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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
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AdvanSix Inc. |
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(Name of Registrant as Specified In Its Charter) |
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant) |
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Payment of Filing Fee (Check all boxes that apply):
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No fee required. |
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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2023 |
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Proxy Statement |
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and Notice of Annual Meeting
of Stockholders
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300 Kimball Drive, Suite 101
Parsippany, New Jersey 07054
April 28, 2023
To our Stockholders:
You are cordially invited to attend the Annual Meeting of
Stockholders of AdvanSix Inc. (the "Annual Meeting"), which will be
held at 9:00 a.m. on Thursday, June 15, 2023. The Annual
Meeting will be a completely virtual meeting conducted via live
audio webcast to enable our stockholders to participate remotely
from any location. You will be able to attend the Annual Meeting by
visiting www.virtualshareholdermeeting.com/ASIX2023. See
“Attendance at the Virtual Annual Meeting” in the proxy statement
for additional information regarding how to attend and participate
at the Annual Meeting.
The accompanying notice of meeting and proxy statement describe the
matters to be voted on at the meeting. You will be asked to elect
directors, to ratify the appointment of the independent
accountants, to cast an advisory vote to approve executive
compensation, and to cast an advisory vote on the frequency of
future advisory votes on executive compensation.
The Board of Directors recommends that you vote “FOR” each of the
director nominees named in Proposal 1, "FOR" Proposals 2 and 3, and
for a frequency of "1 YEAR" for Proposal 4:
Proposal 1: Election of eight Director Nominees to the Board of
Directors
Proposal 2: Ratification of Appointment of Independent Registered
Public Accountants
Proposal 3: Advisory Vote to Approve Executive
Compensation
Proposal 4: Advisory Vote on the Frequency of Future Advisory Votes
to Approve Executive Compensation
YOUR VOTE IS IMPORTANT. We encourage you to read the proxy
statement and vote your shares as soon as possible. Stockholders
may vote via the Internet, by telephone, by completing and
returning a proxy card or voting instruction form or by scanning
the QR code provided on the Notice of Internet Availability of
Proxy Materials, the next page in the Notice of Annual Meeting of
Stockholders or on the proxy card. Specific voting instructions are
set forth in the proxy statement and on both the Notice of Internet
Availability of Proxy Materials and the proxy card.
On behalf of the Board of Directors, thank you for your continued
support of AdvanSix.
Sincerely,
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Michael L. Marberry |
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Erin N. Kane |
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Chair of the Board |
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President and Chief Executive Officer |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE:
Thursday, June 15, 2023
TIME:
9:00 a.m. Eastern Time
LOCATION:
Virtual meeting conducted via live audio webcast at
www.virtualshareholdermeeting.com/ASIX2023
RECORD DATE:
Close of business on April 21, 2023
Meeting Agenda:
•Election
of the eight director nominees to the Board of
Directors;
•Ratification
of the appointment of PricewaterhouseCoopers LLP as our independent
registered public accountants for 2023;
•An
advisory vote to approve executive compensation;
•An
advisory vote on the frequency of future advisory votes to approve
executive compensation;
•Transact
any other business that may properly come before the
meeting.
Important Notice of Internet Availability of Proxy
Materials
The Securities and Exchange Commission’s “Notice and Access” rule
enables AdvanSix to deliver a Notice of Internet Availability of
Proxy Materials to stockholders in lieu of a paper copy of the
proxy statement, related materials and the Company’s Annual Report
to Stockholders. The Notice contains instructions on how to access
our Proxy Statement and 2022 Annual Report and how to vote
online.
Shares cannot be voted by marking, writing on and/or returning the
Notice of Internet Availability. Any Notices of Internet
Availability that are returned will not be counted as votes.
We encourage stockholders to vote promptly as this will save the
expense of additional proxy solicitation. Stockholders of record on
the record date are entitled to vote at the meeting or in the
following ways:
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By Telephone |
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By Internet |
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By Mail |
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By Scanning |
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In the U.S. or Canada, you can vote your shares by calling +1 (800)
690-6903. You will need the 16-digit control number on the Notice
of Internet Availability or proxy card. |
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You can vote your shares online at
www.proxyvote.com.
You will need the 16-digit control number on the Notice of Internet
Availability or proxy card.
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You can vote your shares by mail by marking, dating and signing
your proxy card or voting instruction form and returning it in the
postage-paid envelope. |
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You can vote your shares online by scanning the QR code above. You
will need the 16-digit control number on the Notice of Internet
Availability or proxy card. Additional software may need to be
downloaded. |
How to Attend the 2023 Virtual Annual Meeting:
To be admitted to the Annual Meeting at
www.virtualshareholdermeeting.com/ASIX2023, you must enter the
16-digit control number on your Notice of Internet Availability or
proxy card. At the virtual Annual Meeting, you will have the
opportunity to vote, ask questions and examine our stockholder list
by following the instructions provided on the meeting website.
Whether or not you plan to attend the virtual meeting, we encourage
you to vote and submit your proxy in advance of the meeting by one
of the methods described above.
This Notice of Annual Meeting of Stockholders and related Proxy
Materials are being distributed or made available to stockholders
beginning on or about April 28, 2023.
By Order of the Board of Directors,
Achilles
B. Kintiroglou
Senior Vice President, General Counsel and Corporate
Secretary
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TABLE OF CONTENTS |
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SEC
Filings and Section 16(a) Reports
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PROXY STATEMENT
This proxy statement is being provided to stockholders in
connection with the solicitation of proxies by the Board of
Directors (the “Board of Directors” or “Board”) for use at the
Annual Meeting of Stockholders (the "Annual Meeting") of AdvanSix
Inc. (“AdvanSix” or the “Company”) to be held on Thursday,
June 15, 2023. See Appendix A for information regarding
forward-looking statements and non-GAAP measures presented in this
proxy statement.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The terms of office for our nine directors will expire at the
Annual Meeting, and eight of the directors have been nominated for
reelection for a one-year term. Mr. Michael Marberry, who has
served as director and Board Chair since 2016, will be retiring
from his Board position effective as of the Annual Meeting. As a
result, Mr. Marberry has not been renominated and, effective as of
the Annual Meeting, the size of the Board will be reduced from nine
to eight directors. The Board extends its appreciation for Mr.
Marberry's service as founding Board Chair and director for nearly
seven years. Effective at the Annual Meeting, Mr. Todd Karran will
succeed Mr. Marberry as the new Board Chair.
Our Board has nominated the eight director nominees for re-election
as directors to serve a term expiring at the 2024 Annual Meeting of
Stockholders and, in each case, until their respective successor
has been duly elected and qualified.
We do not know of any reason why any nominee would be unable to
serve as a director. If any nominee should become unavailable to
serve prior to the Annual Meeting, the shares represented by proxy
will be voted for the election of such other person as may be
designated by the Board. The Board may also determine to leave the
vacancy temporarily unfilled or reduce the authorized number of
directors in accordance with our By-laws. AdvanSix’s By-laws
provide that in any uncontested election of directors (an election
in which the number of nominees does not exceed the number of
directors to be elected), any nominee who receives a greater number
of votes cast “FOR” his or her election than votes cast “AGAINST”
his or her election will be elected to the
Board.
DIRECTOR NOMINATIONS SKILLS AND CRITERIA
The Nominating and Governance Committee is responsible for
nominating a slate of director nominees who collectively have the
complementary experience, qualifications, skills and attributes to
guide the Company and function effectively as a Board. The
Committee believes that each of the nominees has key personal
attributes that are important to an effective board: integrity,
candor, analytical skills, the willingness to engage management and
each other in a constructive and collaborative fashion, and the
ability and commitment to devote significant time and energy to
their service on the Board and its Committees.
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KEY STATISTICS ABOUT OUR DIRECTOR NOMINEES |
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7 of 8 |
50% |
100% |
100% |
58 years |
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Independent
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Gender/Ethnic Diversity |
Senior Leadership Experience |
Chemicals Industry and Operations, ESG, HS&E
Experience |
Average Age |
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
Listed below are other key experiences, qualifications, attributes
and skills of our director nominees that are relevant and important
in light of AdvanSix’s businesses and structure:
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DIRECTOR SKILLS AND QUALIFICATIONS CRITERIA |
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Senior Leadership Experience
Experience serving as CEO or a senior executive provides a
practical understanding of how complex organizations function and
hands-on leadership experience in core management areas, such as
strategic and operational planning, financial reporting, human
capital management, compliance, risk management, mergers and
acquisitions, and leadership development.
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Industry Experience
Experience in our industry enables a better understanding of the
issues facing the Company’s business as well as risk
management.
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Operations, ESG, HS&E and Sustainability
Experience
Experience with the operations of a manufacturing facility and
Environmental, Social and Governance ("ESG") topics, including
health, safety, and environmental ("HS&E") and sustainability
matters, provides critical perspective in understanding and
evaluating operational planning, management, and risk
mitigation.
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Financial Expertise
We believe that an understanding of finance and financial reporting
processes is important for our directors to monitor and assess the
Company’s operating performance and to ensure accurate financial
reporting and robust controls. Our directors have relevant
background and experience in capital markets, corporate finance,
accounting and financial reporting and several satisfy the
“accounting or related financial management expertise” criteria set
forth in the New York Stock Exchange (“NYSE”) listing
standards.
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Regulated Industries Experience
AdvanSix is subject to a broad array of government regulations and
demand for its products and services can be impacted by changes in
law or regulation in areas such as safety, security and energy
efficiency. Several of our directors have experience in regulated
industries, providing them with insight and perspective in working
constructively and proactively with governments and
agencies.
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Public Company Board Experience
Service as an executive officer, as well as on the boards and board
committees, of public companies provides an understanding of
corporate governance practices and trends and insights into board
management, relations between the board, the CEO and senior
management, agenda setting and succession planning.
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
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Experience, Expertise or Attributes
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Erin N. Kane
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Michael L. Marberry*
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Farha Aslam |
Darrell K. Hughes
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Todd D. Karran
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Gena C. Lovett
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Daniel F. Sansone
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Sharon S. Spurlin
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Patrick S. Williams
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Senior Leadership
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CEO Experience
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Demographics |
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Independent Director |
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*Mr. Marberry is not standing for reelection at the Annual
Meeting.
The Nominating and Governance Committee also considered the
specific experience described in the biographical details that
follow in determining to nominate the individuals below for
election as directors. See “Director Independence” on page 13 of
this proxy statement.
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The Board of Directors unanimously recommends a vote FOR the
election of each of the director nominees. |
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
NOMINEES FOR ELECTION
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Erin N. Kane |
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Ms. Kane (46) has been President and Chief Executive Officer and a
director of AdvanSix since the spin-off on October 1, 2016. Prior
to joining AdvanSix, Ms. Kane served as Vice President and General
Manager of Honeywell Resins and Chemicals since October 2014. She
joined Honeywell in 2002 as a Six Sigma Blackbelt of Honeywell’s
Specialty Materials business. In 2004, she was named Product
Marketing Manager of Honeywell’s Specialty Additives business. From
2006 until 2008, Ms. Kane served as Global Marketing Manager of
Honeywell’s Authentication Technologies business, and in 2008 she
was named Global Marketing Manager of Honeywell’s Resins and
Chemicals business. In 2011, she was named Business Director of
Chemical Intermediates of Honeywell’s Resins and Chemicals
business. Prior to joining Honeywell, Ms. Kane held Six Sigma and
process engineering positions at Elementis Specialties and Kvaerner
Process.
Ms.
Kane serves on the Boards of Directors of the Chemours Company
(NYSE: CC), and the American Chemistry Council. She served on the
Board of Directors of the American Institute of Chemical Engineers
(AIChE) from 2019 through 2021. Ms. Kane brings to the Board her
extensive leadership experience as well as knowledge of AdvanSix’s
business, industry, and operations/HSE and
sustainability. |
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Farha Aslam |
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Ms. Aslam (54) is a Managing Partner at Crescent House Capital, an
investment and strategic advisory firm she founded that focuses on
the agriculture, energy, and food processing industries. Ms. Aslam
has worked in the finance industry since 1996. Prior to founding
Crescent House in 2019, she was Managing Director at Stephens Inc.
from 2004 until 2018, where she led the firm’s Food and
Agribusiness equity research team and built a top-tier research
franchise that spanned the grain, ethanol, protein, and packaged
food sectors and successfully positioned several lead managed
equity offerings and debt financings. Previously, Ms. Aslam was a
vice president at Merrill Lynch and a risk management advisor at
UBS. Ms. Aslam serves on the boards of directors of Green Plains
Inc. (Nasdaq: GPRE), Pilgrim’s Pride Corporation (Nasdaq: PPC); and
Calavo Growers, Inc. (Nasdaq: CVGW). Ms. Aslam graduated from the
University of California with a B.A. degree in Economics. She holds
a Master of Business Administration degree from Columbia
University.
Ms. Aslam brings to the Board extensive experience with senior
leadership, business strategy, public company governance, as well
as financial and accounting expertise.
Ms. Aslam has served as a director of AdvanSix since December
2021.
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Board Committees*: Audit; Compensation and Leadership
Development |
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* The composition of certain Board Committees changed effective
June 15, 2022 and September 28, 2022, and will change effective as
of the Annual Meeting. See below on pages 9-10 under “Board
Committees” for additional information.
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4
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
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Darrell K. Hughes |
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Mr. Hughes (57) has been President and Chief Executive Officer of
Aurora Plastics, an innovative company specializing in high quality
rigid and cellular foam PVC compounds, since 2016. From 2010 until
2016, he served as Vice President and General Manager of Avery
Dennison’s Materials Group, a global leader in labeling and
packaging materials and graphics and reflective solutions. From
2007 until 2010, he was the President and General Manager of SABIC
Innovative Plastics’ specialty film and sheet division. Prior to
joining SABIC Innovative Plastics, Mr. Hughes held various
positions at General Electric, including General Manager of
specialty films and sheets from 2006 until 2007, General Manager of
RTV & Elastomers in General Electric’s silicone division from
2003 until 2006 and General Manager of global business development
and mergers and acquisitions from 1999 until 2003. Mr. Hughes has
also held positions at Engelhard Corporation, Deloitte & Touche
Consulting Group and Air Products.
Mr. Hughes brings to the Board the operational and financial
expertise gained through nearly 30 years of holding senior
management and leadership positions at a number of public
companies, as well as experience in the chemicals industry,
including strategy development and growth, and mergers and
acquisitions.
Mr. Hughes has served as a director of AdvanSix since the spin-off
from Honeywell on October 1, 2016.
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Board Committees*: Audit; Health, Safety and
Environmental |
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Todd D. Karran |
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Mr. Karran (58) has served as the Chief Executive Officer
Petrochemicals of Inter Pipeline, an energy infrastructure business
engaged in the transportation, processing and storage of energy
products across Western Canada and Europe, since May 2022. He was
formerly the President and Chief Executive Officer of NOVA
Chemicals, a leading producer of polyethylene and expandable
styrenics, from 2015 until his retirement in August 2020. Prior to
that, he served as Senior Vice President and Chief Financial
Officer of NOVA Chemicals from 2009 until 2016. Mr. Karran joined
NOVA Chemicals in 1985 and held various other positions since then,
including management, accounting and financial roles such as Vice
President and Controller, Tax Compliance Specialist and Manager of
Financial Services. From 2006 until 2007, he served as NOVA
Chemicals’ Vice President and Chief Information Officer. From 2007
until 2009, he served as NOVA Chemicals’ Treasurer and Vice
President of Corporate Development.
Mr.
Karran was a director of NOVA Chemicals from 2015 through August
2020. He brings to the Board the leadership, management oversight
and financial experience gained through his roles as a director of
and in various senior management leadership roles at NOVA
Chemicals, with extensive chemicals industry experience including
operations/HSE and sustainability, global business, as well as
strategy development and growth.
Mr.
Karran has served as a director of AdvanSix since the spin-off from
Honeywell on October 1, 2016. |
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Board Committees*: Compensation and Leadership Development; Health,
Safety, and Environmental |
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Gena C. Lovett , Ph.D. |
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Dr. Lovett (60) recently successfully defended for a Ph.D. in
Values Driven Leadership at Benedictine University. Dr. Lovett
previously was the Vice President, Operations, Defense, Space and
Security, of The Boeing Company, a manufacturer of airplanes,
between July 2015 and June 2019. She served as Global Chief
Diversity Officer between January 2012 and June 2015, and as
Director, Manufacturing, Forgings, between July 2007 and January
2012, of Alcoa Corporation, a manufacturer of aluminum. She served
in numerous roles with Ford Motor Company, a manufacturer of cars
and trucks, between April 1992 and June 2007, including as Plant
Manager, New Model Programs. She received a B.A. degree from The
Ohio State University, a M.B.A. degree from Baker Center for
Graduate Studies, and a M.Sc. from Benedictine University. Dr.
Lovett is a director of Trex Company, Inc. (Nasdaq: TREX) and
QuantumScape Corporation (NYSE: QS).
Dr. Lovett brings to the Board extensive experience with senior
leadership, business strategy, public company governance, as well
as management oversight, including
operations/HS&E.
Dr. Lovett has served as a director of AdvanSix since September
2021.
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Board Committees*: Health, Safety, and Environmental; Nominating
and Governance |
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* The composition of certain Board Committees changed effective
June 15, 2022 and September 28, 2022, and will change effective as
of the Annual Meeting. See below on pages 9-10 under “Board
Committees” for additional information.
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5
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
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Daniel F. Sansone |
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Mr. Sansone (70) was Executive Vice President of Strategy for
Vulcan Materials Company, a producer of construction aggregates,
ready-mixed concrete, asphalt mix and cement, prior to his
retirement at the end of 2014. Prior to that, he served as Vulcan
Materials' Chief Financial Officer from 2005 until 2014. Mr.
Sansone joined Vulcan Materials in 1988 and held various positions
there, including Corporate Controller and Vice President of
Finance. From 2001 until 2005, Mr. Sansone served as the President
of Vulcan Materials’ Southern and Gulf Coast Division. From 1997
until 2001, he served as President of Vulcan Gulf Coast Materials.
Before joining Vulcan Materials, Mr. Sansone held positions
domestically and internationally at Monroe Auto Equipment, FMC
Corporation and Kraft Inc. Mr. Sansone is a director of Ingevity
Corporation (NYSE: NGVT). He also serves on various non-profit
boards.
Mr. Sansone brings to the Board over 40 years of senior leadership,
general management and financial and accounting experience as both
an executive officer and board member of public companies, as well
as experience with mergers and acquisitions, and regulated
industries.
Mr. Sansone has served as a director of AdvanSix since the spin-off
from Honeywell on October 1, 2016.
