DEF 14A 1 d827479ddef14a.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

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

 

NUCOR CORPORATION

 

 

(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.

 

  (1)   Amount Previously Paid:

 

  

 

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  (4)   Date Filed:

 

  

 


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LOGO

1915 Rexford Road       Charlotte, North Carolina 28211       Phone 704.366.7000       Fax 704.362.4208

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT

The 2020 annual meeting of stockholders (the “Annual Meeting”) of Nucor Corporation (“Nucor”) will be held at 10:00 a.m., Eastern Time, on Thursday, May 14, 2020 at the Charlotte Marriott SouthPark located at 2200 Rexford Road, Charlotte, North Carolina 28211, for the following purposes:

 

   

To elect the eight directors nominated by the Board of Directors;

 

   

To ratify the appointment of PricewaterhouseCoopers LLP to serve as Nucor’s independent registered public accounting firm for 2020;

 

   

To approve, on an advisory basis, Nucor’s named executive officer compensation in 2019;

 

   

To approve the amendment and restatement of the Nucor Corporation 2014 Omnibus Incentive Compensation Plan; and

 

   

To conduct such other business as may properly come before the meeting or any adjournment or postponement thereof.

Stockholders as of the close of business on March 16, 2020 are entitled to receive notice of, and to vote at, the Annual Meeting.

While we still intend to hold the Annual Meeting in person, we are actively monitoring the coronavirus (COVID-19) and we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our Annual Meeting website at www.nucor.com/investors for updated information and check the website in advance of the meeting. Please retain your 16-digit control number, which can be found on your notice of the Annual Meeting, on your proxy card and on the instructions that accompanied your proxy materials as such control number will be necessary to facilitate your participation in a virtual Annual Meeting if a virtual meeting is held. As always, we encourage you to vote your shares prior to the Annual Meeting.

This year we will be using the Securities and Exchange Commission rule that allows us to provide our proxy materials to our stockholders via the Internet. By doing so, most of our stockholders will only receive a notice of the Annual Meeting containing instructions on how to access the proxy materials via the Internet and to vote online, by telephone or by mail. If you would like to receive a paper or e-mail copy of the proxy materials, you should follow the instructions in the notice for requesting a copy.

By order of the Board of Directors,

 

LOGO

A. Rae Eagle

Vice President and

Corporate Secretary

March 27, 2020

 

Important Notice Regarding the Availability of Proxy Materials

for the Annual Meeting of Stockholders To Be Held on May 14, 2020

The Notice of 2020 Annual Meeting of Stockholders and Proxy Statement and

the 2019 Annual Report to Stockholders are available at www.proxyvote.com.

 

YOUR VOTE IS VERY IMPORTANT. TO ENSURE THAT YOU WILL BE REPRESENTED AT THE ANNUAL MEETING, PLEASE SUBMIT YOUR PROXY AS SOON AS POSSIBLE VIA THE INTERNET, BY TELEPHONE OR BY MAIL.


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Table of Contents

 

Proxy Summary     1  
General Information     3  
Proposal 1: Election of Directors     6  
Information Concerning Experience, Qualifications, Attributes and Skills of the Nominees     7  
Security Ownership of Management and Certain Beneficial Owners     10  
Corporate Governance and Board of Directors     12  
Director Compensation     20  
Report of the Audit Committee     22  
Proposal 2: Ratification of the Appointment of Independent Registered Public Accounting Firm     23  
Executive Officer Compensation     24  

Compensation Discussion and Analysis

    24  

Summary Compensation Table

    38  

Grants of Plan-Based Awards Table

    39  

Outstanding Equity Awards at Fiscal Year-End Table

    41  

Options Exercised and Stock Vested Table

    42  

Nonqualified Deferred Compensation Table

    43  

Post-Termination Payments Summary

    47  

Pay Ratio Disclosure

    48  
Report of the Compensation and Executive Development Committee     49  
Equity Compensation Plan Information     50  
Proposal 3: Advisory Vote to Approve Named Executive Officer Compensation     51  
Proposal 4: Approval of the Amendment and Restatement of the Nucor Corporation 2014 Omnibus Incentive Compensation Plan     52  
Other Matters     59  
Appendix A: Nucor Corporation 2014 Omnibus Incentive Compensation Plan as Amended and Restated     A-1  

 

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PROXY SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. As this summary does not contain all of the information that you should consider, please refer to the complete Proxy Statement before voting.

Annual Meeting of Stockholders

 

 

    Time & Date:

  

 

10:00 a.m., Eastern Time, on May 14, 2020

 

    Place:   

Charlotte Marriott SouthPark

2200 Rexford Road

Charlotte, North Carolina 28211

 

    Record Date:   

March 16, 2020

 

    Who Can Vote:   

Stockholders as of the close of business on the record date are entitled to receive notice of, and to vote at, the 2020 Annual Meeting of Stockholders.

 

In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting, which may include holding the meeting solely by means of remote communication.

Voting Matters

 

Proposals

 

  

Board Vote

Recommendation

 

  

 

Page No. for

Additional

  Information  

 

 

 

    1.

 

  

 

Election of eight directors

 

  

 

FOR each nominee

 

  

 

 

 

 

6

 

 

 

 

 

    2.

  

 

Ratification of the appointment of PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for 2020

 

  

 

FOR

  

 

 

 

 

23

 

 

 

 

 

    3.

  

 

Advisory vote to approve named executive officer compensation in 2019

 

  

 

FOR

  

 

 

 

 

51

 

 

 

 

 

    4.

 

  

 

Approval of the amendment and restatement of the Nucor Corporation 2014 Omnibus Incentive Compensation Plan

 

 

  

 

FOR

  

 

 

 

52

 

 

Director Nominees (page 6)

 

  Name

 

  

Age

 

    

 

Director

Since

 

    

Professional Background

 

  

Independent   

 

 

  Lloyd J. Austin III

 

    

 

66

 

 

 

    

 

2017

 

 

 

  

Retired four-star general, U.S. Army

 

   Yes

 

 

  Patrick J. Dempsey

 

    

 

55

 

 

 

    

 

2016

 

 

 

  

President and CEO, Barnes Group Inc.

 

   Yes

 

 

  Christopher J. Kearney

 

  

 

 

 

64

 

 

  

 

 

 

2008

 

 

  

Retired Chairman, President and CEO, SPX FLOW, Inc.

 

   Yes

 

 

  Laurette T. Koellner

 

    

 

65

 

 

 

    

 

2015

 

 

 

  

Retired President, Boeing International

 

   Yes

 

 

  Joseph D. Rupp

  

 

 

 

69

 

 

  

 

 

 

2020

 

 

  

 

Retired Chairman, President and CEO, Olin Corporation

 

  

 

Yes

 

  Leon J. Topalian

 

    

 

52

 

 

 

    

 

2020

 

 

 

  

President and CEO, Nucor Corporation

 

   No

 

 

  John H. Walker

  

 

 

 

62

 

 

  

 

 

 

2008

 

 

  

 

Non-Executive Chairman, Nucor Corporation Retired Non-Executive Chairman, Global Brass and Copper Holdings, Inc.

 

  

 

Yes

 

  Nadja Y. West

  

 

 

 

59

 

 

  

 

 

 

2019

 

 

  

 

Retired lieutenant general, U.S. Army

 

  

 

Yes

 

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Corporate Governance Highlights (page 12)

Our commitment to good corporate governance stems from our belief that a strong governance framework creates long-term value for our stockholders. Our governance framework includes the following highlights:

 

 

  Board and Governance Information

 

 

 

  Size of Board

 

    

 

8

 

 

 

  

Average director tenure

 

    

 

4 Years

 

 

 

 

  Number of independent directors

 

    

 

7

 

 

 

  

All directors stand for annual election

 

    

 

Yes

 

 

 

 

  Average age of directors

 

    

 

62

 

 

 

  

Supermajority threshold for mergers

 

    

 

Yes

 

 

 

 

  Number of Board meetings in 2019

 

    

 

4

 

 

 

  

Proxy access

 

    

 

No

 

 

 

 

  Mandatory retirement age for directors

 

    

 

72

 

 

 

  

Stockholder action by written consent

 

    

 

Yes

 

 

 

 

  Percentage of women and minority Board

  members

 

  

 

 

 

38%

 

 

  

 

Poison pill

  

 

 

 

No

 

 

 

  Majority vote resignation policy in

  uncontested director elections

  

 

 

 

Yes

 

 

  

 

Stock ownership guidelines for non-employee directors and executive officers

 

  

 

 

 

Yes

 

 

 

  Separate Chairman and CEO

 

    

 

Yes

 

 

 

  

Anti-hedging and short-selling policies

 

    

 

Yes

 

 

 

 

  Independent Non-Executive Chairman

  

 

 

 

Yes

 

 

  

 

Executive officer incentive compensation recoupment policy

 

  

 

 

 

Yes

 

 

 

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GENERAL INFORMATION

The Board of Directors (the “Board of Directors” or the “Board”) of Nucor Corporation (“Nucor,” the “Company,” “we,” “us” or “our”) is soliciting your proxy for use at the 2020 annual meeting of stockholders (the “Annual Meeting”) to be held at 10:00 a.m., Eastern Time, on Thursday, May 14, 2020 at the Charlotte Marriott SouthPark located at 2200 Rexford Road, Charlotte, North Carolina 28211. Directions to the location of the Annual Meeting may be obtained by calling (704) 366-7000.

While we still intend to hold the Annual Meeting in person, we are actively monitoring the coronavirus (COVID-19) and we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our Annual Meeting website at www.nucor.com/investors for updated information and check the website in advance of the meeting. Please retain your 16-digit control number, which can be found on your notice of the Annual Meeting, on your proxy card and on the instructions that accompanied your proxy materials as such control number will be necessary to facilitate your participation in a virtual Annual Meeting if a virtual meeting is held. As always, we encourage you to vote your shares prior to the Annual Meeting.

Delivery of Proxy Materials

The Securities and Exchange Commission rules and regulations (the “SEC rules”) allow companies to choose the method for delivery of proxy materials to stockholders. For most stockholders, we have elected to mail a notice regarding the availability of proxy materials on the Internet, rather than sending a full set of these materials in the mail. The notice, or a full set of the proxy materials (including the Proxy Statement and form of proxy), as applicable, was sent to stockholders beginning March 27, 2020, and the proxy materials were posted on the investor relations portion of the Company’s website, www.nucor.com/investors, and on the website referenced in the notice on the same day. Utilizing this method of proxy delivery expedites receipt of proxy materials by the Company’s stockholders and lowers the cost of the Annual Meeting. If you would like to receive a paper or e-mail copy of the proxy materials, you should follow the instructions in the notice for requesting a copy. The information on our website is not a part of this Proxy Statement.

Shares Entitled to Vote; Quorum

The record date for the Annual Meeting is March 16, 2020. Only holders of record of Nucor common stock as of the close of business on that date will be entitled to vote at the Annual Meeting. As of the record date, 301,131,528 shares of Nucor common stock were outstanding. The presence, in person or by proxy, of the holders of a majority of the shares of Nucor common stock issued and outstanding and entitled to vote at the Annual Meeting is necessary to constitute a quorum for the transaction of business at the meeting.

Voting Rights and Procedures

Each share of Nucor common stock outstanding on the record date is entitled to one vote except with respect to the election of directors. With respect to the election of directors, each share of Nucor common stock is entitled to cumulative voting rights, which means that when voting for director nominees each share is entitled to a number of votes equal to the number of nominees for election as directors. Accordingly, when voting for director nominees, all of the votes to which a share of Nucor common stock is entitled may be voted in favor of one nominee or may be distributed among the nominees. The proxy holders will have the discretionary authority to cumulate votes in the election of directors.

Stockholders of record who wish to cumulate their votes must submit a proxy card or cast a ballot and make an explicit statement of their intent to do so, either by so indicating in writing on their proxy card or on their ballot when voting in person at the Annual Meeting. If a person who is the beneficial owner of shares held in street name wishes to cumulate his or her votes, the stockholder will need to contact the broker, bank, trustee or other nominee who is the record owner of the shares.

 

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GENERAL INFORMATION

 

 

Voting Requirement to Approve Each of the Proposals

The following sets forth the voting requirement to approve each of the proposals:

Proposal 1, Election of Directors. Directors shall be elected by a plurality of the votes cast (meaning that the eight director nominees who receive the highest number of votes cast “for” their election will be elected as directors), subject to a Corporate Governance Principle adopted by the Board as described below.

Proposal 2, Ratification of the Appointment of Independent Registered Public Accounting Firm. Ratification of the appointment of PricewaterhouseCoopers LLP to serve as Nucor’s independent registered public accounting firm for 2020 requires the affirmative vote of the holders of a majority of shares present in person or represented by proxy and entitled to vote on the proposal (meaning that of the shares represented at the Annual Meeting and entitled to vote, a majority of them must be voted “for” the proposal for it to be approved).

Proposal 3, Advisory Vote to Approve Named Executive Officer Compensation. Advisory approval of Nucor’s named executive officer compensation in 2019 requires the affirmative vote of the holders of a majority of shares present in person or represented by proxy and entitled to vote on the proposal (meaning that of the shares represented at the Annual Meeting and entitled to vote, a majority of them must be voted “for” the proposal for it to be approved).

Proposal 4, Approval of the Amendment and Restatement of the Nucor Corporation 2014 Omnibus Incentive Compensation Plan. Approval of the amendment and restatement of the Nucor Corporation 2014 Omnibus Incentive Compensation Plan (the “2014 Plan”) requires the affirmative vote of a majority of the votes cast (meaning that the number of shares voted “for” the proposal must exceed the aggregate of the number of shares voted “against” such proposal plus abstentions).

Other Items. Approval of any other matters requires the affirmative vote of the holders of a majority of shares present in person or represented by proxy and entitled to vote on the item (meaning that of the shares represented at the Annual Meeting and entitled to vote, a majority of them must be voted “for” the item for it to be approved).

“Withhold” Votes, Abstentions and Broker Non-Votes

Abstentions and broker non-votes are counted as present or represented for purposes of determining the presence or absence of a quorum for the Annual Meeting. A broker non-vote occurs when a nominee holding shares in street name for a beneficial owner votes on one proposal but does not vote on another proposal because, with respect to such other proposal, the nominee does not have discretionary voting power and has not received voting instructions from the beneficial owner.

Under the New York Stock Exchange rules (the “NYSE rules”), proposal 2, the ratification of the appointment of PricewaterhouseCoopers LLP to serve as Nucor’s independent registered public accounting firm for 2020, is considered a “routine” matter, which means that brokerage firms may vote in their discretion on this proposal on behalf of clients who have not furnished voting instructions. However, proposals 1, 3 and 4, the election of directors, the advisory vote to approve Nucor’s named executive officer compensation in 2019 and the approval of the amendment and restatement of the 2014 Plan, respectively, are “non-routine” matters under the NYSE rules, which means that brokerage firms that have not received voting instructions from their clients on these matters may not vote on these proposals.

With respect to proposal 1, the election of directors, only “for” and “withhold” votes may be cast. Broker non-votes are not considered votes cast for the foregoing purpose and will therefore have no effect on the outcome of the proposal. “Withhold” votes will also generally have no effect on the outcome of the proposal. However, the Board of Directors has adopted a Corporate Governance Principle intended to give effect to “withheld” votes in uncontested director elections under certain circumstances. This Corporate Governance Principle, which is described in more detail in this Proxy Statement under “Proposal 1: Election of Directors,” requires, in an uncontested election, any nominee for director who is an incumbent director and receives a greater number of votes “withheld” from his or her election than votes “for” his or her election to promptly tender his or her resignation to Nucor’s Corporate Secretary following certification of the stockholder vote for consideration by the Board.

 

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GENERAL INFORMATION

 

 

With respect to proposals 2, 3 and 4, the ratification of the appointment of PricewaterhouseCoopers LLP to serve as Nucor’s independent registered public accounting firm for 2020, the advisory vote to approve Nucor’s named executive officer compensation in 2019 and the approval of the amendment and restatement of the 2014 Plan, respectively, you may vote “for” or “against” these proposals, or you may “abstain” from voting on these proposals. For Proposals 2 and 3, abstentions will be counted as votes present or represented and entitled to vote on these proposals and will therefore have the same effect as votes “against” these proposals, and broker non-votes will not be considered entitled to vote on these proposals and will therefore have no effect on their outcome. For Proposal 4, under the NYSE rules, abstentions are considered votes cast for the foregoing purpose and will therefore have the same effect as votes “against” this proposal, whereas broker non-votes are not considered votes cast for the foregoing purpose and will therefore have no effect on the vote for this proposal. As discussed above, because proposal 2, the ratification of the appointment of PricewaterhouseCoopers LLP to serve as Nucor’s independent registered public accounting firm for 2020, is considered a “routine” matter, we do not expect any broker non-votes with respect to this proposal.

Voting of Proxies

Each valid proxy received and not revoked before the Annual Meeting will be voted at the meeting. To be valid, a written proxy card must be properly executed. Proxies voted by telephone or via the Internet must be properly completed pursuant to this solicitation. If you specify your vote regarding any matter presented at the Annual Meeting, your shares will be voted by one of the individuals named on the proxy card in accordance with your specification. If you do not specify your vote, your shares will be voted:

 

   

“FOR” the election of each of the eight director nominees;

 

   

“FOR” the ratification of the appointment of PricewaterhouseCoopers LLP to serve as Nucor’s independent registered public accounting firm for 2020;

 

   

“FOR” the approval, on an advisory basis, of Nucor’s named executive officer compensation in 2019; and

 

   

“FOR” the approval of the amendment and restatement of the 2014 Plan.

Revoking Your Proxy or Changing Your Vote

You may revoke your proxy or change your vote at any time before the vote is taken at the Annual Meeting. If you are a stockholder of record, you may revoke your proxy or change your vote by (i) submitting a written notice of revocation to Nucor’s Corporate Secretary at Nucor Corporation, 1915 Rexford Road, Charlotte, North Carolina 28211; (ii) delivering a proxy bearing a later date by telephone, via the Internet or by mail until the applicable deadline for each method specified in the enclosed proxy card or the notice; or (iii) attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically make that request or vote in person at the meeting. For all methods of voting, the last vote cast will supersede all previous votes. If you hold your shares in street name and you have instructed your broker, bank, trustee or other nominee to vote your shares, you may revoke or change your voting instructions by following the specific instructions provided to you by your broker, bank, trustee or other nominee, or, if you have obtained a legal proxy from your broker, bank, trustee or other nominee, by attending the Annual Meeting and voting in person.

 

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PROPOSAL 1

ELECTION OF DIRECTORS

The Board of Directors currently consists of eight members and has no vacancies. On the recommendation of the Governance and Nominating Committee, the Board has nominated the eight persons listed below for election as directors at the Annual Meeting. If elected, each nominee will serve until his or her term expires at the 2021 annual meeting of stockholders or until his or her successor is duly elected and qualified. Each nominee has agreed to be named in this Proxy Statement and to serve if elected. All of the nominees are currently serving as directors. Except for Mr. Joseph D. Rupp, who was elected to the Board in February 2020, Mr. Leon J. Topalian, who was elected to the Board in December 2019 for a term beginning on January 1, 2020, and General Nadja Y. West, who was elected to the Board in September 2019, all of the nominees were elected to the Board at the 2019 annual meeting of stockholders. Mr. Rupp and General West were initially identified to the Board as potential directors by non-management directors.

Although the Company knows of no reason why any of the nominees would not be able to serve, if any nominee is unavailable for election, the proxy holders intend to vote your shares for any substitute nominee proposed by the Board.

Majority Voting in Uncontested Director Elections. We have a majority vote standard in uncontested director elections in order to address “holdover” terms for any incumbent directors. Under our Corporate Governance Principles, in an uncontested election, any nominee for director who is an incumbent director and receives a greater number of votes “withheld” from his or her election than votes “for” his or her election must promptly tender his or her resignation to Nucor’s Corporate Secretary following certification of the stockholder vote for consideration by the Board. In such event, within 120 days following certification of the stockholder vote, the Board will decide, after taking into account the recommendation of the Governance and Nominating Committee (in each case excluding the nominee(s) in question), whether to accept the resignation. The Governance and Nominating Committee and the Board may each consider all factors it deems relevant in deciding whether to accept a director’s resignation. Nucor will promptly disclose the Board’s decision and the reasons therefor in a Form 8-K filing with the Securities and Exchange Commission (the “SEC”). The resignation policy set forth in the Company’s Corporate Governance Principles does not apply to contested elections.

Vote Recommendation

The Board of Directors recommends a vote FOR the election of each of the eight nominees listed below. Unless otherwise specified, proxies will be voted “FOR each nominee.

 

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INFORMATION CONCERNING EXPERIENCE, QUALIFICATIONS,

ATTRIBUTES AND SKILLS OF THE NOMINEES

 

 

   LOGO

 

  LLOYD J. AUSTIN III

 

  Director Since: 2017

  Age: 66

   General Austin is a retired four-star general who served for 41 years in the U.S. Army. From 2013 through March 2016, General Austin served as the commander of U.S. Central Command responsible for military strategy and joint operations throughout the 20-country Central Region that includes Iraq, Syria, Iran, Afghanistan, Pakistan, Yemen, Egypt and Saudi Arabia. Prior to that, he served as the 33rd Vice Chief of Staff of the U.S. Army from 2012 to 2013 and as the Combined Forces Commander in Iraq from 2010 through the completion of Operation New Dawn in 2011. He is the recipient of numerous U.S. military awards, including the Silver Star, five Defense Distinguished Service Medals and the Legion of Merit. General Austin currently serves as a director of Tenet Healthcare Corporation and United Technologies Corporation, and is on the Board of Trustees of Guest Services, Inc. (non-public). General Austin brings to the Board a unique and valuable perspective from his years of proven leadership and management in the U.S. Army, including service at the most senior levels in the U.S. Armed Forces.
 

 

   LOGO

 

  PATRICK J. DEMPSEY

 

  Director Since: 2016

  Age: 55

   Mr. Dempsey has served as President and Chief Executive Officer of Barnes Group Inc., a global provider of highly engineered products, differentiated industrial technologies and innovative solutions, serving a wide range of end markets and customers, since 2013. Prior to that, Mr. Dempsey had served as Barnes Group’s Senior Vice President and Chief Operating Officer since 2012. Mr. Dempsey joined Barnes Group in 2000 and, since that time, has held a number of other positions, including President, Windsor Airmotive; Vice President, Barnes Group; President, Barnes Aerospace; President, Barnes Distribution; and President, Logistics and Manufacturing Services. Prior to joining Barnes Group, Mr. Dempsey held leadership positions at United Technologies Corporation’s Pratt and Whitney Division and the Interturbine Group of Companies. Mr. Dempsey currently serves as a director of Barnes Group and also serves on the Board of Trustees of the Manufacturers Alliance for Productivity and Innovation. Mr. Dempsey brings to the Board extensive experience in the areas of business management, technology leadership, corporate strategy and development and international business.
 

 

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  CHRISTOPHER J. KEARNEY

 

  Director Since: 2008

  Age: 64

   Mr. Kearney founded Eagle Marsh Holdings, LLC, a business and real estate investment firm, in 2016 and has served as its managing partner since its formation. Mr. Kearney will also serve as Executive Chairman of the board of directors of Otis Elevator Company upon the completion of its planned separation from United Technologies Corporation in 2020. Mr. Kearney previously served as Non-Executive Chairman of the board of directors of SPX FLOW, Inc., a global supplier of highly engineered flow components, process equipment and turn-key solutions into the power and energy, food and beverage and industrial end markets, from January 2016 until May 2017 and as Chairman, President and Chief Executive Officer of SPX FLOW from October 2015 through December 2015. Prior to the spinoff of SPX FLOW from SPX Corporation, a global multi-industry manufacturer, Mr. Kearney served as Chairman of SPX Corporation from 2007 through September 2015, and as President and Chief Executive Officer of SPX Corporation from 2004 through September 2015. He joined SPX Corporation in 1997 as Vice President, Secretary and General Counsel. Mr. Kearney currently serves as a director of United Technologies Corporation and will serve as a director of Otis Elevator Company upon the completion of its planned separation from United Technologies Corporation in 2020. He served as a director of SPX Corporation from 2007 through 2016 and of Polypore International, Inc. from 2012 through 2015. In addition to his strong leadership skills developed as the Chief Executive Officer of a global manufacturing company, Mr. Kearney brings to the Board valuable business and mergers and acquisitions experience as well as corporate legal experience.

 

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INFORMATION CONCERNING EXPERIENCE, QUALIFICATIONS, ATTRIBUTES AND SKILLS OF THE NOMINEES

 

 

 

   LOGO

 

  LAURETTE T. KOELLNER

 

  Director Since: 2015

  Age: 65

   Ms. Koellner most recently served as Executive Chairman of the board of directors of International Lease Finance Corporation, an aircraft leasing subsidiary of American International Group, Inc. (“AIG”), from 2012 until its sale in 2014. Ms. Koellner served from 2006 to 2008 as President of Boeing International, a division of The Boeing Company, an aerospace manufacturer. Prior to that, Ms. Koellner served as President of Connexion by Boeing from 2004 to 2006. She also served as Executive Vice President, Chief Administration and Human Resources Officer of Boeing from 2002 to 2004 and was a member of the Office of the Chairman from 2002 to 2003. She served as President of Shared Services Group of Boeing from 2001 to 2002 and as Vice President and Corporate Controller of Boeing from 1999 to 2001. Prior to her time with Boeing, Ms. Koellner spent 19 years at McDonnell Douglas Corporation, where her roles included Vice President and Corporate General Auditor as well as Division Director of Human Resources. Ms. Koellner currently serves on the boards of directors of Celestica Inc., The Goodyear Tire & Rubber Company and Papa John’s International, Inc. She served as a director of Hillshire Brands, Inc. from 2003 through 2014 and of AIG from 2009 through 2012. Ms. Koellner brings to the Board extensive international and financial expertise as well as experience in corporate governance and risk management.
 

 

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  JOSEPH D. RUPP

 

  Director Since: 2020

  Age: 69

   Mr. Rupp served as Chairman of the board of directors of Olin Corporation, a leading vertically integrated global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition, from May 2016 until his retirement in April 2017. Prior to that, Mr. Rupp served as Chairman and Chief Executive Officer of Olin from 2014 to May 2016, as Chairman, President and Chief Executive Officer of Olin from 2005 to 2014 and as President and Chief Executive Officer of Olin from 2002 to 2005. Prior to 2002, Mr. Rupp served in various positions of increasing responsibility with Olin, which he originally joined in 1972. Mr. Rupp currently serves on the boards of directors of Cass Information Systems, Inc., O-I Glass, Inc. (formerly Owens-Illinois, Inc.), Quanex Building Products Corporation and Dot Foods, Inc. (non-public), and is on the Board of Trustees of Missouri University of Science and Technology. Mr. Rupp served as a director of Olin from 2002 to 2017. Mr. Rupp brings to the Board extensive experience in the metal-related manufacturing industry as well as strong executive leadership and strategic management skills and significant public company board experience.
 

 

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  LEON J. TOPALIAN

 

  Director Since: 2020

  Age: 52

   Mr. Topalian has served as President and Chief Executive Officer of Nucor since January 2020. Previously, Mr. Topalian served as President and Chief Operating Officer of Nucor from September 2019 to December 2019, as Executive Vice President of Beam and Plate Products of Nucor from May 2017 to August 2019 and as Vice President of Nucor from 2013 to May 2017. Since joining Nucor in 1996, Mr. Topalian has held a variety of other positions, including serving as General Manager at two Nucor facilities, in Arkansas and Illinois, as well as a Melting and Casting Manager, an Operations Manager, a cold mill production supervisor and a project engineer. Mr. Topalian brings to the Board a deep understanding of Nucor’s operations and unique organizational culture and values, gained through his 23 years of experience with the Company.

 

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INFORMATION CONCERNING EXPERIENCE, QUALIFICATIONS, ATTRIBUTES AND SKILLS OF THE NOMINEES

 

 

 

   LOGO

 

  JOHN H. WALKER

 

  Director Since: 2008

  Age: 62

   Mr. Walker has served as Non-Executive Chairman of the Board of Directors since January 2020. Prior to that, he had served as Lead Director of Nucor since February 2017. Mr. Walker previously served as Non-Executive Chairman of the board of directors of Global Brass and Copper Holdings, Inc., a manufacturer and distributor of copper and copper-alloy sheet, strip, plate, foil, rod and fabricated components, from 2014 to July 2019. Mr. Walker previously served as Executive Chairman of the board of directors of Global Brass and Copper from 2013 to 2014 and as Chief Executive Officer of Global Brass and Copper from 2007 to 2014. Prior to joining Global Brass and Copper, Mr. Walker was President and Chief Executive Officer of The Boler Company, the parent company of Hendrickson International, a suspension manufacturer for heavy duty trucks and trailers, from 2003 to 2006. From 2001 to 2003, he served as Chief Executive Officer of Weirton Steel Corporation, a producer of flat-rolled carbon steel, and, from 2000 to 2001, as President and Chief Operating Officer of Weirton Steel Corporation. From 1997 to 2000, Mr. Walker was President of flat-rolled products for Kaiser Aluminum Corporation, a producer of fabricated aluminum products. Mr. Walker currently serves on the board of directors of O-I Glass, Inc. (formerly Owens-Illinois, Inc.) and will be a director of Otis Elevator Company upon the completion of its planned separation from United Technologies Corporation in 2020. Mr. Walker was a director of United Continental Holdings, Inc. from 2002 through 2016. In serving as Chief Executive Officer for three different companies, Mr. Walker has developed strong executive leadership and strategic management skills. Mr. Walker also brings to the Board more than 35 years of experience in metal-related manufacturing and fabricating industries.
 

 

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  NADJA Y. WEST

 

  Director Since: 2019

  Age: 59

   General West is a retired U.S. Army lieutenant general who served for 37 years in the U.S. Army. From December 2015 through August 2019, General West served as the 44th U.S. Army Surgeon General and Commanding General of the U.S. Army Medical Command. Prior to that, General West served as Joint Staff Surgeon from 2013 to December 2015, acting as the chief medical advisor to the Chairman of the Joint Chiefs of Staff. She also previously served as Commanding General of Europe Regional Medical Command and Commander of Womack Army Medical Center at Fort Bragg. She is the recipient of numerous military awards, including the Distinguished Service Medal, the Defense Superior Service Medal and the Legion of Merit. General West currently serves as a director of Tenet Healthcare Corporation. General West brings to the Board a strategic perspective and background derived from her years of proven leadership and management in the U.S. Army, including service at the most senior levels in the U.S. Armed Forces.

 

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Table of Contents

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The tables below give information concerning the beneficial ownership of Nucor’s common stock as of February 28, 2020 by all directors and director nominees, each executive officer listed in the Summary Compensation Table, all directors and executive officers as a group, and the persons who are known to Nucor to be the owners of more than 5% of the outstanding common stock of Nucor. “Beneficial ownership” is determined in accordance with the SEC rules.

Executive Officers and Directors

 

     

 

Shares Owned

 

   

Shares
Subject to
Options (1)

 

   

Shares

Underlying
Restricted
Stock
Units (1)

 

   

Total
Beneficial
Ownership

 

   

Percent of  
Class (2)  

  Name

 

  

Sole
Voting and
Investment
Power

 

   

Shared
Voting and
Investment
Power

 

 

 

  Lloyd J. Austin III

 

    

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

5,252

 

 

 

   

 

5,252

 

 

 

  *

 

 

  Patrick J. Dempsey

 

    

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

7,622

 

 

 

   

 

7,622

 

 

 

  *

 

 

  John J. Ferriola

 

    

 

335,253

 

 

 

   

 

 

 

 

   

 

1,909,862

 

 

 

   

 

 

 

 

   

 

2,245,115

 

 

 

  *

 

 

  James D. Frias

 

    

 

116,311

 

(3) 

 

   

 

 

 

 

   

 

191,271

 

 

 

   

 

160,058

 

 

 

   

 

467,640

 

 

 

  *

 

 

  Ladd R. Hall

 

    

 

117,716

 

(3) 

 

   

 

8,402

 

 

 

   

 

117,027

 

 

 

   

 

150,123

 

 

 

   

 

393,268

 

 

 

  *

 

 

  Christopher J. Kearney

 

    

 

6,000

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

30,050

 

 

 

   

 

36,050

 

 

 

  *

 

 

  Laurette T. Koellner

 

    

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

10,490

 

 

 

   

 

10,490

 

 

 

  *

 

 

  Raymond S. Napolitan, Jr.

 

    

 

20,102

 

(3) 

 

   

 

2,982

 

 

 

   

 

151,351

 

 

 

   

 

118,092

 

 

 

   

 

292,527

 

 

 

  *

 

 

  Joseph D. Rupp

 

    

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

  *

 

 

  R. Joseph Stratman

 

    

 

15,000

 

(3) 

 

   

 

202,596

 

 

 

   

 

238,734

 

 

 

   

 

 

 

 

   

 

456,330

 

 

 

  *

 

 

  David A. Sumoski

 

    

 

47,756

 

 

 

   

 

 

 

 

   

 

65,789

 

 

 

   

 

102,520

 

 

 

   

 

216,065

 

 

 

  *

 

 

  Leon J. Topalian

 

    

 

9,865

 

 

 

   

 

1,244

 

 

 

   

 

 

 

 

   

 

86,495

 

 

 

   

 

97,604

 

 

 

  *

 

 

  D. Chad Utermark

 

    

 

38,784

 

(3) 

 

   

 

13,860

 

 

 

   

 

100,113

 

 

 

   

 

111,870

 

 

 

   

 

264,627

 

 

 

  *

 

 

  John H. Walker

 

    

 

2,645

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

31,386

 

 

 

   

 

34,031

 

 

 

  *

 

 

  Nadja Y. West

 

    

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

  *

 

 

All 16 directors and executive officers as a group

 

 

    

 

741,123

 

 

 

   

 

28,997

 

 

 

   

 

2,535,413

 

 

 

   

 

879,474

 

 

 

   

 

4,185,007

 

 

 

  1.39%

 

*   Represents holdings of less than 1%.

 

(1)   The number of shares beneficially owned subject to stock options or underlying restricted stock units (“RSUs”) includes shares of common stock that such person or group had the right to acquire on or within 60 days after February 28, 2020 upon the exercise of stock options or the vesting of RSUs. Holders of RSUs have no voting rights until such units settle and shares of common stock are issued to the holders.

 

(2)   Based on 301,003,305 shares of Nucor common stock outstanding as of the close of business on February 28, 2020.

 

(3)   Includes 51,559 shares for Mr. Frias, 46,988 shares for Mr. Hall, 15,236 shares for Mr. Napolitan, 11,559 shares for Mr. Stratman and 12,428 shares for Mr. Utermark that they have elected to defer under the Nucor Corporation Senior Officers Annual Incentive Plan (the “AIP”). Also includes 3,441 shares for Mr. Stratman that he elected to defer under the Nucor Corporation Senior Officers Long-Term Incentive Plan (the “LTIP”). The deferred shares have no voting power.

 

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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

 

 

Principal Stockholders

 

  Name and Address

 

  

 

Amount and Nature of

Beneficial Ownership

 

   

 

Percent
of Class (1) 

 

 

 

  The Vanguard Group, Inc.

  100 Vanguard Boulevard

  Malvern, Pennsylvania 19355

 

  

 

 

 

37,682,045

 

(2) 

 

 

 

 

12.52

 

 

  State Farm Mutual Automobile Insurance Company

  and related entities

  One State Farm Plaza

  Bloomington, Illinois 61710

 

  

 

 

 

28,340,680

 

(3) 

 

 

 

 

9.42

 

 

  BlackRock, Inc.

  55 East 52nd Street

  New York, New York 10055

 

  

 

 

 

22,455,012

 

(4) 

 

 

 

 

7.46

 

 

  State Street Corporation

  State Street Financial Center

  One Lincoln Street

  Boston, Massachusetts 02111

 

  

 

 

 

19,339,901

 

(5) 

 

 

 

 

6.43

 

(1)   Based on 301,003,305 shares of Nucor common stock outstanding as of the close of business on February 28, 2020.

 

(2)   Based on Schedule 13G/A filed with the SEC on February 11, 2020, reporting beneficial ownership as of December 31, 2019. That filing indicates that The Vanguard Group, Inc. has sole voting power as to 455,398 of the shares shown, shared voting power as to 101,731 of the shares shown, sole dispositive power as to 37,154,266 of the shares shown and shared dispositive power as to 527,779 of the shares shown.

 

(3)   Based on Schedule 13G filed with the SEC on January 28, 2020, reporting beneficial ownership as of December 31, 2019. That filing indicates that State Farm Mutual Automobile Insurance Company has sole voting and dispositive power as to 21,636,800 of the shares shown and shared voting and dispositive power as to 81,617 of the shares shown; State Farm Life Insurance Company has sole voting and dispositive power as to 532,400 of the shares shown and shared voting and dispositive power as to 18,421 of the shares shown; State Farm Life & Accident Assurance Co. has sole voting and dispositive power as to none of the shares shown and has shared voting and dispositive power as to 732 of the shares shown; State Farm Fire and Casualty Company has sole voting and dispositive power as to 2,800,000 of the shares shown and shared voting and dispositive power as to 16,709 of the shares shown; State Farm Investment Management Corp. has sole voting and dispositive power as to 968,000 of the shares shown and shared voting and dispositive power as to none of the shares shown; and State Farm Insurance Companies Employee Retirement Trust has sole voting and dispositive power as to 2,272,100 of the shares shown and shared voting and dispositive power as to 13,901 of the shares shown.

 

(4)   Based on Schedule 13G/A filed with the SEC on February 5, 2020, reporting beneficial ownership as of December 31, 2019. That filing indicates that BlackRock, Inc. has sole voting power as to 19,035,246 of the shares shown, sole dispositive power as to all of the shares shown and shared voting and dispositive power as to none of the shares shown.

 

(5)   Based on Schedule 13G filed with the SEC on February 14, 2020, reporting beneficial ownership as of December 31, 2019. That filing indicates that State Street Corporation has sole voting and dispositive power as to none of the shares shown, shared voting power as to 17,660,550 of the shares shown and shared dispositive power as to 19,331,705 of the shares shown.

