DEF 14A 1 glt-def14a_20201231.htm DEF 14A glt-def14a_20201231.htm

 

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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Soliciting Material Pursuant to §240.14a-12

 

Glatfelter Corporation

(Name of Registrant as Specified In Its Charter)

 

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

Time and Date:

Thursday, May 6, 2021

8:00 a.m. Eastern Time

Place:

Virtual Meeting

www.virtualshareholdermeeting.com/GLT2021

 

 

The 2021 Annual Meeting of Shareholders (“Annual Meeting”) of Glatfelter Corporation (“Glatfelter” or the “Company”), a Pennsylvania corporation, will be held on Thursday, May 6, 2021 at 8:00 a.m. E.T., to consider and act on:

 

1.

the election of eight members of the Board of Directors of the Company (the “Board”) to serve until our 2022 Annual Meeting of Shareholders and until their successors are elected and qualified;

 

2.

the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021;

 

3.

the advisory approval of the Company’s 2020 named executive officer compensation; and

 

4.

such other business as may properly come before the Annual Meeting.

Only holders of record of the Company’s common stock at the close of business on March 15, 2021 (the “Record Date”), will be entitled to notice of, and to vote at, the Annual Meeting.

It is important that your shares be represented and voted at the Annual Meeting. Whether you plan to virtually attend the Annual Meeting or not, please vote your shares by telephone at 1-800-690-6903, online at www.proxyvote.com or by completing and signing the enclosed proxy card and returning it promptly in the enclosed envelope (requiring no postage if mailed in the United States). If you choose, you may still vote online during the Annual Meeting, even if you previously voted by telephone, internet, or mail.

With the continued coronavirus (COVID-19) pandemic, and because the health and safety of our shareholders, directors, officers, employees, other attendees, and the public at large remain our most important concerns, we are holding the Annual Meeting exclusively by remote communication, also known as a “virtual meeting.” There will not be a physical location for the Annual Meeting, and you will not be able to attend the Annual Meeting in person.

To participate in the Annual Meeting, you must log onto www.virtualshareholdermeeting.com/GLT2021 (the “Meeting Website”) and enter the 16-digit control number found on your proxy card, voting instruction form or Notice of Availability. Therefore, it is very important that you retain your Notice of Availability, proxy card, or voting instruction form if you wish to virtually attend the Annual Meeting. You may vote your shares and ask questions during the Annual Meeting by following the instructions available on the Meeting Website. We encourage you to access the Meeting Website prior to the start time to familiarize yourself with the virtual platform and ensure you can hear the streaming audio. Online access will be available starting at 7:45 a.m. on May 6, 2021. Whether or not you plan to virtually attend the Annual Meeting, we urge you to vote and submit your proxy in advance of the Annual Meeting by one of the methods described above.

Jill L. Urey, Secretary

March 31, 2021 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 6, 2021:

Glatfelter Corporation’s proxy statement for the 2021 Annual Meeting of Shareholders and 2020 Annual Report are available via the Internet at www.glatfelter.com/investors/financials-and-filings/.

 

2021 PROXY STATEMENT i

 

 


 

 

 

 

 

Table of Contents

 

 

PROXY SUMMARY

1

PROPOSAL 1: ELECTION OF DIRECTORS

11

PROPOSAL 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

15

PROPOSAL 3: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION (“SAY-ON-PAY” VOTE)

16

OWNERSHIP OF COMPANY STOCK

17

Security Ownership of Certain Beneficial Owners and Management

17

Equity Compensation Plan Information

19

 

 

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

20

Corporate Governance Principles

20

Board Composition and Leadership

20

Board Independence

21

Evaluation of Board Nominees

21

Resignation and Majority Voting Policy

22

Board Meetings

22

Committees of the Board of Directors

22

Continuing Board Education

24

Board Self-Assessment

24

Risk Oversight

24

Director Compensation

26

ENHANCING EVERYDAY LIFE™…SUSTAINABLY

28

Environmental Initiative

29

Social Initiative

31

Governance and Ethics Initiative

32

HUMAN CAPITAL MANAGEMENT

33

 

 

EXECUTIVE COMPENSATION

35

Compensation Discussion and Analysis

35

Report of the Compensation Committee

51

Summary Compensation Table

52

Grants of Plan-Based Awards

54

Outstanding Equity Awards

55

Options Exercised and Stock Vested

56

Retirement Benefits

57

Potential Payments Upon Termination or Change in Control  

60

CEO Pay Ratio

65

 

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

66

REPORT OF THE AUDIT COMMITTEE

67

FREQUENTLY ASKED QUESTIONS (“FAQs”)

68

ADDITIONAL INFORMATION

73

Annual Report on Form 10-K

73

Other Business

73

“Householding”

73

 

 


 

 

2021 PROXY STATEMENT ii

 

 


 

 

Proxy Summary

This Proxy Summary highlights information explained more fully elsewhere in this proxy statement.  We ask that you read the entire proxy statement before voting.

 

Time and Date:

Thursday, May 6, 2021 at 8:00 a.m. Eastern Time

Place:

Virtual Meeting

www.virtualshareholdermeeting.com/GLT2021

Record Date:

March 15, 2021

Voting:

Shareholders of Glatfelter as of the Record Date are entitled to vote.  Each share of Glatfelter common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted upon at the Annual Meeting.

 

Proposals Requiring Your Vote

Your vote is very important to us and our business.  Please cast your vote immediately on all proposals to ensure your shares are represented.

 

 

Board Recommendation

Page

1

PROPOSAL 1 — Election of Directors

11

 

The eight director nominees possess the necessary qualifications and range of experience and expertise to provide effective oversight and advice to Management.

FOR

 

2

PROPOSAL 2 — Ratification of Appointment of Deloitte & Touche LLP

15

 

The Board, at the recommendation of the Audit Committee, approved the retention of Deloitte & Touche LLP as the Company’s independent auditor for fiscal year 2021.  Shareholders are being asked to ratify the Audit Committee’s selection of the independent auditor for fiscal year 2021.

FOR

 

3

PROPOSAL 3 — Advisory Approval of Named Executive Officer Compensation

16

 

The Company’s executive compensation program is designed to create a direct linkage between shareholder interests and Management, with incentives specifically tailored to the achievement of financial and operational goals and total shareholder returns.

FOR

 

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

Any statements included in this proxy statement which pertain to future financial and business matters are “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. The Company uses words such as “anticipates”, “believes”, “expects”, “future”, “intends”, “plans”, “targets”, and similar expressions to identify forward-looking statements. Any such statements are based on the Company’s current expectations and are subject to numerous risks, uncertainties, and other unpredictable or uncontrollable factors that could cause future results to differ materially from those expressed in the forward-looking statements including, but not limited to, the impacts of the COVID-19 pandemic, changes in industry, business, market, and economic conditions, demand for or pricing of its products, market growth rates, and currency exchange rates. In light of these risks, uncertainties, and other factors, the forward-looking matters discussed in this proxy statement may not occur and readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date of this proxy statement and Glatfelter undertakes no obligation, and does not intend, to update these forward-looking statements to reflect events or circumstances occurring after the date of this proxy statement, except as may be required by law. More information about these factors is contained in Glatfelter’s filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available at www.glatfelter.com.

 

 

2021 PROXY STATEMENT  1

 


PROXY SUMMARY

 

 

 

Core Values: Who We Are and What We Stand For

Our Core Values guide and capture the essence of the Company’s identity and culture, establishing pillars upon which to build and govern our business for the long-term.  

Our Core Values are:

Integrity

We act ethically and responsibly in all of our business endeavors at all times.

Financial Discipline

We are responsible for the prudent management of the resources entrusted to us and for the generation of financial value for all constituents.

Mutual Respect

We treat each other with honesty and respect. We recognize that what we have and what we will achieve is through the efforts of our employees.  We strive to provide them with rewarding challenges and opportunities for advancement.

Customer Focus

We are dedicated to understanding and anticipating the needs of our customers and helping them achieve their business objectives.

Environmental Responsibility

We empower employees to take personal responsibility for environmental issues that arise on the job. We strive to prevent pollution by using natural resources efficiently, reducing waste, encouraging recycling and reuse, and reducing adverse environmental impacts relating to our operations, all with the goal to foster environmental sustainability worldwide for the benefit of future generations.

Social Responsibility

We recognize our responsibility to contribute to the betterment of the communities in which we operate and the world in which we live.

 

Over the last few years, we have undertaken a strategic business transformation to become a leading global supplier of engineered materials focused on consistently meeting or exceeding our stakeholders’ expectations. We manage the business with two distinct reporting segments: Airlaid Materials and Composite Fibers – serving high-value, nonwovens growth markets. Our overall strategy is focused on growing the business through acquisitions, organic growth, supply chain effectiveness, product innovation, and sustainability. We believe these initiatives are important to achieving our goals of building an increasingly more profitable, cash-generative, and consistently performing business.

Given the combined efforts of our dedicated employees and loyal suppliers and customers, we successfully navigated a year filled with uncertainty and unexpected challenges resulting from the global pandemic.  Employee health and safety was, and continues to remain, a top priority as we maintain focus on sustaining our operations and supplying our customers with high-quality materials for producing essential consumer staples.

2021 PROXY STATEMENT  2


PROXY SUMMARY

 

 

Our Board of Directors

Our director nominees currently serve on the Board and have diverse experience spanning a broad range of industries in the public, private, and not-for-profit sectors. They bring a wide variety of skills, qualifications, and viewpoints that strengthen and enrich the Board’s ability to carry out its oversight role as fiduciaries on behalf of our shareholders.  Glatfelter—and our shareholders—clearly benefit from their individual and collective business acumen, sound judgment, informed decision-making, and careful guidance and oversight.

 

 

 

Data on the eight nominees with respect to their age, diversity and tenure on the Board is aggregated in the pie charts below.  Of the seven nominees who self-identified race and gender, two are female and one is racially diverse. We believe a diverse Board helps bring unique perspectives to the organization, and we are committed to maintaining Board diversity.

 

 

 


2021 PROXY STATEMENT  3


PROXY SUMMARY

 

 

Enhancing Everyday Life™ . . . Sustainably

Our commitment to sustainability and being a responsible corporate citizen has been longstanding. We contribute to the health, well-being, and betterment of everyday living for millions of people around the world. Our existing products contain mostly plant-based fibers and are engineered for performance.  

In 2019, Glatfelter formalized our sustainability priorities under the ESG (Environmental, Social, Governance) pillars.  Additionally, Glatfelter issued an ESG Report in 2020 to share our commitment to advancing our ESG strategy. The 2019/2020 ESG Report is available on our website at www.glatfelter.com/wp-content/uploads/GLT_2019-2020_ESG-Report_12-7.pdf.

 

 

 

 

 

We are committed to operating as a responsible steward of the environment and creating a more sustainable world for future generations. We also have a consistent record of following through on commitments to our employees and supporting the communities where we work and live.  The pursuit of our vision to be the leading global supplier of engineered materials is supported by strong governance standards, the Glatfelter Code of Business Conduct, and other governance policies and principles.

 

Human Capital Management

Our business is guided by our Board and a diverse management team comprised of leaders with extensive business and industry experience. Additional information on our leadership team is set forth in our 2020 Form 10-K under the caption “Executive Officers” and available on our website at www.glatfelter.com/about/leadership. As of December 31, 2020, we employed 2,415 people worldwide, the substantial majority of whom are skilled personnel responsible for the production and commercialization of our composite fibers and airlaid materials products. Our operations are continuous flow manufacturing with approximately 79% of our employees represented by local works councils or trade unions in the European Union, the United Kingdom, Canada, and the Philippines. 

The daily work of Glatfelter employees is rooted in the Company’s longstanding Code of Business Conduct and Core Values. Now more than ever, we see how important it is to be a good neighbor, employer, and corporate citizen, as we aim to provide current and potential employees around the globe with meaningful work, close to home.


2021 PROXY STATEMENT  4


PROXY SUMMARY

 

 

Business Highlights

Glatfelter is a leading global supplier of engineered materials headquartered in Charlotte, North Carolina. Our high-quality, innovative, and customizable solutions are found in tea and single-serve coffee filtration, and personal hygiene products as well as in many diverse packaging, home, and industrial applications. For the year ending December 31, 2020, our net sales were nearly $1 billion to customers in over 100 countries.  We own and operate ten manufacturing facilities located in the United States, Canada, Germany, France, and the United Kingdom.  Our manufacturing facilities have a combined production capacity of approximately 298,000 metric tons of composite fibers and airlaid materials used in a wide array of applications. We also operate two specialty fiber facilities in Costa Rica and the Philippines.  In addition, we operate sales and distribution offices in Russia, Italy, China, and the United States and have two global centers of excellence – one in Switzerland and one in the United States.  Additional information about Glatfelter may be found in our 2020 Annual Report posted at www.glatfelter.com/investors/financials-and-filings.

We manage our business and make investment decisions under a functional operating model with two distinct reporting segments:  Airlaid Materials and Composite Fibers.  These segments serve growing global customers and markets by providing innovative and customizable solutions that ultimately deliver high-quality engineered materials. For more than 155 years, we have developed deep partnerships with our customers and suppliers and have demonstrated a strong commitment to sustainability and environmental stewardship by broadly promoting responsible corporate citizenship in the communities in which we operate.  

Our growth strategy focuses on expanding our engineered materials business by building leading positions in high-value, specialty businesses supported by new product and business development, organic investments and acquisitions, and optimization of our cost structure to deliver on the expectations of our stakeholders.

2020 was an important year of progress for Glatfelter as we delivered 12% adjusted EBITDA growth amid a very challenging environment. Adjusted EBITDA (as defined below) is a non-GAAP measure that is reconciled in our Current Report on Form 8-K filed on February 4, 2021.

 

Our Airlaid Materials segment delivered another year of record performance with EBITDA of $68.7 million and 17.6% EBITDA margins. Shipments were down less than 1%, entirely driven by the negative impact of the pandemic on the restaurant business that affected tabletop products, which were down 32%.

2021 PROXY STATEMENT  5


PROXY SUMMARY

 

 

 

Our Composite Fibers segment delivered EBITDA of $78.3 million and EBITDA margin of 14.9%, benefiting from volume growth in most product categories.

 

We continued to optimize our product portfolio which is now comprised of approximately 85% essential consumer staples.

 

We focused on our employees’ health and safety to keep all production facilities operational during the pandemic to deliver essential products to our customers.

 

We reduced debt meaningfully, driven by adjusted EBITDA growth of 12% and strong cash flow generation. Our net debt on December 31, 2020 was approximately $214 million compared to $234 million in 2019.  Our leverage improved significantly to 1.8 times with available liquidity of approximately $275 million dollars, providing ample firepower for growth.

 

We relocated the Company’s corporate headquarters from York, Pennsylvania to Charlotte, North Carolina, which is a leading hub for the broader nonwovens industry and provides availability to a larger pool of critical resources and talent for future growth and access to more efficient business travel.  

 

Glatfelter Transformation History – Building Momentum in Engineered Materials

 

We have taken a number of meaningful steps over recent years to evolve Glatfelter from a company with significant exposure to paper markets in secular decline to a leading global supplier of engineered materials. Ultimately, the combined multi-year actions we have taken across the enterprise to achieve a more growth-driven portfolio, less capital-intensive and more cash-generative business, have positioned us well to further enhance shareholder value. We remain committed to aggressively managing costs and improving operating efficiencies to ensure we have the most competitive cost structure for our current scale as we continue to execute our business transformation. Our goals are to maintain and grow our leading positions in our chosen markets, partner with customers to co-create innovative and sustainable solutions for new markets, and generate strong earnings growth and free cash flows.