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Board Committees*: Audit; Health, Safety and
Environmental
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Sharon S. Spurlin |
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Ms. Spurlin (58) has been Senior Vice President and Treasurer of
Plains All American Pipeline L.P., an energy infrastructure and
logistics company, since 2014. She joined Plains All American
Pipeline L.P. in 2002 as its director of Internal Audit. From 2007
until 2009, Ms. Spurlin served as Plains All American Pipeline
L.P.’s Assistant Treasurer. From 2009 until 2014, she served as
both PetroLogistics L.P. and PL Midstream’s Senior Vice President
and Chief Financial Officer. Ms. Spurlin has also held various
positions at American Ref-Fuel Company and Arthur
Andersen.
Ms.
Spurlin is a director of Smart Sand Inc. (Nasdaq: SND), a supplier
of industrial sand to the energy industry. She brings to the Board
her corporate governance and financial expertise, including in
financial reporting, accounting, capital markets and controls, as
well as senior leadership experience in the chemicals industry,
operations/HS&E, ESG and sustainability, regulated industries,
risk management, and public companies.
Ms.
Spurlin has served as a director of AdvanSix since the spin-off
from Honeywell on October 1, 2016. |
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Board Committees*: Audit; Nominating and Governance |
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Patrick S. Williams |
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Mr. Williams (58) has served as President and CEO and as a director
of Innospec Inc. (Nasdaq: IOSP), an international specialty
chemicals company, since 2009. Prior to holding this position, Mr.
Williams was Executive Vice President and President, Fuel
Specialties from 2005 to 2009 and in addition assumed
responsibility for the global Performance Chemicals business in
2008. Prior to 2005, he served as Chief Executive Officer for the
Fuel Specialties business in the Americas, having held a number of
senior management and sales leadership roles in that business since
1993.
Mr.
Williams has served as a director of Innospec Inc. since 2009. Mr.
Williams brings to the Board the senior leadership, business
strategy, management oversight, and public company governance
experience gained through his role as a President and Chief
Executive Officer and board member of Innospec Inc., with extensive
chemicals industry experience including mergers and acquisitions,
operations/HS&E and sustainability, and strategy development
and growth.
Mr.
Williams has served as a director of AdvanSix since February 25,
2020. |
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Board Committees*: Compensation and Leadership Development;
Nominating and Governance |
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* The composition of certain Board Committees changed effective
June 15, 2022 and September 28, 2022, and will change effective as
of the Annual Meeting. See below on pages 9-10 under “Board
Committees” for additional information.
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6
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
CORPORATE GOVERNANCE
AdvanSix is committed to strong corporate governance policies,
practices and procedures designed to make the Board more effective
in exercising its oversight role. The following sections provide an
overview of our corporate governance structure, including the
independence and other criteria we use in selecting director
nominees, our Board leadership structure, and the responsibilities
of the Board and each of its Committees. Our Corporate Governance
Guidelines, among other key governance materials, help guide our
Board and management in the performance of their duties and are
regularly reviewed by the Board.
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KEY CORPORATE GOVERNANCE DOCUMENTS
Please visit our website at
www.AdvanSix.com
(see “Investors”—“Corporate Governance”) to view the following
documents:
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•Certificate
of Incorporation and By-laws
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•Corporate
Governance Guidelines
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•Code
of Business Conduct
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•Board
of Directors Code of Ethics Guidelines
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•Committee
Charters
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These documents are available free of charge on our website or by
writing to AdvanSix Inc., 300 Kimball Drive, Suite 101, Parsippany,
New Jersey 07054, c/o Corporate Secretary. Our Code of Business
Conduct (the "Code of Conduct") applies to all directors, officers
(including the Chief Executive Officer, Chief Financial Officer and
Controller) and employees, and our Board of Directors Code of
Ethics Guidelines (the "Board Code of Ethics") applies to our
directors. Amendments to, or waivers of, the Code of Conduct and
the Board Code of Ethics granted to any of our directors or
executive officers, as applicable, will be disclosed on our
website.
BOARD OF DIRECTORS
The primary functions of our Board of Directors are:
•to
oversee the affairs of the Company and management performance on
behalf of stockholders;
•to
ensure that the long-term interests of the stockholders are being
served;
•to
monitor adherence to AdvanSix standards and policies;
•to
promote the exercise of responsible corporate citizenship;
and
•to
perform the duties and responsibilities applicable to the members
of our Board under the laws of Delaware, AdvanSix’s state of
incorporation.
Board Meetings
During 2022, the Board held five meetings and the Board committees
collectively held 19 meetings. During 2022, all of the directors
then serving attended 100% of the meetings of the Board and all
Committees of the Board on which each such director
served.
Board Leadership Structure
Our Board of Directors has adopted Corporate Governance Guidelines
which outline our corporate governance policies and procedures,
including, among other topics, director responsibilities, Board
committees, management succession and performance evaluations of
the Board.
Our Corporate Governance Guidelines provide that the positions of
Board Chair and Chief Executive Officer are to be held by separate
individuals. Mr. Marberry currently serves as Independent Chair of
the Board who, in accordance with the Corporate Governance
Guidelines, meets the independence requirements established by the
NYSE. Mr. Marberry will be retiring from his Board position
effective as of the Annual Meeting and, as a result, has not been
renominated. Effective at the Annual Meeting, Mr. Karran will
succeed Mr. Marberry as Independent Chair of the Board. Mr. Karran
meets the independence requirements established by the NYSE in
accordance with the Corporate Governance Guidelines. The Chair,
among other responsibilities, works with the Chief Executive
Officer and the Board to prepare Board meeting agendas and
schedules, acts as chair at all Board meetings, and serves as
liaison between management and the other independent members of the
Board to provide feedback from executive sessions and to call and
preside at meetings of the independent directors when necessary and
appropriate.
We believe that the current Board leadership structure is an
appropriate structure and in the best interests of the Company and
its stockholders at this time. The sharing of responsibilities
allows, on the one hand, the Chief Executive Officer to focus her
energy on strategy and management of the Company and its
operations, and on the other hand, the Board to focus on oversight
of strategic planning and risk management of the
Company.
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7
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
Board Practices and Procedures
•The
Board’s Committees—the Audit Committee, the Compensation and
Leadership Development Committee (the "C&LD Committee"), the
Nominating and Governance Committee, and the Health, Safety, and
Environmental Committee, which was formerly known as the Health,
Safety, Environmental and Sustainability Committee (the "HS&E
Committee")—undertake, as applicable, extensive analysis and review
of the Company’s activities in key areas such as financial
reporting, risk management, internal controls, compliance,
corporate governance, cybersecurity, leadership development,
succession planning, executive compensation, environmental, social
and governance ("ESG") topics, including HS&E and
sustainability matters.
•The
Board and its Committees perform an annual review of its priorities
and calendarized agenda of topics to be considered for each
meeting. During that review, each Board and Committee member is
free to raise topics that are not on the agenda and to suggest
items for inclusion on future agendas.
•Each
director is provided, in advance, written material to be considered
at each meeting of the Board and has the opportunity to provide
comments and suggestions.
•The
Board and its Committees provide feedback to management and
management answers questions raised by the directors during Board
and Committee meetings.
•Special
meetings of the Board may be called by the Board Chair, by the
Chief Executive Officer or by a majority of the independent
directors.
•The
Board establishes its governance goals on an annual basis and
utilizes the goals as the basis for agenda topics for meetings
throughout the year.
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8
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
BOARD COMMITTEES
The Board currently has the following Committees: the Audit
Committee, the C&LD Committee, the Nominating and Governance
Committee, and the HS&E Committee. Effective January 1, 2023,
the Board shifted oversight of sustainability, government relations
and public policy matters to the Nominating and Governance
Committee. As a result, the Board changed the name of the Health,
Safety, Environmental and Sustainability Committee to the Health,
Safety and Environmental Committee. Each Committee consists
entirely of independent directors. Each Committee operates under a
written charter which is available on our website at
www.AdvanSix.com
(see “Investors”—“Corporate Governance”).
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Members
(1)
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Primary Responsibility |
2022 Meetings |
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Audit Committee |
Mr. Sansone* |
•Overseeing
our financial reporting process (including systems of internal
accounting and financial controls);
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6 |
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Ms. Aslam |
•Overseeing
compliance with legal and regulatory requirements including regular
review of integrity and compliance incident reporting, as
applicable;
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Mr. Hughes |
•Reviewing
qualifications and independence of our independent
accountants;
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Ms. Spurlin |
•Overseeing
our independent accountants' annual audit of our financial
statements;
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•Overseeing
enterprise risk management and performance of our internal audit
function;
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•Overseeing
ESG matters including disclosure of human capital management and
related metrics;
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•Overseeing
cybersecurity and security of Company data and information;
and
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•Reviewing
and approving certain reports required by SEC rules and
regulations.
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Compensation
and Leadership Development Committee |
Mr. Karran* |
•Establishing
and periodically reviewing our compensation
philosophy;
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5 |
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Ms. Aslam |
•Evaluating
the performance of our Chief Executive Officer including
determining and approving compensation; and overseeing the
performance, development and retention of senior
management;
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Mr. Williams |
•Reviewing
and approving the compensation of our other executive officers, as
well as evaluating Board compensation;
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•Overseeing
the executive succession planning process, including emergency
succession planning;
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•Overseeing
the administration and determination of awards under our
compensation plans;
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•Overseeing
human capital management and ESG matters relating to leadership
development and equity, diversity and inclusion ("ED&I")
initiatives; and
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•Reviewing
and approving any report on executive compensation required by the
rules and regulations of the SEC.
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Nominating and Governance Committee |
Ms. Spurlin* |
•Overseeing
our corporate governance practices and related
matters;
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4 |
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Dr. Lovett |
•Adopting
and reviewing policies regarding the consideration of candidates
for our Board proposed by stockholders and other criteria for Board
membership;
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Mr. Williams |
•Identifying,
reviewing and recommending individuals for election to the
Board;
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•Reviewing
and making recommendations to our Board regarding the structure of
our various Board Committees;
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•Overseeing
policies, performance and goals in the areas of corporate social
responsibility and sustainability including governance practices
associated with ESG matters including that applicable Committees
and/or the Board are chartered with appropriate oversight and
responsibilities, as needed;
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•Overseeing
integrity and compliance incident reporting;
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•Overseeing
public policy and governmental relations matters; and
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•Overseeing
our annual Board and Committee self-evaluations.
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Health, Safety and Environmental Committee |
Dr. Lovett* |
•Overseeing
and providing guidance on HS&E, process safety management and
related programs;
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4 |
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Mr. Hughes |
•Reviewing
effectiveness of HS&E management systems, reporting processes
and systems of internal controls to ensure compliance with
applicable regulations and laws and Company policies and
procedures;
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Mr. Karran |
•Overseeing
risk management programs relating to HS&E.
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Mr. Sansone |
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* Chairperson
(1)
Our Board has determined that (i) all the committee members of each
of the Audit Committee, the C&LD Committee, the Nominating and
Governance Committee and the HS&E Committee are independent for
purposes of applicable NYSE listing standards and Securities and
Exchange Commission ("SEC") rules as well as applicable Committee
charters, and (ii) each of the Audit Committee members satisfy the
“accounting or related financial management expertise” requirements
set forth in the NYSE listing standards, and has designated each of
Mr. Sansone, Ms. Aslam and Ms. Spurlin as an SEC defined “audit
committee financial expert.”
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9
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
The Board adopted the following changes to Committee composition,
effective June 15, 2022:
•Mr.
Sansone succeeded Mr. Huck as Chair of the Audit Committee, was
appointed to the HS&E Committee, and ceased serving on the
C&LD Committee;
•Mr.
Karran was appointed to serve as Chair of the C&LD
Committee;
•Dr.
Lovett was appointed to serve as Chair of the HS&E Committee;
and
•Ms.
Spurlin was appointed to serve on the Audit Committee and ceased
serving on the HS&E Committee.
The Board adopted the following changes to Committee composition,
effective September 28, 2022:
•Mr.
Williams was appointed to the Nominating and Governance Committee
and ceased serving on the HS&E Committee; and
•Mr.
Hughes was appointed to serve on the HS&E Committee and ceased
serving on the Nominating and Governance Committee.
Mr. Michael Marberry, who has served as director and Board Chair
since 2016, will be retiring from his Board position effective as
of the Annual Meeting. As a result, Mr. Marberry has not been
renominated and, effective as of the Annual Meeting, the size of
the Board will be reduced from nine to eight
directors.
The Board has adopted the following changes to the Board and
Committee composition, effective at the Annual
Meeting:
•Mr.
Karran will serve as Independent Chair of the Board of Directors
and will no longer serve on any Committees;
•Mr.
Hughes will serve on the C&LD Committee and will cease serving
on the Audit Committee;
•Ms.
Spurlin will serve as Chair of the C&LD Committee and will
cease serving on the Nominating and Governance
Committee;
•Ms.
Aslam will serve on the Nominating and Governance Committee and
will cease serving on the C&LD Committee; and
•Mr.
Williams will serve as Chair of the Nominating and Governance
Committee.
Board Committee Oversight of Environmental, Social and Governance
Matters
The Board exercises oversight with respect to Environmental, Social
and Governance (ESG) matters including (i) ensuring that the
Nominating and Governance Committee conducts a periodic assessment
of ESG categories to confirm they are appropriately captured within
the chartered responsibilities of applicable Committees; (ii) a
periodic assessment of ESG-related matters escalated by applicable
Committees, from time to time, for full Board oversight; and (iii)
a periodic evaluation of applicable ESG-related enterprise risk
management considerations. Each Committee plays an important role
in assisting the Board with its ESG oversight responsibilities. The
following graphic shows the ESG responsibilities assigned to each
Committee.
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Environmental |
Social |
Governance |
Committee |
HS&E
and Process Safety |
Regulatory |
Climate |
Corp Social Resp. & Sustain. |
ED&I |
Human Capital
Management |
Leadership Dev |
Executive Succession Planning |
Gov't Rel. |
Cyber |
ERM |
ESG Metrics |
Business Conduct Incident Reviews |
Board Composition |
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HS&E |
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C&LD |
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Audit |
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Nom & Gov |
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Board Evaluation Process
The Board and each of its Committees regularly evaluate their
processes, agendas, meeting materials, continuing education and
responsibilities in order to ensure that relevant governance and
oversight functions are properly designed and administered, and
reflect best practices. In addition, the Chair of the Nominating
and Governance Committee oversees a formal annual Board and
Committee self-evaluation process including holding one-on-one
meetings with each director. The results of this self-evaluation
process are reviewed by the Nominating and Governance Committee as
well as by each Committee Chair, and summarized for the full Board
to discuss during a dedicated session where a facilitated
discussion seeks to comprehensively reflect on the results. Based
on the evaluation process in 2022, the Board and Committees
implemented certain changes to Committee composition, meeting
schedules, agendas, as well as meeting materials, and determined to
continue individual meetings with the CEO to support and drive
continuous improvement of the Board's effectiveness, oversight
responsibilities and governance.
Board Committee Oversight of Independent Accountants
The Audit Committee seeks to ensure the exercise of appropriate
professional skepticism by the independent accountants by reviewing
and discussing, among other things, management and auditor reports
regarding significant estimates and judgments and the results of
peer quality review and PCAOB inspections of the independent
accountants. The Audit Committee also reviews and pre-approves all
audit and non-audit services provided to AdvanSix by the
independent accountants in order to determine that such services
would not
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10
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
adversely impact auditor independence and objectivity. At each
in-person meeting, the Audit Committee also holds an executive
session as well as separate private sessions with representatives
of our independent accountants, our Chief Financial Officer, our
General Counsel, our Controller, and our Senior Director, Internal
Audit.
The Audit Committee approved the engagement of
PricewaterhouseCoopers LLP as the Company’s independent registered
public accounting firm for the Company’s fiscal year ending
December 31, 2023.
Board Committee Oversight of Executive Compensation and Outside
Compensation Consultant
The C&LD Committee has sole authority to retain a compensation
consultant to assist the C&LD Committee in the evaluation of
director, CEO and senior management compensation, but only after
considering all factors relevant to the consultant’s independence
from management. In addition, the C&LD Committee is directly
responsible for approving the consultant’s compensation, evaluating
its performance, and terminating its engagement. Under the C&LD
Committee’s established policy, its consultant cannot provide any
other services to AdvanSix. Pearl Meyer has served as the C&LD
Committee's independent compensation consultant since November
2017.
The C&LD Committee regularly reviews the services provided by
its compensation consultant and performs an annual assessment to
determine whether the compensation consultant is independent. The
C&LD Committee and its advisors annually conduct a specific
review of the relationship with Pearl Meyer in advance of their
engagement for the upcoming year. As a result of this review, the
C&LD Committee determined that Pearl Meyer is independent in
providing AdvanSix with executive compensation consulting services
and that Pearl Meyer’s work for the C&LD Committee does not
raise any conflicts of interest, consistent with SEC rules and NYSE
listing standards.
In making this determination, the C&LD Committee reviewed
information provided by its compensation consulting firm on the
following factors:
•any
other services provided to AdvanSix by the consulting
firm;
•fees
received by the consulting firm from AdvanSix as a percentage of
the consulting firm's total revenue;
•policies
or procedures maintained by the consulting firm to prevent a
conflict of interest;
•any
business or personal relationship between the individual
consultants assigned to the AdvanSix relationship and any C&LD
Committee member;
•any
business or personal relationship between the individual
consultants assigned to the AdvanSix relationship, or the
consulting firm itself, and AdvanSix’s executive officers;
and
•any
AdvanSix stock owned by the consulting firm or the individual
consultants assigned to the AdvanSix relationship.
In particular, the C&LD Committee noted that Pearl Meyer's
services were limited to executive and non-employee director
compensation consulting. Specifically, Pearl Meyer does not
provide, nor has it provided, directly or indirectly through
affiliates, any non-executive compensation services. The C&LD
Committee will continue to monitor the independence of its
compensation consultant on a periodic basis.
The C&LD Committee's independent compensation consultant
compiles information and provides advice regarding the components
and mix (short-term/long-term; fixed/variable; cash/equity) of the
executive compensation programs of AdvanSix and its Compensation
Peer Group (see pages 28-29 of this proxy statement for further
detail regarding the Compensation Peer Group) and analyzes the
relative performance of AdvanSix and the Compensation Peer Group
with respect to stock performance and the financial metrics
generally used in the programs. Our independent compensation
consultant also provides information regarding emerging trends and
best practices in executive compensation. While the C&LD
Committee reviews information provided by our independent
compensation consultant regarding compensation paid by the
Compensation Peer Group as a general indicator of relevant market
conditions, the C&LD Committee does not target a specific
competitive position relative to the market in making its
compensation determination. Our independent compensation consultant
reports to the C&LD Committee Chair, has direct access to
C&LD Committee members, and attends C&LD Committee meetings
either in person or by telephone.
