def14a
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Form, Schedule or Registration Statement No.: |
POLYONE
CORPORATION
Notice of 2011
Annual Meeting of
Shareholders
and Proxy Statement
March 21, 2011
Dear Fellow Shareholder:
You are cordially invited to attend the PolyOne Corporation
Annual Meeting of Shareholders, which will be held at
9:00 a.m. on Wednesday, May 11, 2011, at the LACENTRE
Conference and Banquet Facility, Champagne C Ballroom, 25777
Detroit Road, Westlake, Ohio.
A Notice of the Annual Meeting and the Proxy Statement follow.
Please review this material for information concerning the
business to be conducted at the Annual Meeting and the nominees
for election as Directors.
You will also find enclosed a proxy
and/or
voting instruction card and an envelope in which to return the
card. Whether or not you plan to attend the Annual Meeting,
please complete, sign, date and return your enclosed proxy
and/or
voting instruction card, or vote over the telephone or the
Internet as soon as possible so that your shares can be voted at
the meeting in accordance with your instructions. Your vote
is very important. You may, of course, withdraw your proxy
and change your vote prior to or at the Annual Meeting, by
following the steps described in the Proxy Statement.
I appreciate the strong support of our shareholders over the
years and look forward to seeing you at the meeting.
Sincerely,
Stephen D. Newlin
Chairman, President and Chief Executive Officer
PolyOne Corporation
Please refer to
the accompanying materials for voting instructions.
TABLE OF CONTENTS
POLYONE
CORPORATION
NOTICE OF ANNUAL
MEETING
OF SHAREHOLDERS
The Annual Meeting of Shareholders of PolyOne Corporation will
be held at the LACENTRE Conference and Banquet Facility,
Champagne C Ballroom, 25777 Detroit Road, Westlake, Ohio at
9:00 a.m. on Wednesday, May 11, 2011. The purposes of
the meeting are:
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To elect as Directors the nine nominees named in the proxy
statement and recommended by the Board of Directors;
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2.
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To consider an advisory vote on named executive officer
compensation;
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To consider an advisory vote on the frequency of future advisory
votes on named executive officer compensation;
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4.
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To ratify the appointment of Ernst & Young LLP as
PolyOne Corporations independent registered public
accounting firm for the fiscal year ending December 31,
2011; and
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5.
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To consider and transact any other business that may properly
come before the meeting.
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Shareholders of record at the close of business on
March 14, 2011 are entitled to notice of and to vote at the
meeting.
For the Board of Directors
Lisa K. Kunkle
Vice President, General Counsel
and Secretary
March 21, 2011
Important
Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders to be held on
May 11, 2011:
The proxy statement, proxy card and annual report to
shareholders for the fiscal year ended December 31, 2010
are available at our internet website, www.polyone.com, on the
Investors Relations page.
1
POLYONE
CORPORATION
PolyOne Center
33587 Walker Road
Avon Lake, Ohio 44012
PROXY
STATEMENT
Dated March 21, 2011
Our Board of Directors respectfully requests your proxy for use
at the Annual Meeting of Shareholders to be held at the LACENTRE
Conference and Banquet Facility, Champagne C Ballroom, 25777
Detroit Road, Westlake, Ohio at 9:00 a.m. on Wednesday,
May 11, 2011, and at any adjournments of that meeting. This
proxy statement is to inform you about the matters to be acted
upon at the meeting.
If you attend the meeting, you may vote your shares by ballot.
If you do not attend, your shares may still be voted at the
meeting if you sign and return the enclosed proxy card. Common
shares represented by a properly signed card will be voted in
accordance with the choices marked on the card. If no choices
are marked, the shares will be voted to elect the nominees
listed on pages 3 through 7 of this proxy statement, to approve,
by non-binding vote, our named executive officer compensation
for the fiscal year ending December 31, 2010, to recommend,
by non-binding vote, that future advisory votes on named
executive officer compensation occur every year and to ratify
the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2011. You may revoke your proxy
before it is voted by giving notice to us in writing or orally
at the meeting. Persons entitled to direct the vote of shares
held by the following plans will receive a separate voting
instruction card: The PolyOne Retirement Savings Plan and
PolyOne Canada Inc. Retirement Savings Program. If you receive a
separate voting instruction card for one of these plans, you
must sign and return the card as indicated on the card in order
to instruct the trustee on how to vote the shares held under the
plan. You may revoke your voting instruction card before the
trustee votes the shares held by it by giving notice in writing
to the trustee.
Shareholders may also submit their proxies by telephone or over
the Internet. The telephone and Internet voting procedures are
designed to authenticate votes cast by use of a personal
identification number. These procedures allow shareholders to
appoint a proxy to vote their shares and to confirm that their
instructions have been properly recorded. Instructions for
voting by telephone and over the Internet are printed on the
proxy cards.
We are mailing this proxy statement and the enclosed proxy card
and, if applicable, the voting instruction card, to shareholders
on or about March 28, 2011. Our headquarters are located at
PolyOne Center, 33587 Walker Road, Avon Lake, Ohio 44012 and our
telephone number is
(440) 930-1000.
2
PROPOSAL 1
ELECTION OF DIRECTORS
Our Board of Directors currently consists of nine Directors.
Each Director serves for a one-year term and until a successor
is duly elected and qualified, subject to the Directors
earlier death, retirement or resignation. Our Corporate
Governance Guidelines provide that all non-employee Directors
will retire from the Board not later than the first Annual
Meeting of Shareholders following the Directors
70th birthday.
A shareholder who wishes to suggest a Director candidate for
consideration by the Nominating and Governance Committee must
provide written notice to our Secretary in accordance with the
procedures specified in Regulation 12 of our Regulations.
Generally, the Secretary must receive the notice not less than
60 nor more than 90 days prior to the first anniversary of
the date on which we first mailed our proxy materials for the
preceding years annual meeting. The notice must set forth,
as to each nominee, the name, age, principal occupations and
employment during the past five years, name and principal
business of any corporation or other organization in which such
occupations and employment were carried on, and a brief
description of any arrangement or understanding between such
person and any others pursuant to which such person was selected
as a nominee. The notice must include the nominees signed
consent to serve as a Director if elected. The notice must set
forth the name and address of, and the number of our common
shares owned by, the shareholder giving the notice and the
beneficial owner on whose behalf the nomination is made and any
other shareholders believed to be supporting such nominee.
Following are the nominees for election as Directors for terms
expiring in 2012, a description of the business experience of
each nominee and the names of other publicly-held companies for
which he or she currently serves as a director or has served as
a director during the past five years. In addition to the
information presented below regarding each nominees
specific experience, qualifications, attributes and skills that
led our Board to the conclusion that the nominee should serve as
a Director, the Board also believes that all of our Director
nominees are individuals of substantial accomplishment with
demonstrated leadership capabilities. Each of our Directors also
has the following personal characteristics, which are required
attributes for all Board nominees: high ethical standards,
integrity, judgment, and an ability to devote sufficient time to
the affairs of our Company. Each of the nominees is a current
member of the Board. The reference below each Directors
name to the term of service as a Director includes the period
during which the Director served as a Director of The Geon
Company (Geon) or M.A. Hanna Company (M.A.
Hanna), each one of our predecessors. The information is
current as of March 14, 2011.
Our Board of Directors recommends a vote FOR the election to
the Board of each of the following nominees:
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J. Douglas Campbell
Director since 1993
Age 69
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Retired Chairman and Chief Executive Officer of ArrMaz Custom
Chemicals, Inc., a specialty mining and asphalt additives and
reagents producer. Mr. Campbell served in this capacity from
December 2003 until the company was sold in July 2006. Mr.
Campbell served as President and Chief Executive Officer and was
a Director of Arcadian Corporation, a nitrogen chemicals and
fertilizer manufacturer, from December 1992 until the company
was sold in 1997. We believe that Mr. Campbell is particularly
qualified to serve as a member of our Board because of his in-
depth knowledge of our industry and his experience in holding
leadership roles at other manufacturing companies. Mr. Campbell
has served as chief executive officer and has held other officer
positions in the oil,
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chemical and plastics industries. We believe that the knowledge
and skills that he gained in these roles provides him with an
ideal background for serving as a director of PolyOne.
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Dr. Carol A. Cartwright
Director since 1994
Age 69
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President of Bowling Green State University, a public higher
education institution, since January 2009 and Interim President
from July 2008 to January 2009. Dr. Cartwright served as
President of Kent State University, a public higher education
institution, from 1991 until her retirement in June 2006.
Dr. Cartwright currently serves on the Boards of Directors
of KeyCorp and FirstEnergy. From 2002 to 2008,
Dr. Cartwright served on the Board of Directors of The
Davey Tree Expert Company. We believe that Dr. Cartwright
has gained many of the skills and attributes necessary to serve
as an effective member of our Board in her 18 years of
experience serving as a chief executive officer of large,
complex, non-profit organizations. In her leadership role at
these organizations, she has had responsibility for direct
oversight for strategic planning, program development, financial
management, capital construction, human resources, labor
negotiations and investments. This specific experience, as well
as her proven ability to lead, makes Dr. Cartwright an
invaluable member of our Board.
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Richard H. Fearon
Director since 2004
Age 55
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Vice Chairman and Chief Financial and Planning Officer of Eaton
Corporation, a global manufacturing company, since February
2009. Mr. Fearon served as Executive Vice President, Chief
Financial and Planning Officer from April 2002 until February
2009. Mr. Fearon served as a Partner of Willow Place Partners
LLC, a corporate advisory firm, from 2001 to 2002 and was the
Senior Vice President Corporate Development for Transamerica
Corporation, a financial services organization, from 1995 to
2000. We believe that Mr. Fearons financial
expertise, experience and knowledge of international operations,
knowledge of diversified companies and corporate development
expertise provide him with the qualifications and skills to
serve as a valued member of our Board. Mr. Fearons advice
with respect to financial issues affecting our company is
specifically valued and utilized, especially in his role as
Chair of our Audit Committee. As a sitting executive and leader
at a multi-national corporation, Mr. Fearon is particularly
equipped to advise our Board on current issues facing our
company.
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Gordon D. Harnett
Director since 1997
Age 68
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Lead Director of our Board of Directors since July 18, 2007.
Retired Chairman, President and Chief Executive Officer of
Materion Corp. (formerly known as Brush Engineered Materials
Inc.), an international supplier and producer of high
performance engineered materials. Mr. Harnett served in this
capacity from 1991 until his retirement in May 2006. Mr. Harnett
serves on the Boards of Directors of The Lubrizol Corporation,
EnPro Industries, Inc. and Acuity Brands, Inc. We believe that
Mr. Harnetts extensive experience in the specialty
chemicals industry provides him with
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unique skills in serving as a PolyOne Director. Mr.
Harnetts past experience includes leadership roles at a
number of specialty chemical companies, including serving as a
senior vice president of Goodrich Specialty Chemicals and
president of Tremco, in addition to his role as chief executive
officer at Brush Engineered Materials. Mr. Harnett is also
uniquely qualified to assist our Board on international issues,
as he previously resided in Canada and Japan while actively
involved in the international operations of his former
employers. Mr. Harnett, Chair of our Compensation Committee, is
especially knowledgeable in the area of executive compensation,
due to his experiences serving on the compensation committees of
other public companies.
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Richard A. Lorraine
Director since 2008
Age 65
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Retired Senior Vice President and Chief Financial Officer of
Eastman Chemical Company, a specialty chemicals company. Mr.
Lorraine served in this capacity from 2003 to 2008. Mr. Lorraine
also served as Executive Vice President and Chief Financial
Officer of Occidental Chemical Company, a chemical manufacturing
company, from 1995 to 2003. Mr. Lorraine serves on the Board of
Directors of Carus Corporation. We believe that Mr. Lorraine is
a valuable recent addition to our Board. Mr. Lorraine provides
our Board with the broad business perspective that he gained in
extensive leadership roles in varying industries. He is
particularly equipped to advise our Board and Audit Committee on
financial issues affecting our company due to his prior roles as
chief financial officer. In addition, he has a significant
international background and in-depth commercial experience. All
of these attributes provide Mr. Lorraine with valuable skills
that he shares with our Board.
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Edward J. Mooney
Director since 2006
Age 69
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Retired Chairman and Chief Executive Officer of Nalco Chemical
Company, a specialty chemicals company. Mr. Mooney served in
this capacity from 1994 to 2000. Mr. Mooney also served as
Déléqué Général North
America, of Suez Lyonnaise des Eaux from 2000 to 2001, following
its acquisition of Nalco. Mr. Mooney serves on the Boards of
Directors of FMC Corporation, FMC Technologies, Inc., Northern
Trust Corporation, Cabot Microelectronics Corporation and
Commonwealth Edison Company (a wholly-owned subsidiary of Exelon
Corporation). We believe that Mr. Mooneys expansive
knowledge of the chemical industry make him uniquely qualified
to serve on our Board. In particular, in his prior role as chief
executive officer of a specialty chemicals company, Mr. Mooney
gained relevant knowledge and valuable insight that he can share
with our company. In addition, Mr. Mooneys current service
on boards of directors of other private and public companies
provides him with unique, up-to-date perspectives that he has
learned serving in those capacities.
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Stephen D. Newlin
Director since 2006
Age 58
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Chairman, President and Chief Executive Officer of PolyOne since
February 2006. Mr. Newlin served as President
Industrial Sector of Ecolab, Inc., a global leader in cleaning
and sanitizing specialty chemicals, products and services from
2003 to 2006. Mr. Newlin served as President and a director of
Nalco Chemical Company, a manufacturer of specialty chemicals,
services and systems, from 1998 to 2001 and was Chief Operating
Officer and Vice Chairman from 2000 to 2001. Mr. Newlin serves
on the Boards of Directors of Black Hills Corporation and The
Valspar Corporation. We believe that, as our chief executive
officer, Mr. Newlin is particularly qualified to serve on our
Board. He has significant experience in the specialty chemical
industry, serving as a top executive officer in this industry
for over 30 years. In addition, in his role as our CEO, he
has proven that he is an effective leader. He is also able to
contribute his knowledge and experience with respect to
international issues as a result of his global work
responsibilities and living abroad. Mr. Newlins depth
of Board experience, having served on five public company
boards, has allowed him to understand his role of Chairman
versus CEO and has provided him with the skills necessary to
serve as an effective leader of our Board.
