UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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Koppers Holdings Inc.
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NOTICE OF 2019 ANNUAL MEETING AND PROXY STATEMENT KOPPERS HOLDINGS INC.
April 1, 2019
Dear Fellow Shareholder:
Sincerely,
Leroy M. Ball, Jr.
President and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
|
Date: | Thursday, May 2, 2019 | |
Time: | 10:00 a.m. Eastern Daylight Time | |
Place: | Duquesne Club 325 Sixth Avenue, Pittsburgh, PA 15222 |
Proposals:
1. | To elect eight members of our board of directors. |
2. | To approve an advisory resolution on our executive compensation. |
3. | To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2019. |
We will also transact any other business that is properly raised at the meeting or any adjournment of the meeting.
Record Date:
You can vote if you were a shareholder of record on March 18, 2019.
If the annual meeting is adjourned because of the absence of a quorum, those shareholders entitled to vote who attend the adjourned annual meeting, although constituting less than a quorum as provided herein, shall nevertheless constitute a quorum for the purpose of electing directors. If the annual meeting is adjourned for one or more periods aggregating at least fifteen (15) days because of the absence of a quorum, those shareholders entitled to vote who attend the reconvened annual meeting, if less than a quorum as determined under applicable law, shall nevertheless constitute a quorum for the purpose of acting upon any matter set forth in this Notice of Annual Meeting of Shareholders.
By Order of the Board of Directors
Steven R. Lacy
Chief Administrative Officer,
General Counsel and Secretary
April 1, 2019
Your Vote Is Important
Whether or not you plan to attend the meeting, please complete, date, sign and return the accompanying proxy card promptly so that we can be assured of having a quorum present at the meeting and so that your shares may be voted in accordance with your wishes.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Shareholders to Be Held on May 2, 2019
A complete copy of this proxy statement and our annual report for the year ended December 31, 2018 are also available at www.proxydocs.com/KOP.
2019 PROXY SUMMARY
This 2019 Proxy Summary highlights certain information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider before voting, and we strongly encourage you to carefully read the entire proxy statement before voting.
General Information About This Annual Meeting
Date and Time: |
Thursday, May 2, 2019 at 10:00 a.m. Eastern Daylight Time | |
Location: |
Duquesne Club, 325 Sixth Avenue, Pittsburgh, PA 15222 | |
Record Date: |
March 18, 2019 | |
Voting: |
Shareholders as of the record date have one vote for each share held on the record date for each proposal. |
You are entitled to vote if you owned shares of our common stock at the close of business on the record date, March 18, 2019. This proxy statement and the related proxy materials were first mailed to shareholders and made available on the internet on or about April 1, 2019.
How to cast your vote (page 47)
You may vote your shares by proxy or in person at the annual meeting. If you are a shareholder of record, to vote your shares by proxy, you must complete, sign and date the proxy card and return it in the postage prepaid envelope. If you are a beneficial owner, you must complete, sign and date the voting instructions included in the package from your broker, bank or other record holder and return those instructions to the broker, bank or other holder of record.
Proposals to be Considered and Board Recommendations
Proposal | Board Voting Recommendation |
Page Reference | ||
Elect eight members of the board of directors
|
FOR each director nominee
|
1
| ||
Approve an advisory resolution on our executive compensation
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FOR
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45
| ||
Ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2019
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FOR
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46
|
Name | Age | Director Since |
Independent | Committee Memberships | ||||
Leroy M. Ball, Jr.
|
50
|
2015
|
No
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SHE
| ||||
Sharon Feng, Ph.D.
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60
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2009
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Yes
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NCG; SHE (Chair)
| ||||
Traci L. Jensen
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52
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2018
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Yes
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AC; MDC; SHE; SRC
| ||||
David L. Motley
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60
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2018
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Yes
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AC; NCG; SRC
| ||||
Albert J. Neupaver
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68
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2009
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Yes
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AC; MDC; SRC (Chair)
| ||||
Louis L. Testoni
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69
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2013
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Yes
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AC (Chair); NCG; SRC
| ||||
Stephen R. Tritch
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69
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2009
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Yes
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AC; MDC (Chair); NCG; SRC
| ||||
Sonja M. Wilkerson
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58
|
2018
|
Yes
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MDC; NCG; SHE
|
| We achieved record high sales of $1.7 billion, which represented year-over-year sales growth of approximately 16%. Excluding acquisitions, year-over-year sales increased approximately 5%. |
| Net income attributable to Koppers for 2018 was $23.4 million compared with net income of $29.1 million in the prior year. As adjusted, earnings before interest, taxes, depreciation and amortization (EBITDA) was $221.6 million, which represented year-over-year growth of approximately 10.6% and a fourth consecutive year of improved adjusted EBITDA. |
1 On pages iv-v, 16 and 18-21, we refer to our 2018 adjusted EBITDA, adjusted EBITDA margin and adjusted EPS results. Adjusted EBITDA, adjusted EBITDA margin and adjusted EPS are non-GAAP measures, which provide information useful to investors in understanding the underlying operational performance of our company, its business and performance trends, and facilitates comparisons between periods. The exclusion of certain items permits evaluation and a comparison of results for ongoing business operations, and it is on this basis that our management internally assesses the companys performance. In addition, our board of directors and executive management team use adjusted EBITDA as a performance measure under the companys annual incentive plan. The adjustments to EBITDA, EBITDA margin and EPS, as well as reconciliations to the most directly comparable GAAP measures, are set forth in Annex A of this proxy statement. These reconciliations also reflect how adjusted EBITDA is calculated for purposes of compensation.
KOPPERS HOLDINGS INC. - 2019 Proxy Statement iv
2019 PROXY SUMMARY
| Adjusted EBITDA margin for 2018 was 13%, which is the second consecutive year that our adjusted EBITDA margin was greater than or equal to 13%. |
| We achieved earnings per share (EPS) of $1.10 for fiscal year 2018 compared with $1.32 in the prior year. As adjusted, EPS was $3.50 compared with $3.68 in the prior year. |
| In April 2018, we re-entered the North American utility pole market with the acquisition of Cox Industries, Inc., which has been renamed Koppers Utility and Industrial Products Inc. |
| In February 2018, Koppers Inc. acquired M.A. Energy Resources, LLC, a business related to the recovery of used crossties, which has been renamed Koppers Recovery Resources LLC. |
| We completed construction and commissioning of our new naphthalene unit at our Stickney, Illinois facility in the third quarter of 2018. |
Executive Compensation Highlights:
In awarding compensation to each of our named executive officers (NEOs) in 2018 our management development and compensation committee considered the companys overall performance for the year and performance for the business units managed by the NEO, as applicable. The table below reflects, for each NEO, the total direct compensation awarded in 2018.
Long-Term Incentive | ||||||||||||||||||||||||
NEO | Base Salary |
Annual Cash Incentive |
PSUs | Stock Options |
RSUs | Total Direct Compensation |
||||||||||||||||||
Leroy M. Ball, Jr.
|
|
$833,338
|
|
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$725,350
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|
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$1,269,319
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|
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$672,361
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|
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$448,240
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|
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$3,948,608
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| ||||||
Michael J. Zugay
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$388,243
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$202,760
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$ 268,772
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$142,376
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|
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$ 94,890
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|
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$1,097,041
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| ||||||
James A. Sullivan
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$388,642
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|
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$219,143
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|
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$ 339,782
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|
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$179,997
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|
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$119,974
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|
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$1,247,538
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| ||||||
Steven R. Lacy
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$433,438
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|
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$226,363
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|
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$ 300,060
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|
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$158,955
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|
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$105,955
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|
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$1,224,771
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| ||||||
Thomas D. Loadman
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$380,471
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|
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$209,650
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|
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$
|
|
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$233,216
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|
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$233,210
|
|
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$1,056,547
|
|
Our Summary Compensation Table can be found on page 27. In accordance with SEC regulations, the Summary Compensation Table also reports amounts for Changes in Pension Value and Nonqualified Deferred Compensation and All Other Compensation.
Key Pay-for-Performance Features of Our Executive Compensation Program:
| Total compensation consists primarily of base salary, an annual cash incentive and long-term equity incentives. |
| Our NEOs received annual incentive awards ranging from 89% to 103% of their targets, in certain cases after taking into account adjusted EBITDA performance at the business units they run. |
| Long-term incentives comprise a significant portion of the executives total compensation package, with approximately 50% of such awards consisting of performance-based restricted stock units (PSUs) with a three-year performance measurement period. |
| PSUs do not vest unless a threshold level of performance is surpassed. |
| Executives receive only limited perquisites, all of which are for business-related purposes. |
Corporate Governance Highlights:
Majority Voting and Director Resignation Policy
|
Our board is subject to a majority voting requirement; any director not receiving a majority of votes cast (excluding abstentions) in an uncontested election must tender his or her resignation to the board.
| |
Term Limits for Directors |
All directors, other than our CEO, who are first elected to the board of directors after August 2, 2017, will have a term limit of 15 years, unless the board approves an exception to this limit, which the board has the authority to do on a case-by-case basis.
| |
Age Limits for Directors |
A director is not eligible to stand for re-election if he or she has reached 74 before the date of election, unless the board approves an exception to this limit, which the board has authority to do on a case-by-case basis. In accordance with this limit, Cynthia A. Baldwin and T. Michael Young will not stand for re-election to the board.
| |
Declassified Board Structure |
Our entire board is re-elected every year; we have no staggered elections. | |
Annual Board and Committee Self-Evaluations
|
Our board and committees engage in thorough self-evaluations on an annual basis.
| |
No Poison Pill |
The company currently does not have a poison pill in place. | |
Independent Board |
Our board is comprised of all independent directors, other than Mr. Ball, and our independent directors regularly meet in executive sessions.
| |
Stock Ownership Guidelines for Directors and Stock Ownership Requirements for Executive Officers
|
We have adopted stock ownership guidelines for directors and stock ownership requirements for executives that encourage a long-term perspective and ensure that the interests of directors and executives are closely aligned with shareholders. All directors and executive officers are in compliance with these stock ownership guidelines and requirements, respectively.
| |
Corporate Governance Guidelines |
We have adopted corporate governance guidelines to ensure we are fully compliant with the law and engaging in corporate governance best practices. These guidelines are reviewed at least annually.
| |
Strong Board Attendance |
In 2018, we had cumulative director attendance of 99% at board and committee meetings.
