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
Filed by the Registrant ☒ Filed by a party other than the Registrant ☐
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| ☒ | 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 Pursuant to Rule14a-12 | |||||||
(Name of Registrant as Specified In Its Charter)
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| ☒ | No fee required | |||||||||||||
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| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 | |||||||||||||
PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION DATED March 10, 2023
In accordance with Rule 14a-6(d) under Regulation 14A, please be advised that Cooper-Standard Holdings Inc. intends to release definitive copies of this proxy statement to security holders on or about April 6, 2023.
A Letter from our Chairman and Chief Executive Officer
To Our Investors,
On behalf of the Board of Directors of Cooper-Standard Holdings Inc. (the “Board”), I am pleased to invite you to electronically attend the 2023 Annual Meeting of the Stockholders (the “Annual Meeting”) to be held May 18, 2023, beginning at 9:00 a.m., Eastern Time. I would like to thank you for your ongoing support as we continue our recovery and manage through the significant headwinds impacting our industry and markets.
During the past three years of unprecedented challenge and disruption in our industry, three aspects of our business remained certain and unwavering: our strong Company culture, our talented team, and our commitment to delivering sustained value to all of our stakeholders. These core strengths have enabled and motivated us to improve our operating efficiency, reduce costs and deliver world-class products and service. As a result, we have developed strong relationships with our customer and supply partners that we believe position us for long-term success.
By upholding our core value of Commitment to Excellence, our team members achieved several records, milestones and key accomplishments in 2022 including:
•Again being named one of the World’s Most Ethical Companies and Newsweek’s America’s Most Responsible Companies;
•Delivering world-class product quality, launches and customer service, including 98% green customer scorecards for product quality, 97% green for program launches and our best year ever for global quality IPB (incidents per billion);
•Achieving record safety results, outperforming world-class safety benchmarks with a safety incident rate of 0.33 per 200,000 hours worked, including 25 plants that completed the year with a perfect safety record of zero reported incidents;
•Reducing costs by $105 million as a result of sustainable cost reductions through lean initiatives, SGA&E reduction and realization of savings from past restructuring actions;
•Working with customers and suppliers to obtain pricing to recover commodity inflation and manage supply costs;
•Successfully initiated refinancing transactions that were closed in January 2023 to extend the maturity on the majority of our long-term debt to 2027; and
•Earning recognition from SPE Automotive Innovation Award for our thermoplastic thermal management solution and an Environment + Energy Leader Award for our Fortrex™ chemistry platform.
Thank you once again for your support as we continue to work to strengthen the business for long-term success and deliver on our purpose of Creating Sustainable Solutions TOGETHER. I encourage you to participate in our Annual Meeting, as your vote and engagement are important to the ongoing success of the Company. This year’s Annual Meeting will again be in a virtual format. You will be able to attend the meeting online, vote your shares electronically and submit your questions during the meeting via a live webcast by visiting www.virtualshareholdermeeting.com/CPS2023. Details of the business to be conducted at the Annual Meeting are given in the Notice of the 2023 Annual Meeting of the Stockholders and the proxy statement.
Thank you in advance for your participation in the meeting and for your continued support.
Sincerely,
Jeffrey S. Edwards
Chairman and Chief Executive Officer
2023 ANNUAL MEETING OF THE STOCKHOLDERS
Meeting Notice
Where
Online via live webcast at www.virtualshareholdermeeting.com/CPS2023. You may vote your shares electronically and submit questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CPS2023. To participate in the Annual Meeting, you will need the 16-digit control number included on your Notice Regarding the Availability of Proxy Materials, on your proxy card (if you received a printed copy of the proxy materials), or on the instructions that accompanied your proxy materials.
When
Thursday, May 18, 2023
9:00 a.m. Eastern Time
Online check-in will begin at 8:45 a.m. Eastern Time, and you should allow ample time for the online check-in procedures.
Items of Business
•To elect the director nominees described in the proxy statement for a one-year term ending at the next annual meeting of the stockholders;
•To hold an advisory vote on named executive officer compensation;
•To hold an advisory vote on the frequency of future advisory votes on named executive officer compensation;
•To ratify the appointment of the independent registered public accounting firm for the 2023 fiscal year;
•To approve the Cooper-Standard Holdings Inc. Amended and Restated 2021 Omnibus Incentive Plan;
•To ratify the Company’s Section 382 Rights Agreement, dated as of November 7, 2022, between the Company and Broadridge Corporate Issuer Solutions, Inc.; and
•To conduct any other business if properly brought before the Annual Meeting.
You will find more information about the matters to be voted on at the Annual Meeting in the proxy statement.
Record Date
Holders of the Company’s common stock as of the close of business on March 24, 2023, the record date, are entitled to vote at the Annual Meeting. A list of these stockholders will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the Annual Meeting at our principal executive offices at 40300 Traditions Drive, Northville, Michigan, 48168, and electronically during the Annual Meeting at
www.virtualshareholdermeeting.com/CPS2023 when you enter your 16-digit control number.
www.virtualshareholdermeeting.com/CPS2023 when you enter your 16-digit control number.
Pre-meeting Questions to Management
The online format used by the Company for the Annual Meeting also allows us to communicate more effectively with you. Stockholders can submit appropriate questions in advance of the Annual Meeting by visiting www.proxyvote.com. Stockholders will need their 16-digit control number to enter the website.
Your vote is important! We strongly encourage you to exercise your right to vote as a stockholder. You may revoke your proxy at any time before it is exercised. You will find instructions on how to vote on page 4 of the proxy statement.
By Order of the Board of Directors,
Joanna M. Totsky
Senior Vice President, Chief Legal and Transformation Officer & Secretary
[April 6, 2023]
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 18, 2023 | ||
The Notice of the 2023 Annual Meeting, the 2023 Proxy Statement, and the Company’s 2023 Annual Report to Stockholders for the year ended December 31, 2022 are available free of charge at: https://www.proxyvote.com. | ||
2023 ANNUAL MEETING OF STOCKHOLDERS
Proxy Statement
[April 6, 2023]
Table of Contents
GOVERNANCE AND COMPANY HIGHLIGHTS | |||||
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This proxy statement was first sent or made available to stockholders on or about [April 6, 2023].
Governance and Company Highlights
Governance Highlights | ||
•Independent Lead Director •9 of the 10 director nominees are independent •Minimum stock ownership requirements for directors •Board committees composed of independent directors •Annual Board evaluations •Board considers diversity when evaluating prospective directors •Board comprised of members with the key skills and experiences integral to the Company’s success •Board meets regularly in executive sessions •Strong governance framework for the oversight of environmental, social and governance (“ESG”) matters | ||
Director Nominees
2022 Board Engagement
| 16 | 21 | 98% | 16 | |||||||||||||||||
Board Meetings | Committee Meetings | Attendance1 | Executive Sessions | |||||||||||||||||
1 Percentage represents average attendance of the directors based on the total number of meetings of the Board and of the committees on which each such director served during 2022.
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2022 Business and Financial Highlights
 | Enhanced Culture •Reinforced our Purpose, Mission and Value statements to continue evolving for the future and better leverage our culture, capabilities and resources for sustained growth •Advanced our Diversity, Inclusion and Belonging (DIB) Action Group to help continue raise awareness and conversation around DIB-related topics to promote a culture where all employees feel they belong and are valued | ||||||||||
 | Cost Reduction •Continued focus on cost and improved efficiency, reducing costs including $105 million in savings and 10% reduction in headcount •$75 million in improved manufacturing operating efficiency and purchasing lean •$22 million reduced overhead (SGA&E expense) •$8 million restructuring related savings •Successfully negotiated commercial recoveries agreements to significantly reduce exposure to commodity inflation through index-based contracts | ||||||||||
 | Functional Excellence •Delivered world-class safety performance with 0.33 incident rate per 200,000 hours worked •Achieved 98% green customer score cards for quality •Achieved 97% green customer score cards for launch •Received awards for $246 million in annualized net new business, including $198 million of net new business on electric vehicle •Provided key components for 3 of the top five and 9 of the top 15 electric vehicle (EV) platforms, with EV sales outlook expected to outpace the market over the next five years | ||||||||||
Risk Oversight
•Robust enterprise risk management approach
•Active participation from leaders of the Company with the Board’s oversight
•Culture of integrity and risk awareness throughout the Company
•The Board’s ESG governance framework that integrates ESG risks and opportunities into the Company’s long-term strategy and enterprise risk management processes
Corporate Responsibility
•Global Sustainability Council
•Long term ESG goals aligned with business goals and stakeholder priorities
•Refresh materiality assessment every three years
•Rating agency analyses showing continued ESG score improvement
•Peer benchmarking showing higher scores compared to aspirational comparative peer group in 10 out of 11 high priority categories for our focus on transparency and reporting
•Integration of select ESG goals and milestones into executive compensation plans
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Awards and Recognitions
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One of the 2022 World’s Most Ethical Companies® by Ethisphere® for the third consecutive year | Newsweek’s American Most Responsible Companies for the fourth consecutive year | |||||||
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2022 Ford Motor Company WIN (Widening the Inclusion Network) Award | GM Supplier of the Year for the fifth consecutive year | |||||||
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2022 SPE Automotive Innovation Awards for our Thermoplastic Thermal Management Solution | 2022 Environmental and Energy Leader Award for our Fortrex™ Material Platform | |||||||
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Compensation Highlights
2022 Highlights - •True pay-for-performance approach, paired with challenging incentive plan targets, demonstrated by: ◦below target annual incentive payments for 2022, and ◦no payout on performance-based long-term incentive awards with performance periods ending in 2022. •Increased weighting on the financial component for evaluating annual incentive plan performance, paired with implementation of strategic Environmental, Social and Governance (ESG) metrics that include fully formulaic evaluation as well as and qualitative metrics. •Continued use of primarily performance-based long-term incentive awards, with performance measured against both Company financial targets and the Relative Total Shareholder Return of comparable companies. | ||||||||||||||
Compensation programs that are designed to: •Link executive compensation to Company performance; •Attract and retain a highly-qualified executive leadership team; •Align the interests of executives with those of our stockholders; •Focus our leadership team on increasing profitability and return on invested capital (“ROIC”); and •Motivate our leadership team to execute our long-term growth strategy while delivering consistently strong financial results. | Sound and effective compensation and related governance practices, such as: •Independent compensation consultant retained by the Compensation Committee; •Annual benchmarking using general industry surveys and a peer group proxy analysis; •Majority of long-term incentive compensation is performance-based; •Balanced mix of performance measures aligned with long-term strategy; •Clawback policy covering cash and equity; •Anti-hedging and anti-pledging policy; and •Executive and non-employee director stock ownership guidelines. | |||||||||||||
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Voting and Virtual Meeting Information
Holders of the Company’s common stock as of the close of business on March 24, 2023, the record date, are entitled to vote at the Annual Meeting. On March 24, 2023, [ ] shares of common stock were outstanding and, thus, eligible to be voted. Each outstanding share of common stock will be entitled to one vote on each proposal.
How does the Board of Directors recommend that I vote on matters to be considered at the Annual Meeting and what is the vote required to approve each proposal?
You may vote for or against or abstain from voting on each proposal submitted for voting. Provided that there is no competing proxy, if you are a beneficial owner and do not provide voting instructions to your broker, trustee, or other nominee under the New York Stock Exchange (“NYSE”) rules, your broker, trustee, or other nominee has the discretion to vote those shares only on matters that are routine. A broker cannot vote shares on non-routine matters without your instructions. This is referred to as a “broker non-vote.”
The following table sets forth how the Board recommends that you vote, the vote required for approval and the effect of abstentions and broker non-votes for each of the following Proposals for the Annual Meeting.
| Proposal Number | Description | Board Recommendation | Vote Required for Approval | Effect of Abstentions and Broker Non-Votes | ||||||||||
| 1 | Election of Directors | FOR ALL | More votes are cast “for” than “against” a nominee. | Abstentions and Broker non-votes have no effect on the outcome of the vote. | ||||||||||
| 2 | Advisory Vote on Named Executive Officer Compensation | FOR | More votes are cast “for” than “against” the proposal. | Abstentions and Broker non-votes have no effect on the outcome of the vote. | ||||||||||
| 3 | Advisory Vote on the Frequency of Future Advisory Votes on Named Executive Compensation. | FOR EVERY “ONE YEAR” | The affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote. | Abstentions and Broker non-votes have no effect on the outcome of the vote. | ||||||||||
| 4 | Ratification of Appointment of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm for 2023 | FOR | More votes are cast “for” than “against” the proposal. | Abstentions have no effect on the outcome of the vote. NYSE rules permit brokers to vote uninstructed shares at their discretion on this proposal in uncontested situations. | ||||||||||
| 5 | Approval of the Cooper-Standard Holdings Inc. Amended and Restated 2021 Omnibus Incentive Plan | FOR | More votes are cast “for” than “against” the proposal. | Abstentions and Broker non-votes have no effect on the outcome of the vote. | ||||||||||
| 6 | Ratification of the Company’s Section 382 Rights Agreement, dated as of November 7, 2022, between the Company and Broadridge Corporate Issuer Solutions, Inc. | FOR | More votes are cast “for” than “against” the proposal. | Abstentions and Broker non-votes have no effect on the outcome of the vote. | ||||||||||
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How do I vote before the Annual Meeting?
We encourage stockholders to submit their votes in advance of the Annual Meeting. If your shares are registered directly in your name with our transfer agent, you are considered the “stockholder of record” with respect to those shares. By following the instruction provided in your proxy card, you may submit your votes in the following ways:
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Vote online at www.proxyvote.com until 11:59 p.m. Eastern Time on May17, 2023 | Call 1-800-690-6903 until 11:59 p.m. Eastern Time on May 17, 2023 | Mail Proxy Card to: Vote Processing c/o Broadridge 51 Mercedes Way Edgewood, NY 11717 | |||||||||||||||
If your shares are held in a brokerage account, by a trustee or by another nominee (that is, in “street name”), you are considered to be the beneficial owner of those shares, and you have the right to give instructions to your broker, trustee or other nominee on how to vote your shares following the instructions provided in the voting instructions form.
How do I vote online during the Annual Meeting?
You may vote your shares by completing a ballot online during the designated time during the Annual Meeting if you are a stockholder of record or a “street name” holder.
How can I change my vote?
After you have submitted your proxy or voting instructions by the Internet, telephone, or mail, you may revoke your proxy at any time until it is voted at the Annual Meeting. If your shares are registered in your name, you may do this by (i) written notice of revocation to the secretary of the Company; (ii) timely delivery of a valid, later-dated proxy or later-dated vote by telephone or Internet; or (iii) voting your shares online during the Annual Meeting. If your shares are held in street name, you may revoke your vote (i) through your broker, trustee or other nominee in accordance with their voting instructions, or (ii) by subsequently voting online during the Annual Meeting.
What constitutes a quorum at the Annual Meeting?
The presence of the holders of a majority of the outstanding shares of our common stock, in person or by proxy, will constitute a quorum for transacting business at the Annual Meeting. Abstentions and broker non-votes are counted as present for purposes of establishing a quorum at the Annual Meeting.
What if I do not specify how I want my shares voted?
If you return your proxy card with no votes marked or do not specify when giving your proxy by telephone or online how you want to vote your shares, we will vote them:
•FOR the election of all nominees for director (Proposal 1);
•FOR the approval of named executive officer compensation (Proposal 2);
•FOR every one year with respect to the frequency of future advisory votes on named executive officer compensation (Proposal 3);
•FOR the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2023 (Proposal 4).
•FOR the approval of the Cooper-Standard Holdings Inc. Amended and Restated 2021 Omnibus Incentive Plan (Proposal 5)
•FOR the ratification of the Company’s Section 382 Rights Agreement, dated as of November 7, 2022, between the Company and Broadridge Corporate Issuer Solutions, Inc. (Proposal 6).
Who pays for this proxy solicitation?
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This solicitation of proxies is made by and on behalf of the Board of Directors. We will bear the cost of the solicitation of proxies. We do not currently plan to hire a proxy solicitor to help us solicit proxies from brokers, bank nominees, or other institutions or stockholders although we reserve the right to do so. In addition, our officers, directors, and employees may solicit proxies in person, by telephone, or other means of communication, but they will not receive any additional compensation in connection with such solicitation.
How can I attend the Annual Meeting?
This year’s annual meeting will be a completely virtual meeting of stockholders, which will be conducted through an audio webcast. You will be able to attend the annual meeting of stockholders online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/CPS2023. To participate in the annual meeting, you will need the 16-digit control number included on your notice of Internet availability of the proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong WiFi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting.
The meeting webcast will begin promptly at 9:00 a.m., Eastern Time. We encourage you to access the meeting prior to the start time. Online access to the meeting will open at 8:45 a.m., Eastern Time, and you should allow ample time to log in to the meeting webcast and test your computer audio system.
What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website?
For technical difficulties, you may call the telephone numbers provided on the login page of the virtual meeting platform at www.virtualshareholdermeeting.com/CPS2023.
How do I submit a question at the 2023 Annual Meeting?
If you wish to submit a question, you may do so in two ways:
•Before the meeting: Once you receive your proxy materials, you may log into www.proxyvote.com and enter your 16-digit control number. Once past the login screen, click on "Question for Management," type in your question, and click "Submit." You may submit questions through this pre-meeting forum until the start of the meeting.
•During the meeting: Log into the virtual meeting platform at www.virtualshareholdermeeting.com/CPS2023 to attend the meeting, during which you may type your question into the "Ask a Question" field, and click "Submit."
Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. Questions regarding personal matters, including those related to employment, product or service issues, or suggestions for product innovations, are not pertinent to meeting matters and therefore will not be answered. Any questions pertinent to meeting matters that cannot be answered during the meeting due to time constraints will be posted online and answered at http://www.ir.cooperstandard.com/investor-relations. The questions and answers will be available as soon as practical after the meeting and will remain available until one week after posting.
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Proposal 1: Election of Directors
Director Nominee Overview: Tenure, Skills, Experience and Diversity | ||||||||||||||
The Board considers the following skills and experiences to be integral to the success of the Company:
•Core Industry experience is important to providing relevant understanding of our business, strategy, and marketplace dynamics.