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William H. Powell
Director since 2008
Age 65
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Retired Chairman and Chief Executive Officer of National Starch
and Chemical Company, a specialty chemicals company. Mr. Powell
served in this capacity from 1999 until his retirement in 2006.
Mr. Powell serves on the Boards of Directors of Arch
Chemicals, Inc. and Granite Construction Incorporated. We
believe that Mr. Powells previous employment as a chief
executive officer has provided him with the leadership skills
that are important in serving as a Director of our company. His
prior employment in the specialty chemicals industry is
particularly relevant. This experience gives him the knowledge
and insights to provide valuable advice and strategic direction
in addressing the issues facing our company. Mr. Powell also
serves as a Director of two other public companies, which
provides him with experiences he can utilize when serving as a
member of our Board.
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Farah M. Walters
Director since 1998
Age 66
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President and Chief Executive Officer of QualHealth, LLC, a
healthcare consulting firm. From 1992 until her retirement in
June 2002, Ms. Walters was the President and Chief Executive
Officer of University Hospitals Health System and University
Hospitals of Cleveland. Ms. Walters currently serves on the
Board of Directors of Celanese Corporation. From 1993 to 2006,
Ms. Walters served on the Board of Directors of Kerr-McGee Corp.
From 2003 to 2006, Ms. Walters served on the Board of
Directors of Alpharma Inc. Ms. Walters extensive
business experience provides her with the attributes and skills
that uniquely qualify her to serve as a member of our Board of
Directors. She has over ten years of experience as a chief
executive officer of a $2 billion company and a proven track
record of success in a leadership role. Further, she has served
on the
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Boards of Directors of other public companies, including those
in the chemical industry. Ms. Walters business experience
has provided her with the necessary background to allow her to
provide practical and relevant advice on the issues facing our
company.
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CORPORATE
GOVERNANCE AND BOARD MATTERS
Director
Independence
Our Corporate Governance Guidelines require that a substantial
majority of the members of our Board of Directors be
independent under the listing standards of the New
York Stock Exchange (NYSE). To be considered
independent, the Board of Directors must make an
affirmative determination that the Director has no material
relationship with us other than as a Director, either directly
or indirectly (such as an officer, partner or shareholder of
another entity that has a relationship with us or any of our
subsidiaries), and that the Director is free from any business,
family or other relationship that would reasonably be expected
to interfere with the exercise of independent judgment as a
Director. In each case, the Board of Directors considers all
relevant facts and circumstances in making an independence
determination.
The Board of Directors determined that J. Douglas Campbell,
Carol A. Cartwright,
Gale Duff-Bloom
(who retired during 2010), Richard H. Fearon, Gordon D. Harnett,
Richard A. Lorraine, Edward J. Mooney, William H. Powell and
Farah M. Walters are independent under the NYSE
independent director listing standards. In making
this determination, the Board reviewed significant transactions,
arrangements or relationships that a Director might have with
our customers or suppliers. In making this determination with
respect to Mr. Fearon, the Board determined that the sales
of products by the Company to Eaton Corporation, of which
Mr. Fearon serves as an executive officer, did not create a
material relationship or impair the independence of
Mr. Fearon because Mr. Fearon receives no material
direct or indirect benefit from such transactions, which were
undertaken in the ordinary course of business. For 2010, the
amount paid to the Company from sales to Eaton Corporation was
less than 0.2% of the Companys consolidated revenues.
Lead
Director
Our independent directors meet regularly in executive sessions.
Our Corporate Governance Guidelines provide that the independent
directors are to select a Lead Director to preside at executive
sessions. The Lead Director acts as the key liaison between the
independent directors and the Chief Executive Officer and is
responsible for coordinating the activities of the other
independent directors and for performing various other duties as
may from time to time be determined by the independent
directors. Mr. Harnett has served as our Lead Director
since July 2007.
Board
Leadership Structure
Mr. Newlin is the Chairman of our Board of Directors and
our Chief Executive Officer. The Board of Directors believes
that this leadership structure is appropriate for our company
given the experience and active involvement of our independent
directors, our corporate governance practices, and our Lead
Directors role. Having a Lead Director role helps to
ensure greater communication between management and the
independent directors, increases the independent directors
understanding of management decisions and Company operations,
and provides an additional layer of independent oversight of the
Company. The Board of Directors believes that this approach
serves
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to strike an effective balance between management and
independent director participation in the board process.
Combining the Chairman and Chief Executive Officer position
gives the Company a clear leader and improves efficiencies in
the decision-making process.
Board
Attendance
The Board met seven times during 2010, the calendar year being
our fiscal year. Each member of our Board attended at least 75%
of the meetings held by our Board and the meetings held by the
Committees of the Board on which such member served in 2010.
Each Director is expected to attend the Annual Meeting of
Shareholders. In 2010, nine of our Directors serving at that
time attended the Annual Meeting of Shareholders.
Committees
of the Board of Directors
As of the date of this proxy statement, our Board has nine
directors and the following five committees: the Audit
Committee, the Compensation Committee, the Nominating and
Governance Committee, the Environmental, Health and Safety
Committee, and the Financial Policy Committee.
The following table sets forth the membership of the standing
committees of our Board of Directors, as of the date of this
proxy statement, and the number of times each committee met in
2010. The current function of each committee is described below.
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Environmental,
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Nominating and
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Compensation
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Health and
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Financial
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Governance
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Director
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Audit Committee
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Committee
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Safety Committee
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Policy Committee
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Committee
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Mr. Campbell
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X
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X
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X
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*
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Dr. Cartwright
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X
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X
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Mr. Fearon
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*
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X
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Mr. Harnett
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X
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*
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Mr. Lorraine
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Mr. Mooney
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X
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*
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Mr. Newlin
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Mr. Powell
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X
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X
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Ms. Walters
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|
|
X
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
X
|
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|
|
|
|
|
|
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|
|
|
|
|
|
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|
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|
|
|
Number of Meetings in 2010
|
|
|
|
7
|
|
|
|
|
6
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
X Member
* Chairperson
The Audit Committee meets with appropriate financial and legal
personnel and independent auditors to review our corporate
accounting, internal controls, financial reporting and
compliance with legal and regulatory requirements. The Committee
exercises oversight of our independent auditors, internal
auditors and financial management. The Audit Committee appoints
the independent auditors to serve as auditors in examining our
corporate accounts. Our common shares are listed on the NYSE and
are governed by its listing standards. All members of the Audit
Committee meet the financial literacy and independence
requirements as set forth in the NYSE listing standards. The
Board of Directors has determined that Mr. Fearon meets the
requirements of an audit committee financial expert
as defined by the Securities and Exchange Commission.
The Compensation Committee reviews and approves the
compensation, benefits and perquisites afforded our executive
officers and other highly-compensated personnel. The Committee
has similar
8
responsibilities with respect to non-employee Directors, except
that the Committees actions and determinations are subject
to the approval of the Board of Directors. The Committee also
has oversight responsibilities for all of our broad-based
compensation and benefit programs and provides policy guidance
and oversight on selected human resource policies and practices.
To help it perform its responsibilities, the Committee makes use
of PolyOne resources, including members of senior management in
our human resources, legal and finance departments. In addition,
the Committee directly engages the resources of Towers Watson
(the Consultant) as an independent outside
compensation consultant to assist the Committee in assessing the
competitiveness and overall appropriateness of our executive
compensation programs. In 2010, the Committee, assisted by the
Consultant, analyzed competitive market compensation data
relating to salary, annual incentives and long-term incentives.
In analyzing competitive market data, the Committee reviewed
data from a peer group of similarly-sized U.S. chemical
companies and reviewed data from the Consultants
Compensation Data Bank and other published surveys. The
Consultant then assisted the Committee in benchmarking base
salaries and annual and long-term incentive targets to
approximate the market median. The Consultant assisted our human
resources department in preparing tally sheets to provide the
Committee with information regarding our executive
officers total annual compensation, termination benefits
and wealth accumulation. More detailed information about the
compensation awarded to our executive officers in 2010 is
provided in the Compensation Discussion and Analysis
section of this proxy statement. The Consultant maintains
regular contact with the Committee and interacts with management
to gather the data needed to prepare reports for Committee
review.
The Committee periodically reviews the relationship with our
compensation consultant, Towers Watson, including the level and
quality of services provided, as well as, fees for those
services. In addition, expenses for other consulting services
provided to the Company by Towers Watson, that are not related
to executive compensation, are monitored to ensure that
executive compensation consultant independence is maintained.
The Consultant did not provide us with services in excess of
$120,000 that were in addition to the services provided in
connection with its advice and recommendations on the amount or
form of executive and director compensation.
The Compensation Committee reviews succession planning for the
Chief Executive Officer and other executive officers and
oversees the process by which the Board annually evaluates the
performance of the Chief Executive Officer. All members of the
Compensation Committee have been determined to be independent as
defined by the NYSE listing standards.
The Nominating and Governance Committee recommends to the Board
of Directors candidates for nomination as Director and advises
the Board with respect to governance issues and directorship
practices. All members of the Nominating and Governance
Committee have been determined to be independent as defined by
the NYSE listing standards.
The Nominating and Governance Committee will consider
shareholder suggestions for nominees for election to our Board
of Directors as described on page 3. The Committee uses a
variety of methods for identifying and evaluating nominees for
Directors, including third-party search firms, recommendations
from current Board members and recommendations from
shareholders. Nominees for election to the Board of Directors
are selected on the basis of the following criteria:
|
|
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|
|
Business or professional experience;
|
|
|
|
Knowledge and skill in certain specialty areas such as
accounting and finance, international markets, physical sciences
and technology or the polymer or chemical industry;
|
9
|
|
|
|
|
Personal characteristics such as ethical standards, integrity,
judgment, leadership and the ability to devote sufficient time
to our affairs;
|
|
|
|
Substantial accomplishments with demonstrated leadership
capabilities;
|
|
|
|
Freedom from outside interests that conflict with our best
interests;
|
|
|
|
The diversity of backgrounds and experience each member will
bring to the Board of Directors; and
|
|
|
|
Our needs from time to time.
|
While the Committee or the Board does not have a formal policy
with respect to the consideration of diversity in identifying
director nominees, they do consider diversity when evaluating
potential Board nominees. We consider diversity to include race,
gender and national origin, as well as differences in viewpoint,
background, experience and skills. The Committee believes that
having a diverse Board leads to more innovation,
outside-the-box-thinking
and better governance. In 2010, approximately 25% of our Board
members were female and diversity is a key characteristic that
we will consider, and instruct any third party search firm we
use to consider, in searches for future Board members.
The Committee also considers such other relevant factors as it
deems appropriate, including the current composition of the
Board, the balance of management and independent directors, the
need for Audit Committee expertise and the evaluations of other
prospective nominees. The Committee has established these
criteria that any Director nominee, whether suggested by a
shareholder or otherwise, should satisfy. A nominee for election
to the Board who is suggested by a shareholder will be evaluated
by the Committee in the same manner as any other nominee for
election to the Board. Finally, if the Committee determines that
a candidate should be nominated for election to the Board, the
Committee will present its findings and recommendation to the
full Board for approval.
In 2010 and in past years, the Committee used a third-party
search firm, Russell Reynolds Associates, Inc., to identify
possible candidates who meet the minimum and desired
qualifications, to interview and screen such candidates
(including conducting appropriate background and reference
checks), to act as a liaison among the Board, the Committee and
each candidate during the screening and evaluation process, and
thereafter to be available for consultation as needed by the
Committee.
The Environmental, Health and Safety Committee exercises
oversight with respect to our environmental, health, safety,
security and product stewardship policies and practices and our
compliance with related laws and regulations.
The Financial Policy Committee exercises oversight with respect
to our capital structure, borrowing and repayment of funds,
financial policies, management of foreign exchange risk and
other matters of financial risk management, banking
relationships and other financial matters.
The Board of Directors has adopted a written charter for each of
the standing committees of the Board of Directors. These
charters are posted and available on our website at
www.polyone.com under Corporate Governance on our
investor relations page. The Board and each Committee conduct an
annual self-evaluation.
Boards
Oversight of Risk
Our Board of Directors oversees a company-wide approach to risk
management that is designed to support the achievement of our
strategic objectives and improve long-term organizational
performance, which we believe will ultimately enhance
shareholder value. The Board of Directors
10
believes that risk management is not only understanding the
risks we face and what steps management is taking to manage
those risks, but also understanding what level of risk is
appropriate for us as an organization.
Our Board of Directors administers its risk oversight function
directly and through its Audit Committee, Financial Policy
Committee and Environmental, Health and Safety Committee. The
Audit Committee discusses with management our major financial
risk exposures and the steps management has taken to monitor and
control such exposures, including our risk assessment and risk
management policies. The Audit Committee also receives an annual
risk assessment report from our internal auditors. The Financial
Policy Committee assists the Board of Directors in fulfilling
its oversight and monitoring responsibilities to our
shareholders relating to our capital structure, our borrowing
and repayment of funds, financial policies, management of
foreign exchange risk and other matters of financial risk
management, including the utilization of financial derivative
products, insurance coverage strategies, banking relationships
and other financial matters. The Environmental, Health and
Safety Committee periodically reviews with management the
significant risks or exposures faced by the Company relating to
safety, health, environmental, security and product stewardship
standards and practices.
Our Board of Directors sets the appropriate tone at the
top when it comes to risk tolerance and management by
fostering a culture of risk-adjusted decision-making throughout
the company. Our Board ensures that the risk management
processes designed and implemented by our management team are
adapted to the Boards corporate strategy and are
functioning as directed. The Board of Directors also
participates in an ongoing effort to assess and analyze the most
likely areas of future risk for the company by asking our
management team to discuss the most likely sources of material
future risks and how we are addressing any significant potential
vulnerability.
The Board of Directors believes that its leadership structure,
as discussed on pages 7 through 8, supports the risk
oversight function of the Board of Directors.