2021 PROXY STATEMENT  6


PROXY SUMMARY

 

 

2020 Financial Performance - Year in Review

 

On an adjusted basis, a non-US GAAP (as defined below) measure, our earnings for 2020 totaled $37.4 million, or $0.84 per share, compared with $33.2 million, or $0.75 per share, in 2019. These results reflect the positive momentum from the actions we have taken to transform our portfolio and sharpen our focus on commercial excellence, supply chain efficiencies, and rigorous cost optimization across the enterprise. Airlaid Materials improved earnings by $0.08 attributable to improved volume and mix of $1.4 million, a net $1.1 million benefit after the contractual pass-through of savings to customers on lower raw material prices, improved operations, and a $2.0 million benefit from foreign exchange. Driven by efficient operations of $4.0 million and a net $1.1 million benefit when combining price, volume, mix and raw material and energy price changes, Composite Fibers improved earnings by $0.07. Corporate costs were $0.02 favorable, and our debt refinancing improved earnings by $0.03. These benefits were offset by a negative impact from the tax rate which reduced earnings per share by $0.11.

 

Cash provided by operating activities totaled $109.0 million in 2020 compared with $102.8 million a year ago, which included $53.4 million of cash received in connection with the termination of our overfunded qualified pension plan. The improvement in operating cash flow reflects a $12.9 million increase in earnings before interest, taxes, depreciation, and amortization, adjusted to exclude items identified to determine adjusted earnings. The cash from operations also included benefits of $21.7 million from improved working capital usage, $20.4 million tax refund associated with the CARES Act, and $17.9 million less cash used to meet our ongoing obligations related to the settlement of the Fox River environmental litigation.  These benefits were partially offset by $17.2 million of cash used for restructuring activities, excise taxes payments on the pension asset reversion, and expenses related to strategic acquisition initiatives in 2020, among other items. Cash used for interest payments declined $4.0 million, reflecting savings from our debt refinancing in early 2019. During 2020 and 2019, capital expenditures totaled $28.1 million and $27.8 million, respectively.

The following charts present financial information for the periods indicated.  Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) by reporting segment represents operating profit as presented in our 2020 Form 10-K, adjusted to exclude depreciation and amortization (totals exclude corporate unallocated costs and other income and expense items).  A reconciliation of adjusted earnings per share to the nearest GAAP measure is incorporated by reference to Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2020 Form 10-K.

 

 

 

 

 

2021 PROXY STATEMENT  7


PROXY SUMMARY

 

 

 

 

Compensation Highlights

The Compensation Committee designs compensation programs that reflect the Company’s financial performance and are market-competitive based on a person’s responsibilities, individual performance, and ability to exemplify the Company’s Core Values (Integrity, Financial Discipline, Mutual Respect, Customer Focus, Environmental Responsibility, and Social Responsibility). The objectives of our executive compensation programs are to attract, retain, motivate, and reward executives crucial to achieving the Company’s strategic plan, and in turn, create long-term shareholder value. Given the Company’s business transformation, the retention of key talent and leadership continuity remain an important part of sustaining the momentum and business performance we achieved in 2020 and navigating the ongoing impacts from the global pandemic.

Our compensation programs are organized around three principles:

 

 

 

 

 

 

 

 

 

Pay for Performance

 

 

Pay at Risk

 

Shareholder Alignment

 

 

 

Rewarding achievement of financial outcomes that increase shareholder value

 

 

Providing a mix of compensation with strong emphasis on short- and long-term incentives tied to the Company’s financial performance

 

Requiring executives to own a meaningful personal stake in the Company

 

 

 

 

 

 

 

 

Total compensation for our executives consists of:

Base Salary

Fixed Cash

Short-Term Incentive

Cash Bonus for Achievement of Annual Goals

Long-Term Incentive

Performance Share Awards

Restricted Stock Units

 

Benefits

Retirement Savings

Health & Welfare Benefits

Severance

Minimal Perquisites

 

Given the Company’s business transformation, our Board and Compensation Committee approved the following organizational and compensation changes for 2020 to further align the Company’s compensation philosophy and executive compensation practices with shareholder expectations:

2021 PROXY STATEMENT  8


PROXY SUMMARY

 

 

 

Completed additional streamlining of the senior executive team under the functional operating model by combining Information Technology with the Global Supply Chain function, to further leverage technology, integrate core global business processes, and reduce annualized costs by approximately $0.75 million.

 

 

Expanded the talent assessment program to include newly acquired and long-tenured leaders and managers to ensure we have the skills and capabilities necessary to achieve the Company’s growth aspirations.

 

 

Relocated the Company’s corporate headquarters from York, Pennsylvania to Charlotte, North Carolina in 2020, and operationalized the office in preparation for returning employees from their home office environments when appropriate. Several key employee relocations were initiated and completed throughout the year with additional select relocations planned for 2021. Also, we successfully completed recruitment for certain professional-level roles by tapping into the diverse and expansive talent pool from the greater Charlotte metropolitan area.

 

 

Preserved several key design features in the incentive structures that are important for ensuring Management’s interests remain aligned to the shareholders based on their continued feedback:

 

 

­

Anchored the 2020 financial performance targets for the short- and long-term incentive programs to the Company’s annual budget and long-term strategic plan, respectively, which require year-over-year improvement in performance to achieve meaningful payouts. All financial performance targets were established at the start of the year and maintained with no adjustments to lower the performance targets given the impacts from the global pandemic.

 

 

­

Utilized a cumulative three-year relative Total Shareholder Return (“TSR”) modifier for earning performance shares under the Long-Term Incentive (“LTI”) plan to emphasize the long-term nature of the program and reward for outperformance versus peers.

 

 

­

Proactively assessed the Company’s compensation peer group to size-appropriate peer choices which share common industry and financial characteristics and compete for executive and employee talent. The review was conducted in 2020 and resulted in a new peer group that will be used to drive 2021 compensation decisions.

 

 

After terminating the U.S. qualified pension plan (“Retirement Plan”) and freezing the U.S. non-qualified Supplemental Executive Retirement Plan (“SERP”) in 2019, we implemented a replacement retirement program with an enhanced 401(k) benefit and a non-qualified deferred compensation plan with benefit levels that are aligned to current market practices. These combined actions effectively enabled the assets from our overfunded Retirement Plan to be used for Company contributions to the 401(k) plan for up to seven years.   In Switzerland, a defined contribution plan was implemented for all Swiss employees that provides the mandatory minimum contribution rates.    

 

2021 PROXY STATEMENT  9


PROXY SUMMARY

 

 

 

Governance and Best Practices

Comprised entirely of independent directors, the Compensation Committee regularly monitors and implements best practices in executive compensation and governance.  The following practices demonstrate our commitment to strong governance within our executive compensation programs:

What We Do

What We Don’t Do

Maintain a pay mix that is heavily performance-based.

 

 

X

Provide for excise tax gross-ups in the event of a change in control, starting with newly eligible executives in 2011.

Establish compensation levels after consideration of peer group market data, generally targeted at the size-adjusted 50th percentile for total direct compensation (base, short- and long-term incentive), with the ability to pay higher or lower based on breadth of leadership experience.

 

 

X

Backdate or reprice stock options or stock appreciation rights.

Assess and design compensation programs to mitigate compensation-related risks.

 

 

X

Pay dividend equivalents on unearned performance awards.

Maintain stock ownership guidelines for executives.

 

 

X

Permit hedging transactions or short sales.

Use multiple performance metrics in the short- and long-term incentive plans to avoid heavy reliance on one definition of success.

 

 

X

Permit pledging or holding Company stock in a margin account.

Maintain a clawback policy.

 

 

X

Provide excessive perquisites.

Require double-trigger vesting of long-term incentives in the event of a change in control.

 

 

X

Provide uncapped incentive opportunities thereby avoiding unnecessary risk-taking by the management.

Maintain holding requirements on equity grants to comply with stock ownership guidelines.

 

 

 

 

Engage with shareholders to gather input and feedback on compensation program design.

 

 

 

 

Retain an independent compensation consultant who meets regularly in executive session with the Compensation Committee.

 

 

 

 

 

2021 PROXY STATEMENT  10


 

 

 

Proposal 1: Election of Directors

 

At the Annual Meeting, the Company’s shareholders will vote to fill eight director positions, each for one-year terms expiring on the date of the Company’s 2022 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified. As of the Annual Meeting, the size of the Board will be reduced from ten members to eight due to the retirements of Nicholas DeBenedictis and Ronald J. Naples.  The Company acknowledges and thanks them for their service on the Board for over 25 and 20 years, respectively.

 

The Board recommends that shareholders vote “For” the following director nominees: Bruce Brown, Kathleen A. Dahlberg, Kevin M. Fogarty, Marie T. Gallagher, Darrel Hackett, J. Robert Hall, Dante C. Parrini, and Lee C. Stewart, each of whom is currently serving as a director of the Company.

 

All nominees have consented to serve if elected to the Board. If at the time of the Annual Meeting a director nominee is unable to serve, an event we do not anticipate, the Proxy Holders (as defined in “Frequently Asked Questions”) will vote for a substitute nominee as may be designated by the Board, unless the Board elects to reduce the number of directors accordingly.  

 

The following table highlights director nominee information(1):

 

 

 

 

 

Other
Public
Boards

 

Committee Memberships

 

Name

Age

Director

Since

Occupation

Audit 

Comp

Nom &

Gov

Bruce Brown*

62

2014

Retired Chief Technology Officer, Procter & Gamble, Inc.

1

 

 

C

Kathleen A. Dahlberg*

68

2001

CEO, G.G.I., Inc.

--

 

 

Kevin M. Fogarty*

55

2012

President, CEO, and Director, Kraton Corporation, Inc.

1

 

 

C

Marie T. Gallagher*

61

2020

SVP and Controller, PepsiCo, Inc.

--

 

C

 

Darrel Hackett*

49

2020

President, US Wealth Management - BMO Financial Group

--

 

 

J. Robert Hall*

68

2002

CEO, Ole Smoky Distillery, LLC

--

 

 

Dante C. Parrini

56

2010

Chairman and CEO, Glatfelter Corporation

1

 

 

 

 

Lee C. Stewart* (L)

72

2002

Private Financial Consultant

1

 

 

 

 

  indicates Member

*  indicates director is independent

C indicates Committee Chair

(L)  indicates Lead Director

 

 

 

The Board recommends a vote “FOR” each of the eight director nominees.

 

(1)  The Lead Director and Board Committee members and chairs rotated effective February 17, 2021.

2021 PROXY STATEMENT  11

 


PROPOSAL 1: ELECTION OF DIRECTORS

 

 

 

 

Additional Information about Director Nominees

 

 

 

 

Bruce Brown

 

 

 

 

 

 

Director Since: 2014

Mr. Brown joined the Company’s Board in 2014. He retired in 2014 from his position as the Chief Technology Officer of Procter & Gamble, Inc. (“P&G”), a publicly-traded consumer goods company. With 34 years of experience at P&G, Mr. Brown’s responsibilities included leadership for P&G’s Innovation and Technology Program and Global Research & Development. Globally recognized as an innovation thought leader, Mr. Brown currently serves on the Board of Directors for Nokia Corporate (NYSE: NOK) and formerly was a director of Medpace Holdings, Inc. (Nasdaq: MEDP) from 2016 to 2019.

Age at Annual Meeting: 62

 

  Board Committees:

Compensation (Chair)

Nominating and Corporate Governance

 

 

 

Specific qualifications and experience of particular relevance to the Company:

Mr. Brown is a proven leader in innovation, global expansion and organizational leadership development and he has familiarity with a number of the Company’s products and materials. He brings over three decades of business-building experience to our Board and has nine years of experience as a director of public companies.

 

 

 

 

 

Kathleen A. Dahlberg

 

 

 

 

Director Since: 2001

Ms. Dahlberg joined the Company’s Board in 2001. Since 2006, she has been the Chief Executive Officer of G.G.I., Inc. (formerly known as 2Unify LLC), a private company specializing in strategic consulting for companies in various industries and sectors. She served as a director of Theragenics Corporation from May 2008 to November 2013. Ms. Dahlberg has held Vice President positions with BP plc (f/k/a BP Amoco), Viacom International, McDonald’s Corporation, Grand Metropolitan PLC and American Broadcasting Company.

Age at Annual Meeting: 68

 

  Board Committees:

Audit

Nominating and Corporate Governance

 

 

 

Specific qualifications and experience of particular relevance to the Company:

Ms. Dahlberg has significant experience in emerging technologies, acquisitions and divestitures, manufacturing, consumer goods, professional services, international operations, strategic planning, operations, and risk management and corporate governance. She has more than 20 years of experience as a director of public companies.

 

 

 

 

 

Kevin M. Fogarty

 

 

 

 

Director Since: 2012

Mr. Fogarty joined the Company’s Board in 2012. He has been the President and Chief Executive Officer of Kraton Corporation, Inc. (“Kraton”), a leading global producer of styrenic block copolymers, specialty polymers and high-value performance products derived from pine wood pulping co-products, since 2008. Prior to being appointed President and Chief Executive Officer, Mr. Fogarty served as its Executive Vice President of Global Sales and Marketing from June 2005. He was named a director of Kraton (NYSE:KRA) in 2009, and a director of its principal operating subsidiary, Kraton Polymers LLC, in 2008. Prior to joining Kraton, Mr. Fogarty spent 14 years with the Koch Industries, Inc. family of companies, where he held a variety of roles, including President for Polymer and Resins at Invista and President of KoSa’s Polymer and Intermediaries business.  Since 2017, Mr. Fogarty is a Board member of the American Chemistry Council.

Age at Annual Meeting: 55

 

  Board Committees:

Compensation

Nominating and Corporate Governance

(Chair)

 

 

 

Specific qualifications and experience of particular relevance to the Company:

Mr. Fogarty has significant experience with manufacturing, international operations, strategic partnerships, public-company accounting and financial reporting and new product development, as well as strategic planning, operations, and risk management and corporate governance. He has more than ten years of experience as a director of public companies.

 

 

 

 

 

2021 PROXY STATEMENT  12

 

 

 

 


PROPOSAL 1: ELECTION OF DIRECTORS

 

 

 

 

Marie T. Gallagher

 

 

 

 

Director Since: 2020

 

Ms. Gallagher joined the Company’s Board in 2020. She has been the Senior Vice President and Controller of PepsiCo, Inc. (“PepsiCo”), a publicly-traded global food and beverage company, since 2011.  Ms. Gallagher is responsible for PepsiCo’s global financial reporting and Sarbanes-Oxley processes and works closely with the Audit Committee of PepsiCo’s Board of Directors. Ms. Gallagher joined PepsiCo in 2005 as Vice President and Assistant Controller. Prior to joining PepsiCo, Ms. Gallagher was Assistant Controller of Altria Corporate Services, Inc., a consumer products company, and Senior Manager at Coopers & Lybrand LLP, an accounting firm now part of PricewaterhouseCoopers.

Age at Annual Meeting: 61

 

  Board Committees:

Audit (Chair)

Nominating and Corporate Governance

 

 

 

Specific qualifications and experience of particular relevance to the Company:

Ms. Gallagher has significant experience in public-company accounting and financial reporting, consumer goods, strategic planning, M&A, manufacturing, investor relations, sustainability, executive compensation, information technology, innovation, international operations, and corporate governance. 

