DEF 14A
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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    

Check the appropriate box:

 

  

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

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

No fee required

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

  (1)

Title of each class of securities to which transaction applies:    N/A

 

 

  (2)

Aggregate number of securities to which transaction applies:    N/A

 

 

  (3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):    N/A

 

 

  (4)

Proposed maximum aggregate value of transaction:    N/A

 

 

  (5)

Total fee paid:    N/A

 

 

Fee paid previously with preliminary materials.

 

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.

 

  (1)

Amount Previously Paid:    N/A

 

 

  (2)

Form, Schedule or Registration Statement No.:    N/A

 

 

  (3)

Filing Party:    N/A

 

 

  (4)

Date Filed:    N/A

 

Notes:


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LOGO

 

Ashland Global Holdings Inc.

50 E. RiverCenter Blvd.

Covington, KY 41011

December 9, 2019

Dear Ashland Global Holdings Inc. Stockholder:

On behalf of your Board of Directors and management, we are pleased to invite you to the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) of Ashland Global Holdings Inc. (“Ashland”). The Annual Meeting will be held on January 30, 2020, at 10:30 a.m. (EST), at Hotel du Pont, 42 West 11th Street, Wilmington, DE 19801.

The attached Notice of Annual Meeting of Stockholders and Proxy Statement (the “Proxy Statement”) describes the business to be conducted at the Annual Meeting. Proxy cards are being solicited on behalf of the Board of Directors of Ashland (the “Board”). 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.

You are urged to read the Proxy Statement carefully and, whether or not you plan to attend the Annual Meeting, to promptly submit your vote.

Your vote is extremely important no matter how many shares you own. If you have any questions or require any assistance with voting your shares, please contact Ashland’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders may call toll-free: 1 (877) 456-3402

Banks and Brokers may call collect: 1 (212) 750-5833

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

 

Sincerely,

LOGO

William A. Wulfsohn

Chairman and Chief Executive Officer

LOGO

Guillermo Novo

Incoming 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 (“Ashland”), will hold its Annual Meeting of Stockholders (the “Annual Meeting”) on January 30, 2020, at 10:30 a.m. (EST). The Annual Meeting will be held at the following location and for the purposes listed below:

 

Where:

  

Hotel du Pont, 42 West 11th Street, Wilmington, DE 19801.

Items of Business:

  

(1)     Election of the 11 director nominees named in the accompanying Proxy Statement for one-year terms expiring at 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 2020;

  

(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; and

  

(4)     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 2, 2019 are entitled to vote at the Annual Meeting or any adjournment of that Annual 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 visit the website on the 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 provided 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”), your vote will constitute voting instructions to Fidelity Management Trust Company, who serves as trustee of the Plans (the “Trustee”), for the shares held in your account.

If you are a participant in the Employee Savings Plan, the Union Plan or the ISP 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 28, 2020.

 

By Order of the Board of Directors,

PETER J. GANZ

Senior Vice President, General Counsel and Secretary

Covington, Kentucky

December 9, 2019


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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

     6  

ASHLAND COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF ASHLAND

     7  

PROPOSAL ONE - ELECTION OF DIRECTORS

     9  

Board of Directors

     9  

Director Nominees

     10  

Compensation of Directors

     19  

Director Compensation Table

     19  

Annual Retainer

     21  

Restricted Stock Units

     21  

Stock Ownership Guidelines for Directors

     22  

Corporate Governance

     23  

Governance Principles

     23  

Board Leadership Structure

     24  

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

     26  

Related Person Transaction Policy

     27  

Delinquent Section 16(a) Reports

     28  

Communication with Directors

     28  

Attendance at Annual Meeting

     28  

Executive Sessions of Directors

     28  

Stockholder Recommendations for Directors

     28  

Stockholder Nominations of Directors

     29  

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

     58  

Outstanding Equity Awards at Fiscal Year End

     61  

Option Exercises and Stock Vested

     64  

Pension Benefits

     65  

Non-Qualified Deferred Compensation

     69  

Potential Payments upon Termination or Change in Control

     71  

AUDIT COMMITTEE REPORT

     81  

PROPOSAL TWO - RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

     83  

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

     84  

MISCELLANEOUS

     85  

Proxy Solicitation

     85  

Stockholder Proposals for the 2021 Annual Meeting

     85  

Other Matters

     86  

APPENDIX A

     A-1  

Use of Non-GAAP Measures and Non-GAAP Reconciliations

     A-1  

Forward-Looking Statements

     A-7  


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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 2019 performance, please review the Annual Report on Form 10-K for the fiscal year ended September 30, 2019.

Annual Meeting Information

 

Date & Time:

 

  

January 30, 2020 at 10:30 a.m. (EST)

 

Address:

 

  

Hotel du Pont

42 West 11th Street, Wilmington, DE 19801

 

Record Date:

 

  

December 2, 2019

 

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 9)

 

  

 

FOR ALL of your
Board’s Director
Nominees

 

 

  Proposal Two. Ratification of the appointment of Ernst & Young LLP as independent registered public accountants for fiscal 2020 (page 83)

 

   FOR

 

 

  Proposal Three. A non-binding advisory resolution approving the compensation paid to Ashland’s named executive officers (page 84)

 

   FOR

 

 

 

 

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Director Nominees

The table below summarizes information about each of the Board’s director nominees. Each nominee is to be elected by a majority of the votes cast. See pages 10 to 18 for complete biographical information for each of the Board’s nominees. Your Board of Directors recommends that you vote FOR each of your Board’s director nominees.

 

 Name

  Age     Director
Since
 

Primary Occupation

  Independent   Committee
      Memberships      

 

 Brendan M. Cummins

 

 

 

 

68

 

 

 

 

2012

 

 

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

 

    AC;
EHS&Q

 

 William G. Dempsey

 

 

 

 

68

 

 

 

 

2016

 

 

Former Executive Vice President of Global Pharmaceuticals at Abbott Laboratories

 

    AC;
G&N

 

 Jay V. Ihlenfeld

 

 

 

 

67

 

 

 

 

2017

 

 

Former Senior Vice President of 3M Company

 

    AC;
EHS&Q

 

 Susan L. Main

 

 

 

 

61

 

 

 

 

2017

 

 

Senior Vice President and Chief Financial Officer of Teledyne Technologies Incorporated

 

    AC
(Chair);
G&N

 

 Guillermo Novo

 

 

 

 

57

 

 

 

 

2019

 

 

Incoming Chairman of the Board and Chief Executive Officer

 

    EHS&Q

 

 Jerome A. Peribere

 

 

 

 

65

 

 

 

 

2018

 

 

Former President and Chief Executive Officer of Sealed Air Corporation

 

    Comp;
G&N

 

 Craig A. Rogerson

 

 

 

 

63

 

 

 

 

2019

 

 

Chairman, President and Chief Executive Officer of Hexion Inc.

 

    Comp;

EHS&Q

 

 Mark C. Rohr

 

 

 

 

68

 

 

 

 

2008

 

 

Executive Chairman and Former Chief Executive Officer of Celanese Corporation

 

   

 

Comp;
G&N
(Chair)

 

 

 Ricky C. Sandler

 

 

 

 

50

 

 

 

 

N/A

 

 

Founder and Chief Executive Officer/Chief Investment Officer of Eminence Capital

 

    N/A

 

 Janice J. Teal

 

 

 

 

67

 

 

 

 

2012

 

 

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

 

   

 

EHS&Q
(Chair);
Comp

 

 

 Kathleen Wilson-Thompson

 

 

 

 

62

 

 

 

 

2017

 

 

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

 

    Comp
(Chair);
G&N

Committees:

 

AC – Audit Committee

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

Comp – Compensation Committee

  G&N – Governance and Nominating Committee

On October 8, 2019, Ashland announced that Guillermo Novo will succeed Mr. Wulfsohn as Chairman and Chief Executive Officer of Ashland effective December 31, 2019.

 

 

 

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Performance and Compensation Summary

In this section, we highlight fiscal 2019 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 2019 Performance

Fiscal year 2019 was a year of important gains in the context of difficult external conditions. From a financial perspective, Ashland faced challenging end market conditions and a stronger U.S. dollar. We implemented an EBITDA margin acceleration program to reduce layers, increase operational agility, and improve our competitiveness by reducing our fixed costs by $120 million on a run-rate basis by the end of calendar year 2019. The execution of this program contributed to the Company’s results in fiscal 2019:

 

   

Operating income was $166 million compared to $102 million a year ago.

 

   

Income from continuing operations was $24 million, versus $19 million in fiscal 2018.

 

   

Net income attributable to Ashland was $505 million compared to $114 million in fiscal 2018.

 

   

Adjusted EBITDA was $532 million, compared to $515 million in fiscal 2018.

 

   

In August, Ashland divested the Composites business and Marl BDO facility to INEOS Enterprise. Proceeds from this transaction and ongoing cash flow generation enabled Ashland to return over $260 million to shareholders in fiscal 2019 through both share repurchases and dividends, while reducing debt by $940 million.

As part of the EBITDA margin acceleration program, Ashland remains on track to achieve its target of $120 million in total run-rate savings by end of calendar year 2019.

We expect to see continued improvement in fiscal year 2020 and beyond as we realize the benefits from the EBITDA margin acceleration program and work to achieve our full potential by delivering greater revenue growth, margin expansion and cash generation.

EBITDA and Adjusted EBITDA are non-GAAP measures and are reconciled to net income in Appendix A.

Ashland’s Compensation Program at a Glance

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 stockholders’ interests. We strive to provide our named executive officers (“NEOs” or “named executive officers”) with a compensation package that is aligned with the median of our Compensation Peer Group, with the expectation, based on a comparison to executives in the Compensation Peer Group and a review of other competitive market information, 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 our NEOs to determine whether these programs competitively reward our NEOs for their services.

2019 Key Compensation Decisions

Base Salary:

 

   

The Compensation Committee did not increase the base salaries of Messrs. Wulfsohn, Willis and Ganz.

 

 

 

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The Compensation Committee approved merit increases to the base salaries for Messrs. Consiglio and Musa.

Annual and Long-Term Incentives, Metrics and Goals:

 

   

Messrs. Wulfsohn, Willis and Ganz’s annual and long-term target incentive opportunities did not increase.

 

   

The Compensation Committee increased Mr. Consiglio’s annual and long-term target incentive opportunities to 75% and 150%, respectively, to further align Mr. Consiglio’s overall compensation with competitive practices and his internal peers.

 

   

Mr. Musa’s annual target incentive opportunity increased to 75%. In fiscal year 2020, Mr. Musa’s long-term target incentive opportunity will increase to 150% to further align his compensation with his internal peers.

 

   

In addition to regular long-term incentive grants, Messrs. Consiglio and Musa were each awarded an RSU grant on March 20, 2019, with a grant date value of $500,000. These grants provide an additional incentive to encourage the executives to continue to build upon the reorganization of Ashland. Mr. Consiglio’s grant will cliff vest 100% three years from the grant date and Mr. Musa’s grant will vest 30% one year from grant date and 70% three years from the grant date.

 

   

For the fiscal 2019 performance period, the Compensation Committee used Adjusted EBITDA and Free Cash Flow as annual incentive metrics. These are non-GAAP measures and are reconciled to the applicable GAAP measurements in Appendix A. A cost reduction modifier was implemented to award the senior leaders if they were to meet the $120 million cost reduction program, resulting in a range of -20% to +20% of their annual incentive payout.

 

   

The Compensation Committee continued to use adjusted EPS as a three-year performance metric for the long-term incentive performance plan, with the potential for a total shareholder return modifier. Adjusted EPS is a non-GAAP measure and is reconciled to the applicable GAAP measurement in Appendix A.

 

   

The Compensation Committee increased the maximum payout for the maximum performance level under the fiscal 2019 Annual Incentive Plan from 150% of target to 200% of target. This change aligns with general industry practice as well as peer companies.

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 30, 2020

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

 

Q:

What matters will be voted on at the Annual Meeting?

 

A:     

  

(1)    

 

Election of 11 directors to your Board of Directors to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. Your Board unanimously recommends that you vote FOR the election of all of your Board’s nominees: Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld, Susan L. Main, Guillermo Novo, Jerome A. Peribere, Craig A. Rogerson, Mark C. Rohr, Ricky C. Sandler, Janice J. Teal, and Kathleen Wilson-Thompson;

  

(2)    

 

Ratification of Ernst & Young LLP (“EY”) as Ashland’s independent registered public accountants for fiscal 2020; and

  

(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.

 

Q:

Why am I receiving this Proxy Statement?

 

A:

Ashland is delivering this Proxy Statement and the accompanying proxy materials to you in connection with the solicitation of proxies by and on behalf of your Board of Directors, for use at the Annual Meeting, which will take place on January 30, 2020, and at any adjournments and 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 9, 2019 in connection with the solicitation of proxies.

 

Q:

What are the recommendations of the Board of Directors?

 

A:

Your Board of Directors recommends that you vote your shares as follows:

 

   

FOR the election of the directors nominated by your Board of Directors;

 

   

FOR the ratification of EY as Ashland’s independent registered public accountants for fiscal year 2020; and

 

   

FOR the approval, on a non-binding advisory basis, of the compensation paid to Ashland’s named executive officers.

 

Q:

Who may vote at the Annual Meeting?

 

A:

Stockholders of Ashland at the close of business on December 2, 2019 (the “Record Date”) are entitled to vote at the Annual Meeting and any adjournments or postponements thereof. As of the Record Date, there were 60,228,019 shares of Common Stock of Ashland (“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. All attendees will be required to provide a government-issued current form of photo identification. 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 in order to enter the Annual Meeting.

 

 

 

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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 2019 Annual Report, by providing 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 17, 2019.

 

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 2019 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, the proxy card represents all shares of Ashland Common Stock that are registered in your name as well as any shares you hold in the dividend reinvestment plan (the “DRP”) administered by EQ Shareowner Services (“EQ”) for investors in Ashland Common Stock and in the Employee Savings Plan, the Union Plan or the ISP Plan. If your shares are held through a broker, bank or other nominee, your broker, bank or other nominee has enclosed a voting instruction form for you to use to direct it how to vote the shares held by such broker, bank or other nominee. Please return your completed voting instruction form to your broker, bank or other nominee. If your broker, bank or other nominee permits you to provide voting instructions via the Internet or by telephone, you may vote that way as well.

