DEF 14A 1 d496597ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.      )

 

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

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

 

 

THE GOODYEAR TIRE & RUBBER COMPANY

(Name of Registrant as Specified In Its Charter)

 

 

 

  

 

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

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

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Fee paid previously with preliminary materials.

 

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

 

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LOGO

 

 

Notice of 2018 Annual Meeting of Shareholders and Proxy Statement APRIL 9, 2018 AKRON, OHIO


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LOGO

 

INNOVATION EXCELLENCE Develop great products and services that anticipate and respond to the needs of consumers SALES & MARKETING EXCELLENCE Build the value of our brand, help our customers win in their markets, and become consumers’ preferred choice OPERATIONAL EXCELLENCE Relentlessly improve our quality and efficiency to deliver the right tire, to the right place, at the right time for the right cost Winning at the intersection is the key to success


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LOGO

March 9, 2018

Dear Fellow Goodyear Shareholder,

 


Thank you for your continued investment in Goodyear. I and the rest of the Board invite you to attend the 2018 Annual Meeting of Shareholders.

This year’s proxy statement reflects our continued focus on our strategy, an engaged and effective Board, transparent corporate governance and executive compensation structures, and regular communication with our shareholders.

OUR PERFORMANCE IN 2017

We delivered net income of $346 million, which was impacted by a one-time, non-cash charge of $299 million due to U.S. tax reform, and segment operating income of over $1.5 billion in 2017. Our performance fell short of our goals due to higher raw material costs and weak demand in many of our key markets, despite favorable trends in miles driven, gasoline prices and unemployment.

We ended the year with a strong recovery in unit volumes in the fourth quarter of 2017. I was particularly pleased with our performance in 17-inch and greater rim size segments of the industry, where we grew almost double the rate of that segment of the overall consumer replacement market. I am confident in our ability to build on that momentum in the year ahead.

OUR STRATEGY

We remain committed to our strategy which focuses on capturing profitable growth in attractive market segments, mastering increasing complexity and connecting effectively with consumers. Our strategy is designed to take advantage of the long-term trends shaping our industry, particularly in the larger rim size segment of the market. This is where Goodyear can add value with our innovation leadership, award-winning products, strong global brand, aligned retail and distribution network, and all the other capabilities that we bring to bear in the marketplace. The combination of these elements drives value for our customers and consumers and is where Goodyear continues to demonstrate its competitive advantage.

We have continued to execute against our strategy, and we have positioned the company in the right way for the long term. As a result, I continue to be optimistic about the opportunities for growth.

There certainly will be obstacles to overcome as we pursue our objectives, but we remain confident in our ability to address these challenges as they arise and we remain committed to creating sustainable economic value for our company and our shareholders.

On behalf of our Board of Directors, thank you for your continued support. We look forward to welcoming you at our annual meeting.

Sincerely,

 

LOGO  

LOGO

 

Richard J. Kramer

Chairman of the Board,

Chief Executive Officer and President

 

  

 


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LOGO

March 9, 2018

Dear Fellow Goodyear Shareholder,

 


I am honored and proud to serve as Goodyear’s independent Lead Director. At Goodyear, sound corporate governance is an integral part of the way we do business.

BOARD CONTRIBUTION TO STRATEGY AND PERFORMANCE

Our Board of Directors is comprised of committed, qualified individuals who bring a wealth of operating experience and a diversity of perspectives to their roles as the stewards of our Company and your investment in Goodyear. The continued strong independent leadership and oversight capabilities of our Board of Directors have been crucial over the past few years. In my role as independent Lead Director, I am empowered to provide independent leadership for our Board and am fully committed to fulfilling those responsibilities on your behalf.

In particular, our directors’ deep and diverse skill sets and thought leadership have been an invaluable resource to me, our Chairman and the Goodyear management team in establishing our long-term business strategy and in executing on that strategy. As your independent Lead Director, I am grateful to work with such capable and dedicated individuals in the pursuit of long-term shareholder value creation. I encourage you to support each of the Board’s nominees on this year’s ballot.

COMMITMENT TO CONTINUED ENGAGEMENT WITH OUR SHAREHOLDERS

Our Board of Directors values the feedback and insights gained from frequent engagement with our shareholders. In 2017, our Chairman and I met with several of our largest shareholders to discuss the strong operating performance delivered by the Company over the past several years, the challenging industry dynamics we faced in 2017, how our strategy will enable us to drive future growth in our business, and the Board’s role in overseeing that strategy. We also discussed the composition and evaluation process of the Board, our commitment to aligning pay with performance, and our sound corporate governance and corporate responsibility practices. We remain committed to including our shareholders’ perspectives in boardroom discussions, and we believe that regular engagement

with our shareholders is necessary in order to ensure thoughtful and informed consideration of your views on matters of importance to our business.

EXECUTIVE COMPENSATION

We did not meet the goals that we set out at the beginning of 2017 in our operating plan and our incentive compensation plans due to the challenging global industry conditions we faced throughout the year. As described in further detail in the Compensation Discussion and Analysis section of this Proxy Statement, we believe that our incentive compensation plans this year offered tangible proof of our commitment to structure an executive compensation program that pays for performance – as the payouts under those plans were significantly lower, commensurate with our financial and stock price performance.

CORPORATE RESPONSIBILITY

Goodyear has an industry-leading corporate responsibility program that directly supports our strategy and benefits our shareholders and other key constituencies, such as our associates, customers and communities. The Board’s Committee on Corporate Responsibility and Compliance oversees that program.

I appreciate your ongoing confidence in Goodyear and the Board of Directors. We remain committed to serving your interests, and we appreciate the opportunity to serve Goodyear on your behalf.

Sincerely,

 

LOGO  

 

W. Alan McCollough

Independent Lead Director

 

  

 


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LOGO

NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

 

To the shareholders:

 

The 2018 Annual Meeting of Shareholders of The Goodyear Tire & Rubber Company, an Ohio corporation (“Goodyear,” “Company,” “we,” “our” or “us”) will be held at the Hilton Akron/Fairlawn, 3180 West Market Street, Akron, Ohio, on Monday, April 9, 2018 at 4:30 p.m., Akron Time, for the following purposes (the “Annual Meeting”):

 

 

LOGO     To elect the twelve members of the Board of Directors named in the Proxy Statement to serve one-year terms expiring at the 2019 Annual Meeting of Shareholders (Proposal 1);

 

LOGO    To consider and approve an advisory resolution regarding the compensation of our named executive officers (Proposal 2);

 

LOGO    To consider and approve a proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2018 (Proposal 3); and

 

LOGO    To act upon such other matters and to transact such other business as may properly come before the meeting or any adjournments thereof.

  

Location:

 

Hilton Akron/Fairlawn

3180 West Market Street

Akron, Ohio

 

Time & Date:

 

Monday, April 9, 2018 at 4:30 p.m.,

Akron Time

 

The Board of Directors fixed the close of business on February 15, 2018 as the record date for determining shareholders entitled to notice of, and to vote at, the 2018 Annual Meeting. Only holders of record of shares of common stock, without par value, of Goodyear (“Common Stock”) at the close of business on February 15, 2018 will be entitled to vote at the 2018 Annual Meeting and adjournments, if any, thereof.

 

If you are not able to attend in person, we hope that you will vote by proxy. These proxy materials contain detailed information about the matters on which we are asking you to vote. Please read the materials thoroughly and vote in accordance with the Board’s recommendations. Your vote is very important to us.

 

March 9, 2018

By order of the Board of Directors

 

 

LOGO

 

David L. Bialosky, Secretary

 

LOGO

 

Please vote via the internet or by telephone or complete, date and sign your Proxy and return it promptly in the enclosed envelope

 


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LOGO

     

 

PROXY STATEMENT SUMMARY

This summary is an overview of information that you will find elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

Proposals and Board Recommendations

 

Proposal

  

Board’s Voting Recommendation

 

  

Page Reference

 

 

 

1.

 

 

 

Election of Directors

 

   FOR each Nominee

 

  

12

 

 

 

2.

 

 

 

Advisory Vote on Executive Compensation

 

 

 

  

 

 

FOR

 

  

19

 

 

 

3.

 

 

 

Ratification of Appointment of Independent
Registered Public Accounting Firm

 

  

 

 

FOR

  

 

 

75

 

2017 Business Performance Highlights

 

 

LOGO

We experienced challenging global industry conditions, and our performance fell short of our goals, in 2017 due to higher raw material costs and increased price competition. We also saw weak demand in many of our key markets, despite favorable trends in miles driven, gasoline prices and unemployment. We ended the year with a strong recovery in unit volumes in the fourth quarter of 2017. In 2017, we also successfully launched many new products, thereby keeping our product portfolio refreshed, and successfully executed on our cost savings initiatives.

We remain committed to our strategy which is aimed at capturing profitable growth in attractive market segments, particularly in 17-inch and above rim size tires, mastering increasing complexity and turning that into a competitive advantage, and connecting with consumers through our aligned distribution network of distributors and dealers.

 

 


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LOGO

  

PROXY SUMMARY

 

  

 

In order to drive this future growth and address the challenging industry environment, we remain focused on:

 

    Developing innovative products and services that anticipate and respond to the needs of consumers;
    Building the value of our brand, helping our customers win in their markets, and becoming consumers’ preferred choice; and
    Improving our manufacturing efficiency and creating an advantaged supply chain focused on reducing our total delivered costs, optimizing working capital levels and delivering best in industry customer service.

Our strategy is designed to take advantage of the long-term trends shaping our industry, particularly in the larger rim size segment of the market.

In February 2018, we provided investors with our financial targets for 2018 and beyond. We also announced our 2018-2020 capital allocation plan that provides for growth capital expenditures of $700 million to $900 million, restructuring payments of approximately $400 million, debt repayments of $400 million to $600 million and, subject to our performance, common stock dividends and share repurchases of $1.5 billion to $2.0 billion. We also increased the quarterly cash dividend on our common stock by 40%, from $0.10 per share to $0.14 per share, beginning with the December 1, 2017 payment date.

Shareholder Engagement

We believe that it is important for us to communicate regularly with shareholders regarding areas of interest or concern. Over the last several years, in addition to our day-to-day interactions regarding our financial performance, we have enhanced our shareholder engagement program to include an annual outreach that is focused on our long-term business strategy, executive compensation, corporate governance, corporate responsibility and other topics suggested by our shareholders. This annual outreach helps to ensure that our shareholders are heard and able to communicate directly with us on these important matters.

As part of our 2017 annual outreach, we requested the opportunity to meet with approximately 60% of our shareholders and we ultimately engaged with shareholders representing over 50% of our outstanding Common Stock as of September 30, 2017. In 2017, our Lead Director and our Chairman met with several of our largest shareholders to provide a direct line of communication between our shareholders and the Board of Directors. Specifically, our outreach meetings this year gave us the chance to highlight the strong operating performance delivered by the Company over the past several years, the challenging industry dynamics we faced in 2017, how our strategy will enable us to drive future growth in our business, and the Board’s role in overseeing that strategy. We also discussed the composition and evaluation process of the Board, our commitment to aligning pay with performance, and our sound executive compensation, corporate governance and corporate responsibility practices.

Executive Compensation Highlights

Our executive compensation program is designed to support achievement of our business objectives and to serve the long-term interests of our shareholders. Our executive compensation is strongly aligned to company performance and measurable financial metrics, thereby aligning management’s interests with our shareholders’ interests and driving increased shareholder value.

 

 


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LOGO

  

PROXY SUMMARY

 

  

 

The payouts under our incentive compensation plans this year were strongly aligned with our financial and stock price performance – demonstrating our commitment to structure an executive compensation program that pays for performance – as the payouts under those plans were significantly lower than in prior years.

Our CEO’s actual payouts under our annual incentive plan over the past three years are aligned with our EBIT and Free Cash Flow from Operations performance over those periods, as shown in the graphic below. For 2017, the payout for overall company performance under our annual incentive plans was calculated to be 26% of target. However, in light of the Company’s financial performance, Mr. Kramer recommended that he and the other officers not receive any payout under the annual incentive plan. The Compensation Committee agreed with his recommendation and reduced the annual incentive plan payouts for all of the officers to zero. In 2017, our relative total shareholder return, or TSR, modifier reduced the payouts for our 2015-2017 performance cycle by 10% as well.

 

 

CEO annual incentive payout

 

LOGO

For 2017, our financial metrics were:

 

           Incentive Program   Financial Metrics    Weighting        

ANNUAL

INCENTIVES

    

 

Annual Performance Plan

 

 

EBIT

 

  

 

 

 

40

 

 
      

 

Free Cash Flow from Operations

 

  

 

 

 

 

40

 

 

 

 
      

 

Operating Drivers

  

 

 

 

20

 

 
                     

 

 

LONG-TERM

AWARDS

 

 

    

Performance-Based Awards

(Paid out in Equity and Cash)

 

 

Net Income

 

    

 

50

 

 

   

 

LOGO

 

 

 

      

Cash Flow Return on Capital

 

    

 

50

 

 

 
     Stock Options               

 

 


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LOGO

  

PROXY SUMMARY

 

  

 

 

 

 

THE COMPENSATION COMMITTEE HAS ADOPTED A NUMBER OF BEST PRACTICES

THAT ARE CONSISTENT WITH OUR PERFORMANCE-BASED COMPENSATION PHILOSOPHY:

 

•   Use of diversified financial metrics in our annual and long-term plans that are closely tied to our long-term strategy, along with a relative TSR modifier on all long-term performance-based awards

 

•   No dividends or dividend equivalents on unearned performance-based equity awards

 

•   No repricing of options without shareholder approval

 

•   No pension credit for newly hired executives to make up for service at prior employers

 

•   Double-trigger change-in-control provisions in our change-in-control plan and our equity compensation plans, and no walk-away rights

 

•   No tax gross-ups in our change-in-control plan or for perquisites

  

•   Robust stockholding guidelines for officers and directors, including stock retention provisions following the exercise of stock options or the vesting of other stock-based awards

 

•   Hedging and pledging of our Common Stock by officers, directors and employees is prohibited

 

•   Robust clawback policy in place

 

•   Compensation Committee consists only of independent Board members

 

•   Engaged a leading independent compensation consultant to assist the Compensation Committee and Board in determining executive and director compensation and evaluating program design

Our Board of Directors

 

 

 

OUR BOARD IS COMPRISED OF COMMITTED, QUALIFIED INDIVIDUALS WITH A DIVERSE AND COMPLEMENTARY BLEND OF SKILLS, BUSINESS AND PERSONAL EXPERIENCES, BACKGROUNDS AND EXPERTISE, INCLUDING THE FOLLOWING:

 

•  Senior leadership experience

 

•  Global perspective

 

•  Marketing and branded consumer product experience

 

•  Operational and manufacturing experience

 

•  Finance, accounting and financial reporting expertise

 

  

•  Leadership development expertise

 

•  Legal, regulatory and government experience

 

•  Corporate governance, responsibility and compliance experience

These collective attributes enable the Board to exercise appropriate oversight of management and pursue long-term, sustainable shareholder value creation by providing strategic input on the development, and oversight of the implementation, of our long-term strategy.

Our Board is also committed to periodic and thoughtful Board refreshment.

 

 

LOGO

 

 


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LOGO

  

PROXY SUMMARY

 

  

 

Corporate Governance Highlights

 

 

 

WE HAVE AN ABIDING COMMITMENT TO GOOD GOVERNANCE, AS ILLUSTRATED BY THE FOLLOWING PRACTICES:

 

•  Annually elected directors; no classified board

 

•  Majority voting for the election of directors with a resignation policy

 

•  Lead independent director with clear, robust responsibilities

 

•  100% independent audit, compensation and nominating committees

 

•  Regular executive sessions of the independent directors

 

•  Conduct annual Board and Committee evaluations, including periodic use of a third-party facilitator

 

  

•  Proxy access available to 3 year, 3% shareholders for up to 20% of Board

 

•  Overboarding policy in place for directors

 

•  No poison pill in place

 

•  Shareholders have the right to call a special meeting at 25%

 

•  Clear and robust corporate governance guidelines

 

•  Maintain an industry-leading corporate responsibility program with Board oversight

 

Spotlight on Board Evaluation Process

The Board believes that a strong and constructive evaluation process is an important component of good corporate governance and helps to promote Board effectiveness. Our annual evaluation process, which is led by our Lead Director and the Governance Committee, is focused on three components: (1) the Board, (2) Board committees and (3) individual directors.

The Governance Committee periodically reviews the format of our evaluation process to ensure that it remains robust and relevant. Our current process involves an annual self-evaluation by the Board and each Committee and a review of each director’s service on the Board prior to nomination for re-election. We periodically use a third-party facilitator to assist in conducting the Board evaluation in order to receive fresh perspectives on Board effectiveness and corporate governance practices and to encourage candor in the evaluation process.

Our evaluations have led to changes designed to increase Board effectiveness and efficiency. For example, during 2017, we took the following steps as a direct result of our most recent evaluation process:

 

    Increased opportunities for director exposure to high-potential executives and provided the full Board with reports on our diversity and inclusion initiatives, both to support succession planning activities.
    Provided further educational opportunities, particularly external perspectives on emerging trends, such as the new mobility ecosystem, that directly impact Goodyear’s strategy.
    Expanded the scope of responsibilities of the Committee on Corporate Responsibility and Compliance to include product technology and innovation due to its importance to Goodyear’s strategy.

