Item 11. Executive Compensation.
Compensation & Organization Committee Report
The Compensation & Organization Committee has reviewed and discussed with management the Compensation Discussion & Analysis set forth below and, based on this review and discussion, has recommended to the Board the inclusion of the Compensation Discussion & Analysis in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2019.
By: The Compensation & Organization Committee of the OMNOVA Board of Directors
Janet Plaut Giesselman, Chair
Michael J. Merriman
James A. Mitarotonda
William R. Seelbach
Compensation Discussion & Analysis
This Compensation Discussion & Analysis (“CD&A”) provides an overview of OMNOVA’s executive compensation philosophy and practices, and the factors considered by the Compensation & Organization Committee (the “Committee”) in granting and delivering executive compensation for the 2019 fiscal year. This CD&A focuses on the five individuals identified below (the “Named Executive Officers”).
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Name
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Current Title
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Year Hired /
Promoted
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Anne P. Noonan
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President and Chief Executive Officer
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2016
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Paul F. DeSantis
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Senior Vice President and Chief Financial Officer; Treasurer
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2014
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James C. LeMay
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Senior Vice President, Corporate Development; General Counsel
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2000
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Marshall D. Moore
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Chief Technology Officer and Senior Vice President, Operations
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2018
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Michael A. Quinn
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Senior Vice President and Chief Human Resources Officer
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2013
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Compensation philosophy
OMNOVA operates in highly competitive markets. To grow the business and compete on a global scale, the Company must successfully recruit, reward, and retain talented business leaders, and they, in turn, must perform for the Company and successfully drive its strategy. To that end, the Committee pursues a pay-for-performance compensation philosophy that is aligned with the interest of OMNOVA shareholders in sustainable, long-term, profitable growth.
The Committee believes this philosophy is best implemented through a compensation program that:
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establishes a clear and direct connection between the short-term and long-term performance of the Company and the form and amount compensation paid to executives;
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is market-competitive and reasonable; and
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attracts and retains high-caliber executives who can contribute to the Company’s success.
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Making compensation decisions
Executive compensation determinations for the Named Executive Officers are made exclusively by the Committee. The Chief Executive Officer attends Committee meetings and provides information and input about the pay levels and performance of the Named Executive Officers reporting to her, but she plays no role in setting her own compensation. The Committee regularly meets in executive session, during which no member of management is present, to discuss the compensation recommendations and approve pay actions for the executive officers.
1. Evaluation of pay practices and consideration of “say on pay”
In consultation with the Committee’s independent compensation consultant, Pay Governance LLC, the Committee periodically reviews the Company’s compensation program, practices, and governance, and considers adjustments in light of the changing legal and regulatory landscape and emerging best practices. Additionally, members of management, including senior executives, regularly meet with significant institutional shareholders of OMNOVA and share any feedback received concerning the Company’s compensation program with the Committee. During 2019, representatives of OMNOVA met with representatives of shareholders holding approximately 40% of OMNOVA’s outstanding shares.
Additionally, the Committee considers the results of the annual advisory vote on Named Executive Officer compensation held for the benefit of OMNOVA’s shareholders at every annual shareholder meeting. At the annual shareholder meeting held in 2019, approximately 95% of the votes cast were in favor of the Company’s “say-on-pay” proposal. The Committee believes this reflects significant shareholder support for the compensation program and the compensation philosophy of the Committee. Based on shareholder feedback and the results of voting for the 2018 “say on pay” proposal, the overall compensation program for fiscal 2019 was structured to be consistent with prior programs.
2. Market competitiveness and peer group
The Committee seeks to deliver target compensation opportunities for Named Executive Officers that are generally at or near the 50th percentile of “total compensation” for executives having a similar scope of responsibilities within the Company’s compensation peer group and across the market. In reaching the 50th percentile of total compensation, the Committee emphasizes long-term and performance-based compensation, while seeking to maintain market-median base salaries.
Approximately every three years, the Committee, with the support of Pay Governance LLC, engages in a formal, comprehensive review of the Company’s compensation program, practices, and governance. These comprehensive reviews are supplemented with (1) periodic reviews of executive compensation against broad-based third-party survey data, (2) ad hoc reviews of peer and industry compensation data when positions are being filled, and (3) periodic updates on emerging best practices and trends.
In preparation for 2019 compensation decisions, the Committee conducted a supplemental compensation program review in late 2018. From that review, the Committee made adjustments to executive compensation, described on the following pages, designed to bring the total compensation for each Named Executive Officer within a reasonable range (±10%) of the applicable median.
The Committee also considered changes to the Company’s compensation peer group, evaluating potential peers based on their products, customers, end markets, market capitalization, and company size, and whether OMNOVA competes with the current or potential peer for executive talent. For fiscal 2019, the Committee considered the following companies to be OMNOVA’s compensation peer group (ranked in order of annual revenue): Koppers Holdings Inc.; Ferro Corporation; AdvanSix Inc.; Innospec Inc.; Materion Corporation; GCP Applied Technologies Inc.; Schweitzer-Maudit International, Inc.; Neenah, Inc.; Albany International Corp; Quaker Chemical Corporation; P. H. Glatfelter Company; Innophos Holdings, Inc.; Lydall, Inc.; Balchem Corporation; Myers Industries, Inc.; Hawkins, Inc.; American Vanguard Corporation; Raven Industries, Inc.; LSB Industries; CSW Industrials; and Trecora Resources.
3. Committee independence, interlocks, and insider participation
The members of the Committee are Janet Plaut Giesselman (Chair), Michael J. Merriman, James A. Mitarotonda, and William R. Seelbach, each of whom is an independent director under the general standards of director independence set by the New York Stock Exchange and its heightened independence standards for directors serving on a compensation committee. No member of the Committee is currently, or during the 2019 fiscal year was formerly, an officer or employee of OMNOVA or any of its subsidiaries or affiliates. During the 2019 fiscal year, no member of the Committee had a relationship that is required to be disclosed under Securities and Exchange Commission rules regarding related-party transactions. During the 2019 fiscal year, none of OMNOVA’s executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the OMNOVA Board or the Committee.
4. Compensation recovery policy
The Board maintains a compensation recovery policy which is overseen and enforced by the Committee. The policy provides that in the event of a publicly-disclosed financial restatement, the Company could recover any incentive compensation paid to executives to the extent that such compensation would not otherwise have been paid had incentive compensation been calculated on the basis of the restated financial results. The policy does not require that any Named Executive Officer be personally at fault or have committed fraud to trigger the recovery right. The policy also includes a right to recover incentive compensation from a Named Executive Officer if the officer breaches the Company’s Business Conduct Policies and that breach is directly responsible for a fine, penalty, or judgment being imposed on the Company. Recovery under the policy is generally limited to incentive compensation paid in the thirty six months prior to the circumstances giving rise to the right of recovery. The Committee has full discretion to determine whether recovery rights should be enforced, and the amount of such recovery, based on applicable facts and circumstances.
5. Committee discretion
In evaluating the Company’s performance against established performance objectives, the Committee retains the discretion to include or exclude certain gains and losses that relate to unanticipated events and
circumstances. The Committee maintains guidelines for the categories of gains and losses that it considers reasonable for inclusion or exclusion in calculating performance. The Committee believes this approach is consistent with the Committee’s responsibility to: (1) ensure that Named Executive Officers take strategic actions in the long-term interests of the Company and its shareholders without concern for any personal, negative financial implications of those actions; (2) ensure that the Named Executive Officers are not provided with an incentive to engage in unnecessarily risky actions that will increase personal, short-term economic gain at the risk of long-term shareholder value; and (3) ensure that the Named Executive Officers are not unfairly penalized, nor receive an unexpected windfall, for taking such actions. The Committee also retains the discretion to adjust the amount of incentive compensation paid, when appropriate, to reflect individual performance.
6. Definitions of certain goals and metrics
For the purposes of this CD&A:
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Earnings Before Interest and Taxes (“EBIT”) means Consolidated Adjusted EBIT as reported by management in the GAAP to non-GAAP reconciliation tables it presents in its quarterly earnings release, excluding inventory revaluations and reserve adjustments relating to the Company’s last-in-first-out inventory method (non-GAAP measure).
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Earnings per share (“EPS”) means Adjusted Diluted Earnings per Share from Continuing Operations as reported by management in the GAAP to non-GAAP reconciliation tables it presents in its quarterly earnings release. With respect to the 2017-2019 performance shares, the program was established before U.S. tax reform was approved in late 2017. Accordingly, for purposes of determining the outcome of the 2017-2019 performance shares program, the Committee applied the same tax rate used to calculate Adjusted Diluted Earnings per Share for 2017 (a flat rate of 30%) when calculating Adjusted Diluted Earnings per Share for 2018 and 2019 (non-GAAP measure).
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Return on Invested Capital (“ROIC”) means Adjusted Net Operating Profit After Taxes as reported by management in the GAAP to non-GAAP reconciliation tables presented in its quarterly earnings release, divided by the sum of total shareholders equity and debt (non-GAAP measure).
