DEF 14A 1 corning3345331-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:
 
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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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Table of Contents









2018

Notice of
Annual Meeting of Shareholders
& Proxy Statement












Table of Contents

Quality
Integrity
Performance
Leadership
Innovation
Independence
The Individual









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



Table of Contents

   
 
 

Dear Fellow Shareholder:

I hope you will join Corning Incorporated’s Board of Directors, senior leadership, and other stakeholders at our 2018 Annual Meeting in Corning, New York, on April 26 at 11 a.m. Eastern Time. Shareholders will vote on the annual election of directors and the ratification of Corning’s independent registered public accounting firm for 2018. In addition, they will provide advisory votes on the 2017 compensation for our named executive officers.

The meeting is your chance to hear directly from leadership about Corning’s 2017 performance and our expectations for the future. We’re pleased with our strong execution since introducing our Strategy and Capital Allocation Framework in late 2015. We have distributed more than $9 billion to shareholders through share repurchases and our quarterly dividend. We’ve launched innovations to drive Corning’s near and long-term growth. We have strengthened our portfolio with strategic acquisitions. And we have outperformed our peers in the S&P 500.

Of course, how we do things is as important as what we achieve. Here are some examples of how we practice sound corporate governance and honor the principles established by organizations such as the Investor Stewardship Group.

We communicate consistently and openly with our shareholders, including providing regular updates on how we are tracking against our Framework.
Ninety-two percent of our Board is independent from management.
We follow industry best practices on executive pay, including tying compensation closely to company performance via metrics such as cash generation, profitability, revenue growth, and return on invested capital (ROIC).
We are responsive to shareholder feedback, including the adoption of last year’s recommendation to hold annual advisory votes on executive compensation and the 2016 addition of an ROIC modifier to our compensation performance metrics.

I’m also proud of how we continue to honor our commitment to sustainability and equal opportunity. Over the past decade, Corning has improved its energy efficiency by more than 30 percent, which earned the company its fourth consecutive Energy Star Partner of the Year award in 2017. I am also proud to report that we have achieved 100 percent gender pay equity across our U.S. organization.

I look forward to sharing more details at the Annual Meeting. 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 26 so that your shares will be represented and voted at the 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



Table of Contents

Notice of 2018 Annual
Meeting of Shareholders
  

 
    

Thursday, April 26, 2018

    

11:00 a.m. Eastern Time

The Corning Museum
of Glass

One Museum Way,
Corning, New York 14830

 
   
 

www.corning.com/2018-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 (Say on Pay);

3.

Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm; and

4.

Transaction of any other business properly brought before the meeting or any adjournment.

RECORD DATE

You may vote at our 2018 Annual Meeting if you were a shareholder of record at the close of business on February 27, 2018.

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 26, 2018: our Proxy Statement, 2017 Annual Report and other materials are available on our website at www.corning.com/2018-proxy.

Sincerely,


Linda E. Jolly
Vice President and Corporate Secretary
March 16, 2018

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

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

By mail
Cast your ballot, sign the proxy card and send by mail

By Internet
Visit 24/7
www.investorvote.com/glw

This Proxy Statement, the accompanying proxy card and our 2017 Annual Report were first distributed or made available to shareholders on or about March 16, 2018. 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 2018 PROXY STATEMENT


Table of Contents

Table of Contents   

5     Proxy Statement Summary
 
15 Corporate Governance and the Board
of Directors
15 Corporate Governance
16 Board Leadership Structure
16 Lead Independent Director
17 Committees
17 Audit
18 Compensation
18 Corporate Relations
18 Executive
18 Finance
19 Nominating and Corporate Governance
19 Director Independence
20 Policy on Transactions with Related Persons
20 Compensation Committee Interlocks and
Insider Participation
21 Board Composition
21 Tenure
22 Board Nomination and Refreshment Process
22 Management Succession Planning
23 Risk Oversight
24 Compensation Risk Analysis
24 Board and Shareholder Meeting Attendance
24 Other Matters
25 Ethics and Conduct
25 Lobbying and Political Contributions Policy
25 Communications with Directors
26 Corporate Governance Materials Available on
Corning’s Website
 
27 Proposal 1
Election of Directors
27 Board of Directors’ Qualifications and Experience
29 Corning’s Director Nominees
36     Director Compensation
36 2017 Director Compensation
37 Charitable Giving Programs
37 Changes to Director Compensation in 2018
 
39 Stock Ownership Information
39 Stock Ownership Guidelines
39 Section 16(a) Beneficial Ownership Reporting Compliance
40 Beneficial Ownership Table
 
41 Proposal 2
Advisory Vote to Approve Executive
Compensation (Say on Pay)
41 Say on Pay Proposal
 
42 Compensation Discussion & Analysis
42 Executive Summary
45 Company Performance Overview
48 2017 Executive Compensation Program Details
52 Compensation Peer Group
53 Compensation Program – Other Governance Matters
55 Compensation Committee Report
56 2017 Compensation Tables
56 2017 Summary Compensation Table
59 2017 Grants of Plan Based Awards
60 Outstanding Equity Awards at 2017 Fiscal
Year-End
62 Options Exercised and Shares Vested in 2017
62 Retirement Plans
64 Non-qualified Deferred Compensation
65 Arrangements with Named Executive Officers
 
69 Pay Ratio Disclosure


CORNING 2018 PROXY STATEMENT      3


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4      CORNING 2018 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 26, 2018, 11:00 a.m. (ET)
 
Place
The Corning Museum
of Glass
One Museum Way
Corning, New York 14830
 
Record Date
February 27, 2018
 
Admission
See the instructions contained in “Frequently Asked Questions about the Meeting and Voting” on page 74.
 
 
On March 16, 2018, we posted this proxy statement, the accompanying proxy card and our 2017 Annual Report on our website at www.corning.com/2018-proxy and began mailing them shareholders who requested paper copies.
 
Proposals That Require Your Vote
Proposal         Board Vote
Recommendation
        More
Information
1

Election of directors

For Each Nominee

page 27

2

Advisory vote to approve the Company’s executive compensation (Say on Pay)

For

page 41

3

Ratification of appointment of independent registered public accounting firm

For

page 70

Business Information – Who We Are

Corning is one of the world’s leading innovators in materials science. For more than 166 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 to delivers long-term value for Corning and its shareholders.

Our reportable segments are as follows:

Reportable
Segments*
        2017 Core
Net Sales %
        Segments Description

Display
Technologies

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

Optical
Communications

manufactures carrier and enterprise network solutions 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 cover glass for display devices

Life Sciences

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

*All other segments that do not meet the quantitative threshold for separate reporting are grouped as “All Other”. This group is primarily comprised of the pharmaceutical technologies business and new product lines, development projects and corporate investments. All Other represented 2% of Corning’s sales in 2017.



CORNING 2018 PROXY STATEMENT      5


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Proxy Statement Summary

Our 2017 Performance Highlights

Net Sales Earnings per Share Net Cash Provided By
Operating Activities
2017 GAAP Results $10,116
million
$(0.66)*
(diluted)
$2,004
million
2017 Core Results $10,514
million
Core Net Sales
$1.72
(diluted)
Core EPS
$2,620
million
Adjusted Operating
Cash Flow

* 2017 GAAP earnings per share reflect adjustments totaling $1.755 billion resulting from the 2017 Tax Cuts and Jobs Act of 2017 (the Tax Act), including a provisional amount related to the one-time mandatory tax on unrepatriated foreign earnings, a provisional amount related to the re-measurement of U.S. deferred tax assets and liabilities, changes in valuation allowances as a result of the Tax Act, and adjustments for the elimination of excess foreign tax credit planning.

CORE PERFORMANCE MEASURES

In managing the Company and assessing our financial performance, we supplement certain measures provided by our consolidated financial statements with measures that are not calculated in accordance with GAAP and have been adjusted to exclude certain items, to arrive at Core Performance Measures.

We believe that Core Performance Measures provide investors greater transparency to the information used by our management team to make financial and operational decisions. We measure our performance for variable compensation purposes using the same Core Performance Measures we discuss with and disclose to our investors.

   
Corning has adopted the use of constant currency reporting for the Japanese yen and South Korean won, and for the years 2015 through 2017 used an internally derived yen-to-dollar management rate of ¥99 and won-to-dollar management rate of ₩1,100.
   
The Company believes that the use of constant currency reporting allows investors to understand our results without the volatility of currency fluctuations, and reflects the underlying economics of the translated earnings contracts used to mitigate the impact of changes in currency exchange rates on our earnings and cash flows. We have hedged approximately 90% of our projected yen exposure through 2022.

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 the most directly comparable GAAP financial measures.

Core Net Sales, Core Earnings per Share (Core EPS) and Adjusted Operating Cash Flow are non-GAAP financial measures used by our management to measure the true economics of our currency hedges and obtain a clearer view of Corning’s operating results. Accordingly, these Core Performance Measures form the basis for our compensation performance metrics.


6      CORNING 2018 PROXY STATEMENT


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Proxy Statement Summary

Our Strategy and Capital Allocation Framework

In October 2015, Corning announced a Strategy and Capital Allocation Framework (the Framework) that reflects the Company’s financial and operational strengths, as well as its ongoing commitment to increasing shareholder value. The Framework outlines our leadership priorities, and articulates the opportunities we see across our businesses. We designed the Framework to create significant value for shareholders by focusing our portfolio and leveraging our financial strength. Under our Framework we target generating $26 to $30 billion of cash through 2019, returning more than $12.5 billion to shareholders through 2019 and investing $10 billion through 2019 to sustain our leadership positions and deliver growth.

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, e.g., potential transactions outside focus areas

Utilize Financial Strength: Deploy $26-$30B in cash through 2019
          Deliver >$12.5B to shareholders including >10% annual dividend increases
Invest ~$10B in our growth and sustained leadership
Target Debt/EBITDA* » 2x

Continued Success of Strategy and Capital Allocation Framework
• Returned $9B to shareholders since October 2015
• Invested $4.5B in RD&E, CapEx, and M&A
• 2017 sales up 8%; Core EPS up 11%

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

Focusing Our Portfolio: Our probability of success increases as we invest in our world-class capabilities. Corning is concentrating approximately 80% of its research, development and engineering investment and capital spending on a cohesive set of three core technologies, four manufacturing and engineering platforms, and five market-access platforms. Our cost of innovation declines as we reapply our talents and repurpose our assets. And by combining capabilities we create higher and more sustainable advantages, and, ultimately, delighted customers.

Focused and Cohesive Portfolio
Higher Success Rate, Lower Costs, Delighted Customers

CORNING 2018 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 plan to invest $10 billion of that amount 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 our annual dividend.

Utilize Financial Strength
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 Strategy and Capital Allocation Framework: Since introducing the Framework, our cash generation has been on target. In 2016 and 2017, we generated a total of $6.4 billion in adjusted operating cash flow (before RD&E). We realigned our ownership interest in Dow Corning Corporation, which added $4.8 billion to our balance sheet, and we added $1.2 billion in net debt. We have achieved key milestones including the return of over $9 billion to shareholders through dividends, which have increased 50%, and share repurchases, which have reduced outstanding shares by 30%. In 2016 and 2017, we invested $1 billion (after tax) in RD&E, $2.9 billion in capital expenditures to fuel our growth in the future, and $1.4 billion on strategic acquisitions (including the planned $900 million for 3M’s Communications Market Division).

In 2017, we utilized our financial strength to continue our focus on innovation, advancing key programs across our market-access platforms. Some of our key achievements in 2017 included:

Celebrating a major milestone with the production of our one billionth kilometer of optical fiber. We also continued our technology leadership with the introduction of a new multi-use platform to simplify installation and reduce the costs of deploying 4G and 5G networks.
Shipping the world’s first Gen 10.5 glass. We also captured new opportunities for Corning Iris™ Glass, which is featured in new ultra-slim, ultra-bright lines of monitors.
Expanding into new Corning® Gorilla® Glass applications and increased the amount of our glass on mobile electronic devices. Additionally, the superior drop performance of Gorilla Glass 5 has enabled new smartphone designs that feature glass on both the front and back.
Securing an exclusive global supply agreement for gas particulate filters.
Winning new customers for Gorilla Glass for Automotive, which will be featured on more than thirty-five automotive platforms globally.
Launching Valor® Glass, a revolutionary new pharmaceutical packaging solution that dramatically reduces particle contamination, breaks, and cracks. As a result, Valor helps protect patients, while increasing manufacturing throughput.

