UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant:
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Filed by a Party other than the
Registrant:
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Lennox International Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14(a)-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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):
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Date Filed:
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2140
Lake Park Blvd.
Richardson, Texas 75080
April
3, 2013
Dear
Stockholders:
It
is my pleasure to invite you to the 2013 Annual Meeting of Stockholders of Lennox International Inc. The meeting will be held
at 10:30 a.m., local time, on Thursday, May 16, 2013, at the Lennox International Inc. Corporate Headquarters, 2140 Lake Park
Blvd., Richardson, Texas 75080.
Under
the Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet,
Lennox has elected to deliver our proxy materials to the majority of our stockholders over the Internet. This delivery process
allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering
the cost of delivery. On or about April 3, 2013, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials
(the “Notice”) containing instructions on how to access our proxy statement for our 2013 Annual Meeting of Stockholders
and fiscal 2012 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone and
includes instructions on how to receive a paper copy of the proxy materials by mail.
The
accompanying Notice of Annual Meeting of Stockholders and proxy statement describe the items of business that will be discussed
and voted upon during the meeting.
YOUR
VOTE IS VERY IMPORTANT. Whether or not you plan to attend the 2013 Annual Meeting of Stockholders, we urge you to vote and submit
your proxy by the Internet, telephone or mail, pursuant to the instructions on your proxy card. We encourage you to vote via the
Internet. It is convenient and saves the Company postage and other costs. Please use the website shown on your proxy card to vote
through the Internet. If you attend the meeting you will have the right to revoke the proxy and vote your shares in person.
I
look forward to seeing you at the Annual Meeting of Stockholders. On behalf of management and our Board of Directors, I want to
thank you for your continued support and confidence in 2013.
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Sincerely,
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Todd M. Bluedorn
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Chairman of the Board and Chief Executive Officer
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2140
Lake Park Blvd.
Richardson, Texas 75080
April 3, 2013
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2013
Notice
is hereby given that the 2013 Annual Meeting of Stockholders of Lennox International Inc. will be held on Thursday, May 16, 2013
at 10:30 a.m., local time, at the Lennox International Inc. Corporate Headquarters, 2140 Lake Park Blvd., Richardson, Texas 75080,
to:
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elect
four
Class
III
directors
to
hold
office
for
a
three-year
term
expiring
at
the
2016
Annual
Meeting
of
Stockholders;
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ratify
the
appointment
of
KPMG
LLP
as
our
independent
registered
public
accounting
firm
for
the
2013
fiscal
year;
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conduct
an
advisory
vote
to
approve
the
compensation
of
the
named
executive
officers
as
disclosed
in
this
Proxy
Statement;
and
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transact
any
other
business
that
may
properly
come
before
the
Annual
Meeting
of
Stockholders
in
accordance
with
the
terms
of
our
Amended
and
Restated
Bylaws.
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The
Board of Directors has determined that our stockholders of record at the close of business on March 22, 2013 are entitled to notice
of, and to vote at, the Annual Meeting of Stockholders.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 16, 2013.
This
Proxy Statement and the Annual Report to Stockholders are available on our website at http://www.lennoxinternational.com/financials/financialreportproxy.htm
and also at the website appearing on your proxy card. A Proxy Statement, Proxy Card, and Annual Report to Stockholders, which
includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, accompany this Notice.
Your
Vote Is Important. Whether or not you plan to attend the Annual Meeting of Stockholders, we urge you to vote and submit your proxy
in order to ensure the presence of a quorum.
Most
shareholders have a choice of voting on the Internet, by telephone or by mail. Please refer to the proxy card or other voting
instructions included with these proxy materials for information on the voting method(s) available to you. If you vote by telephone
or on the Internet, you do not need to return your proxy card. If your shares are held in the name of a brokerage firm, bank or
other nominee of record, follow the voting instructions you receive from such holder of record to vote your shares.
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By Order of the Board of Directors,
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John D. Torres
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Corporate Secretary
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TABLE
OF CONTENTS
GENERAL
INFORMATION REGARDING THE 2013
ANNUAL MEETING OF STOCKHOLDERS
Meeting
Date and Location
The
2013 Annual Meeting of Stockholders (the “Annual Meeting”) of Lennox International Inc. (also referred to in this
Proxy Statement as the “Company,” “us,” “we,” or “our”) will be held on Thursday,
May 16, 2013 at 10:30 a.m., local time, at the Company’s Corporate Headquarters, 2140 Lake Park Blvd., Richardson, Texas
75080. We began mailing this Proxy Statement and the accompanying Notice of Annual Meeting of Stockholders, Proxy Card and Annual
Report to Stockholders, which includes our Annual Report on Form 10-K, to our stockholders on or about April 3, 2013 for the purpose
of soliciting proxies on behalf of our Board of Directors (our “Board”).
Matters
to be Voted On
At
the meeting, you will be asked to vote on three proposals. Our board recommends you vote “for” each of the director
nominees, and “for” proposals 2 and 3, as described below.
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Proposal
1:
Election
of
four
Class
III
directors
to
hold
office
for
a
three-year
term
expiring
at
the
2016
Annual
Meeting
of
Stockholders.
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Proposal
2:
Ratification
of
the
appointment
of
KPMG
LLP
as
our
independent
registered
public
accounting
firm
for
the
2013
fiscal
year.
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Proposal
3:
Advisory
vote
to
approve
the
compensation
of
the
named
executive
officers
(“NEOs”)
as
disclosed
in
this
Proxy
Statement.
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Record
Versus Beneficial Ownership of Shares
If
your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered,
with respect to those shares, the “stockholder of record.” If you are a stockholder of record, we sent our proxy materials
directly to you.
If
your shares are held in a stock brokerage account or by a bank, you are considered the “beneficial owner” of shares
held in street name. In that case, our proxy materials have been forwarded to you by your broker or bank, which is considered,
with respect to those shares, the stockholder of record. Your broker or bank will also send you instructions on how to vote. If
you have not heard from your broker or bank, please contact them as soon as possible.
Record
Date and Number of Votes
The
record date for the Annual Meeting is March 22, 2013. If you were a stockholder of record at the close of business on the record
date, you may vote. At the close of business on the record date, there were 50,381,941 shares of our common stock outstanding
and entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each other
proposal to be voted on.
Quorum
and Vote Required
A
quorum is required to transact business at the Annual Meeting. To achieve a quorum at the Annual Meeting, stockholders holding
a majority of our outstanding shares entitled to vote must be present either in person or represented by proxy. Shares held by
us in treasury will not count towards the calculation of a quorum. In the event a quorum is not present at the Annual Meeting,
we expect the meeting will be adjourned or postponed to solicit additional proxies.
Our
Amended and Restated Bylaws (“Bylaws”) require that a director nominee will be elected only if he or she receives
a majority of the votes cast with respect to his or her election in an uncontested election (that is, the number of shares voted
“for” a director nominee must exceed the number of votes cast “against” that nominee). Each of our director
nominees is currently serving on the Board. If a nominee who is currently serving as a director is not re-elected, Delaware law
provides that the director would continue to serve on the Board as a “holdover director.” Under our Bylaws and Corporate
Governance Guidelines, each director submits an advance, contingent resignation that the Board may accept if stockholders do not
re-elect the director. In that situation, our Corporate Governance and Nominating Committee would make a recommendation to the
Board about whether to accept or reject the resignation, or whether to take other action. The Board would act on the Corporate
Governance and Nominating Committee’s recommendation, and publicly disclose its decision and the rationale behind it within
90 days from the date that the election results were certified.
If
a quorum is present, ratification of our independent registered public accounting firm and approval of the advisory vote on the
compensation of our named executive officers require that the votes cast in favor of these proposals exceed the votes cast against
proposals.
Abstentions
and Broker Non-Votes
If
a broker or bank holds shares in “street name” (that is, in the name of a bank, broker, nominee or other holder of
record) and the beneficial owner does not provide the broker or bank with specific voting instructions, (referred to as “broker
non-votes”), the broker or bank generally has discretion to vote on routine matters but does not have discretion to vote
on non-routine matters.
Pursuant
to New York Stock Exchange (“NYSE”) rules, Proposal 1 (election of directors) and Proposal 3 (advisory vote on the
compensation of named executive officers) will be considered non-routine proposals for which your broker or bank may not exercise
voting discretion if it does not receive voting instructions from you, and Proposal 2 (ratification of the appointment of our
independent auditor) will be considered a routine proposal for which your broker or bank may exercise voting discretion even if
it does not receive voting instructions from you. As a result, if you hold your shares in street name, it is critical that you
cast your vote in order for it to be counted on Proposals 1 and 3.
Abstentions
and broker non-votes, if applicable, will be included in determining whether a quorum is present, but will not be counted as votes
“for” or “against” Proposals 1 or 3.
Voting
Procedures
Registered
holders may vote in person at the Annual Meeting, via the Internet, by telephone, or, if they received a printed copy of these
proxy materials, by mail. If your shares are held in street name, you will receive instructions from the holder of record that
you must follow in order for your shares to be voted.
A
representative of Alliance Advisors LLC will tabulate the votes and act as inspector of election at the Annual Meeting.
Changing
Your Vote
You
can revoke or change your vote on a proposal at any time before the Annual Meeting for any reason by revoking your proxy. For
stockholders of record, proxies may be revoked by delivering a written notice of revocation, bearing a later date than your proxy,
with our Corporate Secretary at or before the Annual Meeting. Proxies may also be revoked by:
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submitting
a
new
written
proxy
bearing
a
later
date
than
a
proxy
you
previously
submitted
prior
to
or
at
the
Annual
Meeting;
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voting
again
by
telephone
or
Internet
before
11:59
p.m.,
Eastern
Time,
on
May
15,
2013;
or
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attending
the
Annual
Meeting
and
voting
in
person;
however,
attendance
at
the
meeting
will
not
in
and
of
itself
constitute
a
revocation
of
your
proxy.
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In
each case, the later submitted vote will be recorded and the earlier vote revoked. Any written notice of a revocation of a proxy
should be sent to Lennox International Inc., 2140 Lake Park Blvd., Richardson, Texas 75080, Attention: Corporate Secretary. To
be effective, the revocation must be received by our Corporate Secretary before the taking of the vote at the Annual Meeting.
If
your shares are held in street name, you must follow the specific voting directions provided to you by your bank, broker, nominee
or other holder of record to change or revoke any instructions you have already provided. Alternatively, obtain a proxy from your
bank, broker or other holder of record and provide it with your vote at the Annual Meeting.
Other
Business; Adjournments
We
are not aware of any other business to be acted upon at the Annual Meeting. However, if you have voted by proxy and other matters
are properly presented at the Annual Meeting for consideration in accordance with our Bylaws, the persons named in the accompanying
Proxy Card will have discretion to act on those matters according to their best judgment or the Board’s recommendation.
In the absence of a quorum, stockholders representing a majority of the votes present in person or by proxy at the meeting may
adjourn the meeting.
PROPOSAL
1: ELECTION OF DIRECTORS
Our
Bylaws provide that our Board may be composed of no less than three and no more than 15 members. The size of our Board has been
fixed by our Board at 10 members, divided into three classes, with each class serving a three-year term.
Upon
the recommendation of the Board Governance Committee, the Board has nominated four Class III directors for re-election to our
Board to hold office for a three-year term expiring at the 2016 Annual Meeting of Stockholders. All Class I and Class II directors
will continue in office, in accordance with their previous election, until the expiration of the terms of their classes at the
2014 and 2015 Annual Meeting of Stockholders, respectively. The process followed by the Board in nominating directors and the
criteria considered for director nominees is described in the “Corporate Governance — Director Nomination Process
and Nominee Criteria” section of this Proxy Statement.
We
provide below biographical information for each nominee for Class III director and for each current director in the classes continuing
in office following the Annual Meeting. For each director and director nominee, the information presented includes the positions
held, principal occupation, and business experience as of April 3, 2013. The biographical description below for each director
and director nominee also includes the specific experience, qualifications, attributes and skills that led to the Board’s
conclusion that such person should serve as a director of the Company at this time, in light of our business and structure.
If
you do not wish your shares to be voted for any particular nominee, you may withhold your vote for that particular nominee. If
any nominee for Class III director becomes unavailable to serve, the persons named in the accompanying Proxy Card may vote for
any alternate designated by the incumbent Board, upon the recommendation of the Board Governance Committee, or the number of directors
constituting the Board may be reduced.
Nominees
The
Board has nominated the following individuals for re-election as Class III directors for a three-year term expiring at the 2016
Annual Meeting of Stockholders:
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Todd M. Bluedorn,
49,
became Chief Executive Officer (“CEO”) and was elected as a director of our Company in April 2007. He was appointed
as Chairman of the Board on May 10, 2012. Prior to joining the Company, Mr. Bluedorn served in numerous senior management
positions for United Technologies since 1995, including President, Americas — Otis Elevator Company; President, North
America — Commercial Heating, Ventilation and Air Conditioning for Carrier Corporation; and President, Hamilton Sundstrand
Industrial. He began his professional career with McKinsey & Company in 1992. A graduate of West Point with a B.S. in
electrical engineering, Mr. Bluedorn served in the United States Army as a combat engineer officer and United States Army
Ranger from 1985 to 1990. He received his MBA from Harvard University School of Business in 1992.
Mr. Bluedorn serves on the Board of
Directors of Eaton Corporation, a diversified industrial manufacturer.
Mr. Bluedorn possesses considerable
industry knowledge and executive leadership experience. Mr. Bluedorn’s extensive knowledge of our Company and its business,
combined with his drive for excellence and innovation, position him well to serve as CEO and a director of our Company.
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C.L.
(Jerry) Henry
, 71, has served as a director of our Company since 2000. He is the Chairman of the Board Governance Committee
and a member of the Audit Committee. Prior to his retirement, Mr. Henry served as Chairman, President, and CEO of Johns Manville
Corporation, a leading manufacturer of insulation and building products, from 1996 to 2004. Mr. Henry served as Executive Vice
President and CFO for E. I. du Pont de Nemours and Company, a global science and technology company, from 1993 to 1996.
Mr. Henry currently serves on the Board of Directors of MWH Global, Inc.,
a firm providing water, wastewater, energy, natural resource, program management, consulting, and construction services to clients
around the world.
As a former CEO and CFO, Mr. Henry contributes a broad knowledge of financial matters, strategy development,
risk management, and mergers and acquisitions in his service as a director.
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Terry D. Stinson
, 71,
has served as a director of our Company since 1998. He is a member of the Board Governance Committee and the Compensation
and Human Resources Committee. Mr. Stinson currently serves as Group Vice President of AAR Corp., an international, publicly
traded aerospace manufacturing and services firm. In addition, Mr. Stinson has served as CEO of his own consulting practice,
Stinson Consulting, LLC, engaged in strategic alliances and marketing for the aerospace industry, since 2001. From 2002 to
2005, Mr. Stinson served as CEO of Xelus, Inc., a collaborative enterprise service management solution company. From 1998
to 2001, Mr. Stinson was Chairman and CEO of Bell Helicopter Textron Inc., the world’s leading manufacturer of vertical
lift aircraft, and served as President from 1996 to 1998. From 1991 to 1996, Mr. Stinson served as Group Vice President and
Segment President of Textron Aerospace Systems and Components for Textron Inc. Prior to that position, he was President of
the Hamilton Standard Division of United Technologies Corporation, a defense supply company, since 1986.
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Mr. Stinson previously
served on the Board of Directors of Triumph Group, Inc., a company engaged in the manufacturing and repair of aircraft components,
subassemblies and systems, from September 2003 to March 2008.
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As a former senior executive of two
Fortune 500 companies, Mr. Stinson contributes extensive general management experience in technology-driven businesses, and
a thorough knowledge of corporate governance, director recruitment and development, talent management, and strategy development
in his service as a director.
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Richard L. Thompson
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73, has served as a director of our Company since 1993 and Lead Director since May 2012. He is a member of the Board Governance
Committee and Compensation and Human Resources Committee. He served as Vice Chairman of the Board from February 2005 to July
2006 and as Chairman of the Board from July 2006 to May 2012. Mr. Thompson served as Group President and Member of the Executive
Office of Caterpillar Inc., a manufacturer of construction and mining equipment, from 1995 until his retirement in 2004. He
joined Caterpillar in 1983 as Vice President, Customer Services. In 1989, he was appointed President of Solar Turbines Inc.,
a wholly-owned subsidiary of Caterpillar and manufacturer of gas turbines. From 1990 to 1995, he served as Vice President
of Caterpillar, with responsibility for its worldwide engine business. Previously, he held the positions of Vice President
of Marketing and Vice President and General Manager, Components Operations of RTE Corporation, a manufacturer of electrical
distribution products.
Mr. Thompson serves as a director of
Gardner Denver, Inc., a manufacturer of air compressors, blowers and petroleum pumps, and of NiSource Inc., a natural gas
and electric utility. In addition, he is a former Director of the National Association of Manufacturers, the nation’s
largest industrial trade association.
As a former senior executive at a Fortune
50 company, Mr. Thompson contributes extensive experience leading international business units, engineering and product development,
and a substantial knowledge of marketing and channel management, in his service as a director.
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THE BOARD RECOMMENDS
A VOTE “FOR”
EACH OF THE ABOVE NOMINEES
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Continuing
Directors
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The following Class I directors’ terms will
continue until the 2014 Annual Meeting of Stockholders:
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Janet K. Cooper
, 59,
has served as a director of our Company since 1999. She is a member of the Audit Committee and the Public Policy Committee.
From 2002 to 2008, Ms. Cooper served as Senior Vice President and Treasurer of Qwest Communications International Inc. From
2001 to 2002, she served as Chief Financial Officer (“CFO”) and Senior Vice President of McDATA Corporation, a
global leader in open storage networking solutions. From 2000 to 2001, she served as Senior Vice President, Finance of Qwest.
From 1998 to 2000, she served in various senior level finance positions at US West Inc., a regional Bell operating company,
including Vice President, Finance and Controller and Vice President and Treasurer. From 1978 to 1998, Ms. Cooper served in
various capacities with the Quaker Oats Company, including Vice President, Treasurer and Tax from 1997 to 1998 and Vice President,
Treasurer from 1992 to 1997.
Ms. Cooper serves on the Board of Directors
of The TORO Company, a manufacturer of equipment for lawn and turf care maintenance, and MWH Global, Inc., a firm providing
water, wastewater, energy, natural resource, program management, consulting, and construction services to clients around the
world.
Ms. Cooper contributes a substantial
financial background and extensive experience in capital markets, tax, accounting matters, and pension plan investments in
her service as a director.
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John W. Norris, III,
55, has served as a director of our Company since 2001. He is the Chairman of the Public Policy committee and a member of
the Compensation and Human Resources Committee. Mr. Norris is a co-founder of Maine Network Partners and is the founding Chairman
of the Environmental Funders Network. From 2000 to 2005, he served as the Associate Director of Philanthropy for the Maine
Chapter of The Nature Conservancy. Mr. Norris was Co-Founder and President of Borealis, Inc., an outdoor products manufacturer,
from 1988 to 2000 and served as an economic development Peace Corps Volunteer in Jamaica, West Indies from 1985 to 1987. Before
joining the Peace Corps, Mr. Norris completed a graduate school internship at Lennox Industries Inc., a subsidiary of the
Company, in 1983.
Mr. Norris contributes substantial
experience and knowledge on environmental issues, non-governmental organizations, and organizational development in his service
as a director.
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Paul
W. Schmidt
, 68, has served as a director of our Company since 2005. He is the Chairman of the Audit Committee and a member
of the Board Governance Committee. In early 2007, Mr. Schmidt retired from his position as Corporate Controller of General Motors
Corporation, a position he held since 2002. He began his career in 1969 as an analyst with the Chevrolet Motor Division of General
Motors and subsequently served in a wide variety of senior leadership roles for General Motors, including financial, product and
factory management, business planning, investor relations and international operations. Mr. Schmidt also served as Director of
Capital, Performance and Overseas Analysis in General Motors’s New York Treasurer’s Office.
Mr. Schmidt contributes
a thorough knowledge of U.S. GAAP and extensive experience in financial statement preparation, accounting matters, and risk management,
as well as manufacturing expertise, in his service as a director.
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The following
Class II directors’ terms will continue until the 2015 Annual Meeting of Stockholders:
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John E. Major
, 67, has
served as a director of our Company since 1993. He is the Chairman of the Compensation and Human Resources Committee and a
member of the Board Governance Committee. Mr. Major is President of MTSG, a company that provides consulting, management and
governance services, which he formed in 2003. From 2003 to 2006, he served as CEO of Apacheta Corporation, a mobile wireless
software company whose products are used to manage inventory and deliveries. From 2000 to 2003, he served as Chairman and
CEO of Novatel Wireless, Inc., a leading provider of wireless Internet solutions. Prior to joining Novatel Wireless, Mr. Major
served as President and CEO of Wireless Knowledge, Inc., a joint venture between Microsoft Corporation and QUALCOMM Inc.,
from 1998 through 1999. From 1997 to 1998, he served as Executive Vice President of QUALCOMM and President of its Wireless
Infrastructure Division. Prior to joining QUALCOMM, Mr. Major served as Senior Vice President and Chief Technology Officer
at Motorola, Inc., a manufacturer of telecommunications equipment. Prior to that he served as Senior Vice President and General
Manager for Motorola’s Worldwide Systems Group of the Land Mobile Products Sector.
Mr. Major currently serves as the lead
independent director of the Board of Directors of Broadcom Corporation, a semiconductor manufacturing company; and on the
Board of Directors of Littelfuse, Inc., a manufacturer of circuit protection devices, and ORBCOMM Inc., a satellite communications
service provider.
