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. )
Filed by the Registrant x
Filed by a Party other than the
Registrant ¨
Check the appropriate box:
| ¨ |
Preliminary Proxy Statement |
| ¨ |
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| x |
Definitive Proxy Statement |
| ¨ |
Definitive Additional Materials |
| ¨ |
Soliciting Material Pursuant to §240.14a-12 |
Worthington Industries, Inc.
(Name of Registrant as Specified In Its
Charter)
Payment of Filing Fee (Check the
appropriate box):
| ¨ |
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(1) |
Title of each class of securities to which the transaction applies: |
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(2) |
Aggregate number of securities to which the transaction applies: |
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(3) |
Per unit price or other underlying value of the 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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(4) |
Proposed maximum aggregate value of the transaction: |
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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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(1) |
Amount Previously Paid: |
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(2) |
Form, Schedule or Registration Statement No.: |
August 12, 2015
Dear Fellow Shareholders:
On behalf of
the Board of Directors and employees of Worthington Industries, Inc. (the “Company”), I cordially invite you to participate via webcast in the 2015 Annual Meeting of Shareholders (the “Annual Meeting”) of the Company to be held
on Thursday, September 24, 2015, beginning at 2:00 p.m., Eastern Daylight Time. This year’s Annual Meeting will be a virtual meeting of shareholders which means that you will be able to participate in the Annual Meeting, vote and submit
your questions during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/WOR15. You will not be able to attend the Annual Meeting in person.
Details of the business to be conducted at the Annual Meeting are provided in the accompanying Notice of Annual Meeting of Shareholders and
Proxy Statement, which you are urged to read carefully. If you participate in the Annual Meeting via the live webcast at www.virtualshareholdermeeting.com/WOR15, you may revoke your proxy and vote during the Annual Meeting, even
if you have previously submitted a proxy.
We have elected to take advantage of Securities and Exchange Commission rules that allow us to
furnish proxy materials to certain shareholders on the Internet. On or about the date of this letter, we began mailing a Notice of Internet Availability of Proxy Materials to shareholders of record at the close of business on July 31, 2015. At
the same time, we provided those shareholders with access to our online proxy materials and filed our proxy materials with the Securities and Exchange Commission. We believe furnishing proxy materials to our shareholders on the Internet will allow
us to provide our shareholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting.
Your continuing interest in our Company is greatly appreciated.
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| Sincerely, |
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| /s/ John P. McConnell |
| JOHN P. McCONNELL |
| Chairman of the Board and Chief Executive Officer |
200 Old Wilson Bridge Rd. | Columbus, Ohio 43085
WorthingtonIndustries.com
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 24, 2015
Notice is hereby given that the 2015 Annual Meeting of Shareholders (the “Annual Meeting”) of Worthington Industries, Inc.
(the “Company”) will be held at 2:00 p.m., Eastern Daylight Time, on Thursday, September 24, 2015. This year’s Annual Meeting will be a virtual meeting of shareholders which means that you will be able to participate in the
Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/WOR15. You will not be able to attend the Annual Meeting in
person.
The Annual Meeting is being held for the following purposes:
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(1) |
To elect three directors, each to serve for a term of three years to expire at the 2018 Annual Meeting of Shareholders; |
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(2) |
To approve the advisory resolution on executive compensation; and |
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(3) |
To ratify the selection of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending May 31, 2016. |
Only shareholders of record at the close of business on the record date, July 31, 2015, are entitled to notice of, and to vote at, the
Annual Meeting.
We will begin mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) on or about
August 12, 2015 to shareholders of record at the close of business on July 31, 2015. The Notice contains instructions on how to access our Proxy Statement, our 2015 Annual Report to Shareholders and the form of proxy on the Internet, as
well as instructions on how to request a paper copy of the proxy materials.
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| By Order of the Board of Directors, |
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| /s/ Dale T. Brinkman |
| Dale T. Brinkman |
| Secretary |
Columbus, Ohio
August 12, 2015
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Before you vote, access the proxy materials in one of the following ways prior to the Annual Meeting: |
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To view Online: Have available the information that is printed in the box marked by the arrow
provided in your Notice and visit: www.proxyvote.com. You may visit www.proxyvote.com 24 hours a day, seven days a week, prior to 11:59 p.m., Eastern Daylight
Time, on September 23, 2015. |
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| To request and receive a PAPER or E-MAIL copy: |
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You must request a paper or e-mail copy of the proxy materials. There is NO charge for requesting a copy. Please choose one of the
following methods to make your request: |
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(1) By Internet: |
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www.proxyvote.com |
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(2) By Telephone: |
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1-800-579-1639 |
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(3) By E-Mail*: |
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sendmaterial@proxyvote.com |
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*If you request proxy
materials by e-mail, please send a blank e-mail including in the subject line the information that is printed in the box marked by the arrow
provided in your Notice. Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before
September 10, 2015 to facilitate timely delivery of the proxy materials. |
200 Old Wilson Bridge Rd. | Columbus, Ohio 43085
WorthingtonIndustries.com
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS OF
WORTHINGTON INDUSTRIES, INC.
To Be Held On Thursday, September 24, 2015
TABLE OF CONTENTS
i
PROXY STATEMENT SUMMARY
This summary highlights information about Worthington Industries, Inc. (“Worthington” or the “Company”) and certain
information contained elsewhere in this Proxy Statement for the Company’s Annual Meeting of Shareholders (the “Annual Meeting”), which will be held on Thursday, September 24, 2015, beginning at 2:00 p.m. (EDT). This summary does
not contain all of the information that you should consider in voting your common shares, and you should read the entire Proxy Statement carefully before voting. For more complete information regarding the Company’s Fiscal 2015 performance,
please review the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2015.
Virtual Meeting: The
Annual Meeting will be a virtual meeting, which means that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast, by visiting
www.virtualshareholdermeeting.com/WOR15. You will not be able to attend the Annual Meeting in person.
HOW TO CAST YOUR VOTE:
Even if you plan to attend the Annual Meeting via the webcast, please vote as soon as possible and in any event prior to 11:59 p.m. (EDT)
on September 23, 2015. You can vote in one of the following ways prior to the date of the Annual Meeting:
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Internet |
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Telephone |
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Mail |
| Go to www.proxyvote.com: You can use the Internet 24 hours a day to transmit your voting instructions. Have your
proxy card or Notice of Internet Availability of Proxy Materials in hand when you access the web site and follow the instructions. |
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Call 1-800-690-6903: You can use any touch-tone telephone. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you call and
follow the instructions. |
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If you received a printed copy of the proxy materials, you may submit your vote by completing, signing and dating your proxy card and
returning it in the prepaid envelope to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. |
1
VOTING MATTERS AND BOARD RECOMMENDATIONS
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Management Proposals |
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Board Vote
Recommendation |
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Page
Reference
(for more detail) |
| Proposal 1: |
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Election of three (3) directors |
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FOR each
nominee |
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19 |
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| Proposal 2: |
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Approval of advisory resolution on executive compensation |
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FOR |
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68 |
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| Proposal 3: |
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Ratification of selection of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending May 31, 2016 |
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FOR |
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71 |
2
DIRECTOR NOMINEES AND CONTINUING DIRECTORS
The following table provides summary information about the three director nominees and the seven continuing directors. Additional information
about each nominee’s and each continuing director’s experience, qualifications, attributes and skills can be found beginning on page 20.
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| Name |
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Age |
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Director
Since |
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Occupation |
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Board
Committees (1) |
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| Nominees Standing for Re-Election to the Board at the 2015 Annual Meeting of
Shareholders: |
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| John B. Blystone |
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62 |
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1997 |
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Retired Chairman of the Board, President and Chief Executive Officer, SPX Corporation |
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Executive; Comp* |
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| Mark C. Davis |
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55 |
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2011 |
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Private Investor and Chief Executive Officer, Lank Acquisition Corp. |
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Audit |
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| Sidney A. Ribeau |
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67 |
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2000 |
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Professor of Communications and former President, Howard University |
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N&G |
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| Directors Whose Terms Continue Until the 2016 Annual Meeting of
Shareholders: |
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| Kerrii B. Anderson |
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58 |
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2010 |
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Private Investor and Board Advisor; Former CEO & CFO, Wendy’s International, Inc. |
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Audit; Comp |
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| John P. McConnell |
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61 |
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1990 |
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Chairman of the Board and Chief Executive Officer, Worthington Industries, Inc. |
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Executive* |
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| Mary Schiavo |
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59 |
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1998 |
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Member, Motley Rice LLC |
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Audit; N&G |
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| Directors Whose Terms Continue Until the 2017 Annual Meeting of
Shareholders: |
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| Michael J. Endres |
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67 |
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1999 |
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Partner, Stonehenge Partners, Inc. |
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Executive; Comp |
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| Ozey K. Horton, Jr. |
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64 |
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2011 |
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Independent Advisor and Director Emeritus, McKinsey & Company |
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Comp; N&G |
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| Peter Karmanos, Jr. |
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72 |
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1997 |
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Retired Executive Chairman of the Board and Founder, Compuware |
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Executive; N&G* |
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| Carl A. Nelson, Jr. |
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70 |
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2004 |
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Independent Business Consultant |
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Executive; Audit* |
| (1) |
Comp: Compensation and Stock Option |
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N&G: Nominating and Governance |
| * |
Denotes Committee Chair |
3
COMMITMENT TO SHAREHOLDERS / GOVERNANCE
Worthington has long operated under a strong corporate philosophy rooted in the golden rule with earning money for our shareholders and
increasing the value of their investment as the Company’s first corporate goal. Consistent with this philosophy and the Company’s culture, Worthington is committed to high ethical standards and sound corporate governance practices.
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| Strong Corporate Culture |
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• Culture based on long-standing corporate Philosophy rooted in the
golden rule
• First corporate goal is to earn money for shareholders and increase
the value of their investment
• Comprehensive Corporate Governance Guidelines and Code of
Conduct |
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| Returns to Shareholders |
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• Dividends paid every year since going public in 1968
• Stock buy-back program |
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| Board Independence |
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• 9 out of 10 directors are independent—our CEO is the only
management director
• Audit, Compensation, and Nominating and Governance Committees are
composed exclusively of independent directors under NYSE standards |
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| Lead Independent Director |
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• John B. Blystone serves as Lead Independent Director
• Mr. Blystone serves as liaison between management and the other
non-management directors, presides over executive sessions of the non-management directors and has authority to call meetings of the non-management directors |
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| Executive Sessions |
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• The independent directors regularly meet in private without
management
• The Lead Independent Director presides at these executive
sessions |
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| Board Oversight of Risk Management |
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• The Board monitors Worthington’s systematic approach to
identifying and assessing enterprise risks faced by Worthington and our business units
• The Audit Committee reviews our overall enterprise risk management
policies and practices, financial, reporting and compliance risk exposures and the delegation of risk oversight responsibilities to other Board committees
• The Compensation Committee oversees compensation risk
management |
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| Executive Compensation |
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• Strong pay-for-performance philosophy
• Executive compensation is more highly leveraged than market median
– Base pay generally below market median and higher percentage of pay tied to at-risk incentive compensation
• Goals and targets for annual and long-term incentive plans annually
reviewed and set by Compensation Committee
• Compensation Committee advised by independent compensation
consultant
• Annual “say-on-pay” advisory vote
• Limited perquisites and benefits
• No defined benefit pension or SERP benefits
• Change of control equity vesting requires “double trigger”
– must also have termination of employment
• No employment contracts or change in control arrangements outside
shareholder-approved incentive plans
• Have never repriced or offered cash buy-outs of underwater
options |
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| Stock Ownership Requirements |
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• Non-management directors to hold Worthington common shares valued at
five times annual cash retainer
• Our CEO to hold Worthington common shares valued at five times annual
base salary
• Members of executive management to hold Worthington common shares
valued at a multiple of base salary, depending on position
• No speculative trading or hedging permitted by directors, officers or
other key employees |
5
FISCAL 2015
BUSINESS PERFORMANCE AND
EXECUTIVE COMPENSATION PROGRAM HIGHLIGHTS
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After five solid years of growth, Fiscal 2015 proved to be a challenging year for the Company, and we did not achieve a primary financial goal of exceeding prior year results, adjusting for restructuring and
non-recurring items. |
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During the year, and particularly in the later half, the Company faced significant adverse market conditions in certain key markets. The steep decline in steel prices resulted in FIFO losses (wherein margins declined
temporarily as a result of FIFO accounting, lower scrap revenues, and lower margins, due to selling higher cost steel inventory into a declining price environment, on the percentage of the Company’s inventory that is not matched to a customer
contract). The decline in oil and gas prices severely reduced demand in the Company’s oil and gas equipment business. The Company also faced operational difficulties at certain plants in our oil and gas equipment business and our Florence,
South Carolina Engineered Cabs plant. |
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Management has taken action to mitigate the impact of these headwinds. The Company made major cuts in the work force and trimmed other variable costs in the oil and gas equipment business. In Steel Processing, strict
adherence to the Company’s inventory management practices significantly reduced the amount of FIFO holding losses which would have otherwise been incurred. The Company is in the process of closing our Florence, South Carolina Engineered Cabs
plant, but doing so in a way that continues to support our key customers and move as much business as possible to our other facilities. |
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Consistent with the Company’s compensation philosophy of linking executive pay to Company performance, as Company performance fell below target results, Management’s annual cash incentive bonus and
three-fiscal-year incentive compensation pay-outs also declined. For example, the CEO’s annual cash incentive bonus was paid at 70% of target, declining by 26% from Fiscal 2014, and the average decline for all NEOs was 29%. The average decline
in the NEOs’ cash payments under the three-fiscal-year cash performance awards for the period ended Fiscal 2015 was almost 30%, with the CEO’s payment down 47%. The value of the performance share awards earned for that same
three-fiscal-year performance period was down even more, reflecting both a lower number of performance shares earned and a lower share price at the time of pay-out. |
6
FISCAL 2015
EARNED INCENTIVE COMPENSATION
The following table lists, for each of Fiscal 2015, Fiscal 2014 and Fiscal 2013, the incentive compensation earned by the Company’s CEO,
the Company’s Chief Financial Officer (“CFO”), and the Company’s three other most highly compensated executive officers serving at the end of Fiscal 2015 (collectively, the “named executive officers” or
“NEOs”) under their annual incentive bonus awards for those fiscal years and their three-fiscal-year cash performance and performance share awards earned for the periods ended with such fiscal years. See the “Fiscal 2015 Summary
Compensation Table” on page 52 of this Proxy Statement for additional information on compensation of the NEOs.
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Fiscal
Year |
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Annual Incentive
Bonus Earned ($) |
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3-year Cash
Performance Award
($) Earned |
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3-year Performance Share
Award Earned |
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| Name and Principal Position |
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(# of Shares) |
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Value on Date Distributed
($) * |
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| John P. McConnell, Chairman of the Board and Chief Executive Officer |
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2015 |
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616,517 |
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883,000 |
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26,490 |
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747,548 |
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2014 |
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838,070 |
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1,664,875 |
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43,813 |
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1,855,481 |
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2013 |
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740,890 |
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1,461,575 |
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76,156 |
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2,244,608 |
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| B. Andrew Rose, Executive Vice President and Chief Financial Officer |
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2015 |
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350,554 |
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529,800 |
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10,596 |
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299,019 |
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2014 |
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476,531 |
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613,375 |
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12,268 |
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519,550 |
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2013 |
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409,213 |
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538,475 |
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18,462 |
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592,630 |
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| Mark A. Russell, President and Chief Operating Officer |
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2015 |
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443,032 |
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529,800 |
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10,596 |
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299,019 |
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2014 |
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602,241 |
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853,046 |
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17,060 |
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722,491 |
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2013 |
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516,900 |
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647,907 |
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16,252 |
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521,689 |
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| Andrew J. Billman, President, Worthington Cylinder Corporation |
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2015 |
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227,476 |
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337,288 |
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6,133 |
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173,073 |
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2014 |
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346,850 |
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497,040 |
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8,860 |
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375,221 |
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2013 |
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321,638 |
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342,206 |
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6,484 |
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208,136 |
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| Geoffrey G. Gilmore, President, The Worthington Steel Company ** |
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2015 |
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304,883 |
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267,750 |
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4,463 |
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125,946 |
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2014 |
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463,500 |
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327,292 |
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5,309 |
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224,836 |
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| * |
Number of performance shares earned multiplied by closing common share price |
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Mr. Gilmore was not an NEO in Fiscal 2013 |
7
OVERVIEW OF EXECUTIVE COMPENSATION PROGRAM
SHORT-TERM CASH LONG-TERM INCENTIVE PAY ELEMENT BASE SALARY ANNUAL INCENTIVE BONUS CASH PERFORMANCE PERFORMANCE SHARE RESTRICTED COMMON
SHARES STOCK OPTIONS WHO RECEIVES NEOs and other Senior Executives AT RISK No Yes FORM OF PAYMENT Cash Equity TYPE OF PERFORMANCE Short-term emphasis Long-term emphasis PERFORMANCE PERIOD / VESTING PERIOD Ongoing 1 year 3 years 3-year cliff vesting
3-year incremental vesting (33% a year) HOW PAY-OUT DETERMINED Set or approved by Comp. Committee Comp. Committee sets targets based on metrics (below) and potential awards. Performance determines amount earned Comp. Committee determines size of
award. Value depends on price of common shares on exercise / vesting date MOST RECENT PERFORMANCE METRICS n/a EVA (BU or Corp.) EOI (BU) EPS (Corp.) EVA (Corp.) EOI (BU) EPS (Corp.) Stock Price Stock Price Appreciation VALUE OF AWARD EARNED n/a
Formulaic—Performance v Targets Formulaic -Performance v Targets / Market Price of Common Shares Market Price x Common Shares (Market Price – Exercise Price) x Common Shares
8
WORTHINGTON INDUSTRIES, INC.
200 Old Wilson Bridge Road
Columbus, Ohio 43085
(614) 438-3210
www.worthingtonindustries.com
PROXY
STATEMENT
Dated: August 12, 2015
FOR THE ANNUAL MEETING OF SHAREHOLDERS
To Be Held On September 24, 2015
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the
“Board”) of Worthington Industries, Inc., an Ohio corporation (the “Company”), for use at the 2015 Annual Meeting of Shareholders to be held at 2:00 p.m., Eastern Daylight Time, on September 24, 2015 (the “Annual
Meeting”). This year’s Annual Meeting will be a virtual meeting of shareholders which means that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast by visiting
www.virtualshareholdermeeting.com/WOR15. On or about August 12, 2015, we began mailing to our shareholders of record at the close of business on July 31, 2015, a Notice of Internet Availability of Proxy Materials
containing instructions on how to access the Notice of Annual Meeting of Shareholders, this Proxy Statement, the form of proxy and our 2015 Annual Report to Shareholders (for the fiscal year ended May 31, 2015 (“Fiscal 2015”)).
As used in this Proxy Statement, the “Company” means Worthington Industries, Inc. or, where appropriate, Worthington
Industries, Inc. and its subsidiaries. The term “common shares” means the Company’s common shares, without par value. Other than the common shares, there are no voting securities of the Company outstanding.
Purpose of the Annual Meeting
At the
Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of Shareholders included with this Proxy Statement. Specifically, the shareholders will be asked to: (1) elect three directors to the Board;
(2) approve the advisory resolution on executive compensation; and (3) ratify the selection of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending May 31, 2016. In addition,
following the formal portion of the Annual Meeting, management of the Company will respond to questions from shareholders.
Board’s
Recommendations
Subject to revocation, all forms of proxy that are properly completed and timely received will be voted in accordance
with the instructions contained therein. If no instructions are given (excluding broker non-votes), the persons named as proxy holders will vote the common shares in accordance with the recommendations of the Board. The Board’s recommendations
are set forth together with the description of each proposal in this Proxy Statement. In summary, the Board recommends a vote:
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“FOR” the election of its nominated slate of directors (see “PROPOSAL 1: ELECTION OF DIRECTORS”); |
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“FOR” the approval of the advisory resolution on executive compensation (see “PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION”); and |
9
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“FOR” the ratification of the selection of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending May 31, 2016 (see “PROPOSAL 3:
RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM”). |
Shareholder Voting Rights
Only shareholders of record at the close of business on July 31, 2015 (the “Record Date”) or such shareholders’ proxies are
entitled to receive notice of, and to vote at, the Annual Meeting. As of the close of business on the Record Date, there were 65,346,811 common shares outstanding and entitled to vote. Each shareholder is entitled to one vote on each matter voted
upon at the Annual Meeting for each common share held. Shareholders do not have cumulative voting rights in the election of directors. All voting at the Annual Meeting will be governed by our Amended Articles of Incorporation, our Code of
Regulations and the General Corporation Law of the State of Ohio.
Registered Shareholders and Beneficial Shareholders
If our common shares are registered in your name directly with our transfer agent, WellsFargo Shareowner Services, you are considered, with
respect to those common shares, a holder of record (which we also refer to as a “registered shareholder”). If you hold our common shares in a brokerage account or through a bank or other holder of record, you are considered the beneficial
holder or beneficial owner of the common shares, which is often referred to as holding the common shares in “street name”.
Voting of Common
Shares Held in “Street Name”
A “broker non-vote” occurs when a shareholder holds our common shares in “street
name” through a broker or similar organization, and the shareholder does not provide the broker with instructions within the required timeframe before the Annual Meeting as to how to vote the common shares on “non-routine” matters.
Under the applicable sections of the New York Stock Exchange (“NYSE”) Listed Company Manual (the “NYSE Rules”), your broker cannot vote your common shares on non-routine matters unless your broker receives instructions from you
as to how to vote.
The only proposal this year which is considered “routine” is the ratification of the selection of the
Company’s independent registered public accounting firm. The other proposals are considered “non-routine” where your broker can only vote your common shares if your broker receives instructions from you.
Your broker will send you directions on how to instruct your broker to vote your common shares. If you want your common shares to be voted,
you must instruct your broker how to vote: (i) for the election of our director nominees; and (ii) for the proposal to approve the advisory resolution on executive compensation.
Attendance and Participation at the Annual Meeting
We will be hosting the Annual Meeting live via the Internet. You will not be able to attend the Annual Meeting in person.
Any shareholder can listen to and participate in the Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/WOR15. The webcast will start at 2:00 p.m., Eastern Daylight Time, on
September 24, 2015. Shareholders may vote and submit questions while connected to the Annual Meeting on the Internet.
Instructions on how to connect and participate in the Annual Meeting, including how to demonstrate proof of ownership of our common
shares, are posted at www.virtualshareholdermeeting.com/WOR15. If you do not have your 16-digit control number that is printed in the box marked by the arrow on your Notice of Internet Availability of Proxy
Materials or your proxy card (if you received a printed copy of the proxy materials), you will only be able to listen to the Annual Meeting.
10
How to Vote and Voting Deadlines
If you are a registered shareholder, there are several ways for you to vote your common shares:
Before the Annual Meeting: Go to
www.proxyvote.com
You can use the Internet 24 hours a day, seven days a week, to transmit your voting instructions
and for electronic delivery of information up until 11:59 p.m., Eastern Daylight Time, on September 23, 2015. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you access the web site and follow the
instructions to obtain your records and create an electronic voting instruction form.
During the Annual Meeting: Go to
www.virtualshareholdermeeting.com/WOR15
You may attend the Annual Meeting via the Internet and vote during the
Annual Meeting. Have the information printed in the box marked by the arrow on your proxy card or Notice of Internet Availability of Proxy Materials available and follow the instructions.
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Vote By Telephone. Call 1-800-690-6903 |
You can use any touch-tone
telephone to transmit your voting instructions up until 11:59 p.m., Eastern Daylight Time, on September 23, 2015. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you call and follow the instructions.
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By Mail. If you received a printed copy of the proxy materials, you may submit your vote by completing, signing and dating your proxy card and returning it in the
prepaid envelope to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. Sign your name exactly as it appears on the proxy card. Proxy cards submitted by mail must be received no later than September 23, 2015 to be
voted at the Annual Meeting. |
If you vote via the Internet or by telephone, your electronic vote authorizes
the named proxy holders in the same manner as if you signed, dated and returned your proxy card. If you vote via the Internet or by telephone, do not return your proxy card.
If you are a beneficial owner of our common shares, you should have received a Notice of Internet Availability of Proxy Materials or voting
instructions from the broker or other nominee holding your common shares. You should follow the instructions in the Notice of Internet Availability of Proxy Materials or voting instructions provided by your broker or nominee in order to instruct
your broker or nominee on how to vote your common shares. The availability of telephone and Internet voting will depend on the voting process of the broker or nominee. Common shares held beneficially may not be voted during our Annual Meeting.
How to Revoke or Change Your Vote after Submitting Your Proxy
If you are a registered shareholder, you may revoke or change your vote at any time before the final vote at the Annual Meeting by:
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signing and returning a new proxy card with a later date – only your latest proxy card received by September 23, 2015, will be counted; |
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submitting a later-dated vote by telephone or via the Internet – only your latest telephone or Internet proxy received by 11:59 p.m., Eastern Daylight Time, on September 23, 2015, will be counted;
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participating in the Annual Meeting live via the Internet and voting again; or |
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delivering a written revocation to our Secretary at 200 Old Wilson Bridge Road, Columbus, Ohio 43085, to be received no later than September 23, 2015. |
If you are a beneficial owner of our common shares, you must contact the broker or other nominee holding your common shares and follow the
instructions of the broker or other nominee for revoking or changing your vote.
In accordance with rules adopted by the Securities and
Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each shareholder of record, we are permitted to furnish our proxy materials, including the Notice of Annual Meeting of Shareholders, this Proxy
Statement and our 2015 Annual Report to Shareholders, by providing access to such documents on the Internet. Generally, shareholders will not receive printed copies of the proxy materials unless they request them.
11
A Notice of Internet Availability of Proxy Materials that provides instructions for accessing our
proxy materials on the Internet was mailed directly to registered shareholders. The Notice of Internet Availability of Proxy Materials also provides instructions regarding how registered shareholders may vote their common shares on the Internet.
Registered shareholders who prefer to receive a paper or e-mail copy of our proxy materials must follow the instructions provided in the Notice of Internet Availability of Proxy Materials for requesting such materials.
The Notice of Internet Availability of Proxy Materials only identifies the items to be voted on at the Annual Meeting. You cannot vote by
marking the Notice of Internet Availability of Proxy Materials and returning it. The Notice of Internet Availability of Proxy Materials provides instructions on how to cast your vote.
A notice that directs beneficial owners of our common shares to the web site where they can access our proxy materials should be forwarded to
each beneficial shareowner by the broker, bank or other holder of record who is considered the registered shareowner with respect to the common shares of the beneficial shareowner. Such broker, bank or other holder of record should also provide to
the beneficial owners of our common shares with instructions on how the beneficial shareowners may request a paper or e-mail copy of our proxy materials. Beneficial shareholders have the right to direct their broker, bank or other holder of record
on how to vote their common shares by following the voting instructions they receive from their broker, bank or other holder of record.
To enroll in the electronic delivery service for future shareholder meetings, use your Notice of Internet Availability of Proxy
Materials (or proxy card, if you received printed copies of the proxy materials) to register online at www.proxyvote.com and, when prompted, indicate that you agree to receive or access shareholder communications electronically
in future years.
Quorum and Tabulation of Voting Results
Tabulation of the votes cast at the Annual Meeting will be performed by Broadridge Financial Services, and such tabulation will be inspected by
the inspector of election appointed by the Board for the Annual Meeting. The presence, in person or by proxy, of the holders of one-third of the outstanding common shares entitled to vote at the Annual Meeting will constitute a quorum, permitting us
to conduct our business at the Annual Meeting. If you are a registered shareholder and submit a proxy, your common shares will be counted to determine whether we have a quorum even if you abstain or fail to provide voting instructions on any of the
proposals described in this Proxy Statement and listed on the form of proxy. If your common shares are held in the name of your broker or other nominee, and you do not instruct your broker or other nominee how to vote your common shares, these
common shares will still be counted for purposes of determining the presence or absence of a quorum for the transaction of business if your broker or other nominee submits a proxy.
Proxy Solicitation Costs
This
solicitation of proxies is made by and on behalf of the Board. In addition to mailing the Notice of Internet Availability of Proxy Materials (or, if applicable, paper copies of this Proxy Statement, the Notice of Annual Meeting of Shareholders, the
proxy card and our 2015 Annual Report to Shareholders) to registered shareholders as of the close of business on the Record Date, the brokers, banks and other nominees holding our common shares for beneficial owners must provide our proxy materials
to persons for whom they hold our common shares in order that such common shares may be voted. Solicitation may also be made by our directors, officers and select other Company employees telephonically, electronically or by other means of
communication. Directors, officers and employees who help us in the solicitation will not be specially compensated for those services, but they may be reimbursed for their out-of-pocket expenses incurred in connection with the solicitation. In
addition, the Company has retained Broadridge Financial Solutions to aid in the solicitation of proxies with respect to common shares held by broker/dealers, financial institutions and other custodians, fiduciaries and nominees, for a fee of
approximately $17,000, plus out-of-pocket expenses.
The Company will reimburse Broadridge Financial Solutions, as well as broker/dealers,
financial institutions and other custodians, fiduciaries and nominees, who are record holders of common shares not beneficially owned by them, for their reasonable costs in forwarding proxy materials to the beneficial owners of the common shares
entitled to vote at the Annual Meeting. The Company will bear the costs incurred in connection with the solicitation of proxies on behalf of the Board, other than the Internet access fees which may be charged to shareholders.
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table furnishes as of the Record Date (unless otherwise noted below), with respect to each person known to the Company to be the
beneficial owner of more than 5% of the outstanding common shares of the Company, the name and address of such owner and the number and percentage of common shares beneficially owned (as determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)).
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| Name and Address of Beneficial Owner |
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Amount and Nature of
Beneficial Ownership (1) |
|
|
Percent of Outstanding
Common Shares (2) |
|
| John P. McConnell
200 Old Wilson Bridge Road, Columbus, OH 43085 |
|
|
17,748,353 |
(3) |
|
|
26.8 |
% |
| BlackRock, Inc.
55 East 52nd Street, New York, NY
10022 |
|
|
4,245,288 |
(4) |
|
|
6.3 |
%(4) |
| (1) |
Except as otherwise indicated by footnote, each named beneficial owner has sole voting power and sole dispositive power over the listed common shares. |
| (2) |
The “Percent of Outstanding Common Shares” is based on the sum of 65,346,811 common shares outstanding on the Record Date and the number of common shares, if any, as to which the named beneficial owner has the
right to acquire beneficial ownership upon the exercise of options which are currently exercisable or which will first become exercisable within 60 days after the Record Date (collectively, “Currently Exercisable Options”).
|
| (3) |
Includes 12,415,982 common shares held of record by JMAC, Inc. (“JMAC”), a private investment company substantially owned, directly or indirectly, by Mr. McConnell and members of his family. The directors
of JMAC have granted Mr. McConnell sole voting and dispositive power with respect to these 12,415,982 common shares. JMAC has the right to receive the dividends from and the proceeds from the sale of such 12,415,982 common shares. Includes
2,428,312 common shares held of record by an independent corporate trustee in trust for the benefit of Mr. McConnell and his sister. The trustee has voting and dispositive power; however, the trustee’s investment decisions are subject to
the prior approval or disapproval of Mr. McConnell and, accordingly, Mr. McConnell may be deemed to “share” dispositive power with the trustee. Mr. McConnell has the right to change the trustee; however, any successor
trustee appointed by Mr. McConnell must be an independent corporate trustee. Includes 5,726 common shares held by Mr. McConnell as custodian for the benefit of his son. Includes 4,967 common shares held by Mr. McConnell’s wife as
custodian for the benefit of her son. Includes 123,000 common shares held by The McConnell Educational Foundation for the benefit of third parties, of which Mr. McConnell is one of three trustees and shares voting and dispositive power.
Mr. McConnell disclaims beneficial ownership of these 123,000 common shares. Includes 118,000 common shares held by The McConnell Family Trust of which Mr. McConnell is co-trustee and has sole voting and dispositive power. Includes 255,875
common shares held by the Margaret R. McConnell Trust, f/b/o Margaret Kollis of which Mr. McConnell is trustee and has sole voting and dispositive power. Also includes 792,001 common shares subject to Currently Exercisable Options and 74,000
restricted common shares which are subject to forfeiture restrictions. See footnote (21) to the following table for more information on the restricted common shares. As of July 31, 2015, an aggregate of 11,527,208 common shares held by
JMAC, by Mr. McConnell and by the Margaret R. McConnell Trust had been pledged as security to various financial institutions, in connection with both investment and personal loans. |
| (4) |
Information is based on Amendment No. 5 to Schedule 13G dated January 12, 2015 and filed with the SEC on January 30, 2015 by BlackRock, Inc. (“BlackRock”). BlackRock reported sole voting
power as to 4,125,236 of the common shares and sole dispositive power as to 4,245,288 of the common shares reported to be beneficially owned by BlackRock, through its subsidiaries, at December 31, 2014. |
13
The following table furnishes the number and percentage of outstanding common shares beneficially
owned (as determined under Rule 13d-3 under the Exchange Act) by: (a) each current director of the Company; (b) each of the Company’s director nominees; (c) each individual named in the “Fiscal 2015 Summary Compensation
Table” (the “named executive officers” or “NEOs”); and (d) all current directors and executive officers of the Company as a group, in each case as of the Record Date. The address of each of the individuals identified in
this table is c/o Worthington Industries, Inc., 200 Old Wilson Bridge Road, Columbus, Ohio 43085.