 

Q:

What does it mean if I receive more than one proxy card on or about the same time?

 

A:

It generally means that you hold shares registered in more than one account. In order to vote all of your shares, please sign, date and return each proxy card or voting instruction form in the postage-paid envelope provided or, if you vote via the Internet or telephone, please be sure to vote using each proxy card or voting instruction form you receive.

 

Q:

How do I vote my shares?

 

A:

We encourage all stockholders to submit proxies in advance of the Annual Meeting by telephone, by Internet or by mail. Sending your proxy by any of these methods will not affect your right to attend and vote at the Annual Meeting in person or by executing a proxy designating a representative to vote for you at the Annual Meeting.

If you are a registered stockholder as of the Record Date, you can vote (i) by following the instructions on the Notice or proxy card to vote by telephone or Internet, (ii) by signing, dating and mailing your proxy card or (iii) by attending the Annual Meeting and voting by ballot in person.

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 Annual Meeting, you must provide a “legal proxy” issued in your name from the institution that holds your shares.

 

 

 

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Q:

How do I vote my shares in the DRP?

 

A:

The proxy card represents all shares of Ashland Common Stock that are registered in your name as well as any shares you hold in the DRP administered by EQ for investors in Ashland Common Stock. Therefore you may vote your DRP shares (together with your shares of Ashland common Stock) (i) by attending the Annual Meeting, (ii) by following the instructions on the Notice or proxy card to vote by telephone or Internet or (iii) by signing, dating and mailing your proxy card.

 

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 may instruct the Trustee on how to vote the shares of Ashland Common Stock credited to the participant’s account in each plan. In the case of the Union Plan or the ISP plan, such instructions will additionally be applied to a proportionate number of shares of Ashland Common Stock held in all other plan participants’ accounts for which voting instructions are not timely received by the Trustee (the “non-directed shares”). In the case of the Employee Savings Plan, each participant may separately instruct the Trustee on how to vote a proportionate number of non-directed shares. Each participant who gives the Trustee any such 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 the Plan Tabulator, before 6:00 a.m. (EST) on January 28, 2020. You may not vote your shares in such plans in person at the Annual Meeting.

 

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 E. RiverCenter Boulevard, 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, or the ISP Plan must be received by the Plan Tabulator, before 6:00 a.m. (EST) on January 28, 2020.

 

Q:

Who will count the vote?

 

A:

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

 

Q:

What constitutes a quorum?

 

A:

As of the Record Date, 60,228,019 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 (if any), as described below, will be treated as present for the purpose of determining a quorum.

 

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.

 

 

 

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(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.

 

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.

The only proposal that would be considered “routine” is the proposal for the ratification of the appointment of EY as Ashland’s independent registered public accountants for fiscal 2020. A broker, bank or other nominee will not be entitled to vote your shares on any “non-routine” matters, absent instructions from you. “Non-routine” matters include the election of directors and the approval, on a non-binding advisory basis, of the compensation paid to Ashland’s named executive officers.

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. If your shares are voted on this proposal as directed by your broker, bank or other nominee, your shares will constitute broker non-votes on each of the other proposals. Broker non-votes will count for purposes of determining whether a quorum exists, but will not be counted as votes cast with respect to such proposals.

 

Q:

How will my shares be voted if I submit a proxy card but do not specify how I want to vote?

 

A:

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, Guillermo Novo or Peter J. Ganz, as individuals named on the proxy card, will vote in line with the Board’s recommendations with respect to any such proposal, i.e., (i) FOR the election of the 11 director nominees, (ii) FOR the ratification of EY, and (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.

As of the date of this Proxy Statement, your Board of Directors knows of no business other than that set forth above to be transacted at the Annual Meeting, but if other matters requiring a vote do arise, it is the intention of Mr. Novo and Mr. Ganz, as the individuals to whom you are granting your proxy, to vote in accordance with their best judgment on such matters.

 

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

 

 

 

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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.

Accordingly, we urge you to promptly give instructions to your broker to vote FOR your Board’s nominees by using the voting instruction card provided to you by your custodian.

 

Q:

Where can I find the voting results of the Annual Meeting?

 

A:

We intend to announce preliminary voting results based on our proxy solicitor’s advice, at the Annual Meeting. We expect to report preliminary results based on the preliminary report of CES on a Current Report on Form 8-K filed with the SEC within four business days following the Annual Meeting, and final results as certified by CES as soon as practicable thereafter. 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.

 

Q:

Who can I contact if I have questions or need assistance in voting my shares, or if I need additional copies of the proxy materials?

 

A:

Please contact Innisfree M&A Incorporated, the firm assisting us in the solicitation of proxies, toll-free at 1 (877) 456-3402. Banks and brokers may call collect at 1 (212) 750-5833.

 

 

Important Notice regarding the availability of Proxy Materials for the

Annual Meeting to be held on January 30, 2020.

 

This Proxy Statement and Ashland’s 2019 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, 2019.

 

Name and Address of Beneficial Owner

   Aggregate Number of
      Shares of Common      

Stock  Beneficially
Owned
        Percentage of Common      
Stock Beneficially  Owned*

The Vanguard Group

       6,044,801  (1)       10.0 %

100 Vanguard Blvd

Malvern, PA 19355

        
        

BlackRock, Inc.

       5,597,768  (2)       9.3 %

55 East 52nd Street

New York, New York 10022

        
        

Eminence Capital, LP

       5,078,077  (3)       8.4 %

399 Park Avenue, 25th Floor

New York, New York 10022

        

 

 

*

Based on 60,183,754 shares of Ashland Common Stock outstanding as of October 31, 2019.

 

(1)

Based upon information contained in the Schedule 13G/A filed by The Vanguard Group (“Vanguard”) with the SEC on February 11, 2019, Vanguard beneficially owned 6,044,801 shares of Ashland Common Stock as of December 31, 2018, with sole voting power over 30,329 shares, shared voting power over 7,600 shares, sole dispositive power over 6,012,663 shares and shared dispositive power over 32,138 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.

 

(2)

Based upon information contained in the Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) with the SEC on February 4, 2019, BlackRock beneficially owned 5,597,768 shares of Ashland Common Stock as of December 31, 2018, with sole voting power over 5,302,785 shares, shared voting power over no shares, sole dispositive power over 5,597,768 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 Life Limited; BlackRock Advisors, LLC; BlackRock (Netherlands) B.V.; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock Investment Management (Australia) Limited; BlackRock Advisors (UK) Limited; BlackRock Fund Advisors; BlackRock Asset Management North Asia Limited; and BlackRock Fund Managers Ltd.

 

(3)

Based upon information contained in Mr. Sandler’s director nominee questionnaire as of November 5, 2019, Eminence Capital, LP (“Eminence”) beneficially owned 5,078,077 shares of Ashland Common Stock, with sole voting power over 5,078,077 shares, shared voting power over no shares, sole dispositive power over 5,078,077 and shared dispositive power over no shares. Eminence reports its beneficial ownership on behalf of itself and Ricky C. Sandler, a U.S. Citizen (“Mr. Sandler,” and together with Eminence Capital, the “Reporting Persons”). Eminence serves as the management company or investment adviser to, and may be deemed to have shared voting and dispositive power over the shares of Common Stock held by, various investment funds and separately managed accounts under its management and control. The general partner of Eminence is Eminence Capital GP, LLC, the sole managing member of which is Mr. Sandler.

 

 

 

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ASHLAND COMMON STOCK OWNERSHIP OF

DIRECTORS AND EXECUTIVE OFFICERS OF ASHLAND

The following table shows, as of October 31, 2019, the beneficial ownership of Ashland Common Stock by each Ashland director, director nominee 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*

  

 

229,207

 

  

*

  

(2)(3)(4)

 J. Kevin Willis

  

 

92,625

 

  

*

  

(1)(2)(3)

 Peter J. Ganz

  

 

81,741

 

  

*

  

(2)(3)

 Vito J. Consiglio***

  

 

6,091

 

     

(1)(2)(3)

 Osama M. Musa

  

 

9,190

 

  

*

  

(2)(3)

 Brendan M. Cummins

  

 

0

 

  

*

  

(2)

 William G. Dempsey

  

 

6,098

 

  

*

  

(2)(5)

 Jay V. Ihlenfeld

  

 

5,215

 

  

*

  

(2)(5)

 Susan L. Main

  

 

4,218

 

  

*

  

(2)(5)

 Guillermo Novo*

  

 

0

 

  

*

  

 Jerome A. Peribere

  

 

3,370

 

  

*

  

(5)

 Craig A. Rogerson

  

 

0

 

  

*

  

 Mark C. Rohr

  

 

61,278

 

  

*

  

(2)(5)

 Ricky C. Sandler**

  

 

5,081,522

 

  

8.4%

  

(6)

 Janice J. Teal

  

 

22,039

 

  

*

  

(2)(5)

 Kathleen Wilson-Thompson

  

 

4,218

 

  

*

  

(2)(5)

 All directors and executive officers as a group (19 people)

  

 

5,646,170

 

  

9.33%

  

(1)(2)(3)(4)(5)

 

 

*

As announced on October 8, 2019, Mr. Novo will succeed Mr. Wulfsohn as Chairman and Chief Executive Officer of Ashland effective December 31, 2019.

**

Mr. Sandler is a director nominee.

***

Mr. Consiglio will be leaving the Company on January 31, 2020 due to the elimination of the Chief Commercial Officer position.

As of October 31, 2019, there were 60,183,754 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, 2019, other than Mr. Sandler. All directors and executive officers as a group owned 5,646,170 shares of Ashland Common Stock, which equaled 9.33% of the Ashland Common Stock outstanding as of October 31, 2019. Shares deemed to be beneficially owned are included in the number of shares of common stock outstanding on October 31, 2019, 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 by executive officers: as to Mr. Willis, 18,545 shares; as to Mr. Consiglio, 236 shares; and as to all executive officers as a group, 21,674 shares. Participants can vote the Employee Savings Plan shares.

 

 

 

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  (2)

Includes grants of restricted stock units, 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 Plan for Employees (the “Employees’ Deferral Plan”) or by directors under the non-qualified Deferred Compensation Plan for non-employee directors (the “Directors’ Deferral Plan”): as to Mr. Wulfsohn, 17,531 units; as to Mr. Willis, 33,187 units; as to Mr. Ganz, 3,050 units; as to Mr. Consiglio, 2.053 units; as to Mr. Musa, 1,525 units; as to Mr. Dempsey, 4,215 units; as to Dr. Ihlenfeld, 3,332 units; as to Ms. Main, 2,335 units; as to Mr. Peribere, 1,487 units; as to Mr. Rohr, 54,395 units; as to Dr. Teal, 20,156 units; as to Ms. Wilson-Thompson, 2,335 units; and as to all directors and executive officers as a group, 151,681 units. Mr. Cummins, as a non-U.S. resident, is not eligible to defer U.S.-based compensation and therefore holds 18,090 restricted stock units, payable solely in cash, 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, 2019, through the exercise of stock appreciation rights (“SARs”): as to Mr. Wulfsohn, 81,811 shares; as to Mr. Willis, 39,548 shares; as to Mr. Ganz, 38,541 shares; as to Mr. Consiglio, 975 shares; as to Mr. Musa, 7,665 shares; and as to all directors and executive officers as a group, 175,591 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, 2019. All SARs are stock settled and are not issued in tandem with an option.

 

  (4)

Includes restricted shares of Ashland Common Stock for Mr. Wulfsohn of 31,460 shares. No other executive officer holds restricted shares as of October 31, 2019.

 

  (5)

Includes 1,883 restricted shares of Ashland Common Stock for each of the non-employee directors under the prior director compensation program, except for Mr. Cummins who received 1,883 restricted stock units in lieu of 1,883 restricted shares (discussed in footnote 2 above). Beginning in February 2018, Ashland ceased providing new directors the on-boarding grant of 1,883 restricted shares.

 

  (6)

Mr. Sandler has sole voting power over 3,445 shares and shared voting power over 5,078,077 shares. The 5,078,077 shares (the “Eminence Shares”) are owned by certain funds and investment vehicles (the “Eminence Funds”) managed by Eminence. The Eminence Shares are not held directly by Mr. Sandler. From time to time, certain of these shares are held in the ordinary course of business with other investment securities owned by the Eminence Funds in co-mingled margin accounts with a prime broker that may, from time to time, extend margin credit to certain Eminence Funds, subject to applicable federal margin, stock exchange rules and credit policies. Mr. Sandler is the Founder and Chief Executive Officer/Chief Investment Officer of Eminence, and therefore is in a position to determine the Funds’ investment and voting decisions. Accordingly, Mr. Sandler and Eminence may be deemed to indirectly beneficially own the shares that the Eminence Funds directly and beneficially own.

 

 

 

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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 2021 Annual Meeting and until their successors are duly elected and qualified. The 11 individuals nominated by your Board for election as directors at the 2020 Annual Meeting are Brendan M. Cummins, William G. Dempsey, Jay V. Ihlenfeld, Susan L. Main, Guillermo Novo, Jerome A. Peribere, Craig A. Rogerson, Mark C. Rohr, Ricky C. Sandler, Janice J. Teal and Kathleen Wilson-Thompson. The G&N Committee believes that all 11 of your Board’s nominees will be available to serve as directors upon election and the Board unanimously recommends that stockholders vote FOR them at the Annual Meeting.

As previously disclosed, on October 8, 2019, Ashland announced that Mr. Novo will succeed Mr. Wulfsohn as Chairman and Chief Executive Officer of Ashland effective December 31, 2019. Therefore, Mr. Wulfsohn is not running for re-election to Ashland’s Board. Effective December 31, 2019, the Board has decided to decrease the size of the Board to ten directors.

Mr. Sandler expressed his interest in being considered for possible nomination to Ashland’s Board, which interest was supported by other stockholders. The G&N Committee considered Mr. Sandler’s nomination, along with the other nominees and recommended that the Board include him as a nominee. Immediately following the Annual Meeting, the Board will increase in size to 11 directors.

As provided under Article V of Ashland’s Certificate of Incorporation, the affirmative vote of a majority of votes cast with respect to each director nominee will be 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. Abstentions will not be counted as votes cast either for or against the nominees.

