Compensation
Discussion & Analysis
2016 Compensation
Metrics
Our key compensation metrics are Adjusted
Operating Cash Flow less CapEx, Core Net Sales, and Core Earnings per Share
(Core EPS). These metrics are aligned with the Framework and are in place to
ensure that we focus on driving sales growth, improving earnings per share and
generating sufficient operating cash flow to deliver on our commitment to return
more than $12.5 billion to shareholders by 2019.
|
|
|
|
Actual Results
|
$1.55
CORE
EPS
|
$9,710 million
CORE NET
SALES
|
$1,651
million
ADJUSTED OPERATING
CASH FLOW
LESS
CAPEX
|
|
|
|
|
|
|
|
|
2016 Score as %
of Target
Payout
|
100%
of the established
target payout for
2016
|
38%
of the established
target payout for
2016
|
109%
of the
established
target payout for 2016
|
|
|
|
|
Please see Our 2016 Performance
Highlights on page 6 for more information about our Core Performance Measures
and Appendix A to this proxy statement for a reconciliation of the non-GAAP
measures we use in this proxy statement to our audited GAAP financial
statements.
Company Performance
Overview
2016 Business
Environment and Company Performance
Momentum built steadily throughout 2016,
and we were very pleased with several key achievements in our Framework. We
closed the strategic realignment of our interest in Dow Corning Corporation,
strengthened our portfolio with strategic acquisitions, won major platforms for
gas-particulate filters for gasoline direct injection engines, advanced Gorilla
Glass for automobiles, repurchased over 197 million shares of our common stock,
and increased the dividend on our common stock by 12.5%.
Core Net Sales were $9.7 billion, Core EPS
was $1.55 and Adjusted Operating Cash Flow less CapEx was $1.65 billion. For the
full year:
●
|
Display Technologies
Core Net Sales* decreased, driven by LCD glass
price declines slightly higher than 10%, partially offset by a mid-single
digit percentage volume increase. Volume growth was driven primarily by
average television screen size.
|
●
|
Optical Communications
sales increased driven by fiber-to-the-home
products in North America, higher sales of optical fiber and the impact of
an acquisition completed in the second quarter of 2016. These increases
were partially offset by production issues related to the implementation
of new manufacturing software, which constrained our ability to
manufacture product in the first half of 2016. Production returned to
normal levels at the end of the second quarter.
|
●
|
Specialty Materials
sales were up when compared to 2015, driven by an
increase in sales of Corning Gorilla Glass 5 and advanced optics
products.
|
●
|
In
Environmental Technologies
,
record performance in the light-duty business offset slower sales of
heavy-duty products in North America.
|
●
|
Life Sciences
sales were up, driven by growth in North America, China
and Europe.
|
* In 2016, in all segments except Display
Technologies, Core Net Sales and GAAP sales are consistent.
Please see Appendix A for a reconciliation
of the non-GAAP measures we use in this proxy statement to our audited GAAP
financial statements.
CORNING
2017 PROXY STATEMENT
41
|
Table of Contents
Compensation Discussion
& Analysis
2016 Performance
and Compensation Alignment
Each year we set rigorous and challenging
performance goals aligned with our strategic objectives. We continue to believe
profitability, cash generation, and revenue growth are the most important
measures of the successful execution of our Framework and delivery of long-term
shareholder value.
Approximately 89% of the CEOs target
total compensation and 79% of the other NEOs target total compensation is
variable and depends upon operating performance and stock price.
Our short-term incentives are composed of
the Performance Incentive Plan (PIP) and the GoalSharing plan. These plans use
metrics designed to drive growth and shareholder returns. Core EPS measures
bottom line profitability (75% weight); and Core Net Sales focuses on increasing
top line growth (25% weight). These two financial goals comprise 100% of PIP
payouts for NEOs. Because these goals growing both profit and sales are
well-aligned with the Framework, we did not make any changes to this construct
in 2016. Actual performance was below the established PIP targets for 2016, with
the blended result being a payout of 85% of PIP target.
We also have a company-wide GoalSharing
plan that motivates our entire workforce by including compensation objectives
reflecting a combination of corporate financial (25% weight) and business unit
performance (75% weight). NEOs receive payouts based on the average performance
of all business unit plans, which resulted in a payout of 5.96% of base salary
for 2016.
Long-Term Incentive (LTI) awards are
comprised of 60% Cash Performance Units (CPUs), 25% Restricted Stock Units
(RSUs), and 15% Stock Options. CPU awards are based 70% on Adjusted Operating
Cash Flow less CapEx and 30% on Core Net Sales, averaged over a three-year
period. In 2016, we changed the Adjusted Operating Cash Flow measure to Adjusted
Operating Cash Flow less CapEx in order to align that measure with the Framework
and to maintain careful focus on Cornings capital expenditures. In 2016, the
CPU payout was 88% of the performance target.
In addition, because ROIC improvement is
important to the delivery of the commitments made pursuant to our Framework, and
an important metric for many of our shareholders based on their feedback, we
have added an ROIC modifier to the CPUs. CPUs earned for the three-year
performance period (2016 through 2018) will be increased or decreased up to 10%
depending on Cornings ROIC performance over the three-year performance period
compared to pre-established performance targets.
The following table compares the 2016
actual results and targeted goals for each performance measure with 2015 actual
results.
|
|
2016
|
|
2015
|
Measure
|
|
Actual
% increase
vs. 15 Actual
|
|
Target
% increase
vs. 15 Actual
|
|
Actual
|
|
Target
|
Adjusted
Operating Cash Flow
|
|
$1,651
|
|
$1,593
(2)
|
|
$1,969
(2)
|
|
$N/A
(2)
|
less CapEx (millions)
|
|
N/A
(1)
|
|
N/A
(1)
|
|
|
|
|
Core EPS
|
|
$1.55
|
|
$1.55
|
|
$1.40
|
|
$1.53
|
|
+10.7%
|
|
+10.7%
|
|
|
|
|
Core Net Sales (millions)
|
|
$9,710
|
|
$9,996
|
|
$9,800
|
|
$10,352
|
|
-0.9%
|
|
+2.0%
|
|
|
|
|
(1)
|
Adjusted Operating Cash Flow less CapEx goals are
established yearly, independent of the prior year, based on items that may
be unique and non-recurring.
|
(2)
|
Adjusted Operating Cash Flow less CapEx was introduced
as a measure in 2016. Prior to 2016, Adjusted Operating Cash Flow was
used.
|
Please see Our 2016 Performance
Highlights on page 6 for more information about our Core Performance Measures
and Appendix A to this proxy statement for a reconciliation of the non-GAAP
measures we use in this proxy statement to our audited GAAP financial
statements.
42
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Compensation Discussion
& Analysis
Total Shareholder
Return
Cornings Total Shareholder Return (TSR),
which consists of stock price appreciation plus reinvestment of common
dividends, was 36.2% in 2016 and our three-year annualized TSR performance was
13.4%, both higher than the S&P 500 Index and Cornings Compensation Peer
Group.
ANNUALIZED TOTAL
SHAREHOLDER RETURN
As of
December 31, 2016
|
|
|
|
|
|
Cornings
1-Year
and 3-Year TSR
is better than
the TSR of the
S&P 500 Index
and Cornings
Compensation
Peer
Group
|
Return of Value to
Shareholders
Since introducing the Framework in late
2015, we have distributed approximately $6 billion to shareholders through share
repurchases and dividends. Our Board approved a new $4 billion share repurchase
authorization in December 2016, and annual dividend increases of 12.5% in 2016
and 14.8% in February 2017, as part of our ongoing commitment to return cash to
our investors.
Shareholder
Engagement
At our 2016 annual
meeting of
shareholders,
our Say on Pay proposal
received support
from
95%
of
votes cast.
|
|
Strong Say on Pay Results.
At our 2016 annual meeting of shareholders, our
Say on Pay proposal received support from 95% of votes cast, consistent
with 2015 and 2014. We view this level of shareholder support as an
affirmation of our current pay practices and pay-for-performance
philosophy.
Shareholder Outreach.
In
2016, as part of our shareholder outreach program, we met with
shareholders representing approximately 40% of our outstanding shares. In
these meetings, we heard many constructive comments on strategy, capital
allocation, governance, compensation and shareholder communications. We
learned through these meetings that our shareholders generally approved of
our Framework. These shareholders also were supportive of our executive
compensation program and the direct linkage of financial metrics in our
incentive plans to our Framework. As in previous years, shareholders were
not prescriptive about compensation plan design. Instead, they were more
interested to see that the results and outcomes delivered by the incentive
plans were aligned appropriately with Cornings performance and had
appropriately incented our executives to deliver on our Framework. See
Shareholder Communication on page 11 for additional
information.
|
|
|
CORNING
2017 PROXY STATEMENT
43
|
Table of Contents
Compensation Discussion
& Analysis
Robust Compensation
Program Governance
Corning has rigorous and robust governance
with respect to its executive compensation plan:
✓
|
Close alignment of pay with performance over
both the
short and long term horizon
|
✓
|
Mix of cash and equity incentives tied to
short-term
financial performance and long-term
value creation
|
✓
|
CEO total compensation targeted within a
competitive
range of the Compensation Peer Group
median
|
✓
|
Caps on payout levels for annual incentives in
a
budgeted down-cycle year
|
✓
|
Significant NEO share ownership
requirements
|
✓
|
Anti-hedging and pledging policies
|
✓
|
Clawback policy
|
✓
|
No excise tax gross-ups for officer
agreements entered into after July 2004
|
✓
|
Limited and modest perquisites that
have a sound benefit to the Companys business
|
✓
|
No tax gross-ups or tax assistance
on perquisites
|
✓
|
No repricing of underwater stock
options without shareholder approval
|
✓
|
Independent compensation consultant
advisor to the Compensation Committee
|
✓
|
History of demonstrated
responsiveness to shareholder concerns and feedback, and ongoing
commitment to shareholder
engagement
|
2016 Executive
Compensation Program Overview
To ensure compensation is aligned with our
Framework and long-term value creation, we believe a well-structured program
must balance near-term financial results and execution while building long-term
value.
To that end, our compensation program is
composed of a number of elements, each tailored to encourage an aspect of the
Companys performance that the Committee believes is important for delivering on
the Framework and driving long-term shareholder value. Given the importance of
growing sales in our businesses, we include a revenue measure in both our
short-term and long-term incentive programs while continuing to place the most
emphasis on profitability and cash generation. Performance metrics for the
short-term incentives impact almost every employee at Corning through
GoalSharing and approximately 5,500 mid-level managers and above through the
Performance Incentive Plan. For the CPUs of the LTI, we again focus on Core Net
Sales growth because the executives and key employees in this plan can most
dramatically impact sales growth. We believe that revenue and earnings growth,
generating strong positive cash flows and sustaining a return on invested
capital greater than our cost of capital are the key contributors to creating
long-term shareholder value.
44
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Compensation Discussion
& Analysis
In addition to a fixed competitive base
salary, we offer the following variable pay components:
Summary of
Cornings 2016 Executive Variable Compensation Program
|
|
Form of Compensation
Delivered
|
|
Performance
Measures
|
|
|
Performance Incentive
Plan
(Cash)
|
|
Core EPS (75%)
Core Net Sales
(25%)
|
|
|
|
|
|
GoalSharing
(Company-Wide
Business Unit Plan;
Paid in Cash)
|
|
Weighted Average of Business Unit
Plans
|
|
|
|
|
|
|
|
Cash Performance Units
(CPUs) (60%)
|
|
3-year average of
●
Adjusted Operating Cash Flow less CapEx (70%
weighting)
●
Core Net Sales (30% weighting)
●
2016 Changes in Support of our Framework:
Adjusted Operating Cash Flow less CapEx now used to emphasize cash
flow generation
Added a ±10% modifier based on ROIC improvement from 2016 through
2018 relative to pre-established targets
|
|
|
|
|
|
Equity Incentives:
Restricted Stock Units (RSUs) (25%) and
Stock Options
(15%)
|
|
Value depends on Corning share price
performance
|
We believe these features offer the
following benefits:
Clear, measurable and challenging
goals:
We base our performance objectives on
the results of a rigorous goal-setting process that relies on both
business-driven bottom-up and corporate top-down budgets.
Beginning in 2013, we began to provide the
core performance measures that supplement our GAAP financial measures to provide
shareholders a clearer view of the Companys core operating results. Because
Corning uses these core performance measures to manage its businesses, it is
appropriate that we also use these measures for the performance targets in our
short-term and long-term incentive programs. For more information about
Cornings core performance measures, see Core Performance Measures on page
6.
Our incentive plans also require our
results to exceed the set targets by a meaningful margin before payouts increase
significantly. Payouts relative to target fall significantly if performance
goals are not achieved, with full forfeiture occurring if specified threshold
goals are not attained. This approach discourages imprudent risk-taking, creates
a strong incentive to set reasonable and challenging goals, and fosters strong
focus on achievement of the annual business plan.
CORNING
2017 PROXY STATEMENT
45
|
Table of Contents
Compensation Discussion
& Analysis
Our rigorous goal setting process is
demonstrated in the following measures for our short- and long-term incentive
plans:
|
|
|
|
Short Term/Annual Incentive
2016 PIP
Measures
|
|
Long-Term Incentive
2016 CPU Measures
(Year One of Three-Year
Average Plan)
|
|
|
|
|
Core EPS Goal
(Weighted 75%)
|
|
Core Net Sales Goal
(Weighted 25%)
|
|
Adjusted Operating Cash
Flow less CapEx Goal (Weighted
70%)
|
|
Core Net Sales Goal
(Weighted 30%)
|
|
|
Achievement
%
|
|
Core
EPS
(in $M)
|
|
% of
2016
Plan
|
|
Core
Net
Sales
(in $M)
|
|
%
of
2015
Core Net
Sales
|
|
Adjusted
OCF
less
CapEx (in $M)
|
|
% of
2016
Plan
|
|
Core
Net
Sales
(in $M)
|
|
%
of
2015
Core Net
Sales
|
|
|
200%
|
|
$1.74
|
|
112%
|
|
$10,780
|
|
110%
|
|
Capped at 150%
|
|
|
150%
|
|
$1.66
|
|
107%
|
|
$10,322
|
|
105%
|
|
$1,912
|
|
120%
|
|
$10,780
|
|
110%
|
|
|
125%
|
|
$1.62
|
|
105%
|
|
$10,094
|
|
103%
|
|
$1,752
|
|
110%
|
|
$10,094
|
|
103%
|
TARGET
|
|
100%
|
|
$1.55
|
|
100%
|
|
$9,996
|
|
102%
|
|
$1,593
|
|
100%
|
|
$9,996
|
|
102
%
|
|
|
75%
|
|
$1.40
|
|
90%
|
|
$9,898
|
|
101%
|
|
$1,354
|
|
85%
|
|
$9,898
|
|
101%
|
|
|
50%
|
|
$1.24
|
|
80%
|
|
$9,800
|
|
100%
|
|
$1,235
|
|
78%
|
|
$9,800
|
|
100%
|
|
|
0%
|
|
$1.16
|
|
75%
|
|
$9,408
|
|
96%
|
|
$1,035
|
|
65%
|
|
$9,408
|
|
96%
|
As discussed on page 41, in 2016 Cornings
performance results for Core EPS met the annual target bonus opportunity (100%),
while Core Net Sales fell well below its target (38%), with the blended result
for short-term incentives being 85%. Adjusted Operating Cash Flow less CapEx
exceeded the annual target bonus opportunity (109%), and, as stated above, Core
Net Sales was below its target (38%), yielding a blended result of 88% of the
annual target bonus opportunity for the 2016 earned portion of CPUs. 2016 CPUs
are further subject to an ROIC modifier of ± 10% based on ROIC improvement over
the three-year performance period (2016-2018) against pre-established
targets.
Substantial
variable and at risk compensation:
Approximately 89% of the CEOs target total compensation and 79% of the
other NEOs target total compensation is variable and impacted by operating
performance and stock price. Target total compensation includes base salary and
target short- and long-term incentives.
89% of CEO and 79% of NEO
target total compensation is variable
and linked to operating or stock
performance.
|
2016 Executive
Compensation Program Details
Our key compensation program principles
are as follows:
●
|
Provide a competitive base
salary
|
●
|
Pay for
performance
|
●
|
Incentivize execution of our
Framework
|
●
|
Apply a team-based management
approach
|
●
|
Increase the proportion of incentive
compensation for more senior positions
|
●
|
Align the interests of our executive
group with shareholders
|
Base
Salary
Base salaries provide a form of fixed
compensation and are reviewed annually by the Committee taking into account
internal equity and individual performance, as well as competitive positioning,
as discussed in the Compensation Peer Group section on page 50. In 2016, all
NEOs received base salary increases of approximately 2%, consistent with the
salary increase budget for all other U.S. salaried employees.
46
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Compensation Discussion
& Analysis
Short-Term
Incentives
Short-term incentives are designed to
reward NEOs for Cornings consolidated annual financial performance supporting
our Framework and team-based management approach.
Compensation
Element
|
Target
Opportunity
|
2016 Performance
Target
|
2016 Actual
Results
|
Earned Award
for 2016
|
|
Performance
Incentive
Plan
Core EPS (75%)
Core Net Sales
(25%)
|
CEO:
150%*
Other NEOs:
70%-80%*
|
Core EPS:
$1.55
Core Net Sales:
$9,996
million
|
Core EPS:
$1.55
Core Net Sales:
$9,710
million
|
Core EPS result
(75% of
weight):
100% of target
payout
Core Net Sales result
(25% of
weight):
38% of target
payout
Blended
result:
85% of target
payout
|
GoalSharing
|
5%*
|
N/A
(Average of all business unit
plans)
|
5.96%*
|
5.96%*
|
* As a percentage of base
salary.
Long-Term
Incentives and Equity Awards
Long-term incentives (LTI) are designed as
a mix of cash performance units (CPUs), restricted stock units (RSUs), and stock
options (Options). Target value amounts are established by the Committee for
each NEO annually in February. We believe it is important to align LTI amounts
to financial measures that support the execution of our Framework and generate
long-term value for our shareholders. We also believe it is important for a
portion of LTI to be in the form of equity to align the interests of our NEOs
with shareholders.
●
|
CPUs
represent 60% of the annual target LTI value with payouts based on
performance goals that are focused on measures supporting Cornings
long-term financial health and success. Profitability, cash generation and
revenue growth are key drivers of how well we execute our strategy and our
long-term plan focuses on cash generation and Core Net Sales performance.
Actual CPUs earned are based on the average performance over three years.
Beginning in 2016, our adjusted operating cash flow measure for our CPUs
is Adjusted Operating Cash Flow less CapEx; we also added a three-year
ROIC modifier of ±10% to further align the metric with our Framework. In
2019, CPUs earned for 2016 will be paid out subject to an adjustment of
±10%, depending on Cornings ROIC change over the three year performance
period (2016 through 2018) compared to a pre-established performance
target. We will maintain this construct for CPUs awarded in 2017 as
well.
|
●
|
RSUs
represent 25% of the annual target LTI. The number of RSUs granted
is determined based on the stock price at the end of March, and awards
will cliff vest slightly more than three years from the grant
date.
|
●
|
Options
represent 15% of the annual target LTI. The number of
Options granted is determined using a Black-Scholes valuation. Options
were granted at the end of March, April and May in 2016. To simplify the
grant process, options are expected to be granted on a single date at the
end of March beginning in 2017. Vesting is three years after the grant
date, and the option awards have a maximum ten-year
term.
|
CORNING
2017 PROXY STATEMENT
47
|
Table of Contents
Compensation Discussion
& Analysis
Long-Term
Incentives and Equity Awards Earned in 2016
Compensation
Element
|
Target
Opportunity
|
Performance
Target
|
2016
Actual
Results
|
Earned
Award
for 2016
|
|
Adjusted Operating
Cash Flow (70%)
Core Net Sales
(30%)
|
CEO:
$4.95
million
Other
NEOs:
$0.84 million to
$1.35 million
|
Applies to the
following CPUs:
Year 1 of 3:
20162018,
Year 2 of 3:
20152017, and
Year 3 of 3:
20142016
Adjusted Operating
Cash Flow, less CapEx
$1,593 million
Core Net Sales:
$9,996 million
|
Adjusted Operating
Cash Flow less CapEx:
$1,651 million
Result: 100% of target
payout
Core Net Sales:
$9,710 million
Result: 38% of target payout
Blended Result:
88%
of target payout
|
20162018
CPUs
Year 1: 88% of target payout
Year 2: TBD
Year 3:
TBD
Three-year average, ±10%: TBD*
20152017
CPUs
Year 1: 100% of target payout
Year 2: 88% of target payout
Year 3: TBD
Three-year average: TBD
20142016
CPUs
Year 1: 121% of target payout
Year 2: 100% of target
payout
Year 3: 88% of target payout
Three-year average: 103% of
target payout
|
* Subject to a ±10% adjustment based on
ROIC improvement from 2016 through 2018 against pre-established
targets.
CEO Target
Compensation
Over the past twelve years, under the
leadership of Mr. Weeks, Corning has grown Core Net Sales, Core EPS, and
Adjusted Operating Cash Flow at double-digit rates. We have beaten the
competition on growth in each of our business segments, achieved the lowest cost
position in many key businesses, and created new-to-the-world product
categories, such as Corning
®
Gorilla
®
Glass, heavy-duty diesel substrates and
filters, and customized fiber-to-the-home solutions.
In February 2016, the Compensation
Committee approved the following changes to Mr. Weeks target compensation in
recognition of his consistent high performance:
●
|
Base salary increased by 2% in
line with base salary increases for all other U.S. based salaried
employees.
|
●
|
Target Short-Term Incentives
remained flat at 155% of base salary, comprised of a PIP target of 150% of
base salary and a GoalSharing target of 5% of base
salary.
|
●
|
Target Long-Term Incentives
increased 2016 LTI target from $8,000,000 to
$8,250,000.
|
Eighty-nine percent of Mr. Weeks pay is
directly tied to Cornings operating performance and stock price.
Employee Benefits
and Perquisites
Employee
Benefits:
Our NEOs are eligible to
participate in the same employee benefits plans as all other eligible U.S.
salaried employees. These plans include medical, dental, life insurance,
disability, matching gifts, qualified defined benefit and defined contribution
plans. We also maintain non-qualified defined benefit and defined contribution
retirement and long-term disability plans with the same general features and
benefits as our qualified plans for all U.S. salaried employees affected by tax
law compensation, contribution or deduction limits.
In addition to the standard benefits
available to all eligible U.S. salaried employees, the NEOs are eligible for the
benefits and perquisites described in this section.
48
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Compensation Discussion
& Analysis
Executive
Supplemental Pension Plan (ESPP):
We
maintain an ESPP to reward and retain long-serving individuals who are critical
to executing Cornings innovation strategy. Our non-qualified ESPP covers
approximately 20 active participants, including all of the NEOs. In 2006, we
capped the percentage of cash compensation earned as a retirement benefit under
the ESPP at a maximum of 50% of final average pay for 25 or more years of
service, a change that applies to all the NEOs except Dr. Morse. The definition
of pay used to determine benefits includes base salary and annual cash bonuses;
long-term cash or equity incentives are not included and do not affect
retirement benefits. Executives must have at least ten years of service to be
vested under this plan. All of the NEOs meet that requirement.
While we seek to maintain well-funded
qualified retirement plans, we do not fund our non-qualified retirement
plans.
For additional details of the ESPP
benefits and plan features, please refer to the section entitled Retirement
Plans on page 62.
Executive Physical
and Wellness:
All executives are
eligible for an annual physical exam in addition to wellness programs sponsored
by Corning for all employees.
Relocation and
Expatriate-Related Expenses:
As part
of our global mobility program, our policies provide that employees who relocate
to another country at our request are eligible for certain relocation and
expatriate benefits to facilitate the transition and international assignment.
These benefits include moving expenses, allowances for housing and goods and
services, and tax assistance. These policies are intended to recognize and
compensate employees for incremental costs incurred with moving or with living
and working outside of the employees home country. The goal of these relocation
and expatriate assistance programs is to ensure that employees are not
financially advantaged or disadvantaged as a result of their relocation and/or
international assignment, including related taxes. In July 2016, Mr. Clappins
assignment in Tokyo ended and he relocated back to Corning, NY. While he was
based in Tokyo, Mr. Clappin was eligible for expatriate benefits. These amounts
are detailed in footnote 5, section (v) to the Summary Compensation Table. Tax
equalization for Mr. Clappin will continue for the next several years due to the
timing of taxation of compensation earned while on his expatriate
assignment.
Other Executive
Perquisites:
We provide the NEOs with
an overall allowance that can be used for home security, modest personal
aircraft usage, and limited financial counseling services. Each NEO is
responsible for all taxes on any imputed income resulting from these
perquisites.
Given the limited commercial flight
options available in the Corning, New York area, the Committee believes that a
well-managed program of limited personal aircraft use provides an extremely
important benefit at a reasonable cost to the Company. We closely monitor
business and personal usage of our planes and limit personal usage to keep it at
a low percentage of total usage. The Committee establishes annual personal
aircraft usage caps under this program (both hours and absolute dollar value)
for each NEO. The established cap for the CEO was 100 hours and $165,000; the
cap for the other NEOs was approximately half this level or lower. Actual
utilization typically falls below these caps. For additional details, refer to
footnotes relating to All Other Compensation included with the Summary
Compensation Table starting on page 54.
Executive
Severance:
We have entered into
severance agreements with each NEO. The severance agreements provide clarity for
both Corning and the executive if the executives employment terminates. By
having an agreement in place, we avoid the uncertainty, negotiations and
potential litigation that may otherwise occur in the event of termination. The
agreements are competitive with market practices at many other large companies
and are helpful in retaining senior executives. Additional details can be found
under Arrangements with Named Executive Officers on page 65.
Executive
Change-in-Control Agreements:
The
Committee believes that it is in the best interests of shareholders, employees
and the communities in which Corning operates to ensure an orderly process if a
change in control were to occur. The Committee also believes it is important to
prevent the loss of key management personnel (who would be difficult to replace)
that may occur in connection with a potential or actual change in control.
Therefore, we have provided each NEO with a change-in-control agreement
(separate from the severance agreements described above). The change-in-control agreements provide
that an executives employment must be terminated or effectively terminated in
connection with a change in control in order to receive severance benefits.
Additional details about the specific agreements can be found under
Arrangements with Named Executive Officers Change-in-Control Agreements on
page 67.
