UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

Filed by the Registrant  

Filed by a party other than the Registrant  

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

WORTHINGTON INDUSTRIES, INC.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

No fee required

Fee paid previously with preliminary materials

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 

 


 

 

 

 

 

Dear Fellow Shareholders:

 

On behalf of the Board of Directors and employees of Worthington Industries, Inc. (“we”, “our” and “us”), I cordially invite you to participate via live webcast in our 2022 Annual Meeting of Shareholders (the “Annual Meeting”) to be held on Wednesday, September 28, 2022, beginning at 3:00 p.m., Eastern Daylight Time.  This year’s Annual Meeting will be a virtual meeting of shareholders which means that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/WOR2022. You will not be able to attend the Annual Meeting in person.

Details of the business to be conducted at the Annual Meeting are provided in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement, which you are urged to read carefully.  If you are a registered shareholder participating in the Annual Meeting via the live webcast at www.virtualshareholdermeeting.com/WOR2022, you may revoke your proxy and vote during the Annual Meeting, even if you have previously submitted a proxy.

We have elected to take advantage of Securities and Exchange Commission (“SEC”) rules that allow us to furnish proxy materials to certain shareholders on the Internet.  On or about the date of this letter, we began mailing a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) to shareholders of record at the close of business on August 1, 2022.  At the same time, we provided those shareholders with access to our online proxy materials and filed our proxy materials with the SEC.  We believe furnishing proxy materials to our shareholders on the Internet will allow us to provide our shareholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting.  If you have received the Notice of Availability, you will not receive a printed copy of the proxy materials unless you request it by following the instructions for requesting such materials contained in the Notice of Availability.

It is important that your common shares be represented at the Annual Meeting whether or not you are personally able to participate via the live webcast. Accordingly, after reading the accompanying proxy materials, please promptly submit your proxy by telephone, Internet, mobile device or mail as described in the Proxy Statement or the Notice of Availability.

Your continuing interest in our company is greatly appreciated.

Sincerely,

JOHN P. McCONNELL

Executive Chairman

August 15, 2022

 

 

 


 

 

 

Notice of Annual Meeting of Shareholders to be Held September 28, 2022

 

Notice is hereby given that the 2022 Annual Meeting of Shareholders (the “Annual Meeting”) of Worthington Industries, Inc. (“we”, “our” and “us”) will be held at 3:00 p.m., Eastern Daylight Time, on Wednesday, September 28, 2022.  The Annual Meeting will be held virtually, meaning that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/WOR2022. You will not be able to attend the Annual Meeting in person.

The Annual Meeting is being held for the following purposes:

(1)

To elect four directors, each to serve for a term of three years to expire at our 2025 annual meeting of shareholders;

(2)

To approve the advisory resolution to approve the compensation of our named executive officers;

(3)

To ratify the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending May 31, 2023; and

(4)

To transact such other business as may properly come before the Annual Meeting.

Only shareholders of record at the close of business on the record date, August 1, 2022, are entitled to notice of, and to vote at, the Annual Meeting.

We began mailing a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) on or about August 15, 2022 to shareholders of record at the close of business on August 1, 2022.  The Notice of Availability contains instructions on how to access on the Internet our letter to shareholders, this Notice of Annual Meeting of Shareholders, our 2022 Proxy Statement, our 2022 Annual Report and the form of proxy, as well as instructions on how to request a paper copy of the proxy materials.

By Order of the Board of Directors,

 

Patrick J. Kennedy

 

 

 

Secretary

 

 

 

 

 

 

 

 

 

 

 

Columbus, Ohio

 

 

August 15, 2022

 

 

Before you vote, access the proxy materials in one of the following ways prior to the Annual Meeting:

To view ONLINE: Have available the information printed in the box found directly after “Control #” provided in your Notice of Availability and visit: www.proxyvote.com 24 hours a day, seven days a week, prior to 11:59 p.m., Eastern Daylight Time, on September 27, 2022.

To view USING YOUR MOBILE DEVICE:  Scan the QR barcode found on your proxy card or Notice of Availability.

To receive a PAPER or E-MAIL copy:

You must request a paper or e-mail copy of the proxy materials. There is no charge for requesting a copy. Please choose one of the following methods to make your request:

 

 

 

By Internet:

www.proxyvote.com

 

By Telephone:

1-800-579-1639

 

By E-Mail*:

sendmaterial@proxyvote.com

 

 

*If you request proxy materials by e-mail, please send a blank e-mail including in the subject line the information that is printed in the box found directly after “Control #” provided in your Notice of Availability. Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before September 14, 2022 to facilitate timely delivery of the proxy materials.

 

 

 

 


 

 

WORTHINGTON INDUSTRIES, INC.

200 Old Wilson Bridge Road

Columbus, Ohio 43085

(614) 438-3210

www.worthingtonindustries.com

 

2022 PROXY STATEMENT

Dated:  August 15, 2022

FOR THE ANNUAL MEETING OF SHAREHOLDERS

To Be Held On September 28, 2022

 


 


 

 

Table of Contents

 

 

 

 

 

Page

 

 

 

Proxy Statement Summary

 

1

 

 

 

General Information

 

7

 

 

 

Security Ownership of Certain Beneficial Owners and Management

 

11

 

 

 

Corporate Governance

 

14

 

 

 

Proposal 1:  Election of Directors

 

18

 

 

 

Transactions With Certain Related Persons

 

31

 

 

 

Executive Compensation

 

34

 

 

 

Compensation Discussion and Analysis

 

34

 

 

 

Compensation Committee Report

 

52

 

 

 

Fiscal 2022 Summary Compensation Table

 

53

 

 

 

Grants of Plan-Based Awards

 

55

 

 

 

Outstanding Equity Awards at Fiscal 2022
Year-End

 

57

 

 

 

Option Exercises and Stock Vested

 

60

 

 

 

Non-Qualified Deferred Compensation

 

61

 

 

 

Annual Cash Incentive Bonus Awards Granted to NEOs for Fiscal 2023

 

63

 

 

 

Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted to NEOs in Fiscal 2023

 

64

 

 

 

CEO Pay Ratio

 

65

 


 

 

Proxy Statement Summary

 

This summary highlights information about Worthington Industries, Inc., an Ohio corporation, and, where appropriate, its subsidiaries (“we”, our”, “us” or the “Company”) and certain information contained elsewhere in this 2022 Proxy Statement (this “Proxy Statement”) for our annual meeting of shareholders to be held on Wednesday, September 28, 2022, beginning at 3:00 p.m., Eastern Daylight Time (EDT) (the “Annual Meeting”). This summary does not contain all of the information that you should consider in voting the common shares, no par value, of the Company (the “common shares”) that you hold, and you should read the entire Proxy Statement carefully before voting. For more complete information regarding our performance for the fiscal year ended May 31, 2022 (“Fiscal 2022”), please review our Annual Report on Form 10-K for Fiscal 2022 (the “2022 Form 10-K”) filed with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) on August 1, 2022.  Other than the common shares, we do not have any outstanding voting securities.

Virtual Meeting:  The Annual Meeting will be a virtual meeting, which means that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast, by visiting www.virtualshareholdermeeting.com/WOR2022.  You will not be able to attend the Annual Meeting in person.

How to Cast Your Vote:

 

 

 

Even if you plan to participate in the Annual Meeting via the live webcast, please vote as soon as possible and in any event prior to 11:59 p.m. (EDT) on September 27, 2022. You can vote in one of the following ways prior to the date of the Annual Meeting:

 

 

Internet

 

Telephone

 

Mail

 

Mobile Device

 

 

 

Go to www.proxyvote.com: You can use the Internet 24 hours a day to transmit your voting instructions. Have your proxy card or Notice of
Internet Availability of Proxy Materials in hand when you access the website and follow the instructions.

 

Call 1-800-690-6903: You can use any touch-tone telephone.
Have your proxy card or Notice of
Internet Availability of Proxy Materials in hand when you call and follow the instructions.

 

If you received a printed copy

of the proxy materials, you

may submit your vote by completing, signing and dating

your proxy card and returning it in the prepaid envelope to
Vote Processing, c/o Broadridge,
51 Mercedes Way,
Edgewood, New York 11717.

 

 

 

You can view the proxy materials and vote by scanning the QR barcode on your proxy card or Notice of Internet Availability of Proxy Materials.

 

 

 

 

 

 

 

 

 

 

 

 

 

Voting Matters and Board Recommendations

Our Board of Directors (“Board”) recommends that shareholders entitled to vote at the Annual Meeting vote as follows:

 

Management Proposals

Board Vote

Recommendation

Page Reference

(for more detail)

Proposal 1:

Election of four directors, each to serve for a term of three years to expire at our 2025 annual meeting of shareholders

FOR

each nominee

of the Board

18

Proposal 2:

Approval of advisory resolution to approve the compensation of the named executive officers listed in the “Fiscal 2022 Summary Compensation Table” included in this Proxy Statement (the “NEOs”)

FOR

72

Proposal 3:

Ratification of selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending May 31, 2023 (“Fiscal 2023”)

FOR

75

 

 

Proxy Statement Summary • 2022 Proxy Statement | Worthington

1

 


 

 

Director Nominees and Continuing Directors

The following table provides summary information about the four director nominees and the seven continuing directors.  Additional information about each individual’s experience, qualifications, attributes and skills can be found in the “Proposal 1: Election of Directors” section in this Proxy Statement.

 

Name

Age

 

Director

Since

Occupation

Board Committees

Nominees Standing for Re-Election to the Board at the 2022 Annual Meeting of Shareholders

Kerrii B. Anderson

65

2010

Private Investor and Board Advisor;
Former Chief Executive Officer &
Chief Financial Officer,
Wendy’s International, Inc.

Audit; Compensation

David P. Blom

68

2019

Former President and
Chief Executive Officer,
OhioHealth Corporation

Nominating and Governance

John P. McConnell

68

1990

Executive Chairman,
Worthington Industries, Inc.

Executive*

Mary Schiavo

66

1998

Attorney, Motley Rice LLC

Audit; Nominating and Governance

Directors Whose Terms Continue Until the 2023 Annual Meeting of Shareholders

Michael J. Endres

74

1999

Senior Advisor,
Stonehenge Partners, Inc.

Executive; Compensation

Ozey K. Horton, Jr.

72

2011

Independent Advisor and
Director Emeritus,
McKinsey & Company

Compensation; Nominating and Governance

Peter Karmanos, Jr.

79

1997

Retired Executive Chairman
of the Board and Founder,
Compuware Corporation

Executive; Nominating and Governance*

Carl A. Nelson, Jr.

77

2004

Independent Business Consultant

Executive; Audit*

Directors Whose Terms Continue Until the 2024 Annual Meeting of Shareholders

John B. Blystone

69

1997

Retired Chairman of the
Board, President and
Chief Executive Officer,
SPX Corporation

Lead Independent
Director; Executive; Compensation*

Mark C. Davis

62

2011

Private Investor and
Chief Executive Officer,
Lank Acquisition Corp.

Audit

Sidney A. Ribeau

75

2000

Professor of Communications and
Former President, Howard University

Nominating and Governance

 

*Denotes Committee Chair

 

2

Worthington | 2022 Proxy Statement Proxy Statement Summary

 


 

Commitment to Shareholders / Governance

We have long operated under a strong corporate philosophy rooted in the Golden Rule with earning money for our shareholders and increasing the value of their investment as our first corporate goal.  Consistent with this philosophy and our culture, we are committed to high ethical standards and sound corporate governance practices. 

 

Strong

Corporate Culture

Culture based on long-standing corporate philosophy rooted in the Golden Rule

First corporate goal is to earn money for our shareholders and increase the value of their investment

Comprehensive Corporate Governance Guidelines and Code of Conduct

Returns to

Shareholders

Dividends have been paid every quarter since going public in 1968

Stock buy-back program

Board

Independence

10 out of 11 directors are independent – our Executive Chairman is the only management director

Audit, Compensation, and Nominating and Governance Committees are composed exclusively of directors who are independent under NYSE corporate governance standards and applicable SEC rules

Lead Independent

Director

John Blystone serves as Lead Independent Director

Mr. Blystone serves as liaison between management and the non-management directors, presides over executive sessions of non-management directors and can call meetings of non-management directors

Executive

Sessions

The non-management directors regularly meet in private without management

The Lead Independent Director presides at these executive sessions

Board Oversight of

Risk Management

The Board monitors our systematic approach to identifying and assessing enterprise risks faced by us and our business units

The Audit Committee reviews our overall enterprise risk management policies and practices, our financial, reporting and compliance risk exposures, and the delegation of risk oversight responsibilities to other Board committees

The Compensation Committee oversees compensation risk management

The Nominating and Governance Committee manages risks associated with corporate governance, Board composition and the performance of the Board, its committees and the directors

Board Oversight of

Corporate Social Responsibility

Committed to living our Philosophy, which includes being a good corporate citizen and environmental steward

The Nominating and Governance Committee oversees our corporate social responsibility policies, practices and reporting

Executive

Compensation

Strong pay-for-performance philosophy

Executive compensation is more highly leveraged than market median – base salaries are generally below market median and a higher percentage of pay is tied to at-risk incentive compensation

Goals and targets for annual and long-term incentive plans are annually reviewed and set by the Compensation Committee

The Compensation Committee is advised by an independent compensation consultant

Annual “say-on-pay” advisory vote

Limited perquisites and benefits

No defined benefit pension or SERP benefits

Change in control equity vesting requires “double trigger” – must also have termination of employment

No employment contracts or change in control arrangements for executive officers outside shareholder-approved incentive plans

Have never repriced or offered cash buy-outs of underwater stock options as plan provisions prohibit repricing without shareholder consent

Stock Ownership

Requirements

Non-management directors to hold common shares valued at five times annual cash retainer

Executive Chairman and CEO to hold common shares valued at five times annual base salary

Executive officers to hold common shares valued at a multiple of base salary, depending on position

No speculative trading or hedging permitted by our directors, officers or other key employees

 

 

 

Proxy Statement Summary • 2022 Proxy Statement | Worthington

3

 


 

Fiscal 2022 Business Performance and Executive Compensation Program Highlights

 

 

Despite many challenges, Fiscal 2022 proved to be an exceptionally strong year for us. In the face of a very tough environment that included supply chain constraints, steel price volatility, a tight labor market and inflationary cost pressures, we delivered stellar results with very strong earnings per diluted common share (“EPS”). As a result of strong demand across all of our end markets and contributions from recent acquisitions, we performed well and saw year-over-year improvements in most of our major businesses. Steel Processing performed well, even with lower inventory holding gains, while Consumer Products saw improvement despite increased labor and material costs. Building Products also experienced significant improvement in performance after a challenging fiscal year ended May 31, 2021 (“Fiscal 2021”) that was heavily impacted by the effects of COVID-19.

Management has continued to do an outstanding job addressing the lingering supply chain, labor and other challenges presented by COVID-19, which in many cases have been exacerbated by the war in Ukraine and the current inflationary environment, and has shown great discipline in executing our strategies. During Fiscal 2022, we also continued to take action to better position ourselves for the future.  Management remained focused on improving our businesses by investing in new product development and production capacity, and improving efficiencies, all with the aid of transformation and innovation efforts.  We and our M&A team added new businesses through acquisitions focusing on supplying products to the high growth electric vehicle and electricity infrastructure markets, as well as lightweighting applications for the automotive industry, all of which should contribute to our growth in the coming years.  

Consistent with our compensation philosophy, annual incentive compensation earned by our executives continued to move in the direction of our results. Due to our very strong performance, annual cash incentive bonuses for our executives were up for Fiscal 2022, with Corporate (i.e., our aggregate performance as opposed to segment or business unit performance) paying out at 200% of target, following payouts of 185% of target for Fiscal 2021 and only 75% of target for Fiscal 2020.

The strong results also had a significant positive impact on long-term performance awards for the three-fiscal-year period ended with Fiscal 2022. These awards paid out at 200% of target for Corporate, 191% of target for Steel Processing, and 200% for legacy Pressure Cylinders. This followed the three-fiscal-year period ended with Fiscal 2021, which had had similar payouts due to our strong performance in Fiscal 2021.

Our financial position remains strong, as we generated a considerable amount of cash from operations in recent years. We were able to pay most of the purchase price for the acquisitions of Shiloh Industries’ U.S. BlankLight® business and Tempel Steel Company (“Tempel”), an aggregate amount of approximately $377.3 million before closing adjustments, from existing cash. Our capital structure is also in a sound position. We have in place $200 million of long-term senior notes due 2032, $250 million of long-term senior notes due 2026, and $150 million of long-term senior notes due 2024. We also have a $500 million revolving credit facility, through August 2026, and a revolving trade accounts receivable securitization facility allowing us to borrow up to $175.0 million. These committed lines of credit had a total of $518.6 million of borrowing capacity available to be drawn as of July 29, 2022.

We have also been able to reward our shareholders by steadily increasing our quarterly dividend from $0.23 for Fiscal 2019, to $0.24 for Fiscal 2020, to $0.25 for the first, second, and third quarters of Fiscal 2021, to $0.28 for the fourth quarter of Fiscal 2021 and each quarter of Fiscal 2022, and to $0.31 for the first quarter of Fiscal 2023. In addition, we continued our stock buy-back program in Fiscal 2022, repurchasing a total of 3,235,000 common shares last year.


 

4

Worthington | 2022 Proxy Statement Proxy Statement Summary

 


 

 

 

Earned Incentive Compensation Levels

 

 

The following table shows the percentage of target compensation levels achieved under the annual cash incentive bonus program for the last five fiscal years.  

 

Fiscal Year

Performance

Payouts as Percentage of Target

Corporate

Steel Processing

Legacy Pressure Cylinders (1)

2018

Solid year, with the then second best annual EPS results

106%

103%

104%

2019

Then third best annual EPS, but weaker year-over-year results

93%

89%

82%

2020

Results were weakened due to the impact of COVID-19 in the fourth quarter

75%

63%

83%

2021

Strong year despite COVID-19 related challenges

185%

183%

166%

2022

Very strong year despite COVID-19 and other challenges

Corporate

Steel Processing

Consumer Products

Building Products

Sustainable Energy Solutions

200%

200%

168%

189%

100%

 

The following table shows the percentage of target achieved for awards under the long-term incentive program for the three-fiscal-year periods ended with the last five fiscal years.

 

Performance

Period

(Fiscal Years)

Performance

 

Corporate

 

Steel Processing

 

Legacy Pressure Cylinders (1)

2016-2018

Solid year in Fiscal 2018 (then second best reported annual EPS) following two prior then record years, but payouts were below higher target

94%

47%

47%

2017-2019

Weaker results in Fiscal 2019 kept payouts below target despite strong years in Fiscal 2018 and Fiscal 2017

48%

24%

24%

2018-2020

COVID-19 weakened results for Fiscal 2020 negatively affected entire period

0%

0%

52%

2019-2021

Strong results in Fiscal 2021 lifted results for the entire period

200%

173%

144%

2020-2022

Strong results in Fiscal 2021 and Fiscal 2022 lifted results for the entire period

200%

191%

200%

____________________________

(1)

Effective June 1, 2021, the beginning of Fiscal 2022, we separated our legacy Pressure Cylinders segment into three new segments, Consumer Products, Building Products and Sustainable Energy Solutions.

 

 

Proxy Statement Summary • 2022 Proxy Statement | Worthington

5

 


 

 

Overview of Executive Compensation Program

 

 

 

SHORT-TERM CASH

LONG-TERM INCENTIVE

PAY

ELEMENT

 

BASE

SALARY

ANNUAL

INCENTIVE

BONUS (1)

CASH

PERFORMANCE

PERFORMANCE

SHARES

RESTRICTED

COMMON

SHARES

STOCK

OPTIONS

WHO RECEIVES

NEOs and other Senior Executives

AT RISK

FORM OF

PAYMENT

Cash

Equity

TYPE OF

PERFORMANCE

Short-term emphasis

Long-term emphasis

 

PERFORMANCE

PERIOD /

VESTING PERIOD

 

Ongoing

1 year

3-year

performance period

3-year

cliff vesting

3-year

incremental vesting

(33% a year)

HOW PAY-OUT

DETERMINED

Set or
approved by
Comp.
Committee

Compensation Committee

sets targets based on metrics (below) and

potential awards. Performance

determines amount earned

Compensation Committee

determines size of award. Value

depends on price of common shares

on exercise / vesting date

 

MOST RECENT

PERFORMANCE

METRICS (2)

 

N/A

EVA (BU or Corp.) EOI/EBIT (BU)

EPS (Corp.)

EVA (Corp.)

EOI/EBIT (BU)

EPS (Corp.)

Stock Price

Stock Price

Appreciation

VALUE OF

AWARD

EARNED

N/A

Formulaic –

Performance v Targets

Formulaic –

Performance

v Targets /

Market Price of

Common Shares

Market Price x

Common Shares

(Market Price –

Exercise Price) x

Common Shares

 

 

(1)

Discretionary annual bonuses have been awarded from time to time to selected employees or groups of employees at the discretion of the Compensation Committee  

(2)

“BU” means a business unit.  “EBIT” means earnings before interest and taxes.  “EOI” means adjusted business unit earnings.  “EVA” means economic value added.  

 

 

 

 

6

Worthington | 2022 Proxy Statement Proxy Statement Summary

 


 

 

WORTHINGTON INDUSTRIES, INC.

200 Old Wilson Bridge Road

Columbus, Ohio 43085

(614) 438-3210

www.worthingtonindustries.com

 

PROXY STATEMENT

Dated:  August 15, 2022

FOR THE ANNUAL MEETING OF SHAREHOLDERS

To Be Held On September 28, 2022

 

General Information

 

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board for use at the 2022 Annual Meeting. The Annual Meeting will be a virtual meeting, which means that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting only via live webcast by visiting www.virtualshareholdermeeting.com/WOR2022. On or about August 15, 2022, we began mailing to our shareholders of record at the close of business on August 1, 2022 (the “Record Date”), a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) containing instructions on how to access the Notice of Annual Meeting of Shareholders, this Proxy Statement, the form of proxy (often referred to as a “proxy card”) and our 2022 Annual Report.

Purpose of the Annual Meeting

At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of Shareholders included with this Proxy Statement. Specifically, the shareholders will be asked to: (1) elect four directors to the Board for three-year terms to expire at our 2025 annual meeting of shareholders; (2) approve an advisory resolution to approve the compensation of the NEOs; and (3) ratify the selection of KPMG LLP (“KPMG”) as our independent registered public accounting firm for Fiscal 2023.  

Board’s Recommendations

Subject to revocation, all forms of proxy that are properly completed and timely received will be voted in accordance with the instructions contained therein.  If no instructions are given (except in the case of broker non-votes), the persons named as proxy holders will vote the common shares in accordance with the recommendations of the Board.  The Board’s recommendations are set forth together with the description of each proposal in this Proxy Statement.  In summary, the Board recommends a vote:

“FOR” the election of the Board’s nominated slate of directors (see “Proposal 1:  Election of Directors”);

“FOR” the approval of the advisory resolution to approve the compensation of the NEOs (see “Proposal 2: Advisory Vote to Approve the Compensation of the NEOs”); and

“FOR” the ratification of the selection of KPMG as our independent registered public accounting firm for Fiscal 2023 (see “Proposal 3: Ratification of the Selection of Independent Registered Public Accounting Firm”).

Shareholder Voting Rights

Only shareholders of record at the close of business on August 1, 2022 (the “Record Date”) or such shareholders’ proxies are entitled to receive notice of, and to vote at, the Annual Meeting.  As of the close of business on the Record Date, there were 49,528,843 common shares outstanding and entitled to vote.  Each shareholder is entitled to one vote on each matter voted upon at the Annual Meeting for each common share held.  Shareholders do not have cumulative voting rights in the election of directors.  All voting at the Annual Meeting will be governed by our Amended Articles of Incorporation, our Code of Regulations and the General Corporation Law of the State of Ohio.

 

General Information • 2022 Proxy Statement | Worthington

7

 


 

Registered Shareholders and Beneficial Owners

If the common shares are registered in your name directly with our transfer agent, Broadridge Corporate Issuer Solutions, Inc. (“Broadridge”), you are considered, with respect to those common shares, a holder of record (which we also refer to as a “registered shareholder”). If you hold the common shares in a brokerage account or through a bank or other holder of record, you are considered the beneficial owner of the common shares, which is often referred to as holding the common shares in “street name”.

Voting of Common Shares Held in “Street Name”

A “broker non-vote” occurs when a beneficial owner holds the common shares in “street name” through a broker, bank or other holder of record who is considered the registered shareholder with respect to the common shares of the beneficial owner, and the beneficial owner does not provide the broker, bank or other holder of record with instructions within the required timeframe before the Annual Meeting as to how to vote the common shares on “non-routine” matters.  Under the applicable sections of the New York Stock Exchange (the “NYSE”) Listed Company Manual (“NYSE Rules”), your broker, bank or other holder of record cannot vote your common shares on non-routine matters unless it receives instructions from you as to how to vote.

Proposal 1 (Election of Directors) and Proposal 2 (Advisory Vote to Approve the Compensation of the NEOs) are considered “non-routine” matters where your broker, bank or other holder of record can vote your common shares only if it receives instructions from you. Proposal 3 (Ratification of the Selection of Independent Registered Public Accounting Firm) is considered a “routine” matter.

Your broker, bank or other holder of record will send you directions on how to instruct it to vote the common shares.

Attendance and Participation at the Annual Meeting

We will host the Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/WOR2022.  You will not be able to attend the Annual Meeting in person.  

Only shareholders of record at the close of business on the Record Date may participate in and vote at the Annual Meeting.  Any shareholder may listen to the Annual Meeting.  The webcast will start at 3:00 p.m., Eastern Daylight Time, on September 28, 2022.  

Instructions on how to connect to and participate in the Annual Meeting, including how to demonstrate proof of ownership of the common shares, are posted at www.virtualshareholdermeeting.com/WOR2022.  If you do not have your 16-digit control number that is printed in the box found directly after “Control #” provided on your Notice of Availability or your proxy card (if you received a printed copy of the proxy materials), you will only be able to listen to the Annual Meeting.


 

8

Worthington | 2022 Proxy Statement General Information

 


 

 

How to Vote and Voting Deadlines

 

If you are a registered shareholder, there are several ways for you to vote your common shares:

 

Vote by Internet.

Before the Date of the Annual Meeting:  Go to www.proxyvote.com, or, using a mobile device, scan the QR barcode on your proxy card or Notice of Availability.

You can use the Internet 24 hours a day, seven days a week, to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Daylight Time, on September 27, 2022.  Have your proxy card or Notice of Availability in hand when you access the website or scan the QR barcode and follow the instructions to obtain your records and create an electronic voting instruction form.

 

During the Annual Meeting:  Go to www.virtualshareholdermeeting.com/WOR2022

You may attend the Annual Meeting via the Internet and vote during the Annual Meeting.  Have the information that is shown in the box found directly after “Control #” provided on your proxy card or Notice of Availability available and follow the instructions.

Vote By Telephone:  Call 1-800-690-6903.  You can use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Daylight Time, on September 27, 2022.  Have your proxy card or Notice of Availability in hand when you call and follow the instructions.

By Mail:  If you received a printed copy of the proxy materials, you may submit your vote by completing, signing and dating your proxy card and returning it in the prepaid envelope to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717.  Sign your name exactly as it appears on the proxy card.  Proxy cards submitted by mail must be received by Broadridge no later than September 27, 2022 to be voted at the Annual Meeting.

If you vote via the Internet (including by using a mobile device to scan the QR barcode on your proxy card or Notice of Availability and following the prompts) or by telephone, your electronic vote authorizes the named proxy holders in the same manner as if you signed, dated and returned your proxy card.  If you vote via the Internet or by telephone, do not return your proxy card.

If you are a beneficial owner of the common shares, you should have received a notice that directs you to the website where you can access our proxy materials as well as voting instructions from the broker or other nominee holding the common shares.  You should follow the voting instructions provided by your broker or nominee in order to instruct your broker or nominee on how to vote your common shares.  Please note that the voting instructions provided by your broker or nominee will have a voting deadline that is earlier than those listed above.  The availability of telephone and Internet voting will depend on the voting process of the broker or nominee.  Common shares held beneficially may not be voted by the beneficial owner during our Annual Meeting.

How to Revoke or Change Your Vote after Submitting Your Proxy

If you are a registered shareholder, you may revoke or change your vote at any time before the final vote at the Annual Meeting by:

signing and returning a new proxy card with a later date – only your latest completed, signed and dated proxy card received by September 27, 2022, will be counted;

submitting a later-dated vote by telephone or via the Internet (including by using a mobile device to scan the QR barcode on your proxy card or Notice of Availability and following the prompts) – only your latest telephone or Internet voting instructions received by 11:59 p.m., Eastern Daylight Time, on September 27, 2022, will be counted;

participating in the Annual Meeting live via the Internet and voting during the Annual Meeting; or

delivering a written revocation to our Secretary at 200 Old Wilson Bridge Road, Columbus, Ohio 43085, to be received no later than September 27, 2022.

If you are a beneficial owner of the common shares, you must contact the broker or other nominee holding your common shares and follow the instructions of the broker or other nominee for revoking or changing your vote.

 

General Information • 2022 Proxy Statement | Worthington

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Notice of Internet Availability of Proxy Materials

In accordance with rules adopted by the SEC, instead of mailing a printed copy of our proxy materials to each shareholder of record, we are permitted to furnish our proxy materials, including the letter to shareholders, Notice of Annual Meeting of Shareholders, this Proxy Statement, our 2022 Annual Report and the form of proxy, by providing access to such documents on the Internet. Generally, shareholders will not receive printed copies of the proxy materials unless they request them.

A Notice of Availability that provides instructions for accessing our proxy materials on the Internet has been mailed directly to registered shareholders. The Notice of Availability also provides instructions regarding how registered shareholders may vote their common shares on the Internet. Registered shareholders who prefer to receive a paper or e-mail copy of our proxy materials must follow the instructions provided in the Notice of Availability for requesting such proxy materials.

The Notice of Availability only identifies the items to be voted on at the Annual Meeting.  You cannot vote by marking the Notice of Availability and returning it.  The Notice of Availability provides instructions on how to cast your vote.

A notice that directs beneficial owners of the common shares to the website where they can access our proxy materials should be forwarded to each beneficial owner by the broker, bank or other holder of record who is considered the registered shareholder with respect to the common shares of the beneficial owner. Such broker, bank or other holder of record should also provide each beneficial owner of the common shares with instructions on how the beneficial owner may request a paper or e-mail copy of our proxy materials. Beneficial owners have the right to direct their broker, bank or other holder of record on how to vote their common shares by following the voting instructions they receive from their broker, bank or other holder of record.

To enroll in the electronic delivery service for future shareholder meetings, use your Notice of Availability (or proxy card, if you received a printed copy of the proxy materials) to register online at www.proxyvote.com and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years.

Quorum and Tabulation of Voting Results

Tabulation of the votes cast at the Annual Meeting will be performed by Broadridge and such tabulation will be inspected by the inspector of election appointed by the Board for the Annual Meeting.  The presence, in person or by proxy, of the holders of one-third of the outstanding common shares entitled to vote at the Annual Meeting will constitute a quorum, permitting us to conduct business at the Annual Meeting.  If you are a registered shareholder and submit a proxy, your common shares will be counted to determine whether we have a quorum even if you abstain or fail to provide voting instructions on any of the proposals described in this Proxy Statement and listed on the form of proxy.  If your common shares are held in the name of your broker or other nominee, and you do not instruct your broker or other nominee how to vote your common shares, these common shares will still be counted for purposes of determining the presence or absence of a quorum for the transaction of business if your broker or other nominee submits a proxy.

Proxy Solicitation Costs

This solicitation of proxies is made by and on behalf of the Board. In addition to mailing the Notice of Availability (or, if applicable, paper copies of this Proxy Statement, the Notice of Annual Meeting of Shareholders, the proxy card and our 2022 Annual Report) to registered shareholders as of the close of business on the Record Date, the brokers, banks and other nominees holding the common shares for beneficial owners must provide a notice as to where such beneficial owners may access our proxy materials in order that such common shares may be voted.  Solicitation may also be made by our directors, officers and other employees telephonically, electronically or by other means of communication.  Our directors, officers and employees who assist with the solicitation will not be specially compensated for those services, but they may be reimbursed for their out-of-pocket expenses incurred in connection with the solicitation.  In addition, we have retained Broadridge to aid in the solicitation of proxies with respect to common shares held by broker/dealers, financial institutions and other custodians, fiduciaries and nominees, for a fee of approximately $17,000, plus out-of-pocket expenses.

We will reimburse Broadridge, as well as brokers, banks or other holders of record, for their reasonable costs in sending proxy materials to the beneficial owners of the common shares entitled to vote at the Annual Meeting.  We will bear the costs incurred in connection with the solicitation of proxies on behalf of the Board, other than the Internet access or telephone usage fees which may be charged to shareholders.

 

 

 

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Worthington | 2022 Proxy Statement General Information

 


 

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table furnishes as of the Record Date (unless otherwise noted below), with respect to each person known to us to be the beneficial owner of more than 5% of our outstanding common shares, the name and address of such owner and the number and percentage of outstanding common shares beneficially owned (as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).

 

Name and Address of Beneficial Owner

 

Amount and Nature of

Beneficial Ownership (1)

Percent of

Outstanding

Common Shares (2)

 

John P. McConnell

 

 

 

 

 

 

 

 

200 Old Wilson Bridge Road, Columbus, OH  43085

 

 

17,336,760

 

(3)

34.9%

 

BlackRock, Inc.

 

 

 

 

 

 

 

 

55 East 52nd Street, New York, NY  10055

 

 

4,044,503

 

(4)

8.2%

 

The Vanguard Group

 

 

 

 

 

 

 

 

100 Vanguard Blvd., Malvern, PA  19355

 

 

3,316,859

 

(5)

6.7%

 

 

(1)

Except as otherwise indicated by footnote, each named beneficial owner has sole voting power and sole dispositive power over the listed common shares.

(2)

The “Percent of Outstanding Common Shares” is based on the sum of (a) 49,528,843 common shares outstanding on the Record Date and (b) the number of common shares, if any, as to which the named beneficial owner has the right to acquire beneficial ownership upon the exercise of stock options which are currently exercisable or which will first become exercisable within 60 days after the Record Date (collectively, “Currently Exercisable Options”).

(3)

Includes 12,415,982 common shares held of record by JMAC, Inc. (“JMAC”), a private investment company substantially owned, directly or indirectly, by Mr. McConnell and members of his family.  The directors of JMAC have granted Mr. McConnell sole voting and dispositive power with respect to these 12,415,982 common shares.  JMAC has the right to receive the dividends from and the proceeds from the sale of such 12,415,982 common shares.  Includes 2,428,312 common shares held of record by an independent corporate trustee in trust for the benefit of Mr. McConnell and his sister.  The trustee has voting and dispositive power; however, the trustee’s investment decisions are subject to the prior approval or disapproval of Mr. McConnell and, accordingly, Mr. McConnell may be deemed to “share” dispositive power with the trustee.  Mr. McConnell has the right to change the trustee; however, any successor trustee appointed by Mr. McConnell must be an independent corporate trustee.  Includes 8,173 common shares held by Mr. McConnell as custodian for the benefit of his son.  Includes 7,343 common shares held by Mr. McConnell’s wife as custodian for the benefit of her son.  Includes 123,000 common shares held by The McConnell Educational Foundation for the benefit of third parties, of which Mr. McConnell is one of three trustees and shares voting and dispositive power.  Mr. McConnell disclaims beneficial ownership of these 123,000 common shares.  Includes 118,000 common shares held by The McConnell Family Trust of which Mr. McConnell is co-trustee and has sole voting and dispositive power.  Includes 255,875 common shares held by the Margaret R. McConnell Trust, f/b/o Margaret Kollis of which Mr. McConnell is trustee and has sole voting and dispositive power. Includes 44,250 common shares held in the McConnell 2020 LAE Trust, an irrevocable trust for the benefit of the son of Mr. McConnell’s wife as to which she serves as the trustee.  For purposes of Rule 13d-3 under the Exchange Act, Mr. McConnell may be deemed to hold shared voting and dispositive power over such 44,250 common shares.  Includes an aggregate of 398,000 common shares held in four separate irrevocable trusts (with each irrevocable trust holding 99,500 common shares), with each such irrevocable trust having the same independent individual trustee who is not related to Mr. McConnell. The independent individual trustee has voting and dispositive power over such 398,000 common shares; however, Mr. McConnell has the right to reacquire the assets of each trust by substituting property of an equivalent value. Accordingly, Mr. McConnell may be deemed to “share” dispositive power with the independent individual trustee.  Includes 173,966 common shares subject to Currently Exercisable Options and 9,400 restricted common shares which are subject to forfeiture restrictions.  See footnote (16) to the following table for more information on the restricted common shares.  As of August 1, 2022, an aggregate of 9,415,773 common shares held by JMAC and by Mr. McConnell had been pledged as security to various financial institutions, in connection with both investment and personal loans.

(4)

Information is based on Amendment No. 12 to Schedule 13G, dated January 31, 2022, and filed with the SEC on February 1, 2022, by BlackRock, Inc. (together with its subsidiaries, “BlackRock”).  BlackRock reported sole voting power as to 3,913,028 of the common shares and sole dispositive power as to 4,044,503 of the common shares reported to be beneficially owned by BlackRock at December 31, 2021. The beneficial ownership of BlackRock may have changed prior to the printing of this Proxy Statement.

(5)

Information is based on Amendment No. 6 to Schedule 13G, dated February 9, 2022, and filed with the SEC on February 10, 2022, by The Vanguard Group (together with its subsidiaries, “Vanguard”).  Vanguard reported shared voting power as to 28,850 of the common shares, sole dispositive power as to 3,262,573 of the common shares and shared dispositive power as to 54,286 of the common shares reported to be beneficially owned by Vanguard at December 31, 2021. The beneficial ownership of Vanguard may have changed prior to the printing of this Proxy Statement.

 

Security Ownership of Certain Beneficial Owners and Management • 2022 Proxy Statement | Worthington

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The following table furnishes the number and percentage of outstanding common shares beneficially owned (as determined in accordance with Rule 13d-3 under the Exchange Act) by: (a) each of our current directors; (b) each of our director nominees; (c) each NEO; and (d) all of our current directors and executive officers as a group, in each case as of the Record Date.

 

Name of Beneficial Owner

Amount and Nature of

Beneficial Ownership (1)

Percent of

Outstanding

Common

Shares (2)

 

Theoretical Common

Shares Credited to

Bookkeeping Accounts in Our Deferred

Compensation Plans (3)

 

Kerrii B. Anderson

 

69,993

 

(4) (5)

*

 

 

6,996

 

David P. Blom

 

9,500

 

(4)

*

 

 

0

 

John B. Blystone

 

154,825

 

(4)

*

 

 

0

 

Mark C. Davis

 

34,860

 

(4)

*

 

 

0

 

Michael J. Endres

 

134,640

 

(4) (6)

*

 

 

79,826

 

Geoffrey G. Gilmore (7)

 

198,837

 

(8)

*

 

 

10,671

 

Joseph B. Hayek (7)

 

173,047

 

(9)

*

 

 

2,061

 

Ozey K. Horton, Jr.

 

37,869

 

(4)

*

 

 

0

 

Peter Karmanos, Jr.

 

78,040

 

(4) (10)

*

 

 

104,880

 

Catherine M. Lyttle (7)

 

72,734

 

(11)

*

 

 

339

 

John P. McConnell (7)

 

17,336,760

 

(12)

34.9%

 

 

0

 

Carl A. Nelson, Jr.

 

87,455

 

(4) (13)

*

 

 

0

 

Sidney A. Ribeau

 

58,505

 

(4)

*

 

 

18,244

 

B. Andrew Rose (7)

 

816,056

 

(14)

1.6%

 

 

0

 

Mary Schiavo

 

75,574

 

(4)

*

 

 

5,733

 

All Current Directors and Executive

   Officers as a Group (20 people)

 

19,573,666

 

(15) (16)

39.2%

 

 

228,750

 

 

*

Denotes ownership of less than 1% of the outstanding common shares.

(1)

Except as otherwise indicated by footnote, each named beneficial owner has sole voting and dispositive power over the listed common shares or shares such power with his or her spouse.

(2)

The “Percent of Outstanding Common Shares” is based on the sum of (a) 49,528,843 common shares outstanding on the Record Date, and (b) the number of common shares, if any, as to which the named person or group has the right to acquire beneficial ownership upon the exercise of Currently Exercisable Options.

(3)

This column lists the theoretical common shares credited to the bookkeeping accounts of the directors or executive officers participating in our deferred compensation plans.  These theoretical common shares are not included in the beneficial ownership totals.  While the participants have an economic interest in these theoretical common shares, these are not actual common shares which can be voted or disposed of.  Each participant’s only right with respect to the theoretical common shares is to receive a distribution, at the time provided by the applicable plan, of common shares equal to the number of theoretical common shares credited to his or her bookkeeping account(s).  For further information concerning the Employee Deferral Plans, please see the discussion in the section captioned “Executive Compensation –– Compensation Discussion and Analysis –– Compensation Components –– Non-Qualified Deferred Compensation” in this Proxy Statement and for further information concerning the Director Deferral Plans, please see the discussion in the section captioned “Compensation of Directors –– Director Deferral Plans” in this Proxy Statement.

(4)

Includes for each of Ms. Anderson, Mr. Blom, Mr. Davis, Mr. Endres, Mr. Horton, Mr. Karmanos, Mr. Nelson, Dr. Ribeau, and Ms. Schiavo 2,400 restricted common shares, and for Mr. Blystone 3,600 restricted common shares, which will vest on September 28, 2022.  For further information concerning the terms of the restricted common shares granted to non-employee directors, see footnote (16) below.

(5)

Includes 436 common shares held by Ms. Anderson’s spouse, who has sole voting and dispositive power as to the 436 common shares.  Beneficial ownership of these 436 common shares is disclaimed by Ms. Anderson. Also includes 2,842 common shares held in two separate trusts for Ms. Anderson’s two adult children, for which Ms. Anderson’s spouse serves as trustee. Beneficial ownership of these 2,842 common shares is disclaimed by Ms. Anderson.  

(6)

Includes 132,240 common shares held by Mr. Endres as trustee for a living trust.

(7)

The individual is an NEO listed in the “Fiscal 2022 Summary Compensation Table” in this Proxy Statement.

(8)

Includes 14,600 common shares subject to Currently Exercisable Options.  Also includes (i) 57,100 restricted common shares which will vest over time based on continued employment with us; (ii) 25,000 restricted common shares which will vest only if and when both (a) the closing price of the common shares averages $65.00 per share for 90 consecutive days during the five-year period ending on June 25, 2025, and (b) Mr. Gilmore has continuously remained our employee through June 25, 2023, or if later, the date the stock price condition is met; and (iii) 50,000 restricted common shares which will vest only if and when both (a) the closing price of the common shares equals or exceeds $65.00 per share for 90 consecutive days during the five-year period ending on September 26, 2023, and (b) Mr. Gilmore has continuously remained our employee through September 26, 2023.  See footnote (16) below for more information on the restricted common shares.  

(9)

Includes 26,901 common shares subject to Currently Exercisable Options.  Also includes (i) 71,900 restricted common shares which will vest over time based on continued employment with us; and (ii) 50,000 restricted common shares which will vest only if and when both (a) the closing price of the common shares meets or exceeds $65.00 per share for 90 consecutive days during the five-year period ending on September 25, 2024, and (b) Mr. Hayek has continuously remained our employee through September 25, 2024. See footnote (16) below for more information on the restricted common shares.  

(10)

Includes 75,640 common shares held by Mr. Karmanos as trustee for a living trust.

(11)

Includes 18,634 common shares subject to Currently Exercisable Options.  Also includes 21,700 restricted common shares which will vest over time based on continued employment with us.

 

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Worthington | 2022 Proxy Statement Security Ownership of Certain Beneficial Owners and Management

 


 

(12)

See footnote (3) to preceding table.

(13)

Includes 85,055 common shares held by Mr. Nelson as trustee for a living trust.

(14)

Includes 1,187 common shares held by Mr. Rose’s wife, who has sole voting and dispositive power as to the 1,187 common shares.  Beneficial ownership of these 1,187 common shares is disclaimed by Mr. Rose.  Also includes 10,665 common shares held by Mr. Rose as custodian for his daughter. Also includes 10,665 common shares held by his other daughter, who resides with Mr. Rose. Also includes 109,133 common shares subject to Currently Exercisable Options.  Also includes (i) 82,400 restricted common shares which will vest over time based on continued employment with us; and (ii) 175,000 restricted common shares which will vest only if and when both (a) the closing price of the common shares equals or exceeds $65.00 per share for any 90 consecutive days during the five-year period ending on September 26, 2023, and (b) Mr. Rose has continuously remained our employee through September 26, 2023.  See footnote (16) below for more information on the restricted common shares.

(15)

The number of common shares shown as beneficially owned by our current directors and executive officers as a group includes 377,469 common shares subject to Currently Exercisable Options and 684,700 restricted common shares.  See footnote (16) below for more information on the restricted common shares.  The number shown does not include any common shares issuable in connection with the performance shares awarded to NEOs and other executive officers, as to which the performance period has not ended, and the applicable vesting dates have not yet occurred.  The number of common shares shown for all current directors and executive officers as a group includes the common shares beneficially owned by four executive officers not individually identified.

(16)

The restricted common shares granted to our executive officers and non-employee directors are held in escrow by us and may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the restrictions thereon have lapsed.  Each holder of restricted common shares may exercise any voting rights associated with the restricted common shares during the restriction period.  In addition, any dividends or distributions paid with respect to the common shares underlying the restricted common shares will be held by us in escrow during the restriction period and, at the end of the restriction period, will be distributed or forfeited in the same manner as the restricted common shares with respect to which they were paid. For further information regarding the restricted common shares granted to our executive officers and non-employee directors, please see the tables and accompanying narrative discussion in the “Executive Compensation” and “Compensation of Directors — Equity Grants” sections of this Proxy Statement. Restricted common shares held by executive officers not named in this table are not listed individually.

 

Security Ownership of Certain Beneficial Owners and Management • 2022 Proxy Statement | Worthington

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Corporate Governance

 

 

Corporate Governance Guidelines

Upon the recommendation of the Nominating and Governance Committee, in accordance with applicable NYSE Rules, the Board has adopted the Corporate Governance Guidelines to promote the effective functioning of the Board and its committees and to reflect our commitment to high standards of corporate governance.  The Board, with the assistance of the Nominating and Governance Committee, periodically reviews the Corporate Governance Guidelines to ensure they comply with all applicable requirements.

The Corporate Governance Guidelines are available on the “Governance” page of the “Investors” section of our website located at www.worthingtonindustries.com.

Code of Conduct

In accordance with applicable NYSE Rules and the applicable rules and regulations of the SEC (the “SEC Rules”), the Board adopted the Worthington Industries, Inc. Code of Conduct (the “Code of Conduct”) to serve as the ethical and legal standards for our directors, officers and employees.  The Code of Conduct reinforces our commitment to adhere to high standards of business ethics.  The Code of Conduct also establishes ethical principles by which our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions are expected to conduct themselves in carrying out their duties and responsibilities. The Code of Conduct is available on the “Governance” page of the “Investors” section of our website located at www.worthingtonindustries.com.

Director Independence

Pursuant to the Corporate Governance Guidelines, a director is determined to be an independent director if he or she is independent of management and has no material relationship with us, either directly or indirectly as a partner, shareholder or officer of an entity that has such a relationship with us, as affirmatively determined by the Board.  The Board observes all additional criteria for independence established by the NYSE or required under SEC Rules or other applicable laws and regulations.

The Board has been advised of the nature and extent of any direct or indirect personal and business relationships between us and each director and director nominee or any entities for which any director or director nominee is a partner, officer, employee or shareholder.  The Board has reviewed, considered and discussed such relationships, and the compensation which each director or director nominee has received, directly or indirectly, from us, in order to determine whether each director and director nominee meets the independence requirements of the Corporate Governance Guidelines, the applicable NYSE Rules and the applicable SEC Rules.  The Board has affirmatively determined that (a) none of Kerrii Anderson, David Blom, John Blystone, Mark Davis, Michael Endres, Ozey Horton, Jr., Peter Karmanos, Jr., Carl Nelson, Jr., Sidney Ribeau or Mary Schiavo (each, an “Independent Director” and collectively, the “Independent Directors”) have any relationship with us, either directly or indirectly, including, without limitation, any commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship, which: (i) interfered, interferes, or may interfere, with his or her independence from management and us or the exercise of his or her independent judgment, (ii) would be inconsistent with a determination of independence under applicable NYSE Rules and SEC Rules, or (iii) would impair his or her independence under the Corporate Governance Guidelines; and (b) each of the Independent Directors qualifies as an “Independent Director” under the Corporate Governance Guidelines.  As required by applicable NYSE Rules, the Independent Directors represent a majority of our directors.  John P. McConnell does not qualify as independent under applicable NYSE Rules or SEC Rules or the Corporate Governance Guidelines because he is our executive chairman.

 

Barring any unusual circumstances, the Board has determined that a director’s independence would not be impaired if: (a) the director is an executive officer or an employee (or his or her immediate family member is an executive officer or an employee) of a company that makes payments to, or receives payments from, us for property or services performed in the ordinary course of business in an amount which, in any single fiscal year, does not exceed the greater of $1,000,000 or 2% of such other company’s consolidated gross revenues; (b) we make contributions to a scholastic or charitable tax-exempt organization for which the director (or his or her immediate family member) serves as either a member of the board of directors (or similar governing body) or an officer if the contributions, in any single fiscal year, do not exceed the greater of $500,000 or 1% of the total contributions received by that tax-exempt organization during such fiscal year; or (c) we use facilities (dining facilities, clubs, etc.) in which the director is a greater than 5% owner if charges to us are consistent with charges paid by unrelated third parties and are fair, reasonable and consistent with those for similar services available at similar facilities, as long as the charges do not reach other thresholds under applicable NYSE Rules which would disqualify a director from being independent.


 

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Worthington | 2022 Proxy Statement Corporate Governance

 


 

 

The Board specifically considered a number of circumstances in the course of reaching the conclusion that the current Independent Directors qualify as independent under the Corporate Governance Guidelines as well as applicable NYSE Rules and SEC Rules, including the relevant relationships described below in the section captioned “Transactions With Certain Related Persons” in this Proxy Statement.

Nominating Procedures

The Board’s Nominating and Governance Committee has responsibility for providing oversight on a broad range of issues surrounding the composition and operation of the Board, including identifying candidates qualified to become directors and recommending director nominees to the Board.

When considering candidates for the Board, the Nominating and Governance Committee evaluates the entirety of each candidate’s credentials but does not have specific eligibility requirements or minimum qualifications which must be met by a Nominating and Governance Committee-recommended nominee and has not adopted a formal policy with regard to the consideration of diversity in identifying director nominees.  The Nominating and Governance Committee considers those factors it deems appropriate, including, but not limited to, independence, judgment, skill, diversity, strength of character, ethics and integrity, experience with businesses or organizations of comparable size or scope, experience as an executive of or adviser to public and private companies, experience and skill relative to other Board members, specialized knowledge or expertise, and the desirability of the candidate’s membership on the Board and any committees of the Board.  Depending on the current needs of the Board, the Nominating and Governance Committee may weigh certain factors more or less heavily.  The Nominating and Governance Committee does, however, believe that all members of the Board should have strong character and integrity, a reputation for working constructively with others, sufficient time to devote to Board matters, and no conflict of interest that would interfere with his or her performance as a director.

While the Board and the Nominating and Governance Committee do not have specific eligibility requirements and do not, as a matter of course, weigh any of the factors they deem appropriate more heavily than others, both the Board and the Nominating and Governance Committee believe that, as a group, the directors should have diverse backgrounds and qualifications.  We believe that the members of the Board, as a group, have such backgrounds and qualifications.

The Nominating and Governance Committee considers candidates for the Board from any reasonable source, including shareholder recommendations, but does not evaluate candidates differently based on the source of the recommendation.  The process for seeking and vetting additional director candidates is ongoing and is not dependent upon the existence of a vacancy on the Board.  Accordingly, the Board believes that this ongoing identification of qualified candidates functions as an appropriate director succession plan.  Pursuant to its charter, the Nominating and Governance Committee has the authority to retain consultants and search firms to assist with the process of identifying and evaluating director candidates and to approve the fees and other retention terms for any such consultant or search firm.  The Nominating and Governance Committee has never used a consultant or search firm for such purpose, and, accordingly, we have paid no such fees.

 

Shareholders may recommend director candidates for consideration by the Nominating and Governance Committee by sending the recommendation to the Chair of the Nominating and Governance Committee, in care of our Secretary, to our executive offices at 200 Old Wilson Bridge Road, Columbus, Ohio 43085.  The recommendation must include the candidate’s name, age, business address, residence address and principal occupation.  The recommendation must also describe the qualifications, attributes, skills or other qualities possessed by the recommended director candidate.  A written statement from the candidate consenting to serve as a director, if elected, and a commitment by the candidate to meet personally with Nominating and Governance Committee members must accompany any such recommendation.


 

Corporate Governance • 2022 Proxy Statement | Worthington

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The Board, taking into account the recommendations of the Nominating and Governance Committee, selects nominees for election as directors at each Annual Meeting.  In addition, shareholders wishing to nominate directors may do so, provided they comply with the nomination procedures set forth in the Code of Regulations and applicable SEC Rules.  In order to nominate an individual for election as a director at a meeting, a shareholder must give written notice of the shareholder’s intention to make such nomination.  The notice must be sent to our Secretary, and either delivered in person to, or mailed to and received at, our principal executive offices at 200 Old Wilson Bridge Road, Columbus, Ohio 43085 not less than 14 days or more than 50 days prior to any meeting called for the election of directors.  However, if notice or public disclosure of the date of the meeting is given or made less than 21 days prior to the meeting, the shareholder notice must be received by our Secretary not later than the close of business on the seventh day following the day on which notice of the date of the meeting was mailed or publicly disclosed.  Our Secretary will deliver any shareholder notice received in a timely manner to the Nominating and Governance Committee for review.  Each shareholder notice must include the following information as to each individual the shareholder proposes to nominate for election or re-election as a director: (a) the name, age, business address and, if known, residence address of the proposed nominee; (b) the principal occupation or employment of the proposed nominee; (c) the number of common shares beneficially owned by the proposed nominee; and (d) any other information relating to the proposed nominee that is required to be disclosed concerning nominees in proxy solicitations under applicable SEC Rules, including the individual’s written consent to be named in the proxy statement as a nominee and to serve as a director, if elected.  The nominating shareholder must also provide (i) the name and address of the nominating shareholder; and (ii) the number of common shares beneficially owned by the nominating shareholder.  No individual may be elected as a director unless he or she has been nominated by a shareholder in the manner described above or by the Board or the Nominating and Governance Committee.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board is currently comprised of John Blystone (Chair), Kerrii Anderson, Michael Endres and Ozey Horton, Jr. No member of the Compensation Committee is a present or past employee or officer of ours.  During Fiscal 2022 and through the date of this Proxy Statement, none of our executive officers has served on the board of directors or compensation committee (or other committee performing equivalent functions) of any other entity, whose executive officers served on the Board or Compensation Committee.

Communications with the Board

The Board believes it is important for shareholders and other interested persons to have a process by which to send communications to the Board and its individual members, including the Lead Independent Director.  Accordingly, shareholders and other interested persons who wish to communicate with the Board, the non-management directors as a group, the Independent Directors, as defined by the Corporate Governance Guidelines and applicable NYSE Rules as a group, the Lead Independent Director or any other individual director may do so by addressing such correspondence to the name(s) of the specific director(s), to the “Non-Management Directors” as a whole, to the “Independent Directors” as a whole or to the “Board of Directors” as a whole, and sending it in care of our Secretary, to our executive offices at 200 Old Wilson Bridge Road, Columbus, Ohio 43085.  The mailing envelope must contain a clear notation indicating that the enclosed correspondence is a “Shareholder/Interested Person – Non-Management Director Communication”, “Shareholder/Interested Person – Independent Director Communication”, “Shareholder/Interested Person – Board Communication”, “Shareholder/Interested Person – Lead Independent Director Communication”, or “Shareholder/Interested Person – Director Communication”, as appropriate.  All such correspondence must identify the author as a shareholder or other interested person (identifying such interest) and clearly indicate whether the communication is directed to all members of the Board, to the “Non-Management Directors” as a whole, to the “Independent Directors” as a whole or to a certain specified individual director(s).  Copies of all such correspondence will be circulated to the appropriate director(s).  Correspondence marked “personal and confidential” will be delivered to the intended recipient(s) without opening.  There is no screening process in respect of communications from shareholders or other interested persons. The process for forwarding communications to the appropriate Board member(s) has been approved by the Independent Directors.

 

Questions, complaints and concerns may also be submitted to our directors through our Worthington Industries Code of Conduct & Ethics Line website at www.Worthington.EthicsPoint.com or by calling 877-263-9893 inside the United States and Canada.


 

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Worthington | 2022 Proxy Statement Corporate Governance

 


 

 

Corporate Citizenship and Sustainability Highlights

In addition to our commitment to high ethical standards and sound corporate governance practices, which are summarized in the “Commitment to Shareholders / Governance” section in this Proxy Statement, we are dedicated to responsible corporate citizenship. Although our approach to corporate citizenship is ever evolving, our primary focus remains our people, our community and our environmental footprint. We are constantly seeking to improve on and rely on our Philosophy rooted in the Golden Rule to guide us through all aspects of corporate citizenship and sustainability.

In line with our people-first Philosophy, our employees have always been, and will always be, our most important asset. As such, we are continually focused on creating and maintaining a strong corporate culture.  Our culture provides employees with opportunities for personal and professional development, as well as community engagement, all of which we believe contribute to our overall success. We have repeatedly been recognized as a top place to work and we offer our employees competitive pay and above-market benefits, as compared to others in our industry, all while focusing on safety, wellness, and promoting a diverse and inclusive culture.

Our Philosophy guides and encourages us to practice good citizenship which is reflected in our employees’ efforts in our communities. Through financial contributions to not-for-profit organizations and volunteering, we are working to improve the quality of life in the communities where we live and work. We believe that together, better is possible at work and in our communities.  

We have always made protecting our people and the environment a top priority. We have demonstrated our commitment to environmentally responsible operations by conforming to international standards for environmental management (ISO 14001) and reducing our impact on the environment in multiple areas of our global business. In addition, we have sought continuous improvement in our health and safety programs, which follow ISO 45001 standards, and regularly have an industry-leading safety record.  

For more details on our corporate citizenship and sustainability efforts, please see our annual Corporate Citizenship and Sustainability Report available on our website at https://worthingtonindustries.com/Sustainability-Report.

 

 

 

 

Corporate Governance • 2022 Proxy Statement | Worthington

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Proposal 1:  Election of Directors

 

There are currently 11 directors – four in the class whose terms expire at the Annual Meeting and who are proposed to be re-elected for terms expiring at the Annual Meeting of Shareholders in 2025; four in the class whose terms expire at the Annual Meeting of Shareholders in 2023; and three in the class whose terms expire at the Annual Meeting of Shareholders in 2024.  

The Board proposes that the four director nominees named in the following summary, each of whom was unanimously recommended by the Nominating and Governance Committee, be re-elected as directors at the Annual Meeting.  Each individual elected as a director at the Annual Meeting will hold office for a three-year term, expiring at the Annual Meeting of Shareholders in 2025, and until his/her successor is duly elected and qualified, or until his/her earlier death, resignation or removal from office.  The individuals named as proxy holders in the form of proxy solicited by the Board intend to vote the common shares represented by the proxies received under this solicitation for the Board’s nominees, unless otherwise instructed on the form of proxy.  If any nominee becomes unable to serve or for good cause will not serve as a candidate for election as a director, the individuals designated to vote the proxies will have full discretion to vote the common shares represented by the proxies they hold for the election of the remaining nominees and for the election of any substitute nominee designated by the Board.  The Board has no reason to believe that any of the Board’s nominees will be unable to serve or for good cause will not serve as a director if elected.

Information Concerning Nominees and Continuing Directors

The information set forth in the following summary, concerning the age, principal occupation, other affiliations and business experience of each director has been furnished to us by such director as of August 1, 2022.  Except where otherwise indicated, each director has had the same principal occupation for the last five years.  There are no family relationships among any of our current directors, director nominees and executive officers.


 

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Nominees Standing for Re-Election to the Board at the 2022 Annual Meeting

 

 

Kerrii B. Anderson

 

Age 65

Director since 2010

 

 

Kerrii B. Anderson has served continuously as a director of the Company since 2010 and is a member of the Audit Committee and the Compensation Committee.  Ms. Anderson has been a private investor and board advisor since September 2008.  Prior to that time, she served as Chief Executive Officer and President of Wendy’s International, Inc. (now known as The Wendy’s Company), a restaurant operating and franchising company, from November 2006 until September 2008 when that company merged with a subsidiary of Triarc Companies, Inc. to form Wendy’s/Arby’s Group, Inc.  She served as a director of Wendy’s International, Inc. from 2001 until September 2008, and as Wendy’s Interim Chief Executive Officer and President from April to November 2006 and its Executive Vice President and Chief Financial Officer from 2000 to April 2006.  Previously, Ms. Anderson served as Senior Vice President and Chief Financial Officer of M/I Schottenstein Homes, Inc. (now known as M/I Homes, Inc.), a builder of single-family homes, from 1987 to 2000. Ms. Anderson has served as a member of the Board of Directors of Laboratory Corporation of America Holdings since May 2006, where she is Chair of its Audit Committee and a member of its Nominating and Governance Committee.  She joined the Board of Directors of Abercrombie & Fitch Co. in February 2018 and is the Chair of its Audit Committee and a member of its Nominating and Governance Committee.  She also joined the Board of Directors of The Sherwin-Williams Company in April 2019 and has chaired its Compensation Committee since April 2021.  Previously, she served as a member of the Board of Directors of Chiquita Brands International, Inc. from 2009 to January 2015, including service as Chairwoman of the Board from October 2012 to January 2015, as Chair of its Nominating and Governance Committee and as a member of its Audit Committee until January 2015 when Chiquita was acquired by Cavendish Global Limited and became a private company; and as a member of the Board of Directors of P. F. Chang’s China Bistro, Inc. from 2009 until July 2012 when P.F. Chang’s was acquired by Wok Acquisition Corp.  Ms. Anderson chairs the Finance Committee of The Columbus Foundation and is a member of the Board of Directors of OhioHealth Corporation, where she is Chair of its Executive Compensation Committee.  Ms. Anderson has a strong record of leadership in operations and strategy. She is a Certified Public Accountant and qualifies as an “audit committee financial expert”, as defined by applicable SEC Rules, given her experience as Chief Executive Officer and Chief Financial Officer of Wendy’s and Chief Financial Officer of M/I Schottenstein Homes. Ms. Anderson received a Bachelor of Arts from Elon University and a Master of Business Administration from the Duke University Fuqua School of Business. She has extensive corporate governance experience through her service on other public company boards.  Her extensive experience in accounting and financial reporting and analysis and prior experience as a chief executive officer of a public company and chief financial officer of multiple public companies, in addition to other public company board service, make Ms. Anderson a valuable asset to the Board and its various committees, and well qualified to continue to serve on the Board.  Ms. Anderson also recently received an NACD Certification in Cybersecurity Oversight from Carnegie Mellon University.

 

 

 

 

 

 

 

David P. Blom

 

Age 68

Director since 2019

 

 

David P. Blom has served continuously as a director of the Company since June 2019 and is a member of the Nominating and Governance Committee. Mr. Blom served as President and Chief Executive Officer of OhioHealth Corporation, a not-for-profit, healthcare system in central Ohio, from March 2002 until his retirement in June 2019. Mr. Blom previously served as President of OhioHealth’s central Ohio hospitalsGrant Medical Center, Riverside Methodist Hospital and Doctors Hospitalwhile also serving as Executive Vice President and Chief Operating Officer of OhioHealth.  Mr. Blom currently serves as a member of the Board of Directors for several organizations, including Healthy Roster since 2017, Vizient Inc. since 2011 and Kimball Midwest Advisory Council since 2015. Mr. Blom previously served on the Board of Directors of The Columbus Foundation from 2011 to 2017 and Dominion Homes, Inc. from 2006 to 2009.  Mr. Blom holds a Master of Health Services Administration in Healthcare Administration from George Washington University, and a Bachelor of Arts in Business Administration from The Ohio State University. Mr. Blom has a track record of achievement and a solid understanding of complex issues, particularly those facing healthcare delivery. He has expertise in leading strategic initiatives, managing and developing human capital, improving profitability, and improving quality of care and customer experience, which enables him to bring a unique and valuable perspective to the Board, and makes him well qualified to continue to serve on the Board.

 

 

 

 

 


 

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John P. McConnell

 

Age 68

Director since 1990

 

 

John P. McConnell has served as our Executive Chairman since September 2020, as a director of the Company continuously since 1990, and as Chairman of the Board since 1996.  He served as our Chief Executive Officer from June 1993 to September 2020 and in various positions with us from 1975 to June 1993.  Mr. McConnell also serves as the Chair of the Executive Committee of the Board.  He was formerly a director of OhioHealth Corporation and had served as its Chairman.  Mr. McConnell brings solid public company and overall management and operations experience as a Chief Executive Officer and Chairman of the Board.  In addition, in his more than 40 years of service to us, Mr. McConnell has served in various roles spanning not only executive management, but prior to that, time in production, sales, human resources and management at plant, business unit and corporate levels, making him well qualified to continue to serve on the Board.

 

 

 

 

 

 

Mary Schiavo

 

Age 66

Director since 1998

 

 

Mary Schiavo has served continuously as a director of the Company since 1998 and is a member of the Audit Committee and the Nominating and Governance Committee.  Ms. Schiavo has been an attorney with the law firm of Motley Rice LLC since October 2003.  Ms. Schiavo has been employed by CNN as an analyst and on-air commentator since calendar year 2014.  Ms. Schiavo was an attorney with a law firm in Los Angeles, California, from 2001 to October 2003.  Ms. Schiavo served as a professor at The Ohio State University, College of Engineering, Department of Aerospace Engineering and Aviation and School of Public Policy and Management and also as a Consultant for NBC News from 1997 to 2002. Ms. Schiavo served as Inspector General for the U.S. Department of Transportation for six years, where she had auditing and oversight responsibility over a multi-billion dollar government agency; Assistant Secretary of Labor of the U.S. for one year; a White House Fellow for one year; and was an attorney with the U.S. Department of Justice for seven years.  Ms. Schiavo has gained in-depth knowledge of our business and structure from her more than 20 years of service as a director.  Ms. Schiavo received a Bachelor of Arts from Harvard University, a Master of Arts degree from The Ohio State University, and a Juris Doctor degree from New York University. She was previously an elected director of the Harvard University Alumni Association and a member of the President’s Council on Integrity and Efficiency in Government and the President’s Commission on White House Fellowships.  Ms. Schiavo’s legal and governmental experience, together with her leadership and management skills, enable her to bring a unique and valuable perspective to the Board and make her well qualified to continue to serve on the Board.

 

 

Directors Whose Terms Continue Until the 2023 Annual Meeting of Shareholders

 

Michael J. Endres

 

Age 74

Director since 1999

 

 

Michael J. Endres has served continuously as a director of the Company since 1999 and is a member of the Executive Committee and the Compensation Committee.  Mr. Endres serves as Senior Advisor to Stonehenge Partners, Inc., a private equity investment firm he co-founded in August 1999.  His duties include, among other things, providing advice related to specific company financial characteristics, balance sheet and income statement analysis, as well as industry growth rates and trends, and managing the acquisition and disposition of the firm’s investments.  Mr. Endres served as a director of Huntington Bancshares Incorporated from April 2003 to April 2018.  Mr. Endres served as a director of W.W.Williams Company, a privately-held company, from October 2011 to 2016, and currently serves as a director of TRI-W Group (successor to W.W. Williams Company).  He has been a director and Chairman of Conterra AG, a privately-held company, since 2014; and Calibre Group LLC, a privately-held company, since 2015.  Mr. Endres served as a director of Tim Hortons Inc. from 2006 until December 2014 (when it was acquired by Restaurant Brands International), where he was Chair of its Audit Committee and a member of its Executive Committee.  Mr. Endres received a Bachelor of Science from Miami University. Mr. Endres has a depth of experience in equity investing, business development, strategic initiatives and acquisitions, financial analysis, leadership and management, and is a director of various companies.  This experience, along with his financial expertise and his history as a director with the Company, make him well suited to serve on the Board.

 

 

 

 

 

 

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Ozey K. Horton, Jr.

 

Age 72

Director since 2011

 

 

Ozey K. Horton, Jr. has served continuously as a director of the Company since 2011 and is a member of the Compensation Committee and the Nominating and Governance Committee.  He is an independent advisor and serves as Director Emeritus of McKinsey & Company, a management consulting firm, from which he retired in February 2011.  Prior to that time, Mr. Horton served as a Director in the Atlanta office of McKinsey & Company from 1981 through February 2011.  Over the years, Mr. Horton led numerous corporate growth, strategic, mergers and acquisitions, and performance improvement initiatives at global clients across a range of industries — especially in the basic industrials space (such as metals and mining; pulp, paper and packaging; chemicals; and energy). He has also led several practices within McKinsey & Company: as founder of the global pulp, paper, and packaging practice; co-leader of the global basic materials practice; and leader of the global operations practice within the energy and materials sector.  Prior to his service with McKinsey & Company, Mr. Horton had early career experiences in manufacturing, corporate development and project engineering.  Mr. Horton has served as a director of Louisiana-Pacific Corporation, a global leader in engineered wood products, since September 2016 where he currently serves as a member of its Finance & Audit Committee and its Nominating and Corporate Governance Committee.  In 2018, he became a director of Rubicon Limited, which produces genetic tree seedling products. Rubicon Limited became ArborGen Holdings in 2019. Mr. Horton serves on the Dabbagh Group Holding Co. Ltd. Advisory Board.  He also serves as a member of the MUSC Hollings Cancer Center Advisory Board, and the Liberty Fellows Senior Advisor Group.  He formerly served as a member of the Metso Corporation Board and The Board of Visitors of the Pratt School of Engineering/Duke University.  Mr. Horton has extensive experience working in Europe, South America, India and Asia.  Mr. Horton has a Bachelor of Science in Engineering in civil and environmental engineering from Duke University and a Master of Business Administration from the Harvard Business School. Mr. Horton’s wide-ranging experience working with manufacturing and other companies, both domestically and globally, provides unique expertise to the Board, and all of these attributes make him well suited to serve on the Board.

 

 

 

 

 

 

Peter Karmanos, Jr.

 

Age 79

Director since 1997

 

 

Peter Karmanos, Jr. has served continuously as a director of the Company since 1997, is Chair of the Nominating and Governance Committee and is a member of the Executive Committee.  Mr. Karmanos founded Compuware, a software development company, in 1973.  He served as Chairman of the Board, Chief Executive Officer and a director of Compuware Corporation from its founding until June 2011.  He continued to serve as Executive Chairman of the Compuware board of directors until March 2013, when he resigned from that board.  Mr. Karmanos has the entrepreneurial spirit that built a billion-dollar company from a start-up and the business acumen of the Chairman and Chief Executive Officer of an S&P 500 corporation.  Mr. Karmanos is a Partner in MadDog Technology, LLC, a privately-held company that focuses on creating and operating cloud-powered software businesses.  Mr. Karmanos also served as a director for Taubman Centers, Inc. from 2000, and was a member of its Compensation Committee, until January 2018 when he resigned from that board.  He serves as a director for the Barbara Ann Karmanos Cancer Institute, Detroit Renaissance, and New Detroit Coalition, and on the Board of Governors for the National Hockey League. Mr. Karmanos has a wealth of public company management and information technology experience.  This includes extensive skill and background dealing with the growth, operation and management of a large public company as its co-founder and Chairman of the Board. In addition, his skills and expertise in information technology bring valuable insight to the Board.  All of these attributes make him well qualified to serve on the Board.

 

 

 

 

 

 

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Carl A. Nelson, Jr.

 

Age 77

Director since 2004

 

 

Carl A. Nelson, Jr. has served continuously as a director of the Company and the Chair of the Audit Committee since 2004 and is a member of the Executive Committee.  Mr. Nelson was a partner with Arthur Andersen, LLP and retired in February 2002 after 31 years of service.  Mr. Nelson had served as Managing Partner of the Arthur Andersen Columbus, Ohio office, and was the leader of the firm’s consulting services for the products industry in the United States.  Currently, Mr. Nelson serves on the Board of Directors of Advanced Drainage Systems, Inc., a leading manufacturer of thermoplastic corrugated pipe, where he is Chair of its Compensation Committee.  Mr. Nelson is a Certified Public Accountant (retired) and a member of The Ohio Society of Certified Public Accountants and the American Institute of Certified Public Accountants.  Mr. Nelson received his Bachelor of Science in Accounting from The Ohio State University and a Master of Business Administration from the University of Wisconsin.  Mr. Nelson has taught in the MBA and executive education programs at The Ohio State University and is a member of the Dean’s Advisory Council for the Fisher College of Business at The Ohio State University.  Mr. Nelson has significant public company accounting and financial expertise and qualifies as an “audit committee financial expert”, as defined by applicable SEC Rules. Mr. Nelson has vast experience as a business consultant on a variety of projects involving areas such as large-scale technology implementation, defining strategic initiatives, strategic planning and projects with significant change requirements.  All of these attributes make Mr. Nelson well suited to serve on the Board.

 

 

 

 

Directors Whose Terms Continue Until the 2024 Annual Meeting of Shareholders

 

John B. Blystone

 

Age 69

Director since 1997

 

 

John B. Blystone has served continuously as a director of the Company since 1997 and as the Lead Independent Director since January 2007.  He is the Chair of the Compensation Committee and a member of the Executive Committee.  Mr. Blystone served as Chairman of the Board, President and Chief Executive Officer of SPX Corporation, a global provider of technical products and systems, industrial products and services, flow technology, cooling technologies and services and service solutions, from December 1995 to December 2004, when he retired.  From 1991 to 1995, Mr. Blystone served in various managerial and operating roles with General Electric Company.  Mr. Blystone served as Chairman of the Board of Freedom Group, Inc., which manufactures and markets firearms, ammunition and related products, from August 2010 to March 2012.  Mr. Blystone serves as a director for Blystone Consulting, LLC and as General Partner of Blystone Capital Partners.  Mr. Blystone graduated from the University of Pittsburgh. Mr. Blystone has extensive business experience in managing and operating both domestic and international operations, including as a chief executive officer of a large public company.  He has expertise in acquisitions, financial and business analysis, and in generally managing issues that face a large public company.  Mr. Blystone’s business acumen, his long service on our Board, and his collegial style and leadership resulted in his election as the Lead Independent Director of the Company and make him well qualified to serve on the Board.

 

 

 

 

 

 

Mark C. Davis

 

Age 62

Director since 2011

 

 

Mark C. Davis has served continuously as a director of the Company since 2011 and is a member of the Audit Committee.  Mr. Davis is a private investor and the Chief Executive Officer of Lank Acquisition Corp., which invests in minority and majority positions in public and private companies.  Prior to forming Lank Acquisition Corp. in 2007, Mr. Davis spent 20 years in a variety of senior investment banking positions.  From 1996 to 2003, Mr. Davis was a senior executive at JPMorgan Chase where he began as Head of the Merger and Acquisition Group.  He became Head of General Industry Investment Banking in 2000 and was also Co-Head of Investment Banking Coverage which comprised all of JPMorgan Chase’s corporate clients, and was named Vice Chairman of Investment Banking in 2002.  Mr. Davis holds a Master of Business Administration from the Tuck School of Business and a Bachelor of Arts from Dartmouth College. Mr. Davis’ financial knowledge and depth of experience in equity investing, strategic matters, acquisitions, financial analysis and investment banking make him well qualified to serve on the Board, and qualify him as an “audit committee financial expert”, as defined by applicable SEC Rules.

 

 

 

 

 

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Sidney A. Ribeau

 

Age 75

Director since 2000

 

 

Sidney A. Ribeau has served continuously as a director of the Company since 2000 and is a member of the Nominating and Governance Committee.  Since October 2013, Dr. Ribeau has served as Professor of Communications for Howard University, and he also served as President of Howard University from August 2008 to October 2013.  Dr. Ribeau served as President of Bowling Green State University for more than 13 years prior to that time.  Dr. Ribeau served as a Trustee on the Teachers Insurance and Annuity Association for 16 years.  He was a member of TIAA’s Human Resources Committee, Nominating and Governance Committee and Corporate Governance and Social Responsibility Committee.  Dr. Ribeau has previously served on the Boards of Directors of Convergys Corporation from 2001 through 2008 and The Andersons, Inc. from 1997 through 2008.  Dr. Ribeau received his Bachelor of Arts. from Wayne State University and his Master and Doctorate from the University of Illinois. Dr. Ribeau brings extensive experience in managing the issues that face large public institutions.  His background as the leader of a billion-dollar public institution and as an educator and administrator enables him to provide insight relative to management, educational, financial, human resources and public policy matters and make him well qualified to serve on the Board.

 

 

 

 

 

Required Vote and Board’s Recommendation

Under Ohio law and our Code of Regulations, the four nominees for election to the Board receiving the greatest number of votes “FOR” their election will be elected as directors of the Company.

Except in the case of broker non-votes, common shares represented by properly completed and timely received forms of proxy will be voted “FOR” the election of the Board’s nominees, unless authority to vote for one or more of the nominees is withheld.  Common shares as to which the authority to vote is withheld will not be counted toward the election of directors or the election of the individual nominees specified on the form of proxy.  Proxies may not be voted for more than four nominees.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT

OUR SHAREHOLDERS VOTE “FOR” THE

ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.


 

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Meetings of the Board

The Board held four meetings during Fiscal 2022.  During Fiscal 2022, each incumbent director attended at least 75%, other than Mr. Karmanos who attended 50% due to a temporary inability to travel, of the aggregate of (a) the total number of meetings held by the Board, and (b) the total number of meetings held by all committees of the Board on which such director served.

The Board and our management are committed to effective corporate governance practices. The Corporate Governance Guidelines describe the governance principles and procedures by which the Board functions. The Board annually reviews and updates, as appropriate, the Corporate Governance Guidelines and the charters of the committees of the Board in response to corporate governance developments, including changes in applicable NYSE Rules and SEC Rules, and recommendations by directors in connection with Board and Board committee evaluations. In accordance with the Corporate Governance Guidelines and applicable NYSE Rules, our non-management directors, who are all “Independent” Directors, as defined by the Corporate Governance Guidelines and applicable NYSE Rules, meet (without management present) in executive session at such times as the non-management directors deem necessary or appropriate, but at least once annually.  These executive sessions are typically held in conjunction with regularly scheduled Board meetings and are led by the Lead Independent Director, and appropriate feedback from these sessions is given to the Chief Executive Officer (“CEO”) and the Executive Chairman.  The non-management and the Independent Directors met in executive session after each of the four regularly scheduled Board meetings held in Fiscal 2022.

Board Member Attendance at Annual Meetings of the Shareholders

We do not have a formal policy with respect to attendance by our directors at the annual meetings of the shareholders. Five of the 11 then-incumbent directors attended our 2021 annual meeting of shareholders (“2021 Annual Meeting”): Mr. Blom, Mr. Blystone, Mr. Horton, Mr. McConnell and Ms. Schiavo.

Board Leadership Structure

The Board is led by Mr. McConnell, who became Executive Chairman in September 2020, after serving as CEO from June 1993 until September 2020.  He has been a director of the Company since 1990 and has served as Chairman of the Board since September 1996.  The Board is currently comprised of Mr. McConnell and ten non-management directors.  Mr. Blystone is our Lead Independent Director.

The Board has four standing committees: Audit, Compensation, Executive, and Nominating and Governance.  Each of the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee is chaired by a separate Independent Director and is comprised solely of Independent Directors.  Detailed information on each Board committee is contained in the section captioned “Proposal 1: Election of Directors — Committees of the Board” in this Proxy Statement.

We do not have a fixed policy regarding whether the offices of Chairman of the Board and CEO should be vested in the same person or two different people. Prior to Mr. McConnell retiring as CEO in September 2020, the Board had long determined that the most effective leadership structure was having Mr. McConnell in both roles, coupled with a Lead Independent Director, independent chairs for our Audit Committee, our Compensation Committee, and our Nominating and Governance Committee, and regularly scheduled executive sessions of the non-management and independent directors.

The Board believes having Mr. McConnell in the role of Executive Chairman and Mr. Rose as the CEO, while maintaining a Lead Independent Director, is an effective management structure, and that the structure promotes the development and execution of our business strategy and facilitates information flow between management and the Board, which are essential to effective governance. The Board believes that its strong governance practices, including its supermajority of Independent Directors, the change to separate the Executive Chairman and CEO roles, and the clearly-defined Lead Independent Director responsibilities, provide an appropriate balance among strategy development, operational execution and independent oversight of the Company.

The Board periodically reviews our leadership structure and retains the authority to modify the structure, as and when appropriate, to address our then current circumstances.


 

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Lead Independent Director

In January 2007, we established a Lead Independent Director position and appointed Mr. Blystone as the Lead Independent Director.

A copy of our Lead Independent Director Charter is available on the “Governance” page of the “Investors” section of our website located at www.worthingtonindustries.com.  In addition to the other duties more fully described in our Lead Independent Director Charter, the Lead Independent Director is responsible for:

advising the Chairman of the Board and the CEO regarding the information, agenda and meeting schedules for the Board and Board committees, and as to the quality, quantity and timeliness of the information submitted to the Board by our management that is necessary or appropriate for the non-employee directors to effectively and responsibly perform their duties;

recommending to the Chairman of the Board and the CEO the retention of advisers and consultants who report directly to the Board;

assisting the Board, the Nominating and Governance Committee and our officers in ensuring compliance with and implementation of the Corporate Governance Guidelines;

calling meetings of the non-employee directors, developing the agenda for and serving as chairman of the executive sessions of the non-employee directors, and serving as principal liaison between the non-employee directors and the Chairman of the Board and the CEO;

working with the Nominating and Governance Committee, the Chairman of the Board and the CEO to recommend the membership of the various Board committees, as well as the selection of Board committee chairs;

serving as chair of meetings of the Board when the Chairman of the Board is not present;

being available for consultation and direct communications with our shareholders, if requested and appropriate; and

performing such other duties as the Board may determine.

 

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Committees of the Board

 

The Board has four standing committees: the Executive Committee, the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee.  The charter for each committee has been reviewed and approved by the Board and is available on the “Governance” page of the “Investors” section of our website located at www.worthingtonindustries.com.

Committees of the Board

 

 

Executive

Audit

Compensation

Nominating and

Governance

Kerrii B. Anderson*

 

 

 

David P. Blom*

 

 

 

John B. Blystone*

 

 

Mark C. Davis*

 

 

 

 

Michael J. Endres*

 

 

Ozey K. Horton, Jr.*

 

 

Peter Karmanos, Jr.*

 

 

John P. McConnell

 

 

 

Carl A. Nelson, Jr.*

 

 

 

Sidney A. Ribeau*

 

 

 

Mary Schiavo*

 

 

 

*Independent director under applicable NYSE Rules

 Chairperson

 MemberAudit Committee Financial Expert

Executive Committee

The Executive Committee acts in place of, and on behalf of, the Board in the intervals between meetings of the Board.  The Executive Committee has all of the authority of the Board, other than the authority (a) to fill vacancies on the Board or on any committee of the Board, (b) to amend our Code of Regulations, (c) that has been delegated by the Board exclusively to other committees of the Board, and (d) that applicable law or our governing documents do not permit to be delegated to a committee of the Board.

Audit Committee

The Board has determined that each member of the Audit Committee qualifies as an Independent Director under the applicable NYSE Rules and under SEC Rule 10A-3.  The Board believes each member of the Audit Committee is qualified to discharge his or her duties on our behalf and satisfies the financial literacy requirement of the applicable NYSE Rules.  The Board has also determined that each of Ms. Anderson, Mr. Davis and Mr. Nelson qualifies as an “audit committee financial expert”, as that term is defined in Item 407(d)(5) of SEC Regulation S-K, by virtue of their respective experience, including as described in Proposal 1 (Election of Directors) of this Proxy Statement.  No member of the Audit Committee serves on the audit committee of more than two other public companies.

 

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The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act.  The Audit Committee is organized and conducts its business pursuant to a written charter.  The primary responsibility of the Audit Committee is to assist the Board in the oversight of the financial and accounting functions, controls, reporting processes and audits.  Specifically, the Audit Committee appoints and evaluates our independent registered public accounting firm and approves the audit engagement, including fees and terms, and non-audit engagements, if any, of such firm.  The Audit Committee, on behalf of the Board, reviews, monitors and evaluates: (a) our consolidated financial statements and the related disclosures, including the integrity and quality of our consolidated financial statements; (b) our compliance with legal and regulatory requirements, including the financial reporting process; (c) our systems of disclosure controls and procedures and internal control over financial reporting and its accounting and financial controls; (d) the performance, qualifications and independence of our independent registered public accounting firm, including the performance and rotation of the lead and concurring partners of that firm; (e) the performance of our internal audit function; (f) the annual independent audit of our consolidated financial statements; (g) financial, reporting and compliance risk management; and (h) our overall enterprise risk management program including such matters related to privacy, information security, cybersecurity, business conduct, health and safety, compliance, environmental and social aspects.  The Audit Committee also prepares the report that the SEC Rules require be included in our annual proxy statement.

Additional duties and responsibilities set forth in the Audit Committee’s charter include:

reviewing, with our financial management, internal auditors and independent registered public accounting firm, our accounting procedures and policies and audit plans, including staffing, professional services to be provided, audit procedures to be used, and fees to be charged by our independent registered public accounting firm and reviewing the activities of and the results of audits conducted by our internal auditors and independent registered public accounting firm;

reviewing, with our independent registered public accounting firm, the audit report of our independent registered public accounting firm on the effectiveness of our internal control over financial reporting filed with our Annual Report on Form 10‑K;

establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, as well as the confidential, anonymous submissions by our employees of concerns regarding questionable accounting or auditing matters;

setting and maintaining hiring policies for employees or former employees of our independent registered public accounting firm;

receiving reports concerning any non-compliance with the Code of Conduct by our officers or directors and approving, if appropriate, any waivers therefrom;

administering our Related Person Transaction Policy and approving, if appropriate, any “related person” transactions with respect to our directors or executive officers;

reviewing with management, our major financial risk exposures and the steps being taken to monitor and control them as well as our guidelines and policies with respect to risk assessment and risk management and overall antifraud programs and controls;

directing and supervising any special investigations into matters which may come within the scope of the Audit Committee’s duties; and

other matters required by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the Public Company Accounting Oversight Board, the SEC, the NYSE and other similar bodies or agencies which could have an effect on our consolidated financial statements.

Pursuant to its charter, the Audit Committee has the authority to engage and terminate such legal counsel and other consultants and advisors as it deems appropriate to carry out its functions, including the sole authority to approve the fees and other terms of retention of such legal counsel and other consultants and advisors.

At least annually, the Audit Committee evaluates its performance, reviewing and assessing the adequacy of its charter and recommending any proposed changes to the full Board, as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.

The Audit Committee met four times during Fiscal 2022.  The Audit Committee’s report relating to Fiscal 2022 is located in the “Audit Committee Matters” section in this Proxy Statement.

 

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Compensation Committee

The Board has determined that each member of the Compensation Committee qualifies as an Independent Director under the applicable NYSE Rules.  The Board has also determined that each member of the Compensation Committee satisfies the additional independence standards for members of a compensation committee under the applicable NYSE Rules.  All members of the Compensation Committee also qualify as “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act.

The Compensation Committee’s charter sets forth the duties and responsibilities of the Compensation Committee, which include:

discharging the Board’s responsibilities relating to compensation of our CEO and executive management, including reviewing and approving the compensation philosophy, policies, objectives and guidelines for our executive management;

reviewing and approving, if it has been deemed appropriate, our peer group companies and data sources for purposes of evaluating our compensation competitiveness and establishing the appropriate competitive positioning of the levels and mix of compensation elements;

reviewing and approving corporate goals and objectives, including performance goals, relevant to CEO and executive management compensation and evaluating the performance of the CEO and executive management in light of the approved corporate goals and objectives;

reviewing and approving the metrics used for determining payouts under cash-based and equity-based incentive programs;

setting the compensation of the CEO and other executive officers, including the amount and types of compensation;

preparing, producing, reviewing and/or discussing with management, as appropriate, such reports and other information required by applicable laws, rules, regulations or other standards with respect to executive and director compensation, including those required for inclusion in our proxy statement and/or Annual Report on Form 10-K;

providing recommendations to the Board on Company-sponsored compensation-related proposals to be considered at our annual shareholder meetings, including the advisory vote on the compensation of our NEOs and the frequency of that advisory vote, and reviewing and considering the results of such votes;

reviewing, and advising the Board with respect to, Board compensation;

administering our equity-based incentive compensation plans, other executive incentive compensation programs, and any other plans and programs which the Board designates;

reviewing and discussing with management, our compensation risk management disclosures required by SEC Rules relating thereto;

reviewing and making recommendations to the Board regarding, the creation or revision of any “clawback” or similar policy allowing us to recoup certain compensation paid to executive officers;

in consultation with the Nominating and Governance Committee, reviewing, evaluating and making recommendations to the Board concerning shareholder proposals relating to executive and/or director compensation issues and our responses thereto;

reviewing and discussing with management, our human capital management activities, including matters relating to talent management and development, talent attraction and retention, employee engagement and diversity, equity and inclusion; and

carrying out such other roles and responsibilities as the Board may designate or delegate to the Compensation Committee.

The Compensation Committee’s processes and procedures to determine executive compensation, including the use of compensation consultants and the role of executive officers in the executive compensation decision-making process, are described in the sections captioned “Executive Compensation — Compensation Discussion and Analysis — Role of the Compensation Committee” and “Executive Compensation — Compensation Discussion and Analysis — Executive Compensation Philosophy and Objectives” in this Proxy Statement.


 

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Pursuant to its charter, the Compensation Committee has sole authority to retain and terminate any compensation consultant, legal counsel or other advisor, as the Compensation Committee deems appropriate to assist the Committee in the performance of its duties, including the sole authority to approve the fees and other terms and conditions of retention.  Prior to any such retention, the Compensation Committee assesses any factors relevant to such consultant’s, legal counsel’s or advisor’s independence from management, including the factors specified in NYSE’s Corporate Governance Standards or other listing rules, to evaluate whether the services to be performed will raise any conflict of interest or compromise the independence of such consultant, legal counsel or advisor.

The Compensation Committee periodically reviews and reassesses the adequacy of its charter and recommends any proposed changes to the full Board, as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.  The Compensation Committee evaluates its performance at least annually.

The Compensation Committee met three times during Fiscal 2022.  The Compensation Discussion and Analysis regarding compensation for our NEOs and the Compensation Committee Report are located in the “Executive Compensation” section in this Proxy Statement.

Nominating and Governance Committee

The Board has determined that each member of the Nominating and Governance Committee qualifies as an Independent Director under the applicable NYSE Rules.  

Under the terms of its charter, the Nominating and Governance Committee is to:

develop and periodically review principles of corporate governance and recommend them to the Board for its approval;

review our Amended Articles of Incorporation, the Code of Regulations and the Corporate Governance Guidelines and recommend to the Board any changes deemed appropriate;

review the procedures and communication plans for shareholder meetings and ensure that required information regarding the Company is adequately presented;

review and make recommendations to the Board regarding (a) the composition and size of the Board in order to ensure that the Board has the proper expertise and its membership consists of persons with sufficiently diverse backgrounds, (b) the criteria for the selection of Board members and Board committee members, and (c) Board policies on age and term limits for Board members;

plan for continuity on the Board as existing Board members leave the Board;

with the participation of the Chairman of the Board, identify and recruit candidates for Board membership, evaluate Board candidates recommended by shareholders and arrange for appropriate interviews and inquiries into the qualifications of the candidates;

identify and recommend individuals to be nominated for election as directors by the shareholders and to fill vacancies on the Board;

with the Compensation Committee, provide for a review of succession plans for the Chairman of the Board in the case of resignation, retirement or death;

evaluate the performance of current Board members proposed for re-election, and recommend to the Board whether such members of the Board should stand for re-election; oversee an annual evaluation of the Board as a whole; conduct an annual evaluation of the Nominating and Governance Committee; oversee the evaluation of the other Board committees and provide guidance with respect to the evaluation of management;


 

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with the Chairman of the Board and the CEO, periodically review the charter and composition of each Board committee and make recommendations to the Board as to changes in charters, the creation of additional committees;

with the Chairman of the Board and the CEO, recommend to the Board individuals to be chairs and members of Board committees, so that each Board committee is comprised of members with the appropriate qualities, skills and experience for the tasks of the committee; and

oversee our corporate social responsibility programs and goals, and our progress toward achieving those goals.

To the extent not otherwise delegated to the Audit Committee, the Nominating and Governance Committee is also to:

review the relationships between us and each director, whether direct or as a partner, officer or equity owner of an organization that has a relationship with us, for conflicts of interest (all members of the Board are required to report any such relationships to our General Counsel);

address actual and potential conflicts of interest a Board member may have and issue to the Board member having an actual or potential conflict of interest instructions on how to conduct himself/herself in matters before the Board which may pertain to such an actual or potential conflict of interest; and

make appropriate recommendations to the Board concerning determinations necessary to find a director to be an Independent Director.

The Nominating and Governance Committee periodically reviews and assesses the adequacy of its charter and recommends any proposed changes to the full Board, as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.  The Nominating and Governance Committee evaluates its performance at least annually.

The Nominating and Governance Committee met two times during Fiscal 2022.

Board’s Role in Risk Oversight

Our management is principally responsible for defining, identifying and assessing the various risks we face, formulating enterprise risk management policies and procedures and managing our risk exposures on a day-to-day basis.  A risk committee, comprised of senior executives, directs this process.  Management provides an annual risk assessment to the Board, with quarterly updates. The Board’s responsibility is to oversee our risk management processes by understanding and evaluating management’s identification, assessment and management of our critical risks.

The Board as a whole has responsibility for this risk oversight, assisted by the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. Areas of focus include strategic, operational, liquidity, market, financial, reporting, succession, compensation, compliance, privacy, information security, cybersecurity, business conduct, health and safety, environmental, social, governance and other risks.  The Audit Committee is tasked with oversight of financial, reporting and compliance risk management, along with our overall risk management program. The Compensation Committee is tasked with oversight of compensation risk management. The Nominating and Governance Committee manages risks associated with corporate governance, Board composition, and the performance of the Board, its committees and directors. The Board as a whole oversees all other risk management.

 

 

 

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Transactions With Certain Related Persons

 

Review, Approval or Ratification of Transactions with Related Persons

As described in the Code of Conduct, conflicts of interest can arise when an employee’s or a director’s personal or family relationships, financial affairs, an outside business involvement or other private interest may adversely influence the judgment or loyalty required for performance of his or her duties to us.  In cases where there is an actual or even the appearance of a conflict of interest, the individual involved is required to notify his or her supervisor or our Ethics Officer.  The supervisor will then consult with management or the Ethics Officer, as appropriate.  The Code of Conduct provides that any action or transaction in which the personal interest of an executive officer or a director may be in conflict with our interest is to be reported to the Audit Committee.  The Audit Committee must investigate and, if it is determined that such action or transaction would constitute a violation of the Code of Conduct, the Audit Committee is authorized to take any action it deems appropriate.

Our written Related Person Transaction Policy (the “Policy”), which supplements the Code of Conduct provisions addressing conflicts of interest, addresses our policy with respect to related person transactions.  The Policy was adopted by the Board and is administered by the Audit Committee and our General Counsel.  The Policy applies to any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we participate, directly or indirectly, and a related person has, had or will have a direct or indirect material interest.  Under the Policy, a “related person” is any person:

who is or was our executive officer, director or director nominee, or an immediate family member of any such individual; or

who is or was the beneficial owner of more than 5% of our outstanding common shares, or an immediate family member of any such individual.

All related person transactions are to be brought to the attention of management who will then refer each matter to our General Counsel and the Audit Committee.  Each director, director nominee or executive officer must notify our General Counsel in writing of any interest that such individual or an immediate family member of such individual has, had or may have, in a related person transaction.  In addition, any related person transaction proposed to be entered into by us must be reported to our General Counsel by the employee who has authority over the transaction.  On an annual basis, our directors, director nominees and executive officers must complete a questionnaire designed to elicit information about existing and potential related person transactions.  Any potential related person transaction that is raised will be analyzed by our General Counsel, in consultation with management and with outside counsel, as appropriate, to determine whether the transaction, arrangement or relationship does, in fact, qualify as a related person transaction requiring review by the Audit Committee under the Policy.

Under the Policy, all related person transactions (other than those deemed to be pre-approved or ratified under the terms of the Policy) will be referred to the Audit Committee for approval (or disapproval), ratification, revision or termination. Whenever practicable, a related person transaction is to be reviewed and approved or disapproved by the Audit Committee prior to the effectiveness or consummation of the transaction.  If our General Counsel determines that advance consideration of a related person transaction is not practicable, the Audit Committee will review and, in its discretion, may ratify the transaction at the Audit Committee’s next meeting.  However, our General Counsel may present a related person transaction arising between meetings of the Audit Committee to the Chair of the Audit Committee who may review and approve (or disapprove) the transaction, subject to ratification by the Audit Committee at its next meeting if appropriate.  If we become aware of a related person transaction not previously approved under the Policy, the Audit Committee will review the transaction, including the relevant facts and circumstances, at its next meeting and evaluate all options available to us, including ratification, revision, termination or rescission of the transaction, and take the course of action the Audit Committee deems appropriate under the circumstances.

 

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No director may participate in any approval or ratification of a related person transaction in which the director or an immediate family member of the director is involved.  The Audit Committee may only approve or ratify those transactions the Audit Committee determines to be in our best interest.  In making this determination, the Audit Committee will review and consider all relevant information available to it, including:

the terms (including the amount involved) of the transaction and the related person’s interest in the transaction and the amount of that interest;

the business reasons for the transaction and its potential benefits to us, and whether the transaction was undertaken in the ordinary course of our business;

whether the terms of the transaction are fair to us and no less favorable to us than terms that could be reached with an unrelated third party;

the impact of the transaction on the related person’s independence; and

whether the transaction would present an improper conflict of interest for any of our directors, director nominees or executive officers, taking into account the size of the transaction, the overall financial position of the related person, the direct or indirect nature of the related person’s interest in the transaction and the ongoing nature of any proposed relationship and any other factors the Audit Committee deems relevant.

Any related person transaction previously approved or ratified by the Audit Committee or otherwise already existing that is ongoing in nature is to be reviewed by the Audit Committee annually.

Under the terms of the Policy, the following related person transactions are deemed to be pre-approved or ratified (as appropriate) by the Audit Committee even if the aggregate amount involved would exceed $120,000:

interests arising solely from ownership of the common shares if all shareholders receive the same benefit on a pro rata basis (i.e., dividends);

compensation to an executive officer, as long as the executive officer is not an immediate family member of any of our executive officers or directors and the compensation has been approved by the Compensation Committee or is generally available to our employees;

compensation to a director for services as a director if the compensation is required to be reported in our proxy statements;

interests deriving solely from a related person’s position as a director of another entity that is a party to the transaction;

interests deriving solely from the related person’s direct or indirect ownership of less than 10% of the equity interest (other than a general partnership interest) in another person which is a party to the transaction; and

transactions involving competitive bids.

In addition, the Audit Committee will presume that the following transactions do not involve a material interest:

transactions in the ordinary course of business with an entity for which a related person serves as an executive officer, provided (i) the affected related person did not participate in our decision to enter into the transaction, and (ii) the aggregate amount involved in any related category of transactions in a 12-month period is not greater than the least of (a) $1,000,000, or (b) 2% of the other entity’s consolidated gross revenues for such other entity’s most recently completed fiscal year, or (c) 2% of our consolidated gross revenues for our most recently completed fiscal year;

donations, grants or membership payments to non-profit organizations, provided (a) the affected related person did not participate in our decision to make such payments, and (b) the aggregate amount in a 12-month period does not exceed the lesser of $500,000 or 1% of the non-profit organization’s consolidated gross revenues for its most recently completed fiscal year; and

Our use of facilities (such as dining facilities and clubs) if the charges for such use are consistent with charges paid by unrelated third parties and are fair, reasonable and consistent with those for similar services available at similar facilities.

 

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Transactions with Related Persons

We are a party to certain agreements relating to the rental of aircraft to and from JMAC, which is owned by Mr. McConnell and members of his family, and JMAC’s subsidiary, JMAC Air, LLC (“JMAC Air”). Under agreements with JMAC and JMAC Air, we may lease aircraft owned by JMAC as needed for a rental fee per flight and JMAC may lease aircraft operated by us, on a per-flight basis, when we are not using the aircraft.  We also make our pilots available to JMAC Air, for a per-day charge.  The rental fees paid to us under the per-flight rental agreements are set based on Federal Aviation Administration (“FAA”) regulations.  We believe the rental fees set in accordance with such FAA regulations for Fiscal 2022 exceeded the direct operating costs of the aircraft for such flights.  Also, based on quotes for similar services provided by unrelated third parties, we believe that the rental rates paid to JMAC are no less favorable to us than those that could be obtained from unrelated third parties.

For Fiscal 2022, we paid an aggregate amount of $102,057 under the JMAC Air lease agreement and received $67,212 for airplane rental and pilot services.

During Fiscal 2022, we, directly or indirectly through business expense reimbursement, paid approximately $282,535 to Double Eagle Club, a private golf club owned by the McConnell family (the “Club”).  We use the Club’s facilities for corporate functions and meetings, and for meetings and entertainment for our customers, suppliers and other business associates.  Amounts charged to us by the Club are no less favorable to us than those that are charged to unrelated members of the Club for the same type of use.

During Fiscal 2022, we, directly or indirectly through business expense reimbursement, paid approximately $181,430 to the Columbus Blue Jackets, a National Hockey League team of which Mr. McConnell is the majority owner, for suite expenses, game tickets and special event tickets, often used in connection with meetings and entertainment for customers, suppliers and other business associates, at prices no less favorable to us than those charged to third parties.  We have also contributed suite use and tickets for charitable purposes.

 

 

 

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Executive Compensation

 

Compensation Discussion and Analysis

Role of the Compensation Committee

The Compensation Committee reviews and administers the compensation for the CEO and other members of our executive management team, including the NEOs.  The Compensation Committee also oversees our annual incentive plan for executives, long-term incentive program, restricted common share awards, stock option plans, and non-qualified deferred compensation plans.  A more detailed discussion of the duties of the Compensation Committee is set forth in the section captioned “Proposal 1: Election of Directors – Committees of the Board – Compensation Committee” in this Proxy Statement.

The Compensation Committee is comprised of four directors, each of whom qualifies as an “Independent Director” under the Corporate Governance Guidelines, applicable SEC Rules and applicable NYSE Rules, and is free from any relationship (including disallowed consulting, advisory or other compensatory arrangements) prohibited by applicable laws, rules or regulations or that, in the opinion of the Board, is material to his or her ability to be independent from our management in connection with the duties of a member of the Compensation Committee or to make independent judgments about our executive compensation.  Each member also qualifies as a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act.

The Compensation Committee has sole authority to retain and terminate such compensation consultants, legal counsel and other advisors as the Compensation Committee deems appropriate to fulfill its responsibilities, including sole authority to approve the fees and other terms of retention.  The Compensation Committee has retained an independent compensation consultant, Willis Towers Watson, for the purpose of assisting the Compensation Committee in fulfilling its responsibilities, including providing advice on the amount and form of executive and director compensation. Fees paid related to executive and director compensation matters were $82,000 in Fiscal 2022. Management also periodically retains Willis Towers Watson to provide additional services to us, including advising on other compensation matters. Our risk management team also separately engaged (in their own discretion, and not at the recommendation or subject to the approval of the Board or the Compensation Committee) an insurance affiliate of Willis Towers Watson to broker liability insurance for us and such affiliate received commissions totaling $150,000, which were paid by the issuer of the insurance policy. Willis Towers Watson was also separately engaged by our human resources team (in their own discretion, and not at the recommendation or subject to the approval of the Board or the Compensation Committee) to conduct certain due diligence activities in connection with our acquisition of Tempel and the fees paid related to that engagement were $240,000. The Compensation Committee has conducted an assessment, which included the consideration of the six factors specified in the NYSE Corporate Governance Standards and SEC Rule 10C-1(b)(4), to evaluate whether the services performed by Willis Towers Watson and the insurance affiliate of Willis Towers Watson raise a conflict of interest or compromise the independence of Willis Towers Watson.  Based upon this assessment, the Compensation Committee determined that Willis Towers Watson qualifies as an independent compensation consultant and the work of Willis Towers Watson and its affiliates does not raise any conflict of interest.

While the Compensation Committee retains Willis Towers Watson, in carrying out assignments for the Compensation Committee, Willis Towers Watson may interact with our management including the Senior Vice President-Chief Human Resources Officer, the Vice President-General Counsel and the Vice President-Chief Financial Officer and their respective staffs in order to obtain information.  In addition, Willis Towers Watson may, in its discretion, seek input and feedback from management regarding its work product prior to presentation to the Compensation Committee in order to confirm information is accurate or address certain issues.

The agendas for the Compensation Committee’s meetings are determined by the Compensation Committee’s Chair with assistance from the CEO, the Senior Vice President-Chief Human Resources Officer and the Vice President-General Counsel.  These individuals, with input from the Compensation Committee’s compensation consultant, make compensation recommendations for the NEOs and other executive officers.  However, decisions regarding the compensation of the NEOs are made solely by the Compensation Committee.

 

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After each regularly scheduled meeting, the Compensation Committee may meet in executive session.  When meeting in executive session, the Compensation Committee may have a session with the CEO only, a session with the compensation consultant only, and a session with Compensation Committee members only.  The Compensation Committee Chair reports on Compensation Committee actions to the full Board at the following Board meeting.

Stock Ownership Guidelines

In order to further emphasize the stake that our directors and senior executives have in fulfilling the goal of building and increasing shareholder value, and to deepen the resolve of executive leadership to fulfill that goal, we have established stock ownership guidelines for directors and senior executives.

 

Stock Ownership Guidelines

Covered Person(s)

 

Multiple of base salary or

annual cash retainer, as

applicable

 

CEO

 

5 times

 

Executive Chairman

 

5 times

 

Directors

 

5 times

 

Chief Financial Officer

 

3.5 times

 

Chief Operating Officer

 

3.5 times

 

Senior Vice Presidents and Business Unit Presidents

 

2.5 times

 

Other Senior Executives

 

1.25 times

 

 

For purposes of these guidelines, stock ownership includes common shares held directly or indirectly, common shares held in an executive’s 401(k) plan account(s) and theoretical common shares credited to the bookkeeping account of an executive or a director in one of our non-qualified deferred compensation plans.  

Under the stock ownership guidelines, once an executive or a director reaches the target ownership level, and so long as those common shares are retained and the individual remains subject to the same guideline level, there is no obligation to purchase additional common shares as a result of fluctuations in the price of the common shares.

Each covered executive or director is expected to attain the target level of stock ownership within five years from the date he or she is appointed or elected to the position. All directors and executive officers have met their respective target ownership levels, with the exception of two non-NEO executive officers who were appointed to their current positions in the last 18 months, and Mr. Blom, who became a director in June 2019.

Anti-Hedging Policy

We prohibit our directors, officers (including the NEOs) and other key employees from engaging in hedging transactions with respect to the common shares. Prohibited hedging transactions include short sales, transactions in publicly-traded options such as puts, calls or similar derivative securities, or financial instruments such as zero cost collars, prepaid variable forward contracts, equity swaps and exchange funds designed to or which have the effect of offsetting a decrease in the value of the common shares. We have not made this anti-hedging policy applicable to our employees in general.

Compensation Philosophy

Our basic philosophy has long been that employees should have a meaningful portion of their total compensation tied to performance and that we should use incentives which are intended to drive and reward performance.  In furtherance of this philosophy, there is broad-based participation among our full-time, non-union employees in some form of incentive compensation program.  These programs include cash profit sharing programs, which compute payouts based on a fixed percentage of profits, and annual incentive bonus programs that primarily tie bonuses to our aggregate operating results or the operating results of the applicable segment or business unit.

 

 

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We have also made broad-based grants of equity awards periodically to a number of salaried employees below the executive level.

Executive Compensation Philosophy and Objectives

Our objectives with respect to executive compensation are to attract and retain highly-qualified executives, to align the interests of management with the interests of shareholders and to provide incentives, based primarily on our performance, for reaching established goals and objectives.  To achieve these objectives, the Compensation Committee has determined that total compensation for executives will exhibit the following characteristics:

It will be competitive in the aggregate, using broad-based business comparators to gauge the competitive market;

It will be performance-oriented and highly-leveraged, with a substantial portion of the total compensation tied to performance, primarily our performance and/or that of the applicable business unit;

It will align the interests of management and the interests of shareholders; and

It will promote long-term careers with us.

Our practice has long been that executive compensation be highly leveraged.  Our compensation program emphasizes performance-based compensation (pay-at-risk) that promotes the achievement of our short-term and long-term objectives.  We believe it is appropriate to provide a balance between incentives for short-term performance and incentives for long-term profitability.  Our executive compensation program, therefore, includes both an annual cash incentive bonus program and a long-term incentive compensation program.  We also believe it is appropriate for long-term incentives to have a cash compensation component and an equity-based compensation component, which incentivize executives to drive our performance and align their interests with those of our shareholders.  The individual components of executive compensation are discussed below.

In fulfilling its responsibilities, the Compensation Committee annually reviews certain market compensation information with the assistance of its independent compensation consultant, Willis Towers Watson, who is directly engaged by the Compensation Committee to prepare the information.  This includes information regarding compensation paid to officers with similar responsibilities from a broad-based group of approximately 700 companies (the “comparator group”).  A list of the entities in the comparator group is set forth on Appendix I to this Proxy Statement.

The comparator group is comprised largely of manufacturing companies, maintained in the executive compensation database of Willis Towers Watson at the time the study is conducted, with median revenues of $4.0 billion.  Changes in the comparator group occur as companies begin or cease participation in the database, due to a sale, merger or acquisition of the companies included or for other reasons.  The Compensation Committee neither selects nor specifically considers the individual companies which are in the comparator group.  For comparison purposes, due to variances in the size of the companies in the comparator group, regression analysis, which is an objective analytical tool used to determine the relationship between data, is used to adjust data to better align with our revenue size, which the Compensation Committee set at $4.0 billion for purposes of its analysis.  The Compensation Committee believes that using this broad-based comparator group minimizes the effects of changes to the group due to changes in database participation, lessens the impact a single entity can have on the overall data, provides more consistent results and better reflects the market in which we compete for executive talent.

During its review process, the Compensation Committee meets directly with its compensation consultant and reviews comparator group information with respect to base salaries, annual cash incentive bonuses and long-term incentive compensation programs.  The Compensation Committee considers comparator group information provided by the compensation consultant as an important factor in determining the appropriate levels and mix of executive compensation.

Base salaries of the NEOs and other executive officers generally fall below market median comparables developed from the comparator group, although the actual base salaries of the NEOs and other executive officers vary from individual to individual and from position to position due to factors such as time in the position, performance, experience, internal equity and other factors the Compensation Committee deems appropriate.  Annual cash incentive bonus opportunities to be paid to the NEOs and other executive officers for achieving targeted levels of performance are generally above what the compensation consultant considers market median for annual bonuses because base salaries are intentionally set below market median comparables. In setting normal annual long-term incentive compensation opportunities of the NEOs and other executive officers, the Compensation Committee generally starts with the market median developed by the compensation consultant, and then makes adjustments the Compensation Committee deems appropriate.

 

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While comparator group information is a factor considered in setting compensation, where a specific NEOs or other executive officer’s annual cash incentive bonus and long-term incentive compensation fall relative to the market median developed from the comparator group will vary based upon internal equity and other factors listed in the preceding paragraph.  Annual cash incentive bonuses and long-term incentive compensation actually paid may vary significantly depending on Corporate and/or business unit performance during the applicable year(s).

The Compensation Committee uses tally sheets as a tool to assist in its review of executive compensation.  These tally sheets contain the components of the CEO’s and other NEOs’ current and historical compensation, including base salary, annual cash incentive bonuses and long-term incentive compensation.  These tally sheets and other information provided to the Compensation Committee also show the estimated compensation that would be received by the CEO and other NEOs under certain scenarios, including in connection with a change in control of the Company.

While prior compensation or amounts realized or realizable from prior awards are given some consideration, the Compensation Committee believes that the current and future performance of the Company, its business units and the individual executive officers should be the most significant factors in setting the compensation for our executive officers.

The CEO’s performance is annually evaluated by the Compensation Committee and the full Board.  The criteria considered include: our overall performance; overall leadership; the CEO’s performance in light of, and his development and stewardship of, our Philosophy and our current and long-term strategic plans, goals and objectives; development of an effective senior management team; positioning us for future success; and effective communications with the Board and stakeholders.  The Compensation Committee also evaluates the performance of the other NEOs when annually reviewing and setting executive compensation levels.  The criteria considered for the other NEOs are similar to those for the CEO, adjusted to reflect each NEO’s position, with a focus on the applicable business unit for any NEO who is a business unit President.

Compensation Risk Analysis

Our executive compensation programs are designed to be balanced, with a focus on both achieving consistent, solid year-over-year financial results and growing shareholder value over the long term.  The highest amount of compensation can be attained under these programs, taken as a whole, through consistently strong performance over sustained periods of time.  This provides strong incentives for achieving success over the long term and avoiding excessive risk-taking in the short term.

We have long believed that compensation incentives, based primarily upon our earnings or similar performance measures, have played a vital role in our success.  Making profit sharing, bonuses and/or other incentive payments broadly available to all levels of non-union employees has fostered an ownership mentality throughout the workforce which has resulted in long-term employment and a desire to drive consistent financial performance.  Our culture, aided by this ownership mentality, is focused on striving to continually improve performance and achieve long-term success without engaging in excessive risk-taking.

We do not believe that our compensation incentives encourage excessive risk-taking for the following reasons:

Salaries provide meaningful base levels of compensation, minimizing the need for excessive risk-taking.

The performance goals under the annual cash incentive bonus program are based upon realistic EPS, business unit earnings and EVA levels, reviewed and approved by the Compensation Committee, that the Compensation Committee believes can be attained without taking inappropriate risks or materially deviating from normal operations, expected continuous improvement or approved strategy.

The long-term cash performance awards and performance share awards are based upon performance over three-fiscal-year periods which mitigates the risk that executives would take actions designed to benefit only the short-term and jeopardizing longer-term performance.

In setting targets for annual cash incentive bonuses and long-term incentive compensation, restructuring charges and non-recurring items are eliminated and results are adjusted to eliminate inventory holding gains or losses (where appropriate for the Company or the business unit under consideration), which limit rewards for risky behavior outside the ordinary course of business.

Stock options generally contain a three-year incremental vesting schedule and provide rewards based on the long-term performance of the common shares.

 

 

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Restricted common share awards generally have a cliff vesting period of three years and further link executive compensation to the long-term value of the common shares.

Our stock ownership guidelines and anti-hedging policy also drive stock ownership among executives, again aligning their interests with the interests of our shareholders and the long-term growth in the value of the common shares.  This is most evident in the shareholdings of Executive Chairman, John P. McConnell, who is by far our largest shareholder.  His potential financial reward for long-term growth in the value of the common shares far outweighs any short-term compensation he may receive as a result of any excessive short-term risk-taking.

In recent years, the Compensation Committee has granted special performance-based/time-vested restricted common share awards to select NEOs, with vesting tied to the price of the common shares attaining certain levels for a ninety consecutive day period during the term of the award.  These awards are viewed as particularly appropriate as they are earned by top management only when our common share price increases significantly and, thus, our shareholders are also significantly benefited.  While these awards do require a significant increase in the price of the common shares to vest, the Compensation Committee believes that the common share price targets for these awards are reasonable targets which can be met with steady consistent growth in our performance without the need for any undue risk-taking.  The time-based vesting requirements mitigate the incentive for risky behavior intended to drive only a short-term common share price increase, and instead encourage activity that would lead to steady increases in financial results and a common share price which can be maintained.

Cash Compensation Earned in Fiscal 2022 and Company Performance

Short-term cash compensation includes base salary and the annual cash incentive bonus paid to our executives, including the CEO and the other NEOs. Consistent with our compensation philosophy, base salaries in Fiscal 2022 were generally below market median levels for the comparator group.    

The Compensation Committee believes that we have been performing exceptionally well and have responded extremely well to a very challenging environment that included supply chain constraints, steel price volatility, a tight labor market and inflationary cost pressures.  Despite these challenges and record performance in Fiscal 2021, we still achieved year-over-year improvements in almost all of our major businesses.

Management has continued to do an outstanding job managing through the lingering supply chain, labor and other challenges presented by COVID-19, which in many cases have been exacerbated by the war in Ukraine and the current inflationary environment, and has shown great discipline in executing on our strategies. During Fiscal 2022, we also continued to take action to better position ourselves in the future.  Management remained focused on improving our businesses by investing in new product development and production capacity, and improving efficiencies, all with the aid of transformation and innovation efforts.  We and our M&A team added new businesses through acquisitions, focusing on supplying products to the high-growth electric vehicle and electricity infrastructure markets, as well as lightweighting applications for the automotive industry, all of which should contribute to our growth in the coming years.  

Consistent with our compensation philosophy, annual incentive compensation earned by our executives continued to move in the direction of our results. Due to our very strong performance, annual cash incentive bonuses for our executives were up for Fiscal 2022, with Corporate paying out at 200% of target, following payouts of 185% of target for Fiscal 2021 and only 75% of target for Fiscal 2020.

Our financial position remains strong, as we generated a considerable amount of cash from operations in recent years. We were able to pay most of the purchase price for the acquisitions of Shiloh Industries’ U.S. BlankLight® business and Tempel, an aggregate amount of approximately $377.3 million before closing adjustments, from existing cash. Our capital structure is also in a sound position. We have in place $200 million of long-term senior notes due 2032, $250 million of long-term senior notes due 2026, and $150 million of long-term senior notes due 2024. We also have a $500 million revolving credit facility, through August 2026, and a revolving trade accounts receivable securitization facility allowing us to borrow up to $175.0 million. These committed lines of credit had a total of $518.6 million of borrowing capacity available to be drawn as of July 29, 2022.

 


 

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We have also been able to reward our shareholders by steadily increasing our quarterly dividend from $0.23 for Fiscal 2019, to $0.24 for Fiscal 2020, to $0.25 for the first, second, and third quarters of Fiscal 2021, to $0.28 for fourth quarter of Fiscal 2021 and each quarter of Fiscal 2022, and to $0.31 for the first quarter of Fiscal 2023. In addition, we continued our stock buy-back program in Fiscal 2022, repurchasing a total of 3,235,000 common shares last year.

The direct relationship of annual cash incentive bonuses earned by the NEOs to our performance has been exemplified by the amount of annual cash incentive bonuses paid to the NEOs not only in Fiscal 2022, but also in prior fiscal years.  The following table summarizes results for the last five fiscal years. Effective June 1, 2021, the beginning of Fiscal 2022, we separated our legacy Pressure Cylinders segment into three new segments, Consumer Products, Building Products and Sustainable Energy Solutions.

 

Fiscal

Year

Performance

Annual Cash Incentive Bonuses

2018

Solid year, with the then second best annual EPS results

Annual cash incentive bonuses of executives were paid at 106% of target levels at Corporate, 103% at Steel Processing and 104% at legacy Pressure Cylinders

2019

Then third best annual EPS, but weaker year-over-year results

Annual cash incentive bonuses of executives were paid at 93% of target levels at Corporate, 89% at Steel Processing and 82% at legacy Pressure Cylinders

2020

Results were weakened due to the impact of COVID-19 in the fourth quarter

Annual cash incentive bonuses of executives were paid at 75% of target levels at Corporate, 63% at Steel Processing and 83% at legacy Pressure Cylinders

2021

Strong year despite COVID-19 related challenges

Annual cash incentive bonuses of executives were paid at 185% of target levels at Corporate, 183% at Steel Processing and 166% at legacy Pressure Cylinders

2022

Very strong year despite COVID-19 and other challenges

Annual cash incentive bonuses of executives were paid at 200% of target levels at Corporate, 200% at Steel Processing, 168% at Consumer Products, 189% at Building Products and 100% at Sustainable Energy Solutions

 

The relationship of incentive compensation earned to our results is also reflected in payments which have been earned under the long-term cash performance and performance share awards.  Results for each of the last five completed three-fiscal-year performance periods are summarized below.

 

Performance

Period

(Fiscal Years)

Performance

Results

2016-2018

Solid year in Fiscal 2018 (then second best reported annual EPS) following two prior then record years, but payouts were below higher target

Long-term cash and performance share incentive compensation was earned at 94% of target levels for Corporate executives, and 47% of target levels for Steel Processing and legacy Pressure Cylinders executives

2017-2019

Weaker results in Fiscal 2019 kept payouts below target despite strong years in Fiscal 2018 and Fiscal 2017.

Long-term cash and performance share incentive compensation was earned at 48% of target levels for Corporate executives, and 24% of target levels for Steel Processing and legacy Pressure Cylinders executives

 


 

 

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Performance

Period

(Fiscal Years)

Performance

Results

2018-2020

COVID-19 weakened results for Fiscal 2020 negatively affected entire period

No long-term cash or performance share incentive compensation was earned, except for legacy Pressure Cylinders executives who earned 52% of target levels

2019-2021

Strong results in Fiscal 2021 lifted results for the entire period

Long-term cash and performance share incentive compensation was earned at 200% of target levels for Corporate executives, 173% of target levels for Steel Processing executives and 144% of target levels for legacy Pressure Cylinders executives

2020-2022

Strong results in Fiscal 2021 and Fiscal 2022 lifted results for the entire period

Long-term cash and performance share incentive compensation was earned at 200% of target levels for Corporate executives, 191% of target levels for Steel Processing executives and 200% of target levels for legacy Pressure Cylinders executives

 

Say-on-Pay Consideration

At the 2021 Annual Meeting, our shareholders approved the executive compensation as disclosed in the proxy statement for that Annual Meeting, with over 84% of the common shares represented by those shareholders present in person or represented by proxy at the 2021 Annual Meeting voting for approval.  The vote for approval was over 97%, excluding broker non-votes.  The Compensation Committee evaluated the results of this strongly supportive advisory vote, together with the other factors and data discussed in this Compensation Discussion and Analysis, in determining executive compensation policies and making executive compensation decisions.


 

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Compensation Components

Base Salaries

Base salaries for the NEOs are set to reflect the duties and responsibilities inherent in each position, individual levels of experience, performance, market compensation information, internal pay equity, and the Compensation Committee’s judgment.  The Compensation Committee annually reviews information regarding compensation paid by the comparator group to executive officers with similar responsibilities.  It is the Compensation Committee’s intent, in general, to set base salaries below market median levels, with consideration given to the factors listed above, and have total annual cash compensation driven by bonuses.

Annual Bonus Compensation

The NEOs and certain other key employees participate in our annual cash incentive bonus program under which annual bonus awards are tied to attainment of target results.  These awards are generally tied to achieving specified levels (threshold, target and maximum) of Corporate and/or business unit performance for the applicable 12-month performance period.  The type of performance measured and the weighting of those measurements is shown below. Restructuring charges and non-recurring gains and losses are excluded from all calculations, and the impact of inventory holding gains or losses are factored out in calculating Corporate EPS and Steel Processing business unit earnings.

For Corporate executives, the goals are tied to Corporate performance.

 

Payouts are generally tied to achieving specified levels (threshold, target and maximum) of Corporate EVA and Corporate EPS (each adjusted as noted above), with each performance measure carrying a 50% weighting.

For Business Unit executives, the goals are tied to both Corporate performance and the performance of their respective business units.

 

Payouts have historically been tied to achieving specified levels (threshold, target and maximum) of Corporate EPS, 20% weighting; business unit EOI, 30% weighting; and business unit EVA, 50% weighting (each adjusted as noted above). For Fiscal 2022 and later, the business unit EOI targets have been changed mainly to business unit EBIT targets (adjusted as noted above).

For performance falling between threshold and target or between target and maximum, the award is linearly pro-rated.  If threshold levels are not reached for any performance measure, no bonus will be paid under that performance metric.

Annual incentive bonuses are paid within a reasonable time following the end of the performance period in cash, unless the Board specifically provides for a different form of payment.  In the event of a change in control of the Company, followed by the actual or constructive termination of a participant’s employment during the relevant performance period, the annual cash incentive bonus award of the participant would be considered to be earned at the target level and payable as of the date of actual or constructive termination of employment.

The annual cash incentive bonuses paid to the NEOs for Fiscal 2022 were consistent with Fiscal 2021, due to the strong results in both Fiscal 2022 and Fiscal 2021.  Annual cash incentive bonuses for Fiscal 2022 results were paid at 200% of target levels for Corporate executives, 200% for Steel Processing executives, 168% for Consumer Products executives, 189% for Building Products executives and 100% for Sustainable Energy Solutions executives.  Annual cash incentive bonuses for Fiscal 2021 were paid at 185% of target levels for Corporate executives, 183% for Steel Processing executives and 166% for legacy Pressure Cylinders executives.

Annual cash incentive bonuses earned by the NEOs for Fiscal 2022, Fiscal 2021 and Fiscal 2020, are shown in the “Fiscal 2022 Summary Compensation Table” in this Proxy Statement in the “Annual Incentive Bonus Award” column within “Non-Equity Incentive Plan Compensation”.  

On June 21, 2022, the Compensation Committee granted annual cash incentive bonus awards to the NEOs for Fiscal 2023. These annual cash incentive bonus awards are shown in the “Annual Cash Incentive Bonus Awards Granted to NEOs for Fiscal 2023” table in this Proxy Statement.


 

 

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Long-Term Incentive Compensation

The Compensation Committee has implemented a long-term incentive compensation program for the NEOs and other executives, which consists of:

Stock option grants;

Long-term performance share awards based on achieving measurable financial results over a three-fiscal-year period;

Long-term cash performance awards based on achieving measurable financial results over a three-fiscal-year period; and

Restricted common share awards.

Long-term performance share awards, long-term cash performance awards, and restricted common share awards are made under the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “1997 LTIP”).  Stock options are generally granted out of our 2010 Stock Option Plan.  These plans have been approved by our shareholders.

In setting the size of the overall normal long-term incentive compensation awards, the Compensation Committee generally begins by looking at market median values for the comparator group, and then making adjustments for each individual for items such as the executive officer’s time in the position, internal equity, performance and such other factors as the Compensation Committee deems appropriate.  The percentage of the long-term compensation provided by each type of award (long-term cash performance awards, long-term performance share awards, stock options and restricted common shares) is determined by the Compensation Committee.  The value given to stock options for purposes of these awards is determined by the Compensation Committee based on input from its compensation consultant taking into account the anticipated grant date fair value calculated under applicable accounting rules and the stock option values used for recent annual grants.  The same is true for restricted common shares, the value of which is generally based on a recent market price of the common shares.  Likewise, the value of the long-term performance share awards is generally based upon the number of common shares that can be earned at target, multiplied by a recent common share price.  The value used for long-term cash performance awards is generally the amount that can be earned at target.  The amount of each type of award granted to an executive officer is determined consistent with the above factors, with the specific amount determined by the Compensation Committee on a subjective basis combining all of the factors considered.

The Compensation Committee believes that using a blend of restricted common share awards, stock option awards, long-term performance share awards and long-term cash performance awards represents a particularly appropriate and balanced method of motivating and rewarding senior executives.  Restricted common share awards and stock option awards align the interests of employee recipients with those of shareholders by providing value tied to appreciation in the common share price.  Long-term cash performance awards motivate long-term results because their value is tied to sustained financial achievement over a multiple-year period.  Long-term performance share awards blend both of these features because the number of performance shares received is tied to sustained financial achievement over a multiple-year period, and the value of those performance shares is tied to the price of the common shares.  The Compensation Committee believes the combination of these forms of incentive compensation is superior to reliance upon only one form and is consistent with our compensation philosophy and objectives.

The Compensation Committee generally approves annual restricted common share awards, annual stock option grants, long-term performance share awards and long-term cash performance awards at its June meeting.  The stock option grants and restricted common share awards are generally made effective following the meeting and after we report earnings for the just-completed fiscal year.  Long-term performance share awards and long-term cash performance awards have been based on performance over a three-fiscal-year period beginning with the first day of the first fiscal year in that period.  An explanation of the calculation of the compensation expense relative to the equity-based long-term incentive compensation is set forth in the section of this Compensation Discussion and Analysis captioned “Equity-Based Long-Term Incentive Compensation Accounting”.

We have not backdated stock option grants to provide for lower exercise prices, nor have we repriced or offered buyouts of underwater stock options.  Current plan provisions prohibit such repricing without shareholder consent.


 

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Stock Options

Stock options are generally granted annually to the NEOs and a select group of key executives.  In practice, the number of common shares covered by a stock option award generally depends upon the employee’s position and external market data.  

The following describes the Compensation Committee’s general practice in granting stock options, excluding grants tailored to meet specific circumstances.

Nearly all stock options granted to employees since June 1, 2011 have been non-qualified stock options which vest at a rate of 33% per year and fully vest at the end of three years.  In the event an optionee’s employment terminates as a result of retirement, death or total disability, any unexercised stock options outstanding, vested and exercisable on that date will remain exercisable by the optionee or, in the event of death, by the optionee’s beneficiary, until the earlier of either the fixed expiration date, as stated in the applicable stock option award agreement, or 36 months after the last day of employment due to retirement, death or total disability.  Should termination occur for any reason other than retirement, death or disability, unexercised stock options are generally forfeited.  In the event of a change in control of the Company (as defined in the respective stock option plans or award agreements), followed by an actual or constructive termination of employment, stock options then outstanding will become fully vested and exercisable.  The Compensation Committee may allow an optionee to elect, during the 60-day period following a change in control, to surrender a stock option or a portion thereof in exchange for a cash payment equal to the excess of the change in control price per share over the exercise price per share.

Effective June 25, 2021, we made awards of non-qualified stock options to 26 employees to purchase an aggregate of 54,500 common shares, with an exercise price equal to $60.19, the fair market value of the common shares on the grant date.  Of those stock options, an aggregate of 31,100 common shares were covered by stock options granted to the NEOs.

The stock option grants to the NEOs in Fiscal 2022 are detailed in the “Grants of Plan-Based Awards for Fiscal 2022” table in this Proxy Statement.  For purposes of the “Grants of Plan-Based Awards for Fiscal 2022” table, stock options are valued based on a grant date fair value and calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”).  This value for stock options is also reported in the “Option Awards” column of the “Fiscal 2022 Summary Compensation Table” in this Proxy Statement.

Information on stock options granted, effective June 24, 2022, to NEOs for Fiscal 2023 is set forth in the section captioned “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted to NEOs in Fiscal 2023” in this Proxy Statement.

Long-Term Performance Awards – General

We award a select group of key executives, including the NEOs, long-term cash performance awards and long-term performance share awards which are earned based upon results over a prospective three-fiscal-year performance period.

These long-term performance awards are intended to reward executives for achieving pre-established financial goals over a three-fiscal-year period.  Restructuring charges and non-recurring items are excluded from all calculations, and the impact of inventory holding gains or losses are factored out in calculating Corporate EPS and Steel Processing business unit earnings.

For Corporate executives, the goals are tied to Corporate performance.

 

Payouts are generally tied to achieving specified levels (threshold, target and maximum) of cumulative Corporate EVA and growth in Corporate EPS (each adjusted as noted above) over the performance period, with each performance measure carrying a 50% weighting.

For Business Unit executives, the goals are tied to both Corporate performance and the performance of their respective business units.

 

Payouts have historically been tied to achieving specified levels (threshold, target and maximum) of cumulative Corporate EVA and Corporate EPS growth measures, which together carry a 50% weighting, and business unit EOI targets (each adjusted as noted above), which are weighted 50%.  For the three-fiscal-year period beginning with Fiscal 2022, the business unit EOI targets have been changed mainly to business unit EBIT targets (adjusted as noted above).


 

 

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If the performance level falls between threshold and target or between target and maximum, the award is linearly pro-rated.  Payouts, if any, would generally be made in the quarter following the end of the applicable performance period.  Calculation of our results and the level of attainment of performance measures are made solely by the Compensation Committee based upon our consolidated financial statements.

The Compensation Committee determines the appropriate changes and adjustments and may make adjustments for other unusual or non-recurring events, including, without limitation, changes in tax and accounting rules and regulations, extraordinary gains and losses, mergers and acquisitions, and purchases or sales of substantial assets.

These performance measurements have been chosen because the Compensation Committee believes that:

The Corporate EPS growth metric strongly correlates with our growth in equity value;

EOI and EBIT at a business unit tie directly into our EPS growth; and

The cumulative Corporate EVA target, which is driven by net operating profit in excess of the cost of capital employed, keeps management focused on the most effective use of existing assets and pursuing only those growth opportunities which provide returns in excess of the cost of capital.

We have used these, or similar performance measures, since long-term cash performance awards were first granted for the performance period ended May 31, 1998.

The Compensation Committee periodically considers whether to change the performance measures used under the incentive awards and reviews the types of measures used by other companies and other relevant information provided by its compensation consultant.  As noted above, the Compensation Committee determined to change certain performance measures for the business unit executives for the three-fiscal-year period beginning with Fiscal 2022.

As a result of the very strong results in Fiscal 2022, long-term cash performance awards and long-term performance share awards for the three-fiscal-year period ended with Fiscal 2022 were paid out at 200% of target levels for Corporate executives, 191% for Steel Processing executives and 200% for legacy Pressure Cylinders executives.  

Long-Term Cash Performance Awards

Long-term cash performance awards are intended to reward executives for achieving pre-established financial goals over a three-fiscal-year period.  Long-term cash performance awards may be paid in cash, common shares or any combination thereof, as determined by the Compensation Committee at the time of payment.  To date, earned long-term cash performance awards have been paid in cash.  If the performance criteria are met, payouts are generally made in the quarter following the end of the performance period.  Nothing is paid under the long-term cash performance awards if none of the three-fiscal-year financial thresholds are met.

Treatment of awards on a change in control or a termination of employment, including termination due to death, disability or retirement, is discussed below in the section captioned “Long-Term Performance Awards – Impact of Termination/Change in Control”.  The performance measures for the long-term cash performance awards are discussed above in the section captioned “Long-Term Performance Awards – General”.

Long-term cash performance awards earned for the three-fiscal-year performance period ended with Fiscal 2022 are described above in the section captioned “Long-Term Performance Awards – General”.  The amount of the awards earned by the NEOs for this period is shown in the “Fiscal 2022 Summary Compensation Table” in this Proxy Statement under the “3-year Cash Performance Award” column within “Non-Equity Incentive Plan Compensation”.  The long-term cash performance awards earned were paid in cash.

Long-term cash performance awards granted in Fiscal 2022 for the three-fiscal-year performance period ending with Fiscal 2024 are reported in the “Grants of Plan-Based Awards for Fiscal 2022” in this Proxy Statement.

Information on long-term cash performance awards granted in Fiscal 2023 for the three-fiscal-year performance period ending with Fiscal 2025 is shown in the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted to NEOs in Fiscal 2023” table in this Proxy Statement.

 

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Long-Term Performance Share Awards

Performance share awards are intended to reward executives for both achieving pre-established financial goals over the three-fiscal-year period and increasing the common share price.  The long-term performance share awards are generally paid in common shares and the value is determined not only by the number of common shares earned, but also by the value of the common shares at the time the awards are earned and the common shares are paid out.  If the performance criteria are met, payouts are generally made in the quarter following the end of the performance period.  Nothing is paid under the long-term performance share awards if none of the three-fiscal-year financial threshold measures are met.

Treatment of awards on a change in control or a termination of employment, including termination due to death, disability or retirement, is discussed below in the section captioned “Long-Term Performance Awards – Impact of Termination/Change in Control”.  The performance measures for the long-term performance share awards are discussed above in the section captioned “Long-Term Performance Awards – General”.  

Long-term performance share awards earned for the three-fiscal-year performance period ended with Fiscal 2022, are described above in the section captioned “Long-Term Performance Awards – General”.  The long-term performance share awards earned were paid in common shares.

Long-term performance share awards granted in Fiscal 2022 for the three-fiscal-year performance period ending with Fiscal 2024 are reported in the “Grants of Plan-Based Awards for Fiscal 2022” table in this Proxy Statement.  An explanation of the calculation of the compensation expense relative to those awards is set forth in the “Equity-Based Long-Term Incentive Compensation Accounting” section in this Compensation Discussion and Analysis.  If the performance criteria are met, the long-term performance shares earned would generally be issued in the quarter following the end of the performance period.

Information on long-term performance share awards granted in Fiscal 2023 for the three-fiscal-year performance period ending with Fiscal 2025 is shown in the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted to NEOs in Fiscal 2023” table in this Proxy Statement.

Long-Term Performance Awards – Impact of Termination/Change in Control

In general, termination of employment results in termination of long-term cash performance awards and long-term performance share awards.  However, if termination is due to death, disability or retirement, a pro rata payout will be made for performance periods ending 24 months or less after termination of employment based on the number of months of employment completed by the participant during the performance period before the effective date of termination, provided that the applicable performance goals are achieved.  No payout will be made for performance periods ending more than 24 months after termination of employment.  Unless the Compensation Committee specifically provides otherwise at the time of grant, in the event of a change in control of the Company followed by an actual or constructive termination of employment, all long-term cash performance awards and long-term performance share awards would be considered to be earned and payable in full at the maximum level, and immediately settled or distributed.

Annual Restricted Common Share Awards to Executives

Effective June 25, 2021, the Compensation Committee granted annual restricted common share awards to 44 employees covering an aggregate of 109,300 restricted common shares, which will cliff vest on the third anniversary of the grant date.  Of those awards, an aggregate of 55,000 restricted common shares were awarded to the NEOs.  Restricted common share awards are intended to reward and incent executives by directly aligning the interests of management with the interests of shareholders.  The vesting provision of the restricted common shares also serves as a management retention incentive.  For further details with respect to the restricted common share awards granted to the NEOs effective June 25, 2021, see the “Stock Awards” column of the “Fiscal 2022 Summary Compensation Table” in this Proxy Statement.

Restricted common share awards to the NEOs in Fiscal 2022 are detailed in the “Grants of Plan-Based Awards for Fiscal 2022” table in this Proxy Statement.  For purposes of the “Grants of Plan-Based Awards for Fiscal 2022” table, restricted common share awards are valued based on grant date fair value and calculated in accordance with ASC 718.  This value for restricted common share awards is also reported in the “Stock Awards” column of the “Fiscal 2022 Summary Compensation Table” in this Proxy Statement.

 

 

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For further details with respect to the restricted common share awards granted to the NEOs effective June 24, 2022, see the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted to NEOs in Fiscal 2023” table in this Proxy Statement.

Other Restricted Common Share Awards to NEOs in Fiscal 2022

On June 25, 2021, the Compensation Committee made an award of 10,000 restricted common shares to Ms. Lyttle, which will cliff vest on the third anniversary of the grant date.

Other Restricted Common Share Awards to non-NEOs in Fiscal 2022

It has been our practice to award restricted common shares to a broader group of employees every two or three years, and to grant restricted common shares to select employees at other times such as when their employment began or they received a promotion.  Such awards provide employees with the opportunity to participate in increases in shareholder value as a result of common share price appreciation, and further our objective of aligning the interests of management with the interests of shareholders.

Between June 24, 2021 and April 27, 2022, we made awards to 96 employees covering an aggregate of 57,700 restricted common shares, which will cliff vest on the third anniversary of the respective grant dates.  None of these awards were made to an NEO.

Special Performance-Based/Time-Vested Restricted Common Share Awards

The Compensation Committee has at times granted special “one-off” performance-based/time-vested restricted common share awards to select executives, with vesting tied to the price of the common shares attaining certain levels for a ninety consecutive day period during the term of the award.  These awards are viewed as particularly appropriate as they are earned by top management only when the common share price increases significantly and, thus, our shareholders are also significantly benefited. While these awards do require a significant increase in the price of the common shares from that on the grant date in order to vest, the Compensation Committee believes that the common share price targets for these awards are reasonable targets which can be met with steady consistent growth in our performance without the need for any undue risk-taking.  The time-based vesting requirements mitigate the incentive for risky behavior intended to drive only a short-term common share price increase, and instead encourage activity that would lead to steady increases in financial results and a common share price which can be maintained.

In Fiscal 2022, no such awards were issued.

In Fiscal 2021, the Compensation Committee made a special award, effective June 25, 2020, of 25,000 performance-based/time-vested restricted common shares to Mr. Gilmore. The term of this restricted common share award is five years and the restricted common shares will vest if and only when both of the following conditions are met:  (a) the closing price of the common shares averages $65.00 per share for any 90 consecutive day period during the five-year term; and (b) Mr. Gilmore has remained continuously employed by us through June 25, 2023, or if later, the date the stock price condition is met. The restricted common shares will be forfeited five years from the effective date of the award if the performance-based vesting condition is not met by that date, or as of the date of termination if Mr. Gilmore’s employment is terminated (with certain exceptions discussed below) before June 25, 2023.  If Mr. Gilmore’s employment is terminated by us without “cause” or Mr. Gilmore dies or becomes permanently disabled after the performance condition has been met but before the time-based vesting condition has been met, the restricted common shares will be fully vested as of the date of termination.  In the case of death or disability of Mr. Gilmore, the Compensation Committee may elect, in its sole discretion, to accelerate the vesting of all or a portion of the restricted common shares.  


 

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In Fiscal 2020, the Compensation Committee made a special award, effective September 25, 2019, to Mr. Hayek of 50,000 performance-based/time-vested restricted common shares. During Fiscal 2019, in connection with the naming of Mr. Rose as President and Mr. Gilmore as Chief Operating Officer (“COO”), the Compensation Committee made special awards, effective September 26, 2018, of 175,000 performance-based/time-vested restricted common shares to Mr. Rose and 50,000 performance-based/time-vested restricted common shares to Mr. Gilmore. The term of each of these restricted common share awards is five years from the date of grant and the restricted common shares will vest if and only when both of the following conditions are met:  (a) the closing price of the common shares equals or exceeds $65.00 per share for 90 consecutive days during the five-year term; and (b) the applicable NEO has remained continuously employed by us for five years. The restricted common shares will be forfeited five years from the effective date of the award if the performance-based vesting condition is not met by that date, or as of the date of termination if the NEO’s employment is terminated (with certain exceptions discussed below) before the end of the five-year period.  If the applicable NEO’s employment is terminated by us without “cause” or if he dies or becomes permanently disabled after the performance condition has been met but before the time-based vesting condition has been met, the restricted common shares will be fully vested as of the date of termination.  In the case of death or disability, the Compensation Committee may elect, in its sole discretion, to accelerate the vesting of all or a portion of the restricted common shares.  

The Compensation Committee believes the average or continuous (as applicable) $65.00 per share closing price for 90 consecutive days condition was an appropriate performance target, as its achievement will not only reward the NEO, but also our shareholders in general, as the $65.00 stock price would be a significant increase in the price of the common shares from the price on the grant date. The Compensation Committee believed this to be a reasonable target which can be reached by steady, consistent growth in our performance, without the need for any undue risk-taking.

In the event of a change in control followed by an actual or constructive termination of employment (as defined by the Compensation Committee), the restricted common shares will vest, subject to any Internal Revenue Code Section 280G limitation imposed by the Compensation Committee.  

Each of Mr. Rose, Mr. Hayek, and Mr. Gilmore has been a key player in driving our efforts and financial results, as well as in strategic actions taken by us.  The Board (and, with respect to Mr. Hayek and Mr. Gilmore, the CEO) have identified Mr. Rose, Mr. Hayek and Mr. Gilmore as key executives who have key roles and responsibilities in leading us forward.  The Compensation Committee believes these special restricted common share awards have served, and continue to serve, as a strong retention mechanism that provides a unique incentive to these identified leaders to further enhance our success, and directly ties their compensation to our first corporate goal of increasing the value of our shareholders’ investment.

Clawback Policy

We do not have a specific compensation clawback policy.  If we are required to restate our earnings as a result of material non-compliance with a financial reporting requirement due to misconduct, under Section 304 of the Sarbanes-Oxley Act of 2002 (“SOX”), the CEO and our Chief Financial Officer (“CFO”) would be required to reimburse us for any bonus or other incentive-based or equity-based compensation received by them from us during the 12-month period following the first filing with the SEC of the financial document that embodied the financial reporting requirement required to be restated, and any profits realized from the sale of the common shares during that 12-month period, to the extent required by SOX.

On July 1, 2015, the SEC issued proposed rules relating to clawback policies and again solicited public comments on the proposed clawback rules in 2021 and 2022.  Once final SEC Rules have been adopted and the NYSE has, in turn, adopted new listing standards addressing the clawback policy requirements, we will adopt a clawback policy which satisfies the final SEC Rules and NYSE Rules.

Equity-Based Long-Term Incentive Compensation Accounting

The accounting treatment for equity-based long-term incentive compensation is governed by ASC 718.  Stock options are valued using the Black-Scholes pricing model based upon the grant date closing price per common share underlying the stock option award, the expected life of the stock option award, the risk-free interest rate, the dividend yield, and the expected volatility.  Further information concerning the valuation of stock options and the assumptions used in that valuation is contained in “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note L – Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the 2022 Form 10-K.


 

 

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Long-term performance share awards payable in common shares are initially valued using the price per common share based on the target award, and compensation expense is recorded prospectively over the performance period on a straight-line basis.  This amount is then adjusted on a quarterly basis based upon an estimate of the performance level anticipated to be achieved for the performance period in light of actual and forecasted results.

Long-term cash performance awards are initially valued at the target level, and compensation expense is recorded prospectively over the performance period on a straight-line basis.  This amount is then adjusted on a quarterly basis based on an estimate of the performance level anticipated to be achieved for the performance period in light of actual and forecasted results.

Restricted common shares are valued at fair value as of the date of grant and the calculated compensation expense is recognized on a straight-line basis over their respective vesting periods.  For restricted common shares with only time-based vesting, fair value is generally equal to the closing price of the common shares at the respective grant date.  If the vesting is subject to other conditions, such as the special performance-based/time-vested restricted common share awards, the value is generally calculated under a Monte Carlo simulation model.  Further information concerning the valuation of restricted common shares and the assumptions used in that valuation is contained in “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note L – Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the 2022 Form 10-K.

Deferred Profit Sharing Plan

The NEOs participate in the Worthington Industries, Inc. Deferred Profit Sharing Plan (the “DPSP”), together with most of our other full-time, non-union employees.  The DPSP is a 401(k) plan and is our primary retirement plan.  Contributions made by us to participants’ accounts under the DPSP are generally based on 3% of eligible compensation which includes base salary, profit sharing, bonus and annual cash incentive bonus payments, overtime and commissions, up to the maximum limit set by the Internal Revenue Service (“IRS”) from year to year ($305,000 for calendar 2022).  In addition, the NEOs and other participants in the DPSP may elect to make voluntary contributions up to prescribed IRS limits.  These voluntary contributions are generally matched by our contribution of 50% of the first 4% of eligible compensation contributed by the participant.  Distributions under the DPSP are generally deferred until retirement, death or total and permanent disability.

Non-Qualified Deferred Compensation

The NEOs and other highly-compensated employees are eligible to participate in the Worthington Industries, Inc. Amended and Restated 2005 Non-Qualified Deferred Compensation Plan (as amended, the “2005 NQ Plan”).  The 2005 NQ Plan is a voluntary, non-tax-qualified, unfunded deferred compensation plan available only to select highly-compensated employees for the purpose of providing deferred compensation, and thus potential tax benefits, to these employees.

Under the 2005 NQ Plan, our executive officers may defer the payment of up to 50% of their base salary and up to 100% of their bonus and/or annual cash incentive bonus awards.  Amounts deferred are credited to the participants’ bookkeeping accounts under the 2005 NQ Plan at the time the base salary and/or bonus/annual cash incentive bonus awards would have otherwise been paid. In addition, we may make discretionary employer contributions to the participants’ bookkeeping accounts in the 2005 NQ Plan.  In recent years, we have made employer contributions in order to provide the same percentage of retirement-related deferred compensation to executive officers compared to other employees that would have been made but for the IRS limits on annual compensation that may be considered under the DPSP.  For the 2022, 2021 and 2020 calendar years, we made contributions to the 2005 NQ Plan for participants equal to (i) 3% of an executive’s annual compensation (base salary plus bonus/annual cash incentive bonus award) in excess of the IRS maximum; and (ii) a matching contribution of 50% of the first 4% of annual compensation contributed by the executive to the DPSP to the extent not matched by us under the DPSP.  Participants in the 2005 NQ Plan may elect to have their bookkeeping accounts treated as invested (a) with a rate of return reflecting: (i) the returns on those investment options available under the DPSP; or (ii) a fixed interest rate set annually by the Compensation Committee (0.85% for Fiscal 2022), or (b) in theoretical common shares reflecting increases or decreases in the fair market value of the common shares with dividends deemed reinvested.  Any portion of a participant’s bookkeeping account credited to theoretical common shares must remain credited to theoretical common shares until distributed.  Otherwise, participants in the 2005 NQ Plan may change the investment options for their bookkeeping accounts as of the time permitted under the DPSP for the same or a similar investment option.


 

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Employees’ bookkeeping accounts in the 2005 NQ Plan are fully vested.  Payouts of amounts credited to theoretical common shares are made in whole common shares and cash in lieu of fractional shares.  Payouts of amounts credited to all other investment options are made in cash. Payments will be made as of a specified date selected by the participant or, subject to the timing requirements of Section 409A of the Internal Revenue Code, when the participant is no longer employed by us.  Payments are made either in a lump sum or in installments, all as chosen by the participant at the time the deferral is elected.  The Compensation Committee may permit hardship withdrawals from a participant’s account under defined guidelines.

 

Contributions or deferrals for the period before January 1, 2005, are maintained under the Worthington Industries, Inc. Non-Qualified Deferred Compensation Plan, effective March 1, 2000 (as amended, the “2000 NQ Plan”).  Contributions and deferrals for periods on or after January 1, 2005 are maintained under the 2005 NQ Plan, which was adopted to replace the 2000 NQ Plan in order to comply with the provisions of the then newly-adopted Section 409A of the Internal Revenue Code applicable to non-qualified deferred compensation plans.  Among other things, the provisions of Section 409A generally are more restrictive with respect to the timing of deferral elections and the ability of participants to change the time and manner in which accounts will be paid.  The 2005 NQ Plan and the 2000 NQ Plan are collectively referred to as the “Employee Deferral Plans”.

Perquisites

We make a Club membership available to NEOs and certain other executives because we believe that such memberships can be useful for business entertainment purposes.  

For security and safety reasons, the NEOs occasionally use our airplanes for personal travel, and due to COVID-19, such usage has increased during the last 30 months.  In such cases, the NEOs who use our airplanes for personal travel are charged an amount equal to the standard industry fare level, or SIFL rate, set forth in the regulations promulgated by the United States Department of the Treasury (“Treasury Regulations”), which is generally less than our incremental costs.

Other Company Benefits

We provide employees, including the NEOs, with a variety of other employee welfare benefits including medical benefits, disability benefits, life insurance, and accidental death and dismemberment insurance, which are generally provided to all full-time, non-union employees.

Change in Control

We have no formal employment contracts or other stand-alone change in control provisions relative to the NEOs or other top executives.  We have change in control provisions in our compensation plans, as described below.

Our stock option plans generally provide that, unless the Board or the Compensation Committee provides otherwise, upon a change in control of the Company followed by an actual or constructive termination of employment, all stock options then outstanding will become fully vested and exercisable.  In addition, the Compensation Committee may allow the optionee to elect, during the 60-day period from and after the change in control, to surrender the stock options or a portion thereof in exchange for a cash payment equal to the excess of the change in control price per share over the exercise price per share.

For purposes of our stock option plans (the 1997 LTIP and the 2010 Stock Option Plan), a change in control will be deemed to have occurred when any person, alone or together with such person’s affiliates or associates, has acquired or obtained the right to acquire the beneficial ownership of 25% or more of our outstanding common shares, unless such person is: (a) the Company; (b) any of our employee benefit plans or a trustee of or fiduciary with respect to any such plan when acting in that capacity; or (c) any person who, on the date the applicable plan became effective, was an affiliate of ours owning in excess of 10% of our outstanding common shares and the respective successors, executors, legal representatives, heirs and legal assigns of such person (an “Acquiring Person Event”).  

 

 

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If a change in control followed by an actual or constructive termination of employment had occurred as of May 31, 2022, the value of the unvested stock options which would have vested upon the change in control (based upon (a) the difference, if any, between (i) the closing market price of the common shares on May 31, 2022 (the last business day of Fiscal 2022) ($46.64) and (ii) the per share exercise price of each such stock option, multiplied by (b) the number of common shares subject to the unvested portion of each such stock option), for each of the NEOs would have totaled:

 

NEO

Value of Unvested Stock Options If Vesting Accelerated

B. Andrew Rose

$210,848

Joseph B. Hayek

$82,894

Geoffrey G. Gilmore

$115,096

John P. McConnell

$142,075

Catherine M. Lyttle

$49,267

Long-term cash performance awards and long-term performance share awards generally provide that, unless the Board or the Compensation Committee provides otherwise, upon a change in control of the Company followed by an actual or constructive termination of employment, all such awards would be considered earned and payable in full at the maximum amounts and would be immediately settled or distributed.  For purposes of the 1997 LTIP (under which the long-term cash performance awards and long-term performance share awards have been granted), a change in control will be deemed to have occurred when there is an Acquiring Person Event as defined above.

If a change in control followed by an actual or constructive termination of employment had occurred as of May 31, 2022, the aggregate value of the long-term cash performance awards and the number of common shares underlying long-term performance share awards, which would have been distributed to each of the NEOs would have totaled:

 

NEO

Long-Term

Cash Performance

Awards

 

Long-Term

Performance

Share Awards

B. Andrew Rose

 

$7,333,332

 

85,866

Joseph B. Hayek

 

$2,346,666

 

28,334

Geoffrey G. Gilmore

 

$2,906,668

 

35,666

John P. McConnell

 

$4,800,000

 

42,600

Catherine M. Lyttle

 

$1,225,334

 

15,600

Each of the NEOs received time-vested restricted common share awards granted effective June 25, 2021, June 25, 2020, and June 27, 2019. In addition, Ms. Lyttle received an additional time-vested restricted common share award on June 25, 2021; Mr. Hayek received two additional time-vested restricted common share awards on September 25, 2019; and Mr. Gilmore received an additional time-vested restricted common share award on September 26, 2018. All of these restricted common share awards provide that upon a change in control followed by an actual or constructive termination of employment, the restricted common shares will vest and the restrictions will lapse.  If a change in control followed by an actual or constructive termination of employment had occurred as of May 31, 2022, the number of time-vested restricted common shares (and accrued dividends on those common shares) that would have vested and been distributable to each of the NEOs as of such date are set forth below. The closing price of the common shares on May 31, 2022, the last business day of Fiscal 2022, was $46.64.

 

NEO

 

# of Restricted

Common Shares

 

Accrued

Dividends

B. Andrew Rose

 

67,200

 

$105,048

Joseph B. Hayek

 

69,100

 

$165,045

Geoffrey G. Gilmore

 

56,100

 

$156,387

John P. McConnell

 

31,900

 

$81,253

Catherine M. Lyttle

 

21,300

 

$30,405

 

 

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The special performance-based/time-vested restricted common share awards granted to Mr. Rose on September 26, 2018, to Mr. Hayek on September 25, 2019 and to Mr. Gilmore on June 25, 2020 and September 26, 2018 also provide that upon a change in control followed by an actual or constructive termination of employment, the restricted common shares will vest and the restrictions will lapse.  If a change in control followed by an actual or constructive termination of employment had occurred as of May 31, 2022, the number of performance-based/time-vested restricted common shares, and accrued dividends on those common shares, that would have vested and been distributable as of such date are set forth below. The closing price of the common shares on May 31, 2022, the last business day of Fiscal 2022, was $46.64.

 

NEO

 

# of Restricted

Common Shares

 

Accrued

Dividends

B. Andrew Rose

 

175,000

 

$616,000

Joseph B. Hayek

 

50,000

 

$129,500

Geoffrey G. Gilmore

 

75,000

 

$222,750

John P. McConnell

 

0

 

$0

Catherine M. Lyttle

 

0

 

$0

 

Annual cash incentive bonus awards provide that if during a performance period, (a) a change in control of the Company (as defined in the plan) occurs and (b) the participant’s employment with us actually or constructively terminates on or after the change in control, the participant’s award would be considered earned and payable as of the date of the participant’s actual or constructive termination of employment in the amount designated as target for such award and would be settled or distributed following the date of the participant’s actual or constructive termination of employment.  The target amounts for annual cash incentive bonus awards granted to the NEOs for the 12-month performance period ended May 31, 2022, are shown in the “Grants of Plan-Based Awards for Fiscal 2022” table in this Proxy Statement.

Under the Employee Deferral Plans, participants’ bookkeeping accounts will generally be paid out as of the date of the change in control.  See the “Non-Qualified Deferred Compensation for Fiscal 2022” table in this Proxy Statement for further information.

The Compensation Committee believes that these change in control provisions are appropriate, particularly because we have no formal employment contracts or other formal stand-alone change in control provisions relative to the NEOs or other executives.

Tax Deductibility

Section 162(m) of the Internal Revenue Code generally limits the deduction that we may take for certain remuneration paid in excess of $1,000,000 to any “covered employee” in any one taxable year.  Section 162(m) of the Internal Revenue Code applies to the CEO, the CFO and each of our three most highly compensated officers (not including the CEO and the CFO) and any person who has been the CEO, the CFO, or one of the other three most highly compensated officers in any year beginning after December 31, 2016.

The Compensation Committee intends to continue to examine the best method to pay incentive compensation to executive officers, which will include consideration of any changes to Section 162(m) of the Internal Revenue Code. In all cases, whether or not some portion of a covered employee’s compensation is tax deductible, the Compensation Committee will continue to carefully consider the net cost and value of our compensation policies to us.

 

 

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Compensation Committee Report

The Compensation Committee has reviewed the Compensation Discussion and Analysis (the “CD&A”) contained in this Proxy Statement and discussed the CD&A with management.  Based upon such review and discussion, the Compensation Committee recommended to the full Board, and the full Board approved, that the CD&A be included in this Proxy Statement and incorporated by reference into the 2022 Form 10-K.

The foregoing report is provided by the Compensation Committee of the Board.

 

 

 

Compensation Committee

 

 

 

 

 

John B. Blystone, Chair

 

 

Kerrii B. Anderson

 

 

Michael J. Endres

 

 

Ozey K. Horton, Jr.

 

 

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Fiscal 2022 Summary Compensation Table

 

The following table lists, for each of Fiscal 2022, Fiscal 2021 and Fiscal 2020, the compensation of our NEOs (i.e., our CEO, CFO, and the three other most highly compensated executive officers at the end of Fiscal 2022).

Fiscal 2022 Summary Compensation Table

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity Incentive Plan

Compensation