Pursuant to Ashland’s Certificate of Incorporation, 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 shall submit an offer to resign from the Board no later than two weeks after the certification of the stockholder vote. Pursuant to the Board of Directors’ resignation policy in Ashland’s Corporate Governance Guidelines (published on Ashland’s website (http://investor.ashland.com)), 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 of your Board’s director nominees have agreed to abide by the policy.

If you submit a validly executed proxy card or voting instruction form but do not specify how you want to vote your shares with respect to the election of directors, then your shares will be voted in line with the Board’s recommendation with respect to the proposal, i.e., FOR the 11 nominees proposed by your Board and named in this Proxy Statement. Should any of your Board’s nominees be unable or unwilling to stand for election at the time of the Annual Meeting, the proxies named on your proxy card 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 Board’s nominees would not be able to serve as a director if elected.

 

 

The Board of Directors unanimously recommends a vote FOR ALL the following nominees

at the 2020 Annual Meeting: Brendan M. Cummins, William G. Dempsey, Jay V.  Ihlenfeld,

Susan L. Main, Guillermo Novo, Jerome A. Peribere, Craig A. Rogerson, Mark C. Rohr,

Ricky C. Sandler, Janice J. Teal and Kathleen Wilson-Thompson.

 

 

 

 

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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: 68

  

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 Sweden and is a member of the Remuneration Committee, and serves on the board of Tom Murphy Car Sales in Ireland. Up until March 2019, he was a board member of Nanoco Group PLC based in Manchester UK where he served as the Senior Independent Director and served as a member of the Audit Committee and Chair of the Remuneration Committee.

 

Non-Profit Boards:

Mr. Cummins currently serves as a board member and Vice Chairman of Respond Support Ireland, a social housing and 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

*  Environmental, Health, Safety and Quality

 

 

 

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  WILLIAM G. DEMPSEY

 

 

 

LOGO

 

Principal Occupation:

Former Executive Vice

President of Global

Pharmaceuticals at Abbott

Laboratories

 

Director Since: 2016

Age: 68

  

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 Chairman of the Board of Hill-Rom Holdings, Inc., where he is Chair of the Mergers and Acquisitions Committee and a member of the Nominating and Governance Committee. In the past five years, Mr. Dempsey has served on the boards of Landauer, Inc., Hospira, Inc. and Nordion Inc. From March 2018 to July 2018, Mr. Dempsey served as Executive Chairman of Hill-Rom Holdings, 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

*  Governance and Nominating

 

 

 

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  JAY V. IHLENFELD

 

        

 

LOGO

 

Principal Occupation:

Former Senior Vice President

of 3M Company

 

Director Since: 2017

Age: 67

 

Lead Independent Director

  

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, Quality and Public Policy Committee.

 

Non-Profit Boards:

Dr. Ihlenfeld is a director of the Minnesota Orchestra and is currently serving as Treasurer. Dr. Ihlenfeld is also Vice President and Trustee of Phi Delta Theta Foundation.

 

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:

*  Audit

*  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: 61

  

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.

 

Public Company Boards:

Ms. Main serves on the Board of Garrett Motion Inc., where she serves on the Audit and Nominating and Corporate Governance committees.

 

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. She also brings experience gained from service on the board of directors of another public company.

 

Board Committees:

*  Audit (Chair)

*  Governance and Nominating

 

 

 

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  GUILLERMO NOVO

 

  

 

LOGO

 

Principal Occupation:

Incoming Chairman of the

Board and Chief Executive Officer of Ashland Global Holdings Inc.

 

Director Since: 2019

Age: 57

  

Professional Experience:

Mr. Novo recently served as the President and CEO of Versum Materials, Inc., and was a member of the board of directors. Previously, Mr. Novo served as Executive Vice President, Materials Technologies of Air Products and Chemicals, Inc. (“Air Products”) since October 2014. He joined Air Products in September 2012 as Senior Vice President Electronics, Performance Materials, Strategy and Technology. Prior to joining Air Products, Mr. Novo was employed by the Dow Chemical Company where he most recently served as group vice president, Dow Coating Materials, a large specialty chemicals business. He began his career in 1986 with Rohm and Haas Company (which merged with Dow in 2009) and over the next 24 years progressed through a variety of commercial, marketing, and general management positions, living in South America, the United States and Asia. In 1998, Mr. Novo was named a vice president at Rohm and Haas, and in 2006 he became a corporate officer and one of five group executives on the corporate leadership team responsible for driving the overall strategy for the company.

 

Education:

Mr. Novo holds a Bachelor of Science degree in industrial engineering from the University of Central Florida and a Masters of Business Administration degree from the University of Michigan.

 

Public Company Boards:

Mr. Novo has served as a director of Ashland’s Board since May 22, 2019, serving on the Audit Committee until October 8, 2019 and continuing to serve on the Environmental, Health, Safety and Quality Committee until December 31, 2019. Within the past five years, Mr. Novo also served as a director of Versum Materials, Inc. and Bemis Company, where he served on the Compensation and Nominating and Governance committees.

 

Director Qualifications:

As the incoming Chairman and Chief Executive Officer of Ashland and as the former President and Chief Executive Officer of Versum Materials, Inc., a leading electronic materials company, Mr. Novo brings over thirty years of leadership experience in the specialty materials and specialty chemicals industries. With his public company and leadership roles, he brings significant experience and knowledge to the Board in the areas of business strategy, business operations, manufacturing, safety, management, finance, accounting, risk oversight and corporate governance. Mr. Novo also brings substantial experience gained from service on the board of directors of other public companies.

 

 

 

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  JEROME A. PERIBERE

 

  

 

LOGO

 

Principal Occupation:

Former President and Chief

Executive Officer of

Sealed Air Corporation

 

Director Since: 2018

Age: 65

  

Professional Experience:

Mr. Peribere was the President and Chief Executive Officer of Sealed Air Corporation (“Sealed Air”) from March 2013 until his retirement in December 2017. Prior to this 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 board member of Xylem Inc. where he serves on the Finance, Innovation & Technology Committee and chairs the Leadership Development and Compensation Committee. Mr. Peribere previously served as a director of Sealed Air and BMO Financial Corporation.

 

Director Qualifications:

As the former 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.

 

Board Committees:

*  Compensation

*  Governance and Nominating

 

 

 

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  CRAIG A. ROGERSON

 

  

 

LOGO

 

Principal Occupation:

Chairman, President and Chief Executive Officer of Hexion Inc.

 

Director Since: 2019

Age: 63

  

Professional Experience:

Mr. Rogerson is the current Chairman, President and Chief Executive Officer of Hexion Inc. In April of 2019, Hexion filed a petition of voluntary reorganization under Chapter 11 and successfully completed its financial restructuring in July of 2019. Prior to this position, Mr. Rogerson served as Chairman, President and Chief Executive Officer of Chemtura Corporation (“Chemtura”) from December 2008 until April 2017. In March 2009, Chemtura filed a petition of voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code and successfully completed its financial restructuring in November of 2010. Prior to joining Chemtura, Mr. Rogerson served as President, Chief Executive Officer and Director of Hercules Incorporated (“Hercules”) from December 2003 until November 2008 when Hercules was acquired by Ashland. Mr. Rogerson joined Hercules in 1979 and served in a number of management positions before leaving the company to serve as President and Chief Executive Officer of Wacker Silicones Corporation in 1997. In May 2000, Mr. Rogerson rejoined Hercules and was named President of its BetzDearborn Division in August 2000. Prior to being named Chief Executive Officer of Hercules in December 2003, Mr. Rogerson held a variety of senior management positions with the company.

 

Education:

Mr. Rogerson received a Chemical Engineering degree from Michigan State University.

 

Public Company Boards:

Mr. Rogerson is a director of PPL Corporation where he serves on the Audit and Executive Committees and chairs the Compensation, Governance and Nominating Committee. Mr. Rogerson previously served as a director of Chemtura Corporation and Hercules.

 

Non-Profit Boards:

Mr. Rogerson currently serves on the boards of the American Chemistry Council, the Society of Chemical Industry, and the Pancreatic Cancer Action Network. He also serves on the Advisory board of the Michigan State University Chemical Engineering & Materials Science College.

 

Director Qualifications:

As the President and Chief Executive Officer of a specialty chemicals company, Mr. Rogerson 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.

 

Board Committees:

*  Compensation

*  Environmental, Health, Safety and Quality

 

 

 

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  MARK C. ROHR

 

  

 

LOGO

 

Principal Occupation:

Executive Chairman and Former Chief

Executive Officer of

Celanese Corporation

 

Director Since: 2008

Age: 68

  

Professional Experience:

Mr. Rohr is the Executive Chairman, and the former Chief Executive Officer, of Celanese Corporation, a technology and specialty materials company. He served in these roles from April 2012 until May 2019. 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:

Mr. Rohr serves as Executive Chairman of Celanese Corporation. Mr. Rohr previously served as the Chairman and Chief Executive Officer of Albemarle Corporation.

 

Non-Profit Boards:

Mr. Rohr previously served on the Executive Committee of the American Chemistry Council. He serves on the boards of Commit Partnership and the Holdsworth Center, both focused on addressing the needs of public education.

 

Director Qualifications:

As an Executive Chairman and former 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:

*  Compensation

*  Governance and Nominating (Chair)

 

 

 

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  RICKY C. SANDLER

 

 

 

LOGO

 

Principal Occupation:

Founder and Chief Executive

Officer/Chief Investment

Officer of Eminence Capital

 

Director Since: N/A

Age: 50

  

Professional Experience:

In 1999 Mr. Sandler founded Eminence Capital, LP (“Eminence”), a global investment management organization with more than $7 billion under management. As the Chief Executive Officer and Chief Investment Officer of Eminence, Mr. Sandler is responsible for managing a team of investment professionals and a diversified portfolio across most sectors of the equity market. Prior to launching Eminence, Mr. Sandler was co-founder and co-general partner of Fusion Capital Management, LLC. Previously, he was a research analyst covering a wide range of industries and companies for Mark Asset Management, where he began his investing career in 1991. Currently, he serves as a member of the board of directors of the University of Wisconsin Foundation and as a member of its Investment Committee. Mr. Sandler also sits on the boards of several private companies.

 

Education:

Mr. Sandler holds a Bachelor of Business Administration degree in Accounting and Finance from the University of Wisconsin. He has also received his Chartered Financial Analyst designation from the CFA Institute.

 

Non-Profit Boards:

Mr. Sandler serves as a board member of the University of Wisconsin Foundation, and on the boards of several other smaller non-profit companies.

 

Director Qualifications:

Mr. Sandler brings more than 25 years of business and investment experience to the Board. He brings a unique institutional investor perspective, including strong relationships with other investors and stockholders, to the Board and can provide critical insight on issues most important to Ashland’s stockholders. As a result of his role at Eminence, he brings extensive experience and knowledge in the areas of finance, business strategy, accounting, risk oversight and corporate governance.

 

 

  JANICE J. TEAL

 

        

 

LOGO

 

Principal Occupation:

Former Group Vice

President and Chief

Scientific Officer for

Avon Products Inc.

 

Director Since: 2012

Age: 67

  

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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  KATHLEEN WILSON-THOMPSON

 

   

 

LOGO

 

Principal Occupation:

Executive Vice President and

Global Chief Human

Resources Officer of

Walgreens Boots Alliance Inc.

 

Director Since: 2017

Age: 62

  

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 currently serves as a board member of Tesla Inc. where she is a member of the Compensation and Nominating and Governance Committees. Ms. Wilson-Thompson previously served as a director of Vulcan Materials Company where she was the chair of the Safety, Health and Environmental Committee and served on the Compensation Committee.

 

Non-Profit Boards:

Ms. Wilson-Thompson serves on the Board of the University of Michigan Alumni Association, is on the board of 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:

*  Compensation (Chair)

*  Governance and Nominating

 

 

 

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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, 2019, for Ashland’s non-employee directors, other than Mr. Wulfsohn, whose compensation is reflected in the “Summary Compensation Table” below. Mr. Wulfsohn, Chairman of the Board and Chief Executive Officer, receives no compensation in his role as a director of Ashland. Effective December 31, 2019, upon his official appointment as Chairman of the Board and Chief Executive Officer of Ashland, Mr. Novo will no longer receive compensation in his role as a director of Ashland. Mr. Sandler is a director nominee and therefore received no compensation from Ashland in fiscal 2019.

 

Name

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

 

Brendan M. Cummins

  

 

 

 

105,653

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

215,653

 

 

           

 

William G. Dempsey

  

 

 

 

100,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

210,000

 

 

           

 

Jay V. Ihlenfeld

  

 

 

 

122,833

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

232,833

 

 

           

 

Susan L. Main

  

 

 

 

120,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

230,000

 

 

           

 

Guillermo Novo*

  

 

 

 

35,989

 

 

  

 

 

 

79,021

 

 

  

 

 

 

0

 

 

  

 

 

 

115,010

 

 

           

 

Jerome A. Peribere

  

 

 

 

100,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

210,000

 

 

           

 

Barry W. Perry**

  

 

 

 

53,750

 

 

  

 

 

 

0

 

 

  

 

 

 

0

 

 

  

 

 

 

53,750

 

 

           

 

Craig A. Rogerson***

  

 

 

 

64,444

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

174,444

 

 

           

 

Mark C. Rohr

  

 

 

 

109,944

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

219,944

 

 

           

 

Janice J. Teal

  

 

 

 

115,000

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

225,000

 

 

           

 

Michael J. Ward (3)****

  

 

 

 

64,286

 

 

  

 

 

 

110,000

 

 

  

 

 

 

29,343

 

 

  

 

 

 

203,629

 

 

           

 

Kathleen Wilson-Thompson

  

 

 

 

113,694

 

 

  

 

 

 

110,000

 

 

  

 

 

 

0

 

 

  

 

 

 

223,694

 

 

 

 

*

Mr. Novo joined Ashland’s Board on May 22, 2019.

 

**

Mr. Perry retired from the Ashland Board on February 8, 2019 at the 2019 Annual Meeting.

 

***

Mr. Rogerson joined the Board on February 8, 2019.

 

****

Mr. Ward retired from the Board on May 22, 2019.

