PROPOSAL 2 - ADVISORY VOTE TO APPROVE THE COMPANYS EXECUTIVE COMPENSATION
We seek our stockholders advisory (non-binding) vote to approve the compensation of our named executive officers as
described in the Compensation Discussion and Analysis (CD&A), the executive compensation tables, and the accompanying narrative disclosure regarding named executive officer compensation. This advisory proposal, known as a say-on-pay
vote, gives stockholders the opportunity to vote whether or not to approve the compensation of our named executive officers as described in this proxy statement.
We
recognize the interest our stockholders have in the Companys executive compensation program. As such, we currently hold an annual say-on-pay vote. Our next say-on-pay vote will occur at our 2017 annual meeting.
The Companys executive compensation programs are designed to attract, engage and retain highly qualified executive officers. The Company has a strong pay for
performance philosophy and, as a result, the compensation paid to our named executive officers is
closely aligned with the Companys performance. We encourage stockholders to review the CD&A for a detailed description of our executive compensation program. The Board recommends that
stockholders vote FOR the following resolution:
RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to the
Companys named executive officers as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the accompanying executive compensation tables and the related narrative discussion.
This vote is advisory, which means that it is not binding on the Board or the Compensation Committee, nor will it affect any compensation paid or awarded to any named
executive officer. However, the Board and the Compensation Committee will review and consider the voting results when evaluating our future executive compensation arrangements.
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The Board recommends a vote FOR the advisory vote to approve the Companys executive
compensation.
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This Compensation Discussion and Analysis provides a detailed discussion of our executive compensation philosophy and
programs, the compensation decisions that the Compensation Committee has made under those programs and the factors considered in making those decisions. We also provide details regarding the
individual components of our executive compensation programs and explain how and why the Compensation Committee makes decisions to establish executive compensation at particular levels. Our named
executive officers (NEOs) for 2015 were:
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NEO
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Title
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Patrick J. Dempsey
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President and Chief Executive Officer
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Christopher J. Stephens, Jr.
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Senior Vice President, Finance and Chief Financial Officer
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Scott A. Mayo
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Senior Vice President, Barnes Group Inc. and President, Barnes Industrial
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Richard R. Barnhart
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Senior Vice President, Barnes Group Inc. and President, Barnes Aerospace
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Dawn N. Edwards
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Senior Vice President, Human Resources
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16
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BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
During 2015, we continued to transform the Company towards becoming a global provider of highly-engineered products and
differentiated industrial technologies. We made substantial progress executing this transformation by enhancing our business portfolio through strategic acquisitions and driving operational excellence initiatives deeper into our operations through
our Barnes Enterprise System.
We acquired two new companies in the plastic injection molding industry in 2015: Thermoplay, a leader in the design, development and
manufacturing of hot runner solutions for plastic injection molding applications; and Priamus Systems Technologies, a technology leader in the development of advanced process control systems for plastic injection molding.
The Companys annual compensation program closely links compensation to Company performance and results. Short term non-equity incentive compensation in 2015 was
78%-92% lower than in 2014, reflecting the Companys lower than expected financial performance, notwithstanding the Companys strategic accomplishments described above.
The Companys executive compensation programs for 2015 remained relatively unchanged from 2014, with the exception of two key changes to our annual and long-term
compensation performance measures. For our annual incentive program, we replaced operating margin (Operating Margin or OM) as a performance measure with days working capital (DWC) to incentivize management to improve cash generation. For our
long-term compensation program, we replaced the
diluted earnings per share (EPS) growth relative to the Russell 2000 measure with return on invested capital (ROIC) based on an absolute internal measure. These changes are consistent with our
growth strategy that requires focus on effective capital management and prioritizing cash generation.
For our 2015 annual compensation program, we continued to use
Company-wide consolidated revenue (Revenue) and diluted EPS, plus our new measure, DWC. These three corporate measures applied to Messrs. Dempsey and Stephens and Ms. Edwards. Messrs. Mayo and Barnhart were each measured 40% on these
corporate measures and 60% on the performance of the Industrial segment and Aerospace segment, respectively. Overall, this combination of performance measures is designed to emphasize profitability and productivity, and drive sales growth.
Results under our 2015 annual compensation program are determined first according to GAAP but then may be adjusted to include or exclude certain unusual, non-recurring,
or other adjustments such as foreign exchange fluctuations relative to internal planned rate and pension lump sum settlement chargesall in accordance with Section 162(m) of the Internal Revenue Code and as provided under our stockholder
approved Performance-Linked Bonus Plan (PLBP). The Compensation Committee also retains negative discretion in accordance with Section 162(m) of the Internal Revenue Code to further reduce, but not increase, actual awards paid to NEOs under
the PLBP. The adjusted financial performance results certified by the Compensation Committee under the PLBP are non-GAAP financial measures.
For Messrs. Dempsey and Stephens and
Ms. Edwards, we calculated annual incentive compensation using the following corporate measures and weighting (resulting in a payout of 45% of target):
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Corporate Performance Measures
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Weighting (%)
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As Certified
2015 Results
*
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Comparison to Target
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Diluted EPS
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60%
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$
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2.39
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$0.05 below target
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Revenue (in millions)
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20%
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$
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1,200
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$98 below target
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Days Working Capital (DWC)
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20%
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127
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6 days above target
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For Mr. Mayo, we calculated annual incentive compensation using the above corporate measures and weighting, and the following
measures and weighting for the Industrial segment (resulting in a payout of 24% of target):
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Industrial Segment Performance Measures
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Weighting (%)
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As Certified
2015 Results
*
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Comparison to Target
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Operating Profit (in millions)
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60%
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$
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120
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$20 below target
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Revenue (in millions)
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20%
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$
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797
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$28 below target
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Days Working Capital (DWC)
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20%
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114
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4 days above target
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BARNES GROUP INC. 2016 PROXY STATEMENT
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17
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COMPENSATION DISCUSSION AND ANALYSIS
For Mr. Barnhart, we calculated annual incentive compensation using the above corporate measures and weighting, and the following measures and weighting for the
Aerospace segment (resulting in a payout of 0% of target):
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Aerospace Segment Performance Measures
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Weighting (%)
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As Certified
2015 Results
*
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Comparison to Target
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Operating Profit (in millions)
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60%
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$
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36
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$19 below target
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Revenue (in millions)
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20%
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$
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365
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$79 below target
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Days Working Capital (DWC)
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|
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20%
|
|
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142
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14 above target
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*
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Detailed descriptions of the measures and process used to determine adjustments can be found below in the Annual Cash Incentive Awards section on page 24.
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Long-term incentive awards are the largest component of our NEOs annual compensation opportunity. The program consists of performance share
awards (PSAs) that are earned based on key performance criteria; restricted stock units (RSUs); and stock options. Our 2015 measures and weightings are shown below:
The performance share award component of our long-term program for 2015 measures the Companys relative performance over a
three-year period against the performance of Russell 2000 Index companies for Total Shareholder Return (TSR) and EBITDA growth and three-year ROIC performance against an absolute internal goal. The grants made in 2015 cover the 2015 to 2017
performance period. Payouts, if any, under the 2015 grants will be made in 2018.
In 2015, the 2012 grant of Relative Measure PSAs (renamed the PSA program in 2015)
paid out at 134% of target (50
th
percentile), based on the following certified performance results:
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Performance Measure
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3 Year
Growth
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Relative
Performance
Level
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TSR
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57%
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48
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%ile
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EBITDA Growth (in millions)
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46%
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65
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%ile
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Basic EPS Growth
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43%
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68
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%ile
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18
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|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION DISCUSSION AND ANALYSIS
SAY-ON-PAY VOTE
The Compensation Committee believes that our executive compensation programs are consistent with our pay-for-performance
philosophy. Each year, we evaluate our programs in light of market conditions, stockholder views (including the results of our annual say-on-pay resolution), and governance considerations, and make changes deemed appropriate for our business. At the
2015 annual stockholders meeting, we had relatively strong support from our stockholders with respect to the compensation of our NEOs, with over 78% of the votes cast in favor of our say-on-pay resolution. We continue to evaluate our compensation
programs by taking into account the voting results, other investor feedback through our annual outreach efforts, and other factors used in assessing our executive compensation programs as discussed in this CD&A.
As part of our annual outreach efforts in 2015, we met with 8 select institutional shareholders (representing
approximately 21% of our holdings) to better understand specific concerns related to our executive compensation programs. While we generally received positive feedback on our current structure, we also heard general concerns regarding the special
equity awards granted to our NEOs in 2014 that were provided to incentivize and ensure the execution of our transformation strategy. Based on this feedback, we have not made significant changes to our structure but we have limited our use of special
equity awards over the last two grant cycles.
EXECUTIVE COMPENSATION
PHILOSOPHY
We believe that executive compensation should support and reinforce the companys pay-for-performance philosophy.
Consequently, our NEO compensation is closely aligned with the Companys performance on both a short and long-term basis. We tie a significant portion of the compensation opportunity for our NEOs directly to the Companys stock performance
and other objectives that we believe influence and affect stockholder value. As a result, if the Companys performance meets or exceeds pre-established performance targets, including achieving performance levels at or above the 50th percentile
compared to Russell 2000 Index companies, and/or our stock price increases, the NEOs can realize significant compensation in the form of annual cash incentive payouts and long-term equity payouts. If the Companys performance does not meet
pre-established performance targets, such as performance below the 50th percentile compared to Russell 2000
Index companies or other performance targets, and/or our stock price declines, the NEOs have significant downside financial risk.
The Company aims to provide our NEOs with total direct compensation targeted in a range around the median compared to a defined peer group of companies (the Peer Group).
Individual executive compensation may be above or below the target range based on the individuals performance, experience, skill set and responsibilities. We also use survey data to inform the Compensation Committee about the external market
value of our executive roles. We believe that targeting the median range for total direct compensation provides appropriate compensation levels that will attract high quality executives, provide the proper incentives to our NEOs for achievement of
our strategic objectives and retain our NEOs over the long-term.
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BARNES GROUP INC. 2016 PROXY STATEMENT
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19
|
COMPENSATION DISCUSSION AND ANALYSIS
TOTAL DIRECT COMPENSATION IN 2015
Total direct compensation includes the following three elements: annual base salary; annual cash incentive awards; and
long-term incentive awards. The Compensation Committee can vary the performance measures from year to year as needed to reinforce strategic priorities. In addition, our NEOs are eligible for change in control and severance benefits; defined benefit
or defined contribution program benefits; retirement and executive life insurance programs; and certain limited perquisites.
Performance-based compensation in the form of annual and long-term incentives constituted over 80% of 2015 total direct
compensation at target for our CEO and, on average, over 60% of 2015 total direct compensation at target for our other NEOs. The actual mix of compensation for our CEO and other NEOs is shown below.
The
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Summary Compensation Table on page 37 provides details regarding actual compensation for each NEO.
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KEY EXECUTIVE COMPENSATION CHANGE FOR 2016
In 2016, we are changing the number of long-term compensation performance measures from three to two. For the three year
period from January 1, 2016 - December 31, 2018, we will measure Total Shareholder Return (TSR) and Return on Invested Capital (ROIC),
each with a 50% equal weighting. TSR will continue to be measured relative to the Russell 2000 Index and ROIC will continue to be measured on an absolute basis against pre-established targets as
set by the Compensation Committee.
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20
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|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE COMPENSATION GENERAL OBJECTIVES AND PROCESS
The primary objective of the Companys executive compensation program is to support our long-term strategic business
goals of building lasting stockholder value and achieving sustainable profitable growth. To support these goals, our compensation programs for our NEOs are designed to:
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Provide appropriate incentives by linking and balancing significant short- and long-term compensation opportunities to Company performance and TSR;
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Reward NEOs who contribute meaningfully to achieving our strategic objectives;
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Require NEOs to hold a significant equity investment in our Company so that they manage the business from the perspective of stockholders;
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Align our compensation polices with stockholders long-term interests by assigning a significant portion of potential compensation to performance-based pay elements that depend on achieving the Companys
goals, but that do not encourage excessive risk-taking;
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Attract, retain and engage highly qualified individuals by offering competitive, balanced compensation arrangements based upon clear goals that vest on continued employment; and
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Maximize the tax effectiveness of the total compensation and benefits package, and minimize potentially adverse tax and accounting consequences, in each case to the extent practicable.
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The Compensation Committee is responsible for determining the types and amounts of compensation paid to our NEOs. The Compensation Committee uses several tools to make
these determinations, including external consultants and peer group analysis.
External Consultants
Consistent with prior years, we outsourced certain executive compensation analysis services to Mercer, a wholly-owned subsidiary of Marsh & McLennan Companies,
Inc. (Mercer). As part of these services in 2015, Mercer compiled annual competitive compensation data and reviewed the Companys compensation practices in terms of competitiveness, appropriateness and alignment with our performance, as well as
the mix of pay.
The Compensation Committee directly retains a consulting firm, Meridian Compensation Partners, LLC (Meridian), to assist
in its oversight of the executive compensation program, which includes reviewing and assessing information provided by management, including the analysis furnished by Mercer. The fees for Meridian are negotiated directly by the Compensation
Committee and paid by the Company at the Compensation Committees request. Meridian did not provide any services to the Company in 2015 other than advice on executive compensation.
Meridian regularly participates in Compensation Committee meetings, both with and without Company management, and advises the Compensation Committee on compensation
trends and best practices, plan design, pay and performance alignment and the process used to determine the reasonableness of individual compensation awards. The Compensation Committee believes that using a separate consultant helps ensure that the
Companys executive compensation program is reasonable and consistent with Company goals and evolving governance considerations. In addition, the Compensation Committee from time to time directly retains its own outside legal counsel.
Before retaining a compensation consultant or any other external advisor, the Compensation Committee evaluates the independence of such advisors. In 2015, the
Compensation Committee assessed Meridians independence, taking into account SEC Rule 10C-1(b)(4) and the corresponding NYSE independence factors regarding compensation advisor independence. Based on this assessment, the Compensation Committee
believes that there is no conflict of interest and that its advisors are able to independently advise the Compensation Committee.
Peer Group Analysis
A primary data source used in setting NEO compensation is the information publicly disclosed by our Peer Group. The Peer Group is reviewed periodically and updated as
appropriate to take into account changes in the size, scope, financial performance, ownership structure and business focus of the Company and the peer institutions.
In 2013, the Compensation Committee requested a complete review of the Peer Group given the changes to our business with the sale of the Barnes Distribution North
America business in 2013 and the acquisition of
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|
BARNES GROUP INC. 2016 PROXY STATEMENT
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21
|
COMPENSATION DISCUSSION AND ANALYSIS
the Synventive Molding Solutions business in 2012. With the assistance of our former compensation consultant, Frederic W.
Cook & Company, Inc. (Cook), management recommended a preliminary Peer Group. In developing this Peer Group, Cook considered companies: with revenue ranging from about one-half to two times the Companys revenue; that operated in one
of the same industries as the Company; and that used the same distribution channels as the Company. Companies with a significant concentration of ownership by one party were removed from consideration. In addition to the factors described above,
Cook reviewed the following additional criteria to evaluate potential peer companies:
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Primarily focused on manufacturing
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Multiple lines of business
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Involved with specialty products
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Derives at least 25% of its revenue from outside the United States
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Included in the Peer Group assigned to the Company by at least one of the major proxy advisory firms
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Includes the Company in its peer group
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Based on this review, the Compensation Committee approved a new Peer Group in
October 2013 which has not changed and was used in evaluating 2015 NEO compensation. When establishing the Peer Group, the Compensation Committee reviewed the rankings of the Company compared to the Peer Group in a variety of categories, including
Revenue Growth, EBITDA Growth, Net Income Growth, Basic EPS Growth, Return on Average Invested Capital, and TSR.
Our 2015 Peer Group includes the following 24
companies, all of which were part of our 2014 Peer Group:
|
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2015 Peer Group
|
Actuant Corporation
|
|
Esterline Technologies Corporation
|
Altra Holdings Inc.
|
|
Franklin Electric Company
|
B/E Aerospace, Inc.
|
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Graco Inc.
|
Chart Industries
|
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Hexcel Corp.
|
Circor International, Inc.
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IDEX Corporation
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Clarcor, Inc.
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Kennametal Inc.
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Columbus McKinnon Corporation
|
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Nordson Corporation
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Crane Company
|
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Standex International Corp.
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Curtiss-Wright Corporation
|
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TriMas Corporation
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Donaldson Company, Inc.
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Valmont Industries Inc.
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Enpro Industries Inc.
|
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Watts Water Technologies, Inc.
|
Esco Technologies Inc.
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|
Woodward, Inc.
|
For executive positions where public proxy data from our peers is not available, survey data representing similarly sized companies in
manufacturing is used for benchmarking purposes. In addition, in connection with our annual compensation review process, in July 2015 the Compensation Committee reviewed tally sheets for each NEO that provided total compensation information,
including direct compensation and benefits, as well as possible payments under various termination scenarios.
The Role of Executive Officers
Our President and Chief Executive Officer provides the Compensation Committee with a performance assessment for each of the other NEOs. In 2015, Mr. Dempsey
provided the Compensation Committee with his assessments of NEO performance and recommendations on salary changes and annual equity grants. The Compensation Committee uses these assessments, along with other information, to determine NEO
compensation. Mr. Dempsey and
Ms. Edwards, Senior Vice President, Human Resources, regularly attend Compensation Committee meetings at the request of the Compensation Committee, but are not present for any discussion of
their own compensation. In addition, Mr. Stephens, Senior Vice President, Finance, and Chief Financial Officer, provides financial information used by the Compensation Committee to make decisions regarding incentive compensation targets and
related payouts.
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22
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION DISCUSSION AND ANALYSIS
COMPONENTS OF OUR EXECUTIVE COMPENSATION PROGRAM
For 2015, compensation for our NEOs included:
|
|
Annual cash incentive awards;
|
|
|
Long-term incentive awards;
|
|
|
Change in control and severance benefits;
|
|
|
Defined benefit or defined contribution, retirement and executive life insurance programs; and
|
Base salary, annual cash incentive awards and long-term incentive awards are taken into account to
set the target total direct compensation opportunity for each NEO. Based on competitive compensation data compiled by Mercer and presented to the Compensation Committee in December 2014, 2015 target total direct compensation for Messrs. Dempsey,
Stephens, Mayo and Barnhart was at the market median range compared to our Peer Group. Target total direct compensation for Ms. Edwards was at the 75th percentile of the market based on survey data (as robust Head of Human Resources data is not
available in public proxy filings). In setting the target total direct compensation for our NEOs, the Compensation Committee may make decisions that vary from the Peer Group or competitive compensation survey data based on NEO experience,
performance, retention considerations, range of responsibilities, and the nature and complexity of each NEOs role.
Base Salary
Base salaries for executive officers are determined by the Compensation Committee and reviewed annually. They are typically increased at periodic intervals, often at the
time of a change in position or assumption of
new responsibilities. Base salary increases usually take effect on or around April 1
st
of each year, but may be made at other times if
the Compensation Committee deems it appropriate based on internal and external considerations.
In determining whether to award merit-based salary increases to our
NEOs, the Compensation Committee considered a number of factors, including:
|
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Peer Group data and external market information;
|
|
|
Individual performance;
|
|
|
The level of responsibility assumed and the nature and complexity of each NEOs role (including the number of years in the position, any recent promotion or change in responsibility or impact as a
member of management, and the amount, timing and percentage of the last base salary increase);
|
|
|
The leadership demonstrated to create and promote a day-to-day working environment of unwavering integrity, compliance with applicable laws and the Companys ethics policies, and global responsibility; and
|
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The desire to retain NEOs capable of driving achievement of the Companys strategic objectives and the marketability and criticality of retention of NEOs.
|
In 2015, the Compensation Committee continued to focus on performance-based compensation and did not increase the base salary of any NEO other than Mr. Dempsey.
Mr. Dempseys base salary was increased effective April 1, 2015 by $25,000, from $775,000 to $800,000, a 3.13% increase, reflecting competitive market information and a desire by the Compensation Committee to reward Mr. Dempsey
for his performance and continued growth as CEO.
NEO Base Salary Levels 2014 - 2015
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
Base Salary
Effective
December 31,
2014
|
|
|
Base Salary
Effective
December 31,
2015
|
|
|
Change in
Annual Base
Salary ($)
|
|
|
Change in
Annual Base
Salary (%)
|
|
P. Dempsey
|
|
$
|
775,000
|
|
|
$
|
800,000
|
|
|
$
|
25,000
|
|
|
|
3.13
|
%
|
C. Stephens, Jr.
|
|
$
|
461,000
|
|
|
$
|
461,000
|
|
|
$
|
0
|
|
|
|
0
|
%
|
S. Mayo
|
|
$
|
425,000
|
|
|
$
|
425,000
|
|
|
$
|
0
|
|
|
|
0
|
%
|
R. Barnhart
|
|
$
|
375,000
|
|
|
$
|
375,000
|
|
|
$
|
0
|
|
|
|
0
|
%
|
D. Edwards
|
|
$
|
296,000
|
|
|
$
|
296,000
|
|
|
$
|
0
|
|
|
|
0
|
%
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
23
|
COMPENSATION DISCUSSION AND ANALYSIS
Annual Cash Incentive Awards
We pay annual cash incentive awards to reward the performance of our NEOs. Except in circumstances of retirement, death, or disability, or certain instances of
involuntary termination by the Company on or after November 1
st
of an award period, an NEO generally must be employed by us on the payment date to receive an annual cash incentive award. In
2015, all NEOs participated in the PLBP.
Under the PLBP, each NEO is assigned an award opportunity expressed as a percentage of his or her
base salary, which varies by the NEOs role. Each NEOs annual cash incentive payout is generally determined based on our achievement of Company performance objectives.
The chart below details the cash incentive award opportunities available to each NEO for 2015 under the PLBP expressed as a percentage of base salary. Where performance
falls between the threshold, target or maximum performance levels, the cash incentive award opportunity is calculated using straight-line interpolation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Salary
|
|
NEO
|
|
Threshold Level
|
|
|
Target Level
|
|
|
Maximum Level
|
|
P. Dempsey
|
|
|
18.75
|
%
|
|
|
75
|
%
|
|
|
225
|
%
|
C. Stephens, Jr.
|
|
|
12.5
|
%
|
|
|
50
|
%
|
|
|
150
|
%
|
S. Mayo
|
|
|
12.5
|
%
|
|
|
50
|
%
|
|
|
150
|
%
|
R. Barnhart
|
|
|
12.5
|
%
|
|
|
50
|
%
|
|
|
150
|
%
|
D. Edwards
|
|
|
11.25
|
%
|
|
|
45
|
%
|
|
|
135
|
%
|
The Compensation Committee generally establishes the target for each financial performance measure in December of each
year based on review and approval of the Companys annual business plan and budget. These targets are reviewed again at the Compensation Committees next meeting in February along with the Companys full year financial performance.
The Compensation Committee may establish and approve revised targets to the extent the Companys annual business plan and budget are modified within the first 90 days of the year based on the full year performance. We use financial performance
objectives under the PLBP because they are consistent with our focus of driving strong business performance and increasing long-term stockholder value.
For fiscal
year 2015, the corporate performance measures for the PLBP were Diluted EPS, Revenue and DWC, which replaced operating margin as noted
earlier. Diluted EPS is used because it is a principal driver of our stock price. Revenue is used to drive growth in the size of our business. DWC is used to enhance focus on driving cash
flow from operating activities.
For fiscal year 2015, all NEOs were evaluated at least in part on corporate measures. We evaluated NEOs, other than Messrs. Barnhart
and Mayo, based 100% on the corporate measures in recognition of the key role that each plays in the overall management of the Company and in recognition of the impact of overall corporate strategies on segment results. For Messrs. Barnhart and
Mayo, 40% of the determination was based on corporate measures and 60% of the determination was based on measures tied to the performance of their respective business segments, reflecting their specific responsibilities for segment performance.
|
|
|
24
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION DISCUSSION AND ANALYSIS
The charts below set forth the PLBPs performance measures and the weighting of each measure for
the NEOs for 2015:
1
|
The definitions of the segment measures are included in the footnotes to the Segment Goal tables included below.
|
As noted previously, achievement of the financial performance measures under the PLBP is first determined according to
GAAP, but then adjusted under the terms of the PLBP to include or exclude certain extraordinary, unusual or non-recurring items, and other items, all in accordance with Section 162(m) of the Internal Revenue Code. The Compensation Committee
also retains negative discretion in accordance with Section 162(m) of the Internal Revenue
Code to further reduce, but not increase, actual awards paid to the NEOs under the PLBP. The adjusted financial performance results certified by the Compensation Committee under the PLBP are
non-GAAP financial measures.
The charts below detail results certified by the Compensation Committee compared to the goals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Goal
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
As Certified
2015 Results
|
|
Comparison to
Target as a %
|
Diluted EPS
|
|
|
$
|
2.34
|
|
|
|
$
|
2.44
|
|
|
|
$
|
2.80
|
|
|
|
$
|
2.39
|
1
|
|
|
|
62.5
|
%
|
Revenue (in millions)
|
|
|
$
|
1,232
|
|
|
|
$
|
1,298
|
|
|
|
$
|
1,390
|
|
|
|
$
|
1,200
|
2
|
|
|
|
0
|
%
|
Days Working Capital (DWC)
|
|
|
|
128
|
|
|
|
|
121
|
|
|
|
|
118
|
|
|
|
|
127
|
3
|
|
|
|
35.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Segment Goal
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
As Certified
2015 Results
|
|
Comparison to
Target as a %
|
Operating Profit (in millions)
|
|
|
$
|
125.7
|
|
|
|
$
|
139.7
|
|
|
|
|
160.7
|
|
|
|
$
|
120
|
|
|
|
|
0
|
%
|
Revenue (in millions)
|
|
|
$
|
783
|
|
|
|
$
|
825
|
|
|
|
$
|
884
|
|
|
|
$
|
797
|
2
|
|
|
|
49.3
|
%
|
Days Working Capital (DWC)
|
|
|
|
120
|
|
|
|
|
110
|
|
|
|
|
107
|
|
|
|
|
114
|
3
|
|
|
|
71.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace Segment Goal
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
As Certified
2015 Results
|
|
Comparison to
Target as a %
|
Operating Profit (in millions)
|
|
|
$
|
50.0
|
|
|
|
$
|
55.5
|
|
|
|
$
|
63.8
|
|
|
|
$
|
36.2
|
4
|
|
|
|
0
|
%
|
Revenue (in millions)
|
|
|
$
|
422
|
|
|
|
$
|
444
|
|
|
|
$
|
475
|
|
|
|
$
|
365
|
2
|
|
|
|
0
|
%
|
Days Working Capital (DWC)
|
|
|
|
133
|
|
|
|
|
128
|
|
|
|
|
125
|
|
|
|
|
142
|
3
|
|
|
|
0
|
%
|
1
|
As Certified 2015 Diluted EPS is based on reported diluted EPS, excluding the effects of acquisitions, certain foreign currency fluctuations, other unusual items including certain tax benefits, gain on sale
of building, contract termination dispute changes and pension lump sum settlement charges and adjusted for the impact of restructuring activities, under the terms of the PLBP.
|
2
|
As Certified 2015 Revenue corporate performance measure is based on reported Revenue, adjusted for the impact of foreign currency fluctuations, under the
terms of the PLBP. As Certified 2015 Revenue for the business-segment specific portion of Mr. Mayos annual incentive compensation is based on reported revenue for the Industrial segment, adjusted for the impact of foreign
currency, under the terms of the PLBP. As Certified 2015 Revenue for the business segment-specific portion of Mr. Barnharts annual incentive compensation is based on reported revenue for the Aerospace segment, excluding Barnes
Aerospace aftermarket revenue sharing programs (RSPs).
|
3
|
As Certified 2015 DWC corporate performance measure is based on accounts receivables (what our customers owe) plus inventory (generally material, labor and overhead costs used to produce products we sell to
customers) less accounts payables (generally what we owe our suppliers for products and services we purchase) based on a 5 point average.
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
25
|
COMPENSATION DISCUSSION AND ANALYSIS
4
|
As Certified 2015 Operating Profit for the business-segment specific portion of Mr. Mayos incentive compensation is based on operating profit for the Industrial segment, adjusted for the impact of
acquisitions and foreign currency fluctuations, under the terms of the PLBP. As Certified 2015 Operating Profit for the business-segment specific portion of Mr. Barnharts annual incentive compensation is based on operating
profit for the Aerospace segment, excluding Barnes Aerospace aftermarket RSPs.
|
The annual cash incentive awards are generally paid in February of the
following calendar year, after the results are certified by the Compensation Committee. The following cash incentive awards were paid to NEOs for 2015 performance based on the results certified by the Compensation Committee:
|
|
|
|
|
|
|
|
|
NEO
|
|
Annual Incentive
Earned
|
|
|
Annual Incentive
Earned as % of Base
Salary in 2015
|
|
P. Dempsey
|
|
$
|
267,840
|
|
|
|
34
|
%
|
C. Stephens, Jr.
|
|
$
|
102,895
|
|
|
|
22
|
%
|
S. Mayo
|
|
$
|
68,799
|
|
|
|
16
|
%
|
R. Barnhart
|
|
$
|
33,480
|
|
|
|
9
|
%
|
D. Edwards
|
|
$
|
59,460
|
|
|
|
20
|
%
|
Long-Term Incentive Compensation
Long-term incentive award opportunities are potentially the largest component of total annual compensation of our NEOs. We
believe that long-term performance is enhanced through the use of awards denominated in share value. These awards reward our NEOs for maximizing stockholder value over time, aligning the interests of our employees and management with those of our
stockholders. When coupled with the ownership requirements described below, our long-term incentive awards encourage our NEOs to maintain a continuing stake in our long-term success and provide an effective way to tie a substantial percentage of
total direct compensation to any increase or decrease in stockholder value.
In 2015, the Company used a combination of time-based equity awards and performance-based equity awards. Particular
emphasis was placed on PSAs, which make up the largest portion of the value of equity awards at the time of grant. In determining the mix of equity grants, the Compensation Committee considered the pay-for-performance philosophy at the Company,
aligning the interests of stockholders and NEOs, past practice, changes in business strategy, competitive practice (both generally and within the Peer Group), and the strategic impact of equity-based compensation (
i.e.,
cost effectiveness,
stockholder dilution, executive retention, a link to Company performance, and total stockholder return).
|
|
|
26
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION DISCUSSION AND ANALYSIS
The following types of long-term incentive awards are currently used under the terms of the 2014
Barnes Group Inc. Stock and Incentive Award Plan (the Stock and Incentive Award Plan):
|
|
|
|
|
|
|
Vehicle
|
|
Target Portion of
Total Long-Term
Incentive
Compensation
|
|
Vesting
|
|
Comments
|
Stock options
|
|
20%
|
|
Time-based vesting; 18, 30, and 42 months from the grant date in equal installments
|
|
Provide an opportunity for compensation only if the Companys stock price increases from the
grant date
|
|
|
|
|
|
|
Grants are priced at the fair market value on the grant date
|
RSUs
|
|
30%
|
|
Time-based vesting; 18, 30, and 42 months from the grant date in equal installments
|
|
Settled in shares of Common Stock
Pays out
dividend equivalents in cash during vesting periods
|
PSAs
|
|
50%
|
|
Performance-based vesting at the end of a 3-year cycle
|
|
Provide an opportunity to receive Common Stock if pre-defined performance measures are met over
the 3-year performance period
|
|
|
|
|
|
|
Settled in shares of Common Stock
|
|
|
|
|
|
|
Accrued dividends are paid out in cash at the end of the 3-year cycle, adjusted for the number of
shares actually earned
|
|
|
|
|
|
|
Based on three equally weighted performance
measuresTSR and EBITDA Growth relative to the Russell 2000 and ROIC based on an absolute internal measure (ROIC replaced EPS Growth for grants made beginning in 2015)
|
Stock options and RSUs are subject to time-based vesting with staggered vesting dates to encourage NEO retention. In
addition to the time-vesting requirements, stock options have value only if the Common Stock price at the time of exercise exceeds the fair market value as of the grant date. This directly correlates to our stockholders interests, and focuses
executives on the long-term growth of Company and stockholder value.
For 2015, the Compensation Committee continued the relative measure component of our long-term
incentive program for TSR and EBITDA growth measures, established in 2011. This relative performance design increases long-term focus and rewards NEOs based on
performance compared to alternative investment opportunities. For 2015, we replaced relative diluted EPS growth with ROIC. ROIC is measured on an absolute rather than a relative basis. TSR and
EBITDA growth are compared separately to the Companys relative performance against Russell 2000 Index companies over a three-year period. Each measure is equally weighted and independently measured. Based on performance, following the end of
the three-year cycle, a payout, if any, is in the form of shares of Common Stock. A payout may range between zero for performance below the threshold level, to 250% of target for exceptional performance at the maximum level or above.
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
27
|
COMPENSATION DISCUSSION AND ANALYSIS
The chart below illustrates potential payouts at various levels of performance for the 2015 PSAs:
|
|
|
|
|
|
|
Performance
Measures
|
|
Performance
Levels
1
|
|
Performance Goals
|
|
2015 Performance
Share Award Payout
Level (% of Target)
|
3-Year Relative TSR
|
|
Threshold
|
|
Achieve 33
rd
percentile ranking within the Russell 2000
|
|
33%
|
|
Target
|
|
Achieve 50
th
percentile ranking within the Russell 2000
|
|
100%
|
|
Maximum
|
|
Achieve 66
th
percentile ranking within the Russell 2000
|
|
150%
|
|
Maximum+
|
|
Achieve 75
th
percentile ranking within the Russell 2000
|
|
200%
|
|
Maximum++
|
|
Achieve 85
th
percentile ranking within the Russell 2000
|
|
250%
|
3-Year ROIC
|
|
Threshold
|
|
Achieve 8.2% 3-Year ROIC
|
|
33%
|
|
Target
|
|
Achieve 9.0% 3-Year ROIC
|
|
100%
|
|
Maximum
|
|
Achieve 9.25% 3-Year ROIC
|
|
150%
|
|
Maximum+
|
|
Achieve 9.5% 3-Year ROIC
|
|
200%
|
|
Maximum++
|
|
Achieve 10.0% 3-Year ROIC
|
|
250%
|
3-Year Relative EBITDA Growth
|
|
Threshold
|
|
Achieve 33
rd
percentile ranking within the Russell 2000
|
|
33%
|
|
Target
|
|
Achieve 50
th
percentile ranking within the Russell 2000
|
|
100%
|
|
Maximum
|
|
Achieve 66
th
percentile ranking within the Russell 2000
|
|
150%
|
|
Maximum+
|
|
Achieve 75
th
percentile ranking within the Russell 2000
|
|
200%
|
|
Maximum++
|
|
Achieve 85
th
percentile ranking within the Russell 2000
|
|
250%
|
1
|
Results between Performance Levels are interpolated.
|
Payouts in the Last Year
.
Payouts under the PSA program occurred in 2015 for the
three-year performance period ending December 31, 2014. The Relative Measure PSA program was renamed as the PSA program in 2015 to reflect the mixture of performance metrics, measured on a relative basis and on an absolute internal basis. In
accordance with the
plan, the Compensation Committee adjusted the reported or actual performance results to include or exclude certain extraordinary, and unusual or non-recurring items. The PSA payout for the period
ending December 31, 2014 resulted in a weighted average payout level of 134%, calculated using the following results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Measure
|
|
As Certified
2011 Results
|
|
|
As Certified
2014 Results
|
|
|
Change
|
|
|
3 Year
Growth
|
|
|
Relative
Performance
Level
|
|
Payout
Level
|
|
TSR
1
|
|
$
|
24.02
|
|
|
$
|
37.69
|
|
|
$
|
13.67
|
|
|
|
57
|
%
|
|
48
th
%ile
|
|
|
94
|
%
|
EBITDA Growth (in millions)
|
|
$
|
183.9
|
2
|
|
$
|
268.2
|
3
|
|
$
|
84.3
|
|
|
|
46
|
%
|
|
65
th
%ile
|
|
|
147
|
%
|
Basic EPS Growth
|
|
|
1.67
|
2
|
|
|
2.38
|
3
|
|
|
.71
|
|
|
|
43
|
%
|
|
68
th
%ile
|
|
|
162
|
%
|
1
|
TSR represents the comparison between the average closing price for the 20 days before the grant and the average closing price for the final 20 days of the performance period, plus cumulative dividends
during the performance period.
|
2
|
As Certified 2011 EBITDA Results and As Certified 2011 Basic EPS Results are based on EBITDA derived from reported amounts and reported basic EPS, respectively, adjusted for the effects of
discontinued operations, and the effects of restructuring activities.
|
3
|
As Certified 2014 EBITDA Results and As Certified 2014 Basic EPS Results are based on EBITDA derived from reported amounts, and reported basic EPS, respectively, adjusted for the effects of
acquisition short term purchase accounting expenses.
|
Based on these results, the following payouts were made to NEOs who received a grant of Relative
Measure PSAs in 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
2012 PSAs
Granted
|
|
|
|
|
Weighted Average
Payout Level
|
|
|
|
|
Payout of
Shares
|
|
|
|
|
Payout of
Accumulated
Dividends
|
|
P. Dempsey
|
|
|
11,800
|
|
|
|
|
|
134
|
%
|
|
|
|
|
15,851
|
|
|
|
|
$
|
20,131
|
|
C. Stephens, Jr.
|
|
|
12,300
|
|
|
|
|
|
134
|
%
|
|
|
|
|
16,523
|
|
|
|
|
$
|
20,984
|
|
R. Barnhart
|
|
|
1,465
|
|
|
|
|
|
134
|
%
|
|
|
|
|
1,967
|
|
|
|
|
$
|
2,498
|
|
D. Edwards
|
|
|
5,600
|
|
|
|
|
|
134
|
%
|
|
|
|
|
7,522
|
|
|
|
|
$
|
9,553
|
|
*
|
Mr. Mayo joined Barnes on March 17, 2014 and therefore did not participate in the 2012 Relative Measure PSA program.
|
|
|
|
28
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION DISCUSSION AND ANALYSIS
Termination Provisions
.
For PSAs, if the participants employment is involuntarily
terminated by the Company without cause before the first anniversary of the PSA grant date, the award is forfeited. If they are terminated after one year, a pro-rata portion of the award based on the number of days the participant was employed
during the applicable performance period is paid based on the Companys actual performance for that performance period relative to target. For stock options and RSUs, if the participants employment is involuntarily terminated by the
Company without cause, any unvested stock options or RSUs will be forfeited and vested options will remain exercisable for one year from the date of termination.
Since 2012, long-term incentive awards require a double trigger for accelerated vesting in the event of a change in control of the Company. In the event of a
change in control as defined in the Stock and Incentive Award Plan, stock options, RSUs, and PSAs will vest and accelerate only if an NEOs employment is terminated by the Company without cause, or if the NEO resigns for good reason (as defined
in the severance agreements) on or within two years following a change in control.
Setting Award Levels
.
Long-term incentive award
opportunities are established by the Compensation Committee according to the NEOs position and
responsibilities, and based on a comparison to our Peer Group and competitive compensation data. In 2015, the Compensation Committee differentiated target awards based on individual NEO
performance, experience, and market positioning.
The Compensation Committee does not take into account existing NEO Common Stock holdings when determining awards
because it believes that doing so could penalize success (if compensation were reduced based on the appreciation of past awards) or reward underperformance (if compensation were awarded to make up for lack of appreciation in stock price).
The Companys practice is to make all equity awards at the first regularly scheduled meeting of the Compensation Committee, which typically occurs early in
February. The Company makes off-cycle equity grants to NEOs in limited circumstances, generally for newly hired executives, promotions, in recognition of special events, or as retention incentives.
2015 Awards
.
As reflected in the above table on page 28, the Compensation Committee established a target mix for all NEOs that placed more
weight on performance-based equity. The same target mix and weighting for equity was used in 2015 as in prior years, with the PSAs at 50%, RSUs at 30% and stock options at 20%.
2015 Long-Term Incentive
Compensation
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
Target Values
|
|
|
Stock Option
Grants
|
|
|
RSU
Grants
|
|
|
PSA
Grants
|
|
P. Dempsey
|
|
$
|
2,800,000
|
|
|
|
65,700
|
|
|
|
23,800
|
|
|
|
39,600
|
|
C. Stephens, Jr.
|
|
$
|
675,000
|
|
|
|
15,800
|
|
|
|
5,700
|
|
|
|
9,500
|
|
S. Mayo
|
|
$
|
475,000
|
|
|
|
11,200
|
|
|
|
4,000
|
|
|
|
6,700
|
|
R. Barnhart
|
|
$
|
450,000
|
|
|
|
10,600
|
|
|
|
3,800
|
|
|
|
6,400
|
|
D. Edwards
|
|
$
|
282,000
|
|
|
|
6,600
|
|
|
|
2,400
|
|
|
|
4,000
|
|
1
|
Annual grants made in February 2015 are shown.
|
NEO Stock Ownership Requirements
|
|
|
Position
|
|
Multiple of
Annual Salary
|
President and Chief Executive Officer
|
|
5x
|
All Other NEOs
|
|
3x
|
All of our NEOs, as well as certain other members of Company leadership, are subject to stock ownership requirements.
Two-thirds of the value of unvested RSUs count toward achieving ownership requirements. There is no deadline to achieve the ownership levels, but all net
after-tax proceeds from Company equity grants, including stock option exercises, must be retained until ownership levels are met. Once ownership levels are met, the requirement is converted to a
fixed number of shares.
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
29
|
COMPENSATION DISCUSSION AND ANALYSIS
As of the end of 2015, compliance with the requirements was as follows:
|
|
|
|
|
NEO
|
|
Fully Met
Ownership
Requirement
|
|
In Progress Toward
Meeting Ownership
Requirement
|
P. Dempsey
|
|
X
|
|
|
C. Stephens, Jr.
|
|
X
|
|
|
S. Mayo
1
|
|
|
|
X
|
R. Barnhart
|
|
X
|
|
|
D. Edwards
|
|
X
|
|
|
1
|
Mr. Mayo joined the Company on March 17, 2014.
|
Risk Considerations
Our executive compensation program motivates and rewards our NEOs for their performance during the fiscal year and over
the long-term and for taking appropriate business risks consistent with our strategic objectives. Our executive compensation program is also designed to mitigate the likelihood that our NEOs would make business decisions that present undue risk:
|
|
|
Our Stock options and RSUs vest ratably over three or more years. Our PSAs vest based on performance at the end of the three-year performance period.
|
|
|
|
Annual cash incentive performance targets are tied to several financial metrics, including basic or diluted EPS, Revenue, and DWC and are quantitative and measurable.
|
|
|
|
The performance periods and vesting schedules for long-term incentives overlap and, therefore, reduce the motivation to maximize performance in any one period.
|
|
|
|
Our stock ownership requirements require our NEOs to own equity representing a significant multiple of their base salary and to retain this equity throughout their tenures.
|
|
|
|
All NEOs have entered into clawback agreements that allow us to recoup incentive compensation in situations where the awards earned by NEOs are based on the achievement of certain financial performance targets that are
later restated and would therefore result in lower awards paid.
|
|
|
|
Payouts under our annual and long-term incentive programs are subject to a cap. Our annual cash incentive award payments are capped (at 2.25 times base salary for the Chief Executive Officer and less for other NEOs).
Performance-based payouts under the PSAs are capped at 2.5 times the target level PSA grant.
|
Based on its most recent evaluation, the Compensation
Committee concluded that the executive compensation programs are designed with the appropriate balance of risk and reward in relation to the Companys business strategy and are not reasonably likely to have a material adverse effect on the
Company. For further discussion on risk oversight of the compensation programs for Company-wide employees, see the Risk Oversight and Assessment Policies and Practices section on page 36 below.
|
|
|
30
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION DISCUSSION AND ANALYSIS
Pension and Other Retirement Programs
Our NEOs have the opportunity to participate in one or more of the following retirement plans:
|
|
|
Plan
|
|
Summary of Features
|
Salaried Retirement Income Plan (SRIP)
|
|
A broad-based tax-qualified defined benefit pension plan; vesting after 5 years of service. This plan was
closed to employees hired on or after January 1, 2013. Eligible new employees receive an annual retirement contribution under the Barnes Group Inc. Retirement Savings Plan of 4% of eligible earnings. All NEOs except Mr. Mayo participate in the
SRIP.
|
|
|
Retirement Savings Plan (RSP)
|
|
401(k): A broad-based tax qualified defined contribution savings plan
with a 401(k) elective deferral and matching contribution feature for all participants. 100% vesting in matching contributions upon 2 years of service. All NEOs may participate in the 401(k) portion of the RSP.
Retirement Contribution
(RC): Employees hired on or after January 1, 2013 who are not eligible to participate in the SRIP also receive an annual Retirement Contribution (RC) of 4% of eligible earnings subject to 5 year graded vesting. Among the NEOs, only Mr. Mayo is
eligible for the RC component of the RSP.
|
Retirement Benefit Equalization Plan (RBEP)
|
|
Provides benefits on base salary earnings in excess of Internal Revenue Service (IRS) limit on qualified
plans that applies to the SRIP or the RC component of the RSP to eligible salaried employees, officers and NEOs who do not meet MSSORP/DC Plan vesting requirements; vesting upon attaining 5 years of service (5 year graded vesting for benefits based
on the RC component of the RSP). All NEOs participate in the RBEP.
|
|
|
Modified Supplemental Senior Officer Retirement Plan
(MSSORP)
|
|
Provides a 55% average final pay benefit (base salary and annual
incentive); benefit is reduced for offsets from prior employer retirement benefits and other Company retirement benefits; vesting upon attaining age 55 and 10 years of service. This program was closed to new or rehired entrants in 2008.
Mr. Dempsey is the only grandfathered participant in the MSSORP.
|
Nonqualified Deferred Compensation Plan (DC Plan)
|
|
Provides an annual Company contribution based on a percent of
base salary and annual incentive in excess of IRS limit on qualified plans; for 2015, the contribution was based on 20% of base salary and annual incentive pay in excess of the IRS limit; vesting upon attaining age 55 and 10 years of service. The
Company closed the plan to employees hired, rehired, or promoted into an eligible position on or after April 1, 2012. Mr. Stephens and Ms. Edwards are grandfathered participants in the DC Plan.
|
The SRIP and RSP are broad-based tax-qualified plans. The RBEP provides the benefits of the SRIP and the RC component of
the RSP in excess of IRS limits on broad-based tax-qualified plans. The MSSORP and the DC Plan are non-tax-qualified supplemental executive retirement plans that provide a higher level of benefits
than are available under the SRIP to certain designated employees and senior level officers, including certain NEOs as reflected in the below table. Both of these plans are closed to new
participants so new executives receive the same benefit levels as qualified plan participants.
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
31
|
COMPENSATION DISCUSSION AND ANALYSIS
The chart below summarizes which NEOs participate in each of the qualified and non-qualified pension and retirement plans. A more detailed discussion of the pension
benefits payable to our NEOs is described in the Pension Benefits Table and the narrative following the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified Plans
|
|
Non-Qualified Plans
|
NEO
|
|
SRIP
|
|
RSP RC
1
|
|
RBEP
|
|
MSSORP
|
|
DC Plan
|
P. Dempsey
2
|
|
X
|
|
|
|
X
|
|
X
|
|
|
C. Stephens, Jr.
|
|
X
|
|
|
|
X
|
|
|
|
X
|
S. Mayo
|
|
|
|
X
|
|
X
|
|
|
|
|
R. Barnhart
|
|
X
|
|
|
|
X
|
|
|
|
|
D. Edwards
|
|
X
|
|
|
|
X
|
|
|
|
X
|
1
|
All NEOs may participate in the RSP (i.e., 401k plan) on the same terms as all other employees, but Mr. Mayo is the only NEO who is eligible to participate in the RC component of the RSP.
|
2
|
If age and service vesting requirements are not met under the MSSORP or the DC Plan, the RBEP benefits apply.
|
Change in Control and Employment Termination Benefits
The Company provides change in control benefits specifically to retain key executives, including NEOs, during a potential change in control, to provide continuity of
management and to provide income continuation for NEOs who are particularly at risk of involuntary termination in the event of a change in control. These benefits are part of a competitive compensation package and keep our executive officers focused
on our business goals and objectives. In some instances these agreements provide for payments and other benefits if we terminate a NEOs employment without cause, or if an NEO terminates employment for good reason,
either before or after a change in control.
As discussed in more detail on page 34, none of the agreements for our NEOs include a gross-up for any taxes as a result
of golden parachute payments under Section 4999 of the Internal Revenue Code. In addition, we generally do not provide change in control cash compensation benefits in excess of two times an executives base salary and annual cash incentive
compensation. Our agreements with our NEOs also provide for continuation of group health, life insurance, and other benefits for twenty-four months following the executives termination and for certain other benefits. The terms of the change in
control and incremental termination benefits payable to our NEOs are described in more detail below under Potential Payments Upon Termination or Change in Control.
Perquisites
In 2015, the Company provided certain limited perquisites to our
NEOs. The perquisites are fully described in the footnotes to the Summary
Compensation Table and generally fall in the categories of financial planning and tax preparation services and annual executive physical examination.
Additional Benefits
All current NEOs, other than Messrs. Barnhart and Mayo,
are grandfathered participants in the Companys Senior Executive Enhanced Life Insurance Program (SEELIP), under which the Company pays the premiums for a life insurance policy with a benefit of four times the employees base salary. The
policy is owned by the NEO but the Company pays the NEOs income tax liability arising from its payment of the premiums and taxes during the NEOs employment. Upon termination or retirement, the Company no longer pays the premium or the income
tax liability. As previously disclosed, the Company closed participation to any employee hired or promoted into an eligible position after April 1, 2011.
Mr. Barnhart is a grandfathered participant in the Companys Enhanced Life Insurance Program (ELIP) under which the Company pays the premiums for a life
insurance policy with a benefit of four times the employees base salary. The policy is owned by the NEO but the Company does not pay the NEOs income tax liability arising from payment of the premiums. Upon termination or retirement, the
Company no longer pays the premiums. The ELIP also has been closed to new participants.
When the SEELIP and ELIP were closed, the Company established the Executive
Group Term Life Insurance Program (EGTLIP) for new NEOs and other eligible executives who were not already participants in the SEELIP or ELIP. The EGTLIP provides premium payments for a term insurance policy with a benefit of four times the
employees base salary. Upon termination or retirement, the Company no longer pays
|
|
|
32
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION DISCUSSION AND ANALYSIS
the premiums. The NEO owns the policy and is responsible for any tax liability (i.e., no tax gross-up) resulting from this
benefit. Mr. Mayo is a participant in the EGTLIP.
Each of our NEOs participates in other employee benefit plans generally available to all U.S. based employees (e.g.,
health insurance) on the same terms as all other employees.
ADDITIONAL INFORMATION
Employment Contracts
Generally, we have no employment contracts with our employees, unless required or customary based on local law or practice. None of our NEOs have an employment contract.
Clawback Agreements
Executives hired or promoted into corporate officer
positions are required to enter into clawback agreements. These agreements permit the Company to recoup or clawback certain annual incentive compensation and performance-based equity awards paid to those officers where the awards were
based on the achievement of certain financial performance targets that were later restated and would therefore have resulted in lower awards paid. The Company has entered into agreements with all NEOs, and select other key employees. In addition,
all of the Companys equity award agreements provide that awards may be forfeited if an employee engages in activity that is detrimental to the Company, including performing services for a competitor, disclosing confidential information, or
otherwise violating the Companys Code of Business Ethics and Conduct. The Compensation Committee has the discretion to make
certain exceptions to the clawback requirements and ultimately determine whether any adjustment will be made.
Hedging and Pledging
The Company prohibits certain members of Company
leadership, including all directors and executive officers (including all NEOs) from engaging in hedging transactions involving the Companys securities.
The
Company prohibits certain members of Company leadership, including all directors and executive officers, from pledging or margin call arrangements involving the Companys securities that are held to meet the Companys stock ownership
requirements. The Company also places other restrictions on any other pledging or margin call arrangements involving Company securities by such individuals. In addition, the ability of these individuals to engage in such transactions requires
pre-approval from the Corporate Governance Committee and an annual certification to the Corporate Governance Committee that the individual is in compliance with the policy. None of our NEOs have pledged Company securities or have Company securities
subject to a margin call arrangement.
TAX AND ACCOUNTING
CONSIDERATIONS
Internal Revenue Code Section 162(m)
As discussed above, our Compensation Committee considers the tax and accounting treatment associated with cash and equity awards it makes, although these considerations
are not the overriding factor that the Compensation Committee uses in making its decisions. Section 162(m) of the Internal Revenue Code places a limit of $1 million on the compensation that the Company may deduct in any one year with respect to
each of its most highly compensated executive officers, unless certain conditions are met. There is an exception to the $1 million limitation for performance-based compensation meeting certain requirements.
The Company currently grants awards intended to meet this exception including annual cash incentive awards, stock option awards, and PSAs. Grants of restricted stock or stock units that vest
solely on the basis of service do not qualify for the exception. To maintain flexibility in compensating NEOs in a manner designed to promote varying Company goals, our Compensation Committee has not adopted a policy requiring all compensation to be
deductible. Our Compensation Committee may approve compensation or changes to plans, programs or awards that may cause the compensation or awards to exceed the limitation under Section 162(m) if it determines that action is appropriate and in
our best interests.
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
33
|
COMPENSATION DISCUSSION AND ANALYSIS
Internal Revenue Code Section 280G
The Company also periodically reviews the severance agreements entered into between the Company and the NEOs to assess the impact of Section 280G of the Internal
Revenue Code. Currently, the severance agreements do not provide for any gross-up to compensate our NEOs for taxes incurred under Section 4999 of the Internal Revenue Code as a consequence of golden parachute payments upon a
change-in-control. Nor do they preclude the possibility that, in certain circumstances, the compensation payable in the event of a change in control under the agreements or other plans and arrangements may be non-deductible by the Company under
Section 280G of the Internal Revenue Code.
Accounting for Equity Compensation
The Company accounts for its stock-based employee compensation plans at fair value on the grant date and recognizes the related cost in its consolidated statement of
income in accordance with accounting standards related to share-based payments. The fair values of stock options are estimated using the Black-Scholes option-pricing model based on certain assumptions. The fair values of RSU awards and PSA awards
with a performance condition are estimated based on the fair market value of the Companys stock price on the grant date. The fair values of PSA awards with a market condition are estimated using a Monte Carlo valuation model based on certain
assumptions.
|
|
|
34
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
COMPENSATION COMMITTEE REPORT
To Our Fellow Stockholders at Barnes Group Inc.
We, the Compensation and
Management Development Committee of the Board of Directors of Barnes Group Inc., have reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement and, based on such review and discussion, have
recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
|
THE COMPENSATION COMMITTEE
|
|
Mylle H. Mangum, Chair
|
Gary G. Benanav
|
Francis J. Kramer
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
35
|
RISK OVERSIGHT AND ASSESSMENT POLICIES AND PRACTICES
Our Audit Committee is ultimately responsible for overall risk oversight for the Company generally. See Board Role
in Risk Oversight on page 8. The Compensation Committee evaluates and reviews our incentive compensation arrangements annually based on an inventory of all relevant compensation programs prepared by the Human Resources department which
includes details of the principal features of the programs, including key risk mitigation factors to ensure that our employees, including our NEOs, are not encouraged to take unnecessary risks in managing our business. These factors include:
|
|
Our target total direct compensation mix represents a balance of short-term and long-term incentive based compensation, that focuses on both short-term and long-term goals and provides a mixture of cash and equity-based
compensation;
|
|
|
Our annual long-term incentive awards vest over three or more years;
|
|
|
Our short-term incentive awards are tied to multiple performance-driven financial metrics;
|
|
|
Payments under our short-term and long-term incentive programs are capped;
|
|
|
We have stock ownership requirements for our executive officers, as well as certain other members of Company leadership, which ensure alignment with our stockholders interests over the long term;
|
|
|
On an annual basis, our executive officers confirm compliance with both our Code of Business Ethics and Conduct and our Securities Law Compliance Policy; and
|
|
|
We have formal clawback agreements with our executive officers.
|
The Compensation Committee also consults with and makes
certain recommendations to the Board regarding the Companys compensation programs as necessary. Based on its evaluation, the Compensation Committee has concluded that the overall structure of the compensation programs for NEOs and Company-wide
employees are designed with the appropriate balance of risk and reward in relation to the Companys overall business strategy and are not reasonably likely to have a material adverse effect on the Company.
|
|
|
36
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE FOR 2015, 2014, AND 2013
The following table sets forth the compensation earned by our NEOs for the fiscal years ended December 31, 2015, 2014, and 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
Stock
Awards
1
|
|
|
Option
Awards
2
|
|
|
Non-Equity
Incentive Plan
Compensation
3
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
4
|
|
All Other
Compensation
5
|
|
Total
|
|
Patrick J. Dempsey
|
|
|
2015
|
|
|
$
|
793,750
|
*
|
|
|
|
$
|
2,539,258
|
|
|
$
|
579,506
|
|
|
$ 267,840
|
|
$ 249,522
|
|
$ 95,482
|
|
$
|
4,525,358
|
|
President and Chief
|
|
|
2014
|
|
|
|
768,750
|
|
|
|
|
|
2,130,065
|
|
|
|
443,912
|
|
|
1,538,220
|
|
1,622,098
|
|
141,129
|
|
|
6,644,174
|
|
Executive Officer
|
|
|
2013
|
|
|
|
700,000
|
|
|
|
|
|
1,588,668
|
|
|
|
371,030
|
|
|
881,567
|
|
253,304
|
|
123,261
|
|
|
3,917,830
|
|
Christopher J.
|
|
|
2015
|
|
|
|
461,000
|
|
|
|
|
|
608,817
|
|
|
|
139,364
|
|
|
102,895
|
|
32,892
|
|
262,522
|
|
|
1,607,490
|
|
Stephens, Jr.
|
|
|
2014
|
|
|
|
461,000
|
|
|
|
|
|
762,575
|
|
|
|
159,663
|
|
|
609,995
|
|
88,646
|
|
362,296
|
|
|
2,444,175
|
|
Senior Vice
|
|
|
2013
|
|
|
|
453,585
|
|
|
|
|
|
875,508
|
|
|
|
135,805
|
|
|
382,238
|
|
10,912
|
|
165,604
|
|
|
2,023,652
|
|
President, Finance
and Chief Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Mayo
|
|
|
2015
|
|
|
|
425,000
|
|
|
|
|
|
428,650
|
|
|
|
98,789
|
|
|
68,799
|
|
|
|
44,113
|
|
|
1,065,351
|
|
Senior Vice
|
|
|
2014
|
|
|
|
336,799
|
|
|
|
|
|
1,069,840
|
|
|
|
72,978
|
|
|
305,952
|
|
|
|
138,434
|
|
|
1,924,003
|
|
President and
President, Barnes
Industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard R. Barnhart
|
|
|
2015
|
|
|
|
375,000
|
|
|
|
|
|
408,698
|
|
|
|
93,497
|
|
|
33,480
|
|
102,396
|
|
67,631
|
|
|
1,080,702
|
|
Senior Vice
|
|
|
2014
|
|
|
|
375,000
|
|
|
|
|
|
426,618
|
|
|
|
89,508
|
|
|
386,468
|
|
207,608
|
|
45,471
|
|
|
1,530,673
|
|
President and
President,
Barnes Aerospace
|
|
|
2013
|
|
|
|
334,750
|
|
|
|
|
|
419,873
|
|
|
|
|
|
|
|
|
32,401
|
|
30,102
|
|
|
817,126
|
|
Dawn N. Edwards
|
|
|
2015
|
|
|
|
296,000
|
|
|
|
|
|
256,344
|
|
|
|
58,215
|
|
|
59,460
|
|
8,538
|
|
121,010
|
|
|
799,567
|
|
Senior Vice
|
|
|
2014
|
|
|
|
296,000
|
|
|
|
|
|
410,385
|
|
|
|
83,460
|
|
|
352,500
|
|
174,222
|
|
96,364
|
|
|
1,412,931
|
|
President,
|
|
|
2013
|
|
|
|
296,000
|
|
|
|
|
|
488,327
|
|
|
|
64,010
|
|
|
220,886
|
|
|
|
80,568
|
|
|
1,149,791
|
|
Human Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Pro rata amount taking into account Mr. Dempseys increase in salary from $775,000 to $800,000, effective April 1, 2015.
|
1
|
Stock Awards represent the aggregate grant date fair value of RSUs and PSAs granted to NEOs under the Stock and Incentive Award Plan. PSA awards vest upon satisfying established performance and market goals. In addition
to the RSU value, the value disclosed in this column for the PSA awards for Messrs. Dempsey, Stephens, Mayo, and Barnhart and Mses. Edwards represents the amount of compensation if target goals are met. The maximum grant date fair value of the PSA
awards granted in 2015 was $3,112,956 for Mr. Dempsey, $746,795 for Mr. Stephens, $526,687 for Mr. Mayo, $503,104 for Mr. Barnhart, and $314,440 for Ms. Edwards. All three measures of the PSA awards allow an NEO to receive
up to 250% of the target amount. The fair value of the performance based portion of the awards was determined based on the market value of Common Stock on the date of grant and the fair value of the market based portion of awards was determined
based on a Monte Carlo valuation method; as described in the note on Stock-Based Compensation in the notes to the Companys consolidated financial statements filed with the Annual Report on Form 10-K for the respective year-end. The values
disclosed in this column for 2014 include special recognition RSU and PSA awards. The 2014 stock awards for Mr. Mayo include new hire awards.
|
2
|
Option Awards represent the aggregate grant date fair value of stock options granted to NEOs under the Stock and Incentive Award Plan. The fair value was determined by using the Black-Scholes option pricing model
applied consistently with the Companys practice, as described in the note on Stock-Based Compensation in the notes to the Companys consolidated financial statements filed with the Annual Report on Form 10-K for the respective year-end.
|
3
|
Non-Equity Incentive Plan Compensation which were paid in February 2016 includes amounts earned under the PLBP for all NEOs.
|
4
|
The amount listed in Change in Pension Value and Nonqualified Deferred Compensation Earnings represents the annual increase in pension value for all of the
Companys defined benefit retirement programs. All assumptions are as detailed in the notes to the Companys
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
37
|
EXECUTIVE COMPENSATION
|
consolidated financial statements filed with the Annual Report on Form 10-K for the respective year-end, with the exception of the following: retirement age for all plans is assumed to be the older of the unreduced
retirement age, as defined by each plan, or age as of December 31, 2015, December 31, 2014 or December 31, 2013, as applicable, and no pre-retirement mortality, disability, or termination is assumed. The U.S. discount rates of 4.65%,
4.25% and 5.20%, respectively, are detailed in the Managements Discussion & Analysis filed with the Annual Report on Form 10-K for the respective year-end. Year-over-year changes in pension value generally are driven in large part due
to changes in actuarial assumptions underlying the calculations as well as increase in service, age, and compensation. In particular, of the increase in Mr. Dempseys pension value in 2014, $709,671 was due to changes in actuarial
assumptions, and $912,427 was due to changes in service, age, and compensation.
|
The Change in Pension Value and Nonqualified Deferred Compensation
Earnings is segregated by plan in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Plan Name
|
|
|
|
Year
|
|
|
|
|
Amounts
|
|
Patrick J. Dempsey
President and Chief Executive Officer
|
|
SRIP
|
|
|
|
|
2015
|
|
|
|
|
$
|
23,454
|
|
|
RBEP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
a
|
|
MSSORP
|
|
|
|
|
2015
|
|
|
|
|
|
226,068
|
|
|
|
SERP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2015
|
|
|
|
|
|
249,522
|
|
|
|
SRIP
|
|
|
|
|
2014
|
|
|
|
|
$
|
169,813
|
|
|
|
RBEP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
a
|
|
|
MSSORP
|
|
|
|
|
2014
|
|
|
|
|
|
1,452,285
|
|
|
|
SERP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2014
|
|
|
|
|
|
1,622,098
|
|
|
|
SRIP
|
|
|
|
|
2013
|
|
|
|
|
$
|
(22,962
|
)
|
|
|
RBEP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
a
|
|
|
MSSORP
|
|
|
|
|
2013
|
|
|
|
|
|
276,266
|
|
|
|
SERP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2013
|
|
|
|
|
|
253,304
|
|
Christopher J. Stephens, Jr.
Senior Vice President, Finance and Chief Financial Officer
|
|
SRIP
|
|
|
|
|
2015
|
|
|
|
|
$
|
32,892
|
|
|
RBEP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
a
|
|
|
MSSORP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2015
|
|
|
|
|
|
32,892
|
|
|
|
SRIP
|
|
|
|
|
2014
|
|
|
|
|
$
|
88,646
|
|
|
|
RBEP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
a
|
|
|
MSSORP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2014
|
|
|
|
|
|
88,646
|
|
|
|
SRIP
|
|
|
|
|
2013
|
|
|
|
|
$
|
10,912
|
|
|
|
RBEP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
a
|
|
|
MSSORP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2013
|
|
|
|
|
|
10,912
|
|
Scott A. Mayo
Senior Vice President, Barnes Group Inc., and President, Barnes Industrial
|
|
SRIP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
RBEP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
MSSORP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
SERP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
|
SRIP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
RBEP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
MSSORP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
SRIP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
RBEP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
MSSORP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
|
38
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Plan Name
|
|
|
|
Year
|
|
|
|
|
Amounts
|
|
Richard R. Barnhart
Senior Vice President, Barnes Group Inc., and President, Barnes Aerospace
|
|
SRIP
|
|
|
|
|
2015
|
|
|
|
|
$
|
45,850
|
|
|
RBEP
|
|
|
|
|
2015
|
|
|
|
|
|
56,546
|
|
|
MSSORP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
SERP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2015
|
|
|
|
|
|
102,396
|
|
|
|
SRIP
|
|
|
|
|
2014
|
|
|
|
|
$
|
144,193
|
|
|
|
RBEP
|
|
|
|
|
2014
|
|
|
|
|
|
63,415
|
|
|
|
MSSORP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2014
|
|
|
|
|
|
207,608
|
|
|
|
SRIP
|
|
|
|
|
2013
|
|
|
|
|
$
|
9,002
|
|
|
|
RBEP
|
|
|
|
|
2013
|
|
|
|
|
|
23,399
|
|
|
|
MSSORP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2013
|
|
|
|
|
|
32,401
|
|
Dawn N. Edwards
Senior Vice President, Human Resources
|
|
SRIP
|
|
|
|
|
2015
|
|
|
|
|
$
|
8,538
|
|
|
RBEP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
a
|
|
MSSORP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2015
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2015
|
|
|
|
|
|
8,538
|
|
|
|
SRIP
|
|
|
|
|
2014
|
|
|
|
|
$
|
174,222
|
|
|
|
RBEP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
a
|
|
|
MSSORP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2014
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2014
|
|
|
|
|
|
174,222
|
|
|
|
SRIP
|
|
|
|
|
2013
|
|
|
|
|
$
|
(25,525
|
)
|
|
|
RBEP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
a
|
|
|
MSSORP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
SERP
|
|
|
|
|
2013
|
|
|
|
|
|
N/A
|
|
|
|
TOTAL
|
|
|
|
|
2013
|
|
|
|
|
|
(25,525
|
)
|
Consistent with financial
calculations in the notes to the Companys consolidated financial statements filed with the Annual Report on Form 10-K for the fiscal years ending December 31, 2015, December 31, 2014 and December 31, 2013, it is assumed
that the form of payment is a life annuity for the SRIP, the RBEP, the Supplemental Executive Retirement Plan (SERP) and the MSSORP. The 2015, 2014, and 2013 qualified plan limits of $265,000, $260,000 and $255,000, respectively, have been
incorporated.
a
|
The amounts listed for Mr. Stephens and Ms. Edwards assumes that they will vest under the Barnes Group 2009 Deferred Compensation Plan and therefore would not be eligible to receive benefits under the RBEP.
The amounts listed for Mr. Dempsey assume that he would vest under the MSSORP and therefore would not be eligible to receive benefits under the RBEP.
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
39
|
EXECUTIVE COMPENSATION
5
|
The compensation represented by the amounts for 2015 set forth in the All Other Compensation column for the NEOs is detailed in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
|
|
Taxes Paid on
All Other
Compensation
a
|
|
Life
Insurance
Premiums
b,c,d
|
|
Deferred
Compensation
Plan
e
|
|
Relocation
f
|
|
Other
g
|
|
All Other
Perquisites
h
|
|
Total
|
|
Patrick J. Dempsey
President and Chief
Executive Officer
|
|
|
2015
|
|
|
$39,598
|
|
$41,796
|
|
$
|
|
$
|
|
$ 7,800
|
|
$ 6,288
|
|
|
$ 95,482
|
|
Christopher J.
Stephens, Jr.
Senior Vice President,
Finance and Chief
Financial Officer
|
|
|
2015
|
|
|
40,186
|
|
42,416
|
|
161,395
|
|
|
|
7,800
|
|
10,725
|
|
|
262,522
|
|
Scott A. Mayo
Senior Vice President,
Barnes Group Inc.,
and President, Barnes
Industrial
|
|
|
2015
|
|
|
3,570
|
|
2,615
|
|
|
|
6,528
|
|
31,400
|
|
|
|
|
44,113
|
|
Richard R. Barnhart
Senior Vice President,
Barnes Group Inc.,
and President,
Barnes Aerospace
|
|
|
2015
|
|
|
|
|
59,831
|
|
|
|
|
|
7,800
|
|
|
|
|
67,631
|
|
Dawn N. Edwards
Senior Vice President,
Human Resources
|
|
|
2015
|
|
|
15,013
|
|
19,901
|
|
76,796
|
|
|
|
7,800
|
|
1,500
|
|
|
121,010
|
|
a
|
This column represents the reimbursement of taxes paid on eligible compensation included in the All Other Compensation table for the NEOs in accordance with the Companys policies and practices. For Messrs. Dempsey
and Stephens and Ms. Edwards, includes taxes paid pursuant to the terms of the SEELIP, under which the Company pays the policy premiums, and pays the income tax liability arising from its payment of the premiums and taxes. As previously
disclosed, the SEELIP was closed to new participants effective April 1, 2011.
|
b
|
Payments made under the SEELIP for Messrs. Dempsey, Stephens, and Ms. Edwards. Under the SEELIP, the Company pays the premiums for the individual life insurance policies that are owned by the participants, with the
life insurance coverage equal to four times base salary, and the Company pays the participating NEOs income tax liability arising from its payment of the premiums and taxes, therefore, incurring no out-of-pocket expense for the policies. The
Company generally ceases to pay policy premiums on termination of employment, unless the NEO has attained age 62 and 10 years of service, in which case the Company continues to pay premiums and tax gross-ups in retirement.
|
c
|
Payments made under the EGTLIP for Mr. Mayo. The SEELIP was closed to new or rehired executives effective April 1, 2011, and the Company established the EGTLIP for new NEOs and other eligible executives. Under
the EGTLIP, the Company pays the premiums for individual life insurance policies that are owned by the participants, with the life insurance coverage equal to four times base salary. The employee owns the policy and is responsible for any tax
liability (no tax gross-up) resulting from this program. The Company ceases to pay policy premiums on termination of employment.
|
d
|
Payments made under the ELIP for Mr. Barnhart. Under the ELIP, the Company pays the premiums for individual life insurance policies that are owned by the participants, with the life insurance coverage equal to four
times base salary. The employee owns the policy and is responsible for any tax liability (no tax gross-up) resulting from this program. The Company ceases to pay policy premiums on termination of employment.
|
e
|
The amount listed as deferred compensation for Mr. Stephens and Ms. Edwards includes employer contributions to the Barnes Group 2009 Deferred Compensation Plan.
|
f
|
Mr. Mayo received relocation benefits consistent with Company policy and practices. The relocation costs included an allowance for incidentals and costs for the moving of household goods. In addition, Mr. Mayo
received a tax gross-up on all items considered to be taxable, which are reflected in the Taxes Paid on All Other Compensation column.
|
g
|
Consists of matching contributions made by the Company under the RSP which is a plan generally available to most U.S. based employees, including the NEOs. For Mr. Mayo, who was not eligible to participate in the
SRIP, this also includes a retirement contribution of 4% of eligible earnings under the RC component of the RSP. Contributions made by the Company under its health savings account plan which is also a plan generally available to most U.S. based
employees, including the NEOs, are not included; the maximum allowable Company contributions under this plan were $1,000 in 2015.
|
h
|
Included in All Other Perquisites are payments made for financial planning and tax preparation services for Messrs. Dempsey and Stephens, and Ms. Edwards and executive physicals for Messrs. Dempsey and Stephens.
|
|
|
|
40
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
GRANTS OF PLAN-BASED AWARDS IN 2015
For a discussion regarding the PLBP and the Stock and Incentive Award Plan, please see the CD&A. The vesting schedule for outstanding PSAs, RSUs, and stock option
awards are set forth in the footnotes to the Outstanding Equity Awards at Fiscal Year End table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
|
|
|
|
Estimated Future Payouts
Under Equity Incentive Plan
Awards
|
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
3
|
|
|
Exercise
or Base
Price
of
Option
Awards
($/Sh)
4
|
|
|
Grant
Date Fair
Value of
Stock
and
Option
Awards
($)
|
|
Name
|
|
Grant
Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
P. Dempsey
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,700
|
|
|
|
36.31000
|
|
|
|
579,506
|
|
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,800
|
|
|
|
|
|
|
|
|
|
|
|
864,178
|
|
|
|
|
2/11/2015
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,068
|
|
|
|
39,600
|
|
|
|
99,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,675,080
|
|
|
|
|
2
|
|
|
|
150,000
|
|
|
|
600,000
|
|
|
|
1,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Stephens, Jr.
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,800
|
|
|
|
36.31000
|
|
|
|
139,364
|
|
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,700
|
|
|
|
|
|
|
|
|
|
|
|
206,967
|
|
|
|
|
2/11/2015
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,135
|
|
|
|
9,500
|
|
|
|
23,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401,850
|
|
|
|
|
2
|
|
|
|
57,625
|
|
|
|
230,500
|
|
|
|
691,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S. Mayo
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,200
|
|
|
|
36.31000
|
|
|
|
98,789
|
|
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
145,240
|
|
|
|
|
2/11/2015
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,211
|
|
|
|
6,700
|
|
|
|
16,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
283,410
|
|
|
|
|
2
|
|
|
|
53,125
|
|
|
|
212,500
|
|
|
|
637,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Barnhart
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,600
|
|
|
|
36.31000
|
|
|
|
93,497
|
|
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,800
|
|
|
|
|
|
|
|
|
|
|
|
137,978
|
|
|
|
|
2/11/2015
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,112
|
|
|
|
6,400
|
|
|
|
16,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
270,720
|
|
|
|
|
2
|
|
|
|
46,875
|
|
|
|
187,500
|
|
|
|
562,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Edwards
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,600
|
|
|
|
36.31000
|
|
|
|
58,215
|
|
|
|
|
2/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
|
|
|
|
|
|
|
|
|
87,144
|
|
|
|
|
2/11/2015
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,320
|
|
|
|
4,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
169,200
|
|
|
|
|
2
|
|
|
|
33,300
|
|
|
|
133,200
|
|
|
|
399,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
This row sets forth the range of the number of shares of Common Stock that could be issued under PSAs granted in 2015 under the Stock and Incentive Award Plan.
|
2
|
This row sets forth the range of the potential amounts payable under the PLBP for all NEOs.
|
3
|
Stock options granted under the Stock and Incentive Award Plan are described in the Outstanding Equity Awards at Fiscal-Year End table.
|
4
|
Each option has an exercise price equal to the fair market value of Common Stock at the time of grant, as determined by the last trading price per share of Common Stock during regular trading hours on the grant date of
the option.
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
41
|
EXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table summarizes equity awards granted to the Companys NEOs that remain outstanding as of December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Notes
|
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
1
|
|
|
Option
Expiration
Date
2
|
|
|
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units
of
Stock
That
Have Not
Vested
($)
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
|
|
P. Dempsey
|
|
|
4
|
|
|
|
02/11/2015
|
|
|
|
|
65,700
|
|
|
$36.31000
|
|
|
|
02/11/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2014
|
|
|
10,267
|
|
20,533
|
|
|
$37.13000
|
|
|
|
02/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2014
|
|
|
1,967
|
|
3,933
|
|
|
$37.13000
|
|
|
|
02/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
03/01/2013
|
|
|
16,867
|
|
8,433
|
|
|
$26.32000
|
|
|
|
03/01/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2013
|
|
|
10,267
|
|
5,133
|
|
|
$24.24000
|
|
|
|
02/12/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/08/2012
|
|
|
13,000
|
|
|
|
|
$26.59000
|
|
|
|
02/08/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/09/2011
|
|
|
16,400
|
|
|
|
|
$20.69000
|
|
|
|
02/09/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/08/2010
|
|
|
24,600
|
|
|
|
|
$15.26500
|
|
|
|
02/08/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,800
|
|
|
|
$842,282
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,600
|
|
|
|
$ 1,401,444
|
|
|
|
|
6
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,066
|
|
|
|
$ 73,116
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,799
|
|
|
|
$382,177
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,000
|
|
|
|
$ 955,530
|
|
|
|
|
5
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,100
|
|
|
|
$ 180,489
|
|
|
|
|
6
|
|
|
|
03/01/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,533
|
|
|
|
$160,423
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
03/01/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,600
|
|
|
|
$ 799,814
|
|
|
|
|
6
|
|
|
|
02/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,733
|
|
|
|
$ 96,721
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,700
|
|
|
|
$ 484,843
|
|
C. Stephens, Jr.
|
|
|
4
|
|
|
|
02/11/2015
|
|
|
|
|
15,800
|
|
|
$36.31000
|
|
|
|
02/11/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2014
|
|
|
3,134
|
|
6,266
|
|
|
$37.13000
|
|
|
|
02/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2014
|
|
|
1,267
|
|
2,533
|
|
|
$37.13000
|
|
|
|
02/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2013
|
|
|
10,467
|
|
5,233
|
|
|
$24.24000
|
|
|
|
02/12/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/08/2012
|
|
|
13,600
|
|
|
|
|
$26.59000
|
|
|
|
02/08/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/09/2011
|
|
|
10,000
|
|
|
|
|
$20.69000
|
|
|
|
02/09/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,700
|
|
|
|
$201,723
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,500
|
|
|
|
$ 336,205
|
|
|
|
|
6
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,333
|
|
|
|
$ 47,175
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,266
|
|
|
|
$115,584
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,300
|
|
|
|
$ 116,787
|
|
|
|
|
5
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,200
|
|
|
|
$ 290,198
|
|
|
|
|
6
|
|
|
|
02/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,799
|
|
|
|
$ 99,057
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
|
|
|
$ 495,460
|
|
|
|
|
7
|
|
|
|
02/08/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,400
|
|
|
|
$332,666
|
|
|
|
|
|
|
|
|
|
S. Mayo
|
|
|
4
|
|
|
|
02/11/2015
|
|
|
|
|
11,200
|
|
|
$36.31000
|
|
|
|
02/11/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
03/17/2014
|
|
|
1,917
|
|
3,833
|
|
|
$38.96000
|
|
|
|
03/17/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
$141,560
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,700
|
|
|
|
$ 237,113
|
|
|
|
|
8
|
|
|
|
03/17/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,175
|
|
|
|
$147,753
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
03/17/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,066
|
|
|
|
$ 73,116
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
03/17/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,150
|
|
|
|
$ 182,259
|
|
|
|
|
5
|
|
|
|
03/17/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,350
|
|
|
|
$ 295,507
|
|
|
|
|
42
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Notes
|
|
|
Grant
Date
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
1
|
|
|
Option
Expiration
Date
2
|
|
|
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units
of
Stock That
Have Not
Vested
($)
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
|
|
R. Barnhart
|
|
|
4
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
10,600
|
|
|
|
$36.31000
|
|
|
|
02/11/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2014
|
|
|
|
1,967
|
|
|
|
3,933
|
|
|
|
$37.13000
|
|
|
|
02/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2014
|
|
|
|
501
|
|
|
|
999
|
|
|
|
$37.13000
|
|
|
|
02/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,800
|
|
|
|
$134,482
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,400
|
|
|
|
$ 226,496
|
|
|
|
|
6
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
533
|
|
|
|
$ 18,863
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,066
|
|
|
|
$ 73,116
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,300
|
|
|
|
$ 46,007
|
|
|
|
|
5
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,100
|
|
|
|
$ 180,489
|
|
|
|
|
6
|
|
|
|
08/01/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,066
|
|
|
|
$214,676
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
731
|
|
|
|
$ 25,870
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,195
|
|
|
|
$ 77,681
|
|
D. Edwards
|
|
|
4
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
6,600
|
|
|
|
$36.31000
|
|
|
|
02/11/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2014
|
|
|
|
1,434
|
|
|
|
2,866
|
|
|
|
$37.13000
|
|
|
|
02/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2014
|
|
|
|
867
|
|
|
|
1,733
|
|
|
|
$37.13000
|
|
|
|
02/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/12/2013
|
|
|
|
4,934
|
|
|
|
2,466
|
|
|
|
$24.24000
|
|
|
|
02/12/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/08/2012
|
|
|
|
6,300
|
|
|
|
|
|
|
|
$26.59000
|
|
|
|
02/08/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/09/2011
|
|
|
|
13,500
|
|
|
|
|
|
|
|
$20.69000
|
|
|
|
02/09/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/13/2008
|
|
|
|
6,150
|
|
|
|
|
|
|
|
$26.38005
|
|
|
|
02/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
02/14/2007
|
|
|
|
5,700
|
|
|
|
|
|
|
|
$22.33500
|
|
|
|
02/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
|
$ 84,936
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
$ 141,560
|
|
|
|
|
6
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,533
|
|
|
|
$ 54,253
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
933
|
|
|
|
$ 33,019
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,300
|
|
|
|
$ 81,397
|
|
|
|
|
5
|
|
|
|
02/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
|
$ 138,021
|
|
|
|
|
6
|
|
|
|
02/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,299
|
|
|
|
$ 45,972
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
02/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,600
|
|
|
|
$ 233,574
|
|
1
|
Stock option grants awarded from 2007 to 2010 represents the mean between the highest and the lowest stock price of a share of Common Stock on the grant date of the option. Stock option grants awarded from 2011 to 2015
represents the last trading price during regular trading hours per share of Common Stock on the grant date.
|
2
|
The options terminate 10 years after the grant date.
|
3
|
Market value reflects the closing price on December 31, 2015, of $35.39.
|
4
|
The option vests at 33.34% on the eighteenth month and 33.33% on each of the thirtieth and forty-second month anniversaries of the grant date.
|
5
|
The PSA vests on the third anniversary of the grant date subject to the achievement of performance goals.
|
6
|
The RSU award vests one-third on the eighteenth month, thirtieth month and forty-second month anniversaries of the grant date.
|
7
|
The RSU award vests one-third on the twenty-fourth month, thirty-sixth month and forty-eighth month anniversaries of the grant date.
|
8
|
The RSU award vests 50% on March 17, 2015 and 50% on March 17, 2016.
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
43
|
EXECUTIVE COMPENSATION
OPTION EXERCISES AND STOCK VESTED
The following table provides information on the value realized by each of the NEOs as a result of the exercise of stock options and stock awards that vested during
fiscal year 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares Acquired
on Exercise
(#)
|
|
|
Value Realized
on Exercise
($)
1
|
|
|
Number of
Shares Acquired
on Vesting
(#)
|
|
|
Value Realized
on Vesting
($)
2
|
|
P. Dempsey
|
|
|
126,466
|
|
|
$
|
2,521,887
|
|
|
|
33,882
|
|
|
$
|
1,335,951
|
|
C. Stephens, Jr.
|
|
|
|
|
|
|
|
|
|
|
40,720
|
|
|
|
1,581,915
|
|
S. Mayo
|
|
|
|
|
|
|
|
|
|
|
5,209
|
|
|
|
207,215
|
|
R. Barnhart
|
|
|
|
|
|
|
|
|
|
|
7,522
|
|
|
|
283,421
|
|
D. Edwards
|
|
|
10,833
|
|
|
|
271,177
|
|
|
|
16,437
|
|
|
|
654,786
|
|
1
|
Amount reflects the difference between the exercise price of the option and the market value at the time of exercise.
|
2
|
Amount reflects the market value of the stock on the day the stock vested.
|
PENSION BENEFITS
The following table sets forth pension or other benefits providing for payment at, following, or in connection with retirement
granted or accrued to the Companys NEOs in 2015:
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Plan Name
|
|
Number of
Years
of Credited
Service
(12/31/2015)
|
|
Present Value of
Accumulated
Benefit
($)
|
|
Payments During
Last Fiscal Year
|
Patrick J. Dempsey
|
|
SRIP
|
|
15.167
|
|
$ 580,423
|
|
$
|
President and Chief Executive Officer
|
|
RBEP
|
|
15.167
|
|
N/A
|
|
$
|
|
MSSORP
|
|
15.167
|
|
3,042,119
|
|
$
|
|
|
|
|
|
|
|
|
|
Christopher J. Stephens, Jr.
|
|
SRIP
|
|
6.917
|
|
$ 263,311
|
|
$
|
Senior Vice President, Finance and
Chief Financial Officer
|
|
RBEP
|
|
6.917
|
|
N/A
|
|
$
|
|
MSSORP
|
|
6.917
|
|
N/A
|
|
$
|
|
|
|
|
|
|
|
|
|
Scott A. Mayo
|
|
SRIP
|
|
N/A
|
|
N/A
|
|
$
|
Senior Vice President, Barnes Group Inc. and
President, Barnes Industrial
|
|
RBEP
|
|
N/A
|
|
N/A
|
|
$
|
|
MSSORP
|
|
N/A
|
|
N/A
|
|
$
|
|
|
|
|
|
|
|
|
|
Dawn N. Edwards
|
|
SRIP
|
|
17.250
|
|
$ 524,742
|
|
$
|
Senior Vice President,
|
|
RBEP
|
|
17.250
|
|
N/A
|
|
$
|
Human Resources
|
|
MSSORP
|
|
17.250
|
|
N/A
|
|
$
|
|
|
|
|
|
|
|
|
|
Richard R. Barnhart
|
|
SRIP
|
|
10.667
|
|
$ 514,144
|
|
$
|
Senior Vice President, Barnes Group Inc. and
President, Barnes Aerospace
|
|
RBEP
|
|
10.667
|
|
156,735
|
|
$
|
|
MSSORP
|
|
10.667
|
|
N/A
|
|
$
|
|
|
|
|
|
|
|
|
|
1
|
All assumptions are as detailed in the notes to the consolidated financial statements for the fiscal year ended December 31, 2015, including a discount rate of 4.65% with the exception of the following:
|
|
|
|
Retirement age for all plans is assumed to be the later of unreduced retirement age, as defined by each plan, or age as of December 31, 2015.
|
|
|
|
No pre-retirement mortality, disability, or termination is assumed.
|
|
|
|
44
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
2
|
Consistent with financial disclosure calculations, it is assumed that the form of payment is a life annuity for the SRIP, the RBEP and the MSSORP.
|
3
|
The 2015 qualified plan compensation limit of $265,000 has been incorporated.
|
4
|
The terms of (i) the RBEP plan document, as amended and restated effective January 1, 2013, and as further amended on December 12, 2014 and (ii) the terms of the MSSORP plan document, as amended and
restated effective January 1, 2009 have been reflected in the December 31, 2015 SEC disclosure tables. Subsequent amendments as of December 30, 2009 and December 14, 2014 to the MSSORP plan document are likewise reflected in the
December 31, 2015 SEC disclosure tables.
|
5
|
Internal Revenue Code Section 415 limits are not reflected for these calculations. Note that the limits would only affect the distribution of amounts between the qualified and non-qualified plans.
|
DISCUSSION CONCERNING PENSION BENEFITS TABLE
We provide benefits to our NEOs under the following three pension plans:
|
|
Salaried Retirement Income Plan (SRIP);
|
|
|
Retirement Benefit Equalization Plan (RBEP); and
|
|
|
Modified Supplemental Senior Officer Retirement Plan (MSSORP).
|
The SRIP is a broad-based tax-qualified defined benefit pension plan. The RBEP and the MSSORP are non-tax-qualified
supplemental executive retirement plans that provide more generous benefits than are available under the SRIP to certain designated employees and senior level officers, including certain of our NEOs as described below.
SALARIED RETIREMENT INCOME PLAN
The SRIP is a defined benefit pension plan designed to provide income after retirement to eligible employees and their
beneficiaries. All NEOs other than Mr. Mayo participate in the SRIP Plan. As described below, given the closure of the SRIP to employees hired on or after January 1, 2013, Mr. Mayo will receive an annual retirement contribution under
the RSP of 4% of eligible earnings subject to 5 year graded vesting.
Under the SRIP each eligible employee receives credit for benefit accrual and vesting purposes
equal to the number of full months elapsed from the date the employee becomes a participant until the date the participant is no longer employed by the Company. The formula for benefit purposes ranges from 0.5% to 2.5% of a participants
highest five consecutive years of covered compensation (which generally includes base salary). A participant is 100% vested after five years of service. Benefits are generally structured to be paid upon retirement.
The normal retirement date under the SRIP is the first day of the month following (1) a participants 65
th
birthday or (2) if hired after age 60, the month the participant achieves five years of service. Participants are eligible for early retirement if they have completed 10 years of vesting
service and have reached age 55. A participant whose employment terminates before he or she is eligible to retire on account of normal or early retirement but who has otherwise met the vesting requirements of the SRIP is entitled to a deferred
vested retirement benefit.
In 2006, the benefit formula for calculating benefits under the SRIP was changed for credited service earned on and after January 1,
2007. The following table shows the calculation of the basic retirement benefit for credited service earned as of December 31, 2006 under the prior formula, and for credited service earned on and after January 1, 2007:
|
|
|
|
|
|
|
Benefit Accrual Rate
|
|
|
For Credited
Service Earned
as of 12/31/2006
|
|
For Credited
Service Earned
on and after
1/1/2007
|
Final Average Earnings up to Covered Compensation times Credited Service up to
25 years times
|
|
1.85%
|
|
1.5%
|
Plus
|
|
|
|
|
Final Average Earnings above Covered Compensation times Credited Service up to
25 years times
|
|
2.45%
|
|
2.0%
|
Plus
|
|
|
|
|
Final Average Earnings times Credited Service over 25 years times
|
|
0.5%
|
|
0.5%
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
45
|
EXECUTIVE COMPENSATION
Final Average Earnings is the average of a participants highest 5 consecutive years compensation
within the 10 years before retirement or termination of employment with the Company. Compensation includes all earnings paid to the participant as reported to the IRS on the participants Form W-2, but excludes overtime pay, bonuses,
directors fees, reimbursed expenses and any other additional form of earnings, including contributions made to or under any other form of benefit plan (e.g., a 401(k) or profit sharing plan). The 2015 qualified plan compensation
limit is $265,000.
Covered Compensation is the average annual earnings used to calculate a participants Social Security benefit. Covered
Compensation is based on the year in which a participant reaches his or her Social Security retirement age. It assumes that the participant will earn the maximum amount taxable by Social Security up to that time. Covered Compensation for a
participant who reached age 65 and retired in 2015 was $75,000.
Credited Service is the total time a participant spends working at the Company that
counts toward his or her pension benefit. Credited Service most often is the number of months the participant works for the Company.
The basic retirement benefit is reduced by the monthly amount of income payable to the participant attributable to
employer contributions under any other tax-qualified defined benefit pension plan under which the participant receives credit for service which also constitutes credited service under the SRIP.
The normal retirement benefit of a participant will be his or her basic retirement benefit as determined above multiplied by 100% (minus any percentage attributable to
the cost of a pre-retirement survivor annuity, if applicable) and multiplied by (a) the actuarial equivalent factor of the normal form of benefit for the participant or (b) the actuarial equivalent factor of any optional form of retirement
benefit provided for under the SRIP that the participant elects to receive instead of the normal form. Optional forms of benefit include Contingent Annuity of 25%, 50%, 75% or 100%, 120 Months Certain and Life Option, Level Income Option, and Level
Income and Contingent Annuity Option. As noted above, all NEOs participate in the SRIP other than Mr. Mayo, who joined the Company on March 17, 2014. The SRIP was closed to employees hired on or after January 1, 2013, with no impact
to the benefits of existing participants. Certain salaried employees hired on or after January 1, 2013, including Mr. Mayo, receive an annual retirement contribution of 4% of eligible earnings through the Barnes Group Inc. Retirement
Savings Plan.
RETIREMENT BENEFIT EQUALIZATION PLAN
The RBEP provides supplemental benefits for participants in the SRIP whose benefits are limited by statute or the Internal
Revenue Code. For example, the Internal Revenue Code Section 415 limit (i.e. the annual contribution limit to a defined contribution plan ($53,000 through December 31, 2015) and the annual benefits payable from defined benefit plans
($210,000 through December 31, 2015)) and the Internal Revenue Code Section 401(a)(17) limit (i.e., earnings taken into account for tax-qualified plan purposes ($265,000 through December 31, 2015)). All NEOs are eligible to
participate in the RBEP. Generally, the RBEP is
structured to pay the participants the difference between the benefits paid under the SRIP and what the participant would have received but for the statutory limitations described in the SRIP.
The RBEP takes into account base salary for purposes of determining the benefits accrued under the plan. All NEOs participate in the RBEP. The defined benefit RBEP was closed to new participants effective December 31, 2012, with no impact to
the benefits of existing participants, and replaced with the defined contribution RBEP effective January 1, 2013.
|
|
|
46
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
MODIFIED SUPPLEMENTAL SENIOR OFFICER RETIREMENT PLAN
The MSSORP provides supplemental retirement benefits to selected employees of the Company including Mr. Dempsey. The
MSSORP was closed to new participants on December 31, 2008 and replaced by the 2009 Deferred Compensation Plan.
The MSSORP provides certain early or normal
retirement benefits to participants as follows. The normal retirement benefits under the MSSORP are equal to (a) minus the sum of (b), (c) and (d), where:
(a)
|
equals 55% of the participants final average compensation multiplied by the ratio (not to exceed 1.0) of his or her credited service to 15;
|
(b)
|
equals the participants SRIP benefit;
|
(c)
|
equals the participants Social Security benefit; and
|
(d)
|
equals the participants prior employer benefit.
|
The early retirement benefits under the MSSORP are equal to
(a) minus the sum of (b), (c) and (d), where:
(a)
|
equals 55% of the participants final average compensation (which generally includes base salary and annual incentive compensation) multiplied by the ratio (not to exceed 1.0) of his or her credited service to the
greater of 15 years or the credited service the participant would have completed had credited service continued to age 62 multiplied by a percentage factor (less than 100%) based on the participants age at the time that benefits commence;
|
(b)
|
equals the participants SRIP benefit as of such date;
|
(c)
|
equals the participants Social Security benefit; and
|
(d)
|
equals the participants prior employer benefit multiplied by the same percentage factor based on the participants age used in the calculation of (a).
|
The MSSORP is structured to cover any gaps of coverage under the SRIP and RBEP up to 55% of a participants final average compensation. This is because when an
individual becomes eligible for the MSSORP, a portion of the benefits are based on amounts earned and vested under the SRIP and RBEP, which all vest prior to the MSSORP benefits.
Final average compensation has the same meaning as Final Average Earnings under the SRIP except that final average compensation is not subject to
the IRS qualified plan compensation limits. In addition, final average compensation includes annual cash incentive awards. The Qualified Plan benefit is the annual pension benefit payable as a single life annuity upon the
participants actual retirement date, excluding any portion of such annual pension benefit attributable to any period after, or any compensation earned after, the participant has a separation from service within the meaning of
Internal Revenue Code Section 409A. Social Security benefit means the participants annual Social Security benefit. Prior employer benefit means any benefit paid or payable by any prior employer of the participant.
For participants who had attained age 55 as of January 1, 2009, distributions are made in the form of an annuity. For participants who had not attained
age 55 as of January 1, 2009 (currently, all NEOs that participate in the plan), distributions generally are made in 5 installments over a 4-year period following retirement; provided, however, that if the participant terminates employment
before attaining age 55, the participant is instead entitled to benefits under the RBEP.
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
47
|
EXECUTIVE COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION
The following table sets forth information with regard to defined contribution or other plans that provide for the deferral of compensation on a basis that is not tax
qualified by the Companys NEOs in 2015:
NONQUALIFIED DEFERRED COMPENSATION TABLE FOR 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Aggregate
Beginning
Balance in Last
Fiscal Year
|
|
Executive
Contributions
in Last
Fiscal Year
|
|
Registrant
Contributions
in Last
Fiscal Year
|
|
Aggregate
Earnings
in Last
Fiscal Year
|
|
Aggregate
Withdrawals /
Distributions
|
|
Aggregate
Balance
at Last Fiscal
Year-End
|
Patrick J. Dempsey
President and
Chief
Executive Officer
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
Christopher J. Stephens, Jr.
Senior Vice President,
Finance and Chief
Financial Officer
|
|
690,127
|
|
|
|
161,365
|
|
(17,555)
|
|
|
|
833,937
|
Scott A. Mayo
Senior Vice
President,
Barnes Group Inc.,
and President, Barnes
Industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard R. Barnhart
Senior Vice
President,
Barnes Group Inc.,
and President, Barnes
Aerospace
|
|
|
|
|
|
|
|
|
|
|
|
|
Dawn N. Edwards
Senior Vice President,
Human Resources
|
|
326,597
|
|
|
|
76,796
|
|
(2,623)
|
|
|
|
400,770
|
The Barnes Group 2009 Deferred Compensation Plan (DC Plan) was authorized by the Board in July 2009 effective
September 1, 2009. Officers of the Company who were elected or appointed on or after January 1, 2009 until April 1, 2012 when the DC Plan was closed to any new or rehired otherwise eligible executive, were eligible to participate in
the DC Plan at the Boards discretion. The DC Plan replaced the MSSORP which was closed to new participants as of December 31, 2008. Mr. Stephens and Ms. Edwards are the only NEOs that participate in the DC Plan.
There are no participant contributions to the DC Plan; rather, for each DC Plan participant, the Company credits an annual hypothetical contribution equal to 20% of the
compensation above the Internal Revenue Code Section 401(a)(17) limit (i.e., earnings taken into account for tax-qualified plan purposes, currently $265,000) or such other amount determined by the Compensation Committee. The hypothetical
contributions credited are adjusted according to the performance of investment options provided under the DC Plan. Each participant in the DC Plan determines from the investment options available how his or her fund will be invested. The DC Plan
provides most of the same investment options as the Barnes Group Inc.
Retirement Savings Plan. Subject to the Companys amendment and termination rights and other DC Plan and trust provisions, participants generally vest upon attaining the age of 55 and 10
years of service; provided that the Board may reduce the required years of service to five years for any given participant; and provided further that, for death and defined disabilities, vesting occurs if a participant is at least 55 with five years
of service. Distributions under the DC Plan generally are made in five installments over a four-year period. If, at separation from service or death, a participant has satisfied the age and service conditions for the payment of a benefit under the
DC Plan, a benefit under the RBEP will not be paid to the participant.
As of December 31, 2015 if Mr. Stephens was not a participant in the DC Plan, the
present value of his accumulated benefit under the RBEP would be $220,732. As of December 31, 2015 if Ms. Edwards was not a participant in the DC Plan, the present value of her accumulated benefit under the RBEP would be $91,941. The
amount that the Company contributes under the DC Plan is also included in the All Other Compensation column of the Summary Compensation Table for Mr. Stephens and Ms. Edwards.
|
|
|
48
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
POST TERMINATION AND CHANGE IN CONTROL BENEFITS
The Company has entered into certain agreements and maintains certain plans that will require the Company to provide
compensation to the NEOs in the event of a termination of employment or a change in control of the Company. The key provisions of those
arrangements are described below, and then the values of potential payments that would be due if termination of employment or a change in control occurred on December 31, 2015 are set forth
in the tables following the description.
SEVERANCE AGREEMENT
All of our NEOs are eligible for certain severance benefits in connection with a change in control or a separation from
service following a change in control under the terms of a severance agreement. Generally, our severance agreements are based on the same form agreement. The term of each severance agreement is one year with an automatic annual extension commencing
on each January 1, unless the Company or the NEO provides written notice not later than September 30 of the preceding year of a determination not to extend the severance agreement. However, if a change in control occurs during the term of
the severance agreement, the term will expire no earlier than 24 months after the month in which the change in control occurs. The Compensation Committee believes that the Companys severance agreements for its NEOs help assure that the NEOs
will act in the best interest of the stockholders in any proposed merger or acquisition transaction, even if they might face possible termination of employment as a result of such a transaction.
The severance agreements provide, among other things, that upon the occurrence of a change in control, NEOs are entitled to a cash payment equal to a prorated target
annual bonus for the year in which the change in control occurs which will be credited against any annual bonus or incentive award that each NEO is otherwise entitled to receive with respect to such year.
In addition, if, following a change in control and during the applicable term of the severance agreement, a NEOs employment is involuntarily terminated other than
for cause or if the NEO voluntarily terminates employment for good reason, then each NEO is entitled to certain severance payments and benefits conditioned upon executing a release. These payments and benefits generally consist of the following:
|
|
An amount equal to two times the most recent base salary and two times the highest of (i) the annualized average bonus for up to three years prior (or such
|
|
|
annualized year if applicable) to the (a) separation from service; or (b) change in control; or (ii) the target bonus for the year in which the separation from service occurs;
|
|
|
Cash payment equal to a prorated target bonus for the year in which the separation from service occurs (less any pro rata bonus previously paid for the same period);
|
|
|
Twenty-four months of additional age credit, benefit accruals and vesting credit under the Companys non-qualified and qualified retirement plans, with the resulting benefits payable either at the times provided by
such plans or in an actuarially equivalent lump sum on March 1 of the year following the year in which the date of termination occurs;
|
|
|
Twenty-four months of continued financial planning assistance at the Companys expense;
|
|
|
Twenty-four months continued participation in any welfare plans of the Company (including medical, dental, death, disability, and the Companys SEELIP, if applicable) in which the NEO was participating at the time
of termination of employment or change in control; and
|
|
|
An additional payment each month during the
24-month
period to gross-up the NEO for all taxes due on the medical and dental benefits payable under the severance agreement.
|
For purposes of the severance agreements, good reason generally includes a termination by an NEO, subject to an applicable cure period,
for: (i) the assignment of any duties materially inconsistent with the NEOs status as an executive officer or a material adverse alteration in the nature or status of the NEOs responsibilities from such responsibilities in effect
prior to the change in control, (ii) a reduction in the annual base salary of more than 5% or $20,000, (iii) greater than a 50-mile change in the location of Company executive offices, and (iv) the failure to follow procedures in the
event of a termination for cause.
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
49
|
EXECUTIVE COMPENSATION
If, during the term of the severance agreement following a change in control, the Company disputes that an NEOs
employment has been involuntarily terminated other than for cause or that the NEO terminated employment for good reason, the Company may be obligated under the severance agreement to continue to pay the executive salary, bonus, benefits and
perquisites as described above for the balance of the term of the severance agreement, in addition to the payments and benefits described above.
If an NEO becomes
entitled to health, welfare, pension and other benefits of the same type as referred to above during the 24-month period following employment termination, the Company will stop providing these benefits and the NEO may be obligated to repay a portion
of any benefits that were previously paid as described above in a lump sum.
The severance agreement also provides that, if any payment or benefit would be subject to the excise tax imposed under
Section 4999 of the Internal Revenue Code, the severance payments and benefits to the executive will be reduced if and to the extent that reducing the payments and benefits would result in the executive retaining a larger amount, on an
after-tax basis, than if he or she received the entire amount of such payments and benefits and paid the applicable excise tax (i.e. the Company does not provide a tax gross-up for any excise taxes as a result of change in control benefits).
The severance (change in control) agreement supersedes any other agreements and plans that apply in the event that the executives employment with us is terminated
following a change in control without cause or by the executive for good reason. The superseded agreements include the Barnes Group Inc. Executive Separation Pay Plan described below.
BARNES GROUP INC. EXECUTIVE SEPARATION PAY PLAN
During 2015, each of our NEOs was covered by the Executive Separation Pay Plan. The Executive Separation Pay Plan provides
for severance payments and benefits to an eligible executive who experiences an involuntary separation from service without cause provided that, after December 31, 2008, such separation is not covered by a severance agreement. No payments or
benefits are made to an executive whose employment is terminated due to misconduct of any type, including, but not limited to, violation of Company rules or policies or any activity which results in conviction of a felony or if the employment
termination is a result of the sale of a business unit of the Company and the employee is offered employment by the purchaser within 30 days after the closing of the sale, in a comparable position and for substantially equivalent compensation and
benefits as before the sale.
Under the Executive Separation Pay Plan, a terminated eligible NEO is entitled to minimum severance of one months
base salary or the amount of accrued vacation pay, whichever is greater. In order to receive the higher severance benefit of 12 months salary continuation (or, 24 months salary and pro rata actual bonus in the case of Mr. Dempsey)
plus accrued vacation pay, the eligible NEO must execute a release of claims acceptable to us. The salary portion is to be paid on regular payroll dates but payments may be delayed until six months after separation from service if necessary to
comply with Internal Revenue Code Section 409A. The vacation pay portion is to be paid in a lump sum. The pro rata actual bonus to be paid to Mr. Dempsey would be paid in a lump sum. During the severance period, benefits will continue to
be provided pursuant to medical, dental, flexible benefit and premium payments and benefits under the SEELIP, ELIP, or EGTLIP will be continued for NEOs.
ANNUAL INCENTIVE PLANS
Participants in the PLBP for any year whose employment is involuntarily terminated by the Company other than for cause on
or after November 1 and before awards are paid for such year are eligible to receive prorated awards for such year based on actual performance, as are participants who by reason of
retirement, death or disability. A participant whose employment terminates for any other reason before awards are paid for a year is not eligible to receive an award. The MICP is structured on
the same terms and conditions as set forth in the PLBP.
|
|
|
50
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
RETIREMENT PLANS
The amount and form of pension benefits that would be paid upon a qualifying retirement under our SRIP, the RBEP and the
MSSORP are disclosed in the Pension Table on page 44 and the accompanying discussion. Any additional retirement benefits that
would be payable in the event of termination of employment or a change in control are shown in the Potential Payments Upon Termination or Change in Control tables below.
AWARDS GRANTED UNDER THE STOCK AND INCENTIVE AWARD PLAN
The following is a discussion of the standard terms of stock options, RSUs and PSA awards with respect to the effect of
various types of termination of employment under the terms of those awards and in the event of a change in control, although these terms
may vary by agreement and by person. Under all three types of awards, retirement refers to a termination of employment by the employee who has reached the age of 62 with five
years of service.
STOCK OPTIONS
If the holders employment terminates other than by reason of death, disability or retirement or for cause,
(i) the portion of the stock options that are exercisable as of the termination date will terminate; provided, however, if the employee is terminated by the Company without cause, the stock options that were exercisable as of the termination
date will remain exercisable for one year from the date of termination and (ii) the portion of the stock options that have not become exercisable will be forfeited. If the holders employment terminates due to death or disability, the
portion of the stock options that are not exercisable will immediately become exercisable and the stock options will be exercisable for a year after the termination date. If the holders employment terminates by reason of retirement and at
least one
year after the grant date, the portion of the stock options that are not yet exercisable will immediately become exercisable and the stock options will be exercisable for five years after the
termination date. If the holders employment is terminated for cause, all outstanding stock options will terminate. If a change in control occurs and, in addition, within two years following the change of control there is a termination of
employment by the Company without cause, termination by the employee with good reason, or termination on account of death, disability or retirement, the portion of the stock options that are not exercisable will immediately become exercisable and
the stock options will be exercisable for two years after the termination date.
RESTRICTED STOCK UNIT AWARDS
If the holders employment terminates, other than due to death or disability or retirement, the unvested portion of
the award terminates. If the holders employment is terminated due to death or disability, the unvested portion of the award vests in full. If the holders employment terminates by reason of retirement (so long as there is no cause), and
if at least two years have passed since the grant date, then the portion of any RSUs that did not become non-forfeitable before the date of separation from service
by retirement will become non-forfeitable on that date. If the holders employment is terminated for cause, the unvested portion of the award terminates. If a change in control occurs and,
in addition, within two years following a change of control there is a termination of employment by the Company without cause, termination by the employee with good reason, or termination on account of death, disability or retirement, then any
unvested RSUs will become vested on the date of the termination.
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
51
|
EXECUTIVE COMPENSATION
PERFORMANCE SHARE AWARDS
If a holders employment terminates due to death or disability before the completion of a three-year performance
cycle, a prorated payout will be made at the target level as soon as administratively feasible. In the event of involuntary termination not for cause, a prorated number of shares will be earned on the basis of plan performance and will be paid at
the end of the three-year cycle only if at least one-year of employment has occurred from the grant date until the termination date. If the holders employment terminates by reason of retirement (so long as there is no cause), and if at least
two years have passed since the grant date, then a prorated number of shares earned on the basis of plan performance will be paid at the end of the three-year cycle. If the holders employment terminates by reason of retirement (so long as
there is no cause), and
if less than two years have passed since the grant date, then a prorated number of shares will be earned based on the lesser of plan performance or target level and will be paid at the end of the
three-year cycle. If a holders employment terminates for any other reason, then all PSAs not earned as of the termination date terminate.
If there is a change
in control during the three year performance cycle, and the holders employment is terminated by the Company without cause or by the employee for good reason within two years following the change of control, vesting of PSAs based on actual
performance will occur for full years that have been completed and based on target for any remaining period.
|
|
|
52
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
1
The amount of compensation payable to each NEO if termination of employment or a change in control occurs, assuming a December 31, 2015 triggering
event, is listed in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. Dempsey
|
|
Voluntary
Termination
($)
7
|
|
|
For Cause
Termination
($)
8
|
|
|
Without
Cause/Good
Reason
Termination
($)
9
|
|
|
Death ($)
10
|
|
|
Disability
($)
10, 11
|
|
|
Change in
Control
($)
12
|
|
|
Change in
Control With
Termination
($)
13
|
|
|
Retirement
($)
14
|
|
Cash Compensation/
Severance
|
|
|
|
|
|
|
|
|
|
$
|
1,867,840
|
|
|
$
|
267,840
|
|
|
$
|
267,840
|
|
|
$
|
332,160
|
|
|
$
|
3,980,517
|
|
|
|
|
|
Additional Retirement Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
391,058
|
|
|
|
|
|
Continuation of Other Benefits
3
|
|
|
|
|
|
|
|
|
|
$
|
176,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
337,337
|
|
|
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
133,720
|
|
|
$
|
133,720
|
|
|
|
|
|
|
$
|
133,720
|
|
|
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,554,718
|
|
|
$
|
1,554,718
|
|
|
|
|
|
|
$
|
1,554,718
|
|
|
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
|
|
|
|
$
|
2,042,003
|
|
|
$
|
2,509,151
|
|
|
$
|
2,509,151
|
|
|
|
|
|
|
$
|
3,822,120
|
|
|
|
|
|
TOTAL
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,086,012
|
|
|
$
|
4,465,429
|
|
|
$
|
4,465,429
|
|
|
$
|
332,160
|
|
|
$
|
10,219,470
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
C. Stephens, Jr.
|
|
Voluntary
Termination
($)
7
|
|
|
For Cause
Termination
($)
8
|
|
|
Without
Cause/Good
Reason
Termination
($)
9
|
|
|
Death ($)
10
|
|
|
Disability
($)
10, 11
|
|
|
Change in
Control
($)
12
|
|
|
Change in
Control With
Termination
($)
13
|
|
|
Retirement
($)
14
|
|
Cash Compensation/Severance
|
|
|
|
|
|
|
|
|
|
$
|
563,895
|
|
|
$
|
102,895
|
|
|
$
|
102,895
|
|
|
$
|
127,605
|
|
|
$
|
1,974,247
|
|
|
|
|
|
Additional Retirement Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
104,367
|
|
|
|
|
|
Continuation of Other Benefits
3
|
|
|
|
|
|
|
|
|
|
$
|
127,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
240,453
|
|
|
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
58,348
|
|
|
$
|
58,348
|
|
|
|
|
|
|
$
|
58,348
|
|
|
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
796,204
|
|
|
$
|
796,204
|
|
|
|
|
|
|
$
|
796,204
|
|
|
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
|
|
|
|
$
|
766,783
|
|
|
$
|
878,852
|
|
|
$
|
878,852
|
|
|
|
|
|
|
$
|
1,238,650
|
|
|
|
|
|
TOTAL
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,458,405
|
|
|
$
|
1,836,299
|
|
|
$
|
1,836,299
|
|
|
$
|
127,605
|
|
|
$
|
4,412,271
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
S. Mayo
|
|
Voluntary
Termination
($)
7
|
|
|
For Cause
Termination
($)
8
|
|
|
Without
Cause/Good
Reason
Termination
($)
9
|
|
|
Death ($)
10
|
|
|
Disability
($)
10, 11
|
|
|
Change in
Control
($)
12
|
|
|
Change in
Control With
Termination
($)
13
|
|
|
Retirement
($)
14
|
|
Cash Compensation/Severance
|
|
|
|
|
|
|
|
|
|
$
|
493,799
|
|
|
$
|
68,799
|
|
|
$
|
68,799
|
|
|
$
|
143,701
|
|
|
$
|
1,832,655
|
|
|
|
|
|
Additional Retirement Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation of Other Benefits
3
|
|
|
|
|
|
|
|
|
|
$
|
53,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
92,949
|
|
|
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
362,429
|
|
|
$
|
362,429
|
|
|
|
|
|
|
$
|
362,429
|
|
|
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
|
|
|
|
$
|
318,510
|
|
|
$
|
397,548
|
|
|
$
|
397,548
|
|
|
|
|
|
|
$
|
714,878
|
|
|
|
|
|
TOTAL
|
|
$
|
|
|
|
$
|
|
|
|
$
|
866,284
|
|
|
$
|
828,776
|
|
|
$
|
828,776
|
|
|
$
|
143,701
|
|
|
$
|
3,002,911
|
|
|
$
|
|
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
53
|
EXECUTIVE COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Barnhart
|
|
Voluntary
Termination
($)
7
|
|
|
For Cause
Termination
($)
8
|
|
|
Without
Cause/Good
Reason
Termination
($)
9
|
|
|
Death
($)
10
|
|
|
Disability
($)
10, 11
|
|
|
Change in
Control
($)
12
|
|
|
Change in
Control With
Termination
($)
13
|
|
|
Retirement
($)
14
|
|
Cash Compensation/
Severance
|
|
|
|
|
|
|
|
|
|
$
|
408,480
|
|
|
$
|
33,480
|
|
|
$
|
33,480
|
|
|
$
|
154,020
|
|
|
$
|
971,665
|
|
|
|
|
|
Additional Retirement
Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
225,724
|
|
|
|
|
|
Continuation of Other
Benefits
3
|
|
|
|
|
|
|
|
|
|
$
|
81,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
148,766
|
|
|
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
467,006
|
|
|
$
|
467,006
|
|
|
|
|
|
|
$
|
467,006
|
|
|
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
|
|
|
|
$
|
228,678
|
|
|
$
|
304,177
|
|
|
$
|
304,177
|
|
|
|
|
|
|
$
|
530,673
|
|
|
|
|
|
TOTAL
|
|
$
|
|
|
|
$
|
|
|
|
$
|
719,041
|
|
|
$
|
804,663
|
|
|
$
|
804,663
|
|
|
$
|
154,020
|
|
|
$
|
2,343,834
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
D. Edwards
|
|
Voluntary
Termination
($)
7
|
|
|
For Cause
Termination
($)
8
|
|
|
Without
Cause/Good
Reason
Termination
($)
9
|
|
|
Death
($)
10
|
|
|
Disability
($)
10, 11
|
|
|
Change in
Control
($)
12
|
|
|
Change in
Control With
Termination
($)
13
|
|
|
Retirement
($)
14
|
|
Cash Compensation/
Severance
|
|
|
|
|
|
|
|
|
|
$
|
355,460
|
|
|
$
|
59,460
|
|
|
$
|
59,460
|
|
|
$
|
73,740
|
|
|
$
|
1,206,514
|
|
|
|
|
|
Additional Retirement
Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
43,611
|
|
|
|
|
|
Continuation of Other
Benefits
3
|
|
|
|
|
|
|
|
|
|
$
|
74,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
133,088
|
|
|
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27,496
|
|
|
$
|
27,496
|
|
|
|
|
|
|
$
|
27,496
|
|
|
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
218,179
|
|
|
$
|
218,179
|
|
|
|
|
|
|
$
|
218,179
|
|
|
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
|
|
|
|
$
|
379,852
|
|
|
$
|
427,039
|
|
|
$
|
427,039
|
|
|
|
|
|
|
$
|
594,552
|
|
|
|
|
|
TOTAL
|
|
$
|
|
|
|
$
|
|
|
|
$
|
809,356
|
|
|
$
|
732,174
|
|
|
$
|
732,174
|
|
|
$
|
73,740
|
|
|
$
|
2,223,440
|
|
|
$
|
|
|
1
|
The value of equity awards vesting upon a change in control, death or disability are equal to the grants intrinsic value as of December 31, 2015 based on the closing market price of $35.39. Equity awards and
non-equity incentive plan compensation that were fully vested by their terms as of December 31, 2015 are not included in the numbers shown above. For information on any outstanding fully-vested awards, see the Outstanding Equity Awards at
Fiscal Year End Table.
|
2
|
The value of these benefits is based upon provisions of the change in control severance agreements with our NEOs whereby the executives are entitled to the value of additional retirement benefits that would have been
earned had they continued employment for two additional years after employment termination.
|
3
|
The value of these benefits is based upon the Executive Separation Pay Plan and the change in control severance agreements with our NEOs whereby the executives are entitled to continued participation in the
Companys welfare and fringe benefit plans for 12 or 24 months upon covered terminations of employment, and continuation of premium payments and benefits under the SEELIP, ELIP, or EGTLIP as applicable. Although continued participation may
cease to the extent the NEO subsequently has coverage elsewhere, the numbers set forth in the table above reflect an estimate of coverage for the maximum applicable time period.
|
4
|
Amounts reflect the difference between the exercise price of the option and the closing market price of $35.39 as of December 31, 2015. Options with a strike price greater than $35.39 are shown as $0. Equity awards
that were fully vested by their terms as of December 31, 2015 are not included in the numbers shown above. Calculation assumes that stock options are exercised immediately, although severance agreements allow 2 years to exercise following a
Change in Control and qualified termination and 1 year in the cases of death or disability. For information on any outstanding fully-vested awards, see the Outstanding Equity Awards at Fiscal Year End Table.
|
5
|
Amounts reflect the market value of the shares underlying the awards as of December 31, 2015 at the closing market price of $35.39 and do not include any value for that portion of the award with respect to which
the participants accrued a vested interest by or on December 31, 2015. For information on any outstanding fully-vested awards, see the Outstanding Equity Awards at Fiscal Year End Table.
|
6
|
Amounts reflect the market value of the shares underlying the awards as of December 31, 2015 at the closing market price of $35.39 and assume target level performance and do not include any value for that portion
of the award with respect to which the participants accrued a vested interest by or on December 31, 2015. No value is included in the Change in Control column because performance is unknown at December 31, 2015. For Without Cause/Good
Reason Termination, performance shares granted over a year prior to the termination date are pro-rated at target. For death and disability, all unvested performance shares are prorated at target.
|
7
|
Relative to the Cash Compensation/Severance row of the table, no additional payment is due under the Annual Incentive Plans; participants must be employed on the date of payment to receive an award, so no award is
payable.
|
8
|
Relative to the Cash Compensation/Severance row of the table, the Executive Separation Pay Plan stipulates no separation benefits are due if the executive is terminated for misconduct. Under the Annual Incentive Plans,
the officer generally must be employed on the date of payment to receive an award. A retirement-eligible officer also gets no bonus under the Annual Incentive Plans if terminated for Cause.
|
|
|
|
54
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
EXECUTIVE COMPENSATION
9
|
The amount in the Cash Compensation/Severance row of the table equals one years salary (or two years salary for Dempsey) and includes a pro-rated award under the Annual Incentive Plans for all executives.
Under the Annual Incentive Plans, an executive terminated other than for cause after October 31, 2015 is entitled to a pro-rated award. The amounts shown in the table assume performance at target levels for 2015 and future years.
|
10
|
Relative to the Cash Compensation/Severance row of the table, no additional salary is due upon death or disability, but, under the Annual Incentive Plans, the participant would be entitled to a pro-rated award for a
death or disability on December 31, 2015. Participants beneficiaries would also be entitled to life insurance benefits as well as certain pension plan death benefits not shown in this table. Equity awards (other than performance shares)
vest at date of death. No incremental value is shown for death because the table assumes death occurred on the last day of the year; the awards would then have already been earned.
|
11
|
Participants would be able to receive short-term disability and long-term disability payments available to all salaried employees which amounts are not shown in the table above. Participants would also accrue service
under some of the pension plans during a period of disability. Equity awards (other than performance shares) vest upon the occurrence of a qualifying disability event. No incremental value is shown for disability because the table assumes disability
occurred on the last day of the year; the awards would then have already been earned.
|
12
|
Upon a change in control event with continued employment, executives are entitled to a pro-rated target bonus. The table reflects a December 31, 2015 event. Since a portion of the 2015 bonus is earned as of December 31,
2015, the Cash Compensation/Severance row includes the excess (if any) of the full-year target bonus over the amount actually awarded for the year.
|
13
|
Executives are entitled to 2 years salary and a pro-rated target bonus upon a change in control. The table reflects a December 31, 2015 event. Since a portion of the 2015 bonus is earned as of December 31, 2015, the
Cash Compensation/Severance row includes the excess (if any) of the full-year target bonus over the amount actually awarded for the year. Pro-rated bonus is based on target for all NEOs. Agreements separately provide for a bonus component of the
severance benefit. For all NEOs, this is based on a 2x multiple of a 3-year average bonus or the target bonus if target is more favorable, for post-change in control termination. The severance benefits shown for Mr. Barnhart for a post-change
in control termination has been reduced by $340,835, to the largest after-tax payment.
|
14
|
Equity awards only allow for retirement treatment if an executive retires at or after attaining age 62 with at least five years of service. No amounts are shown in
this column as none of the NEOs was eligible to retire on December 31, 2015.
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
55
|
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth information regarding securities authorized for issuance under the Companys equity compensation plans as of
December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
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 under
equity compensation
plans (excluding
securities reflected in
column
(a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
|
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barnes Group Inc. Stock and Incentive Award Plan (2014 Plan)
|
|
|
1,401,926
|
1
|
|
|
25.63
|
2
|
|
|
6,767,432
|
3
|
|
|
|
|
Employee Stock Purchase Plan (ESPP)
|
|
|
|
|
|
|
|
|
|
|
297,205
|
|
|
|
|
|
Non-Employee Director Deferred Stock Plan, As Further Amended
|
|
|
52,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,454,726
|
|
|
|
|
|
|
|
7,064,637
|
|
1
|
Included in this amount are 348,906 shares reserved for RSU awards, 321,639 shares reserved for PSAs assuming target performance, and 87,309 shares reserved for PSAs assuming above target performance.
|
2
|
Weighted-average exercise price excludes 670,545 shares for restricted stock awards with a zero exercise price.
|
3
|
The 2014 Plan allows for stock options and stock appreciation rights to be issued at a ratio of 1:1 and other types of incentive awards at a ratio of 2.84:1.
|
|
|
|
56
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
STOCK OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 21, 2016, the individuals and institutions set forth below are the only persons known by us to be beneficial owners of more than 5% of the outstanding
shares of Common Stock:
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature
of Beneficial Ownership
|
|
|
Percent of
Common Stock
|
|
Bank of America Corporation and Affiliates
1
100 N. Tryon Street
Bank of America Corporate Center
Charlotte, NC 28255
|
|
|
5,223,510
|
|
|
|
9.5
|
%
|
|
|
|
BlackRock, Inc.
2
55 East 52
nd
Street
New York, NY 10022
|
|
|
4,855,136
|
|
|
|
8.8
|
%
|
|
|
|
Vanguard Group Inc.
3
100 Vanguard Boulevard
Malvern, PA 19355
|
|
|
3,627,078
|
|
|
|
6.6
|
%
|
|
|
|
Mr. Thomas O. Barnes
4
123 Main Street
Bristol, CT 06010
|
|
|
3,079,376
|
|
|
|
5.7
|
%
|
|
|
|
Dimensional Fund Advisors LP
5
6300 Bee Cave Road
Building One
Austin, TX 78746
|
|
|
2,834,075
|
|
|
|
5.2
|
%
|
1
|
This information is based on a Schedule 13G/A filed by Bank of America Corporation (BoA) on February 16, 2016 with the SEC. As of December 31, 2015, BoA had shared voting power with respect to 5,152,823 shares
and shared investment power with respect to 5,223,510 shares.
|
2
|
This information is based on a Schedule 13G/A filed by BlackRock, Inc. on January 25, 2016 with the SEC. As of December 31, 2015, BlackRock, Inc., together with affiliates identified in the Schedule 13G/A, had
sole voting power with respect to 4,726,492 shares and sole investment power with respect to an aggregate of 4,855,136 shares.
|
3
|
This information is based on a Schedule 13G/A filed by Vanguard Group Inc. on February 10, 2016 with the SEC. As of December 31, 2015, Vanguard Group Inc., together with affiliates identified in the Schedule
13G, had sole voting power and shared investment power with respect to 68,206 shares and sole investment power with respect to 3,558,872 shares.
|
4
|
As of March 21, 2016, based on Company records, Mr. T. Barnes had sole voting and sole investment power with respect to 589,893 shares and sole voting and shared investment power with respect to 2,082,273 shares.
|
5
|
This information is based on a Schedule 13G filed by Dimensional Fund Advisors LP on February 9, 2016 with the SEC. As of December 31, 2015, Dimensional Fund Advisors LP, together with affiliates identified in
the Schedule 13G, had sole voting power with respect to 2,777,806 shares and sole investment with respect to an aggregate amount of 2,834,075 shares.
|
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
57
|
STOCK OWNERSHIP
SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS
As of March 21, 2016, each
of our directors and NEOs, and all directors and executive officers as a group beneficially owned the number of shares of Common Stock shown below. The number of shares reported as beneficially owned has been determined in accordance with
Rule 13d-3 under the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Person or Group
|
|
|
|
Amount and Nature
of Beneficial Ownership
1
|
|
|
|
|
Percent of
Common Stock
|
|
Thomas O. Barnes
|
|
|
|
|
3,079,376
|
|
|
|
|
|
5.7
|
%
|
Richard R. Barnhart
|
|
|
|
|
29,857
|
|
|
|
|
|
*
|
|
Gary G. Benanav
|
|
|
|
|
83,085
|
|
|
|
|
|
*
|
|
William S. Bristow, Jr.
|
|
|
|
|
426,200
|
|
|
|
|
|
*
|
|
Patrick J. Dempsey
|
|
|
|
|
234,785
|
|
|
|
|
|
*
|
|
Dawn N. Edwards
|
|
|
|
|
92,969
|
|
|
|
|
|
*
|
|
Francis J. Kramer
|
|
|
|
|
10,474
|
|
|
|
|
|
*
|
|
Mylle H. Mangum
|
|
|
|
|
18,514
|
|
|
|
|
|
*
|
|
Scott A. Mayo
|
|
|
|
|
8,102
|
|
|
|
|
|
*
|
|
Hassell H. McClellan
|
|
|
|
|
18,900
|
|
|
|
|
|
*
|
|
William J. Morgan
|
|
|
|
|
35,843
|
|
|
|
|
|
*
|
|
JoAnna L. Sohovich
|
|
|
|
|
2,475
|
|
|
|
|
|
*
|
|
Christopher J. Stephens, Jr.
|
|
|
|
|
120,676
|
|
|
|
|
|
*
|
|
Current directors & executive officers as a group (16 persons)
|
|
|
|
|
4,203,198
|
|
|
|
|
|
7.8
|
%
|
*
|
Less than 1% of Common Stock beneficially owned.
|
1
|
The named person or group has sole voting and investment power with respect to the shares listed in this column, except as set forth in this note.
|
Mr. T. Barnes has sole voting and sole investment power with respect to 589,893 shares and sole voting and shared
investment power with respect to 2,082,273 shares. Of the shares of Common Stock owned by Mr. T. Barnes, 100,000 shares are pledged. Mr. Bristow has shared voting and shared investment power with respect to 30,418 shares which are held in
an irrevocable trust. Of the shares of Common Stock owned by Mr. Bristow, 379,155 shares are held in a margin account and may be pledged from time to time in this account.
The shares listed for Messrs. T. Barnes, Barnhart, Benanav, Bristow, Dempsey, Kramer, Mayo, McClellan, Morgan and Stephens, Mses. Edwards, Mangum and Sohovich, and
all directors and executive officers as a group include 0; 2,468; 0; 0; 93,368; 0; 1,917; 0; 0; 38,468; 38,885; 0; 0; and 187,175 shares, respectively, which they have the right to acquire within 60 days after March 21, 2016. The shares listed for
Messrs. T. Barnes, Barnhart, Dempsey and Stephens, Ms. Edwards, and all directors and executive officers as
a group include 35,446; 2,463; 4,166; 1,760; 14,227 and 58,066 shares, respectively, over which they have shared investment power. These shares are held under the Companys Retirement
Savings Plan. The shares listed for Messrs. T. Barnes, Benanav and Bristow and Ms. Mangum include 12,000 shares that each of them has the right to receive under the Non-Employee Director Deferred Stock Plan described above under the heading
Director Compensation in 2015.
The shares listed for Messrs. T. Barnes, Barnhart, Benanav, Bristow, Dempsey, Kramer, Mayo, McClellan, Morgan and
Stephens, Mses. Edwards, Mangum and Sohovich, and all directors and executive officers as a group do not include 679; 0; 679; 679; 0; 679; 0; 679; 679; 0; 0; 679; 679; and 5,432 shares, respectively, that the holders may have the right to
receive on a future date (beyond 60 days from March 21, 2016) pursuant to RSU and performance share awards.
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58
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
STOCK OWNERSHIP
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers and beneficial
owners of 10% or more of our Common Stock file reports with the SEC concerning their ownership, and changes in their ownership, of our
Common Stock. Based on our review of reports filed with the SEC and written representations from our directors and executive officers, we had one late filing for one transaction for
Mr. William S. Bristow, Jr. in 2015.
RELATED PERSON TRANSACTIONS
POLICIES AND PROCEDURES FOR RELATED PERSON TRANSACTIONS
We have a written policy regarding related person transactions. The policy covers all related person transactions or
series of similar transactions. All related person transactions are to be in the best interests of the Company and its stockholders and, unless different terms are specifically approved or ratified by the Corporate Governance Committee, must be on
terms that are no less favorable to us than would be obtained in a similar transaction with an unaffiliated third party under the same or similar circumstances. The Corporate Governance Committee may consider the following:
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|
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the extent of the related persons interest in the transaction;
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whether the transaction would create an actual or apparent conflict of interest;
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the availability of other sources or comparable products or services, if applicable;
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|
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whether the item is generally available to substantially all employees, if applicable;
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|
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the benefit to the Company; and
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|
|
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the aggregate value of the transaction.
|
Our General Counsel is responsible for reviewing all related person transactions
and taking all reasonable steps to ensure that all material related person transactions (those required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC) are presented to the Corporate Governance
Committee for pre-approval or ratification in its discretion. Each director and executive officer is responsible for promptly notifying our General Counsel of any related person transaction in which such director or executive officer may be directly
or indirectly involved as soon he or she becomes aware of a possible transaction.
For related person transactions that are not material, our General Counsel is to
determine whether the transaction is in compliance with the policy. If a non-material related person transaction involves the General Counsel, the Chief Financial Officer assumes the responsibilities of the General Counsel with respect to the
policy.
|
|
|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
59
|
RELATED PERSON TRANSACTIONS
RELATED PERSON TRANSACTIONS FOR 2015
In 1999, the Company entered into collateral assignment split dollar life insurance agreements (Agreements),
which replaced similar agreements that had been entered into in 1985, with our current Chairman of the Board and his sister. The insured under the policies is the father of our current Chairman of the Board. The current beneficiaries under the
policies are our current Chairman and his sister. The Agreements were originally entered into when our current Chairmans father was the Companys chief executive officer and chairman of the board, and they
were customary at the time. Since 1985, the Company has paid an annual premium of $49,500 for each policy as required under the Agreements. Upon termination of the Agreements or death of the
insured, the Company is entitled to the greater of the aggregate premiums paid or the cash value of the policies. As of December 31, 2015, the death benefit of each policy was $3,326,921, the aggregate premiums paid by the Company for each
policy was $1,665,844, and the cash value of each policy was $1,844,364.
AUDIT MATTERS
PROPOSAL 4 - APPROVE THE COMPANYS PERFORMANCE BASED BONUS PLAN FOR SELECTED EXECUTIVE OFFICERS
In February 2016, the Companys Board of Directors adopted amendments to The Barnes Group Inc. Performance-Linked
Bonus Plan for Selected Executive Officers, as amended (PLBP), subject to stockholder approval at the 2016 Annual meeting. The amendments provide for revised performance objectives and adjustments to be available under the PLBP.
The PLBP is being submitted to stockholders to: (a) extend the term of the PLBP for an additional five
years through the date of the 2021 annual meeting and (b) approve revised performance objectives that can be used under the PLBP. Approval by the stockholders of the amendments to the PLBP
will enable the Company to continue to pay compensation under the PLBP that qualifies as performance-based as defined in Section 162(m) of the Internal Revenue Code and therefore will not be subject to the $1,000,000 deduction
limit. Section 162(m) of the Internal Revenue Code limits the deductibility by the Company of certain
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62
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BARNES GROUP INC. 2016 PROXY STATEMENT
|
OTHER MANAGEMENT PROPOSALS
types of compensation provided to employees to $1,000,000 per individual. However, performance-based compensation that
meets certain conditions is not subject to the $1,000,000 deduction limit. One of these conditions is that the performance-based plan under which the compensation will be paid must be disclosed to and approved by stockholders. The PLBP was approved
by stockholders in 2001, 2006 and again in 2011, to satisfy the requirement under Section 162(m) of the Internal Revenue Code.
Stockholders are requested in this Proposal 4 to approve the amended PLBP, including the revised performance-based
provisions, in substantially the form attached hereto as Annex 1. If the stockholders fail to approve this proposal, then the amended PLBP will not become effective
.
The description of the PLBP terms that follows is subject to and qualified
by reference to the complete text of the PLBP set forth in Annex 1.
PURPOSE AND ELIGIBILITY
The purpose of the PLBP is to provide the Companys senior executive officers with cash incentive compensation
opportunities. No later than 90 days after the start of each year (or by such other deadline as may apply under the Internal Revenue Code), the
Compensation and Management Development Committee of the Companys Board of Directors (Compensation Committee) will select the persons who will participate in the PLBP in such
year.
ADMINISTRATION
Pursuant to the requirements under Section 162(m) of the Internal Revenue Code, the PLBP must be administered by a
committee comprised solely of not less than two directors who are outside directors within the meaning of the Internal Revenue Code. The PLBP will be administered by the Compensation Committee. The Compensation Committee has the
authority to: (i) select employees to participate in the plan; (ii) establish and administer the performance objectives and the award opportunities applicable to
each participant and certify whether the goals have been attained; (iii) construe and interpret the plan and any agreement or instrument entered into under the plan; (iv) establish,
amend, and waive rules and regulations for the plans administration; (v) and make all other determinations which may be necessary or advisable for the administration of the plan. Any determination by the Compensation Committee pursuant to
the PLBP will be final, binding and conclusive.
PERFORMANCE GOALS
Under the PLBP, the performance goals for any award period may be based on any of the criteria set forth below either
alone or in any combination, the consolidated Company, any consolidated group, Company subsidiary or any business unit, business segment, division, or similar collection of cost centers, profit centers, or international subsidiaries that may be
recognized as such by the Compensation Committee as the Compensation Committee may determine. The Performance objective or objectives applicable to any award shall be based on a relative comparison of entity performance to the performance of a
comparator group, index or other external measure, targeted levels of, targeted levels of return on, or targeted levels of growth for, including any percentage increase or decrease of such targeted level, any one or more of the following performance
measures on a consolidated Company, consolidated group, subsidiary, segment, business unit or divisional level basis, as the Compensation Committee may specify: earnings per
share; earnings before taxes; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; net income; operating income; performance profit (operating
income minus an allocated charge approximating the Companys cost of capital, before or after tax); operating profit; gross profit; gross margin; operating margin and statistics; improvement in or attainment of expense levels; cost reduction;
debt reduction; net debt reduction; revenue; working capital; net working capital; days working capital; total assets; net assets; stockholders equity; debt to capital; cash flow; cash conversion; free cash flow (net cash from operations less
CAPEX); dividend net income; return on equity; return on capital; return on assets; return on invested capital; return on capital employed; ratio of operating earnings to capital spending; internal rate of return; liquidity measurements; leverage;
financing and other capital raising transactions; cost of capital; customer satisfaction; employee satisfaction; customer growth;
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BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
63
|
OTHER MANAGEMENT PROPOSALS
sales; net sales; gross sales; attainment of strategic or operating initiatives; operating efficiencies; productivity
improvement and productivity ratios; inventory turns; comparison with various stock market indices; stock price; market share; and total stockholder return.
Any
such performance criterion or combination of such criteria may apply to the participants award opportunity in its entirety or to any designated portion or portions of the award opportunity, as the Compensation Committee may specify. Unless the
Compensation Committee determines otherwise at any time prior to payment of a participants award for an award period and subject to the Compensation
Committees right to reduce an award prior to payment, the performance goals, any of which affect any performance criterion applicable to the award, will automatically be excluded or
included in determining the extent to which the performance level has been achieved, whichever will produce the higher award.
This provision is included in the PLBP
because awards may qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code if the Compensation Committee has discretion to reduce an award, but not if the Compensation Committee has discretion to
increase an award.
ESTABLISHMENT OF PERFORMANCE GOALS
No later than 90 days after the start of each year (or by such other deadline as may apply under the Internal Revenue
Code), the Compensation Committee will establish in writing the performance goals for that year, and if the Compensation Committee determines, the Compensation Committee may establish an unfunded pool for purposes of making awards as a result of
achievement of performance goals in an award period. During the same 90-day period, as applicable, the Compensation Committee will establish the method for computing the amount of compensation which each such participant will be paid if the
established performance goals are attained in whole or in part and such method will be stated in terms of an objective formula or standard that precludes discretion to increase the amount that will be due upon attainment of the goals. The
Compensation Committee may specify, during such period, that the performance
criteria will be adjusted by any or all of the following items: unusual or infrequently occurring items, effects of discontinued operations, effects of restructuring activities, effects of
accounting changes, effects of currency or exchange rate fluctuations, effects of non-operating items; effects of unusual or infrequently occurring financing activities or transactions, effects of acquisitions and acquisition expenses, and effects
of divestitures and divestiture expenses. The foregoing may apply to the participants award opportunity in its entirety or to any designated portion or portions of the award opportunity, as specified by the Compensation Committee. The terms,
formula and criteria specified by the Compensation Committee shall preclude discretion to increase the amount of the award that would otherwise be due upon attainment of the performance level.
AWARDS
Under the PLBP, participants receive specified payments after the close of each award period if specified target
performance objectives are attained during the award period. The Compensation Committee determines the percentage of salary, or the percentage of a performance award pool, if applicable, that will be earned at a given level of performance, and also
determines the level of performance that must be achieved. Performance at less than the target level of performance may result in a lesser percentage of salary, or of the bonus pool, if applicable, than the target being earned, and performance in
excess of the
target performance objective may result in a higher percentage of salary than target being earned. Under no circumstances may the award for a Participants service in any year exceed
$7,000,000. Payment of any award is contingent upon the Compensation Committees certifying in writing that the performance level applicable to such award was in fact satisfied. Unless and until the Compensation Committee so certifies, no award
is paid. The Compensation Committee may not increase the amount of an award upon satisfaction of the performance level.
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64
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|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
OTHER MANAGEMENT PROPOSALS
PAYMENT OF AWARDS
Generally, a person must be employed by the Company or one of its subsidiaries on the date of payment of an award in order
to be eligible to receive an award. However, participants who retire, die or become permanently disabled before awards are paid for that award period will receive a prorated portion of an award based on the number of days employed during the award
period until the date of such retirement, death or permanent disability. If a participant is involuntarily terminated by the Company without cause on or after November 1 of an award period, the participant will receive a pro rata portion of the
award based on the number of days worked during the award period through the date of such involuntary termination.
Prior to payment of a participants award
for an award period, each of the following items automatically shall
be included or excluded, in whatever combination shall produce the highest award, to the extent that any of such items affect any performance criterion applicable to the award (including but not
limited to the criterion of earnings per share): unusual or infrequently occurring items, effects of discontinued operations, effects of restructuring activities, effects of accounting changes, effects of currency or exchange rate fluctuations,
effects of non-operating items; effects of unusual or infrequently occurring financing activities or transactions, effects of acquisitions and acquisition expenses, and effects of divestitures and divestiture expenses. In no event may the
Compensation Committee increase the amount of an award upon satisfaction of the performance level. Awards will be paid in cash (unless the Compensation Committee determines otherwise) within 2
1
⁄
2
months following the end of the award period.
AMENDMENT
The Compensation Committee may amend or terminate the PLBP without stockholder approval at any time. Certain amendments
may require re-approval of the plan by stockholders for the performance-based
compensation to continue to qualify for deductibility by the Company, as specified by the Internal Revenue Code.
FEDERAL INCOME TAX CONSEQUENCES
The following provides only a general description of the application of federal income tax laws to awards under the PLBP.
This discussion is intended for the information of stockholders considering how to vote at the 2016 Annual Meeting and not as tax guidance to participants in the PLBP, as the consequences may vary among the participants. The summary does not address
the effects of other federal taxes (including possible golden parachute excise taxes) or taxes imposed under state, local or foreign tax laws.
As a
general rule, a participant will not receive taxable income on the date of the award. A participant will generally recognize ordinary income upon payment of the award. Assuming, as expected, that compensation paid under the PLBP is qualified
performance-based
compensation under Section 162(m) of the Internal Revenue Code, the Company will be entitled to a tax deduction that corresponds in time and amount to the ordinary income recognized by
the participant. While it is intended that the incentive awards will not be subject to Section 409A of the Internal Revenue Code, an eligible employees award may be subject to a 20% excise tax in addition to ordinary income tax inclusion
at the time the award becomes vested, plus interest, if the award constitutes deferred compensation under Section 409A of the Internal Revenue Code and the requirements of Section 409A of the Internal Revenue Code are not
satisfied. The Company may deduct from an eligible employees award any and all federal, state and local taxes or other amounts required by law to be withheld.
NEW PLAN BENEFITS
Awards under the PLBP are discretionary, so it is currently not possible to predict the amount of awards
that will be granted or who will receive awards under the PLBP after the 2016 Annual Meeting.
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|
The Board recommends a vote FOR the approval of the Performance-Linked Bonus Plan for
Selected Executive Officers.
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|
BARNES GROUP INC. 2016 PROXY STATEMENT
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65
|
OTHER MANAGEMENT PROPOSALS
SHAREHOLDER PROPOSAL
PROPOSAL 6 - SHAREHOLDER PROPOSAL
We have been advised by Jonathan Kalodimos, PhD, 725 NW 29
th
Street,
Corvallis, Oregon 97330, that he intends to present the following shareholder proposal at the Annual Meeting. We are not responsible for the
accuracy or content of the proposal and supporting statement, presented below, as received from the proponent. Our reasons for opposing the proposal are also presented below.
PROPOSAL
Resolved:
Shareholders of Barnes Group Inc. ask the board of directors to adopt and issue a general payout
policy that gives preference to share repurchases (relative to cash dividends) as a method to return capital to shareholders. If a general payout policy currently exists, we ask that it be amended appropriately.
Supporting statement:
Share repurchases as a method to return capital to shareholders have distinct advantages relative to dividends. Share repurchases should be
preferred for the following reasons:
1)
|
Financial flexibility. Four professors from Duke University and Cornell University studied executives decisions to pay dividends or make repurchases by surveying hundreds of executives of public companies. They
found that maintaining the dividend level is on par with investment decisions, while repurchases are made out of the residual cash flow after investment spending.
1
Further, in follow
up interviews as part of the study, executives state[d] that they would pass up some positive net present value (NPV) investment projects before cutting dividends. The creation of long-term value is of paramount importance;
1 believe that repurchases have the distinct advantage that they do not create an incentive to forgo long-term value enhancing projects in order to preserve a historic dividend level.
|
2)
|
Tax efficiency. Share repurchases have been described in the Wall Street Journal
2
as akin to dividends, but without the tax bite for shareholders. The
distribution of a dividend may automatically trigger a tax liability for some shareholders. The repurchase of shares does not
|
|
necessarily trigger that automatic tax liability and therefore gives a shareholder the flexibility to choose when the tax liability is incurred. Shareholders who desire cash flow can choose to
sell shares and pay taxes as appropriate. (This proposal does not constitute tax advice.)
|
Market acceptance. Some may believe that slowing the growth
rate or reducing the level of dividends would result in a negative stock market reaction. However, a study published in the Journal of Finance finds that the market response to cutting dividends by companies that were also share repurchasers was not
statistically distinguishable from zero.
3
I believe this study provides evidence that there is market acceptance that repurchases are valid substitutes for dividends.
Some may worry that share repurchases could be used to prop up metrics that factor into the compensation of executives. I believe that any such concern should not
interfere with the choice of optimal payout mechanism because compensation packages can be designed such that metrics are adjusted to account for share repurchases.
In summary, I strongly believe that adopting a general payout policy that gives preference to share repurchases would enhance long-term value creation. I urge
shareholders to vote FOR this proposal.
1
|
http://www.sciencedirect.com/science/articie/pii/S0304405X05000528
|
2
|
http://www.wsj.com/articIes/companies-stock-buybacks-help-buoy-the-market-1410823441
|
3
|
http://www.afajof.org/details/joumalArticle/289^
n-Hypothesis.html
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68
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|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
SHAREHOLDER PROPOSAL
STATEMENT BY THE BOARD AGAINST THE PROPOSAL
The Board unanimously
recommends a vote AGAINST adoption of the above Proposal for the following reasons:
1.
|
If adopted, the Proposal would would undermine the Board and managements ability to exercise their business judgment in a manner that they reasonably believe is in the Companys best interests.
|
A determination of the manner and amount of capital to return to stockholders is inherently fact-specific and rooted in the day-to-day business of
the Company. These determinations are based on careful consideration of constantly evolving economic, market, legal and industry factors, together with investment opportunities available to the Company. The Board and management devote significant
time and resources to carefully review the projected benefits and risks of various courses of action in consultation with their expert advisors. The Board believes that a fixed general payout policy would impair the Companys ability to respond
to those factors to the potential detriment of the Company and its stockholders.
The Proposal cites to studies and a newspaper article to support the assertion that
stock repurchases are more advantageous than dividends. While stock repurchases benefit certain investor goals, particularly those of short-term investors, the Company and others do not take such a categorical view. Dividends are an important method
to return capital to stockholders given the various benefits of dividends, including stockholder confidence in future cash flows, maintaining a long term investor base, empowering stockholders to decide how to use their cash returns and decreasing
share price volatility.
A balanced approach to the return of capital recognizes that dividends and stock repurchases each have merit and the Board and management
are in the
best position to evaluate each in the context and circumstances of the Company at the time. The Proposal would strip away that reasonable discretion and substitute a fixed policy of blind
preference for stock repurchases.
2.
|
Without a policy, the Company returned more cash directly to stockholders through stock repurchases than dividends over the past 6 years.
|
The Board and Company management maintain a disciplined approach to capital allocation, including whether to pay dividends and/or repurchase stock and in what amounts.
From 2010-2015, the Company returned approximately $210 million of its available cash directly to stockholders through stock repurchases and $131 million through dividends. Accordingly, the Company has demonstrated that it will prefer stock
repurchases over dividends when warranted without the need to hamstring Board and management discretion with a fixed policy.
The Company continues to pay a
competitive dividend and will repurchase shares opportunistically, depending on balance sheet availability, acquisition pipeline and timing, other capital needs and the stock market, among other considerations. As of December 31, 2015, the
Company had approximately $1.1 million shares available for repurchase under then current Board authorizations.
While the Board and Company management oppose
this Proposal for a fixed general payout policy, we are fully committed to returning cash to stockholders by utilizing available methods in a manner that most effectively creates and sustains short and long term stockholder returns.
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The Board recommends a vote AGAINST this Proposal.
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BARNES GROUP INC. 2016 PROXY STATEMENT
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|
69
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VOTING INFORMATION
WHO CAN VOTE
Only stockholders of record at the close of business on March 9, 2016 will be entitled to vote at the 2016 Annual
Meeting. As of March 9, 2016, the Company
had 53,679,842 outstanding shares of common stock, par value $.01 per share (Common Stock), each of which is entitled to one vote.
VOTING YOUR SHARES
You can vote your shares either by proxy or in person at the 2016 Annual Meeting. If you choose to vote by proxy, you can do so in one of four ways:
If you vote by internet or telephone, you should not return your proxy card.
If you hold your shares through a broker, bank or other nominee, you will receive separate instructions from the nominee describing how to vote your shares.
REVOCATION OF PROXY
A stockholder who executes and delivers a proxy may revoke it at any time before it is exercised by voting in person at
the 2016 Annual Meeting, by delivering a subsequent proxy, by notifying the inspectors of the
election in person or in writing or, if previous instructions were given through the internet or by telephone, by providing new instructions by the same means.
QUORUM
For the business of the 2016 Annual Meeting to be conducted, a minimum number of shares constituting a quorum must be
present. The holders of a majority of the outstanding shares of Common Stock entitled to vote at the 2016 Annual Meeting must be present in
person or represented by proxy at the 2016 Annual Meeting to have a quorum. Shares represented at the meeting by proxies including abstentions and broker non-votes are treated as present at the
meeting for purposes of determining a quorum.
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70
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|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
VOTING INFORMATION
VOTING STANDARDS AND BOARD RECOMMENDATIONS
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Voting Item
|
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Voting Standard
|
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Board Recommendation
|
1 Election of directors
|
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Plurality of votes cast. Proxies may not be voted for more than the number of nominees named by the Board
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For
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2 Advisory vote to approve the
Companys executive
compensation
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Affirmative vote of a majority of shares of Common Stock represented in person or by proxy and entitled to vote on the matter
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For
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3 Ratify the selection of
PricewaterhouseCoopers LLP as
the Companys
independent
auditor for 2016
|
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Affirmative vote of a majority of shares of Common Stock represented in person or by proxy and entitled to vote on the matter
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For
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4 Approve the Companys
Performance Based Bonus Plan
for Selected Executive Officers
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Affirmative vote of a majority of shares of Common Stock represented in person or by proxy and entitled to vote on the matter
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For
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5 Amend the Companys Bylaws to
replace plurality voting with
majority voting in
uncontested
director elections
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Affirmative vote of a majority of shares of Common Stock represented in person or by proxy and entitled to vote on the matter
|
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For
|
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6 Shareholder proposal as
described in this proxy
statement,
if properly presented
at the Annual Meeting
|
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Affirmative vote of a majority of shares of Common Stock represented in person or by proxy and entitled to vote on the matter
|
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Against
|
BROKER NON-VOTES
A broker non-vote occurs when a stockholder who holds his or her shares through a bank or brokerage firm does not instruct
that bank or brokerage firm how to vote the shares and, as a result, the broker is prevented from voting the shares held in the stockholders account on certain proposals. Under applicable NYSE rules, if you hold your shares through a bank or
brokerage firm and your broker delivers the
Notice of Internet Availability or the printed proxy materials to you, the broker has discretion to vote on routine matters only. Of the matters to be voted on as described in this
proxy statement, only the ratification of the selection of our independent registered public accounting firm is considered routine and therefore eligible to be voted on by your bank or brokerage firm without instructions from you.
EFFECT OF BROKER NON-VOTES
AND ABSTENTIONS
Abstentions and broker non-votes will not have an effect on the outcome of Proposal 1 (election of directors). In voting
on Proposal 2 (executive compensation), Proposal 3 (independent auditor), Proposal 4 (performance based bonus plan), Proposal 5
(majority voting) and Proposal 6 (shareholder proposal), abstentions will have the effect of votes against the proposals and broker non-votes will not have an effect on the outcome of the vote.
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BARNES GROUP INC. 2016 PROXY STATEMENT
|
|
71
|
VOTING INFORMATION
PARTICIPANTS IN THE BARNES GROUP INC. RETIREMENT SAVINGS PLAN
You must provide the trustee of the Barnes Group Inc. Retirement Savings Plan with your voting instructions in advance of
the meeting. You may do so by returning your voting instructions by mail, or submitting them by telephone or electronically, using the internet. You cannot vote your shares in person at the 2016 Annual Meeting; the trustee is the only one who can
vote your shares. The trustee will vote your shares as you have
instructed. Except as otherwise required by law, if the trustee does not receive your instructions, the trustee will vote your shares in the same proportion on each issue as it votes those shares
for which it has received voting instructions. To allow sufficient time for voting by the trustee, your voting instructions must be received by 11:59 p.m. Eastern Daylight Time (EDT) on May 3, 2016.
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72
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|
BARNES GROUP INC. 2016 PROXY STATEMENT
|
DOCUMENT REQUEST INFORMATION
E-PROXY PROCESS
According to the rules of the Securities and Exchange Commission (the SEC), instead of mailing a printed copy of our proxy
materials to each stockholder of record or beneficial owner, we are furnishing our proxy materials (proxy statement for the 2016 Annual Meeting, the proxy card and the 2015 Annual Report to Stockholders) by providing access to these materials on the
internet.
A Notice of Meeting and Internet Availability of Proxy Materials will be mailed to stockholders on or about March 23, 2016. We are providing this
notice in lieu of
mailing the printed proxy materials and instructing stockholders as to how they may: (1) access and review the proxy materials on the internet; (2) submit their proxy; and
(3) receive printed proxy materials.
Stockholders may request to receive printed proxy materials by mail or electronically by e-mail on an ongoing basis at no
charge by following the instructions in the notice. A request to receive proxy materials in printed form by mail or by e-mail will remain in effect until such time as the submitting stockholder elects to terminate it.
OTHER MATTERS
The Board does not know of any matters to be presented for consideration at the meeting other than the matters described
in Proposals 1, 2, 3, 4, 5 and 6 of the Notice of 2016 Annual Meeting. However, if other matters are presented, it is the intention of the persons
named in the accompanying proxy to vote on such matters in accordance with their judgment. All shares represented by the accompanying proxy, if the proxy is given before the meeting, will be
voted in the manner specified therein.
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74
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BARNES GROUP INC. 2016 PROXY STATEMENT
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STOCKHOLDER PROPOSALS FOR 2017 ANNUAL MEETING
A proposal for action to be presented by any stockholder at the 2017 Annual Meeting of Stockholders will be acted upon
only:
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If the proposal is to be included in the proxy statement and form of proxy, the proposal is received at the Companys Office of the Secretary at the address below on or before November 24, 2016; or
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If the proposal is not to be included in the proxy statement, or to nominate candidates for election as directors, it must be in accordance with our Bylaws, which provide that they may be made only by a stockholder of
record as of the date such notice is given and as of the date for determination of stockholders entitled to vote at such meeting, who shall have given notice of the proposed business or nomination which is received by us between January 6, 2017
and February 5, 2017. The notice
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must contain, among other things, the name and address of the stockholder, a brief description of the business desired to be brought before the 2017 Annual Meeting, the reasons for conducting the
business at the 2017 Annual Meeting, and the stockholders ownership of the Companys capital stock. The requirements for the notice are set forth in the Bylaws, which are available on the Companys website,
www.BGInc.com
.
Stockholders may also obtain a copy by writing to the Company at:
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Manager, Stockholder Relations & Corporate
Governance Services
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Barnes Group Inc.
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123 Main Street
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Bristol, Connecticut 06010
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March 22, 2016
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BARNES GROUP INC. 2016 PROXY STATEMENT
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75
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ANNEX 1
BARNES GROUP INC.
PERFORMANCE-LINKED BONUS
PLAN
For Selected Executive Officers
(as amended on February 9, 2016, effective with respect to awards for 2017 and subsequent years)
SECTION 1. PURPOSE
The Performance-Linked Bonus Plan For Selected Executive
Officers (the Plan) is designed to provide cash incentive compensation opportunities to key executives that contribute to the success of Barnes Group Inc. (the Company) and its subsidiaries. All employees (a) who are
executive officers of the Company, (b) whose incentive compensation for any taxable year(s) of the Company commencing on or after January 1, 2001 that the Committee (as hereafter defined) anticipates may not be deductible by the Company in
whole or in part but for compliance with Section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended (the Code), and (c) who are selected to participate in the Plan, including members of the Board of Directors of the
Company who are such employees, are eligible to participate in the Plan.
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Compensation and Management Development Committee of the Board of Directors of the Company, or its successor (the
Committee). The Committee shall consist of not less than two directors who are not employees of the Company or any subsidiary of the Company and shall be comprised solely of directors who are outside directors within the
meaning of Section 162(m)(4)(C)(i) of the Code. The Committee shall have authority, subject to the provisions of the Plan, to: select employees to participate in the Plan; establish and administer the Performance (as hereafter defined)
objectives and the Award (as hereafter defined) opportunities applicable to each participant and certify whether the goals have been attained; construe and interpret the Plan and any agreement or instrument entered into under the Plan; establish,
amend, and waive rules and regulations for the Plans administration; and make all other determinations which may be necessary or advisable for the administration of the Plan. Any determination by the Committee pursuant to the Plan shall be
final, binding and conclusive on all employees and participants and anyone claiming under or through any of them. Amounts paid or projected to be paid under the Plan are referred to herein as Awards.
SECTION 3. DEFINITIONS
3.1
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Award Period shall mean the period of time within which Performance is measured for the purpose of determining whether an Award has been earned.
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3.2
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CEO shall mean the President and Chief Executive Officer of the Company.
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3.3
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Covered Employee shall have the meaning set forth in Section 162(m) of the Code.
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3.4
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Group shall mean the consolidated Company, any consolidated group, Company subsidiary or any business unit, business segment, division, or similar collection of cost centers, profit centers, or international
subsidiaries that may be recognized as such by the Committee.
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3.5
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Individual Target shall mean a percentage of salary for each individual participating in the Plan, or a percentage of the Performance Award Pool, as applicable. The Committee will establish the Individual
Target for each participant no later than the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed.
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3.6
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Maximum shall mean a Performance level at or above which the amount paid or projected to be paid for an Award Period is equal to such maximum percentage of the Individual Targets as may be established by the
Committee for each participant no later than the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed.
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BARNES GROUP INC. 2016 PROXY STATEMENT
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1
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ANNEX 1
3.7
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Performance shall mean the performance objectives established by the Committee in advance, in writing, in terms of an objective formula or standard, with respect to a Group for an Award Period, for the
purpose of determining whether, and to what extent, an Award has been earned by the Group for such Award Period. The Performance objective or objectives applicable to any Award shall be based on a relative comparison of entity performance to the
performance of a comparator group, index or other external measure, targeted levels of, targeted levels of return on, or targeted levels of growth for, including any percentage increase or decrease of such targeted level, any one or more of the
following performance measures on a consolidated Company, consolidated group, subsidiary, segment, business unit or divisional level basis, as the Committee may specify: earnings per share; earnings before taxes; earnings before interest and taxes;
earnings before interest, taxes, depreciation and amortization; net income; operating income; performance profit (operating income minus an allocated charge approximating the Companys cost of capital, before or after tax); operating profit;
gross profit; gross margin; operating margin and statistics; improvement in or attainment of expense levels; cost reduction; debt reduction; net debt reduction; revenue; working capital; net working capital; days working capital; total assets; net
assets; stockholders equity; debt to capital; cash flow; cash conversion; free cash flow (net cash from operations less CAPEX); dividend net income; return on equity; return on capital; return on assets; return on invested capital; return on
capital employed; ratio of operating earnings to capital spending; internal rate of return; liquidity measurements; leverage; financing and other capital raising transactions; cost of capital; customer satisfaction; employee satisfaction; customer
growth; sales; net sales; gross sales; attainment of strategic or operating initiatives; operating efficiencies; productivity improvement and productivity ratios; inventory turns; comparison with various stock market indices; stock price; market
share; and total stockholder return.
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3.8
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Performance Award Pool shall mean an unfunded pool that may be established by the Committee, for purposes of making Awards as a result of Performance in an Award Period, in accordance with Section 5. If
the Committee chooses to establish a Performance Award Pool for any Award Period, the Committee will establish the Performance Award Pool for such Award Period no later than the earlier of (a) 90 days after the start of the Award Period or
(b) a date on which no more than one fourth of the Award Period has elapsed.
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3.9
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Target shall mean a Performance level above the Threshold and below the Maximum at which the amount paid or projected to be paid for an Award Period is equal to 100% of the Individual Targets for the members
of the corresponding Group.
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3.10
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Threshold shall mean a Performance level at or above which an Award is earned for an Award Period. For Threshold Performance, the amount paid or projected to be paid for an Award Period is equal to such
minimum percentage of the Individual Targets as may be established by the Committee no later than the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has
elapsed.
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SECTION 4. GROUP PERFORMANCE LEVELS
4.1
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The Committee shall establish the Performance criteria for each Award Period. The Performance criteria shall be determined in accordance with generally accepted accounting principles, except to the extent the Committee
directs otherwise, and shall be designated within the period ending on the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed. The Committee may
specify, during such period, that the Performance criteria will be adjusted by any or all of the following items: unusual or infrequently occurring items, effects of discontinued operations, effects of restructuring activities, effects of accounting
changes, effects of currency or exchange rate fluctuations, effects of non-operating items; effects of unusual or infrequently occurring financing activities or transactions, effects of acquisitions and acquisition expenses, and effects of
divestitures and divestiture expenses. With respect to the foregoing, any such Performance criterion or combination of such criteria may apply to the participants Award opportunity in its entirety or to any designated portion or portions of
the Award opportunity, as the Committee may specify. The terms, formula and Performance criteria specified by the Committee shall preclude discretion to increase the amount of the Award that would otherwise be due upon attainment of the Performance
level.
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4.2
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Whether or not specified by the Committee pursuant to Section 4.1, and subject to the Committees exercise of negative discretion pursuant to
Section 7.1, prior to payment of a participants Award for an Award Period,
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2
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BARNES GROUP INC. 2016 PROXY STATEMENT
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ANNEX 1
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any item subject to specification by the Committee pursuant to Section 4.1 shall be included or excluded, in whatever manner that individually or collectively produces the highest Award, to the extent that any of
such items affect any Performance criterion applicable to the Award (including but not limited to the criterion of earnings per share).
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4.3
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If an Award Period is a calendar year, prior to March 31, the Committee shall establish the Threshold, Target and Maximum for each Group, and the method for computing the Award for each participant in the Group for
such year if the Threshold, Target or Maximum is attained. If an Award Period is not a calendar year, then the Committee shall establish in writing no later than the earlier of (a) 90 days after the start of the Award Period or (b) a date
on which no more than one fourth of the Award Period has elapsed, the Threshold, Target and Maximum for each Group and the method for computing the Award for each participant in the Group for such Award Period if the Threshold, Target or Maximum is
attained. The Committee may also designate one or more intermediate levels of Performance between the Threshold and the Target, and the Target and the Maximum, for a Group, and the percentage of the corresponding Individual Targets that will be
available for payment as an Award if Performance equals such intermediate level.
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SECTION 5. PERFORMANCE AWARD POOL
The actual amount of such Performance Award Pool shall be based upon the achievement of a Performance objective or objectives during the applicable Award
Period. The Committee may specify the amount of the Performance Award Pool as a percentage of any such Performance objectives, a percentage thereof in excess of the Threshold, or another amount which need not bear a strictly mathematical
relationship to such Performance objective. The portion of the Performance Award Pool actually awarded as a result of Performance in an Award Period need not be 100% of the Performance Award Pool and shall be subject to the Committees right to
exercise negative discretion pursuant to Section 7.1.
SECTION 6. PARTICIPANTS
If an Award Period is a calendar year, prior to March 31, the Committee shall designate the eligible participants and the respective Groups in which
they shall participate. The CEO shall participate in the Executive Office Group for each Award Period. If an Award Period is not a calendar year, then the Committee shall designate the eligible participants, and the respective Groups, no later than
the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed. Except for (i) participants in the Plan during an Award Period who retire, die or become
permanently disabled, in any case, before Awards are paid for that Award Period pursuant to Section 9, whose Awards for that Award Period shall be prorated to the date of such retirement, death or permanent disability if it occurs before the
last day of that Award Period, and (ii) participants in the Plan during an Award Period whose employment is involuntarily terminated by the Company other than for cause (as determined by the Committee) on or after November 1 of that Award
Period and before Awards are paid for that Award Period pursuant to Section 9, whose Awards for that Award Period shall be prorated to the date of such termination if such termination occurs before the last day of that Award Period, a person
must be employed by the Company or one of its subsidiaries on the date of payment of an Award in order to be eligible to receive an Award. For the avoidance of doubt, a participants Award for any Award Period, including but not limited to an
Award that is to be prorated pursuant to the preceding sentence, (A) shall be determined in accordance with the objective formula or standard that was established by the Committee for the participants Group for that Award Period in
accordance with the Plan, based on the level of Performance attained in that Award Period, and (B) shall be subject to any exercise of negative discretion by the Committee, within the meaning of Treasury Regulation
Section 1.162-27(e)(2)(iii)(A), and (C) shall be paid at the time and subject to the conditions specified in Section 9.
SECTION 7. AWARDS
7.1
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After the end of the Award Period and based on the final Performance of each Group, the Committee shall determine the Award for each participant, based in all instances on the participants Individual Target and
the Performance level achieved. No provision of the Plan shall preclude the Committee from exercising negative discretion with respect to any Award hereunder, within the meaning of Treasury Regulation Section 1.162-27(e)(2)(iii)(A).
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BARNES GROUP INC. 2016 PROXY STATEMENT
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3
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ANNEX 1
7.2
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Subject to Section 8, the Committee shall have the authority to refrain from making an Award to any participant.
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SECTION 8. LIMITATIONS
Notwithstanding anything in the Plan
to the contrary, no Award in excess of the calculated Award shall be made to any Covered Employee under any circumstances.
Awards at Target shall be
greater than Awards at Threshold and less than Awards at Maximum.
Regulations under Section 162(m) of the Code require that a maximum
individual Award be established for any Awards to Covered Employees that are intended to qualify as performance-based compensation. For purposes of qualifying Awards as performance-based compensation under such regulations, notwithstanding anything
in the Plan to the contrary, no Award in excess of $7 million shall be paid to any Covered Employee for services rendered in any calendar year.
SECTION 9.
PAYMENT OF AWARDS
Payment of any Award shall be contingent upon approval by the stockholders of the Company, prior to payment, of the material
terms under which the Award is to be paid, in accordance with Section 162(m)(4)(C)(ii) of the Code and the related Treasury regulations. Unless and until such stockholder approval is obtained, no Award shall be paid.
Payment of any Award shall also be contingent upon the Committees certifying in writing that the Performance level, the applicable Performance
objectives related to the funding of the Performance Award Pool (if applicable), and any other material terms applicable to such Award were in fact satisfied, in accordance with Section 162(m)(4)(C)(iii) of the Code and the related Treasury
regulations. Unless the Committee so certifies, such
Award shall not be paid.
Awards shall be paid within the 2
1
⁄
2
months that immediately
follow the expiration of the Award Period (i.e., in the case of an Award Period that is a calendar year, on or after January 1 and on or before March 15 of the following calendar year). Awards shall be paid in cash unless otherwise decided
by the Committee.
SECTION 10. GENERAL
10.1
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The interpretation of the Plan by the Committee and its decisions on all questions arising under the Plan shall be conclusive and binding on all Plan participants.
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10.2
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The Plan may be amended at any time, including retroactively, by the Committee.
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10.3
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The Plan supersedes all prior incentive plans, including without limitation the Management Incentive Compensation Plan, for all participants, effective as of January 1, 2001 for the Award Period of calendar year
2001 and Award Periods thereafter.
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10.4
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Any provision of the Plan to the contrary notwithstanding, (a) Awards to Covered Employees under the Plan are intended to qualify as performance-based compensation under Section 162(m)(4)(C) of the Code, and
(b) any provision of the Plan that would prevent an Award to any Covered Employee from so qualifying shall be administered, interpreted and construed to carry out such intention and any provision that cannot be so administered, interpreted and
construed shall, to that extent, be disregarded. No provision of the Plan, nor the selection of any eligible employee to participate in the Plan, shall constitute an employment agreement or affect the duration of any participants employment,
which shall remain employment at will unless an employment agreement between the Company and the participant provides otherwise. Both the participant and the Company shall remain free to terminate employment at any time to the same
extent as if the Plan had not been adopted.
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10.5
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All Awards are intended to qualify as short-term deferrals under Treasury Regulation Section 1.409A-1(b) (4). The Plan shall be administered, interpreted and construed to carry out that intention, and any provision
of the Plan that cannot be so administered, interpreted and construed shall to that extent be disregarded. However, the Company does not represent, warrant or guarantee that any Award will qualify as a short-term deferral, nor does the Company make
any other representation, warranty or guaranty to any participant as to the tax consequences of any Award or of participation in the Plan.
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4
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BARNES GROUP INC. 2016 PROXY STATEMENT
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Barnes Group Inc.
123 Main Street
Bristol, Connecticut 06010 U.S.A.
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BGI INVESTOR
RELATIONS
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SCAN TO
VIEW MATERIALS & VOTE
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u
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123 MAIN STREET
BRISTOL, CT 06010
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VOTE BY INTERNET -
www.proxyvote.com
or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day prior to the 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.
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials,
you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
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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 prior to the meeting date. Have your proxy card in hand when you call and then follow the instructions.
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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.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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E01098-Z67242-P73989
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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