 

 

 


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LOGO

     

 

TABLE OF CONTENTS

 

   

Notice Of 2018 Annual Meeting of Shareholders and Proxy Statement

 

01  

Corporate Governance Principles and Board Matters

 

 

02

 

 

Board Leadership Structure

 

03

 

 

Board’s Role in Risk Oversight

 

05

 

 

Consideration of Director Nominees

 

05

 

 

Director Selection Guidelines

 

05

 

 

Identifying and Evaluating Nominees for Director

 

06

 

 

Board Structure and Committee Composition

 

07

 

 

Audit Committee

 

07

 

 

Compensation Committee

 

08

 

 

Committee on Corporate Responsibility and Compliance

 

09

 

 

Finance Committee

 

09

 

 

Governance Committee

 

09

 

 

Executive Committee

 

10

 

 

Corporate Responsibility

 

11

 

 

Communications with the Board

 

11

 

 

Board Independence

 

12  

Proposal 1 – Election of Directors

 

19  

Proposal 2 –  Advisory Vote to Approve the Compensation of Our Named Executive Officers

 

20  

Compensation Discussion and Analysis

 

 

20

 

 

Introduction

 

20

 

 

CD&A Table of Contents

 

21

 

 

Executive Summary

 

27

 

 

Compensation Philosophy

 

27

 

 

Components of Executive Compensation

 

29

 

 

Compensation Decision-Making

 

31

 

 

Role of Compensation Consultant

 

31

 

 

Peer Group Benchmarking of Primary Compensation

 

32

 

 

Target Setting

 

34

 

 

Annual Compensation

 

37

 

 

Long-Term Compensation

43   Retirement and Other Benefits

 

46

 

 

Compensation Policies and Practices

 

48  

Compensation Committee Report

 

49  

Executive Compensation

 

 

49

 

 

Summary Compensation Table

 

51

 

 

Summary of Realized Pay Earned by Our Chief Executive Officer for 2015, 2016 and 2017

 

52

 

 

Grants of Plan-Based Awards

 

54

 

 

Outstanding Equity Awards at Fiscal Year-End

 

56

 

 

Option Exercises and Stock Vested

 

56

 

 

Defined Contribution Plan Benefits

 

56

 

 

Pension Benefits

 

60

 

 

Nonqualified Deferred Compensation

 

61

 

 

 

Potential Payments Upon Termination or Change-in-Control

 

67

 

 

Director Compensation Table

 

69

 

 

Risks Related to Compensation Policies and Practices

 

69

 

 

Pay Ratio

 

 

70  

Beneficial Ownership of Common Stock

 

72  

Section 16(a) Beneficial Ownership Reporting Compliance

 

72  

Related Person Transactions

 

73  

Principal Accountant Fees and Services

 

74  

Report of the Audit Committee

 

75  

Proposal 3 –  Ratification of Appointment of Independent Registered Public Accounting Firm

 

76  

General Information

 

 

76

 

 

Shares Voting

 

76

 

 

Vote Required

77   Adjourned Meeting

 

77

 

 

Voting Shares Held in Street Name

 


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USE OF NON-GAAP FINANCIAL MEASURES

For additional information regarding segment operating income, a non-GAAP financial measure, including reconciliations to the most directly comparable GAAP financial measure, see Exhibit A to this Proxy Statement.


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PMT Insert

 

  

 

CORPORATE GOVERNANCE

PRINCIPLES AND BOARD MATTERS

Goodyear is committed to having sound corporate governance principles. Having such principles is essential to running Goodyear’s business efficiently and to maintaining Goodyear’s integrity in the marketplace. Goodyear’s Corporate Governance Guidelines, Business Conduct Manual, Board of Directors and Executive Officers Conflict of Interest Policy and charters for each of the Audit, Compensation, Corporate Responsibility and Compliance, Finance, and Governance Committees are available at https://corporate.goodyear.com/en-US/investors/governance/documents-charters.html. Please note, however, that information contained on the website is not incorporated by reference in this Proxy Statement or considered to be a part of this document. A copy of the committee charters and corporate governance policies may also be obtained upon request to the Goodyear Investor Relations Department.

CURRENT COMMITTEE MEMBERSHIP AND MEETINGS HELD DURING 2017

 

                                                                                                                                                                              
        Committees
     Independent   Audit   Compensation  

Corporate
Responsibility

& Compliance

  Finance   Governance   Executive

 

 

Mr. Conaty

 

 

 

 

LOGO

 

 

     

 

MEMBER

 

 

         

 

MEMBER

 

 

   

 

Mr. Firestone

 

 

 

 

LOGO

 

 

 

 

MEMBER

 

 

         

 

CHAIR

 

 

     

 

MEMBER

 

 

 

Mr. Geissler

 

 

 

 

LOGO

 

 

 

 

MEMBER

 

 

     

 

CHAIR

 

 

         

 

MEMBER

 

 

 

Mr. Hellman

 

 

 

 

LOGO

 

 

 

 

CHAIR

 

 

         

 

MEMBER

 

 

     

 

MEMBER

 

 

 

Ms. Koellner

 

 

  LOGO

 

 

 

 

MEMBER

 

 

         

 

MEMBER

 

 

       

 

Mr. Kramer

 

 

                         

 

MEMBER

 

 

 

Mr. McCollough Lead Director

 

 

 

 

LOGO

 

 

     

 

MEMBER

 

 

         

 

MEMBER

 

 

 

 

CHAIR

 

 

 

Mr. McGlade

 

 

 

 

LOGO

 

 

     

 

CHAIR

 

 

         

 

MEMBER

 

 

 

 

MEMBER

 

 

 

Mr. Morell

 

 

 

 

LOGO

 

 

 

 

MEMBER

 

 

     

 

MEMBER

 

 

           

 

Mr. Palmore

 

 

 

 

LOGO

 

 

             

 

MEMBER

 

 

 

 

CHAIR

 

 

 

 

MEMBER

 

 

 

Ms. Streeter

 

 

 

 

LOGO

 

 

     

 

MEMBER

 

 

         

 

MEMBER

 

 

   

 

Mr. Weidemeyer

 

 

 

 

LOGO

 

 

         

 

MEMBER

 

 

 

 

MEMBER

 

 

       

 

Mr. Wessel

 

 

             

 

MEMBER

 

 

           
           

Number of Meetings in 2017

 

      6

 

  5

 

  3

 

  3

 

  4

 

  0

 

 

  1  


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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

  

 

 

 
 

LOGO

  

Board Leadership Structure

 

  

 

Board Leadership Structure

Mr. Kramer serves as our Chairman of the Board, Chief Executive Officer and President and Mr. McCollough was elected by the independent members of the Board to serve as our independent Lead Director. The Board believes that the current Board leadership structure is the most appropriate for the Company and its shareholders at this time.

In order to ensure that the independent and non-management members of the Board maintain proper oversight of management on behalf of our shareholders, the Board has an independent Lead Director who is elected annually by the independent members of the Board. The election of a Lead Director by the independent members of the Board demonstrates the Board’s continuing commitment to strong corporate governance, Board independence and the importance of the role of Lead Director.

Currently, the Board believes that having Mr. Kramer serve as Chairman best positions the Company to compete successfully and advance our shareholders’ interests. His extensive knowledge of the Company and the tire industry, gained through 18 years of experience in positions of increasing authority including Chief Financial Officer and President, North America, is valuable to the Board in his role as Chairman. Mr. Kramer has provided strong and open leadership of the Board as the Company executes its strategy in a highly competitive industry that continues to be challenged by volatile global economic conditions. The current combination of the Chairman and CEO roles enhances the Company’s ability to coordinate the development, articulation and execution of a unified strategy at both the Board and management levels. The Board also believes that having Mr. Kramer serve as Chairman and CEO has facilitated the flow of information to, and discussion among, members of the Board regarding the Company’s business.

The Governance Committee believes that Mr. McCollough is highly qualified to serve as our Lead Director and that he provides strong leadership of the independent and non-management directors and diligently fulfills his duties as Lead Director.

 

LEAD DIRECTOR DUTIES

 

    Preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors

 

    Call meetings or executive sessions of the independent directors, and coordinate, develop the agenda for and preside at those meetings or sessions

 

    Serve as liaison between the Chairman and the independent directors

 

    Approve the schedule of Board meetings to ensure that there is sufficient time for discussion of all agenda items and advise the Chairman on the same

 

    Approve all information sent to the Board, including meeting agendas, and advise the Chairman on such matters, and may specifically request the inclusion of information
  Interview, along with the Chairman of the Governance Committee, all Board candidates and make recommendations to the Governance Committee and the Board

 

  Discuss with the Governance Committee and the Chairman the membership of Board committees and the selection of committee chairs

 

  Evaluate, together with the Compensation Committee, the Chairman and CEO’s performance, and meet with the Chairman and CEO to discuss that evaluation

 

  Assist the Governance Committee in connection with the annual Board and committee evaluation process, and address any issues regarding director performance

 

  If requested by major shareholders, ensure that he or she is available for consultation and direct communication in appropriate circumstances
 

 

 

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LOGO

  

Board Leadership Structure

 

  

 

Additional duties of our independent Lead Director are set forth in Annex II to our Corporate Governance Guidelines.

In addition to the clearly-delineated and comprehensive oversight responsibilities of our Lead Director, the independent directors have ample opportunity to, and regularly do, assess the performance of the CEO and provide meaningful direction to him. The Board has strong, independent oversight of management:

 

  85% of the Company’s directors are independent;

 

  All members of the Audit, Compensation and Governance Committees are independent directors;

 

  Committee Chairs, all of whom are independent, approve agendas for their committee meetings;

 

  Board and Committee agendas are prepared based on discussions with all directors and recommendations from management, and all directors are encouraged to request agenda items, additional information and/or modifications to schedules as they deem appropriate; and

 

  The Board holds executive sessions of the independent directors at each Board meeting that are led by the Lead Director.

The Board’s policy is that, especially in our changing and challenging environment, it must retain the flexibility to determine the most effective Board leadership structure at any particular point in time. As a result, the Board has the responsibility to establish our leadership structure, including in connection with any CEO succession. Some of the factors that the Board has considered, and may consider in the future, in combining or separating the Chairman and CEO roles, include:

 

  The respective responsibilities of the Lead Director, the Chairman of the Board and the CEO;

 

  The effectiveness of the current Board leadership structure, including the Board’s assessment of the performance of the Chairman and CEO and the Lead Director and whether the Board is maintaining strong, independent oversight of management;

 

  Shareholder views on our Board leadership structure;

 

  The Company’s operating and financial performance, including the potential impact of particular leadership structures on the Company’s performance;

 

  The ability to attract or retain well-qualified candidates for the positions of CEO, Chairman of the Board and Lead Director;

 

  Practices at other similarly situated U.S. public companies; and

 

  Legislative and regulatory developments.

Board’s Role in Risk Oversight

Management continually monitors the material risks facing the Company, including competitive, financial (accounting, liquidity and tax), legal, regulatory, operational and strategic risks. The Board as a whole has responsibility for oversight of management’s identification and management of, and planning for, those risks. Reviews of certain areas are conducted by relevant Board Committees that report their deliberations to the Board.

 

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Board’s Role in Risk Oversight

 

  

 

The Board and its Committees oversee risks associated with their principal areas of focus, as summarized below. The Board and its Committees exercise their risk oversight function by carefully evaluating the reports they receive from management and by making inquiries of management with respect to areas of particular interest to the Board. Board oversight of risk is enhanced by the fact that the Lead Director and Chairman attend virtually all Committee meetings and that Committee reports are provided to the full Board following each Committee meeting. We believe that our leadership structure also enhances the Board’s risk oversight function since our Lead Director regularly discusses the material risks facing the Company with management. The Chairman is also expected to report candidly to his fellow directors on his assessment of the material risks we face, based upon the information he receives as part of his management responsibilities. Both the Lead Director and the Chairman are well-equipped to lead Board discussions on risk issues.

BOARD/COMMITTEE AREAS OF RISK OVERSIGHT

 

 

 

Full Board   

  Strategic, financial and execution risk associated with the annual operating plan and strategic plan (including allocation of capital investments);

 

  Major litigation and regulatory matters;

 

  Acquisitions and divestitures;

 

  Diversity and inclusion; and

 

  Management succession planning.

 

Audit Committee   

  Risks associated with financial matters, particularly financial reporting, accounting and disclosure and internal controls, and risks associated with information technology and cybersecurity.

 

Compensation Committee   

  Risks associated with the establishment and administration of executive compensation, incentive compensation programs, and performance management of officers.

 

Governance Committee   

  Risks associated with Board effectiveness and organization, corporate governance matters, and director succession planning.

 

Finance Committee   

  Risks associated with liquidity, pension plans (including investment performance, asset allocation and funded status), taxes, currency and interest rate exposures, and insurance strategies.

 

Committee on Corporate
Responsibility and Compliance
  

  Risks associated with health, safety and the environment, sustainability, product quality, technology and innovation, and the Company’s legal and ethical compliance program.

 

 

 

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Consideration of Director Nominees

 

  

 

Consideration of Director Nominees

The Governance Committee will consider properly submitted shareholder nominations of candidates for membership on the Board as described below under “Identifying and Evaluating Nominees for Director.” In evaluating nominations, the Governance Committee seeks to address the criteria described below under “Director Selection Guidelines.”

Any shareholder desiring to submit a proposed candidate for consideration by the Governance Committee should send the name of the proposed candidate, together with biographical data and background information concerning the candidate, to the Office of the Secretary, The Goodyear Tire & Rubber Company, 200 Innovation Way, Akron, Ohio 44316-0001.

Director Selection Guidelines

The Board of Directors has approved guidelines for selecting directors as part of our Corporate Governance Guidelines. Criteria considered in the selection of directors include:

 

  Personal qualities and characteristics, including the highest personal and professional integrity, sound judgment, and reputation in the business community or a record of public service;

 

  Substantial business experience or professional expertise and a record of accomplishments;

 

  Experience and stature necessary to be highly effective, working with other members of the Board, in serving the long-term interests of shareholders;

 

  Ability and willingness to devote sufficient time to the affairs of the Board and the Company and to carry out their duties effectively;

 

  The needs of the Company at the time of nomination to the Board and the fit of a particular individual’s skills and personality with those of the other directors in building a Board that is effective and responsive to the needs of the Company;

 

  Diverse business experience, substantive expertise, skills and background, as well as diversity in personal characteristics, such as age, gender and ethnicity; and

 

  Ability to satisfy Goodyear’s and The Nasdaq Stock Market’s independence standards.

Identifying and Evaluating Nominees for Director

The Governance Committee is responsible for identifying, screening and recommending persons for nomination to the Board. The Governance Committee considers candidates for Board membership suggested by its members and other Board members, as well as management and shareholders. On occasion, the Committee also retains third-party executive search firms to identify candidates. In addition, under our prior master labor agreement with the United Steelworkers (the “USW”), the USW had the right to nominate a candidate for consideration for membership on the Board. Mr. Wessel, who became a director in December 2005, was identified and recommended by the USW.

 

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Identifying and Evaluating Nominees for Director

 

  

 

Once a prospective nominee has been identified, the Committee makes an initial determination on whether to conduct a full evaluation of the candidate. This initial determination is based on whatever information is provided to the Committee with the recommendation of the prospective candidate, as well as the Committee’s own knowledge of the prospective candidate, which may be supplemented by inquiries to the person making the recommendation or others. The preliminary determination is based primarily on the need for additional Board members and the likelihood that the prospective nominee can satisfy the director selection guidelines described above. If the Committee determines, in consultation with the Chairman of the Board, the Lead Director and other Board members as appropriate, that additional consideration is warranted, it may request a third-party search firm to gather additional information about the prospective nominee’s background and experience and to report its findings to the Committee. The Committee then evaluates the prospective nominee against the standards and qualifications set out in Goodyear’s director selection guidelines. The Committee also considers such other relevant factors as it deems appropriate, including the balance of management and independent directors and the evaluations of other prospective nominees. As described above under “Director Selection Guidelines,” diversity is among the many factors that the Committee considers in evaluating prospective nominees. We consider the members of our Board to have a diverse set of business and personal experiences, backgrounds and expertise, and to be diverse in terms of age, gender and ethnicity.

In connection with this evaluation, the Committee determines whether to interview the prospective nominee, and if warranted, the Lead Director, the Chairman of the Committee, one or more other members of the Committee, and others as appropriate, interview prospective nominees in person or by telephone. After completing this evaluation and interview, the Committee makes a recommendation to the full Board as to the persons who should be elected to the Board, and the Board makes its decision after considering the recommendation and report of the Committee.

Board Structure and Committee Composition

As of the date of this Proxy Statement, Goodyear’s Board has thirteen directors, each elected annually, and the following six committees: (1) Audit, (2) Compensation, (3) Corporate Responsibility and Compliance, (4) Finance, (5) Governance, and (6) Executive. The current membership and the function of each of the committees are described below. Each of the committees operates under a written charter adopted by the Board, except for the Executive Committee which is provided for by our Code of Regulations. During 2017, the Board held ten meetings. Each director attended at least 75% of all Board and applicable Committee meetings. Directors are expected to attend annual meetings of Goodyear’s shareholders. All of the directors attended the last annual meeting of shareholders.

 

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Audit Committee

 

  

 

 

 

Audit Committee

 

MEMBERS:

 

Mr. Firestone

 

Mr. Geissler

 

Mr. Hellman (Chairman)

 

Ms. Koellner

 

Mr. Morell

 

MEETINGS IN 2017: 6

 

The Board has determined that each member
of the Audit Committee is independent within the meaning of Goodyear’s independence standards and applicable Securities and Exchange Commission rules and regulations, and each of Mr. Hellman and Ms. Koellner is
an audit committee financial expert.

  

KEY RESPONSIBILITIES:

 

The Audit Committee assists the Board in fulfilling its responsibilities for oversight of the integrity of Goodyear’s financial statements, Goodyear’s compliance with legal and regulatory requirements related to financial reporting, the independent registered public accounting firm’s qualifications and independence, and the performance of Goodyear’s internal auditors and independent registered public accounting firm. The Audit Committee appoints, evaluates and determines the compensation of Goodyear’s independent registered public accounting firm; reviews and approves the scope of the annual audit plan; reviews and pre-approves all auditing services and permitted non-audit services (and related fees) to be performed by the independent registered public accounting firm; oversees investigations into complaints concerning financial matters; reviews policies and guidelines with respect to risk assessment and risk management, including Goodyear’s major financial risk exposures; oversees Goodyear’s information technology and cybersecurity strategy; prepares the Audit Committee report for inclusion in the annual proxy statement; and annually reviews the Audit Committee charter and the Committee’s performance. The Audit Committee works closely with management as well as Goodyear’s independent registered public accounting firm. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from Goodyear for, outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties.