|
v KOPPERS HOLDINGS INC. - 2019 Proxy Statement
PROXY STATEMENT | ||||
PROXY SUMMARY | iv | |||
iv | ||||
iv | ||||
iv | ||||
iv | ||||
iv | ||||
iv | ||||
v | ||||
v | ||||
PROXY ITEM 1 PROPOSAL FOR ELECTION OF DIRECTORS | 1 | |||
1 | ||||
1 | ||||
2 | ||||
2 | ||||
2 | ||||
4 | ||||
CORPORATE GOVERNANCE MATTERS | 9 | |||
9 | ||||
9 | ||||
10 | ||||
10 | ||||
11 | ||||
11 | ||||
11 | ||||
12 | ||||
13 | ||||
13 | ||||
13 | ||||
COMMON STOCK OWNERSHIP | 14 | |||
Director, Director Nominee and Executive Officer Stock Ownership |
14 | |||
15 | ||||
EXECUTIVE AND DIRECTOR COMPENSATION | 16 | |||
16 | ||||
27 | ||||
29 | ||||
30 | ||||
33 | ||||
33 | ||||
35 | ||||
35 | ||||
39 | ||||
41 | ||||
41 |
PROXY ITEM 1 PROPOSAL FOR ELECTION OF DIRECTORS
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 3
PROXY ITEM 1 PROPOSAL FOR ELECTION OF DIRECTORS
Audit Committee | Members: Louis L. Testoni (Chair, Audit Committee Financial Expert), Cynthia A. Baldwin, Traci L. Jensen, David L. Motley, Albert J. Neupaver, Stephen R. Tritch, T. Michael Young | |
All Members Independent
5 meetings in 2018 |
Responsibilities. The audit committees responsibilities include oversight of the integrity of our financial statements; the appointment, compensation and supervision of our independent registered public accounting firm, which we also refer to as our independent auditor; review of the independence of our independent auditor; resolution of disagreements between our management and our independent auditor and oversight of our internal audit function. The audit committee has the authority to engage independent counsel or other outside advisors and experts as necessary to advise the committee in the performance of its duties. | |
Overseeing the Integrity of our Financial Statements. The audit committees responsibilities include oversight of the integrity of our financial statements, which entails:
Reviewing, prior to the audit, the scope and procedures to be utilized in the audit with the independent auditor;
Receiving reports from the independent auditor regarding our critical accounting policies and practices;
Meeting with the independent auditor, without our management, to discuss the audit or other issues deemed relevant by the audit committee, including, but not limited to significant audit issues or concerns and managements response thereto;
Reviewing managements assessment of the effectiveness of internal controls over financial reporting, including any significant deficiencies or material weaknesses identified by management or the independent auditor;
Meeting with management and the independent auditor to review significant reporting issues and practices, including changes in or adoption of accounting principles and disclosure practices; and
Reviewing disclosures in our periodic reports filed with the SEC, including the Managements Discussion and Analysis of Financial Condition and Results of Operations section of such reports. | ||
Appointment and Supervision of the Independent Auditor. In connection with the appointment and supervision of our independent auditor, the audit committees responsibilities include, among other things:
Receiving annual written communication from the independent auditor delineating all relationships with and proposed professional services to us;
Reviewing all non-audit services proposed to be provided by the independent auditor;
Receiving and reviewing, on an annual basis, reports from the independent auditor regarding its internal quality control procedures and results of most recent peer review or any inquiry or investigation by any governmental or professional authorities within the preceding five years;
Reviewing the qualifications and performance of the independent auditor and the lead partner of the independent auditor and making certain that a replacement is named to the lead partner position every five years; and
Reviewing and approving, as appropriate, the compensation of the independent auditor. | ||
Receipt and Treatment of Complaints. The board has established, and the audit committee has reviewed, procedures for the receipt and treatment of complaints we receive concerning, among other things, accounting, internal controls or auditing matters, as well as confidential anonymous submissions by our employees regarding accounting or auditing matters. The audit committee also reviews our process for communicating these procedures to our employees. |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 5
PROXY ITEM 1 PROPOSAL FOR ELECTION OF DIRECTORS
Management Development and Compensation Committee |
Members: Stephen R. Tritch (Chair), Traci L. Jensen, Albert J. Neupaver, Sonja M. Wilkerson, T. Michael Young | |
All Members Independent
6 meetings in 2018 |
Responsibilities. The management development and compensation committee is responsible, among other things, for establishing and reviewing compensation criteria at the board and executive levels. The committee seeks to ensure that our compensation practices are in compliance with the law and with our Code of Conduct and are commensurate with the high standards of performance expected of our directors and officers. | |
Director and Executive Compensation. The committee will periodically review and propose to the full board the compensation for non-employee directors. Such review must occur at least once every two years. In addition, the management development and compensation committee annually approves and recommends to the board for ratification our chief executive officers compensation and, based in part on recommendations from our chief executive officer, the compensation structure for all other officers and key executives, including the adoption of cash-based and equity-based incentive compensation plans. | ||
Administration of Incentive Compensation Plans. The management development and compensation committee is charged with administering our cash-based and equity-based incentive compensation plans, which we refer to as incentive compensation plans. Among other things, the management development and compensation committee will determine which eligible employees receive awards under such plans, determine the types of awards to be received and the conditions thereof, and will make any other determination or take any other action that it deems necessary or desirable to administer each incentive compensation plan. From time to time, the management development and compensation committee will also review and recommend medical, retirement, insurance and other benefit packages for officers and eligible employees. | ||
Succession Planning. At least annually, after considering the recommendations of management, the management development and compensation committee will make recommendations to the board regarding a succession plan, including succession in the event of an emergency or crisis, for our chief executive officer and other officers and key employees, after considering recommendations of management. | ||
Use of Advisers. The management development and compensation committee has the sole power to retain and terminate consulting firms to assist it in performing its responsibilities, including the authority to approve the firms fees and retention terms. The committee has the authority to obtain advice and assistance from internal or external legal, accounting, human resource or other advisors and to have direct access to such advisors without the presence of our management or other employees. The committee is directly responsible for the appointment, compensation and oversight of the work of any such advisors retained by the committee and may select a compensation consultant, legal counsel or other advisor only after taking into consideration all factors relevant to that persons independence from management, as required by NYSE rules. |
6 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
PROXY ITEM 1 PROPOSAL FOR ELECTION OF DIRECTORS
Nominating and Corporate Governance Committee |
Members: T. Michael Young (Chair), Sharon Feng, David L. Motley, Louis L. Testoni, Stephen R. Tritch, Sonja M. Wilkerson | |
All Members Independent
7 meetings in 2018 |
Recommendations for Director Candidates. The nominating and corporate governance committees goals and responsibilities include identifying and recommending individuals qualified to serve as members of the board of directors consistent with criteria approved by the board of directors. The committee identifies candidates for the board of directors by soliciting recommendations from committee members and incumbent directors and considering recommendations from employees and shareholders. The committee also has sole authority to retain and terminate search firms, which will report directly to the committee, to assist in identifying director candidates. The nominating and corporate governance committee charter provides that the committee will ensure that the nominees for membership on the board of directors are of a high caliber and are able to provide insightful, intelligent and effective guidance to our management. | |
Oversight of the Evaluation of the Board and Management. The committee is responsible for the oversight of the evaluation of the board of directors and corporate management. In doing so, the nominating and corporate governance committee evaluates, and reports to the board of directors, the performance and effectiveness of the board of directors as a whole and each committee of the board as a whole (including an evaluation of itself and the effectiveness of the management development and compensation committee in its process of establishing goals and objectives for, and evaluating the performance of, our chief executive officer and our other officers). | ||
Corporate Governance Matters. The committee is committed to ensuring that our corporate governance is in full compliance with the law, reflects generally accepted principles of good corporate governance, encourages flexible and dynamic management without undue burdens and effectively manages the risks of our business and our operations. To accomplish this, the committee developed and recommended to the board of directors a set of corporate governance guidelines. The committee must review and, if appropriate, recommend to the board appropriate changes to the corporate governance guidelines at least once every year and the articles of incorporation, bylaws, the Code of Conduct and the Code of Ethics Applicable to Senior Officers at least once every two years. The committee is charged with investigating and advising the board with respect to any violations of the Code of Ethics Applicable to Senior Officers and, to the extent involving directors or officers, the Code of Conduct, including conflicts of interest between directors or officers and us, and including a review of the outside activities of directors and officers. It is the obligation of each director and officer to bring to the attention of the nominating and corporate governance committee any actual, apparent or possible conflict of interest. |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 7
PROXY ITEM 1 PROPOSAL FOR ELECTION OF DIRECTORS
Safety, Health and Environmental Committee |
Members: Sharon Feng (Chair), Cynthia A. Baldwin, Leroy M. Ball, Jr., Traci L. Jensen, Sonja M. Wilkerson | |
4 meetings in 2018 | Our safety, health and environmental committee is responsible for reviewing our policies and practices that address safety, health and environmental concerns and significant legislative and regulatory trends and developments concerning safety, health and environmental issues. The committee reviews management practices and results to ensure that our managers are promoting proper and government-mandated practices in the areas of safety, health and the environment and that we have written procedures and an audit program in place to ensure proper training, safeguards and controls in these areas. The safety, health and environmental committees charter requires the committee to meet regularly with the relevant executive officers and senior operations managers accountable for product and process safety, health and environmental programs. |
Strategy and Risk Committee | Members: Albert J. Neupaver (Chair), Traci L. Jensen, David L. Motley, Louis L. Testoni, Stephen R. Tritch, T. Michael Young | |
All Members Independent
7 meetings in 2018 |
The committees responsibilities include, among other things:
Advising the board and management regarding long-range planning in the areas of transactions, financial matters, shareholder engagement, risk management and related matters;
Assessing and providing oversight to management relating to the identification and evaluation of major strategic, operational, regulatory, information and external risks inherent in the business of the company and the control processes with respect to such risks;
Reviewing significant relationships with analysts, shareholders, financing sources and related parties;
Reviewing and advising the board and management regarding the companys strategic planning process;
Staying abreast of activities of the companys shareholders and other stakeholders;
Monitoring shareholder turnover;
Reviewing governance as it pertains to the companys shareholder base; and
Preparing in advance in order to respond to engagement from the companys shareholders. |
8 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
CORPORATE GOVERNANCE MATTERS
Our board as a whole has an active role in overseeing the companys management of risks. Our board regularly assesses the major risks facing the company and reviews options for their mitigation by reviewing information regarding accounting, operational, legal and regulatory, and strategic and reputational risks based on reports from senior management, including by our chief compliance officer, and our independent auditor. In addition, our board has established a formal risk management process that involves regular and systematic identification and evaluation of risks. Our board delegates the oversight of specific risk areas to board committees as follows:
Committee | Risk Oversight Responsibilities | |
Audit |
Review with management and our independent auditor the companys risk assessment and risk management practices and discuss policies with respect to risk assessment and risk management
Oversee the companys risk policies and processes relating to financial statements, financial systems, financial reporting processes, compliance and auditing, as well as the guidelines, policies and processes for monitoring and mitigating such risks
| |
Nominating and Corporate Governance
|
Manage risks associated with the independence of the board, potential conflicts of interest, reputation and ethics and corporate governance
| |
Management Development and Compensation
|
Review risks associated with human capital, employee benefits and executive compensation | |
Safety, Health and Environmental
|
Assess regulatory and compliance risks associated with the companys safety, health and environmental performance
| |
Strategy and Risk |
Assess and provide oversight to management relating to the identification and evaluation of major strategic, operational, regulatory, information and external risks inherent in the business of the company and the control processes with respect to such risks
|
Code of Conduct and Code of Ethics
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 11
CORPORATE GOVERNANCE MATTERS
Committee Reports to Shareholders
As set forth in our charter, management is responsible for the preparation, presentation and integrity of our financial statements, and for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures designed to provide reasonable assurance of compliance with accounting standards and related laws and regulations. Our internal auditors are responsible for providing reliable and timely information to the board of directors and senior management concerning the quality and effectiveness of, and the level of adherence to, our control and compliance procedures and risk management systems. Our independent auditor is responsible for planning and carrying out an integrated audit of our consolidated annual financial statements and the effectiveness of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (the PCAOB), reviewing our annual report on Form 10-K prior to the filing of such report with the SEC, and reviewing our quarterly financial statements prior to the filing of each of our quarterly reports on Form 10-Q with the SEC.
In the performance of its oversight function, the audit committee has reviewed and discussed the audited financial statements for the year ended December 31, 2018, with management and with KPMG LLP, our independent auditor for 2018. The audit committee has discussed with our independent auditor the matters required to be discussed by PCAOB Auditing Standard No. 1301, Communications with Audit Committees (AS 1301). The audit committee has received the written disclosures and the letter from the independent auditor required by applicable requirements of the PCAOB Ethics and Independence Rule 3526, Communications with Audit Committees Concerning Independence, regarding the independent auditors communications with the audit committee concerning independence and has discussed with the independent auditor its independence. Also, in the performance of its oversight function, during 2018 the audit committee received frequent reports from our director of internal audit.
At various times the audit committee has considered whether the provision of non-audit services by the independent auditor to us is compatible with maintaining the independent auditors independence and has discussed with KPMG LLP their independence. The audit committee or its chairman (acting pursuant to delegated authority) pre-approves all new non-audit services (as defined in the Sarbanes-Oxley Act of 2002) proposed to be performed by our independent auditor.
Based upon the review and discussions described in this report, and subject to the limitations on the role and responsibilities of the audit committee referred to above and in its charter, the audit committee recommended to the board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2018, for filing with the SEC.
The audit committee of the board of directors presents the foregoing report.
Louis L. Testoni (Chairman) |
Albert J. Neupaver | |
Cynthia A. Baldwin |
Stephen R. Tritch | |
Traci L. Jensen |
T. Michael Young | |
David L. Motley |
Management Development and Compensation Committee Report
The management development and compensation committee has reviewed and discussed the Compensation Discussion and Analysis with our management. Based on our review and discussions, the committee has recommended to our board of directors that the Compensation Discussion and Analysis be included in this proxy statement.
The management development and compensation committee of the board of directors presents the foregoing report.
Stephen R. Tritch (Chairman)
Traci L. Jensen
Albert J. Neupaver
Sonja M. Wilkerson
T. Michael Young
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 13
Director, Director Nominee and Executive Officer Stock Ownership
Set forth below is certain information with respect to the beneficial ownership of shares of our common stock as of March 18, 2019, by directors, including director nominees, the NEOs, who are included in the Summary Compensation Table, and all directors and executive officers as a group. Except as otherwise indicated, sole voting power and sole investment power with respect to the shares shown in the table are held either by the individual alone or by the individual together with his or her spouse.
