 Election of Directors

     
       
  Age   Director Since  
  58   2015  
Committees  
Audit
Finance
Current Public Company Directorships
Amazon.com, Inc.
Public Company Directorships Held During the Past 5 Years
None

Daniel P. Huttenlocher

Dean and Vice Provost, Cornell Tech

Dr. Huttenlocher is the founding dean of Cornell Tech, the technology graduate school of Cornell University located in New York City, a position he has held since 2012. In addition to positions as a professor and dean at Cornell, Dr. Huttenlocher has served as chief technology officer at Intelligent Markets, Inc. and as a principal scientist and member of the senior leadership team at the Xerox Palo Alto Research Center.

Dr. Huttenlocher holds a Ph.D. in computer science and a Master of Science degree in Electrical Engineering, both from the Massachusetts Institute of Technology. He is a renowned computer science researcher and educator, and a prolific inventor with two dozen U.S. patents. He brings to the board extensive experience in technology innovation and commercialization, and expertise in developing next-generation products and services.

 
Skills and Qualifications
Extensive experience in technology innovation and commercialization
Expertise in information technology and computer software
Leadership experience



     
       
  Age   Director Since  
  70   2007  
Committees  
Audit (Chair)
Compensation
Executive
Current Public Company Directorships
Louisiana-Pacific
Corporation
Public Company Directorships Held During the Past 5 Years
None

Kurt M. Landgraf

Retired President and Chief Executive Officer, Educational Testing Service

Mr. Landgraf served as president and chief executive officer of Educational Testing Service (ETS), a private non-profit educational testing and measurement organization, from 2000 until his retirement in December 2013. 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.

 
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



              28      CORNING 2017 PROXY STATEMENT



Table of Contents

Proposal 1 Election of Directors

     
       
  Age   Director Since  
  50   2013  
Committees  
Corporate Relations
Nominating and Corporate Governance
Current Public Company Directorships
None
Public Company Directorships Held During the Past 5 Years
Xtera Communications, Inc.

Kevin J. Martin

Vice President, Mobile and Global Access Policy, Facebook, Inc.

Before Mr. Martin became Vice President, Mobile and Global Access Policy at Facebook, Inc. he was a partner and co-chair of the telecommunications practice at Squire Patton Boggs, an international law firm, from 2009 to 2015, and chairman of the Federal Communications Commission (FCC) from March 2005 to January 2009.

Mr. Martin has nearly two decades experience as a lawyer and policymaker in the telecommunications field. 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 served as the official U.S. government representative to the G-8’s Digital Opportunity Task Force.

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

 
Skills and Qualifications
Extensive knowledge of government policy and regulatory environment
Specialized knowledge of telecommunications and information technology industries
Experience in private equity investing



     
       
  Age   Director Since  
  67   1999  
Committees  
Audit
Compensation (Chair)
Current Public Company Directorships
Neustar, Inc.
Public Company Directorships Held During the Past 5 Years
Keynote Systems

Deborah D. Rieman

Retired Executive Chairman, MetaMarkets Group

Dr. Rieman has more than 30 years of experience in the software industry. In 2016, she retired as 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 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.

 
Skills and Qualifications
Expertise in information technology, innovation and entrepreneurial endeavors
Experience in technology development, marketing, business development and support, investor relations and investing



CORNING 2017 PROXY STATEMENT     29              



Table of Contents

Proposal 1 Election of Directors

     
       
  Age   Director Since  
  69   2001  
Committees  
Compensation
Executive
Nominating and Corporate Governance (Chair)
Current Public Company Directorships
Harris Corporation
NextEra Energy, Inc.
Ryder Systems Inc.
Public Company Directorships Held During the Past 5 Years
BBA Aviation plc.

Hansel E. Tookes II

Retired Chairman and Chief Executive Officer, Raytheon Aircraft Company

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.

 
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



     
       
  Age   Director Since  
  57   2000  
Committees  
Executive (Chair)
Current Public Company Directorships
Amazon.com, Inc.
Merck & Co., Inc.
Public Company Directorships Held During the Past 5 Years
None

Wendell P. Weeks

Chairman, Chief Executive Officer and President, Corning Incorporated

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 34 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 twelve years as chief executive officer, have given him a unique understanding of Corning’s diverse business operations and innovations.

 
Skills and Qualifications
Wide range of experience including financial management, business development, commercial leadership, and general management
Unique understanding of Corning’s businesses and innovations



              30      CORNING 2017 PROXY STATEMENT



Table of Contents

Proposal 1 Election of Directors

     
       
  Age   Director Since  
  67   2009  
Committees  
Audit
Finance
Current Public Company Directorships
Brooks Automation, Inc.
Cabot Corporation
Public Company Directorships Held During the Past 5 Years
None

Mark S. Wrighton

Chancellor and Professor of Chemistry, Washington University in St. Louis

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. He is also a past chair of the Association of American Universities, The Business Higher Education Forum, and the Consortium on Financing Higher Education. 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 Dr. Wrighton’s executive and fiscal leadership, Washington University has grown significantly in academic stature, research enterprise, infrastructure, student quality, curriculum and international reputation. Dr. Wrighton brings to the Board his vast scientific knowledge and understanding of complex research and development issues.

 
Skills and Qualifications
Expertise in materials and chemistry; research interests in the areas of transition metal catalysis, photochemistry, surface chemistry, molecular electronics, and photo processes at electrodes
Executive leadership experience



CORNING 2017 PROXY STATEMENT     31              



Table of Contents

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. As an employee of the Company, Mr. Weeks is 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 amounts 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. In 2016, six directors elected to defer compensation.

The Compensation Committee’s independent consultant, Frederic W. Cook & Co., Inc., advises the committee as part of its annual analysis of the reasonability of the Company’s director compensation. For further information, see “Role of Compensation Consultant” on page 51.


2016 Director Compensation

Annual Retainer      

$60,000

Lead Independent Director
Retainer

Our Lead Independent Director received an additional retainer of $35,000.

Committee Chair Retainer

The Audit Committee Chair and Compensation Committee Chair each received an additional retainer of $20,000. Other Committee Chairs received an additional retainer of $15,000.

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 Board. Non-employee directors generally receive their annual equity grants at the February meeting of the Board. If, however, a non-employee director is appointed between the February meeting and December 31, then that director will receive a pro-rata equity grant shortly after joining the Board.

In 2016, our directors’ annual equity compensation was $155,000. We issued 8,433 shares of restricted stock (with a grant date value of approximately $155,000) to each nonemployee director under our 2010 Equity Plan for Non-Employee Directors. These restricted shares are not available for transfer or sale until six months after the date of a director’s retirement or resignation.


              32     CORNING 2017 PROXY STATEMENT



Table of Contents

Director Compensation

In 2016, the directors below performed the following roles:

Name Role During 2016
Dr. Burns Corporate Relations Committee Chair
Mr. Clark Lead Independent Director
Mr. Cummings Finance Committee Chair
Mr. Landgraf Audit Committee Chair
Dr. Rieman Compensation Committee Chair
Mr. Tookes Nominating and Corporate Governance Committee Chair

Non-employee directors are reimbursed for expenses (including costs of travel, food, and lodging) incurred in attending Board, committee, and shareholder meetings. Travel to such meetings may include the use of Company aircraft, commercial transportation or the director’s own transportation. Directors are also reimbursed for reasonable expenses associated with participation in director education programs.

Changes to Director Compensation in 2017

In October 2016, the Board approved certain changes to director compensation proposed by the Compensation Committee, which were developed in consultation with the Committee’s independent consultant and became effective January 1, 2017. Starting in 2017, directors will be paid an annual Board retainer of $110,000 but will not receive any per meeting fees. Additionally, each Audit Committee member will receive an annual cash retainer of $18,000; each Compensation Committee member will receive an annual cash retainer of $12,000; and each Executive, Finance, Nominating and Governance and Corporation Relations Committee member will receive an annual cash retainer of $10,000. The Lead Independent Director retainer and the Committee Chair retainers are unchanged. The impact of the change will likely be neutral to slightly positive with respect to a given director’s compensation over the next three years.

In October 2016, the Board also approved the Compensation Committee’s recommendation to close the Directors’ Charitable Giving Program to new Board members, as described in “Charitable Giving Programs” below.

Charitable Giving Programs

Although closed to directors joining the Board after October 5, 2016, 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.

This program is either funded directly by the Company or 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 2016, we paid a total of $120,122 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 direct financial benefit from the program, and we do not include these amounts in the directors’ compensation. Generally, one must have been a director for five years to participate in the program. Directors who had not yet achieved five years’ tenure as of October 5, 2016 will be permitted to participate after five years of Board service. In 2016, Messrs. Canning, Clark, Cummings, Landgraf, Tookes and Weeks, and Drs. Rieman and Wrighton were eligible to participate in the program.

Directors are also eligible to participate in the Corning Incorporated Foundation Matching Gifts Program for eligible charitable organizations. This Program is available to all Corning employees and directors. The maximum matching gift amount available from the Foundation on behalf of each participant in the Program is $7,500 per calendar year.

