DEF 14A 1 bmi-def14a_20220429.htm DEF 14A bmi-def14a_20220429.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

 

 

Filed by the Registrant

 

Filed by a Party other than the Registrant

 

 

Check the appropriate box:

Preliminary Proxy Statement

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

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under Rule 14a-12

 

Badger Meter, Inc.

(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 all boxes that apply):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

BADGER METER, INC.

4545 West Brown Deer Road

Milwaukee, Wisconsin 53223

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS - APRIL 29, 2022

The Annual Meeting of the Shareholders of Badger Meter, Inc. will be held at the Badger Meter headquarters in the Customer Experience Center, 4545 West Brown Deer Road, Milwaukee Wisconsin on Friday, April 29, 2022, at 8:30 a.m. local time for the following purposes:

1.

To elect as directors the nine nominees named in the Proxy Statement, each for a one-year term;

2.

To consider an advisory vote to approve the compensation of the company’s named executive officers;

3.

To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for the company for the year ending December 31, 2022;

4.

To vote on a shareholder proposal; and

5.

To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.

Our Board of Directors recommends a vote “FOR ALL NOMINEES" in Proposal 1 and “FOR” Proposals 2 and 3 and “AGAINST” Proposal 4.  The persons named as proxies will use their discretion to vote on other matters that may properly arise at the Annual Meeting.

Holders of record of our common stock at the close of business on February 25, 2022 are entitled to notice of and to vote at the meeting and any adjournments or postponements thereof. Shareholders are entitled to one vote per share.

By Order of the Board of Directors

 

 

 

 

William R. A. Bergum,

 

Secretary

 

March 18, 2022

We urge you to submit your proxy as soon as possible. If the records of our transfer agent, American Stock Transfer & Trust Company, LLC, show that you own shares in your name, or you own shares in our Dividend Reinvestment Plan, then you can submit your proxy for those shares via the Internet or by using a toll-free telephone number provided on the proxy card. Or you can mark your votes on the proxy card we have enclosed, sign and date it, and mail it in the postage-paid envelope we have provided. Instructions for using these convenient services are set forth on the proxy card. If your shares are held in “street name” by a broker, nominee, fiduciary or other custodian, follow the directions given by the broker, nominee, fiduciary or other custodian regarding how to instruct them to vote your shares.

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting to be held on April 29, 2022

This Proxy Statement and our 2021 Annual Report on Form 10-K are available at

www.proxyvote.com

 


 

2022 ANNUAL MEETING OF SHAREHOLDERS

PROXY STATEMENT TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

Nomination and Election of Directors

 

 

2

 

 

 

 

Related Person Transactions

 

 

12

 

 

 

 

Stock Ownership of Certain Beneficial Owners

 

 

13

 

 

 

 

Stock Ownership of Management

 

 

13

 

 

 

 

Executive Compensation

 

 

15

 

 

 

 

Compensation Committee Interlocks and Insider Participation

 

 

30

 

 

 

 

Advisory Vote to Approve Compensation of Named Executive Officers

 

 

30

 

 

 

 

CEO Pay Ratio

 

 

32

 

 

 

 

Equity Compensation Plan Information

 

 

32

 

 

 

 

Audit and Compliance Committee Report

 

 

33

 

 

 

 

Principal Accounting Firm Fees

 

 

34

 

 

 

 

Ratification of Independent Registered Public Accounting Firm

 

 

34

 

 

 

 

Shareholder Proposal

 

 

36

 

 

 

 

Other Matters

 

 

38

 

 

 

 

 

 

 

 

 

 

 


 

BADGER METER, INC.

4545 West Brown Deer Road

Milwaukee, Wisconsin 53223

PROXY STATEMENT

To the Shareholders of BADGER METER, INC.

We are furnishing you with this Proxy Statement in connection with the solicitation of proxies by the Board of Directors (“Board”) of Badger Meter, Inc. (“company”) to be used at our Annual Meeting of Shareholders (the “Annual Meeting”), which will be held at the Badger Meter headquarters in the Customer Experience Center, 4545 West Brown Deer Road, Milwaukee, Wisconsin on Friday, April 29, 2022, at 8:30 a.m. local time and at any adjournment or postponement thereof.

If you execute a proxy, you retain the right to revoke it at any time before it is voted by giving written notice to us, by submitting a valid proxy bearing a later date or by voting your shares in person during the Annual Meeting. Unless you revoke your proxy, your shares will be voted at the Annual Meeting as you instructed in your proxy. Anyone who is a shareholder of record as of the close of business on February 25, 2022 (the “record date”) may attend the Annual Meeting and vote in person. If your shares are held in “street name” by a broker, nominee, fiduciary or other custodian, you may not vote at the Annual Meeting unless you first obtain a proxy issued in your name from your broker, nominee, fiduciary or other custodian.

As of the record date, we had 29,249,448 shares of common stock, par value $1 per share, outstanding and entitled to vote. You are entitled to one vote for each of your shares of common stock.

If your shares are held in “street name” by a broker, nominee, fiduciary or other custodian, you will receive a full meeting package including a voting instruction form to vote your shares. Your broker, nominee, fiduciary or other custodian may permit you to vote by the Internet or by telephone. A broker non-vote occurs when your broker, nominee, fiduciary or other custodian submits a proxy card with respect to your shares, but declines to vote on a particular matter, either because such nominee elects not to exercise its discretionary authority to vote on the matter or does not have discretionary authority to vote on the matter. Your broker, nominee, fiduciary or other custodian has the authority under New York Stock Exchange (“NYSE”) rules to vote your unvoted shares on certain routine matters like the ratification of Ernst & Young LLP as the company’s independent registered public accounting firm for 2022, but not the election of directors or other proposals.

We commenced distribution of this Proxy Statement and accompanying form of proxy on or about March 18, 2022.

1

 


NOMINATION AND ELECTION OF DIRECTORS

You and the other holders of the common stock are entitled to elect nine directors at the Annual Meeting. If you submit a proxy to us, it will be voted as you direct. If, however, you submit a proxy without specifying voting directions, it will be voted in favor of the election of each of the nine nominees for director identified below. If your shares are held in “street name” by your broker, nominee, fiduciary or other custodian, your broker, nominee, fiduciary or other custodian may only vote your shares with your specific voting instructions for the election of directors. Therefore, we urge you to respond to your brokerage firm so that your vote will be cast.

Directors will be elected by a plurality of votes cast at the Annual Meeting (assuming a quorum is present). If you do not vote your shares at the Annual Meeting, whether due to abstentions, broker non-votes or otherwise, and a quorum is present, it will have no impact on the election of directors. Once elected, a director serves for a one-year term or until his/her successor has been duly appointed, or until his/her death, resignation or removal.

If a director receives more “withheld” votes than “for” votes in an uncontested election, the current bylaws state that director will tender his/her resignation to the Chairman of the Board of Directors following certification of the shareholder vote, and the Chairman will refer the resignation to the Board of Directors' Resignation Committee to consider whether or not to accept such resignation. Thereafter, the Board will disclose its decision regarding whether to accept the director’s resignation (or the reason(s) for rejecting the resignation, if applicable) in a Current Report on Form 8-K furnished to the Securities and Exchange Commission (“SEC”).

The nominees of the Board of Directors for director, together with certain additional information concerning each such nominee, are identified below. All of the nominees are current directors of our company. If any nominee is unable or unwilling to serve, the named proxies have discretionary authority to select and vote for substitute nominees. The Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve.

Nominees for Election to the Board of Directors

The Board of Directors currently consists of ten directors, including Ms. Cook who was appointed as a director on February 24, 2022 after recommendation by the Corporate Governance and Sustainability Committee.  Consistent with the longstanding Board refreshment mechanism as outlined in our Principles of Corporate Governance stating that no candidate, including current directors, may stand for re-election after reaching the age of 72, current director Gail A. Lione will not stand for re-election and will cease to be a director as of the Annual Meeting.  As a result, the size of the Board will be reduced from ten to nine.  Proxies may not be voted for any individuals who are not nominees.

The following section provides information as of the date of this Proxy Statement about each of the nine nominees. The information presented includes information each director has given us about his/her age and other demographics, positions held, principal occupation and business experience for the past five years, and the names of other publicly-held companies where he/she currently serves as a director or has served as a director during the past five years.

In addition to the information presented below regarding each nominee’s specific experience, qualifications, attributes and skills that led our Board to the conclusion that he/she should serve as a director, we also believe that all of our director nominees have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to the company and our Board.

2

 


Summary Information for Board of Directors Candidates

 

 

Todd A.

Adams

Kenneth C.

Bockhorst

Henry F. Brooks

Melanie K. Cook

Gale E. Klappa

James W. McGill

Tessa M. Myers

James F. Stern

Glen E. Tellock

Age

51

49

62

49

71

66

46

59

61

Tenure (years)

5

4

*

*

12

2

3

6

5

Independent

Yes

No

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Diversity -Gender

 

 

 

 

 

 

 

Diversity - Race or Ethnicity

 

 

 

 

 

 

 

 

Other Public Boards

1

1

0

0

2

1

0

0

2

Meeting Attendance

100%

100%

100%

*

100%

100%

100%

100%

100%

*Mr. Brooks was appointed to the Board on August 19, 2021 and Ms. Cook was appointed to the Board on February 24, 2022.