8      CORNING 2018 PROXY STATEMENT


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Proxy Statement Summary

 
  We intend to return
more than
 
    $12.5 billion
to our shareholders
from October 2015
through 2019, and
so far have returned
more than
$9 billion.
   
  
  Since 2013, Corning has
returned nearly
$17 billion
to shareholders.
  
  


  









ANNUAL DISTRIBUTIONS TO SHAREHOLDERS(in $ millions)



ANNUAL DIVIDENDS PER COMMON SHARE AND INCREASE OVER PRIOR YEAR



CORNING 2018 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.
59 2014
Audit
Finance
0**
Stephanie A. Burns
Retired Chairman and Chief Executive Officer,
Dow Corning Corporation
63 2012
Audit
Corporate Relations
(Chair)
2
John A. Canning, Jr.
Chairman,
Madison Dearborn Partners, LLC
73 2010
Executive
Finance
Governance
0
Richard T. Clark, Lead Independent Director
Retired Chairman, Chief Executive Officer
and President, Merck & Co., Inc.
71 2011
Compensation
Executive
Governance
1

Robert F. Cummings, Jr.
Retired Vice Chairman of Investment Banking,
JPMorgan Chase & Co.

68 2006
Executive
Finance (Chair)
Governance
1
Deborah A. Henretta
Retired Group President of Global E-Business,
Procter & Gamble Company
56 2013
Audit
Corporate Relations
2
Daniel P. Huttenlocher
Dean and Vice Provost,
Cornell Tech
59 2015
Audit
Finance
1
Kurt M. Landgraf
President, Washington
College
71 2007
Audit (Chair)
Compensation
Executive
1
Kevin J. Martin
Vice President, Mobile and Global Access Policy,
Facebook, Inc.
51 2013
Corporate Relations
Governance
0
Deborah D. Rieman
Retired Executive Chairman,
MetaMarkets Group
68 1999
Audit
Compensation (Chair)
0
Hansel E. Tookes II
Retired Chairman and Chief Executive Officer,
Raytheon Aircraft Company
70 2001
Compensation
Executive
Governance (Chair)
3
Wendell P. Weeks
Chairman, Chief Executive Officer and President,
Corning Incorporated
58 2000
Executive (Chair)
2
Mark S. Wrighton
Chancellor and Professor of Chemistry,
Washington University in St. Louis
68 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
** Mr. Blair is a member of the board of directors of Dropbox, Inc., which is currently in registration for its initial public offering.
Ms. Henretta is a member of the board of directors of Iron Horse Acquisition Corp., which is currently in registration for its initial public offering.

10      CORNING 2018 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 stakeholders.

We have recently enhanced our governance in the following ways:

amended our by-laws to adopt proxy access to allow 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 15 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
 

Active, engaged and experienced Lead Independent Director
 

Independent board committees, with all committees (except the Executive Committee) consisting entirely of independent directors
 

Regular executive sessions of independent directors
 

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 with shareholders, particularly about our Strategy and Capital Allocation Framework, is critically important to Corning. We communicate with our shareholders through a number of channels, including quarterly earnings calls, Securities and Exchange Commission (SEC) filings, Investor Days, investor conferences, our website at www.corning.com and other electronic communications. Our executives also routinely engage with investors through in-person meetings and calls. In addition to regular discussions regarding our Strategy and Capital Allocation Framework, we also conduct outreach to the governance teams at our largest investors.

In 2017, as in prior years, we met with shareholders representing approximately 40% of our outstanding shares, and approximately two-thirds of our fifty largest shareholders. In these meetings, we discussed our Strategy and Capital Allocation Framework, as well as governance, compensation, and sustainability matters. We learned through these meetings that our investors are pleased with our Strategy and Capital Allocation Framework and believe we have clearly articulated how our Strategy and Capital Allocation Framework creates shareholder value and is connected to management incentives at Corning. These shareholders also are generally supportive of our executive compensation program, the direct linkage of financial metrics in our incentive plans to our Strategy and Capital Allocation Framework, and the addition of the ROIC modifier. 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 Strategy and Capital Allocation Framework.

CORNING 2018 PROXY STATEMENT      11


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Proxy Statement Summary

Environmental, Social and Governance Matters

In accordance with Corning’s Values, 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 additional ways of creating 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 environmental, social and governance matters, and its Values, are:

Equal pay for equal work, regardless of gender, is consistent with Corning’s Values and the Company’s commitment to diversity and inclusion, both of which we consider critical to our success. For several years Corning has worked with consultants and data analytics firms in the human resources space to examine the Company’s pay practices, and in 2017, Corning received recognition for achieving effective pay parity between men and women within our US operations. In 2018, we are extending this analysis to include our largest international locations.
 

Corning has received a score of 100 on the Human Rights Campaign Corporate Equality Index for thirteen consecutive years and was named to the 2017 “Best-of-the-Best” Corporations for Inclusion list by the National Gay & Lesbian Chamber of Commerce, distinguishing Corning as one of the “Best Places to Work for LGBT Equality.”
 

Corning is committed to workplace diversity and inclusion. At Corning, we:
 

utilize U.S. Census Bureau diversity statistics to guide hiring for every job classification,
 

ensure that promotion rates for women and minorities match their performance, contributions and expertise,
 

seek to ensure that women and minorities do not leave the Company more frequently than others, and
 

promote diversity: three women and one African-American sit on Corning’s Board of Directors, two women and two African-Americans sit on Corning’s management committee, and in recent years Corning has tripled the number of Asians and ethnic minorities, and doubled African-Americans and women, in the management and leadership ranks across the Company.
 

In 2017, 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, investing more than $2 billion in the development of clean-air products and holding more than 600 environmental technology patents.
 

Corning reached its goal of improving its energy performance by 15 percent by the year 2020 three years early, meeting a goal established in 2014 as part of the company’s participation in the former Clinton Global Initiative. In addition to the environmental benefits, Corning’s energy efficiency actions have saved an average of more than $30 million per year, or a total of $122 million, since 2014.
 

The U.S. Environmental Protection Agency has awarded Corning the ENERGY STAR® Partner of the Year for the last 4 years. Corning was recognized in 2016 and 2017 for its Sustained Excellence, an additional honor given to companies that have earned Partner of the Year status for at least three consecutive years. The Corning Plant in Blacksburg Virginia and the Corning Plant in Oneonta, New York each achieved ENERGY STAR® Challenge for Industry (CFI) recognition for achieving greater than 10% energy productivity within 3 years.

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

12      CORNING 2018 PROXY STATEMENT


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Proxy Statement Summary

Executive Compensation Highlights

As shown below, approximately 88% of our CEO’s target total compensation (excluding employee benefits and perquisites) and 79% of the other Named Executive Officers’ (NEOs) target total compensation (excluding employee benefits and perquisites) in 2017 was variable and depended on Corning’s operating performance or stock price.

2017 Pay Components

Pay Component Tenor and Term Role Determination Factors

Base Salary

Reviewed annually; Paid biweekly

Fixed portion of annual cash income
Value of role in competitive marketplace
 
Value of role to the Company
 
Skills and performance
 
Internal equity

Short-Term Incentives

Cash - GoalSharing Plan
 
Cash - Performance Incentive Plan (PIP)

Variable; earned amounts paid annually in February (Goalsharing) and March (PIP)

Variable portion of annual cash income
 
Focus executives on annual objectives that support the delivery of the short-term business plan
GoalSharing awards are a percentage of salary reflecting annual corporate and unit performance
 
PIP targets are set individually based on the competitive marketplace and level of experience
 
Awards are based on annual corporate performance against pre-set goals

Long-Term Incentives

Cash Performance Units
 
Restricted Share Units
 
Stock Options

Variable; measured and paid (in the case of earned CPUs), or vested (in the case of RSUs and Options), at close of a 3-year performance period

Reinforce need for long-term sustained performance
 
Focus executives on annual objectives that support the long-term strategy and creation of value
 
Align the long-term interests of executives and shareholders
 
Balance cash pay with equity ownership
 
Encourage retention
Target awards are based on competitive marketplace, level of executive, skills and performance
 
Actual value relative to target is based on corporate performance against pre-set goals and stock price performance across the period

All Other:

Benefits
 
Perquisites
 
Severance Protection

Ongoing or Event-Driven

Support the health and security of our executives, and their ability to plan for retirement
 
Enhance executive productivity
Competitive marketplace
 
Limited offerings beyond what is offered to all employees
 
Level of executive
 
Standards of good governance

Target Total Compensation
CEO       ALL OTHER NEOs

CORNING 2018 PROXY STATEMENT      13


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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 Strategy and Capital Allocation Framework and creating and sustaining long-term shareholder value: cash generation, profitability and revenue growth.

Our Metrics and Why We Use Them

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.

Core Net Sales:

Sales growth, both organic through innovation and through acquisitions, is critical to our short- and long-term success.

Adjusted Operating Cash Flow less CapEx:

Generating strong positive cash flow enables our ongoing investment in growth, sustained leadership and returns to shareholders.

Return on Invested Capital (ROIC)

Cash Performance Units (CPUs) payout will be increased or decreased ±10% based on Corning’s ROIC over the three-year performance period, reflecting our commitment to invest in areas that will result in profitable growth.


 
SHORT-TERM INCENTIVE COMPONENTS (PAID IN CASH)
    Year Short-Term Cash Incentives Earned by NEOs

(One-year performance period)

Applicable to 100% of Performance Incentive Plan and 25% of GoalSharing for NEOs

2017

Performance Incentive Plan: 175% of target payout GoalSharing Plan: 7.34% payout*

2016

Performance Incentive Plan: 85% of target payout GoalSharing Plan: 5.96% payout*

2015

Performance Incentive Plan: 67% of target payout GoalSharing Plan: 5.69% payout*

* As a percentage of base salary.

 

LONG-TERM INCENTIVE COMPONENTS
(PAID IN CASH PERFORMANCE UNITS, RSUs AND OPTIONS)

Year

Long-Term Cash Incentives Earned (CPUs) by NEOs

(Average of three one-year performance periods and subject to a three-year ROIC modifier)

Applicable to CPUs. The value of RSUs and Options are based on the price of Corning’s common stock, see page 50 for additional information

2017

Average of 2017, 2018, and 2019 performance 120%, TBD, TBD – 3-year average: TBD**

2016

Average of 2016, 2017, and 2018 performance 88%, 120%, TBD – 3-year average: TBD**

2015

Average of 2015, 2016, and 2017 performance 100%, 88%, 120% – 3-year average: 103%

** With the 2016-2018 and 2017-2019 CPUs, we also added a three-year return on invested capital (“ROIC”) modifier (± 10%) reflecting our commitment to invest in areas that will support Corning’s profitable growth.


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Corporate Governance
and the Board of Directors
  

Corporate Governance

Our Board of Directors employs practices that foster effective Board oversight of critical matters such as strategy, management succession planning, financial and other controls, risk management and compliance. The Board reviews our major governance policies, practices and processes regularly in the context of current corporate governance trends, regulatory changes and recognized best practices. The following sections provide an overview of our corporate governance structure and processes, including key aspects of our Board operations.

Practice       Description
Board Composition and Accountability
Independence Our Corporate Governance Guidelines require a substantial majority of our directors to 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 19.
Skills and qualifications Our Board is composed of accomplished professionals with broad perspectives, skills, experiences, and knowledge relevant to our business. A matrix of relevant skills can be found on page 27.
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 16.
Succession planning review Our Board conducts ongoing executive succession planning. See page 22.
Director tenure The current average tenure of members of our Board, excluding our CEO Mr. Weeks, is 8.2 years. Our director retirement 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 21.
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 review and approval by the Nominating and Corporate Governance Committee, a non-employee director may serve on no more than four other public company boards and an employee director may serve on no more than two other public company boards.
Board and committee
evaluations
The Board and each committee conducts an annual review of its effectiveness. The Chair of the Nominating and Corporate Governance Committee, as part of the Board evaluation, annually interviews each director and solicits his or her opinion regarding the Board’s performance, effectiveness and areas of focus. From those discussions, the Chair reports the results of the self-evaluation to the full Board, composes a list of action items and follows-up to ensure implementation.
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.

