TEN Tenneco Inc

Key Features of Our Executive Compensation Program

Governance Highlights

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What is the purpose of the Annual Meeting?

At the Annual Meeting, stockholders will consider and vote on the following matters:

The stockholders will also act on any other business that may properly come before the Annual Meeting.

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

If your shares are registered directly in your name with our transfer agent, EQ Shareowner Services, you are considered, with respect to those shares, the “stockholder of record.” If your shares are held in a stock brokerage account or by a bank or other record holder, you are considered the “beneficial owner” of shares held in “street name.” As the beneficial owner, you have the right to direct your broker, bank or other record holder on how to vote your shares, and you are also invited to attend the Annual Meeting. Your broker, bank or other record holder should have enclosed or provided voting instructions for you to use in directing the voting of your shares.

Who may attend the Annual Meeting?

Due to the emerging public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our partners and stockholders, the Annual Meeting will be held in a virtual meeting format only. You will not be able to attend the Annual Meeting physically, but your right to vote will not be affected. You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on March 25, 2020. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/TEN 2020 you must enter the control number found on your proxy card, voting instruction form or notice card.

Shares held in your name as the stockholder of record or beneficial owner in street name may be voted electronically during the annual meeting.

Who is entitled to vote at the Annual Meeting?

Only holders of record of our class A common stock at the close of business on March 25, 2020 are entitled to vote. There were 57,463,358 shares of class A common stock outstanding on March 25, 2020. Stockholders are entitled to cast one vote per share of class A common stock on all matters. There were 23,793,669 shares of class B non-voting common stock outstanding on March 25, 2020.

How do I vote my shares in person at the Annual Meeting?

You may vote during the Annual Meeting by following the instructions available on the meeting website during the meeting, but if you are not able to attend virtually, please submit your vote as

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soon as possible as instructed in the Notice, proxy card or voting instruction form.

Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the Annual Meeting.

How do I vote my shares without attending the Annual Meeting?

There are three ways to vote by proxy:

If you received a proxy card in the mail but choose to vote by internet or by telephone, you do not need to return your proxy card.

If your shares are held in the name of a bank, broker or other record holder, follow the voting instructions on the form that you receive from them. The availability of telephone and internet voting will depend on the bank’s, broker’s or other record holder’s voting process. Your bank, broker or other record holder may not be permitted to exercise voting discretion as to some of the matters to be acted upon. Therefore, please give voting instructions to your bank, broker or other record holder.

Unless you hold your shares through the company’s 401(k) plans, you may vote via the internet or by telephone until 11:59 p.m. Eastern Time, on May 11, 2020, or the company’s agent must receive your paper proxy card on or before May 11, 2020. If you hold your shares through the company’s 401(k) plans, you may vote via the internet or by telephone until 11:59 p.m., Eastern Time, on May 7, 2020, or the company’s agent must receive your paper proxy card on or before May 7, 2020.

How will my proxy be voted?

All properly completed, unrevoked proxies that are timely received will be voted in accordance with the specifications made.

If a properly executed, unrevoked written proxy card does not specifically direct the voting of shares covered, the proxy will be voted:

The Board is not aware of any other matters that may properly come before the Annual Meeting. However, should any such matters come before the Annual Meeting, it is the intention of the persons named in the enclosed form of proxy card to vote all proxies (unless otherwise directed by stockholders) in accordance with their judgment on such matters.

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May I revoke or change my vote?

If you are a stockholder of record, you may revoke your proxy at any time before it is actually voted by giving written notice of revocation to our Corporate Secretary, by delivering a proxy bearing a later date (including by telephone or by internet) or by attending virtually and voting during the Annual Meeting. Virtual attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically make that request. If you are a beneficial owner of shares, you may submit new voting instructions by contacting your bank, broker or other record holder or, by attending virtually and voting during the Annual Meeting.

Will my vote be made public?

All proxies, ballots and voting materials that identify the votes of specific stockholders will generally be kept confidential, except as necessary to meet applicable legal requirements and to allow for the tabulation of votes and certification of the vote.

What constitutes a quorum, permitting the Annual Meeting to conduct its business?

The presence at the Annual Meeting, in person or by proxy, of holders of a majority of the issued and outstanding shares of class A common stock as of the record date is considered a quorum for the transaction of business. If you submit a properly completed proxy or if you virtually attend the Annual Meeting to vote during the meeting, your shares of class A common stock will be considered part of the quorum.

Abstentions and “broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A broker non-vote occurs when a bank, broker or other record holder holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. The election of directors (Item 1), the advisory vote on executive compensation (Item 3) and the approval of the Amended and Restated 2006 LTIP (Item 4) are “non-discretionary” items. If you do not instruct your bank, broker or other record holder how to vote with respect to any of these items, your bank, broker or other record holder may not vote with respect to the applicable proposal and those votes will be counted as “broker non-votes.”

How many votes are needed to approve a proposal?

Assuming the presence of a quorum, each director nominee receiving a majority of the votes cast at the Annual Meeting (in person or by proxy) will be elected as a director (Item 1). A “majority of the votes cast” means the number of “For” votes cast exceeds the number of “Against” votes cast. A proxy marked “Abstain” with respect to any director will not be counted in determining the total number of votes cast. Because the election of directors is determined on the basis of a majority of the votes cast, abstentions and broker non-votes have no effect on the election of directors.

Assuming the presence of a quorum, the affirmative vote of a majority of the shares present, in person or by proxy, at the Annual Meeting and entitled to vote is required to ratify the appointment of PricewaterhouseCoopers LLP as our independent public accountants for 2020 (Item 2) and to approve our executive compensation in an advisory vote (Item 3). Because the vote standard for the approval of these proposals is a majority of shares present and entitled to vote, abstentions have the effect of a vote against the proposals and broker non-votes have no effect on the proposals.

Assuming the presence of a quorum, the affirmative vote of a majority of the votes cast at the Annual Meeting is required to approve the Amended and Restated 2006 LTIP (Item 4). Because

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the vote standard for the approval of this proposal is a majority of the votes cast, abstentions have the effect of a vote against the proposal and broker non-votes have no effect on the proposal.

Who will count the vote?

Representatives of Broadridge Financial Solutions, Inc. will tabulate the votes and act as inspectors of election.

How can I find the voting results of the Annual Meeting?

We will report the voting results in a Current Report on Form 8-K within four business days after the end of the Annual Meeting.

How is the solicitation being made?

The cost of solicitation of proxies will be borne by us. Solicitation will be made by mail, and may be made by directors, officers and employees, personally or by telephone, email or fax. Proxy cards and materials also will be distributed to beneficial owners of stock through brokers, custodians, nominees and other like parties, and we expect to reimburse such parties for their charges and expenses. We have engaged Innisfree M&A Incorporated to assist us in the solicitation of proxies, at an estimated cost of $25,000 plus expense reimbursement.

Does Tenneco allow stockholders to have proxy access for the nomination of directors?

Yes. The Board has adopted proxy access By-Law provisions to permit eligible stockholders to include nominees in the company’s proxy statement and form of proxy. See “Submission of Stockholder Proposals” for further information.

Where can I find more information about Tenneco?

We file reports and other information with the U.S. Securities and Exchange Commission (“SEC”). This information is available at our website at http://www.tenneco.com and at the internet site maintained by the SEC at http://www.sec.gov.

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Our Board is currently comprised of 13 directors, Roy V. Armes, SungHwan Cho, Thomas C. Freyman, Denise Gray, Brian J. Kesseler, Dennis J. Letham, James S. Metcalf, Aleksandra A. Miziolek, Roger B. Porter, David B. Price, Jr., Gregg M. Sherrill, Charles K. Stevens III and Jane L. Warner. Messrs. Porter and Price will not be standing for re-election at the Annual Meeting. Effective upon the Annual Meeting, the size of the Board will be reduced from 13 to 11 directors.

Unless otherwise indicated in your proxy, the persons named as proxy voters in the accompanying proxy card, or their substitutes, will vote your proxy for all the nominees, each of whom has been designated as such by the Board. In the event that any nominee for director withdraws or for any reason is not able to serve as a director, we will vote your proxy for the remainder of those nominated for director (except as otherwise indicated in your proxy) and for any replacement nominee designated by the Nominating and Governance Committee of the Board.

You may vote “For” or “Against” any or all of the director nominees, or you may “Abstain” from voting. Assuming a quorum, each director nominee receiving a majority of the votes cast at the Annual Meeting (in person or by proxy) will be elected as a director. A “majority of the votes cast” means the number of “For” votes cast exceeds the number of “Against” votes cast. A proxy marked “Abstain” with respect to any director will not be counted in determining the total number of votes cast.

If an incumbent director is not elected, that director remains in office until the director’s successor is duly elected and qualified or until the director’s death, resignation or retirement. To address this potential outcome, the Board adopted a director resignation policy in Tenneco’s By-Laws. Under this policy, the Board will nominate for directors only those incumbent candidates who tender, in advance, irrevocable resignations, and the Board has obtained such conditional resignations from the nominees in this year’s proxy statement. The irrevocable resignations will be effective upon the failure to receive the required vote at any annual meeting of stockholders at which they are nominated for re-election and Board acceptance of the resignation. If a nominee fails to receive the required vote, the Nominating and Governance Committee will recommend to the Board whether to accept or reject the tendered resignation. The Board will publicly disclose its decision within 90 days following certification of the stockholder vote. The director whose resignation is under consideration will not participate in the recommendation of the Nominating and Governance Committee or the Board’s decision with respect to the resignation. If the Board does not accept the resignation, the director will continue to serve until the next annual meeting of stockholders and until his or her successor is duly elected, or until his or her earlier resignation or removal. If the Board accepts the resignation, then the Board, in its sole discretion, may fill any resulting vacancy or may decrease the size of the Board (but not below the minimum number of directors required under our Certificate of Incorporation).

Included in the incumbent directors nominated for re-election are Messrs. Roy V. Armes and Charles K. Stevens III, and Ms. Aleksandra A. Miziolek, who were each appointed by the Board as a director effective March 10, 2020, February 5, 2020 and March 18, 2020, respectively, after being identified by an independent third-party search firm that was engaged by our Nominating and Governance Committee.

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In connection with the closing of the Federal-Mogul acquisition, on October 1, 2018, the company, Icahn Enterprises L.P. (“IEP”), American Entertainment Properties Corp. (“AEP”) and Icahn Enterprises Holdings L.P. (“IEH”) entered into a Shareholders Agreement (the “Shareholders Agreement”). Mr. Cho, who is the chief financial officer of IEP, was elected to our board as the representative of IEP and is nominated for election at the Annual Meeting pursuant to the terms of the Shareholders Agreement. See “Corporate Governance — Related Party Transactions”.

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Nominees for Election to the Board

The Board recommends that you vote FOR each nominee listed below.

		Roy V. Armes Age: 67 Committee: Nominating and Governance

Mr. Armes is the former Chairman, President and Chief Executive Officer of Cooper Tire & Rubber Company (“Cooper”), a global company that specializes in the design, manufacture, marketing and sales of passenger car, light and medium truck, motorcycle and racing tires. Prior to joining Cooper in January 2007, Mr. Armes concluded an extensive career at Whirlpool Corporation, where he served in a variety of leadership positions across the company, both in the U.S. and key emerging markets globally, most recently serving as Senior Vice President, Project Management Office. Mr. Armes holds a bachelor’s degree in mechanical engineering from the University of Toledo. Mr. Armes has served as a director of AGCO Corporation since 2013 and The Manitowoc Company, Inc. since 2018. He formerly was a board member of JLG Industries, Inc. Mr. Armes joined our Board in March 2020. As the former Chairman, President and Chief Executive Officer of Cooper, Mr. Armes brings significant industry knowledge and experience in the automotive aftermarket and with original equipment manufacturers, the two primary channels through which Tenneco sells its products.

		SungHwan Cho Age: 45

Mr. Cho has served as Chief Financial Officer of IEP, a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, food packaging, metals, mining, real estate and home fashion, since March 2012. Prior to that time, he was Senior Vice President and previously Portfolio Company Associate at IEP since October 2006. Mr. Cho has been a director of: Hertz Global Holdings, Inc., a company engaged in the car rental business, since May 2017; IEP, since September 2012; and CVR Energy, Inc., a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries, since May 2012 (and has been Chairman of the Board of CVR Energy since June 2018). In addition, Mr. Cho serves as a director of certain wholly-owned or majority-owned subsidiaries of IEP, including: Icahn Automotive Group LLC, an automotive parts installer, retailer and distributor; PSC Metals, LLC, a metal recycling company; and WestPoint Home LLC, a home textiles manufacturer. Mr. Cho was previously: a director (from June 2015) of Ferrous Resources Limited, an iron ore mining company, until August 2019; a director (from January 2013) and Chairman of the Board (from June 2018) of CVR Refining, LP, an independent downstream energy limited partnership, until January 2019; a member of the executive committee of American Railcar Leasing LLC, a lessor and seller of specialized railroad tank and covered hopper railcars, from September 2013 to June 2017; a director of CVR Partners LP, a nitrogen fertilizer company,

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		Thomas C. Freyman Age: 65 Committees: Audit (Chair), Compensation

Mr. Freyman served as Executive Vice President, Finance and Administration for Abbott Laboratories from June 2015 until his retirement in February 2017. Prior to that, he served as Chief Financial Officer and Executive Vice President, Finance for Abbott since 2004. He was first appointed Chief Financial Officer and Senior Vice President, Finance in 2001. From 1999 to 2001, he served as Vice President and Controller of Abbott’s Hospital Products Division. Prior to that, he held a number of financial planning and analysis positions with Abbott including Treasurer for Abbott’s international operations and Corporate Vice President and Treasurer. Mr. Freyman holds a bachelor’s degree in Accounting from the University of Illinois and a master’s degree in management from Northwestern University. Mr. Freyman is a director of Hanger, Inc. and Allergan plc. He has been a director of our company since 2013.

As a former Chief Financial Officer of a Fortune 200 company^†, Mr. Freyman brings substantial expertise in finance and accounting to our Board and our Audit Committee. Throughout his more than 30-year career with Abbott, Mr. Freyman served in diverse financial and accounting roles throughout Abbott’s global organization. Prior to his career with Abbott, he was a certified public accountant with the firm of Ernst & Whinney (now Ernst & Young) where he gained substantial experience in auditing, tax and financial reporting. The Board has designated Mr. Freyman as an “audit committee financial expert” as that term is defined in the SEC’s rules adopted pursuant to the Sarbanes-Oxley Act of 2002.

 

 

†	At the time of his retirement.

		Denise Gray Age: 57 Committees: Audit, Compensation

Ms. Gray is currently president of LG Chem Michigan Inc. Tech Center in Troy, Michigan overseeing the North American subsidiary of South Korean LG Chem Ltd., one of the world’s largest lithium-ion battery manufacturers. Prior to that she was President and Chief Executive Officer of LG Chem Power, Inc., a company focused on bringing lithium-ion polymer battery technology to North America for applications in the automotive and commercial markets from September 2015 until March 2018. From March 2013 until September 2015 she was Vice President, Powertrain Electrification at AVL List GMBH in Graz, Austria and North America. She also spent 30 years at General Motors in roles of increasing responsibility including heading up Global Battery Systems Engineering where she was recognized as “the battery czar,” and a driving force behind General Motors’ Chevrolet Volt vehicle. She holds a bachelor’s degree in Electrical Engineering from Kettering University and a master’s degree in Engineering Management Technology from Rensselaer Polytechnic Institute. She has been a director of our company since 2019.

With over 30 years of experience in the automotive industry, Ms. Gray has substantial understanding of the opportunities and needs of our business. Her current and former leadership roles as a President and Chief Executive Officer of companies at the forefront of battery technology bring valuable insight into the future direction of the automotive industry to our company.

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		Brian J. Kesseler Age: 53

Mr. Kesseler was named our Chief Executive Officer in January 2020 and served as our Co-Chief Executive Officer from October 2019 to January 2020. Mr. Kesseler joined Tenneco in January 2015 as our Chief Operating Officer until his appointment in May 2017 as our Chief Executive Officer. Prior to that, Mr. Kesseler was president of Johnson Controls Power Solutions, and served as Chief Operating Officer for that business from May 2012 until January 2013. He originally joined Johnson Controls in 1994 and served in leadership roles of increasing responsibility including, from 2009 to 2012, in the Building Efficiency division, where he was Vice President and General Manager with responsibility for Europe Systems & Services, North America Service and the Unitary Products Group. Prior to Johnson Controls, he was with Ford Motor Company, serving in the North America Assembly operations. Mr. Kesseler holds a bachelor’s degree in Finance from Michigan State University and an M.B.A. from Baldwin-Wallace College. He has been a director of our company since 2016.

Mr. Kesseler brings to our Board more than 30 years of experience in the automotive industry in increasingly senior management roles. As Chief Operating Officer, he oversaw our global operations for over two years, including in key growth areas. Mr. Kesseler has extensive knowledge of our company and its global operations. That, together with his passion for our industry, leadership qualities and track record of elevating performance, makes him a particular asset to our company, both as a member of the Board and as our Chief Executive Officer.

		Dennis J. Letham Age: 68 Committee: Audit

Mr. Letham served as Executive Vice President, Finance and Chief Financial Officer of Anixter International Inc. from 1995 until his retirement in June 2011, where he oversaw the company’s finance, accounting, tax, legal, human resources and internal audit activities in 50 countries. Before assuming his role as Chief Financial Officer in 1995, Mr. Letham served as Executive Vice President and Chief Financial Officer of Anixter, Inc., the principal operating subsidiary of Anixter International, which he joined in 1993. Previously, he had a 10-year career with National Intergroup Inc., where he was Senior Vice President and Chief Financial Officer, as well as Vice President and Controller, Director of Corporate Accounting and Manager for Internal Audit. Mr. Letham began his career at Arthur Andersen & Co. in 1973 where he held progressive responsibilities in the Audit Department. Mr. Letham holds a bachelor’s degree from Pennsylvania State University’s Accounting Honors program. He also is a Certified Public Accountant. Mr. Letham is a director of Extra Space Storage Inc. and chairman of its audit committee and was a director of Interline Brands, Inc. and chairman of its audit committee through August 2015 when it was sold to The Home Depot, Inc. He has been a director of our company since 2007.

Mr. Letham’s substantial experience in finance and accounting makes him a valuable asset to our Board and our Audit Committee. Throughout his more than 40-year career, Mr. Letham has gained a deep understanding of the operations and financial reporting and accounting functions of large organizations. His 15 years of experience as the Chief Financial Officer of Anixter, a large international public company, give him substantial insight into the complex financial, accounting and operational issues that a large multinational company such as ours can encounter. Further, with his background in public accounting, he brings particular insight to the external and internal audit functions. The Board has designated Mr. Letham as an “audit committee financial expert” as that term is defined in the SEC’s rules adopted pursuant to the Sarbanes-Oxley Act of 2002.