•Senior Executive Leadership experience is important to providing the Company with unique insights on developing talent, a productive work culture, and strategy in solving problems in large, complex organizations.
•Financial/Audit & Risk experience is important in overseeing accurate financial reporting, informed decision making on value-adding initiatives, and robust auditing.
•Mergers & Acquisitions/ Capital Markets experience is critical to strategically pursuing complementary acquisitions and joint ventures that enhance our customer base, geographic penetration, scale and technology.
•International Business/Markets experience is critical to cultivating and sustaining business and governmental relationships internationally and providing oversight of our multinational operations.
•Engineering/Technical experience is critical to ensuring we are able to provide our customers with market-leading solutions with predictable quality that meet and exceed expectations.
•Manufacturing/Supply Chain experience is critical to ensuring optimal processes are used in the creation of our products.
•Innovation & Technology Strategy experience is integral to furthering our commitment to having a culture that encourages innovative ideas that are translated into development of new and advanced technologies.
•Cyber Security/Information Technology experience is important because the Board plays a vital role in recognizing the sense of urgency regarding IT/cybersecurity risks and ensuring the Company has the appropriate plans in place to prevent and respond to cyber attacks that could result in reputational, legal, and operational issues for the Company.
•Environmental/ Social/ Governance experience is vital to ensure that the Company fulfills its commitment to good corporate citizenship and sustainability with world-class performance in all areas of our business and our action to elevate our value for all our stakeholders.
Our Board is committed to ensuring that it has the right mix of skills, background, tenure, and experience. A particular director or director nominee may possess additional experience, qualifications, attributes and skills that are valuable to the Company, even if not expressly indicated below.
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The Company recognizes the value of differing perspectives on our Board. We regularly add directors to bring new perspectives and ideas into the boardroom. Four out of the nine independent director nominees standing for this year’s election have joined our Board within the past three years, including two of our women directors. Among many factors, our Nominating and Corporate Governance Committee of the Board (the “Nominating and Corporate Governance Committee”) considers the diversity of experience and viewpoint when evaluating new board members. The Nominating and Corporate Governance Committee and the Board as a whole are continually looking for ways to advance in these areas and leverage our diversity of thought to further the strength of our Company.
| Board Diversity Matrix | ||||||||||||||
| Total Number of Directors: | 10 | |||||||||||||
| Part I: Gender Identity | Female | Male | Non-Binary | Did not Disclose Gender | ||||||||||
| Directors | 3 | 5 | 2 | |||||||||||
| Part II: Demographic Background | ||||||||||||||
| African American or Black | 1 | |||||||||||||
| Alaskan Native or Native American | ||||||||||||||
| Asian | ||||||||||||||
| Hispanic or Latinx | 1 | |||||||||||||
| Native Hawaiian or Pacific Islander | ||||||||||||||
| White | 5 | 1 | ||||||||||||
| Two or More Races or Ethnicities | 1 | |||||||||||||
| LGBTQ+ | ||||||||||||||
| Did Not Disclose Demographic Background | 1 | |||||||||||||
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| Director Recruitment Process | ||||||||||||||
 | Process The Board is responsible for selecting its own members and recommending them for election by the stockholders. The Board delegates the screening process to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee, with the active involvement and input from the Chairman and CEO and other members of the Board, as appropriate, will consider candidates recommended by stockholders, management, members of the Board, and other sources as necessary, including search firms it may engage to assist in the identification and evaluation of qualified director candidates. The procedures for a stockholder to nominate director candidates are described under “Submitting Stockholder Proposals and Nominations for the 2024 Annual Meeting” in this proxy statement. The Nominating and Corporate Governance Committee will evaluate candidates recommended by the stockholders using the same criteria that it uses in evaluating any other candidate. The Nominating and Corporate Governance Committee is responsible for reviewing with the Board, on an annual basis, the appropriate skills and characteristics required of Board members considering current Board composition, Company strategy and all relevant facts and circumstances at that time. In identifying and evaluating the suitability of nominees for director, the Nominating and Corporate Governance Committee takes into account the applicable requirements for directors under the Exchange Act and the NYSE listing rules. In addition, the Nominating and Corporate Governance Committee considers other criteria it deems appropriate and which may vary over time depending on the Board’s needs, including criteria such as automotive or manufacturing industry experience, general understanding of various business disciplines (e.g., marketing, finance, etc.), the Company’s business environment, educational and professional background, analytical ability, diversity of experience and viewpoint, ESG skills and expertise, and willingness to devote adequate time to Board duties. Director candidates should demonstrate commitment to the highest personal and professional ethical standards, integrity, and the core values of the Company and will be evaluated on their ability to consider and balance the legitimate interests and concerns of the Company’s stockholders and other stakeholders effectively, consistently, and appropriately in reaching decisions. The Company’s Corporate Governance Guidelines also require that the potential pool of Board candidates reflects diversity in gender, race, ethnic background, country of citizenship, and professional experience.The Board evaluates each individual in the context of the Board as a whole, with the objective of retaining a group that can best enhance the Company’s success and represent the interests of stockholders and other stakeholders through sound judgment. The Nominating and Corporate Governance Committee will present its recommendations for director nominees to the Board of Directors who will analyze the committee’s findings and select the nominees to be presented to the stockholders for a vote at the annual meeting of the stockholders. | |||||||
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| Nominees | |||||||||||
Our 2023 Director Nominees
Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the ten individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of the stockholders in 2024 and until their successors, if any, are elected or appointed and qualified, or until their earlier resignation, removal, or death. All of these nominees have consented to being named in this proxy statement and to serve, if elected. If any of them is unable or declines to serve as a director, proxies voting for that nominee may be voted for a substitute nominee selected by the Board. The Board may also choose to reduce the number of directors to be elected at the meeting.
Each incumbent director who has been nominated for reelection by the Board must submit or have submitted an irrevocable resignation. If an incumbent director is not reelected, then (within 90 days of receiving the certified vote pertaining to the election of directors) the Nominating and Corporate Governance Committee will make a recommendation to the Board as to whether to accept or reject the resignation, or whether to take other action. The Nominating and Corporate Governance Committee, in making its recommendation, and the Board, in making its determination, may consider any factors they determine appropriate.
Because this is an uncontested election, a nominee will be elected if more votes are cast “for” than “against” that nominee’s election, and any abstentions or broker non-votes will not be counted as a vote “for” or “against” that nominee’s election. If a nominee is not elected, or if the Board accepts an unsuccessful incumbent director’s resignation, then the Board may fill the resulting vacancy.
The names of the nominees, along with their present positions, their principal occupations, directorships held with other public corporations currently and during the past five years, their ages, and the year first elected as a director are set forth below. In addition, certain individual qualifications, experiences, and skills of our nominees that led the Board to the conclusion to nominate each such individual are set forth below.
 | John G. Boss Director Since: 2020 Independent: Yes Age: 63 | ||||
Professional Experience: Until his retirement in March 2020, Mr. Boss was the president and chief executive officer of Momentive Performance Materials Inc. (“MPM”), a global producer of silicones, quartz and specialty ceramic materials, serving in this capacity for six years. Mr. Boss also served as a director of MPM Holdings Inc. from October 2014 to March 2020 and served as President of the Silicones & Quartz Division of MPM from March 2014 to December 2014. Mr. Boss’ career spans more than 30 years in the specialty chemicals and materials industry, including various executive leadership positions with Honeywell International, a producer of commercial, industrial and consumer products. Mr. Boss also serves on the board of directors of Wabash National Corporation, where he chairs the Compensation Committee and serves on the Finance Committee, Libbey, Inc., where he serves on the Audit Committee, and Calumet Specialty Products Partners L.P, where he serves on the Talent and Leadership Development, Audit and Finance, and Strategy and Growth Committees. Mr. Boss has a Master of Business Administration degree in Marketing and Finance from Rutgers Graduate School of Management in 1996 and a Bachelor’s Degree in Mechanical Engineering from West Virginia University in 1981.
Skills and Experience: Core Industry; Senior Executive Leadership; Mergers & Acquisitions/Capital Markets; International Business/ Markets; Engineering/Technical; Manufacturing/Supply Chain; Innovation & Technology Strategy; Environmental/Social/Governance
Committees: Compensation (Chair); Innovation and Business Diversification
Other Current Public Company Directorships: Wabash National Corporation; Calumet Specialty Products Partners L.P
Former Public Company Directorships (past 5 years): MPM Holdings Inc.
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 | Jeffrey S. Edwards (Chairman) Director Since: 2012 Independent: No Age: 60 | ||||
Professional Experience: With more than 37 years of automotive industry experience, Jeffrey Edwards serves as chairman and CEO of Cooper Standard, a position he has held since May 2013. He joined Cooper Standard as CEO and became a member of the Company's board of directors in October 2012. Since joining Cooper Standard, Edwards has been focused on driving value through culture, innovation and results.
Edwards also serves on the board of directors of Standex International Corp., where he serves on the Compensation and Nominating and Corporate Governance Committees.
Prior to joining Cooper Standard, Edwards held positions of increasing responsibility at Johnson Controls, Inc. from 1984 to 2012. Most recently, he led the Automotive Experience Asia Group, serving as corporate vice president as well as group vice president and general manager.
Edwards earned a Bachelor of Science degree in business administration in 1984 from Clarion University in Pennsylvania. He has also completed an executive training program at INSEAD, an international graduate business school and research institution.
Skills and Experience: Core Industry; Senior Executive Leadership; Mergers & Acquisitions/Capital Markets; International Business/Markets; Manufacturing/Supply Chain; Innovation & Technology Strategy; Environmental/Social/Governance.
Other Current Public Company Directorships: Standex International Corp.
Former Public Company Directorships (past 5 years): None
 | Richard J. Freeland Director Since: 2020 Independent: Yes Age: 65 | ||||
Professional Experience: Mr. Freeland served as president and chief operating officer of Cummins Inc., a global manufacturer of engines, power systems, and related components, from July 2014 to October 2019, prior to which he served in various senior leadership positions, including vice president and president of the Engine Business from 2010 to 2014, president of the Components Group from 2008 to 2010, and president of Worldwide Distribution Business from 2005 to 2008. Mr. Freeland serves as chair of the board of directors of Valvoline Inc., and as a member of its Compensation and Governance and Nominating Committees, and serves on the Purdue University, Krannert School of Management Advisory Council. Mr. Freeland received a Bachelor of Science degree from Purdue University in 1979 and a Master of Business Administration degree from Indiana University in 1987.
Skills and Experience: Core Industry; Senior Executive Leadership; Mergers & Acquisitions/Capital Markets; International Business/Markets; Manufacturing/Supply Chain; Innovation & Technology Strategy
Committees: Nominating and Corporate Governance (Chair); Innovation & Business Diversification
Other Current Public Company Directorships: Valvoline Inc.
Former Public Company Directorships (past 5 years): Cummins Inc.
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 | Adriana E. Macouzet-Flores Director Since: 2020 Independent: Yes Age: 61 | ||||
Professional Experience: Ms. Macouzet-Flores is vice president, Latin America and PMC general manager, Latin America of PPG Industries de Mexico, S.A. de C.V., a subsidiary of PPG Industries Inc., a manufacturer and distributer of a broad range of paints, coatings and specialty materials, prior to which she served as its general manager, Latin America North and general manager, Automotive OEM Coatings from January 2012 to June 2017. Ms. Macouzet-Flores held several other positions of increasing responsibility at PPG Industries since she started with the company in 1989.
Ms. Macouzet-Flores has over 25 years of leadership experience in multinational settings. She earned an undergraduate degree in chemical engineering from Universidad La Salle, Mexico City; Mexico City, Mexico, and has completed executive training courses in Finance Management at University of Michigan Ross School of Business; Corporate Strategy at The University of Chicago Booth School of Business; and Women on Boards at Harvard Business School.
Skills and Experience: Core Industry; Senior Executive Leadership; Mergers & Acquisitions/ Capital Markets; International Business/Markets; Engineering/Technical; Manufacturing/Supply Chain; Innovation & Technology Strategy; Environmental/Social/Governance
Committees: Nominating and Corporate Governance; Innovation and Business Diversification
Other Current Public Company Directorships: None
Former Public Company Directorships (past 5 years): None
 | David J. Mastrocola Director Since: 2010 Lead Director Since: 2011 Independent: Yes Age: 61 | ||||
Professional Experience: Mr. Mastrocola is a private investor. Previously, Mr. Mastrocola served as partner and managing director of Goldman, Sachs & Co. During his 22 years at Goldman, Sachs & Co., he held a number of senior management positions in the Investment Banking Division, including heading or coheading the corporate finance, mergers/strategic advisory and industrials/natural resources departments, as well as serving as a member of firm-wide capital and commitments committees. Prior to this, he was a senior auditor at Arthur Anderson & Co. Mr. Mastrocola also served on the Board of Trustees of Save the Children Foundation for 12 years. He earned his Master of Business Administration degree from Harvard University and his undergraduate degree from Boston College.
Skills and Experience: Senior Executive Leadership; Financial/Audit & Risk; Mergers & Acquisitions/Capital Markets; International Business/Markets
Committees: Compensation
Other Current Public Company Directorships: None
Former Public Company Directorships (past 5 years): None
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 | Christine M. Moore Director Since: August 2021 Independent: Yes Age: 60 | ||||
Professional Experience: Ms. Moore is executive vice president and general auditor of Comerica Bank, a financial services company, a position she has held since 2016. Prior to that time she held positions at Comerica Bank of increasing responsibility, including Senior Vice President & Deputy General Auditor from 2014 to 2016, Senior Vice President & Audit Director from 2004 to 2014 and Senior Auditor, Audit Manager, Audit Director from 1991 to 1999. She has also served as Controller, Jordan Services Inc. from 2000 to 2004 and began her accounting and auditing career at PricewaterhouseCoopers. Ms. Moore holds a Bachelor of Business Administration degree from Marygrove College and a Master of Business Administration degree from University of Detroit Mercy. She has participated in the Leadership at the Peak, a Center for Creative Leadership Executive Leadership Program, Inforum’s Center for Women’s Leadership Executive Leadership Program, as well as earned: the Certified Public Accountant (CPA); Certified Information System Auditor (CISA); Certified Anti-Money Laundering Specialists (CAMS); Certified Fiduciary and Investment Risk Specialist (CFIRS) designations; and NACD Directorship Certification. She currently serves as the chair and executive board member of the Alternative for Girls organization and is a member of the Michigan Association of CPAs, Information Systems Audit & Control Association, Institute of Internal Auditors, Association of Certified Anti-Money Laundering Specialists, the Executive Leadership Council, National Association of Corporate Directors, and is the executive sponsor for Comerica’s African American Network employee resource group.
Skills and Experience: Senior Executive Leadership; Financial/Audit & Risk; Cybersecurity/Information Technology; Environmental/Social/ Governance
Committees: Audit
Other Current Public Company Directorships: None
Former Public Company Directorships (past 5 years): None
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 | Robert J. Remenar Director Since: 2015 Independent: Yes Age: 67 | ||||
Professional Experience: Mr. Remenar served as chief operating officer of Kensington Capital Acquisition Corp. IV, a special purpose acquisition company from March 2022 to September 2022. Mr. Remenar was president of Kensington Capital Acquisition Corp. II, a special purpose acquisition company, from February 2021 to October 2021 and served as vice chairman of its board of directors. From June 2020 to November 2020, he was president of Kensington Capital Acquisition Corp. I, a special purpose acquisition company, also serving as vice chairman of its board of directors. Mr. Remenar also served as president and chief executive officer of Chassix Inc., a manufacturer of chassis systems, from July 2012 to June 2014, and he served as president and chief executive officer of Nexteer Automotive from December 2009 to June 2012, and president of Delphi Steering/Nexteer Automotive from April 2002 to November 2012. Prior to this, he held a number of executive positions within Delphi Corp. since 1998 and several executive and managerial positions within General Motors since 1985. Mr. Remenar also serves on the boards of directors of PKC Group PLC, Samvardhana Motherson International Limited, Standadyne LLC and Stellium Inc.. He earned his Master of Business and Professional Accountancy degrees from Walsh College and his undergraduate degree from Central Michigan University.
Skills and Experience: Core Industry; Senior Executive Leadership; Financial/Audit & Risk; Mergers & Acquisitions/Capital Markets; International Business/Markets; Engineering/Technical; Manufacturing/Supply Chain; Innovation & Technology Strategy
Committees: Compensation; Audit
Other Current Public Company Directorships: Samvardhana Motherson International Limited (formerly known as Motherson Sumi Systems Limited)
Former Public Company Directorships (past 5 years): Kensington Capital Acquisition Corp.; Kensington Capital Acquisition Corp. II
 | Sonya F. Sepahban Director Since: 2016 Independent: Yes Age: 62 | ||||
Professional Experience: Ms. Sepahban is the CEO and a director of OurOffice, Inc., developer of an enterprise software platform to measure, benchmark and improve diversity and inclusion and workplace culture. From 2009 to 2015, she served as senior vice president of engineering, development and technology at General Dynamics Land Systems, a business unit of General Dynamics Combat Systems Group, a global aerospace and defense company. From 1997 to 2009, she held a number of leadership positions with Northrop Grumman Space Technology, including chief technology officer and senior vice president and chief engineer. Prior to this, Ms. Sepahban held a number of technical and management positions at the NASA Johnson Space Center. Ms. Sepahban earned a Master of Business Administration degree from the University of Houston, a master’s degree in chemical engineering from Rice University, a bachelor’s degree in chemical engineering from Cornell University, and a political science degree from the Institute of Political Sciences.
Skills and Experience: Core Industry; Senior Executive Leadership; Mergers & Acquisitions/Capital Markets; International Business/Markets; Engineering/Technical; Manufacturing/Supply Chain; Innovation & Technology Strategy; Cyber Security/Information Technology; Environmental/Social/ Governance
Committees: Innovation & Business Diversification (Chair)
Other Current Public Company Directorships: None
Former Public Company Directorships (past 5 years): None
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 | Thomas W. Sidlik Director Since: 2014 Independent: Yes Age: 73 | ||||
Professional Experience: Mr. Sidlik spent 34 years in the automotive industry until his retirement in 2007 from the board of management of DaimlerChrysler AG. Prior to this, he served as chairman and CEO of Chrysler Financial Corp. He also served as chairman of the Michigan Minority Business Development Council, and as the vice chairman and chairman of the board of regents of Eastern Michigan University. He earned his Master of Business Administration degree from the University of Chicago and his undergraduate degree from New York University.