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Relative Total Shareholder Return (“Relative TSR”) means the change in the Company’s average common share price during a performance measurement period, ranked against the change in the common share price of each company within the Company’s comparison group during the same period. Average common share price means: (1) at the beginning of the performance period, the average common share price of OMNOVA or a comparison company during the thirty-trading days immediately preceding the start of the performance measurement period; and (2) at the end of the performance period, the average common share price of OMNOVA or a comparison company during the last thirty-trading days of the period. The Company’s comparison group is comprised of companies that, at the beginning of the period, were included in the Russell 3000 and were identified as belonging to the “Materials” industry and the “Chemicals” industry subgroup under the Global Industry Classification System.
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Weighted Working Capital Days means the sum of the weighted monthly working capital days for the fiscal year. Monthly working capital days are (1) net accounts receivable divided by the trailing 90 days’ net sales, plus (2) net inventory excluding LIFO divided by the trailing 90 days’ cost of goods sold, less (3) trade accounts payable divided by the trailing 90 days’ cost of goods sold. The weight (for each month) is 3.33% for the first quarter, 6.66% for the second quarter, 10% for the third quarter, and 13.33% for the fourth quarter (totaling 100% for the fiscal year). The sum of the results for each of the monthly calculations will result in the Weighted Working Capital Days for the fiscal year (non-GAAP measure).
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Key compensation components
Each year the Committee evaluates the mix of compensation components that the Chief Executive Officer and the other Named Executive Officers could receive by achieving target performance across all compensation components. The mix is set by reviewing competitive market pay data for executive officers having similar roles to each Named Executive Officer, and considers factors such as individual performance, skills and experience, and tenure in role. The Committee’s preference is for the compensation mix to emphasize performance-based opportunities. The subsequent pages describe the key components of compensation for the Named Executive Officers for the 2019 fiscal year.
Base salary
Generally, the Committee seeks to maintain base salaries for the Named Executive Officers within a reasonable range of the market median for executive officers having similar responsibilities with comparable companies. The Committee reviews the salaries of the Named Executive Officers every year and updates them when it deems appropriate.
At her promotion to President and Chief Executive Officer, the Board of Directors set Ms. Noonan’s base salary at $640,000, approximately 81% of the base salary of OMNOVA’s prior Chief Executive Officer and approximately 76% of the median base salary for a chief executive officer in the Company’s then-current compensation peer group. In 2018, the Board adjusted Ms. Noonan’s base salary to $710,000, bringing her salary to approximately 84% of the median base salary for a chief executive officer in the Company’s compensation peer group. In light of the Company’s strong performance and growth over her three years as CEO, the Company’s financial performance during fiscal 2018, and her strong leadership in executing the Company’s strategy, the Committee determined to increase Ms. Noonan’s base salary for fiscal 2019 to $800,000, 100% of the median base salary for a chief executive officer in the Company’s compensation peer group.
The Committee also approved an increase to Mr. Moore’s base salary at the beginning of fiscal 2019 from $320,000 to $345,000, in light of the significant increase in his global technology and operational responsibilities for the Company during the past two years. Lastly, the Committee approved market-comparable base salary increases between 2% and 4% for the Named Executive Officers other than Ms. Noonan and Mr. Moore.
Annual incentives
All Named Executive Officers participate in OMNOVA’s Annual Incentive Plan, a performance-based cash incentive program.
1. Opportunities
Generally, the Committee sets annual incentive payment opportunities to reflect the market’s and the compensation peer group’s target annual incentive payment levels for similarly situated executives, so that below-target performance results in below-median annual incentive payouts (approximately the 25th percentile at threshold performance), and above-target performance results in above-median annual incentive payouts (approximately the 75th percentile at maximum performance).
For the 2019 annual incentive, the Committee maintained annual incentive opportunity levels for the Named Executive Officers at 2018 levels. The Named Executive Officers (other than Ms. Noonan) were eligible for an annual incentive opportunity ranging from 30% of base salary at threshold performance to 120% of base salary at maximum performance, with target performance set at 60% of base salary. Ms. Noonan was eligible for an annual incentive opportunity ranging from 50% of her base salary at threshold performance to 200% of her base salary at maximum performance, with target performance set at 100% of her base salary.
2. Metrics
Annual incentive payments are earned based on the Company’s achievement against objectives tied to short-term financial and strategic metrics established by the Committee. The annual incentives for 2019 required achievement against two metrics: (1) EBIT and (2) Weighted Working Capital Days. Additionally, the Committee established an individual performance objective for Ms. Noonan based on her delivery against strategic objectives. Procedurally, the strategic objectives are proposed by Ms. Noonan, reviewed and commented upon by the Committee and the full Board, and approved by the Committee when
establishing each year’s annual incentive program. Generally, Ms. Noonan’s strategic objectives focus on operational performance, business planning and strategic execution, and leadership and organizational development (including culture).
Ms. Noonan’s performance objectives for 2019 were: (1) EBIT, weighted at 70%; (2) Weighted Working Capital Days, weighted at 10%; and (3) achievement of Strategic Objectives, weighted at 20%. The performance objectives for the other Named Executive Officers were (1) EBIT, weighted at 80% and (2) Weighted Working Capital Days, weighted at 20%.
3. Objectives
In establishing performance objectives for each performance metric, the Committee sets a target level of performance, a threshold level of performance (under which no incentive payment can earned) and a maximum level of performance (over which no greater incentive payment can be earned). Achieving target performance against all performance objectives results in a payment of the target performance opportunity. Additionally, the Committee establishes a “circuit breaker,” which prohibits any payout under the annual incentive plan if threshold performance is not achieved against the EBIT performance objective. The financial value of Ms. Noonan’s Strategic Objectives metric is also linked to EBIT performance—if the Company’s EBIT performance does not exceed target, Ms. Noonan’s payout for performance on the Strategic Objectives cannot exceed a target-level payout, regardless of Ms. Noonan’s actual performance against the Strategic Objectives metric.
4. Outcome
Because the Company’s EBIT performance fell below the threshold objective, the “circuit breaker” for the plan was triggered, and no annual incentive was achieved or paid to any Named Executive Officer for 2019.
Performance shares
Named Executive Officers are eligible to receive performance shares, an element of total long-term compensation, through the OMNOVA 2017 Equity Incentive Plan. The Committee grants performance shares to the Named Executive Officers to link a significant portion of compensation to the Company’s achievement of long-term objectives relating directly to the creation of long-term value for the Company’s shareholders. Performance shares are book-entry units that track the price of OMNOVA common shares. The shares vest, if at all, after a three-year performance period, based on the Company’s achievement against metrics and objectives set by the Committee at the beginning of the period.
1. 2017-2019 Performance Shares
In February 2017, the Committee authorized a three-year performance share program, covering a measurement period beginning December 1, 2016 and ending November 30, 2019 (the “2017-2019 Period”).
a. Opportunities
Generally, the Committee establishes pay opportunities for performance share grants so that the grant date value of the target opportunity for the performance shares, together with the grant date value of time-based equity granted in the same year, reflects the market and compensation peer group median long-term incentive for similarly situated executives. Below-target performance results in below-median total long-term incentive payouts, and above-target performance results in above-median total long-term incentive payouts.
For the 2017-2019 Period, the Committee established threshold, target, and maximum performance share opportunities which were unchanged from prior performance share programs (at 60%, 125%, and 200% of base salary, respectively, for Ms. Noonan, and 25%, 50%, and 100% of base salary, respectively, for the other Named Executive Officers).
To determine the number of performance shares represented by the threshold, target, and maximum opportunities, the Committee divided the value of each level of performance by $9.43, the average closing price per OMNOVA common share for the thirty trading days preceding the grant date. The resulting number of performance shares for each officer was then rounded to the nearest hundred shares.
b. Metrics
The Committee established three weighted performance metrics for the 2017-2019 Period: (1) a three-year cumulative EPS goal, weighted at 40%, (2) a three-year average ROIC goal, weighted at 40%, and (3) Relative TSR, weighted at 20%.
c. Objectives
The number of performance shares that can ultimately be earned by a Named Executive Officer depends upon achievement against performance objectives established by the Committee for each performance metric at the beginning of the measurement period. In establishing performance objectives for the performance shares, the Committee sets a target level of performance, as well as a threshold level of performance (under which no performance shares are earned) and a maximum level of performance (over which no additional performance shares are earned). Increased performance against the performance objectives results in an increased number of performance shares (determined on a straight-line interpolation basis). The final value of the performance awards is also determined by the change in the price of OMNOVA’s common shares during the performance measurement period. Therefore, even if performance shares are earned at target performance, the amount ultimately paid at settlement of the performance shares may exceed (or fall below) the grant date value of the target opportunity based on the increase or decrease in OMNOVA’s common share price over the performance measurement period.
d. Outcome
The following table shows the performance objectives for each metric measured during the 2017-2019 Period, OMNOVA’s actual performance interpolated against those objectives, and the resulting achievement.