Code of
Ethics, Code of Conduct and Corporate Governance
Guidelines
In accordance with applicable NYSE listing standards and
Securities and Exchange Commission regulations, the Board of
Directors has adopted a Code of Ethics, Code of Conduct and
Corporate Governance Guidelines. These are also posted and
available on our website at www.polyone.com under
Corporate Governance on our investor relations page.
In October 2007, the Board amended our Corporate Governance
Guidelines to adopt a policy relating to majority voting.
Pursuant to the policy, any nominee for election as a Director
of the Board who receives a greater number of votes
withheld from his or her election than votes
for his or her election in an election of Directors
that is not a contested election is expected to tender his or
her resignation as a Director to the Board promptly following
the certification of the election results. Neither abstentions
nor broker non-votes will be deemed to be votes for or withheld
from a Directors election for purposes of the policy,
regardless of the rules treating broker non-votes as withheld in
uncontested elections of directors. The Nominating and
Governance Committee (without the participation of the affected
Director) will consider each resignation tendered under the
policy and recommend to the Board whether to accept or reject
it. The Board will then take appropriate action on each tendered
resignation, taking into account the Nominating and Governance
Committees recommendation. The Nominating and Governance
Committee in making its recommendation, and the Board in making
its decision, may consider any factors or other information that
it considers appropriate, including the reasons (if any) given
by shareholders as to why they withheld their votes, the
qualifications of the tendering Director and his or her
11
contributions to the Board and to PolyOne, and the results of
the most recent evaluation of the tendering Directors
performance by the other members of the Board. The Board will
promptly disclose its decision whether to accept or reject the
Directors tendered resignation and, if applicable, the
reasons for rejecting the tendered resignation.
Communication
with Board of Directors
Shareholders and other interested parties interested in
communicating directly with the Board of Directors as a group,
the non-management or independent Directors as a group, or with
any individual Director may do so by writing to the Secretary,
PolyOne Corporation, 33587 Walker Road, Avon Lake, Ohio 44012.
The mailing envelope and letter must contain a clear notation
indicating that the enclosed letter is either a
Shareholder-Board of Directors Communication or an
Interested Party-Board of Directors Communication,
as appropriate.
The Secretary will review all such correspondence and regularly
forward to the Board of Directors a log and summary of all such
correspondence and copies of all correspondence that, in the
opinion of the Secretary, deals with the functions of the Board
or committees of the Board or that she otherwise determines
requires their attention. Directors may at any time review a log
of all correspondence we receive that is addressed to members of
the Board and request copies of any such correspondence.
Concerns relating to accounting, internal controls or auditing
matters are immediately brought to the attention of our internal
audit department and handled in accordance with procedures
established by the Audit Committee for such matters.
Director
Compensation
In 2010, we paid our non-employee Directors an annual retainer
of $135,000, quarterly in arrears, consisting of a cash retainer
of $60,000 and an award of $75,000 in value of fully vested
common shares. We grant the shares payable to the Directors
quarterly and determine the number of shares to be granted by
dividing the dollar value by the arithmetic average of the high
and low stock price on the last trading day of each quarter. We
pay individual meeting fees only as follows: fees of $2,000 for
each unscheduled Board and committee meeting attended and fees
of $1,000 for participation in each unscheduled significant
telephonic Board and committee meeting. In addition, in the
first two quarters of 2010, the Chairpersons of each committee
received a fixed annual cash retainer (payable on a quarterly
basis) as follows: $5,000 for the Environmental, Health and
Safety, Nominating and Governance and Financial Policy
Committees and $10,000 for the Audit and Compensation
Committees. Effective as of the third quarter of 2010, the
annual cash retainer for the Chairpersons of the following
committees was amended to be as follows: $7,500 for the
Environmental, Health and Safety, Nominating and Governance and
Financial Policy Committees and $15,000 for the Audit Committee.
In addition, we instituted an annual retainer of $10,000 for our
Lead Director, effective as of the third quarter of 2010. We
reimburse Directors for their expenses associated with each
meeting attended.
Directors who are not our employees may defer payment of all or
a portion of their compensation as a Director under our Deferred
Compensation Plan for Non-Employee Directors. A Director may
defer the compensation as cash or elect to have it converted
into our common shares.
In 2010, we awarded shares to Directors under our Deferred
Compensation Plan for Non-Employee Directors and our 2008 and
2010 Equity and Performance Incentive Plans. Deferred
compensation, whether in the form of cash or common shares, is
held in trust for the participating Directors. Interest is
earned on the cash amounts and dividends, if any, on the common
shares deferred accrue for the benefit of the participating
Directors.
12
2010
DIRECTOR COMPENSATION
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
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|
|
Stock
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
Paid in
Cash(1)
|
|
|
|
Awards(2)
|
|
|
|
Awards(3)
|
|
|
|
Total
|
|
Name
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
J.D. Campbell
|
|
|
|
66,250
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
141,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C.A. Cartwright
|
|
|
|
66,250
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
141,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G.
Duff-Bloom(4)
|
|
|
|
21,840
|
|
|
|
|
27,300
|
|
|
|
|
|
|
|
|
|
49,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.H. Fearon
|
|
|
|
72,500
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
147,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G.D. Harnett
|
|
|
|
75,000
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.A. Lorraine
|
|
|
|
60,000
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E.J. Mooney
|
|
|
|
66,250
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
141,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.H. Powell
|
|
|
|
60,000
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F.M. Walters
|
|
|
|
60,000
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Non-employee Directors may defer
payment of all or a portion of their cash compensation as a
Director (annual cash retainer of $60,000, meeting fees, and
chair fees).
|
|
(2)
|
|
Our Director stock compensation
consisted of an annual award of $75,000 in value of fully vested
common shares, which the Directors could elect to defer. We
granted the shares quarterly and determined the number of shares
to be granted by dividing the dollar value by the arithmetic
average of the high and low stock price on the last trading day
of each quarter. We used the following quarterly fair market
values in calculating the number of shares: March 31,
2010 $10.425; June 30, 2010 $8.625;
September 30, 2010 $12.095; and
December 31, 2010 $12.595.
|
|
(3)
|
|
In 2010, we did not grant any
stock options to our non-employee Directors. The number of
outstanding stock options held by each non-employee Director at
the end of the fiscal year is set forth in the following table.
All of these options are fully exercisable. In addition, the
number of fully-vested deferred shares held in an account for
each Director at the end of the fiscal year is set forth in the
following table. Stock option exercises by our Directors are set
forth in the table below.
|
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|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock Awards
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Securities Underlying
|
|
|
|
Number of
|
|
|
|
|
Unexercised Options
|
|
|
|
Deferred Shares*
|
|
Name
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
J.D. Campbell
|
|
|
|
24,000
|
|
|
|
|
117,174
|
|
|
|
|
|
|
|
|
|
|
|
|
C.A. Cartwright
|
|
|
|
24,000
|
|
|
|
|
29,552
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Duff-Bloom
|
|
|
|
6,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
R.H. Fearon
|
|
|
|
15,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
G.D. Harnett
|
|
|
|
24,000
|
|
|
|
|
80,998
|
|
|
|
|
|
|
|
|
|
|
|
|
R.A. Lorraine
|
|
|
|
0
|
|
|
|
|
33,061
|
|
|
|
|
|
|
|
|
|
|
|
|
E.J. Mooney
|
|
|
|
0
|
|
|
|
|
81,524
|
|
|
|
|
|
|
|
|
|
|
|
|
W.H. Powell
|
|
|
|
0
|
|
|
|
|
38,430
|
|
|
|
|
|
|
|
|
|
|
|
|
F.M. Walters
|
|
|
|
24,000
|
|
|
|
|
26,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
A distribution of
81,442 shares was made to Mr. Campbell and
55,939 shares was made to Mr. Harnett from the
Deferred Compensation Plan for Non-Employee Directors on
August 4, 2010. A distribution of 26,251 shares was
made to Ms. Walters from the Deferred Compensation Plan for
Non-Employee Directors on February 10, 2010.
|
13
2010
Option Exercises
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Value
|
|
|
|
|
Acquired on
|
|
|
|
Realized on
|
|
|
|
|
Exercise
|
|
|
|
Exercise
|
|
Name
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
J.D. Campbell
|
|
|
|
15,000
|
|
|
|
|
18,075
|
|
|
|
|
|
|
|
|
|
|
|
|
C.A. Cartwright
|
|
|
|
15,000
|
|
|
|
|
9,225
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Duff-Bloom
|
|
|
|
33,000
|
|
|
|
|
82,847
|
|
|
|
|
|
|
|
|
|
|
|
|
R.H. Fearon
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
G.D. Harnett
|
|
|
|
15,000
|
|
|
|
|
32,025
|
|
|
|
|
|
|
|
|
|
|
|
|
R.A. Lorraine
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
E.J. Mooney
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
W.H. Powell
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
F.M. Walters
|
|
|
|
15,000
|
|
|
|
|
18,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
Ms. Duff-Bloom retired after
the 2010 Annual Meeting of Shareholders on May 12, 2010.
|
14
BENEFICIAL
OWNERSHIP OF COMMON SHARES
The following table shows the number of our common shares
beneficially owned on March 14, 2011 (including shares the
individuals have a right to acquire within 60 days of that
date) by each of our Directors and nominees, each of the
executive officers named in the Summary Compensation Table on
page 35 (the Named Executive Officers) and by
all Directors and executive officers as a group.
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Right to
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|
Total
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|
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|
Number of Shares
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|
|
Acquire
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|
Beneficial
|
Name
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|
Owned(1)
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|
Shares
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|
|
Ownership
|
J. Douglas Campbell
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|
215,672
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(2)
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|
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24,000
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(3)
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239,672
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|
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Carol A. Cartwright
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136,066
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(2)
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|
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24,000
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(3)
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|
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|
160,066
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Richard H. Fearon
|
|
|
|
61,259
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|
|
|
|
15,000
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(3)
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|
|
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76,259
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Gordon D. Harnett
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|
|
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141,125
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(2)
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|
|
|
24,000
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(3)
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165,125
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|
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|
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Richard A. Lorraine
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|
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33,061
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(2)
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|
|
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|
|
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33,061
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|
|
|
|
|
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|
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|
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Edward J. Mooney
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|
|
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141,524
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(2)
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|
|
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|
|
|
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141,524
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William H. Powell
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|
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118,430
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(2)
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|
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|
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|
|
118,430
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|
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|
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|
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Farah M. Walters
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|
|
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147,937
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(2)
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|
|
|
18,000
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(3)
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|
|
|
165,937
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|
|
|
|
|
|
|
|
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|
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|
|
|
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Stephen D. Newlin
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|
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|
290,125
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|
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|
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494,358
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(4)
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|
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784,483
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Robert M. Patterson
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|
100,000
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|
|
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70,511
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(4)
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170,511
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Kenneth M. Smith
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114,549
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|
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92,537
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(3)(4)
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|
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207,086
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|
|
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|
|
|
|
|
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|
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|
|
|
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Thomas J. Kedrowski
|
|
|
|
108,638
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|
|
|
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70,988
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(4)
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|
|
|
179,626
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
Bernard Baert
|
|
|
|
35,644
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|
|
|
|
19,490
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(3)(4)
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|
|
|
55,134
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|
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|
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|
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|
18 Directors and executive officers as a group
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|
2,030,891
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|
|
|
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1,271,604
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|
|
|
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3,302,495
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|
|
|
|
|
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|
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|
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(1)
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|
Except as otherwise stated in the
following notes, beneficial ownership of the shares held by each
individual consists of sole voting power and sole investment
power, or of voting power and investment power that is shared
with the spouse or other family member of the individual. It
includes an approximate number of shares credited to the Named
Executive Officers accounts in our Retirement Savings
Plan, a tax-qualified defined contribution plan. The number of
common shares allocated to these individuals is provided by the
savings plan administrator in a statement for the period ending
December 31, 2010, based on the market value of the
applicable plan units held by the individual. Additional common
shares may have been allocated to the accounts of participants
in the savings plan since the date of the last statements
received from the plan administrator. No Director, nominee or
executive officer beneficially owned, on March 14, 2011,
more than 1% of our outstanding common shares. As of that date,
the Directors and executive officers as a group beneficially
owned approximately 3.5% of the outstanding common shares.
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|
(2)
|
|
With respect to the Directors,
beneficial ownership includes shares held under the Deferred
Compensation Plan for Non-Employee Directors as follows: J.D.
Campbell, 117,174 shares; C.A. Cartwright,
29,552 shares; R.H. Fearon, 0 shares; G.D. Harnett,
80,998 shares; R.A. Lorraine, 33,061 shares;
E.J. Mooney, 81,524 shares; W.H. Powell,
38,430 shares; and F.M. Walters, 7,009 shares.
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|
(3)
|
|
Includes shares the individuals
have a right to acquire upon the exercise of options on or
before May 13, 2011.
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15
|
|
|
(4)
|
|
Includes the number of shares that
would be acquired if the individuals outstanding and
exercisable stock-settled stock appreciation rights were
exercised at $12.97, the closing price of PolyOnes common
shares on March 14, 2011.