 

(1)

For Mr. Cummins, the amount provided reflects the pro-rated fee for service as G&N Committee chair through February 8, 2019. For Mr. Ihlenfeld, the amount provided reflects the pro-rated fee for service as the Lead Independent Director beginning February 8, 2019. For Mr. Novo, the amount reflects the pro-rated annual cash retainer beginning May 22, 2019. For Mr. Perry, the amount reflects the pro-rated annual cash retainers for service on the Board, service as the Compensation Committee chair, and service as the Lead Independent Director through February 8, 2019. For Mr. Rogerson, the amount reflects the pro-rated annual cash retainer beginning February 8, 2019. For Mr. Rohr, the amount reflects

 

 

 

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the pro-rated fee for service as G&N Committee chair beginning February 8, 2019. For Mr. Ward, the amount reflects the pro-rated annual cash retainer through May 22, 2019. For Ms. Wilson-Thompson, the amount reflects the pro-rated fee for service as Compensation Committee chair beginning February 8, 2019. For fiscal 2019, Messrs. Perry and Ward and Dr. Teal deferred all or a portion of their fees into the Directors’ Deferral Plan. Mr. Perry deferred $28,125, Mr. Ward deferred $64,286, and Dr. Teal deferred $115,000.

 

(2)

The values in column (c) represent the aggregate grant date fair value of restricted stock unit awards granted in fiscal 2019 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 Messrs. Cummins and Novo, each continuing non-employee director received a grant of 1,413 restricted stock units of Ashland Common Stock in the Directors’ Deferral Plan on February 8, 2019. Mr. Cummins received a grant of 1,413 restricted stock units directly on February 8, 2019. The grant date fair value per share of each restricted stock unit was $77.85 per share of Ashland Common Stock. Mr. Novo joined the Board on May 22, 2019 and received 1,088 restricted stock units on such date, which was based on the grant date fair value of $72.63 per share of Ashland Common Stock.

 

(3)

Mr. Ward retired from Ashland’s Board on May 22, 2019. Due to his continued service past his desired retirement date in order to ensure a smooth transition to a new Board member, the Board decided to accelerate a pro-rated portion of his 2019 restricted stock unit grant in lieu of Mr. Ward forfeiting the entire grant. As such, Mr. Ward received 404 common stock units in the Directors’ Deferral Plan after the acceleration with an additional incremental fair value of $29,343 based on the stock price of $72.63 per share of Ashland Common Stock on May 22, 2019, and forfeited the remaining 1,014 unvested restricted stock units.

The following table identifies the aggregate number of unvested stock awards for each non-employee director outstanding as of September 30, 2019, other than Mr. Wulfsohn, whose unvested stock awards are reflected in the “Outstanding Awards at Fiscal Year-End” table below, and Messrs. Perry and Ward, who retired on February 8, 2019 and May 22, 2019, respectively, and did not hold any shares of restricted Ashland Common Stock or unvested stock units on September 30, 2019.

 

Name

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

 

Brendan M. Cummins

  

 

 

 

0

 

 

  

 

 

 

18,090

 

 

     

 

William G. Dempsey

  

 

 

 

1,883

 

 

  

 

 

 

1,427

 

 

     

 

Jay V. Ihlenfeld

  

 

 

 

1,883

 

 

  

 

 

 

1,427

 

 

     

 

Susan L. Main

  

 

 

 

1,883

 

 

  

 

 

 

1,427

 

 

     

 

Guillermo Novo

  

 

 

 

0

 

 

  

 

 

 

1,088

 

 

     

 

Jerome A. Peribere

  

 

 

 

1,883

 

 

  

 

 

 

1,427

 

 

     

 

Craig A. Rogerson

  

 

 

 

0

 

 

  

 

 

 

1,427

 

 

     

 

Mark C. Rohr

  

 

 

 

1,883

 

 

  

 

 

 

1,427

 

 

     

 

Janice J. Teal

  

 

 

 

1,883

 

 

  

 

 

 

1,427

 

 

     

 

Kathleen Wilson-Thompson

  

 

 

 

1,883

 

 

  

 

 

 

1,427

 

 

 

 

 

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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 the section entitled “Restricted Stock Units” of this Proxy Statement.

Ashland’s non-employee director compensation program is designed to attract and retain highly qualified directors and align their interests with those of our stockholders. The G&N Committee reviews the director compensation program on an annual basis and recommends proposed changes for approval by the Board. As part of this review, the G&N Committee considers the significant amount of time expended, and the skill level required, by each non-employee director in fulfilling his or her duties on the Board, each director’s role and involvement on the Board and its committees and the market compensation practices and levels of our peer companies.

Annual Retainer

Ashland provides annual retainers of (a) $100,000 for each director, (b) an additional $35,000 for the Lead Independent Director, (c) an additional $20,000 for the Chair of the Audit Committee and (d) an additional $15,000 for other committee chairs. Non-employee directors may elect to receive part or all of their annual retainers in cash, shares of Ashland Common Stock, or as deferrals 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 a hypothetical Ashland Common Stock Fund or invested under the other available investment options under the Directors’ Deferral Plan. The payout of the amounts deferred occurs upon termination of service by the director. Directors may elect to receive the payout in a single lump sum or in installments not to exceed 15 years. Upon a “change in control” of Ashland (as defined in the Directors’ Deferral Plan), deferred amounts in the directors’ deferral accounts will be distributed pursuant to each director’s election and valued at the time of the distribution.

Restricted Stock Units

Ashland provides 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).

In 2019, each continuing non-employee director (other than Mr. Cummins) received restricted stock units in the Directors’ Deferral Plan. The restricted stock units vest one year after date of grant. 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 part of their vested units invested under the available investment options under the Directors’ Deferral Plan, other than the Ashland Common Stock Fund, and/or paid in cash after the director terminates from service. Effective as of May 22, 2019, pursuant to an amendment to the Directors’ Deferral Plan, directors can no longer elect to have their restricted stock units invested in any investment option other than the Ashland Common Stock Fund and the restricted stock units will be paid in stock after the director terminates from service. In addition, following such amendment, restricted stock units will be granted under the stockholder approved Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan rather than the Directors’ Deferral Plan.

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 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, (iii) a 50% change in the beneficial ownership of Ashland or (iv) voluntary early retirement to enter governmental service. His annual award will continue to be granted directly (and not through deferral).

 

 

 

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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 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 September 30, 2019, each of Ashland’s current non-employee directors who is currently required to meet the minimum stock ownership guidelines had attained the minimum stock ownership levels. Ms. Main and Ms. Wilson-Thompson joined the Board in 2017 and will not be required to meet the minimum stock ownership guidelines until 2022; Mr. Peribere joined the Board in 2018 and will not be required to meet the minimum stock ownership guidelines until 2023; and Mr. Rogerson joined the Board in 2019 and will not be required to meet the minimum stock ownership guidelines until 2024. Mr. Novo, as the incoming Chairman and Chief Executive Officer, will have five years to meet the officer stock ownership guidelines discussed in the “Compensation Discussion and Analysis” section of this Proxy Statement.

 

 

 

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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’s 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.

 

   

On December 4, 2018, the Board adopted an amendment to the Corporate Governance Guidelines providing that the Chair of each of the Compensation Committee and G&N Committee shall rotate at least once every four years.

 

   

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. Ashland has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act.

 

   

Only independent directors, as defined in the Standards, may serve on the Audit Committee, G&N Committee, and Compensation Committee of the Board. Upon his election as the next Chairman and Chief Executive Officer of Ashland, Mr. Novo was determined to no longer be independent and therefore stepped down from his position on the Audit Committee on October 8, 2019.

 

   

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

Policy Regarding Employee, Officer and Director Hedging and Pledging

Under Ashland’s insider trading policy, directors, officers, employees and certain persons or entities related to these individuals, are prohibited from purchasing any financial instruments that are designed to hedge or offset any decrease in the market value of equity securities of Ashland granted to or held by such covered persons. Such financial instruments include, but are not limited to, prepaid variable forward contracts, equity swaps, collars, and exchange funds.

Additionally, all directors and officers of Ashland are prohibited from, directly or indirectly, pledging equity securities of Ashland. Pledging includes, but is not limited to, the creation of any form of pledge, security interest, deposit, lien or other hypothecation, including the holding of shares in a margin account.

 

 

 

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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 and when Mr. Novo assumes the position of Chairman and Chief Executive Officer. 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. Ihlenfeld 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;

 

   

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;

 

 

 

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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” below.

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 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.

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 2019 were Kathleen Wilson-Thompson (Chair), Jerome A. Peribere, Mark C. Rohr (beginning May 22, 2019), Craig A. Rogerson (beginning February 8, 2019), Janice J. Teal, Michael J. Ward (retired effective May 22, 2019) and Barry W. Perry (retired effective February 8, 2019). 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

 

 

 

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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. On December 4, 2018, the Board adopted an amendment to the Audit Committee Charter, giving the Audit Committee responsibility for reviewing and assisting the Board in its oversight of the Company’s capital allocation framework, including prioritization, significant decisions and risk considerations relating to the Company’s financial resources, capital structure and investments and uses of cash.

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 2019, as well as when a new director joined the Board. 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 part of its assessment of Mr. Rogerson’s independence, the Board evaluated the ongoing pension payments Mr. Rogerson receives in respect of his former employment at Hercules, which was acquired by Ashland in 2008. Hercules’ pension obligations were assumed by Valvoline as part of the 2017 spin-off of Valvoline from Ashland. Mr. Rogerson receives approximately $200,000 annually pursuant to a qualified defined benefit plan and a non-qualified supplemental early retirement plan in respect of his former employment at Hercules.

As a result of the review, Ashland’s Board affirmatively determined that Messrs. Cummins, Dempsey, Peribere, Rogerson, Rohr and Sandler, and 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, and Mr. Novo, Ashland’s incoming Chief Executive Officer, are the only directors 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 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:

Craig A. Rogerson, a director of Ashland, is the Chairman, President and Chief Executive Officer of Hexion Inc. (“Hexion”). During fiscal 2019, Ashland paid Hexion approximately $20,493,000 for certain products and/or services, of which approximately $17 million related to the Composites business which was sold on August 30, 2019, and Hexion paid Ashland approximately $712,000 for certain products and/or services.

Mark C. Rohr, a director of Ashland, is the Executive Chairman and former Chief Executive Officer of Celanese Corporation (“Celanese”). During fiscal 2019, Ashland paid Celanese approximately $2,660,000, and Celanese paid Ashland approximately $6,422,000, for certain products and/or services.

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.

 

 

 

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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, 2018, nor is there any currently proposed transaction, in which (i) Ashland was or is to be a participant, (ii) the amount involved exceeded or will exceed $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 any 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 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

 

 

 

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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.

Delinquent Section 16(a) Reports

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 during fiscal 2019, other than (1) a late Form 4/A for Keith Silverman reflecting his exercise of stock appreciation rights; (2) a Form 3/A for Osama Musa reflecting grants erroneously omitted from his Form 3; and (3) a late Form 4 for Osama Musa reflecting the vesting of his cash-settled RSUs, each due to an administrative error.

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.

Attendance at Annual Meeting

Ashland has a policy and practice of strongly encouraging all directors to attend the Annual Meeting. However, due to the contested election of directors and delay of the Annual Meeting to February 2019, most of Ashland’s then current directors telephonically attended the Annual Meeting. Messrs. Dempsey, Peribere and Perry were unavailable to attend the Annual Meeting on the delayed date.

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, 2020, to be considered by the G&N Committee for inclusion as a director nominee for the 2021 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

 

 

 

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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.

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 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 be 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;

 

 

 

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  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), 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;

 

   

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 Ashland’s 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; Compensation Committee; Environmental, Health, Safety and Quality Committee; and Governance and Nominating Committee. All Committees are composed entirely of independent directors, other than the Environmental, Health, Safety and Quality Committee (the “EHS&Q Committee”). Mr. Novo, who is no longer independent as of his election as the new Chairman and Chief Executive Officer on October 8, 2019, will continue to serve on the EHS&Q Committee until he assumes the position of Chairman and Chief Executive Officer on December 31, 2019. He served on the Audit Committee from May 22, 2019 until October 8, 2019. During fiscal 2019, 13 meetings of the Board were held. Each incumbent 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, 2019.

 

Audit

 

Compensation

 

Environmental, Health,

Safety and Quality

 

Governance and

Nominating

 

Brendan M. Cummins

 

 

Jerome A. Peribere

 

 

Brendan M. Cummins

 

 

William G. Dempsey

 

William G. Dempsey

 

 

Craig A. Rogerson

 

 

Jay V. Ihlenfeld

 

 

Susan L. Main

 

Jay V. Ihlenfeld

 

 

Mark C. Rohr

 

 

Guillermo Novo

 

 

Jerome A. Peribere

 

Susan L. Main*

 

 

Janice J. Teal

 

 

Craig A. Rogerson

 

 

Mark C. Rohr*

 

 

Kathleen Wilson-Thompson*

 

 

Janice J. Teal*

 

 

Kathleen Wilson-Thompson

 

 

*

Chair

On December 4, 2018, the Board adopted an amendment to the Corporate Governance Guidelines, providing that the Chair of each of the Compensation Committee and G&N Committee shall rotate at least once every four years.

On December 4, 2018, the Board also adopted an amendment to the Audit Committee Charter, giving the Audit Committee responsibility for reviewing and assisting the Board in its oversight of the Company’s capital allocation framework, including prioritization, significant decisions and risk considerations relating to the Company’s financial resources, capital structure and investments and uses of cash.

In March 2019, the Board appointed an ad-hoc special committee to consider CEO succession, including determining the skills and experience desired in the next Chief Executive Officer and to develop a position specification. The committee was also charged with reviewing any potential candidates. In discharging its responsibilities, the committee retained outside consultants and provided its recommendation to the G&N Committee.

Following are descriptions of the primary responsibilities of each committee and the number of meetings held during fiscal 2019. Each committee’s charter is available on Ashland’s website (http://investor.ashland.com).

 

 

 Audit Committee

  

 

Number of Meetings in Fiscal 2019: 9

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).

 

 

 

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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.

   

Reviews and oversees Ashland’s capital allocation framework, including prioritization, significant decisions and risk considerations relating to Ashland’s financial resources, capital structure and investments and uses of cash.