 

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Table of Contents

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

Board of Directors.    Our business and affairs are managed under the direction of the Board of Directors. In exercising its fiduciary duties, the Board represents and acts on behalf of the Company’s stockholders. Our Bylaws provide that the Board of Directors consists of a number of directors to be fixed from time to time by a resolution of the Board. The Board of Directors currently has eight members, seven of whom are independent.

Corporate Governance Principles.    The Board has adopted Corporate Governance Principles setting forth a framework for our corporate governance with respect to the role and composition of the Board and Nucor’s management, responsibilities of directors, director qualification standards, functioning of the Board and its committees, compensation of directors, and annual performance evaluations of the Board, its committees, individual directors and our Chief Executive Officer (or CEO).

Codes of Ethics.    The Board has adopted a Code of Ethics for Senior Financial Professionals that applies to the Company’s Chief Executive Officer, Chief Financial Officer, Corporate Controller and other senior financial professionals and includes guidelines relating to the ethical handling of actual or apparent conflicts of interest, compliance with laws and accurate financial reporting. In addition, the Board has adopted Standards of Business Conduct and Ethics, which apply to all employees, officers and directors of the Company. The Company intends to post any amendments or waivers to either of these documents (to the extent required to be disclosed pursuant to Form 8-K) on the Company’s website at www.nucor.com/leadership.

Documents Available.    All of the Company’s corporate governance materials, including the charters for the Audit Committee, the Compensation and Executive Development Committee and the Governance and Nominating Committee, the Corporate Governance Principles, the Code of Ethics for Senior Financial Professionals and the Standards of Business Conduct and Ethics, are available on the Company’s website at www.nucor.com/leadership. The Company also makes available on its website at www.nucor.com/leadership the Company’s Human Rights Policy and other supply chain documents, including a Supplier Code of Conduct, a Policy on Combatting Trafficking in Persons and a Policy on Eliminating Forced Labor from our Supply Chain, as well as a report on the Company’s Political Disclosures and Lobbying Oversight. Any modifications to these documents will be reflected on the Company’s website.

Director Independence.    The Board believes that a majority of its members are independent under the applicable NYSE rules and SEC rules. The NYSE rules provide that a director does not qualify as “independent” unless the board of directors affirmatively determines that the director has no material relationship with the company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the company). The NYSE rules recommend that a board of directors consider all of the relevant facts and circumstances in determining the materiality of a director’s relationship with a company. The Board has adopted Categorical Standards for Determination of Director Independence (the “Categorical Standards”) to assist the Board in determining whether a particular relationship a director has with the Company is a material relationship that would impair the director’s independence. The Categorical Standards establish thresholds at which directors’ relationships with the Company are deemed to be not material and, therefore, shall not disqualify any director or nominee from being considered “independent.” The Categorical Standards are included as an appendix to Nucor’s Corporate Governance Principles, which are available on the Company’s website at www.nucor.com/leadership.

In February 2020, the Board of Directors, with the assistance of the Governance and Nominating Committee, conducted an evaluation of director independence based on the Categorical Standards, the NYSE rules and the SEC rules. The Board considered all relationships and transactions between each director (and his or her immediate family and affiliates) and each of Nucor, its management and its independent registered public accounting firm, including, with respect to Mr. Dempsey, who serves as President and Chief Executive Officer and a director of Barnes Group Inc., that Nucor in the ordinary course of business purchased from and sold to Barnes Group goods in 2019 in an amount less than 0.5% of the consolidated gross revenues of Barnes Group. As a result of this evaluation, the Board determined those relationships that do exist or did exist within the last three years (except for Mr. Ferriola’s in his capacity as Nucor’s Chairman and Chief Executive Officer until his retirement on December 31, 2019 and Mr. Topalian’s in his capacity as Nucor’s President and Chief Executive Officer) all fall well below the thresholds in the Categorical Standards. Consequently, the Board of Directors determined that each of Generals Austin and West and each of Messrs. Dempsey, Kearney, Rupp and Walker and Ms. Koellner is an independent director under the Categorical Standards, the NYSE rules and the SEC rules.

 

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CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

The Board also determined that each member of the Audit Committee, the Compensation and Executive Development Committee and the Governance and Nominating Committee (see membership information below under “Board Committees”) is independent, including that each member of the Audit Committee is “independent” as that term is defined under Rule 10A-3(b)(1)(ii) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and that each member of the Compensation and Executive Development Committee is an “outside director” as defined under Section 162(m) of the Internal Revenue Code prior to amendment by the Tax Cuts and Jobs Act of 2017.

Board Leadership Structure.    Nucor currently has separated the roles of Chairman of the Board and Chief Executive Officer. Mr. John H. Walker serves as Non-Executive Chairman of the Board and Mr. Leon J. Topalian serves as President and Chief Executive Officer of the Company. The Company previously combined the roles of Chairman of the Board and Chief Executive Officer and, in the future, the Board may determine in certain circumstances that it is in the best interests of the Company and our stockholders for the same person to hold the positions of Chairman of the Board and Chief Executive Officer. The Board’s leadership structure is outlined in the Company’s Bylaws and Corporate Governance Principles, as described below:

 

Separate Chairman and CEO    Given the Company’s current needs, the Board believes that the existing leadership structure with Mr. Walker serving as Non-Executive Chairman of the Board and Mr. Topalian serving as President and Chief Executive Officer is appropriate as it allows Mr. Topalian to focus on the day-to-day operation of the business, execution of the Company’s strategy, shaping of the Company’s corporate vision and operational leadership of the business while allowing Mr. Walker to facilitate the Board’s independent oversight of management and the Company’s strategic direction, the Board’s engagement with stockholders, the Board’s consideration of key governance matters and communication between senior management and the Board about issues such as management development and succession planning, executive compensation and Company performance.
Independent Directors    Independent directors comprise more than 87% of the Board and 100% of each of the Audit Committee, the Compensation and Executive Development Committee and the Governance and Nominating Committee.
Committee Chairs    All chairs of the Board’s committees are independent and are annually appointed by the Board, approve agendas and material for respective committee meetings and act as a liaison between committee members and the Board and management.

 

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CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

Board Committees.    The Board of Directors has three standing committees: the Audit Committee, the Compensation and Executive Development Committee and the Governance and Nominating Committee. Each of these committees acts pursuant to a written charter adopted by the Board of Directors. Committee members and committee chairs are appointed by the Board. The members and chairs of these committees are identified in the table below:

 

       
  Director   

Audit

Committee

  

 

Compensation
and Executive
Development
Committee

  

Governance and  

Nominating
Committee

Lloyd J. Austin III

 

  

X

 

   X

 

   X

 

Patrick J. Dempsey

 

  

X

 

   X

 

   X

 

Christopher J. Kearney

 

  

X

 

   Chair

 

   X

 

Laurette T. Koellner

 

  

Chair

 

   X

 

   X

 

Joseph D. Rupp

 

  

X

 

   X

 

   X

 

Leon J. Topalian

 

        

John H. Walker

 

  

X

 

   X

 

   Chair

 

Nadja Y. West

 

  

X

 

   X

 

   X

 

The table below provides information about the operation and key functions of these committees:

 

  Committee

 

  

Key Functions and Additional Information

 

  

 

Number of
Meetings
in 2019

 

 

Audit

Committee

  

•  Assists the Board in its oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualifications and independence of the Company’s independent registered public accounting firm and (iv) the performance of the Company’s internal audit function and independent registered public accounting firm.

 

•  Appoints, compensates, retains and oversees the work of the Company’s independent registered public accounting firm.

 

•  Reviews and discusses with management and the Company’s independent registered public accounting firm the annual and quarterly financial statements.

 

•  Reviews and discusses with management the quarterly earnings releases.

 

•  Considers and pre-approves all auditing services, internal control-related services and permitted non-auditing services to be provided by the Company’s independent registered public accounting firm.

 

•  Monitors the adequacy of the Company’s reporting and internal controls.

 

•  Assists the Board in its oversight of enterprise risk management.

 

     7     

Compensation

and Executive

Development

Committee

  

•  Administers the compensation program for the senior officers.

 

•  Reviews, evaluates and determines compensation of the senior officers.

 

•  Reviews and recommends to the Board compensation of the directors.

 

•  Reviews and approves employment offers, arrangements and other benefits for the senior officers.

 

•  Reviews the Company’s executive succession and management development plans.

 

•  Oversees regulatory compliance and risk regarding compensation matters.

 

     4     

 

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CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

  Committee

 

  

Key Functions and Additional Information

 

  

 

Number of
Meetings
in 2019

 

 

Governance and

Nominating

Committee

  

•  Develops and recommends to the Board for approval specific guidelines and criteria for selecting nominees for election to the Board.

 

•  Identifies, evaluates and recommends to the Board nominees for election to the Board.

 

•  Makes recommendations to the Board concerning (i) the size, composition and leadership of the Board, (ii) the committee structure of the Board, committee operations (including the ability to delegate to subcommittees) and committee reporting to the Board, (iii) the qualifications of committee members, (iv) the size, composition and leadership of each Board committee and (v) the responsibilities of each Board committee.

 

•  Develops and oversees the annual process of evaluating the performance of the Board and the Company’s management.

 

•  Administers the Company’s policy and procedures for the review, approval or ratification of related person transactions.

 

•  Considers and recommends to the Board actions relating to corporate governance.

 

     6     

The Board has determined that Ms. Koellner is an “audit committee financial expert” within the meaning of the SEC rules and that she has accounting and related financial management expertise within the meaning of the NYSE rules. All members of the Audit Committee are financially literate as determined by the Board, in its business judgment.

The Board may also establish other committees from time to time as it deems necessary.

Director Meetings.    The Board of Directors held four meetings during 2019. Each incumbent director attended 75% or more of the aggregate number of meetings of the Board and committees of the Board on which such director served during 2019. Pursuant to the Corporate Governance Principles, the independent directors meet in executive session prior to or after each quarterly Board meeting and as necessary prior to or after other Board meetings. Mr. Walker, as Non-Executive Chairman of the Board, presides over these executive sessions.

Attendance at Annual Meetings of Stockholders.    Directors are expected to attend the Company’s annual meeting of stockholders. Six of the Company’s seven directors in office at the time, including all of the Company’s current directors who were then directors, attended last year’s annual meeting.

Annual Evaluation of Directors and Committee Members.    The Board of Directors evaluates the performance of each director, each committee of the Board and the Board of Directors as a whole on an annual basis. In connection with this annual self-evaluation, each director anonymously records his or her views on the performance of each director, each committee of the Board and the Board of Directors as a whole. The entire Board of Directors reviews these reports and determines what, if any, actions should be taken in the upcoming year to improve its effectiveness and the effectiveness of each director and each committee of the Board. As a result of the Company’s separation of the Chairman of the Board and Chief Executive Officer roles, the Board of Directors also intends to evaluate the performance of the Non-Executive Chairman in connection with future evaluations to determine what, if any, actions should be taken to improve his effectiveness.

Board’s Role in Risk Oversight.    The Board oversees the Company’s risk profile and management’s processes for assessing and managing risk, both as a whole Board and through its committees. At least annually, the full Board reviews strategic risks and opportunities facing the Company. Certain other important categories of risk are assigned to designated Board committees (which are comprised solely of independent directors) that report back to the full Board.

The Audit Committee is specifically charged with the responsibility of meeting periodically with management, the Company’s General Counsel and outside counsel to discuss the Company’s major financial risk exposures,

 

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CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

 

 

including, but not limited to, legal and environmental claims and liabilities, cybersecurity, risk management and other financial exposures, and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. The Company’s Corporate Controller annually conducts a risk assessment, which includes input from senior officers, and prepares for the Audit Committee’s review a report and a presentation identifying and evaluating the key risks facing the Company, how those risks interrelate, how they affect the Company and how management addresses those risks. After completing a review and analysis of the report and the presentation, the Audit Committee meets with management to provide its comments on the report and the presentation and to provide guidance on areas that the Audit Committee believes management and the Corporate Controller should consider in identifying and evaluating the risks facing the Company.

The Compensation and Executive Development Committee oversees Nucor’s executive compensation plans to ensure they do not incentivize excessive risk-taking by our senior officers. Although a significant portion of our executives’ compensation is performance-based, we believe our compensation plans are appropriately structured and do not pose a material risk to Nucor.

The Board believes that its leadership structure supports the Company’s governance approach to risk oversight as the President and Chief Executive Officer is involved directly in risk management as a member of the Company’s management team, while the Non-Executive Chairman of the Board and the committee chairpersons, in their respective areas, maintain oversight roles as independent members of the Board.

Compensation Consultant.    The Compensation and Executive Development Committee has sole authority under its charter to retain compensation consultants and to approve such consultants’ fees and retention terms. The Compensation and Executive Development Committee has retained Pearl Meyer & Partners, LLC (“Pearl Meyer”) to act as its independent advisor and to provide it with advice and support on executive compensation issues. The Compensation and Executive Development Committee has reviewed and confirmed the independence of Pearl Meyer as the committee’s compensation consultant. Neither Pearl Meyer nor any of its affiliates provides any services to Nucor except for services related solely to executive officer and director compensation. Please see Executive Officer Compensation – Compensation Discussion and Analysis – 2019 Executive Compensation in Detail – Determination of 2019 Compensation” on page 30 of this Proxy Statement for a description of Nucor’s process for the consideration and determination of executive compensation and Pearl Meyer’s role in such process.

No Hedging or Short Selling.    Nucor maintains a trading policy that prohibits any hedging or short selling (profiting if the market price decreases) of Nucor securities by any director, officer or general manager of Nucor or any other employee of the Company whose function and responsibilities provide access to material, non-public information about Nucor.

Policy on Executive Officer Incentive Compensation Recoupment.    The Company has a written policy to address the recoupment of performance-based compensation awarded to or earned by an executive officer if there is a restatement of the Company’s financial results due to material noncompliance of the Company with any financial reporting requirement under the federal securities laws. In the event of such a restatement, the Compensation and Executive Development Committee shall review the performance-based compensation awarded to or earned by the executive officers during the three-year period prior to the restatement event and, if the committee determines in its reasonable discretion that any such performance-based compensation would not have been awarded to or earned by an executive officer based on the restated financial results, the committee shall within 12 months of the restatement event, to the extent practicable, seek to recover from such executive officer any portion of the performance-based compensation that is greater than that which would have been awarded or earned had it been calculated on the basis of the restated financial results. A copy of the policy is available on our website at www.nucor.com/leadership.

Policy on Transactions with Related Persons.    The Company has a written policy and procedures for the review, approval or ratification of any transactions that could potentially be required to be reported under the SEC rules for disclosure of transactions with the Company’s directors and executive officers, business and other organizations with which its directors or executive officers are affiliated, members of their immediate families and other related persons. This policy is administered by the Governance and Nominating Committee of the Board of

 

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Directors. The policy includes certain categories of pre-approved transactions that are based upon exceptions to the SEC’s rules for disclosure of such transactions. For transactions that are not pre-approved, the Governance and Nominating Committee, in determining whether to approve a transaction with a related person or an organization with which a related person is affiliated, takes into account, among other things, (i) whether the transaction was undertaken in the ordinary course of business of the Company; (ii) the approximate dollar value of the transaction; (iii) the purpose, and potential benefits to the Company, of the transaction; and (iv) the related person’s interest in the transaction, including whether the related person or his or her immediate family member participated in the negotiation of the terms of the transaction or received any special benefits from the transaction.

In 2019, Smoot Enterprises, Inc. was paid approximately $3.69 million by Nucor to transport products and materials for Nucor. Michael Smoot, who is the brother-in-law of Ladd R. Hall, an executive officer of Nucor, is an officer and greater than 10% owner of Smoot Enterprises, Inc. The foregoing was approved under Nucor’s policy on transactions with related persons.

In 2019, Daniel Pantello, a melt shop supervisor at Nucor, was paid compensation of approximately $186,200, and Nathanael Slate, a casting shift supervisor at Nucor, was paid compensation of approximately $198,500. Mr. Pantello is the stepson of R. Joseph Stratman, a former executive officer of Nucor, and Mr. Slate is the son of MaryEmily Slate, an executive officer of Nucor. The foregoing have been approved under Nucor’s policy on transactions with related persons.

Nominating Directors.    Stockholders may recommend a director nominee for consideration by the Governance and Nominating Committee by submitting the nominee’s name in accordance with provisions of Nucor’s Bylaws that require advance notice to Nucor and certain other information. In general, under the Bylaws, the written notice must be delivered to, or mailed and received at, the Company’s principal executive offices not later than the close of business on the 120th day before the first anniversary of the preceding year’s annual meeting of stockholders nor earlier than the close of business on the 150th day before the first anniversary of the preceding year’s annual meeting of stockholders; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the Company.

The notice must contain certain information about both the nominee and the stockholder submitting the nomination as set forth in Nucor’s Bylaws. With respect to the nominee, the notice must contain, among other things, (i) the nominee’s name, age and business and residential addresses; (ii) the nominee’s background and qualification, including, without limitation, the nominee’s principal occupation or employment; (iii) the class or series and number of shares or other securities of the Company directly or indirectly owned of record or beneficially by the nominee or any Stockholder Associated Person (as defined in Nucor’s Bylaws); (iv) any derivative positions held of record or beneficially by the nominee as well as any hedging transactions or similar agreements; (v) a written statement executed by the nominee (A) acknowledging that as a director of the Company, the nominee will owe a fiduciary duty under Delaware law with respect to the Company and our stockholders, (B) disclosing whether the nominee or any Stockholder Associated Person is a party to an agreement, arrangement or understanding with, or has given any commitment or assurance to, any person or entity as to how the nominee, if elected as a director of the Company, will act or vote on any issue or question, (C) disclosing whether the nominee or any Stockholder Associated Person is a party to an agreement, arrangement or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with the nominee’s service or action as a director of the Company, (D) agreeing to update continually the accuracy of the information required by the immediately preceding clauses (B) and (C) for as long as the nominee is a nominee or a director of the Company and (E) agreeing if elected as a director of the Company to comply with all corporate governance codes, policies and guidelines applicable to directors; and (vi) any other information regarding the nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with a contested solicitation of proxies for the election of directors. With respect to the stockholder submitting the nomination, the notice must contain: (1) the name and address, as they appear on the Company’s books, of the stockholder and

 

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any Stockholder Associated Person; (2) the class or series and number of shares or other securities of the Company directly or indirectly owned of record or beneficially by the stockholder or any Stockholder Associated Person; (3) any derivative positions held of record or beneficially by the stockholder or any Stockholder Associated Person as well as any hedging transactions or similar agreements; (4) any other information regarding the stockholder or any Stockholder Associated Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with a contested solicitation of proxies for the election of directors; and (5) a written statement whether either the stockholder or any Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of the Company’s voting shares. A stockholder who is interested in recommending a director nominee should request a copy of Nucor’s Bylaws by writing to the Company’s Corporate Secretary at Nucor Corporation, 1915 Rexford Road, Charlotte, North Carolina 28211.

The Governance and Nominating Committee has a process of identifying and evaluating potential nominees for election as members of the Board. The Governance and Nominating Committee has a policy that potential nominees shall be evaluated no differently regardless of whether the nominees are recommended by a stockholder, a Board member or Nucor’s management. The Governance and Nominating Committee considers potential nominees from all these sources, develops information from many sources concerning the potential nominees, evaluates the potential nominees as to the qualifications that the committee and the Board have established and in light of the current skill, background and experience of the Board’s members and the future, ongoing needs of the Company and makes a decision whether to recommend any potential nominee for consideration for election as a member of the Board. In the past, Nucor has engaged third-party search firms to assist the Governance and Nominating Committee in identifying and evaluating potential director nominees, and Nucor may do so again in the future.

The Governance and Nominating Committee is committed to having diverse individuals from different backgrounds with varying perspectives, professional experience, education and skills serving as directors. In evaluating potential nominees for election and reelection as members of the Board, the Governance and Nominating Committee considers persons with a variety of perspectives, professional experience, education and skills that possess the below minimum qualifications. The potential nominee must:

 

   

be a person of the highest integrity and be committed to ethical standards of personal and corporate behavior;

 

   

have significant business experience or other organizational leadership experience that will allow the nominee to contribute significantly to the Company as a member of the Board;

 

   

if not a member of the Company’s management, not have any relationships, directly or through an immediate family member, with the Company that would make him or her not able to serve as an independent director within the meaning of any rules and laws applicable to the Company;

 

   

have a willingness and an ability to make the necessary time commitment to actively participate as a member of the Board; and

 

   

be able to represent the interests of all of Nucor’s stockholders and not merely those of one stockholder or a special interest group.

The Governance and Nominating Committee also believes there are certain specific qualities or skills that one or more members of the Board of Directors must possess. These include:

 

   

the skills and experience necessary to serve as an audit committee financial expert;

 

   

experience serving as the chief executive officer of, or in another senior management position with, a major manufacturing company;

 

   

significant and successful merger and acquisition experience; and

 

   

diversity in terms of race or gender.

How to Communicate with the Board of Directors and Non-Management Directors.    Stockholders and other interested parties can communicate directly with any of the Company’s directors by sending a written communication addressed to the individual director c/o Corporate Secretary at Nucor Corporation, 1915 Rexford

 

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Road, Charlotte, North Carolina 28211. Stockholders and other interested parties wishing to communicate with Mr. Walker, as Non-Executive Chairman, or with the non-management directors as a group may do so by sending a written communication addressed to Mr. Walker c/o Corporate Secretary at the above address. All such communications are promptly reviewed before being forwarded to the addressee. Nucor generally will not forward to directors a communication that the Company determines to be primarily commercial in nature, relates to an improper or irrelevant topic or requests general information about the Company.

 

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DIRECTOR COMPENSATION

The Compensation and Executive Development Committee established the following director compensation amounts, which became effective in May 2019.

 

  Board/Committee Position

 

  

 

2019
Annual Fee
($)

 

 

 

  Lead Director

 

    

 

157,000

 

 

 

 

  Board Member (non-employee directors)

 

    

 

125,000

 

 

 

 

  Audit Committee Chairman

 

    

 

25,000

 

 

 

 

  Compensation and Executive Development Committee Chairman

 

    

 

20,000

 

 

 

 

  Governance and Nominating Committee Chairman

 

    

 

15,000

 

 

 

Non-employee directors are granted each June 1 shares of Company common stock under the 2014 Plan. Directors may elect to receive their shares in the form of deferred stock units. Effective June 1, 2019, the number of shares of Company common stock awarded was equal to the quotient of $150,000 divided by the closing price of a share of Nucor common stock on the grant date (rounded down to the next whole share). Because June 1, 2019 was a Saturday, the closing price on the previous day, May 31, 2019, was used. All directors elected to receive their grant in the form of deferred stock units in 2019. The deferred stock units are fully vested on the grant date but are payable in the form of shares of Nucor common stock only after the termination of the director’s service on the Board.

The table below summarizes the compensation of each non-employee director who served on the Board in 2019 for his or her Board and committee services during 2019. Directors who are also employees of Nucor (for 2019, Mr. Ferriola) do not receive compensation (other than their compensation as employees of Nucor) for their service on the Board. Mr. Joseph D. Rupp was elected to the Board on February 17, 2020 and is therefore not included in the table.

 

  Name

 

  

 

Cash Fees
($)

 

    

Stock Awards
($) (1)

 

   

Total

($)

 

 

 

  (a)

 

  

(b)

 

    

(c)

 

   

(h)

 

 

 

  Lloyd J. Austin III

 

    

 

125,000

 

 

 

    

 

150,000

 

(2) 

 

   

 

275,000

 

 

 

 

  Patrick J. Dempsey

 

    

 

125,000

 

 

 

    

 

150,000

 

(2) 

 

   

 

275,000

 

 

 

 

  Victoria F. Haynes (3)

 

    

 

62,500

 

 

 

    

 

150,000

 

(2) 

 

   

 

212,500

 

 

 

 

  Christopher J. Kearney

 

    

 

145,000

 

 

 

    

 

150,000

 

(2) 

 

   

 

295,000

 

 

 

 

  Laurette T. Koellner

 

    

 

150,000

 

 

 

    

 

150,000

 

(2) 

 

   

 

300,000

 

 

 

 

  John H. Walker

 

    

 

172,000

 

 

 

    

 

150,000

 

(2) 

 

   

 

322,000

 

 

 

 

  Nadja Y. West

 

    

 

62,500

 

 

 

    

 

 

(4) 

 

   

 

62,500

 

 

 

(1)   The amounts shown represent the grant date fair value of annual equity awards. Our policy and assumptions made in the valuation of share-based payments are contained in notes 2 and 17 of Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019.

 

(2)   The number of deferred stock units granted and fully vested on June 1, 2019 based on the closing price of Nucor common stock on May 31, 2019 of $48.00 was 3,125 units.

 

(3)   Dr. Haynes retired as a director effective July 10, 2019.

 

(4)   General West was elected as a director on September 5, 2019 and therefore did not receive a stock award in 2019.

 

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DIRECTOR COMPENSATION

 

 

The table below summarizes the total number of vested deferred stock units granted to the non-employee directors under the 2014 Plan, the Nucor Corporation 2010 Stock Option and Award Plan (the “2010 Plan”) and the Nucor Corporation 2005 Stock Option and Award Plan (the “2005 Plan”) that were outstanding as of December 31, 2019.

Outstanding Equity Awards at Fiscal Year-End

 

  Name

 

  

 

Number
of Vested
Stock
Units
(#) (1)

 

    

Market Value
of Stock Units
($) (2)

 

 

  Lloyd J. Austin III

 

    

 

5,252

 

 

 

    

 

295,583

 

 

 

 

  Patrick J. Dempsey

 

    

 

7,622

 

 

 

    

 

428,966

 

 

 

 

  Christopher J. Kearney

 

    

 

30,050

 

 

 

    

 

1,691,214

 

 

 

 

  Laurette T. Koellner

 

    

 

10,490

 

 

 

    

 

590,377

 

 

 

 

  John H. Walker

 

    

 

31,386

 

 

 

    

 

1,766,404

 

 

 

 

  Nadja Y. West

 

    

 

 

 

 

    

 

 

 

 

(1)   Deferred stock units are granted June 1 each year and are fully vested on the grant date, but are payable in the form of shares of Nucor common stock only after the termination of the director’s service on the Board of Directors.

 

(2)   Represents the value of fully vested deferred stock units using the closing price of Nucor common stock of $56.28 on December 31, 2019.

Director Stock Ownership Guidelines.    To ensure that non-employee directors become and remain meaningfully invested in Nucor common stock, each non-employee director is required to own 7,000 shares of Nucor common stock (including deferred stock units). A non-employee director must meet the stock ownership requirement within five years of becoming a member of the Board. As of December 31, 2019, all of the non-employee directors were in compliance with the ownership requirement or in the first five years after becoming a director.

 

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee’s report with respect to the Company’s audited consolidated financial statements for the year ended December 31, 2019 is as follows:

 

1.   The Audit Committee has reviewed and discussed the audited consolidated financial statements with Nucor’s management.

 

2.   The Audit Committee has discussed with PricewaterhouseCoopers LLP (referred to in this report as “PwC”), the Company’s independent registered public accounting firm, the audited consolidated financial statements and the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board and the SEC.

 

3.   The Audit Committee has received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence, and has discussed with PwC that firm’s independence.

 

4.   The Audit Committee has reviewed and discussed with management and PwC management’s report on Nucor’s internal control over financial reporting and PwC’s attestation report on the effectiveness of Nucor’s internal control over financial reporting.

 

5.   Based on the reviews and the discussions referred to in paragraphs (1) through (4) above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the SEC.

THE AUDIT COMMITTEE

Laurette T. Koellner, Chairman

Lloyd J. Austin III

Patrick J. Dempsey

Christopher J. Kearney

Joseph D. Rupp

John H. Walker

Nadja Y. West

Fees Paid to Independent Registered Public Accounting Firm

For the years ended December 31, 2019 and 2018 fees billed for services provided by PwC were as follows:

 

    

 

2019

($)

 

    

2018

($)

 

 

  Audit Fees (1)

 

   

 

4,533,300

 

 

 

    

 

4,313,500

 

 

 

 

  Audit-Related Fees (2)

 

   

 

 

 

 

    

 

24,000

 

 

 

 

  Tax Fees (3)

 

   

 

4,100

 

 

 

    

 

3,900

 

 

 

 

  All Other Fees (4)

 

   

 

4,500

 

 

 

    

 

4,500

 

 

 

(1)   Audit fees consist of fees billed for professional services rendered in connection with the audit of Nucor’s annual consolidated financial statements, for the review of interim consolidated financial statements in Forms 10-Q and for services normally provided in connection with statutory and regulatory filings or engagements. Audit fees also include fees for professional services rendered for the audit of the effectiveness of internal control over financial reporting.

 

(2)   Audit-related fees consist of fees billed for professional services rendered related to new accounting guidance implemented in 2018.

 

(3)   Tax fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning.

 

(4)   All other fees consist of fees billed for financial reporting literature.

 

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REPORT OF THE AUDIT COMMITTEE

 

 

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services to be performed by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. All such services provided for 2019 were pre-approved by the Audit Committee. The Audit Committee concluded that the provision of such services by PwC was compatible with the maintenance of that firm’s independence. The Audit Committee has delegated its authority to approve in advance all permissible non-audit services to be provided by PwC to the Chairman of the Audit Committee; provided, however, any such services approved by its Chairman shall be presented to the full Audit Committee at its next regularly scheduled meeting.

PROPOSAL 2

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors has appointed the firm of PricewaterhouseCoopers LLP to serve as the independent registered public accounting firm of Nucor for 2020. PricewaterhouseCoopers LLP has acted in such capacity for Nucor since 1989.

The Company expects that representatives of PricewaterhouseCoopers LLP will be present at the Annual Meeting, and the representatives will have an opportunity to make a statement if they desire to do so. The Company also expects that the representatives will be available to respond to appropriate questions from stockholders.

Stockholder ratification of the Audit Committee’s appointment of PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm is not required by our Bylaws or otherwise. Nevertheless, the Board is submitting the appointment of PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of good corporate governance. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider its appointment of PricewaterhouseCoopers LLP. Even if the stockholders ratify the appointment of PricewaterhouseCoopers LLP, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of Nucor and its stockholders.

Vote Recommendation

The Board of Directors recommends a vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm for 2020. Unless otherwise specified, proxies will be voted “FOR” the proposal.

 

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EXECUTIVE OFFICER COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Our executive compensation program has consistently aligned with our performance as an industry leader that strives to excel on the measures of profitable growth and total stockholder return, while maintaining our commitment to safe and environmentally responsible operations. Over the years, our stockholders have been highly supportive of our program’s heavily leveraged, pay-for-performance structure, as demonstrated by our say-on-pay results averaging approximately 95% from 2011 through 2018.

Stockholders, through their feedback, have also expressed appreciation for the features of our program that promote stability and facilitate smooth succession planning throughout the organization. They understand the long-term nature of our projects and the critical need for a workforce that can ride through the natural ups and downs of our business cycle and continue to deliver industry-leading returns over the long term. Our people grow, develop and progress through Nucor, which allows us to execute on our multi-year, large-scale initiatives without disruption. Growing our team from within is fundamental to who we are.

This year’s Compensation Discussion and Analysis (referred to in this section and the “Executive Compensation Tables” section as “CD&A”) reviews the objectives and elements of Nucor’s executive compensation program and discusses the 2019 compensation earned by our named executive officers (“Executive Officers”) listed in the table below. It also explains the actions the Compensation and Executive Development Committee of the Board (referred to in this section and the “Executive Compensation Tables” section as the “Committee”) took in order to keep the executive compensation program aligned with stockholder interests and expectations, ensuring we continue to attract, retain and develop the best leadership talent in our industry.

 

 

  Executive Officer

 

 

Principal Position as of December 31, 2019

 

  John J. Ferriola (1)

 

 

Chairman and Chief Executive Officer

 

 

  James D. Frias

 

 

Chief Financial Officer, Treasurer and Executive Vice President

 

 

  Ladd R. Hall

 

 

Executive Vice President-Flat Rolled Products

 

 

  Raymond S. Napolitan, Jr.

 

 

Executive Vice President-Engineered Bar Products and Digital

 

 

  David A. Sumoski

 

 

Executive Vice President-Merchant and Rebar Products

 

 

  D. Chad Utermark

 

 

Executive Vice President-Fabricated Construction Products

 

 

  Leon J. Topalian (2)

 

 

President and Chief Operating Officer

 

 

  R. Joseph Stratman (3)

 

 

 

Former Chief Digital Officer and Executive Vice President

 

 

(1)   Mr. Ferriola retired on December 31, 2019.

 

(2)   Mr. Topalian was promoted to President and Chief Executive Officer on January 1, 2020. We have included Mr. Topalian in this CD&A and related tables; however, the SEC rules do not require disclosure of his compensation in this Proxy Statement.

 

(3)   Mr. Stratman retired on June 8, 2019.

Leadership Succession: Where We Are Today

On September 6, 2019, the Board announced the retirement of Mr. Ferriola as Chairman and CEO, effective December 31, 2019, and the election of Mr. Topalian, President and Chief Operating Officer and 23-year Nucor veteran, to succeed him as President and CEO, effective January 1, 2020. Mr. Topalian was promoted to President and Chief Operating Officer on September 5, 2019. Mr. Topalian’s promotion to President and Chief Operating Officer and later President and CEO was part of the Board’s robust management succession strategy. Mr. Topalian had served as an Executive Vice President of Nucor from 2017 to 2019 and a Vice President from 2013 to 2017. He has been employed by Nucor in various capacities since 1996, including serving as General Manager at two Nucor facilities, in Arkansas and Illinois, as well as a Melting and Casting Manager, an Operations Manager, a cold mill production supervisor and a project engineer.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

EXECUTIVE SUMMARY

2019 Business Overview

Our financial performance for 2019 was strong, despite challenging steel market conditions. Excellent performance from our steel products segment helped to partially offset the effects of inventory destocking by customers of our steel mills segment.

Although overall profitability was not as high as the record-setting level achieved in 2018, we generated a record amount of cash from operations in 2019 – $2.8 billion. In December 2019, we announced an increase in our regular cash dividend to $0.4025 per share. Nucor has increased its base dividend for 47 consecutive years – every year since it first began paying dividends in 1973.

In 2019, we achieved our best safety performance in the key metrics we measure, including Injury/Illness Rate and Days Away, Restricted and Transfer (DART) Case Rate. Safety will remain integral to our business strategy and our culture. Safety continues to be the cornerstone of our operational success and is a critical component of our overall commitment to sustainability.

Our leadership team continues to execute on our business strategy, which drives growth through targeted capital projects and acquisitions intended to enhance our competitiveness. Their long-term focus enabled us to outperform our steel competitors and keep pace with general industry. Our executive compensation program reflects our performance and continues to align the interests of our executives with those of our stockholders.

Say-on-Pay Vote and Feedback from Stockholders

At our 2019 annual meeting of stockholders, the majority of our investors – more than 70% of the total votes cast on the advisory vote to approve the Company’s named executive officer compensation – continued to support the design of our executive compensation program. However, we also received some isolated feedback about our long-standing approach to severance, which was implemented during a time when Nucor was at significant risk of losing critical leadership talent and intellectual capital to emerging industry competitors. While having these types of safeguards in our program is always top priority and critical to our leadership retention and succession objectives, the Committee is also committed to ensuring that our program remains aligned with market practices.

Because our 2019 say-on-pay result was lower than our historical support, we reached out to stockholders representing approximately 53% of our outstanding shares and were able to engage in substantive discussions focused on executive compensation with stockholders who owned approximately 50% of our outstanding shares. These discussions were in addition to our regular stockholder engagement activities that occur throughout the year. In general, investors validated their continued overall support for our program and its heavily leveraged, pay-for-performance structure. However, in light of the specific feedback about severance, the Committee took the following actions on February 17, 2020:

 

   

Eliminated severance benefits. Benefits under the Nucor Corporation Severance Plan for Senior Officers and General Managers (the “Severance Plan”) will no longer be provided to Executive Vice Presidents (“EVPs”) and above, including Executive Officers. Severance benefits will no longer be provided to any Executive Officer upon retirement.

 

   

Implemented a supplemental retirement plan. EVPs and above who are at least age 60 or have held an EVP title (or above) for at least seven years will be eligible for a supplemental retirement plan benefit or a reduced benefit upon termination prior to satisfying the age or service requirement for retirement. Under this plan, EVPs will continue to be subject to robust non-compete/non-solicitation agreements.

 

   

Reduced change in control benefits. Compensation paid following termination in the event of a change in control would be limited to a market multiple of base salary and annual incentives. The LTIP award amounts will no longer be included in the payout calculation. Cash payments for RSU grants based on future performance have also been eliminated.

The Committee worked closely with its independent compensation consultant to ensure that that the above changes balance the need for market-aligned program features with designs that support our culture of workforce stability and growing talent from within. Aside from these adjustments, the Committee did not make any material changes to the overall design of the executive compensation program. It remained aligned with its pay-for-performance principles as described in the following pages of this CD&A.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Share the Pain, Share the Gain: Nucor’s Approach to Executive Compensation

Nucor designed and built its executive compensation program with pay for performance at its core. The result is a program that is highly leveraged – a significant portion of our executive compensation is variable and directly linked to Nucor’s relative performance and the value created for its stockholders. Here is an overview of how it works:

 

   

Base salaries are generally set below the market median for similar size industrial and materials companies. Accordingly, the Committee recognizes that Executive Officers may earn below median levels of compensation when Nucor’s performance is below its peers, even if an Executive Officer’s individual performance may be superior. This practice has resulted, and may result in the future, in Executive Officers earning less than their peer company counterparts.

 

   

The incentive plans measure performance relative to two performance comparator groups: the Steel Comparator Group and the General Industry Comparator Group. The companies included in these comparator groups are reviewed annually by the Committee. Please see “Performance Comparator Groups” beginning on page 29 of this CD&A for more information. The incentive plans are designed to pay well when performance is high and potentially not pay any incentive if performance is poor.

 

   

Through a multi-year business cycle, total compensation outcomes should be aligned with the median of Nucor’s steel company peers and other similar size industrial and materials companies. The incentive plans are based on analysis that assumes some years of lower performance where no payouts may be earned and some years where maximum payouts may be achieved – to reflect fluctuations in economic activity and performance relative to peers.

 

   

A significant amount of equity must be held until retirement. Nucor maintains a higher-than-market level stock ownership requirement, which aligns the interests of our Executive Officers with those of our stockholders.

 

   

Nucor takes an egalitarian approach to providing benefits to our employees. In fact, certain benefits, such as Nucor’s Profit Sharing, Scholarship Program, Employee Stock Purchase Plan, Extraordinary Bonus and Service Awards Program, are not available to Executive Officers, and Executive Officers do not receive significant executive perquisites, such as company cars, country club memberships or personal use of corporate aircraft.

The bottom line is that for any given year, if Nucor performs poorly, Executive Officers will be paid below the market median. On the other hand, if performance is outstanding, Executive Officers will be paid above the market median. By providing this balanced compensation approach, Nucor provides Executive Officers with a reasonable measure of security regarding the minimum level of compensation they are eligible to receive, while motivating them to focus on the business measures that will produce a consistently high level of performance for Nucor and return for its stockholders. Decisions with regard to the actual amount or value of compensation granted to each Executive Officer are based on actual Nucor performance. Individual performance does not influence incentive plan payouts.

2019 Compensation Overview

Nucor’s executive compensation plans worked as designed in 2019.

 

   

Base salaries: Increases for Executive Officers varied by individual. The CEO received a 3.6% increase consistent with our overall employee population. Other executives received larger increases to bring them closer to the median.

 

   

Annual incentives: Our Executive Officers earned an annual incentive under the AIP reflecting Nucor’s ROE and ROAIC performance as compared to the Steel Comparator Group. Performance in 2019 was strong, though behind the record set in 2018.

 

   

Long-term incentives: The LTIP rewarded Executive Officers for Nucor’s strong performance during the three-year performance period ended December 31, 2019 relative to the Steel Comparator Group (ranked second out of six) but resulted in a modest payout for the three-year performance period ended December 31, 2019 relative to the General Industry Comparator Group (ranked seventh out of 11). Please see “Performance Comparator Groups” beginning on page 29 of this CD&A for descriptions of the performance comparator groups. In 2019, performance RSUs were granted based on Nucor’s ROE performance for the preceding year. In addition, time-vesting RSUs and stock options were granted in 2019.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

The Committee has the right to exercise discretion to reduce an incentive plan payout to ensure that payouts from any incentive plan produce their desired result. However, the Committee may not exercise discretion to increase a payout. For 2019, the Committee reviewed the payouts and determined that the incentive plan payouts were appropriate and, therefore, did not reduce the incentive plan payouts.

Best-Practice Compensation Governance Features

Our executive compensation program is grounded in the following policies and practices, which promote sound compensation governance, reflect our executive compensation philosophy and further align our Executive Officers’ interests with those of our stockholders.

 

 

  What We Do

 

What We Don’t Do

 

 

 

  

 

 

Place a heavy emphasis on variable compensation

 

 

x

 

 

Provide “single trigger” change in control severance benefits

 

 

  

 

 

Require significant stock ownership and holding requirements

 

 

 

x

 

 

Offer significant perquisites

 

 

  

 

 

Subject incentive compensation to a clawback policy

 

 

 

x

 

 

Pay excise tax gross ups

 

  

 

 

 

Conduct annual compensation risk assessments

 

 

 

x

 

 

Permit hedging or short selling of Company stock

 

 

  

 

 

 

Use an independent compensation consultant

 

 

 

x

 

 

 

Change plan designs very often

 

 

  

 

 

Reach out to discuss our compensation plans with our stockholders

 

       

In response to stockholder feedback, in February 2020 we entered into new agreements with our Executive Officers, which eliminate severance benefits and reduce change in control benefits (as described on page 25). Consistent with our governance practices described above, these agreements do not provide for excise tax gross-ups, “single trigger” change in control severance benefits or a severance modifier in excess of three times base salary and bonus.

WHAT GUIDES OUR PROGRAM

Program Aligned with Strategy

Nucor’s executive compensation program supports the Company’s profitable growth strategy while maintaining our commitment to safe and environmentally responsible operations. We expect to generate long-term profitable growth by continuing to focus on:

 

  1.   Being a low-cost producer;

 

  2.   Being a leader in the markets in which we compete;

 

  3.   Moving up the value chain to expand our capabilities for our value-appreciative customers;

 

  4.   Expanding our channels to market; and

 

  5.   Achieving commercial excellence to complement our operational strength.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Our Compensation Philosophy

Nucor believes that executive compensation should be commensurate and aligned with the performance of Nucor and the creation of long-term stockholder value. To this end, our executive compensation program is designed to pay above the market median when performance is outstanding and provide compensation below the market median when performance is below Nucor’s peers. The following key principles form the core of our executive compensation philosophy:

 

  Key Principle

 

  

Description

 

  Pay for Performance

  

 

A significant portion of total compensation should be variable and dependent upon the attainment of certain specific and measurable annual and long-term performance objectives.

 

 

  Attraction and Retention

  

 

The executive compensation program should enable the Company to attract highly talented people with exceptional leadership capabilities and to retain high-caliber talent.

 

  Team-Based Incentives

  

 

All of Nucor’s incentives are team-based. Across the organization, Nucor teammates win and lose together. When Nucor performs well, all teammates earn more. When our performance is less than expected, our teammates earn less. Our pay programs support our team-based culture.

 

  Stockholder Alignment

  

 

Executive Officers should be compensated through pay elements (base salaries and annual and long-term incentives) designed to create long-term value for our stockholders and to reinforce a strong culture of ownership.

 

Our compensation philosophy is supported by the following elements of our executive compensation program:

 

  Compensation Element

 

  

Form

 

 

Description

 

 

  Base Salary

  

 

Cash (Fixed)

 

 

Provides a guaranteed rate of pay commensurate with an Executive Officer’s job scope, level of responsibilities, experience and tenure, but generally set below the market median of similar positions at industrial and materials companies.

 

 

  Annual Incentives

  

 

Cash (Variable)

 

 

Provides Executive Officers an opportunity to receive annual cash incentive awards based on Nucor’s annual ROE and ROAIC.

 

 

  Long-Term Incentives

  

 

Equity (mix of Fixed and Variable) and Cash (Variable)

 

 

 

Rewards performance over multi-year periods and growth in long-term stockholder value.

These compensation elements provide a balanced mix of guaranteed compensation and variable, at-risk compensation with an emphasis on annual and long-term incentives. The Committee annually considers adjustment to base salaries (which impact incentive plan opportunities) and periodically reviews the level of annual and long-term incentives to ensure that the mix of base salary and annual and long-term incentives, and the target incentive opportunities, are appropriate to accomplish the goal of paying near the market median total compensation for industrial and materials companies of similar size over a multi-year business cycle.

The Role of Compensation Peer Companies and Performance Comparator Groups

Compensation Peer Companies.    Nucor periodically benchmarks Executive Officer compensation to ensure that the compensation opportunities are reasonable. Nucor does not set compensation according to benchmark data. The Committee’s only formal relationship with benchmark data is generally to set base salaries below the market median.

In 2017, the Committee asked Pearl Meyer to benchmark Nucor’s compensation against the 26 companies listed in the table below. In addition to benchmarking Executive Officer compensation at target and actual levels of

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

pay, the Committee completed an exercise to understand how the compensation of Executive Officers compared to compensation of the peer group at various levels of performance (below threshold, threshold, target and maximum). Nucor’s compensation philosophy is to pay below market when performance is below peers and to pay above market when performance is outstanding. The intent is to provide market levels of compensation over the business cycle.

 

 

  3M Company

 

  

Freeport-McMoRan Inc.

 

   PACCAR Inc.  

 

 

  Air Products and Chemicals, Inc.

 

  

General Dynamics Corporation

 

   Parker-Hannifin Corporation

 

 

  Arconic Inc. (f/k/a Alcoa Inc.)

 

  

Honeywell International Inc.

 

   PPG Industries, Inc.

 

 

  Caterpillar Inc.

 

  

Huntsman Corporation

 

   Praxair, Inc.*

 

 

  Cummins Inc.

 

  

Illinois Tool Works Inc.

 

   Raytheon Company

 

 

  Danaher Corporation

 

  

International Paper Company

 

   Textron Inc.

 

 

  Deere & Company

 

  

 

L3 Technologies, Inc.

 

  

 

Trane Technologies plc (f/k/a
Ingersoll-Rand plc)

 

 

  Eaton Corporation

 

  

Monsanto Company*

 

   United States Steel Corporation

 

 

  Emerson Electric Co.

 

  

Northrop Grumman Corporation

 

 

     

 

 

 

*   Since the 2017 benchmarking, Monsanto and Praxair have been acquired and removed from the peer group.

Some of the above 26 companies are included in the Steel Comparator Group or the General Industry Comparator Group used in the incentive plans as described below. However, these 26 companies were chosen based on size and industry, while the companies used in the incentive plans are all steel companies in the case of the Steel Comparator Group or met the criteria discussed below in the case of the General Industry Comparator Group. The Committee does not benchmark compensation levels and practices against the companies in the Steel Comparator Group because many of them are substantially smaller than Nucor. The Committee does not benchmark compensation to the General Industry Comparator Group because compensation data from these companies may result in above median benchmark data due to their higher than median performance.

The 2017 benchmarking was used to set 2019 salaries. In 2019, Pearl Meyer updated the benchmark data for the position of President and Chief Operating Officer and of President and Chief Executive Officer for the Committee to consider when Mr. Topalian was promoted to President and Chief Operating Officer in September 2019 and to President and Chief Executive Officer, effective January 1, 2020.

Performance Comparator Groups.    The Committee believes that performance should be measured both in absolute terms (meaning based on achieving or exceeding performance measures established by the Committee) and relative to other companies. Two performance comparator groups are used to measure relative performance: the Steel Comparator Group and the General Industry Comparator Group. These comparator groups are used in the AIP and the LTIP – they are not used for purposes of benchmarking compensation.

The Committee reviews the performance comparator groups annually. Companies may be added or dropped from the performance comparator groups based on product mix (in the case of the Steel Comparator Group) or business changes, performance or product mix (in the case of the General Industry Comparator Group). The Committee designates the members of each performance comparator group at the beginning of each performance period. Since some of the performance periods are as long as three years, it is possible that the performance comparator group used for one performance period may differ from the group used in a different performance period.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

The performance comparator groups for performance periods that began in 2019 are comprised of the following companies:

 

  Comparator Group

 

  

Criteria

 

  

Who They Are

 

 

  Steel

  

 

  Must be a group of not less than five steel industry competitors; and

 

  Competitors defined as companies with product offerings similar to Nucor’s.

 

  

 

  AK Steel Holding Corporation

  Commercial Metals Company

  Steel Dynamics, Inc.

  TimkenSteel Corporation

  United States Steel Corporation

 

 

  General Industry

  

 

  Must be a group of not less than 10 companies in capital-intensive industries; and

 

  Are well-respected, capital-intensive companies that have performed well over a long period of time.

  

 

 

  3M Company

  Caterpillar Inc.

  Cummins Inc.

  Emerson Electric Co.

  General Dynamics Corporation

  

 

 

  Illinois Tool Works Inc.

  Johnson Controls International plc

  Parker-Hannifin Corporation

  PPG Industries, Inc.

  United Technologies Corporation

2019 EXECUTIVE COMPENSATION IN DETAIL

Determination of 2019 Compensation

In making its determinations with respect to executive compensation for 2019, the Committee was supported by A. Rae Eagle, Nucor’s Vice President and Corporate Secretary, and Donovan E. Marks, Nucor’s General Manager of Human Resources. In addition, the Committee engaged the services of Pearl Meyer to serve as its independent compensation consultant and, in such capacity, to assist the Committee’s review and determination of the compensation of the Executive Officers. Pearl Meyer also was retained to assist the Committee with additional projects, including benchmarking Executive Officer compensation, benchmarking executive and non-employee director compensation, reviewing and developing alternatives for the performance comparator groups, reviewing the incentive plans, monitoring trends in executive and non-employee director compensation, preparing tally sheets and assisting in the preparation of this CD&A.

The Committee retained Pearl Meyer directly although, in carrying out its assignments, Pearl Meyer also interacted with Nucor management when necessary and appropriate. Specifically, the Vice President and Corporate Secretary and the General Manager of Human Resources interacted with Pearl Meyer to provide compensation and performance data for Executive Officers and Nucor. In addition, Pearl Meyer may, in its discretion, seek input and feedback from the Chief Executive Officer and the Chief Financial Officer regarding its work product prior to presenting such work product to the Committee to confirm the work product’s alignment with Nucor’s business strategy, determine what additional data needs to be gathered, or identify other issues, if any.

The Committee frequently requested Mr. Ferriola, as Chief Executive Officer, to be present at Committee meetings where executive compensation and Company performance were discussed and evaluated. Mr. Ferriola was free to provide insight, suggestions or recommendations regarding executive compensation during these meetings or at other times; however, only independent Committee members were allowed to vote on decisions made regarding executive compensation.

The Committee met separately with the Chief Executive Officer to discuss his compensation, but the Committee made decisions regarding Mr. Ferriola’s compensation in executive session, based solely upon the Committee’s deliberations. The Committee’s decisions regarding the compensation of Executive Officers (other than the CEO) were made after considering recommendations from the Chief Executive Officer.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Base Salary

The Committee’s goal is to set Executive Officers’ base salaries near or below the market median base salary level for comparable positions at industrial and materials companies, because of the Committee’s desire to orient Executive Officers’ total pay significantly towards variable, at-risk incentive compensation. When promoted, Executive Officer salaries are set below the market median. As Executive Officers gain experience and perform, they may receive larger increases to move them towards the median. Base salaries for 2019 were as follows:

 

  Executive Officer

 

  

 

2019 Base Salary
($)

 

    

2018 Base Salary
($)

 

    

% Change

 

 

 

  John J. Ferriola

 

    

 

1,450,000

 

 

 

    

 

1,400,000

 

 

 

    

 

3.6

 

 

 

  James D. Frias

 

    

 

606,100

 

 

 

    

 

551,000

 

 

 

    

 

10.0

 

 

 

  Ladd R. Hall

 

    

 

540,800

 

 

 

    

 

500,700

 

 

 

    

 

8.0

 

 

 

  Raymond S. Napolitan, Jr.

 

    

 

519,700

 

 

 

    

 

481,200

 

 

 

    

 

8.0

 

 

 

  David A. Sumoski

 

    

 

507,200

 

 

 

    

 

461,100

 

 

 

    

 

10.0

 

 

 

  D. Chad Utermark

 

    

 

507,200

 

 

 

    

 

461,100

 

 

 

    

 

10.0

 

 

 

  Leon J. Topalian

 

    

 

452,400

 

 

 

    

 

411,100

 

 

 

    

 

10.0

 

 

 

  R. Joseph Stratman

 

    

 

570,800

 

 

 

    

 

528,500

 

 

 

    

 

8.0

 

 

Mr. Ferriola’s base salary adjustment was in line with the average adjustment of 3.5% for all employees. All of the other Executive Officers received larger adjustments to bring their salaries closer to the median of the benchmark data.

In September 2019, Mr. Topalian’s salary was increased to $700,000 when he was promoted to President and Chief Operating Officer. His salary was also set below the median of the market data.

Annual Incentives

The AIP provides Executive Officers an opportunity to receive annual cash incentive awards based on Nucor’s annual performance. The incentive opportunity is expressed as a percentage of base salary.

Seventy-five percent of the maximum award available under the AIP is earned based on Nucor’s ROE and 25% of the maximum award available under the AIP is earned based on Nucor’s annual ROAIC compared to the annual ROAIC of members of the Steel Comparator Group (identified on page 30). The allocation of the AIP award between the two performance measures is as follows:

 

            

 

Maximum AIP Performance Award Payment
(% of Base Salary)

 

 
Performance Measure   

 

% of Maximum AIP
Performance Award

 

   

CEO

 

   

Other Executive
Officers

 

 
  ROE     

 

75

 

 

   

 

300

 

 

   

 

225

 

 

  Annual ROAIC — Steel Comparator Group     

 

25

 

 

   

 

100

 

 

   

 

75

 

 

  Total Maximum AIP Performance Award             

 

400

 

 

   

 

300

 

 

For 2019, the Committee set the threshold, target and maximum ROE levels as follows:

 

            

 

Performance Award Payment

(% of Base Salary)

 

 
     

            ROE             

 

   

            CEO             

 

   

 

Other Executive
Officers

 

 

 

  Threshold

 

    

 

  3

 

 

   

 

  20

 

 

   

 

20

 

 

 

  Target

 

    

 

  8

 

 

   

 

100

 

 

   

 

100

 

 

 

  Maximum

 

    

 

16

 

 

   

 

300

 

 

   

 

225

 

 

 

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A prorated incentive award is earned for ROE between 3% at threshold, 8% at target and 16% at maximum.

The Committee also set the ROAIC portion of the AIP award for 2019 that could be earned based on Nucor’s annual ROAIC compared to the annual ROAIC of members of the Steel Comparator Group as follows:

 

           

 

Maximum AIP Performance Award Payment

(% of Base Salary)

 

Steel Comparator

Group Rank (1)

 

  

Percentage of Performance
Award Opportunity

 

  

            CEO             

 

  

Other Executive

 

Officers

 

1

 

  

100%

 

  

100%

 

  

75%

 

 

2

 

  

80%

 

  

80%

 

  

60%

 

 

3

 

  

60%

 

  

60%

 

  

45%

 

 

4

 

  

40%

 

  

40%

 

  

30%

 

 

5

 

  

20%

 

  

20%

 

  

15%

 

 

6

 

  

0%

 

  

0%

 

  

0%

 

 

(1)   The table represents potential AIP awards for 2019 annual ROAIC performance. This portion of the incentive is intended to reward performance against other steel companies. The comparator group for future years may include more comparator companies. The potential awards are adjusted to reflect the number of comparator companies in the group.

Executive Officers may elect to defer up to one-half of their AIP award into Nucor common stock units. The AIP provides an incentive for Executive Officers to defer their AIP awards by providing a grant of additional Nucor common stock units equal to 25% of the number of common stock units deferred. An Executive Officer is always vested in the common stock units attributable to the deferred award. The deferral incentive units become vested upon the Executive Officer’s attainment of age 55, death or disability while employed by Nucor. The vested common stock units are distributed to the Executive Officer in the form of Nucor common stock following the Executive Officer’s retirement or other termination of employment. Dividend equivalents are paid on deferred common stock units (including the deferral incentive units) in cash within 30 days of when stockholders are paid.

Five Executive Officers, Messrs. Frias, Hall, Sumoski, Utermark and Stratman, elected to defer a portion of their AIP award payout in 2019.

2019 Performance Results and AIP Payout

Based on Nucor’s ROE of 12.38% and being ranked third within the Steel Comparator Group for ROAIC for 2019, the CEO and the other Executive Officers earned total AIP awards of 269.50% of base salary and 213.44% of base salary, respectively, as follows:

 

     

2019 Result

 

   

Performance Award Payment
(% of Base Salary)

 

 
  Performance Measure  

CEO

 

    

Other Executive
Officers

 

 

 

  ROE

 

    

 

12.38

 

 

   

 

209.50%

 

 

 

    

 

168.44%

 

 

 

 

  Annual ROAIC — Steel Comparator Group

 

    

 

3rd

 

 

 

   

 

60.00%

 

 

 

    

 

45.00%

 

 

 

 

  Total

            

 

269.50%

 

 

 

    

 

213.44%

 

 

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

These performance results for 2019 yielded the following AIP payouts:

 

     

2019

Base Salary

($)

 

    

 

AIP Award Payout

 

 

  Executive Officer

 

  

 

Deferred (1)
($)

 

    

Paid in Cash
($)

 

    

Total

($)

 

 

 

  John J. Ferriola

 

    

 

1,450,000

 

 

 

    

 

 

 

 

    

 

3,907,750

 

 

 

    

 

3,907,750

 

 

 

 

  James D. Frias

 

    

 

606,100

 

 

 

    

 

646,830

 

 

 

    

 

646,830

 

 

 

    

 

1,293,660

 

 

 

 

  Ladd R. Hall

 

    

 

540,800

 

 

 

    

 

577,142

 

 

 

    

 

577,142

 

 

 

    

 

1,154,284

 

 

 

 

  Raymond S. Napolitan, Jr.

 

    

 

519,700

 

 

 

    

 

 

 

 

    

 

1,109,248

 

 

 

    

 

1,109,248

 

 

 

 

  David A. Sumoski

 

    

 

507,200

 

 

 

    

 

108,257

 

 

 

    

 

974,311

 

 

 

    

 

1,082,568

 

 

 

 

  D. Chad Utermark

 

    

 

507,200

 

 

 

    

 

108,257

 

 

 

    

 

974,311

 

 

 

    

 

1,082,568

 

 

 

 

  Leon J. Topalian (2)

 

    

 

532,446

 

 

 

    

 

 

 

 

    

 

1,136,453

 

 

 

    

 

1,136,453

 

 

 

  R. Joseph Stratman (3)

 

    

 

570,800

 

 

 

    

 

265,359

 

 

 

    

 

265,359

 

 

 

    

 

530,718

 

 

 

 

(1)   As discussed above, Messrs. Frias, Hall and Stratman elected to defer 50%, and Messrs. Sumoski and Utermark elected to defer 10% of their AIP payout and received additional stock units having a value equal to 25% of their deferred amount.

 

(2)   Mr. Topalian was promoted on September 5, 2019. $532,446 represents his pro-rated salary.

 

(3)   Mr. Stratman retired on June 8, 2019. His AIP payout of $1,218,316 (213.44% times his base salary of $570,800) was prorated through the date of his retirement. The prorated AIP payout is shown in the table above.

Long-Term Incentives

Long-term incentives are used to balance the short-term focus of the AIP by rewarding performance over multi-year periods and growth in long-term stockholder value. Executive Officers receive long-term incentives in the following forms:

 

   

Cash and restricted stock through the three-year performance-based awards under the LTIP;

 

   

RSUs that vest over time;

 

   

Performance RSUs that may be granted only if certain levels of ROE are achieved; and

 

   

Stock options.

The Committee believes that one-half of the three-year LTIP awards should be earned relative to performance as compared to the Steel Comparator Group and the other half earned relative to performance as compared to the General Industry Comparator Group. The Committee believes that this plan design provides an incentive to perform better than steel industry competitors, as well as other capital-intensive companies. The Committee also believes it is appropriate to provide a level of retention through time-vesting RSUs, alignment with stockholders through stock options and an opportunity to earn more RSUs based on performance.

The Long-Term Incentive Plan

Executive Officers earn incentive compensation under the LTIP based on Nucor’s performance during the LTIP’s performance periods. The performance periods commence every January 1 and last for three years.

The target award under the LTIP for each performance period is a number of shares of Nucor common stock. For the performance period that began January 1, 2017, the target number of shares is determined by dividing 85% of each Executive Officer’s annual base salary rate as of the beginning of the performance period by the closing price of Nucor common stock on the last trading day immediately preceding the first day of the performance period. For the performance periods that began January 1, 2018 and 2019, the Committee increased the LTIP targets for the CEO from 85% of base salary to 200% of base salary and for the other Executive Officers from 85% of base salary to 170% of base salary.

 

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Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS

 

 

The targets for the performance period that began January 1, 2017 and ended December 31, 2019 were as follows:

 

  Executive Officer

 

  

 

Base Salary Rate at the
Beginning of the
Performance Period

($)

 

    

85% of Base
Salary

($)

 

    

Nucor Stock
Price 12/31/16
($)

 

    

Target Award
Number of
Shares

(#)

 

    

Adjusted Target
Award Number
of Shares

(#)

 

 

 

  John J. Ferriola

 

    

 

1,365,000

 

 

 

    

 

1,160,250

 

 

 

    

 

59.52

 

 

 

    

 

19,493

 

 

 

    

 

 

 

 

 

  James D. Frias

 

    

 

519,600

 

 

 

    

 

441,660

 

 

 

    

 

59.52

 

 

 

    

 

7,420

 

 

 

    

 

 

 

 

 

  Ladd R. Hall

 

    

 

472,350

 

 

 

    

 

401,498

 

 

 

    

 

59.52

 

 

 

    

 

6,745

 

 

 

    

 

 

 

 

 

  Raymond S. Napolitan, Jr.

 

    

 

433,100

 

 

 

    

 

368,135

 

 

 

    

 

59.52

 

 

 

    

 

6,185

 

 

 

    

 

 

 

 

 

  David A. Sumoski

 

    

 

413,900

 

 

 

    

 

351,815

 

 

 

    

 

59.52

 

 

 

    

 

5,910

 

 

 

    

 

 

 

 

 

  D. Chad Utermark

 

    

 

413,900

 

 

 

    

 

351,815

 

 

 

    

 

59.52

 

 

 

    

 

5,910

 

 

 

    

 

 

 

 

 

  Leon J. Topalian

 

    

 

327,000

 

 

 

    

 

277,950

 

 

 

    

 

59.52

 

 

 

    

 

4,669

 

 

 

    

 

 

 

 

 

  R. Joseph Stratman (1)

 

    

 

498,600

 

 

 

    

 

423,810

 

 

 

    

 

59.52

 

 

 

    

 

7,120

 

 

 

    

 

5,735

 

 

 

(1)   Because Mr. Stratman retired on June 8, 2019, his target performance award was adjusted by multiplying the target performance award by a fraction, the numerator of which is the number of complete calendar months during the performance period that he was employed by Nucor and participating in the LTIP (29), and the denominator of which is the total number of calendar months in the performance period (36).

The maximum award that an Executive Officer may earn under the LTIP is equal to 200% of the target number of shares.

Fifty percent of the LTIP award is based on Nucor’s ROAIC for the performance period relative to the Steel Comparator Group based on the table below. The remaining 50% of the award is based on Nucor’s ROAIC for the performance period relative to the General Industry Comparator Group based on the table below.

A maximum award of 200% of target may be earned if Nucor ranks first relative to the Steel Comparator Group (which earns 100% of target) and ranks first or second relative to the General Industry Comparator Group (which earns an additional 100% of target).

 

Steel Comparator Group (1)

 

  

General Industry Comparator Group (1)

 

Rank

 

  

 

Award
as a % of
Target

 

  

Rank

 

  

Award
as a % of
Target

 

 

1

 

  

100%

 

  

1 or 2

 

  

100%

 

 

2

 

  

80%

 

  

3 or 4

 

  

80%

 

 

3

 

  

60%

 

  

5 or 6

 

  

60%

 

 

4

 

  

40%

 

  

7 or 8

 

  

40%

 

 

5

 

  

20%

 

  

9

 

  

20%

 

 

6

 

  

0%

 

  

10 or 11

 

  

0%

 

(1)   These tables represent the potential awards based on the LTIP performance period that began January 1, 2017. The comparator group for other performance periods may include more or fewer comparator companies. The potential awards are adjusted to reflect the number of comparator companies in the group.

One-half of each LTIP award is paid in cash and the other half is paid in restricted stock. Restricted stock vests one-third on each of the first three anniversaries of the award date, or upon the Executive Officer’s attainment of age 55, death or disability while employed by Nucor.

An Executive Officer may defer delivery of the restricted stock portion of an LTIP award until the Executive Officer’s retirement or other termination of employment. Nucor does not provide an incentive for the deferral of LTIP restricted stock awards. Dividend equivalents are paid in cash on deferred restricted stock awards within 30 days of when stockholders are paid.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

2019 Performance Results and LTIP Payout

Nucor’s ROAIC of 36.65% for the LTIP performance period that began January 1, 2017 and ended December 31, 2019 was ranked second relative to members of the Steel Comparator Group (second out of six) and ranked seventh relative to the General Industry Comparator Group (seventh out of eleven).

These rankings resulted in the following performance award as a percentage of targets:

 

  Performance Measure   

            ROAIC             

 

   

            Ranking             

 

   

 

Performance
Award as a % of
Target

Number of Shares

 

 

 

  ROAIC — Steel Comparator Group

 

    

 

36.65

 

 

   

 

2

 

nd  

 

   

 

80

 

 

  ROAIC — General Industry Comparator Group      36.65     7 th      40

 

  Total

 

                    

 

120

 

%  

 

The resulting payouts were as follows:

 

  Executive Officer

 

  

 

Target Award
Number of Shares

 

    

Performance Award
as a % of Target

 

   

Shares Earned

 

 

 

  John J. Ferriola

 

    

 

19,493

 

 

 

    

 

120

 

 

   

 

23,392

 

 

 

 

  James D. Frias

 

    

 

7,420

 

 

 

    

 

120

 

 

   

 

8,904

 

 

 

 

  Ladd R. Hall

 

    

 

6,745

 

 

 

    

 

120

 

 

   

 

8,094

 

 

 

 

  Raymond S. Napolitan, Jr.

 

    

 

6,185

 

 

 

    

 

120

 

 

   

 

7,422

 

 

 

 

  David A. Sumoski

 

    

 

5,910

 

 

 

    

 

120

 

 

   

 

7,093

 

 

 

 

  D. Chad Utermark

 

    

 

5,910

 

 

 

    

 

120

 

 

   

 

7,093

 

 

 

 

  Leon J. Topalian

 

    

 

4,669

 

 

 

    

 

120

 

 

   

 

5,603

 

 

 

 

  R. Joseph Stratman

 

    

 

5,735

 

 

 

    

 

120

 

 

   

 

6,883

 

 

 

Nucor paid one-half of the LTIP award in cash and the other half in the form of restricted shares of Nucor common stock in March 2020.

Restricted Stock Units

The Committee believes that RSUs align Executive Officers’ interests with those of stockholders and provide significant retentive characteristics. Each June 1, a base amount of RSUs is granted to each Executive Officer. In addition, performance RSUs are granted contingent on Nucor’s ROE for the prior year. One-third of both the base amount of RSUs and performance RSUs become vested on each of the first three anniversaries of the June 1 award date, upon the Executive Officer’s retirement (defined below), or upon the Executive Officer’s death or disability while employed by Nucor.

The threshold ROE required for a grant of performance RSUs is 3%. The maximum number of performance RSUs is granted for ROE of 20% or more.

The total number of RSUs granted is determined for each Executive Officer position by dividing the dollar amount shown below (prorated for ROE between any of the levels shown below) by the closing price of Nucor’s common stock on the annual June 1 grant date.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

The size of base grants is determined based on the Executive Officer’s position on the grant date. The size of performance RSU grants is determined based on the Executive Officer’s position as of May 31 of the performance year (2018 in the present case). The following schedule was effective for grants on June 1, 2019:

 

     

Base RSUs

Market Value
($)

 

    

 

Performance RSUs Market Value

(Based on Prior Fiscal Year ROE)

 

 
  Position   

 

3% ROE
($)

 

    

10% ROE
($)

 

    

12.5% ROE
($)

 

    

15% ROE
($)

 

    

20% ROE
($)

 

 

 

  Chairman, Chief Executive Officer and

  President

 

    

 

1,000,000

 

 

 

    

 

750,000

 

 

 

    

 

1,100,000

 

 

 

    

 

2,500,000

 

 

 

    

 

3,000,000

 

 

 

    

 

4,600,000

 

 

 

 

  Chief Financial Officer

 

    

 

300,000

 

 

 

    

 

450,000

 

 

 

    

 

625,000

 

 

 

    

 

750,000

 

 

 

    

 

1,530,000

 

 

 

    

 

2,500,000

 

 

 

 

  Chief Digital Officer

 

    

 

300,000

 

 

 

    

 

387,500

 

 

 

    

 

537,500

 

 

 

    

 

645,000

 

 

 

    

 

1,315,000

 

 

 

    

 

2,500,000

 

 

 

 

  Executive Vice Presidents

 

    

 

300,000

 

 

 

    

 

325,000

 

 

 

    

 

450,000

 

 

 

    

 

540,000

 

 

 

    

 

1,100,000

 

 

 

    

 

2,500,000

 

 

 

Retirement for purposes of the RSUs is defined as Committee-approved retirement upon termination of employment and completion of the following age and service requirements:

 

Age

   65    64    63    62    61    60    59    58    57    56    55
Years of Service    -0-    2    4    6    8    10    12    14    16    18    20

2019 Performance Results and RSU Awards

On June 1, 2019, as a result of 2018 ROE of 25.5%, Executive Officers received base and performance RSUs with the following values:

 

     

 

Grant Date Value

 

 

  Executive Officer

 

 

  

 

Base
RSUs
($)

 

    

Performance

RSUs
($)

    

Total (1)
($)

 

 

 

  John J. Ferriola

 

    

 

999,984

 

 

 

    

 

4,599,984

 

 

 

    

 

5,599,968

 

 

 

 

  James D. Frias

 

    

 

300,000

 

 

 

    

 

2,499,984

 

 

 

    

 

2,799,984

 

 

 

 

  Ladd R. Hall

 

    

 

300,000

 

 

 

    

 

2,499,984

 

 

 

    

 

2,799,984

 

 

 

 

  Raymond S. Napolitan, Jr.

 

    

 

300,000

 

 

 

    

 

2,499,984

 

 

 

    

 

2,799,984

 

 

 

 

  David A. Sumoski

 

    

 

300,000

 

 

 

    

 

2,499,984

 

 

 

    

 

2,799,984

 

 

 

 

  D. Chad Utermark

 

    

 

300,000

 

 

 

    

 

2,499,984

 

 

 

    

 

2,799,984

 

 

 

 

  Leon J. Topalian

 

    

 

300,000

 

 

 

    

 

2,499,984

 

 

 

    

 

2,799,984

 

 

 

 

  R. Joseph Stratman

 

    

 

300,000

 

 

 

    

 

2,499,984

 

 

 

    

 

2,799,984

 

 

 

(1)   The actual number of RSUs granted is rounded down to the nearest full unit.

Stock Options

On June 1, 2019, the Committee granted stock options to each Executive Officer in the amounts shown in the table below with the following grant values:

 

  Position   

 

Grant Date Value of
Options Granted (1)
($)

 

 

 

  Chairman, Chief Executive Officer and President

 

    

 

1,750,000      

 

 

 

 

  Chief Financial Officer

 

    

 

250,000      

 

 

 

 

  Executive Vice President retiring in June 2019

 

    

 

500,000      

 

 

 

 

  Other Executive Vice Presidents

 

    

 

250,000      

 

 

 

(1)   The actual number of stock options granted is rounded down to the nearest full option.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

The stock options vest on the third anniversary of the grant date or upon the Executive Officer’s death, disability or retirement (same as RSUs above) and have a 10-year term.

OTHER PRACTICES, POLICIES AND GUIDELINES

Stock Ownership Guidelines

Executive Officers have an opportunity to earn a significant number of Nucor shares, and the Committee considers executive stock ownership a key element of the Nucor culture. Executive Officers are required to hold a significant number of shares as outlined below:

 

 

  Chairman, Chief Executive Officer and President

 

  

At least 150,000 shares

 

 

  Chief Financial Officer

 

  

At least 50,000 shares

 

 

  Chief Digital Officer

 

  

At least 50,000 shares

 

 

  Executive Vice Presidents

 

  

At least 50,000 shares

 

The above guidelines are higher than the median guidelines for Nucor’s steel company peers and other industrial and materials companies of similar size.

Executive Officers have five years to achieve ownership of the guideline number of shares. On an annual basis, the Committee monitors each Executive Officer’s compliance with the ownership guideline or, if applicable, the Executive Officer’s progress in achieving ownership of the guideline number of shares. If the Committee determines an Executive Officer is not in compliance or has not made sufficient progress toward achieving the ownership guideline, the Committee has the discretion to take action or adjust incentive award payments to concentrate payouts more heavily in Nucor common stock. All Executive Officers were in compliance with the stock ownership guidelines as of December 31, 2019.

Executive Officers have significant exposure to Nucor’s stock price through direct stock ownership and their target LTIP awards. The Committee believes aligning the long-term interests of Executive Officers with the long-term interests of Nucor’s stockholders in a material way promotes superior long-term performance. It also means that if Nucor’s stock price declines, then Executive Officers’ Nucor stock, stock options, LTIP awards and RSUs all decline in value.

No Hedging or Short Selling

Nucor maintains a trading policy that prohibits any hedging or short selling (profiting if the market price decreases) of Nucor securities by any director, officer or general manager of Nucor or any other employee of the Company whose function and responsibilities provide access to material, non-public information about Nucor.

Executive Officer Incentive Compensation Recoupment (“Clawback”) Policy

The Company has a written policy to address the recoupment of performance-based compensation awarded to or earned by an executive officer if there is a restatement of the Company’s financial results due to material noncompliance of the Company with any financial reporting requirement under the federal securities laws. In the event of such a restatement, the Committee shall review the performance-based compensation awarded to or earned by the executive officers during the three-year period prior to the restatement event and, if the Committee determines in its reasonable discretion that any such performance-based compensation would not have been awarded to or earned by an executive officer based on the restated financial results, the Committee shall within 12 months of the restatement event, to the extent practicable, seek to recover from such executive officer any portion of the performance-based compensation that is greater than that which would have been awarded or earned had it been calculated on the basis of the restated financial results.

Benefits

Executive Officer benefits are limited to benefits provided to all other full-time employees on the same basis and at the same cost as all other full-time employees. Nucor does not provide any tax gross ups. Certain benefits such as Nucor’s Profit Sharing, Scholarship Program, Employee Stock Purchase Plan, Extraordinary Bonus and Service Awards Program are not available to Executive Officers.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

The table below describes the total compensation of our Executive Officers in 2019.

