UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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| ¨ | Soliciting Material Pursuant to §240.14a-12 |
Corning Incorporated
(Name of Registrant as Specified In Its Charter)
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Corning Incorporated is filing the attached additional materials in support of the Board of Directors’ recommended vote at our 2013 Annual Shareholders Meeting.
Corning Incorporated 2013 Proxy Statement Matters
| • | Proposal 1 – Election of 12 directors for one-year term |
| — | ISS recommends FOR all 12 directors |
| — | Glass Lewis recommends FOR 10 of 12 directors |
| Ø | Withhold James Flaws (policy against CFO on the Board) |
| Ø | Withhold Robert Cummings (Corning uses JP Morgan) |
| • | Proposal 2 – Advisory Vote to Approve Executive Compensation (the annual “Say on Pay” vote) |
| — | ISS recommends AGAINST |
| — | Glass Lewis recommends FOR |
| • | Proposal 3 – Ratification of Independent Public Accounting Firm |
| — | ISS and Glass Lewis both recommend FOR |
Who We Are
Corning has a distinctive identity
| • | Corning is the world leader in specialty glass and ceramics |
| • | We invent, manufacture, and sell keystone components that enable high-technology systems |
| • | We have succeeded for more than 160 years through: |
| — | Sustained investment in R&D |
| — | Deep materials science and process engineering knowledge |
| — | A highly collaborative culture |
Corporate Strategy
We’ve aligned our culture and leadership approach
| • | Deliver near-term performance while investing for future growth |
| — | Drive operational excellence across all businesses and functions |
| — | Nurture early stage research and innovation |
| — | Select and pace promising projects |
| — | Decide when to place major investments on new products |
| • | Consistent leadership with deep understanding of our innovation recipe and business model |
| • | The Board of Directors is an important part of this leadership approach |
The Board is an important part of our leadership approach
| • | What’s important? |
| — | Consistency over time |
| — | Diverse knowledge and experiences |
| — | Commitment to understanding Corning’s technology |
| — | Judgment to make and support major investments |
| • | The Board is experienced, informed and independent |
| — | Financials and business updates at each meeting |
| — | Annual Strategy Review |
| — | Half-day technology review session before each meeting |
| — | Provides input to management on key issues |
| — | Executive sessions at every meeting |
Executive Compensation Overview
| — | CEO pay is 88% variable, Other NEO pay is 81% variable |
| — | Base salary adjustments modest and in line with adjustments for all salaried employees |
| — | Short term incentives for all NEOs are 100% tied to corporate financial performance (NPAT) |
| — | Long Term incentives are balanced between equity and cash, and performance and time-based retention |
| — | 50% equity (RSUs, stock options) / 50% cash performance units |
| — | Cash performance units are based on a blend of EPS and Operating Cash Flow |
| — | Rigorous annual goal-setting process – payouts vary with performance |
Key Messages about 2012 Performance
| • | Corning is an innovation company, with a 160 year history of inventing technologies and starting new businesses. These technology businesses can experience volatility from time to time |
| • | In late 2011 and 2012, we had major market upheavals in two of our main businesses (Display and Solar) |
| — | Display experienced significant price declines (> 20%) |
| — | Dow Corning impacted by solar industry upheaval with price down over 50% |
| • | These were permanent industry resets and were communicated to investors. The Board approved a 2012 plan focused on |
| — | Stopping/mitigating decline in profitability in these two businesses |
| — | Accelerating growth in the other businesses |
| — | Extreme rigor in cost / cash management across the organization |
| — | Careful program choices |
| • | Our leadership delivered results better than the plan and bonuses paid out accordingly |
| — | Corning delivered record revenues and the 3rd highest profit in our history |
| — | Operating cash flow and our balance sheet are strong |
| — | Cash bonus at 124% of target and LTI (cash performance units) at 117% of target |
| • | Flat TSR was disappointing but we have taken additional actions to deliver value to shareholders |
| — | Dividend increase (2 increases in last 18 month) |
| — | Share buy-back program ($1.5 Billion in 2011/2012) |
| — | Our TSR was in line with or better than our two largest competitors in the display glass industry |
2012 Performance impact on CEO Compensation
| • | CEO pay is up 20% year over year |
| — | 3% salary increase (in line with merit budget for all salaried employees) |
| — | Remainder driven by performance related pay coming off low 2011 payout |
| • | Short term cash bonus from 10% of target in 2011 to 124% of target in 2012, |
| • | Long term Cash Performance Units from 60% of target in 2011 to 117% of target in 2012 |
| • | Our CEO is paid at or under median (actual reported pay for 2012 was at 80% of median for Company Peers, and 100% of median for ISS Peers) which is appropriate given our size and complexity |
| — | Our pay practices and philosophies are conservative |
| — | Both ISS and Corning take revenues and market cap into account to establish peer groups |
| • | Our Market Cap is top quartile (top 25%) and profitability is top-decile (top 10%) among the ISS peer group companies, even after the industry resets |
“Say on Pay”
| • | ISS acknowledges reset of Corning’s profitability was real and communicated to shareholders in a timely and appropriate form. However, they believe that targeted pay should have been reduced. |
| • | Corning’s Compensation Committee believes targeted pay is set by comparison to peers (ISS and Corning have overlapping peer groups) |
| — | Corning CEO targeted total direct compensation up 1% in 2012 |
| — | CEO targeted pay at median for ISS peers |
| • | Corning’s Board recommends a FOR vote on “Say on Pay” |
The Board of Directors recommends that you vote FOR: the twelve nominees to the Board of Directors; the advisory vote to approve executive compensation; and the ratification of PricewaterhouseCoopers as our independent registered public accounting firm.