Skills and Experience: Core Industry; Senior Executive Leadership; Financial/Audit & Risk; International Business/Markets; Engineering/Technical; Manufacturing/Supply Chain; Environmental/Social/Governance
Committees: Nominating and Corporate Governance; Audit
Other Current Public Company Directorships: None
Former Public Company Directorships (past 5 years): Aptiv PLC
 | Stephen A. Van Oss Director Since: 2008 Independent: Yes Age: 68 | ||||
Professional Experience: Mr. Van Oss currently serves as an Operating Partner, Distribution for Gamut Capital Management, a New York based private equity firm. From 2009 until his retirement in December 2015, Mr. Van Oss served as senior vice president and chief operating officer and director of WESCO International, Inc., a supply chain solutions company. He served as a senior vice president and chief financial and administrative officer of WESCO from 2004 to 2009 and as vice president and chief financial officer of WESCO from 2000 to 2004. Prior to this, he served as WESCO’s director of information technology from 1997 to 2000 and as its director of acquisition management in 1997. Mr. Van Oss serves on the board of directors of JPW Industries as the chairman and is a member of the audit and compensation committees. He is also a trustee of Robert Morris University and a member of the finance and audit committees. He earned his graduate degree from Cleveland State University, undergraduate degree from Wright State University and is a Certified Public Accountant licensed in Ohio.
Skills and Experience: Senior Executive Leadership; Financial/Audit & Risk; Mergers & Acquisitions/Capital Markets; International Business/Markets; Manufacturing/Supply Chain; Cyber Security/Information Technology
Committees: Audit (Chair); Compensation
Other Current Public Company Directorships: None
Former Public Company Directorships (past 5 years): None
| þ | The Board of Directors recommends that the stockholders vote FOR each of our nominees. | ||||
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Corporate Governance
| Board of Directors | ||||||||||||||
Independence of Directors
Board’s Guidelines on Director Independence:
Our Corporate Governance Guidelines provide that a majority of the members of the Board must meet the criteria for independence set forth under applicable law and the New York Stock Exchange (“NYSE”) listing standards. The Board determines on an annual basis whether each director qualifies as independent under these criteria. In addition to applying the NYSE independence rules, the Board will consider all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director. Furthermore, our Audit, Compensation and Nominating and Corporate Governance Committees are constituted so as to comply with the NYSE listing standards regarding independence, including committee independence.
Application of Guidelines:
The Board has determined that all of our directors and director nominees are independent as determined pursuant to NYSE rules, except for Mr. Edwards who serves as our CEO.
Board Leadership Structure
The Board’s leadership structure currently includes a combined chairman and chief executive officer role with a non-employee lead director, as permitted by our Corporate Governance Guidelines.
Chairman and Chief Executive Officer
Mr. Edwards serves as chairman of the board of directors as well as our CEO. The Board believes that this structure is in the best interests of our stockholders at this time because it takes into consideration the importance of having a chairman with in-depth knowledge of, and experience in, our industry and promotes communication between management and the Board, in particular with respect to the Board’s oversight of the Company’s strategic direction. In addition, this structure helps ensure that the non-employee directors’ attention is devoted to the issues of greatest importance to the Company and our stockholders. Our Board periodically reviews its determination to have a single individual serve as both chairman and CEO.
Lead Director
The lead director position is elected by the non-employee members of the Board upon the recommendation of the Nominating and Corporate Governance Committee. The Board believes that the role of the lead director, together with the existence of a substantial majority of independent directors, fully independent Board committees, and the use of regular executive sessions of non-employee and independent directors achieves an appropriate balance between the effective development of key strategic and operational objectives and independent oversight of management.
As the lead director, Mr. Mastrocola:
1.presides at all meetings of the Board at which the chair is not present, including executive sessions of the independent directors, and communicates with management concerning the substance of such meetings and sessions;
2.serves as liaison between the chair and the independent directors;
3.approves the Board’s meeting agendas, schedules and information sent to the Board;
4.in consultation with the Compensation Committee, assists the Board with its evaluation of the performance
of the CEO; and
5.if requested by major stockholders, ensures that he is available for consultation and direct communication.
Board of Director Attendance Requirements for Meetings
Meetings
Our Board of Directors met 16 times in 2022. As set forth in our Corporate Governance Guidelines, Board members are expected to attend Board meetings and meetings of the committees on which they serve. All directors are also strongly encouraged to attend our annual meeting of the stockholders. All incumbent director nominees attended at least 75% of the meetings of our Board and the committees on which such director served during 2022. All but two of the then-serving directors attended the 2022 Annual Meeting.
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Meetings of Non-Employee Directors
In accordance with our Corporate Governance Guidelines and the listing standards of NYSE, our non-employee directors meet regularly in executive sessions of the Board without management present. Executive sessions of non-employee directors are led by Mr. Mastrocola, the lead director, and are held in conjunction with each regularly scheduled Board meeting. Each committee of the Board also meets in executive session without management in conjunction with regularly scheduled committee meetings, as appropriate. At least once a year, the independent directors meet in an executive session led by one of the independent directors who is selected by all of the independent directors to lead the session.
Evaluation of Board Performance
The Board believes that its annual evaluation process illustrated below is integral to enhancing our Board’s effectiveness. These annual self-evaluations are intended to facilitate a candid assessment and discussion by the Board of its effectiveness as a group in fulfilling its responsibilities, its performance as measured against the Corporate Governance Guidelines, and areas for improvement. Each Committee of the Board also conducts a similar annual self-evaluation of its performance and procedures.
| Questionnaire | » | Questionnaire enables candid director feedback. | ||||||
| Board Assessments & Discussions | » | During an executive session of the Board led by the Chair of the Nominating and Corporate Governance Committee and the lead director, the questionnaires are used to facilitate assessments of the following areas: •Individual performances of the directors, including in the capacity of lead director and committee chair •Board and committee operations •Board performance •Committee performance | ||||||
| Follow-Up | » | Policies and practices updated as appropriate. | ||||||
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| Board Committees and Their Functions | ||||||||||||||
Committees of the Board of Directors
Our Board currently has four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Innovation and Business Diversification Committee. The Board determined that each member of each Committee is independent under applicable NYSE listing standards and SEC rules. Each Committee is organized and conducts its business pursuant to a written charter adopted by the Board and available on our website at www.cooperstandard.com under the “Investors” tab.
The following chart sets forth our Board’s standing committees and membership on these committees.
| Directors | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | Innovation and Business Diversification Committee | ||||||||||
| John G. Boss | C | ● | ||||||||||||
| Jeffrey S. Edwards * | ||||||||||||||
| Richard J. Freeland | C | ● | ||||||||||||
| Adriana E. Macouzet-Flores | ● | ● | ||||||||||||
| David J. Mastrocola ** | ● | |||||||||||||
| Christine M. Moore† | ● | |||||||||||||
| Robert J. Remenar† | ● | ● | ||||||||||||
| Sonya F. Sepahban | C | |||||||||||||
| Thomas W. Sidlik | ● | ● | ||||||||||||
| Stephen A. Van Oss† | C | ● | ||||||||||||
| Number of Meetings in 2022 | 7 | 5 | 5 | 4 | ||||||||||
* Chairman of Board
** Lead Director
† Financial Expert
“C” Denotes member and Chair of Committee
“●” Denotes member
| Audit Committee | ||||||||||||||
Chair Stephen A. Van Oss Members Christine M. Moore Robert J. Remenar Thomas W. Sidlik | Committee’s Key Responsibilities | |||||||||||||
•Select independent registered public accounting firm •Oversee accounting and financial reporting processes and the annual audit and quarterly review of financial statements •Oversee compliance with legal and regulatory requirements •Review and evaluate the independence, qualifications, and performance of our independent registered public accounting firm and the performance of our internal audit function •Review and oversee our system of internal controls regarding finance, accounting, and legal compliance •Oversee ESG disclosures, processes, and controls | ||||||||||||||
| Audit Committee Financial Expertise and Independence | ||||||||||||||
| Our Board has determined that each member of the Audit Committee is financially literate and that Messrs. Van Oss and Remenar and Ms. Moore qualify as audit committee financial experts as defined by the rules and regulations of the Securities and Exchange Commission (“SEC”). | ||||||||||||||
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| Compensation Committee | |||||||||||||||||
Chair John G. Boss Members David J. Mastrocola Robert J. Remenar Stephen A. Van Oss | Committee’s Key Responsibilities | ||||||||||||||||
•Review and approve corporate goals, objectives, and other criteria relevant to the chief executive officer’s and the other executive officers’ compensation •Evaluate the performance of all executive officers and determine their compensation •Establish overall compensation philosophy and review and approve executive compensation programs, and assess related risks •Review and approve any employment or severance arrangement with executive officers •Review and approve equity-based compensation plans and awards made pursuant to such plans •Review and approve equity-based compensation plans and awards made pursuant to such plans •Oversee the Company’s employee benefit plans, including the delegation of responsibility for such programs to the Company’s Benefit Plan Committee •Integration of select ESG goals and milestones into executive compensation plans | |||||||||||||||||
| Compensation Consultant | |||||||||||||||||
The Compensation Committee has engaged FW Cook as its independent compensation consultant. The consultant reports directly to the Compensation Committee, including with respect to management’s recommendations of compensation programs and awards. The consultant advises the Compensation Committee on a number of compensation-related considerations, including compensation practices among our peer group companies, pay-for-performance measures, competitiveness of pay levels, program design, and market trends. Other than consulting on executive compensation matters, FW Cook has performed no other services for the Compensation Committee or the Company. The Compensation Committee maintains a formal process to ensure the independence of any executive compensation advisor engaged by the Compensation Committee, including consideration of all factors relevant to the advisor’s independence from management as required by applicable NYSE listing standards. In connection with its engagement of FW Cook, the Compensation Committee considered these factors and determined that FW Cook qualified as independent and that its engagement does not raise any conflict of interest. | |||||||||||||||||
| Nominating and Corporate Governance Committee | |||||||||||||||||
Chair Richard J. Freeland Members Adriana E. Macouzet-Flores Thomas W. Sidlik | Committee’s Key Responsibilities | ||||||||||||||||
•Identify and evaluate individuals qualified to become members of the Board consistent with criteria approved by the Board •Select or recommend to the Board the director nominees to stand for election by the stockholders or to fill vacancies on the Board and board committee memberships •Develop and ensure compliance with corporate governance principles and practices applicable to the Company •Review our legal compliance and ethics programs and policies •Review and make recommendations to the Board on director compensation, as well as indemnification and insurance matters •Oversee the annual performance evaluation of the Board and its committees •Ensure effective Company communication with investors and other stakeholders on ESG matters •Ensure the Board has the skills, expertise and continued education necessary to oversee the successful execution of the Company’s ESG priorities | |||||||||||||||||
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| Innovation and Business Diversification Committee | |||||||||||||||||
Chair Sonya F. Sepahban Members John G. Boss Richard J. Freeland Adriana E. Macouzet-Flores | Committee’s Key Responsibilities | ||||||||||||||||
•Work to understand megatrends affecting the automotive industry and its adjacent markets and provide insights, and together with Company management assess any impacts on the Company’s innovation and business diversification strategy, competitive landscape, and opportunities and risks, including start-up investments and M&A activities •Advise management regarding the Company's innovation and business diversification strategy, implementation plans and performance targets •Review and advise management regarding the Company's commercialization strategy for new products in its core market, adjacent markets, and business model innovations | |||||||||||||||||
| Corporate Governance Principles and Code of Conduct | ||||||||||||||
Cooper Standard is committed to sound corporate governance principles. Having such principles is essential to maintaining our integrity in the marketplace and ensuring that we are managed for the long-term benefit of our stockholders. Our business is overseen by our Board. Our Board strives to promote the success and continuity of our business through the selection of a qualified management team. It is also responsible for making certain that our activities are conducted responsibly, lawfully, and ethically.
The Board has adopted Corporate Governance Guidelines which provide a framework for the effective governance of the Company. The Board has also adopted a Code of Conduct which applies to all directors, officers, and employees, including our chief executive officer, our chief financial officer, and our chief accounting officer. All of our corporate governance documents, including the Corporate Governance Guidelines, the Code of Conduct, and committee charters are available on our website at www.cooperstandard.com under the “Investors” tab or in printed form upon request by contacting Cooper Standard at 40300 Traditions Drive, Northville, Michigan, 48168, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies our policies as warranted. Any modifications will be reflected on our website. In addition, if the Board grants any waivers from our Code of Conduct to any of our directors or executive officers, or if we amend our Code of Conduct, we will, if required, disclose these matters through the “Investor” section of our website on a timely basis. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference in this proxy statement.
| Board’s Role in Risk Oversight | ||
The Board, as a whole and through its committees, has responsibility for the oversight of risk management, while management is responsible for the day-to-day management of risks to the Company. The effective oversight and management of the risks facing the Company are supported through a top-down and bottom-up communication framework that includes a robust enterprise risk management approach and active participation from leaders across all functional areas of the Company, along with our Global Leadership Team and our Board, fostering an appropriate culture of integrity and risk awareness throughout the Company.
The Board has also developed a strong governance framework for overseeing management’s strategy that integrates ESG risks and opportunities into the Company’s long-term strategy and enterprise risk management processes.
Risk Oversight
The Board has implemented a risk governance framework designed to:
•understand material risks in the Company’s business, strategy and ESG priorities;
•allocate responsibilities for risk oversight among the full Board and its committees;
•evaluate the Company’s enterprise risk management processes and whether they are functioning adequately; and
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•facilitate open communication between management and Directors.
The Board delegates to its committees the task of reviewing and overseeing specific risks that align with their functional responsibilities, as presented below:
| Audit Committee | Nominating and Corporate Governance Committee | |||||||
•Company policies with respect to risk assessment and risk management, including cyber security. •Major litigation, financial risk exposures and the steps management has taken to monitor and control such exposures. •System of disclosure controls and system of internal controls over financial reporting and ESG disclosures. •Compliance with legal and regulatory requirements. | •Risks related to our governance structure and processes, related party transactions, and our legal and ethical compliance programs, including our Code of Conduct. | |||||||
Compensation Committee | Innovation and Business Diversification Committee | |||||||
•Compensation programs and practices. The Committee determines whether any such programs or practices create risks that are likely to have a material adverse effect on the Company and, if necessary, recommends changes to our compensation programs to eliminate such risks. | •Risks related to the Company's diversification and innovation strategy, including pursuits of new and innovative processes, products, markets and business models. | |||||||
Enterprise Risk Management Approach
Our enterprise risk management (ERM) approach is designed to inform the Board and the strategic and business planning processes through identification, detection, prevention and mitigation of risks that could impede the achievement of the Company’s strategic objectives and business goals. The results of the Company’s annual risk assessment process are reviewed with the Audit Committee on an annual basis. A priority in our approach is to connect the ERM process with strategic planning and corporate responsibility initiatives to ensure the sustainability of the enterprise.
The ERM committee is comprised of senior-level leaders from each of the functional areas of the company working in concert with our Global Leadership Team and the Board. On an annual basis, the ERM committee is charged with pursuing a holistic, consolidated risk management approach for all risk classes, including strategic, operational, financial and compliance. The ERM committee has adopted a common risk management language, process, and metrics that are designed to inventory, assess and rank unmitigated and mitigated risks so that the leadership team can determine the appropriate response and mitigation strategies in alignment with the Company’s risk appetite. The committee considers the likelihood, magnitude and timeframe of individual risks (short-term, intermediate-term or long-term) when assessing response and mitigation strategies. This comprehensive risk management process allows for effective risk management and efficient capital allocation, and fosters a risk-aware culture embedded into daily operations across the organization at all levels.
To learn more about risks facing the Company, you can review the factors included in Part I, “Item 1A. Risk Factors” in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which are aligned to the risks that are identified during the annual ERM risk assessment process. The risks described in the Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known or that may currently be deemed to be
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immaterial based on the information known to the Company also may materially adversely affect the Company’s business, financial condition or results of operations in future periods.
| Corporate Responsibility | ||||||||||||||
Cooper Standard is dedicated to maintaining its reputation as a good corporate citizen and fulfilling its Purpose of Creating Sustainable Solutions TOGETHER (our “Purpose”). We strive to achieve our Purpose by consistently acting in an honest, ethical and responsible manner and believing in our core values. By living out our core values, demonstrating our capabilities to achieve our mission, delivering innovative products and systems, and upholding our sustainability and ESG commitments, we aim to Be the First Choice of the Stakeholders We Serve.
In 2022, Cooper Standard was named one of the World's Most Ethical Companies by Ethisphere, for the third consecutive year and one of America's Most Responsible Companies by Newsweek, for the fourth consecutive year. We take pride in recognition of our successes as we look to build upon our performance and evolve to meet the needs of a changing world. We focus on corporate responsibility to deliver value to all our stakeholders and ensure the Company’s long-term sustainability through our ESG initiatives.
We intend to continue to report in alignment with both the Global Reporting Initiative (GRI) Standards and the Sustainable Accounting Standards Board (SASB) Auto Part sector standard.
ESG Board Governance Framework:
The Board is responsible for oversight of our ESG strategy and ensures the management of ESG risks and opportunities are integrated into the Company’s long-term strategy and Enterprise Risk Management. The Board delegates certain ESG oversight responsibilities to its committees as set forth below:
Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | ||||||
ESG disclosures, processes and controls, and their assurance ensuring: •ESG disclosures (both qualitative and quantitative) are high quality and follow appropriate ESG frameworks and/or standards •Processes and controls are in place to ensure ESG disclosures are accurate, comparable and consistent •Whether independent assurance is required | ESG accountability: •Integration of select ESG goals and milestones into executive compensation plans | ESG engagement, board composition and education ensuring: •Effective communication of the Company’s ESG priorities and performance to investors and other stakeholders •The Board has the necessary ESG skills and expertise on the Board •ESG Board education | ||||||
The Board receives regular updates on key ESG topics according to a standard Board calendar. Governance, ethics, and compliance updates are presented quarterly to the Audit Committee, twice a year to the Nominating and Corporate Governance Committee, and annually to the full Board. In addition to reporting on our progress, we regularly invite expert speakers to Board meetings to report on emerging trends in our evolving global landscape.
