Schedule 14A


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The above 2016 annual bonuses are reflected in the 2016 “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 31 of this proxy statement.

Long-Term Incentives

The Compensation Committee believes that long-term incentives, particularly equity-based awards, provide a strong alignment of the interests of shareholders and executives. Therefore, a significant portion of our executive officers’ total compensation is provided in the form of equity awards. Since the adoption of the 2010 Omnibus Stock and Incentive Plan (the “2010 Omnibus Plan”), our long-term incentive programs have concentrated on awards of performance-based share units, which are aimed at delivering rewards in return for our executives’ contributions to generating long-term shareholder returns through business-building efforts and successful strategic planning.

 

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Long-Term Incentive Arrangements for 2016

Overview. In 2016, the Company’s equity compensation to executive officers was governed by the 2016 Long-Term Incentive Program. The 2016 Long-Term Incentive Program, which was adopted at the start of the 2016 fiscal year, consists of two components of substantially equal value at the time of grant: (i) the LTPP that provides for awards of performance shares tied to successful achievement of predetermined ROIC goals over a two-year performance period, and (ii) MSU Grants which vest over a three-year performance period with the actual number of shares tied to TSR over the same three-year performance period. For the 2016 Long-Term Incentive Program, the award types, performance periods and metrics for each of the two plan components are as follows:

 



Each year the Compensation Committee approves equity grants to executive officers in the Long-Term Incentive Program. The grant date value of these grants for 2016 (to be earned based on future performance) was calculated as a function of each executive officer’s “LTPP Percentage” and “MSU Percentage” which represent the target opportunities, expressed as a percentage of the executive officer’s base salary. The LTPP Percentage and MSU Percentage for the executive officers were established by the Compensation Committee simultaneously with the establishment of the 2016 Long-Term Incentive Program. The LTPP Percentage and MSU Percentage were then used to derive a target award, expressed as a number of shares, that would be awardable depending on whether and to what extent the Company meets or exceeds targets for the relevant performance metrics for each of the applicable plan components.

Awards under the Long-Term Incentive Program are credited with dividend equivalent rights for any cash dividends paid on the number of shares covered by the Performance Shares or MSUs, as applicable, and the deferred amounts are settled in cash upon the vesting of the awards at the end of the performance period. No dividends are paid on unvested/unearned shares.

2016 LTPP. Under the 2016 LTPP, the executive officer is eligible to receive an award (a “2016 LTPP Award”) of up to 200% of a target number of shares that is calculated by dividing (i) the product of (y) the executive officer’s LTPP Percentage for the plan year multiplied by (z) his or her base salary at the time the LTPP target award is determined by (ii) the average closing price of the Company’s common stock during the last 30 calendar days of fiscal 2015 and the first 30 calendar days of fiscal 2016, which was $150.835. Actual awards based on these LTPP targets are determined at the end of the applicable performance period and are forfeited (with the exception of awards granted to Ms. Cochran) if, prior to that time, a participant is terminated or voluntarily resigns (other than as a result of retirement by an individual who meets the retirement-eligible conditions of 60 years of age and at least five years of service, for which such awards will be prorated for time served and based on actual performance determined at the end of the performance period).

 

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The performance metric for LTPP performance is ROIC, measured over a two-year performance period. For the 2016 LTPP, the Compensation Committee set a target of cumulative ROIC over fiscal years 2016 and 2017.

At the end of the performance period, the Compensation Committee determines final award amounts based on Company performance relative to these targets. Awards under the 2016 LTPP will be determined after the conclusion of the 2016 LTPP’s performance period covering the 2016 and 2017 fiscal years. The following table summarizes targets and maximum eligible awards under the 2016 LTPP for each of our Named Executive Officers:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NAMED EXECUTIVE OFFICER

  

LTPP

PERCENTAGE

 

 

BASE

SALARY

 

  

LTPP TARGET

VALUE

 

  

LTPP TARGET

SHARES

 

 

LTPP

MAX. AWARD

 

Sandra B. Cochran

  

 

185



 

$

1,025,000

  

  

$

1,896,250

  

  

 

12,571

  

 

 

25,142

  

Jill. Golder

  

 

50



 

$

475,000

  

  

$

237,500

  

  

 

415

(1) 

 

 

830

  

Lawrence E. Hyatt

  

 

100



 

$

535,600

  

  

$

535,600

  

  

 

1,638

(2) 

 

 

3,276

  

Nicholas V. Flanagan

  

 

50



 

$

445,000

  

  

$

222,500

  

  

 

1,475

  

 

 

2,950

  

Beverly K. Carmichael

  

 

32.5



 

$

345,000

  

  

$

112,125

  

  

 

743

  

 

 

1,486

  

Laura A. Daily

  

 

30.0



 

$

320,000

  

  

$

96,000

  

  

 

636

  

 

 

1,272

  

 

(1)

Ms. Golder’s appointment as an executive officer of the Company was effective April 25, 2016. As a result, her participation in the 2016 LTPP Grant was prorated for her service during fiscal 2016.

(2)

Mr. Hyatt retired and ceased to serve as an executive officer of the Company effective July 1, 2016. As a result, his participation in the 2016 LTPP Grant was prorated for his service period relative to the two-year performance period.
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