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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.
Proxy access Eligible shareholders may include their director nominees in our proxy materials.
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 executive sessions 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 27 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 believes that a Lead Independent Director effectively promotes strong Board governance and oversight.

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 2018, 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 the Company.

Richard T. Clark was re-appointed, effective February 7, 2018, 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 at every Board meeting);
 
leading the Board’s oversight of Corning’s Strategy and Capital Allocation Framework;
 
facilitating regular CEO performance reviews and ongoing 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

Committees

As of the date of this proxy statement, the Board has 13 directors and the following six committees: (1) Audit Committee; (2) Compensation Committee; (3) Corporate Relations Committee; (4) Executive Committee; (5) Finance Committee; and (6) Nominating and Corporate Governance Committee. Each of the committees operates under a written charter adopted by the Board except the Executive Committee, which operates pursuant to Corning’s by-laws. The committee charters and the by-laws are available on our website at https://www.corning.com/worldwide/en/about-us/investor-relations/board-download-library.html. Each committee reviews and reassesses the adequacy of their charter annually, conducts annual evaluations of their performance with respect to their duties and responsibilities as laid out in the charter, and reports regularly to the Board with respect to the committee’s activities. Additionally, the Board and each of the committees has the authority to retain outside advisors as the Board and/or each committee deems necessary.

Director membership on committees of Corning’s Board is set forth in the following table. “C” denotes Chair of the committee.

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

The committees and their functions are as follows:

Committee       Primary Responsibilities

Audit(1)

Number of Meetings
in 2017: 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
Regularly reviews our enterprise risk management program; monitors legal and regulatory risks by regular discussions with management; evaluates potential risks related to accounting, internal control over financial reporting, tax planning and cybersecurity

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Corporate Governance and the Board of Directors

Committee       Primary Responsibilities

Compensation(2)

Number of Meetings
in 2017: 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
Monitors potential risks related to the design and administration of compensation plans and policies, and benefits and perquisites plans and policies, including performance-based compensation programs, to promote appropriate incentives in line with shareholder interest that do not promote excessive risk-taking

Corporate
Relations

Number of Meetings
in 2017: 5

Assists the Board in fulfilling its oversight responsibility by reviewing Corning’s strategies and policies in, and overseeing risks related to, the areas of public relations and reputation, employment policy and employee relations, political activities, public policy, community responsibility, and environmental and social matters. These areas include:
-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

Number of Meetings
in 2017: 3

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

Finance

Number of Meetings
in 2017: 5

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 Strategy and Capital Allocation Framework, declaration of dividends, stock repurchase programs, and short- and long-term financing transactions
Monitors strategic risks related to financial affairs, including capital structure and liquidity risk, transaction execution risk, credit and counterparty risk, market risk, insurance risk, and foreign exchange risk; reviews the policies and strategies for managing financial exposure and contingent liabilities

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Corporate Governance and the Board of Directors

Committee Primary Responsibilities

Nominating and
Corporate
Governance(3)

Number of Meetings
in 2017: 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
Monitors potential risks related to governance practices by reviewing succession plans and performance evaluations of the Board and CEO, monitoring legal developments and trends regarding corporate governance practices, and evaluating related party transactions
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.

Director Independence

Our Board is 92% independent and such 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.

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. When making independence determinations, the Board considers all relevant facts and circumstances which might bar a director from being determined to be “independent”, including the NYSE criteria.

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, if any, that occurred since the beginning of 2015 between Corning and entities associated with our independent directors or members of their immediate family.

In making director independence determinations, the Board reviewed and discussed information 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 had a business relationship 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.

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Corporate Governance and the Board of Directors

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 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 a policy requiring the full Board or a designated Board committee to approve or ratify any transaction involving Corning 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 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 2017.

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 2017 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 2017 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 or Compensation Committee.

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Corporate Governance and the Board of Directors

Board Composition

When considering Board composition, the Nominating and Corporate Governance Committee considers whether a candidate possesses skills relevant to the Board’s performance of its responsibilities in the oversight of a complex global business; independence; diversity of experience; and personal characteristics such as race, gender, age and cultural background. 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. The Nominating and Corporate Governance Committee assesses the effectiveness of its efforts at pursuing diversity through its periodic evaluation of the board’s composition. Our 13 Directors include a diverse range of individuals, including three women, one African-American, and four directors who hold science, technology or mathematics Ph.Ds. We also have two decades of age diversity among our Directors, with their ages ranging between 51 and 73 years. 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.

Independence     Diversity     Age


Tenure

The Nominating and Corporate Governance Committee regularly considers the long-term make up of our Board of Directors and how the members of our board change over time. The Nominating and Corporate Governance Committee also considers the experience needed for our Board as our business and the markets in which we do business evolve. Our Board aims to strike a balance between the knowledge that comes from longer-term service on the Board with the new experience, ideas and energy that can come from adding directors to the Board. We believe the average tenure for our independent director nominees of approximately 8.2 years reflects the balance the Board seeks between different perspectives brought by long-serving directors and new directors.

     

Tenure


8.2 yrs Average Tenure of Directors, excluding Mr. Weeks


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Corporate Governance and the Board of Directors

Board Nomination and Refreshment 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

expertise and exceptional achievement in business, finance, technology or other areas relevant to Corning’s Strategy and Capital Allocation Framework;
reputation, ethical character and maturity of judgment;
absence of conflicts of interest that might impede the proper performance of director responsibilities;
diversity of viewpoints, backgrounds and experiences;
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, qualifications and skills relevant to Corning’s Strategy and Capital Allocation Framework and, depending on the result of such inquiries, arrange for in-person meetings with the potential candidates.

The Nominating and Corporate Governance Committee uses 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. To maintain a pipeline for new directors, the Nominating and Corporate Governance Committee has retained the executive search firm of Spencer Stuart to help identify director prospects, perform candidate outreach, assist in reference and background checks, and provide other related services on an ongoing basis. Director candidates recommended by shareholders in the manner described on page 79 will be considered in the same manner in which the Nominating and Corporate Governance Committee 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 79 of this proxy statement.

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 the ongoing 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 no less than 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.

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Corporate Governance and the Board of Directors

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 oversight of the Company’s risk management. The Board exercises this oversight responsibility directly and through its committees.

Board of Directors
(Committee report-outs, discussions with management and annual Board review)

     

Audit Committee
Regularly reviews our enterprise risk management program; monitors legal and regulatory risks by regular discussions with management; oversees internal and external audit; evaluates potential risks related to accounting, internal control over financial reporting, tax planning and cybersecurity.

           

Compensation Committee
Monitors potential risks related to the design and administration of compensation plans and policies, and benefits and perquisites plans and policies, including performance-based compensation programs, to promote appropriate incentives in line with shareholder interest that do not promote excessive risk-taking.

           

Finance Committee
Monitors strategic risks related to financial affairs, including capital structure and liquidity risk, transaction execution risk, credit and counterparty risk, market risk, insurance risk, and foreign exchange risk; reviews the policies and strategies for managing financial exposure and contingent liabilities.

 
  

Corporate Relations Committee
Monitors risks relating to governmental policy, public relations, reputation, employee relations, and environmental and social matters.

Nominating and Corporate Governance Committee
Monitors potential risks related to governance practices by reviewing succession plans and performance evaluations of the Board and CEO, monitoring legal developments and trends regarding corporate governance practices and evaluating potential related party transactions.

  
                                   
 
 
             
Management
(Updates to Board or relevant Committees on risk exposures and mitigation efforts)

Management and the Board discuss risks associated with strategic alternatives being contemplated and the risk-reward associated with these alternatives. Once a strategy is in place, at each meeting, the Board reviews our strategy with the CEO and discusses any newly-identified strategic risks.

Operationally, management reports periodically to the Board on the Company’s enterprise risk management (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. Corning’s ERM program utilizes (1) a Risk Council chaired by the Senior Vice President and Chief Financial Officer and composed of Corning management and staff to aggregate, prioritize and assess risks, including strategic, 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.

The Board believes that the work undertaken by the committees of the Board, together with the work of the full board and the Company’s management, enables the Board to effectively oversee Corning’s management of risk.

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Compensation Risk Analysis

In February 2018, 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.

Board and Shareholder Meeting Attendance

The Board of Directors met 6 times during 2017. Attendance at Board and committee meetings averaged 98% in 2017, and each incumbent director attended no less than 85% of the meetings of the Board and committees on which the director served.

All of our directors attended our 2017 Annual Meeting of Shareholders. The Board has a policy requiring all directors to attend our Annual Meeting, absent extraordinary circumstances.

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 four areas: education, culture, human services and volunteerism. In 2017, Corning donated $1 million to the Foundation, and the Foundation disbursed approximately $3.9 million, of which approximately 27% was directed toward initiatives supporting education, including grants made under the Corning Incorporated Foundation Matching Gifts program. Additional information about the Foundation can be found at www.corningfoundation.org.

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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) and Jeffrey W. Evenson (senior vice president and chief strategy officer) serve on the CMoG board of trustees. In 2017, Corning provided cash and non-cash contributions of services to CMoG of approximately $37 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 53% of its enrollment. In 2017, non-cash contributions totaled approximately $1.5 million and cash contributions totaled $326,000. 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, 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. Our Board spends meaningful time with executive management at board meetings, and other members of management at other board events, where the relationships developed enable the Board to ensure that the Company maintains a culture of integrity, responsibility and accountability throughout the organization.

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 2017.

Lobbying and Political Contributions Policy

Corning encourages employees to participate in the political process 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.

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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
 
Whistleblower 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 skills and areas of expertise. 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.

g g g g g g g g g g g g g

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.

g g g g g g g g g

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.

g g g g g g g g g

Academia, R&D, and Innovation
These directors have advanced degrees in relevant fields and exceptionally deep knowledge of technology and research & development in areas critical to Corning as a science, technology, and innovation company.

g g g g

Entrepreneurial/Commercial Experience
These directors provide valuable perspectives on developing and investing in new technologies

g g g g g g g g g

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.

g g g g g g g

Law, Government, or Regulatory Experience
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.

g g g g g g g

Audit Committee Financial Expert
These directors qualify as audit committee financial experts as defined by applicable SEC rules.

g g g g

Public Company Board Experience
These directors have extensive experience as members of the board of directors of at least two other public companies.

g g g g g g g g g g

Military Service
These directors have experience as a member of the United States armed forces.

g g g

CORNING 2018 PROXY STATEMENT      27


Table of Contents

Proposal 1 Election of Directors

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 2017 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.

If elected by our shareholders, the thirteen director nominees will serve for a one-year term expiring at our 2019 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.

FOR

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


28      CORNING 2018 PROXY STATEMENT


Table of Contents

Proposal 1 Election of Directors

Corning’s Director Nominees

Age
59
Director Since
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, audit and management
Executive leadership experience
Experience in international business and finance

Age
63
Director Since
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 35 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 research and development, science and technology leadership, and audit and business management
Significant public company board experience

CORNING 2018 PROXY STATEMENT      29


Table of Contents

Proposal 1 Election of Directors

Age
73
Director Since
2010

 

Committees

Executive
Finance
Nominating and Corporate Governance
 

Current Public Company Directorships

None
 

Public Company Directorships Held During the Past 5 Years

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 37 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

Sophisticated in private equity investing, including reviewing financial statements and audit results and making investment and mergers and acquisitions decisions
Applies insight into important economic trends relevant to our business
Experience in banking and managing investments

Age
71
Director Since
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 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 and deep managerial expertise, operational expertise, and business knowledge
Extensive experience in the issues facing public companies and multinational businesses
Significant public company board experience, including as chairman and chief executive officer of an R&D-focused global corporation


30      CORNING 2018 PROXY STATEMENT


Table of Contents

Proposal 1 Election of Directors

Age
68
Director Since
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
Knowledgeable in the areas of technology, telecommunications, private equity and real estate
 


Age
56
Director Since
2013

 

Committees

Audit
Corporate Relations
 

Current Public Company Directorships

Meritage Homes Corporation
NiSource, Inc.
 