Global Sustainability Council
Our Global Sustainability Council (GSC) provides executive-level oversight for the Company's sustainability strategy to ensure alignment and integration with business goals and stakeholder priorities. The council is managed by an executive chair and consists of Cooper Standard subject matter experts who oversee the Company's material ESG topics. The GSC cross-functional team meets quarterly and takes a holistic look at the Company's ESG initiatives, tracks rapidly evolving best practices and further develops long-term goals to drive world-class ESG performance. Cooper Standard's longtime commitment to embedded sustainability has positioned us well to tackle the biggest challenges of our time and meet stakeholders' current and future sustainability needs.
Significant ESG Topics
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We believe that our corporate responsibility efforts are most impactful when we focus on the issues that matter most to our business and stakeholders. In 2021, we refreshed Cooper Standard's ESG materiality assessment to evaluate the business's emerging ESG risks and opportunities. Through an objective third party, we engaged twenty stakeholders, including Cooper Standard leaders, subject matter experts, customers, shareholders, and industry associations. We also evaluated over a dozen online resources and frameworks to identify our industry and stakeholders' most significant sustainability issues. The results validated our previous ESG investments and ongoing initiatives and identified a total of seven high-priority topics for Cooper Standard to manage. The details of the results will be discussed in our annual Corporate Responsibility Report and are also available on our website. In 2022, we made progress toward the goals that we identified for each material topic and intend to continue to maintain and increase disclosure and transparency around these topics.
Employee Engagement, Diversity and Human Capital
We recognize that our employees are our greatest asset and key competitive advantage, which is why we value their contributions and take responsibility for providing a positive work environment to foster increased engagement. As workforce flexibility and talent attraction become increasingly critical to staying competitive in the market, we are focused on communicating value to potential future employees and engaging our current employees to ensure that we are giving them the tools they need to succeed. To demonstrate our commitment to our employees, we focused on several human capital-related topics among our top material ESG issues, including our Talent Engagement, Talent Development, Performance Management, and Diversity & Inclusion.
Innovation, Materials and Product Lifecycle
At Cooper Standard, we are committed to sustainability because it allows us to stay true to our values and plays an essential role in contributing to the long-term health of the business. Our highly engaged workforce pursues technological innovations and implements manufacturing and business processes that deliver high quality and robust solutions. These innovative solutions enable us to meet the evolving needs of our customers and the global industries we serve as we face the challenges of today and into the future.
Climate Change, Greenhouse Gas Emissions, and Waste
Cooper Standard is committed to evolving for the future. As our climate changes, we share the growing concerns of our stakeholders around climate change and are taking action to manage climate risks. We believe that it is essential to the longevity of our business and the health of our planet to mitigate our environmental impact by reducing our energy usage, emissions and waste.
We have adopted environmental programs to address our Company’s climate-associated risks, including industry changes, market changes and emerging regulations. Since 2011, we have reported our climate-related risks to the Carbon Disclosure Project. We are in the process of aggregating our Scope 3 emissions data to reach our goal of being able to set Science-Based Targets in the future. Furthermore, we are revisiting our renewable energy goals to ensure they are appropriately challenging, inclusive of the correct stakeholder contributions, and in line with our overall strategy.
ESG Reporting
In 2022, Cooper Standard continued making progress toward its ESG commitments, and these efforts are outlined in our Corporate Responsibility Report. We continue to report in alignment with both the Global Reporting Initiative (GRI) Standards and the Sustainable Accounting Standards Board (SASB) Auto Part sector standard. Our archive of annual Corporate Responsibility Reports is available on our website at www.cooperstandard.com/about-us/corporate-responsibility. Please view the reports for further information about the Company’s ESG efforts, including ESG goals and metrics. Please note that our Corporate Responsibility Report is not a part of our proxy solicitation materials.
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| Director Compensation | ||||||||||||||
Summary of Compensation
Members of the Board who are not Cooper Standard employees receive an annual cash fee of $100,000 and, if they chair a committee, an additional fee of $10,000 per year. The lead director receives an additional fee of $20,000 per year, less any amount the lead director may receive in fees as chair of a committee. Non-employee directors were also eligible to receive equity grants under the 2021 Omnibus Incentive Plan (“2021 Plan”). In 2022, the value of the equity awards granted to non-employee directors was approximately equal in value to 120% of the annual base director fee. Consistent with its charter, the Nominating and Corporate Governance Committee reviews and recommends to the Board any changes with respect to the compensation of directors. With respect to fiscal year 2022, the Nominating and Corporate Governance Committee determined not to recommend any changes to the Company’s director compensation program relative to the prior year.
The following table sets forth information regarding the compensation earned by each non-employee director during the year ended December 31, 2022.
| Name (a) | Fees Earned or Paid in Cash (b) | Stock Awards (c)1 | Option Awards ($) (d) | All Other Compensation ($) (e) | Total (f) | |||||||||||||||
| John G. Boss | $106,178 | 2 | $120,000 | — | — | $226,178 | ||||||||||||||
| Richard J. Freeland | $106,178 | 3 | $120,000 | — | — | $226,178 | ||||||||||||||
| Adriana E. Macouzet-Flores | $100,000 | $120,000 | — | — | $220,000 | |||||||||||||||
| David J. Mastrocola | $120,000 | 4 | $120,000 | — | — | $240,000 | ||||||||||||||
| Christine M. Moore | $100,000 | $120,000 | — | — | $220,000 | |||||||||||||||
| Robert J. Remenar | $103,815 | 5 | $120,000 | — | — | $223,815 | ||||||||||||||
| Sonya F. Sepahban | $110,000 | 6 | $120,000 | — | — | $230,000 | ||||||||||||||
| Thomas W. Sidlik | $103,815 | 7 | $120,000 | — | — | $223,815 | ||||||||||||||
| Stephen A. Van Oss | $110,000 | 8 | $120,000 | — | — | $230,000 | ||||||||||||||
| Justin E. Mirro | $38,425 | 9 | — | — | — | $38,425 | ||||||||||||||
1 The amount shown in column (c) represents the grant-date fair value of 19,802 time-vested RSUs granted to each of the non-employee directors who were directors on the grant date, May 19, 2022, under the Company’s 2021 Plan. These RSUs will vest, assuming continued service as a director, on the earlier of the first annual stockholder meeting after the grant date or the one year anniversary of the grant date. Each RSU represents a contingent right to receive, at the Company’s option, either one share of common stock or the cash equivalent upon satisfaction of the vesting requirements. Under the Cooper-Standard Holdings Inc. Deferred Compensation Plan for Non-Employee Directors, the directors may make an irrevocable election to defer their RSU awards. Messrs. Freeland, Mastrocola, Remenar, Sidlik and Van Oss, and Ms. Sepahban each deferred their 2022 RSU awards.
As of December 31, 2022, the aggregate number of deferred RSUs and outstanding and unvested RSUs held by current non-employee directors were as follows:
| Name | Deferred RSUs | Outstanding and Unvested RSUs | ||||||
| John G. Boss | — | 19,802 | ||||||
| Richard J. Freeland | 16,751 | 19,802 | ||||||
| Adriana E. Macouzet-Flores | — | 19,802 | ||||||
| David J. Mastrocola | 24,930 | 19,802 | ||||||
| Christine M. Moore | — | 19,802 | ||||||
| Robert J. Remenar | — | 19,802 | ||||||
| Sonya F. Sepahban | 19,347 | 19,802 | ||||||
| Thomas W. Sidlik | 24,930 | 19,802 | ||||||
| Stephen A. Van Oss | 24,930 | 19,802 | ||||||
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2 Represents Mr. Boss’s annual outside director fee, plus $6,178 which is a prorated fee for his services as the chair of the Compensation Committee from May 19, 2022, through December 31, 2022.
3 Represents Mr. Freeland’s annual outside director fee, plus $6,178 which is a prorated fee for his services as the chair of the Nominating and Corporate Governance Committee from May 19, 2022, through December 31, 2022.
4 Represents Mr. Mastrocola’s annual outside director fee, plus $20,000 for his services as the lead director.
5 Represents Mr. Remenar’s annual outside director fee, plus $3,815 which is a prorated fee for his services as the chair of the Compensation Committee through May 18, 2022.
6 Represents Ms. Sepahban’s annual outside director fee plus $10,000 for her service as the chair of the Innovation and Business Diversification Committee.
7 Represents Mr. Sidlik’s annual outside director fee, plus $3,815 which is a prorated fee for his services as the chair of the Nominating and Corporate Governance Committee through May 18, 2022.
8 Represents Mr. Van Oss’ annual outside director fee plus $10,000 for his service as the chair of the Audit Committee.
9 Represents Mr. Mirro’s annual outside director fee of $38,425 through May 19, 2022, the date he departed from the board of directors.
Stock Ownership Policy for Non-Employee Directors
To align the interests of our non-employee directors with the interests of our stockholders, the Board has a policy requiring that non-employee directors achieve a level of ownership of our common stock equal to five times their base annual director fee. Under this policy, non-employee directors are required to hold 75% of the net shares resulting from stock option exercises or vesting of other stock-based awards until they reach their applicable stock ownership level. All of our incumbent non-employee directors meet the requirements of this policy or are retaining their acquired amounts until they reach their applicable stock ownership level.
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| Stock Ownership and Related Stockholder Matters | ||||||||||||||
Ownership of Certain Beneficial Owners and Management
The following table and accompanying footnotes show information regarding the beneficial ownership of the issued and outstanding common stock of Cooper-Standard Holdings Inc. by (i) each person known by us to beneficially own more than 5% of the issued and outstanding common stock of Cooper-Standard Holdings Inc. as of the dates indicated in the footnotes and (ii) (A) each of our directors, (B) each named executive officer, and (C) all directors and executive officers as a group, each as of March 19, 2023. Unless otherwise indicated, (i) the address of each beneficial owner is c/o Cooper-Standard Holdings Inc., 40300 Traditions Drive, Northville, Michigan, 48168; and (ii) each of the beneficial owners listed below has sole voting and dispositive (investment) power over the shares beneficially owned.
| Common Stock Beneficially Owned | |||||||||||||||||
| Named Executive Officers and Directors | Number of Common Shares1 | Common Shares Underlying Exercisable Options2 | Common Shares Underlying Restricted Stock Units3 | Total Number of Shares of Common Stock Beneficially Owned | Percentage of Common Stock Beneficially Owned | ||||||||||||
Jeffrey S. Edwards 4 | — | ||||||||||||||||
| Jonathan P. Banas | — | * | |||||||||||||||
| Patrick R. Clark | — | * | |||||||||||||||
Christopher Couch | — | * | |||||||||||||||
| Joanna M. Totsky | — | * | |||||||||||||||
| John G. Boss | — | * | |||||||||||||||
| Richard J. Freeland | — | * | |||||||||||||||
| Adriana E. Macouzet-Flores | — | * | |||||||||||||||
| David J. Mastrocola | — | * | |||||||||||||||
| Christine M. Moore | — | * | |||||||||||||||
| Robert J. Remenar | — | * | |||||||||||||||
| Sonya F. Sepahban | — | * | |||||||||||||||
| Thomas W. Sidlik | — | * | |||||||||||||||
| Stephen A. Van Oss | — | * | |||||||||||||||
| Current directors and executive officers as a group (17 persons) | — | ||||||||||||||||
| Significant Owners | |||||||||||||||||
| Thrivent Financial for Lutherans | |||||||||||||||||
| Charles Schwab Investment Management, Inc. | |||||||||||||||||
| Millstreet Capital Management LLC | |||||||||||||||||
| Divisar Partners QP, L.P. | |||||||||||||||||
* Less than 1%
1 Includes common stock directly or indirectly owned by each listed person.
2 Includes shares underlying options exercisable on March 19, 2022, and options that become exercisable within 60 days thereafter.
3 Includes Restricted Stock Units credited to non-employee directors as of March 19, 2022, or within 60 days thereafter, which have been deferred under the Company’s Deferred Compensation Plan for Non-Employee Directors and are payable within 45 days following termination of board service or a change of control.
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Not included are the following RSUs that are payable within 60 days of March 19, 2022. In each case, the following RSUs may be paid in cash or shares of common stock at the election of the Company:
4 The number of common shares reported for Mr. Edwards includes 13,200 shares held by an irrevocable family trust for which his spouse is a beneficiary. Mr. Edwards disclaims beneficial ownership of the stock held by the trust except to the extent of his pecuniary interest therein.
[ footnotes]
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Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information about our equity compensation plans as of December 31, 2022:
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance (excluding securities reflected in column (a)) | |||||||||||||||||
(a)1 | (b)2 | (c)3 | ||||||||||||||||||
| Equity compensation plans approved by security holders | 1,331,988 | $59.41 | 1,141,194 | |||||||||||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
| Total | 1,331,988 | 1,141,194 | ||||||||||||||||||
1 Included in column (a) are stock-settled restricted stock unit awards and stock-settled performance-based awards converted to shares by dividing the accounting value of the award by the grant date stock price. The number in column (a) includes 785,844 shares subject to options; 350,487 shares covered by stock-settled time-vested Restricted Stock Units; and 195,657 shares representing the target number of shares covered by Performance RSUs that may be earned pursuant to rights granted (assuming maximum payout level is achieved, Performance RSUs earned would be 391,314 and the total number of securities to be issued would be 1,527,645).
2 The weighted-average exercise price presented in column (b) reflects the weighted average exercise price of 785,844 options outstanding under the Long-Term Incentive Program, as further described herein. The price does not take into account the shares issuable upon vesting of outstanding restricted stock unit awards and stock-settled performance-based awards, which have no exercise price.
3 The number of securities remaining available for issuance under the Company's 2021 Plan is 1,141,194. At the date of grant, Performance RSUs are debited from the 2021 Plan number of securities remaining available assuming the maximum payout level. The 2021 Plan originally had 1,453,092 shares authorized.
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| Executive Officers | ||||||||||||||
Set forth below is certain information with respect to the current executive officers of the Company.
| Name | Age | Position | ||||||||||||
| Jeffrey S. Edwards | 60 | Chairman and Chief Executive Officer | ||||||||||||
| Jonathan P. Banas | 52 | Executive Vice President and Chief Financial Officer | ||||||||||||
| Patrick R. Clark | 50 | Senior Vice President and Managing Director - Global Automotive | ||||||||||||
| Christopher E. Couch | 53 | Senior Vice President, Chief Technology Officer | ||||||||||||
| Larry E. Ott | 63 | Senior Vice President and Chief Human Resources Officer | ||||||||||||
| Joanna M. Totsky | 56 | Senior Vice President, Chief Legal and Transformation Officer and Secretary | ||||||||||||
| Somasundhar Venkatasubramanian | 53 | Senior Vice President, Chief Information Technology Officer | ||||||||||||
| Amy B. Kulikowski | 46 | Vice President, Chief Accounting Officer | ||||||||||||
Jeffrey S. Edwards is our chairman and chief executive officer, a position he has held since May 2013, previously serving as chief executive officer and member of the Board of Directors of the Company since October 2012.
Jonathan P. Banas is our executive vice president and chief financial officer, a position he has held since June 2017, previously serving as our vice president, corporate controller, and chief accounting officer since September 2015.
Patrick R. Clark is our senior vice president and managing director - Global Automotive, a position he has held since January 1, 2022. Prior to his current position, Mr. Clark served in a series of roles in the Company with increasing levels of responsibility, including as senior vice president and chief global manufacturing officer from August 2020 to December 2021, senior vice president, chief global engineering and product strategy officer from January 2019 to July 2020, and vice president, business development, North America from May 2017 to December 2018.
Christopher E. Couch is our senior vice president, chief technology officer, a position he has held since July 30, 2021, prior to which he was senior vice president and chief technology and procurement officer, a position he held beginning in January 2020. Mr. Couch previously served as senior vice president and chief innovation officer from January 2019 to January 2020 and as vice president, product line strategy and innovation from 2016 to 2018.
Larry E. Ott is our senior vice president and chief human resources officer, a position he has held since January 2014.
Joanna M. Totsky is our senior vice president, chief legal and transformation officer, and secretary, a position she has held since November 17, 2022, prior to which she held the position of senior vice president, chief legal and officer, and secretary from July 2019. She held the position of vice president and deputy general counsel from October 2016, when she joined the Company.
Somasundhar Venkatasubramanian (Soma Venkat) is our senior vice president, chief information technology officer, a position he has held since September 2021. Prior to his current position, Dr. Venkat was chief information officer at IXS Coatings, a supplier of polyurea solutions, from January 2021 to September 2021, prior to which he served as our vice president, information technology from January 2016 to December 2020.
Amy B. Kulikowski is our vice president, chief accounting officer, a position she has held since July 2022, prior to which she was vice president, internal audit beginning September 2021, when she joined the Company. Prior to joining the Company, Ms. Kulikowski was assistant controller, Delphi accounting and integration at BorgWarner Inc., a supplier of technology solutions for combustion, hybrid and electric vehicles, from October 2020 to May 2021, and vice president, assistant controller at Delphi Technologies PLC, a supplier of integrated propulsion technologies, from December 2017 to October 2020.
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| Transactions with Related Persons | ||||||||||||||
Related Persons Transactions Policies and Procedures
We have established a formal written policy regarding transactions with related persons as defined under Item 404(a) of Regulation S-K (the “Related Party Transaction Policy” or the “Policy”). The Policy assists us in identifying, reviewing, monitoring and, as appropriate, approving transactions with related parties. The Policy requires that any transaction involving the Company and a shareholder who owns greater than 5% of our shares, a director, a nominee for director, or an executive officer, and/or their immediate family members (“Related Party”) which exceeds $120,000 and in which a Related Party had or will have a direct or indirect material interest (“Related Party Transaction”) must be approved or ratified by the Nominating and Corporate Governance Committee.