   

Reviews Ashland’s enterprise risk assessment and risk management policies, including Ashland’s major enterprise and financial risk exposures and steps taken by management to monitor and mitigate such exposure.

   

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.

 

 

 Compensation Committee

  

 

Number of Meetings in Fiscal 2019: 7

Summary of Responsibilities

   

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

   

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 corporate officers.

   

Oversees the execution of Chief Executive Officer and senior management development and 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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 Environmental, Health, Safety and Quality Committee

  

 

Number of Meetings in Fiscal 2019: 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 2019: 7

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 Ashland’s Certificate of Incorporation and By-laws.

   

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.

 

 

 

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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 for fiscal 2019, 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

 

Vito J. Consiglio**

  

 

Senior Vice President, Chief Commercial Officer

 

Osama M. Musa

  

 

Senior Vice President, Chief Technology Officer

 

 

*

On October 8, 2019, Ashland announced that the Board elected Guillermo Novo to succeed William Wulfsohn as the Company’s Chief Executive Officer and Chairman of the Board, effective December 31, 2019. Mr. Novo’s compensation is described in the Form 8-K filed by Ashland on October 8, 2019 (SEC File No. 333-211719), which is incorporated herein by reference.

 

**

On December 4, 2019, Ashland and Mr. Consiglio agreed that Mr. Consiglio will leave the Company on January 31, 2020 due to the elimination of the Chief Commercial Officer position.

FISCAL YEAR 2019 ASHLAND PERFORMANCE

Fiscal year 2019 was a year of important gains in the context of difficult external conditions. From a financial perspective, Ashland faced challenging end market conditions and a stronger U.S. dollar. We implemented an EBITDA margin acceleration program to reduce layers, increase operational agility, and improve our competitiveness by reducing our fixed costs by $120 million on a run-rate basis by the end of calendar year 2019. The execution of this program contributed to the Company’s results in fiscal 2019:

 

   

Operating income was $166 million compared to $102 million a year ago.

 

   

Income from continuing operations was $24 million, versus $19 million in fiscal 2018.

 

   

Net income attributable to Ashland was $505 million compared to $114 million in fiscal 2018.

 

   

Adjusted EBITDA was $532 million, compared to $515 million in fiscal 2018.

 

   

In August, Ashland divested the Composites business and Marl BDO facility. Proceeds from this transaction and ongoing cash flow generation enabled Ashland to return over $260 million to shareholders in fiscal 2019 through both share repurchases and dividends, while reducing debt by $940 million.

As part of the EBITDA margin acceleration program, Ashland remains on track to achieve its target of $120 million in total run-rate savings by end of calendar year 2019.

 

 

 

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We expect to see continued improvement in fiscal year 2020 and beyond as we realize the benefits from the EBITDA margin acceleration program and work to achieve our full potential by delivering greater revenue growth, margin expansion and cash generation.

 

(In millions)

   2019      2018  

 

Sales

     

 

Specialty Ingredients

  

 

$

 

2,382

 

 

  

 

$

 

2,470

 

 

 

Intermediates and Solvents

  

 

 

 

111

 

 

  

 

 

 

119

 

 

 

Operating income

     

 

Specialty Ingredients

  

 

$

 

272

 

 

  

 

$

 

314

 

 

 

Intermediates and Solvents

  

 

 

 

16

 

 

  

 

 

 

17

 

 

 

EBITDA^

     

 

Specialty Ingredients

  

 

$

 

507

 

 

  

 

$

 

560

 

 

 

Intermediates and Solvents

  

 

 

 

29

 

 

  

 

 

 

31

 

 

 

Adjusted EBITDA*^

     

 

Specialty Ingredients

  

 

$

 

558

 

 

  

 

$

 

574

 

 

 

 

*

There were no key items for the I&S segment in fiscal 2019 and 2018.

 

^

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

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 stockholders’ interests. We strive to provide our NEOs with a compensation package that is aligned with the median of our Compensation Peer Group (as defined below), with the expectation, based on a comparison to executives in the Compensation Peer Group and a review of other competitive market information, 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 incentive opportunities of our NEOs to determine whether these programs competitively reward our NEOs for their services.

 

 

 

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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 each 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 so that unnecessary or excessive risk is 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 stretch yet achievable, based on an annual assessment of business conditions for the performance period.

 

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”).

 

 

 

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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 or Reviewed   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   Adjusted EBITDA*
and FCF* with a
safety modifier
 

Adjusted Earnings per Share* & relative Total Shareholder Return (“TSR”)**

 

  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

 

 

*

Adjusted EBITDA and FCF, in each case, as used for purposes of our Annual Incentive Plan, and Adjusted Earnings per Share, as used for purposes of our Long-Term Incentive Performance Plan, are non-GAAP measures. A reconciliation of these measures to results in accordance with GAAP can be found in Appendix A.

 

**

Beginning in fiscal 2020, the metrics used for PUs will be return on net assets and relative TSR. For a discussion of the change, see the “Fiscal Year 2020 Compensation Decisions” section of this CD&A.

 

 

 

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Overall Pay Mix

As illustrated in the charts below, we place a significant emphasis on performance-based compensation (annual 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.

Fiscal Year 2019 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 in limited circumstances in evaluating our stock performance.

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 target opportunities and long-term incentive awards

 

    Assess competitiveness of total direct compensation

 

    Determine form and mix of equity

 

    Input to designing compensation plans, benefits and perquisites

Our Compensation Committee annually reviews the Compensation Peer Group and determines, with input from its independent compensation consultant, whether any changes are appropriate. During this annual review, the Compensation Committee considers whether the Compensation Peer Group companies remain appropriate from a business and talent perspective.

 

 

 

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The fiscal 2019 Compensation Peer Group used for market assessment of compensation included the following companies:

 

 Company  

Revenue   

as of 6/30/19   

($M)   

  Company  

Revenue

as of 6/30/19
($M)

 

Eastman Chemical Company

 

 

$9,924

 

 

International Flavors & Fragrances, Inc.

 

 

$4,344

 

Huntsman Corporation

 

 

$9,118

 

 

Polyone Corporation

 

 

$3,532

 

Westlake Chemical Corporation

 

 

$8,510

 

 

Albemarle Corporation

 

 

$3,385

 

Celanese Corporation

 

 

$6,991

 

 

Cabot Corporation

 

 

$3,369

 

Olin Corporation.

 

 

$6,789

 

 

H.B. Fuller Company

 

 

$3,001

 

The Chemours Company

 

 

$6,284

 

 

 

Ashland Global Holdings Inc.

 

 

 

$2,600

 

RPM International Inc.

 

 

$5,521

 

 

 

New Market Corporation

 

 

 

$2,237

 

FMC Corporation

 

 

$4,812

 

 

 

W.R. Grace & Co.

 

 

 

$1,970

 

Axalta Coating Systems Ltd.

 

 

$4,643

 

 

 

Element Solutions, Inc.

 

 

 

$1,928

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 2020, the Compensation Committee revised the Compensation Peer Group to be used for the market assessment of fiscal year 2020 compensation. The Compensation Committee approved revisions to the Compensation Peer Group so that it more accurately reflects the industries in which Ashland competes and Ashland’s financial size after the disposition of its Composites business and Intermediates and Solvents facility in Marl, Germany (the “Marl facility”). Upon advice from its independent compensation consultant, the Compensation Committee removed three and added five peer companies due to size considerations and M&A activity.

Companies Removed:

 

   

Eastman Chemical Company

 

   

Huntsman Corporation

 

   

Westlake Chemical Corporation

Companies Added:

 

   

Stepan Company

 

   

Kraton Corporation

 

   

Innospec Inc.

 

   

Sensient Technologies Corporation

 

   

Ingevity Corporation

 

 

 

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Beginning in fiscal year 2020, the Compensation Peer Group will include the following companies:

 

Company  

Revenue

as of
6/30/19
($M)

    Company  

Revenue

as of
6/30/19
($M)

 

Celanese Corporation

 

$

6,991

 

 

H.B. Fuller Company

 

$

3,301

 

Olin Corporation

 

$

6,789

 

 

Ashland Global Holdings Inc.

 

$

2,600

 

The Chemours Company

 

$

6,284

 

 

NewMarket Corporation

 

$

2,237

 

RPM International Inc.

 

$

5,521

 

 

Stepan Company

 

$

1,984

 

FMC Corporation

 

$

4,812

 

 

W.R. Grace & Co.

 

$

1,970

 

Axalta Coating Systems Ltd

 

$

4,643

 

 

Kraton Corporation

 

$

1,966

 

International Flavors & Fragrances Inc.

 

$

4,344

 

 

Element Solutions Inc.

 

$

1,928

 

PolyOne Corporation

 

$

3,532

 

 

Innospec Inc.

 

$

1,505

 

Albemarle Corporation

 

$

3,385

 

 

Sensient Technologies Corporation

 

$

1,378

 

Cabot Corporation

 

$

3,369

 

 

Ingevity Corporation

 

$

1,175

 

Performance Peer Group

In fiscal year 2019 the Compensation Committee utilized 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, reflects Ashland’s performance compared to the broader stock market and provides transparency to our investors and incentive plan participants. Our Performance Peer Group is used solely for assessing relative TSR performance for our PUs.

Beginning in fiscal year 2020, in light of Ashland’s size following the sale of the Composites business and Marl facility, the Performance Peer Group will be the S&P 400 index, which will be used for assessing relative TSR performance for our PUs. This index will reflect performance compared to the broader stock market and provide transparency to investors and incentive plan participants. Additionally, the use of this index is consistent with Ashland’s inclusion in the S&P 400 index.

FISCAL YEAR 2019 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.

Overview of CEO Compensation for fiscal 2019

 

CEO Compensation in fiscal 2019

•   No increase in base salary

•   No increase in annual target incentive compensation opportunity

•   No increase in long-term target incentive compensation opportunity

Base Salary

The Compensation Committee considers each NEO’s experience, proficiency, performance and potential to impact future business results, the NEO’s behavior measured against key

 

 

 

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competencies and corporate values and competitiveness in the market, in making base salary decisions.

When evaluating Mr. Wulfsohn’s base salary in its annual review, the Compensation Committee reviewed the market data provided by its independent compensation consultant and, in executive session without management present, recommended no change to Mr. Wulfsohn’s base salary.

The Compensation Committee also reviewed the market data provided by its independent compensation consultant for the merit increase recommendations submitted by Mr. Wulfsohn for each NEO other than himself. Based on the information provided, the Compensation Committee approved increases for Messrs. Consiglio and Musa, reflecting the Company’s standardized annual review process. The Compensation Committee did not approve increases for Messrs. Willis and Ganz based on its review of the market data for companies of similar size after Ashland completed the disposition of its Composites business and Marl facility.

Base salaries for Messrs. Wulfsohn, Willis, Ganz, Consiglio and Musa, effective April 2019, were as follows:

 

NEO

   FY2018 Base Salary
($)
   FY2019 Base Salary
($)
   Increase
(%)

William A. Wulfsohn

    

 

1,189,000

    

 

1,189,000

    

 

0.0

%

J. Kevin Willis

    

 

598,150

    

 

598,150

    

 

0.0

%

Peter J. Ganz

    

 

561,550

    

 

561,550

    

 

0.0

%

Vito J. Consiglio

    

 

503,700

    

 

518,811

    

 

3.0

%

Osama M. Musa

    

 

480,190

    

 

494,596

    

 

3.0

%

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. Annual and long-term target incentive opportunities for Messrs. Wulfsohn, Willis and Ganz remained the same for fiscal year 2019. Mr. Consiglio’s target annual and long-term incentives were increased to align better with market competitive practice and his peers within the Company. Mr. Musa’s target annual incentive was increased to align better with market competitive practice.

 

NEO

   FY2018
Target
Annual
Incentive
(% of Base
Salary)
   FY2019
Target
Annual
Incentive
(% of Base
Salary)
   Target
Annual
Incentive
Change
(%)
   FY2018
Target LTI
(% of Base
Salary)
   FY2019
Target LTI
(% of Base
Salary)
   Target LTI
Increase
(%)

William A. Wulfsohn

    

 

120

    

 

120

    

 

0

    

 

400

    

 

400

    

 

0

J. Kevin Willis

    

 

90

    

 

90

    

 

0

    

 

225

    

 

225

    

 

0

Peter J. Ganz

    

 

75

    

 

75

    

 

0

    

 

150

    

 

150

    

 

0

Vito J. Consiglio

    

 

65

    

 

75

    

 

10

    

 

65

    

 

150

    

 

85

Osama M. Musa*

    

 

65

    

 

75

    

 

10

    

 

85

    

 

85

    

 

0

 

 

*

In November 2018, to be effective in November 2019, the Compensation Committee approved an increase to Mr. Musa’s long-term incentive opportunity from 85% to 150% to align better with internal peers.

 

 

 

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FISCAL YEAR 2019 INCENTIVE PLAN DESIGNS AND PERFORMANCE-RELATED PAYOUTS

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 for each performance metric. The Compensation Committee seeks to establish corporate performance goals that are challenging yet attainable. For our fiscal 2019 Annual Incentive Plan (the “Annual Incentive Plan”) and Long-Term Incentive Performance Plan (“LTIPP”), the Compensation Committee approved the following performance metrics in November 2018 for the reasons noted below:

 

    Performance Metric   

Reason for Selection

LOGO

Annual Incentive Plan

 

 

Adjusted Earnings Before Interest Depreciation and Amortization (“EBITDA”)*

  

 

An indicator of Ashland’s

•   Profitability

•   Ability to optimize cash flow and stockholder value

    
 

Free Cash Flow (“FCF”)*

  

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

    
 

Total Preventable Recordable Rate (“TPRR”)

  

•   Reflects the importance of safety matters within Ashland

 

 

LOGO

LTIPP

    
 

Adjusted Earnings per Share (“EPS”)*

  

•   An indicator of the profitability of Ashland

    
 

Relative Total Shareholder Return (“TSR”) Modifier

  

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

 

 

*

Adjusted EBITDA and FCF, in each case, as used for purposes of our Annual Incentive Plan, and Adjusted EPS, as used for purposes of our LTIPP, are non-GAAP measures. A reconciliation of these measures to results in accordance with GAAP can be found in Appendix A.