 

 

 

 

Darrel Hackett

 

Director Since: 2020

Mr. Hackett joined the Company’s Board in 2020. He has served as President, Bank of Montreal (“BMO”) Wealth Management – U.S. since 2014. In this role, he leads BMO Financial Group’s private wealth management business in the United States, including three distinct businesses across the ultra-high net worth (BMO Family Office), high net worth (BMO Private Bank) and mass affluent segments (BMO Harris Financial Advisors).  Prior to joining BMO, Mr. Hackett was a management consultant at McKinsey & Company (1999-2004). Mr. Hackett began his career as a mechanical engineer, holding a variety of roles with General Electric Company and Eastman Chemical Company.

Age at Annual Meeting: 49

 

  Board Committees:

Audit

Compensation

Specific qualifications and experience of particular relevance to the Company:

Mr. Hackett has significant experience in business transformations and corporate strategy, capital markets, investor relations, public-company finance and financial reporting, M&A, manufacturing, executive compensation, innovation, international operations, risk management and corporate governance.

 

 

J. Robert Hall

 

 

 

 

Director Since: 2002

Mr. Hall joined the Company’s Board in 2002. He has been the Chief Executive Officer of Ole Smoky Distillery LLC, the largest craft distillery in the United States, since July 2016. From January 2014 until June 2016, Mr. Hall served as a Managing Director of Centerview Capital, an operationally-oriented private equity firm focused on the U.S. consumer middle market. Previously, he was the Chief Executive Officer of Ardale Enterprises LLC (“Ardale”), a private company specializing in acquisition-related activities in the food, beverage, and consumer products industry, and in this role was a Senior Advisor to Centerview Capital since 2009. Prior to forming Ardale, Mr. Hall spent over 20 years in the food and consumer goods industry, holding various positions with Nabisco, Kraft Heinz Co., and Nestlé S.A. While at Nabisco, he was President of Nabisco’s Specialty Products Company in the United States and President of Christie Brown & Company, Ltd., the maker of Nabisco cookies and crackers in Canada. Mr. Hall has also been President of Lenox Brands, Chairman of Wise Foods and has served on the board of Ault Foods Ltd., a $1.3 billion dairy products company in Canada.

Age at Annual Meeting: 68

 

  Board Committees:

Audit

Compensation

 

 

 

 

Specific qualifications and experience of particular relevance to the Company:

Mr. Hall has significant experience in general management, financial services, consumer goods, manufacturing, marketing, sales, new product development, strategic planning, M&A, and risk management and corporate governance. Mr. Hall has 20 years of experience as a director of public companies.

 

 

 

 

 


2021 PROXY STATEMENT  13


PROPOSAL 1: ELECTION OF DIRECTORS

 

 

 

 

 

Dante C. Parrini

 

 

 

 

Director Since: 2010

Mr. Parrini joined the Company’s Board in 2010. He is currently the Chairman, President and Chief Executive Officer of Glatfelter Corporation. He has been President and Chief Executive Officer since January 2011 and Chairman of the Board since May 2011. Mr. Parrini previously served as Glatfelter’s Executive Vice President and Chief Operating Officer from 2005 until 2010. From 2003 to 2005, he was Senior Vice President and General Manager of the Company. Mr. Parrini joined Glatfelter in 1997 and, prior to 2003, held various executive positions responsible for the Company’s operations, sales, and marketing. He has served on the board of H. B. Fuller Company (NYSE: FUL) since 2012.

Age at Annual Meeting: 56

 

  Board Committees:

 

 

 

 

Specific qualifications and experience of particular relevance to the Company:

As Mr. Parrini has been with the Company for 24 years, he has valuable institutional knowledge. Mr. Parrini has significant experience leading worldwide operations, including international and domestic sales, marketing, research and development, global supply chain, information technology and corporate program management, overseeing legal and human resource functions, and leading strategy development. His more than 24 years of executive experience include nearly eleven years as a director of public companies.

 

 


 

Lee C. Stewart

 

 

 

 

Director Since: 2002

Independent Lead Director

Mr. Stewart joined the Company’s Board in 2002. He is a private financial consultant with over 25 years of experience as an investment banker. He was a Vice President at Union Carbide Corporation from 1996 to 2001, responsible for various treasury and finance functions, and from 2001 to 2002 was Chief Financial Officer of Foamex International, Inc. Mr. Stewart served as a director of the following companies:  AEP Industries, Inc. from 1996 until it was sold in 2017;  ITC Holdings Corp., a formerly NYSE-listed, electricity transmission company, from 2005 through 2016, when ITC was acquired by Fortis Inc.; Marsulex, Inc. (TSX: MLX), a chemical company, from 2000 until its sale in 2011; Momentive Performance Materials Inc., a specialty chemical company in silicone and advanced materials, from May 2013 through its successful emergence from bankruptcy in October 2014; Hexion, Inc., where he served from 2018 through its bankruptcy proceedings until its successful emergence in 2019; and Mood Media, Inc. from October 2017 until August 2020.  Mr. Stewart has over 25 years of serving as a director on public company boards. Currently, Mr. Stewart serves on the board of Essential Utilities, Inc. (previously known as Aqua America, Inc.) (NYSE: WTRG).

Age at Annual Meeting: 72

 

  Board Committees:

Audit

 

 

 

Specific qualifications and experience of particular relevance to the Company:

Mr. Stewart has significant experience with professional services, financial services, finance and banking, public-company accounting and financial reporting, strategic planning, operations, and risk management and corporate governance. Mr. Stewart has over 25 years of experience as a director of public companies.

 

 

2021 PROXY STATEMENT  14


 

 

Proposal 2: Ratification of Independent Registered Public Accounting Firm

 

 

 

The Audit Committee of the Board appointed Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for the fiscal year 2021. Deloitte audited the Company’s consolidated financial statements for the fiscal year ended December 31, 2020.

Although shareholder ratification is not required by our organizational documents or applicable law, the Board believes it is a sound corporate governance practice to seek shareholder ratification of the appointment of Deloitte. In the event the shareholders fail to ratify the appointment, the Audit Committee will reconsider whether it is appropriate to select another independent registered public accounting firm, but is not required to do so. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its shareholders.

A Deloitte representative is expected to attend the Annual Meeting. The representative will have an opportunity to make a statement at the meeting, if he or she desires to do so, and is expected to be available to respond to appropriate shareholder questions.

What did the Company pay its independent registered public accounting firm in 2019 and 2020?

For the years ended December 31, 2019, and December 31, 2020, fees paid to Deloitte by the Company were as follows:

 

2019

 

 

2020

 

Audit Fees (1)

$

2,444,969

 

 

$

2,305,936

 

Audit Related Fees (2)

$

57,318

 

 

$

137,150

 

Tax Fees (3)

$

242,905

 

 

$

469,273

 

Total Fees

$

2,745,192

 

 

$

2,912,359

 

(1)

Audit Fees – were for professional services rendered for the annual audits of the consolidated financial statements of the Company, including the audits of internal control over financial reporting, review of quarterly financial statements included in the Company's quarterly reports on Form 10-Q, and statutory audits and regulatory filings in foreign jurisdictions.  

(2)

Audit-Related Fees – were for assurance and related services reasonably related to the performance of the audit or review of the Company’s consolidated financial statements.

(3)

Tax Fees – were primarily for tax compliance, tax advice, and tax planning services, including tax planning and consultations.

All of Deloitte’s services for the Company were permissible under applicable laws and regulations.  The Audit Committee’s Audit and Non-Audit Services Pre-Approval Policy (“Pre-Approval Policy”) provides for the pre-approval of audit and non-audit services performed by Deloitte. Under the Pre-Approval Policy, the Audit Committee must pre-approve specific services, including fee levels, to be performed by the independent registered public accounting firm in a designated category (audit, audit-related, tax services and all other services). For fiscal year 2020, 100% of all Fees were approved by the Audit Committee.  The Audit Committee may delegate this authority in writing to one or more of its members, and in such case, the member or members to whom such authority is delegated must report their decisions to the Audit Committee at its next scheduled meeting.

 

The Board recommends a vote “FOR” ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm.

 

2021 PROXY STATEMENT  15


 

 

 

Proposal 3: Advisory Approval of Named Executive Officer Compensation (“Say-on-Pay” Vote)

 

 

Executive compensation is an important topic for our shareholders. At the core of our executive compensation philosophy is the belief that compensation should: (i) reflect performance; (ii) be fair, competitive, and reasonable; and (iii) be determined in a manner consistent with the Company’s long-term strategy, competitive industry practice, sound corporate governance principles, and shareholder interests. We believe our compensation program is strongly aligned with the long-term interests of our shareholders. We urge our shareholders to read the Compensation Discussion and Analysis (“CD&A”) section of this proxy statement for additional details on the Company’s compensation philosophy and objectives and the 2020 compensation of our named executive officers (“NEOs”).

Pursuant to Section 14A of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), we are asking shareholders to vote on the following resolution:

RESOLVED, that the 2020 compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.

 

As an advisory vote, the results on this proposal are non-binding. Nevertheless, the Board and the Compensation Committee value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions for our NEOs.

The Board has adopted a policy providing for annual say-on-pay advisory votes. The next vote on the frequency of the say-on-pay advisory vote will be held at our 2022 Annual Meeting of Shareholders.

The Board recommends a vote “FOR” the non-binding resolution approving the 2020 compensation paid to the NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including in the Compensation Discussion and Analysis, compensation tables, and narrative discussion.

 

2021 PROXY STATEMENT  16

 


 

 

 

Ownership of Company Stock

 

 

To the best of the Company’s knowledge, the following table sets forth information regarding ownership of the Company’s outstanding common stock as of March 15, 2021 (except as otherwise noted) by: (1) each person who is known by the Company to own beneficially more than 5% of the common stock of the Company; (2) each director, director nominee, and NEO; and (3) all directors and executive officers as a group. Except as otherwise indicated and subject to applicable community property laws, each owner has sole voting and investment powers for the securities listed. The number of shares beneficially owned by each person is determined under the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under SEC rules, all shares to which a person has the right to acquire beneficial ownership within 60 days are considered beneficially owned by that person.  

Security Ownership of Certain Beneficial Owners and Management

 

Name of Beneficial Owner

Shares

Beneficially

Owned (1)

% of

Class

BlackRock, Inc. (2)

6,783,711

15.3%

The Vanguard Group, Inc. (3)

4,499,690

10.1%

Dimensional Fund Advisors LP (4)

3,670,545

8.3%

Franklin Mutual Advisers, LLC (5)

3,558,680

8.0%

Silvercrest Asset Management Group LLC; Silvercrest L.P.; Silvercrest Asset Management Group Inc. (6)

2,423,303

5.5%

 

Name of Beneficial Owner

Position

Total

Number

of Shares

Beneficially

Owned (7)

% of

Class

 

Dante C. Parrini (b)

Chairman of the Board & Chief Executive Officer

 

396,938

 

 

*

 

Nicholas DeBenedictis(g)

Director

 

105,585

 

 

*

 

Kathleen A. Dahlberg

Director

 

82,933

 

 

*

 

Ronald J. Naples (c), (g)

Director

 

80,899

 

 

*

 

J. Robert Hall

Director

 

79,683

 

 

*

 

Lee C. Stewart

Director

 

77,933

 

 

*

 

Kevin M. Fogarty

Director

 

50,235

 

 

*

 

Bruce Brown

Director

 

40,079

 

 

*

 

Christopher W. Astley (d)

Senior Vice President & Chief Commercial Officer

 

39,182

 

 

*

 

Samuel L. Hillard

Senior Vice President & Chief Financial Officer

 

21,406

 

 

*

 

Eileen L. Beck (e)

Vice President, Global Human Resources and Administration

 

14,977

 

 

*

 

Marie T. Gallagher

Director

 

9,687

 

 

*

 

Darrel Hackett

Director

 

4,030

 

 

*

 

Wolfgang Laures

Senior Vice President, Integrated Global Supply Chain and IT

 

 

 

*

 

All directors and executive officers as a group (18 individuals)(f)

 

1,064,260

 

 

2.39%

 

 

*

indicates ownership of < 1%

 

(1)

For purposes of the table, shares of common stock are considered beneficially owned by a person if such person has, or shares, voting or investment power for such stock. As a result, more than one person may beneficially own the same security and, in some cases, the same shares are listed opposite more than one name in the table. The table includes, in some cases, shares beneficially held by spouses or minor children, as to which beneficial ownership is disclaimed. The address of each director, director nominee and NEO of the Company is c/o Glatfelter Corporation, 4350 Congress Street, Suite 600, Charlotte, NC 28209.

 

(2)

Pursuant to Amendment No. 12 to Schedule 13G filed on January 26, 2021, consists of shares beneficially owned, as of December 31, 2020, by BlackRock, Inc., a parent holding company with sole voting power over 6,701,792 shares, sole dispositive power over 6,783,711 shares, and shared voting power and shared dispositive power over 0 shares. BlackRock (Netherlands) B.V., BlackRock Advisors LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Limited and BlackRock Investment Management, LLC are subsidiaries of

 

 

2021 PROXY STATEMENT  17


OWNERSHIP OF COMPANY STOCK

 

 

 

BlackRock, Inc. that have acquired the shares reported by BlackRock, Inc. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.

 

(3)

Pursuant to Amendment No. 12 to Schedule 13G filed on February 10, 2021, consists of shares beneficially owned, as of January 29, 2021, by The Vanguard Group, Inc., an investment advisor which has sole voting power and sole dipositive power over 0 shares and 4,417,466 shares, respectively, and shared voting power and shared dipositive power over 47,764 and 82,224 shares, respectively. Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited, and Vanguard Investments UK, Limited are subsidiaries of The Vanguard Group, Inc. That have acquired the shares reported by The Vanguard Group, Inc. The address of The Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, PA 19355.

 

(4)

Pursuant to a Schedule 13G filed on February 12, 2021, consists of shares beneficially owned, as of December 31, 2020, by Dimensional Fund Advisors LP, an investment advisor with sole voting power over 3,541,933 shares, sole dispositive power over 3,670,545 shares, and shared voting power and shared dispositive power over 0 shares.  All 3,670,545 shares are owned by four investment companies registered under Section 203 of the Investment Advisors Act of 1940, to which Dimensional Fund Advisors LP furnishes investment advice. Dimensional Fund Advisors LP disclaims beneficial ownership of such shares. Dimensional Fund Advisors LP serves as investment manager for certain other commingled funds, group trusts and separate accounts. The address of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, TX 78746.

 

(5)

Pursuant to Amendment No. 2 to Schedule 13G filed on February 4, 2021, consists of shares beneficially owned, as of December 31, 2020, by Franklin Mutual Advisers, LLC, an investment advisor with sole voting power over 3,284,990 shares, sole dipositive power over 3,558,680 shares, and shared voting power and shared dipositive power over 0 shares.  All 3,558,680 shares are beneficially owned by one or more open-end investment companies or other managed accounts that are investment management clients of Franklin Mutual Advisers, LLC, an indirect wholly owned subsidiary of Franklin Resources, Inc. The address of Franklin Mutual Advisers, LLC is 101 John F. Kennedy Parkway, Short Hills, NJ 07078-2789.