Skills and Experience Summary (number of Director Candidates with Skill / Experience)

 

Executive Leadership ●●●●●●●●●

Finance/Accounting  ●●●●●●◌◌◌

Global Business  ●●●●●●●●●

M&A  ●●●●●●●●

Utility/Water Sector  ●●●●◌◌◌◌◌

Sales & Marketing  ●●●●●●●◌

Manufacturing Operations  ●●●●●●●●

Technology/Software  ●●●●●◌◌◌◌

Risk/Governance  ●●●●●●●●●

Detailed Information for Board of Directors Candidates

 

Name

 

 

Business Experience During Last Five Years

 

Todd A. Adams

 

 

Zurn Water Solutions (formerly Rexnord, a provider of water management products, headquartered in Milwaukee, WI): Chairman, President and Chief Executive Officer. Mr. Adams joined Rexnord in 2004 where his prior roles included President of the Water Management platform, Senior Vice President & Chief Financial Officer, and Vice President - Controller & Treasurer. Mr. Adams’ public company leadership and complex manufacturing expertise as well as experience in water management solutions are an excellent combination of skills to provide advice and insights for the company.

 

Kenneth C. Bockhorst

 

 

Badger Meter, Inc.: Chairman, President and Chief Executive Officer. Mr. Bockhorst joined Badger Meter as Chief Operating Officer in October 2017 and was promoted to President in April 2018, Chief Executive Officer in 2019 and Chairman of the Board in 2020.  Prior to Badger Meter, he served six years at Actuant Corporation (a diversified industrial company; now named Enerpac Tool Group) with earlier career roles in product management and operational leadership at IDEX and Eaton. Mr. Bockhorst is a director of Mirion Technologies, Inc. He has significant global operational and M&A experience which enables him to provide the Board with valuable advice and insights.

 

 

 

 

 

 

3

 


Name

 

 

Business Experience During Last Five Years

 

Henry F. Brooks

 

 

Collins Aerospace unit of Raytheon Technologies Corporation (one of the world's largest suppliers of aerospace and defense products headquartered in Charlotte, NC): President – Power & Controls since 2020.  His 30-year career spans roles of increasing responsibility at United Technologies Corporation, Collins Aerospace and Raytheon Technologies in the aerospace, defense and industrial sectors where he held leadership positions in engineering, operations and business unit management. Mr. Brooks brings expertise in long-term strategic product and software development planning, building customer alliances, operating global locations, M&A execution, talent development, and cybersecurity, among others. He is able to provide valuable advice and insights to the company in these areas.

 

Melanie K. Cook

 

 

Retired Chief Operating Officer of GE Appliances (a global appliance manufacturer and a Haier Company): Chief Operating Officer from 2017 until retirement in 2021; previously Vice President Sourcing from 2014 to 2017. Prior to Haier, she held multiple roles within General Electric including within the Corporate Audit Staff. Ms. Cook’s nearly 30 years of global experience includes business unit leadership roles with full profit and loss responsibility, product lifecycle management, digitization, end-to-end supply chain, global sourcing and finance/audit across multiple industries globally. She is able to provide valuable advice and insight to the company in these areas.

 

Gale E. Klappa

 

 

WEC Energy Group (one of the nation’s premiere electric and natural gas delivery companies, headquartered in Milwaukee, WI): Executive Chairman, February 2019 to present; previously Chairman and CEO from 2004 to May 2016 and October 2017 to January 2019; Non-Executive Chairman from May 2016 to October 2017. Mr. Klappa is a director of WEC Energy Group and its wholly owned subsidiary, Wisconsin Electric Power Company, and Associated Banc-Corp. Mr. Klappa has significant experience as a former CEO of a major public company and several regulated public utility companies. Further, he has in-depth knowledge of utility metering needs and financial and accounting matters. He is able to provide valuable advice and insights to the company in these areas. As Mr. Klappa will reach the Board’s mandatory retirement age in the next year, this will be his last nomination as director.

 

James W. McGill

 

 

Retired Executive – Eaton Corporation (global power management company): President-Electrical Sector Americas, Eaton from 2015 to his retirement in 2017; President Electrical Products Group 2013-2015; other roles of global responsibility including Chief Human Resources Officer.  Mr. McGill is a director of Powell Industries.  Mr. McGill has significant public company and global leadership experience and expertise in human resources, continuous improvement, and corporate governance, which allows him to provide valuable advice and insights to the company.

 

Tessa M. Myers

 

 

Rockwell Automation (world’s largest company dedicated to industrial automation and information, headquartered in Milwaukee, WI): Global Vice President-Software & Control since November 2020; previously Regional President, North America. Ms. Myers has more than 20 years of experience serving in a variety of sales, channel management, and regional business unit leader roles including global responsibilities in Singapore and Canada for Rockwell.  Throughout her marketing, product management and engineering roles, she has developed expertise in “smart” devices, data and analytics connectivity and Internet of Things (IoT) which allows her to provide valuable advice and insights to the company.

 

James F. Stern

 

 

A. O. Smith Corporation (a manufacturer of water heating equipment and water treatment and air purification products, headquartered in Milwaukee, WI): Executive Vice President, General Counsel and Secretary since 2007. Mr. Stern serves on the Board of Governors of the Water Quality Association.  He has more than 30 years of experience in management, corporate governance and M&A. For the past several years he has chaired A. O. Smith’s global water treatment steering committee, focusing on strategy, expansion and alignment of the water treatment businesses.  Mr. Stern’s legal, international and water background provides valuable advice and insights to the company.

 

4

 


Name

 

 

Business Experience During Last Five Years

 

Glen E. Tellock

 

 

Retired President and Chief Executive Officer of Lakeside Foods (a premier private brand supplier of high quality canned and frozen vegetables, headquartered in Manitowoc, WI): President and Chief Executive Officer from 2016 until his retirement in 2021.  Previously, Mr. Tellock served The Manitowoc Company, Inc. from 1991 to 2015, holding various leadership positions including Chief Financial Officer, until his appointment as President and Chief Executive Officer in 2007 and Chairman, President and Chief Executive Officer in 2009. Mr. Tellock currently serves on the boards of Astec Industries and WEC Energy Group; and was a director at BitNile Holdings, Inc until February 23, 2022.  Mr. Tellock’s past experience as Chief Executive Officer of a public manufacturing company enables him to provide valuable advice and insights to the company.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE “FOR ALL NOMINEES” AS IDENTIFIED ABOVE

Independence, Meetings and Committees

The Board of Directors held four meetings in 2021. A closed session for only independent directors was held following each of the regular Board meetings. All members of the Board attended the Virtual 2021 Annual Meeting of Shareholders. It is the Board’s policy that all directors participate in the Annual Meeting of Shareholders, unless unusual circumstances prevent such attendance.

Our Board of Directors has three standing committees: the Audit and Compliance Committee (“Audit Committee”), the Compensation and Human Resources Committee (“Compensation Committee”) and the Corporate Governance and Sustainability Committee (“Governance Committee”). The Board of Directors has adopted written charters for each committee, which are available on our website at badgermeter.com under the selection “Company”- “Investors”-“Governance”-“Governance Documents.”

In making independence determinations, the Board observes all criteria for independence established by the SEC, the NYSE, and other governing laws and regulations. The Board has determined that each of the directors (other than Mr. Bockhorst) (i) is “independent” within the definitions contained in the current NYSE listing standards and our Principles of Corporate Governance; (ii) meets the categorical independence standards adopted by the Board (set forth below); and (iii) has no other “material relationship” with the company that could interfere with his/her ability to exercise independent judgment. In addition, the Board has determined that each member of the Audit Committee and Compensation Committee, respectively, meets the additional independence standards of the NYSE. One of the Audit Committee members, Mr. Tellock, served on three other public company audit committees until his resignation from one of the boards in February, 2022. Our Board has affirmatively determined that such simultaneous service did not impair Mr. Tellock’s ability to effectively serve on our Audit Committee.

5

 


Committee Composition and Functions

 

   Committee

  Primary Committee Functions

Audit and Compliance

 

   Glen E. Tellock, Chair

   Henry F. Brooks

   Tessa M. Myers

   James F. Stern

   Melanie K. Cook (a)

   2021 Meetings - 6

oversees our financial reporting process on behalf of the Board and reports the results of its activities to the Board

selecting and engaging, with shareholder ratification, an independent registered public accounting firm (1)

discussing with the independent registered public accounting firm and internal auditors the scope and results of audits

monitoring our internal controls, ethics and compliance risk management, as well as key guidelines and policies governing the company’s processes for enterprise risk management, including cyber security risks

pre-approving and reviewing audit fees and other services performed by our independent registered public accounting firm

establishes and oversees procedures for the receipt, retention and treatment, on a confidential basis, of any concerns regarding questionable accounting, internal controls or auditing matters

one member (Mr. Tellock) qualifies as an “audit committee financial expert” as defined by the SEC; all members meet the financial literacy requirements of the NYSE

Compensation and Human   Resources

 

   Todd A. Adams, Chair

   Gale E. Klappa

   Gail A. Lione (b)

   James W. McGill

   2021 Meetings - 3

reviews and establishes all forms of compensation for our executive officers and directors

oversees the comprehensive organizational talent process

oversees our compensation plans, including the various stock plans

reviews the various management development and succession programs

addresses compensation-related risks

Corporate Governance and Sustainability

 

   Gale E. Klappa, Chair

   Gail A. Lione (b)

   Tessa M. Myers

   James F. Stern

   2021 Meetings - 2

oversees all matters related to director performance, including the recommendation of nominees for the Board of Directors

assists the Board of Directors in providing oversight of the company’s environmental, social and governance matters

oversees all corporate governance matters, including monitoring and evaluating Board and committee skills, experience, tenure, diversity and performance and developing and recommending to the Board the company’s Principles of Corporate Governance

(a) Ms. Cook will become a member of the Audit Committee if elected at the Annual Meeting.

(b) Ms. Lione will not stand for re-election and will cease to be a Board member as of the Annual Meeting.

(1) In overseeing the independent registered public accounting firm, the Audit Committee, among other things, (i) reviews the independence of the independent registered public accounting firm; (ii) reviews periodically the level of fees approved for the independent registered public accounting firm and the pre-approved non-audit services it has provided; (iii) reviews the performance, qualifications and quality control procedures of the independent registered public accounting firm; (iv) reviews the selection of the lead engagement partner; (v) conducts the periodic consideration and impact of independent auditor rotations; and (vi) reviews the scope of and overall plans for the annual audit and the internal audit program.

