Page 46 - Proxy Statement - 2020

Compensation Discussion and Analysis / 2019 Chairman, President and CEO Compensation

2019 Chairman, President and CEO Compensation

Base Salary. For 2019, Mr. Nye’s base salary was set at Perquisites. Mr. Nye received limited executive perquisites. We
$1,150,000 (effective March 1, 2019). provide company-leased cars to the NEOs for their use.
Additionally, we pay for the insurance, maintenance and fuel for
2019 Annual Incentive. Mr. Nye’s target annual incentive such vehicles. The value of personal mileage is charged to the
amount for 2019 was $1,484,167 (130% of salary received for NEO as imputed income. We make the company-owned aircraft
the year). His actual annual incentive for 2019 was $2,900,000, available to the CEO and other senior executives for business
or 195% of target. travel only. We do not provide other perquisites, such as country
club memberships, to the NEOs. The Committee reviews our
2019-2021 Long-Term Incentives. In 2019, Mr. Nye’s target LTI
policies and determines whether and to what extent perquisites
award was 400% of base salary. He was granted an LTI award of
should be modified or continued.
approximately $4.60 million, which was allocated 55%, or
$2.53 million, in PSUs and 45%, or $2.07 million, in performance- 2019 Target Pay Mix. We believe that most of the
based RSUs. RSUs will vest pro rata over three years if the compensation opportunities of our CEO should be variable and
performance measure is satisfied, while the vesting of PSUs will be the variable elements of the compensation package should tie to
based upon our results relative to the three-year performance goals the Company’s long-term success and the achievement of
that were established in the beginning of 2019. sustainable long-term total return to our shareholders. As shown
in the chart below, a significant portion of our CEO’s target
Benefit and Retirement Plans. Mr. Nye is eligible for benefit
compensation is variable and in the form of LTI, and more than
and retirement programs similar to other employees. None of
half of total target pay is in the form of equity incentives.
our executives received additional years of service credits or
other forms of formula enhancements under our benefit or
retirement plans. Our pension formula is based on years of
service and pension eligible compensation, which is a similar
formula offered by other companies with defined benefit plans.
Mr. Nye is not eligible for retiree health benefits.

CEO Target Opportunity Mix*

Elements of Fixed vs. Short-Term Variable vs.
Compensation Variable Long-Term Variable

• Base Salary 13% • Fixed 13% • Short-Term 38%
• Annual Incentive 25% • Variable 87% • Long-Term 62%
• Long-Term Incentive 62%

* We consider base salary and annual incentives as short-term pay and PSUs and RSUs as long-term pay. We do not include retirement or other
compensation components in the chart.

Determination of CEO Compensation
At each February Committee meeting, without the CEO present, the Committee reviews and evaluates CEO performance, and
determines achievement levels for the prior year. At this meeting, the Committee also discusses an evaluation of the CEO’s
performance, competitive compensation data, and salary and annual incentive pay recommendations with the independent members of
the Board. In addition, the Committee reviews and discusses an award of RSUs and the target PSU grant size for the CEO at that
meeting, which is also discussed with the independent members of the Board.

2019 Named Executive Officers’ Compensation – Our Compensation Strategy

Our executive compensation program is specifically designed to:
• Attract and retain top-caliber, knowledgeable and experienced senior executives.

• Motivate our executives to achieve superior results and build long-term value for shareholders.

42 2020 PROXY STATEMENT