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The following table shows information relating to all persons
who, as of March 14, 2011, were known by us to beneficially
own more than five percent of our outstanding common shares
based on information provided in Schedule 13Gs and 13Ds
filed with the Securities and Exchange Commission:
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|
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|
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|
|
Number of
|
|
|
% of
|
Name and Address
|
|
|
Shares
|
|
|
Shares
|
BlackRock, Inc.
|
|
|
7,096,753(1)
|
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|
7.59%
|
40 East 52nd Street
New York, NY 10022
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|
|
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|
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Dimensional Fund Advisors LP
|
|
|
5,693,917(2)
|
|
|
6.09%
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1299 Ocean Avenue
Santa Monica, California 90401
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|
|
|
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|
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|
Barrow, Hanley, Mewhinney & Strauss, LLC
|
|
|
5,874,475(3)
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|
|
6.28%
|
2200 Ross Avenue, 31st Floor
Dallas, Texas
75201-2761
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|
|
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|
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The Vanguard Group, Inc.
|
|
|
5,034,766(4)
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|
|
5.38%
|
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
As of December 31, 2010,
based upon information contained in a Schedule 13G filed
with the Securities and Exchange Commission. BlackRock, Inc. has
sole voting power and sole dispositive power with respect to all
of these shares.
|
|
(2)
|
|
As of December 31, 2010,
based upon information contained in a Schedule 13G filed
with the Securities and Exchange Commission. Dimensional
Fund Advisors LP, as an investment advisor, has sole voting
power with respect to 5,625,587 of these shares and has sole
dispositive power with respect to all of these shares.
|
|
(3)
|
|
As of December 31, 2010,
based upon information contained in a Schedule 13G filed
with the Securities and Exchange Commission. Barrow, Hanley,
Mewhinney & Strauss, Inc. has sole voting power with
respect to 2,419,455 of these shares and has sole dispositive
power with respect to all of these shares.
|
|
(4)
|
|
As of December 31, 2010,
based upon information contained in a Schedule 13G filed
with the Securities and Exchange Commission. The Vanguard Group,
Inc., as an investment advisor, has sole voting power with
respect to 128,077 of these shares and sole dispositive power
with respect to 4,906,689 of these shares.
|
Share
Ownership Guidelines
In December 2009, we revised our share ownership guidelines for
our non-employee Directors, executive officers and other elected
corporate officers to better align their financial interests
with those of our shareholders by requiring them to own a
minimum level of our shares. These individuals are expected to
make continuing progress towards compliance with the guidelines
and to comply fully within five years of becoming subject to the
guidelines. These policies, as they relate to our Named
Executive Officers, are discussed in the Compensation
Discussion and Analysis section of this proxy statement.
In order to reflect the Boards commitment to share
ownership and
16
better align the interests of our Board members with our
shareholders, the required share ownership level for directors
is 50,000 shares. For purposes of our guidelines, the
following types of share ownership and equity awards are
included as shares owned: shares directly held, shares and
phantom shares held in our retirement plans and deferral plans,
unvested restricted stock and restricted stock units, and earned
performance shares. All Directors are required to retain 100% of
all shares obtained through us, after the date of adoption of
the guidelines (December 16, 2009), as compensation for
services provided to us, such percentage to be calculated after
any reduction in the number of shares to be delivered as a
result of any taxes and exercise costs relating to the shares.
This requirement to retain 100% of all shares obtained from us
ceases once the Director has met the applicable ownership
guideline.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires that our executive officers and Directors, and persons
who own more than 10% of a registered class of our equity
securities, file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Executive officers,
Directors and greater than 10% shareholders are required by
Securities and Exchange Commission rules to furnish us with
copies of all forms they file. Based solely on our review of the
copies of such forms received by us and written representation
from certain reporting persons, we believe that, during 2010 and
until the date of this proxy statement, all Section 16(a)
filing requirements applicable to our executive officers,
Directors and 10% shareholders were satisfied.
17
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Introduction
In this section of the proxy statement, we discuss in detail our
executive compensation program for 2010 for our Named Executive
Officers. This discussion and analysis includes a description of
the principles underlying our executive compensation policies
and our most important executive compensation decisions for
2010, and provides analysis of these policies and decisions. The
following disclosure also gives context for the data we present
in the compensation tables below and the narratives that
accompany the compensation tables.
The following five individuals are our Named Executive Officers
for 2010, as that term is defined by the Securities and Exchange
Commission:
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|
|
|
|
Mr. Stephen D. Newlin, our Chairman, President and Chief
Executive Officer;
|
|
|
|
Mr. Robert M. Patterson, our Executive Vice President and
Chief Financial Officer;
|
|
|
|
Mr. Kenneth M. Smith, our Senior Vice President, Chief
Information and Human Resources Officer;
|
|
|
|
Mr. Thomas J. Kedrowski, our Senior Vice President, Supply
Chain and Operations; and
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|
|
|
Mr. Bernard Baert, our Senior Vice President, President of
Europe and International.
|
Executive
Summary
Fiscal
2010 Performance
In late 2009 and early 2010, we were confronted with uncertainty
regarding the extent of a global economic recovery. The housing
and automotive markets remained at historically low levels, raw
material costs were rising, and income from our Sunbelt joint
venture was substantially below its prior year results. Despite
these conditions, in early 2010 our Board of Directors approved
an annual operating plan designed to position us for stability
and continued growth. The plan assumed that we would achieve a
40% improvement in operating results through focused execution
of our well-defined strategy, which consists of: specialization,
globalization, commercial excellence and operational excellence.
While depressed demand and marketplace uncertainty provided
significant headwinds in 2010, we focused on generating new
business, creating efficiencies and innovating new solutions. As
a result of our intense focus on strategy and execution, in
2010, each of our business platforms attained record-setting
levels of operating income or profitability, our revenue climbed
27%, our stock price improved 67% and our diluted earnings per
share rose 252%. Overall operating income for 2010 was 121%
higher than the prior year. Working capital as a percentage of
sales was 9.6% which we consider to be world-class
performance. At the end of 2010, we had $378 million in
cash, $506 million in available liquidity, an improved
credit rating, and limited near-term debt maturities,
positioning us well to fund operating expenses and pursue
acquisitions designed to further accelerate our transformation.
Throughout 2010, we demonstrated our ability to meet and surpass
our goals and objectives, with a record-setting year on a number
of different measures.
18
Fiscal
2010 Pay Implications
We determined in 2010 that the best method of motivating our
Named Executive Officers to create and maximize shareholder
value was to focus our Senior Executive Annual Incentive Plan
(the Annual Plan) on operating income improvement
and working capital management, and to link payments under the
Long-Term Incentive Plan to improvements in our working capital
and creating shareholder value. The performance unit component
of the Long-Term Incentive Plan is earned when the
pre-established financial goal, working capital as a percentage
of sales, is achieved. Performance was based on a one-year
period in 2010 and awards are payable in cash after three years
(i.e., in early 2013) contingent on the individuals
continued employment with the Company over the time period in
order to enhance retention.
Due to our exceptional overall performance in 2010, the
performance targets for the Annual Plan were substantially
exceeded, and many of our business units achieved
record-breaking results. As a result of surpassing the operating
income and working capital as a percentage of sales goals, the
Compensation Committee, which we refer to as the Committee in
this Compensation Discussion and Analysis section of the proxy
statement, approved a 200% of target payout under the Annual
Plan. The Company also significantly exceeded the one-year
performance targets set for the performance units granted in
2010, resulting in awards at the 200% of target attainment level.
In addition, after awarding reduced levels of Long-Term
Incentive Plan grants in 2009 due to the decline in our stock
value and limited share availability, 2010 Long-Term Incentive
Plan awards were granted at levels consistent with the market
median of our peer group. We also reinstated salary adjustments
in mid-2010, after base salaries for employees, including the
Named Executive Officers, were frozen in 2009. Economic
conditions had improved and we believed that salary adjustments
were necessary in order to maintain a competitive compensation
position in the market. Each Named Executive Officer received a
modest salary adjustment in mid-2010, with the exception of the
Chief Executive Officer, who received no salary adjustment.
Instead, the Committee increased Mr. Newlins target
annual incentive opportunity from 100% to 110% in order to
leverage his variable compensation opportunity by placing a
greater portion of his pay at risk.
In total, the Committee believes that the compensation actions
and outcomes for 2010 strongly reflect and reinforce the
Companys compensation philosophy, and in particular the
emphasis on performance and alignment with shareholder interests.
The following discussion should be read together with the
information presented in the compensation tables, the footnotes
and the narratives to those tables and the related disclosures
appearing elsewhere in this proxy statement.
Compensation
Philosophy and Objectives
Our executive compensation programs are linked to our
achievement of strategic operating and financial goals and
designed to be competitive in the marketplace. Our executives
are rewarded for performance that meets or exceeds our strategic
goals, without encouraging excessive risk-taking that could have
a detrimental impact on our long-term results and the interests
of our shareholders. We believe the design of our compensation
plans and the relative mix of compensation elements successfully
motivate our executives to improve our overall corporate
performance and the profitability of the specific business unit
for which they are responsible, thus maximizing shareholder
value. The main objectives of our executive compensation
programs are to:
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Attract, motivate and retain a highly qualified and successful
management team to lead PolyOne in setting and effectively
executing upon our strategic goals and objectives;
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19
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Foster a
pay-for-performance
culture by rewarding the achievement of specified strategic
operating and financial objectives; and
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|
Ensure our goals and objectives are aligned with the interests
of our shareholders by recognizing and rewarding business
results and the growth of our share price through incentive
programs.
|
Setting
2010 Executive Compensation Levels
Compensation
Consultant
Our executive compensation programs are approved and overseen by
the Committee, which is composed entirely of independent
directors. For 2010, the Committee selected and retained an
independent compensation consultant, Towers Watson, to assist
the Committee in assessing the competitiveness and overall
appropriateness of our executive compensation programs. The
Committee worked in conjunction with Towers Watson and with
input from members of senior management.
As described below, Towers Watson assisted the Committee in
approximating base salaries and annual and long-term incentive
targets in accordance with the market median, and assisted our
human resources department in preparing tally sheets to provide
the Committee with information regarding our Named Executive
Officers total annual compensation, termination benefits
and wealth accumulation.
Competitive
Market Pay Information and Benchmarking
We have designed our compensation programs to be competitive
with companies of comparable size and industry with whom we
compete for executive talent. We annually analyze competitive
market compensation data relating to salary, annual incentives,
and long term incentives. The Committee generally manages
individual components of compensation and target total
compensation relative to the median
(50th
Percentile) of the competitive market data. However, the
Committee considers many other factors, including the
responsibilities, performance, contributions and experience of
the named executive officer, including compensation in relation
to other employees. As a result, the Company does not set total
direct compensation or the component parts at levels to achieve
a mathematically precise market position. We periodically
analyze competitive market compensation data relating to
retirement benefits and perquisites, most recently in 2009. The
Committee obtains advice and recommendations from Towers Watson
in these areas of total compensation.
In analyzing competitive market data for the purpose of
determining the market median, we draw from two independent
sources. We first review proxy statement disclosures of a peer
group of similarly-sized U.S. chemical companies to
establish an estimate of market compensation for our senior
executives. This approach provides insight into specific company
practices at business competitors or companies facing similar
operating challenges.
In 2010, with the guidance of Towers Watson, we conducted a
review of our peer group to ensure it consisted of appropriate
companies to which we should be compared. Multiple factors were
taken into consideration during the review including: company
revenue between $1.03 billion
$4.12 billion, total asset size between
$0.70 billion $2.78 billion and number of
employees between 1,950 7,800, as well as whether
each potential peer company had a global presence and a
specialty chemical focus. We also looked at the frequency with
which these companies were used as peers by other companies in
our industry, and which companies had identified us as a peer.
In addition, we considered whether they were in the same SIC
code as PolyOne and whether we
20
compete with them for talent. Each of the companies recommended
for the new peer group met a majority of the criteria that were
established. Based on this review and managements
recommendation, for 2010, the Committee approved the addition of
six companies to the peer group and the removal of one company
from our previous peer group of 14 companies. This resulted
in a new peer group consisting of the following
19 companies, which better reflects our transformation into
a global and specialty chemical company:
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Albemarle Corporation
|
|
FMC Corporation
|
|
RPM International Inc.
|
Arch Chemicals, Inc.
|
|
Georgia Gulf Corporation
|
|
The Scotts Miracle-Gro Company
|
A. Schulman, Inc.
|
|
H.B. Fuller Company
|
|
Sigma-Aldrich Corporation
|
Cabot Corporation
|
|
International Flavors & Fragrances Inc.
|
|
Solutia Inc.
|
Cytec Industries Inc.
|
|
The Lubrizol Corporation
|
|
The Valspar Corporation
|
Eastman Chemical Company
|
|
Nalco Holding Company
|
|
|
Ferro Corporation
|
|
Rockwood Holdings, Inc.
|
|
|
In order to augment the peer proxy analysis and provide a
broader sense of market practices, we also review data from
Towers Watsons Executive Compensation Data Base, Towers
Watsons Top Management Compensation Survey and
Mercers Executive Compensation Survey relating to the
chemical industry and other applicable general industries, as
provided by Towers Watson. To obtain comparability based on
company size, the data either references a specific sample of
companies or calibrates the pay of a broad sample of companies
against company size. This data is used as one of several inputs
into managements and the Committees determination of
market compensation levels.
Review
of Named Executive Officer Compensation
Management and the Committee annually review the specific pay
disclosures of our peer group and the broad-based survey data
provided by Towers Watson described above. Management uses this
data to develop recommendations for the Committees review
regarding eligibility, award opportunities, performance measures
and goals for the plan periods commencing in the following year.
The Committee discusses and considers this information when
making compensation decisions and aligning each of the pay
elements with our compensation objectives and relative market
practices.
The Committee and management annually review and consider tally
sheets, which are developed collaboratively by Towers Watson and
our Human Resources department, to determine the reasonableness
of the compensation of our Named Executive Officers. The tally
sheets provide information regarding each Named Executive
Officers base salary, annual incentives, long-term
incentives, perquisites, retirement benefits and wealth
accumulation.
Based upon individual performance and results achieved, the
Chief Executive Officer typically recommends for the
Committees review and approval specific base salary
adjustments for each of the other Named Executive Officers. The
Chief Executive Officer makes his recommendations in conjunction
with the marketplace data and input provided by Towers Watson.
He does not participate in any discussions with the Committee
involving his own compensation. With guidance from Towers Watson
and based on a rigorous review of the prior years
performance, the Committee determines the appropriate base
salary for the Chief Executive Officer.
For Annual Plan purposes, during the fourth quarter, the
Committee typically reviews plan performance and estimates the
incentive payouts for the applicable plan period. In the first
quarter of the following year, the Committee determines actual
performance against pre-established goals and approves plan
attainment levels. Our awards of cash-settled performance units,
stock-settled
21
stock appreciation rights (SARs), and full value
awards (in the form of performance shares or restricted stock
units (RSUs)) are determined in the first quarter
based on competitive long-term incentive market practices,
market data, and an evaluation of individual performance.