CORNING
2017 PROXY STATEMENT
49
|
Table of Contents
Compensation Discussion
& Analysis
In 2012, the Committee approved updated
forms of agreements for all corporate officers entering into change-in-control
agreements after July 2004, which contain no provision for gross-ups for excise
taxes, and cap severance and other benefits at 2.99 times base salary plus
target bonus, with cash severance for most officers limited to 2 times base
salary plus target bonus. Except for Mr. Tripeny, whose agreement is dated
January 1, 2015, our current NEOs have grandfathered agreements that were
entered into prior to July 2004.
Compensation Peer
Group
Corning is a diversified technology
company with five reportable business segments. The majority of our businesses
do not have U.S. public company peers. Most of our businesses compete with
non-U.S. companies in Asia and Europe, or privately-held companies that do not
provide comparable executive compensation disclosure. In attempting to identify
peer companies for compensation purposes, Corning must look to globally
diversified companies or innovation companies in other industries to find
organizations of similar size and complexity (when viewed in terms of revenues,
net income, market capitalization, assets and number of employees). For these
reasons, our peer group for compensation purposes does not mirror the companies
with which we compete for business.
Our largest competitors and
most relevant financial performance peers are not U.S. public
companies.
Corning must look to globally
diversified companies or innovation companies in other industries to find
companies of similar size and
complexity.
|
We currently participate in and use three
general executive compensation surveys for NEO positions: Mercer Executive
Survey, Willis Towers Watson General Industry Executive Compensation Survey, and
Equilar TrueValue Survey. The identity of the individual companies comprising
the survey data is not considered in our evaluation process. In addition to
these three general surveys, we also use proxy data obtained from service
providers, such as Equilar, to review compensation levels of NEOs at companies
in a variety of manufacturing and service industries that are similar in size or
have similar characteristics to Corning. We refer to these companies as the
Compensation Peer Group.
Cornings reported Core Net Sales of
$9,710 million are at approximately the median for revenues of our Compensation
Peer Group. Market capitalization is also close to the median compared with the
Compensation Peer Group market capitalization. Cornings net income, total
assets and number of employees are near or within the top quartile when compared
to the same measures of the Compensation Peer Group.
PERCENT RANK, CORNING VERSUS COMPENSATION PEER
GROUP
|
2016 Compensation
Peer Group
Advanced Micro Devices, Inc.
|
Cummins Inc.
|
Medtronic, Inc.
|
QUALCOMM, Inc.
|
Agilent Technologies, Inc.
|
Danaher Corporation
|
Monsanto Company
|
Rockwell Automation, Inc.
|
Applied Materials, Inc.
|
Dover Corporation
|
Motorola Solutions, Inc.
|
TE Connectivity Limited
|
BorgWarner, Inc.
|
Eaton Corporation PLC
|
NetApp, Inc.
|
Texas Instruments Incorporated
|
Boston Scientific Corporation
|
Harris Corporation
|
PPG Industries, Inc.
|
Thermo Fisher Scientific, Inc.
|
Broadcom Corporation
|
Juniper Networks, Inc.
|
Praxair, Inc.
|
|
50
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Compensation
Discussion & Analysis
Corning uses the Compensation Peer Group
solely as a reference point, in combination with broader executive compensation
surveys, to assess each NEOs target total direct compensation (i.e., salary,
target bonus, and the grant date fair value of long-term incentives). Our goal
is to position our CEOs target total direct compensation within a competitive
range of the Compensation Peer Group median. Median target total direct CEO
compensation in the Compensation Peer Group was determined to be $11.1 million,
and 75th percentile target total direct CEO compensation was $12.6 million,
compared with Corning target total direct CEO compensation of $11.7 million.
Beyond the CEO, external data serves as a reference point, with internal equity
being a more important consideration in establishing a base salary and target
total direct compensation for the other NEOs.
Compensation Program
Governance
Role of
Compensation Consultant
The Committee has the authority to retain
and terminate a compensation consultant, and to approve the consultants fees
and all other terms of such engagement. Since 2014, the Committee has retained
an executive compensation expert from Frederic W. Cook & Co., Inc. (FW Cook)
as its independent consultant.
In 2016, FW Cook attended all Committee
meetings. FW Cook advises the Committee on all matters related to NEO and
director compensation and assists the Committee in interpreting its data as well
as data and recommendations received from the Company.
In 2016, the Company also engaged
Compensation Advisory Partners LLC (CAP), Shearman and Sterling, LLP (S&S)
and Willis Towers Watson (WTW) to assist management with various executive
compensation matters.
The Committee conducted an independence
review of FW Cook and each of CAP, S&S and WTW pursuant to SEC and NYSE
rules, and concluded that the work of each firm for Committee did not raise any
conflicts of interest concerns. FW Cook provides no services to Corning other
than the services rendered to the Committee.
Role of Executive
Management in the Executive Compensation Process
Cornings senior vice president (SVP),
Human Resources and SVP, Global Compensation and Benefits, working closely with
other members of Cornings Human Resources, Law and Finance departments, are
responsible for designing and implementing executive compensation programs and
discussing with the Committee significant proposals or topics that affect
executive compensation at the Company. The SVP, Global Compensation and
Benefits, formulates the target total compensation recommendations for all of
the NEOs (except the CEO) and reviews the recommendations for each of the other
NEOs with the CEO. The NEOs do not recommend or suggest individual compensation
actions that benefit them personally.
The CEO may propose adjustments he deems
appropriate before managements recommendations are submitted to the Committee.
Recommendations for the CEOs compensation are prepared by the compensation
consultant and are not discussed or reviewed with the CEO prior to the
Committees review and the CEO is not present for discussion of his compensation
by the Committee.
After the annual budget is finalized each
year, the Committee receives managements recommendations for the compensation
plan performance metrics and sets the final targets for the year.
The CFO typically attends the annual
Committee meeting to review the CD&A, and attends that portion of the
February Committee meeting where performance metrics are reviewed.
CORNING
2017 PROXY STATEMENT
51
|
Table of Contents
Compensation
Discussion & Analysis
Compensation Risk Analysis
In February 2016, the Committee reviewed
the conclusions of a risk assessment of our compensation policies and practices
covering all employees. This type of assessment is conducted annually by a
cross-functional team with representatives from Human Resources, Law and
Finance. The Committee evaluated the levels of risk-taking that potentially
could be encouraged by our compensation arrangements, taking into account the
arrangements risk-mitigation features, to determine whether they are
appropriate in the context of our strategic plan and annual budget, our overall
compensation arrangements, our compensation objectives, and Cornings overall
risk profile. Identified risk-mitigation features included the
following:
●
|
The mix of cash and equity payouts
tied to both short-term financial performance, mid-term financial
performance, and long-term value creation;
|
●
|
The time vesting requirements in our
long-term incentive plans, which help align the interests of employees to
shareholders;
|
●
|
The use of multiple financial
performance metrics that are readily monitored and
reviewed;
|
●
|
The rigorous budget and goal-setting
processes that involve both top-down and bottom-up
analyses;
|
●
|
The use of common performance
metrics for incentives across Cornings management team and all eligible
employees with corporate results impacting the compensation of all Corning
employees;
|
●
|
Rigorous goal setting in our annual
incentive plan that is intended to avoid imprudent risk-taking to achieve
ambitious goals;
|
●
|
Capped payout levels for annual
incentives, including sales commission plans and cash performance unit
awards;
|
●
|
Our robust stock ownership,
clawback, anti-hedging and anti-pledging policies for NEOs and other
employees; and
|
●
|
Multiple levels of review and
approval of awards, including Committee approval of all officer
compensation proposals.
|
The Committee concluded that Corning's
executive compensation program is balanced and does not reward excessive
financial risk-taking. We believe that Corning does not use compensation
policies or practices that create risks that are reasonably likely to have a
material adverse effect on the Company.
Clawback
Policy
Our clawback policy gives the Committee
the sole and absolute discretion to make retroactive adjustments to any cash or
equity-based incentive compensation paid to certain executive officers and other
key employees if such payment was based upon the achievement of financial
results that were subsequently the subject of a restatement. The Committee has
discretion to seek recovery of any amount that it determines was received
inappropriately by such individuals.
Anti-Hedging Policy
Our anti-hedging policy prohibits
employees and directors from selling or buying publicly traded options on
Corning stock, or trading in any Corning stock derivatives. Additionally, these
individuals may not engage in transactions in which they may profit from
short-term speculative swings in the value of Corning stock utilizing short
sales or put or call options.
Anti-Pledging Policy
Our anti-pledging policy prohibits
employees and directors from holding Corning stock in a margin account or
pledging Company securities as collateral for a loan.
52
CORNING
2017 PROXY
STATEMENT
|
Table of Contents
Compensation
Discussion & Analysis
Tax
Deductibility of Compensation
In general, Corning intends to structure
its performance-based incentives to qualify as deductible performance-based
compensation. See Proposal 5: Re-approval of the Material Terms of the
Performance Goals under Our 2012 Long-Term Incentive Plan, as Required by
Section 162(m) of the IRC for a further description of the Section 162(m)
requirements and our request for shareholder re-approval of the material terms
of the performance goals under our 2012 Long-Term Incentive Plan, which is
required by Section 162(m) at least every five years. The Committee maintains
the flexibility to pay incentive compensation or other compensation that does
not meet the requirements specified under Section 162(m) and is not deductible
by the corporation. The tax deductibility of other components of compensation,
including base salaries above $1 million, time-based restricted stock units, and
the taxable value of executive benefits and perquisites, is potentially limited
under current tax rules. In addition, for other compensation elements, there can
be no guarantee that performance-based compensation requirements for full
deductibility will be met in all instances and, therefore, the tax deductibility
of these amounts may also be limited.
Accounting Implications
In designing our compensation and benefit
programs, we review the accounting implications of our decisions. We seek to
deliver cost-effective compensation and benefit programs that meet both the
needs of the Company and our employees.
Compensation Committee Report
The Compensation Committee of the Board of
Directors (the Committee), which is composed entirely of independent directors,
is responsible to the Board of Directors and our shareholders for the oversight
and administration of executive compensation at Corning. The Committee approves
the principles guiding the Companys compensation philosophy, reviews and
approves executive compensation levels (including cash compensation, equity
incentives, benefits and perquisites for officers) and reports its actions to
the Board of Directors for review and, as necessary, approval. The Committee is
responsible for interpreting Cornings executive compensation plans and
programs. In the event of any questions or disputes, the Committee may use its
judgment and/or discretion to make final administrative decisions regarding
these plans and programs. It is our practice that all compensation decisions
affecting a corporate officer must be reviewed and approved by the Committee.
Additional details regarding the role and responsibilities of the Committee are
defined in the Committee Charter, located in the Corporate Governance section of
the Companys website.
The Committee has reviewed and discussed
the foregoing CD&A with management. Based on our review and discussions with
management, we recommended to the Board of Directors that the CD&A be
included in this proxy statement and in our Annual Report on Form 10-K for the
year ended December 31, 2016.
The Compensation
Committee:
Deborah D. Rieman,
Chair
Richard T. Clark
Kurt M.
Landgraf
Hansel E. Tookes II
CORNING
2017 PROXY STATEMENT
53
|
Table of Contents
Compensation
Discussion & Analysis
2016
Compensation Tables
2016
Summary Compensation Table
This table describes the total
compensation paid to our NEOs for fiscal years 2016, 2015 and 2014, as required.
The components of the total compensation are described in the footnotes below
and in more detail in the tables and narratives that follow. For information on
the role of each component of compensation, see the description under
Compensation Discussion and
Analysis
.
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
(1)
|
|
(f)
(2)
|
|
(g)
(3)
|
|
(h)
(4)
|
|
(i)
(5)
|
|
(j)
|
Named
Executive
Officer
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
Awards
|
|
Option
Awards
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
Change in
Pension
Value
And
Nonqualified
Deferred
Compensation
Earnings
|
|
All
Other
Compensation
|
|
Total
|
Wendell P. Weeks
|
|
2016
|
|
$
|
1,337,740
|
|
|
$0
|
|
$
|
2,062,491
|
|
|
$963,399
|
|
|
$5,750,512
|
|
|
$928,531
|
|
|
$266,582
|
|
$
|
11,309,255
|
Chairman,
Chief
|
|
2015
|
|
|
1,353,096
|
|
|
0
|
|
|
1,999,990
|
|
|
1,116,499
|
|
|
4,407,018
|
|
|
1,306,544
|
|
|
255,841
|
|
|
10,438,988
|
Executive
Officer and
|
|
2014
|
|
|
1,261,923
|
|
|
0
|
|
|
1,750,004
|
|
|
1,037,315
|
|
|
3,991,718
|
|
|
4,346,119
|
|
|
647,382
|
|
|
13,034,461
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Tony Tripeny
|
|
2016
|
|
|
504,808
|
|
|
0
|
|
|
349,991
|
|
|
163,480
|
|
|
916,406
|
|
|
214,950
|
|
|
126,222
|
|
|
2,275,857
|
Senior
Vice President
|
|
2015
|
|
|
434,135
|
|
|
0
|
|
|
387,494
|
|
|
146,542
|
|
|
650,617
|
|
|
0
|
|
|
75,299
|
|
|
1,694,087
|
and Chief
Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James P. Clappin
|
|
2016
|
|
|
686,538
|
|
|
0
|
|
|
525,007
|
|
|
245,230
|
|
|
1,537,749
|
|
|
66,568
|
|
|
3,452,856
|
|
|
6,513,948
|
President,
Corning
|
|
2015
|
|
|
695,000
|
|
|
0
|
|
|
524,997
|
|
|
293,084
|
|
|
1,200,392
|
|
|
56,178
|
|
|
1,672,111
|
|
|
4,441,762
|
Glass Technologies
|
|
2014
|
|
|
641,692
|
|
|
0
|
|
|
710,592
|
|
|
296,377
|
|
|
1,137,400
|
|
|
1,423,940
|
|
|
1,848,935
|
|
|
6,058,936
|
Lawrence D. McRae
|
|
2016
|
|
|
731,971
|
|
|
0
|
|
|
562,505
|
|
|
262,737
|
|
|
1,633,734
|
|
|
90,676
|
|
|
83,329
|
|
|
3,364,952
|
Vice
Chairman
|
|
2015
|
|
|
713,173
|
|
|
0
|
|
|
587,488
|
|
|
300,063
|
|
|
1,245,685
|
|
|
0
|
|
|
77,177
|
|
|
2,923,586
|
and
Corporate
|
|
2014
|
|
|
647,615
|
|
|
0
|
|
|
1,131,792
|
|
|
296,377
|
|
|
1,137,400
|
|
|
1,901,017
|
|
|
64,591
|
|
|
5,178,793
|
Development Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Morse
|
|
2016
|
|
|
631,010
|
|
|
0
|
|
|
525,007
|
|
|
245,230
|
|
|
1,498,641
|
|
|
468,668
|
|
|
97,390
|
|
|
3,465,946
|
Executive
Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The amounts in column (e) reflect the
aggregate grant date fair value computed in accordance with FASB ASC Topic
718 of awards of restricted stock units and restricted stock granted
pursuant to the 2012 Long-Term Incentive Plan. Assumptions used in the
calculation of these amounts are included in Note 19 to the Companys
audited financial statements for the fiscal year ended December 31, 2016
included in the Companys Annual Report on Form 10-K filed with the SEC on
February 6, 2017. This same method was used for the fiscal years ended
December 31, 2015 and 2014. There can be no assurance that the grant date
fair value amounts will ever be realized.
|
(2)
|
The amounts in column (f) reflect the aggregate grant date fair
value computed in accordance with FASB ASC Topic 718 of stock option
awards granted pursuant to the 2012 Long-Term Incentive Plan. Assumptions
used in the calculation of these amounts are included in Note 19 to the
Companys audited financial statements for the fiscal year ended December
31, 2016 included in the Companys Annual Report on Form 10-K filed with
the SEC on February 6, 2017. The grant date fair value amounts may never
be realized.
|
(3)
|
The amounts in column (g) reflect
the sum of annual short-term incentive payments and earned Cash
Performance Units. All of the annual cash bonuses paid to the NEOs are
performance-based. Cash bonuses are paid annually through two plans: (i)
GoalSharing; and (ii) the Performance Incentive Plan (PIP). Awards earned
under the 2016 GoalSharing plan were 5.96% of each NEOs year-end base
salary and paid in February 2017. Awards earned under the 2016 PIP were
based on actual corporate performance compared to the Core EPS and Core
Net Sales goals established for the plans in February 2016. Based on
actual performance, each of the NEOs earned PIP awards equal to 85% of
their annual target bonus opportunities (established as a percentage of
year-end base salary). Cash awards earned under the PIP for 2016 will be
paid in March 2017.
|
54
CORNING
2017 PROXY
STATEMENT
|
Table of Contents
Compensation
Discussion & Analysis
The following
table indicates awards earned under the PIP and the GoalSharing Plan reflected
in column (g) above:
|
Named Executive Officer
|
|
Year End
Base Salary
|
|
2016
PIP Target
|
|
Actual 2016 PIP
Performance
Results
(%
Tgt.)
|
|
2016
PIP $ Award
|
|
Actual 2016
GoalSharing
Performance
|
|
2016
GoalSharing
Award
|
|
Wendell P. Weeks
|
|
$
|
1,351,500
|
|
150%
|
|
85%
|
|
$
|
1,723,163
|
|
5.96%
|
|
$
|
80,549
|
|
R. Tony Tripeny
|
|
|
510,000
|
|
70%
|
|
85%
|
|
|
303,450
|
|
5.96%
|
|
|
30,396
|
|
James P. Clappin
|
|
|
693,600
|
|
75%
|
|
85%
|
|
|
442,170
|
|
5.96%
|
|
|
41,339
|
|
Lawrence D. McRae
|
|
|
739,500
|
|
80%
|
|
85%
|
|
|
502,860
|
|
5.96%
|
|
|
44,074
|
|
David L. Morse
|
|
|
637,500
|
|
75%
|
|
85%
|
|
|
406,406
|
|
5.96%
|
|
|
37,995
|
In addition to
the 2016 PIP and 2016 GoalSharing awards noted above, the amounts in column (g)
also reflect the earned portions of CPU Awards granted in 2016, 2015 and 2014.
2016 CPU award payouts will be made in February 2019 based on actual corporate
performance compared to the established performance goals averaged over three
years (2016, 2017 and 2018) and subject to a ±10% ROIC modifier as described on
page 47. 2015 CPU award payouts are based on performance goals averaged over
three years (2015, 2016 and 2017). 2014 CPU award payouts are based on
performance goals averaged over three years (2014, 2015 and 2016).
The goals for 2016 were Adjusted Operating Cash Flow less
CapEx (70%) and Core Net Sales (30%), as well as a three-year ROIC goal
established in February 2016. Adjusted Operating Cash Flow less CapEx and Core
Net Sales goals for 2017 and 2018 are yet to be established. While the final
payout amounts for 2016 and 2015 CPU awards are unknown, the table below
reflects the earned amount of 2016, 2015 and 2014 CPU awards which are reflected
in column (g) above, on the basis of 2016 performance excluding the portion of
the 2016 award that remains unearned because ROIC change to target (2016-2018)
is not yet known.
|
Named Executive Officer
|
|
2016 CPU
Target
Award
|
|
2016 CPU
Performance
Results %
|
|
Prorated Earned
2016 CPUs
Based
on 2016
Performance
(Year One of
Three)*
|
|
2015 CPU
Target
Amount
|
|
Prorated Earned
2015 CPUs
Based
on 2016
Performance
(Year Two of
Three)*
|
|
2014
CPU
Target
Amount
|
|
Prorated
Earned
2014 CPUs
Based
on 2016
Performance
(Year
Three of
Three)*
|
|
Wendell P. Weeks
|
|
$
|
4,950,000
|
|
88%
|
|
|
$1,306,800
|
|
$
|
4,800,000
|
|
$
|
1,408,000
|
|
$
|
4,200,000
|
|
$
|
1,232,000
|
|
R. Tony Tripeny
|
|
|
840,000
|
|
88%
|
|
|
221,760
|
|
|
630,000
|
|
|
184,800
|
|
|
600,000
|
|
|
176,000
|
|
James P. Clappin
|
|
|
1,260,000
|
|
88%
|
|
|
332,640
|
|
|
1,260,000
|
|
|
369,600
|
|
|
1,200,000
|
|
|
352,000
|
|
Lawrence D. McRae
|
|
|
1,350,000
|
|
88%
|
|
|
356,400
|
|
|
1,290,000
|
|
|
378,400
|
|
|
1,200,000
|
|
|
352,000
|
|
David L. Morse
|
|
|
1,260,000
|
|
88%
|
|
|
332,640
|
|
|
1,260,000
|
|
|
369,600
|
|
|
1,200,000
|
|
|
352,000
|
* reduced by
10% since the ROIC modifier will not be known until after full 2016-2018
performance against pre-established target is known
(4)
|
The amounts in column (h) reflect
the increase in the actuarial present value of the NEOs benefits under
all defined benefit pension plans established by the Company determined
using interest rate and mortality rate assumptions consistent with those
used in the Companys financial statements. Although column (h) is also
used to report the amount of above market earnings on compensation that is
deferred under the nonqualified deferred compensation plans, Corning does
not have any above market earnings under its nonqualified deferred
compensation plan, also referred to as the Supplemental Investment Plan.
In 2016 the discount rate used to value the actuarial liability decreased
approximately 23 basis points from 4.25% to 4.02 %, resulting in an
increase in the pension values of Messrs. Weeks, Tripeny, Clappin, McRae
and Dr. Morse in the amounts of $928,531, $214,950, $66,568, $90,676 and
$468,668, respectively. Discount rate changes over the past several years
have resulted in significant year-to-year fluctuations in the present
value of pension benefits as shown below:
|
|
Named Executive Officer
|
|
2016 Present
Value in
Pension
Benefits
|
|
2015 Present
Value in
Pension
Benefits
|
|
2014 Present
Value in
Pension
Benefits
|
|
2013 Present
Value in
Pension
Benefits
|
|
Wendell P. Weeks
|
|
$24,807,437
|
|
$23,878,906
|
|
$22,572,362
|
|
$18,226,243
|
|
R. Tony Tripeny
|
|
5,331,840
|
|
5,116,890
|
|
------------------------------Not an
NEO---------------------------------
|
|
James P. Clappin
|
|
8,756,632
|
|
8,690,064
|
|
8,633,886
|
|
-----------Not an
NEO-----------
|
|
Lawrence D. McRae
|
|
9,483,094
|
|
9,392,418
|
|
9,501,949
|
|
7,600,932
|
|
David L. Morse
|
|
8,417,752
|
|
-------------------------------------------------------Not an
NEO-------------------------------------------------------
|
|
Valuation Discount Rate
|
|
4.02%
|
|
4.25%
|
|
4.00%
|
|
4.75%
|
CORNING
2017 PROXY STATEMENT
55
|
Table of Contents
Compensation
Discussion & Analysis
(5)
|
The following table shows All
Other Compensation amounts provided to the NEOs. Capped personal aircraft
rights, financial counseling services and home security are the only
perquisites offered to the NEOs. The value of the personal aircraft rights
in the table below reflects the incremental cost of providing such
perquisite and is calculated based on the average variable operating costs
to the Company. Hourly rates are developed using variable operating costs
that include fuel costs, mileage, maintenance, crew travel expense,
catering and other miscellaneous variable costs. Fixed costs that do not
change based on usage, such as pilot salaries, hanger expense and general
taxes and insurance are excluded:
|
|
Named Executive Officer
|
|
Year
|
|
Company
Match
on
Qualified
401(k) Plan
|
|
Company
Match
on
Supplemental
Investment
Plan
|
|
Value
of
Personal
Aircraft
Rights
(i)
|
|
Executive
Allowance
(ii)
|
|
Expatriate
Benefits
|
|
Other
(iii)
|
|
TOTALS
|
|
Wendell P. Weeks
|
|
2016
|
|
|
$9,880
|
|
|
$73,165
|
|
|
$56,893
|
|
$109,520
|
(iv)
|
|
$0
|
|
|
$
|
17,124
|
|
|
$266,582
|
|
|
|
2015
|
|
|
9,880
|
|
|
73,674
|
|
|
83,804
|
|
80,639
|
(iv)
|
|
0
|
|
|
|
7,844
|
|
|
255,841
|
|
|
|
2014
|
|
|
9,468
|
|
|
185,953
|
|
|
62,221
|
|
384,422
|
(iv)
|
|
0
|
|
|
|
5,319
|
|
|
647,382
|
|
R. Tony Tripeny
|
|
2016
|
|
|
4,800
|
|
|
25,017
|
|
|
4,303
|
|
80,030
|
|
|
0
|
|
|
|
12,072
|
|
|
126,222
|
|
|
|
2015
|
|
|
4,800
|
|
|
24,154
|
|
|
4,553
|
|
40,250
|
|
|
0
|
|
|
|
1,542
|
|
|
75,299
|
|
James P. Clappin
|
|
2016
|
|
|
7,410
|
|
|
58,473
|
|
|
54,708
|
|
17,791
|
|
|
3,311,896
|
(v)
|
|
|
2,578
|
|
|
3,452,856
|
|
|
|
2015
|
|
|
7,410
|
|
|
75,854
|
|
|
52,796
|
|
342
|
|
|
1,525,614
|
(v)
|
|
|
10,095
|
|
|
1,672,111
|
|
|
|
2014
|
|
|
7,101
|
|
|
60,889
|
|
|
43,097
|
|
0
|
|
|
1,720,103
|
(v)
|
|
|
17,745
|
|
|
1,848,935
|
|
Lawrence D. McRae
|
|
2016
|
|
|
16,364
|
|
|
0
|
|
|
59,489
|
|
6,781
|
|
|
0
|
|
|
|
695
|
|
|
83,329
|
|
|
|
2015
|
|
|
16,364
|
|
|
0
|
|
|
45,693
|
|
14,776
|
|
|
0
|
|
|
|
344
|
|
|
77,177
|
|
|
|
2014
|
|
|
16,055
|
|
|
0
|
|
|
36,745
|
|
11,472
|
|
|
0
|
|
|
|
319
|
|
|
64,591
|
|
David L. Morse
|
|
2016
|
|
|
14,820
|
|
|
45,734
|
|
|
20,080
|
|
12,389
|
|
|
0
|
|
|
|
4,367
|
|
|
97,390
|
(i)
|
Amounts shown above reflect aircraft
usage during the 2016 fiscal year.
|
(ii)
|
NEOs may use their executive allowance for residential security or
financial counseling services.
|
(iii)
|
These amounts include costs attributable to executive physicals,
including associated travel costs, an annual Board gift, and contributions
made under the Corning Incorporated Foundation Matching Gifts Program that
is open to all employees and directors.
|
(iv)
|
This reflects Company-paid expenses relating to personal and
residential security benefitting Mr. Weeks and, through association, his
family. Over the past three years, these costs have declined
significantly. Mr. Weeks personal safety and security are of vital
importance to the Companys business and prospects, and the Board
considers these costs and the associated expense reduction program to be
appropriate. However, because these costs can be viewed as conveying a
personal benefit to Mr. Weeks, they are reported as perquisites in this
column.
|
(v)
|
This reflects expenses pursuant
to our standard global mobility program in connection with Mr. Clappins
assignment in Tokyo, Japan as President, Corning Glass Technologies.