Public Company Directorships Held During the Past 5 Years

Staples, Inc.
     

Deborah A. Henretta

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

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

Ms. Henretta is a partner at G100 Companies where she assisted in establishing a Board Excellence program that provides director education on board oversight and governance responsibilities, including the areas of digital transformation and cyber security.

 

Skills and Qualifications

Significant experience in business leadership and operations, P&L responsibility
Skilled in brand building, marketing and emerging market management
Significant knowledge of digital transformation and cyber security

CORNING 2018 PROXY STATEMENT      31

Table of Contents

Proposal 1 Election of Directors

Age
59
Director Since
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 innovation and commercialization
Expertise in information technology and computer software
Experience with emerging technologies and customer experience


Age
71
Director Since
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

President, Washington College

In July 2017, Mr. Landgraf was elected president of Washington College. He previously 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 and audit expertise
Operations skills and experience
Specialized knowledge including technology, transportation, education, pharmaceuticals, health care, energy, materials, and mergers and acquisitions
Significant public company board experience

32      CORNING 2018 PROXY STATEMENT

Table of Contents

Proposal 1 Election of Directors

Age
51
Director Since
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

Specialized knowledge of telecommunications, social media and information technology industries
Extensive knowledge of government policy and regulatory environment


Age
68
Director Since
1999

 

Committees

Audit
Compensation (Chair)
 

Current Public Company Directorships

None
 

Public Company Directorships Held During the Past 5 Years

Keynote Systems
Neustar, Inc.
     

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 and cyber security
Experience in technology development, marketing, business development and support, innovation and entrepreneurial endeavors, investor relations and investing

CORNING 2018 PROXY STATEMENT      33

Table of Contents

Proposal 1 Election of Directors

Age
70
Director Since
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 global operations, manufacturing, performance excellence, business development, technology-driven business environments, and military and government contracting
Education, training and knowledge in science and engineering
Extensive public company board experience


Age
58
Director Since
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 35 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
 

34      CORNING 2018 PROXY STATEMENT

Table of Contents

Proposal 1 Election of Directors

Age
68
Director Since
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

Dr. Wrighton has more than 25 years of leadership experience overseeing large research universities. 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, molecular electronics and photoprocesses at electrodes. He also has expertise in areas of direct relevance to Corning, including materials chemistry, photochemistry, surface chemistry and life sciences. 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

Deep knowledge in areas of direct relevance to Corning, including materials chemistry, photochemistry, surface chemistry and life sciences
Executive leadership experience, including finance and audit experience
Significant public company board experience

CORNING 2018 PROXY STATEMENT      35


Table of Contents


Director Compensation
  

The Compensation Committee intends to set director compensation levels within a competitive range of the market median to ensure directors are paid appropriately for their time commitment and responsibilities relative to directors at companies of comparable size, industry and scope of operations. The Committee believes that providing a competitive compensation package is important because it enables Corning to attract and retain highly qualified directors who are critical to the Company’s long-term success.

The Compensation Committee’s independent consultant, Frederic W. Cook & Co., Inc., conducts an annual review of the director compensation levels relative to Corning’s compensation peer group.

The Company uses a combination of cash and stock-based compensation for its directors. 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 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, a restricted stock unit account, or a combination of such accounts. In 2017, five directors elected to defer compensation.

As an employee of the Company, Mr. Weeks is not compensated separately for service on the Board or any of its Committees.

2017 Director Compensation

In October 2016, the Board approved certain changes to director compensation proposed by the Compensation Committee that were developed in consultation with the Committee’s independent consultant and became effective January 1, 2017. Meeting fees were eliminated and an annual retainer was provided instead. The impact is expected to be neutral to slightly positive with respect to a given director’s compensation. Retainers for Audit and Compensation Committee Chairs were adjusted slightly. The following table outlines 2017 director compensation:

Annual Cash Retainer       $110,000

Lead Independent Director Retainer

Our Lead Independent Director received an additional cash 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 cash retainer of $15,000.

Committee Member Retainers

Each Audit Committee member received a cash retainer of $18,000; each Compensation Committee member received a cash retainer of $12,000; and each Executive, Finance, Nominating and Corporate Governance, and Corporate Relations Committee member received a cash retainer of $10,000.

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 director is appointed between the February meeting and December 31, then that director will receive a pro-rata grant shortly after joining the Board.

In 2017, our directors’ annual equity compensation was $155,000. We issued 5,914 restricted stock units (with a grant date value of approximately $155,000) to each non-employee director under our 2010 Equity Plan for Non-Employee Directors. These restricted stock units are not available for transfer or sale until six months after the date of a director’s retirement or resignation.


36      CORNING 2018 PROXY STATEMENT



Table of Contents

Director Compensation

In 2017, the directors below performed the following roles:

Name       Role During 2017
Mr. Clark Lead Independent Director
Mr. Landgraf Audit Committee Chair
Dr. Rieman Compensation Committee Chair
Dr. Burns Corporate Relations Committee Chair
Mr. Cummings Finance 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. Directors are also reimbursed for reasonable expenses associated with participation in director education programs.

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 2017, we paid a total of $101,713 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 2017, Messrs. Canning, Clark, Cummings, Landgraf, Tookes and Weeks, and Drs. Burns, 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 our directors’ and officers’ liability insurance policies covering directors.

Changes to Director Compensation in 2018

In February 2018, the Board approved a change to the non-employee directors’ annual equity compensation proposed by the Compensation Committee in consultation with the Committee’s independent consultant. Starting in 2018, the non-employee directors’ annual equity grant will increase from $155,000 to $165,000. As with the 2017 director equity compensation, this amount will be payable in restricted stock units, which are not available for transfer or sale until six months after the date of a director’s retirement or resignation.

CORNING 2018 PROXY STATEMENT      37


Table of Contents

Director Compensation

2017 DIRECTOR COMPENSATION TABLE

Name       Fees Earned or
Paid in Cash(1)
($)
      Stock
Awards(2)
($)
      All Other
Compensation(3)
($)
      Total
($)
Donald W. Blair $138,000 $155,006 $ 7,500 $300,506
Stephanie A. Burns 153,000 155,006 0 308,006
John A. Canning, Jr. 140,000 155,006 7,500 302,506
Richard T. Clark 177,000 155,006 7,500 339,506
Robert F. Cummings, Jr. 155,000 155,006 0 310,006
Deborah A. Henretta 138,000 155,006 7,500 300,506
Daniel P. Huttenlocher 138,000 155,006 0 293,006
Kurt M. Landgraf 170,000 155,006 7,500 332,506
Kevin J. Martin 130,000 155,006 6,000 291,006
Deborah D. Rieman 160,000 155,006 0 315,006
Hansel E. Tookes II 157,000 155,006 0 312,006
Mark S. Wrighton 138,000 155,006 0 293,006
(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 units 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, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 15, 2018. There can be no assurance that the grant date fair value amounts will ever be realized. The total number of outstanding option awards, RSUs and RSU deferrals, and stock awards each director had as of December 31, 2017 is shown in the table below. Total stock holdings for directors as of December 31, 2017 are shown in the “Beneficial Ownership of Directors and Officers” table. 

(3)

The amounts in this column reflect charitable donation matches made by the Corning Foundation’s Matching Gift Program.

The following are the total number of outstanding option awards and stock awards each director had as of December 31, 2017

Name       Restricted Shares and Units
Outstanding at December
31, 2017(1)
      Options
Outstanding at 
December 31, 2017(2)
Donald W. Blair 45,119 0
Stephanie A. Burns 54,048 0
John A. Canning, Jr. 89,851 1,323
Richard T. Clark 47,876 0
Robert F. Cummings, Jr. 164,768 8,858
Deborah A. Henretta 51,727 0
Daniel P. Huttenlocher 19,824 0
Kurt M. Landgraf 149,611 0
Kevin J. Martin 37,420 0
Deborah D. Rieman 105,527 6,775
Hansel E. Tookes II 92,777 2,345
Mark S. Wrighton 64,227 6,775

(1)

This column reflects restricted shares and restricted stock units awarded and outstanding or deferred for each Director as of December 31, 2017.

(2)

No options were granted to non-employee directors in 2017.


38      CORNING 2018 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 require all directors, named executive officers (NEOs), and non-NEO senior management to achieve the required levels of ownership under our stock ownership guidelines within five years of their election, appointment or designation. Restricted and direct and indirectly owned shares, and current and deferred restricted stock units, each count toward our stock ownership guidelines. An NEO who falls below the ownership requirement for any reason will have up to three years to return to the required minimum ownership level. 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

Our directors and executive management are also subject to our anti-hedging and anti-pledging policies. For further information, see “Anti-Hedging Policy” and “Anti-Pledging Policy” both on page 54.

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 on review of reports furnished to us and written representations that no other reports were required during the fiscal year ended December 31, 2017, all Section 16(a) filing requirements were met.

CORNING 2018 PROXY STATEMENT      39


Table of Contents

Stock Ownership Information

Beneficial Ownership Table

As of December 31, 2017     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
    Restricted
Share Units
Not Vesting Within
60 Days(4)
The Vanguard Group 60,355,056 (5)  6.94
BlackRock Inc. 53,854,415 (6)  6.20
Donald W. Blair 17,243 17,243 * 27,876
Stephanie A. Burns 49,288 49,288 * 13,514
John A. Canning, Jr. 109,150 1,323 110,473 * 40,701
Richard T. Clark 41,962 41,962 * 5,914
Robert F. Cummings, Jr. 144,686 8,858 153,544 * 100,082
Deborah A. Henretta 25,965 25,965 * 25,762
Daniel P. Huttenlocher 13,910 13,910 * 5,914
Kurt M. Landgraf 62,957 62,957 * 86,654
Kevin J. Martin 31,506 31,506 * 5,914
Deborah D. Rieman 100,813 6,775 107,588 * 5,914
Hansel E. Tookes II 96,863 2,345 99,208 * 5,914
Mark S. Wrighton 59,313 6,775 66,088 * 5,914
Wendell P. Weeks 755,262 (7)  810,686 3,760 1,569,708 * 250,464
R. Tony Tripeny 46,438 151,990 1,006 199,434 * 43,048
James P. Clappin 79,140 1,089 80,229 * 63,884
Lawrence D. McRae 126,652 176,073 1,132 303,857 * 67,540
David L. Morse 24,358 98,852 1,116 124,326 * 63,776
All Directors and Executive
Officers as a group
(25 persons)
2,054,152 (8)(9)  1,810,302 10,932 3,875,386 * 1,156,951
*

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 12,267, 0, 2,255, 6,573, 0 and 24,046 shares of common stock, respectively. It also holds for the benefit of all employees who participate in the plans the equivalent of 12,931,135 shares of common stock (being 1.50% of the class).

(4)

Restricted Share Units represent the right to receive unrestricted shares of common stock upon the lapse of restrictions, at which point the holders will have sole investment and voting power. Restricted Share Units that will not vest within 60 days of the date of this table are not considered beneficially owned for purposes of the table and therefore are not included in the Total Shares Beneficially Owned column because the holders are not entitled to voting rights or investment control until the restrictions lapse. However, ownership of these RSUs further aligns our Directors and Executive Officers’ interests with those of our shareholders.

(5)

Reflects shares beneficially owned by The Vanguard Group (Vanguard), according to a Schedule 13G/A filed by Vanguard with the SEC on February 9, 2018, reflecting ownership of shares as of December 31, 2017. Vanguard has sole voting power and/or sole dispositive power with respect to 58,901,614 shares and shared voting power and/or shared dispositive power with respect to 1,453,442. According to the Schedule 13G/A, Vanguard beneficially owned 6.94% of our common stock as of December 31, 2017.