 

(6)

Pursuant to Amendment No. 2 to Schedule 13G filed on February 16, 2021, consists of shares beneficially owned, as of December 31, 2020, by Silvercrest Asset Management Group LLC, Silvercrest L.P., and Silvercrest Asset Management Group Inc., investment advisors and a parent holding company or control person which have shared voting power and shared dispositive power over 2,423,303 shares and sole voting power and sole dispositive power over 0 shares.  Shares reported represent shares held by investment advisory clients of Silvercrest Asset Management Group LLC.  Silvercrest L.P. is the sole member of Silvercrest Asset Management Group LLC.  Silvercrest Asset Management Group Inc. is the general partner of Silvercrest L.P.  Each of the Reporting Persons disclaims beneficial ownership of the shares reported except to the extent of its pecuniary interest therein.  The address of Silvercrest Asset Management Group LLC, Silvercrest L.P., and Silvercrest Asset Management Group Inc.is 1330 Avenue of the Americas, 38th Floor, New York, NY 10019.

 

 

(7)

Shares beneficially owned by each owner as noted below:

 

Name of Beneficial Owner

Directly

Owned

 

Indirectly

Owned

 

Options to Acquire Stock (a)

 

Dante C. Parrini (b)

 

369,376

 

 

7,804

 

 

19,758

 

Nicholas DeBenedictis(g)

 

105,585

 

 

 

 

 

Kathleen A. Dahlberg

 

82,933

 

 

 

 

 

J. Robert Hall

 

79,683

 

 

 

 

 

Lee C. Stewart

 

77,933

 

 

 

 

 

Ronald J. Naples (c), (g)

 

77,649

 

 

3,250

 

 

Kevin M. Fogarty

 

50,235

 

 

 

 

 

Bruce Brown

 

40,079

 

 

 

 

 

Christopher W. Astley (d)

 

33,291

 

 

1,111

 

 

4,780

 

Samuel L. Hillard

 

21,406

 

 

 

 

 

Eileen L. Beck(e)

 

13,483

 

438

 

 

1,056

 

Marie T. Gallagher

 

9,687

 

 

 

 

 

Darrel Hackett

 

4,030

 

 

 

 

 

Wolfgang Laures

 

 

 

 

 

All Directors and executive officers as a group (f)

 

1,019,692

 

 

15,575

 

 

28,993

 

 

(a)

Represents the gross number of shares of common stock that would be issued upon exercise of vested stock-only stock appreciation rights (“SOSARs”) on the Record Date. As of the Record Date, the following NEOs had vested SOSARS:

 

2021 PROXY STATEMENT  18


OWNERSHIP OF COMPANY STOCK

 

 

Name

Number of Vested SOSARS

Dante C. Parrini

583,442

Christopher W. Astley

129,838

Samuel L. Hillard

63,286

Eileen L. Beck

32,097

Wolfgang Laures

N/A

 

 

(b)

Consists of 7,804 shares indirectly owned by Mr. Parrini through the Company’s 401(k) Plan.

 

(c)

Consists of 3,250 shares indirectly owned by Mr. Naples’ spouse.

 

(d)

Consists of 1,111 shares indirectly owned by Mr. Astley through the Company’s 401(k) Plan.

 

(e)

Consists of 438 shares indirectly owned by Ms. Beck through the Company’s 401(k) Plan.

 

(f)

Consists of 70,613 shares vesting within 60 days form the record date.

 

(g)

Retiring Director as of the Annual Meeting of Shareholders.

 

Equity Compensation Plan Information

The following table provides certain information as of December 31, 2020, regarding the Company’s equity compensation plans.

 

 

(a)

(b)

(c)

Plan Category

Number of securities

to be issued upon

exercise of

outstanding options,

warrants and

rights (1)

Weighted-average

exercise price of

outstanding

options, warrants

and rights (2)

Number of securities

remaining available

for future issuance

under equity

compensation plans

(excluding securities

reflected in column

(a)) (3) (4)

Equity compensation plans approved by security holders

 

2,154,065

 

 

$

20.40

 

 

 

1,899,527

 

 

Equity compensation plans not approved by security holders

 

 

 

 

 

 

Total

 

2,154,065

 

 

$

20.40

 

 

 

1,899,527

 

 

(1)

Includes 614,936 restricted stock units (“RSUs”); 456,716 performance share awards (“PSAs”); and 1,082,413 SOSARs. For purposes of this calculation, it is assumed that PSAs will be paid at 100% of target.

(2)

Weighted average exercise price is based on outstanding SOSAR prices only.

(3)

Represents the securities remaining available for issuance under the Amended and Restated Long-Term Incentive Plan.

(4)

For purposes of this calculation, it is assumed that PSAs will be paid at 100% of target.

 

2021 PROXY STATEMENT  19


 

 

Corporate Governance and Board of Directors

 

 

 

Corporate Governance Principles

 

 

The Board and Management are dedicated to effective corporate governance. The Board has adopted Corporate Governance Principles that provide a framework for the Company’s governance. The Board has also adopted a Code of Business Conduct and a Code of Business Ethics for our CEO and Senior Financial Officers. The Corporate Governance Principles are available on the Corporate Governance page of the Company’s website at www.glatfelter.com/investors/corporate-governance, which also contains the Company’s Articles of Incorporation and By-Laws, Code of Business Conduct, a list of the directors and executive officers of the Company, the charters of each of the Committees of the Board, and the Code of Business Ethics for CEO and Senior Financial Officers. Copies of these materials are available, in print at no charge, upon request to the Secretary of the Company at 4350 Congress Street, Suite 600, Charlotte, NC 28209.

 

The Company intends to satisfy the disclosure requirement for any future amendments to, or waivers from, its Code of Business Conduct or Code of Business Ethics for CEO and Senior Financial Officers by posting such information on its website.

 

 

 

 

 

Board Composition and Leadership

 

 

The Board currently consists of ten members; however, two directors, Nicholas DeBenedictis and Ronald J. Naples, will retire as of the Annual Meeting. Accordingly, the Board size will be reduced to eight members following the Annual Meeting. Each year, the Board elects one of its members to serve as Board Chair. Under the Board’s governance structure, the Board Chair:

presides at all meetings of the Board, other than executive sessions;

identifies strategic issues to be considered for the Board agenda; and

consults with directors on the development of the schedule, agenda, and materials for all meetings of the Board.

 

When considering the election of a Board Chair, the Board reviews its governance structure and the qualifications of each director and determines who is best qualified to chair the Board. The Board believes the Company and its shareholders are best served by having a Board Chair who has wide-ranging, in-depth knowledge of the Company’s business operations and the Company’s industry and who can best execute the Company’s strategic plan. Based on his extensive experience and knowledge of the Company’s operations, industry, competitive challenges, and opportunities, the Board has determined that Dante C. Parrini is the director best qualified to serve in the role of Board Chair. The Board nominated Mr. Parrini in February 2021 as Board Chair, subject to his re-election as a director at the Annual Meeting. For the foregoing reasons, the Company believes it is in the best interest of the Company and its shareholders to have combined roles of Board Chair and CEO.

 

The Board has also determined that when the same person serves as both Board Chair and CEO, the interests of the Company and the shareholders are best served by appointment of an independent Lead Director. In February 2021, the Nominating and Corporate Governance (“NCG”) Committee recommended, and the independent directors approved, Lee C. Stewart to serve as the independent Lead Director, effective on the date of the Annual Meeting, subject to his re-election as a director at the Annual Meeting. The Lead Director presides over the executive sessions of the Board and coordinates and develops the agenda for those sessions. The Lead Director communicates to the Board Chair and CEO regarding the discussions at executive sessions as appropriate. In the absence or disability of the Board Chair, the Lead Director assumes the authority of and performs the duties of the Board Chair, as provided in Section 2.18 of the Company’s By-Laws, including presiding at any Board meeting at which the Board Chair is not in attendance.

 

 

 

 

 

2021 PROXY STATEMENT  20

 


CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

 

Board Independence

 

 

The Corporate Governance Principles and the Company’s policies and procedures provide for an empowered, independent Board and the full involvement of the independent members of the Board in the Board’s operations and decision making.

As set forth in the Company’s Corporate Governance Principles, the Board has adopted the NYSE listing standards for determining the independence of directors, which require that a director not have a material relationship with the Company.

Annually, each member of the Board is required to complete a questionnaire designed, in part, to provide information to assist the Board in determining if the director is independent under NYSE rules and our Corporate Governance Principles. In addition, each director or nominee for director has an affirmative duty to disclose to the NCG Committee relationships between and among that director (or an immediate family member), the Company, and/or Management. The Board has determined the following director nominees are independent and have no material relationship with the Company: Messes. Dahlberg and Gallagher and Messrs. Brown, Fogarty, Hackett(1), Hall, and Stewart. The Board has determined Mr. Parrini, as the Company’s CEO, is not an independent director as defined under the NYSE listing standards and the Company’s Corporate Governance Principles.

 

(1)

In November 2020, the Board appointed Darrel Hackett to serve as a director.  As described on page 13, Mr. Hackett is Head of BMO U.S. Wealth Management, an affiliate of the Bank of Montreal (BMO), a leading, full-service financial services provider.  BMO Capital Markets is an analyst firm currently providing research coverage on the Company.  Prior to approving his appointment, the Board considered the potential for a conflict of interest in connection with Mr. Hackett’s employment with, and our analyst coverage by, BMO, as well as any independence issues or other potential adverse impacts as a result of appointing Mr. Hackett to the Board.

 

 

Evaluation of Board Nominees

 

 

The NCG Committee reviews all director nominations submitted to the Company, including individuals recommended by shareholders, directors, or members of Management, using the same criteria. When evaluating whether to recommend an individual for nomination or re-nomination, the NCG Committee will consider, at a minimum and in accordance with the Company’s Corporate Governance Principles, the candidate’s independence, availability to serve on the Board, knowledge, experience, skills, expertise, wisdom, integrity, business acumen, and understanding of the Company’s business environment.

Although the Company does not have a formal policy on Board diversity, the NCG Committee considers a wide variety of qualifications, attributes, and other factors in evaluating director candidates and recognizes that a diversity of viewpoints and practical experiences can enhance the effectiveness of the Board. Accordingly, as part of its evaluation of each director candidate, the NCG Committee considers how the candidate’s background, experience, qualifications, attributes, and skills meet the changing needs of the Company, and may complement, supplement, or duplicate those of other prospective candidates.

The NCG Committee reviews the qualifications of each incumbent director, including the director’s understanding of the Company’s businesses and the environment in which the Company operates, attendance and participation at meetings, and independence, including any relationships with the Company. Prior to nomination, each candidate for director must consent to stand for election, and each director nominee must agree in writing to abide by the Company’s majority voting policy.

After the NCG Committee has completed its evaluation of all director candidates, it presents a recommended slate of directors to the Board for consideration and approval. The NCG Committee also discusses with the Board any candidates considered by the NCG Committee but not recommended for election or re-election as a director.

Based on the process described above, the NCG Committee recommended, and the Board approved, to nominate eight of the incumbent directors for re-election at the Annual Meeting. These decisions were based on the individual experiences, qualifications, attributes, and skills of each candidate, including as described in the skills matrix on page 3. The NCG Committee and the Board assessed these factors in light of the Company’s business.

 

 

 

2021 PROXY STATEMENT  21


CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

 

Resignation and Majority Voting Policy

 

 

Director Nominee Irrevocable Resignation

Each person who is nominated to stand for election as director must, as a condition to such nomination, tender an irrevocable resignation in advance of the meeting for the election of directors.  Such resignation will be effective if, pursuant to the Company’s By-Laws, (a) the person does not receive a majority vote at the next meeting for the election of directors, or (b) in the case of a nominee who is an incumbent director, the Board accepts the resignation.

Majority Voting

Contested Election. In an election of directors, where the Board determines that the number of nominees exceeds the number of directors to be elected, the directors shall be elected by a plurality of the votes cast.

Uncontested Election. If in an election of directors in which the number of nominees does not exceed the number of directors to be elected, any nominee who is not an incumbent director and receives a plurality of the votes cast but does not receive a majority of the votes cast, such nominee’s resignation will be automatically accepted.  If the nominee is an incumbent director and receives a plurality but not majority of the votes cast, the NCG Committee will make a recommendation to the Board on whether to accept the director’s resignation or whether other action should be taken.  The incumbent director not receiving a majority of the votes cast will not participate in the NCG Committee’s recommendation or the Board’s decision regarding the tendered resignation.  The independent members of the Board will consider the NCG Committee’s recommendation and publicly disclose the Board’s decision and the basis for that decision within 90 days from the date of the certification of the final election results.  

A director whose resignation is not accepted by the Board will continue to serve until the next annual meeting at which he or she is up for election and until his or her successor is duly elected, or until his or her earlier resignation or removal. If a director’s resignation is accepted by the Board, or if a nominee for director who is not an incumbent director is deemed to have automatically resigned, then the Board, in its sole discretion, may fill any resulting vacancy pursuant to the Company’s By-Laws, or may amend the Company’s By-Laws to decrease the size of the Board.

 

 

Board Meetings

 

 

The Board held seven meetings during 2020. The standing committees established by the Board held a total of 17 meetings in 2020. Each incumbent director attended at least 95% of the total number of Board and Committee meetings on which he or she served in 2020; overall attendance at such meetings was 99%. Independent directors meet in regularly scheduled executive sessions (without Management), presided by the Lead Director.

Although the Company does not have a formal policy regarding director attendance at the annual meeting of shareholders, directors are strongly encouraged to attend the annual meeting of shareholders and historically have done so. All of our directors, with the exception of Mr. Hackett, who was appointed in November 2020, virtually attended the 2020 Annual Meeting of Shareholders.

 

 

Committees of the Board of Directors

 

 

Our Board has three standing committees: Audit, Compensation, and Nominating & Corporate Governance (“NCG”).  Each standing committee has its own charter, which is available, at no charge, from the Secretary or on the Company’s website at: www.glatfelter.com/investors/corporate-governance.

 

The Board determined that all members of each of the Audit, Compensation, and NCG Committees are independent as required under the current NYSE listing standards and the applicable SEC rules and regulations.

 

 

 

 

 

 

 

 

2021 PROXY STATEMENT  22

 


CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

 

 

The following chart provides a summary of each committee’s duties and responsibilities:

 

 

 

Board Committees

Committee

Responsibilities and Duties

2020 Members

2021 Members

(Eff February 17, 2021)

Meetings in 2020

Audit Committee

The Audit Committee assists the Board with oversight of the quality and integrity of the accounting, auditing, and financial reporting practices of the Company; the compliance by the Company, its directors and officers with applicable laws and regulations and its Code of Business Conduct; the independent auditor’s qualifications and independence; the performance of the Company’s internal audit function and independent auditors; and financial policies and other matters of financial significance to the Company.

Ronald J. Naples (1), (2), (3), (4)

Bruce Brown (3)

Kathleen A. Dahlberg (3)

Nicholas DeBenedictis (2), (3), (4)

Marie T. Gallagher (2), (3)

Darrel Hackett (2), (3)

Lee C. Stewart (2), (3)

 

Marie T. Gallagher (1) (2), (3)

Kathleen A. Dahlberg (3)

Nicholas DeBenedictis (2), (3) (4)

Darrel Hackett (2), (3)

J. Robert Hall (2), (3)

Ronald J. Naples (2), (3), (4)

Lee C. Stewart (2), (3)

 

 

7

Compensation Committee

The Compensation Committee is responsible for an executive compensation policy designed to support overall business strategies and objectives; attract, retain, motivate and reward key executives; link compensation with organizational performance while appropriately balancing risk and reward; align executives’ interests with those of the Company’s shareholders; provide competitive and reasonable compensation opportunities; and review and approve non-employee director compensation. The Compensation Committee also oversees the Company’s executive compensation and incentive plans. The Committee may form subcommittees and delegate authority to them as it deems appropriate; provided that any subcommittee must be solely comprised of one or more members of the Committee.