Amounts listed for 2016 include standard expatriate benefits related to
housing related costs ($87,733), cost of living related allowances
($53,483), home leave ($23,612), as well as tax equalization and host
country tax payments ($3,147,068). Tax equalization expenses arise from
additional taxes payable in respect of Mr. Clappins compensation as a
result of his residency in Japan as well as U.S. taxation. The policies in
our global mobility program are designed to enable us to relocate talent
where needed throughout our global
business.
|
56
CORNING
2017 PROXY
STATEMENT
|
Table of Contents
Compensation
Discussion & Analysis
2016 Grants of Plan Based
Awards
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive
Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
|
(b)
|
|
(c)
|
|
(d)
(1)
|
|
(e)
(1)
|
|
(f)
(1)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
(k)
|
Named
Executive
Officer
|
|
Award
|
|
Grant
Date
|
|
Date
of
Committee
Action
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
All
Other
Stock
Awards:
Number
of Shares
of Stock
or
Units
|
|
All Other
Option
Awards:
Number
of
Securities
Underlying
Options
|
|
Exercise
or Base
Price
of
Option
Awards
|
|
Closing
Market
Price on
Date
of
Grant
|
|
Grant Date
Fair
Value
of Stock
and
Option
Awards
|
Wendell P.
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weeks
|
|
Incentive
Plan
|
|
n/a
|
|
|
|
$0
|
|
$2,027,250
|
|
$
|
4,054,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GoalSharing
Plan
|
|
n/a
|
|
|
|
0
|
|
67,575
|
|
|
135,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
2/3/16
|
|
2/3/16
|
|
0
|
|
4,950,000
|
|
|
8,167,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
98,731
|
|
|
|
|
|
20.89
|
|
$
|
2,062,491
|
(2)
|
|
|
Stock
Options
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
49,366
|
|
20.89
|
|
20.89
|
|
|
$333,508
|
(3)
|
|
|
Stock
Options
|
|
4/29/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
55,236
|
|
18.67
|
|
18.67
|
|
|
$314,946
|
(3)
|
|
|
Stock Options
|
|
5/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
49,366
|
|
20.89
|
|
20.89
|
|
|
$314,946
|
(3)
|
R. Tony
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tripeny
|
|
Incentive
Plan
|
|
n/a
|
|
|
|
0
|
|
357,000
|
|
|
714,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GoalSharing
Plan
|
|
n/a
|
|
|
|
0
|
|
25,500
|
|
|
51,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
2/3/16
|
|
2/3/16
|
|
0
|
|
840,000
|
|
|
1,386,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
16,754
|
|
|
|
|
|
20.89
|
|
|
349,991
|
(2)
|
|
|
Stock
Options
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
8,377
|
|
20.89
|
|
20.89
|
|
|
56,594
|
(3)
|
|
|
Stock
Options
|
|
4/29/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
9,373
|
|
18.67
|
|
18.67
|
|
|
53,443
|
(3)
|
|
|
Stock Options
|
|
5/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
8,377
|
|
20.89
|
|
20.89
|
|
|
53,444
|
(3)
|
James P.
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clappin
|
|
Incentive
Plan
|
|
n/a
|
|
|
|
0
|
|
520,200
|
|
|
1,040,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GoalSharing
Plan
|
|
n/a
|
|
|
|
0
|
|
34,680
|
|
|
69,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
2/3/16
|
|
2/3/16
|
|
0
|
|
1,260,000
|
|
|
2,079,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
25,132
|
|
|
|
|
|
20.89
|
|
|
525,007
|
(2)
|
|
|
Stock
Options
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
12,566
|
|
20.89
|
|
20.89
|
|
|
84,894
|
(3)
|
|
|
Stock
Options
|
|
4/29/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
14,060
|
|
18.67
|
|
18.67
|
|
|
80,168
|
(3)
|
|
|
Stock Options
|
|
5/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
12,566
|
|
20.89
|
|
20.89
|
|
|
80,169
|
(3)
|
CORNING
2017 PROXY STATEMENT
57
|
Table of Contents
Compensation
Discussion & Analysis
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive
Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
|
(b)
|
|
(c)
|
|
(d)
(1)
|
|
(e)
(1)
|
|
(f)
(1)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
(k)
|
Named
Executive
Officer
|
|
Award
|
|
Grant
Date
|
|
Date
of
Committee
Action
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
All
Other
Stock
Awards:
Number
of Shares
of Stock
or
Units
|
|
All Other
Option
Awards:
Number
of
Securities
Underlying
Options
|
|
Exercise
or Base
Price
of
Option
Awards
|
|
Closing
Market
Price on
Date
of
Grant
|
|
Grant Date
Fair Value
of
Stock
and Option
Awards
|
Lawrence D.
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McRae
|
|
Incentive
Plan
|
|
n/a
|
|
|
|
0
|
|
$591,600
|
|
$
|
1,183,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GoalSharing
Plan
|
|
n/a
|
|
|
|
0
|
|
36,975
|
|
|
73,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
2/3/16
|
|
2/3/16
|
|
0
|
|
1,350,000
|
|
|
2,227,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
26,927
|
|
|
|
|
|
20.89
|
|
562,505
|
(2)
|
|
|
Stock
Options
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
13,463
|
|
20.89
|
|
20.89
|
|
90,954
|
(3)
|
|
|
Stock
Options
|
|
4/29/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
15,064
|
|
18.67
|
|
18.67
|
|
85,892
|
(3)
|
|
|
Stock Options
|
|
5/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
13,463
|
|
20.89
|
|
20.89
|
|
85,891
|
(3)
|
David L.
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Morse
|
|
Incentive
Plan
|
|
n/a
|
|
|
|
0
|
|
$478,125
|
|
|
$956,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GoalSharing
Plan
|
|
n/a
|
|
|
|
0
|
|
31,875
|
|
|
63,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
2/3/16
|
|
2/3/16
|
|
0
|
|
1,260,000
|
|
|
2,079,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
25,132
|
|
|
|
|
|
20.89
|
|
525,007
|
(2)
|
|
|
Stock
Options
|
|
3/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
12,566
|
|
20.89
|
|
20.89
|
|
84,894
|
(3)
|
|
|
Stock
Options
|
|
4/29/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
14,060
|
|
18.67
|
|
18.67
|
|
80,168
|
(3)
|
|
|
Stock Options
|
|
5/31/16
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
12,566
|
|
20.89
|
|
20.89
|
|
80,169
|
(3)
|
(1)
|
The amounts shown in columns (d), (e)
and (f) reflect the award amounts under (i) the Companys 2016 Performance
Incentive Plan (PIP) (ii) 2016 GoalSharing Plan and (iii) the Cash
Performance Units under Cornings short- and long-term incentive plans.
Awards under these plans are paid in cash. If the threshold level of
performance is not met the payout will be 0%. If the performance target is
met, the payout is 100% of the target award. If the maximum level of
performance is met for GoalSharing and PIP the payout is 200% of the
target award, and 165% for CPUs which represents the 150% performance
metrics cap plus the maximum 10% ROIC modifier. PIP and GoalSharing awards
are based on the individuals 2016 bonus target and year-end base salary.
CPUs earned in 2016 are based on actual performance against the target
averaged over three years (2016, 2017, 2018); adjusted up or down by up to
10% based on ROIC results versus the pre-established goals; and expected
to be paid in February 2019.
|
(2)
|
This amount reflects the total grant date fair value computed in
accordance with FASB ASC Topic 718 of stock awards granted in 2016
pursuant to the long-term incentive plan, and corresponds to the amounts
set forth in column (e) for 2016 of the Summary Compensation Table. Stock
awards vest 100% three years after grant date.
|
(3)
|
These amounts reflect the total
grant date fair value computed in accordance with FASB ASC Topic 718 of
stock options granted in calendar year 2016 pursuant to Cornings
long-term incentive plans, and corresponds to the amounts set forth in
column (f) for 2016 of the Summary Compensation Table. Stock options vest
100% three years after grant date.
|
58
CORNING
2017 PROXY
STATEMENT
|
Table of Contents
Compensation
Discussion & Analysis
Outstanding Equity Awards at 2016
Fiscal Year-End
The following table shows stock option
awards classified as exercisable and unexercisable as of December 31, 2016. The
table also shows unvested restricted stock and restricted stock unit awards
assuming a market value of $24.27 a share (the NYSE closing price of the
Companys stock on December 30, 2016).
Option Awards
|
|
Stock Awards
|
(a)
|
|
|
|
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
(2)
|
|
(g)
(3)
|
Named
Executive
Officer
|
|
Grant
Date
|
|
Vesting
Code
(1)
|
|
Number of
Securities Underlying
Unexercised
Options
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Number of
Shares or Units
of Stock That
Have Not
Vested
|
|
Market Value of
Shares or
Units
of Stock
That
Have Not Vested
|
Wendell P.
|
|
12/05/07
|
|
A
|
|
153,500
|
|
0
|
|
24.92
|
|
12/4/2017
|
|
263,545
|
|
$
|
6,396,237
|
Weeks
|
|
01/02/08
|
|
B
|
|
76,750
|
|
0
|
|
23.37
|
|
1/1/2018
|
|
|
|
|
|
|
|
02/01/08
|
|
C
|
|
76,750
|
|
0
|
|
24.61
|
|
1/31/2018
|
|
|
|
|
|
|
|
12/02/09
|
|
D
|
|
65,333
|
|
0
|
|
17.82
|
|
12/2/2019
|
|
|
|
|
|
|
|
01/04/10
|
|
D
|
|
65,333
|
|
0
|
|
19.56
|
|
1/4/2020
|
|
|
|
|
|
|
|
02/01/10
|
|
D
|
|
65,334
|
|
0
|
|
18.16
|
|
2/1/2020
|
|
|
|
|
|
|
|
01/03/11
|
|
D
|
|
67,551
|
|
0
|
|
19.19
|
|
1/3/2021
|
|
|
|
|
|
|
|
02/01/11
|
|
D
|
|
57,131
|
|
0
|
|
22.69
|
|
2/1/2021
|
|
|
|
|
|
|
|
03/01/11
|
|
D
|
|
58,842
|
|
0
|
|
22.03
|
|
3/1/2021
|
|
|
|
|
|
|
|
01/03/12
|
|
C
|
|
111,835
|
|
0
|
|
13.04
|
|
1/3/2022
|
|
|
|
|
|
|
|
02/01/12
|
|
C
|
|
113,049
|
|
0
|
|
12.90
|
|
2/1/2022
|
|
|
|
|
|
|
|
03/01/12
|
|
C
|
|
112,439
|
|
0
|
|
12.97
|
|
3/1/2022
|
|
|
|
|
|
|
|
03/28/13
|
|
C
|
|
125,031
|
|
0
|
|
13.33
|
|
3/28/2023
|
|
|
|
|
|
|
|
04/30/13
|
|
C
|
|
114,943
|
|
0
|
|
14.50
|
|
4/30/2023
|
|
|
|
|
|
|
|
05/31/13
|
|
C
|
|
108,436
|
|
0
|
|
15.37
|
|
5/31/2023
|
|
|
|
|
|
|
|
03/31/14
|
|
C
|
|
0
|
|
42,027
|
|
20.82
|
|
3/31/2024
|
|
|
|
|
|
|
|
04/30/14
|
|
C
|
|
0
|
|
41,846
|
|
20.91
|
|
4/30/2024
|
|
|
|
|
|
|
|
05/30/14
|
|
C
|
|
0
|
|
41,080
|
|
21.30
|
|
5/30/2024
|
|
|
|
|
|
|
|
03/31/15
|
|
C
|
|
0
|
|
44,092
|
|
22.68
|
|
3/31/2025
|
|
|
|
|
|
|
|
04/30/15
|
|
C
|
|
0
|
|
47,778
|
|
20.93
|
|
4/30/2025
|
|
|
|
|
|
|
|
05/29/15
|
|
C
|
|
0
|
|
47,801
|
|
20.92
|
|
5/29/2025
|
|
|
|
|
|
|
|
03/31/16
|
|
C
|
|
0
|
|
49,366
|
|
20.89
|
|
3/31/2026
|
|
|
|
|
|
|
|
04/29/16
|
|
C
|
|
0
|
|
55,236
|
|
18.67
|
|
4/29/2026
|
|
|
|
|
|
|
|
05/31/16
|
|
C
|
|
0
|
|
49,366
|
|
20.89
|
|
5/31/2026
|
|
|
|
|
|
|
|
Total
|
|
|
|
1,372,257
|
|
418,592
|
|
|
|
|
|
|
|
|
|
R. Tony Tripeny
|
|
12/05/07
|
|
A
|
|
16,500
|
|
0
|
|
24.92
|
|
12/4/2017
|
|
45,274
|
|
$
|
1,098,800
|
|
|
01/02/08
|
|
B
|
|
8,250
|
|
0
|
|
23.37
|
|
1/1/2018
|
|
|
|
|
|
|
|
02/01/08
|
|
C
|
|
8,250
|
|
0
|
|
24.61
|
|
1/31/2018
|
|
|
|
|
|
|
|
12/03/08
|
|
D
|
|
16,333
|
|
0
|
|
8.67
|
|
12/2/2018
|
|
|
|
|
|
|
|
01/02/09
|
|
D
|
|
32,667
|
|
0
|
|
10.05
|
|
1/1/2019
|
|
|
|
|
|
|
|
02/02/09
|
|
D
|
|
32,667
|
|
0
|
|
10.25
|
|
2/1/2019
|
|
|
|
|
|
|
|
12/02/09
|
|
D
|
|
8,333
|
|
0
|
|
17.82
|
|
12/2/2019
|
|
|
|
|
|
|
|
01/04/10
|
|
D
|
|
8,333
|
|
0
|
|
19.56
|
|
1/4/2020
|
|
|
|
|
|
|
|
02/01/10
|
|
D
|
|
8,334
|
|
0
|
|
18.16
|
|
2/1/2020
|
|
|
|
|
|
|
|
01/03/11
|
|
D
|
|
7,720
|
|
0
|
|
19.19
|
|
1/3/2021
|
|
|
|
|
|
|
|
02/01/11
|
|
D
|
|
6,529
|
|
0
|
|
22.69
|
|
2/1/2021
|
|
|
|
|
|
|
|
03/01/11
|
|
D
|
|
6,725
|
|
0
|
|
22.03
|
|
3/1/2021
|
|
|
|
|
|
|
|
01/03/12
|
|
C
|
|
14,379
|
|
0
|
|
13.04
|
|
1/3/2022
|
|
|
|
|
|
|
|
02/01/12
|
|
C
|
|
14,535
|
|
0
|
|
12.90
|
|
2/1/2022
|
|
|
|
|
|
|
|
03/01/12
|
|
C
|
|
14,456
|
|
0
|
|
12.97
|
|
3/1/2022
|
|
|
|
|
|
|
|
03/28/13
|
|
C
|
|
16,075
|
|
0
|
|
13.33
|
|
3/28/2023
|
|
|
|
|
|
|
|
04/30/13
|
|
C
|
|
14,778
|
|
0
|
|
14.50
|
|
4/30/2023
|
|
|
|
|
|
|
|
05/31/13
|
|
C
|
|
13,942
|
|
0
|
|
15.37
|
|
5/31/2023
|
|
|
|
|
|
|
|
03/31/14
|
|
C
|
|
0
|
|
6,004
|
|
20.82
|
|
3/31/2024
|
|
|
|
|
|
|
|
04/30/14
|
|
C
|
|
0
|
|
5,978
|
|
20.91
|
|
4/30/2024
|
|
|
|
|
|
|
|
05/30/14
|
|
C
|
|
0
|
|
5,869
|
|
21.30
|
|
5/30/2024
|
|
|
|
|
|
|
|
03/31/15
|
|
C
|
|
0
|
|
5,787
|
|
22.68
|
|
3/31/2025
|
|
|
|
|
|
|
|
04/30/15
|
|
C
|
|
0
|
|
6,271
|
|
20.93
|
|
4/30/2025
|
|
|
|
|
|
|
|
05/29/15
|
|
C
|
|
0
|
|
6,274
|
|
20.92
|
|
5/29/2025
|
|
|
|
|
|
|
|
03/31/16
|
|
C
|
|
0
|
|
8,377
|
|
20.89
|
|
3/31/2026
|
|
|
|
|
|
|
|
04/29/16
|
|
C
|
|
0
|
|
9,373
|
|
18.67
|
|
4/29/2026
|
|
|
|
|
|
|
|
05/31/16
|
|
C
|
|
0
|
|
8,377
|
|
20.89
|
|
5/31/2026
|
|
|
|
|
|
|
|
Total
|
|
|
|
248,806
|
|
62,310
|
|
|
|
|
|
|
|
|
|
CORNING
2017 PROXY STATEMENT
59
|
Table of Contents
Compensation
Discussion & Analysis
Option
Awards
|
|
Stock
Awards
|
(a)
|
|
|
|
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
(2)
|
|
(g)
(3)
|
Named
Executive
Officer
|
|
Grant
Date
|
|
Vesting
Code
(1)
|
|
Number of
Securities
Underlying
Unexercised Options
Exercisable
|
|
Number of
Securities
Underlying
Unexercised Options
Unexercisable
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units
of Stock That
Have Not Vested
|
|
Market Value of
Shares or
Units
of Stock That
Have Not Vested
|
James P.
|
|
07/18/07
|
|
A
|
|
500
|
|
0
|
|
26.73
|
|
7/17/2017
|
|
74,125
|
|
$1,799,014
|
Clappin
|
|
12/05/07
|
|
A
|
|
32,000
|
|
0
|
|
24.92
|
|
12/4/2017
|
|
|
|
|
|
|
01/02/08
|
|
B
|
|
16,000
|
|
0
|
|
23.37
|
|
1/1/2018
|
|
|
|
|
|
|
02/01/08
|
|
C
|
|
16,000
|
|
0
|
|
24.61
|
|
1/31/2018
|
|
|
|
|
|
|
01/04/10
|
|
D
|
|
14,667
|
|
0
|
|
19.56
|
|
1/4/2020
|
|
|
|
|
|
|
02/01/10
|
|
D
|
|
14,667
|
|
0
|
|
18.16
|
|
2/1/2020
|
|
|
|
|
|
|
01/03/11
|
|
D
|
|
15,440
|
|
0
|
|
19.19
|
|
1/3/2021
|
|
|
|
|
|
|
02/01/11
|
|
D
|
|
13,058
|
|
0
|
|
22.69
|
|
2/1/2021
|
|
|
|
|
|
|
03/01/11
|
|
D
|
|
13,450
|
|
0
|
|
22.03
|
|
3/1/2021
|
|
|
|
|
|
|
03/31/14
|
|
C
|
|
0
|
|
12,008
|
|
20.82
|
|
3/31/2024
|
|
|
|
|
|
|
04/30/14
|
|
C
|
|
0
|
|
11,956
|
|
20.91
|
|
4/30/2024
|
|
|
|
|
|
|
05/30/14
|
|
C
|
|
0
|
|
11,737
|
|
21.30
|
|
5/30/2024
|
|
|
|
|
|
|
3/31/2015
|
|
C
|
|
0
|
|
11,574
|
|
22.68
|
|
3/31/2025
|
|
|
|
|
|
|
4/30/2015
|
|
C
|
|
0
|
|
12,542
|
|
20.93
|
|
4/30/2025
|
|
|
|
|
|
|
5/29/2015
|
|
C
|
|
0
|
|
12,548
|
|
20.92
|
|
5/29/2025
|
|
|
|
|
|
|
3/31/2016
|
|
C
|
|
0
|
|
12,566
|
|
20.89
|
|
3/31/2026
|
|
|
|
|
|
|
4/29/2016
|
|
C
|
|
0
|
|
14,060
|
|
18.67
|
|
4/29/2026
|
|
|
|
|
|
|
5/31/2016
|
|
C
|
|
0
|
|
12,566
|
|
20.89
|
|
5/31/2026
|
|
|
|
|
|
|
Total
|
|
|
|
135,782
|
|
111,557
|
|
|
|
|
|
|
|
|
Lawrence D.
|
|
12/05/07
|
|
A
|
|
25,000
|
|
0
|
|
24.92
|
|
12/4/2017
|
|
86,758
|
|
$2,105,617
|
McRae
|
|
01/02/08
|
|
B
|
|
12,500
|
|
0
|
|
23.37
|
|
1/1/2018
|
|
|
|
|
|
|
02/01/08
|
|
C
|
|
12,500
|
|
0
|
|
24.61
|
|
1/31/2018
|
|
|
|
|
|
|
01/04/10
|
|
D
|
|
15,333
|
|
0
|
|
19.56
|
|
1/4/2020
|
|
|
|
|
|
|
02/01/10
|
|
D
|
|
15,334
|
|
0
|
|
18.16
|
|
2/1/2020
|
|
|
|
|
|
|
01/03/11
|
|
D
|
|
16,888
|
|
0
|
|
19.19
|
|
1/3/2021
|
|
|
|
|
|
|
02/01/11
|
|
D
|
|
14,283
|
|
0
|
|
22.69
|
|
2/1/2021
|
|
|
|
|
|
|
03/01/11
|
|
D
|
|
14,711
|
|
0
|
|
22.03
|
|
3/1/2021
|
|
|
|
|
|
|
01/03/12
|
|
C
|
|
31,953
|
|
0
|
|
13.04
|
|
1/3/2022
|
|
|
|
|
|
|
03/01/12
|
|
C
|
|
32,125
|
|
0
|
|
12.97
|
|
3/1/2022
|
|
|
|
|
|
|
03/28/13
|
|
C
|
|
35,723
|
|
0
|
|
13.33
|
|
3/28/2023
|
|
|
|
|
|
|
04/30/13
|
|
C
|
|
32,841
|
|
0
|
|
14.50
|
|
4/30/2023
|
|
|
|
|
|
|
05/31/13
|
|
C
|
|
30,982
|
|
0
|
|
15.37
|
|
5/31/2023
|
|
|
|
|
|
|
03/31/14
|
|
C
|
|
0
|
|
12,008
|
|
20.82
|
|
3/31/2024
|
|
|
|
|
|
|
04/30/14
|
|
C
|
|
0
|
|
11,956
|
|
20.91
|
|
4/30/2024
|
|
|
|
|
|
|
05/30/14
|
|
C
|
|
0
|
|
11,737
|
|
21.30
|
|
5/30/2024
|
|
|
|
|
|
|
3/31/2015
|
|
C
|
|
0
|
|
11,850
|
|
22.68
|
|
3/31/2025
|
|
|
|
|
|
|
4/30/2015
|
|
C
|
|
0
|
|
12,840
|
|
20.93
|
|
4/30/2025
|
|
|
|
|
|
|
5/29/2015
|
|
C
|
|
0
|
|
12,847
|
|
20.92
|
|
5/29/2025
|
|
|
|
|
|
|
3/31/2016
|
|
C
|
|
0
|
|
13,463
|
|
20.89
|
|
3/31/2026
|
|
|
|
|
|
|
4/29/2016
|
|
C
|
|
0
|
|
15,064
|
|
18.67
|
|
4/29/2026
|
|
|
|
|
|
|
5/31/2016
|
|
C
|
|
0
|
|
13,463
|
|
20.89
|
|
5/31/2026
|
|
|
|
|
|
|
Total
|
|
|
|
290,173
|
|
115,228
|
|
|
|
|
|
|
|
|
60
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Compensation
Discussion & Analysis
Option
Awards
|
|
Stock
Awards
|
(a)
|
|
|
|
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
(2)
|
|
(g)
(3)
|
Named
Executive
Officer
|
|
Grant
Date
|
|
Vesting
Code
(1)
|
|
Number of
Securities
Underlying
Unexercised Options
Exercisable
|
|
Number of
Securities
Underlying
Unexercised Options
Unexercisable
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units
of Stock That
Have Not Vested
|
|
Market Value of
Shares or
Units
of Stock That
Have Not Vested
|
David L. Morse
|
|
12/05/07
|
|
A
|
|
20,500
|
|
0
|
|
24.92
|
|
12/4/2017
|
|
69,724
|
|
S1,692,201
|
|
|
01/02/08
|
|
B
|
|
10,250
|
|
0
|
|
23.37
|
|
1/1/2018
|
|
|
|
|
|
|
02/01/08
|
|
C
|
|
10,250
|
|
0
|
|
24.61
|
|
1/31/2018
|
|
|
|
|
|
|
12/02/09
|
|
D
|
|
11,000
|
|
0
|
|
17.82
|
|
12/2/2019
|
|
|
|
|
|
|
01/04/10
|
|
D
|
|
11,000
|
|
0
|
|
19.56
|
|
1/4/2020
|
|
|
|
|
|
|
02/01/10
|
|
D
|
|
11,000
|
|
0
|
|
18.16
|
|
2/1/2020
|
|
|
|
|
|
|
01/03/11
|
|
D
|
|
11,098
|
|
0
|
|
19.19
|
|
1/3/2021
|
|
|
|
|
|
|
02/01/11
|
|
D
|
|
9,386
|
|
0
|
|
22.69
|
|
2/1/2021
|
|
|
|
|
|
|
03/01/11
|
|
D
|
|
9,667
|
|
0
|
|
22.03
|
|
3/1/2021
|
|
|
|
|
|
|
03/28/13
|
|
C
|
|
31,258
|
|
0
|
|
13.33
|
|
3/28/2023
|
|
|
|
|
|
|
04/30/13
|
|
C
|
|
28,736
|
|
0
|
|
14.50
|
|
4/30/2023
|
|
|
|
|
|
|
05/31/13
|
|
C
|
|
27,109
|
|
0
|
|
15.37
|
|
5/31/2023
|
|
|
|
|
|
|
03/31/14
|
|
C
|
|
0
|
|
12,008
|
|
20.82
|
|
3/31/2024
|
|
|
|
|
|
|
04/30/14
|
|
C
|
|
0
|
|
11,956
|
|
20.91
|
|
4/30/2024
|
|
|
|
|
|
|
05/30/14
|
|
C
|
|
0
|
|
11,737
|
|
21.30
|
|
5/30/2024
|
|
|
|
|
|
|
3/31/2015
|
|
C
|
|
0
|
|
11,574
|
|
22.68
|
|
3/31/2025
|
|
|
|
|
|
|
4/30/2015
|
|
C
|
|
0
|
|
12,542
|
|
20.93
|
|
4/30/2025
|
|
|
|
|
|
|
5/29/2015
|
|
C
|
|
0
|
|
12,548
|
|
20.92
|
|
5/29/2025
|
|
|
|
|
|
|
3/31/2016
|
|
C
|
|
0
|
|
12,566
|
|
20.89
|
|
3/31/2026
|
|
|
|
|
|
|
4/29/2016
|
|
C
|
|
0
|
|
14,060
|
|
18.67
|
|
4/29/2026
|
|
|
|
|
|
|
5/31/2016
|
|
C
|
|
0
|
|
12,566
|
|
20.89
|
|
5/31/2026
|
|
|
|
|
|
|
Total
|
|
|
|
191,254
|
|
111,557
|
|
|
|
|
|
|
|
|
(1)
|
The Company uses the
following vesting codes
|
|
A
|
100% vesting one
year after grant date
|
|
B
|
100% vesting two years after
grant date
|
|
C
|
100% vesting three
years after grant date
|
|
D
|
1/3 vesting one year after grant
date, 1/3 vesting two years after grant date and 1/3 vesting three years
after grant date
|
(2)
|
Amounts
include:
|
|
i.
|
80,889; 11,259; 23,189; 22,872;
and 22,869 restricted share units granted to Messrs. Weeks, Tripeny,
Clappin, and McRae and Dr. Morse, respectively, on March 31, 2014, which
vest on April 17, 2017. Also included are 4,000 and 12,000 unvested
restricted shares granted to Messrs. Clappin and McRae, respectively, on
February 5, 2014, which vest on February 5, 2017.
|
|
ii.
|
83,925; 10,703; 21,804; 22,336;
and 21,723 restricted share units granted to Messrs. Weeks, Tripeny,
Clappin, and McRae and Dr. Morse, respectively, on March 31, 2015, which
vest on April 16, 2018; Mr. McRae was granted 2,623 restricted shares of
our common stock on July 15, 2015, which will vest on July 15, 2018 as a
result of his promotion to Vice Chairman. Mr. Tripeny was granted 6,558
restricted shares of our common stock on July 15, 2015, which will vest on
July 15, 2018 as a result of his promotion to Chief Financial
Officer.
|
|
iii.
|
98,731; 16,754; 25,132; 26,927
and 25,132 restricted share units granted to Messrs. Weeks, Tripeny,
Clappin, and McRae and Dr. Morse, respectively, on March 31, 2016, which
vest on April 15, 2019.
|
(3)
|
Year-end market price is based on the
December 30, 2016 NYSE closing price of
$24.27.
|
CORNING
2017 PROXY STATEMENT
61
|
Table of Contents
Compensation
Discussion & Analysis
Option Exercises
and Shares Vested in 2016
The following table sets forth certain
information regarding options exercised and restricted stock that vested during
2016 for the NEOs.
|
|
Option
Awards
|
|
Stock
Awards
|
Named Executive
Officer
|
|
Number of Shares
Acquired on
Exercise
|
|
Value Realized
on
Exercise
|
|
Number of Shares
Acquired on
Vesting
|
|
Value Realized
on
Vesting
|
Wendell P.