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

CORNING 2017 PROXY STATEMENT     33              



Table of Contents

Director Compensation

2016 DIRECTOR COMPENSATION TABLE

Name       Fees Earned or
Paid in Cash
(1)
      Stock
Awards(2)
      All Other
Compensation(3)
      Total
Donald W. Blair $131,750 $154,999 $       – $286,749
Stephanie A. Burns 125,750 154,999 280,749
John A. Canning, Jr. 130,000 154,999 7,500 292,499
Richard T. Clark 163,250 154,999 318,249
Robert F. Cummings, Jr. 150,250 154,999 305,249
Deborah A. Henretta 123,000 154,999 7,500 285,499
Daniel P. Huttenlocher 128,250 154,999 6,250 289,499
Kurt M. Landgraf 155,250 154,999 7,500 317,749
Kevin J. Martin 116,000 154,999 7,000 277,999
Deborah D. Rieman 146,500 154,999 301,499
Hansel E. Tookes II 145,000 154,999 299,999
Mark S. Wrighton 131,750 154,999 7,500 294,249
(1)

Includes all fees and retainers paid or deferred pursuant to the Corning Incorporated Non-Employee Directors’ Deferred Compensation Plan.

(2)

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, 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 6, 2017. There can be no assurance that the grant date fair value amounts will ever be realized. The total number of shares outstanding that each Director had as of December 31, 2016 is shown in the table below. Total stock holdings for directors as of December 31, 2016 are shown in the “Beneficial Ownership of Directors and Officers” table.

The following are the total number of shares outstanding for each Director as of December 31, 2016:

Name Shares
Outstanding at
December 31, 2016
      Options
Outstanding at 
December 31, 2016
(1)
Donald W. Blair 17,243 0
Stephanie A. Burns 40,534 0
John A. Canning, Jr. 49,150 1,323
Richard T. Clark 41,962 0
Robert F. Cummings, Jr. 64,686 8,858
Deborah A. Henretta 25,965 0
Daniel P. Huttenlocher 13,910 0
Kurt M. Landgraf 62,957 3,093
Kevin J. Martin 31,506 0
Deborah D. Rieman 99,613 8,858
Hansel E. Tookes II 86,863 8,858
Mark S. Wrighton 58,313 6,775
(1)  No options were granted to non-employee directors in 2016.

(3) The amounts in this column reflect charitable donation matches made by Corning Incorporated Foundation Matching Gifts Program.

              34     CORNING 2017 PROXY STATEMENT



Table of Contents

Stock Ownership
Information

Stock Ownership Guidelines

We believe in the importance of equity ownership by directors and executive management as an effective link to shareholders, and as such, all directors, named executive officers (NEOs), and non-NEO senior management are expected to achieve the required levels of ownership under our stock ownership guidelines within five years of their election, appointment or designation. All directors and NEOs who have been so for five years or more currently comply with our guidelines.

 
DIRECTORS CEO OTHER NEOs NON-NEO SENIOR
MANAGEMENT
 
     
5X 6X 3X 1.5X
Annual Cash Retainer Base Salary Base Salary Base Salary
 

CORNING 2017 PROXY STATEMENT     35              



Table of Contents

Stock Ownership Information

Beneficial Ownership of Directors and Officers

The following table shows, as of December 31, 2016, 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 restricted stock units (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 17,243 0 0 17,243 *
Stephanie A. Burns 47,018 0 2,270 49,288 *
John A. Canning, Jr. 109,150 1,323 0 110,473 *
Richard T. Clark 41,962 0 0 41,962 *
Robert F. Cummings, Jr. 144,686 8,858 0 153,544 *
Deborah A. Henretta 25,965 0 0 25,965 *
Daniel P. Huttenlocher 13,910 0 0 13,910 *
Kurt M. Landgraf 62,957 3,093 0 66,050 *
Kevin J. Martin 31,506 0 0 31,506 *
Deborah D. Rieman 134,863 8,858 0 143,721 *
Hansel E. Tookes II 96,863 8,858 0 105,721 *
Mark S. Wrighton 59,313 6,775 0 66,088 *
Named Executive Officers
Wendell P. Weeks(4) 779,793 (4) 1,372,257 4,821 2,156,871 *
R. Tony Tripeny 40,721 248,806 996 290,523 *
James P. Clappin 68,804 135,782 1,407 205,993 *
Lawrence D. McRae 119,356 290,173 1,424 410,953 *
David L. Morse 43,629 191,254 1,407 236,290 *
All Directors, Section 16 Officers and NEOs
As a group (26 persons) 2,185,846 (5)(6) 3,253,678 16,566 5,456,090 0.59%
*  Less than 0.50%
(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.
(3) Includes shares of common stock held by The Bank of New York Mellon Corporation 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, Tripeny, Clappin, McRae and Dr. Morse, and all executive officers as a group, the equivalent of 12,044, 0, 2,214, 6,454, 0 and 23,610 shares of common stock, respectively. It also holds for the benefit of all employees who participate in the plans the equivalent of 14,241,246 shares of common stock (being 1.53% of the class).
(4) Includes 767,749 shares held by a revocable trust of which Mr. Weeks is the beneficiary. He currently has no voting authority over these shares.
(5) Does not include 30,782 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, 2016, none of our directors or executive officers have pledged any such shares.

              36     CORNING 2017 PROXY STATEMENT



Table of Contents

Stock Ownership Information

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, 2016. 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
The Vanguard Group
100 Vanguard Blvd. 60,808,668(1) 6.39%
Malvern, PA 19355  
BlackRock, Inc.
55 East 52nd Street 57,563,179(2) 6.1%
New York, NY 10022
(1) Reflects shares beneficially owned by The Vanguard Group (Vanguard), according to a Schedule 13G filed by Vanguard with the SEC on February 10, 2017, reflecting ownership of shares as of December 31, 2016. Vanguard has sole voting power and/or sole dispositive power with respect to 59,041,296 shares and shared voting power and/or shared dispositive power with respect to 1,767,372. According to the Schedule 13G, Vanguard beneficially owned 6.39% of our common stock as of December 31, 2016.
(2) Reflects shares beneficially owned by BlackRock, Inc. (BlackRock), according to a Schedule 13G filed by BlackRock with the SEC on January 23, 2017, reflecting ownership of shares as of December 31, 2016. BlackRock has sole voting power and/or sole dispositive power with respect to 57,563,179 shares and shared voting power and/or shared dispositive power with respect to 0 shares. According to the Schedule 13G, BlackRock beneficially owned 6.1% of our common stock as of December 31, 2016.

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, 2016, all Section 16(a) filing requirements were met.

CORNING 2017 PROXY STATEMENT     37              



Table of Contents

Proposal 2
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 shareholder opinion and will consider the outcome of the vote in determining our executive compensation programs.

Say on Pay Proposal

Our Board maintains a “pay for performance” philosophy that forms the foundation for all of the Compensation Committee’s decisions regarding executive compensation. In addition, our compensation programs are designed to facilitate strong corporate governance, foster collaboration and support our short- and long-term corporate strategy.

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 2016 Company performance, focusing on the compensation of our NEOs. Our shareholders have affirmed their support of our programs in our outreach discussions and in last year’s Say on Pay results. 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 2017 Annual Meeting of Shareholders pursuant to the SEC’s executive compensation disclosure rules, including the Compensation Discussion & Analysis, the Summary Compensation Table, and the supporting tabular and related narrative disclosure on executive compensation, is hereby APPROVED.

FOR

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

              38     CORNING 2017 PROXY STATEMENT



Table of Contents

Compensation Discussion
& Analysis

This Compensation Discussion & Analysis (CD&A) focuses on the 2016 compensation of our Named Executive Officers (NEOs) and how this compensation aligns with our pay for performance philosophy and the Framework.

OUR NEOS IN FISCAL YEAR 2016 WERE:

Named Executive Officer      Role      Tenure in Role      Total Years of
Corning Service
Wendell P. Weeks Chairman, Chief Executive Officer (CEO)
and President
12 Years as CEO
(10 years as CEO/Chairman)
34 Years
R. Tony Tripeny Senior Vice President
and Chief Financial Officer
1 Year 31 Years
James P. Clappin President,
Corning Glass Technologies
6 Years 37 Years
Lawrence D. McRae Vice Chairman
and Corporate Development Officer
1 Year as Vice Chairman
(17 years as Corporate Development Officer)
31 Years
David L. Morse Executive Vice President
and Chief Technology Officer
4 Years 40 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:

40        Executive Summary
41 Company Performance Overview
44 2016 Executive Compensation Program Overview
46 2016 Executive Compensation Program Details
50 Compensation Peer Group
51 Compensation Program Governance
53 Compensation Committee Report
54 2016 Compensation Tables
 
CORNING 2017 PROXY STATEMENT     39              



Table of Contents

Compensation Discussion & Analysis

Executive Summary

Executive Compensation Philosophy

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 while executing on our Framework. In order to attract, retain and motivate this caliber of talent, the Compensation Committee (the Committee) is committed to promoting a performance-based culture. Rewards are tied to financial metrics that incentivize management to successfully deliver on the Framework and our commitment to our shareholders.

Target Total Compensation


              40     CORNING 2017 PROXY STATEMENT



Table of Contents

Compensation Discussion & Analysis

2016 Compensation Metrics

Our key compensation metrics are Adjusted Operating Cash Flow less CapEx, Core Net Sales, and Core Earnings per Share (Core EPS). These metrics are aligned with the Framework and are in place to ensure that we focus on driving sales growth, improving earnings per share and generating sufficient operating cash flow to deliver on our commitment to return more than $12.5 billion to shareholders by 2019.

 
Actual Results $1.55
CORE EPS
$9,710 million
CORE NET SALES
$1,651 million
ADJUSTED OPERATING
CASH FLOW LESS
CAPEX
 
     
2016 Score as %
of Target Payout
100%
of the established
target payout for 2016
38%
of the established
target payout for 2016
109%
of the established
target payout for 2016
 

Please see “Our 2016 Performance Highlights” on page 6 for more information about our Core Performance Measures and Appendix A to this proxy statement for a reconciliation of the non-GAAP measures we use in this proxy statement to our audited GAAP financial statements.