Lee C. Stewart (1)

Bruce Brown

Kathleen A. Dahlberg

Nicholas DeBenedictis (4)

J. Robert Hall

Bruce Brown (1)

Nicholas DeBenedictis (4)

Kevin M. Fogarty

Darrel Hackett

J. Robert Hall

 

7

Nominating & Corporate Governance Committee

The NCG Committee advises the Board on all corporate governance matters, monitors the Company’s compliance with corporate governance guidelines, and periodically reviews such guidelines to ensure that they are appropriate for the Company and comply with the requirements of the SEC and the NYSE. The NCG also oversees the annual self-assessment of the Board and its Committees and has oversight of the Company’s ESG strategy, risk management and compliance.

J. Robert Hall (1)

Bruce Brown

Kevin M. Fogarty

Ronald J. Naples (4)

 

Kevin M. Fogarty (1)

Bruce Brown

Kathleen A. Dahlberg

Marie T. Gallagher

Ronald J. Naples (4)

 

 

3

 

(1)    Committee Chair

(2)    Financial Expert, as defined in the applicable SEC regulations (only shown for Audit Committee)

(3)    Financially Literate within the meaning of the NYSE listing standards (only shown for Audit Committee)

(4)    Retiring Director as of the Annual Meeting of Shareholders

 

 

2021 PROXY STATEMENT  23

 

 

 


CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

 

Continuing Board Education

We believe our shareholders are best served by a board that is well versed in subject matters relevant to board service and thoroughly comprehends the role and responsibilities of an effective board in the oversight and management of the Company. The Board regularly conducts Board education sessions on relevant topics for the Company’s future growth and success and to stay informed about best governance practices.   We also feel it is appropriate for our directors to have access to educational programs on an ongoing basis to assist them in performing their duties as directors.  Since November 2017, the Company has been a member of the National Association of Corporate Directors.  This membership provides continuing education programs, research data, conferences and other resources for the Company’s directors and executives.   The NCG Committee periodically reviews and oversees orientation programs for newly-elected directors and suggests topics for continuing education programs for incumbent directors.

 

 

Board Self-Assessment

 

Our Board believes in a constructive self-assessment process as a governance best practice to improve Board performance and ensure it is functioning effectively. As required by our Corporate Governance Principles, the NCG Committee oversees an annual self-assessment of the Board and its Committees.  Each director completes a written questionnaire to gather suggestions for improvement and feedback on a range of issues related to Board and Committee effectiveness.  Outside counsel to the Board reviews the questionnaire responses and additionally conducts individual interviews with each Board member.  The feedback is aggregated and summarized by counsel, who shares the feedback with the Board and its Committees during their regularly-scheduled meetings.  Changes to Board practices, procedures, and agendas are considered and implemented in response to the feedback as appropriate.

The Board also conducts an annual review of its Corporate Governance Principles and Committee charters and recommends revisions accordingly.

 

Risk Oversight

 

The Board plays an active role in risk oversight to ensure that Company Management is taking appropriate actions to identify, evaluate, manage, and mitigate significant risks.  The Board reviews risks associated with the Company’s strategic plan and enterprise level risks annually at a strategic planning session.  Periodically throughout the year, the Board actively monitors risks associated with the Company’s strategic plan through formal business updates it receives from Management, including an annual report from Company executives on information security matters.   

The Board administers its risk oversight responsibilities by delegating certain business and governance activities to the appropriate Committee for more detailed consideration and evaluation.  In performing this oversight function, each Committee has full access to Company Management as well as the ability to engage advisors or other experts it deems necessary in the performance of its duties.  At each Board meeting, the Chair of each Committee reports to the Board on the Committee’s oversight activities.

 

The Company’s Management is responsible for identifying, evaluating, managing, and mitigating the Company’s risk exposures.  The Company manages these enterprise risks through a variety of policies, programs, committees, and internal controls designed to protect the Company’s assets, operations, and reputation, while ensuring compliance with applicable laws and regulations.

 

 

 

 

 

 

 

 

 

 

 

 

 

2021 PROXY STATEMENT  24

 


CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

 

 

The below chart summarizes the Board’s risk-governance framework:

 

 

Board of Directors

Oversees the management of risks inherent in the operation of the Company’s businesses and the implementation of its strategic plan.

Audit Committee

Compensation

Committee

Nominating and

Corporate

Governance

Committee

Management

Internal Audit

Oversees significant risks relating to accounting, foreign exchange, commodity exposures, contingent liabilities, reporting matters, cyber-security, insurance, natural disasters, environmental and ESG-related matters, regulatory requirements, compliance with laws and regulations, and the Company’s Code of Business Conduct.  Oversees the evaluation of internal control effectiveness and meets regularly with representatives of the Company’s independent auditors.

Reviews all compensation policies and procedures, including the incentives that such policies create and factors that may reduce the likelihood of excessive risk taking, to determine whether such policies present a significant risk to the Company.

 

Oversees the Company’s governance matters including the development and maintenance of the Company’s Corporate Governance Principles and related policies and provides oversight of the Company’s ESG strategy, risk management and compliance.

Oversees the implementation, execution, and evaluation of policies, procedures, programs, and internal controls designed to identify and mitigate significant risks in order to provide reasonable assurance in the protection of Company assets and achievement of its strategic plans.

Assists and advises the Company’s Management in identifying, evaluating, improving, and monitoring risk management techniques and methodologies as part of the Company’s enterprise risk management and internal control framework.  The Company’s Director, Internal Audit reports functionally directly to the Audit Committee.

 

2021 PROXY STATEMENT  25

 

 

 


CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

 

Director Compensation

 

Payments to Directors in 2020

Name (1)

Fees Earned or

Paid in Cash

($) (2)

Stock

Awards

($) (3)

Total

Bruce Brown

$

71,500

 

 

$

115,000

 

 

$

186,500

 

 

Kathleen A. Dahlberg

$

79,000

 

 

$

115,000

 

 

$

194,000

 

 

Nicholas DeBenedictis

$

80,500

 

 

$

115,000

 

 

$

195,500

 

 

Kevin M. Fogarty (4)

$

90,000

 

 

$

115,000

 

 

$

205,000

 

 

Marie T. Gallagher (5)

$

83,425

 

 

$

137,055

 

 

$

220,480

 

 

Darrel Hackett (6)

$

35,000

 

 

$

57,500

 

 

$

92,500

 

 

J. Robert Hall

$

86,000

 

 

$

115,000

 

 

$

201,000

 

 

Ronald J. Naples

$

90,000

 

 

$

115,000

 

 

$

205,000

 

 

Lee C. Stewart

$

91,000

 

 

$

115,000

 

 

$

206,000

 

 

 

(1)

Only non-employee directors receive compensation for service on the Board. Mr. Parrini does not receive compensation for his services as a director.

(2)

The amounts include annual retainer fees, meeting fees and chair fees paid in cash.

(3)

In accordance with ASC Topic 718 the amount shown for all directors, except where otherwise noted, is based on the fair market value of $14.15 per share for RSUs granted on May 7, 2020, which vest one year after the grant date. Mr. Hackett received a pro-rated grant in November for his half-year of service. The amount shown for Mr. Hackett is based on the fair market value of $14.27 per share for RSUs granted on November 1, 2020, which vest on May 7, 2021 along with the other 2020 Director grants.

(4)

Mr. Fogarty’s compensation includes a Lead Director fee paid in cash.

(5)

Ms. Gallagher was appointed in February 2020.

(6)

Mr. Hackett was appointed in November 2020.  

 

 

Non-employee directors receive compensation for their service that is designed to compensate them fairly for the time, effort and accountability required of a Board member and align their interests with our shareholders.  In making its recommendation to the Board on independent director compensation, the Compensation Committee considers the results of an analysis of director compensation provided by Meridian Compensation Partners LLC (“Meridian”), the Compensation Committee’s independent compensation consultant. Meridian conducted a competitive assessment that included a review of annual cash retainers, annual equity grants, meeting fees and committee fees compared to the Company’s compensation peer group (see page 41 regarding the Compensation Peer Group).  The results of the assessment determined that non-executive director total compensation approximates the median of the peer group, and that the Company’s pay policies are aligned with market.  

Cash Compensation

In 2020 the non-employee director compensation included the following cash fees for service:

 

Annual cash retainer fee: $70,000

 

Additional fees for those serving in role:

 

o

Audit Committee chair: $20,000

 

o

Compensation Committee chair: $15,000

 

o

NCG Committee chair: $10,000

 

o

Lead Director: $20,000

In addition to the annual retainer, non-employee directors were paid in cash $1,500 for each standing Committee meeting they attended in excess of eight meetings per year (May 1 – April 30). All accrued, but unpaid, director cash compensation payments are made twice annually, in May and November.


2021 PROXY STATEMENT  26

 

 

 


CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

Equity Compensation

In 2020, each non-employee director, except where otherwise noted below, received an annual RSU award valued at $115,000 on the grant date. Such awards fully vest, all restrictions lapse, and the shares are paid out on the first anniversary of the grant date.  During the one-year vesting period, quarterly dividends accrue in the form of additional RSUs (but are not paid until the awards vest). RSUs granted to directors will immediately vest upon a change in control and in the event of the death or disability of the director.

Ms. Gallagher was awarded the normal annual director grant, valued at $115,000, plus an additional 1,559 RSUs pro-rated for service from her appointment date in February through May 6, 2020.

Mr. Hackett was awarded 50% of the normal annual director grant, valued at $57,500, for service from his appointment date in November until his re-election at the 2021 Annual Meeting of Shareholders.  Mr. Hackett’s award fully vests, all restrictions lapse, and the shares are paid out on May 7, 2021, the first anniversary of the original 2020 director grant date.

Deferred Compensation

Pursuant to the Company’s Deferred Compensation Plan for Directors, every year, each non-employee director may elect to defer 50%, 75%, or 100% of his or her annual retainer for serving on the Board. Any fees paid to a director for attending meetings of any Board Committee or for serving as a chair may not be deferred. No deferral elections were made in 2020.

Other Benefits and Coverage

Each non-employee director is covered by the Company’s director and officer liability insurance policy, has entered into an indemnification agreement with the Company, and is covered under the Company’s travel accident insurance policy.

Share Ownership Guidelines

The Company has established share ownership guidelines for non-employee directors to enhance their alignment with shareholders’ interests. The share ownership guidelines preclude the sale of shares by a director until he or she holds shares with a value equal to five times the annual Board retainer of $70,000. Directly held shares and unvested RSUs count toward attainment of the guideline.

 

 

 

2021 PROXY STATEMENT  27

 

 

 


 

 

Enhancing Everyday Life…Sustainably

 

 Overview

Our commitment to sustainability and being a responsible corporate citizen has been longstanding since our founding in 1864. It is reflected in our Core Values of Integrity, Financial Discipline, Mutual Respect, Customer Focus, Environmental Responsibility, and Social Responsibility. We operate our business in line with those values, and we contribute to the health, well-being, and everyday living of millions of people around the world. Our existing products contain mostly plant-based fibers and are engineered for performance.  

As a result of the strategic transformation we have undertaken over the last few years, “the new Glatfelter” consists of two global operating segments – Composite Fibers and Airlaid Materials – serving high-value, niche nonwovens growth markets. To accelerate the transformation, we have implemented a leaner and more agile operating model that enables us to work across the enterprise to address areas such as supply chain effectiveness, product innovation and sustainability. We believe these initiatives are important in our transformation to a less capital-intensive business that consistently meets or exceeds our shareholders’ expectations.

Beginning in 2019, Glatfelter implemented the following measures to formalize its sustainability program under the ESG (Environmental, Social, Governance) pillars.

 

Formed a cross-functional ESG Steering Committee (co-led by the Legal and Investor Relations functions), whose primary role includes setting the sustainability/ESG strategy and providing implementation support to Glatfelter’s segments and facilities.

 

 

Published on our website a formal Sustainability Policy, which complements our existing Global Health and Safety Policy, Environmental Policy, Quality Statement, Glatfelter Code of Business Conduct, and other Corporate Governance documents, all of which are available via our website.

 

 

Conducted a materiality assessment process to identify our ESG priorities. Our process included peer and industry research, internal stakeholder interviews, an ESG Steering Committee workshop, analysis of ESG ratings and sustainability standards (most notably the Global Reporting Initiative, Sustainability Accounting Standards and U.N. Sustainable Development Goals), and application of best practices. We evaluated topics based on their potential impact on Glatfelter, our ability to impact them, and our stakeholders’ interest in the topics. We settled on seven priorities, which are organized along the E, S, and G pillars.

 

 

Updated the Sustainability section of our website to share the Glatfelter ESG strategy and vision which is available at www.glatfelter.com/sustainability.

 

 

Published a Human Rights Policy on our website at www.glatfelter.com/wp-content/uploads/GLT-Human-Rights-Policy.pdf that expanded on the human rights language already existing in our Glatfelter Code of Business Conduct.

 

 

Issued an ESG Report for 2019-2020 – “Enhancing Everyday Life™ . . . Sustainably,” to share Glatfelter’s ESG strategy and progress. The report is available on our website at www.glatfelter.com/wp-content/uploads/GLT_2019-2020_ESG-Report_12-7.pdf.

 

 

Determined the NCG Committee of the Board will have ultimate oversight of ESG for the Company, with regular reporting to the full Board.

2021 PROXY STATEMENT  28


SUSTAINABILITY

 

 

 

Glatfelter’s ESG Steering Committee includes members from Legal, Investor Relations, Human Resources, Supply Chain, Finance, Marketing/Business Development, and EHS (Environmental, Health & Safety).  The ESG Steering Committee is responsible for setting the sustainability/ESG strategy for the Company and providing implementation support to the business and individual facilities. The ESG Steering Committee currently reports to the CEO and also provides ESG updates to the Board at least bi-annually. The Board also receives an annual update on EHS progress, with more frequent updates provided in 2020 due to the COVID-19 pandemic.

Environmental Initiative

Glatfelter is committed to operating as a responsible steward of the environment and creating a more sustainable world for future generations.  As stated in our Environmental Policy, our concern for the environment guides everything we do in our business.  The Environmental Policy further reflects our commitment to comply with applicable environmental laws and regulations, practice pollution prevention, and improve our environmental performance. Instituted in 1997 as part of the ISO 14001 certification process, our Environmental Policy is the foundation for our Environmental Management Systems and reflects one of our Core Values – Environmental Responsibility.

Glatfelter delivers engineered products that perform well, use natural materials responsibly, and contribute to waste reduction in both the manufacturing process and following their end use. Our environmental pillar is focused in two areas that impact our business and where we can make a difference for our stakeholders: (1) Environmental Management; and (2) Innovation and Environmentally Responsible Products.

Environmental Management

Glatfelter’s environmental management is focused on maintaining compliance with all environmental laws and regulations in the regions where we operate, as well as developing programs and continuous improvement initiatives that address areas such as natural resource management, energy-efficient processes, waste reduction and continuous improvement.