Weeks
|
|
273,000
|
|
$541,696
|
|
129,465
|
|
$2,695,591
|
R. Tony
Tripeny
|
|
46,333
|
|
291,740
|
|
17,120
|
|
355,529
|
James P.
Clappin
|
|
231,405
|
|
1,793,811
|
|
33,758
|
|
691,852
|
Lawrence D.
McRae
|
|
123,633
|
|
768,223
|
|
49,102
|
|
992,151
|
David L.
Morse
|
|
111,310
|
|
808,486
|
|
32,644
|
|
678,623
|
Retirement
Plans
Qualified Pension
Plan
Corning maintains a qualified defined
benefit pension plan to provide retirement income to Cornings U.S.-based
employees which was amended effective July 1, 2000, to include a cash balance
component. All salaried and non-union hourly employees as of July 1, 2000, were
given a choice to prospectively accrue benefits under the previously existing
career average earnings formula or a cash balance formula, if so elected.
Employees hired subsequent to July 1, 2000, earn benefits solely under the cash
balance formula.
Benefits earned under the career average
earnings formula are equal to 1.5% of plan compensation plus 0.5% of plan
compensation on which employee contributions have been made. Under the career
average earnings formula, participants may retire as early as age 55 with 5
years of service. Unreduced benefits are available when a participant attains
the earlier of age 60 with 5 years of service or age 55 with 30 years of
service. Otherwise, benefits are reduced 4% for each year by which retirement
precedes the attainment of age 60. Pension benefits earned under the career
average earnings formula are distributed in the form of a lifetime annuity with
six years of payments guaranteed.
Benefits earned under the cash balance
formula are expressed in the form of a hypothetical account balance. Each month
a participants cash balance account is increased by (1) pay credits based on
the participants plan compensation for that
month and (2) interest credits based on the participants hypothetical account
balance at the end of the prior month. Pay credits vary between 3% and 8% based
on the participants age plus service at the end of the year. Interest credits
are based on 10-year Treasury bond yields, subject to a minimum credit of 3.80%. Pension benefits under the cash balance formula may be distributed as either a
lump sum of the participants hypothetical account balance or an actuarial
equivalent life annuity.
Messrs. Weeks, Clappin, McRae and Dr.
Morse are earning benefits under the career average earnings formula. Mr.
Tripeny is earning benefits under the cash balance formula. All of the active
NEOs are currently eligible to retire under the plan.
Supplemental
Pension Plan and Executive Supplemental Pension Plan
Since 1986, Corning has maintained
nonqualified pension plans to attract and retain its executive workforce by
providing eligible employees with retirement benefits in excess of those
permitted under the qualified plans. The benefits provided under the
Supplemental Pension Plan (SPP) are equal to the difference between the benefits
provided under the Corning Incorporated Pension Plan and benefits that would
have been provided thereunder if not for the limitations of the Employee
Retirement Income Security Act of 1974, as amended, and the Internal Revenue
Code of 1986, as amended (the IRC).
62
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Compensation
Discussion & Analysis
Each NEO participates in the Corning
Incorporated Executive Supplemental Pension Plan (ESPP). Participants in the
ESPP receive no benefits from the SPP, other than earned SPP benefits under the
cash balance formula prior to their participation in the ESPP, if any.
Executives fully vest in their ESPP benefit upon attainment of age 50 with 10
years of service. All NEOs are fully vested in the ESPP.
Under the ESPP, participants earn benefits
based on the highest 60 consecutive months of average plan compensation over the
last 120 months immediately preceding the date of termination of
employment.
A change in the benefits provided under
the ESPP formula was approved in December 2006. Subsequent to the change, gross
benefits determined under this plan are equal to one of two benefit
formulas:
Formula A: 2.0% of average plan
compensation multiplied by years of service up to 25 years.
Formula B: 1.5% of average plan
compensation multiplied by years of service.
Benefits are determined under Formula A
for all NEOs except for Dr. Morse.
Benefits earned under the Corning
Incorporated Pension Plan and the cash balance formula of the SPP prior to ESPP
participation, if any, will offset benefits earned under the ESPP.
Participants may retire as early as age 55
with 10 years of service. Unreduced benefits under Formulas A and B are
available when a participant attains the earlier of age 60 with 10 years of
service or age 55 with 25 years of service, provided their accrued benefit is
less than four times the annual compensation limitation under Section 401(a)(17)
of the IRC ($1,060,000 in 2016). Participants with accrued benefits in excess of
four times the annual compensation limitation under Section 401(a)(17) of the
IRC must be age 57 with 25 years of service to receive an unreduced benefit
under the ESPP. Otherwise, benefits are reduced 4% for each year by which
retirement precedes the attainment of age 60. Benefit reductions of 1% per year
by which retirement precedes age 57 apply if the
four-times-annual-compensation-limit rule noted above is in effect for the
participant.
Benefits earned under the ESPP are
distributed in the form of a lifetime annuity, with six years of payments
guaranteed except for benefits earned under the cash balance formula of the SPP
prior to becoming a participant in the ESPP, which is distributed as a lump sum
of the participants hypothetical account balance.
All NEOs are currently eligible to retire
under the ESPP.
Pension
Benefits
The table below shows the actuarial
present value of accumulated benefits payable to each of the NEOs, including the
number of years of service credited to each such NEO, under the qualified
pension plan and the ESPP. These amounts were determined using interest rate and
mortality rate assumptions consistent with those used in the Companys financial
statements with the exception of the assumed retirement age and the assumed
probabilities of leaving employment prior to retirement. Retirement was assumed
to occur at the earliest possible unreduced retirement age for each plan in
which the executive participates. For purposes of determining the earliest
unreduced retirement age, service was assumed to be granted until the actual
date of retirement. For example, an executive under the ESPP formula who is age
50 with 20 years of service would be assumed to
retire at age 55 due to eligibility of unreduced benefits at 25 years of service
or age 57, if the four times annual compensation limit rule noted previously
applies. No termination, disability or death was assumed to occur prior to
retirement. Otherwise, the assumptions used are described in Note 13 to our
Financial Statements for the year ended December
31, 2016, of our Annual Report on Form 10-K filed with the SEC on February 6,
2017. Information regarding the qualified pension plan can be found under the
heading Qualified Pension Plan.
CORNING
2017 PROXY STATEMENT
63
|
Table of Contents
Compensation
Discussion & Analysis
Named Executive
Officer
|
|
Plan Name
|
|
Number of Years
Credited
Service
|
|
Present Value of
Accumulated
Benefit
|
|
Payments During
Last Fiscal
Year
|
Wendell P. Weeks
|
|
Qualified Pension Plan
|
|
34
|
|
|
$1,951,978
|
|
$0
|
|
|
ESPP
|
|
25
|
(1)
|
|
22,855,459
|
|
0
|
R. Tony Tripeny
|
|
Qualified Pension Plan
|
|
31
|
|
|
273,607
|
|
0
|
|
|
ESPP
|
|
25
|
(1)
|
|
5,058,233
|
|
0
|
James P. Clappin
|
|
Qualified Pension Plan
|
|
37
|
|
|
1,421,448
|
|
0
|
|
|
ESPP
|
|
25
|
(1)
|
|
7,335,184
|
|
0
|
Lawrence D. McRae
|
|
Qualified Pension Plan
|
|
31
|
|
|
1,620,656
|
|
0
|
|
|
ESPP
|
|
25
|
(1)
|
|
7,862,438
|
|
0
|
David L. Morse
|
|
Qualified Pension Plan
|
|
41
|
|
|
1,774,717
|
|
0
|
|
|
ESPP
|
|
41
|
(2)
|
|
6,643,035
|
|
0
|
(1)
|
Under Formula A, years of service
are capped at 25 years, in determining benefits under the
ESPP.
|
(2)
|
Under Formula B, years of service
are not capped.
|
The compensation considered for purposes
of determining benefits under the qualified pension plan and the ESPP for the
NEOs is the Salary plus the GoalSharing and PIP cash bonuses set forth in the
Summary Compensation Table. Bonuses are included as compensation in the calendar
year paid. Long-term cash or equity incentives are not (and have never been)
considered as eligible earnings for determining retirement benefits under these
plans. For the 2016 calendar year, the NEOs eligible earnings and final average
compensation were as follows:
|
|
As of December 31,
2016
|
Named Executive
Officer
|
|
Eligible
Pension
Earnings
|
|
Final
Average
Earnings
|
Wendell P.
Weeks
|
|
$2,744,757
|
|
$3,025,039
|
R. Tony
Tripeny
|
|
745,425
|
|
677,083
|
James P.
Clappin
|
|
1,066,930
|
|
1,121,455
|
Lawrence D.
McRae
|
|
1,147,655
|
|
1,187,646
|
David L.
Morse
|
|
980,635
|
|
966,715
|
Nonqualified Deferred
Compensation
The table below shows the contributions,
earnings and account balances for the NEOs in the Supplemental Investment Plan.
Pursuant to the Companys Supplemental Investment Plan, the NEOs may choose to
defer up to 75% of annual base salary and up to 75% of GoalSharing and PIP cash
bonuses. The participant chooses from the same funds available under our Company
Investment Plan (401(k)) in which to invest the deferred amounts. No cash is
actually invested in the unfunded accounts under the Supplemental Investment
Plan. Deferred amounts incur gains and losses based on the performance of the individual participants investment fund selections.
Participants may change their elections among these fund options. All of our
current NEOs have more than three years of service with the Company, so all of
the Companys matching contributions are fully vested. Participants cannot
withdraw any amounts from their deferred compensation balances until retirement
from the Company at or after age 55 with 5 years of service. Participants may
elect to receive distributions as a lump sum payment or two to five annual
installments. If an NEO leaves the Company prior to retirement, the account
balance is distributed in a lump sum six-months following the executives
departure.
No NEO withdrawals or distributions were
made in 2016.
64
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Compensation
Discussion & Analysis
Named Executive
Officer
|
|
Aggregate Balance
at
January 1, 2016
|
|
Executive
Contributions
in
2016
(1)
|
|
Company
Contributions
in
2016
(2)
|
|
Aggregate
Earnings
in
2016
(3)
|
|
Aggregate
Withdrawals/
Distributions
in
2016
|
|
Aggregate
Balance as
of
December 31, 2016
|
Wendell P.
Weeks
|
|
$4,751,488
|
|
$71,092
|
|
$73,165
|
|
$376,925
|
|
$0
|
|
$5,272,670
|
R. Tony
Tripeny
|
|
1,603,423
|
|
125,085
|
|
25,017
|
|
182,143
|
|
0
|
|
1,935,668
|
James P.
Clappin
|
|
3,177,658
|
|
227,425
|
|
58,473
|
|
257,743
|
|
0
|
|
3,721,299
|
Lawrence D.
McRae
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
David L.
Morse
|
|
973,933
|
|
37,031
|
|
45,734
|
|
4,372
|
|
0
|
|
1,061,070
|
(1)
|
Reflects participation in the
Supplemental Investment Plan by Messrs. Weeks, Tripeny, Clappin and Dr.
Morse in the deferral of a portion of their 2016 base salaries and
participation by Mr. Tripeny, Mr. Clappin and Dr. Morse in the deferral of
a portion of the bonus received in 2016 for prior year performance. The
Named Executive Officers contributions are included in the Summary
Compensation Table, as a part of Salary and/or Non-Equity Incentive Plan
Compensation.
|
(2)
|
Reflects Company match on the
Supplemental Investment Plan which was credited to the account of the
Named Executive Officers in 2016. All of these amounts are included in the
All Other Compensation column of the Summary Compensation Table (and are
also detailed in footnote (5) to that Table).
|
(3)
|
Reflects aggregate earnings on
each type of deferred compensation listed above. The earnings on deferred
base salary and bonus payments are calculated based on the actual returns
from the same fund choices that Company employees have in the qualified
401(k) plan. Currently, employees have 14 fund choices from which they may
select. As nonqualified plans, these plans are unfunded which means that
no actual dollars are invested in these funds. The Company does not
provide any above market interest rates or other special terms for any
deferred amounts. These amounts are not included in the Change in Pension
Value column of the Summary Compensation Table.
|
Arrangements with
Named Executive Officers
Severance
Agreements
We have entered into severance agreements
with each of our NEOs. All new executive severance agreements and executive
change-in-control agreements entered into after July 2004, limit the benefits
that may be provided to an executive to 2.99 times the executives annual
compensation of base salary plus target incentive payments. Messrs. Weeks,
Clappin, McRae and Dr. Morse have agreements which were in effect prior to July
2004. Mr. Tripeny has a severance agreement dated as of January 1,
2015.
Severance
AgreementsMr. Weeks
Under Mr. Weeks severance agreement, if
he is terminated involuntarily, and without cause, or as a result of disability,
he is entitled to the following:
●
|
Base
salary, reimbursable expenses and annual bonus accrued and owing as of the
date of termination (lump sum payment);
|
●
|
A severance amount equal to 2.99
times his then-base salary plus an annual bonus amount (calculated at 100%
of target that would have been paid for the fiscal year in which the
termination occurs) (lump sum payment);
|
●
|
Continued participation in the
Companys benefit plans for up to three years; and
|
●
|
In
the calendar year following the year in which the termination occurs
(subject to a six-month waiting period), the purchase of his principal
residence by the Company upon request.
|
If however, Mr. Weeks is terminated for
cause or he resigns, he would (1) be entitled to accrued, but unpaid salary
(lump sum payment) and any reimbursable expenses
accrued or owing to him and (2) forfeit any outstanding stock awards.
CORNING
2017 PROXY STATEMENT
65
|
Table of Contents
Compensation
Discussion & Analysis
Severance
AgreementsOther Named Executive Officers
Under the severance agreements, an NEO is
entitled to severance payments if he is terminated involuntarily other than for
cause.
Generally, under the severance agreements,
an NEO (other than Mr. Weeks) is entitled to receive the following:
●
|
Accrued but unpaid base salary,
reimbursable expenses, vacation pay and the executives target percentage
for the annual bonus plans multiplied by the executives salary, pro-rated
to the last day of the month closest to the termination date (lump sum
payment);
|
●
|
A severance amount equal to two
times the executives then base salary plus an annual bonus amount (an
amount equal to executives salary multiplied by the executives target
percentage in effect on the termination date under the Companys
Performance Incentive Plan and 5% target under the GoalSharing Plan) (lump
sum payment);
|
●
|
Continued medical, dental and
hospitalization benefits for 24 months;
|
●
|
In the calendar year following the
year in which the termination occurs (subject to a six-month waiting
period), the purchase of his principal residence by the Company upon
request; and
|
●
|
Outplacement benefits up to a
maximum amount of $50,000.
|
The following table reflects the amounts
that would be payable under the various arrangements assuming termination
occurred at December 31, 2016.
TERMINATION SCENARIOS (INCLUDING
SEVERANCE, IF ELIGIBLE)
|
Named Executive Officer
|
|
|
|
Voluntary
(1)
$
|
|
For Cause
$
|
|
Death
$
|
|
Disability
(1)
$
|
|
Without Cause
$
|
Wendell P. Weeks
|
|
Severance Amount
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
10,304,512
|
|
|
|
Value of Benefits Continuation
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
71,922
|
(2)
|
|
|
Value of Outplacement Services
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
Purchase of Principal Residence
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
250,000 to 1,000,000
|
(3)
|
|
|
PensionNon-Qualified Annuity
|
|
1,384,514
|
|
0
|
|
1,384,514
|
|
1,384,514
|
|
1,384,514
|
|
|
|
PensionNon-Qualified Lump Sum
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
PensionQualified
Annuity
|
|
118,107
|
|
118,107
|
|
59,053
|
|
118,107
|
|
118,107
|
|
R. Tony Tripeny
|
|
Severance Amount
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
1,785,000
|
|
|
|
Value of Benefits Continuation
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
47,948
|
(2)
|
|
|
Value of Outplacement Services
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
50,000
|
|
|
|
Purchase of Principal Residence
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
50,000 to 250,000
|
(3)
|
|
|
PensionNon-Qualified Annuity
|
|
308,280
|
|
0
|
|
244,653
|
|
308,280
|
|
308,280
|
|
|
|
PensionNon-Qualified Lump Sum
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
PensionQualified
Lump Sum
|
|
275,646
|
|
275,646
|
|
275,646
|
|
275,646
|
|
275,646
|
|
James P. Clappin
|
|
Severance Amount
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
2,736,150
|
|
|
|
Value of Benefits Continuation
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
30,880
|
(2)
|
|
|
Value of Outplacement Services
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
50,000
|
|
|
|
Purchase of Principal Residence
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
0
|
(3)
|
|
|
PensionNon-Qualified Annuity
|
|
465,520
|
|
0
|
|
362,557
|
|
465,520
|
|
465,520
|
|
|
|
PensionNon-Qualified Lump Sum
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
PensionQualified
Annuity
|
|
90,111
|
|
90,111
|
|
45,056
|
|
90,111
|
|
90,111
|
|
Lawrence D. McRae
|
|
Severance Amount
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
2,496,960
|
|
|
|
Value of Benefits Continuation
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
47,948
|
(2)
|
|
|
Value of Outplacement Services
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
50,000
|
|
|
|
Purchase of Principal Residence
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
50,000 to 250,000
|
(3)
|
|
|
PensionNon-Qualified Annuity
|
|
486,008
|
|
0
|
|
397,047
|
|
486,008
|
|
486,008
|
|
|
|
PensionNon-Qualified Lump Sum
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
PensionQualified
Annuity
|
|
100,065
|
|
100,065
|
|
50,032
|
|
100,065
|
|
100,065
|
|
66
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Compensation
Discussion & Analysis
Named Executive
Officer
|
|
|
|
Voluntary
(1)
$
|
|
For
Cause
$
|
|
Death
$
|
|
Disability
(1)
$
|
|
Without
Cause
$
|
David L. Morse
|
|
Severance Amount
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
2,295,000
|
|
|
|
Value of Benefits Continuation
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
47,948
|
(2)
|
|
|
Value of Outplacement Services
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
50,000
|
|
|
|
Purchase of Principle Residence
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
250,000 to 1,000,000
|
(3)
|
|
|
PensionNon-Qualified Annuity
|
|
465,160
|
|
0
|
|
348,871
|
|
465,160
|
|
494,204
|
|
|
|
PensionNon-Qualified Lump Sum
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
PensionQualified Annuity
|
|
124,148
|
|
124,148
|
|
62,074
|
|
124,148
|
|
124,148
|
|
(1)
|
Nonqualified plan benefits shown
for all NEOs are payable from the Executive Supplemental Pension Plan. The
timing and form of the benefits payable in the table above for a voluntary
termination are as follows: Messrs. Weeks, Tripeny, McRae and Clappins
Executive Supplemental Pension Plan benefits are payable as an immediate
life annuity. Dr. Morses benefit is payable as an immediate life annuity
with six years guaranteed.
|
(2)
|
The value of welfare benefits
continuation is estimated at $23,974 per year for family coverage (three
years of benefits continuation for Mr. Weeks and two years of benefits
continuation for the others). Mr. Clappins benefits continuation is
$15,440 per year for two years.
|
(3)
|
Under the terms of the severance
agreements, the NEOs may also request that Corning purchase their
principal residence in the Corning, New York area. Corning is unable to
accurately and precisely estimate the value that may be delivered under
this provision as it requires an independent appraisal of the executives
residence as well as, for Mr. Weeks, Mr. McRae and Dr. Morse, a
calculation of the executives purchase price of the residence plus a
percentage of documented improvements made to the property. These values
are not maintained by Corning in its normal course of business. They are
required only if an executive is terminated. Such purchase must be
finalized in the calendar year following the year in which the executives
termination occurred (subject to a six-month waiting period). Mr. Clappin
does not currently have a principal residence in the Corning, New York
area.
|
Change-in-Control
Agreements
We have entered into change-in-control
agreements with each of the NEOs. These agreements are intended to provide for
continuity of management if there is a change in control of the Company. These
agreements will be effective until the executive leaves the employ of Corning or
until the executive ceases to be an officer of Corning.
If during the term of the agreement a
change in control occurs, the restrictions on all restricted stock and
restricted stock units held by the NEO lapse, and any stock options vest and
become immediately exercisable.
The NEOs are also entitled to severance
and other benefits upon certain terminations of employment following or in
connection with a change in control.
●
|
For Mr. Weeks, benefits are payable
if he (i) is terminated without cause, (ii) resigns for good reason, or
(iii) resigns or is terminated for any reason, each during a potential
change in control period or within four years following a change in
control.
|
●
|
For the NEOs (other than Mr. Weeks),
benefits are payable if their employment is terminated (other than for
cause, by reason of death or disability, or by the executive for any
reason) during a potential change in control period, or within two years
following a change in control.
|
The benefits payable are as
follows:
●
|
Accrued but unpaid base salary, reimbursable expenses, vacation pay
and the executives target percentage for the annual bonus plans
multiplied by the executives salary, pro-rated to the last day of the
month closest to the termination date (lump sum payment);
|
●
|
A severance amount equal to 2.99
times (for Mr. Weeks) and two times (for Messrs. McRae, Clappin, Tripeny
and Dr. Morse) the NEOs then-current base salary plus an annual bonus
amount (lump sum payment);
|
●
|
Continued participation in the
Companys benefit plans for 3 years;
|
●
|
Upon request, purchase of the NEOs
principal residence in the Corning, NY area; and
|
●
|
Outplacement benefits (equal to 20% of base salary) (excluding Mr.
Weeks).
|
CORNING
2017 PROXY STATEMENT
67
|
Table of Contents
Compensation
Discussion & Analysis
If the employment of an NEO (other than
Mr. Weeks) is terminated for cause or he resigns for other than good reason, or
the NEOs employment terminates by reason of death or disability, the NEO is
entitled to accrued but unpaid base salary, reimbursable expenses, vacation pay
and the executives target percentage for the annual bonus plans multiplied by
the executives salary, pro-rated to the last day of the month closest to the
termination date (lump sum payment). In addition,
each NEO except Mr. Tripeny is generally entitled to receive a gross-up payment
in an amount sufficient to make him whole for any federal excise tax on excess
parachute payments imposed under Section 280G and 4999 of the IRC. However, if
the federal excise tax can be avoided by reducing the related payments by a
present value of $45,000 or less, then the payment will be reduced to the extent
necessary to avoid the excise tax and no gross up payment will be made to the
NEO.
The following table reflects the amounts
that would be payable under the various arrangements assuming that a change in
control occurred on December 31, 2016
|
|
Cash-based
|
|
Long-Term Incentives
(1)
|
|
|
Named Executive Officer
|
|
Cash
Severance
($)
|
|
Interrupted
Performance
Cycles
($)
|
|
ESPP
($)
|
|
Misc.
Benefits
($)
|
|
Excise
Tax Gross Up
($)
|
|
Interrupted
CPU
Performance
Cycles
($)
|
|
Share-based
Awards
($)
|
|
Total
Benefits
(2)
($)
|
Wendell P. Weeks
|
|
10,947,654
|
|
0
|
|
25,782,501
|
|
121,922
|
|
0
|
|
9,360,000
|
|
7,836,694
|
|
54,048,771
|
R. Tony Tripeny
|
|
1,785,000
|
|
0
|
|
0
|
|
97,948
|
|
0
|
|
1,411,200
|
|
1,317,312
|
|
4,611,460
|
James P. Clappin
|
|
2,496,960
|
|
0
|
|
8,094,771
|
|
80,879
|
|
0
|
|
2,419,200
|
|
2,181,484
|
|
15,273,294
|
Lawrence D. McRae
|
|
2,736,150
|
|
0
|
|
9,090,885
|
|
97,948
|
|
0
|
|
2,534,400
|
|
2,502,209
|
|
16,961,592
|
David L. Morse
|
|
2,295,000
|
|
0
|
|
9,097,883
|
|
97,948
|
|
2,843,813
|
|
2,419,200
|
|
2,074,671
|
|
18,828,515
|
(1)
|
Long-term incentives includes a
combination of equity (stock options, and restricted stock units) and cash
(cash performance units) which vest upon a change of control.
|
(2)
|
In accordance with IRS rules, the
calculation of excise tax gross-up is a complex calculation that can vary
dramatically from year to year depending on the facts and variables
applicable at the time of a change in control. Dr. Morses value reflects
a legacy benefits in his grandfathered Change of Control Agreement that
provides for a conditional excise tax gross-up upon a change in control.