 

The report of the Audit Committee is on page 74 of this Proxy Statement.

 

 

Compensation Committee

 

MEMBERS:

 

Mr. Conaty

 

Mr. McCollough

 

Mr. McGlade (Chairman)

 

Ms. Streeter

 

MEETINGS IN 2017: 5

 

The Board has determined that each member
of the Compensation Committee is
independent within the meaning of Goodyear’s independence standards and applicable Nasdaq listing standards.

  

KEY RESPONSIBILITIES:

 

The Board of Directors has delegated to the Compensation Committee primary responsibility for establishing and administering Goodyear’s compensation programs for officers and other key personnel. The Compensation Committee oversees Goodyear’s compensation and benefit plans and policies for directors, officers and other key personnel, administers its incentive compensation plans (including reviewing and approving grants to officers and other key personnel), and reviews and approves annually all compensation decisions relating to officers, including the Chief Executive Officer. The Compensation Committee also prepares a report on executive compensation for inclusion in the annual proxy statement and reviews and discusses the Compensation Discussion and Analysis with management and recommends its inclusion in the annual proxy statement. The report of the Compensation Committee is on page 48 of this Proxy Statement.

 

In performing its duties, the Compensation Committee meets periodically with the CEO to review compensation policies and specific levels of compensation paid to officers and other key personnel, and reports and makes recommendations to the Board regarding executive compensation policies and programs. The Compensation Committee informs the non- management directors of the Board of its decisions regarding compensation for the CEO and other significant decisions related to the administration of its duties. The Compensation

 

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Compensation Committee

 

  

 

 

 

Compensation Committee (continued)

 

  

Committee also will consider the results of shareholder advisory votes on executive compensation matters and the changes, if any, to Goodyear’s executive compensation policies, practices and plans that may be warranted as a result of any such vote and reviews an annual risk assessment of Goodyear’s executive compensation policies, practices and plans as part of its role in overseeing management’s identification and management of, and planning for, compensation-related risks. Under its charter, the Compensation Committee may delegate its authority to one or more of its members as appropriate.

 

The Compensation Committee has the authority to retain outside advisors, including independent compensation consultants, to assist it in evaluating actual and proposed compensation for officers. The Compensation Committee also has the authority to approve, and receive appropriate funding from Goodyear for, any such outside advisor’s fees. Prior to retaining any such advisors, the Compensation Committee considers the independence-related factors identified in applicable securities laws and Nasdaq listing standards. The Compensation Committee has retained Frederic W. Cook & Co., Inc. (“F.W. Cook”) as its compensation consultant, and has determined that F.W. Cook is independent. The Compensation Committee solicits advice from F.W. Cook on executive compensation matters relating to the CEO and other officers.

 

This advice is described in more detail under the heading “Compensation Discussion and Analysis – Role of Compensation Consultant.”

 

 

Committee on Corporate Responsibility and Compliance

 

MEMBERS:

 

Mr. Geissler (Chairman)

 

Mr. Morell

 

Mr. Weidemeyer

 

Mr. Wessel

 

MEETINGS IN 2017: 3

 

  

KEY RESPONSIBILITIES:

 

The Committee on Corporate Responsibility and Compliance reviews Goodyear’s legal compliance programs as well as its business conduct policies and practices and its policies and practices regarding its relationships with shareholders, employees, customers, governmental agencies and the general public. The Committee also monitors Goodyear’s objectives, policies and programs with respect to sustainability, workplace health and safety, product technology and innovation, and product quality. The Committee may also recommend appropriate new policies to the Board of Directors.

 

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Finance Committee

 

  

 

 

 

Finance Committee

 

MEMBERS:

 

Mr. Firestone (Chairman)

 

Mr. Hellman

 

Ms. Koellner

 

Mr. Palmore

 

Mr. Weidemeyer

 

MEETINGS IN 2017: 3

  

KEY RESPONSIBILITIES:

 

The Finance Committee consults with management and makes recommendations to the Board of Directors regarding Goodyear’s capital structure, dividend policy, tax strategies, compliance with terms in financing arrangements, insurance strategies, banking arrangements and lines of credit, and pension plan funding. The Finance Committee also reviews and consults with management regarding policies with respect to interest rate and foreign exchange risk, liquidity management, counterparty risk, derivative usage, credit ratings, and investor relations activities.

 

 

Governance Committee

 

MEMBERS:

 

Mr. Conaty

 

Mr. McCollough

 

Mr. McGlade

 

Mr. Palmore (Chairman)

 

Ms. Streeter

 

MEETINGS IN 2017: 4

 

The Board has determined that each member
of the Governance Committee is independent within the meaning of Goodyear’s independence standards.

  

KEY RESPONSIBILITIES:

 

The Governance Committee identifies, evaluates and recommends to the Board of Directors candidates for election to the Board. The Committee also develops and recommends appropriate corporate governance guidelines, recommends policies and standards for evaluating the overall effectiveness of the Board of Directors in the governance of Goodyear and undertakes such other activities as may be delegated to it from time to time by the Board of Directors.

 

 

Executive Committee

 

MEMBERS:

 

Mr. Firestone

 

Mr. Geissler

 

Mr. Hellman

 

Mr. Kramer

 

Mr. McCollough (Chairman)

 

Mr. McGlade

 

Mr. Palmore

 

MEETINGS IN 2017: 0

 

  

KEY RESPONSIBILITIES:

 

The Executive Committee is comprised of the Chairmen of each of the Board’s other standing committees, the Chairman of the Board and the Lead Director, who serves as Chairman of the Executive Committee. The Executive Committee may transact all business and take any actions that can be done by the Board of Directors, except that it does not have authority to fill any Board or committee vacancies.

 

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Corporate Responsibility

 

  

 

Corporate Responsibility

At Goodyear, corporate responsibility is an integral part of our business strategy. We maintain an industry-leading corporate responsibility program that strives for constant improvement to the benefit of our shareholders, associates, customers, suppliers, communities and environment.

The key focus areas of our corporate responsibility program include our people, our health, safety and wellness programs, our environmental stewardship, including our sustainability and product stewardship efforts, our product innovations, our community engagement programs, and our supplier collaboration initiatives. The Board’s Committee on Corporate Responsibility and Compliance oversees our corporate responsibility objectives and regularly monitors our progress towards achieving them. We are also active in discussing these objectives with our shareholders and soliciting their feedback on any areas of improvement.

Our Corporate Responsibility Report is usually published in the second quarter of each year. The chart below describes several of the key aspects of our corporate responsibility program. For more information on Goodyear’s commitment to corporate responsibility, please visit www.goodyear.com/responsibility. Please note, however, that information contained on the website is not incorporated by reference in this Proxy Statement or considered to be a part of this document.

 

 

 

 

 

LOGO

 

 

Our People

 

      

 

 

LOGO

 

 

Our Environment

 

 
 

From providing healthy and safe working conditions for our associates and contractors to ensuring an inclusive hiring process and work environment, Goodyear is committed to a culture where all of our 64,000 associates around the world act with integrity, promote collaboration, are agile, energize the team and deliver results in all that we do.

 

We have:

 

  Reduced our total injury rate by 38% from 2011 through 2017.

  Sponsored the formation of nine Employee Resource Groups to support our diversity and inclusion initiatives.

      

We take our commitment to reduce our environmental impact across our product lifecycle seriously. All our tire manufacturing facilities are ISO 14001 compliant and certified, driving company-wide goals and objectives to continually improve performance, reduce our environmental footprint, and increase the sustainability of our materials, operations and products.

 

We produce zero waste to landfill from our manufacturing facilities.

 

Since 2010, our baseline year, through 2017, we have reduced:

 

  Greenhouse gas emissions by 20%

  Water use by 21%

  Energy use by 15%

  Solvent use by 38%

 
                                 
 

 

 

 

LOGO

 

 

 

Our Innovative Products 

 

      

 

 

 

LOGO

 

 

 

Our Communities

 

 
 

A commitment to quality is at the heart of our work, and our
products are designed and built with quality as a core
characteristic across all our brands. Goodyear scientists and engineers develop products and services with innovative technologies to anticipate and respond to the needs of consumers, while advancing sustainability principles.

 

Goodyear is a leader in low rolling resistance:

 

  Offering 35 truck tire products verified under the U.S. Environmental Protection Agency’s SmartWay program.

  These tires are required to increase fuel efficiency by reducing fuel consumption by at least 3%.

 

We own approximately 5,700 patents worldwide.

      

Goodyear and our associates have a long history of caring for our communities around the world, focused on building and supporting collaborative programs to create positive outcomes where we live and work. Through our Goodyear Better Future platform, we are focused on three core areas:

 

  Promoting safe mobility,

  Inspiring students to reach their full potential, and

  Reducing waste for our planet.

 

In 2017, Goodyear associates:

 

  Provided more than 20,000 hours of volunteer service to more than 185 community organizations globally.

  Launched our inaugural Global Week of Volunteering through 69 volunteer events in six countries.

 

Our iconic Goodyear Blimp also supports the fundraising efforts of local charities.

 

 

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Communications with the Board

 

  

 

Communications with the Board

As described on Goodyear’s website at https://corporate.goodyear.com/en-US/investors/governance/contact-board.html, shareholders may communicate with the Board or any of the directors (including the Lead Director or the non-management directors as a group) by sending correspondence to the Office of the Secretary, The Goodyear Tire & Rubber Company, 200 Innovation Way, Akron, Ohio 44316-0001. All communications will be compiled by the Secretary and submitted to the Board or the individual directors on a periodic basis.

Board Independence

The Board has determined that ten of the twelve director nominees are independent within the meaning of Goodyear’s independence standards, which are based on the criteria established by The Nasdaq Stock Market and are included as Annex I to Goodyear’s Corporate Governance Guidelines. Mr. Kramer, our Chairman of the Board, Chief Executive Officer and President, is not considered independent. In addition, in light of his relationship with the USW, Mr. Wessel is not considered independent. Further, the Board expects that Mr. Wessel will recuse himself from discussions and deliberations regarding Goodyear’s relationship with the USW.

 

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PMT Insert

 

  

 

PROPOSAL 1 – ELECTION OF DIRECTORS

The Board of Directors has selected the following twelve nominees recommended by the Governance Committee for election to the Board of Directors. The directors will hold office from their election until the next Annual Meeting of Shareholders, or until their successors are elected and qualified. If any of these nominees for director becomes unavailable, the persons named in the proxy intend to vote for an alternate designated by the current Board of Directors.

Mr. William J. Conaty was not nominated for re-election to the Board of Directors due to the retirement age provisions of Goodyear’s Corporate Governance Guidelines. Mr. Conaty will be retiring from the Board at the Annual Meeting after six years of distinguished service. Goodyear and the Board of Directors are deeply grateful to Mr. Conaty for his leadership and guidance during his tenure on the Board.

James A. Firestone

 

     

                         LOGO

 

      Director Since:

      December 3, 2007

 

 

_______________________________________________________________

 

      Committees:

      Audit

      Finance (Chairman)

      Executive

 

 

_______________________________________________________________

 

      Age: 63

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Retired. Formerly Executive Vice President and President, Corporate Strategy and Asia Operations of Xerox Corporation

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Firestone was Executive Vice President and President, Corporate Strategy and Asia Operations of Xerox Corporation from January 2014 until his retirement on October 31, 2016. Mr. Firestone was President, Corporate Operations from October 2008 to December 2013 and President of Xerox North America from October 2004 to September 2008. Before joining Xerox in 1998, Mr. Firestone worked for IBM Corporation as general manager of the Consumer Division and for Ameritech Corporation as president of Consumer Services. He began his business career in 1978 with American Express, where during his 15-year tenure he ultimately rose to President, Travelers Cheques.

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

The Nomura Partners Fund (2005 – 2014)

 

Mr. Firestone has extensive executive management experience in positions of increasing responsibility, including most recently as a senior executive officer of Xerox Corporation, which is of similar size and global complexity as Goodyear. He also has over 20 years of profit and loss management responsibility, as well as significant international business experience. These experiences provide him with unique and valuable insights as a director of Goodyear, particularly with respect to operations and finance matters.

 

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LOGO

  

ELECTION OF DIRECTORS

 

  

 

Werner Geissler

 

     

                         LOGO

 

      Director Since:

 

      February 21, 2011

 

________________________________________________________________

 

      Committees:

      Audit

      Corporate Responsibility

      and Compliance

      (Chairman)

 

      Executive

 

_______________________________________________________________

 

      Age: 64

 

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Retired. Formerly Vice Chairman, Global Operations of

The Procter & Gamble Company

Operating Partner of Advent International

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Geissler was Vice Chairman, Global Operations of The Procter & Gamble Company from August 2007 until his retirement on December 31, 2014, and was Group President, Central & Eastern Europe, Middle East and Africa from July 2004 to July 2007. He joined Procter & Gamble in 1979 and held positions of increasing responsibility in various brand and general management and operations roles in Europe, the Middle East, Central Asia, Japan, Africa and the United States.

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

Philip Morris International Inc. (2015 – present)

 

 

Mr. Geissler, a native of Germany, has deep executive management experience, including as a senior executive officer of Procter & Gamble, where he oversaw Procter & Gamble’s extensive worldwide business operations. He has significant international business experience and profit and loss management responsibility. These experiences provide him with valuable insights as a director of Goodyear, particularly with respect to consumer marketing and international, operations and finance matters.

Peter S. Hellman

 

     

                         LOGO

 

      Director Since:

 

      October 5, 2010

 

_______________________________________________________________

 

      Committees:

      Audit (Chairman)

      Finance

 

      Executive

 

_______________________________________________________________

 

      Age: 68

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Retired. Formerly President and Chief Financial and

Administrative Officer of Nordson Corporation

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Hellman retired from Nordson Corporation, a designer, manufacturer and marketer of industrial equipment, in 2008 after a career of over 20 years with large, multinational companies in both financial and operating executive positions. Mr. Hellman was President and Chief Financial and Administrative Officer of Nordson Corporation from 2004 to January 2008 and Executive Vice President and Chief Financial and Administrative Officer from 2000 to 2004. Prior to joining Nordson in 2000, Mr. Hellman was with TRW Inc. for 10 years and held various positions, including President and Chief Operating Officer and Chief Financial Officer. Mr. Hellman also serves on the boards of several nonprofit organizations.

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

Baxter International Inc. (2005 – present)

Owens-Illinois, Inc. (2007 – present)

 

Mr. Hellman has significant financial reporting expertise due to his service as a Chief Financial Officer at both Nordson and TRW, providing him with the necessary skills to be Chairman of our Audit Committee, where he also qualifies as an “audit committee financial expert.” He also has extensive operational experience at both companies. In addition, Mr. Hellman has served on public company boards for over 20 years. Through his board and management experience, Mr. Hellman also has significant experience with corporate governance practices and legal and regulatory compliance issues. Mr. Hellman’s financial and operating experience, business leadership skills and board experience enable him to provide valuable contributions as a Goodyear director.

 

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ELECTION OF DIRECTORS

 

  

 

Laurette T. Koellner

 

     

 

                         LOGO

      Director Since:

 

      February 23, 2015

 

_______________________________________________________________

 

      Committees:

      Audit

 

      Finance

 

_______________________________________________________________

 

      Age: 63

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Retired. Formerly President of Boeing International and Executive Chairman of International Lease Finance Corporation

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Ms. Koellner most recently served as Executive Chairman of International Lease Finance Corporation, an aircraft leasing subsidiary of American International Group, Inc., from June 2012 until its sale in May 2014. From 1978 until 2007, Ms. Koellner held positions of increasing responsibility at McDonnell Douglas Corporation and The Boeing Company, an aerospace company, including as President of Boeing International, where she oversaw Boeing’s international operations, and President of Connexion by Boeing, which provided satellite-based connectivity services to aircraft and maritime vessels. While at Boeing, Ms. Koellner also served as Vice President and General Auditor, Vice President and Corporate Controller, and Chief Human Resources Officer.

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

Celestica Inc. (2009 – present)

Nucor Corporation (2015 – present)

Papa John’s International, Inc. (2014 – present)

The Hillshire Brands Company (formerly Sara Lee
Corporation) (2003 – 2014)

International Lease Finance Corporation (2012-2014)

 

Ms. Koellner has significant senior executive management experience, including extensive international business experience. She qualifies as an “audit committee financial expert” due to her financial leadership roles at Boeing. Her service on several public company boards of directors also provide us with important insights on business practices in a variety of industries.

Richard J. Kramer

 

     

 

                         LOGO

      Director Since:

 

      February 22, 2010

 

______________________________________________________________

 

      Committees:

 

      Executive

 

_______________________________________________________________

 

      Age: 54

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Chairman of the Board, Chief Executive Officer and President of Goodyear

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Kramer joined Goodyear in March 2000 as Vice President – Corporate Finance, serving in that capacity as Goodyear’s principal accounting officer until August 2002, when he was elected Vice President, Finance – North American Tire. In August 2003, he was named Senior Vice President, Strategic Planning and Restructuring, and in June 2004 was elected Executive Vice President and Chief Financial Officer. Mr. Kramer was elected President, North American Tire in March 2007 and continued to serve as Chief Financial Officer until August 2007. In June 2009, Mr. Kramer was elected Chief Operating Officer and continued to serve as President, North American Tire until February 2010. He was elected Chief Executive Officer and President effective April 13, 2010 and Chairman effective October 1, 2010. Prior to joining Goodyear, Mr. Kramer was with PricewaterhouseCoopers LLP for 13 years, including two years as a partner.

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

The Sherwin-Williams Company (2012 – present)

 

Mr. Kramer has been an executive officer of Goodyear for 18 years and has a critical role in creating our strategy and strengthening our leadership teams as Chief Executive Officer and previously as Chief Financial Officer and as President, North American Tire. Mr. Kramer’s deep knowledge of Goodyear, global markets, manufacturing, finance and accounting provides our Board with valuable perspectives that are necessary to advance Goodyear’s business and the interests of our shareholders.