Company Performance Overview

2016 Business Environment and Company Performance

Momentum built steadily throughout 2016, and we were very pleased with several key achievements in our Framework. We closed the strategic realignment of our interest in Dow Corning Corporation, strengthened our portfolio with strategic acquisitions, won major platforms for gas-particulate filters for gasoline direct injection engines, advanced Gorilla Glass for automobiles, repurchased over 197 million shares of our common stock, and increased the dividend on our common stock by 12.5%.

Core Net Sales were $9.7 billion, Core EPS was $1.55 and Adjusted Operating Cash Flow less CapEx was $1.65 billion. For the full year:

Display Technologies Core Net Sales* decreased, driven by LCD glass price declines slightly higher than 10%, partially offset by a mid-single digit percentage volume increase. Volume growth was driven primarily by average television screen size.

Optical Communications sales increased driven by fiber-to-the-home products in North America, higher sales of optical fiber and the impact of an acquisition completed in the second quarter of 2016. These increases were partially offset by production issues related to the implementation of new manufacturing software, which constrained our ability to manufacture product in the first half of 2016. Production returned to normal levels at the end of the second quarter.

Specialty Materials sales were up when compared to 2015, driven by an increase in sales of Corning Gorilla Glass 5 and advanced optics products.

In Environmental Technologies, record performance in the light-duty business offset slower sales of heavy-duty products in North America.

Life Sciences sales were up, driven by growth in North America, China and Europe.

*   In 2016, in all segments except Display Technologies, Core Net Sales and GAAP sales are consistent.

Please see Appendix A for a reconciliation of the non-GAAP measures we use in this proxy statement to our audited GAAP financial statements.

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Table of Contents

Compensation Discussion & Analysis

2016 Performance and Compensation Alignment

Each year we set rigorous and challenging performance goals aligned with our strategic objectives. We continue to believe profitability, cash generation, and revenue growth are the most important measures of the successful execution of our Framework and delivery of long-term shareholder value.

Approximately 89% of the CEO’s target total compensation and 79% of the other NEOs’ target total compensation is variable and depends upon operating performance and stock price.

Our short-term incentives are composed of the Performance Incentive Plan (PIP) and the GoalSharing plan. These plans use metrics designed to drive growth and shareholder returns. Core EPS measures bottom line profitability (75% weight); and Core Net Sales focuses on increasing top line growth (25% weight). These two financial goals comprise 100% of PIP payouts for NEOs. Because these goals – growing both profit and sales – are well-aligned with the Framework, we did not make any changes to this construct in 2016. Actual performance was below the established PIP targets for 2016, with the blended result being a payout of 85% of PIP target.

We also have a company-wide GoalSharing plan that motivates our entire workforce by including compensation objectives reflecting a combination of corporate financial (25% weight) and business unit performance (75% weight). NEOs receive payouts based on the average performance of all business unit plans, which resulted in a payout of 5.96% of base salary for 2016.

Long-Term Incentive (LTI) awards are comprised of 60% Cash Performance Units (CPUs), 25% Restricted Stock Units (RSUs), and 15% Stock Options. CPU awards are based 70% on Adjusted Operating Cash Flow less CapEx and 30% on Core Net Sales, averaged over a three-year period. In 2016, we changed the Adjusted Operating Cash Flow measure to Adjusted Operating Cash Flow less CapEx in order to align that measure with the Framework and to maintain careful focus on Corning’s capital expenditures. In 2016, the CPU payout was 88% of the performance target.

In addition, because ROIC improvement is important to the delivery of the commitments made pursuant to our Framework, and an important metric for many of our shareholders based on their feedback, we have added an ROIC modifier to the CPUs. CPUs earned for the three-year performance period (2016 through 2018) will be increased or decreased up to 10% depending on Corning’s ROIC performance over the three-year performance period compared to pre-established performance targets.

The following table compares the 2016 actual results and targeted goals for each performance measure with 2015 actual results.

  2016 2015
Measure Actual
% increase
     vs. ’15 Actual
Target
% increase
     vs. ’15 Actual
Actual Target
Adjusted Operating Cash Flow       $1,651     $1,593(2)            $1,969(2)     $N/A(2)
less CapEx (millions) N/A(1) N/A(1)
Core EPS $1.55 $1.55 $1.40 $1.53
+10.7% +10.7%
Core Net Sales (millions) $9,710 $9,996 $9,800    $10,352
-0.9% +2.0%
(1) Adjusted Operating Cash Flow less CapEx goals are established yearly, independent of the prior year, based on items that may be unique and non-recurring.
(2) Adjusted Operating Cash Flow less CapEx was introduced as a measure in 2016. Prior to 2016, Adjusted Operating Cash Flow was used.

Please see “Our 2016 Performance Highlights” on page 6 for more information about our Core Performance Measures and Appendix A to this proxy statement for a reconciliation of the non-GAAP measures we use in this proxy statement to our audited GAAP financial statements.

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Table of Contents

Compensation Discussion & Analysis

Total Shareholder Return

Corning’s Total Shareholder Return (TSR), which consists of stock price appreciation plus reinvestment of common dividends, was 36.2% in 2016 and our three-year annualized TSR performance was 13.4%, both higher than the S&P 500 Index and Corning’s Compensation Peer Group.

ANNUALIZED TOTAL SHAREHOLDER RETURN
As of December 31, 2016
 
     

Corning’s 1-Year 
and 3-Year TSR 
is better than 
the TSR of the
S&P 500 Index
and Corning’s
Compensation
Peer Group


 



Return of Value to Shareholders

Since introducing the Framework in late 2015, we have distributed approximately $6 billion to shareholders through share repurchases and dividends. Our Board approved a new $4 billion share repurchase authorization in December 2016, and annual dividend increases of 12.5% in 2016 and 14.8% in February 2017, as part of our ongoing commitment to return cash to our investors.

Shareholder Engagement

At our 2016 annual
meeting of shareholders,
our Say on Pay proposal
received support from

95%
of votes cast.

     Strong Say on Pay Results. At our 2016 annual meeting of shareholders, our Say on Pay proposal received support from 95% of votes cast, consistent with 2015 and 2014. We view this level of shareholder support as an affirmation of our current pay practices and pay-for-performance philosophy.

Shareholder Outreach. In 2016, as part of our shareholder outreach program, we met with shareholders representing approximately 40% of our outstanding shares. In these meetings, we heard many constructive comments on strategy, capital allocation, governance, compensation and shareholder communications. We learned through these meetings that our shareholders generally approved of our Framework. These shareholders also were supportive of our executive compensation program and the direct linkage of financial metrics in our incentive plans to our Framework. As in previous years, shareholders were not prescriptive about compensation plan design. Instead, they were more interested to see that the results and outcomes delivered by the incentive plans were aligned appropriately with Corning’s performance and had appropriately incented our executives to deliver on our Framework. See “Shareholder Communication” on page 11 for additional information.


 
 

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Table of Contents

Compensation Discussion & Analysis

Robust Compensation Program Governance

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

Close alignment of pay with performance over both the short and long term horizon
Mix of cash and equity incentives tied to short-term financial performance and long-term value creation
CEO total compensation targeted within a competitive range of the Compensation Peer Group median
Caps on payout levels for annual incentives in a budgeted down-cycle year
Significant NEO share ownership requirements
Anti-hedging and pledging policies
Clawback policy

No excise tax gross-ups for 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 advisor to the Compensation Committee

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





2016 Executive Compensation Program Overview

To ensure compensation is aligned with our Framework and long-term value creation, we believe a well-structured program must balance near-term financial results and execution while building long-term value.

To that end, our compensation program is composed of a number of elements, each tailored to encourage an aspect of the Company’s performance that the Committee believes is important for delivering on the Framework and driving long-term shareholder value. Given the importance of growing sales in our 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. Performance metrics for the short-term incentives impact almost every employee at Corning through GoalSharing and approximately 5,500 mid-level managers and above through the Performance Incentive Plan. For the CPUs of the LTI, we again focus on Core Net Sales growth because the executives and key employees in this plan can most dramatically impact sales growth. We believe that revenue and earnings growth, generating strong positive cash flows and sustaining a return on invested capital greater than our cost of capital are the key contributors to creating long-term shareholder value.

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Table of Contents

Compensation Discussion & Analysis

In addition to a fixed competitive base salary, we offer the following variable pay components:

Summary of Corning’s 2016 Executive Variable Compensation Program

         Form of Compensation Delivered Performance Measures
 


Performance Incentive Plan
(Cash)

Core EPS (75%)
Core Net Sales (25%) 

 
 


GoalSharing
(Company-Wide Business Unit Plan;
Paid in Cash)

Weighted Average of Business Unit Plans

 

Cash Performance Units
(CPUs) (60%)

3-year average of
Adjusted Operating Cash Flow less CapEx (70% weighting)
Core Net Sales (30% weighting)
2016 Changes in Support of our Framework:
Adjusted Operating Cash Flow less CapEx now used to emphasize cash flow generation
Added a ±10% modifier based on ROIC improvement from 2016 through 2018 relative to pre-established targets
 

Equity Incentives:
Restricted Stock Units (RSUs) (25%) and
Stock Options (15%)

Value depends on Corning share price performance


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.

Beginning in 2013, we began to provide the core performance measures that supplement our GAAP financial measures to provide shareholders a clearer view of the Company’s core operating results. Because Corning uses these core performance measures to manage its businesses, it is appropriate that we also use these measures for the performance targets in our short-term and long-term incentive programs. For more information about Corning’s core performance measures, see “Core Performance Measures” on page 6.

