UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant
to Section 14(a) of the
Securities Exchange Act
of 1934
(Amendment No. )
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by the Registrant ☒
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by a Party other than the Registrant ☐
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240. 14a-12 |
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METALDYNE PERFORMANCE GROUP INC. |
(Name of Registrant as Specified In Its Charter) |
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of Person(s) Filing Proxy Statement, if other than the Registrant) |
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METALDYNE PERFORMANCE
GROUP INC.
47659 Halyard Drive
Plymouth, Michigan
48170
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
Date: |
June 12, 2015 |
Time |
10:00 a.m. Eastern Time |
Place: |
Metaldyne Performance Group Inc. |
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47659 Halyard Drive |
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Plymouth, Michigan 48170 |
The purposes of the Annual
Meeting are:
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To elect three Class I directors; |
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To consider and act upon a proposal to approve, on an advisory basis, the compensation of the Company’s named executive officers; |
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To consider and act upon a proposal to select, on an advisory basis, the frequency with which shareholders will vote on the compensation of the Company’s named executive officers; and |
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To ratify the selection of KPMG LLP as our independent auditor for 2015. |
We will also transact such
other business as may properly come before the meeting.
The Company recommends
that you vote as follows:
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FOR each director nominee; |
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FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers; |
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FOR 3 YEARS, on an advisory basis, as the frequency with which shareholders will vote on the compensation of the Company’s named executive officers; and |
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FOR the selection of KPMG LLP as the Company’s independent auditor for 2015. |
Shareholders of record at
the close of business on May 12, 2015 are entitled to vote at the Annual Meeting or any adjournment or postponement of the meeting.
Whether or not you plan to attend the Annual Meeting, you can ensure that your shares are represented at the meeting by promptly
voting by internet, by telephone, or by completing, signing, dating, and returning your proxy card in the enclosed postage prepaid
envelope. Instructions for each of these methods and the control number that you will need are provided on the proxy card. You
may withdraw your proxy before it is exercised by following the directions in the proxy statement. Alternatively, you may vote
in person at the Annual Meeting.
By Order of the Board of
Directors,
Carol Creel
General Counsel and Secretary
May 15, 2015
IMPORTANT NOTICE REGARDING
THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JUNE 12, 2015. THIS PROXY STATEMENT AND THE METALDYNE
PERFORMANCE GROUP INC. 2014 ANNUAL REPORT TO SHAREHOLDERS ARE AVAILABLE AT: www.proxyvote.com
TABLE OF CONTENTS
METALDYNE PERFORMANCE
GROUP INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING
OF SHAREHOLDERS
To be held on June
12, 2015 at 10:00 a.m. Eastern Time
GENERAL INFORMATION
The Board of Directors
of Metaldyne Performance Group Inc. (referred to as “MPG,” the “Company,” “we,” “us,”
or “our” in this proxy statement) is soliciting the enclosed proxy for use at the Annual Meeting of Shareholders of
MPG to be held at its offices at 47659 Halyard Drive, Plymouth, Michigan 48170, on Friday, June 12, 2015 at 10:00 a.m. Eastern
Time and at any adjournment or postponement of the Annual Meeting. This proxy statement and the enclosed proxy card are being mailed
or otherwise made available to shareholders on or about May 15, 2015. We are concurrently mailing to shareholders a copy of our
2014 Annual Report to Shareholders, which includes our Form 10-K for the year ended December 31, 2014.
Effective December 12,
2014, MPG became a publicly traded company as a result of an initial public offering (an “IPO”). MPG was formed through
the combination (the “Combination”) on August 4, 2014 of three metal-forming technology manufacturing companies, ASP
HHI Holdings, Inc. (together with its subsidiaries, “HHI”), ASP MD Holdings, Inc. (together with its subsidiaries,
“Metaldyne”), and ASP Grede Intermediate Holdings LLC (together with its subsidiaries, “Grede”), each of
which was owned primarily by certain private equity funds affiliated with American Securities LLC (together with its affiliates,
“American Securities”).
Who is entitled to vote
at the Annual Meeting?
Our Board established the
close of business on May 12, 2015 as the record date to determine the shareholders entitled to receive a notice of, and to vote
at, our Annual Meeting or an adjournment or postponement of the meeting. On the record date, there were 67,074,927 shares of our
common stock, $.001 par value, outstanding and entitled to vote. Each share of our common stock represents one vote that may be
voted on each matter that may come before the Annual Meeting.
All shares of our common
stock represented by properly executed and unrevoked proxies will be voted by the persons named as proxy holders in accordance
with the instructions given. If no instructions are indicated on a proxy, properly executed proxies will be voted as follows:
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FOR each director nominee; |
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FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers; |
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FOR 3 YEARS, on an advisory basis, as the frequency with which shareholders will vote on the compensation of the Company’s named executive officers; and |
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FOR the selection of KPMG LLP as our independent auditor for 2015. |
What is the difference
between holding shares as a record holder and as a beneficial owner?
If your shares are registered
in your name with our registrar and transfer agent, American Stock Transfer & Trust Company, LLC, you are the “record
holder” of those shares. If you are a record holder, we have provided these proxy materials directly to you.
If your shares are held
in a stock brokerage account, or with a bank or other holder of record, you are considered the “beneficial owner” of
those shares held in “street name.” If your shares are held in street name, these proxy materials have been forwarded
to you by your bank or broker. As the beneficial owner, you have the right to instruct that organization on how to vote your shares.
What is a broker non-vote?
If your shares are held
in “street name” through a bank, broker, or other nominee, you must provide voting instructions to that organization.
If you do not provide voting instructions, the organization may vote in its discretion on routine proposals, but not on non-routine
proposals, which is called a “broker non-vote.” All of the proposals on our agenda are non-routine, except for Proposal
4: Ratification of Selection of Independent Auditors.
How
are abstentions and broker non-votes treated?
Abstentions and broker
non-votes are not treated as votes cast, so they will not have any effect on voting results of the proposals.
What constitutes a quorum?
To conduct business at
our Annual Meeting, we must have a quorum of shareholders present. A quorum is present when a majority of the outstanding shares
of stock entitled to vote, as of the record date, are represented in person or by proxy. Broker non-votes and abstentions will
be counted toward the establishment of the quorum.
How
can I submit my vote?
There are four methods
you can use to vote: by internet, by telephone, by mail, or in person. Submitting your proxy by internet, telephone, or mail will
not affect your right to attend the Annual Meeting and change your vote. Unless you are voting in person, your vote must be received
by 11:59 p.m. Eastern Time on June 11, 2015.
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Record
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Beneficial
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Internet |
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Have
your proxy card available and log on to www.proxyvote.com. |
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If your bank or broker makes this method available, the instructions will be included with the proxy materials. |
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Telephone |
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Have your proxy card available and call 800-690-6903 from a touchtone telephone anywhere (toll free only in the United States). |
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If your bank or broker makes this method available, the instructions will be included with the proxy materials. |
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Mail
Your Proxy Card |
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Mark, date, sign, and promptly mail the enclosed proxy card in the postage-paid envelope provided for mailing in the United States. |
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Mark, date, sign, and promptly mail the voting instruction form provided by your bank or broker in the postage-paid envelope provided for mailing in the United States. |
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In Person |
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You may vote by ballot in person at the Annual Meeting. |
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Obtain proof of stock ownership as of the record date and a valid legal proxy from the organization that holds your shares and attend the Annual Meeting. |
How
many votes are needed for each proposal to pass?
Our Bylaws provide that
directors are elected by a plurality of votes cast. All of the other matters to be considered at our Annual Meeting require the
affirmative vote of the majority of shares present and voting.
If you are the shareholder
of record, and you sign and return a proxy card without giving specific voting instructions, then the proxy holders will vote your
shares in the manner recommended by our Board on all matters presented in this proxy statement, and as the proxy holders may determine
in their discretion with respect to any other matters properly presented for a vote at the meeting.
Is my proxy revocable?
You may revoke your proxy
before it is exercised by voting in person at the Annual Meeting, by timely delivering a subsequent proxy, or by notifying us in
writing of such revocation to the attention of Carol Creel, General Counsel and Secretary, at Metaldyne Performance Group Inc.,
47659 Halyard Drive, Plymouth, MI 48170 before your proxy is voted. Unless you revoke your proxy in person at the meeting, your
revocation must be received by 11:59 p.m. Eastern Time on June 11, 2015.
Who is paying for the
expenses involved in preparing and mailing this proxy statement?
We are paying the expenses
involved in preparing, assembling, and mailing these proxy materials and all costs of soliciting proxies. Our executive officers
and other employees may solicit proxies, without additional compensation, personally and by telephone and other means of communication.
We will reimburse brokers and other persons holding our common stock in their names or in the names of their nominees for their
reasonable expenses in forwarding proxy materials to beneficial owners.
What happens if additional
matters are presented at the Annual Meeting?
Other than the items of
business described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you
grant a proxy, the persons named as proxy holders, George Thanopoulos and Carol Creel, will have the discretion to vote your shares
on any additional matters properly presented for a vote at the Annual Meeting. If for any reason any of our director nominees is
not available as a candidate, Mr. Thanopoulos and Ms. Creel may vote your shares for another candidate (or candidates) who may
be nominated by the Board, or the Board may reduce its size.
What
is “householding” and how does it affect me?
The proxy rules of the
Securities and Exchange Commission (the “SEC”) permit companies and intermediaries, such as brokers and banks, to satisfy
proxy statement delivery requirements for two or more shareholders sharing an address by delivering one proxy statement to those
shareholders. This procedure, known as “householding,” reduces the amount of duplicate information that shareholders
receive and lowers our printing and mailing costs.
We have been notified that
certain intermediaries will use householding for our proxy materials and our 2014 Annual Report. Therefore, only one proxy statement
and 2014 Annual Report may have been delivered to your address if multiple shareholders share that address. Shareholders who wish
to opt out of this procedure and receive separate copies of the proxy statement and annual report in the future, or shareholders
who are receiving multiple copies and would like to receive only one copy, should contact their bank, broker, or other nominee,
or us at the address and telephone number below.
We will promptly send a
separate copy of the proxy statement for the Annual Meeting or 2014 Annual Report if you send your request to Investor Relations,
Metaldyne Performance Group Inc., 47659 Halyard Drive, Plymouth, Michigan 48170, or call our Investor Relations Department at 248-440-9503.
Our Website
We maintain a website
at www.mpgdriven.com. The information on our website is not a part of this proxy statement, and it is not incorporated
into any other filings we make with the SEC.
PROPOSAL 1: ELECTION
OF CLASS I DIRECTORS
Our amended and restated
certificate of incorporation provides that our Board will be divided into three classes, with one class being elected at each annual
meeting of shareholders and with each director serving a three-year term. The term of office of our Class I directors, Kevin Penn,
Jeffrey Stafeil, and George Thanopoulos, expires at this annual meeting. The Board proposes the election of Messrs. Penn, Stafeil,
and Thanopoulos to serve as directors for a term expiring at the Annual Meeting of Shareholders in 2018, or until their respective
successors are elected and qualified.
The Board of Directors
expects that the persons named as proxy holders on the proxy card will vote the shares represented by each proxy for the election
of each director nominee unless a contrary direction is given. If prior to the meeting a nominee is unable or unwilling to serve
as a director, which the Board of Directors does not expect, the proxy holders may vote for such alternate nominee, if any, as
may be recommended by the Board of Directors, or the Board may reduce its size.
Information regarding each
of our director nominees is set forth below under “Board of Directors—Class I Director Nominees for a Term Expiring in 2018.”
The Board of Directors
recommends a vote FOR the election to the Board of Directors of each of the following Class I director nominees:
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Kevin Penn |
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53 |
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Managing Director of American Securities, LLC |
Jeffrey Stafeil |
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45 |
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Executive Vice President and Chief Financial Officer of Visteon Corporation |
George Thanopoulos |
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51 |
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Chief Executive Officer of Metaldyne Performance Group Inc. and President and Chief Executive Officer of HHI |
BOARD OF DIRECTORS
Our business and affairs
are managed under the direction of our Board of Directors. Our Bylaws provide that our Board of Directors will be composed of eight
directors or such number as the Board shall otherwise fix.
Class I Director Nominees
for a Term Expiring in 2018
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Kevin Penn,
53, has served on our Board of Directors since June 2014. Mr. Penn is the Chairman of our Board of Directors. Mr. Penn is
also a Managing Director of American Securities, having joined in 2009. Prior to joining American Securities he founded and
led ACI Capital Co., LLC. Prior thereto, he was Executive Vice President and Chief Investment Officer for a family investment
office, First Spring Corporation, where he managed private equity, direct investment, and public investment portfolios.