 

  14  


Table of Contents
       

 

 

 
 

LOGO

  

ELECTION OF DIRECTORS

 

  

 

W. Alan McCollough

 

     

                         LOGO

 

      Director Since:

      April 10, 2007

 

 

_______________________________________________________________

      Lead Director

 

 

 

_________________________________________________________________

 

      Committees:

      Compensation

      Governance

      Executive (Chairman)

 

 

______________________________________________________________

 

      Age: 68

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Retired. Formerly Chairman and Chief Executive Officer of Circuit City Stores, Inc.

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. McCollough joined Circuit City Stores, Inc., a consumer electronics retailer, in 1987 as general manager of corporate operations, and was named assistant vice president in 1989, president of central operations in 1991, and senior vice president of merchandising in 1994. He served as President and Chief Operating Officer from 1997 to 2000 and as President and Chief Executive Officer from 2000 to 2002. Mr. McCollough was elected Chairman, President and Chief Executive Officer of Circuit City in 2002 and served in those capacities until 2005. He remained Chief Executive Officer until February 2006 and Chairman until his retirement in June 2006.

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

La-Z-Boy Inc. (2007 – present)

VF Corporation (2000 – present)

 

Mr. McCollough has extensive senior executive management experience, particularly in operations and consumer merchandising and marketing. His experience as Chairman and Chief Executive Officer of Circuit City provides him with the necessary skills to be Lead Director. Mr. McCollough’s past service as Chairman of Circuit City, as well as his current service on other public company boards of directors, provides us with important perspectives on corporate governance and executive compensation matters.

John E. McGlade

 

     

                         LOGO

 

      Director Since:

      December 5, 2012

 

 

___________________________________________________________________

 

      Committees:

      Compensation (Chairman)

      Governance

      Executive

 

 

___________________________________________________________________

 

      Age: 64

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Retired. Formerly Chairman, President and

Chief Executive Officer of

Air Products and Chemicals, Inc.

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. McGlade was Chairman, President and Chief Executive Officer of Air Products and Chemicals, Inc., a global provider of atmospheric, process and specialty gases, from March 2008 until his retirement on July 1, 2014. He joined Air Products in 1976 and held various positions of increasing responsibility, including as Group Vice President, Chemicals Group, and President and Chief Operating Officer.

 

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

Bunge Limited (2014 – present)

Air Products and Chemicals, Inc. (2007 – 2014)

 

Mr. McGlade has strong leadership skills and extensive management, international and operating experience, including as Chief Executive Officer of Air Products. He has also had responsibility for the environment, health, safety and quality function during his career at Air Products. These experiences provide him with unique and valuable insights as a director of Goodyear, particularly with respect to operations matters.

 

  15  


Table of Contents
       

 

 

 
 

LOGO

  

ELECTION OF DIRECTORS

 

  

 

Michael J. Morell

 

     

                         LOGO

 

      Director Since:

 

      January 7, 2014

 

_________________________________________________________________

 

      Committees:

      Audit

      Corporate Responsibility

 

      and Compliance

 

_________________________________________________________________

 

      Age: 59

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Global Chairman, Geopolitical Risk Practice at Beacon Global Strategies

Chief Executive Officer and President,

Morell Consulting

Formerly Deputy Director of the Central

Intelligence Agency

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Morell retired from the Central Intelligence Agency in 2013 following a 33-year career, including serving as Deputy Director from May 2010 to August 2013 and as Director for Intelligence from May 2008 to April 2010. He also served as Acting Director on two occasions. Mr. Morell has received numerous intelligence and defense awards for his service to the United States.

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

None

 

 

 

Mr. Morell has extensive leadership and management experience through his positions with the Central Intelligence Agency, a large and complex global government agency. He also possesses extensive knowledge of national security issues, such as cybersecurity, terrorism and political and economic instability, which directly impact global businesses. These experiences, combined with his strong critical thinking and problem solving skills, make Mr. Morell a valuable contributor to the Board of Directors.

Roderick A. Palmore

 

     

                         LOGO

 

      Director Since:

 

      August 7, 2012

 

________________________________________________________________

 

      Committees:

      Finance

      Governance (Chairman)

 

      Executive

 

_______________________________________________________________

 

      Age: 66

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Senior Counsel at Dentons US LLP

Formerly Executive Vice President, General Counsel, Chief Compliance and Risk Management Officer, and Secretary of General Mills, Inc.

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Palmore joined General Mills, a global manufacturer and marketer of food products, as Executive Vice President, General Counsel, Chief Compliance and Risk Management Officer, and Secretary in February 2008 and served in that capacity until his retirement on February 16, 2015. Following his retirement from General Mills, he joined Dentons, an international law firm, as senior counsel. From 1996 to 2008, he worked for Sara Lee Corporation in a variety of legal leadership roles, ultimately becoming Executive Vice President, General Counsel and Secretary. Prior to 1996, he worked at the U.S. Department of Justice and in private practice.

  

 

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

CBOE Holdings, Inc. (2000 – present)

Express Scripts Holding Co. (2014 – present)

 

 

In his role at General Mills, he was responsible for the company’s worldwide legal activities, corporate ethics, compliance, and corporate security. Through his experience as general counsel of consumer product public companies, in private practice and as an Assistant U.S. Attorney, Mr. Palmore has extensive experience in corporate governance and the legal issues facing Goodyear. In addition, his experience provides him with strong risk management skills. This broad business knowledge and public board experience, as well as his strong leadership skills, are valuable assets to the Board of Directors.

 

 

  16  


Table of Contents
       

 

 

 
 

LOGO

  

ELECTION OF DIRECTORS

 

  

 

Stephanie A. Streeter

 

     

                         LOGO

 

      Director Since:

 

      October 7, 2008

 

________________________________________________________________

 

      Committees:

      Compensation

 

      Governance

 

_______________________________________________________________

 

      Age: 60

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Retired. Formerly Chief Executive Officer of

Libbey Inc.

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Ms. Streeter was Chief Executive Officer of Libbey Inc., a producer of glass tableware products, from August 2011 until January 11, 2016. Previously, Ms. Streeter was with Banta Corporation, a provider of printing and supply chain management services, serving as President and Chief Operating Officer beginning in January 2001, and was elected Chief Executive Officer in 2002 and Chairman in 2004. She served as Chairman, President and Chief Executive Officer of Banta until its acquisition by R.R. Donnelley & Sons in 2007. Ms. Streeter also spent 14 years with Avery Dennison Corporation in a variety of product and business management positions, including as Group Vice President of Worldwide Office Products from 1996 to 2000.

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

Kohl’s Corporation (2007 – present)

Libbey Inc. (2011 – 2016)

 

 

Ms. Streeter has extensive senior executive management experience. Her experiences as Chief Executive Officer of Libbey, as Chairman, President and Chief Executive Officer of Banta and at Avery Dennison provide Ms. Streeter with an understanding of the operations and performance of public companies. Ms. Streeter’s service on several public company and nonprofit boards of directors also provide us with important insights on practices across a variety of industries.

Thomas H. Weidemeyer

 

     

 

                         LOGO

 

      Director Since:

 

      December 9, 2004

 

_________________________________________________________________

 

      Committees:

      Corporate Responsibility

      and Compliance

 

      Finance

 

_________________________________________________________________

 

      Age: 70

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

Retired. Formerly Senior Vice President and

Chief Operating Officer of United Parcel Service, Inc.

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Weidemeyer served as Senior Vice President and Chief Operating Officer of United Parcel Service, Inc., a transportation and logistics company, from January 2001, and as President and Chief Operating Officer of UPS Airlines from July 1994, until his retirement in February 2004. Mr. Weidemeyer became Manager of the Americas International Operation of UPS in 1989, and in that capacity directed the development of the UPS delivery network throughout Central and South America. In 1990, he became Vice President and Airline Manager of UPS Airlines and in 1994 was elected its President and Chief Operating Officer. Mr. Weidemeyer was a director of United Parcel Service from 1998 to 2003.

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

NRG Energy, Inc. (2003 – present)

Waste Management, Inc. (2005 – present)

 

 

Mr. Weidemeyer has over 40 years of management and executive leadership experience. His logistics, finance and international management experience provides us with valuable insights on our supply chain and financial management practices, as well as our overall business. His service on other boards of directors also provides us with perspectives on issues facing companies in different industries.

 

  17  


Table of Contents
       

 

 

 
 

LOGO

  

ELECTION OF DIRECTORS

 

  

 

Michael R. Wessel

 

     

 

 

                         LOGO

 

      Director Since:

 

      December 6, 2005

 

_________________________________________________________________

 

      Committees:

      Corporate Responsibility

 

      and Compliance

 

_________________________________________________________________

 

      Age: 58

 

 

 

CURRENT PRINCIPAL OCCUPATION:

 

President of The Wessel Group Incorporated

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Wessel has served as President of The Wessel Group Incorporated, a government and political affairs consulting firm, since May 2006. Prior to founding The Wessel Group, he served as Senior Vice President of the Downey McGrath Group, a government affairs consulting firm, from March 1999 to December 2005 and as Executive Vice President from January 2006 to April 2006.

 

Mr. Wessel is an attorney with over 30 years of experience as an economic and international trade policy advisor in Washington, D.C. Mr. Wessel has acted as an advisor to Congressman Richard Gephardt, both in the U.S. House of Representatives and to his presidential campaigns in 1987-88 and 2003-04, to the Clinton/Gore Transition

  

 

OTHER PUBLIC COMPANY DIRECTORSHIPS

HELD SINCE JANUARY 1, 2013:

 

None

 

Office in 1992 and 1993, and to Senator John Kerry’s presidential campaign in 2004. Mr. Wessel also serves as a Commissioner on the U.S.-China Economic and Security Review Commission, a position he has held since April 2001.

 

Mr. Wessel’s extensive experience with public policy matters and his government service, including as an advisor to former Majority Leader Gephardt and as an appointee on government commissions, provides us with valuable perspectives on public policy matters impacting trade, international economic affairs and other matters of importance to Goodyear.

 

 

 

LOGO Your Board of Directors unanimously recommends that shareholders vote FOR each of the nominees for director named in this Proxy Statement (Proposal 1).

 

 

 

  18  


Table of Contents
       

 

 

 
 

LOGO

  

PMT Insert

 

  

 

PROPOSAL 2 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

We are seeking your vote to approve, on an advisory (or non-binding) basis, the compensation of our named executive officers as disclosed in this Proxy Statement.

Our Compensation Discussion and Analysis (“CD&A”), which starts on page 21, describes our executive compensation program. We encourage you to read the CD&A before casting your vote.

The advisory resolution below, commonly known as a “say-on-pay” proposal, gives you the opportunity to express your views on our executive compensation program for our named executive officers. The “say-on-pay” proposal is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the executive compensation policies, practices and plans described in this Proxy Statement.

The resolution is required by Section 14A of the Securities Exchange Act of 1934. The resolution is not intended to indicate your approval of the matters disclosed under the heading “Risks Related to Compensation Policies and Practices” or future “golden parachute” payments. We will seek shareholder approval of any “golden parachute” payments at the time of any transaction triggering those payments to the extent required by applicable law.

We ask you to vote “FOR” the following resolution which will be presented by the Board of Directors at the Annual Meeting:

“RESOLVED, that the shareholders of The Goodyear Tire & Rubber Company approve, on an advisory basis, the compensation of the named executive officers as disclosed in the Company’s Proxy Statement for the 2018 Annual Meeting of Shareholders.”

Although this proposal is an advisory vote that will not be binding on the Compensation Committee or the Board of Directors, the Compensation Committee will consider the results of this shareholder advisory vote and the changes, if any, to our executive compensation policies, practices and plans that may be warranted as a result of this vote.

 

 

 

LOGO Your Board of Directors unanimously recommends that shareholders vote FOR the advisory resolution to approve the compensation of our named executive officers (Proposal 2).

 

 

  19  


Table of Contents
       

 

 

 
 

LOGO

  

PMT Insert

 

  

 

COMPENSATION DISCUSSION AND ANALYSIS TABLE OF CONTENTS

Introduction

This Compensation Discussion and Analysis describes the Company’s executive compensation philosophy and programs, focusing in particular on the Compensation Committee’s decisions about named executive officers (“NEOs”) in 2017.

OUR NEOS FOR 2017 ARE:

 

Richard J. Kramer

  Chairman, Chief Executive Officer and President

Laura K. Thompson

  Executive Vice President and Chief Financial Officer

Stephen R. McClellan

  President, Americas

Christopher R. Delaney

  President, Europe, Middle East and Africa

David L. Bialosky

  Senior Vice President, General Counsel and Secretary

Table of Contents

 

 

 

USE OF NON-GAAP FINANCIAL MEASURES

For additional information regarding segment operating income, a non-GAAP financial measure, including reconciliations to the most directly comparable GAAP financial measure, see Exhibit A to this Proxy Statement.

 

  20  


Table of Contents
       

 

 

 
 

LOGO

     

 

COMPENSATION

DISCUSSION AND ANALYSIS

Executive Summary

2017 OPERATING RESULTS AND OUR STRONG PAY AND PERFORMANCE ALIGNMENT

We experienced challenging global industry conditions, and our performance fell short of our targets under our annual and long-term incentive plans, in 2017 due to higher raw material costs and increased price competition. We also experienced weakening demand for original equipment and consumer replacement tires in the United States and Europe despite favorable trends in miles driven, gasoline prices and unemployment. We ended the year with a strong recovery in unit volumes in the fourth quarter of 2017. We also successfully launched many new products, thereby keeping our product portfolio refreshed, and successfully executed on our cost savings initiatives.

Our incentive compensation plans worked as intended in 2017. The payouts under those plans were strongly aligned with our financial and stock price performance – demonstrating our commitment to structure an executive compensation program that pays for performance – as the payouts were significantly lower than in prior years.

The following summarizes key elements of the company’s performance in 2017.

 

LOGO    LOGO

 

 

LOGO

 

* As defined for purposes of our compensation plans in 2017

 

  21  

 


Table of Contents
    

 

COMPENSATION DISCUSSION AND ANALYSIS

  

 

 

 
 

LOGO

  

Executive Summary

 

  

 

KEY ACCOMPLISHMENTS IN 2017

 

 

Shareholder Return Program   

   In 2017, we returned $510 million to our shareholders, comprised of $110 million of dividends and $400 million of share repurchases. Since 2013, we have paid dividends of $332 million and repurchased $1.3 billion of our Common Stock.

 

   
Strong Cost Savings Performance   

   We had $179 million of total delivered cost productivity savings, exceeding our goal by 19%.

 

New Product Vitality   

   We launched 55 new products globally.

 

 

Our CEO’s actual payouts under our annual incentive plan over the past three years are aligned with our EBIT and Free Cash Flow from Operations performance over those periods, as shown in the graphic below. For 2017, the payout for overall company performance under our annual incentive plans was calculated to be 26% of target. However, in light of the Company’s financial performance, Mr. Kramer recommended that he and the other officers not receive any payout under the annual incentive plan. The Compensation Committee agreed with his recommendation and reduced the annual incentive plan payouts for all of the officers to zero.

 

 

CEO annual incentive payout

 

LOGO

In each of the past three years, our CEO’s realized pay has been strongly aligned with our trailing three-year relative TSR performance. In 2017, our relative TSR modifier reduced the payouts for our 2015-2017 performance cycle by 10%.

 

  22  

 


Table of Contents
    

 

COMPENSATION DISCUSSION AND ANALYSIS

  

 

 

 
 

LOGO

  

Executive Summary

 

  

 

 

 

Our CEO’s realized pay shows strong alignment to our stock price

 

 

LOGO

As a result of our operating performance, the performance targets for the 2017 performance periods under our 2015-2017, 2016-2018 and 2017-2019 long-term awards were not exceeded and payouts of 34%, 28% and 52%, respectively, of target were approved for the applicable periods, subject to continued service and a relative total shareholder return modifier (which we refer to as the “TSR modifier” and which is described in more detail on page 38). Our stock out-performed 37% of the companies in the S&P 500 during the three-year period ending December 31, 2017, resulting in a TSR modifier of 0.9 times, which further reduced the payout for the 2015-2017 performance cycle.

In the face of challenging global industry conditions, we remain committed to our strategy which is aimed at capturing profitable growth in attractive market segments, particularly in 17-inch and above rim size tires, mastering increasing complexity and turning that into a competitive advantage, and connecting with consumers through our aligned distribution network of distributors and dealers.

In order to drive this future growth and address the challenging industry environment, we remain focused on:

    Developing innovative products and services that anticipate and respond to the needs of consumers;
    Building the value of our brand, helping our customers win in their markets, and becoming consumers’ preferred choice; and
    Improving our manufacturing efficiency and creating an advantaged supply chain focused on reducing our total delivered costs, optimizing working capital levels and delivering best in industry customer service.

Our strategy is designed to take advantage of the long-term trends shaping our industry, particularly in the larger rim size segment of the market.

In February 2018, we provided investors with our financial targets for 2018 and beyond. We also announced our 2018-2020 capital allocation plan that provides for growth capital expenditures of $700 million to $900 million, restructuring payments of approximately $400 million, debt repayments of $400 million to $600 million and, subject to our performance, common stock dividends and share repurchases of $1.5 billion to $2.0 billion. We also increased the quarterly cash dividend on our common stock by 40%, from $0.10 per share to $0.14 per share, beginning with the December 1, 2017 payment date.

 

  23  

 


Table of Contents
    

 

COMPENSATION DISCUSSION AND ANALYSIS

  

 

 

 
 

LOGO

  

Executive Summary

 

  

 

2017 SHAREHOLDER ENGAGEMENT

We believe that it is important for us to communicate regularly with shareholders regarding areas of interest or concern. Over the last several years, in addition to our day-to-day interactions regarding our financial performance, we have enhanced our shareholder engagement program to include an annual outreach that is focused on our long-term business strategy, executive compensation, corporate governance, corporate responsibility and other topics suggested by our shareholders. This annual outreach helps to ensure that our shareholders are heard and able to communicate directly with us on these important matters.

