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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☐ | Soliciting Material Pursuant to §240.14a-12 |
ARMSTRONG WORLD INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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ARMSTRONG WORLD INDUSTRIES, INC. 2500 COLUMBIA AVE., LANCASTER, PA 17603 P.O. BOX 3001, LANCASTER, PA 17604
www.armstrongceilings.com
April 28, 2020 |
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2020 ANNUAL MEETING OF SHAREHOLDERS
ARMSTRONG WORLD INDUSTRIES, INC.
Dear Fellow Shareholders:
We look forward to your attendance virtually via the Internet or by proxy at the 2020 Armstrong World Industries, Inc. Annual Shareholders Meeting. We will hold the meeting at 8:00 a.m. Eastern Time on Thursday, June 25, 2020. To provide a consistent and convenient experience for all shareholders regardless of location, we have adopted an entirely virtual format for this meeting.
In 2019, we completed our transition to an Americas-focused ceiling, wall and suspension system solutions provider with the sale of our European, Middle East, African, and Pacific Rim businesses to Knauf International GmbH. Within our Mineral Fiber segment, we continued to drive net sales growth and deliver strong earnings performance. Within our Architectural Specialties segment, we expanded our portfolio and capabilities through the acquisitions of Architectural Components Group, Inc. and MRK Industries, Inc. Additionally, we continued our share repurchase program and enhanced our regular quarterly dividend by 14%.
As we look forward to 2020 and beyond, we are excited to highlight several of the initiatives that will transform our business this year and into the future. As an Americas-focused ceilings and walls company, we are investing for growth, agility and speed across our entire organization to (i) rapidly innovate and launch new products, (ii) effectively utilize data and digital technology, (iii) brand, promote and drive specifications for our broad range of product offerings, and (iv) expand our portfolio of solutions and manufacturing capabilities through a pipeline of business development opportunities, as well as new programs focused on the sustainability of our products and operations. These initiatives and investments make this an exciting time for our company.
Finally, as we mail this letter and proxy statement, our dedicated teams are proactively managing the far-reaching impacts of the coronavirus (COVID-19) pandemic. Our primary concern continues to be the health and well-being of our employees and their families, our business partners, and our communities, and the needs of our customers and the economy as a whole. Please know that, with the support of our Board, management is taking actions on a daily basis to safely and effectively navigate this unprecedented economic and public health disruption for the benefit of all of our stakeholders, while operating within CDC guidelines and maintaining a safe working environment for employees and business partners. Manufacturing operations have altered crewing; adjusted line speeds; reconfigured work and common areas; installed barriers to maintain recommended social distancing; and increased the frequency with which facilities are cleaned. Corporate and sales staffs are working remotely, and an emergency leave process has been instituted for all employees. The Company remains focused on serving and supporting customers, particularly priority healthcare projects. With our strong balance sheet, experienced and dedicated teams, industry leading product portfolio and long-standing customer and supplier relationships, we are well-positioned to manage through these challenges and position our company for future opportunities and continued success.
Our Board of Directors and management team look forward to continuing our work to advance our strategic priorities, serve our customers, create value for our shareholders and, through our products and solutions, make a difference in the spaces where people live, work, learn, heal and play.
At the 2020 Annual Shareholders Meeting, we will vote on the election of directors, vote to ratify the selection of KPMG LLP as our independent registered public accounting firm, and vote on a non-binding advisory basis on the compensation of our named executive officers. Please refer to the proxy statement for detailed information on each of the matters to be acted on at the meeting virtually via the Internet.
Your vote is important, and we strongly urge you to cast your vote. For most items, including the election of directors, your shares will not be voted if you do not provide voting instructions via the Internet, by telephone, or by returning a proxy or voting instruction card. We encourage you to vote promptly, even if you plan to attend the meeting virtually via the internet.
On behalf of your Board of Directors, thank you for your continued support.
Very truly yours,
Larry S. McWilliams
Chairman of the Board
NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS
Time and Date | 8:00 a.m. Eastern Time on Thursday, June 25, 2020 |
Attendance | Online at www.virtualshareholdermeeting.com/awi2020 |
Record Date | April 21, 2020 |
Agenda | Items of Business |
Board Recommendation | ||
1. Elect as directors the nine (9) nominees named in the attached proxy statement |
FOR EACH DIRECTOR NOMINEE | |||
2. Ratify the selection of KPMG LLP as our independent registered public accounting firm for 2020 |
FOR | |||
3. Approve, on an advisory basis, our executive compensation program |
FOR |
How To Vote |
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Please act as soon as possible to vote your shares, even if you plan to attend the annual meeting via the Internet. |
| Your broker will not be able to vote your shares with respect to the election of directors unless you have given your broker specific instructions to do so. We strongly encourage you to vote. |
| You may vote via the Internet, by telephone, or, if you have received a printed version of these proxy materials, by mail. |
| See ADDITIONAL MEETING INFORMATION on page 58 of this proxy statement for further information. |
Attending the Meeting via the Internet: |
Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/awi2020.
Shareholders may vote and submit questions while attending the meeting on the Internet. |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING
TO BE HELD ON JUNE 25, 2020:
The Notice of Annual Meeting, this Proxy Statement and
the Companys 2019 Annual Report are available at www.proxyvote.com.
PROXY STATEMENT
This proxy statement was prepared under the direction of our Board of Directors (Board) to solicit your proxy for use at the 2020 Armstrong World Industries, Inc. annual meeting of shareholders (the Annual Meeting). When we refer to we, our, us, Armstrong and the Company in this proxy statement, we are referring to Armstrong World Industries, Inc. This proxy statement and the related materials are first being distributed to shareholders on or about May 6, 2020.
At the 2019 Annual Meeting of Shareholders (the 2019 Annual Meeting), which was held on July 11, 2019, our shareholders elected Stan A. Askren, Victor D. Grizzle, Tao Huang, Barbara L. Loughran, Larry S. McWilliams, James C. Melville, John J. Roberts, Wayne R. Shurts, Roy W. Templin and Cherryl T. Thomas to the Board.
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AWI 2020 Proxy Statement | 1 |
ITEM 1 ELECTION OF DIRECTORS (CONTINUED)
Each director nominees biography in the pages that follow includes notable skills and qualifications that contributed to his or her selection as a nominee. Director skills and qualifications are also featured in the chart immediately following the biographies.
OUR BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE FOLLOWING NOMINEES:
Name | Age* | Director Since | Current Committee Assignments |
Independent^ | ||||||||
Stan A. Askren |
59 | 2008 | MDCC, AC, FC | ✓ | ||||||||
Victor D. Grizzle |
58 | 2016 | |
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Tao Huang |
57 | 2010 | AC, FC | ✓ | ||||||||
Barbara L. Loughran |
56 | 2019 | AC, FC | ✓ | ||||||||
Larry S. McWilliams |
64 | 2010 | | ✓ | ||||||||
James C. Melville |
68 | 2012 | FC, MDCC, NGSRC |
✓ | ||||||||
Wayne R. Shurts |
60 | 2019 | MDCC, AC | ✓ | ||||||||
Roy W. Templin |
59 | 2016 | AC, FC, NGSRC, MDCC |
✓ | ||||||||
Cherryl T. Thomas |
73 | 2016 | MDCC, NGSRC | ✓ |
* | As of March 31, 2020 |
| Committees: AC (Audit); FC (Finance); MDCC (Management Development & Compensation); NGSRC (Nominating, Governance & Social Responsibility) |
^ | As defined in NYSE listing standards and our Corporate Governance Principles |
| Denotes Chair of the Committee; John J. Roberts serves as Chair of the AC |
2 | AWI 2020 Proxy Statement |
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ITEM 1 ELECTION OF DIRECTORS (CONTINUED)
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AWI 2020 Proxy Statement | 3 |
ITEM 1 ELECTION OF DIRECTORS (CONTINUED)
All nominees currently serve as directors. Information concerning the nominees is provided below:
4 | AWI 2020 Proxy Statement |
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ITEM 1 ELECTION OF DIRECTORS (CONTINUED)
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AWI 2020 Proxy Statement | 5 |
ITEM 1 ELECTION OF DIRECTORS (CONTINUED)
6 | AWI 2020 Proxy Statement |
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ITEM 1 ELECTION OF DIRECTORS (CONTINUED)
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AWI 2020 Proxy Statement | 7 |
ITEM 1 ELECTION OF DIRECTORS (CONTINUED)
Skills and Qualifications of Board of Directors
8 | AWI 2020 Proxy Statement |
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CORPORATE GOVERNANCE (CONTINUED)
10 | AWI 2020 Proxy Statement |
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CORPORATE GOVERNANCE (CONTINUED)
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AWI 2020 Proxy Statement | 11 |
CORPORATE GOVERNANCE (CONTINUED)
12 | AWI 2020 Proxy Statement |
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CORPORATE GOVERNANCE (CONTINUED)
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AWI 2020 Proxy Statement | 13 |
CORPORATE GOVERNANCE (CONTINUED)
14 | AWI 2020 Proxy Statement |
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SUSTAINABILITY (CONTINUED)
16 | AWI 2020 Proxy Statement |
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DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding individuals who serve as our executive officers as of April 1, 2020.