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Metric
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Performance Required
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Actual Result
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Achievement (% of Target)
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Weight
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Weighted Achievement %
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Threshold
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Target
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Maximum
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Two-Year Cumulative EPS
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$
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1.64
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$
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1.87
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$
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2.11
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$
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1.43
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—
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%
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40
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%
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—
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%
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Two-Year Average ROIC
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9.75
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%
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10.75
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%
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11.75
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%
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9.46
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%
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—
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%
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40
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%
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—
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%
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Relative TSR
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25th %ile
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50th %ile
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75th%ile
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63rd%ile
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152.5
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%
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20
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%
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30.5
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%
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Calculated Plan Achievement
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30.5
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%
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Committee Certified Achievement
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30.5
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%
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The Committee determined at the start of the 2017-2019 Period that these performance shares would be settled in cash. Based on the certified level of achievement for the 2017-2019 performance shares, the following table provides, for each Named Executive Officer, the opportunities a number of performance shares available for achievement against the performance objectives, the number of performance shares actually earned (calculated on a linear interpolation basis), and the cash value delivered to each Named Executive Officer in settlement of the performance shares.
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Name
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Performance Shares Opportunities at:
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Performance Shares Earned
(#)
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Cash Value of Earned Performance Shares
($)(1)
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Cash Value
(% of Target Incentive Opportunity)
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Cash Value
(% of Base Salary)
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Threshold
(#)
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Target
(#)
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Maximum
(#)
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Anne P. Noonan
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40,700
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84,800
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135,700
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22,302
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225,250
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28
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%
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28
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%
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Paul F. DeSantis
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11,900
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23,800
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47,600
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7,258
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73,306
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33
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%
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15
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%
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James C. LeMay
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10,000
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19,900
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39,800
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6,069
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61,297
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33
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%
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16
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%
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Marshall D. Moore
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7,400
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14,800
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29,700
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4,524
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45,692
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33
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%
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16
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%
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Michael A. Quinn
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7,800
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15,500
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31,100
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4,737
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47,844
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33
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%
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16
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%
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(1)
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The cash settlement value of the performance shares earned by the Named Executive Officers was determined by multiplying the number of earned performance shares by OMNOVA’s common share price for the final thirty trading days of the 2017-2019 Period ($10.10).
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2. 2019-2021 performance shares
In early 2019, the Committee established a performance share program measuring performance for a three-year performance period beginning December 1, 2018 (the beginning of the 2019 fiscal year) and ending November 30, 2021 (the end of the 2021 fiscal year) (the “2019-2021 Period”).
a. Opportunities
When conducting its assessment of the compensation of the Named Executive Officers against the Company’s compensation peer group before setting 2019 compensation levels, the Committee determined that the target performance shares opportunity for Ms. Noonan and the total long-term incentive opportunity for Mr. DeSantis no longer reflected median levels. Accordingly, the Committee increased Ms. Noonan’s target opportunity for the 2019-2021 performance shares from 125% to 140% of base salary (with her threshold and maximum opportunities remaining at 60% and 200%, respectively). For Mr. DeSantis, the Committee increased his threshold, target, and maximum performance shares opportunities to 30%, 60%, and 120% of base salary, respectively, from 25%, 50%, and 100%, previously. The performance share opportunities for each of the other Named Executive Officers remained unchanged at 25%, 50%, and 100% of base salary for threshold, target, and maximum performance.
To determine the number of performance shares represented by the threshold, target, and maximum opportunities, the Committee divided the value of each level of performance by $8.10, the average closing price per OMNOVA common share for the thirty trading days preceding the grant date. The resulting number of performance shares for each officer was then rounded to the nearest hundred shares.
The following table provides the performance share opportunities that were determined by the Committee for each Named Executive Officer at each performance level:
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Name
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Performance Shares Awarded at:
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Threshold
(#)
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Target
(#)
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Maximum
(#)
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Anne P. Noonan
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59,300
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138,300
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197,500
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Paul F. DeSantis
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17,800
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35,600
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71,100
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James C. LeMay
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12,100
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24,300
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48,500
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Marshall D. Moore
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10,600
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21,300
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42,600
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Michael A. Quinn
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9,700
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19,400
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38,900
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b. Metrics
The Committee also established three weighted performance metrics for the 2019-2021 Period, consistent with the performance metrics for the 2017-2019 Period: (1) a three-year cumulative EPS goal, weighted at 40%; (2) a three-year average ROIC goal, weighted at 40%; and (3) Relative TSR, weighted at 20%.
c. Objectives
Due to the competitive sensitivity and the forward-looking nature of the Company-specific performance objectives for its performance share programs, OMNOVA does not disclose performance objectives for financial metrics for an in-progress performance share program. The Committee nonetheless views these performance objectives for the 2019-2021 Period as challenging and subject to risk.
Time-based equity
The Committee grants time-based equity to the Named Executive Officers to further align the interests of the Named Executive Officers with those of Company’s shareholders, to ensure that the Named Executive Officers maintain robust share ownership positions, and to establish a strong retention incentive.
Time-based equity grants to the Named Executive Officers are made in the form of restricted share units, which provide the right to receive OMNOVA common shares at vesting. Generally, these restricted share units only vest if the recipient remains employed with OMNOVA through the third anniversary of the date of grant.
Generally, the amount of time-based equity a Named Executive Officer receives is equal to a percentage of his or her base salary, divided by the average price of OMNOVA common shares for the thirty trading-days preceding the grant date. For 2019, the percentage of base salary used to determine the number of restricted share units for Ms. Noonan was 75% of her base salary, consistent with prior years. For Mr. DeSantis, the Committee increased the percentage of base salary used to determine his number of restricted share units from 35% to 40%, as part of the previously described adjustment of his total long-term incentive compensation opportunity. The percentage of base salary used to determine the number of restricted share units for the other Named Executive Officers was 35%, consistent with prior years.
On March 19, 2019, based on a thirty trading-day average share price of $8.10 through the close of trading on the prior day (rounded to the nearest hundred shares), the Committee approved the following grants of restricted share units to the Chief Executive Officer and each of the other Named Executive Officers:
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Name
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Restricted Share Units
(#)
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Grant Date Fair Value
($)
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Anne P. Noonan
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74,100
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563,160
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Paul F. DeSantis
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23,700
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180,120
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James C. LeMay
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17,000
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129,200
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Marshall D. Moore
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14,900
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113,240
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Michael A. Quinn
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13,600
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103,360
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Other compensation components
Executive officers receive additional compensation in the form of vacation, medical, life insurance, disability, and other benefits generally available to all of our employees. In addition, executive officers are eligible for the following benefits.
1. Perquisites
Executive officers receive certain limited perquisites intended to help ensure their continued health, to ease their transition into executive leadership with OMNOVA, and to support their continued focus on business matters. In this regard, OMNOVA pays the expense of annual physicals, related tests, and travel vaccinations for each executive officer, and pays for (or reimburses the cost of) financial planning, tax preparation, and estate planning services. New executive officers may also receive relocation assistance for a reasonable period, consistent with OMNOVA’s standard relocation practices and policies. Additionally, under the terms of Ms. Noonan’s employment agreement, the Company maintains a $4 million life insurance policy on her behalf. The Committee believes perquisites are commonly used or awarded by companies of OMNOVA’s size, and while the overall value is relatively small, perquisites represent an important part of maintaining a competitive compensation package for the executive officers.
2. Retirement programs
OMNOVA does not maintain special or enhanced retirement programs or benefits that are exclusively available to its Named Executive Officers. Eligible employees are able to participate in the OMNOVA Solutions Inc. Retirement Savings Plan, a customary 401(k) plan, with no special or preferential terms or conditions for Named Executive Officers. The Retirement Savings Plan provides for matching contributions by the Company of up to 3.5% of eligible compensation, subject to applicable Internal Revenue Code limitations.
Eligible employees (including the Named Executive Officers) are also able to participate in the OMNOVA Solutions Retirement Savings Benefits Restoration Plan, with no special or preferential terms or conditions for Named Executive Officers. The Retirement Savings Benefits Restoration Plan allows all participants in the Retirement Savings Plan, whose contributions are subject to annual compensation limits under the Code, to defer additional compensation under the plan once the Internal Revenue Code limits have been exceeded. Contributions into the Retirement Savings Benefits Restoration Plan are matched by the Company up to 3.5% of eligible compensation, and may be invested into the same investment vehicles that are available under the Retirement Savings Plan.
Mr. LeMay also participates in the OMNOVA Solutions Inc. Consolidated Pension Plan and the related OMNOVA Solutions Inc. Pension Benefits Restoration Plan, each of which were frozen in all respects on June 1, 2009.
3. Employment agreements
a. Severance arrangements
Each Named Executive Officer, other than Ms. Noonan, is eligible for benefits under the Second Amended and Restated Corporate Officers’ Severance Plan, upon the execution of a severance and release agreement at the time of separation. Ms. Noonan is eligible to receive severance benefits under her employment agreement with the Company. The benefits available to each Named Executive Officer in the event of a separation "without cause" or for "good reason" (each as defined in the plan) are described in more detail under the headings “Potential payments upon termination or change of control” and “Post-termination tables”, which are incorporated herein by reference.
b. Change in control arrangements
The Second Amended and Restated Corporate Officers’ Severance Plan provides enhanced severance benefits for participating Named Executive Officers, other than Ms. Noonan and Mr. LeMay, who are involuntarily terminated within twenty-four months following a change in control. Ms. Noonan is eligible to receive change-in-control benefits under her employment agreement with the Company. While Mr. LeMay is a participant in the Second Amended and Restated Corporate Officer’s Severance Plan for purposes of a standard severance arrangement, change in control benefits are provided for him under a legacy severance agreement with the Company. The benefits available to each Named Executive Officer in the event of a separation following a change-in-control are described in more detail under the headings “Potential payments upon termination or change of control” and “Post-termination tables”, which are incorporated herein by reference.
