About the Annual Meeting (continued)
What is the difference between a “stockholder of record” and a stockholder who holds stock “in street name”?
If you hold your shares directly in the form of stock certificates or in book-entry form with our transfer agent, Computershare, then you are a “stockholder of record.” If your shares are registered at Computershare in the name of a broker, bank, trustee, nominee or other similar holder of record, your shares are held in “street name.”
Who can attend the meeting?
The 2024 Annual Meeting is open to all Cabot stockholders entitled to vote at the meeting and their legal proxies by following the instructions below under the heading “How can I attend the 2024 Annual Meeting?” You need not attend the 2024 Annual Meeting to vote.
How can I attend the 2024 Annual Meeting?
The 2024 Annual Meeting will be held in a virtual meeting format via live webcast. There will be no in-person meeting.
Visit meetnow.global/MKQL6CH to attend the meeting. To attend the meeting, stockholders of record as of January 16, 2024 will not need to register in advance but will need the control number included on their Notice of Internet Availability of Proxy Materials or proxy card. Stockholders whose shares are held in “street name” may attend the meeting by registering and obtaining a control number in advance using the instructions below under the heading “Do I need to register to attend the 2024 Annual Meeting?” The control number will be required to attend the meeting.
The meeting webcast will begin promptly at 4:00 p.m., Eastern Time. We encourage you to access the meeting prior to the start time. You should allow ample time for the check-in procedures.
We are committed to ensuring that stockholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting. You will be able to attend the meeting online at meetnow.global/MKQL6CH, vote your shares electronically by clicking on the Vote tab and submit questions during the meeting by clicking on the Q&A tab. We will try to answer as many questions as time permits that comply with the meeting rules of conduct. However, we reserve the right to edit inappropriate language or to exclude questions that are not pertinent to meeting matters or that are otherwise inappropriate. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition.
Do I need to register to attend the 2024 Annual Meeting?
If you were a stockholder of record on January 16, 2024, you do not need to register in advance to attend the 2024 Annual Meeting. Please follow the instructions on the Notice of Internet Availability of Proxy Materials or the proxy card that you received in order to attend.
If you hold your shares in “street name,” you must register and obtain a control number in advance to attend, vote and ask questions at the virtual meeting. To register to attend the meeting you will need to obtain a legal proxy from your bank, broker, or other nominee. Follow the instructions provided to you by your bank, broker, or other nominee or contact them to request a legal proxy form. Once you have received a legal proxy from them, you must submit the form of legal proxy provided by your bank, broker or other nominee reflecting the number of shares you hold along with your name and email address to Computershare, as described below. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on March 4, 2024. After Computershare receives your legal proxy, you will receive a confirmation email from Computershare of your registration and control number.
Requests for registration may be directed to Computershare as follows:
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1. |
by email – send an email with your legal proxy form attached to legalproxy@computershare.com, labeled with the subject line “Legal Proxy.” |
2 CABOT CORPORATION
About the Annual Meeting (continued)
|
2. |
by mail – send your legal proxy form, labeled as “Legal Proxy,” to Computershare at the following address: |
Computershare
Cabot Corporation Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Why did I receive a “Notice of Internet Availability of Proxy Materials” but no proxy materials?
We are distributing our proxy materials to stockholders via the Internet under the “Notice and Access” approach permitted by rules of the Securities and Exchange Commission (“SEC”). This approach benefits the environment, while providing a timely and convenient method of accessing the materials and voting. On or about January 26, 2024, we will begin mailing a “Notice of Internet Availability of Proxy Materials” to stockholders, which includes instructions on how to access our proxy statement and our 2023 Annual Report and how to vote your shares. The Notice of Internet Availability of Proxy Materials also contains instructions on how to receive a paper copy of the proxy materials and our 2023 Annual Report, if you prefer.
How many votes must be present to hold the meeting?
Your shares are counted as present at the 2024 Annual Meeting if you attend the meeting or if you properly return a proxy by Internet, telephone, or mail. In order for us to hold our meeting, holders of a majority of our outstanding shares of common stock as of January 16, 2024 must be present or represented by proxy at the meeting. This majority is referred to as a quorum. Shares present virtually during the 2024 Annual Meeting will be considered shares of common stock present at the 2024 Annual Meeting. If you are a stockholder of record, your shares are counted as present at the 2024 Annual Meeting if you properly return a proxy by Internet, telephone, or mail or if you attend the meeting virtually. If you hold your shares in “street name,” you must follow the instructions of your bank or broker in order to direct them how to vote the shares held in your account or obtain a legal proxy from them and send it to Computershare in accordance with the instructions under the previous heading, “Do I need to register to attend the 2024 Annual Meeting?” to vote online at the meeting. Proxy cards or broker voting instruction forms that reflect abstentions and broker non-votes will be counted as shares present to determine whether a quorum exists to hold the 2024 Annual Meeting.
What is a broker non-vote?
Under the rules that govern brokers who hold shares in “street name” for their clients who are the beneficial owners of the shares, brokers normally have discretion to vote such shares on routine matters, such as ratifications of independent registered public accounting firms, but not on non-routine matters. Broker non-votes generally occur when the beneficial owner of shares held by a broker does not give the broker voting instructions on a non-routine matter for which the broker lacks discretionary authority to vote the shares. We expect proposals 1, 2 and 3 will be considered non-routine matters.
Therefore, if your shares are held in “street name” and you do not provide instructions as to how your shares are to be voted on proposals 1, 2 and 3, your broker will not be able to vote your shares on these proposals. We therefore urge you to provide instructions to your broker so that your votes may be counted on these important matters.
How are votes counted? How many votes are needed to approve each of the proposals?
For each of proposals 1, 2, 3, and 4, you may vote “FOR”, “AGAINST”, or “ABSTAIN”.
• |
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Proposal 1 — Election of Directors. Pursuant to our bylaws, a nominee will be elected to the Board of Directors if the votes properly cast “for” his or her election exceed the votes properly cast “against” such nominee’s election. Broker non-votes and abstentions will have no effect on the results of this vote. |
• |
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Proposal 2 — Say-on-Pay. Because proposal 2 is an advisory vote, there is no minimum vote requirement that constitutes approval of this proposal. |
CABOT CORPORATION 3
About the Annual Meeting (continued)
Your vote will influence how Vanguard votes those shares for which no instructions are received from other plan participants as those shares will be voted in the same proportion as shares for which instructions are received. If you hold shares in the plan and do not vote, Vanguard will vote your shares (along with all other shares in the plan for which instructions are not provided) in the same proportion as those shares for which instructions are received from other participants in the plan.
In order for your instructions to be followed, you must provide instructions for the shares you hold through the Cabot 401(k) plan by returning your completed and signed proxy card so that it is received by the Company’s transfer agent by March 4, 2024 or by voting by telephone or over the Internet by 9:00 a.m., Eastern Time, on March 5, 2024.
Can I change or revoke my vote?
Yes. You can change or revoke your vote by (1) re-voting by telephone or over the Internet as instructed above (only your latest telephone or Internet vote will be counted), (2) signing and dating a new proxy card or voting instruction form and submitting it as instructed above (only your latest proxy card or voting instruction form will be counted), or (3) attending the meeting and voting online, if you are a stockholder of record or hold your shares in “street name” and have obtained a legal proxy from your bank, broker or other nominee. If your shares are registered in your name, you may also revoke your vote by delivering timely notice to the Secretary, Cabot Corporation, Two Seaport Lane, Suite 1400, Boston, Massachusetts 02210. Attending the meeting will not in and of itself revoke a previously submitted proxy unless you specifically request it. If you hold shares through a bank or broker, you must follow the instructions on your voting instruction form to revoke or change any prior voting instructions.
Who counts the votes?