Name | Age | Present Position and Business Experience During the Last Five Years* | ||||
Victor D. Grizzle |
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58 |
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Armstrong World Industries, Inc. President & CEO; Director (since April 2016) Executive Vice President & CEO, Armstrong Building Products (2011 to March 2016) | ||
Brian L. MacNeal |
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53 |
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Armstrong World Industries, Inc. Senior Vice President and Chief Financial Officer (since April 2016) Vice President, Global Finance and CFO, Armstrong Building Products (2014 to April 2016) | ||
Charles M. Chiappone |
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57 |
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Armstrong World Industries, Inc. Senior Vice President, Ceilings and Wall Solutions (since April 2018) Senior Vice President, Ceilings Solutions (March 2016 to April 2018) Vice President of Global Marketing & Commercial Excellence, Armstrong Building Products (January 2012 to March 2016) | ||
Mark A. Hershey |
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50 |
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Armstrong World Industries, Inc. Senior Vice President, Business Development (since January 2020) Senior Vice President, General Counsel (since July 2011) Chief Compliance Officer (since February 2012) Secretary (July 2011 to June 2014; since April 2016) | ||
Stephen F. McNamara |
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53 |
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Armstrong World Industries, Inc. Vice President, Controller (since July 2008) | ||
Ellen R. Romano |
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59 |
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Armstrong World Industries, Inc. Senior Vice President, Human Resources (since May 2013) |
* | Information in parentheses regarding previously held positions indicates either the duration the Executive Officer held the position or the year in which service in the position began. |
All executive officers are elected by the Board to serve in their respective capacities until their successors are elected or until their earlier resignation or removal by the Board.
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AWI 2020 Proxy Statement | 17 |
The following table describes the elements of the compensation program for nonemployee directors in 2019:
Director Compensation Program
Element | Amount | Terms | ||
Annual Retainer (Cash) |
$90,000 $140,000 (Chair) |
paid in quarterly installments, in arrears | ||
Annual Retainer (Equity) |
$105,000 $145,000 (Chair) |
annual (or pro-rated) grant of Director RSUs 2016 Directors Stock Unit Plan vest at one year anniversary or earlier change in control if serving on such date pre-2011 grants deliverable six months following end of service (except removal for cause) 2011 and later grants deliverable on date of end of service (except removal for cause) one share per one unit upon delivery no voting power until delivered dividend equivalent rights | ||
Committee Chair Fees* |
$20,000 (AC; MDCC) $10,000 (FC; NGSRC)** |
paid in quarterly installments, in arrears | ||
Special Assignment Fees |
$2,500 per diem ($1,250 for less than four hours) |
may be paid in connection with: one-on-one meetings with the CEO plant visits other non-scheduled significant activities approved by the Chair |
* | Committees: AC (Audit); FC (Finance); MDCC (Management Development & Development); NGSRC (Nominating, Governance & Social Responsibility) |
** | In October 2019, the Board, on the recommendation of the Governance Committee, approved an increase of $5,000 per year for the committee chair fee for each of the Governance Committee and the Finance Committee, effective as of fiscal 2020 |
18 | AWI 2020 Proxy Statement |
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COMPENSATION OF DIRECTORS (CONTINUED)
Director Compensation Table 2019
Name (a) |
Fees Earned or Paid in Cash ($) (b)(1) |
Stock Awards ($)(2) (c) |
Option Awards ($)(3) (d) |
Non-Equity Incentive Plan Compensation ($) (e) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4)(f) |
All Other Compensation ($) (g)(5) |
Total ($) (h) |
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S. Askren |
110,000 | 105,000 | | | | 21,711 | 236,711 | |||||||||||||||||||||
T. Huang |
90,000 | 105,000 | | | | 20,323 | 215,323 | |||||||||||||||||||||
B. Loughran |
45,000 | 105,000 | | | | | 150,000 | |||||||||||||||||||||
L. McWilliams |
140,000 | 145,000 | | | | 20,857 | 305,857 | |||||||||||||||||||||
J. Melville |
100,000 | 105,000 | | | | 19,807 | 224,807 | |||||||||||||||||||||
J. Roberts |
110,000 | 105,000 | | | | 24,243 | 239,243 | |||||||||||||||||||||
W. Shurts |
45,000 | 105,000 | | | | | 150,000 | |||||||||||||||||||||
G. Spivy(6)(7) |
45,000 | | | | | 2,022 | 47,022 | |||||||||||||||||||||
R. Templin |
100,000 | 105,000 | | | | 818 | 205,818 | |||||||||||||||||||||
C. Thomas |
90,000 | 105,000 | | | | 5,456 | 200,456 |
(1) | Includes amounts earned in fourth quarter of 2019 and paid in first quarter of 2020. |
(2) | Represents amounts that are in units of our shares of Common Stock. The amounts reported represent the aggregate grant date fair value for Director RSUs granted during the fiscal year, as calculated under the Financial Accounting Standards Boards Accounting Standards Codification Topic 718. Under ASC Topic 718, the grant date fair value is calculated using the closing market price of our shares of Common Stock on the date of the grant. For the number of Director RSUs credited to each directors account as of March 31, 2020, see SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS, pages 20 and 21. |
(3) | Directors do not receive stock options as part of their compensation for service on our Board. |
(4) | Under the 2016 Directors Stock Unit Plan, directors may elect to defer the equity compensation that they receive as part of their compensation for services on our Board. |
(5) | Represents cash dividend equivalent on vested undistributed shares and, for Messrs. Melville and Roberts, certain special assignment fees paid during the year. |
(6) | Elected not to stand for reelection as of the 2019 Annual Meeting. Information provided is as of the 2019 Annual Meeting. |
(7) | Under an agreement with ValueAct Capital, Mr. Spivy is deemed to receive the cash portion of his retainer for Board service and hold the Director RSUs for the benefit of ValueAct Capital Master Fund, L.P. and indirectly for (i) VA Partners I, LLC as General Partner of ValueAct Capital Master Fund, L.P., (ii) ValueAct Capital Management, L.P. as the manager of ValueAct Capital Master Fund, L.P., (iii) ValueAct Capital Management, LLC as General Partner of ValueAct Capital Management, L.P., (iv) ValueAct Holdings, L.P. as the sole owner of the limited partnership interests of ValueAct Capital Management, L.P. and the membership interests of ValueAct Capital Management, LLC and as the majority owner of the membership interests of VA Partners I, LLC and (v) ValueAct Holdings GP, LLC as General Partner of ValueAct Holdings, L.P. |
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AWI 2020 Proxy Statement | 19 |
The following table sets forth information regarding persons or groups known to us to be beneficial owners of more than 5% of our outstanding shares of Common Stock as of March 31, 2020 or the date of any applicable reports filed by such persons or groups prior to that date. Beneficial ownership is determined in accordance with applicable rules of the SEC.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership |
Percent of Class Outstanding(1) | ||
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 |
7,399,644(2) | 15.5% | ||
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 |
5,166,129(3) | 10.8% | ||
Lazard Asset Management LLC 30 Rockefeller Plaza New York, NY 10112 |
4,411,355(4) | 9.3% | ||
Capital International Investors 11100 Santa Monica Boulevard, 16/F Los Angeles, CA 90025 |
4,046,937(5) | 8.5% |
(1) | Based on 47,660,016 shares of the Companys Common Stock outstanding as of March 31, 2020, as reported to the NYSE (62,313,233 shares reported, less 14,653,217 shares held in treasury). |
(2) | On a Schedule 13G Amendment No. 3 filed on with the SEC on February 14, 2020, T. Rowe Price Associates, Inc. reported, as of December 31, 2019, that it had sole voting power with respect to 1,477,981 shares of Common Stock of the Company and sole dispositive power with respect to 7,399,644 shares of Common Stock of the Company, and T. Rowe Price New Horizons Fund, Inc. reported, as of December 31, 2018, that it had sole voting power with respect to 5,909,863 shares of Common Stock outstanding of the Company |
(3) | On a Schedule 13G Amendment No. 5 filed on with the SEC on February 12, 2020, the Vanguard Group23-1945930 reported, as of December 31, 2019, that it had sole voting power with respect to 27,480 shares of Common Stock of the Company, shared voting power with respect to 6,023 shares of Common Stock, sole dispositive power with respect to 5,166,129 shares of Common Stock of the Company and shares dispositive power with respect to 27,505 shares of Common Stock, further noting that Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 21,482 shares or 0.04% of the shares of Common Stock outstanding of the Company as a result of its serving as investment manager of collective trust accounts, Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 12,021 shares or 0.02% of the shares of Common Stock outstanding of the Company as a result of its serving as investment manager of Australian investment offerings. |
(4) | On a Schedule 13G Amendment filed with the SEC on February 10, 2020, Lazard Asset Management LLC reported that, as of December 31, 2019, it had sole voting power with respect to 2,947,290 shares of Common Stock of the Company and sole dispositive power with respect to 4,411,355 shares of Common Stock of the Company. |
(5) | On a Schedule 13G filed on with the SEC on February 14, 2020, Capital International Investors reported, as of December 31, 2019, that it had sole voting power and sole dispositive power with respect to 4,046,937 shares of Common Stock of the Company, respectively. |
20 | AWI 2020 Proxy Statement |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS (CONTINUED)
The following table sets forth, as of March 31, 2020, the amount of shares of Common Stock beneficially owned by all directors, the Companys named executive officers (NEOs) as identified in the COMPENSATION DISCUSSION AND ANALYSIS section on page 28 and all directors and executive officers as a group in accordance with applicable SEC rules.