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		James S. Metcalf Age: 62 Committee: Compensation (Chair)

Mr. Metcalf is Chairman of the Board and Chief Executive Officer of Cornerstone Building Brands, the newly merged NCI Building Systems, Inc. and Ply Gem Building Products Company. He retired in October 2016 as the Chairman, President and Chief Executive Officer of USG Corporation. At the time of his retirement, he had served as its Chairman since December 2011 and had served as its Chief Executive Officer and President since January 2011. From January 2006 through January 2011, he was President and Chief Operating Officer of USG. Prior to that Mr. Metcalf held many positions at USG including President, Building Systems; President and Chief Executive Officer, L&W Supply; Senior Vice President, Sales and Marketing, USG Interiors, Inc.; Vice President, National Accounts, United States Gypsum Company; Director, Retail Marketing, USG Corporation; Director, Retail Sales, USG Interiors, Inc.; and National Accounts Manager, United States Gypsum Company. He also serves as a board member for the National Association of Manufacturers and as a policy advisory board member for the Joint Center for Housing Studies at Harvard University. Mr. Metcalf holds a bachelor’s degree from The Ohio State University. He also holds an M.B.A. from Pepperdine University and completed the Stanford Executive Program. He has been a director of our company since 2014.

As a current and former Chief Executive Officer of major manufacturers of construction materials, Mr. Metcalf brings substantial executive leadership experience to our Board and our Nominating and Governance Committee. Further, Mr. Metcalf’s service in leadership roles in multiple areas within a large manufacturing company gives him particular insight into the types of strategic, operational and financial issues faced by companies such as ours.

		Aleksandra (“Aleks”) A. Miziolek Age: 63 Committee: Nominating and Governance

Ms. Miziolek concluded an approximately 6-year tenure in 2019 with Cooper-Standard Holdings Inc., a leading global supplier of systems and components for the automotive industry, most recently serving as Chief Transformation Officer. In this role, Ms. Miziolek led crucial transformation initiatives aimed at increasing profitability and was actively involved in the development of the Company’s growth strategy for its nonautomotive specialty markets and material science businesses. She also served as Cooper-Standard Holdings’ Senior Vice President, General Counsel, Secretary and Chief Compliance Officer beginning in 2014. Prior to joining Cooper-Standard Holdings, Ms. Miziolek spent 32 years with the law firm of Dykema Gossett, where she held several key leadership positions, such as Director of the Automotive Industry Group, and built a successful M&A and infrastructure practice spanning multiple industries. Ms. Miziolek holds a juris doctor and bachelor’s degree from Wayne State University. She is also an NACD Governance Fellow and serves on the Transportation and Infrastructure Policy Committee of the National Association of Manufacturers. Ms. Miziolek joined our Board in March 2020.

Her in-depth knowledge of the automotive industry, experience leading transformational initiatives and significant legal expertise make her a valuable addition to our board.

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		Gregg M. Sherrill Age: 67 Chairman

Mr. Sherrill served as our Chairman and Chief Executive Officer from January 2007 to May 2017 and as our Executive Chairman until May 2018. Mr. Sherrill joined us from Johnson Controls Inc., where he served since 1998, most recently as President, Power Solutions. From 2002 to 2003, Mr. Sherrill served as the Vice President and Managing Director of Europe, South Africa and South America for Johnson Controls’ Automotive Systems Group. Before joining Johnson Controls, Mr. Sherrill held various engineering and manufacturing assignments over a 22-year span at Ford Motor Company. Mr. Sherrill holds a B.S. degree in mechanical engineering from Texas A&M University and an M.B.A. from Indiana University’s Graduate School of Business. Mr. Sherrill is a director of The Allstate Corporation and of Snap-on Incorporated, where he is the chairperson of the organization and executive compensation committee. Mr. Sherrill serves on the National Governing Council of The Wilderness Society and is Honorary Vice Chair of the National Association of Manufacturers. He has been a director of our company since 2007.

Mr. Sherrill brings to our Board over 40 years of experience in the automotive industry, including ten years as our Chairman and Chief Executive Officer. Before joining our company, he held increasingly senior management roles at both a major automotive parts supplier and a major original equipment manufacturer, giving him unique perspective and insight. His extensive experience managing international operations is also of key value to a global company such as ours. Under his leadership, in addition to delivering strong financial results, our company established a long-term vision and strategic direction that capitalizes on the distinct strengths and opportunities of each of our product lines. His extensive knowledge of our business and industry, together with his proven talents and leadership, position him well to continue to serve as our Chairman.

 

		Charles K. Stevens III Age: 59 Committees: Compensation, Nominating and Governance

Mr. Stevens retired from General Motors Company (“GM”) in March 2019 after a 40-year career at the company. Mr. Stevens served as Executive Vice President and Senior Advisor of GM between September 2018 and March 2019. Prior to that, he was Executive Vice President and Chief Financial Officer from January 2014 until September 2018 where he was responsible for leading GM’s financial and accounting operations worldwide. He served as Chief Financial Officer of GM North America from 2010 until 2014. He served as Interim Chief Financial Officer of GM South America from 2011 to 2013 and led GM’s financial operations for GM Mexico from 2008 to 2010 and GM Canada from 2006 to 2008. From 1994 to 2005, he held several leadership positions in GM’s Asia Pacific Region. He began his career at Buick Motor Division in 1978. He received a bachelor’s degree in Industrial Administration from General Motors Institute (now Kettering University) and an M.B.A. from the University of Michigan, Flint. Mr. Stevens currently serves on the boards of directors of Masco Corporation (since 2018), Flex Ltd. (since 2018), and Eastman Chemical Company (since 2020). Mr. Stevens joined our Board in February 2020.

As the former Chief Financial Officer of General Motors, Mr. Stevens brings significant auto industry experience and expertise across finance and accounting operations, international financial matters and mergers and acquisitions.

 

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		Jane L. Warner Age: 73 Committees: Audit, Nominating and Governance (Chair)

From August 2007 until her retirement in March 2013, Ms. Warner served as Executive Vice President at Illinois Tool Works Inc., a Fortune 200† diversified manufacturer of highly engineered components and industrial systems and consumables, where she had worldwide responsibility for its Decorative Surfaces and Finishing Systems businesses. Ms. Warner joined Illinois Tool Works Inc. in December 2005 as Group President of its Worldwide Finishing business. She was previously the President of Plexus Systems, L.L.C., a manufacturing software company, from June 2004 to December 2005, and a Vice President with Electronic Data Systems from 2000 through June 2004, where she led their global manufacturing group. Ms. Warner served as Executive Vice President for first tier supplier Textron Automotive from 1994 through 1999, where she was President of its Kautex North America and Randall divisions. Previously, Ms. Warner held executive positions in manufacturing, engineering and human resources over a 20-year span at General Motors Corporation. Ms. Warner received bachelor’s and master’s degrees from Michigan State University. She also received an M.B.A. from Stanford University where she was a Sloan Fellow. Ms. Warner is a board member of Brunswick Corporation and Regal Beloit Corporation. Ms. Warner served on the board of directors of MeadWestvaco Corporation through August 2014. She is also a Trustee for John G. Shedd Aquarium and chairs its long range planning committee. She has been a director of our company since 2004.

With over 20 years of automotive industry experience, Ms. Warner has particular appreciation of the challenges facing our customers. Her automotive industry expertise is supplemented by her leadership roles in global manufacturing and manufacturing information systems businesses, both of which are of particular relevance to a global manufacturing company such as ours. She also brings to us the financial understanding she has gained through her business unit leadership and as a member of the audit committee of both MeadWestvaco and Regal Beloit.

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Overview

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The Board and Its Committees

Board Leadership Structure

Our Board currently is comprised of 13 directors, eleven of whom are independent and one of whom is an officer of our company. Of our 11 nominees, nine are independent. The Board believes that our ratio of outside directors to inside directors represents a commitment to the independence of the Board and a focus on matters of importance to our stockholders.

Mr. Sherrill serves as our non-executive Chairman of the Board and presides at all meetings of stockholders and the Board. With Mr. Kesseler’s appointment as Chief Executive Officer in May 2017, the Chairman and Chief Executive Officer roles were split between Mr. Sherrill and Mr. Kesseler. By having separate roles, the Chief Executive Officer is able to focus on the day-to-day business and affairs of the company and the Chairman is able to focus on key strategic issues, Board leadership and communication. Upon Tenneco’s completion of the acquisition of Federal-Mogul on October 1, 2018, Mr. Kesseler and Roger J. Wood were appointed Co-Chief Executive Officers in anticipation of our planned separation into two independent publicly traded companies. In January 2020, Mr. Wood ceased serving as Co-Chief Executive Officer, and Mr. Kesseler again became our sole Chief Executive Officer.

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Effective April 1, 2020, we also have a lead independent director, Mr. Letham. As lead independent director, Mr. Letham presides at all executive sessions of the Board, consults with management and the other members of the Board regarding Board meeting agendas and serves as the principal liaison between management and the independent directors.

Our Board believes this leadership structure is in the best interests of our company and its stockholders.

The non-management directors on the Board and each of these committees meet in regularly scheduled executive sessions without any members of management present. The purpose of these executive sessions is to promote open and candid discussion among the non-management directors. Our system has provided and will continue to provide appropriate checks and balances to protect stockholder value and allows for efficient management of our company.

Our Board has three standing committees — the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. Each of these committees consists solely of independent directors and has its own chair who is responsible for directing the work of the committee in fulfilling its responsibilities.

