Stockholder Engagement

Ongoing engagement and dialogue with our stockholders is important to the Company. We have adopted a robust and active year-round engagement philosophy that includes outreach for various purposes, including soliciting feedback in advance of filing this Proxy Statement. Our outreach efforts, led by our Board with input from the Compensation and Management Development Committee, sought feedback on governance priorities, compensation programs, and environmental and social issues. In our most recent pre-proxy season engagement cycle:

We contacted

40

of our top stockholders

representing approximately

63%

of our outstanding common stock

We held approximately

10

meetings with stockholders

representing approximately

31%

of our outstanding common stock

We engaged with stockholders in the following ways:

Off Season Engagement

  • Engaged stockholders to understand their respective viewpoints
  • Educated stockholders around the Company's corporate strategy, business developments, and financial position
  • Engaged stockholders to understand any perception gaps between the Company's performance and stockholder interpretation of performance

Engagement Prior to Annual Meeting

  • Sought feedback on potential matters for stockholder consideration at the Annual Meeting
  • Discussed any areas of concern that stockholders voiced

Engagement Around and After Annual Meeting

  • Provide clarification on matters being voted on after Annual Meeting material is published
  • Seek feedback on areas of concern to inform the Board's future decisions

Our Response to Stockholder Feedback

The Compensation and Management Development Committee carefully considers feedback from our stockholders regarding our executive compensation practices, as well as other compensation and governance best practices. The Compensation and Management Development Committee implemented a series of changes to our executive compensation program in fiscal 2022 and fiscal 2023 and stockholders responded favorably. Stockholders indicated continued support for these changes during our annual outreach program. Our say on pay ("Say on Pay") vote results at the annual meetings of stockholders held in January 2023 and January 2024 illustrate this support, with 95% of votes cast in favor of Say on Pay at each meeting. The following table summarizes the feedback received from stockholders relating to executive compensation in recent years and our responses:

Feedback/What We HeardResponse/What We Did

Interest in increased focus on performance-based compensation

 

  • Beginning in fiscal 2022, our CEO received 75% of his long-term incentive program ("LTIP") award in the form of performance stock units ("PSUs"); the remaining 25% were in the form of restricted stock units ("RSUs") Beginning in fiscal 2023, other named executive officers ("NEOs") received 60% of their LTIP awards in the form of PSUs (an increase from 50% in fiscal 2022); the remaining 40% were in the form of RSUs (a decrease from 50% in fiscal 2022)
Support of the Company's interest in adding a relative total shareholder return ("rTSR") measure to the LTIP

Beginning in fiscal 2023:

  • We added PSUs with an rTSR measure for all NEOs CEO PSU awards (75% of his LTIP award) were allocated such that 50% were based on return on invested capital ("ROIC") in excess of the weighted average cost of capital ("WACC"), and 25% were based on rTSR Other NEO PSU awards (60% of their LTIP award) were allocated such that 40% were based on ROIC in excess of WACC, and 20% were based on rTSR
Interest in more descriptive disclosure of individual performance goals
  • Beginning in our proxy statement for our 2023 annual meeting, we included enhanced disclosure of individual performance goals in the short-term incentive program ("STIP") for all NEOs (see Key Achievements of our NEOs).

Corporate Governance Enhancements

Our Board regularly evaluates and enhances our corporate governance practices. Key actions since 2020 include:

  • Continued refreshment of our Board membership, the leadership of our standing committees, and the membership of our standing committees, including focused succession planning (2020 - 2024)
  • Amended the Company's Bylaws and Certificate of Incorporation to eliminate supermajority voting provisions (2021)
  • Amended the Company's Certificate of Incorporation to allow Bylaw amendment granting stockholders' right to call a special meeting (2021)
  • Amended our Code of Ethics and Business Conduct to highlight our commitment to: remaining vigilant to prevent money laundering; designing, sourcing, and producing safe quality products for our customers; and complying with all requirements for doing business with the government or on publicly funded projects (2023)
  • Amended and Restated our Incentive-Based Compensation Recoupment Policy to comply with recently adopted New York Stock Exchange ("NYSE") listing standards and Securities and Exchange Commission ("SEC") regulations governing compensation recovery policies (2023)
  • Amended and Restated our Certificate of Incorporation to provide for exculpation of certain officers of the Company, to the extent permitted by the Delaware General Corporation Law (2024)
  • Amended our Bylaws to address changes in SEC rules regarding universal proxy cards and changes in Delaware law (2024)
  • Amended the Company's Anti-Bribery and Anti-Corruption Policy and Whistleblower and Non-Retaliation Policy to reflect the various laws and regulations in the jurisdictions where we operate as we expand geographically (2024)

Governance Best Practices

The Board takes seriously its responsibility to represent the interests of stockholders and is committed to good corporate governance. To that end, the Board has adopted a number of policies and processes, including:

Board Independence & Oversight

  • Strong independent Lead Director
  • Robust director refreshment and succession planning process (5 new independent directors added in the last 5 years)
  • Annual, robust Board and committee self-evaluation process
  • Oversight of risk management by the Board
  • Oversight of ESG by the Governance Committee

Stockholder Rights

  • Majority voting for directors in uncontested elections
  • Annual election of all directors
  • Proxy access bylaw
  • No stockholder rights plan or "poison pill"

Equity Risk Mitigation

  • Executive and director stock ownership guidelines and retention requirements until ownership level achieved
  • Prohibitions on hedging and pledging of our common stock
  • Clawback policy (compliant with and exceeding NYSE listing standards) for incentive compensation paid to current and former covered officers

Executive Compensation Highlights

The Compensation and Management Development Committee reviews the Company’s executive compensation program to determine whether any changes are needed to align our compensation program with long-‍term stockholder value creation and strengthen our pay aligned to performance approach to compensation for our NEOs. In fiscal 2023, we added an rTSR metric to the PSUs for our NEOs and increased the weighting of our LTIP awards of the NEOs (excluding the CEO, whose LTIP awards were already 75% performance-based) more heavily toward performance. We believe that these changes strengthened our compensation processes for years to come and were aligned with feedback from our stockholders. As a result, no further compensation program design changes were made for the fiscal 2024 plan year.

Executive Compensation Strategy

Our compensation strategy is consistent with and supportive of our long-term goals and is founded on the following principles:

  • alignment of pay and performance;
  • alignment with the Company's business and operating strategy;
  • alignment with stockholder value creation;
  • consistency with peer group and market practice;
  • motivation and retention of key talent; and
  • flexibility to withstand uncertainty and difficulty in a challenging economic climate.

Compensation Program Design Changes

During our stockholder engagement in fiscal 2024, we shared an overview of our current executive compensation programs and discussed with interested stockholders program changes implemented during the past few years, such as the addition of an rTSR metric and increasing the weighting of our performance-based compensation for NEOs. After reviewing market trends and receiving shareholder support for our programs, we made no compensation program design changes for fiscal 2024. 
The following tables highlight several design changes we implemented in fiscal 2023 and fiscal 2022 in response to feedback received from our stockholders:

 

 

Compensation Best Practices

What We Do

  • We align pay and performance by providing a greater portion of compensation in incentive compensation
  • We conduct an annual compensation risk assessment to ensure designs of STI and LTI Programs discourage excessive risk taking
  • We conduct an annual review of peers, as well as benchmark pay practices and pay levels to ensure compatibility
  • We retain an independent compensation consultant to advise on director and executive compensation matters
  • We conduct regular outreach with stockholders to discuss and review our executive compensation program
  • We have a clawback policy that complies with and exceeds NYSE listing standards, and we include clawback rights in our equity award agreements
  • We limit perquisites
  • We have an annual Say on Pay vote

What We Don't Do

  • We do not have employment agreements with executive officers
  • We do not have "single-trigger" provisions for payout of benefits under change in control agreements
  • We do not have tax gross-ups in severance or change in control agreements
  • We do not allow new SERP participants
  • We do not allow executive loans
  • We do not permit hedging or pledging of stock by directors and executive officers
  • We do not pay dividends on equity awards until performance units are earned or time-based awards vest
  • We do not allow repricing or backdating of stock options