(6)

Reflects shares beneficially owned by BlackRock, Inc. (BlackRock), according to a Schedule 13G/A filed by BlackRock with the SEC on February 8, 2018, reflecting ownership of shares as of December 31, 2017. BlackRock has sole voting power and/or sole dispositive power with respect to 53,854,415 shares and shared voting power and/or shared dispositive power with respect to 0 shares. According to the Schedule 13G/A, BlackRock beneficially owned 6.2% of our common stock as of December 31, 2017.

(7)

Includes 742,995 shares held by a revocable trust of which Mr. Weeks is the beneficiary. He currently has no voting authority over these shares.

(8)

Does not include 23,325 shares owned by the spouses and minor children of certain executive officers and directors as to which such officers and directors disclaim beneficial ownership.

(9)

As of December 31, 2017, none of our directors or executive officers have pledged any such shares.


40      CORNING 2018 PROXY STATEMENT


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 2017 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 2018 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 approving the compensation of our Named Executive Officers.


CORNING 2018 PROXY STATEMENT      41


Table of Contents

Compensation Discussion
& Analysis
  

This Compensation Discussion & Analysis (CD&A) presents the 2017 compensation of our Named Executive Officers (NEOs) and describes how this compensation aligns with our pay for performance philosophy and supports the success of our Strategy and Capital Allocation Framework.

OUR NEOs IN FISCAL YEAR 2017 WERE:
Named Executive Officer       Role       Years in Role
Wendell P. Weeks Chairman, Chief Executive Officer (CEO)
and President
13 Years as CEO
(11 years as CEO/Chairman)
R. Tony Tripeny Senior Vice President and Chief Financial Officer 2 Years
James P. Clappin Executive Vice President, Corning Glass Technologies 7 Years
Lawrence D. McRae Vice Chairman and Corporate Development Officer 2 Years as Vice Chairman
(18 years as Corporate
Development Officer)
David L. Morse Executive Vice President and Chief Technology Officer 5 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:

42       Executive Summary
45 Company Performance Overview
48 2017 Executive Compensation Program Details
52 Compensation Peer Group
53 Compensation Program – Other Governance Matters
55 Compensation Committee Report
56 2017 Compensation Tables

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 Strategy and Capital Allocation Framework. In order to 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 incent management to successfully deliver on the Strategy and Capital Allocation Framework and our commitment to our shareholders.

42      CORNING 2018 PROXY STATEMENT


Table of Contents

Compensation Discussion & Analysis

Target Total Compensation
CEO       OTHER NEOs

Our Short- and Long-Term Incentives

Short-Term Incentives
(Paid in Cash)


Long-Term Incentives
(Paid in CPUs, RSUs and Options)


CORNING 2018 PROXY STATEMENT      43


Table of Contents

Compensation Discussion & Analysis

2017 Compensation Metrics

Our key compensation metrics are Core Earnings per Share (Core EPS), Core Net Sales and Adjusted Operating Cash Flow less CapEx. These metrics are designed to ensure the success of our Strategy and Capital Allocation Framework by incenting sales growth, improving earnings per share and generating operating cash flow.

   CORE EPS    CORE NET SALES    ADJUSTED OPERATING
CASH FLOW LESS CAPEX
 

2017 Actual Results

$1.72

 
$10,514
million
 

$816
million

 

2017 Score as %
of Target Payout

173%
of target for 2017

 
182%*
of target for 2017
 

110%
of target for 2017

* The Core Net Sales Score for CPUs is 144%, since CPUs have a maximum payout opportunity of 150%.

Please see “Our 2017 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 the most directly comparable GAAP financial measures.

Core Net Sales, Core Earnings per Share (Core EPS) and Adjusted Operating Cash Flow are non-GAAP financial measures used by our management to measure the true economics of our currency hedges and obtain a clearer view of Corning’s operating results. Accordingly, these Core Performance Measures form the basis for our compensation performance metrics.


44      CORNING 2018 PROXY STATEMENT


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Compensation Discussion & Analysis

Company Performance Overview

2017 Business Environment and Company Performance

In 2017, we utilized our financial strength to continue our focus on innovation, advancing key programs across our market-access platforms. Some of our key achievements in 2017 included:

Celebrating a major milestone with the production of our one billionth kilometer of optical fiber. We also continued our technology leadership with the introduction of a new multi-use platform to simplify installation and reduce the costs of deploying 4G and 5G networks.

Shipping the world’s first Gen 10.5 glass. In addition, we captured new opportunities for Corning Iris™ Glass, which is featured in new ultra-slim, ultra-bright lines of monitors.

Expanding into new Corning® Gorilla® Glass applications and increased the amount of our glass on mobile electronic devices. Additionally, the superior drop performance of Gorilla Glass 5 has enabled new smartphone designs that feature glass on both the front and back.

Securing an exclusive global supply agreement for gas particulate filters.

Winning new customers for Gorilla Glass for Automotive, which will be featured on more than thirty-five automotive platforms globally.

Launching Valor® Glass, a revolutionary new pharmaceutical packaging solution that dramatically reduces particle contamination, breaks, and cracks. As a result, Valor helps protect patients, while increasing manufacturing throughput.


Please see “Our 2017 Performance Highlights” on page 6 and “Our Strategy and Capital Allocation Framework” on page 7 for additional information on Corning’s 2017 financial performance.

2017 Performance and Compensation Alignment

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

Approximately 88% of the CEO’s target total compensation (excluding employee benefits and perquisites) and 79% of the other NEOs’ target total compensation (excluding employee benefits and perquisites) is variable and depends upon our operating performance or stock price.

Net profitability and sales growth, both short- and long-term, drive success under our Strategy and Capital Allocation Framework. Accordingly, we have incentive measures linked to both short- and long-term outcomes. Our short-term incentives are cash payments composed of the Performance Incentive Plan (PIP) and the GoalSharing plan. Under each of the PIP and the GoalSharing plan, 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. Actual performance was well above the established PIP targets for 2017, with the blended result being a payout of 175% of PIP target.

GoalSharing is a company-wide plan that rewards our workforce for the Company’s and Business Unit’s success 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 7.34% of base salary for 2017.

Our Long-Term Incentive (LTI) awards reflect our belief that cash flows and revenue growth enable investments that will sustain our growth over the long term and that the interests of our executives and shareholders should be aligned. 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 2017, the CPU payout was 120% of the performance target resulting in a total payout of 103% of target for the 3-year period 2015-2017.

CORNING 2018 PROXY STATEMENT      45


Table of Contents

Compensation Discussion & Analysis

In addition, because ROIC improvement is important to the delivery of the commitments made pursuant to our Strategy and Capital Allocation Framework, and an important metric for many of our shareholders based on their feedback, we added an ROIC modifier to the CPUs in 2016. 2016 CPUs earned for the year three-year performance period (2016 through 2018) and 2017 CPUs earned for the three-year performance period (2017 through 2019) 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 2017 actual results and targeted goals for each performance measure with 2016 actual results.

2017 2016
Measure       Actual and
% increase
vs. ’16 Actual
      Target and
% increase
vs. ’16 Actual
      Actual       Target
Core EPS
Percentage increase vs ’16 Actual
$1.72 $1.57 $1.55 $1.55
+11.0% +1.3%
Core Net Sales (millions) $10,514 $9,945 $9,710 $9,996
+8.3% +2.4%
Adjusted Operating Cash Flow
less CapEx (millions)
$816 $756 $1,651 $1,593
N/A(1) N/A(1)
(1)

Adjusted Operating Cash Flow less CapEx goals are established yearly, independent of the prior year.

Please see “Our 2017 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 the most directly comparable GAAP financial measures.

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

Short Term/Annual Incentive
2017 PIP Measures

Long-Term Incentive
2017 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%)

      Payout %       Core
EPS
(in $M)
      % of
2017 Plan
      Core Net
Sales
(in $M)
      % of
2016
Core Net
Sales
      Adjusted
OCF less
CapEx (in $M)
      % of
2017 Plan
      Core Net
Sales
(in $M)
      % of
2016
Core Net
Sales
200% $1.76 112% $10,647 110% Capped at 150%
150% $1.68 107% $10,260 106% $1,056 140% $10,647 110%
125% $1.64 105% $10,066 104% $906 120% $10,066 104%
TARGET 100% $1.57 100% $9,945 102% $756 100% $9,945 102%
75% $1.42 90% $9,776 101% $606 80% $9,776 101%
50% $1.26 80% $9,679 100% $556 74% $9,679 100%
0% $1.18 75% $9,292 96% $456 60% $9,292 96%

As discussed on page 44, Corning’s 2017 performance results for Core EPS and Core Net Sales exceeded the annual target payout opportunity (173% and 182%, respectively), with the blended result for short-term incentives being 175%. Adjusted Operating Cash Flow less CapEx and Core Net Sales exceeded the annual target payout opportunity (110% and 144%, respectively), yielding a blended result of 120% of the annual target opportunity for the 2017 earned portion of CPUs. 2017 CPUs are further subject to an ROIC modifier of ± 10% based on ROIC improvement over the three-year performance period (2017-2019) against pre-established targets.

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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 and reinvestment of common dividends, was 34.7% in 2017. Our three-year annualized TSR performance was 14.4% and our five-year annualized TSR performance was 23.3%, both outperforming the S&P 500 Index. Since the introduction of our Strategy and Capital Allocation Framework, we have outperformed the S&P 500 Index by approximately 2.5 times in terms of total shareholder return.

The Strategy and Capital Allocation Framework has paid off from a financial perspective.

Between its inception in October 2015 and year-end 2017, Corning had total shareholder return of approximately 102% vs. less than 40% for the S&P 500.

ANNUALIZED TOTAL SHAREHOLDER RETURN       TOTAL SHAREHOLDER RETURN SINCE START OF FRAMEWORK

As of year-end 2017

October 21, 2015 through year-end 2017

Source: Bloomberg   Source: Bloomberg

Shareholder Engagement

At our 2017 annual
meeting of shareholders,
our Say on Pay proposal
received support from

92%
of votes cast.

Strong Say on Pay Results. At our 2017 Annual Meeting of shareholders, our Say on Pay proposal received support from 92% of votes cast. We view this level of shareholder support as an affirmation of our current pay practices and pay for performance philosophy.

Shareholder Outreach. In 2017, as part of our shareholder outreach program, we met with shareholders representing approximately 40% of our outstanding shares, and approximately two-thirds of our top fifty shareholders. In these meetings, we discussed our Strategy and Capital Allocation Framework, as well as governance, compensation, and sustainability matters. We learned through these meetings that our investors are pleased with our Strategy and Capital Allocation Framework and believe we have clearly articulated how our Strategy and Capital Allocation Framework creates shareholder value and is connected to management incentives at Corning. These shareholders also were generally supportive of our executive compensation program, the direct linkage of financial metrics in our incentive plans to our Strategy and Capital Allocation Framework, and the addition of the ROIC modifier. 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 Strategy and Capital Allocation Framework. See “Shareholder Communication” on page 11 for additional information.

CORNING 2018 PROXY STATEMENT      47


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
   
Employee equity plan specifies minimum vesting period stretching over at least 3 years for restricted stock or restricted stock unit awards
   
Independent compensation consultant advisor to the Compensation Committee
   
History of demonstrated responsiveness to shareholder concerns and feedback, and ongoing commitment to shareholder engagement
   
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
   
No excise tax gross-ups for officer agreements entered into after July 2004

2017 Executive Compensation Program Details

Our key compensation program principles are as follows:

Provide a competitive base salary

   
Pay for performance
   
Incent execution of our Strategy and Capital Allocation Framework
   
Apply a team-based management approach
   
Increase the proportion of performance-based 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 52. In 2017, all NEOs with the exception of Mr. Tripeny received base salary increases of approximately 3%, consistent with the salary increase budget for all other U.S. salaried employees. Mr. Tripeny received a base salary increase of 17.7% as part of a multi-year strategy to better align his overall compensation package to comparable external salary benchmarks as he continues to demonstrate strong performance as CFO.

Short-Term Incentives

Short-term incentives are designed to reward NEOs for Corning’s consolidated annual financial performance supporting our Strategy and Capital Allocation Framework and team-based management approach. As discussed above, they are composed of two annual cash bonus plans, the PIP and GoalSharing.