6

 


Leadership Structure

Mr. Bockhorst was appointed Chairman of the Board in January 2020.  The Board of Directors believes it is in the best interests of the company to combine the positions of Chairman and CEO because it provides unified leadership and direction.  In addition, Mr. Bockhorst has an in-depth knowledge of the business that enables him to effectively set appropriate Board agendas and ensure processes and relationships are established with both management and the independent directors, as the Board works together to oversee the company’s management and affairs.  The Board retains the authority to modify this leadership structure as and when appropriate to best address the company’s circumstances and advance the interests of all shareholders.

Because our Chairman is not an independent director, our independent directors believe it is appropriate to appoint an independent director as a Lead Outside Director. Our Lead Outside Director, if elected as a director on an annual basis by our shareholders, serves for a three-year term and if reappointed, can serve up to two consecutive terms. The Lead Outside Director works with our Chairman and CEO and other Board members to provide strong, independent oversight of our management and affairs. Among other things, our Lead Outside Director serves as the principal liaison between the Chairman and our independent directors and chairs the closed sessions that consist of only our independent directors. Mr. Klappa currently serves as the independent Lead Outside Director.

Board Role in Risk Oversight

Our Board of Directors recognizes the importance of effective risk oversight in running a successful business and fulfilling its fiduciary responsibilities to the company and its shareholders.  Our Board is responsible for assuring that an appropriate culture of risk management exists within the company and for setting the right “tone at the top.”  The Board oversees an enterprise-wide approach to risk management, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance shareholder value.

A fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the company. The involvement of the full Board of Directors in setting the company’s business strategy is a key part of its assessment of management’s tolerance for risk and also a determination of what constitutes an appropriate level of risk for the company.

The company’s Enterprise Risk Management (ERM) process aims to identify, manage and monitor significant and material risks.  A cross functional group of executives prioritizes identified risks and assigns an executive to address each major identified risk area and lead action plans to manage each risk. Our Board of Directors provides oversight of the ERM process and reviews the significant identified risks. Our various Board committees also play a role in risk management, as detailed in their respective charters.

Cybersecurity is a critical component of the company’s ERM program. Badger Meter has established an information security framework to help safeguard the confidentiality, integrity, and availability of information assets and ensure regulatory, operational, and contractual requirements are fulfilled. The framework includes an information security training program for all employees.  The framework is aligned to industry standards including: NIST (National Institute of Standards and Technology), International Organization for Standardization (ISO) 27001, Service Organization Control 2 (SOC2) and Sarbanes Oxley (SOX). In addition to the framework, among other mitigating actions the company maintains a cybersecurity liability insurance policy. The Board and the Audit Committee provide oversight over cybersecurity risk. The Board receives annual cybersecurity updates from senior management, including the Chief Information Officer, and the Audit Committee provides a deeper level of oversight through multiple engagements with senior management.  While the company has experienced, and expects to continue to experience, cyber threats, to date, no breaches or material incidents have occurred.

While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. In particular, the Audit Committee focuses on financial risks, including overseeing the integrity of the company’s financial statements, qualifications and independence of the independent registered public accounting firm, internal controls and general corporate ethics and compliance. In addition, the Audit Committee annually reviews and assesses the effectiveness of the company’s overall compliance program. The Compensation Committee focuses on compensation risks including risks associated with our workforce and the administration and structure of our employee benefit plans. The Governance Committee focuses on corporate governance policies and practices that help mitigate risk as well as risks associated with the environment, climate change and social issues.

 

7

 


 

Shareholder Outreach

The company regularly engages with its shareholders through proactive outreach efforts covering an array of topics such as financial performance, compensation matters, human capital management, corporate governance and ESG.  This shareholder outreach takes a combination of forms, including investor conferences, dedicated in-person or virtual meetings and phone calls. Badger Meter management routinely reports out to the Board and specific Board committees on the substance and nature of its shareholder discussions.

In conjunction with the prior year’s shareholder proposal related to board diversity, the company conducted substantial outreach efforts among its shareholders to gain insight and understanding of their views of the company’s diversity journey, including their voting considerations and deliberations with regard to the proposal.   During this proposal-specific outreach, discussions were held with investors collectively holding nearly 12 million shares, or approximately 40% of the company’s outstanding shares, and included 6 of the company’s top 10 largest shareholders.

A summary of key topics discussed during our various outreach touchpoints, including both general discussions and those specifically related to the shareholder proposal, are included below.

   What We Heard

  How We Responded

Shareholders appreciated the company’s voluntary disclosure of the racial/ethnic diversity of the Board in the Proxy. Investor support for the proposal was based on the company-acknowledged lack of racial/ethnic diversity of the slate of Board nominees up for election at that point in time   

Prepared and published a comprehensive Report on Board Diversity which describes concrete, actionable steps to advance Board diversity, and may be accessed here: https://s22.q4cdn.com/599610907/files/doc_downloads/board_diversity/Badger-Meter-Report-on-Board-Diversity-October-2021.pdf

Appointed one racially diverse Board member in 2021, and an additional female Board member thus far in 2022

Of the slate of nine directors up for election at this Annual Meeting, 33% are from underrepresented demographics; with three of the last four Board appointments being diverse

Continue to dialogue with shareholders regarding the Board’s ongoing action steps and commitment to further advance diversity

The annual bonus and long term incentive compensation metrics should include multiple, varied measures or metrics

 

The 2021 annual bonus program was modified to be based on achievement of two distinct financial metrics

The 2021-2023 LTIP program was modified to include two long-term focused financial metrics, distinct from those used in the annual bonus program

 

(see additional information within the Compensation Discussion & Analysis)

A portion of equity compensation should be performance-based

Modified equity compensation components to exclude stock option grants

Beginning in 2021, equity compensation grants include a mix of 70% performance-based equity for the CEO, and 50% performance-based equity for other officers, with the remaining percentage comprised of time-based restricted stock grants

Provide annual disclosure of material ESG metrics

ESG metrics historically provided within the company’s biennial Sustainability report

Prepared and published “off-cycle” 2020 metrics in the form of a dedicated SASB/GRI report which may be found here: https://badgermeter.widen.net/s/dfzrj99wmr/bmi-sasb_gri-2020-report

Corporate Responsibility – ESG (Environmental, Social, Governance)  

With the support and oversight of our Board of Directors, we continue to advance the tenets of sustainability and corporate responsibility.  The Board, primarily through its Corporate Governance and Sustainability Committee, provides oversight of the company’s overall approach to environmental, social and governance matters. The approach is informed by regular engagement with shareholders and other stakeholders. In connection with this oversight, the Board and the Corporate Governance and Sustainability Committee have reviewed the company’s sustainability strategy and regularly discuss this strategy with management.

8

 


The following reflects a few of the key recent actions, activities and highlights representing the company’s continuous improvement efforts across ESG matters:

The Board of Directors and its committees conducted a review of their respective charters, as well as of the Principles of Corporate Governance, in order to appropriately reflect the various ESG-related oversight and assistance that the committees provide to the full Board.  The changes reflected in the updated governance documents serve to reinforce the Board’s oversight of ESG risks and opportunities.

Badger Meter’s Board has been, and remains, committed to working to attract more women and racial/ethnically diverse individuals to its ranks. Three of the last four appointments to the Board of Directors have been from underrepresented demographics, which now represent 33% of the current slate of nominees for director. 

Employee health, safety and well-being remains a top priority for the company.  Safety, as measured by our global Total Case Incident Rate (TCIR), was 0.75 in 2021, compared to 0.65 in 2020, and 0.98 in 2019. Our goal is zero. Lost time incidents declined in 2021, with an uptick in ergonomic events, which will be a focus area for education and improvement going forward.

Using collected 2020 baseline data for Scope 1 and 2 Greenhouse Gas (GHG) emissions, the company set a 15% intensity reduction target by 2030.  Included an annual intensity reduction goal as part of the company’s SMART goal setting process at the beginning of 2021 with first year progress in excess of the goal.

Implemented a baseline global employee engagement survey in 2021 as part of our continuous improvement process to enable positive change and increased employee engagement. We will utilize feedback received from the survey to identify meaningful actions targeted at fostering improvement in employee engagement, including pulse surveys to monitor effectiveness of action plans.

The company disclosed a variety of human capital-related diversity metrics as part of its SASB/GRI Report for 2020, and will provide comparative 2021 figures in its upcoming 2020-2021 Sustainability report. The metrics are being provided as part of our diversity journey, to hold ourselves accountable to measuring progress on the various programs and initiatives in place to advance recruitment, retention and engagement of talent.

For more information on ESG, please visit: https://www.badgermeter.com/sustainability-and-ethics/

Nomination of Directors

All members of the Governance Committee meet the definition of independence set forth by the NYSE. The Governance Committee has responsibility for recommending nominees for our Board of Directors. The Board has adopted a policy by which the Governance Committee will consider nominees for Board positions, as follows:

The Governance Committee will review each candidate’s qualifications in light of the needs of the Board of Directors and the company, considering the current mix of director attributes and other pertinent factors, with the following minimum qualifications which must be met by each director nominee:

Each director must display the highest personal and professional ethics, integrity and values.

Each director must have the ability to exercise sound business judgment.

Each director must be highly accomplished in his or her respective field, with superior credentials and recognition and broad experience at the administrative and/or policy-making level in business, government, education, technology or public interest.

Each director must have relevant expertise and experience, and be able to offer advice and guidance to the CEO based on that expertise and experience.

Each director must be able to represent all shareholders of the company and be committed to enhancing long-term shareholder value.

The majority of the directors must be independent, as defined herein and according to applicable rules of the SEC and the listing standards of the NYSE. 

Each director must have sufficient time available to devote to activities of the Board and to enhance his or her knowledge of the company’s business.