Compensation of Executive Officers
2019 summary compensation table
The following table sets forth compensation information for the Company’s Named Executive Officers for each of the fiscal years ended November 30, 2019, 2018, and 2017, as applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position (1)
|
Fiscal Year
|
Salary
($)
|
Bonus
($)(2)
|
Stock
Awards
($)(3)
|
Non-Equity Incentive Plan Compensation
($)
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings
($)(4)
|
All Other Compensation
($)(5)
|
Total
($)
|
|
Anne P. Noonan
|
2019
|
796,539
|
|
—
|
|
1,614,240
|
|
—
|
|
—
|
|
68,369
|
|
2,479,148
|
|
|
President and Chief Executive Officer
|
2018
|
699,231
|
|
—
|
|
1,494,790
|
|
—
|
|
—
|
|
103,687
|
|
2,297,708
|
|
|
2017
|
637,358
|
|
—
|
|
1,531,660
|
|
640,000
|
|
—
|
|
78,824
|
|
2,887,842
|
|
|
Paul F. DeSantis
|
2019
|
480,000
|
|
—
|
|
450,680
|
|
—
|
|
—
|
|
43,929
|
|
974,609
|
|
|
Senior Vice President and Chief Financial Officer; Treasurer
|
2018
|
460,000
|
|
—
|
|
413,020
|
|
—
|
|
—
|
|
52,384
|
|
925,404
|
|
|
2017
|
448,818
|
|
—
|
|
450,640
|
|
269,400
|
|
—
|
|
50,668
|
|
1,219,526
|
|
|
James C. LeMay
|
2019
|
393,000
|
|
—
|
|
313,880
|
|
—
|
|
168,832
|
|
37,203
|
|
912,915
|
|
|
Senior Vice President, Corporate Development; General Counsel
|
2018
|
383,538
|
|
—
|
|
344,540
|
|
—
|
|
—
|
|
47,634
|
|
775,712
|
|
|
2017
|
375,373
|
|
—
|
|
376,680
|
|
225,300
|
|
132,865
|
|
36,704
|
|
1,146,922
|
|
|
Marshall D. Moore
|
2019
|
345,000
|
|
—
|
|
275,120
|
|
—
|
|
—
|
|
38,219
|
|
658,339
|
|
|
Chief Technology Officer and Senior Vice President, Operations
|
2018
|
313,846
|
|
—
|
|
285,690
|
|
—
|
|
—
|
|
34,682
|
|
634,218
|
|
|
2017
|
273,027
|
|
103,587
|
|
280,360
|
|
168,000
|
|
—
|
|
9,588
|
|
834,562
|
|
|
Michael A. Quinn
|
2019
|
315,000
|
|
—
|
|
250,800
|
|
—
|
|
—
|
|
37,270
|
|
603,070
|
|
|
Senior Vice President and Chief Human Resources Officer
|
2018
|
303,154
|
|
—
|
|
272,850
|
|
—
|
|
—
|
|
24,340
|
|
600,344
|
|
|
2017
|
292,875
|
|
—
|
|
294,120
|
|
175,800
|
|
—
|
|
23,422
|
|
786,217
|
|
|
|
|
|
(1)
|
Ms. Noonan became the Company’s President and Chief Executive Officer on December 1, 2016, the beginning of the Company’s 2017 fiscal year.
|
|
|
|
|
(2)
|
Amounts reported as “Bonus” for 2017 for Mr. Moore include the vesting of a deferred new hire cash bonus that was granted to him in 2015 and vested during the 2017 fiscal year.
|
|
|
|
|
(3)
|
Amounts reported as “Stock Awards” for 2019 reflect the grant date fair value of stock awards calculated in accordance with FASB ASC Topic 718, based on the probable outcome of any applicable performance conditions and disregarding possible forfeitures. See Note O to the Consolidated Financial Statements contained in our 2019 Annual Report for an explanation of the assumptions made in valuing awards of restricted share units.
|
On March 19, 2019, each Named Executive Officer received grants consisting of a target number of performance shares and a number of restricted share units. The value of the restricted share units and the target number of performance shares was determined by multiplying the amount of such shares by $7.60, the price per OMNOVA common share at the close of trading on the grant date. The value and number of shares or units included for each of the equity-based grants reported in this column can be found in the 2019 grants of plan-based awards table.
The value included in this table with respect to the performance shares is based on the grant date fair value of the target number of performance shares granted at the beginning of the performance period. The Company believes that target performance is the performance level most likely to be achieved during the performance measurement period for those shares. If the Company’s performance at the end of the measurement period resulted in the Named Executive Officers earning the maximum number of performance shares, then each of the Named Executive Officers would be entitled to an award having the grant date fair value set forth beside his or her name in the following table:
|
|
|
|
|
|
|
Name
|
Grant Date Fair Value of Maximum Award
($)
|
|
Anne P. Noonan
|
1,501,000
|
|
|
Paul F. DeSantis
|
540,360
|
|
|
James C. LeMay
|
368,600
|
|
|
Marshall D. Moore
|
323,760
|
|
|
Michael A. Quinn
|
295,640
|
|
|
|
|
|
(4)
|
Amounts reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column reflect the year-over-year change in the present value of amounts to be paid at normal retirement age for Mr. LeMay, who is the only Named Executive Officer who participates in the Company’s Consolidated Pension Plan and its associated Pension Benefits Restoration Plan. For 2018, the change in Mr. LeMay’s Pension Value and Nonqualified Deferred Compensation Earnings was negative, and was therefore reported at $0 for 2018 according to Summary Compensation Table requirements. No above market or preferential earnings are paid to any Named Executive Officer on nonqualified deferred compensation.
|
|
|
|
|
(5)
|
Amounts reported in the “All Other Compensation” column are detailed in the following table and its accompanying footnotes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Matching
Contributions
($)(a)
|
Company Paid
Life Insurance
($)(b)
|
Perquisites and Personal Benefits (c)
|
|
|
Financial and Tax Planning
($)(d)
|
Executive Physical
($)(e)
|
Other Perquisites
($)(f)
|
Total
($)
|
|
Anne P. Noonan
|
26,559
|
|
14,392
|
|
22,218
|
|
5,200
|
|
—
|
|
68,369
|
|
|
Paul F. DeSantis
|
16,061
|
|
253
|
|
21,568
|
|
5,200
|
|
847
|
|
43,929
|
|
|
James C. LeMay
|
13,205
|
|
396
|
|
18,402
|
|
5,200
|
|
—
|
|
37,203
|
|
|
Marshall D. Moore
|
12,008
|
|
253
|
|
20,758
|
|
5,200
|
|
—
|
|
38,219
|
|
|
Michael A. Quinn
|
9,753
|
|
258
|
|
20,963
|
|
6,296
|
|
—
|
|
37,270
|
|
|
|
|
|
(a)
|
Amounts in this column consist of OMNOVA’s matching contributions to the qualified OMNOVA Retirement Savings Plan and the nonqualified OMNOVA Retirement Savings Benefits Restoration Plan.
|
|
|
|
|
(b)
|
Amounts in this column include (i) a premium of $14,134 paid by OMNOVA for a $4 million life insurance policy for Ms. Noonan pursuant to the terms of her employment agreement and (ii) for all of the Named Executive Officers (including Ms. Noonan), 100% of the premium for a $100,000 life insurance benefit paid on their behalf, consistent with the Company’s practices for all of its full-time, salaried employees.
|
|
|
|
|
(c)
|
For more information, see “Perquisites” under the heading “Compensation Discussion & Analysis.”
|
|
|
|
|
(d)
|
Amounts in this column reflect Company paid or reimbursed costs for financial, tax, and estate planning services.
|
|
|
|
|
(e)
|
Amounts in this column reflect the expected cost to the Company for the Named Executive Officer’s participation in an executive physical and health screening.
|
|
|
|
|
(f)
|
Amounts in this column reflect perquisites and other benefits the value of which do not, individually or in the aggregate, exceed $25,000 or 10% of the Named Executive Officer’s aggregate perquisites.
|
2019 grants of plan-based awards table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Grant Date
|
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards
($)(1)
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards
(#)(2)
|
|
All Other Stock Awards: Number of Shares of Stock or Units
(#)(3)
|
|
Grant Date Fair Value of Stock and Option Awards
($)(4)
|
|
Threshold
|
Target
|
Maximum
|
|
Threshold
|
Target
|
Maximum
|
|
|
Anne P. Noonan
|
|
400,000
|
|
800,000
|
|
1,600,000
|
|
|
|
|
|
|
|
|
|
|
|
3/19/19
|
|
|
|
|
59,300
|
|
138,300
|
|
197,500
|
|
|
|
|
1,051,080
|
|
|
|
3/19/19
|
|
|
|
|
|
|
|
|
74,100
|
|
|
563,160
|
|
|
Paul F. DeSantis
|
|
144,000
|
|
288,000
|
|
576,000
|
|
|
|
|
|
|
|
|
|
|
|
3/19/19
|
|
|
|
|
17,800
|
|
35,600
|
|
71,100
|
|
|
|
|
270,560
|
|
|
|
3/19/19
|
|
|
|
|
|
|
|
|
23,700
|
|
|
180,120
|
|
|
James C. LeMay
|
|
117,900
|
|
235,800
|
|
471,600
|
|
|
|
|
|
|
|
|
|
|
|
3/19/19
|
|
|
|
|
12,100
|
|
24,300
|
|
48,500
|
|
|
|
|
184,680
|
|
|
|
3/19/19
|
|
|
|
|
|
|
|
|
17,000
|
|
|
129,200
|
|
|
Marshall D. Moore
|
|
103,500
|
|
207,000
|
|
414,000
|
|
|
|
|
|
|
|
|
|
|
|
3/19/19
|
|
|
|
|
10,600
|
|
21,300
|
|
42,600
|
|
|
|
|
161,880
|
|
|
|
3/19/19
|
|
|
|
|
|
|
|
|
14,900
|
|
|
113,240
|
|
|
Michael A. Quinn
|
|
94,500
|
|
189,000
|
|
378,000
|
|
|
|
|
|
|
|
|
|
|
|
3/19/19
|
|
|
|
|
9,700
|
|
19,400
|
|
38,900
|
|
|
|
|
147,440
|
|
|
|
3/19/19
|
|
|
|
|
|
|
|
|
13,600
|
|
|
103,360
|
|
|
|
|
|
(1)
|
Amounts reported in these columns reflect annual incentive opportunities under OMNOVA’s Annual Incentive Plan for each of the Named Executive Officers for the fiscal year 2019. Threshold, target, or maximum performance would result in a plan payout equal to 50%, 100%, or 200% of base salary, respectively, for Ms. Noonan, and 30%, 60%, or 120% of base salary, respectively, for each of the other Named Executive Officers. As described under the heading “Compensation Discussion & Analysis” the Named Executive Officers did not receive any payout for 2019 annual incentives.
|
|
|
|
|
(2)
|
Amounts reported in these columns reflect the number of performance shares that each of the Named Executive Officers could receive at threshold, target, or maximum performance for a grant of performance shares covering the three-year performance period that began on December 1, 2018 and ends November 30, 2021 (the “2019-2021 performance shares”). This grant is discussed in detail under the heading “Compensation Discussion & Analysis.” The 2019-2021 performance share grants for threshold, target, or maximum performance are equal to 60%, 140%, or 200% of base salary, respectively, for Ms. Noonan, 30%, 60%, or 120% of base salary, respectively, for Mr. DeSantis, and 25%, 50%, or 100% of base salary, respectively, for the other Named Executive Officers. The value for threshold, target, and maximum performance was converted into an equivalent number of book-entry shares that track the price of OMNOVA common shares. The price at which the awards were converted to book-entry performance shares was based on the thirty-day average closing price of OMNOVA common shares for the first thirty trading days of the performance period ($8.10), rounded to the nearest hundred shares. The Committee determined that these shares will ultimately be settled in OMNOVA common shares.
|
|
|
|
|
(3)
|
Amounts reported in this column reflect the number of restricted share units granted to each of the Named Executive Officers on March 19, 2019, which generally vest in full three years from the grant date.
|
|
|
|
|
(4)
|
Amounts reported in this column represent the aggregate grant date fair value of each applicable equity or equity-based award granted during the 2019 fiscal year. The grant date fair value is based on the price per OMNOVA common share on March 19, 2019 ($7.60), multiplied by (a) in the case of restricted share units grants, the amount of restricted share units actually granted, or (b) in the case of performance share grants, the target number of performance shares granted. The accounting assumptions used in calculating the grant date fair value for the equity awards are described in Note O to the Consolidated Financial Statements contained in our 2019 Annual Report.
|
2019 outstanding equity awards at fiscal year-end table
The following table sets forth information for each Named Executive Officer with respect to (i) each unvested award of restricted shares or restricted share units and (ii) each award of performance shares for which the performance measurement period had not expired, in each case as of November 30, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Stock Awards
|
|
Number of Shares or Units of Stock That Have Not Vested
(#)(1)
|
Market Value of Shares or Units of Stock That Have Not Vested
($)(2)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)(3)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested
($)(4)
|
|
Anne P. Noonan
|
177,400
|
|
1,795,288
|
|
225,600
|
|
2,283,072
|
|
|
Paul F. DeSantis
|
56,300
|
|
569,756
|
|
58,300
|
|
589,996
|
|
|
James C. LeMay
|
44,200
|
|
447,304
|
|
43,200
|
|
437,184
|
|
|
Marshall D. Moore
|
36,300
|
|
367,356
|
|
37,000
|
|
374,440
|
|
|
Michael A. Quinn
|
35,000
|
|
354,200
|
|
34,400
|
|
348,128
|
|
|
|
|
|
(1)
|
Amounts reported in this column reflect the aggregate number of restricted share units outstanding as of November 30, 2019. The grant dates and amounts for each individual restricted share units grant are shown in the following table. Generally, these awards vest in full three years from the date of grant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Grant Date
|
Shares
Granted
|
|
Name
|
Grant Date
|
Shares
Granted
|
|
Anne P. Noonan
|
3/19/2019
|
74,100
|
|
|
Marshall D. Moore
|
3/19/2019
|
14,900
|
|
|
|
1/17/2018
|
52,400
|
|
|
|
1/17/2018
|
11,000
|
|
|
|
2/9/2017
|
50,900
|
|
|
|
2/9/2017
|
10,400
|
|
|
Paul F. DeSantis
|
3/19/2019
|
23,700
|
|
|
Michael A. Quinn
|
3/19/2019
|
13,600
|
|
|
|
1/17/2018
|
15,900
|
|
|
|
1/17/2018
|
10,500
|
|
|
|
2/9/2017
|
16,700
|
|
|
|
2/9/2017
|
10,900
|
|
|
James C. LeMay
|
3/19/2019
|
17,000
|
|
|
|
|
|
|
|
1/17/2018
|
13,300
|
|
|
|
|
|
|
|
2/9/2017
|
13,900
|
|
|
|
|
|
|
|
|
|
(2)
|
Amounts reported in this column reflect the aggregate number of the restricted share units outstanding on November 30, 2019, multiplied by the closing price per OMNOVA common share on November 30, 2019 ($10.12).
|
|
|
|
|
(3)
|
Amounts reported in this column reflect the aggregate number of performance shares outstanding at target as of November 30, 2019 (based on the Company’s assessment that performance was higher than threshold but not in excess of target performance as of that date). The amounts and grant dates for the performance shares included in this column are shown in the following table. Generally, performance shares vest on the date that the Compensation & Organization Committee has certified the Company’s performance after the end of the performance measurement period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Grant Date
|
Shares
Granted
|
|
Name
|
Grant Date
|
Shares
Granted
|
|
Anne P. Noonan
|
3/19/2019
|
138,300
|
|
|
Marshall D. Moore
|
3/19/2019
|
21,300
|
|
|
|
1/17/2018
|
87,300
|
|
|
|
1/17/2018
|
15,700
|
|
|
Paul F. DeSantis
|
3/19/2019
|
35,600
|
|
|
Michael A. Quinn
|
3/19/2019
|
19,400
|
|
|
|
1/17/2018
|
22,700
|
|
|
|
1/17/2018
|
15,000
|
|
|
James C. LeMay
|
3/19/2019
|
24,300
|
|
|
|
|
|
|
|
1/17/2018
|
18,900
|
|
|
|
|
|
|
|
|
|
(4)
|
Amounts reported in this column reflect the aggregate number of performance shares outstanding (assuming target performance) on November 30, 2019, multiplied by the closing price per OMNOVA common share on November 30, 2019 ($10.12).
|
2019 option exercises and stock vested table
The following table provides information regarding the vesting of OMNOVA restricted shares and performance shares that were earned during the fiscal year ended November 30, 2019 for each of the Named Executive Officers. No Named Executive Officer held or exercised any option awards during the 2019 fiscal year.