Mr. Major previously served on the
Board of Directors of Verilink Corporation, a manufacturer of microwave communications products, from June 1996 to January
2007.
Mr. Major contributes substantial experience
in product innovation, compensation programs, and mergers and acquisitions in his service as a director.
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Gregory T. Swienton
,
63, has served as a director of our Company since 2010. He is a member of the Compensation and Human Resources Committee and
the Public Policy Committee. Mr. Swienton was appointed Executive Chairman of Ryder System, Inc., a supplier of transportation,
logistics and supply chain management, in January, 2013 after having been Chairman of Ryder System, Inc. since May 2002 and
Chief Executive Officer since November 2000. Mr. Swienton joined Ryder as President and Chief Operating Officer in June 1999.
Before joining Ryder, Mr. Swienton was Senior Vice President-Growth Initiatives of Burlington Northern Santa Fe Corporation
(BNSF). Prior to that he was BNSF’s Senior Vice President-Coal and Agricultural Commodities Business Unit, and previously
had been Senior Vice President of its Industrial and Consumer Units. He joined the former Burlington Northern Railroad in
June 1994 as Executive Vice President-Intermodal Business Unit. Prior to joining Burlington Northern, Mr. Swienton was Executive
Director-Europe and Africa of DHL Worldwide Express in Brussels, Belgium from 1991 to 1994, and prior to that, he was DHL’s
Managing Director-Western and Eastern Europe from 1988 to 1990, also located in Brussels. For the five years prior to these
assignments, Mr. Swienton was Regional Vice President of DHL Airways, Inc. in the United States. From 1971 to 1982, Mr. Swienton
held various national account, sales and marketing positions with AT&T and Illinois Bell Telephone Company.
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Mr. Swienton serves on
the Board of Directors of Ryder System, Inc and Harris Corporation, an international communications and information technology
company. He also serves on the Board of Trustees of St. Thomas University in Miami.
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Mr. Swienton’s contributes extensive
international business experience, deep expertise in global distribution and supply chain innovations, as well as experience
in growth initiatives, in his service as a director.
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Todd J. Teske
, 48, has
served as a director of our company since 2011. He is a member of the Audit Committee and the Public Policy Committee. In
2010,
Mr. Teske became the Chairman, President and Chief Executive Officer of Briggs & Stratton Corporation, a
world leader in gasoline engines for outdoor power equipment, portable generators, and lawn and garden powered equipment and
related accessories. Before becoming CEO of Briggs & Stratton in January 2010, he served as the company’s President
and Chief Operating Officer, President of its power products business, head of corporate development and Controller.
|
|
|
|
Mr. Teske serves as the Chairman of
the Board of Briggs & Stratton. He also serves on the Board of Directors and as a member of the Audit and Compliance Committee
and the Compensation and Corporate Governance Committee of Badger Meter, Inc., a leading innovator, manufacturer and marketer
of flow measurement and control products.
|
|
|
|
As an active CEO and former corporate
controller, Mr. Teske contributes extensive expertise in the areas of management, finance, accounting, manufacturing, and
corporate governance in his service as a director.
|
PROPOSAL
2:
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The
Audit Committee of the Board has appointed KPMG LLP to continue as our independent registered public accounting firm for the 2013
fiscal year. We are asking our stockholders to ratify the appointment of KPMG LLP as our independent registered public accounting
firm. If our stockholders do not ratify the appointment, the Audit Committee will consider the reasons for such rejection and
whether it should select a different firm; however, it is not required to do so. Even if the appointment is ratified, the Audit
Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year
if it determines that such a change would be in the best interests of the Company and our stockholders.
A
representative of KPMG LLP will be present at the 2013 Annual Meeting of Stockholders and will be available to respond to appropriate
questions. The representative will also have an opportunity to make a statement at the meeting if he or she desires to do so.
THE
BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF
KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
THE
2013 FISCAL YEAR.
Audit
and Non-Audit Fees
The
following table sets forth information as to the fees services rendered by KPMG LLP for each of the last two fiscal years (in
thousands).
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
Audit Fees(1)
|
|
$
|
3,007
|
|
$
|
3,166
|
Audit-Related Fees(2)
|
|
|
78
|
|
|
45
|
Tax Fees(3)
|
|
|
259
|
|
|
196
|
All Other Fees
|
|
|
0
|
|
|
0
|
TOTAL
|
|
$
|
3,344
|
|
$
|
3,407
|
|
(1)
|
Represents
fees
billed
for
the
audit
of
our
financial
statements
included
in
our
Annual
Report
on
Form
10-K
and
review
of
financial
statements
included
in
our
Quarterly
Reports
on
Form
10-Q,
the
audit
of
our
internal
control
over
financial
reporting
and
for
services
that
are
provided
by
KPMG
LLP
in
connection
with
statutory
regulatory
filings
or
engagements.
|
|
(2)
|
Represents
fees
billed
for
assurance
and
related
services
reasonably
related
to
the
performance
of
the
audit
or
review
of
our
financial
statements
and
internal
control
over
financial
reporting.
Such
services
in
2012
and
2011
consisted
of
due
diligence
work
relating
to
potential
business
acquisition.
|
|
(3)
|
Represents
fees
billed
for
tax
compliance,
including
review
of
tax
returns,
tax
advice,
and
tax
planning.
|
Audit
Committee Approval of Audit and Non-Audit Services
The
Audit Committee pre-approves all audit services provided by our independent registered public accountants. In addition, all non-audit
services provided by KPMG LLP are pre-approved in accordance with our policy entitled “Use of External Audit Firm for Non-Attest
Services.” The policy identifies services that are specifically prohibited by Securities and Exchange Commission (“SEC”)
rules and states that these services may not be performed by our independent registered public accountants. For permissible non-audit
services, the Audit Committee has delegated pre-approval authority to the Audit Committee Chairman. In addition, the Audit Committee
has approved annual maximum amounts for tax advisory and tax return services. No engagements are commenced until the Audit Committee
Chairman’s approval has been received. All approved services are reported to the full Audit Committee at each quarterly
meeting. In accordance with the foregoing, all services provided by KPMG LLP in 2012 were pre-approved by the Audit Committee.
AUDIT
COMMITTEE REPORT
The
Audit Committee maintains effective working relationships with the Board, management, the Company’s internal auditors and
KPMG, LLP, the Company’s independent registered public accounting firm (the “Independent Accountants”). As set
forth in the Audit Committee Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that
our Company’s consolidated financial statements and disclosures are complete and accurate and in accordance with generally
accepted accounting principles and applicable rules and regulations. The Independent Accountants are responsible for auditing
the Company’s consolidated financial statements and expressing an opinion as to their conformity with U.S. generally accepted
accounting principles and on the Company’s internal control over financial reporting.
The
Audit Committee (1) has reviewed and discussed the Company’s audited consolidated financial statements for the year ended
December 31, 2012 with the Company’s management and with the Independent Accountants; (2) has discussed with the Independent
Accountants the matters required to be discussed by the Statement on Auditing Standards No. 61, Communication with Audit Committees,
as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board
in Rule 3200T; and (3) has received the written disclosures and the letter from the Independent Accountants required by applicable
requirements of the Public Company Accounting Oversight Board regarding the Independent Accountants’ communications with
the Audit Committee concerning independence, and the Audit Committee has discussed with the Independent Accountants the Independent
Accountants’ independence and considered whether the provision of non-audit services by the Independent Accountants to the
Company is compatible with Independent Accountants’ independence.
Members
of the Audit Committee rely, without independent verification, on the information provided to them and on the representations
made by management and the Independent Accountants. Accordingly, the Audit Committee’s oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal
controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore,
the Audit Committee’s considerations and discussions referred to above do not assure that the audits of the Company’s
consolidated financial statements have been carried out in accordance with generally accepted auditing standards, that the consolidated
financial statements are presented in accordance with U.S. generally accepted accounting principles or that the Company’s
Independent Accountants are in fact “independent.”
Based
upon the reviews and discussions described above, and subject to the limitations on the role and responsibilities of the Audit
Committee referred to in this report and in the Audit Committee Charter, the Audit Committee recommended to the Board that the
audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2012.
Submitted
by the Audit Committee of the Board:
|
|
Paul W. Schmidt (Chairperson)
|
Janet K. Cooper
|
C. L. (Jerry) Henry
|
Todd J. Teske
|
CORPORATE
GOVERNANCE
Director
Independence
Our
Corporate Governance Guidelines require that a majority of our directors be “independent,” and that the Compensation
& Human Resources, Board Governance and Audit Committees consist exclusively of independent directors as independence is defined
under the NYSE listing standards, the Securities and Exchange Act of 1934 and any other applicable laws or regulations regarding
independence. No director qualifies as “independent” unless the Board of Directors affirmatively determines that the
director has no material relationship with the Company.
Applying
these standards, the Board has determined that a majority of our Board is independent and that all of the members of the Board’s
standing committees consist exclusively of independent directors (see table below).
In
making its determination as to the independence of our directors, the Board Governance Committee and the Board considered the
following relationship:
|
●
|
Mr.
Swienton
served
as
the
Chairman
and
Chief
Executive
Officer
of
Ryder
System
Inc.,
which
provides
transportation
and
logistics
services
to
the
Company
in
the
ordinary
course
of
business.
|
Board
Meetings and Leadership Structure
The
Board currently is comprised of 10 members, including 9 independent directors. Mr. Bluedorn serves as the Chairman of the
Board and Chief Executive Officer (“CEO”). The Board has determined that
Mr. Bluedorn’s position as
Chairman aligns well with the role he serves between management and the Board of Directors, providing the Board with the
benefit of management’s perspective on our business strategy and all other aspects of the business as the Board
performs its oversight role. In March 2012, the Board amended our Corporate Governance Guidelines to create a Lead Director
position, and elected Richard L. Thompson, the past Chairman, as Lead Director effective at the conclusion of the 2012 Annual
Meeting. The Board believes the Lead Director position provides helpful guidance to the independent directors in their
oversight of management. The Lead Director, among other things, presides at all meetings of the Board at which the Chairman
is not present, including executive sessions of the independent directors, serves as liaison between the Chairman and the
independent directors, assists the Chairman in planning agendas for Board meetings and advises on the quality of the
information provided to the Board. The Lead Director also has the authority to call meetings of the independent directors,
and, if requested by major shareholders, is available for consultation and direct communication.
The
Board met six times in 2012. All directors attended in excess of 75% of the total number of meetings of the Board and committees
of the Board on which they served. Our Corporate Governance Guidelines include a policy that Board members are expected to attend
the annual meeting of stockholders. All of the individuals serving as directors at the time of our 2012 Annual Meeting of Stockholders
attended the meeting, including each of the four Class III director nominees.
Risk
Oversight and Compensation Risk Analysis
The
Board oversees the Company’s processes to manage risk at the Board and senior management levels. The Audit Committee oversees
the guidelines and policies that govern the Company’s processes to assess and manage significant enterprise risk exposure.
While the Board and Audit Committee oversee the Company’s risk management, our management is responsible for the development,
implementation, and maintenance of our risk management processes. Management provides periodic reports to the Board and Board
committees, as appropriate, on its assessment of strategic, operational, legal and compliance, and financial reporting risks to
the Company. The Board and Board committees, as appropriate, review and consider the management reports provided on the Company’s
enterprise risk and risk management strategy.
We
have reviewed the Company’s compensation policies and practices to determine if risks arising from those policies and practices
are reasonably likely to have a material adverse effect on the Company. Based on such review, we have not identified any risks
arising from our compensation policies and practices that are reasonably likely to have a material adverse effect on the Company.
For our executive compensation programs, we incorporate short-term and long-term incentive programs for cash and equity awards
that are designed to reward successful execution of our business strategy and achievement of desired business results. Additionally,
we have stock ownership requirements and clawback provisions to align the interests of our executive officers with the interests
of our stockholders. For non-executive employees, we use a variety of incentive compensation programs to motivate our employees
to attain individual goals and support the financial performance of the Company. All of our incentive compensation plans are reviewed
at least annually by senior management.
Board
Committees
The
standing committees of the Board are as follows: Audit, Board Governance, Compensation and Human Resources, and Public Policy.
The Board has adopted charters for each of these committees which are available on our website at http://www.lennoxinternational.com
by following the links “About Us — Corporate Governance — Committee Charters.” Each of these Board committees
is led by a different independent director and the members of each Board committee are all independent directors.
The
following table provides current membership information for each of the Board committees and indicates which directors (who served
during 2012) our Board determined are independent, as independence for directors is defined by the NYSE.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Independent
|
|
Audit
|
|
Board
Governance
|
|
Compensation
and Human
Resources
|
|
Public
Policy
|
Richard L. Thompson
|
|
X
|
|
—
|
|
X
|
|
X
|
|
—
|
Todd M. Bluedorn
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Janet K. Cooper
|
|
X
|
|
X
|
|
—
|
|
—
|
|
X
|
C.L. (Jerry) Henry
|
|
X
|
|
X
|
|
X*
|
|
—
|
|
—
|
John E. Major
|
|
X
|
|
—
|
|
X
|
|
X*
|
|
—
|
John W. Norris, III
|
|
X
|
|
—
|
|
—
|
|
X
|
|
X*
|
Paul W. Schmidt
|
|
X
|
|
X*
|
|
X
|
|
—
|
|
—
|
Terry D. Stinson
|
|
X
|
|
—
|
|
X
|
|
X
|
|
—
|
Gregory T. Swienton
|
|
X
|
|
—
|
|
—
|
|
X
|
|
X
|
Todd J. Teske
|
|
X
|
|
X
|
|
—
|
|
—
|
|
X
|
Audit
Committee
The
Audit Committee acts pursuant to its written charter adopted by our Board. The Audit Committee assists the Board in fulfilling
its oversight responsibilities relating to the integrity of our financial statements and related systems of internal controls,
our compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications,
independence and performance and the performance of our internal audit function. The Audit Committee also has the direct responsibility
for the appointment, compensation, retention and oversight of our Independent Accountants.
The
Board has determined that each Audit Committee member is independent, as independence for audit committee members is defined by
the SEC and the NYSE, is “financially literate” as defined by the NYSE and has accounting or related financial management
expertise. The Board has determined that Mr. Schmidt, Chairperson of the Audit Committee, is an audit committee financial expert
as defined by the SEC. The Audit Committee met nine times in 2012.
Board
Governance Committee
The
Board Governance Committee assists the Board by identifying individuals qualified to become Board members, developing qualification
criteria for Board membership, making recommendations to the Board regarding the appropriate size of the Board and appointment
of members to the Board’s committees, developing and recommending to the Board the Corporate Governance Guidelines and code
of conduct applicable to our Company, developing our Company’s director education programs, and overseeing the evaluation
of our Board. The Board has determined that each member of the Board Governance Committee is independent as independence for directors
is defined by the NYSE. The Board Governance Committee met four times in 2012.
Compensation
and Human Resources Committee
The
Compensation and Human Resources Committee determines our compensation philosophy and oversees our compensation programs for our
executive officers and the non-employee members of our Board. The Committee’s responsibilities include oversight of our
short- and long-term incentive plans and our senior management succession plans. The Committee also reviews the funding requirements
and investment policies for our defined benefit and defined contribution retirement plans, and the performance of investment funds,
investment advisors and investment managers under those plans.
The
Committee reports to the full Board on a regular basis and seeks Board approval for actions relating to Board compensation and
independent director approval for the compensation of our CEO. Our CEO makes recommendations to the Committee with respect to
various elements of executive compensation. See “Executive Compensation — Compensation Discussion and Analysis”
for information concerning the Committee’s philosophy and objectives in overseeing executive compensation. The Board has
affirmatively determined that each member of the Committee is independent as independence for compensation committee members is
defined by the NYSE. The Board has also determined that each member of the Committee is a “non-employee director”
for purposes of Section 16b-3 of the Exchange Act and is an “outside director” for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”). The Committee met six times in 2012.
The
Committee’s charter authorizes the Committee to retain third-party compensation consultants and to obtain advice and assistance
from internal or external legal, accounting or other advisors. The Committee retains Frederic W. Cook & Co., Inc. (“Frederic
W. Cook”) as its executive compensation consultant to provide objective analysis, advice and recommendations regarding the
compensation of our executives and non-employee directors. Frederic W. Cook does not otherwise provide any other services for
the Company. See “Executive Compensation — Compensation Discussion and Analysis” for further information regarding
our executive compensation programs and the scope of services provided by Frederic W. Cook. The Committee has concluded that Frederic
W. Cook’s work raises no conflicts of interest that require disclosure under Item 407(e)(3)(iv) of Regulation S-K.
Public
Policy Committee
The
Public Policy Committee is responsible for overseeing our Company’s environmental, health and safety issues, and our position
on corporate social responsibility and public issues of significance that affect our stakeholders. The Board has determined that
each Public Policy Committee member is independent, as independence for directors is defined by the NYSE. The Public Policy Committee
met twice in 2012.
Director
Nomination Process and Nominee Criteria
The
Board is responsible for approving candidates for Board membership. The Board has delegated the director screening and recruitment
process to the Board Governance Committee. In this capacity, the Board Governance Committee develops and periodically reviews
the qualification criteria for Board membership, identifies new director candidates, and makes recommendations to the Board regarding
the appropriate size of the Board and appointment of members to the Board’s committees. The Board Governance Committee typically
retains a third-party search firm to assist in identifying and evaluating potential new director candidates. Qualifications required
of individuals for consideration for Board membership will vary according to the particular areas of expertise, experience and
skills being sought as a complement to the existing Board composition at the time of any vacancy.
Neither
our Board nor our Board Governance Committee has a formal diversity policy. However, our Corporate Governance Guidelines provide
that, when nominating new members to the Board, the Board will seek the best qualified candidates with consideration for diversity.
This consideration may include diversity of experience, functional expertise and industry knowledge. Our Board of Director Qualification
Guidelines further provide that the Board Governance Committee consider a candidate’s diversity of viewpoints in determining
the particular qualifications desired for any new Board member.
According
to our Board of Director Qualification Guidelines, the Board Governance Committee considers the following factors in evaluating
directors, in addition to such other factors that the Board Governance Committee deems relevant:
|
●
|
Personal
Characteristics:
leadership,
integrity,
interpersonal
skills
and
effectiveness,
accountability
and
high
performance
standards;
|
|
●
|
Business
Attributes:
high
levels
of
leadership
experience
in
business,
substantial
knowledge
of
issues
faced
by
publicly-traded
companies,
experience
in
positions
demonstrating
expertise,
including
on
other
boards
of
directors,
financial
acumen,
industry
and
Company
knowledge,
diversity
of
viewpoints
and
experience
in
international
markets
and
strategic
planning;
|
|
●
|
Independence:
independence
based
on
the
standards
established
by
the
NYSE,
the
SEC
and
any
other
applicable
laws
or
regulations;
|
|
●
|
Professional
Responsibilities:
willingness
to
commit
the
time
required
to
fully
discharge
his
or
her
responsibilities,
commitment
to
attend
meetings,
ability
and
willingness
to
represent
the
stockholders’
long
and
short-term
interests,
awareness
of
our
responsibilities
to
our
customers,
employees,
suppliers,
regulatory
bodies
and
the
communities
in
which
we
operate
and
willingness
to
advance
his
or
her
opinions
while
supporting
the
majority
Board
decision,
assuming
questions
of
ethics
or
propriety
are
not
involved;
|
|
●
|
Governance
Responsibility:
ability
to
understand,
and
distinguish
between,
the
roles
of
governance
and
management;
and
|
|
●
|
Availability
and
Commitment:
availability
based
on
the
number
of
commitments
to
other
entities
existing
or
contemplated
by
the
candidate.
|
The
full text of our qualification guidelines can be found on our website at http://www.lennoxinternational.com by following the links
“About Us — Corporate Governance — Board of Director Qualification Guidelines.”
When
a vacancy occurs on the Board, the Board Governance Committee may recommend to the Board a nominee to fill the vacancy, or alternatively
may recommend that the vacancy remain. The Board Governance Committee also evaluates and recommends to the Board nominees for
election to our Board at our Annual Meeting.
Stockholder
Nominations for Director
The
Board Governance Committee considers nominees for election to the Board recommended by stockholders in the same manner as other
candidates. A stockholder wishing to nominate a candidate for election to the Board at a meeting of the stockholders is required
to give written notice to our Corporate Secretary of his or her intention to make a nomination in accordance with the terms of
our Bylaws. We must receive the notice of nomination at least 60 days but no more than 90 days prior to the Annual Meeting of
Stockholders, or if we give less than 70 days’ notice of the Annual Meeting date, the notice of nomination must be received
within 10 days following the date on which notice of the date of the Annual Meeting was mailed or such public disclosure was made
to our stockholders.
Pursuant
to our Bylaws, the notice of nomination is required to contain certain information about both the nominee and the stockholder
making the nomination, including information sufficient to allow the Board Governance Committee to determine if the candidate
meets our qualification criteria for Board membership. The Board Governance Committee may require that the proposed nominee furnish
additional information in order to determine that person’s eligibility to serve as a director. A nomination that does not
comply with the above procedure will be disregarded. Stockholder nominees whose nominations comply with the foregoing procedure
and who meet the criteria described above under the heading “Director Nomination Process and Nominee Criteria” and
in our Corporate Governance Guidelines will be evaluated by the Board Governance Committee in the same manner as the Board Governance
Committee’s nominees.