Our incentive plans also require our results to exceed the set targets by a meaningful margin before payouts increase significantly. Payouts relative to target fall significantly if performance goals are not achieved, with full forfeiture occurring if specified threshold goals are not attained. This approach 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.

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Table of Contents

Compensation Discussion & Analysis

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

Short Term/Annual Incentive
2016 PIP Measures
Long-Term Incentive
2016 CPU Measures
(Year One of Three-Year Average Plan)
Core EPS Goal
(Weighted 75%)
Core Net Sales Goal
(Weighted 25%)
Adjusted Operating Cash
Flow less CapEx Goal (Weighted 70%)
Core Net Sales Goal
(Weighted 30%)
Achievement % Core
EPS
(in $M)
% of 2016
Plan
Core Net
Sales
(in $M)
% of
2015
Core Net
Sales
Adjusted
OCF less
CapEx (in $M)
% of 2016
Plan
Core Net
Sales
(in $M)
% of
2015
Core Net
Sales
200% $1.74 112% $10,780 110% Capped at 150%
  150% $1.66 107% $10,322      105%      $1,912      120%        $10,780      110%
     125%      $1.62      105%      $10,094 103% $1,752 110% $10,094 103%
TARGET 100% $1.55 100% $9,996 102% $1,593 100% $9,996 102%
75% $1.40 90% $9,898 101% $1,354 85% $9,898 101%
50% $1.24 80% $9,800 100% $1,235 78% $9,800 100%
0% $1.16 75% $9,408 96% $1,035 65% $9,408 96%

As discussed on page 41, in 2016 Corning’s performance results for Core EPS met the annual target bonus opportunity (100%), while Core Net Sales fell well below its target (38%), with the blended result for short-term incentives being 85%. Adjusted Operating Cash Flow less CapEx exceeded the annual target bonus opportunity (109%), and, as stated above, Core Net Sales was below its target (38%), yielding a blended result of 88% of the annual target bonus opportunity for the 2016 earned portion of CPUs. 2016 CPUs are further subject to an ROIC modifier of ± 10% based on ROIC improvement over the three-year performance period (2016-2018) against pre-established targets.

Substantial variable and ‘at risk’ compensation: Approximately 89% of the CEO’s target total compensation and 79% of the other NEOs’ target total compensation is variable and impacted by operating performance and stock price. Target total compensation includes base salary and target short- and long-term incentives.

89% of CEO and 79% of NEO target total compensation is variable
and linked to operating or stock performance.


2016 Executive Compensation Program Details

Our key compensation program principles are as follows:

Provide a competitive base salary

Pay for performance

Incentivize execution of our Framework

Apply a team-based management approach

Increase the proportion of incentive compensation for more senior positions

Align the interests of our executive group with shareholders

Base Salary

Base salaries provide a form of fixed compensation and are reviewed annually by the Committee taking into account internal equity and individual performance, as well as competitive positioning, as discussed in the “Compensation Peer Group” section on page 50. In 2016, all NEOs received base salary increases of approximately 2%, consistent with the salary increase budget for all other U.S. salaried employees.

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Table of Contents

Compensation Discussion & Analysis

Short-Term Incentives

Short-term incentives are designed to reward NEOs for Corning’s consolidated annual financial performance supporting our Framework and team-based management approach.

Compensation
Element
Target
Opportunity
2016 Performance
Target
2016 Actual
Results
Earned Award
for 2016

Performance
Incentive Plan

Core EPS (75%)
Core Net Sales (25%)

CEO:
150%*

Other NEOs:
70%-80%*

Core EPS:
$1.55

Core Net Sales:
$9,996 million

Core EPS:
$1.55

Core Net Sales:
$9,710 million

Core EPS result
(75% of weight):
100% of target payout

Core Net Sales result
(25% of weight):
38% of target payout

Blended result:
85% of target payout

GoalSharing

5%*

N/A
(Average of all business unit plans)

5.96%*

5.96%*

* As a percentage of base salary.

Long-Term Incentives and Equity Awards

Long-term incentives (LTI) are designed as a mix of cash performance units (CPUs), restricted stock units (RSUs), and stock options (Options). Target value amounts are established by the Committee for each NEO annually in February. We believe it is important to align LTI amounts to financial measures that support the execution of our Framework and generate long-term value for our shareholders. We also believe it is important for a portion of LTI to be in the form of equity to align the interests of our NEOs with shareholders.

CPUs represent 60% of the annual target LTI value with payouts based on performance goals that are focused on measures supporting Corning’s long-term financial health and success. Profitability, cash generation and revenue growth are key drivers of how well we execute our strategy and our long-term plan focuses on cash generation and Core Net Sales performance. Actual CPUs earned are based on the average performance over three years. Beginning in 2016, our adjusted operating cash flow measure for our CPUs is Adjusted Operating Cash Flow less CapEx; we also added a three-year ROIC modifier of ±10% to further align the metric with our Framework. In 2019, CPUs earned for 2016 will be paid out subject to an adjustment of ±10%, depending on Corning’s ROIC change over the three year performance period (2016 through 2018) compared to a pre-established performance target. We will maintain this construct for CPUs awarded in 2017 as well.

RSUs represent 25% of the annual target LTI. The number of RSUs granted is determined based on the stock price at the end of March, and awards will cliff vest slightly more than three years from the grant date.

Options represent 15% of the annual target LTI. The number of Options granted is determined using a Black-Scholes valuation. Options were granted at the end of March, April and May in 2016. To simplify the grant process, options are expected to be granted on a single date at the end of March beginning in 2017. Vesting is three years after the grant date, and the option awards have a maximum ten-year term.


CORNING 2017 PROXY STATEMENT     47              



Table of Contents

Compensation Discussion & Analysis

Long-Term Incentives and Equity Awards Earned in 2016

Compensation
Element
Target
Opportunity
Performance
Target
2016 Actual
Results
Earned Award
for 2016
 

Adjusted Operating Cash Flow (70%)

Core Net Sales
(30%)

CEO:
$4.95 million

Other NEOs:
$0.84 million to
$1.35 million

Applies to the following CPUs:
Year 1 of 3:
2016–2018,
Year 2 of 3:
2015–2017, and
Year 3 of 3:
2014–2016

Adjusted Operating Cash Flow, less CapEx $1,593 million

Core Net Sales: $9,996 million

Adjusted Operating Cash Flow less CapEx:
$1,651 million
Result: 100% of target payout

Core Net Sales: $9,710 million
Result: 38% of target payout

Blended Result:
88% of target payout

2016–2018 CPUs
Year 1: 88% of target payout
Year 2: TBD
Year 3: TBD
Three-year average, ±10%: TBD*

2015–2017 CPUs
Year 1: 100% of target payout
Year 2: 88% of target payout
Year 3: TBD
Three-year average: TBD

2014–2016 CPUs
Year 1: 121% of target payout
Year 2: 100% of target payout
Year 3: 88% of target payout
Three-year average: 103% of target payout


* Subject to a ±10% adjustment based on ROIC improvement from 2016 through 2018 against pre-established targets.

CEO Target Compensation

Over the past twelve years, under the leadership of Mr. Weeks, Corning has grown Core Net Sales, Core EPS, and Adjusted Operating Cash Flow at double-digit rates. We have beaten the competition on growth in each of our business segments, achieved the lowest cost position in many key businesses, and created new-to-the-world product categories, such as Corning® Gorilla® Glass, heavy-duty diesel substrates and filters, and customized fiber-to-the-home solutions.

In February 2016, the Compensation Committee approved the following changes to Mr. Weeks’ target compensation in recognition of his consistent high performance:

Base salary – increased by 2% in line with base salary increases for all other U.S. based salaried employees.

Target Short-Term Incentives – remained flat at 155% of base salary, comprised of a PIP target of 150% of base salary and a GoalSharing target of 5% of base salary.

Target Long-Term Incentives – increased 2016 LTI target from $8,000,000 to $8,250,000.

Eighty-nine percent of Mr. Weeks’ pay is directly tied to Corning’s operating performance and stock price.

Employee Benefits and Perquisites

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

In addition to the standard benefits available to all eligible U.S. salaried employees, the NEOs are eligible for the benefits and perquisites described in this section.

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Table of Contents

Compensation Discussion & Analysis

Executive Supplemental Pension Plan (ESPP): We maintain an ESPP to reward and retain long-serving individuals who are critical to executing Corning’s innovation strategy. Our non-qualified ESPP covers approximately 20 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, a change that applies to all the NEOs except Dr. Morse. 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 affect retirement benefits. Executives must have at least ten years of service to be vested under this plan. All of the NEOs meet that requirement.

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

For additional details of the ESPP benefits and plan features, please refer to the section entitled “Retirement Plans” on page 62.

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

Relocation and Expatriate-Related Expenses: As part of our global mobility program, our policies provide that employees who relocate to another country at our request are eligible for certain relocation and expatriate benefits to facilitate the transition and international assignment. These benefits include 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 or with living and working outside of the 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. In July 2016, Mr. Clappin’s assignment in Tokyo ended and he relocated back to Corning, NY. While he was based in Tokyo, Mr. Clappin was eligible for expatriate benefits. These amounts are detailed in footnote 5, section (v) to the Summary Compensation Table. Tax equalization for Mr. Clappin will continue for the next several years due to the timing of taxation of compensation earned while on his expatriate assignment.

Other Executive Perquisites: We provide the NEOs with an overall allowance that can be used for home security, modest personal aircraft usage, and limited financial counseling services. Each NEO is responsible for all taxes on any imputed income resulting from these perquisites.

Given the limited commercial flight options available in the Corning, New York area, the Committee believes that a well-managed program of limited personal aircraft use provides an extremely important benefit at a reasonable cost to the Company. We closely monitor business and personal usage of our planes and limit personal usage to keep it at a low percentage of total usage. The Committee establishes annual personal aircraft usage caps under this program (both hours and absolute dollar value) for each NEO. The established cap for the CEO was 100 hours and $165,000; the cap for the other NEOs was approximately half this level or lower. Actual utilization typically falls below these caps. For additional details, refer to footnotes relating to “All Other Compensation” included with the Summary Compensation Table starting on page 54.

Executive Severance: We have entered into severance agreements with each NEO. The severance agreements provide clarity for both Corning 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” on page 65.

Executive Change-in-Control Agreements: The Committee believes that it is in the best interests of shareholders, employees and the communities in which Corning operates to ensure an orderly process if a change in control were to occur. The Committee also believes 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. Therefore, we have provided each NEO with a change-in-control agreement (separate from the severance agreements described above). The change-in-control agreements provide that an executive’s employment must be terminated or effectively terminated in connection with a change in control in order to receive severance benefits. Additional details about the specific agreements can be found under “Arrangements with Named Executive Officers – Change-in-Control Agreements” on page 67.

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Table of Contents

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. Except for Mr. Tripeny, whose agreement is dated January 1, 2015, our current NEOs have grandfathered agreements that were entered into prior to July 2004.


Compensation Peer Group

Corning is a diversified technology company with five reportable business segments. The majority of our businesses do not have U.S. public company 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. In attempting to identify peer companies for compensation purposes, Corning must look to globally diversified companies or innovation companies in other industries to find organizations of similar size and complexity (when viewed in terms of revenues, net income, market capitalization, assets and number of employees). For these reasons, our peer group for compensation purposes does not mirror the companies with which we compete for business.

Our largest competitors and most relevant financial performance peers are not U.S. public companies.

Corning must look to globally diversified companies or innovation companies in other industries to find companies of similar size and complexity.

We currently participate in and use three general executive compensation surveys for NEO positions: Mercer Executive Survey, Willis Towers Watson General Industry Executive Compensation Survey, and Equilar TrueValue Survey. The identity of the individual companies comprising the survey data is not considered in our evaluation process. In addition to these 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. We refer to these companies as the Compensation Peer Group.

Corning’s reported Core Net Sales of $9,710 million are at approximately the median for revenues of our Compensation Peer Group. Market capitalization is also close to the median compared with the Compensation Peer Group market capitalization. Corning’s net income, total assets and number of employees are near or within the top quartile when compared to the same measures of the Compensation Peer Group.

PERCENT RANK, CORNING VERSUS COMPENSATION PEER GROUP

2016 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.

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Table of Contents

Compensation Discussion & Analysis

Corning uses the Compensation Peer Group solely as a reference point, in combination with broader executive compensation surveys, to assess each NEO’s target total direct compensation (i.e., salary, target bonus, and the grant date fair value of long-term incentives). Our goal is to position our CEO’s target total direct compensation within a competitive range of the Compensation Peer Group median. Median target total direct CEO compensation in the Compensation Peer Group was determined to be $11.1 million, and 75th percentile target total direct CEO compensation was $12.6 million, compared with Corning target total direct CEO compensation of $11.7 million. Beyond the CEO, external data serves as a reference point, with internal equity being a more important consideration in establishing a base salary and target total direct compensation for the other NEOs.
 

Compensation Program 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. Since 2014, the Committee has retained an executive compensation expert from Frederic W. Cook & Co., Inc. (FW Cook) as its independent consultant.

In 2016, FW Cook attended all Committee meetings. FW Cook advises the Committee on all matters related to NEO and director compensation and assists the Committee in interpreting its data as well as data and recommendations received from the Company.

In 2016, the Company also engaged Compensation Advisory Partners LLC (CAP), Shearman and Sterling, LLP (S&S) and Willis Towers Watson (WTW) to assist management with various executive compensation matters.

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

Role of Executive Management in the Executive Compensation Process

Corning’s senior vice president (SVP), Human Resources and SVP, Global Compensation and Benefits, working closely with other members of Corning’s Human Resources, Law and Finance departments, are responsible for designing and implementing executive compensation programs and discussing with the Committee significant proposals or topics that affect executive compensation at the Company. The SVP, Global Compensation and Benefits, formulates the target total compensation recommendations for all of the NEOs (except the CEO) 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 before management’s recommendations are submitted to the Committee. Recommendations for the CEO’s compensation are prepared by the compensation consultant and are not discussed or reviewed with the CEO prior to the Committee’s review and the CEO is not present for discussion of his compensation by the Committee.

After the annual budget is finalized each year, the Committee receives management’s recommendations for the compensation plan performance metrics and sets the final targets for the year.

The CFO typically attends the annual Committee meeting to review the CD&A, and attends that portion of the February Committee meeting where performance metrics are reviewed.

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Table of Contents

Compensation Discussion & Analysis

Compensation Risk Analysis

In February 2016, the Committee reviewed the conclusions of a risk assessment of our compensation policies and practices covering all employees. This type of assessment is conducted annually by a cross-functional team with representatives from Human Resources, Law and Finance. The 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 Corning’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 multiple 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;

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 achieve ambitious 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 NEOs and other employees; and

Multiple levels of review and approval of awards, including Committee approval of all officer compensation proposals.

The Committee concluded that Corning's executive compensation program is balanced and does not reward 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

Our clawback policy gives the 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 if such payment was based upon the achievement of 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 such individuals.

Anti-Hedging Policy

Our anti-hedging policy prohibits employees and directors 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 they may profit from short-term speculative swings in the value of Corning stock utilizing “short sales” or “put” or “call” options.

Anti-Pledging Policy

Our anti-pledging policy prohibits employees and directors from holding Corning stock in a margin account or pledging Company securities as collateral for a loan.

              52     CORNING 2017 PROXY STATEMENT



Table of Contents

Compensation Discussion & Analysis

Tax Deductibility of Compensation

In general, Corning intends to structure its performance-based incentives to qualify as deductible performance-based compensation. See “Proposal 5: Re-approval of the Material Terms of the Performance Goals under Our 2012 Long-Term Incentive Plan, as Required by Section 162(m) of the IRC” for a further description of the Section 162(m) requirements and our request for shareholder re-approval of the material terms of the performance goals under our 2012 Long-Term Incentive Plan, which is required by Section 162(m) at least every five years. 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 by the corporation. 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. In addition, for other compensation elements, there can be no guarantee that performance-based compensation requirements for full deductibility will be met in all instances and, therefore, the tax deductibility of these amounts may also be limited.

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.

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, 2016.

The Compensation Committee:

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

CORNING 2017 PROXY STATEMENT     53              




Table of Contents

Compensation Discussion & Analysis

2016 Compensation Tables

2016 Summary Compensation Table

This table describes the total compensation paid to our NEOs for fiscal years 2016, 2015 and 2014, as required. The components of the total compensation are described in the footnotes below and in more detail in the tables and narratives that follow. For information on the role of each component of compensation, see the description under “Compensation Discussion and Analysis.”

(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 2016 $ 1,337,740 $0 $ 2,062,491 $963,399 $5,750,512 $928,531 $266,582 $ 11,309,255
Chairman, Chief 2015 1,353,096 0 1,999,990 1,116,499 4,407,018 1,306,544 255,841 10,438,988
Executive Officer and 2014 1,261,923   0 1,750,004 1,037,315 3,991,718 4,346,119 647,382 13,034,461
President
R. Tony Tripeny 2016 504,808 0 349,991 163,480 916,406 214,950 126,222 2,275,857
Senior Vice President 2015 434,135 0 387,494 146,542 650,617 0 75,299 1,694,087
and Chief Financial
Officer
James P. Clappin 2016 686,538 0 525,007 245,230 1,537,749 66,568 3,452,856 6,513,948
President, Corning 2015 695,000 0 524,997 293,084 1,200,392 56,178 1,672,111 4,441,762
Glass Technologies 2014 641,692 0 710,592 296,377 1,137,400 1,423,940 1,848,935 6,058,936
Lawrence D. McRae 2016 731,971 0 562,505 262,737 1,633,734 90,676 83,329 3,364,952
Vice Chairman 2015 713,173 0 587,488 300,063 1,245,685 0 77,177 2,923,586
and Corporate 2014 647,615 0 1,131,792 296,377 1,137,400 1,901,017 64,591 5,178,793
Development Officer
David L. Morse 2016 631,010 0 525,007 245,230 1,498,641 468,668 97,390 3,465,946
Executive Vice
President and Chief
Technology Officer
(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 granted pursuant to the 2012 Long-Term Incentive 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, 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 6, 2017. This same method was used for the fiscal years ended December 31, 2015 and 2014. There can be no assurance that the grant date fair value amounts will ever be realized.
(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 2012 Long-Term Incentive 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, 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 6, 2017. The grant date fair value amounts may never 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 (PIP). Awards earned under the 2016 GoalSharing plan were 5.96% of each NEO’s year-end base salary and paid in February 2017. Awards earned under the 2016 PIP were based on actual corporate performance compared to the Core EPS and Core Net Sales goals established for the plans in February 2016. Based on actual performance, each of the NEOs earned PIP awards equal to 85% of their annual target bonus opportunities (established as a percentage of year-end base salary). Cash awards earned under the PIP for 2016 will be paid in March 2017.

