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BELDEN INC. | ||||
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BELDEN
SENDING ALL THE RIGHT SIGNALS
Leading the way to an interconnected world.
2017 Proxy Statement and notice of 2017 Annual
Meeting of Shareholders
April 5, 2017
Dear Stockholder:
I am pleased to invite you to our 2017 Annual Stockholders Meeting. We will hold the meeting at 12:30 p.m. central time on Thursday, May 25, 2017 at the Four Seasons Hotel Saint Louis, Mississippi Room, 8th Floor at 999 North 2nd Street, Saint Louis, Missouri.
On April 5, 2017, we began mailing our stockholders a notice containing instructions on how to access our 2017 Proxy Statement and 2016 Annual Report and vote online. The notice also included instructions on how to receive a paper copy of your annual meeting materials, including the notice of annual meeting, proxy statement and proxy card. If you received your annual meeting materials by mail, the notice of annual meeting, proxy statement and proxy card from our Board of Directors were enclosed. If you received your annual meeting materials via e-mail, the e-mail contained voting instructions and links to the annual report and the proxy statement on the Internet, which are both available at http://investor.belden.com/investor-relations/financial-information/latest-financials/default.aspx.
The agenda for this years annual meeting consists of the following items:
Agenda Item |
Board Recommendation | |
1. Election of the nine directors nominated by the Companys Board of Directors |
FOR | |
2. Ratification of the appointment of Ernst & Young as the Companys Independent Registered Public Accounting Firm for 2017 |
FOR | |
3. Advisory vote on executive compensation |
FOR | |
4. Advisory vote on Frequency of Future Advisory Votes on Executive Compensation |
ANNUALLY |
Please refer to the proxy statement for detailed information on the proposals and the annual meeting. Your participation is appreciated.
Sincerely,
John Stroup
President, Chief Executive Officer and Chairman
of the Board
BELDEN INC.
1 North Brentwood Boulevard, 15th Floor
Saint Louis, Missouri 63105
314-854-8000
NOTICE OF 2017 ANNUAL STOCKHOLDERS MEETING
PROXY STATEMENT FOR THE
2017 ANNUAL MEETING OF STOCKHOLDERS OF
BELDEN INC.
To be held on Thursday, May 25, 2017
Belden Inc. 2017 Proxy Statement | Page i |
INTERNET AVAILABILITY OF PROXY MATERIALS
Under rules of the United States Securities and Exchange Commission (SEC), we are furnishing proxy materials to our stockholders primarily via the Internet, instead of mailing printed copies of those materials to each stockholder. On April 5, 2017, we began mailing to our stockholders (other than those who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and our annual report. The Notice of Internet Availability of Proxy Materials also instructs you on how to access your proxy card to vote through the Internet or by telephone.
This process is designed to expedite stockholders receipt of proxy materials, lower the cost of the annual meeting, and help conserve natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.
CONTACT INFORMATION FOR QUESTIONS
Answers to certain frequently asked questions including the votes required for approval of the agenda items are included in this document beginning on page 47. For other questions, please see the following contact information:
For questions |
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Regarding: |
Contact: | |
Annual meeting or |
Belden Investor Relations, 314-854-8054 | |
Executive Compensation Questions |
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Stock ownership |
American Stock Transfer & Trust Company | |
(Stockholders of Record) |
http://www.amstock.com | |
800-937-5449 (within the U.S. and Canada) | ||
718-921-8124 (outside the U.S. and Canada) | ||
Stock ownership |
Contact your broker, bank or other nominee | |
(Beneficial Owners) |
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Voting |
Belden Corporate Secretary, 314-854-8035 |
Belden Inc. 2017 Proxy Statement | Page 1 |
The Belden Board has nine members and four standing committees: Audit, Compensation, Finance and Nominating and Corporate Governance. The Board had six meetings during 2016; two of which were telephonic. All directors attended 75% or more of the Board meetings and the Board committee meetings on which they served.
Name of Director | Audit | Compensation | Finance |
Nominating and Corporate Governance | ||||
David Aldrich | Chair | |||||||
Lance C. Balk | Member | Chair | ||||||
Steven W. Berglund | Member | |||||||
Judy L. Brown | Member | Member | ||||||
Bryan C. Cressey(1) | Member | Member | ||||||
Jonathan Klein | Member | |||||||
George Minnich | Chair | |||||||
John M. Monter | Member | Chair | ||||||
John Stroup(2) | ||||||||
Meetings held in 2016 | 12 | 4 | 8 | 4 |
(1) | Mr. Cressey served as the chair of the Board until November 30, 2016. On November 30, 2016, Mr. Cressey was elected Lead Independent Director. |
(2) | Mr. Stroup was elected as chair of the Board on November 30, 2016. |
Page 2 | Belden Inc. 2017 Proxy Statement |
At its regular meeting in February 2017, the Board determined that each of the non-employee directors seeking reappointment meets the independence requirements of the NYSE listing standards. As part of this process, the Board determined that each such member had no material relationship with the Company.
Biographies of Directors Seeking Reappointment
Director Since: 2007
Board Committees: Compensation (Chair) |
David J. Aldrich, 60 | |||||
Principal Occupation, Professional Experience and Educational Background: The Board recruited Mr. Aldrich based on his experience in high technology signal transmission applications and for his experience as a current Chief Executive Officer of a public company. From April 2000 to May 2014, he served as President, Chief Executive Officer, and Director of Skyworks Solutions, Inc. (Skyworks). In May 2014, Mr. Aldrich was named Chairman of the Board and Chief Executive Officer of Skyworks. In May of 2016, Mr. Aldrich was named Executive Chairman of Skyworks. Skyworks is an innovator of high performance analog and mixed signal semiconductors enabling mobile connectivity. In March 2017, Mr. Aldrich was named to the Board of Directors of the Semiconductor Industry Association.
Mr. Aldrich received a B.A. degree in political science from Providence College and an M.B.A. degree from the University of Rhode Island.
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Director Since: 2000
Board Committees: Compensation Finance (Chair)
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Lance C. Balk, 59 | |||||
Principal Occupation, Professional Experience and Educational Background: In September, 2010, Mr. Balk was appointed as General Counsel of Six Flags Entertainment Corporation. Previously, Mr. Balk served as Senior Vice President and General Counsel of Siemens Healthcare Diagnostics from November 2007 to January 2010. From May 2006 to November 2007, he served in those positions with Dade Behring, a leading supplier of products, systems and services for clinical diagnostics, which was acquired by Siemens Healthcare Diagnostics in November 2007. Previously, he had been a partner of Kirkland & Ellis LLP since 1989, specializing in securities law and mergers and acquisitions. The Board originally recruited Mr. Balk based on his expertise in advising multinational public and private companies on complex mergers and acquisitions and corporate finance transactions. He provides insight to the Board regarding business strategy, business acquisitions and capital structure.
Mr. Balk received a B.A. degree from Northwestern University and a J.D. degree and an M.B.A. degree from the University of Chicago.
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Belden Inc. 2017 Proxy Statement | Page 3 |
Director Since: 2013
Board Committees: Compensation
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Steven W. Berglund, 65 | |||||
Principal Occupation, Professional Experience and Educational Background: Mr. Berglunds experience as a director, president and chief executive officer of Trimble Navigation Limited, a technology based firm providing positioning and location solutions, since March 1999 make him highly qualified to serve on the Companys Board.
Prior to joining Trimble, Mr. Berglund was President of Spectra Precision, a group within Spectra Physics AB. Mr. Berglunds business experience includes a variety of senior leadership positions with Spectra Physics, and manufacturing and planning roles at Varian Associates. He began his career as a process engineer at Eastman Kodak.
Mr. Berglund attended the University of Oslo and the University of Minnesota where he received a B. S. in chemical engineering. He received his M.B.A. from the University of Rochester. Mr. Berglund is a member of the board of directors of the Silicon Valley Leadership Group and the Association of Equipment Manufacturers, where he is also the vice chairman of the construction sector board, and a member of the board of trustees of World Education Services.
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Director Since: 2008
Board Committees: Audit Finance
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Judy L. Brown, 48 | |||||
Principal Occupation, Professional Experience and Educational Background: In recruiting Ms. Brown, the Board sought a member with international experience in finance and accounting to help the Company pursue its strategic global focus. As an employee of Ernst & Young for more than nine years in the U.S. and Germany, she provided audit and advisory services to U.S. and European multinational public and private companies. She served in various financial and accounting roles for six years in the U.S. and Italy with Whirlpool Corporation, a leading manufacturer and marketer of appliances. In 2004, she was appointed Vice President and Controller of Perrigo Company, a leading global healthcare supplier and the worlds largest manufacturer and marketer of over-the-counter pharmaceutical products sold under store brand labels. She was appointed Chief Financial Officer of Perrigo in 2006 and served as Executive Vice President Business Operations and Chief Financial Officer from 2016 until her departure from Perrigo Company on February 27, 2017. In April 2017, Ms. Brown will join Amgen Inc. as head of its internal audit function and global business services unit.
She received a B.S. degree in Accounting from the University of Illinois; an M.B.A. from the University of Chicago; and attended the Aresty Institute of Executive Education of the Wharton School of the University of Pennsylvania. Ms. Brown also is a Certified Public Accountant.
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Page 4 | Belden Inc. 2017 Proxy Statement |
Director Since: 1985
Lead Independent Director
Board Committees: Finance Nominating and Corporate Governance |
Bryan C. Cressey, 68 | |||||
Principal Occupation, Professional Experience and Educational Background: Mr. Cressey previously served as Chairman of the Board from 1988-2016. For the past thirty years, Mr. Cressey has been a General Partner and Principal of Golder, Thoma and Cressey, Thoma Cressey Bravo, and Cressey & Company, all private equity firms, the last of which he founded in 2007. The firms have specialized in healthcare, software and business services. He is also a director of Select Medical Holdings Corporation, a healthcare services company, and several privately held companies. He was a director of Jazz Pharmaceuticals, a specialty pharmaceutical company until 2012. Mr. Cresseys years of senior-level experience with public and private companies in diverse industries, his legal and business education and experience, and his regular interaction with the equity markets make him highly qualified to serve on the Companys Board.
Mr. Cressey received a B.A. degree from the University of Washington and a J.D. degree and an M.B.A. degree from Harvard University.
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Director Since: 2015
Board Committees: Nominating and Corporate Governance
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Jonathan C. Klein, 59 | |||||
Principal Occupation, Professional Experience and Educational Background: The Board recruited Mr. Klein for his extensive experience within the broadcast industry, more specifically his experience with programming, production, and over-the-top distribution models. Since 2012, Mr. Klein has served as the CEO and Co-Founder of TAPP Media, an over-the-top subscription video platform which operates paid channels build around personalities. From 2004 to 2010, he served as President of CNN leading the U.S. network to its highest ratings and profitability. Previously he had been the Founder and CEO of the FeedRoom, a pioneering online video aggregation site, developing new online advertising concepts which have become industry standards today. From 1996 to 1998 he served as Executive Vice President of CBS News, overseeing prime time programming and strategic planning for in-house studio productions.
Mr. Klein attended Brown University where he received a B.A. in history.
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Belden Inc. 2017 Proxy Statement | Page 5 |
Director Since: 2010
Board Committees: Audit (Chair)
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George E. Minnich, 67 | |||||
Principal Occupation, Professional Experience and Educational Background: Mr. Minnich served as Senior Vice President and Chief Financial Officer of ITT Corporation from 2005 to 2007. Prior to that, he served for twelve years in several senior finance positions at United Technologies Corporation, including Vice President and Chief Financial Officer of Otis Elevator and of Carrier Corporation. He also held various positions within Price Waterhouse from 1971 to 1993, serving as an Audit Partner from 1984 to 1993. Mr. Minnich served on the Board of Trustees of Albright College from 2008 to 2014, is a member of the Board and Audit Committee of Kaman Corporation, an aerospace and industrial distribution company, and a Board member and Audit Committee Chair of AGCO Corporation, a maker of a broad range of tractors, combines, sprayers, forage and tillage equipment, implements and hay tools. His extensive financial and accounting experience gained over 35 years plus his experience on other public company boards was important to the Board in connection with his initial election. His senior level operational background provides the Board with additional insights into multinational industrial companies.
Mr. Minnich received a B.S. degree in Accounting from Albright College.
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Director Since: 2004
Board Committees: Audit Nominating and Corporate Governance (Chair)
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John M. Monter, 69 | |||||
Principal Occupation, Professional Experience and Educational Background: Mr. Monter served as a director of Belden 1993 Inc. beginning in 2000 and was appointed to the Companys Board at the time of the merger of Belden 1993 Inc. and Cable Design Technologies Corporation in 2004. During his career, Mr. Monter has served in the general management position for three companies, two manufacturers and a construction services company. Previous to his general management experience, Mr. Monter worked in several marketing and sales positions, including holding worldwide responsibilities in both marketing and sales for a multinational manufacturing company. His broad general management and sales and marketing experience at the policy-making level particularly qualifies him to serve on the Companys Board.
From 1993 to 1996, he was President of the Bussmann Division of Cooper Industries, Inc. Bussmann is a multi-national manufacturer of electrical and electronic fuses, with ten manufacturing facilities in four countries and sales offices in most major industrial markets around the world. From 1996 through 2004, he was President and Chief Executive Officer of Brand Services, Inc. (Brand) and also a member of the board of directors of its parent companies, Brand DLJ Holdings (1996-2002) and Brand Holdings, LLC (2002-2006). He was named Chairman of Brand DLJ Holdings in 2001 and Chairman of Brand Holdings, LLC in 2002. From January 1, 2005 through April 30, 2006, he served as Vice Chairman of Brand Holdings, LLC. Brand is a supplier of scaffolding and specialty industrial services.
Mr. Monter received a B.S. degree in journalism from Kent State University and an M.B.A. degree from the University of Chicago.
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Page 6 | Belden Inc. 2017 Proxy Statement |
Director Since: 2005
Chairman President, Chief Executive Officer and Chairman of Belden Inc.
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John S. Stroup, 50 | |||
Principal Occupation, Professional Experience and Educational Background: Mr. Stroup was appointed President, Chief Executive Officer and member of the Board effective October 31, 2005. He was elected Chairman of the Board on November 30, 2016. His experience in strategic planning and general management of business units of other public companies, coupled with his in-depth knowledge of the Company, makes him an integral member of the Board and a highly qualified intermediary between management and the Companys non-employee directors.
From 2000 to the date of his appointment with the Company, he was employed by Danaher Corporation, a manufacturer of professional instrumentation, industrial technologies, and tools and components. At Danaher, he initially served as Vice President, Business Development. He was promoted to President of a division of Danahers Motion Group and later to Group Executive of the Motion Group. Earlier, he was Vice President of Marketing and General Manager with Scientific Technologies Inc.
Mr. Stroup received a B.S. degree in mechanical engineering from Northwestern University and an M.B.A. degree from the University of California at Berkeley. Mr. Stroup is a director of RBS Global, Inc. RBS Global manufactures power transmission components, drives, conveying equipment and other related products under the Rexnord name.
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Belden Inc. 2017 Proxy Statement | Page 7 |
The Audit Committee operates under a Board-approved written charter and each member meets the independence requirements of the NYSEs listing standards. The Committee assists the Board in overseeing the Companys accounting and reporting practices by, among other items:
| selecting and reviewing the independent registered public accounting firm (Ernst & Young) who will audit the Companys financial statements; |
| meeting with its financial management and independent registered public accounting firm to review the financial statements, quarterly earnings releases and financial data of the Company; |
| reviewing the selection of the internal auditors who provide internal audit services; |
| reviewing the scope, procedures and results of the Companys financial audits, internal audit procedures, and internal controls assessments and procedures under Section 404 of the Sarbanes-Oxley Act of 2002 (SOX); |
| providing oversight responsibility for the process the Company uses in performing its periodic enterprise risk analysis; and |
| evaluating the Companys key financial and accounting personnel. |
At its February 23, 2017 meeting, the Board determined that each of Ms. Brown and Mr. Minnich qualifies as an Audit Committee Financial Expert as defined in the rules pursuant to SOX. As previously described, each member of the Audit Committee is independent.
The Compensation Committee of Belden determines, approves and reports to the Board on compensation for the Companys elected officers and oversees senior management succession planning. The Committee reviews the design, funding and competitiveness of the Companys retirement programs. The Committee also assists the Company in developing compensation and benefit strategies to attract, develop and retain qualified employees. The Committee operates under a written charter approved by the Board.
The Finance Committee provides oversight in the area of corporate finance and makes recommendations to the Board about the financial aspects of the Company. Examples of topics upon which the Finance Committee may provide guidance include capital structure, capital adequacy, credit ratings, capital expenditure planning and dividend policy and share repurchase programs. The Committee is governed by a written charter approved by the Board.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee identifies, evaluates, and recommends nominees for the Board for each annual meeting (and to fill vacancies during interim periods); evaluates the composition, organization and governance of the Board and its committees; and develops and recommends corporate governance principles and policies applicable to the Company. The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders if such nominations are submitted to the Company prior to the deadline for proposals as noted above under the caption Nomination of Director Candidates on page 51.
The Committees responsibilities with respect to its governance function include considering matters of corporate governance and reviewing (and recommending to the Board revisions to) the Companys corporate governance principles and its code of conduct, which applies to all Company employees, officers and directors. The Committee is governed by a written charter approved by the Board.
Page 8 | Belden Inc. 2017 Proxy Statement |
Corporate Governance Documents
Current copies of the Audit, Compensation, Finance and Nominating and Corporate Governance Committee charters, as well as the Companys governance principles and code of conduct, are available on the Companys website at http://investor.belden.com/investor-relations/corporate-governance/governance-documents/default.aspx. Printed copies of these materials are also available to stockholders upon request, addressed to the Corporate Secretary, Belden Inc., 1 North Brentwood Boulevard, 15th Floor, Saint Louis, Missouri 63105.
Related Party Transactions and Compensation Committee Interlocks
It is our policy to review all relationships and transactions in which the Company and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. Annually, we obtain information from all directors and executive officers with respect to related person transactions to determine, based on the facts and circumstances, whether the Company or a related person has a direct or indirect material interest in any such transaction. As required under SEC rules, transactions that are determined to be directly or indirectly material to the Company or a related person are disclosed in our proxy statement. We have determined that there were no material related party transactions during 2016.
None of our executive officers served during 2016 as a member of the board of directors or as a member of a compensation committee of any other company that has an executive officer serving as a member of our Board of Directors or Compensation Committee.
The Companys Board has established a process to receive communications from stockholders and other interested parties. Stockholders and other interested parties may contact any member (or all members) of the Board (including John Stroup, Chairman of the Board, or Bryan Cressey, Lead Independent Director and presiding director for non-management director meetings), any Board committee, or any chair of any such committee by U.S. mail, through calling the Companys hotline or via e-mail.
To communicate with the Board, any individual director or any group or committee of directors, correspondence should be addressed to the Companys Board or any such individual directors or group or committee of directors by either name or title. All such correspondence should be sent c/o Corporate Secretary, Belden Inc. at 1 North Brentwood Boulevard, 15th Floor, Saint Louis, MO 63105. To communicate with any of our directors electronically or through the Companys hotline, stockholders should go to our corporate website at http://investor.belden.com/investor-relations/corporate-governance/governance-documents/default.aspx. On this page, you will find a section titled Contact the Belden Board, on which are listed the Companys hotline number (with access codes for dialing from outside the U.S.), the Internet address for our web-based hotline portal and an e-mail address that may be used for writing an electronic message to the Board, any individual directors, or any group or committee of directors. Please follow the instructions on our website to send your message.
All communications received as set forth in the preceding paragraph will be opened by (or in the case of the hotline, initially reviewed by) our corporate ombudsman for the sole purpose of determining whether the contents represent a message to our directors. The Belden ombudsman will not forward certain items which are unrelated to the duties and responsibilities of the Board, including: junk mail, mass mailings, product inquiries, product complaints, resumes and other forms of job inquiries, opinion surveys and polls, business solicitations, promotions of products or services, patently offensive materials, advertisements, and complaints that contain only unspecified or broad allegations of wrongdoing without appropriate supporting information.
In the case of communications to the Board or any group or committee of directors, the corporate ombudsmans office will send copies of the contents to each director who is a member of the group or committee to which the envelope or e-mail is addressed.
In addition, it is the Companys policy that each director attends the annual meeting absent exceptional circumstances. Each director attended the Companys 2016 annual meeting.
Belden Inc. 2017 Proxy Statement | Page 9 |
Board Leadership Structure and Role in Risk Oversight
On November 30, 2016, the Board elected John Stroup, President and Chief Executive Officer of the Company, as Board Chairman. Mr. Cressey, who is independent of management and the Company and previously served as Board Chair since 1988, was designated the Lead Independent Director and continues to provide strong leadership experience, strategic vision and an understanding of the risks associated with our business. Mr. Stroup provides strategic planning expertise, general management experience, and in-depth knowledge of the Company, and, as Chairman of the Board, acts as an important liaison between management and the Companys non-employee directors.
Our Board assesses on an ongoing basis the risks faced by the Company in executing its strategic plan. These risks include strategic, technological, competitive and operational risks. The Audit Committee oversees the process we use in performing our periodic enterprise risk management (ERM) analysis (while the Board oversees the content of the analysis, management is responsible for the execution of the process and the development of the content).
Non-Employee Director Stock Ownership Policy
The Boards policy requires that each non-employee director hold Company stock equal in value to five times his or her annual cash retainer (currently 5 times $75,000). Upon appointment, a member has five years to meet this requirement, but must meet interim goals during the five-year period of: 20% after one year; 40% after two years; 60% after three years; and 80% after four years. The value of unvested RSUs are included in making this determination at the higher of their grant date value or current market value. Each non-employee director meets either the full-period or interim-period holding requirement: Ms. Brown and Messrs. Aldrich, Balk, Cressey, Minnich and Monter each meet 100% of the stock holding requirement. Mr. Berglund, who was appointed in December 2013, meets the three-year interim requirement. Mr. Klein, who was appointed in August, 2015 meets the one-year interim requirement.
The following table reflects the director annual compensation structure as of December 31, 2016 and as of May 1, 2017 per changes approved by the Board at its February 2017 meeting:
Description | As of December 31, 2016 ($) | As of May 1, 2017 ($) | Recipient(s) | |||
Cash Components | ||||||
Basic Retainer | 75,000 | 77,250 | All except Stroup | |||
Audit Committee Chair | 12,500 | 12,900 | Minnich | |||
Other Committee Chair | 6,500 | 6,700 | Aldrich, Balk and Monter | |||
Audit Committee Service | 6,500 | 6,700 | Brown, Minnich and Monter | |||
Multiple Committee Service | 6,500 | 6,700 | Balk, Brown, Cressey and Monter | |||
Lead Independent Director | 25,000 | 25,750 | Cressey | |||
Equity Components | ||||||
Restricted Stock Unit Grant | 139,000 | 143,150 | All except Stroup | |||
Additional Grant for Lead Independent Director | 25,000 | 25,750 | Cressey |
Page 10 | Belden Inc. 2017 Proxy Statement |
The following table provides information on non-employee director compensation for 2016.
Director |
Fees Earned or Paid in Cash(1) ($) |
Stock Awards(2) ($) |
Option Awards ($) |
All Other Compensation(3) ($) |
Total($) | |||||||||||||||
David Aldrich | 80,750 | 138,991 | - | 320 | 220,061 | |||||||||||||||
Lance C. Balk | 87,167 | 138,991 | - | 13,240 | 239,398 | |||||||||||||||
Steven W. Berglund | 74,333 | 138,991 | - | 820 | 214,144 | |||||||||||||||
Judy L. Brown | 87,167 | 138,991 | - | 320 | 226,478 | |||||||||||||||
Bryan C. Cressey | 120,521 | 180,747 | - | 415 | 301,683 | |||||||||||||||
Glenn Kalnasy(4) | 30,583 | 138,977 | - | 30,539 | 200,099 | |||||||||||||||
Jonathan Klein | 74,333 | 138,991 | - | 167 | 213,491 | |||||||||||||||
George Minnich | 93,083 | 138,991 | - | 537 | 232,611 | |||||||||||||||
John M. Monter | 93,583 | 138,991 | - | 320 | 232,894 |
(1) | Amount of cash retainer and committee fees. |
(2) | As required by the instructions for completing this column Stock Awards, amounts shown are the grant date fair value of stock awards granted during 2016. The assumptions used in calculating these amounts are described in Note 19: Share-Based Compensation, to the Companys audited financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2016. Each continuing director other than Mr. Cressey received 2,167 RSUs on May 27, 2016 that vest in one year. On the same date, Mr. Cressey received 2,818 RSUs that vest in one year. Upon his retirement from the Board, Mr. Kalnasy received 2,190 shares of the Companys common stock on May 26, 2016. |
(3) | Amount of interest earned on deferred director fees and dividends paid on vested stock awards. |
(4) | Mr. Kalnasy retired from the Board of Directors following Beldens 2016 Annual Shareholders Meeting. |
ITEM I ELECTION OF NINE DIRECTORS
The Company currently has nine directors Ms. Brown and Messrs. Aldrich, Balk, Berglund, Cressey, Klein, Minnich, Monter and Stroup. The term of each director will expire at this annual meeting and the Board proposes that each of Ms. Brown and Messrs. Aldrich, Balk, Berglund, Cressey, Klein, Minnich, Monter and Stroup be reelected for a new term of one year and until their successors are duly elected and qualified. Each nominee has consented to serve if elected. If any of them becomes unavailable to serve as a director, the Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Board.
THE BELDEN BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE NOMINATED SLATE OF DIRECTORS.
Belden Inc. 2017 Proxy Statement | Page 11 |
ITEM II RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017
It is anticipated that Ernst & Young LLP (EY) will be selected as our independent registered public accounting firm for the year ending December 31, 2017, and the Board of Directors has directed that management submit the anticipated appointment for ratification by the stockholders at the annual meeting. EY has served as our registered public accounting firm since the 2004 merger of Belden Inc. and Cable Design Technologies Corporation, and prior to that served as Belden 1993 Inc.s registered public accounting firm since it became a public company in 1993. A representative of the firm will be present at the annual meeting, will have an opportunity to make a statement, if he or she desires, and will be available to respond to appropriate questions.
We are not required to obtain stockholder ratification of the appointment of EY as our independent registered public accounting firm. However, we are submitting the appointment to stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain EY. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time if they determine that such a change would be in our best interests and the best interests of our stockholders.
Fees to Independent Registered Public Accountants for 2016 and 2015
The following table presents fees for professional services rendered by EY for the audit of the Companys annual financial statements and internal control over financial reporting for 2016 and 2015 as well as other permissible audit-related and tax services.
2016 | 2015 | |||||||
Audit Fees | $ | 3,090,000 | $ | 2,727,995 | ||||
Audit-Related Fees | 0 | 0 | ||||||
Tax Fees | $ | 449,131 | $ | 536,464 | ||||
All Other Fees | 0 | 0 | ||||||
Total EY fees | $ | 3,539,131 | $ | 3,264,459 |
Audit fees primarily represent amounts paid or expected to be paid for audits of the Companys financial statements and internal control over financial reporting under SOX 404, reviews of SEC Form S-3, Forms 10-Q, Form 10-K and the proxy statement, statutory audit requirements at certain non-U.S. locations, and comfort letter procedures related to debt issuances.
Audit-related fees are primarily related to due diligence services on completed and potential acquisitions.
Tax fees for 2016 and 2015 are for domestic and international compliance totaling $117,301 and $186,377, respectively, and tax planning totaling $331,830 and $350,087, respectively.
In approving such services, the Audit Committee did not rely on the pre-approval waiver provisions of the applicable rules of the SEC.
Audit Committees Pre-Approval Policies and Procedures
Audit Fees: For 2016, the Committee reviewed and pre-approved the audit services and estimated fees for the year. Throughout the year, the Committee received project updates and approved or ratified amounts that significantly exceeded the original estimates, if any.
Page 12 | Belden Inc. 2017 Proxy Statement |
Audit-Related and Non-Audit Services and Fees: Annually, and otherwise as necessary, the Committee reviews and pre-approves all audit-related and non-audit services and the estimated fees for such services. For recurring services, such as tax compliance and statutory filings, the Committee reviews and pre-approves the services and estimated total fees for such matters by category and location of service.
For non-recurring services, such as special tax projects, due diligence, or other tax services, the Committee reviews and pre-approves the services and estimated fees by individual project. Up to an approved threshold amount, the Committee has delegated approval authority to the Committee Chair.
For both recurring and non-recurring services, the projected fees are updated quarterly and the Committee considers and, if appropriate, approves any amounts exceeding the original estimates.
Should an engagement need pre-approval before the next Committee meeting, the Committee has delegated to the Committee Chair authority to grant such approval up to an approved spending threshold. Thereafter, the entire Committee will review such approval at its next quarterly meeting.
The Audit Committee assists the Board in overseeing various matters, including: (i) the integrity of the Companys financial statements; (ii) all material aspects of the Companys financial reporting, internal accounting control and audit functions; (iii) the qualifications and independence of the independent auditors; and (iv) the performance of the Companys internal audit function and independent auditors.
The Audit Committees oversight includes reviewing with management the Companys major financial risk exposures and the steps management has taken to monitor, mitigate and control such exposures. Management has the responsibility for the implementation of these activities and is responsible for the Companys internal controls, financial reporting process, compliance with laws and regulations and the preparation and presentation of the Companys financial statements.
Ernst & Young LLP (EY), the Companys registered public accounting firm for 2016, is responsible for performing an independent audit of the consolidated financial statements and an audit of the effectiveness of the Companys internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (U.S.) (PCAOB) and issuing reports with respect to these matters, including expressing an opinion on the conformity of the Companys audited financial statements with generally accepted accounting principles.
In connection with the Companys December 31, 2016 financial statements, the Committee: (i) has reviewed and discussed the audited financial statements with management (including managements assessment of the effectiveness of the Companys internal control over financial reporting and EYs audit of the Companys internal control over financial reporting for 2016); (ii) has discussed with EY the matters required to be discussed under PCAOB Auditing Standard No. 16, Communications with Audit Committees; and (iii) has received and discussed with EY the written disclosures and letter from EY required by the PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, and has discussed with EY its independence from the Company.
As part of such discussions, the Committee has considered whether the provision of services provided by EY, not related to the audit of the consolidated financial statements and internal control over financial reporting referred to above or to the reviews of the interim consolidated financial statements included in the Companys quarterly reports on Form 10-Q, is compatible with maintaining EYs independence. (Above is a report on audit fees, audit-related fees, tax fees, and other fees the Company paid EY for services performed in 2016 and 2015.) The Committee has concluded that EYs provision of non-audit services to the Company and its subsidiaries is compatible with its independence.
Belden Inc. 2017 Proxy Statement | Page 13 |
Based on these reviews and discussions, the Committee recommended to the Board that the audited financial statements be included in the Companys Annual Report on Form 10-K for 2016.
Audit Committee
George E. Minnich (Chair)
Judy L. Brown
John M. Monter
THE BELDEN BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF ERNST & YOUNG AS THE COMPANYS INDEPENDENT REGISTERED ACCOUNTING FIRM FOR 2017.
Page 14 | Belden Inc. 2017 Proxy Statement |
Compensation Discussion and Analysis
A NOTE FROM THE BELDEN COMPENSATION COMMITTEE
Valued Belden Stockholders:
The Committee would like to thank Beldens stockholders for another year of loyal support in 2016. For the fifth consecutive year, our Say-on-Pay proposal was supported by over 97% of the voted shares. This illustrates to us that: (1) the stockholders understand and support the Companys strategy, (2) the stockholders agree that the compensation structure is well aligned with strategy and (3) the stockholders believe in the management team and there is an open line of communication between management and stockholders. Continuous engagement with the investment community is a top priority for Belden management and our consistent Say-on-Pay support signals to us that management is executing well on this priority.
2016 was a return to Beldens upward trajectory that had been seen in recent years prior to 2015. The Company recovered nicely from a challenging 2015 and executed several key strategic actions. In July 2016, the Company completed an issuance of $517.5 million of 6.75% Series B Mandatory Convertible Preferred Stock, and in October 2016, the Company completed an offering of 200 million Senior Subordinated Notes due 2026 carrying an interest rate of 4.125%. These actions allowed the Company to significantly de-lever on a net basis and solidify a capital structure with no meaningful maturities until 2022. The enhanced balance sheet will provide the Company with the resources to drive growth in the future, including through the pursuit of additional acquisition opportunities to advance its overall strategy. The investment communitys endorsement of our strategy and performance continue to be reflected in favorable valuations for Belden, and we strive to build upon the trust provided by current and prospective shareholders.
We continue to appreciate, however, that successful times can test a compensation program as much as challenging times. We are acutely aware that as equity prices increase, we need to ensure that our management team remains properly engaged and motivated. We believe that the long term focus of Beldens incentive programs will continue to be successful in motivating our leaders to drive even more value creation well into the future. We believe that after reviewing the materials that follow, you will continue to agree that we are doing our job of aligning pay with performance.
Therefore, we request your support for Beldens 2017 Say-on-Pay proposal. If at any time you would like to discuss the compensation program, we are available to address your questions. Thank you for your consideration.
The Belden Inc. Compensation Committee
DAVID ALDRICH, CHAIR | LANCE BALK | STEVE BERGLUND |
In this section, we discuss our compensation program as it pertains to our chief executive officer, our chief financial officer, and our three other most highly compensated executive officers who were serving at the end of 2016. We refer to these five persons throughout as the named executive officers or our NEOs.
Belden Inc. 2017 Proxy Statement | Page 15 |
For 2016, our named executive officers were:
John Stroup | President, Chief Executive Officer and Chairman | |
Henk Derksen | Senior Vice President, Finance and Chief Financial Officer | |
Glenn Pennycook | Executive Vice President, Enterprise Solutions | |
Ross Rosenberg | Senior Vice President, Strategy and Corporate Development | |
Roel Vestjens | Executive Vice President, Broadcast Solutions |
As noted by our Compensation Committee above, 2016 was marked by strong performance and a return to positive shareholder returns. The issuance of the mandatory convertible preferred stock in July allowed us to markedly reduce our net leverage and position ourselves for the next round of inorganic growth opportunities. While the business as a whole performed well, standout performance was achieved in our enterprise solutions and broadband connectivity businesses. The results of our productivity improvement programs can be seen in our record EBITDA margins of 18.3%, which is within our long-term desired range of 18-20%. Some other financial highlights of the consolidated business included the following (see the Companys Form 8-K filed on February 2, 2017 for a reconciliation of GAAP financial measures to non-GAAP measures):
| Adjusted revenues of $2.358 billion, with adjusted EBITDA margin of 18.3%, increasing 130 basis points from 17.0% in the prior year. |
| Net income of $240.0 million, up 12% over 2015. |
| $261 million of free cash flow, up 40% over 2015 and representing 109% of net income. |
The Companys 2016 overall financial results and the individual performance of our NEOs are discussed under Annual Cash Incentive Plan Awards beginning on page 21.
Our compensation program design takes into account several stockholder friendly features, including:
| Employment of a full year period for the establishment of performance targets under our annual cash incentive program (ACIP). |
| Performance stock unit awards granted under the long term incentive plan (LTIP) with the following features: |
| Performance measurement period of three years. |
| Two factor performance metrics. |
| Use of a relative measure (total stockholder return relative to the S&P 1500 Industrials Index). |
| No provision for any accrued dividend equivalents. |
| Perquisite-light compensation structure with no change-in-control-related excise tax gross-ups in employment agreements entered into after January 1, 2010. |
| Double trigger change-in-control provisions for severance in employment agreements and for accelerated vesting in equity awards granted in and after 2014. |
| No history of option repricing or cash buyouts of underwater options. |
| Equity plans do not have evergreen share authorizations and do not allow for aggressive share recycling. |
| Robust director and officer ownership guidelines, including six times annual base salary for the Chief Executive Officer. |
| No guaranteed ACIP or LTIP awards for officers. Both plans also contain award caps. The Chief Executive Officers maximum ACIP payout is capped at 200% of target. |
Page 16 | Belden Inc. 2017 Proxy Statement |
For the fourth consecutive year, our executive compensation program was endorsed by a vast majority of our stockholders. With 93.50% of our shares voting on the issue, we received 98.97% in favor of the proposal, with only 0.82% opposing and 0.21% abstaining. We believe this is a reflection of the transparency of our program, which is clearly aligned with the interests of our stockholders. Based on this strong endorsement, we did not make any changes to the existing structure of the program.
IV. Compensation Objectives and Elements
Beldens executive compensation program is designed to support the interests of stockholders by rewarding executives for achievement of the Companys specific business objectives, which for the NEOs in 2016 included net income from continuing operations, EBITDA, share capture, operating working capital turns and inventory turns. The overarching principles of the program are:
| Maximizing stockholder value by allocating a significant percentage of compensation to performance-based pay that is dependent upon achievement of the Companys performance goals, without encouraging excessive or unnecessary risk taking. |
| Aligning executives interests with stockholder interests by providing significant stock-based compensation and expecting executives to hold the stock they earn in compliance with our ownership guidelines. |
| Attracting and retaining talented executives by providing competitive compensation opportunities. |
| Rewarding overall corporate results while recognizing individual contributions and behaviors consistent with our values. |
Belden Inc. 2017 Proxy Statement | Page 17 |
Long-Term Incentive Compensation Annual Cash Compensation Performance Stock Units (PSUs) Stock Appreciation Rights (SARs) Annual Cash Incentive Plan (ACIP) Opportunity Base Salary Objective: Supports retention and achievement of Companys total stockholder return and free cash flow objectives; at risk if performance is below certain thresholds Represents 50% of target long-term incentive opportunity 2016 PSUs may or may not result in the delivery of Belden shares in 2019 based Company performance from 2016-2018. Objective: Rewards for the Companys stock price appreciation Represents 50% of target long-term incentive opportunity Vests equally over three years and has 10-year term Has no value when market price is below the grant date price Objective: Rewards achievement of the Companys performance targets and individual performance; zeros out if performance is below certain thresholds Based on target ACIP amount, which is a percentage of base salary If earned, paid annually following the computation and release of year-end financial results Objective: Compensates individuals based on job type and level within the Company Eligible for merit-based increases in connection with annual performance review
Below is an illustration of Beldens compensation program. Individual compensation packages and the mix of base salary, annual cash incentive opportunity and long-term equity incentive compensation for each NEO vary depending upon the executives level of responsibilities, potential, performance and tenure with the Company. Each of the elements shown below is designed for a specific purpose, with the overall goal of achieving a high and sustainable level of Company and individual performance. The percentage of total compensation that is performance-based and therefore at risk generally increases as an officers level of responsibilities increases. Approximately 80% of Mr. Stroups 2016 summary compensation table compensation was performance-based compensation, compared to 85% in 2015 and 79% for 2014. The chart below is not to scale for any particular named executive officer.
Additionally, the Company provides competitive retirement and benefit programs to our NEOs on the same basis as other employees and limited perquisites as described under Compensation Policies and Other Considerations.
C. Pay for Performance Philosophy
Our ability to execute on our strategic plan relies on implementation of our talent management program. We continually seek to hire and retain high performing and high potential managers to both drive performance today and build a dependable bench of successors for the future. The principles of the program are as follows:
| We believe that providing the highest reward to those who deliver the highest levels of performance creates an environment where everyone is motivated to continually improve and strive for their best; |
| We set objective performance measures and hold ourselves accountable for delivery of the results and our own performance; |
| We believe that performance is both what you do and how you do it, so we measure specific delivery of results and how effectively we have lived our values in the current calendar year; |
| We use our annual performance and compensation review process to assess performance in the year and allocate greater reward to those who delivered the highest performance relative to other members of a particular team; and |
Page 18 | Belden Inc. 2017 Proxy Statement |
| We provide honest and timely feedback to each other on performance and opportunities to continuously improve, so that everyone has the opportunity to be the very best at what they do. |
We believe that this philosophy has provided an appropriate balance to drive continuous improvement while retaining high performers through challenging times. More importantly, we believe the incentives we provide for achievement without rewarding under-performance aligns the interests of our managers closely with those of our investors, which is the main objective.
Role of Compensation Consultant
Following an analysis based on rules promulgated by the NYSE, the Compensation Committee has retained Deloitte Consulting LLP (Deloitte Consulting) as its independent compensation consultant. Deloitte reports directly to the Committee. The Committee generally relies on Deloitte to provide it with comparison group benchmarking data and information as to market practices and trends, and to provide advice on key Committee decisions.
In 2016, Deloitte Consulting provided advice to the Compensation Committee and management in connection with the composition of peer companies we use for benchmarking purposes, the design of our annual cash incentive and long-term incentive programs, and our executive employment agreements. For its compensation consulting in 2016, we paid Deloitte Consulting $159,536.
In 2016, our financial management separately engaged affiliates of Deloitte Consulting to perform other services involving internal controls auditing, tax consulting and acquisition due diligence. For these non-compensation related services, we paid Deloitte $3,055,724. The Compensation Committee did not approve these charges prior to their incurrence, but considered them in connection with Deloitte Consultings retention for 2017. Given the nature and scope of these other services, the Compensation Committee does not believe this work had any impact on the independence of our independent consultant. In addition to considering the type and volume of other services performed by Deloitte Consulting and the fees associated therewith in assessing Deloitte Consultings independence, the Compensation Committee considered a number of other factors. These factors include Deloitte Consultings policies and procedures designed to prevent conflicts of interest; the nature of any business or personal relationship between Deloitte Consultings primary consultant and any member of the Compensation Committee or any other executive officer of the Company; and any Belden stock owned by the Deloitte Consulting employees servicing the Companys account. Deloitte Consulting has represented to the Company that none of its employees that service the Companys account own Belden stock.
Benchmarking and Survey Data
In determining total compensation levels for our NEOs, the Compensation Committee reviews market trends in executive compensation and a competitive analysis prepared by Deloitte Consulting, which compares our executive compensation to both the companies in the comparator group described below and to broader market survey data. The Committee also considers other available market survey data on executive compensation philosophy, strategy and design. The Companys compensation philosophy is to target base salaries at the 50th percentile of the competitive market. Individual executives may have base salaries above or below the target based on their individual performances, internal equity and experience. As discussed above, at-risk incentive compensation components have the potential to reward our executives at levels above industry medians, but only when the Company is outperforming the industry.
The Committee chose our comparator group from companies in the primary industry segments in which the Company operates and competes for talent.
Belden Inc. 2017 Proxy Statement | Page 19 |
The comparator group companies for 2016 were as follows:
Acuity Brands, Inc. | Curtiss-Wright Corporation | Regal Beloit Corporation | ||
Amphenol Corporation | General Cable Corporation | Roper Industries, Inc. | ||
Anixter International Inc. | Hexcel Corporation | Viavi Solutions Inc. | ||
A.O. Smith Corporation | Hubbell Incorporated | Wesco International, Inc. | ||
Carlisle Companies Incorporated | IDEX Corporation |
ISS and Glass-Lewis independently develop and publish peer groups that they use to analyze our compensation. It is noteworthy that of the 14 companies in our comparator group, 12 were chosen by ISS, Glass-Lewis, or both, as appropriate peer companies in their 2016 reports. The Committee considers the comparator group competitive pay analysis and survey data as relevant, but non-determinative data points in making its pay decisions. The approach to pay decisions is not formulaic and the Committee, based on advice from Deloitte Consulting, exercises judgment in making them.
Each year, the Committee reviews the performance evaluations and pay recommendations for the named executive officers and the other senior executives. The Compensation Committee, with input from the Board, meets in executive session without the CEO present to review the CEOs performance and set his compensation. In its most recent review in February 2017, the Committee concluded that the total direct compensation of executive officers, with respect to compensation levels, as well as structure, are consistent with our compensation design and objectives.
Salaries of executive officers are reviewed annually and at the time of a promotion or other change in responsibilities. Increases in salary are based on a review of the individuals performance against objective performance measures, the competitive market, the individuals experience and internal equity. For executives who earn a composite individual performance score of 0.91 or more, base salaries may be adjusted using a merit salary increase matrix, discussed below. An executive who scores less than 0.91 and fails to improve his or her performance may be subject to disciplinary action, including dismissal.
The executive is scored on our merit salary increase matrix that is annually reviewed by the Committee and, if appropriate, revised to reflect the competitive market, based on the salary survey data noted above. The executives salary is classified based on three categories: below market, market and above market. Company-wide, the ranking system, which assigns personal performance factor ranging from 0.5 to 1.5, is designed to take the form of a normal distribution.
2016 Merit Increase Guidelines for Named Executive Officers
Personal Performance Factor | ||||||||||||||||
Current Salary | Current Salary as a % of Midpoint |
0.500.90 | 0.911.10 | 1.111.50 | ||||||||||||
Above Market | Above 105% | 0% | 0%-2% | 2%-5% | ||||||||||||
Market | 95%-105% | 0% | 0%-3% | 4%-8% | ||||||||||||
Below Market | Below 95% | 0% | 3%-5% | 6%-10% |
The timing and amount of any salary adjustment will be based on the executives annual overall performance ranking and whether the executive falls below, at or above market as compared to the median of the applicable market data noted above.
For example, an executive with an overall ranking of 1.25 who is above market will receive a lower salary increase than an executive with a ranking of 1.25 who is below market.
Page 20 | Belden Inc. 2017 Proxy Statement |
The named executive officers salaries as of December 31, 2016 are provided in the following table:
Name |
Annual Base Salary at December 31, 2016 |
|||
Mr. Stroup | $ | 875,000 | ||
Mr. Derksen | $ | 520,180 | ||
Mr. Pennycook | $ | 385,740 | ||
Mr. Rosenberg | $ | 401,590 | ||
Mr. Vestjens | $ | 393,230 |
B. Annual Cash Incentive Plan Awards
Executive officers participate in our annual cash incentive plan. Overall, we had 2,454 employees participate in the plans 2016 performance offering. Under the plan, participants earn cash awards based on the achievement of Company and individual performance goals. For 2016, the amount paid under the plan to all participants was approximately $29.0 million or approximately 7.8% of adjusted net income before ACIP expense. This compares to approximately 6.7%, 7.7%, 7.3%, and 7.2% in 2015, 2014, 2013, and 2012, respectively, as shown below:
(Dollar amounts in thousands) | 2016 | 2015 | 2014 | 2013 | 2012 | |||||
Adjusted Net Income | $239,975 | $213,722 | $186,167 | $165,139 | $128,630 | |||||
Tax effected ACIP Expense (assuming 30% rate) (a) | $20,306 | $15,400 | $15,527 | $12,984 | $9,909 | |||||
Adjusted Net Income Before ACIP Expense (b) | $260,281 | $229,122 | $201,694 | $178,123 | $138,539 | |||||
Reflected as a percentage (a divided by b) |
7.80% | 6.72% | 7.70% | 7.29% | 7.15% | |||||
Form 8-K in which adjusted net income is reconciled to GAAP net income | February 2, 2017 |
February 9, 2016 |
February 5, 2015 |
February 6, 2014 |
February 7, 2013 |
A participants award (other than the CEO) is computed using the following formula:
ACIP Award = Base Salary X Target Percentage X Financial Factor X Personal Performance Factor
In 2012, based on the fact that Mr. Stroups personal performance factor (PPF) had consistently been equal to or greater than 1.0, the Compensation Committee removed the component from the calculation of Mr. Stroups ACIP award. The Committee desired to avoid any perception that the PPF was simply serving as a second multiplier to Mr. Stroups award. Given his direct reporting relationship to the Board, the Committee is comfortable that Mr. Stroup is fully accountable without the need of the additional lever to adjust his ACIP award downward or upward.
Target Percentages
For 2016, each NEOs ACIP Target Percentages were as follows: Mr. Stroup130%, Mr. Derksen75% and Messrs. Pennycook, Rosenberg and Vestjens70%.
Belden Inc. 2017 Proxy Statement | Page 21 |
2016 Strategic Plan Financial Goals ACIP/PSU Financial Factors EBITDA Margin of 18-20% Constant Currency Revenue Growth of 5-7% Free
Cash Flow in Excess of Net Income Return on Invested Capital (ROIC) of 13-15%
All segments of the Company had EBITDA targets In a slow growth macroeconomic environment, the
primary way to achieve revenue growth is via share capture PSU conversion to RSUs based in part on free cash flow Improvements in EBITDA, net income and share capture drive enhanced ROIC
Financial Factors
As stated above, performance targets for calculating the Financial Factors were based on net income from continuing operations, EBITDA, share capture, operating working capital turns and inventory turns. In addition, as discussed further below, the performance stock units (PSUs) had performance targets based on relative total stockholder return and free cash flow. In order to ensure that we are rewarding performance that drives stockholder value, these factors flow from and support the strategic financial goals we communicate to our investors.
Performance Factor Determination and Adjustments
The performance factors we use that make up the Financial Factor support our short- and long-range business objectives and strategy. We have selected multiple factors because we believe no one metric is sufficient to capture the performance we are seeking to achieve and any one metric in isolation may not promote appropriate management performance. Management and the Board believe that income from continuing operations and EBITDA are the financial metrics most clearly aligned with the enhancement of stockholder value. Therefore, they are weighted heavily in our consolidated and platform targets. Additionally, share capture continues to be an important measure of our performance versus our competitors. And despite the maturity of our development from a Lean manufacturing standpoint, continuous improvement in inventory and working capital turnover remains a high corporate priority.
In setting performance goals, we consider our annual and long-range business plans and factors such as our past variance to targeted performance, economic and industry conditions, and our industry performance. We set challenging, realistic goals that will motivate performance within the top quartile of our comparator group based on consensus data on the peer companies publicly available at the time the targets are set. We recognize that the metrics may need to change over time to reflect new priorities and, accordingly, review these performance metrics at the beginning of each performance period.
In 2016, threshold, target and maximum levels for the performance factors that make up the Financial Factors were set to challenge management to grow the company in a low growth environment. For instance, the 2016 target for consolidated net income from continuing operations reflected an approximate 6% increase over actual 2015 performance. Likewise, the consolidated EBITDA target represented a 6.5% improvement over actual 2015 performance. Targets for the business platforms reflected similar improvement initiatives. While platform performance on EBITDA and working capital/inventory turns did not fully meet our expectations in some cases, outperformance on share capture was achieved at the platform and consolidated levels. We view this as a positive result of our Belden Market Delivery System.
Page 22 | Belden Inc. 2017 Proxy Statement |
Officers with company-wide responsibilities (Messrs. Stroup, Derksen and Rosenberg) were measured using consolidated performance. Mr. Pennycook and Mr. Vestjens were compensated based on the performance of the Enterprise Connectivity Solutions and Broadcast Solutions platforms, respectively. The applicable factors and weighting percentages are set prior to each performance period as shown in the chart below and illustrated in further detail on Appendix I.
Consistent with the terms of the annual cash incentive plan, the performance factors were adjusted to reflect certain unusual events that occurred during the year. These adjustments can result in either increases or decreases in performance factors and in 2016 primarily concerned amortization of intangible assets, severance, restructuring and acquisition integration costs, impairment of assets held for sale, depreciation expense, as well as the income tax impact of these adjustments. The Compensation Committee and the Audit Committee meet jointly to analyze and approve the adjustments recommended by management. The Committees agree that it was appropriate to adjust the financial results for these matters to properly capture our operating results and to eliminate the potential for managers delaying strategic decisions beneficial to the Company in the long term (e.g., restructuring) because of the impact of those decisions on short-term financial metrics or to benefit from favorable one-time adjustments or unbudgeted events (such as acquisitions).
For each individual performance factor, threshold, target and maximum amounts are set by the Compensation Committee. Actual performance at the threshold level is reflected with a Financial Factor score of 0.5, actual performance at the target level is reflected with a Financial Factor score of 1.0 and actual performance at or above the maximum level is reflected with a Financial Factor score of 2.0. Performance between the threshold and target and between the target and maximum are interpolated on a linear basis. Actual performance below the threshold would result in a component score of 0 and the failure to achieve at least threshold performance on the consolidated net income/platform EBITDA component would result in an overall Financial Factor of 0. Because Financial Factors are capped at 2.0 and because, as described below, he does not have a Personal Performance Factor, Mr. Stroups ACIP payout cannot mathematically be higher than 200% of his target payout.
Belden Inc. 2017 Proxy Statement | Page 23 |
The performance factor definitions, thresholds, targets and actual results, as well as the applicable weighting and calculations for each NEO are contained in Appendix I, which is incorporated herein by this reference. The applicable 2016 Financial Factor for the NEOs is as follows:
Named Executive Officer | Financial Factor | |
Mr. Stroup | 1.46 | |
Mr. Derksen | 1.46 | |
Mr. Pennycook | 1.07 | |
Mr. Rosenberg | 1.46 | |
Mr. Vestjens | 1.01 |
Personal Performance Factor
Each named executive officer other than Mr. Stroup establishes annual personal performance objectives. As discussed above, the Committee feels that the consolidated Financial Factor is the best reflection of Mr. Stroups personal performance and, thus, he does not have a separate Personal Performance Factor (PPF). The other NEOs objectives are agreed upon between the NEO and Mr. Stroup. At the end of the year, the parties measure progress relative to the objectives, as well as an assessment of how effectively the individual has lived the Companys values during the year. Mr. Stroup scores each NEOs PPF on a scale of 0.50 to 1.50.
The personal performance goals reflected in the Personal Performance Factor measure the attainment of short- and long-term goals that often are in furtherance of achieving objectives set out in our three-year strategic plan. Personal performance goals can be qualitative in nature and the determination of the NEOs degree of attainment of them generally requires the judgment of Mr. Stroup. The values scoring is, by definition, subjective based on the managers observations throughout the year, as well as feedback collected from others inside and outside of the organization.
As a general rule, the higher in the organizational structure that one sits, the more global in scope are his or her personal objectives. Mr. Derksen, as the CFO, had objectives in the areas of talent management, and information technology and investor relations performance, but also focused other objectives on areas specific to the finance function, e.g., accounting, tax and capital structure. As the chief strategy officer, Mr. Rosenberg had objectives relating to the Companys M&A funnel and integration, as well as talent management and other strategic objectives. As the EVPs of two of Beldens product platforms, the objectives of Messrs. Pennycook and Vestjens were supportive of the Companys global goals, but focused within their respective business units. Their objectives related to the areas of growth, both organic and M&A, talent management and operational excellence through the continued institution of Lean enterprise principles in their respective business units.
The 2016 Personal Performance Factors for the NEOs as recommended by Mr. Stroup and approved by the Committee ranged from 0.90 to 1.25.
Page 24 | Belden Inc. 2017 Proxy Statement |
Annual Cash Incentive Plan Payouts
Based on the preceding discussion, each NEOs annual cash incentive plan award is as shown in the table below. The awards were paid out following adoption of the Financial Factors and Personal Performance Factors by the Committee in February 2017.
NEO | 2016 ACIP Award(1) ($) |
Percentage of Target | ||||||
John Stroup | 1,660,750 | 146 | % | |||||
Henk Derksen | 712,000 | 183 | % | |||||
Glenn Pennycook | 332,260 | 123 | % | |||||
Ross Rosenberg | 369,380 | 131 | % | |||||
Roel Vestjens | 347,520 | 126 | % |
(1) | For administrative convenience, the final payouts are rounded to the nearest ten dollar amount. |
C. Performance-Based Equity Awards
Our long-term equity incentive plan is designed to align the financial interests of our executives and our stockholders by providing executives with a continuing stake in the long-term success of the company. With grants of SARs that have value only if Beldens stock price increases and PSUs that only convert into Belden shares if certain performance metrics are achieved, the plan emphasizes Pay-for-Performance. For 2016, executive officers received 50% of their LTI award (discussed below) under the plan in the form of SARs and 50% in the form of PSUs.
Individual performance, the competitive market, executive experience and internal equity were factors used to determine the total dollar value of SARs and PSUs granted to each executive officer in 2016, which we refer to as the Long-Term Incentive Value, or LTI Value.
LTI Value
We use the following matrix to determine the LTI as a percentage of base salary for each officer:
PPF | 0.85 1.15 | 1.16 1.50 | ||
Percentage of Target LTI | 70% 120% | 100% 190% |
An officer did not receive an equity award in 2016 if his or her 2015 Personal Performance Factor was less than 0.85. Mr. Stroup does not have a target LTI percentage or a Personal Performance Factor. At its February 2016 meeting, the Compensation Committee awarded Mr. Stroup LTI with a grant date fair value of approximately $3.35 million, or approximately 383% of base salary. Mr. Derksen has a Target LTI of 160% while Messrs. Pennycook, Rosenberg and Vestjens each have a Target LTI percentage of 120% of their respective base salaries.
To illustrate the LTI value matrix, assume a base salary of $200,000 and a Target LTI percentage of 50%. The Target LTI is $100,000. Assuming the officers PPF is 1.0, he or she would receive equity valued between $70,000 and $120,000. If the same officers PPF is 1.20, he or she would receive equity valued between $100,000 and $190,000. The exact amount granted within the range for each individual is at the discretion of the individuals immediate supervisor (the LTI Award).
For 2016, the NEOs received 50% of their LTI Award in the form of SARs and 50% in the form of PSUs. We use the Black-Scholes-Merton (Black-Scholes) option pricing formula to calculate SAR values. Instead of using the grant date stock price as the input in the Black-Scholes formula, we use a one-year average price of the stock (the Average Belden Stock Price). That same price is utilized to determine the number of PSUs granted. In summary, the LTI Award is allocated into the number of units resulting from the following formulas:
SARs = 50% of the LTI Award divided by the Black-Scholes value of a Belden SAR, rounded to the nearest unit.
PSUs = 50% of the LTI Award divided by the Average Belden Stock Price, rounded to the nearest unit.
Belden Inc. 2017 Proxy Statement | Page 25 |
Half of the PSUs granted in 2016 will be measured based on total stockholder return (TSR) relative to the S&P 1500 Industrials Index. The other half of the PSUs will be measured based on cumulative consolidated free cash flow. The PSU agreements state that following the three-year performance period, a conversion factor ranging from 0 to 2.0 will be applied to each award. The result of that formula, rounded to the nearest whole unit, is the gross number of Belden shares the officer will receive. The actual number of shares to be distributed will be net of any required withholding taxes. The PSUs granted in 2016 will be measured on the performance period from February 24, 2016 (the grant date) to December 31, 2016, in the case of the TSR-based PSUs, and January 1, 2016 to December 31, 2018, in the case of the free cash flow-based PSUs. The conversion and any required payout will occur in the first quarter of 2019.
Conversion will be effected based on the following threshold, target and maximum levels:
Factor | Threshold | Target | Maximum | |||
Relative TSR | 25th Percentile | 50th Percentile | 75th Percentile | |||
Consolidated Free Cash Flow | $606 million | $758 million | $910 million |
For the PSUs based on relative TSR, threshold performance results in a conversion factor of 0.25, target performance results in a conversion factor of 1.00 and maximum performance results in a conversion factor of 2.00. Performance between threshold and target and between target and maximum are interpolated on a linear basis.
For the PSUs based on consolidated free cash flow, threshold performance results in a conversion factor of 0.50, target performance results in a conversion factor of 1.00 and maximum performance results in a conversion factor of 2.00. Performance between threshold and target and between target and maximum are interpolated on a linear basis.
The SARs provide a material incentive for executives to increase the Companys share price during their ten-year term, and they serve as a retention tool because they take three years to fully vest. The PSUs drive performance against targets during the three-year performance period.
At its February 2016 meeting, the Compensation Committee approved equity award grants in the form of 286,819 SARs, 91,007 PSUs and 66,353 RSUs to over 400 employees. The table below shows the total 2016 grants of SARs and RSUs to the named executive officers.
2016 Equity Awards to NEOs
NEO | SARs(1) | PSUs | ||
Mr. Stroup | 81,175 | 30,078 | ||
Mr. Derksen | 16,409 | 6,080 | ||
Mr. Pennycook | 10,256 | 3,800 | ||
Mr. Rosenberg | 9,435 | 3,496 | ||
Mr. Vestjens | 9,435 | 3,496 |
(1) | The Committee granted the listed SARs to the NEOs at the closing price of Belden stock on February 24, 2016 ($52.89), the grant date of the awards. |
VI. Compensation Policies and Other Considerations
Stock Ownership Guidelines
To align their interests with those of the Companys stockholders, the Companys executive officers must hold stock whose value is at least three times their annual base salary (six times in the case of Mr. Stroup). Officers have five years from the date they are appointed an officer to acquire the appropriate shareholdings. In
Page 26 | Belden Inc. 2017 Proxy Statement |
addition, officers must make interim progress toward the ownership requirement during the five year period 20% after one year, 40% after two years, 60% after three years and 80% after four years. For purposes of determining ownership, unvested RSUs and the value of vested but unexercised, in-the-money options and SARs are included. For calculation purposes, the Company will use the higher of the current trading price or the acquisition price. As of March 27, 2017 (our record date for the annual meeting), each of the named executive officers either met his interim or five-year stock ownership guideline. In accordance with Company policy, an officer is prohibited from selling Belden stock received from the Company as an equity award until the officer meets the interim guideline.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the Companys CEO or any of the Companys other NEOs who are employed as of the end of the fiscal year. This limitation does not apply to compensation that meets the requirements under Section 162(m) for qualifying performance based compensation (i.e., compensation paid only if performance meets pre-established objective goals based on performance criteria approved by stockholders). The Companys incentive compensation plans are designed to qualify under Internal Revenue Code Section 162(m) to ensure tax deductibility. However, the Committee retains the flexibility to design and administer compensation programs that are in the best interests of Belden and its stockholders.
Annual non-equity based incentive compensation and PSUs for our Named Executive Officers are unguaranteed, subject to maximum payout amounts based on the achievement of the Section 162(m) performance objectives established by the Committee annually. These objectives are selected by the Committee from among the performance metrics in the annual incentive plan for non-equity based compensation and the long term incentive plan for the PSUs. The Committee may exercise negative discretion to reduce the award based on an assessment of Company and individual performance. For 2016, the Committee awarded less than the maximum amount. Also, our compensation plans comply with the requirements of Internal Revenue Code Section 409A, which requires that nonqualified deferred compensation arrangements must meet specific requirements.
In accordance with FASB ASC Topic 718, for financial statement purposes, we expense all equity-based awards over the period earned based upon their estimated fair value at grant date.
Executive Compensation Recovery
In accordance with the Sarbanes-Oxley Act of 2002, Mr. Stroup, as CEO, and Mr. Derksen, as CFO, must forfeit certain bonuses and profits if the Company is required to restate its financial statements as a result of misconduct. In addition, if the Board of Directors determines that any other executive officer has engaged in fraudulent or intentional misconduct that results in the Company restating its financial statements because of a material inaccuracy, the Company, as permitted by law, will seek to recover any cash incentive compensation or other equity-based compensation (including proceeds from the exercise of a stock option or SAR) received by the officer from the Company during the 12-month period following the first public issuance or filing with the SEC of the financial statement required to be restated. The Company will revisit its clawback policies once the proposed rules issued by the SEC implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) are finalized.
Insider Trading; Hedging and Pledging of Company Stock
Company policy requires executive officers and directors to consult the Companys legal department prior to engaging in transactions involving Belden stock. In order to protect the Company from exposure under insider trading laws, executive officers and directors are encouraged to enter into pre-programmed trading plans under Securities Exchange Act Rule 10b5-1. The Company will not approve hedging or monetization transactions including, but not limited to, through the use of financial instruments such as exchange funds, prepaid variable forwards, equity swaps, puts, calls, collars, forwards and other derivative instruments, or through the
Belden Inc. 2017 Proxy Statement | Page 27 |
establishment of a short position in the Companys securities. Executive officers and directors are prohibited from utilizing margin accounts to engage in transactions in Belden stock and from pledging Belden stock for any purpose. The Company will revisit its trading policies once the proposed rules issued by the SEC implementing the Dodd-Frank Act are finalized.
Equity Compensation Grant Practices
The Committee approves all grants of equity compensation, including stock appreciation rights, performance stock units and restricted stock units, to executive officers of the Company, as defined in Section 16 of the Exchange Act. All elements of executive officer compensation are reviewed by the Committee annually at its February/March meeting. Generally, the Companys awards of stock appreciation rights, performance stock units and/or restricted stock units are made at that meeting, but may be made at other meetings of the Committee. The Committee meeting date, or the next business day if the meeting falls on a non-business day, is the grant date for stock appreciation rights and restricted stock unit awards. The Company may also make awards in connection with acquisitions or promotions, or for retention purposes. Under the Companys equity plan, the Committee may delegate to the Companys CEO the authority to grant stock options to any employees of the Company other than executive officers of the Company as that term is defined in Section 16 of the Exchange Act. The Committee has exercised this authority and delegated to the CEO the ability to make limited equity grants in connection with promotion, retention and acquisitions, which he uses strategically but infrequently. Awards made by the CEO are reported to the Committee on a periodic basis.
Employment Agreements: Severance, Termination and Retirement
The Company has an employment agreement with each of the named executive officers. We believe that our agreements are essential in attracting and retaining the desired executive talent in a competitive market. In addition, the agreements benefit the Company by providing for the upfront agreement of each executive on certain important provisions, including post-termination covenants and an agreement to provide a full release of claims against the Company. These agreements address key provisions of the employment relationship, including payment of severance benefits upon a termination of employment before and after a change of control of the Company. Beginning in 2010, new executive employment agreements no longer contain a gross-up to compensate the executives for an Internal Revenue Code Section 280G excise tax. Instead the executives are given the option of either (a) collecting their full severance and paying the excise tax themselves with no assistance from the Company or (b) reducing the severance payments to an amount that prevents the excise tax from being imposed. Information regarding benefits under these agreements is provided following this Compensation Discussion and Analysis under the heading Potential Payments upon Termination or Change of Control.
Aircraft
The Company owns and from time to time leases corporate aircraft to provide flexibility to executive officers and other associates to allow more efficient use of executive time for Company matters. The Nominating and Corporate Governance Committee reviews managements use of corporate aircraft throughout the year to confirm that it is consistent with this philosophy and in full compliance with the regulations promulgated by the Federal Aviation Administration, the Internal Revenue Service and the Securities and Exchange Commission.
Benefits and Perquisites
The named executive officers receive retirement and health care benefits on a consistent basis with other Belden employees. As described in Pension Benefits and Nonqualified Deferred Compensation, excess defined benefit and defined contribution plans are offered to eligible U.S. employees. In order to attract and retain talented officers, we have provided certain other compensation to our NEOs. In connection with an expatriate assignment in Hong Kong that ended in 2014, Mr. Vestjens was, by agreement, entitled to tax equalization, including a gross-up to make him whole financially. Other than this limited exception, it is our policy to not provide tax gross-ups for any perquisites provided to executive officers.
Page 28 | Belden Inc. 2017 Proxy Statement |
Report of the Compensation Committee
The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis section of this proxy statement. Based on such review and discussion, the Committee recommended to the Board of Belden that the Compensation Discussion and Analysis be included in the proxy statement.
Compensation Committee
David Aldrich (Chair)
Lance Balk
Steve Berglund
We consider the variable, pay-for-performance components of our compensation programs to assess the level of risk-taking these elements may create. The variable components of our compensation programs offered to management (including our executives) are our annual cash incentive plan and performance-based equity awards program. We believe the way we select and set performance goals and targets with multiple levels of performance; using gradually-sloped payout curves that do not provide large payouts for small incremental improvements; and confirming the achievement of performance before issuing the awards, all reduce the potential for managements excessive risk-taking or poor judgment. Consistent with sound risk management, we limit the annual cash incentive award by capping the financial factor component at two times the target, as well as capping the awards themselves at the lesser of three times target or $5 million. The long-term incentive is limited through the use of a fixed percentage of the participants base salary. In addition, we require that executive officers adhere to stock ownership guidelines to promote a long-term focus and have adopted a compensation recovery policy in the event of fraudulent or intentional misconduct that leads to a restatement of our financial results.
We also consider our variable compensation programs offered to other associates. These are primarily incentive programs offered to sales and marketing associates. We believe the way we administer these programs reduces the potential of their causing a material adverse impact on the Company through excessive risk-taking. We have customer contract practices with respect to operating margins, customer creditworthiness, and channel management that are designed to reduce poor judgment in connection with entering into sales contracts having unreasonable terms. Sales targets are not designed to provide large payouts that are either based on small incremental improvement or overly aggressive goals that could induce excessive risk-taking by the salesperson. These programs are monitored throughout the performance period to ensure they are being properly administered. The results are subject to multiple levels of approval, including through the involvement of internal and external audit resources.
Starting on the next page are the following compensation tables:
| Summary Compensation Table; |
| Grants of Plan-Based Awards; |
| Outstanding Equity Awards at Fiscal Year-End; |
| Option Exercises and Stock Vested; |
| Pension Benefits; |
| Nonqualified Deferred Compensation; and |
| Potential Payments Upon Termination or Change-in-Control. |
Belden Inc. 2017 Proxy Statement | Page 29 |
Name and Principal Position (a) |
Year (b) |
Salary(1) ($) (c) |
Bonus ($) (d) |
Stock Awards(2) ($) (e) |
Option Awards(3) ($) (f) |
Non-Equity Incentive Plan Compen- sation(4) ($) (g) |
Change in Pension Value and Nonqualified Deferred Compen- Earnings(5) ($) (h) |
All Other Compensa- ($) (i) |
Total ($) (j) |
|||||||||||||||||||||||||||
John Stroup | 2016 | 868,750 | - | 1,825,283 | 1,525,278 | 1,660,750 | 273,681 | 100,466 | 6,254,208 | |||||||||||||||||||||||||||
Chairman, President and | 2015 | 850,000 | - | 2,802,138 | 1,967,901 | 1,093,950 | 91,352 | 115,769 | 6,921,110 | |||||||||||||||||||||||||||
Chief Executive | 2014 | 850,000 | - | 1,966,865 | 1,929,994 | 1,143,680 | 387,080 | 110,462 | 6,388,081 | |||||||||||||||||||||||||||
Officer | ||||||||||||||||||||||||||||||||||||
Henk Derksen | 2016 | 512,820 | - | 368,965 | 308,325 | 712,000 | 100,069 | 45,924 | 2,048,103 | |||||||||||||||||||||||||||
Senior Vice | 2015 | 486,023 | - | 597,772 | 419,818 | 382,590 | 58,230 | 47,543 | 1,991,976 | |||||||||||||||||||||||||||
President, Finance, | 2014 | 464,153 | - | 544,638 | 534,462 | 418,750 | 110,300 | 44,062 | 2,116,365 | |||||||||||||||||||||||||||
and Chief Financial | ||||||||||||||||||||||||||||||||||||
Officer | ||||||||||||||||||||||||||||||||||||
Glenn Pennycook | 2016 | 379,430 | - | 230,603 | 192,710 | 332,260 | 73,140 | 41,961 | 1,250,104 | |||||||||||||||||||||||||||
Executive Vice | 2015 | 357,875 | - | 283,997 | 199,421 | 391,770 | 36,375 | 31,835 | 1,301,273 | |||||||||||||||||||||||||||
President, Enterprise | - | |||||||||||||||||||||||||||||||||||
Solutions | ||||||||||||||||||||||||||||||||||||
Ross Rosenberg | 2016 | 398,665 | - | 212,155 | 177,284 | 369,380 | - | 20,849 | 1,178,333 | |||||||||||||||||||||||||||
Senior Vice | 2015 | 387,050 | - | 336,274 | 236,159 | 270,190 | - | 15,266 | 1,244,939 | |||||||||||||||||||||||||||
President, Strategy | ||||||||||||||||||||||||||||||||||||
and Corporate | ||||||||||||||||||||||||||||||||||||
Development | ||||||||||||||||||||||||||||||||||||
Roel Vestjens | 2016 | 388,547 | - | 212,155 | 177,284 | 347,520 | - | 63,917 | 1,189,422 | |||||||||||||||||||||||||||
Executive Vice | 2015 | 368,375 | - | 373,663 | 262,378 | 238,560 | - | 576,497 | 1,819,473 | |||||||||||||||||||||||||||
President, Broadcast | 2014 | 311,087 | - | 242,094 | 237,543 | 290,510 | - | 313,826 | 1,395,060 | |||||||||||||||||||||||||||
Solutions |
(1) | Salaries are amounts actually received. |
(2) | Reflects the aggregate grant date fair value with respect to awards of stock for each named officer computed in accordance with FASB ASC Topic 718. See Grants of Plan-Based Awards Table for 2016 stock awards to the named officers. The assumptions used in calculating these amounts are described in Note 19: Share-Based Compensation, to the Companys audited financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2016. |
Each amount listed in column (e) represents the grant date fair value of performance share units (PSUs) based on the assumption that the Company would meet its performance goals at the target level, resulting in, in the case of the PSUs granted in 2014, one restricted stock unit (RSU), or in the case of the PSUs granted in 2015 and 2016, one share of Belden stock, being issued to the officer for each PSU. In 2014, performance at 120% of target levels or greater would have resulted in the issuance of two RSUs for each PSU. For the PSUs granted in 2015 and 2016, performance over the relevant three-year measurement period at 120% of target levels or greater (in the case of PSUs based on free cash flow) or at or greater than the 75th percentile (in the case of PSUs based on relative TSR) could result in the issuance of two shares of Belden stock for each PSU. During each performance period, the Company periodically analyzes performance and makes appropriate adjustments to the amount of stock-based compensation expense it records. Based on this structure, the maximum grant date fair value of each award (in dollars) was as follows:
Mr. Stroup | Mr. Derksen | Mr. Pennycook | Mr. Rosenberg | Mr. Vestjens | ||||||
2016 | 3,650,567 | 737,930 | 461,206 | 424,310 | 424,310 | |||||
2015 | 5,604,276 | 1,195,544 | 567,994 | 672,548 | 747,325 | |||||
2014 | 3,933,729 | 1,089,276 | Not listed | Not listed | 484,187 |
Page 30 | Belden Inc. 2017 Proxy Statement |
(3) | Reflects the aggregate grant date fair value with respect to awards of options or SARs for each named officer computed in accordance with FASB ASC Topic 718. The assumptions used in calculating these amounts are described in Note 19: Share-Based Compensation, to the Companys audited financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2016. |
(4) | Represents amounts earned under the Companys annual cash incentive plan as determined by the Compensation Committee at its February 2017 meeting. |
(5) | The amounts in this column reflect the increase in the actuarial present value of the accumulated benefits under the Companys defined benefit plans in which the named executives participate. None of the named executives received above-market or preferential earnings on deferred compensation. |
(6) | The amounts (in dollars) shown in column (i) for 2016 consist of the following: |
Total |
Companys Matching Contributions In Its Defined Contribution Plan |
Life Insurance and Long Term Disability Benefits |
Restricted Stock Dividends |
Gross-Up on Tax Equalization Payment | ||||||
John Stroup | 100,466 | 88,321 | 4,755 | 7,390 | - | |||||
Henk Derksen | 45,924 | 40,294 | 4,112 | 1,518 | - | |||||
Glenn Pennycook | 41,961 | 34,704 | 6,161 | 1,096 | - | |||||
Ross Rosenberg | 20,849 | 11,925 | 3,083 | 5,841 | - | |||||
Roel Vestjens | 63,917 | 28,220 | 3,184 | 538 | 31,975 |
Belden Inc. 2017 Proxy Statement | Page 31 |
Name | Grant Date |
Award Type |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards(2) |
All Other Stock Awards: Number of Shares of Stock or Units (#) |
All Other Option Awards: Number of Securities Underlying Options(3) (#) |
Exercise or Base Price of Option Awards(4) ($ per Share) |
Grant Date Fair Value of Stock and Option Awards | ||||||||||||||||||||||||||||||||||||
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | |||||||||||||||||||||||||||||||||
John Stroup |
ACIP | 568,750 | 1,137,500 | 2,275,000 | ||||||||||||||||||||||||||||||||||||||||
2/24/2016 | PSU | 11,279 | 30,078 | 60,156 | 1,825,283 | |||||||||||||||||||||||||||||||||||||||
2/24/2016 | SAR | 81,175 | 52.89 | 1,525,278 | ||||||||||||||||||||||||||||||||||||||||
Henk Derksen |
ACIP | 97,534 | 390,135 | 1,170,405 | ||||||||||||||||||||||||||||||||||||||||
2/24/2016 | PSU | 2,280 | 6,080 | 12,160 | 368,965 | |||||||||||||||||||||||||||||||||||||||
2/24/2016 | SAR | 16,409 | 52.89 | 308,325 | ||||||||||||||||||||||||||||||||||||||||
Glenn Pennycook |
ACIP | 67,505 | 270,018 | 810,054 | ||||||||||||||||||||||||||||||||||||||||
2/24/2016 | PSU | 1,425 | 3,800 | 7,600 | 230,603 | |||||||||||||||||||||||||||||||||||||||
2/24/2016 | SAR | 10,256 | 52.89 | 192,710 | ||||||||||||||||||||||||||||||||||||||||
Ross Rosenberg |
ACIP | 281,113 | 281,113 | 843,339 | ||||||||||||||||||||||||||||||||||||||||
2/24/2016 | PSU | 1,311 | 3,496 | 6,992 | 212,155 | |||||||||||||||||||||||||||||||||||||||
2/24/2016 | SAR | 9,435 | 52.89 | 177,284 | ||||||||||||||||||||||||||||||||||||||||
Roel Vestjens |
ACIP | 68,815 | 275,261 | 825,783 | ||||||||||||||||||||||||||||||||||||||||
2/24/2016 | PSU | 1,311 | 3,496 | 6,992 | 212,155 | |||||||||||||||||||||||||||||||||||||||
2/24/2016 | SAR | 9,435 | 52.89 | 177,284 |
(1) | The amounts in column (c) represent the cash payment under the Companys annual cash incentive plan (ACIP) that would have been made if the threshold performance for 2016 was met, including a personal performance factor of 0.5; the amounts in column (d) represent the cash payment under ACIP that would have been made if the target performance for 2016 was met; and the amounts in column (e) represent the maximum cash payment under ACIP, the lesser of three times target or $5 million. For Mr. Stroup, the maximum cash payment under ACIP is two times target because the company financial factor is capped at 2.0 and because a personal performance factor is not utilized for him. |
(2) | The Compensation Committee granted the performance stock unit awards (PSUs) at its February 24, 2016 meeting. The PSUs granted in 2016 will be measured on the performance period from February 24, 2016 (the grant date) to December 31, 2018, in the case of the TSR-based PSUs, and January 1, 2016 to December 31, 2018, in the case of the free cash flow-based PSUs. Any payout will be made in shares of Belden stock in 2019. The conversion factor from PSUs to shares is based on the Companys total stockholder return over the performance period measured relative to the S&P 1500 Industrials Index, weighted 50%, and the companys consolidated free cash flow over the performance period, weighted 50%. |
(3) | The amounts in column (j) are the number of SARs granted to each of the named executive officers in 2016. These awards vest in equal amounts over three years on the first, second and third anniversaries of the grant date and expire on the tenth anniversary of the grant date. |
(4) | The exercise price for awarded SARs was the closing price of the Belden shares on the grant date. |
Page 32 | Belden Inc. 2017 Proxy Statement |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards | Stock Awards | |||||||||||||||||
Name | Number of Securities Underlying Unexercised Options(1) |
Number of Securities Underlying Unexercised Options(2)(3) |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options |
Option Exercise Price(4) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested(5) |
Market Value of Shares or Units of Stock That Have Not Vested(6) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(7) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(8) | |||||||||
(a) | (#) Exercisable (b) |
(#) Unexercisable (c) |
(#) (d) |
($) (e) |
(f) | (#) (g) |
($) (h) |
# (i) |
($) (j) | |||||||||
John Stroup |
34,137 | - | - | 50.010 | 3/4/2023 | 27,645 | 2,067,016.65 | 25,407 | 1,899,681.40 | |||||||||
36,275 | 18,137 | 72.570 | 3/4/2024 | 30,078 | 2,248,932.06 | |||||||||||||
20,891 | 41,781 | 89.230 | 2/25/2025 | |||||||||||||||
- | 81,175 | 52.890 | 2/24/2026 | |||||||||||||||
Henk Derksen |
10,230 | - | - | 35.830 | 3/1/2021 | 7,655 | 572,364.35 | 5,420 | 405,253.40 | |||||||||
3,100 | - | 28.760 | 8/28/2021 | 6,080 | 454,601.60 | |||||||||||||
24,810 | - | 39.830 | 2/27/2022 | |||||||||||||||
15,234 | - | 50.010 | 3/4/2023 | |||||||||||||||
10,046 | 5,022 | 72.570 | 3/4/2024 | |||||||||||||||
4,457 | 8,913 | 89.230 | 2/25/2025 | |||||||||||||||
- | 16,409 | 52.890 | 2/24/2026 | |||||||||||||||
Glenn Pennycook |
13,190 | - | - | 21.700 | 2/22/2020 | 2,764 | 206,664.28 | 2,575 | 192,532.76 | |||||||||
11,200 | - | 35.830 | 3/1/2021 | 3,800 | 284,126.00 | |||||||||||||
9,950 | - | 39.830 | 2/27/2022 | |||||||||||||||
6,311 | - | 50.010 | 3/4/2023 | |||||||||||||||
3,628 | 1,813 | 72.570 | 3/4/2024 | |||||||||||||||
2,117 | 4,234 | 89.230 | 2/25/2025 | |||||||||||||||
- | 10,256 | 52.890 | 2/24/2026 | |||||||||||||||
Ross Rosenberg |
- | 30,600 | - | 50.070 | 2/18/2023 | 2,339 | 174,887.03 | 3,049 | 227,973.74 | |||||||||
2,477 | - | 50.010 | 3/4/2023 | 3,496 | 261,395.92 | |||||||||||||
1,535 | 1,534 | 72.570 | 3/4/2024 | |||||||||||||||
2,507 | 5,014 | 89.230 | 2/25/2025 | |||||||||||||||
- | 9,435 | 52.890 | 2/24/2026 | |||||||||||||||
Roel Vestjens |
980 | - | - | 39.830 | 2/27/2022 | 3,403 | 254,442.31 | 3,388 | 253,320.76 | |||||||||
5,392 | - | 50.010 | 3/4/2023 | 3,496 | 261,395.92 | |||||||||||||
4,465 | 2,232 | 72.570 | 3/4/2024 | |||||||||||||||
2,786 | 5,570 | 89.230 | 2/25/2025 | |||||||||||||||
- | 9,435 | 52.890 | 2/24/2026 |
(1) | Shows vested SARs. |
(2) | Shows unvested SARs. |
(3) | For Mr. Stroup, his 18,137 unexercisable SARs expiring on March 4, 2024 vested on March 4, 2017. His 41,781 unexercisable SARs expiring on February 25, 2025 vest as follows: 20,891 on February 25, 2017 and 20,890 on February 25, 2018. His 81,175 unexercisable SARs expiring on February 24, 2026 vest as follows: 27,059 on February 24, 2017, 27,058 on February 24, 2018, and 27,058 on February 24, 2019. |
For Mr. Derksen, his 5,022 unexercisable SARs expiring on March 4, 2024 vested on March 4, 2017. His 8,913 unexercisable SARs expiring on February 25, 2025 vest as follows: 4,457 on February 25, 2017 and 4,456 on February 25, 2018. His 16,409 unexercisable SARs expiring on February 24, 2026 vest as follows: 5,470 on February 24, 2017; 5,470 on February 24, 2018, and 5,469 on February 24, 2019.
For Mr. Pennycook, his 1,813 unexercisable SARs expiring on March 4, 2024 vested on March 4, 2017. His 4,234 unexercisable SARs expiring on February 25, 2025 vest as follows: 2,117 on February 25, 2017 and 2,117 on February 25, 2018. His 10,256 unexercisable SARs expiring on February 24, 2026, vest as follows: 3,419 on February 24, 2017, 3,419 on February 24, 2018, and 3,418 on February 24, 2019.
Belden Inc. 2017 Proxy Statement | Page 33 |
For Mr. Rosenberg, his 30,600 unexercisable SARs expiring on February 18, 2023 vest on February 18, 2018. His 1,534 unexercisable SARs expiring on March 4, 2024 vested on March 4, 2017. His 5,014 unexercisable SARs expiring on February 25, 2025 vest as follows: 2,507 on February 25, 2017 and 2,507 on February 25, 2018. His 9,435 unexercisable SARs expiring on February 24, 2026 vest as follows: 3,145 on February 24, 2017, 3,145 on February 24, 2018, and 3,145 on February 24, 2019.
For Mr. Vestjens, his 2,232 unexercisable SARs expiring on March 4, 2024 vested on March 4, 2017. His 5,570 unexercisable SARs expiring on February 25, 2025 vest as follows: 2,785 on February 25, 2017 and 2,785 on February 25, 2018. His 9,435 SARs expiring on February 24, 2026 vest as follows: 3,145 on February 24, 2017, 3,145 on February 24, 2018, and 3,145 on February 24, 2019.
(4) | The exercise price of SAR awards granted was the closing price of Belden shares on the grant date. |
(5) | Mr. Stroups 27,645 RSUs vested on February 25, 2017. |
Mr. Derksens 7,655 RSUs vested on February 25, 2017.
Mr. Pennycooks 2,764 RSUs vested on February 25, 2017.
Mr. Rosenbergs 2,339 RSUs vested on February 25, 2017.
Mr. Vestjens 3,403 RSUs vested on February 25, 2017.
(6) | The market value represents the product of the number of shares and the closing market price of Belden shares on December 30, 2016 ($74.77). |
(7) | On each of February 25, 2015 and February 24, 2016, the NEOs were granted PSUs. Each tranche of PSUs carries a three year measurement period. Based on the Companys performance during this period on total stockholder return relative to the S&P 1500 Industrials Index, weighted 50%, and on consolidated free cash flow, weighted 50%, a conversion factor from 0 to 2.0 will be generated. If the conversion factor is greater than 0, the PSUs will be converted to a whole number of shares and delivered to the NEOs upon vesting. |
Mr. Stroups 25,407 PSUs vest on February 25, 2018. His 30, 078 PSUs vest on February 24, 2019.
Mr. Derksens 5,420 PSUs vest on February 25, 2018. His 6,080 PSUs vest on February 24, 2019.
Mr. Pennycooks 2,575 PSUs vest on February 25, 2018. His 3,800 PSUs vest on February 24, 2019.
Mr. Rosenbergs 3,049 PSUs vest on February 25, 2018. His 3,496 PSUs vest on February 24, 2019.
Mr. Vestjens 3,388 PSUs vest on February 25, 2018. His 3,496 PSUs vest on February 24, 2019.
(8) | The market value represents the product of the number of shares and the closing market price of Belden shares on December 30, 2016 ($74.77). |
Page 34 | Belden Inc. 2017 Proxy Statement |
OPTION EXERCISES AND STOCK VESTED
Option Awards | Stock Awards | |||||||
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting(1) ($) | ||||
(a) | (b) | (c) | (d) | (e) | ||||
John Stroup | 18,335 | 2,603,525(2) | 18,476 | 1,096,366 | ||||
Henk Derksen | 8,953 | 697,503(3) | 3,796 | 225,255 | ||||
Glenn Pennycook | - | - | 2,089 | 123,961 | ||||
Ross Rosenberg | - | - | 10,352 | 548,753 | ||||
Roel Vestjens | - | - | 1,344 | 79,753 |
(1) | The dates on which the executive officers had stock awards vest and the applicable fair market values on those days are as follows: February 18, 2016 $51.63, and March 4, 2016 $59.34. When the vesting date falls on a trading day, the fair market value is the average of the high and low trading prices of Belden shares on that day. When the vesting date falls on a non-trading day, the fair market value is the average of (a) the average of the high and low trading prices of Belden shares on the trading day immediately preceding the vesting date and (b) the average of the high and low trading prices of Belden shares on the trading day immediately following the vesting date. The number of RSUs that vested were as follows: Mr. Stroup 18,476 RSUs on March 4, 2016; Mr. Derksen 3,796 RSUs on March 4, 2016; Mr. Pennycook 2,089 RSUs on March 4, 2016; Mr. Rosenberg 8,500 RSUs on February 18, 2016 and 1,852 RSUs on March 4, 2016; and Mr. Vestjens 1,344 RSUs on March 4, 2016. Giving effect to the actual tax withholding that occurred, Mr. Stroup acquired 9,616 shares on March 4, 2016; Mr. Derksen acquired 2,530 shares on March 4, 2016; Mr. Pennycook acquired 1,427 shares on March 4, 2016; Mr. Rosenberg acquired 5,590 shares on February 18, 2016 and 1,234 shares on March 4, 2016; and Mr. Vestjens acquired 895 shares on March 4, 2016. |
(2) | During 2016, Mr. Stroup exercised the following SARs and sold the resulting shares pursuant to his 10b5-1 plan: |
Date | Number of SARS |
Market Price |
Exercise Price |
Pre-tax proceeds |
Resulting shares |
Net proceeds | ||||||||||||||||||
11/18/2016 | 42,500 | $ | 72.560 | $ | 35.790 | $ | 1,562,725 | 11,210 | $ | 806,968 | ||||||||||||||
12/06/2016 | 40,000 | $ | 76.030 | $ | 50.010 | $ | 1,040,800 | 7,125 | $ | 552,723 |
(3) | During 2016, Mr. Derksen exercised the following SARs and sold the resulting shares pursuant to his 10b5-1 plan: |
Date | Number of SARS |
Market Price |
Exercise Price |
Pre-tax proceeds |
Resulting shares |
Net proceeds | ||||||||||||||||||
08/29/2016 | 1,800 | $ | 74.310 | $ | 47.705 | $ | 47,889 | 429 | $ | 33,422 | ||||||||||||||
08/29/2016 | 8,400 | $ | 74.310 | $ | 40.960 | $ | 280,140 | 2,512 | $ | 195,702 | ||||||||||||||
08/29/2016 | 1,868 | $ | 74.310 | $ | 11.920 | $ | 116,545 | 939 | $ | 73,155 | ||||||||||||||
08/29/2016 | 13,768 | $ | 74.310 | $ | 21.700 | $ | 724,334 | 5,073 | $ | 395,223 |
Belden Inc. 2017 Proxy Statement | Page 35 |
Name | Plan Name(1) |
Number of Years Credited Service (#) |
Present Value of Accumulated Benefit(2) ($) |
Payments During Last Fiscal Year ($) | ||||
(a) | (b) | (c) | (d) | (e) | ||||
John Stroup | Pension Plan | 11.2 | 637,893 | - | ||||
Excess Plan | 1,373,823 | - | ||||||
Postretirement Life Benefits |
971 | - | ||||||
Henk Derksen | Pension Plan | 6.8 | 344,754 | - | ||||
Excess Plan | 99,469 | - | ||||||
Glenn Pennycook | Pension Plan | 8.1 | 302,113 | - | ||||
Excess Plan | - | - | ||||||
Ross Rosenberg | Pension Plan | - | - | - | ||||
Excess Plan | - | - | ||||||
Roel Vestjens | Pension Plan | - | - | - | ||||
Excess Plan | - | - |
(1) | Messrs. Stroup, Derksen and Pennycook participate in the Belden Wire & Cable Company Pension Plan (Pension Plan) and the Belden Wire & Cable Company Supplemental Excess Defined Benefit Plan (Excess Plan). Mr. Rosenberg does not participate in the plans because he joined the Company after the plans were closed to new participants in 2010. Mr. Vestjens does not participate in the plans because he relocated to the U.S. after they were closed to new participants in 2010. The Pension Plan is a cash balance plan. The account of each participant increases on an annual basis by 4% of the participants eligible compensation up to the Social Security wage limit ($118,500 for 2016) and by 8% of the participants eligible compensation in excess of the Social Security wage limit up to the limit on compensation that may be taken into account by a plan qualified under the Internal Revenue Code ($265,000 for 2016). The Excess Plan provides the benefit to the participant that would have been available under the Pension Plan if there were not a limit on compensation that may be taken into account by a plan qualified under the Internal Revenue Code. In general, eligible compensation for a participant includes base salary plus any amount earned under the annual cash incentive plan. Upon retirement, participants in the Pension Plan may elect a lump sum distribution or a variety of annuity options. Upon retirement, participants in the Excess Plan will receive a lump sum distribution. |
(2) | The computation of the value of accumulated benefit for each individual incorporates a 3.70% discount rate, an interest credit rate of 4.50%, and an expected retirement age of 65. |
NONQUALIFIED DEFERRED COMPENSATION(1)
Name | Executive Contributions in Last FY |
Registrant Contributions in Last FY |
Aggregate Earnings in Last FY ($) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at Last FYE ($) |
|||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
John Stroup | 99,762 | 76,396 | 43,252 | - | 2,382,845 | |||||||||||||||
Henk Derksen | 35,725 | 28,369 | 5,048 | - | 301,537 | |||||||||||||||
Glenn Pennycook | 174,800 | 22,779 | 8,571 | - | 534,217 | |||||||||||||||
Ross Rosenberg | - | - | - | - | - | |||||||||||||||
Roel Vestjens | 19,626 | 16,295 | 1,005 | - | 75,136.74 |
(1) | Each of Messrs. Stroup, Derksen, Pennycook and Vestjens participates in the Belden Supplemental Excess Defined Contribution Plan. Amounts reflected in column (c), but not those in column (d), have been reflected in column (i) of the Summary Compensation Table. |
Page 36 | Belden Inc. 2017 Proxy Statement |
EMPLOYMENT, SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has written agreements with each of the named executive officers. The Compensation Committee (with the assistance of Deloitte Consulting and management) annually reviews the key provisions of the executive employment agreements to ensure they are competitive, based on peer group and market survey data.
John Stroup. Mr. Stroup entered into an employment agreement with the Company, effective October 31, 2005, and it was amended and restated in 2008. The amended agreement was for a term through October 31, 2011 and automatically renews for additional one-year terms if not terminated by either party. It is subject to earlier termination based on disability, death, termination by the Company, with or without cause, and before or after a change in control of the Company. Mr. Stroups current base salary of $875,000 per year is subject to annual review. He is entitled to participate in the Companys long-term incentive plan, annual cash incentive plan, and all other employment benefit plans available to senior executives. His target annual cash incentive award is 130% of his base salary. Amounts payable in the event of Mr. Stroups separation of employment are noted below under Potential Payments upon Termination or Change in Control.
Henk Derksen. Mr. Derksen entered into an employment agreement with the Company, effective January 1, 2010. It was amended and restated as of January 1, 2012 when Mr. Derksen was promoted to his current position. The agreements initial term was for three years and it automatically renews for additional one-year terms if not terminated by either party. It is subject to earlier termination based on disability, death, termination by the Company, with or without cause, and before or after a change in control of the Company. Mr. Derksens annual base salary of $520,180 is subject to annual review. Mr. Derksen is entitled to participate in the Companys long-term incentive plan, annual cash incentive plan and all other employment benefit plans available to senior executives. His target annual cash incentive award is 75% of his base salary. Amounts payable in the event of his separation of employment are noted below under Potential Payments upon Termination or Change in Control.
Glenn Pennycook. Mr. Pennycook entered into an employment agreement with the Company, effective May 30, 2013, in connection with his promotion to his current position. The agreements initial term was for one year and it automatically renews for additional one-year terms if not terminated by either party. It is subject to earlier termination based on disability, death, termination by the Company, with or without cause, and before or after a change in control of the Company. Mr. Pennycooks annual base salary of $385,740 is subject to annual review. Mr. Pennycook is entitled to participate in the Companys long-term incentive plan, annual cash incentive plan and all other employment benefit plans available to senior executives. His target annual cash incentive award is 70% of his base salary. Amounts payable in the event of his separation of employment are noted below under Potential Payments upon Termination or Change in Control.
Ross Rosenberg. Mr. Rosenberg entered into an employment agreement with the Company, effective May 28, 2014, in connection with his promotion to his current position. The agreements initial term is for one year and it automatically renews for additional one-year terms if not terminated by either party. It is subject to earlier termination based on disability, death, termination by the Company, with or without cause, and before or after a change in control of the Company. Mr. Rosenbergs annual base salary of $401,590 is subject to annual review. Mr. Rosenberg is entitled to participate in the Companys long-term incentive plan, annual cash incentive plan and all other employment benefit plans available to senior executives. His target annual cash incentive award is 70% of his base salary. Amounts payable in the event of his separation of employment are noted below under Potential Payments upon Termination or Change in Control.
Roel Vestjens. Mr. Vestjens entered into an employment agreement with the Company, effective May 28, 2014, in connection with his promotion to his current position. The agreements initial term was for one year and it automatically renews for additional one-year terms if not terminated by either party. It is subject to earlier termination based on disability, death, termination by the Company, with or without cause, and before or after a change in control of the Company. Mr. Vestjens annual base salary of $393,230 is subject to annual review. Mr. Vestjens is entitled to participate in the Companys long-term incentive plan, annual cash incentive plan and all other employment benefit plans available to senior executives. His target annual cash incentive award is 70% of his base salary. Amounts payable in the event of his separation of employment are noted below under Potential Payments upon Termination or Change in Control.
Belden Inc. 2017 Proxy Statement | Page 37 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
The NEOs employment agreements with the Company provide for the potential payment of severance and other benefits upon certain terminations of employment. In addition, pursuant to the terms of the Companys equity incentive plans, upon certain termination events, each executive will be entitled to acceleration of his outstanding and unvested equity awards.
Termination not for cause not in connection with a change in control
Pursuant to the employment agreements, in the event a named executive officer is terminated without cause, as defined below, the executive will be entitled to receive:
| severance payments equal to the sum of the officers current base salary plus his annual target bonus (multiplied by 1.5 in the case of Mr. Stroup), payable in equal semi-monthly installments over a twelve-month period (eighteen months in the case of Mr. Stroup); |
| any unpaid bonus earned with respect to any fiscal year ending on or prior to the date of termination; and |
| continued participation in the Companys medical and dental plans for twelve months (eighteen months for Mr. Stroup). |
Pursuant to the employment agreements, cause is defined to include the officers:
| willful and continued failure to perform his duties following appropriate opportunities to cure the deficiencies; |
| conviction of a felony or any crime involving moral turpitude; |
| lack of authority to enter the employment agreement without violating another agreement to which officer was a party; and |
| gross misconduct in the performance of his employment duties. |
Termination not for cause by the Company or for good reason by the officer after a change in control
Each employment agreement provides that if, within two years following a change in control, as defined below, the officer is terminated without cause or resigns for good reason, the officer will be entitled to receive:
| severance payments equal to the sum of the officers current base salary plus his annual target bonus multiplied by two, payable in equal semi-monthly installments over a 24-month period; |
| any unpaid bonus earned with respect to any fiscal year ending on or prior to the date of termination; |
| unvested PSUs convert to RSUs at a 1.00 conversion ratio at the time of the change in control; |
| unvested equity awards vest upon the termination following the change in control; |
| continued participation in the Companys medical and dental plans for 24 months; and |
| if necessary, a gross-up payment to cover the officers excise tax liability under IRC Section 280G where the present value of his payments is more than 110% of the threshold at which such amounts become an excess parachute payment under IRC Section 280G. Starting in 2010, this gross-up feature was not offered to new executive officers. There is no gross-up in the employment agreements of Messrs. Derksen, Pennycook, Rosenberg and Vestjens. |
A change in control of the Company generally will occur when a person acquires more than 50% of the outstanding shares of the Companys stock or a majority of the Board consists of individuals who were not approved by the Board. Upon a change in control in the Company, the named executive officers will have the right for a period of two years to leave the Company for good reason and receive the amounts set out above should the scope of their employment with the Company negatively and materially change.
Page 38 | Belden Inc. 2017 Proxy Statement |
Death/Disability
The Company provides long-term disability coverage and life insurance coverage for the executive officers on terms consistent with and generally available to all salaried employees. Upon the officers death or disability, the officer, or the officers heirs will be entitled to receive:
| any unpaid bonus earned with respect to any fiscal year ending on or prior to the date of termination; and |
| unvested equity awards vest immediately. |
Retirement
Under the Companys equity plans, an employee who has reached the age of 65 or has reached the age of 55 with ten years of service with the Company can voluntarily retire from the Company with the result that all unvested equity awards that were granted at least one year prior to the retirement date (longer for portions of certain multi-year grants) shall immediately vest in full and any options or stock appreciation rights are eligible for exercise for the shorter of three years or the original term of the award. None of the NEOs were eligible for retirement as of December 31, 2016.
Estimate of Payments
The estimated payments owed to each officer upon the various termination events are based on the following assumptions and/or exclusions:
| it is assumed that each triggering event occurred on December 31, 2016 and that the value of our common stock was the closing market price of our stock on that date, or $74.77 (in the case of Termination not for cause by the Company or for good reason by the officer after a change in control, it is assumed that the change in control and the termination both occurred on December 31, 2016); |
| the payments do not include any amounts earned and owed to the officer as of the termination date, such as salary earned to date, unreimbursed expenses or benefits generally available to all employees of the Company on a non-discriminatory basis (the 2016 Non-Equity Incentive Plan Compensation is included based on the technical requirement that an employee must be employed on January 1, 2017 to earn the 2016 bonus. The officers employment agreements would entitle them to receive the 2016 bonus even if termination occurred on December 31, 2016); |
| the payments include only additional benefits that result from termination and do not include any amounts or benefits earned, vested, accrued or owing under any plan. See Outstanding Equity Awards at Fiscal Year-End, Pension Benefits and Nonqualified Deferred Compensation; and |
| in performing calculations for determining whether a Section 280G gross-up payment was applicable, no reductions were made to the hypothetical severance amounts to allocate amounts as reasonable compensation or to a non-competition agreement. The values placed on the acceleration of previously unvested equity awards were consistent with the regulations set out under Section 280G and the methodology was consistent with our standard practices for determining fair value of equity awards for our financial statements. |
Belden Inc. 2017 Proxy Statement | Page 39 |
Accelerated Vesting of Equity Value |
||||||||||||||||||||||||||||
Name | Aggregate Severance ($) |
2016 Non- Incentive Plan Compensation ($) |
Restricted Stock Units ($) |
Stock Options/ SARs ($) |
Welfare Benefits Continuation ($) |
Excise Tax Gross-up Payment ($) |
Total ($) |
|||||||||||||||||||||
John Stroup |
||||||||||||||||||||||||||||
Termination not for cause not in connection with a change in control |
3,018,750 | 1,660,750 | - | - | 21,373 | - | 4,700,873 | |||||||||||||||||||||
Termination not for cause by the Company or for good reason by the officer after a change in control |
4,025,000 | 1,660,750 | 6,226,688 | 1,816,010 | 28,497 | - | 13,756,946 | |||||||||||||||||||||
Death/Disability |
- | 1,660,750 | 6,226,688 | 1,816,010 | - | 9,703,449 | ||||||||||||||||||||||
Retirement |
- | - | - | - | - | - | - | |||||||||||||||||||||
Henk Derksen |
||||||||||||||||||||||||||||
Termination not for cause not in connection with a change in control |
910,315 | 712,000 | - | - | 14,355 | - | 1,636,670 | |||||||||||||||||||||
Termination not for cause by the Company or for good reason by the officer after a change in control |
1,820,630 | 712,000 | 1,435,281 | 370,077 | 28,710 | - | 4,366,698 | |||||||||||||||||||||
Death/Disability |
- | 712,000 | 1,435,281 | 370,077 | - | - | 2,517,358 | |||||||||||||||||||||
Retirement |
- | - | - | - | - | - | - | |||||||||||||||||||||
Glenn Pennycook |
- | |||||||||||||||||||||||||||
Termination not for cause not in connection with a change in control |
655,758 | 332,260 | - | - | 14,248 | - | 1,002,266 | |||||||||||||||||||||
Termination not for cause by the Company or for good reason by the officer after a change in control |
1,311,516 | 332,260 | 684,429 | 228,390 | 28,497 | - | 2,585,092 | |||||||||||||||||||||
Death/Disability |
- | 332,260 | 684,429 | 228,390 | - | - | 1,245,079 | |||||||||||||||||||||
Retirement |
- | - | - | - | ||||||||||||||||||||||||
Ross Rosenberg |
||||||||||||||||||||||||||||
Termination not for cause not in connection with a change in control |
682,703 | 369,380 | - | - | 14,248 | - | 1,066,331 | |||||||||||||||||||||
Termination not for cause by the Company or for good reason by the officer after a change in control |
1,365,406 | 369,380 | 665,192 | 965,633 | 28,497 | - | 3,394,108 | |||||||||||||||||||||
Death/Disability |
- | 369,380 | 665,192 | 965,633 | - | - | 2,000,205 | |||||||||||||||||||||
Retirement |
- | - | - | - | - | - | - | |||||||||||||||||||||
Roel Vestjens |
||||||||||||||||||||||||||||
Termination not for cause not in connection with a change in control |
668,491 | 347,520 | - | - | 14,248 | - | 1,030,259 | |||||||||||||||||||||
Termination not for cause by the Company or for good reason by the officer after a change in control |
1,336,982 | 347,520 | 770,520 | 211,348 | 28,497 | - | 2,694,867 | |||||||||||||||||||||
Death/Disability |
- | 347,520 | 770,520 | 211,348 | - | - | 1,329,388 | |||||||||||||||||||||
Retirement |
- | - | - | - | - | - |
Page 40 | Belden Inc. 2017 Proxy Statement |
ITEM III ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Act requires that we include in this proxy statement a non-binding stockholder vote on our executive compensation as described in this proxy statement (commonly referred to as Say-on-Pay).
We encourage stockholders to review the Compensation Discussion and Analysis on pages 15 to 28 and the tabular disclosure that follows it. We believe that our compensation policies and procedures are competitive, are focused on pay for performance principles and are strongly aligned with the long-term interests of our stockholders. Our executive compensation philosophy is based on the belief that the compensation of our employees should be set at levels that allow us to attract and retain employees who are committed to achieving high performance and who demonstrate the ability to do so. We seek to provide an executive compensation package that is driven by our overall financial performance, our increased stockholder value, the success of areas of our business directly impacted by the executives performance, and the performance of the individual executive. We view our compensation program as a strategic tool that supports the successful execution of our business strategy and reinforces a performance-based culture. The Company employs an executive compensation program for our senior executives that emphasizes long-term compensation over short-term, with a significant portion weighted toward equity awards. This approach strongly aligns our senior executive compensation with that of our stockholders. We believe that there is a direct correlation between the performance of Belden and the compensation our senior executives receive. We also believe that our annual compensation disclosure is reflective of this correlation and is transparent and helpful to stockholders.
The Say-on-Pay resolution discussed below gives stockholders the opportunity to endorse or not endorse the compensation that we pay to our named executive officers by voting to approve or not approve such compensation as described in this proxy statement.
The Board strongly endorses the Companys executive compensation program and recommends that the stockholders vote in favor of the following resolution:
RESOLVED, that the compensation paid to the Companys named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
Because the vote is advisory, it will not be binding upon the Board or the Compensation Committee and neither the Board nor the Compensation Committee will be required to take any action as a result of the outcome of the vote on this proposal. The Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation arrangements.
THE BELDEN BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPANYS EXECUTIVE COMPENSATION.
Belden Inc. 2017 Proxy Statement | Page 41 |
ITEM IV ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
Also, in accordance with the Dodd-Frank Act, we are providing our stockholders with the opportunity to cast an advisory vote regarding the frequency that the stockholders will consider and vote regarding our executive compensation. This is the Say-on-Pay vote discussed in Item III above. Stockholders will be given the opportunity to vote on whether they want the Say-on-Pay vote regarding our executive officers compensation to occur annually, biennially or triennially.
Consistent with the Companys historical practice and stockholder expectations, the Company believes that an advisory vote on executive compensation every year is the best approach.
Stockholders may cast their vote on the preferred voting frequency by choosing the option of one year, two years, three years or by abstaining from voting in response to the resolution set forth below:
RESOLVED, that the stockholders of the Company indicate, by their vote on this resolution, whether the vote on the compensation of the Companys named executive officers, pursuant to Rule 14a-21(b) of the Exchange Act, should take place every one year, every two years, or every three years.
The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders. Abstentions will not be counted as a vote on any of the frequency options. However, because this vote is advisory and not binding on the Board or the Company in any way, the Board may decide that it is in the best interest of the stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders.
THE BELDEN BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE TO CONDUCT AN ADVISORY VOTE ON EXECUTIVE COMPENSATION ANNUALLY.
Page 42 | Belden Inc. 2017 Proxy Statement |
EQUITY COMPENSATION PLAN INFORMATION ON DECEMBER 31, 2016
Plan Category | A | B | C | |||||||||
Number of Securities to be Issued Upon Exercise of Outstanding Options |
Weighted Average Exercise Price of Outstanding Options |
Number of Securities Remaining Available for Reflected in Column A) |
||||||||||
Equity Compensation Plans Approved by Stockholders(1) |
1,124,418 | (2) | $ | 56.7920 | 4,032,406.59 | (3) | ||||||
Equity Compensation Plans Not Approved by Stockholders | - | - | - | |||||||||
Total
|
|
1,124,418
|
|
$
|
56.7920
|
|
|
4,032,406.59
|
|
(1) | Consists of the Cable Design Technologies Corporation 2001 Long-Term Performance Incentive Plan (the 2001 Plan); and the Belden Inc. 2011 Long Term Incentive Plan (the 2011 Plan). The 2001 Plan has expired, but stock appreciation rights and restricted stock unit awards remain outstanding under the plan. |
(2) | Consists of 154,108 shares under the 2001 Plan; and 970,310 shares under the 2011 Plan. All of these shares pertain to outstanding stock appreciation rights (SARs). Because the issued shares resulting from SAR exercises only represent the share appreciation between the grant date and exercise date, after any applicable tax withholding, SARs are much less dilutive to our stockholders than stock options. |
(3) | Consists of 4,032,406.59 shares under the 2011 Plan. Pursuant to the flexible share authorization nature of the 2011 Plan, full-value awards (e.g., restricted stock units (RSUs), performance stock units (PSUs), other stock-based awards) count against the share authorization at a rate of 1.90 to 1 for awards granted or converted, as the case may be, prior to May 26, 2016, and 2.23 to 1 for awards granted or converted, as the case may be, on or after May 26, 2016. Stock options, SARs and other non-full-value awards count against the share authorization at a rate of 1 to 1. We subtract awards from the share reserve at the time of grant (or at the time of conversion into RSUs or shares in the case of PSUs), as opposed to the time of issuance, as we feel this gives us a more accurate picture of our remaining reserve. Awards cancelled prior to vesting or exercise, as the case may be, are added back to the reserve in accordance with the 2011 Plan document. |
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of filings with the Securities and Exchange Commission and other reports submitted by our directors and officers, we believe that all of our directors and executive officers complied during 2016 with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934.
Belden Inc. 2017 Proxy Statement | Page 43 |
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the amount of Belden common stock beneficially owned (unless otherwise indicated) by our directors, the executive officers named in the Summary Compensation Table below and the directors and executive officers as a group. Except as otherwise noted, all information is as of March 27, 2017.
BENEFICIAL OWNERSHIP TABLE OF DIRECTORS, NOMINEES AND
EXECUTIVE OFFICERS
Name |
Number of Shares Beneficially Owned(1)(2) |
Acquirable Within 60 Days(3) |
Percent of Class Outstanding(4) | |||||||||||||||||
David Aldrich | 33,301 | - | * | |||||||||||||||||
Lance Balk | 87,905 | - | * | |||||||||||||||||
Steven W. Berglund | 8,076 | - | * | |||||||||||||||||
Judy L. Brown | 13,268 | - | * | |||||||||||||||||
Bryan C. Cressey | 184,522 | - | * | |||||||||||||||||
Henk Derksen | 15,194 | 82,826 | * | |||||||||||||||||
Jonathan Klein | 4,667 | - | * | |||||||||||||||||
George Minnich | 22,033 | - | * | |||||||||||||||||
John M. Monter(5) | 90,476 | - | * | |||||||||||||||||
Glenn Pennycook | 3,874 | 40,555 | * | |||||||||||||||||
Ross Rosenberg | 6,108 | 13,705 | * | |||||||||||||||||
John Stroup | 122,331 | (6) | 157,400 | * | ||||||||||||||||
Roel Vestjens | 4,484 | 21,785 | * | |||||||||||||||||
All directors and executive officers as a group (18 persons) | 613,565 | 376,536 | 1.31% |
* | Less than one percent |
(1) | The number of shares includes shares that are individually or jointly owned, as well as shares over which the individual has either sole or shared investment or voting authority. Mr. Cresseys number does not include shares held by the Bryan and Christina Cressey Foundation. Mr. Cressey is the President of the foundation but disclaims any beneficial ownership of shares owned by the foundation. |
(2) | For Mr. Klein, the number of shares consists of a grant of 1,666 unvested RSUs from his date of appointment to the Board in August 2015. For each of Ms. Brown and Messrs. Aldrich, Balk, Berglund, Klein, Minnich and Monter, the number of shares includes unvested RSUs of 2,167 awarded to them in May 2016. For Mr. Cressey, the number of shares includes unvested RSUs of 2,818 awarded to him in May 2016. For each of Messrs. Aldrich, Balk and Minnich, the number of shares includes awards, the receipt of which has been deferred pursuant to the 2004 Belden Inc. Non-Employee Director Deferred Compensation Plan as follows: Mr. Aldrich 1,489; Mr. Balk 20,916; and Mr. Minnich 9,309. |
(3) | Reflects the number of shares that could be purchased by exercise of stock options and the number of SARs that are exercisable at March 27, 2017, or within 60 days thereafter, under the Companys long-term incentive plans. Upon exercise of a SAR, the holder would receive the difference between the market price of Belden shares on the date of exercise and the exercise price paid in the form of Belden shares. This column includes stock options and SARs that are exercisable without regard to whether the current market price of Belden common stock is greater than the applicable exercise price. |
Page 44 | Belden Inc. 2017 Proxy Statement |
(4) | Represents the total of the Number of Shares Beneficially Owned column (excluding RSUs, which do not have voting rights before vesting) divided by the number of shares outstanding at March 27, 2017 42,270,177. |
(5) | Includes 17,008 shares held in his spouses grantor retained annuity trusts, 16,820 shares held in a charitable remainder unitrust and 46,181 shares held in a family investment LLC. |
(6) | Includes 4,063 shares held in trust for children and 86,555 shares held in a family trust. |
Belden Inc. 2017 Proxy Statement | Page 45 |
BENEFICIAL OWNERSHIP TABLE OF STOCKHOLDERS OWNING MORE THAN FIVE PERCENT
The following table shows information regarding those stockholders known to the Company to beneficially own more than 5% of the outstanding Belden shares as of December 31, 2016.
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of Outstanding Common Stock(1) | ||
BlackRock, Inc. 55 East 52nd Street New York, New York 10022 |
4,765,593(2) | 11.30% | ||
Janus Capital Management LLC 151 Detroit Street Denver, Colorado 80206 |
4,616,873(3) | 10.95% | ||
The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 |
3,364,902(4) | 7.98% | ||
Wellington Management Company, LLP 280 Congress Street Boston, Massachusetts 02210 |
3,046,679(5) | 7.22% | ||
FMR LLC 245 Summer Street Boston, Massachusetts 02210 |
2,433,423(6) | 5.77% | ||
Invesco Ltd. 1555 Peachtree Street NE, Suite 1800 Atlanta, Georgia 30309 |
2,250,080(7) | 5.33% |
(1) | Based 42,179,896 shares outstanding on December 31, 2016. |
(2) | Information based on Schedule 13G/A filed with the SEC by BlackRock, Inc. on January 12, 2017, reporting sole voting power over 4,635,458 shares and sole dispositive power over 4,765,593 shares. |
(3) | Information based on Schedule 13G/A filed with the SEC by Janus Capital Management LLC on February 14, 2017, reporting sole voting power and sole dispositive power over 4,616,873 shares. |
(4) | Information based on Schedule 13G/A filed with the SEC by the Vanguard Group on February 10, 2017, reporting sole voting power over 83,569 shares, shared voting power over 4,927 shares, sole dispositive power over 3,278,557 shares and shared dispositive power over 86,345 shares |
(5) | Information based on Schedule 13G/A filed with the SEC by Wellington Management Company, LLP on February 9, 2017, reporting shared voting power over 2,177,940 shares and shared dispositive power over 3,046,679 shares. |
(6) | Information based on Schedule 13G filed with the SEC by FMR LLC on February 14, 2017, reporting sole voting power over 3,723 shares and sole dispositive power over 2,433,423 shares. |
(7) | Information based on Schedule 13G filed with the SEC by Invesco Ltd. on February 7, 2017, reporting sole voting power and sole dispositive power over 2,250,080 shares. |
Page 46 | Belden Inc. 2017 Proxy Statement |
The Company knows of no other matters that will be brought before the annual meeting. If other matters are introduced, the persons named in the proxy as the proxy holders will vote on such matters in their discretion.
Belden Inc. 2017 Proxy Statement | Page 47 |
Page 48 | Belden Inc. 2017 Proxy Statement |
Q: | What are the voting requirements to approve the proposals and how are votes withheld, abstentions and broker non-votes treated? |
A: | The following table describes the voting requirements and treatment of votes withheld, abstentions, and broker non-votes for each proposal: |
Proposal |
Voting Requirement | Tabulation Treatment | ||||
Votes Withheld/Abstentions | Broker Non-Votes | |||||
Election of Directors | Majority of votes cast for or against a particular director* | Present for quorum purposes; treated as a vote against the director(s) for purposes of calculating approval percentage | Not present for quorum purposes; brokers do not have discretion to vote non-votes in favor of directors | |||
Ratification of Ernst & Young | No requirement; not binding on company | The Board of Directors will consider the number of abstentions in its analysis of the results of the advisory vote | Count as present for quorum purposes; brokers have discretion to vote non-votes in favor of ratification | |||
Advisory vote on executive compensation | No requirement; not binding on company | The Board of Directors will consider the number of abstentions in its analysis of the results of the advisory vote | Not present for quorum purposes; brokers do not have discretion to vote non-votes in favor of compensation matters | |||
Advisory vote on frequency of future executive compensation votes | No requirement; not binding on company | The Board of Directors will consider the number of abstentions in its analysis of the results of the advisory vote | Brokers do not have discretion to vote non-votes in favor of compensation matters |
* | In May, 2016, the Companys bylaws were amended to provide that, in an uncontested election, a director must receive more votes for than votes against to be elected to the Board. An incumbent director that fails to receive such a majority shall tender his or her resignation, which will be considered by the Boards Nominating and Corporate Governance Committee. |
Belden Inc. 2017 Proxy Statement | Page 49 |
Page 50 | Belden Inc. 2017 Proxy Statement |
STOCKHOLDER PROPOSALS FOR THE 2018 ANNUAL MEETING
You may submit proposals for consideration at future stockholder meetings, including director nominations.
Stockholder Proposals: To be included in the Companys proxy statement and form of proxy for the 2018 annual meeting, a stockholder proposal must, in addition to satisfying the other requirements of the Companys bylaws and the SECs rules and regulations, be received at the Companys principal executive offices by December 6, 2017. If you want the Company to consider a proposal at the 2018 annual meeting that will not be included in the Companys proxy statement, among other things, the Companys bylaws require that you notify our Board of your proposal no earlier than January 25, 2018 and no later than February 24, 2018.
Nomination of Director Candidates: The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders if such nominations are submitted to the Company prior to the deadline for proposals to be included in future proxy statements as noted in the above paragraph. To have a candidate considered by the Committee, a stockholder must submit the recommendation in writing and must include the following information:
| The name of the stockholder and evidence of the persons ownership of Company stock, including the number of shares owned (whether direct ownership or derivative ownership) and the length of time of ownership; and |
| The name of the candidate, the candidates resume or a listing of his or her qualifications to be a director of Belden, the candidates ownership interest in the Company (if any), a description of any arrangements between the candidate and the nominating stockholder, and the persons consent to be named as a director if selected by the Committee and nominated by the Board. |
In considering candidates submitted by stockholders, the Committee will take into consideration the needs of the Board and the qualifications of the candidate. The Committee may also take into consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held. The Committee believes that the minimum qualifications for serving as a director of the Company are that a nominee demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Boards oversight of the business and affairs of the Company and have an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities. In addition, the Committee examines a candidates specific experiences and skills, time availability in light of other commitments, potential conflicts of interest, and independence from management and Belden. The Committee also seeks to have the Board represent a diversity of backgrounds and experience.
The Committee will identify potential nominees by asking current directors and executive officers to notify the Committee if they become aware of persons, meeting the criteria described above, who have had a change in circumstances that might make them available to serve on the Board. The Committee also, from time to time, may engage firms that specialize in identifying director candidates. As described above, the Committee will also consider candidates recommended by stockholders.
Once a person has been identified by the Committee as a potential candidate, the Committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the Committee determines that the candidate warrants further consideration, the Chairman or another member of the Committee may contact the person. Generally, if the person expresses a willingness to be considered and to serve on the Board, the Committee will request information from the candidate, review the persons accomplishments and qualifications, and conduct one or more interviews with the candidate. In certain instances, Committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand knowledge of the candidates accomplishments. The Committees evaluation process will not vary based on whether or not a candidate is recommended by a stockholder, although, as stated above, the Board may take into consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held.
Belden Inc. 2017 Proxy Statement | Page 51 |
The performance factors applicable to the NEOs, along with the respective threshold, target and actual performance levels and the respective financial factor scores, are illustrated below (income numbers are shown in thousands):
Category | 2016 ACIP | |||||||||||||||||||
Threshold | Target | Maximum | Actual | Score | ||||||||||||||||
Consolidated Net Income from Continuing Operations ($) | 181,168 | 226,460 | 242,312 | 239,975 | 1.85 | |||||||||||||||
Consolidated EBITDA ($) | 384,058 | 426,731 | 448,067 | 431,201 | 1.21 | |||||||||||||||
Consolidated Share Capture ($) | 16,018 | 32,035 | 48,053 | 38,873 | 1.18 | |||||||||||||||
Consolidated Operating Working Capital Turns | 5.8 | 6.3 | 6.8 | 6.6 | 1.60 | |||||||||||||||
Enterprise Connectivity EBITDA ($) | 92,320 | 115,400 | 126,940 | 111,168 | 0.92 | |||||||||||||||
Enterprise Connectivity Share Capture | 3,900 | 7,800 | 11,700 | 9,744 | 1.50 | |||||||||||||||
Enterprise Connectivity Inventory Turns | 8.1 | 8.6 | 9.1 | 8.5 | 0.90 | |||||||||||||||
Broadcast Solutions EBITDA ($) | 124,800 | 156,000 | 171,600 | 154,021 | 0.97 | |||||||||||||||
Broadcast Solutions Share Capture ($) | 7,400 | 14,800 | 22,200 | 10,200 | 0.69 | |||||||||||||||
Broadcast Solutions Operating Working Capital Turns | 3.6 | 4.1 | 4.6 | 4.3 | 1.40 |
Performance Factor Definitions
Net Income from Continuing Operations is consolidated revenues, less cost of sales, less selling, general and administrative expenses (SG&A), less interest expense, plus interest income, plus other income, less other expense, less tax expense, and less any loss from discontinued operations.
EBITDA is GAAP operating income, adjusted in a manner consistent with the Companys use of Adjusted EBITDA in its periodic filings on Forms 10-K, 10-Q and 8-K, whether on a consolidated basis or of the applicable business platform (i.e., Enterprise Connectivity Solutions for Mr. Pennycook and Broadcast Solutions with respect to Mr. Vestjens).
Share Capture is the revenue that the Company, whether on a consolidated basis or with respect to the applicable business platform, compared to the revenue from the same period the previous year, excluding revenue changes due to acquisitions and divestitures, changes in copper prices, changes in foreign currency exchange rates, actual market growth (as measured based on third-party sources), changes in channel inventory and changes in the number of days in a period.
Operating Working Capital Turns, whether on a consolidated basis or with respect to the applicable business platform, are based on a monthly average of working capital turns during the applicable performance period and for each individual month were computed based on a ratio calculated at the end of the month of (i) annualized actual cost of goods sold for the prior two months and the current month to (ii) operating working capital at the end of the month.
Inventory Turns are based on a monthly average of inventory turns during the applicable performance period and for each individual month were computed based on a ratio calculated at the end of the month of (i) annualized actual cost of goods sold for the prior two months and the current month to (ii) inventory at the end of the month.
Belden Inc. 2017 Proxy Statement | Page I-1 |
Below is a summary of the applicable performance factors and weighting percentages for each NEO and a calculation of each NEOs applicable Financial Factor for the performance period (rounded to two decimal places):
Messrs. Stroup, Derksen and Rosenberg 2016 | ||||||
Category | Score | Weighting | Contribution to Financial Factor | |||
Consolidated Net Income from Continuing Operations | 1.85 | 25% | 0.46 | |||
Consolidated EBITDA | 1.21 | 25% | 0.30 | |||
Consolidated Share Capture | 1.18 | 25% | 0.30 | |||
Consolidated Operating Working Capital Turns | 1.60 | 25% | 0.40 | |||
Consolidated Financial Factor | 1.46 |
Mr. Pennycook 2016 | ||||||
Category | Score | Weighting | Contribution to Financial Factor | |||
Enterprise Connectivity EBITDA | 0.92 | 50% | 0.46 | |||
Enterprise Connectivity Share Capture | 1.50 | 25% | 0.38 | |||
Enterprise Connectivity Inventory Turns | 0.90 | 25% | 0.23 | |||
Mr. Pennycooks Financial Factor | 1.07 |
Mr. Vestjens 2016 | ||||||
Category | Score | Weighting | Contribution to Financial Factor | |||
Broadcast Solutions EBITDA | 0.97 | 50% | 0.49 | |||
Broadcast Solutions Share Capture | 0.69 | 25% | 0.17 | |||
Broadcast Solutions Operating Working Capital Turns | 1.40 | 25% | 0.35 | |||
Mr. Vestjens Financial Factor | 1.01 |
Page I-2 | Belden Inc. 2017 Proxy Statement |
BELDEN
SENDING ALL THE RIGHT SIGNALS
1 N. Brentwood Blvd.
15th Floor
St. Louis, MO 63105
314-854-8000
www.Belden.com
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VOTE BY INTERNET - www.proxyvote.com | ||||
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | ||||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS |
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If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | ||||
VOTE BY PHONE - 1-800-690-6903 |
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Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. | ||||
VOTE BY MAIL |
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: ☒ |
KEEP THIS PORTION FOR YOUR RECORDS | |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
DETACH AND RETURN THIS PORTION ONLY |
The Board of Directors recommends you vote | For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below. |
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FOR the following: | ☐ | ☐ | ☐ |
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1. Election of Directors |
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Nominees |
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01 David J. Aldrich 02 Lance C. Balk 03 Steven W. Berglund 04 Judy L. Brown 05 Bryan C. Cressey |
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06 Jonathan C. Klein 07 George E. Minnich 08 John M. Monter 09 John S. Stroup | ||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR proposals 2 and 3. |
For | Against | Abstain | |||||||||||||||||||||||
2 To ratify the appointment of Ernst & Young as the Companys independent registered public accounting firm for 2017. |
☐ | ☐ | ☐ | |||||||||||||||||||||||
3 Advisory vote to approve named executive officer compensation. |
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The Board of Directors recommends you vote 1 YEAR on the following proposal: |
1 year | 2 years | 3 years | Abstain | ||||||||||||||||||||||
4 Advisory vote on frequency of future advisory votes related to executive officer compensation. |
☐ | ☐ | ☐ | ☐ | ||||||||||||||||||||||
NOTE: In their discretion, proxies are authorized to transact and vote upon such other business as may properly come before the meeting.
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Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 |
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Yes | No | |||||||||||||||||||||||||
Please indicate if you plan to attend this meeting | ☐ | ☐ | ||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The NOTICE AND PROXY STATEMENT and ANNUAL REPORT is/are available at www.proxyvote.com
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BELDEN INC. PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 25, 2017 SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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The undersigned stockholder of Belden Inc. appoints Brian E. Anderson and Nicholas E. Eckelkamp, as proxies, acting jointly or severally and with full power of substitution, for and in the name of the undersigned to vote at the Annual Meeting of Stockholders to be held on May 25, 2017, beginning at 12:30 p.m., local time, at the Mississippi Room on the 8th Floor of the Four Seasons Hotel St. Louis, 999 North 2nd Street, St. Louis, Missouri 63102 and at any adjournments or postponements thereof, as directed, on the matters set forth in the accompanying Proxy Statement and on all other matters that may properly come before the Annual Meeting, including on a motion to adjourn or postpone the Annual Meeting to another time or place (or both) for the purpose of soliciting additional proxies.
Signing and dating this proxy card will have the effect of revoking any proxy card that you signed on an earlier date, and will constitute a revocation of all previously granted authority to vote for every proposal included on any proxy card.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO CHOICE IS SPECIFIED AND THE PROXY IS SIGNED AND RETURNED, THEN THE PROXY WILL BE VOTED ON THE PROPOSALS CONSISTENT WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS AND IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
Receipt is hereby acknowledged of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated April 5, 2017, and the Annual Report to Stockholders for the year ended December 31, 2016.
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Continued and to be signed on reverse side
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*** Exercise Your Right to Vote *** Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 25, 2017
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Meeting Information |
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BELDEN INC. | Meeting Type: Annual Meeting | |||||||||||
For holders as of: March 27, 2017 | ||||||||||||
Date: May 25, 2017 Time: 12:30 PM CDT | ||||||||||||
Location: Four Seasons Hotel St. Louis | ||||||||||||
The Mississippi Room 8th Floor 999 North 2nd Street St. Louis, Missouri 63102
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You are receiving this communication because you hold shares in the above named company.
This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side).
We encourage you to access and review all of the important information contained in the proxy materials before voting.
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See the reverse side of this notice to obtain proxy materials and voting instructions.
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Broadridge Internal Use Only
Job # Envelope # Sequence # # of # Sequence # |
Before You Vote
How to Access the Proxy Materials
Proxy Materials Available to VIEW or RECEIVE:
1. NOTICE AND PROXY STATEMENT 2. ANNUAL REPORT
How to View Online:
Have the information that is printed in the box marked by the arrow (located on the following page) and visit: www.proxyvote.com.
How to Request and Receive a PAPER or E-MAIL Copy:
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1) BY INTERNET: www.proxyvote.com 2) BY TELEPHONE: 1-800-579-1639 3) BY E-MAIL*: sendmaterial@proxyvote.com
* If requesting materials by e-mail, please send a blank e-mail with the information that is printed in the box marked by the arrow (located on the following page) in the subject line.
Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before May 11, 2017 to facilitate timely delivery.
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How To Vote Please Choose One of the Following Voting Methods
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Vote In Person: Many stockholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote these shares.
Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the information that is printed in the box marked by the arrow available and follow the instructions.
Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card.
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Voting items | ||||||||||||
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The Board of Directors recommends you vote |
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FOR the following: |
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1. Election of Directors |
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Nominees |
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01 David J. Aldrich 02 Lance C. Balk 03 Steven W. Berglund 04 Judy L. Brown 05 Bryan C. Cressey |
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06 Jonathan C. Klein 07 George E. Minnich 08 John M. Monter 09 John S. Stroup | ||||||||||||
The Board of Directors recommends you vote FOR proposals 2 and 3. |
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2 To ratify the appointment of Ernst & Young as the Companys independent registered public accounting firm for 2017. |
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3 Advisory vote to approve named executive officer compensation. |
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The Board of Directors recommends you vote 1 YEAR on the following proposal: |
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4 Advisory vote on frequency of future advisory votes related to executive officer compensation. |
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NOTE: In their discretion, proxies are authorized to transact and vote upon such other business as may properly come before the meeting. |
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Broadridge Internal Use Only xxxxxxxxxx xxxxxxxxxx Cusip Job # Envelope # Sequence # # of # Sequence # |
Reserved for Broadridge Internal Control Information
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THE COMPANY NAME INC. - CLASS A | 123,456,789,012.12345 | |||||||
THE COMPANY NAME INC. - CLASS B | 123,456,789,012.12345 | |||||||
THE COMPANY NAME INC. - CLASS C | 123,456,789,012.12345 | |||||||
THE COMPANY NAME INC. - CLASS D | 123,456,789,012.12345 | |||||||
THE COMPANY NAME INC. - CLASS E | 123,456,789,012.12345 | |||||||
THE COMPANY NAME INC. - CLASS F | 123,456,789,012.12345 | |||||||
THE COMPANY NAME INC. - 401 K | 123,456,789,012.12345 | |||||||
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THIS SPACE RESERVED FOR SIGNATURES IF APPLICABLE
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