Name of Beneficial Owner |
Amount and Nature of Beneficial Ownership(1)(2) |
|||
Cynthia A. Baldwin
|
|
20,976
|
| |
Sharon Feng
|
|
26,016
|
| |
Traci L. Jensen
|
|
1,768
|
| |
David L. Motley
|
|
1,768
|
| |
Albert J. Neupaver
|
|
50,316
|
| |
Louis L. Testoni
|
|
20,338
|
| |
Stephen R. Tritch
|
|
25,847
|
| |
Sonja M. Wilkerson
|
|
1,768
|
| |
T. Michael Young
|
|
35,516
|
| |
Leroy M. Ball
|
|
380,146
|
| |
Michael J. Zugay
|
|
96,923
|
| |
James A. Sullivan
|
|
82,779
|
| |
Steven R. Lacy
|
|
166,258
|
| |
Thomas D. Loadman
|
|
116,195(3)
|
| |
All Directors and Executive Officers as a Group (17 in total)
|
|
1,208,537
|
|
(1) | Includes the following amounts of common stock that the following individuals and the group have the right to acquire on or within 60 days after March 18, 2019 through the exercise of stock options or vesting of restricted stock units: Mr. Ball, 198,161; Mr. Zugay, 45,615; Mr. Sullivan, 42,222; Mr. Lacy, 95,353; 2,430 restricted stock units for Justice Baldwin, Dr. Feng, Mr. Neupaver, Mr. Testoni, Mr. Tritch and Mr. Young; 1,768 restricted stock units for Ms. Jensen, Mr. Motley and Ms. Wilkerson; and all directors and executive officers as a group, 478,798. |
(2) | The total number of shares beneficially owned by Mr. Ball and by all directors and executive officers as a group constitutes approximately 1.8% and 5.9%, respectively, of the outstanding shares of our common stock as of March 18, 2019. |
(3) | According to the Form 4 filed January 3, 2019, Mr. Loadman beneficially owned 48,138 shares of our common stock on December 31, 2018. Includes 68,057 shares of common stock that Mr. Loadman had the right to acquire on or within 60 days after December 31, 2018 through the exercise of stock options or vesting of PSUs. Mr. Loadman retired on December 31, 2018. |
14 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
COMMON STOCK OWNERSHIP
Beneficial Owners of More Than Five Percent
The following table shows shareholders whom we know were beneficial owners of more than five percent of our common stock as of March 18, 2019.
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of Class |
||||||
BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055
|
3,288,585 | 15.94 | % | |||||
SouthernSun Asset Management LLC(2) 240 Madison Avenue, Suite 700 Memphis, TN 38103
|
2,011,645 | 9.75 | % | |||||
Fuller & Thaler Asset Management, Inc.(3) 411 Borel Avenue, Suite 300 San Mateo, CA 94402
|
1,829,536 | 8.87 | % | |||||
The Vanguard Group, Inc.(4) 100 Vanguard Blvd. Malvern, PA 19355 |
1,608,670 | 7.80 | % | |||||
Division of Investment, Department of the Treasury, State of New Jersey(5) 50 West State Street, 9th Floor PO Box 290 Trenton, NJ 08625-0290 |
1,261,000 | 6.11 | % | |||||
State Street Corporation(6) One Lincoln Street Boston, MA 02111 |
1,243,590 | 6.03 | % |
(1) | According to the amended Schedule 13G filed January 31, 2019, BlackRock, Inc. beneficially owns 3,288,585 shares of our common stock and has sole dispositive power over such shares. BlackRock, Inc. has sole voting power over 3,193,934 shares. |
(2) | According to Schedule 13G filed February 14, 2019, SouthernSun Asset Management LLC beneficially owns 2,011,645 shares of our common stock and has sole dispositive power over such shares. SouthernSun Asset Management LLC has sole voting power over 1,901,966 shares. |
(3) | According to the amended Schedule 13G filed February 14, 2019, Fuller & Thaler Asset Management, Inc. beneficially owns 1,829,536 shares of our common stock and has sole dispositive power over such shares. Fuller & Thaler Asset Management, Inc. has sole voting power over 1,792,822 shares. |
(4) | According to the amended Schedule 13G filed January 10, 2019, The Vanguard Group, Inc. beneficially owns 1,608,670 shares of our common stock and has sole dispositive power over 1,572,479 shares, shared dispositive power over 36,191 shares, sole voting power over 36,771 shares and shared voting power over 1,551 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 34,640 shares of our common stock as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 3,682 shares of our common stock as a result of its serving as investment manager of Australian investment offerings. |
(5) | According to the amended Schedule 13G filed January 31, 2019, Division of Investment, Department of the Treasury, State of New Jersey beneficially owns 1,261,000 shares of our common stock and has sole dispositive power and sole voting power over such shares. |
(6) | According to Schedule 13G filed February 14, 2019, State Street Corporation beneficially owns 1,243,590 shares of our common stock and has shared dispositive power over such shares. State Street Corporation has shared voting power over 506,806 shares. |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 15
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Discussion and Analysis
Executive Summary | ||||
Our Compensation Philosophy | Our management development and compensation committee (which we refer to as the committee) makes compensation decisions in a manner it believes will best serve the long-term interests of our shareholders by attracting and retaining executives who will be inspired and motivated to meet and exceed the companys goals and whose interests will be aligned with the interests of our shareholders. To accomplish these objectives, the committee has implemented a strong pay-for-performance compensation program, while striving to pay our executives competitively and align our compensation program with our business strategies. | |||
Our Pay Practices | What we do: | What we dont do: | ||
✓Directly link pay to performance |
× No change in control tax gross-ups | |||
✓Weigh long-term incentives more heavily in favor of performance-based awards, as compared to our peer group |
× No new participants in our Pension or Supplemental Executive Retirement Plans | |||
✓Require compliance with stock ownership requirements |
× No stock options with exercise price below market | |||
✓Engage an independent consultant |
× No hedging, pledging or short sales of our stock | |||
✓Ability to clawback compensation in connection with a financial restatement |
Our Performance | We achieved record high sales of $1.7 billion, which represented year-over-year sales growth of approximately 16%. Excluding acquisitions, year-over-year sales increased approximately 5%.
Net income attributable to Koppers for 2018 was $23.4 million compared with net income of $29.1 million in the prior year. As adjusted, EBITDA was $221.6 million, which represented year-over-year growth of approximately 10.6% and a fourth consecutive year of improved adjusted EBITDA.
Adjusted EBITDA margin for 2018 was 13%, which is the second consecutive year that our adjusted EBITDA margin was greater than or equal to 13%.
We achieved EPS of $1.10 for fiscal year 2018 compared with $1.32 in the prior year. As adjusted, EPS was $3.50 compared with $3.68 in the prior year. | |||
Compensation of our Named Executive Officers | Our NEOs received annual incentive awards ranging from 89% to 103% of their targets, in certain cases after taking into account adjusted EBITDA performance at the business units they run.
Long-term incentives represented, on average, 54% of our NEOs 2018 total direct compensation, 46% of which were in the form of performance-based awards.
On average, base salaries for NEOs were increased in 2018 by 3.0% (other than for promotions) in order to bring base salaries closer to market median. | |||
Our Named Executive Officers | This Compensation Discussion and Analysis describes the compensation of the following NEOs: | |||
Name | Current Title | |||
Leroy M. Ball, Jr. |
President and Chief Executive Officer | |||
Michael J. Zugay |
Chief Financial Officer and Treasurer | |||
James A. Sullivan |
Senior Vice President, Railroad Products and Services and Global Carbon Materials and Chemicals | |||
Steven R. Lacy |
Chief Administrative Officer, General Counsel and Secretary | |||
Thomas D. Loadman |
Former Senior Vice President* | |||
* Mr. Loadman served as our Senior Vice President, Railroad Products and Services through May 1, 2018 and as our Senior Vice President, Koppers Inc. until his retirement on December 31, 2018. |
16 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
Executive Compensation Objectives
Consistent with these overall principles, the committee has established the following objectives for its executive compensation programs, which are critical to our long-term success:
| Attract We want our compensation programs to be comparable to market in terms of level of pay and form of award so that we can attract talented executives. |
| Retain We want to retain talented leaders whose continued employment is a key component of our overall success. |
| Engage We want to inspire our executives to meet or exceed our goals and generate superior returns for our shareholders. |
| Align We want to align the financial interests of our executives with those of our shareholders. |
Key Components of Our Compensation Program
The compensation objectives for our NEOs are achieved through the following mix of components of target direct compensation for our CEO and most other NEOs, respectively, which are discussed in more detail later in this Compensation Discussion and Analysis.
CEO Target Direct Compensation
|
Other NEO Target Direct Compensation
|
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 17
EXECUTIVE AND DIRECTOR COMPENSATION
As in prior years, the fiscal year 2018 compensation decisions for our executive officers were made in three steps.
Steps | When | |
1. Design Program The program for the year is approved (including targeted levels of annual and long-term pay, fixed and incentive compensation, and any base salary adjustment).
|
Beginning of fiscal year | |
2. Establish Range of Compensation Opportunities Incentive compensation opportunities are set based on corporate performance or corporate and business unit performance. Minimum, target, and maximum performance levels and payouts are established for incentive awards.
|
Beginning of fiscal year | |
3. Review Performance Performance is reviewed and incentive pool amounts are approved which leads to decisions about annual cash incentive awards.
|
Beginning of next fiscal year |
18 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
2018 CEO Actual Compensation Mix
|
2018 Other NEOs Average Actual Compensation Mix
|
The following represents the total direct compensation to our NEOs for 2018.
Long-Term Incentive | ||||||||||||||||||||||||
NEO | Base Salary |
Annual Cash Incentive |
PSUs | Stock Options |
RSUs | Total Direct Compensation |
||||||||||||||||||
Leroy M. Ball
|
$
|
833,338
|
|
$
|
725,350
|
|
$
|
1,269,319
|
|
$
|
672,361
|
|
$
|
448,240
|
|
$
|
3,948,608
|
| ||||||
Michael J. Zugay
|
$
|
388,243
|
|
$
|
202,760
|
|
$
|
268,772
|
|
$
|
142,376
|
|
$
|
94,890
|
|
$
|
1,097,041
|
| ||||||
James A. Sullivan
|
$
|
388,642
|
|
$
|
219,143
|
|
$
|
339,782
|
|
$
|
179,997
|
|
$
|
119,974
|
|
$
|
1,247,538
|
| ||||||
Steven R. Lacy
|
$
|
433,438
|
|
$
|
226,363
|
|
$
|
300,060
|
|
$
|
158,955
|
|
$
|
105,955
|
|
$
|
1,224,771
|
| ||||||
Thomas D. Loadman
|
$
|
380,471
|
|
$
|
209,650
|
|
$
|
|
|
$
|
233,216
|
|
$
|
233,210
|
|
$
|
1,056,547
|
|
Please see our Summary Compensation Table on page 27 which also reports amounts for Changes in Pension Value and Nonqualified Deferred Compensation and All Other Compensation.
2018 Compensation Decisions and Performance
Base Salary. As part of setting pay mix and structure for 2018, the committee evaluated NEO base salaries. Annual salary increases are neither automatic nor guaranteed, but determined by the committee after taking into consideration each NEOs position with the company, their respective responsibilities and experience and peer company information for similar positions. Based on this evaluation, the following base salary increases were approved for the NEOs in 2018. All increases were effective April 1, 2018 and approved by the committee. A base salary increase of 12.8% was awarded to Mr. Sullivan for 2018 in order to reflect his new responsibility as Senior Vice President, Railroad Products and Services and Global Carbon Materials and Chemicals, which he assumed on May 1, 2018.
NEO |
Base Salary as of January 1, 2018 |
Base Salary as of April 1, 2018 |
Percentage Increase |
|||||||||
Mr. Ball
|
|
$815,000
|
|
|
$839,450
|
|
|
3.0
|
%
| |||
Mr. Zugay
|
|
$379,700
|
|
|
$391,091
|
|
|
3.0
|
%
| |||
Mr. Sullivan
|
|
$354,600
|
|
|
$399,989
|
|
|
12.8
|
%
| |||
Mr. Lacy
|
|
$423,900
|
|
|
$436,617
|
|
|
3.0
|
%
| |||
Mr. Loadman
|
|
$339,240
|
|
|
$349,417
|
|
|
3.0
|
%
|
Annual Cash Incentives.
Annual Incentive Plan. In early 2018, the committee approved and the board ratified our annual incentive plan, which served as the companys main annual incentive plan for salaried employees. The annual cash incentive payouts under the annual incentive plan are based upon: (1) each participants target total annual incentive (100% of salary for Mr. Ball and 60% of salary for the other NEOs) and (2) the companys and, as applicable, individual business units performance in relation to adjusted EBITDA targets contained in the plan. The incentive opportunity for corporate employees (such as Messrs. Ball, Zugay and Lacy) was based
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 19
EXECUTIVE AND DIRECTOR COMPENSATION
entirely upon corporate level adjusted EBITDA performance goals. The incentive opportunity for business unit employees (such as Messrs. Sullivan and Loadman), was determined based upon both corporate level adjusted EBITDA performance goals and applicable business unit level adjusted EBITDA performance goals, which had weightings of 75% and 25%, respectively. Adjusted EBITDA, as measured under the annual incentive plan, is defined as earnings before interest, taxes, depreciation and amortization, as adjusted by the committee in its discretion to account for certain items, as set forth on Annex A hereto.
Taking all of these elements together, the committees framework for determining annual cash incentives for the NEOs can be expressed as follows:
(1) | The 2018 target total incentives for our NEOs were: Mr. Ball ($815,000), Mr. Zugay ($227,820), Mr. Sullivan ($212,760), Mr. Lacy ($254,340) and Mr. Loadman ($203,544). |
(2) | For Messrs. Ball, Zugay and Lacy, the corporate component weighting was 100%. For Messrs. Sullivan and Loadman, the corporate component weighting was 75% and the business unit weighting was 25%. |
The committee established a target corporate adjusted EBITDA performance level of $232.0 million along with a range of incentive payouts at threshold, target and maximum performance levels, as set forth below.
Corporate Adjusted EBITDA | Performance | % of Target | % of Payout | |||||||||
Maximum
|
$
|
278,400,000
|
|
|
120
|
%
|
|
150
|
%
| |||
Target
|
$
|
232,000,000
|
|
|
100
|
%
|
|
100
|
%
| |||
Actual
|
$
|
221,621,000
|
|
|
96
|
%
|
|
89
|
%
| |||
Threshold
|
$
|
185,600,000
|
|
|
80
|
%
|
|
50
|
%
|
For 2018, the company achieved adjusted EBITDA performance of $221.6 million. For corporate employees, this corresponded to achievement of 96% of target adjusted EBITDA performance and an 89% payout level, which resulted in the following annual cash incentives to our corporate NEOs:
Annual Cash Incentive for Mr. Ball:
$815,000 individual target award X [89% corporate component payout X 100% weighting] = $725,350 annual incentive award
Annual Cash Incentive for Mr. Zugay:
$227,820 individual target award X [89% corporate component payout X 100% weighting] = $202,760 annual incentive award
20 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
Annual Cash Incentive for Mr. Lacy:
$254,340 individual target award X [89% corporate component payout X 100% weighting] = $226,363 annual incentive award
Mr. Sullivans and Mr. Loadmans annual cash incentive was determined by reference to both corporate adjusted EBITDA performance and adjusted EBITDA performance of our Railroad Products and Services and Global Carbon Materials and Chemicals (RPS and Global CMC) business unit, which Mr. Sullivan leads, with weightings of 75% and 25%, respectively. The target adjusted EBITDA level for the RPS and Global CMC business unit was set at $126.6 million along with a range of incentive payouts at threshold, target and maximum performance levels, as set forth below. The target adjusted EBITDA level for the RPS and Global CMC business unit, and the corresponding performance level below, exclude certain business operations that did not report to Mr. Sullivan or Mr. Loadman in 2018.
Adjusted EBITDA (RPS and Global CMC Business Unit) | Performance | % of Target | % of Payout | |||||||||
Maximum
|
$
|
151,911,000
|
|
|
120
|
%
|
|
150
|
%
| |||
Actual
|
$
|
149,179,000
|
|
|
118
|
%
|
|
145
|
%
| |||
Target
|
$
|
126,593,000
|
|
|
100
|
%
|
|
100
|
%
| |||
Threshold
|
$
|
101,274,000
|
|
|
80
|
%
|
|
50
|
%
|
For 2018, the RPS and Global CMC business unit achieved adjusted EBITDA performance of $149.2 million, which translated to achievement of 118% of target adjusted EBITDA performance. For Mr. Sullivan and Mr. Loadman, this led to a payout level of 145% for the 25% of their incentive opportunity that was based on business unit performance. Taken together with the 89% percentage payout under the corporate component, this resulted in the following annual cash incentives for Mr. Sullivan and Mr. Loadman:
Annual Cash Incentive for Mr. Sullivan:
$212,760 individual target award X [89% corporate component payout X 75% weighting + 145% RPS and Global CMC business unit payout X 25% weighting] = $219,143 annual incentive award
Annual Cash Incentive for Mr. Loadman:
$203,544 individual target award X 89% corporate component payout X 75% weighting + 145% RPS and Global CMC business unit payout X 25% weighting] = $209,650 annual incentive award
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 21
EXECUTIVE AND DIRECTOR COMPENSATION
Long-Term Equity Incentives. Under our shareholder-approved 2018 Long Term Incentive Plan (the LTIP), in 2018, each NEO (except Mr. Loadman) received his long-term incentive award in three primary forms: PSUs (50%), which measure our performance over a three-year period, stock options (30%) and RSUs (20%), which vest in annual installments of 25% over four years. Mr. Loadmans long-term incentive award consisted of RSUs (50%) and stock options (50%) and no PSUs, which was intended to accelerate Mr. Loadmans equity ownership and to facilitate an orderly transition of Mr. Loadmans responsibilities to Mr. Sullivan. Mr. Loadmans 2018 equity awards vested fully on December 31, 2018. The table below summarizes the material terms and conditions of the 2018 long-term incentive awards.
PSUs | Stock Options | RSUs | ||||
What objective does the award serve? |
PSUs align shareholder and management interests by focusing management on long-term operating performance and/or relative stock price appreciation. | Stock options align shareholder and management interests by providing a reward based solely on stock price appreciation. | RSUs align to shareholder interests and also help to retain participants (some of whom are currently eligible for retirement), as well as to attract the next generation of our senior management. | |||
When do the awards vest? |
Performance is measured over three years. PSUs granted prior to 2019 will vest, if at all, if the relevant threshold performance level is met at the end of the three-year performance period. PSUs granted in 2019 will be eligible to be earned in three separate tranches each representing one-third of the total award. The first tranche will be earned, if at all, if the relevant threshold performance level is met at the end of a one-year performance period. The second tranche will be earned, if at all, if the relevant threshold performance level is met at the end of a two-year performance period and the third tranche will be earned, if at all, if the relevant threshold performance level is met at the end of a three-year performance period. Subject to certain retirement and termination provisions, all shares will vest, if earned, if the participant remains in service through the third anniversary of the award date. | Vest in equal annual installments over four years (except as noted above for Mr. Loadman) | Vest in equal annual installments over four years (except as noted above for Mr. Loadman) | |||
How do we measure performance for the PSUs? |
For PSUs granted prior to 2019, performance is based upon the companys TSR relative to the S&P Small Cap 600 Materials Index at the end of the applicable three-year period. PSUs will vest, if at all, on the third anniversary of the grant date provided that the participant continues in service until that date and based on a range of relative TSR achieved over the performance period set forth in the following table:
|
Relative TSR | Performance | % of Units to Vest |
||||||
Outstanding | ³ 80th percentile | 200% | ||||||
|
70th percentile
|
|
|
150%
|
| |||
Target
|
|
50th percentile
|
|
|
100%
|
| ||
35th percentile | 50% | |||||||
Threshold
|
|
£ 25th percentile
|
|
|
0%
|
|
The percentage vesting is interpolated on a straight-line basis for performance between levels above the threshold. If the companys TSR is negative during the performance period, then the percentage of units to vest will be capped at 100% of target. For PSUs granted in 2019, performance is based upon the same range of relative TSR, but, as described above, such PSUs will be eligible to be earned in three equal tranches based upon the companys relative TSR achieved over one-year, two-year and three-year performance periods.
|
|
22 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 23
EXECUTIVE AND DIRECTOR COMPENSATION
24 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
In November 2017, the committee engaged Meridian to conduct a comprehensive review of the companys peer group. Our objective in selecting the peer group was to select a peer group that accurately reflects our size and the industries in which we operate. As a result of this review, the committee selected the following peer group for 2018:
A. Schulman, Inc.1
|
Granite Construction Incorporated
|
Quaker Chemical Corporation
| ||
Aegion Corporation
|
H.B. Fuller Company
|
Simpson Manufacturing Co., Inc.
| ||
Armstrong World Industries, Inc.
|
Hillenbrand, Inc.
|
Standex International Corporation
| ||
Cabot Corporation
|
Innospec, Inc.
|
Stepan Company
| ||
EnPro Industries, Inc.
|
Louisiana-Pacific Corporation
|
Sterling Construction Company, Inc.
| ||
Ferro Corporation
|
Masonite International Corporation
|
Tronox Limited
| ||
Gibraltar Industries, Inc.
|
Minerals Technologies, Inc.
|
Universal Forest Products Inc.
| ||
The Greenbrier Companies, Inc.
|
OMNOVA Solutions Inc.
|
(1) | A. Schulman, Inc. was part of the peer group for purposes of determining 2018 compensation. A. Schulman, Inc. was acquired by LyondellBasell in August 2018, and currently operates as a LyondellBasell stand-alone reporting segment. Because compensation benchmarking data is no longer available for A. Schulman, Inc., the committee removed it from the peer group for 2019. |
Position |
Ownership Requirement Multiple of Base Salary | |||
Chief Executive Officer
|
(Mr. Ball)
|
5x
| ||
Senior Vice President, Chief Administrative Officer
|
(Messrs. Lacy and Sullivan)
|
3x
| ||
Chief Financial Officer
|
(Mr. Zugay)
|
3x
|
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 25
EXECUTIVE AND DIRECTOR COMPENSATION
26 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
The following table and related footnotes describe the total compensation awarded to, earned by or paid to our NEOs for services rendered during fiscal years 2018, 2017 and 2016.
Name and Principal Position |
Year | Salary | Stock Awards(3) |
Option Awards(3) |
Non-Equity Incentive Plan Compensation |
Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) |
All Other Compensation(5) |
Total | ||||||||||||||||||||||||
Leroy M. Ball |
2018 | $ | 833,338 | $ | 1,717,559 | $ | 672,361 | $ | 725,350 | $ | 854 | $ | 94,583 | $ | 4,044,045 | |||||||||||||||||
Chief Executive Officer |
2017 | 792,500 | 1,851,641 | 599,990 | 928,000 | 1,057 | 106,836 | 4,280,024 | ||||||||||||||||||||||||
2016 | 716,250 | 1,281,480 | 449,994 | 786,600 | 556 | 64,626 | 3,299,507 | |||||||||||||||||||||||||
Michael J. Zugay |
2018 | $ | 388,243 | $ | 363,662 | $ | 142,376 | $ | 202,760 | $ | 182 | $ | 65,157 | $ | 1,162,380 | |||||||||||||||||
Chief Financial Officer and |
2017 | 376,700 | 425,512 | 137,884 | 282,394 | 171 | 54,198 | 1,276,859 | ||||||||||||||||||||||||
Treasurer |
2016 | 365,000 | 381,123 | 133,832 | 244,120 | 47 | 37,209 | 1,161,330 | ||||||||||||||||||||||||
James A. Sullivan(1) |
2018 | $ | 388,642 | $ | 459,756 | $ | 179,997 | $ | 219,143 | $ | 142 | $ | 53,966 | $ | 1,301,646 | |||||||||||||||||
Senior Vice President, Railroad |
2017 | 351,300 | 395,063 | 128,021 | 284,728 | 114 | 55,623 | 1,214,849 | ||||||||||||||||||||||||
Products and Services and Global Carbon Materials and Chemicals |
2016 | 338,100 | 350,464 | 123,073 | 217,597 | 36 | 37,345 | 1,066,615 | ||||||||||||||||||||||||
Steven R. Lacy |
2018 | $ | 433,438 | $ | 406,015 | $ | 158,955 | $ | 226,363 | $ | 790 | $ | 51,528 | $ | 1,277,089 | |||||||||||||||||
Chief Administrative Officer, |
2017 | 420,300 | 473,864 | 153,546 | 314,496 | 53,484 | 104,267 | 1,519,957 | ||||||||||||||||||||||||
General Counsel and Secretary |
2016 | 405,900 | 421,922 | 148,156 | 270,248 | 27,286 | 66,952 | 1,340,463 | ||||||||||||||||||||||||
Thomas D. Loadman(2) |
2018 | $ | 380,471 | (6) | $ | 233,210 | $ | 233,216 | $ | 209,650 | $ | 1,033 | $ | 83,995 | $ | 1,141,575 | ||||||||||||||||
Former Senior Vice President |
(1) | Mr. Sullivan assumed the responsibilities of Senior Vice President, Railroad Products and Services and Global Carbon Materials and Chemicals on May 1, 2018. Mr. Sullivan served as Senior Vice President, Global Carbon Materials and Chemicals from April 2014 to May 2018. |
(2) | Mr. Loadman was not a NEO in 2016 or 2017. Mr. Loadman served as Senior Vice President, Railroad Products and Services until May 1, 2018. He then served as Senior Vice President, Koppers Inc., until his retirement on December 31, 2018. |
(3) | The amounts shown in these columns represent the aggregate grant date fair value of RSUs, stock options and PSUs granted to our NEOs computed in accordance with FASB ASC Topic 718. The value of PSUs disclosed in the table is based upon the target amount of shares granted, and for the 2016, 2017 and 2018 awards (that are earned based on our relative TSR performance), using a fair value based on a Monte Carlo valuation model. These award grant date fair values have been determined using the assumptions underlying the valuation of equity awards set forth in note 8 of the consolidated financial statements in our annual reports on Form 10-K for the years ended December 31, 2018, December 31, 2017 and December 31, 2016. Assuming the maximum amount of shares are granted (based on our relative TSR performance), the grant date values of PSUs granted in 2018, 2017, or 2016 are: (i) for 2018, Mr. Ball, $2,538,637; Mr. Zugay, $537,545; Mr. Sullivan, $679,565; and Mr. Lacy, $600,120; (ii) for 2017, Mr. Ball, $2,903,307; Mr. Zugay, $667,216; Mr. Sullivan, $619,458; and Mr. Lacy, $743,016; and (iii) for 2016, Mr. Ball, $1,962,976; Mr. Zugay, $583,826; Mr. Sullivan, $536,852; and Mr. Lacy, $646,299. |
(4) | The amount disclosed in this column represents (i) the aggregate change in the present value of the executives accumulated pension benefit and (ii) the portion of interest accrued (but not currently paid or payable) on deferred compensation above 120 percent of the applicable federal long-term rate at the maximum rate payable under our Benefit Restoration Plan. The increase or decrease, as applicable, in the present value of accumulated benefit was as follows: Mr. Lacy: negative $12,837 (2018), $51,909 (2017) and $26,051 (2016); Mr. Loadman negative $172,396 (2018). Negative amounts are not reflected in the amounts disclosed above. The remainder of the amount reported in this column for each NEO for 2018, 2017 and 2016, respectively, represents the above-market interest on deferred compensation. Additional information regarding these plans is below under 2018 Pension Benefits and 2018 Non-qualified Deferred Compensation. |
(5) | Includes all other compensation as described in the table below. |
(6) | The full amount of salary disclosed for Mr. Loadman includes $33,598 paid to Mr. Loadman in December 2018 for unused vacation. |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 27
EXECUTIVE AND DIRECTOR COMPENSATION
All Other Compensation Table (2018)
Perquisites | Other Compensation | |||||||||||||||||||||||||||||||||||
Club Dues |
Executive Physical |
Parking | Total Perquisites(1) |
Defined Contribution Plan Contributions(2) |
Benefit Restoration Plan Contributions(3) |
Payment for Forfeited Equity Awards(4) |
Total Other Compensation(5) |
Total All Other Compensation |
||||||||||||||||||||||||||||
Leroy M. Ball |
$ | 13,330 | $ | | $ | 3,340 | $ | 16,670 | $ | 21,450 | $ | 56,463 | $ | | $ | 77,913 | $ | 94,583 | ||||||||||||||||||
Michael J. Zugay |
28,681 | | | 28,681 | 21,450 | 15,026 | | 36,476 | 65,157 | |||||||||||||||||||||||||||
James A. Sullivan |
16,512 | 899 | | 17,411 | 21,450 | 15,105 | | 36,555 | 53,966 | |||||||||||||||||||||||||||
Steven R. Lacy |
12,097 | | | 12,097 | 21,450 | 17,981 | | 39,431 | 51,528 | |||||||||||||||||||||||||||
Thomas D. Loadman |
11,258 | 1,100 | | 12,358 | 31,636 | 15,001 | 25,000 | 71,637 | 83,995 |
(1) | The aggregate incremental cost for the perquisites is based on our direct, out-of-pocket cost for providing those benefits. |
(2) | The full amount of defined contribution plan contributions disclosed for each NEO includes an assumed amount for employer contributions made under our 401(k) plan. Actual employer contributions have not yet been made for 2018, however, for purposes of this table, we have assumed that such contributions will be paid for 2018. The assumed amount included for employer contributions with respect to each NEO is $10,450. |
(3) | Actual Benefit Restoration Plan contributions have not yet been made for 2018, however, for purposes of this table, we have assumed that such contributions will be paid for 2018 in accordance with past practice. Additional information regarding this plan is below under 2018 Non-qualified Deferred Compensation. |
(4) | In connection with his retirement on December 31, 2018, Mr. Loadman received a lump sum payment of $25,000 in exchange for the forfeiture of two months of vesting for his 2015 through 2017 RSUs, 2016 PSUs and 2015 through 2017 stock options that would have vested in March 2019 had he continued in our service through such time. |
(5) | The full amount of other compensation disclosed for Mr. Lacy and Mr. Loadman excludes negative $16,624 and negative $4,255, respectively, based on an accrued amount attributed to benefits pursuant to the Survivor Benefit Plan rather than our out-of-pocket expenses attributed to the plan. The expense associated with the Survivor Benefit Plan is calculated by determining the annual change in fair value of our liability for this benefit for accounting purposes. |
28 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
2018 Grants of Plan Based Awards Table
As further described in the Compensation Discussion and Analysis section above, the following table shows the details concerning the potential amounts payable to Messrs. Ball, Zugay, Sullivan, Lacy and Loadman for performance during 2018 under our annual incentive plan. The actual amounts paid to each NEO are included in the Summary Compensation Table above. The table below also reflects PSUs, RSUs and stock options granted to each NEO during 2018 under our LTIP.
Form of Award(1) |
Grant Date |
Date Management, Development and Compensation Committee Took Action to Grant Award |
Estimated Possible 2018 Payouts Under |
Estimated Future Payouts Under |
All Other Stock Awards: Number of Shares of Stock or Units(3) (#) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Exercise or Base Price of Option Awards(4) ($/Sh) |
Grant Date Fair Value of Stock and Option Awards(5) ($) |
||||||||||||||||||||||||||||||||||||||||||
Name | Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
||||||||||||||||||||||||||||||||||||||||||||
Leroy M. Ball |
Annual Cash Incentive Award | 407,500 | 815,000 | 1,222,500 | ||||||||||||||||||||||||||||||||||||||||||||||
PSU Award | 3/2/2018 | 2/13/2018 | 13,469 | 26,938 | 53,876 | 1,269,319 | ||||||||||||||||||||||||||||||||||||||||||||
RSU Award | 3/2/2018 | 2/13/2018 | 10,775 | 448,240 | ||||||||||||||||||||||||||||||||||||||||||||||
Option Award | 3/2/2018 | 2/13/2018 | 41,123 | $41.60 | 672,361 | |||||||||||||||||||||||||||||||||||||||||||||
Michael J. Zugay |
Annual Cash Incentive Award | 113,910 | 227,820 | 341,730 | ||||||||||||||||||||||||||||||||||||||||||||||
PSU Award | 3/2/2018 | 2/13/2018 | 2,852 | 5,704 | 11,408 | 268,772 | ||||||||||||||||||||||||||||||||||||||||||||
RSU Award | 3/2/2018 | 2/13/2018 | 2,281 | 94,890 | ||||||||||||||||||||||||||||||||||||||||||||||
Option Award | 3/2/2018 | 2/13/2018 | 8,708 | $41.60 | 142,376 | |||||||||||||||||||||||||||||||||||||||||||||
James A. Sullivan |
Annual Cash Incentive Award | 106,380 | 212,760 | 319,140 | ||||||||||||||||||||||||||||||||||||||||||||||
PSU Award | 3/2/2018 | 2/13/2018 | 3,606 | 7,211 | 14,422 | 339,782 | ||||||||||||||||||||||||||||||||||||||||||||
RSU Award | 3/2/2018 | 2/13/2018 | 2,884 | 119,974 | ||||||||||||||||||||||||||||||||||||||||||||||
Option Award | 3/2/2018 | 2/13/2018 | 11,009 | $41.60 | 179,997 | |||||||||||||||||||||||||||||||||||||||||||||
Steven R. Lacy |
Annual Cash Incentive Award | 127,170 | 254,340 | 381,510 | ||||||||||||||||||||||||||||||||||||||||||||||
PSU Award | 3/2/2018 | 2/13/2018 | 3,184 | 6,368 | 12,736 | 300,060 | ||||||||||||||||||||||||||||||||||||||||||||
RSU Award | 3/2/2018 | 2/13/2018 | 2,547 | 105,955 | ||||||||||||||||||||||||||||||||||||||||||||||
Option Award | 3/2/2018 | 2/13/2018 | 9,722 | $41.60 | 158,955 | |||||||||||||||||||||||||||||||||||||||||||||
Thomas D. Loadman |
Annual Cash Incentive Award | 101,772 | 203,544 | 305,316 | ||||||||||||||||||||||||||||||||||||||||||||||
RSU Award | 3/2/2018 | 2/13/2018 | 5,606 | 233,210 | ||||||||||||||||||||||||||||||||||||||||||||||
Option Award | 3/2/2018 | 2/13/2018 | 14,264 | $41.60 | 233,216 |
(1) | The material terms of the awards reflected in this column are provided in the Compensation, Discussion and Analysis2018 Compensation Decisions and Performance section under the heading Annual Cash Incentives and Long-Term Equity Incentives. |
(2) | The amounts shown in these columns represent the threshold, target and maximum possible payouts in 2018 expressed as a percentage of each NEOs salary as of January 1, 2018. For Mr. Ball, the target payout was 100% of salary. For every other NEO the target payout was 60% of salary. Threshold performance would yield a payout of 50% of target and maximum performance would yield a payout of 150% of target. Amounts paid to each NEO under our annual incentive plan are reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
(3) | Unvested RSUs and PSUs granted under our LTIP are entitled to dividends at the same rate as those paid, if any, to holders of our common stock which are converted annually into additional RSUs or PSUs, respectively, that vest on the same schedule as the underlying award. We call these dividend equivalent units. |
(4) | The option awards will vest in equal annual installments over four years and have a maximum term of 10 years. |
(5) | The amounts shown in this column represent the aggregate grant date fair value of RSUs, stock options and PSUs granted to our NEOs in 2018. See Footnote 3 to the Summary Compensation Table above. |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 29
EXECUTIVE AND DIRECTOR COMPENSATION
Outstanding Equity Awards at Fiscal Year-End 2018
The table below provides information concerning unvested RSUs, PSUs and unexercised options held by each NEO at December 31, 2018.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Grant Date |
Number of Securities Underlying Unexercised Options Exercis- able(1)(#) |
Number of Securities Underlying Unexercised Options Unexercis- able(2)(#) |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested(3)(#) |
Market Value of Shares or Units of Stock That Have Not Vested(4)($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5)(#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(4)($) |
|||||||||||||||||||||||||||
Leroy M. Ball |
|
|||||||||||||||||||||||||||||||||||
|
9/1/2010 | 2,500 | $ | 20.00 | 8/31/2020 | |||||||||||||||||||||||||||||||
2/22/2011 | 6,100 | 40.26 | 2/21/2021 | |||||||||||||||||||||||||||||||||
2/21/2012 | 7,807 | 38.21 | 2/21/2022 | |||||||||||||||||||||||||||||||||
2/19/2013 | 7,591 | 42.76 | 2/19/2023 | |||||||||||||||||||||||||||||||||
2/18/2014 | 9,167 | 37.93 | 2/18/2024 | |||||||||||||||||||||||||||||||||
3/3/2015 | 69,307 | 23,103 | 17.57 | 3/3/2025 | ||||||||||||||||||||||||||||||||
3/1/2016 | 30,364 | 30,364 | 18.11 | 3/1/2026 | ||||||||||||||||||||||||||||||||
3/3/2017 | 8,379 | 25,140 | 44.10 | 3/3/2027 | ||||||||||||||||||||||||||||||||
3/2/2018 | | 41,123 | 41.60 | 3/2/2028 | ||||||||||||||||||||||||||||||||
35,621 | $ | 606,982 | | $ | | |||||||||||||||||||||||||||||||
Michael J. Zugay |
|
|||||||||||||||||||||||||||||||||||
3/3/2015 | 19,530 | 6,511 | $ | 17.57 | 3/3/2025 | |||||||||||||||||||||||||||||||
3/1/2016 | 9,030 | 9,031 | 18.11 | 3/1/2026 | ||||||||||||||||||||||||||||||||
3/3/2017 | 1,925 | 5,778 | 44.10 | 3/3/2027 | ||||||||||||||||||||||||||||||||
3/2/2018 | | 8,708 | 41.60 | 3/2/2028 | ||||||||||||||||||||||||||||||||
9,141 | $ | 155,763 | | $ | | |||||||||||||||||||||||||||||||
James A Sullivan |
|
|||||||||||||||||||||||||||||||||||
3/3/2015 | 17,577 | 5,860 | $ | 17.57 | 3/3/2025 | |||||||||||||||||||||||||||||||
3/1/2016 | 8,304 | 8,305 | 18.11 | 3/1/2026 | ||||||||||||||||||||||||||||||||
3/3/2017 | 1,788 | 5,364 | 44.10 | 3/1/2027 | ||||||||||||||||||||||||||||||||
3/2/2018 | | 11,009 | 41.60 | 3/2/2028 | ||||||||||||||||||||||||||||||||
9,183 | $ | 156,478 | | $ | | |||||||||||||||||||||||||||||||
Steven R. Lacy |
|
|||||||||||||||||||||||||||||||||||
2/22/2010 | 7,078 | $ | 28.10 | 2/21/2020 | ||||||||||||||||||||||||||||||||
2/22/2011 | 6,584 | 40.26 | 2/21/2021 | |||||||||||||||||||||||||||||||||
2/21/2012 | 8,327 | 38.21 | 2/21/2022 | |||||||||||||||||||||||||||||||||
2/19/2013 | 7,864 | 42.76 | 2/19/2023 | |||||||||||||||||||||||||||||||||
2/18/2014 | 9,204 | 37.93 | 2/18/2024 | |||||||||||||||||||||||||||||||||
3/3/2015 | 25,935 | 8,645 | 17.57 | 3/3/2025 | ||||||||||||||||||||||||||||||||
3/1/2016 | 9,997 | 9,997 | 18.11 | 3/1/2026 | ||||||||||||||||||||||||||||||||
3/3/2017 | 2,144 | 6,434 | 44.10 | 3/3/2027 | ||||||||||||||||||||||||||||||||
3/2/2018 | | 9,722 | 41.60 | 3/2/2028 | ||||||||||||||||||||||||||||||||
10,427 | $ | 177,676 | | $ | | |||||||||||||||||||||||||||||||
Thomas D. Loadman |
|
|||||||||||||||||||||||||||||||||||
2/22/2010 | 3,751 | $ | 28.10 | 2/21/2020 | ||||||||||||||||||||||||||||||||
2/22/2011 | 5,132 | 40.26 | 2/21/2021 | |||||||||||||||||||||||||||||||||
2/21/2012 | 6,432 | 38.21 | 12/31/2021 | |||||||||||||||||||||||||||||||||
2/19/2013 | 6,050 | 42.76 | 12/31/2021 | |||||||||||||||||||||||||||||||||
2/18/2014 | 7,078 | 37.93 | 12/31/2021 | |||||||||||||||||||||||||||||||||
3/3/2015 | 12,164 | 17.57 | 12/31/2021 | |||||||||||||||||||||||||||||||||
3/1/2016 | 11,128 | 18.11 | 12/31/2021 | |||||||||||||||||||||||||||||||||
3/3/2017 | 3,130 | 44.10 | 12/31/2021 | |||||||||||||||||||||||||||||||||
3/2/2018 | 11,887 | 41.60 | 12/31/2021 | |||||||||||||||||||||||||||||||||
1,305 | $ | 22,237 | | $ | |
(1) | Mr. Loadmans options granted on March 3, 2015, March 1, 2016, March 3, 2017 and March 2, 2018 vested on a pro-rata basis upon his retirement on December 31, 2018 and the balance of remaining unvested options were forfeited. |
30 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
(2) | Options granted on March 3, 2015, March 1, 2016, March 3, 2017 and March 2, 2018 will vest in annual installments of 25% over four years beginning on the first anniversary of the grant date. |
(3) | The amounts shown in this column reflect the aggregate number of unvested RSUs awarded in 2015, 2016, 2017 and 2018, and related dividend equivalent units, if any. The RSUs are scheduled to vest in annual installments of 25% over four years beginning on the first anniversary of the grant date, as summarized below. Also included in this column are the 2016-2018 PSU awards, which were earned for performance through 2018 at 13% of target, and became vested on March 1, 2019. |
Name | Grant Date |
# of Shares |
Vesting Date |
|||||||||
Leroy M. Ball |
3/3/2015 | 4,418 | 3/2/2019 | |||||||||
3/1/2016 | 5,342 | 3/1/2019 | ||||||||||
3/1/2016 | 4,142 | 3/1/2019 | ||||||||||
3/1/2016 | 4,141 | 3/1/2020 | ||||||||||
3/3/2017 | 2,267 | 3/3/2019 | ||||||||||
3/3/2017 | 2,268 | 3/3/2020 | ||||||||||
3/3/2017 | 2,268 | 3/3/2021 | ||||||||||
3/2/2018 | 2,694 | 3/2/2019 | ||||||||||
3/2/2018 | 2,694 | 3/2/2020 | ||||||||||
3/2/2018 | 2,694 | 3/2/2021 | ||||||||||
3/2/2018 | 2,693 | 3/2/2022 | ||||||||||
Michael J. Zugay |
3/3/2015 | 1,245 | 3/2/2019 | |||||||||
3/1/2016 | 1,589 | 3/1/2019 | ||||||||||
3/1/2016 | 1,232 | 3/1/2019 | ||||||||||
3/1/2016 | 1,231 | 3/1/2020 | ||||||||||
3/3/2017 | 521 | 3/3/2019 | ||||||||||
3/3/2017 | 521 | 3/3/2020 | ||||||||||
3/3/2017 | 522 | 3/3/2021 | ||||||||||
3/2/2018 | 570 | 3/2/2019 | ||||||||||
3/2/2018 | 570 | 3/2/2020 | ||||||||||
3/2/2018 | 570 | 3/2/2021 | ||||||||||
3/2/2018 | 570 | 3/2/2022 | ||||||||||
James A. Sullivan |
3/3/2015 | 1,121 | 3/2/2019 | |||||||||
3/1/2016 | 1,461 | 3/1/2019 | ||||||||||
3/1/2016 | 1,133 | 3/1/2019 | ||||||||||
3/1/2016 | 1,132 | 3/1/2020 | ||||||||||
3/3/2017 | 484 | 3/3/2019 | ||||||||||
3/3/2017 | 484 | 3/3/2020 | ||||||||||
3/3/2017 | 484 | 3/3/2021 | ||||||||||
3/2/2018 | 721 | 3/2/2019 | ||||||||||
3/2/2018 | 721 | 3/2/2020 | ||||||||||
3/2/2018 | 721 | 3/2/2021 | ||||||||||
3/2/2018 | 721 | 3/2/2022 | ||||||||||
Steven R. Lacy |
3/3/2015 | 1,653 | 3/2/2019 | |||||||||
3/1/2016 | 1,759 | 3/1/2019 | ||||||||||
3/1/2016 | 1,364 | 3/1/2019 | ||||||||||
3/1/2016 | 1,363 | 3/1/2020 | ||||||||||
3/3/2017 | 580 | 3/3/2019 | ||||||||||
3/3/2017 | 580 | 3/3/2020 | ||||||||||
3/3/2017 | 581 | 3/3/2021 | ||||||||||
3/2/2018 | 637 | 3/2/2019 | ||||||||||
3/2/2018 | 636 | 3/2/2020 | ||||||||||
3/2/2018 | 637 | 3/2/2021 | ||||||||||
3/2/2018 | 637 | 3/2/2022 | ||||||||||
Thomas D. Loadman |
3/1/2016 | 1,305 | 3/1/2019 |
(4) | The amounts shown in this column represent the market value of these stock awards and related dividend equivalent units based on a closing market price of $17.04 per share on December 31, 2018, the last trading day in 2018. |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 31
EXECUTIVE AND DIRECTOR COMPENSATION
(5) | There are no amounts shown in this column because unvested PSUs awarded in 2017 and 2018 were below threshold performance at December 31, 2018. All PSU grants and related dividend equivalent units, if any, are scheduled to vest upon the achievement of total shareholder return ranking above the 25th percentile as compared to the S&P Small Cap 600 Materials Index during the last two months of the applicable performance period. As of December 31, 2018, the total shareholder return ranked below the 25th percentile for all outstanding awards. The number of unvested shares at target are summarized below. |
Name | Grant Date |
# of Shares at |
Vesting Date |
|||||||||
Leroy M. Ball |
3/3/2017 | 22,675 | 3/3/2020 | |||||||||
3/2/2018 | 26,938 | 3/2/2021 | ||||||||||
Michael J. Zugay |
3/3/2017 | 5,211 | 3/3/2020 | |||||||||
3/2/2018 | 5,704 | 3/2/2021 | ||||||||||
James A. Sullivan |
3/3/2017 | 4,838 | 3/3/2020 | |||||||||
3/2/2018 | 7,211 | 3/2/2021 | ||||||||||
Steven R. Lacy |
3/3/2017 | 5,803 | 3/3/2020 | |||||||||
3/2/2018 | 6,368 | 3/2/2021 | ||||||||||
Thomas D. Loadman |
3/3/2017 | 2,823 | 3/3/2020 |
32 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
2018 Option Exercises and Stock Vested
The table below sets forth information concerning aggregate exercises of stock options and the vesting of a portion of RSUs held by the NEOs during 2018.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise |
Value Realized on Exercise(1) |
Number of Shares Acquired on Vesting |
Value Realized on Vesting(2) |
||||||||||||
Leroy M. Ball
|
|
|
|
$
|
|
|
|
99,186
|
|
$
|
4,122,825
|
| ||||
Michael J. Zugay
|
|
|
|
|
|
|
|
27,897
|
|
|
1,159,530
|
| ||||
James A. Sullivan
|
|
|
|
|
|
|
|
25,145
|
|
|
1,045,126
|
| ||||
Steven R. Lacy
|
|
|
|
|
36,660
|
|
|
1,523,966
|
| |||||||
Thomas D. Loadman
|
|
3,091
|
|
|
3,431
|
|
|
36,120
|
|
|
1,306,680
|
|
(1) | The amounts in this column are calculated by multiplying the number of shares acquired on exercise by the difference between the fair market value of the common stock on the date of exercise of $41.10 and the exercise price of the options. |
(2) | The amounts in this column represent the number of shares acquired upon the vesting of PSUs and RSUs on March 1, 2018, March 2, 2018 and December 31, 2018 multiplied by the closing stock price on the applicable vesting date, which was $40.80, $41.60 and $17.04, respectively. Amounts included do not deduct any taxes paid by the NEOs in connection with the vesting of the RSUs. |
The table below sets forth information as of December 31, 2018, with respect to each plan that provides for payments or other benefits at, following, or in connection with retirement. None of our NEOs received any payments during 2018 under any of these plans.
Name | Plan Name | Number of Years Credited Service (#) |
Present Value of Accumulated Benefit ($)(1) |
|||||||
Steven R. Lacy |
Retirement Plan for Koppers Inc. | 5.5 | $ | 182,178 | ||||||
Koppers Inc. Retirement Income Restoration Plan (SERP I) | 5.5 | 105,228 | ||||||||
Koppers Inc. Supplemental Executive Retirement Plan II (SERP II)
|
|
5.5
|
|
|
148,646
|
| ||||
$ | 436,052 | |||||||||
Thomas D. Loadman |
Retirement Plan for Koppers Inc. | 27.6 | $ | 784,456 | ||||||
Koppers Inc. Retirement Income Restoration Plan (SERP I) | 27.6 | 264,523 | ||||||||
Koppers Inc. Supplemental Executive Retirement Plan II (SERP II) | 27.6 | 970,970 | ||||||||
$ | 2,019,949 |
(1) | These present values have been determined using the assumptions and valuation methodology set forth in note 15 of the consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2018. |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 33
EXECUTIVE AND DIRECTOR COMPENSATION
34 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
2018 Non-qualified Deferred Compensation
The table below sets forth information as of December 31, 2018, with respect to our Benefit Restoration Plan, a defined contribution plan that provides for the deferral of compensation on a basis that is not tax-qualified. The Benefit Restoration Plan is described in further detail below. None of our NEOs made any contributions or withdrawals during 2018 under the Benefit Restoration Plan.
Name | Registrant Contributions in Last Fiscal Year ($)(1)(2) |
Aggregate Earnings ($)(3) |
Aggregate Balance at Last Fiscal End ($)(2)(4) |
|||||||||
Leroy M. Ball
|
$
|
56,463
|
|
$
|
5,209
|
|
$
|
199,484
|
| |||
Michael J. Zugay
|
|
15,026
|
|
|
1,112
|
|
|
45,549
|
| |||
James A. Sullivan
|
|
15,105
|
|
|
864
|
|
|
38,836
|
| |||
Steven R. Lacy
|
|
17,981
|
|
|
4,815
|
|
|
150,168
|
| |||
Thomas D. Loadman
|
|
15,001
|
|
|
6,299
|
|
|
187,953
|
|
(1) | The amounts shown in this column are reported as compensation in 2018 in the Summary Compensation Table. |
(2) | The amounts disclosed in these columns includes an assumed amount for employer contributions made under our Benefit Restoration Plan. Actual employer contributions have not yet been made for 2018, however, for purposes of this table, we have assumed that such contributions will be paid for 2018 in accordance with past practice. |
(3) | The following amounts reported in this column are reported as compensation in 2018 in the Summary Compensation Table: $854 for Mr. Ball, $182 for Mr. Zugay, $142 for Mr. Sullivan, $790 for Mr. Lacy and $1,033 for Mr. Loadman. |
(4) | The following amounts reported in this column were reported as compensation in the Summary Compensation Table for previous years: $132,717 for Mr. Ball, $29,013 for Mr. Zugay, $20,217 for Mr. Sullivan, $110,078 for Mr. Lacy and $97,714 for Mr. Loadman. |
Potential Payments upon Termination or Change in Control
The following information and related table set forth the details of the payments and benefits that would be provided to each NEO in the event that his employment is terminated with us for any reason including resignation, termination without cause, retirement, a constructive termination of the executive, a change in control or a change in the executives responsibilities.
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 35
EXECUTIVE AND DIRECTOR COMPENSATION
Change in Control Agreements
36 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
Effect of Termination for Any Reason or Change in Control on Unvested LTIP Awards
As further described in the Outstanding Equity Awards at Fiscal Year End table, certain NEOs hold unvested RSUs, PSUs and stock options under the LTIP. If the employment of any of the NEOs is terminated for any reason (other than retirement, death or permanent disability), the executive will forfeit any unvested RSUs, PSUs and stock options; the executive will not forfeit any RSUs, PSUs and stock options already vested. Except for PSUs granted in 2019, if the employment of any of the NEOs (except Mr. Loadman) is terminated for retirement, death or permanent disability, vesting of RSUs, PSUs and stock options will be as follows:
Type of Award | Vesting | |
PSUs |
Pro-Rata Vesting at End of Measurement Period. Upon completion of the performance measurement period, the executive will vest in a number of shares equal to the number of shares (if any) in which the executive would have vested at the end of the measurement period had he/she continued in our service through the end of the measurement period multiplied by a fraction, the numerator of which is the number of months of service the executive completed between the award date and the termination of the executives service and the denominator of which is the total number of months in the measurement period. | |
RSUs and Stock Options |
Immediate Pro-Rata Vesting. For awards granted in 2015 and thereafter, immediate vesting in the number of RSUs or stock options in which the executive would have been vested at the time of the executives termination had 25% of the RSUs or stock options that were scheduled to vest on the next anniversary of the award date instead vested in a series of 12 successive equal monthly installments over the duration of the 12-month period proceeding such anniversary of the award date. |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 37
EXECUTIVE AND DIRECTOR COMPENSATION
Named Executive Officer | Death, Disability or Retirement(1) |
Qualifying Termination Following a Change in |
Without Cause (2) |
|||||||||
Leroy M. Ball
|
||||||||||||
Bonus
|
$
|
725,350
|
|
$
|
857,300
|
|
$
|
|
| |||
Cash severance
|
|
|
|
|
1,678,900
|
|
|
|
| |||
Equity vesting
|
|
641,599
|
|
|
1,452,388
|
|
|
|
| |||
Health and welfare
|
|
|
|
|
23,912
|
|
|
|
| |||
$
|
1,366,949
|
|
$
|
4,012,500
|
|
$
|
|
| ||||
Michael J. Zugay
|
||||||||||||
Bonus
|
$
|
202,760
|
|
$
|
263,257
|
|
$
|
|
| |||
Cash severance
|
|
|
|
|
782,182
|
|
|
|
| |||
Equity vesting
|
|
157,497
|
|
|
341,755
|
|
|
|
| |||
Health and welfare
|
|
|
|
|
28,787
|
|
|
|
| |||
$
|
360,257
|
|
$
|
1,415,981
|
|
$
|
|
| ||||
James A. Sullivan
|
||||||||||||
Bonus
|
$
|
219,143
|
|
$
|
251,163
|
|
$
|
|
| |||
Cash severance
|
|
|
|
|
799,978
|
|
|
|
| |||
Equity vesting
|
|
157,136
|
|
|
361,793
|
|
|
|
| |||
Health and welfare
|
|
|
|
|
43,082
|
|
|
|
| |||
$
|
376,279
|
|
$
|
1,456,016
|
|
$
|
|
| ||||
Steven R. Lacy
|
||||||||||||
Bonus
|
$
|
226,363
|
|
$
|
292,372
|
|
$
|
226,363
|
| |||
Cash severance
|
|
|
|
|
1,457,978
|
|
|
1,165,556
|
| |||
Equity vesting
|
|
178,996
|
|
|
385,070
|
|
|
|
| |||
Health and welfare
|
|
|
|
|
30,234
|
|
|
24,910
|
| |||
$
|
405,359
|
|
$
|
2,165,654
|
|
$
|
1,416,829
|
|
(1) | In the event of termination due to disability or retirement, the executive will receive the pro-rata share of the bonus to which he would have otherwise been entitled at year-end subject to the discretion of the CEO (as approved by the management development and compensation committee and the board). |
(2) | Does not include amounts that Messrs. Ball, Zugay and Sullivan would be eligible to receive under the Companys broad-based severance plan in the case of termination without cause. |
38 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
We have adopted a standard arrangement to compensate each of our non-employee directors. In 2018, each non-employee director received the following:
Director Compensation Program | ||||
Annual Cash Retainer for Non-Management Directors
|
$
|
70,000
|
| |
Supplemental Annual Cash Retainer for Non-Executive Chairman
|
$
|
80,000
|
| |
Supplemental Annual Cash Retainer for Committee Chair (except Audit Committee)
|
$
|
10,000
|
| |
Supplemental Annual Cash Retainer for Audit Committee Chair
|
$
|
15,000
|
| |
Annual Equity Award of RSUs
|
$
|
95,000
|
| |
Supplemental board meeting attendance fee for meetings in excess of six per year
|
$
|
1,000
|
| |
Supplemental committee meeting attendance fee for meetings in excess of six per year
|
$
|
1,000
|
|
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 39
EXECUTIVE AND DIRECTOR COMPENSATION
2018 Director Compensation Table
The table below provides information concerning the compensation of our non-employee directors for 2018.
Name | Fees Earned or Paid in Cash(1) |
Stock Awards(2) |
Total | |||||||||
David M. Hillenbrand |
$ | 116,984 | (3) | $ | 95,013 | $ | 211,997 | |||||
Cynthia A. Baldwin |
73,000 | (4) | 95,013 | 168,013 | ||||||||
Sharon Feng |
84,000 | (5) | 95,013 | 179,013 | ||||||||
Traci L. Jensen |
21,495 | 60,908 | 82,403 | |||||||||
David L. Motley |
21,495 | 60,908 | 82,403 | |||||||||
Albert J. Neupaver |
84,000 | (6) | 95,013 | 179,013 | ||||||||
Louis L. Testoni |
90,000 | (7) | 95,013 | 185,013 | ||||||||
Stephen R. Tritch |
|
101,174
|
(8)
|
|
95,013
|
|
|
196,187
|
| |||
Sonja M. Wilkerson
|
|
21,495
|
|
|
60,908
|
|
|
82,403
|
| |||
T. Michael Young
|
|
84,000
|
(9)
|
|
95,013
|
|
|
179,013
|
|
(1) | Each director received a total amount of $70,000 for his or her 2018 annual cash retainer, except for directors who served for only part of the year ended December 31, 2018. Dr. Hillenbrand, who retired from the board of directors effective as of October 11, 2018, received a total amount of $54,592 for his 2018 annual cash retainer for the period from January 1, 2018 through October 11, 2018. Ms. Jensen, Mr. Motley, and Ms. Wilkerson, who were elected to the board of directors effective as of September 10, 2018, received a total amount of $21,495 for their annual cash retainer for the period from September 10, 2018 through December 31, 2018. |
(2) | On May 8, 2018, each non-management member of the board of directors on such date was granted 2,430 RSUs. On September 10, 2018, Ms. Jensen, Mr. Motley, and Ms. Wilkerson were each granted 1,768 RSUs. The amounts in this column relating to the May 8, 2018 awards represent the grant date fair value of that grant, which is determined by multiplying the shares granted by $39.10 per share, the closing stock price on May 8, 2018. The amounts in this column relating to the September 10, 2018 awards represent the grant date fair value of that grant, which is determined by multiplying the shares granted by $34.45 per share, the closing stock price on September 10, 2018. These award grant date fair values have been determined in accordance with FASB ASC Topic 718 using the assumptions underlying the valuation of equity awards set forth in note 8 of the consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2018. As of December 31, 2018, each incumbent non-management director, except Ms. Jensen, Mr. Motley, and Ms. Wilkerson, owned 2,430 unvested RSUs. As of December 31, 2018, Ms. Jensen, Mr. Motley, and Ms. Wilkerson, each owned 1,768 unvested RSUs. |
(3) | Dr. Hillenbrand received an additional $62,391 for serving as chairman of the board for the period from January 1, 2018 through October 11, 2018. |
(4) | Justice Baldwin received an additional $3,000 for supplemental meeting fees. |
(5) | Dr. Feng received an additional $10,000 for serving as chair of the safety, health and environmental committee and an additional $4,000 for supplemental meeting fees. |
(6) | Mr. Neupaver received an additional $10,000 for serving as chair of the strategy and risk committee and an additional $4,000 for supplemental meeting fees. |
(7) | Mr. Testoni received an additional $15,000 for serving as chair of the audit committee and an additional $5,000 for supplemental meeting fees. |
(8) | Mr. Tritch received an additional $17,174 for serving as chairman of the board for the period from October 14, 2018 through December 31, 2018, an additional $10,000 for serving as chair of the management development and compensation committee, and an additional $4,000 for supplemental meeting fees. |
(9) | Mr. Young received an additional $10,000 for serving as chair of the nominating and corporate governance committee and an additional $4,000 for supplemental meeting fees. |
40 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
EXECUTIVE AND DIRECTOR COMPENSATION
Stock Ownership Guidelines for Our Non-Employee Directors
Based on this information, for 2018 the ratio of the annual total compensation of Leroy M. Ball, Jr., our President and Chief Executive Officer, to the annual total compensation of our median employee was 56 to 1.
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 41
EXECUTIVE AND DIRECTOR COMPENSATION
42 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
(Dollars in thousands) | 2018 | 2017 | ||||||
Audit fees(1)
|
$
|
2,952
|
|
$
|
2,992
|
| ||
Audit-related fees(2)
|
|
25
|
|
|
41
|
| ||
Tax compliance(3)
|
|
126
|
|
|
429
|
| ||
Tax other(4)
|
|
616
|
|
|
706
|
| ||
All other fees
|
|
|
|
|
|
| ||
$
|
3,719
|
|
$
|
4,168
|
|
(1) | Fees related to professional services rendered for the audits of our consolidated financial statements included in our Annual Report on Form 10-K, quarterly reviews of the financial statements included in our Quarterly Reports on Form 10-Q, audits of internal control over financial reporting and statutory audits. |
(2) | Fees related to assistance with international accounting matters. |
(3) | Fees related to tax compliance review of our federal and foreign tax return filing and preparation of related calculations and transfer pricing documentation. |
(4) | Fees related to United States and international tax consulting services, assistance with tax audits and advice on other international tax matters. |
44 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
GENERAL MATTERS
Q. | How do I vote? |
A. | You may vote your shares by proxy or in person. |
By proxy |
If you are a shareholder of record, to vote your shares by proxy, you must complete, sign and date the proxy card and return it in the postage prepaid envelope.
If you are a beneficial owner, you must complete, sign and date the voting instructions included in the package from your broker, bank or other record holder and return those instructions to the broker, bank or other holder of record. | |
In person |
All shareholders may vote in person at the annual meeting.
If you are a shareholder of record, you may vote your shares directly at the meeting by casting a ballot in person. In addition, you may also be represented by another person at the annual meeting by executing a proper proxy designating that person.
If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or other holder of record and present it to the inspectors of election with your ballot to be able to vote at the meeting. |
Your vote is important. Please vote your shares promptly. We recommend you vote by proxy even if you plan to attend the meeting. You can always revoke your proxy before it is exercised by voting in person at the meeting.
48 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
GENERAL MATTERS
KOPPERS HOLDINGS INC. - 2019 Proxy Statement 49
GENERAL MATTERS
50 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
ANNEX A Unaudited Reconciliations of Non-GAAP Financial Measures
This proxy statement contains the following non-GAAP financial measures: adjusted earnings (loss) before interest, income taxes, depreciation and amortization (EBITDA), adjusted EBITDA margin and adjusted earnings per share (EPS).
We believe that adjusted EBITDA, adjusted EBITDA margin and adjusted EPS provide information useful to investors in understanding the underlying operational performance of our company, its business and performance trends, and facilitates comparisons between periods and with other corporations in similar industries. The exclusion of certain items permits evaluation and a comparison of results for ongoing business operations, and it is on this basis that our management internally assesses the companys performance. In addition, the board of directors and executive management team use adjusted EBITDA as performance measures under the companys annual incentive plan.
Although we believe that these non-GAAP financial measures enhance investors understanding of our business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP basis financial measures and should be read in conjunction with the relevant GAAP financial measure. Other companies in a similar industry may define or calculate these measures differently than our company, limiting their usefulness as comparative measures. Because of these limitations, these non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP.
UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
(In millions, except Adjusted EBITDA Margin)
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
Net income |
$ | 29.2 | $ | 30.5 | ||||
Interest expense |
56.3 | 42.5 | ||||||
Loss on extinguishment of debt |
| 13.3 | ||||||
Depreciation and amortization |
54.8 | 62.8 | ||||||
Income taxes |
26.0 | 29.0 | ||||||
(Income) loss from discontinued operations |
(0.4 | ) | 0.8 | |||||
EBITDA with noncontrolling interests |
165.9 | 178.9 | ||||||
Unusual items impacting net income |
||||||||
Impairment, restructuring and plant closure costs |
23.5 | 15.9 | ||||||
Non-cash LIFO expense (benefit) |
12.6 | (0.5 | ) | |||||
Mark-to-market commodity hedging loss (gain) |
6.9 | (3.5 | ) | |||||
UIP inventory purchase accounting adjustment |
6.0 | | ||||||
Acquisition closing costs |
3.1 | | ||||||
Contract buyout |
1.6 | | ||||||
Sale of land |
1.1 | | ||||||
Sale of specialty chemicals business |
0.9 | | ||||||
Pension settlement charge |
| 10.0 | ||||||
Reimbursement of environmental costs |
| (0.4 | ) | |||||
Total adjustments |
55.7 | 21.5 | ||||||
Adjusted EBITDA with noncontrolling interests |
$ | 221.6 | $ | 200.4 | ||||
Net sales |
$ | 1,710.2 | $ | 1,475.5 | ||||
Adjusted EBITDA margin |
13.0 | % | 13.6 | % |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement A-1
ANNEX A UNAUDITED RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
UNAUDITED RECONCILIATION OF NET INCOME ATTRIBUTABLE TO KOPPERS AND ADJUSTED NET INCOME
(In millions)
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
Net income attributable to Koppers |
$ | 23.4 | $ | 29.1 | ||||
Unusual items impacting pre-tax income |
||||||||
Impairment, restructuring and plant closure costs |
27.1 | 33.3 | ||||||
Non-cash LIFO expense (benefit) |
12.6 | (0.5 | ) | |||||
Mark-to-market commodity hedging loss (gain) |
6.9 | (3.5 | ) | |||||
UIP inventory purchase accounting adjustment |
6.0 | | ||||||
Acquisition closing costs |
3.1 | | ||||||
Contract buyout |
1.6 | | ||||||
Sale of land |
1.1 | | ||||||
Sale of specialty chemicals business |
1.0 | | ||||||
Debt refinancing costs |
| 13.3 | ||||||
Pension settlement charge |
| 10.0 | ||||||
Reimbursement of environmental costs |
| (0.4 | ) | |||||
Total adjustments |
59.4 | 52.2 | ||||||
Adjustments to income tax and noncontrolling interests |
||||||||
Income tax on adjustments to pre-tax income |
(13.0 | ) | (21.8 | ) | ||||
Income tax - U.S. Tax Reform |
5.3 | 20.5 | ||||||
Noncontrolling interests |
| 0.2 | ||||||
Effect on adjusted net income |
51.7 | 51.1 | ||||||
Adjusted net income including discontinued operations |
75.1 | 80.2 | ||||||
(Income) loss from discontinued operations |
(0.4 | ) | 0.8 | |||||
Adjusted net income |
$ | 74.7 | $ | 81.0 |
UNAUDITED RECONCILIATION OF DILUTED EARNINGS PER SHARE AND ADJUSTED EARNINGS PER SHARE
(In millions except share and per share amounts)
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
Net income attributable to Koppers |
$ | 23.4 | $ | 29.1 | ||||
Adjusted net income (from above) |
$ | 74.7 | $ | 81.0 | ||||
Denominator for diluted earnings per share (in thousands) |
21,326 | 22,000 | ||||||
Earnings per share: |
||||||||
Diluted earnings per share |
$ | 1.10 | $ | 1.32 | ||||
Adjusted earnings per share |
$ | 3.50 | $ | 3.68 |
A-2 KOPPERS HOLDINGS INC. - 2019 Proxy Statement
ANNEX A UNAUDITED RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
UNAUDITED RECONCILIATION OF SEGMENT OPERATING PROFIT TO ADJUSTED EBITDA1
(in millions)
Year Ended December 31, 2018 | ||||||||||||||||||||
Railroad and Utility Products and Services |
Performance Chemicals |
Carbon Materials and Chemicals |
Corporate | Consolidated | ||||||||||||||||
Operating profit (loss) |
$ | 5.9 | $ | 36.2 | $ | 70.7 | $ | (2.4 | ) | $ | 110.4 | |||||||||
Other income (loss) |
(0.2 | ) | 2.4 | 1.9 | (3.4 | ) | 0.7 | |||||||||||||
Depreciation |
17.7 | 17.8 | 15.3 | | 50.8 | |||||||||||||||
Depreciation in impairment and restructuring charges |
| | 4.0 | | 4.0 | |||||||||||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) |
23.4 | 56.4 | 91.9 | (5.8 | ) | 165.9 | ||||||||||||||
Adjustments to EBITDA: |
||||||||||||||||||||
CMC restructuring |
| | 22.7 | | 22.7 | |||||||||||||||
Non-cash LIFO expense |
8.7 | | 3.9 | | 12.6 | |||||||||||||||
Mark-to-market commodity hedging loss |
| 6.9 | | | 6.9 | |||||||||||||||
UIP inventory purchase accounting adjustment |
6.0 | | | | 6.0 | |||||||||||||||
Acquisition closing costs |
| | | 3.1 | 3.1 | |||||||||||||||
Contract buyout |
1.6 | | | | 1.6 | |||||||||||||||
Sale of land |
| (1.1 | ) | | 2.2 | 1.1 | ||||||||||||||
Sale of specialty chemicals business |
| | 0.9 | | 0.9 | |||||||||||||||
RUPS treating plant closures |
0.8 | | | | 0.8 | |||||||||||||||
Adjusted EBITDA |
$ | 40.5 | $ | 62.2 | $ | 119.4 | $ | (0.5 | ) | $ | 221.6 |
(1) | A reconciliation of segment net income to adjusted segment EBITDA is not available without unreasonable efforts as we do not measure net income at the segment level or use it as a measure of operating performance. |
KOPPERS HOLDINGS INC. - 2019 Proxy Statement A-3
Koppers is an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds for the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and construction industries.WWW.KOPPERS.COM
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.
|
☒
|
|||||||||
Annual Meeting Proxy Card
|
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A | Proposals THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL LISTED NOMINEES AND FOR PROPOSALS 2 AND 3. |
1. | PROPOSAL FOR ELECTION OF DIRECTORS | + | ||||||||||||||||||||||||
Nominees: | For | Against | Abstain | For | Against | Abstain | For | Against | Abstain | |||||||||||||||||
01 - Leroy M. Ball, Jr. | ☐ | ☐ | ☐ | 02 - Sharon Feng | ☐ | ☐ | ☐ | 03 - Traci L. Jensen | ☐ | ☐ | ☐ | |||||||||||||||
04 - David L. Motley | ☐ | ☐ | ☐ | 05 - Albert J. Neupaver | ☐ | ☐ | ☐ | 06 - Louis L. Testoni | ☐ | ☐ | ☐ | |||||||||||||||
07 - Stephen R. Tritch | ☐ | ☐ | ☐ | 08 - Sonja M. Wilkerson | ☐ | ☐ | ☐ |
For | Against | Abstain | For | Against | Abstain | |||||||||||||||
2. | ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION | ☐ | ☐ | ☐ | 3. | PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2019 | ☐ | ☐ | ☐ |
B | Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below |
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
Date (mm/dd/yyyy) Please print date below. | Signature 1 Please keep signature within the box. | Signature 2 Please keep signature within the box. | ||||||
/ / |
1 P C F | + |
02Z6FC
Important notice regarding the availability of proxy materials for the Annual Meeting of Shareholders to be held on May 2, 2019.
The Proxy Statement and the 2018 Annual Report to Shareholders are available at: www.proxydocs.com/KOP
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy Koppers Holdings Inc. | + |
ANNUAL MEETING OF SHAREHOLDERS MAY 2, 2019
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder hereby appoints Michael J. Zugay and Steven R. Lacy or either of them, as proxies, each with the power to act without the other and power of substitution, and herby authorizes them to represent and to vote, as designated on the reverse, and in their discretion on any other business which may properly come before the Annual Meeting of Shareholders (the Annual Meeting), all the shares of stock of Koppers Holdings Inc. held of record by the undersigned on March 18, 2019, at the Annual Meeting to be held on May 2, 2019, or any adjournments thereof. If this proxy card is executed and no direction is given, such shares will be voted for all listed nominees and in accordance with the recommendation of the Board of Directors on the other matters referred to on the reverse side and in the discretion of Michael J. Zugay and Steven R. Lacy on such other business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL LISTED NOMINEES AND FOR PROPOSALS 2 AND 3.
YOU MAY RECEIVE MORE THAN ONE PROXY CARD FOR SHARES OF COMMON STOCK THAT YOU OWN DEPENDING ON HOW YOU OWN YOUR SHARES. PLEASE COMPLETE, SIGN AND RETURN EACH PROXY CARD THAT YOU RECEIVE AS EACH CARD REPRESENTS SEPARATE SHARES OF COMMON STOCK HELD BY YOU.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on the reverse side)
C | Non-Voting Items |
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