Natural resource management: Natural materials are the most significant feedstock in our manufacturing processes.  Glatfelter has achieved Forest Stewardship Council certification at all our manufacturing facilities – maintaining a strong chain of custody to ensure that 100% of the wood fibers we use come from well-managed, sustainable forests. In addition, as the world’s top purchaser of abaca fiber, Glatfelter monitors its farmers and traders to ensure they follow local compliance requirements and Glatfelter’s Supplier Code of Conduct. We also partner with the Rainforest Alliance™ and Sustainable Agricultural Network to ensure abaca farms meet both groups’ standards for environmental, social, and economic sustainability.

Water is a significant natural resource input for our Composite Fibers business in Europe. Water is used within the manufacturing process, for equipment cleaning and in a few cases, for cooling purposes. Apart from the cooling water, all water used in our manufacturing process is recycled at least once. For water that can no longer be used in the

2021 PROXY STATEMENT  29


SUSTAINABILITY

 

 

manufacturing process, each manufacturing facility has a dedicated wastewater treatment plant to remove solids and biodegradable materials to ensure that the final effluent discharged back into the water system meets or exceeds permit requirements. We also seek to identify manufacturing efficiency measures that reduce the amount of water required. We regularly discuss water-related risks with public officials and local authorities. Our Airlaid Materials products are manufactured with a dry forming process where water is not a significant natural resource. Overall, our operations used 70.5 m3 of water per tonne of production in 2020.

Energy usage: One of the byproducts of transforming our business into a leading global supplier of engineered materials is that we have become a less-energy-intensive, lower-emissions company. Nonetheless, energy still accounts for up to 10% of our cost of goods sold, and we seek to drive efficiencies through equipment upgrades and process improvements, where feasible. Five of our European sites comply with formal energy management systems (ISO 50001) to drive energy efficiency. Our U.K. sites have improvement targets to reduce energy usage per ton as part of formal industry agreements with the government to achieve long-term energy efficiency improvements. At several of our Composite Fibers facilities, we produce a significant amount of electricity through cogeneration, which produces useful heat that can be used in the manufacturing process. A total of 64,553 megawatt hours of electricity was produced by cogeneration. In 2020, our operations consumed 1.52 megawatt hours of electricity per tonne of production. Approximately 85.8% of our consumed electricity came from the grid in 2020. We continue to look for opportunities to drive efficiencies and reduce our use of nonrenewable energy.  

Greenhouse gas emissions: We are working to lower our greenhouse gas emissions by reducing our carbon dioxide emissions and increasing our energy efficiency across our operations. In addition to using the cogeneration process and complying with ISO 50001, other efforts include participating in climate change agreements to drive improvements in efficiency and investing in more efficient equipment and processes, such as variable speed drives on motors, improved heat recovery, installation of LED lighting, and better control processes. Our greenhouse gas emissions in 2020 were 0.611 tonnes per metric tonne of production, which represents approximately a 0.8% decrease over the previous year.

Waste: Consistent with our application of Lean Manufacturing and Six Sigma principles, we view waste as an opportunity to improve efficiency and cost effectiveness, while reducing our environmental impact. We have had waste reduction and recycling success in both our Composite Fibers and Airlaid Materials segments. For example, a significant volume of off-spec material in Composite Fibers is used for lower-grade applications. In Airlaid Materials, we strive for zero waste to landfill by recycling materials and finding buyers who value our byproducts’ high-absorbency performance. We also have general business waste recycling efforts in place at our corporate headquarters and several of our major locations.

Innovation and Environmentally Responsible Products

We believe our commitment to innovation and environmentally responsible products gives us a competitive advantage in an environment of elevated sustainability awareness. We collaborate and work directly with our customers to help them achieve their sustainability goals and demonstrate their environmental commitments to their customers.

To capitalize on these opportunities, we are focused in two primary areas: (1) Helping our customers and markets appreciate the full sustainability benefits of our existing products, which are mostly plant-based; and (2) Developing new products with enhanced sustainability profiles, such as replacing oil-based plastic ingredients with plant-based materials that provide improved biodegradability and compostability.

 

 

Environmentally responsible products: Natural materials are the most significant raw material input in our products. In fact, 60% to 80% of our product content is natural cellulose fiber. The remaining materials in our products consist of a combination of binders, coatings, and adhesives – some of which are derived from petroleum products and/or are plastic-based. Environmental considerations are an ongoing part of product line discussions internally and with customers and suppliers.

Innovation: Sustainability considerations have consistently been part of every new product development program at Glatfelter. Our research and development (R&D) scientists and product developers are actively and systematically evaluating ideas for products and applications that have a smaller environmental footprint. This includes ways to further reduce the use of plastics in our finished goods, including increasing bio-based content in wipes, table-top and feminine hygiene products, and studying alternative materials for food and beverage filter media applications. Given that many of our products already have a relatively high percentage of natural content, we believe we have an advantage in developing next-generation solutions that are environmentally sustainable to further differentiate Glatfelter in the marketplace.

Glatfelter produces personal protective equipment (PPE) materials such as the inner and outer layers of face masks to protect the critical filtration layer.  When the COVID-19 pandemic hit, customer demand for these products increased and we responded by increasing production and adding capacity at several of our facilities.

 

 

2021 PROXY STATEMENT  30


SUSTAINABILITY

 

 

Social Initiative

Social Responsibility is a Glatfelter Core Value, and we have a consistent record of following through on our commitments and supporting communities where we work and live. We have three priority areas in the “S” pillar: (1) Occupational Health and Safety; (2) Product Safety and Quality; and (3) Community and Employee Engagement.

 

Occupational Health and Safety

 

We view health and safety as everyone’s responsibility and involve all employees at every level of the organization in our programs.

 

 

Safety first: Glatfelter facilities are striving to be “injury free every day” through implementation of our Global Health & Safety Policy, a focus on regulatory compliance, site-specific safety plans and safety resources/training, and an ongoing risk assessment and safety auditing program. Six of our ten manufacturing facilities and one of our specialty fiber facilities are third-party certified under the Occupational Health and Safety management standard OHSAS 18001.

 

Safety performance: We track multiple critical safety metrics, including total case incident rate (TCIR) to encourage and ensure continuous improvement and mitigation of potential safety risks. In recent years, Glatfelter’s TCIR has consistently ranked in the top quartile of safety performance in our industry.  Glatfelter’s TCIR for 2020 was 0.68, which is 9% lower than 2019 and a 22% improvement over 2018. TCIR represents the average number of work-related injuries incurred by 100 full-time employees working 200,000 hours per year (40 hours/week for 50 weeks). With every injury-free day that passes, employees return home safely to their families and we get closer to achieving world-class safety performance.

 

Product Safety and Quality

 

People around the world rely on Glatfelter’s solutions for their most important daily needs – from their morning cup of coffee or tea to the cleaning wipes used to keep their families healthy.  We take pride in our role in Enhancing Everyday Life™.

 

Compliance: Ensuring a consistent, high level of product safety and quality is critical given our leading positions in several food-grade and personal hygiene categories. Our regulatory obligations with various products include complying with requirements and guidelines from the U.S. Food and Drug Administration, U.S. Federal Trade Commission, European Union, and ISO 9001 quality standards. We conduct extensive product testing during both the development and commercialization stages, and have an ongoing program to make sure that, first and foremost, our products continue to meet or exceed product safety requirements and quality specifications. In the past two years, the Company had no product recalls due to product safety or quality concerns.

Supply chain: We partner with stable, trusted, high-quality suppliers and contractors who uphold our standards of safety and quality as outlined in Glatfelter’s Supplier Code of Conduct, and we encourage them to expect the same of their suppliers and contractors. Our questionnaire for qualifying suppliers looks at a wide variety of factors, including their safety, compliance, and quality.

Community and Employee Engagement

Glatfelter owes its success in large part to the dedication of its employees and support from the communities where we operate.  We aim to provide current and potential employees around the globe with meaningful work, close to home.

Community: Glatfelter has a long history of positively impacting our local communities and groups through philanthropy, volunteer work, and other charitable initiatives. We believe our efforts help to improve the quality of life for the communities in which we live and work, and we value the relationships we have built with government entities, community leaders, business partners, and nonprofit and volunteer organizations. We focus our support for nonprofit giving in four key areas:  Education, Civic, Environment, and Arts and Culture. Our leadership team encourages each business location to identify and support local initiatives in these four areas. As we moved our corporate headquarters in 2020 from York, Pennsylvania, to Charlotte, North Carolina, we remain committed to evaluating all aspects of our community engagement program to ensure we are having a meaningful, sustained impact in the Charlotte metropolitan community, as well as other communities and regions where we operate.

Employees: Glatfelter people are an essential component of our success and ability to drive growth and innovation. Even as our organization has undertaken substantial change in recent years, our culture and our Core Values have remained strong. We are always working to implement and integrate enterprise-level systems for talent attraction, career development, and training. We are a global company that embraces different cultures and backgrounds. Our people, including our management team, are diverse. We rely on in-country hiring for both salaried and production positions to ensure we are aligned with local laws and culture. Creating a best-in-class, globally consistent process for these

2021 PROXY STATEMENT  31


SUSTAINABILITY

 

 

employee experiences has become even more important as part of our strategic transformation and the move of our corporate headquarters to Charlotte, North Carolina.  

Training and professional growth are central to developing our workforce and driving our long-term success. Global training at Glatfelter encompasses a variety of programs, from apprenticeships and machine-specific skill development, grant-funded partnerships, Lean Six Sigma principles training, and leadership development.  Glatfelter’s Performance Management program is one of the core tools we use to provide direction, coaching, performance feedback and encouragement to motivate employees and improve overall individual and Company performance. This is done by linking employee goals, feedback, and rewards to key business objectives.

Glatfelter supports its team by providing fair wages, competitive salaries, comprehensive benefits, diverse wellness programs and other benefits to help enhance the lives of our employees. We regularly review our employee offerings to ensure we are positioned to attract, support, and retain world-class talent. The global nature of our business helps drive the inclusive corporate environment, as we regularly collaborate with colleagues who have different backgrounds, ethnicities, and world views.

 

 

Governance and Ethics Initiative

The pursuit of our vision to be the leading global supplier of engineered materials is supported by strong corporate governance standards, the Glatfelter Code of Business Conduct, and a variety of policies and principles, including a new specific policy demonstrating our commitment to human rights. Our “G” priorities are: (1) Corporate Governance; and (2) Ethics and Integrity.

 

Corporate Governance Our commitment to sustainability and responsible corporate practice begins with our Board. As discussed elsewhere in this proxy statement, our directors have a diversity of experience that spans a broad range of industries in the public, private, and not-for-profit sectors. The slate of director nominees has 25% gender diversity and 12.5% racial diversity. Five of our eight director nominees have environmental/sustainability skills and experience, and all Board members have skills and experience in corporate governance, compliance, and risk management. In 2020, the Board determined that the NCG Committee should have ultimate oversight of ESG for the Company, although each Board Committee has identified ESG responsibilities incorporated into their respective committee charters. The Board also received several reports from Management in 2020 on ESG-related matters.

Ethics and Integrity Glatfelter’s expectation is that our personal and business ethics shall be above reproach. We believe our accomplishments, as well as our prospects, are based not just on what we have done, but how we have done it. The decisions we make and why we make them are key to our continued success as a high-integrity company. The Glatfelter Code of Business Conduct aligns with our Core Values of Integrity, Financial Discipline, Mutual Respect, Customer Focus, Environmental Responsibility, and Social Responsibility and defines appropriate conduct and behaviors for our organization and conducting business. Every quarter, we provide compliance and ethics training for salaried employees. We expect, and regularly achieve, 100% participation in the training by the completion deadline, and following the training, we require our employees to pass a test with a score of 80% or better. In 2020, in response to events that highlighted the injustices and inequalities present in our society, we committed to enhancing our compliance training by adding content that focuses on respecting diversity and recognizing unconscious bias in the workplace.

As we rely more and more upon electronic systems to conduct our business, cyber-security and protection of the Company's information has grown in importance. To address the human element of data protection, our employees complete information security and compliance training annually.  Additionally, employees are subject to intermittent phishing tests throughout the year that can result in supplemental training for those who do not take the appropriate actions. 

Glatfelter has controls in place for our employees and outside partners to report and address critical concerns.  Our Integrity Helpline provides a free, anonymous, and confidential way to make a report and is available 24 hours a day, seven days a week in multiple languages to support our global population.  Concerns may also be shared directly with our Legal Department or the Board’s Audit Committee Chair.

In 2020, we officially adopted and published our Human Rights Policy on our website and Company intranet, which expanded on the human rights language that has been part of the Glatfelter Code of Business Conduct and other employment policies for years.  This policy is a recognition of our commitment to continually ensure our business and supply chain adhere to high ethical standards to protect human rights. Our Human Rights Policy covers a range of topics including safety and health, prohibition of child labor, diversity/equal opportunity, and the right to water.


2021 PROXY STATEMENT  32


 

Human Capital Management 

 

 

 Our business is guided by our Board and a diverse management team comprised of leaders with extensive business and industry experience. Additional information on our leadership team is set forth within our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “2020 Form 10-K”) under the caption “Executive Officers.” As of December 31, 2020, we employed 2,415 people worldwide, the substantial majority of whom are skilled personnel responsible for the production and commercialization of our composite fibers and airlaid materials products. Our facilities are a continuous flow manufacturing operation with approximately 79% of our employees represented by local works councils or trade unions in the European Union, the United Kingdom, Canada, and the Philippines. 

The daily work of Glatfelter employees is rooted in the Company’s longstanding Code of Business Conduct and Core Values of Integrity, Financial Discipline, Mutual Respect, Customer Focus, Environmental Responsibility, and Social Responsibility. Now, more than ever, we see how important it is to be a good neighbor, employer, and corporate citizen, as we aim to provide current and potential employees around the globe with meaningful work, close to home.

 

Employee Health and Safety

We have a well-established safety management system and ongoing employee wellness programs. The health and safety of our employees and their families have remained a top priority, and we have been diligently taking the necessary measures to protect them. This includes expanded safety, hygiene, and communication protocols throughout our facilities in response to the COVID-19 pandemic. As a result, all our facilities have remained open so that we can be part of the essential workforce supporting global response efforts to the pandemic.

We view health and safety as everyone’s responsibility and involve all employees at every level of the organization in our programs. Glatfelter facilities are striving to be “injury free every day” through the implementation of our Global Health & Safety Protocol, regulatory compliance, site-specific safety plans, safety resources and training, ongoing risk assessment, and a safety auditing program. We track multiple safety metrics, including total case incident rate (TCIR), to encourage and ensure continuous improvement and mitigation of potential safety risks. In recent years, our TCIR has consistently ranked in the top quartile of safety performance in our industry.

 

Talent Attraction, Retention and Development 

Our employees make essential contributions to our success and ability to drive growth and innovation. Even as the organization has undertaken substantial change in recent years, our vision and Core Values remain the center of our steadfast compliant culture. We are always working to enhance our human resources programs by implementing and integrating enterprise-level processes for talent attraction, career development, and training. Creating a best-in-class, globally consistent process for these employee experiences has become even more important as part of our strategic transformation and the move of our corporate headquarters to Charlotte, North Carolina.