Pay
for Performance
We believe that the majority of each Named Executive
Officers compensation should be linked directly to our
performance and the creation of shareholder value. The following
chart compares cumulative total shareholder return on our common
shares against the cumulative total return of the S&P 500
Index and the S&P Mid Cap Chemicals Index for the five year
period, December 31, 2005 to December 31, 2010,
assuming in each case a fixed investment of $100 and
reinvestment of all dividends. Our five-year performance has
exceeded the S&P 500 Index and has kept pace with the
S&P Mid Cap Chemicals Index.
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Base
|
|
INDEXED RETURNS
|
|
|
Period
|
|
Years Ending
|
Company / Index
|
|
12/31/05
|
|
12/31/06
|
|
12/31/07
|
|
12/31/08
|
|
12/31/09
|
|
12/31/10
|
|
|
PolyOne Corporation
|
|
$
|
100
|
|
|
$
|
116.64
|
|
|
$
|
102.33
|
|
|
$
|
48.99
|
|
|
$
|
116.17
|
|
|
$
|
194.25
|
|
S&P 500 Index
|
|
$
|
100
|
|
|
$
|
115.79
|
|
|
$
|
122.16
|
|
|
$
|
76.96
|
|
|
$
|
97.33
|
|
|
$
|
111.99
|
|
S&P Mid Cap Chemicals
|
|
$
|
100
|
|
|
$
|
117.76
|
|
|
$
|
149.65
|
|
|
$
|
94.16
|
|
|
$
|
150.05
|
|
|
$
|
209.77
|
|
We believe that the returns to shareholders shown in this graph
indicate that our
pay-for-performance
philosophy, compensation plan design and selected metrics have
resulted in performance that has provided increased value to our
shareholders and that the compensation of our Named Executive
Officers is appropriate given both the fiscal 2010 and long-term
performance of Polyone.
Our executive compensation programs are also designed to
recognize an executives scope of responsibilities,
leadership ability, and effectiveness in achieving key
performance goals and objectives. As an executives level
of responsibility within PolyOne increases, so does the
percentage of total compensation that is linked to performance
in the form of variable compensation.
The following table summarizes the allocation of the
compensation opportunity at target, or pay mix that
was granted in 2010 to the Named Executive Officers, based upon
the primary elements of compensation (base salary, annual
incentive opportunity, and long-term incentive opportunity).
Both the annual incentive and long-term incentive opportunity
represent the variable
22
compensation portion of each Named Executive Officers
total compensation opportunity, consistent with our overall
pay-for-performance
philosophy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAY MIX ALLOCATION
|
|
Element
|
|
|
Newlin
|
|
|
|
Patterson
|
|
|
|
Smith
|
|
|
|
Kedrowski
|
|
|
|
Baert
|
|
Base Salary
|
|
|
|
19
|
%
|
|
|
|
34
|
%
|
|
|
|
40
|
%
|
|
|
|
40
|
%
|
|
|
|
42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Opportunity
|
|
|
|
20
|
%
|
|
|
|
21
|
%
|
|
|
|
22
|
%
|
|
|
|
22
|
%
|
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive Opportunity
|
|
|
|
61
|
%
|
|
|
|
45
|
%
|
|
|
|
38
|
%
|
|
|
|
38
|
%
|
|
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our incentive programs focus on the critical performance
measures that determine our overall success and reward
executives for the attainment of sustainable, long-term success.
For positions with significant business unit responsibilities,
annual incentive programs also emphasize success at the business
unit level, which may lead to Named Executive Officers at
comparable levels being paid differently.
Our executive compensation programs play a material role in our
ability to drive strong financial results that exceed
expectations. We believe that providing incentive plan
opportunities to our executives that are based upon achieving
strategic goals and objectives are instrumental in driving
desired results.
2010
Executive Compensation Elements
The following table outlines the major elements of 2010 total
compensation for our Named Executive Officers:
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
Element
|
|
|
Key Features
|
|
|
Objectives and Comments
|
Base Salary
|
|
|
Fixed compensation
|
|
|
Intended to pay for the experience,
skills and ongoing value the officer brings to the position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
Variable cash compensation that is
earned if pre-established annual performance goals are achieved.
For 2010, the goals were operating income and working capital as
a percentage of sales
|
|
|
Builds accountability for important
annual financial goals
Payment is made only upon achievement of
specified goals
|
|
|
|
|
|
|
|
Long-Term Incentive
Cash-settled
Performance Units
|
|
|
Variable cash compensation that is
earned if pre-established financial goals are achieved. The 2010
goal was working capital as a percentage of sales. Awards were
determined at the end of 2010 based on performance over the
preceding 12-month period but payable in three years, generally
subject to the officers continued employment
|
|
|
Emphasizes achievement of strategic
goals and objectives
Payment is made only upon achievement of
specified goals
Avoids stock dilution
One-year measurement period emphasizes
key goals, while the three-year payout period supports our
retention objective
|
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
Element
|
|
|
Key Features
|
|
|
Objectives and Comments
|
Stock-settled
Stock Appreciation Rights
|
|
|
Variable compensation that increases in
value as our share price rises. For the 2010 grants, SARs vest
one-third per year over a three-year period, generally subject
to the officers continued employment
Paid in PolyOne common shares
|
|
|
Aligns goals with those of shareholders by maximizing value through increased stock price
Requires growing stock price before any value is realized
Increases share ownership
Three-year vesting period supports our retention objective
Multi-year incentive is a common market practice
|
|
|
|
|
|
|
|
Restricted Stock Units
|
|
|
Equity compensation that vests and is
payable at the end of the three-year restriction period, subject
to the officers continued employment
Paid in PolyOne common shares
|
|
|
Increases share ownership
Three-year vesting period supports our
retention objective
Full-value grant is a common market
practice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans
|
|
|
|
|
|
|
U.S. Defined
Contribution Plans
|
|
|
Tax-qualified 401(k) defined
contribution plan
Nonqualified excess 401(k) defined
contribution plan
|
|
|
Standard tax-qualified benefit offered
to all employees, subject to Internal Revenue Code limits
Restores benefits that are limited by
the Internal Revenue Code in the qualified plan
|
|
|
|
|
|
|
|
Luxembourg Defined
Contribution Plan
|
|
|
Tax-efficient defined contribution plan
|
|
|
Mr. Baert participates in a standard
tax-efficient defined contribution plan provided to Luxembourg
employees
|
|
|
|
|
|
|
|
Defined Benefit Plans
(these plans have been closed to new participants since the
formation of PolyOne and were frozen as of March 20, 2009)
|
|
|
Tax-qualified defined benefit pension
plan
Nonqualified excess defined benefit plan
|
|
|
Mr. Smith, as a 21 year employee,
participates in the frozen defined benefit pension plan offered
to certain employees
Prior to March 20, 2009, restored
benefits that are limited by the Internal Revenue Code in the
qualified plan
|
|
|
|
|
|
|
|
Supplemental Retirement Benefit for Mr. Newlin
|
|
|
Non-qualified annual supplemental
retirement payments, payable upon a Qualifying Separation
from Service, payable in the form of a 15-year certain and
continuous life annuity
|
|
|
Consistent with benefits offered at peer
companies
Vesting condition supports our retention
objective
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
Element
|
|
|
Key Features
|
|
|
Objectives and Comments
|
Subsidized Post-Retirement Medical Plan (this plan has been closed to new participants since the formation of PolyOne in 2000, and will be eliminated in 2013)
Post-Retirement Medical Plan (at Full Cost to Employee)
|
|
|
Subsidized retiree medical coverage
(available to certain employees)
Retiree medical coverage provided at
full cost to the retiree from ages 55 to 65. This is available
to all employees who meet specified age and service requirements
|
|
|
Mr. Smith, as a 21 year employee,
is eligible to participate in this plan
Messrs. Newlin, Patterson and Kedrowski
are eligible to participate in this plan upon reaching specified
age and service requirements
Mr. Baert is a non-U.S. based employee
and therefore is not eligible to participate in the Company
provided retiree medical plan
|
|
|
|
|
|
|
|
Perquisites
|
|
|
Benefit allowance
Financial planning and tax
preparation
Relocation benefits
Executive physical
|
|
|
Perquisites and relocation benefits
assist in attracting and retaining executive talent
Executive physicals help to ensure
continuity of our management team
|
|
|
|
|
|
|
|
The following discussion analyzes the main elements of
compensation for the Named Executive Officers, including
specific decisions relating to 2010.
Base
Salary
Merit adjustments were reinstated during 2010 after base
salaries for Named Executive Officers, as well as our other
officers, had been frozen in 2009. As noted earlier, management
recommended again for 2010 that no base salary adjustment would
be provided to the Chief Executive Officer. Instead, the
Committee increased Mr. Newlins target annual
incentive opportunity in order to tie a greater portion of his
pay to our performance. The Committee considered the
recommendation of the Chief Executive Officer in determining the
salary adjustments for each of the other Named Executive
Officers. The primary factors used in determining the adjustment
amounts were each executives individual performance and
the relative position of their salary to the market median for
their role. The Committee approved the following base salaries
for the Named Executive Officers, with salary changes effective
in May 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
|
2009 Base Salary
|
|
|
|
2010 Base Salary
|
|
|
|
Adjustment %
|
Stephen D. Newlin
|
|
|
$
|
860,000
|
|
|
|
$
|
860,000
|
|
|
|
|
0%
|
|
|
Robert M. Patterson
|
|
|
$
|
415,000
|
|
|
|
$
|
430,000
|
|
|
|
|
3.6%
|
|
|
Kenneth M. Smith
|
|
|
$
|
336,000
|
|
|
|
$
|
344,000
|
|
|
|
|
2.4%
|
|
|
Thomas J. Kedrowski
|
|
|
$
|
322,000
|
|
|
|
$
|
333,000
|
|
|
|
|
3.4%
|
|
|
Bernard Baert
|
|
|
$
|
392,931
|
|
|
|
$
|
401,683
|
|
|
|
|
2.2%
|
|
|
Based on the data provided by Towers Watson, we determined that
the 2010 salaries of the Named Executive Officers range from 93%
to 111% of the market median for comparable positions, with an
average of 103% for all Named Executive Officers.
25
Annual
Incentive
The Annual Plan was originally approved by shareholders in 2005
and includes a defined set of performance measures that can be
used in determining awards under the plan. Annual awards for
2010 were made under the Annual Plan. We received shareholder
approval of a new Annual Plan at the 2010 Annual Meeting, and
future annual awards will be made under that plan.
Consistent with our approach to use the market median as a
reference point and reward our Named Executive Officers for
achievement of specific performance objectives that would
advance our profitability, the Committee approved the following
target annual incentive levels for the Named Executive Officers
for 2010 as follows:
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
|
2009 Annual Plan Target
|
|
|
2010 Annual Plan Target
|
Stephen D. Newlin
|
|
|
|
100
|
%
|
|
|
|
110
|
%
|
|
Robert M. Patterson
|
|
|
|
50
|
%
|
|
|
|
60
|
%
|
|
Kenneth M. Smith
|
|
|
|
50
|
%
|
|
|
|
55
|
%
|
|
Thomas J. Kedrowski
|
|
|
|
50
|
%
|
|
|
|
55
|
%
|
|
Bernard Baert
|
|
|
|
50
|
%
|
|
|
|
50
|
%
|
|
For 2010, we continued to use the following performance measures
for the Annual Plan: operating income and working capital as a
percentage of sales. The Committee chose to use the same
performance measures as those used in 2009 in order to continue
to drive profitability, promote working capital management,
improve cash flow and drive efficiency in our operations, all of
which we believe lead to maximizing shareholder value. We
selected these performance measures for the Annual Plan as they
were the most critical elements of PolyOnes performance
for 2010. In the Annual Plan, these measures are defined as:
|
|
|
|
|
Operating income: operating income less Sunbelt (our joint
venture) operating income and less any specified special items
(which consist of non-recurring items as set forth in our
quarterly earnings release).
|
|
|
|
Working capital as a percentage of sales is calculated using the
following formula: (Average 13 months of Working Capital)
divided by (the sum of 12 months of sales), where Working
Capital equals (1) Trade Accounts Receivable plus
(2) Inventory on a First In First Out (FIFO)
basis minus (3) Trade Accounts Payable.
|
In order to place a greater emphasis on profitable growth and as
a critical measure of our operating performance, for 2010 we
increased the weighting on operating income from 50% to 65% and
we reduced the weighting on working capital as a percentage of
sales from 50% to 35%. Mr. Baert is the only Named
Executive Officer with responsibility for business unit specific
results within the international region, and his incentive
opportunity under the Annual Plan is based on operating income
for that region. The performance measures and weightings used
for the Named Executive Officers in the 2010 Annual Plan were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Measure
|
|
|
Newlin
|
|
|
Patterson
|
|
|
Smith
|
|
|
Kedrowski
|
|
|
Baert
|
|
|
Company Operating Income
|
|
|
65%
|
|
|
65%
|
|
|
65%
|
|
|
65%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Unit Operating Income (within International)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Working Capital as a Percentage of Sales
|
|
|
35%
|
|
|
35%
|
|
|
35%
|
|
|
35%
|
|
|
35%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Even when faced with uncertain economic conditions at the
beginning of 2010, we set aggressive goals that focused our
efforts on those factors that we believe were critical to our
on-going success, including profitable growth, earnings
improvement, cash generation from working capital, efficiencies
in our operations and the continued implementation of our
overall strategy. In 2010, we were able to achieve maximum
performance on our working capital as a percentage of sales
metric by achieving 9.6%, which is considered world-class
performance, and represents an improvement of 20.7% over 2009.
In addition, on a consolidated basis, our performance and
results under the operating income metric exceeded the maximum
performance level and was 170.7% higher than the prior year. We
viewed the targeted level of performance as very challenging to
achieve, and hence the actual level of performance reflects
superlative results. The attainment levels of above-target to
maximum performance for this metric in 2010 required exceptional
performance across all disciplines and business units.