Stockholder
Communications with Directors
Stockholders
may send written communications to the Board by email to directors@lennoxintl.com, or by regular mail to 2140 Lake Park Blvd.,
Richardson, Texas 75080, Attention: Board of Directors, c/o Corporate Secretary.
Stockholder
communications received by the Corporate Secretary will be delivered to one or more members of the Board or management, as determined
by the Corporate Secretary. Any allegations of accounting, internal controls or auditing-related complaints or concerns will be
directed to the Chairman of the Audit Committee.
Interested
parties may communicate with non-management directors of the Board by sending written communications to the addresses listed above
to the attention of the Chairman of the Board.
Other
Corporate Governance Policies and Practices
Code
of Conduct
We
have adopted a Code of Conduct that applies to all our directors and employees, including our senior financial and principal executive
officers. Amendments to and waivers, if any, of our Code of Conduct as it pertains to our executive officers, will be disclosed
on our website. Our Code of Conduct is available on our website at http://www.lennoxinternational.com by following the links “About
Us — Corporate Governance — Code of Conduct.”
Corporate
Governance Guidelines
We
have adopted Corporate Governance Guidelines that are available on our website at http://www.lennoxinternational.com by following
the links “About Us — Corporate Governance — Corporate Governance Guidelines.”
Executive
Session Meetings
In
accordance with our Corporate Governance Guidelines, the independent members of our Board, all of whom are non-management directors,
meet regularly in executive session without the presence of management. The Lead Director chairs the executive session meetings
of our independent directors.
Whistleblower
Procedures
The
Audit Committee has established procedures for the handling of complaints regarding accounting, internal accounting controls,
or auditing matters, including procedures for confidential and anonymous submission by our employees of concerns regarding such
matters.
Sustainability
Report
The
Company issued its first Sustainability Report this year.
PROPOSAL
3:
ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
The
Company’s stockholders are entitled to vote at the Annual Meeting to approve the compensation of the Company’s
named executive officers, or NEOs (“Say-on-Pay”), as disclosed in this Proxy Statement. The
Say-on-Pay
vote is a vote on the advisory resolution below, and it is not binding on the Company or the Board. Although the vote is
non-binding, the Compensation and Human Resources Committee and the Board value the opinions of the stockholders and will
consider the outcome of the vote when making future compensation decisions.
As
described more fully in the Compensation Discussion and Analysis section of this Proxy Statement, the Company has designed its
NEO compensation program to reward successful execution of our business strategy and achievement of desired business results,
with a focus on creating alignment with the interests of our stockholders. Our program seeks to achieve these goals on an annual
and long-term basis through a balanced combination of base pay, annual incentives and long-term incentives.
The
annual incentive payout is based on Company financial performance metrics, and for NEOs that are business segment leaders, a combination
of Company and business segment metrics. In addition, long-term incentives currently include: (i) stock appreciation rights (SARs),
which are designed to incentivize NEOs to grow our business and deliver increased returns to our stockholders, (ii) restricted
stock units (RSUs), which are designed to support our retention efforts, and (iii) performance shares units (PSUs), which are
designed to link compensation to the Company’s financial performance as measured by Return on Invested Capital (a three-year
weighted average) and Net Income (three-year compound annual growth rate).
The
Company also has several governance programs in place to align executive compensation with stockholder interests and mitigate
risks in its plans. These programs include: stock ownership guidelines, prohibition of employee hedging of Company stock, and
a clawback policy. These programs are discussed in detail in the Compensation Discussion and Analysis section of this Proxy Statement.
In
2012, the Company continued to drive performance and stockholder value through its focus on innovation, productivity and disciplined
use of cash. In this regard, some highlights of our 2012 performance are outlined below and are described in more detail in our
Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ending December 31, 2012. These results have been adjusted
for discontinued operations related to the divestiture of the Hearth business and the planned divestiture of the Service Experts
business.
|
●
|
Diluted
GAAP
EPS
from
continuing
operations
of
$2.63,
up
26%
from
2011;
and
|
|
●
|
One-year
stockholder
return
of
58%
and
three-year
total
stockholder
return
of
41%
(in
both
cases,
assuming
reinvestment
of
dividends).
|
We
are asking stockholders to approve the following advisory resolution at the Annual Meeting:
RESOLVED,
that the compensation of the Company’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 is hereby APPROVED.
The
Say-on-Pay vote shall be approved if the votes cast in favor of the proposal exceed the votes cast against the proposal. Abstentions
will not be counted as either votes cast for or against the proposal. If no voting specification is made on a properly returned
or voted proxy card, the proxies named on the proxy card will vote FOR the approval of the compensation of the NEOs.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
COMPENSATION OF THE NEOS AS DISCLOSED IN THIS PROXY STATEMENT.
EXECUTIVE
COMPENSATION
Compensation
Discussion And Analysis
Executive
Summary
LII’s
executive compensation program is designed to attract, retain and motivate leadership talent, align executive compensation with
short- and long-term business goals, maintain market competitiveness and drive increased stockholder value. Set forth below are
highlights of our 2012 financial performance and how our executive compensation program is linked directly to our performance.
2012
Financial Highlights
In
2012, the Company continued to drive performance and shareholder value through its focus on innovation, productivity and a disciplined
use of cash. These results have been adjusted for discontinued operations related to the divestiture of the Hearth business and
the planned divestiture of the Service Experts business as described in more detail in our Form 10-K for the year ending December
31, 2012.
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Net
sales
up
4%
from
2011
to
approximately
$2.95
billion
|
|
●
|
Diluted
GAAP
EPS
from
continuing
operations
of
$2.63,
up
26%
from
2011
|
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●
|
One-year
stockholder
return
of
58%
and
three-year
total
stockholder
return
of
41%
(in
each
case,
assuming
reinvestment
of
dividends)
|
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●
|
Cash
generated
from
operations
of
$221
million,
up
from
$76
million
in
2011
|
Pay
for Performance Linkage
LII’s
pay for performance linkage is demonstrated through both our annual incentive compensation program and our long-term incentive
program. As such, we did not implement any major changes to our executive compensation program in 2012. Highlights of our short-term
and long-term incentive programs and how they are linked to our pay-for-performance philosophy include:
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85%
of
our
CEO’s
compensation
is
designed
as
variable
–
either
tied
to
annual
or
long-term
incentive
compensation
|
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●
|
70%
of
our
NEOs’
long-term
incentive
compensation
is
performance-based,
with
the
remainder
provided
as
RSUs
for
retention
purposes
|
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●
|
CEO
compensation
(as
shown
in
the
Summary
Compensation
Table)
was
up
approximately
39%
in
2012,
following
an
18%
decrease
in
2011.
The
2012
compensation
increase
was
driven
mostly
by
higher
variable
compensation
–
and
is
supported
by
our
one-year
stockholder
return
of
58%
and
our
three-year
stockholder
return
of
41%
|
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●
|
Actual
payouts
under
our
Performance
Share
Unit
(“PSU”)
Program
have
ranged
from
0%
to
86.9%
of
target
over
the
last
three
completed
performance
cycles
(each
spanning
three
years)
while
stockholder
return
over
that
same
five-year
period
has
increased
almost
38%
(assuming
reinvestment
of
dividends)
|
Overview
This
Compensation Discussion and Analysis (“CD&A”) describes the philosophy and objectives of the compensation programs
for our NEOs. The Compensation and Human Resources Committee of the Board (the “Committee”) establishes and administers
our executive compensation programs, practices and policies. The Committee receives input from management and its executive compensation
consultant, and considers competitive practices, our business objectives, stockholder interests, regulatory requirements and other
relevant factors to develop our executive compensation programs. The Committee reviews, modifies and approves, as appropriate,
our executive compensation programs in an effort to provide market-competitive compensation for our executive officers.
The
Committee also monitors the results of the Say-on-Pay vote and considers those results in determining compensation policies and
decisions. At our 2012 Annual Meeting, over 80% of votes cast on the Say-on-Pay resolution approved the compensation program described
in our 2012 proxy statement. Our Say-on-Pay approval declined slightly from the prior year’s results, and management responded
by initiating discussions with proxy advisors and investors to better understand investors’ issues and views concerning
executive compensation.
Executive
Compensation Philosophy and Key Objectives
Pay-for-Performance
We
maintain a pay-for-performance compensation philosophy designed to reward successful execution of our business strategy and achievement
of desired business results, with a focus on aligning compensation with the interests of our stockholders. When our financial
results exceed expected performance, monetary rewards to our executive officers generally pay out at higher levels. When our financial
results fall below expected performance, monetary awards to our executive officers generally pay out at lower levels.
Recent
payouts under our short-term incentive program demonstrate the strong link between Company performance and actual payments made
to our executive officers. In 2012, overall Company performance exceeded expectations and, as a result, our NEOs experienced above
target annual incentive compensation payouts. In 2011, when the Company performed below expectations, annual incentive compensation
payouts were less than 15% of those in 2012. These results are consistent with our pay-for-performance approach, which we believe
motivates the type of results-oriented culture we strive to achieve at the Company. The graph below further depicts our adherence
to a pay-for-performance philosophy by showing changes in annual CEO compensation (using Summary Compensation Table totals) versus
changes in total shareholder return (“TSR”) over the last several years.
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|
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|
|
$ amounts are in thousands. TSR represents the
change in a $100 investment from the end of fiscal
year 2007, assuming reinvestment of dividends.
|
Key
Strategic Objectives
The
strategic objectives of our executive compensation programs are to:
|
●
|
attract,
retain
and
motivate
top
executive
talent;
|
|
●
|
align
with
the
achievement
of
short-term
and
long-term
business
goals;
|
|
●
|
maintain
market-competitive
executive
compensation
programs;
and
|
|
●
|
drive
increased
stockholder
value
by
maintaining
a
strong
alignment
between
pay
and
performance.
|
The
following table lists each element of executive compensation and how the Committee believes it correlates to our compensation
philosophy and key objectives.
|
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|
|
|
|
|
|
|
|
|
|
|
Executive
Compensation Elements
|
|
Attract
Top
Talent
|
|
Retain &
Motivate
Top
Talent
|
|
Achieve
Short-
Term
Goals
|
|
Achieve
Long-
Term
Goals
|
|
Maintain
Market
Competiveness
|
|
Pay for
Performance
|
Base Salary
|
|
ü
|
|
ü
|
|
|
|
|
|
ü
|
|
|
Short-Term Incentive
Program
|
|
ü
|
|
ü
|
|
ü
|
|
|
|
ü
|
|
ü
|
Long-Term Incentive
Program
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Share Units
|
|
ü
|
|
ü
|
|
|
|
ü
|
|
ü
|
|
ü
|
Restricted Stock
Units
|
|
ü
|
|
ü
|
|
|
|
|
|
ü
|
|
|
Stock Appreciation
Rights
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
Perquisites
|
|
ü
|
|
ü
|
|
|
|
|
|
ü
|
|
|
Benefit Programs
|
|
ü
|
|
ü
|
|
|
|
|
|
ü
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Competitive
Compensation
Market
Analysis
To
maintain a market-competitive program, the Committee uses benchmarking data when establishing executive compensation. Benchmarking
against a representative peer group assists us in assessing the competitiveness of our executive compensation programs.
Our
Company’s compensation peer group, as reviewed and approved by the Committee, includes the following 15 companies and is
unchanged from the prior year (the “Compensation Peer Group”):
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●
|
A. O. Smith Corporation
|
|
●
|
Flowserve Corporation
|
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●
|
Rockwell Automation, Inc.
|
●
|
Acuity Brands, Inc.
|
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●
|
Gardner Denver, Inc.
|
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●
|
Snap-On Incorporated
|
●
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Armstrong World Industries, Inc.
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●
|
Kennametal Inc.
|
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●
|
SPX Corporation
|
●
|
Briggs & Stratton Corporation
|
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●
|
Owens Corning
|
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●
|
The Timken Company
|
●
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Dover Corporation
|
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●
|
Pentair, Inc.
|
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●
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USG Corporation
|
The
Committee selected the members of our Compensation Peer Group using the following criteria:
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●
|
industry—building
products,
electrical
components/equipment,
household
appliances
and
industrial
machinery;
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●
|
revenues
of
approximately
0.5
to
2.0
times
our
revenues;
|
|
●
|
business
and
product
mix
similar
to
ours;
and
|
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●
|
international
presence
and
operations.
|
Although
other potential peer companies fit these selection criteria, the Committee has a strong preference for year-over-year consistency,
when possible, for our Compensation Peer Group.
In
addition to comparing our executive officer compensation to the compensation provided by our Compensation Peer Group, we also
reference published compensation data from compensation databases and other studies of compensation trends and practices (with
all such data and practices, including our Compensation Peer Group, collectively referred to as the “Market”).
Pay
Positioning and Compensation Mix
For
2012, the Committee targeted base salary for our NEOs at the 50
th
percentile of the Market. The Committee set short-term
incentive opportunities and long-term incentive planning values between the 50
th
– 65
th
percentiles
of the Market and included stretch performance goals, allowing us to maintain a strong pay-for-performance link while attracting
and retaining leadership talent.
The
Committee granted a majority of total compensation to our NEOs in the form of non-cash long-term incentive awards. The graphs
below illustrate the 2012 target compensation mix for the CEO and the average target compensation mix for the other NEOs.
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|
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CEO - Target Compensation Mix
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|
Other NEOs - Target Compensation
Mix
|
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|
|
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|
We
apply similar methodologies in setting compensation and determining the compensation mix for our CEO as we apply for our other
NEOs, but our CEO’s target compensation mix has a slightly greater percentage of “at-risk” performance-based
incentive compensation, largely due to his broad influence on Company performance.
Process
for Determining Named Executive Officer Compensation
Role
of Management
The
Committee obtains input from various members of management when making executive compensation decisions. The CEO makes recommendations
to the Committee with respect to all of the elements of compensation to be offered to each of the other executive officers. Recommendations
are developed in consultation with the Chief Human Resources Officer and the Committee’s compensation consultant, and are
considered with relevant Market data. The Committee then determines and approves the final compensation elements and amounts to
be provided to the Company’s executive officers. The CEO does not make any recommendations regarding his own compensation.
In
March 2012, the Board changed the process for approving CEO compensation. As a result of this change, the independent members
of the Board (rather than the Committee) have direct responsibility for approving CEO compensation. The Committee reviews and
recommends proposed changes to CEO compensation to the independent members of the Board for approval.
Role
of the Executive Compensation Consultant
In
2012, the Committee engaged Frederic W. Cook to provide analysis, advice and recommendations on executive compensation to the
Committee. Frederic W. Cook does not otherwise provide any other services for our Company. At the Committee’s request, Frederic
W. Cook performed the following services for the Committee in 2012:
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●
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reviewed
and
opined
on
our
executive
compensation
philosophy;
|
|
●
|
reviewed
and
opined
on
our
Compensation
Peer
Group;
|
|
●
|
provided
and
analyzed
data
for
various
elements
of
executive
compensation;
|
|
●
|
reviewed
and
opined
on
our
executive
and
Board
compensation
programs;
and
|
|
●
|
presented
executive
compensation
trends
and
regulatory
updates
to
the
Committee.
|
The
Committee analyzed and considered the information provided by management and Frederic W. Cook to determine the appropriate program
design and the level and mix of each compensation element for the NEOs.
Components
and Analysis of 2012 Executive Compensation
Base
Salary
In
establishing each NEO’s annual base salary, the Committee considered salary data for the Market, each individual’s
experience and responsibilities, our annual merit budget, achievement of performance objectives, internal equity and recommendations
provided by the CEO for his direct reports.
The
following table provides detail regarding 2012 and 2013 base salaries for each NEO:
Name
|
|
Title
|
|
2012
Annualized
Base Salary
|
|
|
Increase
Effective
April 1, 2013
|
|
|
2013
Annualized
Base Salary
|
|
Todd M. Bluedorn
|
|
Chairman and Chief Executive Officer
|
|
$
|
980,000
|
|
|
|
2.0
|
%
|
|
|
$
|
1,000,000
|
|
Joseph Reitmeier
|
|
EVP, Chief Financial Officer
|
|
|
370,000
|
|
|
|
4.1
|
|
|
|
|
385,000
|
|
Douglas L. Young
|
|
EVP, President and Chief Operating Officer, Residential Heating and Cooling
|
|
|
430,000
|
|
|
|
11.6
|
|
|
|
|
480,000
|
|
David W. Moon
|
|
EVP, President and Chief Operating Officer, Worldwide Refrigeration
|
|
|
395,000
|
|
|
|
13.9
|
|
|
|
|
450,000
|
|
Daniel M. Sessa
|
|
EVP, Chief Human Resources Officer
|
|
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420,000
|
|
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|
3.6
|
|
|
|
|
435,000
|
|
In
setting NEO base salaries, the Committee used the 50
th
percentile of the Market as a guideline. The base salary was
set within a reasonable range of this guideline for each NEO.
Mr.
Moon’s and Mr. Young’s base salaries were increased more than the other NEOs 1) in an effort to better align with
the Market, and 2) in recognition of the scope and complexity of their roles.
Short-Term
Incentive Program
Our
short-term incentive program is an annual cash-based program for our executive officers designed to reward the successful performance
of our Company, our business units and each individual. Early each year, the CEO proposes to the Committee, for review and approval,
the financial metrics and performance goals that must be achieved for any payouts to be made under our short-term incentive program.
The 2012 short-term incentive program is funded based on performance against the financial goals, which follow. The 2012 short-term
incentive awards were based 75% on financial performance and 25% on each NEO’s individual performance.
Financial
Performance
. The following table summarizes the performance goals and payout opportunities under our
2012 short-term incentive program, along with the actual Company and business unit performance for each metric.
2012
Short-Term Incentive Program Summary — Financial Performance
($ in millions)
Name(1)
|
|
Metric
|
|
Weight
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
All
|
|
Company Core Net Income(2)
|
|
60%
|
|
$
|
96,239
|
|
|
$
|
120,299
|
|
|
$
|
138,344
|
|
|
$
|
121,102
|
|
|
|
Free Cash Flow(3)
|
|
40%
|
|
|
72,100
|
|
|
|
103,000
|
|
|
|
133,900
|
|
|
|
171,200
|
|
Payout Opportunity as a % of Target
|
|
|
|
50
|
%
|
|
|
100
|
%
|
|
|
225
|
%
|
|
|
|
|
Mr. Young
|
|
Segment Profit(4)
|
|
70%
|
|
$
|
78,065
|
|
|
$
|
93,157
|
|
|
$
|
98,982
|
|
|
$
|
108,998
|
|
|
|
Segment Controllable Cash Flow(5)
|
|
30%
|
|
|
65,368
|
|
|
|
81,710
|
|
|
|
98,052
|
|
|
|
106,461
|
|
Payout Opportunity as a % of Target
|
|
|
|
50
|
%
|
|
|
100
|
%
|
|
|
225
|
%
|
|
|
|
Mr. Moon
|
|
Segment Profit(4)
|
|
70%
|
|
$
|
83,173
|
|
|
$
|
95,908
|
|
|
$
|
105,459
|
|
|
$
|
83,877
|
|
|
|
Segment Controllable Cash Flow(5)
|
|
30%
|
|
|
68,504
|
|
|
|
85,630
|
|
|
|
102,756
|
|
|
|
72,476
|
|
Payout Opportunity as a % of Target
|
|
|
50
|
%
|
|
|
100
|
%
|
|
|
225
|
%
|
|
|
|
|
|
(1)
|
All
NEOs
except
Mr.
Young
and
Mr.
Moon
were
measured
100%
on
overall
Company
financial
performance,
which
earned
a
153%
of
target
payout
factor.
Because
Mr.
Young
is
the
President
of
our
Residential
Heating
and
Cooling
segment,
his
award
was
measured
50%
on
Residential
Heating
and
Cooling’s
financial
performance
and
50%
on
overall
Company
financial
performance.
Residential
Heating
and
Cooling’s
financial
performance
resulted
in
a
225%
payout,
which
when
blended
with
our
Company
financial
performance
of
153%
resulted
in
a
payout
as
a
percentage
of
target
of
189%.
Because
Mr.
Moon
is
the
President
of
our
Refrigeration
segment,
his
award
is
measured
50%
on
Refrigeration’s
financial
performance
and
50%
on
overall
Company
financial
performance.
Refrigeration’s
financial
performance
resulted
in
a
55%
payout,
which
when
blended
with
our
Company
financial
performance
of
153%
resulted
in
a
payout
as
a
percentage
of
target
of
104%.
|
|
(2)
|
We
calculate
Company
core
net
income,
which
is
a
non-GAAP
financial
measure
used
only
for
incentive
compensation
purposes,
as
income
from
continuing
operations,
adjusted
for
2012
restructuring
charges,
certain
product
quality
adjustments,
certain
legal
contingency
adjustments,
unrealized
gains
on
open
futures
contracts,
and
certain
other
items.
The
operating
losses
attributable
to
the
planned
Service
Experts
business
divestiture
were
included
in
Company
core
net
income.
|
|
(3)
|
We
calculate
free
cash
flow,
which
is
a
non-GAAP
financial
measure
used
only
for
incentive
compensation
purposes,
as
net
cash
provided
by
operating
activities
less
purchases
of
property,
plant
and
equipment.
|
|
(4)
|
We
calculate
segment
profit,
which
is
a
non-GAAP
financial
measure
used
only
for
incentive
compensation
purposes,
as
earnings
from
continuing
operations
for
the
applicable
segment
before
interest
expense,
other
expenses,
net
and
income
taxes,
adjusted
for
2012
restructuring
charges,
certain
product
quality
adjustments,
certain
legal
contingency
adjustments,
unrealized
gains
on
open
futures
contracts,
and
certain
other
items.
|
|
(5)
|
We
calculate
controllable
cash
flow,
which
is
a
non-GAAP
financial
measure
used
only
for
incentive
compensation
purposes,
as
segment
profit,
defined
above,
less
purchases
of
property,
plant
and
equipment,
plus
or
minus
changes
in
accounts
receivable,
inventory
and
accounts
payable.
|
Individual
Performance
. The Committee considers individual performance in addition to financial performance in order
to further align pay with performance. After an NEO’s short-term incentive payout is calculated, based on Company and segment
financial performance as described above, that result may be decreased by as much as 25%, or increased by up to 56.25% to account
for individual performance. The individual performance component is measured against specific financial, operational, strategic,
and leadership objectives established for each NEO in advance of the performance measurement period as part of our performance
management process. After the end of the fiscal year, the CEO reviews with the Committee the extent of achievement of these objectives
by each NEO. The Committee then determines and approves the individual performance component for each executive officer. Based
on the Committee’s review of the CEO’s performance, the Committee recommended to the independent members of the Board
and the Board approved an increase in Mr. Bluedorn’s short-term incentive payout to 170% of target. Mr. Moon and Mr. Sessa
also received payout adjustments based on their individual performance, resulting in an actual payout for Mr. Moon of 148% and
Mr. Sessa of 170%.
Targets
and Payouts
. Under the short-term incentive program, target payout opportunities are determined as a
percentage of base salary. The target payout opportunities are based on Market data using the 50
th
– 65
th
percentiles as a guideline. Each NEO’s target percentage fits within this guideline.
Based
on analysis of the Market data and internal equity considerations, the Committee set the following short-term incentive targets
for 2012. Based on actual financial and individual performance, the Committee approved the following 2012 payouts for each NEO:
2012
Short-Term Incentive Targets and Payouts
Name
|
|
2012
STI Target as a
% of Base Salary
|
|
|
2012 STI Target
|
|
|
2012 STI Payout
|
|
|
2012
STI Payout as a
% of Target
|
|
Mr. Bluedorn
|
|
|
125
|
%
|
|
|
$
|
1,202,582
|
|
|
$
|
2,044,039
|
|
|
|
170
|
%
|
|
Mr. Reitmeier (1)
|
|
|
40 / 70
|
|
|
|
|
168,130
|
|
|
|
286,143
|
|
|
|
170
|
|
|
Mr. Young
|
|
|
70
|
|
|
|
|
298,725
|
|
|
|
565,098
|
|
|
|
189
|
|
|
Mr. Moon
|
|
|
70
|
|
|
|
|
272,125
|
|
|
|
404,017
|
|
|
|
148
|
|
|
Mr. Sessa
|
|
|
70
|
|
|
|
|
291,375
|
|
|
|
495,337
|
|
|
|
170
|
|
|
|
(1)
|
Mr.
Reitmeier
was
promoted
to
CFO
in
July
2012
and
previously
served
as
the
finance
leader
for
our
Commercial
Heating
and
Cooling
segment.
His
2012
STI
payout
was
pro-rated
to
reflect
the
two
roles
he
held
in
2012.
|
The
Committee may, in its discretion, modify the short-term incentive program to account for unusual events or revised business objectives
that occur during the performance period. The Committee did not make any such modifications in 2012.
We
include the short-term incentive payments made to the NEOs for 2012, which were approved by the Committee on February 28, 2013
and paid on March 15, 2013, in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.”
Long-Term
Incentive Program
We
have a long-term incentive program designed to incent those employees who have principal responsibility for our long-term profitability.
We believe participation in our long-term incentive program helps align the interests of our NEOs with the interests of our stockholders.
We
use a mix of PSUs, restricted stock units (“RSUs”) and stock appreciation rights (“SARs”) in our long-term
incentive program. PSUs and SARs reward performance, as measured by achievement of specified financial objectives for PSUs and
stock price growth for SARs. RSUs help us to retain key members of management because of their time-based vesting. The Committee
allocated the mix of elements in our long-term incentive program in a manner designed to drive Company performance, retain key
talent, and provide competitive compensation.
For
2012, the long-term incentive allocations for our NEOs were as follows:
|
|
|
Award Vehicle
|
|
Performance vs. Time-Based Allocation
|
|
|
|
|
|
|
The
Committee determines the grant date for all long-term incentive awards. The Committee generally grants awards on an annual basis
at its regularly scheduled December meeting. Although awards may be granted in special circumstances or upon hire for certain
executives, no out-of-cycle grants were made to any NEO in 2012. The Committee does not coordinate the grant date for any award
with the release of material non-public information. The Committee sets the exercise price of our SARs at 100% of fair market
value, which is defined as the average of the high and low NYSE trading prices of our common stock on the date of grant.
The
target planning values under our long-term incentive program are based on publicly available Market data for similar executive
officer positions using the 50
th
– 65
th
percentiles as a guideline. In December 2012, the Committee
established the target planning values between the 50
th
– 65
th
percentiles of the Market, which reflected
an increase of approximately 10% from prior year planning values – the first program increase since 2005. When determining
the actual award sizes for each NEO, the Committee considered the NEO’s time in position, individual performance and potential,
the NEO’s impact on the financial performance of our Company, internal equity, and the number of shares available for grant
under the Lennox International Inc. 2010 Incentive Plan, as amended and restated (the “LII Incentive Plan”).
Once
the Committee determined the actual long-term incentive planning value for each NEO for the 2012 grants, 50% of the value was
provided as PSUs, 30% as RSUs and 20% as SARs.
The
following table summarizes the planning values and number of awards granted for each NEO:
|
|
December 2012 Planning Value
|
|
|
Number of Awards Granted
|
|
Name
|
|
PSUs
|
|
|
RSUs
|
|
|
SARs
|
|
|
Total
|
|
|
PSUs(1)
|
|
|
RSUs(1)
|
|
|
SARs(2)
|
|
|
Total
|
|
Mr. Bluedorn
|
|
$
|
2,037,500
|
|
|
$
|
1,222,500
|
|
|
$
|
815,000
|
|
|
$
|
4,075,000
|
|
|
|
39,995
|
|
|
|
23,997
|
|
|
|
56,014
|
|
|
|
120,006
|
|
Mr. Reitmeier (3)
|
|
|
350,000
|
|
|
|
210,000
|
|
|
|
140,000
|
|
|
|
700,000
|
|
|
|
6,870
|
|
|
|
4,122
|
|
|
|
9,621
|
|
|
|
20,613
|
|
Mr. Young
|
|
|
550,000
|
|
|
|
330,000
|
|
|
|
220,000
|
|
|
|
1,100,000
|
|
|
|
10,796
|
|
|
|
6,477
|
|
|
|
15,120
|
|
|
|
32,393
|
|
Mr. Moon
|
|
|
550,000
|
|
|
|
330,000
|
|
|
|
220,000
|
|
|
|
1,100,000
|
|
|
|
10,796
|
|
|
|
6,477
|
|
|
|
15,120
|
|
|
|
32,393
|
|
Mr. Sessa
|
|
|
500,000
|
|
|
|
300,000
|
|
|
|
200,000
|
|
|
|
1,000,000
|
|
|
|
9,814
|
|
|
|
5,888
|
|
|
|
13,745
|
|
|
|
29,447
|
|
|
(1)
|
The
specific
number
of
PSUs
and
RSUs
granted
were
determined
by
dividing
the
corresponding
planning
value
by
the
fair
market
value
of
our
common
stock
on
the
NYSE
averaged
over
the
30
calendar
days
ending
on
November
28,
2012
($50.944).
|
|
(2)
|
The
specific
number
of
SARs
granted
was
determined
by
dividing
the
corresponding
planning
value
by
the
Black-Scholes
value
of
our
common
stock
based
on
the
30
calendar
day
average
of
our
common
stock
as
of
November
28,
2012
($14.550).
|
|
(3)
|
Mr.
Reitmeier’s
planning
value
and
number
of
awards
granted
reflect
his
recent
promotion
to
CFO
in
July
2012.
|
PSUs
. To
maintain our strong focus on long-term Company performance, we granted 50% of the December 2012 long-term incentive award in the
form of PSUs. PSUs generally vest at the end of a three-year performance period. If the threshold performance level has been achieved
at the end of the performance period, the PSUs, to the extent earned, are distributed in the form of Company common stock. Dividends
are not earned or paid on PSU awards during the three-year performance period. The Committee determines the measurement criteria
annually, in consultation with the CEO, and in consideration of the financial metrics selected for the short-term incentive program
as well as other metrics that enhance stockholder value. The Committee certifies the financial performance levels following the
end of the performance period and the Company distributes any earned shares. We believe that the degree of difficulty in achieving
these metrics is challenging.
The
following table summarizes the key attributes of the PSUs granted in December 2009, which vested on December 31, 2012, and sets
out the financial performance goals and payout opportunities versus actual performance.
December
2009 PSU Grant
(for the January 1, 2010 — December 31, 2012 Performance Period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric
(1)
|
|
Weight
|
|
Measurement
Period
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Actual
|
Return on Invested Capital (“ROIC”)
|
|
50%
|
|
3-year weighted average (20% lowest
year, 40% other two years)
|
|
15
|
%
|
|
19
|
%
|
|
23
|
%
|
|
16.5
|
%
|
Company Core Net Income
|
|
50%
|
|
3-year compound annual growth rate
|
|
-10
|
%
|
|
6
|
%
|
|
12
|
%
|
|
6.3
|
%
|
Payout as a % of Target Award
|
|
|
|
|
|
50
|
%
|
|
100
|
%
|
|
200
|
%
|
|
86.9
|
%
|
|
(1)
|
We
calculate
net
operating
profit
after
tax
(NOPAT),
which
is
a
component
of
ROIC
and
a
non-GAAP
financial
measure
used
only
for
incentive
compensation
purposes,
as
income
from
continuing
operations,
adjusted
for
restructuring
charges,
certain
product
quality
adjustments,
certain
legal
contingency
adjustments,
unrealized
gains
on
open
futures
contracts
and
certain
other
items.
The
operating
losses
attributable
to
the
Hearth
business
divestiture
and
the
planned
Service
Experts
divestiture
were
included
in
both
Company
core
net
income
and
NOPAT.
The
earnings
and
acquisition-related
costs
attributable
to
the
Kysor/Warren
acquisition,
which
occurred
after
the
performance
period
began,
were
excluded
from
Company
core
net
income
and
NOPAT.
|
In
2012, NEOs earned an 86.9% of target payout for the PSUs granted in December 2009. The payout value is reflected in the Fiscal
2012 Option Exercises and Stock Vested Table in the “Stock Awards — Value Realized on Vesting” column.
The
following table summarizes the key attributes of the PSUs granted in December 2012. The Committee established the ROIC performance
goals based on its assessment of desired return relative to the cost of capital as well as historical and projected ROIC outcomes.
Similarly, the Committee set our Company core net income growth performance goals based on historical results, projected outcomes
of that measure, and expected market conditions. While specific forward-looking performance goals are not included in the table
below in light of competitive sensitivities, the performance standards are similar to those disclosed for prior completed cycles.
December
2012 PSU Grant
(for the January 1, 2013 — December 31, 2015 Performance Period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric
|
|
Weight
|
|
Rationale
for
Selection
|
|
Measurement
Period
|
|
Threshold
|
|
Target
|
|
Maximum
|
ROIC
|
|
50%
|
|
Measures
efficient use of
capital; higher
ROIC correlates
to greater cash
flow
|
|
Three-year weighted
average (20% lowest year, 40% other two years)
|
|
No payout occurs unless
ROIC exceeds LII’s estimated cost of capital
|
Company Core
Net Income
Growth
|
|
50%
|
|
Measures
profitability;
higher Company
core net income
correlates with
higher earnings
per share
|
|
Three-year compound
annual growth rate
|
|
Maximum payout requires
mid-teens core net income
compound annual growth rate
|
Payout
as a % of Target Award
|
|
|
|
50%
|
|
100%
|
|
200%
|
The
PSUs granted to our NEOs in 2012 are included in the Fiscal 2012 Grants of Plan-Based Awards Table in the “Estimated Future
Payouts Under Equity Incentive Plan Awards” column.
RSUs
. To
support our retention efforts, the Committee granted the NEOs 30% of the December 2012 long-term incentive award in the form of
RSUs. RSUs generally vest and are distributed in shares of our common stock three years following the date of grant if the recipient
remains an employee of the Company and all other conditions of the award are met. Dividends are not earned or paid on RSUs during
the three-year vesting period. The number of shares underlying RSUs granted to our NEOs in 2012 is included in the Fiscal 2012
Grants of Plan-Based Awards Table in the “All Other Stock Awards: Number of Shares of Stock or Units” column.
SARs
. To
incentivize NEOs to grow our business and deliver increased returns to our stockholders, the Committee granted the NEOs 20% of
the December 2012 award in the form of SARs. SARs vest in one-third increments on each anniversary of the date of grant. Upon
the exercise of vested SARs, the increase, if any, between the fair market value of our common stock on the date of grant and
the fair market value on the date the SAR is exercised is paid in Company common stock. The grant date fair value and the SAR
exercise price are determined on the actual date of grant. SARs granted in 2012 expire seven years from the date of grant. The
number of SARs granted to our NEOs in 2012 is included in the Fiscal 2012 Grants of Plan-Based Awards Table in the “All
Other Option Awards: Number of Securities Underlying Options” column.
Perquisites
We
believe providing reasonable perquisites is a market-competitive practice to attract and retain top executive talent. However,
rather than offering individual perquisites, we provide a monthly cash stipend to allow our executive officers more flexibility
and choice. Our executive officers have full discretion on how the cash stipend is spent and it is not tracked by the Company
after the money is paid. In addition, we offer the installation of Company products and equipment at each executive officer’s
home to promote our brand to both business and personal guests.
Benefit
Programs
To
attract and retain top executive talent and as a market-competitive practice, we provide certain benefit programs to our NEOs
that are in addition to those provided to our employees generally. The following table summarizes the additional benefit programs
in place during 2012 and the purpose of each program. The aggregate change in the actuarial present value of accumulated pension
benefits (as shown in the Summary Compensation Table) that accrued during 2012 under our Supplemental Retirement Plan is mostly
due to changes in the valuation discount rate.
Additional
Benefit Programs Offered to NEOs in 2012
|
|
|
|
|
Plan
|
|
Type
|
|
Purpose
|
Supplemental Retirement Plan
|
|
Non-Qualified Defined Benefit
|
|
Provide market-competitive executive level retirement benefit opportunity
by providing higher accruals and permitting accruals that otherwise could not occur because of the Code limitations on compensation.
|
Life Insurance Plan
|
|
Company-Sponsored Life Insurance
|
|
Provide market-competitive executive level life insurance benefits;
minimum of $3 million in coverage for CEO and minimum of $1 million for other NEOs.
|
Additional
Information Regarding Executive Compensation
Following
are descriptions of other agreements and policies that are important to a stockholder’s understanding of the Company’s
overall executive compensation program structure.
Employment
Agreements and Change in Control Agreements
We
have employment agreements and change in control (“CIC”) agreements with each NEO that have been reviewed and approved
by the Committee. We believe employment agreements are necessary to attract and retain top executive talent and for financial
and business planning purposes. We believe CIC agreements are necessary to (1) retain key executives during periods of uncertainty;
(2) enable executives to evaluate, negotiate and execute a CIC transaction more objectively; (3) encourage executives to remain
focused on running the business rather than seeking other employment in the event of a possible CIC; (4) preserve stockholder
value by providing continuity of management during a transition period; and (5) provide benefit to the Company in the form of
restrictive covenants, such as non-competes and non-solicitation provisions.
Since
we pay compensation under our CIC agreements only if defined triggering events occur, we evaluate compensation to be provided
under these agreements in isolation from the rest of the NEO’s compensation package. Our employment agreements and CIC agreements,
and the potential costs associated with each, are discussed in detail under “Potential Payments Upon Termination or Change
in Control.”
Stock
Ownership Guidelines
The
Company has stock ownership guidelines for the CEO and other executive officers. We believe stock ownership by executives helps
align the interests of the executives with the interests of our stockholders and motivates the executives to build long-term stockholder
value. For purposes of the guidelines, ownership includes shares of Company common stock and RSUs that have not yet vested, but
does not include PSUs or SARs.
The
following chart sets forth, as of December 31, 2012, for each NEO, the stock ownership requirements as a percentage of base salary,
the total number of shares counted toward the stock ownership requirements, the value of the shares counted toward the stock ownership
requirements as a percentage of base salary and the deadline for compliance with the stock ownership requirements. All NEOs currently
meet our stock ownership guidelines, except for Mr. Reitmeier who was subject to these guidelines for the first time when he was
promoted in July 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Level of Stock Ownership
|
|
|
|
Name
|
|
Ownership
Requirement as a % of
Base Salary
|
|
|
Total Number of
Shares
|
|
Stock Ownership as % of
Base Salary (1)
|
|
|
Deadline for
Compliance with Stock
Ownership Guidelines
|
Mr. Bluedorn
|
|
|
500
|
%
|
|
|
214,294
|
|
|
|
970
|
%
|
|
|
December 31, 2014
|
Mr. Reitmeier
|
|
|
300
|
|
|
|
7,322
|
|
|
|
88
|
|
|
|
July 17, 2017
|
Mr. Young
|
|
|
300
|
|
|
|
81,789
|
|
|
|
844
|
|
|
|
December 31, 2014
|
Mr. Moon
|
|
|
300
|
|
|
|
73,970
|
|
|
|
831
|
|
|
|
December 31, 2014
|
Mr. Sessa
|
|
|
300
|
|
|
|
54,949
|
|
|
|
581
|
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Based
on
the
average
daily
closing
price
for
2012
of
$44.38.
|
The
Committee oversees and administers the stock ownership guidelines. In the event an executive officer fails to meet the guidelines
by the compliance deadline, the Committee will determine any appropriate action or corrective measures to be taken.
Clawback
Policy
Our
Company has a formal incentive compensation clawback policy for the CEO and other executive officers. Under this policy, in the
event of any fraud or misconduct that results in a restatement of our Company’s financial results within three years of
the filing of the original financial results, the Committee has the right to recoup and cancel cash and equity-based incentive
compensation of each person involved in such fraud or misconduct.
Prohibition
on Hedging Policy
The
Company’s Insider Trading Policy prohibits directors, executive officers and all other employees from trading in any interest,
security or position relating to the future price of Company securities, such as a put, call, swap, short sale, hedge or any other
type of derivative security. It also prohibits directors, executive officers and all other employees from pledging Company securities
as collateral for a loan, which would include the purchases of Company securities on margin.
Tax
and Accounting Implications
Section
162(m) Compliance
The
Committee carefully considers the income tax consequences to our Company when analyzing our executive compensation programs. Section
162(m) of the Code limits a Company’s ability to deduct compensation paid in excess of $1 million to certain NEOs, unless
the compensation meets certain stockholder-approved performance requirements. The Committee has designed several elements of our
executive compensation programs to qualify for the “performance-based” exemption. For example, our short-term incentive
program, PSUs and SARs are performance-based and exempt from the limitations imposed by Section 162(m) of the Code. If granting
awards or providing other executive compensation is consistent with Market data, our compensation philosophy or our strategic
business goals, the Committee may provide executive compensation that is not fully deductible. For example, our awards of RSUs
meet our objective of key talent retention, but do not meet the performance-based exemption.
Nonqualified
Deferred Compensation
In
addition to the non-qualified Supplemental Retirement Plan discussed previously, our Company also maintains a frozen non-qualified
Profit Sharing Restoration Plan. Both of these deferred compensation plans are administered in compliance with Section 409A of
the Code.
Accounting
for Stock-Based Awards
When
developing each element of NEO compensation, the Committee considered the accounting consequences (in accordance with the requirements
of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation (“FASB
ASC Topic 718”)) of the program design and award levels. The Committee reviewed accounting cost models and structured our
executive compensation programs in a manner that considered the cost and benefits of the various program elements.
Compensation
Committee Report
The
Compensation and Human Resources Committee has reviewed and discussed the foregoing CD&A with management. Based on this review
and discussion, the Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated
by reference in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which was filed with the SEC on February
15, 2013.