Name | Number of Common Shares Beneficially Owned |
Number of Shares Subject to Options(1) Exercisable or Which Become Exercisable Within 60 Days |
Total Number of Shares Beneficially Owned(2) |
Restricted Stock Units(3) / Unvested Options |
Total Common Shares Beneficially Owned Plus Restricted Stock Units and Unvested Options |
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Stan A. Askren |
6,468 | * | * | 6,468 | 29,882 | 36,350 | ||||||||||||||
Charles M. Chiappone |
28,605 | 11,992 | 40,597 | 18,283 | 58,880 | |||||||||||||||
Victor D. Grizzle |
192,921 | 130,309 | 323,230 | 146,857 | 470,087 | |||||||||||||||
Mark A. Hershey |
34,692 | 33,723 | 68,415 | 35,650 | 104,065 | |||||||||||||||
Tao Huang |
| * | * | | 28,719 | 28,719 | ||||||||||||||
Barbara L. Loughran |
| * | * | | 1,064 | 1,064 | ||||||||||||||
Brian L. MacNeal |
36,032 | 3,740 | 39,772 | 22,680 | 62,452 | |||||||||||||||
Larry S. McWilliams |
| * | * | | 29,718 | 29,718 | ||||||||||||||
James C. Melville |
4,229 | * | * | 4,229 | 17,663 | 21,892 | ||||||||||||||
James J. Roberts |
468 | * | * | 468 | 23,029 | 23,497 | ||||||||||||||
Ellen R. Romano |
19,896 | * | * | 19,896 | 22,223 | 42,119 | ||||||||||||||
Wayne R. Shurts |
| * | * | | 1,064 | 1,064 | ||||||||||||||
Gregory P. Spivy(4)(5) |
9,907 | * | * | 9,907 | | 9,907 | ||||||||||||||
Roy W. Templin |
8,672 | * | * | 8,672 | 1,064 | 9,736 | ||||||||||||||
Cherryl T. Thomas |
| * | * | | 8,214 | 8,214 | ||||||||||||||
Directors and Executive Officers as a group (16 persons)(6) |
352,363 | 210,154 | 562,517 | 398,432 | 960,949 |
(1) | Directors do not receive stock option grants under the 2008 Directors Stock Unit Plan, the 2016 Directors Stock Unit Plan or as part of the compensation program for directors. |
(2) | No individual director or executive officer beneficially owns 1% of the shares of Common Stock outstanding as of March 31, 2020. The directors and executive officers as a group beneficially own approximately 0.7% of the shares of Common Stock outstanding as of March 31, 2020. |
(3) | Represents, in the case of NEOs, unvested time-based restricted stock units (NEO RSUs) granted to them under the 2006, 2011 and 2016 Long-Term Incentive Plan, as applicable, and, in the case of nonemployee directors, vested and unvested stock units (Director RSUs) granted to them as part of their annual retainer for Board service that are not acquirable by the director within 60 days of March 31, 2020 under the terms of the 2008 Directors Stock Unit Plan and the 2016 Directors Stock Unit Plan. See Directors Aggregate Ownership table below for further information. Neither the unvested NEO RSUs nor the Director RSUs have voting power. |
(4) | Elected not to stand for re-election at the 2019 Annual Meeting. Information provided is as of the 2019 Annual Meeting. |
(5) | Under the Nomination Agreement with ValueAct Capital, Mr. Spivy is deemed to hold the Director RSUs for the benefit of ValueAct Capital Master Fund, L.P. and indirectly for (i) VA Partners I, LLC as General Partner of ValueAct Capital Master Fund, L.P., (ii) ValueAct Capital Management, L.P. as the manager of ValueAct Capital Master Fund, L.P., (iii) ValueAct Capital Management, LLC as General Partner of ValueAct Capital Management, L.P., (iv) ValueAct Holdings, L.P. as the sole owner of the limited partnership interests of ValueAct Capital Management, L.P. and the membership interests of ValueAct Capital Management, LLC and as the majority owner of the membership interests of VA Partners I, LLC and (v) ValueAct Holdings GP, LLC as General Partner of ValueAct Holdings, L.P. |
(6) | Includes amounts for Stephen F. McNamara, VP, Controller. |
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AWI 2020 Proxy Statement | 21 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS (CONTINUED)
Directors Aggregate Ownership
The table below sets forth, as of March 31, 2020, additional detail as to each nonemployee directors ownership and rights to ownership in the Companys equity.
Name | Common Shares |
Vested Restricted Stock Units(1) |
Unvested Restricted Stock Units(2) |
Phantom Stock Units(3) |
Total Equity(4) |
Total Value(5) |
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Stan A. Askren |
6,468 | 28,818 | 1,064 | | 36,350 | $ | 2,886,917 | |||||||||||||||||
Tao Huang |
| 27,655 | 1,064 | | 28,719 | $ | 2,280,863 | |||||||||||||||||
Barbara L. Loughran |
| | 1,064 | | 1,064 | $ | 84,503 | |||||||||||||||||
Larry S. McWilliams |
| 28,249 | 1,469 | | 29,718 | $ | 2,360,204 | |||||||||||||||||
James C. Melville |
4,229 | 16,599 | 1,064 | | 21,892 | $ | 1,738,663 | |||||||||||||||||
John J. Roberts |
468 | 21,965 | 1,064 | 11,773 | 23,497 | $ | 2,801,143 | (6) | ||||||||||||||||
Wayne R. Shurts |
| | 1,064 | | 1,064 | $ | 84,503 | |||||||||||||||||
Gregory P. Spivy(7)(8) |
9,907 | | | | 9,907 | $ | 786,814 | |||||||||||||||||
Roy W. Templin |
8,672 | | 1,064 | | 9,736 | $ | 773,233 | |||||||||||||||||
Cherryl T. Thomas |
| 7,150 | 1,064 | | 8,214 | $ | 652,356 | |||||||||||||||||
Total |
29,744 | 130,436 | 9,981 | 11,773 | 170,161 | $ | 14,449,198 |
(1) | Under the terms of the 2008 Directors Stock Unit Plan, the Director RSUs granted to each director as part of his retainer for Board service are not acquirable by the director until (i) for those Director RSUs granted prior to June 2011, the earlier of the six-month anniversary of the directors separation from the Board for any reason other than a removal for cause or the date of a Change in Control Event (as defined in the 2008 Directors Stock Unit Plan); or (ii) for those Director RSUs granted during and after June 2011, on the date of the directors separation from the Board for any reason other than a removal for cause or the date of a Change in Control Event (as defined in the 2008 Directors Stock Unit Plan). Under the terms of the 2016 Directors Stock Unit Plan, the Director RSUs granted to each director as part of his retainer for Board Service shall vest (contingent upon the Directors continued service as of such date) on the earlier of (i) the one-year anniversary of the grant; (ii) the death or total and permanent disability of the Director; or (iii) the date of any Change in Control Event (as defined in the Plan). |
(2) | Under the terms of the 2008 Directors Stock Unit Plan, Director RSUs vest on the first anniversary of the grant date. Under the terms of the 2016 Directors Stock Unit Plan, the vested units will be acquirable by the Director, at the election of the Director: (i) at the vesting of the units at the one-year anniversary of the grant or (ii) at the time of the Directors termination of service. All of the director RSUs listed in this column will vest on July 12, 2020. Amount excludes $399.00 in accrued dividends (non-interest bearing) for all directors except for the Chairman. Amount excludes $550.88 in accrued dividends (non-interest bearing) for the Chairman. |
(3) | Phantom Stock Units awarded under the Companys 2006 Phantom Stock Unit Plan (Phantom Stock Unit Plan) become payable (Phantom Units Payment Date) in cash on the earlier of the six-month anniversary of the directors separation from the Board for any reason other than a removal for cause or the date of a Change in Control Event (as defined in the Phantom Stock Unit Plan). The cash payment amount will be equal to the number of units multiplied by the closing price of the shares of Common Stock on the stock exchange on which such shares are traded on the Phantom Units Payment Date. |
(4) | Excludes Phantom Stock Units |
(5) | Represents an amount equal to the sum of the number of shares of Common Stock beneficially owned, plus the number of vested and unvested Director RSUs, plus the number of Phantom Stock Units held, as applicable, multiplied by $79.42, which was the closing price of the shares of Common Stock of the Company on the NYSE on March 31, 2020. |
(6) | Amount excludes $286,747.08 in accrued dividends (non-interest bearing). |
(7) | Elected not to stand for re-election at the 2019 Annual Meeting. Information provided is as of the 2019 Annual Meeting. |
(8) | Under an agreement with ValueAct Capital, Mr. Spivy is deemed to hold the Director RSUs for the benefit of ValueAct Capital Master Fund, L.P. and indirectly for (i) VA Partners I, LLC as General Partner of ValueAct Capital Master Fund, L.P., (ii) ValueAct Capital Management, L.P. as the manager of ValueAct Capital Master Fund, L.P., (iii) ValueAct Capital Management, LLC as General Partner of ValueAct Capital Management, L.P., (iv) ValueAct Holdings, L.P. as the sole owner of the limited partnership interests of ValueAct Capital Management, L.P. and the membership interests of ValueAct Capital Management, LLC and as the majority owner of the membership interests of VA Partners I, LLC and (v) ValueAct Holdings GP, LLC as General Partner of ValueAct Holdings, L.P. |
22 | AWI 2020 Proxy Statement |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS (CONTINUED)
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AWI 2020 Proxy Statement | 23 |
The Audit Committee engaged KPMG LLP as the Companys independent registered public accounting firm for 2020. In making this selection, the Audit Committee considered KPMG LLPs qualifications, discussed with KPMG LLP its independence, and reviewed the audit and non-audit services provided by KPMG LLP to the Company.
Management of the Company has primary responsibility for preparing the Companys financial statements and establishing effective internal control over financial reporting. KPMG LLP is responsible for auditing those financial statements and expressing an opinion on the conformity of the Companys audited financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Companys internal control over financial reporting based on the criteria established in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Accordingly, the Audit Committee reviewed and discussed the audited consolidated financial statements for fiscal 2019 with the Companys management. The Audit Committee reviewed and discussed with management the critical accounting policies applied by the Company in the preparation of those financial statements. The Audit Committee also discussed with KPMG LLP the matters required to be discussed by applicable standards of the Public Company Accounting Oversight Board, and had the opportunity to ask KPMG LLP questions relating to such matters. The discussions included the quality, and not just the acceptability, of the accounting principles utilized, the reasonableness of significant accounting judgments, and the clarity of disclosures in the financial statements.
The Audit Committee regularly considers the independence, qualifications and performance of KPMG LLP. Such consideration includes reviewing the written disclosures and the letter received from KPMG LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accountants communications with the Audit Committee concerning independence, and discussing with KPMG LLP their independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2019. The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as the Companys independent registered public accounting firm is in the best interests of the Company and its shareholders and have recommended that shareholders ratify the appointment of KPMG LLP as the Companys independent registered public accounting firm for the fiscal year 2020.
Submitted by the Audit Committee
John J. Roberts (Chair)
Stan A. Askren
Tao Huang
Barbara L. Loughran
Wayne R. Shurts
Roy W. Templin
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AWI 2020 Proxy Statement | 25 |
The following table presents fees for professional audit services rendered by KPMG LLP for the audit of our annual consolidated financial statements for 2019 and 2018, as well as fees billed for other services rendered by KPMG LLP. All fees in 2019 and 2018 were pre-approved by the Audit Committee.
(amounts in thousands) | 2019 | 2018 | ||||||
Audit Fees(1) |
$ | 3,190 | $ | 3,648 | ||||
Audit Related Fees(2) |
103 | 90 | ||||||
Audit and Audit Related Fees Subtotal |
3,293 | 3,738 | ||||||
Tax Fees(3) |
662 | 2,844 | ||||||
All Other Fees |
| | ||||||
Total Fees |
$ | 3,955 | $ | 6,582 |
(1) | Audit Fees are for services rendered in connection with the integrated audit of Armstrongs consolidated financial statements as of and for the year, for which a portion of the billings occurred the following year. Audit fees were also incurred for reviews of consolidated financial statements included in the Companys quarterly reports on Form 10-Q and services normally provided in connection with statutory and regulatory filings. Audit Fees in 2018 also include fees associated with the impact of U.S. tax reform, first year of FASB ASC 606, and adoption of FASB ASC 842. |
(2) | Audit-Related Fees consisted principally of fees for audits of financial statements of certain employee benefit plans, accounting research assistance on technical topics and other matters with respect to non-U.S. statutory financial statements. |
(3) | Tax Fees were primarily for tax compliance, tax planning, advice on divestiture, technical assistance, and advice on both domestic and international matters. |
The Audit Committee has considered whether the provision by KPMG LLP of the non-audit services described above was allowed under Rule 2-01(c)(4) of Regulation S-X and was compatible with maintaining auditor independence, and has concluded that KPMG LLP was and is independent of the Company in all respects.
Audit Committee Pre-Approval Policy
The Audit Committee adheres to a policy that requires the Audit Committees prior approval of any audit, audit-related and non-audit services provided by the firm that serves as our independent registered public accounting firm. Pursuant to this policy, management cannot engage the firm for any services without the Audit Committees pre-approval. The Audit Committee delegates to the Audit Committee Chair the authority to pre-approve non-audit services for purposes of handling immediate needs, with a report to the full Audit Committee of such approvals at its next meeting. The policy complies with Section 10A(i) of the Exchange Act.
Auditor Tenure
Through more than 90 years of experience with Armstrong, KPMG LLP has gained institutional knowledge of and deep expertise regarding Armstrongs global operations and businesses, accounting policies and practices, and internal control over financial reporting. We believe KPMG LLPs aggregate fees are competitive with peer companies because of KPMG LLPs familiarity with our business.
26 | AWI 2020 Proxy Statement |
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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE COMPANYS COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS SECTION AND THE ACCOMPANYING COMPENSATION TABLES CONTAINED IN THIS PROXY STATEMENT
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AWI 2020 Proxy Statement | 27 |
In this compensation discussion and analysis (CD&A) section, we review the objectives and elements of our executive compensation philosophy, as well as the Companys performance and compensation decisions in 2019 relating to our named executive officers (NEOs) who are:
Victor D. Grizzle President and CEO
Brian L. MacNeal Senior Vice President and CFO
Charles M. Chiappone Senior Vice President, Ceiling & Wall Solutions
Mark A. Hershey Senior Vice President, General Counsel & Chief Compliance Officer(1)
Ellen R. Romano Senior Vice President, Human Resources
(1) | Effective January 1, 2020, Mr. Hersheys title changed to Senior Vice-President, General Counsel and Business Development |
This CD&A contains information regarding decisions made regarding our compensation policies and decisions and the compensation paid for performance during 2019 and prior periods. The annual incentive payouts described in this CD&A were based on the Companys financial performance in 2019, while the payouts for performance units under our Long-Term Incentive Program described in this CD&A were based on the Companys achievement during 2017-2019 of adjusted free cash flow and absolute total shareholder return objectives established at the start of that period. The Compensation Committee is aware that, as of the date of this proxy statement, concerns about the effects of the coronavirus (COVID-19) pandemic appear to be having an effect on the economy, financial markets generally and on the trading prices of the Companys common stock. Accordingly, the value of the stock awards disclosed in the CD&A as determined as of the dates indicated have been directly impacted by changes in Company stock price. As described further in this CD&A, our executive compensation program is currently designed to strongly tie realizable compensation with stock price performance in order to align compensation with the financial interests of our shareholders. Our Compensation Committee remains committed to maintaining effective programs and incentives that are appropriate to the operating environment and economic circumstances, and will consider the business and financial impacts of the pandemic in evaluating future compensation decisions.
EXECUTIVE SUMMARY
Business Overview
28 | AWI 2020 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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AWI 2020 Proxy Statement | 29 |
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
Compensation Elements
In 2019, we executed our compensation philosophy by providing compensation opportunities through a combination of: (a) fixed compensation, including (i) base salaries, (ii) benefits and (iii) select perquisites; and (b) performance-based compensation, including (i) cash incentive awards under our Annual Incentive Plan, and (ii) grants of PSUs under our 2016 Long-Term Incentive Plan (our omnibus equity award plan).
Type | Compensation Elements |
Form and Objective | Further Information | Key 2019 NEO Actions | ||||
|
Base Salary | Delivered in cash
Provides reasonable, market competitive fixed pay delivered to each NEO, and reflects his or her role, responsibility, individual performance and contribution to the Company
Generally set at market median
|
2019 Base Salary changes for our NEOs are presented on page 36 |
NEOs received merit increases averaging 4.7%, effective April 1, 2019 | ||||
Benefits | Standard range of health, welfare, and retirement benefits generally similar to those provided to other salaried employees, except that executives:
are eligible to receive enhanced Company-paid long-term disability benefits; and
are eligible for non-qualified retirement benefits |
|||||||
Select Perquisites | Select perquisites or personal benefits
Personal financial counseling at a cost generally less than $4,500 per NEO
Executive physicals at a cost generally less than $5,000 per NEO
Executive long-term disability at a cost generally less than $5,000 per NEO
|
|||||||
|
Annual Incentive Plan (AIP) | Delivered in cash
Provides an annual incentive opportunity for achieving financial results based on performance goals tied to our annual operating plan
Drives selected target metric performance
Payouts are tied to Company and individual performance, including leadership behaviors
Target opportunity generally set at market median
|
AIP was based on revenue and EBITDA (as described on page 36) |
NEOs received AIP payments for 2019 performance at 105% of target | ||||
Long-Term Incentive Program (LTIP) | Delivered in 100% PSUs for 2019
Drives and promotes long-term value-creation for our shareholders, and fosters retention, by rewarding execution and achievement of goals linked to our longer term strategic initiatives and stock performance
Target opportunity generally set at market median
In 2019, our Compensation Committee awarded 3-year PSUs tied to Absolute TSR and FCF |
LTIP performance goals were based on FCF and Absolute TSR (as described on page 38) |
NEOs received annual PSU awards with values ranging from 100% to 413% of base salary. |
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AWI 2020 Proxy Statement | 31 |
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
32 | AWI 2020 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
The following table illustrates how our executive compensation elements align with our compensation objectives.
Executive Compensation Element | Attract Talented Employees |
Align Management and Shareholder Interests |
Pay for Performance |
Motivate and Retain Management | ||||
Base Salary |
✓ |
|
|
✓ | ||||
Annual Incentive (AIP) |
✓ | ✓ | ✓ | ✓ | ||||
Long-Term Incentive (LTIP) |
✓ | ✓ | ✓ | ✓ |
HOW WE MAKE COMPENSATION DECISIONS
Roles of Key Participants
Compensation Committee | Sets the philosophy and principles that guide the executive compensation program;
Oversees the design of our executive compensation program in the context of our culture, competitive practices, the legal and regulatory landscape, and governance trends;
Reviews and approves short- and long-term incentive compensation design, including performance goals and the reward consequences for delivering above or below target performance;
Reviews and approves corporate goals and individual objectives relevant to the compensation of the CEO, evaluates the CEOs performance relative to those goals and objectives, and recommends CEO compensation to be ratified by the independent directors based on the evaluation; and
Oversees the evaluation of the other executive officers and approves their compensation in collaboration with the CEO.
| |
Independent Members of the Board | Participate in the performance assessment process for the CEO; and
Review decisions regarding CEO compensation, including base salary, AIP and LTIP awards for the CEO.
| |
Committee Consultant Willis Towers Watson | Provides analysis, advice and recommendations with regard to executive compensation;
Attends Compensation Committee meetings, as requested, and communicates between meetings with the Compensation Committee Chair and other Committee members; and
Advises the Compensation Committee on market trends, regulatory issues and developments and how they may impact our executive compensation programs.
| |
CEO | Provides input to the Compensation Committee on senior executive performance and compensation recommendations. |
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AWI 2020 Proxy Statement | 33 |
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
34 | AWI 2020 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
Peer Group
The Compensation Committee uses compensation data compiled from a group of peer companies based on a number of pre-established criteria, including business model comparability, company size measured by revenue (approximately one-half to two times the Companys revenue) and market capitalization, global presence and investor capital.
In 2019, our Compensation Committee reviewed our compensation Peer Group. The Committee removed NCI Building Systems, Inc. and H. B. Fuller Company because their revenue exceeded our range of one-half to two times, and replaced them with GCP Applied Technologies Inc., PGT Innovations, Inc. and Trex Company, Inc.
Our current compensation Peer Group consists of the following 18 manufacturing companies:
Allegion PLC | Herman Miller Inc. | PH Glatfelter Inc. | ||
Apogee Enterprises, Inc. | Interface, Inc. | Quanex Building Products Corp | ||
Eagle Materials Inc. | Knoll, Inc. | Simpson Manufacturing Co., Inc. | ||
Ferro Corporation | Kraton Performance Polymers Inc. | Trex Company, Inc. | ||
GCP Applied Technologies, Inc. | Masonite International Corporation | |||
Gibraltar Industries, Inc. | OMNOVA Solutions Inc. | |||
Griffon Corporation | PGT Innovations, Inc. |
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AWI 2020 Proxy Statement | 35 |
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
2019 AIP Design
Base Salary $
|
x | Target AIP Opportunity % |
= | Target AIP $ |
x | Company Performance % |
x | Individual Performance % |
= | Annual AIP Payout $ |
36 | AWI 2020 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
Our Compensation Committee established the following performance ranges and associated payout ranges for the 2019 AIP. The Companys performance was converted to a corresponding payout factor on a straight line basis between Threshold and Target and between Target and Maximum. AIP payout factors are capped at 200%.
|
Target $ (in millions) | Performance as % of Target | Payout | |||||||||||||||||||||||||||||||||
|
Threshold | Target | Maximum | Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||
Revenue |
997.0 | 1,057.0 | 1,099.0 | 94 | % | 100 | % | 104 | % | 50 | % | 100 | % | 200 | % | |||||||||||||||||||||
EBITDA |
354.0 | 400.0 | 420.0 | 88 | % | 100 | % | 115 | % | 50 | % | 100 | % | 200 | % |
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AWI 2020 Proxy Statement | 37 |
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
38 | AWI 2020 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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AWI 2020 Proxy Statement | 39 |
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
40 | AWI 2020 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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AWI 2020 Proxy Statement | 41 |
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
42 | AWI 2020 Proxy Statement |
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The Management Development and Compensation Committee (MDCC) of our Board has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with our management. Based on this review and discussion, the MDCC recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by the Management Development and Compensation Committee
Stan A. Askren, Chair
James C. Melville
Wayne R. Shurts
Roy W. Templin
Cherryl T. Thomas
This report shall not be deemed to be soliciting material or to be filed with the SEC, nor incorporated by reference into any future SEC filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference therein.
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AWI 2020 Proxy Statement | 43 |
The table below sets forth the total compensation for our NEOs during fiscal 2019, 2018 and 2017.
Name and Principal Position |
Year | Salary ($) |
Bonus(3) ($) |
Stock Awards(1) ($) |
Option Awards(1) ($) |
Non-Equity Incentive Plan ($) |
Change in Pension Value & Nonqualified Deferred Compensation Earnings(4) ($) |
All Other Compensation(5) ($) |
Total ($) | ||||||||||||||||||||||||||||||||||||
Victor D. Grizzle | 2019 | 787,500 | | 3,300,000 | | 826,880 | | 195,375 | 5,109,755 | ||||||||||||||||||||||||||||||||||||
President and Chief Executive Officer |
|
2018 2017 |
|
743,750 718,750 |
|
|
|
3,100,000 2,300,000 |
|
|
|
803,250 567,820 |
|
|
|
83,319 92,921 |
|
4,730,319 3,679,491 |
|||||||||||||||||||||||||||
Brian L. MacNeal |
2019 | 440,938 | | 510,000 | | 277,800 | | 56,917 | 1,285,655 | ||||||||||||||||||||||||||||||||||||
Senior Vice | 2018 | 421,688 | | 452,900 | | 273,260 | | 31,523 | 1,179,371 | ||||||||||||||||||||||||||||||||||||
President and Chief Financial Officer |
2017 | 402,563 | | 375,000 | | 190,820 | | 32,642 | 1,001,025 | ||||||||||||||||||||||||||||||||||||
Charles M. Chiappone |
|
2019 2018 |
|
435,750 407,745 |
|
|
|
462,000 370,900 |
|
|
|
274,530 292,340 |
|
|
|
39,406 18,500 |
|
1,211,686 1,089,485 |
|||||||||||||||||||||||||||
Senior Vice President, Ceiling Solutions | 2017 | 366,985 | | 266,300 | | 144,960 | | 23,122 | 801,367 | ||||||||||||||||||||||||||||||||||||
Mark A. Hershey | 2019 | 431,758 | | 524,000 | | 272,010 | | 54,226 | 1,281,994 | ||||||||||||||||||||||||||||||||||||
Senior Vice President, General Counsel and Chief Compliance Officer | |
2018 2017 |
|
415,635 418,200 |
|
280,000 |
|
506,300 506,300 |
|
|
|
269,340 252,940 |
|
|
|
44,207 48,413 |
|
1,515,482 1,225,853 |
|||||||||||||||||||||||||||
Ellen R. Romano | 2019 | 326,428 | | 320,400 | | 188,520 | 958,061 | 35,987 | 1,829,396 | ||||||||||||||||||||||||||||||||||||
Senior Vice President, Human Resources |
|
2018 2017 |
|
318,473 310,723 |
|
|
|
312,600 305,000 |
|
|
|
189,180 143,560 |
|
559,893 |
|
34,159 10,830 |
|
854,412 1,330,006 |
(1) | The amounts reflect the aggregate grant date fair value of stock units granted in the fiscal year, computed in accordance with ASC Topic 718. Under ASC Topic 718, the grant date fair value is calculated using the closing price of the Companys shares of Common Stock ($74.32) on the date of grant (February 26, 2019). The 2019 LTIP awards consist of PSUs only. The target and maximum payouts for the PSUs are as follows: target of $3,300,000 and maximum of $9,075,000 for Mr. Grizzle, target of $510,000 and maximum of $1,402,500 for Mr. MacNeal, target of $462,000 and maximum of $1,270,500 for Mr. Chiappone (maximums are 275% of target); target of $524,000 and maximum of $1,179,000 for Mr. Hershey, target of $320,400 and maximum of $720,900 for Ms. Romano (maximums are 225% of target). |
(2) | The 2019 amounts disclosed are the awards under the 2019 AIP. |
(3) | Mr. Hershey received a one-time special cash bonus of $280,000 on October 25, 2018. The bonus was paid in recognition of his leadership and performance in connection with certain significant projects. The special bonus was separate from our AIP. |
(4) | For 2018, the change in pension value decreased from 2017 due to the higher discount rate for Ms. Romano. The decline in value was ($205,437). |
(5) | The amounts shown in the All Other Compensation column include: (i) Company matching contributions to the Savings and Investment 401(k) Plan and to the NQDCP; (ii) premiums for long-term disability insurance; (iii) termination payments (severance); (iv) relocation expenses; (v) cash dividends and (vi) personal benefits (perquisites) consisting of medical examinations and financial planning expense reimbursements to the extent the total perquisite value is $10,000 or greater per individual. For each person the total value of all such perquisites did not reach $10,000. |
44 | AWI 2020 Proxy Statement |
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2019 SUMMARY COMPENSATION TABLE (CONTINUED)
(6) | The following table provides the detail for the amounts reported in the All Other Compensation for 2019 for each NEO: |
Name | Perquisites and Other Benefits ($) |
Cash Dividends ($) |
Company Match Savings Plan Contributions ($) |
Executive Long- Term Disability ($) |
All Other Compensation ($) | ||||||||||||||||||||
Victor D. Grizzle |
| 97,180 | 98,195 | | 195,375 | ||||||||||||||||||||
Brian L. MacNeal |
| 20,825 | 36,093 | | 56,917 | ||||||||||||||||||||
Charles M. Chiappone |
| 14,788 | 24,618 | | 39,406 | ||||||||||||||||||||
Mark A. Hershey |
| 9,656 | 42,739 | 1,830 | 54,226 | ||||||||||||||||||||
Ellen R. Romano |
| 5,915 | 28,243 | 1,830 | 35,987 |
CEO Pay Ratio
|
AWI 2020 Proxy Statement | 45 |
The table below shows information on AIP awards and PSUs granted to each NEO in 2019. There is no assurance that the grant date fair value of PSU/RSU awards will be realized by the executive.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All Other Stock Awards: Number of Shares of Stock or Units (#) |
All Other Option Awards: Number of Securities Under-Lying Options (#) |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Stock and Option Awards ($) |
|||||||||||||||||||||||||||||||||||||||||
Name | Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||||||||
Victor D. Grizzle |
(1 | ) | N/A | 393,750 | 787,500 | 1,575,000 | ||||||||||||||||||||||||||||||||||||||||
(2 | ) | 2/26/2019 | 11,101 | 44,403 | 122,108 | 3,300,000 | ||||||||||||||||||||||||||||||||||||||||
Brian L. MacNeal |
(1 | ) | N/A | 132,281 | 264,563 | 529,125 | ||||||||||||||||||||||||||||||||||||||||
(2 | ) | 2/26/2019 | 1,716 | 6,863 | 18,873 | 510,000 | ||||||||||||||||||||||||||||||||||||||||
Charles M. Chiappone |
(1 | ) | N/A | 130,725 | 261,450 | 522,900 | ||||||||||||||||||||||||||||||||||||||||
(2 | ) | 2/26/2019 | 1,554 | 6,217 | 17,097 | 462,000 | ||||||||||||||||||||||||||||||||||||||||
Mark A. Hershey |
(1 | ) | N/A | 129,527 | 259,055 | 518,109 | ||||||||||||||||||||||||||||||||||||||||
(2 | ) | 2/26/2019 | 3,526 | 7,051 | 15,865 | 524,000 | ||||||||||||||||||||||||||||||||||||||||
Ellen R. Romano |
(1 | ) | N/A | 89,768 | 179,535 | 359,070 | ||||||||||||||||||||||||||||||||||||||||
(2 | ) | 2/26/2019 | 2,156 | 4,312 | 9,702 | 320,400 |
(1) | The amounts shown represent the 2019 AIP threshold, target and maximum opportunity for each NEO. Actual payouts are included in the Non-Equity Incentive Plan Compensation column of the SCT. |
(2) | In 2019, the Companys LTIP program for NEOs included PSUs that have a three-year performance period based on Absolute TSR and FCF; participants earn up to 275% of target for Messrs. Grizzle, MacNeal and Chiappone and up to 225% of target for Mr. Hershey and Ms. Romano if the Company achieves the established performance goals. Any cash dividends declared on shares underlying PSUs will be accrued in a non-interest bearing account and paid when the restrictions on the underlying shares lapse. |
46 | AWI 2020 Proxy Statement |
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The table below shows the number of shares covered by exercisable and unexercisable stock options, and unvested RSUs and PSUs held by each NEO on December 31, 2019. Market or payout values in the table below are based on the closing price of our shares of Common Stock on that date, $93.97. Equity awards held by NEOs at the time of the 2016 separation of Armstrong Flooring Inc. were adjusted to reflect such separation, consistent with equity awards held by other Company employees, and the table below includes outstanding adjusted awards as of December 31, 2019.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Grant Date |
Number of Securities Underlying Unexercised Options |
Number of Securities Underlying Unexercised Options (#) |
Option Exercise Price ($) |
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 ($) |
Equity Incentive Plans Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plans Awards Market or Payout Value of Unearned Shares or Other Rights That Have Not Vested ($) |
||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | ||||||||||||||||||||||||||||||||||
Victor D. Grizzle |
1/17/2011 | 19,158 | 32.03 | 01/17/21 | ||||||||||||||||||||||||||||||||
3/2/2011 | 31,200 | 31.15 | 03/02/21 | |||||||||||||||||||||||||||||||||
2/28/2012 | 31,348 | 37.83 | 02/28/22 | |||||||||||||||||||||||||||||||||
2/20/2013 | 25,689 | 45.32 | 02/20/23 | |||||||||||||||||||||||||||||||||
2/25/2014 | 22,914 | 47.17 | 02/25/24 | |||||||||||||||||||||||||||||||||
2/28/2017 | 50,000 | (2) | 4,698,500 | |||||||||||||||||||||||||||||||||
2/27/2018 | 52,454 | (3) | 4,929,102 | |||||||||||||||||||||||||||||||||
2/26/2019 | 44,403 | (4) | 4,172,550 | |||||||||||||||||||||||||||||||||
Brian L. MacNeal |
6/24/2014 | 3,740 | 49.96 | 06/24/24 | ||||||||||||||||||||||||||||||||
2/28/2017 | 8,153 | (2) | 766,137 | |||||||||||||||||||||||||||||||||
2/27/2018 | 7,664 | (3) | 720,186 | |||||||||||||||||||||||||||||||||
2/26/2019 | 6,863 | (4) | 644,916 | |||||||||||||||||||||||||||||||||
Charles M. Chiappone |
2/28/2012 | 2,307 | 37.83 | 02/28/22 | ||||||||||||||||||||||||||||||||
2/20/2013 | 3,781 | 45.32 | 02/20/23 | |||||||||||||||||||||||||||||||||
2/25/2014 | 5,904 | 47.17 | 02/25/24 | |||||||||||||||||||||||||||||||||
2/28/2017 | 5,790 | (2) | 544,086 | |||||||||||||||||||||||||||||||||
2/27/2018 | 6,276 | (3) | 589,756 | |||||||||||||||||||||||||||||||||
2/26/2019 | 6,217 | (4) | 584,211 | |||||||||||||||||||||||||||||||||
Mark A. Hershey |
2/20/2013 | 17,539 | 45.32 | 02/20/23 | ||||||||||||||||||||||||||||||||
2/25/2014 | 16,184 | 47.17 | 02/25/24 | |||||||||||||||||||||||||||||||||
4/11/2016 | 4,513 | (1) | 424,087 | |||||||||||||||||||||||||||||||||
2/28/2017 | 11,007 | (2) | 1,034,328 | |||||||||||||||||||||||||||||||||
2/27/2018 | 8,567 | (3) | 805,041 | |||||||||||||||||||||||||||||||||
2/26/2019 | 7,051 | (4) | 662,582 | |||||||||||||||||||||||||||||||||
Ellen R. Romano |
4/11/2016 | 2,995 | (1) | 281,440 | ||||||||||||||||||||||||||||||||
2/28/2017 | 6,631 | (2) | 623,115 | |||||||||||||||||||||||||||||||||
2/27/2018 | 5,290 | (3) | 497,101 | |||||||||||||||||||||||||||||||||
2/26/2019 | 4,312 | (4) | 405,199 |
(1) | Grant will vest in three equal installments two, three and four years from the date of grant. |
(2) | The number of shares of Common Stock represents the amount that vests if target is achieved for the 2017 PSU grant (based on Absolute TSR and FCF goals). The awards would vest on December 31, 2019. Participants can earn up to 275% of target for Messrs. Grizzle, MacNeal and Chiappone and 225% of target for Mr. Hershey and Ms. Romano. |
(3) | The number of shares of Common Stock represents the amount that vests if target is achieved for the 2018 PSU grant (based on Absolute TSR and FCF goals). The awards would vest on December 31, 2020. Participants can earn up to 275% of target for Messrs. Grizzle, MacNeal and Chiappone and 225% of target for Mr. Hershey and Ms. Romano. |
(4) | The number of shares of Common Stock represents the amount that vests if target is achieved for the 2019 PSU grant (based on Absolute TSR and FCF goals). The awards would vest on December 31, 2021. Participants can earn up to 275% of target for Messrs. Grizzle, MacNeal and Chiappone and 225% of target for Mr. Hershey and Ms. Romano. |
|
AWI 2020 Proxy Statement | 47 |
The following table shows the exercise of stock options by each NEO during 2019, as well as stock awards held by each NEO that became free of restrictions during 2019.
Option Awards | Restricted Stock Awards | |||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($)(1) | ||||||||||||||||
Victor D. Grizzle |
| | 277,658 | 22,537,500 | ||||||||||||||||
Brian L. MacNeal |
| | 59,500 | 4,829,615 | ||||||||||||||||
Charles M. Chiappone |
| | 42,252 | 3,429,595 | ||||||||||||||||
Mark A. Hershey |
| | 27,590 | 2,252,204 | ||||||||||||||||
Ellen R. Romano |
| | 16,899 | 1,380,138 |
(1) | Represents the number of RSUs/ PSUs that vested in 2019. The value realized upon vesting is computed by multiplying the number of units by the value of the underlying shares on the vesting date. |
The performance period for PSUs granted in 2017 ended on December 31, 2019. The final payout determination was made in April 2020 by the Compensation Committee after a review of the Companys performance and certification of achievement of the performance goals. The final 2017 PSU shares paid out and the value realized in April 2020 are set forth below.
Name | 2017 PSU Absolute TSR Shares Granted (#) |
2017 PSU Payout Factor |
2017 PSU (#) |
PSU Absolute ($) |
||||||||||||
Victor D. Grizzle |
37,500 | 300 | % | 112,500 | 8,249,625 | |||||||||||
Brian L. MacNeal |
6,115 | 300 | % | 18,345 | 1,345,239 | |||||||||||
Charles M. Chiappone |
4,342 | 300 | % | 13,026 | 955,197 | |||||||||||
Mark A. Hershey |
2,752 | 300 | % | 8,256 | 605,412 | |||||||||||
Ellen R. Romano |
1,658 | 300 | % | 4,974 | 364,743 | |||||||||||
Name | 2017 PSU FCF Shares Granted (#) |
2017 PSU FCF Payout Factor |
2017 PSU FCF (#) |
PSU FCF Value on ($) |
||||||||||||
Victor D. Grizzle |
12,500 | 152 | % | 19,000 | 1,393,270 | |||||||||||
Brian L. MacNeal |
2,038 | 152 | % | 3,098 | 227,176 | |||||||||||
Charles M. Chiappone |
1,448 | 152 | % | 2,201 | 161,399 | |||||||||||
Mark A. Hershey |
8,255 | 152 | % | 12,548 | 920,145 | |||||||||||
Ellen R. Romano |
4,973 | 152 | % | 7,559 | 554,301 |
(a) | Value at $73.33, the closing price of our shares of Common Stock on April 1, 2020, the date of Compensation Committee final payout determination. |
48 | AWI 2020 Proxy Statement |
|
The table below shows the present value of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each such NEO, under the RIP and the RBEP as of December 31, 2019. The amounts were determined using the same interest rate and mortality rate assumptions used in the Companys Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019. Information regarding the RIP and RBEP can be found in Note 18 to the Companys Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019.
Name | Plan Name |
Number of Years (#) |
Present Value
of ($) |
Payments During ($) |
||||||||||
Victor D. Grizzle |
Not eligible |
|
|
|
|
|
|
|
|
| ||||
Brian L. MacNeal |
Not eligible |
|
|
|
|
|
|
|
|
| ||||
Charles M. Chiappone |
Not eligible |
|
|
|
|
|
|
|
|
| ||||
Mark A. Hershey |
Not eligible |
|
|
|
|
|
|
|
|
| ||||
|
Retirement Income Plan for Employees of Armstrong World Industries, Inc. | 36.5 | 1,878,960 | | ||||||||||
Ellen R. Romano |
|
|
|
|
|
|
|
|
|
| ||||
|
Retirement Benefit Equity Plan of Armstrong World Industries, Inc. | 36.5 | 1,708,916 | |
|
AWI 2020 Proxy Statement | 49 |
PENSION BENEFITS (CONTINUED)
50 | AWI 2020 Proxy Statement |
|
The table below shows the executive contributions, earnings and account balances for each NEO who participates in the NQDCP.
Name | Executive Contributions in 2019 ($)(1) |
Registrant Contributions in 2019 ($)(2) |
Aggregate Earnings in 2019 ($) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at 12/31/19 ($) |
|||||||||||||||
Victor D. Grizzle |
105,593 | 79,195 | 139,065 | | 944,859 | |||||||||||||||
Brian L. MacNeal |
36,648 | 27,486 | 56,148 | | 283,677 | |||||||||||||||
Charles M. Chiappone |
6,242 | 5,618 | 10,334 | | 67,921 | |||||||||||||||
Mark A. Hershey |
35,635 | 26,726 | 115,674 | | 659,167 | |||||||||||||||
Ellen R. Romano |
20,247 | 15,185 | 10,296 | | 75,824 |
(1) | The amount in this column is also reported as either Salary or Non-Equity Incentive Plan Compensation in the SCT. |
(2) | The amount in this column is also reported in the All Other Compensation column of the SCT. |
(3) | The table below reflects amounts reported in the aggregate balance at last fiscal year end that were previously reported as compensation to the NEO in the SCT for previous years. |
Name | Amount Previously Reported ($) |
|||
Victor D. Grizzle |
580,878 | |||
Brian L. MacNeal |
143,647 | |||
Charles M. Chiappone |
11,952 | |||
Mark A. Hershey |
370,609 | |||
Ellen R. Romano |
32,310 |
|
AWI 2020 Proxy Statement | 51 |
The tables below summarize the estimated value of the potential payments and benefits under the Companys plans and arrangements to which each NEO would be entitled upon termination of employment under the circumstances indicated. Except for the continuation of health and welfare benefits and outplacement support, amounts would be paid as a lump sum at termination. The amounts shown assume that such termination was effective December 31, 2019.
The Change in Control column assumes that there is no limitation on payments under the best net provision in each CIC agreement relating to tax under Section 4999 of the Internal Revenue Code. Amounts in the Change in Control column are double trigger payments and are therefore applicable only in the event both a change in control (CIC) event and either an involuntary (without cause) termination or a termination for Good Reason under the CIC agreement occur. The PSUs are valued at target for purposes of the tables below.
Victor D. Grizzle
|
Reason for Termination | |||||||||||||||
Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
Cash Severance |
| | $ | 3,200,000 | $ | 3,200,000 | $ | 4,000,000 | ||||||||
Health & Welfare Benefit Continuation |
| | | | 44,433 | |||||||||||
Outplacement Support |
| | 30,000 | 30,000 | 30,000 | |||||||||||
Pro-rated Bonus |
| | 800,000 | 800,000 | 800,000 | |||||||||||
Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
Performance Shares |
| | | | 13,800,152 | |||||||||||
Restricted Stock |
| | | | | |||||||||||
Stock Options |
| | | | | |||||||||||
|
||||||||||||||||
Total |
| | $ | 4,030,000 | $ | 4,030,000 | $ | 18,674,585 |
Brian L. MacNeal
|
Reason for Termination | |||||||||||||||
Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
Cash Severance |
| | $ | 1,071,000 | $ | 1,071,000 | $ | 1,428,000 | ||||||||
Health & Welfare Benefit Continuation |
| | | | 59,697 | |||||||||||
Outplacement Support |
| | 30,000 | 30,000 | 30,000 | |||||||||||
Pro-rated Bonus |
| | 267,750 | 267,750 | 267,750 | |||||||||||
Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
Performance Shares |
| | | | 2,131,240 | |||||||||||
Restricted Stock |
| | | | | |||||||||||
Stock Options |
| | | | | |||||||||||
|
||||||||||||||||
Total |
| | $ | 1,368,750 | $ | 1,368,750 | $ | 3,916,687 |
52 | AWI 2020 Proxy Statement |
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (CONTINUED)
Charles M. Chiappone
|
Reason for Termination | |||||||||||||||
Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
Cash Severance |
| | $ | 1,058,400 | $ | 1,058,400 | $ | 1,411,200 | ||||||||
Health & Welfare Benefit Continuation |
| | | | 64,224 | |||||||||||
Outplacement Support |
| | 30,000 | 30,000 | 30,000 | |||||||||||
Pro-rated Bonus |
| | 264,600 | 264,600 | 264,600 | |||||||||||
Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
Performance Shares |
| | | | 1,718,054 | |||||||||||
Restricted Stock |
| | | | | |||||||||||
Stock Options |
| | | | | |||||||||||
|
||||||||||||||||
Total |
| | $ | 1,353,000 | $ | 1,353,000 | $ | 3,488,078 |
Mark A. Hershey
|
Reason for Termination | |||||||||||||||
Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
Cash Severance |
| | $ | 1,046,280 | $ | 1,046,280 | $ | 1,395,040 | ||||||||
Health & Welfare Benefit Continuation |
| | | | 56,601 | |||||||||||
Outplacement Support |
| | 30,000 | 30,000 | 30,000 | |||||||||||
Pro-rated Bonus |
| | 261,570 | 261,570 | 261,570 | |||||||||||
Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
Performance Shares |
| | | | 2,501,951 | |||||||||||
Restricted Stock |
| | | | 424,087 | |||||||||||
Stock Options |
| | | | | |||||||||||
|
||||||||||||||||
Total |
| | $ | 1,337,850 | $ | 1,337,850 | $ | 4,669,249 |
Ellen R. Romano
|
Reason for Termination | |||||||||||||||
Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
Cash Severance |
| | $ | 763,600 | $ | 763,600 | $ | 1,018,133 | ||||||||
Health & Welfare Benefit Continuation |
| | | | 30,567 | |||||||||||
Outplacement Support |
| | 30,000 | 30,000 | 30,000 | |||||||||||
Pro-rated Bonus |
| | 180,637 | 180,637 | 180,637 | |||||||||||
Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
Performance Shares |
| | | | 1,525,415 | |||||||||||
Restricted Stock |
| | | | 281,440 | |||||||||||
Stock Options |
| | | | | |||||||||||
|
||||||||||||||||
Total |
| | $ | 974,236 | $ | 974,236 | $ | 3,066,192 |
|
AWI 2020 Proxy Statement | 53 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (CONTINUED)
54 | AWI 2020 Proxy Statement |
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (CONTINUED)
CIC Arrangements Key Terms
We will not provide tax gross-ups under Sections 280G and 4999 of the Internal Revenue Code to any of our officers. Set forth below are certain key terms of the CIC agreements:
Term of Agreement |
Fixed one-year term that automatically renews for an additional year unless notice is given at least 90 days prior to the anniversary of intent not to renew; term automatically continues for two years if the CIC occurs during term | |
Severance Benefits |
2.5 times base salary plus target AIP for Mr. Grizzle, two times base salary plus target AIP for Messrs. MacNeal, Chiappone, and Hershey and Ms. Romano | |
Pro rata AIP |
Prorated target AIP bonus for year of termination | |
Accelerated Equity Vesting |
Double-trigger accelerated vesting (requires a CIC and qualifying termination of employment) for stock options, RSUs, PSUs and other equity grants to vest if assumed by the acquirer; the Compensation Committee may cash out equity grants if not assumed by the acquirer. | |
280G Taxation |
Any amounts paid under the CIC Agreement will be reduced to the maximum amount that can be paid without being excess parachute payments under Internal Revenue Code Section 280G and that are subject to the excise tax imposed under Internal Revenue Code Section 4999, but only if the after-tax benefit of the reduced amount is higher than the after-tax benefit of the unreduced amount |
|
AWI 2020 Proxy Statement | 55 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (CONTINUED)
56 | AWI 2020 Proxy Statement |
|
Securities authorized for issuance under equity compensation plans as of December 31, 2019.
