Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)
Compensation Arrangements for Certain Executive Officers
On August 3, 2016, the independent members of the Board of Directors of the Company took certain actions with respect to compensation arrangements for the following executive officers of the Company.
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Richard L. Simons,
President and Chief Executive Officer
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Douglas J. Malone,
Vice President and Chief Financial Officer
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James P. Langa,
Senior Vice President - Machine Solutions
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William B. Sepanik,
Vice President - Workholding
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Urs Baumgartner,
Vice President - Grinding
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2016 Cash Incentive Plan
On August 3, 2016, the independent members of the Board of Directors of Hardinge, accepting the recommendations of the Compensation Committee of the Board of Directors, adopted terms for 2016 incentive compensation (payable in 2017) for the Company’s executive officers under the Hardinge Inc. Cash Incentive Plan (the “2016 Plan”). The 2016 Plan provides incentive bonuses payable in cash to the Company’s executive officers based, in part, on the Company’s performance against specified financial performance goals. The Compensation Committee approves payments, if any, after the end of the year.
Target awards for each executive officer in the 2016 Plan are expressed as a percentage of the executive officer’s annual base salary. The 2016 target awards are as follows:
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Executive Officer
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Percentage of Base Salary
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Richard L. Simons,
President and Chief Executive Officer
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70%
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Douglas J. Malone,
Vice President and Chief Financial Officer
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50%
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James P. Langa,
Senior Vice President - Machine Solutions
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50%
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William B. Sepanik,
Vice President - Workholding
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50%
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Urs Baumgartner,
Vice President - Grinding
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50%
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As set by the Compensation Committee and adopted by the independent members of the Board of Directors, performance goals under the 2016 Plan for Messrs. Simons, Malone and Langa include a threshold, target and maximum for the Company’s (i) earnings before interest, taxes, depreciation and amortization (EBITDA) (the “EBITDA Goal”) and (ii) managed working capital (expressed as a percentage of annualized sales) (the “Managed Working Capital Goal”).
Performance goals under the 2016 Plan for Mr. Sepanik include a threshold, target and maximum for (i) the Company’s earnings before interest, taxes and depreciation and amortization (EBITDA) (the “EBITDA Goal”), (ii) Aftermarket Tooling and Accessories (“ATA”) segment earnings before interest, taxes and depreciation and amortization (EBITDA) (the “ATA EBITDA Goal”) and (iii) managed working capital for the ATA segment (expressed as a percentage of annualized sales) (the “ATA Managed Working Capital Goal”).
Performance goals under the 2016 Plan for Mr. Baumgartner include a threshold, target and maximum for (i) the Company’s earnings before interest, taxes and depreciation and amortization (EBITDA) (the “EBITDA Goal”), (ii) the Grinding operations earnings before interest, taxes and depreciation and amortization (EBITDA) (the “Grinding EBITDA Goal”) and (iii) managed working capital for the Grinding operations (expressed as a percentage of annualized sales) (the “Grinding Managed Working Capital Goal”).
Messrs. Simons, Malone and Langa are eligible to earn the percentages of the target award referenced in the table below based on the performance (i.e., if the threshold level is achieved, if the target level is achieved or if the maximum level is achieved) with respect to the EBITDA Goal and Managed Working Capital Goal:
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% of Target Award Paid
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EBITDA Goal
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Managed Working
Capital Goal
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Performance Result
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Threshold
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9.375%
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9.375%
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Target
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37.50%
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37.50%
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Maximum
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75.00%
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75.00%
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Mr. Sepanik is eligible to earn the percentages of the target award referenced in the table below based on the performance (i.e., if the threshold level is achieved, if the target level is achieved or if the maximum level is achieved) with respect to the EBITDA Goal, the ATA EBITDA Goal and the ATA Managed Working Capital Goal:
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% of Target Award Paid
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EBITDA Goal
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ATA EBITDA Goal
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ATA Managed Working
Capital Goal
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Performance Result
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Threshold
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2.50%
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6.875%
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9.375%
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Target
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10.00%
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27.50%
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37.50%
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Maximum
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20.00%
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55.00%
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75.00%
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Mr. Baumgartner is eligible to earn the percentages of the target award referenced in the table below based on the performance (i.e., if the threshold level is achieved, if the target level is achieved or if the maximum level is achieved) with respect to the EBITDA Goal, the Grinding EBITDA Goal and the Grinding Managed Working Capital Goal:
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% of Target Award Paid
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EBITDA Goal
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Grinding
EBITDA Goal
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Grinding Managed Working
Capital Goal
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Performance Result
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Threshold
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2.50%
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6.875%
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9.375%
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Target
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10.00%
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27.50%
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37.50%
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Maximum
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20.00%
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55.00%
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75.00%
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In addition, the Compensation Committee retains full discretion to award or withhold incentive compensation in an amount up to 25% of an executive officer’s target award, regardless of the Company’s performance against the performance goals, and full discretion to reduce, but not increase, any award otherwise determined by the Company’s performance against the performance goals.