Submitted
by the Compensation and Human Resources Committee of the Board:
|
|
John E. Major (Chairperson)
|
John W. Norris, III
|
Terry D. Stinson
|
Gregory T. Swienton
|
|
Richard L. Thompson
|
Summary
Compensation Table
The
following table provides information regarding the total compensation of each of the Company’s NEOs for the fiscal years
ended December 31, 2012, 2011 and 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
and Principal Position
|
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)(1)
|
|
Option
Awards
($)(2)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)(3)
|
|
All
Other
Compensation
($)(4)
|
|
Total
($)
|
Todd M. Bluedorn
|
|
2012
|
|
962,065
|
|
|
0
|
|
|
3,126,329
|
|
|
808,618
|
|
|
2,044,039
|
|
|
914,960
|
|
|
45,227
|
|
|
7,901,238
|
Chairman and Chief Executive Officer
|
|
2011
|
|
861,700
|
|
|
107,713
|
|
|
2,960,377
|
|
|
781,107
|
|
|
0
|
|
|
917,728
|
|
|
46,335
|
|
|
5,674,960
|
|
|
2010
|
|
867,000
|
|
|
0
|
|
|
2,873,155
|
|
|
745,475
|
|
|
1,897,065
|
|
|
485,880
|
|
|
47,545
|
|
|
6,916,120
|
Joseph W. Reitmeier (5)
|
|
2012
|
|
293,137
|
|
|
0
|
|
|
533,892
|
|
|
137,869
|
|
|
286,143
|
|
|
14,192
|
|
|
38,489
|
|
|
1,303,722
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas L. Young
|
|
2012
|
|
426,750
|
|
|
0
|
|
|
838,967
|
|
|
216,670
|
|
|
565,098
|
|
|
754,410
|
|
|
47,904
|
|
|
2,849,799
|
Executive Vice President and Chief
|
|
2011
|
|
397,320
|
|
|
27,812
|
|
|
680,091
|
|
|
179,442
|
|
|
0
|
|
|
578,270
|
|
|
46,082
|
|
|
1,909,017
|
Operating Officer, Residential H&C
|
|
2010
|
|
401,377
|
|
|
0
|
|
|
649,351
|
|
|
168,478
|
|
|
462,500
|
|
|
463,459
|
|
|
45,407
|
|
|
2,190,573
|
David W. Moon
|
|
2012
|
|
388,750
|
|
|
0
|
|
|
838,967
|
|
|
216,670
|
|
|
404,017
|
|
|
305,328
|
|
|
45,228
|
|
|
2,198,960
|
Executive Vice President,
|
|
2011
|
|
350,200
|
|
|
0
|
|
|
680,091
|
|
|
179,442
|
|
|
148,083
|
|
|
394,464
|
|
|
45,316
|
|
|
1,797,597
|
President and Chief Operating Officer,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Refrigeration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel M. Sessa
|
|
2012
|
|
416,250
|
|
|
0
|
|
|
762,662
|
|
|
196,966
|
|
|
495,337
|
|
|
294,238
|
|
|
45,444
|
|
|
2,210,897
|
Executive Vice President
|
|
2011
|
|
385,550
|
|
|
53,977
|
|
|
680,091
|
|
|
179,442
|
|
|
0
|
|
|
256,989
|
|
|
45,380
|
|
|
1,601,430
|
and Chief Human Resources Officer
|
|
2010
|
|
388,444
|
|
|
0
|
|
|
649,351
|
|
|
168,478
|
|
|
495,802
|
|
|
145,711
|
|
|
45,705
|
|
|
1,893,492
|
Robert W. Hau (6)
|
|
2012
|
|
270,417
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
32,500
|
|
|
302,917
|
Former Executive Vice President
|
|
2011
|
|
433,050
|
|
|
60,627
|
|
|
680,091
|
|
|
179,442
|
|
|
0
|
|
|
454,977
|
|
|
45,347
|
|
|
1,853,535
|
and Chief Financial Officer
|
|
2010
|
|
436,250
|
|
|
0
|
|
|
649,351
|
|
|
168,478
|
|
|
556,821
|
|
|
0
|
|
|
555,450
|
|
|
2,366,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
amounts
shown
represent
the
grant
date
fair
value
of
the
aggregate
amount
of
all
stock
awards
(prior
to
any
assumed
forfeitures
related
to
service-based
vesting
conditions,
where
applicable)
for
each
year,
in
accordance
with
FASB
ASC
Topic
718,
in
connection
with
RSUs
and
PSUs
granted
under
the
LII
Incentive
Plan.
Assumptions
used
in
calculating
these
amounts
are
described
in
Note
14
of
the
Consolidated
Financial
Statements
for
the
year
ended
December
31,
2012,
included
in
our
Form
10-K
for
that
year
filed
with
the
SEC
on
February
15,
2013.
Amounts
for
2012
PSUs
reflect
the
most
probable
outcome
for
the
awards
at
December
31,
2012
valued
at
the
date
of
grant
in
accordance
with
FASB
ASC
Topic
718.
If
the
PSUs
were
valued
at
maximum
performance
levels,
the
total
PSU
value
at
grant
date
would
equal:
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
PSU
Value at Maximum
Performance Levels ($)
|
Todd M. Bluedorn
|
|
2012
|
|
|
3,907,911
|
|
|
|
2011
|
|
|
3,700,495
|
|
|
|
2010
|
|
|
3,591,433
|
|
Joseph W. Reitmeier
|
|
2012
|
|
|
667,366
|
|
Douglas L. Young
|
|
2012
|
|
|
1,048,745
|
|
|
|
2011
|
|
|
850,098
|
|
|
|
2010
|
|
|
811,689
|
|
David W. Moon
|
|
2012
|
|
|
1,048,745
|
|
|
|
2011
|
|
|
850,098
|
|
Daniel M. Sessa
|
|
2012
|
|
|
953,352
|
|
|
|
2011
|
|
|
850,098
|
|
|
|
2010
|
|
|
811,689
|
|
Robert W. Hau
|
|
2012
|
|
|
0
|
|
|
|
2011
|
|
|
850,098
|
|
|
|
2010
|
|
|
811,689
|
|
|
(2)
|
The
amounts
shown
represent
the
grant
date
fair
value
of
the
aggregate
amount
of
all
SAR
awards
(prior
to
any
assumed
forfeitures
related
to
service-based
vesting
conditions,
where
applicable)
for
each
year,
in
accordance
with
FASB
ASC
Topic
718,
in
connection
with
SARs
granted
under
the
LII
Incentive
Plan.
Assumptions
used
in
calculating
these
amounts
are
included
in
Note
14
of
the
Consolidated
Financial
Statements
for
the
year
ended
December
31,
2012,
included
in
our
Form
10-K
for
that
year
filed
with
the
SEC
on
February
15,
2013.
|
|
(3)
|
The
amounts
shown
represent
the
aggregate
change
in
the
actuarial
present
value
of
accumulated
pension
benefits
that
accrued
during
the
applicable
year
under
our
Supplemental
Retirement
Plan
and
frozen
Consolidated
Pension
Plan,
each
as
discussed
below,
as
a
result
of
changes
in
the
valuation
discount
rate,
changes
in
compensation,
and
an
additional
one
year
of
service.
No
above-market
interest
on
nonqualified
deferred
compensation
was
earned.
|
|
(4)
|
The
amounts
shown
include
perquisites
and
other
compensation.
The
following
table
identifies
the
separate
amounts
attributable
to
each
category
of
perquisites
and
other
compensation
in
2012
for
each
NEO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
Other
Compensation
|
|
Name
|
|
Cash
Stipend
|
|
Company
Equipment
and Installation
|
|
Matching
Charitable
Contributions
|
|
Term
Life
Insurance
Premiums
|
|
Retirement
Contributions
|
|
Total
|
Todd M. Bluedorn
|
|
|
$
|
30,000
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
227
|
|
|
|
$
|
15,000
|
|
|
$
|
45,227
|
Joseph W. Reitmeier
|
|
|
|
22,417
|
|
|
—
|
|
|
|
$500
|
|
|
|
|
821
|
|
|
|
|
14,751
|
|
|
|
38,489
|
Douglas L. Young
|
|
|
|
30,000
|
|
|
$2,746
|
|
|
|
—
|
|
|
|
|
158
|
|
|
|
|
15,000
|
|
|
|
47,904
|
David W. Moon
|
|
|
|
30,000
|
|
|
—
|
|
|
|
—
|
|
|
|
|
228
|
|
|
|
|
15,000
|
|
|
|
45,228
|
Daniel M. Sessa
|
|
|
|
30,000
|
|
|
313
|
|
|
|
—
|
|
|
|
|
131
|
|
|
|
|
15,000
|
|
|
|
45,444
|
Robert W. Hau
|
|
|
|
17,500
|
|
|
—
|
|
|
|
—
|
|
|
|
|
0
|
|
|
|
|
15,000
|
|
|
|
32,500
|
The
values attributable to each item listed above are calculated as follows:
|
●
|
Cash
Stipend
—
based
on
actual
cash
paid
to
each
NEO
in
lieu
of
individual
perquisites.
|
|
●
|
Company
Equipment
and
Installation
—
Company
equipment
is
based
on
the
purchase
price
of
the
equipment,
adjusted
in
accordance
with
our
employee
rebate
program,
and
installation
of
such
equipment
is
based
on
the
incremental
cost
for
installation
paid
by
the
Company
in
2012.
|
|
●
|
Matching
Charitable
Contributions
—
we
offer
an
employee
matching
charitable
contribution
program
to
all
employees
to
promote
our
community
values
by
matching
gifts
up
to
$1,000
per
year.
The
value
for
this
table
is
based
on
contributions
made
on
the
NEO’s
behalf
and
accrued
in
2012.
|
|
●
|
Term
Life
Insurance
Premiums
—
our
NEOs
participate
in
the
same
life
insurance
programs
as
our
general
employee
population;
however,
all
are
guaranteed
minimum
coverage
of
$1
million
or,
in
the
case
of
Mr.
Bluedorn,
minimum
coverage
of
$3
million.
The
amounts
shown
are
based
on
the
incremental
cost
paid
in
2012
on
behalf
of
each
NEO
for
Basic
Life
and
Basic
Accidental
Death
and
Dismemberment
over
and
above
the
premiums
we
would
otherwise
pay
under
our
life
insurance
programs
for
other
employees.
|
|
●
|
Retirement
Contributions
—
based
on
Company
contributions
made
under
our
qualified
401(k)
Plan
in
2012.
|
|
(5)
|
Mr.
Reitmeier
was
appointed
Executive
Vice
President
and
Chief
Financial
Officer
in
July
2012.
|
|
(6)
|
Mr.
Hau
served
as
Executive
Vice
President
and
Chief
Financial
Officer
until
he
resigned
in
July
2012.
In
connection
with
his
resignation,
Mr.
Hau
repaid
the
Company
$545,000,
which
represented
his
cash
sign-on
bonus
and
a
portion
of
his
relocation
payment
he
received
in
connection
with
his
employment
with
the
Company.
These
repayments
are
not
reflected
in
the
Summary
Compensation
Table.
|
Fiscal
2012 Grants of Plan-Based Awards
The
following table provides information regarding short-term incentive awards and long-term incentive awards (PSUs, RSUs and SARs)
granted under the LII Incentive Plan to our NEOs in 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Possible Payouts Under
Non-Equity Incentive Plan
Awards(1)
|
|
Estimated
Future Payouts
Under Equity Incentive Plan
Awards(2)
|
|
All
Other Stock
Awards: Number
of Shares of
Stock or Units
(#)
(3)
|
|
All
Other Option
Awards: Number
of Securities
Underlying
Options
(#)
(4)
|
|
Exercise
or
Base Price of
Option
Awards
($/Sh)
(5)
|
|
Closing
Market
Price on
Date of
Grant
($/Sh)
|
|
Grant
Date Fair
Value of Stock
and Option
Awards
($)
(6)
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Max.
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Max.
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd M. Bluedorn
|
|
—
|
|
|
601,291
|
|
|
1,202,582
|
|
|
2,705,808
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12/7/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,998
|
|
|
39,995
|
|
|
79,990
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,953,956
|
|
|
12/7/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,997
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,172,373
|
|
|
12/7/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56,014
|
|
|
51.395
|
|
|
51.08
|
|
|
808,618
|
Joseph W. Reitmeier
|
|
—
|
|
|
84,065
|
|
|
168,130
|
|
|
378,292
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,435
|
|
|
6,870
|
|
|
13,740
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
333,683
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,122
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200,210
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,621
|
|
|
51.11
|
|
|
51.07
|
|
|
137,869
|
Douglas L. Young
|
|
—
|
|
|
149,363
|
|
|
298,725
|
|
|
672,131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,398
|
|
|
10,796
|
|
|
21,592
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
524,373
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,477
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
314,594
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,120
|
|
|
51.11
|
|
|
51.07
|
|
|
216,670
|
David W. Moon
|
|
—
|
|
|
136,063
|
|
|
272,125
|
|
|
612,281
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,398
|
|
|
10,796
|
|
|
21,592
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
524,373
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,477
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
314,594
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,120
|
|
|
51.11
|
|
|
51.07
|
|
|
216,670
|
Daniel M. Sessa
|
|
—
|
|
|
145,688
|
|
|
291,375
|
|
|
655,594
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,907
|
|
|
9,814
|
|
|
19,628
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
476,676
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,888
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
285,986
|
|
|
12/6/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,745
|
|
|
51.11
|
|
|
51.07
|
|
|
196,966
|
Robert W. Hau
|
|
—
|
|
|
94,646
|
|
|
189,292
|
|
|
425,907
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
(1)
|
The
amounts
shown
represent
award
opportunities
under
our
short-term
incentive
program
for
2012.
The
actual
awards
were
paid
March
15,
2013
in
the
amounts
included
in
the
Summary
Compensation
Table.
|
|
(2)
|
The
amounts
shown
represent
the
number
of
PSUs
granted,
which
to
the
extent
earned,
will
vest
and
be
distributed
in
shares
of
our
common
stock
at
the
end
of
the
three-year
performance
period
ending
December
31,
2015.
|
|
(3)
|
The
amounts
shown
represent
the
number
of
RSUs
granted,
which
vest
and
will
be
distributed
in
shares
of
our
common
stock
on
the
third
anniversary
of
the
date
of
grant.
|
|
(4)
|
The
amounts
shown
represent
the
number
of
SARs
granted,
which
vest
in
one-third
increments
on
each
anniversary
of
the
date
of
grant
and
expire
seven
years
from
the
date
of
grant.
|
|
(5)
|
The
amounts
shown
reflect
the
exercise
price
of
SARs
granted,
based
on
the
average
of
the
high
and
low
NYSE
trading
prices
of
our
common
stock
on
the
date
of
grant.
|
|
(6)
|
The
amounts
shown
represent
the
grant
date
fair
values
of
PSUs,
RSUs
and
SARs,
calculated
in
accordance
with
FASB
ASC
Topic
718.
The
grant
date
fair
value
for
SARs
was
determined
using
the
Black-Scholes
valuation
model.
The
grant
date
fair
value
for
the
RSU
and
PSU
awards
equals
the
dividend-discounted
value
of
our
common
stock
on
the
date
of
grant.
The
assumptions
used
to
calculate
the
grant
date
fair
values
of
such
awards
are
set
forth
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions
|
|
FMV
Based on
Average High/
Low NYSE Trading
Prices on Date of
Grant ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
Date
Fair Value
Per Share
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk
Free
Interest Rate
(%)
|
|
|
|
|
|
|
|
Volatility
(%)
|
|
Expected
Life
(Years)
|
|
Dividend
Yield
(%)
|
|
|
|
Grant
Date
|
|
|
Award
|
|
|
|
|
|
|
12/6/2012
|
|
RSU
|
|
—
|
|
—
|
|
1.70
|
|
—
|
|
|
51.110
|
|
|
48.571
|
|
|
12/6/2012
|
|
PSU
|
|
—
|
|
—
|
|
1.70
|
|
—
|
|
|
51.110
|
|
|
48.571
|
|
|
12/6/2012
|
|
SAR
|
|
40.42
|
|
4.14
|
|
1.75
|
|
0.48
|
|
|
51.110
|
|
|
14.330
|
|
|
12/7/2012
|
|
RSU
|
|
—
|
|
—
|
|
1.69
|
|
—
|
|
|
51.395
|
|
|
48.855
|
|
|
12/7/2012
|
|
PSU
|
|
—
|
|
—
|
|
1.69
|
|
—
|
|
|
51.395
|
|
|
48.855
|
|
|
12/7/2012
|
|
SAR
|
|
40.42
|
|
4.14
|
|
1.74
|
|
0.50
|
|
|
51.395
|
|
|
14.436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
Equity Awards at Fiscal 2012 Year-End
The
following table provides information regarding all outstanding equity awards held by our NEOs as of December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/SAR
Awards(1)
|
|
Stock
Awards
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options/
SARs(#)
Exercisable(1)
|
|
Number
of
Securities
Underlying
Unexercised
Options/
SARs (#)
Unexercisable(1)
|
|
Option/
SAR
Exercise
Price
($/Sh)(2)
|
|
Option/
SAR
Expiration
Date
|
|
Number
of
Shares or
Units of
Stock
That Have
Not
Vested
(#)(3)
|
|
Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested
($)(4)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)(5)
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested
($)(4)
|
Todd M. Bluedorn
|
|
48,025
|
|
|
|
0
|
|
|
|
35.820
|
|
12/08/13
|
|
82,958
|
|
|
4,356,954
|
|
196,490
|
|
|
10,319,655
|
|
|
|
81,437
|
|
|
|
0
|
|
|
|
34.520
|
|
12/06/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,976
|
|
|
|
0
|
|
|
|
28.240
|
|
12/11/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,096
|
|
|
|
0
|
|
|
|
36.935
|
|
12/10/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,141
|
|
|
|
18,071
|
|
|
|
46.780
|
|
12/09/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,715
|
|
|
|
55,431
|
|
|
|
34.060
|
|
12/08/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
56,014
|
|
|
|
51.395
|
|
12/07/19
|
|
|
|
|
|
|
|
|
|
|
|
Joseph W. Reitmeier
|
|
2,651
|
|
|
|
0
|
|
|
|
28.240
|
|
12/11/15
|
|
6,467
|
|
|
339,647
|
|
13,138
|
|
|
690,008
|
|
|
|
869
|
|
|
|
0
|
|
|
|
36.935
|
|
12/10/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,397
|
|
|
|
699
|
|
|
|
46.780
|
|
12/09/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,123
|
|
|
|
2,248
|
|
|
|
34.060
|
|
12/08/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
9,621
|
|
|
|
51.110
|
|
12/06/19
|
|
|
|
|
|
|
|
|
|
|
|
Douglas L. Young
|
|
5,009
|
|
|
|
0
|
|
|
|
36.935
|
|
12/10/16
|
|
19,933
|
|
|
1,046,881
|
|
46,598
|
|
|
2,447,327
|
|
|
|
8,168
|
|
|
|
4,084
|
|
|
|
46.780
|
|
12/09/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,367
|
|
|
|
12,734
|
|
|
|
34.060
|
|
12/08/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
15,120
|
|
|
|
51.110
|
|
12/06/19
|
|
|
|
|
|
|
|
|
|
|
|
David W. Moon
|
|
17,062
|
|
|
|
0
|
|
|
|
30.845
|
|
12/08/13
|
|
19,933
|
|
|
1,046,881
|
|
46,598
|
|
|
2,447,327
|
|
|
|
20,359
|
|
|
|
0
|
|
|
|
34.520
|
|
12/06/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,994
|
|
|
|
0
|
|
|
|
28.240
|
|
12/11/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,027
|
|
|
|
0
|
|
|
|
36.935
|
|
12/10/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,168
|
|
|
|
4,084
|
|
|
|
46.780
|
|
12/09/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,367
|
|
|
|
12,734
|
|
|
|
34.060
|
|
12/08/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
15,120
|
|
|
|
51.110
|
|
12/06/19
|
|
|
|
|
|
|
|
|
|
|
|
Daniel M. Sessa
|
|
15,027
|
|
|
|
0
|
|
|
|
36.935
|
|
12/10/16
|
|
19,344
|
|
|
1,015,947
|
|
45,616
|
|
|
2,395,752
|
|
|
|
8,168
|
|
|
|
4,084
|
|
|
|
46.780
|
|
12/09/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,367
|
|
|
|
12,734
|
|
|
|
34.060
|
|
12/08/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
13,745
|
|
|
|
51.110
|
|
12/06/19
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Hau
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
N/A
|
|
0
|
|
|
0
|
|
0
|
|
|
0
|
|
|
(1)
|
Outstanding
SARs
vest
in
one-third
increments
on
each
anniversary
of
the
date
of
grant,
with
the
first
anniversary
date
occurring
six
years
prior
to
the
expiration
date
for
each
grant.
|
|
(2)
|
Pursuant
to
the
LII
Incentive
Plan,
the
exercise
price
for
all
outstanding
SARs
is
based
on
the
grant
date
fair
market
value,
which
is
the
average
of
the
high
and
low
NYSE
trading
prices
of
our
common
stock
on
the
date
of
grant.
|
|
(3)
|
The
amounts
shown
represent
all
outstanding
RSUs
held
by
the
NEOs.
Refer
to
column
(a)
of
Table
1
which
follows
for
the
vesting
dates
of
such
awards.
|
|
(4)
|
The
amounts
shown
are
based
on
the
NYSE
closing
price
of
our
common
stock
on
December
31,
2012,
which
price
was
$52.52.
|
|
(5)
|
The
amounts
shown
represent
outstanding
PSUs
held
by
the
NEOs.