|
|
|
|
|
|
|
|
|
|
Name
|
Vesting or Certification Date (1)
|
Stock Vested
|
|
Number of Shares Acquired on Vesting
(#)
|
Value Realized on Vesting
($)(2)
|
|
Anne P. Noonan
|
12/27/2019
|
22,302
|
|
225,250
|
|
|
|
1/20/2019
|
24,200
|
|
199,650
|
|
|
Paul F. DeSantis
|
12/27/2019
|
7,258
|
|
73,306
|
|
|
|
1/20/2019
|
25,500
|
|
210,375
|
|
|
James C. LeMay
|
12/27/2019
|
6,069
|
|
61,297
|
|
|
|
1/20/2019
|
21,400
|
|
176,550
|
|
|
Marshall D. Moore
|
12/27/2019
|
4,524
|
|
45,692
|
|
|
|
1/20/2019
|
5,000
|
|
41,250
|
|
|
Michael A. Quinn
|
12/27/2019
|
4,737
|
|
47,844
|
|
|
|
1/20/2019
|
16,600
|
|
136,950
|
|
|
|
|
|
(1)
|
Each of the Named Executive Officers earned 2017-2019 performance shares based on performance during the performance measurement period of December 1, 2016 to November 30, 2019. The cash value of the earned performance shares was certified by the Compensation & Organization Committee of the Board on December 27, 2019.
|
|
|
|
|
(2)
|
The value of the restricted shares that vested for each of the Named Executive Officers was based on the closing price per OMNOVA common share on January 20, 2019 ($8.25). The earned 2017-2019 performance shares were settled entirely in cash, based on the average trading price per OMNOVA common share for the thirty trading days ending November 30, 2019 ($10.10).
|
2019 pension benefits table
The following table presents information about the participation of the Named Executive Officers in OMNOVA’s defined benefit pension plans as of November 30, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Plan Name
|
Number of Years Credited Service
(#)
|
Present Value of Accumulated Benefit
($)(1)
|
Payments During Last Fiscal Year
($)
|
|
Anne P. Noonan
|
Consolidated Pension Plan
|
—
|
|
—
|
|
—
|
|
|
|
Pension Benefits Restoration Plan
|
—
|
|
—
|
|
—
|
|
|
Paul F. DeSantis
|
Consolidated Pension Plan
|
—
|
|
—
|
|
—
|
|
|
|
Pension Benefits Restoration Plan
|
—
|
|
—
|
|
—
|
|
|
James C. LeMay
|
Consolidated Pension Plan
|
19.00
|
|
889,511
|
|
—
|
|
|
|
Pension Benefits Restoration Plan
|
19.00
|
|
352,703
|
|
—
|
|
|
Marshall D. Moore
|
Consolidated Pension Plan
|
—
|
|
—
|
|
—
|
|
|
|
Pension Benefits Restoration Plan
|
—
|
|
—
|
|
—
|
|
|
Michael A. Quinn
|
Consolidated Pension Plan
|
—
|
|
—
|
|
—
|
|
|
|
Pension Benefits Restoration Plan
|
—
|
|
—
|
|
—
|
|
|
|
|
|
(1)
|
The amounts reflected in this column were calculated as of November 30, 2019, assuming a normal retirement age of 65 years and using the same assumptions employed for financial reporting purposes under Accounting Standards Codification Topic 715. These assumptions are described in Note O of the Notes to Consolidated Financial Statements included in the Company’s 2019 Form 10-K.
|
1. OMNOVA Solutions Consolidated Pension Plan
OMNOVA sponsors the OMNOVA Solutions Consolidated Pension Plan, a defined benefit pension plan qualified under Section 401(a) of the Internal Revenue Code. Appendix A of the OMNOVA Solutions Consolidated Pension Plan (the “Salaried Plan”) provides benefits for salaried and non-union hourly employees who were employed by the company prior to December 1, 2004, the date the Salaried Plan was closed to new participants. Effective June 1, 2009, OMNOVA froze the accrual of benefit and vesting service under the Salaried Plan. Accordingly, the amounts in the “Present Value of Accumulated Benefits” column in the table above reflect the present value of the benefit that had been accrued by each Named Executive Officer as of June 1, 2009. Changes in such accrued amounts after June 1, 2009 reflect the impact of actuarial adjustments due to, for example, changes in applicable mortality tables and interest rates. Such changes do not represent an increase in the accrued benefit that will actually become payable to a participant at normal retirement age. The normal form of payment for a Salaried Plan participant is a single life annuity. Participants are eligible to begin receiving full benefits at the normal retirement age of 65, or a reduced benefit for early retirement at age 55 if the participant had 10 years of service with the Company. As of November 30, 2019, Mr. LeMay is the only Named Executive Officer who participates in the Salaried Plan.
2. OMNOVA Solutions Pension Benefit Restoration Plan
OMNOVA sponsors the OMNOVA Solutions Pension Benefit Restoration Plan (the “Pension BRP”), an unfunded plan that is not qualified under the Internal Revenue Code. The Pension BRP provides benefits to participants in the Salaried Plan whose benefits are limited due to certain limits on qualified plans contained in the Internal Revenue Code. The benefit available under the Pension BRP is intended to restore the benefits that a participant would have received under the Salaried Plan but does not because of such Internal Revenue Code limits. Executive officers participate on the same terms and conditions as all other participants who are subject to such limitations. Consistent with the Salaried Plan, OMNOVA froze the accrual of benefit and vesting service under the Pension BRP on June 1, 2009. The amounts in the “Present Value of Accumulated Benefits” column in the table above reflect the present value of the benefit accrued by each Named Executive Officer as of June 1, 2009. Benefits under the Pension BRP are paid as a lump sum no sooner than 60 days after the participant’s retirement, subject to the requirements of Section 409A of the Internal Revenue Code (including its required six month delay on the making of payments to certain specified employees), if applicable.
2019 nonqualified deferred compensation table
OMNOVA sponsors the OMNOVA Solutions Retirement Savings Restoration Plan (the “Savings BRP”), an unfunded compensation deferral plan that is not qualified under the Internal Revenue Code. The Savings BRP allows participants in the OMNOVA Solutions Retirement Savings Plan (“401(k) Plan”) whose contributions to a tax-qualified savings plan are subject to annual compensation limits under the Internal Revenue Code to defer up 50% of cash compensation (including cash bonuses) to the Savings BRP once such compensation limits have been exceeded.
Participant deferrals are invested on a bookkeeping basis in investment funds that mirror the funds the participant has elected to invest in under the 401(k) Plan. OMNOVA provides participants with a match of 100% on the first 1%, and 50% on the next 5%, of participant contributions into the Savings BRP, for a total Company match of 3.5% of contributions. The Company’s executive officers participate in the Savings BRP on the same terms and conditions as all other 401(k) Plan participants whose benefits are limited by the Internal Revenue Code.
The following table shows activity for the Named Executive Officers during the 2019 fiscal year under the Savings BRP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Executive Contributions in Last FY
($)(1)
|
OMNOVA Contributions in Last FY
($)(2)
|
Aggregate Earnings in Last FY
($)(3)
|
Aggregate Withdrawals / Distributions
($)
|
Aggregate Balance at Last FYE
($)(4)(5)
|
|
Anne P. Noonan
|
30,969
|
|
18,065
|
|
34,065
|
|
—
|
|
319,359
|
|
|
Paul F. DeSantis
|
18,822
|
|
4,475
|
|
29,716
|
|
—
|
|
265,604
|
|
|
James C. LeMay
|
6,312
|
|
3,682
|
|
30,451
|
|
—
|
|
476,175
|
|
|
Marshall D. Moore
|
5,458
|
|
2,255
|
|
2,809
|
|
—
|
|
27,724
|
|
|
Michael A. Quinn
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
(1)
|
Amounts reported in this column are included in the 2019 summary compensation table under the “Salary” column.
|
|
|
|
|
(2)
|
Amounts reported in this column are included in the 2019 summary compensation table under the “All Other Compensation” column.
|
|
|
|
|
(3)
|
Amounts reported in this column are not reflected in the 2019 summary compensation table because the earnings were neither preferential nor above-market.
|
|
|
|
|
(4)
|
Amounts reported in this column reflect the total ending account balance (including executive and OMNOVA contributions) at November 30, 2019 for each Named Executive Officer.
|
|
|
|
|
(5)
|
All nonqualified executive contributions and OMNOVA contributions included in this column are also included in the current-year compensation presented in the 2019 summary compensation table under the “Salary” and “All Other Compensation” columns, respectively. The aggregate amount of this balance that has been included as compensation for each of the Named Executive Officers in the summary compensation tables of prior years is:
|
|
|
|
|
|
|
|
Name
|
Amounts Previously Included
($)
|
|
Anne P. Noonan
|
219,432
|
|
|
Paul F. DeSantis
|
176,418
|
|
|
James C. LeMay
|
278,445
|
|
|
Marshall D. Moore
|
17,604
|
|
|
Michael A. Quinn
|
—
|
|
Potential payments upon termination or change of control
The below table identifies the compensation and benefits that would generally be available to the Named Executive Officers in various scenarios, based on the Company’s programs and equity award agreements for executive officers as they were in effect on November 30, 2019. Except as required by law, no benefits are payable to any Named Executive Officer as a result of an involuntary, for cause termination or as a result of a resignation. This table does not describe benefits that are available to both salaried employees and Named Executive Officers on the same terms and conditions. Exceptions to the benefits described below arising from other agreements are identified in footnotes to the post-termination tables.
