Director Compensation and Ownership Guidelines

Director Compensation and Ownership Guidelines

Members of the Board, who are not employees of the Company (“Independent Directors”), receive compensation for their service in the form of cash and equity. Each form of compensation is evaluated by the Compensation Committee on an annual basis. The Compensation Committee believes director pay should be aligned with the long-term interests of shareholders, so it has historically given substantial weight to the equity component, which represented 69% of our Independent Directors median total compensation in 2017. As part of their annual review process, the Compensation Committee evaluates a variety of sources and benchmarks the compensation we pay our Independent Director’s against our peer group and relevant market data. It also consults with an independent compensation consulting firm, Frederic W. Cook & CO., Inc. prior to issuing a recommendation to the Board, which it has historically done in April. Following this process provides the Compensation Committee with more visibility into director pay trends based on the most recently disclosed public filings of peer companies included in its analysis. Accordingly, the Compensation Committee has determined that the compensation we pay our Independent Directors falls slightly above the median of our 2017 peer group.

Director Cash Compensation

We pay our Independent Directors an annual cash retainer. We do not pay any meeting fees to our directors. The Chairman of the Board, Committee Chairpersons and one Executive Committee member receive an additional annual retainer for their services. We also reimburse directors for out-of-pocket expenses incurred in connection with their service. Annual retainers are paid in four equal quarterly installments. The table on the right sets forth the current annual retainer schedule for our Independent Directors.

(1) On April 1, 2017, we increased the annual retainer for our Independent Directors from $60,000 to $65,000.
(2) On April 1, 2017, we increased the annual retainer for the Chairperson of the Board from $75,000 to $100,000.

Director Equity Compensation

We typically grant full-value equity awards to non-management directors upon appointment or election to the Board, and annually thereafter during the director’s term. We anticipate that we will continue to grant annual equity awards to non-management directors at some level for the foreseeable future. Since 2010, the aggregate grant date fair value (“AGD Fair Value”) of such awards has been approximately $135,000.

On April 18, 2017, we granted each non-management director an equity award of 3,365 restricted stock units (“RSUs”) representing 69% of the total median compensation. The RSU awards will vest on April 18, 2018, and each director had the option of deferring receipt of the shares underlying the RSUs until his or her separation of service.

Director Compensation Table

The following table provides information about the compensation that our directors earned during fiscal year 2017. The table does not include Ms. Salka, who received no additional compensation for her service as a director.

(1) The amount set forth in this column represents the AGD Fair Value of the 3,365 RSUs we granted each of our directors on April 18, 2017, which will vest on April 18, 2018.

Director Equity Ownership Requirement

The Board believes that all directors should maintain a meaningful personal financial stake in the Company to further align their long-term interests with those of our shareholders. Accordingly, it is the Board’s desire that each non-management director will hold Common Stock and vested but unsettled RSUs of the Company equal to a value of at least three times the director’s annual cash retainer (i.e., $195,000).

The value of unvested RSUs and vested or unvested SARs and options are not taken into account in determining whether a director meets our director equity ownership guidelines. As of December 31, 2017, all of our directors satisfy our director equity ownership guidelines.


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