Role of Board in Risk Oversight

Our Board recognizes that, although risk management is primarily the responsibility of the company’s management team, the Board plays a critical role in the oversight of risk, including the identification and management of risk. The Board believes that an important part of its responsibilities is to assess the major risks we face and review our strategies for monitoring and controlling these risks. The Board’s involvement in risk oversight involves the full Board, the Audit Committee, the Compensation Committee and the Nominating and Governance Committee.

We perform an annual enterprise risk assessment, which originates within our internal audit department and is performed in accordance with the standards adopted by the Committee of Sponsoring Organizations of the Treadway Commission (CSO). As part of its assessment, our internal audit department interviews each of our directors, as well as members of management, regarding the strategic, operational, compliance and financial risks that our company faces. Our Vice President of Internal Audit and Chief Financial Officer review the results of this annual enterprise risk assessment with our Board. In addition, throughout the year, the Board meets with senior management to discuss:

The Board receives presentations throughout the year from senior management and leaders of our business units and functional groups regarding specific risks that we face. Finally, on an annual basis, management provides a comprehensive strategic review to the Board, which includes a discussion of the major risks faced by our company and our strategies to manage and minimize these risks.

The Audit Committee meets frequently during the year with senior management, our Vice President of Internal Audit and our independent public accountants and discusses the major risks facing us, and the steps management has taken to monitor and control such risks, as well as the adequacy of internal controls that could mitigate risks that could significantly affect our financial statements. At each regularly scheduled meeting, our Vice President of Internal Audit reviews with

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the Audit Committee the results of internal audit activities and testing since the Audit Committee’s prior meeting. In addition, at each regularly scheduled Audit Committee meeting, the company’s General Counsel provides a report to the Audit Committee regarding any significant litigation, environmental and regulatory risks faced by our company. The Audit Committee also maintains oversight over the company’s compliance programs, including compliance with the company’s Code of Conduct. The Chair of the Audit Committee provides the Board with a report concerning its risk oversight activities at each Board meeting. The Compensation Committee reviews our compensation structures and programs to ensure that they do not encourage excessive risk-taking.

Director Independence

The Board has determined that all of our non-management directors, except for Mr. Sherrill, are “independent” as that term is defined under the listing standards of the NYSE. As part of its analysis, the Board determined that none of the outside directors has a direct or indirect material relationship with our company. Under written guidelines adopted by the Board, the following commercial or charitable relationships are not considered to be material relationships that would impair a director’s independence:

Mr. Sherrill was an officer of our company until May 16, 2018 and is therefore not considered “independent” under the listing standards of the NYSE. Mr. Cho is Chief Financial Officer of IEP, which indirectly owns more than 5% of our class A common stock. Certain subsidiaries of IEP have entered into transactions with our company that are described in “Related Party Transactions” below. In finding Mr. Cho to be independent, the Board has determined that these transactions are immaterial to both our company and IEP and that the director’s interest in these transactions is not material (as his interest in these transactions is primarily as an officer of IEP).

Board Meetings

During 2019, the Board held 14 meetings. All of our directors who served in 2019 attended at least 90% of all meetings of the Board and the committees of the Board on which the director served. The Board is scheduled to meet in executive session, without management, after every regularly scheduled Board meeting. Mr. Letham presides at all executive sessions of the Board.

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Nine of our 10 directors serving at the time attended last year’s annual meeting of stockholders. One director was unable to attend for health reasons. The Board has a policy that, absent unusual circumstances, all directors attend our annual meetings of stockholders.

Compensation Committee

Effective April 1, 2020, the members of the Compensation Committee are Ms. Gray and Messrs. Freyman, Stevens and Metcalf, who is the Chair of the Committee. The Compensation Committee is comprised solely of outside directors who meet the independence standards for compensation and nominating committee members as set forth in the NYSE listing standards.

The Compensation Committee has the responsibility, among other things, to:

The Compensation Committee operates pursuant to a written charter, the current version of which was reaffirmed by the Board and the Compensation Committee in February 2020 as part of their annual review process. The Compensation Committee held 10 meetings during 2019.

For 2019, the Compensation Committee retained the services of Meridian Compensation Partners, LLC (“Meridian”) as its principal outside compensation consultant. Meridian reports directly to the Compensation Committee with the assignment to:

From time to time, the Compensation Committee will review materials prepared by other consultants to assist them with specific compensation matters. For a discussion of the role of our

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executive officers in the establishment of executive officer compensation, see “Executive Compensation — Compensation Discussion and Analysis.” Our executive officers do not participate in the process for establishing director compensation.

A report of the Compensation Committee regarding executive compensation appears elsewhere in this proxy statement. For a more detailed discussion of the processes and procedures for considering and determining executive compensation, see “Executive Compensation — Compensation Discussion and Analysis.”

Nominating and Governance Committee

Effective April 1, 2020, the members of the Nominating and Governance Committee are Messrs. Armes, Porter and Stevens and Mss. Miziolek and Warner, who is the Chair of the Nominating and Governance Committee. The Nominating and Governance Committee is comprised solely of outside directors who meet the general independence standards as set forth in the NYSE listing standards.

The Nominating and Governance Committee has the responsibility, among other things, to:

The Nominating and Governance Committee operates pursuant to a written charter, the current version of which was reaffirmed by the Board and the Compensation Committee in February 2020 as part of their annual review process. The Nominating and Governance Committee held five meetings during 2019.

For 2019, the Nominating and Governance Committee retained the services of Meridian its principal outside compensation consultant with respect to director compensation. Meridian reports directly to the Nominating and Governance Committee in connection with apprising the committee members regarding best practices and pay levels in association with director compensation.

For our director compensation, Meridian prepares comparative market data and presents that information directly to the Nominating and Governance Committee. The Nominating and Governance Committee reviews this data and establishes director compensation in consultation with Meridian.

Other than its services as a compensation consultant, Meridian provides no other services to the Nominating and Governance Committee, the Compensation Committee or our company.

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Consideration of Director Nominees

The Nominating and Governance Committee regularly assesses the size of the Board, the need for expertise on the Board and whether any vacancies are expected on the Board. The Nominating and Governance Committee’s process for identifying and evaluating nominees is as follows:

In evaluating and determining whether to recommend a person as a candidate for election as a director, the Nominating and Governance Committee considers each candidate’s experience, qualifications, attributes and skills as well as the specific qualification standards set forth in our By-Laws and Corporate Governance Principles, including:

The Nominating and Governance Committee and the Board value diversity, and believe that a diverse Board composition provides significant benefit to our company. Each candidate is reviewed in light of the overall composition and skills of the entire Board at the time, including the varied characteristics of the Board members and candidate in terms of opinions, perspectives, personal and professional experiences and backgrounds. The nominees selected are those whose experience and background are deemed to provide the most valuable contribution to the Board.

Our By-Laws permit, under certain circumstances, a stockholder or group of no more than 20 stockholders (meeting our continuous ownership requirement of 3% or more of our outstanding common stock held continuously for at least the previous three years) to nominate a candidate or candidates for election to the Board at an annual meeting of stockholders, constituting up to two directors or 20% of the number of directors then serving on the Board (rounded down to the nearest whole number), whichever is greater. In order to require us to include such candidate or candidates in our proxy statement and form of proxy, stockholders and nominees must submit a notice of proxy access nomination together with certain related information required by our By-Laws.

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Our By-Laws also permit stockholders entitled to vote at the meeting to nominate directors for consideration at an annual meeting of stockholders without requiring that their nominees be included in our proxy statement and form of proxy. Stockholders may nominate persons for election to the Board at an annual meeting of stockholders by submitting a letter of nomination, together with certain related information required by our By-Laws.

Pursuant to our By-Laws, written notice by stockholders of qualifying nominations for election to the Board must have been received by our Corporate Secretary by February 15, 2020.

Correspondence related to stockholder proposals must be sent in writing to our Corporate Secretary at our principal executive offices, 500 North Field Drive, Lake Forest, Illinois 60045. For more information on submitting a nomination, visit www.tenneco.com or see “Submission of Stockholder Proposals.”

Audit Committee

Effective April 1, 2020, the members of the Audit Committee are Mss. Warner and Gray and Messrs. Letham and Freyman, who is the Chair of the Committee. The Audit Committee is comprised solely of directors who are all financially literate and who meet all of the independence standards for audit committee membership as set forth in the Sarbanes-Oxley Act of 2002 and the SEC rules adopted thereunder and the NYSE listing standards. The Board has designated each of Messrs. Freyman and Letham as an “audit committee financial expert” as that term is defined in the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002.

Management is responsible for maintaining our internal controls over financial reporting. Our independent public accounting firm is responsible for performing an independent audit of our consolidated financial statements in accordance with generally accepted auditing standards and for issuing a report on its audit. The Audit Committee’s duty is to oversee and monitor these activities on behalf of the Board. Specifically, the Audit Committee has the responsibility, among other things, to:

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In fulfilling its responsibilities, the Audit Committee reviewed with management and our independent public accountants:

In addition, the Audit Committee has discussed our major risk exposures and the steps that management has taken to monitor and control such exposures. Management is required to advise the Audit Committee of any instances of fraud relating to employees who have a significant role in our internal controls.

The Audit Committee operates under a written charter, the current version of which was reaffirmed by the Board and the Audit Committee in February 2020 as part of their annual review process. The Audit Committee held 13 meetings in 2019. A report of the Audit Committee appears elsewhere in this proxy statement.

Stockholder Engagement

As part of our overall corporate governance, we have an on-going outreach program to develop and maintain communication with our investors in regard to governance and compensation issues. We value these discussions and the Board considers pertinent feedback when evaluating corporate governance and compensation issues. In addition, management regularly participates in investor and industry conferences throughout the year to discuss performance, environmental, social and governance topics, and share its perspective on business and industry developments. Stockholders may also contact the Board with any inquiry or issue, by the methods described in this Proxy Statement and the Board will respond as appropriate.

Sustainability Reporting

The Board oversees our public responsibility and sustainability practices and we are committed to corporate responsibility and helping our customers, employees and communities build a sustainable future. We provide public reporting and are forthcoming in disclosures about our environmental stewardship and long-term strategy, including voluntarily reporting our climate risk strategy and related data to CDP (formerly known as the Carbon Disclosure Project). We also publish a Corporate Social Responsibility and Sustainability Report, which can be found on our public website, and highlights our performance across our global portfolio and was developed in accordance with the Global Reporting Initiative Standards.

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Accounting Complaints and Communications with the Directors

Anyone with concerns about our conduct, or about our accounting, internal accounting controls or auditing matters, may communicate that concern directly to the Board, any non-employee director or the Audit Committee. All such concerns will be forwarded to the appropriate directors for their review, and all material concerns related to audit or accounting matters will be forwarded to the Audit Committee. All reported concerns will be simultaneously reviewed and addressed by each of our Chief Compliance Officer and General Counsel or his or her respective designee (unless he or she is alleged to be involved in the matter at issue). The status of all outstanding concerns addressed to the Board, the non-employee directors or the Audit Committee will be reported to the Board or the Audit Committee (as applicable) on at least a quarterly basis. The Board or any committee may direct special treatment, including the retention of outside advisors or counsel, for any concern addressed to them. Our corporate policies prohibit retaliatory action against any employee who raises concerns or questions in good faith about these matters.

Stockholders wishing to communicate with the Board, any outside director or the Audit Committee may do so by writing to our Corporate Secretary at 500 North Field Drive, Lake Forest, Illinois 60045. The Corporate Secretary will review and forward, as appropriate, any communications as directed by the stockholder. We maintain a separate, internal system for the receipt of communications from employees.

Transactions with Related Persons

The Board has adopted a Policy and Procedures for Transactions with Related Persons. As a general matter, the policy requires the Audit Committee to review and approve or disapprove the entry by us or our subsidiaries into certain transactions with related persons. The policy only applies to transactions, arrangements and relationships where the aggregate amount involved will or may reasonably be expected to exceed $120,000 in any calendar year and in which a related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A related person is:

If advance approval of a transaction subject to the policy is not obtained, it must be promptly submitted to the Audit Committee for possible approval, amendment, termination or rescission. In reviewing any transaction, the Audit Committee will take into account, among other factors the Audit Committee deems appropriate, whether the transaction is on terms no less favorable than terms generally available to a third party in similar circumstances and the extent of the related person’s interest in the transaction.

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The policy provides that the following transactions are pre-approved for the purposes of the policy:

Related Party Transactions

In connection with the closing of the Federal-Mogul acquisition, on October 1, 2018, the company, IEP, AEP and IEH entered into the Shareholders Agreement.

Pursuant to the Shareholders Agreement, until the earlier of the date that the Spin-Off (as defined in the Shareholders Agreement) is consummated and the date on which IEP and its affiliates cease to own at least 10% of the issued and outstanding class A common stock and class B common stock, measured as a single class, the Board will nominate for election the then-serving chief executive officer of IEP (or another designee of IEP that is reasonably acceptable to the company, if applicable) at each annual meeting of stockholders.

The Shareholders Agreement also contains certain standstill and voting obligations applicable to IEP and affiliates that expired on April 1, 2020. However, IEP must have caused its designee to resign from the Board at least 30 days prior to IEP taking certain specified actions with respect to the Company. In addition, IEP and its affiliates are prohibited from acquiring, offering to acquire, or agreeing to acquire, directly or indirectly, any shares of class A common stock or other securities until April 1, 2021.

Furthermore, until the later of (i) the expiration of the standstill restrictions discussed above and (ii) the time when IEP and its affiliates cease to own at least 10% of the issued and outstanding class A common stock and class B common stock, measured as a single class, IEP and its affiliates may not transfer any shares (a) to certain specified types of investors and (b) in an amount equal to 5% or more of the class A common stock issued and outstanding at the time of such transfer (subject to certain exceptions).

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For so long as IEP and its affiliates own at least 10% of the outstanding class A common stock and class B common stock, measured as a single class, and the company proposes to issue any equity securities (other than in an excluded issuance), IEP and its affiliates have certain preemptive rights. The Shareholders Agreement also includes registration rights for IEP. In addition, IEP has the right to convert certain of its class B common stock to class A common stock, provided that its aggregate holdings of the outstanding class A common stock do not exceed 15%. IEP indicated to the company that it intends to exercise its right to such a conversion of class B common stock on April 1, 2020.

As part of the Federal-Mogul acquisition, the company acquired a redeemable noncontrolling interests related to a subsidiary in India. In accordance with local regulations, as a result of the change in control triggered by the acquisition, the company was required to make a tender offer to purchase the remaining outstanding shares of the subsidiary. The company entered into agreements with IEP subsequent to executing the purchase agreement whereby IEP agreed to fund and execute the tender offer on behalf of the company.

Prior to its acquisition, Federal-Mogul was party to supply contracts with The Pep Boys—Manny, Moe & Jack (“Pep Boys”) and IEH Auto Parts LLC (“Auto Plus”). Pep Boys and Auto Plus are owned by IEP. IEP indirectly holds more than 5% of our class A common stock, and Mr. Cho is chief financial officer of IEP. In connection with the acquisition of Federal-Mogul, we negotiated modifications to the supply contracts with Pep Boys and Auto Plus which we believe are favorable to us. We assumed these contracts in the acquisition of Federal-Mogul. Prior to the acquisition, we had sales to Pep Boys and Auto Plus unrelated to Federal-Mogul which are ongoing. Net sales to Pep Boys and Auto Plus since the beginning of 2019 were $53 million and $127 million, respectively. Such sales were made and are continuing to be made in the ordinary course of our business.

Federal-Mogul is party to certain other minor arrangements with IEP subsidiaries: (i) leases of office space and facilities (under $0.5 million in 2019); (ii) a distribution services agreement (under $1.5 million in 2019); and (iii) sales of scrap materials in the ordinary course of our business to PSC Metals, Inc. (under $2 million in 2019).

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Management

The following table shows, as of March 4, 2020, the number of shares of our class A common stock (the only class of voting securities outstanding), beneficially owned by: (1) each director; (2) each person who is named in the Summary Compensation Table below; and (3) all directors and executive officers as a group. Except as otherwise noted, the stockholders named in this table have sole voting and investment power for all shares shown as beneficially owned by them.

*Less than 1%

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Certain Other Stockholders

The following table sets forth, as of March 4, 2020, certain information regarding the persons known by us to be the beneficial owner of more than 5% of our outstanding class A common stock (the only class of voting securities outstanding).

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Compensation Discussion and Analysis

Our executive compensation philosophy, policies, plans and programs are under the supervision of the Compensation Committee of our Board. For a description of the composition, authority and responsibilities of the committee, see “Corporate Governance — The Board and Its Committees — Compensation Committee.” Unless the context requires otherwise, in this Compensation Discussion and Analysis when we refer to the “committee,” we are referring to the Compensation Committee and when we refer to “named executive officers,” we are referring to the named executive officers whose compensation is shown in this proxy statement under “— Summary Compensation Table.”

Executive Summary

Our compensation policies are based on the belief that executive and stockholder financial interests should be aligned as closely as possible, and compensation should be designed such that company performance drives the level of pay that our named executive officers and all management employees receive.

Our Company

Tenneco is a global automotive parts and products manufacturing company. We are one of the world’s leading designers and manufacturers of Clean Air, Powertrain, Aftermarket, and Ride Performance products and systems. Our 78,000 worldwide employees operate over 300 manufacturing, engineering and technical and distribution centers worldwide, developing and producing parts such as exhaust and emissions control systems and their components such as mufflers and catalytic converters, and vehicle suspension systems and components such as shock absorbers, springs, and struts. We sell these parts to light vehicle makers (including 25 passenger car companies), commercial truck makers, off-highway vehicle makers, and industrial vehicle makers, and to the aftermarket.

Significant Recent Events

In April 2018, we announced that we had entered into a definitive agreement to acquire Federal-Mogul LLC (“Federal-Mogul”), along with the intention to separate into two independent public companies following the acquisition – a powertrain technology company (“New Tenneco”) – and an aftermarket and ride performance company – DRiV Incorporated (“DRiV”). In anticipation of the separation, we appointed Roger J. Wood as Co-Chief Executive Officer upon consummation of the acquisition on October 1, 2018 with the expectation that he would lead New Tenneco and Mr. Kesseler would lead DRiV. In January 2020, Mr. Wood ceased serving as Co-Chief Executive Officer and the Board consolidated the Co-Chief Executive Officer roles, with Mr. Kesseler serving as our sole Chief Executive Officer.

On March 13, 2020, Jason Hollar resigned as Chief Financial Officer, effective April 1, 2020. On March 18, 2020, Kenneth R. Trammell was appointed to serve as Interim Chief Financial Officer while we conduct a search to find a permanent replacement.