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AMOUNT AND NATURE OF
BENEFICIAL
OWNERSHIP (1) |
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| Name of Beneficial Owner |
|
Number of Common Shares
Presently Held and Which Can Be
Acquired Upon Exercise of
Currently Exercisable Options |
|
|
Percent of
Outstanding
Common
Shares (2) |
|
|
Theoretical Common Shares
Credited to Bookkeeping Accounts
in the Company’s Deferred
Compensation Plans (3) |
|
| Kerrii B. Anderson |
|
|
52,326 |
(4) (5) |
|
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* |
|
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2,179 |
|
| Andrew J. Billman (6) |
|
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134,250 |
(7) |
|
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* |
|
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2,659 |
|
| John B. Blystone |
|
|
134,336 |
(5) (8) |
|
|
* |
|
|
|
— |
|
| Mark C. Davis |
|
|
37,065 |
(5) (9) |
|
|
* |
|
|
|
— |
|
| Michael J. Endres |
|
|
196,040 |
(5) (10) |
|
|
* |
|
|
|
53,197 |
|
| Geoffrey G. Gilmore (6) |
|
|
96,079 |
(11) |
|
|
* |
|
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4,642 |
|
| Ozey K. Horton, Jr. |
|
|
32,003 |
(5) (12) |
|
|
* |
|
|
|
— |
|
| Peter Karmanos, Jr. |
|
|
143,940 |
(5) (13) |
|
|
* |
|
|
|
73,055 |
|
| John P. McConnell (6) |
|
|
17,748,353 |
(14) |
|
|
26.8 |
% |
|
|
— |
|
| Carl A. Nelson, Jr. |
|
|
90,183 |
(5) (15) |
|
|
* |
|
|
|
— |
|
| Sidney A. Ribeau |
|
|
82,809 |
(5) (16) |
|
|
* |
|
|
|
15,653 |
|
| B. Andrew Rose (6) |
|
|
631,491 |
(17) |
|
|
* |
|
|
|
— |
|
| Mark A. Russell (6) |
|
|
706,965 |
(18) |
|
|
1.1 |
% |
|
|
204,496 |
|
| Mary Schiavo |
|
|
67,832 |
(5) (19) |
|
|
* |
|
|
|
4,919 |
|
| All Current Directors and Executive Officers as a Group (21 people) |
|
|
20,992,080 |
(20) (21) |
|
|
31.1 |
% |
|
|
366,688 |
|
| * |
Denotes ownership of less than 1% of the outstanding common shares. |
| (1) |
Except as otherwise indicated by footnote, each named beneficial owner has sole voting power and sole dispositive power over the listed common shares or shares such power with his or her spouse. |
| (2) |
The “Percent of Outstanding Common Shares” is based on the sum of (a) 65,346,811 common shares outstanding on the Record Date, and (b) the number of common shares, if any, as to which the named
person or group has the right to acquire beneficial ownership upon the exercise of Currently Exercisable Options. |
| (3) |
This column lists the theoretical common shares credited to the bookkeeping accounts of the directors or executive officers participating in the Company’s deferred compensation plans. These theoretical common
shares are not included in the beneficial ownership totals. While the participants have an economic interest in these theoretical common shares, these are not actual common shares which can be voted or disposed of. Each participant’s only right
with respect to the theoretical common shares is to receive a distribution, at the time provided by the applicable plan, of common shares equal to the number of theoretical common shares credited to his or her bookkeeping account(s). For further
information concerning the Employee Deferral Plans, please see the discussion in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis – Compensation Components – Non-Qualified Deferred
Compensation” beginning on page 47 of this Proxy Statement and for further information concerning the Director Deferral Plans, please see the discussion in the section captioned “COMPENSATION OF DIRECTORS – Director Deferral
Plans” on page 65 of this Proxy Statement. |
| (4) |
Includes 436 common shares held by Ms. Anderson’s spouse, who has sole voting power and sole dispositive power as to the 436 common shares. Beneficial ownership of these 436 common shares is disclaimed by
Ms. Anderson. |
14
| (5) |
Includes for each of Ms. Anderson; Mr. Davis; Mr. Endres; Mr. Horton; Mr. Karmanos; Mr. Nelson; Dr. Ribeau; and Ms. Schiavo an award of 2,370 restricted common shares and for
Mr. Blystone an award of 3,555 restricted common shares, which awards will vest on September 24, 2015. For further information concerning the terms of the restricted common shares granted to non-employee directors, see footnote
(21) below. |
| (6) |
Individual named in the “Fiscal 2015 Summary Compensation Table” beginning on page 52 of this Proxy Statement. |
| (7) |
Includes 69,000 common shares subject to Currently Exercisable Options. Also includes (i) 19,000 restricted common shares which will vest over time based on continued employment; and (ii) 25,000 restricted
common shares which will vest only if and when both (a) the closing price of the Company’s common shares equals or exceeds $60 per share for 30 consecutive days during the five-year period ending on June 24, 2019, and
(b) Mr. Billman has continuously remained an employee of the Company through June 24, 2019. See footnote (21) below for more information on the restricted common shares. |
| (8) |
Includes 80,550 common shares subject to Currently Exercisable Options. |
| (9) |
Includes 20,875 common shares subject to Currently Exercisable Options. |
| (10) |
Includes 196,040 common shares held by Mr. Endres as trustee for a living trust. |
| (11) |
Includes 38,500 common shares subject to Currently Exercisable Options. Also includes (i) 21,500 restricted common shares which will vest over time based on continued employment; and (ii) 25,000 restricted
common shares which will vest only if and when both (a) the closing price of the Company’s common shares equals or exceeds $60 per share for 30 consecutive days during the five-year period ending on June 24, 2019, and
(b) Mr. Gilmore has continuously remained an employee of the Company through June 24, 2019. See footnote (21) below for more information on the restricted common shares. |
| (12) |
Includes 18,438 common shares subject to Currently Exercisable Options. |
| (13) |
Includes 90,240 common shares held by Mr. Karmanos as trustee for a living trust and 53,700 common shares subject to Currently Exercisable Options. |
| (14) |
See footnote (3) to preceding table. |
| (15) |
Includes 57,700 common shares subject to Currently Exercisable Options. |
| (16) |
Includes 53,700 common shares subject to Currently Exercisable Options. |
| (17) |
Includes 1,187 common shares held by Mr. Rose’s wife, who has sole voting power and sole dispositive power as to the 1,187 common shares. Beneficial ownership of these 1,187 common shares is disclaimed by
Mr. Rose. Includes 21,330 common shares held by Mr. Rose as custodian for his two children. Also includes 184,000 common shares subject to Currently Exercisable Options. Also includes: (i) 38,000 restricted common shares which will
vest over time based on continued employment; and (ii) 180,000 restricted common shares which vest only if and when both (a) the closing price of the Company’s common shares equals or exceeds $50 per share for 30 consecutive days
during the five-year period ending June 28, 2018, and (b) Mr. Rose continuously remains an employee of the Company through the later of June 28, 2016 or the date the condition in clause (a) is met. See footnote
(21) below for more information on the restricted common shares. |
| (18) |
Includes 325,000 common shares subject to Currently Exercisable Options. Also includes: (i) 38,000 restricted common shares which will vest over time based on continued employment; and (ii) 180,000 restricted
common shares which vest only if and when both (a) the closing price of the Company’s common shares equals or exceeds $50 per share for 30 consecutive days during the five-year period ending June 28, 2018, and
(b) Mr. Russell continuously remains an employee of the Company through the later of June 28, 2016 or the date the condition in clause (a) is met. See footnote (21) below for more information on the restricted common shares.
|
| (19) |
Includes 25,000 common shares subject to Currently Exercisable Options. |
| (20) |
The number of common shares shown as beneficially owned by the Company’s current directors and executive officers as a group includes
2,231,468 common shares subject to Currently Exercisable Options |
15
| |
and 693,115 restricted common shares. See footnote (21) below for more information on the restricted common shares. The number shown does not include any common shares issuable in connection
with the performance shares awarded to NEOs and other executive officers in Fiscal 2014 or Fiscal 2015, as to which the performance period has not ended and the applicable vesting dates have not yet occurred. The number of common shares shown for
all current officers and executive officers as a group includes the common shares beneficially owned by seven executive officers not individually identified. |
| (21) |
The restricted common shares granted to executive officers and non-employee directors of the Company are held in escrow by the Company and may not be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated until the restrictions thereon have lapsed. Each holder of restricted common shares may exercise any voting rights associated with the restricted common shares during the restriction period. In addition, any dividends or distributions
paid with respect to the common shares underlying the restricted common shares will be held by the Company in escrow during the restriction period and, at the end of the restriction period, will be distributed or forfeited in the same manner as the
restricted common shares with respect to which they were paid. For further information concerning the terms of the restricted common shares granted to non-employee directors, please see the discussion in the section captioned “COMPENSATION OF
DIRECTORS –– Equity Grants” on page 66 of this Proxy Statement. For further information concerning the terms of the restricted common shares granted to executive officers, please see the discussion in the sections captioned
“EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Long-Term Incentive Compensation — Annual Restricted Common Share Awards to Executives”, “EXECUTIVE COMPENSATION —
Compensation Discussion and Analysis — Compensation Components — Long-Term Incentive Compensation — Special Performance-Based/Time-Vested Restricted Common Share Awards”, “EXECUTIVE COMPENSATION — Grants of Plan-Based
Awards”, “EXECUTIVE COMPENSATION — Outstanding Equity Awards at Fiscal 2015 Year-End” and “EXECUTIVE COMPENSATION — Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal
2016” beginning on page 44, page 45, page 55, page 57 and page 63, respectively, of this Proxy Statement. Restricted common shares held by executive officers not named in this table are not listed individually. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that the Company’s directors and executive officers and greater-than-10% beneficial owners
of the Company’s outstanding common shares file reports with the SEC reporting their initial beneficial ownership of common shares and any subsequent changes in their beneficial ownership. Specific due dates for such reports have been
established by the SEC and the Company is required to disclose in this Proxy Statement any late report or known failure to file a required report. To the Company’s knowledge, based solely on a review of the copies of the reports furnished to
the Company and written representations that no other reports were required, the Company believes that during Fiscal 2015, all Section 16(a) filing requirements applicable to the Company’s directors and executive officers and
greater-than-10% beneficial owners of the Company’s outstanding common shares were complied with, except that (i) each of Andrew Billman and Mark Russell filed a Form 4 on July 15, 2014 which covered one transaction under one of the
Company’s Employee Deferral Plans which was reported late as the result of an administrative oversight in connection with an incentive bonus payout following the Company’s Fiscal 2014 year-end; and (ii) each of Joseph Hayek and Mark
Russell filed a Form 4 on February 9, 2015 which covered two transactions which were reported late as a result of a change in their participation in the Company’s Employee Deferred Plans.
CORPORATE GOVERNANCE
Corporate Governance Guidelines
Upon the
recommendation of the Nominating and Governance Committee, in accordance with applicable NYSE Rules, the Board has adopted the Corporate Governance Guidelines to promote the effective functioning of the Board and its committees and to reflect the
Company’s commitment to high standards of corporate governance. The Board, with the assistance of the Nominating and Governance Committee, periodically reviews the Corporate Governance Guidelines to ensure they comply with all applicable
requirements.
The Corporate Governance Guidelines are available on the “Corporate Governance” page of the “Investor
Center” section of the Company’s web site located at www.worthingtonindustries.com.
16
Code of Conduct
In accordance with applicable NYSE Rules and the applicable rules and regulations of the SEC (the “SEC Rules”), the Board adopted the
Worthington Industries, Inc. Code of Conduct (the “Code of Conduct”). The Code of Conduct is available on the “Corporate Governance” page of the “Investor Center” section of the Company’s web site located at
www.worthingtonindustries.com.
Director Independence
Pursuant to the Corporate Governance Guidelines, a director is determined to be an independent director if he or she is independent of
management and has no material relationship with the Company, either directly or indirectly as a partner, shareholder or officer of an entity that has such a relationship with the Company, as affirmatively determined by the Board. The Board observes
all additional criteria for independence established by NYSE or required under SEC Rules or other applicable laws and regulations.
The
Board has been advised of the nature and extent of any direct or indirect personal and business relationships between the Company (including its subsidiaries) and Kerrii Anderson, John Blystone, Mark Davis, Michael Endres, Ozey Horton, Jr., Peter
Karmanos, Jr., Carl Nelson, Jr., Sidney Ribeau or Mary Schiavo, individually (each, an “Independent Director” and collectively, the “Independent Directors”), or any entities for which any Independent Director is a partner,
officer, employee or shareholder. The Board has reviewed, considered and discussed such relationships, and the compensation which each Independent Director has received, directly or indirectly, from the Company, in order to determine whether each
Independent Director meets the independence requirements of the Corporate Governance Guidelines, the applicable NYSE Rules and the applicable SEC Rules. The Board has affirmatively determined that (a) none of the Independent Directors has any
relationship with the Company, either directly or indirectly, including, without limitation, any commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship, which: (i) interfered, interferes, or may
interfere, with his or her independence from management and the Company or the exercise of his or her independent judgment, (ii) would be inconsistent with a determination of independence under applicable NYSE Rules and SEC Rules, or
(iii) would impair his or her independence under the Corporate Governance Guidelines; and (b) each of the Independent Directors qualifies as an “Independent Director” under the Corporate Governance Guidelines. As required by
applicable NYSE Rules, the Independent Directors represent a majority of the Company’s directors. John P. McConnell does not qualify as independent under applicable NYSE Rules or SEC Rules or the Corporate Governance Guidelines because he is an
executive officer of the Company.
Barring any unusual circumstances, the Board has determined that a director’s independence would
not be impaired if: (a) the director is an executive officer or an employee (or his or her immediate family member is an executive officer or employee) of a company that makes payments to, or receives payments from, the Company for property or
services performed in the ordinary course of business in an amount which, in any single fiscal year, does not exceed the greater of $1,000,000 or 2% of such other company’s consolidated gross revenues; (b) the Company makes contributions
to a scholastic or charitable tax exempt organization for which the director (or his or her immediate family member) serves as either a member of the board of directors or an officer if the contributions, in any single fiscal year, do not exceed the
greater of $500,000 or 1% of the total contributions received by that tax exempt organization; or (c) the Company uses facilities (dining facilities, clubs, etc.) in which the director is a greater than 5% owner if charges to the Company are
consistent with charges paid by unrelated third parties and are fair, reasonable and consistent with those for similar services available at similar facilities, as long as the charges do not reach other thresholds under the NYSE Rules which would
disqualify a director from being independent.
The Board specifically considered a number of circumstances in the course of reaching the
conclusion that the current Independent Directors qualify as independent under the Corporate Governance Guidelines as well as applicable NYSE Rules and SEC Rules, including the relevant relationships described below in the section captioned
“TRANSACTIONS WITH CERTAIN RELATED PERSONS” beginning on page 29 of this Proxy Statement.
Nominating Procedures
The Board’s Nominating and Governance Committee has responsibility for providing oversight on a broad range of issues surrounding the
composition and operation of the Board, including identifying candidates qualified to become directors and recommending director nominees to the Board.
17
When considering candidates for the Board, the Nominating and Governance Committee evaluates the
entirety of each candidate’s credentials but does not have specific eligibility requirements or minimum qualifications which must be met by a Nominating and Governance Committee-recommended nominee and has not adopted a formal policy with
regard to the consideration of diversity in identifying director nominees. However, the Corporate Governance Guidelines provide that the retirement age for directors is 75, and a director is to submit his or her resignation to be effective at the
conclusion of the three-year term immediately after attaining age 75. The Nominating and Governance Committee considers those factors it deems appropriate, including, but not limited to, independence, judgment, skill, diversity, strength of
character, experience with businesses and organizations of comparable size or scope, experience as an executive of or adviser to public and private companies, experience and skill relative to other Board members, specialized knowledge or experience,
and the desirability of the candidate’s membership on the Board and any committees of the Board. Depending on the current needs of the Board, the Nominating and Governance Committee may weigh certain factors more or less heavily. The Nominating
and Governance Committee does, however, believe that all members of the Board should have strong character and integrity, a reputation for working constructively with others, sufficient time to devote to Board matters, and no conflict of interest
that would interfere with his or her performance as a director.
While the Board and the Nominating and Governance Committee do not have
specific eligibility requirements and do not, as a matter of course, weigh any of the factors they deem appropriate more heavily than others, both the Board and the Nominating and Governance Committee believe that, as a group, the directors should
have diverse backgrounds and qualifications. The Company believes that the members of the Board, as a group, have such backgrounds and qualifications.
The Nominating and Governance Committee considers candidates for the Board from any reasonable source, including shareholder recommendations,
but does not evaluate candidates differently based on the source of the recommendation. The process for seeking and vetting additional director candidates is ongoing and is not dependent upon the existence of a vacancy on the Board. Accordingly, the
Board believes that this ongoing identification of qualified candidates functions as an appropriate director succession plan. Pursuant to its charter, the Nominating and Governance Committee has the authority to retain consultants and search firms
to assist with the process of identifying and evaluating director candidates and to approve the fees and other retention terms for any such consultant or search firm. The Nominating and Governance Committee has never used a consultant or search firm
for such purpose, and, accordingly, the Company has paid no such fees.
Shareholders may recommend director candidates for consideration
by the Nominating and Governance Committee by sending the recommendation to the Chair of the Nominating and Governance Committee, in care of the Company, to the Company’s executive offices at 200 Old Wilson Bridge Road, Columbus, Ohio 43085.
The recommendation must include the candidate’s name, age, business address, residence address and principal occupation. The recommendation must also describe the qualifications, attributes, skills or other qualities possessed by the
recommended director candidate. A written statement from the candidate consenting to serve as a director, if elected, and a commitment by the candidate to meet personally with Nominating and Governance Committee members must accompany any such
recommendation.
The Board, taking into account the recommendations of the Nominating and Governance Committee, selects nominees for
election as directors at each Annual Meeting of Shareholders. In addition, shareholders wishing to nominate directors for election may do so, provided they comply with the nomination procedures set forth in the Company’s Code of Regulations and
applicable SEC Rules. In order to nominate an individual for election as a director at a meeting, a shareholder must give written notice of the shareholder’s intention to make such nomination. The notice must be sent to the Company’s
Secretary, either delivered in person to, or mailed to and received at, the Company’s principal executive offices at 200 Old Wilson Bridge Road, Columbus, Ohio 43085 not less than 14 days or more than 50 days prior to any meeting called for the
election of directors. However, if notice or public disclosure of the date of the meeting is given or made less than 21 days prior to the meeting, the shareholder notice must be received by the Company’s Secretary not later than the close of
business on the seventh day following the day on which notice of the date of the meeting was mailed or publicly disclosed. The Company’s Secretary will deliver any shareholder notice received in a timely manner to the Nominating and Governance
Committee for review. Each shareholder notice must include the following information as to each individual the shareholder proposes to nominate for election or re-election as a director: (a) the name, age, business address and, if known,
residence address of the proposed nominee; (b) the principal occupation or employment of the proposed nominee; (c) the number of common shares of the Company beneficially owned by the proposed nominee; and (d) any other information
relating to the proposed nominee that is required to be disclosed concerning nominees in
18
proxy solicitations under applicable SEC Rules, including the individual’s written consent to be named in the proxy statement as a nominee and to serve as a director, if elected. The
nominating shareholder must also provide (i) the name and address of the nominating shareholder; and (ii) the number of common shares of the Company beneficially owned by the nominating shareholder. No individual may be elected as a
director unless he or she has been nominated by a shareholder in the manner described above or by the Board or the Nominating and Governance Committee.
Compensation Committee Interlocks and Insider Participation
The Compensation and Stock Option Committee of the Board (the “Compensation Committee”) is currently comprised of John Blystone
(Chair), Kerrii Anderson, Michael Endres and Ozey Horton, Jr. No member of the Compensation Committee is a present or past employee or officer of the Company. During Fiscal 2015 and through the date of this Proxy Statement, none of the
Company’s executive officers has served on the board of directors or compensation committee (or other committee performing equivalent functions) of any other entity, one of whose executive officers served on the Company’s Board or
Compensation Committee.
Communications with the Board
The Board believes it is important for shareholders and other interested persons to have a process by which to send communications to the Board
and its individual members, including the Lead Independent Director. Accordingly, shareholders and other interested persons who wish to communicate with the Board, the non-management directors as a group (who are also all “Independent”
Directors, as defined by the Corporate Governance Guidelines and applicable NYSE Rules), the Lead Independent Director or any other individual director may do so by addressing such correspondence to the name(s) of the specific director(s), to the
“Non-Management Directors” as a whole or to the “Board of Directors” as a whole, and sending it in care of the Company, to the Company’s executive offices at 200 Old Wilson Bridge Road, Columbus, Ohio 43085. The mailing
envelope must contain a clear notation indicating that the enclosed correspondence is a “Shareholder/Interested Person – Non-Management Director Communication”, “Shareholder/Interested Person – Board Communication”,
“Shareholder/Interested Person – Lead Independent Director Communication”, or “Shareholder/Interested Person – Director Communication”, as appropriate. All such correspondence must identify the author as a shareholder
or other interested person (identifying such interest) and clearly indicate whether the communication is directed to all members of the Board, to the non-management directors as a whole or to a certain specified individual director(s). Copies of all
such correspondence will be circulated to the appropriate director(s). Correspondence marked “personal and confidential” will be delivered to the intended recipient(s) without opening. There is no screening process in respect of
communications from shareholders or other interested persons. The process for forwarding communications to the appropriate Board member(s) has been approved by the Company’s Independent Directors.
Questions, complaints and concerns may also be submitted to Company directors by telephone through the Worthington Industries EthicsLine by
calling 877-263-9893 inside the United States and Canada, and 770-613-6395 outside the United States.
PROPOSAL
1: ELECTION OF DIRECTORS
There are currently ten directors – three in the class whose terms expire at the Annual Meeting and who
are proposed to be re-elected for terms expiring at the Annual Meeting of Shareholders in 2018; three in the class whose terms expire at the Annual Meeting of Shareholders in 2016; and four in the class whose terms expire at the Annual Meeting of
Shareholders in 2017.
The Board proposes that the three director nominees named in the summary below, each of whom was unanimously
recommended by the Nominating and Governance Committee, be re-elected as directors at this Annual Meeting of Shareholders. Each individual elected as a director at the Annual Meeting will hold office for a three-year term, expiring at the Annual
Meeting of Shareholders in 2018, and until his successor is duly elected and qualified, or until his earlier death, resignation or removal from office. The individuals named as proxy holders in the form of proxy solicited by the Board intend to vote
the common shares represented by the proxies received under this solicitation for the Board’s nominees, unless otherwise instructed on the form of proxy. If any nominee becomes unable to serve or for good cause will not serve as a candidate for
election as a director, the individuals designated to vote the proxies will have full discretion to vote the common shares represented by the proxies they hold for the election of the remaining nominees and for the election of any substitute nominee
designated by the
19
Board. The Board has no reason to believe that any of the Board’s nominees will be unable to serve or for good cause will not serve as a director of the Company if elected.
Information Concerning Nominees and Directors
The information set forth below, concerning the age, principal occupation, other affiliations and business experience of each director has been
furnished to the Company by such director as of July 31, 2015. Except where otherwise indicated, each director has had the same principal occupation for the last five years. There are no family relationships among any of the current directors,
director nominees and executive officers of the Company.
Nominees Standing for Re-Election to the Board at the 2015 Annual Meeting
John B. Blystone
John B. Blystone,
age 62, has served continuously as a director of the Company since 1997 and as the Lead Independent Director of the Company since January 2007. He is the Chair of the Compensation Committee and a member of the Executive Committee. Mr. Blystone
served as Chairman of the Board, President and Chief Executive Officer of SPX Corporation, a global provider of technical products and systems, industrial products and services, flow technology, cooling technologies and services and service
solutions, from December 1995 to December 2004, when he retired. From 1991 to 1995, Mr. Blystone served in various managerial and operating roles with General Electric Company. Mr. Blystone served as Chairman of the Board of Freedom Group,
Inc., which manufactures and markets firearms, ammunition and related products, from August 2010 to March 2012. Mr. Blystone serves as a director for Blystone Consulting, LLC and as General Partner of Blystone Capital Partners.
Mr. Blystone graduated from the University of Pittsburgh. Mr. Blystone has extensive business experience in managing and operating both domestic and international operations, including as a chief executive officer of a large public
company. He has expertise in acquisitions, financial and business analysis, and in generally managing issues that face a large public company. Mr. Blystone’s business acumen, his long service on our Board, and his collegial style and
leadership resulted in his election as the Lead Independent Director of the Company and make him well qualified to continue to serve on the Board.
Mark C. Davis
Mark C. Davis, age
55, has served continuously as a director of the Company since March 2011 and is a member of the Audit Committee. Mr. Davis is a private investor and Chief Executive Officer of Lank Acquisition Corp. which invests in minority and majority
positions in public and private companies. Prior to forming Lank Acquisition Corp. in 2007, Mr. Davis spent 20 years in a variety of senior investment banking positions. From 1996 to 2003, Mr. Davis was a senior executive at JPMorgan Chase
where he began as Head of the Merger and Acquisition Group. He became Head of General Industry Investment Banking in 2000 and was also Co-Head of Investment Banking Coverage which comprised all of JPMorgan Chase’s corporate clients, and was
named Vice Chairman of Investment Banking in 2002. Mr. Davis holds a Masters in Business Administration from the Tuck School of Business and a B.A. from Dartmouth College. Mr. Davis’ financial knowledge and depth of experience in
equity investing, strategic matters, acquisitions, financial analysis and investment banking make him well qualified to continue to serve on the Board, and qualify him as an “audit committee financial expert”, as defined by applicable SEC
Rules.
Sidney A. Ribeau
Sidney A. Ribeau, age 67, has served continuously as a director of the Company since 2000 and is a member of the Nominating and Governance
Committee. Since October 2013, Dr. Ribeau has served as Professor of Communications for Howard University, and served as President of Howard University from August 2008 to October 2013. He served as President of Bowling Green State University
for more than 13 years prior to that time. Dr. Ribeau serves on the Board of Trustees of Teachers Insurance and Annuity Association (TIAA). He is Chair of the TIAA Human Resources Committee, and a member of each of TIAA’s Nominating and
Governance Committee and Corporate Governance and Social Responsibility Committee. Dr. Ribeau also serves on the Boards of the World Affairs Council and the American Association of Colleges and Universities. Dr. Ribeau has previously
served on the Boards of Directors of Convergys Corporation from 2001 through 2008 and Anderson, Inc. from 1997 through 2008. Dr. Ribeau received his B.A. degree from Wayne State University and his Master’s and Doctorate from the University
of Illinois. Dr. Ribeau brings extensive experience in managing the issues that face large public institutions. His background as the leader of a billion dollar public institution and as an educator and administrator
20
enables him to provide insight relative to management, educational, financial, human resources and public policy matters and make him well qualified to continue to serve on the Board.
Directors Whose Terms Continue Until the 2016 Annual Meeting of Shareholders
Kerrii B. Anderson
Kerrii B.
Anderson, age 58, has served continuously as a director of the Company since September 2010 and is a member of the Audit Committee and the Compensation Committee. Ms. Anderson has been a private investor and board advisor since September 2008.
Prior to that time, she served as Chief Executive Officer and President of Wendy’s International, Inc., a restaurant operating and franchising company, from November 2006 until September 2008 when that company merged with a subsidiary of Triarc
Companies, Inc. to form Wendy’s/Arby’s Group, Inc. She served as a director of Wendy’s International, Inc. from 2001 until September 2008, and as Wendy’s Interim Chief Executive Officer and President from April to November 2006
and as its Executive Vice President and Chief Financial Officer from 2000 to April 2006. Previously, Ms. Anderson served as Senior Vice President and Chief Financial Officer of M/I Schottenstein Homes, Inc. (now known as M/I Homes, Inc.), a
builder of single-family homes, from 1987 to 2000. Ms. Anderson has served as a member of the Board of Directors of Laboratory Corporation of America Holdings since May 2006, where she is Chair of its Audit Committee and a member of its
Nominating and Governance Committee. Previously, she served as a member of the Board of Directors of Chiquita Brands International, Inc. from 2009 to January 2015, including service as Chairwoman of the Board from October 2012 to January 2015, as
Chair of its Nominating and Governance Committee and as member of its Audit Committee until January 2015 when Chiquita was acquired by Cavendish Global Limited and became a private company; and as a member of the Board of Directors of P. F.
Chang’s China Bistro, Inc. from 2009 until July 2012 when P.F. Chang’s was acquired by Wok Acquisition Corp. Ms. Anderson serves on the Finance Committee of The Columbus Foundation and as a member of the Board of Directors of
OhioHealth Corporation, where she is Chair of its Finance Committee. Ms. Anderson has a strong record of leadership in operations and strategy. She is a Certified Public Accountant and qualifies as an “audit committee financial
expert”, as defined by applicable SEC Rules, given her experience as Chief Executive Officer and Chief Financial Officer of Wendy’s International, Inc. and Chief Financial Officer of M/I Schottenstein Homes, Inc. Ms. Anderson received
a B.A. from Elon University and a Masters of Business Administration from the Duke University Fuqua School of Business. She has extensive corporate governance experience through her service on other public company boards. Her extensive experience in
accounting and financial reporting and analysis and prior experience as a chief executive officer of a public company and chief financial officer of several public companies, in addition to other public company board service, make Ms. Anderson
particularly well suited to serve as a director.
John P. McConnell
John P. McConnell, age 61, has served as the Company’s Chief Executive Officer since June 1993, as a director of the Company continuously
since 1990, and as Chairman of the Board of the Company since September 1996. He has served in various positions with Worthington Industries from 1975 to June 1993. Mr. McConnell also serves as the Chair of the Executive Committee. He served as
director of Alltel Corp. from 1990 until November 2007, and as a member of its Compensation Committee and of its Audit Committee for part of that time. Mr. McConnell brings solid public company and overall management and operations experience
as Chief Executive Officer and Chairman of the Board. In addition, in his more than 30 years of service to the Company, Mr. McConnell has served in various roles with the Company spanning not only executive management, but prior to that, time
in production, sales, human resources and management at plant, business unit and corporate levels, making him well suited to serve as a director.
Mary Schiavo
Mary Schiavo, age
59, has served continuously as a director of the Company since 1998 and is a member of each of the Audit Committee and the Nominating and Governance Committee. Ms. Schiavo has been a member of the law firm of Motley Rice LLC, since October
2003. Ms. Schiavo has been employed by CNN as an analyst and on air commentator since calendar year 2014. Ms. Schiavo was an attorney with a law firm in Los Angeles, California, from 2001 to October 2003. Ms. Schiavo served as a
professor at The Ohio State University, College of Engineering, Department of Aerospace Engineering and Aviation and School of Public Policy and Management and also as a Consultant for NBC News from 1997 to 2002. Ms. Schiavo served as Inspector
General for the U. S. Department of Transportation for six years, where she had auditing and oversight responsibility over a multi-billion
21
dollar government agency; Assistant Secretary of Labor of the U.S. for one year; as a White House Fellow for one year; and with the U.S. Department of Justice for seven years. Ms. Schiavo
has gained in-depth knowledge of the Company’s business and structure from her more than 16 years of service as a director. Ms. Schiavo received a B.A. from Harvard University, a Master of Arts degree from The Ohio State University, and a
Juris Doctorate degree from New York University. She was previously an elected director of the Harvard University Alumni Association and a member of the President’s Council on Integrity and Efficiency in the federal government.
Ms. Schiavo’s legal and governmental experience enable her to bring a unique and valuable perspective to the Board, and make her well qualified to serve as a director.
Directors Whose Terms Continue Until the 2017 Annual Meeting of Shareholders
Michael J. Endres
Michael J.
Endres, age 67, has served continuously as a director of the Company since 1999 and is a member of each of the Executive Committee and the Compensation Committee. Mr. Endres serves as a partner in Stonehenge Partners Inc., a private equity
investment firm he co-founded in August 1999. His duties include, among other things, the examination of specific company financial characteristics, balance sheet and income statement analysis, as well as industry growth rates and trends, and
managing the acquisition and disposition of the firm’s investments. Mr. Endres has served as a director of Huntington Bancshares Incorporated since April 2003 and is a member of its Technology Committee and of its Executive
Committee. Mr. Endres has also served as a director of W.W.Williams Company, a privately-held company, since October 2011. Mr. Endres served as a director of Tim Hortons Inc. from 2006 until December 2014 when it was acquired by
Restaurant Brands International, where he was Chair of its Audit Committee and a member of its Executive Committee. Mr. Endres received a B.S. from Miami University. Mr. Endres has a depth of experience in equity investing,
business development, strategic initiatives and acquisitions, financial analysis, leadership and management, and is a director of various public companies. This experience, along with his financial expertise and his history as a director with the
Company, make him a valuable asset to the Board and its various committees, and well qualified to serve on the Board.
Ozey K. Horton, Jr.
Ozey K. Horton, Jr., age 64, has served continuously as a director of the Company since 2011 and is a member of each of the
Compensation Committee and the Nominating and Governance Committee. He is an independent advisor and serves as Director Emeritus of McKinsey & Company, a management consulting firm, from which he retired in February 2011. Prior to that
time, Mr. Horton served as a Director in the Atlanta office of McKinsey & Company from 1981 through February 2011. Over the years, Mr. Horton led numerous corporate growth, strategic, mergers and acquisitions, and performance
improvement initiatives at global clients across a range of industries — especially in the basic industrials space (such as metals and mining; pulp, paper and packaging; chemicals; and energy). He has also led several practices within
McKinsey & Company: as founder of the global pulp, paper, and packaging practice; co-leader of the global basic materials practice; and leader of the global operations practice within the energy and materials sector. Prior to his service
with McKinsey & Company, Mr. Horton had early career experiences in manufacturing, corporate development and project engineering. Mr. Horton serves as director on the Metso Corporation Board and the Dabbagh Group Board. He also
serves as a member of the board of the Gaillard Performance Hall Foundation Campaign Cabinet, the MUSC Hollings Cancer Center Advisory Board, and the Liberty Fellows Senior Advisor Group. Mr. Horton has extensive experience working in Europe,
South America, India and Asia. Mr. Horton has a BSE in civil and environmental engineering from Duke University and a Masters of Business Administration from the Harvard Business School. Mr. Horton’s wide-ranging experience working
with manufacturing and other companies, both domestically and globally, provides unique expertise to the Board, and makes him well qualified to serve on the Board.
Peter Karmanos, Jr.
Peter
Karmanos, Jr., age 72, has served continuously as a director of the Company since 1997, is Chair of the Nominating and Governance Committee and is a member of the Executive Committee. Mr. Karmanos founded Compuware, a software development
company, in 1973. He served as Chairman of the Board, Chief Executive Officer and a director of Compuware from its founding until June 2011. He continued to serve as Executive Chairman of the Board and a director until March 2013, when he resigned
from that board. Mr. Karmanos has the entrepreneurial spirit that built a billion dollar company from a start-up and the business acumen of the Chairman and Chief Executive Officer
22
of an S&P 500 corporation. Mr. Karmanos has also served as a director for Taubman Centers, Inc. since 2000 and is a member of its Compensation Committee. He serves as a director for the
Barbara Ann Karmanos Cancer Institute, Detroit Renaissance, New Detroit Coalition and MadDog Technology, and on the Board of Governors for the National Hockey League. Mr. Karmanos has a wealth of public company management and information
technology experience. This includes extensive skill and background dealing with the growth, operation and management of a large public company as its co-founder and Chairman. In addition, his skills and expertise in information technology bring
valuable insight to the Board. All of these attributes make him well qualified to serve on the Board.
Carl A. Nelson, Jr.
Carl A. Nelson, Jr., age 70, has served continuously as a director of the Company since 2004, is the Chair of the Audit Committee and is a
member of the Executive Committee. Mr. Nelson was a partner with Arthur Andersen, LLP and retired in February 2002 after 31 years of service. Mr. Nelson had served as Managing Partner of the Arthur Andersen Columbus, Ohio office,
and was the leader of the firm’s consulting services for the products industry in the United States. Currently, Mr. Nelson serves on the board of Star Leasing Company, a $70 million ESOP-owned company that leases semi-trailers through
nine facilities across seven states. Mr. Nelson is a Certified Public Accountant and a member of The Ohio Society of Certified Public Accountants and the American Institute of Certified Public Accountants. Mr. Nelson received his B.S.
in Accounting from The Ohio State University and a Masters of Business Administration from the University of Wisconsin. Mr. Nelson has taught in the MBA and executive education programs at The Ohio State University and is a member of the
Dean’s Advisory Council for the Fisher College of Business at The Ohio State University. Mr. Nelson has significant public company accounting and financial expertise. Mr. Nelson has vast experience as a business consultant on a
variety of projects involving areas such as large scale technology implementation, defining strategic initiatives, strategic planning and projects with significant change requirements. As an “audit committee financial expert”, as defined
by applicable SEC Rules, Mr. Nelson has served the Board well as the Chair of the Audit Committee since 2004. All of these attributes make him well qualified to serve on the Board.
Required Vote and Board’s Recommendation
Under Ohio law and the Company’s Code of Regulations, the three nominees for election to the Board receiving the greatest
number of votes “FOR” their election will be elected as directors of the Company.
Except in the case of broker non-votes, common shares represented by properly completed and timely received forms of proxy will
be voted “FOR” the election of the Board’s nominees, unless authority to vote for one or more of the nominees is withheld. Common shares as to which the authority to vote is withheld will not be counted toward the
election of directors or the election of the individual nominees specified on the form of proxy. Proxies may not be voted for more than three nominees.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY VOTE “FOR” THE ELECTION OF EACH OF THE
DIRECTOR NOMINEES NAMED ABOVE.
Meetings of the Board
The Board held five meetings during Fiscal 2015, including regularly scheduled and special meetings. During Fiscal 2015, each incumbent
director attended at least 75% of the aggregate of (a) the total number of meetings held by the Board during such director’s period of service, and (b) the total number of meetings held during such director’s period of service by
all committees of the Board on which such director served.
The Board and management of the Company are committed to effective corporate
governance practices. The Corporate Governance Guidelines describe the governance principles and procedures by which the Board functions. The Board annually reviews and updates, as appropriate, the Corporate Governance Guidelines and the charters of
the various committees of the Board in response to corporate governance developments, including changes in the applicable NYSE Rules and SEC Rules, and recommendations by directors in connection with Board and Board committee evaluations. In
accordance with the Corporate Governance Guidelines and applicable NYSE Rules, non-management directors of the Company, who are also all “Independent” Directors, as defined by the Corporate Governance Guidelines and applicable NYSE Rules,
meet (without management present) at regularly scheduled executive sessions at least twice per year and at such other times as the directors deem necessary or appropriate. These executive sessions are typically held in conjunction with regularly
scheduled Board meetings
23
and are led by the Lead Independent Director, and appropriate feedback from these sessions is given to the Chief Executive Officer. The non-management directors met in executive session after
three of the four regularly scheduled Board meetings held in Fiscal 2015.
Board Member Attendance at Annual Meetings of the Shareholders
The Company does not have a formal policy with respect to attendance by our directors at the annual meetings of the shareholders. The Board
generally schedules its quarterly meetings to fall in March, June, September and December. Eight of the ten then-incumbent directors attended the Company’s 2014 Annual Meeting of Shareholders: Ms. Anderson, Mr. Blystone,
Mr. Endres, Mr. Horton, Mr. McConnell, Mr. Nelson, Dr. Ribeau and Ms. Schiavo.
Board Leadership Structure
The Company is led by John P. McConnell, who has served as Chief Executive Officer since June 1993, as a director of the Company since 1990,
and as Chairman of the Board of the Company since September 1996. The Company’s Board is currently comprised of Mr. McConnell and nine non-management directors. John Blystone is the Company’s Lead Independent Director.
The Board has four standing committees: Audit, Compensation, Executive, and Nominating and Governance. Each of the Audit Committee, the
Compensation Committee and the Nominating and Governance Committee is chaired by a separate Independent Director and is comprised solely by Independent Directors. Detailed information on each Board committee is contained in the section captioned
“PROPOSAL 1: ELECTION OF DIRECTORS — Committees of the Board” beginning on page 25 of this Proxy Statement.
The Company
does not have a fixed policy regarding whether the offices of Chairman of the Board and Chief Executive Officer should be vested in the same person or two different people. The Board has determined that the most effective leadership structure at the
present time is for the Chief Executive Officer to also serve as the Chairman of the Board, coupled with a Lead Independent Director, independent chairs for our Audit Committee, our Compensation Committee and our Nominating and Governance Committee,
and regularly scheduled executive sessions of the non-management directors.
The Board believes that the currently combined role of
Chairman of the Board and Chief Executive Officer promotes the development and execution of our business strategy and facilitates information flow between management and the Board, which are essential to effective governance. The Board believes that
its strong governance practices, including its supermajority of Independent Directors, the combination of the Chairman of the Board and Chief Executive Officer roles, and its clearly-defined Lead Independent Director responsibilities, provide an
appropriate balance among strategy development, operational execution and independent oversight of the Company.
The Board periodically
reviews our leadership structure and retains the authority to modify the structure, as and when appropriate, to address our then current circumstances.
Lead Independent Director
In January
2007, the Company established a Lead Independent Director position and appointed John Blystone as the Lead Independent Director.
A
copy of the Company’s Lead Independent Director Charter is available on the “Corporate Governance” page of the “Investor Center” section of the Company’s web site located at www.worthingtonindustries.com.
In addition to the other duties more fully described in the Company’s Lead Independent Director Charter, the Lead Independent Director is responsible for:
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• |
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advising the Chairman of the Board regarding the information, agenda and meeting schedules for the Board and Board committees, and as to the quality, quantity and timeliness of the information submitted to the Board by
the Company’s management that is necessary or appropriate for the non-employee directors to effectively and responsibly perform their duties; |
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• |
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recommending to the Chairman of the Board and Chief Executive Officer the retention of advisers and consultants who report directly to the Board; |
24
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• |
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assisting the Board, the Nominating and Governance Committee and the officers of the Company in ensuring compliance with and implementation of the Corporate Governance Guidelines; |
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• |
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calling meetings of the non-employee directors, developing the agenda for and serving as chairman of the executive sessions of the non-employee directors, and serving as principal liaison between the non-employee
directors and the Chairman of the Board and Chief Executive Officer on sensitive issues; |
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• |
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working with the Nominating and Governance Committee and the Chairman of the Board and Chief Executive Officer to recommend the membership of the various Board committees, as well as the selection of committee chairs;
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• |
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serving as chair of meetings of the Board when the Chairman of the Board is not present; and |
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• |
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performing such other duties as the Board may determine. |
Committees of the Board
The Board has four standing committees: the Executive Committee, the Audit Committee, the Compensation Committee, and the Nominating and
Governance Committee. The charter for each committee has been reviewed and approved by the Board and is available on the “Corporate Governance” page of the “Investor Center” section of the Company’s web site located at
www.worthingtonindustries.com.
COMMITTEES OF THE BOARD
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Executive |
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Audit |
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Compensation |
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Nominating and
Governance |
| Kerrii B. Anderson* |
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X Ä |
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X |
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| John B. Blystone* |
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X |
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Chair |
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| Mark C. Davis* |
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X Ä |
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| Michael J. Endres* |
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X |
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X |
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| Ozey K. Horton, Jr.* |
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X |
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X |
| Peter Karmanos, Jr.* |
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X |
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Chair |
| John P. McConnell |
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Chair |
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| Carl A. Nelson, Jr.* |
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Chair Ä |
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| Sidney A. Ribeau* |
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| Mary Schiavo* |
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Independent director under NYSE Rules |
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Audit Committee Financial Expert |
Executive Committee
The Executive Committee acts in place of, and on behalf of, the Board in the intervals between meetings of the Board. The Executive Committee
has all of the authority of the Board, other than the authority (a) to fill vacancies on the Board or on any committee of the Board, (b) to amend the Company’s Code of Regulations, (c) that has been delegated by the Board
exclusively to other committees of the Board, and (d) that applicable law or the Company’s governing documents do not permit to be delegated to a committee of the Board.
Audit Committee
The Board has
determined that each member of the Audit Committee qualifies as an Independent Director under the applicable NYSE Rules and under SEC Rule 10A-3. The Board believes each member of the Audit Committee is qualified to discharge his or her duties
on behalf of the Company and satisfies the financial literacy requirement of the NYSE Rules. The Board has also determined that Ms. Anderson, Mr. Davis and Mr. Nelson qualify as “audit committee financial experts” as that
term is defined in Item 407(d)(5) of SEC Regulation S-K by virtue of their respective experience, including that described on pages 21, 20 and 23, respectively, of this Proxy Statement. No member of the Audit Committee serves on the audit
committee of more than two other public companies.
At least annually, the Audit Committee evaluates its performance, reviewing and
assessing the adequacy of its charter and recommending any proposed changes to the full Board, as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.
25
The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange
Act. The Audit Committee is organized and conducts its business pursuant to a written charter. The primary responsibility of the Audit Committee is to assist the Board in the oversight of the financial and accounting functions, controls, reporting
processes and audits of the Company. Specifically, the Audit Committee appoints and evaluates the Company’s independent registered public accounting firm and approves the audit engagement, including fees and terms, and non-audit engagements, if
any, of such firm. The Audit Committee, on behalf of the Board, reviews, monitors and evaluates: (a) the Company’s financial statements and the related disclosures, including the integrity and quality of the financial statements;
(b) the Company’s compliance with legal and regulatory requirements, including the financial reporting process; (c) the Company’s systems of disclosure controls and procedures and internal control over financial reporting and its
accounting and financial controls; (d) the performance, qualifications and independence of the Company’s independent registered public accounting firm, including the performance and rotation of the lead and concurring partners of that
firm; (e) the performance of the Company’s internal audit function; (f) the annual independent audit of the Company’s financial statements; and (g) financial, reporting and compliance risk management. The Audit Committee
also prepares the report that the SEC Rules require be included in the Company’s annual proxy statement.
Additional duties and
responsibilities set forth in the Audit Committee’s charter include:
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reviewing, with the Company’s financial management, internal auditors and independent registered public accounting firm, (i) the Company’s accounting procedures and policies and audit plans, including
staffing, professional services to be provided, audit procedures to be used, and fees to be charged by the Company’s independent registered public accounting firm and (ii) reviewing the activities of and the results of audits conducted by
the Company’s internal auditors and independent registered public accounting firm; |
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reviewing with the Company’s independent registered public accounting firm the attestation/audit report of the Company’s independent registered public accounting firm on the effectiveness of the Company’s
internal control over financial reporting filed with the Company’s Annual Report on Form 10-K; |
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establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, as well as the confidential, anonymous
submissions by employees of the Company or its subsidiaries of concerns regarding questionable accounting or auditing matters; |
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setting and maintaining hiring policies for employees or former employees of the Company’s independent registered public accounting firm; |
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receiving reports concerning any non-compliance with the Company’s Code of Conduct by any officers or directors of the Company and approving, if appropriate, any waivers therefrom; |
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administering the Company’s Related Person Transaction Policy and approving, if appropriate, any “related person” transactions with respect to the Company’s directors or executive officers;
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directing and supervising any special investigations into matters which may come within the scope of the Audit Committee’s duties; and |
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other matters required by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the Public Company Accounting Oversight Board, the SEC, NYSE and other similar bodies or
agencies which could have an effect on the Company’s financial statements. |
Pursuant to its charter, the Audit
Committee has the authority to engage and terminate such legal counsel and other consultants and advisors as it deems appropriate to carry out its functions, including the sole authority to approve the fees and other terms of retention of such legal
counsel and other consultants and advisors.
The Audit Committee met six times during Fiscal 2015. The Audit Committee’s report
relating to Fiscal 2015 begins on page 72 of this Proxy Statement.
26
Compensation Committee
The Board has determined that each member of the Compensation Committee qualifies as an Independent Director under the applicable NYSE Rules.
The Board has also determined that each member of the Compensation Committee satisfies the additional independence standards for members of a compensation committee under the applicable NYSE Rules. All members of the Compensation Committee also
qualify as “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and as “non-employee directors” for purposes of Rule 16b-3 under the
Exchange Act.
The Compensation Committee periodically reviews and reassesses the adequacy of its charter and recommends any proposed
changes to the full Board, as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices. The Compensation Committee evaluates its performance at least annually.
The Compensation Committee’s charter sets forth the duties and responsibilities of the Compensation Committee, which include:
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discharging the Board’s responsibilities relating to compensation of the Company’s Chief Executive Officer and executive management, including reviewing and approving the compensation philosophy, policies,
objectives and guidelines for the Company’s executive management; |
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reviewing and approving, if it has been deemed appropriate, the Company’s peer group companies and data sources for purposes of evaluating the Company’s compensation competitiveness and establishing the
appropriate competitive positioning of the levels and mix of compensation elements; |
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reviewing and approving corporate goals and objectives, including performance goals, relevant to Chief Executive Officer and executive management compensation and evaluating the performance of the Chief Executive
Officer and executive management in light of the approved corporate goals and objectives; |
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setting the compensation of the Chief Executive Officer and other executive officers’ compensation, including the amount and types of compensation; |
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preparing, producing, reviewing and/or discussing with the Company’s management, as appropriate, such reports and other information required by applicable laws, rules, regulations or other standards with respect to
executive and director compensation, including those required for inclusion in the Company’s proxy statement and/or Annual Report on Form 10-K; |
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providing recommendations to the Board on Company-sponsored compensation-related proposals to be considered at the Company’s annual shareholder meetings, including Say-on-Pay and Say-on-Frequency proposals,
including the review and consideration of the results of such votes; |
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reviewing, and advising the Board with respect to, Board compensation; |
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administering the Company’s equity-based incentive compensation plans, our other executive incentive compensation programs, and any other plans and programs which the Board designates; |
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reviewing and discussing with the Company’s management, the Company’s compensation risk management disclosures required by SEC Rules relating thereto; and |
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carrying out such other roles and responsibilities as the Board may designate or delegate to the Compensation Committee. |
The Compensation Committee’s processes and procedures to determine executive compensation, including the use of compensation consultants
and the role of executive officers in the executive compensation decision-making process, are described in the sections captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Role of the Compensation
Committee” and “— Executive Compensation Philosophy and Objectives” beginning on page 32 and page 33, respectively, of this Proxy Statement.
Pursuant to its charter, the Compensation Committee has sole authority to retain and terminate any compensation consultant, legal counsel or
other advisor, as the Compensation Committee deems appropriate to assist the Committee in the performance of its duties, including the sole authority to approve the fees and other
27
terms and conditions of retention. Prior to any such retention, the Compensation Committee assesses any factors relevant to such consultant’s, legal counsel’s or advisor’s
independence from management, including the factors specified in NYSE’s Corporate Governance Standards or other listing rules, to evaluate whether the services to be performed will raise any conflict of interest or compromise the independence
of such consultant, legal counsel or advisor.
The Compensation Committee met two times during Fiscal 2015. The Compensation Discussion
and Analysis regarding executive compensation for our NEOs begins on page 32 of this Proxy Statement, and the Compensation Committee Report for Fiscal 2015 is on page 51 of this Proxy Statement.
Nominating and Governance Committee
The Board has determined that each member of the Nominating and Governance Committee qualifies as an Independent Director under the applicable
NYSE Rules. The Nominating and Governance Committee periodically reviews and assesses the adequacy of its charter and recommends any proposed changes to the full Board, as necessary to reflect changes in regulatory requirements, authoritative
guidance and evolving practices. The Nominating and Governance Committee evaluates its performance at least annually.
Under the terms of
its charter, the Nominating and Governance Committee is to:
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develop and periodically review principles of corporate governance and recommend them to the Board for its approval; |
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review the Articles of Incorporation, the Code of Regulations and the Corporate Governance Guidelines of the Company and recommend to the Board any changes it deems appropriate; |
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review the procedures and communication plans for shareholder meetings and ensure that required information regarding the Company is adequately presented; |
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review and make recommendations to the Board regarding (a) the composition and size of the Board in order to ensure that the Board has the proper expertise and its membership consists of persons with sufficiently
diverse backgrounds, (b) the criteria for the selection of Board members and Board committee members and (c) Board policies on age and term limits for Board members; |
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plan for continuity on the Board as existing Board members leave the Board; |
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with the participation of the Chairman of the Board, identify and recruit candidates for Board membership, evaluate Board candidates recommended by shareholders and arrange for appropriate interviews and inquiries into
the qualifications of the candidates; |
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identify and recommend individuals to be nominated for election as directors by the shareholders and to fill vacancies on the Board; |
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with the Compensation Committee, provide for an annual review of succession plans for the Chairman of the Board and Chief Executive Officer in the case of his resignation, retirement or death; |
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evaluate the performance of current Board members proposed for re-election, and recommend to the Board whether such members of the Board should stand for re-election; oversee an annual evaluation of the Board as a
whole; conduct an annual evaluation of the Nominating and Governance Committee; and oversee the evaluation of the other Board committees and of management; and |
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with the Chairman of the Board, periodically review the charter and composition of each Board committee and make recommendations to the Board as to changes in charters, the creation of additional committees or, with the
Chairman of the Board, recommend to the Board individuals to be chairs and members of Board committees; so that each Board committee is comprised of members with the appropriate qualities, skills and experience for the tasks of the committee.
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To the extent not otherwise delegated to the Audit Committee, the Nominating and Governance Committee is also to:
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review the relationships between the Company and each director, whether direct or as a partner, officer or equity owner of an organization that has a
relationship with the Company, for conflicts of interest |
28
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(all members of the Board are required to report any such relationships to the Company’s General Counsel); |
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address actual and potential conflicts of interest a Board member may have and issue to the Board member having an actual or potential conflict of interest instructions on how to conduct himself/herself in matters
before the Board which may pertain to such an actual or potential conflict of interest; and |
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make appropriate recommendations to the Board concerning determinations necessary to find a director to be an Independent Director. |
The Nominating and Governance Committee met one time during Fiscal 2015.
Board’s Role in Risk Oversight
Our
management is principally responsible for defining, identifying and assessing the various risks facing our Company, formulating enterprise risk management policies and procedures and managing our risk exposures on a day-to-day basis. A risk
committee, comprised of senior executives, directs this process. Management provides an annual risk assessment to the Board, with quarterly updates. The Board’s responsibility is to oversee our risk management processes by understanding and
evaluating management’s identification, assessment and management of the Company’s critical risks.
The Board as a whole has
responsibility for this risk oversight, assisted by the Audit Committee and the Compensation Committee. Areas of focus include strategic, operational, liquidity, market, financial, reporting, succession, compensation, compliance and other risks. The
Audit Committee is tasked with oversight of financial, reporting and compliance risk management, the Compensation Committee is tasked with oversight of compensation risk management, and the Board as a whole oversees all other risk management.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Review, Approval or Ratification of Transactions with Related Persons
The Company’s policy with respect to related person transactions is addressed in the Company’s written Related Person Transaction
Policy (the “Policy”), which supplements the Company’s written Code of Conduct provisions addressing “conflicts of interest”. As described in the Code of Conduct, conflicts of interest can arise when an employee’s or a
director’s personal or family relationships, financial affairs or an outside business involvement may adversely influence the judgment or loyalty required for performance of his or her duties to the Company. In cases where there is an actual or
even the appearance of a conflict of interest, the individual involved is required to notify his or her supervisor or the Company’s Ethics Officer. The supervisor will then consult with management and the Ethics Officer as appropriate. The Code
of Conduct provides that any action or transaction in which the personal interest of an executive officer or a director may be in conflict with those of the Company is to be reported to the Audit Committee. The Audit Committee must investigate and,
if it is determined that such action or transaction would constitute a violation of the Code of Conduct, the Audit Committee is authorized to take any action it deems appropriate.
The Policy was adopted by the Board and is administered by the Audit Committee and the Company’s General Counsel. The Policy applies to
any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which: the Company participates, directly or indirectly; the amount involved exceeds or is expected to exceed $120,000; and a
“related person” has, had or will have a direct or indirect material interest. Under the Policy, a “related person” is any person:
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who is or was an executive officer, a director or a director nominee of the Company, or an immediate family member of any such individual; or |
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who is or was the beneficial owner of more than 5% of the Company’s outstanding common shares, or an immediate family member of any such individual. |
All related person transactions are to be brought to the attention of the Company’s management who will then refer each matter to the
Company’s General Counsel and the Audit Committee. Each director, director nominee or executive officer of the Company must notify the Company’s General Counsel in writing of any interest that such individual or an immediate family member
of such individual has, had or may have, in a related person transaction. In addition, any related person transaction proposed to be entered into by the Company must be
29
reported to the Company’s General Counsel by the employee of the Company who has authority over the transaction. On an annual basis, each director, director nominee and executive officer of
the Company must complete a questionnaire designed to elicit information about existing and potential related person transactions. Any potential related person transaction that is raised will be analyzed by the Company’s General Counsel, in
consultation with management and with outside counsel, as appropriate, to determine whether the transaction, arrangement or relationship does, in fact, qualify as a related person transaction requiring review by the Audit Committee under the Policy.
Under the Policy, all related person transactions (other than those deemed to be pre-approved or ratified under the terms of the Policy)
will be referred to the Audit Committee for approval (or disapproval), ratification, revision or termination. Whenever practicable, a related person transaction is to be reviewed and approved or disapproved by the Audit Committee prior to the
effectiveness or consummation of the transaction. If the Company’s General Counsel determines that advance consideration of a related person transaction is not practicable, the Audit Committee will review and, in its discretion, may ratify the
transaction at the Audit Committee’s next meeting. However, the Company’s General Counsel may present a related person transaction arising between meetings of the Audit Committee to the Chair of the Audit Committee who may review and
approve (or disapprove) the transaction, subject to ratification by the Audit Committee at its next meeting if appropriate. If the Company becomes aware of a related person transaction not previously approved under the Policy, the Audit Committee
will review the transaction, including the relevant facts and circumstances, at its next meeting and evaluate all options available to the Company, including ratification, revision, termination or rescission of the transaction, and take the course
of action the Audit Committee deems appropriate under the circumstances.
No director may participate in any approval or ratification of a
related person transaction in which the director or an immediate family member of the director is involved. The Audit Committee may only approve or ratify those transactions the Committee determines to be in the Company’s best interest. In
making this determination, the Audit Committee will review and consider all relevant information available to it, including:
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the terms (including the amount involved) of the transaction and the related person’s interest in the transaction and the amount of that interest; |
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the business reasons for the transaction and its potential benefits to the Company, and whether the transaction was undertaken in the ordinary course of the Company’s business; |
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whether the terms of the transaction are fair to the Company and no less favorable to the Company than terms that could be reached with an unrelated third party; |
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the impact of the transaction on the related person’s independence; and |
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whether the transaction would present an improper conflict of interest for any director, director nominee or executive officer of the Company, taking into account the size of the transaction, the overall financial
position of the related person, the direct or indirect nature of the related person’s interest in the transaction and the ongoing nature of any proposed relationship and any other factors the Audit Committee deems relevant. |
Any related person transaction previously approved or ratified by the Audit Committee or otherwise already existing that is ongoing in nature
is to be reviewed by the Audit Committee annually.
Under the terms of the Policy, the following related person transactions are deemed to
be pre-approved or ratified (as appropriate) by the Audit Committee even if the aggregate amount involved would exceed $120,000:
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interests arising solely from ownership of the Company’s common shares if all shareholders receive the same benefit on a pro rata basis (i.e., dividends); |
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compensation to an executive officer of the Company, as long as the executive officer is not an immediate family member of another executive officer or a director of the Company and the compensation has been approved by
the Compensation Committee or is generally available to the Company’s employees; |
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compensation to a director for services as a director if the compensation is required to be reported in the Company’s proxy statements; |
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interests deriving solely from a related person’s position as a director of another entity that is a party to the transaction; |
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interests deriving solely from the related person’s direct or indirect ownership of less than 10% of the equity interest (other than a general partnership interest) in another person which is a party to the
transaction; and |
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transactions involving competitive bids. |
In addition, the Audit Committee will presume that
the following transactions do not involve a material interest:
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transactions in the ordinary course of business with an entity for which a related person serves as an executive officer, provided (i) the affected related person did not participate in the decision of the Company
to enter into the transaction, and (ii) the aggregate amount involved in any related category of transactions in a 12-month period is not greater than the lesser of (a) $1,000,000, or (b) 2% of the other entity’s gross revenues
for its most recently completed fiscal year, or (c) 2% of the Company’s consolidated gross revenues for the Company’s most recently completed fiscal year; |
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donations, grants or membership payments to nonprofit organizations, provided (a) the affected related person did not participate in the decision of the Company to make such payments, and (b) the aggregate
amount in a 12-month period does not exceed the lesser of $1,000,000 or 2% of the non-profit organization’s gross revenues for its most recently completed fiscal year; and |
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Company use of facilities (such as dining facilities and clubs) if the charges for such use are consistent with charges paid by unrelated third parties and are fair, reasonable and consistent with similar services
available for similar facilities. |
Transactions with Related Persons
The Company is a party to certain agreements relating to the rental of aircraft to and from JMAC, Inc., a private investment company
(“JMAC”), which is owned by John P. McConnell, Chairman of the Board and Chief Executive Officer of the Company, and members of his family. JMAC Air, LLC (“JMAC Air”) is owned by JMAC. Under the agreement with JMAC Air, the
Company may lease aircraft owned by JMAC as needed for a rental fee per flight; and under the agreement with the Company, JMAC is allowed to lease aircraft operated by the Company, on a per-flight basis, when the Company is not using the aircraft.
The Company also makes its pilots available for a per-day charge, to JMAC Air and Blue Jackets Air, LLC which primarily provides air transportation services for the Columbus Blue Jackets, a professional hockey team of which John P. McConnell is the
majority owner. The rental fees paid to the Company under the per-flight rental agreements are set based on Federal Aviation Administration (“FAA”) regulations. The Company believes the rental fees set in accordance with such FAA
regulations for Fiscal 2015 exceeded the direct operating costs of the aircraft for such flights. Also, based on quotes for similar services provided by unrelated third parties, the Company believes that the rental rates paid to JMAC are no less
favorable to the Company than those that could be obtained from unrelated third parties.
For Fiscal 2015: (a) the Company paid an
aggregate amount of $278,641 under the JMAC Air lease agreement and received $57,249 for airplane rental and pilot services; and (b) the Company received an aggregate amount of $21,500 from Blue Jackets Air for pilot services.
During Fiscal 2015, the Company, either directly or through business expense reimbursement, paid approximately $202,269 to Double Eagle Club,
a private golf club owned by the McConnell family (the “Club”). The Company uses the Club’s facilities for Company functions and meetings, and for meetings, entertainment and overnight lodging for customers, suppliers and other
business associates. Amounts charged by the Club to the Company are no less favorable than those that are charged to unrelated members of the Club for the same type of use.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Role of the
Compensation Committee
The Compensation Committee reviews and administers the compensation for the Chief Executive Officer (the
“CEO”) and other members of executive management of the Company, including the named executive officers (the “NEOs”) identified in the “Fiscal 2015 Summary Compensation Table” beginning on page 52 of this Proxy
Statement. The Compensation Committee also oversees the Company’s annual incentive plan for executives, long-term incentive program, restricted common share awards, stock option plans, and non-qualified deferred compensation plans. A more
detailed discussion of the duties of the Compensation Committee is set forth in the section captioned “PROPOSAL 1: ELECTION OF DIRECTORS – Committees of the Board – Compensation Committee” starting on page 27.
The Compensation Committee is comprised of four directors, each of whom qualifies as an Independent Director under the applicable NYSE Rules,
and is free from any relationship (including disallowed consulting, advisory or other compensatory arrangements) prohibited by applicable laws, rules or regulations or that, in the opinion of the Board, is material to his or her ability to be
independent from management of the Company in connection with the duties of a member of the Compensation Committee or to make independent judgments about the Company’s executive compensation. Each member also qualifies as an “outside
director” for purposes of Section 162(m) of the Internal Revenue Code and as a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act.
The Compensation Committee has sole authority to retain and terminate such compensation consultants, legal counsel and other advisors, as the
Compensation Committee deems appropriate to fulfill its responsibilities, including sole authority to approve the fees and other terms of retention. The Compensation Committee has retained an independent compensation consultant, Towers Watson, for
the purpose of assisting the Compensation Committee in fulfilling its responsibilities, including providing advice on the amount and form of executive and director compensation. Management also periodically retains Towers Watson to provide
additional services to the Company with respect to advising on compensation matters. Fees for these additional services were less than $25,000 in Fiscal 2015. The Compensation Committee has conducted an assessment, which included the consideration
of the six factors specified in the NYSE Corporate Governance Standards, to evaluate whether the services performed by Towers Watson raise a conflict of interest or compromise the independence of Towers Watson. Based upon this assessment, the
Compensation Committee determined that Towers Watson qualifies as an independent compensation consultant and its work does not raise any conflict of interest.
While the Compensation Committee retains Towers Watson, in carrying out assignments for the Compensation Committee, Towers Watson may interact
with the Company’s management including the Vice President-Human Resources, the Vice President-Administration, General Counsel and the Executive Vice President-Chief Financial Officer and their respective staffs in order to obtain information.
In addition, Towers Watson may, in its discretion, seek input and feedback from management regarding its work product prior to presentation to the Compensation Committee in order to confirm information is accurate or address certain issues.
The agendas for the Compensation Committee’s meetings are determined by the Compensation Committee’s Chair with assistance from the
CEO, the Vice President-Human Resources and the Vice President-Administration, General Counsel. These individuals, with input from the Compensation Committee’s compensation consultant, make compensation recommendations for the NEOs and other
executive officers. However, decisions regarding the compensation of the NEOs are made solely by the Compensation Committee.
After each
regularly scheduled meeting, the Compensation Committee may meet in executive session. When meeting in executive session, the Compensation Committee may have a session with the CEO only, a session with the compensation consultant only, and a session
with Compensation Committee members only. The Compensation Committee Chair reports on Compensation Committee actions to the full Board at the following Board meeting.
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Stock Ownership Guidelines
In order to further emphasize the stake that the Company’s directors and senior executives have in fulfilling the goal of building and
increasing shareholder value, and to deepen the resolve of executive leadership to fulfill that goal, the Company has established stock ownership guidelines for directors and senior executives.
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| Stock Ownership Guidelines |
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| Covered Person(s) |
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Multiple of base salary or
annual cash retainer, as applicable |
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| Chief Executive Officer |
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5 times |
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| Directors |
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5 times |
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| Chief Financial Officer |
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3.5 times |
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| Chief Operating Officer |
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3.5 times |
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| Senior Vice Presidents and Business Unit Presidents |
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2.5 times |
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| Other Senior Executives |
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1.25 times |
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For purposes of these guidelines, stock ownership includes common shares held directly or indirectly, common
shares held in an executive’s 401(k) plan account(s) and theoretical common shares credited to the bookkeeping account of an executive or a director in one of the Company’s non-qualified deferred compensation plans. Each covered executive
or director is expected to attain the target level of stock ownership within five years from the date he or she is appointed or elected to the position.
According to the stock ownership guidelines, once an executive or a director reaches the target ownership level, and so long as those common
shares are retained and the individual remains subject to the same guideline level, there is no obligation to purchase additional common shares as a result of fluctuations in the price of the Company’s common shares.
All directors and executive officers who have been in their current positions at least five years have met their target ownership levels.
Anti-Hedging Policy
The Company
prohibits directors, officers (including the NEOs) and other key employees of the Company from engaging in hedging transactions with respect to common shares of the Company.
Company Compensation Philosophy
A
basic philosophy of the Company has long been that employees should have a meaningful portion of their total compensation tied to performance and that the Company should use incentives which are intended to drive and reward performance. In
furtherance of this philosophy, there is broad-based participation among full-time, non-union employees of the Company in some form of incentive compensation program. These programs include cash profit-sharing programs, which compute payouts based
on a fixed percentage of profits, and annual incentive bonus programs that primarily tie bonuses to the operating results of the Company or the applicable business unit.
The Company has also made broad-based grants of equity awards periodically to a number of salaried employees below the executive level.
Executive Compensation Philosophy and Objectives
The Company’s objectives with respect to executive compensation are to attract and retain highly-qualified executives, to align the
interests of management with the interests of shareholders and to provide incentives, based primarily on Company performance, for reaching established Company goals and objectives. To achieve these
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objectives, the Compensation Committee has determined that total compensation for executives will exhibit the following characteristics:
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It will be competitive in the aggregate, using broad-based business comparators to gauge the competitive market; |
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It will be performance-oriented and highly leveraged, with a substantial portion of the total compensation tied to performance, primarily that of the Company and/or that of the applicable business unit;
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It will align the interests of management and the interests of shareholders; and |
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It will promote long-term careers at the Company. |
The Company’s practice has long been
that executive compensation be highly leveraged. The Company’s compensation program emphasizes performance-based compensation (pay-at-risk) that promotes the achievement of short-term and long-term Company objectives. The Company believes it is
appropriate to provide a balance between incentives for current short-term performance and incentives for long-term profitability of the Company. The Company’s executive compensation program, therefore, includes both an annual cash incentive
bonus program and a long-term incentive compensation program. The Company also believes it appropriate for long-term incentives to have a cash compensation component and an equity-based compensation component, which incentivize executives to drive
Company performance and align their interests with those of the Company’s shareholders. The individual components of executive compensation are discussed below.
