|KAMAN CORP filed this Form DEF 14A on 03/03/2017|
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2016 Compensation for our NEOs
The total compensation program for our Named Executive Officers during 2016 was comprised of the following elements:
While base salaries, long-term incentives, and retirement and other benefits generally are determined in similar ways for each of our Named Executive Officers, different annual cash incentive awards apply to those Named Executive Officers employed at our Corporate Headquarters (Messrs. Keating, Starr, Galla and Lisle), our Aerospace Segment (Mr. Steiner) and our Distribution Segment (Mr. Smidler).
Base salaries are established with reference to the biennial market report prepared by the independent compensation consultant, generally targeting base salaries at the market median with appropriate modifications to reflect the individual’s professional experience and knowledge of his area of management responsibility. The Committee's determination regarding the CEO is subject to the Board’s ratification and approval. Adjustments to base salary are determined as follows: An overall salary increase budget guideline is developed, based on market data and the use of nationally recognized surveys of anticipated salary increases published by Meridian, AonHewitt, Willis Towers Watson and World at Work. Within the overall budget guideline, a narrow range of salary adjustment percentages is then established for each salary grade, with slightly higher percentages for individuals who are below the grade midpoint and slightly lower percentages for individuals who are above the grade midpoint. Salary adjustments, if any, are then determined within this narrow range based upon an annual performance rating given to the Named Executive Officer by Mr. Keating and recommended to the Committee. The performance rating determination is primarily based upon the officer’s level of substantive performance in executing the responsibilities listed in his or her position description.
The Committee’s recommendation to the Board regarding the CEO’s base salary adjustment is made after consultation with the Corporate Governance Committee to obtain that Committee's assessment of the CEO’s performance for the year. The Corporate Governance Committee solicits input from all independent directors in connection with its annual CEO performance assessment.
Amounts paid to the Named Executive Officers in respect of their 2016 base salaries are shown in the Summary Compensation Table that follows this Compensation Discussion and Analysis. As was done during 2013, 2014 and 2015, the Committee, at the request of the CEO, elected to defer the 2016 salary increases for our Named Executive Officers from January 1 to July 1 due to uncertain business conditions. The 2016 base salary increases for our Named Executive Officers were relatively modest, ranging from 0% to 3%, reflecting the fact that the base salaries of most of our NEOs are at or above the market median as reported by the 2015 Market Report prepared by the independent compensation consultant.
Annual Cash Incentive Awards
Our annual cash incentive award plans are designed to reward employees for financial and operational performance that drives shareholder value and to focus our organization on meeting or exceeding designated performance goals. The plans provide employees, including our Named Executive Officers, with the opportunity to earn cash awards based on the degree to which the Company achieves pre-determined performance measures for the year. Amounts paid to our Named Executive Officers under our annual cash incentive plans are intended to qualify as "performance-based compensation" under Section 162(m) of the Code. The Committee retains the ability to utilize negative discretion to eliminate or decrease the amount payable to a participant with respect to any award.
The elements used to determine awards include:
The Committee establishes the target annual cash incentive award opportunity for each Named Executive Officer after using the independent compensation consultant’s biennial market report and advice. Positioning award targets at the market median reinforces the Committee’s strategy that annual cash incentive payments should exceed target levels only when the Company's actual financial performance exceeds the Company’s targeted objectives.
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