As part of our 2017 annual outreach, we requested the opportunity to meet with approximately 60% of our shareholders and we ultimately engaged with shareholders representing over 50% of our outstanding Common Stock as of September 30, 2017. In 2017, our Lead Director and our Chairman met with several of our largest shareholders to provide a direct line of communication between our shareholders and the Board of Directors.

Our outreach meetings gave us the chance to highlight the strong operating performance delivered by the Company over the past several years and the challenging industry dynamics we faced in 2017. Specifically, we discussed our thorough process for setting challenging targets and aligning pay and performance, as well as our commitment to sound executive compensation practices. We also took the opportunity to discuss our ongoing commitment to strong corporate governance and corporate responsibility. We received positive feedback on our executive compensation program, specifically the metrics in our annual and long-term incentive plans and our proportion of performance-based pay. This feedback was consistent with the success of last year’s say on pay proposal, which was approved by 96% of our voting shareholders at our 2017 annual meeting.

All of the shareholder feedback that we received was reported to the Compensation Committee and the Board of Directors for its consideration.

ELEMENTS OF EXECUTIVE COMPENSATION

Compensation for NEOs is comprised of a mix of variable and fixed compensation that is strongly linked to company performance and targeted to the median of the benchmark data that we use.

For 2017, the mix of performance metrics was as follows:

 

           Incentive Program   Financial Metrics    Weighting        

ANNUAL

INCENTIVES

    

 

Annual Performance Plan

 

 

EBIT

 

  

 

 

 

40

 

 
      

 

Free Cash Flow from Operations

 

  

 

 

 

 

40

 

 

 

 
      

 

Operating Drivers

  

 

 

 

20

 

 
                     

 

 

LONG-TERM

AWARDS

 

 

    

Performance-Based Awards

(Paid out in Equity and Cash)

 

 

Net Income

 

    

 

50

 

 

    LOGO  
      

Cash Flow Return on Capital

 

    

 

50

 

 

 
     Stock Options               

We believe that our compensation program is consistent with our performance-based compensation philosophy and serves the long-term interests of our shareholders. We will continue to seek feedback from our investors and consider ongoing enhancements to the program.

 

  24  

 


Table of Contents
    

 

COMPENSATION DISCUSSION AND ANALYSIS

  

 

 

 
 

LOGO

  

Executive Summary

 

  

 

 

 

Over 90% of our CEO’s pay opportunity is performance based and over 75% is tied to stock price.

 

 

LOGO

 

  25  

1 As reported in the Summary Compensation Table beginning at page 57 of this Proxy Statement. 2 Realized pay includes base salary, annual incentive earned, long term incentive to be paid out and pre-tax compensation earned upon the exercise of stock options and vesting of stock awards regardless of when they were granted. For more information on our calculation of realized pay, see “Summary of Realized Pay Earned by Our Chief Executive Officer for 2014, 2015 and 2016” beginning at page 59 of this Proxy Statement.

 


Table of Contents
    

 

COMPENSATION DISCUSSION AND ANALYSIS

  

 

 

 
 

LOGO

  

Executive Summary

 

  

 

COMPENSATION BEST PRACTICES

The Compensation Committee has adopted a number of best practices that are consistent with our performance-based compensation philosophy and serve the long-term interests of our shareholders:

 

 

 

Strong Link to Financial

Performance

  

 

Use of diversified financial metrics in our annual and long-term plans that are closely tied to our long-term strategy, along with a relative TSR modifier on all long-term performance-based awards

 

 

Dividend Policy

  

 

No dividends or dividend equivalents on unearned performance-based equity awards

 

 

No Repricing

  

 

No repricing of options without shareholder approval

 

 

No Additional Service

Credit in Pension

 

  

No pension credit for newly hired executives to make up for service at prior employers

 

 

Double-Trigger

Change-in-Control

  

 

Double-trigger change-in-control provisions in our change-in-control plan and our equity compensation plans, and no walk-away rights

 

 

No Gross-Ups

  

 

No tax gross-ups in our change-in-control plan or for perquisites

 

 

Strong Stockholding

and Retention Policies

  

 

Robust stockholding guidelines for officers and directors, including stock retention provisions following the exercise of stock options or the vesting of other stock-based awards

 

In 2017, we increased the stockholding requirement for the CEO from 5x to 6x his annual base salary

 

 

No Hedging or Pledging

  

 

Hedging and pledging of our Common Stock by officers, directors and employees is prohibited

 

 

Clawback Policy

  

 

Robust clawback policy in place

 

 

Independent

Committee

 

  

Compensation Committee consists only of independent Board members

 

 

Leading Independent

Consultant

  

Engaged a leading independent compensation consultant to assist the Compensation Committee and Board in determining executive compensation and evaluating program design

 

 

 

 

  26  

 


Table of Contents
    

 

COMPENSATION DISCUSSION AND ANALYSIS

  

 

 

 
 

LOGO

  

Compensation Philosophy

 

  

 

Compensation Philosophy

The following core principles form the foundation of the compensation program for our executives, including the named executive officers:

 

 

   

FIRST, compensation programs should motivate our executives to take actions that are aligned with our short- and long-term strategic objectives, and appropriately balance risk versus potential reward.

 

   

SECOND, as executives move to a greater level of responsibility, the percentage of their pay based on performance should increase to ensure the highest level of accountability to shareholders.

 

THIRD, performance pay should offer an opportunity for above average compensation when our performance exceeds our goals balanced by the risk of below average compensation when it does not.    

FOURTH, the percentage of total compensation paid in the form of equity should also increase as executives have increasing responsibility for corporate performance, thereby more closely aligning their interests with those of our shareholders.

 

Components of Executive Compensation

We provide executive compensation and benefits that are market-competitive in which a large portion of the total opportunity is variable and tied to our performance and changes in shareholder value over a multi-year period. The key components of compensation provided to our executive officers and how each supports our compensation objectives are presented in the following table:

 

    Description   Objectives

 

 Annual Compensation

 

 Base Salary

  Annual cash compensation  

•   Provide an appropriate level of fixed compensation necessary to attract and retain employees

 

•   Recognize and reward skills, competencies, experience, leadership and individual contribution

 

 Annual Incentive

 Plans

  Annual cash incentive based on corporate and individual performance  

Link annual cash compensation to attainment of key short-term performance goals:

 

•   Across total company and operating units as measured primarily by achievement of annual operating goals

 

•   By the individual as measured by achievement of specific strategic goals and demonstrated leadership traits

 

 

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Components of Executive Compensation

 

  

 

    Description   Objectives

 

 Long-Term Incentive Compensation

 

 Stock Options

  Provides opportunity to purchase stock at the grant date fair market value over a ten-year period. Results in value only if stock price increases  

   Link realized compensation over long-term to appreciation in stock price

 

   Facilitate retention

 

   Build executive stock ownership

 

   Align interests of management with those of shareholders

 

 Performance-Based

 Awards

 

Long-term incentive program with award payouts tied to achievement of corporate goals over a three-year period, with performance targets for each year of the three-year period established on the grant date, subject to a relative total shareholder return modifier over that three-year period

 

Payable in shares of Common Stock and cash

 

 

   Link multi-year compensation to performance against key operational goals over a three-year period, as well as changes in share price on both an absolute and relative basis

 

   Facilitate retention

 

   Build executive stock ownership

 

   Align interests of management with those of shareholders

 

 

 Retirement Programs

 

 Qualified Retirement

 Plans

 

  Post-retirement benefits  

•   Necessary to attract and retain employees

 Supplementary

 Pension Plan and

 Excess Benefit Plans

  Additional retirement benefits  

•   Facilitate attraction and retention of executive officers

 

•   Provide for retirement replacement income, thereby facilitating an orderly succession of talent

 

 

 Other Executive Benefits

 

 Perquisites

 

Home security systems

Tire program

Financial planning and tax preparation services

Annual physical exams

Limited use of company aircraft

 

 

   Assure protection of officers

 

   Enable officers to focus on Company business with minimal disruption

 Other Benefits

  Medical, welfare and other benefits  

   Necessary to attract and retain employees

 

 

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Compensation Decision-Making

 

  

 

Compensation Decision-Making

The Compensation Committee undertakes ongoing review of our executive compensation policies, practices and plans to determine whether they are consistent with our compensation philosophy and objectives, and whether they need to be modified in light of changes in our business or the markets in general. The Compensation Committee meets periodically with the CEO to review compensation policies and specific levels of compensation paid to officers and other key personnel, and reports and makes recommendations to the Board regarding executive compensation policies and programs. In addition, the CEO annually makes recommendations to the Compensation Committee regarding salary adjustments and the setting of annual and long-term incentive targets and awards for officers other than himself, including the other named executive officers. The Compensation Committee also obtains feedback, advice and recommendations on our compensation program from its independent compensation consultant, F.W. Cook. The Compensation Committee also reviews Company performance, compensation practices of its peers, compensation surveys and other materials regarding executive compensation.

In determining the compensation of a named executive officer, the Compensation Committee considers various factors, including:

 

  Company performance against corporate and operating unit objectives,

 

  The Company’s relative shareholder return,

 

  The compensation of officers with similar responsibilities at comparable companies,

 

  Individual performance,

 

  Current and future responsibilities,

 

  Retention considerations,

 

  The awards given to the named executive officer in past years, and

 

  The relationship between the compensation to be received by the officer and the compensation to be received by the other named executive officers (which we refer to as “internal pay equity”), including comparing the relationship to that found at comparable companies. In reviewing the CEO’s compensation relative to our other named executive officers, the Compensation Committee takes into account the fact that we do not currently have a president or chief operating officer between the CEO and our business unit presidents or corporate senior vice presidents as do many companies.

 

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Compensation Decision-Making

 

  

 

The Compensation Committee generally sets “primary compensation,” which we define to include salary, annual cash incentives and long-term compensation, for the CEO and the other named executive officers as follows:

 

 

LOGO

Long-term compensation is delivered through grants of stock options and long-term performance-based incentive awards that are payable in shares of Common Stock and cash. The mix of long-term compensation between cash-based long-term incentives, performance shares and stock options is based, in part, on the market value of our Common Stock, the number of shares available for grant under our shareholder-approved equity compensation plan, and considerations relating to managing the dilutive effect of share-based awards.

We generally target base salaries for our CEO and other officers below median market rates, in the aggregate, consistent with the requirements of our master labor agreement with the USW, and we target annual and long-term incentive compensation at rates that, when added to base salaries, result in median market levels of target primary compensation, on average. The actual positioning of target compensation relative to the median varies based on each executive’s experience and skill set, and generally results in executives who are new in their role being placed lower in the range and those with more experience being placed higher in the range. We emphasize variable compensation because it minimizes fixed expense associated with salary and enables total compensation to fluctuate directly with performance against operating goals and changes in share price. This approach aligns overall costs with performance and provides executives with a leveraged and attractive compensation opportunity that varies based on results.

For further information regarding the Compensation Committee and its authority and responsibilities, see “Corporate Governance Principles and Board Matters — Compensation Committee” at page 7.

 

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Role of Compensation Consultant

 

  

 

Role of Compensation Consultant

The Compensation Committee has the authority to retain outside advisors, including compensation consultants, to assist it in evaluating actual and proposed compensation for our officers. During 2017, the Compensation Committee retained F.W. Cook as its independent compensation consultant.

As part of its engagement, F.W. Cook reviewed our executive compensation peer group and conducted a competitive analysis of compensation for the named executive officers as well as our operational and stock price performance relative to the peer group. F.W. Cook also assisted the Committee with a variety of other issues, including setting CEO compensation, compensation related to leadership succession activities, the design and establishment of performance goals under our variable incentive plans, and reviewing our compensation risk analysis and this Compensation Discussion and Analysis.

In addition, F.W. Cook reviewed and provided recommendations regarding our non-management director compensation program and made a presentation to the full Board on trends and regulatory developments in executive compensation. A representative of F.W. Cook regularly attends Compensation Committee meetings. F.W. Cook works with Goodyear management only under the direction of the Compensation Committee and does not provide any other advice or consulting services to the Company.

Peer Group Benchmarking of Primary Compensation

As noted above, the Compensation Committee generally targets primary compensation levels for officers at median market rates. For these purposes, the Compensation Committee has determined market rates by considering two sources:

 

    Proxy statements and other public filings of 17 peer companies; and

 

    Broad-based compensation surveys published from time to time by national human resources consulting firms.

 

FOR 2017 COMPENSATION DECISIONS, THE PEER GROUP NOTED ABOVE CONSISTED OF:

 

3M Company

 

    

Eaton Corporation plc

 

    

PACCAR Inc.

 

 

Caterpillar Inc.

 

    

 

Honeywell International Inc.

 

    

 

Parker-Hannifin Corporation

 

 

Cummins Inc.

 

    

 

Illinois Tool Works Inc.

 

    

 

PPG Industries, Inc.

 

 

Deere & Co.

 

    

 

Ingersoll-Rand plc

 

    

 

Stanley Black & Decker, Inc.

 

 

Delphi Automotive PLC

 

    

 

Johnson Controls, Inc.

 

    

 

Whirlpool Corporation

 

 

E.I. du Pont de Nemours and Co.

 

 

    

 

Lear Corporation

 

 

    

 

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Peer Group Benchmarking of Primary Compensation

 

  

 

This peer group was selected because the companies, as a whole, represent organizations of comparable size and complexity with which we compete for executive talent. The peer group includes companies in similar industries with comparable business models and global reach. It does not include other companies in the tire industry because no other U.S.-based tire company is similar in size and complexity to us, and non-U.S.-based tire companies do not publish comparable compensation information.

The Compensation Committee strongly believes that performance should be the primary basis on which compensation decisions are made. At the same time, the Compensation Committee believes that our peer group should reflect the fact that our executive officers are responsible for managing a larger and more complex enterprise relative to that of many other publicly traded companies with a larger market capitalization. Accordingly, in 2016, prior to analyzing competitive compensation data to help inform 2017 compensation decisions, the Compensation Committee reviewed the composition of the peer group using the following criteria:

 

(1) companies with which we compete for executive talent;

 

(2) size, including revenues, net income, total assets, market capitalization and enterprise value;

 

(3) global manufacturing focus;

 

(4) industry focus, particularly companies in the automotive industry;

 

(5) consumer branded product companies; and

 

(6) number of employees.

Our peer group had 2016 annual revenues – the size criteria most strongly correlated to compensation – ranging from $11.3 billion to $41.8 billion and median revenues of $18.4 billion (for 2016, we had revenues of $15.2 billion), and had approximately 60% of our selected peer companies in common with each of the peer groups constructed by two leading proxy advisory firms.

Following its review of the criteria described above, the Compensation Committee removed TRW Automotive Holdings from our peer group for 2017 compensation decisions due to TRW’s acquisition by ZF Friedrichshafen AG. The Compensation Committee may make further changes in the peer group from time to time based on the criteria described above or other relevant factors.

Data with respect to comparable elements of primary compensation is compiled for the peer group of companies described above from available sources, including, in most cases, the most recently available annual proxy statements and other SEC filings that address executive compensation matters.

Target Setting

The Compensation Committee set the performance targets for our 2017 executive compensation program in February 2017. The Compensation Committee believes that the performance targets it established were rigorous and reflected the significant raw material headwinds we faced in 2017, while providing meaningful motivational value to our executives. The performance targets required us to offset the anticipated $1.1 billion raw material cost increase with pricing actions and improved mix, which would keep us on track to generate significant organic earnings growth and free cash flow through 2020. The achievement of the performance targets would enable us to fund our capital allocation plan, and would mean we had successfully met the significant challenges posed by rapidly rising raw material costs, were a stronger competitor and were poised for future growth.

 

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Target Setting

 

  

 

The Compensation Committee considered the following factors when establishing the performance targets, including the related threshold and maximum target levels:

 

  Corporate strategy

 

  Annual and long-term operating plans

 

  Publicly disclosed financial targets and guidance

 

  Performance history

 

  Macro-economic and tire industry environment

 

  Input from F.W. Cook and management

 

  Difficulty of the targets in light of the above factors

In September 2016, we announced an ambitious four-year strategic plan for 2017 to 2020, which set goals for segment operating income of $3.0 billion by 2020 and cash flow generation of up to $5.0 billion over that four-year period. The strategic plan included a related capital allocation plan and would deliver significant long-term shareholder value.

In late 2016 and early 2017, raw material prices increased rapidly, making the achievement of our 2020 strategic plan much more difficult. In February 2017, we reflected these significant raw material cost headwinds in our publicly announced earnings targets for 2017. As in prior years, the target level of performance for the 2017 performance period under our annual and long-term incentive plans was consistent with those publicly announced earnings targets. The performance targets would be achieved, at the target performance level, if we successfully executed our operating plan for 2017 and the 2017-2019 performance cycle. The minimum level of performance was consistent with the known risks inherent in our 2017 operating plan, particularly with respect to the competitive pricing environment in the tire industry. The maximum level of performance would be achieved if we more than offset the rapid increase in raw material costs and remained firmly on track to successfully complete our 2020 strategic plan despite the significant headwinds we faced.

ANNUAL COMPENSATION TARGETS

The 2017 Corporate EBIT target was essentially the same as our 2016 actual results. Our 2017 Corporate EBIT target reflected a $1.1 billion increase in raw material costs, as well as unabsorbed overhead costs, foreign currency exchange headwinds, and start-up costs for our new manufacturing facility in Mexico. Our goal was to hold our ground in 2017, build momentum in the second half of 2017, and be positioned to continue pursuing our 2020 targets in 2018.

The 2017 free cash flow from operations target of $650 million was a 12% decline from our 2016 actual results, reflecting the anticipated $200 million impact of rapidly rising raw material costs on our working capital. We anticipated offsetting more than half of that impact through interest expense savings and other cost saving initiatives, but did not expect to fully offset the impact of raw material costs on free cash flow from operations in 2017.

LONG-TERM COMPENSATION TARGETS

The 2017 net income target was an 8% decrease from our 2016 actual results and was also impacted by rapidly rising raw material costs. Net income was expected to decrease more than Corporate EBIT primarily due to higher expected taxes and

 

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foreign currency headwinds. The 2017 target for cash flow return on capital reflected the increase in working capital described above, as well as a planned increase in average net fixed assets.