The Chief Legal Officer, in consultation with members of management and external counsel, will determine if a transaction with a Related Party constitutes as Related Party Transaction under the Policy requiring approval from the Nominating and Corporate Governance Committee. In connection with the review and approval or ratification of a Related Party Transaction, the Nominating and Corporate Governance Committee will consider relevant facts and circumstances, including:
•whether the terms of the transaction would apply on the same basis if the transaction did not involve a Related Party;
•whether there are compelling business reasons for the Company to enter into the transaction and the nature of any alternative transactions;
•the timing of the transaction;
•whether the transaction would impair the independence of a director; and
•whether the transaction would present an improper conflict of interest.
We have implemented procedures to ensure compliance with the Related Party Transaction Policy. In particular, each director, nominee for director, and executive officer is required to complete a questionnaire in connection with the annual proxy statement that asks a series of questions aimed at identifying possible Related Party Transactions. In addition, on a quarterly basis, we seek to identify related party transactions through an internal inquiry across various departments, including finance, sales, and legal, which includes a review of payments to or from any party that may be considered related. In addition, our Code of Business Conduct and Ethics prohibits our directors, officers, employees, and associates from participating in transactions involving conflicts of interest and requires disclosure of any potential conflicts of interest.
Fiscal Year 2022 Related Persons Transactions
As of December 31, 2022, Mr. Van Oss, one of our directors, owned $3,000,000 in principal amount of the Company’s 5.625% Senior Notes due 2026 (described in Note 10 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022), which he acquired through three open market purchases in the principal amount of $1,000,000 each on August 10, 2020, September 30, 2020, and March 2, 2022. The Company paid cash interest to Mr. Van Oss in the amounts of $56,250, $112,500 and $168,750, in the years ended December 31, 2020, December 31, 2021, and December 31, 2022, respectively, with respect to these securities.
| Delinquent Section 16(a) Reports | ||||||||||||||
Section 16(a) of the Exchange Act requires the Company’s officers, directors and persons who own more than ten percent of the common stock of the Company to file with the SEC reports of ownership of the Company’s securities and changes in reported ownership. Officers, directors, and greater than ten percent stockholders are required to furnish the Company with copies of all Section 16(a) reports they file. To our knowledge, based solely on a review of copies of such reports received by the Company, we believe that during 2022 our officers, directors, and greater than ten percent stockholders complied with their Section 16(a) filing obligations on a timely basis.
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| Other Matters Concerning Directors, Nominees and Executive Officers | ||||||||||||||
SEC regulations require the Company to describe certain legal proceedings, including bankruptcy and insolvency filings involving directors, nominees for director or executive officers of the Company or companies of which a director, nominee for director, or executive officer was an executive officer at the time of filing. Mr. Remenar, a director, was an executive officer of Chassix Inc. approximately nine months before Chassix Inc. filed for protection under Chapter 11 in March 2015. Mr. Boss, a director, was an executive officer at Momentive Performance Materials Inc. at the time it filed for protection under Chapter 11 in April 2014.
| Communications with the Board of Directors | ||||||||||||||
The Board has established procedures for the stockholders and other interested parties to communicate with the Board. A stockholder or other interested party may contact the Board by writing to the lead director or the non-employee or independent members of the Board to their attention at the Company’s principal executive offices at 40300 Traditions Drive, Northville, Michigan, 48168. Any stockholder must include the number of shares of the Company’s common stock he or she holds and any interested party must detail his or her relationship with the Company in any communication to the Board. Communications received in writing are distributed to the lead director or independent members of the Board as a group, as appropriate, unless such communications are considered, in the reasonable judgment of the Company’s secretary, improper for submission to the intended recipient(s). Examples of communications that would be considered improper for submission include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to the Company or the Company’s business, or communications that relate to improper or irrelevant topics.
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Proposal 2: Advisory Vote on Named Executive Officer Compensation
Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking the stockholders to vote, on an advisory or non-binding basis, to approve the compensation of our named executive officers (“NEOs”) as disclosed in this proxy statement. A detailed description of our compensation program is available in the Compensation Discussion and Analysis section.
The advisory vote, commonly known as a say-on-pay vote, gives stockholders the opportunity to express their views on the overall compensation of our NEOs and the philosophy, policies and practices described in this proxy statement. Approval of this advisory proposal requires the affirmative vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote. Abstentions and broker non-votes are not counted as votes FOR or AGAINST the proposal, and will therefore have no effect on such vote. The say-on-pay vote is an advisory vote only, and therefore it will not bind the Company or the Board. However, the Board and the Compensation Committee will consider the voting results as appropriate when making future decisions regarding executive compensation. We intend to hold the next advisory vote on the compensation of our named executive officers at the 2023 annual meeting of the stockholders.
The Board and the Compensation Committee believe that we have created an executive compensation program that is tied to performance, aligns with stockholder interests and merits stockholder support. Accordingly, we are asking the stockholders to indicate their support for our NEOs’ compensation by voting FOR the following resolution at the Annual Meeting:
RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and the narrative discussion contained in this proxy statement.
| þ | The Board of Directors recommends that the stockholders vote FOR Proposal 2. | ||||
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| Compensation Discussion and Analysis | ||||||||||||||
This Compensation Discussion and Analysis describes the key principles and material elements of the compensation programs applicable to our NEOs in 2022. The NEOs for 2022 are as follows:
| Mr. Jeffrey S. Edwards | Chairman and Chief Executive Officer | ||||
| Mr. Jonathan P. Banas | Executive Vice President and Chief Financial Officer | ||||
| Mr. Patrick R. Clark | Senior Vice President and Managing Director - Global Automotive | ||||
| Mr. Christopher E. Couch | Senior Vice President, Chief Technology Officer | ||||
| Ms. Joanna M. Totsky | Senior Vice President, Chief Legal and Transformation Officer and Secretary | ||||
Executive Summary
Cooper Standard’s sales increased in 2022 by 8.4% to $2.53 billion, primarily driven by volume and mix and net customer price adjustments including partial recovery of cost increases, partially offset by foreign exchange and the deconsolidation of a joint venture in the Asia Pacific region. Our net loss in 2022 was $215.4 million, compared to a net loss of $322.8 million in 2021. Our Adjusted EBITDA was $37.9 million (or $43.4 million for 2022 officer annual incentive plan purposes) compared to $(8.0) million in 2021. For purposes of determining Adjusted EBITDA for the annual incentive plan, Adjusted EBITDA was measured net of all incentive plan payouts other than neutralizing the impact of a modest discretionary adjustment made with respect to payout levels under the bonus programs for non-executive employees.
The Company believes in a true pay-for-performance program. In alignment with that belief, and based on the pre-established payout curve, the Compensation Committee approved the 2022 annual incentive payout percentage at 74.7% of target, reflective of actual performance against Adjusted EBITDA and strategic ESG metrics, and respective established targets. With respect to Long-Term Incentive Plan awards for the performance periods ending on December 31, 2022, our ROIC over the two-year period ending December 31, 2022 of (11.9)% was below the pre-established threshold performance level of 4.8%, and our ROIC for the one-year period ending December 31, 2022 of (8.6)% was below the pre-established threshold performance level set at a 810 bps improvement relative to 2021; resulting in no payments to our NEOs under the Long-Term Incentive Plan.
Below is the four-year history of payouts under the annual incentive program and the Performance RSUs in the Long-Term Incentive Plan. The figures presented represent payout levels for performance periods ending during the respective year. For performance periods ending in 2022, payouts are described more fully under “Long-Term Incentive Compensation.” As of December 31, 2022, all outstanding stock options held by the NEOs were underwater and time-vested restricted stock units (RSUs) granted in such years had a current value well below the grant date fair value of such awards.
| Payout (% of Target) | |||||||||||||||||
| Incentive Award | 2019 | 2020 | 2021 | 2022 | 4-Year Average | ||||||||||||
| Annual Incentive Program | 0.0% | 70.0% | 0.0% | 74.7% | 36.2% | ||||||||||||
| Long-Term Incentive Plan | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | ||||||||||||
In addition to low or no annual and long-term incentive payouts over the past four years, our CEO’s target compensation has not increased since 2019, including through 2022 where his target total direct compensation (“TDC”) remained unchanged and below the market median.
Compensation Philosophy and Objectives
Our compensation programs are designed to:
•Link executive compensation to Company performance;
•Attract and retain a highly-qualified executive leadership team;
•Align the interests of executives with those of our stockholders;
•Focus our leadership team on increasing profit and ROIC performance; and
•Motivate our leadership team to execute our long-term growth strategy while delivering consistently strong financial results.
To help achieve these goals, we believe compensation for executive officers should include the following components:
•Base salary;
•Annual performance-based cash incentives;
•Long-term equity incentives;
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•Regular and change-of-control termination benefits; and
•Competitive health, welfare, and retirement benefits.
The Compensation Committee regularly reviews these components and evaluates each in connection with furthering our compensation philosophy and objectives. To assist with determining appropriate target compensation levels and components, the Compensation Committee reviews market data and best practices, including benchmarking our senior executive target compensation levels to those provided to similarly-situated executives at comparable companies as discussed below. The Compensation Committee generally targets compensation for our NEOs at approximately the 50th percentile of market practice (based on our benchmarking peer group and general industry survey data), recognizing that actual compensation levels will fluctuate above or below median levels depending on our performance. In addition, target compensation for specific executives can be above or below the market median based on the individual’s importance to the organization, the difficulty and cost of replacement, the expected future contribution to the organization, tenure at current position, and skill set relative to the external marketplace.
We are committed to sound and effective compensation and related governance practices. As such, we have adopted the following:
•Independent compensation consultant retained by the Compensation Committee;
•Annual benchmarking using general industry surveys and a peer group proxy analysis;
•Majority of long-term incentive compensation is performance-based;
•Balanced mix of performance measures aligned with long-term strategy;
•Clawback policy covering cash and equity;
•Anti-hedging and anti-pledging policy; and
•Executive and non-employee director stock ownership guidelines.
Processes Relating to Executive Compensation
The Compensation Committee assists the Board in discharging its responsibilities relating to the compensation of our NEOs and overseeing our compensation plans, policies, and benefit programs. Our human resources team supports the Compensation Committee in its work. In evaluating and determining target compensation levels for our NEOs, the Compensation Committee relies on data received from its independent compensation consultant and the Chief Human Resources Officer, as well as recommendations from the CEO. The Compensation Committee, following discussions with the CEO, determines the base salary and target annual and long-term incentive compensation of the other NEOs. Executives whose compensation is under consideration are not present during the Compensation Committee’s review meetings, and neither the CEO nor management has any input into the compensation decisions for the CEO. The considerations, criteria and procedures applicable to these determinations are discussed more fully under “Executive Compensation Components.”
Executive Compensation Review for 2022
As discussed above, the Compensation Committee has engaged FW Cook as its independent compensation consultant. FW Cook has served as the Compensation Committee’s independent consultant since 2013. As part of its engagement, FW Cook benchmarked the target compensation levels of our NEOs to assess the competitiveness of our executive compensation programs in the markets in which we compete for talent, focusing in particular on base salaries, target annual incentive opportunities and long-term incentive opportunities. To inform target TDC levels for 2022, FW Cook compared our programs in these areas to a peer group comprised of 15 publicly-traded automotive suppliers with annual revenues between $0.8 billion and $5.4 billion and with median revenues of $2.8 billion at the time of the benchmarking analysis. FW Cook supplemented its analysis of peer group proxy data with general industry survey data, which was adjusted to reflect the revenue responsibility of each executive.
The peer group below was reviewed and approved by the Compensation Committee in June 2021 to inform target TDC levels for 2022. In comparison to 2021, Briggs & Stratton was removed from the peer group due to the company’s bankruptcy proceedings and delisting from the NYSE. Additionally, Stoneridge was added to the peer group as a size-appropriate company and, more specifically, given the company’s business comparability, market capitalization alignment, prevalence within the peer groups of Company peers, prior inclusion within the peer group and meaningful overlap between Stoneridge’s and Cooper Standard’s current peer groups. At the time the market analysis was completed in the winter of 2021, Cooper Standard was positioned relatively close to the peer median for revenue ($2.4B versus the peer median of $2.8B) and at approximately the 25th percentile for market capitalization ($441M versus the peer median of $1.2B).
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The 15 peer group companies used to inform target TDC levels were:
| • | American Axle & Mfg. Holdings, Inc. | • | LCI Industries | • | Stoneridge | ||||||||||||||||||
| • | Cooper Tire & Rubber | • | Linamar | • | Superior Industries Int’l | ||||||||||||||||||
| • | Garrett Motion | • | Martinrea International Inc. | • | Terex | ||||||||||||||||||
| • | Gentherm | • | Meritor, Inc. | • | Visteon Corp. | ||||||||||||||||||
| • | Greenbrier Companies | • | Modine Manufacturing Co. | • | Wabash National | ||||||||||||||||||
Based on its December 2021 analysis (which was used to inform target TDC changes for 2022), FW Cook concluded that base salaries for our NEOs were 105% of the market median, in the aggregate. The competitiveness of target bonus opportunities varied by executive, resulting in target cash compensation that was 106% of the median, in the aggregate. Relative to market data, executive target TDC levels were 98% of the median, in the aggregate.
As discussed above, the Compensation Committee considers all factors relevant to FW Cook’s independence from management as required by applicable NYSE standards. Apart from the work it performed for the Compensation Committee, FW Cook provided no other services to the Company in 2022. As a result of this and the consideration of other factors, the Compensation Committee determined that the engagement of FW Cook in 2022 was appropriate and raised no conflict of interest.
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“Say-on-Pay” Vote
Our annual stockholder advisory vote on the compensation of our NEOs was held in May 2022. Our stockholders approved the compensation of the NEOs as disclosed in the 2022 Proxy Statement, with nearly 98% of shares voted in favor of the “say-on-pay” advisory proposal. The Compensation Committee has determined that our executive compensation philosophy, compensation objectives, and compensation elements continue to be appropriate and did not make any material changes to our executive compensation program in direct response to the 2022 “say-on-pay” vote. We continue to believe that our executive compensation program has a strong performance orientation and aligns with stockholder interests.
Executive Compensation Components
The following describes the components of our 2022 executive compensation program as approved by the Compensation Committee.
Base Salary
Our NEOs are paid a base salary determined early in each fiscal year or upon changes in roles or positions within the Company. The Compensation Committee determines the CEO’s base salary and, taking into account recommendations from the CEO, the salaries of the other NEOs. Generally, our practice is to pay base salaries that are competitive in the markets in which we compete for talent and commensurate with the responsibilities and contributions of each executive. Based upon the Compensation Committee’s evaluation of data supplied by FW Cook, the Compensation Committee determined to adjust certain NEO salaries, representing an average increase of 3.7% across all NEOs. Base salary adjustments in 2022 for the NEOs were as follows:
| 2021 Base Salary | 2022 Base Salary | Increase | ||||||||||||||||||
| Mr. Edwards | $1,000,000 | $1,000,000 | —% | |||||||||||||||||
Mr. Banas1 | $500,000 | $515,000 | 3.0% | |||||||||||||||||
Mr. Clark2 | $440,000 | $500,000 | 13.6% | |||||||||||||||||
Mr. Couch3 | $465,000 | $480,000 | 3.2% | |||||||||||||||||
Ms. Totsky4 | $435,000 | $450,000 | 3.4% | |||||||||||||||||
1 Mr. Banas’ base salary increased effective April 18, 2022 in light of continued growth into his role and to align his base salary to market.
2 Mr. Clark’s base salary increased effective April 18, 2022 in light of his assumption of responsibilities for the Company’s Commercial function and the criticality of the role.
3 Mr. Couch’s base salary increased effective April 18, 2022, reflecting a market adjustment to align his base salary with his responsibility for multiple functions.
4 The increase to Ms. Totsky’s base salary became effective April 18, 2022 and reflected continued growth into her role and a market adjustment to align her base salary to market.
Annual Incentive Award
Prior to or early in each fiscal year, the Compensation Committee determines target annual incentive opportunities payable to the NEOs upon the achievement of performance targets approved by the Compensation Committee for the year. For 2022, the Compensation Committee determined that the relevant performance metrics would include both a Company financial performance metric, namely Adjusted EBITDA, along with strategic ESG performance metrics. Incorporating strategic ESG metrics for purposes of annual incentive opportunities for NEOs was deemed appropriate by the Compensation Committee as ESG initiatives are believed to support delivery of value to all of our stakeholders and ensure the long-term sustainability of the Company. For purposes of evaluating potential 2022 incentive payouts, achievement against the Adjusted EBITDA financial metric determined 85% of funded incentive amounts, with the remaining 15% of funded incentive amounts dependent upon achievement relative to prescribed ESG metrics. No payout was to be funded with respect to achievement against strategic ESG metrics unless a threshold payout was earned with respect to performance relative to Adjusted EBITDA financial performance goals.
Adjusted EBITDA is deemed by the Compensation Committee to be an appropriate objective measurement of the financial performance of the Company because it is an indicator of our strategy to achieve sustained profitable growth and align executive compensation with the interests of our stockholders over the long term. With respect to our strategic ESG performance metrics, the Compensation Committee deemed the following metrics as appropriate for measuring Company performance with respect to ESG initiatives, each of which contribute equally to the 15% funding of annual incentive amounts associated with ESG performance:
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•Safety, as measured by achieved Total Incident Rate (TIR)
•Energy consumption, as measured by year-over-year improvement in electricity consumption as a percentage of normalized hours worked, and
•Overall talent, as measured by the Company’s ability to create and sustain a high-performance organization through the identification, recruitment, development, and retention of a diverse, high-quality workforce.
Each metric is equally weighted at 5% and could be earned from 0-200% of target.
For 2022, the Compensation Committee established a “threshold” or minimum performance Adjusted EBITDA goal, the achievement of which entitled NEOs to a payment equal to 25% of the target incentive associated with Company financial performance, which decreased from 37.5% of target in 2021. In connection with the decrease of the threshold payment percentage, the threshold level of performance was also decreased from 80% to 50% of the target Adjusted EBITDA goal. The decrease in the threshold level of performance and the corresponding payout was reflective of continued industry volatility and associated challenges with establishing financial goals. The Compensation Committee’s future expectation, upon return to greater levels of certainty and reduced volatility within the business and industry, is to return to a structure similar to the historical program of setting threshold performance of 85% of target earning a payout of 50% of target.