48      CORNING 2018 PROXY STATEMENT


Table of Contents

Compensation Discussion & Analysis

Short-Term Incentives Earned in 2017



Performance
Measures

Target
Opportunity

2017 Performance
Target
2017 Actual
Results
Earned Award
for 2017

Performance
Incentive Plan

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

CEO:
150%
of base salary

Other NEOs:
75%-80%
of base salary

Core EPS:
$1.57

Core Net Sales: $9,945 million

Core EPS:
$1.72

Core Net Sales: $10,514 million

Core EPS result
(75% of weight):
173% of target payout

Core Net Sales result
(25% of weight):
182% of target payout

Blended result:
175% of target payout

GoalSharing

Average of all
business unit plans

5% of
base salary

25% Core EPS and Core Net Sales (as noted above)

75% Business unit performance

NEO awards are based on the average of all business unit plans

7.34% of base salary

7.34% of base salary

Long-Term Incentives

Long-term incentives (LTI) are comprised of cash and equity in the form of 1) cash performance units (CPUs), 2) restricted stock units (RSUs), and 3) stock options (Options). Target value amounts are established by the Committee for each NEO annually in February. We believe it is important to link LTI amounts to financial measures that support the execution of our Strategy and Capital Allocation 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 our NEOs’ stock ownership interests with those of our shareholders.

CPUs represent 60% of the annual target LTI value. Payout is based on cash generation and revenue growth, measures that support our Strategy and Capital Allocation Framework as well as our long-term financial health and success. The performance measures for CPUs are 1) Adjusted Operating Cash Flow less CapEx (70%), which aligns the cash flow goal to our capital allocation plan and maintains focus on our CapEx, and 2) Core Net Sales (30%). Actual CPUs earned are based on the average over a three-year period. CPUs awarded in 2017 are also subject to a three-year ROIC modifier of ±10% to further align compensation earned with the goal of our Strategy and Capital Allocation Framework to improve our corporate ROIC. Accordingly, CPUs earned for the years 2017-2019 will be paid out (in 2020) subject to an adjustment of ±10%, depending on Corning’s ROIC performance over the three year performance period compared to a pre-established performance target.

RSUs represent 25% of the annual target LTI value. The number of RSUs granted is determined based on the stock price at the end of March, and awards cliff vest approximately three years from the grant date.
Options represent 15% of the annual target LTI value. The number of Options granted is determined using a Black-Scholes valuation. Options were granted at the end of March. Vesting is three years after the grant date, and the option awards have a maximum ten-year term.

CORNING 2018 PROXY STATEMENT      49


Table of Contents

Compensation Discussion & Analysis

2017 Long-Term Incentives – Cash Component



Performance
Metrics

Target
Opportunity

Performance
Target
2017 Actual
Results
Earned Award
for 2017

Adjusted Operating
Cash Flow (70%)

Core Net Sales
(30%)

CEO:
$4.95 million

Other NEOs:
$1.14 million to
$1.35 million

Applies to the
following CPUs:
Year 1 of 3:
2017–2019,
Year 2 of 3:
2016–2018, and
Year 3 of 3:
2015–2017

Adjusted Operating
Cash Flow, less
CapEx $756 million

Core Net Sales:
$9,945 million

Adjusted
Operating Cash
Flow less CapEx:
$816 million
Result: 110% of
target payout

Core Net Sales:
$10,514 million
Result: 144% of
target payout

Blended Result:
120% of
target payout
 

2017–2019 CPUs
Year 1: 120% of target payout
Year 2: TBD
Year 3: TBD
Three-year average, ±10%:
TBD*

2016–2018 CPUs
Year 1: 88% of target payout
Year 2: 120% of target payout
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: 120% of target payout
Three-year average: 103% of target payout, paid in 2018


* Subject to a ±10% adjustment based on ROIC improvement from 2017 through 2019 against pre-established targets.
**

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

2017 Long-Term Incentives – Equity Components



Compensation
Component

Target
Opportunity

Number of
Units/Options Granted
Vesting
Period
Value
Realized

Restricted
Stock
Units (RSUs)

CEO:
$2.06 million

Other NEOs:
$0.48 million to
$0.56 million

25% of annual target LTI value, based on the closing price of Corning’s common stock on the grant date (March 31, 2017) Approximately
3 years
Dependent upon Corning common stock price on the vesting date

Stock
Options

CEO:
$1.24 million

Other NEOs:
$0.29 million to
$0.34 million

15% of annual target LTI value, based on the Black Scholes Valuation at the time of the grant(March 31, 2017) 3 years Dependent upon Corning common stock price increase, if any, between time of the grant and the time of exercise

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Compensation Discussion & Analysis

CEO Target Compensation

Over the past thirteen years, under the leadership of Mr. Weeks, Corning has consistently increased Core Net Sales, Core EPS, and Adjusted Operating Cash Flow. We have continued to grow, 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, customized fiber-to-the-home solutions and Corning Valor® Glass.

In February 2017, the Compensation Committee approved a 3% base salary increase for Mr. Weeks, with all other compensation elements remaining flat:

Base salary – increased by 3% 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 – remained flat compared with 2016 LTI target at $8,250,000.

Eighty-eight 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.

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.

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Compensation Discussion & Analysis

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 $170,000; the cap for the other NEOs was approximately half this level or lower. Actual utilization falls below these caps. For additional details, refer to footnotes relating to “All Other Compensation” included with the Summary Compensation Table starting on page 56.

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.

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 closely resemble 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.


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Compensation Discussion & Analysis

We currently participate in and use several executive compensation surveys for NEO positions. We continue to use the Willis Towers Watson General Industry Executive Compensation Survey and the Equilar TrueValue Survey. In 2017, we discontinued use of the Mercer Executive Compensation survey and supplemented our sources with a small group of specialized senior executive matches found in the Aon Hewitt Total Compensation Measurement Survey for Executives. The surveys provide data for relevant positions in companies with revenues and market capitalization similar to Corning’s in both the Technology industry and in general industry.

PERCENT RANK, CORNING VERSUS COMPENSATION PEER GROUP

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.

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 $11.2 million, and 75th percentile target total direct CEO compensation was $13.2 million, compared with Corning target total direct CEO compensation of $11.8 million. Beyond the CEO, external data serves as a reference point, with internal equity and individual performance and impact being more important considerations in establishing a base salary and target total direct compensation for the other NEOs.

Compensation Program – Other Governance Matters

Role of Compensation Consultant

The Compensation 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 2017, 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 2017, the Company also engaged Compensation Advisory Partners LLC (CAP), and Willis Towers Watson (WTW) to assist management with various executive compensation matters.

The Committee conducted an independence review of FW Cook, CAP 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.

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Compensation Discussion & Analysis

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 Committee’s independent 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.

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.

Tax Deductibility of Compensation

Historically, the Committee has made compensation decisions with an eye towards deductibility of performance-based pay under IRC Section 162(m). However, the Tax Cuts and Jobs Act of 2017 (the Tax Act) that was signed into law December 22, 2017 eliminated the exemption from Section 162(m)’s deduction limit for performance-based compensation, effective for taxable years beginning after December 31, 2017. Compensation paid to our covered officers in excess of $1 million therefore will not be deductible unless it qualifies for transition relief. Given the changing nature of the deductibility for such compensation, the Committee will be reviewing the Tax Act in 2018 and its application and impact, if any, on the Company’s compensation programs.

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.

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Compensation Discussion & Analysis

Compensation Committee Report

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

The Committee has reviewed and discussed the foregoing CD&A with management. Based on our review and discussions with management, we recommended to the Board of Directors that the CD&A be included in this proxy statement and in our Annual Report on Form 10-K for the year ended December 31, 2017.

The Compensation Committee:

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

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Compensation Discussion & Analysis

2017 Compensation Tables

2017 Summary Compensation Table

This table describes the total compensation paid to our NEOs for fiscal years 2017, 2016 and 2015, 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.”

Named
Executive Officer
Year Salary
($)
Stock
Awards(1)
($)
Option
Awards(2)
($)
Non-Equity
Incentive Plan
Compensation(3)
($)
Change in
Pension
Value And
Non-qualified
Deferred
Compensation
Earnings(4)
($)
All Other
Compensation(5)
($)
Total
($)
Wendell P. Weeks 2017 $1,370,971 $2,062,503 $1,154,705 $9,240,173 $2,680,783 $359,440 $16,868,575
Chairman, Chief 2016 1,337,740 2,062,491 963,399 5,750,512 928,531 266,582 11,309,255
Executive Officer and 2015 1,353,096 1,999,990 1,116,499 4,407,018 1,306,544 255,841 10,438,988
President
R. Tony Tripeny 2017 553,269 475,011 265,933 1,796,340 858,254 111,412 4,060,219
Senior Vice President 2016 504,808 349,991 163,480 916,406 214,950 126,222 2,275,857
and Chief Financial 2015 434,135 387,494 146,542 650,617 0 75,299 1,694,087
Officer
James P. Clappin 2017 703,600 524,988 293,929 2,401,287 674,260 157,335 4,755,399
President, Corning 2016 686,538 525,007 245,230 1,537,749 66,568 3,452,856 6,513,948
Glass Technologies 2015 695,000 524,997 293,084 1,200,392 56,178 1,672,111 4,441,762
Lawrence D. McRae 2017 750,173 562,491 314,921 2,610,289 893,805 78,304 5,209,983
Vice Chairman 2016 731,971 562,505 262,737 1,633,734 90,676 83,329 3,364,952
and Corporate 2015 713,173 587,488 300,063 1,245,685 0 77,177 2,923,586
Development Officer
David L. Morse 2017 646,683 524,988 293,929 2,321,182 1,154,083 115,809 5,056,674
Executive Vice 2016 631,010 525,007 245,230 1,498,641 468,668 97,390 3,465,946
President and Chief
Technology Officer
(1)

The amounts in the Stock Awards column reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards of restricted stock units and restricted stock awards granted pursuant to the 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, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 15, 2018. This same method was used for the fiscal years ended December 31, 2016 and 2015. There can be no assurance that the grant date fair value amounts will ever be realized.

(2)

The amounts in the Option Awards column 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, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 15, 2018. The grant date fair value amounts may never be realized.

(3)

The amounts in the Non-Equity Incentive Plan Compensation column reflect the sum of annual short term incentive payments and earned cash performance units under the Long-Term Incentive Plan. 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 2017 GoalSharing plan were 7.34% of each NEO’s year-end base salary and paid in February 2018. Awards earned under the 2017 PIP were based on actual corporate performance compared to the Core EPS and Core Net Sales goals established for the plans in February 2017. Based on actual performance, each of the NEOs earned PIP awards equal to 175% of their annual target bonus opportunities (established as a percentage of year-end base salary). Cash awards earned under the PIP for 2017 will be paid in March 2018.


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Compensation Discussion & Analysis

The following table indicates awards earned under the PIP and the GoalSharing Plan reflected in the Non-Equity Incentive Plan Compensation column above:

        Named Executive Officer Year End
Base Salary
2017
PIP Target %
Actual 2017 PIP
Performance
Results
(% Tgt.)
2017
PIP $ Award
Actual 2017
GoalSharing
Performance %
2017
GoalSharing
$ Award
Wendell P. Weeks $1,392,000 150% 175% $3,654,000 7.34% $102,173
R. Tony Tripeny 600,000 75% 175% 787,500 7.34% 44,040
James P. Clappin 714,400 75% 175% 937,650 7.34% 52,437
Lawrence D. McRae 761,700 80% 175% 1,066,380 7.34% 55,909
Dr. David L. Morse 656,600 75% 175% 861,788 7.34% 48,194

In addition to the 2017 PIP and 2017 GoalSharing awards noted above, the amounts in the Non-Equity Incentive Plan Compensation column also reflect the earned portions of CPU Awards granted in 2017, 2016 and 2015 on the basis of 2017 performance against established measures. 2017 CPU award payouts will be made in 2020 based on actual corporate performance compared to the established performance goals averaged over three years (2017, 2018 and 2019) and subject to a ±10% ROIC modifier as described on page 49 . 2016 CPU award payouts are based on performance goals averaged over three years (2016, 2017 and 2018) and is also subject to a ±10% ROIC modifier. 2015 CPU award payouts are based on performance goals averaged over three years (2015, 2016 and 2017). The goals for 2017 were Adjusted Operating Cash Flow less Capex (70%) and Core Net Sales (30%), as well as a three-year ROIC goal established in February 2017. Adjusted Operating Cash Flow less Capex and Core Net Sales goals for 2018 and 2019 are yet to be established. While the final payout amounts for 2017 and 2016 CPU awards are unknown, the table below reflects the earned amount of 2017, 2016 and 2015 CPU awards which are reflected in the Non-Equity Incentive Plan Compensation column above, on the basis of 2017 performance metrics which excludes the portion of the 2017 award that remains unearned because ROIC performance against targets (2017-2019) are not yet known and the portion of 2016 award that remains unearned because ROIC performance against targets (2016-2018) are not yet known.