Glatfelter’s Performance Management program is one of the core tools that provides us with the ability to excel. Through this program, we provide direction, coaching, performance feedback, and encouragement to motivate employees and improve overall individual and Company performance. This is done by linking employee goals, feedback, and rewards to key business objectives. This approach ensures we remain focused on generating value for our customers and shareholders.

Glatfelter supports its team by providing fair wages, competitive salaries, comprehensive benefits, diverse wellness programs, and other benefits to help enhance the lives of our employees. We regularly review our employee offerings to ensure we are positioned to attract, support, and retain world-class talent.

 

Employee Training

Training and professional growth are central to developing our workforce and driving long-term success for our organization. Global training encompasses a variety of programs, from apprenticeships and machine-specific skill development, grant-funded partnerships, Lean Six Sigma principles training, leadership development, and compliance training. To ensure we continue to have the necessary resources with the skills needed to support the production of increasingly sophisticated engineered materials, we invest in the development of skills required to operate our machinery, including operational apprenticeship programs in many of our global locations.

2021 PROXY STATEMENT  33


HUMAN CAPITAL MANAGEMENT

 

 

Diversity and Inclusion

We are a global company that encourages and embraces different cultures and backgrounds. Our employees, including our management team, are diverse. Our facilities hire locally for leadership positions, as well as salaried and production positions at all levels. We strive to create an inclusive culture and provide opportunities for people of all backgrounds to share their unique viewpoints and contribute to our success. The global nature of our business helps drive our inclusive corporate environment, as we regularly collaborate with colleagues who have different backgrounds, ethnicities, and world views.

We are committed to ensuring our Company is diverse and an inclusive place to work, while also strengthening the communities in which we live. To reflect this commitment, in June 2020, we announced the following actions:

 

Develop plans to advance our diversity aspirations that further enrich the Glatfelter culture and build a workforce that more closely resembles the global markets we serve;

 

Enhance our current compliance training by adding content that brings a focus to diversity and unconscious biases existing in the workplace; and

 

Allocate 25% of our annual charitable giving budget to support community partners whose missions address social inequities and racial injustice.

Supporting Our Communities

Through philanthropy and volunteerism, Glatfelter positively impacts many communities and groups across our footprint. We believe that supporting our communities not only involves financial contributions, but also extends to partnering with community organizations, giving time and talent to those who need our help and supporting causes important to Glatfelter people. We focus our support for nonprofit organizations in four key areas:

 

1.

Education: We encourage the development of knowledge for individuals and application of knowledge for the betterment of society.

 

2.

Civic: We engage in challenges and opportunities that impact the local community, and, where possible, we find opportunities to lead by example.

 

3.

Environment: We support programs that protect and conserve the natural environment, including critical habitats and waterways.

 

4.

Arts and Culture: We recognize the importance of experiences with culture and the arts and help enhance the participation and exposure for local programs.

The Glatfelter leadership team encourages each site to identify and support local initiatives in these four key areas. Employees are encouraged to participate in Glatfelter’s Charitable Giving program and request support for local nonprofit organizations that are important to them and reflect the Company’s Core Values and community priorities.

In 2020, Glatfelter recorded donations of approximately $145,000 to 24 organizations in communities where we operate and whose mission is aligned to the four key areas. An additional $40,000 was donated to three non-profits with social justice missions.

In the Philippines, we facilitate an abaca sustainability initiative aimed at improving people’s lives. Since its inception, the program has offered agricultural education, training, and certification coordination for hundreds of local farmers, and it has established and supported a women’s handicraft group. Glatfelter’s Philippines team has also donated water, food, and personal hygiene supplies to the Marawi Relief Operation and Relief Center.

As we moved our corporate headquarters to Charlotte in 2020, we are committed to evaluating all aspects of our community engagement program. This includes ensuring we can have a meaningful, sustained impact in the Charlotte metropolitan community, as well as enhancing the level of engagement at all Glatfelter locations.

 

 

2021 PROXY STATEMENT  34


 

 

Executive Compensation

 

Compensation Discussion and Analysis

 

INTRODUCTION

 

 

This Compensation Discussion and Analysis (“CD&A”) describes the Company’s executive compensation philosophy and programs, the 2020 compensation decisions made by the Compensation Committee and the factors influencing its decisions.  

 

The CD&A focuses on the compensation of the following 2020 named executive officers (“NEOs”):

Dante C. Parrini, Chairman of the Board and Chief Executive Officer (“CEO”)

Samuel L. Hillard, Senior Vice President (“SVP”), and Chief Financial Officer (“CFO”)

Christopher W. Astley, Senior Vice President (“SVP”), and Chief Commercial Officer

Wolfgang Laures, Senior Vice President (“SVP”), Integrated Global Supply Chain and Information Technology

Eileen L. Beck, Vice President (“VP”), Global Human Resources and Administration

 

 

SAY-ON-PAY VOTE

 

 

 

An advisory shareholder vote on the Company’s executive compensation practices (“Say-on-Pay”) was held at the 2020 Annual Meeting of Shareholders, with over 94% of the shares voting in favor of the Company’s NEO compensation. The Compensation Committee built upon the actions taken in 2018 and 2019 by continuing to evaluate the Company’s executive compensation programs to ensure alignment with the Company’s long-term strategy and shareholder expectations.

 

EXECUTIVE SUMMARY

 

2020 Year in Review

 

2020 was a very productive year for the Company as discussed in the Business Highlights section on page 5. The Company performed very well due in large part to the dedication of our employees, suppliers, and customers, during a difficult and demanding year caused by the impacts of the COVID-19 pandemic. Our functional operating model proved beneficial in managing our global workforce through the pandemic by enabling the Company to quickly identify and mobilize best practices for protecting the health of our employees and their families. We successfully maintained all mill operations and produced an uninterrupted supply of high-quality products as part of the essential workforce supporting global response efforts to the pandemic. These efforts, along with an unwavering focus on delivering strong financial performance, expanding new product innovation, and achieving world-class safety through effective operational excellence, contributed to the Company's performance in 2020.

The Board and Compensation Committee, in conjunction with management, leveraged the Company’s ongoing business transformation and events from 2020 to further align the organizational structure and Human Resources programs with market-competitive offerings aimed at ensuring the programs remain relevant and cost-competitive.

The actions taken resulted in several meaningful outcomes.    

2021 PROXY STATEMENT  35


EXECUTIVE COMPENSATION

 

 

 

Completed additional streamlining of the senior executive team under the functional operating model by combining Information Technology with the Global Supply Chain function, to further leverage technology, integrate core global business processes, and reduce annualized costs by approximately $0.75 million.

 

 

Expanded the talent assessment program to include newly acquired and long-tenured leaders and managers to ensure we have the skills and capabilities necessary to achieve the Company’s growth aspirations.

 

 

Relocated the Company’s corporate headquarters from York, Pennsylvania to Charlotte, North Carolina in 2020, and operationalized the office in preparation for returning employees from their home office environments when appropriate.  Several key employee relocations were initiated and completed throughout the year with additional select relocations planned for 2021. Also, we successfully completed recruitment for certain professional-level roles by tapping into the diverse and expansive talent pool from the greater Charlotte metropolitan area.  

 

 

Preserved several key design features in the incentive structures that are important for ensuring management’s interests remain aligned to the shareholders based on their continued feedback:

 

 

-

Anchored the 2020 financial performance targets for the short- and long-term incentive programs to the Company’s annual budget and long-term strategic plan, respectively, which require year-over-year improvement in performance to achieve meaningful payouts. All financial performance targets were established at the start of the year and maintained with no adjustments to lower the performance targets given the impacts from the global pandemic.

 

 

-

Utilized a cumulative three-year relative Total Shareholder Return (“TSR”) modifier for earning performance shares under the Long-Term Incentive (“LTI”) plan to emphasize the long-term nature of the program and reward for outperformance versus peers.

 

 

-

Proactively assessed the Company’s compensation peer group to size-appropriate peer choices which share common industry and financial characteristics and compete for executive and employee talent. The review was conducted in 2020 and resulted in a new peer group that will be used to drive 2021 compensation decisions.

 

 

After terminating the U.S. qualified pension plan (“Retirement Plan”) and freezing the U.S. non-qualified Supplemental Executive Retirement Plan (“SERP”) in 2019, we implemented a replacement retirement program with an enhanced 401(k) benefit and a non-qualified deferred compensation plan with benefit levels that are aligned to current market practices. These combined actions effectively enabled the assets from our overfunded Retirement Plan to be used for Company contributions to the 401(k) plan for up to seven years.   In Switzerland, a defined contribution plan was implemented for all Swiss employees that provides the mandatory minimum contribution rates.    

 

2021 PROXY STATEMENT  36

 

 

 

 


EXECUTIVE COMPENSATION

 

 

 

2020 Compensation Overview

The elements of our executive compensation programs for 2020 included base salary, short- and long-term incentives, and other benefits, as summarized in the following table:

 

Primary Elements of Compensation

Element

Form

Relation to Performance

Base Salary

Fixed Cash

Reflects each executive’s performance, responsibilities, skills, and value to the Company

Short-Term Incentive (“STI”)

Annual Cash Bonus (Management Incentive Plan)

Variable pay motivates and rewards executives for achieving annual financial results

Long-Term Incentives (“LTI”)

Performance Share Awards (“PSAs”)

Variable pay motivates and rewards executives for achieving cumulative business and financial results derived from the Company’s strategic plan; directly aligns Management’s interests with shareholders’ interests

Restricted Stock Units (“RSUs”)

Promotes retention of key executives that is aligned with Company stock price and supports execution of the Company’s strategic plan

Other Benefits

401(k) plan, non-qualified deferred compensation plan, health and welfare benefits, severance arrangements and minimal perquisites

Market-competitive offerings to attract and retain high-caliber executive talent

 

 

 

2020 CEO Compensation Highlights

Each year, the Board conducts an annual performance evaluation of the CEO’s performance for the prior business cycle. Mr. Parrini’s base salary was increased for 2020 consistent with benchmarking and based on his ongoing leadership in transforming the business and successfully delivering the Company’s performance. Mr. Parrini’s short-term incentive plan payout for 2020 was earned at 128% of target based on the Company’s attainment of the combined Operating Net Income (“ONI”) and Free Cash Flow performance goals described on page 44.

Mr. Parrini received a modest salary adjustment but no change in target annual short-term incentive or long term incentive opportunity. The FY 2020 long-term incentive award opportunity is comprised of 60% performance PSAs and 40% time-based RSUs.  The PSAs will vest based on performance goals tied to Return on Capital Employed (“ROCE”), Earnings Before Interest Depreciation and Amortization (“EBITDA”), and a cumulative three-year relative TSR modifier.  The RSUs cliff vest at the end of a three-year period.

As part of the corporate headquarters relocation to Charlotte, North Carolina, Mr. Parrini initiated the early stages of his relocation benefits, which will continue into 2021 given the ongoing impacts from the COVID-19 pandemic.

 

2020 NEO Compensation Overview and Highlights

 

 

In 2020, we continued to align senior leadership to focus on driving growth and sustainable profitability while simultaneously integrating the Company’s global supply chain to further enhance operational excellence. As a result, the Chief Information Officer role was eliminated, and Information Technology was combined with Supply Chain. Wolfgang Laures was promoted to the role of SVP, Integrated Global Supply Chain and Information Technology.

The NEOs received the following compensation and benefits, with short- and long-term incentives linked to Company performance:

 

Base salaries: Salary increases were awarded effective February 1, 2020, consistent with benchmarking and in acknowledgement of the executive’s role in driving the Company’s business transformation. Mr. Laures received a salary increase in July 2020 in connection with his promotion and expanded responsibilities.  

 

Short-term incentive awards payable under the Management Incentive Plan (“MIP”): The NEOs’ annual incentives under the MIP were contingent on the achievement of ONI and Free Cash Flow to encourage the executives to focus on earnings and cash flow generation at the corporate level.  

 

-

Individual STI target bonus opportunities were unchanged for 2020.

2021 PROXY STATEMENT  37

 

 

 

 


EXECUTIVE COMPENSATION

 

 

 

 

-

The combined result for corporate Operating Net Income and Free Cash Flow yielded a payout of 128% based on the Company’s over-attainment of the performance targets established by the Compensation Committee at the start of 2020.

 

Long-term incentives (“LTI”): The Company provided all NEOs with market-competitive equity awards tied to long-term performance measures derived from the Company’s strategic plan. A key design feature of the award includes a three-year relative cumulative TSR modifier that applies at the end of the performance period. The long-term incentive program (“LTIP”) is primarily performance-based.  Under the annual LTIP grants, 60% of a NEO’s equity value (at target) is awarded in PSAs tied directly to the achievement of ROCE and EBITDA goals.  The remaining value (40%) is awarded in time-vested RSUs.  

 

-

PSAs have a three-year vesting period and provide an opportunity to receive shares of Company common stock contingent upon the achievement of two-year performance goals tied to ROCE and cumulative EBITDA and excluding unusual items.  A three-year relative cumulative TSR modifier relative to the S&P Small Cap 600 Index is applied at the end of the performance period.  

 

-

RSUs cliff vest at the end of a three-year vesting period based on continued service and are designed to promote retention and provide motivation to increase share value.

 

-

For the PSAs granted in 2018, a payout of 31.0% of target was achieved based on performance comprised of a two-year average ROCE and cumulative EBITDA for the period ended December 31, 2019.  A three-year relative TSR modifier applies to the PSAs granted in 2018 based on relative TSR performance through December 31, 2020, and the PSAs required service through December 31, 2020 for vesting. No modification to the earned performance shares was warranted based on the three-year relative TSR outcome. The final payout percentage for the PSAs granted in 2018 was 31.0% of target.

 

Retirement Programs:

 

-

In conjunction with the termination of the U.S. qualified Retirement Plan in 2019, the Company  enhanced retirement benefits for all eligible U.S. participants in the  qualified 401(k) plan, which includes a discretionary Company contribution on eligible earnings (base salary and earned annual short-term incentive). The Company contribution for 2020 was 11% of earnings, capped at the required Internal Revenue Code limits; and administered consistent with Internal Revenue Code requirements for allocating excess pension assets received by the 401(k) plan upon termination of the Company’s Retirement Plan.

 

-

Effective January 1, 2020, the Company implemented a non-qualified deferred compensation plan (the “NQDCP”) that aligns with contemporary market practice, to replace the SERP that was frozen effective December 31, 2019. Accrued benefits from the frozen SERP were converted to opening balances under the new NQDCP as of January 1, 2020, which will be credited with a market rate of interest (Moody’s Aa bond yield) until distribution. The opening balance, with interest, will be paid after separation from service in the same form that the SERP benefit would have been paid. This plan coordinates with the Company’s 401(k) plan and participants will receive a Company contribution of up to 7% on earnings in excess of the annual Internal Revenue Code earnings limit.

 

-

In Switzerland, a defined contribution plan was implemented for all Swiss employees, which provides the mandatory minimum contribution rates based on age, paid 50% by the employer and 50% by the employee.

 

Relocation Benefits: In 2020, the Company operationalized the renovation of the corporate headquarters office in Charlotte, North Carolina and commenced the relocation of several senior executives. Mr. Hillard completed his relocation to Charlotte toward the end of 2020. Messrs. Parrini and Astley initiated the early stages of their individual relocations, which will continue into 2021 due to certain disruptions in the real estate market caused by COVID-19.  Prior to commencing employee relocations to Charlotte, the Compensation Committee reviewed the Company's relocation program to ensure it was aligned to market.