The performance measures and targets, and the respective levels
of achievement for each performance measure, under the Annual
Plan for 2010 are set forth below. Payouts are capped at 200% of
a participants award amount at target.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Goals
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
2010
|
|
|
2010
|
|
|
|
Actual
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
|
% Plan
|
Performance Measure ($ in millions)
|
|
|
Result
|
|
|
(50%)
|
|
|
(100%)
|
|
|
(200%)
|
|
|
Result
|
|
|
Attainment
|
Company Operating Income
|
|
|
$
|
54.9
|
|
|
|
$
|
54.3
|
|
|
|
$
|
69.4
|
|
|
|
$
|
99.5
|
|
|
|
$
|
148.2
|
|
|
|
|
200.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Working Capital as a Percentage of Sales
|
|
|
|
12.1
|
%
|
|
|
|
12.0
|
%
|
|
|
|
11.3
|
%
|
|
|
|
10.6
|
%
|
|
|
|
9.6
|
%
|
|
|
|
200.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Unit Operating Income (Baert)
|
|
|
$
|
24.4
|
|
|
|
$
|
34.1
|
|
|
|
$
|
41.5
|
|
|
|
$
|
58.1
|
|
|
|
$
|
58.8
|
|
|
|
|
200.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The actual amounts earned by the Named Executive Officers under
the Annual Plan are set forth in the Non-Equity Incentive Plan
Compensation column of the 2010 Summary Compensation Table.
The Annual Plan, as it applies to the Named Executive Officers,
is structured to comply with Section 162(m) of the Internal
Revenue Code. A more detailed discussion of Section 162(m)
of the Internal Revenue Code appears in the Tax
Considerations section below.
Long-Term
Incentive
In May 2008, our shareholders approved the 2008 Equity and
Performance Incentive Plan (the 2008 Plan), which
was used to make equity incentive awards in 2010. Our
shareholders approved the 2010 Equity and Performance Incentive
Plan (the 2010 Plan) at the 2010 Annual Meeting. Our
2011 Long-Term Incentive Plan grants will be made under the 2010
Plan.
Long-Term Incentive Plan targets are established with
consideration of market median levels for each Named Executive
Officers position and are intended to reward them for
achievement of specific performance objectives.
Awards
Granted in 2010
In February 2010, we granted long-term incentive awards under
the 2008 Plan using three vehicles, with the allocation of the
award values roughly as follows: 36% of the awards value
was allocated to performance units for the 2010 performance
period, 30% was allocated to stock-settled SARs and 34% was
allocated to RSUs. We chose this mix in order to provide balance
between the relative values of the three components and
efficiently use the shares available under the 2008 Plan.
27
Cash-Settled
Performance Units
The performance units granted in February 2010 will be paid in
cash, consistent with past practice, and were based on
achievement of performance goals relating to our working capital
as a percentage of sales during 2010. The Committee selected
working capital as a percentage of sales as the performance
measure in order to reinforce our focus on improving working
capital. In 2010, we again elected to use a one-year measurement
period for performance units in order to sustain our working
capital performance attained in 2009, continue our focus on
generating cash and in acknowledgement of the significant
continued economic uncertainty at the time the goals were set.
The attainment level for the performance units is determined at
the end of the measurement period, but awards generally do not
become vested for three years, in order to serve as a retention
vehicle.
Upon achievement of the target performance level, a participant
would earn the target amount of performance units; attainment of
only the threshold performance level would earn 50% of the
target award; and attainment of the maximum performance level or
greater earns the participant 200% of the target award. If final
performance falls between the threshold and target or between
target and maximum, earned award amounts under the plan would be
interpolated. If threshold performance is not achieved, no award
would be paid to the participants. For performance units granted
in 2010, we were able to achieve working capital as a percentage
of sales equal to 9.6%, which equated to a maximum level of
performance. We believe this level of performance influenced the
improvement in our stock price during the course of the year,
benefiting both PolyOne and our shareholders, and positioned us
well for future success. Performance goals at the threshold,
target, and maximum levels for the 2010 performance units are
shown below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Goals
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
2010
|
|
|
2010
|
|
|
|
Actual
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
|
% Plan
|
Performance Measure
|
|
|
Result
|
|
|
(50%)
|
|
|
(100%)
|
|
|
(200%)
|
|
|
Result
|
|
|
Attainment
|
Working Capital as a Percentage of Sales
|
|
|
|
12.1
|
%
|
|
|
|
12.0
|
%
|
|
|
|
11.3
|
%
|
|
|
|
10.6
|
%
|
|
|
|
9.6
|
%
|
|
|
|
200
|
%
|
|
The performance unit amounts at maximum for the Named Executive
Officers under the Long-Term Incentive Plan are set forth in the
2010 Grants of Plan-Based Awards table.
Stock-Settled
SARs
To continually reinforce our ongoing commitment to enhancing
shareholder value, the Named Executive Officers received an
award of SARs that, when exercised by the holder, are settled in
our common shares. Each SAR granted to our Named Executive
Officers in February 2010 has a base price of $7.99, the closing
market price of our common stock on the date of grant. All SARs
granted in 2010 vest in equal installments over three years and
have an exercise term of seven years. The exercise term is
shorter than market practice in an effort to control dilution.
Restricted
Stock Units
To promote share ownership and enhance the retention of our
executives, we granted RSUs in February 2010 to all Named
Executive Officers. The RSUs vest on the third anniversary of
the grant date.
Awards
Granted in Prior Years
In February 2011, the Committee approved the payout of
performance units granted at the start of 2008 for performance
during the period
2008-2010.
These performance units were based on achievement of performance
goals related to our earnings per share over the three-year
period. The
28
Named Executive Officers received a cash award based on an
attainment of 110.3% of the target level performance for this
goal.
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|
Goals
|
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Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
Performance Measure
|
|
|
(50%)
|
|
|
|
(100%)
|
|
|
|
(200%)
|
|
|
|
Actual Result
|
|
|
|
%Attainment
|
|
Earnings Per Share
|
|
|
$
|
1.50
|
|
|
|
$
|
1.63
|
|
|
|
$
|
2.31
|
|
|
|
$
|
1.70
|
|
|
|
|
110.3
|
%
|
|
All equity awards outstanding as of December 31, 2010 are
set forth in the Outstanding Equity Awards at 2010 Fiscal
Year-End Table in this proxy statement.
Retirement
Benefits
We offer the following retirement benefits to eligible employees
and certain Named Executive Officers as specified. Additional
details of these plans, as they apply to the Named Executive
Officers, are included in the narrative to the 2010 Pension
Benefits Table.
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|
|
A defined contribution retirement benefit available to all
U.S. employees through an Internal Revenue Code
tax-qualified profit sharing/401(k) plan (the Qualified
Savings Plan);
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|
|
An unfunded, nonqualified plan that provides benefits similar to
the Qualified Savings Plan (the Nonqualified Savings
Plan), but without the Internal Revenue Code contribution
and earnings limitations;
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|
|
A standard defined contribution retirement benefit plan provided
to all Luxembourg employees, of which Mr. Baert is a
participant;
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|
|
A company-funded Internal Revenue Code qualified defined benefit
pension plan (the Qualified Pension Plan), as well
as an unfunded, nonqualified defined benefit pension plan (the
Benefit Restoration Plan), under which
Mr. Smith is eligible, along with certain other employees,
to receive frozen benefits. In addition, since becoming
retirement eligible (55 years of age with 10 years of
service), Mr. Smith is eligible to receive certain retiree
medical benefits for which he will be required to pay a
substantial portion of the cost;
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|
|
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A supplemental retirement benefit for Mr. Newlin that
provides annual supplemental retirement payments, payable in the
form of a
15-year
certain and continuous life annuity, conditioned upon his
execution of a release and waiver and upon a qualifying
separation from service.
|
Employment
Agreements with Named Executive Officers
Messrs. Newlin and Baert are party to employment agreements
with us, as described below. We do not maintain employment
agreements with any of the other Named Executive Officers,
although each of our Named Executive Officers is party to a
Continuity Agreement, as described in Potential Payments
Upon Termination or
Change-in-Control
below.
Mr. Newlin
On February 6, 2006, we entered into an agreement with
Mr. Newlin, under which he serves as our Chairman,
President and Chief Executive Officer. We entered into this
agreement in order to attract Mr. Newlin to PolyOne and set
the terms of his employment. The agreement provided for
specified equity awards, intended to serve as an inducement to
join PolyOne, for Mr. Newlins initial base salary and
for his participation in our various long-term incentive and
benefit plans in effect during the term of his employment. In
addition, the agreement provides for certain payments upon
29
termination of Mr. Newlins employment, as described
more fully in Potential Payments Upon Termination or
Change-in-Control
below. In July 2008, Mr. Newlins agreement was
amended to provide for a supplemental retirement benefit, as
described above and more fully in the narrative for the 2010
Pension Benefits Table.
Mr. Baert
In connection with the change in location for our European
headquarters, PolyOne Luxembourg s.à r.l., our wholly owned
subsidiary located in Luxembourg, entered into an employment
agreement with Bernard Baert, effective September 1, 2009.
It is customary in Luxembourg that we maintain an agreement with
each of our employees, including Mr. Baert. Among other
things, the agreement provides that Mr. Baert will be
entitled to a monthly base salary of 24,708, daily meal
vouchers and the use of a company car. Under the agreement,
Mr. Baert may also be eligible to participate in our Annual
Plan and will be included in a defined contribution benefits
cafeteria plan established by PolyOne Luxembourg. Pursuant to
the terms of the agreement, Mr. Baert has agreed not to
compete with us for a period of twelve months after termination
of the agreement. Mr. Baerts agreement provides for
certain payments upon termination of Mr. Baerts
employment, as described more fully in the Potential
Payments Upon Termination or
Change-in-Control
section of this proxy statement.
Perquisites
We provide minimal perquisites to the Named Executive Officers,
which we believe are necessary to compete for executive talent.
These perquisites for the Named Executive Officers based in the
United States consist of a monthly benefit allowance,
reimbursement of expenses for financial planning and tax
preparation, and an annual physical examination. The perquisites
for Mr. Baert, which are typical and competitive with
companies in Europe, include a PolyOne-provided automobile, meal
and entertainment allowance, and reimbursement of expenses for
financial planning and tax preparation. The specific amounts
attributable to perquisites for 2010 for the Named Executive
Officers are disclosed in the 2010 Summary Compensation Table.
We made several changes to the perquisites provided to the Named
Executive Officers based in the United States that were
effective beginning January 2010. We eliminated the car
allowance, cancelled the excess liability insurance coverage,
and eliminated tax
gross-ups on
all perquisites and replaced them with a benefit allowance. We
intend that benefit allowances will not be provided to new
executives. The benefit allowance and reimbursement of expenses
for financial planning and tax preparation in 2010 and future
years will be treated as taxable income to the Named Executive
Officers. These changes were made in response to market trends
that indicated companies were reducing or eliminating these
types of benefits.
Mr. Newlin and Mr. Kedrowski were eligible for
reimbursement of their relocation expenses under our standard
relocation plan. During 2010, we reimbursed Mr. Newlin and
Mr. Kedrowski for moving expenses and also provided them
with a tax
gross-up on
all or a portion of these amounts. Details of these amounts are
set forth in the All Other Compensation column of the 2010
Summary Compensation Table.
We also provide other benefits such as medical, dental and life
insurance and disability coverage to each
U.S.-based
Named Executive Officer, which are identical to the benefits
provided to all other eligible
U.S.-based
employees. Medical, dental and life insurance coverage provided
to Mr. Baert is identical to the benefits provided to all
other Luxembourg-based employees. We provide vacation and paid
holidays to all employees, including the Named Executive
Officers. The Named Executive Officers were eligible for the
following vacation in 2010: Mr. Newlin five
30
weeks, Mr. Patterson four weeks,
Mr. Smith five weeks,
Mr. Kedrowski four weeks and
Mr. Baert 26 days.
2011
Total Compensation
For 2011, the Committees review and approval of final
terms for both the Annual Plan and the Long-Term Incentive Plan
took place in the fourth quarter of 2010. The Committee also
reviewed the compensation levels for our Named Executive
Officers and compared them to the peer group proxy data and
survey data provided by Towers Watson.
2011
Base Salaries
In recognition of the significant role Mr. Newlin played in
transforming PolyOne into a high-performing company, the
Committee approved an adjustment to Mr. Newlins
annual base salary, effective January 1, 2011, from
$860,000 to $950,000. Prior to this adjustment,
Mr. Newlins base salary had not changed since March
2008. In the Committees judgment, the total compensation
package provided to Mr. Newlin, as described under the
heading Employment Agreements with Named Executive
Officers above, is appropriate in order to fairly
compensate and retain Mr. Newlin.
In January 2011, Mr. Patterson was promoted to Executive
Vice President and Chief Financial Officer, taking on additional
responsibilities of supporting the growth of our global
businesses in Asia. As a result, the Committee approved an
adjustment to his annual base salary, from $430,000 to $475,000
in order to recognize his increased responsibilities.
2011
Annual Incentive
In light of Mr. Pattersons promotion, an increase in
his target incentive opportunity under the Annual Plan was also
approved from 60% to 65%. This change was made to keep
Mr. Pattersons annual incentive target in line with
the market median in recognition of his new level of
responsibilities.
The Committee determined that we will fundamentally maintain the
same design as 2010 for the Annual Plan. Performance measures
will continue to be operating income and working capital as a
percentage of sales with current weightings maintained. For
Named Executive Officers who have responsibility for a business
unit, the working capital measure will be applied to relate only
to the working capital performance for their specific business
unit, as opposed to the consolidated number for the Company.
Having the executive be accountable for the specific performance
of the applicable business unit will more closely align the
executives responsibilities with his 2011 Annual Plan
award. We believe that the established goals for the 2011 Annual
Plan are challenging, yet achievable upon exceeding 2010
performance levels.
2011
Long-Term Incentive Plan
We are maintaining the same plan design with RSUs, SARs and
performance units in 2011. In 2009 and 2010, we had one-year
performance periods for performance units, and in 2011, we are
returning to a three-year performance period
(2011-2013).
The Committee determined that cash-settled performance units
would be earned upon achievement of an earnings per share
performance goal. To promote retention, the performance units
will only be earned if the performance goal is achieved and the
participant continues to be employed at the time the awards are
paid in 2014, except in the case of death, disability and
retirement.
31
Further, the Committee determined that it would grant
stock-settled SARs and full value RSUs to promote stock price
appreciation, increase shareholder value and enhance retention.