Earlier in his career Mr. Penn was a principal of the private equity firm Adler & Shaykin and was a founding member of
the Leveraged Buyout Group at Morgan Stanley & Co. He was previously Chairman of Metaldyne, Grede, and HHI, and is
currently the chairman of the boards of Frontier Spinning Mills and Learning Care Group. He is also a board member of Unified
Logistics and Cornhusker Energy Lexington Holdings. He is a member of the Mount Sinai Hospital Department of Medicine
Advisory Board, and he serves as Chairperson of the Board of Overseers of University of Pennsylvania School of Design and as
a Governor/Overseer of Hebrew Union College. Mr. Penn holds a B.S. degree in Economics from the Wharton School of University
of Pennsylvania and an M.B.A. from Harvard Business School. Mr. Penn was chosen as our director because of his management and
financial expertise. |
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Jeffrey Stafeil, 45, has served on our Board of Directors since August 2014. Mr. Stafeil has been Chief Financial Officer at Visteon Corporation since October 2012 and has been its Executive Vice President since November 2012. He served as the Chief Financial Officer and Executive Vice President of DURA Automotive Systems, LLC (alternate name, Dura Automotive Systems Inc.) from December 2008 to 2010 and served as its Chief Executive Officer from October 2010 to 2012. Prior to joining DURA, he served as the Chief Financial Officer and member of management board of Klöckner Pentaplast GmbH & Co. KG. He served as Chief Financial Officer and Executive Vice President of Oldco M Corporation (the former Metaldyne Corporation) from 2001 to 2007, in addition to other management positions, since joining Oldco M Corporation in 2001. Mr. Stafeil served as a director of DURA Automotive Systems, LLC from June 2008 to October 2012 and Meridian Corporation from 2006 to 2009. From 2009 to 2012, he served as a director of J.L. French Automotive Castings Inc. and was previously a director of HHI. He currently serves as a director of Mentor Graphics Corp. Mr. Stafeil holds a B.S. degree in Accounting from Indiana University and an M.B.A. from the Fuqua School of Business at Duke University. Mr. Stafeil was chosen as our director because of his operational leadership and financial management experience. |
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George Thanopoulos, 51, was named our Chief Executive Officer in August 2014 in connection with the Combination and has served on our Board of Directors since August 2014. Mr. Thanopoulos is the founder of HHI and serves as its |
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President and Chief Executive Officer since September 2005. Prior to founding HHI, he was a group president of Oldco M Corporation (the former Metaldyne Corporation) and prior to that held multiple positions at MascoTech, Inc., a predecessor company to Oldco M Corporation, over a 15-year period, including engineering, plant management, and executive management. Mr. Thanopoulos served as a member of the board of directors of Global Brass and Copper Holdings, Inc., a converter, fabricator, distributor, and processor of specialized copper and brass products in North America, from 2011 to 2014. Mr. Thanopoulos also served as a director of JL French Automotive Castings, Inc., a supplier of die cast aluminum components and assemblies, from 2006 to 2012 and as a director of Chassis Brakes International, a supplier of automotive foundation brakes and brake components, from 2012 to 2013. Mr. Thanopoulos holds a B.S. degree in Mechanical Engineering from the University of Michigan. Mr. Thanopoulos was chosen as our director because of his extensive experience in management and in the manufacturing industry. |
Class II Directors whose
Term Expires in 2016
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Nick Bhambri, 51, has served on our Board of Directors since August 2014. Mr. Bhambri also served as the President of MECS Inc., a DuPont company, until April 2012. Before MECS was acquired by DuPont, Mr. Bhambri served as President and Chief Executive Officer of MECS since 2007, having joined the company in 1992. Mr. Bhambri was previously a director of HHI. Mr. Bhambri holds a B.S. degree in Mechanical Engineering and an M.B.A. from Washington University in St. Louis. Mr. Bhambri was chosen as our director because of his experience in the manufacturing industry. |
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Loren Easton, 35, has served on our Board of Directors since June 2014. Mr. Easton is also a Managing Director of American Securities, having joined in 2009. Prior to joining American Securities, Mr. Easton was a Vice President at ACI Capital Co., LLC and was an analyst at Lazard Frères. He was previously a director of Grede and Metaldyne and is currently a director of Frontier Spinning Mills and Unifrax. Mr. Easton holds a B.A. degree and an M.B.A. from the University of Pennsylvania. Mr. Easton was chosen as our director because of his management and financial expertise. |
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William
Jackson, 54, has served on our Board of Directors since August 2014. Mr. Jackson has been an Executive Vice President of
Corporate Development at Johnson Controls Inc. since September 2013 and served as its President of the Automotive Electronics
& Interiors since March 2012. Mr. Jackson served as an Executive Vice President of Operations & Innovation at Johnson
Controls Inc. from May 2011 to September 2013. Prior to Johnson Controls, he served as Senior Vice President and President of
Automotive at Sears Holdings Corporation since March 2009 and was responsible for the oversight, leadership, and strategic
growth of its automotive business, both in-store and online. Prior to Sears Holdings Corporation, Mr. Jackson was a Senior
Partner and served in various leadership roles at Booz & Company. He served on the board of directors for both Booz
Allen Hamilton and Booz & Company and was previously a director of Metaldyne. Mr. Jackson holds a B.S. degree and an M.S.
degree in Mechanical Engineering from the University of Illinois and an M.B.A. from the University of Chicago. Mr. Jackson
was chosen as our director because of his automotive and industrial consulting experience. |
Class III Directors whose
Term Expires in 2017
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Michael Fisch, 52, has served on our board of directors since August 2014. Mr. Fisch is also the President and CEO of American Securities, which he co-founded in 1994. Mr. Fisch was previously a director of Metaldyne, Grede, and HHI and currently serves on the boards of certain American Securities affiliates, including ASP Portfolio Companies. He is a Trustee of Princeton Theological Seminary; board member of Human Rights Watch; and member of Mount Sinai Hospital Department of Medicine Advisory Board. Mr. Fisch holds a B.A. degree from Dartmouth College and an M.B.A. from Stanford University. Mr. Fisch was chosen as our director because of his management and financial expertise. |
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John (Jack) Pearson Smith, 66, has served on our Board of Directors since August 2014. Mr. Smith is also director and co-owner of Silversmith Inc., a producer of metering and automated data reporting systems for natural gas, oil production, and waste water disposal. Prior to co-founding Silversmith Inc. in 2003, Mr. Smith was President and Chief Executive Officer of Holland Neway International, a producer of commercial vehicle suspensions and brake systems, with prior experience in engineering management at Ford Heavy Truck Division. Mr. Smith was previously a director of Metaldyne, and currently serves on the board of directors of SRAM Corporation. He is also on the board of Grand Valley State University Foundation. Mr. Smith holds a B.S. degree and an M.S. degree in Mechanical Engineering and an M.B.A. from the University of Michigan. Mr. Smith was chosen as our director because of his operational leadership and automotive expertise. |
Controlled Company Exception
and Phase-in
American Securities beneficially owns shares representing more than 50% of the voting power of our shares eligible to vote in the
election of directors. As a result, we are a “controlled company” within the meaning of the corporate governance standards
of the New York
Stock Exchange (“NYSE”). Under these corporate governance standards, a company of which more than 50% of the
voting power is held by an individual, group, or another company is a “controlled company” and may elect not to
comply with certain corporate governance standards, including the requirements (1) that a majority of our Board of Directors
consist of independent directors, (2) that our Board of Directors have a compensation committee that is comprised entirely of
independent directors with a written charter addressing the committee’s purpose and responsibilities, and (3) that our
Board of Directors have a nominating and corporate governance committee that is comprised entirely of independent
directors with a written charter addressing the committee’s purpose and responsibilities. The Company is currently
utilizing some of these exemptions. As a result, although we have independent director representation on our compensation and
nominating and corporate governance committees, they are not comprised entirely of independent directors, and only half of
our board members are independent directors. Although we may transition to fully independent compensation and nominating and
corporate governance committees prior to the time we cease to be a “controlled company,” for such period of time
you will not have the same protections afforded to shareholders of companies that are subject to all of these corporate
governance requirements. The controlled company exemption does not modify the independence requirements for the audit
committee, and we currently comply with the requirements of the Sarbanes-Oxley Act and the NYSE rules which require that our
Audit Committee be composed of at least three members, a majority of whom are independent, and plan to comply with the
requirement that each Audit Committee member will be independent within one year of the IPO. In the event that we cease to be
a “controlled company” and our shares continue to be listed on the NYSE, we will be required to comply with these
provisions within the applicable transition periods.
Director Independence
Our Board of Directors
has affirmatively determined that Mr. Bhambri, Mr. Jackson, Mr. Smith, and Mr. Stafeil are independent directors under the applicable
rules of the NYSE and as such term is defined in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 (the “Exchange
Act”).
Board Committees
Our Board of Directors
has the authority to appoint committees to perform certain management and administration functions. Our Board of Directors has
three committees: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee.
Audit Committee
The primary purpose of
our Audit Committee is to assist the Board’s oversight of:
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the audits and integrity of our financial statements; |
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our processes relating to risk management; |
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our processes relating
to the systems of internal control over financial reporting and disclosure controls and procedures; |
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the qualifications, engagement, compensation, independence, and performance of our independent auditor; |
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the auditor’s conduct of the annual audit of our financial statements and any other auditor services provided; and |
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the performance of our internal audit function. |
Our Audit Committee also
reviews and assesses our legal and regulatory compliance and the application of our codes of business conduct and ethics as established
by management and the Board.
Messrs. Stafeil, Bhambri,
and Easton serve on the Audit Committee. Mr. Stafeil serves as Chairman of the Audit Committee and also qualifies as an “audit
committee financial expert” as such term has been defined by the SEC in Item 407(d)(5)(ii) of Regulation S-K, and each Audit
Committee member meets the financial literacy requirements of the NYSE. Our Board of Directors has affirmatively determined that
Mr. Stafeil and Mr. Bhambri meet the definition of an “independent director” for the purposes of serving on the Audit
Committee under applicable Securities and Exchange Commission and NYSE rules, and we intend to comply with these independence requirements
for all members of the Audit Committee within the time periods specified therein. The Audit Committee is governed by a charter
that complies with the NYSE rules.
Compensation Committee
The primary purposes of
our Compensation Committee are to:
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oversee our employee compensation policies and practices; |
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determine and approve the compensation of our chief executive officer and other executive officers; |
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review and approve incentive compensation and equity compensation policies and programs; and |
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produce the annual report of the Compensation Committee as required by Securities and Exchange Commission rules. |
Messrs. Penn, Easton, and
Jackson serve on the Compensation Committee, and Mr. Penn serves as the Chairman. The Compensation Committee is governed by a charter.
Nominating and Corporate
Governance Committee
The primary purposes of
our Nominating and Corporate Governance Committee are to:
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identify and screen individuals qualified to serve as directors and recommend to the Board of Directors candidates for nomination for election; |
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evaluate, monitor, and make recommendations to the Board of Directors with respect to our corporate governance guidelines; |
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coordinate and oversee the annual self-evaluation of the Board of Directors and its committees and management; and |
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review our overall corporate governance and recommend improvements for approval by the Board of Directors where appropriate. |
Messrs. Fisch,
Penn, and Smith serve on the Nominating and Corporate Governance Committee, and Mr. Fisch serves as the Chairman. The Nominating and
Corporate Governance Committee is governed by a charter. The committee has a policy to consider properly submitted
shareholder recommendations for candidates for membership on the Board of Directors.
Pursuant to the Stockholders’
Agreement dated August 4, 2014 among the Company and certain of its shareholders, for so long as American Securities in the aggregate
owns at least 10% of the outstanding shares of Company common stock, it is entitled to nominate at least one individual for election
to the Board. The Stockholders’ Agreement also provides that the Company, the Board (subject to exercise of their fiduciary
duties under applicable law), and the Nominating and Corporate Governance Committee (subject to exercise of their fiduciary duties
under applicable law) will (i) nominate and recommend to shareholders, for election or re-election as part of the management slate
of directors, a nominee designated by American Securities (the “AS Nominee”), and (ii) provide the same type of support
for the election of each AS Nominee as provided to other persons standing for election as directors of the Company as part of the
management slate. See “Certain Relationships and Related Person Transactions” for additional information regarding
the Stockholders’ Agreement.
The Nominating and Corporate
Governance Committee will also consider recommendations for Board candidates submitted by shareholders using substantially the
same criteria it applies to recommendations from the committee, directors, and members of management. Shareholders may submit recommendations
by providing a person’s name and appropriate background and biographical information in writing to:
Metaldyne Performance
Group Inc.
47659 Halyard Drive
Plymouth, MI 48170
Attention: Nominating
and Corporate Governance Committee
Board and Committee
Meetings
During 2014 the Board of
Directors held four meetings and the Audit Committee held three meetings. The Compensation Committee and the Nominating and Corporate
Governance Committee were formed in connection with our initial public offering and held no meetings during 2014. Each director
attended all of the Board meetings and all applicable committee meetings that were held during 2014 while such person was a director.
The Board has a policy that all directors attend the Annual Meeting of Shareholders absent unusual circumstances.
Compensation Committee
Interlocks and Insider Participation
None of our
executive officers serves, or in the past year has served, as a member of a board of directors or compensation committee (or
other committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board
of Directors or Compensation Committee. No interlocking relationship exists between any member of our Compensation Committee
and any executive, member of a board of directors, or member of a compensation committee (or other committee performing
equivalent functions) of any other company.
Code of Business Conduct
and Ethics
We adopted a code of business
conduct and ethics that applies to all of our employees, officers, and directors, including those officers responsible for financial
reporting. These standards are designed to deter wrongdoing and to promote honest and ethical conduct. The code of business conduct
and ethics is available on our web site at www.mpgdriven.com. Any waiver of the code for directors or executive officers
may be made only by our Board of Directors and will be promptly disclosed to our shareholders as required by applicable U.S. securities laws and the corporate governance rules of the NYSE. Amendments to the code must be approved by our Board of Directors
and will be promptly disclosed (other than technical, administrative, or non-substantive changes). Any amendments to the code,
or any waivers of its requirements, will be disclosed on our website. Any person may request a copy of the code of business conduct
and ethics, at no cost, by writing to us at the following address:
Metaldyne Performance
Group Inc.