|
(a) Number of securities to be issued upon exercise of outstanding options, warrants, and rights |
(b) Weighted-average exercise price of outstanding options, warrants, and rights |
(c) Number of securities remaining available for future Issuance under equity compensation plans (excluding securities reflected in column (a)) | |||
Equity compensation plans approved by security holders |
824,642(1) | $40.84(2) | 2,528,536(3) | |||
Equity compensation plans not approved by security holders |
| Not Applicable | | |||
Totals | 824,642 | $40.84(2) | 2,528,536(3) |
(1) | Includes RSUs, PSUs and stock options to purchase our shares of Common Stock granted under the Companys 2016 LTIP and the 2008 and 2016 Directors Stock Unit Plans. |
(2) | Represents the weighted-average exercise price of the outstanding stock options only; the outstanding RSUs and PSUs are not included in this calculation. |
(3) | Reflects shares available pursuant to the issuance of stock options, RSUs, PSUs, or other stock-based awards under the 2016 LTIP and the 2008 and 2016 Director Stock Unit Plans. The aggregate number of shares of Common Stock reserved for the grant or settlement of awards under the 2016 LTIP (Share Limit) is 5,142,138, subject to adjustment as provided therein. With respect to awards granted on or after June 24, 2011, the number of shares of Common Stock reserved for award and issuance under this LTIP is reduced on a one-for-one basis for each Common Share subject to a Stock Option or Stock Appreciation Right and is reduced by a fixed ratio of 1.6 shares of Common Stock for each Common Share subject to a Restricted Stock Award or Stock Unit granted under the LTIP. |
|
AWI 2020 Proxy Statement | 57 |
ADDITIONAL MEETING INFORMATION (CONTINUED)
|
AWI 2020 Proxy Statement | 59 |
ADDITIONAL MEETING INFORMATION (CONTINUED)
The Board knows of no matters other than the foregoing to come before the meeting. However, if any other matters properly come before the meeting, the persons named in the enclosed proxy will vote in their discretion with respect to such other matters.
60 | AWI 2020 Proxy Statement |
|
A list of shareholders entitled to vote at the Annual Meeting will be available for examination by shareholders at the Annual Meeting through the website portal for shareholders (see Additional Meeting Information section above).
62 | AWI 2020 Proxy Statement |
|
ANNEX A to Armstrong World Industries, Inc. 2020 Proxy Statement
To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (GAAP), the Company provides additional measures of performance adjusted to exclude the impact of restructuring charges and related costs, impairments, the non-cash impact of the U.S. pension plan and certain other gains and losses. The Company uses these adjusted performance measures in managing the business, including communications with its Board of Directors and employees, and believes that they provide users of this financial information with meaningful comparisons of operating performance between current results and results in prior periods. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance, as well as prospects for its future performance. These non-GAAP measures should not be considered in isolation or as a substitute for the most comparable GAAP measures. Non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies. Dollars are in millions unless otherwise indicated.
2019 | ||||
Adjusted EBITDA* |
$ | 403 | ||
Depreciation and Amortization** |
(75 | ) | ||
Operating Income, Adjusted |
$ | 328 | ||
U.S. Pension Expense |
(5 | ) | ||
Litigation Expense |
(20 | ) | ||
WAVE Items |
16 | |||
Net Environmental Expenses |
(1 | ) | ||
Operating Income, Reported |
$ | 317 | ||
MINERAL FIBER |
||||
2019 | ||||
Adjusted EBITDA |
$ | 358 | ||
Depreciation and Amortization |
(63 | ) | ||
Operating Income, Adjusted |
$ | 296 | ||
Litigation Expense |
$ | (20 | ) | |
WAVE Items |
$ | 16 | ||
Net Environmental Expenses |
(1 | ) | ||
Operating Income, Reported |
$ | 290 | ||
ARCHITECTURAL SPECIALTIES |
||||
2019 | ||||
Adjusted EBITDA |
$ | 45 | ||
Depreciation and Amortization |
(9 | ) | ||
Operating Income, Reported |
$ | 36 | ||
UNALLOCATED CORPORATE |
||||
2019 | ||||
Adjusted EBITDA |
$ | 6 | ||
Depreciation and Amortization |
$ | (3 | ) | |
Operating Income, Adjusted |
$ | (3 | ) | |
U.S. Pension Expense |
(5 | ) | ||
Operating Income (Loss), Reported |
$ | (8 | ) | |
CASH FLOW |
||||
2019 | ||||
Net cash from operations |
$ | 183 | ||
Net cash (used for) investing activities |
(89 | ) | ||
Add: Acquisition, net |
56 | |||
Add: Litigation |
23 | |||
Add: Environmental payment, net |
5 | |||
Add: Net payments from the sale of international businesses to Knauf International GmbH |
66 | |||
Adjusted Free Cash Flow |
$ | 244 |
|
AWI 2020 Proxy Statement | 63 |
ARMSTRONG WORLD INDUSTRIES, INC. Mark A. Hershey 2500 COLUMBIA AVENUE
LANCASTER, PA 17603
VOTE BY INTERNET - www.proxyvote.com Before The Meeting: www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/AWI2020
You may attend the
meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your
voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we
have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY
THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
For Withhold For All To withhold authority to vote for any All All Except individual nominee(s), mark For All
Except and write the number(s) of the
The Board of Directors recommends you vote FOR the following: nominee(s) on the line below.
1. Election of Directors
Nominees
01 Stan A. Askren 02 Victor D. Grizzle 03 Tao Huang 04 Barbara L. Loughran
06 James C.
Melville 07 Wayne R. Shurts 08 Roy W. Templin 09 Cherryl T. Thomas
The Board of Directors recommends you vote FOR proposals 2 and 3.
2 To ratify the selection of KPMG LLP as our independent registered public accounting firm for 2020.
3 To approve, on an advisory basis, our executive compensation program.
NOTE: Such other
business as may properly come before the meeting or any adjournment thereof. In their discretion, the proxy holders are authorized to vote such other business as may properly come before the meeting or any postponement or adjournment thereof. Please
sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership,
please sign in full corporate or partnership name by authorized officer.
05 Larry S. McWilliams
For Against Abstain
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement
are available at www.proxyvote.com
ARMSTRONG WORLD INDUSTRIES, INC. Annual Meeting of Shareholders June 25, 2020 8:00 AM
This proxy is solicited by the Board of Directors
The undersigned hereby appoints Victor D.
Grizzle and Larry S. McWilliams as proxies, each with full power of substitution, to represent and vote as designated on the reverse side, all of the common shares of Armstrong World Industries, Inc. held of record by the undersigned on April 21,
2020, at the Annual Meeting of Shareholders to be held on July 25, 2020 at 8:00 a.m., or any adjournment or postponement thereof.
This proxy, when properly
executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors recommendations.
Continued and to be signed on reverse side