 

Additional details regarding the compensation programs are included in the Compensation Programs and Elements of Compensation and followed by the Target Pay Mix sections of the CD&A.

 

2021 Incentive Plan Design Changes

For the upcoming 2021 compensation planning cycle, the Compensation Committee determined to change several key design elements of the short- and long-term incentive programs to ensure the programs remain aligned to the interests of

2021 PROXY STATEMENT  38

 

 

 

 


EXECUTIVE COMPENSATION

 

 

stakeholders and tied to the Company’s annual operating budget for the short-term incentive plan, and the three-year strategic plan for the long-term incentive plan. The Compensation Committee’s decisions were guided by input from its compensation consultant and included a review of market practices. The changes in the design of the programs are tailored to the achievement of financial and operational goals and total shareholder returns. Changes to the programs are highlighted below.

 

 

 


2021 PROXY STATEMENT  39

 

 

 

 


EXECUTIVE COMPENSATION

 

 

COMPENSATION PROGRAMS

 

Compensation Program Objectives

The objectives of the Company’s executive compensation programs are to attract, retain, motivate, and reward those executives crucial to the success of the Company and to create long-term shareholder value. 

 

Our programs are organized around three principles:

 

 

 

 

 

 

 

 

 

Pay for Performance

 

Pay at Risk

 

Shareholder Alignment

 

 

 

Rewarding achievement of financial outcomes that increase shareholder value

 

 

Providing a mix of compensation with strong emphasis on short- and long-term incentives tied to the  Company’s financial performance

 

Requiring executives to own a meaningful personal stake in the Company

 

 

 

 

 

 

 

 

 

 

Overview

 

The Compensation Committee believes compensation should reflect the Company’s financial performance and be competitive based on a person’s responsibilities, individual performance, and ability to exemplify the Company’s Core Values of Integrity, Financial Discipline, Mutual Respect, Customer Focus, Environmental Responsibility, and Social Responsibility.  The Compensation Committee recommends approval of the Company’s compensation philosophy to the Board and oversees the compensation programs for the NEOs and other executive officers of the Company.  All compensation decisions impacting the Chief Executive Officer are approved by the Compensation Committee and require the ratification and approval of the independent members of the Board.

Total compensation for the NEOs and other Company executive officers consists of base salary, short-term and long-term incentives, retirement and other benefits, and minimal perquisites.  The Company’s executive compensation programs generally target total compensation at the size-adjusted 50th percentile of the peer group.  A significant portion of each NEO’s compensation is tied to the Company’s financial performance.  The opportunity to earn incentive compensation, and the level of pay at risk, generally increases commensurate with the NEO’s level of responsibility.

The Compensation Committee reviews the incentive plans annually, as discussed in the Risk Oversight section of this proxy statement, to determine whether they present undue risk to the Company.

 

 

2021 PROXY STATEMENT  40

 


EXECUTIVE COMPENSATION

 

 

Determination of Compensation Levels

The Compensation Committee seeks input from certain NEOs, external advisors and other Company executives when determining compensation decisions.  Specifically:

 

The Compensation Committee retains an independent compensation consultant (“Consultant”) that regularly meets with the Compensation Committee in executive session to provide advice, information and analysis on executive compensation and benefits.

The Compensation Committee confers with the Consultant, the CEO, the CFO, and the Vice President of Global Human Resources and Administration to design compensation programs and obtain background on the Company’s key financial objectives, metrics, and performance, and design of the Company’s short- and long-term incentive compensation programs.

Compensation decisions pertaining to the CEO are ratified by the independent members of the Board, based on recommendations by the Compensation Committee and guidance from the Consultant.

Compensation decisions pertaining to the NEOs, other than the CEO, are made by the Compensation Committee with consideration of recommendations from the CEO and guidance from the Consultant.

The Company’s legal counsel and Human Resources staff provide legal, governance, and technical input to the Compensation Committee with oversight by the Consultant.

The Compensation Committee may invite NEOs or other executive officers to attend portions of its meetings; however, the Compensation Committee meets in executive session alone and with and without the Consultant to reach final decisions regarding NEO compensation.

To assist with reviewing NEO compensation, the Compensation Committee considers market benchmark data, pay history, tally sheets, vested and unvested equity holdings, and required share ownership.  The Compensation Committee uses this information, in addition to market compensation data, individual and Company performance, and the Company’s succession planning when making compensation decisions for each NEO.

 

Consistent with the prior year, the Compensation Committee continued to retain the services of Meridian as the Consultant during 2020. 

The role of the Consultant is to assist with:

 

providing competitive compensation market data

 

assessing the competitiveness of the executive compensation programs

 

making recommendations regarding program design based on prevailing market practices and business conditions

 

advising the Compensation Committee on:

 

-

the level of each NEO’s compensation

 

-

composition of the compensation peer group

 

-

incentive plan performance metrics and design

 

-

external trends and regulatory developments

 

-

revisions or additions to the Company’s executive compensation policies

 

-

Say-on-Pay guidance and input

 

Compensation Peer Group and Benchmarking Process

 

To determine market levels, the Company targets the size-adjusted 50th percentile of the Company’s peer group companies (“Compensation Peer Group”), and the Compensation Committee reviews target total compensation for similarly situated executives from the Compensation Peer Group where data is available, as well as from multiple nationally-recognized compensation survey sources including:

 

 

William H. Mercer’s Executive Compensation Database

2021 PROXY STATEMENT  41

 


EXECUTIVE COMPENSATION

 

 

 

 

Willis Towers Watson’s Executive Compensation Database

A market analysis is performed annually for the CEO and CFO and biennially for the remaining executives unless market conditions warrant a market study for additional executive roles for the year.  For 2020 compensation decisions, the market review included the total compensation of the CEO and CFO and all other NEOs.

The Compensation Committee annually reviews the Company’s Compensation Peer Group to establish a relevant and appropriate peer group size. 

The Compensation Committee believes the historical Compensation Peer Group was appropriate for 2020 given the Company’s ongoing business transformation as it consists of companies within a reasonable revenue range (subject to size-adjusting) in the paper, packaging, and forest products industries.  In selecting peer companies, the Compensation Committee targets consistency in the Company’s Compensation Peer Group to ensure it continues to reflect companies within its industry for which the Company competes for talent.

Recognizing that the median annual revenue of the Company’s Compensation Peer Group is greater than the Company’s annual revenue, the Company targets the size-adjusted revenue at the 50th percentile through regression analysis to determine appropriate market levels in setting competitive pay.  The Compensation Committee believes the methodology of benchmarking pay to regressed peer compensation levels is a widely accepted and appropriate methodology.

 

The following is a list of companies included in the historical Compensation Peer Group:

 

Historical Compensation Peer Group

    Aptar Group, Inc.

Neenah Inc.

    Avery Dennison Corp.

Packaging Corp. of America

    Bemis Company Inc.

Potlatch Corp.

    Clearwater Paper Corp.

Rayonier, Inc.

    Domtar Corp.

Resolute Forest Products, Inc.

    Graphic Packaging Holding Co.

Schweitzer-Mauduit International, Inc.

    Greif, Inc.

Silgan Holdings, Inc.

    KapStone Paper & Packaging Corp.

Sonoco Products Co.

The Compensation Committee proactively reassessed the Company’s peer group in preparation for the 2021 compensation cycle and made changes appropriate to the current market. The new peer group is comprised of size-appropriate peer companies that share common industry and financial characteristics and compete with the Company for executive and employee talent.

The Compensation Committee intends to use the following list of companies to establish 2021 compensation decisions:

 

Current Compensation Peer Group

    Aptar Group, Inc.

Neenah Inc.

    Balchem Corporation

PotlatchDeltic Corporation

    Clearwater Paper Corp.

Quaker Chemical Corporation

    GCP Applied Technologies Inc.

Rayonier Advanced Materials Inc.

    H.B. Fuller Company

Rayonier, Inc

    Innospec, Inc.

Resolute Forest Products, Inc.

    Kaiser Aluminum Corporation

Schweitzer-Mauduit International, Inc.

    Lydall, Inc.

Tredegar Corporation

    Mercer International Inc.

Verso Corporation

    Myers Industries, Inc.

 

2021 PROXY STATEMENT  42

 

 

 


EXECUTIVE COMPENSATION

 

 

 

TARGET PAY MIX

 

 

Annually, the Compensation Committee reviews the mix of base salary, STI and LTI, which comprises total target direct compensation, for each NEO to ensure an appropriate level of the executives’ recurring target compensation is tied to Company performance.  The Compensation Committee believes this approach is appropriate to provide year-over-year consistency in analyzing the pay mix when compared to the peer group.

The targeted pay mix of compensation varies for each NEO with an average of 58% of target pay considered at-risk for the NEOs (excluding the CEO).  This average does not include one-time equity grants, retirement, or other benefits.  Mr. Parrini has the greatest level of STI and LTI opportunity, with 73% of his total target direct compensation considered at-risk.  The Compensation Committee believes this level is appropriate for Mr. Parrini given his responsibility as CEO to deliver and sustain shareholder value.

 

 

 

 

 

 

 

 

 

Base Salary

 

The Compensation Committee believes base salary, which contributes to the Company’s compensation objectives of attracting and retaining talented executives, is an important element of compensation.  The base salaries of the NEOs are approved annually by the Compensation Committee and, in the case of the CEO, ratified by the independent members of the Board.  The Compensation Committee considers several factors, without any assigned relative weightings, when determining base salary increases for NEOs:

 

 

Salary recommendations from the CEO for the NEOs other than himself

 

Company and individual NEO performance

 

The accountability and complexity of the NEO’s role in attaining Company objectives

 

The external competitiveness of the NEO’s compensation

 

Executive succession planning

 

Internal equity and retention considerations

 

In 2020, salary increases were awarded effective February 1, 2020, and were consistent with benchmarking. The Compensation Committee believes that the 2020 salary increases were appropriate when compared to market, and in light of the NEOs’ roles and the value they provide in driving the overall business transformation.  Mr. Laures also received a salary increase on July 1, 2020 in connection with his promotion and expanded responsibility as SVP, Integrated Global Supply Chain and Information Technology.

 

 

NEO Base Salaries (Annualized)

 

NEO

 

New Base Salary

eff. 2/1/2019

 

 

New Base Salary

eff. 2/1/2020(1)

 

% change

 

Parrini

 

$

998,212

 

 

$

1,018,176

 

2.0%

 

Hillard

 

$

375,000

 

 

$

401,250

 

7.0%

 

Astley

 

$

426,000

 

 

$

438,780

 

3.0%

 

Laures(2)

 

$

408,560

 

 

$

448,089

 

9.7%

 

Beck

 

$

309,000

 

 

$

315,180

 

2.0%

 

 

(1)

Mr. Laures received a salary increase effective July 1, 2020 for promotion to SVP, Integrated Global Supply Chain and Information Technology.

 

 

(2)

Mr. Laures’s salary was paid in CHF’s and converted to USD using an exchange rate of 1.064 $/CHF. Effective February 1, 2020 Mr. Laures’s base was 393,585 CHF and effective July 1, 2020 his base salary increased to 421,136 CHF, respectively.

 

 

2021 PROXY STATEMENT  43

 

 

 


EXECUTIVE COMPENSATION

 

 

 

Short-Term Incentives: The Management Incentive Plan

 

The Company provides an annual STI bonus opportunity to the NEOs under the Company’s MIP.  The Compensation Committee approves a target bonus for each NEO expressed as a percentage of the NEO’s base salary.  The Compensation Committee establishes target bonuses for the NEOs at the 50th percentile of the Company’ Compensation Peer Group.  There were no changes to NEO target bonuses for 2020.

2020 NEO target bonus opportunities were as follows:

 

NEO MIP Target Bonus

 

NEO

2019 Target Bonus

(as a percentage of 2019

Base Salary)

 

2020 Target Bonus

(as a percentage of 2020

Base Salary)

 

Parrini

100%

 

100%

 

Hillard

60%

 

60%

 

Astley

55%

 

55%

 

Laures

55%

 

55%

 

Beck

50%

 

50%

 

In February each year, the Compensation Committee, in consultation with the Audit Committee Chair, determines the degree to which the pre-established MIP performance metrics have been met.  The Compensation Committee then decides whether to award bonuses to the NEOs, and at what level.  The amount ultimately earned by the NEOs depends on the achievement of performance metrics.  The Compensation Committee may in its discretion adjust downward any bonus of a NEO or other executive based on its judgment of management’s achievement of the financial outcomes.  Any downward adjustment to the CEO’s bonus requires ratification and approval by the independent members of the Board.  

 

For 2020, the Compensation Committee adopted a MIP design generally consistent with the design used in 2019 with a floor of 80% achievement of target performance which pays 50% of the target award and a ceiling of 140% achievement, which pays 200% of the target award. Performance below threshold levels results in a zero payout.  In an effort to reinforce the transition to the functional model, the Compensation Committee aligned all senior executive officers to the same performance metrics in 2020.

 

The 2020 MIP incorporated the following metrics for our NEOs:

Operating Net Income (“ONI”) – (weighted 80%) ONI is defined as net income determined in accordance with accounting principles generally accepted in the United States (“US GAAP”), the cost of strategic initiatives, and certain other items as specified by the Compensation Committee.

 

Free Cash Flow – (weighted 20%) Free Cash Flow is defined as cash flows from operations determined in accordance with US GAAP less capital expenditures, adjusted to exclude spending related to strategic initiatives and certain other items as specified by the Compensation Committee.

 

These metrics are intended to focus NEOs and other key executive officers on generating earnings and effectively managing cash flow.  

 

In 2020, the performance metrics were weighted as follows for all NEOs:

 

 

 

 

 

 


2021 PROXY STATEMENT  44

 

 

 

 


EXECUTIVE COMPENSATION

 

 

The targeted performance levels of ONI and Free Cash Flow were derived from the Company’s 2020 budgeted levels as approved by the Board.  Developing the budget involves a variety of factors and assumptions including the Company’s strategic planning process and an assessment of the future business environment.  The Compensation Committee incorporates a requirement that the Company achieve minimum performance, or the threshold, for each metric separately before any bonus may be earned on the respective portions of the overall award.

 

The Compensation Committee set rigorous MIP goals for 2020 with targets above the prior year’s actual results to emphasize the importance of year-over-year growth.  In setting performance goals for 2020, the Compensation Committee considered, among other factors, expectations of projected growth in certain markets with a focus on engineered materials and the overall future business environment.  

 

Throughout the year, the Compensation Committee assessed the impact of the COVID-19 pandemic and its impact to the business. All financial performance targets were established at the start of the year and maintained with no adjustments to lower the performance targets given the impacts from the global pandemic.

 

The following table outlines the approved threshold, target, and maximum payment opportunities and financial goals for the NEOs under the 2020 MIP, as well as the weighted payout results based on the performance metric weights.  

 

NEO MIP Performance Metrics and Payout Levels

 

 

Plan Goals

 

2020 Results

 

 

Below

Threshold

(0% Payout)

Threshold

(50%

Payout)

 

Target

(100%

Payout)

 

Maximum

(200%

Payout)

 

Actual

Achievement

Factor

 

Weighted

MIP

Payout %

 

Achievement against Financial Goals

<   80%

 

80%

 

 

100%

 

 

140%

 

 

 

 

 

 

 

 

Performance metric (millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Net Income (1)

< $29.4

$29.4

 

$36.8

 

$51.5

 

$39.8