In determining the number of SARs and RSUs to be granted, the
Committee used the market median as a reference point in
determining the value of the Named Executive Officers
long-term incentive awards.
For 2011, the long-term incentive award design and critical
components are summarized as follows:
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The cash-settled performance units are earned based on
achievement of goals relating to earnings per share over a
three-year performance period and vest three years from date of
grant, generally subject to continued employment. Achievement of
threshold performance will result in a payout of 50% of the
target award, achievement of target performance will result in a
payout of the target award, and achievement of maximum
performance will result in a payout of 200% of the target award
(performance units represent a target of 37% of total grant
value).
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|
|
|
The SARs granted will now have a term of ten years, as opposed
to our previous seven-year term, reflecting the easing of
dilution issues associated with the Companys relatively
low stock price and in order to better align with market
practice, and will vest one-third each year on the anniversary
date of the grant. The base price for the SARs is the closing
market price of our common stock on the date of grant
(February 16, 2011) (SARs represent a target of 31.5% of
total grant value).
|
|
|
|
Each RSU is equal in value to one share of our common stock and
the RSUs will pay out in the form of our common shares on a
one-for-one
basis. The RSUs will vest in full on the third anniversary of
the date of grant (RSUs represent a target of 31.5% of total
grant value).
|
In order to align compensation more closely with the market and
to focus participants on the long-term performance goals
critical to our success and that of our shareholders, the
Committee approved an adjustment to the target Long-Term
Incentive Plan opportunity for the Named Executive Officers
during the first quarter of 2011, as follows:
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive Plan
|
|
|
|
2010 Target
|
|
|
2011 Target
|
|
|
|
(as a percentage of
|
|
|
(as a percentage of
|
Named Executive Officer
|
|
|
Base Salary)
|
|
|
Base Salary)
|
Stephen D. Newlin
|
|
|
|
300
|
%
|
|
|
|
350
|
%
|
|
Robert M. Patterson
|
|
|
|
120
|
%
|
|
|
|
135
|
%
|
|
Kenneth M. Smith
|
|
|
|
90
|
%
|
|
|
|
100
|
%
|
|
Thomas J. Kedrowski
|
|
|
|
90
|
%
|
|
|
|
100
|
%
|
|
Bernard Baert
|
|
|
|
90
|
%
|
|
|
|
100
|
%
|
|
Tax
Considerations
Cash compensation, such as base salary or annual incentive
compensation, is taxable to the recipient as ordinary income
when earned, unless deferred under a Company-sponsored deferral
plan. Deferrals under tax-qualified plans, such as a 401(k)
plan, do not affect our current tax deduction. Deferrals under
supplemental executive deferral plans delay our tax deduction
until the deferred amount (and any accumulation thereon) is
paid. Stock-settled SARs are generally taxable as ordinary
income when exercised and performance shares, RSUs and
performance units are generally
32
taxable when paid. We realize a tax deduction at that time. The
Committee reviews potential tax implications before making
decisions regarding compensation.
Management and the Committee are aware of Section 162(m) of
the Internal Revenue Code, which generally limits the
deductibility of executive pay in excess of one million dollars
for certain Named Executive Officers, and which specifies the
requirements for the performance-based exemption
from this limit. The Committee generally manages our incentive
programs to qualify for the performance-based exemption. It also
reserves the right to provide compensation that does not meet
the exemption criteria if, in its sole discretion, it determines
that doing so advances our business objectives.
Accounting
Considerations
When reviewing preliminary recommendations and in connection
with approving the terms of a given incentive plan period,
management and the Committee review and consider the accounting
implications of a given award, including the estimated expense
and/or
dilutive considerations. Depending upon the type of accounting
treatment associated with an incentive plan design, management
and the Committee may alter or modify the incentive award due to
the accounting treatment if the award (and the related
accounting consequences) were to adversely affect our financial
performance.
Executive
Compensation Governance
Stock
Ownership and Retention Guidelines
In order to better align the financial interests of our
executives with those of our shareholders, we believe our
executives should own a meaningful number of shares of PolyOne
stock. We have adopted share ownership guidelines specifying a
minimum level of share ownership for all executives, including
all Named Executive Officers. The specific levels of share
ownership for the Named Executive Officers are noted in the
following table. These levels were established in 2010 when,
given the sustained impact of volatile stock prices on ownership
guidelines, we changed from a value that was a multiple of an
executives salary to a fixed number of shares. The
retention requirement was also added at this time. The share
requirements for each level were determined with the help of
Towers Watson and represent what was determined at the time to
be a reasonable number of shares. Executives are expected to
accumulate the specified shares within five years of their
becoming subject to the policy.
In general, shares counted toward required ownership include
shares directly held and shares held in our benefit or deferral
plans (including RSUs, performance shares that have met the
applicable performance criteria, and phantom shares under our
nonqualified deferral plan). Our guidelines include a stock
retention component, which requires that executives retain half
of all shares granted as compensation (net of taxes) after
December 16, 2009. After age 55, the 50% retention
requirement is reduced 10% each year for five years, allowing
individuals who are close to retirement the opportunity to
diversify their portfolios. These guidelines and retention
requirements apply until the executive retires.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Element
|
|
|
Newlin
|
|
|
Patterson
|
|
|
Smith
|
|
|
Kedrowski
|
|
|
Baert
|
|
|
Share Ownership Target (in shares)
|
|
|
315,000
|
|
|
60,000
|
|
|
90,000
|
|
|
80,000
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Share Ownership as of 3/14/11
|
|
|
744,125
|
|
|
228,200
|
|
|
171,701
|
|
|
158,738
|
|
|
80,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attainment Status
|
|
|
236.2%
|
|
|
380.3%
|
|
|
190.8%
|
|
|
198.4%
|
|
|
160.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
Note: Ownership targets have been reduced by 30% for
Mr. Newlin, 10% for Mr. Smith and 50% for
Mr. Baert according to the applicable guideline pertaining
to age reduction as discussed above. Mr. Patterson and
Mr. Kedrowski have been with PolyOne less than five years
and are not yet required to reach 100% of the full share
ownership guideline (100,000 shares). The share ownership
target for Mr. Patterson has been reduced to reflect that
he has been with PolyOne for three years and the share ownership
target for Mr. Kedrowski has been reduced to reflect that
he has been with PolyOne for four years.
Timing
with Respect to Equity Award Grants
We have adopted a policy with respect to the timing of the grant
of equity awards, which provides that equity awards are granted
pursuant to approval by the Board or the Committee or, pursuant
to authority delegated by the Board or the Committee to the
Chief Executive Officer. Such grants generally should be made at
times when the Company is not in a blackout period,
which is the period of time that is in close proximity to the
release of financial or material non-public information or at
other times when the Company is not in possession of material
non-public information. The policy further provides that, to the
extent practicable, annual grants to existing employees should
be approved at regularly scheduled meetings and that the grant
price for any stock option or stock appreciation right shall not
be less than the fair market value of the Companys common
shares on the date of grant (which is defined as the closing
price of our common shares on the date of grant).
Clawback
Policy
We have adopted a policy that is consistent with the
requirements of the Sarbanes-Oxley Act of 2002, which requires
the Chief Executive Officer and Chief Financial Officer to
reimburse us for any awards received during the twelve-month
period following the release of financial results that
subsequently require an accounting restatement due to material
noncompliance with any financial reporting requirement if they
are subject to automatic forfeiture under Section 304 of
the Sarbanes-Oxley Act. If necessary, we plan to modify our
policy to comply with the provisions of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (the Dodd-Frank
Act), when the SEC promulgates implementing rules and
regulations.
Hedging
Policy
Our Securities Trading Policy currently provides that,
consistent with our philosophy to encourage long-term
investments, directors, officers and certain other employees of
PolyOne are prohibited from engaging in any speculative
transactions involving our securities, including buying or
selling puts or calls, short sales, or margin purchases of our
securities. If necessary, we plan to modify our policy to comply
with the provisions of the Dodd-Frank Act when they are
finalized.
34
2010
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned by, and
the compensation opportunity granted to, our principal executive
officer, our principal financial officer, and our other three
most highly compensated executive officers, during the fiscal
years ended December 31, 2010, December 31, 2009 and
December 31, 2008.
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
Name and
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards(2)
|
|
|
Awards(3)
|
|
|
Compensation(4)
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
Principal Position
|
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
Stephen D. Newlin,
|
|
|
|
2010
|
|
|
|
$
|
860,000
|
|
|
|
|
|
|
|
|
$
|
967,589
|
|
|
|
$
|
850,590
|
|
|
|
$
|
3,030,236
|
|
|
|
$
|
538,990
|
(5)
|
|
|
$
|
1,263,730
|
(7)
|
|
|
$
|
7,511,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman, President &
|
|
|
|
2009
|
|
|
|
|
860,000
|
|
|
|
|
|
|
|
|
|
312,547
|
|
|
|
|
275,559
|
|
|
|
|
1,720,000
|
|
|
|
|
516,552
|
|
|
|
|
138,847
|
|
|
|
|
3,823,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
2008
|
|
|
|
|
831,731
|
|
|
|
|
|
|
|
|
|
771,931
|
|
|
|
|
648,168
|
|
|
|
|
1,044,150
|
|
|
|
|
4,341,255
|
|
|
|
|
135,106
|
|
|
|
|
7,772,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert M. Patterson,
|
|
|
|
2010
|
|
|
|
|
424,231
|
|
|
|
|
|
|
|
|
|
191,760
|
|
|
|
|
167,700
|
|
|
|
|
509,077
|
|
|
|
|
|
|
|
|
|
71,168
|
(8)
|
|
|
|
1,363,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President and
|
|
|
|
2009
|
|
|
|
|
415,000
|
|
|
|
|
|
|
|
|
|
60,325
|
|
|
|
|
53,223
|
|
|
|
|
415,000
|
|
|
|
|
|
|
|
|
|
198,924
|
|
|
|
|
1,142,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
2008
|
|
|
|
|
255,385
|
|
|
|
|
|
|
|
|
|
307,200
|
|
|
|
|
160,800
|
|
|
|
|
107,568
|
|
|
|
|
|
|
|
|
|
85,109
|
|
|
|
|
916,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth M. Smith,
|
|
|
|
2010
|
|
|
|
|
340,923
|
|
|
|
|
|
|
|
|
|
107,865
|
|
|
|
|
94,380
|
|
|
|
|
504,501
|
|
|
|
|
130,531
|
(6)
|
|
|
|
70,308
|
(9)
|
|
|
|
1,248,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President,
|
|
|
|
2009
|
|
|
|
|
336,000
|
|
|
|
|
|
|
|
|
|
35,179
|
|
|
|
|
31,042
|
|
|
|
|
336,000
|
|
|
|
|
121,177
|
|
|
|
|
61,563
|
|
|
|
|
920,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Information and Chief Human Resources Officer
|
|
|
|
2008
|
|
|
|
|
333,308
|
|
|
|
|
|
|
|
|
|
84,798
|
|
|
|
|
70,512
|
|
|
|
|
210,289
|
|
|
|
|
156,297
|
|
|
|
|
69,065
|
|
|
|
|
924,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Kedrowski,
|
|
|
|
2010
|
|
|
|
|
328,769
|
|
|
|
|
|
|
|
|
|
107,865
|
|
|
|
|
94,380
|
|
|
|
|
484,735
|
|
|
|
|
|
|
|
|
|
221,966
|
(10)
|
|
|
|
1,237,715
|
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supply Chain and Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bernard Baert,
|
|
|
|
2010
|
|
|
|
|
398,507
|
|
|
|
|
|
|
|
|
|
107,865
|
|
|
|
|
94,380
|
|
|
|
|
566,927
|
|
|
|
|
|
|
|
|
|
59,377
|
(11)
|
|
|
|
1,227,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President,
|
|
|
|
2009
|
|
|
|
|
424,953
|
|
|
|
|
|
|
|
|
|
28,194
|
|
|
|
|
24,898
|
|
|
|
|
283,974
|
|
|
|
|
|
|
|
|
|
78,259
|
|
|
|
|
840,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President of Europe and
International(1)
|
|
|
|
2008
|
|
|
|
|
415,441
|
|
|
|
|
|
|
|
|
|
84,798
|
|
|
|
|
70,512
|
|
|
|
|
121,564
|
|
|
|
|
|
|
|
|
|
84,388
|
|
|
|
|
776,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Mr. Baerts compensation
is paid in Euros. The conversion rate used for purposes of
converting the Euros earned by Mr. Baert into dollars for
purposes of this table was 1.00 = $1.32525, which is the
conversion rate used in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010.
|
|
(2)
|
|
This column includes time-vested,
stock-settled RSUs granted in 2010 to the Named Executive
Officers under our 2008 Plan. The amounts reported represent the
grant date fair value of the awards computed in accordance with
Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 718,
Compensation Stock Compensation. For information
regarding the assumptions used in determining the fair value of
these awards, please refer to Note 15, Share-Based Compensation,
of our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010. For 2010,
these grants are described more fully in the narrative following
the 2010 Grants of Plan-Based Awards table and in the
Compensation Discussion and Analysis 2010
Executive Compensation Elements Long-Term
Incentive Awards Granted in 2010
Restricted Stock Units section of this proxy statement.
|
|
(3)
|
|
This column includes time-vested,
stock settled SARs granted in 2010 to the Named Executive
Officers under our 2008 Plan. The amounts reported represent the
grant date fair value of the awards computed in accordance with
FASB ASC Topic 718. For information regarding the assumptions
used in determining the fair value of these awards, please refer
to Note 15, Share-Based Compensation, of our Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2010. For 2010,
these grants are described more fully in the narrative following
the 2010 Grants of Plan-Based Awards table and in the
Compensation Discussion and Analysis 2010
Executive Compensation Elements Long-Term
Incentive Awards Granted in 2010
Stock-Settled SARs section of this proxy statement.
|
|
(4)
|
|
This column reflects amounts
earned by the Named Executive Officers under the Annual Plan and
the 2008 2010 Long Term Incentive Plan. The terms of
the Annual Plan are described more fully in the narrative
following the 2010 Grants of Plan-Based Awards table and in the
Compensation Discussion
|
35
|
|
|
|
|
and Analysis Elements
of Compensation Annual Incentive section of
this proxy statement. The terms of the 2008 2010
Long Term Incentive Plan Cash-Settled Performance Units are
described more fully in the Compensation Discussion and
Analysis 2010 Executive Compensation
Elements Long-Term Incentive Awards
Granted in Prior Years section of this proxy statement.