              54     CORNING 2017 PROXY STATEMENT



Table of Contents

Compensation Discussion & Analysis

The following table indicates awards earned under the PIP and the GoalSharing Plan reflected in column (g) above:

Named Executive Officer       Year End
Base Salary
      2016
PIP Target
      Actual 2016 PIP
Performance
Results
(% Tgt.)
      2016
PIP $ Award
      Actual 2016
GoalSharing
Performance
      2016
GoalSharing
Award
     Wendell P. Weeks   $ 1,351,500 150% 85%    $ 1,723,163 5.96%          $ 80,549
R. Tony Tripeny 510,000 70% 85% 303,450 5.96% 30,396
James P. Clappin 693,600 75% 85% 442,170 5.96% 41,339
  Lawrence D. McRae 739,500 80% 85% 502,860 5.96% 44,074
David L. Morse 637,500 75% 85% 406,406 5.96% 37,995

In addition to the 2016 PIP and 2016 GoalSharing awards noted above, the amounts in column (g) also reflect the earned portions of CPU Awards granted in 2016, 2015 and 2014. 2016 CPU award payouts will be made in February 2019 based on actual corporate performance compared to the established performance goals averaged over three years (2016, 2017 and 2018) and subject to a ±10% ROIC modifier as described on page 47. 2015 CPU award payouts are based on performance goals averaged over three years (2015, 2016 and 2017). 2014 CPU award payouts are based on performance goals averaged over three years (2014, 2015 and 2016). The goals for 2016 were Adjusted Operating Cash Flow less CapEx (70%) and Core Net Sales (30%), as well as a three-year ROIC goal established in February 2016. Adjusted Operating Cash Flow less CapEx and Core Net Sales goals for 2017 and 2018 are yet to be established. While the final payout amounts for 2016 and 2015 CPU awards are unknown, the table below reflects the earned amount of 2016, 2015 and 2014 CPU awards which are reflected in column (g) above, on the basis of 2016 performance excluding the portion of the 2016 award that remains unearned because ROIC change to target (2016-2018) is not yet known.

Named Executive Officer      2016 CPU
Target
Award
     2016 CPU
Performance
Results %
    

Prorated Earned
2016 CPUs
Based on 2016
Performance
(Year One of
Three)*

     2015 CPU
Target
Amount
     Prorated Earned
2015 CPUs
Based on 2016
Performance
(Year Two of
Three)*
     2014 CPU
Target
Amount
     Prorated Earned
2014 CPUs
Based on 2016
Performance
(Year Three of
Three)*
     Wendell P. Weeks $ 4,950,000 88% $1,306,800 $ 4,800,000           $ 1,408,000 $ 4,200,000            $ 1,232,000
R. Tony Tripeny 840,000 88% 221,760 630,000 184,800 600,000 176,000
James P. Clappin 1,260,000 88% 332,640 1,260,000 369,600 1,200,000 352,000
Lawrence D. McRae 1,350,000 88% 356,400 1,290,000 378,400 1,200,000 352,000
David L. Morse 1,260,000 88% 332,640 1,260,000 369,600 1,200,000 352,000

* reduced by 10% since the ROIC modifier will not be known until after full 2016-2018 performance against pre-established target is known

(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 2016 the discount rate used to value the actuarial liability decreased approximately 23 basis points from 4.25% to 4.02 %, resulting in an increase in the pension values of Messrs. Weeks, Tripeny, Clappin, McRae and Dr. Morse in the amounts of $928,531, $214,950, $66,568, $90,676 and $468,668, respectively. 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      2016 Present
Value in
Pension
Benefits
      2015 Present
Value in
Pension
Benefits
      2014 Present
Value in
Pension
Benefits
      2013 Present
Value in
Pension
Benefits
     Wendell P. Weeks $24,807,437 $23,878,906 $22,572,362 $18,226,243
R. Tony Tripeny 5,331,840 5,116,890 ------------------------------Not an NEO---------------------------------
  James P. Clappin 8,756,632 8,690,064 8,633,886 -----------Not an NEO-----------
Lawrence D. McRae 9,483,094 9,392,418 9,501,949 7,600,932
David L. Morse 8,417,752 -------------------------------------------------------Not an NEO-------------------------------------------------------
Valuation Discount Rate 4.02% 4.25% 4.00% 4.75%

CORNING 2017 PROXY STATEMENT     55              



Table of Contents

Compensation Discussion & Analysis

(5) The following table shows “All Other Compensation” amounts provided to the NEOs. Capped personal aircraft rights, financial counseling services 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 perquisite 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)
      Executive
Allowance(ii)
      Expatriate
Benefits
      Other(iii)       TOTALS
     Wendell P. Weeks 2016 $9,880 $73,165 $56,893    $109,520 (iv) $0 $ 17,124 $266,582
2015 9,880 73,674 83,804 80,639 (iv) 0 7,844 255,841
  2014 9,468 185,953 62,221 384,422 (iv) 0 5,319 647,382
R. Tony Tripeny 2016 4,800 25,017 4,303 80,030 0 12,072 126,222
2015 4,800 24,154 4,553 40,250 0 1,542 75,299
  James P. Clappin 2016 7,410 58,473 54,708 17,791 3,311,896 (v) 2,578 3,452,856
2015 7,410 75,854 52,796 342 1,525,614 (v) 10,095 1,672,111
2014 7,101 60,889 43,097 0 1,720,103 (v) 17,745 1,848,935
Lawrence D. McRae 2016 16,364 0 59,489 6,781 0 695 83,329
2015 16,364 0 45,693 14,776 0 344 77,177
2014 16,055 0 36,745 11,472 0 319 64,591
David L. Morse 2016 14,820 45,734 20,080 12,389 0 4,367 97,390
(i) Amounts shown above reflect aircraft usage during the 2016 fiscal year.
(ii) NEOs may use their executive allowance for residential security or financial counseling services.
(iii) These amounts include costs attributable to executive physicals, including associated travel costs, an annual Board gift, and contributions made under the Corning Incorporated Foundation Matching Gifts Program that is open to all employees and directors.
(iv) This reflects Company-paid expenses relating to personal and residential security benefitting Mr. Weeks and, through association, his family. Over the past three years, these costs have declined significantly. 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, they are reported as perquisites in this column.
(v) 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 for 2016 include standard expatriate benefits related to housing related costs ($87,733), cost of living related allowances ($53,483), home leave ($23,612), as well as tax equalization and host country tax payments ($3,147,068). 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.

              56     CORNING 2017 PROXY STATEMENT



Table of Contents

Compensation Discussion & Analysis

2016 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   $2,027,250 $ 4,054,500
GoalSharing Plan n/a 0 67,575 135,150
Cash Performance  
Units 2/3/16 2/3/16 0 4,950,000 8,167,500
Time-Based  
Restricted Stock
Units 3/31/16 2/3/16 98,731 20.89 $ 2,062,491 (2)
Stock Options 3/31/16 2/3/16 49,366 20.89 20.89 $333,508 (3)
Stock Options 4/29/16 2/3/16 55,236 18.67 18.67 $314,946 (3)
Stock Options 5/31/16 2/3/16 49,366 20.89 20.89 $314,946 (3)
R. Tony Performance
Tripeny Incentive Plan n/a 0 357,000 714,000
GoalSharing Plan n/a 0 25,500 51,000
Cash Performance
Units 2/3/16 2/3/16 0 840,000 1,386,000
Time-Based
Restricted Stock
Units 3/31/16 2/3/16 16,754 20.89 349,991 (2)
Stock Options 3/31/16 2/3/16 8,377 20.89 20.89 56,594 (3)
Stock Options 4/29/16 2/3/16 9,373 18.67 18.67 53,443 (3)
Stock Options 5/31/16 2/3/16 8,377 20.89 20.89 53,444 (3)
James P. Performance
Clappin Incentive Plan n/a 0 520,200 1,040,400
GoalSharing Plan n/a 0 34,680 69,360
Cash Performance
Units 2/3/16 2/3/16 0 1,260,000 2,079,000
Time-Based
Restricted Stock
Units 3/31/16 2/3/16 25,132 20.89 525,007 (2)
Stock Options 3/31/16 2/3/16 12,566 20.89 20.89 84,894 (3)
Stock Options 4/29/16 2/3/16 14,060 18.67 18.67 80,168 (3)
Stock Options 5/31/16 2/3/16 12,566 20.89 20.89 80,169 (3)

CORNING 2017 PROXY STATEMENT     57              



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
Lawrence D. Performance
McRae Incentive Plan n/a 0 $591,600 $ 1,183,200
GoalSharing Plan n/a 0 36,975 73,950
Cash Performance
Units 2/3/16 2/3/16 0 1,350,000 2,227,500
Time-Based
Restricted Stock
Units 3/31/16 2/3/16 26,927 20.89 562,505 (2)
Stock Options 3/31/16 2/3/16 13,463 20.89 20.89 90,954 (3)
Stock Options 4/29/16 2/3/16 15,064 18.67 18.67 85,892 (3)
Stock Options 5/31/16 2/3/16 13,463 20.89 20.89 85,891 (3)
David L. Performance
Morse Incentive Plan n/a 0 $478,125 $956,250
GoalSharing Plan n/a 0 31,875 63,750
Cash Performance
Units 2/3/16 2/3/16 0 1,260,000 2,079,000
Time-Based
Restricted Stock
Units 3/31/16 2/3/16 25,132 20.89 525,007 (2)
Stock Options 3/31/16 2/3/16 12,566 20.89 20.89 84,894 (3)
Stock Options 4/29/16 2/3/16 14,060 18.67 18.67 80,168 (3)
Stock Options 5/31/16 2/3/16 12,566 20.89 20.89 80,169 (3)
(1) The amounts shown in columns (d), (e) and (f) reflect the award amounts under (i) the Company’s 2016 Performance Incentive Plan (PIP) (ii) 2016 GoalSharing Plan and (iii) the Cash Performance Units under Corning’s short- and long-term incentive plans. Awards under these plans are paid in cash. If the threshold level of performance is not met the payout will be 0%. If the performance target is met, 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, and 165% for CPUs which represents the 150% performance metrics cap plus the maximum 10% ROIC modifier. PIP and GoalSharing awards are based on the individual’s 2016 bonus target and year-end base salary. CPUs earned in 2016 are based on actual performance against the target averaged over three years (2016, 2017, 2018); adjusted up or down by up to 10% based on ROIC results versus the pre-established goals; and expected to be paid in February 2019.
(2) This amount reflects the total grant date fair value computed in accordance with FASB ASC Topic 718 of stock awards granted in 2016 pursuant to the long-term incentive plan, and corresponds to the amounts set forth in column (e) for 2016 of the Summary Compensation Table. Stock awards vest 100% three years after grant date.
(3) These amounts reflect the total grant date fair value computed in accordance with FASB ASC Topic 718 of stock options granted in calendar year 2016 pursuant to Corning’s long-term incentive plans, and corresponds to the amounts set forth in column (f) for 2016 of the Summary Compensation Table. Stock options vest 100% three years after grant date.