At least one director should have the requisite experience and expertise to be designated as an “audit committee financial expert” as defined by applicable rules of the SEC.

The Board believes that maintaining a diverse membership with varying backgrounds, skills, expertise and other differentiating personal characteristics promotes inclusiveness, enhances the Board’s deliberations and enables

9

 


the Board to better represent all of the company’s constituents.  Accordingly, the Board is committed to actively seeking out highly qualified self-identified female, underrepresented minority (racial/ethnically diverse) and LGBTQ+ candidates as well as candidates with diverse backgrounds, skills and experiences as part of all Board searches the company undertakes and will ensure each pool of qualified candidates from which Board nominees are chosen includes candidates of these underrepresented demographics.

No candidate, including current directors, may stand for reelection after reaching the age of 72.

The Governance Committee will consider candidates recommended by shareholders.  There are no differences in the manner in which the Governance Committee evaluates candidates recommended by shareholders and candidates identified from other sources.

To recommend a candidate, shareholders should write to the Board of Directors, c/o Secretary, Badger Meter, Inc., P.O. Box 245036, Milwaukee, WI 53224-9536, via certified mail. Such recommendation should include the nominating shareholder’s stock ownership, the candidate’s name and address, a brief biographical description and statement of qualifications of the candidate and the candidate’s signed consent to be named in the Proxy Statement and to serve as a director if elected.

To be considered by the Governance Committee for nomination and inclusion in our Proxy Statement, the Board of Directors must receive shareholder recommendations for director no less than 60 days and no more than 90 days prior to the second Saturday in the month of April or as otherwise stated in the company’s Proxy Statement. See “Other Matters” for the deadline for shareholder recommendations for directors with respect to the 2023 Annual Meeting of Shareholders.

During 2021, as part of the Board’s commitment to expand the pool of Board nominees from underrepresented demographics, the Governance Committee paid fees of approximately $125,000 to third parties to assist in identifying and/or evaluating potential candidates.

Communications with the Board of Directors

Shareholders and non-shareholders may communicate with the full Board of Directors, non-management directors as a group or individual directors, including the Chairman or Lead Outside Director, by submitting such communications in writing to the intended recipient, c/o Secretary, Badger Meter, Inc., P.O. Box 245036, Milwaukee, WI 53224-9536, via certified mail. The Secretary will forward communications received to the appropriate party.

Categorical Independence Standards for Directors

The company’s categorical independence standards for directors are contained in the company’s Principles of Corporate Governance, which are annually reviewed by the Governance Committee. If appropriate, changes are recommended to the Board of Directors for approval.

A director who at all times during the previous three years has met all of the following categorical standards and has no other material relationships with Badger Meter, Inc. will be deemed to be independent:

1.

The company has not employed the director, and has not employed (except in a non-executive officer capacity) any of his or her immediate family members. Employment as an interim Chairman or CEO does not disqualify a director from being considered independent following that employment.

2.

Neither the director, nor any of his or her immediate family members, has received more than $120,000 per year in direct compensation from the company, other than director and committee fees, and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service). Compensation received by a director for former service as an interim Chairman or CEO need not be considered in determining independence under this test. Compensation received by an immediate family member for service as a non-executive employee of the company need not be considered in determining independence under this test.

3.

The director has not been employed by, or affiliated with the company’s present or former internal or external auditor, nor have any of his or her immediate family members been so employed or affiliated (except in a nonprofessional capacity).

4.

Neither the director, nor any of his or her immediate family members, has been part of an “interlocking directorate” in which any of the company’s present executives serve on the compensation (or equivalent)

10

 


committee of another company that employs the director or any of his or her immediate family members in an executive officer capacity.

5.

Neither the director, nor any of his or her immediate family members (except in a non-executive officer capacity), has been employed by a company that makes payments to, or receives payments from, the company for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues. In applying this test, both the payments and the consolidated gross revenues to be measured are those reported in the last completed fiscal year. The look-back provision for this test applies solely to the financial relationship between the company and the director’s or immediate family member’s current employer; the company need not consider former employment of the director or immediate family member.

6.

Neither the director, nor any of his or her immediate family members, has been an employee, officer or director of a foundation, university or other non-profit organization to which the company gives directly, or indirectly through the provision of services, more than $1 million per annum or 2% of such organization’s consolidated gross revenues (whichever is greater).

In addition to satisfying the criteria set forth above, directors who are members of the Audit Committee will not be considered independent for purposes of membership on the Audit Committee unless they satisfy the following additional criteria:

1.

A director who is a member of the Audit Committee may not, other than in his or her capacity as a member of the Audit Committee, the Board, or any other Board committee, accept directly or indirectly any consulting, advisory, or other compensatory fee from the company or any subsidiary thereof, provided that, unless the rules of the NYSE provide otherwise, compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the company (provided that such compensation is not contingent in any way on continued service).

2.

A director, who is a member of the Audit Committee may not, other than in his or her capacity as a member of the Audit Committee, the Board, or any other Board committee, be an affiliated person of the company.

3.

If an Audit Committee member simultaneously serves on the audit committees of more than two other public companies, then the Board must determine that such simultaneous service would not impair the ability of such member to effectively serve on the company’s Audit Committee. The company must disclose this determination in its Proxy Statement.

Available Corporate Governance Information

The company’s Code of Business Conduct, Principles of Corporate Governance, Code of Conduct for Financial Executives and Charters of all current Board committees are available on our website at badgermeter.com under the selection “Company” - “Investors” – “Governance”- “Governance Documents”. Copies can also be obtained by writing to the Secretary of Badger Meter, Inc., P.O. Box 245036, Milwaukee, WI 53224-9536.

11

 


RELATED PERSON TRANSACTIONS

We had no transactions during 2021, and none are currently proposed, in which we were a participant and in which any related person had a direct or indirect material interest. Our Board of Directors has adopted policies and procedures regarding related person transactions. For purposes of these policies and procedures:

 

A “related person” means any person who is, or was at some time since the beginning of the last fiscal year, (a) one of our directors, executive officers or nominees for director, (b) a greater than five percent beneficial owner of our common stock, or (c) an immediate family member of the foregoing; and

 

A “related person transaction” generally is a transaction (including any indebtedness or a guarantee of indebtedness) in which we were or are to be a participant and the amount involved exceeds $120,000, and in which a related person had or will have a direct or indirect material interest.

Each of our executive officers, directors or nominees for director is required to disclose to the Governance Committee certain information relating to related person transactions for review and approval by the Governance Committee. Disclosure to the Governance Committee must occur before the executive officer, director or nominee for director enters into the related party transaction. The Governance Committee’s decision whether or not to approve a related person transaction is to be made in light of the Governance Committee’s determination that consummation of the transaction is not inconsistent with the interests of the company and its shareholders. Any related person transaction must be disclosed to the Board of Directors.

Certain related person transactions are deemed pre-approved, including, among others, (a) any transaction with another company, or charitable contribution, grant or endowment to a charitable organization, foundation or university, at which a related person’s only relationship is as an employee (other than an executive officer), director or beneficial owner of less than ten percent of that company’s shares, if the aggregate amount involved does not exceed the greater of $1 million or 2% of the company’s total annual revenues or the charitable organization’s total annual receipts, and (b) any transaction involving a related person where the rates or charges involved are determined by competitive bids.

12

 


STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table provides information concerning persons known by us to beneficially own more than five percent of our common stock as of February 25, 2022.

 

Name

 

Aggregate

Number of

Shares

 

 

Percent of

Common Stock

Beneficially

Owned

 

 

BlackRock, Inc.

 

 

4,963,228

 

 

 

17.0

%

(1)

55 East 52nd Street

New York, NY 10055

 

 

 

 

 

 

 

 

 

The Vanguard Group, Inc.

 

 

3,393,097

 

 

 

11.6

%

(1)

100 Vanguard Boulevard

Malvern, PA 19355

 

 

 

 

 

 

 

 

 

State Street Corporation

 

 

1,717,486

 

 

 

5.9

%

(1)

State Street Financial Center

 

 

 

 

 

 

 

 

 

1 Lincoln Street

 

 

 

 

 

 

 

 

 

Boston, MA 02111

 

 

 

 

 

 

 

 

 

 

(1)

Beneficial ownership at December 31, 2021 per Schedule 13G and/or 13F filings.

The following table sets forth, as of February 25, 2022, the number of shares of common stock beneficially owned and the number of exercisable options outstanding by (i) each of our directors and nominees, (ii) each of the executive officers named in the Summary Compensation Table set forth below (referred to as the named executive officers or “NEOs”), and (iii) all of our directors and executive officers as a group. SEC rules define “beneficial owner” of a security to include any person who has or shares voting power or investment power with respect to such security.

 

Named Executive Officers and Director Nominees

 

Aggregate Number of

Shares of Common

Stock Beneficially

Owned (1)

 

 

Percent of

Common Stock

Beneficially

Owned (1)

 

 

Todd A. Adams

 

 

2,627

 

 

*

 

(2)

Kenneth C. Bockhorst

 

 

55,908

 

 

*

 

(3)

Henry F. Brooks

 

 

-

 

 

*

 

(4)

Melanie K. Cook

 

 

-

 

 

*

 

(4)

Gale E. Klappa

 

 

19,660

 

 

*

 

(5)

James W. McGill

 

 

4,445

 

 

*

 

 

Tessa M. Myers

 

 

5,188

 

 

*

 

 

James F. Stern

 

 

7,941

 

 

*

 

 

Glen E. Tellock

 

 

7,941

 

 

*

 

 

William R.A. Bergum

 

 

37,100

 

 

*

 

(6)

Gregory M. Gomez

 

 

40,165

 

 

*

 

(7)

Kimberly K. Stoll

 

 

14,630

 

 

*

 

(8)

Robert A. Wrocklage

 

 

13,566

 

 

*

 

(9)

All Director Nominees and Executive Officers as a Group (19 persons, including those named above)

 

 

243,103

 

 

 

0.8

%

(10)

Director Not Standing For Re-Election

 

 

 

 

 

 

 

 

 

Gail A. Lione

 

 

10,154

 

 

*

 

 

 

*

Less than one percent

(1)

Unless otherwise indicated, the beneficial owner has sole investment and voting power over the reported shares, which includes shares from stock options that are currently exercisable or were exercisable within 60 days of February 25, 2022.