The conditional language stipulates that he would not be eligible for this
benefit if his parachute payments could be reduced by no more than
$45,000. The Compensation Committee approved a new form of agreement for
all agreements after July 2, 2004 which contains no provision for
gross-ups for excise taxes.
|
In addition to the above, the NEOs may
also request that Corning purchase their principal residence. Corning is unable
to accurately and precisely estimate the value as it requires an independent
appraisal of the executives residence and, for all, a calculation of the
executives purchase price of such residence and any documented improvements
made to the property. This is data that Corning does not maintain in its normal
course of business. See footnote (3) to the Termination Scenarios on page
67.
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Proposal 3
Advisory Vote on the Frequency
of the Say on Pay Vote
|
|
As described in Proposal 2 above,
Cornings shareholders are being provided the opportunity to cast an advisory
vote on Cornings executive compensation program. The advisory vote on executive
compensation described in Proposal 2 above is referred to as a say-on-pay
vote.
Section 14A(a)(2) of the Securities
Exchange Act of 1934 requires public companies to solicit the preference of
their shareholders as to whether future say-on-pay votes should be held every
one, two, or three years no later than the annual meeting of shareholders held
in the sixth calendar year after the last such vote. Our last advisory vote on
the frequency of our say-on-pay vote was held at our 2011 Annual Meeting, where
shareholders voted to hold say-on-pay votes every year. Accordingly, this
Proposal 3 affords shareholders the opportunity to cast an advisory vote on how
often Corning should include a say-on-pay vote in its proxy materials for future
annual shareholder meetings (or special shareholder meeting for which Corning
must include executive compensation information in the proxy statement for that
meeting). Under this Proposal 3, shareholders may vote to have the say-on-pay
vote every year, every two years or every three years.
Our Board believes that say-on-pay votes
should be conducted every year so that shareholders may annually express their
views on our executive compensation program. Our shareholders also
overwhelmingly support annual say-on-pay voting. The Compensation Committee,
which administers Cornings executive compensation program, values the opinions
expressed by shareholders in these votes and will continue to consider the
outcome of these votes in making its decisions on executive
compensation.
|
FOR
|
Our Board unanimously recommends that shareholders vote on
Proposal 3 to hold say-on-pay votes EVERY YEAR.
|
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Table of
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Proposal 4
Ratification of Appointment of
Independent Registered
Public Accounting Firm
|
|
The Audit Committee (the Committee)
evaluates the selection of our independent auditor each year and has selected
PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting
firm for 2017. PwC has served in this role since 1944. The Committee concluded
that many factors contribute to the continued support of PwCs independence,
such as the oversight of the Public Company Accounting Oversight Board (PCAOB)
through the establishment of audit, quality, ethics, and independence standards
in addition to conducting audit inspections; the mandating of reports on
internal control over financial reporting; PCAOB requirements for audit partner
rotation; and limitations imposed by regulation and by the Committee on
non-audit services provided by PwC. The Committee preapproves all audit and
permitted non-audit services that PwC performs for the Company, and it approves
the audit fees associated with the engagement of PwC. All services provided to
Corning by PwC in 2015 and 2016 were pre-approved by the Committee in accordance
with the policy.
The Committee requires key PwC partners
assigned to our audit to be rotated at least every five years. The Committee and
its Chair oversee the selection process for each new lead engagement partner.
Throughout this process, the Committee and management provide input to PwC about
the Companys priorities, discuss candidate qualifications and interview
potential candidates put forth by the firm.
In considering continuing auditor
independence, the Committee periodically considers whether there should be a
regular rotation of the independent registered public accounting firm. The
Committee has determined that such a rotation would likely cause significant
disruption to the Company without providing any significant benefit. The members
of the Committee and the Board believe that the continued retention of PwC to
serve as the Companys independent registered public accounting firm is in the
best interests of the Company and its investors.
As a matter of good corporate governance,
the Board submits the selection of the independent audit firm to our
stockholders for ratification. If the selection of PwC is not ratified by a
majority of the shares of common stock present or represented at the annual
meeting and entitled to vote on the matter, the Committee will review its future
selection of an independent registered public accounting firm in light of that
vote result. Even if the selection is ratified, the Committee in its discretion
may appoint a different registered public accounting firm at any time during the
year if the Committee determines that such change would be
appropriate.
Corning expects representatives of PwC to
be present at the Annual Meeting and available to respond to questions that may
be raised there. These representatives may comment on the financial statements
if they so desire.
|
FOR
|
Our Board unanimously recommends a vote FOR the ratification
of the appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the fiscal year ending December 31,
2017.
|
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Proposal 4
Ratification of Appointment of Independent Registered Public Accounting Firm
Fees Paid
to Independent Registered Public Accounting Firm
Aggregate fees for professional services
rendered by PwC in 2015 and 2016:
|
|
2015
|
|
2016
|
Audit Fees
|
|
$9,123,000
|
|
$8,798,000
|
Audit Related Fees
|
|
314,500
|
|
486,000
|
Tax
Fees
|
|
475,000
|
|
596,000
|
All
Other Fees
|
|
503,000
|
|
163,000
|
Total Fees
|
|
$10,415,500
|
|
$10,043,000
|
Audit
Fees.
These fees are composed of professional
services rendered in connection with the annual audit of Cornings consolidated
financial statements, including the audit of the effectiveness of internal
control over financial reporting, and reviews of Cornings quarterly
consolidated financial statements on Form 10-Q that are customary under auditing
standards generally accepted in the United States. Audit fees also include
statutory audits of Cornings foreign jurisdiction subsidiaries, audit of new
information technology systems, tax related audit support, comfort letters,
consents for other SEC filings and reviews of documents filed with the
SEC.
Audit-Related
Fees.
These fees are composed of professional
services rendered in connection with due diligence pertaining to acquisitions,
procedures to translate certain financial statements for foreign subsidiaries,
employee benefit plan audits, agreed-upon procedures and the evaluation of new
accounting policies.
Tax Fees.
These fees are composed of statutory tax compliance,
assistance for Cornings foreign jurisdiction subsidiaries tax returns,
expatriate tax return compliance, other tax compliance projects and assistance
in reviewing Cornings transfer pricing policies.
All Other
Fees.
These fees are composed of a strategy
consulting project with respect to new product development, an information
technology security assessment, a fee relating to contract compliance
assessment, and a fee relating to licensing technical accounting software from
the independent registered public accounting firm.
Policy
Regarding Audit Committee Pre-Approval of Audit and Permitted Non-Audit Services
of Independent Registered Public Accounting Firm
The Audit Committee has adopted a policy
for pre-approval of audit and permitted non-audit services by Cornings
independent registered public accounting firm. The full Audit Committee approves
annually projected services and fee estimates for these services and other major
types of services. The Audit Committee chairman has been designated by the Audit
Committee to approve any services arising during the year that were not
pre-approved by the Audit Committee and services that were pre-approved, but for
which the associated fees will materially exceed the budget established for the
type of service at issue. Services approved by the chairman are communicated to
the full Audit Committee at its next regular meeting. For each proposed service,
the independent registered public accounting firm is required to provide
supporting documentation detailing said service and confirm that the provision
of such services does not impair its independence. The Audit Committee regularly
reviews reports detailing services provided to Corning by its independent
registered public accounting firm.
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Proposal 4
Ratification of Appointment of Independent Registered Public Accounting Firm
Report of
the Audit Committee
The purpose of the Audit Committee is to
assist the Board of Directors in its general oversight of Cornings financial
reporting, internal controls and audit functions. The Audit Committee operates
under a written charter adopted by the Board of Directors. The directors who
serve on the Audit Committee have no financial or personal ties to Corning
(other than director compensation and equity ownership as described in this
proxy statement) and are all financially literate and independent for
purposes of the New York Stock Exchange listing standards. The Board of
Directors has determined that none of the Audit Committee members have a
relationship with Corning that may interfere with the members independence from
Corning and its management.
The Audit Committee met with management
periodically during the year to consider the adequacy of Cornings internal
controls and the objectivity of its financial reporting. The Audit Committee
discussed these matters with Cornings independent registered public accounting
firm and with the appropriate financial personnel and internal auditors. The
Audit Committee also discussed with Cornings senior management and independent
registered public accounting firm the process used for certifications by
Cornings chief executive officer and chief financial officer that are required
for certain of Cornings filings with the SEC. The Audit Committee met privately
with both the independent registered public accounting firm and the internal
auditors, both of whom have unrestricted access to the Audit
Committee.
The Audit Committee has reviewed and
discussed the consolidated financial statements with management and the
independent registered public accounting firm. Management is responsible for:
the preparation, presentation and integrity of Cornings financial statements;
accounting and financial reporting principles; establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e));
establishing and maintaining internal control over financial reporting (as
defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of
disclosure controls and procedures; evaluating the effectiveness of internal
control over financial reporting; and evaluating any change that has materially
affected, or is reasonably likely to materially affect, internal control over
financial reporting. The independent registered public accounting firm is
responsible for performing an independent audit of the consolidated financial
statements and expressing an opinion on the conformity of those financial
statements with accounting principles generally accepted in the United States,
as well as expressing an opinion on the effectiveness of internal control over
financial reporting.
During the course of 2016, management
updated the documentation, and performed testing and evaluation of Cornings
system of internal control over financial reporting in response to the
requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and
related regulations. The Audit Committee was kept apprised of the progress of
the evaluation, and it provided oversight and advice to management during the
process. In connection with this oversight, the Audit Committee received
periodic updates provided by management, internal audit and the independent
registered public accounting firm at each regularly scheduled Audit Committee
meeting. At the conclusion of the process, management provided the Audit
Committee with, and the Audit Committee reviewed a report on, the effectiveness
of Cornings internal control over financial reporting. The Audit Committee also
reviewed: the report of management contained in Cornings Annual Report on Form
10-K for the year ended December 31, 2016, filed with the SEC; as well as
PricewaterhouseCoopers LLPs Report of Independent Registered Public Accounting
Firm included in Cornings Annual Report on Form 10-K for the year ended
December 31, 2016 related to its audits of the consolidated financial statements
and financial statement schedule, and the effectiveness of internal control over
financial reporting.
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Proposal 4
Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee has discussed with the
independent registered public accounting firm the matters required by the
applicable requirements of the Public Company Accounting Oversight Board. In
addition, the Audit Committee has received from the independent registered
public accounting firm the written disclosures and the letter required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accounting firms communications
with the Audit Committee concerning independence and discussed with them their
independence from Corning and its management. The Audit Committee has considered
whether the provision of permitted non-audit services by the independent
registered public accounting firm to Corning is compatible with the auditors
independence.
Based on these reviews and discussions,
the Audit Committee recommended to the Board of Directors and the Board of
Directors approved that the audited financial statements be included in
Cornings Annual Report on Form 10-K for the year ended December 31,
2016.
The Audit Committee:
Kurt M. Landgraf,
Chair
Donald W. Blair
Stephanie A. Burns (excused from approval, as new Committee
member)
Deborah A. Henretta
Daniel P. Huttenlocher
Deborah D.
Rieman
Mark S. Wrighton
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Proposal 5
Re-approval of the Material
Terms of the Performance
Goals under our 2012 Long-Term Incentive Plan,
as
Required by Section 162(m) of the Internal Revenue
Code
|
|
General.
Our 2012
Long-Term Incentive Plan (the 2012 Plan) was approved by our shareholders in
April 2012 and became effective on May 1, 2012. The 2012 Plan provides for the
grant of awards to eligible employees in the form of stock options, restricted
stock, restricted stock units, stock appreciation rights, performance stock,
performance stock units, cash performance units, or other awards granted by the
Compensation Committee. The 2012 Plan is designed to attract, retain and
motivate highly-qualified personnel key to our future success and our ability
to remain competitiveand to provide a flexible way to enable employees to
obtain equity ownership of the Company, aligning their objectives with those of
our shareholders.
The 2012 Plan is summarized below and
attached as Appendix B to this proxy statement. This 2012 Plan summary may not
contain all the information that is important to you and you should read
Appendix B carefully before you decide how to vote.
Proposal:
In February 2017, our Board of Directors directed us to
submit this proposal to our shareholders and to seek re-approval of the material
terms of the performance goals of the 2012 Plan pursuant to Section 162(m) of
the Internal Revenue Code of 1986, as amended (the IRC), so that we may retain
the flexibility to deduct for federal income tax purposes gains attributable to
certain awards under the 2012 Plan which, when added to the compensation payable
by us to certain executive officers in any single year, exceeds $1.0 million.
The material terms of the 2012 Plan are not
being changed. No new shares or amendments are being proposed or requested for
the 2012 Plan.
Under Section 162(m) of the IRC, the
federal income tax deductibility of compensation paid to our CEO and three other
most highly compensated officers (other than our CEO and CFO) (collectively, the
Covered Employees) may be limited to the extent such compensation exceeds
$1,000,000, in any taxable year. However, we may deduct compensation paid to our
Covered Employees in excess of that amount if it qualifies as performance-based
compensation as defined in Section 162(m). In order for awards under the 2012
Plan to constitute performance-based compensation, the award must, among other
things, must be payable only upon the attainment of pre-established, objective
performance goals established by a committee comprised solely of two or more
outside directors (the Committee), which in our case is the Compensation
Committee. In addition, the materials terms of the performance goals must be
disclosed to, and reapproved by, our shareholders at least every five years. As
the material terms of the performance goals under the 2012 Plan were last
approved by our shareholders in April 2012, such terms must be reapproved at our
Annual Meeting this year for the 2012 Plan to remain in compliance with 162(m)
of the IRC.
Material Terms of the 2012 Plan for
Re-Approval.
Eligibility.
The
Committee selects the individuals who are eligible to participate in the 2012
Plan. These individuals may include executives and employees (including officers
and employees who are directors) of Corning and its affiliates. As of January
31, 2017, Corning and its affiliates had approximately 41,000 active employees
who would have been eligible to receive awards under the 2012 Plan.
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Proposal 5
To Re-Approval of the Material Terms of the Performance Goals under our 2012 Long-Term Incentive Plan
The following
table sets forth, as of January 31, 2017, the stock option grants made under the
2012 Plan since its adoption to the individuals and groups of individuals set
forth below:
|
|
No. of Stock
Options
|
Named Executive
Officers:
|
|
|
Wendell P. Weeks
|
|
767,002
|
R. Tony Tripeny
|
|
107,105
|
James P. Clappin
|
|
191,194
|
Lawrence D. McRae
|
|
214,774
|
David L. Morse
|
|
198,660
|
All Current Executive Officers as a Group
(14 persons)
:
|
|
2,627,562
|
Non-Executive Directors as a
Group
:
|
|
0
|
All Non-Executive Officer Employees as a
Group
:
|
|
6,743,899
|
On January 31,
2017, the last reported sale price of our common stock on the New York Stock
Exchange was $26.49 per share.
Program Limitations.
Under the 2012 Plan, not more than 1,500,000 shares may be granted to any
participant in any calendar year in any form (i.e., options, stock appreciation
rights or shares of restricted stock). In addition, the maximum amount of awards
denominated in cash to any participant in any calendar year is
$15,000,000.
Stock.
Under the 2012
Plan, the maximum number of shares of Corning common stock that may be granted
to eligible participants is 85,000,000.
At any given
time, the number of shares remaining available for issuance under the 2012 Plan
will be reduced by the number of shares subject to outstanding awards and, for
awards that are not denominated in shares, by the number of shares actually
delivered in settlement of the award. When determining the number of shares that
remain available for issuance under the 2012 Plan, the following will not be
added back to the shares available for issuance:
●
|
The number of shares that are
tendered by a participant or withheld by the Company to pay the exercise
price of an award or to satisfy the participants tax withholding
obligations in connection with the exercise or settlement of an
award;
|
●
|
All of the shares covered by a
stock-settled stock appreciation right to the extent exercised;
and
|
●
|
Any shares that are forfeited or
cancelled or otherwise expire for any reason without having been exercised
or settled under prior programs.
|
Shares issued
or options granted to settle, assume or substitute outstanding awards or
obligations to grant future awards as a condition to the purchase, merger or
consolidation of another entity by Corning; and (ii) shares unallocated and
available for grant under a stock plan of another entity acquired by Corning,
based on the applicable exchange ratio, will not reduce the number of shares
available for issuance.
Shares of
Cornings common stock which are granted under the 2012 Plan may be authorized
but unissued shares, treasury shares, shares acquired by the Company on the open
market or a combination of these. Except in connection with a corporate
transaction involving Corning, the 2012 Plan prohibits repricing of stock
options and stock appreciation rights without shareholder approval, including
amendment of outstanding awards to reduce the exercise price and cancellation of
outstanding options or rights in exchange for cash or property, options or
rights with lower exercise prices or other awards.
The 2012 Plan
provides for appropriate adjustments in the aggregate number of shares and in
the number of shares and the price per share, or either, of outstanding options
in the case of changes in the capital stock of Corning resulting from any
corporate event or distribution of stock or property in order to preserve, but
not increase, the value of awards available under the 2012 Plan. The 2012 Plan
also provides that in any merger or consolidation in which Corning is not the
survivor and in which awards are not granted in substitution of awards
outstanding under the 2012 Plan, or predecessor plans, the Committee may make
provision for adjustments and/or settlements of outstanding awards as it deems
appropriate and consistent with the 2012 Plans purposes.
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Proposal 5
To Re-Approval of the Material Terms of the Performance Goals under our 2012 Long-Term Incentive Plan
Grant of Shares, Share Units and Cash
Units:
Performance Goals.
Under
the 2012 Plan, the Committee may award to eligible employees shares, or the
right to receive shares of Cornings common stock, or the right to receive cash
payments. The Committee determines the number of shares or amount of cash
awarded to individual employees and the number of rights covering shares to be
issued.
The Committee determines the conditions,
restrictions and contingencies placed upon the grant of shares or cash, except
that time-based shares and share units shall have minimum vesting over three
years and performance based awards shall have minimum vesting of one year. In
order to constitute qualified performance-based compensation under Section
162(m), in addition to certain other requirements, the relevant amounts must be
payable only upon the attainment of pre-established, objective performance goals
set by the Committee and linked to shareholder-approved performance criteria.
For purposes of the 2012 Plan, one or more of the following performance criteria
will be used in setting performance goals applicable to qualified
performance-based compensation, either for the entire company or a subsidiary,
division, business unit or an individual: net income; cash flow or cash flow on
investment; operating cash flow; pre-tax or post-tax profit levels or earnings;
profit in excess of cost of capital; operating earnings; return on investment;
free cash flow; free cash flow per share; earnings per share; return on assets;
return on net assets; return on equity; return on capital; return on invested
capital; return on sales; sales growth; growth in managed assets; operating
margin; operating income; total stockholder return or stock price appreciation;
EBITDA; EBITA; revenue; net revenues; market share, market penetration;
productivity improvements; inventory turnover measurements; reduction of losses,
loss ratios or expense ratios; reduction in fixed costs; operating cost
management; cost of capital; and debt reduction, any of which may be measured
either in absolute terms or as compared to any incremental increase or decrease
or as compared to results of a peer group or to market performance indicators or
indices. The 2012 Plan also permits the Committee to provide for objectively
determinable adjustments to the applicable performance criteria in setting
performance goals for performance-based compensation awards. To allow Corning to
qualify awards as performance-based compensation, we are seeking shareholder
approval of the 2012 Plan and the performance criteria listed above.
Restrictions on Awards.
The shares or cash awarded to or earned by individual employees are subject to
transfer restriction and/or forfeiture for a period of time as determined by the
Committee in its discretion. The restrictions on transfer and the possibility of
forfeiture may be waived, with the approval of the Committee, if an employees
employment relationship is terminated by reason of death, disability or
retirement, or by reason of a subsidiary ceasing to be such.
In addition, the Committee may remove, in its discretion, in
whole or in part, the restrictions on sale or transfer and the possibility of
forfeiture in the event of the termination of employment if circumstances so
warrant. Shares may be issued to recognize past performance either generally or
upon attainment of specific objectives. Shares issuable for performance will be
payable only to the extent the Committee determines that an eligible employee
has met such objectives and will generally be valued as of the date of such
determination. No employee shall have any right to receive shares or cash based
upon the attainment of objectives prior to the expiration of the date set for
the performance of objectives unless (i) otherwise determined by the Committee
or (ii) the participants employment is terminated by reason of disability or
retirement, in each case with the consent of Corning.
Grant of Stock Options and Stock Appreciation
Rights.
Under the 2012 Plan, the Committee
may grant to eligible employees either non-qualified or incentive stock
options, or both, to purchase shares of Cornings common stock at not less than
100% of fair market value on the date of grant. No stock option may be
outstanding for more than ten years. The Committee may also provide that options
may not be exercised in whole or in part for any period or periods of time.
The number of shares covered by incentive stock
options that may be first exercised by an individual in any year cannot have an
aggregate fair market value in excess of $100,000, measured at the date of
grant. The maximum number of shares that may be issued in connection with
incentive stock options intended to comply with Section 422 of the IRC, shall be
85,000,000. The Committee may provide that in the event the employment of an
employee is terminated, the right to exercise options held under the 2012 Plan
may continue through its original expiration date or for such shorter period of
time after such event as the Committee may determine appropriate. Options are
not assignable or transferable except for limited circumstances such as death
and, with the consent of the Committee, to certain family members to assist with
estate planning. The 2012 Plan does not permit an optionee to defer recognition
of gain upon the exercise of a stock option.
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Proposal 5
To Re-Approval of the Material Terms of the Performance Goals under our 2012 Long-Term Incentive Plan
The 2012 Plan permits the granting of
stock appreciation rights which permit an optionee to receive an amount equal to
the difference between the fair market value on the date of grant and the market
price of the common stock on the date the right is exercised, payable in cash or
shares. No stock appreciation right may be outstanding for more than 10 years.
The option price is to be paid to Corning by the optionee, in full, concurrently
with the issuance or delivery of the stock. The optionee may pay the option
price in cash or with shares of Cornings common stock owned by the optionee, or
by such other means as the Committee may authorize. The optionee has no rights
as a shareholder with respect to the shares subject to option until shares are
issued upon exercise of the option.
Other Terms:
Committee.
The 2012 Plan is administered by the Compensation Committee of the Board
of Directors, consisting of three or more independent directors, whose members
meet the requirements of Section 16(b) promulgated under the Securities Exchange
Act of 1934, as amended, and the definition of an outside director under the
regulations promulgated pursuant to Section 162(m) of the IRC. No member of the
Committee or non-employee member of the Board is eligible to participate in the
2012 Plan. The Committee may delegate to an executive officer of Corning certain
rights and responsibilities, including the limited right to grant awards to
individuals, except that only the Committee may grant awards to
officers.
Amendment, Administration and
Termination.
The 2012 Plan expires May 1,
2021 and no awards may be granted after that date. The Board is authorized to
terminate or amend the 2012 Plan, except that no such termination or amendment
is effective without the approval of shareholders, if such approval is
required.
Taxation.
Corning believes that the federal income tax consequences of the 2012
Plan are as follows:
Stock Options and Stock Appreciation
Rights.
No income will be recognized by an
optionee at the time either a non-qualified option, an incentive stock option or
a stock appreciation right is granted. An optionee who exercises a non-qualified
option or a stock appreciation right will recognize compensation taxable as
ordinary income (subject, in the case of employees, to withholding) in an amount
equal to the difference between the exercise price and the fair market value of
the shares on the date of exercise, and Corning or the subsidiary employing the
optionee will be entitled to a deduction from income in the same amount. The
optionee s basis in such shares will be increased by the amount taxable as
compensation, and the optionees capital gain or loss when the shares are sold
will be calculated using such increased basis. The capital gain or loss on
disposition of the shares will be either long-term or short-term depending on
the holding period of the shares.
If all applicable requirements of Section
422 of the IRC, are met with respect to incentive stock options, including the
requirement that the stock be held for more than two years from the date of
grant of the option and more than one year from the date of exercise, no income
to the optionee will be recognized at the time of exercise of an incentive stock
option. The excess of the fair market value of the shares at the time of
exercise over the amount paid is an item of tax preference, which may be subject
to the alternative minimum tax. In general, if an incentive stock option is
exercised after three months of termination of employment, or if the shares are
sold within one year of the date of exercise or two years from the date of
grant, the optionee will recognize ordinary income in an amount equal to the
difference between the exercise price and the lesser of the fair market value of
the shares on the date of exercise or the sale price. Any excess of the sale
price over the fair market value on the date of exercise will be taxed as a
capital gain. Corning will be entitled to a tax deduction only if its employee
recognizes ordinary income and only in the amount of income the employee
recognizes.
Restricted Shares and Restricted Share
Units.
Shares of common stock awarded to an
employee which are not subject to restrictions and the possibility of forfeiture
will be taxed as ordinary income, subject to withholding, at the time of the
transfer of the shares to the participant. Subject to any applicable limitations
imposed by Section 162(m) of the IRC, the value of such awards will be
deductible by Corning or by the subsidiary employing the employee at the same
time and in the same amount. Shares subject to restrictions and the possibility
of forfeiture will not be subject to tax nor will such grant result in a tax
deduction for Corning at the time of award. However, when such shares become
free of restrictions and the possibility of forfeiture, the fair market value of
such shares at that time (i) will be treated as ordinary income to the employee
and (ii) subject to any applicable limitations imposed by Section 162(m) of the
IRC, will be deductible by Corning or by the subsidiary employing the employee.
Alternatively, an employee receiving shares
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Proposal 5
To Re-Approval of the Material Terms of the
Performance Goals under our 2012 Long-Term Incentive Plan
subject to
restrictions and the possibility of forfeiture may elect to include in his or
her gross income, for the taxable year in which such shares are transferred to
him or her, the fair market value of such shares at that time; in such case, he
or she need not include any amount in gross income at the time the shares become
free of restrictions and the possibility of forfeiture. However, an employee
making such an election will not be allowed a deduction if the shares are
subsequently forfeited. The employee will have a tax basis for the shares equal
to their fair market value at the time they are included in gross income and
will realize long-term or short-term capital gain on disposition of the shares
depending upon the holding period of the shares, which will commence at the time
the employee is deemed to be in receipt of ordinary income with respect to such
shares.
Restricted
share units awarded to an employee will be taxed as ordinary income, subject to
withholding, at the time of the units are settled or paid to the participant.
Subject to any applicable limitations imposed by Section 162(m) of the IRC, the
value of such awards will be deductible by Corning or by the subsidiary
employing the employee at the same time and in the same amount. Certain awards
under the 2012 Plan may be subject to the requirements applicable to
nonqualified deferred compensation under Section 409A of the IRC. Although
Corning intends that awards will satisfy those requirements, if they do not,
employees may be subject to additional income taxes and interest under Section
409A of the IRC.
Limitations on the Employers Compensation
Deduction.
Section 162(m) of the IRC limits
the deduction certain employers may take for otherwise deductible compensation
payable to certain executive officers of the employer to the extent the
compensation paid to such an officer for the year exceeds $1 million, unless the
compensation is performance-based, is approved by the employers shareholders,
and meets certain other criteria, as described above under the heading Grant of
Shares, Share Units and Cash UnitsPerformance Goals.
Application of Section 409A of the Code.
Section 409A of the IRC imposes an additional 20% tax and
interest on an individual receiving non-qualified deferred compensation under a
plan that fails to satisfy certain requirements. For purposes of Section 409A,
non-qualified deferred compensation includes equity-based incentive programs,
including some stock options, stock appreciation rights and restricted stock
unit programs. Generally speaking, Section 409A does not apply to incentive
stock options, non-discounted non-qualified stock options and appreciation
rights if no deferral is provided beyond exercise, or restricted stock. The
awards made pursuant to the 2012 Plan are expected to be designed in a manner
intended to comply with the requirements of Section 409A of the IRC to the
extent the awards granted under the 2012 Plan are not exempt from coverage.
However, if the 2012 Plan fails to comply with Section 409A in operation, a
participant could be subject to the additional taxes and interest.
State and Local Tax Consequences.
State and local tax consequences may in some cases differ
from the federal tax consequences. The foregoing summary of the income tax
consequences in respect of the 2012 Plan is for general information only.
Interested parties should consult their own advisors as to specific tax
consequences of their awards.
ERISA.
The 2012 Plan is
not subject to the Employee Retirement Income Security Act of 1974, as amended,
and is not intended to be qualified under Section 401(a) of the IRC.
New Plan Benefits:
The granting of awards under the 2012 Plan
to officers and employees of Corning and its affiliates is discretionary, and we
cannot now determine the number or type of awards to be granted in the future to
any particular person or group of employees under the 2012 Plan.
|
FOR
|
The Board of Directors recommends a vote FOR the re-approval
of the material terms of the performance goals under our 2012 Long-Term
Incentive Plan, as required by Section 162(m) of the Internal Revenue
Code.
|
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Proposal 5
To Re-Approval of the Material Terms of the
Performance Goals under our 2012 Long-Term Incentive Plan
Equity
Compensation Plan Information
The following table shows the total number
of outstanding options and shares available for future issuances under all of
our existing equity compensation plans, including the 2012 Long-Term Incentive
Plan and our 2010 Equity Plan for Non-Employee Directors as of December 31,
2016.
|
|
A
|
|
B
|
|
C
|
Plan Category
|
|
Securities To Be
Issued Upon Exercise
of
Outstanding
Options, Warrants
and Rights
|
|
|
Weighted-Average
Exercise Price
of Outstanding
Options,
Warrants
and Rights
|
|
Number of
Securities
Remaining Available
for Future Issuance
Under
Equity
Compensation
Plans (excluding
securities reflected
in
column A)
|
Equity Compensation Plans Approved by
Security
Holders
|
|
36,147,000
|
(1)
|
|
$16.91
|
|
68,646,314
|
Equity Compensation Plans Not
Approved
Security Holders
|
|
0
|
|
|
|
|
0
|
Total
|
|
36,147,000
|
(1)
|
|
$16.91
|
|
68,646,314
|
(1)
|
Shares indicated are total grants under the most recent
shareholder approved plans as well as any shares remaining outstanding
from any prior shareholder approved plans.
|
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Table of
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Frequently Asked
Questions About
the
Meeting and Voting
|
|
Why Did You
Send Me This Proxy Statement?
We sent this proxy statement and the
enclosed proxy card to you because our Board of Directors is soliciting your
proxy to vote at the Annual Meeting. This proxy statement summarizes information
concerning the matters to be presented at the meeting and related information
that will help you make an informed vote. This proxy statement and the
accompanying proxy card are first being distributed or made available to
shareholders on or about March 17, 2017.
When and
Where is the Annual Meeting?
The Annual Meeting will be held on
Thursday, April 27, 2017, at 11 a.m. Eastern Time, at The Corning Museum of
Glass, One Museum Way, Corning, New York 14830.
Who May
Attend the Annual Meeting?
The Annual Meeting is open to holders of
our common shares who held such shares as of the meetings record date, February
27, 2017. To attend the meeting, you will need to register upon arrival. We may
check for your name on our shareholders list and ask you to produce valid photo
ID. If your shares are held in street name by your broker or bank, you should
bring your most recent brokerage account statement or other evidence of your
share ownership. If we cannot verify that you own Corning shares, it is possible
that you will not be admitted to the meeting.
What Am I
Voting On?
At the Annual Meeting, you will be
voting:
●
|
To elect 13 directors for a one-year
term;
|
●
|
To approve the Companys executive
compensation (Say on Pay);
|
●
|
To vote on the frequency with which
we hold the Say on Pay vote;
|
●
|
To ratify the appointment of
PricewaterhouseCoopers LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2017;
|
●
|
To re-approve the material terms of
the performance goals under our 2012 Long-Term Incentive Plan, as required
by Section 162(m) of the U.S. Internal Revenue Code; and
|
●
|
Any other matter, if any, as may
properly come before the meeting and any adjournment or postponement of
the Annual Meeting.
|
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Table of
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Frequently Asked Questions
About the Meeting and Voting
How Do You
Recommend That I Vote on These Items?
The Board of Directors recommends that you
vote your shares:
●
|
FOR
all of the director nominees (Proposal
1);
|
●
|
FOR
the advisory approval of the compensation of the
Companys NEOs, as such information is disclosed in the
Compensation Discussion & Analysis, the compensation
tables and the accompanying disclosure (Say on Pay) (Proposal
2);
|
●
|
To hold the Say on Pay vote
EVERY YEAR
(Proposal 3);
|
●
|
FOR
ratification of the Boards appointment of
PricewaterhouseCoopers LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2017 (Proposal 4);
and
|
●
|
FOR
the re-approval of the material terms of the
performance goals under our 2012 Long-Term Incentive Plan, as required by
Section 162(m) of the U.S. Internal Revenue Code (Proposal
5).
|
Who is
Entitled to Vote?
You may vote if you owned our common
shares as of the close of business on February 27, 2017, the record date for the
Annual Meeting.
How Many
Votes Do I Have?
You are entitled to one vote for each
common share you own. As of the close of business on February 27, 2017, we had
927, 045, 692 common shares outstanding. The shares held in our treasury are not
considered outstanding and will not be voted or considered present at the
meeting.
How Do I
Vote By Proxy Before the Annual Meeting?
Before the meeting, registered
shareholders may vote shares in one of the following three ways:
●
|
By Internet at
www.investorvote.com/glw;
|
●
|
By telephone (from the United States
and Canada only) at
1-(800)-652-VOTE
(8683)
; and
|
●
|
By mail by completing, signing,
dating and returning the enclosed proxy card in the postage paid envelope
provided (see instructions on proxy card).
|
Please refer to the proxy card for further
instructions on voting by Internet or telephone.
Please use only
one
of the three ways to
vote.
If you hold shares in the account of or
name of a broker, your ability to vote those shares by Internet and telephone
depends on the voting procedures used by your broker, as explained below under
How Do I Vote If My Broker Holds My Shares In
Street Name?
May I Vote
My Shares in Person At the Annual Meeting?
Yes. You may vote your shares at the
meeting if you attend in person, even if you previously submitted a proxy card
or voted by Internet or telephone. Whether or not you plan to attend the
meeting, however, we strongly encourage you to vote your shares by proxy before
the meeting.
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Table of
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Frequently Asked Questions
About the Meeting and Voting
May I
Change My Mind After I Vote?
Yes. You may change your vote or revoke
your proxy at any time before the polls close at the meeting. You may change
your vote by:
●
|
signing another proxy card with a
later date and returning it to Cornings Corporate Secretary at One
Riverfront Plaza, Corning, NY 14831, prior to the
meeting;
|
●
|
voting again by Internet or
telephone prior to the meeting; or
|
●
|
voting again at the
meeting.
|
You also may revoke your proxy prior to
the meeting without submitting any new vote by sending a written notice that you
are withdrawing your vote to our Corporate Secretary at the address listed
above.
What Shares
Are Included on My Proxy Card?
Your proxy card includes shares held in
your own name and shares held in any Corning plan. You may vote these shares by
Internet, telephone or mail, as described on the enclosed proxy card. Your proxy
card does not include any shares held in a brokerage account in the name of your
bank or broker (such shares are said to be held in street
name).
How Do I
Vote if I Participate in the Corning Investment Plan?
If you hold shares in the Corning
Investment Plan, which includes shares held in the Corning Stock Fund in the
Companys 401(k) plan, these shares have been added to your other holdings on
your proxy card. Your completed proxy card serves as voting instructions to the
trustee of the plan. You may direct the trustee to vote your plan shares by
submitting your proxy vote for those shares, along with the rest of your shares,
by Internet, telephone or mail, all as described on the enclosed proxy card. If
you do not instruct the trustee to vote, your plan shares will be voted by the
trustee in the same proportion that it votes shares in other plan accounts for
which it did receive timely voting instructions.
How Do I
Vote if My Broker Holds My Shares in Street Name?
If your shares are held in a brokerage
account in the name of your bank or broker (this is called street name), those
shares are not included in the total number of shares listed as owned by you on
the enclosed proxy card. Instead, your bank or broker will send you directions
on how to vote those shares.
Will My
Shares Held in Street Name be Voted if I Do Not Provide My Proxy?
Under the New York Stock Exchange rules,
if you own shares in street name through a broker and do not vote, your broker
may not vote your shares on proposals determined to be non-routine. In such
cases, the absence of voting instructions results in a broker non-vote. Broker
non-voted shares count toward achieving a quorum requirement for the Annual
Meeting, but they do not affect the determination of whether the non-routine
matter is approved or rejected. The proposal to ratify the appointment of
PricewaterhouseCoopers LLP as our independent registered public accounting firm
is the only matter in this proxy statement considered to be a routine matter for
which brokers will be permitted to vote on behalf of their clients, if no voting
instructions are furnished. Since Proposals 1, 2, 3, and 5 are non-routine
matters, broker non-voted shares will not count as votes cast to affect the
determination of whether those proposals are approved or rejected. Therefore, it
is important that you provide voting instructions to your broker.
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Frequently Asked Questions
About the Meeting and Voting
What if I
Return My Proxy Card or Vote by Internet or Telephone but Do Not Specify How I
Want to Vote?
If you sign and return your proxy card or
complete the Internet or telephone voting procedures, but do not specify how you
want to vote your shares, we will vote them as follows:
●
|
FOR
all of the director nominees (Proposal
1);
|
●
|
FOR
the advisory vote to approve the compensation of the
Companys NEOs, as such information is disclosed in the
Compensation Discussion & Analysis, the compensation
tables and the accompanying disclosure (commonly referred to as “Say on Pay”) (Proposal 2);
|
●
|
To hold the Say on Pay vote
EVERY YEAR
(Proposal 3);
|
●
|
FOR
ratification of the Boards appointment of
PricewaterhouseCoopers LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2017 (Proposal 4);
and
|
●
|
FOR
the re-approval of the material terms of the
performance goals under our 2012 Long-Term Incentive Plan, as required by
Section 162(m) of the U.S. Internal Revenue Code (Proposal
5).
|
If you participate in the Corning
Investment Plan and do not submit timely voting instructions, the trustee of the
plan will vote the shares in your plan account in the same proportion that it
votes shares in other plan accounts for which it did receive timely voting
instructions, as explained above under the question How Do I Vote If I
Participate In The Corning Investment Plan?
What Does
it Mean if I Receive More Than One Proxy Card?
If you received more than one proxy card,
you have multiple accounts with your brokers or our transfer agent. Please vote
all of these shares. We recommend that you contact your broker or our transfer
agent to consolidate as many accounts as possible under the same name and
address. You may contact our transfer agent, Computershare Trust Company, N.A.,
at 1-(800)-255-0461.
May
Shareholders Ask Questions at the Annual Meeting?
Yes. Our representatives will answer your
questions of general interest to shareholders at the end of the meeting. In
order to give a greater number of shareholders the opportunity to ask questions,
we may impose certain procedural requirements, such as limiting repetitive or
follow-up questions, or those of a personal nature.
How Many
Shares Must be Present to Hold the Meeting?
In order for us to conduct our meeting, a
majority of our outstanding common shares as of February 27, 2017, the record
date for the meeting, must be present in person or by proxy at the meeting. This
is called a quorum. Your shares are counted as present at the meeting if you
attend the meeting and vote in person or if you properly return a proxy by
Internet, telephone or mail.
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Table of
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Frequently Asked Questions
About the Meeting and Voting
What is the
Vote Required for Each Proposal?
|
Affirmative Vote
Required
|
Broker
Discretionary
Voting Allowed
|
Proposal 1:
Election of 13 directors
|
Majority of votes cast at the meeting in
person or by proxy
|
No
|
Proposal 2:
Advisory vote to
approve the compensation of the
Companys
NEOs
|
Majority of votes cast at the meeting in
person or by proxy
|
No
|
Proposal 3: Advisory vote on the
frequency of the Say
on Pay vote
|
N/A
|
No
|
Proposal 4: Ratification of the
appointment of
independent
registered public accounting firm
for fiscal year
2017
|
Majority of votes cast at the meeting in
person or by proxy
|
Yes
|
Proposal 5: Re-approval of the material
terms of the
performance goals under
our 2012 Long-Term Incentive Plan,
as
required by Section 162(m) of the IRC
|
Majority of votes cast at the meeting in
person or by proxy
|
No
|
With respect to Proposals 1, 2, 4, and 5
you may vote FOR, AGAINST or ABSTAIN. With respect to Proposal 3, you may
vote EVERY YEAR, EVERY 2 YEARS, EVERY 3 YEARS or ABSTAIN. If you
ABSTAIN from voting on any of these Proposals, the abstention will not
constitute a vote cast.
How Will
Voting on Any Other Business be Conducted?
We have not received proper notice of, and
are not aware of, any business to be transacted at the meeting other than as
indicated in this proxy statement. If any other item or proposal properly comes
before the meeting, the proxies received will be voted on those matters in
accordance with the discretion of the proxy holders.
Who Pays
for the Solicitation of Proxies?
Our Board of Directors is making this
solicitation of proxies on behalf of the Company. The Company will pay the costs
of the solicitation, including the costs for preparing, printing and mailing
this proxy statement. We have hired Georgeson Inc. to assist us in soliciting
proxies. It may do so by telephone, in person or by other electronic
communications. We anticipate paying Georgeson a fee of $21,000 plus expenses
for these services. We also will reimburse brokers, nominees and fiduciaries for
their costs in sending proxies and proxy materials to our shareholders so that
you may vote your shares. Our directors, officers and regular employees may
supplement Georgesons proxy solicitation efforts by contacting you by telephone
or electronic communication or in person. We will not pay directors, officers or
other regular employees any additional compensation for their proxy solicitation
efforts.
How Can I
Find the Voting Results of the Annual Meeting?
Following the conclusion of the Annual
Meeting, we will include the voting results in a Form 8-K, which we expect to
file with the Securities and Exchange Commission (the SEC) on or before May 3,
2017.
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Frequently Asked Questions
About the Meeting and Voting
How Do I
Submit a Shareholder Proposal For, or Nominate a Director For Election at, Next
Years Annual Meeting?
Proposals for Inclusion in Next Years Proxy
Statement
SEC rules permit shareholders to submit
proposals for inclusion in our proxy statement if the shareholder and the
proposal meet the requirements specified in SEC Rule 14a-8.
When to send these
proposals:
Any shareholder proposals
submitted in accordance with SEC Rule 14a-8 must be received at our principal
executive offices no later than the close of business on November 17,
2017.
Where to send these
proposals:
Proposals should be addressed to
Corporate Secretary, Corning Incorporated, One Riverfront Plaza, Corning, New
York 14831.
What to
include:
Proposals must conform to and
include the information required by SEC Rule 14a-8.
Director
Nominees for Inclusion in Next Years Proxy Statement
In 2015, we amended our by-laws to permit
a group of shareholders (up to 20) who have owned a significant amount of
Cornings common stock (at least 3%) for a significant amount of time (at least
3 years) the ability to submit director nominees (the greater of two directors
or 20% of our Board) for inclusion in our proxy statement if the shareholder(s)
and the nominee(s) satisfy the requirements specified in our by-laws.
When to send these
notices of director nominees:
Notices of
director nominees submitted under these by-law provisions must be received no
earlier than October 18, 2017 and no later than November 17, 2017.
Where to send these
notices of director nominees:
Notices should
be addressed to Corporate Secretary, Corning Incorporated, One Riverfront Plaza,
Corning, New York 14831.
What to
include:
Notices must include the information
required by our by-laws, which are available on Cornings website.
Other
Proposals or Nominees for Presentation at Next Years Annual
Meeting
Our by-laws require that any shareholder
proposal, including director nominations, that is not submitted for inclusion in
next years proxy statement (either under SEC Rule 14a-8 or our proxy access
by-laws), but is instead sought to be presented directly at the 2018 annual
meeting, must be received at our principal executive offices no earlier than the
120
th
day and no later than the close of business on the
90
th
day prior to the first anniversary of the preceding years
annual meeting.
When to send these
proposals:
Shareholder proposals, including
director nominations, submitted under these by-law provisions must be received
no earlier than December 28, 2017 and no later than January 27, 2018.
Where to send these
proposals:
Proposals should be addressed to
Corporate Secretary, Corning Incorporated, One Riverfront Plaza, Corning, New
York 14831.
What to
include:
Proposals must include the
information required by our by-laws, which are available on Cornings
website.
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85
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Table of
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Frequently Asked Questions
About the Meeting and Voting
Why Havent
I Received a Printed Copy of the Proxy Statement or Annual Report?
We are furnishing proxy materials to you
online, as permitted by SEC rules, to expedite your receipt of materials while
lowering costs and reducing the environmental impact of printing and mailing
full sets of annual meeting materials. If you received by mail a notice of the
electronic availability of these materials, you will not receive a printed copy
unless you specifically request it. Such notice contains instructions on how to
request a paper copy of the materials.
Is the
Proxy Statement Available on the Internet?
Yes. Most shareholders will receive the
proxy statement and other annual meeting materials online. If you received a
paper copy, you can also view these documents online by accessing our website at
www.corning.com/2017-proxy
. You can elect to receive future proxy statements and
annual reports by Internet instead of receiving paper copies by mail by
following the instructions for making such election when you electronically vote
your shares.
Are You
Householding For Shareholders Sharing the Same Address?
Yes. The SECs rules regarding the
delivery to shareholders of proxy statements, annual reports, prospectuses and
information statements permit us to deliver a single copy of these documents to
an address shared by two or more of our shareholders. This method of delivery is
referred to as householding, and can significantly reduce our printing and
mailing costs. It also reduces the volume of mail you receive. This year, we are
delivering only one proxy statement and 2016 Annual Report to multiple
registered shareholders sharing an address, unless we receive instructions to
the contrary from one or more of the shareholders. We will still be required,
however, to send you and each other shareholder at your address an individual
proxy voting card. If you would like to receive more than one copy of this proxy
statement and our 2016 Annual Report, we will promptly send you additional
copies upon written or oral request directed to our transfer agent,
Computershare Trust Company, N.A., toll free at 1-(800)-255-0461 or at PO Box
30170, College Station, Texas 77842-3170. The same phone number and mailing
address may be used to notify us that you wish to receive a separate proxy
statement or Annual Report in the future, or to request delivery of a single
copy of a proxy statement or Annual Report if you are receiving multiple
copies.
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Frequently Asked
Questions About the Meeting and Voting
Code of
Ethics
Our Board of Directors has adopted the
Code of Ethics for the Chief Executive Officer and Financial Executives and the
Code of Conduct for Directors and Executive Officers, which supplements the Code
of Conduct governing all employees and directors. A copy of the Code of Ethics
is available on our website at
https://www.corning.com/worldwide/en/about-us/investor-relations/board-download-library.html
. We will disclose any amendments to, or waivers from, the
Code of Ethics on our website within four business days of such determination.
During 2016, no amendments to or waivers of the provisions of the Code of Ethics
were made with respect to any of our directors or executive officers.
Incorporation by
Reference
The Compensation Committee Report on page
53 and the Report of Audit Committee of the Board of Directors on page 72, are
not deemed filed with the SEC and shall not be deemed incorporated by reference
into any prior or future filings made by Corning under the Securities Act or the
Exchange Act, except to the extent that Corning specifically incorporates such
information by reference. In addition, this proxy statement includes several
website addresses. These website addresses are intended to provide inactive,
textual references only. The information on these websites is not part of this
proxy statement.
Additional
Information
This Proxy Statement, our 2016 Annual
Report, our Annual Report on Form 10-K, and all other filings with the SEC, each
of the Board Committee Charters and the Corporate Governance Guidelines and
Director Qualification Standards may be accessed via the Investor Relations page
on Cornings web site at
www.corning.com
. These documents are
also available without charge upon a shareholders written or oral request to
Investor Relations, Corning Incorporated, One Riverfront Plaza, Corning, NY,
14831, telephone number 1-(607)-974-9000.
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Table of Contents
Appendix A
Corning Incorporated and
Subsidiary Companies
Reconciliation of Non-GAAP Financial Measures
to
GAAP Financial Measures; Certain Definitions
|
|
Certain Definitions Used in this Proxy
Statement:
Target Debt
is total reported debt, plus operating lease adjustment, plus pension and
other post-employment benefits (OPEB) adjustment.
Target EBITDA
is EBITDA, plus
operating lease adjustment, plus pension and OPEB adjustment, plus stock
compensation expense.
* * *
CORNING INCORPORATED AND SUBSIDIARY
COMPANIES
RECONCILIATIONS OF ADJUSTED
EARNINGS PER SHARE AND ADJUSTED NET INCOME TO EARNINGS PER SHARE AND NET
INCOME
Year Ended December 31,
2016
(Unaudited; amounts in millions,
except per share amounts)
|
|
Per Share
|
|
|
Net Income
|
|
Adjusted earnings per share (EPS) and
adjusted net income
|
|
$1.55
|
|
|
$1,774
|
|
Adjustments:
|
|
|
|
|
|
|
Constant currency adjustments (JPY@ ¥99, KRW
@ 1,100) and impact of foreign currency hedges
|
|
(0.41
|
)
|
|
(470
|
)
|
related to translated
earnings
(a)
|
|
|
|
|
|
|
Gain on realignment of our ownership
interest in Dow Corning, net of acquisition-related
costs
(b)
|
|
2.24
|
|
|
2,569
|
|
Pension mark-to-market
adjustment
(c)
|
|
(0.04
|
)
|
|
(44
|
)
|
Restructuring, impairment and other
charges
(d)
|
|
(0.22
|
)
|
|
(249
|
)
|
Equity in earnings of affiliated
companies
(e)
|
|
0.02
|
|
|
22
|
|
Discrete tax items and other tax-related
adjustments
(f)
|
|
0.02
|
|
|
28
|
|
Other items
(g)
|
|
0.06
|
|
|
65
|
|
GAAP EPS and net income
|
|
3.23
|
|
|
3,695
|
|
(a)
|
Represents constant currency
adjustments to our U.S. GAAP results to reflect after-tax performance
applying a ¥99 JPY and 1,100 KRW FX rate. Hedge contracts: Represents the
mark-to-market and realized net gain related to translated earnings
contracts.
|
(b)
|
Gain recorded on the completion
of the strategic realignment of our ownership interest in Dow Corning, net
of intangible amortization, inventory valuation adjustments and external
acquisition-related deal costs.
|
(c)
|
Mark-to-market pension gains and
losses, which arise from changes in actuarial assumptions and the
difference between actual and expected returns on plan assets and discount
rates.
|
(d)
|
This amount includes
restructuring, impairment and other charges, including other expenses and
disposal costs not classified as restructuring expense.
|
(e)
|
These adjustments relate to items
which do not reflect expected on-going operating results of our affiliated
companies, such as restructuring, impairment and other charges and
settlements under take-or-pay contracts.
|
(f)
|
This represents the removal of
discrete adjustments attributable to changes in tax law and changes in
judgment about the realizability of certain deferred tax assets, as well
as other non-operational tax-related adjustments.
|
(g)
|
Includes the after-tax gain of
$25 million on the contribution of our equity interests in Pittsburgh
Corning Corporation and Pittsburgh Corning Europe as partial settlement of
the asbestos litigation and the positive impact of the change in the
contingent consideration fair value adjustment of $40
million.
|
88
CORNING
2017 PROXY
STATEMENT
|
Table of Contents
Appendix
A
CORNING INCORPORATED AND SUBSIDIARY
COMPANIES
RECONCILIATIONS OF ADJUSTED
EARNINGS PER SHARE AND ADJUSTED NET INCOME TO EARNINGS PER SHARE AND NET
INCOME
Year Ended December 31,
2015
(Unaudited; amounts in millions,
except per share amounts)
|
|
Per Share
|
|
|
Net Income
|
|
Adjusted earnings per share (EPS) and adjusted net
income
|
|
$1.40
|
|
|
$1,882
|
|
Adjustments:
|
|
|
|
|
|
|
Pension mark-to-market
adjustment
(a)
|
|
(0.08
|
)
|
|
(105
|
)
|
Constant currency
adjustments (JPY @ ¥99, KRW @ 1,100) and impact of foreign currency
hedges
|
|
(0.26
|
)
|
|
(356
|
)
|
related to translated
earnings
(b)
|
|
|
|
|
|
|
Equity earnings in
affiliated companies
(c)
|
|
0.02
|
|
|
33
|
|
Restructuring, impairment
and other charges
(d)
|
|
(0.03
|
)
|
|
(42
|
)
|
Other
(e)
|
|
0.00
|
|
|
(1
|
)
|
Discrete tax items and
other tax-related adjustments
(f)
|
|
(0.03
|
)
|
|
(36
|
)
|
Acquisition-related
costs
(g)
|
|
(0.03
|
)
|
|
(36
|
)
|
GAAP EPS and net income
|
|
$1.00
|
|
|
$1,339
|
|
(a)
|
Represents pension mark-to-market
gains and losses arising from changes in actuarial assumptions and the
difference between actual and expected returns on plan assets and discount
rates.
