Schedule 14A


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Compensation Process Overview

Below we highlight certain executive compensation practices that we consider instrumental in driving Company performance while mitigating risk, as well as practices that we avoid because we do not believe they would serve the interest of the shareholders.

 

 

 

 

WHAT WE DO

  

WHAT WE DO NOT DO

✓       Maintain a pay mix that is majority performance-based.

  

×        Backdate stock options.

 

×        Reprice stock options without shareholder approval.

 

×        Permit hedging transactions or short sales by executives or directors.

 

×        Permit pledging or holding company stock in a margin account by executives or directors.

 

×        Maintain excise tax gross-up provisions for executives.

 

×        We do not have a “poison pill” take-over defense plan.

 

✓       Fully disclose the financial performance drivers used in our incentives, in numeric terms.

  

✓       Use different performance metrics in the annual incentive and LTI plan, to avoid heavy reliance on one definition of success (see “Components of Compensation” section).

  

✓       Maintain stock ownership and holding guidelines for executive officers.

  

✓       Require double trigger vesting for cash severance payments in the executive severance policy.

  

✓       Retain an independent compensation consultant engaged by, and reporting directly to, the Compensation Committee.

  

✓       Hold Compensation Committee executive sessions without management present.

  

✓       Maintain an incentive recoupment, or “claw back” policy.

  

✓       Allow stockholders the right to call special meetings via majority voting.

  

✓       Beginning in 2017, the Company intends to transition from a June equity award to a first quarter award and measure future performance awards on a 36-month performance period.

  

 

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Summary of 2016 Executive Compensation Program

The following table provides an overview of TreeHouse compensation programs granted in 2016 and program objectives for our NEOs.

 

 

 

 

 

 

Program

  

Descriptions

  

Program Objectives

Annual Cash Compensation

  

 

Base Salary

  

Fixed cash compensation based on size and scope of individual’s role and level of performance

  

• Retain & attract talented executives

• Motivate individual contribution

Annual Cash Incentive Plan

  

Target annual incentive awards are expressed as a percent of base salary, are payable in cash, with payouts that range from 0%-200% of target depending on Company performance

  

• Drive performance on operating net income & cash flow

• Encourage collaboration across teams and business units

Long Term Incentive Compensation

  

 

Stock Options

  

Equity awards that vest annually in three approximately equal tranches, beginning one year from grant date; represented 37.5% of grant value for NEOs in 2016

  

• Drive long-term share price appreciation

• Increase stock ownership & alignment with stockholders

Performance Units

  

Performance-based, overlapping 21/2 year performance cycle, running from 7/1/16 - 12/31/18; represented 37.5% of grant value for NEOs in 2016

  

• Retain talented executives

• Drive long-term performance on operating net income

Restricted Stock Units

  

Time-based equity awards that vest annually in three approximately equal tranches, beginning one year from grant date; represented 25% of grant value for NEOs in 2016

  

• Retain talented executives

• Increase stock ownership & alignment with stockholders

Total Compensation Pay Mix and Pay-for-Performance

We believe our key stakeholders, including stockholders and employees, are best served by having our executives focused and rewarded based on the long-term results of the Company. In addition, it is important that a significant portion of NEO pay be tied to incentive compensation to reinforce our pay-for-performance compensation philosophy.

In 2016, at target, NEOs received 44%-70% of their total compensation opportunity awarded through LTI awards. In addition, NEOs received 17%-25% of their total compensation opportunity in the form of the annual incentive award. In total, approximately 79% of NEOs’ total direct compensation opportunity, on average, is delivered in the form of incentive compensation, which supports our pay-for-performance compensation philosophy.

 

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Total Compensation Pay Mix of NEOs in 2016 (Opportunity at Target)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

% Long-Term

 

Executives

  

% Base Salary

 

 

% Annual Incentive

 

 

Incentive

 

Sam K. Reed

  

 

13



 

 

17



 

 

70



Matthew J. Foulston

  

 

23



 

 

21



 

 

56



Dennis F. Riordan

  

 

25



 

 

25



 

 

50



Thomas E. O’Neill

  

 

26



 

 

23



 

 

51



Rachel R. Bishop

  

 

32



 

 

24



 

 

44



Erik T. Kahler

  

 

31



 

 

24



 

 

45



Christopher D. Sliva

  

 

24



 

 

24



 

 

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