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(2)

Does not include deferred director fee holdings of 11,311 phantom stock units held by Mr. Adams under the Badger Meter Deferred Compensation Plan for Directors. The value of the phantom stock units is based upon and fluctuates with the market value of the common stock. When a participant chooses to exit the plan, the phantom stock units are paid out only in cash.

(3)

Mr. Bockhorst has sole investment and voting power over 14,831 shares he holds directly, 251 shares in our Employee Savings and Stock Ownership Plan, 24,902 shares subject to stock options that are currently exercisable or were exercisable within 60 days of February 25, 2022 and 15,924 shares of restricted stock.

(4)

Mr. Brooks and Ms. Cook became new directors subsequent to the last annual director stock grant in 2021.

(5)

Mr. Klappa shares voting and investment power with his spouse for 12,209 of the reported shares, and sole voting and investment power for the remainder, all of which are held directly.

(6)

Mr. Bergum has sole investment and voting power over the 9,777 shares held directly, 11,258 shares in our Employee Savings and Stock Ownership Plan, 14,382 shares subject to stock options that are currently exercisable or were exercisable within 60 days of February 25, 2022 and 1,683 shares of restricted stock

(7)

Mr. Gomez has joint investment and voting power with his spouse over the 13,060 shares held directly, and sole investment and voting power over 13,255 shares in our Employee Savings and Stock Ownership Plan, 11,998 shares subject to stock options that are currently exercisable or were exercisable within 60 days of February 25, 2022 and 1,852 shares of restricted stock.

(8)

Ms. Stoll has sole investment and voting power over the 2,148 shares held directly, 5,946 shares in our Employee Savings and Stock Ownership Plan, 4,182 shares subject to stock options that are currently exercisable or were exercisable within 60 days of February 25, 2022 and 1,927 shares of restricted stock.   She has shared investment and voting power over 427 shares she owns with her spouse.

(9)

Mr. Wrocklage has joint investment and voting power with his spouse over the 3,474 shares held directly, and sole investment and voting power over 170 shares in our Employee Savings and Stock Ownership Plan, 3,761 shares subject to stock options that are currently exercisable or were exercisable within 60 days of February 25, 2022 and 6,161 shares of restricted stock.

(10)

For the group, the percentage was calculated by including all shares that the members have the right to acquire within 60 days of February 25, 2022.

14

 


EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides information about our executive compensation programs for 2021 and discusses the compensation decisions that we made with respect to our Named Executive Officers (NEOs).   For 2021, our NEOs were:

 

Mr. Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer;

 

Mr. Robert A. Wrocklage, Senior Vice President – Chief Financial Officer;

 

Ms. Kimberly K. Stoll, Vice President – Sales and Marketing;

 

Mr. Gregory M. Gomez (1), Vice President – Global Flow Instrumentation, International Water & Business Development; and

 

Mr. William R.A. Bergum, Vice President – General Counsel and Secretary.

 

(1)On February 14, 2022 Mr. Gomez announced his intent to retire from the company on September 30, 2022 after 38 years of service.

 

Overview of Compensation Policies and Procedures

Our executive compensation program for all executive officers, including each NEO, is administered by the Compensation and Human Resources Committee (“Compensation Committee”). The Compensation Committee is comprised of four independent directors.

The Compensation Committee is committed to developing and implementing an executive compensation program that rewards our executives for achieving specific strategic goals of the company and directly aligns the interests of all executive officers with the interests of shareholders.  Some highlights of our executive compensation program are as follows:

The executive compensation program is designed to attract and retain qualified executive officers, as well as motivate and reward individual and company performance.

The Compensation Committee strives to achieve a fair and market competitive compensation structure for our executive officers, including each NEO that supports our business by establishing an emphasis on balancing critical annual objectives and long-term strategy without encouraging excessive risk-taking.

The payment of annual incentive compensation is directly linked to the attainment of performance goals approved by the Compensation Committee.  See “Total Compensation and Link to Performance” below.

The long-term incentive program is designed to align with shareholder interests by utilizing equity and other awards based on the achievement of long-duration targets in order to ensure that our executive officers are committed to and focused on our long-term success.

Compensation policies are structured to drive enterprise financial and operational outcomes in a manner that improves the company’s operational performance, creates shareholder value and aligns the interests of management with the interests of shareholders, in a manner that does not encourage excessive risk-taking. To discourage excessive risk-taking, the Compensation Committee conducts an annual risk assessment of our compensation plans and places great emphasis on variable and equity-based incentive compensation and stock ownership by executive officers.  See “Risk Assessment” below.

While the Compensation Committee retains sole authority in making its decisions and recommendations regarding executive compensation, it considers and reviews, among other things:

Compensation data for competitive businesses of similar size and business activity as obtained through an independent executive compensation consultant. The data considered includes information relative to both base salary and bonus separately and on a combined basis, as well as total cash and long-term incentive compensation.   The Compensation Committee reviews this market-based data as one reference point for compensation practices as well as a source of comparative information to assist in determining various components of compensation. However, it does not use this information to mathematically calculate compensation nor limit itself to any specified range. The Compensation Committee reviews market-based data

15

 


in general terms and uses its judgment and discretion to address individual circumstances rather than simply targeting a level of compensation that falls within a specific range of the data.

Our financial performance as a whole relative to the prior year, our annual financial and strategic plans and other meaningful financial data, such as, but not limited to, sales, profitability, return on invested capital, cash generated from operations, primary working capital and overall financial position.

The recommendations of the CEO with regard to the other executive officers, including the NEOs (the CEO does not participate in determining or recommending compensation for himself). The CEO’s recommendations are given significant weight by the Compensation Committee, but the Compensation Committee remains responsible for all decisions on compensation levels for the executive officers and for our executive compensation policies and programs.

Regarding shareholder input and outreach, the Compensation Committee considers the results of advisory “say-on-pay” shareholder votes when making compensation decisions. The company currently holds say-on-pay votes annually, which is consistent with the results of the shareholder advisory vote on “say-on-pay frequency” that was last held at the 2017 annual meeting. At the 2021 annual meeting, approximately 95% of shares voting approved the compensation of the company’s executive officers on an advisory basis. Based on this result, the Committee concludes that our shareholders affirmatively support the company’s executive compensation philosophy, program and decisions.  As further discussed in the “Shareholder Outreach section above, from time to time, we also meet or speak with various shareholders to discuss corporate governance, executive compensation and other matters. The Compensation Committee has considered, and will continue to seriously consider, feedback from these discussions as they review and evaluate our corporate governance practices and executive compensation program.  

Executive Compensation and Governance Practices and Standards

We endeavor to maintain sound governance practices and standards consistent with our executive compensation philosophies. Below is a summary of those practices and standards:

 

What We Do

 

What We Do Not Do

  Use performance metrics that align pay with performance

 

  Provide excise tax gross ups

  Offer excessive executive perquisites

  Cap payouts under our annual cash bonus and long-term incentive plans

  Employ robust stock ownership guidelines for our CEO, NEOs and all executive officers

  Apply clawback provisions to annual cash bonus and long-term incentive plans

  Engage an independent compensation consultant that reports to the Compensation Committee

 

  Provide single-trigger change-in-control severance benefits

  Reprice stock options

  Provide incentive programs that encourage excessive risk taking

  Prohibit short sales, hedging or pledging of our stock by our executive officers and directors

  Comprise the Compensation Committee of entirely independent directors

  Compensation Committee regularly meets in executive session without management present

  Compensation Committee performs an annual risk assessment of compensation practices

 

 

 

Role of Compensation Consultant

For 2021, the Compensation Committee engaged Willis Towers Watson PLC (“WTW”), an independent executive compensation consultant. The Compensation Committee generally engages an independent compensation consultant and has the authority to approve fees and other terms of the engagement. The consultant’s duties for 2021 were to evaluate executive compensation, to discuss with the Compensation Committee general compensation trends, to assist the Compensation Committee with revising the company’s peer group, to provide the Compensation Committee with competitive market data relating to the compensation of each

16

 


of our NEOs, and to assist our CEO in developing compensation recommendations to present to the Compensation Committee for the executive officers other than himself. The compensation consultant provides the Committee with advice, consultation and market information on a regular basis, as requested, throughout the year. The executive compensation consultant does not make specific recommendations on individual compensation amounts for the executive officers, nor does the consultant determine the amount or form of executive compensation. The Compensation Committee has assessed the independence of WTW pursuant to SEC rules and NYSE listing standards and affirmatively determined that WTW's services have not raised any conflicts of interest.

Total Compensation and Link to Performance

 

We strive to compensate our executive officers at market competitive levels, with the opportunity to earn above-median compensation for above-market performance, through programs that emphasize variable, performance-based incentive compensation in the form of annual cash payments, equity-based awards and a long-term incentive program. To that end, total executive compensation is tied to company performance and is structured to ensure that, due to the nature of our business, there is an appropriate emphasis on balancing critical annual objectives and long-term strategy.   We also strive to strike a balance between company financial performance and the individual performance of our executive officers. For example, the annual bonus plan is based primarily on select annual financial metrics, but includes an individual performance component for each NEO other than our CEO. The long-term incentive plan, in contrast, is based solely on financial performance, and includes awards based upon financial targets measured over a three-year performance period, and equity grants that increase or decrease in value with changes in the stock price. These programs are further described under “Amount and Elements of Compensation” below.