We have hired Computershare Trust Company, N.A., our transfer agent, to count the votes represented by proxies cast by ballot, telephone, and the Internet. A representative of Computershare, Cabot’s Secretary or Cabot’s Assistant Secretary will act as Inspector of Election.
What if I return my proxy card but don’t vote for some of the matters listed?
If you return a signed proxy card without indicating your vote, your shares will be voted in line with the recommendation of the Board of Directors for each of the proposals for which you did not indicate a vote.
Can other matters be decided at the 2024 Annual Meeting?
We are not aware of any other matters that will be considered at the 2024 Annual Meeting. If any other matters properly arise that require a vote, the named proxies will vote in accordance with their best judgment.
What is “householding” and how does it affect me as a stockholder?
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements. This means that only one copy of this proxy statement may have been sent to multiple stockholders in the same household. We will promptly deliver a separate copy of this proxy statement to any stockholder upon request to: Secretary, Cabot Corporation, Two Seaport Lane, Suite 1400, Boston, Massachusetts 02210. Any stockholder who wants to receive a separate copy of this proxy statement, or of our proxy statements or annual reports in the future, or any stockholder who is receiving multiple copies and would like to receive only one copy per household, should contact the stockholder’s bank, broker, or other nominee record holder, or the stockholder may contact us at the address and phone number above.
Important Notice Regarding the Availability of Proxy Materials for the 2024 Annual Meeting
This proxy statement and our 2023 Annual Report on Form 10-K are available at the following Internet address: http://www.edocumentview.com/CBT.
CABOT CORPORATION 5
Board Leadership, Governance and Composition, and Risk Management (continued)
able materials or materials recovered from end-of-life tires and/or using processes that result in reduced greenhouse gas emissions.
Information on our sustainability goals, our climate scenario risks and opportunities matrix, our EVOLVE® Sustainable Solutions technology platform, and the various ESG-related awards we have received is available on our website at www.cabotcorp.com/sustainability, which information is not part of, or incorporated by reference into, this proxy statement.
In addition, to reinforce the Company’s commitment to developing a more inclusive and diverse organization, the Compensation Committee recently oversaw management’s development of diversity, equity, and inclusion (“DE&I”) objectives and metrics for the portion of the short-term incentive compensation awards payable on the basis of participant individual performance.
Assessment of Risk in Incentive Compensation Program
Our Compensation Discussion and Analysis (“CD&A”) section of this proxy statement describes our compensation policies, programs and practices for our named executive officers. The corporate goal-setting, assessment and compensation decision-making processes described in our CD&A apply to all participants in our corporate short- and long-term incentive programs.
Participants in our long-term incentive program receive awards consisting of time-based restricted stock units and performance-based restricted stock units and, in the case of members of the Management Executive Committee and a limited number of other participants, stock options. In addition to our corporate short- and long-term incentive programs, we also maintain a cash incentive plan for certain functional and business roles and our manufacturing facilities offer an annual cash incentive plan.
The Compensation Committee directed management, working with the Committee’s independent consultant, Meridian Compensation Partners, to provide an evaluation of the design of these incentive plans to assess whether any portion of our incentive compensation programs encourages excessive risk taking. That assessment was presented to and reviewed by the Compensation Committee. Among the program features evaluated were the types of compensation offered, the types and mix of performance metrics, the alignment between performance goals, payout curves and the Company’s business strategy, and the overall mix of incentive awards. The Company’s compensation programs are designed with features intended to mitigate risk without diminishing the incentive nature of the program. Specific features of the programs intended to mitigate risk include, as applicable, the following: caps limiting the amount that can be paid under the corporate short- and long-term incentive programs and all of the non-corporate cash incentive programs; a balanced mix of annual and longer-term incentive opportunities; a mix of cash and equity incentives; multiple performance metrics; management processes to oversee risk associated with each of our incentive programs; stock ownership guidelines for members of the Management Executive Committee; company compensation recoupment policies; and significant controls for important business decisions. In our CD&A we describe in more detail the features of our executive compensation programs that are designed to mitigate risk, including the oversight provided by the Compensation Committee, which reviews and approves the design, goals, and payouts under our corporate short- and long-term incentive programs and each executive officer’s compensation. Based on our assessment, we believe our compensation policies, programs and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
12 CABOT CORPORATION
Board Leadership, Governance and Composition, and Risk Management (continued)
Corporate Governance Guidelines
Our Board of Directors has adopted Corporate Governance Guidelines that address director qualifications (which include the Board’s policy on director overboarding) and independence, Board Committees, director compensation, Board performance evaluations, Board and Committee meetings, access to senior management, and Chief Executive Officer performance evaluation and succession planning, among other matters. Many of the Board’s practices and policies set out in these Guidelines are described throughout this discussion of Board Leadership, Governance and Composition and Risk Management. The Corporate Governance Guidelines are posted on our website (www.cabotcorp.com) under the heading “Company — About Cabot – Governance – Resources.”
How We Assess Director Independence
The Board’s Guidelines. Under our Corporate Governance Guidelines, it is the Board’s policy that at least the majority of the Board’s members must be independent. The Governance Committee annually reviews the independence of all directors and reports its findings to the full Board. All of our current directors are “independent” under the Board’s director independence standards, other than Mr. Keohane, our President and CEO. For a director to be considered independent, the Board must determine that he or she does not have any material relationship with Cabot. The Board’s guidelines for director independence are consistent with the independence requirements in the New York Stock Exchange’s listing standards. The Board evaluates all relevant facts and circumstances in making an independence determination. In assessing director independence, the Board considers all known relationships, transactions and arrangements among directors, their family members, and Cabot. The Board concluded that none of the non-management directors who served as directors during the 2023 fiscal year had a material relationship with Cabot.
How We Evaluate Our Board and Assess Director Recommendations
Each year, the Governance Committee leads our Board’s annual evaluation process. The process focuses on the effectiveness of the Board as a whole, prioritizing issues, and identifying specific matters for future discussion. For 2023, our General Counsel solicited feedback from each director based on a series of questions covering Board and Committee membership, operations, and responsibilities, as well as open-ended questions so that each director had leeway to provide feedback on the issues he or she believed to be the most pertinent. In addition, our Non-Executive Chair conducted one-on-one discussions with each director, during which feedback on individual director performance from other directors was sought. The key themes, observations, and suggestions with respect to the Board’s performance as a whole were summarized and discussed with the full Board. Based on these discussions, opportunities to further enhance the Board’s effectiveness have been and are being implemented.
Board Refreshment. A number of changes have occurred in the Board of Directors over the past several years as part of our continuing efforts to ensure that our Board has the right skills and tenures to best oversee management and the execution of our strategy and the associated risks. Two new directors have joined the Board within the last two years and approximately 40% of our directors have joined within the last five years. Our Board does not have a mandatory retirement policy because the Board is of the view that a mix of tenures that takes into consideration appropriate levels of continuity, institutional memory and fresh perspectives is critical in achieving and maintaining a high-performing board. The Board will continue to proactively manage its composition and make-up to ensure it has the appropriate mix of tenures, diversity, and the requisite skills to address the Company’s current and future needs.