      Named Executive Officer 2017 CPU
Target
Award ($)
2017 CPU
Performance
Results %
Prorated Earned
2017 CPU Award
Based on 2017
Performance
(Year One of
Three)
($)*
2016 CPU
Target
Award
($)

Prorated Earned
2016 CPU Award
Based on 2017
Performance
(Year Two of
Three)
($)*

2015 CPU
Target Amount
Prorated Earned
2015 CPU Award
Based on 2017
Performance
(Year Three of
Three)
($)
Wendell P. Weeks $4,950,000 120% $1,782,000 $4,950,000 $1,782,000 $4,800,000 $1,920,000
R. Tony Tripeny 1,140,000 120% 410,400 840,000 302,400 630,000 252,000
James P. Clappin 1,260,000 120% 453,600 1,260,000 453,600 1,260,000 504,000
Lawrence D. McRae 1,350,000 120% 486,000 1,350,000 486,000 1,290,000 516,000
Dr. David L. Morse 1,260,000 120% 453,600 1,260,000 453,600 1,260,000 504,000
      *

reduced by 10% since the ROIC modifier will not be known until after full 3-year performance against pre-established targets are known


(4)

The amounts in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column 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 the Change in Pension Value and Non-qualified Deferred Compensation Earnings column is also used to report the amount of above market earnings on compensation that is deferred under the non-qualified deferred compensation plans, Corning does not have any above market earnings under its non-qualified deferred compensation plan, also referred to as the Supplemental Investment Plan. In 2017, the discount rate used to value the actuarial liability decreased approximately 42 basis points from 4.02% to 3.6%, resulting in an increase in the pension values of Messrs. Weeks, Tripeny, Clappin, McRae and Dr. Morse in the amounts of $2,680,783, $858,254, $674,260, $893,805, and $1,154,083, 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 2017 Present
Value in
Pension
Benefits ($)
2016 Present
Value in
Pension
Benefits ($)
2015 Present
Value in
Pension
Benefits ($)
2014 Present
Value in
Pension
Benefits ($)
Wendell P. Weeks $27,488,220 $24,807,437 $23,878,906 $22,572,362
R. Tony Tripeny 6,190,094 5,331,840 5,116,890 ----------Not a NEO---------
James P. Clappin 9,430,892 8,756,632 8,690,064 8,633,886
Lawrence D. McRae 10,376,899 9,483,094 9,392,418 9,501,949
Dr. David L. Morse 9,571,835 8,417,752 ------------------------------Not a NEO--------------------------
Valuation Discount Rate 3.60% 4.02% 4.25% 4.00%

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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 perquisites and is calculated based on the average variable operating costs to the Company. Hourly rates are developed using variable operating costs that include fuel costs, mileage, maintenance, crew travel expense, catering and other miscellaneous variable costs. Fixed costs that do not change based on usage, such as pilot salaries, hanger expense and general taxes and insurance are excluded.


     Named Executive Officer Year Company
Match on
Qualified
401(k) Plan
Company
Match on
Supplemental
Investment
Plan
Value of
Personal
Aircraft
Rights(i)
Value of Home
Security Costs
and Financial
Counseling(ii)
Expatriate
Benefits
Other(iii) TOTALS
Wendell P. Weeks 2017 $14,603 $75,028 $94,117 $165,921 (iv)  $0 $9,771 $359,440
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
R. Tony Tripeny 2017 4,800 30,685 14,138 50,859 0 10,930 111,412
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 2017 7,410 65,894 49,039 23,461 0 11,531 157,335
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
Lawrence D. McRae 2017 16,673 0 58,055 3,231 0 345 78,304
2016 16,364 0 59,489 6,781 0 695 83,329
2015 16,364 0 45,693 14,776 0 344 77,177
David L. Morse 2017 14,820 52,554 24,588 12,052 0 11,795 115,809
2016 14,820 45,734 20,080 12,389 0 4,367 97,390
(i)

Amounts shown above reflect aircraft usage over the calendar 2017 although the Executive Allowance runs from November 1 through October 30.

(ii)

NEOs may use their Executive Allowance for residential security or financial counseling services.

(iii)

These amounts include cost attributable to executive physicals, including associated travel costs, an annual Board gift, and contributions made under the Corning Foundation Matching Gift Program.

(iv)

This reflects Company-paid expenses relating to personal and residential security benefitting Mr. Weeks and, through association, his family. 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 which were largely associated with taxes and housing. Mr. Clappin repatriated back to the US in July 2016.


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Table of Contents

Compensation Discussion & Analysis

2017 Grants of Plan Based Awards

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards

Named
Executive
Officer

     

Award

     

Grant
Date

     

Date of
Committee
Action

     

Threshold(1)
($)

     

Target(1)
($)

     

Maximum(1)
($)

     

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
($/Sh)

     

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 $2,088,000 $4,176,000
GoalSharing Plan n/a 0 69,600 139,200
Cash Performance
Units 2/1/17 2/1/17 0 4,950,000 8,167,500
Time-Based
Restricted Stock
Units 3/31/17 2/1/17 76,389 27.00 $2,062,503(2)
Stock Options 3/31/17 2/1/17 137,514 27.00 27.00 1,154,705(3)
R. Tony Performance
Tripeny Incentive Plan n/a 0 450,000 900,000
GoalSharing Plan n/a 0 30,000 60,000
Cash Performance Units 2/1/17 2/1/17 0 1,140,000 1,881,000
Time-Based Restricted
Stock Units 3/31/17 2/1/17 17,593 27.00 475,011(2)
Stock Options 3/31/17 2/1/17 31,670 27.00 27.00 265,933(3)
James P. Performance
Clappin Incentive Plan n/a 0 535,800 1,071,600
GoalSharing Plan n/a 0 35,720 71,440
Cash Performance Units 2/1/17 2/1/17 0 1,260,000 2,079,000
Time-Based Restricted
Stock Units 3/31/17 2/1/17 19,444 27.00 524,988(2)
Stock Options 3/31/17 2/1/17 35,004 27.00 27.00 293,929(3)
Lawrence D. Performance
McRae Incentive Plan n/a 0 609,360 1,218,720
GoalSharing Plan n/a 0 38,085 76,170
Cash Performance Units 2/1/17 2/1/17 0 1,350,000 2,227,500
Time-Based Restricted
Stock Units 3/31/17 2/1/17 20,833 27.00 562,491(2)
Stock Options 3/31/17 2/1/17 37,504 27.00 27.00 314,921(3)
David L. Performance
Morse Incentive Plan n/a 0 492,450 984,900
GoalSharing Plan n/a 0 32,830 65,660
Cash Performance Units 2/1/17 2/1/17 0 1,260,000 2,079,000
Time-Based Restricted
Stock Units 3/31/17 2/1/17 19,444 27.00 524,988(2)
Stock Options 3/31/17 2/1/17 35,004 27.00 27.00 293,929(3)
(1)

The amounts shown in the columns titled “Threshold”, “Target” and “Maximum” reflect the award amounts under (i) the Company’s 2017 Performance Incentive Plan (PIP) (ii) 2017 GoalSharing Plan and (iii) the Cash Performance Units under the Company’s 2012 Long- Term Incentive Plan. Awards under these plans are paid in cash. If the threshold level of performance is not met the payout will be 0%. If 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 2017 bonus target and yearend base salary. Actual awards earned for CPUs are based on average performance against established metrics over three years (2017, 2018, 2019), adjusted up or down by up to 10% based on ROIC results versus the pre-established goal for the three-year period, and will be payable in February 2020.

(2)

This amount reflects the total grant date fair value computed in accordance with FASB ASC Topic 718 of stock awards granted in calendar year 2017 pursuant to the 2012 Long-Term Incentive Plan, and corresponds to the amounts set forth in the Stock Awards column of the 2017 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 2017 pursuant to the 2012 Long-Term Incentive Plan, and corresponds to the amounts set forth in the Option Awards column of the 2017 Summary Compensation Table. Stock options vest 100% three years after grant date.


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Compensation Discussion & Analysis

Outstanding Equity Awards at 2017 Fiscal Year-End

The following table shows stock option awards classified as exercisable and unexercisable as of December 31, 2017. The table also shows unvested restricted stock and restricted stock unit awards assuming a market value of $31.99 a share (the NYSE closing price of the Company’s stock on December 29, 2017).

Option Awards

Stock Awards

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(2)
(#)

  

Market Value of
Shares or Units
of Stock That
Have Not Vested(3)
($)

Wendell P. 01/03/12 A 111,835 0 13.04 1/3/2022 254,224 8,132,626
Weeks 02/01/12 A 113,049 0 12.90 2/1/2022
03/01/12 A 112,439 0 12.97 3/1/2022
03/28/13 A 125,031 0 13.33 3/28/2023
04/30/13 A 114,943 0 14.50 4/30/2023
05/31/13 A 108,436 0 15.37 5/31/2023
03/31/14 A 42,027 0 20.82 3/31/2024
04/30/14 A 41,846 0 20.91 4/30/2024
05/30/14 A 41,080 0 21.30 5/30/2024
03/31/15 A 0 44,092 22.68 3/31/2025
04/30/15 A 0 47,778 20.93 4/30/2025
05/29/15 A 0 47,801 20.92 5/29/2025
03/31/16 A 0 49,366 20.89 3/31/2026
04/29/16 A 0 55,236 18.67 4/29/2026
05/31/16 A 0 49,366 20.89 5/31/2026
03/31/17 A 0 137,514 27.00 3/31/2027
Total 810,686 431,153
R. Tony Tripeny 12/02/09 B 8,333 0 17.82 12/2/2019 50,612 $1,619,078
01/04/10 B 8,333 0 19.56 1/4/2020
02/01/10 B 8,334 0 18.16 2/1/2020
01/03/11 B 7,720 0 19.19 1/3/2021
02/01/11 B 6,529 0 22.69 2/1/2021
03/01/11 B 6,725 0 22.03 3/1/2021
01/03/12 A 14,379 0 13.04 1/3/2022
02/01/12 A 14,535 0 12.90 2/1/2022
03/01/12 A 14,456 0 12.97 3/1/2022
03/28/13 A 16,075 0 13.33 3/28/2023
04/30/13 A 14,778 0 14.50 4/30/2023
05/31/13 A 13,942 0 15.37 5/31/2023
03/31/14 A 6,004 0 20.82 3/31/2024
04/30/14 A 5,978 0 20.91 4/30/2024
05/30/14 A 5,869 0 21.30 5/30/2024
03/31/15 A 0 5,787 22.68 3/31/2025
04/30/15 A 0 6,271 20.93 4/30/2025
05/29/15 A 0 6,274 20.92 5/29/2025
03/31/16 A 0 8,377 20.89 3/31/2026
04/29/16 A 0 9,373 18.67 4/29/2026
05/31/16 A 0 8,377 20.89 5/31/2026
03/31/17 A 0 31,670 27.00 3/31/2027
Total 151,990 76,129

60      CORNING 2018 PROXY STATEMENT


Table of Contents

Compensation Discussion & Analysis

Option Awards

Stock Awards

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(2)
(#)

  

Market Value of
Shares or Units
of Stock That
Have Not Vested(3)
($)