Compensation Input from Senior Management
The C&LD Committee considers input from senior management in
making determinations regarding the overall executive compensation
program and the individual compensation of the executive officers.
As part of AdvanSix’s annual planning process, the CEO and CFO
develop targets for AdvanSix’s incentive compensation programs and
present them to the C&LD Committee. These targets are reviewed
by the C&LD Committee to ensure alignment with our strategic
and annual operating plans, taking into account the targeted
year-over-year and multi-year improvements as well as identified
opportunities and risks. The CEO recommends base salary adjustments
and cash and equity incentive award levels for AdvanSix’s other
executive officers, but does not provide recommendations on her own
compensation. The CEO regularly presents to the C&LD Committee
her evaluation of each executive officer’s contribution and
performance, strengths and development needs and actions to support
recommendations. The CEO's recommendations are based on performance
appraisals (including an assessment of the achievement of
pre-established financial and non-financial management
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objectives determined by the C&LD Committee with input from the
full Board) together with a review of supplemental performance
measures and prior compensation levels relative to
performance.
Compensation and Leadership Development Committee Interlocks and
Insider Participation
During fiscal year 2022, all members of the C&LD Committee were
independent directors, and no member was an employee or former
employee of AdvanSix. No Committee member had any relationship
requiring disclosure under “Policy and Procedures Governing Related
Party Transactions” on page 18 of this proxy statement. During
fiscal year 2022, none of our executive officers served on the
compensation committee (or its equivalent) or board of directors of
another entity whose executive officer served on the C&LD
Committee.
BOARD’S ROLE IN RISK OVERSIGHT
While senior management has primary responsibility for managing
risk, the Board, as a whole, has responsibility for risk oversight,
while the relevant Committees review specific risk areas and report
to the full Board as appropriate. The Board exercises its oversight
through periodic management updates on the financial and operating
results of AdvanSix, including its annual operating plans and
strategic planning, and provides input to management with respect
to ordinary course, business and commercial operating risks as well
as related prospective risks. In addition, management reports to
the Board and each Committee periodically on specific, material
risks as they arise or as requested by individual Board
members.
On a periodic basis, management reports to each of the Committees
and the full Board, as applicable, on its Enterprise Risk
Management ("ERM") program. These presentations are designed to
provide the Committees and full Board with adequate visibility into
business risks and enable the Board to effectively exercise its
oversight function. Through its ERM program, management identifies
the most significant risks facing the Company and ensures that,
where possible, it deploys adequate risk mitigation strategies. The
Board and Committees provide oversight and guidance to management
to ensure that the ERM process appropriately identifies the risks
facing AdvanSix and its operations, and that adequate risk
mitigation steps are implemented where appropriate. In addition,
the Board and each Committee work collaboratively with management
to ensure that updates regarding such key risks are provided on a
regular basis to support continuous oversight and
assessment.
The specific risk areas of focus for the Board and each of its
Committees are summarized below. In addition, each Committee meets
in executive session as well as in separate private sessions with
key management personnel and representatives of outside advisors.
For example, the Senior Director, Internal Audit regularly meets in
private sessions with the Audit Committee. In addition, the
HS&E Director regularly meets in private sessions with the
HS&E Committee.
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Board/Committee |
Primary Areas of Risk Oversight |
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Full Board |
• |
Strategic and commercial execution such as strategic planning and
implementation, capital deployment, M&A, technology and
innovation, and any slowdown in economic growth |
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• |
Plant outages, supply chain and logistical disruptions, raw
material price inflation, labor relations, customer demand, and
competitive risk |
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• |
Capital structure and allocation, and development of financial
policy including liquidity and debt management |
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• |
CEO succession planning |
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Catastrophic events such as acts of terrorism, pandemics, natural
disasters and plant accidents |
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Audit Committee |
• |
Accounting controls and financial disclosure |
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• |
Cybersecurity, including IT infrastructure, protection of customer
and employee data, trade secrets and other proprietary information,
ensuring the security of data, persistent threats and cyber
risks |
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• |
Tax and liquidity management, financial, solvency, capital
structure and credit risks |
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Board/Committee |
Primary Areas of Risk Oversight |
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• |
Employee pension and saving plans |
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• |
Employee misconduct related to books, records and financial
controls |
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Nominating and Governance |
• |
Code of Conduct and Board Code of Ethics compliance |
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Committee |
• |
Litigation, labor issues, intellectual property infringement,
regulatory issues such as Foreign Corrupt Practices Act ("FCPA"),
and product liability |
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• |
Compliance matters associated with import/export and
FCPA |
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• |
Corporate social responsibility and sustainability matters
including processes and public reporting |
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• |
Governance practices associated with ESG matters including that
applicable Committees and/or the Board are chartered with
appropriate oversight and responsibilities as needed |
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• |
Impact of public policy and government affairs |
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• |
Potential conflicts of interest and related party
transactions |
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Compensation and Leadership Development Committee |
• |
Development and administration of executive and director
compensation plans, programs and arrangements |
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• |
Performance, development and retention of senior
management |
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• |
ED&I policies and initiatives |
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• |
Executive succession planning |
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Health, Safety, and Environmental Committee |
• |
Regulatory compliance and management of health, safety, and
environmental matters |
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• |
Effectiveness of health, safety, and environmental management
systems, reporting processes and systems of internal
controls |
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• |
Occupational process safety and environmental reporting |
DIRECTOR INDEPENDENCE
Our Corporate Governance Guidelines state that a majority of our
directors must be considered independent under relevant NYSE and
SEC guidelines. The Nominating and Governance Committee conducts an
annual review of the independence of the directors and reports its
findings to the full Board.
Based on the report and recommendation of the Nominating and
Governance Committee, the Board has determined that all of our
non-employee directors are independent and satisfy the independence
criteria in the applicable NYSE listing standards and SEC rules. In
addition, the Board determined that each director who served during
2022, and who is intended to serve in 2023, on the Audit Committee
and/or C&LD Committee satisfies the enhanced independence
criteria associated with their membership on the Audit Committee
and C&LD Committee, as applicable.
For a director to be considered independent, the Board must
determine that the director does not have any material
relationships with AdvanSix, either directly or indirectly through
a family member or as a partner, member, principal or officer of an
organization that has a relationship with AdvanSix, other than as a
director and stockholder. Material relationships can include
vendor, supplier, consulting, legal, banking, accounting,
charitable and family relationships, among others.
Criteria for Director Independence
The Board considered all relevant facts and circumstances in making
its independence determinations, including the
following:
•No
non-employee director receives any direct compensation from
AdvanSix other than under the director compensation program
described on pages 16-18 of this proxy statement.
•No
immediate family member (within the meaning of the NYSE listing
standards) of any non-employee director is an employee of AdvanSix
or otherwise receives direct compensation from
AdvanSix.
•No
non-employee director is affiliated with AdvanSix or any of its
subsidiaries or affiliates.
•No
non-employee director is an employee of AdvanSix’s independent
accountants and no non-employee director (or any of their
respective immediate family members) is a current partner of
AdvanSix’s independent accountants, or was within the last three
years, a partner or employee of AdvanSix’s independent accountants
and personally worked on AdvanSix’s audit.
•No
non-employee director is a member, partner, or principal of any law
firm, accounting firm or investment banking firm that receives any
consulting, advisory or other fees from AdvanSix.
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•No
AdvanSix executive officer is on the compensation committee of the
board of directors of a company that employs any of our
non-employee directors (or any of their respective immediate family
members) as an executive officer.
•No
non-employee director (or any of their respective immediate family
members) is indebted to AdvanSix, nor is AdvanSix indebted to any
non-employee director (or any of their respective immediate family
members).
•No
non-employee director serves as an executive officer of a
charitable or other tax-exempt organization that receives
contributions from AdvanSix.
The above information was derived from AdvanSix’s books and records
and responses to questionnaires completed by the directors in
connection with the preparation of this proxy statement. Based on
our review of these materials, none of our non-employee directors
had or has any relationship with AdvanSix other than as a
director.
IDENTIFICATION AND EVALUATION OF DIRECTOR CANDIDATES
The Nominating and Governance Committee consists entirely of
independent directors under applicable SEC rules and NYSE listing
standards. The Committee seeks individuals qualified to become
directors, evaluates the qualifications of individuals suggested or
nominated by third parties, including stockholders, and recommends
to the Board the nominees to be proposed by AdvanSix for election
to the Board. The Committee’s responsibilities include
consideration of director candidates in anticipation of upcoming
director elections and in connection with filling Board
vacancies.
The Committee intends to take into consideration criteria
established by the Board as set forth in the Company’s Corporate
Governance Guidelines or established by the Committee in the Policy
Statement Regarding Director Nominations and Stockholder
Communications. In advance of, and at the time of, recommending
candidates to the Board, the Committee shall inform the Board of
the criteria used in making the recommendation.
The Committee annually reviews with the Board the requisite skills
and characteristics of Board members, as well as the composition of
the Board as a whole. This assessment includes a consideration of
independence, diversity, age, skills, experience and industry
backgrounds in the context of the needs of the Board and the
Company, as well as the ability of current and prospective
directors to devote sufficient time to performing their duties in
an effective manner. Directors are expected to exemplify the
highest standards of personal and professional integrity. In
particular, the Committee seeks directors with established strong
professional reputations and expertise in areas relevant to the
strategy and operations of AdvanSix’s businesses. While AdvanSix’s
Corporate Governance Guidelines do not prescribe a diversity policy
or standards, as a matter of practice, the Guidelines do prescribe
that the Committee will give consideration to diversity when
evaluating the composition of the Board and the nomination of
director candidates. Directors are expected to challenge management
constructively through active participation and questioning. The
Nominating and Governance Committee is committed to enhancing both
the diversity of the Board itself and the perspectives that are
discussed in Board and Committee meetings.
The Committee conducts regular reviews of current directors in
light of the considerations described above and past contributions
to the Board.
Stockholders wishing to recommend a director candidate to the
Committee for its consideration should write to the Committee, in
care of Corporate Secretary, AdvanSix Inc., 300 Kimball Drive,
Suite 101, Parsippany, New Jersey 07054. To receive meaningful
consideration, a recommendation should include the candidate’s
name, biographical data, and a description of his or her
qualifications in light of the above criteria, and the Committee
reserves its right to request additional information regarding such
candidate in its discretion. Stockholders wishing to nominate a
director should follow the procedures set forth in the Company’s
By-laws, the Policy Statement regarding Director Nominations and
Stockholder Communications, and as described under “Other
Information—Director Nominations” in this proxy
statement.
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EQUITY, DIVERSITY AND INCLUSION
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At AdvanSix, we strive for an inclusive work environment that
fosters respect for all our coworkers, customers, suppliers and
business partners. We value the diversity reflected in the various
backgrounds, experiences, and ideas of our directors, employees,
contractors, and other stakeholders. Our Equity, Diversity and
Inclusion purpose statement reflects our journey to be our
customers' trusted partner for Advantaged Chemistries by caring,
innovating and advancing together. To achieve that togetherness, we
strive to represent the communities in which we operate, celebrate
our differences, inspire belonging, and be tenacious in our pursuit
of bringing out the best in people both individually and
collectively.
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Our Code of Conduct outlines our commitment to provide employees a
workplace that is free from discrimination or harassment
(specifically related to gender, race, disability, ethnicity,
nationality, religion and sexual orientation) or personal behavior
not conducive to a productive work climate. We believe it is
important that each employee feels a sense of belonging and valued
as part of the organizational culture we are cultivating, and we
feel it is important that each employee sees diverse representation
across our AdvanSix team.
AdvanSix joined hundreds of companies in signing the CEO Action for
Diversity and Inclusion pledge in 2019, which centers around three
main commitments: to have complex discussions about diversity and
inclusion, implement and expand upon unconscious bias education and
share diversity and inclusion practices. We supported this
commitment through 2022 as we engaged in honest and transparent
conversations with our employees. AdvanSix also seeks to improve
gender equality in the manufacturing industry, starting with
supporting science, technology, engineering and math ("STEM")
education and work in related fields. A group of employees formed
Supporting Women in Manufacturing ("SWiM"), an AdvanSix Employee
Resource Group, with the goal of promoting women in manufacturing,
female leadership and growth in STEM-related fields. SWiM seeks to
raise awareness on these matters through programs, events and
discussions, including networking, professional development,
outreach, volunteering and internal programs highlighting
leadership and career paths in multiple disciplines. AdvanSix is
committed to pay equity for its employees and regularly performs
reviews of its compensation practices to evaluate and maintain pay
equity in several respects, including by gender, ethnicity and
race.
At a national level, AdvanSix participates as a patron level
supporter of the American Institute of Chemical Engineers’ “Doing a
World of Good” initiative that actively supports five high priority
pillars within the chemical engineering field that align closely
with sustainability and ESG principles including ED&I. In
addition, AdvanSix has supported and participated in the Future of
STEM Scholars Initiative ("FOSSI"), a national, industry-wide
program which provides scholarships to students pursuing STEM
degrees at Historically Black Colleges and Universities ("HBCUs")
and connections to internships, leadership development and
mentoring opportunities. During 2022, we welcomed our second class
of FOSSI scholars all of whom are in attendance at HBCUs, doubling
our previous year's number of scholars to ten.
During 2022, we progressed a number of key actions to advance
equity, diversity and inclusion within the organization including
focus group discussions, review of our talent pipeline and overall
development programs. Notably, we continued our program of
mandating a diverse candidate slate with the goal to increase our
organization’s workforce diversity and improve outreach in the
local communities where we operate. In addition, we created a
program for inclusive leadership, ensuring our leaders understand
and have the tools to create an inclusive environment where all can
thrive. We held our second annual Days of Understanding at our
largest manufacturing facility throughout the month of June 2022 to
encourage active engagement by leadership with all employees to
listen to their experiences and gather feedback for
improvement.
Our senior leadership team was comprised of approximately 45% women
in 2022, including our Chief Executive Officer, Chief Human
Resources Officer, Chief Information Officer, and Vice President,
Nylon Solutions. Four of our eight nominated directors are women,
and two of our eight nominated directors are ethnically
diverse.
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
All new directors participate in a comprehensive director
onboarding and orientation program, including presentations by
senior management to familiarize new directors with the Company’s
strategic and operating plans, its financial and accounting
practices, its key risk management topics, its compliance programs,
its Code of Conduct and the Board Code of Ethics, its principal
officers, its internal auditors and independent accountants. The
directors receive materials or briefing sessions before each Board
and Committee meeting. Between meetings, the directors are in
frequent communication with the executive management of the Company
on matters relating to critical aspects of the Company’s business.
The Board also regularly participates in site visits, plant tours
and training at
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AdvanSix’s facilities, as well as informational presentations
regarding industry developments and various aspects of the
Company's business and operations. Members of the Board attend, at
the Company’s expense, seminars, conferences and other continuing
education programs designed for directors of public
companies.
DIRECTOR ATTENDANCE AT ANNUAL MEETINGS
AdvanSix encourages director attendance at its Annual Meeting of
Stockholders, and it is expected that each of our directors will
attend absent extenuating circumstances. Generally, Board and
Committee meetings are held immediately following the Annual
Meeting of Stockholders. All of our directors then serving attended
our 2022 Annual Meeting of Stockholders and all of our director
nominees are expected to attend the 2023 Annual Meeting of
Stockholders.
DIRECTOR COMPENSATION
The C&LD Committee reviews and makes recommendations to the
Board regarding the form and amount of compensation for
non-employee directors. Directors who are employees of AdvanSix
receive no compensation for service on the Board. AdvanSix’s
director compensation program is designed to enable continued
attraction and retention of highly qualified directors and is
designed to account for the time, effort, expertise and
accountability required for active Board membership.
In general, the C&LD Committee and the Board believe that
annual compensation for non-employee directors should consist of
both a cash component, designed to compensate members for their
service on the Board and its Committees, and an equity component,
designed to align the interests of directors and stockholders and,
by vesting over time, to create an incentive for continued service
on the Board. The compensation program was approved by our Board
upon the recommendation of our C&LD Committee, in consultation
with its independent compensation consultant, who conducted a
comprehensive review of peer group and market data in order to
assess total director compensation, consisting of cash retainer
fees and annual equity awards, and to align the elements of our
director compensation program with our peer group, including the
recommended mix of approximately half of total compensation in
equity.
Our independent compensation consultant was engaged to conduct a
competitive review of our director compensation program for 2022
and determined that total director compensation was aligned with
the median of the peer group (as described on pages 28-29 of this
proxy statement). For 2023, our independent compensation consultant
determined that total director compensation was aligned with the
median of the peer group, but slightly below the median for our
Board Chair cash retainer as well as Committee Chair cash retainers
for the Nominating and Governance Committee and the HS&E
Committee. Our consultant proposed adjustments for the C&LD
Committee's consideration in order to align with the median for
such Chair roles. For 2023, upon the recommendation of our C&LD
Committee, in consultation with its independent compensation
consultant and based on a comprehensive review of peer group and
market data, our Board approved the following changes to the
compensation of our non-employee directors: (i) increasing the
Board Chair’s cash retainer from $85,000 to $100,000, and (ii)
increasing the Committee Chair cash retainers for the Nominating
and Governance Committee and the HS&E Committee from $10,000 to
$15,000, which aligns with the existing Committee Chair cash
retainer for the C&LD Committee.
Our 2016 Stock Incentive Plan of AdvanSix Inc. and its Affiliates,
as Amended and Restated, or the 2016 Stock Incentive Plan, includes
an annual limit of $750,000 on each director's total compensation,
including both cash and equity components.
Cash Compensation
For 2022, non-employee directors received $90,000 as an annual cash
retainer for their service on the Board, and they received
additional retainers for the following roles:
•The
Independent Chair of the Board received $85,000;
•The
Chair of the Audit Committee received $20,000;
•The
Chair of the C&LD Committee received $15,000;
•The
Chair of the HS&E Committee received $10,000; and
•The
Chair of the Nominating and Governance Committee received
$10,000.
All directors are also reimbursed for reasonable travel, lodging
and related expenses incurred in attending Board
meetings.
Equity Compensation
Each non-employee director is eligible for an annual equity grant
in the form of full-value stock awards. For 2022, each non-employee
director was granted an award in the form of restricted stock units
("RSUs") with a grant date fair value of approximately $105,000.
These annual stock grants are awarded following each Annual Meeting
of Stockholders and vest one year from the date of
grant.