Candidate Recommendations. We identify candidates for election to the Board of Directors through the business networks of the directors and management and from recommendations made by third-party search firms upon the request of the Governance Committee. In fiscal 2023, the Governance Committee retained a search firm to help identify potential candidates with specific skills and professional experience identified by the Committee as important as it considers Board succession planning, as well as potential candidates whose membership on our Board would continue to enhance the Board’s gender and ethnic diversity. Dr. Williams was initially identified as a candidate for election to the Board by a third-party search firm, and upon the recommendation of the Governance Committee, the Board elected Dr. Williams as a director effective September 2023. In evaluating Dr. Williams’s candidacy, the Board considered her extensive
CABOT CORPORATION 17
Director Compensation
Annual compensation for our non-employee directors is comprised of cash compensation and a grant of Cabot common stock. The Governance Committee is responsible for reviewing the form and amount of compensation paid to our non-employee directors and recommends changes to our Board of Directors as appropriate. In November 2023, the Governance Committee, with the assistance of Meridian, a national executive compensation firm, evaluated the competitiveness of the Company’s director compensation program, which included a review of director compensation data from the same peer group of companies our Compensation Committee uses for assessing its executive compensation decisions. Based on this evaluation and upon the recommendation of the Governance Committee, our Board of Directors approved changes to our non-employee director compensation program as follows: effective January 1, 2024, we (i) increased the annual equity retainer from $135,000 to $155,000; and (ii) increased the annual retainer paid to the Chair of the Compensation Committee from $15,000 to $20,000. Directors who are Cabot employees do not receive compensation for their services as directors.
Cash Compensation
With the changes described above, effective January 1, 2024, annual cash compensation for our non-employee directors consists of the following components:
• |
|
$20,000 for serving as Chair of the Audit Committee |
• |
|
$20,000 for serving as Chair of the Compensation Committee ($15,000 for fiscal 2023 service) |
• |
|
$15,000 for serving as Chair of the SHE&S Committee |
• |
|
$15,000 for serving as Chair of the Governance & Nominating Committee |
• |
|
$120,000 for serving as Non-Executive Chair of the Board of Directors |
Cash compensation is paid quarterly and, when changes occur in Board or Committee membership during a quarter, the compensation is pro-rated.
Stock Compensation
Under the Cabot Corporation 2015 Directors’ Stock Compensation Plan (the “Directors’ Stock Plan”), each non-employee director is eligible to receive each calendar year shares of Cabot common stock as part of his or her compensation for services to be performed in that year. For calendar year 2023, each non-employee director who was serving as a director at the time the awards were granted in January received an award of shares having a grant date value as close as possible to $135,000 (1,854 shares). The closing price of our common stock on January 12, 2023, the date such shares were granted, was $72.81. Upon her election to the Board, effective September 13, 2023, Dr. Williams received an award of shares having a grant date value as close as possible to $45,000 (655 shares) as compensation for her services as a non-employee director to be performed in calendar year 2023. The closing price of our common stock on September 13, 2023 was $68.75. For calendar year 2024, each non-employee director received an award of shares having a grant date value as close as possible to $155,000 (2,035 shares).
As of January 16, 2024, there were 151,134 shares available for issuance under the Directors’ Stock Plan. If Proposal 3 is approved by our stockholders, we will no longer make awards under the Directors’ Stock Plan and instead will make awards under the Cabot Corporation 2024 Non-Employee Director Plan.
We believe that it is desirable for our directors to have an equity interest in Cabot and we encourage all directors to own a reasonable amount of Cabot stock to align director and stockholder interests and to enhance a director’s long-term perspective. Accordingly, our Corporate Governance Guidelines require non-employee directors to have an equity ownership in Cabot in an amount equal to five times the annual cash retainer paid for service as a director. It is expected that this ownership level will generally be achieved within a five-year period beginning when a director is first elected to the Board. For purposes of determining a director’s compliance with this ownership requirement, any deferred shares
28 CABOT CORPORATION
Executive Compensation (continued)
Company’s executive compensation programs have been effective in implementing the Company’s stated compensation philosophy and objectives, and directly aligning compensation paid or earned with Company performance and the performance of our stock. Therefore, the Committee did not make any changes in the structure of these programs or in response to this vote.
The Compensation Committee recognizes that executive pay practices and corporate governance principles continue to evolve. Accordingly, the Compensation Committee will continue to monitor executive compensation practices and make adjustments as necessary to ensure that our executive compensation programs continue to support our corporate goals and objectives, appropriately incentivize management and reflect good corporate governance principles.
In addition to voting on our executive compensation programs, shareholders may provide feedback on the executive compensation programs directly to the Compensation Committee or the Board. You may contact the Board of Directors through our website at “Company — About Cabot — Governance — Contact the Board of Directors”.
Compensation Philosophy, Objectives and Process
Continuing to position Cabot for future success requires the talent to support our business and strategy. Our executive compensation programs are designed to provide a competitive and internally equitable compensation and benefits package that incentivizes and rewards individual and Company performance and reflects job complexity and the strategic value of the individual’s position while also promoting long-term retention. We seek to accomplish these goals in a way that is aligned with the long-term interests of our stockholders.
To achieve these goals, our executive compensation programs adhere to these principles:
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Offer a total compensation opportunity and a benefits package that are competitive in our industry; |
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Reward executives based on our business performance by closely aligning a majority portion of their compensation with the performance of the Company on both a short- and long-term basis; |
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Set challenging performance goals that support the Company’s short- and long-term financial goals; |
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Motivate individual performance by rewarding the specific performance and achievements of individual executives and their demonstrated leadership; and |
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Align the interests of our executives and our stockholders through performance-based compensation, equity grants and stock ownership guidelines. |
Our Compensation Setting Process
The Compensation Committee
As discussed under “Board Leadership, Governance and Composition, and Risk Management — How Our Board Operates — Compensation Committee”, on page 15, the Compensation Committee is responsible for all compensation decisions related to members of the Company’s Management Executive Committee, which includes all our named executive officers.
The annual compensation planning process for the preceding fiscal year concludes at the Committee’s meeting in November, when the Committee evaluates the Company’s performance against the corporate performance goals set for the just-concluded fiscal year and also evaluates each executive officer’s individual performance and, on this basis, determines the amounts payable or earned, as applicable, in the fiscal year under our STI and LTI programs. Each November, the Compensation Committee also (i) determines any adjustments to base salaries, with any adjustment typically effective the following January, (ii) sets corporate performance metrics applicable to our STI and LTI programs for the current fiscal year, (iii) grants LTI awards, and (iv) establishes performance goals and maximum payout levels under our STI and LTI programs for awards granted in the current fiscal year, in each case, for each named executive officer.
A description of the Compensation Committee’s roles and responsibilities is set forth in its written charter adopted by the Board of Directors, which can be found at www.cabotcorp.com under “Company — About Cabot — Governance — Resources.”
38 CABOT CORPORATION
Executive Compensation (continued)
Our Performance-based Compensation Philosophy
How Did our Fiscal 2023 STI Program Operate?
We provide annual STI awards to drive the achievement of key short-term business results and to recognize individuals based on their contributions to those results and Cabot’s overall performance. Each named executive officer has an annual target incentive opportunity under our STI program, which is expressed as a percentage of his or her base salary, as summarized below:
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Name |
|
FY23 STI Target |
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FY23 STI Target Amount |
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Sean D. Keohane |
|
|
120 |
% |
|
$ |
1,320,000 |
|
Erica McLaughlin |
|
|
80 |
% |
|
$ |
462,888 |
|
Karen A. Kalita |
|
|
70 |
% |
|
$ |
355,749 |
|
Hobart C. Kalkstein |
|
|
70 |
% |
|
$ |
388,704 |
|
Jeff Zhu |
|
|
70 |
% |
|
$ |
388,571 |
|
The actual amounts payable under the STI program range from 0% to 200% of the target award opportunity, with 70% of each award based on the achievement of pre-established corporate financial goals and the remaining 30% of each award based on individual performance and achievements. The Committee established threshold, target, and maximum performance level goals for each financial metric under the STI program: adjusted EBIT, NWC days, and DFCF, with payout for performance between performance levels determined on a straight-line basis. For NWC days, the target levels utilized a narrow “dead band” of days. For DFCF, the target levels utilized a cash flow range. This approach prevents small variations around demonstrated performance levels on these two metrics from being rewarded or penalized. Under our STI program, the Committee retains the discretion, after determining the amount that would otherwise be payable under an award for a performance period, to adjust the actual payment, if any, to be made under such award. Consistent with prior years, the Committee did not exercise such discretion with respect to fiscal 2023 awards.
As it relates to the 30% of the STI award that is based on individual performance and achievements, at the beginning of each fiscal year, the non-Executive Chair, with input from the other independent directors, develops the individual performance goals for our CEO, which are then approved by the Committee. Each of our other executive officers develops with the CEO his or her individual performance goals for the year. In assessing each executive officer’s individual performance, the Committee considers the officer’s personal achievements, including his or her achievement against these pre-established individual performance goals, as well as individual contributions to the management team and to the Company, and leadership and management of the executive officer’s business, region, or function, as applicable. To reinforce the Company’s commitment to integrate sustainability throughout Cabot and develop a more inclusive and diverse organization, for the 2023 STI program, management developed DE&I objectives for the portion of STI awards that is based on individual performance and achievements. These objectives were to: (i) demonstrate improvement in the percent of job searches in which candidates from underrepresented populations are interviewed; (ii) ensure strong pay equity is maintained with action plans to address any pay inequity identified through the Company’s global compensation review process; and (iii) require all managers to attend inclusive leadership training. In assessing each named executive officer’s individual performance when determining amounts payable under STI awards related to these objectives, achievement against these goals by the Company as a whole with respect to Mr. Keohane, and with respect to the business or function each other named executive officer manages, was considered.
The Committee does not assign specific numerical weightings or ratings to the individual performance goals, including with respect to the DE&I objectives, and the performance of each officer is evaluated as a whole. Furthermore, there are no formal threshold levels of achievement applicable to the individual performance component of our STI program. Ultimately, the determination of the payout of the portion of the STI awards based on individual performance is based on the judgment of the Committee (with respect to our CEO) and our CEO and the Committee (with respect to our CEO’s direct reports), in each case, after reviewing all relevant factors, with the final determination made by the Committee.
42 CABOT CORPORATION
Executive Compensation (continued)
Based on these mitigating factors, the Committee agreed with the study’s findings that our compensation programs do not pose inappropriate or unacceptable risk to the Company, and that any risks are within our ability to effectively monitor and manage and are not reasonably likely to have a material adverse effect on the Company.
Share Ownership Guidelines
To further align the interests of our executives and our stockholders, we maintain share ownership guidelines for members of our Management Executive Committee. Under these guidelines, we expect our CEO to own equity in the Company in an amount equal to five times his or her annual base salary, and each other officer who reports directly to the CEO to own equity in an amount equal to three times his or her annual base salary. Each executive has five years from the date he or she becomes subject to the share ownership guidelines to meet his or her target. The Committee reviews compliance with these guidelines annually. At the time of this filing, all of the members of the Management Executive Committee who have been subject to these guidelines for five years or longer had satisfied such share ownership guidelines.
Recoupment of Compensation
In September 2023, the Company adopted a policy that requires Cabot to recover from members of its Management Executive Committee (which includes our named executive officers) incentive compensation (such as certain portions of STI and LTI compensation) that would not have been earned based on specified accounting restatements (the “Dodd-Frank policy”). This policy is effective for compensation received from and after October 2, 2023, and is consistent with the requirements of the SEC’s final compensation clawback rules under the Dodd-Frank Act and the NYSE listing standards. At the same time, the Company amended its existing recoupment (clawback) policy that applies to performance-based compensation (such as STI and LTI compensation) paid to participants in our LTI program (which includes our named executive officers). Under this policy, as amended, the Company has the right to recoup (without duplication), in the discretion of the Compensation Committee, erroneously received incentive compensation in the event of an accounting restatement, and certain compensation in the event a participant’s employment with Cabot is terminated for “Cause”, or under circumstances that in the Company’s discretion would have constituted grounds for such participant’s employment to have been terminated for “Cause”.
Other Information
Retirement and Other Benefit Programs
Except for Mr. Zhu, our named executive officers participate in the full range of benefit programs and are covered by the same retirement plans on the same terms as are generally provided to our full-time U.S. salaried employees, are eligible to participate in and/or receive benefits under our Deferred Compensation Plan and our Death Benefit Protection Plan, and participate in our Senior Management Severance Protection Plan. These plans are described in the footnotes and text that accompany the compensation tables that follow this CD&A.
Mr. Zhu is a participant in our Senior Management Severance Protection Plan, but as a China-based employee, does not participate in the other retirement and benefit programs described above. Instead, Mr. Zhu participates in the China Supplemental Pension Plan, which is provided to full-time Cabot employees in China, and participates in insurance and other benefit programs consistent with those made available to other employees who are on an international assignment. These benefits, and their costs to Cabot, are described in the footnotes and text that accompany the compensation tables that follow this CD&A.
Health and Welfare Plans
The health and welfare plans offered to our named executive officers are the same as those offered to all other employees working in the same country. Mr. Zhu is also covered by the health and welfare plans and life and disability benefits offered to our employees who are on an international assignment.
CABOT CORPORATION 51
Executive Compensation (continued)
Perquisites
We provide our named executive officers a modest level of perquisites, consisting principally of financial planning and tax assistance services and an executive physical examination. We provide these benefits to help our executives maintain their health and manage their finances, in each case, so that they can focus their attention on Cabot’s business. Mr. Zhu receives certain benefits because of his international assignment as described further below.
Employment Arrangements
Except for Mr. Zhu, our named executive officers serve without employment agreements.
Under the terms of Mr. Zhu’s relocation and employment arrangements, described in his February 2012 offer letter, he receives additional benefits, many of which are offered to employees who are on an international assignment. These benefits consist of tax equalization, housing (including utilities), a car allowance, annual home leave, and a travel allowance. The tax equalization benefit is intended to ensure that Mr. Zhu’s tax obligations are equal to the taxes he would have paid on his earnings had he remained a resident in Singapore, with the Company paying all other Chinese taxes associated with the income Mr. Zhu earns while based in China. In addition, under the terms of Mr. Zhu’s offer letter with the Company, if Mr. Zhu’s employment is terminated at Cabot’s initiation while based in China, for any reason other than dismissal due to a violation of law or applicable Company policy, Cabot will pay the costs to repatriate Mr. Zhu and his family back to Singapore. Mr. Zhu’s base salary and short-term incentive and equity awards are determined and paid in U.S. Dollars.
Hedging and Pledging Policy
The Company’s insider trading policy prohibits directors, all participants in the Company’s LTI program, their family members who share the same address as, or whose transactions in the Company’s securities are directed by them or are subject to their influence or control, and entities owned or controlled by any such persons, from, among other things, (i) engaging in any “short sales”, including short sales “against the box”, or purchases, sales, or other arrangements involving, puts, calls or other derivative securities on the Company’s securities, (ii) issuing any standing or limit orders for the sale of the Company’s common stock that remain outstanding for more than one day, other than in connection with a Rule 10b5-1 trading plan adopted in compliance with the policy, or (iii) holding the Company’s securities in a margin account or pledging the Company’s securities as collateral for a loan. No categories of hedging transactions are specifically permitted and, other than the transactions described above, no other categories of hedging transactions are specifically disallowed.
Tax and Accounting Information
We consider the tax and accounting rules associated with various forms of compensation when designing our compensation programs. However, to maintain flexibility to compensate our executive officers in a manner designed to promote short- and long-term corporate goals and objectives, the Compensation Committee has not adopted a policy that all compensation must be deductible or have the most favorable accounting treatment to the Company and has paid, and will continue to pay, compensation that is not deductible.
52 CABOT CORPORATION
Executive Compensation (continued)
Potential Payments Following a Change in Control
Severance Plan
Participants in our Senior Management Severance Protection Plan (the “Severance Plan”) are the members of our Management Executive Committee and other employees as determined by our Compensation Committee and, as of September 30, 2023, consisted of eleven employees, including all of our named executive officers.
Under the Severance Plan, participants are entitled to severance payments if their employment with Cabot terminates within two years following a change in control (for any reason other than cause, disability, death, or a termination initiated by the participant without good reason). Under the Severance Plan, Mr. Keohane is entitled to a lump sum payment equal to three times the sum of his base salary and bonus (each, as determined below) and continued health and welfare benefits for a period of three years (i.e., medical and dental benefits, long-term disability coverage, and life insurance) and Mses. McLaughlin and Kalita and Messrs. Zhu and Kalkstein are each entitled to a lump sum payment equal to two times the sum of their base salary and bonus (each, as determined below) and continued health and welfare benefits for a period of two years. In addition, under the Severance Plan, each participant is entitled to receive a pro-rated bonus with respect to the fiscal year in which the termination occurs and outplacement services in an amount up to 15% of his or her base salary.
Base salary under the Severance Plan is calculated at the greater of the rate in effect (i) immediately before the change in control or (ii) as of the participant’s employment termination date. The bonus is calculated at the greater of (i) the participant’s target annual incentive bonus for the fiscal year in which the change in control occurs or the fiscal year in which the participant’s employment is terminated, whichever was greater, or (ii) the highest annual incentive bonus amount paid or payable to the participant for any of the three fiscal years preceding the fiscal year in which the change in control occurs.
The Severance Plan also includes a “better of” provision. Under this provision, a participant will be entitled to receive either the full amount of payments (and pay any applicable excise tax imposed by Section 4999 of the Internal Revenue Code) or such lesser amount that is not subject to the excise tax, whichever results in the greater after-tax benefit to him or her.
The provision of severance benefits under any other plan or program provided by Cabot or its affiliates, or pursuant to any agreement with Cabot or its affiliates, or by law, counts toward our obligation to provide the benefits under the Severance Plan so that the benefits are not duplicative.
The economic compensation benefits Mr. Zhu is eligible to receive under China Labor Contract Law in the event of his disability as described below under the heading “Termination of Employment Upon Disability or Death” may also be available to him in the event of his separation from service upon a change in control. We have not included a value for these benefits in the table on page 64 because these benefits do not discriminate in terms of scope, terms, or operation in favor of our named executive officers compared with the benefits available to all salaried employees in China. Further, the provision of these benefits would count toward our obligations to provide Mr. Zhu benefits under the Severance Plan.
Retirement and Equity Incentive Plans
The accrued account balances under the Supplemental Cash Balance Plan, 401(k) Plan, and Supplemental 401(k) Plan immediately vest and become payable upon a change in control of Cabot. All of our named executive officers are vested in their account balances under the plans in which they participate.
Upon a change in control of Cabot, the Compensation Committee, as administrator of our Amended and Restated 2017 Long-Term Incentive Plan, will have discretion to provide for the assumption or continuation of some or all outstanding awards or any portion of an award, the grant of new awards in substitution by the acquirer or survivor, or the cash-out of some or all awards. Further, the Compensation Committee retains authority to accelerate the vesting of awards. The Compensation Committee has provided, and intends to continue to provide, for “double trigger” vesting upon a change in control. This means that if an award remains outstanding following a change in control, such as if the acquiring company assumes the award, vesting would be accelerated only if the participant’s employment was involuntarily terminated without cause or by the participant for good reason within two years following the change in control.
62 CABOT CORPORATION
Executive Compensation (continued)
Termination of Employment Upon Disability or Death
For Cabot’s full-time employees based in the U.S., including our U.S.-based named executive officers, a termination of employment upon disability is generally determined under the terms of Cabot’s long-term disability plan and is deemed to occur one year following the date of disability. A U.S.-based employee who becomes disabled would receive (i) benefits under our long-term disability plan, and (ii) continued participation in our medical, dental, and life insurance plans in accordance with the terms of those plans if the employee has completed ten years of service with Cabot. We have not included a value for these benefits in the table on page 64 because the plans do not discriminate in scope, terms, or operation in favor of our named executive officers compared to the benefits offered to all salaried U.S. employees. Under the terms of our disability plan for employees on an international assignment, in the event Mr. Zhu becomes disabled, he is entitled to a monthly benefit of up to $10,000 while he remains disabled, until he reaches age 65. Further, Mr. Zhu is eligible for economic compensation payments in the case of disability under China Labor Contract Law, which provides for a tax-exempt lump sum payment based on the number of his years of service, up to a maximum of 12 years, times his average monthly compensation which is subject to an upper limit of 36,549 CNY. In the table on page 64, we have not included a value for these benefits, which would be payable by the Company or the Chinese government, depending on the circumstances, because these benefits do not discriminate in scope, terms, or operation in favor of our named executive officers compared to the benefits available to all salaried employees in China. In addition, the accrued account balances under the Supplemental Cash Balance Plan, 401(k) Plan, Supplemental 401(k) Plan and China Supplemental Pension Plan immediately vest and become payable upon termination of employment by reason of death or disability. All of our named executive officers are vested in their account balances under the plans in which they participate.
Under the terms of Cabot’s Amended and Restated 2017 Long-Term Incentive Plan, if any participant (including a named executive officer) ceases to be an employee because of disability or death, his or her unvested stock options and unvested TSUs would immediately vest. In the case of PSUs, the total number of units that vests is the sum of the units that have been earned based upon performance as of the date of the termination of employment.
We provide each of our U.S.-based named executive officers with a death benefit under our Death Benefit Protection Plan equal to three times their base salary up to a maximum benefit of $3,000,000, which is payable to their beneficiary at the time of their death. Mr. Zhu is provided with life insurance coverage under the life insurance plan for international assignees that provides a benefit equal to two times base salary up to a maximum benefit of $400,000, which is payable to his designated beneficiary in a lump sum in the event of his death.
Termination of Employment Upon Retirement
Upon retirement, participants in the Supplemental Cash Balance Plan are entitled to receive benefit payments, and participants in the 401(k) Plan, the Supplemental 401(k) Plan and China Supplemental Pension Plan may receive a distribution of their account balances. Participants in the U.S. retirement plans are eligible for early retirement upon attaining age 55 and completing at least 10 years of service. As of September 30, 2023, Mr. Keohane is the only named executive officer that meets the eligibility criteria for early retirement under these plans.
As discussed in more detail under the heading “Retirement Vesting Terms” in the CD&A section of this proxy statement, at the beginning of fiscal 2024, the Committee amended the terms of outstanding equity awards to provide for retirement vesting. These provisions generally result in pro rata vesting of a portion of the equity award based on when the retirement-eligible participant retires. As of September 30, 2023, no named executive officer met the age and service requirements for retirement vesting.
Termination for Cause or Voluntarily Without Good Reason
As described above, no severance payments under the terms of the Severance Plan are payable if a participant’s employment is terminated for cause or if he or she terminates employment without good reason. In addition, no benefits are payable under the terms of our Supplemental 401(k) Plan or Supplemental Cash Balance Plan or the China Supplemental Pension Plan if a participant’s employment is terminated for cause.
CABOT CORPORATION 63
Proposal 3 — Approval of the Cabot Corporation 2024 Non-Employee Director Plan
Introduction
We have for many years used stock awards as part of our overall director compensation program to align the interests of our directors with those of our stockholders and to assist us in attracting and retaining highly-qualified directors. The Cabot Corporation 2015 Directors’ Stock Compensation Plan, which was approved by Cabot’s stockholders on March 12, 2015 (the “2015 Director Plan”), expires by its terms on March 11, 2025 and no further awards of stock may be made under the 2015 Director Plan after that date. Accordingly, on January 11, 2024, Cabot’s Board of Directors, acting on the recommendation of the Governance Committee, unanimously approved the adoption of the Cabot Corporation 2024 Non-Employee Director Plan (the “Director Plan”) to provide for the issuance of stock awards in the future to our non-employee directors. The Director Plan will not become effective unless it is approved by our stockholders, and accordingly, we are now seeking stockholder approval of the Director Plan. If the Director Plan is approved, no further awards will be made under the 2015 Director Plan. The material terms of the Director Plan are described under “Summary of the Director Plan” below.
The Board of Directors believes that the Director Plan promotes the interests of stockholders consistent with principles of good corporate governance. In particular, the Director Plan limits the aggregate value of all compensation granted or paid to any non-employee director with respect to his or her service on the Board of Directors during any calendar year.
For a description of our director compensation program, please see “Director Compensation” on pages 28-30 of this proxy statement.
Summary of the Director Plan
The purpose of the Director Plan is to advance the interests of Cabot and its stockholders by aligning the interests of our directors with those of our stockholders and to assist us in attracting and retaining highly-qualified, non-employee directors. Subject to adjustment as provided for in the Director Plan, the maximum number of shares of Cabot common stock that may be issued under the Director Plan is 350,000. The Director Plan will be administered by the Governance Committee of the Board of Directors.
The Director Plan provides for the annual issuance of shares of Cabot common stock to each non-employee director as a portion of his or her annual compensation in an amount, based on grant-date fair market value, determined by the Governance Committee, subject to limits included in the Director Plan. The aggregate value of all compensation granted or paid to any non-employee director with respect to his or her service on the Board of Directors (and not including other service) during any calendar year during any part of which a non-employee director is eligible to receive compensation, including shares of Cabot common stock issued or granted under the Director Plan and cash fees or other compensation paid by Cabot to such non-employee director outside of the Director Plan for his or her service on the Board of Directors during such calendar year, is $750,000 in the aggregate. The limit for any chair of the board or a lead director is $900,000 in the aggregate. The value of any award of shares of Cabot common stock or other equity-based awards is based on the grant date fair value of a share of common stock or other equity-based awards on the date the shares are issued under the Director Plan. As described above under “Director Compensation”, our recent practice has been to pay our non-employee directors with a cash retainer and an award of Cabot common stock annually in an aggregate value, reflecting the increase in compensation approved by the Board of Directors effective January 2024, ranging from $385,000, for our chair of the board, to $250,000 for a director who does not serve as a committee chair, which values include a grant of fully-vested shares with a grant date value of $155,000. Based on our number of non-employee directors, the current price of Cabot common stock and our grant practices, we expect the Director Plan will last approximately ten years. In the event of any reorganization, capitalization, stock split, stock dividend, combination of shares, merger, consolidation, issuance of rights or any other change in Cabot’s capital structure, the Governance Committee will make an appropriate adjustment to the maximum number of shares that may be issued under the Director Plan as well as any other equitable adjustments necessary to outstanding awards.
72 CABOT CORPORATION
Audit Committee Matters
Audit Committee Report
The Audit Committee of the Board of Directors is comprised of three non-employee directors. The Board has determined that all of the members of the Audit Committee satisfy the requirements of the New York Stock Exchange (“NYSE”) as to independence and financial literacy. In addition, the Board has determined that Mr. Wilson is an audit committee financial expert as defined by SEC rules. Our responsibilities are set forth in our written charter and are described above under the heading “Board Composition — How Our Board Operates — Audit Committee” on page 14.
We have sole authority to appoint, retain, terminate, and determine the compensation of our independent registered public accounting firm. At least annually, we review the performance and qualifications of our independent registered public accounting firm to determine whether to retain such firm on behalf of the Company. Deloitte & Touche LLP (“D&T”) has been Cabot’s independent registered public accounting firm since 2007. During its tenure as Cabot’s independent registered public accounting firm, D&T has gained significant depth of understanding of Cabot’s global businesses, operations and systems, accounting policies and practices, and internal control over financial reporting. In accordance with SEC rules and D&T’s policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide services to us. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. In fiscal 2021, the Audit Committee, after consultation with management, approved the appointment of a new lead audit partner effective for the fiscal 2022 audit pursuant to this policy.
One of our primary responsibilities is to assist the Board in its oversight of the quality and integrity of Cabot’s financial statements. We met ten times during fiscal 2023. A number of those meetings included executive sessions with D&T and with Cabot’s Chief Financial Officer, Corporate Controller, Vice President of Internal Audit, and General Counsel. We took numerous actions to discharge our oversight responsibility with respect to the audit process, which are summarized in this report.
As described in more detail under the heading “Board Composition — Our Board’s Role in Risk Oversight and in Overseeing our Progression on Environmental, Social and Governance (“ESG”) Matters and Activities” on page [9], we focus on Cabot’s financial risk exposures and the actions management has taken to monitor and mitigate such risks, and oversee Cabot’s enterprise risk management processes.
Review of Audited Financial Statements with Management
We reviewed and discussed with management Cabot’s audited consolidated financial statements for the fiscal year ended September 30, 2023.
Review of Financial Statements and Other Matters with Independent Registered Public Accounting Firm
We discussed with D&T Cabot’s audited consolidated financial statements for the fiscal year ended September 30, 2023, including the matters required to be communicated by the standards of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. This included a discussion of accounting policies and practices critical to our financial statements. We also received the written disclosures and the letter from D&T required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, which requires auditors to annually disclose in writing all relationships that in the auditor’s professional opinion may reasonably be thought to bear on independence and to confirm their independence, and discussed with D&T its independence from Cabot. In addition, we discussed Cabot’s internal controls over financial reporting and management’s assessment of the effectiveness of those controls with management, Cabot’s internal auditors and D&T. We reviewed with both D&T and Cabot’s internal auditors their audit plans, audit scope and identification of audit risks. We also discussed the results of the internal audit examinations with and without management present. In addition, any reports or concerns the Company receives relating to financial matters are communicated directly to the Chair of the Audit Committee.
CABOT CORPORATION 75
Pay vs Performance Disclosure - USD ($)
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12 Months Ended |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Pay vs Performance Disclosure |
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|
|
Pay vs Performance Disclosure, Table |
As required by Section 953(a) of the Dodd-Frank Act Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (as computed in accordance with SEC rules) and certain financial performance of the Company. For further information concerning the Company’s pay for performance philosophy and how the Company’s executive compensation program aligns executive compensation with the Company’s performance, refer to the CD&A section of this proxy statement. Pay Versus Performance Table
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Value of Initial Fixed $100 Investment Based on: |
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SCT Total Compensation For PEO |
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Compensation Actually Paid to PEO |
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Average SCT Total Compensation for Other NEOs |
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Average Compensation Actually Paid to Other NEOs |
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|
|
|
Peer Group Total Shareholder Return |
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|
|
|
|
|
|
2023 |
|
$ |
7,791,510 |
|
|
$ |
8,106,840 |
|
|
$ |
2,247,211 |
|
|
$ |
2,279,259 |
|
|
$ |
206 |
|
|
$ |
135 |
|
|
$ |
445M |
|
|
$ |
553M |
|
2022 |
|
$ |
7,948,029 |
|
|
$ |
17,160,056 |
|
|
$ |
2,268,356 |
|
|
$ |
3,901,604 |
|
|
$ |
186 |
|
|
$ |
117 |
|
|
$ |
209M |
|
|
$ |
583M |
|
2021 |
|
$ |
8,242,487 |
|
|
$ |
17,132,578 |
|
|
$ |
2,251,536 |
|
|
$ |
3,758,111 |
|
|
$ |
143 |
|
|
$ |
136 |
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|
$ |
250M |
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|
$ |
492M |
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* |
Non-GAAP financial measure. See Appendix A. |
(1) |
Our Principal Executive Officer (PEO) for each of the years reported was Sean D. Keohane, our CEO and President. The names of each of the NEOs, other than our PEO, included for the purposes of calculating the average amounts in each applicable year are as follows: Ms. McLaughlin, Ms. Kalita, Mr. Kalkstein, and Mr. Zhu. The dollar amounts reported in column (b) are the amounts of total compensation for our PEO reported in our Summary Compensation Table (“SCT”) for each applicable fiscal year and the dollar amounts reported in column (d) are the average of the total compensation amounts reported for the Company’s NEOs as a group (excluding our PEO) in our SCT for each applicable fiscal year. |
(2) |
The dollar amounts reported represent the amount of “compensation actually paid”, as computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned or realized by or paid to an NEO during the applicable year. In accordance with SEC rules, the following adjustments were made to total compensation to determine the compensation actually paid: | PEO SCT CAP Reconciliation
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Reported Summary Compensation Table Total for PEO |
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Reported Value of Equity Awards |
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Pension values reported in SCT for covered fiscal year |
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Equity Awards Adjustments |
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“Compensation Actually Paid” to PEO |
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2023 |
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$ |
7,791,510 |
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$ |
5,399,962 |
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$ |
4,763 |
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$ |
5,720,055 |
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$ |
8,106,840 |
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2022 |
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$ |
7,948,029 |
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$ |
4,749,921 |
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|
— |
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$ |
13,961,948 |
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$ |
17,160,056 |
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2021 |
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$ |
8,242,487 |
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$ |
4,749,610 |
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— |
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$ |
13,639,701 |
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$ |
17,132,578 |
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(a) |
The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the SCT for the applicable year. The value of dividends paid on stock awards are reflected in the value of the award in the SCT for each applicable year. |
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(b) |
The amounts included in this column are the amounts reported in the “Change in Pension and Nonqualified Deferred Compensation Earnings” column of the SCT for each applicable year. There are no pension benefits adjustme nts as the Supplemental Cash Balance Plan was frozen on December 31, 2013, resulting in no service costs or prior service costs. |
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(c) |
The equity award adjustments for each applicable year were calculated in accordance with the methodology required by item 402(v) of Regulation S-K. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments for the PEO are provided in the table below. |
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Year End Fair Value of Equity Awards |
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Awards Granted in Prior Years |
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of Equity Awards Granted in Prior Years that Vested in the Year |
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Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value |
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Total Equity Award Adjustments |
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2023 |
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$ |
3,775,328 |
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$ |
313,488 |
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$ |
1,394,821 |
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$ |
236,419 |
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|
$ |
5,720,055 |
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2022 |
|
$ |
7,430,835 |
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$ |
5,145,861 |
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|
$ |
1,191,627 |
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$ |
193,625 |
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$ |
13,961,948 |
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2021 |
|
$ |
8,655,360 |
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$ |
4,231,688 |
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|
$ |
617,361 |
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|
$ |
135,292 |
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$ |
13,639,701 |
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(3) |
The dollar amounts reported represent the average amount of “compensation actually paid” to the NEOs as a group (excluding our CEO), as computed in accordance with SEC rules. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding our CEO) during the applicable year. In accordance with the SEC rules, the following adjustments were made to average total compensation for the NEOs as a group (excluding our CEO) for each year to determine the compensation actually paid, using the same methodology described above in footnote 2. | Average Non-PEO SCT CAP Reconciliation
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Average Reported Summary Compensation Table Total for Non-PEO NEOs |
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Average Reported Value of Equity Awards |
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Pension values reported in SCT for covered fiscal year |
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Average Equity Awards Adjustments (c) |
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Average “Compensation Actually Paid” to Non-PEO NEOs |
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2023 |
|
$ |
2,247,211 |
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|
$ |
1,024,885 |
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|
$ |
168 |
|
|
$ |
1,057,100 |
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|
$ |
2,279,259 |
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2022 |
|
$ |
2,268,356 |
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|
$ |
881,209 |
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|
|
— |
|
|
$ |
2,514,456 |
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|
$ |
3,901,604 |
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2021 |
|
$ |
2,251,536 |
|
|
$ |
856,145 |
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|
|
— |
|
|
$ |
2,362,720 |
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|
$ |
3,758,111 |
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(a) |
The grant date fair value of equity awards represents the Non-PEO NEOs average of the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the SCT for the applicable year. The value of dividends paid on stock awards are reflected in the value of the award in the SCT for each applicable year. |
|
(b) |
The amounts included in this column are the average of the Non-PEO NEOs amounts reported in the “Change in Pension and Nonqualified Deferred Compensation Earnings” column of the SCT for each applicable year. There are no pension benefits adjustments as the Supplemental Cash Balance Plan was frozen on December 31, 2013, resulting in no service costs or prior service costs. |
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(c) |
The average Non-PEO equity award for each applicable year were calculated in accordance with the methodology required by item 402(v) of Regulation S-K. The amounts deducted or added in calculating the equity award adjustments for the Non-PEO NEOs are provided in the table below. |
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Average Year End Fair Value of Equity Awards Granted in the Year |
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Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years |
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Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year |
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|
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Total Average Equity Award Adjustments |
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2023 |
|
$ |
716,547 |
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|
$ |
53,871 |
|
|
$ |
243,399 |
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|
$ |
43,282 |
|
|
$ |
1,057,100 |
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2022 |
|
$ |
1,378,593 |
|
|
$ |
904,541 |
|
|
$ |
197,037 |
|
|
$ |
34,285 |
|
|
$ |
2,514,456 |
|
2021 |
|
$ |
1,560,173 |
|
|
$ |
689,457 |
|
|
$ |
90,383 |
|
|
$ |
22,707 |
|
|
$ |
2,362,720 |
|
(4) |
Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end of each applicable fiscal year and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
(5) |
Represents the cumulative TSR for the peer group for each measurement period. The peer group for this purpose is the S&P 400 Chemicals index. |
(6) |
The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
(7) |
The Company has determined that Adjusted EBIT is the financial performance measure that represents the most important financial measure used to link compensation actually paid to the Company’s NEOs for the most recently completed fiscal year. |
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Company Selected Measure Name |
Adjusted EBIT
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|
Named Executive Officers, Footnote |
The names of each of the NEOs, other than our PEO, included for the purposes of calculating the average amounts in each applicable year are as follows: Ms. McLaughlin, Ms. Kalita, Mr. Kalkstein, and Mr. Zhu. The dollar amounts reported in column (b) are the amounts of total compensation for our PEO reported in our Summary Compensation Table (“SCT”) for each applicable fiscal year and the dollar amounts reported in column (d) are the average of the total compensation amounts reported for the Company’s NEOs as a group (excluding our PEO) in our SCT for each applicable fiscal year.
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|
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Peer Group Issuers, Footnote |
Represents the cumulative TSR for the peer group for each measurement period. The peer group for this purpose is the S&P 400 Chemicals index.
|
|
|
PEO Total Compensation Amount |
$ 7,791,510
|
$ 7,948,029
|
$ 8,242,487
|
PEO Actually Paid Compensation Amount |
$ 8,106,840
|
17,160,056
|
17,132,578
|
Adjustment To PEO Compensation, Footnote |
PEO SCT CAP Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Summary Compensation Table Total for PEO |
|
|
Reported Value of Equity Awards |
|
|
Pension values reported in SCT for covered fiscal year |
|
|
Equity Awards Adjustments |
|
|
“Compensation Actually Paid” to PEO |
|
2023 |
|
$ |
7,791,510 |
|
|
$ |
5,399,962 |
|
|
$ |
4,763 |
|
|
$ |
5,720,055 |
|
|
$ |
8,106,840 |
|
2022 |
|
$ |
7,948,029 |
|
|
$ |
4,749,921 |
|
|
|
— |
|
|
$ |
13,961,948 |
|
|
$ |
17,160,056 |
|
2021 |
|
$ |
8,242,487 |
|
|
$ |
4,749,610 |
|
|
|
— |
|
|
$ |
13,639,701 |
|
|
$ |
17,132,578 |
|
|
(a) |
The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the SCT for the applicable year. The value of dividends paid on stock awards are reflected in the value of the award in the SCT for each applicable year. |
|
(b) |
The amounts included in this column are the amounts reported in the “Change in Pension and Nonqualified Deferred Compensation Earnings” column of the SCT for each applicable year. There are no pension benefits adjustme nts as the Supplemental Cash Balance Plan was frozen on December 31, 2013, resulting in no service costs or prior service costs. |
|
(c) |
The equity award adjustments for each applicable year were calculated in accordance with the methodology required by item 402(v) of Regulation S-K. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments for the PEO are provided in the table below. |
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|
|
|
|
|
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|
Year End Fair Value of Equity Awards |
|
|
Awards Granted in Prior Years |
|
|
of Equity Awards Granted in Prior Years that Vested in the Year |
|
|
Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value |
|
|
Total Equity Award Adjustments |
|
2023 |
|
$ |
3,775,328 |
|
|
$ |
313,488 |
|
|
$ |
1,394,821 |
|
|
$ |
236,419 |
|
|
$ |
5,720,055 |
|
2022 |
|
$ |
7,430,835 |
|
|
$ |
5,145,861 |
|
|
$ |
1,191,627 |
|
|
$ |
193,625 |
|
|
$ |
13,961,948 |
|
2021 |
|
$ |
8,655,360 |
|
|
$ |
4,231,688 |
|
|
$ |
617,361 |
|
|
$ |
135,292 |
|
|
$ |
13,639,701 |
|
|
|
|
Non-PEO NEO Average Total Compensation Amount |
$ 2,247,211
|
2,268,356
|
2,251,536
|
Non-PEO NEO Average Compensation Actually Paid Amount |
$ 2,279,259
|
3,901,604
|
3,758,111
|
Adjustment to Non-PEO NEO Compensation Footnote |
Average Non-PEO SCT CAP Reconciliation
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|
Average Reported Summary Compensation Table Total for Non-PEO NEOs |
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|
Average Reported Value of Equity Awards |
|
|
Pension values reported in SCT for covered fiscal year |
|
|
Average Equity Awards Adjustments (c) |
|
|
Average “Compensation Actually Paid” to Non-PEO NEOs |
|
2023 |
|
$ |
2,247,211 |
|
|
$ |
1,024,885 |
|
|
$ |
168 |
|
|
$ |
1,057,100 |
|
|
$ |
2,279,259 |
|
2022 |
|
$ |
2,268,356 |
|
|
$ |
881,209 |
|
|
|
— |
|
|
$ |
2,514,456 |
|
|
$ |
3,901,604 |
|
2021 |
|
$ |
2,251,536 |
|
|
$ |
856,145 |
|
|
|
— |
|
|
$ |
2,362,720 |
|
|
$ |
3,758,111 |
|
|
(a) |
The grant date fair value of equity awards represents the Non-PEO NEOs average of the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the SCT for the applicable year. The value of dividends paid on stock awards are reflected in the value of the award in the SCT for each applicable year. |
|
(b) |
The amounts included in this column are the average of the Non-PEO NEOs amounts reported in the “Change in Pension and Nonqualified Deferred Compensation Earnings” column of the SCT for each applicable year. There are no pension benefits adjustments as the Supplemental Cash Balance Plan was frozen on December 31, 2013, resulting in no service costs or prior service costs. |
|
(c) |
The average Non-PEO equity award for each applicable year were calculated in accordance with the methodology required by item 402(v) of Regulation S-K. The amounts deducted or added in calculating the equity award adjustments for the Non-PEO NEOs are provided in the table below. |
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|
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Average Year End Fair Value of Equity Awards Granted in the Year |
|
|
Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years |
|
|
Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year |
|
|
|
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|
Total Average Equity Award Adjustments |
|
2023 |
|
$ |
716,547 |
|
|
$ |
53,871 |
|
|
$ |
243,399 |
|
|
$ |
43,282 |
|
|
$ |
1,057,100 |
|
2022 |
|
$ |
1,378,593 |
|
|
$ |
904,541 |
|
|
$ |
197,037 |
|
|
$ |
34,285 |
|
|
$ |
2,514,456 |
|
2021 |
|
$ |
1,560,173 |
|
|
$ |
689,457 |
|
|
$ |
90,383 |
|
|
$ |
22,707 |
|
|
$ |
2,362,720 |
|
|
|
|
Compensation Actually Paid vs. Total Shareholder Return |
|
|
|
Compensation Actually Paid vs. Net Income |
|
|
|
Compensation Actually Paid vs. Company Selected Measure |
|
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|
Total Shareholder Return Vs Peer Group |
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Tabular List, Table |
Financial Performance Measures The most important financial performance measures used by the Company to link executive “compensation actually paid” to the Company’s NEOs in fiscal 2023 to the Company’s performance are listed below. These metrics are in our incentive awards and are further described in the CD&A section of this proxy statement.
• |
|
Net Working Capital Days |
• |
|
Discretionary Free Cash Flow |
|
|
|
Total Shareholder Return Amount |
$ 206
|
186
|
143
|
Peer Group Total Shareholder Return Amount |
135
|
117
|
136
|
Net Income (Loss) |
$ 445,000,000
|
$ 209,000,000
|
$ 250,000,000
|
Company Selected Measure Amount |
553,000,000
|
583,000,000
|
492,000,000
|
PEO Name |
Sean D. Keohane
|
|
|
Measure:: 1 |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Name |
Adjusted EBIT
|
|
|
Measure:: 2 |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Name |
Adjusted EPS
|
|
|
Measure:: 3 |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Name |
Adjusted RONA
|
|
|
Measure:: 4 |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Name |
Net Working Capital Days
|
|
|
Measure:: 5 |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Name |
Discretionary Free Cash Flow
|
|
|
PEO | Reported Value Of Equity Awards [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
$ 5,399,962
|
$ 4,749,921
|
$ 4,749,610
|
PEO | Pension Values Reported In SCT For Covered Fiscal Year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
4,763
|
0
|
0
|
PEO | Equity Awards Adjustments [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
5,720,055
|
13,961,948
|
13,639,701
|
PEO | Year End Fair Value Of Equity Awards Granted In The Year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
3,775,328
|
7,430,835
|
8,655,360
|
PEO | Year Over Year Change In Fair Value Of Outstanding And Unvested Equity Awards Granted In Prior Years [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
313,488
|
5,145,861
|
4,231,688
|
PEO | Year Over Year Change In Fair Value Of Equity Awards Granted In Prior Years That Vested In The Year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
1,394,821
|
1,191,627
|
617,361
|
PEO | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
236,419
|
193,625
|
135,292
|
Non-PEO NEO | Reported Value Of Equity Awards [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
1,024,885
|
881,209
|
856,145
|
Non-PEO NEO | Pension Values Reported In SCT For Covered Fiscal Year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
168
|
0
|
0
|
Non-PEO NEO | Equity Awards Adjustments [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
1,057,100
|
2,514,456
|
2,362,720
|
Non-PEO NEO | Year End Fair Value Of Equity Awards Granted In The Year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
716,547
|
1,378,593
|
1,560,173
|
Non-PEO NEO | Year Over Year Change In Fair Value Of Outstanding And Unvested Equity Awards Granted In Prior Years [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
53,871
|
904,541
|
689,457
|
Non-PEO NEO | Year Over Year Change In Fair Value Of Equity Awards Granted In Prior Years That Vested In The Year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
243,399
|
197,037
|
90,383
|
Non-PEO NEO | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
$ 43,282
|
$ 34,285
|
$ 22,707
|