DEF 14A
KAMAN CORP filed this Form DEF 14A on 03/03/2017
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We entered into new change in control agreements with our Named Executive Officers. The Company has change in control agreements with each of our Named Executive Officers, the terms and provisions of which are discussed in more detail below. See "POST-TERMINATION PAYMENTS AND BENEFITS — Change in Control Agreements." We reviewed these agreements during 2016 to ensure that the agreements incorporate appropriate terms and provisions and continue to reflect best practices. Upon completion of this review, we amended and restated the change in control agreements with all of our Named Executive Officers.
We amended our deferred compensation plan to permit alternative, market-based investment alternatives. The Company also maintains a nonqualified deferred compensation plan for senior executives, including the Named Executive Officers, that affords participants the opportunity to defer on a pre-tax basis a portion of their base salaries and annual incentive awards and receive a matching contribution from the Company in the form of additional deferred compensation. We undertook a periodic review of this plan during 2015-16 to ensure that it continues to reflect best practices. Upon completion of this review, we amended the plan to allow participants to invest a portion of their accounts in market-based investment options in order to diversify their investments and potentially improve their annual returns on deferrals.
We continued to emphasize total shareholder return ("TSR") in the financial metrics relating to the long-term incentive program ("LTIP") awards granted to our executive officers, including our NEOs. The performance factors included in the LTIP awards granted to our executive officers during 2016 continued to assign a 34% weighting to TSR, up from 20% in LTIP awards granted prior to 2014.
We continued to incorporate additional caps on the LTIP awards granted to our NEOs. The LTIP awards granted to our executive officers during 2016 continued to include an additional sub-limit of 150% on the payouts in respect of any particular performance measure if the Company's adjusted performance for such measure is less than zero. For example, if the Company's three-year average total return to shareholders is negative but outperforms the three-year average total return to shareholders for the Russell 2000 Index companies, the payout in respect of that performance measure cannot exceed 150%.
We continued the practice of deferring annual base salary adjustments for our senior executives. Continuing a practice that commenced in 2013, the Committee, at the request of our Chief Executive Officer, deferred the 2016 salary adjustments for our Named Executive Officers, including our Chief Executive Officer and the other senior executive officers who report directly to him, from January 1 to July 1, 2016. The 2016 salary adjustments for all other officers were deferred from January 1 to April 1, 2016. Similar deferrals are planned for 2017.
We continued to assess the potential impact of new revenue recognition rules that are scheduled to become effective for interim and annual reporting periods beginning after December 15, 2017. Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, which is currently scheduled to become effective for interim and annual reporting periods beginning after December 15, 2017, eliminates the transaction- and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. During 2016, the Committee continued to assess the potential impact the new guidance may have on our incentive compensation program. The new guidance has the potential to significantly affect the way in which the Company recognizes revenue on long-term contracts with customers, but the Committee was unable to quantify the full extent of the likely impact. Moreover, the Committee was unable to fully assess the likely impact the new guidance may have on the companies comprising the Russell 2000 Index, against which the Company's own financial performance is measured. The Committee, therefore, determined not to make any change to our incentive compensation program pending a more detailed assessment of the likely impact as the Company prepares for the implementation of the new guidance.
We ceased further accruals under our non-contributory qualified defined benefit pension plan (our "Qualified Pension Plan") and our supplemental employees' retirement plan ("SERP") for service after December 31, 2015. During 2010, the Company's Board of Directors approved amendments to the Qualified Pension Plan and the SERP closing them to all new hires and changing the benefit calculation for then-current employees. Among other things, the amendments provided that changes in pay would be taken into account for benefit calculation purposes until December 31, 2010, but years of service credits would continue to accrue through December 31, 2015. Therefore, effective as of January 1, 2016, benefit calculations under our Qualified Pension Plan and our SERP will not include any additional accrual for additional service to the Company.
Kaman's Compensation and Benefits Best Practices
The Company's executive compensation program is designed to link total compensation with both short- and long-term Company performance and increases in shareholder value with minimal excess risk taking. The Committee periodically reviews and adjusts the compensation and benefits program to ensure alignment with current market practices. By continuing to evaluate and modify the programs as necessary and by designing the program around the following best practices, the Committee has shown its commitment to paying for performance and aligning executive pay with shareholder interests.

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