Deferred Compensation Plan
In September 2017, the Board, upon the recommendation of the
C&LD Committee, adopted the AdvanSix Inc. Deferred Compensation
Plan (the “DCP”), effective January 1, 2018. The DCP is a
nonqualified deferred compensation plan under which our directors
may elect to defer up to a maximum of 100% of their cash retainer
fees. Company contributions may not be made to the accounts of
non-
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employee directors. Until a director meets his or her stock
ownership requirements, as described below under “Stock Ownership
Guidelines,” the only investment option available to a director who
elects to participate is the AdvanSix stock unit fund. After
satisfaction of the stock ownership requirements, a director may
elect to allocate his or her deferrals to any investment option
under the DCP. Any deferrals under the AdvanSix stock unit fund are
irrevocably allocated to such fund. Any dividends applicable to
deferrals under the AdvanSix stock unit fund are credited in the
form of additional stock units. Under the Plan, each director’s
account will be payable in lump sum or installments upon a
scheduled distribution date or the participant’s separation from
service or death in accordance with the director’s elections, the
terms of the DCP and subject to Section 409A of the Internal
Revenue Code of 1986, as amended (the "Code"). Distributions will
be made in cash, with the exception of amounts held in the AdvanSix
stock unit fund which will be distributed in shares of Company
common stock, par value $0.01 per share ("Common Stock"). Deferrals
by directors to the AdvanSix stock unit fund are reported as Other
Stock-Based Holdings in the Stock Ownership Information table on
page 19.
Stock Ownership Guidelines
Director stock ownership guidelines have been adopted under which
each non-employee director, while serving as a director of
AdvanSix, must hold Common Stock (including restricted shares,
RSUs, holdings in the Company stock unit fund under the DCP, and/or
Common Stock equivalents) with a market value of at least five
times the annual base cash retainer (or $450,000 in 2022). Until a
director has met the applicable ownership requirement, he or she is
required to hold 100% of the shares (net of taxes) received upon
the vesting of RSUs. As of April 1, 2023, all directors, other than
Ms. Aslam and Dr. Lovett, have attained the prescribed ownership
threshold. Directors have five years from appointment or election
to the Board to attain the prescribed ownership threshold and each
of Ms. Aslam and Dr. Lovett are within this five-year
period.
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DIRECTOR COMPENSATION—FISCAL YEAR 2022
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Director Name |
Fees Earned or
Paid in Cash
($)(1)
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Stock Awards
($)(2)(3)
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All Other
Compensation
($)
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Total
($)
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Farha Aslam |
$90,000 |
$105,005 |
— |
$195,005 |
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Paul E. Huck |
$50,417 |
$— |
— |
$50,417 |
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Darrell K. Hughes |
$90,000 |
$105,005 |
— |
$195,005 |
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Todd D. Karran |
$102,708 |
$105,005 |
— |
$207,713 |
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Gena Lovett |
$95,417 |
$105,005 |
— |
$200,422 |
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Michael L. Marberry |
$175,000 |
$105,005 |
— |
$280,005 |
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Daniel F. Sansone |
$107,718 |
$105,005 |
— |
$212,723 |
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Sharon S. Spurlin |
$100,000 |
$105,005 |
— |
$205,005 |
|
Patrick Williams |
$90,000 |
$105,005 |
— |
$195,005 |
(1)Includes
all fees earned in 2022, whether paid in cash or deferred under the
DCP (including amounts held in the AdvanSix stock unit fund and any
other investment option under the DCP). The amount shown for Mr.
Huck is prorated based on the date of his retirement from the
Board.
(2)The
amounts set forth in this column represent the aggregate grant date
fair value of stock awards computed in accordance with FASB ASC
Topic 718. Stock awards of 2,714 RSUs were made to each
non-employee director on June 15, 2022 with a value of $38.69 per
share, which vest in full on June 15, 2023. A more detailed
discussion of assumptions used in the valuation of stock awards
made in fiscal year 2022 may be found in Note 16 of the Notes to
Consolidated Financial Statements in the Company’s Form 10-K for
the fiscal year ended December 31, 2022 ("2022 Form
10-K").
(3)The
table below reflects each director's outstanding RSUs granted under
our 2016 Stock Incentive Plan, all of which are unvested at
December 31, 2022. All of our directors, other than Ms. Aslam and
Dr. Lovett, also hold amounts in the AdvanSix stock unit fund under
the DCP.
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Director Name |
Outstanding RSUs at 12/31/22
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Farha Aslam |
2,714 |
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Paul E. Huck |
— |
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Darrell K. Hughes |
2,714 |
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Todd D. Karran |
2,714 |
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Gena C. Lovett |
2,714 |
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Michael L. Marberry |
2,714 |
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Daniel F. Sansone |
2,714 |
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Sharon S. Spurlin |
2,714 |
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Patrick Williams |
2,714 |
Policy and Procedures Governing Related Party
Transactions
Our Board adopted a written policy regarding the review and
approval of related party transactions. This policy provides that
our Nominating and Governance Committee reviews in advance each of
AdvanSix’s transactions involving an amount exceeding $100,000 and
in which any “related person” will have a direct or indirect
material interest. In general, “related persons” are our directors,
director nominees, executive officers and stockholders beneficially
owning more than 5% of our outstanding Common Stock and immediate
family members or certain affiliated entities of any of the
foregoing persons. Our Nominating and Governance Committee will
approve only those transactions that are fair and reasonable to
AdvanSix and in our, and our stockholders’, best interests. The
Nominating and Governance Committee has delegated to its Chair the
authority to review and approve any related person transaction in
which the aggregate amount involved is expected to be less than
$500,000, unless its Chair is directly or indirectly involved in
such transaction, in which case such authority shall be delegated
to another Nominating and Governance Committee member. The
Committee Chair’s decision with respect to any such related person
transaction shall be reported to the full Nominating and Governance
Committee at its next scheduled meeting.
Since January 1, 2022, the Company has not been a participant in
any related party transaction requiring disclosure under SEC
rules.
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18
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Proxy and Notice of Annual Meeting of Stockholders |
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STOCK OWNERSHIP INFORMATION
The following table provides information regarding the beneficial
ownership of our Common Stock by the following:
•each
stockholder who beneficially owns more than 5% of our outstanding
Common Stock;
•each
of our directors;
•each
of our named executive officers listed in our Summary Compensation
Table; and
•all
of our directors and executive officers as a group.
Except as otherwise noted below, we based the share amounts on each
person or entity's beneficial ownership of our Common Stock as of
April 1, 2023. Except as otherwise noted in the footnotes
below, each person or entity identified in the table has sole
voting and investment power with respect to the securities held.
The percentage values are based on
27,652,332
shares of our Common Stock outstanding as of April 1, 2023.
The address for each director and executive officer of AdvanSix is
300 Kimball Drive, Suite 101, Parsippany, New Jersey
07054.
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Name |
Amount and Nature of Beneficial Ownership |
Percentage of Class |
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Directors and Named Executive Officers: |
Common Stock (1) |
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Other Stock-Based Holdings (2) |
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Farha Aslam |
— |
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— |
* |
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Willem Blindenbach |
2,956 |
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— |
* |
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Christopher Gramm |
77,435 |
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Paul E. Huck |
25,874 |
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* |
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Darrell K. Hughes |
25,874 |
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1,801 |
* |
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Erin N. Kane |
750,965 |
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2.7% |
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Todd D. Karran |
38,512 |
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19,681 |
* |
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Achilles B. Kintiroglou |
64,157 |
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* |
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Gena Lovett |
— |
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— |
* |
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Michael L. Marberry |
107,579 |
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17,237 |
* |
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Michael Preston |
241,878 |
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* |
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Daniel F. Sansone(3)
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34,874 |
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3,185 |
* |
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Kelly Slieter |
17,973 |
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* |
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Sharon S. Spurlin |
42,639 |
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14,505 |
* |
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Patrick S. Williams |
11,474 |
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2,867 |
* |
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All directors and executive officers as a group (15
persons) |
1,442,190 |
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59,276 |
5.2% |
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Principal Stockholders: |
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BlackRock, Inc. (4)
55 East 52nd Street
New York, NY 10055
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4,779,938 |
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17.3% |
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The Vanguard Group (5)
100 Vanguard Blvd.
Malvern, PA 19355 |
2,455,306 |
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8.9% |
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Dimensional Fund Advisors LP (6)
6300 Bee Cave Road, Building One
Austin, TX 78746 |
1,575,723 |
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5.7% |
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*Represents
beneficial ownership of less than one percent of the outstanding
Common Stock.
(1)Reflects
shares of Common Stock held directly or indirectly by the named
individual, as well as shares which the named individual has the
right to acquire through the exercise of vested stock options as
follows: Ms. Kane 356,749, Mr. Kintiroglou 39,402, Mr. Preston
118,225,
Ms. Slieter 7,481, and Mr. Gramm 46,084.
(2)Reflects
share-equivalents in deferred accounts under our Deferred
Compensation Plan, as to which no voting or investment power
exists. These share equivalents are not included for purposes of
determining the "Percentage of Class."
(3)Common
Stock total reflects 31,479 shares held indirectly by Mr. Sansone's
spouse.
(4)Based
on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on
January 26, 2023. BlackRock, Inc. has sole voting power in respect
of 4,723,995 shares and sole dispositive power in respect of
4,779,938 shares.
(5)Based
on a Schedule 13G/A filed by Vanguard Group Inc. with the SEC on
February 9, 2023. Vanguard Group Inc. has sole dispositive power in
respect of 2,380,229 shares, shared dispositive power in respect of
75,077 shares, sole voting power in respect of no shares and shared
voting power in respect of 50,734 shares.
(6)Based
on a schedule 13G filed by Dimensional Fund Advisors LP filed on
February 10, 2023. Dimensional Fund Advisors LP has sole voting
power in respect of 1,540,780 shares and sole dispositive power in
respect of 1,575,723 shares.
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19
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
SEC FILINGS AND SECTION 16(a) REPORTS
Availability of AdvanSix SEC Filings
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and any amendments to those reports,
are available free of charge on our website at www.AdvanSix.com
under the heading “Investors” (see “SEC Filings”) immediately after
they are filed with or furnished to the SEC.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors, executive officers, and persons who own
more than 10% of our Common Stock to file reports of ownership and
changes in ownership of our Common Stock with the SEC. Based on the
information available to us during fiscal year 2022, we believe
that all applicable Section 16(a) filing requirements were met on a
timely basis.
CORPORATE SOCIAL RESPONSIBILITY
AND SUSTAINABILITY
At AdvanSix, a key priority has been, and will continue to be,
ensuring safe, stable and sustainable operations through
best-in-class performance and adherence to our core values of
Safety, Accountability, Integrity and Respect. We believe that our
legacy and continued commitment to operational excellence,
including process safety and commitment to ACC Responsible Care®
principles, have served to establish a solid foundation for our
corporate social responsibility ("CSR") and sustainability
programs. By integrating health, safety, environmental and
sustainability considerations into all aspects of our business, we
strive to protect our team and the environment, achieve sustainable
growth and accelerated productivity, and drive compliance with all
applicable regulations. Our health, safety and environmental
management systems reflect our values and help us meet our business
objectives.
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Our initiatives are supported by AdvanSix's Sustainability Council,
comprised of subject matter experts throughout our organization,
with a critical, strategic mission --
As our customers’ trusted partner for Advantaged Chemistries, we
will advance on our path forward by remaining true to our core
values, serving as a responsible corporate citizen, adapting to the
needs of our stakeholders and delivering innovative ideas for a
sustainable future.
The Sustainability Council regularly reports to the Nominating and
Governance Committee of the Board, which oversees our policies and
programs relating to sustainability matters and our role as a
responsible corporate citizen. For information regarding Board
Committee oversight of key environmental, social and governance
matters, please see above under "Corporate Governance - Board
Committees - Board Committee Oversight of Environmental, Social and
Governance Matters."
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AdvanSix continues to build on its legacy and commitment to a
sustainable future by weaving sustainability into its core business
culture and values with a focus on transparency, accountability and
innovation across the organization. This commitment propelled the
Company’s progress and achievements which included, among
others:
•2023
Platinum Rating for CSR by EcoVadis, an independent CSR assessment
agency which includes evaluations in the areas of Environment,
Labor & Human Rights, Ethics, and Sustainable Procurement. The
Platinum Rating puts AdvanSix in the top one percent of all
companies assessed. This is AdvanSix's second consecutive Platinum
Rating.
•We
further progressed our commitment as a Member of Together for
Sustainability ("TfS"), a global, procurement-driven initiative
based on the United Nations Global Compact and Responsible Care®
principles that delivers a groundbreaking framework with robust
tools to assess the sustainability performance of chemical
companies and their suppliers. TfS delivers the de facto global
standard for ESG performance of chemical supply chains by allowing
member companies to assess the environmental, labor & human
rights, ethical and sustainable procurement performance of their
suppliers and progress measurable improvements of their suppliers’
as well as their own sustainability performance. In 2022, we
achieved milestones relative to assessing critical
suppliers.
•We
maintained our commitment to Operation Clean Sweep®, an industry
initiative to keep plastic waste out of the marine environment, by
integrating the effort into our Chesterfield, VA site’s existing
programs, installing equipment to prevent chip discharges to
waterways and acquiring new equipment to clean up chip
spills.
•Named
one of Newsweek's Most Responsible Companies for 2022.
•We
also continued to align initiatives consistent with our commitment
to the UN Global Compact, undertaking
efforts to implement universal sustainability principles with
respect to our business practices.
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Proxy and Notice of Annual Meeting of Stockholders |
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•Advanced
key actions to support ED&I within the organization including
focus group discussions, enterprise-wide unconscious bias education
of leadership and managers, and recruiting enhancements mandating a
diverse candidate slate, with the goal to increase our
organization’s workforce diversity and improve outreach in the
local communities where we operate. AdvanSix supported and
participated in the Future of STEM Scholars Initiative, a national,
industry-wide program which provides scholarships to students
pursuing STEM degrees at HBCUs and connections to internships,
leadership development and mentoring opportunities. For a
discussion of ED&I at AdvanSix, see above under "Corporate
Governance - Equity, Diversity and Inclusion."
Responsible Care
AdvanSix is a proud member of the American Chemistry Council
("ACC") and, as an ACC Responsible Care® company, has a sharp focus
on safety and advancing a sustainable enterprise, supported by
approximately 1,458 dedicated employees. Since 1988, Responsible
Care® has helped ACC member and partner companies improve the
health and safety of employees, the communities in which they
operate, and the environment. We engage in open and honest dialogue
with our key stakeholders including employees, investors, business
partners, public authorities and communities to discuss their
concerns, present our actions and communicate results.
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We adhere to the Responsible Care® Guiding Principles, which
encourage:
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•Ethical
leadership
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•Product
safety
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•A
culture which reduces and manages process safety risk
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•Reduction
of pollution and waste
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•Continuous
improvement in environmental, health, safety and security
performance
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All AdvanSix sites, including our corporate headquarters, are
RC14001® Certified. We are committed to managing our operations in
a safe, secure and sustainable manner in accordance with the
Responsible Care® Guiding Principles. This includes our commitment
to: safety as a core value, compliance, protection of our
environment, engagement with our stakeholders, continuous
improvement of the performance of our products and processes, and
implementation of processes to assure adherence.
AdvanSix’s Integrity and Compliance Program
AdvanSix’s Integrity and Compliance program reflects our core
values and helps our employees, representatives, contractors,
consultants, and suppliers meet a high standard of business conduct
globally. At the core of the Integrity and Compliance program is
the AdvanSix Code of Conduct that applies across the Company to all
directors, officers (including the Chief Executive Officer, Chief
Financial Officer and Controller) and employees. The Code of
Conduct serves as a set of baseline requirements that enables
employees to recognize and be aware of how to report compliance,
integrity, and legal issues. It also outlines our organization’s
pledge to operate in a safe, ethical and compliant manner, promote
a positive workplace, respect each employee, promote development
through education and training that broadens work-related skills,
and value diversity of perspectives and ideas. The Code of Conduct
provides guidance and outlines expectations in a number of key
integrity and compliance areas, including the prohibition of sexual
or other forms of harassment, avoiding conflicts of interest, our
commitment to health, safety and environmental matters, maintaining
accurate books and records, anti-corruption and proper business
practices, trade compliance, insider trading, data privacy, respect
for human rights, and the appropriate use of information technology
and social media. One of the hallmarks of a successful enterprise
is a transparent culture of integrity and compliance, as well as a
commitment to health, safety and environmental matters. Operating
with integrity enhances our ability to operate safely, sustain the
credibility of our brand, maintain a strong reputation, and build a
track record of growth and performance.
All AdvanSix employees are required to participate in Code of
Conduct training and certify on an annual basis that they comply
with the Code of Conduct. In addition, directors and executive
officers certify, on an annual basis, their recognition of the Code
of Conduct and their commitment to act in accordance with its
requirements. In connection with our quarterly and annual SEC
reporting, certain key members of management similarly certify as
to their compliance with the Code of Conduct as well as
confirmation of their responsibility to report suspected violations
of law, Company policy and the Code of Conduct. In addition to the
Code of Conduct, our Integrity and Compliance program provides
comprehensive training on a periodic basis, or more frequently, as
needed, regarding key compliance topics, develops training
scenarios, provides mechanisms for employees and third parties to
report concerns, and ensures timely and fair reviews of integrity
and compliance concerns. This includes annual training regarding
our Anticorruption and FCPA policy, our Insider Trading Policy, our
Acceptable Use Policy and our Cybersecurity Policies.
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Our Sustainability Report and more information about our corporate
social responsibility and sustainability initiatives can be found
on our Sustainability website at
https://www.advansix.com/about/manufacturing-sites/sustainability/.
Information contained on our website is not incorporated into this
Proxy Statement. |
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21
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
STOCKHOLDER OUTREACH AND ENGAGEMENT
It is critical that we understand the issues that are important to
our stockholders and address, as appropriate, their interests in a
meaningful and effective manner. As a result, we engage with our
stockholders on a regular basis to discuss a range of topics
including our performance, risk management, executive compensation,
and corporate governance. Continuous dialogue and engagement with
our stockholders helps us understand how they view us, set goals
and expectations for our performance, and identify emerging issues
that may affect our strategies, corporate governance, compensation
practices or other aspects of our operations. Our stockholder and
investor outreach includes investor meetings and conferences, as
well as analyst meetings. We also communicate with stockholders and
other stakeholders through various media, including our annual
report and SEC filings, proxy statement, news releases, our website
as well as our conference calls for our quarterly earnings
releases. Our CEO, CFO, VP of Investor Relations and other members
of management meet periodically with investors to discuss the
Company and its financial and business performance and, during
2021, we hosted an investor day in Virginia with site
tours.
In addition, we conduct comprehensive governance and compensation
outreach efforts with stockholders representing nearly 60% of our
shares outstanding to provide updates regarding our business, our
compensation philosophy and governance framework. From these
outreach efforts, as well as meetings held with stockholders, we
received positive feedback regarding our governance and
compensation regime and our willingness to engage with our
stockholders on issues that are important to them. We continue
these efforts in connection with our Annual Meeting as well as
throughout the remainder of the year. Our executive compensation
program received substantial support and was approved, on an
advisory basis, by 97% of votes cast at our 2022 Annual Meeting of
Stockholders. We believe that this level of approval is indicative
of our stockholders’ strong support of our executive compensation
program, philosophy and goals and the decisions made with respect
to the structure of our executive compensation program and the
compensation of our NEOs.
As a result of our stockholder engagement efforts, our Board and
stockholders approved at our 2019 Annual Meeting of Stockholders an
amendment to our Certificate of Incorporation and By-laws to remove
the supermajority vote requirement to amend our By-laws. In
addition, at our 2022 Annual Meeting of Stockholders our
stockholders approved the 2016 Stock Incentive Plan of AdvanSix
Inc. and its Affiliates, as Amended and Restated (June 15,
2022).
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22
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
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COMMUNICATING WITH MANAGEMENT AND IR
Our Investor Relations department is the primary point of contact
for stockholder interaction with AdvanSix. Stockholders should
write to or call:
Adam Kressel
Vice President, Investor Relations and Treasurer
AdvanSix Inc., 300 Kimball Drive, Suite 101, Parsippany, New Jersey
07054
Phone: +1 (973) 526-1700
Visit our website at
www.AdvanSix.com
We encourage our stockholders to visit the “Investors” section of
our website for more information on our investor relations and
corporate governance programs.
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PROCESS FOR COMMUNICATING WITH BOARD MEMBERS
Stockholders, as well as other interested parties, may communicate
directly with the Board Chair, the non-employee directors as a
group, or individual directors by writing to: AdvanSix Inc., c/o
Corporate Secretary, 300 Kimball Drive, Suite 101, Parsippany, New
Jersey 07054.
AdvanSix’s Corporate Secretary reviews and promptly forwards
communications to the directors as appropriate. Communications
involving substantive accounting or auditing matters are forwarded
to the Chair of the Audit Committee. Certain items that are
unrelated to the duties and responsibilities of the Board will not
be forwarded such as: business solicitation or advertisements;
product or service-related inquiries; junk mail or mass mailings;
resumes or other job-related inquiries; spam; and overly hostile,
threatening, potentially illegal or similarly unsuitable
communications.
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23
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
In this Compensation Discussion and Analysis (“CD&A”), we
discuss the compensation philosophy, programs and practices adopted
by the C&LD Committee for senior executive officers and review
the various objectives and elements of AdvanSix’s executive
compensation program, its alignment with performance and the 2022
compensation decisions regarding our Named Executive Officers
(“NEOs”).
For purposes of this CD&A and the disclosure that follows, the
following are AdvanSix’s NEOs for 2022:
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Erin N. Kane |
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President and Chief Executive Officer (CEO) |
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Michael Preston |
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Senior Vice President and Chief Financial Officer (CFO) |
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Achilles B. Kintiroglou |
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Senior Vice President, General Counsel and Corporate
Secretary |
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Kelly Slieter |
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Senior Vice President and Chief Human Resources Officer |
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Christopher Gramm |
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Vice President and Controller |
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Willem Blindenbach* |
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Former Senior Vice President, Integrated Supply Chain |
*Mr. Blindenbach ceased employment with the Company, effective July
1, 2022.
Executive Summary
Overview
In 2022, the Company built upon its track record of performance
with earnings growth for the third consecutive year. Our results
continue to benefit from our diversified portfolio and integrated,
efficient and cost-advantaged business model. Some of the notable
highlights include:
•We
achieved record annual sales, adjusted EBITDA(1)
and free cash flow(1,2)
of $1.9 billion, $308 million, and $184 million,
respectively.
•We
announced and closed the acquisition of U.S. Amines, a leading
North American producer of high-value intermediates used in
agrochemicals, pharmaceuticals and other applications, for
approximately $97 million.
•We
repurchased 915,597 shares for approximately $34
million.
•We
increased our quarterly cash dividend on the Company's common stock
in the third quarter of 2022 by 16% to $0.145 per share, reflecting
confidence in our financial strength and ability to generate strong
and sustained free cash flow.
•We
further reduced our debt levels supporting optionality to deploy
capital with a focus on maximizing shareholder value.
•We
were awarded our second consecutive Platinum rating for corporate
social responsibility (CSR) from EcoVadis, an independent CSR
assessment agency. The Platinum rating puts the Company in the top
1% of all companies assessed.
We believe that we are well positioned for another year of
differentiated performance in 2023 supported by our diverse
portfolio, continued strong agricultural and fertilizer industry
fundamentals and the resilience of our business model. While we
anticipate the challenges of an uncertain environment and expect
demand weakness in certain market segments within our nylon and
chemical intermediates product lines, we remain confident in our
demonstrated ability to execute and perform through various
macroeconomic cycles. We believe that we have structurally improved
the earnings power of this business and that our competitive
advantage will support us running disproportionately higher plant
production rates in 2023 to complement our strong commercial
performance. Our healthy balance sheet also continues to support
our ability to deploy capital and maximize shareholder
value.
2022 Financial Results
Highlights:
•Sales
up approximately 15% versus 2021 driven by 20% favorable impact of
market-based pricing, 2% higher raw material pass-through pricing
and 4% contribution from acquisitions, partially offset by (10%)
lower volume
•Net
Income of $171.9 million, an increase of $32.1 million versus
2021
•Adjusted
EBITDA1
of $308.5 million, an increase of $41.5 million versus
2021
•Cash
Flow from Operations of $273.6 million, an increase of $54.8
million versus 2021
•Capital
Expenditures of $89.4 million, an increase of $32.6 million versus
2021
•Free
Cash Flow1,2
of $184.2 million, an increase of $22.1 million versus
2021
(1) See “Non-GAAP Measures” included in Appendix A for non-GAAP
reconciliations.
(2) Free Cash Flow is Net cash provided by operating activities
less Capital expenditures
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Proxy and Notice of Annual Meeting of Stockholders |
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Total Stockholder Return
The following graph compares the cumulative total stockholder
return on the Company’s common stock to the total returns on the
S&P Small Cap 600 Materials Index and our compensation peer
group since October 3, 2016, the date that AdvanSix common stock
began "regular-way" trading on the New York Stock
Exchange.
Reflects period from October 3, 2016 through December 31,
2022
Fiscal 2022 Compensation Actions
The following summarizes the key compensation decisions for our
NEOs for fiscal 2022:
•Base
Salary:
Based on performance assessments and, in consultation with the
independent compensation consultant, a review of peer group data
for compensation benchmarking, in February 2022, the C&LD
Committee approved merit-based salary increases for Ms. Kane to
$990,000 and for Mr. Preston to $490,000, in each case to better
align their base pay with competitive market practices. In February
2022, the C&LD Committee approved the following annual base
salaries for our other NEOs: Mr. Kintiroglou, $430,000; Ms.
Slieter, $365,000 and Mr. Gramm, $312,000. Mr. Blindenbach's salary
was not increased for 2022. All salary increases were effective
April 1, 2022.
•Short-Term
Incentive Awards:
Our 2022 short-term incentive compensation program remained
generally consistent with our 2021 program. The performance metrics
under the short-term incentive program adopted in February 2022
were based on Adjusted EBITDA (60% weighting), Free Cash Flow (20%
weighting) and Leadership Team Strategic Objectives (20%
weighting). The target bonus payout opportunities as a percentage
of base salary for all of our NEOs remained unchanged from 2021.
Our financial and strategic performance during 2022, as discussed
below under “Short-Term Incentive Awards,” resulted in achievement
of 99% of the target bonus payout opportunity.
•Long-Term
Incentive Compensation:
Our 2022 long-term incentive compensation program remained
generally consistent with our 2021 program. In February 2022, our
NEOs were granted annual long-term incentive awards in the form of
performance stock units (“PSUs”), restricted stock units (“RSUs”)
and stock options. All of our NEOs received 50% of their total
annual grant value in PSUs, 25% in RSUs and 25% in stock options.
PSUs vest after the completion of a three year performance period,
and the number of shares earned, if any, will be based on our
average return on investment ("ROI") and cumulative earnings per
share ("EPS") performance relative to pre-established targets. In
addition, the program includes a Relative Total Shareholder Return
("rTSR") modifier, pursuant to which the number of shares earned
based on our EPS and ROI performance will be: (i) increased by 10%
if our TSR performance is above the 75th percentile relative to the
S&P Small Cap 600 Materials Index, or (ii) decreased by 10% if
our TSR performance is below the 25th percentile relative to the
S&P Small Cap 600 Materials Index. Stock options vest ratably
over a three-year period on the first three anniversaries of the
grant date and expire ten years after the grant date.
•Peer
Group:
In consultation with the independent compensation consultant, we
reviewed our existing peer group to ensure it appropriately
reflects comparator companies of similar revenue size and business
scope with whom we compete for talent and capital. In September
2022, upon the recommendation of the independent compensation
consultant, the C&LD Committee approved the removal of one
company from the peer group that was acquired in 2022 and the
addition of the following five
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companies to the peer group: Koppers Holdings, Inc., LSB
Industries, Inc., Mativ Holdings, Inc., Orion Engineered Carbons
S.A. and Tronox Holdings plc.
Results of our 2022 Advisory Vote on Executive
Compensation
Our executive compensation program received substantial support and
was approved, on an advisory basis, by 97% of votes cast at our
2022 Annual Meeting of Stockholders. Our C&LD Committee and the
other members of our Board believe that this level of approval is
indicative of our stockholders’ strong support of our executive
compensation program, philosophy and goals and the decisions made
with respect to the structure of our executive compensation program
and the compensation of our NEOs.
Our Executive Compensation Philosophy and Approach
Our executive compensation and benefit programs are designed to
support the creation of stockholder value through four key
objectives:
•attract
and retain world-class leadership talent
•drive
performance that creates stockholder value
•pay
for superior results and sustainable performance
•manage
risk through oversight and sound management
In setting total compensation to meet these key objectives, we seek
to achieve the optimal balance between: (1) fixed and variable (or
“at-risk”) pay elements; (2) short-term and long-term pay elements;
and (3) cash and equity-based elements.
The factors applicable to our NEOs that generally shape our
assessment of compensation and help achieve our key objectives
include: (1) compensation history, in total and for each element of
compensation; (2) operational and financial performance of
AdvanSix; (3) individual future leadership development and
potential; (4) our performance relative to the competitive
marketplace; (5) individual performance record; (6) relative level
of responsibility within AdvanSix and the impact of the NEO’s
position on Company performance; (7) trends and best practices in
executive compensation; and (8) industry and macroeconomic
conditions.
We seek to establish annual and long-term incentive compensation
program designs that are reflective of our pay-for-performance
culture and adopt performance metrics under our short-term
incentive compensation program and for our PSUs which are designed
to align with the key elements of our strategy to grow stockholder
value.
For a discussion of certain of our C&LD Committee processes and
procedures with respect to executive compensation, please see
"Board Committee Oversight of Executive Compensation and Outside
Compensation Consultant" on page 11.
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2022 Target Compensation Mix
The following charts illustrate the approximate target mix of base
salary, short-term incentive awards and long-term incentive awards
for our CEO and our other NEOs in 2022, highlighting the
performance-driven focus of our executive compensation program
which emphasizes at risk, performance-based pay:
Key 2022 Compensation Program Elements
The following is a summary of the main elements of our 2022
compensation program, a description of each element and an
explanation as to why we pay each element:
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Compensation Element |
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Description |
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Objectives |
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Base Salary |
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Fixed cash compensation; reviewed annually and subject to
adjustment |
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Attract, retain and motivate our NEOs |
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Short-Term Cash Incentive Compensation |
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Annual cash incentive compensation based on performance against
annually established Company financial and operational performance
goals, as well as strategic objectives |
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Reward and motivate our NEOs for achieving key short-term
performance objectives |
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Long-Term Equity Incentive Compensation |
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Annual equity compensation awards of PSUs (with payout tied to
achievement of Company financial and operational goals measured
over a 3-year performance period, with an rTSR modifier),
time-based RSUs and stock options |
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Align NEO interests with those of our stockholders by rewarding the
creation of long-term stockholder value and encouraging stock
ownership; reward and motivate our NEOs for achieving key long-term
performance objectives |
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Health, Welfare and Retirement Benefits |
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Qualified and nonqualified retirement plans and health care and
insurance benefits |
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Attract and retain NEOs by providing market-competitive
benefits |
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Severance and Change-in-Control Arrangements |
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Reasonable severance benefits provided upon covered terminations of
employment, including following a change in control |
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Attract and retain high quality talent by providing
market-competitive severance protection, thereby encouraging NEOs
to direct their attention to stockholders’ interests
notwithstanding the potential for loss of employment in connection
with a change in control |
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Our Commitment to Compensation Best Practices
As part of our executive compensation program, our C&LD
Committee is committed to regular review and consideration of best
practices in governance and executive compensation. Our C&LD
Committee has adopted the following policies and
practices:
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What We Do |
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What We Don’t Do |
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l |
Pay-for-performance
philosophy designed to emphasize compensation tied to creation of
stockholder value
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l |
No excise tax gross-ups
upon a change in control
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l |
Retention of an
independent compensation consultant
who is prohibited from performing any other services for the Board
or Company
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l |
No significant perquisites and no gross-ups
on perquisites
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Multiple performance metrics
for short-term and long-term incentive compensation; different
metrics used for each plan
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l |
No excessive severance or change in control
protection
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Maximum cap
on our incentive award payouts
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No repricing or replacement
of stock options without stockholder approval
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Deliver a
substantial portion of executives’ target total
direct compensation
in the form of
variable, “at risk,”
performance-based
compensation
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l |
No hedging and pledging
permitted by our executives and directors
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Robust compensation governance practices,
including annual CEO performance evaluation by our independent
directors and a comprehensive process for setting performance goals
with use of independent compensation consultant
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Double trigger
provisions for accelerated vesting of equity awards upon a change
in control
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Stock ownership guidelines
(5x base salary for our CEO, 3x base salary for our CFO, and 1x for
our other NEOs)
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Annual limit on director compensation |
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Guard against competitive harm
by obtaining our executives’ agreement to non-competition
compensation forfeiture clauses and other restrictive
covenants
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l |
Apply
clawback obligations
to incentive-based and equity-based compensation awards for
executive officers pursuant to our clawback policy and our 2016
Stock Incentive Plan
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Peer Group
The C&LD Committee believes it is important to understand the
relevant market for executive talent to ensure that AdvanSix’s
executive compensation program is competitive and supports the
attraction and retention of highly qualified executives. The
C&LD Committee also believes that market information is useful
as one relevant factor in assessing the reasonableness of
compensation paid to our executive officers.
The C&LD Committee utilizes its independent compensation
consultant to advise with respect to establishing its peer group of
companies for use in connection with compensation benchmarking,
review of market practices and relative performance evaluations.
The following selection criteria were used in determining the peer
group: size (revenues and market capitalization generally within
the range of 0.33 - 3x AdvanSix’s revenue and market
capitalization), industry (chemicals industry), operating
complexity (focused on organizations with vertical integration),
location/geographic reach (U.S. based organizations with global
distribution) and availability of data (publicly traded companies).
On a regular basis, at the C&LD Committee's direction, the
independent compensation consultant evaluates the peer group and
proposes modifications for the C&LD Committee's consideration
to eliminate companies that were acquired or no longer meet the
peer group selection criteria and to add new companies to ensure
that we can continue to maintain a robust data set from the peer
group.
In February 2021, the C&LD Committee approved the following
peer companies, as recommended by its independent compensation
consultant, to be used in determining 2021 compensation for our
executive officers as well as our directors (which we refer to in
this proxy statement as our "Compensation Peer Group" or our "peer
group"):
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American Vanguard |
H.B. Fuller |
Quaker Chemical Corp. |
W.R. Grace |
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Cabot Corp. |
Ingevity Corp. |
Sensient Technologies Corp. |
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Ferro Corp. |
Innospec Inc. |
Stepan Co. |
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GCP Applied Technologies |
Kraton Corp. |
Trinseo |
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Hawkins Inc. |
Minerals Technologies Inc. |
Tredegar Corp. |
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This peer group remained in effect for purposes of determining 2022
compensation for our executive officers and directors, with the
exception that, during 2021, W.R. Grace was removed from the peer
group as a result of an acquisition that closed during
2021.
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During 2022, Kraton Corp. was removed from the peer group as a
result of an acquisition that closed.
In September 2022, upon the recommendation of the independent
compensation consultant, the C&LD Committee approved the
addition of the five following companies to the peer group: Koppers
Holdings, Inc., LSB Industries, Inc., Mativ Holdings, Inc., Orion
Engineered Carbons S.A. and Tronox Holdings plc. As a result, the
following represents the updated peer group:
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American Vanguard |
H.B. Fuller |
Mativ Holdings, Inc. |
Stepan Co. |
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Cabot Corp. |
Koppers Holdings, Inc. |
Minerals Technologies Inc. |
Tredegar Corp. |
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Ferro Corp. |
Ingevity Corp. |
Orion Engineered Carbons S.A. |
Trinseo |
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GCP Applied Technologies |
Innospec Inc. |
Quaker Chemical Corp. |
Tronox Holdings plc |
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Hawkins Inc. |
LSB Industries, Inc. |
Sensient Technologies Corp. |
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As compared to the updated peer group, AdvanSix ranked at
approximately the 60th percentile with respect to fiscal year-end
2022 revenues and at approximately the 30th percentile with respect
to market capitalization as of December 31, 2022, based on the data
provided by our independent compensation consultant.
Details on Program Elements and Related 2022 Compensation
Decisions
Base Salary
Base salaries are intended to attract and compensate
high-performing and experienced leaders and are determined based on
scope of responsibility, years of experience and performance, with
reference to market data (but are not targeted to a specific
competitive position). On February 28, 2022, based on performance
assessments and, in consultation with the independent compensation
consultant, a review of peer group data for compensation
benchmarking, the C&LD Committee approved merit-based salary
increases for Ms. Kane to $990,000, representing a 7% increase, and
for Mr. Preston to $490,000, representing a 3% increase, in order
to align their base pay with competitive market
practices.
In February 2022, the C&LD Committee approved the following
annual base salaries for our other NEOs, effective April 1, 2022:
Mr. Kintiroglou, $430,000, representing an approximately 9%
increase; Ms. Slieter, $365,000, representing an approximately 6%
increase; and Mr. Gramm, $312,000, representing an approximately 3%
increase. Mr. Blindenbach's base salary remained at
$335,000.
In February 2023, based on performance assessments and, in
consultation with the independent compensation consultant, the
C&LD Committee approved merit-based salary increases for each
of Ms. Kane, Mr. Kintiroglou and Ms. Slieter in order to better
align with peer group data for compensation benchmarking. The
following are the annual base salaries of our NEOs: Ms. Kane,
$1,019,700; Mr. Preston, $490,000; Mr. Kintiroglou, $455,000; Ms.
Slieter, $400,000; and Mr. Gramm, $312,000. These base salaries of
our NEOs were effective April 1, 2023.
Short-Term Incentive Awards
Short-term incentive awards are intended to motivate and reward
executives for achieving annual corporate and individual goals in
key areas of financial and operational performance.
In February 2022, the C&LD Committee established the metrics
for the short-term incentive plan for 2022 to ensure alignment with
the Company’s business objectives and compensation philosophy while
also taking into consideration a review of peer group data
confirmed by its independent compensation consultant. Under the
2022 program, the performance metrics for employees at the level of
vice president and above, including our NEOs, were unchanged from
2021.
Under the plan established for 2022, our NEOs had the opportunity
to earn a cash payment based on Company financial performance
measured over the period from January 1, 2022 to December 31, 2022.
The Company performance metrics for 2022 were based on the
following metrics:
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Performance Metrics(1)
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Weighting |
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Definition |
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Adjusted EBITDA |
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60% |
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Adjusted earnings before interest, taxes, depreciation and
amortization |
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Free Cash Flow |
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20% |
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Net cash provided by operating activities less Expenditures for
property, plant and equipment |
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Leadership Team Strategic Objectives |
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20% |
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Goals relating to business strategies, operational excellence, risk
management and corporate social responsibility factors including
environmental, social and governance priorities
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(1) Adjusted EBITDA and Free Cash Flow are non-GAAP measures; See
Appendix A for non-GAAP reconciliations.
For performance achievement at the target level (100% of the
specified performance metric), each NEO would earn his or her
target award opportunity, which is expressed as a specified
percentage of his or her base salary. The target award
opportunities for our NEOs for 2022 were: Ms. Kane, 100%; Mr.
Preston, 70%; Mr. Kintiroglou, 60%; Ms. Slieter, 60%; Mr. Gramm,
40%; and Mr. Blindenbach, 60%. These were unchanged from
2021.
For performance achievement below the threshold level, no payment
is earned. For performance achievement at the following threshold
levels, each NEO would earn the applicable percentage of his or her
target award opportunity: Adjusted EBITDA threshold at 25%; Free
Cash Flow threshold at 25%; and Strategic Objectives threshold at
50%. For performance achievement at or above the maximum level,
each NEO would earn a maximum amount of 200% of his or her target
award opportunity. For performance achievement between
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threshold, target and maximum amounts, payout of awards will be
interpolated. If actual performance falls below threshold for all
three performance metrics, no incentive awards will be paid. The
performance metrics defined for our 2022 short-term incentive plan
were:
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Performance Metrics(1)
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Threshold
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Target
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Maximum
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Adjusted EBITDA |
$234 million |
$312 million |
$390 million |
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Free Cash Flow |
$115 million |
$174 million |
$232 million |
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Leadership Team Strategic Objectives |
50% achievement |
100% achievement |
200% achievement |
(1) Adjusted EBITDA and Free Cash Flow are non-GAAP measures; See
Appendix A for non-GAAP reconciliations.
Each NEO’s award was generally determined based on the following
primary factors: base salary, target award opportunity and
applicable performance metric percentage achievement. Under our
short-term incentive plan, actual performance results are subject
to further adjustment for the cumulative effect of changes in
accounting treatment, impact of acquisitions and divestitures,
discontinued operations, restructuring charges and other unusual
events. No such adjustments were made under our 2022
program.
In assessing performance with respect to the Leadership Team
Strategic Objectives, the C&LD Committee determined achievement
of 90% based on strong progress towards the goals set for our
leadership team at the outset of the year. The achievement level
was based on the Committee's assessment of key results against each
strategic objective for 2022 including:
•Growth
and execution for our each of our nylon solutions, chemical
intermediates, and plant nutrients business plans including driving
sales, integration of the U.S. Amines business acquired in February
2022, and execution of quality improvement programs, alongside
achieving record annual sales, earnings and cash flow in
2022;
•Implemented
actions to enable Total Shareholder Return ("TSR") delivering 135%
TSR since our spin-off, as well as execution of our financial
strategy through dividend initiation and increase, share
repurchases, and leverage reduction;
•Advanced
maturity of ESG initiatives enterprise-wide including:
◦Improved
corporate social responsibility ratings as reflected in the
EcoVadis 2023 Platinum Rating, ranking AdvanSix in the top 1% of
all companies assessed, as further discussed under "Corporate
Social Responsibility and Sustainability";
◦Although
safety performance did not achieve ACC top quartile performance, we
continued to progress employee and contractor safety initiatives
including key HS&E leadership hires as well as identification
of enterprise- and site-specific initiatives focused on personal
safety, process safety management, environmental improvement and
implementation of an enterprise-wide HS&E management software
program;
◦Driving
progress on various ED&I initiatives, as discussed under
"Equity, Diversity & Inclusion," resulting in an increase of
our overall diverse representation; and
◦Advanced
maturity of cybersecurity program enterprise-wide consistent with
the NIST CyberSecurity Framework.
Based on actual results for 2022, our performance exceeded target
for Free Cash Flow and exceeded threshold for Adjusted EBITDA and
Leadership Team Strategic Objectives, resulting in actual
achievement at 99% of the target award opportunity.
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Performance Metrics(1)
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Weighting |
Actual Results |
STI
Achievement % Based on Actual Results |
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Adjusted EBITDA |
60% |
$308 million |
96% |
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Free Cash Flow |
20% |
$184 million |
118% |
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Leadership Team Strategic Objectives |
20% |
90% achievement |
90% |
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99% |
(1) Adjusted EBITDA and Free Cash Flow are non-GAAP measures; See
Appendix A for non-GAAP reconciliations.
Based on achievement of Company performance metrics, as described
above, and a review of each NEO's individual performance for 2022,
which was generally concluded to be strong and in-line with
expectations, the C&LD Committee approved payouts under our
2022 short-term incentive plan as follows:
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Performance Achievement |
x |
Target Award Opportunity |
= |
Actual 2022 Short-Term Incentive Plan Award |
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Erin N. Kane |
99.0% |
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$990,000 |
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$980,100 |
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Michael Preston |
99.0% |
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$343,000 |
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$339,570 |
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Achilles B. Kintiroglou |
99.0% |
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$258,000 |
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$255,420 |
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Kelly Slieter |
99.0% |
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$219,000 |
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$216,810 |
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Christopher Gramm |
99.0% |
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$124,800 |
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$123,552 |
Payments under the 2022 short-term incentive compensation program
were made in the first quarter of 2023 following approval of
performance results by the C&LD Committee. Mr. Blindenbach
ceased employment with the Company effective July 1, 2022 and was
not eligible for payout under the 2022 short-term incentive
compensation program.
In February 2023, the C&LD Committee approved the 2023
short-term incentive compensation program. Under the 2023 program,
the performance metrics for employees at the level of vice
president and above, including our NEOs, are unchanged from
2022.
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Long-Term Incentive Compensation
2022 Long-Term Incentive Awards
In February 2022 the C&LD Committee established our long-term
incentive award program for 2022 to ensure alignment with the
Company’s business objectives and compensation philosophy, while
also taking into consideration a review of market practice
confirmed by its independent compensation consultant. The C&LD
Committee determined to award long-term incentive awards in the
form of:
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Terms |
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Weighting for NEOs |
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Performance Stock Units (PSUs) |
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3 year performance period |
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50% |
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Restricted Stock Units (RSUs) |
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Service-based vesting; cliff vest after 3 years |
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25% |
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Stock Options |
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Ratable vesting over 3 years; 10 year option term |
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25% |
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The C&LD Committee believes strongly in using long-term
incentive compensation to reinforce key Company objectives such as
promoting the achievement of long-term performance goals, focusing
on the significance of stockholder return, encouraging executive
retention, and promoting executive stock ownership. In determining
the overall opportunity and mix of long-term incentive awards, the
C&LD Committee considers various factors, including competitive
market positioning against comparable peer group executives, peer
group long-term incentive award practices, potential economic value
realized, and timing of vesting and related matters. The NEOs’
total target award values for their 2022 long-term incentive awards
were as follows: Ms. Kane, $3,200,000; Mr. Preston, $800,000; Mr.
Kintiroglou, $550,000; Ms. Slieter, $350,000; and Mr. Gramm,
$295,000.
Performance Stock Units.
In February 2022, the C&LD Committee approved cumulative
earnings per share (“EPS”) and average three-year Return on
Investment (“ROI”), weighted 50% each, as the performance metrics
for our 2022 PSU awards plus a modifier component based on Relative
Total Shareholder Return (“rTSR”). In choosing the relevant
performance metrics for our PSU grants, the C&LD Committee
considered: (i) with respect to cumulative EPS, this measure’s
direct relationship to valuation and that EPS is a key driver of
stockholder return; and (ii) with respect to average three-year
ROI, this measure's alignment with stockholder interests because
AdvanSix is capital intensive and ROI has a high correlation to
stockholder return.
The C&LD Committee established the relevant metrics based on
internal operating targets, industry data as well as peer group
data for compensation benchmarking. We do not disclose the
specific, forward-looking EPS or ROI goals that we established for
the PSU awards granted in 2022 because these goals relate to
executive compensation to be earned and/or paid in future years and
we believe that disclosure of such goals while the applicable
performance period is ongoing would cause us competitive harm.
However, we expect to disclose such goals in future proxy
statements once the applicable performance period has ended as part
of our discussion and analysis about the amounts earned by the NEOs
under these awards. In setting the applicable target levels, the
C&LD Committee considered how achievement of the performance
goals could be impacted by events expected to occur in the coming
years. We believe that the threshold goals have been established at
levels reasonably challenging to attain and will promote execution
of business strategies and drive stockholder value, and that the
target goals will require considerable and increasing collective
effort on the part of our employees, including our NEOs, to
achieve. See the Grants of Plan-Based Awards Table in this proxy
statement for additional information regarding the PSU grants made
to our NEOs in 2022.
For achievement of a given performance metric below the threshold
level, no shares will be earned. For performance achievement at the
threshold, target and maximum levels, each NEO would earn 25%, 100%
or 200% of his or her target award, respectively. For performance
achievement between threshold, target and maximum amounts, the
number of shares earned will be interpolated. If actual performance
falls below threshold for both performance metrics, no shares are
earned.
In addition, the program includes an rTSR modifier. Under the rTSR
modifier, the number of shares earned based on our EPS and ROI
performance will be: (i) increased by 10% if our TSR performance is
above the 75th percentile relative to the S&P Small Cap 600
Materials Index, or (ii) decreased by 10% if our TSR performance is
below the 25th percentile relative to the S&P Small Cap 600
Materials Index. The rTSR modifier has no impact for performance
between the 26th and 74th percentiles relative to the selected
comparator index.
Restricted Stock Units.
An RSU represents the right to receive one share of our Common
Stock on a set vesting date subject to continued employment through
such vesting date. RSUs provide incentive to drive share price
appreciation while encouraging retention.
Stock Options.
A stock option represents the right to purchase shares of our
Common Stock at a specified per share price known as the exercise
price. Under the terms of our incentive plan, the exercise price of
our stock options is equal to the average of the high and low sale
prices of our Common Stock on the date of grant. The C&LD
Committee believes that stock options are a highly effective
long-term incentive vehicle as they only have value if the price of
the Company’s stock appreciates following the grant date, thereby
directly aligning compensation value with stockholder value
creation. Each option is subject to vesting requirements over three
years, encouraging retention.
In February 2023, the C&LD Committee approved a LTI program
consistent with the 2022 program.
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2020 PSU Awards - Performance Achievement and Vesting
In February 2023, the Committee approved payout of our PSU awards
granted in February 2020. Actual performance achievement with
respect to each of the performance metrics was as
follows:
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Measure |
2020 |
2021 |
2022 |
Cumulative EPS / Average ROI |
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EPS(1)
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$1.64 |
$4.81 |
$5.86 |
$12.31 |
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ROI |
7.0% |
19.1% |
20.6% |
15.6% |
(1) Excludes impact of U.S. Amines acquisition, which was not
included in target setting.
This performance resulted in payout percentages as
follows:
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Measure |
Weighting |
Threshold |
Target |
Maximum |
Performance Achievement |
Payout % |
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EPS |
50% |
$4.62 |
$4.89 |
$5.39 |
$12.31 |
200.0% |
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ROI |
50% |
6.6% |
6.9% |
7.5% |
15.6% |
200.0% |
|
Total Payout %: |
200.0% |
Our NEOs earned the following shares upon vesting of the 2020 PSU
Awards in February 2023:
|
|
|
|
|
|
|
|
|
|
Named Executive Officer |
PSUs Granted at Target |
PSUs Earned* |
|
Erin N. Kane |
92,373 |
187,586 |
|
Michael Preston |
27,992 |
56,845 |
|
Achilles B. Kintiroglou |
14,871 |
30,200 |
|
Christopher Gramm |
10,322 |
20,962 |
*PSUs Earned includes dividend equivalents.
Mr. Blindenbach forfeited his 2020 PSU award upon his July 1, 2022
termination of employment. Ms. Slieter joined the Company in June
2020.
Other AdvanSix Compensation & Benefit Programs
In addition to the annual and long-term compensation programs
described above, we provide our executive officers with the
benefits, retirement plans and limited perquisites summarized
below.
Severance Benefits
In November 2017, our C&LD Committee adopted the AdvanSix Inc.
Executive Severance Pay Plan (“Severance Plan”) for executive
officers. The purpose of the Severance Plan is to provide financial
protection upon loss of employment at market competitive rates. The
severance terms for the NEOs were established in connection with
peer group market practices and data provided by the compensation
consultant. We believe these arrangements are necessary to attract
and retain our executives and ensure continuity of
management.
The Severance Plan provides participants with certain severance
benefits in the event of a covered termination, which includes: (i)
an involuntary termination of employment by the Company, subject to
certain exceptions enumerated in the Severance Plan; and (ii)
voluntary termination of employment by a participant for Good
Reason, as defined in the Severance Plan.
In the event of a covered termination occurring outside of the
Change in Control Period, which is the twenty-four month period
following the occurrence of a Change in Control, as defined in the
Severance Plan, each participant would be entitled to receive a
lump sum cash payment in an amount equal to:
•For
our CEO: 2x the sum of her base salary plus prior year’s target
bonus.
•For
each other participant: 1x the sum of his or her base salary plus
prior year’s target bonus.
In the event of a covered termination occurring during the Change
in Control Period, each participant would be entitled to
receive:
•For
our CEO: (i) a lump-sum cash payment in an amount equal to 3x the
sum of her base salary plus target bonus; and (ii) in the event
that she is eligible to elect insurance continuation coverage under
COBRA, a lump-sum cash payment in an amount equal to the estimated
aggregate cost that the Company would have incurred, less expected
participant contributions, to subsidize continuation of her COBRA
coverage for 36 months.
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•For
each other participant: (i) a lump-sum cash payment in an amount
equal to 2x the sum of his or her base salary plus target bonus;
and (ii) in the event that he or she is eligible to elect insurance
continuation coverage under COBRA, a lump-sum cash payment in an
amount equal to the estimated aggregate cost that the Company would
have incurred, less expected participant contributions, to
subsidize continuation of his or her COBRA coverage for 24
months.
A participant’s right to receive benefits under the Severance Plan
is conditioned, among other things, on the participant timely
executing and not revoking an effective release of claims against
the Company, its officers, directors and employees and the
participant’s agreement to abide by certain restrictive covenants,
in the C&LD Committee’s discretion. The Severance Plan also
reserves the right of the C&LD Committee to cancel benefits
under the Severance Plan in the event a participant engages in any
activity that is considered detrimental to the Company’s
interests.
Each participant is solely responsible for any tax liabilities
incurred by him or her in connection with the Severance Plan. In
the event that a participant would be subject to the excise tax
imposed by Section 4999 of the Code, the Severance Plan
includes a “net best” provision whereby a participant would be
entitled to the greater after-tax benefit of either: (i) his or her
full severance benefits, for which the participant is responsible
for the payment of any applicable Section 4999 excise tax; or (ii)
his or her severance benefits reduced to the maximum amount that
would result in no Section 4999 excise tax for the
participant.
The C&LD Committee may amend or terminate the Severance Plan at
any time in accordance with its terms, provided that during the
Change in Control Period and during a specified period prior to a
Change in Control, the Severance Plan may not be amended or
terminated in any manner adverse to the interests of the
participants.
The compensation that could be received by our NEOs in connection
with various termination scenarios occurring on December 31, 2022
is set forth below in the section entitled “Potential Payments Upon
Termination or Change in Control.” Information regarding the cash
severance payment to which Mr. Blindenbach became entitled in
connection with his July 2022 termination of employment is set
forth below in the Summary Compensation Table.
Retirement Plans and Nonqualified Deferred Compensation
Plan
In connection with the spin-off, we were required to adopt a
qualified defined benefit retirement plan with terms materially
consistent with the terms of Honeywell’s Retirement Earnings Plan
(“Honeywell REP”). In October 2016, our Board adopted the AdvanSix
Inc. Retirement Earnings Plan (“ASIX REP”). The only participants
in the ASIX REP are those Company employees who were active
participants in the Honeywell REP.
Of our NEOs, only Ms. Kane, Mr. Preston and Mr. Gramm participate
in the ASIX REP. Participants earn a benefit under a formula
substantially identical to the formula which applied to the
participant under the Honeywell REP, except that any benefit earned
under the ASIX REP will be reduced by the value of benefits accrued
through the spin-off date under the Honeywell REP, which remain the
responsibility of Honeywell. The material terms of the ASIX REP are
explained below under “Pension Benefits - Fiscal Year
2022.”
We have also adopted a broad-based defined contribution plan, or
401(k) plan. The AdvanSix Inc. Savings Plan (“Savings Plan”) allows
eligible employees to contribute a portion of their cash
compensation on a tax-deferred basis to save for their future
retirement needs. The Company matches 50% of the first 8% of
contributions for employees covered by a collective bargaining
agreement and matches 75% of the first 8% of the employee’s
contribution election for all other employees. The Company may also
provide an additional discretionary retirement savings contribution
which is at the sole discretion of the Company. Matching
contributions vest after three years of service.
The Company has also adopted the AdvanSix Inc. Deferred
Compensation Plan (the "DCP"), effective January 1, 2018. The DCP
is a nonqualified deferred compensation plan under which designated
eligible executives, including our NEOs, and directors of the
Company may elect to defer annual base salary, bonuses or
director’s fees, as applicable. The DCP also permits the Company to
make contributions to the accounts of employee participants. Under
the DCP, employee participants may elect to defer up to a maximum
of 75% of base salary and 90% of bonuses. Participants designate
the funds in which their account balances will be deemed to be
invested for purposes of determining the amount of earnings and
losses to be credited to their accounts. The rate of return earned
on a participant’s account balance is based on the actual
performance of the funds in which he or she is deemed invested. All
amounts credited under the DCP, with the exception of any
contributions which may be made by the Company, are immediately
vested. The material terms of the DCP are explained below under
“Nonqualified Deferred Compensation - Fiscal Year
2022.”
Benefits and Perquisites
Our NEOs are eligible to participate in Company-wide benefits such
as life, medical, dental, accidental death and disability insurance
that are competitive with other similarly-sized companies. Our NEOs
participate in these programs on the same basis as the rest of
AdvanSix’s salaried employees. We offer an annual executive health
exam to each of our executive officers, including our NEOs. We also
maintain excess liability coverage for senior management personnel,
including our NEOs, as well as a relocation program providing for
reimbursement of certain relocation expenses.
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Stock Ownership Guidelines
The C&LD Committee believes that our executives will more
effectively pursue our stockholders’ long-term interests if they
hold substantial amounts of our stock. Accordingly, our C&LD
Committee has adopted minimum stock ownership guidelines for all
executive officers.
Under these guidelines, our executive officers must hold shares of
our Common Stock equal in value to the following multiples of their
current base salary:
|
|
|
|
|
|
|
CEO |
5x base salary |
|
CFO |
3x base salary |
|
Other executive officers |
1x base salary |
Shares used in determining whether these guidelines are met include
shares held personally or beneficially owned and RSUs subject to
service-based vesting conditions. Unvested PSUs and stock options,
whether vested or unvested, do not count towards an executive’s
ownership. As of April 1, 2022, all of our executive officers have
satisfied their stock ownership guidelines. Executives have five
years from the date they become subject to the guidelines to meet
the ownership requirement. Until an executive has met the
applicable ownership requirement, he or she is required to hold
100% of the shares (net of taxes) received upon the vesting of RSUs
and PSUs and upon the exercise of stock options.
Clawback Policy
We have a clawback policy which applies to executive officers and
certain other key employees. In developing the policy, the C&LD
Committee obtained the advice of its independent compensation
consultant which advised that the policy is consistent with then
market practice. The policy applies to incentive-based and
equity-based compensation, the amount, payment and/or vesting of
which was predicated upon achievement of financial results. The
policy is triggered, at the discretion of the C&LD Committee,
if there is a restatement of the financial results of the Company
and the covered executives would have received a lower incentive
payout had they been calculated on the restated financials. The
C&LD Committee may seek to recover excess compensation, as it
deems appropriate, following consideration of: the likelihood of
success of recoupment versus the cost and effort involved, whether
any fraud, gross negligence, illegal conduct or other misconduct
materially contributed to the need for a restatement, whether
recoupment may prejudice the Company’s interests, the time that has
lapsed since the misconduct, and any pending legal proceedings
related to the misconduct.
Hedging and Pledging
All employees and directors are prohibited from pledging AdvanSix
securities or using AdvanSix securities to support margin
debt.
Hedging by employees and directors is prohibited. For this purpose,
hedging means purchasing financial instruments (including prepaid
variable forward contracts, equity swaps, collars, and exchange
funds) that are designed to offset any decrease in the market value
of AdvanSix stock held, directly or indirectly by them, whether the
stock was acquired pursuant to a compensation arrangement or
otherwise.
Employees and directors are prohibited from engaging in short sales
of AdvanSix securities. Selling or purchasing puts or calls or
otherwise trading in or writing options on AdvanSix securities by
employees and directors is also prohibited.
Risk Oversight Considerations
AdvanSix subscribes to a “pay-for-performance” philosophy. As
such:
•A
substantial portion of our NEOs’ target compensation is “at risk”
with the value of one or more elements of compensation tied to the
achievement of financial and other measures the Company considers
important drivers of stockholder value.
•Long-term
incentive compensation for our NEOs makes up a larger percentage of
an employee’s target total direct compensation than short-term
incentive compensation. By tying a significant portion of total
direct compensation to long-term incentives over a three-year
period, we promote longer-term perspectives regarding Company
performance and align the interests of employees with those of
stockholders.
•The
maximum payout for both the annual and long-term incentive
compensation is generally capped at 200% of target. The C&LD
Committee also has discretionary authority to reduce short-term
incentive payments, including to zero.
•We
use multiple performance metrics to avoid having compensation
opportunities overly weighted toward the performance result of a
single metric. In general, our incentive programs are based on a
mix of financial, operational, and strategic goals.
•Base
salaries are positioned to be consistent with executives’
responsibilities so as not to motivate excessive risk-taking to
achieve financial security.
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•Our
executive officers and directors are subject to stock ownership
guidelines which help to promote longer term perspectives and align
the interests of our executive officers and directors with those of
our stockholders.
•Our
C&LD Committee does not generally exercise discretion to
accelerate equity vesting absent special
circumstances.
•We
prohibit our executives and directors from hedging or pledging
AdvanSix securities.
Our C&LD Committee reviews the risks and rewards associated
with our employee compensation programs. The programs are designed
with features that mitigate risk without diminishing the incentive
nature of the compensation. We believe our compensation programs
encourage and reward prudent business judgment and appropriate
risk-taking over the short-term and the long-term. Management and
the C&LD Committee do not believe any of our compensation
policies or practices create risks that are reasonably likely to
have a material adverse impact on the Company.
Tax Deductibility of Executive Compensation
Section 162(m) of the Code restricts deductibility for federal
income tax purposes of annual individual compensation paid to NEOs
and former NEOs in excess of $1 million. The C&LD Committee
reserves its discretion to approve nondeductible compensation where
necessary to achieve our overall compensation objectives and to
ensure that the Company make appropriate payments to its executive
officers.
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2023 |
COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE
REPORT
The C&LD Committee reviewed and discussed our Compensation
Discussion and Analysis with management. Based on this review and
discussion, the Committee recommended that the Board of Directors
include the Compensation Discussion and Analysis in this proxy
statement and the Form 10-K for the fiscal year ended December 31,
2022.
The Compensation and Leadership Development Committee
Todd D. Karran, Chair
Farha Aslam
Patrick S. Williams
2022 SUMMARY COMPENSATION TABLE
The following tables provide information concerning compensation
paid to our NEOs for fiscal year 2022.
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Named Executive
Officer and
Principal Position
|
Year |
|
Salary
($)(1)
|
Stock
Awards
($)(2)
|
Option
Awards
($)(3)
|
Non-Equity
Incentive Plan
Compensation
($)(4)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)(5)
|
All Other
Compensation
($)(6)
|
Total
Compensation ($)
|
|
Erin N. Kane,
President and Chief Executive Officer
|
2022 |
|
$ |
975,000 |
|
$ |
2,493,152 |
|
$ |
799,999 |
|
$ |
980,100 |
|
$ |
— |
|
$ |
71,338 |
|
$ |
5,319,589 |
|
|
2021 |
|
$ |
919,231 |
|
$ |
2,309,616 |
|
$ |
749,981 |
|
$ |
1,711,250 |
|
$ |
— |
|
$ |
61,766 |
|
$ |
5,751,844 |
|
|
2020 |
|
$ |
861,923 |
|
$ |
1,980,022 |
|
$ |
660,002 |
|
$ |
825,300 |
|
$ |
— |
|
$ |
58,328 |
|
$ |
4,385,576 |
|
|
Michael Preston,
Senior Vice President and Chief Financial Officer
|
2022 |
|
$ |
486,539 |
|
$ |
623,269 |
|
$ |
199,993 |
|
$ |
339,570 |
|
$ |
— |
|
$ |
31,138 |
|
$ |
1,680,508 |
|
|
2021 |
|
$ |
471,538 |
|
$ |
615,888 |
|
$ |
199,996 |
|
$ |
615,125 |
|
$ |
— |
|
$ |
24,012 |
|
$ |
1,926,560 |
|
|
|
2020 |
|
$ |
468,808 |
|
$ |
600,009 |
|
$ |
200,004 |
|
$ |
295,274 |
|
$ |
— |
|
$ |
19,942 |
|
$ |
1,584,037 |
|
|
Achilles B. Kintiroglou,
Senior Vice President, General Counsel, Corporate
Secretary
|
2022 |
|
$ |
421,923 |
|
$ |
428,499 |
|
$ |
137,494 |
|
$ |
255,420 |
|
$ |
— |
|
$ |
18,275 |
|
$ |
1,261,612 |
|
|
2021 |
|
$ |
390,385 |
|
$ |
627,224 |
|
$ |
106,254 |
|
$ |
438,450 |
|
$ |
— |
|
$ |
21,237 |
|
$ |
1,583,550 |
|
|
|
2020 |
|
$ |
366,473 |
|
$ |
318,767 |
|
$ |
106,252 |
|
$ |
206,325 |
|
$ |
— |
|
$ |
22,726 |
|
$ |
1,020,542 |
|
|
Kelly Slieter,
Senior Vice President, Chief Human Resources Officer
|
2022 |
|
$ |
360,385 |
|
$ |
272,612 |
|
$ |
87,492 |
|
$ |
216,810 |
|
$ |
— |
|
$ |
28,461 |
|
$ |
965,760 |
|
|
2021 |
|
$ |
342,693 |
|
$ |
257,946 |
|
$ |
83,754 |
|
$ |
382,950 |
|
$ |
— |
|
$ |
27,175 |
|
$ |
1,094,517 |
|
|
|
2020 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Christopher Gramm,
Vice President and Controller
|
2022 |
|
$ |
310,000 |
|
$ |
229,786 |
|
$ |
73,749 |
|
$ |
123,552 |
|
$ |
— |
|
$ |
20,447 |
|
$ |
757,534 |
|
|
2021 |
|
$ |
301,808 |
|
$ |
227,124 |
|
$ |
73,755 |
|
$ |
236,208 |
|
$ |
— |
|
$ |
20,067 |
|
$ |
858,962 |
|
|
|
2020 |
|
$ |
305,827 |
|
$ |
321,253 |
|
$ |
73,754 |
|
$ |
108,023 |
|
$ |
— |
|
$ |
19,962 |
|
$ |
828,819 |
|
|
Willem Blindenbach,
Former Senior Vice President, Integrated Supply Chain
|
2022 |
|
$ |
173,942 |
|
$ |
272,612 |
|
$ |
87,492 |
|
$ |
— |
|
$ |
— |
|
$ |
1,163,138 |
|
$ |
1,697,185 |
|
|
2021 |
|
$ |
332,692 |
|
$ |
269,490 |
|
$ |
87,507 |
|
$ |
355,770 |
|
$ |
— |
|
$ |
30,012 |
|
$ |
1,075,472 |
|
|
|
2020 |
|
$ |
337,500 |
|
$ |
262,522 |
|
$ |
87,500 |
|
$ |
178,815 |
|
$ |
— |
|
$ |
17,775 |
|
$ |
884,112 |
|
(1)Amounts
in this column reflect base salary paid to our NEOs in 2022, 2021
and 2020. For Ms. Slieter, compensation amounts are reported only
for 2022 and 2021, as 2021 was her first year serving as an NEO of
the Company.
(2)Amounts
in this column for 2022 reflect the RSU awards and the PSU awards
granted to our NEOs under our 2022 long-term incentive award
program. The aggregate grant date fair value of RSUs and PSUs was
computed in accordance with FASB ASC Topic 718. The grant date fair
value of each RSU was $39.15 per share, calculated using the high
and low sales price of a share of our stock on the grant date. The
grant date fair value of each PSU, taking into account the
estimated probable outcome of the performance conditions, including
using a Monte Carlo simulation model with reference to the grant
date for the market-based condition (rTSR modifier) and using the
closing price of a share of our stock on the grant date, was
$41.43. A discussion of assumptions used in the valuation of RSU
and PSU awards made in fiscal year 2022 may be found in Note 16 to
the Notes to the Financial Statements in our 2022 Form
10-K.
The grant date fair value of RSU awards granted in 2022 is as
follows: Ms. Kane, $799,991; Mr. Preston, $199,978; Mr.
Kintiroglou, $137,495; Ms. Slieter, $87,461; Mr. Gramm $73,719; and
Mr. Blindenbach, $87,461.
The grant date fair value of PSU awards granted in 2022 is
reflected in the table at target as follows: Ms. Kane, $1,693,161;
Mr. Preston, $423,290; Mr. Kintiroglou, $291,004; Ms. Slieter,
$185,151; Mr. Gramm, $156,067; and Mr. Blindenbach, $185,151. The
grant date fair value of the 2022 PSU awards assuming maximum
performance achievement is as follows: Ms. Kane, $3,386,322; Mr.
Preston, $846,581; Mr. Kintiroglou, $582,009; Ms. Slieter,
$370,301; Mr. Gramm, $312,134; and Mr. Blindenbach,
$370,301.
Mr. Blindenbach forfeited his 2022 RSU and PSU awards upon his July
1, 2022 termination of employment.
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(3)Amounts
in this column for 2022 reflect stock options granted to our named
executive officers under our 2022 long-term incentive award
program. Amounts reflect the aggregate grant date fair value of
stock option awards computed in accordance with FASB ASC Topic 718,
using the Black-Scholes option-pricing model at the time of grant.
These stock options were awarded with a Black-Scholes value of
$14.01 per share. A discussion of the assumptions used in the
valuation of option awards made in fiscal year 2022 may be found in
Note 16 to the Notes to the Financial Statements in our 2022 Form
10-K. Mr. Blindenbach forfeited his option award upon his July 1,
2022 termination of employment.
(4)Amounts
in this column for 2022 reflect payouts under our 2022 short-term
incentive program. See above in the Compensation Discussion and
Analysis under “Details on Program Elements and Related 2022
Compensation Decisions-Short-Term
Incentive Awards”
for additional information.
(5)Values
in this column for 2022 represent the aggregate change in the
present value of the accumulated benefit under the AdvanSix
Retirement Earnings Plan ("ASIX REP") from December 31, 2021 to
December 31, 2022 of each of our NEOs who participates in the ASIX
REP, namely Ms. Kane, Mr. Preston, and Mr. Gramm (see the "Pension
Benefits—Fiscal Year 2022" table of this proxy statement for
additional information). The value of the overall benefit under the
ASIX REP when expressed as an annuity has decreased as a result of
interest rate decreases driven by economic conditions. Since the
Honeywell qualified plan offset expressed as an annuity is fixed at
the 2016 level, the net ASIX REP benefit was $0 at December 31,
2021 and December 31, 2022 for our NEOs who participate in the ASIX
REP. Accordingly, the amount reported in the table is zero. There
are no above-market earnings under our DCP.
(6)For
2022, All Other Compensation consists of the
following
items:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item |
|
Ms. Kane |
|
Mr. Preston |
|
Mr. Kintiroglou |
|
Ms. Slieter |
|
Mr. Blindenbach |
|
Mr. Gramm |
|
Matching Contributions 401K |
|
$ |
15,375 |
|
|
$ |
18,300 |
|
|
$ |
11,438 |
|
|
$ |
15,375 |
|
|
$ |
— |
|
|
$ |
17,934 |
|
|
Excess Liability Insurance |
|
$ |
1,838 |
|
|
$ |
1,838 |
|
|
$ |
1,838 |
|
|
$ |
1,838 |
|
|
$ |
1,838 |
|
|
$ |
1,838 |
|
|
Matching Contributions DCP |
|
$ |
43,125 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6,248 |
|
|
$ |
— |
|
|
$ |
675 |
|
|
Executive Health Exam |
|
$ |
11,000 |
|
|
$ |
11,000 |
|
|
$ |
5,000 |
|
|
$ |
5,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Severance Payment |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
580,650 |
|
|
$ |
— |
|
|
Total |
|
$ |
71,338 |
|
|
$ |
31,138 |
|
|
$ |
18,275 |
|
|
$ |
28,461 |
|
|
$ |
582,488 |
|
|
$ |
20,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
Proxy and Notice of Annual Meeting of Stockholders |
2023 |
GRANTS OF PLAN-BASED AWARDS—FISCAL YEAR 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan
Awards (3)
|
Estimated
Future Payouts
Under Equity Incentive
Plan Awards (4)
|
All Other Stock Awards: Number of Shares of Stock or
Units |
All Other
Option
Awards:
Number
of Securities
Underlying
Options
(#)
|
Exercise
or Base
Price
of Option
Awards
($/Sh) (5)
|
Closing
Price on
Date of
Grant of
Option
Awards
($/Sh)
|
Grant
Date Fair
Value
of Stock
and Option
Awards ($)
|
|
Named
Executive
Officer
|
Award |
Grant |
Date of |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
|
Type (1)
|
Date |
Action (2) |
($) |
($) |
($) |
(#) |
(#) |
(#) |
(#) |
Erin N.