In November 2018, the Compensation Committee approved a cost reduction modifier to the fiscal 2019 Annual Incentive Plan for certain senior leaders, including the NEOs. This cost reduction modifier was intended to provide senior leaders with an incentive to achieve pre-determined cost reduction goals for the year. Participants’ annual incentive payouts could be modified from -20% to +20% depending on cost reductions achieved, as set forth in the table below under “Fiscal Year 2019 Annual Incentive Plan Design”.

Adjustments to Reported 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 annual operating plan. This year’s adjustments include restructuring and severance costs for significant business model redesign events, proxy contest costs, legal settlement reserves, asset impairments, tax indemnity expenses, variance to target for corporate

 

 

 

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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.

Fiscal Year 2019 Annual Incentive Plan

Fiscal Year 2019 Annual Incentive Plan Design

For fiscal 2019, the NEOs, including the CEO, participated in the Annual Incentive Plan, which is designed to reward executives for the achievement of EBITDA growth and for delivering value through FCF, with an additional safety modifier (“TPRR”) for overall employee safety performance. A team goal for senior leadership was also added to drive successful and rapid achievement of the $120 million cost reduction/redesign and to reflect the commitment to the cost reduction efforts as well as to penalize the leaders if the cost reduction targets were not met.

The fiscal 2019 Adjusted EBITDA and FCF targets were set below our fiscal 2018 actual results due to the projected disposition of the Composites business and Marl facility, but above fiscal 2018 Adjusted EBITDA and FCF adjusted for the disposition. Ashland believes the targets set are consistent with the Company’s focus on establishing stretch target level incentive plan goals.

In addition, beginning in fiscal 2019 the Compensation Committee determined that the maximum payout opportunity under the 2019 Annual Incentive Plan should be increased from 150% to 200% of target. After a careful review of market data, including our Compensation Peer Group, with the assistance of the independent compensation consultant, it was determined that a 200% maximum opportunity is more closely aligned with competitive practice. In addition, the increased maximum provides flexibility to recognize outstanding individual performance and safety goal achievement that was otherwise limited by the prior cap on annual incentive payouts. Importantly, however, the required level of financial performance needed to achieve a maximum payout has been increased over prior years and is intended to require extraordinary performance relative to the plan.

The fiscal 2019 goals for each metric were initially established as indicated below:

 

Performance Levels

   Adjusted EBITDA
($, thousands)
   FCF
($, thousands)
   Payout Curve
(%)

Threshold

    

 

501,500

    

 

162,800

    

 

50

Target

    

 

590,000

    

 

217,000

    

 

100

Maximum

    

 

678,500

    

 

260,400

    

 

200

As a result of the closing of the sale of the Composites business and Marl facility occurring five months later than anticipated due to the regulatory approval process, the EBITDA and FCF targets were adjusted downward by $6.3 million for lost transition services income with the payout curves adjusted commensurately with the new targets as follows:

 

Performance Levels

   Adjusted EBITDA
($, thousands)
   FCF
($, thousands)
   Payout Curve
(%)

Threshold

    

 

496,145

    

 

158,025

    

 

50

Target

    

 

583,700

    

 

210,700

    

 

100

Maximum

    

 

671,255

    

 

252,840

    

 

200

TPRR, the rate of injuries per 100 employees in a work year, is used as a safety modifier that may modify the total percentage of the annual incentive target amount earned by adding or

 

 

 

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deducting up to 10 percentage points based on Ashland’s TPRR performance. The safety modifier may not increase the incentive paid above 200% of target. For fiscal 2019, we set our TPRR targets so as to require improved safety relative to our fiscal 2018 targets, as we continue to emphasize focus on Zero Incident Culture within Ashland.

 

TPRR Goals

Target

16% Improvement over Three-Year

                      Rolling Avg.                    

  

Neutral

No Adjustment

  

Unacceptable

20% Increase over Three-Year

Rolling Avg.

 

.89 or less

  

 

.90—1.26

  

 

1.27 or greater

The cost reduction modifier was implemented by the Compensation Committee to award the senior leaders if they were to meet the $120 million cost reduction as publicly announced. The cost reduction modifier, when applied, may not increase the incentive paid above 200% of target. The table below reflects the goals and potential payouts of the modifier, as well as the adjusted goals for the delay of the closing of the sale of the Composites business and Marl facility and the related lost transition services income, resulting in a $9.6 million adjustment. The Compensation Committee retained the discretion to apply the modifier percentage they deem to be appropriate based on the savings achieved in fiscal 2019.

 

Cost Reduction Goals

  

Adjusted Cost Reduction Goals

  

Resulting Cost Modifier

Above $85MM

  

Above $75.3MM

  

+20%

>$72MM to $85MM

  

>$62.4MM to $75.3MM

  

+10% to +20%

$72MM

  

$62.4MM

  

0% to +10%

<$72MM to $66MM

  

<$62.4MM to $56.4MM

  

0% to -10%

<$66MM to $60MM

  

<$56.4MM to $50.4MM

  

-10% to -20%

Below $60MM

  

Below $50.4MM

  

-20%

Fiscal Year 2019 Annual Incentive Performance

The table below shows the adjusted fiscal 2019 performance compared to the pre-established financial performance targets:

 

Metric

   Weighting     Target
($, thousands)
     Adjusted
Performance
($, thousands)
     Payout (% of
Target)
    Combined Weighted
Payout (% of Target)
 

Adjusted EBITDA*

  

 

80

 

 

583,700

 

  

 

533,500

 

  

 

71.3

 

 

57.1

FCF**

  

 

20

 

 

210,700

 

  

 

124,000

 

  

 

0.0

 

 

*

See Appendix A for a reconciliation of Adjusted EBITDA to Net Income.

 

**

See Appendix A for a reconciliation of FCF to cash flows provided by operating activities from continuing operations.

The fiscal 2019 TPRR was .94 resulting in no adjustment to the target bonus opportunity.

The cost reduction amount of $71.8 million achieved in fiscal 2019 resulted in a 17.3% cost savings modifier.

 

 

 

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Fiscal Year 2019 Annual Incentive Payout

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

 

NEO

   Annual Incentive
Target Amount
($)
     Percent of Annual
Incentive
Target Earned
(%)
     Annual
Incentive
Award –
Pre-modifier

($)
     Cost Savings
Modifier*

($)
     FY2019 Annual
Incentive
Award Value

($)
 

 

William A. Wulfsohn

  

 

 

 

1,426,800

 

 

  

 

 

 

57.1

 

 

  

 

 

 

813,847

 

 

  

 

 

 

140,795

 

 

  

 

 

 

954,642

 

 

 

J. Kevin Willis

  

 

 

 

538,335

 

 

  

 

 

 

57.1

 

 

  

 

 

 

307,066

 

 

  

 

 

 

53,122

 

 

  

 

 

 

360,189

 

 

 

Peter J. Ganz

  

 

 

 

421,163

 

 

  

 

 

 

57.1

 

 

  

 

 

 

240,231

 

 

  

 

 

 

41,560

 

 

  

 

 

 

281,791

 

 

 

Vito J. Consiglio

  

 

 

 

389,108

 

 

  

 

 

 

57.1

 

 

  

 

 

 

221,947

 

 

  

 

 

 

38,397

 

 

  

 

 

 

260,344

 

 

 

Osama M. Musa

  

 

 

 

370,947

 

 

  

 

 

 

57.1

 

 

  

 

 

 

211,588

 

 

  

 

 

 

36,605

 

 

  

 

 

 

248,193

 

 

 

*

The cost savings modifier resulted in a score of 17.3%, which modified the annual incentive award payouts by the amounts indicated.

Long-Term Incentive Plan

LTI Plan Design

Our Long-Term Incentive Plan (“LTI”) for our NEOs is composed of 50% in the form of PUs, 25% in the form of SARs, and 25% in the form of RSUs. We grant executives a mix of types 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 and, in the case of PUs and RSUs, are converted to a number of shares using the average of closing prices of Ashland Common Stock for the 20 business days ended September 30 of the applicable fiscal year. The number of SARs granted is determined as described below.

PUs—Long-Term Incentive Performance Plan

In fiscal 2019, our LTIPP was designed to reward executives for achieving long-term performance that meets or exceeds adjusted 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 shares of Ashland Common Stock 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 they have no value unless our stock price appreciates during the term of the SAR. SARs expire on the tenth anniversary 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 anniversaries of the grant date. No dividends are payable on SARs. The number of SARs granted is based on the Black-Scholes value calculated using the 20-day average closing price of Ashland Common Stock prior to fiscal year end. At the time of exercise, the holder will be entitled to receive shares of Ashland Common Stock for each share subject to a SAR with a fair market value equal to the excess of the fair market value per share of Ashland Common Stock at the time of exercise over the price per share of Ashland Common Stock at the time of grant.

 

 

 

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RSUs

RSUs provide strong retentive value, while still providing alignment with stockholder value creation. Our annual RSU grants generally vest in equal installments on each anniversary of the date of grant over a three-year period. Dividend equivalents are accrued on outstanding RSUs 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 vests. At the time of vesting, one share of Ashland Common Stock is issued for each RSU and any accrued dividend equivalents are paid as additional shares of Ashland Common Stock.

Fiscal Year 2019-2021 LTIPP Design

In November 2018, the Compensation Committee reviewed and approved the performance metrics and target performance levels for the fiscal 2019-2021 LTIPP.

PUs for the fiscal 2019-2021 LTIPP will be earned based on adjusted EPS and relative TSR performance compared to goals established at the beginning of the three-year performance cycle. The adjusted EPS target is 15 percent growth relative to reported adjusted EPS for fiscal 2018. Adjusted EPS is a non-GAAP measure, and reconciliation of this measure to results in accordance with GAAP can be found in Appendix A.

 

Performance Level

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

 

Threshold

  

 

5%

 

 

25%

  

 

10%

 

 

50%

 

Target

  

 

15%

 

 

100%

  

 

20%

 

 

150%

 

Maximum

  

 

25%

 

 

200%

Adjusted EPS is measured for each of the three years of the performance period and on a cumulative three-year basis. Adjusted EPS Cumulative Annual Growth Rate (“CAGR”) performance for fiscal 2019, fiscal 2020, fiscal 2021, and cumulative fiscal 2019-2021 is equally weighted at 25% for each of these periods. Each annual measurement period is calculated independently and there is no opportunity to revise previous years’ calculations. Relative TSR is calculated by measuring the change in the market price of stock plus dividends paid over the performance period, and is measured over the three-year period and used as a modifier to the earned adjusted EPS score.

The total award earned based on the adjusted EPS score 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 25th Percentile

  

 

Decreased by 25%

 

In between 25th and 75th Percentile

  

 

No Adjustment

 

At or Above 75th Percentile

  

 

Increased by 25%

Fiscal Year 2017-2019 LTIPP Performance Results and Payment

PUs for the fiscal 2017–2019 LTIPP were earned based on adjusted EPS performance compared against goals established at the beginning of the three-year performance cycle and modified by TSR performance over such period.

 

 

 

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Adjusted EPS was measured for each of the three years and on a cumulative three-year basis. Adjusted EPS CAGR performance for FY2017, FY2018, FY2019, and FY17-FY19, was equally weighted at 25% for each of these periods. The adjusted EPS goals are set forth in the table below.

 

Performance Level

   Adjusted
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

The total award earned based on the four adjusted EPS measurements was then modified based on Ashland’s three-year relative TSR performance compared against the S&P 500 as set forth below.

 

    TSR Performance Relative to the S&P 500    

   Adjustment to Earned Award

 

At or Below 25th Percentile

  

 

Decreased by 25%

 

In between 25th and 75th Percentile

  

 

No Adjustment

 

At or Above 75th Percentile

  

 

Increased by 25%

The fiscal 2017-2019 LITPP payout of 153.9% of target was approved by the Compensation Committee in November 2019 for the performance period of October 1, 2016 to September 30, 2019. Ashland’s relative TSR performance of 36.6% for the three-year performance cycle resulted in no adjustment to final payout.

 

     

Performance   

 

  

Adjusted EPS for Incentive Compensation   

 

  

Payouts   

 

               

Levels   

 

  

Growth   

Goals   

 

  

Base   

 

  

2017   

 

  

2018   

 

  

2019   

 

  

Cumulative   

 

  

% of   

Target   

 

   

Threshold

   2.5%       $2.07       $2.13       $2.18       $2.23       $6.54       25.0%   
     5.0%       $2.07       $2.18       $2.29       $2.40       $6.87       50.0%   
   

Target

   10.0%       $2.07       $2.28       $2.51       $2.76       $7.56       100.0%   
     15.0%       $2.07       $2.39       $2.74       $3.16       $8.29       150.0%   
   

Maximum

   20.0%       $2.07       $2.49       $2.99       $3.59       $9.06       200.0%   
   

Adjusted EPS*

      $2.44       $3.57       $2.55       $8.56        
   

Resulting Annual Payout

      178%       200%       70%       167.0%        
   

3 Year Payout

 

                            153.9%   

 

 

     
 

TSR Score

 

Payout

 

   

TSR Modifier

 

36.6%  

 

0.0%  

 

 

*

See Appendix A for a reconciliation of adjusted EPS to diluted EPS from continuing operations.

 

 

 

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The Company had insufficient shares at the start of the fiscal 2017-2019 LTIPP performance period following the Valvoline transaction, and the awards were granted as “cash-settled”. Additional shares were approved at the 2018 annual stockholders’ meeting, and subsequent PUs are all stock-settled. The NEOs earned the following for the fiscal 2017-2019 performance period, resulting in the cash payouts set forth below:

 

NEO

  Number of LTIPP Units Granted   LTIPP Award
as a % of
Target
  Number of
Units
Earned (#)
  Payout Amount*
($)

 

William A. Wulfsohn

   

 

 

 

36,727

 

   

 

 

 

153.9

 

   

 

 

 

56,523

 

   

 

 

 

4,445,511

 

 

J. Kevin Willis

   

 

 

 

10,171

 

   

 

 

 

153.9

 

   

 

 

 

15,652

 

   

 

 

 

1,231,064

 

 

Peter J. Ganz

   

 

 

 

6,309

 

   

 

 

 

153.9

 

   

 

 

 

9,710

 

   

 

 

 

763,716

 

 

Vito J. Consiglio

   

 

 

 

1,130

 

   

 

 

 

153.9

 

   

 

 

 

1,739

 

   

 

 

 

136,785

 

 

Osama M. Musa

   

 

 

 

3,108

 

   

 

 

 

153.9

 

   

 

 

 

4,783

 

   

 

 

 

376,159

 

 

*

Based on the Ashland Common Stock price on November 18, 2019 of $78.65, the day the PUs vested.