In fulfilling its responsibilities, the Compensation Committee annually reviews certain market compensation information with the assistance of
its independent compensation consultant, Towers Watson, who is directly engaged by the Compensation Committee to prepare the information. This includes information regarding compensation paid to officers with similar responsibilities from a
broad-based group of more than 400 companies (the “comparator group”). A list of the entities in the comparator group is set forth on Appendix I to this Proxy Statement.
The comparator group is comprised predominantly of manufacturing companies, maintained in the executive compensation data base of Towers
Watson at the time the study is conducted, with median revenues of $6.4 billion. Changes in the comparator group occur as companies begin or cease participation in the data base, due to a sale, merger or acquisition of the companies included or for
other reasons. The Compensation Committee neither selects nor specifically considers the individual companies which are in the comparator group. For comparison purposes, due to variances in the size of the companies in the comparator group,
regression analysis, which is an objective analytical tool used to determine the relationship between data, is used to adjust data. The Compensation Committee believes that using this broad-based comparator group minimizes the effects of changes to
the group due to changes in data base participation, lessens the impact a single entity can have on the overall data, provides more consistent results and better reflects the market in which the Company competes for executive talent.
During its review process, the Compensation Committee meets directly with the compensation consultant and reviews comparator group information
with respect to base salaries, annual cash incentive bonuses and long-term incentive compensation programs. The Compensation Committee considers comparator group information provided by the compensation consultant as an important factor in
determining the appropriate levels and mix of executive compensation.
For its June 2015 meeting, the Compensation Committee had Towers
Watson prepare and review information on a more focused group of companies to assure that compensation information from this group was not significantly different than the information obtained from the broad-based comparator group discussed above.
After reviewing this information, the Committee determined that the results of the two groups were not significantly different. The Committee continues to believe that the use of a broad-based comparator group provides more consistent information
and is preferable for the reasons set forth above.
Base salaries of the NEOs and other executives generally fall below market median
comparables developed from the comparator group, although the actual base salaries of the NEOs and other executives vary from individual to individual and from position to position due to factors such as time in the position, performance,
experience, internal equity and other factors the Compensation Committee deems appropriate. Annual cash incentive bonus opportunities to be paid to the NEOs and other executives for achieving targeted levels of performance are generally
34
above what the compensation consultant considers market median for annual bonuses because base salaries are intentionally set below market median comparables. In setting normal annual long-term
incentive compensation opportunities of the NEOs and other executives, the Compensation Committee generally starts with the market median developed by the compensation consultant, and then makes adjustments the Compensation Committee deems
appropriate.
While comparator group information is a factor considered in setting compensation, where a specific NEO’s or other
executive’s annual cash incentive bonus and long-term incentive compensation fall relative to the market median developed from the comparator group will vary based upon internal equity and other factors listed above. Annual cash incentive
bonuses and long-term incentive compensation actually paid may vary significantly depending on Company and/or business unit performance during the applicable year(s).
The Compensation Committee uses tally sheets as a tool to assist in its review of executive compensation. These tally sheets contain the
components of the CEO’s and other NEOs’ current and historical compensation, including base salary, annual cash incentive bonuses and long-term incentive compensation. These tally sheets and other information provided to the Compensation
Committee also show the estimated compensation that would be received by the CEO and other NEOs under certain scenarios, including in connection with a change in control of the Company.
While prior compensation or amounts realized or realizable from prior awards are given some consideration, the Compensation Committee believes
that the current and future performance of the Company, its business units and the individual executive officers should be the most significant factors in setting the compensation for the Company’s executive officers.
The CEO’s performance is annually evaluated by the Compensation Committee and/or the full Board. The criteria considered include: overall
Company performance; overall leadership; the CEO’s performance in light of, and his development and stewardship of, the Company’s philosophy and its current and long-term strategic plans, goals and objectives; development of an effective
senior management team; appropriate positioning of the Company for future success; and effective communications with the Board and stakeholders. At the request of Mr. McConnell, his base salary and overall compensation have been well below
market median levels. The Compensation Committee also evaluates the performance of the other NEOs when annually reviewing and setting executive compensation levels. The criteria considered for the other NEOs are similar to those for the CEO,
adjusted to reflect each NEO’s position, with a focus on the applicable business unit for any NEO who is a business unit President.
Compensation Risk Analysis
The
Company’s executive compensation programs are designed to be balanced, with a focus on both achieving consistent, solid year-over-year financial results and growing shareholder value over the long term. The highest amount of compensation can be
attained under these programs, taken as a whole, through consistently strong performance over sustained periods of time. This provides strong incentives for achieving success over the long term and avoiding excessive risk-taking in the short term.
The Company has long believed that compensation incentives, based primarily upon Company earnings or similar performance measures, have
played a vital role in the success of the Company. Making profit-sharing, bonuses and/or other incentive payments broadly available to all levels of non-union employees has fostered an ownership mentality throughout the workforce which has resulted
in long-term employment and a desire to drive consistent financial performance. The Company’s culture, aided by this ownership mentality, is focused on striving to continually improve performance and achieve long-term success without engaging
in excessive risk-taking.
We do not believe that our compensation incentives encourage excessive risk-taking for the following reasons:
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Base salaries are a sufficient component of total compensation, minimizing the need for excessive risk-taking. |
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The performance goals under the annual cash incentive bonus plan are based upon realistic earnings per share (“EPS”), business unit operating income (“EOI”) and economic value added (“EVA”)
levels, reviewed and approved by the Board, that the Compensation Committee believes can be attained |
35
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without taking inappropriate risks or materially deviating from normal operations, expected continuous improvement or approved strategy. |
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The long-term cash performance awards and performance share awards are based upon performance over three-fiscal-year periods which mitigates the taking of short-term risk. |
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In setting targets for annual cash incentive bonuses and long-term incentive compensation, restructuring charges and non-recurring items are eliminated and results are adjusted to eliminate FIFO gains or losses (where
appropriate for the Company or the business unit under consideration), which limit rewards for risky behavior outside the ordinary course of business. |
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Stock options generally contain a three-year incremental vesting schedule and provide rewards based on the long-term performance of our common shares. |
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Restricted common share awards generally have a cliff vesting period of three years and further link executive compensation to the long-term value of Worthington’s common shares. |
The Company’s stock ownership guidelines and anti-hedging policy also drive stock ownership among executives, again aligning their
interests with the interests of Worthington’s shareholders and the long-term growth in the value of the Company’s common shares. This is most evident in the shareholdings of CEO John P. McConnell, who is by far the Company’s largest
shareholder. His potential financial reward for long-term growth in the value of the Company’s common shares far outweighs any short-term compensation he may receive as a result of any excessive short-term risk-taking.
The Compensation Committee has granted special performance-based/time-vested restricted common share awards to select NEOs in recent years.
These awards are viewed as particularly appropriate as they are earned by top management only when the Worthington stock price increases significantly and, thus, the Company’s shareholders are also significantly benefited. The target price was
set at more than 44% above the then all-time high average closing price of the Company’s common shares for any consecutive thirty (30)-day period prior to the applicable grant date. While these awards do require a significant increase in the
price of Worthington’s common shares to vest, the Compensation Committee believes that the stock price targets for these awards are reasonable targets which can be met with steady consistent growth in the Company’s performance without the
need for any undue risk-tasking. The time-based vesting and holding period requirements mitigate the incentive for risky behavior intended to drive only a short-term stock price increase, and instead encourage activity that would lead to steady
increases in financial results and a stock price which can be maintained.
Cash Compensation Earned in Fiscal 2015 and Company Performance
Short-term cash compensation includes the base salary and the annual cash incentive bonus paid to the Company’s executives,
including the CEO and the other NEOs. Effective September 2015, base salaries for most executives increased 3%, with larger increases being given to certain executives, such as those promoted to new positions or given broader responsibilities.
Messrs. McConnell, Russell and Rose all requested that they not receive base salary increases for the fiscal year ending May 31, 2016 (“Fiscal 2016”).
Consistent with the philosophy of our executive compensation program, base salaries paid in Fiscal 2015 were generally below median levels of
the comparator group. Annual cash incentive bonus compensation earned by the NEOs was below median levels as financial performance was below the target level.
Annual cash incentive bonuses of the NEOs for Fiscal 2015 were down significantly from Fiscal 2014, on average down 29%, reflecting the lower
financial results. In Fiscal 2015, annual cash incentive bonuses were earned only at 70% of target levels for Corporate, 77% for Steel Processing and 63% for Pressure Cylinders.
The amounts paid for the long-term performance-based cash and equity awards for the three-fiscal-year period ended with Fiscal 2015 also
reflected the weaker Company performance in Fiscal 2015. Despite the strong performance of the Company in Fiscal 2013 and Fiscal 2014, the weaker results in Fiscal 2015 lowered long-term incentive compensation payouts to 88% of target levels at
Corporate and 89% at Steel Processing. Pressure Cylinders received 123% of target levels due to its very strong performance in the first two years of the period. On average, the cash performance award payouts to NEOs for the three-fiscal-year period
ended with Fiscal 2015 were down almost 30% from the three-fiscal-year period ended with Fiscal 2014, with the CEO payout being down 47%.
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The direct relationship of incentive compensation earned by the Company’s NEOs to Company
performance is exemplified by the amount of compensation earned by the NEOs not only in Fiscal 2015 but also in recent years as follows:
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Fiscal
Year |
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Performance |
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Annual Incentive Bonuses Earned |
| 2009 |
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Difficult year due to recession |
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No bonus payouts |
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| 2010 |
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Performance improved and exceeded expected levels, aided by the Transformation and other actions taken by management in response to the depressed market conditions |
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Annual incentive bonuses earned |
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| 2011 |
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Strong growth in earnings |
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Annual incentive bonuses were paid at close to maximum levels |
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| 2012 |
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EPS continued to grow, but targets were higher |
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Annual incentive bonuses earned at 110% of target levels, but down 20% - 40% from Fiscal 2011 amounts |
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| 2013 |
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Diluted EPS, as reported, was up 15% (21% excluding the effect of FIFO and restructuring charges), but targets were higher |
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Annual incentive bonuses for Corporate executives were down 15%-30% from Fiscal 2012 amounts |
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| 2014 |
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Both diluted EPS and adjusted EPS were up approximately 10% |
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Annual incentive bonuses for Corporate executives were up between 13% and 17% from the lower levels in Fiscal 2013 |
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| 2015 |
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Weaker performance (see discussion following these tables) |
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Annual incentive bonuses of the NEOs were earned at 63% - 77% of target levels and were down on average 29% from Fiscal 2014 |
The relationship of incentive compensation earned to Company results is also reflected in payments which have
been earned under the long-term performance-based cash and share awards.
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Performance
Period |
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Performance |
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Results |
| 2007-2009 |
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Performance impacted by recession |
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No long-term performance-based incentive compensation was paid |
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| 2008-2010 |
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Performance impacted by recession |
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No long-term performance-based incentive compensation was paid |
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| 2009-2011 |
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Strong performance in Fiscal 2011 could not overcome the drag early in the performance period caused by the recession |
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No long-term performance-based incentive compensation was paid |
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| 2010-2012 |
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Strong performance in Fiscal 2011 and 2012 |
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Long-term cash and long-term performance share incentive compensation was earned at somewhat above threshold levels (Corporate payout at 61%
of target) |
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|
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Performance
Period |
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Performance |
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Results |
| 2011-2013 |
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Continued improvement of results |
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Long-term cash and long-term performance share incentive compensation was earned between target and maximum levels |
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| 2012-2014 |
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Continued improvement of results |
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Long-term cash and long-term performance share incentive compensation was earned between target and maximum levels |
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| 2013-2015 |
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Weaker results in Fiscal 2015 (see discussion following this table) |
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Corporate and Steel Processing payouts fell below target levels. Results for Pressure Cylinders were above target level due to its very
strong performance in Fiscal 2013 and Fiscal 2014 |
After posting solid growth and productivity in the years following the recession in Fiscal 2009, Fiscal 2015
was a challenging year for the Company, as it faced serious headwinds, including:
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a significant decline in steel prices which resulted in FIFO losses; |
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low prices for oil and gas, which severely reduced demand in that industry for our equipment; |
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soft demand in agricultural markets; and |
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operational problems at certain facilities. |
The Compensation Committee believes management
has taken appropriate measures to respond to these issues. The Company’s price risk and inventory management program helped control inventories and steel costs which reduced the size of the FIFO losses which would have otherwise been incurred.
To address operational issues at certain oil and gas equipment facilities, the Company began to cut the workforce and other variable costs and generally right-size its operations before the industry downturn. It made further cuts as the market
contracted. The Company is also taking action to optimize the footprint of the Engineered Cabs segment and is implementing a plan to close our Florence, South Carolina facility in a manner to protect our customers’ business and retain
profitable programs at the Company’s other facilities. On a more positive note, the Steel Processing segment performed well, particularly after adjusting for the FIFO losses, and Rome Strip Steel has produced solid results since its acquisition
in January 2015. Most core Pressure Cylinders businesses continued to perform well.
Beginning in Fiscal 2008, management initiated a
transformation plan (the “Transformation”) with the overall goal of improving the Company’s sustainable earnings potential, asset utilization and operation performance. The Transformation emphasizes cost reduction, margin expansion
and capability improvements and seeks to drive excellence in three core capacities: sales, operations and supply chain management. The Transformation has been very successful in Steel Processing where it is well entrenched and is being continually
refreshed. Management has also enhanced this program, using ‘lean’ and rapid improvement events, as the Company drives it throughout the Pressure Cylinders and Engineered Cabs segments with a focus on the operations where it can provide
the biggest impact.
Since the recession in Fiscal 2009, the Company’s financial position has continued to strengthen and management
has put the Company’s balance sheet on a very sound footing. The Company now has in place $580,000,000 of long-term debt, issued on favorable terms maturing in tranches between 2020 and 2026. The Company also just renewed its revolving credit
facility increasing total commitments to $500,000,000 and extending its maturity to April 2020.
The Company has also been able to reward
its shareholders by steadily increasing its quarterly dividend from $0.12 per share for Fiscal 2012, to $0.13 per share for Fiscal 2013, to $0.15 per share for Fiscal 2014, to $0.18 per share for Fiscal 2015, and to $0.19 per share for the first
quarter of Fiscal 2016. The Company has also undertaken an aggressive stock buy-back program, repurchasing a total of 4,176,187 common shares during Fiscal 2015.
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Say-on-Pay Consideration
At the Company’s 2014 Annual Meeting of Shareholders, the Company’s shareholders approved the executive compensation as disclosed in
the proxy statement for that Annual Meeting, with more than 90% of the common shares represented by those shareholders present in person or represented by proxy at the 2014 Annual Meeting voting for approval. The vote for approval was 98%
excluding broker non-votes. The Compensation Committee evaluated the results of this strongly supportive advisory vote, together with the other factors and data discussed in this Compensation Discussion and Analysis, in determining executive
compensation policies and making executive compensation decisions.
Compensation Components
Base Salaries
Base
salaries for the NEOs and other executive officers are set to reflect the duties and responsibilities inherent in each position, individual levels of experience, performance, market compensation information, internal equity among positions in the
Company, and the Compensation Committee’s judgment. The Compensation Committee annually reviews information regarding compensation paid by the comparator group to executive officers with similar responsibilities. It is the Compensation
Committee’s intent, in general, to set base salaries below market median levels, with consideration given to the factors listed above, and have total annual cash compensation driven by bonuses.
At the request of Messrs. McConnell, Russell and Rose, the Compensation Committee did not increase their base salaries for Fiscal 2016. Base
salaries for Mr. Billman and Mr. Gilmore will increase to $371,315 and $425,000, respectively, as of September 2015.
Annual Incentive Compensation
The NEOs and certain other key employees of the Company participate in the Company’s annual cash incentive bonus program under which
annual bonus awards are tied to attainment of target results. These awards are generally tied to achieving specified levels (threshold, target and maximum) of corporate and/or business unit performance for the applicable 12-month performance period.
The type of performance measured and the weighting of those measurements is shown below. Restructuring charges and non-recurring gains and losses are excluded from all calculations, and the impact of FIFO gains or losses are factored out in
calculating corporate EPS and Steel Processing business unit EOI.
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For corporate executives, the goals are tied to corporate performance. |
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Payouts are generally tied to achieving specified levels (threshold, target and maximum) of corporate EVA and corporate EPS (adjusted as noted above), with each performance measure carrying a 50% weighting.
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For business unit executives, the goals are tied to both corporate performance and the performance of their respective business units. |
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Payouts are generally tied to achieving specified levels (threshold, target and maximum) of adjusted corporate EPS, 20% weighting; business unit EOI (adjusted as noted above), 30% weighting; and business unit EVA, 50%
weighting. |
For performance falling between threshold and target or between target and maximum, the award is linearly
prorated. If threshold levels are not reached for any performance measure, no bonus will be paid under that performance metric.
Annual
incentive bonuses are paid within a reasonable time following the end of the performance period in cash, unless the Board specifically provides for a different form of payment. In the event of a change in control of the Company, followed by the
actual or constructive termination of a participant’s employment during the relevant performance period, the annual incentive bonus award of the participant would be considered to be earned at the target level and payable as of the date of
actual or constructive termination of employment.
Annual incentive bonuses for the NEOs for Fiscal 2015 were down an average of 29% for
Fiscal 2015 as results reached only 70% of target levels for Corporate, 77% for Steel Processing and 63% for Pressure Cylinders.
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Annual incentive bonuses earned by the NEOs for the 12-month periods which comprised Fiscal 2015,
Fiscal 2014, and Fiscal 2013, are shown in the “Fiscal 2015 Summary Compensation Table” beginning on page 52 of this Proxy Statement in the “Annual Incentive Bonus Award” column within “Non-Equity Incentive Plan
Compensation”.
On June 23, 2015, the Compensation Committee granted annual incentive bonus awards to the NEOs for Fiscal 2016.
These annual cash incentive bonus awards are shown in the “Annual Cash Incentive Bonus Awards Granted for Fiscal 2016” table beginning on page 62 of this Proxy Statement.
Long-Term Incentive Compensation
The Compensation Committee has implemented a long-term incentive compensation program for the NEOs and other executives, which consists of:
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Long-term performance share awards based on achieving measurable financial results over a three-fiscal-year period |
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Long-term cash performance awards based on achieving measurable financial results over a three-fiscal-year period |
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Restricted common share awards |
Restricted common share awards, long-term performance share
awards and long-term cash performance awards are made under the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “1997 LTIP”). Options are generally granted out of one of the Company’s stock option
plans or under the 1997 LTIP. All of these plans have been approved by the Company’s shareholders.
The Compensation Committee added
awards of restricted common shares to the long-term incentive program beginning in Fiscal 2012, and somewhat reduced the size of the other long-term incentive awards. Beginning with awards for Fiscal 2014, the Compensation Committee increased the
portion of long-term incentive awards made in the form of restricted common shares and correspondingly reduced the portion provided through options.
In setting the size of the overall normal long-term incentive compensation awards, the Compensation Committee generally begins by looking at
market median values for the comparator group, and then making adjustments for the individual for items such as the executive officer’s time in the position, internal equity, performance and such other factors as the Compensation Committee
deems appropriate. The percentage of the long-term compensation provided by each type of award (long-term cash performance awards, performance share awards, options and restricted common shares) is determined by the Compensation Committee. The value
given to options for purposes of these awards is determined by the Compensation Committee based on input from its compensation consultant taking into account the anticipated grant date fair value calculated under applicable accounting rules and the
option values used for recent annual grants. The same is true for restricted common shares, the value of which is generally based on a recent market price of the common shares. Likewise, the value of the performance share awards is generally based
upon the number of common shares that can be earned at target, multiplied by a recent share price. The value used for long-term cash performance awards is generally the amount that can be earned at target. The amount of each type of award granted to
an executive officer is determined consistent with the above factors, with the specific amount determined by the Compensation Committee on a subjective basis combining all of the factors considered.
The Compensation Committee believes that using a blend of restricted common share awards, option awards, long-term performance share awards
and long-term cash performance awards represents a particularly appropriate and balanced method of motivating and rewarding senior executives. Restricted common share awards and option awards align the interests of employee recipients with those of
shareholders by providing value tied to appreciation in the Company’s common share price. Long-term cash performance awards motivate long-term results because their value is tied to sustained financial achievement over a multiple-year period.
Performance share awards blend both of these features because the number of performance shares received is tied to sustained financial achievement over a multiple-year period, and the value of those performance shares is tied to the price of the
Company’s common shares. The Compensation Committee believes the combination of these forms of incentive compensation is superior to reliance upon only one form and is consistent with the Company’s compensation philosophy and objectives.
40
The Compensation Committee generally approves annual restricted common share awards, annual
option awards and long-term performance share and long-term cash performance awards at its June meeting. The option grants and restricted common share awards are generally made effective following the meeting and after the Company has reported its
earnings for the just-completed fiscal year. Long-term performance share awards and long-term cash performance awards have been based on performance over a three-fiscal-year period beginning with the first day of the first fiscal year in that
period. An explanation of the calculation of the compensation expense relative to the equity-based long-term incentive compensation is set forth in the section captioned “Equity-Based Long-Term Incentive Compensation Accounting” beginning
on page 46 of this Proxy Statement.
Neither the Company nor the Compensation Committee has backdated option grants to obtain lower
exercise prices, nor have they repriced or offered buy-outs of underwater options. Current plan provisions prohibit such repricing without shareholder consent.
Options
Options
are generally awarded annually to the NEOs and a select group of executive officers. In practice, the number of common shares covered by an option award generally depends upon the employee’s position and external market data. It has also been
the practice of the Company to award options to a broader group of key employees every two or three years, and to grant options at other times to selected key employees such as when their employment began or they received a promotion. Options
provide employees with the opportunity to participate in increases in shareholder value as a result of stock price appreciation, and further the Company’s objective of aligning the interests of management with the interests of shareholders.
As noted above, starting in Fiscal 2014, the Compensation Committee decreased the portion of long-term incentive awards made to the
executive group in the form of options and increased the portion provided through awards of restricted common shares. The Compensation Committee also authorized the grants of restricted common shares to a broader group of key employees, rather than
providing options. The Compensation Committee made this change to restricted common shares in lieu of options based on a number of factors, including that restricted common share awards are less dilutive than options having the same grant date fair
value and are generally better understood and appreciated by the employees.
The following describes the Compensation Committee’s
general practice in granting options, excluding specific grants tailored to meet specific circumstances, such as when an employee nears retirement.
Options granted to employees between 1984 and May 31, 2011 were non-qualified stock options, which generally vested at a rate of
20% per year and are to be fully vested at the end of five years. Nearly all options granted to employees since June 1, 2011 have been non-qualified stock options which vest at a rate of 33% per year and fully vest at the end of three
years.
In the event an optionee’s employment terminates as a result of retirement, death or total disability, any unexercised
options outstanding and exercisable on that date will remain exercisable by the optionee or, in the event of death, by the optionee’s beneficiary, until the earlier of either the fixed expiration date, as stated in the applicable option award
agreement, or 36 months after the last day of employment due to retirement, death or disability. Should termination occur for any reason other than retirement, death or disability, unexercised options are generally forfeited.
In the event of a change in control of the Company (as defined in the respective option plans or award agreements), options then outstanding
will become fully vested and exercisable. However, for options granted after June 1, 2011, the change in control must be followed by an actual or constructive termination of employment for the options to become fully vested and exercisable.
The Compensation Committee may allow an optionee to elect, during the 60-day period following a change in control, to surrender an option
or a portion thereof in exchange for a cash payment equal to the excess of the change in control price per share over the exercise price per share.
Effective June 30, 2014, the Company made awards of non-qualified stock options to 42 employees to purchase an aggregate of 96,200 common
shares, with an exercise price equal to $43.04, the fair market value of the common shares on the grant date. Of those options, an aggregate of 47,000 common shares were covered by options awarded to the current NEOs.
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The option grants to the NEOs in Fiscal 2015 are detailed in the “Grants of Plan-Based
Awards for Fiscal 2015” table on page 55 of this Proxy Statement. For purposes of the “Grants of Plan-Based Awards for Fiscal 2015” table, options are valued based on a grant date fair value and calculated in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). This value for options is also reported in the “Option Awards” column of the “Fiscal 2015 Summary Compensation Table” beginning on page
52 of this Proxy Statement.
Information on options granted, effective June 26, 2015, to NEOs for Fiscal 2016, is set forth in the
section captioned “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2016”, beginning on page 63.
Long-Term Performance Awards – General
Since Fiscal 2006, the Company has awarded a select group of key executives, including the NEOs, long-term cash performance awards and
long-term performance share awards both based upon results over a prospective three-fiscal-year performance period.
These long-term
performance awards are intended to reward executives for achieving pre-established financial goals over a three-fiscal-year period. Restructuring charges and non-recurring items are excluded from all calculations and corporate EPS and Steel
Processing business unit EOI results are adjusted for FIFO gains or losses.
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For corporate executives, the goals are tied to corporate performance. |
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Payouts are generally tied to achieving specified levels (threshold, target and maximum) of cumulative corporate EVA and growth in corporate EPS (adjusted as noted above) over the performance period, with each
performance measure carrying a 50% weighting. |
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For business unit executives, the goals are tied to both corporate performance and the performance of their respective business units. |
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Cumulative corporate EVA and adjusted corporate EPS growth measures together carry a 50% weighting, and business unit adjusted EOI targets are weighted 50%. |
If the performance level falls between threshold and target or between target and maximum, the award is linearly prorated. Payouts, if any,
would generally be made in the quarter following the end of the applicable performance period. Calculation of Company results and attainment of performance measures are made solely by the Compensation Committee based upon the Company’s
consolidated financial statements.
The Compensation Committee determines the appropriate changes and adjustments and may make adjustments
for other unusual or non-recurring events, including, without limitation, changes in tax and accounting rules and regulations, extraordinary gains and losses, mergers and acquisitions, and purchases or sales of substantial assets, provided that, if
Section 162(m) of the Internal Revenue Code would be applicable to the payout of the award, any such change or adjustment, if not provided for when the targets are set, must be permissible under Section 162(m).
These performance measurements have been chosen because the Compensation Committee believes that:
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The corporate EPS growth metric strongly correlates with the Company’s growth in equity value; |
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EOI at a business unit ties directly into Company EPS growth; and |
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The cumulative corporate EVA target, which is driven by net operating profit in excess of the cost of capital employed, keeps management focused on the most effective use of existing assets and pursuing only those
growth opportunities which provide returns in excess of the cost of capital. |
The Company has used these, or similar
performance measures, since long-term cash performance awards were first granted for the performance period ended May 31, 1998.
The
Compensation Committee periodically considers whether to change the performance measures used under the incentive awards and reviews the types of measures used by other companies and other relevant information provided by its compensation
consultant. After reviewing this matter in detail at its June 2015 meeting,
42
the Compensation Committee determined to continue to use the performance measures set forth above, for the reasons discussed.
Payouts have been made based on the achievement of corporate and business unit three-fiscal-year performance targets in each of the last four
years. No payments of these awards for corporate performance were made in the three-fiscal-year periods ending with Fiscal 2009, Fiscal 2010 or Fiscal 2011, as targets for those years were set prior to the recession which adversely affected results
in those three-fiscal-year periods.
The Company’s performance, based on the applicable measures, was down in Fiscal 2015, after
solid results and increases in Fiscal 2013 and Fiscal 2014. Accordingly, performance results between threshold and target levels were attained and payouts were made to executive officers with respect to both long-term cash performance awards and
performance share awards at 88.3% of target levels for Corporate executives, and 89.3% of target levels for Steel Processing executives. Performance results for Pressure Cylinders executives reached 122.7% of target levels due to the very strong
performance by Pressure Cylinders in Fiscal 2013 and Fiscal 2014. Based on the Company’s performance for Fiscal 2014, Fiscal 2015 and Fiscal 2016 (through the date of this Proxy Statement), it appears that the Company is positioned to attain
results between threshold and target performance measure levels applicable to the NEOs for the three-fiscal-year period ending May 31, 2016. The Company will need to improve results significantly in Fiscal 2017 to exceed target performance
levels for the three-fiscal-year period then ending.
Long-Term Cash Performance Awards
Long-term cash performance awards have been part of the long-term performance awards granted to key members of management since they were first
awarded in 1998. They are intended to reward executives for achieving pre-established financial goals over a three-fiscal-year period. These long-term cash performance awards may be paid in cash, common shares or any combination thereof, as
determined by the Compensation Committee at the time of payment. To date, earned long-term cash performance awards have been paid in cash. If the performance criteria are met, payouts would generally be made in the quarter following the end of the
performance period. Nothing is paid under the long-term cash performance awards if none of the three-fiscal-year financial thresholds are met.
Treatment of awards on a change in control or a termination of employment, including termination due to death, disability or retirement, is
discussed below in the section captioned “Long-Term Performance Awards – Impact of Termination/Change in Control”. The performance measures for the long-term cash performance awards are discussed above in the section captioned
“Long-Term Performance Awards – General”.
Long-term cash performance awards earned for the three-fiscal-year performance
period ended May 31, 2015 are described above in the section captioned “Long-Term Performance Awards – General”. The amount of the awards earned by the NEOs for this period is shown in the “Fiscal 2015 Summary Compensation
Table” beginning on page 52 of the Proxy Statement under the “3-year Cash Performance Award” column within “Non-Equity Incentive Plan Compensation”. The long-term cash performance awards earned were paid in cash.
Long-term cash performance awards granted in Fiscal 2015 for the three-fiscal-year performance period ending May 31, 2017 are reported in
the “Grants of Plan-Based Awards for Fiscal 2015” table on page 55 of this Proxy Statement.
Information on long-term cash
performance awards granted in Fiscal 2016 for the three-fiscal-year performance period ending May 31, 2018 is shown in the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2016” table
beginning on page 63 of this Proxy Statement.
Long-Term Performance Share Awards
Performance share awards have constituted a portion of the long-term performance awards granted to key members of management since June 2006.
They are intended to reward executives for both achieving pre-established financial goals over the three-fiscal-year period and increasing the common share price. The long-term performance share awards are paid in common shares and the value is
determined not only by the number of common shares earned, but also by the value of the common shares at the time the awards are earned and the common shares are paid out. If the performance criteria are met, payouts are generally made the quarter
following the end of the performance period. Nothing is paid under the performance share awards if none of the three-fiscal-year financial threshold measures are met.
43
Treatment of awards on a change in control or a termination of employment, including termination
due to death, disability or retirement, is discussed below in the section captioned “Long-Term Performance Awards – Impact of Termination/Change in Control”. The performance measures for the long-term performance share awards are
discussed above in the section captioned “Long-Term Performance Awards – General”. Long-term performance share awards earned for the three-fiscal-year performance period ended May 31, 2015, are described above in the section
captioned “Long-Term Performance Awards – General”. The long-term performance share awards earned were paid in common shares.
Long-term performance share awards granted in Fiscal 2015 for the three-fiscal-year performance period ending May 31, 2017 are reported
in the “Grants of Plan-Based Awards for Fiscal 2015” table on page 55 of this Proxy Statement. An explanation of the calculation of the compensation expense relative to those awards is set forth in the section captioned “Equity-Based
Long-Term Incentive Compensation Accounting” beginning on page 46 of this Proxy Statement. If the performance criteria are met, the performance shares earned would generally be issued in the quarter following the end of the performance period.
Information on long-term performance share awards granted in Fiscal 2016 for the three-fiscal-year performance period ending May 31,
2018 is shown in the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2016” table beginning on page 63 of this Proxy Statement.
Long-Term Performance Awards – Impact of Termination/Change in Control
In general, termination of employment results in termination of long-term cash performance awards and long-term performance share awards.
However, if termination is due to death, disability or retirement, a pro rata payout will be made for performance periods ending 24 months or less after termination of employment based on the number of months of employment completed by the
participant during the performance period before the effective date of termination, provided that the applicable performance goals are achieved. No payout will be made for performance periods ending more than 24 months after termination of
employment. Unless the Compensation Committee specifically provides otherwise at the time of grant, in the event of a change in control of the Company, all long-term cash performance awards and long-term performance share awards would be considered
to be earned and payable in full at the maximum level, and immediately settled or distributed. For the three-fiscal-year long-term cash performance awards and long-term performance share awards granted in Fiscal 2013 or later, a double-trigger
provision was added and the change in control must be followed by an actual or constructive termination of employment for the payout provision to apply.
Annual Restricted Common Share Awards to Executives
Effective June 30, 2014, the Compensation Committee granted annual restricted common share awards to 46 employees covering an aggregate of
108,725 restricted common shares, which will cliff vest on the third anniversary of the grant date. Of those awards, an aggregate of 56,000 restricted common shares were awarded to the NEOs. Restricted common share awards are intended to reward and
incent executives by directly aligning the interests of management with the interests of shareholders. The vesting provision of the restricted common shares also serves as a management retention incentive. For further details with respect to the
restricted common share awards granted to the NEOs effective June 30, 2014, see the “Stock Awards” column of the “Fiscal 2015 Summary Compensation Table” beginning on page 52 of this Proxy Statement.
Effective June 26, 2015, the Compensation Committee granted restricted common share awards to 36 executives covering an aggregate of
146,200 restricted common shares (of which 78,500 restricted common shares were awarded to the NEOs) which will generally cliff vest on the third anniversary of the grant date. For further details with respect to the restricted common share awards
granted to the NEOs on June 26, 2015, see the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2016” table beginning on page 63 of this Proxy Statement.
Other Restricted Common Share Awards
Between September 19, 2014 and April 6, 2015, the Company made awards to 164 employees (none of whom was an NEO) covering an
aggregate of 109,175 restricted common shares which will cliff vest on the third anniversary of the grant date; one employee (not an NEO) received a 650 restricted common share award which will cliff vest on the fifth anniversary of the grant date.
44
The Compensation Committee has delegated, to the CEO, the authority to make grants during Fiscal
2016 covering up to an aggregate of 50,000 restricted common shares to key employees (none of which may be NEOs).