Annual Compensation

2017 BASE SALARY DECISIONS

 

Mr. Delaney received a merit pay increase of 2.9% effective May 1, 2017, and a further increase of 11% effective September 1, 2017 as a result of his increased responsibilities upon being named President, Europe, Middle East and Africa.     Name    Annual Base Salary1    % Increase
   

Kramer

   $1,300,000      0%  
   

Thompson

   650,000      0     
   

McClellan

   630,000      3.3     
   

Delaney

   600,000      14.3     
   

Bialosky

   581,500      2.0     
   

 

1  Except for Mr. Delaney, base salary increases were effective May 1, 2017.

2017 ANNUAL CASH INCENTIVE PAYOUTS

For 2017, the performance objectives under our annual incentive plans were as follows:

Corporate Officers

 

 

LOGO

Officers of Our Three Operating Units

 

 

LOGO

We believe these weightings hold our operating unit executives most accountable for financial results in the areas where they have the most control and influence, but also motivate them to work cooperatively with other operating units to maximize results for the entire Company.

The Compensation Committee used Corporate EBIT and Operating Unit EBIT to measure our results of operations and free cash flow from operations to measure our ability to generate cash, which enables us to provide funding for dividends and share

 

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repurchases, debt repayments and restructuring actions. The Compensation Committee also emphasized the balance between profitability and cash generation by equally weighting EBIT and free cash flow from operations.

“EBIT,” as defined in our annual incentive plans, means the Company’s net sales, less cost of goods sold and selling, administrative and general expense, excluding the effects of restructuring charges, accelerated depreciation, discontinued operations, extraordinary items, other unusual or non-recurring items, and the cumulative effect of tax or accounting changes. “Free cash flow from operations,” as defined in our annual incentive plans, means cash flow from operating activities before pension contributions and direct payments and rationalization payments, less capital expenditures. Our 2017 targets also excluded the effects of (1) certain pension curtailment and settlement charges, and (2) interest savings, net of charges and payments relating to the refinancing of debt. In 2017, EBIT and free cash flow from operations were adjusted to reflect the impact of Hurricanes Harvey and Irma on our operations.

In 2017, the Compensation Committee established the following operating drivers that were consistent with our annual operating plan and are tied to the achievement of important strategic objectives that drive the success of our business:

 

Strategic Objective    Operating Driver

Innovation Excellence

Sales & Marketing Excellence

  

New Product Vitality – Meet goals for the proportion of branded replacement tire sales volume from products launched in the last four years.

 

Operational Excellence   

Total Delivered Cost Productivity – Achieve $150 million in cost reductions from improvements in labor, overhead and utilities cost, raw material cost, and transportation and warehousing cost.

 

Enabling Investments   

Working Capital Excellence – Achieve an average ratio of working capital to net sales of 14.0%.

 

 

Overall Company performance is relevant for determining the annual incentive payments for all named executive officers. Additionally, Americas’ performance is relevant for determining the annual incentive payment for Mr. McClellan and Asia Pacific’s and EMEA’s performance is relevant for determining the annual incentive payment for Mr. Delaney. In February 2018, the Compensation Committee reviewed actual results for 2017 with respect to achievement of the company-wide and operating unit performance objectives. The table below shows the performance objectives, actual results for 2017 and corresponding payout percentages under our annual incentive plans.

 

     Payout Under Annual Incentive Plans                
      50%      100%      200%      Actual Results      Payout Percentage  

 Overall Company Performance (2017):

 

           

 Corporate EBIT

 

   $

 

1,565 million

 

 

 

   $

 

1,840 million

 

 

 

   $

 

2,045 million

 

 

 

        $

 

1,453 million

 

 

 

    

 

0%

 

 

 

 Free cash flow from operations

 

   $

 

520 million

 

 

 

   $

 

650 million

 

 

 

   $

 

780 million

 

 

 

        $

 

522 million

 

 

 

    

 

51%

 

 

 

 

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Annual Compensation

 

  

 

The table below shows the payout percentages under our annual incentive plans for each of our operating units.

 

     Payout Percentage  
      EBIT     Free Cash Flow
From Operations
 

 Americas

 

    

 

0

 

 

   

 

0%

 

 

 

 EMEA

 

    

 

66

 

 

   

 

72%

 

 

 

 Asia Pacific

 

    

 

0

 

 

   

 

88%

 

 

 

The Committee also assessed whether our performance against the operating drivers was below, at or above target. The Committee determined that we met two of the three operating drivers, and failed to meet one of the operating drivers. In reaching that conclusion, the Committee considered the following results by the Company against the operating driver goals:

 

  Exceeding our goal for the proportion of branded replacement tire sales volume coming from products launched in the last four years by 7%.

 

  Achieving $179 million of total delivered cost productivity savings, versus a goal of $150 million.

 

  Achieving an average ratio of working capital to net sales of 14.8%, which fell short of our goal of 14.0%.

Since the overall company EBIT and free cash flow from operations performance was largely consistent with our operating driver performance, the Committee determined that the overall company operating driver performance should mirror the calculated performance using the financial performance measures. In reaching these decisions, the Committee considered whether the performance under the financial performance measures and the operating drivers were appropriately aligned, and concluded that they were.

The Compensation Committee reviewed its assessment of the CEO’s performance and the CEO’s assessment of each of the other named executive officer’s performance during 2017, and their respective contributions to our results. In particular, the Compensation Committee considered:

 

  The launch of 55 new products globally, which supported strong new product vitality.

 

  Strong cost savings performance.

 

  Performance on our capital allocation plan, including direct shareholder returns of $510 million in 2017.

 

  Continued strong momentum in innovation.

 

  Continued strengthening of our leadership team and pipeline.

 

  Unit volume, Corporate EBIT and free cash flow from operations that did not meet the targets in our operating plan for 2017.

The CEO and the Compensation Committee also considered the contributions of the other named executive officers in furthering the Company’s strategic initiatives described in the preceding bullet points.

The Compensation Committee then established an aggregate incentive pool for all officers, and determined the payout for each officer. In this process, the officer’s target incentive amount is first multiplied by the same percentage used to determine the applicable portion of the aggregate incentive pool. (For example, if the portion of the aggregate incentive pool applicable to

 

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such officer, e.g., overall company, is funded at 150% of the aggregate target incentive amount, the officer’s individual payout initially would be set at 150% of his individual incentive target.) Then, the CEO assesses the officer’s individual performance and contributions towards Company goals and makes his recommendations with respect to individual payout amounts to the Compensation Committee, which considers the CEO’s recommendations and determines the final payouts. The Compensation Committee undertakes the same process for the CEO and makes the determination as to the final payout amount for the CEO. Officers can earn between 0% and 200% of their target incentive, but the total payout for all officers may not exceed the aggregate incentive pool.

The incentive pool for the overall company was funded at 26% of the target incentive amount (and the operating unit pools were funded at 22% to 52% of the target incentive amount). For 2017, Mr. Kramer recommended that he and the other officers not receive any payout under the annual incentive plan in light of the Company’s financial performance. The Compensation Committee agreed with his recommendation and approved the following awards for our named executive officers under our annual incentive plans:

 

  Name    Target Award
($)
     Actual Award
($)
     Actual Award
as a %
of Target Award
 
     

Kramer

 

            $

 

1,950,000

 

 

 

                       $

 

0

 

 

 

    

 

0%

 

 

 

     

Thompson

 

    

 

628,355

 

 

 

    

 

0

 

 

 

    

 

0%

 

 

 

     

McClellan

 

    

 

609,021

 

 

 

    

 

0

 

 

 

    

 

0%

 

 

 

     

Delaney

 

    

 

551,929

 

 

 

    

 

0

 

 

 

    

 

0%

 

 

 

     

Bialosky

 

    

 

494,275

 

 

 

    

 

0

 

 

 

    

 

0%

 

 

 

Long-Term Compensation

2017 GRANTS OF PERFORMANCE-BASED INCENTIVES

In February 2017, the Compensation Committee granted 70% of total long-term compensation in the form of long-term performance-based incentives that have the following characteristics:

 

  The awards will be payable 30% in shares of Common Stock and 70% in cash.

 

  The payout is based on results over a three-year performance cycle, with performance targets for each year of the three-year period established on the grant date in order to provide greater accountability for long-term results, weighted one-third for each year in the three-year performance cycle.

 

  The payout can range from 0% to 200% for the 2017-2019 performance cycle based on actual results (and assuming the recipient remains continuously employed by us through the entire three-year period).

 

  The payout can increase or decrease up to 20% (up to a maximum payout of 200%) based on our total shareholder return versus the S&P 500 over the three-year period ending December 31, 2019.

The performance criteria for the 2017, 2018 and 2019 performance periods for the 2017-2019 performance cycle are, consistent with our strategic plan, based 50% on net income and 50% on cash flow return on capital, providing a balanced

 

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emphasis on profitability and capital efficiency. Results will be based on our consolidated performance, with no award tied to business unit performance. In this manner, the plan balances performance measures used under our annual incentive plans and reinforces the need for teamwork among executives. Net income is used as a measure to focus on improvement in profitability. Cash flow return on capital is an efficiency metric that measures how much return is generated in proportion to the investment in the business in terms of plant, property and equipment and working capital.

The TSR modifier measures the relative performance of our Common Stock versus the S&P 500 over the three-year performance cycle of our long-term incentive awards, and is calculated based on the trailing two-month average closing price for our Common Stock and the S&P 500 (as in existence at the end of the period), assuming the reinvestment of dividends. The TSR modifier will cause the payout of our long-term incentive awards to increase or decrease up to 20% (up to a maximum payout of 200%) as follows:

 

 Goodyear Common Stock vs. S&P 5001   TSR Modifier
 

³ 75th Percentile

 

 

1.2 times

 

 

= 50th Percentile

 

 

1.0 times

 

 

£ 25th Percentile

 

 

0.8 times

 

 

1 Results between these performance levels will be interpolated.

The table below shows the aggregate value of the long-term performance-based incentives granted to each of our named executive officers for the 2017-2019 performance cycle at the target award opportunity, as well as the amount payable in shares of Common Stock and cash.

 

 Name    Aggregate Target Award
($)
    

Portion Payable in Shares

($)1

     Portion Payable in Cash
($)
 
     

  Kramer

 

                             $

 

7,455,000

 

 

 

                               $

 

2,130,000

 

 

 

                             $

 

5,325,000

 

 

 

     

  Thompson

 

    

 

1,662,500

 

 

 

    

 

475,000

 

 

 

    

 

1,187,500

 

 

 

     

  McClellan

 

    

 

1,505,000

 

 

 

    

 

430,000

 

 

 

    

 

1,075,000

 

 

 

     

  Delaney

 

    

 

1,281,000

 

 

 

    

 

366,000

 

 

 

    

 

915,000

 

 

 

     

  Bialosky

 

    

 

1,137,500

 

 

 

    

 

325,000

 

 

 

    

 

812,500

 

 

 

 

1 See the “Grants of Plan-Based Awards” Table at page 52 for information regarding the target number of performance shares actually granted, which was determined by dividing the amount in this column by the closing market price of our Common Stock on the respective date of grant.

 

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PERFORMANCE FOR THE 2017 PERFORMANCE PERIOD

The table below shows the performance goals, actual results and payout percentages for the 2017 performance period applicable to the 2015-2017, 2016-2018 and 2017-2019 performance cycles. With respect to each performance cycle, each year was weighted evenly (33%), goals were set on the grant date and the maximum payout was 200% of the target award opportunity.

 

     Net Income  
 Performance Cycle    Threshold      Target      Maximum     

Actual

Results

    

Payout

Percentage

 
         

2015-2017

 

   $

 

695 million

 

 

 

   $

 

930 million

 

 

 

   $

 

1,070 million

 

 

 

   $

 

783 million

 

 

 

    

 

69%

 

 

 

         

2016-2018

 

    

 

770 million

 

 

 

    

 

1,030 million

 

 

 

    

 

1,185 million

 

 

 

    

 

800 million

 

 

 

    

 

56%

 

 

 

         

2017-2019

 

    

 

785 million

 

 

 

    

 

980 million

 

 

 

    

 

1,130 million

 

 

 

    

 

800 million

 

 

 

    

 

54%

 

 

 

“Net income,” as defined in our long-term incentive plans, means the Company’s net income, excluding charges for restructurings, accelerated depreciation, certain pension curtailment and settlement charges, charges relating to the refinancing of debt, changes in tax valuation allowances, and the cumulative effect of accounting changes. Our 2017 “net income” also excluded the impact of certain other items noted in the table below. Our 2017 “net income” for purposes of our long-term incentive plans was calculated as follows:

 

 ($ in millions)    2015 - 2017      2016 - 2018      2017 - 2019  
     

Goodyear net income (as reported)

 

                $

 

346

 

 

 

                $

 

346

 

 

 

                $

 

346

 

 

 

     

U.S. tax reform impact

 

    

 

299

 

 

 

    

 

299

 

 

 

    

 

299

 

 

 

     

Restructuring and accelerated depreciation charges

 

    

 

121

 

 

 

    

 

121

 

 

 

    

 

121

 

 

 

     

Dissolution of global alliance with Sumitomo Rubber Industries (“SRI”)

 

    

 

(33

 

 

    

 

 

 

 

    

 

 

 

 

     

Debt refinancing charges

 

    

 

19

 

 

 

    

 

19

 

 

 

    

 

19

 

 

 

     

Hurricanes impact

 

    

 

16

 

 

 

    

 

16

 

 

 

    

 

16

 

 

 

     

Net gains on asset sales

 

    

 

(13

 

 

    

 

(13

 

 

    

 

(13

 

 

     

Pension curtailment and settlement charges

 

    

 

12

 

 

 

    

 

12

 

 

 

    

 

12

 

 

 

     

Impact of release of tax valuation allowances

 

    

 

8

 

 

 

    

 

 

 

 

    

 

 

 

 

     

Loss of royalty income due to licensing agreement termination

 

    

 

8

 

 

 

    

 

 

 

 

    

 

 

 

 

     

Net income

 

                $

 

783

 

 

 

                $

 

800

 

 

 

                $

 

800

 

 

 

 

     Cash Flow Return on Capital  
 Performance Cycle    Threshold      Target      Maximum     

Actual

Results

    

Payout

Percentage

 
         

2015-2017

 

    

 

5.9%

 

 

 

    

 

7.9%

 

 

 

    

 

9.8%

 

 

 

    

 

5.7%

 

 

 

    

 

0%

 

 

 

         

2016-2018

 

    

 

7.6%

 

 

 

    

 

9.8%

 

 

 

    

 

11.5%

 

 

 

    

 

5.4%

 

 

 

    

 

0%

 

 

 

         

2017-2019

 

    

 

5.4%

 

 

 

    

 

6.7%

 

 

 

    

 

8.1%

 

 

 

    

 

5.4%

 

 

 

    

 

50%

 

 

 

“Cash flow return on capital,” as defined in our long-term incentive plans, means free cash flow from operations (as defined for purposes of our annual incentive plan) divided by the sum of average net fixed assets and average working capital. Our 2017

 

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Long-Term Compensation

 

  

 

cash flow return on capital calculation for each of the performance cycles excluded the impact on free cash flow from operations of (1) the interest savings, net of the payment of redemption premiums and other refinancing costs, related to the redemption of debt, and (2) Hurricanes Harvey and Irma. Our 2017 cash flow return on capital calculation for the 2015-2017 performance cycle also excluded the impact on free cash flow from operations of the dissolution of the global alliance with SRI.

In 2017, we faced a number of challenges, which are discussed in detail above in the “Executive Summary” to this Compensation Discussion and Analysis. We did not meet our net income or cash flow return on capital targets for the 2017 performance period primarily due to Corporate EBIT that fell short of our annual operating plan.

Based on the results during the 2017 performance period, the Compensation Committee approved earnings on the long-term incentive awards for that period in an amount equal to 34% of the target amount for 2015-2017 awards, 28% for 2016-2018 awards and 52% for 2017-2019 awards. The payout of these amounts is contingent upon the named executive officer’s continued service during the related three-year performance cycle, except in the case of certain events, such as retirement, death, disability or severance following a change-in-control, and is subject to a three-year relative total shareholder return modifier.

The table below shows amounts earned by each of the named executive officers in respect of their long-term incentive grants for the 2017 performance period with respect to their 2015-2017 awards, which represents one-third of the three-year target award opportunity:

 

 Name

 

  

Aggregate
Target Award ($)

 

    

Portion of
Actual Award
Payable in
Cash ($)1

 

    

Portion of
Actual Award
Payable in Shares
(# of Shares)1

 

 

 

Kramer

 

  

 

             $

 

 

2,317,396

 

 

 

 

  

 

             $

 

 

555,322

 

 

 

 

  

 

 

 

 

8,178

 

 

 

 

 

Thompson

 

  

 

 

 

 

354,688

 

 

 

 

  

 

 

 

 

85,000

 

 

 

 

  

 

 

 

 

1,251

 

 

 

 

 

McClellan

 

  

 

 

 

 

502,443

 

 

 

 

  

 

 

 

 

120,394

 

 

 

 

  

 

 

 

 

1,773

 

 

 

 

 

Delaney

 

  

 

 

 

 

374,587

 

 

 

 

  

 

 

 

 

90,644

 

 

 

 

  

 

 

 

 

1,290

 

 

 

 

 

Bialosky

 

  

 

 

 

 

468,218

 

 

 

 

  

 

 

 

 

112,200

 

 

 

 

  

 

 

 

 

1,652

 

 

 

 

 

1 Payable subject to a three-year relative total shareholder return modifier. See “Impact of TSR Modifier and Payout of 2015-2017 Long-Term Incentive Awards” below.