The Compensation Committee further established “threshold,” “target” and “maximum” performance safety and energy consumption goals, as disclosed further below. No formulaic performance levels were established for purposes of the overall talent ESG metric. Instead, performance as it relates to overall talent was measured on a qualitative basis, supported by a number of factors which included: (1) diversity of candidates on senior leadership team succession plans, (2) diversity hiring and staffing by function and level, (3) salaried employee training hours, (4) salaried employee turnover rates, and (5) salaried employee internal fill rates.
The Company sets challenging targets in the annual incentive plan as evidenced by below target payouts in 2020 and 2022 and no payouts in all other years since 2017. No annual incentive award is payable if the Company fails to meet the threshold performance goal for Adjusted EBITDA, unless the Compensation Committee applies a discretionary adjustment in extraordinary situations. The Compensation Committee also sets a “superior performance” level, the achievement of which entitles NEOs to a maximum payout equal to 200% of the target amounts. The superior performance level represents a goal deemed difficult to achieve at the beginning of the year based on the assumptions underlying our business plan. Actual annual incentive payments are determined using linear interpolation for performance attainment between “threshold” and “target” and between “target” and “superior.”
While funding of the bonus pool is determined based on Adjusted EBITDA and ESG performance, the annual incentive plan provides that the Compensation Committee may recommend a discretionary adjustment to the potential award amount for any participant based upon overall individual performance and/or other factors; provided that the final total awarded amount may not be greater than 200% of target amount for the performance award. As such, with respect to NEOs, the calculated payout may be subject to downward adjustment to 0% and to upward adjustment to 200% of target at the discretion of the Compensation Committee in extraordinary situations.
For 2022, the Compensation Committee established target awards under the AIP for each NEO based on a percentage of base salary as follows: 120% for Mr. Edwards; 75% for Mr. Banas; 70% for Messrs. Clark and Couch; and 65% for Ms. Totsky. Compared to 2021, the target award amount for Mr. Clark increased from 65% to 70% effective January 1, 2022, in recognition of the criticality of his position, his assumption of responsibilities for the Company’s Commercial function, and progression toward alignment with market data. Compared to 2021, the target award amount for Mr. Couch increased from 65% to 70% effective January 1, 2022, reflective of his responsibilities for multiple Company functions. The target award amounts for Messrs. Edwards and Banas, as well as Ms. Totsky, remained unchanged from 2021.
The Compensation Committee set Adjusted EBITDA targets applicable to the Company as a whole in accordance with our 2022 business plan as approved by the Board of Directors, as outlined below. For 2022, achievement against the Adjusted EBITDA financial metric determined 85% of funded incentive amounts.
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| 2022 Achievement Level (85% Weighting) | Adjusted EBITDA1 (000) | Award Payout as % of Award Target | ||||||||||||
| Below Threshold | Below $30,000 | 0% | ||||||||||||
| Threshold (50% of target performance) | $30,000 | 25% | ||||||||||||
| Target | $60,000 | 100% | ||||||||||||
| Superior (115% of target performance) | $69,000+ | 200% | ||||||||||||
1Adjusted EBITDA is not a measure recognized under U.S. GAAP and is defined as net income plus income tax expense, interest expense net of interest income, depreciation and amortization, and certain items that management does not consider to be reflective of the Company's core operating performance. Adjusted EBITDA, for AIP purposes, for 2022 was calculated net of all incentive plan payouts other than neutralizing the impact of a discretionary adjustment made to the bonus programs for non-executive officers. The neutralizing of that adjustment increased Adjusted EBITDA for AIP purposes from $37.9 million to $43.4 million.
For 2022, the Compensation Committee set safety (TIR) and energy consumption improvement (electricity usage as a percentage of normalized hours worked) targets applicable to the Company as a whole, as described below. For 2022, these two metrics were evenly weighted with achievement against each determining 5% of funded incentive amounts. Each could be earned from 0-200% of target.
| 2022 Achievement Level - Safety (5% Weighting) | Total Incident Rate (TIR) | Award Payout as % of Award Target | ||||||||||||
| Below Threshold | Above 0.68 | 0% | ||||||||||||
| Threshold (80% of target performance) | 0.68 | 50% | ||||||||||||
| Target | 0.57 | 100% | ||||||||||||
| Superior (130% of target performance) | 0.4 (or below) | 200% | ||||||||||||
| 2022 Achievement Level - Energy Consumption (5% Weighting) | Electricity Consumption Improvement as a % of Normalized Hours Worked | Award Payout as % of Award Target | ||||||||||||
| Below Threshold | Below 1.6% Improvement | 0% | ||||||||||||
| Threshold (80% of target performance) | 1.6% Improvement | 50% | ||||||||||||
| Target | 2.0% Improvement | 100% | ||||||||||||
| Superior (120% of target performance) | 2.4%+ Improvement | 200% | ||||||||||||
In 2022, for purposes of the AIP, our Adjusted EBITDA was $43.4 million, which was between threshold and target performance. Further, with respect to our measurable ESG metrics, TIR achievement was 0.33 for 2022, which was above superior performance level, and our improvement in electricity consumption was 3.0%, which was also above superior performance. Finally, the assessment of performance relative to our overall talent ESG metric was believed to have satisfied target level, noting favorable results associated with salaried turnover and salaried internal fill rate, as well as progress related to diversity of candidates on senior leadership team succession plans and in the area of diverse hiring.
| 2022 AIP Metrics | Weighting | Actual Performance | Payout Achievement | Weighted Payout (as % of Award Target) | ||||||||||
| Adjusted EBITDA | 85% | $43.4 million | 58.43% | 49.7% | ||||||||||
| Strategic ESG Metrics: | ||||||||||||||
| Safety (TIR) | 5% | 0.33 TIR | 200% (Superior) | 10.0% | ||||||||||
| Energy Consumption (Electricity Consumption Improvement) | 5% | 3.0% | 200% (Superior) | 10.0% | ||||||||||
| Overall Talent | 5% | Achieved | 100% (Target) | 5.0% | ||||||||||
| Total 2022 Payout | 100% | 74.7% | ||||||||||||
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Overall performance achievement for 2022 resulted in a payout at 74.7% of target on a weighted basis, resulting in the following AIP award payments to our NEOs as follows.
| NEOs | 2022 Year- End Base Salary | Target Bonus Opportunity | Weighted Achievement as a Percent of Target Award | 2022 Amount Earned Under AIP | ||||||||||
| Mr. Edwards | $1,000,000 | 120% | 74.7% | $896,400 | ||||||||||
| Mr. Banas | $515,000 | 75% | 74.7% | $288,529 | ||||||||||
| Mr. Clark | $500,000 | 70% | 74.7% | $261,450 | ||||||||||
| Mr. Couch | $480,000 | 70% | 74.7% | $250,992 | ||||||||||
| Ms. Totsky | $450,000 | 65% | 74.7% | $218,498 | ||||||||||
Long-Term Incentive Compensation
2022 Long-Term Incentive Program
The 2021 Omnibus Incentive Plan (“2021 Plan”) authorizes the Compensation Committee to award stock options, stock appreciation rights, shares of common stock, restricted stock, RSUs, incentive awards, and certain other types of awards to our key employees and directors. Except in the case of newly hired or promoted executives, it has been the practice of the Compensation Committee to grant incentive awards, including equity-based incentive awards, during the first quarter of the calendar year so that all elements of executive target TDC can be considered in a coordinated, comprehensive manner.
For 2022, the Compensation Committee, following consultation with FW Cook, determined that equity-based awards to our NEOs should have a value generally equal to or below the typically targeted market median for executives in comparable positions due to the decline in Company stock price, a lower market capitalization and the limited number of shares available under the 2021 Plan. The equity-based awards we granted in 2022 consisted of stock-settled time-vested RSUs, and performance-based RSUs (“Performance RSUs”) which can be settled in cash or stock, at the discretion of the Compensation Committee. Performance RSUs can be earned based on both Company financial (ROIC) performance (“Financial Performance RSUs”) and Relative Total Shareholder Return (“RTSR”) performance to a Comparator group (“TSR Performance RSUs”). No stock options were granted for 2022.
The percentage mix of the three Long-Term Incentive Program (“LTIP”) vehicles granted in 2022 (on a grant date fair value basis) was approximately 40%, 20%, and 40% for Financial Performance RSUs, TSR Performance RSUs, and time-vested RSUs, respectively, which increased the Performance RSU weighting from 50% in 2021 to 60% in 2022. For 2022, the Compensation Committee determined to change the mix of equity awards granted under the LTIP, including removal of stock options and inclusion of both Financial Performance RSUs and TSR Performance RSUs, as a result of a number of factors, including that the elimination of stock options eases share reserve burden, the granting of stock options have become a minority practice among peer companies and inclusion of standalone RTSR performance-based RSUs helps to further align pay with shareholder value.
With the exception of Mr. Edwards, all NEOs received increases in their targeted 2022 LTIP value as compared to their 2021 targeted LTIP values in order to move toward levels closer to the market median for current roles or to recognize increases in responsibility. Mr. Edwards’ targeted LTIP value was unchanged at $3,800,000 for 2022. Mr. Banas’ targeted LTIP value increased from $750,000 to $825,000, reflective of a market adjustment in connection with target TDC remaining below that of the peer group and market median. Mr. Clark’s targeted LTIP value increased from $400,000 to $550,000, moving his value closer to, but remaining below market median. Mr. Couch’s targeted LTIP value increased from $450,000 to $485,000, reflective of the significance of his role given his continued responsibility for multiple functions in Advanced Material Science, Product Development/Strategy, and Program Management & Engineering. Ms. Totsky’s targeted LTIP value increased from $450,000 to $550,000, reflective of continued growth in her role and market adjustment in connection with TDC which remains below the market median. The percentage of targeted LTIP value increase from 2021 to 2022, the grant value approved by the Compensation Committee for the 2022 annual equity awards, and the number of units granted in 2022 are as follows:
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Number of Awards Granted in 20221 | ||||||||||||||||||||
| 2021 Targeted LTIP Grant Value | 2022 Targeted LTIP Grant Value | % Change from 2021 to 2022 | Financial Performance RSUs at Target | TSR Performance RSUs at Target2 | Time Vested RSUs | |||||||||||||||
| Mr. Edwards | $3,800,000 | $3,800,000 | —% | 70,241 | 36,965 | 70,241 | ||||||||||||||
| Mr. Banas | $750,000 | $825,000 | 10.0% | 15,250 | 8,026 | 15,250 | ||||||||||||||
| Mr. Clark | $400,000 | $550,000 | 37.5% | 10,167 | 5,351 | 10,167 | ||||||||||||||
| Mr. Couch | $450,000 | $485,000 | 7.8% | 8,965 | 4,718 | 8,965 | ||||||||||||||
| Ms. Totsky | $450,000 | $550,000 | 22.2% | 10,167 | 5,351 | 10,167 | ||||||||||||||
1 The Company’s 20-day average closing stock price as of the fifth day preceding the date of grant was used to convert targeted LTIP award levels to units granted in 2022. For NEO grants in 2022, the number of units were calculated using price of $21.64.
2 The number of TSR Performance Units granted to NEOs in 2022 were calculated using a price of $20.56 which reflects the 20-day average closing stock price as of the fifth day preceding date of grant ($21.64) and a factor of 0.95, reflecting an approximate accounting value as determined by an independent valuation.
2022 Performance-Based Restricted Stock Units
Following its review of the benchmarking analysis by FW Cook, and considering peer group prevalence data, the Compensation Committee determined that the value of the Performance RSUs granted in 2022 should approximate 60% of the total value of each NEO’s annual long-term incentive opportunity. Further, the Compensation Committee determined that Performance RSUs granted in 2022 should be comprised of a mix of Financial Performance RSUs and TSR Performance RSUs. Financial Performance RSU payout is based on the Company’s capital efficiency during two, one-year performance periods (2022 and 2023). TSR Performance RSU payout is based on the Company’s RTSR performance versus a pre-established comparator group over the three-year performance period (2022-2024). We believe Performance RSUs align the interests of our NEOs with those of our stockholders and further emphasize the importance of our long-term performance.
For 2022, all Performance RSUs may be settled in cash or stock, at the discretion of the Compensation Committee (versus the exclusively cash-settled Performance RSUs granted in 2021). The 2022 Performance Units were issued with optionality as to the settlement method due to desire to stock-settle awards where possible, but reflective of the limited number of shares available under the 2021 Plan.
The Financial Performance RSUs provide a grant of units earned based on two separate one-year performance periods ending on December 31, 2022 and 2023, respectively, where:
•Half of the Financial Performance RSUs granted in 2022 can vest as of December 31, 2023 if the financial performance goals for the performance period ending December 31, 2022 are achieved at the target level, subject to the NEO’s continued employment through December 31, 2023. Actual achieved units are based on performance achieved during 2022. If the Company’s ROIC for 2022 is at target, the full one-half of total target Financial Performance RSUs granted will be eligible to vest. Further, if the Company’s ROIC for 2022 is 80% of the target performance goal, then 50% of such units granted will be eligible to vest. If the Company’s ROIC for 2022 is 120% of the target performance goal, then the maximum of two times the number of such units will be eligible to vest. Achievement of the performance goal between threshold and target, and between target and maximum will be linearly interpolated. Our ROIC for the one-year period ending December 31, 2022 was (8.6)%, which was below the pre-established threshold performance level set at a 810 bps improvement relative to 2021. As such, no Financial Performance RSUs were earned by our NEOs for 2022 performance.
•The second half of total Financial Performance RSUs granted can vest as of December 31, 2024 if the financial performance goals for the performance period ending December 31, 2023 are achieved at the target level, subject to the NEO’s continued employment through December 31, 2024. Actual achieved units are based on performance achieved during 2023, with goals for the 2023 performance period having been set by the Compensation Committee in early 2023. Further, if the Company’s ROIC for 2023 is 80% of the target performance goal, then 50% of such units granted will be eligible to vest. And, if the Company’s ROIC for 2022 is 120% of the target performance goal, then the maximum of two times the number of such units will be eligible to vest. Achievement of the performance goal between threshold and target, and between target and maximum will be linearly interpolated.
The two separate one-year performance periods for the 2022 grants of Financial Performance RSUs replaced a two-year performance period used for the 2021 Performance RSUs to retain the long-term orientation of the program but to balance the continued difficulty in forecasting business performance over two or three years given industry and macroeconomic uncertainty. Additionally, the backloaded vesting associated with each of the one-year performance periods was similar to the
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backloaded vesting used with 2021 Performance RSUs, which replaced a traditional three-year cliff vesting to promote leadership retention and hold executives accountable for multi-year stock price performance. Further, with implementation of TSR Performance Units granted in 2022, based on standalone TSR performance relative to a comparator group, the 2022 Financial Performance RSUs no longer included a relative total shareholder return modifier, as was included with the 2021 Performance RSUs.
The TSR Performance RSUs provide a standalone grant of units that cliff vest after three years if we achieve established performance goals based on RTSR performance of the Company relative to that of a comparator group for a single, three-year performance period ending on December 31, 2024. If the Company’s RTSR performance for the three-year performance period ending December 31, 2024 is at target, or median of the comparator group, 100% of the TSR Performance RSUs will vest. If the Company’s RTSR performance achieves the threshold level, or 25th percentile of the comparator group, one half of the TSR Performance Units will vest. If the Company’s RTSR performance achieves the maximum level, or 75th percentile of the comparator group, then the maximum of two times the number of TSR Performance Units will vest. No payout occurs if the Company’s RTSR is below the 25th percentile of the comparator group. Achievement of the performance goal between threshold and target, and between target and maximum, will be linearly interpolated.
The comparator group for RTSR is different from the benchmarking peer group identified in “Executive Compensation Review for 2022” under the Processes Relating to Executive Compensation section above, as the RTSR comparator group: (1) is less encumbered by company size than the benchmarking peer group since target TDC levels are strongly correlated to size, (2) is design to be comprised of closer business peers whose stock prices are similarly correlated to ensure that performance comparisons are meaningful, and (3) needs to be large enough to sustain three years of merger and acquisition activity given the multi-year nature of the award. The 2022 RTSR comparator group companies were:
| • | Adient plc | • | Genthern | • | Stoneridge, Inc. | ||||||||||||||||||
| • | American Axle & Manufacturing Holdings, Inc. | • | LCI Industries | • | The Goodyear Tire & Rubber Company | ||||||||||||||||||
| • | Aptiv PLC | • | Lear Corporation | • | Tenneco Inc. | ||||||||||||||||||
| • | Autoliv, Inc. | • | Linamar Corporation | • | TI Fluid Systems plc | ||||||||||||||||||
| • | BorgWarner Inc. | • | Magna International Inc. | • | Visteon Corporation | ||||||||||||||||||
| • | Dana Incorporated | • | Martinrea International Inc. | ||||||||||||||||||||
| • | Gentex Corporation | • | Standard Motor Products Inc. | ||||||||||||||||||||
2022 Time-Vested Cash-Settled Restricted Stock Unit Awards
For 2022, we granted time-vested stock settled RSUs to our NEOs, similar to the time-vested stock settled RSUs granted in 2021. The 2022 RSUs vest ratably over a three-year period, beginning as of March 1, 2022 (“Vest-From Date”), compared to the 2021 RSUs which provided for cliff vesting after three years. Following its review of a benchmarking analysis by FW Cook, and with implementation of a new mix of LTIP vehicles granted in 2022, the Compensation Committee determined that the value of time-vested RSUs granted in 2022 should constitute approximately 40% of the total value of the long-term incentive awards granted, an increase from 20% in 2021. Further, the Compensation Committee determined to modify the vesting schedule to provide for ratable vesting in alignment with market trends and concluded that the use of a Vest-From Date will aid in equity program administration by aligning future vesting dates for time-vested RSU awards. We believe that the use of time-vested RSUs as a component of compensation helps retain executives and aligns the interests of our executives and stockholders, as the value of RSUs is directly linked to the price of our common stock.
Payouts under the 2021 Performance-Based Restricted Stock Units
In 2021, the Compensation Committee granted performance-based RSUs for each of the NEOs who was employed by us at the time for the two-year period ending December 31, 2022.
The LTIP awards for the two-year performance period ending December 31, 2022 were based on the achievement of a target ROIC of 4.8%, subject to continued service. Pursuant to the terms of the awards, payouts were to be determined as follows:
| Achievement Level | Two-Year Average Return on Invested Capital | Award Payout as % of Award Target | ||||||||||||
| Below Threshold | Below 3.8% | 0% | ||||||||||||
| Threshold (80% of target performance) | 3.8% | 50% | ||||||||||||
| Target | 4.8% | 100% | ||||||||||||
| Superior (120% of target performance) | 5.7% + | 200% | ||||||||||||
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Actual earnouts are determined using linear interpolation for performance attainment between “threshold” and “target” and between “target” and “superior.” The actual average ROIC of the Company for the performance period was (11.9)%, which resulted in no earnout.
Payouts under the 2022 Performance-Based Restricted Stock Units (Financial Performance RSUs)
As described above, in 2022, the Compensation Committee granted performance-based RSUs for each of the NEOs, which included two separate one-year performance periods ending December 31, 2022 and 2023, respectively.
The Financial Performance RSU awards for the performance period ending December 31, 2022 were based on the achievement of a target ROIC in 2022, and would vest as of December 31, 2023, subject to continued service through that date. Pursuant to the terms of the awards, payouts were to be determined as follows:
| Achievement Level | One-Year Return on Invested Capital | Award Payout as % of Award Target | ||||||||||||
| Below Threshold | <810 bps improvement vs. 2021 actual ROIC | 0% | ||||||||||||
| Threshold (80% of target performance) | 810 bps improvement vs. 2021 actual ROIC | 50% | ||||||||||||
| Target | 930 bps improvement vs. 2021 actual ROIC | 100% | ||||||||||||
| Superior (120% of target performance) | 1,050+ bps improvement vs. 2021 actual ROIC | 200% | ||||||||||||
Actual payouts are determined using linear interpolation for performance attainment between “threshold” and “target” and between “target” and “superior.” The actual ROIC of the Company for the performance period was a reduction in ROIC relative to 2021 equal to 210 bps, which resulted in payouts of 0% of the total target units granted under the Financial Performance RSU awards for the performance period ending December 31, 2022. No adjustments were made to the Financial Performance RSU awards payout. The second half of the total target units granted under the Financial Performance RSU awards may be earned based on ROIC achievement against targets for the performance period ending December 31, 2023.
Special Bonuses
In addition to the annual cash incentive program, we may from time to time pay our NEOs discretionary bonuses as determined by the board of directors or the Compensation Committee to reflect superior individual performance, to recognize new roles and responsibilities, to attract new hires or to compensate new hires for amounts forfeited from their previous employer. No such bonuses were provided to NEOs in respect of 2022.
Retirement Plan Benefits
Our NEOs participate in a tax-qualified 401(k) retirement savings plan (the “CSA Savings Plan”) and our nonqualified retirement plan. Benefits under these plans provide executives with an income source during their retirement years and reward executives for long-term service to the Company. We believe that our retirement plans are generally competitive in the automotive industry and assist the Company in attracting and retaining a high caliber executive leadership team. Please see the 2022 Nonqualified Deferred Compensation table and the accompanying narrative for further information regarding our retirement plans.
Termination and Change of Control Benefits
Our NEOs receive certain benefits upon certain termination events including following a change of control of the Company under the Executive Severance Pay Plan. These benefits, described in detail under “Terms Applicable to Payments upon Termination of Employment,” are intended to ensure that the executive leadership team is able to objectively evaluate potential change of control transactions without the distraction of the potential impact such transactions may have on their employment.
Health Benefits
We provide our NEOs with health and welfare benefits that are available to all of our salaried employees. Our plan is a flexible plan which permits participants to choose among various co-pay options and available benefits, including medical, prescription drug, dental, long-term disability and life insurance, and other benefits depending on the needs of the participant and his or her dependents. These benefits help us remain competitive in attracting and retaining a high-caliber management team.
Perquisites
Our executives are provided with a vehicle allowance. This program helps us to attract and retain a high-caliber management team in the very competitive automotive supplier industry. The value of this benefit is treated as ordinary income for tax purposes at the full extent of its value, and participants, including the NEOs, do not receive any tax “gross up” payments or similar compensation to cover this tax.
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Stock Ownership Policy
We require that our officers achieve and maintain levels of ownership of our common stock. The levels are based on multiples of each officer’s base salary. The Compensation Committee reviewed the stock ownership policy in June 2022 for market appropriateness and best practices. Based on its review, and input from FW Cook and management, the committee concluded that the terms and provisions of the policy remained appropriate; therefore, no changes were recommended and no changes were approved by the Compensation Committee. Under our policy, officers are required to hold 50% of the net shares resulting from stock option exercises or vesting of other stock-based awards until they reach the applicable ownership level based on position. Only shares owned outright and time-vested RSUs count toward satisfaction of the guideline (time-vested RSUs are counted on an after-tax basis assuming a 35% tax rate for ease of administration). The “in-the-money” spread of outstanding stock options and the value of unearned performance-based restricted stock units do not count toward satisfaction of the guideline. This policy is intended to align the interests of our key executives with the interests of our stockholders by maintaining a strong link between the Company’s long-term success and the ultimate compensation of key executives. The 2022 stock ownership requirement was as follows:
| Positions | Stock Ownership Level (Multiple of Base Salary) | ||||||||||
| Chief Executive Officer | 6X | ||||||||||
| Chief Financial Officer | 3X | ||||||||||
| All Other NEOs | 2X | ||||||||||
All NEOs are in compliance with the required multiple of base salary or are retaining their acquired amounts until they reach the required multiple.
Policy Concerning Transactions Involving Company Securities
We have a policy applicable to all directors, officers, and employees that prohibits certain transactions involving our stock, including engaging in short-term speculative transactions, which includes hedging transactions and buying or selling put or call options. The policy also prohibits holding the Company’s securities in a margin account, pledging the Company’s securities as collateral for a loan, and engaging in short sales of the Company’s securities.
Clawback Policy
Cooper Standard has a compensation recovery (“clawback”) policy. The policy authorizes the Board to recoup incentive compensation paid to executive officers, including our NEOs, in the event the Company experiences a material financial restatement. Recoverable compensation is any cash or equity-based compensation for which the grant, payment, or vesting was predicated upon the achievement of financial results that were derived from financial statements that are required to be restated, except where such restatement is required due to changes in accounting rules or standards, immaterial correction of errors, or changes in applicable law. The SEC recently adopted final rulemaking with respect to issuer recoupment policies that will require further rulemaking by the NYSE. The Company intends to revisit its clawback policy when NYSE rulemaking regarding recoupment policies becomes effective and the policy will be updated to comply with all final requirements.
| Compensation Committee Report | ||||||||||||||
The Compensation Committee of the Board of Directors of Cooper-Standard Holdings Inc. oversees our executive compensation program. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth in this proxy statement.
In reliance on the review and discussions referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be incorporated in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and included in this Proxy Statement.
Compensation Committee
John G. Boss, Chair
David J. Mastrocola
Robert J. Remenar
Stephen A. Van Oss
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| Executive Compensation | ||||||||||||||
Set forth below is information regarding compensation for services to the Company in all capacities of the following NEOs during the year ended December 31, 2022: (i) our current chief executive officer; (ii) our current chief financial officer; and (iii) the three most highly compensated executive officers other than the chief executive officer and chief financial officer who were serving as executive officers at December 31, 2022.
2022 Summary Compensation Table
| Name and Principal Position(1) | Year | Salary(2) | Bonus | Stock Awards(3) | Option Awards | Non-Equity Incentive Plan Compensation(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(5) | All Other Compensation | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||||||||||||||||||||||
| Jeffrey S. Edwards, Chairman and Chief Executive Officer | 2022 | $1,000,000 | — | $2,689,813 | — | $896,400 | — | $121,545 | (6) | $4,707,758 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | $1,000,000 | — | $2,738,195 | $1,140,004 | — | — | $209,745 | $5,087,944 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | $1,038,462 | $840,000 | $2,004,732 | $900,001 | — | — | $126,150 | $4,909,345 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jonathan P. Banas, Executive Vice President and Chief Financial Officer | 2022 | $510,385 | — | $583,992 | — | $288,529 | — | $68,260 | (7) | $1,451,166 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | $500,000 | $15,000 | $540,441 | $225,008 | — | — | $96,308 | $1,376,757 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | $516,922 | $262,500 | $421,011 | $189,001 | — | — | $61,065 | $1,450,499 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Patrick R. Clark, Senior Vice President and Managing Director - Global Automotive | 2022 | $481,539 | — | $389,343 | — | $261,450 | — | $565,009 | (8) | $1,697,341 | ||||||||||||||||||||||||||||||||||||||||||||||
| Christopher E. Couch, Senior Vice President, Chief Technology Officer | 2022 | $475,385 | — | $343,308 | — | $250,992 | — | $64,487 | (9) | $1,134,172 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | $456,346 | $13,950 | $302,262 | $155,016 | — | — | $82,101 | $1,009,675 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Joanna M. Totsky, Senior Vice President, Chief Legal and Transformation Officer and Secretary | 2022 | $445,385 | — | $389,343 | — | $218,498 | — | $61,931 | (10) | $1,115,157 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | $435,000 | $13,050 | $324,303 | $135,008 | — | — | $81,339 | $988,700 | ||||||||||||||||||||||||||||||||||||||||||||||||
1The column reflects each NEO’s position as of December 31, 2022.
2Amounts shown reflect the NEO's annual base salary earned during the fiscal year and are not reduced to reflect the NEOs’ elections, if any, to defer receipt of salary into the CSA Savings Plan for salaried U.S. employees.
3The amounts shown in column (e) represent the aggregate grant-date fair value of time-vested RSUs, Financial Performance RSUs and TSR Performance RSUs, which were granted under the 2021 Plan on February 16, 2022, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification 718, Stock Compensation (“ASC Topic 718”). In the case of Financial Performance RSUs and TSR Performance RSUs, the amounts shown are based on the probable outcome of performance conditions at the time of the grant, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under ASC Topic 718 as follows: Mr. Edwards, $1,569,469; Mr. Banas, $340,754; Mr. Clark, $227,179; Mr. Couch, $200,316; and Ms. Totsky, $227,179. Assuming the highest level of performance is achieved for the Financial Performance RSUs, the maximum value of the Financial Performance RSU awards at the grant date would be as follows: Mr. Edwards, $1,120,344; Mr. Banas, $243,238; Mr. Clark, $162,164; Mr. Couch, $142,992; and Ms. Totsky, $162,164. The value of the TSR Performance RSUs is market-based; thus no maximum grant date fair value is known. The fair value of the TSR Performance RSU awards at the grant date would be as follows: Mr. Edwards, $449,125; Mr. Banas, $97,516; Mr. Clark, $65,015; Mr. Couch, $57,324; and Ms. Totsky, $65,015. The amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Assumptions used in the calculation of these amounts are included in Note 20 to the Company’s audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
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4The amounts shown in column (g) represent the bonus payments for 2022 under the Company’s annual incentive award program. Payouts under the annual incentive program were made based on achievement by the Company of Adjusted EBITDA as compared to the established targets, as well as performance against strategic ESG metrics and related established targets. The determination of the amounts achieved is described under “Annual Incentive Award” under the Executive Compensation Components section of the Compensation Discussion and Analysis.
5The amount shown in column (h) represents for each NEO the sum of the aggregate annualized change in the actuarial present value of accumulated benefits under all defined benefit and actuarial pension plans (qualified and non-qualified, including supplemental plans) from the plan measurement date used for financial statement reporting purposes with respect to the prior completed fiscal year to the plan measurement date used for financial statement reporting purposes with respect to the covered fiscal year. Mr. Clark is the only NEO that has a defined benefit pension and the change in the actuarial present value of his accumulated benefits was negative. Negative amounts are reported as zero for this purpose.
6The amount shown in column (i) for Mr. Edwards represents Company contributions under the CSA Savings Plan ($21,350) and nonqualified Supplemental Executive Retirement Plan ($84,910); car allowance ($12,000); and life insurance premiums paid by the Company ($3,285).
7The amount shown in column (i) for Mr. Banas represents Company contributions under the CSA Savings Plan ($21,350) and nonqualified Supplemental Executive Retirement Plan ($33,500); car allowance ($12,000); and life insurance premiums paid by the Company ($1,410).
8The amount shown in column (i) for Mr. Clark represents Company contributions under the CSA Savings Plan ($21,350) and nonqualified Supplemental Executive Retirement Plan ($29,212); life insurance premiums paid by the Company ($829); and the value of Company-paid costs associated with Mr. Clark's expatriate assignment (totaling $513,618). The expatriate benefits include a goods and services allowances ($8,889); the cost of a company-provided vehicle ($12,763); housing costs ($50,154); travel-related expenses ($31,660); tax preparation services ($1,500); and language services ($399). The expatriate benefits also include payment of German income taxes ($251,906); U.S. federal and state tax payments ($64,299); and U.S. tax gross ups ($92,048).
9The amount shown in column (i) for Mr. Couch represents Company contributions under the CSA Savings Plan ($21,350) and nonqualified Supplemental Executive Retirement Plan ($29,826); car allowance ($12,000); and life insurance premiums paid by the Company ($1,311).
10The amount shown in column (i) for Ms. Totsky represents Company contributions under the CSA Savings Plan ($21,350) and nonqualified Supplemental Executive Retirement Plan ($26,676); car allowance ($12,000); and life insurance premiums paid by the Company ($1,905).
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2022 Grants of Plan-based Awards
The following table sets forth information regarding plan-based awards made to the NEOs during 2022.
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards (#) (1) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards; Number of Securities Underlying Options | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair value of Stock and Option Awards ($) (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Award Type | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jeffrey S. Edwards | Annual Bonus (3) | N/A | $255,000 | $1,200,000 | $2,400,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs (4) | 2/16/2022 | — | — | — | — | — | — | 70,241 | — | — | $1,120,344 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Performance RSUs (5) | 2/16/2022 | — | — | — | 35,121 | 70,241 | 140,482 | — | — | — | $1,120,344 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TSR Performance RSUs (6) | 2/16/2022 | — | — | — | 18,483 | 36,965 | 73,930 | — | — | — | $449,125 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jonathan P. Banas | Annual Bonus (3) | N/A | $82,078 | $386,250 | $772,500 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs (4) | 2/16/2022 | — | — | — | — | — | — | 15,250 | — | — | $243,238 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Performance RSUs (5) | 2/16/2022 | — | — | — | 7,625 | 15,250 | 30,500 | — | — | — | $243,238 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TSR Performance RSUs (6) | 2/16/2022 | — | — | — | 4,013 | 8,026 | 16,052 | — | — | — | $97,516 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Patrick R. Clark | Annual Bonus (3) | N/A | $74,375 | $350,000 | $700,000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs (4) | 2/16/2022 | — | — | — | — | — | — | 10,167 | — | — | $162,164 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Performance RSUs (5) | 2/16/2022 | — | — | — | 5,084 | 10,167 | 20,334 | — | — | — | $162,164 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TSR Performance RSUs (6) | 2/16/2022 | — | — | — | 2,676 | 5,351 | 10,702 | — | — | — | $65,015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Christopher E. Couch | Annual Bonus (3) | N/A | $71,400 | $336,000 | $672,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs (4) | 2/16/2022 | — | — | — | — | — | — | 8,965 | — | — | $142,992 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Performance RSUs (5) | 2/16/2022 | — | — | — | 4,483 | 8,965 | 17,930 | — | — | — | $142,992 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TSR Performance RSUs (6) | 2/16/2022 | — | — | — | 2,359 | 4,718 | 9,436 | — | — | — | $57,324 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Joanna M. Totsky | Annual Bonus (3) | N/A | $62,156 | $292,500 | $585,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSUs (4) | 2/16/2022 | — | — | — | — | — | — | 10,167 | — | — | $162,164 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Performance RSUs (5) | 2/16/2022 | — | — | — | 5,084 | 10,167 | 20,334 | — | — | — | $162,164 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TSR Performance RSUs (6) | 2/16/2022 | — | — | — | 2,676 | 5,351 | 10,702 | — | — | — | $65,015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1The number of shares represents the range of potential payouts under the Financial Performance RSU and TSR Performance RSU awards granted under the 2021 Plan. The number of performance units that are earned, if any, associated with the Financial Performance RSUs awards will be based on performance for fiscal years 2022 and 2023, and will be determined after the end of both fiscal year 2022 and 2023, in each case with respect to one-half of the target total units granted. The number of performance units that are earned, if any, associated with the TSR Performance RSUs awards, will be based on performance for fiscal years 2022 to 2024, and will be determined after the end of fiscal year 2024.
2Represents the grant-date fair value of time-vested RSU, Financial Performance RSU and TSR Performance RSU awards granted under the 2021 Plan on February 16, 2022, computed in accordance with ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 20 to the Company’s audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
3For 2022, the Compensation Committee approved target annual incentive awards under the AIP for executive officers and, as the basis for determining the entitlement of executives to actual payment of annual incentive awards, set an Adjusted EBITDA performance target for the year in accordance with the Company’s 2022 business plan approved by the Company’s Board. Funding of the bonus pool was determined 85% based on Adjusted EBITDA performance, and 15% based on performance of executive officers against strategic ESG metrics, with earnout based on ESG metrics performance only available to the extent there is earnout based on Adjusted EBITDA performance. The determination of annual incentive award payments is described under “Annual Incentive Award” under the Executive Compensation Components section. The amounts set forth under “Estimated Future Payouts under Non-Equity Incentive Plan Awards” reflects the possible payouts of cash annual incentive awards under the AIP. Amounts reported in the “Threshold” column assume that the NEO only earns the minimum payout for the Adjusted EBITDA performance metric and earns no payout for performance against strategic
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ESG metrics. For 2022, payouts under the annual incentive program were made based on achievement by the Company of Adjusted EBITDA and performance against established Adjusted EBITDA and strategic ESG targets. The determination of the amounts achieved is described under “Annual Incentive Award” under the Executive Compensation Components section of the Compensation Discussion and Analysis. Payouts, as approved by the Company's Compensation Committee, are noted under column (g) of the Summary Compensation Table.