              58      CORNING 2017 PROXY STATEMENT



Table of Contents

Compensation Discussion & Analysis

Outstanding Equity Awards at 2016 Fiscal Year-End

The following table shows stock option awards classified as exercisable and unexercisable as of December 31, 2016. The table also shows unvested restricted stock and restricted stock unit awards assuming a market value of $24.27 a share (the NYSE closing price of the Company’s stock on December 30, 2016).


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. 12/05/07 A 153,500 0 24.92 12/4/2017 263,545            $ 6,396,237
Weeks 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 111,835 0 13.04 1/3/2022
02/01/12 C 113,049 0 12.90 2/1/2022
03/01/12 C 112,439 0 12.97 3/1/2022
03/28/13 C 125,031 0 13.33 3/28/2023
04/30/13 C 114,943 0 14.50 4/30/2023
05/31/13 C 108,436 0 15.37 5/31/2023
03/31/14 C 0 42,027 20.82 3/31/2024
04/30/14 C 0 41,846 20.91 4/30/2024
05/30/14 C 0 41,080 21.30 5/30/2024
03/31/15 C 0 44,092 22.68 3/31/2025
04/30/15 C 0 47,778 20.93 4/30/2025
05/29/15 C 0 47,801 20.92 5/29/2025
03/31/16 C 0 49,366 20.89 3/31/2026
04/29/16 C 0 55,236 18.67 4/29/2026
05/31/16 C 0 49,366 20.89 5/31/2026
Total 1,372,257 418,592
R. Tony Tripeny 12/05/07 A 16,500 0 24.92 12/4/2017 45,274 $ 1,098,800
01/02/08 B 8,250 0 23.37 1/1/2018
02/01/08 C 8,250 0 24.61 1/31/2018
12/03/08 D 16,333 0 8.67 12/2/2018
01/02/09 D 32,667 0 10.05 1/1/2019
02/02/09 D 32,667 0 10.25 2/1/2019
12/02/09 D 8,333 0 17.82 12/2/2019
01/04/10 D 8,333 0 19.56 1/4/2020
02/01/10 D 8,334 0 18.16 2/1/2020
01/03/11 D 7,720 0 19.19 1/3/2021
02/01/11 D 6,529 0 22.69 2/1/2021
03/01/11 D 6,725 0 22.03 3/1/2021
01/03/12 C 14,379 0 13.04 1/3/2022
02/01/12 C 14,535 0 12.90 2/1/2022
03/01/12 C 14,456 0 12.97 3/1/2022
03/28/13 C 16,075 0 13.33 3/28/2023
04/30/13 C 14,778 0 14.50 4/30/2023
05/31/13 C 13,942 0 15.37 5/31/2023
03/31/14 C 0 6,004 20.82 3/31/2024
04/30/14 C 0 5,978 20.91 4/30/2024
05/30/14 C 0 5,869 21.30 5/30/2024
03/31/15 C 0 5,787 22.68 3/31/2025
04/30/15 C 0 6,271 20.93 4/30/2025
05/29/15 C 0 6,274 20.92 5/29/2025
03/31/16 C 0 8,377 20.89 3/31/2026
04/29/16 C 0 9,373 18.67 4/29/2026
05/31/16 C 0 8,377 20.89 5/31/2026
Total 248,806 62,310

CORNING 2017 PROXY STATEMENT     59              



Table of Contents

Compensation Discussion & Analysis

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
James P. 07/18/07 A 500 0 26.73 7/17/2017 74,125 $1,799,014
Clappin 12/05/07 A 32,000 0 24.92 12/4/2017
01/02/08 B 16,000 0 23.37 1/1/2018
02/01/08 C 16,000 0 24.61 1/31/2018
01/04/10 D 14,667 0 19.56 1/4/2020
02/01/10 D 14,667 0 18.16 2/1/2020
01/03/11 D 15,440 0 19.19 1/3/2021
02/01/11 D 13,058 0 22.69 2/1/2021
03/01/11 D 13,450 0 22.03 3/1/2021
03/31/14 C 0 12,008 20.82 3/31/2024
04/30/14 C 0 11,956 20.91 4/30/2024
05/30/14 C 0 11,737 21.30 5/30/2024
3/31/2015 C 0 11,574 22.68 3/31/2025
4/30/2015 C 0 12,542 20.93 4/30/2025
5/29/2015 C 0 12,548 20.92 5/29/2025
3/31/2016 C 0 12,566 20.89 3/31/2026
4/29/2016 C 0 14,060 18.67 4/29/2026
5/31/2016 C 0 12,566 20.89 5/31/2026
Total 135,782 111,557
Lawrence D. 12/05/07 A 25,000 0 24.92 12/4/2017 86,758 $2,105,617
McRae 01/02/08 B 12,500 0 23.37 1/1/2018
02/01/08 C 12,500 0 24.61 1/31/2018
01/04/10 D 15,333 0 19.56 1/4/2020
02/01/10 D 15,334 0 18.16 2/1/2020
01/03/11 D 16,888 0 19.19 1/3/2021
02/01/11 D 14,283 0 22.69 2/1/2021
03/01/11 D 14,711 0 22.03 3/1/2021
01/03/12 C 31,953 0 13.04 1/3/2022
03/01/12 C 32,125 0 12.97 3/1/2022
03/28/13 C 35,723 0 13.33 3/28/2023
04/30/13 C 32,841 0 14.50 4/30/2023
05/31/13 C 30,982 0 15.37 5/31/2023
03/31/14 C 0 12,008 20.82 3/31/2024
04/30/14 C 0 11,956 20.91 4/30/2024
05/30/14 C 0 11,737 21.30 5/30/2024
3/31/2015 C 0 11,850 22.68 3/31/2025
4/30/2015 C 0 12,840 20.93 4/30/2025
5/29/2015 C 0 12,847 20.92 5/29/2025
3/31/2016 C 0 13,463 20.89 3/31/2026
4/29/2016 C 0 15,064 18.67 4/29/2026
5/31/2016 C 0 13,463 20.89 5/31/2026
Total 290,173 115,228

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Table of Contents

Compensation Discussion & Analysis

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
David L. Morse 12/05/07 A 20,500 0 24.92 12/4/2017 69,724 S1,692,201
01/02/08 B 10,250 0 23.37 1/1/2018
02/01/08 C 10,250 0 24.61 1/31/2018
12/02/09 D 11,000 0 17.82 12/2/2019
01/04/10 D 11,000 0 19.56 1/4/2020
02/01/10 D 11,000 0 18.16 2/1/2020
01/03/11 D 11,098 0 19.19 1/3/2021
02/01/11 D 9,386 0 22.69 2/1/2021
03/01/11 D 9,667 0 22.03 3/1/2021
03/28/13 C 31,258 0 13.33 3/28/2023
04/30/13 C 28,736 0 14.50 4/30/2023
05/31/13 C 27,109 0 15.37 5/31/2023
03/31/14 C 0 12,008 20.82 3/31/2024
04/30/14 C 0 11,956 20.91 4/30/2024
05/30/14 C 0 11,737 21.30 5/30/2024
3/31/2015 C 0 11,574 22.68 3/31/2025
4/30/2015 C 0 12,542 20.93 4/30/2025
5/29/2015 C 0 12,548 20.92 5/29/2025
3/31/2016 C 0 12,566 20.89 3/31/2026
4/29/2016 C 0 14,060 18.67 4/29/2026
5/31/2016 C 0 12,566 20.89 5/31/2026
Total 191,254 111,557
(1) The Company uses the following vesting codes
A 100% vesting one year after grant date
B 100% vesting two years after grant date
C 100% vesting three years after grant date
D 1/3 vesting one year after grant date, 1/3 vesting two years after grant date and 1/3 vesting three years after grant date
(2) Amounts include:
i. 80,889; 11,259; 23,189; 22,872; and 22,869 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, and McRae and Dr. Morse, respectively, on March 31, 2014, which vest on April 17, 2017. Also included are 4,000 and 12,000 unvested restricted shares granted to Messrs. Clappin and McRae, respectively, on February 5, 2014, which vest on February 5, 2017.
ii. 83,925; 10,703; 21,804; 22,336; and 21,723 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, and McRae and Dr. Morse, respectively, on March 31, 2015, which vest on April 16, 2018; Mr. McRae was granted 2,623 restricted shares of our common stock on July 15, 2015, which will vest on July 15, 2018 as a result of his promotion to Vice Chairman. Mr. Tripeny was granted 6,558 restricted shares of our common stock on July 15, 2015, which will vest on July 15, 2018 as a result of his promotion to Chief Financial Officer.
iii. 98,731; 16,754; 25,132; 26,927 and 25,132 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, and McRae and Dr. Morse, respectively, on March 31, 2016, which vest on April 15, 2019.
(3) Year-end market price is based on the December 30, 2016 NYSE closing price of $24.27.