James P. 03/31/15 A 0 11,574 22.68 3/31/2025 64,973 $2,078,486
Clappin 04/30/15 A 0 12,542 20.93 4/30/2025
05/29/15 A 0 12,548 20.92 5/29/2025
03/31/16 A 0 12,566 20.89 3/31/2026
04/29/16 A 0 14,060 18.67 4/29/2026
05/31/16 A 0 12,566 20.89 5/31/2026
03/31/17 A 0 35,004 27.00 3/31/2027
Total 0 110,860
Lawrence D. 01/04/10 B 15,333 0 19.56 1/4/2020 71,295 $2,280,727
McRae 02/01/10 B 15,334 0 18.16 2/1/2020
01/03/11 B 16,888 0 19.19 1/3/2021
02/01/11 B 14,283 0 22.69 2/1/2021
03/01/11 B 14,711 0 22.03 3/1/2021
04/30/13 A 32,841 0 14.50 4/30/2023
05/31/13 A 30,982 0 15.37 5/31/2023
03/31/14 A 12,008 0 20.82 3/31/2024
04/30/14 A 11,956 0 20.91 4/30/2024
05/30/14 A 11,737 0 21.30 5/30/2024
03/31/15 A 0 11,850 22.68 3/31/2025
04/30/15 A 0 12,840 20.93 4/30/2025
05/29/15 A 0 12,847 20.92 5/29/2025
03/31/16 A 0 13,463 20.89 3/31/2026
04/29/16 A 0 15,064 18.67 4/29/2026
05/31/16 A 0 13,463 20.89 5/31/2026
03/31/17 A 0 37,504 27.00 3/31/2027
Total 176,073 117,031
David L. Morse 12/02/09 B 11,000 0 17.82 12/2/2019 64,892 $2,075,895
01/04/10 B 11,000 0 19.56 1/4/2020
02/01/10 B 11,000 0 18.16 2/1/2020
01/03/11 B 11,098 0 19.19 1/3/2021
02/01/11 B 9,386 0 22.69 2/1/2021
03/01/11 B 9,667 0 22.03 3/1/2021
3/31/2014 A 12,008 0 20.82 3/31/2024
4/30/2014 A 11,956 0 20.91 4/30/2024
5/30/2014 A 11,737 0 21.30 5/30/2024
3/31/2015 A 0 11,574 22.68 3/31/2025
4/30/2015 A 0 12,542 20.93 4/30/2025
5/29/2015 A 0 12,548 20.92 5/29/2025
03/31/16 A 0 12,566 20.89 3/31/2026
04/29/16 A 0 14,060 18.67 4/29/2026
05/31/16 A 0 12,566 20.89 5/31/2026
03/31/17 A 0 35,004 27.00 3/31/2027
Total 98,852 110,860
(1)

The company uses the following vesting codes

A

100% Vesting 3 years after grant date

B

1/3 Vesting 1 year after grant date, 1/3 Vesting 2 years after grant date and 1/3 Vesting 3 years after grant date

(2)

Amounts include:

(i)

83,925; 10,703; 21,804; 22,336; and 21,723 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, 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.

(ii)

93,910; 15,758; 23,725; 25,503 and 23,725 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, McRae and Dr. Morse respectively, on March 31, 2016, which vest on April 15, 2019.

(iii)

76,389; 17,593; 19,444; 20,833; and 19,444 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, McRae and Dr. Morse, respectively, on March 31, 2017, which vest on April 15, 2020.

(3)

Year-end market price is based on the December 29, 2017 NYSE closing price of $31.99.


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Table of Contents

Compensation Discussion & Analysis

Options Exercised and Shares Vested in 2017

The following table sets forth certain information regarding options exercised and restricted stock that vested during 2017 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 686,524 5,071,537 85,710 2,263,944
R. Tony Tripeny 114,667 1,597,571 12,255 323,017
James P. Clappin 171,483 1,136,929 28,596 756,466
Lawrence D. McRae 149,801 1,899,153 36,296 962,146
David L. Morse 128,103 1,167,958 24,276 641,133

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 non-qualified 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 2018 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 ($1,080,000 in 2017). 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, 2017, of our Annual Report on Form 10-K filed with the SEC on February 15, 2018. Information regarding the qualified pension plan can be found under the heading “Qualified Pension Plan”.

CORNING 2018 PROXY STATEMENT      63


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                35 $2,096,825 $0
ESPP 25 (1)  25,391,395 0
R. Tony Tripeny Qualified Pension Plan 32 331,274 0
ESPP 25 (1) 5,858,820 0
James P. Clappin Qualified Pension Plan 38 1,539,001 0
ESPP 25 (1) 7,891,891 0
Lawrence D. McRae Qualified Pension Plan 32 1,749,810 0
ESPP 25 (1) 8,627,089 0
David L. Morse Qualified Pension Plan 42 1,882,591 0
ESPP 42 (2) 7,689,244 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 2017 calendar year, the NEOs eligible earnings and final average compensation were as follows:

As of December 31, 2017
Named Executive Officer Eligible Pension
Earnings
Final Average
Earnings
Wendell P. Weeks       $3,174,683       $3,225,897
R. Tony Tripeny 887,115 758,209
James P. Clappin 1,187,109 1,163,477
Lawrence D. McRae 1,297,107 1,247,903
David L. Morse 1,091,084 1,051,056

Non-qualified 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 2017.

64      CORNING 2018 PROXY STATEMENT


Table of Contents

Compensation Discussion & Analysis

Named Executive Officer       Aggregate Balance
at January 1, 2017
($)
      Executive
Contributions
in 2017
($)(1)
      Company
Contributions
in 2017
($)(2)
      Aggregate
Earnings
in 2017
($)(3)
      Aggregate
Withdrawals/
Distributions
in 2017
($)
      Aggregate
Balance as of
December 31, 2017
($)
Wendell P. Weeks 5,272,670 72,902 75,028 836,698 0 6,257,298
R. Tony Tripeny 1,935,668 153,423 30,685 330,428 0 2,450,204
James P. Clappin 3,721,299 261,773 65,894 748,736 0 4,797,702
Lawrence D. McRae 0 0 0 0 0 0
David L. Morse 1,061,070 42,554 52,554 9,698 0 1,165,876
(1)

Reflects participation in the Supplemental Investment Plan by Messrs. Weeks, Tripeny, Clappin, and Dr. Morse in the deferral of a portion of their 2017 base salaries and participation by Messrs. Weeks, Tripeny, Clappin, and Dr. Morse in the deferral of a portion of the bonus received in 2017 for prior year performance. The Named Executive Officers’ contributions are included in the Summary Compensation Table, as a part of Salary and/or Non-Equity Incentive Plan Compensation.

(2)

Reflects Company match on the Supplemental Investment Plan which was credited to the account of the Named Executive Officers in 2017. All of these amounts are included in the All Other Compensation column of the Summary Compensation Table (and are also detailed in footnote (5) to that Table).

(3)

Reflects aggregate earnings on each type of deferred compensation listed above. The earnings on deferred base salary and bonus payments are calculated based on the actual returns from the same fund choices that Company employees have in the qualified 401(k) plan. Currently, employees have 14 fund choices that they may select from. As non-qualified plans, these plans are unfunded which means that no actual dollars are invested in these funds. The Company does not provide any above market interest rates or other special terms for any deferred amounts. These amounts are not included in the Change in Pension Value column of the Summary Compensation Table.

Arrangements with Named Executive Officers

Severance Agreements

We have entered into severance agreements with each of our NEOs. All new executive severance agreements and executive change-in-control agreements entered into after July 2004, limit the benefits that may be provided to an executive to 2.99 times the executive’s annual compensation of base salary plus target incentive payments. Messrs. Weeks, Clappin, McRae and Dr. Morse have agreements which were in effect prior to July 2004. Mr. Tripeny has a severance agreement dated as of January 1, 2015.

Severance Agreements—Mr. Weeks

Under Mr. Weeks’ severance agreement, if he is terminated involuntarily, and without cause, or as a result of disability, he is entitled to the following:

Base salary, reimbursable expenses and annual bonus accrued and owing as of the date of termination (lump sum payment);

A severance amount equal to 2.99 times his then-base salary plus an annual bonus amount (calculated at 100% of target that would have been paid for the fiscal year in which the termination occurs) (lump sum payment);

Continued participation in the Company’s benefit plans for up to three years; and

In the calendar year following the year in which the termination occurs (subject to a six-month waiting period), the purchase of his principal residence by the Company upon request.

If however, Mr. Weeks is terminated for cause or he resigns, he would (1) be entitled to accrued, but unpaid salary (lump sum payment) and any reimbursable expenses accrued or owing to him and, if terminated for cause, (2) forfeit any outstanding stock awards.

CORNING 2018 PROXY STATEMENT      65

Table of Contents

Compensation Discussion & Analysis

Severance Agreements—Other Named Executive Officers

Under the severance agreements, an NEO is entitled to severance payments if he is terminated involuntarily other than for cause.

Generally, under the severance agreements, an NEO (other than Mr. Weeks) is entitled to receive the following:

Accrued but unpaid base salary, reimbursable expenses, vacation pay and the executive’s target percentage for the annual bonus plans multiplied by the executive’s salary, pro-rated to the last day of the month closest to the termination date (lump sum payment);

A severance amount equal to two times the executive’s then-base salary plus an annual bonus amount (an amount equal to executive’s salary multiplied by the executive’s target percentage in effect on the termination date under the Company’s Performance Incentive Plan and 5% target under the GoalSharing Plan) (lump sum payment);

Continued medical, dental and hospitalization benefits for 24 months;

In the calendar year following the year in which the termination occurs (subject to a six-month waiting period), the purchase of his principal residence by the Company upon request; and

Outplacement benefits up to a maximum amount of $50,000.

The following table reflects the amounts that would be payable under the various arrangements assuming termination occurred at December 31, 2017.

TERMINATION SCENARIOS (INCLUDING SEVERANCE, IF ELIGIBLE)
Named Executive Officer Voluntary(1)
$
For Cause
$
Death
$
Disability(1)
$
Without Cause
$
Wendell P. Weeks       Severance Amount      n/a      n/a      n/a      n/a      $10,613,304
Value of Benefits Continuation n/a n/a n/a n/a 75,981 (2)
Value of Outplacement Services n/a n/a n/a n/a n/a
Purchase of Principal Residence n/a n/a n/a n/a 250,000 to 1,000,000 (3)
Pension—Non-Qualified Annuity $1,491,429 $0 $1,491,429 $1,491,429 1,491,429
Pension—Non-Qualified Lump Sum n/a n/a n/a n/a n/a
Pension—Qualified Annuity 122,871 122,871 61,435 122,871 122,871
R. Tony Tripeny Severance Amount n/a n/a n/a n/a 2,100,000
Value of Benefits Continuation n/a n/a n/a n/a 50,654 (2)
Value of Outplacement Services n/a n/a n/a n/a 50,000
Purchase of Principal Residence n/a n/a n/a n/a 50,000 to 250,000 (3)
Pension—Non-Qualified Annuity 346,433 0 270,111 346,433 346,433
Pension—Non-Qualified Lump Sum n/a n/a n/a n/a n/a
Pension—Qualified Lump Sum 325,294 325,294 325,294 325,294 325,294
James P. Clappin Severance Amount n/a n/a n/a n/a 2,571,840
Value of Benefits Continuation n/a n/a n/a n/a 30,874 (2)
Value of Outplacement Services n/a n/a n/a n/a 50,000
Purchase of Principal Residence n/a n/a n/a n/a 0 (3)
Pension—Non-Qualified Annuity 487,601 0 372,688 487,601 487,601
Pension—Non-Qualified Lump Sum n/a n/a n/a n/a n/a
Pension—Qualified Annuity 94,875 94,875 47,438 94,875 94,875
Lawrence D. McRae   Severance Amount n/a n/a n/a n/a 2,818,290
Value of Benefits Continuation n/a n/a n/a n/a 50,654 (2)
Value of Outplacement Services n/a n/a n/a n/a 50,000
Purchase of Principal Residence n/a