Table of Contents
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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CHECK THE APPROPRIATE BOX: |
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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 Under Rule
14a-12 |
Pentair plc
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy
Statement, if Other Than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE
BOX): |
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No fee
required. |
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Fee computed on table below per Exchange Act Rules
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Title of each class of securities to which transaction
applies: |
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Aggregate number of securities to which transaction applies: |
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3)
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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Proposed maximum aggregate value of transaction: |
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5) Total fee paid: |
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Fee paid previously with
preliminary materials: |
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Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule and the
date of its filing. |
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Table of Contents
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2017 |
Notice of Annual General Meeting and Proxy
Statement |
Table of Contents
NOTICE OF ANNUAL GENERAL MEETING OF
SHAREHOLDERS
To Be Held May 9, 2017
Our Annual General Meeting of Shareholders
will be held at Claridges, Brook Street, Mayfair, London, United Kingdom,
W1K4HR, on Tuesday, May 9, 2017, at 8:00 a.m. local time, to consider and vote
upon the following proposals:
1. |
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By separate resolutions, to re-elect the
following director nominees: |
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(a) |
Glynis A. Bryan |
(g) |
David H. Y. Ho |
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(b) |
Jerry W. Burris |
(h) |
Randall J. Hogan |
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(c) |
Carol Anthony (John) Davidson |
(i) |
David A. Jones |
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(d) |
Jacques Esculier |
(j) |
Ronald L Merriman |
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(e) |
Edward P. Garden |
(k) |
William T. Monahan |
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(f) |
T. Michael Glenn |
(l) |
Billie Ida
Williamson |
2. |
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To approve, by non-binding advisory vote, the
compensation of the named executive officers. |
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3. |
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To recommend, by non-binding advisory vote, the
frequency of future advisory votes on the compensation of the named
executive officers. |
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4. |
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To ratify, by non-binding advisory vote, the appointment
of Deloitte & Touche LLP as the independent auditors of Pentair plc
and to authorize, by binding vote, the Audit and Finance Committee of the
Board of Directors to set the auditors remuneration. |
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5. |
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To authorize the price range at which Pentair plc can
re-allot shares it holds as treasury shares under Irish law. |
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6. |
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To approve amendments to Pentair plcs Articles of
Association to implement proxy access. |
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7. |
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To consider and act on such other business as may
properly come before the Annual General Meeting or any
adjournment. |
Proposals 1, 2 and 4 are ordinary
resolutions, requiring the approval of a simple majority of the votes cast at
the meeting. A plurality of the votes cast for Proposal 3 will be the frequency
of the advisory vote on executive compensation that shareholders are deemed to
have approved. Proposals 5 and 6 are special resolutions, requiring the approval
of not less than 75% of the votes cast.
Only shareholders of record as of the
close of business on March 6, 2017 are entitled to receive notice of and to vote
at the Annual General Meeting.
If you are a shareholder entitled to
attend and vote at the Annual General Meeting, you are entitled to appoint a
proxy or proxies to attend, speak and vote on your behalf. A proxy need not be a
shareholder. If you wish to appoint as proxy any person other than the individuals specified on the proxy card, please contact
our Corporate Secretary at our registered office.
Whether or not you plan to attend, we
encourage you to vote your shares by submitting a proxy as soon as possible, AND
IN ANY EVENT AT LEAST 48 HOURS BEFORE THE ANNUAL GENERAL MEETING. IF YOU PLAN TO
SUBMIT A PROXY, YOU MUST SUBMIT YOUR PROXY BY INTERNET OR TELEPHONE, OR YOUR
PRINTED PROXY CARD MUST BE RECEIVED AT THE ADDRESS STATED ON THE CARD, BY NO
LATER THAN 8:00 A.M. LOCAL TIME (3:00 A.M. EASTERN DAYLIGHT TIME) ON MAY 7,
2017.
By
Internet |
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You can vote over the Internet
at www.proxyvote.com. |
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By Telephone |
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You can vote by telephone from the
United States or Canada by calling the telephone number in the Notice of
Internet Availability of Proxy Materials or on the proxy
card. |
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By Mail |
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You can vote by mail by marking,
signing and dating your proxy card or voting instruction form and
returning it in the postage-paid envelope, which will be forwarded to
Pentair plcs registered address electronically. |
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Vote in Person |
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If you plan to attend the Annual
General Meeting and wish to vote your ordinary shares in person, we will
give you a ballot at the meeting. |
By Order of the Board of
Directors,
Angela D. Jilek, Secretary
March 24, 2017
Important Notice Regarding the
Availability of Proxy Materials for the Shareholder Meeting to Be Held on May 9,
2017. The Annual Report, Notice of Annual General Meeting, Proxy Statement and
Irish Financial Statements and Related Reports are available by Internet at
www.proxyvote.com.
Shareholders in Ireland may
participate in the Annual General Meeting by audio link at the offices of
Arthur Cox, Earlsfort Centre, Earlsfort Terrace, Dublin 2, Ireland, at
8:00 a.m. local time. See Questions and Answers About the Annual General
Meeting and Voting for further information on participating in the Annual
General Meeting in Ireland. |
Pentair plc 03
Table of Contents
PROXY STATEMENT FOR
THE ANNUAL GENERAL MEETING OF SHAREHOLDERS OF PENTAIR PLC TO BE HELD ON TUESDAY,
MAY 9, 2017
04 2017
Proxy Statement
Table of Contents
PROXY
SUMMARY
This summary highlights information
contained elsewhere in this proxy statement. This summary does not contain all
of the information you should consider, and you should read the entire proxy
statement before voting.
VOTING MATTERS
Proposal |
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Board Vote Recommendation |
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Vote Required |
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Page Reference |
1. |
Re-Election of Director Nominees |
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FOR each nominee |
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Majority of votes cast |
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11 |
2. |
Advisory Vote on the Compensation of Named Executive
Officers |
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FOR |
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Majority of votes cast |
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27 |
3. |
Advisory Vote on Frequency of the Vote on the Compensation
of Named Executive Officers |
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ONE YEAR |
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Alternative receiving greatest number of votes |
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59 |
4. |
Ratify the Appointment of Independent Auditors and the
Audit and Finance Committee to Set the Auditors Remuneration |
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FOR |
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Majority of votes cast |
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60 |
5. |
Authorize the Price Range at which Pentair Can
Re-allot Treasury Shares |
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FOR |
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75% of votes cast |
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63 |
6. |
Approve Amendments to Pentairs Articles of Association
to Implement Proxy Access |
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FOR |
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75% of votes cast |
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64 |
At the Annual General Meeting, management
will review Pentair plcs affairs and will also present Pentair plcs Irish
statutory financial statements for the fiscal year ended December 31, 2016 and
the report of the statutory auditors thereon.
BOARD AND GOVERNANCE HIGHLIGHTS
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Committee
Memberships |
Name |
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Age |
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Director Since |
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Independent |
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Audit and Finance |
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Compensation |
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Governance |
Glynis A. Bryan |
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58 |
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2003 |
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✓ |
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● |
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Jerry W. Burris |
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53 |
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2007 |
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✓ |
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● |
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● |
Carol Anthony (John) Davidson |
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61 |
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2012 |
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✓ |
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Jacques Esculier |
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57 |
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2014 |
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✓ |
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● |
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Edward P. Garden |
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55 |
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2016 |
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✓ |
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● |
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● |
T. Michael Glenn |
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61 |
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2007 |
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✓ |
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● |
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David H.Y. Ho |
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57 |
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2007 |
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✓ |
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● |
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Randall J. Hogan |
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61 |
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1999 |
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David A. Jones |
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67 |
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2003 |
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✓ |
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● |
Ronald L. Merriman |
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72 |
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2004 |
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✓ |
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William T. Monahan (Lead Director) |
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69 |
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2001 |
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✓ |
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● |
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● |
Billie Ida Williamson |
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64 |
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2014 |
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✓ |
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● |
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● |
committee member |
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committee
chair |
Pentair plc 05
Table of Contents
PROXY
SUMMARY
Directors are chosen with a view to
bringing to the Board a variety of rich financial and management experience and
backgrounds and establishing a core of business advisers with financial and
management expertise.
TENURE
BALANCE |
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GENDER
DIVERSITY |
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DIRECTOR
INDEPENDENCE |
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EXECUTIVE COMPENSATION
HIGHLIGHTS
These executive compensation highlights
should be read in connection with the Executive Compensation section of this
Proxy Statement, including the Compensation Discussion and Analysis section (see
page 29).
2016 was an historic year for Pentair as
we celebrated our 50 year anniversary as a company and marked our 40th year of
increasing dividends to shareholders. That celebration highlighted many of the
values and qualities that have been at the core of our company since it was
founded in 1966. In 2016, Mr. Hogan also completed his 16th year as our CEO.
During Mr. Hogans tenure, Pentairs market capitalization has grown by 821%
while delivering a total shareholder return of 538%.
The market environment in 2016 remained
challenged as continued weakness in energy and industrial markets negatively
impacted the financial results in a number of our businesses. Management
responded by taking significant restructuring and operating actions to reduce
costs and maintain operating margins, achieving solid gains over 2015. We
increased EPS by 14%, adjusted EPS by 8%, operating income by 14% and segment
income by 11% and converted 109% of our adjusted net income to free cash flow.
In 2016, we also announced an agreement to sell our Valves & Controls
business to Emerson Electric Co. We expect the sale of Valves & Controls to
significantly strengthen our balance sheet and liquidity position and enable us
to focus on our strategic priorities in Water and Electrical.
In 2016 our total shareholder return was
16%, a marked improvement following the difficult years we faced since oil
prices began their precipitous decline toward the end of 2014. At that time,
nearly 30% of our business was directly impacted by energy markets and our stock
price suffered accordingly. Foreign exchange headwinds and weakening economies
in Asia, Latin America, and the Middle East compounded these challenges. Under
Mr. Hogans leadership, Pentair responded by taking decisive action to cut
costs, cull our portfolio, and redouble our commitment to the Pentair Integrated
Management System (PIMS). In response to these challenging market conditions,
the Compensation Committee also kept Mr. Hogans base salary, annual incentive
and long-term incentive targets substantially unchanged from 2015 through 2017.
For 2015, we did not pay out any annual incentive compensation to our Named
Executive Officers. Realizable pay related to our long-term incentive awards has
been significantly below the grant values over this period, and the Compensation
Committee again froze the base salaries of all Named Executive Officers for
2017.
While our stock price has not returned to
the $83 peak it achieved in March of 2014 when the price of oil was more than
$100/barrel, we are encouraged by our progress in 2016 and the outlook for 2017.
Our Win-Right Values continue to guide how we conduct business, including our
commitment to a performance-based executive compensation program that closely
aligns the interests of our executives with those of our
shareholders.
06 2017
Proxy Statement
Table of Contents
PROXY
SUMMARY
Our
Compensation Philosophy |
The Compensation Committee believes that
the most effective executive compensation program aligns executive initiatives
with shareholders economic interests. The Committee seeks to accomplish this by
rewarding the achievement of specific annual, longer-term and strategic goals
that create lasting shareholder value. The Committees specific objectives
include:
► |
to
motivate and reward executives for achieving financial and strategic
objectives; |
► |
to align management and shareholder
interests by encouraging employee stock ownership; |
► |
to provide rewards commensurate with
individual and company performance; |
► |
to encourage growth and innovation;
and |
► |
to attract and retain top-quality
executives and key employees. |
To balance these objectives, our executive
compensation program uses the following direct compensation elements:
► |
base salary, to provide fixed
compensation competitive in the marketplace; |
► |
annual incentive compensation, to
reward short-term performance against specific financial targets and
individual goals; and |
► |
long-term incentive compensation, to
link management incentives to long-term value creation and shareholder
return. |
The Compensation Committee reviews total
compensation for executive officers and the relative levels of each of these
forms of compensation against the Committees goals. The mix of total direct
compensation for 2016 for our CEO and the average of the other Named Executive
Officers is shown in the chart below.
2016 DIRECT COMPENSATION MIX |
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SHAREHOLDER OUTREACH AND RESPONSE TO 2016
SAY ON PAY VOTE
In April 2016, one proxy advisory firm
recommended that shareholders vote against approving the compensation of our
Named Executive Officers in our annual advisory shareholder vote (our say on
pay vote). As a result of this disappointing recommendation we reached out to
shareholders to gain additional insight and to provide them with clarifying
information enabling them to make an informed decision on the say on pay vote.
Shareholders ultimately supported our say on pay vote on May 10, 2016, with
approximately 72% of votes cast in favor, but the level of support was down
substantially from the 92% of votes cast in favor of our say on pay vote in
2015.
Our 2016 shareholder outreach included 35
of our largest shareholders representing 70.2% of our outstanding shares. These
shareholders either arranged for individual discussions with us or provided us
with feedback that they did not require a meeting. The purpose of the outreach
was to better understand shareholder perspectives and evaluate any concerns
regarding our executive compensation program.
Given the commitment of the entire Board to understanding the perspectives of
our shareholders, our Lead Director and Compensation Committee Chair
participated in the majority of the calls with our investors. Shareholder
feedback and suggestions on our executive compensation program were shared and
discussed with the Compensation Committee and the entire Board. We found the
robust shareholder engagement process to be valuable and intend to continue it
annually.
A majority of the investors we spoke with
were supportive of our executive compensation program. We listened to and
considered the suggestions and opinions our investors shared on how to further
enhance our executive compensation program. While shareholders have different
points of view, several key themes emerged, supporting changes the Compensation
Committee had already approved in 2016 and, after careful consideration, adopted
for 2017:
Pentair plc 07
Table of Contents
PROXY
SUMMARY
What We Heard from our
Shareholders |
► |
The Companys executive compensation
program demonstrates a true pay-for-performance linkage and shareholder
alignment. |
► |
CEOs and other Named Executive
Officers compensation should be appropriately risk-based, balancing
annual and long-term performance. |
► |
Goal setting should support the
achievement of strategic business goals and creation of shareholder
value. |
Actions Taken Prior to
Our Shareholder Outreach that Our Investors
Supported |
► |
Any payment under our annual and
long-term incentive plans requires the attainment of rigorous performance
thresholds and stretch targets as evidenced by the following
actions: |
► |
The CEO and other Named Executive
Officers did not receive an annual incentive payment in 2016 for 2015
performance, reflecting the severe market downturns in mining, energy and
oil and gas. |
► |
The long-term performance cash plan
for the three-year performance period ending on December 31, 2016 also
paid out well below target (page 40). |
► |
For
2016, the Compensation Committee again established challenging performance
thresholds and stretch targets, ensuring that any payment under the
Companys incentive plans required meaningful financial and operating
performance (page 36). |
Actions Taken
Considering Our Shareholders Feedback |
► |
The Compensation Committee carefully
assessed the 2017 annual and long-term incentive opportunity, taking into
account not only competitive market data, but also factors such as
company, business unit and individual performance, scope of
responsibility, critical needs and skill sets, experience, leadership
potential and succession planning. |
► |
The Compensation Committee also
evaluated the pay mix of our CEO and our other Named Executive Officers
for 2017, as it does every year, to ensure annual and long-term incentives
are properly balanced. |
► |
In 2016 annual and long-term
incentives again reflected company performance
appropriately: |
► |
The annual incentive plan paid out
at below target overall as above target free cash flow generation was
offset by below target income performance and below threshold core revenue
growth. (page 37). |
► |
The long-term performance cash plan
for the three-year performance period ending on December 31, 2016 paid out
at 30% of target, due to the challenging business conditions over the
performance period (page 40). |
What We Heard from our
Shareholders |
► |
Annual incentive plan measures of
operating income and free cash flow are well aligned with shareholder
interests. |
► |
Free cash flow measure is
particularly valued because it reflects the quality of our earnings
stream. |
► |
Reward profitable growth, not growth
at any cost. |
Actions Taken Prior to
Our Shareholder Outreach that Our Investors
Supported |
► |
Increased the weighting of our free
cash flow measure from 10% to 30%, bringing renewed focus on what has been
a traditional strength of our company and resulting in superior free cash
flow performance in 2016 (page 37). |
► |
Reduced the weighting of individual performance in the annual
incentive from 20% to 10% (page 37). |
Actions Taken
Considering Our Shareholders Feedback |
► |
Replaced core revenue growth with a
profitable growth measure and increased the weighting from 20% to 30% for
2017 annual incentives. |
► |
Eliminated the strategic deployment
factor (SDF) from the 2017 annual incentive of the Executive Officers to
further reinforce the importance of financial and operating
results. |
08 2017
Proxy Statement
Table of Contents
PROXY
SUMMARY
Long Term Incentive Design |
What We Heard from our
Shareholders
► |
Greater portion of long-term
compensation should be performance-vested equity.
|
► |
Adjusted EPS viewed as a measure closely
tied to creation of shareholder value, but suggestion to add a return
and/or relative performance measure.
|
► |
Disclosure of performance goals in year
of grant.
|
► |
CEO and other Executive Officer stock
ownership highly valued. |
Actions Taken Prior to Our
Shareholder Outreach that Our Investors Supported
► |
Replaced cash-settled performance
units with performance share
units. |
► |
Introduced adjusted EPS as the performance share unit
measure.
|
► |
Established rigorous three-year
adjusted EPS growth goals to support the creation of long-term shareholder
value. |
Actions Taken Considering Our
Shareholders Feedback
► |
For 2017, increased performance share units from one third to 50% of the Executive Officers long-term
incentive mix and reduced restricted stock units and stock options proportionately. |
► |
Augmented adjusted EPS growth measure with return on equity
(ROE) weighted 75% and 25%, respectively, for 2017
awards.
|
► |
Performance goals disclosed for adjusted EPS and return on
equity (ROE) performance share units in the year of grant (page 39).
|
► |
Increased stock ownership
requirement from 2.0 times base salary to 2.5 times base salary for
Segment Presidents in 2017. The CEO is already subject to a robust 6x base
salary requirement. |
Pentair plc 09
Table of Contents
TABLE OF
CONTENTS
3 |
|
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS |
4 |
|
PROXY STATEMENT FOR THE ANNUAL GENERAL MEETING OF SHAREHOLDERS OF PENTAIR PLC TO BE HELD ON TUESDAY, MAY 9, 2017 |
5 |
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PROXY SUMMARY |
11 |
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PROPOSAL 1 RE-ELECT DIRECTOR NOMINEES |
11 |
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Vote Requirement |
12 |
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Directors Standing for Re-Election |
18 |
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Director Independence |
18 |
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Director Qualifications; Diversity and Tenure |
19 |
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Shareholder Recommendations, Nominations and Proxy Access |
20 |
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CORPORATE GOVERNANCE MATTERS |
20 |
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The Boards Role and Responsibilities |
21 |
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Board Structure and Processes |
23 |
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Committees of the Board |
24 |
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Attendance at Meetings |
24 |
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Director Compensation |
27 |
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EXECUTIVE COMPENSATION |
27 |
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PROPOSAL 2 APPROVE, BY NON-BINDING ADVISORY VOTE, THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS |
28 |
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Vote Requirement |
28 |
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COMPENSATION COMMITTEE REPORT |
29 |
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COMPENSATION DISCUSSION AND ANALYSIS |
29 |
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Overview of Compensation Program, Philosophy and Objectives |
30 |
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2016 Business Results |
32 |
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Shareholder Outreach and Response to 2016 Say on Pay Vote |
34 |
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Comparative Framework |
34 |
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2016 Compensation Program Elements |
38 |
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2016 Long-Term Incentive Compensation |
39 |
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Prior Long-Term Incentive Grants |
40 |
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Stock Ownership Guidelines |
41 |
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Equity Holding Policy |
41 |
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Clawback Policy |
41 |
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Policy Prohibiting Hedging and Pledging |
42 |
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Retirement and Other Benefits |
42 |
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Perquisites and Other Personal Benefits |
43 |
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Expatriate Benefits |
43 |
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Severance and Change-in-Control Benefits |
44 |
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Impact of Tax Considerations |
44 |
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Compensation Consultant |
45 |
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Evaluating the Chief Executive Officers Performance |
45 |
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Equity Award Practices |
46 |
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EXECUTIVE COMPENSATION TABLES |
46 |
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Summary Compensation Table |
48 |
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Grants of Plan-Based Awards In 2016 |
49 |
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Outstanding Equity Awards at December 31, 2016 |
50 |
|
2016 Option Exercises and Stock Vested Table |
51 |
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2016 Pension Benefits |
53 |
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Nonqualified Deferred Compensation Table |
54 |
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Potential Payments Upon Termination or Change in Control |
58 |
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Risk Considerations in Compensation Decisions |
59 |
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PROPOSAL 3 NON-BINDING ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON COMPENSATION OF NAMED EXECUTIVE OFFICERS |
59 |
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Vote Requirement |
60 |
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PROPOSAL 4 RATIFY, BY NON-BINDING ADVISORY VOTE, THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF PENTAIR PLC AND TO AUTHORIZE, BY BINDING VOTE, THE AUDIT AND FINANCE COMMITTEE OF THE BOARD OF DIRECTORS TO SET THE AUDITORS REMUNERATION |
60 |
|
Vote Requirement |
61 |
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Audit and Finance Committee Pre-approval Policy |
61 |
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Fees Paid to the Independent Auditors |
62 |
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AUDIT AND FINANCE COMMITTEE REPORT |
63 |
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PROPOSAL 5 AUTHORIZE THE PRICE RANGE AT WHICH PENTAIR PLC CAN RE-ALLOT SHARES IT HOLDS AS TREASURY SHARES UNDER IRISH LAW |
63 |
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Vote Requirement |
64 |
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PROPOSAL 6 APPROVE AMENDMENTS TO PENTAIR PLCS ARTICLES OF ASSOCIATION TO IMPLEMENT PROXY ACCESS |
64 |
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Description of the Proxy Access Amendments |
66 |
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Vote Requirement |
67 |
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SECURITY OWNERSHIP |
68 |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE |
69 |
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL GENERAL MEETING AND VOTING |
72 |
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SHAREHOLDER PROPOSALS AND NOMINATIONS FOR THE 2018 ANNUAL GENERAL MEETING OF SHAREHOLDERS |
72 |
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IRISH DISCLOSURE OF SHAREHOLDER INTERESTS |
73 |
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2016 ANNUAL REPORT ON FORM 10-K |
73 |
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REDUCE DUPLICATE MAILINGS |
74 |
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APPENDIX A RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
75 |
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APPENDIX B PROXY ACCESS AMENDMENTS TO ARTICLES OF ASSOCIATION |
10 2017
Proxy Statement
Table of Contents
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PROPOSAL 1 |
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RE-ELECT DIRECTOR
NOMINEES |
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The Board recommends a
vote FOR
each Director nominee |
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On the recommendation of the Governance
Committee, the Board of Directors has nominated all of our current directors for
re-election for a one-year term expiring on completion of the 2018 Annual
General Meeting. If any of the nominees should become unable to accept
re-election, the proxies named on the proxy card may vote for other persons
selected by the Board. Management has no reason to believe that any of the
nominees named above will be unable to serve their full term if
elected.
Biographies of the director nominees
follow. These biographies include for each director their ages; their business
experience; the publicly held and some other organizations of which they are, or
have been within the past five years, directors; and a discussion of the
specific experience, qualifications, attributes or skills that led to the
conclusion that each should serve as a director.
The resolutions in respect of this
Proposal 1 are ordinary resolutions. The text of the resolutions in respect of
Proposal 1 are as follows:
IT IS
RESOLVED, by separate resolutions, to
re-elect the following twelve director nominees:
(a) Glynis A. Bryan |
(g) David H.Y. Ho |
(b) Jerry W. Burris |
(h) Randall J. Hogan |
(c) Carol Anthony (John) Davidson |
(i) David A. Jones |
(d) Jacques Esculier |
(j) Ronald L. Merriman |
(e) Edward P. Garden |
(k) William T. Monahan |
(f) T. Michael Glenn |
(l) Billie Ida
Williamson |
Under our Articles of Association, the
election of each director requires the affirmative vote of a majority of the
votes cast in person or by proxy at the Annual General Meeting. A nominee who
does not receive a majority of the votes cast in an uncontested election will not be elected to our Board. Your proxies
cannot be voted for a greater number of persons than the number of nominees
named in this Proxy Statement.
THE BOARD
RECOMMENDS A VOTE FOR RE-ELECTION OF EACH DIRECTOR
NOMINEE. |
Pentair plc 11
Table of Contents
PROPOSAL
1
DIRECTORS STANDING FOR
RE-ELECTION
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1 Carol Anthony (John)
Davidson |
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Age:
61 |
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Director
Since: 2012 |
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Biography From 2004 until 2012, Mr. Davidson was Senior Vice President,
Controller and Chief Accounting Officer of Tyco International Ltd., a
provider of diversified industrial products and services. Between 1997 and
2004, Mr. Davidson held a variety of leadership roles at Dell Inc., a
computer and technology services company, including the positions of Vice
President, Audit, Risk and Compliance, and Vice President, Corporate
Controller. Mr. Davidson also serves on the Board of Governors of the
Financial Industry Regulatory Authority and previously served as a member
of the Board of Trustees of the Financial Accounting
Foundation.
Skills &
Qualifications Mr. Davidson
is a CPA with more than 30 years of leadership experience across multiple
industries and brings a strong track record of building and leading global
teams and implementing governance and controls processes.
Other Public
Board Service: DaVita, Inc.
(2010present); Legg Mason, Inc. (2014present); TE Connectivity Ltd.
(2016present) |
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2 Edward P.
Garden |
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Age:
55 |
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Director Since: 2016 |
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Committee
Served: ► Compensation
► Governance |
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Biography Since November 2005, Mr. Garden has been Chief Investment Officer
and a founding partner of Trian Fund Management, L.P. (Trian), a
multi-billion dollar investment management firm. Previously, Mr. Garden
served as Vice Chairman of Triarc Companies, Inc. (Triarc) from December
2004 through June 2007 and Executive Vice President from August 2003 until
December 2004. From 1999 to 2003, Mr. Garden was a managing director of
Credit Suisse First Boston, where he served as a senior investment banker
in the Financial Sponsors Group. From 1994 to 1999, he was a managing
director at BT Alex Brown where he was a senior member of the Financial
Sponsors Group and, prior to that, co-head of Equity Capital Markets. Mr.
Garden was appointed as a director following an increase in the size of
our Board pursuant to a letter agreement that we entered into with Trian,
one of our largest shareholders, Mr. Garden and certain other parties on
September 7, 2015, a copy of which is filed as Exhibit 10.1 to our Current
Report on Form 8-K filed with the SEC on September 8, 2015 and is
incorporated herein by reference.
Skills &
Qualifications Mr. Garden has over 25 years of experience advising, financing,
operating and investing in companies, and he has worked with
management teams and boards of directors to implement
growth initiatives as well as operational, strategic and corporate
governance improvements. Mr. Garden has strong operating
experience, a network of relationships with institutional investors
and investment banking/capital markets experience that can be
utilized for our benefit.
Other Public
Board Service: The Bank of
New York Mellon Corporation (2014present); Family Dollar Stores, Inc.,
(20112015); The Wendys Company (formerly Wendys/ Arbys Group, Inc. and
previously Triarc) (20042015) |
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12 2017
Proxy Statement
Table of Contents
PROPOSAL
1
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3 David H. Y.
Ho |
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Age:
57 |
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Director Since: 2007 |
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Committee
Served: ► Audit & Finance |
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Biography Mr. Ho is Chairman and founder of Kiina Investment Limited, a
venture capital firm that invests in start-up companies in the technology,
media, and telecommunications industries, and has significant executive
experience with global technology companies. From 2007 until his
retirement in 2008, he served as the Chairman of the Greater China Region
for Nokia Siemens Networks, a telecommunications infrastructure company
that is a joint venture between Finland-based Nokia Corporation and
Germany-based Siemens AG. Between 2002 and 2007, Mr. Ho served in various
capacities for Nokia China Investment Limited, the Chinese operating
subsidiary of Nokia Corporation, a multinational telecommunications
company. Mr. Ho is also a director of China COSCO Shipping Corporation,
formerly China Ocean Shipping Company, a Chinese state owned enterprise
(since 2016), and China Mobile Communications Corporation, a Chinese state
owned enterprise (since 2016), and was a director of Sinosteel Corporation
from 2008 to 2012 and Dong Fang Electric Corporation from 2009 to
2015.
Skills &
Qualifications Mr. Ho brings
extensive experience and business knowledge of global markets in
diversified industries, with a strong track record in establishing and
building businesses in China, and management expertise in operations,
mergers, acquisitions and joint ventures in the area.
Other Public
Board Service: Air Products
and Chemicals, Inc. (2013present); Qorvo, Inc. (2015present);
Owens-Illinois Inc. (20082012), 3Com Corporation
(20082010) |
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4 Ronald L.
Merriman |
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Age:
72 |
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Director Since: 2004 |
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Committee
Served: ► Audit & Finance (Chair until May 2017) |
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Biography Mr. Merriman serves as the Chair of the Audit and Finance Committee
(until May 2017). He has also served as Managing Director of Merriman
Partners, and Managing Director of OMelveny & Myers LLP. He is the
retired Vice Chair of KPMG, a global accounting and consulting firm, where
he served for 30 years in various positions, including as a member of the
Executive Management Committee and as a member of the Board of Directors.
Mr. Merriman also led KPMGs Global Transportation & Logistics
Practice and its Global Healthcare Practice and served as its U.S. Liaison
Partner for Asia.
Skills &
Qualifications Mr. Merrimans
extensive accounting and financial background has strengthened our Audit
and Finance Committee and its processes. In addition, his global
experience has assisted us in our expansion into overseas
markets.
Other Public
Board Service: Realty Income
Corporation (2005present); Haemonetics Corporation (2005present);
Aircastle Limited (2006present) |
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Pentair plc 13
Table of Contents
PROPOSAL
1
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5 William T.
Monahan |
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Age: 69 |
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Director Since: 2001 |
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Committee
Served: ► Compensation |
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► Governance |
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Biography Mr. Monahan serves as our Lead Director. In 2006, Mr. Monahan
served as a director and the Interim Chief Executive Officer of Novelis,
Inc., a global leader in aluminum rolled products and aluminum can
recycling. From 1995 to 2004, Mr. Monahan was Chairman of the board of
directors and Chief Executive Officer of Imation Corp., a manufacturer of
magnetic and optical data storage media. He was involved in worldwide
marketing with Imation and prior to that he held numerous leadership roles
at 3M Company.
Skills &
Qualifications Mr. Monahan
brings to our Board a wealth of global operational and management
experience, as well as a deep understanding of our businesses gained as a
long serving member of our Board. Mr. Monahan has extensive service as a
board member and chief executive officer at companies in a number of
different industries. His broad international perspective on business
operations has been instrumental as we become more global.
Other Public
Board Service: The Mosaic
Company (2004present); Hutchinson Technology, Inc. (20002013); Solutia
Inc. (20082012); Novelis, Inc. (20052007); Imation Corp.
(19952004) |
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6 Randall J. Hogan |
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Age:
61 |
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Director Since: 1999 |
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Biography Since January 1, 2001, Mr. Hogan has
been our Chief Executive Officer. Mr. Hogan became Chairman of the Board
on May 1, 2002. From December 1999 through December 2000, Mr. Hogan was
our President and Chief Operating Officer. From March 1998 to December
1999, he was Executive Vice President and President of our Electrical and
Electronic Enclosures Group. Mr. Hogan also held leadership roles with
United Technologies Corporation as President of the Carrier Transicold
Division; Pratt & Whitney Industrial Turbines as Vice President and
General Manager; General Electric Company in executive positions in a
variety of functions such as marketing, product management, and business
development and planning; and McKinsey & Company as a consultant. Mr.
Hogan serves as the Chairman of the Board of the Federal Reserve Bank of
Minneapolis.
Skills &
Qualifications Mr. Hogan has significant leadership
experience both with us and predecessor employers demonstrating a wealth
of operational management, strategic, organizational and business
transformation acumen. His deep knowledge of business in general and our
businesses, strengths and opportunities in particular, as well as his
experience as a director in two other complex global public companies
allow him to make significant contributions to the Board.
Other Public Board
Service: Covidien plc (20072015); Medtronic plc
(2001present) |
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14 2017
Proxy Statement
Table of Contents
PROPOSAL
1
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7 Jerry W.
Burris |
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Age: 53 |
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Director Since: 2007 |
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Committee
Served: ► Compensation
► Governance |
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Biography Mr. Burris is the former President and Chief Executive Officer of
Associated Materials Group, Inc., a manufacturer of professionally
installed exterior building products, serving in that role from 2011 until
2014. Between 2008 and 2011, he was President, Precision Components of
Barnes Group Inc. From 2006 until 2008, Mr. Burris was the President of
Barnes Industrial, a global precision components business within Barnes
Group. Prior to joining Barnes Group, Mr. Burris worked at General
Electric Company, where he served as president and chief executive officer
of Advanced Materials Quartz and Ceramics; GE Healthcare where he was
general manager of global services; GE Industrial Systems and Honeywell
Integration where he was head of global supply chain sourcing. Mr. Burris
is also a director of Schramm, Inc., a portfolio company of GenNx360
Capital Partners.
Skills &
Qualifications Mr. Burris
brings to our Board significant experience in management of global
manufacturing operations and related processes, such as supply chain
management, quality control and product development. Mr. Burris provides
the Board with insight into operating best practices and current
developments in a variety of management contexts.
Other Public
Board Service: Fifth Third
Bancorp (2016present) |
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8 T. Michael
Glenn |
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Age: 61 |
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Director Since: 2007 |
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Committee
Served: ► Governance (Chair) ►
Compensation |
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Biography Mr. Glenn serves as the Chair of our Governance Committee. From
1998 until his retirement in December 2016, Mr. Glenn served as the
Executive Vice PresidentMarket Development and Corporate Communications
of FedEx Corporation, a global provider of supply chain, transportation,
business and related information services. From 2000-2016, Mr. Glenn also
served as President and Chief Executive Officer of FedEx Corporate
Services, responsible for all marketing, sales, customer service and
retail operations functions for all FedEx Corporation operating companies
including FedEx Office.
Skills &
Qualifications Mr. Glenn
brings extensive strategic, marketing and communications experience to our
Board from his service as one of the top leaders at FedEx Corporation. He
has been an active participant in the development of our strategic plans,
and a strong proponent for strengthening our branding and marketing
initiatives.
Other Public
Board Service: Level 3
Communications, Inc. (2012present); Renasant Corporation (20082012);
Deluxe Corporation (20042007) |
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Pentair plc 15
Table of Contents
PROPOSAL
1
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9 Billie Ida
Williamson |
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Age: 64 |
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Director Since: 2014 |
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Committee
Served: ► Audit & Finance |
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Biography Ms. Williamson has over three decades of experience auditing public
companies as an employee and partner of Ernst & Young LLP. From 1998
until December 2011, Ms. Williamson served Ernst & Young as a Senior
Assurance Partner. Ms. Williamson was also Ernst & Youngs Americas
Inclusiveness Officer, a member of its Americas Executive Board, which
functions as the Board of Directors for Ernst & Young dealing with
strategic and operational matters, and a member of the Ernst & Young
U.S. Executive Board responsible for partnership matters for the
firm.
Skills &
Qualifications Ms. Williamson
is qualified to serve on our Board of Directors because of her extensive
financial and accounting knowledge and experience, including her service
as a principal financial officer, as an independent auditor to numerous
Fortune 250 companies and as a member of the board of directors of other
companies, as well as her broad experience with SEC reporting and her
professional training and standing as a Certified Public
Accountant.
Other Public
Board Service: CSRA Inc.
(2015present); Janus Capital Group Inc. (2015present); Exelis Inc.
(20122015); Annies Inc. (20122014) |
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10 Glynis A. Bryan |
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Age:
58 |
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Director Since: 2003 |
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Committee Served: ► Audit & Finance
(Chair beginning in May 2017) |
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Biography Since
2007, Ms. Bryan has been the Chief Financial Officer of Insight
Enterprises, Inc., a leading provider of information technology products
and solutions to clients in North America, Europe, the Middle East and the
Asia-Pacific region. Between 2005 and 2007, Ms. Bryan was the Executive
Vice President and Chief Financial Officer of Swift Transportation Co., a
holding company which operates the largest fleet of truckload carrier
equipment in the United States. Between 2001 and 2005, Ms. Bryan was the
Chief Financial Officer of APL Logistics, the supply-chain management arm
of Singapore-based NOL Group, a logistics and global transportation
business. Prior to joining APL, Ms. Bryan spent 16 years with Ryder
System, Inc., a truck leasing company where Ms. Bryan served as Senior
Vice President and Chief Financial Officer of Ryder Transportation
Services in 1999 and 2000.
Skills &
Qualifications Ms. Bryan has extensive global financial and
accounting experience in a variety of business operations, especially in
logistics services. Ms. Bryan originally served on the Audit and Finance
Committee of the Board for five years, and was selected in 2009 by the
Board to serve as the Chair of the Governance Committee. Ms. Bryan
returned to the Audit and Finance Committee in 2015 and will become its
Chair in May 2017. |
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16 2017
Proxy Statement
Table of Contents
PROPOSAL
1
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11 Jacques
Esculier |
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Age: 57 |
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Director Since: 2014 |
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Committee Served: |
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►
Audit &
Finance |
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Biography Since
2007, Mr. Esculier has served as the Chief Executive Officer and a
Director and, since 2009, as Chairman of WABCO Holdings, Inc., a leading
global supplier of technologies and control systems for the safety and
efficiency of commercial vehicles. From 2004 to 2007, Mr. Esculier served
as Vice President of American Standard Companies Inc. and President of its
Vehicle Control Systems business. Prior to holding that position, Mr.
Esculier served as Business Leader for American Standards Trane
Commercial Systems Europe, Middle East, Africa, India and Asia Region and
in leadership positions at Allied Signal/Honeywell including as Vice
President and General Manager of Environmental Control and Power Systems
Enterprise and as Vice President of Aftermarket Services- Asia
Pacific.
Skills &
Qualifications Mr. Esculier
has significant leadership experience demonstrating a wealth of
operational management, strategic, organizational and business
transformation acumen. His deep knowledge of business in general and our
businesses, strengths and opportunities in particular, as well as his
experience as a director in a global public company allows him to make
significant contributions to the Board.
Other Public
Board Service: WABCO
Holdings, Inc. (2007Present) |
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12 David A.
Jones |
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Age: 67 |
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Director Since: 2003 |
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Committee Served: |
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► Compensation
(Chair)
► Governance |
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Biography Mr.
Jones serves as the Chair of our Compensation Committee. Since 2008, Mr.
Jones has been Senior Advisor to Oak Hill Capital Partners, a private
equity firm. In 2016, Mr. Jones was appointed to the board of directors of
Imagine! Print Solutions, a provider of in-store marketing solutions, and
in 2012, Mr. Jones was appointed to the board of directors of Earth Fare,
Inc., one of the largest natural food retailers in the U.S., both of which
are privately owned by Oak Hill Capital Partners. Between 1996 and 2007,
Mr. Jones was Chairman and Chief Executive Officer of Spectrum Brands,
Inc. (formerly Rayovac Corporation), a global consumer products company
with major businesses in batteries, lighting, shaving/grooming, personal
care, lawn and garden, household insecticide and pet supply product
categories. Mr. Jones also served in leadership roles with Rayovac,
Spectrum Brands, Thermoscan and The Regina Company.
Skills &
Qualifications Mr. Jones
extensive management experience with both public and private companies and
private equity funds, coupled with his global operational, financial and
mergers and acquisitions expertise, have given the Board invaluable
insight into a wide range of business situations. Mr. Jones has served on
each of our Board Committees, which has given him an understanding of the
impact on us of a wide range of business situations.
Other Public
Board Service: The Hillman
Group (20102014); Simmons Bedding Company (20002010); Spectrum Brands,
Inc. (19962007); Tyson Foods, Inc. (19952005); Dave & Busters
Holdings, Inc. (20102016) |
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Pentair plc 17
Table of Contents
PROPOSAL
1
DIRECTOR INDEPENDENCE
The Board, based on the recommendation of
the Governance Committee, determines the independence of each director based
upon the New York Stock Exchange listing standards and the categorical standards
of independence included in our Corporate Governance Principles. Based on these
standards, the Board has affirmatively determined that all of our non-employee
directors (i.e., Ms. Bryan, Ms. Williamson and Messrs. Burris, Davidson,
Esculier, Garden, Glenn, Ho, Jones, Merriman and Monahan) are independent and
have no material relationship with us (including our directors and officers)
that would interfere with their exercise of independent judgment. The Board has
affirmatively determined that Randall J. Hogan (the only employee who is a
director) is not independent because he is our Chief Executive
Officer.
In determining independence, our Board and
Governance Committee considers circumstances where a director serves as an
employee of another company that is a customer or supplier. The Board and
Committee have reviewed each of these relationships, which are set forth below.
In every case, the relationship involves sales to or purchases from the other
company that, for each of 2014 through 2016, were (a) less than the greater of
$1 million or 2% of that organizations consolidated gross revenues during each
of 2016, 2015 and 2014; and (b) not of an amount or nature that impeded the
directors exercise of independent judgment.
Director |
|
Relationship(s)
Considered |
Ms. Bryan |
|
Chief Financial Officer, Insight Enterprises,
Inc. |
Mr. Esculier |
|
Chief Executive Officer of WABCO Holdings, Inc. |
Mr. Glenn |
|
Executive Vice President Market Development and Corporate
Communications, FedEx Corporation; President and Chief Executive Officer
FedEx Corporate Services |
Mr. Jones |
|
Senior Advisor, Oak Hill Capital
Partners |
Our Governance Committee also considered
the fact that Mr. Davidson was Senior Vice President, Controller and Chief
Accounting Officer of Tyco International Ltd. until September 28, 2012, the date
on which Pentair Ltd. (the predecessor of Pentair plc), previously a subsidiary
of Tyco,was spun off by Tyco to its shareholders. Immediately following the
spin-off, a wholly owned subsidiary of Pentair Ltd. merged with and into
Pentair, Inc., with Pentair, Inc. surviving as a wholly owned subsidiary of
Pentair Ltd. (the Merger). Due to the resulting leadership structure after the
Merger, and the fact that Mr. Davidsons relationship with the former parent of
Pentair Ltd. ceased concurrently with the Merger, the Governance Committee
determined that Mr. Davidsons former officer position with Tyco does not
interfere with Mr. Davidsons exercise of independent judgment.
DIRECTOR QUALIFICATIONS; DIVERSITY AND
TENURE
The Governance Committee and the Board
recognize that the Boards contributions and effectiveness depend on the
character and abilities of each director individually as well as on their
collective strengths. Accordingly, the Committee and the Board evaluate
candidates based on several criteria. Directors are chosen with a view to
bringing to the Board a variety of experience and backgrounds and establishing a
core of business advisers with financial and management expertise. The Committee
and the Board also consider candidates with substantial experience outside the
business community, such as in the public, academic or scientific communities.
In addition, the Committee and the Board consider the tenure of incumbent
directors, with the goal of having a mix of shorter-tenured directors who
provide fresh perspectives and longer-tenured directors who provide experience
regarding our company and its business.
When considering candidates for election
as directors, the Committee and the Board are guided by the following
principles, found in our Corporate Governance Principles:
► |
at least a majority of the Board
must consist of independent directors; |
► |
each director should be chosen
without regard to gender, sexual orientation, race, religion or national
origin; |
► |
each director should be an
individual of the highest character and integrity and have an inquiring
mind, vision and the ability to work well with others; |
► |
each director should be free of any
conflict of interest that would violate any applicable law or regulation
or interfere with the proper performance of his or her responsibilities as
a director; |
► |
each director should possess
substantial and significant experience that could be important to us in
the performance of his or her duties; |
► |
each director should have sufficient
time available to devote to our affairs; and |
► |
each director should have the
capacity and desire to represent the balanced, best interests of the
shareholders as a whole and not primarily the interests of a special
interest group or constituency and be committed to enhancing long-term
shareholder value. |
Our policies on director qualifications
emphasize our commitment to diversity at the Board level diversity not only of
gender, sexual orientation, race, religion or national
18 2017
Proxy Statement
Table of Contents
PROPOSAL
1
origin but also diversity of experience,
expertise and training. The Governance Committee in the first instance is
charged with observing these policies, and strives in reviewing each candidate
to assess the fit of his or her qualifications with the needs of the Board and
our company at that time, given the then current
mix of directors attributes. Board composition, effectiveness and processes are
all subject areas of our annual Board self-assessment, which is described in
more detail below under Board and Committee Self-Assessments.
SHAREHOLDER RECOMMENDATIONS, NOMINATIONS
AND PROXY ACCESS
Our Corporate Governance Principles
provide that the Governance Committee will consider persons properly recommended
by shareholders to become nominees for election as directors in accordance with
the criteria described above under Directors Qualifications; Diversity and
Tenure. Recommendations for consideration by the Governance Committee, together
with appropriate biographical information concerning each proposed nominee,
should be sent in writing to c/o Corporate Secretary, Pentair plc, 43 London
Wall, London, EC2M 5TF, United Kingdom.
Our Articles of Association set forth
procedures to be followed by shareholders who wish to nominate candidates for
election as directors in connection with an Annual General Meeting. All such
nominations must be accompanied by certain background and other information
specified in the Articles of Association and submitted within the timing
requirements set forth in the Articles of
Association. See Shareholder Proposals and Nominations for the 2018 Annual
General Meeting below for more information.
In addition, subject to shareholder
approval at the 2017 Annual General Meeting, eligible shareholders may under
certain circumstances be able to nominate and include in our proxy materials a
specified number of candidates for election as directors under the proposed
proxy access provisions in our Articles of Association. All such nominations
must be accompanied by certain background and other information specified in our
Articles of Association and submitted within the timing requirements set forth
in our Articles of Association. See Proposal 6 Approve Amendments to Pentair
Plcs Articles of Association to Implement Proxy Access and Shareholder
Proposals and Nominations for the 2018 Annual General Meeting of Shareholders
below for more information.
Pentair plc 19
Table of Contents
CORPORATE GOVERNANCE MATTERS
THE BOARDS ROLE AND
RESPONSIBILITIES
At the direction of our Board, we have
instituted an enterprise-wide risk management system to assess, monitor and
mitigate risks that arise in the course of our business. The Board has
determined that the Board as a whole, and not a separate committee, will oversee
our risk management process. Each of our Board Committees has historically
focused and continues to focus on specific risks within their respective areas
of responsibility, but the Board believes
that the overall enterprise risk management process is more properly overseen by
the full Board. Our chief financial officer and general counsel are the primary
personnel responsible to the Board in the planning, assessment and reporting of
our risk profile. The Board reviews an assessment of, and a report on, our risk
profile on a regular basis.
Oversight in Company
Strategy |
At least once per year, the Board and
senior management engage in an in-depth strategic review of the Companys
outlook and strategies which is designed to create long-term shareholder value and serves as the foundation upon which
goals are established. Throughout the year, the Board then monitors managements
progress against such goals.
Oversight in Succession
Planning |
The Board views their role in succession
planning and talent development as a key responsibility. At least once annually,
usually as part of the annual talent review process, the Board discusses and
reviews the succession plans for the Chief Executive Officer position and other
executive officers and key contributors. The Directors become familiar with
potential successors for key management positions
through various means, including annual talent reviews, presentations to the
Board, and communications outside of meetings. Our succession planning process
is an organization-wide practice designed to proactively identify, develop and
retain the leadership talent that is critical for our future business
success.
Communicating with Shareholders
and Other Stakeholders |
We believe that maintaining an active
dialogue with our shareholders is important to our long-term success. We value
the opinions of our shareholders and other stakeholders and welcome their views
throughout the year on key issues. During 2016, we continued our shareholder
outreach on executive compensation and corporate governance matters. Our Lead
Director and the chair of our Compensation Committee and members of senior
management conducted outreach with our 35 largest shareholders representing
70.2% of our outstanding shares on these matters.
If you wish to communicate with the Board,
non-management directors as a group or any individual director, including the
Lead Director, you may send a letter addressed to the relevant party, c/o
Corporate Secretary, Pentair plc, 43 London Wall, London, EC2M 5TF, United
Kingdom. Any such communications will be forwarded directly to the
addressee(s).
20 2017
Proxy Statement
Table of Contents
CORPORATE GOVERNANCE MATTERS
Policies and Procedures Regarding
Related Person Transactions |
Our Board has adopted written policies and
procedures regarding related person transactions. For purposes of these policies
and procedures:
► |
a related person means any of our
directors, executive officers or 5% shareholders or any of their immediate
family members; and |
► |
a related person transaction
generally is a transaction (including any indebtedness or a guarantee of
indebtedness) in which we were or are a participant and the amount
involved exceeds $50,000, and in which a related person had or will have a
direct or indirect material interest. |
Potential related person transactions must
be disclosed in the manner required in our Articles of Association and be
brought to the attention of the Governance Committee directly or to the General
Counsel for transmission to the Committee. Disclosure to the Committee should
occur before, if possible, or as soon as practicable after the related person
transaction is effected, but in any event as soon as practicable after the
executive officer or director becomes aware of the related person transaction.
The Committees decision whether to approve or ratify a related person
transaction is to be made in light of a number of factors, including the
following:
► |
whether the terms of the related
person transaction are fair to us and on terms at least as favorable as
would apply if the other party had no affiliation with any of our
directors, executive officers or 5% shareholders; |
► |
whether there are demonstrable
business reasons for us to enter into the related person
transaction; |
► |
whether the related person
transaction could impair the independence of a director under our
Corporate Governance Principles standards for director independence;
and |
► |
whether the related person
transaction would present an improper conflict of interest for any of our
directors or executive officers, taking into account the size of the
transaction, the overall financial position of the director or executive
officer, the direct or indirect nature of the interest of the director or
executive officer in the transaction, the ongoing nature of any proposed
relationship, and any other factors the Committee deems
relevant. |
We had no related person transactions
during 2016. To our knowledge, no related person transactions are currently
proposed.
BOARD STRUCTURE AND PROCESSES
We and our Board are committed to the
highest standards of corporate governance and ethics. As part of this
commitment, the Board has adopted a set of Corporate Governance Principles that
sets out our policies on: f selection and composition of
the Board;
► |
selection and composition of the Board; |
► |
Board leadership;
|
► |
Board composition and
performance; |
► |
responsibilities of the
Board; |
► |
the Boards Relationship to senior
management; |
► |
meeting
procedures; |
► |
Committee matters;
and |
► |
succession planning and leadership
development. |
The Board regularly reviews and, if
appropriate, revises the Corporate Governance Principles and other governance
instruments, including the charters of its Audit and Finance, Compensation and
Governance Committees, in accordance with rules of the SEC and the NYSE. The
Board has also adopted a Code of Business Conduct and Ethics and has designated
it as the code of ethics for our Chief Executive Officer and senior financial
officers.
Copies of these documents are available,
free of charge, on our website at http://www.pentair.com/en/about-us/leadership/
corporate-governance.
Board Leadership
Structure |
We do not have a policy requiring the
positions of Chairman of the Board and Chief Executive Officer to be held by
different persons. Rather, the Board has the discretion to determine whether the
positions should be combined or separated. Since 2002, our Chief Executive
Officer has also been the Chairman of the Board. The Board believes that this
leadership structure has worked well for several reasons, among them:
► |
We historically have had a
super-majority of independent directors, with our Chief Executive Officer
the only employee serving as a director since 2007. |
► |
Since 2003 more than 13 years an
independent member of the Board has served as our Lead Director (see
below). |
► |
Our Lead Directors have served as an
effective communication channel, both between the independent Board
members and the Chief Executive Officer as well as among the independent
Board members. |
► |
Our independent directors meet in
executive session without the Chief Executive Officer present at every
regular meeting of the Board. |
Pentair plc 21
Table of Contents
CORPORATE GOVERNANCE MATTERS
► |
Our annual Board assessment process
addresses issues of Board structure and director
performance. |
Our Lead Director is selected each year by
our independent directors. Mr. Monahan has served as our Lead Director since
2008. The role of the Lead Director is to provide independent leadership to the
Board, act as liaison between and among the non-employee directors and our
company, and to seek to ensure that the Board operates independently of
management. The Lead Directors principal responsibilities include:
► |
chairing the Board in the absence of
the Chief Executive Officer; |
► |
presiding over all executive
sessions of the Board; |
► |
in conjunction with the Chairman of
the Compensation Committee, reporting to the Chief Executive Officer on
the Boards annual review of his
performance; |
► |
in conjunction with the Chairman of
the Board, approving the agenda for Board meetings, including scheduling
to assure sufficient time for discussion of all agenda
items; |
► |
in conjunction with the Chairman of
the Board and Committee Chairs, ensuring an appropriate flow of
information to the Directors; |
► |
holding one-on-one discussions with
individual directors where requested by directors or the Board;
and |
► |
carrying out other duties as
requested by the Board. |
Board and Committee
Self-Assessments |
The Board annually conducts a
self-assessment of the Board and each Committee. The assessment process consists
of a written evaluation comprising both quantitative scoring and narrative
comments on a range of topics, including the composition and structure of the
Board, the type and frequency of communications and information provided to the
Board and the Committees, the Boards effectiveness in carrying out its
functions and responsibilities, the effectiveness of the Committee structure,
directors preparation and participation in the meetings and the values and
culture displayed by the Board members. The
evaluation responses are compiled by a third party and shared with the Lead
Director and Governance Committee Chair who lead a discussion of the assessment
results at the following Board meeting.
In addition, a verbal assessment is
conducted in independent executive session at the end of every Board and
Committee meeting. This assessment includes a discussion of six specific areas
addressing various aspects of the Boards or Committees
effectiveness.
Board education is an ongoing, year-round
process, which begins when a director joins our Board. Upon joining our Board,
new directors are provided with a comprehensive orientation to our company,
including our business, strategy and governance. For example, new directors
typically participate in one-on-one introductory meetings with our senior
business and functional leaders. On an ongoing
basis, directors receive presentations on a variety of topics related to their
work on the Board and within the industry, both from senior management and from
experts outside of the company. Directors may also enroll in continuing
education programs sponsored by third parties at our expense.
22 2017
Proxy Statement
Table of Contents
CORPORATE GOVERNANCE MATTERS
COMMITTEES OF THE BOARD
The Board has three standing committees
comprised solely of independent directors: the Audit and Finance Committee, the
Compensation Committee and the Governance Committee. The committee members
generally also meet in executive session without management present at each
meeting.
5 |
MEETINGS OF THE PENTAIR BOARD OF
DIRECTORS |
8 |
Meetings of the Audit and
Finance Committee |
|
4 |
Meetings of
the Compensation Committee |
|
4 |
Meetings of
the Governance Committee |
Audit and Finance Committee |
Role: |
|
The Audit and Finance Committee is
responsible, among other things, for assisting the Board with oversight of
our accounting and financial reporting processes, oversight of our
financing strategy, investment policies and financial condition, and
audits of our financial statements. These responsibilities include the
integrity of the financial statements, compliance with legal and
regulatory requirements, the independence and qualifications of our
external auditor and the performance of our internal audit function and of
the external auditor. The Committee is directly responsible for the
appointment, compensation, evaluation, terms of engagement (including
retention and termination) and oversight of the independent registered
public accounting firm. The Committee holds meetings periodically with our
independent and internal auditors, the Board and management to review and
monitor the adequacy and effectiveness of reporting, internal controls,
risk assessment and compliance with our policies. |
Members: |
|
Ronald L. Merriman (Chair until May
2017), Glynis A. Bryan (Chair beginning in May 2017), Jacques Esculier,
David H.Y. Ho and Billie Ida Williamson. All members have been determined
to be independent under SEC and NYSE rules. Mr. Merriman is a member of
the audit committees of Aircastle Limited, Realty Income Corporation and
Haemonetics Corporation, each of which is a publicly-traded company. The
Board has determined that Mr. Merrimans service on the audit committees
of three other public companies does not impair his ability to effectively
serve as Chair of our Audit and Finance Committee. In May 2017, Ms. Bryan
will replace Mr. Merriman as the Chair of the Audit and Finance
Committee. |
Report: |
|
You can find the Audit and Finance
Committee Report under Audit and Finance Committee Report of this Proxy
Statement. |
Financial
Experts: |
|
The Board has determined that all
members of the Committee are financially literate under NYSE rules and
qualify as audit committee financial experts under SEC standards.
|
Compensation Committee |
Role: |
|
The Compensation Committee sets and
administers the policies that govern executive compensation. This includes
establishing and reviewing executive base salaries and administering cash
bonus and equity-based compensation under the Pentair plc 2012 Stock and
Incentive Plan. The Committee also sets the Chief Executive Officers
compensation based on the Boards annual evaluation of his performance.
The Committee has engaged Aon Hewitt, a human resources consulting firm,
to aid the Committee in its annual review of our executive compensation
programs for continuing appropriateness and reasonableness and to make
recommendations regarding executive officer compensation levels and
structures. In reviewing our compensation programs, the Committee also
considers other sources to evaluate external market, industry and peer
company practices. Information regarding the independence of Aon Hewitt is
included under Compensation Discussion and Analysis Compensation
Consultant. A more complete description of the Compensation Committees
practices can be found under Compensation Discussion and Analysis under
the headings Comparative Framework and Compensation Consultant.
|
Members: |
|
David A. Jones (Chair), Jerry W.
Burris, Edward P. Garden, T. Michael Glenn and William T. Monahan. All
members have been determined to be independent under SEC and NYSE
rules. |
Report: |
|
You can find the Compensation
Committee Report under Compensation Committee Report of this Proxy
Statement. |
Pentair plc 23
Table of Contents
CORPORATE GOVERNANCE MATTERS
Governance Committee |
Role: |
|
The Governance Committee is
responsible for, among other things, identifying individuals qualified to
become directors and recommending nominees to the Board for election at
Annual General Meetings. In addition, the Committee monitors developments
in director compensation and, as appropriate, recommends changes in
director compensation to the Board. The Committee is also responsible for
reviewing annually and recommending to the Board changes to our corporate
governance principles and administering the annual Board and Board
Committee self-assessment. Finally, the Committee oversees public policy
matters and compliance with our Code of Business Conduct and
Ethics. |
Members: |
|
T. Michael Glenn (Chair), Jerry W.
Burris, Edward P. Garden, David A. Jones and William T. Monahan. All
members have been determined to be independent under NYSE
rules. |
ATTENDANCE AT MEETINGS
The Board held five meetings in 2016.
Members of the Board are expected to attend all scheduled meetings of the Board
and the Committees on which they serve and all shareholder meetings. In each
regularly scheduled meeting, the independent directors also met in executive
session, without the Chief Executive Officer or other members of management
present. All directors attended at least 75% of the aggregate of all meetings of the Board and all meetings
of the Committees on which they served during the period for which such persons
served as directors in 2016, with an average attendance of over 97%. We expect
our directors to attend our Annual General Meetings. All the directors in office
attended the 2016 Annual General Meeting in person, except for Mr. Jones, who
attended by telephone.
DIRECTOR COMPENSATION
Director compensation is recommended by
the Governance Committee and approved by the Board. We use a combination of cash
and equity-based incentive compensation to attract and retain qualified
directors. Compensation of our directors reflects our belief that a significant
portion of directors compensation should be tied to long-term
growth in shareholder value. Mr. Hogan, our CEO, is our only employee director;
he receives no separate compensation for his Board service. Directors do not
receive fees for meeting attendance.
The annual retainers for non-employee
directors service on the Board and Board Committees in 2016 were as
follows:
Board Retainer |
|
$123,000 |
Lead Director Supplemental Retainer |
|
$40,000 |
Audit and Finance Committee Chair Supplemental
Retainer |
|
$25,000 |
Compensation Committee Chair Supplemental Retainer |
|
$25,000 |
Governance Committee Chair Supplemental Retainer |
|
$20,000 |
Audit and Finance Committee Retainer |
|
$23,500 |
Other Committee Retainer (per committee) |
|
$11,750 |
To be consistent with the benchmarking
changes caused by the change to Pentairs peer group for executive compensation
for 2017, the annual retainers for non-employee directors service on the Board
and Board Committees for 2017 will be reduced as follows:
Board Retainer |
|
$120,000 |
Lead Director Supplemental Retainer |
|
$30,000 |
Audit and Finance Committee Chair Supplemental
Retainer |
|
$25,000 |
Compensation Committee Chair Supplemental Retainer |
|
$20,000 |
Governance Committee Chair Supplemental Retainer |
|
$15,000 |
Audit and Finance Committee Retainer |
|
$12,500 |
Other Committee Retainer (per committee) |
|
$6,250 |
24 2017
Proxy Statement
Table of Contents
CORPORATE GOVERNANCE
MATTERS
Non-employee directors also receive an
annual grant of options and restricted stock units under the Pentair plc 2012
Stock and Incentive Plan (Pentair plc 2012 Stock and Incentive Plan) as a part
of their compensation unless a director has not met the stock ownership
guidelines described below, in which case a director only receives a grant of
restricted stock units. Options are exercisable at the closing price of our
stock on the date of grant, have a ten-year term and vest in three
installments on the first, second and third
anniversaries of the grant date. Restricted stock units vest on the first
anniversary of the grant date. Each restricted stock unit represents the right
to receive one of our ordinary shares upon vesting and includes one dividend
equivalent unit, which entitles the holder to all cash dividends declared on one
of our ordinary shares from and after the date of grant.
Stock Ownership Guidelines
for Non-Employee Directors |
Non-employee directors are expected to
acquire and hold our ordinary shares or stock equivalents having a value equal
to five times the annual retainer for non-employee directors within five years
after election or appointment to the Board.
STOCK OWNERSHIP FOR DIRECTORS SERVING AS
OF DECEMBER 31, 2016
|
Share |
|
|
12/31/16 |
|
Ownership |
|
|
|
|
Ownership |
|
|
Market Value |
|
Guideline |
|
|
|
|
(1) |
|
|
($)(2) |
|
($) |
|
Meets Guideline |
|
Glynis A. Bryan |
22,817 |
|
|
1,279,326 |
|
615,000 |
|
Yes |
|
Jerry W. Burris |
14,906 |
|
|
835,779 |
|
615,000 |
|
Yes |
|
Carol Anthony (John) Davidson |
15,140 |
|
|
848,900 |
|
615,000 |
|
Yes |
|
Jacques Esculier |
6,387 |
|
|
358,119 |
|
615,000 |
|
No |
(3) |
Edward P. Garden |
14,337,040 |
(4) |
|
803,877,833 |
|
615,000 |
|
Yes |
|
T.
Michael Glenn |
16,917 |
|
|
948,519 |
|
615,000 |
|
Yes |
|
David H. Y. Ho |
12,001 |
|
|
672,896 |
|
615,000 |
|
Yes |
|
David A. Jones |
40,058 |
|
|
2,246,041 |
|
615,000 |
|
Yes |
|
Ronald L. Merriman |
20,786 |
|
|
1,165,475 |
|
615,000 |
|
Yes |
|
William T. Monahan |
53,977 |
|
|
3,026,505 |
|
615,000 |
|
Yes |
|
Billie I. Williamson |
6,351 |
|
|
356,101 |
|
615,000 |
|
No |
(3) |
(1) |
The amounts in this column include ordinary shares owned
by the director, both directly and indirectly, and unvested restricted
stock units. |
(2) |
Based on the closing market price for our ordinary
shares on December 30, 2016 of $56.07. |
(3) |
Non-employee directors have until the later of five
years after their election or appointment as a director to meet the stock
ownership guideline. Mr. Esculier and Ms. Williamson were first appointed
as directors in 2014. |
(4) |
Includes 14,335,888 shares owned by certain funds and
investment vehicles managed by Trian, which Mr. Garden may be deemed to
indirectly beneficially own, as described in further detail in the section
titled Security Ownership below. These shares are deemed to be held by
Mr. Garden for purposes of the stock ownership guidelines. |
Pentair plc 25
Table of Contents
CORPORATE GOVERNANCE
MATTERS
Director Compensation
Table |
The table below summarizes the
compensation that we paid to non-employee directors for 2016.
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
and Deferred |
|
|
|
|
|
|
Fees Earned or |
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All Other |
|
|
|
|
Paid in Cash |
|
Awards |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Name |
|
($) |
|
($)(1) |
|
($)(2) |
|
($) |
|
($) |
|
($) |
|
($) |
Glynis A. Bryan |
|
146,500 |
|
67,514 |
|
67,427 |
|
- |
|
- |
|
- |
|
281,441 |
Jerry W. Burris |
|
146,500 |
|
67,514 |
|
67,427 |
|
- |
|
- |
|
- |
|
281,441 |
Carol Anthony (John) Davidson |
|
123,000 |
|
67,514 |
|
67,427 |
|
- |
|
- |
|
- |
|
257,941 |
Jacques Esculier |
|
146,500 |
|
134,978 |
|
- |
|
- |
|
- |
|
- |
|
281,478 |
Edward P. Garden(3) |
|
109,875 |
|
67,473 |
|
67,474 |
|
- |
|
- |
|
- |
|
244,821 |
T. Michael Glenn |
|
166,500 |
|
67,514 |
|
67,427 |
|
- |
|
- |
|
- |
|
301,441 |
David H. Y. Ho |
|
146,500 |
|
67,514 |
|
67,427 |
|
- |
|
- |
|
- |
|
281,441 |
David A. Jones |
|
171,500 |
|
67,514 |
|
67,427 |
|
- |
|
- |
|
- |
|
306,441 |
Ronald L. Merriman |
|
171,500 |
|
67,514 |
|
67,427 |
|
- |
|
- |
|
- |
|
306,441 |
William T. Monahan |
|
186,500 |
|
67,514 |
|
67,427 |
|
- |
|
- |
|
- |
|
321,441 |
Billie I. Williamson |
|
146,500 |
|
134,978 |
|
- |
|
- |
|
- |
|
- |
|
281,478 |
(1) |
The amounts in column (c)
represent the aggregate grant date fair value, computed in accordance with
Accounting Standards Codification 718 (ASC 718), of restricted stock
units granted during 2016. Assumptions used in the calculation of these
amounts are included in footnote 15 to our audited financial statements
for the year ended December 31, 2016 included in our Annual Report on Form
10-K filed with the SEC on February 21, 2017. Mr. Esculier and
Ms.Williamson only received a grant of restricted stock units because they
have not met the stock ownership guidelines as described above. As of
December 31, 2016, each director had the unvested restricted stock units
and deferred share units shown in the table
below. |
|
Unvested Restricted |
|
Deferred |
Name |
Stock Units |
|
Share Units |
Glynis A. Bryan |
1,370 |
|
4,960 |
Jerry W. Burris |
1,370 |
|
- |
Carol Anthony (John) Davidson |
1,370 |
|
- |
Jacques Esculier |
2,739 |
|
- |
Edward P. Garden |
1,152 |
|
- |
T.
Michael Glenn |
1,370 |
|
1,012 |
David H. Y. Ho |
1,370 |
|
- |
David A. Jones |
1,370 |
|
28,706 |
Ronald L. Merriman |
1,370 |
|
423 |
William T. Monahan |
1,370 |
|
12,773 |
Billie I. Williamson |
2,739 |
|
- |
(2) |
The amounts in column (d)
represent the aggregate grant date fair value, computed in accordance with
ASC 718, of stock options granted during 2016. Assumptions used in the
calculation of these amounts are included in footnote 15 to our audited
financial statements for the year ended December 31, 2016 included in our
Annual Report on Form 10-K filed with the SEC on February 21, 2017. As of
December 31, 2016, each director had the outstanding stock options shown
in the table below. |
|
Outstanding Stock |
Name |
Options |
Glynis A. Bryan |
60,754 |
Jerry W. Burris |
53,554 |
Carol Anthony (John) Davidson |
16,840 |
Jacques Esculier |
- |
Edward P. Garden |
5,898 |
T.
Michael Glenn |
60,754 |
David H. Y. Ho |
16,840 |
David A. Jones |
43,554 |
Ronald L. Merriman |
58,754 |
William T. Monahan |
60,754 |
Billie I. Williamson |
- |
(3) |
Mr. Garden has advised us that,
pursuant to his arrangement with Trian, he transfers to Trian, or holds for the
benefit of Trian, all director compensation paid to him. |
26 2017
Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
|
|
|
|
|
|
PROPOSAL 2 |
|
|
APPROVE, BY NON-BINDING ADVISORY VOTE,
THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS |
|
|
|
The Board
recommends a vote FOR approval of
the compensation of the Named Executive Officers |
|
|
|
|
|
|
See discussion beginning on page 29 for further information about
the compensation of the Named Executive Officers |
|
|
|
|
|
|
The Board is asking the shareholders to
approve, by non-binding advisory vote, the compensation of the Named Executive
Officers disclosed in the sections below titled Compensation Discussion and
Analysis and Executive Compensation Tables.
Executive compensation is an important
matter to the Board and the Compensation Committee and to our shareholders. We
have designed our executive compensation programs to align executive and
shareholder interests by rewarding the achievement of specific annual,
longer-term and strategic goals that create long-term shareholder value. We
believe that our executive compensation programs provide competitive
compensation that will motivate and reward executives for achieving financial
and strategic objectives, provide rewards commensurate with performance to
incentivize the Named Executive Officers to perform at their highest levels,
encourage growth and innovation, attract and retain the Named Executive Officers
and other key executives and align our executive compensation with shareholders
interests through the use of equity-based incentive awards.
The Compensation Committee has overseen
the development and implementation of our executive compensation programs in
line with these compensation objectives. The Compensation Committee also
continuously reviews, evaluates and updates our executive compensation programs
to ensure that we provide competitive compensation that motivates the Named
Executive Officers to perform at their highest levels while increasing long-term
value to our shareholders.
With these compensation objectives
in mind, the Compensation Committee has taken a number of compensation
actions to align with our shareholders interests, including the
following:
►No automatic single trigger change in control vesting
and excise tax gross-ups in new agreements with our executive officers.
►Annual cash incentives for the Named Executive Officers
are based on performance goals that correlate strongly with two primary
corporate objectives: improving the financial return from our businesses
and strengthening our balance sheet through cash flow improvement and debt
reduction.
►A significant portion of total compensation is at risk
if certain performance goals are not satisfied or otherwise subject to our
future performance.
►Executive officers must comply with vigorous stock
ownership guidelines.
►Perquisites are generally limited to an annual cash
allowance, subject to limited exceptions described below under the heading
Perquisites and Other Personal Benefits. |
As described in detail under Compensation
Discussion and Analysis Shareholder Outreach and Response to 2016 Say on Pay
Vote, we engaged in a robust program of shareholder outreach in 2016 and have
made significant changes to our compensation programs as a result.
These and other actions demonstrate our
continued commitment to align executive compensation with shareholders
interests while providing competitive compensation to attract, motivate and
retain the Named Executive Officers and other key executives. We will continue
to review and adjust our executive compensation programs with these goals in
mind to ensure the long-term success of our company and generate increased
long-term value to our shareholders.
This non-binding advisory vote gives you
an opportunity to express your views about our executive compensation programs.
As we further align our executive compensation programs with the interests of
our shareholders while continuing to retain key talented executives that drive
our companys success, we ask that you approve the compensation of the Named
Executive Officers.
The resolution in respect of this Proposal
2 is an ordinary resolution. The text of the resolution in respect of Proposal 2
is as follows:
IT IS
RESOLVED, that, on a non-binding, advisory
basis, the compensation of Pentair plcs Named Executive Officers as disclosed
in the Compensation Discussion and Analysis, the accompanying compensation
tables and the related disclosures contained in Pentair plcs proxy statement is
hereby approved.
Pentair plc 27
Table of Contents
EXECUTIVE COMPENSATION
VOTE REQUIREMENT
Approval, by non-binding advisory vote, of
the compensation of the Named Executive Officers requires the affirmative vote
of a majority of the votes cast in person or by proxy at the Annual General
Meeting.
EACH OF THE BOARD AND THE COMPENSATION COMMITTEE RECOMMENDS
A VOTE FOR THE APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE
OFFICERS. |
COMPENSATION COMMITTEE
REPORT
The Committee has reviewed and discussed
the following Compensation Discussion and Analysis with management and, based on
such review and discussions, the Committee has recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy Statement and
incorporated by reference into our Annual Report on Form 10-K for the year ended
December 31, 2016.
THE COMPENSATION COMMITTEE
David A. Jones, Chair
Jerry W. Burris
T. Michael Glenn
William T. Monahan
28 2017
Proxy Statement
Table of Contents
COMPENSATION
DISCUSSION AND ANALYSIS
OVERVIEW OF COMPENSATION PROGRAM,
PHILOSOPHY AND OBJECTIVES
The Compensation Committee sets and
administers the policies that govern our executive compensation,
including:
► |
establishing and reviewing executive
base salaries; |
► |
overseeing our annual incentive
compensation plans; |
► |
overseeing our long-term
equity-based compensation plan; |
► |
approving all awards under those
plans; |
► |
annually evaluating risk
considerations associated with our executive compensation programs;
and |
► |
annually approving all compensation
decisions for executive officers, including those for the Chief Executive
Officer and the other officers named in the Summary Compensation Table
below (collectively, the Named Executive
Officers). |
The Committee believes that the most
effective executive compensation program aligns executive initiatives with
shareholders economic interests. The Committee seeks to accomplish this by
rewarding the achievement of specific annual, longer-term and strategic goals
that create lasting shareholder value. The Committees specific objectives
include:
► |
motivating and rewarding executives
for achieving financial and strategic objectives; |
► |
aligning management and shareholder
interests by encouraging employee stock ownership; |
► |
providing rewards commensurate with
individual and company performance; |
► |
encouraging growth and innovation;
and |
► |
attracting and retaining top-quality
executives and key employees. |
To balance the objectives described above,
our executive compensation program uses the following direct compensation
elements:
► |
base salary, to provide fixed
compensation competitive in the marketplace; |
► |
annual incentive compensation, to
reward short-term performance against specific financial targets and
individual goals; and |
► |
long-term incentive compensation, to
link management incentives to long-term value creation and shareholder
return. We also provide retirement, a prerequisite allowance and other
benefits, to attract and retain executives over the longer
term. |
The Compensation Committee reviews total
compensation for executive officers and the relative levels of each of these
forms of compensation against the Committees goals. The mix of total direct
compensation for 2016 for our CEO and the average of the other NEOs is shown in
the chart below.
2016 DIRECT COMPENSATION
MIX |
|
|
|
Pentair plc 29
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
2016 BUSINESS RESULTS*
2016 was an historic year for Pentair as
we celebrated our 50 year anniversary as a company and marked our 40th year of
increasing dividends to shareholders. That celebration highlighted many of the
values and qualities that have been at the core of our company since it was
founded in 1966. In 2016, Mr. Hogan also completed his 16th year as our CEO.
During Mr. Hogans tenure, Pentairs market capitalization has grown by 821%
while delivering a total shareholder return of 538%.
The market environment in 2016 remained
challenged as continued weakness in energy and industrial markets negatively
impacted the financial results in a number of our businesses. Management
responded by taking significant restructuring and operating actions to reduce
costs and maintain operating margins, achieving solid gains over 2015. We
increased EPS by 14%, adjusted EPS by 8%, operating income by 14% and segment
income by 11% and converted 109% of our adjusted net income to free cash flow.
In 2016, we also announced an agreement to sell our Valves & Controls
business to Emerson Electric Co. We expect the sale of Valves & Controls to
significantly strengthen our balance sheet and liquidity position and enable us
to focus on our strategic priorities in Water and Electrical.
In 2016 our total shareholder return was
16%, a marked improvement following the difficult years we faced since oil
prices began their precipitous decline toward the end of 2014.
At that time, nearly 30% of our business
was directly impacted by energy markets and our stock price suffered
accordingly. Foreign exchange headwinds and weakening economies in Asia, Latin
America, and the Middle East compounded these challenges. Under Mr. Hogans
leadership, Pentair responded by taking decisive action to cut costs, cull our
portfolio, and redouble our commitment to the Pentair Integrated Management
System (PIMS). In response to these challenging market conditions, the
Compensation Committee also kept Mr. Hogans base salary, annual incentive and
long-term incentive targets substantially unchanged from 2015 through 2017. For
2015, we did not pay out any annual incentive compensation to our Named
Executive Officers. Realizable pay related to our long-term incentive awards has
been significantly below the grant values over this period, and the Compensation
Committee again froze the base salaries of all Named Executive Officers for
2017.
While our stock price has not returned to
the $83 peak it achieved in March of 2014 when the price of oil was more than
$100/barrel, we are encouraged by our progress in 2016 and the outlook for 2017.
Our Win-Right Values continue to guide how we conduct business, including our
commitment to a performance-based executive compensation program that closely
aligns the interests of our executives with those of our
shareholders.
ADJUSTED
EPS |
|
|
|
In 2016 we fulfilled our
long-standing commitment of delivering performance for our shareholders
with year over year increases in all key financial measures. Earnings per
diluted share from continuing operations (EPS) were $2.47 in 2016
compared to $2.17 in 2015. On an adjusted basis, EPS increased 8% to $3.05
in 2016 compared to $2.83 in 2015. |
* Please see Appendix A for reconciliation
of GAAP to non-GAAP financial measures included in this section.
30 2017
Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
SEGMENT
INCOME |
|
|
|
Operating income in 2016 was $701
million compared to $616 million in 2015. On an adjusted basis, our
segment income increased 11% over the prior year to $840 million in 2016
from $755 million in 2015. Segment income as a percent of sales grew to
17.2% in 2016 from 16.8% in 2015. |
FREE CASH
FLOW |
|
|
|
Net cash provided by operating
activities of continuing operations was $702 million in 2016 compared to
$598 million in 2015. Free cash flow from continuing operations of $609
million represented approximately 110% conversion of adjusted net income
from continuing operations. In 2016 we increased the cash dividend paid to
our shareholders for the 40th consecutive year, returning over $240
million to our shareholders. |
SALES |
|
|
|
Our sales during 2016 were $4,890
million, up 6% compared to $4,616 million in
2015. |
On August 18, 2016, we entered into a
Share Purchase Agreement to sell our Valves & Controls business to Emerson
Electric Co. The results of the Valves & Controls business have been
presented as discontinued operations for all periods presented.
Pentair plc 31
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
Key
Compensation Facts
►Our CEOs target incentive compensation amounts have not
been materially increased since 2015
►Our Named Executive Officers realizable long-term
incentive compensation amounts have been significantly below the target
grant values since 2015
►The 2016 total compensation amounts shown in our
required 2016 Summary Compensation Table are higher in part because we are
required to show two years worth of long-term incentives in a single year
due to our replacement of cash settled performance units with performance
share units in our long-term incentive program
►Our CEOs total compensation amount for 2016 was also
significantly impacted by a change in pension value resulting from the
pension plans benefit formula and interest rate
changes |
|
|
CEO
COMPENSATION SUMMARY COMPENSATION TABLE VS. REALIZABLE LONG-TERM INCENTIVE
COMPENSATION 3
YEAR |
|
|
|
|
Realizable pay is
calculated using the number of restricted stock units and performance shares
granted to our CEO (adjusted to reflect the estimated payout of outstanding
performance shares based on performance through the end of 2016) in each
year multiplied by our share price on the last trading day of 2016 of
$56.07, plus the aggregate intrinsic value of all stock options granted in
each year calculated based on our share price on the last trading day of
2016 of $56.07. |
SHAREHOLDER OUTREACH AND RESPONSE TO 2016
SAY ON PAY VOTE
In April 2016, one proxy advisory firm
recommended that shareholders vote against approving the compensation of our
Named Executive Officers in our annual advisory shareholder vote (our say on
pay vote) at our 2016 Annual General Meeting. As a result of this disappointing
recommendation we reached out to shareholders to gain additional insight and to
provide them with clarifying information enabling them to make an informed
decision on the say on pay vote. Shareholders ultimately supported our say on
pay vote on May 10, 2016, with approximately 72% of votes cast in favor, but the
level of support was down substantially from the 92% of votes cast in favor of
our say on pay vote in 2015.
Our 2016 shareholder outreach included 35
of our largest shareholders representing 70.2% of our outstanding shares. These
shareholders either arranged for individual discussions with us or provided us
with feedback that they did not require a meeting. The purpose of the outreach
was to better understand shareholder perspectives and evaluate any concerns
regarding our executive compensation program.
Given the commitment of the Board to understanding the perspectives of our
shareholders, our Lead Director and Compensation Committee Chair participated in
the majority of the calls with our investors. Shareholder feedback and
suggestions on our executive compensation program were shared and discussed with
the Compensation Committee and the entire Board. We found the robust shareholder
engagement process to be valuable and intend to continue it annually.
A majority of the investors we spoke with
were supportive of our executive compensation program. We listened to and
considered the suggestions and opinions our investors shared on how to further
enhance our executive compensation program. While shareholders have different
points of view, several key themes emerged, supporting changes the Compensation
Committee had already approved in 2016 and, after careful consideration, adopted
in 2017:
What We Heard from our
Shareholders
► |
The Companys executive compensation program
demonstrates a true pay-for-performance linkage and shareholder
alignment. |
► |
CEOs and other Named Executive Officers
compensation should be appropriately risk-based, balancing annual and
long-term performance. |
► |
Goal setting should support the achievement of
strategic business goals and creation of shareholder
value. |
Actions Taken Prior to Our
Shareholder Outreach that Our Investors Supported
► |
Any payment under our annual and long-term
incentive plans requires the attainment of rigorous performance thresholds
and stretch targets as evidenced by the following actions: |
|
►The CEO and other Named Executive Officers did not
receive an annual incentive payment in 2016 for 2015 performance,
reflecting the severe market downturns in mining, energy and oil and gas.
|
32 2017
Proxy Statement
Table of
Contents
COMPENSATION
DISCUSSION AND ANALYSIS
|
►The long-term performance cash plan for the three-year
performance period ending on December 31, 2016 also paid out well below
target (page 40). |
► |
For 2016, the Compensation Committee again
established challenging performance thresholds and stretch targets,
ensuring that any payment under the Companys incentive plans required
meaningful financial and operating performance (page
36). |
Actions Taken Considering
Our Shareholders Feedback
► |
The Compensation Committee
carefully assessed the 2017 annual and long-term incentive opportunity,
taking into account not only competitive market data, but also factors
such as company, business unit and individual performance, scope of
responsibility, critical needs and skill sets, experience, leadership
potential and succession planning. |
► |
The Compensation Committee
also evaluated the pay mix of our CEO and our other Named Executive
Officers for 2017, as it does every year, to ensure annual and long-term
incentives are properly balanced. |
► |
In 2016 annual and long-term
incentives again reflected company performance
appropriately: |
► |
The annual incentive plan paid
out at below target overall as above target free cash flow generation was
offset by below target income performance and below threshold core revenue
growth (page 37). |
► |
The long-term performance cash
plan for the three-year performance period ending on December 31, 2016
paid out at 30% of target, due to the challenging business conditions over
the performance period (page 40). |
What We Heard from our
Shareholders
► |
Annual incentive plan measures
of operating income and free cash flow are well aligned with shareholder
interests. |
► |
Free cash flow measure is
particularly valued because it reflects the quality of our earnings
stream. |
► |
Reward profitable growth, not
growth at any cost. |
Actions Taken Prior to
Our Shareholder Outreach that Our Investors Supported
► |
Increased the weighting of our
free cash flow measure from 10% to 30%, bringing renewed focus on what has
been a traditional strength of our company and resulting in superior free
cash flow performance in 2016 (page 37). |
► |
Reduced the weighting of
individual performance in the annual incentive from 20% to 10% (page
37). |
Actions Taken Considering
Our Shareholders Feedback
► |
Replaced core revenue growth
with a profitable growth measure and increased the weighting from 20% to
30% for 2017 annual incentives. |
► |
Eliminated the strategic deployment factor (SDF) from the 2017 annual
incentive of the Executive Officers to further reinforce the importance of financial and operating
results. |
Long Term Incentive
Design |
What We Heard from our
Shareholders
► |
Greater portion of long-term
compensation should be performance-vested equity. |
► |
Adjusted EPS viewed as a
measure closely tied to creation of shareholder value, but suggestion to
add a return and/or relative performance measure. |
► |
Disclosure of performance goals in year of
grant. |
► |
CEO and other Executive
Officer stock ownership highly valued. |
Actions Taken Prior to
Our Shareholder Outreach that Our Investors Supported
► |
Replaced cash-settled
performance units with performance share units. |
► |
Introduced adjusted EPS as the
performance share unit measure. |
► |
Established rigorous
three-year adjusted EPS growth goals to support the creation of long-term
shareholder value. |
Actions Taken Considering
Our Shareholders Feedback
► |
For 2017, increased
performance share units from one third to 50% of the Executive Officers
long-term incentive mix and reduced restricted stock units and stock
options proportionately. |
► |
Augmented adjusted EPS growth
measure with return on equity (ROE) weighted 75% and 25% respectively for
2017 awards. |
► |
Performance goals disclosed for adjusted EPS and
return on equity (ROE) performance share units in the year of grant (page
39). |
► |
Increased stock ownership
requirement from 2.0-times base salary to 2.5 times base salary for
Segment Presidents in 2017. The CEO is already subject to a robust 6x base
salary requirement. |
Pentair plc 33
Table of
Contents
COMPENSATION
DISCUSSION AND ANALYSIS
COMPARATIVE
FRAMEWORK
In setting compensation for our executive
officers, including our Named Executive Officers, the Committee uses competitive
compensation data from an annual total compensation study of selected peer
companies and other relevant survey sources to inform its decisions about
overall compensation opportunities and specific compensation elements.
Additionally, the Committee uses multiple reference points when establishing
targeted compensation levels. The Committee applies judgment and discretion in
establishing targeted pay levels, taking into account not only competitive
market data, but also factors such as company, business unit and individual
performance, scope of responsibility, critical needs and skill sets, experience,
leadership potential and succession planning. In setting compensation for 2016,
the Committee engaged Aon Hewitt to provide the annual total
compensation study of selected peer groups referred to above. All companies in
the peer group were:
► |
publicly-traded on a major
exchange; |
► |
similar in business scope
and/or operations to our business units and global in nature; |
► |
within a reasonable revenue
range (generally 0.5x to 3x) compared to our revenue; and |
► |
engaged in the same or a
similar industry to ours, based on Global Industry Classification Standard
(GICS) code: industrial machinery, electrical components and equipment,
agricultural and farm machinery, building products, electronic components,
industrial conglomerates and security and alarm
services. |
Based on Aon Hewitts review and
recommendations and the foregoing criteria, the Committee maintained the
existing group of peer companies for benchmarking purposes with respect to 2016
compensation, which consisted of the following 17 companies (the Comparator
Group):
AGCO Corporation |
Cummins Inc. |
Danaher Corporation |
Dover Corporation |
Eaton Corporation plc |
Emerson Electric Co. |
Flowserve Corporation |
Illinois Tool Works Inc. |
Ingersoll-Rand plc |
Masco Corp. |
Parker-Hannifin
Corporation |
Rockwell Automation, Inc. |
SPX Corporation |
Stanley Black & Decker,
Inc. |
The Timken Company |
Tyco
International plc (n/k/a Johnson |
Xylem
Inc. |
|
Controls International plc) |
|
|
The Comparator Group companies had
revenues ranging from approximately $3.0 billion to $24.5 billion, with median
revenues of approximately $10.3 billion. Our revenue for 2016 was $4.89 billion.
Companies that fall outside the revenue range of 0.5x to 3x compared to our
revenue have been removed for the 2017 Comparator Group and replaced with
appropriate peers.
In late 2016, in anticipation of the
sale of our Valves & Controls business, the Committee asked Aon Hewitt
to provide recommendations concerning potential changes to our Comparator
Group for 2017 to reflect the impact of the sale on our revenue and
operations. Based on Aon Hewitts recommendations, the Committee approved
an updated Comparator Group for use in setting target compensation for
2017 for our executive officers, including our Named Executive Officers.
We will describe in detail the updated Comparator Group for 2017 in our
proxy statement for our 2018 Annual General
Meeting. |
2016 COMPENSATION
PROGRAM ELEMENTS
For 2016, the principal components of
compensation for Named Executive Officers were:
► |
base salary; |
► |
annual incentive
compensation; |
► |
long-term incentive
compensation, consisting of stock options, restricted stock units and
performance share units; |
► |
retirement and health &
welfare benefits; and |
► |
perquisite
allowance. |
The Committee reviews total compensation
for executive officers and the relative levels of each of these forms of
compensation against the Committees goals to attract, retain and incentivize
talented executives and to align the interests of these executives with those of
our long-term shareholders.
34 2017
Proxy Statement
Table of
Contents
COMPENSATION
DISCUSSION AND ANALYSIS
BASE
SALARIES
We provide each Named Executive Officer
with a fixed base salary. In setting base salaries, the Committee generally
references comparable positions at peer companies based on available market
data, which include published survey data and proxy statement data for our
Comparator Group. The Committee considers compensation at comparable companies, and does
not set base salaries based on a particular peer group benchmark or any single
factor. Differences in base salaries among the Named Executive Officers are
determined by the Committee based on numerous factors such as competitive
conditions for the Named Executive Officers position within the Comparator
Group and in the broader employment market, as well as the Named Executive
Officers level of responsibility, experience and individual
performance.
In December 2015, the Committee undertook
its annual review of base salaries for the then-serving Named Executive Officers
and other management personnel, in accordance with its normal procedures.
Following a market review by Aon Hewitt, the Committee approved an annual merit
increase to base salary for Mr. Frykman of 4% and an additional 6% market
adjustment effective January 1, 2016. The other four Named Executive Officers
base salaries were not changed for 2016 (two were hired in 2016).
In connection with Ms. Keegans
commencement of employment on June 1, 2016, the Committee set her base salary at
$450,000 based on a wide range of factors, including a market review, prior
compensation level and arms length negotiations with Ms. Keegans. In connection
with Mr. Cassidys commencement of employment on April 11, 2016, the Committee
set his base salary at $485,000 based on a wide range of factors, including a
market review, prior compensation level and arms length negotiations with Mr.
Cassidy.
ANNUAL INCENTIVE
COMPENSATION
To provide competitive compensation to
attract and retain top talent while linking pay to annual performance, we pay a
portion of our executives cash compensation as incentive compensation tied to
annual business performance as measured against annual goals established by the
Committee. In 2016, we provided cash annual incentive compensation to our
executive officers, including the Named Executive Officers, under our Management
Incentive Plan (MIP). MIP awards were granted under the Pentair plc 2012 Stock
and Incentive Plan. The Committee had no discretion to increase formula-derived
incentive compensation under the MIP.
The Committee determines a percentage of
each then-serving Named Executive Officers base salary as a targeted level of
incentive compensation opportunity under the MIP, based on the Committees
review of Aon Hewitts recommendations, relevant survey data and, in the case of
Named Executive Officers other than the Chief Executive Officer, the
recommendations of the Chief Executive Officer. The Committee generally sets
each executives target incentive compensation opportunity with reference to the
Comparator Groups target payouts and does not set target incentive compensation
opportunities based on a particular peer group benchmark or any single
factor.
The actual target incentive compensation
opportunity set by the Committee for each Named Executive Officer varies
depending on a wide range of factors, including competitive conditions for the
Named Executive Officers position within the
Comparator Group and in the broader employment market, as well as the Named
Executive Officers performance, level of responsibility and
experience.
An executive officers base salary
multiplied by the incentive compensation opportunity percentage establishes the
target incentive compensation for which the executive officer is eligible. The
Committee determined incentive compensation targets in 2016 for all Named
Executive Officers. These incentive compensation targets as a percentage of
salary and a dollar amount, based on actual base salary paid during 2016, were
as follows:
|
Target as a % of
Salary |
|
Target |
Randall J. Hogan |
160% |
|
|
$2,041,272 |
John L. Stauch |
100% |
|
|
$701,600 |
Karen L. Keegans |
80% |
|
|
$360,000 |
Karl R. Frykman |
70% |
|
|
$339,500 |
Dennis J. Cassidy, Jr. |
70% |
|
|
$339,500 |
Because Ms. Keegans did not join our company until mid-year in 2016, her award was pro-rated from the amount shown
in the table to reflect her partial year of service.
Actual incentive compensation awarded to
each Named Executive Officer may range from 0 to 2.4 times the target (0 to 2.5
times the target for Mr. Cassidy due to the increased weight on Segment Income),
depending on actual company and individual performance, as described
below.
Pentair plc 35
Table of
Contents
COMPENSATION
DISCUSSION AND ANALYSIS
To establish the performance goals and
related targets applied to MIP payments for the Named Executive Officers, the
Committee examined company-wide and segment-specific goals that were recommended
by the Chief Executive Officer, and that were based solely on objectively
determinable financial performance measures. The Committee also took into
account the challenging market conditions we faced due to continued weakness in
energy and industrial markets. In addition, the performance goals have been
adjusted for the effect of moving our Valves & Controls business to discontinued
operations for 2016 following our entry into an agreement for the sale of that
business. As a result, although the performance goals for 2016 were lower than
the 2015 goals in absolute terms, they were no less rigorous. The MIP
performance goals that applied to Messrs. Hogan and Stauch and Ms. Keegans, as
Named Executive Officers with company-wide responsibilities (prior to
adjustments specified in the MIP), as well as the weight assigned to each
performance goal and the corresponding payout levels, were as
follows:
Financial
Performance Measure |
|
Weight |
|
Threshold (Required for
any payout; payouts begin at 50%) |
|
Target (100%
payout) |
|
Superior Performance (200%
payout) |
|
Excellence (300%
payout) |
Segment Income (earnings before
interest, taxes and amortization) |
|
40% |
|
$800 million |
|
$860 million |
|
$940 million |
|
$965 million |
Free Cash Flow (cash from operating
activities less capital expenditures, plus proceeds from sale of property
and equipment) |
|
30% |
|
$515 million |
|
$570 million |
|
$625 million |
|
N/A |
Growth in Core Sales (sales excluding
the impact of acquisitions, divestitures and currency exchange rate
changes) |
|
20% |
|
Unchanged from 2015 |
|
3.0% increase over prior
year |
|
6.0% over prior year |
|
N/A |
Strategy Deployment (SDF) (contingent
on EBITDA hurdle, defined as earnings before interest, taxes, depreciation
and amortization) |
|
10% |
|
EBITDA of $975 million was required for any
payout |
|
N/A |
For Mr. Frykman, the MIP performance goals
were specific to the Water Quality Systems segment, for which he had primary
responsibility, were as follows:
Financial
Performance Measure |
|
Weight |
|
Threshold (Required for
any payout; payouts begin at 50%) |
|
Target (100%
payout) |
|
Superior Performance (200%
payout) |
|
Excellence (300%
payout) |
Segment Income (earnings before
interest, taxes and amortization) |
|
40% |
|
$285 million |
|
$300 million |
|
$315 million |
|
$323 million |
Free Cash Flow (cash from operating
activities less capital expenditures, plus proceeds from sale of property
and equipment) |
|
30% |
|
$194 million |
|
$215 million |
|
$247 million |
|
N/A |
Growth in Core Sales (sales excluding
the impact of acquisitions, divestitures and currency exchange rate
changes) |
|
20% |
|
Unchanged from 2015 |
|
5.0% increase over prior
year |
|
8.0% over prior year |
|
N/A |
SDF (contingent on EBITDA hurdle,
defined as earnings before interest, taxes, depreciation and
amortization) |
|
10% |
|
EBITDA of $975
million was required for any payout |
|
N/A |
36 2017
Proxy Statement
Table of
Contents
COMPENSATION
DISCUSSION AND ANALYSIS
For Mr. Cassidy, the MIP performance goals
were specific to the Valves & Controls segment, for which he had primary
responsibility, as set forth below. In addition, only the Segment Income and
Free Cash Flow measures were used for the Valves & Controls MIP in light of
the environment of market uncertainty and the resulting difficulty of
establishing core sales growth targets:
Financial
Performance Measure |
|
Weight |
|
Threshold (Required for
any payout; payouts begin at 50%) |
|
Target (100%
payout) |
|
Superior Performance (200%
payout) |
|
Excellence (300%
payout) |
Segment Income (earnings before
interest, taxes and amortization) |
|
50% |
|
$175 million |
|
$215 million |
|
$245 million |
|
$265 million |
Free Cash Flow (cash from operating
activities less capital expenditures, plus proceeds from sale of property
and equipment) |
|
40% |
|
$216 million |
|
$240 million |
|
$264 million |
|
N/A |
SDF (contingent on EBITDA hurdle,
defined as earnings before interest, taxes, depreciation and
amortization) |
|
10% |
|
EBITDA of $975 million was
required for any payout |
|
N/A |
For 2016, the Committee replaced operating
income as a performance measure with segment income to better align the MIP
structure with cash earnings per share. The general framework of the MIP
performance goals otherwise remained similar to previous years, except that the
Committee also increased the relative weight assigned to cash flow from 10% to
30% in response to our economic environment and business goals and
correspondingly decreased the relative weight assigned to the strategic
deployment factor (SDF,) from 20% to 10%, and to growth in core sales, from
30% to 20%. The target levels for the performance goals were aligned with the
corporate objectives in our annual operating plan.
To provide an added performance incentive,
the Committee determined that the amount of incentive compensation related to
each performance goal other than EBITDA would be scaled according to the amount
by which the measure exceeded or fell short of the target. The Committee also
determined that the performance goals for free cash flow and sales should have a
threshold level below which no incentive compensation would be earned, and that
potential payouts would be scaled from 0.50 at the threshold to 2.0 times at the
maximum, as detailed above. The Committee set the threshold at 0.50 and the
maximum potential payout for segment income at 3.0 times the target.
In the case of EBITDA, the Committee
determined that attainment of this performance goal is a necessary condition,
but not sufficient in itself, to trigger a payout under the EBITDA component of the MIP. If the EBITDA threshold was not
attained, no award would be made for this performance goal. If the EBITDA
threshold was attained, the Named Executive Officer would be eligible for up to
the maximum payout under this component of the award. The Committee retained the
discretion to reduce, but not to increase, the amount of the payout under this
component to a Named Executive Officer, based upon the Named Executive Officers
individual performance, as measured according to the applicable SDF. The SDF
measures an individual executives performance against expectations in the
attainment of corporate strategic goals set by the Committee. The SDF for each
Named Executive Officer is recommended by the CEO and is approved by the
Committee based on its assessment of individual performance.
The actual incentive compensation of each
Named Executive Officer was determined by multiplying the eligible target
incentive compensation amount by a multiplier determined as described above. In
determining the actual financial results, the classification of our Values &
Controls business was excluded and moved to discontinued operations in the third
quarter of 2016 due to the expected sale. Taking into account this adjustment
and the other adjustments described below the following tables, for 2016, actual
results as measured by the performance goals under the MIP for Messrs. Hogan and
Stauch and Ms. Keegans were as follows:
Financial
Performance Measure |
|
Weight |
|
Actual Financial
Results |
|
Payout % |
|
Weighted Payout
% |
Segment Income (As Adjusted for the
MIP) |
|
40% |
|
$839.5 |
|
82.9% |
|
33.2% |
Free Cash Flow |
|
30% |
|
$609.3 |
|
171.3% |
|
51.4% |
Core Sales Growth |
|
20% |
|
-1.4% |
|
0.0% |
|
0.0% |
SDF (contingent on EBITDA hurdle) |
|
10% |
|
1,119.5 |
|
100-110% |
|
10-11% |
Pentair plc 37
Table of
Contents
COMPENSATION
DISCUSSION AND ANALYSIS
For Mr. Frykman, actual results as
measured by the performance goals under the MIP were as follows:
Financial
Performance Measure |
|
Weight |
|
Actual Financial
Results |
|
Payout % |
|
Weighted Payout
% |
Segment Income (As Adjusted for the
MIP) |
|
40% |
|
$314.1 |
|
194.0% |
|
77.6% |
Free Cash Flow |
|
30% |
|
$273.4 |
|
200.0% |
|
60.0% |
Core Sales Growth |
|
20% |
|
4.8% |
|
98.0% |
|
19.6% |
SDF (contingent on EBITDA hurdle) |
|
10% |
|
1,119.5 |
|
150% |
|
15% |
For Mr. Cassidy, actual results as
measured by the performance goals under the MIP were as follows:
Financial
Performance Measure |
|
Weight |
|
Actual Financial
Results |
|
Payout % |
|
Weighted Payout
% |
Segment Income (As Adjusted for the
MIP) |
|
50% |
|
$149.6 |
|
0.0% |
|
0.0% |
Free Cash Flow |
|
40% |
|
$244.3 |
|
117.9% |
|
47.2% |
SDF (contingent on EBITDA hurdle) |
|
10% |
|
1,119.5 |
|
125% |
|
12.5% |
Adjustments to operating income and EBITDA
for factors specified in the MIP included: restructuring and other charges
($20.6 million), intangible asset impairment ($13.3 million), pension mark to
market losses ($4.2 million), and intangible asset amortization ($96.4
million). These adjustments for factors specified in the MIP are the same as
those used to calculate our segment income as disclosed elsewhere in this Proxy
Statement. Core sales growth is defined as the year over year rate of change in
sales excluding the impact of foreign currency (-0.8%) and acquisitions (8.1%).
The Committee determined that each Named Executive Officers performance in 2016 met individual performance expectations
with respect to the EBITDA/SDF component. Based on this determination, the
resulting incentive bonus percentage for the EBITDA/SDF measure ranged from 10% to 15% of each Named Executive
Officers target for this portion of the award (10% weighting times 70% to
160%). Based on the foregoing, the Named Executive Officers received the MIP
payouts that are reflected in the Non-Equity Incentive Plan Compensation
column under Executive Compensation Tables-Summary Compensation
Table.
2016 LONG-TERM INCENTIVE
COMPENSATION
The Committee emphasizes executive
compensation that is tied to building and sustaining our companys value through
ordinary share performance over time.
In keeping with its philosophy that executive
compensation must be tied to building and sustaining value through ordinary
share performance over time, the Committee establishes long-term incentive
compensation targets with reference to both published survey data and data from
our Comparator Group. The Committee does not set award levels based on a
particular peer group benchmark or any single factor. The Committee may make
awards above or below that range if it believes
it is necessary to provide appropriate retention and performance incentives
based on a wide range of factors, such as competitive conditions for the Named
Executive Officers position within the Comparator Group and in the broader
employment market, as well as the Named Executive Officers level of responsibility, experience and individual
performance.
38 2017
Proxy Statement
Table of
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COMPENSATION
DISCUSSION AND ANALYSIS
In 2016, the Committee awarded long-term
incentive compensation under the Pentair plc 2012 Stock and Incentive Plan. As
it does each year, the Committee referenced benchmark data (including
compensation surveys, Comparator Group information and other data provided by
Aon Hewitt) in setting target dollar award levels for each Named Executive
Officer and for each position or grade level. The Committee did not change the
target long-term incentive compensation for Messrs. Hogan or Stauch in 2016. Ms.
Keegans and Mr. Cassidys target long-term incentive compensation was set at a
competitive level and through arms length negotiation in connection with their
recruitment to join our company in 2016. For Mr. Frykman, the Committee
increased the target long-term incentive compensation level to reflect performance,
increased level of responsibility, and competitive conditions in
the Comparator Group data.
The Committee approved in December 2015
the elements and mix of long-term incentive compensation granted effective
January 4, 2016 under the Pentair plc 2012 Stock and Incentive Plan. The
Committee granted all then-serving Named Executive Officers a mix of the
following components: stock options, restricted stock units and performance
share units. The replacement of cash settled performance units with performance
share units is discussed above under the heading Shareholder Outreach and
Response to 2016 Say on Pay Vote (see page 32). We have balanced our long-term
incentive compensation program vehicles to create an equal focus on shareholder wealth creation, the creation of a sustaining
business and assuring the leadership is committed to the long-term success of
the enterprise. Each component was equally weighted, representing one-third of
the total long-term incentive award value. The components had the features
described below:
► |
Stock
options: The Committee determined that it would grant ten-year
stock options, with one third of the options vesting on each of the first,
second and third anniversaries of the grant date, as in prior
years. |
► |
Restricted stock
units: Each restricted stock unit represents the right to receive one of
our ordinary shares upon vesting and includes one dividend equivalent
unit, which entitles the holder to a cash payment equal to all cash
dividends declared on our ordinary shares from and after the date of
grant. One-third of the restricted stock units would vest on each of the
first three anniversaries of the grant date if the performance hurdle
described below under Impact of Tax Considerations was
met. |
► |
Performance share
units: Each performance share unit represents the right to receive one of
our ordinary shares at the end of a three-year performance period if
specified performance goals are achieved. For the performance share units
granted in 2016 relating to the performance period 2016-2018, the
performance goal is adjusted EPS: |
Metrics |
|
Threshold (50%
payout) |
|
Target (100%
payout) |
|
Superior Performance (200%
payout) |
|
Excellence (300%
payout) |
Adjusted EPS |
|
$3.45 |
|
$3.85 |
|
$4.25 |
|
$4.50 |
Payouts would be scaled for performance
between threshold and target and between target and maximum.
The numbers of shares subject to the stock
options, restricted stock units and performance share units, and the values of
the awards, granted to the Named Executive Officers in 2016 are reflected under
Executive Compensation Tables-Grants of Plan-Based Awards Table.
The value of restricted stock units that
vested for each Named Executive Officer in 2016 and the value of options
exercised by each Named Executive Officer in 2016 are shown in the table under
Executive Compensation Tables-Option Exercises and Stock Vested.
PRIOR LONG-TERM INCENTIVE
GRANTS
Prior to 2016, as described above, the
Committee granted cash settled performance units rather than performance share
units to the Named Executive Officers. The Committee made such a grant in 2014
relating to the three-year performance period 2014-2016. Each performance unit
entitled the holder to a cash payment following the end of the three-year
performance period, if we achieved specified company performance goals on
metrics established by the Committee. The performance goals selected by the
Committee for the 2014-2016 performance period were revenue growth and return on
invested capital, each weighted 50%. Subject to establishment of the bonus pool
and depending on cumulative company performance over the three-year performance
period, we would pay nothing if the threshold were not met, 50% of the target
value if the threshold were met, 100% of the target value if the target were met
and 200% of the target value if the maximum were met. Payouts would be scaled
for performance between threshold and target and between target and
maximum.
Pentair plc 39
Table of
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COMPENSATION
DISCUSSION AND ANALYSIS
The performance goals selected by the
Committee for the 2014-2016 performance period, as well as the weighting,
potential payout levels, actual performance and actual payout percentages were
as follows:
Financial Performance
Measure |
|
Weight |
|
Threshold (50% payout) |
|
Target (100% payout) |
|
Maximum (200% payout) |
|
Actual |
|
Actual Payout (% of
Target) |
Compounded Annual Growth Rate (CAGR)(1) of Revenue in
2014-2016 Compared to 2013 |
|
50% |
|
1.0% CAGR |
|
3.0% CAGR |
|
6.0% CAGR |
|
1.4% CAGR |
|
60.6% |
Return on Invested Capital (ROIC) in 2014-2016 Compared to
2013 |
|
50% |
|
100
basis point increase |
|
250
basis point increase |
|
450
basis point increase |
|
80 basis point increase |
|
0% |
2014 Program Total Weighted Performance |
|
|
|
|
|
|
|
|
|
30.3% |
(1) |
CAGR excludes the impact of changes
in foreign currency exchange rates. |
Based on the foregoing, the Named
Executive Officers received the payouts that are reflected in the Non-Equity
Incentive Plan Compensation column under Executive Compensation Tables-Summary
Compensation Table.
STOCK OWNERSHIP GUIDELINES
The Committee has established stock
ownership guidelines for the Named Executive Officers and other executives to
motivate them to become significant shareholders, and to further encourage
long-term performance and growth, and to align their interests with those of
shareholders generally. The Committee monitors executives compliance with these
guidelines and periodically reviews the definition of stock ownership to
reflect the practices of companies in the Comparator Group. Stock ownership
currently includes ordinary shares owned by the officer both directly and
indirectly, the pro-rated portion of unvested restricted stock, restricted stock
units, and shares held in our employee stock ownership plan or our employee stock purchase plan. Stock ownership does
not include performance share units until they are earned at the end of the
performance period. The Committee determined that, over a period of five years
from appointment, certain executives should accumulate and hold ordinary shares
equal to specified multiples of base salary. We increased the ownership guidelines
applicable to our Segment Presidents from 2.0 times base salary to 2.5 times
base salary in 2017. Following those adjustments, the multiples of base salary
required by the guidelines are as
follows:
Executive
Level |
Stock Ownership
Guidelines
(as a multiple of
salary) |
Chief Executive Officer |
6.0x base salary |
Executive Vice President and Chief
Financial Officer |
3.0x base salary |
Senior Vice President, Chief Human Resources
Officer; |
2.5x base salary |
Senior Vice President and General Counsel |
|
Segment Presidents |
|
Other key executives |
2.0x base
salary |
40 2017
Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND
ANALYSIS
STOCK OWNERSHIP FOR THE NAMED EXECUTIVE
OFFICERS AS OF DECEMBER 31, 2016
|
|
Share Ownership |
|
12/31/16 Market Value ($)(1) |
|
Ownership Guideline ($) |
|
Meets Guideline |
Randall J. Hogan |
|
629,585 |
|
35,300,833 |
|
7,654,770 |
|
Yes |
John L. Stauch |
|
191,525 |
|
10,738,806 |
|
2,104,800 |
|
Yes |
Karen L. Keegans |
|
5,053 |
|
283,300 |
|
1,125,000 |
|
No(2) |
Karl R. Frykman |
|
39,744 |
|
2,228,459 |
|
970,000 |
|
Yes |
Dennis J. Cassidy, Jr. |
|
11,250 |
|
630,788 |
|
970,000 |
|
No(3) |
(1) |
The amounts in this column were
calculated by multiplying the closing market price of our ordinary shares
on the last trading day of our most recently completed fiscal year of
$56.07 by the number of shares owned. |
(2) |
Newly hired officer on June 1,
2016. |
(3) |
Newly hired officer on April 11,
2016. |
SHARE OWNERSHIP
REQUIREMENTS |
EQUITY HOLDING POLICY
We maintain an equity holding policy under
which executive officers subject to our stock ownership guidelines are required
to retain 100% of the net number of shares acquired under equity awards until
the ownership guidelines are satisfied.
This policy may be waived to the extent
its application to any individual executive officer would cause undue hardship
to the executive officer.
CLAWBACK POLICY
We maintain a clawback policy under which
certain incentive compensation earned by our executive officers may be recouped
if the executive officers fraud or intentional misconduct is a significant
contributing factor to a restatement of financial results. The incentive
compensation subject to this policy includes cash
bonuses, cash performance units and equity-based awards subject to
performance-based vesting conditions to the extent the compensation was paid,
credited or earned during the year after the financial results were first
disclosed.
POLICY PROHIBITING HEDGING AND
PLEDGING
We maintain a policy that prohibits our
executive officers and directors from engaging in hedging or pledging
transactions involving our ordinary shares or other Pentair
securities.
Pentair plc 41
Table of Contents
COMPENSATION
DISCUSSION AND ANALYSIS
RETIREMENT AND OTHER BENEFITS
Eligible Named Executive Officers and
other executives and employees participate in a number of retirement and similar
plans that are described below under Executive Compensation Tables Pension
Benefits. We also provide other benefits such as medical, dental, life insurance and
disability coverage to substantially all of our
full-time U.S. salaried employees, including the Named Executive Officers. We
aim to provide employee and executive benefits at levels that reflect
competitive market levels.
Medical, Dental, Life Insurance
and Disability Coverage |
Employee benefits such as medical, dental,
life insurance and disability coverage are available to all full-time U.S.-based
participants through our active employee plans. In addition to these benefits
for active employees, we provide post-retirement medical, dental and life
insurance coverage to certain retirees in accordance with the legacy
company plans which applied at the time the
employees were hired. We provide up to one and a half times annual salary (up to
$1,000,000) in life insurance, and up to $15,000 per month in long-term
disability coverage. The value of these benefits is not required to be included
in the Summary Compensation Table since they are made available to all full-time U.S.
salaried employees.
Other Paid Time-Off Benefits |
We also provide vacation and other paid
holidays to all employees, including the Named Executive Officers, which we have
determined to be comparable to those provided at other large
companies.
We sponsor a non-qualified deferred
compensation program, called the Sidekick Plan, for our U.S. executives within
or above the pay grade that has a midpoint annual salary of $208,300 in 2016.
This plan permits executives to defer up to 25% of their base salary and 75% of
their annual cash incentive compensation. Executives also may defer receipt of
restricted stock units or performance share units. We normally make
contributions to the Sidekick Plan on behalf of participants with respect to
each participants contributions from that portion of his or her income above
the maximum imposed by the U.S. Internal Revenue Code of 1986, as amended (the
Code), which was $265,000 in 2016, but below the Sidekick Plans compensation
limit of $700,000. Please see the narrative following the Nonqualified Deferred
Compensation Table below for additional information on our
contributions.
Participants in the Sidekick Plan may
invest their account balances in a number of possible mutual fund investments.
Fidelity Investments Institutional Services Co. provides these investment
vehicles for participants and handles all allocation and accounting services for
the Plan. We do not guarantee or subsidize any investment earnings under the
Plan, and our ordinary shares are not a permitted investment choice under the
Plan, although deferred restricted stock units and performance share units are
automatically invested in shares.
Amounts deferred, if any, under the Sidekick
Plan by the Named Executive Officers are included in the Salary and
Non-Equity Incentive Plan Compensation columns under Executive Compensation
Tables-Summary Compensation Table. Our contributions allocated to the Named
Executive Officers under the Sidekick Plan are included in the All Other
Compensation column under Executive Compensation Tables-Summary Compensation
Table.
PERQUISITES AND OTHER PERSONAL
BENEFITS
We provide Named Executive Officers with a
perquisite program (the Flex Perq Program) under which the Named Executive
Officers receive a cash perquisite allowance in an amount that the Committee
believes is customary, reasonable and consistent with our overall compensation
program to better enable us to attract and retain superior employees for key
positions. The Committee periodically reviews market data provided by Aon Hewitt
to assess the levels of perquisites provided to Named Executive
Officers.
For 2016, the total aggregate annual
allowance under the Flex Perq Program was $50,000 for Mr. Hogan and $40,000 for
all other executive officers (pro rated for Ms. Keegans and Mr. Cassidy in light
of their partial year of service). In addition to the allowance provided under
the Flex Perq Program, we provided security arrangements for Mr. Hogan during an
instance of personal travel in a geographic area in which there were security
concerns and an additional payment to make him whole for the taxes he incurred
as result of the security
42 2017
Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND
ANALYSIS
benefits. We also provided a fitness center
reimbursement for certain of our Named Executive Officers.
The fitness center reimbursement is provided pursuant to a broad-based policy
that applies generally to U.S. employees.
The amounts of the annual allowance under
the Flex Perq Program, the security arrangements and related additional payment
and the fitness center reimbursement are included in the All Other
Compensation column under Executive Compensation Tables Summary Compensation
Table and are set forth in more detail in footnote 7 to that table.
Ms. Keegans received a sign-on award to
address forfeitures related to her prior employment and relocation assistance in
connection with her joining our company on June 1, 2016. The award is included
in the Bonus column under Executive Compensation Tables Summary
Compensation Table and the relocation
assistance, including a payment to make her whole for taxes on the relocation
assistance, is included in the All Other Compensation column under Executive
Compensation Tables Summary Compensation Table and is set forth in more
detail in footnote 7 to that table. The relocation assistance we provided to Ms.
Keegans is consistent with the relocation assistance that we provide to all
other similarly situated employees under our standard relocation program.
Mr. Cassidy received a sign-on award in connection with joining our company on April
11, 2016 to address forfeitures and changes in the compensation mix related to
his prior employment. The award is included in the Bonus column under
Executive Compensation Tables Summary Compensation Table. The award has a 2
year payback clause should he voluntarily leave the company.
EXPATRIATE BENEFITS
For our employees who are assigned to an
international location outside of their home country or country of primary
residence, we provide customary expatriate benefits. During a portion of 2016,
one of our Named Executive Officers, Mr. Cassidy, was assigned to Switzerland
and received such benefits. The expatriate benefits provided to Mr. Cassidy
included relocation expenses, housing expenses, educational expenses for
dependent children, a cost of living adjustment, use of a company car in
Switzerland, tax consulting services and home leave travel and language training
for Mr. Cassidy and his family. Mr. Cassidy also received a tax equalization
benefit designed to absorb the additional tax burden resulting from his
assignment to Switzerland. Due to his assignment to Switzerland, Mr. Cassidys
compensation was subject to higher taxes than would have been the case if he had
been assigned only in the United States. In addition, some of the expatriate benefits provided to Mr. Cassidy in connection with
his assignment resulted in additional taxation to him. The tax equalization
benefit was designed to make Mr. Cassidy whole for these effects and ensure
that, on an after-tax basis, Mr. Cassidy received the same level of compensation
that he would have received had he not been assigned to Switzerland.
We believe these expatriate and tax
equalization benefits are standard in the marketplace and that the cost to us of
providing the benefits is reasonable in light of the benefits we received in
having Mr. Cassidy assigned outside of his home country. The aggregate
incremental cost to us of providing these benefits to Mr. Cassidy are included
in the All Other Compensation column under Executive Compensation Tables
Summary Compensation Table and are set forth in more detail in footnote 10 to
that table.
SEVERANCE AND CHANGE-IN-CONTROL
BENEFITS
We provide severance and change-in-control
benefits to selected executives to provide for continuity of management upon a
threatened or completed change in control. These benefits are designed to
provide economic protection to key executives following a change in control of
our company so that our executives can remain focused on our business without
undue personal concern. We believe that the security that these benefits provide
helps our key executives to remain focused on our ongoing business and reduces
the key executives concerns about future employment. We also believe that these
benefits allow our executives to consider the best interests of our company and
its shareholders due to the economic security afforded by these benefits. We
currently provide only the following severance and change-in-control benefits to
our executive officers:
► |
We have agreements with our key
corporate executives and other key leaders, including all Named Executive
Officers, that provide for contingent benefits upon a change in control or
upon a covered termination following a change in control. |
► |
The
Pentair plc 2012 Stock and Incentive Plan provides that, upon a change in
control, all options, restricted stock and restricted stock units that are
unvested become fully vested; all performance awards (other than annual
incentive awards) are paid in full based on performance at the better of
target or trend; and all annual incentive awards are paid based on full
satisfaction of the performance goals (i.e., target). In addition, if an employees employment is
involuntarily terminated for a reason other than cause, death or
disability, or if an employee who is a Board-appointed corporate officer
voluntarily terminates employment for good reason, then the employees
outstanding awards under the Pentair plc 2012 Stock and Incentive Plan
will be eligible for continued or accelerated vesting as described below
under Executive Compensation Tables-Potential Payments Upon Termination
Or Change In Control. |
Pentair plc 43
Table of Contents
COMPENSATION
DISCUSSION AND ANALYSIS
► |
Upon certain types of terminations of
employment (other than a termination following a change in control),
severance benefits may be paid to the Named Executive Officers at the
discretion of the Committee. |
We explain these benefits more fully below under Executive Compensation
Tables-Potential Payments Upon Termination Or Change In Control.
We have adopted a policy of not including
automatic single trigger change in control vesting and excise tax gross-ups in
new agreements with our executive officers. Since 2013 any new agreements
entered into with any new executive officers, including Ms. Keegans, our Senior
Vice President and Chief Human Resources Officer, and Mr. Cassidy, President of
Valves & Controls, in 2016 did not contain either of these
features.
IMPACT OF TAX CONSIDERATIONS
Section 162(m) of the Code limits to
$1,000,000 the amount of compensation that we may deduct in any one year with
respect to each of our Chief Executive Officer and our three other most highly
paid executive officers (other than our Chief Financial Officer), except for
performance-based compensation meeting certain requirements, including periodic
shareholder approval of the benefit plans under which we pay such
performance-based compensation. Annual and long-term cash incentive compensation
generally is performance-based compensation meeting those requirements and, as
such, is fully deductible. The Committee included a performance hurdle on grants
of restricted stock units in 2016 that requires our company to meet a specified
goal for adjusted net income for any vesting to take place. This performance
condition is intended to make the restricted stock units eligible to be treated
as performance-based compensation. Stock options that we grant under the Pentair
plc 2012 Stock and Incentive Plan are also treated as performance-based compensation. At the 2013 Annual General Meeting,
our shareholders approved the performance goals under the Pentair plc 2012 Stock
and Incentive Plan, making awards granted under the Plan eligible to be treated
as performance-based compensation under Section 162(m) if the Committee elects
to make the awards otherwise compliant with the applicable requirements of
Section 162(m).
The Committee also considers the impact of
other tax provisions, such as the restrictions on deferred compensation set
forth in Section 409A of the Code, and attempts to structure compensation in a
tax-efficient manner, both for the Named Executive Officers and for our company.
To maintain flexibility in compensating executive officers in a manner designed
to promote varying corporate goals, the Committee has not adopted a policy
requiring all compensation to be deductible. It is also possible that
compensation we believe to be deductible under Section 162(m) may not be
deductible.
COMPENSATION CONSULTANT
During 2016, the Committee continued to
retain Aon Hewitt, an external compensation consultant, to advise the Committee
on executive compensation issues. See Corporate Governance Matters Committees
of the Board Compensation Committee. The Committee evaluated the independence
of Aon Hewitt and the individual representatives of Aon Hewitt who served as the
Committees consultants based on the factors required by the NYSE. Aon Hewitt is
a wholly owned subsidiary of Aon plc, which provides insurance brokerage and
benefit administrative outsourcing services to us. For the year ended December
31, 2016, we paid Aon plc approximately $3,088,685 for these services and Aon
Hewitt approximately $292,421 for executive compensation consulting for the
Committee. The decision to engage Aon plc for insurance brokerage and benefit
administrative outsourcing services was made by management and was not approved
by the Board or the Committee. The Committee concluded, based on the evaluation
described above, that the services performed by Aon plc with respect to
insurance and benefits administration did not raise a conflict of interest or
impair Aon Hewitts ability to provide independent advice to the Committee
regarding executive compensation matters.
At the direction of the Committee, Aon
Hewitt advises the Committee in implementing and overseeing appropriate
compensation programs and policies. As part of this process, Aon Hewitt provides
the Committee with comparative market data based on analyses of the practices of
the Comparator Group defined above under Comparative Framework and relevant
survey data. The comparative market data that Aon Hewitt provides address the
structure of the compensation programs maintained by the Comparator Group
companies as well as the amount of compensation they provide. Aon Hewitt
provides guidance on industry best practices and advises the Committee in
determining appropriate ranges for base salaries, annual incentives and equity
compensation for each senior executive position.
44 2017
Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND
ANALYSIS
EVALUATING THE CHIEF EXECUTIVE OFFICERS
PERFORMANCE
The Board and the Committee employ a
formal rating process to evaluate the Chief Executive Officers performance. As
part of this process, the Board reviews financial and other relevant data
related to the performance of the Chief Executive Officer at each meeting of the
Board throughout the year. At the end of the year, each independent director
provides an evaluation and rating of the Chief Executive Officers performance
in various categories. The Committee Chair submits a consolidated rating report
and the Committees recommendations regarding the Chief Executive Officers
compensation to the independent directors for review and ratification. The Lead Director chairs a discussion with the independent
directors in executive session without the Chief Executive Officer present. From
that discussion, the Committee finalizes the Chief Executive Officers
performance rating. The Committee Chair and the Lead Director review the final
performance rating results and commentary with the Chief Executive Officer. The
Committee takes the performance rating and financial data into account in
determining the Chief Executive Officers compensation and the adoption of goals
and objectives for the Chief Executive Officer for the following
year.
EQUITY AWARD PRACTICES
The Committee reviews and approves all
equity awards to newly hired or promoted executives at regular meetings
throughout the year. As a rule, the Committee grants awards to newly hired or
promoted executives that are effective the earlier of the 15th day of
the month following the date of hire or promotion or the 15th day of
the month following the date of the Committee meeting at which the grant is
approved. If the 15th day of such month is a day on which the NYSE is
not open for trading, then the grant date will be the first day following the 15th day of such month on which the
NYSE is open for trading. The Committee has also given the Committee Chair and
the Chief Executive Officer discretion to grant equity awards to newly hired or
promoted executives as required throughout the year, within the guidelines of
the Pentair plc 2012 Stock and Incentive Plan. The Committee then ratifies these
grants at its next meeting. All options are granted with an exercise price equal
to fair market value based on the closing share price on the effective day of
grant.
Pentair plc 45
Table of Contents
EXECUTIVE COMPENSATION TABLES
SUMMARY COMPENSATION TABLE
The table below summarizes the total
compensation paid to or earned by each of the Named Executive Officers for the
years ended December 31, 2014, 2015 and 2016.
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
Name and Principal Position |
Year |
Salary(1) ($) |
Bonus ($) |
Stock Awards ($)(3) |
Option Awards ($)(4) |
Non-Equity Incentive Plan
Compensation ($)(1)(5) |
Change in Pension Value
and Non-Qualified Deferred Compensation Earnings ($)(6) |
All
Other Compensation ($)(7) |
Total Compensation ($) |
Randall J.
Hogan |
2016 |
1,275,795 |
- |
6,666,696 |
3,329,901 |
2,877,513 |
1,256,952 |
176,636 |
15,583,493 |
Chairman and |
2015 |
1,275,795 |
- |
3,133,360 |
3,132,877 |
1,860,352 |
- |
101,657 |
9,504,041 |
Chief Executive |
2014 |
1,226,726 |
- |
3,130,377 |
3,130,873 |
3,639,624 |
3,595,207 |
113,895 |
14,836,702 |
Officer |
|
|
|
|
|
|
|
|
|
John L.
Stauch |
2016 |
701,600 |
- |
1,933,352 |
965,670 |
897,278 |
812,032 |
81,079 |
5,391,011 |
Executive Vice |
2015 |
674,625 |
- |
800,027 |
799,883 |
416,000 |
67,883 |
81,408 |
2,839,826 |
President and Chief |
2014 |
642,500 |
- |
750,021 |
750,127 |
1,168,709 |
1,293,988 |
76,978 |
4,682,323 |
Financial Officer |
|
|
|
|
|
|
|
|
|
Karen L.
Keegans |
2016 |
262,500 |
390,000 |
1,700,055 |
299,880 |
200,550 |
132,247 |
269,885 |
3,255,117 |
Senior Vice |
|
|
|
|
|
|
|
|
|
President and Chief |
|
|
|
|
|
|
|
|
|
Human Resources |
|
|
|
|
|
|
|
|
|
Officer(8) |
|
|
|
|
|
|
|
|
|
Karl R.
Frykman |
2016 |
485,000 |
- |
666,660 |
332,988 |
640,169 |
247,218 |
67,814 |
2,439,849 |
President, Water |
|
|
|
|
|
|
|
|
|
Quality Systems(9) |
|
|
|
|
|
|
|
|
|
Dennis J. Cassidy,
Jr. |
2016 |
352,727 |
1,000,000 |
2,666,717 |
333,197 |
202,682 |
141,286 |
353,140 |
5,049,749 |
President, Valves & |
|
|
|
|
|
|
|
|
|
Controls(10) |
|
|
|
|
|
|
|
|
|
(1) |
Amounts shown in the Salary and
Non-Equity Incentive Plan Compensation columns are not reduced by any
deferrals under our nonqualified deferred compensation plans. |
(2) |
Note the impact of the change
from cash performance units to performance share units is detailed in the
Alternative Summary Compensation Table Double Counting on page
47. |
(3) |
The amounts in column (e)
represent the aggregate grant date fair value, computed in accordance with
ASC 718, of restricted stock units and performance share units granted
during each year. The values attributable to the 2016 grants of restricted
stock units were as follows: Mr. Hogan $3,333,348; Mr. Stauch
$966,676; Ms. Keegans $1,400,038; Mr. Frykman $333,330; and Mr.
Cassidy $2,333,357. The values attributable to the 2016 grants of
performance share units were based on the probable outcome of the
performance conditions at the time of grant, and were as follows: Mr.
Hogan $3,333,348; Mr. Stauch $966,676; Ms. Keegans $300,017; Mr.
Frykman $333,330; and Mr. Cassidy $333,360. The maximum values of the
2016 grants of performance share units at the time of grant assuming that
the highest level of performance conditions are attained, are as follows:
Mr. Hogan $10,000,044; Mr. Stauch $2,900,028; Ms. Keegans $900,051;
Mr. Frykman $999,990; and Mr. Cassidy $1,000,080. Additional
assumptions used in the calculation of the amounts in column (e) are
included in footnote 15 to our audited financial statements for the year
ended December 31, 2016 included in our Annual Report on Form 10-K filed
with the Securities and Exchange Commission on February 21, 2017. The
grant to Ms. Keegans represents a new hire grant to address forfeitures
related to her prior employment. |
(4) |
The amounts in column (f)
represent the aggregate grant date fair value, computed in accordance with
ASC 718, of stock options granted during each year. Assumptions used in
the calculation of these amounts are included in footnote 15 to our
audited financial statements for the year December 31, 2016 included in
our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on February 21, 2017. |
(5) |
The amounts in column (g) with respect to 2016
reflect cash awards to the named individuals pursuant to awards under the
MIP in 2016, which were determined by the Compensation Committee at its
February 20, 2017 meeting and, to the extent not deferred by the
executive, paid shortly thereafter, as well as payments to the named
individuals pursuant to cash settled performance units granted in 2014
that vested in 2016. The amounts paid pursuant to awards under the MIP were as follows: Mr. Hogan $1,929,002; Mr.
Stauch $670,028; Ms. Keegans $200,550; Mr. Frykman $584,619; and Mr. Cassidy
$202,682. The amounts paid pursuant to cash
settled performance units earned at the end of a three-year performance
period from 2014-2016 were as follows: Mr. Hogan $948,511; Mr. Stauch
$227,250; and Mr. Frykman $55,550. Neither Ms. Keegans nor Mr. Cassidy
received any payments pursuant to cash settled performance units in 2016.
The amounts in column (g) with respect to 2015 reflect that no MIP awards
were paid for 2015. |
(6) |
The amounts in column (h) reflect
the increase in the actuarial present value of the Named Executive
Officers accumulated benefits under all of our pension plans determined
using interest rate and mortality rate assumptions consistent with those
used in our financial statements. |
46 2017
Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION TABLES
(7) |
The table below shows the
components of column (i) for 2016, which include perquisites and other
personal benefits; and the Company contributions under the Sidekick Plan,
RSIP/ESOP Plan and the Employee Stock Purchase Plan: |
|
|
|
(A) |
|
(B) |
|
(C) |
|
(D) |
|
Name |
|
Perquisites under
the Flex Perq Program ($)(a) |
|
Other Perquisites
and Personal Benefits ($)(b) |
|
Contributions
under Defined Contribution Plans ($)(c) |
|
Matches under
the Employee Stock Purchase Plan ($) |
|
Mr. Hogan |
|
50,000 |
|
87,661 |
|
38,975 |
|
- |
|
Mr. Stauch |
|
40,000 |
|
304 |
|
38,975 |
|
1,800 |
|
Ms. Keegans |
|
20,000 |
|
244,703 |
|
5,182 |
|
- |
|
Mr. Frykman |
|
40,000 |
|
- |
|
27,814 |
|
- |
|
Mr. Cassidy |
|
30,000 |
|
315,824 |
|
7,316 |
|
- |
|
(a) |
The amount shown in
column (A) for each individual reflects amounts paid to or for the benefit
of each Named Executive Officer under the Flex Perq Program, which is
designed to provide corporate officers and other key executives with an
expense allowance for certain personal and business-related
benefits. |
|
(b) |
The amounts shown in
column (B) consist of the security benefits and a related tax-gross up
provided to Mr. Hogan (the gross-up was in the amount of $40,823),
relocation assistance in the amount of $221,185 and a related tax gross up
provided to Ms. Keegans (the gross-up was in the amount of $23,518),
expatriate benefits in the amount of $315,824 provided to Mr. Cassidy and
a fitness center reimbursement for Mr. Stauch. The fitness center
reimbursement was provided pursuant to a broad-based policy that applies
generally to U.S. employees. |
|
(c) |
The amount shown in
column (C) for each individual reflects amounts contributed by us to the
RSIP/ESOP Plan and the Sidekick Plan during 2016. In the case of the
Sidekick Plan, the amounts contributed by us during 2016 relate to salary
deferrals in 2015. |
(8) |
Ms. Keegans
joined our company on June 1, 2016. The amount shown in the Bonus column
reflects the sign-on award Ms. Keegans received in connection with her
commencement of employment to address forfeitures related to her prior
employment. |
(9) |
Because Mr.
Frykman has not previously been a named executive officer of our company,
the Summary Compensation Table includes only one year of his compensation
in accordance with applicable Securities and Exchange Commission
regulations. |
(10) |
Mr. Cassidy
joined our company on April 11, 2016. The amount shown in the Bonus
column reflects the sign-on award Mr. Cassidy received in connection with
his commencement of employment to address forfeitures and changes in the
compensation mix related to his prior employment, of which $500,000 was
paid during 2016 and $500,000 was paid in 2017. In connection with Mr.
Cassidys assignment to Switzerland during a portion of 2016, payment of
certain compensation was made to him in Swiss Francs (CHF). Amounts shown
in table represent the CHF salary translated to U.S. dollars at the
exchange rate on the respective dates of payment, except for the tax
equalization amount, which was converted at a December 31, 2016 rate of
1.0284 CHF per U.S. dollar. |
Alternative Summary Compensation
Table Double Counting |
ATTENTION: Double Counting of Equity (2014
Cash Performance Units and 2016 Performance Share Units)
Due to our replacement of cash settled
performance units with performance share units in our long-term incentive
program beginning in 2016, the total compensation disclosed in our required 2016
Summary Compensation Table above doubles up on our Named Executive Officers
long-term incentives. The double counting occurs because, as required by
applicable Securities and Exchange Commission regulations, the Table includes
both the cash settled performance units that were earned in 2016 and the
performance share units granted in 2016, which will not be earned until the end
of the performance period in 2018. To facilitate comparability with prior years,
the alternative summary compensation table below shows Mr. Hogans total
compensation for 2016 without this doubling up by eliminating the performance
share units granted in 2016 and including only the cash settled performance
units earned in 2016:
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
Name and Principal Position |
|
Year |
|
Salary ($) |
|
Bonus ($) |
|
Stock Awards ($)(1) |
|
Option Awards ($)(2) |
|
Non-Equity Incentive
Plan Compensation ($)(3) |
|
Change in Pension Value
and Non-Qualified Deferred Compensation Earnings ($)(4) |
|
All Other Compensation ($) |
|
Total Compensation ($) |
Randall J.
Hogan |
|
2016 |
|
1,275,795 |
|
- |
|
3,333,348 |
|
3,329,901 |
|
2,877,513 |
|
1,256,952 |
|
176,636 |
|
12,250,145 |
Chairman and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The amount in column (e)
represents the aggregate grant date fair value, computed in accordance
with Accounting Standards Codification 718 (ASC 718), of restricted
stock units granted during the year. For purposes of this Alternate
Summary Compensation, the performance share units granted during the year
are not included; the value of those units
are included in the Summary Compensation Table on page 46.
|
(2) |
The amount in column (f)
represents the aggregate grant date fair value, computed in accordance
with ASC 718, of stock options granted during the year. |
(3) |
The amount in column (g) reflects
the cash award pursuant to awards under the MIP in 2016, which were
determined by the Compensation Committee at its February 20, 2017 meeting
and, to the extent not deferred by the executive, paid shortly thereafter,
as well as payments pursuant to cash settled performance units granted in
2014 that vested in 2016. |
(4) |
The amount in column (h) reflects
the increase in the actuarial present value of the Named Executive
Officers accumulated benefits under all of our pension plans determined
using interest rate and mortality rate assumptions consistent with those
used in our financial statements. |
Pentair plc 47
Table of Contents
EXECUTIVE COMPENSATION TABLES
GRANTS OF PLAN-BASED AWARDS IN
2016
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive Plan Awards(2) |
Estimated Future
Payouts Under Equity Incentive Plan Awards(3) |
|
|
|
|
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
(k) |
(l) |
(m) |
Name |
Grant Date |
Compensation Committee Approval Date(1) |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
All Other Stock Awards: Number of Shares
of Stock or Units (#)(4) |
All Other Option Awards: Number
of Securities Underlying Options (#)(5) |
Exercise or Base Price of
Option Awards ($/sh) |
Grant Date Fair Value of Stock and
Option Awards ($)(6) |
Randall J. Hogan |
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/2016 |
12/7/2015 |
|
|
|
33,821 |
67,641 |
202,923 |
|
|
|
3,333,348 |
|
1/4/2016 |
12/7/2015 |
|
|
|
|
|
|
67,641 |
|
|
3,333,348 |
|
1/4/2016 |
12/7/2015 |
|
|
|
|
|
|
|
2,029 |
49.28 |
20,779 |
|
1/4/2016 |
12/7/2015 |
|
|
|
|
|
|
|
323,123 |
49.28 |
3,309,122 |
|
|
|
1,020,636 |
2,041,272 |
4,899,053 |
|
|
|
|
|
|
|
John L. Stauch |
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/2016 |
12/7/2015 |
|
|
|
9,808 |
19,616 |
58,848 |
|
|
|
966,676 |
|
1/4/2016 |
12/7/2015 |
|
|
|
|
|
|
19,616 |
|
|
966,676 |
|
1/4/2016 |
12/7/2015 |
|
|
|
|
|
|
|
2,029 |
49.28 |
20,779 |
|
1/4/2016 |
12/7/2015 |
|
|
|
|
|
|
|
92,265 |
49.28 |
944,891 |
|
|
|
350,800 |
701,600 |
1,683,840 |
|
|
|
|
|
|
|
Karen L. Keegans |
|
|
|
|
|
|
|
|
|
|
|
|
|
6/15/2016 |
5/9/2016 |
|
|
|
2,509 |
5,017 |
15,051 |
|
|
|
300,017 |
|
6/15/2016 |
5/9/2016 |
|
|
|
|
|
|
5,017 |
|
|
300,017 |
|
6/15/2016 |
5/9/2016 |
|
|
|
|
|
|
18,395 |
|
|
1,100,021 |
|
6/15/2016 |
5/9/2016 |
|
|
|
|
|
|
|
5,016 |
59.80 |
58,588 |
|
6/15/2016 |
5/9/2016 |
|
|
|
|
|
|
|
20,658 |
59.80 |
241,292 |
|
|
|
180,000 |
360,000 |
864,000 |
|
|
|
|
|
|
|
Karl R. Frykman |
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/2016 |
12/7/2015 |
|
|
|
3,382 |
6,764 |
20,292 |
|
|
|
333,330 |
|
1/4/2016 |
12/7/2015 |
|
|
|
|
|
|
6,764 |
|
|
333,330 |
|
1/4/2016 |
12/7/2015 |
|
|
|
|
|
|
|
2,029 |
49.28 |
20,779 |
|
1/4/2016 |
12/7/2015 |
|
|
|
|
|
|
|
30,486 |
49.28 |
312,209 |
|
|
|
169,750 |
339,500 |
814,800 |
|
|
|
|
|
|
|
Dennis J. Cassidy, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
4/15/2016 |
2/22/2016 |
|
|
|
3,025 |
6,049 |
18,147 |
|
|
|
333,360 |
|
4/15/2016 |
2/22/2016 |
|
|
|
|
|
|
6,049 |
|
|
333,360 |
|
4/15/2016 |
2/22/2016 |
|
|
|
|
|
|
36,291 |
|
|
1,999,997 |
|
4/15/2016 |
2/22/2016 |
|
|
|
|
|
|
|
5,442 |
55.11 |
58,579 |
|
4/15/2016 |
2/22/2016 |
|
|
|
|
|
|
|
25,512 |
55.11 |
274,618 |
|
|
|
169,750 |
339,500 |
848,750 |
|
|
|
|
|
|
|
(1) |
The Compensation Committees
practices for granting options and restricted stock units, including the
timing of all grants and approvals therefore, are described under
Compensation Discussion and Analysis 2016 Long-Term Incentive
Compensation. |
(2) |
The amounts shown in column (d)
reflect the total of the threshold payment levels for each element under
our MIP. This amount is 50% of the target amounts shown in column (e). The
amounts shown in column (f) are 240% of such target amounts for each Named
Executive Officer other than Mr. Cassidy, and 250% of such target amount
for Mr. Cassidy. These amounts are based on the individuals actual salary
paid for 2016 and current position. For Ms. Keegans, who did not join our company until mid-year in 2016, the amounts shown in the
table are based on full-year salary; the amount actually earned was pro
rated to reflect her partial year of service. |
(3) |
The amounts shown in column (h)
as having been granted on January 4, 2016, reflect the total of the
threshold payment levels for the awards of share settled performance units
granted in 2016 under the Pentair plc 2012 Stock and Incentive Plan which
is 50% of the target amounts shown in column (i). The amounts shown in
column (j) are 300% of such target amounts. These amounts are based on the
individuals current salary and position. Any amounts payable with respect
to performance units would be paid in March 2019, based on cumulative
Company performance for the period 2016 to 2018. |
(4) |
The amounts shown in column (j)
reflect the number of restricted stock units granted to each Named
Executive Officer in 2016. |
(5) |
The amounts shown in column (k)
reflect the number of options to purchase ordinary shares granted to each
Named Executive Officer in 2016. |
(6) |
The amounts shown in column (m)
reflect the grant date fair value of the awards of restricted stock units,
performance share units and stock options computed in accordance with ASC
718. |
48 2017
Proxy Statement
Table
of Contents
EXECUTIVE COMPENSATION
TABLES
OUTSTANDING EQUITY AWARDS
AT DECEMBER 31, 2016
|
|
Option
Awards |
|
Stock
Awards |
Name |
|
Number
of securities underlying unexercised options
(#) Exercisable |
|
Number
of securities underlying unexercised options
(#) Unexercisable |
|
Equity incentive plan awards: Number
of securities underlying unexercised unearned options (#) |
|
Option exercise price ($)(1) |
|
Option expiration date |
|
Number of shares of stock or units that
have not been vested (#)(2) |
|
Market value of shares of stock or units
that have not vested ($)(3) |
|
Equity incentive plan awards: Number
of unearned shares that have not
vested (#)(4) |
|
Equity incentive plan awards: Market or
payout value of unearned shares that have not
vested ($)(5) |
Randall J. Hogan |
|
|
|
|
|
|
|
|
|
|
|
137,913 |
|
7,732,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,641 |
|
3,792,631 |
|
|
330,325 |
|
- |
|
|
|
34.18 |
|
1/2/2018 |
|
|
|
|
|
|
|
|
|
|
305,253 |
|
- |
|
|
|
24.78 |
|
1/2/2019 |
|
|
|
|
|
|
|
|
|
|
362,572 |
|
- |
|
|
|
33.38 |
|
1/4/2020 |
|
|
|
|
|
|
|
|
|
|
171,324 |
|
- |
|
|
|
36.98 |
|
1/3/2021 |
|
|
|
|
|
|
|
|
|
|
193,777 |
|
- |
|
|
|
34.12 |
|
1/3/2022 |
|
|
|
|
|
|
|
|
|
|
198,831 |
|
- |
|
|
|
50.61 |
|
1/2/2023 |
|
|
|
|
|
|
|
|
|
|
27,282 |
|
- |
|
|
|
52.69 |
|
3/15/2023 |
|
|
|
|
|
|
|
|
|
|
91,052 |
|
45,527 |
(5) |
|
|
76.87 |
|
1/2/2024 |
|
|
|
|
|
|
|
|
|
|
62,262 |
|
124,524 |
(6) |
|
|
66.68 |
|
1/2/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
325,152 |
(7) |
|
|
49.28 |
|
1/4/2026 |
|
|
|
|
|
|
|
|
John L. Stauch |
|
|
|
|
|
|
|
|
|
|
|
37,455 |
|
2,100,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,616 |
|
1,099,869 |
|
|
59,220 |
|
- |
|
|
|
33.38 |
|
1/4/2020 |
|
|
|
|
|
|
|
|
|
|
54,890 |
|
- |
|
|
|
36.98 |
|
1/3/2021 |
|
|
|
|
|
|
|
|
|
|
60,953 |
|
- |
|
|
|
34.12 |
|
1/3/2022 |
|
|
|
|
|
|
|
|
|
|
50,813 |
|
- |
|
|
|
50.61 |
|
1/2/2023 |
|
|
|
|
|
|
|
|
|
|
21,815 |
|
10,908 |
(5) |
|
|
76.87 |
|
1/2/2024 |
|
|
|
|
|
|
|
|
|
|
15,896 |
|
31,794 |
(6) |
|
|
66.68 |
|
1/2/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
94,294 |
(7) |
|
|
49.28 |
|
1/4/2026 |
|
|
|
|
|
|
|
|
Karen L. Keegans |
|
|
|
|
|
|
|
|
|
|
|
23,412 |
|
1,312,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,017 |
|
281,303 |
|
|
|
|
25,674 |
(8) |
|
|
59.80 |
|
6/15/2026 |
|
|
|
|
|
|
|
|
Karl R. Frykman |
|
|
|
|
|
|
|
|
|
|
|
11,078 |
|
621,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,764 |
|
379,257 |
|
|
18,771 |
|
- |
|
|
|
32.40 |
|
3/3/2018 |
|
|
|
|
|
|
|
|
|
|
15,422 |
|
- |
|
|
|
19.13 |
|
3/3/2019 |
|
|
|
|
|
|
|
|
|
|
19,444 |
|
- |
|
|
|
34.23 |
|
3/2/2020 |
|
|
|
|
|
|
|
|
|
|
11,773 |
|
- |
|
|
|
36.53 |
|
3/2/2021 |
|
|
|
|
|
|
|
|
|
|
11,571 |
|
- |
|
|
|
38.63 |
|
3/1/2022 |
|
|
|
|
|
|
|
|
|
|
9,146 |
|
- |
|
|
|
50.61 |
|
1/2/2023 |
|
|
|
|
|
|
|
|
|
|
5,332 |
|
2,667 |
(5) |
|
|
76.87 |
|
1/2/2024 |
|
|
|
|
|
|
|
|
|
|
4,636 |
|
9,274 |
(6) |
|
|
66.68 |
|
1/2/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
32,515 |
(7) |
|
|
49.28 |
|
1/4/2026 |
|
|
|
|
|
|
|
|
Dennis J. Cassidy, Jr. |
|
|
|
|
|
|
|
|
|
|
|
42,340 |
|
2,374,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,049 |
|
339,167 |
|
|
|
|
30,954 |
(9) |
|
|
55.11 |
|
4/15/2026 |
|
|
|
|
|
|
|
|
Pentair plc 49
Table
of Contents
EXECUTIVE
COMPENSATION TABLES
(1) |
The exercise price for all stock
option grants is the fair market value of our ordinary shares on the date
of grant. |
(2) |
For the restricted stock unit
awards granted prior to 2014, the restrictions with respect to half of the
shares will lapse on the third anniversary of the grant date and the
restrictions on the remaining half of the shares will lapse on the fourth
anniversary of the grant date. For the other awards of restricted stock
units, the restrictions with respect to one-third of the shares will lapse
on the first, second, and third anniversaries of the grant date. The grant
dates of the restricted stock unit awards are as
follows: |
Name |
Grant Date |
|
Number of Restricted Stock Units |
Mr. Hogan |
1/2/2013 |
|
24,569 |
|
3/12/2013 |
|
3,537 |
|
1/2/2014 |
|
13,575 |
|
1/2/2015 |
|
31,328 |
|
1/4/2016 |
|
64,904 |
Mr. Stauch |
1/2/2013 |
|
6,587 |
|
1/2/2014 |
|
3,253 |
|
1/2/2015 |
|
7,999 |
|
1/2/2016 |
|
19,616 |
Ms. Keegans |
6/15/2016 |
|
5,017 |
|
6/15/2016 |
|
18,395 |
Mr. Frykman |
1/2/2013 |
|
1,186 |
|
1/2/2014 |
|
795 |
|
1/2/2015 |
|
2,333 |
|
1/4/2016 |
|
6,764 |
Mr. Cassidy |
4/15/2016 |
|
6,049 |
|
4/15/2016 |
|
36,291 |
(3) |
The amounts in this column were
calculated by multiplying the closing market price of our ordinary shares
on the last trading day of our most recently completed fiscal year of
$56.07 by the number of unvested restricted stock units. |
(4) |
The number of performance share
units shown in this column reflects the target performance level for the
2016 awards, in accordance with SEC regulations requiring that the number
of units be based on achieving threshold performance goals or, if the
previous fiscal years performance has exceeded the threshold, the next
higher performance measure (target or maximum) that exceeds the previous
fiscal years performance. |
(5) |
One-third of these options will
vest on each of the first, second and third anniversaries of the grant
date, January 2, 2014. |
(6) |
One-third of these options will
vest on each of the first, second and third anniversaries of the grant
date, January 2, 2015. |
(7) |
One-third of these options will
vest on each of the first, second and third anniversaries of the grant
date, January 4, 2016. |
(8) |
One-third of these options will
vest on each of the first, second and third anniversaries of the grant
date, June 15, 2016. |
(9) |
One-third of these options will
vest on each of the first, second and third anniversaries of the grant
date, April 15, 2016. |
2016 OPTION EXERCISES AND STOCK VESTED
TABLE
The following table shows a summary of the
stock options exercised by the Named Executive Officers in 2016 and the
restricted stock or restricted stock units vested for the Named Executive
Officers during 2016.
|
|
Option
awards |
|
Stock
awards |
Name |
|
Number of shares acquired on exercise
(#) |
|
Value realized
on exercise ($)(1) |
|
Number of shares acquired on vesting
(#) |
|
Value realized
on vesting ($)(2) |
Randall J. Hogan |
|
316,448 |
|
10,049,715 |
|
157,690 |
|
8,810,184 |
John L. Stauch |
|
112,500 |
|
3,500,934 |
|
44,681 |
|
2,519,148 |
Karen L. Keegans |
|
- |
|
- |
|
|
|
|
Karl R. Frykman |
|
15,900 |
|
373,719 |
|
6,760 |
|
383,729 |
Dennis J. Cassidy, Jr. |
|
- |
|
- |
|
- |
|
- |
(1) |
Reflects the amount calculated by
multiplying the number of options exercised by the difference between the
market price of our ordinary shares on the exercise date and the exercise
price of options. |
(2) |
Reflects the amount calculated by
multiplying the number of shares vested by the market price of our
ordinary shares on the vesting date. |
50 2017
Proxy Statement
Table of
Contents
EXECUTIVE COMPENSATION
TABLES
2016 PENSION
BENEFITS
Listed below are the number of years of
credited service and present value of accumulated pension benefits as of
December 31, 2016 for each of the Named Executive Officers under the Pentair,
Inc. Pension Plan, the Pentair, Inc. Supplemental Executive Retirement Plan and
the Pentair, Inc. Restoration Plan, which are
described in detail following the table below. The disclosed amounts are
actuarial estimates only and do not necessarily reflect the actual amounts that
will be paid to the Named Executive Officers, which will only be known at the
time that they become eligible for payment.
Name |
|
Plan name |
|
Number of years credited service
(#) |
|
Present value of accumulated benefit
($)(1) |
|
Payments during last fiscal
year ($) |
Randall J. Hogan |
|
Pentair, Inc. Pension Plan |
|
19 |
|
750,963 |
|
- |
|
|
Pentair, Inc. Supplemental Executive Retirement
Plan |
|
19 |
|
20,356,269 |
|
- |
John L. Stauch |
|
Pentair, Inc. Pension Plan |
|
10 |
|
270,294 |
|
- |
|
|
Pentair, Inc. Supplemental Executive Retirement
Plan |
|
10 |
|
4,709,825 |
|
- |
Karen L. Keegans |
|
Pentair, Inc. Pension Plan |
|
N/A |
|
N/A |
|
- |
|
|
Pentair, Inc. Supplemental Executive Retirement
Plan |
|
1 |
|
132,247 |
|
- |
Karl R. Frykman |
|
Pentair, Inc. Pension Plan |
|
N/A |
|
N/A |
|
- |
|
|
Pentair, Inc. Supplemental Executive Retirement
Plan |
|
3 |
|
1,049,211 |
|
- |
Dennis J. Cassidy, Jr. |
|
Pentair, Inc. Pension Plan |
|
N/A |
|
N/A |
|
- |
|
|
Pentair, Inc. Supplemental Executive Retirement
Plan |
|
1 |
|
141,286 |
|
- |
(1) |
The Supplemental Executive
Retirement Plan benefits, which include amounts under the Restoration
Plan, are payable following retirement at age 55 or later in the form of
an annuity. The actuarial present values above were calculated using the
following methods and assumptions: |
|
► |
The Pension Plan present values
were based on the accrued benefit payable at age 65 and were calculated as
of December 31, 2016. |
|
► |
Present values for the Pension
Plan are based on a life-only annuity. Present values for the Supplemental
Executive Retirement Plan are based on a 180-month-certain only
annuity. |
|
► |
The present value of Pension Plan
benefits as of December 31, 2016 was calculated assuming a 4.11% interest
rate and the MRP2007 male and female generational mortality (no collar
adjustments) with improvement scale MMP2007 for post-retirement decrements
with no pre-retirement mortality used. |
|
► |
The present value of Supplemental
Executive Retirement Plan benefits as of December 31, 2016 was calculated
assuming a 3.55% interest rate. |
The actual amount of pension benefits
ultimately paid to a Named Executive Officer may vary based on a number of
factors, including differences from the assumptions used to calculate the
amounts.
The Pentair, Inc. Pension Plan, the
Pentair, Inc. Retirement Savings and Stock Incentive Plan, the Pentair, Inc.
Supplemental Executive Retirement Plan and the Pentair, Inc. Restoration Plan were all amended in 2008 to comply with final
regulations under Section 409A of the Code. As a result of these amendments,
benefits vested prior to January 1, 2005 are separated from benefits earned
after January 1, 2005, and may offer different distribution or other options to
participants from those described below.
The
Pentair, Inc. Pension Plan |
The Pentair, Inc. Pension Plan (the
Pension Plan) is a funded, tax-qualified, noncontributory defined-benefit
pension plan that covers certain employees, including each of the Named
Executive Officers other than Ms. Keegans, Mr. Frykman and Mr. Cassidy.
Participation in the Pension Plan is restricted to those Named Executive
Officers and other employees who were hired on or before December 31, 2007.
Benefits under the Pension Plan are based upon an employees years of service
and highest average earnings in any five-year period during the ten-year period
preceding the employees retirement (or, in the case of an employee with more
than five years but less than ten years of service, during any five-year period
preceding the employees retirement). No additional benefits may be
earned under the Pension Plan after December 31,
2017. Benefits under the Pension Plan are payable after retirement in the form
of an annuity.
Compensation covered by the Pension Plan
for the Named Executive Officers equals the amounts set forth in the Salary
column under Executive Compensation Tables-Summary Compensation Table and 2016
incentive compensation paid under the MIP in March 2017 set forth in the
Non-Equity Incentive Plan Compensation column under Executive Compensation
Tables-Summary Compensation Table. The amount of annual earnings that may be
considered in calculating benefits under the Pension Plan is limited by law. For
2016, the annual limitation was $265,000.
Pentair plc 51
Table of
Contents
EXECUTIVE
COMPENSATION TABLES
Benefits under the Pension Plan are
calculated as an annuity equal to the participants years of service multiplied
by the sum of:
► |
1.0% of the participants highest
final average earnings; and |
► |
0.5% of such earnings in excess
of Primary Social Security compensation. |
Years of service under these formulas
cannot exceed 35. Contributions to the Pension Plan are made entirely by us and
are paid into a trust fund from which the benefits for all participants will be
paid.
The
Pentair, Inc. Supplemental Executive Retirement and Restoration
Plan |
The Pentair, Inc. Supplemental Executive
Retirement Plan (SERP) and the Pentair, Inc. Restoration Plan (Restoration
Plan) are unfunded, nonqualified defined benefit pension plans. Employees
eligible for participation in the SERP include all executive officers and other
key executives selected for participation by the Committee. Participation in the
Restoration Plan is limited to eligible employees under the SERP who were
eligible employees on or before December 31, 2007. Benefits under these two
Plans vest upon the completion of five years of benefit service (all service
following initial participation). These Plans are combined for all
administrative, accounting and other purposes. Each of the Named Executive
Officers participates in the SERP and each of the Named Executive Officers other
than Ms. Keegans, Mr. Cassidy and Mr. Frykman participates in the Restoration
Plan. All Named Executive Officers other than Ms. Keegans, Mr. Cassidy and Mr.
Frykman are fully vested in these Plans.
Benefits under the SERP are based upon the
number of an employees years of service following initial participation and the
highest average earnings for a five calendar-year period (ending with
retirement). Compensation covered by the SERP and the Restoration Plan for the
Named Executive Officers equals the amounts set forth in the Salary column
under Executive Compensation Tables-Summary Compensation Table and 2016
incentive compensation paid under the MIP in March 2017 set forth in the
Non-Equity Incentive Plan Compensation column under Executive Compensation
Tables-Summary Compensation Table.
Benefits under the SERP are calculated
as:
► |
final average compensation as
defined above; multiplied by |
► |
benefit service percentage, which
equals 15% multiplied by years of benefit
service. |
As discussed above, the Pension Plan
limits retirement benefits for compensation earned in excess of the annual
limitation imposed by the Code, which was $265,000 in 2016. The Restoration Plan
is designed to provide retirement benefits based on compensation earned by
participants in excess of this annual limitation.
Benefits under the Restoration Plan are
calculated as:
► |
final average compensation as
defined above, less compensation below the annual limitation amount in
each year; multiplied by |
► |
earned benefit service percentage
(which is weighted based on age at the time of service), in accordance
with the following table: |
Service Age |
Percentage |
Under 25 |
4% |
25-34 |
5.5% |
35-44 |
7% |
45-54 |
9% |
55
or over |
12% |
The benefit percentages calculated above
are added and the resulting percentage is multiplied by the covered compensation
amount. Benefits vested as of December 31, 2004 are payable after retirement in
the form of a 15-year certain annuity or, at the participants option, a 100%
joint and survivor annuity. Benefits earned after December 31, 2004 are payable
after retirement in the form of a 15-year certain annuity. No additional
benefits may be earned under the Restoration Plan after December 31,
2017.
The present value of the combined
accumulated benefits for the Named Executive Officers under both the SERP and
the Restoration Plan is set forth in the table under Executive Compensation
Tables-Pension Benefits.
The
Pentair, Inc. Retirement Savings and Stock Incentive
Plan |
The Pentair, Inc. Retirement Savings and
Stock Incentive Plan (RSIP/ESOP Plan) is a tax-qualified 401(k) retirement
savings plan, with a companion Employee Stock Ownership Plan (ESOP) component.
Participating employees may contribute up to 50% of base salary and incentive
compensation on a before-tax basis and 15% of compensation on an after-tax
basis, into their 401(k) plan (RSIP). We normally match an amount equal to one dollar for each dollar contributed to the RSIP by
participating employees on the first 1%, and 50 cents for each dollar
contributed to the RSIP by participating employees on the next 5%, of their
regular earnings to incent employees to make contributions to our retirement
plan. In addition, after the first year of employment, we contribute to the ESOP
an amount equal to 1½% of cash compensation (salary and
52 2017
Proxy Statement
Table of
Contents
EXECUTIVE COMPENSATION
TABLES
incentive compensation) for each
participant in the RSIP. The RSIP/ESOP Plan limits the amount of cash
compensation considered for contribution purposes to the maximum imposed by the
Code, which was $265,000 in 2016.
Participants in the RSIP/ESOP Plan are
allowed to invest their account balances in a number of possible mutual fund
investments. Our ordinary shares are also a permitted investment choice under
the RSIP. We also make ESOP contributions in our ordinary shares.
Fidelity Investments Institutional
Services Co. provides these investment vehicles for participants and handles all
allocation and accounting services for the Plan. We do not guarantee or
subsidize any investment earnings under the Plan.
Amounts deferred, if any, under the
RSIP/ESOP Plan by the Named Executive Officers are included in the Salary and
Non-Equity Incentive Plan Compensation columns under Executive Compensation
Tables-Summary Compensation Table. Amounts contributed by us to the RSIP/ESOP
Plan for the Named Executive Officers are included in the All Other
Compensation column under Executive Compensation Tables-Summary Compensation
Table. Matching contributions are generally made a year in arrears.
NONQUALIFIED DEFERRED COMPENSATION
TABLE
The following table sets forth the
contributions, earnings, distributions and 2016 year-end balances for each of
the Named Executive Officers under our Sidekick Plan described under
Compensation Discussion and Analysis Retirement and Other Benefits Deferred
Compensation. Contributions we make to the Sidekick Plan are intended to make
up for contributions to our RSIP/ESOP Plan (including our matching
contributions) for cash compensation above the maximum imposed by the Code,
which was $265,000 in 2016. Because the Code does
not permit contributions on amounts in excess of that limit under a
tax-qualified plan, the Sidekick Plan is designed to permit matching
contributions on compensation in excess of the maximum imposed by the Code. We
make these matching contributions to the Sidekick Plan on amounts in excess of
the maximum imposed by the Code, but below the $700,000 compensation limit
contained in our Sidekick Plan (such contributions by a Named Executive Officer,
Covered Sidekick Compensation).
Name |
|
Executive Contributions in
2016 ($) |
|
Registrant Contributions in
2016 ($) |
|
Aggregate Earnings/(Loss) in
2016 ($) |
|
Aggregate Withdrawals/ Distributions in
2016 ($) |
|
Aggregate Balance at December
31, 2016 ($) (1) |
Randall J. Hogan |
|
187,098 |
|
21,750 |
|
642,209 |
|
(463,789 |
) |
5,672,558 |
John L. Stauch |
|
221,787 |
|
21,750 |
|
542,563 |
|
- |
|
4,798,936 |
Karen L. Keegans |
|
14,700 |
|
- |
|
247 |
|
- |
|
14,947 |
Karl R. Frykman |
|
- |
|
10,589 |
|
5,575 |
|
- |
|
44,326 |
Dennis J. Cassidy, Jr. |
|
18,175 |
|
- |
|
896 |
|
- |
|
19,071 |
(1) |
Amounts deferred under the
Sidekick Plan that have also been reported in the Summary Compensation
Table since 2006 for each Named Executive Officer are: Mr. Hogan
$5,466,684; Mr. Stauch $4,776,860; Ms. Keegans $14,700; Mr. Frykman
$10,589; Mr. Cassidy $18,175. To the extent the amounts in this column
are less than the amounts reported in the Summary Compensation Table since
2006, the difference is due to losses, withdrawals or
distributions. |
The amounts set forth in the column
Executive Contributions in 2016 reflect the amount of cash compensation each
Named Executive Officer deferred in 2016 under the Sidekick Plan.
The amounts set forth in the column
Registrant Contributions in 2016 are the totals of contributions we made in
2016 under the Sidekick Plan for the account of each Named Executive Officer.
These amounts, in addition to contributions we made under the RSIP/ESOP Plan,
are included in the Summary Compensation Table
in the column labeled All Other Compensation above. The contributions we made
are derived from some or all of the following sources:
► |
Matching contributions equal to
one dollar for each dollar contributed up to 1% of Covered Sidekick
Compensation, and 50 cents for each incremental dollar contributed on the
next 5%, deferred in 2015 by each Named Executive Officer; we normally
make these contributions one year in arrears. |
Pentair plc 53
Table of
Contents
EXECUTIVE COMPENSATION
TABLES
► |
A discretionary contribution of
up to 1½% of Covered Sidekick Compensation earned in 2015 for each Named
Executive Officer; we normally make these contributions one year in
arrears. |
The amounts set forth in the column
Aggregate Earnings/(Loss) in 2016 reflect the amount of investment earnings
realized by each Named Executive Officer on the investments chosen that are
offered to participants in our RSIP/ESOP Plan and Sidekick Plan. Fidelity
Investments Institutional Services Co. provides these investment vehicles for
participants and handles all allocation and accounting services for these plans.
We do not guarantee or subsidize any investment earnings in either
Plan.
For some participants, including the Named
Executive Officers, the selected distribution events under the Sidekick Plan
included a change in control, which included the Merger. As a result, the
distribution of some previously earned and vested, but unpaid, amounts under
Pentairs deferred compensation programs to the Named Executive Officers
commenced upon the consummation of the Merger. Some of these amounts were
distributed in installments, and the amounts of the installments occurring in
2016 are set forth in the column Aggregate Withdrawals/Distributions in
2016.
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL
Except for items described below, we have
no agreements, arrangements, or plans that entitle executive officers to
severance, perquisites, or other enhanced benefits upon termination of their employment; any such payments or benefits (other
than following a change in control) would be at the discretion of the
Compensation Committee.
Change in Control Agreements |
We have entered into agreements with
certain key corporate executives and business division leaders, including all
Named Executive Officers, that provide for contingent benefits upon a change in
control. These agreements are intended to provide for continuity of management
upon a completed or threatened change in control. The agreements provide that
covered executive officers could be entitled to certain severance or other
benefits following a change in control. If, following such a change in control,
the executive officer is involuntarily terminated, other than for disability or
for cause, or if such executive officer terminates his or her employment for
conditions that constitute good reason, then the executive officer is entitled
to certain severance payments. As previously disclosed, we have adopted a policy
of not including automatic single trigger change in control vesting and excise
tax gross-ups in new agreements with our executive officers.
Under these agreements, cause
means:
► |
engaging in intentional conduct
that causes us demonstrable and serious financial injury; |
► |
conviction of a felony;
or |
► |
continuing willful and
unreasonable refusal by an officer to perform his or her duties or
responsibilities. |
Under these agreements, good reason
means:
► |
a breach of the agreement by
us; |
► |
any reduction in an officers
base salary, percentage of base salary available as incentive compensation
or bonus opportunity or benefits; |
► |
an officers removal from, or any
failure to reelect or reappoint him or her to serve in, any of the
positions held with us on the date of the change in control or any other
positions to which he or she is thereafter elected, appointed or assigned,
except in the event that such removal or failure to reelect or reappoint
relates to our termination of an officers employment for cause or by
reason of disability; |
► |
a good faith determination by an
officer that there has been a material adverse change in his or her
working conditions or status relative to the most favorable working
conditions or status in effect during the 180-day period prior to the
change in control, or, to the extent more favorable to him or her, those
in effect at any time while employed after the change in control,
including a significant change in the nature or scope of his or her
authority, powers, functions, duties or responsibilities or a significant
reduction in the level of support services, staff, secretarial and other
assistance, office space and accoutrements, but in each case excluding for
this purpose an isolated, insubstantial and inadvertent event not
occurring in bad faith that we remedy within 10 days after receipt of
notice; |
► |
relocation of an officers
principal place of employment to a location more than 50 miles from his or
her principal place of employment on the date 180 days prior to the change
in control; |
► |
imposition of a requirement that
an officer travel on business 20% in excess of the average number of days
per month he or she was required to travel during the 180-day period prior
to the change in control; |
► |
our failure to cause a successor
to assume an officers agreement; or |
► |
only in the case of the Chief
Executive Officer, a voluntary termination for any reason within 30 days
following the first anniversary of any change in
control. |
54 2017
Proxy Statement
Table of
Contents
EXECUTIVE COMPENSATION
TABLES
Under these agreements, a change in
control is deemed to have occurred if:
► |
any person is or becomes the
beneficial owner of securities representing 30% (or 20% in the case of Mr.
Hogan) or more of our outstanding ordinary shares or combined voting
power; |
► |
a majority of the Board changes
in a manner that has not been approved by at least two-thirds of the
incumbent directors or successor directors nominated by at least two-thirds of the incumbent directors; |
► |
we consummate a merger,
consolidation or share exchange with any other entity (or the issuance of
voting securities in connection with a merger, consolidation or share
exchange) which our shareholders have approved and in which our
shareholders control less than 50% of combined voting power after the
merger, consolidation or share exchange; or |
► |
we consummate a plan of complete
liquidation or dissolution or an agreement for the sale or disposition of
all or substantially all of our assets which our shareholders have
approved. |
The benefits under the change in control
agreements that could be triggered by a change in control and a covered
termination in connection with such a change in control include:
► |
upon any change in
control: |
|
► |
incentive compensation
awards for the year in question to be paid at target; |
|
► |
for Named Executive
Officers other than Ms. Keegans and Mr. Cassidy, immediate vesting of all
unvested stock options and termination of all restrictions on restricted
stock awards; |
|
► |
for Named Executive
Officers other than Ms. Keegans and Mr. Cassidy, cash settled performance
awards and performance share units to be paid at one-third of target if
the award cycle has been in effect less than 12 months, at two-thirds of
the then-current value if the award cycle has been in effect for between
12 and 24 months, and at the then-current value if the award cycle has
been in effect for 24 months or more, in each case as if all performance
or incentive requirements and periods had been satisfied; and |
|
► |
in certain cases for
Named Executive Officers other than Ms. Keegans and Mr. Cassidy,
reimbursement of any excise taxes triggered by payments to the executive
and any additional taxes on this reimbursement. In place of a tax gross up
for excise taxes, Ms. Keegans and Mr. Cassidys agreements provide that,
if excise taxes would otherwise be imposed in connection with a change in
control, the executives change in control compensation protections will
be either cut back to a level below the level that would trigger the
imposition of the excise taxes or paid in full and subjected to the excise
taxes, whichever results in the better after-tax result to the
executive. |
|
► |
upon termination of the
executive by us other than for death, disability or cause or by the
executive for good reason, after a change in control: |
|
► |
severance payable upon
termination in an amount equal to 300% (for the Chief Executive Officer),
250% (for Mr. Stauch) or 200% (for Ms. Keegans, Messrs. Frykman and
Cassidy) of annual base salary plus the greater of the executives target
bonus for the year of termination or the actual bonus paid with respect to
the year prior to the change in control; |
|
► |
replacement coverage for
Company-provided group medical, dental and life insurance policies for up
to three years (for Mr. Hogan) or two years (for Messrs. Stauch, Frykman
and Cassidy and Ms. Keegans); |
|
► |
the cost of an executive search
agency not to exceed 10% of the executives annual base
salary; |
|
► |
the accelerated accrual and
vesting of benefits under the SERP (for those executives who have been
made participants of such plan); and for executives having fewer than
seven years of participation in the SERP, up to three additional years of
service can be credited, up to a maximum of seven years of
service; |
|
► |
up to $15,000 in fees and
expenses of consultants and legal or accounting advisors; and |
|
► |
for Ms. Keegans and Mr. Cassidy,
whose agreements do not provide for single-trigger equity vesting, all
equity-based and cash incentive awards granted prior to the change in
control will be subject to the terms of the incentive plan under which
they were granted (including accelerated vesting, if provided for in the
applicable plan), and all equity-based and cash incentive awards granted
on or after the change in control will vest or be earned in full upon such
termination. |
In the case of each Named Executive
Officer, the agreement also requires the executive to devote his or her best
efforts to us or our successor during the three-year or two-year period, to
maintain the confidentiality of our information during and following employment
and to refrain from competitive activities for a period of one year following
termination of employment with us or our successor.
Pentair plc 55
Table of
Contents
EXECUTIVE
COMPENSATION TABLES
Change in Control and Termination Provisions of Incentive
Plans |
Change in Control
Provisions
The Pentair plc 2012 Stock
and Incentive Plan provides that, upon a change in control, unless an agreement
between us and the executive provides for a more favorable result to the
executive:
► |
all outstanding options,
restricted stock and restricted stock units that are not performance
awards are immediately vested; |
► |
all outstanding performance
awards (other than annual incentive awards) are paid in full based on
performance at the better of target or trend; and |
► |
all outstanding annual incentive
awards are paid based on full satisfaction of the performance
goals. |
The 2004 Omnibus Plan and 2008 Omnibus
Plan each provides that, upon a change in control, unless otherwise provided in
an agreement between us and the executive that discusses the effect of a change
in control on the executives awards:
► |
all outstanding options (which
are the sole form of awards currently outstanding under the plans) that
are unvested become fully vested. |
Termination Provisions
► |
Retirement. If any of the Named
Executive Officers terminates employment in a retirement with at least 10
years of service, the Pentair plc 2012 Stock and Incentive Plan and its
predecessor plans provide as follows: |
|
► |
If the retirement is prior to age
60: unvested options are forfeited; restricted stock and restricted stock
units (that are not performance awards or for which any performance goals
have been satisfied) vest pro rata; and performance awards are paid on a
pro rata basis based on actual performance; or |
|
► |
If the retirement
is after age 60: options continue to vest for 5 years; restricted stock
and restricted stock units (that are not performance awards or for which
any performance goals have been satisfied) vest in full; and performance
awards are paid in full based on actual performance. |
|
|
► |
Death or
Disability. If any of the Named
Executive Officers terminates employment as a result of death or
disability, the Pentair plc 2012 Stock and Incentive Plan and its
predecessor plans provide that options, restricted stock and restricted
stock units are immediately vested; and performance awards are paid in
full based on actual performance. |
► |
Termination Without
Cause or for Good Reason. If any of the
Named Executive Officers terminates employment in an involuntary
termination for a reason other than cause, death or disability, or in a
voluntarily termination for good reason, then the employees outstanding
awards under the Pentair plc 2012 Stock and Incentive Plan will be
eligible for continued or accelerated vesting, as
described below. A termination of employment under these circumstances is
referred to in the Pentair plc 2012 Stock and Incentive Plan as a Covered
Termination. For a Named Executive Officers termination to be considered
a Covered Termination, the officer must execute a general release in a
form and manner determined by us. Upon a Covered Termination, the Pentair
plc 2012 Stock and Incentive Plan provides that awards held by a
Board-appointed corporate officer, including such a Named Executive
Officer, will be treated as follows: |
|
► |
Stock options will remain
outstanding, and will continue to vest in accordance with their terms as
if the officer had remained in employment, until the earlier of the
expiration date of the stock option and the fifth anniversary of the
covered termination. |
|
► |
Restricted stock and restricted
stock units (that are not performance awards or for which any performance
goals have been satisfied) will vest in full. |
|
► |
Performance awards, including
restricted stock and restricted stock units that have performance-based
vesting, will be paid following the end of the performance period based on
achievement of the performance goals established for the awards as if the
employee had not experienced a covered
termination. |
Under the Pentair plc 2012 Stock and
Incentive Plan, the term cause means an act or omission by the officer as is
determined by the Plan administrator to constitute cause for termination,
including but not limited to any of the following:
► |
a material violation of any
company policy; |
► |
embezzlement from, or theft of
property belonging to, us or any of our affiliates; |
► |
willful failure to perform, or
gross negligence in the performance of, or failure to perform, assigned
duties; or |
► |
other intentional misconduct,
whether related to employment or otherwise, which has, or has the
potential to have, a material adverse effect on our
business. |
Under the Pentair plc 2012 Stock and
Incentive Plan, the term good reason means:
► |
any material breach by us of the
terms of any employment agreement; |
► |
any reduction in base salary or
percentage of base salary available as incentive compensation or bonus
opportunity, or any material reduction in nonqualified deferred
compensation retirement benefits; |
► |
a good faith determination by the
officer that there has been a material adverse change in the officers
working conditions or status; |
► |
a relocation of the principal
place of employment to a location more than 50 miles; or |
► |
an increase of 20% or more in
travel requirements. |
56 2017
Proxy Statement
Table of
Contents
EXECUTIVE COMPENSATION
TABLES
For an event to constitute good reason, we
must receive written notice and an opportunity to cure.
Benefits pursuant to these incentive plans
are generally applicable to all other participants who meet the requisite
criteria as well as to the Named Executive Officers.
Quantification of Compensation Payable upon a Change in
Control or Termination of Employment |
The amounts each Named Executive Officer
would receive upon a termination as a result of a Covered Termination, a
qualifying retirement with 10 years of service, death or disability, in each
case in the absence of a change in control, is shown below. As required by the
Securities and Exchange Commission rules, the amounts shown assume that such
termination was effective as of December 31, 2016, and thus are estimates of the
amounts that would actually be received. The actual amounts to be received can
only be determined in connection with the termination event. As indicated in
the table below, the only benefits the Named
Executive Officer would be entitled to receive upon a termination as a result of
a Covered Termination, a qualifying retirement with 10 years of service, death
or disability, in each case in the absence of a change in control, relate to
accelerated vesting or payment of long-term incentive awards. Any severance,
perquisites, or other enhanced benefits upon termination of employment in the
absence of a change in control would be at the discretion of the Compensation
Committee.
Executive |
|
Stock Option Vesting($) |
|
Restricted Stock Unit Vesting(1)($) |
|
Cash Settled Performance
Unit Vesting(2)($) |
|
Performance Share Unit Vesting(2)($) |
|
Total($) |
Randall J. Hogan(3) |
|
- |
|
- |
|
3,133,334 |
|
3,886,716 |
|
7,020,050 |
John L. Stauch |
|
640,256 |
|
2,100,102 |
|
800,000 |
|
1,127,119 |
|
4,667,477 |
Karen L. Keegans |
|
- |
|
1,312,711 |
|
- |
|
284,499 |
|
1,597,210 |
Karl R. Frykman |
|
220,777 |
|
621,143 |
|
233,334 |
|
388,621 |
|
1,463,875 |
Dennis J. Cassidy, Jr. |
|
29,716 |
|
2,374,004 |
|
- |
|
344,999 |
|
2,748,719 |
(1) |
None of the restricted stock
units would vest upon a retirement prior to 10 years of service, and only
a pro rata portion of the restricted stock units would vest upon a
retirement with 10 years of service prior to age 60. |
(2) |
The amount shown assumes target
performance. The actual amount is determined on the basis of actual
performance through the end of the applicable performance
period. |
(3) |
Because Mr. Hogan is eligible for
immediate or continued vesting upon retirement, no enhanced benefit would
occur with respect to his stock options or restricted stock
units. |
The table below shows the amount of
compensation payable to each Named Executive Officer upon (1) a change in
control without a termination of employment or (2) a change in control followed
by a termination of employment (a) by us, other than for death, disability or
cause or (b) by the executive for good reason.
The amounts shown assume that such termination was effective as of December 31,
2016. The actual amounts to be paid out can only be determined in connection
with a change in control or termination following a change in
control.
Executive |
|
Cash Termination Payment (1)($) |
|
Stock Option Vesting (2)($) |
|
Restricted Stock
Unit Vesting (2)($) |
|
Cash
Settled Performance Unit Vesting (2)($) |
|
Performance Share
Unit Vesting (2)($) |
|
SERP
& Related Pension (1)($) |
|
Incentive Compensation (2)($) |
|
Outplacement (1)($) |
|
Legal
& Accounting Advisors (1)($) |
|
Medical, Dental, Life Insurance (1)($) |
|
Total: Change in Control (2)($) |
|
Excise Tax Gross Up
or Cutback (3)($) |
|
Total: Change in
Control Followed by Termination (1)($) |
Randall J. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hogan(4) |
|
9,951,201 |
|
- |
|
- |
|
3,133,334 |
|
3,886,716 |
|
- |
|
2,041,272 |
|
50,000 |
|
15,000 |
|
40,153 |
|
9,061,322 |
|
- |
|
19,117,676 |
John L. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stauch |
|
3,508,000 |
|
640,256 |
|
2,100,102 |
|
800,000 |
|
1,127,119 |
|
- |
|
701,600 |
|
50,000 |
|
15,000 |
|
36,545 |
|
5,369,077 |
|
- |
|
8,978,622 |
Karen L. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keegans |
|
1,620,000 |
|
- |
|
1,312,711 |
|
- |
|
284,499 |
|
329,296 |
|
360,000 |
|
45,000 |
|
15,000 |
|
35,263 |
|
1,957,210 |
|
(915,638 |
) |
3,086,131 |
Karl R. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frykman |
|
1,704,272 |
|
220,777 |
|
621,143 |
|
233,334 |
|
388,621 |
|
1,048,646 |
|
339,500 |
|
48,500 |
|
15,000 |
|
34,898 |
|
1,803,375 |
|
1,975,009 |
|
6,629,700 |
Dennis J. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cassidy, Jr. |
|
1,649,000 |
|
29,716 |
|
2,374,004 |
|
- |
|
344,999 |
|
288,593 |
|
339,500 |
|
48,500 |
|
15,000 |
|
46,521 |
|
3,088,219 |
|
- |
|
5,135,833 |
(1) |
Triggered only upon a change in
control and a termination of the executive officer by us other than for
death, disability or cause or by the executive for good
reason. |
Pentair plc 57
Table of Contents
EXECUTIVE COMPENSATION TABLES
(2) |
Triggered solely upon a change in control under the
change in control agreement for executives other than Ms. Keegans and Mr.
Cassidy and under the Pentair plc 2012 Stock and Incentive Plan for Ms.
Keegans and Mr. Cassidy. The amount shown for cash settled performance
units and performance share units assumes target performance and includes
the balance of any dividend equivalent units (rounded down to the nearest
whole share). |
(3) |
For each of the executives other than Ms. Keegans and
Mr. Cassidy, reflects either the amount of the gross-up for excise taxes
or a reduction mandated by the change in control agreement in the event
that the excise tax on certain parachute payments can be avoided by
reducing the amount of the payments by not more than 10%. In place of a
tax gross up for excise taxes, Ms. Keegans and Mr. Cassidys agreements
provide that, if excise taxes would otherwise be imposed in connection
with a change in control, the executives change in control compensation
protections will be either cut back to a level below the level that would
trigger the imposition of the excise taxes or paid in full and subjected
to the excise taxes, whichever results in the better after-tax result to
the executive. |
(4) |
Because Mr. Hogan is eligible for immediate or continued
vesting upon retirement, no enhanced benefit would occur with respect to
his stock options or restricted stock units. |
The amounts in the two tables above
assume, to the extent applicable, that:
► |
our ordinary shares were valued at
$56.07, the closing market price for our ordinary shares on the last
trading day of 2016; |
► |
outplacement services fees are
$50,000 or 10% of annual base salary, whichever is less; |
► |
legal and accounting advisor fees
are the maximum possible under the change in control agreements for each
executive officer; and |
► |
medical, dental and life insurance
coverage will continue until three years (for Mr. Hogan) or two years (for
Messrs. Stauch, Frykman and Cassidy and Ms. Keegans) after a change in
control, in each case at the current cost per year for each
executive. |
Under certain circumstances, as reflected
above, we may pay to an executive covered by a change in control agreement
(other than Ms. Keegans and Mr. Cassidy) an excise tax gross up. This practice
was discontinued in 2013. Since then, any new agreements entered into with any
new executive officers did not contain this feature. In place of a tax gross up
for excise taxes, Ms. Keegans and Mr. Cassidys agreements provide that, if excise taxes would otherwise be
imposed in connection with a change in control, the executives change in
control compensation protections will be either cut back to a level below the
level that would trigger the imposition of the excise taxes or paid in full and
subjected to the excise taxes, whichever results in the better after-tax result
to the executive. In determining the amount of any gross up or cut back included
in the tables above, we made the following material assumptions: an excise tax
rate of 20% under the Code, a combined federal and state individual tax rate of
41.9%, and we would be able to overcome any presumption that grants of stock
options or restricted stock units in 2016 were made in contemplation of a change
in control pursuant to regulations promulgated under the Code. In addition, no
excise tax gross up will be made if the portion of the payments treated as
parachute payments received by an executive in the event of a change in
control can be reduced by not more than 10% and escape an excise tax. In that
event, the payments will be reduced to the highest qualifying amount and no
gross up will be paid. Furthermore, it was assumed that no value will be
attributed to any non-competition agreement. At the time of any such change in
control or termination, a value may be attributed, which would result in a
reduction of amounts subject to the excise tax.
RISK CONSIDERATIONS IN COMPENSATION
DECISIONS
The Committee believes that paying for
performance is an important part of its compensation philosophy, but recognizes
the risk that incentivizing specific measures of performance may pose to the
performance of the Company as a whole if personnel were to act in ways designed
primarily to maximize their compensation. Therefore, the Committee conducts an
annual assessment of potential risks arising from its compensation programs and
policies applicable to all employees. In its December 2016 assessment, the
Committee noted the following considerations, among others:
► |
the balance of our fixed and
variable compensation in our executive officer compensation
programs |
► |
the balance in our compensation
programs between the achievement of short-term objectives and longer-term
value creation |
► |
the mix of compensation forms within
our long-term incentive compensation program |
► |
our use of multiple performance
measures under our incentive compensation programs |
► |
the impact of these performance
measures on our financial results |
► |
our use of performance curves that
require achievement of a minimum level of performance before receiving any
incentive payout |
► |
capped payouts under our incentive
programs |
► |
our adoption of a clawback policy
pursuant to which certain incentive compensation earned by our executive
officers may be subject to recoupment |
► |
our stock ownership guidelines and
equity holding policy |
► |
our adoption of an equity holding
policy |
Based on its assessment, the Committee
concluded that the risks arising from our compensation programs and policies are
not reasonably likely to have a material adverse effect on our company. The
Committee will continue to assess our compensation programs to align employee
interests with those of long-term shareholder interests.
58 2017
Proxy Statement
Table of Contents
|
|
|
|
|
|
PROPOSAL 3 |
|
|
NON-BINDING ADVISORY
VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON COMPENSATION OF NAMED
EXECUTIVE OFFICERS |
|
|
|
|
The Board recommends a
vote of ONE YEAR on frequency of future
advisory votes on compensation of named executive officers |
|
|
|
|
|
|
|
|
Section 14A of the Securities Exchange Act
of 1934 requires that, every six years, we provide shareholders with a vote on
how frequently we will submit the non-binding advisory vote on compensation of
our named executive officers (the say on pay vote) to our shareholders in the
future. We last submitted a vote on the frequency of future say on pay votes to
our shareholders in 2011, when, in keeping with the recommendation of our Board,
our shareholders expressed a preference that future say on pay votes be held on
an annual basis. Consistent with that preference, our Board has held a say on
pay vote annually since 2011. Because this is the sixth year after the first
vote on the frequency of future say on pay votes, we are again asking our
shareholders at the Annual General Meeting whether future say on pay votes
should occur every one, two or three years.
Our Board recommends that shareholders
approve holding a say on pay vote every year (an annual vote) because we
continue to believe that an annual vote will promote best governance practices
and facilitate our Compensation Committees and our senior managements
consideration of the views of our shareholders in structuring our compensation
programs for our named executive officers. We believe that an annual vote will
provide our Compensation Committee and our senior management with more direct
input on, and reactions to, our current compensation practices, and better allow
our Compensation Committee and our senior
management to measure how they have responded to the prior years vote.
For the
reasons discussed above, our Board recommends that shareholders vote in favor of
holding an advisory say on pay vote on executive compensation at our annual
meeting of shareholders every year. In voting on this non-binding advisory vote
on the frequency of the say on pay vote, shareholders should be aware that they
are not voting for or against the Boards recommendation to vote for a
frequency of every year. Rather, shareholders will be casting votes to recommend
a say on pay vote frequency which may be every one, two or three years, or they
may abstain entirely from voting on the proposal.
Additionally, although the
outcome of this advisory vote on the frequency of future say on pay votes is
non-binding, our Board will review and consider the outcome of this vote when
making determinations as to when the say on pay vote will again be submitted to
shareholders for approval at an annual meeting of shareholders.
The text of the resolution in respect of
Proposal 3 is as follows:
IT IS
RESOLVED, that, on a non-binding, advisory
basis, the shareholders recommend, whether a vote to approve the compensation of
the Companys named executive officers should occur every one, two or three
years, or abstain from any recommendation.
VOTE REQUIREMENT
Approval, by non-binding advisory vote, of
the frequency of future advisory votes on compensation of named executive
officers requires the affirmative vote of a majority of the votes cast in person
or by proxy at the Annual General Meeting.
The frequency of the say on pay vote
receiving the greatest number of votes cast in favor of such frequency will be
the frequency of the say on pay vote that shareholders are deemed to have
approved.
EACH OF THE BOARD AND THE COMPENSATION COMMITTEE RECOMMENDS
A VOTE OF ONE YEAR ON FREQUENCY OF FUTURE ADVISORY VOTES ON COMPENSATION
OF NAMED EXECUTIVE OFFICERS. |
Pentair plc 59
Table of Contents
|
|
|
|
|
|
PROPOSAL 4 |
|
|
RATIFY, BY
NON-BINDING ADVISORY VOTE, THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
THE INDEPENDENT AUDITORS OF PENTAIR PLC AND TO AUTHORIZE, BY BINDING VOTE,
THE AUDIT AND FINANCE COMMITTEE OF THE BOARD OF DIRECTORS TO SET THE
AUDITORS REMUNERATION |
|
|
|
|
The Board recommends a
vote FOR the
ratification of the appointment of Deloitte & Touche LLP as the
independent auditors of Pentair plc and the authorization of the Audit and
Finance Committee to set the auditor's remuneration |
|
|
|
|
|
|
|
|
The Audit and Finance Committee has
selected and appointed Deloitte & Touche LLP (D&T) to audit our
financial statements for the fiscal year ending December 31, 2017. The Board,
upon the recommendation of the Audit and Finance Committee, is asking our
shareholders to ratify, by non-binding advisory vote, the appointment and to
authorize, by binding vote, the Audit and Finance Committee of the Board of
Directors to set the independent auditors remuneration. Although approval is
not required by our Articles of Association or otherwise, the Board is
submitting the appointment of D&T to our shareholders because we value our
shareholders views on our independent auditors. If the appointment of D&T
is not ratified by shareholders, it will be considered as notice to the Board
and the Audit and Finance Committee to consider the selection of a different
firm. Even if the appointment is ratified, the Audit and Finance Committee in
its discretion may select a different independent auditor at any time during the
year if it determines that such a change would be in the best interests of our
company and our shareholders.
The Audit and Finance Committee is
directly responsible for the appointment, compensation, retention and oversight
of the independent auditors retained to audit our financial statements. D&T
has been retained as our independent auditor continuously since 1977. The Audit and Finance Committee is responsible
for the audit fee negotiations associated with our retention of D&T. In
connection with the mandated rotation of D&Ts lead engagement partner, the
Audit and Finance Committee and its Chair are directly involved in the selection
of D&Ts new lead engagement partner. The members of the Audit and Finance
Committee and the Board believe that the continued retention of D&T to serve
as our independent auditor is in our and our shareholders best
interests.
We expect that one or more representatives
of D&T will be present at the Annual General Meeting. Each of these
representatives will have the opportunity to make a statement, if he or she
desires, and is expected to be available to respond to any questions.
The resolution in respect of this Proposal
4 is an ordinary resolution. The text of the resolution in respect of Proposal 4
is as follows:
IT IS RESOLVED, to ratify, on a non-binding, advisory basis, the appointment
of Deloitte & Touche LLP as the independent auditors of Pentair plc and to
authorize, in a binding vote, the Audit and Finance Committee to set the
auditors remuneration.
VOTE REQUIREMENT
Ratification, by non-binding advisory
vote, of the appointment of Deloitte & Touche LLP as the independent
auditors of Pentair plc and the authorization, by binding vote, of the Audit and
Finance Committee to set the auditors remuneration requires the affirmative
vote of a majority of the votes cast in person or by proxy at the Annual General
Meeting.
EACH OF THE
BOARD AND THE AUDIT AND FINANCE COMMITTEE RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT AUDITORS OF PENTAIR PLC AND THE AUTHORIZATION OF THE AUDIT AND
FINANCE COMMITTEE TO SET THE AUDITORS
REMUNERATION. |
60 2017
Proxy Statement
Table of Contents
PROPOSAL 4
AUDIT AND FINANCE COMMITTEE PRE-APPROVAL
POLICY
The Audit and Finance Committee reviews
and approves the external auditors engagement and audit plan, including fees,
scope, staffing and timing of work. In addition, the Audit and Finance Committee
Charter limits the types of non-audit services that may be provided by the
independent auditors. Any permitted non-audit services to be performed by the
independent auditors must be pre-approved by the Audit and Finance Committee
after the Committee is advised of the nature of the engagement and particular services to be provided. The Audit and
Finance Committee pre-approved audit fees and all permitted non-audit services
of the independent auditor in 2016. Responsibility for this pre-approval may be
delegated to one or more members of the Audit and Finance Committee; all such
approvals, however, must be disclosed to the Audit and Finance Committee at its
next regularly scheduled meeting. The Audit and Finance Committee may not
delegate authority for pre-approvals to management.
FEES PAID TO THE INDEPENDENT
AUDITORS
We engaged D&T, Deloitte AG, Deloitte
& Touche (Ireland) and the member firms of Deloitte Touche Tohmatsu and
their respective affiliates (collectively, the Deloitte Entities) to provide
various audit, audit-related, tax and other permitted non-audit services to us
during fiscal years 2016 and 2015.
The Audit and Finance Committee approved
all fees paid to the Deloitte Entities and underlying services provided by the
Deloitte Entities. Their fees for these services were as follows (in
thousands):
|
|
2016 |
|
2015 |
Audit fees(1) |
|
$11,329 |
|
$10,842 |
Audit-related fees(2) |
|
845 |
|
885 |
Tax
fees(3) |
|
|
|
|
Tax compliance and return
preparation |
|
1,202 |
|
532 |
Tax planning and
advice |
|
2,007 |
|
357 |
Total
tax fees |
|
3,209 |
|
889 |
Total |
|
$15,383 |
|
$12,616 |
(1) |
Consists of fees for audits of
our consolidated annual financial statements and the effectiveness of
internal controls over financial reporting, reviews of our quarterly
financial statements, statutory audits, reviews of SEC filings, consents
for registration statements and comfort letters in connection with
securities offerings. |
(2) |
Consists of fees for due
diligence, employee benefit plan audits and certain other attest
services. |
(3) |
Consists of fees for tax
compliance and return preparation and tax planning and
advice. |
Pentair plc 61
Table of Contents
AUDIT AND FINANCE COMMITTEE
REPORT
In connection with the financial
statements for the year ended December 31, 2016, the Audit and Finance Committee
has:
► |
reviewed and discussed our audited
U.S. GAAP consolidated financial statements and Irish statutory financial
statements for the year ended December 31, 2016 with management;
|
► |
discussed with Deloitte & Touche
LLP, our independent registered public accounting firm, the matters
required to be discussed by Auditing Standard No. 1301 and Rule 2-07 of
SEC Regulation S-X; and |
► |
received the written disclosures and
the letter from Deloitte & Touche LLP as required by applicable
requirements of the Public Company Accounting Oversight Board regarding
the independent registered public accounting firms communications with
the Audit and Finance Committee concerning independence, and discussed
with Deloitte & Touche LLP their
independence. |
Based upon these reviews and discussions,
the Audit and Finance Committee recommended to the Board that our audited
consolidated financial statements be included in the Annual Report on Form 10-K
for the year ended December 31, 2016 filed with the Securities and Exchange
Commission on February 21, 2017. The Board has approved these inclusions.
THE AUDIT AND FINANCE COMMITTEE
Ronald L. Merriman, Chair
Glynis A.
Bryan
Jacques Esculier
David H. Y. Ho
Billie I.
Williamson
62 2017
Proxy Statement
Table of Contents
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|
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|
|
|
PROPOSAL 5 |
|
|
AUTHORIZE THE PRICE
RANGE AT WHICH PENTAIR PLC CAN RE-ALLOT SHARES IT HOLDS AS TREASURY SHARES
UNDER IRISH LAW |
|
|
|
|
The Board recommends a
vote FOR the
authorization of the price range at which Pentair plc can re-allot shares
it holds as treasury shares under Irish law |
|
|
|
|
|
|
|
|
Our historical open-market share
repurchases (redemptions) and other share buyback activities result in ordinary
shares being acquired and held by us as treasury shares. We may re-allot
treasury shares that we acquire through our various share buyback activities in
connection with our employee compensation programs.
Under Irish law, our shareholders must
authorize the price range at which we may re-allot any shares held in treasury.
In this proposal, that price range is expressed as a minimum and maximum
percentage of the prevailing market price (as defined below). Under Irish law,
this authorization will expire after eighteen months unless renewed.
Accordingly, we expect to propose renewal of this authorization at subsequent
Annual General Meetings.
The authority being sought from
shareholders provides that the minimum and maximum prices at which an ordinary
share held in treasury may be re-allotted are 95% (or nominal value where the
re-allotment of treasury shares is required to satisfy an obligation under any
employee or director share or option plan operated by Pentair plc) and 120%,
respectively, of the average closing price per ordinary share, as reported on
the New York Stock Exchange, for the 30 trading days immediately preceding the
proposed date of re-allotment. Any re-allotment of treasury shares will be at
price levels that the Board considers in the best interests of our
shareholders.
The resolution in respect of this Proposal
5 is a special resolution. The text of the resolution in respect of Proposal 5
is as follows:
IT IS
RESOLVED, as a special resolution, that for
the purposes of section 1078 of the Companies Act 2014, the re-allot price range
at which any treasury shares (as defined by section 106 of the Companies Act
2014) for the time being held by Pentair plc may be re-allotted off-market shall
be as follows:
1. |
|
the maximum price at which a treasury share may be
re-allotted off-market shall be an amount equal to 120% of the market
price. |
|
2. |
|
the minimum price at which a treasury share may be
re-allotted off-market shall be the nominal value of the share where such
a share is required to satisfy an obligation under any employee or
director share or option plan operated by Pentair plc or, in all other
cases, 95% of the market price. |
|
3. |
|
for the purposes of this resolution, the market price
shall mean the average closing price per ordinary share of Pentair plc, as
reported on the New York Stock Exchange, for the 30 trading days
immediately preceding the day on which the relevant share is
re-allotted. |
FURTHER RESOLVED, that this authority to re-allot treasury shares shall expire
on the date 18 months from the date of the passing of this resolution unless
previously varied, revoked or renewed in accordance with the provisions of
sections 109 and/or 1078 (as applicable) of the Companies Act 2014 (and/or any
corresponding provision of any amended or replacement legislation) and is
without prejudice or limitation to any other authority of the Company to
re-allot treasury shares on-market.
VOTE REQUIREMENT
Authorization of the price range at which
Pentair plc can re-allot shares it holds as treasury shares under Irish law
requires the affirmative vote of not less than 75% of the votes cast in person
or by proxy at the Annual General Meeting.
THE BOARD
RECOMMENDS A VOTE FOR THE AUTHORIZATION OF THE PRICE RANGE AT WHICH
PENTAIR PLC CAN RE-ALLOT SHARES IT HOLDS AS TREASURY SHARES UNDER IRISH
LAW. |
Pentair plc 63
Table of Contents
|
|
|
|
|
|
PROPOSAL 6 |
|
|
APPROVE AMENDMENTS TO PENTAIR
PLCS ARTICLES OF ASSOCIATION TO IMPLEMENT PROXY ACCESS |
|
|
|
|
The Board recommends a vote
FOR
approval of amendments
to our Articles of Association to implement proxy
access |
|
|
|
|
|
|
|
|
In connection with a review of our
corporate governance practices, the Board decided to proactively propose the
adoption of proxy access to our shareholders. Therefore, the Board is
recommending that our shareholders approve amendments to our Articles of
Association to implement proxy access. Proxy access would allow eligible
shareholders to nominate their own nominees for election to our Board and have
their nominees included in our proxy materials, along with the candidates
nominated by the Board. Our Board is committed to strong corporate governance
practices and believes that proxy access is in the best interests of our company
and our shareholders.
The Board believes that the implementation
of proxy access in the manner set forth in this proposal will provide meaningful
rights to our shareholders while ensuring these rights are used by shareholders in a responsible manner. During 2016, we
conducted shareholder outreach on proposed proxy access terms with 30 of our
largest shareholders representing 64% of our outstanding shares. The Board took
into account feedback received from such shareholders when determining the terms
of the proposed amendments to our Articles of Association to implement proxy
access.
The Board recommends the implementation of
proxy access and, since implementation requires amendments to our Articles of
Association under Irish law, seeks shareholder approval for its adoption. If
approved by shareholders, proxy access will become effective immediately and
will be available for use at our 2018 Annual General Meeting.
DESCRIPTION OF THE PROXY ACCESS
AMENDMENTS
The following description is only a
summary and is qualified in its entirety by reference to the complete text of
the proposed amendments to the relevant articles in our Articles of Association,
which is attached to this proxy statement as Appendix B. We urge you to read
Annex B in its entirety before casting your vote.
Shareholder Eligibility to Nominate
Directors |
Any shareholder or group of up to 20
shareholders that has maintained ownership of 3% or more of our outstanding
shares continuously for at least three years would be permitted to include a
specified number of director nominees in our proxy materials for future Annual
General Meetings.
Calculation of Qualifying
Ownership |
In order to ensure that the interests of
shareholders seeking to include candidates in our proxy materials are aligned
with those of other shareholders, a shareholder would be deemed to own only
those shares as to which the shareholder possesses both (1) the full voting and
investment rights pertaining to such shares and (2) the full economic interest
in (including the opportunity for profit and risk of loss on) such shares. The
following shares would not count as owned shares for purposes of determining
whether the ownership threshold has been met:
► |
shares sold by a person or any of
its affiliates in any transaction that has not been settled or closed;
|
► |
shares that a person or any of its
affiliates borrowed or purchased pursuant to an agreement to resell; and
|
► |
shares subject to any derivative
instrument or similar agreement in respect of our shares, which instrument
or agreement has the purpose or effect of
(1) reducing the persons or affiliates full right to vote or direct the
voting of any such shares and/or (2) hedging, offsetting or altering the
gain or loss arising from the full economic ownership of such persons or
affiliates shares. |
A shareholder will be deemed to own
shares held in the name of a nominee or other intermediary so long as the person
claiming ownership of such shares retains the right to instruct how the shares
are voted with respect to the election of directors and possesses the full
economic interest in the shares. A shareholders ownership of shares will also
be deemed to continue during any period in which such person has loaned such
shares, provided that the person has the power to recall such loaned shares on
five U.S. business days notice.
64 2017
Proxy Statement
Table of Contents
PROPOSAL 6
Number of Shareholder-Nominated
Candidates |
The maximum number of candidates nominated
by all eligible shareholders that we would be required to include in our proxy
materials cannot exceed the greater of 2 nominees or 20% of the number of
directors in office as of the last day on which a notice of proxy access
nomination may be delivered to us. Any candidate who is subsequently withdrawn
or included by the Board in our proxy materials as a Board-nominated candidate
would be counted against the nominee limit.
Moreover, directors that the Board
nominates for reelection that were previously elected pursuant to our proxy
access provisions or pursuant to an agreement or other arrangement with one or
more shareholders in lieu of such person being formally nominated as a director
pursuant to our proxy access provisions, in each case, at one of the previous
two Annual General Meetings, would be counted against the nominee
limit.
Procedure
for Electing Candidates if Nominee Limit is
Exceeded |
Any shareholder or group of shareholders
that submits more than one candidate for inclusion in our proxy materials would
be required to rank its candidates. If the number of candidates exceeds the
nominee limit, the highest ranking eligible candidate from each shareholder or group of shareholders will be included
in our proxy materials until the limit is reached, beginning with the
shareholder or group of shareholders with the largest number of
shares.
In order to provide adequate time to
assess shareholder-nominated candidates, requests to include such candidates in
our proxy materials must be received no earlier than 150 days and no later than 120 days before the first anniversary of the
date of our definitive proxy statement released to shareholders in connection
with the prior years Annual General Meeting.
Information Required by All Nominating
Shareholders |
Each shareholder seeking to include a
candidate in our proxy materials would be required to provide certain
information to us, including but not limited to:
► |
verification of, and information
regarding, the share ownership of the shareholder as of the date of the
submission and the record date for the annual meeting; |
► |
information regarding each
candidate, including biographical and share ownership information;
|
► |
in the case of a nomination by a
group of shareholders, the designation by all group members of one
specified group member that is authorized to act on behalf of all group
members with respect to the nomination and all related matters;
|
► |
a copy of the Schedule 14N filed by
the shareholder(s) with the SEC; and; |
► |
a description of any financial
arrangement with respect to the nomination between the shareholder or
candidate and any other person. |
Shareholders and candidates, as
applicable, would also be required to make certain representations to, and
agreements with, us, including but not limited to:
► |
representation that such
person does not have any intent to change or influence control of our
company; |
► |
agreement to refrain from soliciting
in support of the election of any individual as a director other than its
candidate(s) or a nominee of the Board; |
► |
agreement to provide written
statements verifying continuous qualifying ownership through the record
date for the applicable Annual General Meeting; |
► |
agreement by the candidate to
refrain from becoming a party to any agreement or commitment as to how
such candidate will vote on any issue if elected as a director;
|
► |
unless disclosed to us, agreement by
the candidate to refrain from becoming a party to any compensatory or
other financial arrangement with any person other than with us in
connection with such persons service as a director; |
► |
agreement to not distribute any form
of proxy for the Annual General Meeting other than the form distributed by
us; and |
► |
agreement to comply with our
policies and indemnify us and our directors and officers for liability
arising from certain matters relating to the
nomination. |
Pentair plc 65
Table of Contents
PROPOSAL 6
Exclusion
of Shareholder Nominees |
We would not be required to include a
candidate in our proxy materials if, among other things:
► |
any shareholder nominates a person
for election pursuant to the advance notice provisions of our Articles of
Association; |
► |
the candidate is not independent
under applicable independence standards or is an officer or director of a
competitor; |
► |
the election of the candidate would
cause us to violate our Memorandum or Articles of Association, the rules
and listing standards of the principal exchange upon which our shares are
listed, any applicable law, rule or regulation or any publicly disclosed
standards of our company applicable to directors; |
► |
the candidate or the shareholder has
provided materially false or misleading information to us;
or |
► |
the shareholder or its
representative does not appear at the Annual General Meeting in person to
present the nomination of its candidate. |
In addition, the Board or the chair of the
Annual General Meeting will declare a director nomination to be defective, and
such nomination will be disregarded, if the shareholder fails to comply with any
of the provisions of our Articles of Association relating to proxy
access.
Future
Disqualification of Shareholder-Nominated
Candidates |
Any candidate who is included in our proxy
materials but subsequently either withdraws from or becomes ineligible for
election at the meeting or does not receive at least 25% of the votes cast in
favor of election would be ineligible for nomination at the following two Annual
General Meetings.
Shareholders would be permitted to include
in our proxy statement for the applicable Annual General Meeting a written
statement of up to 500 words in support of the election of their candidate. We
would be permitted to omit any information or statement that we determine is
materially false or misleading or the disclosure of which would violate any
applicable law or regulation.
The resolution in respect of this Proposal
6 is a special resolution. The text of the resolution in respect of Proposal 6
is as follows:
IT IS RESOLVED, as a special resolution, that the Articles of Association of
Pentair plc be and are hereby amended in the manner provided in Appendix B of
this proxy statement.
VOTE REQUIREMENT
Approval of the amendments to our Articles
of Association to implement proxy access requires the affirmative vote of not
less than 75% of the votes cast in person or by proxy at the Annual General
Meeting.
THE BOARD
RECOMMENDS A VOTE FOR APPROVAL OF AMENDMENTS TO PENTAIR PLCS ARTICLES
OF ASSOCIATION TO IMPLEMENT PROXY
ACCESS. |
66 2017
Proxy Statement
Table of Contents
SECURITY
OWNERSHIP
The following table contains information
concerning the beneficial ownership of our ordinary shares as of March 6, 2017, by
each director and nominee to become a director, by each executive officer listed
in the Summary Compensation Table, and by all directors and executive officers
as a group. Based on filings with the SEC, the following table also contains
information concerning each person we know who beneficially owned more than 5%
of our ordinary shares as of December 31, 2016.
Name of Beneficial Owner |
|
Ordinary Shares(1) |
|
Share Units(2) |
|
Right to Acquire within 60 days |
|
ESOP Stock(3) |
|
Total |
|
% of Class(4) |
Glynis A. Bryan |
|
17,309 |
|
4,988 |
|
55,022 |
|
- |
|
77,319 |
|
|
Jerry W. Burris |
|
14,358 |
|
- |
|
47,822 |
|
- |
|
62,180 |
|
|
Dennis J. Cassidy, Jr. |
|
- |
|
- |
|
12,334 |
|
- |
|
12,334 |
|
|
Carol Anthony (John) Davidson |
|
14,592 |
|
- |
|
11,108 |
|
- |
|
25,700 |
|
|
Jacques Esculier |
|
4,933 |
|
- |
|
- |
|
- |
|
4,933 |
|
|
Karl R. Frykman |
|
33,390 |
|
- |
|
114,237 |
|
1,817 |
|
149,444 |
|
|
Edward P. Garden(5) |
|
14,335,888 |
|
- |
|
- |
|
- |
|
14,335,888 |
|
7.9% |
T.
Michael Glenn |
|
15,357 |
|
1,018 |
|
55,022 |
|
- |
|
71,397 |
|
|
David H. Y. Ho |
|
10,746 |
|
- |
|
11,108 |
|
- |
|
21,854 |
|
|
Randall J. Hogan |
|
475,325 |
|
59,594 |
|
1,962,388 |
|
2,125 |
|
2,499,432 |
|
1.4% |
David A. Jones |
|
10,804 |
|
28,872 |
|
37,822 |
|
- |
|
77,498 |
|
|
Karen L. Keegans |
|
- |
|
- |
|
- |
|
70 |
|
70 |
|
|
Ronald L. Merriman |
|
19,815 |
|
426 |
|
43,022 |
|
- |
|
63,263 |
|
|
William T. Monahan |
|
40,656 |
|
12,847 |
|
55,022 |
|
- |
|
108,525 |
|
|
John L. Stauch |
|
116,874 |
|
62,306 |
|
321,823 |
|
706 |
|
501,709 |
|
|
Billie I. Williamson |
|
5,255 |
|
- |
|
- |
|
- |
|
5,255 |
|
|
Directors and executive officers as a group (20) |
|
15,172,991 |
|
179,417 |
|
2,936,420 |
|
6,323 |
|
18,295,151 |
|
9.9% |
The
Vanguard Group(6) |
|
15,208,806 |
|
- |
|
- |
|
- |
|
15,208,806 |
|
8.4% |
Trian Fund Management, L.P.(7) |
|
14,335,888 |
|
- |
|
- |
|
- |
|
14,335,888 |
|
7.9% |
State Street Corporation(8) |
|
11,103,238 |
|
- |
|
- |
|
- |
|
11,103,238 |
|
6.1% |
T.
Rowe Price Associates, Inc.(9) |
|
10,957,817 |
|
- |
|
- |
|
- |
|
10,957,817 |
|
6.0% |
BlackRock, Inc.(10) |
|
10,811,683 |
|
- |
|
- |
|
- |
|
10,811,683 |
|
5.9% |
(1) |
Unless otherwise noted, all
shares are held either directly or indirectly by individuals possessing
sole voting and investment power with respect to such shares. Beneficial
ownership of an immaterial number of shares held by spouses or trusts has
been disclaimed in some instances. |
(2) |
Represents for non-employee
directors deferred share units held under our Compensation Plan for
Non-Employee Directors. No director has voting or investment power related
to these share units. Represents for executive officers restricted stock
units, receipt of which was deferred by the executive officer under the
companys Non-Qualified Deferred Compensation Plan and over which the
executive officers have no voting or investment power. |
(3) |
Represents shares owned as a
participant in the RSIP/ESOP Plan. As of March 6, 2017, Fidelity
Management Trust Company (Fidelity), the Trustee of the RSIP/ESOP Plan,
held 1,915,534 ordinary shares (1.1%). Fidelity disclaims beneficial
ownership of all shares. The RSIP/ ESOP Plan participants have the right
to direct the Trustee to vote their shares, although participants have no
investment power over such shares. The Trustee, except as otherwise
required by law, votes the shares for which it has received no direction
from participants, in the same proportion on each issue as it votes those
shares for which it has received voting directions from
participants. |
(4) |
Less than 1% unless otherwise
indicated. |
(5) |
Represents shares owned by
certain funds and investment vehicles (the Trian Funds) managed by Trian
Fund Management, L.P. (Trian), which is an institutional investment
manager that files reports on Form 13F with the Securities and Exchange
Commission. None of such shares are held directly by Mr. Garden. Of such
shares, approximately [__] million shares are currently held in the
ordinary course of business with other investment securities owned by the
Trian Funds in co-mingled margin accounts with a prime broker, which prime
broker may, from time to time, extend margin credit to certain Trian
Funds, subject to applicable federal margin regulations, stock exchange
rules and credit policies. Mr. Garden is a member of Trian Fund Management
GP, LLC, which is the general partner of Trian, and therefore is in a
position to determine the investment and voting decisions made by Trian on
behalf of the Trian Funds. Accordingly, Mr. Garden may be deemed to
indirectly beneficially own the shares owned by the Trian Funds Mr. Garden
disclaims beneficial ownership of such shares for all other
purposes. |
(6) |
Information derived from a
Schedule 13G/A filed with the Securities and Exchange Commission on
February 10, 2017. The address of The Vanguard Group is 100 Vanguard
Boulevard, Malvern, PA 19355. As of December 31, 2016, The Vanguard Group
had sole voting power for 266,363 ordinary shares, shared voting power for
31,553 ordinary shares, sole dispositive power for 14,916,371 ordinary
shares and shared dispositive power for 292,435 ordinary
shares. |
(7) |
Information derived from a
Schedule 13D/A filed with the Securities and Exchange Commission on May
10, 2016 and information provided to us by Trian. The address of Trian
Fund Management, L.P. is 280 Park Avenue, 41st Floor, New York, NY 10017.
As of March 6, 2017, Trian, in its capacity as the management company for
the Trian Funds, had shared voting and dispositive power for 14,335,888
ordinary shares. |
Pentair plc 67
Table of Contents
SECURITY
OWNERSHIP
(8) |
Information derived from a
Schedule 13G filed with the Securities and Exchange Commission on February
8, 2017. The address of State Street Corporation is State Street Financial
Center, One Lincoln Street, Boston, MA 02111. As of December 31, 2016,
State Street Corporation had shared voting and dispositive power for
11,103,238 ordinary shares. |
(9) |
Information derived from a
Schedule 13G/A filed with the Securities and Exchange Commission on
February 7, 2017. The address of T. Rowe Price Associates, Inc. is 100
East Pratt Street, Baltimore, MD 21202. As of December 31, 2016, T. Rowe
Price Associates, Inc. had sole voting power for 2,907,182 ordinary shares
and sole dispositive power for 10,941,117 ordinary shares. |
(10) |
Information derived from a
Schedule 13G/A filed with the Securities and Exchange Commission on
January 25, 2017. The address of BlackRock, Inc. is 55 East
52nd Street, New York, NY 10055. As of December 31, 2016,
BlackRock, Inc. had sole voting power for 9,074,664 ordinary shares and
sole dispositive power for 10,811,683 ordinary
shares. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our executive officers, directors and 10%
shareholders are required under the Securities Exchange Act of 1934 to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and furnish copies of these reports to us.
We have reviewed copies of reports
furnished to us, or written representations that no reports were required. Based
solely on these reports, we believe that during 2016 our executive officers and
directors complied with all such filing requirements.
68 2017
Proxy Statement
Table of Contents
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL GENERAL MEETING AND VOTING
Why did I receive
these proxy materials?
We are providing these proxy materials to
you because our Board of Directors is soliciting proxies for use at our Annual
General Meeting of Shareholders to be held on May 9, 2017. We either (i) mailed
you a Notice of Internet Availability of Proxy Materials on or before March 24,
2017 notifying each shareholder entitled to vote at the Annual General Meeting
how to vote and how to electronically access a copy of this Proxy Statement and
our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 or
(ii) mailed you a printed copy of such proxy materials and a proxy card in paper
format. You received these proxy materials because you were a shareholder of
record as of the close of business on March 6, 2017.
If you received a Notice of Internet
Availability of Proxy Materials and would like to receive a printed copy of our
proxy materials, including a proxy card in paper format on which you may submit
your vote by mail, you should follow the instructions for requesting such proxy
materials in the Notice of Internet Availability of Proxy Materials.
This Proxy Statement, our Annual Report on
Form 10-K for the fiscal year ended December 31, 2016 and our Irish statutory
financial statements and directors and auditors reports are available online
at www.proxyvote.com.
What is a
proxy?
A proxy is your legal designation of
another person (the proxy) to vote on your behalf. By voting your proxy, you
are giving the persons named on the proxy card the authority to vote your shares
in the manner you indicate on your proxy card. You may vote your proxy by
telephone or over the Internet as directed in the Notice of Internet
Availability of Proxy Materials or, if you have requested or received a proxy
card, by signing and dating the proxy card and submitting it by mail.
What is the
difference between a shareholder of record and a beneficial
owner?
If your shares are registered directly in
your name with Computershare Trust Company, N.A., our transfer agent, you are a
shareholder of record. If your shares are held in a stock brokerage account or
by a bank or other custodian or nominee, you are considered the beneficial owner
of shares held in street name. As a beneficial owner, you have the right to
direct your broker, bank or other custodian or nominee on how to vote your
shares.
Who is entitled to
vote at the Annual General Meeting and how many votes do I
have?
The Board has set the close of business on
March 6, 2017 (Eastern Standard Time) as the record date for the Annual General
Meeting. At the close of business on the record date, we had [181,928,107]
ordinary shares outstanding and entitled to vote. All shareholders of record at
the close of business on the record date are entitled to vote on the matters set
forth in this Proxy Statement and any other matter properly presented at the
Annual General Meeting. Beneficial owners whose banks, brokers or other
custodians or nominees are shareholders registered in our share register with
respect to the beneficial owners shares at the close of business on the record
date are entitled to vote on the matters set forth in this Proxy Statement and
any other matter properly presented at the Annual General Meeting. Each ordinary
share is entitled to one vote on each matter properly brought before the Annual
General Meeting.
How do I vote if I
am a shareholder of record?
If you are a shareholder of record of
ordinary shares, you can vote in the following ways:
► |
By Internet:
You can vote over the Internet at www.proxyvote.com.
For more information, follow the instructions in the Notice of Internet
Availability of Proxy Materials or on the proxy card. |
► |
By Telephone:
You can vote by telephone from the United States
or Canada by calling the telephone number in the Notice of Internet
Availability of Proxy Materials or on the proxy card. |
► |
By Mail: You can vote by mail by marking, signing and dating your
proxy card or voting instruction form and returning it in the postage-paid
envelope, which will be forwarded to Pentair plcs registered address
electronically. For more information, follow the instructions in the
Notice of Internet Availability of Proxy Materials or on the proxy
card. |
► |
At the Annual General
Meeting: If you plan to attend the
Annual General Meeting and wish to vote your ordinary shares in person, we
will give you a ballot at the meeting. |
How do I vote if I
am a beneficial owner?
If you are a beneficial owner of ordinary
shares, you can vote in the following ways:
► |
General: You can vote by following the materials and instructions
provided by your bank, broker or other custodian or
nominee. |
Pentair plc 69
Table of Contents
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL GENERAL MEETING AND VOTING
► |
At the Annual General
Meeting: If you plan to attend the
Annual General Meeting and wish to vote your ordinary shares in person,
then you must obtain a legal proxy, executed in your favor, from the
shareholder of record of your shares (i.e., your broker, bank or other
custodian or nominee) and bring it to the Annual General
Meeting. |
What is the
deadline to vote my shares if I do not vote in person at the Annual General
Meeting?
If you are a shareholder of record, you
may vote by Internet or by telephone until 8:00 a.m. local time (3:00 a.m.
Eastern Daylight Time) on May 7, 2017. If you are a shareholder of record and
submit a proxy card, the proxy card must be received at the address stated on
the proxy card by 8:00 a.m. local time (3:00 a.m. Eastern Daylight Time) on May
7, 2017. If you are a beneficial owner, please follow the voting instructions
provided by your bank, broker or other custodian or nominee.
How do I attend the
Annual General Meeting?
All shareholders of record as of the close
of business on the record date are invited to attend and vote at the Annual
General Meeting. For admission to the Annual General Meeting, shareholders
should bring a form of photo identification to the shareholders check-in area at
the meeting, where their ownership will be verified. Those who beneficially own
shares should also bring account statements or letters from their banks, brokers
or other custodians or nominees that they own our ordinary shares as of March 6,
2017 (see above for further information if you also intend to vote at the Annual
General Meeting). Registration will begin at 7:00 a.m. (local time) and the
Annual General Meeting will begin at 8:00 a.m. (local time) on May 9,
2017.
Shareholders in Ireland may participate in
the Annual General Meeting by audio link at the offices of Arthur Cox, Earlsfort
Centre, Earlsfort Terrace, Dublin 2, Ireland at 8:00 a.m. (local time) and the
requirements for admission to the Annual General Meeting, as set out above,
apply.
May I change or
revoke my proxy?
If you are a shareholder of record and
have already voted, you may change or revoke your proxy before it is exercised
at the Annual General Meeting in the following ways:
► |
By voting by Internet or telephone
at a date later than your previous vote but prior to the voting deadline
(which is 8:00 a.m. local time or 3:00 a.m. Eastern Daylight Time on May
7, 2017); |
► |
By mailing a proxy card that is
properly signed and dated later than your previous vote and that is
received prior to the voting deadline (which is 8:00 a.m. local time or
3:00 a.m. Eastern Daylight Time on May 7, 2017); or |
► |
By attending the Annual General
Meeting and voting in person. |
If you are a beneficial owner, you must
contact the record holder of your shares to revoke a previously authorized proxy
or voting instructions.
What is the effect
of broker non-votes and abstentions?
A broker non-vote occurs when a broker
holding shares for a beneficial owner does not vote on a particular agenda item
because the broker does not have discretionary voting power for that particular
item and has not received instructions from the beneficial owner. Although
brokers have discretionary power to vote your shares with respect to routine
matters, they do not have discretionary power to vote your shares on
non-routine matters pursuant to New York Stock Exchange (NYSE) rules. If you
do not provide voting instructions for proposals considered non-routine a
broker non-vote occurs. We believe that Proposals 1, 2, 3 and 6 will be
considered non-routine under NYSE rules and therefore your broker will not be
able to vote your shares with respect to these proposals unless the broker
receives appropriate instructions from you. If a broker does not receive voting
instructions from you regarding Proposals 1, 2, 3 and 6, the broker non-vote
will have no effect on the vote on such agenda items. The routine proposals in
this Proxy Statement are Proposals 4 and 5, for which your broker has
discretionary voting authority under the NYSE rules to vote your shares, even if
the broker does not receive voting instructions from you.
Ordinary shares owned by shareholders
electing to abstain from voting on any of the Proposals will have no effect on
any of the Proposals.
How will my shares
be voted if I do not specify how they should be voted?
If you submit a proxy to the
company-designated proxy holders and do not provide specific voting
instructions, you instruct the company-designated proxy holders, or, if your
shares are held in the Pentair Retirement Savings and Stock Incentive Plan,
Fidelity Management Trust Company (or its designated affiliate) to vote your
shares in accordance with the recommendations of the Board.
If your shares are held in the Pentair
Retirement Savings and Stock Incentive Plan and you do not submit a proxy,
Fidelity Management Trust Company (or its designated affiliate) will vote your
shares along with all other uninstructed shares in proportion to the voting by
Pentair Retirement Savings and Stock Incentive Plan shares for which instructed
proxies were received.
How will voting on
any other business be conducted?
Other than matters incidental to the
conduct of the Annual General Meeting and those set forth in this Proxy
Statement, we do not know of any business or proposals to be considered at the
Annual General Meeting. If any other
70 2017
Proxy Statement
Table of Contents
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL GENERAL MEETING AND VOTING
business is proposed and properly
presented at the Annual General Meeting, you instruct the company-designated
proxy holders, in the absence of other specific instructions or the appointment
of other proxy holders, to vote your shares in accordance with the
recommendations of the Board.
What constitutes a
quorum for the Annual General Meeting?
Our Articles of Association provide that
all resolutions and elections made at a shareholders meeting require the
presence, in person or by proxy, of a majority of all shares entitled to vote,
with abstentions and broker non-votes regarded as present for purposes of
establishing the quorum.
Who will count the
votes?
Representatives from The Carideo Group,
Inc. will count the votes and serve as our Inspectors of Election.
Who will pay for
the cost of this proxy solicitation?
We will pay the costs of soliciting
proxies sought by the Board. Proxies may be solicited on our behalf by our
directors, officers or employees telephonically, electronically or by other
means of communication. We have engaged Morrow & Co., LLC to assist us in
the solicitation of proxies at a cost to us of $10,000, plus out-of-pocket
expenses. We have requested that banks, brokers and other custodians and
nominees who hold ordinary shares on behalf of beneficial owners forward
soliciting materials to those beneficial owners. Upon request, we will reimburse
banks, brokers and other custodians and nominees for reasonable expenses
incurred by them in forwarding these soliciting materials to beneficial owners
of our ordinary shares.
Why did I receive a
notice in the mail regarding the Internet availability of the proxy materials
instead of a paper copy of the proxy materials?
As explained in more detail below, we are
using the notice and access system adopted by the SEC relating to the delivery
of our proxy materials over the Internet. As a result, we mailed to many of our
shareholders a notice about the Internet availability of the proxy materials
instead of a paper copy of the proxy materials.
Shareholders who received the notice will have the ability to access the proxy
materials over the Internet and to request a paper copy of the proxy materials
by mail, by e-mail or by telephone. Instructions on how to access the proxy
materials over the Internet or to request a paper copy may be found on the
notice. In addition, the notice contains instructions on how shareholders may
request proxy materials in printed form by mail or electronically by e-mail on
an ongoing basis. The Notice of Internet Availability of Proxy Materials also
serves as a Notice of Meeting.
What are the
notice and access rules and how do they affect the delivery of the proxy
materials?
The SECs notice and access rules allow us
to deliver proxy materials to our shareholders by posting the materials on an
Internet website, notifying shareholders of the availability of the proxy
materials on the Internet and sending paper copies of proxy materials upon
shareholder request. We believe that the notice and access rules allow us to use
Internet technology that many shareholders prefer, continue to provide our
shareholders with the information that they need and, at the same time, ensure
more prompt delivery of the proxy materials. The notice and access rules also
lower our cost of printing and delivering the proxy materials and minimize the
environmental impact of printing paper copies.
Why did I receive
more than one Notice of Internet Availability of Proxy Materials or proxy
card?
You may have received multiple Notices of
Internet Availability of Proxy Materials or proxy cards if you hold your shares
in different ways or accounts (for example, 401(k) accounts, joint tenancy,
trusts, custodial accounts) or in multiple accounts. If you are the beneficial
owner of shares held in street name, you will receive your voting information
from your bank, broker or other custodian or nominee, and you will vote as
indicated in the materials you receive from your bank, broker or other custodian
or nominee. You should vote your proxy for each separate account you
have.
Pentair plc 71
Table of Contents
SHAREHOLDER PROPOSALS
AND NOMINATIONS FOR THE 2018 ANNUAL GENERAL MEETING OF
SHAREHOLDERS
The deadline for submitting a shareholder
proposal for inclusion in our proxy materials for our 2018 Annual General
Meeting pursuant to SEC Rule 14a-8 is November 24, 2017. Any such proposal must
meet the requirements set forth in the rules and regulations of the SEC,
including Rule 14a-8, for such proposals to be eligible for inclusion in our
proxy statement and form of proxy for our 2018 Annual General
Meeting.
Subject to shareholder approval at the
2017 Annual General Meeting, eligible shareholders may under certain
circumstances be able to nominate and include in our proxy materials a specified
number of candidates for election as directors under the proposed proxy access
provisions of our Articles of Association. See Proposal 6 Approve Amendments
to Pentair Plcs Articles of Association to Implement Proxy Access. Among other
requirements in our Articles of Association, to nominate a director under the
proxy access provisions of our Articles of Association, a shareholder must give
written notice to our Corporate Secretary that complies with our Articles of
Association no earlier than 150 days and no later than 120 days prior to the
first anniversary of the date our definitive proxy statement was released to
shareholders in connection with the prior years Annual General Meeting.
Accordingly, we must receive notice of a shareholders nomination for the 2017
Annual General Meeting pursuant to the proxy access provisions of our Articles
of Association no earlier than October 25, 2017 and no later than November 24,
2017. If the notice is received outside of that time frame, then the notice will
be considered untimely and we are not required to include the nominees in our
proxy materials for the 2018 Annual General Meeting.
A shareholder who intends to present
business, other than a shareholder proposal pursuant to Rule 14a-8, or to
nominate a director, other than pursuant to the proxy access provisions of our
Articles of Association, at the 2018 Annual General Meeting must comply with the requirements set forth in our Articles of
Association. Among other requirements in our Articles of Association, to present
business or nominate a director at an Annual General Meeting, a shareholder must
give written notice that complies with the Articles of Association to our
Corporate Secretary no earlier than 70 days and no later than 45 days prior to
the first anniversary of the date our proxy statement was released to
shareholders in connection with the prior years Annual General Meeting.
Accordingly, we must receive notice of a shareholders intent to present
business, other than pursuant to SEC Rule 14a-8, or to nominate a director,
other than pursuant to the proxy access provisions of our Articles of
Association, no earlier than January 13, 2018 and no later than February 7,
2018. If the notice is received outside of that time frame, then the notice will
be considered untimely and we are not required to present such proposal or
nomination at the 2018 Annual General Meeting. If the Board chooses to present a
matter of business submitted under our Articles of Association at the 2018
Annual General Meeting, then the persons named in the proxies solicited by the
Board for the 2018 Annual General Meeting may exercise discretionary voting
power with respect to such proposal.
Shareholder proposals or nominations
pursuant to any of the foregoing should be sent to us at our principal executive
offices: Pentair plc, 43 London Wall, London, EC2M 5TF, United Kingdom,
Attention: Corporate Secretary.
Our Articles of Association can be found
on the website of the U.S. Securities and Exchange Commission by searching its
EDGAR archives at http://www.sec.gov/edgar/searchedgar/ webusers.htm. Shareholders may also obtain a copy from us free of charge
by submitting a written request to our principal executive offices at Pentair
plc, 43 London Wall, London, EC2M 5TF, United Kingdom, Attention: Corporate
Secretary.
IRISH DISCLOSURE OF
SHAREHOLDER INTERESTS
Under the Irish Companies Act of 2014, our
shareholders must notify us if, as a result of a transaction, the shareholder
will become interested in 3% or more of our shares; or if as a result of a
transaction a shareholder who was interested in more than 3% of our shares
ceases to be so interested. Where a shareholder is interested in more than 3% of
our shares, the shareholder must notify us of any alteration of his or her
interest that brings his or her total holding
through the nearest whole percentage number, whether an increase or a reduction.
The relevant percentage figure is calculated by reference to the aggregate
nominal value of the shares in which the shareholder is interested as a
proportion of the entire nominal value of our issued share capital (or any such
class of share capital in issue), and disclosable interests in our shares
include any interests
72 2017
Proxy Statement
Table of Contents
IRISH COMPANIES
ACT 2014 (THE ACT)
in our shares of any kind whatsoever.
Where the percentage level of the shareholders interest does not amount to a
whole percentage this figure may be rounded down to the next whole number. We
must be notified within five business days of the transaction or alteration of
the shareholders interests that gave rise to the notification requirement. If a
shareholder fails to comply with these
notification requirements, the shareholders rights in respect of any our
ordinary shares it holds will not be enforceable, either directly or indirectly.
However, such person may apply to the court to have the rights attaching to such
shares reinstated.
2016 ANNUAL REPORT ON
FORM 10-K
Any shareholder wishing to review, without
charge, a copy of our 2016 Annual Report on Form 10-K (without exhibits) filed
with the SEC should write to us at our principal executive offices: 43 London
Wall, London, EC2M 5TF, United Kingdom, Attention: Corporate
Secretary.
REDUCE DUPLICATE
MAILINGS
To reduce duplicate mailings, we are now
sending only one copy of our Notice of Internet Availability of Proxy Materials
or Annual Report to Shareholders and Proxy Statement, as applicable, to multiple
shareholders sharing an address unless we receive contrary instructions from one
or more of the shareholders. Upon written or oral request, we will promptly
deliver a separate copy of these documents to a shareholder at a shared address.
If you wish to receive separate copies of these documents, please notify us by
writing or calling Pentair plc, 43 London Wall, London, EC2M 5TF, United
Kingdom, Attention: Corporate Secretary, Telephone: 44-207-374-8925 or (800)
328-9626.
If you are receiving duplicate mailings,
you may authorize us to discontinue mailings of multiple Notices of Internet
Availability of Proxy Materials or Annual Reports to Shareholders and Proxy
Statements, as applicable. To discontinue duplicate mailings, notify us by
writing or calling Pentair plc, 43 London Wall, London, EC2M 5TF, United
Kingdom, Attention: Corporate Secretary, Telephone: 44-207-374-8925 or (800)
328-9626.
Pentair plc 73
Table of Contents
APPENDIX
A
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES
PENTAIR PLC AND
SUBSIDIARIES
RECONCILIATION OF THE GAAP YEARS ENDED DECEMBER 31, 2016, 2015,
2014 AND 2013 TO THE NON-GAAP EXCLUDING THE EFFECT OF 2016, 2015, 2014 AND 2013
ADJUSTMENTS (UNAUDITED)
In millions, except per-share data |
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Net
sales |
|
$4,890.0 |
|
|
$4,616.4 |
|
|
$4,666.8 |
|
|
$4,553.7 |
|
Operating income |
|
700.7 |
|
|
616.1 |
|
|
538.5 |
|
|
529.1 |
|
% of net
sales |
|
14.3 |
% |
|
13.3 |
% |
|
11.5 |
% |
|
11.6 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
other |
|
20.6 |
|
|
42.4 |
|
|
63.1 |
|
|
59.1 |
|
Pension and other
post-retirement mark-to-market (gain) / loss |
|
4.2 |
|
|
(23.0 |
) |
|
31.5 |
|
|
(30.3 |
) |
Intangible
amortization |
|
96.4 |
|
|
68.1 |
|
|
60.6 |
|
|
59.1 |
|
Impairment of trade
names |
|
13.3 |
|
|
- |
|
|
- |
|
|
11.0 |
|
Inventory step-up and
customer backlog |
|
- |
|
|
35.7 |
|
|
- |
|
|
6.0 |
|
Deal related costs and
expenses |
|
- |
|
|
14.3 |
|
|
- |
|
|
- |
|
Redomicile related
expenses |
|
- |
|
|
- |
|
|
10.3 |
|
|
5.4 |
|
Equity income of
unconsolidated subsidiaries |
|
4.3 |
|
|
1.5 |
|
|
1.2 |
|
|
2.0 |
|
Segment income |
|
839.5 |
|
|
755.2 |
|
|
705.2 |
|
|
641.4 |
|
% of net
sales |
|
17.2 |
% |
|
16.4 |
% |
|
15.1 |
% |
|
14.1 |
% |
Net
income from continuing operationsas reported |
|
451.6 |
|
|
397.1 |
|
|
356.6 |
|
|
354.8 |
|
Loss (gain) on sale of
businesses |
|
3.9 |
|
|
3.2 |
|
|
0.2 |
|
|
(20.8 |
) |
Amortization of bridge
financing fees |
|
- |
|
|
10.7 |
|
|
- |
|
|
- |
|
Interest expense |
|
- |
|
|
- |
|
|
- |
|
|
2.1 |
|
Adjustments to operating
income |
|
134.5 |
|
|
137.5 |
|
|
165.5 |
|
|
110.3 |
|
Income tax
adjustments |
|
(31.0 |
) |
|
(30.9 |
) |
|
(41.7 |
) |
|
(25.8 |
) |
Net
income from continuing operationsas adjusted |
|
$559.0 |
|
|
$517.6 |
|
|
$480.6 |
|
|
$420.6 |
|
Continuing earnings per ordinary sharediluted |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per ordinary shareas reported |
|
$2.47 |
|
|
$2.17 |
|
|
$1.84 |
|
|
$1.73 |
|
Adjustments |
|
0.58 |
|
|
0.66 |
|
|
0.64 |
|
|
0.33 |
|
Diluted earnings per ordinary shareas adjusted |
|
$3.05 |
|
|
$2.83 |
|
|
$2.48 |
|
|
$2.06 |
|
PENTAIR PLC AND
SUBSIDIARIES
FREE CASH FLOW FOR YEARS ENDED DECEMBER 31, 2016, 2015, 2014 AND
2013
In millions |
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Net
cash provided by (used for) operating activities of continuing
operations |
|
$702.4 |
|
|
$597.7 |
|
|
$675.8 |
|
|
$541.7 |
|
Capital expenditures |
|
(117.8 |
) |
|
(91.3 |
) |
|
(83.7 |
) |
|
(102.8 |
) |
Proceeds from sale of property and equipment |
|
24.7 |
|
|
4.6 |
|
|
1.9 |
|
|
4.0 |
|
Free cash flow from continuing operations |
|
$609.3 |
|
|
$511.0 |
|
|
$594.0 |
|
|
$442.9 |
|
74 2017
Proxy Statement
Table of Contents
APPENDIX
B
PROXY ACCESS AMENDMENTS TO ARTICLES OF
ASSOCIATION
Note: the amendments set forth in this
Appendix B are reflected as a comparison to the relevant Articles of Association
of the Company as of the date of this proxy statement.
38. |
At any annual general meeting of the members, only such
nominations of persons for election to the Board shall be made, and only
such other business shall be conducted or considered, as shall have been
properly brought before the meeting. For nominations to be properly made
at an annual general meeting, and proposals of other business to be
properly brought before an annual meeting, nominations and proposals of
other business must be: (a) specified in the Companys notice of meeting
(or any supplement thereto) given by or at the direction of the Board, (b)
otherwise properly made at the annual general meeting, by or at the
direction of the Board or (c) otherwise properly requested to be brought
before the annual general meeting by a member of the Company in accordance
with these articles or, in the case of Director nominations made
pursuant to article 96(b) below, properly executed by an owner (as defined
in article 96(b)) in accordance with the provisions of such article.
Except as provided otherwise in article 96(b), Ffor nominations of
persons for election to the Board or proposals of other business to be
properly requested by a member to be made at an annual general meeting, a
member must (i) be a member at the time of giving of notice of such annual
general meeting by or at the direction of the Board and at the time of the
annual general meeting, (ii) be entitled to vote at such annual general
meeting and (iii) comply with the procedures set forth in these articles
as to such business or nomination. The immediately preceding sentence
and/or article 96(b) shall be the exclusive means for a member
or an owner to make nominations and/or other business
proposals (other than matters properly brought under Rule 14a-8 under the
Exchange Act and included in the Companys notice of meeting) before an
annual general meeting of members. |
|
|
50. |
Without qualification or limitation, subject to article
60, for any nominations or any other business to be properly brought
before an annual general meeting by a member pursuant to article 38, the
member must have given timely notice thereof (including, in the case of
nominations, the completed and signed questionnaire, representation and
agreement required by article 61 or article 96(b), as applicable),
in writing to the Secretary, and such other business must otherwise be a
proper matter for member action; provided, however, that if such member
wishes to have their nomination or nominations for Director included in
the Companys proxy materials for the applicable annual general meeting,
then such member shall comply with the notice requirements set forth in
article 96(b) in lieu of the notice requirements contained in articles
50-51, 54-59 and 61. |
|
|
60. |
Nothing in these articles shall be deemed to affect any
rights (a) of members to request inclusion of proposals in the Companys
proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) of
members of the Company to bring business before an extraordinary general
meeting pursuant to the valid exercise of power granted to them under the
Acts. Subject to Rule 14a-8 under the Exchange Act, and except as
provided otherwise in article 96(b), nothing in these articles shall
be construed to permit any member, or give any member the right, to
include or have disseminated or described in the Companys proxy statement
any nomination of director or directors or any other business
proposal. |
|
|
96. |
The Directors shall be individuals appointed as
follows: |
|
|
|
|
(a) |
The Directors may appoint a person who is willing to act
to be a Director, either to fill a vacancy or as an additional Director,
provided that the appointment does not cause the number of Directors to
exceed any number fixed by or in accordance with these articles as the
maximum number of Directors. |
|
|
|
|
|
(b) |
(i) |
Whenever the Board solicits
proxies with respect to the election of Directors at an annual general
meeting, in addition to any persons nominated for election to the Board by
or at the direction of the Board or any committee thereof, subject to the
provisions of this article 96(b), the Company shall (1) include in its
notice of meeting and proxy materials, as applicable, for any annual
general meeting of shareholders (A) the name of any person nominated for
election (the Shareholder
Nominee) pursuant to a Notice of Proxy
Access Nomination (as defined below) submitted to the Company in
accordance with this article 96(b) by an owner (as defined below) who is
entitled to vote at the annual general meeting and who satisfies the
applicable notice, ownership and other requirements of this article 96(b)
(a Nominator), or by a group of no more than 20 such owners who are each
entitled to vote at the annual general meeting (collectively, a
Nominator Group) and who,
collectively |
Pentair plc 75
Table of
Contents
APPENDIX
B
|
|
as a Nominator Group, satisfy the notice, ownership and
other requirements of this article 96(b) applicable to a Nominator Group;
provided that, in the case of a Nominator Group, each member thereof (each
a Group Member) shall also have satisfied the notice, ownership and
other requirements of this article 96(b) applicable to Group Members, and
(B) subject to sub-paragraph (x) of this article 96(b), if the Nominator
or the Nominator Group, as applicable, so elects, the Nomination Statement
(as defined below) furnished by such Nominator or Nominator Group; and (2)
include such Shareholder Nominees name on any ballot distributed at such
annual general meeting and on the Companys proxy card (as well as any
other portal or format through which the Company permits proxies to be
submitted) distributed in connection with such annual general meeting.
Nothing in this article 96(b) shall limit the Companys ability to solicit
against, and include in its proxy materials its own statements relating
to, any Shareholder Nominee, Nominator or Nominator Group, or to include
such Shareholder Nominee as a nominee of the Board. |
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(ii) |
At each annual general meeting, a Nominator or Nominator
Group may nominate one or more Shareholder Nominees for election at such
meeting pursuant to this article 96(b); provided that the maximum number
of Shareholder Nominees nominated by all Nominators and Nominator Groups
(including Shareholder Nominees that were submitted by a Nominator or
Nominator Group for inclusion in the Companys proxy materials pursuant to
this article 96(b) but are subsequently withdrawn or that the Board
determines to nominate as Board nominees) appearing in the Companys proxy
materials with respect to an annual general meeting shall not exceed the
greater of (1) two nominees or (2) 20% of the total number of Directors in
office as of the Final Proxy Access Deadline (as defined below), or if
such number is not a whole number, the closest whole number below 20% (the
greater of (1) and (2) being the Maximum Number). The Maximum
Number shall be reduced, but not below zero, by the number of Directors
that the Board decides to nominate for re-election who were previously
elected to the Board pursuant to (A) a nomination made pursuant to this
article 96(b) or (B) an agreement or other arrangement with one or more
shareholders to elect such Directors in lieu of them being nominated
pursuant to this article 96(b), in each case, at one of the previous two
annual general meetings. If one or more vacancies for any reason occurs on
the Board at any time after the Final Proxy Access Deadline but before the
date of the applicable annual general meeting and the Board resolves to
reduce the size of the Board in connection therewith, the Maximum Number
shall be calculated based on the number of Directors in office as so
reduced. Any Nominator or Nominator Group submitting more than one
Shareholder Nominee for inclusion in the Companys proxy materials
pursuant to this article 96(b) shall rank in its Notice of Proxy Access
Nomination such Shareholder Nominees based on the order that the Nominator
or Nominator Group desires such Shareholder Nominees to be selected for
inclusion in the Companys proxy materials in the event that the total
number of Shareholder Nominees submitted by Nominators or Nominator Groups
pursuant to this article 96(b) exceeds the Maximum Number. In the event
that the number of Shareholder Nominees submitted by Nominators or
Nominator Groups pursuant to this article 96(b) exceeds the Maximum
Number, the highest ranking Shareholder Nominee who meets the requirements
of this article 96(b) from each Nominator and Nominator Group will be
selected for inclusion in the Companys proxy materials until the Maximum
Number is reached, beginning with the highest ranking Shareholder Nominee
submitted by the Nominator or Nominator Group with the largest number of
shares disclosed as owned (as defined below) in its respective Notice of
Proxy Access Nomination submitted to the Company and proceeding through
the highest ranking Shareholder Nominee submitted by each Nominator or
Nominator Group in descending order of ownership. If the Maximum Number is
not reached after the highest ranking Shareholder Nominee who meets the
requirements of this article 96(b) from each Nominator and Nominator Group
has been selected, this process will continue as many times as necessary,
following the same order each time, until the Maximum Number is
reached. |
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(iii) |
To be timely, the Notice of Proxy Access Nomination
must be delivered to the Secretary at the Office not earlier than 150 days
nor later than 120 days prior to the first anniversary of the date on
which the Companys definitive proxy statement was released to
shareholders in connection with the prior years annual general meeting;
provided, however, that if the annual general meeting is convened more
than 30 days prior to or delayed by more than 60 days after the first
anniversary of the preceding years annual general meeting, or if no
annual general meeting was held in the preceding year, the Notice of Proxy
Access Nomination must be so received not later than the close of business
on the later of (x) the 90th day prior to the annual general meeting or
(y) the 10th day following the day on which a public announcement of the
date of the annual general meeting is first made (the last day on which a
Notice of Proxy Access Nomination may be delivered pursuant to and in
accordance with this |
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article 96(b), the
Final Proxy Access
Deadline); provided further that in no
event shall any adjournment or postponement of an annual general meeting,
or the public announcement thereof, commence a new time period or extend
any time period provided in this article 96(b). The written notice
required by this article 96(b) (the Notice of Proxy Access Nomination)
shall include: |
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(1) |
a written notice of the nomination by such Nominator
or Nominator Group expressly electing to have its Shareholder Nominee(s)
included in the Companys proxy materials pursuant to this article
96(b); |
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(2) |
if the Nominator or Nominator Group so elects, a written
statement of the Nominator or Nominator Group for inclusion in the
Companys proxy statement in support of the election of its Shareholder
Nominee(s) to the Board, which statement shall not exceed 500 words with
respect to each Shareholder Nominee (the Nomination Statement); |
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(3) |
in the case of a nomination by a Nominator Group, the
designation by all Group Members of one specified Group Member that is
authorized to act on behalf of all Group Members with respect to the
nomination and matters related thereto, including withdrawal of the
nomination; |
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(4) |
a statement of the Nominator, or, in the case of a
Nominator Group, each Group Member, setting forth and certifying the
number of shares such Nominator or Group Member is deemed to own (as
determined in accordance with sub-paragraph (iv) of this article 96(b))
continuously for at least three years as of the date of the Notice of
Proxy Access Nomination, and if any such persons are not record holders of
the shares they are deemed to own, one or more written statements from the
record holder of such shares, and from each intermediary through which
such shares are or have been held during the requisite three-year holding
period, verifying that, as of a date within seven days prior to the date
that the Notice of Proxy Access Nomination is received by the Secretary,
the Nominator or the Group Member, as the case may be, owns, and has owned
continuously for the preceding three years, such number of shares, and the
Nominators or, in the case of a Nominator Group, each Group Members,
agreement to provide (A) within seven days after the record date for the
applicable annual general meeting, written statements certifying the
number of shares that the Nominator or the Group Member, as the case may
be, has continuously owned through the record date, and (B) prompt notice
if the Nominator or the Group Member, as the case may be, ceases to own
any such shares following the record date and prior to the date of the
applicable annual general meeting; |
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(5) |
a copy of the Schedule 14N that has been or is being
concurrently filed with the U.S. Securities and Exchange Commission as
required by Rule 14a-18 under the Exchange Act; |
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(6) |
a representation by the Nominator, or, in the case of
a Nominator Group, each Group Member: (A) that the Required Shares were
acquired in the ordinary course of business and not with intent to change
or influence control of the Company, and each such person does not
presently have such intent, (B) that each such person has not nominated,
and will not nominate, for election to the Board at the applicable annual
general meeting any person other than its Shareholder Nominee(s) pursuant
to this article 96(b), (C) that each such person has not distributed, and
will not distribute, to any shareholders any form of proxy for the
applicable annual general meeting other than the form to be distributed by
the Company, (D) that each such person has not engaged and will not engage
in, and has not been and will not be a participant (as defined in Schedule
14A of the Exchange Act) in, another persons solicitation within the
meaning of Rule 14a-1(l) under the Exchange Act in support of the election
of any individual as a Director at the applicable annual general meeting,
other than its Shareholder Nominee(s) or a nominee of the Board and (E)
that each such person consents to the public disclosure of the information
provided pursuant to this article 96(b) that is required to be disclosed
in the Companys proxy statement or any other proxy soliciting materials
under Section 14(a) of the Exchange Act or the rules and regulations
promulgated thereunder; and |
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(7) |
an executed agreement, in a form deemed satisfactory
by the Board acting in good faith (which form shall be provided by the
Secretary promptly upon written request), pursuant to which the Nominator
or, in the case of a Nominator Group, each Group Member agrees to (A)
comply with all applicable laws, rules and regulations applicable to the
nomination of each Shareholder Nominee pursuant to this article 96(b), (B)
assume all liability, and indemnify and hold harmless the Company and each
of its Directors, officers, |
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employees, agents and affiliates
individually against any liability, loss or damages in connection with any
threatened or pending action, suit or proceeding, whether legal,
administrative or investigative, against the Company or any of its
Directors, officers, employees, agents and affiliates, arising out of such
persons solicitations or communications with the shareholders of the
Company or out of the information that such person has provided to the
Company, in each case, in connection with the nomination submitted by such
person pursuant to this article 96(b), and (C) file with the U.S.
Securities and Exchange Commission any solicitation or other communication
with the Companys shareholders relating to the meeting at which the
Shareholder Nominee will be nominated, regardless of whether any such
filing is required under Regulation 14A of the Exchange Act or whether any
exemption from such filing is available for such solicitation or other
communication under Regulation 14A of the Exchange
Act. |
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(iv) |
To nominate any such
Shareholder Nominee pursuant to this article 96(b), the Nominator shall
have owned or, in the case of a Nominator Group, the Group Members
collectively as a Nominator Group shall have owned, shares representing 3%
or more of the voting power, entitled to vote generally in the election of
Directors, of the voting shares that are issued and outstanding as of the
most recent date for which such amount is set forth in any filing by the
Company with the U.S. Securities and Exchange Commission prior to the date
the Proxy Access Nomination is submitted to the Company (the
Required Shares) continuously for at least three years as of the date
the Notice of Proxy Access Nomination is submitted to the Company, and
must continue to own the Required Shares at all times between the date the
Notice of Proxy Access Nomination is submitted to the Company and the date
of the applicable annual general meeting; provided that the aggregate
number of owners whose share ownership is counted for the purposes of
satisfying the foregoing ownership requirement shall not exceed 20. Two or
more funds that are (i) under common management and investment control,
(ii) under common management and funded primarily by the same employer or
(iii) a family of investment companies or group of investment
companies, as such terms are defined in the Investment Company Act of
1940, as amended, of the United States of America shall be treated as one
owner, as the case may be, for the purpose of satisfying the foregoing
ownership requirements; provided that each fund otherwise meets the
requirements set forth in this article 96(b); and provided further that
any such funds whose shares are aggregated and treated as being held by
one owner for the purpose of satisfying the foregoing ownership
requirements provide documentation reasonably satisfactory to the Company
that demonstrates that the funds satisfy the conditions set forth in this
article 96(b)(iv) to be treated as one owner within seven days after the
Notice of Proxy Access Nomination is delivered to the Company. No owner
may be a member of more than one Nominator Group for the purposes of this
article 96(b), and if any owner purports to be a member of more than one
Nominator Group, it shall only be deemed to be a member of the Nominator
Group purporting to have the largest ownership position. |
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For purposes of this article
96(b), ownership shall be deemed to consist of and include only the
outstanding shares as to which a person possesses both (i) the full voting
and investment rights pertaining to such shares and (ii) the full economic
interest in (including the opportunity for profit and risk of loss on)
such shares; provided that the ownership of shares calculated in
accordance with clauses (i) and (ii) above shall not include any shares
(1) that a person or any of its affiliates has sold in any transaction
that has not been settled or closed, (2) that a person or any of its
affiliates has borrowed for any purposes or purchased pursuant to an
agreement to resell or (3) that are subject to any Derivative Instrument
(as defined below) or similar agreement entered into by a person or any of
its affiliates, whether any such instrument or agreement is to be settled
with shares or with cash based on the notional amount or value of shares,
in any such case which instrument or agreement has, or is intended to
have, or if exercised by either party would have, the purpose or effect of
(x) reducing in any manner, to any extent or at any time in the future,
such persons or such persons affiliates full right to vote or direct
the voting of any such shares, and/or (y) hedging, offsetting or altering
to any degree gain or loss arising from the full economic ownership of
such persons or such persons affiliates shares. Ownership shall
include shares held in the name of a nominee or other intermediary so long
as the person claiming ownership of such shares retains the right to
instruct how the shares are voted with respect to the election of
Directors and possesses the full economic interest in the shares. A
persons ownership of shares shall be deemed to continue during any period
in which the person has delegated any voting power by means of a proxy,
power of attorney or other instrument or arrangement that is revocable at
any time by the person. In addition, a persons ownership of shares shall
be deemed to continue during any period in which the person has loaned
such shares, provided that the person has the power to recall such loaned
shares on not more than five U.S. business days notice. The
determination |
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of whether the requirements of
ownership of shares for purposes of this article 96(b) are met shall be
made by the Board acting in good faith. For the purposes of this article
96(b), the terms own owned, owner and owning and other variations
of the word own shall have correlative meanings. For the purposes of
this article 96(b), the term affiliate or affiliates shall have the
meaning ascribed thereto under the rules and regulations of the Exchange
Act. |
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(v) |
In addition to the
representations, agreements and other information required to be furnished
by the Nominator and Shareholder Nominee pursuant to this article 96(b),
the Notice of Proxy Access Nomination shall set forth as of the date of
such notice: |
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(1) |
with respect to the Nominator
or, in the case of a Nominator Group, with respect to each Group
Member: |
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(A) |
the name and address of each such
person; |
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(B) |
(aa)the class or series and number of shares of the
Company that are, directly or indirectly, owned beneficially and of record
by each such person; (bb) any Derivative Instrument (as defined above)
directly or indirectly owned beneficially by each such person; (cc) any
proxy, contract, arrangement, understanding or relationship pursuant to
which such person is a party and has a right to vote, directly or
indirectly, any class or series of shares of the Company; (dd) any Short
Interest (as defined above) held by each such person; (ee) any rights to
dividends on the shares of the Company directly or indirectly owned
beneficially by each such person that are separated or separable from the
underlying shares of the Company; (ff) any proportionate interest in
shares of the Company or Derivative Instruments held, directly or
indirectly, by a general or limited partnership in which such person is a
general partner or, directly or indirectly, beneficially owns an interest
in a general partner; and (gg) any performance-related fees (other than an
asset-based fee) that such person is entitled to based on any increase or
decrease in the value of shares of the Company or Derivative Instruments,
if any, including without limitation any such interests held by members of
each such persons immediate family sharing the same household;
and |
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(C) |
any other information relating to each such person
and the nomination that would be required to be disclosed in a proxy
statement, form of proxy or other filings required to be made in
connection with solicitations of proxies for the election of directors at
an annual general meeting in a contested election pursuant to Regulation
14A of the Exchange Act; and |
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(2) |
with respect to each
Shareholder Nominee(s): |
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(A) |
all of the information required to be furnished by
the Nominator pursuant to article 96(b)(v)(1); |
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(B) |
the age and residence address of such person;
and |
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(C) |
the principal occupation or employment of such
person. |
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(vi) |
For the avoidance of doubt,
with respect to any nomination submitted by a Nominator Group pursuant to
this article 96(b), the information required by sub-paragraphs (iii) and
(v) of this article 96(b) to be included in the Notice of Proxy Access
Nomination shall be provided by each Group Member and each such Group
Member shall execute and deliver to the Secretary at the Office the
representations and agreements required under sub-paragraph (iii) of this
article 96(b) at the time the Notice of Proxy Access Nomination is
submitted to the Company (or, in the case of any person who becomes a
Group Member after such date, within five days of becoming a Group
Member). In the event that the Nominator, Nominator Group or any Group
Member shall have breached any of their agreements with the Company, or
any information included in the Nomination Statement or otherwise provided
by the Nominator, Nominator Group or any Group Member to the Company or
its shareholders, ceases to be true and correct in all material respects
(or omits a material fact necessary to make the statements made, in light
of the circumstances under which they were made, not misleading), such
Nominator, Nominator Group or Group Member, as the case may be, shall
promptly (and in any event within 5 days of discovering such breach or
that such information has ceased to be true and correct in all material
respects (or omits a material fact necessary to make the statements made,
in light of the circumstances under which they were made, not misleading))
notify the Secretary of any such breach or inaccuracy or omission in such
previously provided information and shall provide the information that is
required to correct any such defect, if applicable. All such information
included in the Notice of Proxy Access Nomination shall be
updated |
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and supplemented to the extent
that such update and supplement is necessary to ensure that such
information is true and correct in all material respects (a) as of the
record date for determining the shareholders entitled to notice of the
annual general meeting and (b) as of the date that is 15 days prior to the
meeting or any adjournment or postponement thereof, provided that if the
record date for determining the shareholders entitled to vote at the
meeting is less than 15 days prior to the meeting or any adjournment or
postponement thereof, the information is only required to be updated and
supplemented as of the date that is 15 days prior to the meeting or any
adjournment or postponement thereof. Any such update and supplement shall
be delivered in writing to the Secretary at the Office not later than five
days after the record date for determining the shareholders entitled to
notice of the meeting (in the case of any update and supplement required
to be made as of the record date for determining the shareholders entitled
to notice of the meeting) and not later than ten days prior to the date
for the meeting or any adjournment or postponement thereof (in the case of
any update or supplement required to be made as of 15 days prior to the
meeting or adjournment or postponement thereof). Notwithstanding anything
to the contrary set forth herein, if any Nominator, Nominator Group or
Group Member has failed to comply with the requirements of this article
96(b), the Board or the Chairman shall declare the nomination by such
Nominator or Nominator Group to be invalid, and such nomination shall be
disregarded. |
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(vii) |
Shareholder Nominee
Requirements. |
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(1) |
Within the time period specified in this article
96(b) for delivering the Notice of Proxy Access Nomination, each
Shareholder Nominee must deliver to the Secretary at the Office a written
representation and agreement, which shall be deemed a part of the Notice
of Proxy Access Nomination for purposes of this article 96(b), that such
person: (A) consents to be named in the proxy statement as a nominee, to
serve as a Director if elected and to the public disclosure of the
information provided pursuant to this article 96(b) that is required to be
disclosed in the Companys proxy statement or proxy soliciting materials
under Section 14(a) of the Exchange Act and the rules and regulations
promulgated thereunder; (B) is not and will not become a party to any
Voting Commitment that has not been disclosed to the Company; (C) is not
and will not become a party to any agreement, arrangement or understanding
with any person or entity other than the Company with respect to any
direct or indirect compensation, reimbursement or indemnification in
connection with service or action as a Director that has not been
disclosed to the Company; and (D) would be in compliance, if elected as a
Director of the Company, and will comply with all applicable corporate
governance, conflict of interest, confidentiality and share ownership and
trading policies and guidelines of the Company publicly disclosed from
time to time. |
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(2) |
At the request of the Company, each Shareholder
Nominee must promptly submit (but in no event later than ten days after
receipt of the request) to the Secretary at the Office all completed and
signed questionnaires reasonably requested by the Company, which are
generally required to be completed by all of the Companys Directors. The
Company may request such additional information as is reasonably necessary
to permit the Board to determine if each Shareholder Nominee is
independent under the listing standards of each principal securities
exchange upon which the Companys shares are listed, any applicable rules
of the U.S. Securities and Exchange Commission and any publicly disclosed
standards used by the Board in determining and disclosing the independence
of the Companys Directors and to determine whether the nominee otherwise
meets all other publicly disclosed standards applicable to
Directors. |
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(3) |
In the event that the Shareholder Nominee shall have
breached any of their agreements with the Company or any information or
communications provided by a Shareholder Nominee to the Company or its
shareholders ceases to be true and correct in any respect or omits a fact
necessary to make the statements made, in light of the circumstances under
which they were made, not misleading, such nominee shall promptly (and in
any event within five days of discovering such breach or that such
information has ceased to be true and correct in all material respects (or
omits a material fact necessary to make the statements made, in light of
the circumstances under which they were made, not misleading)) notify the
Secretary of any such breach, inaccuracy or omission in such previously
provided information and of the information that is required to make such
information or communication true and correct in all material respects, if
applicable. |
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(viii) |
In the event any Nominator or
Nominator Group submits a nomination at an annual general meeting and such
Shareholder Nominee shall have been nominated for election pursuant to
this article 96(b) at any of the previous two annual general meetings and
such Shareholder Nominee shall not have received at least 25% of the votes
cast in favor of such nominees election, or such Shareholder Nominee
withdrew from or became ineligible or unavailable for election to the
Board, then such nomination shall be disregarded. |
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(ix) |
Notwithstanding anything to
the contrary contained in this article 96(b), the Company shall not be
required to include, pursuant to this article 96(b), a Shareholder Nominee
in its proxy materials for any annual general meeting, or, if the proxy
statement already has been filed, to submit the nomination of a
Shareholder Nominee to a vote at the annual general meeting
(notwithstanding that proxies in respect of such vote may have been
received by the Company): |
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(1) |
for any meeting for which the Secretary receives
timely notice in proper form stating that any member intends to nominate
one or more persons for election to the Board pursuant to articles
50-51; |
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(2) |
who is not independent under the listing standards of
each principal securities exchange upon which the shares of the Company
are listed, any applicable rules of the U.S. Securities and Exchange
Commission and any publicly disclosed standards used by the Board in
determining and disclosing the independence of the Companys Directors, in
each case as determined by the Board acting in good
faith; |
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(3) |
who does not meet the audit committee independence
requirements under the rules of any securities exchange upon which the
shares of the Company are listed or qualify as a non-employee Director
for the purposes of Rule 16b-3 under the Exchange Act (or any successor
rule) or as an outside Director for the purposes of Section 162(m) of
the Internal Revenue Code of 1986, in each case as determined by the Board
acting in good faith; |
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(4) |
whose election as a member of the Board would cause
the Company to be in violation of these articles, the Companys memorandum
of association, the rules and listing standards of the principal
securities exchanges upon which the shares of the Company are listed, or
any applicable law, rule or regulation or of any publicly disclosed
standards of the Company applicable to Directors, in each case as
determined by the Board acting in good faith; |
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(5) |
who is an officer or director of a competitor, as
defined in Section 8 of the Clayton Antitrust Act of
1914; |
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(6) |
who is a named subject of a pending criminal
proceeding (excluding traffic violations and other minor offenses) or has
been convicted in such a criminal proceeding within the past ten
years; |
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(7) |
who is subject to any order of the type specified in
Rule 506(d) of Regulation D promulgated under the Securities Act of 1933,
as amended, of the United States of America; |
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(8) |
if the Shareholder Nominee or Nominator, or, in the
case of a Nominator Group, any Group Member (or any owner on whose behalf
the nomination is made) shall have provided information to the Company in
connection with such nomination that was untrue in any material respect or
omitted to state a material fact necessary in order to make any statement
made, in light of the circumstances under which it was made, not
misleading, as determined by the Board acting in good
faith; |
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(9) |
to the extent permitted under applicable law, the
Nominator (or a qualified representative thereof) or, in the case of a
Nominator Group, the representative designated by the Nominator Group in
accordance with sub-paragraph (iii)(3) of this article 96(b) (or a
qualified representative thereof), does not appear at the applicable
annual general meeting to present the Shareholder Nominee for election;
or |
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(10) |
the Nominator or, in the case of a Nominator Group,
any Group Member, or the applicable Shareholder Nominee, otherwise
breaches or fails to comply in any material respect with its
representations or agreements made to the Company in connection with the
nomination of such Shareholder Nominee. |
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For the purpose of this sub-paragraph (ix), clauses (2) through
(10) will result in the exclusion from the proxy materials pursuant to
this article 96(b) of the specific Shareholder Nominee to whom the
ineligibility applies, or, if the proxy statement already has been filed,
the ineligibility of the Shareholder Nominee and, in either case, the
inability of the Nominator or Nominator Group that nominated such
Shareholder Nominee to substitute another Shareholder Nominee therefor;
provided, however, clause (1) will result in the exclusion from the proxy
materials pursuant to this article 96(b) of all Shareholder Nominees for
the applicable annual general meeting, or, if the proxy statement already
has been filed, the ineligibility of all Shareholder
Nominees. |
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(x) |
Notwithstanding anything to the contrary contained in
this article 96(b), the Company may omit from its proxy materials any
information, including all or any portion of the Nomination Statement, if
the Board acting in good faith determines that the disclosure of such
information would violate any applicable law or regulation or that such
information is not true and correct in all material respects or omits to
state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not
misleading. |
82 2017
Proxy Statement
Table of
Contents
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WIN |
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RIGHT |
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CUSTOMER FIRST
We make it easy
for customers to do business with Pentair and are tenacious about
meeting customer commitments |
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POSITIVE ENERGY
We display a
positive outlook and take responsibility for our impact on
others |
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ACCOUNTABILITY FOR PERFORMANCE
We commit to high
standards of performance and demonstrate personal ownership for getting
the job done |
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RESPECT AND TEAMWORK
We treat others
with respect and openness; we collaborate and align with others for team
success. |
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INNOVATION AND ADAPTABILITY
We actively
pursue continuous improvement, adapting to changing circumstances and
applying new ideas |
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ABSOLUTE INTEGRITY
We are committed
to honest and ethical business practices in our dealings with customers,
business partners, investors, communities, and each other |
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Table of
Contents
Table of Contents
PENTAIR PLC
C/O BROADRIDGE
51 MERCEDES WAY
EDGEWOOD, NY 11717
VOTE BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information up until 3:00 a.m. Eastern Daylight
Time on May 7, 2017. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records
and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until 3:00 a.m. Eastern Daylight Time on May 7, 2017. Have your
proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717 (which Broadridge will arrange to forward to
Pentair plc's registered address). In order to assure that your proxy card is
tabulated in time to be voted at the Annual General Meeting, you must return
your proxy card at the above address by 3:00 a.m. Eastern Daylight Time on May
7, 2017.
All instruments of proxy and proxy
cards should be received by 3:00 a.m. Eastern Daylight Time on May 7,
2017.
TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
E17579-TBD |
KEEP
THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. |
PENTAIR PLC
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The Board of
Directors recommends you vote FOR the following director
nominees: |
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1. |
Election of Directors |
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For |
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Abstain |
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1a. |
Glynis A.
Bryan |
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1b. |
Jerry W.
Burris |
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1c. |
Carol Anthony (John)
Davidson |
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1d. |
Jacques
Esculier |
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1e. |
Edward P.
Garden |
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1f. |
T. Michael
Glenn |
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1g. |
David H. Y.
Ho |
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1h. |
Randall J.
Hogan |
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1i. |
David A.
Jones |
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1j. |
Ronald L.
Merriman |
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1k. |
William
T. Monahan |
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1l. |
Billie
Ida Williamson |
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The Board of Directors
recommends you vote FOR proposals 2, 4, 5, 6 and 1 Year on proposal
3. |
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For |
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Against |
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Abstain |
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2. |
To approve, by non-binding advisory
vote, the compensation of the named executive officers. |
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☐ |
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1 Year |
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2 Years |
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3 Years |
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Abstain |
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3. |
To recommend, by non-binding advisory
vote, the frequency of future advisory votes on the compensation of the
named executive officers. |
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For |
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Against |
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Abstain |
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4. |
To ratify, by non-binding advisory vote,
the appointment of Deloitte & Touche LLP as the independent auditors
of Pentair plc and to authorize, by binding vote, the Audit and Finance
Committee of the Board of Directors to set the auditors
remuneration. |
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5. |
To authorize the price range at which
Pentair plc can re-allot shares it holds as treasury shares under Irish
law. (Special Resolution) |
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6. |
To approve amendments to Pentair plcs Articles of
Association to implement proxy access. (Special Resolution) |
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7. |
To consider and act on such other business as may
properly come before the Annual General Meeting or any
adjournment. |
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Any shareholder entitled to
attend and vote at the Annual General Meeting of Shareholders may appoint
one or more proxies, who need not be a shareholder(s) of the Company. A
proxy is required to vote in accordance with any instructions given to him
or her. Completion of a form of proxy will not preclude a member from
attending and voting at the meeting in person. |
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Please sign exactly as your name(s) appear(s) hereon. When signing
as attorney, executor, administrator, or other fiduciary, please give full
title as such. Joint owners should each sign personally. All holders must
sign. If a corporation or partnership, please sign in full corporate or
partnership name by authorized officer. |
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Signature [PLEASE SIGN WITHIN
BOX] |
Date |
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Signature (Joint Owners) |
Date |
Table of Contents
Important Notice Regarding the
Availability of Proxy Materials for the
Annual General Meeting to be held on
May 9, 2017:
The Annual Report, Notice of
Annual General Meeting, Proxy Statement and
Irish Financial Statements and
Related Reports are available at www.proxyvote.com.
PENTAIR PLC
Annual General Meeting of Shareholders
May 9, 2017 8:00
a.m. Local Time
This proxy is solicited by the Board
of Directors.
The signatory, revoking any proxy
heretofore given in connection with the Meeting (as defined below), hereby
appoints Randall J. Hogan, John L. Stauch and Angela D. Jilek, or any of them
(the Proxies), as proxies, each with the power to appoint his or her
substitute, and hereby authorizes them to attend, speak and to vote at the
Meeting, as designated on the reverse side of this card, all ordinary shares of
Pentair plc that the signatory is entitled to vote at the Annual General Meeting
of Shareholders to be held at 8:00 AM, local time, on May 9, 2017, at the
Claridge's, Brook Street, Mayfair, London, United Kingdom, W1K 4HR, and any
adjournment or postponement thereof (the Meeting).
If you wish to appoint as proxy any
other person or persons, please contact the Corporate Secretary.
If the signatory is a participant in
the Pentair Retirement Savings and Stock Incentive Plan (Pentair ESOP), the
signatory hereby directs Fidelity Management Trust Company as Pentair ESOP
Trustee, to vote at the Meeting, as designated on the reverse side of this card,
all of the ordinary shares of Pentair plc allocated to the signatorys account
in the Pentair ESOP as of March 6, 2017.
If the signatory is a participant in
the Pentair plc Employee Stock Purchase and Bonus Plan or the Pentair plc
International Stock Purchase and Bonus Plan (the Purchase Plans), the
signatory, revoking any proxy heretofore given in connection with the Meeting,
hereby appoints the Proxies, or any of them, as proxies, each with the power to
appoint his or her substitute, and hereby authorizes the Proxies to attend and
to vote at the Meeting, as designated on the reverse side of this card, all of
the ordinary shares of Pentair plc allocated to the signatorys account in the
Purchase Plans as of March 6, 2017.
In the event of other agenda items or
proposals during the Meeting on which voting is permissible under Irish law, you
instruct the Proxies, in the absence of other specific instructions, to vote the
shares in accordance with the Board of Directors recommendations.
This proxy, when properly executed,
will be voted in the manner directed herein. If no such direction is made, this
proxy will be voted in accordance with the Board of Directors'
recommendations.
Continued and to be signed on reverse
side.
This regulatory filing also includes additional resources:
pnr_courtesy-pdf.pdf
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