The amounts earned by the Named Executive Officers under each
plan are listed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Plan
|
|
|
Cash-Settled Performance Units
|
Name
|
|
|
($)
|
|
|
($)
|
S.D. Newlin
|
|
|
$
|
1,892,000
|
|
|
|
$
|
1,138,236
|
|
|
|
|
|
|
|
|
|
|
|
|
R.M. Patterson*
|
|
|
|
509,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K.M. Smith
|
|
|
|
375,015
|
|
|
|
|
129,486
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Kedrowski
|
|
|
|
361,646
|
|
|
|
|
123,089
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Baert
|
|
|
|
398,507
|
|
|
|
|
168,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Mr. Patterson was not
employed at the Company at the time the cash-settled performance
unit grant was made.
|
|
(5)
|
|
Mr. Newlin is entitled to a
supplemental retirement benefit under his employment agreement,
as described more fully in the Compensation Discussion and
Analysis Elements of Compensation
Retirement Benefits section of this proxy statement. The
amount represents the aggregate change in actuarial present
value (determined by subtracting the December 31, 2009
actuarial present value from the December 31, 2010
actuarial present value) of the annual benefit payment that will
be payable as a
15-year
certain and continuous life annuity beginning at age 58.6
and assumes that Mr. Newlin has a Qualifying
Separation from Service.
|
|
(6)
|
|
Mr. Smith participates in the
Qualified Pension Plan and the Benefit Restoration Plan that
existed prior to our formation in 2000 through the consolidation
of Geon and M.A. Hanna. The amount represents the aggregate
change in actuarial present value (determined by subtracting the
December 31, 2009 actuarial present value from the
December 31, 2010 actuarial present value) of
Mr. Smiths accumulated benefits under the Qualified
Pension Plan and the Benefit Restoration Plan.
|
|
(7)
|
|
Amount consists of a tax
gross-up on
the reimbursement for the loss on the sale of his home in the
amount of $426,371, company contributions under our Qualified
Savings Plan in the amount of $15,925, and company contributions
under our non-qualified retirement plan in the amount of
$151,775. Mr. Newlin also received perquisites in 2010,
reflected in the table, with the following incremental costs:
reimbursement of the loss on the sale of his home plus moving
expenses ($632,331), benefit allowance ($23,631), financial
planning and tax preparation expenses ($13,000), reimbursement
of guest travel ($316) and an executive physical ($381). In
2010, we purchased Mr. Newlins home for $1,562,500,
which was based on relocation guidelines and two independent
appraisals of his home. The amount disclosed in this column does
not include the costs we incurred in 2010 in connection with our
ownership of the home as the home is currently being marketed
for resale at a price above our purchase price. We do not
consider these additional costs to be compensation to
Mr. Newlin.
|
|
(8)
|
|
Amount consists of company
contributions under our Qualified Savings Plan in the amount of
$15,925 and company contributions under our non-qualified
retirement plan in the amount of $38,625. Mr. Patterson
also received perquisites in 2010, reflected in the table, with
the following incremental costs: benefit allowance ($6,923),
financial planning and tax preparation expenses ($7,565) and an
executive physical ($2,130).
|
|
(9)
|
|
Amount consists of company
contributions to our Qualified Savings Plan in the amount of
$15,925 and company contributions under our non-qualified
retirement plan in the amount of $28,075. Mr. Smith also
received perquisites in 2010, reflected in the table, with the
following incremental costs: benefit
|
36
|
|
|
|
|
allowance ($18,923), financial
planning and tax preparation expenses ($5,893), reimbursement of
guest travel ($386) and an executive physical ($1,106).
|
|
(10)
|
|
Amount consists of a tax
gross-up on
the reimbursement for moving expenses in the amount of $3,629,
company contributions to our Qualified Savings Plan in the
amount of $15,925, and company contributions under our
non-qualified retirement plan in the amount of $23,121.
Mr. Kedrowski also received perquisites in 2010, reflected
in the table, with the following incremental costs:
reimbursement for the loss on the sale of his home plus moving
expenses ($154,444), benefit allowance ($18,923), reimbursement
of guest travel ($424) and financial planning and tax
preparation expenses ($5,500).
|
|
(11)
|
|
Amount consists of company
contributions to a tax-efficient savings plan, generally
provided to all Luxembourg employees, in the amount of $45,673.
Mr. Baert also received perquisites in 2010, reflected in
the table, with the following incremental costs: company
provided automobile ($9,179), financial planning and tax
preparation expenses ($2,120) and meal vouchers ($2,405). These
amounts have been converted from Euros to dollars as set forth
in footnote 1 to the 2010 Summary Compensation Table.
|
37
2010
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan
Awards(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Stock
|
|
|
All Other Options
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards: Number of
|
|
|
Exercise or
|
|
|
Fair Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Securities
|
|
|
Base Price of
|
|
|
Stock and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
|
Grant
|
|
|
Threshold(3)
|
|
|
Target
|
|
|
Maximum
|
|
|
or
Units(4)
|
|
|
Options(5)
|
|
|
Awards(6)
|
|
|
Awards(7)
|
Name
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
S.D. Newlin
|
|
|
(1)
|
|
|
$
|
473,000
|
|
|
|
$
|
946,000
|
|
|
|
$
|
1,892,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
516,000
|
|
|
|
|
1,032,000
|
|
|
|
|
2,064,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
967,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
218,100
|
|
|
|
|
7.99
|
|
|
|
|
850,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.M. Patterson
|
|
|
(1)
|
|
|
|
127,269
|
|
|
|
|
254,539
|
|
|
|
|
509,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
99,600
|
|
|
|
|
199,200
|
|
|
|
|
398,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,000
|
|
|
|
|
7.99
|
|
|
|
|
167,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K.M. Smith
|
|
|
(1)
|
|
|
|
93,754
|
|
|
|
|
187,508
|
|
|
|
|
375,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
60,500
|
|
|
|
|
121,000
|
|
|
|
|
242,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,200
|
|
|
|
|
7.99
|
|
|
|
|
94,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Kedrowski
|
|
|
(1)
|
|
|
|
90,411
|
|
|
|
|
180,823
|
|
|
|
|
361,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
58,000
|
|
|
|
|
116,000
|
|
|
|
|
232,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,200
|
|
|
|
|
7.99
|
|
|
|
|
94,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Baert
|
|
|
(1)
|
|
|
|
99,627
|
|
|
|
|
199,254
|
|
|
|
|
398,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
74,000
|
|
|
|
|
148,000
|
|
|
|
|
296,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,200
|
|
|
|
|
7.99
|
|
|
|
|
94,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
There is no Grant Date for these
awards. This row relates to awards made under our cash-based
Annual Plan.
|
|
(2)
|
|
The first row of these columns for
each Named Executive Officer represents the annual cash
incentive opportunity for the Named Executive Officer under the
Annual Plan. The actual amount earned for 2010 under the Annual
Plan is included in the Non-Equity Incentive Plan
Compensation column of the 2010 Summary Compensation
Table. The second row of this column for each Named Executive
Officer represents the performance units awarded to each Named
Executive Officer under the 2008 Plan. Each performance unit is
equal in value to $1.00. These performance units were subject to
achievement of specified performance goals over the performance
period from January 1, 2010 to December 31, 2010 and
were ultimately earned at the maximum level. The performance
units will be paid in cash generally contingent upon the Named
Executive Officer remaining in continuous employment through the
payment date, which shall be in 2013 and shall occur no later
than March 15, 2013.
|
38
|
|
|
(3)
|
|
Threshold refers to the minimum
amount payable upon reaching the threshold level of performance.
If threshold performance is not attained, the participant will
receive $0 for this award.
|
|
(4)
|
|
The numbers in this column
represent stock-settled RSUs granted to the Named Executive
Officers under the 2008 Plan, which vest on the third
anniversary of the grant date.
|
|
(5)
|
|
The numbers in this column
represent stock-settled SARs granted to the Named Executive
Officers under the 2008 Plan, which awards become exercisable
one-third on each anniversary of the grant date.
|
|
(6)
|
|
The base price of a SAR is equal
to closing market price of a share of our common stock on the
grant date. This practice is in compliance with our 2008 Plan.
The award of stock-settled SARs that was granted on
February 17, 2010 to the Named Executive Officers was
priced using the grant date closing price of $7.99.
|
|
(7)
|
|
The amounts in this column
represent the grant date fair value of each equity-based award,
computed in accordance with FASB ASC Topic 718. For information
regarding the assumptions used in determining the fair value of
an award, please refer to Note 15, Share-Based
Compensation, of our Annual Report on Form
10-K for the
fiscal year ended December 31, 2010.
|
Set forth below is narrative disclosure relating to the 2010
Summary Compensation Table and the 2010 Grants of Plan-Based
Awards table.
Senior
Executive Annual Incentive Plan
Annual cash incentives were awarded for 2010 under our Annual
Plan and are based on achievement of performance goals relating
to company operating income and consolidated working capital as
a percentage of sales (for the corporate staff participants) and
business unit operating income and consolidated working capital
as a percentage of sales (for Mr. Baert). For a more
detailed discussion of our annual incentive plan, see
Compensation Discussion and Analysis 2010
Executive Compensation Elements Annual
Incentive.
Cash-Settled
Performance Units
Cash-settled performance units were granted in 2010 to all of
our Named Executive Officers under our 2008 Plan and are based
on achievement of the performance goal, working capital as a
percentage of sales, over a one-year period. These awards vest
and pay out on the third anniversary of the date of grant,
generally subject to continued employment. For a more detailed
discussion of the performance units granted in 2010, see
Compensation Discussion and Analysis 2010
Executive Compensation Elements Long-Term
Incentive Awards Granted in 2010
Cash-Settled Performance Units.
Stock-Settled
SARs
In 2010, the Committee granted stock-settled SARs to the Named
Executive Officers. These SARs have a term of seven years and
vest one-third per year over three years. For a more detailed
discussion of the stock-settled SARs granted in 2010, see
Compensation Discussion and Analysis 2010
Executive Compensation Elements Long-Term
Incentive Awards Granted in 2010
Stock-Settled SARs.
39
Restricted
Stock Units
In 2010, the Committee granted RSUs to the Named Executive
Officers. The RSUs vest 100% and are payable at the end of a
three-year period. For a more detailed discussion of the RSUs
granted in 2010, see Compensation Discussion and
Analysis 2010 Executive Compensation
Elements Long-Term Incentive Awards
Granted in 2010 Restricted Stock Units.
Employment
Agreements
We do not have employment agreements with any of our Named
Executive Officers except for Messrs. Newlin and Baert.
Mr. Newlins and Mr. Baerts employment
agreements are described in detail in the Compensation
Discussion and Analysis Employment Agreements with
Named Executive Officers and the Potential Payments
Upon Termination or
Change-in-Control
sections of this proxy statement.
40
OUTSTANDING
EQUITY AWARDS AT 2010 FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Awards: Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Market Value
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
of Shares or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
or Units of Stock
|
|
|
Units of Stock
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have Not
|
|
|
That Have Not
|
|
|
|
Exercisable(1)
|
|
|
Unexercisable
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested(2)
|
Name
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
S.D. Newlin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,700
|
(3)
|
|
|
$
|
1,432,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246,100
|
(4)
|
|
|
|
3,073,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,100
|
(5)
|
|
|
|
1,512,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.1850
|
|
|
|
|
2/20/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
308,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.5850
|
|
|
|
|
3/7/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,200
|
|
|
|
|
95,600
|
(6)
|
|
|
|
|
|
|
|
|
6.7650
|
|
|
|
|
3/5/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
284,067
|
(7)
|
|
|
|
1.4300
|
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
218,100
|
(8)
|
|
|
|
|
|
|
|
|
7.9900
|
|
|
|
|
2/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.M. Patterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(3)
|
|
|
|
499,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,500
|
(4)
|
|
|
|
593,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
(5)
|
|
|
|
299,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
20,000
|
(6)
|
|
|
|
|
|
|
|
|
7.7200
|
|
|
|
|
5/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,433
|
|
|
|
|
|
|
|
|
|
54,867
|
(7)
|
|
|
|
1.4300
|
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,000
|
(8)
|
|
|
|
|
|
|
|
|
7.9900
|
|
|
|
|
2/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K.M. Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,600
|
(3)
|
|
|
|
157,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,700
|
(4)
|
|
|
|
345,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
(5)
|
|
|
|
168,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.9400
|
|
|
|
|
1/4/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,800
|
|
|
|
|
10,400
|
(6)
|
|
|
|
|
|
|
|
|
6.7650
|
|
|
|
|
3/5/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
(7)
|
|
|
|
1.4300
|
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,200
|
(8)
|
|
|
|
|
|
|
|
|
7.9900
|
|
|
|
|
2/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.2200
|
|
|
|
|
3/25/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.0000
|
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Kedrowski
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,600
|
(3)
|
|
|
|
157,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,700
|
(4)
|
|
|
|
345,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
(5)
|
|
|
|
168,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.6750
|
|
|
|
|
9/9/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,800
|
|
|
|
|
10,400
|
(6)
|
|
|
|
|
|
|
|
|
6.7650
|
|
|
|
|
3/5/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
|
|
|
|
|
|
32,000
|
(7)
|
|
|
|
1.4300
|
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,200
|
(8)
|
|
|
|
|
|
|
|
|
7.9900
|
|
|
|
|
2/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B.Baert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,600
|
(3)
|
|
|
|
157,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,200
|
(4)
|
|
|
|
277,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
(5)
|
|
|
|
168,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,400
|
(6)
|
|
|
|
|
|
|
|
|
6.7650
|
|
|
|
|
3/5/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,667
|
(7)
|
|
|
|
1.4300
|
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,200
|
(8)
|
|
|
|
|
|
|
|
|
7.9900
|
|
|
|
|
<