 

  Name and Principal Position   Year    

Salary

($)

   

Bonus

($)

   

Stock
Awards

($) (1)

   

Option
Awards

($) (1)

   

Non-Equity
Incentive Plan
Compensation

($)

   

All Other
Compensation

($) (2)

   

Total

($)

 
  (a)   (b)     (c)     (d)     (e)     (f)     (g)     (i)     (j)  
  John J. Ferriola     2019       1,450,000             8,499,968 (4)      1,750,000       3,907,750       3,491,864       19,099,582  

     Chairman and Chief Executive

     Officer (3)

    2018       1,400,000             7,087,989 (4)      1,750,000       5,320,000       1,480       15,559,469  
    2017       1,365,000             3,324,220       4,000,000       3,400,352       900       12,090,472  
  James D. Frias     2019       606,100             4,638,891       250,000       646,830       3,990       6,145,811  

     Chief Financial Officer, Treasurer

     and Executive Vice President

    2018       551,000             3,530,178       250,000       1,099,245       1,480       5,431,903  
    2017       519,600             1,871,994       600,000       906,063       900       3,898,557  
  Ladd R. Hall     2019       540,800             4,440,771       250,000       577,142       3,990       5,812,703  
     Executive Vice President     2018       500,700             3,395,037       250,000       713,498       1,480       4,860,715  
      2017       472,350             1,901,224       600,000       588,336       900       3,562,810  
  Raymond S. Napolitan, Jr.     2019       519,700             3,683,474       250,000       1,109,248       3,990       5,566,412  
     Executive Vice President     2018       481,200             2,470,015       250,000       1,371,420       1,480       4,574,115  
  David A. Sumoski     2019       507,200             3,797,545       250,000       974,311       3,990       5,533,046  
     Executive Vice President                                                                
  D. Chad Utermark     2019       507,200             3,797,545       250,000       974,311       3,990       5,533,046  
     Executive Vice President                                                                
  Leon J. Topalian     2019       532,446             3,569,064       250,000       1,136,453             5,487,963  

     President and Chief Operating

     Officer (3)

                                                               
  R. Joseph Stratman     2019       248,650             4,102,043 (5)      500,000       265,359       2,377,106       7,493,158  

     Former Chief Digital Officer and

     Executive Vice President

 

    2018       528,500             2,726,703 (5)      250,000       1,506,225       1,480       5,012,908  
   

 

2017

 

 

 

   

 

498,600

 

 

 

   

 

 

 

 

   

 

1,964,406

 

(5) 

 

   

 

600,000

 

 

 

   

 

621,031

 

 

 

   

 

900

 

 

 

   

 

3,684,937

 

 

 

(1)   The amounts shown represent the grant date fair value of the shares or stock options awarded. The stock awards for 2019 include the following grant date fair values of the performance-based awards that may be earned under the LTIP for target-level performance during the 2019–2021 performance period: Mr. Ferriola, $2,900,000; Mr. Frias, $1,030,370; Mr. Hall, $919,360; Mr. Napolitan, $883,490; Mr. Sumoski, $862,240; Mr. Utermark, $862,240; Mr. Topalian, $769,080; and Mr. Stratman, $970,360. The grant date fair values of the performance-based awards assuming performance at the maximum level over the three-year performance period would have been: Mr. Ferriola, $5,800,000; Mr. Frias, $2,060,740; Mr. Hall, $1,838,720; Mr. Napolitan, $1,766,980; Mr. Sumoski, $1,724,480; Mr. Utermark, $1,724,480; Mr. Topalian, $1,538,160; and Mr. Stratman, $1,940,720. Our policy and assumptions made in the valuation of share-based payments are contained in notes 2 and 17 of Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019.

 

(2)   For Executive Officers other than Mr. Ferriola and Mr. Stratman, the amounts shown represent matching contributions to the Nucor 401(k) retirement savings plan. For Mr. Ferriola, who retired on December 31, 2019, the amount shown in 2019 includes $3,990 of matching contributions to the Nucor 401(k) retirement savings plan, and $3,487,874 of severance benefits pursuant to the Severance Plan. For Mr. Stratman, who retired on June 8, 2019, the amount shown in 2019 includes $3,990 of matching contributions to the Nucor 401(k) retirement savings plan, $1,414,172 of severance benefits pursuant to the Severance Plan and $958,944 earned under his non-compete and non-solicitation agreement. As described on page 25, effective February 2020, severance benefits will no longer be provided to any Executive officer upon retirement.

 

(3)   Mr. Ferriola retired on December 31, 2019 and Mr. Topalian was promoted to President and Chief Executive Officer on January 1, 2020.

 

(4)   Because Mr. Ferriola retired on December 31, 2019, his actual LTIP earned will be based on actual performance for the performance period prorated for the time employed. For the LTIPs beginning in 2019 and 2018, he will receive 12/36ths and 24/36ths, respectively, of what he would have earned had he been employed for the entire three-year performance periods.

 

(5)   Because Mr. Stratman retired on June 8, 2019, his actual LTIP earned will be based on actual performance for the performance period prorated for the time employed. For the LTIPs beginning in 2019, 2018 and 2017, he will receive 5/36ths, 17/36ths and 29/36ths, respectively, of what he would have earned had he been employed for the entire three-year performance periods.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Grants of Plan-Based Awards Table

The table below presents the RSUs and stock options awarded June 1, 2019 and the potential payouts under the AIP for 2019 and the LTIP for the performance periods beginning in 2019.

 

  Name   Grant
Date
    Committee  
Approval
Date
 

  Award  

Type

 

Estimated Possible Payouts

Under Non-Equity

Incentive Plan Awards

    Estimated Possible Payouts
Under Equity
Incentive Plan Awards
   

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units

(#)

    All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
    Exercise
or Base
Price of
Option
Awards
($)
   

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

 
 

Threshold

($)

    Target
($)
    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
 
  (a)   (b)             (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)     (k)    

(l)

 
  John J. Ferriola                      
  6/1/19   5/8/19   RSP(1)                 116,666           5,599,968 (5) 
      AIP(2)     290,000       2,175,000       5,800,000                
  1/1/19   11/30/18   LTIP(3)           11,195       55,974       111,948             2,900,013 (6) 
    6/1/19   5/8/19   OPT(4)                                                             201,380     $ 48.00       1,750,000 (7) 
  James D. Frias                      
  6/1/19   5/8/19   RSP(1)                 58,333           2,799,984 (5) 
      AIP(8)     90,915       833,388       1,818,300                
  3/10/20   11/30/18   AIP(9)                 23,287           808,525 (10) 
  1/1/19   11/30/18   LTIP(3)           3,977       19,887       39,774             1,030,345 (6) 
    6/1/19   5/8/19   OPT(4)                                                             28,768     $ 48.00       250,000 (7) 
  Ladd R. Hall                      
  6/1/19   5/8/19   RSP(1)                 58,333           2,799,984 (5) 
      AIP(8)     81,120       743,600       1,622,400                
  3/10/20   11/30/18   AIP(9)                 20,778           721,412 (10) 
  1/1/19   11/30/18   LTIP(3)           3,549       17,744       35,488             919,317 (6) 
    6/1/19   5/8/19   OPT(4)                                                             28,768     $ 48.00       250,000 (7) 
  Raymond S. Napolitan, Jr.                    
  6/1/19   5/8/19   RSP(1)                 58,333           2,799,984 (5) 
      AIP(8)     77,955       714,588       1,559,100                
  1/1/19   11/30/18   LTIP(3)           3,410       17,052       34,104             883,464 (6) 
    6/1/19   5/8/19   OPT(4)                                                             28,768     $ 48.00       250,000 (7) 
  David A. Sumoski                      
  6/1/19   5/8/19   RSP(1)                 58,333           2,799,984 (5) 
      AIP(8)     76,080       697,400       1,521,600                
  3/10/20   11/30/18   AIP(9)                 3,897           135,304 (10) 
  1/1/19   11/30/18   LTIP(3)           3,328       16,642       33,284             862,222 (6) 
    6/1/19   5/8/19   OPT(4)                                                             28,768     $ 48.00       250,000 (7) 
  D. Chad Utermark                    
  6/1/19   5/8/19   RSP(1)                 58,333           2,799,984 (5) 
      AIP(8)     76,080       697,400       1,521,600                
  3/10/20   11/30/18   AIP(9)                 3,897           135,304 (10) 
  1/1/19   11/30/18   LTIP(3)           3,328       16,642       33,284             862,222 (6) 
    6/1/19   5/8/19   OPT(4)                                                             28,768     $ 48.00       250,000 (7) 
  Leon J. Topalian                      
  6/1/19   5/8/19   RSP(1)                 58,333           2,799,984 (5) 
      AIP(8)     79,867       732,113       1,597,338                
  1/1/19   11/30/18   LTIP(3)           2,969       14,844       29,688             769,068 (6) 
    6/1/19   5/8/19   OPT(4)                                                             28,768     $ 48.00       250,000 (7) 
  R. Joseph Stratman                    
  6/1/19   5/8/19   RSP(1)                 58,333           2,799,984 (5) 
      AIP(8)     85,620       784,850       1,712,400                
  3/10/20   11/30/18   AIP(9)                 9,554           331,715 (10) 
  1/1/19   11/30/18   LTIP(3)           3,746       18,729       37,458             970,349 (6) 
   

6/1/19

 

 

5/8/19

 

 

OPT(4)

 

                                                           

 

57,537

 

 

 

  $

 

48.00

 

 

 

   

 

500,000

 

(7) 

 

(1)   Represents RSUs awarded June 1, 2019 under the 2014 Plan. As described in the CD&A above, the majority of these RSUs are performance-based, earned for achievement of ROE during the immediately preceding year. Includes 95,833 performance RSUs for Mr. Ferriola and 52,083 performance RSUs for Messrs. Frias, Hall, Napolitan, Sumoski, Utermark, Topalian and Stratman.

 

(2)   Mr. Ferriola was eligible to earn a range of performance-based payments under the AIP for the Company’s performance during 2019. The threshold, target and maximum amounts shown are equal to 20%, 150% and 400%, respectively, of his base salary.

 

(3)   Represents the range of performance-based awards that may be earned under the LTIP for the 2019-2021 performance period. Earned awards, if any, will be paid one-half in cash and the other half in the form of restricted shares of Nucor common stock in March 2022. The grant date fair value is calculated by multiplying the closing price of Nucor common stock on the grant date by the target number of shares.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

(4)   Represents stock options awarded June 1, 2019 under the 2014 Plan.

 

(5)   The awards have been valued using the June 1, 2019 closing price of Nucor common stock of $48.00.

 

(6)   The target awards have been valued using the December 31, 2018 closing price of Nucor common stock of $51.81.

 

(7)   The awards have been valued using a Black-Scholes value of $8.69.

 

(8)   Executive Officers (other than Mr. Ferriola) were eligible to earn a range of performance-based payments under the AIP for the Company’s performance during 2019. The threshold, target and maximum amounts shown are equal to 15%, 137.5% and 300%, respectively, of each Executive Officer’s base salary.

 

(9)   Represents common stock units deferred under the 2019 AIP. The awards were paid in March 2020.

 

(10)   The awards have been valued using the March 9, 2020 closing price of Nucor common stock of $34.72.

Non-Equity Incentive Plan Awards

Under the AIP, the CEO and the other Executive Officers may earn a non-equity incentive award for each year of up to a total of 400% and 300%, respectively, of the Executive Officer’s base salary. The threshold, target and maximum award amounts for 2019 are reported in column (c), column (d) and column (e), respectively.

Equity Incentive Plan Awards

Restricted Stock Units

Each year, on or about June 1, participants are granted a threshold or base amount of RSUs. An additional amount of RSUs may be granted based on Nucor’s ROE for the prior year. The awards vest annually over the three-year period following the date of grant or upon retirement. The RSUs were granted on June 1, 2019 and are reported in column (i).

Stock Options

The Committee granted Executive Officers stock options to purchase shares of Nucor common stock reported in column (j) at an exercise price of $48.00. The stock options become vested and exercisable on June 1, 2022.

Long-Term Incentive Plan

The range of potential awards for the LTIP performance period January 1, 2019 through December 31, 2021 is reported in columns (f), (g) and (h). The Company pays one-half of the LTIP award in cash and the other half in the form of restricted shares of Nucor common stock.

Actual performance for the LTIP performance period ended December 31, 2018 resulted in cash payments and awards of restricted shares on March 10, 2019 as follows:

 

  Name

 

  

Shares
Issued
(#)

 

    

Cash
Paid
($)

 

 

 

  John J. Ferriola

 

    

 

19,193

 

 

 

    

 

994,418

 

 

 

 

  James D. Frias

    

 

7,239

 

 

 

    

 

375,087

 

 

 

 

  Ladd R. Hall

 

    

 

6,837

 

 

 

    

 

354,242

 

 

 

 

  Raymond S. Napolitan, Jr.

 

    

 

5,920

 

 

 

    

 

306,740

 

 

 

 

  David A. Sumoski

 

    

 

5,657

 

 

 

    

 

293,124

 

 

 

 

  D. Chad Utermark

 

    

 

5,657

 

 

 

    

 

293,124

 

 

 

 

  Leon J. Topalian

 

    

 

4,476

 

 

 

    

 

231,929

 

 

 

 

  R. Joseph Stratman

 

    

 

6,837

 

 

 

    

 

354,242

 

 

 

Messrs. Ferriola, Frias, Hall, Napolitan and Stratman were 55 or older as of March 10, 2019; therefore, the restricted shares vested upon issuance. Messrs. Sumoski, Utermark and Topalian were all under 55 as of March 10, 2019; therefore, their restricted shares vest one-third on each of the first three anniversaries of the award date, or upon the Executive Officer’s attainment of age 55, death or disability while employed by Nucor. These shares were granted at the beginning of the performance period, January 1, 2016, and are therefore not reported in the Grants of Plan Based Awards Table for 2019.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Outstanding Equity Awards at Fiscal Year-End Table

The table below shows the outstanding equity awards for each Executive Officer on December 31, 2019.

 

     Option Awards            Stock Awards  
  Name  

Number of
Securities
Underlying
Unexercised
Options

(#) Exercisable

    Number of
Securities
Underlying
Unexercised
Options
(#) Unexercisable
   

Option
Exercise Price

($)

    Option
Expiration Date
          Number of
Shares or
Units of Stock
That Have Not
Vested
(#)
    Market Value of
Shares or Units
of Stock That
Have Not
Vested
($) (1)
    Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)
   

Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other Rights

That Have
Not Vested
($) (1)

 
  (a)   (b)     (c)     (e)     (f)            (g)     (h)     (i)     (j)  
  John J. Ferriola     266,134         44.51       5/31/23                       11,194 (3)      629,998  
    228,832         50.63       5/31/24               41,103 (4)      2,313,277  
    341,588         47.59       5/31/25              
    438,596         48.80       5/31/26              
    317,208         59.07       5/31/27              
    116,124         65.80       5/31/28              
      201,380               48.00       5/31/29                                          
  James D. Frias     39,920         44.51       5/31/23           160,058 (7)      9,008,064       11,932 (3)      671,533  
    34,324         50.63       5/31/24               20,625 (4)      1,160,775  
    51,238         47.59       5/31/25              
    65,789         48.80       5/31/26              
      47,581 (2)      59.07       5/31/27              
      16,589 (5)      65.80       5/31/28              
              28,768 (6)      48.00       5/31/29                                          
  Ladd R. Hall     51,238         47.59       5/31/25           150,123 (8)      8,448,922       10,646 (3)      599,157  
    65,789         48.80       5/31/26               18,742 (4)      1,054,800  
      47,581 (2)      59.07       5/31/27              
      16,589 (5)      65.80       5/31/28              
              28,768 (6)      48.00       5/31/29                                          
  Raymond S. Napolitan, Jr.     34,324         50.63       5/31/24           118,092 (9)      6,646,218       10,231 (3)      575,801  
    51,238         47.59       5/31/25               18,012 (4)      1,013,715  
    65,789         48.80       5/31/26              
      47,581 (2)      59.07       5/31/27              
      16,589 (5)      65.80       5/31/28              
              28,768 (6)      48.00       5/31/29                                          
  David A. Sumoski     65,789         48.80       5/31/26           102,520 (10)      5,769,826       9,985 (3)      561,956  
      47,581 (2)      59.07       5/31/27           8,875 (11)      499,485       17,260 (4)      971,393  
      16,589 (5)      65.80       5/31/28              
              28,768 (6)      48.00       5/31/29                                          
  D. Chad Utermark     34,324         50.63       5/31/24           111,870 (12)      6,296,044       9,985 (3)      561,956  
    65,789         48.80       5/31/26           8,979 (13)      505,338       17,260 (4)      971,393  
      47,581 (2)      59.07       5/31/27           2,486 (14)      139,912      
      16,589 (5)      65.80       5/31/28              
              28,768 (6)      48.00       5/31/29                                          
  Leon J. Topalian       47,581 (2)      59.07       5/31/27           86,495 (15)      4,867,939       12,697 (3)      714,587  
      16,589 (5)      65.80       5/31/28           7,030 (16)      395,648       20,195 (4)      1,136,575  
              28,768 (6)      48.00       5/31/29                                          
  R. Joseph Stratman     51,238         47.59       6/8/20                       1,560 (3)      87,797  
    65,789         48.80       6/8/20               9,342 (4)      525,768  
    47,581         59.07       6/8/20              
    16,589         65.80       6/8/20              
     

 

57,537

 

 

 

           

 

48.00

 

 

 

   

 

6/8/20

 

 

 

                                       
(1)   The awards have been valued using the December 31, 2019 closing price of Nucor common stock of $56.28.

 

(2)   Represents stock options vesting on June 1, 2020.

 

(3)   Represents the expected number of shares that will be earned under the LTIP for the 2019-2021 performance period valued using the December 31, 2019 closing price of Nucor common stock of $56.28. The expected number of shares that will be earned has been calculated based on performance through December 31, 2019. One-half of the value of the shares that are earned will be paid in cash and the other half will be paid in the form of restricted shares of Nucor common stock after the end of the performance period.

 

(4)   Represents the expected number of shares that will be earned under the LTIP for the 2018-2020 performance period valued using the December 31, 2019 closing price of Nucor common stock of $56.28. The expected number of shares that will be earned has been calculated based on performance through December 31, 2019. One-half of the value of the shares that are earned will be paid in cash and the other half will be paid in the form of restricted shares of Nucor common stock after the end of the performance period.

 

(5)   Represents stock options vesting on June 1, 2021.

 

(6)   Represents stock options vesting on June 1, 2022.

 

(7)   Represents RSUs vesting as follows: 31,292 units vesting on June 1, 2020; 29,599 units vesting on June 1, 2021; 19,445 units vesting on June 1, 2022; and 79,722 units vesting upon Mr. Frias’ retirement as defined in the CD&A with the prior approval of the Committee.

 

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(8)   Represents RSUs vesting as follows: 29,506 units vesting on June 1, 2020; 27,813 units vesting on June 1, 2021; 19,445 units vesting on June 1, 2022; and 73,359 units vesting upon Mr. Hall’s retirement as defined in the CD&A with the prior approval of the Committee.

 

(9)   Represents RSUs vesting as follows: 29,506 units vesting on June 1, 2020; 27,813 units vesting on June 1, 2021; 19,445 units vesting on June 1, 2022; and 41,328 units vesting upon Mr. Napolitan’s retirement as defined in the CD&A with the prior approval of the Committee.

 

(10)   Represents RSUs vesting as follows: 29,506 units vesting on June 1, 2020; 27,813 units vesting on June 1, 2021; 19,445 units vesting on June 1, 2022; and 25,756 units vesting upon Mr. Sumoski’s retirement as defined in the CD&A with the prior approval of the Committee.

 

(11)   Represents restricted stock issued under the LTIP vesting as follows: 3,873 shares vesting on March 10, 2020; 3,116 shares vesting on March 10, 2021 and 1,886 shares vesting on November 30, 2021.

 

(12)   Represents RSUs vesting as follows: 29,506 units vesting on June 1, 2020; 27,813 units vesting on June 1, 2021; 19,445 units vesting on June 1, 2022; and 35,106 units vesting upon Mr. Utermark’s retirement as defined in the CD&A with the prior approval of the Committee.

 

(13)   Represents restricted stock issued under the LTIP vesting as follows: 3,977 shares vesting on March 10, 2020; 3,116 shares vesting on March 10, 2021 and 1,886 shares vesting on March 10, 2022.

 

(14)   Represents common stock units deferred under the AIP vesting on March 7, 2023.

 

(15)   Represents RSUs vesting as follows: 29,506 units vesting on June 1, 2020; 27,813 units vesting on June 1, 2021; 19,445 units vesting on June 1, 2022; and 9,731 units vesting upon Mr. Topalian’s retirement as defined in the CD&A with the prior approval of the Committee.

 

(16)   Represents restricted stock issued under the LTIP vesting as follows: 3,073 shares vesting on March 10, 2020; 2,465 shares vesting on March 10, 2021 and 1,492 shares vesting on March 10, 2022.

Options Exercised and Stock Vested Table

The table below presents the stock options exercised by each Executive Officer in 2019. Stock awards vested in 2019 are comprised of restricted stock granted under the LTIP for the performance periods ended December 31, 2015, December 31, 2016, December 31, 2017 and December 31, 2018 and RSUs issued in 2016, 2017 and 2018. Under the LTIP, awards vest over a three-year period unless the executive is age 55 or older, dies or becomes disabled. In 2019, Messrs. Ferriola, Frias, Hall, Napolitan and Stratman were 55 or older and became fully vested upon grant in the restricted shares awarded for the three-year performance period ended December 31, 2018. Messrs. Sumoski, Utermark and Topalian are all under the age of 55; therefore, their restricted shares vest one-third on each of the first three anniversaries of the award date. For Mr. Ferriola and Mr. Stratman, stock awards vested in 2019 also include RSUs that vested upon retirement.

 

     

 

Option Awards

 

          

 

Stock Awards

 

 

  Name

 

  

 

Number of
Shares Acquired
on Exercise
(#)

 

    

Value Realized
on Exercise
($)

 

          

Number of
Shares Acquired
on Vesting

(#)

 

    

Value Realized
on Vesting

($)

 

 

 

  (a)

 

  

(b)

 

    

(c)

 

          

(d)

 

     (e)  

 

  John J. Ferriola

 

    

 

152,780

 

 

 

    

 

3,058,755

 

 

 

       

 

345,090

 

 

 

    

 

19,113,962

 

 

 

 

  James D. Frias

 

    

 

 

 

 

    

 

 

 

 

       

 

21,136

 

 

 

    

 

1,087,208

 

 

 

 

  Ladd R. Hall

 

    

 

 

 

 

    

 

 

 

 

       

 

18,947

 

 

 

    

 

978,099

 

 

 

 

  Raymond S. Napolitan, Jr.

 

    

 

 

 

 

    

 

 

 

 

       

 

18,030

 

 

 

    

 

924,877

 

 

 

 

  David A. Sumoski

 

    

 

 

 

 

    

 

 

 

 

       

 

14,793

 

 

 

    

 

737,001

 

 

 

 

  D. Chad Utermark

 

    

 

 

 

 

    

 

 

 

 

       

 

14,984

 

 

 

    

 

748,087

 

 

 

 

  Leon J. Topalian

 

    

 

 

 

 

    

 

 

 

 

       

 

12,620

 

 

 

    

 

627,175

 

 

 

 

  R. Joseph Stratman

 

    

 

34,324

 

 

 

    

 

218,644

 

 

 

           

 

171,749

 

 

 

    

 

8,744,017

 

 

 

 

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Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS

 

 

Nonqualified Deferred Compensation Table

The table below presents information about the amounts deferred by Executive Officers under the AIP. Executive Officers may elect to defer up to one-half of their AIP award into Nucor common stock units. The AIP provides an incentive for Executive Officers to defer their AIP awards by providing a grant of additional Nucor common stock units equal to 25% of the number of common stock units deferred. An Executive Officer is always vested in the common stock units attributable to the deferred award. The deferral incentive units become vested upon the Executive Officer’s attainment of age 55, death or disability while employed by Nucor. The vested common stock units are distributed to the Executive Officer in the form of Nucor common stock following the Executive Officer’s retirement or other termination of employment. Dividend equivalents are paid on deferred incentive units in cash within 30 days of when stockholders are paid.

 

  Name

 

  

 

Executive
Contributions in
Last FY
($)

 

   

Registrant
Contributions in
Last FY
($)

 

   

Aggregate
Earnings in
Last FY
($) (1)

 

    

Aggregate
Withdrawals /
Distributions
($)

 

    

Aggregate
Balance at
Last FYE
($)

 

 

  (a)

 

  

(b)

 

   

(c)

 

   

(d)

 

    

(e)

 

    

(f)

 

 

 

  James D. Frias

 

    

 

471,105

 

(2) 

 

   

 

117,777

 

(3) 

 

   

 

169,530

 

 

 

    

 

 

 

 

    

 

2,901,721

 

(4) 

 

 

  Ladd R. Hall

 

    

 

713,497

 

(5) 

 

   

 

178,375

 

(6) 

 

   

 

117,748

 

 

 

    

 

 

 

 

    

 

2,644,489

 

(7) 

 

 

  Raymond S. Napolitan, Jr.

 

    

 

 

 

 

   

 

 

 

 

   

 

68,105

 

 

 

    

 

 

 

 

    

 

857,483

 

(8) 

 

 

  D. Chad Utermark

 

    

 

262,827

 

(9) 

 

   

 

65,707

 

(10) 

 

   

 

21,558

 

 

 

    

 

 

 

 

    

 

699,461

 

(11) 

 

 

  R. Joseph Stratman

 

    

 

 

 

 

   

 

 

 

 

   

 

51,668

 

 

 

    

 

 

 

 

    

 

650,529

 

(12) 

 

 

(1)   Represents the value of the units due to the change in Nucor’s common stock price from $51.81 at December 31, 2018 and $57.79 at March 8, 2019 to $56.28 at December 31, 2019.

 

(2)   Represents the value of 8,152 common stock units deferred by Mr. Frias under the 2018 AIP valued using the closing price of Nucor common stock of $57.79 on March 8, 2019, the date the units were issued.

 

(3)   Represents the value of 2,038 additional common stock units granted to Mr. Frias as a 25% match of the units deferred under the 2018 AIP. The units have been valued using the closing price of Nucor common stock of $57.79 on March 8, 2019, the date the units were issued.

 

(4)   Represents 51,559 deferred units valued using the closing price of Nucor common stock of $56.28 on December 31, 2019. Of the amount shown, $2,208,884 was reported in the Summary Compensation Tables of Nucor proxy statements for previous years.

 

(5)   Represents the value of 12,346 common stock units deferred by Mr. Hall under the 2018 AIP valued using the closing price of Nucor common stock of $57.79 on March 8, 2019, the date the units were issued.

 

(6)   Represents the value of 3,087 additional common stock units granted to Mr. Hall as a 25% match of the units deferred under the 2018 AIP. The units have been valued using the closing price of Nucor common stock of $57.79 on March 8, 2019, the date the units were issued.

 

(7)   Represents 46,988 deferred units valued using the closing price of Nucor common stock of $56.28 on December 31, 2019. Of the amount shown, $2,703,677 was reported in the Summary Compensation Tables of Nucor proxy statements for previous years. The amount shown exceeds the amount reported in the Summary Compensation Tables by $59,188, which is equal to the net decrease in value of the deferred units since Mr. Hall began deferring under the AIP.

 

(8)   Represents 15,236 deferred units valued using the closing price of Nucor common stock of $56.28 on December 31, 2019. None of the amount shown has been reported in the Summary Compensation Tables of Nucor proxy statements for previous years for Mr. Napolitan.

 

(9)   Represents the value of 4,548 common stock units deferred by Mr. Utermark under the 2018 AIP valued using the closing price of Nucor common stock of $57.79 on March 8, 2019, the date the units were issued.

 

(10)   Represents the value of 1,137 additional common stock units granted to Mr. Utermark as a 25% match of the units deferred under the 2018 AIP. The units have been valued using the closing price of Nucor common stock of $57.79 on March 8, 2019, the date the units were issued.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

(11)  Represents 12,428 deferred units valued using the closing price of Nucor common stock of $56.28 on December 31, 2019. Mr. Utermark was a named executive officer for the first time in 2019; therefore, none of the amount shown has been reported in the Summary Compensation Tables of Nucor proxy statements for previous years.

(12)  Represents 11,559 deferred units valued using the closing price of Nucor common stock of $56.28 on December 31, 2019. Of the amount shown, $776,289 was reported in the Summary Compensation Tables of Nucor proxy statements for previous years. The amount shown exceeds the amount reported in the Summary Compensation Tables by $125,760, which is equal to the net decrease in value of the deferred units since Mr. Stratman began deferring under the AIP.

Internal Revenue Code Section 162(m)

Section 162(m) of the Internal Revenue Code previously limited the deductibility of non-performance-based compensation paid to certain executives, including our CEO and our three other most highly compensated officers (other than our Chief Financial Officer), to $1 million annually. We took this limitation, among other factors, into consideration in structuring our annual bonuses and long-term incentive awards (other than RSUs) so that they would qualify for the exception to this limitation for performance-based compensation and these amounts would be fully deductible for income tax purposes.

The U.S. tax reform legislation that became law at the end of 2017 made significant changes to Section 162(m), including expanding the group of executives subject to the $1 million deduction limit to include our Chief Financial Officer and certain other individuals and eliminating the performance-based compensation exception to that limit. The rules and regulations promulgated under Section 162(m) are complicated and may change from time to time, and the scope of the transition relief provided in connection with the repeal of the performance-based exemption is limited. As a result, there is no guarantee that compensation paid under our compensation programs will be deductible.

The Committee will continue to consider tax implications (including the lack of deductibility under Section 162(m)) among other relevant factors in designing and implementing our executive compensation program. The Committee will continue to monitor taxation, applicable incentives, standard practice in our industry, and other factors and adjust our executive compensation program as needed.

Post-Termination Compensation Benefits

The Committee believes that Executive Officers should be provided a reasonable severance benefit in the event an executive is terminated. Severance benefits for Executive Officers reflect the fact that it may be difficult to find comparable employment within a reasonable period of time. The Committee periodically reviews total compensation, including these post-termination compensation benefits, to ensure that such amounts remain reasonable.

As discussed on page 25, in response to stockholder feedback, the Committee took the following actions effective February 17, 2020 related to post-termination compensation benefits:

 

   

Eliminated severance benefits. Benefits under the Severance Plan will no longer be provided to EVPs and above, including Executive Officers. Severance benefits will no longer be provided to any Executive Officer upon retirement.

 

   

Reduced change in control benefits. Compensation paid following termination in the event of a change in control would be limited to a market multiple of base salary and annual incentives. LTIP award amounts will no longer be included in the payout calculation. Cash payments for RSU grants based on future performance have also been eliminated.

The following discussion and “Post-Termination Payments Summary” table reflect the severance, non-compete and change in control benefits available to executives as of December 31, 2019 and do not reflect the changes described above. Two Executive Officers retired in 2019 and received severance benefits under the post-termination benefit plans in effect in 2019. No severance benefit will be provided upon retirement to any Executive Officer who retires after December 31, 2019.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Non-Compete and Non-Solicitation Agreements.    Nucor has entered into a non-compete and non-solicitation agreement with each Executive Officer. Pursuant to these agreements, Executive Officers have agreed not to compete with Nucor during the 24-month period following their termination of employment with Nucor for any reason in exchange for monthly cash payments from Nucor during the non-competition period. The agreements with Executive Officers also restrict the disclosure of confidential information and prohibit Executive Officers from encouraging Nucor customers to purchase steel or steel products from any Nucor competitor or encouraging any Nucor employee to terminate his or her employment with Nucor. Each agreement further provides that any inventions, designs or other ideas conceived by Executive Officers during their employment with Nucor will be assigned to Nucor. Since Nucor began entering into the non-compete and non-solicitation agreements with its executive officers in 1999, no executive officer has left Nucor other than to retire.

The amount of each monthly cash payment during the 24-month non-competition period will be equal to the product of 3.36 times the Executive Officer’s highest annual base salary during the 12 months immediately preceding the termination of his employment, divided by 12. If an Executive Officer who is receiving monthly installment payments dies within 12 months of his date of termination of employment, Nucor will continue to pay his estate the monthly payments only through the end of the first 12 months following termination of his employment. Nucor’s obligation to make the monthly installment payments to an Executive Officer terminates if the Executive Officer dies 12 or more months following termination of his employment.

Severance Benefits.    Executive Officers are entitled to receive severance payments following termination of employment or their resignation, death or retirement under the Severance Plan. Effective February 17, 2020, Executive Officers will not receive severance benefits upon retirement. No Executive Officer has retired in 2020 and received severance. The amount of severance payments to be received by a particular Executive Officer or, in the case of his death while employed by Nucor, his estate, will depend upon his age at the time of his termination, resignation, retirement or death and his length of service with Nucor. If the Executive Officer is younger than age 55, then the Executive Officer, or his estate, will be entitled to receive a severance payment equal to the greater of (i) one month of his base salary for each year of service to Nucor with a minimum severance payment of six months’ base salary or (ii) the value of the total number of his unvested shares of Nucor common stock (including deferred shares) granted under the LTIP. If the Executive Officer is age 55 or older, then the Executive Officer, or his estate, will be entitled to receive a severance payment equal to one month of his base salary for each year of service to Nucor with a minimum severance payment of six months’ base salary.

Change in Control Benefits.    Nucor provides Executive Officers the following benefits in the event of a change in control of Nucor. The benefits do not result in Executive Officers receiving severance benefits in excess of three times their annual compensation or provide an excise tax gross up for any payments that would be considered excess parachute payments under Section 280G of the Internal Revenue Code.

 

   

Severance – If terminated within 24 months of a change in control, Executive Officers participating in the Severance Plan would receive a severance payment equal to a base amount multiplied by 3 in the case of the Chief Executive Officer, 2.5 in the case of the Chief Financial Officer and Chief Operating Officer, and 2 in the case of any other Executive Vice President. The base amount is the sum of the executive’s base salary plus the greater of target or the three-year average actual award under the AIP, plus the greater of target or the most recent award under the LTIP. The target awards under the AIP are equal to 150% and 137.5% of base salary for the Chief Executive Officer and for all other Executive Officers, respectively. The target award under the LTIP is equal to 50% of the plan’s maximum award payout. In addition, Executive Officers participating in the Severance Plan would receive 36 months of medical, dental and life insurance continuation for the Chief Executive Officer, 30 months for the Chief Financial Officer and Chief Operating Officer, and 24 months for all other Executive Officers.

 

   

Annual Incentive Plan – For the year in which a change in control occurs, the AIP award will be no less than an award equal to the greater of actual performance through the change in control or target performance, in each case prorated through the date of the executive’s termination of employment.

 

   

Long-Term Incentive Plan – The LTIP performance periods in progress on the date of the change in control will be terminated and awards will be paid based on a prorated basis through the date of the change in control in an amount equal to the greater of actual or target performance.

 

   

Acceleration of Unvested Equity – All unvested equity awards under the AIP and the LTIP, including deferred shares, and all outstanding unvested stock options and RSUs, will vest upon a change in control.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

   

Restricted Stock Units – If terminated within 24 months of a change in control, Executive Officers would receive a payment equal to the sum of the value of the RSUs that would have been granted in the year of termination based on the prior year’s performance (if not granted prior to the date of termination) and the value of the RSUs that would normally be granted the following year for performance during the year of the Executive Officer’s termination.

 

   

Excess Parachute Payments – If any payments or benefits would be considered excess parachute payments under Section 280G of the Internal Revenue Code, the payments or benefits would be reduced to the Section 280G safe harbor amount if the reduction results in a larger net benefit to the Executive Officer. Executive Officers are responsible for taxes on all payments. No tax gross ups are provided.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Post-Termination Payments Summary

The following is a summary of the severance and non-compete payments that would have been payable to each Executive Officer (other than Mr. Ferriola and Mr. Stratman) if his employment had terminated on December 31, 2019. The amounts included in the table for Mr. Ferriola and Mr. Stratman are the amounts payable to them in connection with their retirement on December 31, 2019 and June 8, 2019, respectively.

 

  Executive Officer

 

 

Executive Benefits and
Payments Upon
Termination

 

 

Voluntary
Termination
($)

 

   

Retirement
($) (1)

 

   

 

Involuntary
Not for
Cause
Termination
($)

 

   

For Cause
Termination
($)

 

   

Disability
($)

 

   

Death
($)

 

   

Change In
Control
($)

 

 
  John J. Ferriola   Non-compete–cash           9,744,000                                
  Severance–cash           3,487,874                                
  Vesting of restricted stock           16,358,592                                
  Vesting of stock options           1,667,426                                
  Restricted stock units–cash                                          
  Pro-rata LTIP                                          
    Benefits and perquisites                                          
        Total           31,257,892                                
  James D. Frias   Non-compete–cash     4,072,992       4,072,992       4,072,992       4,072,992       4,072,992             4,072,992  
  Severance–cash     1,437,243       1,437,243       1,437,243             1,437,243       1,437,243       7,556,496  
  Vesting of restricted stock           9,008,064                   9,008,064       9,008,064       9,008,064  
  Vesting of stock options           238,199                   238,199       238,199       238,199  
  Restricted stock units–cash                                         1,081,200  
  Pro-rata LTIP                                         149,236  
    Benefits and perquisites                                         38,208  
        Total     5,510,235       14,756,498       5,510,235       4,072,992       14,756,498       10,683,506       22,144,395  
  Ladd R. Hall   Non-compete–cash     3,634,176       3,634,176       3,634,176       3,634,176       3,634,176             3,634,176  
  Severance–cash     1,737,946       1,737,946       1,737,946             1,737,946       1,737,946       5,425,620  
  Vesting of restricted stock           8,448,922                   8,448,922       8,448,922       8,448,922  
  Vesting of stock options           238,199                   238,199       238,199       238,199  
  Restricted stock units–cash                                         862,400  
  Pro-rata LTIP                                         133,158  
    Benefits and perquisites                                         38,169  
        Total     5,372,122       14,059,243       5,372,122       3,634,176       14,059,243       10,425,067       18,780,644  
  Raymond S. Napolitan, Jr.   Non-compete–cash     3,492,384       3,492,384       3,492,384       3,492,384       3,492,384             3,492,384  
  Severance–cash     1,012,693       1,012,693       1,012,693             1,012,693       1,012,693       5,179,422  
  Vesting of restricted stock           6,646,218                   6,646,218       6,646,218       6,646,218  
  Vesting of stock options           238,199                   238,199       238,199       238,199  
  Restricted stock units–cash                                         862,400  
  Pro-rata LTIP                                         127,962  
    Benefits and perquisites                                         25,498  
        Total     4,505,077       11,389,494       4,505,077       3,492,384       11,389,494       7,897,110       16,572,083  
  David A. Sumoski   Non-compete–cash                                          
  Severance–cash     1,018,509       &