 

For those compensation components where individual performance is a consideration, individual performance is considered as part of the overall evaluation process. This evaluation of individual performance impacts the annual adjustment to base salaries for all of our executive officers and also may impact payments made under the annual bonus plan for all officers except the CEO.  For the period disclosed, the Compensation Committee determined that the performance of all executive officers was satisfactory.  As such, annual base salary adjustments were made for each executive officer based upon recommendations from the CEO (for all executive officers except the CEO) and the judgment of the Compensation Committee, and there were no discretionary increases or decreases to payments made under the annual bonus plan for 2021.

 

Compensation Actions in Response to the COVID-19 Pandemic

 

The pandemic’s impact on the company’s annual and long-term incentive compensation programs in 2021 was modest, reflective of the critical and essential nature of our products and the resiliency of our business model.  We believe that the total compensation paid or awarded to our executive officers during 2021 was consistent with our financial performance and the individual performance of each of the executive officers overall and in relation to the implications of COVID-19 on the business. Based on our analysis and the advice of WTW, we also believe that the compensation was reasonable in its totality and is consistent with our compensation philosophies as described above. As a result, no structural changes were made to the company’s annual or long-term incentive payouts for 2021.

Amount and Elements of Compensation

 

The Compensation Committee determines the amounts and elements of compensation under our compensation program for our executive officers. The program involves base salaries, benefits, short-term annual cash bonus plan and a long-term incentive program utilizing a mix of restricted stock and performance share awards.

 

Compensation Survey Data. Compensation levels are established for each executive officer by the Compensation Committee, with general reference to data supplied by WTW on organizations of similar size and business activity. WTW provided data from two sources: general industry survey data and the recent proxy statements of a peer group (discussed in the section below). The general industry survey data was obtained from the 2021 WTW Executive Compensation Database Survey. This compensation data incorporates primarily publicly-traded companies, and has a broad definition of similar business activity, thereby providing a comprehensive basis for evaluating Badger Meter’s compensation compared to market. The survey includes salaries, bonus opportunities, total cash compensation, long-term incentive compensation and total direct compensation. Where appropriate, the data was size-adjusted using regression analysis based on company revenues.

 

17

 


 

Peer Group Data. As noted above, the Compensation Committee also references compensation data from proxy statement of a peer group when establishing pay levels for executive officers.  The Compensation Committee annually reviews and approves the appropriateness of the selected peer group.  In 2021, the Compensation Committee engaged WTW to analyze the peer group using the following criteria and considerations:  complexity and business model, size, size of peer group, competitive talent market and investor profile/industry similarity.  This analysis resulted in a revision of our peer group including the removal of four companies from the list and the addition of nine new companies.  The final list of 18 peer group companies are publicly-held manufacturing companies. The compensation information for the five highest paid executives at each of the 18 companies was obtained from the proxy statements of the companies and compared to the compensation of our five highest paid executives. The companies in the peer group for 2021 were:

 

Brady Corporation

Evoqua Water Technologies Corp

Mueller Water Products, Inc.

CIRCOR International, Inc.

The Gorman-Rupp Company

SPX Flow, Inc.

CTS Corporation

Helios Technologies Inc

Standex International Corporation

Douglas Dynamics, Inc.

Itron, Inc.

Strattec Security Corporation

Enerpac Tool Group

Kadant, Inc.

Watts Water Technologies, Inc

ESCO Technologies, Inc.

Lindsay Corporation

Zurn Water Solutions

 

Base Salary. Our policy is to pay executive officers at market, with appropriate adjustments for performance and levels of responsibility. To aid the Compensation Committee in its understanding of each executive officer’s performance and levels of responsibility, the Compensation Committee is given a five-year history, which sets forth the base salary, short-term incentive awards, and long-term compensation of each such officer.

 

Base salary increases across all executive officers for calendar year 2021 were approved by the Compensation Committee on November 12, 2020 and ranged from 3.0% to 9.0%.  These increases were based primarily on our philosophy to set base salaries at market to maintain competitive salary levels, but they also reflect salary progression to market for less tenured executives and the positive impact each of our executive officers had on our financial and strategic results in 2020.

 

Base salary increases for our executive officers for calendar year 2022 were approved by the Compensation Committee on November 11, 2021 and ranged from 3.0% to 5.0% for all but one officer who is not an NEO at 13%. The increases were based primarily on our philosophy to set base salaries at market to maintain competitive salary levels and the positive impact each of our executive officers had on our financial and strategic results in 2021, with the larger increase reflecting salary progression to market for a less tenured officer.

 

Annual Bonus Plan for 2021. Our annual bonus plan is designed to reward executive officers, along with other leaders and most salaried employees of Badger Meter.  The plan is intended to provide a competitive level of compensation when performance objectives and metrics are achieved. Under the 2021 annual bonus plan, the target bonus level for the CEO was 110% of base salary and the target bonus levels for all other NEOs ranged from 35% - 55% of base salary, depending on scope of the NEOs duties and responsibilities.

 

The targets set pursuant to the annual bonus plan for 2021 were comprised of two equally weighted, financial performance metrics: adjusted EBITDA (50% weighting) and adjusted absolute free cash flow (50% weighting). We generally define EBITDA as GAAP net earnings plus interest, income taxes, depreciation and amortization.  We define absolute free cash flow as GAAP cash flow from operations less capital expenditures. The company believes EBITDA is an important supplemental measure of performance and is frequently used by analysts, investors, lenders and other interested parties in evaluating companies in our industries.  Further, the company believes absolute free cash flow is in an important metric as it captures the company’s ability to generate cash and therefore, grow the company’s revenues, profits, and returns over time.

 

Per the terms of our annual bonus plan, the Compensation Committee may make adjustments to reported EBITDA and free cash flow for certain items.  For example, in the past the Compensation Committee has excluded pension curtailment or termination charges, costs (other than internal labor) associated with actual or potential acquisitions, results of newly acquired entities not contemplated at the time of target setting and other non-operating items such as significant gains or losses from the disposal or impairment of long-term assets. For 2021, the Compensation Committee approved an adjustment to EBITDA (and related bonus payments) for costs associated with acquisition due diligence and closing incurred in 2021.

 

18

 


 

Details of the annual bonus targets and achievement specific to executive officers, including our NEOs, for the two financial performance metrics for 2021 were as follows (in millions):

 

 

2021 Annual Bonus Scale

 

 

2021 Annual

Bonus

Achievement

 

 

 

Threshold

 

 

Target

 

 

Maximum

 

 

Actual

 

2021 Adjusted EBITDA

 

$

97.6

 

 

$

101.7

 

 

$

106.1

 

 

$

106.6

 

Bonus Payout

 

 

50

%

 

 

100

%

 

 

200

%

 

 

200

%

2021 Absolute Free Cash Flow

 

$

67.7

 

 

$

70.8

 

 

$

74.1

 

 

$

80.8

 

Bonus Payout

 

 

50

%

 

 

100

%

 

 

200

%

 

 

200

%

 

 

The blended results of the individual metric achievement equated to a combined bonus payout for all executive officers, including the NEOs, of 200%.

 

The 2021 annual bonus for each executive officer, except the CEO, could also be adjusted up or down 10% at the discretion of the Compensation Committee. Further, the Compensation Committee has the authority to award special performance bonuses.   No such adjustments were made for 2021 for the regular program, and no special performance bonuses were awarded.

 

Details of the annual bonus targets utilizing the two financial performance metrics for 2022 (in millions) are as follows:

 

 

 

2022 Annual Bonus Scale

 

 

 

Threshold

 

 

Target

 

 

Maximum

 

2022 Adjusted EBITDA

 

$

106.6

 

 

$

111.9

 

 

$

117.3

 

2022 Absolute Free Cash Flow

 

$

71.0

 

 

$

77.0

 

 

$

83.0

 

Bonus Payout

 

 

50

%

 

 

100

%

 

 

200

%

 

 

 

 

 

 

 

 

 

 

 

 

 

In setting the 2022 financial performance targets, the Compensation Committee considered multiple factors, including: our annual financial and strategic business plans; our historical performance; the projected contributions of recently completed acquisitions; carry-over implications of accruals and adjustments, and other factors the Compensation Committee deemed appropriate.

Long-Term Incentive Plan (referred to as LTIP)

In determining the amount of incentive compensation to be awarded to each NEO under the LTIP, we consider the amount of long-term incentives provided by companies in the competitive market data supplied by WTW and the peer group as a guidepost.  We primarily structure the LTIP equity mix based on our compensation objectives, specifically, the desire to ensure that executive compensation is tied to our performance, with an appropriate balance of time-based and performance-based vesting. Furthermore, the individual performance of each NEO was considered as part of the overall evaluation process, with the Compensation Committee determining that the performance of each of the NEOs was satisfactory.  

Awards under the LTIP are comprised of two forms of equity compensation - performance share units (PSUs) which are earned based on the achievement of objective performance criteria over a three-year period, and restricted stock awards, which vest ratably over a three-year period. Consistent with prevailing market practice of emphasizing performance-based equity compensation, PSUs make up 70% of the CEO’s, and 50% of the other NEOs’, target LTIP compensation. The LTIP award mix between restricted stock awards and PSUs also is intended to promote share ownership (aligned with our share ownership guidelines) and motivate our executives to succeed in the long-term.

Achievement/vesting of the PSUs is based upon two equally weighted financial performance metrics – adjusted free cash flow conversion (50% weighting) and adjusted return on invested capital (“ROIC”) (50% weighting) as measured over a three-year performance period.  We generally define free cash flow conversion as free cash flow divided by net earnings before special items.  We believe free cash flow conversion is a valuable metric that captures the efficient generation and use of cash.  We generally define ROIC as net operating profit after-tax, utilizing a fixed tax rate, divided by the simple average of beginning and ending net debt plus shareholder’s equity.  We believe ROIC is a valuable metric that is utilized to ensure that our executives remain focused on effectively employing capital, while maximizing shareholder value creation in the execution of our growth strategy.  The PSUs are only earned if performance targets are achieved at the end of a three-year measurement period (i.e., no interim vesting).  

19

 


The Compensation Committee approved a threshold, target and maximum performance goal for each of the free cash flow conversion and ROIC metrics.  The number of PSUs that would vest for such achievement levels are 50% for threshold, 100% for target, and 200% for maximum, with vesting pro-rated for performance between these points.  If the company does not achieve the threshold performance level, then no portion of the PSUs tied to that performance metric will vest.

In setting the free cash flow conversion and ROIC targets, the Compensation Committee considered multiple factors, including: our annual financial and long-term strategic business plans; investor expectations; peer and broader market historical performance and Badger Meter’s historical performance.  The free cash flow conversion and ROIC targets are established at levels that are intended to incentivize achievement of our long-term strategic plans and the continuous improvement of returns relative to historic levels and our ongoing cost of capital.  

In addition to the stock awards described above, one-time stock awards may be granted to new executive officers either upon hire or within one year of becoming an executive officer.  No such awards were granted to NEOs in 2021.

In selecting a date of grant for any stock awards, the Compensation Committee establishes a date that avoids any inference with the release of material non-public information. Stock awards use an average of the prior 10 days closing prices to determine the number of shares granted based on a predetermined dollar value.

LTIP for 2020 and years prior:  For 2020 and years prior, long-term incentive compensation awards for the executive officers were comprised of 30% restricted stock awards, 30% stock option awards and 40% cash bonus.   Under the LTIP cash award program, the Compensation Committee established three-year adjusted operating earnings goals that are the basis for threshold, target and maximum payout amounts for the three-year performance period. At the threshold, target and maximum levels of adjusted operating earnings, the executive officers earn 50%, 100% and 200%, respectively, of the target cash payout for each officer, with the payouts pro-rated for performance between these amounts. The table below summarizes the threshold, target, and maximum operating earnings goals (in millions) for each remaining performance period, as well as the actual achievement (in millions) for the most recently completed three-year performance period:    

 

 

 

LTIP Incentive Plan (Cash Award) - Adjusted Operating

Earnings Scale

 

 

LTIP Incentive

Achievement

Performance Period

 

Threshold (50%)

 

 

Target (100%)

 

 

Maximum (200%)

 

 

Actual

2019 - 2021

 

$

196.1

 

 

$

215.2

 

 

$

235.0

 

 

$205.4 (74.2%)

2020 - 2022

 

$

202.4

 

 

$

218.5

 

 

$

232.2

 

 

NA

 

Adjusted operating earnings utilized to determine achievement for the LTIP cash award is subject to the same potential for approved adjustments as to adjusted EBITDA under the annual bonus plan, as described above.

Employee Annual Cash Bonus

Annual cash bonuses are also paid to various salaried employees using the same adjusted EBITDA and free cash flow threshold and target levels as used for the executive officers and previously described under “Amount and Elements of Compensation - Annual Bonus Plan.” For 2021, approximately 336 salaried employees participated in that bonus plan.

In addition, the company authorized a discretionary bonus for approximately 175 non-union, hourly/non-exempt employees in the US, not otherwise eligible to participate in the salaried employee annual cash bonus, or other incentive bonus programs.  This discretionary bonus was authorized in appreciation for their exceptional performance, customer focus and commitment in 2021.  Beginning in 2022, this employee group will be eligible to participate in the salaried employee annual cash bonus program described above.

Other Benefits

Salary Deferral Plan. All executive officers are eligible to participate in a Salary Deferral Plan described in Note 1 of the “Nonqualified Deferred Compensation Table” below. The Compensation Committee believes that it is appropriate to offer this program to enable the executive officers to better manage their taxable income and retirement planning. Based on its analysis and the advice of WTW, the Compensation Committee believes that this program is competitive with comparable programs offered by other companies. As of December 31, 2021, three executive officers, one of whom is a NEO for 2021, had balances in the Salary Deferral Plan.  For more information, see “Salary Deferral Plan” below.

20

 


Supplemental Retirement Plans. We offer a supplemental retirement plan to certain employees, including executive officers. The purpose of this plan is to compensate certain employees for compensation reductions caused by salary deferrals or by regulatory compensation limitations on qualified plans. The Compensation Committee believes that this supplemental retirement plan is appropriate to attract and retain qualified executives. For more information, see “Retirement Benefits” below.

Additional Benefits. Each executive officer receives his/her choice of either the use of a company-paid leased vehicle for both personal and business purposes, or a vehicle allowance.  All executive officers participate in the Badger Meter, Inc. Employee Savings and Stock Ownership Plan (“ESSOP”) and other benefit plans provided to all of our U.S. employees.  Executive officers are provided with a company-paid long-term disability plan that provides replacement income for approximately 60% of executive base salary and bonus in the event of a qualified long-term disability.  Executive officers are provided a taxable benefit up to $5,000 of annual financial/estate planning reimbursement.  In addition, executive officers are required to participate in an annual executive physical program designed to proactively identify and address medical issues and health risks.

Clawback Policy.  The company has a Compensation Recoupment Policy (commonly referred to as a “clawback policy”). The clawback policy is designed to ensure that incentive-based compensation is paid to executive officers based on accurate financial statements and ethical and legal conduct. In the event that we are required to prepare an accounting restatement due to the material noncompliance with accounting rules, or we determine that an executive officer engaged in illegal or fraudulent conduct or materially breached the company’s Code of Business Conduct, the result of which is adverse to the company, whether financial or reputational harm, the policy requires the recoupment of certain incentive-based compensation that was granted to current or former executive officers of the company who received incentive-based compensation at any time after the effective date of policy and during the three-year period preceding the date on which we are required to prepare the accounting restatement, or, respectively, the date on which we determined the conduct occurred that caused the company the aforementioned harm.

Section 162(m) Limitations. The company’s compensation programs were designed generally to ensure tax deductibility of the compensation paid under the incentive plans based on tax regulations in effect at the time the plans were adopted, including Section 162(m) of the Internal Revenue Code.  In December 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was enacted in the United States. Among other changes, the Tax Act eliminated prospectively the provisions under Section 162(m) of the Internal Revenue Code that allowed tax deductions for certain performance-based compensation above the $1.0 million deductibility limit for certain executive officers, subject to transitional provisions for compensation and grants awarded prior to November 2017.  Although the Tax Act substantially changed certain elements of tax deductibility of executive compensation, including the loss of certain deductions keyed to the former specified performance-based standards, the Compensation Committee intends to continue to structure compensation programs to be consistent with its pay-for-performance philosophy. During the transition period, the Compensation Committee anticipates taking appropriate action to preserve the deductibility for past awards to the extent reasonably possible and as permitted by transitional provisions.

 

Tax Gross-ups. The company does not provide tax gross-ups to any of the executive officers.

 

 

 

Potential Payments Upon Termination or Change-in-Control

We have entered into Key Executive Employment and Severance Agreements (each referred to as a KEESA) with all executive officers, whose expertise has been critical to our success, to encourage them to remain with us in the event of any merger or transition period. The Compensation Committee has reviewed these agreements and determined that they are appropriate given competitive market practices. Each KEESA requires a “double-trigger,” providing for payments in the event there is a change-in-control and (1) the executive officer’s employment with us terminates (whether by us, the executive officer or otherwise) within 180 days prior to the change-in-control and (2) it is reasonably demonstrated by the executive officer that (a) any such termination of employment by us (i) was at the request of a third party who has taken steps reasonably calculated to effect a change-in-control or (ii) otherwise arose in connection with or in anticipation of a change-in-control, or (b) any such termination of employment by the executive officer took place because of an event that allowed the termination for good reason, which event (i) occurred at the request of a third party who has taken steps reasonably calculated to effect a change-in- control or (ii) otherwise arose in connection with or in anticipation of a change-in-control. For more information regarding the KEESAs, see the discussion in “Potential Payments Upon Termination or Change-in-Control” below.

21

 


Common Stock Ownership Guidelines and Hedging and Pledging Policies

We believe that it is important to align executive and shareholder interests by defining stock ownership guidelines for our executives. As a result, each executive officer is expected to hold common stock equal to at least two-times his or her annual base salary, except the CEO who is expected to hold common stock equal to at least three-times his annual base salary. New executive officers are expected to achieve this level of stock ownership within a reasonable time, but in any event, within six years of becoming an executive officer. Each executive officer, including each NEO either met the targeted level of stock ownership, or are within the permitted six-year window to achieve the ownership requirement.

Additionally, we have a policy that prohibits our executive officers, as well as our directors, from engaging in short selling, hedging transactions (including the purchase of prepaid variable forward contracts, equity swaps, collars and exchange funds) and from holding our common stock in a margin account or pledging our common stock as collateral for a loan.

Risk Assessment

The Compensation Committee conducts an annual risk assessment of our compensation programs to determine whether our compensation policies and practices are reasonably likely to have a material adverse effect on the company. Based on this assessment, the Compensation Committee believes that our compensation program is balanced and does not motivate or encourage unnecessary or excessive risk taking because of, in part, the following:

 

Base salaries are fixed in amount and thus do not encourage risk taking;

 

Our annual bonus plan is designed to align compensation with our shareholders’ interests over the long term;  

 

Our long-term incentive plan uses a mix of performance measures that are designed to reward our executives only if the company is achieving positive long-term growth;

 

We apply clawback provisions to the annual cash bonus and long-term incentive plans;

 

We maintain appropriate caps on incentives; and

 

We have limited and appropriate perquisites.

 

22

 


 

Summary Compensation Table

The following table sets forth information concerning compensation earned or paid to each of the NEOs for each of the last three fiscal years in which they were an NEO, as applicable. The NEOs are our principal executive officer, principal financial officer and three other most highly compensated executive officers employed as of December 31, 2021.

Summary Compensation Table for 2021 (all amounts in $)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity Incentive

Plan Compensation

 

 

Change in

Pension and

Non-Qualified

 

 

 

 

 

 

 

 

 

Name & Principal Position

 

Year

 

Salary

(1)

 

 

Bonus

(2)

 

 

Stock

Awards

(3)

 

 

Option

Awards

(4)

 

 

Annual

Bonus

(5)

 

 

LTIP

Cash

(6)

 

 

Deferred

Compensation

(7)

 

 

All Other

Compensation (8)

 

 

Total

 

Kenneth C. Bockhorst

 

2021

 

 

640,000

 

 

 

 

 

 

1,199,221

 

 

 

-

 

 

 

1,408,000

 

 

 

276,024

 

 

 

72,945

 

 

 

78,129

 

 

 

3,674,319

 

Chairman, President &

 

2020

 

 

593,712

 

 

 

 

 

 

314,380

 

 

 

317,986

 

 

 

697,410

 

 

 

 

 

 

76,854

 

 

 

59,992

 

 

 

2,060,334

 

CEO

 

2019

 

 

575,000

 

 

 

 

 

 

277,524

 

 

 

278,988

 

 

 

442,750

 

 

 

 

 

 

48,578

 

 

 

42,357

 

 

 

1,665,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert A. Wrocklage

 

2021

 

 

350,000

 

 

 

 

 

 

326,002

 

 

 

-

 

 

 

385,000

 

 

 

59,360

 

 

 

19,885

 

 

 

44,430

 

 

 

1,184,677

 

Senior Vice President - Chief

 

2020

 

 

308,923

 

 

 

 

 

 

77,098

 

 

 

77,988

 

 

 

199,584

 

 

 

 

 

 

16,524

 

 

 

35,834

 

 

 

715,951

 

Financial Officer

 

2019

 

 

300,000

 

 

 

16,500

 

 

 

59,670

 

 

 

59,987

 

 

 

127,050

 

 

 

 

 

 

4,056

 

 

 

34,493

 

 

 

601,756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kimberly K. Stoll

 

2021

 

 

263,000

 

 

 

 

 

 

134,395

 

 

 

-

 

 

 

210,400

 

 

 

37,100

 

 

 

6,005

 

 

 

42,418

 

 

 

693,318

 

Vice President - Sales and

 

2020

 

 

246,173

 

 

 

 

 

 

40,030

 

 

 

40,489

 

 

 

115,668

 

 

 

 

 

 

4,912

 

 

 

39,837

 

 

 

487,109

 

Marketing

 

2019

 

 

245,300

 

 

 

 

 

 

37,287

 

 

 

37,492

 

 

 

75,552

 

 

 

38,275

 

 

 

4,024

 

 

 

35,667

 

 

 

473,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gregory M. Gomez

 

2021

 

 

263,000

 

 

 

 

 

 

134,395

 

 

 

-

 

 

 

210,400

 

 

 

32,648

 

 

 

6,102

 

 

 

42,006

 

 

 

688,551

 

Vice President - Flow Instru-

 

2020

 

 

246,173

 

 

 

 

 

 

40,030

 

 

 

40,489

 

 

 

115,668

 

 

 

 

 

 

5,343

 

 

 

33,420

 

 

 

481,123

 

mentation and Global Utility

 

2019

 

 

244,200

 

 

 

9,768

 

 

 

32,798

 

 

 

32,997

 

 

 

75,214

 

 

 

33,682

 

 

 

3,735

 

 

 

31,608

 

 

 

464,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William R.A Bergum

 

2021

 

 

247,000

 

 

 

 

 

 

119,942

 

 

 

-

 

 

 

197,600

 

 

 

29,680

 

 

 

4,574

 

 

 

44,210

 

 

 

643,006

 

Vice President - General

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counsel and Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

2020 salaries for all executive officers include a temporary reduction of 20% for a total of nine weeks during April – June 2020 in response to COVID.

(2)

The amount reflects a discretionary bonus representing a 10% upward adjustment to the annual bonus awarded for exceeding various individual performance goals in 2019.

(3)

For all NEO’s, these amounts reflect the grant date fair value of the restricted stock awards made in each respective year, plus the grant date fair value of performance share units granted in 2021.  The fair value is determined based on the market price of the shares on the grant date and, for the PSUs, assumes that both performance goals are achieved at target and 100% of the PSUs granted will be earned.  The value of the PSUs as of the grant date assuming the maximum 200% performance level for both PSU performance metrics for each NEO is:  Mr. Bockhorst $1,678,989; Mr. Wrocklage $326,002; Ms. Stoll $134,496; Mr. Gomez $134,496 and Mr. Bergum $120,043.  More details regarding the assumptions made in valuing these awards can be found under the captions “Restricted Stock” and “Performance Share Units” in Note 5 to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K.  These awards were made on the first Friday of March in each year.

(4)

These amounts reflect the grant date fair value of the option awards made in each respective year. The strike price is the closing price of our common stock on the NYSE on the first Friday of March of each year. The assumptions made in valuing the option awards are included under the caption “Stock Options” in Note 5 to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K and such information is incorporated herein by reference.  Beginning in 2021, the company no longer awards stock option grants.

(5)

“Non-Equity Incentive Plan Compensation - Annual Bonus” amounts represent annual incentive bonuses earned during the year indicated but paid in February of the following year. For example, any bonus earned during 2021 was paid in February of 2022 under the bonus program described in the “Compensation Discussion and Analysis”.

(6)

The “Non-Equity Incentive Plan Compensation - LTIP Cash” represents the amount earned for the three-year plan ending as of the year shown under our LTIP plan, as described in the “Compensation Discussion and Analysis”. At the conclusion of each three-year plan, any amounts earned are paid in February of the following year.  The amount paid in February 2022 was based on plan performance for the three-year performance period 2019-2021.

23

 


(7)

Change in Pension Value and Non-Qualified Deferred Compensation” includes the 2021 aggregate increase in the actuarial present value of each NEO’s accumulated benefit under our non-qualified unfunded supplemental retirement plan, using the same assumptions and measurement dates used for financial reporting purposes with respect to our audited financial statements.  It also includes $560 for Mr. Wrocklage, representing earnings on deferred compensation in excess of 120% of the applicable federal rate.

(8)

“All Other Compensation” for 2021 includes the following items:

 

a.

Contributions to the Badger Meter, Inc. ESSOP of $4,875 each for each NEO.  The defined contribution feature of the plan resulted in contributions of $17,444 for all NEOs.

 

b.

Dividends on restricted stock of $13,692 for Mr. Bockhorst, $4,807 for Mr. Wrocklage, $1,481 for Ms. Stoll, $1,408 for Mr. Gomez and $1,281 for Mr. Bergum.

 

c.

Vehicle usage of $17,172 for Mr. Bockhorst, $11,100 for Mr. Wrocklage, $12,716 for Ms. Stoll, $10,697 for Mr. Gomez and $12,412 for Mr. Bergum.

 

d.

Taxable Supplemental Long Term Disability Insurance premiums of $22,966 for Mr. Bockhorst, $5,779 for Mr. Wrocklage, $5,901 for Ms. Stoll, $7,582 for Mr. Gomez and $4,708 for Mr. Bergum

 

e.

Taxable financial planning assistance of $1,980 for Mr. Bockhorst, $425 for Mr. Wrocklage and $3,490 for Mr. Bergum.

 

Grants of Plan-Based Awards

The following table sets forth information regarding all plan-based awards that were granted to the NEOs during 2021, including incentive plan awards (equity-based) and other plan-based awards. Disclosure on a separate line item is provided for each grant of an award made to an NEO during the year. Non-equity incentive plan awards are awards that are not subject to FASB ASC Topic 718 and are intended to serve as an incentive for performance to occur over a specified period. The equity incentive awards are subject to a performance condition or a market condition as those terms are defined by FASB ASC Topic 718.

Grants of Plan-Based Awards for 2021

 

 

 

 

 

Estimated Future Payouts Under

Non-Equity Incentive Plan

Awards

 

 

Estimated Future Payouts Under

Equity Incentive Plan

Awards

 

 

All Other

Stock

 

 

Grant Date

Fair Value of

 

Name

 

Grant

Date

 

Threshold

($)

 

 

Target

($)

 

 

Maximum

($)

 

 

Threshold

(#)

 

 

Target

(#)

 

 

Maximum

(#)

 

 

Awards:

Restricted

Shares

(#)

 

 

Stock and

Option

Awards

($)

 

Kenneth C.

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,584

 

 

 

359,726

 

Bockhorst

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

4,182

 

 

 

8,364

 

 

 

16,728

 

 

 

 

 

 

 

839,495

 

 

 

2/11/2021

(2)

 

352,000

 

 

 

704,000

 

 

 

1,408,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert A.

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,624

 

 

 

163,001

 

Wrocklage

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

812

 

 

 

1,624

 

 

 

3,248

 

 

 

 

 

 

 

163,001

 

 

 

2/11/2021

(2)

 

96,250

 

 

 

192,500

 

 

 

385,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kimberly K.

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

669

 

 

 

67,148

 

Stoll

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

335

 

 

670

 

 

 

1,340

 

 

 

 

 

 

 

67,248

 

 

 

2/11/2021

(2)

 

52,600

 

 

 

105,200

 

 

 

210,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gregory M.

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

669

 

 

 

67,148

 

Gomez (3)

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

335

 

 

670

 

 

 

1,340

 

 

 

 

 

 

 

67,248

 

 

 

2/11/2021

(2)

 

52,600

 

 

 

105,200

 

 

 

210,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William R.A.

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

597

 

 

 

59,921

 

Bergum

 

3/5/2021

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

299

 

 

598

 

 

 

1,196