Refer
to
column
(b)
of
Table
1
which
follows
for
the
vesting
dates
of
such
awards
and
the
performance
assumptions
used
to
calculate
the
number
of
unvested
PSUs.
|
Table
1
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Shares or Units of Stock
That
Have Not Vested
|
|
(b)
Equity Incentive Plan Awards: Unearned
Shares,
Units or Other Rights That Have Not Vested
|
Name
|
|
Number of
Awards
|
|
Vesting Date
|
|
Number of
Awards
|
|
Vesting
Date
|
|
Performance
Assumption
|
Todd M. Bluedorn
|
|
24,026
|
|
|
12/09/13
|
|
40,043
|
|
|
12/31/13
|
|
Target
|
|
|
34,935
|
|
|
12/08/14
|
|
116,452
|
|
|
12/31/14
|
|
Maximum
|
|
|
|
23,997
|
|
|
12/07/15
|
|
|
39,995
|
|
|
12/31/15
|
|
Target
|
Total
|
|
82,958
|
|
|
|
|
196,490
|
|
|
|
|
|
Joseph W. Reitmeier
|
|
929
|
|
|
12/09/13
|
|
1,548
|
|
|
12/31/13
|
|
Target
|
|
|
1,416
|
|
|
12/08/14
|
|
4,720
|
|
|
12/31/14
|
|
Maximum
|
|
|
|
4,122
|
|
|
12/06/15
|
|
|
6,870
|
|
|
12/31/15
|
|
Target
|
Total
|
|
6,467
|
|
|
|
|
13,138
|
|
|
|
|
|
Douglas L. Young
|
|
5,430
|
|
|
12/09/13
|
|
9,050
|
|
|
12/31/13
|
|
Target
|
|
|
8,026
|
|
|
12/08/14
|
|
26,752
|
|
|
12/31/14
|
|
Maximum
|
|
|
|
6,477
|
|
|
12/06/15
|
|
|
10,796
|
|
|
12/31/15
|
|
Target
|
Total
|
|
19,933
|
|
|
|
|
46,598
|
|
|
|
|
|
David W. Moon
|
|
5,430
|
|
|
12/09/13
|
|
9,050
|
|
|
12/31/13
|
|
Target
|
|
|
8,026
|
|
|
12/08/14
|
|
26,752
|
|
|
12/31/14
|
|
Maximum
|
|
|
|
6,477
|
|
|
12/06/15
|
|
|
10,796
|
|
|
12/31/15
|
|
Target
|
Total
|
|
19,933
|
|
|
|
|
46,598
|
|
|
|
|
|
Daniel M. Sessa
|
|
5,430
|
|
|
12/09/13
|
|
9,050
|
|
|
12/31/13
|
|
Target
|
|
|
8,026
|
|
|
12/08/14
|
|
26,752
|
|
|
12/31/14
|
|
Maximum
|
|
|
|
5,888
|
|
|
12/06/15
|
|
|
9,814
|
|
|
12/31/15
|
|
Target
|
Total
|
|
19,344
|
|
|
|
|
45,616
|
|
|
|
|
|
Robert W. Hau
|
|
0
|
|
|
N/A
|
|
0
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2012 Option Exercises and Stock Vested
The
following table provides information regarding each exercise of SARs by our NEOs and each distribution of RSUs and PSUs held by
our NEOs in 2012.
|
|
Options/SAR Awards
|
|
Stock Awards
|
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
Value Realized on
Exercise
($)
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
Value Realized on
Vesting
($)(1)
|
Todd M. Bluedorn
|
|
0
|
|
|
0
|
|
|
RSU
|
|
27,280
|
|
1,401,101
|
|
PSU
|
|
39,510
|
|
|
2,503,354
|
|
|
|
|
|
|
|
Joseph W. Reitmeier
|
|
2,640
|
|
|
13,897
|
|
|
RSU
|
|
1,163
|
|
59,732
|
|
PSU
|
|
1,684
|
|
|
106,698
|
|
|
|
|
|
|
|
Douglas L. Young
|
|
77,068
|
|
|
1,480,271
|
|
|
RSU
|
|
8,928
|
|
437,462
|
|
PSU
|
|
9,718
|
|
|
615,732
|
|
|
|
|
|
|
|
David W. Moon
|
|
2,717
|
|
|
56,704
|
|
|
RSU
|
|
7,286
|
|
368,727
|
|
PSU
|
|
9,718
|
|
|
615,732
|
|
|
|
|
|
|
|
Daniel M. Sessa
|
|
46,353
|
|
|
906,281
|
|
|
RSU
|
|
6,710
|
|
344,626
|
|
PSU
|
|
9,718
|
|
|
615,732
|
|
|
|
|
|
|
|
Robert W. Hau
|
|
10,018
|
|
|
74,584
|
|
|
RSU
|
|
0
|
|
0
|
|
PSU
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
(1)
|
The
amounts
shown
for
RSUs
and
PSUs
are
based
on
the
average
of
the
high
and
low
NYSE
trading
prices
of
our
common
stock
on
the
day
of
distribution.
|
Retirement
Plans
Qualified
Retirement Plans
Frozen
Consolidated Pension and Profit Sharing Retirement Plans
Effective
January 1, 2009, the Company’s Consolidated Pension Plan and Profit Sharing Retirement Plan were frozen. As of that date,
benefits under the frozen Pension Plan stopped increasing with additional service and compensation, and additional contributions
to the Profit Sharing Plan were discontinued.
The
monthly target benefit under the frozen Pension Plan is based on 1.0% of final average annual pay, plus 0.6% of final average
annual pay above Social Security covered compensation, multiplied by the number of years of credited service (not to exceed 30
years). The target benefit is reduced by the value of the participant’s defined contribution profit sharing account under
the frozen Profit Sharing Plan, with the difference, if any, provided by the frozen Pension Plan. Participants become vested in
their frozen Pension Plan accrued benefits after five years of service and may commence unreduced benefits at age 65 (normal retirement
age) or actuarially reduced benefits at younger ages if age and service requirements are met (generally the attainment of age
62 and 10 years of service or if age plus years of service total 80). Benefits are generally paid in the form of an annuity. We
do not grant extra years of service under the Consolidated Pension Plan. Participants in the frozen Profit Sharing Plan are fully
vested in the plan after six years of service and the Company directs the investment funds. Distributions may occur at separation
from service and are eligible for roll-over into another qualified retirement plan.
401(k)
Salaried Retirement Plan
Salaried
employees are eligible to participate in this plan, and contributions can be made on a pre-tax or Roth post-tax basis, subject
to limitations for qualified plans under the Code. Participants can contribute up to 75% of their eligible earnings and receive
a Company match of 50% on up to 6% of their eligible pay. In addition, all participants (after completing one year of service)
receive a base contribution equal to 3% of eligible pay. The match vests after the participant completes two years of service
and the base contribution is fully vested.
Non-Qualified
Retirement Plans
Supplemental
Retirement Plan
Our
Supplemental Retirement Plan, the purpose of which is to provide market-competitive executive level retirement benefit opportunities,
permits income above Code limitations to be considered in determining final average annual pay, doubles the rate of benefit accrual
available under the frozen Pension Plan (2.0% of final average annual pay, plus 1.2% of final average annual pay above Social
Security covered compensation), limits credited service to 15 years, generally permits early retirement on more favorable terms
than the frozen Pension Plan (for example, unreduced benefits at age 62 with 10 years of service or unreduced benefits at age
60 if age plus years of service total 80), and pays benefits in the form of a lump-sum. Any benefits provided under the Supplemental
Retirement Plan are reduced by the benefits payable under our Company’s frozen Pension Plan (as if such plan had not been
frozen), frozen Profit Sharing Plan, and frozen Profit Sharing Restoration Plan. Participants become vested in their Supplemental
Retirement Plan benefit after five years of service. Extra years of credited service are not provided to participants except for
up to an additional three years of service and age (subject to the 15 year service limit) in the case of a change in control.
The incremental effects of additional years of service are reflected in the tables included in “Potential Payments Upon
Termination or Change in Control.”
Frozen
Profit Sharing Restoration Plan
We
froze the Profit Sharing Restoration Plan and discontinued contributions effective January 1, 2009. Distributions may occur at
separation from service and may be paid as a lump-sum or in equal annual installments over either a five- or ten-year period.
We direct the investment funds for the frozen Profit Sharing Restoration Plan, which mirror the investments and returns under
the frozen Profit Sharing Retirement Plan. The weighted average annual rate of return for the calendar year ended December 31,
2012, was 14.19%.
Fiscal
2012 Pension Benefits
The
following table provides information regarding the number of years of service credited to each NEO and the present value of accumulated
benefits payable to each NEO under our frozen Consolidated Pension Plan and our Supplemental Retirement Plan as of December 31,
2012, as well as payments made to each NEO in 2012 under such plans.
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan
Name
|
|
Number
of
Years
Credited
Service
(#)
|
|
Present
Value of
Accumulated
Benefit
($) (1)
|
|
Payments
During
Last
Fiscal Year
($)
|
Todd M. Bluedorn
|
|
Consolidated Pension Plan (Frozen)
|
|
1.9
|
|
|
37,512
|
|
|
0
|
|
|
Supplemental Retirement Plan
|
|
5.9
|
|
|
2,898,091
|
|
|
0
|
Joseph W. Reitmeier
|
|
Consolidated Pension Plan (Frozen)
|
|
3.3
|
|
|
51,972
|
|
|
0
|
|
|
Supplemental Retirement Plan
|
|
0.6
|
|
|
0
|
|
|
0
|
Douglas L. Young
|
|
Consolidated Pension Plan (Frozen)
|
|
9.6
|
|
|
98,207
|
|
|
0
|
|
|
Supplemental Retirement Plan
|
|
13.6
|
|
|
2,601,205
|
|
|
0
|
David W. Moon
|
|
Consolidated Pension Plan (Frozen)
|
|
11.0
|
|
|
102,576
|
|
|
0
|
|
|
Supplemental Retirement Plan
|
|
6.5
|
|
|
769,735
|
|
|
0
|
Daniel M. Sessa
|
|
Consolidated Pension Plan (Frozen)
|
|
1.7
|
|
|
31,113
|
|
|
0
|
|
|
Supplemental Retirement Plan
|
|
5.7
|
|
|
849,572
|
|
|
0
|
|
(1)
|
The
actuarial
present
value
of
the
lump-sum
accumulated
benefit
payable
at
December
31,
2012
is
equal
to
the
annualized
present
value
factor,
multiplied
by
the
monthly
benefit.
The
amounts
shown
are
calculated
in
accordance
with
FASB
ASC
Topic
715,
using
a
3.46%
interest
(discount)
rate
for
the
Supplemental
Retirement
Plan
and
4.02%
for
the
Consolidated
Pension
Plan
as
of
December
31,
2012
and
the
RP-2000
mortality
table
for
males
and
females
without
collar
adjustment.
The
calculations
assume
payments
are
deferred
until
age
65
for
all
participants
under
our
frozen
Consolidated
Pension
Plan
and
until
the
earliest
unreduced
retirement
age
for
each
participant
under
our
Supplemental
Retirement
Plan.
Additional
assumptions
are
included
in
Note
13
to
our
audited
financial
statements
for
the
fiscal
year
ended
December
31,
2012
included
in
our
Form
10-K
for
that
year
filed
with
the
SEC
on
February
15,
2013.
|
Fiscal
2012 Nonqualified Deferred Compensation
The
following table provides information regarding contributions, earnings, withdrawals and distributions under our frozen Profit
Sharing Restoration Plan in 2012 for each NEO, as well as each NEO’s aggregate balance in such plan at December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last Fiscal Year
($)
|
|
Company
Contributions in
Last Fiscal Year
($)
|
|
Aggregate
Earnings
in Last Fiscal Year
($)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance
at Last
Fiscal
Year-End
($)
|
Todd M. Bluedorn
|
|
0
|
|
0
|
|
7,189
|
|
|
0
|
|
57,853
|
|
Joseph W. Reitmeier(1)
|
|
0
|
|
0
|
|
0
|
|
|
0
|
|
0
|
|
Douglas L. Young
|
|
0
|
|
0
|
|
36,670
|
|
|
0
|
|
295,085
|
|
David W. Moon
|
|
0
|
|
0
|
|
9,401
|
|
|
0
|
|
75,652
|
|
Daniel M. Sessa
|
|
0
|
|
0
|
|
1,715
|
|
|
0
|
|
13,797
|
|
|
(1)
|
Mr.
Reitmeier
was
not
eligible
to
participate
in
this
plan
prior
to
the
plan
being
frozen.
|
Potential
Payments Upon Termination or Change in Control
Employment
Agreements and Change in Control Agreements
We
are party to employment agreements and CIC agreements with each NEO who is currently employed by us. These agreements serve as
the basis for the payments and benefits to which each NEO would be entitled in the event of termination of such individual’s
employment with our Company under the various circumstances described below.
Employment
Agreements
The
employment agreements with our NEOs establish the basis of compensation and responsibilities for each NEO and contain post-employment
covenants, including confidentiality, prohibition against the diversion of employees, vendors and contractors and prohibition
against the solicitation of customers, for a period of 24 months following termination of employment. On January 1 of each year,
the agreements automatically renew for an additional year, unless either party notifies the other in writing at least 30 days
prior to such date of a decision not to renew the agreement. Except as otherwise provided below, the terms and conditions of our
employment agreement with each NEO are substantially similar.
Change
in Control Agreements
Our
CIC agreements with our NEOs, the terms and conditions of which are substantially similar except as noted below, provide for certain
benefits under specified circumstances if a NEO’s employment is terminated in connection with a CIC transaction involving
our Company. The agreements require the NEO to maintain the confidentiality of our information and not to induce our employees
to terminate their employment with our Company, for a period of 24 months following termination of employment.
No
CIC agreement or employment agreement entered into after 2009 includes a 280G Tax Gross-Up provision.
Payments
Made Upon Voluntary Termination or Upon For Cause Termination
If
a NEO voluntarily terminates his employment with our Company or we terminate a NEO for cause, he will be entitled to receive base
salary through the last day of employment and a lump-sum payment equal to unused, accrued vacation days. All of the NEO’s
outstanding SARs, RSUs and PSUs will terminate on the NEO’s last day of employment.
Payments
Made Upon Retirement
If
a NEO retires, he will be entitled to receive his base salary through the last day of employment, a payment under our short-term
incentive program based on actual company performance (prorated through the NEO’s last day of employment) and a lump-sum
payment equal to unused, accrued vacation days. In addition, with respect to long-term incentive awards:
|
●
|
unvested
SARs
will
terminate
on
the
NEO’s
last
day
of
employment
and
vested
awards
will
remain
exercisable
for
the
remainder
of
the
term
of
the
award;
|
|
●
|
for
RSUs,
the
NEO
will
receive
a
prorated
portion
of
shares
based
on
the
date
of
retirement
at
the
end
of
the
applicable
vesting
period;
and
|
|
●
|
for
PSUs,
the
NEO
will
receive,
to
the
extent
earned
based
on
achievement
of
specific
performance
measures,
a
prorated
portion
of
shares
based
on
the
date
of
retirement
at
the
end
of
the
applicable
performance
period.
|
Payments
Made Upon Involuntary — Not for Cause Termination
If
we terminate a NEO prior to the expiration of his employment agreement (including non-renewal of the NEO’s agreement) for
any reason other than for cause, the NEO will generally be entitled to receive “normal severance compensation” or,
in the NEO’s sole discretion, “enhanced severance benefits.” Under both severance packages:
|
●
|
all
outstanding
SARs
that
have
vested
as
of
the
last
day
of
employment
will
continue
to
be
exercisable
for
90
days
following
the
NEO’s
last
day
of
employment;
and
|
|
●
|
unvested
equity
awards
(SARs,
RSUs
and
PSUs)
will
generally
terminate
on
the
NEO’s
last
day
of
employment.
|
Normal
Severance Compensation
. If the NEO elects to receive “normal severance compensation,” he
will receive monthly payments equal to the greater of (1) his monthly base salary for the remainder of the employment agreement’s
term, or (2) three months of his monthly base salary in addition to any other compensation or benefits applicable to an employee
at the NEO’s level, including a lump-sum payment equal to unused, accrued vacation days.
Enhanced
Severance Benefits
. If the NEO agrees to execute a written general release of any and all possible claims
against us existing at the time of termination, we will provide the employee with “enhanced severance benefits.” Payments
provided under this severance arrangement, which are dependent on years of service with our Company, generally include the following:
|
|
|
|
|
Component
|
|
Less
than Three Years of Service
|
|
Three
or More Years of Service
|
Base Salary
|
|
One year of base salary
|
|
Two years of base salary
|
Short-Term Incentive
|
|
Lump-sum payment equal to all payments under our short-term incentive
programs received by the NEO in the previous 12 months
|
|
Lump-sum payment equal to all payments under our short-term incentive
programs received by the NEO in the previous 24 months
|
Payment in Lieu of Outplacement Services
|
|
Lump-sum payment equal to 10% of base salary
|
|
Same
|
Payment in Lieu of Perquisites
|
|
Lump-sum payment equal to 10% of base salary
|
|
Same
|
Post-Employment Health Care Coverage
|
|
Payment of COBRA premiums for up to 18 months while the NEO is
unemployed and not eligible for other group health coverage and payment of the equivalent of such premium for up to an additional
six months, should the NEO remain unemployed
|
|
Same
|
Death Benefit
|
|
If the NEO dies during the enhanced severance period, a lump-sum
death benefit equal to six months of the NEO’s base salary will be paid to the NEO’s beneficiary
|
|
Same
|
Accrued Vacation
|
|
A lump-sum payment equal to unused, accrued vacation days
|
|
Same
|
Payments
Made Upon Death or Disability
Generally,
if a NEO dies during the term of his employment agreement, the NEO’s beneficiary will be entitled to receive “normal
severance compensation,” as described above. If a NEO becomes permanently disabled during the agreement term, he will generally
be entitled to, at the NEO’s option, either “normal severance compensation” or “enhanced severance benefits,”
as described above. In the case of either death or disability, with respect to long-term incentive awards:
|
●
|
all
SARs
will
vest
immediately
and
remain
exercisable
for
the
duration
of
the
term;
|
|
●
|
for
RSUs,
the
NEO,
or
his
beneficiary,
will
receive
a
prorated
payment
based
upon
the
portion
of
the
vesting
period
the
NEO
actually
served
as
an
employee
of
our
Company
payable
at
the
time
employment
ceases;
and
|
|
●
|
for
PSUs,
the
NEO,
or
his
beneficiary,
will
receive,
to
the
extent
earned
based
on
achievement
of
specific
performance
measures,
a
prorated
portion
of
shares
based
upon
the
portion
of
the
performance
period
the
NEO
actually
served
as
our
employee,
payable
at
the
time
employment
ceases.
|
Payments
Made to Mr. Bluedorn if he Terminates his Employment for “Good Reason,” Upon Involuntary — Not for Cause Termination,
or Upon Death or Disability
Except
as described below, Mr. Bluedorn will receive similar severance benefits as the other NEOs.
Mr. Bluedorn’s employment
agreement provides for certain severance benefits in the event he terminates his employment for “good reason.” “Good
reason” includes:
|
●
|
any
change
in
Mr.
Bluedorn’s
position,
authority,
duties,
or
responsibilities
inconsistent
with
the
position
of
CEO
(excluding
de
minimus
changes
and
an
isolated,
insubstantial
and
inadvertent
action
not
taken
in
bad
faith
and
promptly
remedied
by
us
after
notice);
|
|
●
|
any
failure
by
us
to
comply
with
any
of
the
provisions
of
Mr.
Bluedorn’s
employment
agreement
(excluding
an
isolated,
insubstantial
and
inadvertent
action
not
taken
in
bad
faith
and
promptly
remedied
by
us
after
notice);
|
|
●
|
any
requirement
for
him
to
be
based
at
any
office
or
location
other
than
our
current
headquarters
in
Richardson,
Texas;
|
|
●
|
any
purported
termination
by
us
of
Mr.
Bluedorn’s
employment
otherwise
than
as
expressly
permitted
by
his
employment
agreement;
or
|
|
●
|
any
failure
by
our
Board
to
nominate
him
for
election
by
the
stockholders
as
a
director.
|
Pursuant
to his employment agreement, in the event (1) Mr. Bluedorn terminates his employment for “good reason,” (2) we terminate
him prior to the expiration of his employment agreement (including non-renewal of his agreement) for any reason other than for
cause, or (3) Mr. Bluedorn dies or becomes permanently disabled during the term of his employment agreement, he (or his beneficiary,
as applicable) will be entitled to receive “enhanced severance benefits” as described above under “Payments
Made Upon Involuntary — Not For Cause Termination,” provided he (or his personal representative, as applicable) agrees
to execute a written general release of any and all possible claims against us existing at the time of termination.
In
the case of either death or permanent disability, Mr. Bluedorn’s long-term incentive awards will vest, remain exercisable
and be paid or distributed as described above under “Payments Made Upon Death or Disability.”
Payments
Made Upon a Change in Control
Definition
of Change in Control
A
CIC generally includes the occurrence of any of the following events:
|
●
|
an
acquisition
by
a
third
party
of
35%
or
more
of
our
voting
stock;
|
|
●
|
a
change
in
a
majority
of
Board
members
without
majority
Board
approval;
|
|
●
|
stockholder
approval
of
a
merger,
consolidation
or
reorganization;
|
|
●
|
stockholder
approval
of
the
liquidation
or
dissolution
of
our
Company;
or
|
|
●
|
stockholder
approval
of
the
sale
of
substantially
all
corporate
assets.
|
Definition
of Good Reason
“Good
reason,” under each CIC agreement, includes:
|
●
|
any
change
in
the
NEO’s
position,
authority,
duties,
or
responsibilities
(excluding
de
minimus
changes);
|
|
●
|
any
failure
by
us
to
comply
with
the
NEO’s
CIC
agreement,
including
without
limitation
the
provision
regarding
compensation
and
benefits;
|
|
●
|
a
required
relocation
to
any
office
or
location
not
within
35
miles
of
the
NEO’s
current
office
or
location;
|
|
●
|
any
failure
by
any
successor
to
adopt
and
comply
with
the
NEO’s
CIC
agreement;
or
|
|
●
|
any
failure
to
reelect
to
the
Board
any
NEO
serving
as
a
member
of
the
Board.
|
CIC
Benefits
If
a NEO’s employment is terminated by us without cause or by the NEO for “good reason” either (i) within two years
following a CIC, or (ii) within six months prior to a CIC, we will provide the NEO with the following CIC benefits:
|
|
|
Component
|
|
CIC
Benefit
|
Base Salary Severance
|
|
Lump-sum payment equal to three times the NEO’s annual base
salary
|
Prorated Bonus
|
|
Lump-sum payment equal to the NEO’s target bonus, prorated
based on the last day of employment
|
Bonus Severance
|
|
Lump-sum payment equal to three times the NEO’s target bonus
|
Payment in Lieu of Outplacement Services
|
|
Lump-sum payment equal to 15% of current base salary
|
Payment in Lieu of Perquisites
|
|
Lump-sum payment equal to 45% of current base salary
|
Post-Employment Health Care Coverage
|
|
Payment of COBRA premiums for up to 36 months while the NEO
is unemployed and not eligible for other group health coverage
|
Supplemental Retirement Plan and Profit Sharing Restoration Plan
|
|
Three years added to each of the service and age criteria
|
280G Tax Gross-up(*)
|
|
If CIC payments are subject to the excise tax imposed by Section
4999 of the Code, an additional “gross-up payment”
|
Accrued Vacation
|
|
A lump-sum payment equal to unused, accrued vacation days
|
|
(*)
|
The
CIC
agreement
with
Mr.
