Section 162(m) of the Internal Revenue Code
In the course of fulfilling its responsibilities, the Compensation Committee routinely reviews the impact of Section 162(m) of the Internal Revenue Code, which
disallows a tax deduction for certain compensation paid in excess of $1,000,000 to the Chief Executive Officer and the next three highest paid executive officers of the Company, excluding the Chief Financial Officer. The regulations under
Section 162(m), however, exempt from this $1,000,000 limit various forms of compensation, including performance-based compensation. The Companys performance-based Incentive Plan, described above, and the 2014 Omnibus Plan
satisfy the requirements of this Section 162(m) exemption. Although the Compensation Committee considers the impact of Section 162(m) when administering the Companys compensation programs, the Compensation Committee does not make
decisions regarding executive compensation solely based on the expected tax treatment of such compensation.
In order to maintain flexibility in designing
compensation programs that retain key leaders, reward past performance, incentivize strong future performance and align executives long-term interests with stockholders, the Compensation Committee may deem it appropriate at times to forgo
Section 162(m) qualified awards in favor of awards that may not be fully tax-deductible. This has occurred, for example, when the Companys operating results were adversely impacted by restructuring
or other non-operating charges, yet the Company performed significantly better than its business plan notwithstanding the charges.
Perks and Other Benefits
Our named executive officers participate in various
employee benefit plans that are generally available to all employees and on the same terms and conditions as with respect to other similarly situated employees. These include normal and customary programs for life insurance, health insurance,
prescription drug insurance, dental insurance, short and long term disability insurance, pension benefits, and matching gifts for charitable contributions. While these benefits are considered to be an important and appropriate employment benefit for
all employees, they are not considered to be a material component of a named executive officers annual compensation program. Because the named executive officers receive these benefits on the same basis as other employees, these benefits are
not established or determined by the Compensation Committee separately for each named executive officer as part of the named executive officers annual compensation package.
In addition, we maintain a 401(k) retirement savings plan for the benefit of all of our employees, including our named
executive officers. In fiscal 2017, we provided a Company match of up to 4% of the qualified retirement plan compensation limit per employee, which executives also were able to receive.
RPMs company match is fully vested to all employees, including executives, at the time of contribution. As is the case with all employees, unless they elect to make their contributions on an after-tax
basis, named executive officers are not taxed on their contributions to the 401(k) retirement savings plan or earnings on those contributions until they receive distributions from the 401(k) retirement savings plan, and all RPM contributions are tax
deductible by us when made.
During fiscal 2017 we provided the use of cars to our named executive officers. Also during fiscal 2017, we made financial and estate
planning services available to Messrs. Sullivan, Rice and Moore, and we paid executive life insurance premiums for the benefit of our named executive officers.
We periodically review the perquisites that named executive officers receive.
In addition to the above described plans, the Company offers a tax
qualified defined benefit retirement plan. Information about this plan can be found under the heading Pension Benefits for Fiscal 2017. The Company also offers a deferred compensation plan. Under this plan, selected management employees,
certain highly compensated employees and Directors are eligible to defer a portion of their salary, bonus, incentive plan amounts and Director fees until a future date. A participants account will be credited with investment gains or losses as
if the amounts credited to the account were invested in selected investment funds. Any compensation deferred under the plan is not included in the $1,000,000 limit provided for under Section 162(m) of the Internal Revenue Code until the year in
which the compensation actually is paid. Additional information about this plan can be found under the heading, Nonqualified Deferred Compensation for Fiscal 2017.
Report of the Compensation Committee
The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the Companys management and legal counsel. Based on that review and discussion, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Companys Annual Report on Form 10-K and in the Companys definitive proxy statement
RPM International Inc. (NYSE: RPM) owns subsidiaries that are world leaders in coatings, sealants, building materials and related services. From homes to precious landmarks worldwide, their brands are trusted by consumers and professionals alike to protect, improve and beautify. Among its leading consumer brands are Rust-Oleum, DAP and Zinsser. Learn more about RPM brands >>
RPM is a compelling long-term investment.
The percent by which RPM's 10-year total return has bested the S&P 500. More reasons >>
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