Equity Awards Granted in Fiscal Year 2019

Fiscal Year 2019 Equity Grant

We typically 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 2019.

 

NEO

  Target
FY2019
Equity
Award
(as a
% of
Base
Salary)
    Target
FY2019
Equity
Award
($)
    Target
FY2019 -
2021 PU
Award
($)
    Target
FY2019 -
2021 PU
Award
(#)
    SAR
Award
($)
    SAR
Award
(#)
    RSU
Award
($)
    RSU
Award
(#)
 

 

William A. Wulfsohn

 

 

 

 

400

 

 

 

 

 

 

4,756,000

 

 

 

 

 

 

2,378,000

 

 

 

 

 

 

28,150

 

 

 

 

 

 

1,189,000

 

 

 

 

 

 

64,350

 

 

 

 

 

 

1,189,000

 

 

 

 

 

 

14,100

 

 

 

J. Kevin Willis

 

 

 

 

225

 

 

 

 

 

 

1,345,838

 

 

 

 

 

 

672,900

 

 

 

 

 

 

8,000

 

 

 

 

 

 

336,450

 

 

 

 

 

 

18,200

 

 

 

 

 

 

336,450

 

 

 

 

 

 

4,000

 

 

 

Peter J. Ganz

 

 

 

 

150

 

 

 

 

 

 

842,300

 

 

 

 

 

 

412,150

 

 

 

 

 

 

5,000

 

 

 

 

 

 

210,575

 

 

 

 

 

 

11,400

 

 

 

 

 

 

210,575

 

 

 

 

 

 

2,500

 

 

 

Vito J. Consiglio

 

 

 

 

150

 

 

 

 

 

 

755,550

 

 

 

 

 

 

377,775

 

 

 

 

 

 

4,500

 

 

 

 

 

 

188,900

 

 

 

 

 

 

10,250

 

 

 

 

 

 

188,900

 

 

 

 

 

 

2,250

 

 

 

Osama M. Musa

 

 

 

 

85

 

 

 

 

 

 

408,200

 

 

 

 

 

 

204,100

 

 

 

 

 

 

2,450

 

 

 

 

 

 

102,050

 

 

 

 

 

 

5,550

 

 

 

 

 

 

102,050

 

 

 

 

 

 

1,250

 

 

In addition to the annual grants mentioned above, Messrs. Consiglio and Musa were each awarded an RSU grant on March 20, 2019 with a grant date value of $500,000 to encourage them to continue to build upon the reorganization of Ashland. Mr. Consiglio’s grant of 6,415 RSUs will cliff vest 100% on the third anniversary of the grant date. Mr. Musa’s grant of 6,415 RSUs will vest 30% on the one-year anniversary of the grant date and 70% on the third anniversary of the grant date.

FISCAL YEAR 2020 COMPENSATION DECISIONS

In November 2019, the Compensation Committee approved EBITDA and FCF as the metrics for the annual incentive program for fiscal 2020. Additionally, a safety modifier will be applied to the annual incentive payouts for the NEOs if certain safety goals are met.

The Compensation Committee approved new metrics for the upcoming fiscal 2020 – 2022 LTIPP. The metrics will consist of Return on Net Assets (“RONA”) and Relative Total Shareholder Return (“RTSR”). RONA is defined as Adjusted Net Operating Profit After Tax (“NOPAT”) divided by (current assets – cash – (current liabilities – short term debt) + property plant and equipment). NOPAT will be reconciled back to Ashland’s net income. Forty percent of PUs will be earned based on a 3-year average RONA metric and sixty percent of PUs will be earned based on Ashland RTSR performance compared to the S&P 400.

 

 

 

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CEO TRANSITION

On October 8, 2019, Ashland announced that the Board elected Guillermo Novo to serve as the Company’s Chief Executive Officer, effective December 31, 2019. Mr. Novo was also elected Chairman of the Board, effective December 31, 2019. Mr. Novo is succeeding William A. Wulfsohn, 57, who will step down as Chairman and Chief Executive Officer effective December 31, 2019.

Offer Letter with Mr. Novo

Mr. Novo entered into an offer letter with Ashland, dated October 8, 2019 (the “Offer Letter”). Pursuant to the Offer Letter, Mr. Novo will receive an annual base salary of $1,050,000, an annual target incentive opportunity pursuant to Ashland’s incentive compensation plan equal to 120% of base salary (with a maximum amount equal to 200% of base salary) and annual grants pursuant to Ashland’s LTI with a target value equal to 400% of base salary, subject to the discretion of the Compensation Committee in each year, with such initial annual long-term incentive award to be granted in January 2020 and allocated as 50% PUs, 25% SARS and 25% RSUs. The Offer Letter also provides that Mr. Novo will be eligible for certain other benefits, including relocation benefits, financial planning assistance, an annual executive physical exam and other benefits provided to Ashland’s senior executives.

In addition, promptly following the commencement of Mr. Novo’s employment with Ashland, Mr. Novo will receive (1) a sign-on cash award of $1 million and (2) a sign-on equity award consisting of (a) RSUs which will vest in equal installments on each of December 15, 2020, 2021 and 2022, with a value equal to $2 million as of the date of the Offer Letter and (b) performance-based RSUs with a performance period ending on December 15, 2022 and a target value equal to $2 million as of the date of the Offer Letter.

Mr. Novo will be entitled to severance payments and benefits pursuant to the Ashland Severance Pay Plan upon a termination without “cause” (as defined in the Offer Letter). For a description of the Severance Pay Plan, see the section entitled “Potential Payments Upon Termination or Change in Control – Severance Pay Plan.”

In addition, upon a termination without cause or a resignation for “good reason” (as defined in the Offer Letter) at any time prior to December 31, 2022, Mr. Novo will be entitled to the payments and benefits provided under the Severance Pay Plan as in effect on the date of the Offer Letter, as well as (1) a pro-rata annual incentive compensation payment for the year of termination based on actual performance and (2) COBRA continuation coverage at Ashland’s cost for a minimum of 20 weeks. Upon a termination of employment by Ashland for any reason other than for cause, or upon Mr. Novo’s resignation for good reason or “retirement” (as defined in the Offer Letter), in each case, prior to December 31, 2022, Mr. Novo will additionally be entitled to pro-rata vesting of any outstanding equity-based awards, with performance-based awards settled after the end of the applicable performance period based on actual performance.

In connection with his start date, Mr. Novo will also enter into a change in control agreement, substantially consistent with the change in control agreement with Mr. Wulfsohn. For a description of the benefits under the change in control agreement, see the section entitled “Potential Payments Upon Termination or Change in Control – Executive Change in Control Agreements.”

Letter Agreement with Mr. Wulfsohn

Ashland and Mr. Wulfsohn entered into a letter agreement, dated October 8, 2019 (the “Wulfsohn Letter Agreement”), under which Mr. Wulfsohn will continue to serve as Chief Executive Officer and Chairman of the Board until December 31, 2019 in accordance with his current terms and conditions of employment, except that he will not receive any additional equity-based awards after the date of the Wulfsohn Letter Agreement. Pursuant to the Wulfsohn Letter Agreement, as of December 31, 2019, Mr. Wulfsohn will be offered a Separation Agreement and

 

 

 

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General Release pursuant to which Mr. Wulfsohn will be entitled to receive (1) a lump-sum severance payment equal to two years of base salary, in accordance with the terms of the Severance Pay Plan, (2) 20 weeks of continued coverage under Ashland’s medical and dental plans at no cost, (3) a pro-rata short term incentive payment for fiscal year 2020, based on actual performance and paid at the time short-term incentive payments are generally made, (4) a pro-rata payment with respect to outstanding PUs, based on actual performance and payable in accordance with the terms of such awards, (5) pro-rata accelerated vesting of outstanding RSUs and SARs and (6) certain other benefits, including outplacement and financial planning expense reimbursements.

Under the terms of the Separation Agreement and General Release, Mr. Wulfsohn will provide a general release of claims and agree to non-competition and non-solicitation of customers and employees restrictions for the two-year post-termination period. The Separation Agreement and General Release also contains customary restrictive covenants related to confidential information, company property, and non-disparagement.

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 of 1986, as amended (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 executives, management, and sales incentive compensation plans and designs plans and programs so they are aligned with our compensation philosophy and do not encourage excessive risk taking.

 

 

 Compensation at Risk

  

 

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

 

 

 Stock Ownership Guidelines

  

 

In fiscal 2019, the Compensation Committee revised the stock ownership guidelines to eliminate the fixed share amount. The guidelines now require senior employees to maintain an amount of equity equal to a multiple of base salary: (i) five times base salary for the CEO and (ii) three times base salary for the CEO’s direct reports. The executive officer must achieve compliance with the guidelines by the fifth anniversary of the executive officer’s appointment. All executive officers are in compliance with the guidelines with the exception of Mr. Musa.

 

 

 

 

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 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 or pledging Ashland securities.

 

 

 “Double triggers” in Change in Control Agreements and Salary Continuation Plan

  

 

The NEOs and other executive officers do not receive change in control cash severance 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

  

 

Our Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation 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 2019 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 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 2019 Annual Meeting, stockholders approved our executive compensation proposal by an overwhelming majority (approximately 93.5%). 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 2019.

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 NEOs other than himself with respect to base salary, annual incentive and long-term compensation, the CEO considers the relative importance of the executive’s position within the organization, individual tenure and experience, individual performance and the 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 CEO. The CEO, and in certain instances other executives, in consultation with the Compensation Committee’s independent compensation consultant and the Chief

 

 

 

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Human Resources and IT Officer, develops compensation recommendations for the Compensation Committee’s consideration.

Role of the Compensation Committee and Independent Adviser

The Compensation Committee has the authority to obtain advice and assistance from advisors and to determine their fees and terms of engagement. In fiscal 2019, 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. Deloitte’s aggregate fees for executive and director compensation services in fiscal 2019 were $367,288.

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, (ii) auditing services, (iii) reporting assessments and (iv) assistance in preparation of executive compensation tables for Ashland’s fiscal 2018 proxy tables. Ashland paid $9.2 million to Deloitte affiliates in fiscal 2019 for these other services. The Compensation Committee believes that, given the nature and scope of these projects, these additional services provided by Deloitte affiliates do not raise a conflict of interest and do not impair Deloitte’s ability to provide independent advice to the Compensation Committee concerning executive compensation matters.

OTHER COMPENSATION AND TAX MATTERS

Equity Treatment Post-Separation of Valvoline

As discussed in Ashland’s proxy statement for fiscal 2017, on May 12, 2017 (the “Distribution Date”), Ashland distributed to its stockholders 170,000,000 shares of common stock of Valvoline (“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’s officers, directors and employees that were outstanding on the Distribution Date were adjusted using an equity adjustment ratio. A similar adjustment was made to the strike price of outstanding SARs. For more information about the equity treatment, see Ashland’s proxy statements filed December 6, 2017 and January 2, 2019. All other terms and conditions of the grants remained the same unless otherwise noted.

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 this plan 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 plan are limited by the Code. This plan, standing alone, does 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.

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.

 

 

 

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

In addition, certain NEOs have accumulated benefits under certain qualified and non-qualified pension plans previously sponsored by Ashland but that have been transferred to Valvoline.

For a description of these plans, see the narratives to the “Non-Qualified Deferred Compensation” and “Pension Benefits” tables in 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 in fiscal 2019. All NEOs are additionally eligible for a reimbursement of up to $5,000 a year for services performed relating to an executive physical; however, only Messrs. Wulfsohn and Consiglio participated in this program in fiscal year 2019. In addition, Ashland pays life insurance premiums on behalf of the NEOs and provides certain charitable matching donations pursuant to various Company programs, in each case, on the same terms as such premiums are paid and contributions are made with respect to Ashland employees generally.

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. In November 2019, the Compensation Committee reduced the financial planning allowance to align with current market practice.

A detailed description of the cost of these perquisites is included in the “Summary Compensation Table” section of this Proxy Statement.

Severance Pay Plan and Salary Continuation 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 a termination for cause and voluntary resignation.

In May 2018, the Compensation Committee approved an enhanced severance program (the “Enhanced Severance Program”) effective through December 2019 in connection with the restructuring and cost cutting programs. As part of the Enhanced Severance Program, all employees were entitled to receive a minimum cash severance payment based on band, three weeks of pay for every year of service up to a maximum of 52 weeks, a minimum of 20 weeks of COBRA continuation at the exclusive cost of Ashland, and pro-rata accelerated vesting of all RSUs and SARs, as well as pro-rata payment of PUs and annual cash incentives at the regular time of payment under the programs. In November 2019, the Enhanced Severance Program was extended through December 2020 due to the delayed closing of the sale of the Composites business and the Marl facility. As a result of the program, Messrs. Wulfsohn and Consiglio are both entitled to the Enhanced Severance Program benefits to the extent they are more beneficial than the Severance Pay Plan.

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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Under the Salary Continuation Plan, in the event of a termination without cause or resignation for good reason within two years after a change in control for Ashland executives in specified employee bands without a change in control agreement, certain benefits will be paid as follows:

 

   

52 weeks of base salary plus target annual bonus, payable as a lump sum;

 

   

COBRA continuation at the exclusive cost of Ashland for between 13-52 weeks, depending on the employees’ length of service with the Company; and

 

   

Outplacement services for one year following termination.

Change in Control Agreements

Each of Messrs. Wulfsohn, Willis and Ganz has entered into a change in control agreement that sets forth the economic consequences and entitlements for a 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.

Prior to the enactment of the Tax Cuts and Jobs Act on December 22, 2017, Section 162(m) of the Code limited deductibility of certain compensation to $1 million per year for the Chief Executive Officer and the three other named executive officers (other than the Chief Financial Officer) who were the highest paid and employed at year end. If certain conditions were met, performance-based compensation may have been excluded from this limitation.

The Company’s annual and long-term incentive plans generally have been structured with the intent of enabling the Compensation Committee to grant compensation that constitutes performance-based compensation under Section 162(m) of the Code, if the Compensation Committee determined to do so. The Tax Cuts and Jobs Act includes a number of significant changes to Section 162(m), such as the repeal of the performance-based compensation exemption and the expansion of the individuals subject to the provision (for example, by including the Chief Financial Officer and certain former named executive officers). As a result of these changes, except as otherwise provided in the transition relief provisions of the Tax Cuts and Jobs Act, compensation paid to any of our named executive officers generally will not be deductible in the fiscal year starting October 1, 2018 or a later fiscal year, to the extent that it exceeds $1 million per year.

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 2019 and Ashland’s Proxy Statement for its 2020 Annual Meeting of Stockholders. This report is provided by the following independent directors who comprise the Compensation Committee:

 

  COMPENSATION COMMITTEE
  Kathleen Wilson-Thompson, Chair
  Jerome A. Peribere
  Craig A. Rogerson
  Mark C. Rohr
  Janice J. Teal

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, 2019, for Ashland’s Chief Executive Officer, Chief Financial Officer and each of the other three most highly compensated executive officers in fiscal 2019.

 

Name and Principal Position

(a)

  Year
(b)
    Salary (1)
($)
(c)
    Bonus
($)
(d)
  Stock
Awards (2)
($)
(e)
    Option
Awards (3)
($)
(f)
    Non-Equity
Incentive
Plan
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

    2019       1,189,000     -     3,551,774       1,412,483       954,642       -       264,486       7,372,385  

Chairman of the Board

and Chief Executive

Officer

    2018       1,189,000     -     3,830,428       2,030,670       1,818,314       -       275,617       9,144,029  
    2017       1,174,342     -     3,086,896       1,335,247       1,371,012       -       250,350       7,217,847  
                 
                 

J. K. Willis

    2019       609,652     -     1,008,800       399,490       360,189       344,631       122,081       2,844,843  

Senior Vice President

and Chief Financial

Officer

    2018       600,256     -     1,055,853       558,189       686,054       -       107,108       3,007,460  
    2017       584,621     -     854,833       367,536       502,195       -       46,225       2,355,410  
                 
                 

P. J. Ganz

    2019       562,450     -     630,500       250,230       281,791       -       111,141       1,836,112  

Senior Vice President,

General Counsel and

Secretary

    2018       550,335     -     656,064       346,293       536,729       -       95,510       2,184,931  
    2017       533,496     -     533,042       227,315       389,128       -       94,746       1,777,727  
                 
                 

V. J. Consiglio

    2019       510,965     -     1,067,435       224,988       260,344       -       71,666       2,135,398  

Senior Vice President,

Chief Commercial

Officer

                 
                 
                 

O. M. Musa

    2019       496,350     -     810,989       121,823       248,193       -       79,130       1,756,485  

Senior Vice President,

Chief Technology

Officer

                 
                 

 

 

  (1)

Messrs. Willis and Musa base salary amounts include Ashland’s repurchase of vacation days in accordance with Ashland’s vacation day sell option.

 

  (2)

The values in column (e) for fiscal 2019 represent the aggregate grant date fair value of fiscal 2019-2021 LTIPP and RSUs computed in accordance with FASB ASC Topic 718. The assumptions made when calculating the amounts for column (e) with respect to LTIPP and RSUs are found in Note Q 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, 2019 (the “2019 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 assumed probable outcome of performance conditions. The grant date fair values of the fiscal 2019-2021 LTIPP awards assuming the maximum level of performance are as follows: Mr. Wulfsohn, $4,781,559; Mr. Willis, $1,358,880; Mr. Ganz, $849,300; Mr. Consiglio, $764,370; and Mr. Musa, $416,157.

 

  (3)

The values in column (f) for fiscal 2019 represent the aggregate grant date fair value of SARs computed in accordance with FASB ASC Topic 718. The assumptions made when calculating the amounts for column (f) are found in Note Q to the Notes to Consolidated Financial Statements included in the 2019 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.

 

 

 

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  (4)

The values in column (g) for fiscal 2019 represent the amounts earned with respect to annual incentive awards under the 2019 Annual Incentive Plan.

 

  (5)

Ashland’s non-qualified deferred compensation arrangements do not provide above-market or preferential earnings; therefore, for fiscal 2019 the amounts in column (h) represent only the one-year change between September 30, 2018 and September 30, 2019 in the present value of accrued benefits under qualified and non-qualified defined benefit plans previously sponsored by Ashland but that have been transferred to Valvoline. Only Mr. Willis participates in the 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, 2018 and September 30, 2019 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 the change in pension value was $344,631.

 

  (6)

Amounts reported in column (i) for fiscal 2019 are composed of the following items:

 

     W. A.
Wulfsohn
($)
    J. K. Willis
($)
    P. J. Ganz
($)
    V. J.
Consiglio
($)
    O. M. Musa
($)
 

Employee Savings Plan Match (a)

     22,400           22,400           22,400           15,850           21,612      

Life Insurance Premiums (b)

     536           1,242           2,322           2,322           1,242      

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

     218,585           80,334           65,364           42,561           47,914      

Charitable Giving Match (d)

     936           1,386           347           -           -      

Other (e)

     22,029           16,719           20,708           10,933           8,362      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     264,486           122,081           111,141           71,666           79,130      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

  (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)

The amounts in this row represent the matching charitable contributions by Ashland made pursuant to various Company programs which are generally available to all employees.

 

  (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 Consiglio. None of these items exceeded the greater of $25,000 or 10% of total perquisites as a category for any named executive officer.

 

 

 

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GRANTS OF PLAN-BASED AWARDS

The following table sets forth certain information regarding the annual incentive awards, SARs, RSUs and PUs awarded during fiscal 2019 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

   

 

713,400

 

 

 

1,426,800

 

 

 

2,853,600

 

             
 

 

11/15/2018

 

       

 

7,038

 

 

 

28,150

 

 

 

56,300

 

       

 

2,390,780

 

 

 

11/15/2018

 

             

 

14,100

 

     

 

1,160,994

 

 

 

11/15/2018

 

               

 

64,350

 

 

$

82.34

 

 

 

1,412,483

 

                     

J. K. Willis

   

 

269,168

 

 

 

538,335

 

 

 

1,076,670

 

             
 

 

11/15/2018

 

       

 

2,000

 

 

 

8,000

 

 

 

16,000

 

       

 

679,440

 

 

 

11/15/2018

 

             

 

4,000

 

     

 

329,360

 

 

 

11/15/2018

 

               

 

18,200

 

 

$

82.34

 

 

 

399,490

 

                     

P. J. Ganz

   

 

210,582

 

 

 

421,163

 

 

 

842,326

 

             
 

 

11/15/2018

 

       

 

1,250

 

 

 

5,000

 

 

 

10,000

 

       

 

424,650

 

 

 

11/15/2018

 

             

 

2,500

 

     

 

205,850

 

 

 

11/15/2018

 

               

 

11,400

 

 

$

82.34

 

 

 

250,230

 

                     

V. J. Consiglio

   

 

194,554

 

 

 

389,108

 

 

 

778,216

 

             
 

 

11/15/2018

 

       

 

1,125

 

 

 

4,500

 

 

 

9,000

 

       

 

382,185

 

 

 

11/15/2018

 

             

 

2,250

 

     

 

185,265

 

 

 

3/20/2019

 

             

 

6,415

 

     

 

499,985

 

 

 

11/15/2018

 

               

 

10,250

 

 

$

82.34

 

 

 

224,988

 

                     

O. M. Musa

   

 

185,474

 

 

 

370,947

 

 

 

741,894

 

             
 

 

11/15/2018

 

       

 

613

 

 

 

2,450

 

 

 

4,900

 

       

 

208,079

 

 

 

11/15/2018

 

             

 

1,250

 

     

 

102,925

 

 

 

3/20/2019

 

             

 

6,415

 

     

 

499,985

 

 

 

11/15/2018

 

               

 

5,550

 

 

$

82.34

 

 

 

121,823

 

 

 

(1)

The dollar amounts in these columns represent the potential annual incentive payouts under the 2019 Annual Incentive Plan. The actual dollar amounts earned will be paid in December 2019 and are included in column (g) in the fiscal 2019 row of the “Summary Compensation Table” in this Proxy Statement.

 

(2)

The amounts in these columns represent potential payments under the LTIPP for the fiscal 2019-2021 performance period granted under the Ashland Global Holdings Inc. 2018 Omnibus Incentive Compensation Plan (the “2018 Omnibus Plan”).

 

(3)

RSU grants made on November 15, 2018, to Messrs. Wulfsohn, Willis, Ganz, Consiglio and Musa were made pursuant to the 2018 Omnibus Plan and vest in equal installments on each anniversary of the grant date over a three-year period. The grant of 6,415 RSUs to Mr. Consiglio on March 20, 2019 was made pursuant to the 2018 Omnibus Plan and vests 100% on the third anniversary of the grant date. The grant of 6,415 RSUs to Mr. Musa on March 20, 2019 was made pursuant to the 2018 Omnibus Plan and vests 30% on the first anniversary of the grant date and 70% on the third anniversary of the grant date.

 

(4)

The amounts in column (j) represent the number of SARs granted to named executive officers under the 2018 Omnibus Plan in fiscal 2019. All SARs were granted at an exercise price of $82.34 per share, the closing price of Ashland Common Stock as reported on the NYSE on November 15, 2018.

 

 

 

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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 PUs at target using a Monte-Carlo simulation valuation to incorporate the relative TSR modifier ($84.93 per unit), as valued at the end of the fourth fiscal quarter; (ii) valuation of all SARs using the Black-Scholes valuation model ($21.95 per SAR granted on November 15, 2018); (iii) the grant date fair value of $82.34 per RSU granted on November 15, 2018; and (iv) the grant date fair value of $77.94 per RSU granted on March 20, 2019. For further information on the Black-Scholes model and related stock price assumptions utilized during fiscal 2019, see Note Q to the Notes to Consolidated Financial Statements in the 2019 Form 10-K.

Long-Term Incentive Performance Plan—Performance Units

PUs, granted under the LTIPP, are made to certain key employees. In fiscal 2019, these awards were long-term incentives tied to Ashland’s adjusted earnings per share (EPS) growth and modified by relative TSR over the performance period. Awards are granted annually, with each award covering a three-year performance period. For fiscal 2020, the Compensation Committee approved new metrics consisting of Return on Net Assets (“RONA”) and Relative Total Shareholder Return (“RTSR”).

After the beginning of the performance period, performance hurdle, target and maximum objectives are established for the performance period. The target number of PUs awarded to the NEOs is based on a percentage of the employee’s salary. For a description of the fiscal 2019-2021 LTIPP, see the section entitled “Compensation Discussion and Analysis—Fiscal Year 2019 Incentive Plan Designs and Performance Related Payouts—Long-Term Incentive Plan” of this Proxy Statement. For a description of the circumstances under which the PUs may be entitled to accelerated vesting, see the section entitled “Potential Payments upon Termination or Change in Control—SARs/Stock Options, Incentive Compensation, RS/RSUs and PUs” of this Proxy Statement.

Stock Appreciation Rights

Ashland’s employee SAR grants are designed to link executive compensation with increased stockholder value over time. The number of SARs to be granted annually to the NEOs is based on a percentage of the employee’s salary. 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) to the “Outstanding Equity Awards at Fiscal Year-End” table in this Proxy Statement. SARs are not re-valued if the stock price declines below the grant price. For a description of the circumstances under which the SARs may be entitled to accelerated vesting, see the section entitled “Potential Payments upon Termination or Change in Control—SARs/Stock Options, Incentive Compensation, RS/RSUs and PUs” of this Proxy Statement. For a description of the material aspects of the program, see the section entitled “Compensation Discussion and Analysis—Fiscal Year 2019 Incentive Plan Designs and Performance-Related Payouts—Long-Term Incentive Plan” of this Proxy Statement.

Restricted Stock Units

Ashland’s RSU grants are designed to link executive compensation with increased stockholder value over time. The number of RSUs to be granted annually to the NEOs is based on a percentage of the employee’s salary. All RSUs 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 RSUs occurs over a period of three years, as more fully described in footnote (2) to the “Outstanding Equity Awards at Fiscal Year-End” table in this Proxy Statement.

The Compensation Committee may award RSUs to named executive officers. RSUs are intended to reward superior performance and encourage continued employment with Ashland. For vesting periods applicable to RSUs granted to named executive officers, see footnote (2) to the “Outstanding Equity Awards at Fiscal Year-End” table in this Proxy Statement.

 

 

 

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RSUs may not be sold, assigned, transferred or otherwise encumbered during the restricted period. Dividend equivalents are paid on the RSUs in the form of additional RSUs subject to the same vesting requirements. For a description of the circumstances under which the RSUs may be entitled to accelerated vesting, see the section entitled “Potential Payments upon Termination or Change in Control—SARs/Stock Options, Incentive Compensation, RS/RSUs and PUs” of this Proxy Statement. For a description of the material aspects of the program, see the section entitled “Compensation Discussion and Analysis—Fiscal Year 2019 Incentive Plan Designs and Performance-Related Payouts—Long-Term Incentive Plan” of this Proxy Statement.

 

 

 

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table sets forth certain information regarding SARs, PUs, RSUs and restricted stock held by each of the named executive officers as of September 30, 2019.

 

    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

 

 

-   

 

 

 

64,350 

(4) 

 

-   

 

 

82.34

 

 

 

11/15/2028

 

       
 

 

51,750

 

 

 

51,750 

(5) 

 

-   

 

 

67.16

 

 

 

12/15/2027

 

       
 

 

88,778

 

 

 

29,595 

(6) 

 

-   

 

 

57.96

 

 

 

12/16/2026

 

       
 

 

107,826

 

 

 

-   

 

 

-   

 

 

59.41

 

 

 

12/1/2025

 

       
 

 

86,637

 

 

 

-   

 

 

-   

 

 

62.33

 

 

 

2/28/2025

 

       
           

 

121,442

 

 

 

9,357,106

 

   
               

 

65,500

 

 

 

5,046,775