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Table of Contents

Compensation Discussion & Analysis

Option Exercises and Shares Vested in 2016

The following table sets forth certain information regarding options exercised and restricted stock that vested during 2016 for the NEOs.

Option Awards Stock Awards
Named Executive Officer       Number of Shares
     Acquired on Exercise
           Value Realized
on Exercise
      Number of Shares
      Acquired on Vesting
           Value Realized
on Vesting
Wendell P. Weeks 273,000 $541,696 129,465 $2,695,591
R. Tony Tripeny 46,333 291,740 17,120 355,529
James P. Clappin 231,405 1,793,811 33,758 691,852
Lawrence D. McRae 123,633 768,223 49,102 992,151
David L. Morse 111,310 808,486 32,644 678,623


Retirement Plans

Qualified Pension Plan

Corning maintains a qualified defined benefit pension plan to provide retirement income to Corning’s U.S.-based employees which was amended effective July 1, 2000, to include a cash balance component. All salaried and non-union hourly employees as of July 1, 2000, were given a choice to prospectively accrue benefits under the previously existing career average earnings formula or a cash balance formula, if so elected. Employees hired subsequent to July 1, 2000, earn benefits solely under the cash balance formula.

Benefits earned under the career average earnings formula are equal to 1.5% of plan compensation plus 0.5% of plan compensation on which employee contributions have been made. Under the career average earnings formula, participants may retire as early as age 55 with 5 years of service. Unreduced benefits are available when a participant attains the earlier of age 60 with 5 years of service or age 55 with 30 years of service. Otherwise, benefits are reduced 4% for each year by which retirement precedes the attainment of age 60. Pension benefits earned under the career average earnings formula are distributed in the form of a lifetime annuity with six years of payments guaranteed.

Benefits earned under the cash balance formula are expressed in the form of a hypothetical account balance. Each month a participant’s cash balance account is increased by (1) pay credits based on the participant’s plan compensation for that month and (2) interest credits based on the participant’s hypothetical account balance at the end of the prior month. Pay credits vary between 3% and 8% based on the participant’s age plus service at the end of the year. Interest credits are based on 10-year Treasury bond yields, subject to a minimum credit of 3.80%. Pension benefits under the cash balance formula may be distributed as either a lump sum of the participant’s hypothetical account balance or an actuarial equivalent life annuity.

Messrs. Weeks, Clappin, McRae and Dr. Morse are earning benefits under the career average earnings formula. Mr. Tripeny is earning benefits under the cash balance formula. All of the active NEOs are currently eligible to retire under the plan.

Supplemental Pension Plan and Executive Supplemental Pension Plan

Since 1986, Corning has maintained nonqualified pension plans to attract and retain its executive workforce by providing eligible employees with retirement benefits in excess of those permitted under the qualified plans. The benefits provided under the Supplemental Pension Plan (SPP) are equal to the difference between the benefits provided under the Corning Incorporated Pension Plan and benefits that would have been provided thereunder if not for the limitations of the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended (the IRC).

              62     CORNING 2017 PROXY STATEMENT



Table of Contents

Compensation Discussion & Analysis

Each NEO participates in the Corning Incorporated Executive Supplemental Pension Plan (ESPP). Participants in the ESPP receive no benefits from the SPP, other than earned SPP benefits under the cash balance formula prior to their participation in the ESPP, if any. Executives fully vest in their ESPP benefit upon attainment of age 50 with 10 years of service. All NEOs are fully vested in the ESPP.

Under the ESPP, participants earn benefits based on the highest 60 consecutive months of average plan compensation over the last 120 months immediately preceding the date of termination of employment.

A change in the benefits provided under the ESPP formula was approved in December 2006. Subsequent to the change, gross benefits determined under this plan are equal to one of two benefit formulas:

Formula A: 2.0% of average plan compensation multiplied by years of service up to 25 years.

Formula B: 1.5% of average plan compensation multiplied by years of service.

Benefits are determined under Formula A for all NEOs except for Dr. Morse.

Benefits earned under the Corning Incorporated Pension Plan and the cash balance formula of the SPP prior to ESPP participation, if any, will offset benefits earned under the ESPP.

Participants may retire as early as age 55 with 10 years of service. Unreduced benefits under Formulas A and B are available when a participant attains the earlier of age 60 with 10 years of service or age 55 with 25 years of service, provided their accrued benefit is less than four times the annual compensation limitation under Section 401(a)(17) of the IRC ($1,060,000 in 2016). Participants with accrued benefits in excess of four times the annual compensation limitation under Section 401(a)(17) of the IRC must be age 57 with 25 years of service to receive an unreduced benefit under the ESPP. Otherwise, benefits are reduced 4% for each year by which retirement precedes the attainment of age 60. Benefit reductions of 1% per year by which retirement precedes age 57 apply if the four-times-annual-compensation-limit rule noted above is in effect for the participant.

Benefits earned under the ESPP are distributed in the form of a lifetime annuity, with six years of payments guaranteed except for benefits earned under the cash balance formula of the SPP prior to becoming a participant in the ESPP, which is distributed as a lump sum of the participant’s hypothetical account balance.

All NEOs are currently eligible to retire under the ESPP.

Pension Benefits

The table below shows the actuarial present value of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each such NEO, under the qualified pension plan and the ESPP. These amounts were determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements with the exception of the assumed retirement age and the assumed probabilities of leaving employment prior to retirement. Retirement was assumed to occur at the earliest possible unreduced retirement age for each plan in which the executive participates. For purposes of determining the earliest unreduced retirement age, service was assumed to be granted until the actual date of retirement. For example, an executive under the ESPP formula who is age 50 with 20 years of service would be assumed to retire at age 55 due to eligibility of unreduced benefits at 25 years of service or age 57, if the four times annual compensation limit rule noted previously applies. No termination, disability or death was assumed to occur prior to retirement. Otherwise, the assumptions used are described in Note 13 to our Financial Statements for the year ended December 31, 2016, of our Annual Report on Form 10-K filed with the SEC on February 6, 2017. Information regarding the qualified pension plan can be found under the heading “Qualified Pension Plan”.

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Table of Contents

Compensation Discussion & Analysis

Named Executive Officer       Plan Name       Number of Years
Credited Service
      Present Value of
Accumulated Benefit
      Payments During
Last Fiscal Year
Wendell P. Weeks Qualified Pension Plan 34 $1,951,978 $0
ESPP 25 (1) 22,855,459 0
R. Tony Tripeny Qualified Pension Plan 31 273,607 0
ESPP 25 (1) 5,058,233 0
James P. Clappin Qualified Pension Plan 37 1,421,448 0
ESPP 25 (1) 7,335,184 0
Lawrence D. McRae Qualified Pension Plan 31 1,620,656 0
ESPP 25 (1) 7,862,438 0
David L. Morse Qualified Pension Plan 41 1,774,717 0
ESPP 41 (2) 6,643,035 0
(1) Under Formula A, years of service are capped at 25 years, in determining benefits under the ESPP.
(2) Under Formula B, years of service are not capped.

The compensation considered for purposes of determining benefits under the qualified pension plan and the ESPP for the NEOs is the “Salary” plus the GoalSharing and PIP cash bonuses set forth in the Summary Compensation Table. Bonuses are included as compensation in the calendar year paid. Long-term cash or equity incentives are not (and have never been) considered as eligible earnings for determining retirement benefits under these plans. For the 2016 calendar year, the NEOs eligible earnings and final average compensation were as follows:

As of December 31, 2016
Named Executive Officer            Eligible Pension
Earnings
         Final Average
Earnings
Wendell P. Weeks $2,744,757 $3,025,039
R. Tony Tripeny 745,425 677,083
James P. Clappin 1,066,930 1,121,455
Lawrence D. McRae 1,147,655 1,187,646
David L. Morse 980,635 966,715

Nonqualified Deferred Compensation

The table below shows the contributions, earnings and account balances for the NEOs in the Supplemental Investment Plan. Pursuant to the Company’s Supplemental Investment Plan, the NEOs may choose to defer up to 75% of annual base salary and up to 75% of GoalSharing and PIP cash bonuses. The participant chooses from the same funds available under our Company Investment Plan (401(k)) in which to “invest” the deferred amounts. No cash is actually invested in the unfunded accounts under the Supplemental Investment Plan. Deferred amounts incur gains and losses based on the performance of the individual participant’s investment fund selections. Participants may change their elections among these fund options. All of our current NEOs have more than three years of service with the Company, so all of the Company’s matching contributions are fully vested. Participants cannot withdraw any amounts from their deferred compensation balances until retirement from the Company at or after age 55 with 5 years of service. Participants may elect to receive distributions as a lump sum payment or two to five annual installments. If an NEO leaves the Company prior to retirement, the account balance is distributed in a lump sum six-months following the executive’s departure.

No NEO withdrawals or distributions were made in 2016.

              64     CORNING 2017 PROXY STATEMENT



Table of Contents

Compensation Discussion & Analysis

Named Executive Officer       Aggregate Balance
at January 1, 2016
      Executive
Contributions
in 2016(1)
      Company
Contributions
in 2016(2)
      Aggregate
Earnings
in 2016(3)
      Aggregate
Withdrawals/
Distributions
in 2016
      Aggregate
Balance as of
December 31, 2016
Wendell P. Weeks $4,751,488 $71,092 $73,165 $376,925 $0