4Represents time-vested RSUs granted under the 2021 Plan. These RSUs vest ratably, with one-third of the RSUs vesting on each of the first three anniversaries of March 1, 2022 ("vest from" date).
5Represents Financial Performance RSUs granted under the 2021 Plan. One-half of the Financial Performance RSUs are subject to the achievement of a ROIC performance goal during the one-year period commencing on January 1, 2022 and ending on December 31, 2022, and the remaining one-half are subject to the achievement of a ROIC performance goal during the one-year period commencing on January 1, 2023 and ending on December 31, 2023. The number of achieved Financial Performance RSUs for each of the two performance years is determined as soon as practicable after the end of the respective performance year, December 31, 2022 and December 31, 2023. No Financial Performance RSUs were earned for the performance year ended December 31, 2022.
Subject to performance during the performance period commencing on January 1, 2023 and ending on December 31, 2023, the achieved Financial Performance RSUs for the 2023 performance year will vest if employment with the Company continues until December 31, 2024. At the discretion of the Compensation Committee, the Company will settle achieved Financial Performance RSUs for the 2023 performance year by either delivering an amount of cash equal to the number of achieved Financial Performance RSUs multiplied by the closing stock price on the first anniversary of performance achievement determination date for the 2022 performance period or issuing a number of shares of common stock of the Company equal to the number of achieved Financial Performance RSUs that have vested.
The determination of the amounts achieved is described under “Long-Term Incentive Compensation” under the Executive Compensation Components section of the Compensation Discussion and Analysis.
6Represents TSR Performance RSUs granted under the 2021 Plan. The TSR Performance RSUs are subject to the achievement of a Relative Total Shareholder Return (RTSR) performance goal during the performance period commencing on January 1, 2022 and ending on December 31, 2024. RTSR performance is measured based on in relation to an identified comparator group during the performance period. The number of achieved TSR Performance RSUs will be determined as soon as practicable after the end of the performance period, December 31, 2024.
Subject to performance, the total achieved TSR Performance RSUs will vest if employment with the Company continues until December 31, 2024. At the discretion of the Compensation Committee, the Company will settle the total achieved TSR Performance RSUs by either delivering an amount of cash equal to the number of achieved TSR Performance RSUs multiplied by the closing stock price on the performance achievement determination date or issuing a number of shares of common stock of the Company equal to the number of achieved TSR Performance RSUs that have vested.
The determination of the amounts achieved is described under “Long-Term Incentive Compensation” under the Executive Compensation Components section of the Compensation Discussion and Analysis.
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Outstanding Equity Awards at 2022 Fiscal Year End
The following table sets forth information concerning outstanding equity awards held by the NEOs at December 31, 2022.
| Option Awards(1) | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable (2) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Number of Securities Underlying Unearned Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not vested ($) (3) | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (3) | |||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||||||||||||||||
| Jeffrey S. Edwards | 31,900 | — | $66.23 | 3/20/2024 | (4) | 23,819 | (5) | $215,800 | — | (6) | — | |||||||||||||||||||||||||||||||||||||||
| 38,900 | — | $56.27 | 2/19/2025 | (4) | 20,387 | (7) | $184,706 | 35,120 | (8) | 318,187 | ||||||||||||||||||||||||||||||||||||||||
| 35,200 | — | $68.50 | 2/18/2026 | (4) | 70,241 | (9) | $636,383 | 18,483 | (10) | $167,451 | ||||||||||||||||||||||||||||||||||||||||
| 26,573 | — | $107.48 | 2/13/2027 | (4) | ||||||||||||||||||||||||||||||||||||||||||||||
| 25,117 | — | $112.71 | 2/13/2028 | (11) | ||||||||||||||||||||||||||||||||||||||||||||||
| 45,293 | — | $74.15 | 2/14/2029 | (11) | ||||||||||||||||||||||||||||||||||||||||||||||
| 67,796 | 33,899 | (12) | $25.19 | 2/13/2030 | (11) | |||||||||||||||||||||||||||||||||||||||||||||
| 22,196 | 44,393 | (13) | $37.28 | 2/16/2031 | (11) | |||||||||||||||||||||||||||||||||||||||||||||
| Jonathan P. Banas | 2,000 | — | $68.50 | 2/18/2026 | (4) | 5,002 | (5) | $45,318 | — | (6) | — | |||||||||||||||||||||||||||||||||||||||
| 1,384 | — | $107.48 | 2/13/2027 | (4) | 4,024 | (7) | $36,457 | 7,625 | (8) | 69,083 | ||||||||||||||||||||||||||||||||||||||||
| 3,152 | — | $108.00 | 6/7/2027 | (11) | 15,250 | (9) | $138,165 | 4,013 | (10) | $36,358 | ||||||||||||||||||||||||||||||||||||||||
| 4,248 | — | $112.71 | 2/13/2028 | (11) | ||||||||||||||||||||||||||||||||||||||||||||||
| 7,748 | — | $74.15 | 2/14/2029 | (11) | ||||||||||||||||||||||||||||||||||||||||||||||
| 14,237 | 7,119 | (12) | $25.19 | 2/13/2030 | (11) | |||||||||||||||||||||||||||||||||||||||||||||
| 4,381 | 8,762 | (13) | $37.28 | 2/16/2031 | (11) | |||||||||||||||||||||||||||||||||||||||||||||
| Patrick R. Clark | 1,478 | — | $112.71 | 2/13/2028 | (11) | 1,985 | (5) | $17,984 | — | (6) | — | |||||||||||||||||||||||||||||||||||||||
| 2,682 | — | $74.15 | 2/14/2029 | (11) | 2,146 | (7) | $19,443 | 5,083 | (8) | 46,052 | ||||||||||||||||||||||||||||||||||||||||
| 5,650 | 2,825 | $25.19 | 2/13/2030 | (11) | 10,167 | (9) | $92,113 | 2,676 | (10) | $24,240 | ||||||||||||||||||||||||||||||||||||||||
| 2,336 | 4,674 | $37.28 | 2/16/2031 | (11) | ||||||||||||||||||||||||||||||||||||||||||||||
| Christopher E. Couch | 2,700 | — | $81.45 | 7/11/2026 | (4) | 1,985 | (5) | $17,984 | — | (6) | — | |||||||||||||||||||||||||||||||||||||||
| 1,897 | — | $107.48 | 2/13/2027 | (4) | 1,878 | (7) | $17,015 | 4,482 | (8) | 40,607 | ||||||||||||||||||||||||||||||||||||||||
| 1,581 | — | $112.71 | 2/13/2028 | (11) | 2,034 | (14) | $18,428 | 2,359 | (10) | $21,373 | ||||||||||||||||||||||||||||||||||||||||
| 3,576 | — | $74.15 | 2/14/2029 | (11) | 8,965 | (9) | $81,223 | |||||||||||||||||||||||||||||||||||||||||||
| 5,650 | 2,825 | (12) | $25.19 | 2/13/2030 | (11) | |||||||||||||||||||||||||||||||||||||||||||||
| 2,044 | 4,090 | (13) | $37.28 | 2/16/2031 | (11) | |||||||||||||||||||||||||||||||||||||||||||||
| 1,427 | 2,854 | (15) | $24.59 | 7/28/2031 | (11) | |||||||||||||||||||||||||||||||||||||||||||||
| Joanna M. Totsky | 923 | — | $107.48 | 2/13/2027 | (4) | 2,740 | (5) | $24,824 | — | (6) | — | |||||||||||||||||||||||||||||||||||||||
| 1,293 | — | $112.71 | 2/13/2028 | (11) | 2,415 | (7) | $21,880 | 5,083 | (8) | 46,052 | ||||||||||||||||||||||||||||||||||||||||
| 2,980 | — | $74.15 | 2/14/2029 | (11) | 10,167 | (9) | $92,113 | 2,676 | (10) | $24,240 | ||||||||||||||||||||||||||||||||||||||||
| 4,916 | — | $45.46 | 7/1/2029 | (11) | ||||||||||||||||||||||||||||||||||||||||||||||
| 3,898 | 3,899 | (12) | $25.19 | 2/13/2030 | (11) | |||||||||||||||||||||||||||||||||||||||||||||
| 2,628 | 5,258 | (13) | $37.28 | 2/16/2031 | (11) | |||||||||||||||||||||||||||||||||||||||||||||
1All of the amounts presented in this portion of the table relate to options to purchase shares of the Company’s common stock granted to the NEOs under the following Plans:
- 2011 Plan (for awards granted in 2014, 2015, 2016, and on February 13, 2017);
- 2017 Plan (for awards granted on June 7, 2017 and in 2018, 2019, 2020, and on February 16, 2021); and,
- 2021 Plan (for awards granted on July 28, 2021).
2Represents options which have vested and were exercisable as of December 31, 2022.
3The values in column (h) equal the total number of shares of stock or RSUs listed in column (g) for each NEO multiplied by the value of Company common stock as of December 31, 2022. The values in column (j) equal the total number of shares of stock or Performance RSUs listed in column (i) for each NEO multiplied by the value of Company common stock as of December 31, 2022. The value of common stock as of December 31, 2022 was $9.06 per share, which was the closing price of Company stock listed on the NYSE on December 30, 2022.
4Options listed expire on the earliest to occur of: (i) the tenth anniversary of the date of grant; (ii) the first anniversary of the date of the optionee’s termination of employment due to death or disability, or in connection with a change of control; (iii)
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the third anniversary of the date of the optionee’s termination of employment due to retirement after attaining age 65 or attaining age 60 with at least five years of service; or (iv) 90 days following the date of the optionee’s termination of employment by the Company and its affiliates for any reason not described in clauses (ii) through (iii) above.
5Represents time-vested, cash-settled RSUs granted on February 13, 2020, under the 2017 Plan that had not yet vested as of December 31, 2022. These RSUs cliff vest on the third anniversary of the date of grant.
6Target awards of cash-settled Performance RSUs were granted in February 2021 under the 2017 Plan to be earned in a multiple ranging from zero to two times the target awards based on our performance during the performance period commencing on January 1, 2021 and ending on December 31, 2022, subject to continued employment during the performance period. Performance for 2021 to 2022 paid out at 0% of target. Actual number of units earned are reflected in the table.
7Represents time-vested RSUs granted on February 16, 2021, under the 2017 Plan that had not yet vested as of December 31, 2022. These RSUs cliff vest on the third anniversary of the date of grant.
8Target awards of Financial Performance RSUs with optionality to be settled in cash or stock were granted in February 2022 under the 2021 Plan to be earned in a multiple ranging from zero to two times the target awards based on our performance during the performance period commencing on January 1, 2022 and ending on December 31, 2023, subject to continued employment during the performance period. One-half of the total target awards granted will be earned based on our performance during the one-year period commencing on January 1, 2022 and ending on December 31, 2022, with earned Financial Performance RSUs vesting as of December 31, 2023 and settled in 2024. The remaining half of the total target awards granted will be earned based on performance during the one-year period commencing on January 1, 2023 and ending on December 31, 2023, with earned Financial Performance RSUs vesting as of December 31, 2024 and settled in 2025. Performance for 2022 paid out at 0% of target, with no units earned with respect to one-half of the total target awards granted. Actual number of units earned are reflected in the table. Performance for 2023 is to be determined; therefore, the target amounts are shown in accordance with SEC rules for the remaining half of the total target awards granted. The actual number of units that will be issued with respect to the remaining half of the total target awards granted is not yet determinable.
9Represents time-vested RSUs granted on February 16, 2022, under the 2021 Plan that had not yet vested as of December 31, 2022. These RSUs vest ratably over three years.
10Target awards of TSR Performance RSUs with optionality to be settled in cash or stock were granted in February 2022 under the 2021 Plan to be earned in a multiple ranging from zero to two times the target awards based on relative Total Shareholder Return (RTSR) performance to a comparator group during the performance period commencing on January 1, 2022 and ending on December 31, 2024, subject to continued employment during the performance period. The TSR Performance RSUs earned will be settled in 2025. The actual number of shares that will be issued is not yet determinable.
11Options listed expire on the earliest to occur of: (i) the tenth anniversary of the date of grant; provided, however, that (other than as would otherwise result in the violation of Section 409A of the Internal Revenue Code (the “Code”)), to the extent an option would expire at a time when the holder of such option is prohibited by applicable law or by the Company’s insider trading policy from exercising the option (the closed window period), then such option shall remain exercisable until the thirtieth (30th) day following the end of the closed window period; (ii) the first anniversary (as defined in the 2017 Plan) of the date of the optionee’s termination of employment due to death or disability, or in connection with a change of control; (iii) the third anniversary of the date of the optionee’s termination of employment due to retirement after attaining age 65 or attaining age 60 with at least five years of service; or (iv) 90 days following the date of the optionee’s termination of employment by the Company or its affiliates for any reason not described in clauses (ii) or (iii) above.
12Represents outstanding options granted February 13, 2020 under the 2017 Plan, which have not vested and were unexercisable as of December 31, 2022. These options vest ratably over three years.
13Represents outstanding options granted February 16, 2021 under the 2017 Plan, which have not vested and were unexercisable as of December 31, 2022. These options vest ratably over three years.
14Represents time-vested RSUs granted on July 28, 2021 under the 2021 Plan, which had not yet vested as of December 31, 2022. These RSUs cliff vest on the third anniversary of the date of grant.
15Represents outstanding options granted July 28, 2021 under the 2021 Plan, which have not vested and were unexercisable as of December 31, 2022. These options vest ratably over three years.
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2022 Option Exercises and Stock Vested
The following table sets forth information concerning the exercise of stock options and vesting of stock for each NEO during 2022.
| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) (1) | Value Realized on Vesting ($) (2) | ||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | ||||||||||||||||||||||
| Jeffrey S. Edwards | — | — | 10,250 | $173,020 | ||||||||||||||||||||||
| Jonathan P. Banas | — | — | 1,754 | $29,608 | ||||||||||||||||||||||
| Patrick R. Clark | — | — | 607 | $10,246 | ||||||||||||||||||||||
| Christopher E. Couch | — | — | 810 | $13,673 | ||||||||||||||||||||||
| Joanna M. Totsky | — | — | 2,325 | $19,809 | ||||||||||||||||||||||
1The number of shares reported includes the number of shares withheld by the Company for the payment of tax liabilities incurred upon the vesting of restricted stock units.
2The amount represents the market price of the underlying shares on the date of vesting.
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2022 Pension Benefits
The following table sets forth the actuarial present value of accumulated benefit under the Cooper-Standard Automotive Inc. Salaried Retirement Plan (“Cooper Standard Retirement Plan”), which is frozen, as described in the narrative following this table, assuming benefits are paid at normal retirement age or the earliest retirement age at which participants receive unreduced benefits. The table also shows the number of years of credited service under the Cooper Standard Retirement Plan computed as of the same pension plan measurement date used in our audited financial statements for the year ended December 31, 2022. Mr. Clark is the only NEO who is a participant in the Cooper Standard Retirement Plan. Mr. Edwards, who was hired in 2012, Mr. Banas who was hired in 2015, and Mr. Couch and Ms. Totsky who were hired in 2016 are not eligible to participate in the Cooper Standard Retirement Plan.
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit (1) ($) | Payments During Last Fiscal Year ($) | ||||||||||
| (a) | (b) | (c) | (d) | (e) | ||||||||||
| Patrick R. Clark | Cooper Standard Retirement Plan2 | 14.58 | $135,347 | $0 | ||||||||||
1Present values determined using a December 31, 2022 measurement date and reflect benefits accrued based on service through such date (no benefits were accrued based on pay earned during 2022). In October 2022, the Board approved the termination of the Cooper Standard Retirement Plan, with a Date of Plan Termination on December 31, 2022. The termination process includes offering active and deferred participants a lump sum option, estimated to occur in the fourth quarter of 2023, then subsequently purchasing annuities for all remaining participants with a qualified insurance company in 2024.
As a result, plan termination liabilities were determined for December 31, 2022 reporting. The figure reflected for Mr. Clark was determined assuming no pre-retirement mortality. It is assumed that cash balance participants will elect a lump sum at the assumed lump sum window date, December 1, 2023 with 80% likelihood, and the remaining 20% will be purchased by an insurance company at a 117.5% premium. These assumptions are applied to Mr. Clark's cash balance account for the lump sum portion and to the present value of Mr. Clark's benefit assuming a commencement date of age 65 and a 4.50% discount rate for the portion purchased by an insurance company.
2Mr. Clark is covered under the cash balance design for purposes of the qualified Cooper Standard Retirement Plan, which was frozen January 31, 2009.
Cooper Standard Retirement Plan
The Cooper Standard Retirement Plan is a defined benefit plan that covers non-union employees of the Company in the United States, including eligible NEOs. The applicable provisions of the Cooper Standard Retirement Plan for eligible NEOs (cash balance provisions) state benefits in the form of a hypothetical account established for each participant. Prior to the freeze of the Cooper Standard Retirement Plan effective January 31, 2009, annual pay credits were added to a participant’s cash balance account at the end of each year, based on the participant’s compensation for the year and the sum of the participant’s age and service as of the beginning of that year.
Subsequent to the freeze, participants continue to receive interest credits each year equal to their cash balance account value on the last day of each plan year, multiplied by an applicable interest rate for such year. The applicable interest rate is equal to the rate of interest on 30-year Treasury securities as of the third calendar month preceding the first day of the plan year.
The normal form of retirement benefit is defined as a monthly life annuity amount that is actuarially equivalent to the cash balance account projected to normal retirement age with interest credits. Other optional forms were available as well.
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2022 Nonqualified Deferred Compensation
The following table sets forth annual contributions, withdrawals, earnings and fiscal year-end balances for each NEO under the Company’s non-qualified Supplemental Executive Retirement Plan (“SERP”).
| Name (a) | Executive Contributions in Last FY ($) (b) | Registrant Contributions in Last FY ($) (1) (c) | Aggregate Earnings in Last FY ($)(2) (d) | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at Last FYE ($) (3) (f) | |||||||||||||||||||||||||||
| Jeffrey S. Edwards | — | $84,910 | $(373,783) | — | $2,119,068 | |||||||||||||||||||||||||||
| Jonathan P. Banas | — | |||||||||||||||||||||||||||||||