47659 Halyard Drive
Plymouth, MI 48170
Attention: Corporate
Integrity Committee
Corporate Governance
Guidelines
Our Board of Directors
adopted corporate governance guidelines in accordance with the corporate governance rules of the NYSE, as applicable, that serve
as a flexible framework within which our Board of Directors and its committees operate. These guidelines cover a number of areas
including the size and composition of the board, board membership criteria and director qualifications, director responsibilities,
board agenda, roles of the Chairman of the Board and Chief Executive Officer, executive sessions, standing board committees, board
member access to management and independent advisors, director communications with third parties, director compensation, director
orientation and continuing education, evaluation of senior management, and management succession planning. A copy of our corporate
governance guidelines is posted on our website www.mpgdriven.com.
Director Compensation
Following
the Combination, each director who was not an employee of the Company or of American Securities received annual cash
compensation of $100,000 and in 2015, received a grant of restricted stock with a grant date value of $50,000 that will vest
over a three-year period. Effective January 1, 2015, our non-employee directors affiliated with American Securities are
also entitled to the same non-employee director compensation; however, the cash compensation and restricted shares of our
common stock will be paid and granted, respectively, directly to American Securities and not to the director individually.
Mr. Stafeil receives additional annual cash compensation of $25,000 for his services as the Chairman of the Audit Committee.
Mr. Thanopoulos, who is an employee of the Company, receives no additional compensation for his service on our Board of
Directors.
The following table sets
forth compensation paid to our non-employee directors for their services as a director of the boards of HHI, Metaldyne, or MPG
as applicable.
|
|
|
|
|
Name |
|
Fees
Earned or
Paid in Cash ($)(3) |
|
Nick Bhambri(1) |
|
|
70,833 |
|
William Jackson(2) |
|
|
70,833 |
|
Jack Smith(2) |
|
|
70,833 |
|
Jeffrey
Stafeil(1) |
|
|
81,250 |
|
|
|
(1) |
Compensation paid by
HHI and MPG. |
|
|
(2) |
Compensation paid by
Metaldyne and MPG. |
|
|
(3) |
The aggregate number
of stock options held by non-employee directors as of December 31, 2014 was: 16,690 for Mr. Bhambri; 11,765 for Mr. Jackson;
11,765 for Mr. Smith; and 12,630 for Mr. Stafeil. |
EXECUTIVE OFFICERS
The following table sets
forth the names and ages of our executive officers, who serve at the discretion of our Board of Directors.
|
|
|
|
|
Name |
|
Age |
|
Position |
George Thanopoulos |
|
51 |
|
Chief Executive Officer of MPG, and President & CEO of HHI |
Mark Blaufuss |
|
47 |
|
Chief Financial Officer and Treasurer of MPG |
Thomas Amato |
|
51 |
|
Co-President of MPG, and President & CEO of Metaldyne |
Douglas Grimm |
|
53 |
|
Co-President of MPG, and President & CEO of Grede |
Mr.
Thanopoulos’s experience is set forth above under “Board of Directors—Class I Director Nominees for a Term
Expiring in 2018.”
Mark Blaufuss was
named our Chief Financial Officer and Treasurer in August 2014 in connection with the Combination. Mr. Blaufuss has also
served as Metaldyne’s Chief Financial Officer since May 2011. Prior to joining Metaldyne, Mr. Blaufuss held the Chief
Financial Officer position at United Components, Inc., an aftermarket automotive parts supplier, from September 2009 to April
2011, and at Axletech International, a planetary axle supplier, from April 2007 to September 2009. He also worked as a
director of AlixPartners, a consulting firm, Corporate Controller of JPE, Inc., an automotive parts supplier, and Manager at
PricewaterhouseCoopers. Mr. Blaufuss acted as CFO for Stonebridge Industries, Inc. until 2004. Stonebridge Industries, Inc.
filed for Chapter 11 bankruptcy in 2005. Mr. Blaufuss holds a B.S. degree in Accounting from Michigan State University.
Thomas Amato was
named our Co-President in August 2014 in connection with the Combination. Mr. Amato also serves as the President and Chief
Executive Officer of Metaldyne, LLC, which he has done since its founding in 2009. Prior to that, he held multiple positions
at Oldco M Corporation (the former Metaldyne Corporation), including Executive Vice President of Corporate Development and
Executive Vice President of Commercial Operations. He was named Chairman, President, and Chief Executive Officer of Oldco M
Corporation in January 2008 and was also Co-Chief Executive Officer of Asahi Tec, a Japanese casting and forging company
publicly traded on the Tokyo Stock Exchange. Mr. Amato also held multiple positions at MascoTech, Inc., a predecessor
company to Oldco M Corporation, which he joined in 1994, and he has served on the boards of Asahi Tec and Wolverine Tube. Mr.
Amato holds a B.S. degree in Chemical Engineering from Wayne State University and an M.B.A. from the University of
Michigan.
Douglas Grimm was named
our Co-President in August 2014 in connection with the Combination. Mr. Grimm also serves as President and Chief Executive Officer
of Grede which he has done since February 2010. Prior to that, he served as Chief Executive Officer of Citation Corporation, a
foundry that manufactures components for the transportation and industrial markets, from January 2008 to February 2010. Prior to
co-founding Grede Holdings LLC, Mr. Grimm served as Vice President—Global Ford, Materials Management, Powertrain Electronics
& Fuel Operations of Visteon Corporation, a global automotive supplier that manufactures climate, electronics, and interior
products for vehicle manufacturers, from 2006 to 2008. Prior to that time, Mr. Grimm spent five years at Oldco M Corporation (the
former Metaldyne Corporation) as a Vice President in various executive positions, including commercial operations, General Manager
of forging and casting operations, as well as having responsibility for global purchasing and quality. Before joining Oldco M Corporation
in 2001, Mr. Grimm was with Dana Corporation, a worldwide supplier of drivetrain, sealing and thermal management components and
systems in 1998 and served as Vice President, Global Strategic Sourcing. Prior to that, Mr. Grimm spent 10 years at Chrysler Corporation
in various purchasing management positions. Mr. Grimm is the immediate past Chairman of the Original Equipment Supplier Association
(OESA), Vice-Chairman of the Motor & Equipment Manufacturers Association (MEMA) and a director for the Peterson American Corporation.
Mr. Grimm holds a B.A. degree in Economics & Management from Hiram College (OH), where he is a member of the board of trustees,
and an M.B.A. from the University of Detroit.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange
Act requires our directors and executive officers and persons who own more than ten percent of our common stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our common stock and other
equity securities. Based solely on our review of copies of such forms received by us, or written representations from reporting
persons that no such forms were required for those persons, we believe that our insiders complied with all applicable Section 16(a)
filing requirements during the fiscal year ended December 31, 2014.
SECURITY OWNERSHIP OF
MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table shows
information as of March 15, 2015 regarding the beneficial ownership of our common stock by:
|
|
|
|
• |
each person or group who is known by us to own beneficially more than 5% of our common stock; |
|
|
|
|
• |
each member of our Board, and each executive officer named in the 2014 Summary Compensation Table below (a “named executive officer” or “NEO”); and |
|
|
|
|
• |
all members of our Board and our executive officers as a group (11 individuals). |
Beneficial ownership of
shares is determined under SEC rules and generally includes any shares over which a person exercises sole or shared voting or investment
power. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information
provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all
shares of our common stock shown as beneficially owned by them. Percentage of beneficial ownership is based on 67,075,085 shares
of our common stock outstanding and beneficial ownership as of March 15, 2015. Shares of common stock subject to options currently
exercisable or exercisable within 60 days are deemed to be outstanding and beneficially owned by the person holding the options
for the purposes of computing the percentage of beneficial ownership of that person and any group of which that person is
a member, but are not
deemed outstanding for the purpose of computing the percentage of beneficial ownership for any other person. Unless otherwise
indicated, the address for each holder listed below is 47659 Halyard Drive, Plymouth, MI 48170, c/o Metaldyne Performance
Group Inc.
|
|
|
|
|
|
|
|
|
Shares
of common stock
beneficially owned |
|
Name
of beneficial owner |
|
Number
of shares(4)(5) |
|
|
Percentage
of shares |
|
5% shareholders: |
|
|
|
|
|
|
ASP MD Investco
LP(1) |
|
|
52,681,147 |
|
|
|
78.5 |
% |
Named executive officers and directors: |
|
|
|
|
|
|
|
|
George Thanopoulos |
|
|
2,224,018 |
|
|
|
3.3 |
% |
Mark Blaufuss(2) |
|
|
136,728 |
|
|
|
* |
|
Thomas Amato(3) |
|
|
541,863 |
|
|
|
* |
|
Douglas Grimm |
|
|
103,215 |
|
|
|
* |
|
Nick Bhambri |
|
|
22,705 |
|
|
|
* |
|
Loren Easton |
|
|
— |
|
|
|
— |
|
Michael Fisch |
|
|
— |
|
|
|
— |
|
William Jackson |
|
|
4,278 |
|
|
|
* |
|
Kevin Penn |
|
|
— |
|
|
|
— |
|
John Pearson Smith |
|
|
4,278 |
|
|
|
* |
|
Jeffrey Stafeil |
|
|
9,340 |
|
|
|
* |
|
All board of director members and executive officers as a group (11 persons) |
|
|
3,046,425 |
|
|
|
4.5 |
% |
|
|
|
* |
Less than
1% |
|
|
(1) |
Based
on Schedule 13G filed on February 17, 2015, as of December 31, 2014 ASP MD Investco LP, a Delaware limited partnership, American
Securities Partners VI, L.P., American Securities Partners VI(B), L.P., American Securities Partners VI(C), L.P. and American
Securities Partners VI(D), L.P. (collectively, the “Sponsors”), are collectively owners of more than 99% of the
limited partnership interests of ASP MD Investco LP. The following persons may be deemed having voting or investment power
with respect to shares of our common stock beneficially owned by ASP MD Investco LP: (i) David Horing and Michael G. Fisch,
in their capacities as the managing members of American Securities Associates VI, LLC, the general partner of each of the
Sponsors, and (ii) Michael G. Fisch, in his capacity as trustee of The Michael G. Fisch 2006 Revocable Trust, the manager
of ASCP, LLC, the managing member of American Securities LLC, which in turn is (A) the provider of investment advisory services
to each Sponsor and (B) the owner of 100% of the issued and outstanding shares of ASP Manager Corp., the general partner of
ASP MD Investco LP. Such individuals disclaim beneficial ownership of the shares of common stock held by ASP MD Investco,
LP, except to the extent of their pecuniary interests therein. The address for ASP MD Investco LP is c/o American Securities
LLC, 299 Park Avenue, 34th Floor, New York, NY 10171. |
|
|
(2) |
Does not
include 1,550 shares of our common stock held in escrow in connection with the Metaldyne Transaction. |
|
|
(3) |
Does not
include 9,700 shares of our common stock held in escrow in connection with the Metaldyne Transaction. |
|
|
(4) |
Shares owned by directors
and executive officers include unvested shares of restricted stock over which the holder has sole voting but not investment
power: 133,334 shares for Mr. Thanopoulos; 83,334 shares for Mr. Blaufuss; 133,334 shares for Mr. Amato; 133,334 shares for
Mr. Grimm; and 483,336 shares for all directors and executive officers as a group. |
|
|
(5) |
Shares owned by directors
and executive officers include shares that may be acquired on or before May 14, 2015 upon exercise of stock options: 831,823
shares for Mr. Thanopoulos; 98,773 shares for Mr. Blaufuss; 287,843 shares for Mr. Amato; 9,385 shares for Mr. Grimm; 7,429
shares for Mr. Bhambri; 4,278 shares for Mr. Jackson; 4,278 shares for Mr. Smith; 3,615 shares for Mr. Stafeil; and 1,247,424
shares of directors and executive officers as a group. Holders of options have no voting or investment power over exercised
option shares. |
CERTAIN RELATIONSHIPS
AND RELATED PERSON TRANSACTIONS
Set forth below is a
description of certain relationships and related person transactions between us or our subsidiaries and our directors, executive
officers, and holders of more than 5% of our voting securities. We believe that all of the following transactions were entered
into with terms as favorable as could have been obtained from unaffiliated third parties.
Merger Agreement
Pursuant to the Merger
Agreement dated as of July 31, 2014 (the “Merger Agreement”), the Combination was consummated on August 4, 2014 whereby
HHI, Metaldyne, and Grede became wholly-owned subsidiaries of MPG. In connection with the Combination (except for treasury shares
or treasury units and certain shares or units owned by American Securities, which were cancelled for no consideration), (i) each
issued and outstanding unit of ASP Grede Intermediate Holdings LLC was converted into the right to receive 10.72363 shares of our
common stock, (ii) each issued and outstanding share of common stock of ASP MD Holdings, Inc. was converted into the right to receive
0.21399 shares of our common stock, (iii) each issued and outstanding share of common stock of ASP HHI Holdings, Inc. was converted
into the right to receive 1.67082 shares of our common stock, and (iv) the outstanding options to purchase shares of ASP MD Holdings,
Inc., ASP HHI Holdings, Inc., and ASP Grede Intermediate Holdings LLC were converted into options to
acquire a number of
shares of our common stock, in each case in accordance with and subject to the terms and conditions of the Merger Agreement.
In addition, following the Grede merger in the Combination, ASP Grede Holdings LLC liquidated and distributed the shares of
our common stock it received in the Combination to its former unit holder.
Stockholders’ Agreement
We entered into a
Stockholders’ Agreement on August 4, 2014 (the “Stockholders’ Agreement”) that governs our
relationship with certain of our stockholders, and which prescribes the rights and restrictions of each stockholder party
thereto. Upon completion of the IPO, the provisions in the Stockholders’ Agreement that provide for limitations on
transfers (including, among others, the limitations on a minority investor transferring his or her shares, the right of first
offer, tag-along rights, drag-along rights and participation rights) terminated. In addition, certain provisions that provide
for the purchase of minority shares of our common stock upon termination of employment of a minority investor also terminated
at that time. All provisions in the Stockholders’ Agreement will terminate upon the sale of all or substantially all of
the assets or equity interests in MPG to a third party, whether by merger, consolidation, sale of assets or securities, or
otherwise.
The Stockholders’
Agreement provides demand registration rights to American Securities. In connection with any registration effected pursuant to
the terms of the Stockholders’ Agreement, we are required to pay for all of the fees and expenses incurred in connection
with such registration, including registration fees, filing fees, and printing fees. However, the underwriting discounts and selling
commissions payable in respect of registrable securities included in any registration are to be paid by the persons including such
registrable securities in any such registration on a pro rata basis. We have also agreed to indemnify the holders of registrable
securities against all claims, losses, damages, and liabilities with respect to each registration effected pursuant to the Stockholders’
Agreement.
Management Consulting
Agreements
Each of HHI, Metaldyne,
and Grede entered into separate management consulting agreements (together, the “Management Consulting Agreements”)
with American Securities in connection with American Securities’ acquisitions of such entities. Pursuant to the Management
Consulting Agreements, American Securities provided management consulting services to HHI, Metaldyne, and Grede. American Securities
was also eligible to receive 1% of the value of certain corporate transactions for which they provided advisory services. The Management
Consulting Agreements also included customary exculpation and indemnification provisions in favor of American Securities. The Management
Consulting Agreements, and fees payable under those agreements, terminated on December 12, 2014 pursuant to their respective terms
upon consummation of the IPO.
Pursuant to the Management
Consulting Agreements, American Securities received the following fees and expenses:
|
|
|
|
|
|
|
|
|
|
|
(In
millions) |
|
|
|
2014 |
|
|
2013 |
|
Management fees |
|
$ |
5.1 |
|
|
$ |
4.0 |
|
Transaction fees |
|
|
8.3 |
|
|
|
— |
|
Expense reimbursements |
|
|
1.3 |
|
|
|
0.5 |
|
Total |
|
$ |
14.7 |
|
|
$ |
4.5 |
|
Employment Agreements
We have entered into
employment agreements with each of George Thanopoulos, Thomas Amato, Douglas Grimm, and Mark Blaufuss. For more information regarding
these agreements, see “Compensation Discussion and Analysis” below.
Indemnification Agreements
We entered into indemnification
agreements with our current directors and NEOs and expect to enter in a similar agreement with any new directors or executive officers.
The indemnification agreement entitles the indemnitee to indemnification, to the fullest extent permitted by law, if the indemnitee
is, or threatened to be made, a party to or to participate in a legal proceeding, investigation, inquiry, hearing, or other action
by reason of the fact that the person is or was a director or executive officer of the Company.
Policies for Approval
of Related Person Transactions
We have adopted a written
policy relating to the approval of related person transactions. Our Audit Committee will review and approve or ratify all relationships
and related person transactions between us and (i) our directors, director nominees, executive officers, (ii) any 5% record or
beneficial owner of our common stock or (iii) any immediate family member of any person specified in (i) and (ii) above. Our General
Counsel will be primarily responsible for the development and implementation of processes and controls to obtain information from
our directors and executive officers with respect to related party transactions and for determining, based on the facts and circumstances,
whether we or a related person have a direct or indirect material interest in the transaction.
As set forth in the related
person transaction policy, in the course of its review and approval or ratification of a related party transaction, the committee
will consider:
|
|
|
|
• |
the nature of the related person’s interest in the transaction; |
|
|
|
|
• |
the availability of other sources of comparable products or services; |
|
|
|
|
• |
the material terms of the transaction, including, without limitation, the amount and type of transaction; and |
|
|
|
|
• |
the importance of the transaction to us. |
Any member of the Audit
Committee who is a related person with respect to a transaction under review will not be permitted to participate in the discussions
or approval or ratification of the transaction. However, such member of the Audit Committee will provide all material information
concerning the transaction to the Audit Committee
COMPENSATION DISCUSSION
AND ANALYSIS
The
following discussion and analysis of compensation arrangements should be read with the compensation tables and related disclosures
set forth below.
Executive Summary
This compensation discussion
and analysis provides an overview and analysis of (i) the elements comprising the compensation programs at HHI, Metaldyne, or Grede,
as applicable, for our named executive officers, which we refer to in this compensation discussion and analysis as our named executive
officers (“NEOs”), (ii) the compensation decisions made under such programs and reflected in the executive compensation
tables that follow this compensation discussion and analysis, and (iii) the material factors considered in making those decisions.
In addition, this compensation discussion and analysis includes a discussion of our compensation program for NEOs after the Combination.
Our NEOs
Our NEOs were executive
officers at HHI, Metaldyne, or Grede prior to the Combination. We determined the NEOs based on their position after the Combination
and their compensation for the year ended December 31, 2014 from HHI, Metaldyne, or Grede, as applicable. For the year ended December
31, 2014, our NEOs were:
|
|
|
|
• |
George Thanopoulos, our Chief
Executive Officer, and President & CEO of HHI. In 2014, Mr. Thanopoulos served as the Chief Executive Officer of HHI
through August 3, 2014. On August 4, 2014, effective with the Combination, Mr. Thanopoulos was named Chief Executive Officer
of MPG, in addition to his role as President & CEO of HHI. |
|
|
|
|
• |
Mark Blaufuss, our Chief Financial
Officer and Treasurer. In 2014, Mr. Blaufuss served as the Chief Financial Officer of Metaldyne through August 3, 2014. On
August 4, 2014, effective with the Combination, Mr. Blaufuss was named Chief Financial Officer and Treasurer of
MPG. |
|
|
|
|
• |
Thomas Amato, our Co-President, and
President & CEO of Metaldyne. In 2014, Mr. Amato served as the President and Chief Executive Officer of Metaldyne through
August 3, 2014. On August 4, 2014, effective with the Combination, Mr. Amato was named Co-President of MPG, in addition to
his role as President & CEO Metaldyne. |
|
|
|
|
• |
Douglas Grimm, our Co-President, and
President & CEO of Grede. In 2014, Mr. Grimm served as the Chairman, President and Chief Executive Officer of Grede
through August 3, 2014. On August 4, 2014, effective with the Combination, Mr. Grimm was named Co-President of MPG, in
addition to his role as and President & CEO of Grede. |
Compensation Philosophy
In connection
with the Combination, we reviewed and aligned the existing compensation programs of HHI,
Metaldyne, and Grede
into our executive compensation program. Consistent with the existing programs, our overall post-Combination compensation program
is structured to attract, motivate, and retain highly qualified executives by paying them competitively, with variable components
designed to pay them based on results that are consistent with our performance on both a short- and long-term basis and on their
contribution to that success. In addition, this program is structured to ensure that a significant portion of compensation opportunity
is related to specific, measurable factors that directly and indirectly influence shareholder value. Accordingly, we continue to
set goals designed to link each executive officer’s compensation to our performance and the executive officer’s own
performance.
Compensation Elements
Our compensation for
our NEOs consists primarily of the elements, and their corresponding primary objectives, identified in the following table.
|
|
|
Compensation
Element |
|
Primary
Objective |
Base salary |
|
To recognize performance of job responsibilities and to attract and retain individuals with superior talent. |
|
|
|
Annual performance-based compensation |
|
To promote our near-term performance objectives across the entire workforce and reward individual contributions to the achievement of those objectives. |
|
|
|
Long-term equity incentive awards |
|
To emphasize our long-term performance objectives, encourage the maximization of shareholder value and retain key executives by providing an opportunity to own our stock. |
|
|
|
Severance and change in control benefits |
|
To encourage the continued attention and dedication of key individuals when considering strategic alternatives. |
|
|
|
Retirement savings (401(k)) plans |
|
To provide an opportunity for tax-efficient savings and long-term financial security. |
|
|
|
Other elements of compensation and perquisites |
|
To attract and retain talented executives in a cost-efficient manner by providing health, dental, disability and life insurance as well as other benefits with high perceived values at a relatively low cost to us. |
Determination of Compensation
Awards
The post-Combination
executive compensation program is based on the existing programs at HHI, Metaldyne, and Grede and the existing employment agreements
for our NEOs, which were revised to reflect the impact of the Combination and changes to responsibilities, as well as to harmonize
common elements of each of the senior executive’s employment arrangements, such as severance, change of control, and other
provisions. We did not use benchmarking or a compensation consultant to establish the terms of the revised employment agreements.
We relied upon our judgment and general industry knowledge of management and our Board of Directors obtained through years of service
with comparably sized companies in our industry to determine the terms of our executive compensation program, as well as the relative
roles of the executives and any additional responsibilities to be undertaken by the executives.
Compensation Committee
The Compensation Committee
oversees our executive compensation program and determines the compensation of our executive officers, including our NEOs, and
is charged with reviewing executive officer compensation policies and practices to ensure adherence to our compensation philosophies.
In addition, the Compensation Committee is charged with ensuring that the total compensation paid to our executive officers is
fair, reasonable, and competitive, taking into account our position within our industry, including our comparative performance,
and our NEOs’ level of expertise and experience in their positions. The Compensation Committee has primary responsibility
for (i) overseeing our executive compensation policies and practices; (ii) reviewing and determining the compensation of our executive
officers (including our Chief Executive Officer and other NEOs), including (a) determining base salary and target bonus levels
(representing the bonus that may be awarded expressed as a percentage of base salary or as a dollar amount for the year), (b) assessing
the performance of the Chief Executive Officer and other NEOs for each applicable performance period, (c) determining the awards
to be paid to our Chief Executive Officer and other NEOs under our annual performance-based compensation program for each year,
and (d) making equity award grants under our 2014 Equity Incentive Plan (defined below); (iii) providing oversight of our compensation
policies, plans, and benefit programs including reviewing, approving, and administering all compensation and employee benefit plans,
policies, and programs; and (iv) producing, approving, and recommending to the Board of Directors for approval reports on compensation
matters required to be included in our annual proxy statement or annual report.
In determining compensation
levels for our NEOs, the Compensation Committee considers each NEO’s unique position and responsibility and relies upon the
judgment and experience of its members, including their review of competitive compensation levels in our industry. We believe that
executive officer base salaries should be competitive with the salaries of executive officers in similar positions and with similar
responsibilities in our marketplace and adjusted for financial and operating performance, each executive’s level of experience,
and each executive’s current and expected future contributions to our results. In this regard, each NEO’s current and
prior compensation is considered as a reference point against which determinations are made as to whether increases are appropriate
to retain the NEO in light of competition or in order to provide continuing performance incentives.
Role of Chief Executive
Officer
To aid the Compensation
Committee in making its determinations, the Chief Executive Officer will provide recommendations at least annually to the Compensation
Committee regarding the compensation of executive officers other than him. The performance of our executive officers, including
the Chief Executive Officer, will be reviewed at least annually by the Compensation Committee to determine each executive officer’s
compensation.
Use of Peer Group
Data
In making compensation
determinations in connection with the Combination, we did not use benchmarking or compensation consultants, directly compare compensation
levels with any other companies, or refer to any specific compensation survey or other data. The Compensation Committee may use
compensation consultants and peer group data in making future compensation decisions, including studies on compensation structure
and banding as well as our long-term incentive plan in comparison to our peers. Our Compensation Committee has established the
following peer group with which we compete for talent to assist with external benchmarking and to assist the committee in determining
total compensation for executive officers:
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Ametek |
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Allison Transmission |
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American Axle |
BorgWarner |
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Briggs & Stratton |
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Brunswick Corp |
Cooper Standard |
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Dana Holding |
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Delphi Automotive |
ITT Corp |
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Linamar Corp |
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Snap-on Inc. |
Terex Corp |
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Timken Co. |
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Titan International |
TRW Automotive |
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Valmont Industries |
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WABCO Holdings |
Compensation Programs
The 2014 compensation
for each of our NEOs was determined in accordance with the terms of their respective employment agreements or offer letter and
was overseen by the respective compensation committees or boards of directors, as applicable, of HHI, Metaldyne, and Grede. The
compensation for Mr. Thanopoulos and Mr. Blaufuss in 2014 consisted of base salary, non-equity incentive plan compensation, equity
compensation, and other compensation (including, among other items, 401(k) savings plan match). The compensation for Mr. Amato
in 2014 consisted of base salary, non-equity incentive plan compensation, equity compensation, and other compensation (including,
among other items, a flexible allowance plan and 401(k) savings plan match). The compensation for Mr. Grimm in 2014 consisted of
a base salary, non-equity compensation, and other compensation (including, among other items, a flexible allowance plan, car allowance,
and 401(k) savings plan match). Each of the elements of the 2014 compensation for the NEOs is described below.
Base Salary
Each of our NEOs is
party to an employment agreement that establishes a minimum base salary (as may be adjusted up but not down by our Board of Directors
from time to time). Base salaries for our executive officers were generally set at levels deemed necessary to attract and retain
individuals with superior talent while taking into account the total compensation package provided to them in their employment
agreements. Each year, base salaries will be adjusted, subject to the terms and conditions of their respective employment agreements,
based upon the scope of responsibility and demonstrated proficiency of the NEOs as assessed by the Compensation Committee.
Each of HHI, Metaldyne,
and Grede paid base compensation commensurate with the position and responsibilities of the NEO. The applicable 2014 base salary
for each of our NEOs was determined in accordance with their respective employment agreements and reviewed as part of the Combination.
The following table sets forth the 2014 base salaries for our NEOs.
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2014 |
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Name |
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Principal
Position |
|
Base
Salary(1) |
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George Thanopoulos |
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Chief Executive Officer of MPG, and President & CEO of HHI |
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$874,182 |
(2) |
Mark Blaufuss |
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Chief Financial Officer and Treasurer of MPG |
|
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$600,000 |
(3) |
Thomas Amato |
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Co-President of MPG and President & CEO of Metaldyne |
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$750,000 |
(4) |
Douglas Grimm |
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Co-President of MPG and President & CEO of Grede |
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$750,000 |
(5) |
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(1) |
Represents
the base salary of our NEOs, as paid by HHI, Metaldyne, or Grede, as applicable, in 2014. |
|
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(2) |
The base salary of Mr. Thanopoulos
was $848,720 for the period from January 1, 2014 through June 30, 2014. It was increased to $874,182 effective as of July
1, 2014. |
|
|
(3) |
The base
salary of Mr. Blaufuss was $337,594 for the period from January 1, 2014 through June 30, 2014. It was increased to $600,000
effective as of July 1, 2014. |
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(4) |
The base
salary of Mr. Amato was $533,820 for the period from January 1, 2014 through June 30, 2014. It was increased to $750,000 effective
as of July 1, 2014. |
|
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(5) |
The base
salary of Mr. Grimm was $590,000 for the period from January 1, 2014 through June 30, 2014. It was increased to $750,000 effective
as of July 1, 2014. |
2014 Performance-based
Compensation
In 2014, each of HHI,
Metaldyne, and Grede had a performance-based compensation component to their executive compensation plan to link a portion of the
NEO’s compensation to the respective company’s performance and/or the individual’s performance. Set forth below
is a description of performance-based compensation for each of the NEOs.
In accordance with HHI’s
performance-based compensation plan, HHI paid each of its executive officers an award based on HHI’s adjusted EBITDA (earnings
before interest, taxes, depreciation and amortization and various non-cash or one-time adjustments) and individual performance
objectives. Each HHI executive officer was entitled to receive a target award based on a percentage of their base salary. Seventy-five
percent of the award was based on HHI’s adjusted EBITDA and 25% of the award was based on individual performance objectives.
To receive an award, HHI’s adjusted EBITDA had to exceed 80% of budgeted adjusted EBITDA and/or the executive officer had
to meet his or her individual performance objectives. To receive the target award, HHI had to meet or exceed its budgeted adjusted
EBITDA, which was $186.9 million for 2014, and the executive officer had to meet his or her individual performance objectives.
In the event HHI’s adjusted EBITDA exceeded budgeted adjusted EBITDA and individual performance objectives were met, an executive
officer would be entitled to receive an award in excess of his or her target award. The target award for Mr. Thanopoulos was 100%
of his base salary. Since HHI’s adjusted EBITDA was 104% of the pre-determined target and he met his individual objectives,
Mr. Thanopoulos received a cash award in the amount of $1,032,819, which was equal to 118% of his target award.
In accordance with Metaldyne’s
performance-based compensation plan, Metaldyne paid each of its executive officers an award based on Metaldyne’s adjusted
EBITDA (earnings before interest, taxes, depreciation, and amortization and various non-cash or one-time adjustments) and Metaldyne’s
operating cash flow generation (adjusted EBITDA less capital expenditures plus/minus the change in operating working capital).
Each Metaldyne executive officer was entitled to receive a target award based on a percentage of his or her base salary. Fifty
percent of the award was based on Metaldyne’s adjusted EBITDA and 50% of the award was based on Metaldyne’s operating
cash flow generation. To receive an award, Metaldyne had to achieve 90% of budgeted adjusted EBITDA and 90% of budgeted operating
cash flow generation. To receive the target award, Metaldyne had to achieve 100% of both budgeted adjusted EBITDA and budgeted
operating cash flow generation which were $195 million and $110.5 million, respectively, for 2014. In the event Metaldyne’s
adjusted EBITDA and operating cash flow generation exceeded the budgeted amounts, an executive officer was entitled to receive
an award in excess of the target award up to a maximum of 135% of the target award. The target awards for Mr. Blaufuss and Mr.
Amato were 60% and 100% of their base salary, respectively. Since Metaldyne’s budgeted adjusted EBITDA and operating cash
flow generation were, respectively, 104% and 116% of the pre-determined targets, Mr. Blaufuss and Mr. Amato received cash awards
in the amounts of $396,000 and $825,000, respectively, in each case equal to 110% of the target award.
In accordance with Grede’s
performance-based compensation plan, Grede paid each of its executive officers an award based on Grede’s adjusted EBITDA
(earnings before interest, taxes, depreciation and amortization and various non-cash or one-time adjustments), Grede’s adjusted
free cash flow generation and individual performance objectives. Each executive officer was entitled to receive a target award
based on a percentage of base salary with 50% of the award was based on Grede’s adjusted EBITDA, 25% of the award was based
on Grede’s adjusted free cash flow generation and 25% of the award was based on individual performance objectives. To receive
an award, Grede’s adjusted EBITDA had to exceed 80% of budgeted adjusted EBITDA. To receive the target award, Grede had to
meet or exceed its budgeted adjusted EBITDA and adjusted free cash flow, which were $159.3 million and $118 million, respectively,
for 2014, and the executive officer had to meet his or her individual performance objectives. In the event Grede’s adjusted
EBITDA and adjusted free cash flow exceeded budgeted adjusted EBITDA and adjusted free cash flow and individual performance objectives
were met, an executive officer would be entitled to receive an award in excess of his or her target award up to a maximum of 200%
of base salary. The target award for Mr. Grimm was 110% of his base salary. Since Grede’s adjusted EBITDA and adjusted free
cash flow were each 94% of the pre-determined targets and he met his individual objectives, Mr. Grimm received a cash award in
the amount of $679,196, which was equal to 82% of his target award.
2015 Performance-based
Compensation
For 2015, the Compensation
Committee structured our performance-based compensation program in a manner that was consistent with the existing programs to reward
executive officers based on MPG performance and the performance of the individual NEOs relative to their individual performance
objectives. This allows all executive officers to receive incentive bonus compensation in the event certain specified corporate
performance measures are achieved.
Under the MPG performance-based
compensation plan effective January 1, 2015, each of our executive officers will earn an award based on MPG Adjusted EBITDA, MPG
Adjusted EBITDA less capital expenditures, and individual performance objectives. Each NEO will be entitled to receive a target
award based on a percentage of his base salary in which 50% of the award will be based on
MPG Adjusted EBITDA, 25% of the award
will be based on MPG Adjusted EBITDA less capital expenditures, and 25% of the award will be based on individual performance objectives.
To receive an award, our Adjusted EBITDA has to meet or exceed 90% of budgeted Adjusted EBITDA. To receive the target award, we
have to meet or exceed our budgeted Adjusted EBITDA and Adjusted EBITDA less capital expenditures, and the executive officer has
to meet their individual performance objectives. In the event our Adjusted EBITDA and Adjusted EBITDA less capital expenditures
exceed the budget amounts and the NEOs meet their performance objectives, the executive officers would be entitled to receive an
award in excess of their target award up to a maximum of 200% of their target award. The target awards for Mr. Thanopoulos, Mr.
Blaufuss, Mr. Amato, and Mr. Grimm will be 100%, 60%, 100%, and 110%, respectively, of their base salary.
Long-Term Equity Incentive
Awards
We believe that equity
ownership provides our NEOs with a strong incentive to increase our value and aligns the interests of our NEOs with the interests
of our shareholders. While we do not have a formal policy requiring our officers and directors to own our stock, we may adopt one
in the future. However, our NEOs, along with other key employees, were granted stock options and other equity awards at the time
of the acquisition of each of HHI, Metaldyne, and Grede by American Securities, as applicable, which were converted into options
to purchase our common stock in the Combination. In addition, we granted additional options in connection with the Combination
under our newly adopted equity incentive plan, which we refer to as the Metaldyne Performance Group Inc. 2014 Equity Incentive
Plan. The 2014 Equity Incentive Plan is discussed in more detail under “2014 Equity Incentive Plan” below. Our executive
officers will be eligible to receive additional awards of stock options or other equity or equity-based awards under our 2014 Equity
Incentive Plan at the discretion of the Compensation Committee, including, in 2015, grants of restricted shares of our common stock
in an amount equal to $750,000 in the aggregate at the date of grant and options to purchase our common stock in an amount equal
to $750,000 in the aggregate at the date of grant, each vesting over a three-year period from the date of grant. Mr. Thanopoulos,
Mr. Blaufuss, Mr. Amato, and Mr. Grimm were each party to a letter agreement entitling them to a grant of restricted shares of
our common stock under the 2014 Equity Incentive Plan. These awards were granted on December 11, 2014, the date of the pricing
of the IPO, and vest 25% upon the first anniversary of the grant date and 75% upon the second anniversary of the grant date. Under
the agreements, Mr. Thanopoulos, Mr. Amato, and Mr. Grimm were granted restricted stock with a fair market value of $2.0 million,
and Mr. Blaufuss was granted restricted stock with a fair market value of $1.25 million, in each case, based on the $15.00 offering
price per share of MPG common stock.
Generally, our existing
stock options have vesting schedules that are designed to encourage an optionee’s continued employment and option prices
that are designed to reward an optionee for our performance. Options generally expire ten years from the date of the grant and
vest in three to five equal annual installments following the date of grant, subject to the optionee’s continued employment
on each applicable vesting date.
In connection with the
Combination, we assumed the ASP MD Holdings, Inc. Stock Option Plan previously sponsored by Metaldyne (the “Metaldyne Plan”),
the ASP HHI Holdings, Inc. Stock Option Plan, previously sponsored by HHI (the “HHI Plan”), and the ASP Grede Intermediate
Holdings LLC 2014 Unit Option Plan, previously sponsored by Grede (the “Grede Plan” and, together with the Metaldyne
Plan and the HHI Plan, the “Assumed Plans”), together with all stock options to purchase shares of common stock of
Metaldyne or HHI and options to purchase units of Grede issued and outstanding under the Assumed Plans as of the time of the Combination,
which options were converted in accordance with the terms of the Assumed Plans and the Merger Agreement into options to acquire
shares of our common stock (the “Assumed Options”). Following our assumption of the Assumed Plans and the Assumed Options,
we entered into new award agreements evidencing the Assumed Options which eliminated any performance-based vesting provisions and
such options are now solely subject to time-vesting. Prior to the Combination, Mr. Thanopoulos held options to purchase 110,948
shares of common stock of HHI with a strike price of $27.61 which were converted to options under the HHI Plan (split adjusted)
to purchase 926,870 shares of our common stock with a strike price of $3.31. These options vested with respect to 20% of the shares
subject to the option on each of December 6, 2013 and 2014 and shall vest in respect of another 20% on each of December 6, 2015,
2016 and 2017, subject to continued employment on such dates. Mr. Blaufuss held options to purchase 221,597 shares of common stock
of Metaldyne with a strike price of $5.77 which were converted to options under the Metaldyne Plan (split adjusted) to purchase
237,095 shares of our common stock with a strike price of $5.40. These options vested with respect to 20% of the shares subject
to the option on February 19, 2014 and shall vest in respect of another 20% on each of February 19, 2015, 2016, 2017 and 2018,
subject to continued employment on such dates. Mr. Amato held options to purchase 576,153 shares of common stock of Metaldyne with
a strike price of $5.77 and 35,000 shares of common stock of Metaldyne with a strike price of $15.77 which were converted to options
under the Metaldyne Plan (split adjusted) to purchase 616,450 shares of our common stock with a strike price of $5.40 and 37,445
shares of our common stock with a strike price of $14.75. Both of these options vested with respect to 20% of the shares subject
to the options on February 19, 2014 and each of which shall vest in respect of another 20% on each of February 19, 2015, 2016,
2017, and 2018, subject to continued employment on such dates. Mr. Grimm held options to purchase 9,049 units of Grede with a strike
price of $1,000 which were converted to options under the Grede Plan (split adjusted) to purchase 485,205 shares of our common
stock with a strike price of $18.66 which vest with respect to 100% of the shares subject to the option on June 2, 2021, subject
to continued employment.
In connection with the
Combination, we adopted the 2014 Equity Incentive Plan providing for the grant of options, restricted stock awards, restricted
stock units, and other equity-based compensation awards. As a holder of options to acquire shares of common stock of HHI, Mr. Thanopoulos
received an option granted under the 2014 Equity Incentive Plan (split adjusted) to acquire 424,950 shares of our common stock
at a strike price of $20, with respect to which 253,125 of the shares subject to option were fully vested upon grant and 171,825
of the shares subject to option. These options are 20% vested upon grant and shall vest in respect of another 20% on each of December
6, 2014, 2015, 2016, and 2017, subject to continued employment on such dates. In addition, Mr. Thanopoulos, Mr. Blaufuss, Mr. Amato,
and Mr. Grimm were also granted fully vested options under the 2014 Equity Incentive Plan (split adjusted) to purchase 139,220,
3,935, 26,285, and 9,385 shares of our common stock, respectively, at an exercise price of $20 per share, which amounts were equal
to 10% of the number of shares of our common stock owned by such individual. In addition, in connection with the Combination, Mr.
Thanopoulos, Mr. Blaufuss, Mr. Amato, and Mr. Grimm were granted options under the 2014 Equity Incentive Plan (split adjusted)
to purchase 135,185, 23,710, 65,390, and 48,875 shares of our common stock, respectively, at an exercise price of $20 per share,
which amounts were equal to 10% of the number of shares of our common stock held under option by such individual, which options
vest one-third on each of August 4, 2015, 2016 and 2017.
All of the foregoing
options received by Mr. Thanopoulos, Mr. Blaufuss, Mr. Amato, and Mr. Grimm provide for full vesting upon a “transaction”
as defined in their individual award agreements and the Assumed Plans, subject to continued employment through consummation of
the transaction. The definition of “transaction” under such agreements and plans generally means (i) the sale of all,
or substantially all, of our consolidated assets, including, without limitation, a sale of all or substantially all of our assets
or the assets of any of our subsidiaries whose assets constitute all or substantially all of our consolidated assets (or the sale
of a majority of the outstanding shares of voting capital stock of any subsidiary or subsidiaries whose consolidated assets so
constitute), in any single transaction or series of related transactions; (ii) the sale of shares of our common stock by American
Securities or its affiliates, which results in American Securities and its affiliates not having the power to elect or appoint
a majority of the members of the board; or (iii) any merger or consolidation of us with or into another corporation or entity unless,
after giving effect to such merger or consolidation, the holders of our voting securities (on a fully-diluted basis immediately
prior to the merger or consolidation), own voting securities (on a fully-diluted basis) of the surviving or resulting corporation
or entity representing a majority of the outstanding voting power to elect directors of the surviving or resulting corporation
or entity in substantially the same proportions that they held their shares prior to such merger. In addition, options granted
to any employees under the 2014 Equity Incentive Plan or the Assumed Plans are subject to full vesting upon a “transaction.”
Also, the Assumed Options received by Mr. Blaufuss and Mr. Amato provide that if an operating division of the Company or an affiliate
is sold, our Board of Directors may, in its discretion, accelerate the vesting of some or all of such executive’s options
if the executive’s employment is transferred in connection with such sale.
Retirement Benefits
Each of HHI, Metaldyne,
and Grede offers their executive officers retirement benefits through 401(k) plans, which provide tax-efficient retirement savings.
Each of HHI, Metaldyne, and Grede matches a portion of the pre-tax dollar contributions of the executive officer up to a pre-set
limit, subject to Internal Revenue Code of 1986, as amended (the “Code”) contribution limits. Matching contributions
are immediately vested. In 2014, Mr. Thanopoulos, Mr. Blaufuss, Mr. Amato, and Mr. Grimm received matching contributions of $6,120,
$7,800, $6,697, and $5,200, respectively.
Perquisites and Other
Compensation
We provide our executive
officers, including our NEOs, with certain personal benefits and perquisites, which we do not consider to be a significant component
of executive compensation but which we recognize are an important factor in attracting and retaining talented executives. Executive
officers are eligible under the same plans as all other employees for medical, dental, disability, and life insurance. We provide
higher levels of long-term disability and life insurance coverages to our executive officers than is generally available to our
non-executive employees. We provide these supplemental benefits to our executive officers due to the relatively low cost of such
benefits and the value they provide in assisting us in attracting and retaining talented executives.
Each of Metaldyne and
Grede also offers certain of its executive officers other compensation and perquisites in order to better enable the companies
to attract and retain talented employees to key positions by providing additional benefits with high perceived values at relatively
low cost to us. Metaldyne and Grede provided Mr. Amato and Mr. Grimm with a flexible allowance plan that provided reimbursement
for certain designated items (including, among other items, supplemental life insurance, liability insurance, club membership,
financial and estate planning, and income tax preparation) as well as a tax gross up for certain reimbursements. Mr. Amato received
$25,489 from Metaldyne under this program and Mr. Grimm received $43,483 executive flex and $9,450 for executive life from Grede
under this program.
Employment Agreements
and Severance Benefits
In connection with the
Combination, we entered into new employment agreements with our NEOs. We have described the material terms of these agreements
below. These employment agreements establish the terms and conditions of such NEO’s employment
relationship with us. These
agreements generally provide that such NEO receive a minimum base salary and be eligible to receive an annual bonus, but do not
otherwise provide for annual salary or bonus increases or other compensation increases. In addition, these employment agreements
provide for benefits upon termination of employment in certain circumstances.
We entered into an employment
agreement with George Thanopoulos as of August 4, 2014. Mr. Thanopoulos’ contract period is valid through the earliest of
(i) his resignation, (ii) his death or disability, and (iii) his termination by us at any time for cause or without cause. The agreement
provides that Mr. Thanopoulos will receive an initial annualized base salary of $874,182. The Board of Directors has discretion
to increase (but not reduce) the base salary from time to time. The agreement also provides for an annual cash bonus with a target
level of 100% of his base salary, as determined by the Board of Directors based on performance objectives established with respect
to that particular year. Mr. Thanopoulos is eligible to participate in one or more of our equity incentive plans pursuant to the
terms and conditions of such plans. If we terminate Mr. Thanopoulos’ employment at any time without cause (as defined in
the agreement) or Mr. Thanopoulos resigns with good reason (as defined in the agreement), we must provide Mr. Thanopoulos with
the following, subject to his execution of a release of claims and his continued compliance with the restrictive covenants set
forth in his employment agreement: (a) an amount equal to his monthly base salary rate paid monthly for a period of 24 months (or
12 months if such termination occurs on or after August 28, 2015), (b) continued group medical coverage, paid for by the Company,
for a period of 24 months (or 12 months if such termination occurs on or after August 28, 2015), ceasing earlier if he ceases to
be eligible for COBRA continuation coverage or obtains other employment that offers group health benefits, and (c) a pro rata portion
of the annual bonus he otherwise would have received for the fiscal year in which he was terminated.
We entered into an employment
agreement with Mark Blaufuss as of August 4, 2014. Mr. Blaufuss’ contract period is valid through the earliest of (i) his
resignation, (ii) his death or disability, and (iii) his termination by us at any time for cause or without cause. The agreement
provides that Mr. Blaufuss will receive an initial annualized base salary of $600,000. The Board of Directors has discretion to
increase (but not reduce) the base salary from time to time. The agreement also provides for an annual cash bonus with a target
level of 60% of his base salary, as determined by the Board of Directors based on performance objectives established with respect
to that particular year. Mr. Blaufuss is eligible to participate in one or more of our equity incentive plans pursuant to the terms
and conditions of such plans. If we terminate Mr. Blaufuss’ employment at any time without cause (as defined in the agreement)
or Mr. Blaufuss resigns with good reason (as defined in the agreement) we must provide Mr. Blaufuss with the following, subject
to his execution of a release of claims and his continued compliance with the restrictive covenants set forth in his employment
agreement: (a) an amount equal to his monthly base salary rate paid monthly for a period of 18 months, (b) continued group medical
coverage for a period of 18 months at the same cost as he would have paid as an active participant in the Company’s group
health plan, ceasing earlier if he ceases to be eligible for COBRA continuation coverage or obtains other employment that offers
group health benefits, and (c) a pro rata portion of the annual bonus he otherwise would have received for the fiscal year in which
he was terminated.
We entered into an employment
agreement with Thomas Amato as of August 4, 2014. Mr. Amato’s contract period is valid through the earliest of (i) his resignation,
(ii) his death or disability, and (iii) his termination by us at any time for cause or without cause. The agreement provides that
Mr. Amato will receive an initial annualized base salary of $750,000. The Board of Directors has discretion to increase (but not
reduce) the base salary from time to time. The agreement also provides for an annual cash bonus with a target level of 100% of
his base salary, as determined by the Board of Directors based on performance objectives established with respect to that particular
year. Mr. Amato receives an executive flex spending allowance and is eligible to participate in one or more of our equity incentive
plans pursuant to the terms and conditions of such plans. If we terminate Mr. Amato’s employment at any time without cause
(as defined in the agreement), we must provide Mr. Amato with the following, subject to his execution of a release of claims and
his continued compliance with the restrictive covenants set forth in his employment agreement: (a) an amount equal to his monthly
base salary rate paid monthly for a period of 18 months, (b) continued group medical coverage for a period of 18 months at the
same cost as he would have paid as an active participant in the Company’s group health plan, ceasing earlier if he ceases
to be eligible for COBRA continuation coverage or obtains other employment that offers group health benefits, and (c) a pro rata
portion of the annual bonus he otherwise would have received for the fiscal year in which he was terminated.
We entered into an employment
agreement with Douglas Grimm as of August 4, 2014. Mr. Grimm’s contract period is valid through the earliest of (i) his resignation,
(ii) his death or disability, and (iii) his termination by us at any time for cause or without cause. The agreement provides that
Mr. Grimm will receive an initial annualized base salary of $750,000. The Board of Directors has discretion to increase (but not
reduce) the base salary from time to time. The agreement also provides for an annual cash bonus with a target level of 110% of
his base salary, as determined by the Board of Directors based on performance objectives established with respect to that particular
year. Mr. Grimm is provided with life insurance coverage carrying a death benefit at least equal to five times his annualized base
salary, a cash automobile allowance of $850 per month and an annual perquisite allowance of $25,000, and is eligible to participate
in one or more of our equity incentive plans, pursuant to the terms of such plans. If we terminate Mr. Grimm’s employment
at any time without cause (as defined in the agreement) or Mr. Grimm resigns with good reason (as defined in the agreement), we
must provide Mr. Grimm with the following, subject to his execution of a release of claims and his continued compliance with the
restrictive covenants set forth in his employment agreement: (a) an amount, paid in equal monthly installments over the 18 months
following his termination, equal to the sum of (1) a prorated portion of his target annual bonus for the year of termination based
on the number of days
that have elapsed during the year of termination, plus (2) 1.5 times the sum of his annualized base salary
rate and his target annual bonus, (b) continued group medical coverage for a period of 18 months at the same cost as he would have
paid as an active participant in the Company’s group health plan, ceasing earlier if he ceases to be eligible for COBRA continuation
coverage or obtains other employment that offers group health benefits, and (c) outplacement services for a period of six months
in an amount not to exceed $40,000 in the aggregate.
For purposes of each
of the employment agreements with our NEOs, “cause” means that the named executive officer has:
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continually failed to perform in a material manner or was materially negligent or committed willful misconduct in the performance of the executive’s duties to us or our subsidiaries for a period of 30 days after written notice was delivered to the executive by or on behalf of our Board of Directors specifying the manner in which the executive failed to perform (and which such failure or other performance default remains uncured after such time); |
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materially breached any material provisions in any written agreement between the executive and us or one of our subsidiaries for a period of 30 days after written notice was delivered to the executive by or on behalf of our Board of Directors specifying the manner in which the executive breached (and which breach remains uncured after such time); |
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• |
developed or pursued interests materially adverse to us or any of our subsidiaries or willfully failed to observe any of our or any of our subsidiaries’ material written policies applicable to the executive for a period of 30 days after written notice was delivered to the executive by or on behalf of our Board of Directors specifying the manner in which the executive failed to observe (and which failure remains uncured after such time); |
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• |
materially breached any non-competition, non-solicitation, or confidentiality agreement or covenant with us or any applicable subsidiary; |
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• |
engaged in theft, embezzlement, fraud, or misappropriation of any of our or any of our subsidiaries’ property; or |
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• |
been convicted of or entered a guilty or no contest plea with respect to a felony (other than a vehicular felony or through vicarious liability not related to us or any of our affiliates) or a misdemeanor involving moral turpitude or fraud. |
For purposes of each
of the employment agreements with our NEOs, “good reason” means the executive’s resignation from employment with
us as a result of one or more of the following reasons, provided, in each case, that the executive must deliver written notice
of resignation to us within 30 days after the occurrence of any such event, and if we do not cure the breach within 30 days of
receipt of such notice, the executive actually terminates his employment within 60 days following the expiration of such cure period:
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• |
we reduce the amount of the NEO’s base salary; |
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• |
we change the executive officer’s titles or reduce the NEO’s responsibilities materially inconsistent with the positions the executive then holds; |
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• |
we change the NEO’s place of work to a location more than 35 miles from the executive’s present place of work, other than any relocation to the current business headquarters of any of the Metaldyne, HHI, or Grede businesses, or to any location within five miles of any such headquarters; or |
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• |
a successor to substantially all of our business and/or assets does not expressly assume and agree to perform such employment agreement and provide the executive with the same or comparable position, duties, base salary, target annual bonus and benefits under such agreement. |
The options and restricted
stock awards granted to each NEO fully vest upon a termination of employment with us by reason of death or “disability,”
termination by us without “cause,” or such individual’s resignation for “good reason,” as those terms
are defined in their individual award agreements.
Compensation Policies
and Practices as They Relate to Risk Management
The Compensation
Committee has evaluated the policies and practices of compensating our employees in light of the relevant factors, including the
following:
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• |
allocation of compensation between cash and equity awards and the focus on stock-based compensation, including options and stock awards generally vesting over a period of years, thereby mitigating against short-term risk taking; |
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• |
performance-based compensation is not based solely on our performance, but also requires achievement of individual performance objectives; and |
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• |
financial performance targets of our performance-based compensation plan are budgeted objectives that are reviewed and approved by our Board of Directors and/or our Compensation Committee. |
Based on such evaluation,
the Compensation Committee has determined that our policies and practices do not incentivize taking unnecessary or excessive risks
and are not reasonably likely to have a material adverse effect on us.
IRS Code Section 162(m)
Section 162(m) of the
Code generally disallows publicly held companies a tax deduction for compensation in excess of $1,000,000 paid to their chief executive
officer and the three other most highly compensated executive officers (other than the chief financial officer) unless such compensation
qualifies for an exemption for certain compensation that is based on performance. Section 162(m) of the Code provides transition
relief for privately held companies that become publicly held, pursuant to which the foregoing deduction limit does not apply to
any remuneration paid pursuant to compensation plans or agreements in existence during the period in which the corporation was
not publicly held if, in connection with an initial public offering, the prospectus accompanying the initial public offering discloses
information concerning those plans or agreements that satisfies all applicable securities laws then in effect. If the transition
requirements are met in connection with an initial public offering, the transition relief continues until the earliest of (i) the
expiration of the plan or agreement, (ii) the material modification of the plan or agreement, (iii) the issuance of all employer
stock and other compensation that has been allocated under the plan, or (iv) the first meeting of the shareholders at which directors
are to be elected that occurs after the close of the third calendar year following the calendar year in which the initial public
offering occurs. Our intent generally is to design and administer executive compensation programs in a manner that will preserve
the deductibility of compensation paid to our executive officers, and we believe that a substantial portion of our current executive
compensation program will satisfy the requirements for exemption from the $1,000,000 deduction limitation, to the extent applicable.
However, we reserve the right to design programs that recognize a full range of performance criteria important to our success,
even where the compensation paid under such programs may not be deductible. The Compensation Committee will monitor the tax and
other consequences of our executive compensation program as part of its primary objective of ensuring that compensation paid to
our executive officers is reasonable, performance based and consistent with our goals and the goals of our shareholders.
COMPENSATION COMMITTEE
REPORT
The Compensation Committee
of the Board of Directors (hereafter referred to as the “Committee”) oversees the Company’s programs for compensating
executive officers and other key management employees, including the administration of the Company’s equity-based compensation
plans, and approves the salaries, bonuses, and other awards to executive officers. The Committee has reviewed and discussed the
Compensation Discussion and Analysis with management of the Company and, based on such review and discussion, the Committee has
recommended to the Board of Directors that the Compensation Discussion and Analysis so stated be included in this proxy statement.
|
Compensation Committee:
Kevin Penn, Chairman
Loren Easton
William Jackson |
EXECUTIVE COMPENSATION
Summary Compensation
Table for 2014
The following table
sets forth certain information with respect to the compensation paid to our NEOs during the years ended December 31, 2013 and 2014.
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Name
and Principal Position |
|
Year |
|
|
Salary
($) |
|
|
Bonus
($)(5) |
|
|
Stock
Awards
($)(6) |
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|
Option
Awards
($)(1) |
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|
Non-equity
Incentive Plan
Compensation
($)(7) |
|
|
Change
in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) |
|
|
All
Other
Compensation
($)(8) |
|
|
Total
($) |
|
George Thanopoulos
Chief Executive Officer and President of MPG
& CEO of HHI(2) |
|
|
2014
2013 |
|
|
|
857,644
836,360 |
|
|
|
—
|
|
|
|
2,000,010 |
|
|
|
7,926,524 |
|
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|
1,030,970
1,384,739 |
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|
—
|
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639,628
6,120 |
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12,454,776
2,227,219 |
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Mark Blaufuss
Chief Financial Officer of MPG(3) |
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2014
2013 |
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468,797
328,343 |
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— |
|
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|
1,250,010 |
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|
327,054
1,247,593 |
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396,000
224,821 |
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|
|
— |
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|
7,800
7,650 |
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2,449,661
1,808,407 |
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Thomas Amato
Co-President of MPG and President & CEO
of Metaldyne(3) |
|
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2014
2013 |
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|
658,539
533,820 |
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|
|
— |
|
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|
2,000,010 |
|
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|
1,072,329
3,349,442 |
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825,000
603,216 |
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|
|
— |
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32,185
26,379 |
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|
4,588,063
4,512,857 |
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Douglas Grimm
Co-President of MPG and President & CEO
of Grede(4) |
|
|
2014
2013 |
|
|
|
670,004
590,000 |
|
|
|
—
|
|
|
|
2,000,010 |
|
|
|
6,830,930 |
|
|
|
679,196
976,246 |
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|
|
—
|
|
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|
68,333
58,932 |
|
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10,248,473
1,625,178 |
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(1) |
As required by Securities
and Exchange Commission rules, amounts shown in the column “Option Awards” reflects the aggregate grant-date fair
value of option awards granted in the fiscal year in accordance with accounting rules ASC 718, Compensation—Stock
Compensation. For a description of the assumptions used in calculating the fair value of equity awards in 2014 and 2013
under ASC 718, see Note 16 of the notes to the consolidated financial statements contained within “Item 8. Financial
Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2014. These amounts
reflect our cumulative accounting expense over the vesting period and do not correspond to the actual values that may be realized
by the NEOs. |
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(2) |
Compensation paid
by HHI. Does not include $2,485,775 received by Mr. Thanopoulos for the anti-dilution feature of his options related to the
dividend paid by HHI during 2014. |
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(3) |
Compensation paid
by Metaldyne. |
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(4) |
Compensation paid
by Grede. Does not include $23,526,659 received by Mr. Grimm in recognition of the equity units he held related to American
Securities’ acquisition of Grede. |
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(5) |
Does not include the
value of 1,016 plan units granted to Mr. Grimm, that vested in 2013, under the Equity Based Compensation Plan previously maintained
by Grede Holdings LLC, entitling Mr. Grimm to receive a cash payment in respect of such units in an amount determined as if
such units were membership units of Grede Holdings LLC, in a change of control transaction. As of December 31, 2013, the liquidity
event (a change of control) was considered not probable of occurring in accordance with ASC 718, Compensation—Stock
Compensation. |
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(6) |
As required by Securities
and Exchange Commission rules, the amounts shown in the column “stock awards” reflects the aggregate grant date
fair value of restricted stock awards granted in the fiscal year in accordance with accounting rules ASC 718, Compensation—Stock
Compensation. The amounts represent our cumulative accounting expense over the vesting period and do not correspond to
the actual values that may be realized by the NEOs. |
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(7) |
The amounts in column
“Non-Equity Incentive Plan Compensation” reflects the 2014 plan year payout, paid in March 2015, as part
of the previous HHI, Metaldyne, and Grede annual bonus plans. |
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(8) |
The components of
the column “All Other Compensation” for 2014 are summarized in the following table. |
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|
Name |
|
401(k)
Match
($) |
|
|
Car
Allowance
($) |
|
|
Executive
Flex
Allowance
($) |
|
|
Executive
Life
Insurance
($) |
|
|
Other
Compensation
($)(a) |
|
|
Total
($) |
|
George Thanopoulos |
|
|
6,120 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
633,508 |
|
|
|
639,628 |
|
Mark Blaufuss |
|
|
7,800 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,800 |
|
Thomas Amato |
|
|
6,697 |
|
|
|
— |
|
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25,488 |
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— |
|
|
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— |
|
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|
32,185 |
|
Douglas Grimm |
|
|
5,200 |
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10,200 |
|
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43,483 |
|
|
|
9,450 |
|
|
|
— |
|
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|
68,333 |
|
|
|
(a) |
Represents a payment
of $633,508 for recognition of dividends Mr. Thanopoulos would have received for shares purchased upon the March 2014 escrow
release. |
Grants of Plan-Based
Awards for 2014
The following table sets
forth certain information with respect to the grants of plan-based awards to our NEOs during the year ended December 31, 2014.
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Estimated
Future Payouts
Under Non-Equity Incentive
Plan Awards(1) |
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All
Other
Stock
Awards:
Number of |
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All
Other
Option
Awards:
Number of |
|
|
Exercise
or Base |
|
|
Grant
Date Fair
Value of |
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Shares of |
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|
Securities |
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|
Price
of |
|
|
Stock and |
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Stock or |
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Underlying |
|
|
Option |
|
|
Option |
|
Name |
|
Grant
Date |
|
|
Threshold
($) |
|
|
Target
($) |
|
|
Maximum
($) |
|
|
Units
(#) |
|
|
Options
(#) |
|
|
Awards
($/Sh) |
|
|
Awards
($)(2) |
|
George Thanopoulos |
|
08/06/2014
08/06/2014
08/06/2014
08/06/2014
08/06/2014
12/11/2014
01/01/2014 |
|
|
437,091 |
|
|
874,182 |
|
|
— |
|
|
133,334 |
|
|
253,125
171,825
136,540
2,680
135,185 |
|
|
20.00
20.00
20.00
20.00
20.00 |
|
|
2,793,994
1,978,737
1,507,129
29,582
1,617,083
2,000,010 |
|
Mark Blaufuss |
|
08/06/2014
08/06/2014
12/11/2014
01/01/2014 |
|
|
180,000 |
|
|
360,000 |
|
|
486,000 |
|
|
83,334 |
|
|
3,935
23,710 |
|
|
20.00
20.00 |
|
|
43,435
283,619
1,250,010 |
|
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|
Thomas Amato |
|
08/06/2014
08/06/2014
12/11/2014
01/01/2014 |
|
|
375,000 |
|
|
750,000 |
|
|
1,012,500 |
|
|
133,334 |
|
|
26,285
65,390 |
|
|
20.00
20.00 |
|
|
290,134
782,195
2,000,010 |
|
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|
Douglas Grimm |
|
06/02/2014
08/06/2014
08/06/2014
12/11/2014
01/01/2014 |
|
|
416,254 |
|
|
832,509 |
|
|
1,665,018 |
|
|
133,334 |
|
|
485,205
9,385
48,875 |
|
|
18.66
20.00
20.00 |
|
|
6,142,695
103,592
584,643
2,000,010 |
|
(1) |
The amounts
shown represent the threshold, target and maximum amounts payable as part of the HHI, Metaldyne, and Grede bonus plans, in
which each NEO participated in 2014. |
|
|
(2) |
As required by Securities
and Exchange Commission rules, amounts shown in the column “Grant Date Fair Value of Stock and Option Awards”
present the aggregate grant-date fair value of option awards granted in the fiscal year in accordance with accounting rules
ASC 718, Compensation—Stock Compensation. For a description of the assumptions used in calculating the fair value
of equity awards in 2014 under ASC 718, see the Notes to the Company’s audited financial statements included
in its Annual Report on Form 10-K for the year ended December 31, 2014. These amounts reflect our cumulative accounting expense
over the vesting period and do not correspond to the actual values that may be realized by the NEOs. |
Outstanding Equity
Awards at December 31, 2014
The following table
provides information regarding the equity awards held by the NEOs as of December 31, 2014.
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|
Option
Awards |
|
Stock
Awards |
|
Name |
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable |
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable |
|
|
Option
Exercise
Price
($) |
|
|
Option
Expiration
Date |
|
Number
of
Shares or
Units of
Stock That
Have Not
Vested
(#)(1) |
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(2) |
|
George Thanopoulos |
|
|
370,748
253,125
68,730
136,540
2,680
— |
|
|
|
556,122
—
103,095
—
—
135,185 |
|
|
|
3.31
20.00
20.00
20.00
20.00
20.00 |
|
|
12/06/2022
08/06/2024
08/06/2024
08/06/2024
08/06/2024
08/06/2024 |
|
|
133,334 |
|
|
|
2,314,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Blaufuss |
|
|
47,419
3,935
— |
|
|
|
189,676
—
23,710 |
|
|
|
5.40
20.00
20.00 |
|
|
02/19/2023
08/06/2024
08/06/2024 |
|
|
83,334 |
|
|
|
1,446,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Amato |
|
|
123,290
7,489
26,285
— |
|
|
|
493,160
29,956
—
65,390 |
|
|
|
5.40
14.75
20.00
20.00 |
|
|
02/19/2023
02/19/2023
08/06/2024
08/06/2024 |
|
|
133,334 |
|
|
|
2,314,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas Grimm |
|
|
—
9,385
— |
|
|
|
485,205
—
48,875 |
|
|
|
18.66
20.00
20.00 |
|
|
06/02/2024
08/06/2024
08/06/2024 |
|
|
133,334 |
|
|
|
2,314,678 |
|
(1) |
Refers
to Restricted Stock Awards, which vest 25% on the first anniversary of the grant date and 75% on the second anniversary of
the grant date. |
|
|
(2) |
Market Value is determined
using the number of awards multiplied by $17.36, which was the closing price of our common stock on the New York Stock Exchange
on December 31, 2014. |
Options Exercised
and Stock Vested during 2014
None of the NEOs exercised
options or had any stock that vested during 2014.
Pension Benefits
Our NEOs did not participate
in any defined benefit pension plan during 2014.
Nonqualified Deferred
Compensation
In the year ended December
31, 2014, our NEOs received no nonqualified deferred compensation and had no deferred compensation benefits.
Potential Payments
upon Termination or Change in Control
The table below shows
the estimated value transfer to each NEO upon termination of employment without a Change in Control or in connection with a Change
in Control. The table below assumes that such termination occurred on December 31, 2014, when the closing price of our stock was
$17.36 and payments are made under the employment agreements then in effect. The actual amounts that would be paid to any NEO can only be determined at the time of
an actual termination of employment and would vary from those listed below.
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|
|
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|
|
Termination
without Cause or for Good
Reason without a Change in Control or within
Two Years Following a Change in Control |
|
|
|
|
Name |
|
Severance
Pay
($) |
|
|
Benefits
($) |
|
|
Accelerated
Equity
Vesting
($) |
|
|
Total
($) |
|
George Thanopoulos |
|
|
2,779,334 |
|
|
|
38,871 |
|
|
|
10,128,192 |
|
|
|
12,946,397 |
|
Mark Blaufuss |
|
|
1,296,000 |
|
|
|
18,000 |
|
|
|
3,715,203 |
|
|
|
5,029,203 |
|
Thomas Amato |
|
|
1,950,000 |
|
|
|
18,000 |
|
|
|
8,291,057 |
|
|
|
10,259,057 |
|
Douglas Grimm |
|
|
2,706,279 |
|
|
|
52,258 |
|
|
|
2,314,678 |
|
|
|
5,073,215 |
|
PROPOSAL 2: ADVISORY
VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
We are seeking your
advisory vote approving the compensation of our “named executive officers” or “NEOs” identified in the “Compensation Discussion
and Analysis” above in this proxy statement. We believe that the structure of our executive compensation programs aligns the interests
of our NEOs with our business objectives and the interests of our shareholders.
In connection with the
Combination, we reviewed and aligned the existing compensation programs of HHI, Metaldyne, and Grede into our executive compensation
program. Consistent with the existing programs, our overall post-Combination compensation program is structured to attract, motivate,
and retain highly qualified executives by paying them competitively, with variable components designed to pay them based on results
that are consistent with our performance on both a short- and long-term basis and on their contribution to that success. In addition,
our program is structured to ensure that a significant portion of compensation opportunity is related to specific, measurable factors
that directly and indirectly influence shareholder value. We also believe that equity ownership provides our NEOs with a strong
incentive to increase our value and aligns the interests of our executive officers with the interests of our shareholders.
For the reasons discussed
above, the Board recommends a vote FOR the following resolution providing an advisory approval of the compensation paid to our
named executive officers:
RESOLVED, that
the compensation of the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of
the SEC, including the Compensation Discussion and Analysis, the compensation tables, and the related material disclosed in this
proxy statement, is hereby approved.
Although the vote on
this proposal is advisory and non-binding, the Compensation Committee and the Board will review and consider the result of the
vote when making future determinations regarding our executive compensation programs. The affirmative vote of a majority of the
votes cast by shares entitled to vote thereon is required for the approval of the foregoing resolution. Abstentions and broker
non-votes are not counted as votes cast, and therefore do not affect the approval of the resolution.
PROPOSAL 3: ADVISORY
VOTE ON FREQUENCY OF ADVISORY VOTES ON EXECUTIVE COMPENSATION
We are also seeking
your input with respect to the frequency of future shareholder advisory votes on compensation paid to our named executive officers.
In particular, we are asking whether the advisory vote that is the subject of Proposal 2 should occur every 1, 2 or 3 years.
The Board believes that
a vote every three years (a triennial vote) complements our goal to create a compensation program that enhances long-term shareholder
value. A triennial vote will provide shareholders the ability to evaluate our compensation program over a time period and as compared
to our long-term performance. In addition, a triennial vote will give the Compensation Committee sufficient time to analyze the
Company’s compensation program and the integration of the compensation programs as a result of the Combination. The Compensation
Committee will also be able to compare the Company’s performance over that same period to determine whether any changes
to the compensation program are advisable. A three-year period will provide some time to implement changes and assess the effectiveness
of such changes. The greater time period between votes will also allow the Compensation Committee to consider various factors that
impact the Company’s financial performance and executive pay on a long-term basis.
When voting on this
Proposal you will have the option to choose whether to approve holding future advisory votes on the compensation of our named executive
officers every 1, 2 or 3 years, or to abstain entirely from voting on the matter. If a frequency (1, 2 or 3 years) receives a majority
of the votes cast by shares entitled to vote thereon, it will be deemed to be the frequency of the advisory vote on the compensation
of our named executive officers recommended by shareholders. Abstentions and broker non-votes are not counted as votes cast and
therefore do not affect the selection of frequency on the outcome.
The vote on this proposal
is advisory and is not binding; however, the Board will carefully consider the voting results when deciding when to call for the
next advisory vote on executive compensation. A scheduling vote similar to this will occur at least once every six years.
The Board of Directors
recommends a vote for 3 YEARS for the frequency of the non-binding advisory vote on the compensation of the Company’s named
executive officers.
AUDIT COMMITTEE REPORT
The Audit Committee
operates under a written charter adopted by the Board of Directors. MPG management has the primary responsibility for the Company’s
internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing
an independent audit of the company’s consolidated financial statements and issuing an opinion on the conformity of those
audited financial statements with accounting principles generally accepted in the United States of America. The Audit Committee oversees and monitors these processes and reports to the Board of Directors on its findings.
Auditor Independence
The Audit Committee
met and held discussions with MPG management and KPMG LLP, the independent registered public accounting firm. The Audit Committee
reviewed and discussed with MPG management and KPMG LLP the audited financial statements contained in the company’s Annual
Report on Form 10-K for the year ended December 31, 2014, as well as the Company’s internal control over financial reporting.
The Audit Committee also discussed with KPMG LLP the matters required to be discussed with the Committee by the standards of the
Public Company Accounting Oversight Board (United States)(PCAOB) Auditing Standard No. 16, Communications with Audit Committees,
the rules of the Securities and Exchange Commission, and other applicable regulations.
KPMG LLP submitted to
the Audit Committee the written disclosures and the letter required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence. The
Audit Committee discussed with KPMG LLP the firm’s independence and considered whether the provision of non-audit services
by KPMG LLP to the company is compatible with maintaining the independence of KPMG LLP. The Audit Committee concluded that the
independence of KPMG LLP from MPG and management is not compromised by the provision of such non-audit services.
Based on these reviews
and discussion, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in
the company’s Annual Report on Form 10-K for the year ended December 31, 2014, and filed with the SEC.
Audit Committee:
Jeff Stafeil, Chairman
Nick Bhambri
Loren Easton
The Audit Committee
Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other
MPG filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent
that MPG specifically incorporates this Audit Committee Report by reference into any such filing.
PROPOSAL 4: RATIFICATION
OF THE SELECTION OF INDEPENDENT AUDITORS
The Audit Committee
has selected the independent registered public accounting firm of KPMG LLP (“KPMG”) to audit the Company’s financial statements
for the year 2015. KPMG also served as MPG’s independent auditor for the Company’s financial statements for 2013 and
2014. Representatives of KPMG will be present at the Annual Meeting and will have the opportunity to make a statement and respond
to appropriate questions.
Neither our Bylaws nor
our other governing documents or law require stockholder ratification of the selection of KPMG as our independent registered public
accounting firm. However, the Audit Committee is submitting the selection of KPMG to the shareholders for ratification as a matter
of good corporate practice. If the shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not
to retain KPMG. Even if the selection is ratified, the Audit Committee, in its sole discretion, may change the appointment at any
time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.
The affirmative vote
of a majority of the votes cast by shares entitled to vote is required for the ratification of the selection of independent auditors.
Abstentions and broker non-votes are not counted as votes cast and therefore do not affect the ratification of the selection of
independent auditors.
KPMG LLP FEES
The following table
provides information regarding the aggregate fees for professional services rendered to the Company by KPMG for the years ended
December 31, 2013 and 2014. All of the fees described below have been approved by the Board of Directors or, for fees incurred
since our initial public offering in December 2014, by the Audit Committee.
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(In
Millions) |
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|
2014 |
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|
2013 |
|
Audit
Fees |
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|
$4.4 |
|
|
|
$1.0 |
|
Audit-Related Fees |
|
|
0.8 |
|
|
|
— |
|
Tax Fees |
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0.2 |
|
|
|
0.2 |
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All Other Fees |
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* |
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* |
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Total |
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$5.4 |
|
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$1.2 |
|
* Less
than $0.1 million.
Audit
Fees
The Audit Fees for the
year ended December 31, 2014 were for professional services rendered by KPMG for the audits and quarterly reviews of the Company’s
consolidated financial statements, and for services that are normally provided by the independent registered public accounting
firm in connection with statutory or regulatory filings or engagements.
Audit-Related
Fees
Audit-Related Fees for
the years ended December 31, 2014 and 2013 were for comfort letters and consents associated with the Company’s S-1 filing.
Tax
Fees
The Tax Fees for the
years ended December 31, 2014 and 2013 were for professional services rendered by KPMG related to tax compliance, tax advice and
tax planning.
All Other Fees
All Other Fees for the
years ended December 31, 2014 and 2013 were for trade agreement and pension advisory services, accounting research tool subscription
and benchmarking data.
Audit Committee Pre-Approval
Policies and Procedures
Our audit committee
charter, adopted on December 1, 2014, requires the Audit Committee to consider and, in its discretion, approve in advance any services
(including the fees and material terms thereof) proposed to be carried out for the Company by the independent auditor or by any
other firm proposed to be engaged by the Company as its independent auditor. All audit services provided for the years ended December
31, 2014 and 2013 were approved by the audit committees of MPG or Metaldyne.
The Board recommends
a vote FOR the ratification of the selection of KPMG LLP as our independent auditors for the year 2015.
2016 ANNUAL MEETING OF
SHAREHOLDERS
If you wish to submit a
proposal to be considered at the 2016 Annual Meeting, you must comply with the following procedures:
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• |
If you intend to present proposals to be included in our proxy statement for our 2016 Annual Meeting, you must give written notice of your intent to our Secretary on or before January 16, 2016 (120 calendar days prior to the anniversary of our mailing this proxy statement). The proposals must comply with SEC regulations under Rule 14a-8 for including shareholder proposals in a company’s materials. |
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• |
If you
wish to nominate a director or have other business brought before the 2016 Annual Meeting of Shareholders, you must submit
the nomination or proposal between February13, 2016 and March 14, 2016 in accordance with the Company’s Bylaws. The
nomination or proposal must be delivered to the Company’s corporate officers at 47659 Halyard Drive, Plymouth,
Michigan 48170, Attention: Secretary. Such notice must include a written statement setting forth the following
information (with a representation as the accuracy of such information): (i) your name and address; (ii) the number and
class of all shares of each class of Company stock owned of record and beneficially by such shareholder (and any
beneficial owner on whose behalf the nomination is made) and the date such ownership was acquired; (iii) any derivative
instruments directly or indirectly beneficially owned by you or your immediate family or any other direct or indirect
opportunity to profit or share in the profit derived from any increase or decrease in the value of shares of the
Company; (iv) any proxy, contract, arrangement, understanding, or relationship pursuant to which you or any member
of your immediate family have a right to vote or have granted a right to vote with respect to any securities of
the Company; (v) interests of you or any member of your immediate family related to any short interest, rights
to dividends (other than dividends on shares owned by you or such family member), any interest in shares or
derivative securities of the Company or performance-related fees based on any increase or decrease in the value of
securities of the Company; (vi) a representation that you intend to appear in person or by proxy at the
meeting to nominee the person or propose the business and whether you intend to deliver a proxy
statement or form of proxy to holders of the Company; (vii) a certification regarding whether you
have complied with all applicable federal, state, and local requirements in connection with your
acquisition of shares of the Company or your acts as a shareholder; and (viii) any other information
required by applicable SEC regulations or the Bylaws or as the Company may reasonably
request. |
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The notice to
nominate a person for election as a Company director must also include: (i) information relating to the nominee (including
without limitation, the nominee’s name, age, address and occupation, and the number and class of all shares of each
class of Company stock owned of record and beneficially by such person) that would be required to be included in a proxy
statement filed pursuant to the proxy rules of the SEC; (ii) a description of any agreements, arrangements, and
understandings between or among you and any other person in connection with the nomination; and (iii) a description of all
direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the prior
three years and any other material relationship between or among you and the nominee, including all information required to
be disclosed under SEC Regulation S-K 404, as if you or the holder on whose behalf you are making the nomination (or any
affiliate or associate thereof) were a “registrant” under such provision and if the nominee were a director or
executive officer thereof. The foregoing, however, does not apply to the exercise by American Securities of its rights to
designate persons for nomination to the Board pursuant to the Stockholders’ Agreement described above in “Certain
Relationships and Related Person Transactions.” |
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The notice related to business (other than the nomination of a director) that you propose to bring before the meeting must include the following information: (i) a brief description of the business to be brought before the meeting (including the text of any resolution proposed for consideration), the reasons for conducting such business at the meeting, and any material direct or indirect interest of yours in such business; and (ii) a description of all agreements, arrangements, and understandings, direct or indirect, between you and any other person (naming them) in connection with the proposal of such business. |
OTHER MATTERS
The Board of Directors
knows of no other matters to be voted upon at the Annual Meeting. If any other matters properly come before the Annual Meeting,
the proxy holders named in the enclosed proxy will have discretionary authority to vote the shares represented by the proxy in
their discretion with respect to such matters.
By Order of the Board of
Directors,
Carol Creel
General Counsel and Secretary
Taylor, Michigan
May 15, 2015
METALDYNE PERFORMANCE GROUP INC. (NYSE:MPG)
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