Reitmeier
does
not
include
a
280G
Tax
Gross
Up
provision.
|
Upon
a CIC, all outstanding SARs, RSUs and PSUs held by the NEO will immediately vest and become exercisable, with applicable performance
measures for outstanding PSUs deemed to have been satisfied at the highest possible level (200% of target). Further, outstanding
SARs may be exercised by the NEO up to 90 days after a NEO’s termination within one year following a CIC.
Tables
Illustrating Potential Payments Upon Termination or Change in Control
The
following tables provide information regarding the benefits to which each NEO would be entitled in the event of termination of
such individual’s employment with our Company under specified circumstances, including a CIC. Except as otherwise noted,
the amounts shown (1) are estimates only and (2) assume that (A) termination was effective as of December 31, 2012, (B) in the
case of disability, the NEO elects to receive “enhanced severance benefits,” (C) in the case of retirement, the NEO
is eligible for retirement and (D) in the case of change in control, the NEO terminates for “good reason” or is involuntarily
terminated without cause.
Todd
M. Bluedorn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary-Not
For
Cause Termination
|
|
Component
|
|
Voluntary
Termination
|
|
Retirement
|
|
Normal
Severance
|
|
Enhanced
Severance (1)
|
|
Death
|
|
Disability
|
|
For
Cause
Termination
|
|
Change
in
Control
|
Base
Salary
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$245,000
|
|
|
|
$1,960,000
|
|
|
|
$1,960,000
|
|
|
|
$1,960,000
|
|
|
|
$0
|
|
|
|
$2,940,000
|
Prorated
Bonus
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
1,225,000
|
Bonus
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,004,778
|
|
|
|
2,004,778
|
|
|
|
2,004,778
|
|
|
|
0
|
|
|
|
3,675,000
|
Payment
in Lieu of Outplacement Services
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
98,000
|
|
|
|
98,000
|
|
|
|
98,000
|
|
|
|
0
|
|
|
|
147,000
|
Payment
in Lieu of Perquisites
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
98,000
|
|
|
|
98,000
|
|
|
|
98,000
|
|
|
|
0
|
|
|
|
441,000
|
Post-Employment
Health Care Coverage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
32,220
|
|
|
|
18,810
|
|
|
|
32,220
|
|
|
|
0
|
|
|
|
63,261
|
Long-Term
Equity Accelerated Vesting(2)
|
|
|
0
|
|
|
|
5,133,361
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,323,360
|
|
|
|
6,323,360
|
|
|
|
0
|
|
|
|
20,070,196
|
Incremental
Payment Under Supplemental Retirement Plan & Frozen Profit Sharing Restoration Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,588,720
|
280G
Tax Gross-up
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
12,055,303
|
Unused,
Accrued Vacation(3)
|
|
|
94,231
|
|
|
|
94,231
|
|
|
|
94,231
|
|
|
|
94,231
|
|
|
|
94,231
|
|
|
|
94,231
|
|
|
|
94,231
|
|
|
|
94,231
|
TOTAL
|
|
|
$94,231
|
|
|
|
$5,227,592
|
|
|
|
$339,231
|
|
|
|
$4,287,229
|
|
|
|
$10,597,179
|
|
|
|
$10,610,589
|
|
|
|
$94,231
|
|
|
|
$42,299,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
amounts
shown
reflect
the
same
severance
benefits
that
would
be
provided
to
Mr.
Bluedorn
if
he
terminated
employment
with
our
Company
for
“good
reason”
under
his
employment
agreement
as
discussed
above.
|
|
(2)
|
The
amounts
shown
reflect
unvested
long-term
incentive
awards.
Such
amounts
are
based
on
the
NYSE
closing
price
of
our
common
stock
on
December
31,
2012,
which
was
$52.52.
|
|
(3)
|
The
amounts
shown
represent
a
lump-sum
payment
for
five
weeks
of
vacation
in
2012
(assuming
the
NEO
did
not
take
any
vacation
days
in
2012).
Actual
payouts
may
vary
depending
on
the
specific
circumstances.
|
Joseph
W. Reitmeier
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary-Not
For
Cause Termination
|
|
Component
|
|
Voluntary
Termination
|
|
Retirement
|
|
Normal
Severance
|
|
Enhanced
Severance
|
|
|
Death
|
|
Disability
|
|
For
Cause
Termination
|
|
Change
in
Control
|
Base Salary
|
|
|
$0
|
|
|
$0
|
|
|
$92,500
|
|
|
$740,000
|
|
|
$92,500
|
|
|
$740,000
|
|
|
$0
|
|
|
$1,110,000
|
Prorated Bonus
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
259,000
|
Bonus
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
237,444
|
|
|
0
|
|
|
237,444
|
|
|
0
|
|
|
777,000
|
Payment in Lieu
of Outplacement Services
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
37,000
|
|
|
0
|
|
|
37,000
|
|
|
0
|
|
|
55,500
|
Payment in Lieu
of Perquisites
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
37,000
|
|
|
0
|
|
|
37,000
|
|
|
0
|
|
|
166,500
|
Post-Employment
Health Care Coverage
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
32,889
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
56,115
|
Long-Term Equity
Accelerated Vesting(1)
|
|
|
0
|
|
|
213,812
|
|
|
0
|
|
|
0
|
|
|
272,887
|
|
|
272,887
|
|
|
0
|
|
|
1,530,830
|
Incremental Payment
Under Supplemental Retirement Plan and Frozen Profit Sharing Restoration Plan
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
280G Tax Gross-up
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
n/a
|
Unused, Accrued
Vacation(2)
|
|
|
35,577
|
|
|
35,577
|
|
|
35,577
|
|
|
35,577
|
|
|
35,577
|
|
|
35,577
|
|
|
35,577
|
|
|
35,577
|
TOTAL
|
|
|
$35,577
|
|
|
$249,389
|
|
|
$128,077
|
|
|
$1,119,910
|
|
|
$400,964
|
|
|
$1,359,908
|
|
|
$35,577
|
|
|
$3,990,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
amounts
shown
reflect
unvested
long-term
incentive
awards.
Such
amounts
are
based
on
the
NYSE
closing
price
of
our
common
stock
on
December
31,
2012,
which
was
$52.52.
|
|
(2)
|
The
amounts
shown
represent
a
lump-sum
payment
for
five
weeks
of
vacation
in
2012
(assuming
the
NEO
did
not
take
any
vacation
days
in
2012).
Actual
payouts
may
vary
depending
on
the
specific
circumstances.
|
Douglas
L. Young
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary-Not
For
Cause Termination
|
|
Component
|
|
Voluntary
Termination
|
|
Retirement
|
|
Normal
Severance
|
|
Enhanced
Severance
|
|
Death
|
|
Disability
|
|
For
Cause
Termination
|
|
Change
in
Control
|
Base Salary
|
|
|
$0
|
|
|
$0
|
|
|
$107,500
|
|
|
$860,000
|
|
|
$107,500
|
|
|
$860,000
|
|
|
$0
|
|
|
$1,290,000
|
Prorated Bonus
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
301,000
|
Bonus
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
490,312
|
|
|
0
|
|
|
490,312
|
|
|
0
|
|
|
903,000
|
Payment in Lieu
of Outplacement Services
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
43,000
|
|
|
0
|
|
|
43,000
|
|
|
0
|
|
|
64,500
|
Payment in Lieu
of Perquisites
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
43,000
|
|
|
0
|
|
|
43,000
|
|
|
0
|
|
|
193,500
|
Post-Employment
Health Care Coverage
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
32,889
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
56,115
|
Long-Term Equity
Accelerated Vesting(1)
|
|
|
0
|
|
|
1,174,445
|
|
|
0
|
|
|
0
|
|
|
1,454,276
|
|
|
1,454,276
|
|
|
0
|
|
|
4,816,351
|
Incremental Payment
Under Supplemental Retirement Plan and Frozen Profit Sharing Restoration Plan
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
341,753
|
280G Tax Gross-up
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2,576,407
|
Unused, Accrued
Vacation(2)
|
|
|
41,346
|
|
|
41,346
|
|
|
41,346
|
|
|
41,346
|
|
|
41,346
|
|
|
41,346
|
|
|
41,346
|
|
|
41,346
|
TOTAL
|
|
|
$41,346
|
|
|
$1,215,791
|
|
|
$148,846
|
|
|
$1,510,547
|
|
|
$1,603,122
|
|
|
$2,931,934
|
|
|
$41,346
|
|
|
$10,583,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
amounts
shown
reflect
unvested
long-term
incentive
awards.
Such
amounts
are
based
on
the
NYSE
closing
price
of
our
common
stock
on
December
31,
2012,
which
was
$52.52.
|
|
(2)
|
The
amounts
shown
represent
a
lump-sum
payment
for
five
weeks
of
vacation
in
2012
(assuming
the
NEO
did
not
take
any
vacation
days
in
2012).
Actual
payouts
may
vary
depending
on
the
specific
circumstances.
|
David
W. Moon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary-Not
For
Cause Termination
|
|
Component
|
|
Voluntary
Termination
|
|
Retirement
|
|
Normal
Severance
|
|
Enhanced
Severance
|
|
Death
|
|
Disability
|
|
For
Cause
Termination
|
|
Change
in
Control
|
Base Salary
|
|
|
$0
|
|
|
$0
|
|
|
$98,750
|
|
|
$790,001
|
|
|
$98,750
|
|
|
$790,001
|
|
|
$0
|
|
|
$1,185,001
|
Prorated Bonus
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
276,500
|
Bonus
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
604,711
|
|
|
0
|
|
|
604,711
|
|
|
0
|
|
|
829,501
|
Payment in Lieu
of Outplacement Services
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
39,500
|
|
|
0
|
|
|
39,500
|
|
|
0
|
|
|
59,250
|
Payment in Lieu
of Perquisites
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
39,500
|
|
|
0
|
|
|
39,500
|
|
|
0
|
|
|
177,750
|
Post-Employment
Health Care Coverage
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
35,550
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
89,463
|
Long-Term Equity
Accelerated Vesting(1)
|
|
|
0
|
|
|
1,174,445
|
|
|
0
|
|
|
0
|
|
|
1,454,276
|
|
|
1,454,276
|
|
|
0
|
|
|
4,816,351
|
Incremental Payment
Under Supplemental Retirement Plan and Frozen Profit Sharing Restoration Plan
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
632,000
|
280G Tax Gross-up
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2,937,002
|
Unused, Accrued
Vacation(2)
|
|
|
37,981
|
|
|
37,981
|
|
|
37,981
|
|
|
37,981
|
|
|
37,981
|
|
|
37,981
|
|
|
37,981
|
|
|
37,981
|
TOTAL
|
|
|
$37,981
|
|
|
$1,212,426
|
|
|
$136,731
|
|
|
$1,547,243
|
|
|
$1,591,007
|
|
|
$2,965,969
|
|
|
$37,981
|
|
|
$11,040,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
amounts
shown
reflect
unvested
long-term
incentive
awards.
Such
amounts
are
based
on
the
NYSE
closing
price
of
our
common
stock
on
December
31,
2012,
which
was
$52.52.
|
|
(2)
|
The
amounts
shown
represent
a
lump-sum
payment
for
five
weeks
of
vacation
in
2012
(assuming
the
NEO
did
not
take
any
vacation
days
in
2012).
Actual
payouts
may
vary
depending
on
the
specific
circumstances.
|
Daniel
M. Sessa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary-Not
For
Cause Termination
|
|
Component
|
|
Voluntary
Termination
|
|
Retirement
|
|
Normal
Severance
|
|
Enhanced
Severance
|
|
Death
|
|
Disability
|
|
For
Cause
Termination
|
|
Change
in
Control
|
Base Salary
|
|
|
$0
|
|
|
$0
|
|
|
$105,000
|
|
|
$840,000
|
|
|
$105,000
|
|
|
$840,000
|
|
|
$0
|
|
|
$1,260,000
|
Prorated Bonus
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
294,000
|
Bonus
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
549,779
|
|
|
0
|
|
|
549,779
|
|
|
0
|
|
|
882,000
|
Payment in Lieu
of Outplacement Services
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
42,000
|
|
|
0
|
|
|
42,000
|
|
|
0
|
|
|
63,000
|
Payment in Lieu
of Perquisites
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
42,000
|
|
|
0
|
|
|
42,000
|
|
|
0
|
|
|
189,000
|
Post-Employment
Health Care Coverage
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
32,889
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
56,115
|
Long-Term Equity
Accelerated Vesting(1)
|
|
|
0
|
|
|
1,172,611
|
|
|
0
|
|
|
0
|
|
|
1,450,504
|
|
|
1,450,504
|
|
|
0
|
|
|
4,680,329
|
Incremental Payment
Under Supplemental Retirement Plan and Frozen Profit Sharing Restoration Plan
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
545,817
|
280G Tax Gross-up
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
3,193,844
|
Unused, Accrued
Vacation(2)
|
|
|
40,385
|
|
|
40,385
|
|
|
40,385
|
|
|
40,385
|
|
|
40,385
|
|
|
40,385
|
|
|
40,385
|
|
|
40,385
|
TOTAL
|
|
|
$40,385
|
|
|
$1,212,996
|
|
|
$145,385
|
|
|
$1,547,053
|
|
|
$1,595,889
|
|
|
$2,964,668
|
|
|
$40,385
|
|
|
$11,204,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
amounts
shown
reflect
unvested
long-term
incentive
awards.
Such
amounts
are
based
on
the
NYSE
closing
price
of
our
common
stock
on
December
31,
2012,
which
was
$52.52.
|
|
(2)
|
The
amounts
shown
represent
a
lump-sum
payment
for
five
weeks
of
vacation
in
2012
(assuming
the
NEO
did
not
take
any
vacation
days
in
2012).
Actual
payouts
may
vary
depending
on
the
specific
circumstances.
|
DIRECTOR
COMPENSATION
We
use a combination of cash, stock and long-term equity awards to compensate members of our Board. Directors who are also employees
of our Company do not receive any additional compensation for serving on our Board.
2012
Annual Retainer
In
2012, we provided the following retainers to our Board:
|
|
|
|
|
|
|
|
Board
Retainer
|
|
Lead
Director / Committee
Chair Retainer
|
Non-Employee Directors,
Other than the Chairman of the Board:
|
|
$90,000, with up to $70,000 payable in cash and the
remainder payable in Company common stock
|
|
●
|
Lead Director:
$20,000
|
●
|
Audit: $15,000
|
●
|
Compensation and Human Resources: $10,000
|
●
|
Board Governance: $10,000
|
●
|
Public Policy Committee: $6,000
|
Chairman of the
Board (through May, 2012):
|
|
$180,000, with up to $140,000 payable
in cash and the remainder payable in Company common stock
|
|
●
|
$25,000 flat fee
|
|
|
|
|
|
|
|
In
March 2012, the Board elected Mr. Bluedorn, our CEO, to the role of Chairman of the Board, effective as of the conclusion of our
2012 Annual Meeting in May 2012. The past Chairman of the Board, Richard L. Thompson, then assumed the role of Lead Director.
See “Corporate Governance — Board Meetings and Leadership Structure” for further discussion of this topic. In
connection with this change, the Board eliminated separate fees for the Chairman of the Board going forward.
We
also reimbursed all non-employee directors for their reasonable expenses incurred in connection with attendance at Board or Board
committee meetings. We pay directors’ fees on a quarterly basis.
Non-Employee
Directors’ Compensation and Deferral Plan
Under
the Non-Employee Directors’ Compensation and Deferral Plan, non-employee directors may receive all or a portion of their
annual retainer for service on the Board in the form of Company common stock. The cash deferral component of the plan is frozen.
Long-Term
Incentive Compensation
Non-employee
directors receive 100% of their long-term incentive in the form of RSUs under the LII Incentive Plan. In 2012, we awarded each
non-employee director 2,061 RSUs. Generally, the RSUs vest three years following the date of grant provided that the director
remains on our Board throughout the vesting period. In December 2012, the Board of Directors approved a $10,000 increase in the
targeted value of the RSUs received by non-employee directors under the LII Incentive Plan to better align with Market practices
– the first increase since 2006 – which was reflected in their 2012 awards.
Retirement
and Health and Welfare Plans
We
provide a frozen Directors’ Retirement Plan for non-employee directors who were active Board members prior to 1998 and allow
such directors to participate in our health care programs under the same terms and provisions that we provide to our employees.
The frozen Directors’ Retirement Plan provides for partial continuation of the cash component of the director’s annual
retainer at the time of retirement for life. During 2012, Mr. Major and Mr. Thompson were the only active Board members eligible
for this plan. Mr. Major is the only active Board member who participates in our health care program.
Perquisites
and Other Compensation
We
allow our non-employee directors to participate in our employee rebate program, which provides rebates on eligible residential
heating and air conditioning equipment, accessories, and supplies.
Stock
Ownership Guidelines
Pursuant
to our Corporate Governance Guidelines, all directors are required to own shares of our common stock having a value of at least:
|
●
|
three
times
their
annual
retainer
by
the
later
of
January
1,
2013
or
three
years
after
their
election;
and
|
|
●
|
four
times
their
annual
retainer
by
the
later
of
January
1,
2015
or
five
years
after
their
election.
|
As
of December 31, 2012, all non-employee directors currently meet our stock ownership guidelines, except Mr. Teske who joined the
Board in July 2011.
Fiscal
2012 Director Compensation Table
The
following table provides information regarding compensation earned in 2012 by each non-employee member of our Board in 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned
($)(1)
|
|
Stock
Awards ($)(2)
|
|
Change
in Pension Value
and Nonqualified
Deferred Compensation
Earnings ($)(3)
|
|
All
Other
Compensation
($)(4)
|
|
Total
($)
|
Richard
L. Thompson
|
|
144,190
|
|
|
|
100,691
|
|
|
33,705
|
|
0
|
|
278,586
|
Janet
K. Cooper
|
|
90,000
|
|
|
|
100,691
|
|
|
0
|
|
0
|
|
190,691
|
C.L.
(Jerry) Henry
|
|
100,000
|
|
|
|
100,691
|
|
|
0
|
|
0
|
|
200,691
|
John
E. Major
|
|
100,000
|
|
|
|
100,691
|
|
|
36,990
|
|
0
|
|
237,681
|
John
W. Norris, III
|
|
96,000
|
|
|
|
100,691
|
|
|
0
|
|
0
|
|
196,691
|
Paul
W. Schmidt
|
|
105,000
|
|
|
|
100,691
|
|
|
0
|
|
0
|
|
205,691
|
Terry
D. Stinson
|
|
90,000
|
|
|
|
100,691
|
|
|
0
|
|
0
|
|
190,691
|
Gregory
T. Swienton
|
|
89,929
|
|
|
|
100,691
|
|
|
0
|
|
0
|
|
190,620
|
Todd
J. Teske
|
|
90,000
|
|
|
|
100,691
|
|
|
0
|
|
0
|
|
190,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
table
below
identifies
the
allocation
between
cash
and
stock
of
the
fees
earned
in
2012
by
each
non-employee
director:
|
|
|
Name
|
|
Paid in Stock
|
|
|
Paid in Cash
|
|
Richard L. Thompson
|
|
$
|
57,155
|
|
|
|
$
|
87,035
|
|
|
Janet K. Cooper
|
|
|
19,957
|
|
|
|
|
70,043
|
|
|
C.L. (Jerry) Henry
|
|
|
19,957
|
|
|
|
|
80,043
|
|
|
John E. Major
|
|
|
19,957
|
|
|
|
|
80,043
|
|
|
John W. Norris, III
|
|
|
19,957
|
|
|
|
|
76,043
|
|
|
Paul W. Schmidt
|
|
|
19,957
|
|
|
|
|
85,043
|
|
|
Terry D. Stinson
|
|
|
89,929
|
|
|
|
|
71
|
|
|
Gregory T. Swienton
|
|
|
89,929
|
|
|
|
|
0
|
|
|
Todd J. Teske
|
|
|
19,957
|
|
|
|
|
70,043
|
|
|
|
(2)
|
For
the
non-employee
directors,
the
amounts
shown
represent
the
grant
date
fair
value
(prior
to
any
assumed
forfeitures
related
to
service-based
vesting
conditions,
where
applicable)
in
accordance
with
FASB
ASC
Topic
718,
in
connection
with
RSUs
granted
under
the
LII
Incentive
Plan.