Changes in 2019 Program Design

For 2019, we modified the design of our annual cash incentive plan, the Tenneco Annual Incentive Plan (“AIP”), in anticipation of the separation of New Tenneco and DRiV. Under the modified AIP, a named executive officer is generally entitled to an annual cash incentive based on the performance

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of the Business – New Tenneco or DRiV – by which he is expected to be employed following the separation. For those named executive officers in charge of a Division within New Tenneco or DRiV, his annual cash incentive will be based 40% on the overall performance of New Tenneco or DRiV, as applicable, and 60% based on the performance of his individual Division. Accordingly, the annual cash incentives for the named executive officers were to be based on the following operating results: (i) Messrs. Kesseler, Hollar and Norton – DRiV; (ii) Mr. Wood – New Tenneco; (iii) Mr. Jueckstock – New Tenneco and the Powertrain Division; and (iv) Mr. Guo – New Tenneco and the Clean Air Division.

Company Performance in 2019 and Impact on Compensation Outcomes

In 2019, the company achieved a number of operational and strategic milestones. We launched 14 advanced suspension technology platforms, rebalanced our DRiV portfolio, initiated or continued development on 27 new Commercial Truck & Off-Highway product launches designed to satisfy China VI emissions standards, and we signed a strategic cooperation agreement with New Carzone for the China aftermarket.

Our 2019 revenue and earnings were up sharply over 2018, largely due to our acquisition of Federal-Mogul in late 2018. However, our financial results for 2019 fell short of the targets that our board set in our annual cash incentive program. As a result, our annual cash incentives paid out well below target. In 2019, our annual cash incentives were based on a combination of EBITDA and Free Cash Flow, as measured for the parts of the business appropriate for each executive and specified in the section titled “Salary and Annual Cash Incentive Compensation”. In early 2020, the Compensation Committee declared annual bonuses at between 20 percent and 61 percent of their targeted amounts, with our CEO receiving 54 percent of his target annual cash incentive.

The committee believes that 2019 compensation awards and outcomes for our named executive officers were appropriate in light of our financial performance for 2019.

Executive Compensation Decisions and Outcomes for 2019

Key pay outcomes under our 2019 executive compensation program included:

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The mix of the key elements of compensation (expressed as a proportion of total compensation) awarded to our named executive officers at the beginning of 2019 was as follows (excluding compensation of the type that would fall under “All Other Compensation” in our Summary Compensation Table):

As the table and charts show, at the targeted level, our incentive compensation awards made at the beginning of 2019 represented approximately 87.5% of the total compensation awarded to our Chief Executive Officer and former Co-Chief Executive Officer for 2019 and an average of approximately 73% of the total compensation awarded to the other named executive officers shown above for 2019. The table above does not include retention awards made in 2019 to Messrs. Hollar and Guo in connection with the anticipated separation. See “— Compensation Discussion and Analysis — Design and Elements of Compensation — Certain Other 2019 Compensation Actions.”

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Results of Say-on-Pay Vote and Stockholder Engagement

Our stockholders hold an annual advisory vote on executive compensation (the “say-on-pay proposal”). At our annual meeting of stockholders held in May 2019, approximately 92% of the shares present and entitled to vote on our say-on-pay proposal were voted in favor of the proposal. The committee believes this affirms stockholders’ support of our approach to executive compensation for 2019. The committee will continue to consider the outcome of the annual say-on-pay proposal when making future compensation decisions for our executives.

As part of our overall corporate governance, we have an on-going outreach program to develop and maintain communication with our investors in regard compensation issues. We value these discussions and the Board considers pertinent feedback when evaluating compensation issues.

Highlights of our Executive Compensation Practices

What we do

What we don’t do

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Compensation Objectives

Our compensation policies are based on the belief that executive and stockholder financial interests should be aligned as closely as possible, and compensation should be designed such that company performance drives the level of pay that our named executive officers and all management employees receive. Our executive compensation program has been structured to:

Based on the guiding principle of aligning executive compensation with the financial interests of our stockholders, our executive compensation program provides competitive levels of compensation derived from several sources: salaries, annual cash incentive awards, stock ownership opportunities through restricted stock awards, restricted stock unit awards and stock-settled long-term performance share units, and cash-settled long-term performance units.

We also offer other benefits typically offered to executives by major U.S. corporations, including defined benefit retirement plans (under which future benefit accruals were substantially eliminated for senior management in 2006 as described below), defined contribution retirement plans, limited perquisites, employment agreements (in limited cases), severance and change in control benefits, and health and welfare benefits.

Compensation Process

In determining competitive compensation, the committee engages Meridian Compensation Partners, LLC (“Meridian”), a nationally recognized compensation consulting firm that, in order to maintain its independence, reports directly to the committee. For our Chief Executive Officer and former Co-Chief Executive Officer, Meridian provided market data regarding salary, annual cash incentive award targets, and equity-based and other long-term incentive compensation awards directly to the committee as it makes decisions with respect to compensation. For the other named executive officers, Mr. Kesseler and Mr. Wood formulated the initial recommendations regarding salary, annual cash incentive award targets and equity-based and other long-term incentive compensation awards. The committee reviewed these recommendations in light of market data prepared by Meridian. For other forms of compensation and benefits, management generally makes initial recommendations that are considered by the committee.

Our general policy is to provide salary, annual cash incentive payments and equity-based and other long-term incentive compensation to named executive officers that is competitive with the market and comparable companies when financial and qualitative performance targets are met (i.e., in the range of the median compensation for target performance). In making its determinations regarding these elements of compensation, the committee regularly reviews data regarding compensation practices at other companies that it determines to be relevant to compensation matters affecting our company.

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The benchmarking information we use in establishing salary, annual cash incentive payments and equity-based and other long-term incentive compensation typically includes the most recently available data regarding publicly traded companies comparable to our company in terms of industry, proximity, market capitalization and/or other factors. For 2019 compensation determinations, specific data was reviewed regarding a comparison group consisting of the following twenty companies:

In addition, the committee reviewed aggregate data regarding a broader group of durable goods manufacturers (that were not specifically identified to the committee). This data was prepared by Meridian and compared targeted and actual compensation paid by these companies to their executive officers in specified positions to the compensation we pay to named executive officers in the same or similar positions.

For 2019, Mr. Kesseler and Mr. Wood reviewed with and recommended to the committee the annual salary, incentive plan target and equity-based and other long-term compensation for each of our named executive officers and other key management personnel (excluding Mr. Kesseler and Mr. Wood). The committee reviewed those recommendations and made a final determination with respect to such compensation.

In general, the compensation that is developed for each of these named executive officers is based on competitive market data and on recommendations regarding the executive’s overall contributions, past performance and anticipated future contributions. The committee also reviews the executive’s performance separately and sets the salary, incentive plan target and equity-based and other long-term compensation of the Chief Executive Officer (and formerly, the Co-Chief Executive Officers) based on competitive market data as well as the committee’s assessment of the Chief Executive Officer’s past performance and anticipated future contributions.

Design and Elements of Compensation

Our compensation program generally provides that, as an employee’s level of responsibility increases, a greater portion of his or her potential total compensation is based on company performance and varies in accordance with the market price of our common stock. This results in greater potential variability in the individual’s total compensation from year to year. In designing and administering the components of the executive compensation program, the committee strives to balance short- and long-term incentive objectives and to employ prudent judgment when establishing performance criteria, evaluating performance and determining actual incentive payments.

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In general, we use the benchmarking data described above to allocate between annual compensation and long-term compensation (excluding retirement benefits) and between cash compensation and equity compensation. The following is a description of each element of our executive compensation program, along with a discussion of the decisions of, and actions taken by, the committee with respect to each such aspect of compensation for 2019.

Salary and Annual Cash Incentive Compensation

For 2019, an executive’s basic annual cash compensation package consisted primarily of a base salary and the opportunity to earn payments under the AIP.

The 2019 salary levels established for our named executive officers were designed to be, in general, in the 50th percentile range when compared to the salaries set by the companies in the compensation surveys reviewed as set forth above. For 2019, salary increases were 0% for Mr. Kesseler, 0% for Mr. Wood, 2.5% for Mr. Hollar, 0% for Mr. Jueckstock, 0% for Mr. Norton and 4.6% for Mr. Guo over 2018 levels and consistent with market movement and appropriate equity adjustments.

The following table shows the base salary and 2019 annual AIP bonus target for each named executive officer for 2019:

The AIP target payment levels established for our named executive officers for 2019 were also designed to be, in general, in the 50th percentile range when compared to target levels for similar payments set by the companies in the compensation surveys reviewed as described above. Like executives at peer companies, our named executive officers had the potential to earn payouts above or below the target under the AIP based on our actual performance. In 2019, we used performance metrics based on EBITDA, a departure from our use of EBIT in previous years, and FCF for the AIP because we believe that strong EBITDA and FCF performance are correlated with stockholder returns and that making business and investment decisions based on EBITDA and cash flow balances cash-oriented and earnings-oriented results.

Under the AIP, our management developed and recommended to the committee goals for Business EBITDA and Business FCF (see “— Calculations Under Various Plans — Calculations Under Our Annual Incentive Plan” for a description of how these metrics are calculated) for each of New Tenneco and DRiV as if the two Businesses were separate as of January 1, 2019. Our management developed and recommended to the committee goals for Division EBITDA and Division FCF (see “— Calculations Under Various Plans — Calculations Under Our Annual Incentive Plan” for a description of how these metrics are calculated) for each of New Tenneco’s Powertrain and Clean Air Divisions and for each of DRiV’s Motorparts and Ride Performance Divisions. The committee reviewed those goals, other information provided by management and performance data provided by Meridian and adopted the goals the committee determined appropriate. For those employees considered to be corporate-level employees of New Tenneco

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or DRiV (based on their contributions to more than one Division), as applicable, 100% of such employee’s AIP payout is based on Business EBITDA (60%) and Business FCF (40%) performance of the applicable Business (New Tenneco or DRiV). For those employees assigned to a Division within New Tenneco or DRiV, as applicable, such employee’s AIP payout is based 40% of the applicable New Tenneco or DRiV overall performance (calculated as described above) and 60% based on the performance of the applicable Division (60% based on Division EBITDA and 40% based on Division FCF). At the conclusion of the year, the committee approved incentive award payments to named executive officers based on the degree of achievement of the goals established for the year against actual performance as determined by the committee. The target and maximum performance and weighting for each metric for our named executive officers are reflected in the following tables:

The terms of the AIP allow the committee to adjust the award based on factors that the committee considers relevant. Each participant’s payout under the AIP is capped at two times his or her target.

The AIP awards for each of the named executive officers were based on the following operating results: (i) Messrs. Kesseler, Hollar and Norton – DRiV Business; (ii) Mr. Jueckstock – New Tenneco Business and the Powertrain Division; and (iii) Mr. Guo – New Tenneco Business and the Clean Air Division. No named executive officer had an AIP award based on the performance of the Motorparts Division or Ride Performance Division. Given Mr. Wood’s separation in January 2020, he did not receive an AIP payout for 2019.

In approving actual performance as calculated under the AIP for 2019, the committee adjusted free cash flow downward to remove the positive impact on working capital which came from reduced volumes in the fourth quarter of 2019. Giving effect to this determination, the committee’s aggregate 2019 AIP award payouts as declared were $11 million lower than the payouts would have been before giving effect to this adjustment. The 2019 AIP award payouts are set forth below:

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Accordingly, the committee declared that AIP bonuses for New Tenneco Business employees be paid at the 20% of target level.

In view of these results and New Tenneco’s overall performance, the committee declared that AIP bonuses for Powertrain Division employees be paid at the 20% of target level in light of (1) the Division’s progress on strategic goals, (2) the extreme macroeconomic challenges in underlying segments such as China, (3) the significant headwinds created by the industry mix shift from diesel to gasoline engines, including the resulting impact on profitability and capital expenditure requirements, and (4) the impact of a prolonged labor stoppage at a key customer.

Accordingly, the committee declared that AIP bonuses for Clean Air Division employees be paid at the 61% of target level.

Accordingly, the committee declared that AIP bonuses for DRiV Business employees be paid at the 54% of target level.

The following table illustrates the target, maximum and actual AIP payments for our named executive officers for (except Mr. Wood, who did not receive an AIP payment):

Long-Term and Stock-Based Incentives

Our long-term and stock-based incentive plans have been designed to align a significant portion of executive compensation with stockholder interests. The current plan — the Tenneco Inc. 2006 Long-Term Incentive Plan (the “2006 LTIP”) — permits a variety of awards including stock options, restricted stock, restricted stock units, stock equivalent units and performance units. These awards are based on an analysis of competitive levels of similar awards.

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The company’s long-term and stock-based compensation program has been comprised of:

Each year, typically at its meeting in February, the committee reviews and approves long-term incentive award amounts earned for the most recent performance period, and determines the size, nature and distribution of long-term and stock-based grants for our named executive officers for the new year. In addition, during the course of the year the committee may award additional LTPUs/PSUs covering partially completed performance periods in connection with new hires or promotions.

Historically, the amount of these awards has been designed by the committee to target value for our named executive officers in the range of the 50th percentile when compared to the value of similar awards granted by peer companies to their executives, based on the committee’s assumptions regarding future company performance and other factors. The value actually realized from these awards could be above or below the 50th percentile based on our actual company performance.

LTPUs granted by the committee have historically been denominated in dollar targets (“Target Value”) and have been payable 50% based on our total stockholder return (stock price appreciation adjusted for any dividends) (“TSR”) relative to the TSR of the companies in the S&P 500, 30% based on our EBITDA (as described in “— Calculations Under Various Plans — Calculations Under Our LTPUs”) and 20% based on our FCF (See ”— Calculations Under Various Plans — Calculations Under Our LTPUs”) during the performance period. The performance is applied against a multiplier that determines the percentage of the dollar target that is earned based on that level of performance. The committee included EBITDA and FCF as part of our LTPU program so that our program would incorporate multiple metrics that are key to our delivering sustainable performance. The LTPUs are payable at the end of a three-year performance period. The LTPUs granted in 2017 were paid in early 2020 based on our 2017 through 2019 performance, as described below.

In 2018, we began issuing PSUs in lieu of LTPUs. The PSUs granted by the committee in 2018 were designed to be earned 50% based on Economic Value Added (“EVA^®”) performance and 50% based on three-year total stockholder return against a peer group. EVA^® is defined as net operating profit after taxes minus the annual cost of capital and is a registered trademark of Stern Value Management. The PSUs issued in 2019 were modified in anticipation of the separation of New Tenneco and DRiV and are designed to be earned 50% based on Business FCF (for New Tenneco or DRiV, as applicable, depending on the named executive officer’s responsibilities) and 50% based on our TSR relative to the TSR of companies in a peer group selected by the committee.

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For the LTPUs granted by the committee in 2017, a named executive officer would earn a percentage of the LTPUs Target Value based on performance as set forth below.

For Relative TSR Performance — 50% of Total Target Value (“TSR Target Value”)

For Cumulative EBITDA Performance — 30% of Total Target Value (“EBITDA Target Value”)

For Cumulative FCF Performance — 20.0% of Total Target Value (“FCF Target Value”)

For the PSUs granted in 2019, a named executive officer could earn a percentage of the PSUs Target Value based on performance as set forth below:

For Relative TSR Performance — 50% of Total Target Value (“TSR Target Value”)

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For Cumulative Business FCF Performance — 50% of Total Target Value (“Business FCF Target Value”)

Payouts are prorated for performance between the levels presented above.

The LTPUs granted in 2017 established performance goals that were based upon the composition of the company and its operations prior to the Federal-Mogul acquisition. Accordingly, the committee determined it was necessary to make adjustments to the awards to give effect to the acquisition. The committee noted that the majority of 2018 was complete at the time of the acquisition. In light of that, the committee looked at actual corporate level performance for each of 2017 and 2018 (excluding the Federal-Mogul acquisition) against the original targets established in 2017 to determine the level at which 2/3 of each award was earned.

The committee’s target levels of performance for the 2017 through 2018 period and our actual level of performance were as follows:

For 2019 performance, the committee determined that each named executive officer should earn the final 1/3 of his award based on the performance of the applicable Business in which the employee was employed and applied the level of payout earned under the AIP for such Business.

Based on the foregoing, LTPUs held by New Tenneco employees were paid at the 36.8% of target level and LTPUs held by DRiV employees were paid at the 48.1% of target level.

Two of the named executive officers – Messrs. Norton and Jueckstock – have long-term incentive awards for the 2017 through 2019 performance period granted to them by Federal-Mogul before the acquisition (“FM LTIPs”).

For Mr. Norton, his FM LTIP was based 50% on EBITDA of the Motorparts Division, 25% on ROWA of the Motorparts Division and 25% based on his continued employment during the period. The 50% based on EBITDA was broken out 8.3% based on 2017 results, 8.3% based on 2018 results, 8.3% based on 2019 results and 25% based on cumulative 3-year results. The committee determined that, for 2017, Motorparts achieved EBITDA and ROWA of 8.7% and 8.1%, respectively, versus targets of 8.3% and 8.3%. The committee determined that, for 2018, Motorparts achieved EBITDA and ROWA of 0% and 0%, respectively, versus targets of 8.3% and 8.3%. Because the FM LTIP did not account for the change in the Motorparts Division that occurred in connection with the acquisition, the committee applied the cumulative factor on EBITDA on the first two years of the plan and determined that to be 12.8%, versus a target of 16.7%. This resulted in 2/3 of the award being paid at 46.3% of target. Further, the committee

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applied the 54% DRiV AIP payout factor to performance for the 2019 portion of the FM LTIP resulting in 21.8% for that portion of the LTIP award calculation. As a result, and inclusive of the continued employment component, the committee determined that Mr. Norton’s FM LTIP was payable at 68.1% of target, or $476,700 in the aggregate. See “— Calculations Under Various Plans — Calculations Under FM LTIPs” for a description of how these metrics are calculated.

For Mr. Jueckstock, the FM LTIP applicable to the Powertrain Division enabled 10 individuals to share in a pool that would be $5 million at target and $10 million at maximum (Mr. Jueckstock is entitled to 31.75% of the final pool). The Plan was measured based on LTIP EBIT (x), Capital Charge (y) and Economic Profit. The Powertrain Division reported EBIT for 2017 and 2018 was adjusted for, among other items, (a) legacy defined benefit expenses, (b) amortization of capitalized restructuring charge over a 3-year period and (c) amortization of goodwill for acquisitions after September 30, 2013. 2017 Powertrain Division EBIT was $267.7 million and 2018 Powertrain Division EBIT was $272.8 million. The Capital Charge (y) was calculated based on Powertrain reported Average Working Assets of $263.1 million in 2017 and $275.0 million in 2018. The Economic Profit was determined by deducting the Capital Charge (y) from the LTIP EBIT (x) as described above, and 5% of the Economic Profit, or $58,464, was deposited into the pool to be shared among all remaining participants in the plan for 2017 and 2018 in aggregate. Because the FM LTIP did not account for the change in the Clean Air Division that occurred in connection with the acquisition, for 2019 performance, the committee applied the 20% New Tenneco payout percentage. As a result, the committee determined that Mr. Jueckstock’s FM LTIP aggregate payout was $130,387 (representing of the 2.6% target pool). See “— Calculations Under Various Plans — Calculations Under FM LTIPs” for a description of how these metrics are calculated.

Certain Other 2019 Compensation Actions

In October 2019, the committee granted a cash retention award to Mr. Hollar, and in November 2019, the committee granted a cash retention award to Mr. Guo, each in recognition of the work they completed in connection with the planned separation of DRiV and New Tenneco and as an inducement for each to remain employed with the company through the completion of the separation. Mr. Hollar was to receive an aggregate cash payment of $2 million, and Mr. Guo will receive an aggregate cash payment of $500,000. Mr. Guo’s award will vest 50% on December 31, 2020 and 50% on December 31, 2021, provided that vesting may be accelerated (i) in the event that the company consummates the separation of DRiV and New Tenneco, whether effected through a merger, exchange, sale of stock or assets or other transaction, on or before December 31, 2020 and (ii) in connection with certain events triggering a separation from service. Mr. Hollar’s award will be forfeited upon his departure from our company.

Employment Agreements and Arrangements

In January 2015, we entered into an offer letter with Mr. Kesseler that was amended on October 1, 2018 in connection with Mr. Wood joining us as Co-Chief Executive Officer, each of which is described on pages 59-60.

In October 2018, we entered into an offer letter with Mr. Wood and in March 2020, we entered into a separation agreement with Mr. Wood, each of which is described beginning on page 60.

In April 2017, we entered into an offer letter with Mr. Hollar that is described on page 60.

In October 2018, we entered into an offer letter with Mr. Jueckstock that is described on page 61.

In October 2018, we entered into an offer letter with Mr. Norton that is described on page 61.

We have certain arrangements with Mr. Guo relating to his former expatriate assignment that are described on page 61.

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Retirement Plans

We offer to our U.S.-based salaried employees, including our U.S.-based named executive officers, a customary, tax-qualified defined contribution retirement (401(k)) plan. For 2019, we provided a company match on employee contributions of 100% on the first 3% of an employee’s pay and 50% on the next 2% of an employee’s pay, which we believe to be in line with prevailing practices for major U.S. corporations. In addition to this matching contribution, we also provide a company contribution equal to 2% of salary for persons hired on or after April 1, 2005 who have completed at least one year of service, and beginning in 2019, on an age-graded schedule. We established this company contribution when we closed our defined benefit retirement plans to new participants in 2005.

For those U.S.-based executives hired before April 1, 2005, we offered defined benefit retirement plans that we believed were customary for the automotive industry and were consistent with similar plans maintained by the consolidated Tenneco Inc. prior to our becoming a stand-alone public company in 1999. These plans included:

Effective December 31, 2006, we froze our defined benefit retirement plans for certain employees and replaced them with additional benefits under defined contribution retirement plans. Prior earned benefits under the defined benefit retirement plans were, however, preserved.

To address the loss of future benefits associated with the freeze, we amended our qualified defined contribution retirement plans, effective January 1, 2007, to provide for additional annual company contributions in amounts that increase with the employee’s age. These additional contributions, which we refer to as “Company Retirement Contributions,” are payable for each employee who ceased to accrue benefits or whose benefits were otherwise modified under any defined benefit retirement plan in connection with the freeze. Company Retirement Contributions are also provided to employees hired after the freeze in an amount equal to 2% of compensation. In addition, effective January 1, 2007, we implemented an unfunded non-qualified defined contribution retirement plan. Our named executive officers and other senior managers are eligible to participate in this plan, with allocations under the plan generally calculated in the same manner as under the applicable existing defined contribution retirement plan, except that (i) Company Retirement Contributions under the plan are made based on compensation that includes bonus compensation payable in accordance with the AIP formula (or other annual bonus formula as in effect at the relevant time) and (ii) contributions under this plan are based on compensation in excess of the Section 401(a)(17) limitations of the Internal Revenue Code. The level of the Company Retirement Contributions under the 401(k) plans was modified effective for periods after 2018 to provide for a different age-weighted formula with a one year grandfathered period for participants who would have received higher Company Retirement Contributions under the formula in effect prior to 2019.

Under the terms of their offers, Mr. Kesseler and Mr. Wood received an additional contribution under this plan of 3% of compensation (including bonus compensation) through December 31, 2019. Thereafter, Mr. Kesseler is entitled to receive an age-weighted contribution under this plan based on the same formula that applies to the Company Retirement Contribution under the 401(k) plan.

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Mr. Jueckstock, a native of Germany, participates in a defined benefit schedule of the Federal-Mogul German Pension Plan in lieu of the U.S. defined contribution plan. The company makes contributions not to exceed 125,000 Euros per year to the Federal-Mogul German Pension Plan on his behalf pursuant to his offer letter.

Perquisites

Mr. Kesseler was accompanied by his spouse on business travel using an aircraft chartered by the company. The aggregate value of such perquisite to Mr. Kesseler was less than $10,000.

Severance Benefits

We have agreed to pay our Chief Executive Officer two times his then-current salary and target bonus for the year in which termination occurs if we terminate his employment other than for disability, cause or in connection with a change in control. We view these benefits as customary and a key element of the recruiting and retention of executives in light of company and industry specific factors.

Otherwise, we maintain a Severance Benefit Plan that applies to all U.S. salaried, full-time employees with at least three months of service who are terminated by us without cause or in connection with a reduction in force or similar layoff. The benefits payable under this plan are described under “— Other Potential Post-Employment Compensation — Severance Benefits.” We most recently amended the plan in August 2018 to reflect prevailing market practices.

Change in Control

We maintain a Change in Control Severance Benefit Plan for Key Executives to enable us to retain and motivate highly qualified employees by eliminating, to the maximum practicable extent, any concern that their job security or benefit entitlements will be jeopardized by a “change in control” of our company.

Our plan applies to twelve members of management and generally provides for cash benefits consisting primarily of a multiple (two or three times) of an officer’s annual salary and annual targeted cash incentive if the executive officer is actually terminated (other than for cause, death or disability) or constructively terminated within two years following a change in control. See “Post-Employment Compensation — Other Potential Post-Employment Compensation — Change in Control Severance Benefit Plan for Key Executives.” Our current Change in Control Severance Benefit Plan for Key Executives was adopted in 2007. Mr. Kesseler’s cash payment in connection with a change in control termination will equal three times the total of his then current base salary plus his targeted annual bonus in effect immediately prior to the change in control (Mr. Wood was entitled to the same benefit prior to his separation). The cash payment in connection with a change in control termination for each of Messrs. Hollar, Jueckstock, Norton and Guo will equal two times the total of his then current base salary plus his targeted annual bonus in effect immediately prior to the change in control.

In addition, the terms of our 2006 LTIP (and our prior plans), provide for awards to vest upon a change in control, unless the committee otherwise provides in an award agreement.

Equity Award Policy

Our Board has adopted a formal policy regarding compensatory awards in the form of our common stock or any common stock derivative, such as restricted stock, options, stock appreciation rights

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and stock equivalent units. Under the policy, in general, equity awards must be approved by the committee or the Board. Typically, the committee will make annual awards that it determines to be appropriate at its meeting held in February. The committee also has the authority to make interim awards in its discretion. The strike price of any option or stock appreciation right must be the fair market value of a share of our common stock on the date of grant as determined under the 2006 LTIP (which is the average of the highest and lowest sales price of a share of our common stock on the date of grant).

Our policy also permits a committee of management to make awards in certain cases. The management committee consists of our Chief Executive Officer, General Counsel and our most senior human resources executive. The management committee has the authority to make equity awards to (i) newly hired employees and (ii) employees who are promoted during the course of a year. The awards can be made only in amounts necessary to provide the employee with awards consistent with the amount of awards most recently made to employees of the same salary grade level, prorated based on when the employee was hired or promoted. The total number of shares that the management committee can issue under this policy is 100,000. The management committee is not authorized to make awards to new or promoted employees whom we would typically consider to be at the most senior management or executive officer level.

Stock Ownership Guidelines

We maintain stock ownership guidelines that apply to all of our directors and senior officers. We believe our guidelines further align management’s and stockholders’ interests and we based the guidelines on practices at comparable companies. The individual guidelines are:

The committee may, from time to time, temporarily suspend or reevaluate and revise participants’ guidelines to give effect to changes in our common stock price or other factors the committee deems relevant. Shares that count towards satisfaction of the guidelines include: (i) shares owned outright by the participant or an immediate family member that shares the same household; (ii) shares held in our defined contribution plans; (iii) restricted stock issued by us, whether or not vested; (iv) unvested time-vesting restricted stock units issued and held as part of long-term compensation; and (v) shares issued upon stock option exercises or vesting of any long-term compensation award that the participant continues to hold.

Participants are required to achieve their guideline within five years of becoming subject to the guidelines. The committee reviews each participant’s compliance (or progress towards compliance) with the guidelines annually, typically at its meeting in February. In its discretion, the committee may impose conditions, restrictions or limitations on any non-compliant participant as the committee determines to be necessary or appropriate.

All of our non-management directors and executive officers, including the named executive officers, are in compliance with the guidelines either through maintaining the requisite level of ownership or being within the “ramp-up” period to achieve the requisite level of ownership under the policy or relying on the committee’s discretion to re-assess guidelines to give effect to unexpected volatility in our stock price.

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Anti-Hedging Policy and Trading Restrictions

Our insider trading policy limits the timing and types of transactions in our securities by our directors, officers and other employees. These persons are permitted to trade in our securities only during window periods (following earnings releases) and, in some cases, only after they have pre-cleared transactions with our General Counsel. In addition, the policy provides that none of our directors, officers or other employees may engage in the following transactions: