Ashland Global Holdings Inc.
ASHLAND GLOBAL HOLDINGS INC (Form: DEF 14A, Received: 12/06/2017 16:50:28)
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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.    )

Filed by the Registrant                                                          Filed by a Party other than the Registrant    

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   Preliminary Proxy Statement
   Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(E)(2))
   Definitive Proxy Statement
   Definitive Additional Materials
   Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

ASHLAND GLOBAL HOLDINGS INC.

 

(Name of Registrant as Specified in Its Charter)

N/A

 

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

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LOGO

 

Ashland Global Holdings Inc.

50 E. RiverCenter Blvd.

Covington, KY 41011

December 6, 2017

Dear Ashland Global Holdings Inc. Stockholder:

On behalf of your Board of Directors and management, I am pleased to invite you to the 2018 Annual Meeting of Stockholders of Ashland Global Holdings Inc. The meeting will be held on Thursday, January 25, 2018, at 10:30 a.m. (EST), at the Metropolitan Club, 50 E. RiverCenter Boulevard, Covington, KY 41011.

The attached Notice of Annual Meeting of Stockholders and Proxy Statement describe the business to be conducted at the meeting. We have elected, where possible, to provide access to our proxy materials over the Internet under the Securities and Exchange Commission’s “notice and access” rules. We believe that providing our proxy materials over the Internet reduces the environmental impact of our Annual Meeting without limiting our stockholders’ access to important information about Ashland.

Whether or not you plan to attend the meeting, we encourage you to vote promptly.

We appreciate your continued confidence in Ashland and look forward to seeing you at the meeting.

 

Sincerely,
LOGO

William A. Wulfsohn

Chairman and Chief Executive Officer


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LOGO

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To our Stockholders:

Ashland Global Holdings Inc., a Delaware corporation, will hold its Annual Meeting of Stockholders on Thursday, January 25, 2018, at 10:30 a.m. (EST). The Annual Meeting will be held at the following location and for the purposes listed below:

 

Where:

  

Metropolitan Club, 50 E. RiverCenter Boulevard, Covington, KY 41011

Items of Business:

  

(1)     To elect 11 directors: Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld, Susan L. Main, Jerome A. Peribere, Barry W. Perry, Mark C. Rohr, Janice J. Teal, Michael J. Ward, Kathleen Wilson-Thompson and William A. Wulfsohn to the Board of Directors to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified;

  

(2)     To ratify the appointment of Ernst & Young LLP as independent registered public accountants for fiscal 2018;

  

(3)     To vote upon a non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion;

  

(4)     To approve the Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan; and

  

(5)     To consider any other business properly brought before the Annual Meeting.

Who Can Vote:

  

Only stockholders of record at the close of business on December 4, 2017 are entitled to vote at the Annual Meeting or any adjournment of that meeting.

 

  

You can vote in one of several ways:

LOGO   

Visit the website listed on your proxy card or Notice of Internet Availability of Proxy Materials to vote VIA THE INTERNET

LOGO   

Call the telephone number specified on your proxy card or the website listed on your Notice of Internet Availability of Proxy Materials to vote BY TELEPHONE

LOGO   

If you received paper copies of your proxy materials in the mail, sign, date and return your proxy card in the enclosed envelope to vote BY MAIL

LOGO   

Attend the meeting to vote IN PERSON

 

If you are a participant in the Ashland Employee Savings Plan (the “Employee Savings Plan”), the Ashland Union Employee Savings Plan (the “Union Plan”) or the International Specialty Products Inc. 401(k) Plan (the “ISP Plan”) or if on the Record Date you held Ashland Common Stock in the Valvoline 401(k) Plan, your vote will constitute voting instructions to Fidelity Management Trust Company, who serves as trustee of all of these plans (the “Trustee”), for the shares held in your account.

If you are a participant in the Employee Savings Plan, the Union Plan, the ISP Plan or the Valvoline 401(k) Plan, then our proxy tabulator, Corporate Election Services or its agent, must receive all voting instructions, whether given by telephone, over the Internet or by mail, before 6:00 a.m. (EST) on Tuesday, January 23, 2018.

 

By Order of the Board of Directors,

PETER J. GANZ

Senior Vice President, General Counsel and Secretary

Covington, Kentucky

December 6, 2017


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TABLE OF CONTENTS

 

     Page  

PROXY SUMMARY

     (i)  

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

     1  

ASHLAND COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     5  

ASHLAND COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF ASHLAND

     6  

PROPOSAL ONE - ELECTION OF DIRECTORS

     8  

Board of Directors

     8  

Director Nominees

     10  

Compensation of Directors

     19  

Director Compensation Table

     19  

Annual Retainer

     21  

Restricted Shares/Units

     21  

Stock Ownership Guidelines for Directors

     22  

Other Compensation

     22  

Corporate Governance

     23  

Governance Principles

     23  

Board Leadership Structure

     23  

Oversight of Ashland’s Executive Compensation Program

     24  

Compensation Committee Interlocks and Insider Participation

     25  

Board’s Role of Risk Oversight

     25  

Director Independence and Certain Relationships

     25  

Related Person Transaction Policy

     26  

Section 16(a) Beneficial Ownership Reporting Compliance

     27  

Communication with Directors

     27  

Attendance at Annual Meeting

     28  

Executive Sessions of Directors

     28  

Stockholder Recommendations for Directors

     28  

Stockholder Nominations of Directors

     28  

Committees and Meetings of the Board of Directors

     31  

EXECUTIVE COMPENSATION

     34  

Compensation Discussion and Analysis

     34  

Compensation Committee Report

     55  

Summary Compensation Table

     56  

Grants of Plan-Based Awards

     59  

Outstanding Equity Awards at Fiscal Year-End

     62  

Option Exercises and Stock Vested

     65  

Pension Benefits

     67  

Non-Qualified Deferred Compensation

     72  

Potential Payments upon Termination or Change in Control Table

     74  

AUDIT COMMITTEE REPORT

     82  

PROPOSAL TWO - RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

     84  

PROPOSAL THREE - NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION PAID TO ASHLAND’S NAMED EXECUTIVE OFFICERS

     85  

PROPOSAL FOUR - APPROVAL OF ASHLAND GLOBAL HOLDINGS INC. 2018 OMNIBUS INCENTIVE COMPENSATION PLAN

     86  

MISCELLANEOUS

     101  

Proxy Solicitation Costs

     101  

Stockholder Proposals for the 2019 Annual Meeting

     101  

Other Matters

     102  

APPENDIX A: Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan

     A-1  

APPENDIX B: Use of Non-GAAP Measures and Non-GAAP Reconciliations

     B-1  

Use of Non-GAAP Measures

     B-1  

Business Unit EBITDA and Adjusted EBITDA

     B-2  

Non-GAAP Reconciliations

     B-2  


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PROXY SUMMARY

This proxy summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting. For more complete information regarding Ashland Global Holdings Inc.’s fiscal 2017 performance, please review the Annual Report on Form 10-K for the fiscal year ended September 30, 2017.

Annual Meeting Information

 

Date & Time:

 

  

January 25, 2018 10:30 a.m. (Eastern Daylight Saving Time)

 

Address:

  

Metropolitan Club

50 E. RiverCenter Boulevard, Covington, KY 41011

 

Record Date:

 

  

December 4, 2017

 

Voting:

   Stockholders as of the Record Date are entitled to vote.

Voting Matters

Stockholders are being asked to vote on the following matters at the Annual Meeting:

 

     

Board’s
Recommendations

 

 Proposal One . The election of 11 director nominees that possess the necessary qualifications to provide guidance to the Company’s management (page 8)

 

   FOR each Director Nominee

  Proposal Two.  Ratification of the appointment of Ernst & Young LLP as independent registered public accountants for fiscal 2018 (page 84)

 

   FOR

  Proposal Three. A non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers (page 85)

 

   FOR

  Proposal Four. To approve the Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan (page 86)

 

   FOR

 

 

 

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Director Nominees

The table below summarizes information about each director nominee. Each nominee is to be elected by a majority of the votes cast. See pages 10-18 for complete biographical information for each nominee.

 

 Name

  Age     Director
Since
   

Primary Occupation

  Independent     Committee
Memberships
 

 Brendan M. Cummins

    66       2012    

Former Consultant to The Valence Group; Former Chief Executive Officer of Ciba Specialty Chemicals

 

       

AC;

G&N (Chair)

 

 

 William G. Dempsey

    66       2016    

Former Executive Vice President of Global Pharmaceuticals at Abbott Laboratories

 

        AC; EHS&Q; G&N  

 Jay V. Ihlenfeld

    66       2017    

Former Senior Vice President of 3M Company

 

        Comp; EHS&Q  

 Susan L. Main

    59       2017    

Senior Vice President and Chief Financial Officer of Teledyne Technologies Incorporated

 

        AC; G&N  

 Jerome A. Peribere

    63       N/A    

President and Chief Executive Officer of Sealed Air Corporation

 

        N/A  

 Barry W. Perry

    71       2007    

Former Chairman and Chief Executive Officer of Engelhard Corporation

 

       

 

Lead Independent
Director; Comp
(Chair); G&N

 

 
 
 

 

 Mark C. Rohr

    66       2008    

Chairman and Chief Executive Officer of Celanese Corporation

 

        AC; EHS&Q  

 Janice J. Teal

    65       2012    

Former Group Vice President and Chief Scientific Officer for Avon Products Inc.

 

       
EHS&Q (Chair);
Comp
 
 

 Michael J. Ward

    67       2001    

Retired Chairman of the Board and Chief Executive Officer of CSX Corporation

 

        G&N; Comp  

 Kathleen Wilson-Thompson

    60       2017    

Executive Vice President and Global Chief Human Resources Officer of Walgreens Boots Alliance Inc.

 

        EHS&Q; Comp  

 William A. Wulfsohn

    55       2015    

Chairman of the Board and Chief Executive Officer of Ashland Global Holdings Inc.

 

   

Committees:

 

AC – Audit Committee

  EHS&Q – Environmental, Health, Safety and Quality Committee

Comp – Compensation Committee

 

G&N – Governance and Nominating Committee

 

 

 

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Performance and Compensation Summary

Fiscal 2017 Performance

Fiscal 2017 was a year of transition and great progress for Ashland. We completed the separation of Valvoline Inc. (“Valvoline”) and acquired Pharmachem Laboratories, Inc., which was immediately accretive to our earnings. Ashland also completed the acquisition of a composites manufacturing facility in France, which was also immediately accretive.

For the full year, Ashland’s net income was $28 million compared to a net loss of $28 million in fiscal 2016, while Adjusted EBITDA decreased 5% to $570 million. These results include roughly $85 million in higher raw material costs and unfavorable currency impact. Ashland’s sales rose 8%, to $3.3 billion, with growth coming from all three reportable segments.

Specialty Ingredients’ operating income totaled $233 million, compared to $237 million in fiscal 2016, while Adjusted EBITDA grew by $17 million, to $493 million, despite $25 million of raw material inflation and foreign currency impact.

Within Composites, the team overcame $50 million of raw material inflation by delivering price and volume, resulting in full-year operating income of $67 million, an increase of $4 million from the prior year. EBITDA increased by $4 million, to $89 million, in fiscal 2017.

Intermediates and Solvents (I&S) returned to year-over-year profit growth in the second half of the fiscal year. I&S saw an operating loss of $12 million in fiscal 2017 compared to a loss of $181 million in fiscal 2016. I&S saw a decrease in Adjusted EBITDA by $5 million, to $26 million.

EBITDA and Adjusted EBITDA are non-GAAP measures and are reconciled to net income for Ashland and operating income for each segment in Appendix B.

Ashland’s Compensation Program at a Glance

The executive compensation program reflects the belief that the amount earned by executives depends on achieving Ashland’s rigorous objectives designed to enhance stockholder value. We strive to provide our NEOs with a compensation package that is aligned with the market median, with the expectation that above-target performance will result in above-median pay and below-target performance will result in below-median pay. The Compensation Committee annually reviews the base salaries and the annual and long-term target opportunities of the NEOs to determine whether these programs competitively reward the NEOs for his or her services based on a comparison to executives in the Compensation Peer Group and a review of other competitive market information.

2017 Key Compensation Decisions

Base Salary:

 

   

The Compensation Committee, based on market data and a recommendation submitted by Mr. Wulfsohn, approved base salary increases for Messrs. Willis, Ganz, and Heitman and Ms. Schumann.

 

   

Additionally, Mr. Wulfsohn and the Compensation Committee approved an additional increase to Ms. Schumann’s base salary to reflect her expanded responsibilities as Chief Human Resources Officer.

 

   

The same merit guidelines were used by the Compensation Committee, in executive session without management present, to recommend a base salary increase for Mr. Wulfsohn of 2.5%.

Annual and Long-Term Incentive Metrics and Goals:

 

   

There were no increases in the annual and long-term target incentive opportunities for fiscal 2017.

 

 

 

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Beginning in fiscal 2017, the Compensation Committee approved utilizing the entire S&P 500 index as the performance peer group.

 

   

Beginning with the fiscal 2018 performance period, the Compensation Committee will use EBITDA and Free Cash Flow as annual incentive metrics, as adjusted for such items and management exceptions that the Compensation Committee may approve.

Equity Treatment Post-Separation of Valvoline

On May 12, 2017 (the “Distribution Date”), Ashland distributed to its stockholders 170,000,000 shares of Valvoline Common Stock as a pro rata dividend (the “Final Distribution”). In connection with the Final Distribution and pursuant to the terms of the applicable equity compensation plans, equity awards held by Ashland officers, directors and employees that were outstanding on the Distribution Date were adjusted with the guiding principle of maintaining approximately the same value immediately before and after the Final Distribution. Awards were converted using an equity adjustment ratio (the “Equity Adjustment Ratio”) to convert the number of stock-based Ashland awards held immediately before the Final Distribution to a new number of stock-based awards held immediately after the Final Distribution. A similar adjustment was made to the strike price of outstanding stock appreciation rights (“SARs”). The Equity Adjustment Ratio was calculated using the quotient of the closing price of Ashland Common Stock on the Distribution Date and the 10-day Volume Weighted Average Price (“VWAP”) of Ashland Common Stock following the Final Distribution. Accordingly, unless otherwise noted, all equity information and related stock prices in this proxy statement have been converted using the Equity Adjustment Ratio. All other terms and conditions of the grants remained the same unless otherwise noted.

Additional Information

For additional information please see the proxy statement below.

 

 

 

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PROXY STATEMENT

ASHLAND GLOBAL HOLDINGS INC.

Annual Meeting on January 25, 2018

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

 

Q:

What matters will be voted on at the Annual Meeting?

 

A:             

  

(1)            

 

Election of 11 directors: Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld, Susan L. Main, Jerome A. Peribere, Barry W. Perry, Mark C. Rohr, Janice J. Teal, Michael J. Ward, Kathleen Wilson-Thompson and William A. Wulfsohn to the Board of Directors to serve until the next annual meeting of the stockholders and until their successors are duly elected and qualified;

  

(2)            

 

Ratification of Ernst & Young LLP (“EY”) as Ashland’s independent registered public accountants for fiscal 2018;

  

(3)            

 

A non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion; and

  

(4)            

 

Approval of the Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan (the “2018 Omnibus Plan”).

 

Q:

Why am I receiving this proxy statement?

 

A:

Ashland Global Holdings Inc. (“Ashland” or the “Company”) is making this proxy statement and the accompanying proxy materials available to you in connection with the solicitation of proxies by and on behalf of the Board of Directors for use at the Annual Meeting, which will take place on January 25, 2018, and at any adjournments or postponements thereof. This proxy statement is intended to assist you in making an informed vote on the proposals described in this proxy statement. On behalf of our Board of Directors, we are making these materials available to you beginning on or around December 11, 2017 in connection with the solicitation of proxies.

 

Q:

Who may vote at the Annual Meeting?

 

A:

Stockholders of Ashland at the close of business on December 4, 2017 (the “Record Date”) are entitled to vote at the Annual Meeting and any adjournments or postponements thereof. As of the Record Date, there were 62,224,784 shares of Ashland Common Stock outstanding. Each share of Ashland Common Stock is entitled to one vote.

 

Q:

Who can attend the Annual Meeting?

 

A:

All Ashland stockholders on the Record Date are invited to attend the Annual Meeting, although seating is limited. If your shares are held in the name of a broker, bank or other nominee, you will need to bring a proxy or letter from that nominee that confirms you are the beneficial owner of those shares.

 

Q:

Why did I receive the Notice of Internet Availability of Proxy Materials in the mail instead of a full set of proxy materials?

 

A:

In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”), we may furnish proxy materials, including the Notice of Annual Meeting of Stockholders and Proxy Statement, together with our 2017 Annual Report, by providing

 

 

 

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access to such documents on the Internet instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials unless they have specifically requested them. Instead, a Notice of Internet Availability of Proxy Materials (“Notice”) will be mailed to stockholders starting on or around December 11, 2017.

 

Q:

How do I access the proxy materials?

 

A:

The Notice will provide you with instructions regarding how to view Ashland’s proxy materials for the Annual Meeting and the 2017 Annual Report on the Internet. The Notice also instructs you on how you may submit your vote. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice.

 

Q:

What shares are included on the proxy card?

 

A:

If you are a registered stockholder of Ashland as of the Record Date, your proxy card represents all shares of Ashland Common Stock that are registered in your name and any shares you hold in the Employee Savings Plan, the Union Plan, the ISP Plan or the Valvoline 401(k) Plan. Additionally, your proxy card includes shares you hold in the dividend reinvestment plan (the “DRP”) administered by Wells Fargo Bank, National Association (“Wells Fargo”) for investors in Ashland Common Stock. If your shares are held through a broker, bank or other nominee, you will receive either a voting instruction form or a proxy card from the broker, bank or other nominee instructing you on how to vote your shares.

 

Q:

How do I vote if I am a registered stockholder or I own shares through a broker, bank or other nominee?

 

A:

If you are a registered stockholder as of the Record Date, you can vote (i) by attending the Annual Meeting, (ii) by following the instructions on the Notice or proxy card for voting by telephone or Internet or (iii) by signing, dating and mailing in your proxy card. If you hold shares through a broker, bank or other nominee, that institution will instruct you as to how your shares may be voted by proxy, including whether telephone or Internet voting options are available. Even if you plan to attend the Annual Meeting in person, we encourage you to vote your shares by submitting your proxy in advance of the Annual Meeting. If you hold your shares through a broker, bank or other nominee and would like to vote in person at the meeting, you must first obtain a proxy issued in your name from the institution that holds your shares.

All shares represented by validly executed proxies will be voted at the Annual Meeting, and such shares will be voted in accordance with the instructions provided. If no voting specification is made on your returned proxy card, William A. Wulfsohn or Peter J. Ganz, as individuals named on the proxy card, will vote (i) FOR the election of the 11 director nominees, (ii) FOR the ratification of EY, (iii) FOR the non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion and (iv) FOR the 2018 Omnibus Plan.

 

Q:

How do I vote my shares in the DRP?

 

A:

Shares of Ashland Common Stock credited to your account in the DRP will be voted by Wells Fargo, the plan sponsor and administrator, in accordance with your voting instructions.

 

Q:

How will the Trustee of the Employee Savings Plan, the Union Plan and the ISP Plan vote?

 

A:

Each participant in the Employee Savings Plan, the Union Plan, or the ISP Plan will instruct the Trustee on how to vote the shares of Ashland Common Stock credited to the

 

 

 

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participant’s account in each plan. This instruction also applies to a proportionate number of those shares of Ashland Common Stock allocated to participants’ accounts for which voting instructions are not timely received by the Trustee. These shares are collectively referred to as non-directed shares. Each participant who gives the Trustee such an instruction acts as a named fiduciary for the applicable plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Your vote must be received by our proxy tabulator, Corporate Election Services (“CES”), before 6:00 a.m. (EST) on Tuesday, January 23, 2018.

 

Q:

Can a plan participant vote the non-directed shares differently from shares credited to his or her account?

 

A:

Yes, provided that you are a participant in the Employee Savings Plan. Any participant in the Employee Savings Plan who wishes to vote the non-directed shares differently from the shares credited to his or her account or who wishes not to vote the non-directed shares at all may do so by requesting a separate voting instruction card from CES at Corporate Election Services, P.O. Box 1150, Pittsburgh, PA 15230. Participants in the Union Plan and the ISP Plan, however, cannot direct that the non-directed shares be voted differently from the shares in their accounts.

 

Q:

Can I change my vote once I vote by mail, by telephone or over the Internet?

 

A:

Yes. You have the right to change or revoke your proxy (1) at any time before the Annual Meeting by (a) notifying Ashland’s Secretary in writing at 50 East RiverCenter Blvd., Covington, KY 41011, (b) returning a later dated proxy card or (c) entering a later dated telephone or Internet vote; or (2) by voting in person at the Annual Meeting. Your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting. Any changes or revocations of voting instructions to the Trustee of the Employee Savings Plan, the Union Plan, the ISP Plan, or the Valvoline 401(k) Plan must be received by our proxy tabulator, CES, before 6:00 a.m. (EST) on Tuesday, January 23, 2018.

 

Q:

When is the deadline to vote?

 

A:

If you are attending the stockholder meeting you may vote at the meeting. If you are a participant in the Employee Savings Plan, the Union Plan, the ISP Plan or the Valvoline 401(k) Plan your vote must be received by CES, before 6:00 a.m. (EST) on Tuesday, January 23, 2018. If you are a registered stockholder of Ashland as of the Record Date your vote must be received by CES before 6:00 a.m. on Thursday, January 25, 2018.

 

Q:

Who will count the vote?

 

A:

Representatives of CES will tabulate the votes and will act as the inspector of election.

 

Q:

Is my vote confidential?

 

A:

Yes. Your vote is confidential.

 

Q:

What constitutes a quorum?

 

A:

As of the Record Date, 62,224,784 shares of Ashland Common Stock were outstanding and entitled to vote. A majority of the shares issued and outstanding and entitled to be voted thereat must be present in person or by proxy to constitute a quorum to transact business at the Annual Meeting. If you vote in person, by telephone, over the Internet or by returning a properly executed proxy card, you will be considered a part of that quorum. Abstentions and broker non-votes (as described below) will be treated as present for the purpose of determining a quorum.

 

 

 

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Q:

What vote is required for approval of each matter to be considered at the Annual Meeting?

 

A:

(1)

Election of directors —Under Article V of Ashland’s Certificate of Incorporation (the “Certificate”), the affirmative vote of a majority of votes cast with respect to each director nominee is required for the nominee to be elected. A majority of votes cast means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that director nominee.

 

  (2)

Ratification of independent registered public accountants —The appointment of EY will be ratified if votes cast in its favor exceed votes cast against it.

 

  (3)

Non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers —The non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, will be approved if the votes cast in its favor exceed the votes cast against it.

 

  (4)

Approval of the 2018 Omnibus Plan —The 2018 Omnibus Plan will be approved if the votes cast in its favor exceed votes cast against it.

 

Q:

What is a broker non-vote?

 

A:

A broker non-vote occurs when brokers, banks or other nominees holding shares for a beneficial owner have discretionary authority to vote on “routine” matters brought before a stockholder meeting, but the beneficial owner of the shares fails to provide the broker, bank or other nominee with specific instructions on how to vote any “non-routine” matters brought to a vote at the stockholders meeting. Each of the proposals included in this proxy statement (other than the proposal to ratify the appointment of EY as Ashland’s independent registered public accountant) is a “non-routine” matter. Consequently, if you do not submit any voting instructions to your broker, bank or other nominee, your broker, bank or other nominee may exercise its discretion to vote your shares on the proposal to ratify the appointment of EY, but your shares will constitute broker non-votes on each of the other proposals.

 

Q:

How will broker non-votes and abstentions be treated?

 

A:

Ashland will treat broker non-votes as present to determine whether or not there is a quorum at the Annual Meeting, but they will not be treated as entitled to vote on any “non-routine” matters. Abstentions will also be treated as present for the purpose of determining quorum but as unvoted shares for the purpose of determining the approval of any matter submitted for a vote. This means that broker non-votes and abstentions will have no effect on whether any of the proposals pass.

 

Q:

Where can I find the voting results of the meeting?

 

A:

We intend to announce preliminary voting results at the Annual Meeting. We will report the final results on a Current Report on Form 8-K filed with the SEC no later than January 31, 2018. You can obtain a copy of the Form 8-K from our website at http://investor.ashland.com , by calling the SEC at 1-800-SEC-0330 for the location of the nearest public reference room or through the SEC’s EDGAR system at http://www.sec.gov .

 

 

Important Notice regarding the availability of Proxy Materials for the

Annual Meeting to be held on January 25, 2018.

 

This Proxy Statement and Ashland’s 2017 Annual Report to Stockholders are available at

www.ashland.com/proxy.

 

 

 

 

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ASHLAND COMMON STOCK OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS

The following table sets forth information with respect to each person known to Ashland to beneficially own more than 5% of the outstanding shares of Ashland Common Stock as of October 31, 2017.

 

Name and Address of Beneficial Owner

   Aggregate Number of
      Shares of Common      
Stock Beneficially
Owned
          Percentage of Common      
Stock Beneficially Owned*
 

BlackRock, Inc.

     5,439,385  (1)      8.75

55 East 52nd Street

New York, New York 10022

 

    
    

The Vanguard Group

     5,042,790  (2)      8.11

100 Vanguard Blvd.

Malvern, Pennsylvania 19355

 

    
    

T. Rowe Price Associates, Inc.

     4,346,443  (3)      6.99

100 East Pratt Street

Baltimore, Maryland 21202

    

 

 

*

Based on 62,142,622 shares of Ashland Common Stock outstanding as of October 31, 2017.

 

(1)

Based upon information contained in the Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) with the SEC on January 19, 2017, BlackRock beneficially owned 5,439,385 shares of Ashland Common Stock as of December 31, 2016, with sole voting power over 4,975,851 shares, shared voting power over no shares, sole dispositive power over 5,439,385 shares and shared dispositive power over no shares. BlackRock reported its beneficial ownership on behalf of itself and the following direct and indirect subsidiaries and affiliates: BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock Advisors (UK) Limited; BlackRock Advisors, LLC; BlackRock Asset Management Canada Limited; BlackRock Asset Management Ireland Limited; BlackRock Asset Management North Asia Limited; BlackRock Asset Management Schweiz AG; BlackRock Capital Management Inc.; BlackRock Financial Management, Inc.; BlackRock Fund Advisors; BlackRock Fund Managers Ltd; BlackRock Institutional Trust Company, N.A.; BlackRock International Limited; BlackRock Investment Management (Australia) Limited; BlackRock Investment Management (UK) Ltd; BlackRock Investment Management, LLC; BlackRock Japan Co Ltd; and BlackRock Life Limited.

 

(2)

Based upon information contained in the Schedule 13G/A filed by The Vanguard Group (“Vanguard”) with the SEC on February 9, 2017, Vanguard beneficially owned 5,042,790 shares of Ashland Common Stock as of December 31, 2016, with sole voting power over 53,661 shares, shared voting power over 12,799 shares, sole dispositive power over 4,979,697 shares and shared dispositive power over 63,093 shares. Vanguard reported its beneficial ownership on behalf of itself and the following wholly owned subsidiaries: Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd.

 

(3)

Based upon information contained in the Schedule 13G/A filed by T. Rowe Price Associates, Inc. (“T. Rowe Price”) with the SEC on May 10, 2017, T. Rowe Price beneficially owned 4,346,443 shares of Ashland Common Stock as of April 30, 2017, with sole voting power over 1,682,315 shares, shared voting power over no shares, sole dispositive power over 4,346,443 shares and shared dispositive power over no shares.

 

 

 

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ASHLAND COMMON STOCK OWNERSHIP OF

DIRECTORS AND EXECUTIVE OFFICERS OF ASHLAND

The following table shows as of October 31, 2017, the beneficial ownership of Ashland Common Stock by each Ashland director and each Ashland executive officer named in the Summary Compensation Table of this proxy statement and the beneficial ownership of Ashland Common Stock by the directors and executive officers of Ashland as a group.

Common Stock Ownership

 

Name of Beneficial Owner

   Aggregate
Number of
Shares of
Common Stock  
    Beneficially    
Owned
     Percentage of
  Common Stock  
Beneficially
Owned
   

 

William A. Wulfsohn

     110,745        *     (2)(3)(4)

J. Kevin Willis

     103,232        *     (1)(2)(3)(4)

Peter J. Ganz

     72,861        *     (2)(3)(4)

Anne T. Schumann

     28,511        *     (1)(2)(3)(4)

J. William Heitman

     20,781        *     (1)(2)(3)(4)

Luis Fernandez-Moreno^

     32,800        *     (2)

Brendan M. Cummins

     14,786        *     (2)

William G. Dempsey

     2,744        *     (2)(5)

Jay V. Ihlenfeld

     1,883        *     (5)

Susan L. Main

     1,883        *     (5)

Jerome A. Peribere*

     0        *    

Barry W. Perry

     55,793        *     (2)(5)

Mark C. Rohr

     56,623        *     (2)(5)

George A. Schaefer, Jr.**

     58,529        *     (2)(5)

Janice J. Teal

     17,196        *     (2)(5)

Michael J. Ward

     129,778        *     (2)(5)

Kathleen Wilson-Thompson

     1,883        *     (5)

All directors and executive officers as a group (18 people)

     716,397        1.14   (1)(2)(3)(4)(5)

 

 

^

Mr. Fernandez-Moreno left Ashland on February 28, 2017, and is no longer an executive officer of Ashland.

 

*

Mr. Peribere is a director nominee and does not beneficially own any shares of Ashland Common Stock.

 

**

Consistent with Ashland’s mandatory retirement policy set forth in the Corporate Governance Guidelines, the Governance and Nominating Committee and the Board determined not to nominate Mr. Schaefer for re-election to Ashland’s Board.

As of October 31, 2017, there were 62,142,622 shares of Ashland Common Stock outstanding. None of the listed individuals owned more than 1% of Ashland’s Common Stock outstanding as of October 31, 2017. All directors and executive officers as a group owned 716,397 shares of Ashland Common Stock, which equaled 1.14% of the Ashland Common Stock outstanding as of October 31, 2017. Shares deemed to be beneficially owned are included in the number of shares of common stock outstanding on October 31, 2017, for computing the percentage ownership of the applicable person and the group, but shares are not deemed to be outstanding for computing the percentage ownership of any other person.

 

  (1)

Includes shares of Ashland Common Stock held under the Employee Savings Plan and/or the Valvoline 401(k) Plan by executive officers: as to Mr. Willis, 17,322 shares; as to Ms. Schumann, 1,316 shares; as to Mr. Heitman, 326 shares; and as to all executive officers as a group, 19,815 shares. Participants can vote the Employee Savings Plan and the Valvoline 401(k) Plan shares.

 

 

 

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  (2)

Includes grants of restricted stock units and restricted stock units acquired from the fiscal 2015-2017 Long Term Incentive Performance Plan to executive officers that vest within 60 days of October 31, 2017, and common stock units and/or restricted stock units (share equivalents) held by executive officers in the Ashland Common Stock Fund under Ashland’s non-qualified deferred compensation plans for employees (the “Employees’ Deferral Plan”) or by directors under the non-qualified deferred compensation plans for non-employee directors (the “Directors’ Deferral Plan”): as to Mr. Wulfsohn, 13,118 units; as to Mr. Willis, 44,124 units; as to Mr. Ganz, 9,360 units; as to Ms. Schumann, 5,384 units; as to Mr. Heitman, 3,639 units; as to Mr. Fernandez-Moreno, 0 units; as to Mr. Dempsey, 861 units; as to Mr. Perry, 53,910 units; as to Mr. Rohr, 49,740 units; as to Mr. Schaefer, 53,910 units; as to Dr. Teal, 15,313 units; as to Mr. Ward, 127,895 units; and as to all directors and executive officers as a group, 379,110 units. Mr. Cummins, as a non-U.S. resident, is not eligible to defer U.S.-based compensation and therefore holds 14,786 restricted stock units directly and not through the Directors’ Deferral Plan.

 

  (3)

Includes shares of Ashland Common Stock with respect to which the executive officers have the right to acquire beneficial ownership within 60 calendar days after October 31, 2017, through the exercise of stock appreciation rights (“SARs”): as to Mr. Wulfsohn, 24,319 shares; as to Mr. Willis, 21,100 shares; as to Mr. Ganz, 25,726 shares; as to Ms. Schumann, 2,145 shares; as to Mr. Heitman, 8,498 shares; as to Mr. Fernandez-Moreno, 0 shares; and as to all directors and executive officers as a group, 83,548 shares through SARs. All SARs included in this table are reported on a net basis based on the closing price for Ashland Common Stock as reported on the New York Stock Exchange (“NYSE”) Composite Tape on October 31, 2017. All SARs are stock settled and are not issued in tandem with an option.

 

  (4)

Includes restricted shares of Ashland Common Stock: as to Mr. Wulfsohn, 37,577 shares; as to Mr. Willis, 19,803 shares; as to Mr. Ganz, 17,075 shares; as to Ms. Schumann, 8,593 shares; as to Mr. Heitman, 460 shares; as to Mr. Fernandez-Moreno, 0 shares; and as to all executive officers as a group, 83,732 shares.

 

  (5)

Includes 1,883 restricted shares of Ashland Common Stock for each of the non-employee directors, except for Mr. Cummins who received 1,883 restricted stock units in lieu of 1,883 restricted shares (discussed in footnote 2 above).

 

 

 

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PROPOSAL ONE – ELECTION OF DIRECTORS

BOARD OF DIRECTORS

Eleven directors are proposed to be elected at the Annual Meeting to serve until the 2019 Annual Meeting and until their successors are duly elected and qualified. The 11 individuals nominated for election as directors at the 2018 Annual Meeting are Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld, Susan L. Main, Jerome A. Peribere, Barry W. Perry, Mark C. Rohr, Janice J. Teal, Michael J. Ward, Kathleen Wilson-Thompson and William A. Wulfsohn. All nominees are incumbent directors except for Mr. Peribere who is being nominated as a director and would join the Board in January if approved. The Governance and Nominating Committee (“G&N Committee”) believes that all 11 nominees will be available to serve as directors upon election and unanimously recommends that stockholders vote FOR them at the Annual Meeting. During fiscal 2017, the G&N Committee engaged Russell Reynolds Associates, an independent executive and director search firm, to assist it in identifying and recruiting suitable director candidates. As a result of that engagement, Ms. Main and Ms. Wilson-Thompson were suggested to the G&N Committee by Russell Reynolds Associates and were elected to the Board on July 19, 2017. Ashland management and representatives of Cruiser Capital Advisors, LLC, an Ashland stockholder, discussed potential new director candidates to be added to Ashland’s Board at the 2018 Annual Meeting. After consideration of the potential director candidates by the G&N Committee and the full Board, both the G&N Committee and the Board approved the nomination of Mr. Peribere for election to the Ashland Board at the Annual Meeting.

Consistent with Ashland’s mandatory retirement policy set forth in the Corporate Governance Guidelines, George A. Schaefer, Jr., having reached his 72 nd birthday, was not nominated by the Board to stand for re-election to the Board. Ashland expects that the Board will remain at 11 directors.

Under Article V of Ashland’s Certificate, in an uncontested election, the affirmative vote of a majority of votes cast with respect to a director nominee is required for the nominee to be elected. Therefore, the number of votes cast “for” a nominee must exceed those cast “against” a nominee for the nominee to be elected to the Board of Directors. Abstentions will not be counted as votes cast either for or against the nominees.

Pursuant to the Board of Directors’ resignation policy in Ashland’s Corporate Governance Guidelines (published on Ashland’s website ( http://investor.ashland.com )), any nominee who is serving as a director at the time of an uncontested election who fails to receive a greater number of votes “for” his or her election than votes “against” his or her election will tender his or her resignation for consideration by Ashland’s Board within ten days following the certification of the stockholder vote. The Board will decide, through a process managed by the G&N Committee, whether to accept the resignation within 90 days following the date of the stockholder meeting. The Company will then promptly disclose the Board’s decision and reasons therefor. As a condition to his or her nomination, each person nominated by the G&N Committee must agree in advance to abide by the policy. All 11 director nominees have agreed to abide by the policy.

 

 

 

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If you are the record holder of your shares and do not specify on your proxy card (or when giving your proxy by telephone or via the Internet) how you want to vote your shares, then William A. Wulfsohn or Peter J. Ganz (proxies named on the proxy card) will vote FOR the 11 nominees named in this proxy statement. Should any of the nominees be unable or unwilling to stand for election at the time of the Annual Meeting, the proxies may vote for a replacement nominee recommended by the Board of Directors, or the Board may reduce the number of directors to be elected at the Annual Meeting. At this time, the Board knows of no reason why any of the nominees would not be able to serve as a director if elected.

 

 

The Board of Directors unanimously recommends a vote FOR the following nominees
at the 2018 Annual Meeting: Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld,
Susan L. Main, Jerome A. Peribere, Barry W. Perry, Mark C. Rohr, Janice J. Teal,
Michael J. Ward, Kathleen Wilson-Thompson and William A. Wulfsohn

 

 

 

 

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DIRECTOR NOMINEES

 

  BRENDAN M. CUMMINS

 

 

LOGO

 

Principal Occupation:

Former Consultant to

The Valence Group; Former

Chief Executive Officer of

Ciba Specialty Chemicals

 

Director Since: 2012

Age: 66

  

Professional Experience:

Mr. Cummins served as a global strategic advisor to, and on the senior executive panel of, The Valence Group, a specialist mergers and acquisitions firm, from 2010 until May 2012. Prior to that position, Mr. Cummins served as Chief Executive Officer for Ciba Specialty Chemicals (“Ciba”) from 2007 to 2008 and as Chief Operating Officer from 2005 to 2007. From 1974 to 2005, Mr. Cummins held a variety of international and senior management positions with Ciba.

 

Education:

Mr. Cummins is an Associate and Fellow of the Institute of Company Accountants, is a Fellow of the Association of International Accountants and received a Diploma in Company Direction from the Institute of Directors in 2010. He also completed a management development program at Harvard in 1989.

 

Other Company Boards:

Mr. Cummins serves as a board member of Perstorp Group of Sweden and is a member of the Remuneration Committee, and serves on the boards of Tom Murphy Car Sales Ltd in Ireland and Nanoco Group PLC based in Manchester UK where he is a member of the Audit Committee and the Remuneration Committee. He served until February 2014 as a board member of SolarPrint Ltd.

 

Non-Profit Boards:

Mr. Cummins currently serves as a board member of Respond Support Ireland, a community support charity organization. He also served as Chairman of The Viking Trust Ltd in Waterford City, Ireland from 2012 until July 2016, and as Chair of the Audit Committee and member of the Planning Committee of Waterford City and County Council until the first quarter of 2016.

 

Director Qualifications:

As the former Chief Executive Officer of a major chemical company and a chemical industry consultant, Mr. Cummins brings significant management and chemical industry experience and knowledge to the Board in the areas of international business operations, accounting and finance, risk oversight, environmental compliance and corporate governance.

 

Board Committees:

*       Audit

*       Governance and Nominating (Chair)

 

 

 

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  WILLIAM G. DEMPSEY

 

 

LOGO

 

Principal Occupation:

Former Executive Vice

President of Global Pharmaceuticals at Abbott Laboratories

 

Director Since: 2016

Age: 66

  

Professional Experience:

Mr. Dempsey held various executive positions with Abbott Laboratories from 1982 until 2007, including, Executive Vice President of Global Pharmaceuticals from 2006, Senior Vice President of Pharmaceutical Operations from 2003 and Senior Vice President of International Operations from 1999. He has previously served as Chairman of the International Section of the Pharmaceutical Research and Manufacturers of America (PhRMA) and as Chairman of the Accelerating Access Initiative, a cooperative public-private partnership of UNAIDS, the World Bank, and six research-based pharmaceutical companies.

 

Education:

Mr. Dempsey holds a Bachelor of Science degree in accounting from DePaul University.

 

Public Company Boards:

Mr. Dempsey currently serves as a Director of Hill-Rom Holdings, Inc. since 2014, where he is a member of the Audit Committee. In the past five years, Mr. Dempsey has served on the boards of Landauer, Inc., Hospira, Inc. and Nordion Inc.

 

Non-Profit Boards:

Mr. Dempsey is a member of the Board of Trustees for the Guadalupe Center in Immokalee Florida.

 

Director Qualifications:

As former Executive Vice President of Global Pharmaceuticals at a public company, Mr. Dempsey brings significant experience within the pharmaceutical industry, as well as knowledge in the areas of finance, accounting, international operations and corporate governance. He also brings significant experience gained from service on the boards of other public companies.

 

Board Committees:

*       Audit

*       Environmental, Health, Safety and Quality

*       Governance and Nominating

 

 

 

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  JAY V. IHLENFELD

 

  

 

LOGO

 

Principal Occupation:

Former Senior Vice President

of 3M Company

 

Director Since: 2017

Age: 66

  

Professional Experience:

Dr. Ihlenfeld served as the Senior Vice President, Asia Pacific, for 3M Company, a leader in technology and innovation from 2006 until his retirement in 2012. Dr. Ihlenfeld has held various leadership positions during his 33-year career at 3M Company, including Senior Vice President, Research and Development from 2002 to 2006, Vice President of its Performance Materials business and Executive Vice President of its Sumitomo/3M business in Japan.

 

Education:

Dr. Ihlenfeld holds a Bachelor of Science degree in chemical engineering from Purdue University and a Ph.D. in chemical engineering from the University of Wisconsin.

 

Public Company Boards:

Dr. Ihlenfeld is a director of Celanese Corporation, where he serves on the Compensation and Management Development Committee and is the chair of the Environmental, Health, Safety and Public Policy Committee.

 

Non-Profit Boards:

Dr. Ihlenfeld is a director of the Minnesota Orchestra.

 

Director Qualifications:

As a former Senior Vice President of a global science company, Dr. Ihlenfeld brings significant management and chemical industry experience to the Board, as well as knowledge in the areas of international operations, leadership development and succession, environmental compliance and safety, risk oversight and M&A evaluation. He also brings significant experience gained from service on the board of directors of another public company.

 

Board Committees:

*       Compensation

*       Environmental, Health, Safety and Quality

 

  SUSAN L. MAIN

 

  

 

LOGO

 

Principal Occupation:

Senior Vice President and Chief Financial Officer of

Teledyne Technologies Incorporated

 

Director Since: 2017

Age: 59

  

Professional Experience:

Ms. Main is Senior Vice President and Chief Financial Officer of Teledyne Technologies, a leading provider of sophisticated instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems, since November 2012. Prior to that, she was Vice President and Controller of Teledyne, a position she held for eight years. From 1999-2004, Ms. Main served as Vice President and Controller for Water Pik Technologies, Inc. She also held numerous financial roles at the former Allegheny Teledyne Incorporated in its government, industrial and commercial segments.

 

Education:

Ms. Main holds a bachelor’s degree from California State University, Fullerton.

 

Director Qualifications:

As the Senior Vice President and Chief Financial Officer of a public company, Ms. Main brings significant management and public company financial experience and knowledge to the Board in the areas of finance, accounting, operations, risk oversight and corporate governance.

 

Board Committees:

*       Audit

*       Governance and Nominating

 

 

 

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  JEROME A. PERIBERE

 

  

 

LOGO

 

Principal Occupation:

President and Chief

Executive Officer of

Sealed Air Corporation

 

Age: 63

  

Professional Experience:

Mr. Peribere is the President and Chief Executive Officer of Sealed Air Corporation (“Sealed Air”) since March 2013. As announced in September 2017, Mr. Peribere plans to retire from Sealed Air at the end of December 2017. Prior to such position, he served as the President and Chief Operating Officer of Sealed Air. Prior to joining Sealed Air, Mr. Peribere worked at The Dow Chemical Company (“Dow”) from 1977 through August 2012. Mr. Peribere served in multiple managerial roles with Dow, most recently as Executive Vice President of Dow and President and Chief Executive Officer, Dow Advanced Materials, a unit of Dow, from 2010 through August 2012.

 

Education:

Mr. Peribere graduated with a degree in business economics and finance from the Institut D’Etudes Politiques in Paris, France.

 

Public Company Boards:

Mr. Peribere currently serves as a director of Sealed Air and as a board member of Xylem Inc. where he serves on the Finance, Innovation & Technology Committee and the Leadership Development and Compensation Committee. Mr. Peribere previously served as a director of BMO Financial Corporation.

 

Director Qualifications:

As the current President and Chief Executive Officer of Sealed Air and former Executive Vice President of Dow and President and Chief Executive Officer of Dow Advanced Materials, Mr. Peribere brings significant management and chemical industry experience and knowledge to the Board in the areas of finance, international business operations, safety, environmental compliance, risk oversight and corporate governance. He also brings significant experience gained from service on the board of directors of other public companies.

 

  BARRY W. PERRY

 

 

LOGO

 

Principal Occupation:

Former Chairman and Chief

Executive Officer of

Engelhard Corporation

 

Director Since: 2007

Age: 71

Lead Independent Director

  

Professional Experience:

Mr. Perry served as Chairman and Chief Executive Officer of Engelhard Corporation from January 2001 to June 2006. Prior to that position, he held various management positions with Engelhard Corporation beginning in 1993. From 1991 to 1993, Mr. Perry was a Group Vice President of Rhone-Poulenc. Prior to joining Rhone-Poulenc, he held a number of executive positions with General Electric Company.

 

Education:

Mr. Perry holds a Bachelor of Science degree in plastics engineering from the University of Massachusetts.

 

Public Company Boards:

Mr. Perry is the Lead Director of Arrow Electronics, Inc., where he serves on the Compensation Committee, and a director of Albemarle Corporation, where he serves on the Executive Compensation Committee and chairs the Health, Safety and Environment Committee. Mr. Perry previously served on the Board of Directors of Cookson Group PLC.

 

Director Qualifications:

As the former Chairman of the Board and Chief Executive Officer of a leading chemical company, Mr. Perry brings significant management and chemical industry experience and knowledge to the Board in the areas of finance, accounting, international business operations, safety, environmental compliance, risk oversight and corporate governance. He also brings significant experience gained from service on the board of directors of other public companies.

 

Board Committees:

*       Compensation (Chair)

*       Governance and Nominating

 

 

 

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  MARK C. ROHR

 

  

 

LOGO

 

Principal Occupation:

Chairman and Chief

Executive Officer of

Celanese Corporation

 

Director Since: 2008

Age: 66

  

Professional Experience:

Mr. Rohr is Chairman and Chief Executive Officer of Celanese Corporation, a technology and specialty materials company. He has served in these roles since April 2012. Prior to that position, he held several executive positions with Albemarle Corporation, a specialty chemical company, including Executive Chairman of the Board (2011-2012), Chairman of the Board (2008-2011), Chief Executive Officer (2002-2011) and President (2000-2010). Before joining Albemarle, he served with Occidental Chemical Corporation as Senior Vice President.

 

Education:

Mr. Rohr holds Bachelor of Science degrees in chemistry and chemical engineering from Mississippi State University.

 

Public Company Boards:

Within the past five years, Mr. Rohr has served as the Executive Chairman and Chairman of the Board of Albemarle Corporation.

 

Non-Profit Boards:

Mr. Rohr serves on the Executive Committee of the American Chemistry Council and the Advisory Board of Mississippi State University College of Arts and Sciences. He is the Chair of City Year Dallas, serves on the boards of Commit! and the Holdsworth Center, both focused on addressing the needs of public education, and is the past campaign chair of United Way Metropolitan Dallas.

 

Director Qualifications:

As a current Chairman and Chief Executive Officer of a leading technology and specialty materials company and former Chairman of the Board and Chief Executive Officer of a leading chemical company, Mr. Rohr brings significant management and chemical industry experience and knowledge to the Board in the areas of finance, accounting, international business operations, safety, environmental compliance, risk oversight and corporate governance. He also brings significant experience gained from service on the board of directors of other public companies.

 

Board Committees:

*       Audit

*       Environmental, Health, Safety and Quality

 

 

 

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  JANICE J. TEAL

 

  

 

LOGO

 

Principal Occupation:

Former Group Vice

President and Chief

Scientific Officer for

Avon Products Inc.

 

Director Since: 2012

Age: 65

  

Professional Experience:

Dr. Teal served as the Group Vice President and Chief Scientific Officer for Avon Products Inc., a direct seller of beauty and related products, from January 1999 to May 2010. Prior to that position, Dr. Teal served as Vice President of the Avon Skin Care Laboratories, where she led the bioscience research and skin care teams.

 

Education:

Dr. Teal holds a doctorate degree and a Master of Science degree in Pharmacology from Emory University Medical School, a Pharmacy Degree from Mercer University and was a Post-Doctoral Fellow at the New York University Medical Center Institute of Environmental Medicine.

 

Public Company Boards:

From 2003 until 2011, Dr. Teal served on the Board of Directors of Arch Chemicals, Inc., where she served on the Audit Committee and the Corporate Governance Committee.

 

Director Qualifications:

As former Group Vice President and Chief Scientific Officer of a leading personal care company, Dr. Teal brings significant scientific and personal care industry experience and knowledge to the Board in the areas of research and development, marketing, safety and risk oversight. She also brings significant experience gained from service on the board of directors of another public chemical company.

 

Board Committees:

*       Environmental, Health, Safety and Quality (Chair)

*       Compensation

 

 

 

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  MICHAEL J. WARD

 

 

LOGO

 

Principal Occupation:

Retired Chairman of the Board

and Chief Executive

Officer of CSX

Corporation

 

Director Since:  2001

Age: 67

  

Professional Experience:

Mr. Ward is the retired Chairman of the Board and Chief Executive Officer of CSX Corporation, a transportation supplier, where he served in that position from 2003 to 2017. Prior to that position, he was President of CSX Transportation, the corporation’s rail unit.

 

Education:

Mr. Ward holds a Bachelor of Science degree from the University of Maryland and a Masters in Business Administration from the Harvard Business School.

 

Public Company Boards:

Since January 2016, Mr. Ward has served on the Board of Directors of the PNC Financial Services Group, Inc., where he serves on the Nominating and Governance Committee and Personnel and Compensation Committee. From January 2003 until May 2017, Mr. Ward served as Chairman of the Board of Directors of CSX Corporation, where he also served as Chairman of the Executive Committee. In September 2017, Mr. Ward joined the Board of Contura Energy, where he serves on the Compensation Committee, the Nominating and Corporate Governance Committee and the Safety, Health, and Environmental Committee.

 

Non-Profit Boards:

Mr. Ward is the Chair of City Year Jacksonville, the Hubbard House Foundation and Edward Waters College Foundation. He is also on the Boards of the United Way of Northeast Florida, and One Love. He is a trustee of the Michael Ward and Jennifer Glock Foundation.

 

Director Qualifications:

As a retired Chairman of the Board and Chief Executive Officer of a major transportation company, Mr. Ward brings significant experience and knowledge to the Board in the areas of finance, accounting, business operations, safety, environmental compliance, risk oversight and corporate governance. He also brings significant experience gained from service on the board of directors of another public company.

 

Board Committees:

*       Governance and Nominating

*       Compensation

 

 

 

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  KATHLEEN WILSON-THOMPSON

 

 

LOGO

 

Principal Occupation:

Executive Vice President and Global Chief Human Resources Officer of Walgreens Boots Alliance Inc.

 

Director  Since:  2017

Age: 60

  

Professional Experience:

Ms. Wilson-Thompson is Executive Vice President and Global Chief Human Resources Officer at Walgreens Boots Alliance Inc., the largest retail pharmacy, health and daily living destination across the USA and Europe. Prior to this, she was Senior Vice President and Chief Human Resources Officer for Walgreens since 2010. Prior to her role at Walgreens, she held several positions of increasing responsibility in the operations and legal departments at Kellogg Company. She left Kellogg as Senior Vice President of Global Human Resources to join Walgreens. She also worked as Vice President and Staff Counsel of litigation and banking law for Michigan National Corporation.

 

Education:

Ms. Wilson-Thompson holds a bachelor’s degree from the University of Michigan, and a Juris Doctorate and an LLM, Master of Laws, in corporate and finance law from Wayne State University.

 

Public Company Boards:

Ms. Wilson-Thompson has served as a director of Vulcan Materials Company since 2009, and currently is the chair of the Safety, Health and Environmental Committee and serves on the Compensation Committee.

 

Non-Profit Boards:

Ms. Wilson-Thompson serves on the University of Michigan Alumni Association, is on the boards of the Skills for Chicagoland’s Future, the Chicago Children’s Choir and the Taylor Wilson Thompson Family Foundation, and is a trustee for the NAACP Foundation.

 

Director Qualifications:

As the current Executive Vice President and Global Chief Human Resources Officer of a large retail pharmacy company, Ms. Wilson-Thompson brings significant experience and knowledge to the Board in the areas of business operations, safety, executive compensation, risk oversight and corporate governance. She also brings significant experience gained from service on the board of directors of another public company.

 

Board Committees:

*       Environmental, Health, Safety and Quality

*       Compensation

 

 

 

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  WILLIAM A. WULFSOHN

 

 

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Principal Occupation:

Chairman of the Board and

Chief Executive Officer of

Ashland Global Holdings Inc.

 

Director Since: 2015

Age: 55

  

Professional Experience:

Mr. Wulfsohn is Ashland’s Chairman of the Board and Chief Executive Officer. Prior to this position, Mr. Wulfsohn served as President and Chief Executive Officer of Carpenter Technology Corporation from July 2010 to December 2014. Mr. Wulfsohn also served as a Director for Carpenter Technology Corporation beginning in April 2009. Prior to joining Carpenter Technology Corporation, Mr. Wulfsohn served as Senior Vice President, Industrial Coatings at PPG Industries. Before joining PPG Industries, Mr. Wulfsohn served as Vice President and General Manager for Honeywell International. Previously, Mr. Wulfsohn worked for Morton International/Rohm & Haas, beginning as a director of marketing and subsequently as Vice President and Business Director. Mr. Wulfsohn began his professional career with McKinsey & Company.

 

Education:

Mr. Wulfsohn holds a chemical engineering degree from the University of Michigan and a Masters of Business Administration degree from Harvard University.

 

Public Company Boards:

Mr. Wulfsohn is a director of PolyOne Corporation, where he serves on the Audit and Compensation Committees and is a director of Valvoline Inc. Valvoline has announced that Mr. Wulfsohn will not be standing for re-election at the January 2018 Valvoline Annual Shareholder Meeting. Within the past five years, Mr. Wulfsohn also served as the non-executive chairman of Valvoline Inc. and on the Board of Directors of Carpenter Technology Corporation.

 

Director Qualifications:

As the Chairman and Chief Executive Officer of Ashland and as the former President and Chief Executive Officer of Carpenter Technology Corporation, a leading specialty materials company, Mr. Wulfsohn brings significant experience and knowledge to the Board in the areas of finance, accounting, business operations, management, manufacturing, safety, environmental compliance, risk oversight and corporate governance. Also, as former Senior Vice President of Industrial Coatings at PPG Industries and an executive at other chemical companies, Mr. Wulfsohn brings considerable specialty chemicals management and manufacturing experience to the Board. He also brings significant experience gained from service on the board of directors of other public companies.

 

 

 

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COMPENSATION OF DIRECTORS

Director Compensation Table

The following table is a summary of compensation information for the fiscal year ended September 30, 2017, for Ashland’s non-employee directors. Mr. Wulfsohn, Chairman of the Board and Chief Executive Officer, receives no compensation as a director of Ashland. Mr. Peribere is a director nominee and has not received any compensation from Ashland. On May 12, 2017, Ashland completed its separation of Valvoline. Consistent with the terms of the Deferred Compensation Program for Non-Employee Directors and the applicable Ashland Global Holdings Inc. incentive compensation plan, each director’s outstanding deferred stock units, restricted stock units and on-boarding grant of restricted stock or restricted stock units were adjusted using the Equity Adjustment Ratio.

 

Name

  Fees Earned or
Paid in Cash (1)
($)
     Stock
Awards (2)
($)
     All Other
Compensation (3)
($)
     Total
($)
 
(a)   (b)      (c)      (d)      (e)  

Brendan M. Cummins

    110,208        110,000        0        220,208  
          

William G. Dempsey

    100,000        110,000        0        210,000  
          

Jay V. Ihlenfeld*

    68,056        226,250        0        294,306  
          

Stephen F. Kirk**

    32,222        0        187,875        220,097  
          

Susan L. Main***

    20,109        180,935        0        201,044  
          

Vada O. Manager**

    37,056        0        187,875        224,931  
          

Barry W. Perry

    140,000        110,000        0        250,000  
          

Mark C. Rohr

    100,000        110,000        0        210,000  
          

George A. Schaefer, Jr.****

    120,000        110,000        5,000        235,000  
          

Janice J. Teal

    115,000        110,000        0        225,000  
          

Michael J. Ward

    100,000        110,000        0        210,000  
          

Kathleen Wilson-Thompson***

    20,109        180,935        0        201,044  

 

 

*

Dr. Ihlenfeld joined Ashland’s Board on January 26, 2017.

 

**

Messrs. Kirk and Manager ended their service on the Ashland Board in January 2017 and now serve on the Board of Valvoline.

 

***

Ms. Main and Ms. Wilson-Thompson joined Ashland’s Board on July 19, 2017.

 

****

Consistent with Ashland’s mandatory retirement policy set forth in the Corporate Governance Guidelines, the G&N Committee and the Board determined not to nominate Mr. Schaefer to stand for re-election to the Board.

 

(1)

For fiscal 2017, Messrs. Manager, Perry and Ward and Dr. Teal deferred all or a portion of their fees into the Directors’ Deferral Plan. Mr. Manager deferred $2,875, Mr. Perry deferred $113,750, Dr. Teal deferred $115,000, and Mr. Ward deferred $100,000.

 

 

 

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(2)

The values in column (c) represent the aggregate grant date fair value of restricted stock unit awards granted in fiscal 2017 computed in accordance with FASB ASC Topic 718. These restricted stock unit awards do not require assumptions in computing their grant date fair value under generally accepted accounting principles. The number of restricted stock unit awards received is rounded to the nearest whole share. Other than Mr. Cummins, Ms. Main and Ms. Wilson-Thompson, each non-employee director received a grant of 1,781 restricted stock units of Ashland Common Stock in the Directors’ Deferral Plan on January 26, 2017. Mr. Cummins received a grant of 1,781 restricted stock units directly on January 26, 2017. The grant date fair value per share of each restricted stock unit was $61.72 per share of Ashland Common Stock. Dr. Ihlenfeld joined the Board on January 26, 2017 and in addition to the restricted stock units, also received an initial grant of 1,883 restricted shares with a grant date fair value of $116,250, which was based on the grant date fair value of $61.72 per share of Ashland stock. Ms. Main and Ms. Wilson-Thompson joined the Board in July and received a pro-rated grant of 823 restricted stock units, with a grant date fair value of $66.88 per share, the closing price of Ashland Common Stock on the NYSE on July 19, 2017, the date of the grant. Upon joining the Board, Ms. Main and Ms. Wilson-Thompson received 1,883 restricted shares of Ashland Common Stock with a grant date fair value of $125,935, which was based on the closing price of Ashland Common Stock on the date of grant of $66.88.

 

(3)

For Mr. Schaefer, this amount includes a charitable match. For Messrs. Kirk and Manager, this amount includes fees in the amount of $37,056 for their service on the Valvoline Board from October 1, 2016 through January 26, 2017 (their last day on the Ashland Board). They also received (a) an initial grant of 4,937 shares of Valvoline restricted stock with a grant date fair value per share of $23.21 and (b) a pro-rated portion of their annual Valvoline restricted stock unit grant equal to 1,561 Valvoline restricted stock units, with a grant date fair value per share of $23.21.

The following table identifies the aggregate number of unvested stock awards for each non-employee director outstanding as of September 30, 2017. Messrs. Kirk and Manager retired at Ashland’s 2017 Annual Meeting and did not have any unvested Ashland stock or stock units as of September 30, 2017.

 

Name

   Shares of
Restricted Ashland
Common Stock
(#)
     Unvested
Restricted Stock
Units of Ashland
Common Stock
(1)
(#)
 

Brendan M. Cummins

     0        14,786  
     

William G. Dempsey

     1,883        1,797  
     

Jay V. Ihlenfeld

     1,883        1,797  
     

Susan L. Main

     1,883        826  
     

Barry W. Perry

     1,883        1,797  
     

Mark C. Rohr

     1,883        1,797  
     

George A. Schaefer, Jr.

     1,883        1,797  
     

Janice J. Teal

     1,883        1,797  
     

Michael J. Ward

     1,883        1,797  
     

Kathleen Wilson Thompson

     1,883        826  

 

 

 

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(1)

Includes credit for reinvested dividends allocated since the grant date for all directors. For all directors other than Mr. Cummins, the restricted stock units vest one year after date of grant. Mr. Cummins’s restricted stock units vest as described below under “Restricted Shares/Units” of this proxy statement.

Annual Retainer

Ashland’s non-employee director compensation program provides: (a) an annual retainer of $100,000 for each director; (b) an additional annual retainer of $25,000 for the Lead Independent Director; (c) an additional annual retainer of $20,000 for the Chair of the Audit Committee; and (d) an additional annual retainer of $15,000 for other committee chairs.

Non-employee directors may elect to receive part or all of each annual retainer in cash or in shares of Ashland Common Stock. They may also elect to have a part or all of each annual retainer deferred and paid through the Directors’ Deferral Plan. The directors who make an election to defer part or all of any annual retainer may have the deferred amounts held as common stock units (share equivalents) in the hypothetical Ashland Common Stock fund or invested under the other available investment options under the plan. The payout of the amounts deferred occurs upon termination of service by a director. Directors may elect to have the payout in a single lump sum or in installments not to exceed 15 years. For amounts deferred before January 1, 2005, upon a “change in control” of Ashland (as defined in the Directors’ Deferral Plan), deferred amounts in the directors’ deferral accounts will be automatically distributed as a lump sum in cash to the director. For amounts deferred on and after January 1, 2005, such amounts will be distributed pursuant to each director’s election and valued at the time of the distribution.

Restricted Shares/Units

Upon election to Ashland’s Board, each new non-employee director (other than Mr. Cummins, who is a non-U.S. resident) received 1,883 restricted shares of Ashland Common Stock (after applying the Equity Adjustment Ratio). In lieu of 1,883 restricted shares of Ashland Common Stock, Mr. Cummins received 1,883 restricted stock units. The restricted shares and Mr. Cummins’s restricted stock units may not be sold, assigned, transferred or otherwise encumbered until the earliest to occur of: (i) retirement from the Board of Directors; (ii) death or disability of the director; (iii) a 50% change in the beneficial ownership of Ashland; or (iv) voluntary early retirement to enter governmental service. The G&N Committee has discretion to limit a director’s forfeiture of these shares or restricted stock units if the non-employee director leaves Ashland’s Board for reasons other than those listed above. As discussed above, in connection with the Final Distribution, these awards were adjusted using the Equity Adjustment Ratio resulting in 1,883 restricted shares. New directors joining after the Final Distribution received the adjusted grant of 1,883 shares.

Each non-employee director (other than Mr. Cummins) also received an annual award of deferred restricted stock units in the Directors’ Deferral Plan with a grant date value of $110,000 (pro-rated as applicable for less than a full-year of service). The restricted stock units vest one year after date of grant, and are settled in accordance with each such director’s deferral election. Dividends on restricted stock units are reinvested in additional restricted stock units. Upon a “change in control” of Ashland, the restricted stock units immediately vest. Prior to being awarded restricted stock units, directors can elect to have his or her vested units paid in shares of Ashland Common Stock or in cash after the director terminates from service. In November 2016, Ashland amended its Directors’ Deferral Plan to provide that the annual grant of restricted stock units will vest one year after the date of grant, regardless of an earlier occurring annual stockholder meeting.

Mr. Cummins, as a non-U.S. resident, is not eligible to participate in the Directors’ Deferral Plan. Therefore, he received an annual award of restricted stock units directly, which will vest on the same basis as his restricted stock units described above. His annual award will continue to be granted directly (and not through deferral).

 

 

 

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All restricted stock units in the Directors’ Deferral Plan, as well as the restricted stock units granted to Mr. Cummins, were adjusted using the Equity Adjustment Ratio. New directors joining after the Final Distribution still received the number of units with a grant date value of $110,000, pro-rated for less than a full-year of service.

Stock Ownership Guidelines for Directors

The Board of Directors considers Ashland Common Stock ownership by directors to be of utmost importance. The Board believes that such ownership enhances the commitment of directors to Ashland’s future and aligns their interests with those of Ashland’s other stockholders. The Board has therefore established minimum stock ownership guidelines for non-employee directors which require each director to own the lesser of (i) 23,500 shares or units of Ashland Common Stock or (ii) Ashland Common Stock having a value of at least five times his or her base annual cash retainer of $100,000. Each newly elected director has five years from the year elected to reach this ownership level. As of October 31, 2017, all of Ashland’s current non-employee directors had attained the minimum stock ownership levels based on holdings, except for (a) Mr. Dempsey, who joined the Board in 2016 and will not be required to meet the minimum stock ownership guidelines until 2021 and (b) Dr. Ihlenfeld, Ms. Main and Ms. Wilson-Thompson, who joined the Board in 2017 and will not be required to meet the minimum stock ownership guidelines until 2022.

Other Compensation

Messrs. Kirk and Manager joined the Board of Directors of Valvoline in connection with its initial public offering in September 2016. From October 1, 2016 through May 12, 2017, Valvoline was a majority-owned subsidiary of Ashland. As members of the Valvoline Board of Directors, on October 1, 2016, Messrs. Kirk and Manager each received an initial grant of 4,937 restricted shares of Valvoline Common Stock, which will vest upon the earliest of (i) retirement from the Valvoline Board of Directors; (ii) death or disability of the director; (iii) any removal or involuntary separation of the director from the Valvoline Board following a change in control; or (iv) voluntary early retirement to enter governmental service. Additionally, they each received a pro-rated portion of their annual Valvoline restricted stock unit grant equal to 1,561 Valvoline restricted stock units, which will vest one year after the date of grant and will be settled in accordance with each such director’s deferral election. They also received fees in the amount of $37,056 for their service on the Valvoline Board from October 1, 2016 through January 26, 2017 (their last day on the Ashland Board).

 

 

 

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CORPORATE GOVERNANCE

Governance Principles

Ashland is committed to adhering to sound corporate governance practices. The documents described below are published on Ashland’s website ( http://investor.ashland.com ). These documents are also available in print at no cost to any stockholder who requests them. Among the corporate governance practices followed by Ashland are the following:

 

   

Ashland has adopted Corporate Governance Guidelines. These guidelines provide the framework for the Board of Directors’ governance of Ashland and include a general description of the Board’s purpose, director qualification standards, retirement and resignation policies and other responsibilities. The Corporate Governance Guidelines require that at least two-thirds of Ashland’s directors be independent, as defined by Ashland’s Director Independence Standards (the “Standards”), which incorporate the independence requirements of the SEC rules and the listing standards of the NYSE.

 

   

Ashland also requires compliance with its global code of conduct which applies to all of Ashland’s directors and employees, including the principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. The global code of conduct promotes honest and ethical conduct, compliance with applicable laws, rules and regulations, prompt reporting of violations of the code and full, fair, accurate, timely and understandable disclosure in reports filed with the SEC. Ashland intends to post any amendments or waivers of the code (to the extent applicable to Ashland’s directors and executive officers) on Ashland’s website or in a Current Report on Form 8-K.

 

   

Each of Ashland’s Board Committees has adopted a charter defining its respective purposes and responsibilities.

 

   

Only independent directors, as defined in the Standards, may serve on the Audit Committee, G&N Committee, Compensation Committee and Environmental, Health, Safety and Quality Committee (the “EHS&Q Committee”) of the Board.

 

   

The Board, and each Committee of the Board, has the authority to engage independent consultants and advisors.

Board Leadership Structure

Ashland combines the roles of Chairman of the Board and Chief Executive Officer, which is balanced through the appointment of a Lead Independent Director. The Board believes that combining the positions of Chairman and Chief Executive Officer provides clarity of leadership and is in the best interests of Ashland and its stockholders at this time. The Board believes that the use of a Lead Independent Director provides appropriate independent oversight of management. Independent oversight has been further assured by having only one member of management on the Board. The non-management directors regularly meet alone in executive session at Board meetings.

The Lead Independent Director is an independent director selected annually by the G&N Committee and approved by the Board. Mr. Perry is currently the Lead Independent Director. In addition to the duties of all Board members, the Lead Independent Director:

 

   

Coordinates with the Chairman of the Board to determine the appropriate schedule of meetings;

 

   

Places any item he or she determines is appropriate on the Board’s agenda;

 

   

Directs that specific materials be included in Board mailings and works with the G&N Committee, as appropriate, to assess the quality, quantity and timeliness of the flow of information from management to the Board;

 

 

 

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Directs the retention of consultants and advisors to report directly to the Board;

 

   

Coordinates with the G&N Committee to oversee compliance with Ashland’s Corporate Governance Guidelines and to recommend appropriate revisions thereto;

 

   

Coordinates and develops the agenda for, and moderates executive sessions of, the Board’s independent directors and acts as principal liaison between the independent directors and the Chairman of the Board and Chief Executive Officer on sensitive matters; and

 

   

Works with the G&N Committee to recommend the membership of the various Board Committees and Committee Chairs.

Oversight of Ashland’s Executive Compensation Program

The Compensation Committee is responsible for the approval and administration of compensation programs for executive officers and certain other employees of Ashland. The Compensation Committee is composed of independent directors (as defined in the Standards). In making compensation decisions, the Compensation Committee considers, among other things: Ashland’s compensation philosophy, its financial and operating performance, the individual performance of executives, compensation policies and practices for Ashland employees generally, and practices and executive compensation levels of peer and similarly-sized general industry companies.

The Compensation Committee’s primary responsibilities are to:

 

   

Ensure that the Company’s executive compensation programs are competitive, support organizational objectives and stockholder interests, and emphasize the pay for performance linkage;

 

   

Review, evaluate and approve on an annual basis, the goals and objectives of the Chief Executive Officer. The Compensation Committee annually evaluates the Chief Executive Officer’s performance in light of these established goals and objectives, and based on these evaluations, the Compensation Committee sets the Chief Executive Officer’s annual compensation, including base salary, annual incentives and long-term incentives;

 

   

Review and approve compensation of all key senior executives and certain elected corporate officers; and

 

   

Approve any employment agreements, consulting arrangements, severance or retirement arrangements, change in control agreements, and/or any special or supplemental benefits or provisions covering any current or former executive officer of Ashland.

For further information about the responsibilities of the Compensation Committee, see “Committees and Meetings of the Board of Directors - Compensation Committee” on page 32.

The Compensation Committee may form and delegate authority to subcommittees with regard to any of the above responsibilities.

In determining and administering the executive compensation programs, the Compensation Committee takes into consideration:

 

   

Recommendations of the Chief Executive Officer and the Chief Human Resources and Information Technology Officer regarding potential changes to named executive officer compensation based on performance, competitiveness, personnel and organizational changes, regulatory issues, strategic initiatives and other matters;

 

   

Information provided by the Human Resources function at Ashland; and

 

   

Advice of an outside, independent, executive compensation consultant on all aspects of executive compensation, including comparison to the practices and executive compensation levels of peer and general industry companies.

 

 

 

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The Compensation Committee meets in executive session for a portion of each of its meetings.

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee for fiscal 2017 were Barry W. Perry (Chair), Jay V. Ihlenfeld (beginning January 26, 2017), Vada O. Manager (through January 26, 2017), George A. Schaefer, Jr., Janice J. Teal, Michael J. Ward and Kathleen Wilson-Thompson (beginning July 19, 2017). There were no impermissible interlocks or inside directors on the Compensation Committee.

Board’s Role of Risk Oversight

The Board of Directors has oversight responsibility with respect to Ashland’s risk management processes. This includes working with management to determine and assess the Company’s philosophy and strategy towards risk management and mitigation. Management is responsible for the day-to-day management of risk, and they report periodically to the Board and to specific committees on current and emerging risks and the Company’s approach to avoiding and mitigating risk exposure. The Board reviews in detail the Company’s most significant risks and whether management is responding consistently within the Company’s overall risk management and mitigation strategy.

While the Board maintains the ultimate oversight responsibility for risk management, each of the various committees of the Board has been assigned responsibility for risk management oversight of specific areas. In particular, the Audit Committee maintains responsibility for overseeing risks related to Ashland’s financial reporting, audit process, internal controls over financial reporting and disclosure controls and procedures and for the global ethics and compliance program. The Audit Committee also has oversight responsibility related to Ashland’s key financial risks. The EHS&Q Committee assists the Board in fulfilling its oversight responsibility with respect to environmental, health, safety, product compliance and business continuity risks. In setting compensation, the Compensation Committee monitors and evaluates the compensation and benefits structure of the Company, including providing guidance on philosophy and policy matters and excessive risk-taking. Finally, the G&N Committee conducts an annual review of nominees to the Board and is charged with developing and recommending to the Board corporate governance principles and policies and Board Committee structure, leadership and membership.

Director Independence and Certain Relationships

The Board of Directors has adopted the Standards to assist in its determination of director independence. To qualify as independent under these Standards, the Board must affirmatively determine that a director has no material relationship with Ashland, other than as a director.

Pursuant to the Standards, Ashland’s Board undertook a review of director independence in November 2017. During this review, the Board considered relationships and transactions between, on the one hand, each director or nominee, any member of his or her immediate family, and his or her affiliates, and on the other hand, Ashland and its subsidiaries and affiliates. As provided for in the Standards, the purpose of the review was to determine whether any such relationships or transactions were inconsistent with a determination that the director or nominee is independent.

As a result of the review, Ashland’s Board affirmatively determined that Messrs. Cummins, Dempsey, Kirk (through January 26, 2017), Manager (through January 26, 2017), Peribere, Perry, Rohr, Schaefer and Ward, Dr. Teal, Dr. Ihlenfeld, Ms. Main and Ms. Wilson-Thompson are each independent of Ashland and its affiliates. Mr. Wulfsohn, Ashland’s Chief Executive Officer, is the only director determined not to be independent of Ashland. In addition, the Board has affirmatively determined that all members of the Audit Committee and Compensation Committee are independent under SEC rules and the listing standards of the NYSE.

In the normal course of business, Ashland had transactions with other corporations where certain directors are executive officers. None of the transactions were material in amount as to

 

 

 

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Ashland and none were reportable under federal securities laws. Ashland’s Board has concluded that the following relationships between Ashland and the director-affiliated entities are not material pursuant to the Standards, and the G&N Committee has determined that the transactions are not “Related Person Transactions,” as defined in the Related Person Transaction Policy:

Jerome A. Peribere, a director nominee of Ashland, is the current President and Chief Executive Officer of Sealed Air Corporation (“Sealed Air”), although he plans to retire at the end of calendar year 2017. During fiscal 2017, Sealed Air paid Ashland approximately $838,000 for certain products and/or services. Ashland did not purchase any products or services from Sealed Air.

Mark C. Rohr, a director of Ashland, is the Chairman and Chief Executive Officer of Celanese Corporation (“Celanese”). During fiscal 2017, Ashland paid Celanese approximately $2 million, and Celanese paid Ashland approximately $7.6 million, for certain products and/or services.

Michael J. Ward, a director of Ashland, is the former Chairman of the Board and Chief Executive Officer of CSX Corporation (“CSX”). During fiscal 2017, Ashland paid CSX approximately $5.3 million for transportation services. CSX did not purchase any products or services from Ashland.

There are no material proceedings to which any director, director nominee or executive officer of Ashland is a party adverse to Ashland or any of its subsidiaries or has a material interest adverse to Ashland or any of its subsidiaries.

There are no family relationships between any director of Ashland, executive officer of Ashland or person nominated or chosen to become a director or executive officer of Ashland.

Related Person Transaction Policy

Federal securities laws require Ashland to describe any transaction since the beginning of the last fiscal year, or any currently proposed transaction, in which (i) Ashland was or is to be a participant, (ii) the amount involved exceeds $120,000, and (iii) in which any related person had or will have a direct or indirect material interest. Related persons are directors and executive officers, nominees for director and any immediate family members of directors, executive officers or nominees for director. There have been no transactions since October 1, 2016, nor is there any currently proposed transaction, in which (i) Ashland was or is to be a participant, (ii) the amount involved exceeded or exceeds $120,000 and (iii) any related person had or will have a direct or indirect material interest. Ashland is also required to describe its policies and procedures for the review, approval or ratification of any Related Person Transaction.

Pursuant to Ashland’s written Related Person Transaction Policy (the “Policy”), the G&N Committee is responsible for reviewing the material facts of all transactions that could potentially be “transactions with related persons.” The Policy covers any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, (2) Ashland is a participant, and (3) any related person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). Transactions between Ashland and any firm, corporation or entity in which a related person is an executive officer or general partner, or in which any related persons collectively hold more than 10% of the ownership interests, are also subject to review under the Policy.

Under the Policy, Ashland’s directors and executive officers are required to identify annually, and on an as-needed basis, potential transactions with related persons or their firms that meet the criteria set forth in the Policy, and management is required to forward all such disclosures to the G&N Committee. The G&N Committee reviews each disclosed transaction. The G&N Committee has discretion to approve, disapprove or otherwise act if a transaction is deemed to be a Related

 

 

 

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Person Transaction subject to the Policy. Only disinterested members of the G&N Committee may participate in the determinations made with regard to a particular transaction. If it is impractical to convene a meeting of the G&N Committee, the Chair of the G&N Committee is authorized to make a determination and promptly report such determination in writing to the other G&N Committee members. All determinations made under the Policy are required to be reported to the full Board of Directors.

Under the Policy and consistent with SEC regulations, certain transactions are not Related Person Transactions, even if such transactions exceed $120,000 in a fiscal year. Those exceptions are:

 

   

Compensation to a director or executive officer which is or will be disclosed in Ashland’s proxy statement;

 

   

Compensation to an executive officer which is approved by the Compensation Committee and would have been disclosed in Ashland’s proxy statement if the executive officer was a “named executive officer”;

 

   

A transaction in which the rates or charges involved are determined by competitive bids, or which involves common, contract carrier or public utility services at rates or charges fixed in conformity with law or governmental authority;

 

   

A transaction that involves services as a bank depository of funds, transfer agent, registrar, indenture trustee or similar services; and

 

   

A transaction in which the related person’s interest arises solely from the ownership of Ashland Common Stock and all stockholders receive the same benefit on a pro rata basis.

Section 16(a) Beneficial Ownership Reporting Compliance

Pursuant to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s directors and certain executive officers are required to report, within specified due dates, their initial ownership of the Company’s Common Stock and all subsequent acquisitions, dispositions or other transfers of interest in such securities, if and to the extent reportable events occur which require reporting by such due dates. The Company is required to identify in its proxy statement whether it has knowledge that any person required to file such a report may have failed to do so in a timely manner. Based on that review, all of the Company’s directors and all executive officers subject to the reporting requirements satisfied such requirements in full except (1) due to administrative error, a late Form 4 was filed for Peter Ganz, J. Kevin Willis, Luis Fernandez-Moreno, Keith Silverman, Anne Schumann, and J. William Heitman reflecting the timing of the LTIPP vesting; and (2) due to administrative error, a late Form 4 was filed for Anne Schumann reflecting an intra-plan transfer into an Ashland Common Stock fund.

Communication with Directors

The Board of Directors has established a process by which stockholders and other interested parties may communicate with the Board. Persons interested in communicating with the Board, or with a specific member or Committee of the Board, may do so by writing to the Lead Independent Director in care of the General Counsel of Ashland, 50 E. RiverCenter Boulevard, Covington, KY 41011. Communications directed to the Lead Independent Director will be reviewed by the General Counsel and distributed to the Lead Independent Director as well as to other individual directors, as appropriate, depending on the subject matter and facts and circumstances outlined in the correspondence. Communications that are not related to the duties and responsibilities of the Board, or are otherwise inappropriate, will not be forwarded to the Lead Independent Director, although all communications directed to the Board will be available to any director upon request.

 

 

 

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Attendance at Annual Meeting

Ashland has a policy and practice of strongly encouraging all directors to attend the Annual Meeting. All of Ashland’s then current directors were present at the Annual Meeting held on January 26, 2017.

Executive Sessions of Directors

The non-employee directors meet in executive session at each regularly scheduled meeting of the Board, and at other times as they may determine appropriate. The Audit and Compensation Committees of the Board meet in executive session during every regular committee meeting. Other Board committees meet in executive session at the discretion of the committee members.

Stockholder Recommendations for Directors

The G&N Committee considers director candidates recommended by other directors, employees and stockholders, and is authorized, at its discretion, to engage a professional search firm to identify and suggest director candidates. Written suggestions for director candidates should be sent via registered, certified or express mail to the Secretary of Ashland at 50 E. RiverCenter Boulevard, Covington, KY 41011. Such suggestions should be received no later than September 1, 2018, to be considered by the G&N Committee for inclusion as a director nominee for the 2019 Annual Meeting. Suggestions for director candidates should include all information required by Ashland’s By-laws, and any other relevant information, as to the proposed candidate. The G&N Committee selects each director nominee based on the nominee’s skills, achievements and experience. The G&N Committee will review all director candidates in accordance with its charter and Ashland’s Corporate Governance Guidelines, and it will identify qualified individuals consistent with criteria approved by the Board of Directors. The G&N Committee shall select individuals as director nominees who exhibit the highest personal and professional integrity, who have demonstrated exceptional ability and judgment and who shall be most effective in serving the interests of Ashland’s stockholders. Additionally, the G&N Committee shall seek director candidates who exhibit the following personal and professional qualifications: (1) significant experience in the chemical industry; (2) product or process innovation experience; (3) international business expertise; (4) diverse experience in policy-making in business, government, education and/or technology, or in areas that are relevant to Ashland’s global business and strategy; (5) an inquisitive and objective nature, practical wisdom and mature judgment; and (6) the ability to work with Ashland’s existing directors and management. Individuals recommended by stockholders in accordance with these procedures will be evaluated by the G&N Committee in the same manner as individuals who are recommended through other means. During fiscal 2017, the G&N Committee engaged Russell Reynolds Associates, an independent executive and director search firm, to assist it in identifying and recruiting suitable director candidates. As a result of that engagement, Ms. Main and Ms. Wilson-Thompson were suggested to the G&N Committee by Russell Reynolds Associates and were elected to the Board on July 19, 2017. From October 2017 to November 2017, Ashland management and representatives of Cruiser Capital Advisors, LLC, an Ashland stockholder, discussed potential director candidates for election to Ashland’s Board at the Annual Meeting. As a result of those discussions, Mr. Peribere was suggested to Ashland, and the Board nominated Mr. Peribere for election to the Ashland Board at the Annual Meeting.

Stockholder Nominations of Directors

In order for a stockholder to nominate a director at an annual meeting who is not otherwise nominated by the G&N Committee, Ashland’s By-laws require that the stockholder must give written notice (as specified below) to the Secretary of Ashland not less than 90 days nor more than 120 days prior to the first anniversary of the date of the immediately preceding annual meeting; provided , however , that in the event that the date of the annual meeting is more than 30 days earlier or more than 60 days later than such anniversary date, notice by the stockholder to be timely must be so delivered or received not earlier than the 120th day prior to such annual meeting

 

 

 

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and not later than the close of business on the later of the 90th day prior to such annual meeting and the 10th day following the day on which public announcement of the date of such meeting is first made. Public disclosure may include a press release or in a public filing with the SEC. The notice must contain the following information:

 

   

as to each stockholder proposing a nominee and any Stockholder Associated Person (as defined below),

  i.

the class or series and number of shares of stock directly or indirectly held of record and beneficially by the stockholder proposing such business or Stockholder Associated Person,

  ii.

the date such shares of stock were acquired,

  iii.

a description of any agreement, arrangement or understanding, direct or indirect, with respect to such business between or among the stockholder proposing such business, any Stockholder Associated Person or any others (including their names) acting in concert with any of the foregoing,

  iv.

a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions and borrowed or loaned shares) that has been entered into, directly or indirectly, as of the date of such stockholder’s notice by, or on behalf of, the stockholder proposing such business or any Stockholder Associated Person, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the stockholder proposing such business or any Stockholder Associated Person with respect to shares of stock of Ashland (a “ Derivative ”),

  v.

a description in reasonable detail of any proxy (including revocable proxies), contract, arrangement, understanding or other relationship pursuant to which the stockholder proposing such business or Stockholder Associated Person has a right to vote any shares of stock of Ashland,

  vi.

any rights to dividends on the stock of Ashland owned beneficially by the stockholder proposing such business or Stockholder Associated Person that are separated or separable from the underlying stock of Ashland,

  vii.

any proportionate interest in stock of Ashland or Derivatives held, directly or indirectly, by a general or limited partnership in which the stockholder proposing such business or Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, and

  viii.

any performance-related fees (other than an asset-based fee) that the stockholder proposing such business or Stockholder Associated Person is entitled to, based on any increase or decrease in the value of stock of Ashland or Derivatives thereof, if any, as of the date of such notice (sections (i) through (viii) above, the “ Stockholder Information ”);

 

   

as to each stockholder proposing such nominee, the name and address of (i) any other beneficial owner of stock of Ashland that are owned by such stockholder and (ii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the stockholder or such beneficial owner (each, a “ Stockholder Associated Person ”);

 

   

the name and address of each stockholder proposing such nominee, as they appear on Ashland’s books;

 

   

the name and address of the person or persons to be nominated;

 

   

a representation that the stockholder is a holder of record of stock of Ashland entitled to vote in the election of directors and intends to appear in person or by proxy at the meeting;

 

 

 

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a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder;

 

   

a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the stockholder and any Stockholder Associated Person or any of their respective affiliates or associates or other parties with whom they are acting in concert, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder, Stockholder Associated Person or any person acting in concert therewith, were the “registrant” for purposes of such rule and each nominee were a director or executive of such registrant;

 

   

such other information regarding each nominee proposed by such stockholder and Stockholder Associated Persons as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each nominee been nominated, or intended to be nominated, by the Board and a completed signed questionnaire, representation and agreement required by Section 3.02(c) of the Ashland By-laws;

 

   

a representation as to whether such stockholder intends (a) to deliver a proxy statement and form of proxy to holders of at least the percentage of Ashland’s outstanding capital stock required to approve the nomination or (b) otherwise to solicit proxies from stockholders in support of such nomination;

 

   

a representation that the stockholder shall provide any other information reasonably requested by Ashland; and

 

   

the executed written consent of each nominee to serve as a director of Ashland if so elected.

The chairman of any meeting of stockholders to elect directors and Ashland’s Board may refuse to acknowledge any nomination that is not made in compliance with the procedure described above or if the stockholder fails to comply with the representations set forth in the notice.

 

 

 

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COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors currently has four committees: Audit Committee; Environmental, Health, Safety and Quality Committee; Governance and Nominating Committee; and Compensation Committee. All Committees are composed entirely of independent directors. During fiscal 2017, eight meetings of the Board were held. Each director attended at least 75% of the total meetings of the Board and the Committees on which he or she served. Overall attendance at Board and Committee meetings was 96%. Listed below are the members of each of the four standing committees as of September 30, 2017.

 

 Audit

 

Environmental, Health,
Safety and Quality

 

Governance and

Nominating

 

Compensation

 Brendan M. Cummins

  William G. Dempsey   Brendan M. Cummins*   Jay V. Ihlenfeld

 William G. Dempsey

  Jay V. Ihlenfeld   William G. Dempsey   Barry W. Perry *

 Susan L. Main**

  Mark C. Rohr   Susan L. Main**   George A. Schaefer, Jr.^

 Mark C. Rohr

  Janice J. Teal *   Barry W. Perry   Janice J. Teal

 George A. Schaefer, Jr. *^

  Kathleen Wilson-Thompson***   Michael J. Ward   Michael J. Ward
      Kathleen Wilson-Thompson***

 

 

*

Chair

 

**

Susan L. Main joined the Ashland Board on July 19, 2017.

 

***

Kathleen Wilson-Thompson joined the Ashland Board on July 19, 2017.

 

^

Consistent with Ashland’s mandatory retirement policy set forth in the Corporate Governance Guidelines, the G&N Committee and the Board determined not to nominate Mr. Schaefer to stand for re-election to the Board.

Following are descriptions of the primary responsibilities of each committee and the number of meetings held during fiscal 2017. Each committee’s charter is available on Ashland’s website ( http://investor.ashland.com ).

 

Audit Committee

   Number of Meetings In Fiscal 2017: 8

Summary of Responsibilities

   

Oversees Ashland’s financial reporting process, including earnings releases and the filing of financial reports.

   

Reviews management’s implementation and maintenance of adequate systems of internal accounting and financial controls (including internal control over financial reporting).

   

Evaluates the independence and performance of the independent auditors, who report directly to the Audit Committee.

   

Selects independent auditors based on qualification and independence and approves audit fees and services performed by independent auditors.

   

Reviews the effectiveness of Ashland’s legal and regulatory compliance programs.

   

Discusses the overall scope and plans for audits with both internal and independent auditors.

   

Reviews and investigates any matters pertaining to the integrity of executive management and oversees compliance by management with laws, regulations and the global code of conduct.

   

Establishes and maintains procedures for handling complaints regarding accounting and auditing matters.

 

 

 

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Reviews Ashland’s enterprise risk management policies and assessment processes.

   

Evaluates and recommends actions regarding significant financial issues such as capital structure, dividend policy, offerings of corporate securities, major borrowings, credit facilities, derivatives and swaps policies (including entry into swaps in reliance on the end-user exception), past audits of capital investments, capital projects, commercial commitments and merger, acquisition and divestiture activities.

   

Oversees funding and investment policy related to employee benefit plans.

   

Reviews performance and operation of internal audit, including the head of internal audit, and reviews adverse audit reports.

   

Reviews the Company’s information and cyber security risks and programs.

 

Environmental, Health, Safety and Quality Committee

   Number of Meetings In Fiscal 2017: 4

Summary of Responsibilities

   

Oversees and reviews Ashland’s environmental, health and safety, quality and compliance policies, programs, practices and audits and any issues, as well as competitors’ activities and industry best practices.

   

Oversees and reviews environmental, health and safety regulatory trends, including Ashland’s overall compliance, remediation and sustainability efforts.

   

Oversees and reviews product safety and quality trends, issues and concerns which affect or could affect Ashland’s product safety or quality practices, including Ashland’s overall efforts related to product safety and quality.

   

Oversees, reviews and receives updates on Ashland’s policies regarding environmental, health, safety and quality compliance and business continuity risks.

   

Reports to the Board concerning implementation of environmental, health, safety and quality compliance policies and assists the Board in assuring Ashland’s compliance with those policies.

 

Governance and Nominating Committee

   Number of Meetings In Fiscal 2017: 5

Summary of Responsibilities

   

Recommends nominees for the Board of Directors and its Committees.

   

Reviews suggested potential candidates for the Board.

   

Recommends desirable size and composition of the Board and its Committees.

   

Recommends to the Board programs and procedures relating to director compensation, evaluation, retention and resignation.

   

Reviews corporate governance guidelines, corporate charters and proposed amendments to the Certificate and By-laws of Ashland.

   

Reviews transactions pursuant to the Related Person Transaction Policy.

   

Assists the Board in ensuring the Board’s independence as it exercises its corporate governance and oversight roles.

   

Oversees the evaluation of the Board.

   

Reviews the process for succession planning for the executive management of Ashland.

   

Reviews all Committee charters.

   

Reviews and makes recommendations to address stockholder proposals.

   

Oversees the administration of the equity plans and awards, solely with respect to non-employee directors.

 

Compensation Committee

   Number of Meetings In Fiscal 2017: 6

Summary of Responsibilities

   

Ensures Ashland’s executive compensation programs are appropriately competitive, support organizational objectives and stockholder interests and emphasize pay for performance linkage.

 

 

 

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Evaluates and approves compensation and sets performance criteria for compensation programs with respect to Ashland’s Chief Executive Officer.

   

Evaluates and approves compensation and sets performance criteria for compensation programs for all key senior executives and elected officers.

   

Oversees the execution of senior management succession plans, including HR-related business continuity plans.

   

Approves any employment agreements, consulting arrangements, severance or retirement arrangements, change in control agreements and/or any other special or supplemental benefits covering any current or former executive officer.

   

Adopts, amends, terminates and performs other design functions for Ashland’s benefit plans.

   

Oversees the implementation and administration of Ashland’s compensation plans.

   

Monitors and evaluates Ashland’s compensation and benefits structure, providing guidance on philosophy, policy matters and excessive risk taking.

   

Oversees regulatory compliance on compensation matters, including Ashland’s policies on structuring compliance programs to preserve tax deductibility.

   

Oversees the preparation of the annual report on executive compensation.

   

Oversees the retention of compensation consultants, independent legal counsel or other advisors and determines independence of the same.

 

 

 

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) provides a detailed description of our executive compensation philosophy and programs and the compensation decisions made by the Compensation Committee under those programs. This CD&A focuses on the compensation of our named executive officers (“NEOs” or “named executive officers”) for fiscal 2017, who were:

 

Name

  

Position

William A. Wulfsohn

   Chairman of the Board and Chief Executive Officer (“CEO”)

J. Kevin Willis

   Senior Vice President and Chief Financial Officer (“CFO”)

Peter J. Ganz

   Senior Vice President, General Counsel and Secretary

Anne T. Schumann

   Senior Vice President, Chief Human Resources and IT Officer

J. William Heitman

   Vice President, Ashland & Controller

Luis Fernandez-Moreno*

   Former Senior Vice President, Ashland & President, Chemicals Group

 

 

*

Luis Fernandez-Moreno departed the company on February 28, 2017. Details of his separation arrangement can be found under the Separation Terms for NEO and Potential Payments upon Termination or Change in Control sections of this proxy statement.

EXECUTIVE SUMMARY

In this section, we highlight fiscal 2017 performance and key actions that our Compensation Committee took to support our strategic priorities and to effectively align the interests of our NEOs with stockholders.

Fiscal Year 2017 Ashland Performance^

Fiscal 2017 was a year of transition and great progress for Ashland. We completed the separation of Valvoline (approximately $4.7 billion of market cap immediately following the Final Distribution) and acquired Pharmachem Laboratories, Inc. (“Pharmachem”), which was immediately accretive to our earnings. Pharmachem has annual revenues of approximately $300 million and was purchased for $680 million. Ashland also completed the acquisition of a composites manufacturing facility in France, which was also immediately accretive.

For the full year, Ashland’s net income was $28 million compared to a net loss of $28 million in fiscal 2016, while Adjusted EBITDA decreased 5% to $570 million from $598 million in fiscal 2016. These results include roughly $85 million in higher raw material costs and unfavorable currency impact. Ashland’s sales rose 8%, to $3.3 billion, with growth coming from all three reportable segments—Specialty Ingredients, Composites and Intermediates and Solvents (I&S).

Specialty Ingredients’ operating income totaled $233 million, compared to $237 million in fiscal 2016, while Adjusted EBITDA grew by $17 million, to $493 million, despite $25 million of raw material inflation and foreign currency impact.

Within Composites, the team overcame $50 million of raw material inflation by delivering price and volume, resulting in full-year operating income of $67 million, an increase of $4 million from the prior year. EBITDA increased by $4 million, to $89 million, in fiscal 2017.

 

 

 

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I&S returned to year-over-year profit growth in the second half of the fiscal year. I&S saw an operating loss of $12 million in fiscal 2017 compared to a loss of $181 million in fiscal 2016. I&S saw a decrease in Adjusted EBITDA by $5 million, to $26 million in fiscal 2017.

 

(In millions)

   2017      2016  

Sales

     

Specialty Ingredients

   $ 2,216      $ 2,089  

Composites

     779        669  

Intermediates and Solvents

     265        261  

Operating income (loss)

     

Specialty Ingredients

   $ 233      $ 237  

Composites

     67        63  

Intermediates and Solvents

     (12      (181

EBITDA^

     

Specialty Ingredients

   $ 462      $ 476  

Composites

     89        85  

Intermediates and Solvents

     19        (150

Adjusted EBITDA*^

     

Specialty Ingredients

   $ 493      $ 476  

Intermediates and Solvents

     26        31  

 

 

*

There were no key items for the Composites segment.

 

^

EBITDA and Adjusted EBITDA are non-GAAP measures and are reconciled to net income for Ashland and operating income for each segment in Appendix B.

Pay and Performance at a Glance

Our executive compensation program reflects our belief that the amount earned by our executives must, to a significant extent, depend on achieving rigorous Company and Business Unit objectives designed to enhance stockholder value.

Our pay and performance illustrations below show the relationship between payouts as a percentage of target opportunity and the annual and long-term incentive performance as a percentage of target performance goals. Our payout levels for the annual and long-term incentive plans have varied from year to year based on company performance as shown below:

 

 

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COMPENSATION PHILOSOPHY AND PROGRAM DESIGN PRINCIPLES

Compensation Philosophy and Executive Compensation Program Objectives

Our executive compensation program is designed to create a pay-for-performance culture by aligning compensation to the achievement of our financial and strategic objectives and our stockholder’s interests. We strive to provide our NEOs with a compensation package that is aligned with the market median, with the expectation that above-target performance will result in above-median pay and below-target performance will result in below-median pay.

The primary objectives of our executive compensation program and the guiding principles for setting and awarding executive compensation are:

 

Align the interests of management with our stockholders

  

To closely align the interests of management with the interests of our stockholders, a significant portion of the executive’s compensation is equity based and is linked to building long-term stockholder value through the achievement of the financial and strategic objectives of Ashland.

Provide incentive compensation that promotes desired behavior without encouraging unnecessary and excessive risk

  

Incentive compensation should help drive business strategy. The compensation program should encourage both the desired results and the right behaviors. It should help drive business strategy and strike a balance between short-term and long-term performance, while incorporating risk-mitigating design features to ensure that unnecessary or excessive risk are not encouraged.

Attract, retain and motivate executive talent by providing competitive levels of salary and targeted total pay

  

Compensation should be competitive with those organizations with which we compete for top talent.

Integrate with our performance management process of goal setting and formal evaluation

  

Target level goals should be aligned with the annual operating plan and be considered stretching yet achievable, based on an annual assessment of business conditions for the performance period.

 

 

 

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ELEMENTS OF COMPENSATION AND LINK TO COMPANY PERFORMANCE

Primary Compensation Elements

We have three primary elements of total direct compensation—base salary, annual incentive and long-term incentive. Our long-term incentive is delivered through Performance Units (“PUs” or “Performance Units”), Stock Appreciation Rights (“SARs”) and Restricted Stock Units (“RSUs”).

The majority of our NEOs’ compensation is performance based and not guaranteed. The following table summarizes the key elements of our executive compensation program and describes why each element is provided:

 

    

 

Base Salary

 

 

 

  Annual Incentive  

 

 

 

PUs

 

 

 

SARs

 

 

 

RSUs

 

 

Who Receives  

 

 

 

All NEOs

 

When Granted / Received   Reviewed annually   Annually for prior year performance   First quarter annually

 

Form of Delivery  

 

  Cash   Equity
Type of Performance   Short-term emphasis   Long-term emphasis
Performance Period   Ongoing   1 Year   3 Years
How Payout is Determined   Compensation Committee judgment based on review of market and other factors   Formulaic; Compensation Committee verifies performance before payout   Formulaic; Compensation Committee verifies performance before payout   Stock price on exercise/vest date
Most Recent Performance Measure   N/A   OI and WCE with a safety modifier   Earnings per Share & relative TSR modifier   Stock price appreciation
What is Incentivized   Balance against excessive risk taking   Deliver on annual strategic objectives   Deliver on long-term strategic objectives; outperform peers   Increase stock price     Balance against excessive risk   taking and retention

Overall Pay Mix

As illustrated in the charts below, we place a significant emphasis on performance-based compensation (short- and long-term) so that a substantial percentage of each NEO’s total direct target compensation is contingent on the successful achievement of our financial and strategic goals, in accordance with our compensation philosophy.

 

 

 

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Fiscal Year 2017 Total Direct Compensation Mix

 

 

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USE OF COMPARATOR PEER GROUPS

The Compensation Committee primarily uses two comparator groups as part of its executive compensation process. The “Compensation Peer Group” is used to assess the competitiveness of our NEOs’ compensation, and the “Performance Peer Group” is used to evaluate our performance relative to our peers.

Compensation Peer Group

The Compensation Committee considers relevant market pay practices, among other factors, when setting executive compensation to enhance our ability to recruit and retain high performing talent. In assessing market competitiveness, the compensation of our NEOs is reviewed against executive compensation at a number of companies with which we compete for executive talent. Factors used to determine the companies included in the analysis and how the data is used is set forth below:

 

 Considerations used to choose peer group

  

   How we use the peer group information

  Comparable revenue size

 

  Global operations

 

  Chemical industry

 

  Market capitalization

  

    Input in developing base salary ranges, annual incentive targets and long-term incentive awards

 

    Assess competitiveness of total direct compensation

 

    Determining form and mix of equity

 

    Input to designing compensation plans, benefits and perquisites

Our Compensation Committee reviews the Compensation Peer Group on an annual basis and determines, with input from its independent consultant, whether any changes are appropriate. This annual review ensures that the Compensation Peer Group companies remain appropriate from a business and talent perspective.

 

 

 

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The fiscal 2017 Compensation Peer Group used for market assessment of compensation in fiscal 2017 included the following companies:

 

   

A. Schulman, Inc.

   

Albermarle Corporation

   

Axiall Corporation

   

Cabot Corporation

   

Celanese Corporation

   

CF Industries Holdings, Inc.

   

Cytec Industries Inc.

   

Eastman Chemical Company

   

FMC Corporation

   

H.B. Fuller Company

   

Huntsman Corporation

   

International Flavors & Fragrances Inc.

   

NewMarket Corporation

   

Olin Corporation

    Platform Specialty Products Corporation
   

Polyone Corporation

   

RPM International Inc.

   

Scotts Miracle-Gro Company

   

Sherwin-Williams Company

   

The Mosaic Company

   

Valspar Company

   

W. R. Grace and Company

   

Westlake Chemical Corporation

 

 

Additionally, competitive pay data was gathered from the Towers Watson CDB General Industry Executive Compensation Survey. The data from the survey is scoped to Ashland’s industry and adjusted to Ashland’s revenue size.

In fiscal 2017, the Compensation Committee revised the Compensation Peer Group to be used for the market assessment of fiscal 2018 compensation. The Compensation Committee approved revisions to the Compensation Peer Group so that it more accurately reflects the industries in which we compete and financial size following the separation of Valvoline. Upon advice from its compensation consultant, the Compensation Committee removed the following seven peer companies due to industry and size considerations and M&A activity, and added one company due to industry and size considerations:

 

 

Companies Removed

 

   

Axiall Corporation

   

Cytec Industries Inc.

   

The Mosaic Company

   

Sherwin-Williams Company

   

Scotts Miracle-Gro Company

   

CF Industries Holdings, Inc.

   

Valspar Company

Company Added

 

   

Axalta Coating Systems Ltd.

 

 

Beginning in fiscal 2018, the Compensation Peer Group will include the following companies:

 

   

A. Schulman, Inc.

   

Albermarle Corporation

   

Axalta Coating Systems Ltd.

   

Cabot Corporation

   

Celanese Corporation

   

Eastman Chemical Company

   

FMC Corporation

   

H.B. Fuller Company

   

Huntsman Corporation

   

International Flavors & Fragrances Inc.

   

NewMarket Corporation

   

Olin Corporation

    Platform Specialty Products Corporation
   

Polyone Corporation

   

RPM International Inc.

   

W. R. Grace and Company

   

Westlake Chemical Corporation

 

 

Performance Peer Group

Beginning in fiscal 2017, our Compensation Committee approved utilizing the entire S&P 500 index as our performance peer group (the “Performance Peer Group”). We believe the Performance Peer Group is an appropriate measure of our relative TSR and reflects Ashland’s performance compared to the broader stock market. Our Performance Peer Group is used for assessing relative TSR performance for our PUs. This change reflects a more robust and consistent group of peers and simplifies the process of tracking results.

 

 

 

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Our outstanding PUs, other than those granted in fiscal 2017, compare TSR performance relative to the S&P MidCap 400 and the S&P 500 Materials Group.

FISCAL YEAR 2017 COMPENSATION STRUCTURE DECISIONS

Our Compensation Committee reviews the base salaries and the annual and long-term target opportunities of our NEOs annually to determine whether these programs competitively reward our NEOs for their services based on a comparison to executives in the Compensation Peer Group and a review of other competitive market information.

Base Salary

The Compensation Committee considers each NEO’s experience, proficiency, performance and potential to impact future business results, the NEO’s behavior against key competencies and corporate values as well as the competitiveness in the market, in making future base salary decisions.

The Compensation Committee reviewed the market data provided by its compensation consultant as well as the merit increase recommendations submitted by Mr. Wulfsohn. Based on the information provided, the Compensation Committee approved the base salary increases for Messrs. Willis, Ganz, and Heitman and Ms. Schumann. Mr. Wulfsohn and the Compensation Committee considered Ms. Schumann’s appointment as Chief Human Resources Officer in addition to her current role as Chief Information Technology Officer, and approved an additional increase to Ms. Schumann’s base salary to reflect her expanded responsibilities.

The same merit guidelines were used by the Compensation Committee when evaluating the merit increase for Mr. Wulfsohn. After reviewing the competitive market data and Mr. Wulfsohn’s individual performance relative to pre-established objectives, the Compensation Committee, in executive session without management present, recommended a base salary increase for Mr. Wulfsohn of 2.5%.

Base salary increases for Messrs. Wulfsohn, Willis, Ganz, and Heitman and Ms. Schumann, effective April 2017, were as follows:

 

NEO

   FY2016 Base Salary
($)
     FY2017 Base Salary
($)
     Increase
(%)
 

William A. Wulfsohn

     1,160,000        1,189,000        2.5

J. Kevin Willis

     566,500        580,700        2.5

Peter J. Ganz

     526,750        539,950        2.5

Anne T. Schumann

     381,300        420,000        10.1 %* 

J. William Heitman

     328,800        340,640        3.6

Luis Fernandez-Moreno**

     539,200        -        -  

 

 

*

Increase reflects performance and expanded responsibilities in connection with Ms. Schumann’s appointment as Chief Human Resources Officer

 

**

Mr. Fernandez-Moreno left the Company on February 28, 2017, and therefore was not present for the April 2017 merit increases

Annual and Long-Term Incentive Metrics and Goals

Based on a review of the annual and long-term financial goals, operational plans, strategic initiatives and the prior year’s actual results, the Compensation Committee annually approves the financial performance metrics that will be used to measure performance in our annual and long-term incentive arrangements as well as the relative weighting that will be assigned to each metric. The Compensation Committee then approves threshold, target and maximum performance levels

 

 

 

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for each performance metric. The Compensation Committee seeks to establish corporate performance goals that are challenging yet attainable. For our fiscal 2017 Annual Incentive Plan and Long-term Incentive Performance Plan (“LTIPP”), the Compensation Committee approved the following performance metrics for the reasons noted below:

 

    Performance Metric   

Reason for Selection

 

LOGO

 

 

Operating Income for Incentive Compensation (“OI”) = net operating income under GAAP adjusted for certain key items and management exceptions*

  

 

An indicator of Ashland’s

•      Profitability

•      Ability to optimize cash flow and stockholder value

    
 

Working Capital Efficiency (“WCE”) = (accounts receivable + inventory—accounts payable)/sales measured on a 13-month average basis

  

•      Focuses on three key cash flow drivers (accounts receivable, inventory, and accounts payable) and is measured as a % of sales

•      An important indicator of Ashland’s ability to optimize cash flow and value

    
 

Total Preventable Recordable Rate (“TPRR”) = rate of injuries per 100 employees in a work year

  

•      Reflects the importance of safety matters within Ashland

 

 

LOGO     
 

Earnings per Share (“EPS”) = GAAP earnings (loss) from continuing operations per share, adjusted for certain key items

  

•      An indicator of the profitability of Ashland

    
 

Relative Total Shareholder Return (“TSR”) = calculated by measuring the change in the market price of stock plus dividends paid over the performance period

  

•      Measures performance against our Performance Peer Group and stockholder value creation

 

 

*

Operating Income for Incentive Compensation is a non-GAAP measure used because we believe it facilitates a comparison of our historical operating results and shows trends in our underlying operating results. A reconciliation of this measure to results in accordance with GAAP can be found in Appendix B.

Beginning with the fiscal 2018 performance period, the annual incentive metrics, as approved by the Compensation Committee in November 2017, will be EBITDA and Free Cash Flow, which more closely support the key objectives reflected in our annual operating plan. Safety remains a key operational metric and will be used in performance and operational evaluations.

At the beginning of fiscal 2017, the Compensation Committee approved a change in metrics for the LTIPP from 50% ROI (Return on Investment—determined by dividing GAAP net income, adjusted for certain key items, over the performance period by the average equity and debt over the same period) and 50% TSR to 100% EPS with a TSR modifier. The Compensation Committee, upon recommendation from management, made this change in order to provide a clear motivation for management with a simpler target goal and to use TSR as a modifier only since there is less control over outside factors for this metric. Additionally, EPS and TSR are more closely aligned with stockholder value.

 

 

 

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Adjustments to Reported GAAP Financial Results

The Compensation Committee reviews our financial performance following the end of the fiscal year and determines the financial performance score. The Compensation Committee retains the authority to adjust our reported financial results for items causing significant differences from assumptions contained in our plan, including gains or losses on divestitures of major business units and assets, changes in accounting principles, restructuring and severance costs for significant business model re-design events, variance to target for corporate legacy pension income and environmental expense, foreign exchange variance outside a 5% corridor, and unusual or non-recurring gains or losses. The Compensation Committee has adopted a set of guidelines to help it evaluate potential adjustments. Adjustments to reported financial results are intended to better reflect executives’ line of sight and ability to affect performance results, align award payments with decisions that support the annual operating plan, avoid artificial inflation or deflation of awards due to unusual or non-recurring items in the applicable period and emphasize long-term and sustainable growth.

Annual and Long-Term Incentive Target Opportunities

Each year, the Compensation Committee reviews the annual and long-term target incentive opportunities to ensure alignment with our compensation philosophy and competitive practice. The following table shows there were no increases in the annual and long-term target incentive opportunities for fiscal 2017.

 

NEO

   FY2016
Target
Annual
Incentive
(% of Base
Salary)
     FY2017
Target
Annual
Incentive
(% of Base
Salary)
     Target
Annual
Incentive
Increase
(%)
     FY2016
Target LTI
(% of Base
Salary)
     FY2017
Target LTI
(% of Base
Salary)
     Target LTI
Increase
(%)
 

William A. Wulfsohn

     120        120        -        400        400        -  

J. Kevin Willis

     90        90        -        225        225        -  

Peter J. Ganz

     75        75        -        150        150        -  

Anne T. Schumann

     75        75        -        90        90        -  

J. William Heitman

     75        75        -        90        90        -  

Luis Fernandez-Moreno

     75        75        -        150        150        -  

FISCAL YEAR 2017 INCENTIVE PLAN DESIGNS AND PERFORMANCE RELATED PAYOUTS

Fiscal Year 2017 Annual Incentive Plan

Fiscal Year 2017 Annual Incentive Plan Design

For fiscal 2017, our NEOs, including the CEO, participated in our annual incentive plan which is designed to reward executives for the achievement of OI growth and for delivering value through WCE.

Our fiscal 2017 goals for each metric are:

 

Performance Levels

   OI
($, thousands)
     WCE
(%)
     Payout
Curve

(%)
 

Threshold

     230,147        25.40        20  

Target

     324,047        24.42        100  

Maximum

     403,215        23.81        150  

 

 

 

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TPRR is used as a safety modifier that may add or deduct up to 10 percentage points based on the Business Units’ TPRR performance. The safety modifier may not increase the incentive paid above 150% of target.

 

Safety Modifier Goals (TPRR)

Target

15% Improvement over Three-Year
Rolling Avg.

  

Neutral

No Adjustment

  

Unacceptable

25% Increase over Three-Year
Rolling Avg.

.54 or less    .55 - .79    .80 or greater

Fiscal Year 2017 Annual Incentive Performance

The table below shows the adjusted fiscal 2017 performance compared to the pre-established financial performance targets:

$, thousands

Metric

   Weighting     Target     Adjusted
Performance
    Payout (% of
Target)
    Combined Weighted
Payout (% of Target)
 

OI*

     90   $ 324,047     $ 305,531       90.1     96.1

WCE

     10     24.42     22.38     150  

 

 

*

See Appendix B for a reconciliation of this measure to GAAP operating income.

Our fiscal 2017 TPRR was .69 resulting in no adjustment to the financial score.

Fiscal Year 2017 Annual Incentive Payout

Based on the performance outlined above, our Compensation Committee approved the following annual incentive awards for our NEOs:

 

NEO

   Annual Incentive
Target Amount

($)
     Percent of Annual Incentive
Target Earned

(%)
     FY2017 Annual Incentive
Award Value

($)
 

William A. Wulfsohn

     1,426,800        96.1        1,371,013  

J. Kevin Willis

     522,630        96.1        502,196  

Peter J. Ganz

     404,963        96.1        389,130  

Anne T. Schumann

     315,000        96.1        302,684  

J. William Heitman

     255,480        96.1        245,491  

Luis Fernandez-Moreno *

     167,300        96.1        160,759  

 

 

*

L. Fernandez-Moreno’s amount has been pro-rated. His original target incentive was $404,400.

Long-Term Incentive (“LTI”) Plan

Conversion Methodology Due to Spin-Off

In connection with the successful spin-off of Valvoline on May 12, 2017, the Compensation Committee believed it was appropriate to adjust the outstanding long-term incentive (“LTI”) awards in order to prevent dilution or enlargement of rights, as contemplated by the terms of the stockholder-approved equity incentive compensation plans that govern these awards. As a result, our stock based LTI awards that were outstanding on May 12, 2017 were adjusted in accordance with their terms with the guiding principle of maintaining approximately the same value immediately before and immediately after the Final Distribution of Valvoline. This was accomplished by converting the number of stock-based Ashland awards held by our employees immediately before the Final Distribution of Valvoline to a new number of Ashland stock-based

 

 

 

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awards held after the Final Distribution of Valvoline. A similar adjustment was made to the strike price of outstanding SARs. These adjustments were based on a ratio (the “Equity Adjustment Ratio”), which was calculated using the quotient of the closing price of Ashland common stock on the Distribution Date and the 10-day Volume Weighted Average Price of Ashland common stock following the Final Distribution. Accordingly, unless otherwise noted, all equity information provided in this CD&A and the accompanying tables reflect the adjustment in the number of shares (and strike price) from the original grant. All other terms and conditions of the grants remained the same unless otherwise noted.

LTI Plan Design

LTI for NEOs is composed of 50% PUs, 25% SARs, and 25% RSUs. We grant executives a mix of equity awards to provide an effective balance between performance and retention. This design aligns the executives’ interests and long-term strategies with the interests of stockholders. LTI targets are expressed as a percentage of base salary which are converted to a number of shares based on the fair value of the award on the grant date.

PUs—Long-term Incentive Performance Plan

Our LTIPP is designed to reward executives for achieving long-term performance that meets or exceeds EPS financial performance targets, as modified by relative TSR performance.

PUs vest at the end of the three-year performance period and the NEOs will earn a number of shares based upon achievement of the performance metrics during the performance period. Upon vesting, PUs convert into ordinary shares on a one-for-one basis. Grants under the LTIPP are not adjusted for, nor entitled to receive, cash dividends during the performance period.

SARs

SARs are considered “at risk” since there is no value unless the stock price appreciates during the term of the SAR. SARs expire on the tenth anniversary plus one month from the date of grant and vest over a three-year period as follows—50% vest on the first anniversary of the grant date and 25% vest on each of the second and third anniversary of the grant date. No dividends are payable on SARs. The number of shares granted is based on the Black-Scholes value calculated using the 20-day average of Ashland’s closing stock price prior to year end.

RSUs

RSUs provide strong retentive value, while still providing alignment with stockholder value creation. RSUs vest ratably over a three-year period following the grant. Dividend equivalents are accrued on outstanding RSU awards at the same time and at the same rate as dividends are paid to stockholders. Dividend equivalents on RSUs are only payable if the underlying RSU award vests. At the time of vesting, one ordinary share is issued for each RSU and any accrued dividend equivalents are paid as additional shares of common stock.

 

 

 

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Fiscal Year 2015-2017 LTIPP Design

The fiscal 2015-2017 LTIPP was initially designed to measure performance from October 1, 2014 to September 30, 2017. Due to the Final Distribution of Valvoline on May 12, 2017, our Compensation Committee determined that certain changes to the fiscal 2015-2017 LTIPP design were necessary, while still keeping the vesting date the same. The measurement period was shortened as a majority of the performance period was already completed as of March 2017 and the full year ROI and TSR targets were not applicable post-separation, and therefore a full year calculation could not be completed. The changes are set forth in the chart below:

Changes to the fiscal 2015-2017 LTIPP

 

Feature

  

Original fiscal 2015-2017

  

Revised fiscal 2015-2017

Form of Award

   100% PUs    100% PUs
     

Performance Measures

  

Adjusted ROI as of Sept. 30, 2017 TSR as of September 30, 2017

  

Adjusted ROI as of March 31, 2017 (latest quarter end prior to Final Distribution of Valvoline); TSR as of May 12, 2017 (Distribution Date)

     

Settlement of Award

   Shares   

After performance is measured, converted to RSUs*, which then convert to shares on the Vesting Date

     

Vesting Date

   November 13, 2017   

November 13, 2017

 

*

RSUs are not entitled to dividends

Fiscal Year 2017-2019 LTIPP Design

In November 2016, the Compensation Committee reviewed and approved the performance metrics and target performance levels for the fiscal 2017—2019 LTIPP. The Compensation Committee also approved the earned award to be paid out in cash in order to preserve shares available for issuance under the Amended and Restated 2015 Ashland Global Holdings Inc. Incentive Plan (the “2015 Incentive Plan”) pending the final results of the EPIRP described below.

PUs for the fiscal 2017—2019 LTIPP will be earned based on EPS and TSR performance against goals established at the beginning of the three-year performance cycle.

 

Performance Level

   EPS Achieved
(CAGR)
    Award Earned
(as a % of Target)
 

Threshold

     2.5     25  
     5.0     50  

Target

     10.0     100  
     15.0     150  

Maximum

     20.0     200  

EPS is measured each of the three years and on a cumulative three-year basis. EPS Cumulative Annual Growth Rate (“CAGR”) performance for fiscal 2017, fiscal 2018, fiscal 2019, and fiscal 2017 - 2019 is equally weighted at 25% for each of these periods. Relative TSR is measured over a three-year period and is used as a modifier to the earned EPS score. Each year is measured independently and there is no opportunity to revisit and change previous years’ scores.

 

 

 

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The total award earned based on the four EPS measurements (fiscal 2017, fiscal 2018, fiscal 2019, and fiscal 2017 - 2019) will be modified (up or down) based on Ashland’s three-year relative TSR performance as follows:

 

    TSR Performance Relative to the S&P  500    

  

Adjustment to Earned Award

At or Below 25 th Percentile

   Decreased by 25%

In between 25 th and 75 th Percentile

   No Adjustment

At or Above 75 th Percentile

   Increased by 25%

Executive Performance Incentive and Retention Program (“EPIRP”) Design

On October 5, 2015, the Compensation Committee approved the EPIRP for certain NEOs. The philosophy behind this program was to provide an additional incentive to remain employed by Ashland in the critical period up to and immediately following the Final Distribution of Valvoline. The EPIRP also provided increased alignment between executives and stockholders by providing equity-based compensation that vests based on both relative TSR and the participant’s continued service. The program also required the successful final separation of Valvoline from Ashland in order to vest and therefore motivated participants to successfully position both Ashland and Valvoline as independent publicly-traded companies.

A portion of each EPIRP award, originally performance-based restricted stock (“PBRS”), (equal to two-thirds of the original maximum grant, which was determined based on the period elapsed between the grant date of the awards and the completion of the Final Distribution of Valvoline) was converted in accordance with its terms into a number of time-vested restricted shares (“TVRS”) of Ashland based on (i) Ashland’s TSR performance from October 1, 2015 through the final separation of Valvoline and (ii) the combined weighted-average TSR of Ashland and Valvoline from the Final Distribution of Valvoline to September 9, 2017 (120 days after the Final Distribution of Valvoline), relative to the TSR of the S&P Mid-Cap 400 and the S&P 500 Materials groups measured over the period beginning October 1, 2015 and ending September 9, 2017, as shown below:

 

Performance Level

  

TSR Performance
10/1/15-9/9/17 Relative to
the S&P MidCap 400 and the
S&P 500 Materials Group

  

Percent of Award Earned
and Converted to TVRS

Maximum

   90 th Percentile    100%
   75 th Percentile    75%

Target

   50 th Percentile    50%
   40 th Percentile    25%

Threshold

   35 th Percentile    12.5%

The weighting of the post-final separation Ashland TSR and Valvoline TSR was based on the market cap of each of Ashland (approximately $3.7 billion) and Valvoline (approximately $4.7 billion) immediately following the Final Distribution of Valvoline.

The remaining portion of each EPIRP award (equal to one-third of the original maximum grant) was not performance based but rather converted to TVRS at target in accordance with its terms (i.e., 1/6 of original maximum grant are based solely on service-based vesting criteria). These shares will vest in November 2019 for the CEO and November 2018 for the remaining participating NEOs.

LTIPP Performance Results and Payment

Fiscal Year 2015-2017 LTIPP Performance Results and Payment

The PUs earned for the fiscal 2015-2017 performance period were determined as follows:

 

   

Adjusted ROI performance was measured as of March 31, 2017 (latest quarter end prior to Final Distribution of Valvoline).

 

 

 

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TSR performance was measured on the date of the Final Distribution of Valvoline, May 12, 2017.

 

   

Settlement of the PUs resulted in RSUs that cliff vested on November 13, 2017, except for Mr. Wulfsohn whose vesting will occur on January 29, 2018, the third anniversary of the grant date (the original vesting date).

In July 2017, the Compensation Committee approved performance of a total weighted average of 109.15% for the fiscal 2015-2017 performance period as shown below:

 

Performance Metric

 

Weighting

 

Threshold

 

Target

 

Maximum

 

Performance

 

Payout (% of
Target)

ROI*

  50%   7.4%   9.8%   11.8%   10.1%   111.6%

TSR (by percentile)

  50%   35th   50 th   90 th   52.7 (19.2 TSR)   106.7%

Payout as a % of Target

    25%   100%   200%  
        Weighted Average Payout   109.15%

 

*

ROI was adjusted to eliminate the impact of (i) foreign exchange, (ii) pension actuarial gain or loss, and (iii) legacy environmental gain or loss in addition to some small one-off adjustments related to acquisitions, divestures, plant shutdowns and tax items. These adjustments increased the ROI achieved by Ashland from 9.4% to 10.1%.

Based on the foregoing performance, our NEOs earned the following awards for the fiscal 2015 - 2017 performance period:

 

NEO

   Target 2015-
2017 PU Award

(#)
     Weighted
Average Payout
(%)
     PUs Earned
(#)
 

William A. Wulfsohn

     39,835        109.15        43,479  

J. Kevin Willis

     11,206        109.15        12,232  

Peter J. Ganz

     6,498        109.15        7,092  

Anne T. Schumann

     2,919        109.15        3,186  

J. William Heitman

     2,543        109.15        2,775  

Luis Fernandez-Moreno *

     4,552        109.15        4,972  

 

*

L. Fernandez-Moreno’s earned amount was pro-rated. His original target grant was 5,650.

Fiscal Year 2016-2018 LTIPP Performance Results

The fiscal 2016-2018 LTIPP score was approved by the Compensation Committee in September 2017 for the performance period of October 1, 2015 to September 9, 2017.

 

   

Target PUs were converted from old Ashland PUs to new Ashland PUs (“Converted PUs”) using the Equity Adjustment Ratio.

 

   

In September 2017, two-thirds of the Converted PUs were determined to have been earned based on the following methodology:

 

   

50% of the performance was measured against adjusted ROI performance as of March 31, 2017 (latest quarter end prior to the Final Distribution).

 

   

50% of the performance was measured against TSR performance on September 9, 2017 (120 days after the Final Distribution).

 

   

These earned Converted PUs and the remaining one-third of the Converted PUs were converted to RSUs and remain subject to continued service-based vesting conditions until November 18, 2018 (the original vesting date).

 

 

 

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The TSR performance was based on (i) Ashland’s TSR performance from October 1, 2015 through the Final Distribution of Valvoline and (ii) the combined weighted average TSR of Ashland and Valvoline from the Final Distribution of Valvoline to September 9, 2017 (120 days after the final separation of Valvoline), relative to the TSR of the S&P Mid-Cap 400 and the S&P 500 Materials Groups measured over the period beginning October 1, 2015 and ending on September 9, 2017. The weighting of the post-final separation Ashland TSR and Valvoline TSR was based on the market cap of each of Ashland (approximately $3.8 billion) and Valvoline (approximately $4.7 billion) on the date of the Final Distribution of Valvoline.

Despite the creation of over $1.5 billion of market cap during the measurement period, relative TSR fell below the 35th percentile of the performance peer companies and resulted in 0% being earned. Performance for the ROI portion of the award equaled 96.8% of target and the Compensation Committee approved the weighted performance score of 48.40% as shown below:

 

Performance Metric

   Weighting    Threshold    Target    Maximum    Performance    Payout (% of
Target)

ROI*

   50%    6.7%    8.9%    10.7%    8.8%    96.8%

 

TSR (by percentile)

  

 

50%

  

 

35 th  

  

 

50 th  

  

 

90 th  

  

 

22 nd  

  

 

0%

 

Payout as a % of Target

     

 

25%

  

 

100%

  

 

200%

     
           

 

Weighted Average Payout

  

 

48.40%

 

*

ROI was adjusted to eliminate the impact of (i) foreign exchange, (ii) pension actuarial gain or loss, and (iii) legacy environmental gain or loss in addition to some small one-off adjustments related to outsourcing and restructuring costs. These adjustments decreased the ROI achieved by Ashland from 9.0% to 8.8%.

Because of the foregoing performance, our NEOs earned the following RSUs for the fiscal 2016 - 2018 performance period (earned RSUs will vest in November 2018 and do not accrue dividends):

 

NEO

   Target 2016-2018
PU Award

(#)
     2/3 Performance-based
PUs Earned

(#)
     1/3 Time
Vested RSUs

(#)
     Total RSUs from
the 16-18 LTIPP

(#)
 

William A. Wulfsohn

     40,682        13,127        13,561        26,688  

J. Kevin Willis

     11,395        3,677        3,799        7,476  

Peter J. Ganz

     6,968        2,249        2,323        4,572  

Anne T. Schumann

     3,108        1,003        1,036        2,039  

J. William Heitman

     2,543        821        848        1,669  

Luis Fernandez-Moreno *

     3,380        1,091        1,126        2,217  

 

*

L. Fernandez-Moreno’s earned amount has been pro-rated. His original target grant was 7,157.

 

 

 

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EPIRP Performance Results and Payment

Similar to the fiscal 2016-2018 LTIPP performance cycle, the Compensation Committee approved our TSR performance at the 26th percentile of the peer group which resulted in 0% payout of the converted PBRS. The time-vested portion of the EPIRP award shown below will vest on November 18, 2018 for Messrs. Willis and Ganz and Ms. Schumann and on November 18, 2019 for Mr. Wulfsohn. In connection with his separation from Ashland, Mr. Fernandez-Moreno’s grant was pro-rated and accelerated after the scoring of performance.

 

NEO

   EPIRP Grant After
Conversion (Maximum)
– including dividends
     1/6 of Original Maximum
Grant Converted to Time
Vested Restricted Stock
at 9/30/17
     2/3 of Original Maximum
Grant PUs Earned
 

William A. Wulfsohn

     183,938        30,657        0  

J. Kevin Willis

     77,316        12,886        0  

Peter J. Ganz

     66,215        11,037        0  

Anne T. Schumann

     48,393        8,065        0  

Luis Fernandez-Moreno*

     32,098        5,350        0  

 

*

L. Fernandez-Moreno’s amount has been pro-rated. His original EPIRP grant was 66,100 excluding dividends.

Due to the strategic business decision to separate the Valvoline business from its specialty chemical businesses, Ashland provided a retention bonus in the amount of $574,611 to Mr. Heitman in November 2015. Mr. Heitman, with over 20 years accounting experience and nearing retirement age, was necessary for a successful separation as the structure and the initial public offering process required accounting expertise. The terms of the agreement required Mr. Heitman to remain employed with Ashland six months after the Final Distribution. Mr. Heitman was given an additional bonus payment in November 2017 in the amount of $51,906 in recognition for taking Valvoline public, financial reporting work required after separation and the accounting expertise given for the Pharmachem acquisition.

Equity Awards Granted in Fiscal Year 2017

Fiscal Year 2017 Annual Equity Grant

We regularly grant annual equity awards during the first quarter of each fiscal year. The equity grant date is never selected or changed to increase the value of equity awards for executives.

The Compensation Committee approved the annual grants shown in the table below in the first quarter of fiscal 2017.

 

NEO

  Target
FY2017
Equity
Award
(as a
% of
Salary)
    Target
FY2017
Equity
Award

($)
    SAR
Award

($)
    SAR
Award

(#)
    RSU
Award

($)
    RSU
Award

(#)
    Target
FY2017-
2019 PU
Award

($)
    Target
FY2017-
2019 PU
Award

(#)
 

William A. Wulfsohn

    400       4,640,000       1,160,000       118,373       1,160,000       18,363       2,320,000       36,727  

J. Kevin Willis

    225       1,274,600       318,650       32,583       318,650       5,085       637,300       10,171  

Peter J. Ganz

    150       790,100       197,525       20,152       197,525       3,202       395,050       6,309  

Anne T. Schumann

    90       343,200       85,800       8,757       85,800       1,413       171,600       2,731  

J. William Heitman

    90       295,900       73,975       7,627       73,975       1,224       147,950       2,354  

Luis Fernandez-Moreno

    150       808,800       202,200       20,623       202,200       3,202       404,400       6,404  

 

 

 

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Separation Terms for NEO

In connection with his departure, Mr. Fernandez-Moreno was offered a Separation Agreement and General Release pursuant to which Mr. Fernandez-Moreno agreed to certain restrictive covenants and provided a general release of claims, in exchange for a separation package that includes:

 

   

a lump sum severance payment equal to 78 weeks of his base salary, in accordance with the terms of the Ashland Severance Pay Plan;

 

   

continued coverage under Ashland’s medical and dental plans at no cost to Mr. Fernandez-Moreno for the first 5 months of the applicable 18-month COBRA continuation coverage period;

 

   

accelerated pro-rata vesting of certain one-time restricted stock awards and pro-rata payment of incentive compensation and outstanding LTIPP Performance Units, each granted under the Ashland Incentive Plan in effect at the time of grant; and

 

   

executive level outplacement assistance for a 12-month period following his termination date.

A pro-rata portion of Mr. Fernandez-Moreno’s EPIRP award remained outstanding following his termination date in accordance with its terms and was accelerated after the performance was scored. All other outstanding restricted stock awards, restricted stock units, and stock appreciation rights that were not vested as of Mr. Fernandez-Moreno’s termination date were forfeited.

Mr. Fernandez-Moreno also received an additional agreement that will provide him with a lump sum payment of $1,200,000 in exchange for his observance of certain restrictive covenants for a 24-month period following his termination date, payable following the conclusion of the 24-month period.

CORPORATE GOVERNANCE

Maintaining Best Practices Regarding Executive Compensation

Our Compensation Committee intends to compensate our NEOs consistent with the objectives and design principles previously outlined. We have adopted the following compensation practices, which are intended to promote strong corporate governance and alignment with stockholder interests:

Compensation Committee Practices

 

 Independence of Committee Members

  

The Compensation Committee members satisfy the NYSE independence standards, are “non-employee directors” under SEC rules and satisfy the requirements of an “outside director” for purposes of the Internal Revenue Code (the “Code”).

 

 Independent Compensation Consultant

 

  

The Compensation Committee retains and annually reviews the independence of its compensation consultant.

 

 Annual Risk Assessment

  

The Compensation Committee conducts an annual risk assessment of our executive, management, and sales incentive compensation plans to ensure they are aligned with our compensation philosophy and do not encourage excessive risk taking.

 

 

 

 

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 Compensation at Risk

  

We grant a high percentage of at-risk compensation. We believe this is essential to creating a pay-for-performance culture.

 

 Target Pay at the Median Level

  

We generally target total direct compensation opportunities at the competitive market median and allow performance (both operational and shareholder return) to determine actual or realized pay. Actual pay may be above or below the target median based on performance.

 

 Mitigate Undue Risk

  

We mitigate undue risk in our compensation program by instituting governance policies such as capping potential payments under our incentive plans, instituting clawback provisions, utilizing multiple performance metrics, including absolute and relative metrics, striking a balance between short- and long-term incentives and adopting stock ownership requirements.

 

 Stock Ownership Guidelines

  

The Compensation Committee has adopted stock ownership guidelines that are the lesser of the dollar value of a multiple of base salary or a fixed number of shares of Ashland stock: (i) five times base salary or 125,000 shares for the CEO, (ii) three times base salary or 30,000 shares for the CFO, (iii) three times base salary or 25,000 shares for the General Counsel and Secretary, (iv) two times base salary or 11,000 shares for the Chief Human Resources and IT Officer and (v) two times base salary or 11,000 shares for the Controller. The executive officer must achieve compliance with the guidelines by the fifth anniversary of the officer’s appointment. All executive officers are in compliance with the guidelines.

 

 Clawback Policy

  

We have the right to seek recoupment of all or part of annual cash incentives or PUs if there is a restatement of our financial statements for any such year which results from fraud or intentional misconduct committed by an award holder.

 

 Anti-Hedging and Pledging Policy

  

We prohibit our executive officers from hedging Ashland securities. Pledging is also prohibited.

 

 “Double triggers” in Change in Control Agreements

  

The NEOs and other executive officers do not receive change in control benefits unless their employment is terminated without cause (or by the executive for good reason) within a specified period following a change in control.

 

 No Tax Gross Ups on Change in Control Benefits

  

The NEOs and other executive officers are not entitled to tax gross ups in the event that their change in control benefits are subject to the “golden parachute” excise tax under the Code.

 

 Equity Incentive Compensation Plan Best Practices

  

As described in Proposal Four of this proxy statement, our 2018 Omnibus Plan includes many best practices, such as minimum vesting periods and absence of single-trigger vesting and liberal share recycling provisions.

Consideration of Fiscal Year 2017 Advisory Vote on Executive Compensation

The Compensation Committee regularly reviews the philosophy, objectives and elements of our executive compensation programs in relation to our short- and long-term business objectives. In

 

 

 

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undertaking this review, the Compensation Committee considers the views of stockholders as reflected in their annual advisory vote on our executive compensation proposal. At our 2017 Annual Meeting, stockholders approved our executive compensation proposal by an overwhelming majority (approximately 94%). Based on the Compensation Committee’s review and the support of our executive compensation programs received from stockholders, the Compensation Committee maintained the core elements of our executive compensation programs in fiscal 2017.

Decision Making Process and Role of Executive Officers

The Compensation Committee is responsible for the approval and administration of compensation programs for executive officers and certain other employees of Ashland. The Compensation Committee frequently reviews Ashland’s compensation practices, and its decisions take into consideration, among other things, Ashland’s compensation philosophy, its financial and operating performance, individual performance, practices and compensation levels of peer companies and the voting guidelines of certain proxy advisory firms and stockholders. In making compensation decisions, the Compensation Committee uses several resources and tools, including competitive market information, and reviews accumulated and potential equity holdings.

When making individual recommendations to the Compensation Committee for the other NEOs on base salary, annual incentive and long-term compensation, the CEO considers the relative importance of the executive’s position within the organization, the individual tenure and experience of the executive, individual performance and the executive’s contributions to Ashland’s financial and operating results.

Management also plays an important role in the process of setting compensation for executives, other than the Chief Executive Officer. The Chief Executive Officer, and in certain instances other executives, in consultation with the Compensation Committee’s independent executive compensation consultant and the Chief Human Resources and IT Officer, develops compensation recommendations for the Compensation Committee’s consideration.

Role of the Compensation Committee and Independent Adviser

Our Compensation Committee has the authority to obtain advice and assistance from advisors and to determine their fees and terms of engagement. In fiscal 2017, the Compensation Committee directly engaged Deloitte Consulting LLP (“Deloitte” or the “compensation consultant”) to serve as the outside advisor on executive compensation matters and to review Ashland’s executive compensation program.

On January 26, 2016, the Compensation Committee approved the engagement of Deloitte to serve as an outside advisor on the design of compensation programs for Ashland and Valvoline in connection with the separation of Ashland into two independent, publicly traded companies. Deloitte’s aggregate fees for executive and director compensation services in fiscal 2017, including fees in connection with the separation, were $465,290.

In addition to the compensation services provided by Deloitte to the Compensation Committee, Deloitte affiliates provided certain services to Ashland at the request of management consisting of (i) tax services and other tax-related services, including those related to the separation of Valvoline; (ii) auditing services and (iii) assistance with preparation of the executive compensation tables for Ashland’s and Valvoline’s 2016 proxy statements. Ashland paid $13 million to Deloitte in fiscal 2017 for these other services. The Compensation Committee believes that, given the nature and scope of these projects, these additional services did not raise a conflict of interest and did not impair Deloitte’s ability to provide independent advice to the Compensation Committee concerning executive compensation matters.

 

 

 

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OTHER COMPENSATION AND TAX MATTERS

Retirement Benefits

The combination of tax-qualified and non-qualified retirement plans is designed to assist the NEOs in building savings for retirement over the term of their employment.

The Company’s Employee Savings Plan is a tax-qualified vehicle to provide retirement benefits to the NEOs and their families. The benefits in these plans are available to most U.S.-based employees. The benefits are funded through trusts and are separate from the assets of Ashland and by law are protected from Ashland’s creditors.

The benefits that may be provided under the tax-qualified plans are limited by the Internal Revenue Code of 1986, as amended (the “Code”). These plans, standing alone, do not provide sufficient retirement income to the NEOs when compared to their pay as an active employee. To make up for this gap in potential replacement income in retirement, Ashland offers the NEOs non-qualified retirement plans that complement each other and the tax-qualified plans. A detailed description of the non-qualified plans, and a description of recent amendments to such plans, for the applicable NEO is included in the Pension Benefits section of this proxy statement.

The Employee Savings Plan contributions are also limited by law, which means their potential Ashland matching contributions are also limited. Therefore, Ashland has an unfunded, non-qualified defined contribution plan that provides a contribution equivalent to a base contribution of 4% and a Company match of 4% on annual incentive compensation paid and eligible earnings in excess of limits established under Code Section 401(a) (17) not permitted in the Employee Savings Plan.

Ashland also has employee deferral plans that allow the NEOs to annually make a separate deferral election so that the named executive officers can save amounts from their own pay in addition to amounts they are allowed to save in the savings plans.

A description of these plans is included in the Non-Qualified Deferred Compensation section of this proxy statement.

Executive Perquisites

Ashland provides the NEOs and other selected executives with financial planning services (including tax preparation). All the NEOs participated in the financial planning program. On November 16, 2016, the Compensation Committee approved for select executives to be eligible for a reimbursement of up to $5,000 a year for services performed relating to an executive physical. Messrs. Wulfsohn, Willis, Ganz and Ms. Schumann will be eligible for this reimbursement.

The Compensation Committee reviews the perquisites provided to executive officers as part of their overall review of executive compensation. The Compensation Committee has determined the perquisites serve a useful business purpose, as such expenditures allow the executives to be more effective in their duties and the types and amounts are well within the appropriate range of market practices.

Severance Pay Plan

The NEOs are covered by the Severance Pay Plan that provides benefits in the event of a covered termination in the absence of a change in control. A covered termination is the direct result of the permanent closing of a facility, job discontinuance or other termination action of Ashland’s initiative as determined by Ashland. The plan excludes certain terminations such as, but not limited to, termination for cause and voluntary resignation.

A detailed description of this plan is included in the “Potential Payments upon Termination or Change in Control” section of this proxy statement.

 

 

 

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Change in Control Agreements

Each NEO has a change in control agreement that sets forth the economic consequences and entitlements for termination without cause or for good reason after a change in control. The primary purpose of these agreements is to align executive and stockholder interests by enabling the executives to assess possible corporate transactions without regard to the effect such transactions could have on their employment.

A detailed description of these agreements is included in the “Potential Payments upon Termination or Change in Control” section of this proxy statement.

Tax and Accounting Implications of Compensation

Tax and accounting implications are considered, but they are not the only factors considered in developing our compensation program.

Section 162(m) of the Code limits deductibility of certain compensation to $1 million per year for the Chief Executive Officer and the three other executive officers (other than the Chief Financial Officer) who are the highest paid and employed at year-end. If certain conditions are met, performance-based compensation may be excluded from this limitation.

The Company’s annual and long-term incentive plans have been structured with the intent of enabling the Compensation Committee to grant compensation that constitutes “qualified performance-based compensation” under Section 162(m) of the Code, if the Compensation Committee determines to do so. On November 16, 2017, the U.S. House of Representatives passed H.R.1, referred to as the “Tax Cuts and Jobs Act”. On December 2, 2017, the Senate passed a different version of the Tax Cuts and Jobs Act. We recognize that the proposed Tax Cuts and Jobs Act currently under consideration by the U.S. Congress would limit the exemption for performance- compensation under Section 162(m) of the Code. We will continue to monitor the progress of that proposed law.

Generally, under GAAP, compensation is expensed as earned. Equity compensation is expensed in accordance with ASC Topic 718, which is generally over the vesting period.

 

 

 

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Compensation Committee Report

The Compensation Committee has reviewed the Compensation Discussion and Analysis appearing on pages 34 through 54 of this proxy statement and discussed it with management. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Ashland’s Annual Report on Form 10-K for fiscal 2017 and Ashland’s proxy statement for its 2018 Annual Meeting of Stockholders. This report is provided by the following independent directors who comprise the Compensation Committee:

 

   COMPENSATION COMMITTEE
   Barry W. Perry, Chair
   Jay V. Ihlenfeld
   George A. Schaefer, Jr.
   Janice J. Teal
   Michael J. Ward
   Kathleen Wilson-Thompson

The Compensation Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Ashland specifically incorporates the Compensation Committee Report by reference.

 

 

 

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Summary Compensation Table

The following table is a summary of compensation information for the last three fiscal years, the most recent of which ended September 30, 2017, for Ashland’s Chief Executive Officer, Chief Financial Officer and each of the other three most highly compensated executive officers in fiscal 2017. Mr. Fernandez-Moreno, a former Senior Vice President of Ashland, is also included in the tables below, as required by SEC rules.

 

Name and Principal Position

(a)

  Year
(b)
    Salary (1)
($)
(c)
    Bonus
($)
(d)
  Stock
Awards (2)

($)
(e)
    Option
Awards (3)

($)
(f)
    Non-Equity
Incentive
Compen-
sation (4)

($)
(g)
    Change in
Pension
Value

and Non-
Qualified
Deferred
Compen-
sation
Earnings (5)

($)
(h)
    All Other
Compen-
sation (6)

($)
(i)
    Total
($)
(j)
 

W. A. Wulfsohn

    2017       1,174,342     -     3,086,896       1,335,247       1,371,012       -       250,350       7,217,847  

Chairman of the Board and Chief Executive Officer

    2016       1,188,462     -     9,023,648       1,502,240       1,105,248       -       219,939       13,039,537  
    2015       791,000     -     9,775,279       1,413,580       1,340,949       -       42,560       13,363,368  
                 

J. K. Willis

    2017       584,621     -     854,833       367,536       502,195       -       46,225       2,355,411  

Senior Vice President and Chief Financial Officer

    2016       579,404     -     3,293,050       421,152       404,821       1,808,337       30,497       6,537,261  
    2015       509,615     -     1,893,473       402,039       489,506       877,637       36,765       4,209,035  
                 

P. J. Ganz

    2017       533,496     -     533,042       227,315       389,128       -       94,746       1,777,727  

Senior Vice President,

General Counsel and Secretary

    2016       538,744     -     2,572,054       255,840       313,680       -       91,416       3,771,734  
    2015       499,527     -     1,436,370       230,175       379,293       -       96,252       2,641,617  
                 

A. T. Schumann

    2017       400,806     -     232,267       98,779       302,684       -       36,846       1,071,382  

Senior Vice President and Chief Human Resources and IT Officer

    2016       391,927     -     1,707,719       112,832       227,065       260,189       30,429       2,730,160  
                 

J. William Heitman (7)

    2017       328,612     625,707     200,607       86,033       245,491       -       44,432       1,530,882  

Vice President and Controller

                 
                 

L. Fernandez-Moreno

    2017       259,631     -     538,228       232,627       160,758       -       4,057,346       5,248,591  

Former Senior Vice

President and

President, Chemicals Group

    2016       552,292     -     2,640,653       262,400       204,405       -       60,086       3,719,836  
   

 

2015

 

 

 

   

 

491,786

 

 

 

  -

 

   

 

3,129,225

 

 

 

   

 

201,020

 

 

 

   

 

287,484

 

 

 

   

 

-

 

 

 

   

 

77,840

 

 

 

   

 

4,187,355

 

 

 

 

 

  (1)

Due to the timing of pay periods, the executives were paid an additional pay period in fiscal 2016 for services performed in fiscal 2015.

 

  (2)

The values in column (e) for fiscal 2017 represent the aggregate grant date fair value of fiscal 2017-2019 LTIPP and RSU awards computed in accordance with FASB ASC Topic 718. The assumptions made when calculating the amounts for column (e) with respect to LTIPP and RSU awards are found in Note P to the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017 (the “2017 Form 10-K”) and the grant date fair values can be found in the footnotes to the Grants of Plan-Based Awards table in this proxy statement. For LTIPP awards, the grant date fair value is based on target levels, which is the probable outcome of performance conditions. The grant date fair values of fiscal 2017-2019 LTIPP

 

 

 

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awards assuming the maximum level of performance are as follows: Mr. Wulfsohn, $4,045,101; Mr. Willis, $1,120,182; Mr. Ganz, $694,927; Ms. Schumann, $300,789; Mr. Hetiman, $259,302; and Mr. Fernandez-Moreno, $705,300.

 

  (3)

The values in column (f) for fiscal 2017 represent the aggregate grant date fair value of SAR awards computed in accordance with FASB ASC Topic 718. The assumptions made when calculating the amounts for column (f) are found in Note P to the Notes to Consolidated Financial Statements included in the 2017 Form 10-K and the grant date fair values can be found in the footnotes to the Grants of Plan-Based Awards table in this proxy statement.

 

  (4)

The values in column (g) for fiscal 2017 represent the amounts earned with respect to annual incentive awards under the 2017 Annual Incentive Plan.

 

  (5)

Ashland’s non-qualified deferred compensation arrangements do not provide above-market or preferential earnings; therefore, for fiscal 2017 the amounts in column (h) represent only the one-year change between September 30, 2016 and September 30, 2017 in the present value of accrued benefits under Ashland’s qualified and non-qualified defined benefit plans. These plans are more fully discussed in the narrative to the Pension Benefits table in this proxy statement.

 

      

The present values at September 30, 2016 and September 30, 2017 were calculated based on the earliest age that a participant could receive an unreduced benefit (see the discussion under the Pension Benefits table in this proxy statement regarding the earliest retirement age under the various plans). For Mr. Willis and Ms. Schumann the change in pension value was $(131,101) and $(40,832), respectively. Mr. Heitman’s pension value remained unchanged.

 

  (6)

Amounts reported in column (i) for fiscal 2017 are composed of the following items:

 

     W.A.
Wulfsohn
($)
    J.K. Willis
($)
    P.J. Ganz
($)
    A.T.
Schumann
($)
    J.W.
Heitman
($)
    L. Fernandez-
Moreno
($)
 

Ashland Employee Savings Plan Contributions (a)

     23,069           26,730           26,730           19,789           27,637           15,914      

Life Insurance Premiums (b)

     1,262           628           1,261           1,126           1,795           99      

Ashland Contribution to Non-Qualified Defined Contribution Plan (c)

     155,658           -           44,887           -           -           -      

Tax Reimbursement for Housing Expenses and Personal Travel

     21,180           -           -           -           -           -      

Severance (d)

     -           -           -           -           -           4,040,748      

Charitable Match Program- Ashland Contribution

     600           1,300           400           1,300           -           585      

Other (e)

     48,581           17,567           21,468           14,631           15,000           -      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     250,350           46,225           94,746           36,846           44,432           4,057,346      

 

 

  (a)

The amounts in this row represent the contributions by Ashland to the accounts of each of the named executive officers in the Ashland Employee Savings Plan.

 

  (b)

The amounts in this row represent the value of life insurance premiums paid on behalf of the named executive officers.

 

  (c)

The amounts in this row represent the contributions by Ashland to the account of the named executive officers pursuant to the Non-Qualified Defined Contribution Plan.

 

  (d)

Mr. Fernandez-Moreno’s severance package is explained in more detail in the Potential Payments upon Termination or Change in Control table and footnotes, but generally includes cash severance plus accelerated equity and incentive awards.

 

  (e)

The amounts in this row represent the amount of aggregate incremental cost to Ashland with respect to any tax and financial planning services and up to $5,000 for the executive physical program for Messrs. Wulfsohn and Ganz. For Mr. Wulfsohn, this row also includes interim housing expenses and personal travel. Other than Mr. Wulfsohn, none of these items exceeded the greater of $25,000 or 10% of total perquisites as a category for any named

 

 

 

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executive officer. Mr. Wulfsohn’s interim housing expenses included $27,512 for rent, utilities and housing management fees. Beginning in fiscal 2018, Mr. Wulfsohn will no longer receive interim housing expenses.

 

  (7)

Due to the strategic business decision to separate the Valvoline business from Ashland’s specialty chemical businesses in November 2015, Ashland provided a retention bonus in the amount of $574,611 to Mr. Heitman. The terms of the agreement required Mr. Heitman to remain employed with Ashland six months after the Final Distribution of Valvoline. Mr. Heitman was given an additional bonus payment in the amount of $51,906 in November 2017 in recognition for his efforts towards taking Valvoline public, his financial reporting work required after the final separation and his contributions to the acquisition of Pharmachem Laboratories, Inc.

 

 

 

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Grants of Plan-Based Awards

The following table sets forth certain information regarding the annual incentive awards, SARs, RSUs and Performance Units awarded during fiscal 2017 to each of the named executive officers.

 

         

Estimated Possible Payouts

Under

Non-Equity Incentive Plan

Awards (1)

   

Estimated Future Payouts

Under Equity Incentive

Plan Awards (2)

   

All

Other

Stock

Awards:

Number

of

Shares

of Stock

   

All Other

Option

Awards:

Number of

Securities

Underlying

   

Exercise

or Base

Price of

Option

   

Grant

Date

Fair

Value of

Stock

And

Option

 
Name   Grant
Date
   

Threshold

($)

   

Target

($)

   

Maximum

($)

   

Threshold

(#)

   

Target

(#)

   

Maximum

(#)

   

or Units

(#) (3)

   

Options

(#) (4)

   

Awards

($/Sh)

   

Awards

($) (5)

 

(a)

  (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)     (k)     (l)  

W. A. Wulfsohn

      285,360       1,426,800       2,140,200                
    11/16/16             9,182       36,727       73,454             2,022,550  
    11/16/16                   18,363           1,064,346  
    11/16/16                     118,373     $ 57.96       1,335,247  
                     

J. K. Willis

      104,526       522,630       783,945                
    11/16/16             2,543       10,171       20,341             560,091  
    11/16/16                   5,085           294,742  
    11/16/16                     32,583     $ 57.96       367,536  
                     

P. J. Ganz

      80,993       404,963       607,444                
    11/16/16             1,577       6,309       12,619             347,464  
    11/16/16                   3,202           185,578  
    11/16/16                     20,152     $ 57.96       227,315  
                     

A. T. Schumann

      63,000       315,000       472,500                
    11/16/16             638       2,731       5,462             150,395  
    11/16/16                   1,413           81,873  
    11/16/16                     8,757     $ 57.96       98,779  
                     

J. W. Heitman

      51,096       255,480       383,220                
    11/16/16             589       2,354       4,709             129,651  
    11/16/16                   1,224           70,956  
    11/16/16                     7,627     $ 57.96       86,033  
                     

L. Fernandez-Moreno

      80,880       404,400       606,600                
    11/16/16             1,601       6,404       12,807             352,650  
    11/16/16                   3,202           185,578  
    11/16/16                     20,623     $ 57.96       232,627  

 

 

(1)

The dollar amounts in these columns represent the potential annual incentive payouts under the 2017 Annual Incentive Plan for fiscal 2017. The actual dollar amounts earned will be paid in December 2017 and are included in column (g) in the fiscal 2017 row of the Summary Compensation Table in this proxy statement. Mr. Fernandez-Moreno left the company on February 28, 2017, and therefore only received a pro-rata amount of his 2017 Annual Incentive Plan payment.

 

(2)

The amounts in these columns represent potential payments under LTIPP awards for the fiscal 2017-2019 performance period granted under the 2015 Incentive Plan.

 

(3)

RSU grants made on November 16, 2016, were made pursuant to the 2015 Incentive Plan and vest one-third in each of the next three years.

 

(4)

The amounts in column (j) represent the number of SARs granted to named executive officers under the 2015 Incentive Plan in fiscal 2017. All SARs were granted at an exercise price of $57.96 per share, converted from the closing price of Ashland Common Stock as reported on the NYSE on November 16, 2016 using the Equity Adjustment Ratio.

 

 

 

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(5)

The dollar amounts in column (l) are calculated in accordance with FASB ASC Topic 718 and assume (i) payment of Performance Unit awards at target using a Monte-Carlo simulation valuation to incorporate the TSR modifier ($55.07 per unit), as valued at the end of the fourth fiscal quarter (such awards being marked to market at the end of each quarter as a result of their eventual settlement in cash); (ii) valuation of all SARs using the Black-Scholes valuation model ($11.28 per SAR granted on November 16, 2016, after application of the Equity Adjustment Ratio); and (iii) the grant date fair value of $57.96 per RSU granted on November 16, 2016, after application of the Equity Adjustment Ratio. For further information on the Black-Scholes model and related stock price assumptions utilized during fiscal 2017, see Note P to the Notes to Consolidated Financial Statements in the 2017 Form 10-K.

Annual Incentive Compensation

Incentive compensation for executives is primarily awarded annually, contingent upon meeting applicable targets. After the beginning of each fiscal year, performance hurdle, target and maximum objectives are established for the upcoming year. Awards for the Chief Executive Officer and certain other executive officers (including all the fiscal 2017 named executive officers) are based upon overall Ashland performance. Awards for other executives and employees are based upon the performance of Ashland or Ashland’s business segments or regions.

The performance hurdle, target and maximum objectives for fiscal 2017 included measures of Operating Income for Incentive Compensation and Working Capital Efficiency, as well as a “safety modifier.” The CD&A section in this proxy statement discusses the fiscal 2017 performance goals as well as other aspects of this program.

Long-Term Incentive Performance Plan—Performance Units

Performance Unit awards, granted under the LTIPP, are available to certain key employees. Beginning in fiscal 2017, these awards are long-term incentives tied to Ashland’s earnings per share (EPS) and modified by the total shareholder return (TSR) over the performance period. Awards are granted annually, with each award covering a three-year performance period.

After the beginning of the performance period, performance hurdle, target and maximum objectives are established for the performance period. The initial number of Performance Units awarded is based on either the employee’s salary or the midpoint of their salary band. For accelerated vesting events, see the SARs/Stock Options, Incentive Compensation, RS/RSUs and Performance Units subsection of the Potential Payments upon Termination or Change in Control section in this proxy statement. The CD&A section in this proxy statement discusses fiscal 2017-2019 LTIPP awards.

Stock Appreciation Rights

Ashland’s employee SAR grants are designed to link executive compensation with increased stockholder value over time. In determining the amount of SARs to be granted annually to key employees, a target number of shares for each employee band level is established. All SARs are granted with an exercise price equal to the fair market value of Ashland Common Stock on the date of grant. Vesting of SARs occurs over a period of three years, as more fully described in footnote (1) of the Outstanding Equity Awards at Fiscal Year-End table in this proxy statement. For accelerated vesting events, see the SARs/Stock Options, Incentive Compensation, RS/RSUs and Performance Units subsection of the Potential Payments upon Termination or Change in Control section in this proxy statement. SARs are not re-valued if the stock price declines below the grant price. The CD&A section in this proxy statement discusses the material aspects of this program.

Restricted Stock Units/Restricted Stock

Ashland’s RSU/RS grants are designed to link executive compensation with increased stockholder value over time. In determining the amount of RSU/RS awards to be granted annually to key employees, a target number of shares for each employee band level is established. All RSU/

 

 

 

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RS awards are granted with a price equal to the fair market value of Ashland’s Common Stock on the date of grant. Vesting of the annual grant of RSU/RS awards occurs over a period of three years, as more fully described in footnote (2) of the Outstanding Equity Awards at Fiscal Year-End table in this proxy statement.

The Compensation Committee may award RSU or RS awards to named executive officers. RSU/RS awards are intended to reward superior performance and encourage continued employment with Ashland. For vesting periods applicable to RSU/RS awards granted to named executive officers, see footnote (2) of the Outstanding Equity Awards at Fiscal Year-End table in this proxy statement.

RSU/RS awards may not be sold, assigned, transferred or otherwise encumbered during the restricted period. Dividend equivalents are paid on the RSUs/RS in the form of additional RSUs/RS subject to the same vesting requirements. For accelerated vesting events, see the SARs/Stock Options, Incentive Compensation, RS/RSUs and Performance Units subsection of the Potential Payments upon Termination or Change in Control section in this proxy statement. The terms of the RSUs are generally the same as RS, except RSUs will not have voting rights and will not be counted as outstanding shares.

 

 

 

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Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information regarding SARs, Performance Units and RSUs/RS held by each of the named executive officers as of September 30, 2017.

 

    Option Awards     Stock Awards  

Name

(a)

  Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
(#)
(b)
    Number of
Securities
Underlying
Unexercised
Options
Unexercisable (1)
(#)
(c)
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
    Option
Exercise
Price
($)
(e)
    Option
Expiration
Date
(f)
    Number
of Shares
or Units
of Stock
That
Have Not
Vested (2)
(#)
(g)
    Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested (2)
($)
(h)
    Equity
Incentive
Plan

Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (3)
(#)
(i)
    Equity
Incentive Plan
Awards:

Market or
Payout Value
of Unearned
Shares, Units
or
Other
Rights That
Have Not
Vested (3)
($)
(j)
 

W. A. Wulfsohn

    -          118,373  (4)      -          57.96       12/16/2026          
    53,913       53,913  (5)      -          59.41       12/28/2025          
    64,977       21,660  (6)      -          62.33       2/28/2025          
              140,308       9,174,766      
                  36,727       2,401,572  
                 

J. K. Willis

    -          32,583  (4)      -          57.96       12/16/2026          
    15,114       15,115  (5)      -          59.41       12/18/2025          
    18,504       6,168  (7)      -          59.95       12/12/2024          
    25,426       -          -          47.63       12/13/2023          
    4,940       -          -          46.65       6/3/2023          
    5,426       -          -          37.37       12/14/2022          
    2,307       -          -          29.50       1/2/2022          
              48,609       3,178,541      
                  10,171       665,051  
                 

P. J. Ganz

    -          20,152  (4)      -          57.96       12/16/2026          
    9,181       9,182  (5)      -          59.41       12/18/2025          
    10,593       3,532  (7)      -          59.95       12/12/2024          
    13,937       -          -          47.63       12/13/2023          
    29,193       -          -          37.37       12/14/2022          
    6,216       -          -          29.50       1/2/2022          
              34,378       2,247,955      
                  6,309       412,578  
                 

A. T. Schumann

    -          8,757  (4)      -          57.96       12/16/2026          
    4,049       4,049  (5)      -          59.41       12/18/2025          
    4,660       1,555  (7)      -          59.95       12/12/2024          
              16,354       1,069,413      
                  2,731       178,578  
                 

J. W. Heitman

    -          7,627  (4)      -          57.96       12/16/2026          
    3,390       3,390  (5)      -          59.41       12/18/2025          
    4,095       1,366  (7)      -          59.95       12/12/2024          
    5,273       -          -          47.63       12/13/2023          
    5,462       -          -          37.37       12/14/2022          
    4,614       -          -          29.50       1/2/2022          
              7,055       461,295      
                  2,354       153,947  
                 

L. Fernandez-Moreno

                  889       58,130  
                 

 

 

(1)

The numbers in columns (b) and (c) relate to SARs which vest over a three-year period measured from the date of grant. Fifty percent vest on the first anniversary of grant, 25% vest on the second anniversary of grant and 25% on the third anniversary of grant. Mr. Fernandez-Moreno’s unvested SARs were canceled as of his termination date on February 28, 2017, after which he had 30 days to exercise his vested SARs. As of September 30, 2017, Mr. Fernandez-Moreno had no SARs outstanding.

 

 

 

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(2)

The numbers in column (g) and the dollar values in column (h) represent the number of RSUs earned for the fiscal 2015-2017 and fiscal 2016-2018 LTIPP performance periods, the number of shares of RS earned from the EPIRP and other unvested RSUs/RS.

LTIPP and EPIRP

The number of shares of Ashland Common Stock earned for the fiscal 2015-2017 LTIPP awards was determined by the Compensation Committee in July 2017, at which point the awards converted into RSUs that became vested in November 2017, except for Mr. Wulfsohn whose RSUs will vest in January 2018. The number of RSUs earned for the fiscal 2016-2018 LTIPP awards was determined by the Compensation Committee in September 2017, and will vest in November 2018. These RSUs do not earn dividends or dividend equivalents. After Compensation Committee approval of the RSUs, Mr. Fernandez-Moreno’s grants were accelerated in accordance with the terms of his Severance Agreement and therefore were not outstanding as of September 30, 2017. For more information, please see the CD&A—Separation Terms for NEO in this proxy statement.

The number of RS earned for the EPIRP was determined by the Compensation Committee in September 2017, as discussed in the CD&A. The EPIRP grants were made on November 18, 2015, and will vest on the third anniversary of the grant date for Messrs. Willis and Ganz and Ms. Schumann and will vest on the fourth anniversary of the grant date for Mr. Wulfsohn. The RS earned pursuant to the EPIRP will continue to accrue dividends which will vest at the same time as the underlying award. After Compensation Committee approval of the EPIRP scoring, Mr. Fernandez-Moreno’s RS grant was accelerated per the terms of his Severance Agreement and therefore was not outstanding as of September 30, 2017.

The number of RSUs earned from the LTIPP performance periods and the number of RS earned from the EPIRP (and the dividends earned on the grants of the EPIRP as of September 30, 2017) for each NEO is set forth in the table below:

 

Name

   2015-2017 LTIPP -
RSUs earned
     2016-2018 LTIPP -
RSUs earned
     EPIRP - RS
Earned
     EPIRP - RS
Dividends Earned
 

W. A. Wulfsohn

     43,479        26,688        29,806        851  

J. K. Willis

     12,232        7,476        12,526        360  

P. J. Ganz

     7,092        4,572        10,729        308  

A. T. Schumann

     3,186        2,039        7,841        224  

J. W. Heitman

     2,775        1,669        N/A        N/A  

Unvested RS/RSUs

The following paragraphs list the unvested RS/RSUs as of September 30, 2017 for each named executive officer. Unless otherwise noted, the RS/RSUs vest 33.3% on the first anniversary of grant, 33.3% on the second anniversary of grant and 33.4% on the third anniversary of grant. Any additional RS/RSUs earned from dividends will vest when the underlying RS/RSUs vest.

For Mr. Wulfsohn, the amounts reported in columns (g) and (h) also represent:

 

  (i)

6,655 RS remaining from a grant of 19,964 RS on January 29, 2015; and 265 RS earned from dividends;

 

  (ii)

13,561 RSUs remaining from a grant of 20,341 RSUs on November 18, 2015; and 388 RSUs earned from dividends; and

 

  (iii)

18,363 RSUs granted November 16, 2016; and 252 RSUs earned from dividends.

For Mr. Willis, the amounts reported in columns (g) and (h) also represent:

 

  (i)

1,946 RS remaining from a grant of 5,838 RS granted on November 12, 2014; and 84 RS earned from dividends;

 

  (ii)

4,708 RS remaining from a grant of 14,125 RS granted on November 17, 2014; and 179 RS earned from dividends;

 

 

 

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  (iii)

3,829 RSUs remaining from a grant of 5,744 RSUs granted on November 18, 2015; and 113 RSUs earned from dividends; and

 

  (iv)

5,085 RSUs granted November 16, 2016; and 70 RSUs earned from dividends.

For Mr. Ganz, the amounts reported in columns (g) and (h) also represent:

 

  (i)

1,099 RS remaining from a grant of 3,296 RS granted on November 12, 2014; and 52 RS earned from dividends;

 

  (ii)

4,708 RS remaining from a grant of 14,125 RS granted on November 17, 2014; and 179 RS earned from dividends;

 

  (iii)

2,323 RSUs remaining from a grant of 3,484 RSUs granted on November 18, 2015; and 70 RSUs earned from dividends; and

 

  (iv)

3,202 RSUs granted November 16, 2016; and 44 RSUs earned from dividends.

For Ms. Schumann, the amounts reported in columns (g) and (h) also represent:

 

  (i)

502 RS remaining from a grant of 1,506 RS granted on November 12, 2014; and 26 RS earned from dividends;

 

  (ii)

1,067 RSUs remaining from a grant of 1,601 RSUs granted on November 18, 2015; and 37 RSUs earned from dividends; and

 

  (iii)

1,412 RSUs granted November 16, 2016; and 19 RSUs earned from dividends.

For Mr. Heitman, the amounts reported in columns (g) and (h) also represent:

 

  (i)

439 RS remaining from a grant of 1,318 RS granted on November 12, 2014; and 21 RS earned from dividends;

 

  (ii)

879 RSUs remaining from a grant of 1,318 RSUs granted on November 18, 2015; and 30 RSUs earned from dividends; and

 

  (iii)

1,224 RSUs granted November 16, 2016; and 17 RSUs earned from dividends.

 

(3)

The numbers in column (i) represent the estimated performance units granted through September 30, 2017, under the LTIPP for the fiscal 2017-2019 performance period. The estimated number is computed assuming that the target performance goals are achieved. The dollar amounts in column (j) correspond to the performance units identified in column (i). For LTIPP units, the dollar value is computed by converting the performance units to shares of Ashland Common Stock on a one-for-one basis. The number of LTIPP shares is then multiplied by the closing price of Ashland Common Stock of $65.39 as reported on the NYSE on September 29, 2017. Payment, if any, under the LTIPP will be made in cash for the fiscal 2017-2019 performance period. Due to rounding of the performance units after application of the Equity Adjustment Ratio to the nearest whole performance unit for purposes of this table, dollar values may not match exactly.

 

(4)

These numbers relate to SARs granted on November 16, 2016, that vest over the three-period referenced in footnote (1) above.

 

(5)

These numbers relate to SARs granted on November 18, 2015, that vest over the three-year period referenced in footnote (1) above.

 

(6)

These numbers relate to SARs granted on January 29, 2015, that vest over the three-year period referenced in footnote (1) above.

 

(7)

These numbers relate to SARs granted on November 12, 2014, that vest over the three-year period referenced in footnote (1) above.

 

 

 

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Option Exercises and Stock Vested

The following table sets forth certain information regarding the value realized by each named executive officer during fiscal 2017 upon the exercise of SARs and the vesting of Performance Units and RSUs/RS.

 

     Option Awards      Stock Awards  
    

Number of Shares

Acquired on Exercise (1)

    

Value Realized on

Exercise (1)

    

Number of Shares

Acquired on Vesting (2)(3)

    

Value Realized on

Vesting (2)(3)

 
Name    (#)      ($)      (#)      ($)  

(a)

   (b)      (c)      (d)      (e)  

W. A. Wulfsohn

     -            -            62,079            3,637,277      
           

J. K. Willis

     -            -            32,039            1,857,433      
           

P. J. Ganz

     -            -            22,152            1,284,687      
           

A. T. Schumann

     18,268        464,902        15,441            961,285      
           

J. W. Heitman

     -            -            4,756            275,552      
           

L. Fernandez-Moreno

     36,325        492,040        65,884            4,038,117      

 

 

  (1)

The amounts in column (b) include the gross number of shares acquired on exercise of SARs. The amounts in column (c) represent the value realized on exercise.

 

  (2)

For Messrs. Willis, Ganz, Heitman and Fernandez-Moreno, and Ms. Schumann, the amounts in column (d) include 16,069; 8,927; 3,349; 7,588 and 4,017 shares of Ashland Common Stock, respectively, received in settlement of the fiscal 2014-2016 LTIPP. The dollar amounts in column (e) represent the value of the fiscal 2014-2016 LTIPP (computed by multiplying the number of shares awarded by the closing price of Ashland Common Stock as reported on November 16, 2016, the date the Compensation Committee approved the payment). The weighted score for the 2014-2016 LTIPP was 118.50%.

 

  (3)

The amounts in column (d) also include the following RSU/RS vestings. All stock prices prior to May 12, 2017, have been converted using the Equity Adjustment Ratio:

(i) Mr. Wulfsohn received 6,872.752 shares with the value included in column (e) using the Ashland Common Stock closing price of $59.00 on November 18, 2016; he received 48,381 shares, with the value included in column (e) using Ashland Common Stock closing price of $57.94 on January 3, 2017; and he received 6,825 shares with the value included in column (e) using the Ashland Common Stock closing price of $62.82 on January 30, 2017;

(ii) Mr. Willis received 4,397 shares, with the value included in column (e) using the Ashland Common Stock closing price of $57.46 on November 14, 2016; he received 9,635 shares with the value included in column (e) using the Ashland Common Stock closing price of $58.05 on November 17, 2016; and he received 1,937.304 shares, with the value included in column (e) using the Ashland Common Stock closing price of $59.00 on November 18, 2016;

(iii) Mr. Ganz received 2,419 shares with the value included in column (e) using the Ashland Common Stock closing price of $57.46 on November 14, 2016; he received 9,635 shares, with the value included in column (e) using the Ashland Common Stock closing price of $58.05 on November 17, 2016; and he received 1,170.872 shares with the value included in column (e) using the Ashland Common Stock closing price of $59.00 on November 18, 2016;

(iv) Ms. Schumann received 1,095 shares, with the value included in column (e) using the Ashland Common Stock closing price of $57.46 on November 14, 2016; she received 534.395 shares with the value included in column (e) using the Ashland Common Stock closing price of $59.00 on November 18, 2016; and she received 9,794 shares with the value included in column (e) using the Ashland Common Stock closing price of $64.74 on September 18, 2017;

 

 

 

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(v) Mr. Heitman received 967 shares, with the value included in column (e) using the Ashland Common Stock closing price of $57.46 on November 14, 2016; and he received 440.123 shares with the value included in column (e) using the Ashland Common Stock closing price of $59.00 on November 18, 2016; and

(vi) Mr. Fernandez-Moreno received 2,135 shares with the value included in column (e) using the Ashland Common Stock closing price of $57.46 on November 14, 2016; he received 19,275 shares with the value included in column (e) using the Ashland Common Stock closing price of $58.05 on November 17, 2016; he received 1,204.326 shares with the value included in column (e) using the Ashland Common Stock closing price of $59.00 on November 18, 2016; and he received 35,681 shares with the value included in column (e) using the Ashland Common Stock closing price of $64.07 on March 1, 2017.

 

 

 

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Pension Benefits

The following table shows the actuarial present value of the named executive officers’ (other than William A. Wulfsohn, Peter J. Ganz, and Luis Fernandez-Moreno) accumulated benefits under each certain qualified and non-qualified pension plans previously owned by Ashland but that have been transferred to Valvoline, calculated as of September 30, 2017. Messrs. Wulfsohn, Ganz, and Fernandez-Moreno were not eligible to participate in the Pension Plan, the Excess Plans or the SERP (as defined in footnote 1) when those plans were owned by Ashland since those plans were closed to new employees on January 1, 2011. On September 30, 2016, these plans were frozen to future benefit accruals and on September 1, 2016, the sponsorship of these plans was transferred to Valvoline LLC. Please see the narrative to the Pension Benefits table below for further information.

 

Name

(a)

 

Plan Name (1)

(b)

  Number of Years
Credited Service (2)
(#)
(c)
  Present Value of
Accumulated Benefit
($)
(d)
    Payments During
Last
Fiscal Year
($)
(e)