The
grant
date
fair
value
of
RSUs
granted
to
non-employee
directors
in
2012,
calculated
in
accordance
with
FASB
ASC
Topic
718,
is
as
follows:
|
|
|
|
|
|
|
|
|
|
Grant
Date
|
|
RSUs
Granted in
2012 (#)
|
|
Grant
Date Fair
Value
Per Share ($)(a)
|
|
Grant
Date
Fair
Value ($)
|
|
|
|
|
|
|
|
|
All Non-Employee Directors
|
December 7, 2012
|
|
2,061
|
|
48.8554
|
|
100,691
|
|
(a)
|
$48.8554
is
the
dividend
discounted
value,
based
on
a
dividend
rate
of
1.69%,
of
the
average
of
the
high
and
low
NYSE
trading
prices
of
our
common
stock
on
the
date
of
the
grant,
which
was
$51.395.
|
|
(3)
|
The
amounts
shown
represent
the
change
in
the
present
value
of
accumulated
pension
benefits
that
accrued
during
2012
under
our
Directors’
Retirement
Plan,
based
on
a
4.46%
discount
rate.
|
|
(4)
|
The
aggregate
value
of
all
perquisites
provided
for
each
non-employee
director
was
less
than
$10,000
for
2012.
|
The
following table provides information regarding the aggregate number of outstanding RSUs and SARs held by each non-employee director
as of December 31, 2012. RSUs generally vest on the third anniversary of the date of grant and all SARs are now fully vested.
SARs expire seven years from the date of grant.
Name
|
|
Aggregate RSUs Outstanding as
of December 31, 2012 (# of shares)
|
|
|
Aggregate Options/SARs
Outstanding as of
December 31, 2012 (# of shares)
|
|
Richard L. Thompson
|
|
|
12,154
|
|
|
|
|
0
|
|
|
Janet K. Cooper
|
|
|
7,107
|
|
|
|
|
0
|
|
|
C.L. (Jerry) Henry
|
|
|
7,107
|
|
|
|
|
0
|
|
|
John E. Major
|
|
|
7,107
|
|
|
|
|
0
|
|
|
John W. Norris, III
|
|
|
7,107
|
|
|
|
|
4,706
|
|
|
Paul W. Schmidt
|
|
|
7,107
|
|
|
|
|
0
|
|
|
Terry D. Stinson
|
|
|
7,107
|
|
|
|
|
0
|
|
|
Gregory T. Swienton
|
|
|
7,107
|
|
|
|
|
0
|
|
|
Todd J. Teske
|
|
|
5,051
|
|
|
|
|
0
|
|
|
EQUITY
COMPENSATION PLAN INFORMATION
We
currently administer three equity compensation plans: the LII Incentive Plan, the 2012 Employee Stock Purchase Plan, and the Non-Employee
Directors’ Compensation and Deferral Plan. The following table provides information as of December 31, 2012 regarding shares
of our common stock that may be issued under these equity compensation plans.
|
|
|
|
|
|
|
|
|
Plan
Category
|
|
Number
of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants and
Rights(1)
|
|
Weighted
Average
Exercise Price
of
Outstanding
Options,
Warrants and
Rights(2)
|
|
Number
of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans(3)
|
Equity compensation plans approved by security holders
|
|
|
|
|
|
|
|
●
|
LII Incentive Plan
|
|
3,291,506
|
|
$38.93
|
|
3,744,735
|
|
●
|
2012 Employee Stock Purchase Plan
|
|
—
|
|
—
|
|
2,482,652
|
|
●
|
Non-Employee Directors’
Compensation and Deferral Plan
|
|
—
|
|
—
|
|
257,209
|
Equity compensation plans
not approved by security holders
|
|
—
|
|
—
|
|
—
|
Total
|
|
|
3,291,506
|
|
$38.93
|
|
6,484,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes
the
following:
|
|
●
|
2,209,413
stock
appreciation
rights
granted
under
the
LII
Incentive
Plan,
which,
upon
exercise,
will
be
net-settled
in
shares
of
our
common
stock;
|
|
●
|
537,489
shares
of
our
common
stock
to
be
issued
upon
the
vesting
of
restricted
stock
units
outstanding
under
the
LII
Incentive
Plan;
and
|
|
●
|
544,604
shares
of
our
common
stock
to
be
issued,
assuming
we
meet
the
target
performance
goals
for
the
applicable
three-year
performance
period,
of
performance
share
units
granted
under
the
LII
Incentive
Plan.
|
The
following table illustrates the number of shares of our common stock that may be issued pursuant to outstanding performance share
units and the number of shares that may be available for future issuance under our equity compensation plans if our performance
falls below or exceeds our target performance goals:
|
|
|
|
|
|
|
|
|
Performance
Level
|
|
Below
Threshold
|
|
Threshold
|
|
Target
|
|
Maximum
|
Shares
to be Issued Pursuant to Outstanding Performance Share Units
|
0
|
|
|
272,302
|
|
|
544,604
|
|
|
1,089,208
|
Number
of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
|
7,029,200
|
|
|
6,756,898
|
|
|
6,484,596
|
|
|
5,939,992
|
|
(2)
|
Excludes
performance
share
unit
and
restricted
stock
unit
awards
because
such
awards
have
no
exercise
price.
|
|
(3)
|
Assuming,
with
respect
to
outstanding
performance
share
units,
we
meet
target
performance
goals
for
the
applicable
three-year
performance
period,
includes
3,744,735
shares
of
common
stock
available
for
issuance
under
the
LII
Incentive
Plan,
of
which
2,900,932
shares
are
available
for
awards
to
employees
and
independent
contractors
and
843,803
shares
are
available
for
awards
to
non-employee
directors;
2,482,652
shares
of
common
stock
available
for
issuance
under
the
2012
Employee
Stock
Purchase
Plan,
and
257,209
shares
of
common
stock
available
for
issuance
under
the
Non-Employee
Directors’
Compensation
and
Deferral
Plan.
|
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
All
related party transactions must be approved in accordance with the written Related Party Transactions Policy adopted by our Board.
A related party transaction is a transaction or relationship since the beginning of the Company’s last fiscal year in which
(i) the total amount involved will or may be expected to exceed $120,000, (ii) the Company or any of its subsidiaries is a participant,
and (iii) any related party has or will have a direct or indirect interest (other than solely as a result of being a director
or a less than 10 percent beneficial owner of an equity interest in another entity). A related party is any person who is or was
since the beginning of the previous fiscal year an executive officer, director or nominee for election as a director; a stockholder
owning more than 5% of the Company’s voting securities; or an immediate family member of any of these persons.
Our
Board has considered certain limited types of transactions with related persons that meet specified criteria and determined that
each of them is deemed to be pre-approved under the terms of the Related Party Transaction Policy. These include (i) transactions
with companies and charitable contributions to organizations at which a related party’s only relationship is as an employee
(other than an executive officer), if the amount of the transaction or contribution does not exceed the greater of $1,000,000
or 1% of that company’s total annual revenue; (ii) transactions involving competitive bids, (iii) regulated transactions;
and (iv) certain routine banking services.
Our
Audit Committee is generally responsible for approving all related party transactions, which must be on terms that are fair to
our Company and comparable to those that could be obtained in arm’s length dealings with an unrelated third party. In the
event a related party transaction involves one or more members of the Audit Committee, the transaction must be approved by an
ad hoc committee appointed by the Board and composed entirely of independent and disinterested directors. There were no transactions
with related persons in 2012 that require disclosure pursuant to Item 404(a) of Regulation S-K.
Compensation
Committee Interlocks and Insider Participation
During
2012, no member of the Compensation and Human Resources Committee was an officer or employee of our Company or any of our subsidiaries.
In addition, none of our executive officers served on the board of directors or on the compensation committee of any other entity,
for which any executive officers of such other entity served either on our Board or on our Compensation and Human Resources Committee.
OWNERSHIP
OF COMMON STOCK
The
following table provides information regarding the beneficial ownership of our common stock as of February 15, 2013 (unless otherwise
noted) by (i) each person known to own beneficially more than 5% of our common stock, (ii) each of our directors, (iii) each of
our NEOs, and (iv) all current directors and executive officers as a group.
For
purposes of this table, “beneficial ownership” (as defined in Rule 13d-3 of the Securities Exchange Act of 1934)(the
“Exchange Act”) takes into account shares as to which the individual has or shares voting or investment power as well
as shares that may be acquired within 60 days (such as by exercising vested stock options or SARs, or the vesting of RSUs) and
is different from beneficial ownership for purposes of Section 16 of the Exchange Act. As a result, the numbers below may differ
from the numbers reported in forms filed pursuant to Section 16 (e.g., Forms 4).
To
our knowledge and unless otherwise indicated, each stockholder listed below has sole voting and investment power over the shares
listed as beneficially owned by such stockholder. Percentage of ownership is based on 50,258,148 shares of common stock outstanding
as of February 8, 2013. Number of shares held by beneficial owners of more than 5% of our common stock are as of the date of the
applicable SEC filing made by those owners (unless otherwise noted), however, percentages have been recalculated based on shares
outstanding as of February 8, 2013.
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Name
of Beneficial Owner
|
|
Common
Stock
Held (#)
|
|
Common
Stock that
may be Acquired
Within 60 Days(#)
|
|
Total
Shares
Beneficially
Held(#)
|
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Percent
of
Class(%)
|
5% Stockholders
|
|
|
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Wellington
Management Company, LLP (1)
|
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3,859,840
|
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|
|
|
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3,859,840
|
|
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7.7
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%
|
John
W. Norris, Jr. (2)
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3,181,613
|
|
|
|
|
|
|
3,181,613
|
|
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6.3
|
%
|
BlackRock,
Inc. (3)
|
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3,159,011
|
|
|
|
|
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3,159,011
|
|
|
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6.3
|
%
|
T.
Rowe Price Associates, Inc. (4)
|
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2,814,290
|
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|
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2,814,290
|
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5.6
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%
|
State
Street Corporation (5)
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2,700,786
|
|
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|
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2,700,786
|
|
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5.4
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%
|
Directors
and Executive Officers
|
|
|
|
|
|
|
|
|
|
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Todd
M. Bluedorn
|
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131,336
|
|
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334,378
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|
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465,714
|
|
|
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*
|
|
Janet
Cooper (6)
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13,640
|
|
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0
|
|
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13,640
|
|
|
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*
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C.
L. (Jerry) Henry
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34,559
|
|
|
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0
|
|
|
34,559
|
|
|
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*
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John
E. Major (7)
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37,710
|
|
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0
|
|
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37,710
|
|
|
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*
|
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David
W. Moon
|
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54,037
|
|
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92,977
|
|
|
147,014
|
|
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*
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John
W. Norris, III (8)
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346,410
|
|
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4,706
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351,116
|
|
|
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*
|
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Joseph
Reitmeier
|
|
855
|
|
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6,040
|
|
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6,895
|
|
|
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*
|
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Paul
W. Schmidt (9)
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20,749
|
|
|
|
0
|
|
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20,749
|
|
|
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*
|
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Daniel
M. Sessa
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35,605
|
|
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29,562
|
|
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65,167
|
|
|
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*
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Terry
D. Stinson
|
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29,005
|
|
|
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0
|
|
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29,005
|
|
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*
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Gregory
T. Swienton
|
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4,173
|
|
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0
|
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4,173
|
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*
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Todd
J. Teske
|
|
770
|
|
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|
0
|
|
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770
|
|
|
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*
|
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Richard
L. Thompson (10)
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|
220,068
|
|
|
|
0
|
|
|
220,068
|
|
|
|
*
|
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Douglas
L. Young
|
|
61,856
|
|
|
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19,544
|
|
|
81,400
|
|
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*
|
|
All
current executive officers and directors as a group (19 persons)
|
|
1,033,967
|
|
|
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603,249
|
|
|
1,637,216
|
|
|
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3.3
|
%
|
|
*
|
Less
than
1%
of
outstanding
common
stock
|
|
(1)
|
As
reported
by
Wellington
Management
Company,
LLP,
on
Amendment
No.
5
to
Schedule
13G
filed
with
the
Securities
and
Exchange
Commission
on
February
14,
2013.
Wellington
Management
Company,
LLP,
280
Congress
Street,
Boston,
MA
02210,
reported
shared
dispositive
power
with
respect
to
3,859,840
shares
and
shared
voting
power
with
respect
to
2,927,018
shares.
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(2)
|
As
reported
by
Mr.
Norris,
Jr.
on
Schedule
13D
filed
with
the
Securities
and
Exchange
Commission
on
August
12,
1999,
and
as
updated
with
information
provided
by
Mr.
Norris,
Jr.
to
the
Company
on
March
1,
2013,
includes
(a)
321,750
shares
held
by
the
John
W.
Norris,
Jr.
Trust
A,
for
which
Mr.
Norris,
Jr.
is
a
co-trustee
(Mr.
Norris,
Jr.
disclaims
beneficial
ownership
of
such
shares);
(b)
2,545,105
shares
held
by
the
Norris
Family
Limited
Partnership,
of
which
Mr.
Norris,
Jr.
is
General
Partner;
(c)
214,758
shares
held
by
the
Norris
Living
Trust;
and
(d)
100,000
shares
held
by
The
Cabin
Foundation,
of
which
Mr.
Norris,
Jr.
serves
as
President.
Mr.
Norris,
Jr.’s
address
is
3831
Turtle
Creek
Blvd.,
Dallas,
Texas
75219.
|
|
(3)
|
As
reported
by
BlackRock,
Inc.,
40
East
52
nd
Street,
New
York,
NY
10022,
on
a
Schedule
13G
filed
with
the
Securities
and
Exchange
Commission
on
February
4,
2013.
BlackRock,
Inc.
reported
sole
dispositive
and
sole
voting
power
with
respect
to
all
of
these
shares.
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(4)
|
As
reported
by
T.
Rowe
Price
Associates,
Inc.
(“Price
Associates”),
100
E.
Pratt
Street,
Baltimore,
MD
21202,
on
a
Schedule
13G
filed
with
the
Securities
and
Exchange
Commission
on
February
14,
2013.
Price
Associates
reported
sole
dispositive
power
with
respect
to
2,814,290
shares
and
sole
voting
power
with
respect
to
290,300
shares.
The
shares
are
owned
by
various
individual
and
institutional
investors,
including
funds,
for
which
Price
Associates
serves
as
an
investment
advisor
with
power
to
direct
investments
and/or
sole
power
to
vote
the
shares.
For
purposes
of
the
reporting
requirements
of
the
Exchange
Act,
Price
Associates
is
deemed
to
be
the
beneficial
owner
of
such
shares;
however,
Price
Associates
expressly
disclaims
that
it
is,
in
fact,
the
beneficial
owner
of
such
shares.
|
|
(5)
|
As
reported
by
State
Street
Corporation
on
a
Schedule
13G
filed
with
the
Securities
and
Exchange
Commission
on
February
8,
2013.
State
Street
Corporation,
One
Lincoln
Street,
Boston,
MA
02111
reported
shared
dispositive
and
shared
voting
power
with
respect
to
all
of
these
shares.
|
|
(6)
|
Includes
(a)
4,237
shares
held
by
a
minor
son
and
(b)
815
shares
held
by
another
son
for
whom
Ms.
Cooper
has
a
power
of
attorney.
Excludes
6,000
shares
held
by
the
Janet
K.
Cooper
2012
Trust
(Ms.
Cooper
disclaims
beneficial
ownership
of
such
shares).
|
|
(7)
|
Includes
(a)
11,069
shares
held
by
the
John
Major
Children’s
Trust
dated
12/15/96
FBO
John
Blackston
Major
and
(b)
12,068
shares
held
by
the
John
Major
Children’s
Trust
dated
12/15/96
FBO
Barbara
Marie
Major.
Mr.
Major
disclaims
beneficial
ownership
of
these
shares.
|
|
(8)
|
Includes
(a)
12,225
shares
held
by
the
W.H.
Norris
Trust,
12,225
shares
held
by
the
B.W.
Norris
Trust
and
11,301
shares
held
by
the
L.C.
Norris
Trust,
for
each
of
which
Mr.
Norris
is
a
trustee;
(b)
15,823
shares
held
by
spouse,
Catherine
Norris,
of
which
Mr.
Norris
disclaims
beneficial
ownership;
and
(c)
26,694
shares
held
by
Mr.
Norris’s
minor
children,
including
16,147
in
the
B.W.
Norris
Revocable
Trust
for
the
benefit
of
one
minor
child.
|
|
(9)
|
Includes
18,113
shares
held
by
the
Mary
T.
Schmidt
Irrevocable
Trust
U/A/D
10-16-12
of
which
Mr.
Schmidt
is
a
co-trustee
and
a
beneficiary
and
2,636
shares
held
by
the
Paul
W.
Schmidt
Living
Trust.
|
|
(10)
|
Includes
220,068
shares
held
by
the
R&B
Thompson
2005
Family
Trust,
of
which
Mr.
Thompson
is
a
co-trustee.
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and persons who beneficially own more
than 10% of our common stock to timely file with the SEC and the NYSE initial reports of ownership and reports of changes in their
ownership of our common stock. SEC regulations require our directors, executive officers and greater than 10% stockholders to
furnish us with copies of these reports. Based solely upon a review of such reports and related information furnished to us, we
believe that, during the 2012 fiscal year, all reportable transactions were timely made in accordance with the Section 16(a) filing
requirements.
To
our knowledge, based solely on a review of the reports we filed on behalf of our directors and executive officers, written representations
from these persons that no other reports were required and all Section 16(a) reports provided to us, we believe that during fiscal
2012 our directors, executive officers and holders of more than 10% of our common stock filed the required reports on a timely
basis under Section 16(a), except for a late Form 5 filing by Mr. Swienton with respect to 9 shares purchased with dividends paid
by the Company in July and October 2011.
OTHER
INFORMATION
Proxy
Solicitation
We
will pay for the cost of this proxy solicitation. In addition to solicitation by mail, our directors, officers and employees may
solicit proxies from stockholders by telephone, facsimile, email or in person. They will not be paid for soliciting proxies but
may be reimbursed for out-of-pocket expenses related to the proxy solicitation. We have retained Georgeson Inc. to assist in the
solicitation of proxies for a fee of $12,000 plus reimbursement of expenses. We will also make arrangements with brokerage houses
and other custodians, nominees and fiduciaries to send the proxy materials to beneficial owners of our common stock. Upon request,
we will reimburse the brokerage houses and custodians for their reasonable expenses in so doing.
Multiple
Stockholders Sharing the Same Address
We
have adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders who have the
same address and last name will receive only one copy of our Notice of Annual Meeting of Stockholders, Proxy Statement, Annual
Report to Stockholders and Annual Report on Form 10-K, unless one or more of these stockholders notifies us that they wish to
continue receiving individual copies. This procedure helps reduce our printing costs and postage fees.
Stockholders
who participate in householding will continue to receive separate Proxy Cards. Also, householding will not in any way affect dividend
check mailings.
If
you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple
copies of the Notice of Annual Meeting of Stockholders, Proxy Statement, Annual Report to Stockholders and Annual Report on Form
10-K, or if you hold stock in more than one account, and, in either case, you wish to receive only a single copy of each of these
documents for your household, please contact our Investor Relations department by telephone at (972) 497-5000 or in writing at
2140 Lake Park Blvd., Richardson, Texas 75080, Attention: Investor Relations.
If
you participate in householding and wish to receive a separate copy of these documents, please contact our Investor Relations
department as indicated above.
Form
10-K
Our
Annual Report on Form 10-K (excluding exhibits) is a part of our 2012 Annual Report to Stockholders, which is being sent with
this Proxy Statement. If you are entitled to vote at the Annual Meeting of Stockholders, you may obtain a copy of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2012, including the financial statements required to be filed with the SEC,
without charge, by contacting our Investor Relations department by telephone at (972) 497-5000 or in writing at 2140 Lake Park
Blvd., Richardson, Texas 75080, Attention: Investor Relations.
Stockholder
Proposals for the 2014 Annual Meeting of Stockholders
Proposals
for Inclusion in the Proxy Statement
If
you wish to submit a proposal for possible inclusion in our 2014 Proxy Statement, we must receive your notice, in accordance with
the rules of the SEC, on or before December 4, 2013. The proposal should be sent in writing to 2140 Lake Park Blvd., Richardson,
Texas 75080, Attention: Corporate Secretary.
Proposals
to be Offered at the 2014 Annual Meeting
If
you wish to introduce a proposal at the 2014 Annual Meeting of Stockholders but do not intend for your proposal to be considered
for inclusion in our 2014 proxy materials, our Bylaws, as permitted by the rules of the SEC, require that you follow certain procedures.
Specifically, you must give written notice to our Corporate Secretary of your intention to introduce a proposal. We must receive
such notice at least 60 days but no more than 90 days prior to the 2014 Annual Meeting of Stockholders, or if we give less than
70 days’ notice of the 2014 Annual Meeting of Stockholders date, the notice must be received within 10 days following the
date on which notice of the date of the 2014 Annual Meeting of Stockholders was mailed or such public disclosure was made to our
stockholders. In the case of a special meeting of stockholders, we must receive notice of your intention to introduce a proposal
within 10 days following the date on which notice of such meeting is first given to stockholders. Pursuant to our Bylaws, a stockholder’s
notice must include certain information regarding the proposal and the stockholder making the proposal. Depending on the nature
of the proposal, additional information may be required (see “About Us — Corporate Governance — Stockholder
Nominations for Director” at our website at http://www.lennoxinternational.com).
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By Order of the Board of Directors,
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John D. Torres
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Corporate Secretary
|
Richardson,
Texas
April 3, 2013
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