|
(b)
|
Represents constant currency
adjustments to our US GAAP results to reflect after-tax performance
applying a ¥99 JPY and 1,100 KRW FX rate. Hedge Contracts: Represents the
mark-to-market and realized net gain related to translated earnings
contracts.
|
(c)
|
These adjustments relate to items
which do not reflect expected on-going operating results of our affiliated
companies, such as asset impairments, significant liability reserve
reversals and other charges and settlements under take-or-pay
contracts.
|
(d)
|
Represents restructuring,
impairment and other charges, including goodwill impairment charges and
other expenses and disposal costs not classified as restructuring
expense.
|
(e)
|
Includes amounts related to the
Pittsburgh Corning Corporation (PCC) asbestos litigation, impacts from the
acquisition of Samsung Corning Precision Materials and post combination
expenses related to an acquisition in the first quarter of
2015.
|
(f)
|
Represents the removal of
discrete adjustments attributable to changes in tax law and changes in
judgment about the realizability of certain deferred tax assets, as well
as other non-operational tax-related adjustments, including the tax effect
of transfer pricing out-of-period adjustment.
|
(g)
|
Includes intangible amortization,
inventory valuation adjustments and external acquisition-related deal
costs.
|
CORNING INCORPORATED AND SUBSIDIARY
COMPANIES
RECONCILIATION OF ADJUSTED
CASH FLOWS FROM OPERATING ACITIVITIES TO CASH FLOWS FROM OPERATING
ACTIVITIES
Year Ended December 31,
2016
(Unaudited; amounts in
millions)
Net cash provided by operating activities
|
|
$2,521
|
Transaction costs on realignment of equity
investment
(a)
|
|
37
|
Realized gains on translated earnings
contracts
(b)
|
|
201
|
Translation losses on cash
balances
(c)
|
|
10
|
Adjusted cash flows from operating activities
|
|
$2,769
|
(a)
|
Represents the transaction costs
on the strategic realignment of our ownership interest in Dow
Corning
|
(b)
|
Represents the realized gain on
foreign currency hedges related to translated earnings.
|
(c)
|
Represents translation losses on
Cornings foreign cash balances
|
CORNING INCORPORATED AND SUBSIDIARY
COMPANIES
RECONCILIATION OF ADJUSTED
OPERATING CASH FLOW FOR COMPENSATION PURPOSES TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Year Ended December 31,
2016
(Unaudited; amounts in
millions)
Adjusted Operating Cash Flow for
Compensation Purposes of Corning Incorporated
Adjusted operating cash flow for compensation
purposes
|
|
$1,651
|
|
Adjustments from GAAP
Net Cash Provided by Operating Activities
|
|
|
|
Translation losses on cash
balances
(a)
|
|
(10
|
)
|
Restructuring payments and Dow
Corning deal costs
(b)
|
|
(49
|
)
|
Realized gains on translated earnings
contracts
(c)
|
|
(201
|
)
|
Capital expenditures
(d)
|
|
1,130
|
|
Net cash provided by operating activities
|
|
$2,521
|
|
(a)
|
Represents translation losses on
Cornings foreign cash balances
|
(b)
|
Represents a budget to actual
adjustment to arrive at the metric to calculate incentive
compensation.
|
CORNING
2017 PROXY STATEMENT
89
|
Table of Contents
Appendix
A
(c)
|
Represents the realized gain on
foreign currency hedges related to translated earnings.
|
(d)
|
Represents Cornings 2016 capital
expenditures.
|
CORNING INCORPORATED AND SUBSIDIARY
COMPANIES
RECONCILIATION OF ADJUSTED
OPERATING CASH FLOW FOR COMPENSATION PURPOSES TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Year Ended December 31,
2015
(Unaudited; amounts in
millions)
Adjusted Operating Cash Flow for
Compensation Purposes of Corning Incorporated
Adjusted operating cash flow for compensation
purposes
|
|
$3,219
|
|
Adjustments from GAAP Net Cash Provided by Operating
Activities:
|
|
|
|
Translation losses on cash
balances
(a)
|
|
278
|
|
Restructuring cash
(b)
|
|
(35
|
)
|
Realized gain on foreign currency hedges related to
translated earnings
(c)
|
|
(653
|
)
|
Net cash provided by operating activities -
GAAP
|
|
$2,809
|
|
(a)
|
Represents translation losses on
Cornings foreign cash balances.
|
(b)
|
Represents a budget to actual
adjustment to arrive at the metric to calculate incentive
compensation.
|
(c)
|
Represents the 2015 realized gain
on foreign currency hedges related to translated earnings (Japanese yen,
Korean won and euro).
|
CORE PERFORMANCE
MEASURES
In managing the Company and
assessing our financial performance, we supplement certain measures provided by
our consolidated financial statements with measures adjusted to exclude certain
items, to arrive at core performance measures. We believe reporting core
performance measures provides investors greater transparency to the information
used by our management team to make financial and operational decisions. Corning
has adopted the use of constant currency reporting for the Japanese yen and
South Korean won, and uses an internally derived yen-to-dollar management rate
of ¥99 and won-to-dollar management rate of
₩
1,100.
Net sales, equity in earnings of
affiliated companies and net income are adjusted to exclude the impacts of
changes in the Japanese yen and the South Korean won, gains and losses on our
foreign currency hedges related to translated earnings, acquisition-related
costs, discrete tax items, restructuring and restructuring-related charges,
certain litigation-related expenses, pension mark-to-market adjustments and
other items which do not reflect on-going operating results of the Company or
our equity affiliates. Managements discussion and analysis on our reportable
segments has also been adjusted for these items, as appropriate. These measures
are not prepared in accordance with Generally Accepted Accounting Principles in
the United States (GAAP). We believe investors should consider these non-GAAP
measures in evaluating our results as they are more indicative of our core
operating performance and how management evaluates our operational results and
trends. These measures are not, and should not be viewed as a substitute for
GAAP reporting measures. Corning does not forecast the movement of the Japanese yen and South Korean won against the U.S.
dollar, or other items that do not reflect ongoing operations. As a result, the
company is unable to provide forward-looking information on a GAAP
basis.
Items which we exclude from GAAP
measures to arrive at Core Performance measures
are as follows:
(1)
|
Constant-currency
adjustments:
|
|
Constant-yen: Because a
significant portion of Display Technologies segment revenues and
manufacturing costs are denominated in Japanese yen, management believes
it is important to understand the impact on core earnings of translating
yen into dollars. Presenting results on a constant-yen basis mitigates the
translation impact of the Japanese yen, and allows management to evaluate
performance period over period, analyze underlying trends in our
businesses, and establish operational goals and forecasts. As of January
1, 2015, we used an internally derived management rate of ¥99, which is
closely aligned to our current yen portfolio of foreign currency hedges,
and have recast all periods presented based on this rate in order to
effectively remove the impact of changes in the Japanese yen.
Constant-won: Because a significant portion of Corning Precision
Materials costs are denominated in South Korean won, management believes
it is important to understand the impact on core earnings from translating
won into dollars. Presenting results on a constant-won basis mitigates the
translation impact of the South Korean won, and allows management to
evaluate performance period over period, analyze underlying trends in our
businesses, and establish operational goals and forecasts without the
variability caused by the fluctuations caused by changes in the rate of
this currency. We use an internally derived management rate of ₩1,100,
which is consistent with historical prior period averages of the
won.
|
(2)
|
Translated earnings contract loss
(gain): We have excluded the impact of the gains and losses of our
translated earnings contracts for each period presented.
|
(3)
|
Acquisition-related costs: These
expenses include intangible amortization, inventory valuation adjustments
and external acquisition-related deal costs.
|
(4)
|
Discrete tax items and other
tax-related adjustments: This represents the removal of discrete
adjustments attributable to changes in tax law and changes in judgment
about the realizability of certain deferred tax assets, as well as other
non-operational tax- related adjustments, including the tax effect of
transfer pricing out-of-period adjustments in 2014 and 2015.
|
(5)
|
Litigation, regulatory and other
legal matters: Includes amounts related to the Pittsburgh Corning
Corporation (PCC) asbestos litigation, adjustments to our estimated
liability for environmental-related items and other legal
matters.
|
(6)
|
Restructuring, impairment and
other charges: This amount includes restructuring, impairment and other
charges, including goodwill impairment charges and other expenses and
disposal costs not classified as restructuring expense.
|
(7)
|
Equity in earnings of affiliated
companies: These adjustments relate to items which do not reflect expected
on-going operating results of our affiliated companies, such as
restructuring, impairment and other charges and settlements under
take-or-pay contracts.
|
(8)
|
Impacts from the acquisition of
Samsung Corning Precision Materials: Pre-acquisition gains and losses on
previously held equity investment and other gains and losses related to
the acquisition, including post-combination expenses, fair value
adjustments to the indemnity asset related to contingent consideration and
the impact of the withholding tax on a dividend from Samsung Corning
Precision Materials.
|
(9)
|
Post-combination expenses:
Post-combination expenses incurred as a result of an acquisition in the
first quarter of 2015.
|
(10)
|
Pension mark-to-market
adjustment: Mark-to-market pension gains and losses, which arise from
changes in actuarial assumptions and the difference between actual and
expected returns on plan assets and discount
rates.
|
90
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Appendix
A
(11)
|
Gain on realignment of equity
investment: Gain recorded upon the completion of the strategic realignment
of our ownership interest in Dow Corning.
|
(12)
|
Taiwan power outage: Impact of
the power outage that temporarily halted production at our Tainan, Taiwan
manufacturing location in the second quarter of 2016. The impact includes
asset write-offs and charges for facility repairs, offset somewhat by
partial reimbursement through our insurance
program.
|
CORNING INCORPORATED AND SUBSIDIARY
COMPANIES
RECONCILIATIONS OF CORE NET
SALES, CORE NET INCOME AND CORE EARNINGS
PER SHARE TO NET SALES, NET INCOME AND EARNINGS PER
SHARE
Year Ended December 31,
2016
(Unaudited; amounts in millions,
except per share amounts)
|
|
Net sales
|
|
Net income
|
|
Earnings
per
share
|
As reported
|
|
$9,390
|
|
$3,695
|
|
|
$3.23
|
|
Constant-yen
(1)
|
|
316
|
|
222
|
|
|
0.19
|
|
Constant-won
(1)
|
|
4
|
|
(34
|
)
|
|
(0.03
|
)
|
Translated earnings contract
loss
(2)
|
|
|
|
282
|
|
|
0.25
|
|
Acquisition-related
costs
(3)
|
|
|
|
107
|
|
|
0.09
|
|
Discrete tax items and other tax-related
adjustments
(4)
|
|
|
|
(27
|
)
|
|
(0.02
|
)
|
Litigation, regulatory and other legal
matters
(5)
|
|
|
|
70
|
|
|
0.06
|
|
Restructuring, impairment and other
charges
(6)
|
|
|
|
138
|
|
|
0.12
|
|
Equity in earnings of affiliated
companies
(7)
|
|
|
|
(18
|
)
|
|
(0.02
|
)
|
Impacts from the acquisition of Samsung
Corning Precision Materials
(8)
|
|
|
|
(42
|
)
|
|
(0.04
|
)
|
Pension mark-to-market
adjustment
(10)
|
|
|
|
44
|
|
|
0.04
|
|
Gain on realignment of equity
investment
(11)
|
|
|
|
(2,676
|
)
|
|
(2.34
|
)
|
Taiwan power outage
(12)
|
|
|
|
13
|
|
|
0.01
|
|
Core performance measures
|
|
$9,710
|
|
$1,774
|
|
|
$1.55
|
|
See Reconciliation of Non-GAAP Financial
Measures to GAAP Financial Measures, Items which we exclude from GAAP measures
to arrive at Core Performance measures for the descriptions of the footnoted
reconciling items.
Year Ended December 31,
2015
(Unaudited; amounts in millions,
except per share amounts)
|
|
Net sales
|
|
Net income
|
|
Earnings
per
share
|
As reported
|
|
$9,111
|
|
$1,339
|
|
|
$1.00
|
|
Constant-yen
(1)
|
|
687
|
|
423
|
|
|
0.31
|
|
Constant-won
(1)
|
|
2
|
|
(19
|
)
|
|
(0.01
|
)
|
Translated earnings contract
gain
(2)
|
|
|
|
(48
|
)
|
|
(0.04
|
)
|
Acquisition-related
costs
(3)
|
|
|
|
36
|
|
|
0.03
|
|
Discrete tax items and other tax-related
adjustments
(4)
|
|
|
|
36
|
|
|
0.03
|
|
Litigation, regulatory and other legal
matters
(5)
|
|
|
|
3
|
|
|
|
|
Restructuring, impairment and other
charges
(6)
|
|
|
|
42
|
|
|
0.03
|
|
Equity in earnings of affiliated
companies
(7)
|
|
|
|
(33
|
)
|
|
(0.02
|
)
|
Impacts from the acquisition of Samsung
Corning Precision Materials
(8)
|
|
|
|
(18
|
)
|
|
(0.01
|
)
|
Post-combination
expenses
(9)
|
|
|
|
16
|
|
|
0.01
|
|
Pension mark-to-market
adjustment
(10)
|
|
|
|
105
|
|
|
0.08
|
|
Core performance measures
|
|
$9,800
|
|
$1,882
|
|
|
$1.40
|
|
See Reconciliation of Non-GAAP Financial
Measures to GAAP Financial Measures, Items which we exclude from GAAP measures
to arrive at Core Performance measures for the descriptions of the footnoted
reconciling items.
CORNING
2017 PROXY STATEMENT
91
|
Table of Contents
CORNING INCORPORATED AND SUBSIDIARY
COMPANIES
RECONCILIATION OF CORE NET SALES TO NET SALES
In 2016, in all segments except Display
Technologies, Core Net Sales are consistent with GAAP net sales.
Display Technologies Segment
Year
Ended December 31, 2016
(Unaudited;
amounts in millions)
(in
millions)
|
|
Net
sales
|
As reported
|
|
$3,238
|
Constant-yen
(1)
*
|
|
316
|
Constant-won
(1)
|
|
2
|
Core Net Sales
|
|
$3,556
|
See Reconciliation of Non-GAAP Financial
Measures to GAAP Financial Measures, Items which we exclude from GAAP measures
to arrive at Core Performance measures for the descriptions of the footnoted
reconciling items.
92
CORNING
2017 PROXY STATEMENT
|
Table of Contents
Appendix B
|
|
Corning Incorporated
2012 Long-Term Incentive Plan
1. Purposes of the Plan
The purposes of the Plan are to (a)
promote the long-term success of the Company and its Subsidiaries and to
increase stockholder value by providing Eligible Individuals with incentives to
contribute to the long-term growth and profitability of the Company and (b)
assist the Company in attracting, retaining and motivating highly qualified
individuals who are in a position to make
significant contributions to the Company and its Subsidiaries.
The Plan shall become effective on May 1,
2012 upon its approval by shareholders (the
Effective Date
). If the Plan is
not approved by shareholders, it shall be void
ab initio
and of no further force and
effect. Upon the Effective Date, no further Awards will be granted under the
Prior Plan.
2. Definitions and Rules of
Construction
(a)
Definitions
. For purposes of the Plan,
the following capitalized words shall have the meanings set forth
below:
Affiliate
means any Subsidiary and any person that directly or
indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the
Company.
Award
means an Option, Restricted Stock, Restricted Stock Unit,
Stock Appreciation Right, Performance Stock, Performance Stock Unit, Cash
Performance Unit or Other Award granted by the Committee pursuant to the
terms of the Plan.
Award Document
means an agreement, certificate or other type or form of
document or documentation approved by the Committee that sets forth the terms
and conditions of an Award. An Award Document may be in written, electronic or other media, may be limited to a notation on
the books and records of the Company and, unless
the Committee requires otherwise, need not be signed by a representative of the
Company or a Participant.
Beneficial Owner
and
Beneficially
Owned
have the meaning set forth in Rule
13d-3 under the Exchange Act.
Board
means the Board of Directors of the Company, as constituted
from time to time.
Cash Performance
Unit
means a right to receive a Target
Amount of cash in the future granted pursuant to
Section 10(b) of the Plan.
Code
means the Internal Revenue Code of 1986, as amended, and the
applicable rulings, regulations and guidance
promulgated thereunder as amended from time to time.
Committee
means the Compensation Committee of the Board, any successor
committee thereto or any other committee appointed from time to time by the
Board to administer the Plan, which committee shall meet the requirements of
Section 162(m) of the Code, Section 16(b) of the Exchange Act, the applicable
rules of NYSE and all other applicable rules and regulations (in each case as
amended or superseded from time to time);
provided
,
however
, that, if any Committee member
is found not to have met the qualification requirements of Section 162(m) of the
Code or Section 16(b) of the Exchange Act, any actions taken or Awards granted
by the Committee shall not be invalidated by such
failure to so qualify.
Common Stock
means the common stock of the Company, par value $0.50 per
share, or such other class of share or other
securities as may be applicable under Section 13 of the Plan.
Company
means Corning Incorporated, a New York corporation, or any
successor to all or substantially all of the Companys business that adopts the
Plan.
EBITDA
means earnings before interest, taxes, depreciation and
amortization.
EBITA
means the Companys earnings before interest, taxes and
amortization.
Eligible
Individuals
means the individuals
described in Section 4(a) of the Plan who are eligible for Awards under the
Plan.
Exchange Act
means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, as amended from time to
time.
CORNING
2017 PROXY STATEMENT
93
|
Table of Contents
Appendix
B
Fair Market Value
means, with respect to a Share, the fair market value
thereof as of the relevant date of determination, as determined in accordance
with the valuation methodology approved by the Committee. In the absence of any
alternative valuation methodology approved by the Committee, the Fair Market
Value of a Share shall equal the closing selling price of a Share on the date on
which such valuation is made as reported on the composite tape for securities listed on NYSE.
Incentive Stock
Option
means an Option that is intended
to comply with the requirements of Section 422 of
the Code or any successor provision thereto.
Nonqualified Stock
Option
means an Option that is not
intended to comply with the requirements of Section 422 of the Code or any successor provision thereto.
NYSE
means the New York Stock Exchange Euronext.
Option
means an Incentive Stock Option or Nonqualified Stock Option
granted pursuant to Section 7 of the
Plan.
Other Award
means any form of Award (other than an Option, Performance
Stock, Performance Stock Unit, Cash Performance Unit, Restricted Stock,
Restricted Stock Unit or Stock Appreciation Right) granted pursuant to Section 11 of the Plan.
Participant
means an Eligible Individual who has been granted an Award
under the Plan.
Performance Period
means the period established by the Committee and set
forth in the applicable Award Document over which
Performance Targets are measured.
Performance Stock
means a Target Amount of Shares granted pursuant to
Section 10(a) of the Plan.
Performance Stock
Unit
means a right to receive a Target
Amount of Shares granted pursuant to Section 10(a) of the Plan.
Performance Target
means the performance criteria established by the
Committee, from among the performance criteria provided in Section 6(f), and set
forth in the applicable Award Document.
Permitted
Transferees
means (i) one or more trusts
established in whole or in part for the benefit of one or more of a
Participants family members and (iii) one or more entities which are
beneficially owned in whole or in part by one or
more of a Participants family members.
Plan
means this Corning Incorporated 2012 Long-Term Incentive Plan,
as amended or restated from time to
time.
Plan Limit
means the maximum aggregate number of Shares that may be
issued for all purposes under the Plan as set forth in Section 5(a) of the
Plan.
Prior Plan
means the Corning Incorporated 2005 Employee Equity
Participation Program, as amended from time to
time.
Restricted Stock
means one or more Shares granted or sold pursuant to
Section 8(a) of the Plan.
Restricted Stock
Unit
means a right to receive one or
more Shares (or cash, if applicable) in the future granted pursuant to Section 8(b) of the Plan.
Shares
means shares of Common Stock, as may be adjusted pursuant to
Section 13(b).
Stock Appreciation
Right
means a right to receive all or
some portion of the appreciation on Shares granted pursuant to Section 9 of the
Plan.
Subsidiary
means any corporation, limited liability company, partnership
or other entity of which 50% or more of the outstanding voting equity securities
or voting power is beneficially owned directly or indirectly by the Company. For
purposes of determining eligibility for the grant of Incentive Stock Options
under the Plan, the term Subsidiary shall be defined in the
manner required by Section 424(f) of the Code.
Substitute Award
means any Award granted upon assumption of, or in
substitution or exchange for, outstanding employee equity awards previously
granted by a company or other entity acquired by the Company or with which the
Company combines pursuant to the terms of an equity compensation plan that was
approved by the stockholders of such company or
other entity.
Target Amount
means the target number of Shares or target cash value
established by the Committee and set forth in the applicable Award
Document.
(b)
Rules of Construction
. The masculine
pronoun shall be deemed to include the feminine pronoun, and the singular form of a word
shall be deemed to include the plural form, unless the context requires
otherwise. Unless the text indicates otherwise, references to sections are to
sections of the Plan.
3. Administration
(a)
Committee
. The Plan shall be
administered by the Committee, which shall have full power and authority,
subject to
the express provisions hereof, to:
(i) select the Participants from the
Eligible Individuals;
(ii) grant Awards in accordance with the
Plan;
(iii) determine the number of Shares
subject to each Award or the cash amount payable in connection with an Award;
(iv) determine the terms and conditions of
each Award, including, without limitation, those related to term, permissible
methods of exercise, vesting, cancellation, payment, settlement, exercisability,
Performance Periods, Performance Targets, and the effect, if any, of a
Participants termination of employment with the Company or any of its
Subsidiaries or, subject to Section 6(c), a Change of Control of the
Company;
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(v) subject to Sections 15 and 16(f) of
the Plan, amend the terms and conditions of an Award after the granting
thereof;
(vi) specify and approve the provisions of
the Award Documents delivered to Participants in connection with their
Awards;
(vii) construe and interpret any Award
Document delivered under the Plan;
(viii) make factual determinations in
connection with the administration or interpretation of the Plan;
(ix) adopt, prescribe, amend, waive and
rescind administrative regulations, rules and procedures relating to
the Plan;
(x) employ such legal counsel, independent
auditors and consultants as it deems desirable for the administration of the
Plan and to rely upon any advice, opinion or computation received
therefrom;
(xi) vary the terms of Awards to take into
account tax and securities laws (or change thereto) and other regulatory
requirements or to procure favorable tax treatment for Participants;
(xii) correct any defects, supply any
omission or reconcile any inconsistency in any Award Document or the
Plan; and
(xiii) make all other determinations and
take any other action desirable or necessary to interpret, construe or implement
properly the provisions of the Plan or any Award Document.
(b)
Plan
Construction and Interpretation
. The
Committee shall have full power and authority, subject to the
express provisions hereof, to construe and interpret the Plan.
(c)
Prohibited Actions
. Notwithstanding
the authority granted to the Committee pursuant to Section 3(a) and
3(b), the
Committee shall not have the authority, without obtaining shareholder approval,
to (i) reprice or cancel Options and Stock Appreciation Rights in violation of
Section 6(g), (ii) amend Section 5 to increase the Plan Limit or any of the
special limits listed therein or (iii) grant Options or Stock Appreciation
Rights with an exercise price that is less than 100% of the Fair Market Value of
a Share on the date of grant in violation of Section 6(j).
(d)
Determinations of Committee Final and Binding
. All determinations by the Committee in carrying out and administering the Plan and
in construing and interpreting the Plan shall be made in the Committees sole
discretion and shall be final, binding and conclusive for all purposes and upon
all persons interested herein.
(e)
Delegation of Authority
. To the extent
not prohibited by applicable laws, rules and regulations, the
Committee may, from time to time, delegate some or all of its authority under the
Plan to a subcommittee or subcommittees thereof or other persons or groups of
persons as it deems necessary, appropriate or advisable under such conditions or
limitations as it may set at the time of such delegation or thereafter;
provided
,
however
, that the
Committee may not delegate its authority (i) to make Awards to employees (A) who
are subject on the date of the Award to the reporting rules under Section 16(a)
of the Exchange Act, (B) whose compensation for such fiscal year may be subject
to the limit on deductible compensation pursuant to Section 162(m) of the Code
or (C) who are officers of the Company, or (ii) pursuant to Section 15 of the
Plan. For purposes of the Plan, reference to the
Committee shall be deemed to refer to any subcommittee, subcommittees, or other
persons or groups of persons to whom the Committee delegates authority pursuant
to this Section 3(e).
(f)
Liability of Committee
. Subject to
applicable laws, rules and regulations: (i) no member of the Board
or Committee (or its delegates) shall be liable for any good faith action,
omission or determination made in connection with the operation, administration
or interpretation of the Plan and (ii) the members of the Board or the Committee
(and its delegates) shall be entitled to indemnification and reimbursement in
the manner provided in the Companys Certificate of Incorporation as it may be
amended from time to time. In the performance of its responsibilities with
respect to the Plan, the Committee shall be entitled to rely upon information
and/or advice furnished by the Companys officers or employees, the Companys
accountants, the Companys counsel and any other party the Committee deems
necessary, and no member of the Committee shall be liable for any action taken
or not taken in reliance upon any such information and/or advice.
(g)
Action by the Board
. Anything in the
Plan to the contrary notwithstanding, subject to applicable laws,
rules and
regulations, any authority or responsibility that, under the terms of the Plan,
may be exercised by the Committee may alternatively be exercised by the
Board.
4. Eligibility
(a)
Eligible Individuals
. Awards may be
granted to officers and employees of the Company or any of its
Affiliates. The Committee shall have the authority to select the persons to whom
Awards may be granted and to determine the type, number and terms of Awards to
be granted to each such Participant.
(b)
Grants to Participants
. The Committee
shall have no obligation to grant any Eligible Individual an Award or
to designate an Eligible Individual as a Participant solely by reason of
such Eligible Individual having received a prior Award or having been previously
designated as a Participant. The Committee may grant more than one Award to a
Participant and may designate an Eligible Individual as a Participant for
overlapping periods of time.
5. Shares Subject to the
Plan
(a)
Plan
Limit
. Subject to adjustment in accordance
with Section 13 of the Plan, the maximum aggregate number of Shares that may be
issued for all purposes under the Plan shall be eighty-five million
(85,000,000). Shares to be issued under the Plan may be authorized and unissued
shares, issued shares that have been reacquired by the Company (in the
open-market or in private transactions) and that are being held in treasury, or
a combination thereof. All of the Shares subject to the Plan Limit may be issued
pursuant to Incentive Stock Options.
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(b)
Rules
Applicable to Determining Shares Available for Issuance
. The number of
Shares remaining available for issuance will be reduced by the number of Shares
subject to outstanding Awards and, for Awards that are not denominated by
Shares, by the number of Shares actually delivered upon settlement or payment of
the Award. For purposes of determining the number of Shares that remain
available for issuance under the Plan, (i) the number of Shares that are
tendered by a Participant or withheld by the Company to pay the exercise price
of an Award or to satisfy the Participants tax withholding obligations in
connection with the exercise or settlement of an Award, (ii) all of the Shares
covered by a stock-settled Stock Appreciation Right to the extent exercised, and
(iii) any Shares that are forfeited or cancelled or otherwise expire for any
reason without having been exercised or settled under the Prior Plan will
not
be
added back to the Plan Limit. In addition, for purposes of determining the
number of Shares that remain available for issuance under the Plan, the number
of Shares corresponding to Awards under the Plan that are forfeited or cancelled
or otherwise expire for any reason without having been exercised or settled or
that is settled through issuance of consideration other than Shares (including,
without limitation, cash) shall be added back to the Plan Limit and again be
available for the grant of Awards.
(c)
Special
Limits
. Anything to the contrary in Section 5(a) above notwithstanding, but
subject to adjustment under Section 13 of the Plan, the following special limits
shall apply to Shares available for Awards under the Plan:
(i) the
maximum number of Shares that may be subject to Options and Stock Appreciation
Rights granted to any Eligible Individual in any calendar year shall equal one
million five-hundred thousand (1,500,000) Shares; and
(ii) the
maximum amount of Awards (other than those Awards set forth in Section (i)) that
may be awarded to any Eligible Individual in any calendar year is fifteen
million dollars ($15,000,000) measured as of the date of grant (with respect to
Awards denominated in cash) or one million five-hundred thousand (1,500,000)
Shares (less any Shares subject to Options or Stock Appreciation Rights granted
to the Eligible Individual in the relevant calendar year) measured as of the
date of grant (with respect to Awards denominated in Shares).
(d) Any Shares
underlying Substitute Awards shall not be counted against the number of Shares
remaining for issuance and shall not be subject to Section
5(c).
6. Awards in General
(a)
Types
of Awards
; Exercise. Awards under the Plan may consist of Options,
Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance
Stock, Performance Stock Units, Cash Performance Units and Other Awards. Any
Award described in Sections 7 through 11 of the Plan may be granted singly or in
combination or tandem with any other Award, as the Committee may determine.
Subject to Section 6(g), Awards under the Plan may be made in combination with,
in replacement of, or as alternatives to awards or rights under any other
compensation or benefit plan of the Company, including the plan of any acquired
entity. Subject to the provisions of the Plan and the applicable Award Document,
the Committee shall determine the permissible methods of exercise for any
Award.
(b)
Terms
Set Forth in Award Document
. The terms and conditions of each Award shall be
set forth in an Award Document in a form approved by the Committee for such
Award, which Award Document shall contain terms and conditions not inconsistent
with the Plan. Notwithstanding the foregoing, and subject to applicable laws,
rules and regulations, the Committee may at any time following grant (i)
accelerate the vesting, exercisability, lapse of restrictions, settlement or
payment of any Award, (ii) eliminate the restrictions and conditions applicable
to an Award or (iii) extend the post-termination exercise period of an
outstanding Award. The terms of Awards may vary among Participants, and the Plan
does not impose upon the Committee any requirement to make Awards subject to
uniform terms. Accordingly, the terms of individual Award Documents may vary.
(c)
Termination of Employment and Change in Control
. The Committee shall
specify at or after the time of grant of an Award the provisions governing the
disposition of an Award in the event of a Participants termination of
employment, with the Company or any of its Subsidiaries or the Participants
death or disability. Similarly, the Committee shall have full authority to
determine the effect, if any, of a change in control of the Company on an Award,
which effect may be specified in the applicable Award Document or determined at
a subsequent time.
(d)
Dividends and Dividend Equivalents
. The Committee may provide
Participants with the right to receive dividends or payments equivalent to
dividends or interest with respect to an outstanding Award, which payments can
either be paid currently or deemed to have been reinvested in Shares, and can be
made in Shares, cash or a combination thereof, as the Committee shall determine;
provided
,
however
,
that (i) no payments of dividend equivalents may be made unless and until the
related Award is earned and vested and (ii) the terms of any reinvestment of
dividends must comply with all applicable laws, rules and regulations,
including, without limitation, Section 409A of the Code. Notwithstanding the
foregoing, no dividends or dividend equivalents shall be paid with respect to
Cash Performance Units, Options or Stock Appreciation Rights.
(e)
Rights
of a Stockholder
. A Participant shall have no rights as a stockholder with
respect to Shares covered by an Award (including voting rights) until the date
the Participant or his nominee becomes the holder of record of such Shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to such date, except as provided in Section 13.
(f)
Performance-Based Awards
.
(i) The Committee may determine whether any Award under the Plan is
intended to be performance-based compensation as that term is used in Section
162(m) of the Code. Any such Awards designated to be performance-based
compensation shall be conditioned on the achievement of one or more Performance
Targets to the extent required by Section 162(m) of the Code and will be subject
to all other conditions and requirements of Section 162(m). The Performance
Targets may include one or more of the following performance criteria:
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net income;
cash flow or cash flow on investment; operating cash flow; pre-tax or post-tax
profit levels or earnings; profit in excess of cost of capital; operating
earnings; return on investment; free cash flow; free cash flow per share;
earnings per share; return on assets; return on net assets; return on equity;
return on capital; return on invested capital; return on sales; sales growth;
growth in managed assets; operating margin; operating income; total stockholder
return or stock price appreciation; EBITDA; EBITA; revenue; net revenues; market
share, market penetration; productivity improvements; inventory turnover
measurements; reduction of losses, loss ratios or expense ratios; reduction in
fixed costs; operating cost management; cost of capital; and debt reduction.
(ii) The
Performance Targets shall be determined in accordance with generally accepted
accounting principles (subject to adjustments and modifications approved by the
Committee in advance) consistently applied on a business unit, divisional,
subsidiary or consolidated basis or any combination thereof.
(iii) The
Performance Targets may be described in terms of objectives that are related to
the individual Participant or objectives that are Company-wide or related to a
Subsidiary, business unit, or region and may be measured on an absolute or
cumulative basis or on the basis of percentage of improvement over time, and may
be measured in terms of Company performance (or performance of the applicable
Subsidiary, business unit, or region) or measured relative to selected peer
companies or a market index. At the time of grant, the Committee may provide for
adjustments to the performance criteria in accordance with Section 162(m) of the
Code.
(iv) The
Participants will be designated, and the applicable Performance Targets will be
established, by the Committee within ninety (90) days following the commencement
of the applicable Performance Period (or such earlier or later date permitted or
required by Section 162(m) of the Code). Each Participant will be assigned a
Target Amount payable if Performance Targets are achieved. Any payment of an
Award granted with Performance Targets shall be conditioned on the written
certification of the Committee in each case that the Performance Targets and any
other material conditions were satisfied. The Committee may determine, at the
time of Award grant, that if performance exceeds the specified Performance
Targets, the Award may be settled with payment greater than the Target Amount,
but in no event may such payment exceed the limits set forth in Section 5(c).
The Committee retains the right to reduce any Award notwithstanding the
attainment of the Performance Targets.
(v) The
Committee may also grant Awards not intended to qualify as performance-based
compensation under Section 162(m) of the Code. With respect to such Awards, the
Committee may establish Performance Targets based on any criteria as it deems
appropriate.
(g)
Repricing of Options and Stock Appreciation Rights
. Except in connection
with a corporate transaction involving the Company (including, without
limitation, any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, or exchange of Shares), the terms of outstanding Awards may not be
amended, without stockholder approval, to reduce the exercise price of
outstanding Options or Stock Appreciation Rights, or to cancel outstanding
Options or Stock Appreciation Rights in exchange for (i) cash or other property,
(ii) Options or Stock Appreciation Rights with an exercise price that is less
than the exercise price of the original Options or Stock Appreciation Rights or
(iii) other Awards.
(h)
Recoupment
. Notwithstanding anything in the Plan to the contrary, all
Awards granted under the Plan, any payments made under the Plan and any gains
realized upon exercise or settlement of an Award shall be subject to claw-back
or recoupment as permitted or mandated by applicable law, rules, regulations or
Company policy as enacted, adopted or modified from time to time.
(i)
Minimum
Vesting Period
. At the time of grant of an Award the Committee shall, in its
discretion, establish a vesting period for the Award;
provided
,
however
, that, (i) Restricted Stock
and Restricted Stock Units granted to Eligible Individuals (other than
performance-based Awards) shall vest no more frequently than pro rata over a
period of 3 years and (ii) performance-based awards (including Performance
Stock, Performance Stock Units and Cash Performance Units) shall have a minimum
vesting period of one year.
(j)
Minimum
Grant or Exercise Price
. In no event shall the exercise price per Share of
an Option or the grant price per Share of a Stock Appreciation Right be less
than one hundred percent (100%) of the Fair Market Value of a Share on the date
of grant;
provided
,
however
that the exercise price of a Substitute Award granted as an Option shall
be determined in accordance with Section 409A of the Code and may be less than
one hundred percent (100%) of the Fair Market Value.
(k)
Term of
Options and SARs
. An Option or Stock Appreciation Right shall be effective
for such term as shall be determined by the Committee and as set forth in the
Award Document relating to such Award. The Committee may extend the term of an
Option or Stock Appreciation Right after the time of grant;
provided
,
however
, that the term of
an Option or Stock Appreciation Right may in no event extend beyond the tenth
(10
th
) anniversary of the date of grant of such Award.
7. Terms and Conditions of
Options
(a)
General
. The Committee, in its discretion, may grant Options to Eligible
Individuals and shall determine whether such Options shall be Incentive Stock
Options or Nonqualified Stock Options. Each Option shall be evidenced by an
Award Document that shall expressly identify the Option as an Incentive Stock
Option or Nonqualified Stock Option, and be in such form and contain such
provisions as the Committee shall from time to time deem
appropriate.
(b)
Payment
of Exercise Price
. Subject to the provisions of the applicable Award
Document, the exercise price of an Option may be paid (i) in cash or cash
equivalents, (ii) by actual delivery or attestation to ownership of freely
transferable Shares already owned by the person exercising the Option, (iii) by
a combination of cash and Shares equal in value to the exercise price, (iv)
through net share settlement or similar procedure involving the withholding of
Shares subject to the
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Option with a value equal to the
exercise price or (v) by such other means as the Committee may authorize. In
accordance with the rules and procedures authorized by the Committee for this
purpose, the Option may also be exercised through a cashless exercise
procedure authorized by the Committee from time to time that permits
Participants to exercise Options by delivering irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the exercise price and the amount of any required tax or other
withholding obligations or such other procedures determined by the Company from
time to time.
(c)
Incentive Stock Options
. The exercise price per Share of an Incentive
Stock Option shall be fixed by the Committee at the time of grant or shall be
determined by a method specified by the Committee at the time of grant, but in
no event shall the exercise price of an Incentive Stock Option be less than one
hundred percent (100%) of the Fair Market Value of a Share on the date of grant.
No Incentive Stock Option may be issued pursuant to the Plan to any individual
who, at the time the Incentive Stock Option is granted, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any of its Subsidiaries, unless (i) the exercise price
determined as of the date of grant is at least one hundred ten percent (110%) of
the Fair Market Value on the date of grant of the Shares subject to such
Incentive Stock Option and (ii) the Incentive Stock Option is not exercisable
more than five (5) years from the date of grant thereof. No Participant shall be
granted any Incentive Stock Option which would result in such Participant
receiving a grant of Incentive Stock Options that would have an aggregate Fair
Market Value in excess of one hundred thousand dollars ($100,000), determined as
of the time of grant, that would be exercisable for the first time by such
Participant during any calendar year. No Incentive Stock Option may be granted
under the Plan after the tenth anniversary of the Effective Date. The terms of
any Incentive Stock Option granted under the Plan shall comply in all respects
with the provisions of Section 422 of the Code, or any successor provision
thereto, as amended from time to time.
8. Terms and Conditions of Restricted
Stock and Restricted Stock Units
(a)
Restricted Stock
. The Committee, in its discretion, may grant or sell
Restricted Stock to Eligible Individuals. An Award of Restricted Stock shall
consist of one or more Shares granted or sold to an Eligible Individual, and
shall be subject to the terms, conditions and restrictions set forth in the Plan
and established by the Committee in connection with the Award and specified in
the applicable Award Document. Restricted Stock may, among other things, be
subject to restrictions on transferability, vesting requirements or other
specified circumstances under which it may be canceled.
(b)
Restricted Stock Units
. The Committee, in its discretion, may grant
Restricted Stock Units to Eligible Individuals. A Restricted Stock Unit shall
entitle a Participant to receive, subject to the terms, conditions and
restrictions set forth in the Plan and the applicable Award Document, one or
more Shares. Restricted Stock Units may, among other things, be subject to
restrictions on transferability, vesting requirements or other specified
circumstances under which they may be canceled. If and when the cancellation
provisions lapse, the Restricted Stock Units shall become Shares owned by the
applicable Participant or, at the sole discretion of the Committee, cash, or a
combination of cash and Shares, with a value equal to the Fair Market Value of
the Shares at the time of payment.
9. Stock Appreciation
Rights
The Committee,
in its discretion, may grant Stock Appreciation Rights to Eligible Individuals.
Each Stock Appreciation Right shall be subject to the terms, conditions and
restrictions set forth in the Plan and established by the Committee in
connection with the Award and specified in the applicable Award Document. A
Stock Appreciation Right shall entitle a Participant to receive, upon
satisfaction of the conditions to payment specified in the applicable Award
Document, an amount equal to the excess, if any, of the Fair Market Value of a
Share on the exercise date of the number of Shares for which the Stock
Appreciation Right is exercised over the per Share grant price for such Stock
Appreciation Right specified in the applicable Award Document. Payments to a
Participant upon exercise of a Stock Appreciation Right may be made in cash or
Shares.
10. Terms and Conditions of
Performance Stock, Performance Stock Units and Cash Performance
Units
(a)
Performance Stock or Performance Stock Units
. The Committee may grant
Performance Stock or
Performance
Stock Units to Eligible Individuals. An Award of Performance Stock or
Performance Stock Units shall consist of, or represent a right to receive, a
Target Amount of Shares granted to an Eligible Individual based on the
achievement of Performance Targets over the applicable Performance Period, and
shall be subject to the terms, conditions and restrictions set forth in the Plan
and established by the Committee in connection with the Award and specified in
the applicable Award Document.
(b)
Cash
Performance Units
. The Committee, in its discretion, may grant Cash
Performance Units to Eligible Individuals. A Performance Unit shall entitle a
Participant to receive, subject to the terms, conditions and restrictions set
forth in the Plan and established by the Committee in connection with the Award
and specified in the applicable Award Document, a Target Amount of cash based
upon the achievement of Performance Targets over the applicable Performance
Period.
11. Other Awards
The Committee
shall have the authority to specify the terms and provisions of other forms of
equity-based or equity-related Awards not described above that the Committee
determines to be consistent with the purpose of the Plan and the interests of
the Company, which Awards may provide for cash payments based in whole or in
part on the value or future value of Shares, for the acquisition or future
acquisition of Shares, or any combination thereof.
12. Certain
Restrictions
(a)
Transfers
. No Award shall be transferable other than pursuant to a
beneficiary designation approved by the Company, by last will and testament or
by the laws of descent and distribution or, except in the case of an Incentive
Stock Option, pursuant to a domestic relations order, as the case may be;
provided
,
however
, that the Committee may, subject to
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applicable laws, rules and regulations
and such terms and conditions as it shall specify, permit the transfer of an
Award, other than an Incentive Stock Option, for no consideration to a Permitted
Transferee. Any Award transferred to a Permitted Transferee shall be further
transferable only by last will and testament or the laws of descent and
distribution or, for no consideration, to another Permitted Transferee of the
Participant.
(b)
Award Exercisable Only by
Participant
. During the lifetime of a Participant, an Award shall be exercisable
only by the Participant or by a Permitted Transferee to whom such Award has been
transferred in accordance with Section 12(a) above. The grant of an Award shall
impose no obligation on a Participant to exercise or settle the
Award.
13. Recapitalization or
Reorganization
(a)
Authority of the Company and
Stockholders
. The existence of the Plan, the Award Documents and the Awards
granted hereunder shall not affect or restrict in any way the right or power of
the Company or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Companys
capital structure or business, any merger or consolidation of the Company, any
issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Shares or the rights thereof or which are convertible into or
exchangeable for Shares, or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
(b)
Change in Capitalization
.
Notwithstanding any provision of the Plan or any Award Document, the number and
kind of Shares authorized for issuance under Section 5 of the Plan, including
the maximum number of Shares available under the special limits provided for in
Section 5(c), shall be equitably adjusted in the manner deemed necessary by the
Committee in the event of a stock split, reverse stock split, stock dividend,
recapitalization, reorganization, partial or complete liquidation,
reclassification, merger, consolidation, separation, extraordinary cash
dividend, split-up, spin-off, combination, exchange of Shares, warrants or
rights offering to purchase Shares at a price substantially below Fair Market
Value, or any other corporate event or distribution of stock or property of the
Company affecting the Shares in order to preserve, but not increase, the
benefits or potential benefits intended to be made available under the Plan. In
addition, upon the occurrence of any of the foregoing events, the number and
kind of Shares subject to any outstanding Award and the exercise price per Share
(or the grant price per Share, as the case may be), if any, under any
outstanding Award shall be equitably adjusted in the manner deemed necessary by
the Committee (including by payment of cash to a Participant) in order to
preserve the benefits or potential benefits intended to be made available to
Participants. Such adjustments shall be made by the Committee. Unless otherwise
determined by the Committee, such adjusted Awards shall be subject to the same
restrictions and vesting or settlement schedule to which the underlying Award is
subject.
14. Term of the Plan
Unless earlier terminated pursuant to
Section 15, the Plan shall terminate on the tenth (10
th
) anniversary
of the Effective Date, except with respect to Awards then outstanding. No Awards
may be granted under the Plan after the tenth (10
th
) anniversary of
the Effective Date.
15. Amendment and
Termination
Subject to applicable laws, rules and
regulations, the Board may at any time terminate or, from time to time, amend,
modify or suspend the Plan;
provided
,
however
, that no termination,
amendment, modification or suspension (i) will be effective without the approval
of the stockholders of the Company if such approval is required under applicable
laws, rules and regulations, including the rules of NYSE, and (ii) shall
materially and adversely alter or impair the rights of a Participant in any
Award previously made under the Plan without the consent of the holder thereof.
Notwithstanding the foregoing, the Board shall have broad authority to amend the
Plan or any Award under the Plan without the consent of a Participant to the
extent it deems necessary or desirable (a) to comply with, or take into account
changes in, or interpretations of, applicable tax laws, securities laws,
employment laws, accounting rules and other applicable laws, rules and
regulations, (b) to take into account unusual or nonrecurring events or market
conditions (including, without limitation, the events described in Section
13(b), or (c) to take into account significant acquisitions or dispositions of
assets or other property by the Company.
16. Miscellaneous
(a)
Tax Withholding
. The Company or a
Subsidiary, as appropriate, may require any individual entitled to receive a
payment of an Award to remit to the Company, prior to payment, an amount
sufficient to satisfy any applicable tax withholding requirements. In the case
of an Award payable in Shares, the Company or a Subsidiary, as appropriate, may
permit or require a Participant to satisfy, in whole or in part, such obligation
to remit taxes by directing the Company to withhold shares that would otherwise
be received by such individual or to repurchase shares that were issued to the
Participant to satisfy the minimum statutory withholding rates for any
applicable tax withholding purposes, in accordance with all applicable laws and
pursuant to such rules as the Committee may establish from time to time. The
Company or a Subsidiary, as appropriate, shall also have the right to deduct
from all cash payments made to a Participant (whether or not such payment is
made in connection with an Award) any applicable taxes required to be withheld
with respect to such payments.
(b)
No Right to Awards or Employment
. No
person shall have any claim or right to receive Awards under the Plan. Neither
the Plan, the grant of Awards under the Plan nor any action taken or omitted to
be taken under the Plan shall be deemed to create or confer on any Eligible
Individual any right to be retained in the employ of the Company or any
Affiliate thereof, or to interfere with or to limit in any way the right of the
Company or other Affiliate thereof to terminate the employment of such Eligible
Individual at any time. No Award shall constitute salary, recurrent compensation
or contractual
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Appendix B
compensation for the year of grant, any
later year or any other period of time. Payments received by a Participant under
any Award made pursuant to the Plan shall not be included in, nor have any
effect on, the determination of employment-related rights or benefits under any
other employee benefit plan or similar arrangement provided by the Company and
its Affiliates, unless otherwise specifically provided for under the terms of
such plan or arrangement or by the Committee.
(c)
Securities Law Restrictions
. An Award
may not be exercised or settled, and no Shares may be issued in connection with
an Award, unless the issuance of such shares (i) has been registered under the
Securities Act of 1933, as amended, (ii) has qualified under applicable state
blue sky laws (or the Company has determined that an exemption from
registration and from qualification under such state blue sky laws is
available) and (iii) complies with all applicable foreign securities laws. The
Committee may require each Participant purchasing or acquiring Shares pursuant
to an Award under the Plan to represent to and agree with the Company in writing
that such Eligible Individual is acquiring the Shares for investment purposes
and not with a view to the distribution thereof. All certificates for Shares
delivered under the Plan shall be subject to such stock-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any exchange upon which the Shares are then listed, and any applicable
securities law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
(d)
Section 162(m) of the Code
. The Plan
is intended to comply in all respects with Section 162(m) of the Code;
provided
,
however
, that in the event the Committee determines that compliance with Section
162(m) of the Code is not desired with respect to a particular Award, compliance
with Section 162(m) of the Code will not be required. In addition, if any
provision of this Plan would cause Awards that are intended to constitute
qualified performance-based compensation under Section 162(m) of the Code, to
fail to so qualify, that provision shall be severed from, and shall be deemed
not to be a part of, the Plan, but the other provisions hereof shall remain in
full force and effect.
(e)
Section 16 of the Exchange Act
.
Notwithstanding anything contained in the Plan or any Award Document under the
Plan to the contrary, if the consummation of any transaction under the Plan, or
the taking of any action by the Committee in connection with a change in control
of the Company, would result in the possible imposition of liability on a
Participant pursuant to Section 16(b) of the Exchange Act, the Committee shall
have the right, in its discretion, but shall not be obligated, to defer such
transaction or the effectiveness of such action to the extent necessary to avoid
such liability, but in no event for a period longer than 180 days.
(f)
Section 409A of the Code
. Notwithstanding any
contrary provision in the Plan or an Award Document, if any provision of the Plan or an Award Document contravenes any
regulations or guidance promulgated under Section 409A of
the Code or would cause an Award
to be subject to additional taxes, accelerated taxation, interest and/or penalties under Section 409A of the Code, such
provision of the Plan or Award Document may be modified by the Committee without consent of the Participant in any manner
the Committee deems reasonable or necessary. In making such modifications the Committee shall attempt, but shall not be
obligated, to maintain, to the maximum extent practicable, the original intent of the applicable provision without
contravening the provisions of Section 409A of the Code. Moreover, any discretionary authority that the Committee may have
pursuant to the Plan shall not be applicable to an Award that is subject to Section 409A of the Code to the extent such
discretionary authority would contravene Section 409A of the Code.
(g)
Awards to Individuals Subject to Laws
of a Jurisdiction Outside of the United States
. To the extent that Awards under
the Plan are awarded to Eligible Individuals who are domiciled or resident
outside of the United States or to persons who are domiciled or resident in the
United States but who are subject to the tax laws of a jurisdiction outside of
the United States, the Committee may adjust the terms of the Awards granted
hereunder to such person (i) to comply with the laws, rules and regulations of
such jurisdiction and (ii) to permit the grant of the Award not to be a taxable
event to the Participant. The authority granted under the previous sentence
shall include the discretion for the Committee to adopt, on behalf of the
Company, one or more sub-plans applicable to separate classes of Eligible
Individuals who are subject to the laws of jurisdictions outside of the United
States.
(h)
No Limitation on Corporate Actions
.
Nothing contained in the Plan shall be construed to prevent the Company or any
Subsidiary from taking any corporate action, whether or not such action would
have an adverse effect on any Awards made under the Plan. No Participant,
beneficiary or other person shall have any claim against the Company or any
Subsidiary as a result of any such action.
(i)
Unfunded Plan
. The Plan is intended to
constitute an unfunded plan for incentive compensation. Prior to the issuance of
Shares, cash or other form of payment in connection with an Award, nothing
contained herein shall give any Participant any rights that are greater than
those of a general unsecured creditor of the Company.
(j)
Successors
. All obligations of the
Company under the Plan with respect to Awards granted hereunder shall be binding
on any successor to the Company, whether the existence of such successor is the
result of a direct or indirect
purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
(k)
Award Document
. In the event of any
conflict or inconsistency between the Plan and any Award Document, the Plan
shall govern and the Award Document shall be interpreted to minimize or
eliminate any such conflict or inconsistency.
(l)
Headings
. The headings of Sections
herein are included solely for convenience of reference and shall not affect the
meaning of any of the provisions of the Plan.
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(m)
Severability
. If any provision of this
Plan is held unenforceable, the remainder of the Plan shall continue in full
force and effect without regard to such unenforceable provision and shall be
applied as though the unenforceable provision were not contained in the Plan.
(n)
Governing Law
. Except as to matters of
federal law, the Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused
its duly authorized officer to execute this amendment on its behalf this
1
st
day of May, 2012.
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INCORPORATED
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By:
|
/S/John P.
MacMahon
|
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Name: John P.
MacMahon
|
Title: Senior Vice
President, Global Compensation and
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Benefits
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Table of Contents
Who We Are
What We Do
We are one of the worlds leading innovators in materials
science. For more than 165 years, weve applied our
unparalleled expertise in specialty glass, ceramics, and
optical physics to develop products that have created
new industries and transformed lives.
We succeed through sustained investment in R&D,
a unique combination of material and process
innovation, and close collaboration with
customers to solve tough
technology challenges.
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Table of Contents
Table of Contents
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