 

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Long-Term Compensation

 

  

 

The table below shows amounts earned by each of the named executive officers in respect of their long-term incentive grants for the 2017 performance period with respect to their 2016-2018 awards, which represents one-third of the three-year target award opportunity:

 

 Name

 

  

Aggregate
Target Award ($)

 

    

Portion of
Actual Award
Payable in

Cash ($)1

 

    

Portion of
Actual Award
Payable in Shares
(# of Shares)1

 

 

 

Kramer

 

  

 

             $

 

 

2,427,467

 

 

 

 

  

 

         $

 

 

480,676

 

 

 

 

  

 

 

 

 

6,430

 

 

 

 

 

Thompson

 

  

 

 

 

 

542,012

 

 

 

 

  

 

 

 

 

107,324

 

 

 

 

  

 

 

 

 

1,435

 

 

 

 

 

McClellan

 

  

 

 

 

 

483,172

 

 

 

 

  

 

 

 

 

95,676

 

 

 

 

  

 

 

 

 

1,279

 

 

 

 

 

Delaney

 

  

 

 

 

 

365,263

 

 

 

 

  

 

 

 

 

72,324

 

 

 

 

  

 

 

 

 

967

 

 

 

 

 

Bialosky

 

  

 

 

 

 

365,263

 

 

 

 

  

 

 

 

 

72,324

 

 

 

 

  

 

 

 

 

967

 

 

 

 

 

1 Payable contingent on continued service through December 31, 2018 and subject to a three-year relative total shareholder return modifier.

The table below shows amounts earned by each of the named executive officers in respect of their long-term incentive grants for the 2017 performance period with respect to their 2017-2019 awards, which represents one-third of the three-year target award opportunity:

 

 Name

 

  

Aggregate
Target Award ($)

 

    

Portion of
Actual Award
Payable in
Cash ($)1

 

    

Portion of
Actual Award
Payable in Shares
(# of Shares)1

 

 

 

  Kramer

 

  

 

             $

 

 

2,515,602

 

 

 

 

  

 

         $

 

 

923,000

 

 

 

 

  

 

 

 

 

10,470

 

 

 

 

 

  Thompson

 

  

 

 

 

 

561,079

 

 

 

 

  

 

 

 

 

205,868

 

 

 

 

  

 

 

 

 

2,335

 

 

 

 

 

  McClellan

 

  

 

 

 

 

507,911

 

 

 

 

  

 

 

 

 

186,368

 

 

 

 

  

 

 

 

 

2,113

 

 

 

 

 

  Delaney

 

  

 

 

 

 

434,823

 

 

 

 

  

 

 

 

 

158,652

 

 

 

 

  

 

 

 

 

1,834

 

 

 

 

 

  Bialosky

 

  

 

 

 

 

383,925

 

 

 

 

  

 

 

 

 

140,868

 

 

 

 

  

 

 

 

 

1,597

 

 

 

 

 

1 Payable contingent on continued service through December 31, 2019 and subject to a three-year relative total shareholder return modifier.

IMPACT OF TSR MODIFIER AND PAYOUT OF 2015 – 2017 LONG-TERM INCENTIVE AWARDS

Our stock out-performed 37% of the companies in the S&P 500 during the three-year period ending December 31, 2017, resulting in a TSR modifier of 0.9 times (up to a maximum payout of 200%). See page 38 for more information on the calculation of the TSR modifier.

 

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The Compensation Committee approved the payout of shares of Common Stock and cash to the named executive officers with respect to the 2015-2017 performance cycle as follows.

 

    

Cash Payout

 

 

 Name

 

  

2015
Performance
Period1

 

    

2016
Performance
Period2

 

    

2017
Performance
Period

 

    

Impact of TSR
Modifier

 

    

Total Payout of
2015-2017
Awards

 

 

 

  Kramer

 

  

 

     $

 

 

3,266,800

 

 

 

 

  

 

     $

 

 

2,711,278

 

 

 

 

  

 

       $

 

 

555,322

 

 

 

 

  

 

        $

 

 

(653,400

 

 

 

  

 

        $

 

 

5,880,000

 

 

 

 

 

  Thompson

 

  

 

 

 

 

500,000

 

 

 

 

  

 

 

 

 

415,000

 

 

 

 

  

 

 

 

 

85,000

 

 

 

 

  

 

 

 

 

(100,000

 

 

 

  

 

 

 

 

900,000

 

 

 

 

 

  McClellan

 

  

 

 

 

 

708,400

 

 

 

 

  

 

 

 

 

587,972

 

 

 

 

  

 

 

 

 

120,394

 

 

 

 

  

 

 

 

 

(141,766

 

 

 

  

 

 

 

 

1,275,000

 

 

 

 

 

  Delaney

 

  

 

 

 

 

533,400

 

 

 

 

  

 

 

 

 

442,722

 

 

 

 

  

 

 

 

 

90,644

 

 

 

 

  

 

 

 

 

(106,766

 

 

 

  

 

 

 

 

960,000

 

 

 

 

 

  Bialosky

 

  

 

 

 

 

660,000

 

 

 

 

  

 

 

 

 

547,800

 

 

 

 

  

 

 

 

 

112,200

 

 

 

 

  

 

 

 

 

(132,000

 

 

 

  

 

 

 

 

1,188,000

 

 

 

 

 

    

Shares Payout

 

 

 Name

 

  

2015
Performance
Period1

(# of Shares)

 

    

2016
Performance
Period2

(# of Shares)

 

    

2017

Performance

Period

(# of Shares)

 

    

Impact of TSR

Modifier

(# of Shares)

 

    

Total Payout of
2015-2017
Awards

(# of Shares)

 

 

 

  Kramer

 

  

 

 

 

 

48,110

 

 

 

 

  

 

 

 

 

39,931

 

 

 

 

  

 

 

 

 

8,178

 

 

 

 

  

 

 

 

 

(9,623

 

 

 

  

 

 

 

 

86,596

 

 

 

 

 

  Thompson

 

  

 

 

 

 

7,364

 

 

 

 

  

 

 

 

 

6,112

 

 

 

 

  

 

 

 

 

1,251

 

 

 

 

  

 

 

 

 

(1,474

 

 

 

  

 

 

 

 

13,253

 

 

 

 

 

  McClellan

 

  

 

 

 

 

10,432

 

 

 

 

  

 

 

 

 

8,658

 

 

 

 

  

 

 

 

 

1,773

 

 

 

 

  

 

 

 

 

(2,087

 

 

 

  

 

 

 

 

18,776

 

 

 

 

 

  Delaney

 

  

 

 

 

 

7,594

 

 

 

 

  

 

 

 

 

6,303

 

 

 

 

  

 

 

 

 

1,290

 

 

 

 

  

 

 

 

 

(1,520

 

 

 

  

 

 

 

 

13,667

 

 

 

 

 

  Bialosky

 

  

 

 

 

 

9,720

 

 

 

 

  

 

 

 

 

8,067

 

 

 

 

  

 

 

 

 

1,652

 

 

 

 

  

 

 

 

 

(1,944

 

 

 

  

 

 

 

 

17,495

 

 

 

 

 

1 Previously reported, to the extent applicable, in the Proxy Statement dated March 11, 2016.

 

2 Previously reported, to the extent applicable, in the Proxy Statement dated March  10, 2017.

2017 STOCK OPTION GRANTS

In February 2017, the Compensation Committee granted 30% of total long-term compensation in the form of stock options. Stock options granted in 2017 have the following terms:

 

  options vest in equal, annual installments over a four-year period;

 

  options have a ten-year term; and

 

  the exercise price is equal to the closing market price of our Common Stock on the date of grant.

All options granted to named executive officers during 2017 were non-qualified stock options. The portion of long-term compensation provided in the form of stock option grants each year is determined based on the number of available options under our equity compensation plans, as well as market data on long-term compensation. We use a Black-Scholes valuation model to determine the number of stock options to be granted.

 

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The table below shows the aggregate grant date fair value and the number of stock options granted to each of our named executive officers in 2017.

 

 Name

 

 

Aggregate

Grant Date
    Fair Value ($)

 

    

Number of

                         Stock Options (#)

 

 

 

  Kramer

 

 

 

             $

 

 

3,194,991

 

 

 

 

  

 

 

 

 

264,486

 

 

 

 

 

  Thompson

 

 

 

 

 

 

712,490

 

 

 

 

  

 

 

 

 

58,981

 

 

 

 

 

  McClellan

 

 

 

 

 

 

645,000

 

 

 

 

  

 

 

 

 

53,394

 

 

 

 

 

  Delaney

 

 

 

 

 

 

548,989

 

 

 

 

  

 

 

 

 

46,323

 

 

 

 

 

  Bialosky

 

 

 

 

 

 

487,488

 

 

 

 

  

 

 

 

 

40,355

 

 

 

 

2017 RESTRICTED STOCK AWARDS

In October 2017, the Compensation Committee granted 15,281 restricted stock units to Mr. Delaney due to his increased responsibilities upon being named President, Europe, Middle East and Africa. The restricted stock units will vest and convert into shares of Common Stock three years from the date of grant (in October 2020). The Compensation Committee believes that restricted stock links executives to the results earned by shareholders and builds executive stock ownership.

Retirement and Other Benefits

RETIREMENT BENEFITS

We provide our named executive officers with retirement benefits under both tax-qualified and non-qualified retirement plans. Tax-qualified plan benefits are pursuant to a defined benefit pension plan, the Goodyear Salaried Pension Plan (the “Salaried Plan”), which was frozen effective December 31, 2008, and a defined contribution plan, the Goodyear Employee Savings Plan for Salaried Employees (the “Savings Plan”). Non-qualified plan benefits are pursuant to a defined benefit plan, the Goodyear Supplementary Pension Plan (the “Supplementary Plan”). We also maintain a non-qualified defined benefit Excess Benefit Plan, which was also frozen effective December 31, 2008, that pays an additional pension benefit over that paid from the Salaried Plan if a participant does not meet the eligibility requirements of the Supplementary Plan. For all employees who do not meet the eligibility requirements of the Supplementary Plan, there is also a corresponding non-qualified defined contribution Excess Benefit Plan that mirrors the retirement contributions feature of the Savings Plan.

Mr. Kramer, Ms. Thompson and Mr. McClellan are currently eligible to receive a benefit under the Supplementary Plan. Upon an involuntary termination within two years of a change in control under the Executive Severance Plan described below, Mr. Bialosky will become vested in his Supplementary Plan benefits. Mr. Kramer, Ms. Thompson and Mr. McClellan will receive benefits from the frozen Salaried Plan.

 

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Retirement and Other Benefits

 

  

 

Mr. Delaney and Mr. Bialosky are not eligible to participate in the Salaried Plan or the defined benefit Excess Benefit Plan. Participants in the Savings Plan, including all of the named executive officers, are currently eligible to receive Company matching contributions and retirement contributions.

The Supplementary Plan provides additional pension benefits to officers and certain other key individuals identified by the Compensation Committee. All of the named executive officers participate in the Supplementary Plan. The Committee believes supplemental executive retirement plans such as the Supplementary Plan are an important part of executive compensation and are utilized by many large companies that compete with the Company for executive talent. Retirement benefits, including those provided through a supplemental executive retirement plan, are essential to attracting, motivating and retaining talented executives with a history of leadership and to providing retirement replacement income. Retirement benefits are an important factor in an executive’s decision to accept or reject a new position. The Compensation Committee has adopted a policy prohibiting the grant of additional service credit in the Supplementary Plan for newly hired officers and other key employees.

The number reported in the “Change in Pension Value” column in the Summary Compensation Table reflects the change in each NEO’s pension value in 2017. Changes in pension value are caused largely by two factors: (1) additional pension benefits accrued by the NEOs under the Supplementary Plan when they receive higher compensation due to roles of increasing responsibility or through strong performance, and (2) changes in assumptions used for financial reporting purposes, such as changes in discount rates and updated actuarial assumptions regarding life expectancies. Mr. Kramer’s pension value increased in 2017 due to decreases in both the discount rate used to calculate the pension value and the interest rate used to determine the lump sum value of the Supplementary Plan benefit, as well as the effect of increases in his pay since 2011 due to our strong operating performance over that time frame and his tenure as CEO.

For more information regarding the terms of these plans and the named executive officers’ accrued benefits under these plans, see “Defined Contribution Plan Benefits” at page 56 and “Pension Benefits” at page 56.

SEVERANCE AND CHANGE-IN-CONTROL BENEFITS

Our Executive Severance and Change in Control Plan (the “Executive Severance Plan”) provides for the payment of severance benefits to our officers, including all of the named executive officers, if their employment is terminated under certain circumstances during certain periods before or within two years following a change-in-control of the Company. The Executive Severance Plan does not provide for any excise tax gross-ups or walk-away rights.

The Executive Severance Plan is designed to attract, retain and motivate officers, provide for stability and continuity in the event of an actual or threatened change-in-control, and ensure that our officers are able to devote their full time and attention to the Company’s operations in the event of an actual or threatened change-in-control.

The Executive Severance Plan and the related change-in-control triggers (commonly referred to as “double triggers”) generally provide for the payment of severance benefits if employment is terminated under certain circumstances during certain periods before or within two years following a change-in-control of the Company. The change-in-control triggers in our equity compensation plans are substantially similar to those in the Executive Severance Plan. We selected the specific change-in-control triggers used in the Executive Severance Plan and our equity compensation plans, such as the acquisition of 20% or more of Goodyear’s Common Stock, a significant change in the composition of the Board of Directors or the acquisition

 

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of actual control of Goodyear, based upon our review of market practices, including provisions included in similar agreements of other public companies. Based upon that review, we determined that the terms and conditions of the Executive Severance Plan, including the specific change-in-control triggers, were consistent with market practices.

The Executive Severance Plan also provides severance benefits to our officers, including each of the named executive officers, if their employment is terminated by us other than for Cause (as defined in the Executive Severance Plan), death or disability, and other than in connection with a change-in-control.

To be eligible to receive benefits under the Executive Severance Plan, an officer must execute a release and agree, among other things, to certain confidentiality, non-disparagement, non-solicitation and non-competition covenants.

The Compensation Committee believes that our severance benefits are in the best interests of the Company and our shareholders, are a necessary component of a competitive compensation program, and are in line with severance benefits in place at other companies.

For additional information regarding the terms of the Executive Severance Plan and benefits payable under that plan, see “Potential Payments Upon Termination or Change-in-Control” at page 61.

PERQUISITES

We provide certain executive officers, including our named executive officers, with limited personal benefits and perquisites, as described below and in footnote 5 to the Summary Compensation Table at page 50. The Compensation Committee has reviewed and approved the perquisites described below. The Compensation Committee recognizes that these perquisites are an important factor in protecting our executive officers and in enabling them to focus on our business with minimal disruption. We do not provide any tax reimbursements to our executive officers for any of the perquisites we provide them.

Home Security Systems. We pay for the cost of home security systems for a limited number of executive officers in order to enhance their safety and protect our investment in them. We cover the cost of installation, monitoring and maintenance for these systems.

Use of Company Aircraft. In limited circumstances, executive officers are permitted to use our company aircraft for personal travel.

Tire Program. We offer our executive officers and Board members the opportunity to receive up to two sets of tires per year at our expense, including the cost of tires, mounting, balancing and disposal fees.

Financial Planning and Tax Preparation Services. We offer financial assistance to our executive officers to help them cover the cost of financial planning and tax preparation services. In providing this benefit, we seek to alleviate our executives’ concern regarding personal financial planning so that they may devote their full attention to our business. The maximum annual cost to the Company under this program is $9,000 per officer.

Club Memberships. We pay the annual dues for a corporate club membership that is available to Mr. Kramer and Mr. McClellan. None of the other named executive officers utilize this corporate club membership. The membership is intended to be used primarily for business purposes, although members may use the club for personal purposes so long as they pay all incremental costs, other than the annual dues, related to that personal use.

 

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Annual Physical Exams. We strongly encourage our executive officers to have an annual comprehensive physical examination which we pay for in order to enhance their physical well-being and protect our investment in them.

EXECUTIVE DEFERRED COMPENSATION PLAN

The Goodyear Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) is a non-qualified deferred compensation plan that provides named executive officers and other highly compensated employees the opportunity to defer various forms of compensation. For participants, this offers an additional means to save for retirement on a tax-deferred basis. There is no guaranteed return associated with any deferred amounts. During 2017, none of the named executive officers made deferrals under the Deferred Compensation Plan.

For additional information regarding the terms of the Deferred Compensation Plan and participant balances, see “Nonqualified Deferred Compensation” at page 60.

Compensation Policies and Practices

STOCKHOLDING GUIDELINES

To better link the interests of management and our shareholders, the Compensation Committee has established stockholding guidelines for our officers. These guidelines specify a number of shares that our officers are expected to accumulate and hold based on a multiple of annual base salary of six times for the CEO, three times for Executive Vice Presidents, Presidents of our operating units and Senior Vice Presidents, and two times for elected Vice Presidents. Therefore, the stockholding requirement for Mr. Kramer is six times his annual base salary and for Ms. Thompson, Mr. McClellan, Mr. Delaney and Mr. Bialosky is three times their annual base salary. All shares of Common Stock owned outright by officers (or their spouses) and held by them in the Goodyear stock fund of the Savings Plan, and 60% of the shares of restricted stock, restricted stock units, earned (but unvested) performance shares awarded to officers and share equivalent units held in our deferred compensation plan, are counted as ownership in assessing compliance with the guidelines. Unexercised stock options and unearned performance shares are not counted toward compliance with the guidelines. The stock price used in assessing compliance with the guidelines as of May 1st of each year will be the average closing stock price for the prior 60-day period.

The stockholding guidelines also include stock retention provisions. If an officer has met their stockholding requirement, they are required to retain 25% of the net shares received from any exercised options or any vested shares of Common Stock for at least one year from the date of exercise or vesting and may only sell or otherwise dispose of shares to the extent they will still meet their stockholding requirement following that sale or disposition. If an officer has not met their stockholding requirement, they are required to retain all of the net shares received from any exercised options or any vested shares of Common Stock, and may not sell or otherwise dispose of shares until they have met their stockholding requirement, unless they demonstrate a need to sell shares due to a financial hardship. Net shares are the shares remaining after payment of the exercise price and/or withholding taxes.

 

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Compensation Policies and Practices

 

  

 

Mr. Kramer holds shares of Common Stock worth over eleven times his annual base salary, well in excess of his minimum stockholding requirement. Ms. Thompson, Mr. McClellan and Mr. Bialosky have also met their stockholding requirement, and Mr. Delaney is making progress towards satisfying his stockholding requirement.

PROHIBITION ON HEDGING AND PLEDGING

We have adopted, as part of our insider trading policy, prohibitions on the short sale of our Common Stock and other securities and the issuance, purchase or sale of, or trading or dealing in, puts, calls or other options or rights relating to our Common Stock and other securities. These provisions prohibit our directors, officers and employees from hedging the risk of their ownership of our Common Stock. We also prohibit our directors, officers and employees from holding our Common Stock and other securities in a margin account or otherwise pledging them as collateral for a loan.

RECOVERY OF COMPENSATION (CLAWBACK POLICY)

If the Compensation Committee determines that an officer has engaged in conduct detrimental to the Company, the Compensation Committee may take a range of actions to remedy this conduct, prevent its recurrence and impose appropriate discipline. Discipline would vary depending on the facts and circumstances, and may include (1) termination of employment, (2) cancelling or reducing any outstanding compensatory grants or awards, (3) initiating an action for breach of fiduciary duty or fraud which could include recovery of any unjustly obtained incentive compensation, and (4) requiring reimbursement of compensation or other payments in accordance with provisions of the Sarbanes-Oxley Act of 2002, our claw-back policy described below or the terms of the relevant compensation plan. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.

Beginning with awards made in 2012, the Compensation Committee adopted a claw-back policy that effectively contractually extends the claw-back provisions of the Sarbanes-Oxley Act of 2002 that apply to our Chief Executive Officer and Chief Financial Officer to the Presidents of each of our strategic business units and all of our Senior Vice Presidents. If we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement as a result of misconduct, the claw-back policy would permit the Compensation Committee to require reimbursement of (1) any incentive compensation received from us during the one-year period following the publication of misstated financial statements and (2) any profits realized from the sale of our securities during that one-year period. We will make any necessary revisions to our claw-back policy once implementing rules pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 are adopted by the Securities and Exchange Commission and The Nasdaq Stock Market.

In addition, under our equity compensation plans, the Compensation Committee may require a plan participant who engages in competition with us within 18 months after their termination of employment to return or forfeit the realized value of all awards under those plans during such period of time that the Compensation Committee determines. Our Executive Severance Plan also provides for the recovery or forfeiture of severance payments if a person receiving payments pursuant to the plan violates certain confidentiality, non-disparagement, non-solicitation and non-competition covenants.

 

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LOGO

  

PMT Insert

 

  

 

COMPENSATION COMMITTEE REPORT

We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in Goodyear’s Annual Report on Form 10-K for the year ended December 31, 2017.

THE COMPENSATION COMMITTEE

John E. McGlade, Chairman

William J. Conaty

W. Alan McCollough

Stephanie A. Streeter

 

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LOGO

  

PMT Insert

 

  

 

EXECUTIVE COMPENSATION

Summary Compensation Table

The table below sets forth information regarding the compensation of the CEO, the Chief Financial Officer of Goodyear (the “CFO”), and the persons who were, at December 31, 2017, the other three most highly compensated executive officers of Goodyear (collectively, the “named executive officers”) for services in all capacities to Goodyear and its subsidiaries during 2015, 2016 and 2017.

 

 Name and

 Principal Position

  Year    

Salary

($)

   

Bonus

($)

   

Stock

Awards

($)1

   

Option

Awards

($)2

   

Non-Equity

Incentive Plan

Compensation

($)3

   

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($)4

   

All Other

Compensation

($)5

   

Total

($)

 

 Richard J. Kramer

    2017     $ 1,300,000       $0     $ 2,221,806     $ 3,194,991       $  1,305,598       $2,678,203       $145,161     $ 10,845,759  
 Chairman of the Board,     2016       1,233,333       0       2,132,331       3,089,998       9,667,094       3,509,123       166,225       19,798,104  

 Chief Executive Officer

    2015       1,100,000       0       2,052,344       2,940,000       11,577,753       1,535,672       102,031       19,307,800  

 and President

 

                 

 Laura K. Thompson

    2017       650,000       0       495,463       712,490       298,192       1,350,719       40,216       3,547,080  

 Executive Vice President

    2016       621,667       0       476,135       689,989       1,722,680       1,547,999       46,801       5,105,271  

 and Chief Financial Officer

 

   

 

2015

 

 

 

   

 

551,667

 

 

 

   

 

0

 

 

 

   

 

314,120

 

 

 

   

 

449,992

 

 

 

   

 

2,114,933

 

 

 

   

 

662,960

 

 

 

   

 

43,791

 

 

 

   

 

4,137,463

 

 

 

 Stephen R. McClellan

    2017       623,333       0       448,532       645,000       260,672       973,956       44,447       2,995,940  

 President, Americas

    2016       610,000       0       424,386       614,989       1,917,080       1,504,591       46,008       5,117,054  
   

 

2015

 

 

 

   

 

541,250

 

 

 

   

 

0

 

 

 

   

 

445,029

 

 

 

   

 

637,494

 

 

 

   

 

2,657,663

 

 

 

   

 

455,714

 

 

 

   

 

43,960

 

 

 

   

 

4,781,110

 

 

 

 Christopher R. Delaney

    2017       555,000       0       889,126       548,989       214,854       289,281       25,133       2,522,383  

 President,

                 

 Europe, Middle East and Africa

 

                 

 David L. Bialosky

    2017       577,667       0       339,001       487,488       193,392       635,619       25,736       2,258,903  

 Senior Vice President,

    2016       565,000       0       320,859       464,999       1,799,560       629,586       25,550       3,805,554  

 General Counsel and

    2015       555,000       0       414,655       593,999       2,377,381       424,167       25,107       4,390,309  

 Secretary

 

                                                                       

 

1 Represents the aggregate grant date fair value as of the respective grant date for each award. The maximum amount to be awarded with respect to the equity portion of our long-term incentive awards for each of the named executive officers is shown in the Grants of Plan-Based Awards Table in the column “Estimated Future Payouts Under Equity Incentive Plan Awards — Maximum.” The assumptions made in valuing stock awards reported in this column are discussed in Note to the Consolidated Financial Statements No. 1, “Accounting Policies” under “Stock-Based Compensation” and Note to the Consolidated Financial Statements No. 18, “Stock Compensation Plans” included in Goodyear’s Annual Report for the year ended December 31, 2017. For additional information regarding such grants, see “Compensation Discussion and Analysis — Long-Term Compensation — 2017 Grants of Performance-Based Incentives” and “— 2017 Restricted Stock Awards.” See also “Grants of Plan-Based Awards” below.

 

2 Represents the aggregate grant date fair value as of the respective grant date for each award. The assumptions made in valuing option awards reported in this column are discussed in Note to the Consolidated Financial Statements No. 1, “Accounting Policies” under “Stock-Based Compensation” and Note to the Consolidated Financial Statements No. 18, “Stock Compensation Plans” included in Goodyear’s Annual Report for the year ended December 31, 2017. For additional information regarding such grants, see “Compensation Discussion and Analysis — Long-Term Compensation — 2017 Stock Option Grants.” See also “Grants of Plan-Based Awards” below.

 

3 Represents amounts awarded under our annual and long-term incentive compensation plans. For additional information regarding annual cash incentive awards in 2017, see “Compensation Discussion and Analysis — Annual Compensation — 2017 Annual Cash Incentive Payouts.”

 

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LOGO

  

Summary Compensation Table

 

  

 

 

     Amounts awarded under our long-term incentive compensation plans are, for 2017, in respect of the one-year performance period ended December 31, 2017 for the 2015-2017 awards, the 2016-2018 awards and the 2017-2019 awards. The 2016-2018 awards and the 2017-2019 awards remain subject to the named executive officer’s continued service and a three-year relative total shareholder return modifier. For additional information regarding long-term incentive awards, see “Compensation Discussion and Analysis — Long-Term Compensation — 2017 Grants of Performance-Based Incentives,” “— Performance for the 2017 Performance Period,” and “— Impact of TSR Modifier and Payout of 2015-2017 Long-Term Incentive Awards.”

 

     The following table provides further information on the amounts payable, or earned but not yet payable, for performance periods ending on December 31, 2017:

 

       

2017

Annual Incentive

(Currently Payable)

      

2017 Period;

2015-2017 Long-

Term Incentive

(Currently Payable)

      

2015-2017

Impact of TSR

Modifier

(Currently

Payable)

    

2017 Period;

2016-2018 Long-

Term Incentive

(Not Yet Payable)

      

2017 Period;

2017-2019 Long-

Term Incentive

(Not Yet Payable)

 

 

Kramer

 

    

 

 

 

 

$0

 

 

 

 

    

 

 

 

 

$555,322

 

 

 

 

    

 

 

 

 

$(653,400

 

 

 

  

 

 

 

 

$480,676

 

 

 

 

    

 

 

 

 

$923,000

 

 

 

 

 

Thompson

 

    

 

 

 

 

0

 

 

 

 

    

 

 

 

 

85,000

 

 

 

 

    

 

 

 

 

(100,000

 

 

 

  

 

 

 

 

107,324

 

 

 

 

    

 

 

 

 

205,868

 

 

 

 

 

McClellan

 

    

 

 

 

 

0

 

 

 

 

    

 

 

 

 

120,394

 

 

 

 

    

 

 

 

 

(141,766

 

 

 

  

 

 

 

 

95,676

 

 

 

 

    

 

 

 

 

186,368

 

 

 

 

 

Delaney

 

    

 

 

 

 

0

 

 

 

 

    

 

 

 

 

90,644

 

 

 

 

    

 

 

 

 

(106,766

 

 

 

  

 

 

 

 

72,324

 

 

 

 

    

 

 

 

 

158,652

 

 

 

 

 

Bialosky

 

    

 

 

 

 

0

 

 

 

 

    

 

 

 

 

112,200

 

 

 

 

    

 

 

 

 

(132,000

 

 

 

  

 

 

 

 

72,324

 

 

 

 

    

 

 

 

 

140,868

 

 

 

 

 

4 Represents total change in pension value for each named executive officer, which reflects both the accrual of additional benefits and changes in the assumptions used to value the benefits. The discount rate used to calculate the Supplementary Plan pension value decreased from 4.16% at December 31, 2016 to 3.68% at December 31, 2017. Also, the interest rate used to determine the lump sum value of the Supplementary Plan benefit decreased from 1.50% to 1.00%. These changes in assumptions accounted for a portion of the total change in pension value for each of the named executive officers. The table below allocates the total change in pension value between the actual increase in accrued benefits, including the growth in pension value due to the passage of time, and assumption changes.

 

          

Increase in Pension

Value due to

Benefit Accrual

     Increase in Pension
Value due to
Assumption Changes
    

Total Increase in

Pension Value

 

 

Kramer

 

      

 

 

 

 

$949,785

 

 

 

 

  

 

 

 

 

$1,728,418

 

 

 

 

  

 

 

 

 

$2,678,203

 

 

 

 

 

Thompson

 

        

 

811,089

 

 

 

    

 

539,630

 

 

 

  

 

 

 

 

1,350,719

 

 

 

 

 

McClellan

 

        

 

341,152

 

 

 

    

 

632,804

 

 

 

  

 

 

 

 

973,956

 

 

 

 

 

Delaney

 

        

 

249,817

 

 

 

    

 

39,464

 

 

 

  

 

 

 

 

289,281

 

 

 

 

 

Bialosky

 

         449,442        186,177     

 

 

 

 

635,619

 

 

 

 

 

     No nonqualified deferred compensation earnings are required to be reported because the Deferred Compensation Plan does not provide for “above-market” or preferential earnings as defined in applicable Securities and Exchange Commission rules and regulations.

 

5 Includes amounts for home security system installation and monitoring, personal financial planning services, annual physical exams, and the provision of up to two sets of automobile tires per year. From time to time, certain of the named executive officers may receive tickets to sporting and other events for their personal use, typically when those tickets would not otherwise be used for business purposes, which use resulted in no incremental cost to the Company. Mr. Kramer’s total also includes amounts for the personal use of company aircraft of $49,245 and the annual dues for a club membership. Mr. McClellan’s total also includes amounts for the annual dues for a club membership. The value of the total perquisites in 2017 was $72,625 for Mr. Kramer, $13,216 for Ms. Thompson, $17,447 for Mr. McClellan, $12,508 for Mr. Delaney, and $12,236 for Mr. Bialosky. Company contributions to qualified defined contribution plans in 2017 were $27,000 for Mr. Kramer, $27,000 for Ms. Thompson, $27,000 for Mr. McClellan, $12,625 for Mr. Delaney, and $13,500 for Mr. Bialosky. The value of dividends on shares of restricted stock that were not included in prior years’ grant date fair value for those awards were $45,536 for Mr. Kramer.

 

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EXECUTIVE COMPENSATION

  

 

 

 
 

LOGO

  

Summary of Realized Pay Earned by

Our Chief Executive Officer for 2015, 2016 and 2017

 

  

 

Summary of Realized Pay Earned by Our Chief Executive Officer for 2015, 2016 and 2017

Our compensation programs for Mr. Kramer and our other officers are primarily based on performance. The information shown below is intended to supplement and not be a substitute for the information in the Summary Compensation Table. The Summary Compensation Table includes several items that are driven by accounting and actuarial assumptions, which are not necessarily reflective of compensation actually realized by Mr. Kramer in a particular year. For example, the information required to be in the Summary Compensation Table combines pay actually received (base salary and annual cash incentive payments) with the accounting value of equity compensation granted, which may never be realized, and earned but unvested long term cash awards, which continue to be subject to forfeiture and a TSR modifier until the vesting date. The Summary Compensation Table is also required to include other compensation (contributions to qualified defined contribution plans and perquisites) and the change in pension values (based on actuarial assumptions), much of which is not realized in the periods presented.

The following table reports base salary, annual incentive earned, long term incentive to be paid out for the three-year performance cycle ending in each respective year and pre-tax compensation earned upon the exercise of stock options and the vesting of stock awards regardless of when they were granted.

 

 Name    Year      Salary
($)1
     Annual
Incentive
($)2
     Long Term
Incentive
Cash Payout
($)3
     Stock Option
Exercises
($)4
     Long Term
Incentive
Equity
Vesting
($)5
     Total
Realized
Pay ($)
 

 

  Kramer

  

 

 

 

2017

 

 

  

 

 

 

$1,300,000

 

 

  

 

$

 

0

 

 

  

 

 

 

$  5,880,000

 

 

  

 

 

 

$          —

 

 

  

 

 

 

$2,797,917

 

 

  

 

$

 

9,977,917

 

 

     2016        1,233,333        1,462,500        8,421,600               2,681,584        13,799,017  
      

 

2015

 

 

 

    

 

1,100,000

 

 

 

    

 

3,168,000

 

 

 

    

 

10,560,000

 

 

 

    

 

891,929

 

 

 

    

 

4,429,791

 

 

 

    

 

20,149,720

 

 

 

 

1 Mr. Kramer’s salary was targeted below market median for 2015, 2016 and 2017.

 

2 Mr. Kramer’s individual targets were set at 150% of base salary for 2015, 2016 and 2017. Mr. Kramer’s awards were 192% of target in 2015, 75% of target in 2016 and 0% of target in 2017.

 

3 The percentage of Mr. Kramer’s long term incentive target to be paid in cash is fifty percent. This column shows the cash payout for each of the performance cycles completed in the respective year. The 2013-2015 awards were earned at 200% of target, the 2014-2016 awards were earned at 174% of target, and the 2015-2017 awards were earned at 120% of target, in each case including the impact of the TSR modifier.

 

4 Thirty percent of Mr. Kramer’s long term incentive target is granted in the form of stock options. In 2017, Mr. Kramer did not exercise any stock options. At December 31, 2017, Mr. Kramer’s vested, exercisable, in-the-money stock options had a potential value of $26,498,741, based on the difference between the closing market price of our Common Stock on December 31, 2017 ($32.31) and the exercise price of such stock options.

 

5 The percentage of Mr. Kramer’s long term incentive target to be paid in shares of Common Stock is twenty percent. This column shows the value of the shares that vested for each of the performance cycles completed in the respective year. The 2013-2015 awards were earned at 200% of target, the 2014-2016 awards were earned at 174% of target, and the 2015-2017 awards were earned at 120% of target, in each case including the impact of the TSR modifier. The value of the shares earned in each year is based on the closing market price of our Common Stock on December 31 of that year.

 

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LOGO

  

Grants of Plan-Based Awards

 

  

 

Grants of Plan-Based Awards

The following table summarizes grants of plan-based awards made to the named executive officers during 2017.

 

          Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards1

 

   

 

Estimated Future Payouts
Under Equity Incentive Plan
Awards2

 

   

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)3

 

   

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)4

 

   

Exercise
or Base
Price of

Option
Awards
($/Sh)5

 

   

Grant
Date Fair
Value of
Stock and
Option
Awards
($)

 

 

 Name

 

 

Grant
Date

 

   

Threshold
($)

 

   

Target
($)

 

   

Maximum
($)

 

   

Threshold
(#)

 

   

Target
(#)

 

   

Maximum
(#)

 

         
                       

Kramer

 

   

 

2/27/2017

 

 

 

  $

 

2,662,500

 

 

 

  $

 

5,325,000

 

 

 

  $

 

10,650,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                     

Kramer

 

   

 

2/27/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

30,204

 

 

 

   

 

60,408

 

 

 

   

 

120,816

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  $

 

2,221,806

 

 

 

                     

Kramer

 

   

 

2/27/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

264,486

 

 

 

  $

 

35.26

 

 

 

   

 

3,194,991

 

 

 

                     

Thompson

 

   

 

2/27/2017

 

 

 

   

 

593,750

 

 

 

   

 

1,187,500

 

 

 

   

 

2,375,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

            &