Kane |
STI |
2/28/2022 |
2/28/2022 |
495,000 |
|
990,000 |
|
1,980,000 |
|
- |
- |
- |
- |
- |
- |
- |
- |
|
|
PSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
20,434 |
|
40,868 |
|
81,736 |
|
- |
- |
- |
- |
$ |
1,693,161 |
|
|
|
RSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
20,434 |
|
- |
- |
- |
$ |
799,991 |
|
|
|
NQSO |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
- |
57,102 |
|
$ |
39.15 |
|
$ |
40.06 |
|
$ |
799,999 |
|
|
Michael Preston |
STI |
2/28/2022 |
2/28/2022 |
171,500 |
|
343,000 |
|
686,000 |
|
- |
- |
- |
- |
- |
- |
- |
- |
|
|
PSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
5,109 |
|
10,217 |
|
20,434 |
|
- |
- |
- |
- |
$ |
423,290 |
|
|
|
RSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
5,108 |
|
- |
- |
- |
$ |
199,978 |
|
|
|
NQSO |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
- |
14,275 |
|
$ |
39.15 |
|
$ |
40.06 |
|
$ |
199,993 |
|
|
Achilles B. Kintiroglou |
STI |
2/28/2022 |
2/28/2022 |
129,000 |
|
258,000 |
|
516,000 |
|
- |
- |
- |
- |
- |
- |
- |
- |
|
|
PSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
3,512 |
|
7,024 |
|
14,048 |
|
- |
- |
- |
- |
$ |
291,004 |
|
|
|
RSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
3,512 |
|
- |
- |
- |
$ |
137,495 |
|
|
|
NQSO |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
- |
9,814 |
|
$ |
39.15 |
|
$ |
40.06 |
|
$ |
137,494 |
|
|
Kelly Slieter |
STI |
2/28/2022 |
2/28/2022 |
109,500 |
|
219,000 |
|
438,000 |
|
- |
- |
- |
- |
- |
- |
- |
- |
|
|
PSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
2,235 |
|
4,469 |
|
8,938 |
|
- |
- |
- |
- |
$ |
185,151 |
|
|
|
RSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
2,234 |
|
- |
- |
- |
$ |
87,461 |
|
|
|
NQSO |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
- |
6,245 |
|
$ |
39.15 |
|
$ |
40.06 |
|
$ |
87,492 |
|
|
Christopher Gramm |
STI |
2/28/2022 |
2/28/2022 |
62,400 |
|
124,800 |
|
249,600 |
|
- |
- |
- |
- |
- |
- |
- |
- |
|
|
PSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
1,884 |
|
3,767 |
|
7,534 |
|
- |
- |
- |
- |
$ |
156,067 |
|
|
|
RSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
1,883 |
|
- |
- |
- |
$ |
73,719 |
|
|
|
NQSO |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
- |
5,264 |
|
$ |
39.15 |
|
$ |
40.06 |
|
$ |
73,749 |
|
|
Willem Blindenbach |
STI |
2/28/2022 |
2/28/2022 |
100,500 |
|
201,000 |
|
402,000 |
|
- |
- |
- |
- |
- |
- |
- |
- |
|
|
PSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
2,235 |
|
4,469 |
|
8,938 |
|
- |
- |
- |
- |
$ |
185,151 |
|
|
|
RSU |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
2,234 |
|
- |
- |
- |
$ |
87,461 |
|
|
|
NQSO |
2/28/2022 |
2/28/2022 |
- |
- |
- |
- |
- |
- |
- |
6,245 |
|
$ |
39.15 |
|
$ |
40.06 |
|
$ |
87,492 |
|
(1)Award
Type:
RSU = restricted stock unit subject to service-based vesting
conditions
PSU = restricted stock unit subject to performance-based vesting
conditions (grant date fair value presented at target)
NQSO = nonqualified stock option subject to service-based vesting
conditions
STI = annual cash incentive award under our short-term incentive
compensation program
(2)At
a meeting held on February 28, 2022, the Committee took action to
grant the 2022 long-term incentive awards effective on February 28,
2022.
(3)Represents
our NEOs’ potential threshold, target and maximum award
opportunities under our short-term cash incentive program for 2022
performance. The amount reported for threshold assumes achievement
of threshold performance with respect to each of the metrics under
the 2022 plan (Adjusted EBITDA, Free Cash Flow and Leadership Team
Strategic Objectives). Amounts actually paid for 2022 are reported
in the Non-Equity Incentive Plan Compensation column of the Summary
Compensation Table above.
(4)Represents
the potential threshold, target and maximum number of shares that
our NEOs may earn with respect to 2022 PSU grants under our 2022
long-term incentive program for the performance period commencing
January 1, 2022 and ending December 31, 2024. The amount reported
for threshold assumes achievement of threshold performance with
respect to each of the applicable performance metrics (Cumulative
EPS and Average ROI). The number of shares earned pursuant to these
awards, if any, will be determined and paid following completion of
the three-year performance period based on our actual performance
against the pre-established performance metrics. The number of
shares earned may potentially be increased or decreased by 10%
depending on our rTSR performance under the performance modifier
component of these awards, as described above in the Compensation
Discussion and Analysis under “Details on Program Elements and
Related 2022 Compensation Decisions - Long-Term Incentive
Compensation.”
(5)Under
the terms of our 2016 Stock Incentive Plan, the exercise price of
our stock options is equal to the average of our high and low sale
prices of our Common Stock on the date of grant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
Proxy and Notice of Annual Meeting of Stockholders |
2023 |
OUTSTANDING EQUITY AWARDS AT 2022 FISCAL
YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
Named Executive
Officer
|
Grant Date |
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock
That Have
Not Vested
(#)
|
Market Value
of Shares or
Units of
Stock
That Have
Not Vested
($)(1)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or
Other Rights That Have Not Vested (#)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned
Shares, Units or Other Rights That Have Not Vested
($)(1)
|
|
Erin N. Kane |
2/28/2022 |
— |
57,102 |
|
(2) |
$39.15 |
2/28/2032 |
|
20,434 |
|
(3) |
$ |
776,901 |
|
40,868 |
|
(4) |
$ |
1,553,801 |
|
|
|
2/24/2021 |
24,177 |
|
48,355 |
|
(2) |
$29.21 |
2/24/3031 |
|
25,677 |
|
(3) |
$ |
976,240 |
|
102,706 |
|
(4) |
$ |
3,904,882 |
|
|
|
2/26/2020 |
92,827 |
|
46,414 |
|
(2) |
$14.29 |
2/26/2030 |
|
46,187 |
|
(3) |
$ |
1,756,030 |
|
184,746 |
|
(4) |
$ |
7,024,043 |
|
|
Michael Preston |
2/28/2022 |
— |
14,275 |
|
(2) |
$39.15 |
2/28/2032 |
|
5,108 |
|
(3) |
$ |
194,206 |
|
10,217 |
|
(4) |
$ |
388,450 |
|
|
|
2/24/2021 |
6,447 |
|
12,895 |
|
(2) |
$29.21 |
2/24/3031 |
|
6,847 |
|
(3) |
$ |
260,323 |
|
27,388 |
|
(4) |
$ |
1,041,292 |
|
|
|
2/26/2020 |
28,130 |
|
14,065 |
|
(2) |
$14.29 |
2/26/2030 |
|
13,996 |
|
(3) |
$ |
532,128 |
|
55,984 |
|
(4) |
$ |
2,128,512 |
|
|
Achilles B. Kintiroglou |
2/28/2022 |
— |
9,814 |
|
(2) |
$39.15 |
2/28/2032 |
|
3,512 |
|
(3) |
$ |
133,526 |
|
7,024 |
|
(4) |
$ |
267,052 |
|
|
|
2/24/2021 |
3,425 |
|
22,416 |
|
(2) |
$29.21 |
2/24/3031 |
|
3,638 |
|
(3) |
$ |
138,317 |
|
14,550 |
|
(4) |
$ |
553,191 |
|
|
|
2/26/2020 |
14,944 |
|
7,472 |
|
(2) |
$14.29 |
2/26/2030 |
|
7,436 |
|
(3) |
$ |
282,717 |
|
29,742 |
|
(4) |
$ |
1,130,791 |
|
|
Kelly Slieter |
2/28/2022 |
— |
6,245 |
|
(2) |
$39.15 |
2/28/2032 |
|
2,234 |
|
(3) |
$ |
84,937 |
|
4,469 |
|
(4) |
$ |
169,911 |
|
|
|
2/24/2021 |
2,700 |
|
5,400 |
|
|
$29.21 |
2/24/3031 |
|
2,868 |
|
(3) |
$ |
109,041 |
|
11,470 |
|
(4) |
$ |
436,089 |
|
|
|
6/24/2020 |
— |
|
— |
|
|
|
|
|
8,977 |
|
|
$ |
341,306 |
|
— |
|
|
$ |
— |
|
|
Christopher Gramm |
2/28/2022 |
— |
5,264 |
|
|
$39.15 |
2/28/2032 |
|
1,883 |
|
(3) |
$ |
71,592 |
|
3,767 |
|
(4) |
$ |
143,221 |
|
|
|
2/24/2021 |
2,377 |
|
4,756 |
|
|
$29.21 |
2/24/3031 |
|
2,525 |
|
(3) |
$ |
96,001 |
|
10,100 |
|
(4) |
$ |
384,002 |
|
|
|
2/26/2020 |
10,373 |
|
5,187 |
|
|
$14.29 |
2/26/2030 |
|
12,159 |
|
(3) |
$ |
462,285 |
|
20,644 |
|
(4) |
$ |
784,885 |
|
(1)Calculated
using the closing market price of our Common Stock on December 31,
2022 ($38.02).
(2)Options
scheduled to vest in three equal annual installments on the first
three anniversaries of the grant date.
(3)RSUs
scheduled to vest on the third anniversary of the grant date,
except for the following: 10,271 RSUs granted to Mr. Kintiroglou on
February 24, 2021 and 26,930 RSUs granted to Ms. Slieter on June
21, 2020 which vest in three equal installments on the first three
anniversaries of the grant date.
(4)PSUs
scheduled to vest following the conclusion of a three-year
performance period based on actual performance achievement measured
against the pre-established performance metrics. The performance
period for the 2020 PSU awards ended on December 31, 2022 and for
the 2021 and 2022 PSU awards will end on December 31, 2023 and
December 31, 2024, respectively. In February 2022, the Committee
determined that the 2020 PSU awards achieved 200% performance.
Accordingly, the amount reported here for the 2020 PSU awards
represents the number of shares using the 200% performance factor.
For the 2021 and 2022 PSU awards, represents the maximum and target
number of shares, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
Proxy and Notice of Annual Meeting of Stockholders |
2023 |
EQUITY COMPENSATION PLAN INFORMATION TABLE
As of December 31, 2022, information about our equity compensation
plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares to
be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights (1)
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights (2)
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))
|
|
Plan category |
|
(a) |
|
(b) |
|
(c) |
|
Equity compensation plan approved by security holders |
|
3,685,304 |
|
$27.97 |
|
2,709,291 |
|
Equity compensation plans not approved by security
holders |
|
— |
|
— |
|
— |
|
Total |
|
3,685,304 |
|
$27.97 |
|
2,709,291 |
(1)Equity
compensation plan approved by stockholders in column (a) of the
table includes the 2016 Stock Incentive Plan of AdvanSix Inc. and
its Affiliates, as Amended and Restated. RSUs included in column
(a) of the table represent the full number of RSUs awarded and
outstanding whereas the number of shares of Common Stock to be
issued to certain participants upon vesting will be lower than what
is reflected on the table because shares are withheld to meet
employee tax withholding requirements that arise upon vesting. PSUs
included in column (a) of the table represent PSUs assuming
achievement of target performance with respect to each of the
applicable performance metrics (Average ROI and Cumulative EPS).
The number of shares earned pursuant to PSUs, if any, will be
determined and paid following completion of the three-year
performance period based on our actual performance against the
pre-established performance metrics and the rTSR modifier and such
number may be higher or lower than target depending on such
performance. Additionally, actual shares of Common Stock to be
issued to certain participants upon vesting of PSUs will be lower
than earned because shares are withheld to meet employee tax
withholding requirements that arise upon vesting.
(2)Column
(b) relates to outstanding stock options and does not include any
exercise price for RSUs or PSUs because they are settled for shares
of Common Stock on a one-for-one basis without payment of any
exercise price.
OPTION EXERCISES AND STOCK VESTED—FISCAL YEAR 2022
The following table provides additional information about the value
realized by our NEOs upon exercises of option awards and vesting of
stock awards during the fiscal year ended December 31,
2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
Named Executive
Officer
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
Value Realized
on Exercise ($)
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
Value Realized
on Vesting ($)
|
|
Erin N. Kane |
|
— |
|
|
|
|
— |
|
|
|
57,511 |
|
|
|
$ |
2,251,608 |
|
|
|
Michael Preston |
|
— |
|
|
|
|
— |
|
|
|
17,171 |
|
|
|
$ |
672,289 |
|
|
|
Achilles B. Kintiroglou |
|
— |
|
|
|
|
— |
|
|
|
5,103 |
|
|
|
$ |
185,656 |
|
|
|
Kelly Slieter |
|
— |
|
|
|
|
— |
|
|
|
9,047 |
|
|
|
$ |
299,197 |
|
|
|
Willem Blindenbach |
|
15,127 |
|
|
|
|
$ |
338,358 |
|
|
|
— |
|
|
|
$ |
— |
|
|
|
Christopher Gramm |
|
5,186 |
|
|
|
|
$ |
166,272 |
|
|
|
6,182 |
|
|
|
$ |
242,035 |
|
|
PENSION BENEFITS—FISCAL YEAR 2022
The following table provides summary information about the pension
benefits that have been earned by our NEOs under the AdvanSix
Retirement Earnings Plan (the “ASIX REP”). The ASIX REP is a
tax-qualified
defined benefit pension plan
in which a significant portion of AdvanSix U.S. employees
participate and which, as a broad-based pension plan, is subject to
tax requirements that impose dollar limitations on the benefits
that can be provided.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer |
|
Plan Name |
|
Number of Years of
Credited Service (#)
|
|
Present Value of
Accumulated Benefits ($)
|
|
Erin N. Kane |
|
ASIX REP |
|
20.1 |
|
$0 |
|
|
Michael Preston |
|
ASIX REP |
|
21.3 |
|
$0 |
|
|
Christopher Gramm |
|
ASIX REP |
|
26.0 |
|
$0 |
|
See Note 10 “Postretirement Benefit Obligations” to our
consolidated financial statements in our 2022 Form 10-K for a
discussion of our assumptions used in determining the present value
of the accumulated pension benefits.
|
|
|
|
|
|
|
|
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
ASIX REP—Summary
The ASIX REP is a tax-qualified pension plan. Participation is
limited to those employees who were active participants in the
Honeywell REP and became AdvanSix employees as of the date of the
spin. Ms. Kane, Mr. Preston and Mr. Gramm are our only NEOs who
participate in the ASIX REP.
The ASIX REP complies with tax requirements applicable to
broad-based ERISA pension plans, which impose dollar limits on the
amount of benefits that can be provided as well as dollar limits on
the amount of compensation which can be recognized. As a result,
the pensions that can be paid under the ASIX REP for higher-paid
employees represent a smaller fraction of current income than can
be paid to less highly paid employees.
Participants in the ASIX REP earn a benefit under a formula
substantially identical to the formula which applied to the
participant under the Honeywell REP, except that any benefit earned
under our Retirement Plan will be reduced by the value of benefits
accrued through the spin-off date under the Honeywell REP, which
remain the responsibility of Honeywell. The ASIX REP has multiple
formulas within it which are used to determine participants’ plan
benefits. The pension benefits of Ms. Kane, Mr. Preston and Mr.
Gramm are determined under the following formula: 6% of final
average compensation (annual average compensation for the five
calendar years out of the previous ten calendar years that produces
the highest average) multiplied by years of credited service (“RE
formula”). The resulting amount represents the lump sum payable at
termination. Compensation for purposes of the RE formula includes
base pay, short-term incentive compensation, payroll-based rewards
and recognition and lump sum incentives. The RE formula includes
annual compensation in the year in which it was paid. The amount of
compensation that may be used in calculating the RE formula is
limited by tax rules. Participants in the RE formula vested after
three years of service with Honeywell and participants continue to
earn vesting service through employment at AdvanSix. Ms. Kane, Mr.
Preston and Mr. Gramm are vested in the ASIX REP (RE formula) based
on their prior Honeywell service. There is no early retirement
subsidy. Payment of the balance in the ASIX REP (RE formula) is
made at termination in either a lump sum or in monthly annuities
depending on participant election. The overall benefit continues to
increase due to additional service and higher compensation limits;
however, due to decreases in interest rates since 2016, the value
of the overall benefit when expressed as an annuity has decreased.
Since the Honeywell qualified plan offset expressed as an annuity
is fixed at the 2016 level, the net ASIX REP benefit is $0 at
December 31, 2022 for those in the RE formula.
NONQUALIFIED DEFERRED COMPENSATION—FISCAL YEAR 2022
The AdvanSix Inc. Deferred Compensation Plan (“DCP”), adopted
effective January 1, 2018, is a nonqualified deferred compensation
plan under which designated eligible executive officers, including
our named executive officers, and directors of the Company may
elect to defer annual base salary, bonuses or director’s fees, as
applicable.
Under the DCP, employee participants may elect to defer up to a
maximum of 75% of base salary and 90% of bonuses. Participants
designate the funds (in any combination of the funds offered as
investment options under the DCP) in which their account balances
will be deemed to be invested for purposes of determining the
amount of earnings and losses to be credited to their accounts. The
DCP includes a Company stock unit fund which is only available to
non-employee director participants.
The DCP also permits the Company to make contributions to the
accounts of employee participants. For 2022, Company contributions
represent makeup plan contributions under the DCP. These makeup
contributions are calculated as follows: (i) the maximum Company
contribution that would have been provided under our tax-qualified
Savings Plan if the deferrals made under the DCP had been made
under the Savings Plan (disregarding the compensation limit
determined under the Code that applies under the Savings Plan),
minus (ii) the amount of Company contributions actually credited to
the employee participant under the Savings Plan for the applicable
year and not thereafter forfeited.
The rate of return earned on a participant’s account balance is
based on the actual performance of the funds in which he or she is
deemed invested, and the participant may change his or her choice
of funds at any time. All amounts credited under the DCP, with the
exception of any contributions which may be made by the Company,
are immediately vested. Upon a participant's death or a change in
control, unvested amounts vest in full. Participants cannot sell,
assign, hypothecate, alienate, encumber or in any way transfer or
convey in advance of receipt any amounts held in their DCP
accounts.
Under the DCP, each participant’s account will be payable in lump
sum or installments upon a scheduled distribution date or the
participant’s separation from service or death in accordance with
the participant’s elections, the terms of the DCP and subject to
Section 409A of the Code. Participants may receive a distribution
earlier than initially elected in the event of a financial
hardship. Participants may also elect to receive distributions of
their accounts in a lump sum upon a change in control.
Distributions to employee participants will be made solely in
cash.
The Board may amend or terminate the DCP at any time in accordance
with the terms of the DCP. The deferred compensation obligations
under the DCP are unsecured general obligations of the Company to
pay the deferred compensation of participants in the DCP. The
deferred compensation obligations under the DCP will rank equally
with the Company’s other unsecured and unsubordinated indebtedness
from time to time outstanding.
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Proxy and Notice of Annual Meeting of Stockholders |
2023 |
The following table reflects contributions under the DCP made by
our NEOs and AdvanSix for the fiscal year ended December 31, 2022,
earnings (the net of the gains and losses on funds, as applicable),
distributions, and the ending balance as of December 31,
2022.