Special
Performance-Based/Time-Vested Restricted Common Share Awards
The Compensation Committee has at times made special “one
off” performance-based/time-vested long-term incentive awards to certain key employees tied to the price of the Company’s common shares attaining certain levels. The Compensation Committee made a special award, effective June 24,
2014, of 25,000 performance-based/time-vested restricted common shares to each of Mr. Billman and Mr. Gilmore. The term of these restricted common share awards is five years and the restricted common shares will vest if both: (a) the
closing price of the Company’s common shares equals or exceeds $60.00 per share for 30 consecutive days during the five-year term; and (b) the NEO has remained continuously employed by the Company for five years (i.e., through
June 24, 2019). If the NEO’s employment is terminated by the Company without “cause” or if the NEO dies or becomes permanently disabled after the performance condition has been met but before the time-based vesting condition has
been met, the restricted common shares will be fully vested as of the date of termination. In the case of death or disability, the Compensation Committee may elect, in its sole discretion, to accelerate the vesting of all or a portion of these
restricted common shares. In the event of a change in control followed by an actual or constructive termination of employment (as defined by the Compensation Committee), these restricted common shares will vest, subject to any Internal Revenue Code
Section 280G limitation imposed by the Compensation Committee. These awards are shown in the “Stock Awards” column for 2015 in the “Fiscal 2015 Summary Compensation Table”.
As leaders of the Company’s key business units, each of Mr. Billman and Mr. Gilmore will be a key player in driving the
Company’s Transformation efforts and financial results. The CEO and the Board have identified Mr. Billman and Mr. Gilmore as key executives who have important roles and responsibilities in leading the Company forward —
Mr. Billman in his capacity as President of the Pressure Cylinders business unit and Mr. Gilmore in his capacity as President of the Steel Processing business unit. The Compensation Committee believes these special restricted common share
awards serve as a strong retention mechanism that provides a unique incentive to these identified leaders to further enhance the Company’s success, and directly ties their compensation to the Company’s first corporate goal of increasing
the value of our shareholders’ investment.
The Compensation Committee believes the $60.00 per share closing price for 30 consecutive
days to be an appropriate performance target, as its achievement will not only reward Messrs. Billman and Gilmore, but also the shareholders in general, as the $60.00 stock price would be more than 44% above the all-time high average closing price
of the Company’s common shares for any consecutive 30-day period prior to the June 24, 2014 grant date. The Compensation Committee believes this to be reasonable target which can be reached by steady, consistent growth in the
Company’s performance, without the need for any undue risk-taking. Further, the Compensation Committee believes that the five-year time-based vesting (coupled with their other stock holdings and equity awards), reduces the incentive for risky
behavior intended to drive only a short-term increase in the price of the common shares, and instead encourages activity which would lead to steady increases in financial results and the stock price which can be maintained.
The Compensation Committee made a special award, effective June 28, 2013, of 180,000 performance-based/time-vested restricted common
shares to each of Mr. Rose and Mr. Russell. The term of these restricted common share awards is five years and the restricted common shares will vest if and when both of the following conditions are met: (a) the closing price of the
Company’s common shares equals or exceeds $50.00 per share for 30 consecutive days during the five-year term; and (b) the NEO has remained continuously employed by the Company for three years (i.e., through June 28, 2016). The NEO
must hold any vested restricted common shares until the later of (i) five years after the June 28, 2013 grant date or (ii) two years after vesting. The restricted common shares will be forfeited five years from the effective date of
the award (i.e., June 28, 2018) if the performance-based vesting condition is not met by that date, or if the NEO’s employment is terminated before June 28, 2016. If the NEO’s employment is terminated by the Company without
“cause” or if the NEO dies or becomes permanently disabled after the performance condition has been met but before the time-based vesting condition has been met, the restricted common shares will be fully vested as of the date of
termination. In the case of death or disability, the Compensation Committee may elect, in its sole discretion, to accelerate the vesting of all or a portion of these restricted common shares. In the event of a change in control followed by an actual
or constructive termination of employment (as defined by the Compensation Committee), these restricted common shares will vest, subject to any Internal Revenue Code Section 280G limitation imposed by the Compensation Committee. These awards are
shown in the “Stock Awards” column for 2014 in the “Fiscal 2015 Summary Compensation Table”.
45
Each of Mr. Rose and Mr. Russell has been a key player in driving the Company’s
Transformation efforts and financial results, as well as in other strategic actions taken by the Company in recent years. The CEO and the Board have identified Mr. Rose and Mr. Russell as key executives who have key roles and
responsibilities in leading the Company forward. The Compensation Committee believes these special restricted common share awards serve as a strong retention mechanism that provides a unique incentive to these identified leaders to further enhance
the Company’s success, and directly ties their compensation to the Company’s first corporate goal of increasing the value of our shareholders’ investment.
The Compensation Committee believes the $50.00 per share closing price for 30 consecutive days condition to be an appropriate performance
target, as its achievement will not only reward Messrs. Rose and Russell, but also the shareholders in general, as the $50.00 stock price would be more than 44% above the all-time high average closing price of the Company’s common shares for
any consecutive 30-day period prior to June 28, 2013. The Compensation Committee believes this to be a reasonable target which can be reached by steady, consistent growth in the Company’s performance, without the need for any undue
risk-taking. Further, the Compensation Committee believes that requiring the executive officers to continue to hold the common shares for at least two years after vesting (coupled with their other stock holdings and equity awards), reduces the
incentive for risky behavior intended to drive only a short-term increase in the price of the common shares, and instead encourages activity which would lead to steady increases in financial results and the stock price which can be maintained and
increased beyond the vesting period of the restricted common shares.
Clawback Policy
The Company does not have a specific clawback policy. If the Company is required to restate its earnings as a result of material non-compliance
with a financial reporting requirement due to misconduct, under Section 304 of the Sarbanes-Oxley Act of 2002 (“SOX”), the CEO and the Chief Financial Officer would be required to reimburse the Company for any bonus or other
incentive-based or equity-based compensation received by them from the Company during the 12-month period following the first filing with the SEC of the financial document that embodied the financial reporting requirement, and any profits realized
from the sale of common shares of the Company during that 12-month period, to the extent required by SOX.
On July 1, 2015, the SEC
issued proposed rules relating to clawback policies which the Company is in the process of reviewing. Once the proposed SEC rules have been adopted and NYSE has, in turn, adopted new listing standards addressing the clawback policy requirements, the
Company will adopt a clawback policy which satisfies the final rules.
Equity-Based Long-Term Incentive Compensation Accounting
The accounting treatment for equity-based long-term incentive compensation is governed by ASC 718. Options are valued using the
Black-Scholes pricing model based upon the grant date closing price per common share underlying the option award, the expected life of the option, the risk-free interest rate, the dividend yield, and the expected volatility. Further information
concerning the valuation of options and the assumptions used in that valuation is contained in “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note J – Stock-Based
Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for Fiscal 2015 filed on July 30, 2015 (the
“2015 Form 10-K”).
Long-term performance share awards payable in common shares are initially valued using the grant date
closing price per common share based on the target award, and compensation expense is recorded prospectively over the performance period on a straight-line basis. This amount is then adjusted on a quarterly basis based upon an estimate of the
performance level anticipated to be achieved for the performance period in light of actual and forecasted results.
Long-term cash
performance awards are initially valued at the target level, and compensation expense is recorded prospectively over the performance period on a straight-line basis. This amount is then adjusted on a quarterly basis based on an estimate of the
performance level anticipated to be achieved for the performance period in light of actual and forecasted results.
Restricted common
shares are valued at fair value as of the date of grant and the calculated compensation expense is recognized on a straight-line basis over their respective vesting periods. For restricted common shares
46
with only time-based vesting, fair value is generally equal to the closing price of the common shares at the respective grant date. If the vesting is subject to other conditions, such as the
special performance-based/time-vested restricted common share awards, the value is generally calculated under a Monte Carlo simulation model. Further information concerning the valuation of restricted common shares and the assumptions used in that
valuation is contained in “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note J – Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8.
– Financial Statements and Supplementary Data” of the Company’s 2015 Form 10-K.
Deferred Profit Sharing Plan
The NEOs participate in the Worthington Industries, Inc. Deferred Profit Sharing Plan (the “DPSP”), together with most other
full-time, non-union employees of the Company. The DPSP is a 401(k) plan and is the Company’s primary retirement plan. Contributions made by the Company to participants’ accounts under the DPSP are generally based on 3% of eligible
compensation which includes base salary, profit-sharing, bonus and annual cash incentive bonus payments, overtime and commissions, up to the maximum limit set by the Internal Revenue Service (“IRS”) from year to year ($265,000 for calendar
2015). In addition, the NEOs and other participants in the DPSP may elect to make voluntary contributions up to prescribed IRS limits. These voluntary contributions are generally matched by Company contributions of 50% of the first 4% of eligible
compensation contributed by the participant. Distributions under the DPSP are generally deferred until retirement, death or total and permanent disability.
Non-Qualified Deferred Compensation
The NEOs and other highly-compensated employees are eligible to participate in the Worthington Industries, Inc. Amended and Restated 2005
Non-Qualified Deferred Compensation Plan (as amended, the “2005 NQ Plan”). The 2005 NQ Plan is a voluntary, non-tax qualified, unfunded deferred compensation plan available only to select highly-compensated employees for the purpose of
providing deferred compensation, and thus potential tax benefits, to these employees.
Under the 2005 NQ Plan, executive officers of the
Company may defer the payment of up to 50% of their base salary and up to 100% of their bonus and/or annual cash incentive bonus awards. Amounts deferred are credited to the participants’ bookkeeping accounts under the 2005 NQ Plan at the time
the base salary and/or annual cash incentive bonus would have otherwise been paid. In addition, the Company may make discretionary employer contributions to the participants’ bookkeeping accounts in the 2005 NQ Plan. In recent years, the
Company has made employer contributions in order to provide the same percentage of retirement-related deferred compensation to executive officers compared to other employees that would have been made but for the IRS limits on annual compensation
that may be considered under the DPSP. For the 2014 and 2015 calendar years, the Company made contributions to the 2005 NQ Plan for participants equal to (i) 3% of an executive’s annual compensation (base salary plus annual cash incentive
bonus) in excess of the IRS maximum; and (ii) a matching contribution of 50% of the first 4% of annual compensation contributed by the executive to the DPSP to the extent not matched by the Company under the DPSP. Participants in the 2005 NQ
Plan may elect to have their bookkeeping accounts treated as invested (a) with a rate of return reflecting: (i) the returns on those investment options available under the DPSP; or (ii) a fixed interest rate set annually by the
Compensation Committee (2.08% for Fiscal 2015), or (b) in theoretical common shares reflecting increases or decreases in the fair market value of the Company’s common shares with dividends deemed reinvested. Any portion of a
participant’s bookkeeping account credited to theoretical common shares must remain credited to theoretical common shares until distributed. Otherwise, participants in the 2005 NQ Plan may change the investment options for their bookkeeping
accounts as of the time permitted under the DPSP for the same or a similar investment option.
Employees’ bookkeeping accounts in the
2005 NQ Plan are fully vested. Payouts of amounts credited to theoretical common shares are made in whole common shares and cash in lieu of fractional shares. Payouts of amounts credited to all other investment options are made in cash. Payments
will be made as of a specified date selected by the participant or, subject to the timing requirements of Section 409A of the Internal Revenue Code, when the participant is no longer employed by the Company. Payments are made either in a lump
sum or in installment payments, all as chosen by the participant at the time the deferral is elected. The Compensation Committee may permit hardship withdrawals from a participant’s account under defined guidelines.
Contributions or deferrals for the period before January 1, 2005, are maintained under the Worthington Industries, Inc. Non-Qualified
Deferred Compensation Plan, effective March 1, 2000 (as amended, the “2000 NQ
47
Plan”). Contributions and deferrals for periods on or after January 1, 2005 are maintained under the 2005 NQ Plan, which was adopted to replace the 2000 NQ Plan in order to comply with
the provisions of the then newly-adopted Section 409A of the Internal Revenue Code applicable to non-qualified deferred compensation plans. Among other things, the provisions of Section 409A generally are more restrictive with respect to
the timing of deferral elections and the ability of participants to change the time and manner in which accounts will be paid. The 2005 NQ Plan and the 2000 NQ Plan are collectively referred to as the “Employee Deferral Plans”.
Perquisites
The
Company makes club memberships available to NEOs and certain other executives because it believes that such memberships can be useful for business entertainment purposes. In 2007, the Company elected to no longer provide executives with leased
Company vehicles and generally eliminated leased Company vehicles for all employees unless a substantial portion of their business time involves travel, as is the case with those individuals in outside sales.
For security reasons, the NEOs occasionally use Company airplanes for personal travel. In such cases, the NEOs who use Company airplanes for
personal use are charged an amount equal to the SIFL rate set forth in the regulations promulgated by the United States Department of the Treasury (“Treasury Regulations”), which is generally less than the Company’s incremental costs.
Other Company Benefits
The Company provides employees, including the NEOs, a variety of other employee welfare benefits including medical benefits, disability
benefits, life insurance, accidental death and dismemberment insurance, which are generally provided to employees on a Company-wide basis.
Change
in Control
The Company has no formal employment contracts or other stand-alone change in control provisions relative to the NEOs
or other top executives. It does have certain change in control provisions in its various compensation plans, as described below.
The
Company’s stock option plans generally provide that, unless the Board or the Compensation Committee provides otherwise, upon a change in control of the Company, all options then outstanding will become fully vested and exercisable as of the
date of the change in control. However, for the options granted in Fiscal 2013 and later, a double-trigger provision was added and the change in control must be followed by an actual or constructive termination of employment for the accelerated
vesting provision to apply. In addition, the Compensation Committee may allow the optionee to elect, during the 60-day period from and after the change in control, to surrender the options or a portion thereof in exchange for a cash payment equal to
the excess of the change in control price per share over the exercise price per share.
For purposes of the Company’s stock option
plans (the 1997 LTIP, the Amended and Restated 2003 Stock Option Plan (the “2003 Stock Option Plan”) and the 2010 Stock Option Plan), a change in control will be deemed to have occurred when any person, alone or together with its
affiliates or associates, has acquired or obtained the right to acquire the beneficial ownership of 25% or more of the Company’s outstanding common shares, unless such person is: (a) the Company; (b) any employee benefit plan of the
Company or a trustee of or fiduciary with respect to any such plan when acting in that capacity; or (c) any person who, on the date the applicable plan became effective, was an affiliate of the Company owning in excess of 10% of the
Company’s outstanding common shares and the respective successors, executors, legal representatives, heirs and legal assigns of such person (an “Acquiring Person Event”). In addition, in the case of options granted under the 2003
Stock Option Plan and the 2010 Stock Option Plan, a change in control will also be deemed to have occurred if there is a change in the composition of the Board with the effect that a majority of the directors are not “continuing directors”
(as defined in each plan).
If a change in control (followed by an actual or constructive termination of employment where required by the
terms of the options at issue) had occurred as of May 31, 2015, the value of the unvested options which would have vested upon the change in control (based upon (a) the difference, if any, between (i) the closing market price of the
Company’s common shares on May 29, 2015, the last business day of Fiscal 2015 ($27.21), and (ii) the per share
48
exercise price of each such option, multiplied by (b) the number of common shares subject to the unvested portion of each such option), for each of the NEOs would have totaled:
|
|
|
|
|
| NEO |
|
Value of Unvested Options
If Vesting Accelerated |
|
| John P. McConnell |
|
$ |
589,049 |
|
| B. Andrew Rose |
|
$ |
233,609 |
|
| Mark A. Russell |
|
$ |
221,481 |
|
| Andrew J. Billman |
|
$ |
92,099 |
|
| Geoffrey G. Gilmore |
|
$ |
60,089 |
|
Long-term cash performance awards and long-term performance share awards generally provide that, unless the
Board or the Compensation Committee provides otherwise, upon a change in control of the Company, all such awards would be considered earned and payable in full at the maximum amounts and would be immediately settled or distributed. However, for the
three-fiscal-year long-term performance share awards and long-term cash performance awards granted in Fiscal 2013 and later, a double-trigger provision requires that the change in control be followed by an actual or constructive termination of
employment for this payout provision to apply. For purposes of the 1997 LTIP (under which the long-term cash performance awards and long-term performance share awards have been granted), a change in control will be deemed to have occurred when there
is an Acquiring Person Event as defined above.
If a change in control (followed by an actual or constructive termination of employment
when required by the terms of the award at issue) had occurred as of May 31, 2015, the aggregate value of the long-term cash performance awards and the number of common shares underlying long-term performance share awards, which would have been
distributed to each of the NEOs would have totaled:
|
|
|
|
|
|
|
|
|
| NEO |
|
Long-Term Cash
Performance Awards |
|
|
Long-Term
Performance Share Awards |
|
| John P. McConnell |
|
$ |
6,000,000 |
|
|
|
128,000 |
|
| B. Andrew Rose |
|
$ |
3,600,000 |
|
|
|
52,000 |
|
| Mark A. Russell |
|
$ |
3,600,000 |
|
|
|
52,000 |
|
| Andrew J. Billman |
|
$ |
1,750,000 |
|
|
|
22,000 |
|
| Geoffrey G. Gilmore |
|
$ |
1,800,000 |
|
|
|
22,000 |
|
The time-vested restricted common share awards granted effective June 30, 2014, June 28, 2013,
and June 29, 2012 also provide that upon a change in control followed by an actual or constructive termination of employment, the restricted common shares will vest and the restrictions will lapse. If a change in control followed by an actual
or constructive termination of employment had occurred as of May 31, 2015, the number of time-vested restricted common shares (and accrued dividends on those common shares) that would have vested and been distributable to each of the NEOs as of
such date are set forth below. The closing price of the common shares on May 29, 2015, the last business day of Fiscal 2015, was $27.21.
|
|
|
|
|
|
|
|
|
| NEO |
|
# of Restricted
Common Shares |
|
|
Accrued
Dividends |
|
| John P. McConnell |
|
|
64,000 |
|
|
$ |
70,160 |
|
| B. Andrew Rose |
|
|
32,000 |
|
|
$ |
35,080 |
|
| Mark A. Russell |
|
|
32,000 |
|
|
$ |
35,080 |
|
| Andrew J. Billman |
|
|
16,000 |
|
|
$ |
17,540 |
|
| Geoffrey G. Gilmore |
|
|
19,000 |
|
|
$ |
20,880 |
|
The 180,000 special performance-based/time-vested restricted common share awards granted to Messrs. Rose and
Russell as of June 28, 2013 and the 25,000 special performance-based/time-vested restricted common share awards granted to Messrs. Billman and Gilmore as of June 24, 2014 also provide that upon a change in control followed by an actual or
constructive termination of employment, the restricted common shares will vest and the restrictions will lapse. If a change in control followed by an actual or constructive termination of employment had
49
occurred as of May 31, 2015, the number of restricted common shares, and accrued dividends on those common shares, that would have vested and been distributable as of such date are set forth
below. The closing price of the common shares on May 29, 2015, the last business day of Fiscal 2015, was $27.21.
|
|
|
|
|
|
|
|
|
| NEO |
|
# of Restricted
Common Shares |
|
|
Accrued
Dividends |
|
| B. Andrew Rose |
|
|
180,000 |
|
|
$ |
205,200 |
|
| Mark A. Russell |
|
|
180,000 |
|
|
$ |
205,200 |
|
| Andrew J. Billman |
|
|
25,000 |
|
|
$ |
13,500 |
|
| Geoffrey G. Gilmore |
|
|
25,000 |
|
|
$ |
13,500 |
|
Annual cash incentive bonus awards provide that if during a performance period, (a) a change in control
of the Company (as defined in the plan) occurs and (b) the participant’s employment with the Company terminates on or after the change in control, the participant’s award would be considered earned and payable as of the date of the
participant’s actual or constructive termination of employment in the amount designated as target for such award and would be settled or distributed following the date of the participant’s actual or constructive termination of employment.
The target amounts for annual cash incentive bonus awards granted to the NEOs for the 12-month performance period ended May 31, 2015, are shown in the “Grants of Plan-Based Awards for Fiscal 2015” table on page 55 of this Proxy
Statement.
Under the Employee Deferral Plans, participants’ bookkeeping accounts will generally be paid out as of the date of the
change in control. See the “Non-Qualified Deferred Compensation for Fiscal 2015” table on page 62 of this Proxy Statement for further information.
The Compensation Committee believes that these change in control provisions are appropriate and well within market norms, particularly because
the Company has no formal employment contracts or other formal change in control provisions relative to the NEOs or other executives.
Tax
Deductibility
Section 162(m) of the Internal Revenue Code generally limits the deduction that the Company may take for
certain remuneration paid in excess of $1,000,000 to any “covered employee” of the Company in any one taxable year. Currently, Section 162(m) of the Internal Revenue Code only applies to the Company’s CEO as well as the three
other most highly compensated officers of the Company (not including the Company’s Chief Financial Officer). Compensation which qualifies as “qualified performance-based compensation” within the meaning of Section 162(m) of the
Internal Revenue Code and the related Treasury Regulations will not be taken into account in determining whether this $1,000,000 deduction limitation has been exceeded. Awards granted under the Company’s stock option plans generally qualify as
“qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code and restricted common shares with vesting tied to performance measures would also generally qualify. The Compensation Committee intends to
tailor the long-term incentive compensation awards granted under the 1997 LTIP (except for restricted common share awards which do not have a performance-based vesting requirement) and the awards granted to executive officers under the
Company’s annual cash incentive bonus program to so qualify. The Compensation Committee believes that the awards granted for Fiscal 2015 and Fiscal 2016 under the Company’s annual cash incentive bonus program as well as the long-term cash
performance awards and long-term performance share awards granted for the three-fiscal-year periods ending May 31, 2017 and 2018, under the 1997 LTIP will qualify for the “qualified performance-based compensation” exemption under
Section 162(m). Please see the description of these awards in the sections captioned “Grants of Plan-Based Awards” on page 55 of this Proxy Statement, “Annual Cash Incentive Bonus Awards Granted for Fiscal 2016” beginning on
page 62 of this Proxy Statement and “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2016”, beginning on page 63 of this Proxy Statement.
The Compensation Committee intends to continue to examine the best method to pay incentive compensation to executive officers, which will
include consideration of the application of Section 162(m) of the Internal Revenue Code.
In all cases, whether or not some portion
of a covered employee’s compensation is tax deductible, the Compensation Committee will continue to carefully consider the net cost and value to the Company of its compensation policies.
50
Compensation Committee Report
The Compensation Committee has reviewed the Compensation Discussion and Analysis (the “CD&A”) contained in this Proxy Statement
and discussed the CD&A with management. Based upon such review and discussion, the Compensation Committee recommended to the full Board, and the Board approved, that the CD&A be included in this Proxy Statement and incorporated by reference
into the 2015 Form 10-K.
The foregoing report is provided by the Compensation Committee of the Board:
|
| Compensation Committee |
|
| John B. Blystone, Chair |
| Kerrii B. Anderson |
| Michael J. Endres |
| Ozey K. Horton, Jr. |
[Remainder of page intentionally left blank]
51
Fiscal 2015 Summary Compensation Table
The following table lists, for each of Fiscal 2015, Fiscal 2014 and Fiscal 2013, the compensation of the Company’s CEO, the Company’s
Chief Financial Officer (“CFO”), and the Company’s three other most highly compensated executive officers serving at the end of Fiscal 2015 (collectively, the “NEOs”).
Fiscal 2015 Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan
Compensation |
|
|
Change in
Pension
Value and
Non-
qualified
Deferred
Compen-
sation
Earnings
($) |
|
|
All Other
Compen-
sation
($) (5) |
|
|
|
|
| Name and Principal Position |
|
|
|
|
Salary
($) (1) |
|
|
Stock
Awards
($) (2) |
|
|
Option
Awards
($) (3) |
|
|
Short-Term / Long-Term |
|
|
|
|
Total ($) |
|
| |
|
|
|
|
Annual
Incentive
Bonus
Award
($) (1) |
|
|
3-year
Cash
Perform-
ance Award
($) (4) |
|
|
|
|
| John
P. McConnell, Chairman of the Board and Chief Executive Officer |
|
|
2015 |
|
|
|
639,062 |
|
|
|
1,672,950 |
|
|
|
305,320 |
|
|
|
616,517 |
|
|
|
883,000 |
|
|
|
0 |
|
|
|
55,570 |
|
|
|
4,172,419 |
|
| |
|
2014 |
|
|
|
625,000 |
|
|
|
1,266,270 |
|
|
|
220,150 |
|
|
|
838,070 |
|
|
|
1,664,875 |
|
|
|
0 |
|
|
|
86,619 |
|
|
|
4,700,984 |
|
| |
|
2013 |
|
|
|
625,000 |
|
|
|
1,071,800 |
|
|
|
618,400 |
|
|
|
740,890 |
|
|
|
1,461,575 |
|
|
|
0 |
|
|
|
68,903 |
|
|
|
4,586,568 |
|
| |
|
|
|
|
|
|
|
|
|
| B. Andrew Rose, Executive Vice
President and Chief Financial Officer (6) |
|
|
2015 |
|
|
|
478,450 |
|
|
|
772,410 |
|
|
|
161,640 |
|
|
|
350,554 |
|
|
|
529,800 |
|
|
|
0 |
|
|
|
38,962 |
|
|
|
2,331,816 |
|
| |
|
2014 |
|
|
|
460,500 |
|
|
|
4,937,160 |
|
|
|
116,550 |
|
|
|
476,531 |
|
|
|
613,375 |
|
|
|
0 |
|
|
|
44,611 |
|
|
|
6,648,727 |
|
| |
|
2013 |
|
|
|
437,500 |
|
|
|
469,660 |
|
|
|
386,500 |
|
|
|
409,213 |
|
|
|
538,475 |
|
|
|
0 |
|
|
|
47,752 |
|
|
|
2,289,100 |
|
| |
|
|
|
|
|
|
|
|
|
| Mark A. Russell, President and
Chief Operating Officer |
|
|
2015 |
|
|
|
526,625 |
|
|
|
772,410 |
|
|
|
161,640 |
|
|
|
443,032 |
|
|
|
529,800 |
|
|
|
0 |
|
|
|
56,746 |
|
|
|
2,490,253 |
|
| |
|
2014 |
|
|
|
511,250 |
|
|
|
4,937,160 |
|
|
|
116,550 |
|
|
|
602,241 |
|
|
|
853,046 |
|
|
|
0 |
|
|
|
53,169 |
|
|
|
7,073,416 |
|
| |
|
2013 |
|
|
|
480,000 |
|
|
|
496,660 |
|
|
|
386,500 |
|
|
|
516,900 |
|
|
|
647,907 |
|
|
|
0 |
|
|
|
62,066 |
|
|
|
2,590,033 |
|
| |
|
|
|
|
|
|
|
|
|
| Andrew J. Billman, President,
Worthington Cylinder Corporation |
|
|
2015 |
|
|
|
357,875 |
|
|
|
1,166,350 |
|
|
|
107,760 |
|
|
|
227,476 |
|
|
|
337,288 |
|
|
|
0 |
|
|
|
39,468 |
|
|
|
2,236,217 |
|
| |
|
2014 |
|
|
|
339,750 |
|
|
|
274,755 |
|
|
|
77,700 |
|
|
|
346,850 |
|
|
|
497,040 |
|
|
|
0 |
|
|
|
33,759 |
|
|
|
1,569,854 |
|
| |
|
2013 |
|
|
|
306,750 |
|
|
|
212,750 |
|
|
|
212,575 |
|
|
|
321,638 |
|
|
|
342,206 |
|
|
|
0 |
|
|
|
28,162 |
|
|
|
1,424,081 |
|
| |
|
|
|
|
|
|
|
|
|
| Geoffrey G. Gilmore, President,
The Worthington Steel Company (7) |
|
|
2015 |
|
|
|
365,750 |
|
|
|
1,209,390 |
|
|
|
107,760 |
|
|
|
304,883 |
|
|
|
267,750 |
|
|
|
0 |
|
|
|
35,233 |
|
|
|
2,290,766 |
|
| |
|
2014 |
|
|
|
341,250 |
|
|
|
306,465 |
|
|
|
77,700 |
|
|
|
463,500 |
|
|
|
327,292 |
|
|
|
0 |
|
|
|
28,921 |
|
|
|
1,545,128 |
|
| (1) |
The amounts shown in these columns include that portion of salaries and annual incentive bonus awards the NEOs elected to defer pursuant to the DPSP or the 2005 NQ Plan. Amounts deferred pursuant to the 2005 NQ Plan in
Fiscal 2015 are separately shown in the “Non-Qualified Deferred Compensation for Fiscal 2015” table on page 62 of this Proxy Statement. |
| (2) |
The amounts shown in this column include the aggregate grant date fair values of: (a) the performance share awards granted to the NEOs under the
1997 LTIP in Fiscal 2015, Fiscal 2014 and Fiscal 2013, for the three-fiscal-year period beginning with the first day of such fiscal year; (b) the annual time-vested restricted common share awards granted to the NEOs in Fiscal 2015, Fiscal 2014
and Fiscal 2013; (c) for Messrs. Rose and Russell, the special performance-based/time-vested restricted common share awards granted to them in Fiscal 2014; and (d) for Messrs. Billman and Gilmore, the special performance-based/time-vested
|
52
| |
restricted common share awards granted to them in Fiscal 2015. The following table shows separately the aggregate grant date fair values of the long-term performance share awards, the annual
time-vested restricted common share awards and the special performance-based/time-vested restricted common share awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fiscal 2015 |
|
|
Fiscal 2014 |
|
|
Fiscal 2013 |
|
| John P. McConnell:
Long-term performance share award (a)
Annual time-vested restricted common share award (b) |
|
$
$ |
726,070
946,880 |
|
|
$
$ |
568,650
697,620 |
|
|
$
$ |
662,400
409,400 |
|
|
|
|
|
| B. Andrew Rose:
Long-term performance share award (a)
Annual time-vested restricted common share award (b)
Special performance-based/time-vested restricted common share award (c) |
|
$
$ |
298,970
473,440
N/A |
|
|
$
$ $ |
234,150
348,810
4,354,200 |
|
|
$
$ |
264,960
204,700
N/A |
|
|
|
|
|
| Mark A. Russell:
Long-term performance share award (a)
Annual time-vested restricted common share award (b)
Special performance-based/time-vested restricted common share award (c) |
|
$
$ |
298,970
473,440
N/A |
|
|
$
$ $ |
234,150
348,810
4,354,200 |
|
|
$
$ |
264,960
204,700
NA |
|
|
|
|
|
| Andrew J. Billman:
Long-term performance share award (a)
Annual time-vested restricted common share award (b)
Special performance-based/time-vested restricted common share award (c) |
|
$
$ $ |
128,130
236,720
801,500 |
|
|
$
$ |
100,350
174,405
N/A |
|
|
$
$ |
110,400
102,350
N/A |
|
|
|
|
|
| Geoffrey G. Gilmore:
Long-term performance share award (a)
Annual time-vested restricted common share award (b)
Special performance-based/time-vested restricted common share award (c) |
|
$
$ $ |
128,130
279,760
801,500 |
|
|
$
$ |
100,350
206,115
N/A |
|
|
|
N/A
N/A
NA |
|
| (a) |
The amounts for the long-term performance share awards are computed in accordance with ASC 718 as of the date the long-term performance share awards were granted. These grant date fair values were calculated based
upon the “target” award and the closing price of the common shares on the date of the grant which was: $42.71 for the Fiscal 2015 awards; $33.45 for the Fiscal 2014 awards; and $22.08 for the Fiscal 2013 awards. The aggregate grant
date fair values included for the long-term performance share awards would have been (i) double the amounts shown above for each fiscal year if the “maximum” award had been used instead of the “target” award and
(ii) half of the amounts shown above for each fiscal year if the “threshold” award had been used. The performance measures associated with the long-term performance share awards are described in the section captioned
“Compensation Discussion and Analysis – Compensation Components – Long-Term Performance Awards – General” beginning on page 42 of this Proxy Statement. The “Grants of Plan-Based Awards for Fiscal 2015” table
on page 55 of this Proxy Statement provides information on the long-term performance share awards granted in Fiscal 2015. |
| (b) |
The amounts for the annual time-vested restricted common share awards are computed in accordance with ASC 718 as of the date the restricted common share awards were granted. These amounts were calculated by
multiplying the number of restricted common shares granted by the closing price of the common shares on the date of the grant which for Fiscal 2015 was $43.04, for Fiscal 2014 was $31.71, and for Fiscal 2013 was $20.47. The annual time-vested
restricted common share awards are described in the section captioned “Compensation Discussion and Analysis – Compensation Components – Annual Restricted Common Share Awards to Executives” on page 44 of this Proxy
Statement. The “Grants of Plan-Based Awards for Fiscal 2015” table on page 55 of this Proxy Statement provides information on the annual time-vested restricted common share awards granted in Fiscal 2015. |
| (c) |
For the special performance-based/time-vested restricted common share awards granted to Messrs. Rose and Russell in Fiscal 2014, the grant date fair
value was $24.19 per share, determined using the Monte Carlo simulation model. For the special performance-based/time-vested restricted common |
53
| |
share awards granted to Messrs. Billman and Gilmore in Fiscal 2015, the grant date fair value was $32.06 per share, determined using the Monte Carlo simulation model. The
performance-based/time-vested restricted common share awards for Fiscal 2015 are described in the section captioned “Compensation Discussion and Analysis – Compensation Components – Special Performance-Based/Time-Vested Restricted
Common Share Awards” beginning on page 45 of this Proxy Statement. |
| (3) |
The amounts shown in this column represent the aggregate grant date fair values of the option awards granted to the NEOs in Fiscal 2015 ($17.96 per share), in Fiscal 2014 ($12.95 per share), and in Fiscal 2013 ($7.73
per share), computed in accordance with ASC 718. The amounts shown in this column exclude the impact of estimated forfeitures, as required by applicable SEC Rules. See “Note A – Summary of Significant Accounting Policies – Stock-Based
Compensation” and “Note J – Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the Company’s 2015 Form 10-K for the
assumptions used and additional information regarding the options. The “Grants of Plan-Based Awards for Fiscal 2015” table on page 55 of this Proxy Statement provides further information on option awards granted in Fiscal 2015.
|
| (4) |
This column reflects the long-term cash performance awards earned by the NEOs for the three-fiscal-year performance periods ended May 31, 2015 (for Fiscal 2015), ended May 31, 2014 (for Fiscal 2014) and ended
May 31, 2013 (for Fiscal 2013). |
| (5) |
The following table describes each component of the “All Other Compensation” column for each of Fiscal 2015, Fiscal 2014 and Fiscal 2013: |
All Other Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Fiscal Year |
|
|
Company
Contributions to DPSP
(the Company’s 401(k)
Plan) ($) (a) |
|
|
Company
Contributions to
2005 NQ Plan
($) (b) |
|
|
Group Term Life
Insurance Premium
Paid ($) (c) |
|
|
Perquisites
($) (d) |
|
| John P. McConnell |
|
|
2015
2014
2013 |
|
|
|
13,250
13,000
13,222 |
|
|
|
40,880
36,977
43,922 |
|
|
|
1,440
1,141
927 |
|
|
|
N/A
35,501
10,832 |
|
|
|
|
|
|
|
| B. Andrew Rose |
|
|
2015
2014
2013 |
|
|
|
13,328
13,044
14,323 |
|
|
|
24,194
30,426
32,502 |
|
|
|
1,440
1,141
927 |
|
|
|
N/A
N/A
N/A |
|
|
|
|
|
|
|
| Mark A. Russell |
|
|
2015
2014
2013 |
|
|
|
12,206
13,702
14,845 |
|
|
|
43,101
38,326
46,294 |
|
|
|
1,440
1,141
927 |
|
|
|
N/A
N/A
N/A |
|
|
|
|
|
|
|
| Andrew J. Billman |
|
|
2015
2014
2013 |
|
|
|
16,024
13,205
12,907 |
|
|
|
22,004
19,413
14,328 |
|
|
|
1,440
1,141
927 |
|
|
|
N/A
N/A
N/A |
|
|
|
|
|
|
|
| Geoffrey G. Gilmore |
|
|
2015
2014 |
|
|
|
13,444
13,490 |
|
|
|
20,349
14,290 |
|
|
|
1,440
1,141 |
|
|
|
N/A
N/A |
|
| (a) |
Include Company contributions and matching Company contributions made under the DPSP which is described in the section captioned “Compensation Discussion and Analysis – Compensation Components – Deferred
Profit Sharing Plan” on page 47 of this Proxy Statement. |
| (b) |
Include Company contributions and matching Company contributions made under the 2005 NQ Plan to the bookkeeping accounts of the NEOs. See the “Non-Qualified Deferred Compensation for Fiscal 2015” table on page
62 of this Proxy Statement for more information concerning the contributions made by the Company under the 2005 NQ Plan for Fiscal 2015. |
| (c) |
The amounts in this column represent the dollar value of the group term life insurance premiums paid by the Company on behalf of the NEOs. |
| (d) |
The column shows “N/A” when the aggregate value of the perquisites and other personal benefits received by the NEO for the applicable fiscal
year was less than $10,000. Perquisites generally include dues and similar fees paid by the Company for club memberships used by the NEOs for both business and personal use. Perquisites also include the aggregate incremental cost of the personal use
of Company aircraft for Mr. McConnell in the amount of $35,501 for Fiscal 2014 and $10,832 for Fiscal 2013. The reported aggregate incremental cost of the personal use of Company aircraft is based on the
|
54
| |
direct costs associated with operating a flight, including fuel, landing fees, pilot and flight attendant fees, on-board catering and trip-related hangar costs and excluding the value of the
disallowed corporate income tax deductions associated with the personal use of the aircraft. Due to the fact that Company-owned aircraft is used primarily for business travel, the reported aggregate incremental cost excludes fixed costs which do not
change based on usage, including depreciation and monthly management fees. |
| (6) |
Mr. Rose was promoted to Executive Vice President on July 21, 2014 and continues to serve as CFO. |
| (7) |
For Mr. Gilmore, the table includes information only for Fiscal 2015 and Fiscal 2014, as those were the only years during the applicable three-fiscal-year period that he qualified as a named executive officer under
the applicable SEC Rules. |
Grants of Plan-Based Awards
The following table provides information about the equity and non-equity awards granted to the NEOs in Fiscal 2015:
Grants of Plan-Based Awards for Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Grant
Date |
|
|
Compen-
sation
Committee
Approval
Date |
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards |
|
|
Estimated Future Payouts
Under Equity Incentive Plan
Awards (5) |
|
|
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units |
|
|
All Other
Option
Awards:
Number of
Common
Shares
Underlying
Options (6) |
|
|
Exercise
or Base
Price of
Option
Awards
($/Share) |
|
|
Grant
Date Fair
Value of
Stock and
Option
Awards
($) |
|
| |
|
|
|
|
|
|
|
|
|
|
Threshold
($) |
|
|
Target
($) |
|
|
Maximum
($) |
|
|
Threshold
(# of
Common
Shares) |
|
|
Target
(# of
Common
Shares) |
|
|
Maximum
(# of
Common
Shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| John P. McConnell |
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(1 |
) |
|
|
442,900 |
|
|
|
885,800 |
|
|
|
1,771,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(2 |
) |
|
|
500,000 |
|
|
|
1,000,000 |
|
|
|
2,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500 |
|
|
|
17,000 |
|
|
|
34,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
726,070 |
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000 |
|
|
|
43.04 |
|
|
|
305,320 |
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000 |
|
|
|
|
|
|
|
|
|
|
|
946,880 |
|
| B. Andrew Rose |
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(1 |
) |
|
|
251,835 |
|
|
|
503,670 |
|
|
|
1,007,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(2 |
) |
|
|
300,000 |
|
|
|
600,000 |
|
|
|
1,200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500 |
|
|
|
7,000 |
|
|
|
14,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
298,970 |
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
|
|
|
43.04 |
|
|
|
161,640 |
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
|
|
|
|
|
|
|
|
473,440 |
|
| Mark A. Russell |
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(1 |
) |
|
|
318,270 |
|
|
|
636,540 |
|
|
|
1,273,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(2 |
) |
|
|
300,000 |
|
|
|
600,000 |
|
|
|
1,200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500 |
|
|
|
7,000 |
|
|
|
14,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
298,970 |
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
|
|
|
43.04 |
|
|
|
161,640 |
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
|
|
|
|
|
|
|
|
473,440 |
|
| Andrew J. Billman |
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(1 |
) |
|
|
180,250 |
|
|
|
360,500 |
|
|
|
721,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(2 |
) |
|
|
150,000 |
|
|
|
300,000 |
|
|
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
|
3,000 |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,130 |
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
43.04 |
|
|
|
107,760 |
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500 |
|
|
|
|
|
|
|
|
|
|
|
236,720 |
|
|
|
|
06/24/14 |
|
|
|
06/24/14 |
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
801,500 |
|
| Geoffrey G. Gilmore |
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(1 |
) |
|
|
198,750 |
|
|
|
397,500 |
|
|
|
795,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
(2 |
) |
|
|
150,000 |
|
|
|
300,000 |
|
|
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
|
3,000 |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,130 |
|
|
|
|
06/01/14 |
|
|
|
06/24/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
43.04 |
|
|
|
107,760 |
|
|
|
|
06/30/14 |
|
|
|
06/24/14 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,500 |
|
|
|
|
|
|
|
|
|
|
|
279,760 |
|
|
|
|
06/24/14 |
|
|
|
06/24/14 |
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
801,500 |
|
| (1) |
These rows show the potential payouts which could have been earned under annual cash incentive bonus awards granted under the Annual Incentive Plan for Executives, based on achievement of specified levels of performance
for the twelve months ended May 31, 2015. The types of performance measured and the weighting of those measurements are described in the section captioned “Compensation Discussion and Analysis – Compensation Components — Annual
Incentive Compensation” beginning on page 39 of this Proxy Statement. For Fiscal 2015, the NEOs earned the amounts shown in the “2015” rows of the “Annual Incentive Bonus Award” column of the “Fiscal 2015 Summary
Compensation Table” beginning on page 52 of this Proxy Statement. Please also see the discussion in the section captioned “Compensation Discussion and Analysis – Cash Compensation Earned in Fiscal 2015 and Company Performance”
beginning on page 36 of this Proxy Statement for more information about these awards. |
| (2) |
These rows show the potential payouts under long-term cash performance awards granted to the NEOs under the 1997 LTIP for the three-fiscal-year performance period from June 1, 2014 to May 31, 2017. The types
of performance measured and the weighting of those measurements are described in the section captioned “Compensation Discussion and Analysis – Compensation Components — Long-Term Performance Awards – General” beginning on
page 42 of this Proxy Statement. For further information on the terms of the long-term cash performance awards, see the discussion in the sections captioned “Compensation Discussion and Analysis – Compensation Components – Long-Term
Performance Awards – General”, “– Long-Term Cash Performance Awards”, and “– Long-Term Performance Awards – Impact |
55
of Termination/Change in Control” beginning on page 42, page 43, and page 44, respectively,
of this Proxy Statement. For additional information about the effect of a change in control, also see the discussion in the section captioned “Compensation Discussion and Analysis – Change in Control” beginning on page 48.
| (3) |
These rows show the number of annual time-vested restricted common shares awarded effective June 30, 2014 under the 1997 LTIP. The restricted common shares granted to the NEOs are held in escrow by the Company and
may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the restrictions thereon have lapsed. Each holder of a restricted common share award may exercise any voting rights associated with the restricted common
shares during the restriction period. In addition, any dividends or distributions paid with respect to the common shares underlying the restricted common shares will be held by the Company in escrow during the restriction period and, at the end of
the restriction period, will be distributed or forfeited in the same manner as the restricted common shares with respect to which they were paid. |
These annual time-vested restricted common shares are generally forfeited in the event of termination of an NEO’s employment before
vesting, except that (i) the restricted common shares will fully vest if the NEO dies or becomes disabled, and (ii) the Compensation Committee, in its discretion, may elect to vest all or a portion of the restricted common shares upon
retirement. For information on the effect of a change in control, see the discussion in the section captioned “Compensation Discussion and Analysis – Change in Control” beginning on page 48 of this Proxy Statement.
The grant date fair value for the annual time-vested restricted common shares, computed in accordance with ASC 718, was calculated by
multiplying the number of annual time-vested restricted common shares granted by the $43.04 closing price of the common shares on the grant date. “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation”
and “Note J – Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the 2015 Form 10-K for additional information regarding the awards.
| (4) |
These rows show the 25,000 special performance-based/time-vested restricted common shares awarded effective June 24, 2014 to each of Messrs. Billman and Gilmore under the 1997 LTIP. The term of these special
performance-based/time-vested restricted common shares is five years. These special performance based/time-vested restricted common shares will vest when both (A) the closing price of the Company’s common shares equals or exceeds $60.00
per share for 30 consecutive days during the five-year term; and (B) the NEO has remained continuously employed for the five-year term. See the first paragraph of footnote (3) for more information concerning restricted common shares
generally. |
The grant date fair value for the special performance-based/time-vested restricted common shares, computed in
accordance with ASC 718 using the Monte Carlo simulation model, was $32.06 per share. See “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note J – Stock-Based Compensation” of
the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the 2015 Form 10-K for assumptions used and additional information regarding the method for calculating the grant date fair
value of the special performance-based/time-vested restricted common shares awards and additional information regarding the awards.
| (5) |
These columns show the potential payouts under long-term performance share awards granted to the NEOs under the 1997 LTIP for the three-fiscal-year performance period from June 1, 2014 to May 31, 2017. The
types of performance measured and the weighting of those measurements are described in the section captioned under “Compensation Discussion and Analysis – Compensation Components — Long-Term Performance Awards – General”
beginning on page 42 of this Proxy Statement. For further information on the terms of the long-term performance share awards, including those applicable to a change in control, see the discussion in the sections captioned “Compensation
Discussion and Analysis – Change in Control” beginning on page 48 of this Proxy Statement and “Compensation Discussion and Analysis – Compensation Components – Long-Term Performance Awards – General,” “–
Long-Term Performance Share Awards” and “Long-Term Performance Awards – Impact of Termination/Change in Control” beginning on page 42, page 43, and page 44, respectively, of this Proxy Statement. |
The grant date fair value for the long-term performance share awards, computed in accordance with ASC 718, were calculated based upon the
“target” award and the $42.71 closing price of the common shares on the date of grant.
56
| (6) |
These options were granted as of June 30, 2014 under the 2010 Stock Option Plan with exercise prices equal to the fair market value of the underlying common shares on the date of grant. The options become
exercisable in increments of 33% per year on each of the first through third anniversaries of their grant date. For further information on the terms of the options, see the discussion in the section captioned “Compensation Discussion and
Analysis – Compensation Components – Options” beginning on page 41 of this Proxy Statement. For information on the effect of a change in control, see the discussion in the section captioned “Compensation Discussion and Analysis
– Change in Control” beginning on page 48 of this Proxy Statement. |
The grant date fair value of the option awards
was $17.96 per share, computed in accordance with ASC 718. Generally, the grant date fair value of the options is the aggregate amount the Company would include as a compensation expense in its consolidated financial statements over each
award’s three-year vesting schedule. See “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note J – Stock-Based Compensation” of the Notes to Consolidated Financial
Statements in “Item 8. – Financial Statements and Supplementary Data” of the 2015 Form 10-K for the method (Black-Scholes) used in calculating the fair value of the option awards and additional information regarding the awards.
Outstanding Equity Awards at Fiscal 2015 Year-End
The following table summarizes the outstanding option awards, restricted common share awards and long-term performance share awards held by the
NEOs as of May 31, 2015. For additional information about these equity awards, see the discussion in the sections captioned “Compensation Discussion and Analysis – Compensation Components – Long-Term Incentive Compensation”,
“– Options”, “– Long-Term Performance Awards – General”, “– Long-Term Performance Share Awards,” “ – Annual Restricted Common Share Awards to Executives” and “ – Special
Performance-Based/Time-Vested Restricted Common Share Awards” beginning on page 40, page 41, page 42, page 43, page 44, and page 45, respectively, of this Proxy Statement.
Outstanding Equity Awards at Fiscal 2015 Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Option Awards (1) |
|
|
Stock
Awards |
|
| Name |
|
No. of
Common
Shares
Underlying
Unexercised
Options (#)
Exercisable |
|
|
No. of
Common
Shares
Underlying
Unexercised
Options (#)
Unexercisable |
|
|
|
|
|
Option
Exercise
Price |
|
|
Option
Expiration
Date |
|
|
No. of Shares
or Units of
Stock that
Have Not
Vested (#)
(2) (3) |
|
|
Market Value of
Shares or Units
of Stock That
Have Not
Vested ($) (4) |
|
|
Equity Incentive
Plan Awards: No.
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#) (5) |
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($) (5) |
|
|
Equity Incentive
Plan Awards:
Performance
Period Ending
Date |
|
| John P. McConnell |
|
|
130,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
18.17 |
|
|
|
06/01/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
100,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
22.73 |
|
|
|
07/02/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
100,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
20.21 |
|
|
|
07/01/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
150,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
13.25 |
|
|
|
07/16/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
108,000 |
|
|
|
27,000 |
|
|
|
(6 |
) |
|
$ |
12.05 |
|
|
|
07/02/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
80,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
23.10 |
|
|
|
06/30/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
53,334 |
|
|
|
26,666 |
|
|
|
(7 |
) |
|
$ |
20.47 |
|
|
|
06/29/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
5,667 |
|
|
|
11,333 |
|
|
|
(8 |
) |
|
$ |
31.71 |
|
|
|
06/28/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
0 |
|
|
|
17,000 |
|
|
|
(9 |
) |
|
$ |
43.04 |
|
|
|
06/30/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
544,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
22,000 |
|
|
|
598,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
22,000 |
|
|
|
598,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000 |
|
|
|
462,570 |
|
|
|
05/31/16 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000 |
|
|
|
462,570 |
|
|
|
05/31/17 |
|
| B. Andrew Rose |
|
|
15,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
11.81 |
|
|
|
12/01/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
40,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
13.25 |
|
|
|
07/16/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
32,000 |
|
|
|
8,000 |
|
|
|
(6 |
) |
|
$ |
12.05 |
|
|
|
07/02/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
30,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
23.10 |
|
|
|
06/30/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
33,334 |
|
|
|
16,666 |
|
|
|
(7 |
) |
|
$ |
20.47 |
|
|
|
06/29/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3,000 |
|
|
|
6,000 |
|
|
|
(8 |
) |
|
$ |
31.71 |
|
|
|
06/28/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
0 |
|
|
|
9,000 |
|
|
|
(9 |
) |
|
$ |
43.04 |
|
|
|
06/30/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
272,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
299,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
299,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
|
180,000 |
|
|
|
4,897,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000 |
|
|
|
190,470 |
|
|
|
05/31/16 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000 |
|
|
|
190,470 |
|
|
|
05/31/17 |
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Option Awards (1) |
|
|
Stock Awards |
|
| Name |
|
No. of
Common
Shares
Underlying
Unexercised
Options (#)
Exercisable |
|
|
No. of
Common
Shares
Underlying
Unexercised
Options (#)
Unexercisable |
|
|
|
|
|
Option
Exercise
Price |
|
|
Option
Expiration
Date |
|
|
No. of Shares
or Units of
Stock that
Have Not
Vested (#)
(2) (3) |
|
|
Market Value of
Shares or Units
of Stock That
Have Not
Vested ($) (4) |
|
|
Equity Incentive
Plan Awards: No.
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#) (5) |
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($) (5) |
|
|
Equity
Incentive
Plan
Awards:
Performance
Period
Ending Date |
|
| Mark A. Russell |
|
|
100,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
18.41 |
|
|
|
02/12/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
30,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
22.73 |
|
|
|
07/02/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
30,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
20.21 |
|
|
|
07/01/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
40,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
13.25 |
|
|
|
07/16/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
28,800 |
|
|
|
7,200 |
|
|
|
(6 |
) |
|
$ |
12.05 |
|
|
|
07/02/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
30,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
23.10 |
|
|
|
06/30/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
33,334 |
|
|
|
16,666 |
|
|
|
(7 |
) |
|
$ |
20.47 |
|
|
|
06/29/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3,000 |
|
|
|
6,000 |
|
|
|
(8 |
) |
|
$ |
31.71 |
|
|
|
06/28/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
0 |
|
|
|
9,000 |
|
|
|
(9 |
) |
|
$ |
43.04 |
|
|
|
06/30/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
272,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
299,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
299,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
|
180,000 |
|
|
|
4,497,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000 |
|
|
|
190,470 |
|
|
|
05/31/16 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000 |
|
|
|
190,470 |
|
|
|
05/31/17 |
|
| Andrew J. Billman |
|
|
3,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
20.80 |
|
|
|
12/03/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
2,500 |
|
|
|
0 |
|
|
|
|
|
|
$ |
13.39 |
|
|
|
10/16/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
8,000 |
|
|
|
2,000 |
|
|
|
(6 |
) |
|
$ |
12.05 |
|
|
|
07/02/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
6,500 |
|
|
|
0 |
|
|
|
|
|
|
$ |
23.10 |
|
|
|
06/30/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
13,500 |
|
|
|
0 |
|
|
|
|
|
|
$ |
14.84 |
|
|
|
09/02/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
18,334 |
|
|
|
9,166 |
|
|
|
(7 |
) |
|
$ |
20.47 |
|
|
|
06/29/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
2,000 |
|
|
|
4,000 |
|
|
|
(8 |
) |
|
$ |
31.71 |
|
|
|
06/28/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
0 |
|
|
|
6,000 |
|
|
|
(9 |
) |
|
|
$43.04 |
|
|
|
06/30/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
161,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
5,500 |
|
|
|
201,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
5,500 |
|
|
|
221,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
680,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
81,630 |
|
|
|
05/31/16 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
81,630 |
|
|
|
05/31/17 |
|
| Geoffrey G. Gilmore |
|
|
4,000 |
|
|
|
1,000 |
|
|
|
(6 |
) |
|
$ |
12.05 |
|
|
|
07/02/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
7,500 |
|
|
|
0 |
|
|
|
|
|
|
$ |
14.84 |
|
|
|
09/02/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
13,334 |
|
|
|
6,666 |
|
|
|
(7 |
) |
|
$ |
20.47 |
|
|
|
06/29/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
667 |
|
|
|
4,000 |
|
|
|
(8 |
) |
|
$ |
31.71 |
|
|
|
06/28/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
2,000 |
|
|
|
6,000 |
|
|
|
(9 |
) |
|
$ |
43.04 |
|
|
|
06/30/24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
0 |
|
|
|
|
|
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
163,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
6,500 |
|
|
|
176,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
6,500 |
|
|
|
176,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
680,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
(14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
81,630 |
|
|
|
05/31/16 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
81,630 |
|
|
|
05/31/17 |
|
| (1) |
All options outstanding as of May 31, 2015 were granted under the 1997 LTIP, the Amended and Restated 2003 Stock Option Plan, or the 2010 Stock Option Plan with exercise prices equal to the fair market value of the
underlying common shares on the date of grant. All options granted prior to June 30, 2011 become exercisable in increments of 20% per year on each anniversary of their grant date for the first five anniversaries. All options granted on or
after June 30, 2011 become exercisable in increments of 33% per year on each anniversary of their grant date for the first three anniversaries. See the discussion in the section captioned “Compensation Discussion and Analysis —
Long-Term Incentive Compensation — Compensation Components — Options” beginning on page 41 of this Proxy Statement. |
| (2) |
See footnote (3) to the “Grants of Plan-Based Awards for Fiscal 2015” table beginning on page 55 of this Proxy Statement for detailed information on the annual time-vested restricted common share awards
granted during Fiscal 2015. |
| (3) |
See footnote (4) to the “Grants of Plan-Based Awards for Fiscal 2015” table beginning on page 55 of this Proxy Statement for detailed information on the special performance-based/time-vested restricted
common share awards granted during Fiscal 2015. |
| (4) |
Each market value shown in this column is calculated by multiplying the number of restricted common shares by the $27.21 closing price of the Company’s common shares on May 29, 2015, the last business day of
Fiscal 2015, without any discount for restrictions. |
| (5) |
The amounts shown in this column assume that the long-term performance share awards granted for each of the three-fiscal-year periods ending May 31, 2016 and May 31, 2017 will be earned at the
“target” amount based upon achieving those specified performance levels and multiplying such amount by the $27.21 closing price of the Company’s common shares on May 29, 2015, the last business day of Fiscal 2015. See the
“Estimated Future Payouts Under Equity Incentive Plan Awards” columns of the “Grants of |
58
| |
Plan-Based Awards for Fiscal 2015” table beginning on page 55 of this Proxy Statement for the threshold, target and maximum number of performance shares that may be received for the performance period ending
May 31, 2017. |
| (6) |
Unexercisable options vested on July 2, 2015. |
| (7) |
Unexercisable options vested on June 29, 2015. |
| (8) |
Unexercisable options vested 50% on June 28, 2015 and will vest 50% on June 28, 2016. |
| (9) |
Unexercisable options vested 33% on June 30, 2015 and will vest 33% on June 30, 2016 and 33% on June 30, 2017 |
| (10) |
These time-vested restricted common share awards were granted effective June 29, 2012 under the 1997 LTIP. Subject to continued employment of the NEO, these restricted common shares will fully vest on the third
anniversary of the date of grant, subject to the terms of each restricted common share award. For the general terms of the restricted common shares, see footnote (21) to the “Beneficial Ownership” table beginning on page 14 of this
Proxy Statement. |
| (11) |
These time-vested restricted common share awards were granted effective June 28, 2013 under the 1997 LTIP. Subject to continued employment of the NEO, these restricted common shares will become fully vested on the
third anniversary of the date of grant, subject to the terms of each restricted common share award. For the general terms of the restricted common shares, see footnote (21) to the “Beneficial Ownership” table beginning on page 14 of
this Proxy Statement. |
| (12) |
These time-vested restricted common share awards were granted effective June 30, 2014 under the 1997 LTIP. Subject to continued employment of the NEO, these restricted common shares will become fully vested on the
third anniversary of the date of grant, subject to the terms of each restricted common share award. For the general terms of the restricted common shares see footnote (21) to the “Beneficial Ownership” table beginning on page 14 of
this Proxy Statement. |
| (13) |
Effective June 28, 2013, Mr. Rose and Mr. Russell each received a special performance-based/time-vested restricted common share award covering 180,000 common shares which will fully vest if and when both:
(a) the closing price of the Company’s common shares equals or exceeds $50.00 per share for 30 consecutive days during the five-year period ending on June 28, 2018; and (b) the NEO has continuously remained an employee of the
Company through the later of June 28, 2016 or the date the condition in (a) is met. The holding period for the special performance-based/time-vested restricted common shares following vesting extends to two years after vesting. Further
information on these awards is set forth in the section captioned “Compensation Discussion and Analysis – Special Performance-Based/Time-Vested Restricted Common Share Awards” beginning on page 45 of this Proxy Statement. For the
general terms of the restricted common shares, see footnote (21) to the “Beneficial Ownership” table beginning on page 14 of this Proxy Statement. |
| (14) |
Effective June 24, 2014, Mr. Billman and Mr. Gilmore each received a special performance-based/time-vested restricted common share award covering 25,000 common shares which will vest if both: (a) the
closing price of the Company’s common shares equals or exceeds $60.00 per share for 30 consecutive days during the five-year period ending on June 24, 2019; and (b) the NEO has continuously remained an employee of the Company or a
subsidiary of the Company through June 24, 2019. For further details on these special performance-based/time-vested restricted common share awards, see the “Grants of Plan -Based Awards for Fiscal 2015” table beginning on page 55 of
this Proxy Statement. For the general terms of the restricted common shares, see footnote (21) to the “Beneficial Ownership” table beginning on page 14 of this Proxy Statement. |
Option Exercises and Stock Vested
The
following table sets forth information about (i) non-qualified stock options exercised by NEOs in Fiscal 2015; (ii) long-term performance share awards earned by NEOs for the three-fiscal-year period ended May 31, 2015;
(iii) special performance-based/time-vested restricted common shares held by NEOs which vested in Fiscal 2015; and (iv) time-vested restricted common shares held by NEOs which vested in Fiscal 2015:
59
Option Exercises and Stock Vested during Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Option Awards |
|
|
Stock Awards |
|
| Name |
|
Number of
Common
Shares
Acquired on
Exercise (#) |
|
|
Value Realized
on Exercise ($) |
|
|
Number of
Common Shares
Acquired on
Vesting (#) |
|
|
Value Realized
on Vesting ($) |
|
| John P. McConnell |
|
|
200,000 |
|
|
|
2,066,000 |
|
|
|
26,490
20,000 |
(1)
(2) |
|
|
747,548
860,800 |
(1)
(2) |
|
|
|
|
|
| B. Andrew Rose |
|
|
|
|
|
|
|
|
|
|
10,596
7,000
61,667 |
(1)
(2)
(3) |
|
|
299,019
301,280
2,654,148 |
(1)
(2)
(3) |
|
|
|
|
|
| Mark A. Russell |
|
|
|
|
|
|
|
|
|
|
10,596
7,000
61,667 |
(1)
(2)
(3) |
|
|
299,019
301,280
2,654,148 |
(1)
(2)
(3) |
|
|
|
|
|
| Andrew J. Billman |
|
|
|
|
|
|
|
|
|
|
6,133
1,000
4,000 |
(1)
(2)
(4) |
|
|
173,073
43,040
161,760 |
(1)
(2)
(4) |
|
|
|
|
|
| Geoffrey G. Gilmore |
|
|
|
|
|
|
|
|
|
|
4,463
1,000 |
(1)
(2) |
|
|
125,946
40,440 |
(1)
(2) |
| (1) |
The number of common shares acquired on vesting relates to long-term performance share awards granted on June 1, 2012 and represents the common shares earned with respect to the three-fiscal-year period ended
May 31, 2015. The value realized on vesting represents the number of common shares earned multiplied by the closing market price of the common shares on June 24, 2015 ($28.22 per share). The number of common shares actually received by the
NEOs was reduced in each case by the withholding of common shares to pay the income taxes associated with the value realized upon vesting, with the net number of common shares received by each of the NEOs as follows: Mr. McConnell –
13,127; Mr. Rose – 6,904; Mr. Russell – 6,904; Mr. Billman – 3,996; and Mr. Gilmore – 2,908. |
| (2) |
The number of common shares acquired on vesting relates to restricted common share awards granted on June 30, 2011 which vested on June 30, 2014. The value realized on vesting represents the number of common
shares earned multiplied by the closing market price of the common shares on June 30, 2014 ($43.04 per common share). The number of common shares actually received by each NEO was reduced by the withholding of common shares to pay the income
taxes associated with the value realized upon vesting, with the net number of common shares received by each of the NEOs as follows: Mr. McConnell – 9,909; Mr. Rose – 3,538; Mr. Russell – 3,538; Mr. Billman –
651; and Mr. Gilmore – 505. |
| (3) |
For Messrs. Rose and Russell, these 61,667 common shares represent one-third of the special performance-based/time-vested restricted common shares granted on June 30, 2011, which vested June 30, 2014. The
performance-based vesting requirement was met on May 7, 2013. The time-based vesting is 33% per year. The value realized on vesting represents the number of common shares earned and vested multiplied by the closing market price of the
common shares on the June 30, 2014 vesting date ($43.04). The number of common shares actually received by Messrs. Rose and Russell was reduced in each case by the withholding of common shares to pay the income taxes associated with the value
realized upon vesting, with the net number of common shares acquired by each of them as follows: Mr. Rose – 31,172; and Mr. Russell – 31,172. The holding period for the restricted common shares following vesting extends to
June 30, 2016. |
| (4) |
The number of common shares acquired on vesting relates to a restricted common share award granted on September 2, 2011 which vested on September 2, 2014. The value realized on vesting represents the number of
common shares earned multiplied by the closing market price of the common shares on September 2, 2014 ($40.44 per common share). The number of common shares actually received by Mr. Billman was reduced by the withholding of common shares
to pay the income taxes associated with the value realized upon vesting, with Mr. Billman receiving a net number of 2,022 common shares. |
60
Non-Qualified Deferred Compensation
The Company maintains two Employee Deferral Plans which provide for the deferral of compensation on a basis that is not tax-qualified –
the 2000 NQ Plan and the 2005 NQ Plan. Contributions and deferrals for the period from March 1, 2000 through December 31, 2004 are maintained under the 2000 NQ Plan. Contributions and deferrals for periods on or after January 1, 2005
are maintained under the 2005 NQ Plan, which was adopted to replace the 2000 NQ Plan in order to comply with the provisions of Section 409A of the Internal Revenue Code. The terms of the 2005 NQ Plan, which are discussed below, are similar to
those of the 2000 NQ Plan but are more restrictive with respect to the timing of deferral elections and the ability of participants to change the time and manner in which accounts will be paid. The Employee Deferral Plans are intended to supplement
the 401(k) plans sponsored by the Company. For further information on the term, see the discussion in the section captioned “Compensation Discussion and Analysis — Compensation Components — Non-Qualified Deferred Compensation”
beginning on page 47 of this Proxy Statement.
Only select highly-compensated employees of the Company, including the NEOs, are eligible
to participate in the Employee Deferral Plans. As of July 31, 2015, approximately 130 employees of the Company were eligible to participate in the 2005 NQ Plan and 24 employees of the Company had accounts in the 2000 NQ Plan.
Under the 2005 NQ Plan, participants may defer the payment of up to 50% of their base salary and up to 100% of their annual cash incentive
bonus awards. Deferred amounts are credited to the participants’ bookkeeping accounts under the 2005 NQ Plan at the time the base salaries and/or annual cash incentive bonus awards would have otherwise been paid. In addition, the Company may
make discretionary employer contributions to participants’ bookkeeping accounts in the 2005 NQ Plan. For the 2015, 2014 and 2013 calendar years, in order to provide the same percentage of retirement-related deferred compensation contributions
to participants compared to other employees that would have been made but for the IRS limits on annual compensation that may be considered under tax-qualified plans, the Company made contributions to participants’ bookkeeping accounts under the
2005 NQ Plan equal to (i) 3% of a participant’s annual compensation (base salary plus annual cash incentive bonus award) in excess of the IRS maximum and (ii) a matching contribution of 50% of the first 4% of annual compensation
contributed by the participant to the DPSP to the extent not matched by the Company under the DPSP.
Participants in the 2005 NQ Plan may
elect to have their bookkeeping accounts treated as invested (a) with a rate of return reflecting (i) a fixed interest rate which is set annually by the Compensation Committee (2.08% for Fiscal 2015); or (ii) the returns on those
investment options available under the DPSP, or (b) in theoretical common shares reflecting increases or decreases in the value of the Company’s common shares with dividends deemed reinvested. Any portion of a participant’s
bookkeeping account credited to theoretical common shares must remain credited to theoretical common shares until distributed. Otherwise, participants in the 2005 NQ Plan may change the investment options for their bookkeeping accounts as of the
time permitted under the DPSP for the same or a similar investment option.
Bookkeeping accounts of employees are fully vested under the
2005 NQ Plan. Theoretical common shares are paid in whole common shares and cash in lieu of fractional shares and all other amounts are paid in cash. Payouts are made as of a specified date selected by the participant or, subject to the timing
requirements of Section 409A of the Internal Revenue Code, when the participant is no longer employed by the Company. Payouts are made in a lump sum or in installment payments, as chosen by the participant at the time the deferral election is
made. The Compensation Committee may permit hardship withdrawals from a participant’s bookkeeping account under the 2005 NQ Plan in accordance with defined guidelines. In the event of a defined change in control, the participants’
bookkeeping accounts under the 2005 NQ Plan will generally be paid out as of the date of the change in control.
61
The following table provides information concerning the participation by the NEOs in the Employee
Deferral Plans for Fiscal 2015:
Non-Qualified Deferred Compensation for Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Name of Plan |
|
|
Executive
Contributions in
Fiscal
2015 ($) (1) |
|
|
Company
Contributions
in Fiscal
2015 ($) (2) |
|
|
Aggregate
Earnings /
(Loss)
in Fiscal
2015 ($) (3) |
|
|
Aggregate
Withdrawals/
Distributions
($) |
|
|
Aggregate
Balance at
May 31,
2015 ($) (4) |
|
| John P. McConnell |
|
|
2000 NQ Plan
2005 NQ Plan |
|
|
|
0
0 |
|
|
|
0
40,880 |
|
|
|
6,741
7,312 |
|
|
|
0
0 |
|
|
|
328,446
391,424 |
|
|
|
|
|
|
|
|
| B. Andrew Rose |
|
|
2000 NQ Plan
2005 NQ Plan |
|
|
|
0
0 |
|
|
|
0
24,194 |
|
|
|
0
41,960 |
|
|
|
0
0 |
|
|
|
0
717,623 |
|
|
|
|
|
|
|
|
| Mark A. Russell |
|
|
2000 NQ Plan
2005 NQ Plan |
|
|
|
0
572,908 |
|
|
|
0
43,101 |
|
|
|
0
(2,337,989 |
) |
|
|
0
0 |
|
|
|
0
5,157,386 |
|
|
|
|
|
|
|
|
| Andrew J. Billman |
|
|
2000 NQ Plan
2005 NQ Plan |
|
|
|
0
35,226 |
|
|
|
0
22,004 |
|
|
|
0
(2,282 |
) |
|
|
0
0 |
|
|
|
0
202,512 |
|
|
|
|
|
|
|
|
| Geoffrey G. Gilmore |
|
|
2000 NQ Plan
2005 NQ Plan |
|
|
|
0
0 |
|
|
|
0
20,349 |
|
|
|
0
(46,728 |
) |
|
|
0
0 |
|
|
|
0
126,207 |
|
| (1) |
The amounts in this column reflect contributions to the 2005 NQ Plan during Fiscal 2015 as a result of deferrals of base salary and/or annual cash incentive bonus awards which would otherwise have been paid to the NEOs.
These amounts are also included in the “Salary” or “Annual Incentive Bonus Award” columns, respectively, for Fiscal 2015 in the “Fiscal 2015 Summary Compensation Table” beginning on page 52 of this Proxy Statement.
|
| (2) |
These contributions are also included in the “All Other Compensation” column in the “Fiscal 2015 Summary Compensation Table” beginning on page 52 of this Proxy Statement. |
| (3) |
Since the earnings on compensation that has been deferred under the Employee Deferral Plans by the NEOs do not represent “above-market” earnings for purposes of the applicable SEC Rules, none of the amounts
included in this column have been reported in the “Fiscal 2015 Summary Compensation Table” beginning on page 52 of this Proxy Statement. |
| (4) |
The amounts included in the “Aggregate Balance at May 31, 2015” column represent contributions by the Company or the NEOs and credited to the respective NEOs’ bookkeeping accounts under the 2000 NQ
Plan or the 2005 NQ Plan, and earnings on the amounts credited to those accounts. The total amount of the Company and NEO contributions to the Employee Deferral Plans, which are included in this column are as follows: (a) Mr. McConnell
— $546,257; (b) Mr. Rose — $548,238; (c) Mr. Russell — $4,007,236; (d) Mr. Billman — $173,423; and (e) Mr. Gilmore — $107,606. |
Annual Cash Incentive Bonus Awards Granted For Fiscal 2016
The following supplemental table sets forth the annual cash incentive bonus awards granted to the NEOs under the Annual Incentive Plan for
Executives for Fiscal 2016 as of the date of this Proxy Statement:
Annual Cash Incentive Bonus Awards Granted for Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Annual Cash Incentive Bonus Awards for
Twelve-Month Performance Period Ending
May 31, 2016 (1) |
|
| |
|
Threshold ($) |
|
|
Target ($) |
|
|
Maximum ($) |
|
| John P. McConnell |
|
|
442,900 |
|
|
|
885,800 |
|
|
|
1,771,600 |
|
| B. Andrew Rose |
|
|
251,835 |
|
|
|
503,670 |
|
|
|
1,007,340 |
|
| Mark A. Russell |
|
|
318,270 |
|
|
|
636,540 |
|
|
|
1,273,080 |
|
| Andrew J. Billman |
|
|
185,658 |
|
|
|
371,315 |
|
|
|
742,630 |
|
| Geoffrey G. Gilmore |
|
|
225,000 |
|
|
|
450,000 |
|
|
|
900,000 |
|
| (1) |
Payouts which can be earned under these annual cash incentive bonus awards are generally tied to achieving specified levels (threshold, target and
maximum) of corporate EVA and EPS for the twelve- |
62
month performance period with each performance measure carrying a 50% weighting. For Mr. Billman and Mr. Gilmore, business unit executives, the corporate EPS measure carries a 20%
weighting, the applicable business unit EOI carries a 30% weighting, and the business unit EVA carries a 50% weighting. For all calculations, restructuring charges and non-recurring items are to be excluded and EPS and the Steel Processing business
unit EOI results are to be adjusted to eliminate the impact of FIFO gains and losses. If the performance level falls between threshold and target or between target and maximum, the award is linearly prorated. If threshold levels are not reached for
any performance measure, no annual cash incentive bonus will be paid. Annual cash incentive bonus award payouts earned will be made within a reasonable time following the end of the performance period. In the event of a change in control of the
Company (followed by actual or constructive termination of an NEO’s employment during the performance period), the annual cash incentive bonus award would be considered to be earned at “target” and payable as of the date of
termination of employment.
Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2016
The following supplemental table sets forth the long-term performance awards (consisting of long-term cash performance awards and long-term
performance share awards) for the three-fiscal-year period ending May 31, 2018, the option awards and the restricted common share awards granted to the NEOs in Fiscal 2016 through the date of this Proxy Statement:
Long-Term Performance Awards, Option Awards and
Restricted Common Share Awards Granted in Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Long-Term Cash Performance Awards
for Three-Fiscal-Year Period Ending
May 31, 2018 (1) |
|
|
Long-Term Performance Share
Awards for Three-Fiscal-Year
Period Ending
May 31, 2018 (1) |
|
|
Option
Awards:
Number of
Common
Shares
Underlying
Options
(2) |
|
|
Exercise
or Base
Price of
Option
Awards
($/
Share)
(2) |
|
|
Restricted
Common
Share
Awards |
|
| |
Threshold
($) |
|
|
Target
($) |
|
|
Maximum
($) |
|
|
Threshold
(# of
Common
Shares) |
|
|
Target
(# of
Common
Shares) |
|
|
Maximum
(# of
Common
Shares) |
|
|
|
|
| John P. McConnell |
|
|
500,000 |
|
|
|
1,000,000 |
|
|
|
2,000,000 |
|
|
|
10,000 |
|
|
|
20,000 |
|
|
|
40,000 |
|
|
|
35,000 |
|
|
|
30.92 |
|
|
|
30,000 |
(3) |
| B. Andrew Rose |
|
|
300,000 |
|
|
|
600,000 |
|
|
|
1,200,000 |
|
|
|
5,000 |
|
|
|
10,000 |
|
|
|
20,000 |
|
|
|
17,000 |
|
|
|
30.92 |
|
|
|
16,000 |
(3) |
| Mark A. Russell |
|
|
300,000 |
|
|
|
600,000 |
|
|
|
1,200,000 |
|
|
|
5,000 |
|
|
|
10,000 |
|
|
|
20,000 |
|
|
|
17,000 |
|
|
|
30.92 |
|
|
|
16,000 |
(3) |
| Andrew J. Billman |
|
|
150,000 |
|
|
|
300,000 |
|
|
|
600,000 |
|
|
|
2,500 |
|
|
|
5,000 |
|
|
|
10,000 |
|
|
|
8,500 |
|
|
|
30.92 |
|
|
|
8,000 |
(3) |
| Geoffrey G. Gilmore |
|
|
150,000 |
|
|
|
300,000 |
|
|
|
600,000 |
|
|
|
2,500 |
|
|
|
5,000 |
|
|
|
10,000 |
|
|
|
8,500 |
|
|
|
30.92 |
|
|
|
8,500 |
(3) |
| (1) |
These columns show the potential payouts under the long-term cash performance awards and the long-term performance share awards granted to the NEOs
under the 1997 LTIP for the three-fiscal-year performance period from June 1, 2015 to May 31, 2018. Payouts of long-term cash performance awards and long-term performance share awards for Corporate executives are tied to achieving
specified levels (threshold, target and maximum) of cumulative corporate EVA for the three-fiscal-year performance period and EPS growth over that performance period, with each performance measure carrying a 50% weighting. For Mr. Gilmore, a
Steel Processing business unit executive, and for Mr. Billman, a Pressure Cylinders business unit executive, the cumulative corporate EVA and EPS growth measures together carry a 50% weighting, and the applicable business unit EOI targets are
weighted 50%. In all calculations, restructuring charges and non-recurring items are to be excluded, and EPS and Steel Processing business unit EOI results are to be adjusted to eliminate the impact of FIFO gains or losses. No awards are paid or
distributed if none of the three-fiscal-year threshold financial measures are met. If the performance levels fall between threshold and target or between target and maximum, the award is linearly prorated. For further information on the terms of the
long-term cash performance awards and the long-term performance share awards, see the discussion in the sections captioned “Compensation Discussion and Analysis – Compensation Components –
Long- |
63
| |
Term Performance Awards – General”, “– Long-Term Performance Share Awards”, “– Long-Term Cash Performance Awards” and “– Long-Term Performance
Awards – Impact of Termination/Change in Control” beginning on page 42, page 43, page 43 and page 44, respectively, of this Proxy Statement. For information on the effect of a change in control, also see the discussion in the section
captioned “Compensation Discussion and Analysis – Change in Control” beginning on page 48 of this Proxy Statement. |
| (2) |
Effective June 26, 2015, under the 2010 Stock Option Plan, the NEOs were granted non-qualified stock options with respect to the number of common shares shown, with an exercise price equal to $30.92, the fair
market value of the underlying common shares on the date of grant. The options become exercisable over three years in increments of 33% per year on each anniversary of their grant date. For further information on the terms of the options, see
the discussion in the section captioned “Compensation Discussion and Analysis – Compensation Components – Options” beginning on page 41 of this Proxy Statement. For information on the effect of a change in control, see the
discussion in the section captioned “Compensation Discussion and Analysis — Change in Control” beginning on page 48 of this Proxy Statement. |
| (3) |
These annual time-vested restricted common share awards were granted effective June 26, 2015 under the 1997 LTIP. For further information on the annual restricted common shares, see the discussion in the sections
captioned “Compensation Discussion and Analysis — Long-Term Incentive Compensation — Annual Restricted Common Share Awards to Executives” and “Compensation Discussion and Analysis — Change in Control” beginning on
page 44 and page 48, respectively, of this Proxy Statement. |
COMPENSATION OF DIRECTORS
The Compensation Committee annually reviews, with the assistance of Towers Watson, certain market information provided by Towers Watson
concerning compensation (both cash and non-cash) paid to directors. Based upon such information, the Company’s past practices concerning directors’ compensation and such other information as the Compensation Committee deems appropriate,
the Compensation Committee makes recommendations to the Board with respect to directors’ compensation. Following consideration of such recommendations, the compensation payable to the directors is set by the entire Board.
Compensation for Fiscal 2015
In June
2014, upon recommendation of the Compensation Committee and its compensation consultant, the Board elected not to make any changes to the cash portion of director compensation and determined it would grant the equity portion of director compensation
in the form of restricted common shares, as it did in Fiscal 2014, to be awarded as of the date of the annual meeting of shareholders on September 25, 2014. Consistent with Fiscal 2014, the number of restricted common shares to be awarded was
determined in September 2014 at the Board meeting, with a targeted value of approximately $90,000 based on the price of the common shares at or about the time of the Board meeting ($135,000 for Mr. Blystone to reflect his position as Lead
Independent Director).
The following table sets forth the cash compensation paid to the Company’s non-employee directors during
Fiscal 2015 and paid/to be paid for the portion of Fiscal 2016 up until the September 24, 2015 Annual Meeting.
|
|
|
|
|
| Annual Retainer |
|
$ |
55,000 |
|
| Lead Independent Director Supplemental Annual Retainer |
|
$ |
25,000 |
|
| Attendance at a Board Meeting (including telephonic meetings) |
|
$ |
1,500 |
|
| Audit Committee Chair Supplemental Annual Retainer |
|
$ |
15,000 |
|
| Compensation Committee Chair Supplemental Annual Retainer |
|
$ |
10,000 |
|
| Committee Chair (other than Audit or Compensation) Supplemental Annual Retainer |
|
$ |
7,500 |
|
| Attendance at a Board Committee Meeting (including telephonic meetings) |
|
$ |
1,500 |
|
64
Compensation for Fiscal 2016
Information provided to the Compensation Committee by Towers Watson in June 2015 including the amount of the director fees being paid by
comparable companies, showed that both the cash portion and the equity portion of the Company’s director compensation were well below market median levels. The report also showed that industry prevalence is not to pay meeting fees and instead
reflect their elimination in a larger cash retainer.
In light of the report from its compensation consultant, upon the recommendation of
the Compensation Committee, the Board increased the annual retainer for Board members to $85,000 and eliminated per meeting fees.
The
following table sets forth the cash compensation to be paid to the Company’s non-employee directors effective on the date of the Company’s September 24, 2015 Annual Meeting:
|
|
|
|
|
| Annual Retainer |
|
$ |
85,000 |
|
| Lead Independent Director Supplemental Annual Retainer |
|
$ |
25,000 |
|
| Audit Committee Chair Supplemental Annual Retainer |
|
$ |
15,000 |
|
| Compensation Committee Chair Supplemental Annual Retainer |
|
$ |
10,000 |
|
| Committee Chair (other than Audit or Compensation) Supplemental Annual Retainer |
|
$ |
7,500 |
|
Although the compensation consultant recommended an increase in the targeted value of the equity grants, the
Compensation Committee recommended not to increase those grants, and instead to leave the annual equity grants of restricted common shares at a targeted value of approximately $90,000 ($135,000 for Mr. Blystone). At its June 2015 meeting, the
Board approved the recommendation of the Compensation Committee, and left the targeted value of the equity grant unchanged. The restricted common share awards will be granted as of September 24, 2015, the date of the 2015 Annual Meeting.
Director Deferral Plans
The Company
maintains two Director Deferral Plans which provide for deferral of directors’ fees on a basis that is not tax-qualified. The Worthington Industries, Inc. Deferred Compensation Plan for Directors, as Amended and Restated effective June 1,
2000 (as amended, the “Directors 2000 NQ Plan”) governs deferrals prior to January 1, 2005. Deferrals with respect to the period on or after January 1, 2005 are governed by the Worthington Industries, Inc. Amended and Restated
2005 Deferred Compensation Plan for Directors (Restatement effective as of December 2008) (as amended, the “Directors 2005 NQ Plan”) which was adopted in order to comply with the provisions of Section 409A of the Internal Revenue Code
applicable to non-qualified deferred compensation plans. The terms of the Directors 2005 NQ Plan, which are discussed below are similar to those of the Directors 2000 NQ Plan, but are generally more restrictive with respect to the timing of deferral
elections and the ability of participants to change the time and manner in which accounts will be paid.
Under the Directors 2005 NQ Plan,
non-employee directors are able to defer payment of all or a portion of their cash directors’ fees until a specified date or until they are no longer associated with the Company. Any fees deferred are credited to each participating
director’s bookkeeping account under the Directors 2005 NQ Plan at the time the fees would have otherwise been paid. Participants in the Directors 2005 NQ Plan may elect to have their bookkeeping accounts treated as invested (a) with a
rate of return reflecting (i) a fixed interest rate (2.08% for Fiscal 2015) which is set annually by the Compensation Committee; or (ii) the rates of return on those investment options available under the DPSP or (b) in theoretical
common shares reflecting increases or decreases in the value of the Company’s common shares with dividends deemed reinvested. Any portion of a participant’s bookkeeping account credited to theoretical common shares will remain credited to
theoretical common shares until distributed. Otherwise, participants in the Directors 2005 NQ Plan may change the investment options for their bookkeeping accounts at the time permitted by the DPSP for the same investment option. The Directors 2005
NQ Plan, as well as the Directors 2000 NQ Plan, are administered by the Compensation Committee. All bookkeeping accounts are fully vested. Payouts under the Directors 2005 NQ Plan are made in cash or, in the case of amounts credited to theoretical
common shares, whole common shares and cash in lieu of fractional shares. The Compensation Committee may permit hardship withdrawals from a participant’s bookkeeping account under the Directors 2005 NQ Plan under defined guidelines. In the
event of a defined change in control, participants’ bookkeeping accounts under the Directors 2005 NQ Plan will generally be paid out as of the date of change in control.
65
Equity Grants
Under the Worthington Industries, Inc. Amended and Restated 2006 Equity Incentive Plan for Non-Employee Directors as amended, the “2006
Directors Equity Plan”), the Board may grant non-qualified stock options, restricted common shares, restricted stock units, stock appreciation rights and whole common shares to non-employee directors of the Company. Awards under the 2006
Directors Equity Plan are made by the Board in its discretion.
On September 25, 2014, each individual then serving as a non-employee
director (including each non-employee director nominee elected at the 2014 Annual Meeting) immediately following the 2014 Annual Meeting received an award of 2,370 restricted common shares (3,555 restricted common shares for Mr. Blystone to
reflect his position as Lead Independent Director). Each restricted common share granted to the non-employee directors immediately following the 2014 Annual Meeting will vest September 24, 2015.
On September 24, 2015, each individual then serving as a non-employee director (including each non-employee director nominee elected at
the 2015 Annual Meeting) immediately following the 2015 Annual Meeting will receive a restricted common share award having a value of approximately $90,000 ($135,000 for Mr. Blystone to reflect his position as Lead Independent Director), based
on the then market price of the Company’s common shares shortly before that date. Each restricted common share granted to the non-employee directors immediately following the 2015 Annual Meeting will vest on the first to occur of the first
anniversary of the 2015 Annual Meeting or the date of the 2016 Annual Meeting of Shareholders.
Upon a business combination or change in
control, all restricted common shares will become fully vested. In the case of death, total disability or retirement, all restricted common shares will also immediately become fully vested. If a non-employee director’s service on the Board
terminates for any other reason, unvested restricted common shares will be forfeited. During the time between the grant date and the vesting date, a non-employee director may exercise full voting rights in respect of the restricted common shares and
will be credited with any dividends paid on the restricted common shares (which dividends will be distributed with the restricted common shares if they vest, or forfeited if the restricted common shares are forfeited).
Director Compensation for Fiscal 2015
The following table sets forth information concerning the compensation earned by the Company’s non-employee directors during Fiscal 2015:
Director Compensation for Fiscal 2015 (1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Fees Earned or
Paid in Cash
($) (3) |
|
|
Stock
Awards
($) (4) |
|
|
Option
Awards
($) (5) |
|
|
Total
($) |
|
| Kerrii B. Anderson |
|
|
76,119 |
|
|
|
94,062 |
|
|
|
— |
|
|
|
170,181 |
|
| John B. Blystone (6) |
|
|
102,928 |
|
|
|
141,093 |
|
|
|
— |
|
|
|
244,021 |
|
| Mark C. Davis |
|
|
73,119 |
|
|
|
94,062 |
|
|
|
— |
|
|
|
167,181 |
|
| Michael J. Endres |
|
|
67,119 |
|
|
|
94,062 |
|
|
|
— |
|
|
|
161,181 |
|
| Ozey K. Horton, Jr. |
|
|
67,119 |
|
|
|
94,062 |
|
|
|
— |
|
|
|
161,181 |
|
| Peter Karmanos, Jr. |
|
|
74,619 |
|
|
|
94,062 |
|
|
|
— |
|
|
|
168,681 |
|
| Carl A. Nelson, Jr. |
|
|
88,119 |
|
|
|
94,062 |
|
|
|
— |
|
|
|
182,181 |
|
| Sidney A. Ribeau |
|
|
65,619 |
|
|
|
94,062 |
|
|
|
— |
|
|
|
159,681 |
|
| Mary Schiavo |
|
|
71,619 |
|
|
|
94,062 |
|
|
|
— |
|
|
|
165,681 |
|
| (1) |
John P. McConnell, the Company’s Chairman of the Board and CEO, is not included in this table because he was an employee of the Company during Fiscal 2015 and received no additional compensation for his services as
a director. The compensation received by Mr. McConnell as an employee of the Company is shown in the “Fiscal 2015 Summary Compensation Table” beginning on page 52 of this Proxy Statement and the accompanying tables. |
66
| (2) |
Since the earnings on compensation that has been deferred under the Director Deferral Plans by the Company’s non-employee directors do not represent “above-market” earnings for purposes of the applicable
SEC Rules, no amount with respect to such earnings has been reported in this table. |
| (3) |
Represents cash earned in Fiscal 2015 for annual retainer fees and meeting fees in accordance with the cash compensation program discussed in the section captioned “COMPENSATION OF DIRECTORS —Compensation for
Fiscal 2015” beginning on page 64 of this Proxy Statement. Also includes cash received as a result of dividends paid on the restricted common share awards that vested in Fiscal 2015. |
| (4) |
The amounts shown in this column represent the grant date fair value of the restricted common share awards granted to the non-employee directors in Fiscal 2015, as computed in accordance with ASC 718. These amounts
exclude the impact of estimated forfeitures, as required by SEC Rules. See “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note J– Stock-Based Compensation” of the Notes to
Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the Company’s 2015 Form 10-K for assumptions used and additional information regarding the restricted common share awards. The awards
granted to the then non-employee directors on September 25, 2014 covering 2,370 restricted common shares (3,555 restricted common shares for Mr. Blystone) had a grant date fair value of $36.60 per share (the closing price of the common
shares on that date). The restricted common shares described above were the only restricted common share awards granted to directors during, and outstanding at the end of, Fiscal 2015. |
| (5) |
No options were granted to the individuals named in this table during Fiscal 2015 and, accordingly, no dollar amount is required to be reported in respect of option awards. The aggregate number of common shares of the
Company underlying options outstanding at May 31, 2015, for each individual named in the table were: (a) Ms. Anderson – 0 common shares; (b) Mr. Blystone – 80,550 common shares; (c) Mr. Davis –
20,875 common shares; (d) Mr. Endres – 0 common shares; (f) Mr. Horton – 18,438 common shares; (f) Mr. Karmanos – 53,700 common shares; (g) Mr. Nelson – 57,700 common shares;
(h) Dr. Ribeau – 53,700 common shares; and (i) Ms. Schiavo – 25,000 common shares. |
| (6) |
Mr. Blystone is the Company’s Lead Independent Director. |
EQUITY COMPENSATION PLAN INFORMATION
The Company maintains five equity compensation plans (the “Equity Plans”) under which common shares are authorized for issuance to
eligible directors, officers and employees: (a) the 1997 LTIP; (c) the Amended and Restated 2000 Stock Option Plan for Non-Employee Directors (amendment and restatement effective as of November 1, 2008) (the “2000 Directors
Option Plan”); (d) the 2003 Stock Option Plan; (e) the 2006 Directors Equity Plan; and (f) the 2010 Stock Option Plan. Each Equity Plan has been approved by the shareholders of the Company.
The following table shows for the Equity Plans, as a group, the number of common shares issuable upon the exercise of outstanding options and
upon payout of outstanding performance share awards, the weighted-average exercise price of outstanding options, and the number of common shares remaining available for future issuance, excluding common shares issuable upon exercise of outstanding
options or upon payout of outstanding performance share awards, in each case as of May 31, 2015.
Equity Compensation Plan
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
| Plan Category |
|
Number Of Common
Shares To Be Issued
Upon Exercise Of
Outstanding Options,
Warrants And Rights |
|
|
Weighted-Average
Exercise Price Of
Outstanding
Options, Warrants
And Rights |
|
|
Number Of Common Shares
Remaining Available For
Future Issuance Under Equity
Compensation Plans
[Excluding Common Shares
Reflected In Column (a)] |
|
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
| Equity compensation plans approved by shareholders |
|
|
5,134,570 |
(1) |
|
$ |
18.25 |
(2) |
|
|
4,298,778 |
(3) |
| Equity compensation plans not approved by shareholders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| TOTAL |
|
|
5,134,570 |
(1) |
|
$ |
18.25 |
(2) |
|
|
4,298,778 |
(3) |
67
| (1) |
Includes 1,133,300 common shares issuable upon exercise of outstanding options granted under the 1997 LTIP, 8,000 common shares issuable upon exercise of outstanding options granted under the 2000 Directors Option Plan,
1,930,532 common shares issuable upon exercise of outstanding options granted under the 2003 Stock Option Plan, 301,963 common shares issuable upon exercise of outstanding options granted under the 2006 Directors Equity Plan and 1,302,800 common
shares issuable upon exercise of outstanding options granted under the 2010 Stock Option Plan. Also includes 457,975 common shares which represent the maximum number of common shares which may be paid out in respect of outstanding long-term
performance share awards granted under the 1997 LTIP. |
Does not include 1,724,523 common shares which represent the maximum
number of common shares which may be paid out in respect of long-term cash performance awards granted under the 1997 LTIP which were outstanding as of May 31, 2015, because to date all such awards have been paid in cash. If all long-term cash
performance awards granted under the 1997 LTIP which were outstanding as of May 31, 2015, were paid out at their maximum amount and the Compensation Committee were to elect to make all payments in the form of common shares, then, based on the
$27.21 closing price on May 29, 2015, the last business day of the Company’s fiscal year, the number of common shares which would be issued upon payout of the long-term cash performance awards would be 1,724,523 common shares. The number
of common shares, if any, actually issued with respect to long-term cash performance awards granted under the 1997 LTIP would be based on (i) the percentage of the long-term cash performance awards determined by the Compensation Committee to be
paid in common shares rather than cash, (ii) the actual performance level (i.e., threshold, target or maximum) used to determine the payout in respect of each long-term cash performance award and (iii) the price of the Company’s
common shares at the time of payout.
| (2) |
Represents the weighted-average exercise price of options outstanding under the Equity Plans as of May 31, 2015. Also see note (1) above with respect to long-term performance share awards and long-term cash
performance awards granted under the 1997 LTIP. The weighted-average exercise price does not take these awards into account. |
| (3) |
Includes 2,262,745 common shares available under the 1997 LTIP, 404,402 common shares available under the 2003 Stock Option Plan, 213,187 common shares available under the 2006 Directors Equity Plan, and 1,876,419
common shares available under the 2010 Stock Option Plan. The number shown in this column excludes 457,975 common shares representing the maximum number of common shares which may be paid out in respect of outstanding long-term performance share
awards granted under the 1997 LTIP as described in the first paragraph of note (1) above. If less than the maximum number of common shares were paid out in respect of any outstanding long-term performance share awards, the number of common
shares available under the 1997 LTIP would increase by an amount equal to that difference. In addition to options, long-term performance share awards and long-term cash performance awards, the 1997 LTIP authorizes the Compensation Committee to grant
awards in the form of stock appreciation rights, restricted common shares, performance units, dividend equivalents, and other stock unit awards that are valued in whole or in part by reference to, or are otherwise based on, the Company’s common
shares or other property. In addition to options, the 2006 Directors Equity Plan authorizes the Board to grant awards in the form of restricted common shares, restricted stock units, stock appreciation rights and whole common shares. No common
shares remain available for grants of future awards under the 2000 Directors Option Plan. |
PROPOSAL 2: ADVISORY VOTE ON
EXECUTIVE COMPENSATION
We
are asking shareholders to approve an advisory resolution on the Company’s executive compensation as reported in this Proxy Statement. As described in detail in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion
and Analysis” beginning on page 32 of this Proxy Statement and in the “Fiscal 2015 Summary Compensation Table” beginning on page 52 of this Proxy Statement and the accompanying tables and narrative, our executive compensation programs
are reviewed annually by our Compensation Committee, with advice from its independent compensation consultant and consideration given to executive compensation paid by other comparator companies. Our compensation programs are designed to foster
alignment of the interests of executive management with the interests of shareholders and to provide incentives, based primarily on Company and business unit performance, for reaching established Company and business unit goals and objectives.
Shareholders are urged to read the “Compensation Discussion and Analysis” which describes in detail how the Company’s executive compensation policies and procedures achieve our compensation objectives.
68
The direct relationship of the compensation earned by the Company’s NEOs to Company
performance is exemplified by the amounts of incentive compensation earned by the Company’s NEOs for Fiscal 2015.
Annual incentive
bonuses paid to the NEOs in Fiscal 2015 were down significantly from Fiscal 2014 – on average down 29% – reflecting the lower financial results. In Fiscal 2015, annual incentive bonuses were earned only at 70% of target levels for
Corporate, 77% for Steel Processing and 63% for Pressure Cylinders.
The amounts paid for the long-term performance-based cash and equity
awards for the three-fiscal-year performance period ended May 31, 2015, also reflected the weaker Company performance in Fiscal 2015. Despite the strong performance of the Company in Fiscal 2013 and Fiscal 2014, the weaker results in Fiscal
2015 lowered long-term incentive compensation payouts to 88% of target levels at Corporate and 89% at Steel Processing. Pressure Cylinders received 123% of target levels due to its very strong performance in the first two years of the period. On
average, the three-year cash performance award payouts to NEOs for the three-fiscal-year period ended with Fiscal 2015 were down almost 30% from the three-fiscal-year period ended with Fiscal 2014, with the CEO payout being down 47%.
Earned Incentive Compensation
The
following table lists, for each of Fiscal 2015, Fiscal 2014 and Fiscal 2013, the incentive compensation earned by the NEOs under their annual incentive bonus awards for those fiscal years and their three-year cash performance and performance share
awards for the three-fiscal-year periods ended with such fiscal years. See the “Fiscal 2015 Summary Compensation Table” beginning on page 52 for additional information on compensation of the NEOs.
Earned Incentive Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name and Principal Position |
|
Fiscal Year |
|
|
Annual
Incentive
Bonus
Earned
($) |
|
|
Earned
3-year Cash
Performance
Award ($) |
|
|
3-year Performance Share
Award
Earned |
|
| |
|
|
|
|
(# of Shares) |
|
|
Value on Date
Distributed ($) * |
|
| John P. McConnell, Chairman of the Board and Chief Executive Officer |
|
|
2015 |
|
|
|
616,517 |
|
|
|
883,000 |
|
|
|
26,490 |
|
|
|
747,548 |
|
| |
|
2014 |
|
|
|
838,070 |
|
|
|
1,664,875 |
|
|
|
43,813 |
|
|
|
1,855,481 |
|
| |
|
2013 |
|
|
|
740,890 |
|
|
|
1,461,575 |
|
|
|
76,156 |
|
|
|
2,244,608 |
|
| B. Andrew Rose, Executive Vice President and Chief Financial Officer |
|
|
2015 |
|
|
|
350,554 |
|
|
|
529,800 |
|
|
|
10,596 |
|
|
|
299,019 |
|
| |
|
2014 |
|
|
|
476,531 |
|
|
|
613,375 |
|
|
|
12,268 |
|
|
|
519,550 |
|
| |
|
2013 |
|
|
|
409,213 |
|
|
|
538,475 |
|
|
|
18,462 |
|
|
|
592,630 |
|
| Mark A. Russell, President and Chief Operating Officer |
|
|
2015 |
|
|
|
443,032 |
|
|
|
529,800 |
|
|
|
10,596 |
|
|
|
299,019 |
|
| |
|
2014 |
|
|
|
602,241 |
|
|
|
853,046 |
|
|
|
17,060 |
|
|
|
722,491 |
|
| |
|
2013 |
|
|
|
516,900 |
|
|
|
647,907 |
|
|
|
16,252 |
|
|
|
521,689 |
|
| Andrew J. Billman, President, Worthington Cylinder Corporation |
|
|
2015 |
|
|
|
227,476 |
|
|
|
337,288 |
|
|
|
6,133 |
|
|
|
173,073 |
|
| |
|
2014 |
|
|
|
346,850 |
|
|
|
497,040 |
|
|
|
8,860 |
|
|
|
375,221 |
|
| |
|
2013 |
|
|
|
321,638 |
|
|
|
342,206 |
|
|
|
6,484 |
|
|
|
208,136 |
|
| Geoffrey G. Gilmore, President, The Worthington Steel Company ** |
|
|
2015 |
|
|
|
304,883 |
|
|
|
267,750 |
|
|
|
4,463 |
|
|
|
125,946 |
|
| |
|
2014 |
|
|
|
463,500 |
|
|
|
327,292 |
|
|
|
5,309 |
|
|
|
224,836 |
|
| * |
Number of performance shares earned multiplied by closing common share price |
| ** |
Mr. Gilmore was not an NEO in Fiscal 2013 |
69
A review of annual incentive bonuses earned since the recession which began in Fiscal 2009
further shows the direct relationship of the Company’s executive compensation to performance. Due to the recession, Fiscal 2009 was a difficult year for the Company and most other businesses, and no annual incentive bonuses were paid to the
NEOs. In Fiscal 2010, the Company’s performance improved and exceeded expected levels, and annual incentive bonuses were earned by the NEOs as well as other executives. In Fiscal 2011, the Company showed strong improvement with a 168% increase
in diluted EPS (303% in adjusted EPS, i.e. excluding the effects of FIFO, non-recurring items and restructuring charges) and annual incentive bonuses were paid at close to maximum levels. In Fiscal 2012, due to higher performance target levels,
annual incentive bonuses were down 20% to 40% from Fiscal 2011 amounts even though adjusted EPS were up 36% and corporate NEO annual incentive bonuses were earned at 110% of target levels. In Fiscal 2013, annual incentive bonuses for the Corporate
NEOs were down 15% to 30% from Fiscal 2012, again due to higher targets even though diluted EPS as reported were up 15% and adjusted EPS were up 21%. Mr. Billman’s annual incentive bonus for Fiscal 2013 was up as it reflected his first
full year as President of Pressure Cylinders, and a strong performance from that business unit. For Fiscal 2014, annual incentive bonuses for Corporate NEOs were up between 13% and 17%, after being down in Fiscal 2013, as diluted EPS as reported,
adjusted EPS, and EVA were all up approximately 10%. As noted above, for Fiscal 2015, annual incentive bonuses of the NEOs were down on average 29% from Fiscal 2014.
The relationship of incentive compensation earned by NEOs to Company results is also reflected in payments which have been earned under the
long-term performance-based cash and share awards. No long-term performance-based incentive compensation was paid for the three-fiscal-year performance periods ended in Fiscal 2009, Fiscal 2010 or Fiscal 2011, as even the strong performance in
Fiscal 2011 could not overcome the drag early in each of these performance periods caused by the recession. With the improved performance in Fiscal 2011 and Fiscal 2012, long-term incentive compensation was earned for the three-fiscal-year
performance period ended May 31, 2012 at somewhat above threshold levels (Corporate at 61% of target). Results continued to improve and long-term performance incentive compensation was earned between target and maximum levels for each of the
three-fiscal-year performance periods ended May 31, 2013 and 2014. As noted above, despite the strong results in Fiscal 2013 and Fiscal 2014, the weaker results in Fiscal 2015 lowered the results for the three-fiscal-year performance period
ended May 31, 2015 and the Corporate and Steel Processing payouts fell below target levels. Performance results for Pressure Cylinders were above the target level due to its very strong performance in Fiscal 2013 and Fiscal 2014.
Performance and payments earned over these periods are also discussed in the section captioned “EXECUTIVE COMPENSATION —
Compensation and Disclosure Analysis — Cash Compensation Earned in Fiscal 2015 and Company Performance” beginning on page 36 of this Proxy Statement.
The large amount reported in the “Fiscal 2015 Summary Compensation Table” for stock awards granted to each of Messrs. Billman and
Gilmore in Fiscal 2015 was driven by the special performance-based/time-vested restricted common share awards granted in Fiscal 2014, which do not vest unless the price of the common shares reaches $60.00 per share for a 30 consecutive day period
before June 24, 2019. These awards are discussed in detail in the “Compensation Disclosure and Analysis” under “Special Performance-Based/Time-Vested Restricted Common Share Awards”.
Likewise, the large amount reported in the “Fiscal 2015 Summary Compensation Table” for stock awards granted to each of Messrs.
Russell and Rose in Fiscal 2014 was driven by the special performance-based / time-vested restricted common share awards which do not vest unless the price of the common shares reaches $50 per share for thirty consecutive day period before June
2018. These awards are discussed in detail in the “Compensation Discussion and Analysis” under “Special Performance-Based/Time-Vested Restricted Common Share Awards”.
The increase shown in the “Fiscal 2015 Summary Compensation Table” for stock awards (excluding the special performance-based
restricted common share awards noted above) and option awards made in Fiscal 2015 is due to the higher valuations given to those awards when granted in June 2014, due to the higher price of the Company’s common shares at that time. The total
number of common shares covered by the option awards, the restricted share awards and the long-term performance share awards was the same for both Fiscal 2015 and Fiscal 2014.
The Company has been fairly conservative in providing severance benefits and perquisites to its executives. For example, it eliminated
Company-provided automobiles for top executives in 2007. The Company has not entered into separate severance agreements with its executive officers and has provided change in control benefits only in connection with its incentive awards. The
Compensation Committee has elected to require a “double trigger” for accelerated vesting for awards granted in Fiscal 2013 and later. In the event of a change in control, these
70
incentive awards will also require an actual or constructive termination of employment within a specified period of time after the change in control in order for the acceleration of vesting to
occur.
The vote on this resolution relates to the compensation of our NEOs as a whole. The vote is advisory, which means that the vote is
not binding on the Company, the Board or the Compensation Committee. To the extent there is any significant vote against the NEOs’ compensation for Fiscal 2015 as reported, the Compensation Committee will evaluate whether any actions are
necessary to address the concerns of shareholders.
In accordance with Regulation 14A under the Exchange Act, the Company is asking
shareholders to approve the following advisory resolution at the Annual Meeting:
RESOLVED, that the shareholders of
Worthington Industries, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s NEOs as disclosed in the Company’s proxy statement for its 2015 Annual Meeting of Shareholders pursuant to the
executive compensation disclosure rules in Item 402 of SEC Regulation S-K (including the Compensation Discussion and Analysis, the Fiscal 2015 Summary Compensation Table and the related executive compensation tables, notes and narratives).
Taking into account the advisory vote of shareholders at our 2011 Annual Meeting of Shareholders, regarding the frequency of future advisory
votes to approve executive compensation, the Board’s current policy is to include an advisory resolution regarding approval of the compensation of our NEOs annually. Accordingly, unless the Board modifies its policy on the frequency of future
votes, the next advisory vote to approve our executive compensation will occur at the 2016 Annual Meeting of Shareholders.
Vote Required to Approve
the Advisory Vote on Executive Compensation
The affirmative vote of the holders of a majority of the votes entitled to be cast by the
holders of outstanding common shares, present in person or by proxy, and entitled to vote on the proposal, is required to approve the advisory resolution on NEO compensation. Abstentions will be counted in determining the required vote and will have
the effect of votes “AGAINST” the advisory resolution. Broker non-votes will not be counted in determining the required vote.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE
COMPENSATION.
PROPOSAL 3: RATIFICATION OF THE SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The selection of the Company’s independent registered public accounting firm is made annually by the Audit Committee after consulting
with management and carefully considering that firm’s qualifications and independence. As a result, the Audit Committee of the Company’s Board has selected KPMG LLP (“KPMG”) to serve as the Company’s independent registered
public accounting firm for Fiscal 2016, and recommends that the shareholders of the Company ratify that selection. KPMG audited the Company’s consolidated financial statements as of and for the fiscal years ended May 31, 2015 and
May 31, 2014, and the effectiveness of the Company’s internal control over financial reporting as of May 31, 2015 and May 31, 2014. Representatives of KPMG are expected to be present at the Annual Meeting and will be given the
opportunity to make a statement if they so desire and to respond to appropriate questions.
Recommendation and Vote Required to Ratify Selection of
KPMG
The affirmative vote of the holders of a majority of the votes entitled to be cast by the holders of outstanding common shares,
present in person or by proxy, and entitled to vote on the proposal, is required to ratify the selection of KPMG as the Company’s independent registered public accounting firm for Fiscal 2016. The effect of an abstention is the same as a vote
“AGAINST” the proposal. Even if the selection of KPMG is ratified by the shareholders, the Audit Committee, in its discretion, could decide to terminate the engagement of KPMG and to engage another firm if the Audit Committee determines
such action is necessary or desirable. If the selection of KPMG is not ratified, the Audit Committee will reconsider (but may decide to maintain) the selection.
THE AUDIT COMMITTEE AND THE BOARD UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF THE COMPANY VOTE “FOR” THE
RATIFICATION OF THE SELECTION OF KPMG.
71
AUDIT COMMITTEE MATTERS
Report of the Audit Committee for the Fiscal Year Ended May 31, 2015
The Audit Committee oversees the Company’s financial and accounting functions, controls, reporting processes and audits on behalf of the
Board in accordance with the Audit Committee’s written charter. The Audit Committee is responsible for providing independent, objective oversight of the integrity and quality of the Company’s consolidated financial statements, the
qualifications and independence of the Company’s independent registered public accounting firm, the performance of the Company’s internal auditors and independent registered public accounting firm and the annual independent audit of the
Company’s consolidated financial statements. Management has the primary responsibility for the preparation, presentation and integrity of the Company’s consolidated financial statements and the reporting process, for the appropriateness of
the accounting principles and reporting policies that are used by the Company, for the establishment and maintenance of effective systems of disclosure controls and procedures and internal control over financial reporting, and for the preparation of
the annual report on management’s assessment of the effectiveness of the Company’s internal control over financial reporting. The Company’s independent registered public accounting firm, KPMG, is responsible for auditing the
Company’s annual consolidated financial statements included in the Company’s Annual Report on Form 10-K in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing its
report thereon based on such audit, for issuing an audit report on the effectiveness of the Company’s internal control over financial reporting, and for reviewing the Company’s unaudited interim consolidated financial statements included
in the Company’s Quarterly Reports on Form 10-Q.
In fulfilling its oversight responsibilities, the Audit Committee reviewed with
management the Company’s audited consolidated financial statements as of and for the fiscal year ended May 31, 2015 and discussed with management the quality, not just the acceptability, of the accounting principles and policies as applied
in the Company’s financial reporting, the reasonableness of significant judgments and accounting estimates, and the clarity and completeness of disclosures in the consolidated financial statements.
In fulfilling its oversight responsibilities, the Audit Committee met with management, the Company’s internal auditors and KPMG
throughout the year. Since the beginning of the fiscal year, the Audit Committee met with the Company’s internal auditors and KPMG, with and without management present, to discuss the overall scope of their respective annual audit plans, the
results of their respective audits, the effectiveness of the Company’s internal control over financial reporting, including management’s and KPMG’s reports thereon and the basis for the conclusions expressed in those reports, and the
overall quality of the Company’s financial reporting. Throughout that period, the Audit Committee reviewed management’s plan for documenting and testing controls, the results of the documentation and testing, any deficiencies discovered
and the resulting remediation of the deficiencies. In addition, the Audit Committee reviewed and discussed with KPMG all matters required by auditing standards generally accepted in the United States, including those described in PCAOB Auditing
Standard No. 16, Communications with Audit Committees.
The Audit Committee has discussed with KPMG the independence of
that firm from management and the Company. The Audit Committee has received from KPMG the written disclosures and the letter from KPMG required by applicable PCAOB requirements regarding KPMG’s communications with the Audit Committee concerning
independence. The Audit Committee has discussed with KPMG any relationships with or services to the Company or the Company’s subsidiaries or affiliates that may impact the objectivity and independence of KPMG, and the Audit Committee has
satisfied itself as to the independence of KPMG.
Management and KPMG have represented to the Audit Committee that the Company’s
audited consolidated financial statements, as of and for the fiscal year ended May 31, 2015, were prepared in accordance with accounting principles generally accepted in the United States, and the Audit Committee has reviewed and discussed
those audited consolidated financial statements with management and KPMG.
Based on the Audit Committee’s reviews and discussions
referred to above and the Audit Committee’s review of the report of KPMG to the Audit Committee, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included (and the Board approved
such inclusion) in the Company’s Annual Report on Form 10-K for Fiscal 2015 filed with the SEC on July 30, 2015.
72
The Audit Committee has also selected KPMG as the Company’s independent registered public
accounting firm for Fiscal 2016 and unanimously recommends that the shareholders ratify such selection.
The foregoing report is provided
by the Audit Committee of the Company’s Board:
|
| Audit Committee |
|
| Carl A. Nelson, Jr., Chair |
| Kerrii B. Anderson |
| Mark C. Davis |
| Mary Schiavo |
Pre-Approval of Services Performed by the Independent Registered Public Accounting Firm
Under applicable SEC Rules and PCAOB standards, the Audit Committee is to pre-approve the audit and non-audit services performed by the
independent registered public accounting firm in order to ensure that the performance of these services does not impair the firm’s independence from the Company and its subsidiaries. The SEC Rules and PCAOB standards specify the types of
non-audit services that independent registered public accounting firms may not provide to their audit clients and establish the Audit Committee’s responsibility for administration of the engagement of the independent registered public
accounting firm.
Consistent with applicable SEC Rules and PCAOB standards, the charter of the Audit Committee requires that the Audit
Committee review and pre-approve all audit services and permitted non-audit services provided by the independent registered public accounting firm to the Company or any of its subsidiaries. The Audit Committee may delegate pre-approval authority to
one or more designated members of the Audit Committee and, if it does, the decision of that member or members must be reported to the full Audit Committee at its next regularly scheduled meeting.
All requests or applications for services to be provided by the independent registered public accounting firm must be submitted to the Audit
Committee by both the independent registered public accounting firm and the Company’s CFO and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC Rules and PCAOB standards governing
auditor independence.
Independent Registered Public Accounting Firm Fees
Fees billed for services rendered by KPMG for each of Fiscal 2015 and Fiscal 2014 were as follows:
|
|
|
|
|
|
|
|
|
| Type of Fees |
|
Fiscal 2015 |
|
|
Fiscal 2014 |
|
| Audit Fees |
|
$ |
1,284,000 |
|
|
$ |
1,316,000 |
|
| Tax Fees |
|
|
151,000 |
|
|
|
110,000 |
|
| Other Fees |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
1,435,000 |
|
|
$ |
1,426,000 |
|
|
|
|
|
|
|
|
|
|
All of the services rendered by KPMG to the Company and the Company’s subsidiaries during Fiscal 2015 and
Fiscal 2014 were pre-approved by the Audit Committee.
In accordance with applicable SEC Rules, “Audit Fees” are fees for
professional services rendered for: the audit of the Company’s consolidated financial statements; the review of the interim consolidated financial statements included in the Company’s Forms 10-Q; the audit of the Company’s internal
control over financial reporting with the objective of obtaining reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects; and services that are normally provided by the
independent registered public accounting firm in connection with statutory and regulatory filings or engagements for the applicable fiscal years.
“Tax Fees” are fees for professional services rendered for tax compliance, tax advice and tax planning.
73
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
The SEC has implemented rules regarding the delivery of proxy materials (i.e., annual reports, proxy statements and Notices of Internet
Availability of Proxy Materials) to households. This method of delivery, often referred to as “householding”, would permit the Company to send a single annual report and/or a single proxy statement and/or a single Notice of Internet
Availability of Proxy Materials to any household at which two or more registered shareholders reside if the Company reasonably believes such shareholders are members of the same family or otherwise share the same address or that one shareholder has
multiple accounts. In each case, the shareholder(s) must consent to the householding process in accordance with applicable SEC Rules. The householding procedure reduces the volume of duplicate information shareholders receive and reduces the
Company’s expenses. The Company may institute householding in the future and will notify registered shareholders affected by householding at that time. Registered shareholders sharing an address may request delivery of a single copy of annual
reports to shareholders, proxy statements and Notices of Internet Availability of Proxy Materials, as applicable, by contacting the Investor Relations Department of the Company at Worthington Industries, Inc., 200 Old Wilson Bridge Road, Columbus,
Ohio 43085, Attention: Catherine M. Lyttle, Vice President—Communications and Investor Relations.
Many broker/dealers and other
holders of record have instituted householding. If your family has one or more “street name” accounts under which you beneficially own common shares of the Company, you may have received householding information from your broker/dealer,
financial institution or other nominee in the past. Please contact the holder of record directly if you have questions, require additional copies of this Proxy Statement, the Company’s 2015 Annual Report to Shareholders or the Notice of
Internet Availability of Proxy Materials, as appropriate, or wish to revoke your decision to household and thereby receive multiple copies of the Company’s proxy materials. You should also contact the holder of record if you wish to institute
householding.
SHAREHOLDER PROPOSALS FOR 2016 ANNUAL MEETING
Shareholders of the Company seeking to bring business before an annual meeting of shareholders (an “annual meeting”) or to nominate
candidates for election as directors at an annual meeting must provide timely notice thereof in writing to the Company’s Secretary. Under Section 1.08(A) of the Company’s Code of Regulations, to be timely, a shareholder’s notice
with respect to business to be brought before an annual meeting must be delivered to, or mailed and received at, the principal executive offices of the Company not less than 30 days prior to an annual meeting. However, if less than 40 days’
notice or prior public disclosure of the date of the meeting is given or made to shareholders, the shareholder’s notice must be received no later than the close of business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. In order for a shareholder’s notice to be in proper form, it must include: (a) a brief description of the business the shareholder desires to bring before an annual meeting;
(b) the reasons for conducting the proposed business at an annual meeting; (c) the name and address of the proposing shareholder; (d) the number of common shares beneficially owned by the proposing shareholder; and (e) any
material interest of the proposing shareholder in the business to be brought before an annual meeting. The requirements applicable to nominations are described above in “CORPORATE GOVERNANCE – Nominating Procedures” beginning on
17 of this Proxy Statement.
A shareholder seeking to bring business before an annual meeting must also comply with all applicable SEC
Rules. Under SEC Rule 14a-8, proposals of shareholders intended to be presented at the Company’s 2016 Annual Meeting must be received by the Company no later than April 14, 2016, to be eligible for inclusion in the Company’s proxy
materials relating to the 2016 Annual Meeting. Upon receipt of a shareholder proposal, the Company will determine whether or not to include the proposal in the proxy materials in accordance with applicable SEC Rules.
The SEC has promulgated rules relating to the exercise of discretionary voting authority pursuant to proxies solicited by the Board.
Generally, a proxy may confer discretionary authority to vote on any matters brought before an annual meeting if the Company did not have notice of the matter at least 45 days before the date on which the Company first sent its proxy materials for
the prior year’s annual meeting and a specific statement to that effect is made in the proxy statement or proxy card. If during the prior year, the Company did not hold an annual meeting, or if the date of the meeting has changed more than 30
days from the prior year, then notice must not have been received a reasonable time before the Company mails its proxy materials for the current year. Any written notice required as described in this paragraph must have been given by June 30,
2015, for matters to be brought before the
74
2015 Annual Meeting. Any written notice required as described in this paragraph must be given by June 28, 2016 for matters to be brought before the 2016 Annual Meeting.
Any written notice to be given with respect to matters set forth in the three prior paragraphs of this “SHAREHOLDER PROPOSALS FOR 2016
ANNUAL MEETING” section should be sent to the Company’s Secretary, Dale T. Brinkman, Worthington Industries, Inc., 200 Old Wilson Bridge Road, Columbus, Ohio 43085 or by fax to (614) 840-3706.
The Company’s 2016 Annual Meeting of Shareholders is currently scheduled to be held on September 29, 2016.
FUTURE ELECTRONIC ACCESS TO PROXY MATERIALS AND ANNUAL REPORT
Registered shareholders can further reduce the costs incurred by the Company by consenting to receive all future proxy
statements, proxy cards, annual reports to shareholders and Notices of Internet Availability of Proxy Materials, as appropriate, electronically via e-mail or the Internet. To sign up for electronic delivery of future proxy materials, you must vote
your common shares electronically via the Internet by logging on to www.proxyvote.com and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future
years. You will be responsible for any fees or charges that you would typically pay for access to the Internet.
ANNUAL REPORT ON FORM 10-K
Audited consolidated financial statements for Worthington Industries, Inc. and its
subsidiaries for Fiscal 2015 are included in the 2015 Annual Report to Shareholders. Additional copies of these financial statements and the Company’s Annual Report on Form 10-K for Fiscal 2015
(excluding exhibits) may be obtained, without charge, by sending a written request to the Company’s Investor Relations Department at 200 Old Wilson Bridge Road, Columbus, Ohio 43085, Attention: Catherine M. Lyttle, Vice President -
Communications and Investor Relations. The Company’s Annual Report on Form 10-K for Fiscal 2015 is also available on the Company’s web site located at www.worthingtonindustries.com and can also be
found on the SEC web site located at www.sec.gov.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board knows of no business that will be presented for action by the shareholders at the
Annual Meeting other than those matters discussed in this Proxy Statement. However, if any other matter requiring a vote of the shareholders properly comes before the Annual Meeting, the individuals acting under the proxies solicited by the Board
will vote and act according to their best judgment in light of the conditions then prevailing, to the extent permitted under applicable law.
|
|
|
|
|
|
|
|
|
|
|
|
|
By Order of the Board of Directors, |
|
|
|
|
|
|
|
|
|
|
/s/ Dale T. Brinkman |
| Dated: August 12, 2015 |
|
|
|
|
|
Dale T. Brinkman, |
|
|
|
|
|
|
Secretary |
75
Appendix I
Group Companies Included in Comparator
|
|
|
|
|
|
|
|
|
| 3M |
|
Chrysler |
|
Goodman Manufacturing |
|
Matthews International |
|
Seagate Technology |
| A.O. Smith |
|
CHS |
|
Goodyear Tire & Rubber |
|
McDermott International |
|
Sealed Air |
| AbbVie |
|
Cisco Systems |
|
Google |
|
McDonald’s |
|
Serco |
| Accenture |
|
Clear Channel Communications |
|
Graco |
|
McKesson |
|
ServiceMaster Company |
| ACH Food |
|
Cliffs Natural Resources |
|
Green Mountain Coffee Roasters |
|
MeadWestvaco |
|
ShawCor |
| Adecco |
|
Cloud Peak Energy |
|
Grupo Ferrovial |
|
Media General |
|
Sherwin-Williams |
| Aerojet |
|
CNH |
|
GTECH |
|
Medtronic |
|
Shire |
| AGCO |
|
Coach |
|
H.B. Fuller |
|
Menasha Corporation |
|
Sigma-Aldrich |
| Agilent Technologies |
|
Coca-Cola |
|
Hanesbrands |
|
Merck & Co |
|
Snap-on |
| Agrium |
|
Coinstar |
|
Harland Clarke |
|
Micron Technology |
|
Sodexo |
| Aimia |
|
Colgate-Palmolive |
|
Harman International Industries |
|
Microsoft |
|
Sonoco Products |
| Air Liquide |
|
Columbia Sportswear |
|
Harsco |
|
Milacron |
|
Sony Electronics |
| Air Products and Chemicals |
|
Comcast |
|
Hasbro |
|
MillerCoors |
|
Southwest Airlines |
| Alcoa |
|
Commercial Metals |
|
HBO |
|
Millicom International Cellular |
|
Spirit AeroSystems |
| Alexander & Baldwin |
|
Compass Group |
|
HD Supply |
|
Mine Safety Appliances |
|
Sprint Nextel |
| Alliant Techsystems |
|
ConAgra Foods |
|
Henry Schein |
|
Molnlycke Health Care |
|
SPX |
| American Crystal Sugar |
|
Convergys |
|
Herman Miller |
|
Molson Coors Brewing |
|
SSAB |
| American Sugar Refining |
|
Cooper Standard Automotive |
|
Hershey |
|
Molycorp |
|
St. Jude Medical |
| Americas Styrenics |
|
Corning |
|
Hertz |
|
Momentive Specialty Chemicals |
|
Staples |
| AmerisourceBergen |
|
Cott Corporation |
|
Hexcel |
|
Mosaic |
|
Starbucks Coffee |
| AMETEK |
|
Covance |
|
Hilton Worldwide |
|
MTS Systems |
|
Starwood Hotels & Resorts |
| Amgen |
|
Covidien |
|
Hitachi Data Systems |
|
Nash-Finch |
|
Statoil |
| AMR |
|
CSX |
|
HNI |
|
Navigant Consulting |
|
Steelcase |
| AMSTED Industries |
|
Cumberland Gulf Group |
|
HNTB |
|
Navistar International |
|
Stryker |
| Amway |
|
Curtiss-Wright |
|
Hoffmann-La Roche |
|
NBTY |
|
Suburban Propane |
| Ansell |
|
CVS Caremark |
|
Home Depot |
|
NCR |
|
Syngenta Crop Protection |
| AptarGroup |
|
Cytec |
|
Hormel Foods |
|
Neoris USA |
|
Target |
| ARAMARK |
|
Daiichi Sankyo |
|
Host Hotels & Resorts |
|
Nestle USA |
|
Taubman Centers |
| Arby’s Restaurant Group |
|
Daimler Trucks North America |
|
Houghton Mifflin Harcourt Publishing |
|
Newell Rubbermaid |
|
TE Connectivity |
| Archer Daniels Midland |
|
Darden Restaurants |
|
Hunt Consolidated |
|
Newmont Mining |
|
TeleTech Holdings |
| Arkema |
|
Day & Zimmermann |
|
Husky Injection Molding Systems |
|
NewPage |
|
Teradata |
| Armstrong World Industries |
|
Dean Foods |
|
IBM |
|
Nissan North America |
|
Terex |
| Arrow Electronics |
|
Deere & Company |
|
IDEXX Laboratories |
|
Nokia |
|
Tetra Tech |
| Ashland |
|
Dell |
|
Illinois Tool Works |
|
Norfolk Southern |
|
Texas Instruments |
| AstraZeneca |
|
Deluxe |
|
Ingersoll Rand |
|
NOVA Chemicals |
|
Textron |
| AT&T |
|
Dentsply |
|
Intel |
|
Novartis |
|
Thermo Fisher Scientific |
| Automatic Data Processing |
|
Diageo North America |
|
Intercontinental Hotels Group |
|
Novo Nordisk Pharmaceuticals |
|
Thomson Reuters |
| Avaya |
|
Donaldson Company |
|
International Automotive Components |
|
Nypro |
|
Tiffany & Co. |
| Avery Dennison |
|
Dow Corning |
|
International Flavors & Fragrances |
|
Occidental Petroleum |
|
Time Warner |
| Avis Budget Group |
|
Dr Pepper Snapple |
|
International Game Technology |
|
Office Depot |
|
Time Warner Cable |
| Avon Products |
|
DSM Nutritional Products |
|
International Paper |
|
Omgeo |
|
T-Mobile |
| Axiall Corporation |
|
DuPont |
|
Invensys Controls |
|
Omnicare |
|
Toro |
| BAE Systems |
|
E.W. Scripps |
|
ION Geophysical |
|
OMNOVA Solutions |
|
Total System Service (TSYS) |
| Ball |
|
Eastman Chemical |
|
Irvine |
|
Orange Business Services |
|
Toyota Motor Engineering & Manufacturing North America |
| Barnes Group |
|
Eaton eBay |
|
ITT Corporation |
|
Oshkosh |
|
Transocean |
| Barrick Gold of North America |
|
Ecolab |
|
J.M. Smucker |
|
Owens Corning |
|
Trinity Industries |
| Baxter International |
|
Eli Lilly |
|
J.R. Simplot |
|
Owens-Illinois |
|
Tronox |
| Bayer |
|
EMC |
|
Jabil Circuit |
|
Oxford Instruments America |
|
TRW Automotive |
| Bayer Business & Technology Services |
|
EMD Millipore |
|
Jacobs Engineering |
|
Pall Corporation |
|
Tupperware Brands |
| Bayer CropScience |
|
Emerson Electric |
|
JetBlue Airways |
|
Panasonic of North America |
|
Underwriters Laboratories |
| Bayer HealthCare |
|
EnCana Oil & Gas USA |
|
Johns-Manville |
|
Parker Hannifin |
|
Unilever United States |
| BD (Becton Dickinson) |
|
Engility Corporation |
|
Johnson & Johnson |
|
Parsons Corporation |
|
Unisys |
| Beam |
|
EnPro Industries |
|
Johnson Controls |
|
PepsiCo |
|
United Rentals |
| Bechtel Systems & Infrastructure |
|
Equifax |
|
KBR |
|
Performance Food Group |
|
United States Cellular |
| Benjamin Moore |
|
Equity Office Properties |
|
Kellogg |
|
Pfizer |
|
United States Steel |
| Best Buy |
|
Ericsson |
|
Kelly Services |
|
PHH |
|
United Technologies |
| Big Lots |
|
ESRI |
|
Kennametal |
|
PHI |
|
UPS |
| Biogen Idec |
|
Estee Lauder |
|
Kewaunee Scientific Corporation |
|
Pitney Bowes |
|
URS |
| Black Box |
|
Esterline Technologies |
|
Keystone Foods |
|
Plexus |
|
Valero Energy |
| Boise |
|
Exel |
|
Kimberly-Clark |
|
Plum Creek Timber |
|
Ventura Foods |
| Boise Cascade |
|
Exelis |
|
Kimco Realty |
|
Polaris Industries |
|
Verizon |
| Booz Allen Hamilton |
|
Expedia |
|
Kinross Gold |
|
Polymer Group |
|
Vertex Pharmaceuticals |
| BorgWarner |
|
Experian Americas |
|
Koch Industries |
|
PolyOne |
|
Viacom |
| Boston Scientific |
|
Express Scripts |
|
Kofax |
|
Potash |
|
Viad |
| Brady |
|
Exterran |
|
Kohler |
|
PPG Industries |
|
Visteon |
| Bristol-Myers Squibb |
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Federal-Mogul |
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Kyocera Corporation |
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Praxair |
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Vulcan Materials |
| Bunge |
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First Data |
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L-3 Communications |
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PulteGroup |
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VWR International |
| Burlington Northern Santa Fe |
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Fiserv |
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Land O’Lakes |
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Purdue Pharma |
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W.R. Grace |
| Bush Brothers |
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Flowserve |
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Leggett and Platt |
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Qualcomm |
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W.W. Grainger |
| CA Technologies |
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Ford |
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Lehigh Hanson |
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Quest Diagnostics |
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Wal-Mart Stores |
| Caesar’s Entertainment |
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Fortune Brands Home & Security |
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Lend Lease |
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Quintiles |
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Walt Disney |
| Calgon Carbon |
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Freeport-McMoRan Copper & Gold |
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Leprino Foods |
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R.R. Donnelley |
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Waste Management |
| Cardinal Health |
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Frontier Communications |
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Level 3 Communications |
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Rayonier |
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Wendy’s Group |
| Cargill |
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Fujitsu Limited |
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Life Technologies |
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Regal-Beloit |
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West Pharmaceutical Services |
| Carlson |
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G&K Services |
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Lifetouch |
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Regeneron Pharmaceuticals |
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Westinghouse Electric |
| CarMax |
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GAF Materials |
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Lincoln Electric |
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Revlon |
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Weyerhaeuser |
| Carmeuse North America Group |
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Gap |
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Lorillard Tobacco |
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Reynolds Packaging |
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Whirlpool |
| Carnival |
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Gartner |
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LyondellBasell |
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Ricoh Americas |
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Winnebago Industries |
| Carpenter Technology |
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Gates |
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Magellan Midstream Partners |
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Roche Diagnostics |
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Worthington Industries |
| Carriage Services |
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Gavilon |
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Makino |
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Rockwell Automation |
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Wyndham Worldwide |
| Catalent Pharma Solutions |
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GenCorp |
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Manitowoc |
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Rockwell Collins |
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Xerium Technologies |
| CBS |
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General Atomics |
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Marriott International |
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Rolls-Royce North America |
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Xerox |
| Celestica |
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General Dynamics |
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Martin Marietta Materials |
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Rowan Companies |
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Xilinx |
| Celgene |
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General Mills |
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Mary Kay |
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Ryder System |
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Yum! Brands |
| CEVA Logistics |
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General Motors |
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Masco |
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S.C. Johnson & Son |
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Zimmer |
| CF Industries |
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Gerdau Long Steel North America |
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Mattel |
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Sage Software |
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| CH2M Hill |
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Gilead Sciences |
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SAIC |
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| Chemtura |
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GlaxoSmithKline |
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Sanofi |
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| Christensen Farms |
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SAS Institute |
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Schreiber Foods |
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Schwan’s |
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Scotts Miracle-Gro |
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WORTHINGTON INDUSTRIES, INC.
ATTN: SHAREOWNER SERVICES
P.O. BOX 218
PORTLAND, OR 97228-2168 |
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VOTE BY INTERNET Before The
Meeting - Go to www.proxyvote.com Use the Internet to transmit your
voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Daylight Time, on September 23, 2015. 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. |
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During The Meeting - Go to www.virtualshareholdermeeting.com/WOR15
You may attend the Annual Meeting via the Internet and vote during the Annual
Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. |
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VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Daylight Time, on September 23, 2015. Have your proxy card
in hand when you call and then follow the instructions. |
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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. |
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| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
| M95365-P68666 KEEP THIS PORTION FOR YOUR RECORDS |
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| DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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WORTHINGTON
INDUSTRIES, INC. |
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For All |
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Withhold
All |
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For All
Except |
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To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. |
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The Board of Directors recommends a vote FOR each of the listed nominees for election as a director and FOR Proposals 2 and 3. |
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1. To elect three directors, each to serve for a term of three
years to expire at the 2018 Annual Meeting of Shareholders: |
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Nominees: |
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01) John B. Blystone
02) Mark C. Davis
03) Sidney A. Ribeau |
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For |
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2. To approve the advisory resolution on executive
compensation. |
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3. To ratify the selection of KPMG LLP as the independent registered public accounting firm of the
Company for the fiscal year ending May 31, 2016. |
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NOTE: In their discretion, the proxies are authorized to vote on such other business as may properly come before the Annual Meeting. |
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Each of the foregoing proposals is more fully described in the accompanying Proxy Statement. |
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This proxy will be voted as directed above. If no direction is made, except in the case of broker non-votes, this proxy will be voted FOR all nominees listed above and FOR Proposals 2 and 3. |
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Please sign exactly as your name appears on this proxy card. Executors, administrators, trustees, guardians, attorneys and agents should give their full titles.
If shareholder is a corporation, an authorized officer should sign in full corporate name. If shareholder is a partnership or other entity, an authorized person should sign in the entity’s full name. If the Common Shares represented by this
proxy are held in joint tenancy, both holders must sign this proxy card. |
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Signature [PLEASE SIGN WITHIN BOX] |
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Signature (Joint Owners) |
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NOTICE OF VIRTUAL ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, SEPTEMBER 24, 2015, AT 2:00 P.M., EDT
Access to this year’s virtual Annual Meeting of Shareholders will be available at
www.virtualshareholdermeeting.com/WOR15. A replay of the Annual Meeting of Shareholders
will be available for one year.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Shareholders of Worthington Industries, Inc. to be Held on September 24, 2015:
The Notice of Annual Meeting of Shareholders, the Proxy Statement and the Company’s 2015 Annual Report
to Shareholders are available at www.proxyvote.com.
— — — — — — — — — — — — —
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M95366-P68666
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WORTHINGTON INDUSTRIES, INC. |
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PROXY |
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WORTHINGTON
INDUSTRIES, INC. PLEASE COMPLETE, SIGN AND DATE THIS PROXY CARD WITHIN THE BOXES ON THE REVERSE SIDE AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Each shareholder identified on this proxy card hereby constitutes and appoints John P. McConnell, B. Andrew Rose and Dale T. Brinkman, and each of them, with
full power of substitution, the lawful agents and proxies of the shareholder to attend the Annual Meeting of Shareholders of Worthington Industries, Inc. (the “Company”) to be held via live webcast only at
www.virtualshareholdermeeting.com/WOR15, on Thursday, September 24, 2015, at 2:00 p.m., Eastern Daylight Time, and to vote all of the Common Shares of the Company that the shareholder is entitled to vote at such Annual Meeting, as directed on the
reverse side with respect to the matters set forth on the reverse side, and to vote such Common Shares with discretionary authority on all other matters which are properly brought before the Annual Meeting.
All proxies previously given or executed by each shareholder identified on this proxy
card are hereby revoked. Each shareholder identified on this proxy card acknowledges receipt of the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement for the September 24, 2015 Annual Meeting of Shareholders and the
Company’s 2015 Annual Report to Shareholders. Continued and to
be signed on reverse side |
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