|
|
|
|
|
|
|
|
|
|
Compensation or Benefit
|
Termination Event (1)
|
|
Retirement
|
Involuntary, Not For Cause
|
Change In Control Termination
|
Due to Disability
|
Death
|
|
Severance
Pay
|
None
|
1x annual base salary and target bonus, paid as a lump sum
|
2x annual base salary and target bonus, paid as a lump sum
|
None
|
None
|
|
Annual Incentive
|
Payment for completed period; incomplete periods prorated and paid on actual performance
|
Payment for completed period; pro rata payment at actual performance for incomplete periods
|
Payment for completed periods; payment at 75% of maximum bonus opportunity for incomplete periods
|
Payment for completed period; incomplete periods prorated and paid on actual performance
|
Payment for completed period; incomplete periods prorated and paid on actual performance
|
|
Time-Based Equity
|
Time-based equity continues vesting per grant terms
|
Time-based equity is forfeited, subject to the Committee's discretion to permit continued vesting per original grant terms
|
Time-based equity is accelerated if (1) not replaced at the time of the change in control or (2) after replacement, executive is terminated within twenty-four months of the change-in-control
|
Time-based equity is accelerated
|
Time-based equity is accelerated
|
|
Performance Shares
|
Payment for completed performance period; incomplete periods prorated and paid on actual performance
|
Payment for completed performance period; committee discretion to prorate and pay incomplete periods based on actual performance
|
Payment for completed performance period; immediate payment for incomplete periods assuming target performance
|
Payment for completed performance period; incomplete periods prorated and paid on actual performance
|
Payment for completed performance period; incomplete periods prorated and paid on actual performance
|
|
Life
Insurance
|
None
|
None
|
None
|
None
|
Payable according to applicable insurance plans
|
|
Other
Benefits
|
None
|
Reasonable cost of 12 months of outplacement services; 100% of premiums for OMNOVA provided medical, dental and, basic life insurance for 12 months
|
Reasonable cost of 12 months of outplacement services; 100% of premiums for OMNOVA provided medical, dental and, basic life insurance for 24 months
|
None
|
None
|
|
|
|
|
(1)
|
“Retirement” includes a Named Executive Officer’s separation from employment (a) at or after age sixty-five or (b) at or after fifty-five years of age with at least ten years of service with OMNOVA . "Involuntary, Not For Cause” means an involuntary termination of the Named Executive Officer or the executive’s resignation for “good reason.” "Change of Control Termination" means an involuntary termination of the Named Executive Officer or the executive’s resignation for “good reason" within two years after a change in control. “Good reason” means, among other reasons, a change in the executive’s reporting line, a material reduction in the executive’s duties, responsibilities or title, and certain reductions or changes to the executive’s overall compensation program.
|
|
|
|
|
(2)
|
Except where otherwise detailed, the “Other Benefits” row in the following tables assumes outplacement service costs of $25,000, medical insurance premiums of $23,688, dental insurance premiums of $1,260, and the annual life insurance premiums reported in the 2019 components of all other compensation table for each Named Executive Officer.
|
2019 post-termination tables
The following tables report the compensation and benefits that would be paid by the Company to each Named Executive Officer, assuming that each of the termination events occurred on November 30, 2019.
1. Anne P. Noonan
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation or Benefit
|
Termination Event (1)
|
|
Involuntary, Not For Cause
($)
|
Change In Control Termination
($)
|
Due to Disability
($)
|
Death
($)
|
|
Severance Pay (2)
|
3,200,000
|
|
4,800,000
|
|
—
|
|
—
|
|
|
Annual Incentive
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Time-Based Equity (3)
|
—
|
|
1,795,288
|
|
1,795,288
|
|
1,795,288
|
|
|
Performance Shares (3)
|
1,270,211
|
|
3,141,248
|
|
1,270,211
|
|
1,270,211
|
|
|
Life Insurance
|
—
|
|
—
|
|
—
|
|
4,100,000
|
|
|
Other Benefits (4)
|
78,680
|
|
78,680
|
|
—
|
|
—
|
|
|
Total
|
4,548,891
|
|
9,815,216
|
|
3,065,499
|
|
7,165,499
|
|
|
|
|
|
(1)
|
Ms. Noonan did not meet the eligibility criteria for Retirement as of November 30, 2019.
|
|
|
|
|
(2)
|
Upon Ms. Noonan’s Involuntary, Not for Cause separation, Ms. Noonan’s severance pay would equal two times the sum of her (a) annual base salary and (b) her target incentive opportunity for the current fiscal year. Upon a Change in Control Termination, she would receive severance pay equal to three times her (a) annual base salary and (b) her target incentive opportunity for the current fiscal year.
|
|
|
|
|
(3)
|
The values for time-based equity and performance shares are estimated based on OMNOVA’s common share closing price on November 30, 2019 ($10.12). For prorated performance shares, target performance is assumed through the period. For this disclosure, the “Involuntary, Not For Cause” scenario assumes the Committee would approve payment for incomplete performance periods.
|
|
|
|
|
(4)
|
Upon (a) an Involuntary, Not for Cause separation, or (b) a Change in Control Termination, Ms. Noonan would continue receiving health and welfare benefits for twenty four months.
|
2. Paul F. DeSantis
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation or Benefit
|
Termination Event (1)
|
|
Involuntary, Not For Cause
($)
|
Change In Control Termination
($)
|
Due to Disability
($)
|
Death
($)
|
|
Severance Pay
|
768,000
|
|
1,536,000
|
|
—
|
|
—
|
|
|
Annual Incentive
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Time-Based Equity (2)
|
—
|
|
569,756
|
|
569,756
|
|
569,756
|
|
|
Performance Shares (2)
|
343,814
|
|
663,302
|
|
343,814
|
|
343,814
|
|
|
Life Insurance
|
—
|
|
—
|
|
—
|
|
100,000
|
|
|
Other Benefits
|
50,201
|
|
75,402
|
|
—
|
|
—
|
|
|
Total
|
1,162,015
|
|
2,844,460
|
|
913,570
|
|
1,013,570
|
|
|
|
|
|
(1)
|
Mr. DeSantis did not meet any eligibility criteria for Retirement as of November 30, 2019.
|
|
|
|
|
(2)
|
The values for time-based equity and performance shares are estimated based on OMNOVA’s common share closing price on November 30, 2019 ($10.12). For prorated performance shares, target performance is assumed through the period. For purposes of this disclosure, the “Involuntary, Not For Cause” scenario assumes the Committee would approve payment for incomplete performance periods.
|
3. James C. LeMay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation or Benefit
|
Termination Event
|
|
Retirement
($)
|
Involuntary, Not For Cause
($)
|
Change in Control Termination
($)(5)
|
Due to Disability
($)
|
Death
($)
|
|
Severance Pay (1)
|
—
|
|
628,800
|
|
2,240,100
|
|
—
|
|
—
|
|
|
Annual Incentive
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Time-Based Equity (2)
|
447,304
|
|
447,304
|
|
447,304
|
|
447,304
|
|
447,304
|
|
|
Performance Shares (2)(3)
|
268,686
|
|
268,686
|
|
498,481
|
|
268,686
|
|
268,686
|
|
|
Life Insurance
|
—
|
|
—
|
|
—
|
|
—
|
|
100,000
|
|
|
Other Benefits (4)
|
—
|
|
50,344
|
|
191,436
|
|
—
|
|
—
|
|
|
Total
|
715,990
|
|
1,395,134
|
|
3,377,321
|
|
715,990
|
|
815,990
|
|
|
|
|
|
(1)
|
Upon a Change In Control Termination, Mr. LeMay’s Amended and Restated Severance Agreement (the “Severance Agreement”) provides for a lump-sum payment equal to three times the sum of his (a) annual base salary and (b) an incentive pay amount not less than the greater of (i) the average bonus paid to him during the three fiscal years preceding the Change-In-Control Termination and (ii) 75% of his maximum bonus opportunity for the current fiscal year.
|
|
|
|
|
(2)
|
As of November 30, 2019, Mr. LeMay satisfies the criteria for Retirement under OMNOVA’s Third Amended and Restated 1999 Equity Incentive Plan and the 2017 Equity Incentive Plan. Under those plans, any separation (including his resignation) is treated as a Retirement and his outstanding equity would continue to vest according to the terms of the respective grants. The values for time-based equity and performance shares are estimated based on OMNOVA’s common share closing price on November 30, 2019 ($10.12). For prorated performance shares, target performance is assumed for the performance period.
|
|
|
|
|
(3)
|
All scenarios assume Mr. LeMay would receive payment for incomplete performance periods, due to his satisfaction of all criteria for Retirement under the terms of the Company’s performance share agreements.
|
|
|
|
|
(4)
|
Upon a Change In Control Termination, the Severance Agreement provides for three years of health and welfare benefits ($76,032), two years of financial planning assistance ($36,804), and up to one year of outplacement assistance (the expense of which may not to exceed 20% of his pre-separation annual base salary – $78,600).
|
|
|
|
|
(5)
|
Upon a Change In Control Termination, the Severance Agreement provides that if all compensation, benefits and other payments to which he may be entitled constitute an “excess parachute payment” under certain tax laws (including Section 280G of the Internal Revenue Code), OMNOVA will gross-up those payments so he receives the same after-tax compensation he would have received but for the tax requirements. The table above assumes that at least one-third of Mr. LeMay’s severance pay would be considered by taxing authorities as compensation for a three-year non-compete covenant imposed upon him as a condition to his severance payment. However, if taxing authorities concluded that no part of Mr. LeMay’s severance pay was includable when determining whether an “excess parachute payment” was made, as of November 30, 2019 Mr. LeMay would be entitled to a tax gross-up payment equal to $1,055,274.
|
4. Marshall D. Moore
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation or Benefit
|
Termination Event (1)
|
|
Involuntary, Not For Cause
($)
|
Change in Control Termination
($)
|
Due to Disability
($)
|
Death
($)
|
|
Severance Pay
|
527,000
|
|
1,054,000
|
|
—
|
|
—
|
|
|
Annual Incentive
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Time-Based Equity (2)
|
—
|
|
215,160
|
|
215,160
|
|
215,160
|
|
|
Performance Shares (2)
|
259,092
|
|
476,804
|
|
259,092
|
|
259,092
|
|
|
Life Insurance
|
—
|
|
—
|
|
—
|
|
100,000
|
|
|
Other Benefits
|
50,201
|
|
75,402
|
|
—
|
|
—
|
|
|
Total
|
836,293
|
|
1,821,366
|
|
474,252
|
|
574,252
|
|
|
|
|
|
(1)
|
Mr. Moore did not meet the eligibility criteria for Retirement as of November 30, 2019.
|
|
|
|
|
(2)
|
The values for time-based equity and performance shares are estimated based on OMNOVA’s common share closing price on November 30, 2019 ($10.12). For prorated performance shares, target performance is assumed through the period. For purposes of this disclosure, the “Involuntary, Not For Cause” scenario assumes the Committee would approve payment for incomplete performance periods.
|
5. Michael A. Quinn
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation or Benefit
|
Termination Event (1)
|
|
Involuntary, Not For Cause
($)
|
Change in Control Termination
($)
|
Due to Disability
($)
|
Death
($)
|
|
Severance Pay
|
504,000
|
|
1,008,000
|
|
—
|
|
—
|
|
|
Annual Incentive
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Time-Based Equity (2)
|
—
|
|
354,200
|
|
354,200
|
|
354,200
|
|
|
Performance Shares (2)
|
359,445
|
|
542,597
|
|
359,445
|
|
359,445
|
|
|
Life Insurance
|
—
|
|
—
|
|
—
|
|
100,000
|
|
|
Other Benefits
|
55,546
|
|
75,172
|
|
—
|
|
—
|
|
|
Total
|
918,991
|
|
1,979,969
|
|
713,645
|
|
813,645
|
|
|
|
|
|
(1)
|
Mr. Quinn did not meet the eligibility criteria for Retirement as of November 30, 2019.
|
|
|
|
|
(2)
|
The values for time-based equity and performance shares are estimated based on OMNOVA’s common share closing price on November 30, 2019 ($10.12). For prorated performance shares, target performance is assumed through the period. For purposes of this disclosure, the “Involuntary, Not For Cause” scenario assumes the Committee would approve payment for incomplete performance periods.
|
CEO pay ratio
The 2019 annual total compensation of the Chief Executive Officer was $2,479,148, the 2019 annual total compensation of OMNOVA’s (and its consolidated subsidiaries’) median compensated employee was $52,388, and the ratio of these amounts is approximately 47:1. This ratio is a reasonable estimate made in good faith, and was calculated in a manner consistent with Item 402(u) of Regulation S-K.
The median compensated employee was identified by using base salary, bonuses, and commissions granted to employees for the one year period ended November 30, 2019. We applied this measure to our global employee population (taking into account all employees who joined OMNOVA upon the acquisition of OMNOVA Portugal) as of November 30, 2019 and annualized base salaries for permanent full-time and part-time employees who were not employed for the full year. Once we determined our median compensated employee using these measures, we calculated the median employee’s 2019 annual total compensation using the same methodology that is used to calculate our Chief Executive Officer’s annual total compensation in the table entitled “Summary Compensation Table.”
Compensation of Non-Executive Directors
OMNOVA’s annual director compensation program includes: (i) a cash fee and (ii) an equity grant, in the form of restricted share units, to further align the interests of the Company’s nonemployee directors with those of OMNOVA’s shareholders. Directors do not receive per-meeting compensation for Board or committee meeting attendance or for attending Board-related activities, but OMNOVA reimburses reasonable expenses related to such attendance. Directors who serve in Board leadership roles (as chair of a committee or as Board Chairman) receive additional compensation for their increased responsibility and time commitment. Ms. Noonan, an employee of OMNOVA, receives no compensation for her service as a director.
Annually, the Compensation & Organization Committee conducts a review of OMNOVA’s director compensation program with the assistance of the committee’s independent compensation consultant, Pay Governance LLC. The 2019 review evaluated OMNOVA’s director compensation program in comparison to OMNOVA’s compensation peer group as well as twenty-two similarly sized Standard & Poor’s small cap companies. The review concluded that the structure of OMNOVA’s director compensation program, as described above, generally aligns to market practices and pays compensation near the median of the comparison groups. The following table shows the director compensation program for 2019:
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Annual Compensation Element
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($)
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All Directors
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Annual Cash Compensation
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75,000
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Annual Restricted Share Units Grant
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90,000
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Board Leadership Roles
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Board Chairman
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70,000
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Audit Committee Chair
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17,500
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Compensation & Organization Committee Chair
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12,500
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Safety, Health, Environmental & Security Committee Chair
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10,000
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Nominating & Corporate Governance Committee Chair
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10,000
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No director received benefits or compensation other than as described above for services to the Company.
1. Restricted share units
Director equity is granted annually in the form of restricted share units under OMNOVA’s 2017 Equity Incentive Plan. The number of restricted share units granted is equal to $90,000 divided by the average closing price per OMNOVA common share on the New York Stock Exchange for the thirty trading days preceding the date of grant. Regardless of the results of the calculation, OMNOVA’s 2017 Equity Incentive Plan limits grants to any individual, non-executive director to 50,000 shares in the aggregate during any calendar year. Restricted share units generally vest on the later of one year from the grant date or the date a director separates from the Board.
2. Deferral of cash fees
The Company’s Deferred Compensation Plan for Non-Employee Directors, an unfunded plan, allows each director to defer payment of the director’s cash fees (including committee and Board chairman fees) to a future date. Cash fees may be deferred into three investment choices: phantom shares that track the price of OMNOVA common shares; an S&P 500 index fund; or into a stable-value cash fund in which quarterly interest is credited. All distributions from the Deferred Compensation Plan for Non-Employee Directors are settled in cash at the then-current value of the investment, regardless of the director’s investment selection.
3. 2019 director compensation table
The following table sets forth certain information regarding the compensation earned by or paid to each non-employee director who served on the Board of Directors during the 2019 fiscal year.
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Name
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Fees Earned or Paid in Cash
($)(1)
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Stock
Awards
($)(2)
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Total
($)
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David J. D'Antoni
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75,000
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84,444
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159,444
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Janet Plaut Giesselman
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87,500
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84,444
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171,944
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Joseph M. Gingo
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75,000
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84,444
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159,444
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Michael J. Merriman
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85,000
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84,444
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169,444
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James A. Mitarotonda
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75,000
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84,444
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159,444
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Steven W. Percy
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92,500
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84,444
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176,944
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Larry B. Porcellato
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85,000
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84,444
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169,444
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Allan R. Rothwell
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75,000
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84,444
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159,444
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William R. Seelbach
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145,000
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84,444
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229,444
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(1)
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Includes an additional retainer for Board Chairman or Board committee chair responsibilities as follows: Janet Plaut Giesselman, $12,500 for service as chair of the Compensation & Organization Committee; Michael J. Merriman, $10,000 for service as chair of the Nominating & Corporate Governance Committee; Steven W. Percy, $17,500 for service as chair of the Audit Committee; Larry B. Porcellato, $10,000 for service as chair of the Safety, Health, Environmental & Security Committee; and William R. Seelbach, $70,000 for service as Chairman of the Board of Directors.
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(2)
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Amounts reported as “Stock Awards” reflect the grant date fair value of restricted share units awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”). See Note O to the Consolidated Financial Statements contained in our 2019 Form 10-K for an explanation of the assumptions made in valuing these awards.
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On March 19, 2019, each of the directors received a grant of 11,111 restricted share units at a grant date fair market value of $7.60 per share. The number of restricted share units each director received was based on the equity grant value for the director compensation program, $90,000, divided by the thirty trading-day average price for OMNOVA’s common shares through March 18, 2019 ($8.10).
The aggregate amount of restricted share units shares held by each director at the Company’s 2019 fiscal year-end is included for each director under the Column “Restricted Share Units” in the table “Ownership of OMNOVA Securities.” Although that table is reported as of the date of this report, no director’s holdings of restricted share units changed from the end of fiscal 2019. No director presently holds option awards covering OMNOVA common shares.
