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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.  )

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

 

 

O-I GLASS, 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 the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0‑11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 

 

 

 

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NOTICE OF ANNUAL MEETING OF SHARE OWNERS

 

 

 

Tuesday, May 12, 2020
9:00 a.m. EDT

Plaza 2
O-I World Headquarters
Perrysburg, Ohio 43551

To Our Share Owner:

You are cordially invited to attend the Annual Meeting (the “Annual Meeting”) of the share owners of O-I Glass, Inc. (the “Company”) for the purpose of considering and voting upon the following matters:

 

 

 

 

 

Proposal

  

Board
Recommendation

  

For more
information

1.  The election of 12 directors, each to serve for a term of one year

 

FOR
each of the nominees for election to the Board of Directors

 

Page 3

2.  The ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020

 

FOR
the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020

 

Page 60

3.  An advisory vote to approve named executive officer compensation for 2019

 

FOR
the advisory vote to approve named executive officer compensation for 2019

 

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Mail Date:

The Company intends to commence distribution of this notice and the accompanying Proxy Statement and proxy card on or about April 1, 2020.

Record Date:

The Board fixed the close of business on March 16, 2020, as the record date for the determination of share owners owning the Company’s common stock, par value $.01 per share, entitled to notice of, and to vote at, the Annual Meeting.

Your Vote is Important:

Enclosed is a proxy card that provides you with a convenient means of voting on the matters to be considered at the meeting, whether or not you attend the meeting in person. All you need do is mark the proxy card to indicate your vote, sign and date the card, then return it in the enclosed envelope as soon as conveniently possible. If the shares are held of record in more than one name, all holders of record should sign the proxy card. If you are a share owner of record and you submit a proxy, but you do not provide voting instructions, your shares will be voted: for each of the Board nominees, for the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020, and for the advisory vote to approve named executive officer compensation for 2019. As an alternative to returning the proxy card, you may use the Internet or telephone to submit your proxy as described in the enclosed Proxy Statement and on the proxy card.

 

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We sincerely appreciate your interest in and support of O-I Glass, and we hope to see you at the Annual Meeting.

By order of the Board of Directors,

 

 

 

ANDRES A. LOPEZ
Chief Executive Officer

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MARY BETH WILKINSON
Corporate Secretary

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April 1, 2020

Perrysburg, Ohio

Due to the emerging public health impact of coronavirus disease 2019 (COVID-19), we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be set forth in a press release issued by the Company and available at www.o-i.com.

 

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

PROXY STATEMENT FOR THE ANNUAL MEETING OF SHARE OWNERS

1

Who May Vote 

1

How to Vote 

2

Deadline 

2

Householding 

2

Further Instructions Regarding “How to Vote” 

2

Revocability of Proxies 

3

Vote Required to Approve Matters 

3

Other Matters 

3

PROPOSAL 1 ELECTION OF DIRECTORS 

3

General 

3

Information on Nominees 

4

GOVERNANCE INFORMATION 

9

Board Leadership Structure 

9

Executive Sessions 

9

Risk Oversight 

9

General Board Responsibilities 

9

Board Independence 

9

Board Member Stock Ownership 

10

Board Size 

10

Board Meeting Attendance 

10

Corporate Governance Guidelines 

10

Board Nominees 

10

Director Experience and Skills 

11

Code of Business Conduct and Ethics 

12

Communicating with the Board 

12

BOARD AND COMMITTEE MEMBERSHIP 

13

Current Committee Membership 

13

Audit Committee 

13

Compensation and Talent Development Committee 

14

Nominating/Corporate Governance Committee 

14

Risk Oversight Committee 

14

DIRECTOR COMPENSATION AND OTHER INFORMATION 

16

Director Compensation 

16

Related Person Transactions 

17

Compensation and Talent Development Committee Interlocks and Insider Participation 

18

 

 

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TABLE OF CONTENTS (continued)

B

 

 

Page

EXECUTIVE COMPENSATION 

19

Compensation Discussion and Analysis 

19

Compensation and Talent Development Committee Report 

42

2019 Summary Compensation Table 

42

Grants of Plan-Based Awards in 2019 

44

Outstanding Equity Awards at Fiscal Year End 2019 

45

Option Exercises and Stock Vested in 2019 

46

Pension Benefits

47

Non-Qualified Deferred Compensation 

48

Potential Payments upon Termination or Change in Control 

48

CEO PAY RATIO

55

AUDIT COMMITTEE REPORT 

56

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

57

Fees Paid to Ernst & Young LLP 

57

Pre-Approval of Independent Registered Public Accounting Firm Services 

57

PROPOSAL 2 RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

60

PROPOSAL 3 ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION FOR 2019 

61

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 

63

2021 ANNUAL MEETING OF SHARE OWNERS 

65

FORWARD LOOKING STATEMENTS 

65

PROXY SOLICITATION 

65

APPENDIX A 

A-1

 

 

 

 

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PROXY STATEMENT FOR THE ANNUAL MEETING OF SHARE OWNERS TO BE HELD MAY 12, 2020

The Annual Meeting of the share owners of O-I Glass, Inc. will be held on Tuesday, May 12, 2020, at 9:00 a.m. EDT in Plaza 2 of the O-I World Headquarters, Perrysburg, Ohio. Due to the emerging public health impact of coronavirus disease 2019 (COVID-19), we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be set forth in a press release issued by the Company and available at www.o-i.com.  At the Annual Meeting, share owners will: (1) vote to elect 12 directors, each to serve a term of one year; (2) consider the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020; and (3) participate in an advisory vote to approve named executive officer compensation for 2019. The term “Company,” as used herein and unless otherwise stated or indicated by context, refers to Owens-Illinois, Inc. prior to the reorganization of Owens-Illinois, Inc. into a new holding company structure that was completed on December 27, 2019, and refers to O-I Glass, Inc. after such reorganization.

This Proxy Statement has been prepared in connection with the solicitation by the Company’s Board of Directors (the “Board”) of proxies for the Annual Meeting and provides information concerning the persons nominated by the Board for election as directors, and other information relevant to the Annual Meeting. The Company intends to commence distribution of this Proxy Statement and the accompanying proxy card on or about April 1, 2020.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHARE OWNERS TO BE HELD ON MAY 12, 2020

The Securities and Exchange Commission (“SEC”) has adopted a “Notice and Access” rule that allows companies to deliver a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) to share owners in lieu of a paper copy of the proxy statement and related materials and the Company’s 2019 Annual Report to share owners. The Notice of Internet Availability provides instructions as to how share owners can access the proxy materials online, contains a listing of matters to be considered at the meeting, and sets forth instructions as to how shares can be voted. Shares must be voted either by telephone, on the Internet or by completing and returning a proxy card. Shares cannot be voted by marking, writing on and/or returning the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes. Instructions for requesting a paper copy of the proxy materials are set forth on the Notice of Internet Availability.

The Notice of Annual Meeting and Proxy Statement, the Company’s 2019 Annual Report to share owners and the Stakeholder Letter are available at www.proxyvote.com. You will need your assigned control number to vote your shares. Your control number can be found on your proxy card.

Who May Vote

You will be entitled to vote at the Annual Meeting if you are a share owner of record as of the close of business on March 16, 2020 (the “record date”). At the close of business on the record date, 156,518,634 shares of the Company’s common stock, par value $.01 per share (“Common Stock”), were outstanding. Each share of Common Stock entitles the holder of record to one vote on all matters to be voted upon at the Annual Meeting. Shares of Common Stock held by the trustee under the Company’s 401(k) plans must be voted by the trustee in accordance with written instructions from participants in such plan or, as to those shares for which no instructions are received, in a uniform manner as a single block in accordance with the instructions received with respect to the majority of shares for which instructions were received from participants. No other securities are entitled to be voted at the Annual Meeting.

 

 

 

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How to Vote

Shares of Common Stock can be voted at the Annual Meeting only if the share owner is present in person or represented by proxy. If shares are owned of record in the share owner’s name, the share owner may cause these shares to be voted at the Annual Meeting in one of four ways.

 

 

 

 

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Internet

Phone

Mail

In Person

Visit www.proxyvote.com. Be sure to have the control number found on the proxy card, follow the voting instructions and confirm that your votes have been accurately recorded.

Call the toll-free number (for residents of the U.S. and Canada) listed on the proxy card. You must enter the control number listed on the proxy card and follow the instructions.

Send your completed and signed proxy card promptly in the enclosed envelope or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

Share owners can choose to vote in person by ballot at the Annual Meeting. At the meeting, the share owner will need to request a ballot to vote their shares.

Deadline

The deadline for submitting a proxy by internet or telephone is 11:59 p.m., EDT, on May 11, 2020. If a proxy is submitted by internet or telephone, the share owner does not need to return the proxy card. If the share owner chooses to submit its proxy by mail, the deadline for Broadridge to receive and count a proxy by mail is 11:59 p.m., EDT, on May 11, 2020.

Householding

To reduce costs and the environmental impact of the Company’s Annual Meeting, a single copy of the Proxy Statement and 2019 Annual Report to Share Owners will be delivered to two or more share owners who share an address, unless contrary instructions have been received from an affected share owner, a practice commonly referred to as “householding.” The Company will promptly deliver, upon written or oral request, individual copies of the proxy materials to any share owner at the shared address to which single copies of those documents were delivered. To make such a request, please contact Broadridge Householding Department by phone at 1-866-540-7095 or by mail to Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717.  If you are a share owner of record and would like to enroll in this householding service or would like to receive individual copies of future proxy materials, please contact Broadridge Householding Department by phone at 1-866-540-7095 or by mail to Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717. Share owners who hold their shares beneficially in street name should contact their bank, broker or other holder of record to request information about householding.

Further Instructions Regarding “How to Vote”

The telephonic and Internet voting procedures are designed to authenticate votes cast by use of a personal identification number. These procedures allow share owners to appoint a proxy to vote their shares and to confirm that their instructions have been properly recorded.

Share owners who hold their shares beneficially in street name through a nominee (such as a bank or broker) may be able to submit their proxy by telephone or the Internet as well as by mail. The share owner should follow the instructions received from the nominee to vote these shares. Share owners who hold their shares beneficially in street name can also choose to vote in person by ballot at the Annual Meeting, but must have a legal proxy with them executed by the nominee in order for their vote to count. At the meeting, the share owner will need to request a ballot to vote these shares.

The proxy card lists each person nominated by the Board for election as a director. Proxies duly executed and received in time for the meeting will be voted in accordance with share owners’ instructions. If no instructions are given, proxies will be voted to (a) elect each of the 12 nominated directors of the Company for a term of one year to expire at the Annual Meeting in 2021; (b) ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020; (c) approve, on an advisory basis, the compensation of the Company’s named executive officers for 2019; and (d) in the discretion of the proxy holders as to any other business that may properly come before the meeting.

 

 

 

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Revocability of Proxies

Any proxy solicited hereby may be revoked by the person or persons giving it at any time before it has been exercised at the Annual Meeting by (a) giving notice of revocation to the Company in writing or at the 2020 Annual Meeting; (b) submitting a later dated proxy; or (c) attending the Annual Meeting in person and voting at the meeting.

Vote Required to Approve Matters

There must be a quorum for the transaction of business at the meeting. A majority in voting power of the Common Stock issued and outstanding and entitled to vote at the meeting, the holders of which are present in person or represented by proxy, shall constitute a quorum. If you submit a properly executed proxy card or a telephonic or Internet proxy, or you are present at the meeting in person, even if you abstain from voting, your shares will be considered part of the quorum. Broker non‑votes (shares held by a broker or nominee that are represented at the meeting, but with respect to which the broker or nominee is not empowered to vote on a proposal) are included in determining the presence of a quorum.

Proposal One. Each director to be elected by the share owners of the Company shall be elected by the affirmative vote of a majority of the votes cast with respect to such director by the shares represented and entitled to vote thereon. For purposes of electing directors, a “majority of the votes cast” means that the number of votes cast “for” a candidate for director exceeds the number of votes cast “against” that director (with “abstentions” and “broker non‑votes” not counted as votes cast as either “for” or “against” such director’s election). The Board has established procedures under which any director who is not elected shall offer to tender his or her resignation to the Board.

Proposal Two. The affirmative vote of the holders of a majority in voting power of the Common Stock present in person or represented by proxy and entitled to vote thereon is required to ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020. Abstentions will have the same effect as votes “against” this proposal. “Broker non‑votes” are not expected for this proposal as NYSE rules allow brokers or nominees to exercise discretionary voting authority on this “routine” proposal.

Proposal Three. The affirmative vote of the holders of a majority in voting power of the Common Stock present in person or represented by proxy and entitled to vote thereon is required for the advisory vote to approve named executive officer compensation for 2019. Abstentions will have the same effect as votes “against” this proposal and “broker non‑votes” will not be counted in determining whether this proposal has been approved.

Other Matters

Management of the Company does not know of any matter that will be presented for action at the 2020 Annual Meeting other than as described in this Proxy Statement. However, if any other matter should properly be brought to a vote at the meeting, or any adjournment or postponement thereof, all shares covered by proxies solicited hereby will be voted with respect to such matter in accordance with the proxy holders’ discretion.

PROPOSAL 1: ELECTION OF DIRECTORS

General

The Board currently consists of 12 members whose terms expire at this year’s Annual Meeting. The Board believes that refreshment is important to help ensure that Board composition is appropriately aligned with the Company’s evolving business and strategic needs. The Nominating/Corporate Governance Committee has reviewed the composition of the Board for a balance of tenure, skills and diversity on the Board and pursuant to the Nominating/Corporate Governance Committee’s Policies and Procedures Regarding the Identification and Evaluation of Candidates for Director (the “Policies and Procedures”), the qualifications, performance and circumstances of each incumbent director. After completing its review, the Nominating/Corporate Governance Committee recommended all incumbent directors for re‑election, except for Hugh H. Roberts and Dennis K. Williams. As previously announced, Messrs. Roberts and Williams will retire at the conclusion of the Annual Meeting and are not standing for re-election. The Board approved the Nominating/Corporate Governance Committee’s recommendations regarding the incumbent directors and also approved the Nominating/Corporate Governance Committee’s recommendation that two new candidates, Samuel R. Chapin and Catherine I. Slater, stand for election to fill the vacancies.

 

 

 

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Information on Nominees

The Board, at the recommendation of the Nominating/Corporate Governance Committee, has nominated 12 persons for election as directors to serve for a one year term expiring at the 2021 annual meeting of share owners and until their successors have been elected. The nominees of the Board are Samuel R. Chapin, Gordon J. Hardie, Peter S. Hellman, John Humphrey, Anastasia D. Kelly, Andres A. Lopez, Alan J. Murray, Hari N. Nair, Joseph D. Rupp, Catherine I. Slater, John H. Walker, and Carol A. Williams. Except for Mr. Chapin and Ms. Slater, each nominee is currently serving as a director of the Company and each nominee, including Mr. Chapin and Ms. Slater, has consented to being named in this Proxy Statement and has agreed to serve if elected. If for any reason any nominee should be unavailable to serve, proxies solicited hereby may be voted for a substitute as well as for the other Board nominees. The Board, however, expects all of its nominees to be available to serve.

The following is information on the persons nominated for election to the Board at the 2020 Annual Meeting:

Nominees—To be elected for terms expiring at the 2021 Annual Meeting

Samuel R. Chapin, age 63

 

 

 

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Director Nominee

Mr. Chapin retired in 2016 as Executive Vice Chairman of Bank of America Merrill Lynch, a multinational investment bank, after more than 30 years in banking. He served as Executive Vice Chairman of Bank of America Merrill Lynch from 2010 until 2016, during which time he was responsible for managing relationships with a number of the firm’s largest corporate clients. Mr. Chapin joined Merrill Lynch in 1984 as a member of the Mergers and Acquisitions group and was named a Managing Director in Investment Banking in 1993, Senior Vice President and head of Merrill Lynch’s global investment banking division in 2001 and Vice Chairman in 2003. He currently serves on the boards of Circor International, Inc. and PerkinElmer, Inc., chairing PerkinElmer’s audit and finance committees, and is also a member of the Board of Trustees at Lafayette College. Mr. Chapin holds a B.A. in economics from Lafayette College and an M.B.A. from the Wharton School at the University of Pennsylvania. Mr. Chapin’s extensive executive experience leading a global business, financial reporting expertise and public company board service qualify him to serve on the Company’s Board.

 

Gordon J. Hardie, age 56

 

 

 

 

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Director since 2015

Mr. Hardie retired as an executive in September 2019 after serving as President, Food & Ingredients at Bunge Ltd., a global company that operates in agribusiness, sugar and bioenergy, food and ingredients, and fertilizer. Mr. Hardie previously served as Managing Director at Bunge (2011-2017), and as a member of the Executive Committee. Mr. Hardie led the global Operational Excellence program for Bunge Ltd from 2013 to 2019. In his role at Bunge Ltd, Mr. Hardie served as Chairman of the Supervisory Board of Walter Rau AG (Germany) and as Chairman of the Board of Bunge Loders Croklaan B.V. (Holland). Mr. Hardie service as Chairman Prior to joining Bunge, Mr. Hardie was a Managing Director at Morningside Partners, an M&A Advisory firm he established in 2009. Mr. Hardie previously held senior management positions at Goodman Fielder, including Managing Director (2004-2009), Sales and Marketing Director and Marketing Innovation Director (2002-2003). He was named Group General Manager, Marketing at SouthCorp Wines in 2000 and Vice President, Regional Markets, Asia Pacific at Foster’s Brewing Group in 1999. Before immigrating to Australia in 1999, Mr. Hardie was Regional Director for the Americas and Asia Pacific Regions at Pernod Ricard Irish Distillers. Mr. Hardie holds a B.A. from the University College Cork and an M.B.A. from University College, Dublin Smurfit Graduate School of Business and has completed the Advanced Management Program and the AVIRA CEO Program at INSEAD. Mr. Hardie serves  on the board of Greencore Group plc and previously served on the board of Zaklady Tluszcowe Kruszwica from 2013 to 2016. Mr. Hardie also serves on the North American Advisory Board of the Smurfit Graduate School of Business, University College Dublin. Mr. Hardie’s extensive business leadership skills, his global business experience, and broad food and spirits industry knowledge qualify him to serve on the Company’s Board.

 

 

 

 

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Peter S. Hellman, age 70

 

 

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Director since 2007

Mr. Hellman retired in 2008 after a long career with large, multinational companies in both financial and operating executive positions. Mr. Hellman has over 40 years of financial analysis experience and has been involved with investor relations for over 35 years. He was an executive with Nordson Corporation from 2000 to 2008, where he served as President and Chief Financial and Administrative Officer from 2004 to 2008 and Executive Vice President and Chief Financial and Administrative Officer from 2000 to 2004. Nordson is a global leader in providing capital equipment to the packaging industry. Mr. Hellman also served as a director of Nordson from 2001 to 2008. Prior thereto, Mr. Hellman was with TRW Inc. for ten years and held various positions, the most recent of which was President and Chief Operating Officer. During his tenure as a financial executive, Mr. Hellman obtained significant reporting expertise and substantial experience in corporate transactions. Mr. Hellman also has extensive experience as a director of both public and private companies, and has been serving on public company boards for over 20 years. He is currently a director of Baxter International, Inc. (since 2005) and The Goodyear Tire and Rubber Company (since 2010). Mr. Hellman also serves on the board of the Cleveland Museum of Natural History and The Holden Arboretum. Through his significant board and management experience, Mr. Hellman has obtained extensive training in executive compensation matters and corporate governance practices. Mr. Hellman holds a B.A. from Hobart College and an M.B.A. in finance from Case Western Reserve University. Mr. Hellman’s long career and financial and operating experience, business leadership skills, extensive board experience and knowledge of executive compensation and corporate governance matters qualify him to serve on the Company’s Board.

 

John Humphrey, age 54

 

 

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Director since 2018

From 2011 to May 2017, Mr. Humphrey served as Executive Vice President and Chief Financial Officer of Roper Technologies, Inc., a Fortune 1000 company that designs and develops software and engineered products and solutions for healthcare, transportation, food, energy, water, education and other niche markets worldwide. He retired from Roper in December 2017. From 2006 to 2011, he served as Vice President and Chief Financial Officer of Roper. Prior to joining Roper, Mr. Humphrey served as Vice President and Chief Financial Officer of Honeywell Aerospace, the aviation segment of Honeywell International Inc., after serving in several financial positions with Honeywell International and its predecessor AlliedSignal Inc. Mr. Humphrey’s earlier career included six years with Detroit Diesel Corporation, a manufacturer of heavy-duty engines, in a variety of engineering and manufacturing management positions. Mr. Humphrey is a member of the board of directors for EnPro Industries, Inc. and Gardner Denver Holdings, Inc. Mr. Humphrey holds a B.S. in industrial engineering from Purdue University and an M.B.A. from the University of Michigan. Mr. Humphrey’s extensive executive experience leading a global business, financial reporting expertise and public company board service qualify him to serve on the Company’s Board.

 

 

 

 

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Anastasia D. Kelly, age 70

 

 

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Director since 2002

Ms. Kelly is Managing Partner (Americas) in the law firm of DLA Piper (Partner since 2010, Co‑Managing Partner since 2013 and Managing Partner since 2018). From 2006 to 2010, she was the Vice Chairman—Legal, Human Resources, Corporate Communication and Corporate Affairs of American International Group, Inc. (“AIG”), and through that senior management position she obtained experience handling corporate issues across the enterprise. Prior to joining AIG, Ms. Kelly was an executive and general counsel of several large, publicly traded companies, including MCI, where she was the Executive Vice President and General Counsel from 2003 to 2006, Sears, Roebuck and Co., where she was the Senior Vice President and General Counsel from 1999 to 2003, and Fannie Mae, where she was the Senior Vice President from 1996 to 1999 and General Counsel and Secretary from 1995 to 1999. Ms. Kelly is currently a director of Huntington Ingalls Industries, Inc. (since 2011) and sits on the board of numerous philanthropic organizations. Ms. Kelly holds a B.A., cum laude, from Trinity University in Washington, D.C. and a J.D., magna cum laude, from George Washington University Law School. Ms. Kelly’s broad legal expertise and knowledge, extensive understanding of regulatory, compliance and securities issues involving public companies and financial institutions, significant experience in corporate governance issues and substantial business management skills qualify her to serve on the Company’s Board.

 

Andres A. Lopez, age 57

 

 

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Director since 2016

Mr. Lopez has served as the President and Chief Executive Officer of O-I Glass since January 2016. He has been with the Company since 1986 and held several positions before becoming Chief Executive Officer, most recently serving as Chief Operating Officer (2015). He has also served as President of O-I Americas (2014‑2015); President of O-I’s Latin America operations (2009‑2015); and Vice President of O-I’s global manufacturing and engineering business unit (GMEC) (2006‑2009). In 2004, he moved to the Company’s headquarters in Ohio to serve as Vice President of Finance and Administration for the North America region, becoming Vice President of Manufacturing for North America in 2005. Mr. Lopez held a number of other manufacturing assignments before 2005. In 1996, he moved to Brazil, first serving as Plant Manager for the Rio de Janeiro plant, and then for the São Paulo plant. In 1999, he was named General Manager of O-I Peru. Mr. Lopez began his career at O-I Glass as an Engineer at one of the Colombian plants. Mr. Lopez currently serves as a board member of Avery Dennison (since 2017). He holds a B.S. in production engineering from EAFIT University in Medellin, Colombia, and has completed the Executive Program at Stanford University. He speaks English and Portuguese, in addition to his native Spanish. Mr. Lopez’s long experience in manufacturing, leadership skills and global business experience with the Company over the past 30 years qualify him to serve on the Company’s Board.

 

Alan J. Murray, age 66


 

 

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Director since 2015

Mr. Murray retired as an executive in 2008 after serving as Managing Board Member for North America for HeidelbergCement AG, a German multinational building materials company. Mr. Murray took on this role after Heidelberg’s 2007 acquisition of Hanson PLC, where Mr. Murray served as Chief Executive Officer. Previously, Mr. Murray served as Chief Executive Officer of Hanson Building Materials America, where he handled a business that was 50% of Hanson’s overall operations. While at Hanson, Mr. Murray also served as Finance Director (1997‑1998), Assistant Finance Director (1995‑1997), Division Finance Director (1993‑1995), and Divisional Financial Controller (1988‑1993). Between 1978 and 1988, he held various financial roles at Chloride Group PLC and Burton Group PLC. Mr. Murray is a qualified Chartered Management Accountant and has a bachelor’s degree in Economics and Marketing from Lancaster University in the United Kingdom. Mr. Murray currently serves on the public board of Ferguson PLC (formerly Wolseley PLC) since 2013 and was on the board of HeidelbergCement AG between 2010 and 2017. Mr. Murray’s extensive business leadership skills, executive and board experience, global business and financial reporting expertise qualify him to serve on the Company’s Board.

 

 

 

 

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Hari N. Nair, age 60

 

 

Picture 18

Director since 2013

Mr. Nair serves as CEO of Anitar Investments LLC, a private investment company with holdings in the manufacturing and technology sectors. Previously, Mr. Nair served as the Chief Operating Officer of Tenneco Inc., a Fortune 500 company with revenues of $9 billion, from 2010 until his retirement in early 2015. He also was a member of the Tenneco Board of Directors from 2009 until his retirement. Prior to being appointed COO, Mr. Nair was President of Tenneco’s International Group, where he was responsible for managing business operations and capitalizing on growth opportunities in Europe, South America and the Asia Pacific regions. Mr. Nair joined Tenneco in 1987 and assumed positions of increasing responsibility across various functions including strategic planning, business development, quality and operations. Mr. Nair’s early career included financial and operations positions with General Motors Corporation and the American Water Company. Mr. Nair currently serves on the boards of Musashi Seimitsu Industry Co., Ltd. based in Japan, Delphi Technologies PLC based in London and as Chairman of Sintercom Limited based in India. Mr. Nair holds a B.S. in engineering from Bradley University, an M.B.A. from the University of Notre Dame, and completed the Advanced Management Program at Harvard Business School. Mr. Nair’s extensive manufacturing experience leading large business operations, global business experience, strategic planning, executive leadership skills, and financial reporting expertise qualify him to serve on the Company’s Board.

 

Joseph D. Rupp, age 69

 

 

Picture 27

Director since 2017

Mr. Rupp was employed by Olin Corporation, a publicly traded global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition located in Clayton, Missouri, from 1972 until his retirement in 2017. During his tenure at Olin, Mr. Rupp held positions of increasing responsibility, serving as President of Olin Brass, Corporate Vice President and Executive Vice President-Operations before being named President and CEO in 2002, a position he held until 2016. Mr. Rupp also served as Chairman of Olin’s Board of Directors from 2005 until April 2017. Mr. Rupp serves as a director of Nucor Corporation, Quanex Building Products, Dot Foods, Inc., Cass Information Systems and on the Board of Trustees, Missouri University of Science and Technology. Mr. Rupp holds a B.S. in metallurgical engineering from Missouri University of Science and Technology, formerly the University of Missouri-Rolla. Mr. Rupp’s extensive business leadership skills, management expertise, executive experience leading a global manufacturer and significant public company board experience qualify him to serve on the Company’s Board.

 

Catherine I. Slater, age 56

Picture 5

Director Nominee

Ms. Slater currently serves as Senior Vice President, Global Cellulose Fibers and IP Asia, at the International Paper Company. She previously served as Senior Vice President, Consumer Packaging, with responsibility for International Paper’s Coated Paperboard and Foodservice businesses. Prior to joining International Paper in 2016, Ms. Slater served in various leadership positions at the Weyerhauser Company, including Senior Vice President, Cellulose Fibers, and Senior Vice President, Engineered Products and Distribution. Ms. Slater started her career as an engineer at Procter & Gamble in 1983 and has held management positions in manufacturing, printing papers, consumer products, wood products and cellulose fiber. Ms. Slater currently serves on the board of the United Way of the Mid-South and previously served on the boards of North Pacific Printing Papers, the American Wood Council and Washington State MESA (Math, Engineering & Science Achievement).  Ms. Slater holds a B.S. in chemical engineering from the University of South Alabama and has completed executive education programs at Harvard University, the Wharton School at the University of Pennsylvania and the Foster School at the University of Washington. She is a guest lecturer at Owens School at Vanderbilt University. Ms. Slater’s global business expertise, executive leadership skills, extensive industry experience and broad manufacturing and technical background qualify her to serve on the Company’s Board.

 

 

 

 

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John H. Walker, age 62

 

 

Picture 31

Director since 2019

Mr. Walker has served as Non-Executive Chairman of Global Brass and Copper Holdings, Inc., a manufacturer and distributor of copper and copper-alloy sheet, strip, plate, foil, rod and fabricated components, since March 2014. Mr. Walker previously served as Executive Chairman of Global Brass and Copper from November 2013 to March 2014 and as Chief Executive Officer from 2007 to March 2014. Prior to joining Global Brass and Copper, Mr. Walker was President and Chief Executive Officer of The Boler Company, the parent company of Hendrickson International, a suspension manufacturer for heavy duty trucks and trailers, from 2003 to 2006. From 2001 to 2003, he served as Chief Executive Officer of Weirton Steel Corporation, a producer of flat rolled carbon steel, and from 2000 to 2001 as President and Chief Operating Officer. From 1997 to 2000, Mr. Walker was President of flat rolled products for Kaiser Aluminum Corporation, a producer of fabricated aluminum products. Mr. Walker has been a director of Nucor Corporation since 2008 (Non Executive Chairman since 2020) and Otis Elevator since 2020, and was a director of Delphi Corporation from 2005 to 2009 and United Continental Holdings, Inc. from 2002 to 2016. Mr. Walker’s extensive executive experience leading global businesses, strategic management skills, vast experience in metal-related manufacturing and fabricating industries and public company board service qualify him to serve on the Company’s Board.

 

Carol A. Williams, age 62

 

 

Picture 23

Director since 2014

Ms. Williams retired in early 2015 after serving as a special advisor to the Chief Executive Officer at Dow Chemical Company, a diversified chemical company. Prior to her special advisor role, she served as Dow’s Executive Vice President of Manufacturing and Engineering, Supply Chain and Environmental, Health & Safety Operations. During Ms. Williams’ 34 year history at Dow, she assumed increasingly more significant management positions in R&D before becoming operations leader and then Vice President for the chloralkali assets business. She was named Senior Vice President of Basic Chemicals in 2009 and President of Chemicals & Energy in 2010. Ms. Williams has served as a board member at Olin Corporation since October 2015. She previously served as a board member at Zep, Inc. from 2012 to 2015. She holds a B.S. in chemical engineering from Carnegie Mellon University where she was selected as an Alumnae of the year in 2009. Ms. Williams received the 2010/2011 Woman of the Year Award from the National Association of Professional Women and in 2014, received the Junior Achievement Laureate award of Mid-Michigan. Ms. Williams’ extensive management expertise from manufacturing to purchasing to supply chain as well as her substantial experience in research and development qualify her to serve on the Company’s Board.

 

 

 

 

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES IDENTIFIED ABOVE.

 

 

 

 

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GOVERNANCE INFORMATION

Board Leadership Structure

The Board decided that the roles of the Board Chair and CEO would be separated as of January 1, 2016. At the 2016 Annual Meeting, the Board selected Carol A. Williams, an independent member of the Board, to become its Independent Board Chair (“IBC”) and the Company eliminated the role of Lead Director.

The primary responsibility of the IBC is to make the Board as effective as possible in fulfilling its oversight responsibility for the Company and to ensure that the Company derives the most benefit from the experience, education and skills of individual Board members.

In fulfilling this primary responsibility, the IBC will be expected to be a leader of his/her peers by taking personal responsibility for delivering excellence in the boardroom. This will mean helping shape meeting agendas, ensuring open communication, meaningful participation and constructive debate and focusing on appropriate follow-through regarding Board conclusions and recommendations.

The IBC will maintain regular communications with other Board members, with the frequency and depth of communications dependent on the issues that are the current focus of the Company. In addition, the IBC will act as a sounding board for the CEO, as well as other members of senior management. In separating the roles of CEO and IBC, the Board has expressly decided that it does not want the IBC to be perceived as “managing the Company” or as an “executive chair” in the eyes of management or the Company’s investors.

As the leader of the Board, the IBC is expected to take the lead in connection with the Board’s self-assessment process and the follow-through necessary to improve the Board’s overall oversight of the Company. Moreover, the IBC will assume a leadership role in CEO succession planning.

Executive Sessions

The Company’s non-employee directors meet in regularly scheduled executive sessions, both with the CEO and also without any members of management present. The purpose of these executive sessions is to promote open and candid discussion between the Board and the CEO and separately among the non-employee directors of the Board. The Board believes this approach effectively complements the Company’s Board leadership structure. The non-employee directors met seven times in executive session in 2019 without management present. As provided by the Guidelines, the IBC presided at these executive sessions.

Risk Oversight

The Board recognizes that an important part of its responsibilities is to evaluate the Company’s exposure to risk and to monitor the steps management has taken to assess and control risk. The Board primarily oversees risks through committees of the Board, particularly through the Risk Oversight Committee and the Audit Committee, as discussed in the descriptions of the committees below. The committees report to the Board and matters of particular importance or concern, including any significant areas of risk faced by the Company, are discussed by the entire Board. In addition, the Board meets with the Company’s regional presidents on a rotating basis to review risk exposure with respect to the Company’s strategic plans and objectives in order to improve long-term organizational performance.

General Board Responsibilities

The Board has the ultimate authority for overseeing the management of the Company’s business. The Board also identifies and evaluates candidates for, and ultimately appoints the Company’s officers, delegates responsibilities for the conduct of the Company’s operations to those officers, and monitors their and the Company’s performance. Certain important functions of the Board are performed by committees comprised of members of the Board, as provided below.

Board Independence

The vast majority of the members of the Board are “independent” in accordance with the New York Stock Exchange listing standards. The Board has affirmatively determined that each of the following directors is an independent director

 

 

 

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of the Company under the listing standards of the New York Stock Exchange: Gordon J. Hardie, Peter S. Hellman, John Humphrey, Anastasia D. Kelly, Alan J. Murray, Hari N. Nair, Hugh H. Roberts, Joseph D. Rupp, John H. Walker, Carol A. Williams and Dennis K. Williams. The Board has also affirmatively determined that the director nominees who are not currently directors, Samuel R. Chapin and Catherine I. Slater, are independent. In making this determination, the Board has determined that none of these directors or nominees have any material relationships with the Company other than their roles as directors.

Board Member Stock Ownership

The Board has established stock ownership guidelines for its members. Each member of the Board is required to own shares of the Company’s Common Stock having a value equal to five times the director’s annual cash retainer. New directors have four years from the date of joining the Board to attain the required stock ownership. Until the stock ownership guidelines are met, directors are required to retain 100% of the “net profit shares” acquired from grants of restricted stock or exercises of stock options. Net profit shares are those shares remaining after payment of tax obligations.

Board Size

The Board currently consists of 12 members. Under the Company’s Amended and Restated Certificate of Incorporation, the maximum size of the Board is 12 members.

Board Meeting Attendance

In 2019, the full Board met 11 times. All of the incumbent members of the Board attended more than 75% of the aggregate number of meetings of the Board and of committees of the Board of which such director was a member. Attendance at Board and committee meetings during 2019 averaged over 96% for directors as a group.

The Company does not have a policy with regard to Board members’ attendance at Annual Meetings, although members of the Board are encouraged to attend. All members of the then-current Board attended the 2019 Annual Meeting.

Corporate Governance Guidelines

A copy of the Company’s Corporate Governance Guidelines is available on the “Investors” section of the Company’s website (www.o-i.com). A copy is also available in print to share owners upon request, addressed to the “Corporate Secretary” at O-I Glass, Inc., One Michael Owens Way, Perrysburg, Ohio 43551‑2999. The address of the Company’s website provided above or elsewhere in the Proxy Statement is not intended to function as a hyperlink, and the contents of the Company’s website are neither a part of this Proxy Statement nor incorporated by reference.

Board Nominees

The Nominating/Corporate Governance Committee is responsible for identifying individuals qualified to become members of the Board and recommending that the Board select the candidates for all directorships to be filled by the Board or by the share owners. The Nominating/Corporate Governance Committee is governed in this regard by its Policies and Procedures Regarding the Identification and Evaluation of Candidates for Director (the “Policies and Procedures”), copies of which are available on the “Investors” section of the Company’s website (www.o-i.com) and in print, free of charge, to share owners upon request to the “Corporate Secretary” at O-I Glass, Inc., One Michael Owens Way, Perrysburg, Ohio 43551‑2999.

Pursuant to the Policies and Procedures, in addition to other qualifications, candidates for the Board should be individuals of the highest integrity and ethical character, who value and appreciate these qualities in others. Candidates should not have any conflicts of interest and be able to represent fairly and equally all share owners of the Company. Candidates are also evaluated on their ability to function effectively in an oversight role and to devote adequate time to the Board and its committees.

The Policies and Procedures require the Nominating/Corporate Governance Committee to consider the contributions that a candidate can be expected to make to the collective functioning of the Board based on the totality of the candidate’s background, skills, experience and expertise and the composition of the Board at the time. The Policies and Procedures also state the Nominating/Corporate Governance Committee’s belief that diversity is an important attribute of a well-functioning Board and the Policies and Procedures, the Guidelines and the Nominating/Corporate Governance

 

 

 

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Committee’s Charter each require the Nominating/Corporate Governance Committee to take into consideration the benefits of having Board members who reflect a diversity of age, gender, ethnicity and country of citizenship.

The Company maintains a skills matrix, and actively monitors the skills, experience and expertise of all its individual directors with an eye towards ensuring that the Board is balanced with respect to key skill sets. Given that the Company is a large global public manufacturing company, many of the Board’s directors have skills and experience relating to similar organizations. The Board also has strong skills, experience and expertise in other areas, including finance and capital allocation, mergers and acquisitions, strategic planning and corporate governance. The Nominating/Corporate Governance Committee considers the skills, experience and expertise of Board members expected to retire or leave the Board in the near future when it identifies candidates for Board membership. The Nominating/Corporate Governance Committee also considers in its nomination processes the recommendations of current Board members regarding particular skills that could improve the ability of the Board to carry out its responsibilities.

Director Experience and Skills

The following chart represents the diverse range of experience and skills offered by the 12 nominees for director.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing

Operations

    

Public Company Management

    

Global Business

    

Corporate Governance

    

Financial

    

Marketing/Sales

    

Risk

Management

    

Engineering

Samuel R. Chapin

 

 

 

X

 

X

 

X

 

X

 

 

 

X

 

 

Gordon J. Hardie

 

X

 

X

 

X

 

X

 

 

 

X

 

X

 

 

Peter S. Hellman

 

X

 

X

 

X

 

X

 

X

 

X

 

X

 

 

John Humphrey

 

X

 

X

 

 

 

 

 

X

 

 

 

X

 

X

Anastasia D. Kelly

 

 

 

X

 

 

 

X

 

 

 

 

 

X

 

 

Andres A. Lopez

 

X

 

X

 

X

 

X

 

X

 

X

 

X

 

X

Alan J. Murray

 

X

 

X

 

X

 

X

 

X

 

X

 

X

 

 

Hari N. Nair

 

X

 

X

 

X

 

X

 

X

 

X

 

X

 

X

Joseph D. Rupp

 

X

 

X

 

X

 

X

 

X

 

X

 

X

 

X

Catherine I. Slater

 

X

 

X

 

X

 

 

 

X

 

X

 

X

 

X

John H. Walker

 

X

 

X

 

X

 

X

 

X

 

 

 

X

 

X

Carol A. Williams

 

X

 

X

 

X

 

X

 

X

 

X

 

X

 

X

The Nominating/Corporate Governance Committee will consider potential candidates for director who have been recommended by the Company’s directors, the CEO, other members of senior management and share owners. Outside consultants may also be employed to help identify potential candidates. Mr. Chapin was recommended to the Nominating/Corporate Governance Committee as a director candidate by the Board in consultation with investors. Ms. Slater was recommended to the Nominating/Corporate Governance Committee as a director candidate by a third-party search firm engaged by the Company under the direction of the Nominating/Corporate Governance Committee to assist in identifying potential director candidates. Pursuant to its Policies and Procedures, the Nominating/Corporate Governance Committee conducts all necessary and appropriate inquiries into the backgrounds and qualifications of possible candidates and considers questions of independence and possible conflicts of interest. Members of the Nominating/Corporate Governance Committee discuss and evaluate possible candidates in detail, and determine which individuals to consider in more depth. Once a candidate is identified whom the Nominating/Corporate Governance Committee wants to move toward nomination, one or more members of the Nominating/Corporate Governance Committee will enter into discussions with the candidate. The procedures for the nomination of director candidates by share owners are described under the heading “2021 Annual Meeting of Share Owners.”

The performance of incumbent members of the Board is evaluated annually by the Nominating/Corporate Governance Committee. Incumbent directors who continue to satisfy the Nominating/Corporate Governance Committee’s criteria for

 

 

 

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Board membership and whom the Nominating/Corporate Governance Committee believes continue to make important contributions to the Board generally will be renominated by the Board at the end of their term.

Code of Business Conduct and Ethics

The Company has a Global Code of Business Conduct and Ethics (the “Code”) that is applicable to all directors, officers and employees of the Company, including the Chief Executive Officer and Chief Financial Officer. The Code is available on the “Investors” section of the Company’s website (www.o-i.com) and in print, free of charge, to share owners upon request, addressed to the “Corporate Secretary” at O-I Glass, Inc., One Michael Owens Way, Perrysburg, Ohio 43551‑2999.

Communicating with the Board

Share owners and other interested parties may contact any member (or all members) of the Board (including, without limitation, the non-employee directors as a group), the IBC, any Board committee or any Chair of any such committee. To communicate with the Board, the IBC, any individual directors or any group or committee of directors, correspondence should be addressed to the “Board of Directors,” the “IBC” or any such individual directors or group or committee of directors by either name or title. All such correspondence should be sent in care of the “Corporate Secretary” at O-I Glass, Inc., One Michael Owens Way, Perrysburg, Ohio 43551‑2999. All communications so received will be opened by the Corporate Secretary for the sole purpose of determining whether the contents represent a message to the directors. Any contents that are not in the nature of advertising, promotions of a product or service or patently offensive material will be forwarded promptly to the addressees. In the case of communications to the Board, the IBC or any group or committee of directors, the Corporate Secretary will distribute the contents to each director who is a member of the group or committee to which the contents are addressed.

 

 

 

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BOARD AND COMMITTEE MEMBERSHIP

There are four standing committees of the Board: the Audit Committee, the Compensation and Talent Development Committee, the Nominating/Corporate Governance Committee and the Risk Oversight Committee. Subject to applicable provisions of the Company’s By-Laws and Corporate Governance Guidelines, the Board appoints the members of each committee and rotates members periodically consistent with the experience and expertise of individual directors.

Current Committee Membership

Directors currently serving on committees of the Board and the number of meetings held in 2019 by the committees are identified below.

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation

 

Nominating/

 

 

 

 

 

 

and Talent

 

Corporate

 

Risk

Name

    

Audit

    

Development

    

Governance

    

Oversight

Independent Directors:

 

  

 

  

 

  

 

  

Gordon J. Hardie

 

  

 

  

 

  

 

Chair

Peter S. Hellman

 

X

 

X

 

  

 

  

John Humphrey

 

X

 

 

 

 

 

 

Anastasia D. Kelly

 

  

 

  

 

Chair

 

X

Alan J. Murray(1)

 

Chair

 

  

 

 

 

  

Hari N. Nair(2)

 

X

 

X

 

  

 

  

Hugh H. Roberts

 

  

 

X

 

X

 

  

Joseph D. Rupp(3)

 

 

 

Chair

 

X

 

  

John H. Walker(4)

 

 

 

 

 

X

 

X

Carol A. Williams

 

  

 

  

 

X

 

  

   Dennis K. Williams

 

X

 

X

 

  

 

  

Non-Independent Directors:

 

  

 

  

 

  

 

  

Andres A. Lopez

 

  

 

  

 

  

 

X

Number of meetings in 2019

 

9

 

7

 

6

 

5


(1)

On May 16, 2019, Mr. Murray resigned from the Nominating/Corporate Governance Committee.

(2)

On May 16, 2019, Mr. Nair resigned from his position as Chair of the Compensation and Talent Development Committee, but continued to serve as a member of the Compensation and Talent Development Committee.

(3)

On May 16, 2019, Mr. Rupp began serving as Chair of the Compensation and Talent Development Committee.

(4)

On May 16, 2019, Mr. Walker began serving as a director of the Company and as a member of the Nominating/Corporate Governance Committee and the Risk Oversight Committee.

Audit Committee

The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee represents and assists the Board with the oversight of: (a) the integrity of the Company’s financial statements and internal controls; (b) the Company’s compliance with legal and regulatory requirements; (c) the independent registered public accounting firm’s qualifications and independence; and (d) the performance of the Company’s internal audit function and of the independent registered public accounting firm. The Audit Committee operates under a written charter adopted by the Board that sets forth the specific responsibilities of the Audit Committee. A copy of the Audit Committee Charter is available on the “Investors” section of the Company’s website (www.o-i.com) and in print, free of charge, to any share owner upon request addressed to the “Corporate Secretary” at O-I Glass, Inc., One Michael Owens Way, Perrysburg, Ohio 43551‑2999.

All members of the Audit Committee meet the audit committee independence requirements of the New York Stock Exchange and also satisfy the independence standards applicable to audit committees pursuant to Rule 10A‑3(b)(i) under the Exchange Act. The Board has determined that Mr. Murray, the Chair of the Audit Committee,  and Messrs. Hellman and Humphrey are each qualified as an “audit committee financial expert” within the meaning of SEC regulations and that all of the Audit Committee members meet the financial literacy requirements of the New York Stock Exchange. No member of the Audit Committee serves on the audit committee of more than three public companies.

 

 

 

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Compensation and Talent Development Committee

The Compensation and Talent Development Committee assists the Board with respect to compensation of the Company’s directors, officers and employees. In carrying out such responsibilities, the Compensation and Talent Development Committee administers the Amended and Restated 1997 Equity Participation Plan, the Second Amended and Restated 2005 Incentive Award Plan, the Amended and Restated 2017 Incentive Award Plan, the Company’s annual bonus plans and certain other benefit plans of the Company and makes recommendations to the Board with respect to the compensation to be paid and benefits to be provided to directors, officers and employees of the Company. The Compensation and Talent Development Committee also oversees and reviews management succession planning and development for key executive positions other than the Chief Executive Officer, including ensuring the availability of qualified replacements and planning for contingencies such as the departure, death or disability of key executives so that the Company has in place an emergency succession plan that addresses both interim and longer-term leadership for the Company. The Compensation and Talent Development Committee makes recommendations to the Board with respect to the adequacy of the succession and development plans for key executive officer positions other than the Chief Executive Officer.

The Compensation and Talent Development Committee operates under a written charter adopted by the Board that sets forth the specific responsibilities of the Compensation and Talent Development Committee. A copy of the Compensation and Talent Development Committee Charter is available on the “Investors” section of the Company’s website (www.o‑i.com) and in print, free of charge, to any share owner upon request addressed to the “Corporate Secretary” at O-I Glass, Inc., One Michael Owens Way, Perrysburg, Ohio 43551‑2999.

Each member of the Compensation and Talent Development Committee is an “independent director” under the New York Stock Exchange listing standards.

Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee assists the Board by (a) identifying and evaluating individuals qualified to become directors; (b) selecting, or recommending that the Board select, the candidates for all directorships to be filled by the Board or by the share owners; (c) developing and recommending to the Board a set of corporate governance principles contained in the Company’s Corporate Governance Guidelines and Global Code of Business Conduct and Ethics; (d) overseeing the evaluation of the Board and management of the Company; (e) taking a leadership role in shaping the corporate governance of the Company; (f) overseeing CEO succession planning and development; and (g) overseeing the Company’s Ethics and Compliance function, in conjunction with other committees requested to address issues arising in this area.

The Nominating/Corporate Governance Committee operates under a written charter adopted by the Board that sets forth the specific responsibilities of the Nominating/Corporate Governance Committee. A copy of the Nominating/Corporate Governance Committee Charter is available on the “Investors” section of the Company’s website (www.o-i.com) and in print, free of charge, to share owners upon request, addressed to the “Corporate Secretary” at O-I Glass, Inc., One Michael Owens Way, Perrysburg, Ohio 43551‑2999.

Each member of the Nominating/Corporate Governance Committee is an “independent director” under the New York Stock Exchange listing standards.

The Nominating/Corporate Governance Committee will accept recommendations from share owners for nominees for the Board. The procedures for submitting share owner recommendations are described under the heading “2021 Annual Meeting of Share Owners.”

Risk Oversight Committee

The Risk Oversight Committee assists the Board in fulfilling its oversight responsibilities with respect to the Company’s risk management processes. The Risk Oversight Committee: (a) provides oversight of management’s policies and activities relating to the identification, evaluation, management and monitoring of the Company’s significant enterprise risks, including the major strategic, operational, financial, regulatory, compliance, cyber security, reporting, reputational, governance and human resources and labor risks inherent in the business of the Company (the “Enterprise Risks”); (b) oversees compliance with legal and regulatory requirements with respect to the conduct of the Company’s business, except for those specific compliance matters under the jurisdiction of other Committees of the Board, as determined by

 

 

 

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the Board; and (c) reports to the Board regarding the Enterprise Risks that have the potential to significantly impact the Company’s ability to execute its strategic priorities and achieve its performance goals.

The Risk Oversight Committee operates under a written charter adopted by the Board that sets forth the specific responsibilities of the Risk Oversight Committee. A copy of the Risk Oversight Committee Charter is available on the “Investors” section of the Company’s website (www.o-i.com) and in print, free of charge, to share owners upon request to the “Corporate Secretary” at O-I Glass, Inc., One Michael Owens Way, Perrysburg, Ohio 43551‑2999.

Under the terms of the Risk Oversight Committee Charter, the Risk Oversight Committee (a) reviews and submits for Board approval the Company’s Risk Management Philosophy, Risk Management Policy and Statement of Risk Appetite, as developed by management; (b) reviews management’s processes designed to identify, assess, manage, monitor and report the Company’s significant Enterprise Risks; (c) reviews, monitors and discusses with management the Company’s significant Enterprise Risks and opportunities including steps management is taking to assess and manage such risks and opportunities; (d) reviews the Company’s disclosure of Enterprise Risks in all filings with the SEC (including the Annual Report on Form 10-K); and (e) together with the Audit Committee, reviews, assesses and discusses with the general counsel, the Chief Financial Officer and the independent registered public accounting firm (i) any significant risks or exposures; (ii) the steps management has taken to minimize such risks or exposures; and (iii) the Company’s underlying policies with respect to risk assessment and risk management.

 

 

 

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DIRECTOR COMPENSATION AND OTHER INFORMATION

Director Compensation

Each non-employee director of the Company receives an annual retainer of $72,500, paid quarterly. Each non-employee director also receives $2,000 for each Board meeting in which such director participates and for each committee meeting in which such director participates as a member (including as Chair). Chairs also receive additional annual retainers paid quarterly as follows:

·

Independent Board Chair – $150,000

·

Audit Committee Chair – $25,000

·

Compensation and Talent Development Committee Chair – $20,000

·

Nominating/Corporate Governance and Risk Oversight Committee Chairs – $15,000

Each non-employee director also receives on the date immediately following the date of the Company’s annual meeting of share owners at which directors are elected (“Date of Grant”), a grant of restricted stock units (“RSUs”) with respect to a number of shares of Common Stock having a fair market value on the Date of Grant equal to $125,000, rounded up or down to the nearest whole share of Common Stock, pursuant to the terms of the applicable Company equity incentive plan (the “Annual Grant”).

The RSUs subject to the Annual Grant vest in full on the date of the Company’s next annual meeting of share owners at which directors are elected following the Date of Grant (the “Normal Vesting Date”), subject to the director’s continued service through such date, or, if earlier, upon the applicable director’s termination of service due to death, disability or retirement (after reaching age 60). In addition, upon termination of service for reasons other than death, disability, retirement or removal for cause, the RSUs will vest pro rata based on the number of days of the applicable director’s service from the Date of Grant to the Normal Vesting Date.  All RSUs are immediately forfeited upon a non-employee director’s removal for cause. All RSUs will fully vest upon a change in control. Vested RSUs are settled in shares of Common Stock, on a one for one basis, within 30 days after the Normal Vesting Date, or if earlier, termination of service.

In the event a new non-employee director joins the Board on any date other than the date of the annual meeting of share owners, in addition to the Annual Grant, such new non-employee director will also receive on the date immediately following the first annual meeting of share owners at which directors are elected during such director’s tenure on the Board an additional grant of RSUs with respect to a number of shares of Common Stock having a fair market value on the date of such grant equal to the fair market value of the Annual Grant awarded to directors in the previous year, pro-rated based on the number of days of service in the period from the commencement of such director’s service on the Board to the date of such grant.

Beginning with the RSUs granted in 2019, awards were granted with tandem dividend equivalents, which conferred on the holder of such RSUs the right to receive dividend equivalent payments for dividends declared over the  time-vesting period during which such units remain outstanding. Such dividend equivalents are payable only if and when the underlying unit vests and will generally be paid in cash upon or shortly after vesting of the underlying unit.

The Deferred Compensation Plan for Directors of O-I Glass, Inc. provides an opportunity for non-employee directors to defer payment of their directors’ fees. Under the plan, a non-employee director may defer receipt of all or any portion of the cash portion of the compensation described above. Deferrals may be credited into a cash account or into a Company stock unit account. Funds held in a cash account accrue interest at a rate equal to the average annual yield on domestic corporate bonds of Moody’s A-rated companies, plus one percent. Distributions from the plan are made in cash.

Each director is reimbursed for expenses associated with meetings of the Board or its committees.

 

 

 

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The total compensation earned by non-employee directors in 2019 is reflected in the following table:

DIRECTOR COMPENSATION IN 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock

 

 

 

 

 

Fees Earned

 

Awards

 

 

 

Name

    

(1)

    

(2)

    

Total

Gordon J. Hardie

 

 

117,500

 

 

125,000

 

 

242,500

Peter S. Hellman

 

 

122,500

 

 

125,000

 

 

247,500

John Humphrey

 

 

110,500

 

 

125,000

 

 

235,500

Anastasia D. Kelly

 

 

131,500

 

 

125,000

 

 

256,500

John J. McMackin, Jr.(3)

 

 

39,287

 

 

 —

 

 

39,287

Alan J. Murray

 

 

141,500

 

 

125,000

 

 

266,500

Hari N. Nair

 

 

132,028

 

 

125,000

 

 

257,028

Hugh H. Roberts

 

 

120,500

 

 

125,000

 

 

245,500

Joseph D. Rupp

 

 

132,973

 

 

125,000

 

 

257,973

John H. Walker(4)

 

 

75,213

 

 

125,000

 

 

200,213

Carol A. Williams

 

 

254,500

 

 

125,000

 

 

379,500

Dennis K. Williams

 

 

118,500

 

 

125,000

 

 

243,500


(1)

The cash amounts earned by each director are made up of the following amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Committee

 

Board

 

Committee

 

 

 

 

 

Annual

 

Chair

 

Meeting

 

Meeting

 

 

 

Name

    

Retainer

    

Retainer(6)

    

Fees

    

Fees

    

Total

Gordon J. Hardie

 

 

72,500

 

 

15,000

 

 

20,000

 

 

10,000

 

 

117,500

Peter S. Hellman

 

 

72,500

 

 

 —

 

 

20,000

 

 

30,000

 

 

122,500

John Humphrey

 

 

72,500

 

 

 —

 

 

20,000

 

 

18,000

 

 

110,500

Anastasia D. Kelly

 

 

72,500

 

 

15,000

 

 

22,000

 

 

22,000

 

 

131,500

John J. McMackin, Jr.

 

 

27,287

 

 

 —

 

 

8,000

 

 

4,000

 

 

39,287

Alan J. Murray

 

 

72,500

 

 

25,000

 

 

22,000

 

 

22,000

 

 

141,500

Hari N. Nair(5)

 

 

72,500

 

 

7,528

 

 

20,000

 

 

32,000

 

 

132,028

Hugh H. Roberts

 

 

72,500

 

 

 —

 

 

22,000

 

 

26,000

 

 

120,500

Joseph D. Rupp(5)

 

 

72,500

 

 

12,473

 

 

22,000

 

 

26,000

 

 

132,973

John H. Walker

 

 

45,213

 

 

 —

 

 

16,000

 

 

14,000

 

 

75,213

Carol A. Williams

 

 

72,500

 

 

150,000

 

 

20,000

 

 

12,000

 

 

254,500

Dennis K. Williams

 

 

72,500

 

 

 —

 

 

20,000

 

 

26,000

 

 

118,500


(2)

Amounts reflect the aggregate grant date fair value of RSUs computed in accordance with Financial Accounting Standard Board (“FASB”) ASC 718. Each of the current non-employee directors held 7,200 unvested restricted stock units as of December 31, 2019.

(3)

Mr. McMackin served as a Director through May 16, 2019.

(4)

Mr. Walker became a Director on May 16, 2019.

(5)

Mr. Nair resigned as Chair of the Compensation and Talent Development Committee and Mr. Rupp began serving as Chair of the Compensation and Talent Development Committee on May 16, 2019.

(6)

Includes the IBC Retainer.

Related Person Transactions

Pursuant to written policies and procedures set forth in the Company’s Corporate Governance Guidelines, the Company reviews relationships and transactions in which the Company and its directors and executive officers, or their immediate family members, are participants. The Board has delegated initial review of such transactions to the Nominating/Corporate Governance Committee. The Company’s Corporate Governance Guidelines provide that the Nominating/Corporate Governance Committee will review and, if appropriate, recommend to the full Board the approval or ratification of related party transactions. Pursuant to the Guidelines, the Nominating/Corporate Governance

 

 

 

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Committee takes into account the following factors: the related person’s connection to the Company and interest in the transaction, the approximate dollar value of the transaction, the importance of the transaction to the related person and the Company, whether the transaction would impair the judgment of the director or executive officer to act in the best interests of the Company, and any other appropriate information.

During 2019, the law firm of Williams & Jensen, PLLC, of which Mr. McMackin (who was a board member of the Company through May 16, 2019) is a principal, billed the Company approximately $500,000 for consulting and legal services in connection with various matters. Williams & Jensen, PLLC is an independently owned, Washington, D.C. law firm with particular expertise in the area of government affairs. Upon the review and recommendation of the Nominating/Corporate Governance Committee, the Board reviewed and approved the Company’s 2019 engagement of Williams & Jensen, PLLC at the billing levels indicated above.

Compensation and Talent Development Committee Interlocks and Insider Participation

During 2019, the following directors served on the Compensation and Talent Development Committee of the Board: Peter S. Hellman, Hari N. Nair, Hugh H. Roberts, Joseph D. Rupp (Chair) and Dennis K. Williams. No member of the Compensation and Talent Development Committee is a current or former officer or employee of the Company or has any relationship with the Company requiring disclosure under Item 404 or Item 407(e)(4)(iii) of Regulation S‑K. In addition, no executive officer of the Company served on any board of directors or compensation committee of any other board for which any of the Company’s directors served as an executive officer at any time during 2019.

 

 

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes the material elements of the compensation of the Company’s named executive officers (“NEOs”), the objectives and principles underlying executive compensation programs, the Company’s recent compensation decisions, and the factors considered in making those decisions. The Company’s NEOs for 2019 were:

 

 

 

Name

    

Position

Andres A. Lopez

 

President and Chief Executive Officer (“CEO”)

John A. Haudrich (1)

 

Senior Vice President and Chief Financial Officer (“CFO”)

Jan A. Bertsch (2)

 

Former Senior Vice President and CFO

Miguel I. Alvarez

 

President, O-I Americas

Giancarlo Currarino

 

Senior Vice President and Chief Technology and Supply Chain Officer

Mary Beth Wilkinson

 

Senior Vice President, General Counsel and Corporate Secretary


(1)

Mr. Haudrich served as Senior Vice President and Chief Strategy and Integration Officer through April 3, 2019 and as Senior Vice President and Chief Financial Officer commencing April 4, 2019. 

(2)

Ms. Bertsch served as Senior Vice President and Chief Financial Officer through April 3, 2019, and remained an employee through her retirement on May 31, 2019.  

Executive Summary

The O-I Glass Compensation and Talent Development Committee (“the Committee”) is committed to working with the Board of Directors and management to design compensation plans that motivate the Company’s executives and support business objectives that create share owner value. In 2018 the Company engaged in extensive share owner outreach. The outreach discussions indicated support for the Company’s executive pay program and identified no fundamental issues.  For the 2019 performance cycle the Committee made two important changes to the Company’s compensation plans to further align the program’s ties to performance in general and share owners’ interests. Specifically, the Company: 

§

introduced relative total shareholder return (“r-TSR”) as a modifier to the performance stock unit payout; and

§

increased the portion of target long-term incentive (“LTI”) value delivered in the form of performance stock units from 50% to 60%.

 

The Company believes this revised pay program supports the Company’s business objectives and reflects share owners’ interests, as demonstrated by the overwhelmingly strong support (with 97% approval) from share owners for the Company’s advisory Say on Pay vote received in 2019.  Further, the incentive program payout levels and the associated stock price movement are consistent with a historical trend of being closely aligned with the returns earned by its investors relative to those of the S&P 500 or its pay benchmarking companies as more clearly seen in the realizable pay and performance analysis covered beginning on page 24, demonstrating the strong alignment of pay for performance.

 

The Foundation: The Strategic Plan for the Company

The strategic plan for the Company serves as the foundation for its pay program. The Company’s vision is to shape a healthier and more exciting world with innovative and competitive packaging solutions for food and beverage brands. Its goal is to win the fight for glass and achieve success for its customers, employees and share owners. The Company will realize its vision and goal by achieving its three strategic ambitions including:

 

§

To be the preferred supplier for glass packaging in the global food and beverage industry by significantly improving the customer experience; aligning its activity with customers’ value to grow revenue together; improving quality and flexibility; improving innovation and speed of commercialization; improving its environmental profile; as well as increasing sales, marketing, end-to-end supply chain capabilities and talent;

 

 

 

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§

To be the most cost effective producer in the global glass packaging segment by ensuring asset stability and total systems cost management; elevating factory profitability and efficiency, leveraging automation, and improving quality; cultivating game changing concepts that create new competitive advantages; and focusing on continuous improvement; and

§

To create a new business model to make glass increasingly more relevant and accessible by leveraging innovation; developing breakthrough technology; and enabling the value chain.

The Company continues to emphasize collaboration across the Company, leveraging its knowledge and expertise, increasing accountability, and aligning incentives with the right results, with a focus on one team, one enterprise and one plan. The Company believes successful execution along these lines will lead to enhanced value for share owners, customers, and employees. 

 

Despite a very challenging year, the Company continued to execute its strategy in 2019 by taking a number of bold structural actions to change O-I's business fundamentals. First, the Company is optimizing its structure. This includes ensuring it has the right business portfolio for evolving markets. After a few recent acquisitions geared to increase exposure to attractive growing markets, the Company is now focused on divesting assets that are not core to its strategy. In addition, in late December, the Company completed its corporate modernization initiative, whereby O-I Glass became the Company’s new parent entity and O-I Group and Paddock became direct, wholly owned subsidiaries. In January 2020, Paddock voluntarily filed for relief under Chapter 11, structurally isolating the Company’s legacy asbestos liabilities from O-I Glass, Inc. and the glass-production operations and setting in motion efforts to finally resolve its legacy asbestos liability. With Paddock's Chapter 11 filing, definitive action has been taken to establish a final, certain and equitable resolution to legacy asbestos-related liabilities. Proceeds from divestitures, along with decisive actions to address legacy liabilities, will improve the health of the Company’s balance sheet. All of these actions are well underway. Second, the Company is focused on turning around its business performance and initiated a number of important turnaround initiatives. Third, with an eye on the long term, the Company continues to advance MAGMA, technology that would enable dramatic reductions in capital intensity, improve speed to market, and significantly enhance flexibility, creating a new business model for the glass packaging industry. The Company is confident that these efforts will improve business performance and cash flows in 2020 and beyond.  Coupled with important trends like sustainability, the glass packaging industry and the Company are well positioned for future growth.

 

Linking the Company’s Incentives to Its Plan and Share Owner Interests

For the 2019 Short-Term Incentive (“STI”) Plan in which the NEOs participated, the Committee maintained the measures of Earnings Before Interest and Taxes (“EBIT”) (weighted at 80%) to continue management’s focus on profitability, the need to control costs and accountability for delivering financial results, and Free Cash Flow (“FCF”) (weighted at 20%) critical for managing the Company’s financial obligations, deleveraging its balance sheet, investing in its business, and returning value to share owners.  Further, the Committee continued to base its STI awards on overall enterprise results, reinforcing the Company’s strategy of one team, one enterprise and one plan.

For the 2019 LTI Plan, the Committee increased the portion of the target value delivered in the form of performance stock units from 50% to 60% of target value, with the remaining 40% delivered in the form of time-based restricted stock units. Further, such awards have dividend equivalents to align them with the total returns provided to shareholders and are only payable to the degree the underlying awards vest. The Committee also continued its approach for measuring long-term results associated with the performance stock units, wherein awards are based on the Company’s performance for a full three-year period as measured by cumulative Adjusted Net Earnings Per Share (“EPS”) and a three-year average Return on Invested Capital (“ROIC”), weighted equally, maintaining the program’s ties to delivering sustained, long-term financial results.  In addition, the Company added r-TSR as a modifier to the performance stock unit payout, further strengthening the program’s ties to share owners’ interests.

The Committee continued to set challenging incentive goals for both the STI and LTI plans consistent with the Board’s expectations of management and its commitments to share owners.  As shown below, the Company’s incentive structure is highly motivational and creates share owner alignment.

Incentive Plan Results: Reflect the Company’s Performance

The Company is confident that its new and bold strategy will continue to evolve and lead to improvement in its operating and stock price performance over the next few years. However, 2019 remained a year of challenging transitions as the Company started to execute that strategy. The disappointing key performance results shown below reflect the impact of

 

 

 

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this transition. Thus, the Company’s stock price was down significantly for the year. The Company was buoyed, however, to see the positive stock price reaction to its announcement of Paddock and other strategic actions—with the stock price increasing more than 30% from the announcement in November 2019 to the end of the year.

Key Performance Highlights

 

 

Delivered EBIT (as defined on page 28) of $753M, a 14% decrease from prior year, which fell below the threshold performance level for this STI measure.

 

 

 

 

Produced FCF (as defined on page 28) of $13M, a 96% decrease from prior year, which fell below the threshold performance level for this STI measure.

 

 

 

 

Generated cumulative EPS (as defined on page 32) of $7.58 over the three-year performance period 2017-20191, generating a payout below target for this measure under the Company’s LTI performance stock unit program.

 

 

 

 

Achieved average ROIC (as defined on page 32) of 10.64%, which significantly exceeded the Company’s weighted average cost of capital, generating a payout slightly above target level for this measure under the Company’s LTI performance stock unit program.

 

 

 

 

Returned value to share owners, by instituting a quarterly dividend beginning in the first quarter of 2019.


(1)

Adjusted to exclude the effect of share buybacks above dilution.

These results were reflected in the compensation actually earned and paid for 2019 under the Company’s incentive plans, which required management to meet challenging goals. 

The Company’s NEOs did not earn a payout under the 2019 STI program.  Management and the Committee believe this result is aligned with the underlying operating performance of the Company for 2019.  The Company’s NEOs earned performance stock units for the 2017-2019 period at 90% of target, based on above-target EPS and ROIC performance in 2017 and 2018, offset by below-target EPS performance and threshold ROIC performance in 2019. While they vested in 90% of the target number of performance stock units, they actually earned 55% of their target grant value as the Company’s stock price declined from $19.57(a) to $11.93(b) during the 2017-2019 period, consistent with the Company’s aim of linking executives’ interests to share owners’ interests. The Committee felt that the payout reflected the Company performance for the period, as the Company had strong performance in 2017 and 2018, offset by weaker performance in 2019. As the performance stock units are earned based on cumulative EPS and average ROIC for each year of a three-year performance period, the payouts for the performance stock units granted in 2018 and 2019 will also be negatively affected by the performance of the Company for 2019.

These payout levels are consistent with the Company’s historical trend of being closely aligned with the changes in our stock price and the returns earned by its investors relative to those of the S&P 500 or its pay benchmarking companies. This is more clearly seen in the realizable pay and performance analysis covered beginning on page 24. In addition, the Company’s stock ownership guidelines and substantial executive stock ownership also created significant alignment with the share owners, as the value of those holdings reflect changes in the Company’s stock price.

No Problematic Pay Practices

The Committee regularly monitors the Company’s pay practices, which are consistent with good corporate governance and identified best practices.  The Committee has established a clawback or recovery policy covering cash and equity incentives. Double triggers have been established for receiving any benefits associated with a change-in-control. Further, the Company does not offer tax gross-ups for any severance benefits or executive perquisites, with the exception of a tax gross up on the annual economic value of the executive life insurance benefit for Mr. Lopez, as the Committee previously determined that it was not in the share owners’ best interest to incur the costs that would be required to eliminate this contractually based benefit. No other NEOs are eligible for gross-ups on these benefits. The stock ownership guidelines are consistent with those of other large companies and are reinforced by stock holding requirements.


(a) Based on the closing price of the Company's Common Stock on the New York Stock Exchange on March 6, 2017.

(b) Based on the closing price of the Company's Common Stock on the New York Stock Exchange on December 31, 2019, the last business day of the year.

 

 

 

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The Committee also prohibits its directors, officers and employees from hedging their ownership of Company securities, whether such securities are granted as compensation or held directly or indirectly. This includes, but is not limited to, trading in publicly traded options, puts, calls, or other derivative instruments related to Company securities, such as zero cost collars and forward sale contracts. 

2020 Say on Pay

The Company’s 2020 Say on Pay proposal is found on page 61. The Company’s 2019 Say on Pay proposal received 97% support from share owners, up from 78% in 2018. In response to the decline in support in 2018 compared to 2017, the Company conducted a share owner outreach initiative, wherein it reached out to its largest 20 share owners and met with those that expressed interest. As discussed above, while the outreach discussions indicated strong support for its executive pay program and identified no fundamental issues, the Committee made two important changes to the Company’s compensation plans for 2019 to strengthen the program’s ties to performance in general and share owners’ interests. Specifically, the Company:

§

introduced r-TSR as a modifier to the performance stock unit payout and

§

increased the portion of the target LTI value delivered in the form of performance stock units from 50% to 60%.

In addition, the Board, at the recommendation of the Committee, amended its Insider Trading Policy in 2018 to prohibit the Company’s directors, executive officers, employees and other covered personnel from purchasing Company securities on margin, pledging Company securities as collateral for a loan, and borrowing against any account in which company securities are held. Prior to this revision, Company securities could be pledged with pre-clearance from the Company’s General Counsel and notice to the Committee. While none of the NEOs or directors had pledged shares in the past, the Committee felt it important to implement this practice as the Company’s formal policy.

As a result, the Committee believes the Company’s executive compensation program continues to represent share owners’ interests in a responsible and reasonable fashion and warrants your support at this year’s Annual Meeting.

Compensation Principles

The Committee maintains executive compensation programs designed to align executive pay with share owner interests and the annual and long‑term performance of the Company. The Company believes its executive compensation program strikes the appropriate balance between using responsible, measured pay practices and providing rewards that effectively attract and retain executives while motivating them to create value for the share owners. Key elements of this pay strategy include:

Key Principles of Compensation

 

 

Targeting total direct compensation (overall and by element) for the NEOs to approximate market median pay levels, while also considering internal equity, and regularly evaluating pay versus market practices using comparator company and survey comparisons;

 

 

 

 

Ensuring that a majority of target compensation for each NEO is in the form of annual and long-term incentives, the latter delivered primarily in stock;

 

 

 

 

Analyzing annually the relationship between executive pay and Company performance to ensure alignment; and

 

 

 

 

Completing regular risk assessments, taking into consideration the Company’s business model, incentive plan design (including mix of incentive vehicles, balance of performance measures, target setting methodology, caps on payouts, etc.) and policies designed to reduce risk (such as share ownership and retention guidelines, clawback policy, and anti‑hedging and prohibition of pledging policy), among other considerations, to evaluate if the Company’s compensation program promotes excessive risk taking.

 

 

 

 

 

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Say on Pay Vote and Share Owner Outreach

 

 

 

 

 

 

97%

   

In the 2019 “Say on Pay” vote, the Company’s share owners approved its executive compensation program with a 97% approval rating. The Committee continues to believe the Company’s compensation programs are well aligned with both share owners’ interests, competitive market practices and the overall performance of the Company and the individual executive. Nonetheless, the Committee and management regularly review compensation programs to ensure such alignment continues and make changes as appropriate or necessary.

 

 

 


As the Company believes that an annual “Say on Pay” vote encourages beneficial dialogue on compensation and provides the most consistent and clear communication channel for share owner concerns about executive compensation, the Company is holding an annual advisory vote in 2020 to approve executive compensation. The Committee will continue to consider the results from this year’s and future advisory votes on executive compensation. The Company continues to actively engage major share owners and proxy advisory firms, ISS and Glass Lewis, regarding executive pay and its alignment with share owner interests, as well as the preferred frequency in which to conduct the “Say on Pay” vote.  The Company believes these discussions have confirmed the reasonableness and appropriateness of the executive pay program’s principles, structure and outcomes.

Compensation and Governance Practices

The Company’s executive compensation programs are designed to reflect appropriate governance practices aligned with the needs of the business. Below is a summary of compensation practices the Company has adopted to drive performance and to align with share owner interests, followed by a list of practices the Company does not subscribe to because the Company does not believe they would serve their share owners’ long‑term interests.

 

 

 

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What the Company Does/Has

    

What the Company Does Not Do/Have

  Aligned Pay and Performance

  Appropriately Demanding Incentive Goals

  Incentive Metrics Aligned with Value Creation Strategy: higher earnings (EBIT and EPS), greater free cash flow, capital efficiency (ROIC) and stock price (equity awards)

  Balanced Compensation Structure: fixed vs. variable; annual vs. long term; cash vs. stock; service vs. performance-based awards

  Target Market Median Pay Levels based on pay data of Peers and Other Industrial Companies of Similar Size

  Compensation Recovery (Clawback) Policy

  Stock Ownership and Retention Guidelines

  Double Trigger (a change in control and an involuntary termination) Requirement for Equity Vesting

  Anti-Hedging and Prohibition of Pledging Policy, as well as a Pre-Clearance Policy regarding equity transactions

  Annual Independent Risk Assessment of Compensation Programs

  Annual Review of Independence of Committee’s Advisors

  Annual “Say on Pay” Vote

  Independent Compensation and Talent Development Committee 

  r-TSR modifier in the LTI performance stock unit program (beginning in 2019)

  Majority (60%) of LTI delivered in performance-based awards vs. service-based equity (beginning in 2019)

  Common Annual Grant Date each Year to Minimize Perception of Market Timing

  Protective Noncompete, Nonsolicitation and Confidential Information Covenants Applicable to LTI Awards

  One-year minimum vesting requirement for equity awards (with up to 5% of shares being exempt from this requirement)

  Non-employee director award limit

 

  Excessive Perquisites or Tax Gross‑ups for Perquisites: See “Other Benefits” for details

  Excise Tax Gross‑Ups upon Change in Control

  Payment of Dividends or Dividend Equivalents on Unvested LTI awards

  Repricing of Underwater Stock Options

✘   Rely on fixed compensation or service-based reward elements

 Use the same financial metric(s) in the annual and long-term incentive plans

  Single Trigger Change in Control Severance Payments

  Encourage Excessive Risk Taking

  Liberal Share Recycling

  Multi-Year Employment Contracts

 

Assessment of Realizable Pay and Performance

The Committee annually compares the NEOs’ realizable pay and the Company’s performance to the pay and performance of comparator companies in order to assess the alignment of the Company’s pay and performance.

In assessing pay and performance, the Company’s independent compensation advisors, Pay Governance, analyzed the Company’s 2016-2018 realizable pay and performance relative to comparator companies. Unlike the results reported in the Summary Compensation Table reported on page 42, realizable pay looks at the pay an executive earned or could have earned for a period based on the actual financial performance against the Company’s incentive goals and the stock price performance that was influenced by those results. It also included the potential value that could be realized from any unvested awards based on the Company’s stock price at the end of that period (December 31, 2019). The Committee believes realizable pay is a better gauge for assessing pay and performance than the data found in the Summary Compensation Table, as the Summary Compensation Table definition of total pay includes a mix of some elements that are actual pay, such as salary and annual incentives, and other elements that are accounting estimates of future potential pay, such as performance stock units, restricted stock units and options. Further, realizable pay excludes the annual changes in pension calculations which are not part of the pay decisions made by the Committee. Those benefits can significantly distort pay reported in the Summary Compensation Table and how it relates to the Company’s performance.

 

 

 

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In assessing realizable pay, the Committee reviewed the actual rewards earned by the CEO and CFO from 2016 to 2018: base salaries received by the executive, annual bonuses earned, vesting date value (as opposed to grant date or accounting value used in the Summary Compensation Table) of time‑based restricted awards granted during the period, any exercise gains realized on options granted during the period (which the Company did not award but some of its pay peers continue to award) and the value of any long‑term performance awards made and earned in the three‑year period. In addition, realizable pay includes the value of any outstanding (unvested, unexercised or unearned) long‑term incentives awarded during the three‑year period based on the Company’s stock price as of December 31, 2018. The same approach is used to calculate the realizable pay of the CEOs and CFOs at comparator companies. This enables the Committee to compare the Company’s realizable pay levels with similar executives at comparator companies. As a result, realizable pay relies on information reported in comparator company proxies, the latest year for which pay is available being 2018.

In addition to assessing the Company’s realizable pay levels relative to comparator companies, the Committee also examined the Company’s annual and long‑term performance versus those companies. From a long‑term performance perspective, the analysis focused on TSR relative to those companies, which captures the principal goal of the Company’s long‑term incentive plans—creating value for investors. As shown in the following two exhibits, the Company’s pay program has produced realizable pay levels relative to peers that are directionally and reasonably aligned with the Company’s TSR performance relative to those companies. For the 2016-18 period, the Company’s TSR approximated the median result of the Company’s pay peers and was closely aligned with the realizable pay of its CEO and CFO, both of which approximated the peers’ median levels.

 

 

Picture 32

Picture 33

 

From an annual or short‑term performance perspective, the Company’s performance across several perspectives of EBIT and cash flow performance (growth, percent of revenue and percent of invested capital) was evaluated relative to similar metrics for comparator companies for each year of the past five years. These results captured the key drivers of the Company’s STI program, which support the Company’s strategic objectives as well as its value creation efforts. The Company’s rankings relative to comparator companies across these annual performance metrics were compared to rankings of the cash compensation (salary + actual bonus) earned by the Company’s CEO and CFO during the same period. As with the Company’s realizable pay and TSR comparisons, the Company’s annual cash compensation was appropriately aligned with its annual performance rankings relative to peers.  When considering financial performance for each of the past five years, the Company’s average peer ranking equaled the 44th percentile, comparable to the average cash compensation (salary and bonus) ranking of its CEO (44th percentile) and CFO (57th percentile).

From these perspectives, the Company believes the pay program produced acceptable outcomes with officers’ relative pay levels aligned with its relative annual and long‑term performance levels, supportive of share owners’ interests.

Compensation Benchmarking

While realizable pay examines the alignment of the Company’s performance and the pay actually realized or realizable by those results, the Committee also annually reviews the competitiveness of the target pay opportunities provided to the Company’s senior leadership team (including the CEO and his key direct reports). This review encompasses all elements of target direct compensation: base salary, annual incentives and cash compensation (base salary + annual

 

 

 

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incentives), LTI and direct compensation (base salary + annual incentives + LTI). In addition, the review examines the mix of total pay (fixed to variable pay, short to long‑term compensation and cash to stock compensation) and LTI mix (stock awards versus options and service versus performance‑based awards). The objectives of this review are to ensure the opportunities associated with the Company’s program are aligned with its pay philosophy, which targets market median but also considers internal equity between senior leadership team members.

Market Data

In determining compensation levels for the senior leadership team, the Committee reviews competitive market remuneration data including:

     proxies of companies in the comparator group used to benchmark pay (shown below). Proxy data is only considered for the Company’s CEO and CFO; and

     surveys published by Aon Hewitt, Mercer and Willis Towers Watson, which provide data reflecting the incumbent’s functional responsibilities and the appropriate revenue scope (corporate or region) of their operating unit, are used to assess the target compensation for other senior leaders.

Comparator Group Companies

While there is no other company of comparable size to O-I that also focuses purely on glass container production, the group of comparator companies used to benchmark executive pay practices and pay levels for select officers is selected primarily from companies in the packaging and manufacturing sectors that resemble the Company in size, business profile, global presence, asset intensity, and other relevant factors. After a review of the comparator group companies in 2019, the Committee elected not to make any changes to the comparator group from that was used in 2018, with the exception of Bemis Company, Inc. being removed in 2019. Bemis Company, Inc. was excluded from the comparator group of companies as it was acquired in June 2019 and ceased to be a public company. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dollars in Millions

 

% Revs.

 

 

 

 

 

 

 

 

 

Total

 

Mkt.

 

Enterp.

 

Outside

 

# of

 

Company

    

Industry

    

Revs.(1)

    

Assets(1)

    

Cap(2)

    

Value(2,3)

    

U.S.(4)

    

Emp.

    

WestRock Company

 

Paper Packaging

 

18,289

 

30,157

 

11,081

 

21,009

 

18

%

45,100

 

Tenneco Inc.

 

Auto Parts and Equipment

 

17,450

 

13,246

 

1,060

 

6,914

 

74

%

78,000

 

Ingersoll-Rand Plc

 

Industrial Machinery

 

16,599

 

20,492

 

31,677

 

37,024

 

34

%

50,000

 

The Goodyear Tire & Rubber Company

 

Tires and Rubber

 

14,745

 

17,185

 

3,618

 

10,465

 

56

%

63,000

 

Parker-Hannifin Corporation

 

Industrial Machinery

 

14,320

 

17,577

 

26,441

 

31,777

 

39

%

55,610

 

Crown Holdings Inc.

 

Metal and Glass Containers

 

11,665

 

15,505

 

9,659

 

18,202

 

71

%

33,000

 

Ball Corporation

 

Metal and Glass Containers

 

11,474

 

17,360

 

21,155

 

27,998

 

50

%

18,300

 

Dana Incorporated

 

Auto Parts and Equipment

 

8,620

 

7,220

 

2,619

 

5,150

 

53

%

36,300

 

Owens Corning

 

Building Products

 

7,160

 

10,006

 

7,084

 

10,486

 

33

%

19,000

 

Avery Dennison Corporation

 

Paper Packaging

 

7,070

 

5,489

 

10,924

 

12,812

 

77

%

30,000

 

Packaging Corporation of America

 

Paper Packaging

 

6,964

 

7,236

 

10,520

 

15,500

 

 6

%

15,000

 

Graphic Packaging Holding Company

 

Paper Packaging

 

6,160

 

7,290

 

4,833

 

8,719

 

13

%

18,000

 

Sonoco Products Co.

 

Paper Packaging

 

5,374

 

5,126

 

6,178

 

7,936

 

37

%

23,000

 

Sealed Air Corporation

 

Paper Packaging

 

4,791

 

5,765

 

6,154

 

9,950

 

48

%

16,500

 

Greif, Inc.

 

Metal and Glass Containers

 

4,595

 

5,427

 

2,300

 

5,112

 

41

%

17,000

 

Silgan Holdings Inc.

 

Metal and Glass Containers

 

4,490

 

4,931

 

3,443

 

6,172

 

24

%

13,100

 

Terex Corporation

 

Construction Machinery and Heavy Trucks

 

4,353

 

3,196

 

2,123

 

2,955

 

47

%

9,500

 

75th Percentile

 

  

 

14,320

 

17,185

 

10,924

 

18,202

 

53

%

45,100

 

50th Percentile

 

  

 

7,160

 

7,290

 

6,178

 

10,465

 

41

%

23,000

 

25th Percentile

 

  

 

5,374

 

5,489

 

3,443

 

6,914

 

33

%

17,000

 

O-I Glass, Inc.

 

Metal and Glass Containers

 

6,691

 

9,610

 

1,857

 

7,759

 

71

%

27,500

 

O-I Percentile Rank

 

  

 

35

%

55

%

 5

%

30

%

88

%

54

%


(1)

Fiscal 2019 financial data

(2)

Data as of December 31, 2019

(3)

Enterprise value defined as market capitalization plus total debt plus total preferred equity plus minority interest less cash and short-term investments

(4)

Select companies’ data represent revenues for sales outside North America

 

 

 

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Compensation Program Overview

Total Direct Compensation

Total direct compensation is the combination of base pay, annual incentive and long‑term incentives. Although the Company’s pay philosophy targets market median, while also considering internal equity, an NEO’s total direct compensation opportunity may be higher or lower than the market 50th percentile based on individual performance, experience, past leadership roles, potential future contributions and Company performance. In making compensation decisions, the Committee considers each of these factors and the NEO’s total direct compensation to ensure overall alignment with the Company’s compensation philosophy and principles.

It is the Company’s philosophy that a significant portion of the target compensation opportunity provided to the NEOs be “variable” or “at risk”—based on Company performance and/or the price of the Company’s stock. Based on compensation packages in effect on December 31, 2019, the CEO had 87% of his target total direct compensation “at risk” and the other NEOs had approximately 67% of their target total direct compensation “at risk.” The Company has no prescribed pay mix that drives compensation decisions. The resulting pay mix is based on the Company’s pay philosophy, market pay data used to establish individual executive’s compensation and internal equity pay considerations.

 

 

 

Picture 26

 

Picture 30

The Committee strives to achieve alignment between executive pay and performance by establishing and adhering to a fair and performance‑oriented rewards philosophy/strategy, setting appropriate performance objectives which are assessed annually for their difficulty, and regularly testing the relationship between pay and performance.

Base Pay

The base pay program is designed to ensure the Company’s ability to attract and retain key executives. The Committee reviews NEO salaries and pay positioning at least once per year, and may adjust salaries based on several factors, including: current market conditions, Company performance, individual performance, previous experience, potential, the results of benchmarking against market data, and the Company’s overall merit pay budgets. Merit pay budgets are set annually based on external labor market trends, business performance, inflation and other pertinent factors. In 2019, the Company’s merit budget was 3% for the United States. After considering the factors listed above, the Committee approved a base pay increase of 5% for Mr. Lopez (to reduce but not eliminate the differences between his salary and the median of the CEO’s in the Company’s peer group), 3% each for Ms. Bertsch and Mr. Alvarez, 7% and 12%, respectively for Mr. Currarino and Ms. Wilkinson (to bring their salaries to the market median), and 7% for Mr. Haudrich (to recognize his strong performance), all effective April 1, 2019. Mr. Haudrich received a subsequent base salary increase of 22% upon his promotion to CFO in April 2019. Overall, base salaries for these officers generally reflect the median of the market, consistent with the Company’s pay philosophy.

 

 

 

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Short-Term Incentive

The Company’s annual STI program is designed to promote the achievement of short‑term financial results and motivate individual performance.

Measures

The Committee reviews the performance measures for the STI each year to ensure they support the Company’s ongoing business strategies and reflect the needs of the business as well as drive share owner value. For the 2019 STI, the Committee continued to evaluate performance against the following measures to determine STI awards under the 2017 Incentive Award Plan:

 

 

 

 

 

Measure

    

Weight

    

Definition

Financial Measures:

 

 

 

 

EBIT

 

80

%  

Consolidated earnings from continuing operations before net interest expense and provision for income taxes, excluding charges for asbestos‑related costs, restructuring, asset impairment and other items that management considers not representative of ongoing operations, and adjusted for changes in foreign currency exchange rates and to exclude the impact of acquisitions and divestitures that were not included in the Company’s budget and that occurred during the performance period.

FCF

 

20

%  

Cash provided by continuing operating activities less cash payments for property, plant and equipment from continuing operations, adjusted for changes in foreign currency exchange rates and for payments made beyond the Company’s annual statutory requirement for pensions that were not included in the Company’s budget.

The Committee believes these measures improved the balance between accounting (EBIT) versus value-based metrics (FCF) and reward results within management’s control versus those outside their ability to influence. These metrics also aligned with the Company’s strategic objectives for 2019 and supported both short- and long-term share owner value creation based on discussions with its investors.  In addition, by rewarding the senior leadership team, including Regional Presidents, based on enterprise performance, the senior leadership team is encouraged to leverage one region of the Company to compensate for pressures in another region, for the good of the Company.

While the Company is affected by broader macroeconomic trends, including currency and interest rate shifts, results are measured on a constant currency basis in order to squarely focus management on select key value drivers and delivering steady—and improving—performance results they can control and influence. The Company bases its incentive programs and sets core operating goals on metrics the executive team can influence and thus create increased long-term share owner value. This design drives motivation and retention despite cost headwinds and other external challenges that may be out of the executive team’s control.

Each measure stands alone for payment, so results under one measure can result in payment (up to the established maximum for that metric) even if results under the other measure result in no award.

Determining Performance Targets and Measure Weights

The Committee reviews and approves the financial targets and measure weightings set for the metrics for each plan year after considering the overall Company budget (as approved by the Board of Directors), the state of the industry and other external economic factors for the Company overall. Performance is based on the Company’s absolute performance.

When setting the targets for the measures, the Committee considers an assessment prepared by its independent executive compensation consultant, Pay Governance, of the difficulty of its financial goals from various perspectives, including the Company’s historic payout results, as well as a comparison of proposed goals versus: previous goals, the Company’s performance guidance, analyst estimates for the Company and its peers as well as the historic performance of the Company and its peers. The assessment found the Company’s EBIT goals for 2019 to be very challenging and the FCF goals to be moderately challenging.

 

 

 

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Individual Target Opportunities

Target awards for each NEO are expressed as a percentage of annual earnings based on market competitiveness and considering the Company’s overall median pay philosophy. Achievement of threshold financial performance against the performance measures would result in a payout of 30% of the target opportunity, while maximum performance would yield a payout of 200% of the target.

Target incentives are sufficient to produce median cash compensation (salary + annual incentives) if earned, with maximum incentives capable of producing top quartile pay if maximum performance goals are achieved or exceeded. If no STI awards are paid, pay for the Company’s NEOs would rank in the market’s bottom quartile on a cash compensation basis.

For 2019, the individual target STI opportunities were as follows:

Name

    

Annual Earnings

    

Target

%

    

Target

$

Andres A. Lopez

 

$
1,037,500

 

150%

 

$
1,556,250

John A. Haudrich (1)

 

$
516,364

 

65% / 80%

    

$
396,574

Miguel Alvarez

 

$
501,250

 

65%

 

$
325,813

Giancarlo Currarino

 

$
482,500

 

65%

 

$
313,625

Mary Beth Wilkinson

 

$501,250

 

65%

 

$
325,813

Jan A. Bertsch (2)

 

 

 

 

 

 


(1)

The target STI award for Mr. Haudrich reflects earnings while he served as Senior Vice President and Chief Strategy and Integration Officer through April 3, 2019 with a target of 65% and earnings while he served as Senior Vice President and Chief Financial Officer commencing April 4, 2019 with a target of 80%.   

(2)

Ms. Bertsch was not eligible for an STI payout for 2019.

2019 Performance Results

For 2019, the STI awards for the NEOs were determined by the financial results of the Company.

Based on the targets set and actual achievement against those targets, the Company’s performance was below the threshold for both EBIT and FCF and resulted in no payout.  Management and the Committee believe this result is aligned with the underlying operating performance of the Company for the year.

The performance targets, results, and payouts for the enterprise are as follows (dollars in millions):

Measures: