Myers Industries (MYE) DEF 14ADefinitive proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE14A

(RULE 14A-101)

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES

EXCHANGE ACT OF 1934

Check the appropriate box:

MYERS INDUSTRIES, INC.

(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

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NOTICE OF 2020

ANNUAL MEETING OF SHAREHOLDERS

AND PROXY STATEMENT

1293 South Main Street — Akron, Ohio 44301

March 23, 2020

Dear Fellow Shareholders,

It is a privilege to work on behalf of Myers shareholders as Chairman of its Board of Directors. I am writing to update you on our work.

In October, with David Banyard’s departure from the Company, the board acted swiftly and decisively in naming our Executive Vice President, Chief Legal Officer, and Corporate Secretary Andrean Horton as Interim President and CEO. During this transition, Andrean has been capably supported by other members of the team, including our two segment group presidents, Chris DuPaul and Mike Valentino, and Executive Vice President and CFO Kevin Brackman. The Company's management has also been strengthened by the September hiring of Tom Harmon, our Vice President and Chief Human Resources Officer.

We were actively engaged in finding a new CEO, and a search committee comprised of board members (led by director and Corporate Governance and Nominating Committee Chair Bruce Lisman) worked diligently and quickly to attract and select the best possible candidate. We were very pleased to announce the selection of Mike McGaugh as Myers’ new President, Chief Executive Officer, and director effective April 6, 2020. Mike most recently served as Executive Vice President and Chief Operating Officer of BMC Stock Holdings, Inc. and previously served The Dow Chemical Company for over 20 years in global business leadership roles.

The board, including in very recent strategy sessions, is focusing the Company on revenue growth -- encompassing both new products and potential related acquisitions. Already, our Distribution segment has seen positive results. Until 2018, sales had been declining every year since 2012. Last year, however, organic sales increased by 1.7% and the acquisition of Tuffy Manufacturing (announced in late August) is expected to be accretive to Myers’ earnings.

Our largest segment, Material Handling, suffered from a decline in earnings last year. To put this into context, however, despite a 15% decline in sales, the segment increased its adjusted EBITDA margin by 130 basis points, thanks to management's continual attention to driving efficiencies. 

The board was highly engaged throughout 2019. In fact, there were a total of ten full board meetings and a total of fifteen regular committee meetings. All directors attended a board meeting and plant tour at our Scepter facility in Miami, Oklahoma. I want to thank the entire Miami team for their kind hospitality (even during a tornado warning!).

Effective with this year’s annual meeting, we will be making one change to our Committee Chairs. After over a decade of superb service in the role, Bob Stefanko will be transitioning off as Audit Chair. He will be succeeded by director Jane Scaccetti, who is currently Audit Chair of Penn National Gaming. She joins Bruce Lisman and Sarah Coffin as Chairs of the Corporate Governance and Nominating and Compensation Committees, respectively. Fortunately, we are retaining Bob’s wise counsel as a director. 

We continue to incorporate best practices in our corporate governance. For example, we conduct annual elections for all directors; ensure there is an independent board chair and committees comprised exclusively of independent board members; and utilize the services of an independent third party to facilitate annual self-evaluations of our board performance.

The committee system is central to our governance structure. Each of the Audit and Compensation Committees reviews and approves all proposed changes and adjustments (affecting earnings and employee compensation) at their respective committee meetings on a quarterly basis.

Our Compensation Committee continues to work to optimize the Company’s compensations program, ensuring that management’s short- and long-term incentives are properly aligned with shareholders’ interests. The Corporate Governance and Nominating Committee is charged with overseeing board training and evaluation, as well as continuing board succession. The Audit Committee continues to work closely with our outside independent accounting firm and internal financial staff to ensure the quality of our financial controls.

Environmental stewardship and corporate responsibility are likewise very important to Myers – and something about which several shareholders have inquired on an ongoing basis. We incorporate environmental consciousness into all aspects of our operations by, among other measures, recycling and reprocessing plastic scrap in our facilities. We also manufacture returnable packaging products and implement and maintain recycling programs. We conserve energy whenever we can and focus on sustainability, as well. The board remains focused on the Company’s safety record, which thankfully remains well below the industry average. We continue to strive for zero injuries at our facilities, and last year our recordable injuries were reduced by one-third (our injury rate is about half that of the industry). We are also working to increase employee engagement and satisfaction within the organization. To that end, we completed an engagement survey last year, in which 91% of all employees responded. 

As I mentioned in last year’s letter, we changed the method (but not the actual dollar equivalent) of director pay. Beginning a year ago, the stock portion of director pay was granted at the beginning of the year, with vesting at year end, rather than granted at year end (in April, 2019, for instance, Directors’ stock grants vested at about $24/share). Directors’ annual cash retainer has been $55,000 since 2018, and was $52,500 from 2015.

For the fourth consecutive year, we reached out to all shareholders owning more than 1% of Myers’ outstanding shares, offering to meet on governance issues. We contacted our top shareholders representing approximately three-quarters of total outstanding shares. We were gratified by the results of the “say on pay” proposal at last year's annual meeting, when more than 30 million shares voted “for” and less than 700,000 shares voted “against.”

During 2019, the total return (including dividends) for Myers’ stock was 13.8%, compared to 31.5% for the S&P 500 (the return for smaller companies like Myers was generally less than that index). Although this one year performance was relatively disappointing, we believe that one year is not an appropriate gauge of long-term performance, and are gratified about our internal improvements and opportunities for long-term growth.

As always, we welcome feedback from our shareholders. Shareholders may send communication by email to governance@myersind.com or by mail or courier delivery addressed as follows: Board of Directors (or Committee Chair, Board Member, or Non-Management Directors, as the case may require), c/o Chief Legal Officer and Secretary, Myers Industries, Inc. 1293 Main Street South, Akron, Ohio 44301, as outlined more completely in our Communication Procedures for Interested Parties and Shareholders available on the Company’s website www.myersindustries.com.

Your board remains very active and engaged and we begin 2020 firmly committed to building long-term shareholder value at Myers. Thank you for your support of the Company and confidence in our efforts on your behalf.

Sincerely,

************

Dear Shareholders,

The Board of Directors of Myers Industries, Inc. (“Myers Industries” or the “Company”) has fixed the close of business on March 6, 2020, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting of Shareholders to be held on April 29, 2020 (the “Annual Meeting”). This Proxy Statement, together with the related proxy card and our 2019 Annual Report to Shareholders, is being mailed to our shareholders on or about March 23, 2020. To be sure that your shares are properly represented at the Annual Meeting, whether or not you intend to attend the Annual Meeting via live webcast or in person, please complete and return the enclosed proxy card, or follow the instructions to vote by telephone or internet, as soon as possible.

If you have any questions or need assistance in voting your shares, please contact our Investor Relations Department at (330) 761-6212.

Akron, Ohio

March 23, 2020

THE 2019 ANNUAL REPORT TO SHAREHOLDERS ACCOMPANIES THIS NOTICE

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: This Proxy Statement and the Company’s 2019 Annual Report to Shareholders are available on Myers Industries’ website at:

http://investor.myersindustries.com/investor-relations/financial-information/default.aspx.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Items of Business

The Board of Directors recommends that you vote “FOR” each of the director nominees included in Proposal Number 1 and “FOR” each of Proposal Numbers 2 and 3. The full text of these proposals is set forth in the accompanying Proxy Statement.

How to Vote

PROXY STATEMENT SUMMARY

Below are the highlights of important information you will find in this Proxy Statement.  As this is only a summary, we request you please review the full Proxy Statement before casting your vote.

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PROXY STATEMENT SUMMARY (CONTINUED)

Recent Highlights and Achievements

The Company’s management and its Board of Directors (the “Board” or “Board of Directors”) have developed a strategic vision for the Company, which they have focused on implementing for the past several years. This long-term strategy is guided by three key operating principles:

The Company’s mission is to instill a culture where safety and efficiency are part of every aspect of the business and where employees are empowered to act like owners. The Company’s management and Board of Directors work hand-in-hand to develop our strategic vision and together review the Company’s strategy and performance periodically throughout the year.

Myers Industries has made meaningful progress executing its long-term strategy. The Company’s key achievements in 2019 included, among others:

The Company uses certain non-GAAP measures in this proxy statement. Adjusted income per diluted share from continuing operations, operating income as adjusted, income from continuing operations as adjusted, EBITDA as adjusted, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted EPS and free cash flow are non-GAAP financial measures and are intended to serve as a supplement to results provided in accordance with accounting principles generally accepted in the United States. Myers Industries believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Appendix A to this proxy statement.

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PROXY STATEMENT SUMMARY (CONTINUED)

Governance Highlights

Myers Industries’ commitment to sound corporate governance practices has been illustrated through a number of positive actions taken over recent years. We firmly believe that sound corporate governance is in the best interests of our shareholders and strengthens accountability within the organization. The following is a summary of our sound governance practices:

Director Nominees

You are being asked to vote on the election of the following director candidates.  The candidates listed below are the nominees recommended by the Corporate Governance and Nominating Committee (the “Governance Committee”) and approved by the Board to serve for a one-year term. Detailed information on each director is available starting on page 12.

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PROXY STATEMENT SUMMARY (CONTINUED)

Board Overview

Myers Industries has an experienced and effective Board focused on shareholder value creation. The Board is currently composed of eight members, all of whom are independent. The charts below highlight the Board’s composition and experience, including the impending appointment of Mike McGaugh as a non-independent director effective April 6, 2020.

Board Composition

Director Qualifications

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PROXY STATEMENT SUMMARY (CONTINUED)

Shareholder Engagement

One of our key priorities is conducting robust engagement with our shareholders in order to provide transparency into our business and determine which issues are important to our shareholders. Participants in our engagement programs include executive management, members of the Board of Directors and Investor Relations personnel. Our methods of engagement include:

Shareholder Outreach

We believe engaging in shareholder outreach is an important element of strong corporate governance.  In 2019, in a continuation of the Company’s shareholder outreach efforts that began in 2016, members of our Board and executive management acted on this belief and contacted the top 12 shareholders who own 1% or greater of outstanding shares and represent collectively approximately 75% of total shares outstanding. Following this outreach, we received feedback and questions on corporate governance matters, Board of Directors and management composition, and other items of shareholder interest.

The Company values the input received from these discussions with shareholders. Following these conversations, the Company has continued to emphasize the importance of safety in our operations and has renewed its focus on enhancing sustainable business practices and incorporating environmental consciousness throughout our operations.  Additionally, the Compensation Committee of the Company regularly evaluates the Company’s compensation programs and considers shareholder input in evaluating the programs.  

At any time during the year shareholders may access our Annual Report, Proxy Statement, financial presentations, and corporate governance guidelines at www.myersindustries.com.  

Shareholder Communications

Shareholders may contact any director, committee of the board, non-management director or the Board through the following:

via U.S. Mail at:

Myers Industries, Inc.

c/o Secretary

1293 South Main Street

Akron, Ohio 44301

via e-mail at:

governance@myersind.com

A toll-free hotline has also been established if an interested party wishes to contact a director, a committee of the Board, a non-management director or the Board by phone. The number is (877) 285-4145 and is available worldwide 24 hours a day, seven days a week.

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PROXY STATEMENT SUMMARY (CONTINUED)

Executive Compensation Overview

Myers Industries’ executive compensation program, set forth by the Compensation Committee, is designed to implement our executive pay philosophy to:

Compensation Practices

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PROXY STATEMENT SUMMARY (CONTINUED)

Elements of Compensation for 2019

Our 2019 executive compensation program was designed to reinforce the relationship between the interests of our named executive officers (or “NEOs”) and our shareholders.  The objectives and key characteristics of each element of our 2019 executive compensation are summarized below:

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PROXY STATEMENT SUMMARY (CONTINUED)

2019 CEO and CFO Target Compensation Mix⁽¹⁾

2019 CEO Target Compensation Mix⁽²⁾

2019 CFO Target Compensation Mix

____________________

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Myers Industries, Inc.

Proxy Statement

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Corporate Governance and Compensation Practices and Policies

The Board of Directors is committed to maintaining sound corporate governance and a compensation structure that promotes the best interests of our shareholders.  

Corporate Governance Guidelines

The Company has adopted “Corporate Governance Guidelines” and a “Code of Business Conduct and Ethics” for the Company’s directors, officers and employees.  Each of our corporate governance policies is available on the “Corporate Governance” page accessed from the “Investor Relations” page of our website at www.myersindustries.com.

Corporate Governance and Compensation Practices

Shareholder Outreach

We consider the opinions expressed by shareholders through their votes, periodic meetings and other communications and believe that shareholder engagement leads to enhanced governance practices. In 2016, we implemented a proactive investor outreach program which includes contacting shareholders who own 1% or more of our outstanding shares.

In 2019, the Company and members of the Board continued to conduct considerable shareholder outreach, through which we requested input from our twelve largest institutional investors and other shareholders collectively holding approximately 75% of our outstanding shares. Following this outreach, we received feedback and questions on corporate governance matters, changes to the Board of Directors and management, and other items of shareholder interest.

We value shareholder views and insights and expect to continue to dialogue with our shareholders.

Annual Elections

In accordance with best practices, all of our directors are elected annually.

Independent Board Chair

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Board and Committee Independence

Director Resignation Policy

Over-Boarding Policy

The Company has adopted a policy that the maximum number of public company boards on which a non-CEO director may sit is five (including our Board) and the maximum number of public company boards on which a CEO director may sit is three (including our Board).

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Board Role in Risk Oversight

The Board annually reviews the Company’s strategic plan, which addresses, among other things, the Company’s risks and opportunities. Certain areas of oversight are delegated to the relevant Committees of the Board and the Committees regularly report back on their deliberations. This oversight is enabled by reporting processes that are designed to provide visibility to the Board about the identification, assessment, monitoring and management of enterprise-wide risks. Every year, management conducts an enterprise-wide risk assessment of the Company and each of its business segments and presents the assessment to the Board for review. The focus of this assessment includes a review of strategic, financial, operational, compliance, reputational and technology (IT) objectives and risks for the Company. In addition:

Each committee also considers the reputational risk implicated by the oversight responsibilities described above.

Clawback Policy

The Company maintains a ��Clawback Policy” that provides for the recoupment of certain incentive compensation in the event of an accounting restatement resulting from material noncompliance (whether or not based upon misconduct) with financial reporting requirements under the federal securities laws. The Clawback Policy is administered by the Compensation Committee and applies to current and former executive officers and such other employees who may from time to time be deemed subject to the policy by the Compensation Committee.

Succession Planning

Our Board, in coordination with the Governance Committee, oversees succession planning for the CEO and other officers of the Company. As part of its succession planning oversight, the Board reviews the senior management team’s experience, skills, competence and potential, to help assess which executives have the ability to develop the attributes that the Board believes are necessary to lead and execute the Company's strategic vision.

Stock Ownership Guidelines

The Company maintains “Stock Ownership Guidelines” whereby our executive officers and non-employee directors are expected to hold a specified amount of our common stock.  These expectations are as follows:

The executive officers and non-employee directors have five years from the date they become subject to the guidelines to attain the ownership requirement. These “Stock Ownership Guidelines” are available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at www.myersindustries.com.

Anti-Hedging and Pledging Policy

The Company prohibits directors, officers and employees from engaging in any hedging or pledging transactions with respect to Company shares.

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Board Member Recruiting Guidelines

The Company’s Board Member Recruiting Guidelines outline the process for nominating potential director candidates for consideration by the Governance Committee. These recruiting guidelines are available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at www.myersindustries.com.

Executive Sessions of the Board and Committees

The Board has a policy requiring the non-management directors, both as to the Board and Committees, to meet regularly in executive session without any management personnel or employee directors present. During 2019, the Board and each Committee met regularly in executive session as follows: Board, ten times; Audit Committee, six times; Compensation Committee, six times; and the Governance Committee, three times.

Presiding Directors

The Chairman of each Committee was selected as the Presiding Director for each Committee executive session.

Anonymous Reporting

The Audit Committee maintains procedures, including a worldwide telephone “hotline,” which allows employees and interested parties to report any financial or other concerns anonymously as further detailed under “Shareholder Communication with Directors” below.

Code of Ethics

We have a “Code of Ethics and Business Conduct,” which incorporates a “Code of Ethical Conduct for the Finance Officers and Finance Department Personnel,” which embodies our commitment to ethical and legal business practices, as well as satisfying the NYSE requirements to implement and maintain such policies. The Board expects all of our officers, directors and other members of our workforce to act ethically at all times. This policy is available on the “Corporate Governance” page accessed from the “Investor Relations” page on our website at www.myersindustries.com.

Annual Board and Committee Self-Assessments

The Board conducts annual self-assessments of the Board, as well as of the Audit Committee, the Compensation Committee, and the Governance Committee, to assist in determining whether the Board and its Committees are functioning effectively. In late 2017 through 2018, the Board conducted self-assessment evaluations with the assistance of outside counsel and reviewed the results as a Board. In 2019, evaluations were conducted by an independent consultant and feedback was provided to the Board, committees and individual directors. The Board intends to utilize this consultant process every third calendar year.

Shareholder Communication with Directors

Our Board provides the following methods for interested parties and shareholders to send communications to a director, to a Committee of the Board, to the non-management directors, or to the Board:

Written Communication

Interested parties may send such communications by e-mail to governance@myersind.com or by mail or courier delivery addressed as follows:

Board of Directors (or Committee Chairman, Director or Non-Management Directors, as the case may be)

c/o Secretary

Myers Industries, Inc.

1293 South Main Street

Akron, Ohio 44301

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All communications directed to the “Board of Directors” or to the “Non-Management Directors” will be forwarded unopened or unread to the Chairman of the Governance Committee. The Chairman of the Governance Committee in turn determines whether the communications should be forwarded to the appropriate members of the Board and, if so, forwards them accordingly. For communications addressed to a particular director or the Chairman of a particular Committee of the Board, however, the Secretary will forward those communications, unopened or unread, directly to the person or Committee Chairman in question.

Toll Free Hotline

The Company maintains a “hotline” for receiving, retaining and addressing complaints from any interested party regarding accounting, internal accounting controls and auditing matters, and procedures for the anonymous submission of these concerns.

The hotline is maintained by an independent third party. Interested parties may also use this hotline to communicate with the Board.

Any interested party may contact a director, a Committee of the Board, the non-management directors, or the Board through the toll free hotline at (877) 285-4145.

The hotline is available worldwide, 24 hours a day, seven days a week. Note that all reports made through the hotline are directed to the Chairman of the Audit Committee and the Secretary. We do not permit any retaliation of any kind against any person who submits a complaint or concern under these procedures.

Corporate Responsibility

At Myers Industries, we are committed to helping our customers make the world a safer and more efficient place. We provide bulk packaging that is more easily cleaned than other solutions. We provide stronger, rigid packaging for safe stacking and storage of food and beverage products. In addition, we provide a wide selection of storage bins to help our customers organize their workplace and drive efficiency. We also provide world-leading tire pressure monitoring systems so that our end users have the proper and safest pressure in their car tires. Ultimately, we incorporate safety and environmental consciousness into our products, and into all aspects of our operations.

Ethics, Cultures and Values

Myers Industries is built on a foundation of quality, ethics, hard work and dedication which begins and ends with our people.

We believe in providing our employees with a supportive work environment that fosters individual thinking and personal accountability.  We expect employees to be responsible not only for their personal success within the organization, but also for the success of the organization as a whole.

Here are the values that serve, collectively, as our daily compass:

Bias for Action: From top to bottom, we have a preference for action. That means we each take personal ownership, expect to be held accountable, and make proactive decisions – even when there is risk.

Analytical, Results-Oriented: We take an analytical approach to ideas and problem-solving, and focus our efforts on achieving the challenging goals we’ve set forth. However, we also learn from our mistakes, all for the sake of driving continuous improvement.

Customer Intimacy: By always seeking to understand our customers’ needs, values, and motivations, we can serve them in the best way possible. That way, we can connect with and network within our target clients.

Open, Candid, Non-Political: While we encourage speaking candidly and challenging the status quo, we also listen to each other’s perspectives and seek to understand competing ideas and opinions.

Flexible: Change, variety, and ambiguity are inevitable. We embrace this and take the initiative to explore new methods and viewpoints.

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Humble: Being humble means focusing on the success of the team instead of self-recognition, as well as seeking out opportunities to support others.

Process: Process is everything, and it’s what allows us to execute initiatives in an organized manner, create structured implementation plans, and anticipate potential problems.

Environmental Impact and Sustainable Business Practices

Myers Industries has a long-standing respect for the environment.  Today, we incorporate environmental consciousness into every aspect of our operation – from using recycled products in our lunch rooms and recycling office paper, to recycling and reprocessing plastic scrap in our factories, to taking steps to prevent water, air and land pollution by conserving energy whenever possible.

The Company has instituted a Sustainability Committee to develop and oversee our long-term sustainable business practices.  The team is responsible for establishing key metrics, goals and reporting standards across the company.

We also encourage our businesses to explore certifications. Our Ameri-Kart and Scepter Canada locations have ISO 9001 certifications and our Scepter US location is actively pursuing ISO 14001 certification.

As a result of continuous improvement efforts, Myers Industries has identified and acted upon practices that incorporate energy efficiency, waste reduction and utilization of environmentally friendly raw materials.

Energy Efficiency

As a result, the company now consumes less electricity, and new molding machines have increased production speed saving approximately 2,348,550 kWh and reducing CO2 by 4,361,600 pounds annually.

Waste Reduction and Recycling

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Environmentally Friendly Raw Materials

In addition to our own environmental responsibility, we also encourage our customers to focus on sustainability by providing alternative solutions in manufacturing materials, transportation methods and product end-use.

Health & Safety

The health and safety of our employees, our customers, and our end-users is at the forefront of each business decision we make:

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Our People

We strive to provide our employees with financial, personal, and physical well-being through our comprehensive and highly competitive pay and benefits packages, as well as by providing access to a variety of innovative and flexible employee health and wellness programs.

We also invest in our people through annual employee development programs, including web-based training solutions and an improved Learning Management System that increases efficiency and compliance.

We are working to improve the factors that drive employee engagement and satisfaction within our organization, as we believe that an engaged and enthusiastic workforce is key to achieving our organizational goals. In 2019, we completed an engagement survey with all of our employees across the company. The survey included 63 questions, and 91% of employees responded. Following the survey we conducted employee feedback sessions across the organization to better understand the results.  Action plans are now in place. For example, we’ve implemented an employee rewards and recognition software platform focused on improving employee connection and collaboration.

As we cultivate the future of our workforce, we are also taking steps to further promote diversity. For example,

Community Impact

At Myers Industries, we believe that sharing our success in the communities where we do business is key to community development.  With the help of our employees, we strive to create a positive impact on our communities, making them better places to live and work.

Myers Industries community involvement can be any combination of financial contributions, leadership assistance, or employee volunteering in local civic and charitable organizations. 

Charitable Contribution Program

Our goal is to support organizations, projects, and programs that encourage the development and well-being of local communities. While our employees have the opportunity to donate time and funds to the community organizations of their choice, Myers Industries is strongly connected to and focused on the following areas of impact:

Each year, the Charitable Contributions Committee will designate funds for charitable contribution to organizations that complement the categories above and meet these requirements:

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Certain categories of nonprofit organizations / requests are not eligible to receive a charitable contribution from Myers Industries. These include:

Myers Industries also provides a matching gifts program for employee donations made to qualified nonprofit organizations meeting the criteria outlined above.

Employee Relations and Workplace Environment

We are committed to providing a safe and open work environment where we empower our employees to achieve their full potential, regardless of differences in gender, age, ethnic background, culture, religion, sexual orientation, or physical ability. We strive to provide our employees with financial, personal and physical well-being through our comprehensive and highly competitive pay and benefits packages as well as by providing access to a variety of innovative, flexible and convenient employee health and wellness programs. We also invest in our people through annual employee development and engagement programs, including web-based training solutions.

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PROPOSAL NO. 1 — ELECTION OF DIRECTORS

Nominees

Set forth below for each nominee for election as a director is a brief statement, including the age, principal occupation and business experience for at least the past five years, and any directorships held with public companies. The members of the Governance Committee have recommended, and the independent members of the Board of Directors have nominated, the persons listed below as nominees for the Board of Directors.

Each of the below nominees has consented:

If any nominee should become unavailable for any reason, it is intended that votes will be cast for a substitute nominee designated by the Board. There is no reason to believe that the nominees named will be unable to serve if elected. Proxies cannot be voted for a greater number of nominees than the number named in this Proxy Statement.

THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF THESE NOMINEES

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NOMINEE INFORMATION

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Each of the foregoing nominees is recommended by the Governance Committee. The Governance Committee believes that each of the nominees possesses certain key attributes that the Governance Committee believes to be important for an effective Board. There are, and during the past ten years there have been, no legal proceedings material to an evaluation of the ability of any director, nominee, or executive officer of Myers Industries to act in such capacity or concerning his or her integrity. There are no family relationships among any of the directors, director nominees and executive officers.

The Board of Directors recommends that you vote “FOR” each of the director nominees listed above.

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Nominating Process

The Governance Committee reviews and evaluates individuals for nomination to stand for election as a director who are recommended to the Governance Committee: in writing by any of our shareholders or by our current or past directors, executive officers, or identified by professional search firms retained by the Governance Committee.

Recruiting Guidelines and Director Qualifications

The Company’s Board Member Recruiting Guidelines outline the process for the Governance Committee to recruit and evaluate potential director candidates. These guidelines are available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at www.myersindustries.com. In considering these potential candidates for nomination to stand for election, the Governance Committee will consider:

The Governance Committee endeavors to select nominees that contribute unique skills and professional experiences in order to advance the performance of the Board of Directors and establish a well-rounded Board with diverse views that reflect the interests of our shareholders. The Governance Committee considers diversity as one of a number of factors in identifying nominees for directors; however, there is no formal policy in this regard. The Governance Committee views diversity broadly to include diversity of experience, skills and viewpoint, in addition to traditional concepts of diversity such as race and gender.

When considering an individual candidate’s suitability for the Board, the Governance Committee will evaluate each individual on a case-by-case basis. The Governance Committee does not prescribe minimum qualifications or standards for directors, however, the Governance Committee looks for directors who have personal characteristics, educational backgrounds and relevant experience that would be expected to help further the goals of the Company. In addition, the Governance Committee will review the extent of the candidate’s demonstrated excellence and success in his or her chosen business, profession, or other career and the skills and talents that the candidate would be expected to add to the Board. The Governance Committee may choose, in individual cases, to conduct interviews with the candidate and/or contact references, business associates, other members of boards on which the candidate serves or other appropriate persons to obtain additional information. The Governance Committee will make its determinations on whether to nominate an individual candidate based on the Board’s then-current needs, the merits of that candidate and the qualifications of other available candidates.

Shareholder Recommendation Policy

The Governance Committee will consider individuals for nomination to stand for election as a director who are recommended to it in writing by any of our shareholders that strictly follow the below procedures.  Shareholders making recommendations for directors must:

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Shareholder Nomination Policy

In accordance with our Amended and Restated Code of Regulations, a shareholder may directly nominate a candidate for election as a director of the Company only if written notice of such intention is received by the Secretary not less than sixty (60) days nor more than ninety (90) days prior to the date of such Annual Meeting of shareholders or special meeting of shareholders for the election of directors. In the event that the date of such meeting to elect directors is not publicly disclosed at least seventy (70) days prior to the date of such meeting, written notice of such shareholder’s intent to nominate a candidate must be received by the Secretary not later than the close of business on the tenth (10th) day following the date on which notice of such meeting is first provided to the shareholders. A shareholder wishing to directly nominate an individual to serve as a director must follow the procedure outlined in Article I, Section 12 of our Amended and Restated Code of Regulations, titled “Advance Notice of Director Nomination” and then send a signed letter of nomination to the following address: Corporate Governance and Nominating Committee, c/o Secretary, Myers Industries, Inc., 1293 South Main Street, Akron, Ohio 44301. Our Amended and Restated Code of Regulations is available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at: www.myersindustries.com.

Board Committees and Meetings

There were a total of 10 regularly scheduled and special meetings of the Board of Directors in 2019. During 2019, all directors attended at least 75% of the aggregate total number of the meetings of the Board and committees on which they served. Seven of our then current directors and then nominees attended our Annual Meeting in 2019 in person, telephonically, or virtually via the internet. Although we do not have a formal policy requiring directors to attend the Annual Meeting, our directors are encouraged to attend.

Board Committees

The Board has three standing committees: the Audit Committee, the Compensation Committee, and the Governance Committee.  Set forth below are the current committee memberships.

*   Mr. Liebau is an ex officio member of each of the Board committees.

In addition to the standing Audit Committee, Compensation Committee and Governance Committee, from time to time, the Board has established, and may establish in the future, special committees to address particular matters.

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Audit Committee

The Audit Committee assists our Board in the oversight and integrity of our financial statements, ensures our structure meets legal and regulatory requirements, and oversees our internal auditing functions, controls, and procedures.  The Board has determined that based on their extensive financial background and expertise, F. Jack Liebau, Jr. (ex officio), Lori Lutey, Jane Scaccetti and Robert A. Stefanko meet the criteria of a “financial expert” under SEC rules. None of our Audit Committee members serve on more than two other public company audit committees.

Audit Committee Functions:

See the Audit Committee Report on page 53 for further information regarding the Audit Committee’s activities.

Compensation Committee

The Compensation Committee administers our executive incentive compensation programs and determines, either as a committee or together with the other independent board members, annual base salaries and incentive compensation awards for our executive officers.

Compensation Committee Functions:

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Corporate Governance and Nominating Committee

The Governance Committee assists the Board in developing and implementing corporate governance guidelines, identifying potential director candidates, determining the size and composition of our Board and its committees, and evaluating the overall effectiveness of our Board.

Governance Committee Functions:

Committee Charters and Policies

The Board has adopted written charters for each of the Audit Committee, the Compensation Committee and the Governance Committee. Each committee reviews and evaluates the adequacy of its charter at least annually and recommends any proposed changes to the Board for approval. Each of the written charters and policies of the Audit Committee, the Compensation Committee, and the Governance Committee are available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at: www.myersindustries.com.

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Director Compensation

The Company has structured its non-employee director compensation to attract and retain highly qualified directors and to compensate directors for their service, while also aligning the interests of the directors to the long-term interests of the Company’s shareholders.

In addition to the compensation provided to our non-employee directors, which is described below, our Amended and Restated Code of Regulations provides that we will indemnify, to the fullest extent then permitted by law, any of our directors or former directors who was or is a party or is threatened to be made a party to any matter, whether civil or criminal, by reason of the fact that the individual is or was a director of the Company, or serving at our request as a director of another entity. We have entered into indemnity agreements with each of our directors contractually obligating us to provide such protection. We also currently have in effect director and officer insurance coverage.

2019 Non-Employee Director Compensation

The Company’s non-employee director compensation program maintained in 2019 reflected the recommendations of the Compensation Committee’s compensation consultant based on the consultant’s assessment of market competitiveness. The analysis included pay levels and prevalent practices for retainers, fees, equity-based compensation, and stock ownership guidelines, and affirmed that the Company’s non-employee director compensation program is structured in a manner consistent with good governance, continues to be aligned with best practices, and meets the needs of the Board.

For 2019, each non-employee director received an annual cash retainer of $55,000 and an equity-based award under our 2017 Incentive Stock Plan of Myers Industries, Inc., as Amended and Restated (the “2017 Plan”) of $75,000. Directors who are employees of the Company do not receive any annual retainer. Director cash retainers are paid quarterly in arrears, and the equity based award is granted for directors’ upcoming year of service subject to vesting at the following year’s Annual Meeting of Shareholders. The target value of each equity based award in 2019 was $75,000, based on the fair market value of our common stock on the grant date. Directors may elect to receive an equivalent number of stock units rather than shares of common stock upon vesting, with payment to be made with respect to such stock units when such director ceases to be a member of the Board. For non-employee directors who join the Board between annual meeting dates, the annual equity award is prorated for the portion of the term that such director serves.

The cash portions of the retainers established for 2019 for our non-employee directors’ annual, committee member, and committee chair service is set forth below.

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The following table shows the compensation paid to our non-employee directors for their service during 2019.

NON-EMPLOYEE DIRECTOR COMPENSATION FOR FISCAL YEAR 2019

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PROPOSAL NO. 2 — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

Myers Industries, pursuant to Section 14A of the Securities Exchange Act of 1934, provides shareholders with the opportunity to cast an annual advisory vote on executive compensation (“Say-on-Pay”). The Compensation Committee has designed our executive compensation program (as described further in the Compensation Discussion & Analysis (“CD&A”) and tabular disclosures of this Proxy Statement) principally as follows:

Result of 2019 Advisory Vote on Executive Compensation

At the 2019 Annual Meeting of shareholders, over 97% of the votes cast on the Say-on-Pay proposal were voted in favor of the compensation of our named executive officers. The Compensation Committee evaluated those results as evidencing shareholder general support of the current structure of our executive compensation program.

2020 Advisory Vote on Executive Compensation

We are presenting the following proposal, which gives you, as a shareholder, the opportunity to endorse or not endorse our compensation program for our NEOs by voting “FOR” or “AGAINST” the following resolution.

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion & Analysis, compensation tables, and narrative discussion is hereby APPROVED.”

Although the advisory vote is non-binding, the Board values shareholders’ opinions, and the Compensation Committee will review the results of the vote and consider shareholders’ concerns and take those matters into account when considering future decisions concerning our executive compensation program.

Our advisory Say-on-Pay vote occurs annually with the next advisory vote at the Annual Meeting in 2021.

The Board of Directors recommends that you vote “FOR” Proposal 2

relating to the approval of the Company’s executive compensation.

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EXECUTIVE COMPENSATION AND RELATED INFORMATION

Compensation Discussion and Analysis

In this section, we describe the material components of our executive compensation program for our named executive officers (“NEOs”), whose compensation for 2019 is set forth in the Summary Compensation Table and other compensation tables contained in this Proxy Statement.

Overview

The Compensation Committee is responsible for overseeing our executive compensation plans and policies, administering our equity plans, and approving all compensation for our NEOs.

Compensation Philosophy

The Compensation Committee believes that the Company’s NEOs should be paid in a manner that attracts the best-available talent, drives performance, encourages an appropriate sensitivity to risk, and encourages and rewards increases in shareholder value. This philosophy is achieved through the Company’s base salary, annual bonus opportunity, long-term incentive plan and other benefits, which are described in greater detail later in this Proxy Statement. Myers Industries’ NEOs are compensated in a manner consistent with the Company’s strategy, competitive practice, sound compensation governance principles, and shareholder interests.

The Compensation Committee’s goals are to:

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Our Strategy and Pay for Performance Approach to Executive Compensation

The Company’s mission is to instill a culture where safety and efficiency are part of every aspect of the business and where employees are empowered to act like owners.  The Company has developed a long-term strategic vision for the Company, guided by three key operating principles:

The Company’s compensation program is designed to compensate the Company’s NEOs in a manner consistent with the Company’s mission and near and long-term strategic vision. The Company’s compensation program seeks to achieve this through the mixture of base pay, short and long-term incentives, and the provision of other benefits.  Base pay and other benefits provide appropriate compensation to attract and retain talent. Short-term incentives are tied to the achievement of Company growth with targets intended to advance the long-term strategic vision of the Company. Long-term incentives, which in 2019 comprised from 38% to 56% of each NEOs’ target compensation and which are primarily comprised of equity awards, provide executives with an ownership stake in the Company (emphasizing the “act like owners” principle of the Company) and help drive long-term shareholder value creation. Further, long-term incentive awards are based on performance metrics (EBITDA and free cash flow as a percentage of sales) that support the achievement of the Company’s operating principles.

Performance Highlights and Key Achievements in 2019

In 2019, we achieved the following:

Highlights of our 2019 NEO compensation program were as follows:

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The Company uses certain non-GAAP measures in this proxy statement. Adjusted income per diluted share from continuing operations, operating income as adjusted, income from continuing operations as adjusted, EBITDA as adjusted, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted EPS and free cash flow are non-GAAP financial measures and are intended to serve as a supplement to results provided in accordance with accounting principles generally accepted in the United States. Myers Industries believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Appendix A to this proxy statement.

Checklist of Compensation Practices

Our success depends largely on the contributions of motivated, focused and energized executives all working to achieve our strategic objectives. The Compensation Committee and senior management, with assistance from our independent compensation advisor, develop competitive pay programs for our executives and we follow the basic tenets set forth below:

Elements of 2019 Compensation

Our executive compensation program consists of elements designed to provide an integrated and competitive total pay package: base salary, annual bonus, long-term incentives and benefits.  A majority of the compensation package for NEOs is performance-based and the metrics are focused on paying for growth.

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Description of Compensation Elements

Our 2019 executive compensation program was designed to reinforce the relationship between the interests of our NEOs and our shareholders and is comprised of three primary components: base pay (salary), annual cash bonus and long-term incentives. The objectives and key characteristics of each element of our 2019 executive compensation program are summarized below:

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NEO Target Compensation Mix

We believe in linking pay for performance. The following graphs indicate the percentage of each NEO’s total target direct compensation that is attributable to base salary, target bonus, and target long-term incentives. For Mr. Banyard, the percentages were applicable during his service as President and Chief Executive Officer through October 25, 2019. For Ms. Horton, the percentages are based on her role as Executive Vice President, Chief Legal Officer, and Secretary and do not reflect the supplemental monthly payment of $25,000 she received beginning October 1, 2019, during her appointment as Interim President and Chief Executive Officer. For Mr. Harmon, the percentages are based on his participation in the Company’s compensation programs for 2020. Mr. Harmon’s participation in our 2019 annual incentive plan was pro-rated for the period of his employment during 2019 based on a target opportunity of 50% of his base salary. Mr. Harmon also received on September 30, 2019, the following onboarding awards (i) a cash award of $100,000 which is subject to disgorgement if Mr. Harmon’s employment with the Company is terminated prior to September 30, 2021, and (ii) an award of restricted stock units valued at $100,000 which will vest in two equal installments on the second and third anniversary of the grant subject to his continued employment on those dates. The target compensation mix for Ms. Horton, Mr. Brackman, and Mr. Harmon does not reflect the one-time retention awards they received on October 16, 2019, in connection with the departure of Mr. Banyard. Each cash retention award was $100,000 and was subject to vesting in two equal installments on the first and second anniversary of the grant. Each restricted stock unit retention award was valued at $100,000 and was subject to vesting in three equal installments on the first three anniversaries of the grant, conditioned on continued employment on those dates.

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How Compensation is Determined

The Company believes its practices are consistent with the practices of a company of its size, reflect best practices regarding the governance of executive pay programs and reflect the executive pay program’s objectives of delivering competitive and appropriate pay aligned with our shareholders’ interests.

The Compensation Committee refers to market data to benchmark and help establish pay opportunities for the NEOs that are competitive for a company of our size in our industry, and for the role and experience of the individual executive. The Compensation Committee generally considers a range around the market median when establishing compensation levels for the NEOs.

As part of its annual review and consideration of the benchmarking process used to assess the Company’s pay levels and pay programs for its executives, the Compensation Committee and its independent compensation consultant conduct an executive compensation market analysis that draws from third-party compensation surveys and publicly available data for a group of peer companies (“Compensation Peer Group”). The Compensation Committee annually reviews the Compensation Peer Group, with input from the Committee’s independent compensation consultant, to evaluate whether the composition of the group remains relevant for the ensuing calendar year, with consideration of certain quantitative and qualitative criteria, including: (1) companies within approximately 40% to 250% of the Company’s revenue, (2) companies operating within the Company’s industries and end-markets, and (3) companies with similar focus and/or business complexity. Our Compensation Committee regards the Company’s comparison to these companies as reference points only because finding direct publicly-traded peers within the lower end of our revenue range is difficult and does not seek to establish any specific benchmark in reference to these companies or to require changes in our executive compensation to match changes in these companies’ compensation.

The following companies comprised the Compensation Peer Group for executive compensation benchmarking purposes in 2019.

$ in millions

Based on the annual evaluation of the Compensation Peer Group conducted in late 2019, the Compensation Committee determined to eliminate certain companies for 2020 due to acquisitions or impending acquisitions (Milacron Holding and Omnova Solutions) or due to becoming significantly larger than the Company (Park-Ohio Holdings, Altra Industrial Motion, and Advanced Drainage Systems), and added several companies as being size and industry comparatively appropriate (Spartan Motors, Standex International, ESCO Technologies, and Raven Industries). Accordingly, the following companies will comprise the Compensation Peer Group for executive compensation benchmarking purposes in 2020.

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Consistent with the objectives of our executive pay philosophy of attracting and retaining a talented and experienced executive management team and other key employees, paying for performance, motivating our executive officers to achieve short-term and long-term Company goals that will enhance shareholder value, and rewarding executives whose knowledge, skills, and performance are crucial to our success, actual compensation may be above or below the median

for executives in similar roles at companies of similar size and complexity, depending on an evaluation of several factors including, but not limited to, time-in-position, experience, performance, and future potential. We believe this approach is appropriate as it is intended to attract and retain key executives, but does not position our compensation costs out of line with expected or actual performance.

Compensation Elements in 2019

Base Salary

Base salary provides a fixed element of compensation that competitively rewards our NEOs’ individual skills, competencies, experience and performance. Additionally, the base salaries provide our NEOs with income regardless of the Company’s stock price performance, which acts as a risk-balancing measure in that it helps to avoid incentives to create short-term stock price fluctuations.  Furthermore, it helps mitigate elements beyond the control of the Company, like general economic and stock market conditions unrelated to Company performance.

The Company does not have written employment agreements with our NEOs. The Board and Compensation Committee annually review the performance of the CEO and the CEO’s corporate goals and objectives and, in connection with this review, may recommend a merit-based increase to the CEO’s base salary.  

For the other NEOs, base salary adjustments are based on recommendations by the CEO to the Compensation Committee. In making such adjustments, the Company’s performance and the individual NEO’s scope of work, performance and competitive benchmarks are considered.  

For 2019, the base salaries of all NEOs were maintained at the same levels in effect at the end of calendar year 2018 as shown in the table below, although Mr. Harmon’s base salary of $340,000 was established upon his appointment as Vice President and Chief Human Resources Officer on September 30, 2019. Ms. Horton began receiving a supplemental monthly payment of $25,000 commencing October 1, 2019, and continuing for the period during which she serves as the Company’s Interim President and Chief Executive Officer, but such amount is not considered as part of her base salary for compensation related purposes such as short-term or long-term incentive compensation opportunities. Mr. Banyard’s base salary remained in effect through his voluntary termination on October 25, 2019.

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2019 NEO Base Salaries and Adjustments

2019 Short-Term Incentives

The Company’s annual incentive plan is a cash-based incentive plan in which our NEOs, along with certain other senior level employees, participate. The annual incentive plan is intended to reward management primarily for annual business growth that will help us achieve our long-term objectives.

Annual Bonus Metrics

For 2019 annual bonuses, performance was determined using the following objective financial metric:

The Compensation Committee also included a qualitative element in our 2019 annual incentive plan based on each NEO’s individual performance, with weighting at 20% of the target annual incentive opportunity and payouts ranging from zero to two times target, equating to 0% to 40% of total annual bonus opportunity for each NEO.

Annual Bonus Performance – 2019 Objectives and Achievements

The Compensation Committee annually approves a target bonus opportunity for each NEO. Objective performance targets were established for achieving certain levels of operating income growth with a weighting of 80% of each NEO’s total annual bonus opportunity. As part of the annual bonus performance goal-setting process, the Board annually reviews and approves management’s business and financial plan for the Company, and the Compensation Committee reviews the various performance goals, with minimum and maximum ranges intended to appropriately reward for results that exceed or fall short of target expectations. Bonuses can range from 0% to 200% of target, depending on actual performance, a practice determined to be consistent with the range of annual bonus opportunities of other companies our size.

Goals are intended to reward for growth and business performance, consistent with the Company’s strategy, and motivate management with additional compensation opportunities without encouraging excessive risk-taking.  We reward our executives with higher levels of cash compensation for results that substantially exceed target results. Conversely, we pay relatively lower levels of cash compensation for results that fail to meet minimally acceptable performance expectations.  

Our 2019 goals were set first by establishing that growth is a critical element of success.  As a step toward a long term trajectory in growth for 2019, the company set a target growth goal of 11.6% and a maximum growth goal of 34%. To incentivize our team to continue to provide growth, we also set a threshold of 0%, which is above our industry’s historical performance level of -2% at the 25th percentile.

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The following table illustrates the Company’s adjusted operating income growth actual results for 2019 and the impact on our annual incentive plan payout:

For 2019, the Compensation Committee determined to also consider the individual performance of each named executive officer based on achievement against individual performance objectives, which it had done prior to 2018, with a weighting of 20% of each NEO’s target annual incentive opportunity. Payouts under this qualitative metric were based on evaluations of each NEO’s job performance during 2019 based on qualitative measures or goals individually established for such executive. The Committee understands the need to align incentive compensation with objective financial performance, but also believes that including a qualitative element allows both the Committee and executive management to guide and assess continuous improvement in personal performance of the Company’s leadership team. For each NEO other than the CEO, the evaluations were completed by the CEO for this qualitative portion of the executive’s bonus for 2019. For the CEO, the Compensation Committee evaluated the CEO’s performance with respect to the CEO’s qualitative goals or measures in reaching its determination with respect to payouts on this element. Consistent with the objective performance metric of our annual incentive plan, payouts on this qualitative measure can range from 0% to 200% of target, therefore 0% to 40% of the NEO’s overall annual bonus opportunity, depending on actual performance Based upon such reviews and recommendations, the Compensation Committee approved the following percentage payouts with respect to the 20% qualitative element of the total bonus opportunity: (i) Ms. Horton, 27.8%; (ii) Mr. Brackman, 27.8%; and (iii) Mr. Harmon 27.8%. Mr. Banyard was not evaluated due to his voluntary departure on October 25, 2019.

Based on the Compensation Committee’s determination of the results above, the NEOs earned bonus awards for 2019 as follows:

2019 Long-Term Incentives

The Company’s long-term incentive plan was established to, among other things, encourage management to drive long-term shareholder value and to align management’s interests with shareholders’ interests, emphasizing the “act like owners” principle of the Company. The long-term incentive plan is intended to motivate and reward leaders for increasing shareholder value and returns. The Company believes the Company’s shareholders and employees are both best served by having our NEOs focused on and rewarded based on the achievement of longer-term results of the Company.  To accomplish this, the Board has, over the years, awarded a blend of stock options, service-based restricted stock units, performance restricted stock units, and performance-based long-term cash incentives to NEOs.  In particular, the use of stock options, service-based restricted stock units, and performance restricted stock units are designed to meet specific reward objectives:

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The target long-term incentive opportunity for each NEO (other than Mr. Harmon) was based on a percentage of their respective base salaries as follows: Mr. Banyard, 250%, Ms. Horton, 100%, and Mr. Brackman, 100%. Mr. Harmon received on September 30, 2019 (i) an onboarding cash award of $100,000 which is subject to disgorgement if Mr. Harmon’s employment with the Company is terminated prior to September 30, 2021, and (ii) an onboarding award of restricted stock units valued at $100,000 which will vest in two equal installments on the second and third anniversary of the grant subject to his continued employment on those dates, or approximately 60% of his base salary. In 2020, Mr. Harmon’s target long-term incentive opportunity will be 65% of his base salary.

Long-Term Performance Metrics

Beginning in 2017, the Compensation Committee revised the long-term incentive performance metrics to include the two objective metrics which continued to be used in 2019 – three-year cumulative EBITDA and three-year total free cash flow as a percentage of sales. These metrics were adopted to better align with the Company’s strategy, drive consistent performance over time toward achieving objective financial metrics with strong alignment with shareholder value, and to more effectively correlate this performance to compensation. Additionally, these metrics are used by management to assess operating performance of the business. Cumulative EBITDA acts as a measure of the Company’s operating performance with targets emphasizing growth and relates strongly to shareholder return, creating greater alignment between long-term executive incentive compensation and enhancing shareholder value. Free cash flow is defined as cash flow from continuing operations less capital expenditures. Free cash flow as a percentage of sales recognizes the importance of the efficient use of cash to the Company’s ability to fund ongoing investments in our business while incentivizing management to create a business culture that generates strong cash flow year after year. We also believe that free cash flow conversion is a good measurement of success and has a strong correlation to shareholder value over the long-term.

The following table shows the performance periods for the Company’s long-term incentive programs outstanding as of the end of 2019:

2019 Long-Term Incentive Mix

Once target values are developed, annual awards for each long-term element are based on an individual’s position, experience, future potential, organizational level, scope of responsibilities, their ability to impact results, and any special recruiting and retention needs. For the NEOs, the Compensation Committee aimed to emphasize performance-based elements (long-term performance restricted stock units and options) over service-based elements (restricted stock units).

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For our NEOs other than Mr. Harmon, the following mix of target long-term incentives were maintained for calendar year 2019. Mr. Harmon received an onboarding cash award of $100,000 subject to disgorgement if his employment with the Company is terminated for cause or voluntarily prior to September 30, 2021, and an onboarding award of restricted stock units valued at $100,000 which will vest in two equal installments on the second and third anniversary of the grant subject to his continued employment on those dates.

Long-Term Incentive Performance-Objectives and Achievements for the Three-Year Period Ended in 2019

For the three-year period ending in 2019, the Company established three-year performance objectives for the two performance metrics of cumulative EBITDA and total free cash flow as a percentage of sales. For the three-year period ending in 2019, the Company achieved a three-year cumulative EBITDA of $192.7 million, resulting in a settlement percentage of 0% of target. For the same performance period, the Company’s total free cash flow as a percentage of sales was 7.9%, resulting in a settlement percentage of 187% of target. The table below summarizes the vesting of our long-term incentive awards for the period 2017 through 2019:

2019 Long-Term Retention Awards

In October 2019, following the voluntary resignation of Mr. Banyard as President and Chief Executive Officer, the Compensation Committee determined that it was appropriate on a one-time basis to issue long-term cash-based and equity-based retention awards to our remaining NEOs and certain other senior officers. Each cash retention award was in the amount of $100,000 and was subject to vesting in two equal installments on the first and second anniversary of the grant, conditioned on continued employment on those dates. Each restricted stock unit retention award was valued at $100,000 and was subject to vesting in three equal installments on the first three anniversaries of the grant, conditioned on continued employment on those dates. The following table sets forth the value of the special retention awards granted to each NEO in 2019:

⁽¹⁾ Based on the closing price of the Company’s common stock on the grant date of October 16, 2019.

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Other Benefits

NEOs participate in broad-based benefit plans that are available to other employees. These benefits are not tied to individual or Company performance, which is the same approach used for other employees. Moreover, changes to executives’ benefits reflect the changes to the benefits of other employees.

The Company’s NEOs participate in the following broad-based benefit plans that provide basic health, life, and income security:

The Company provides no executive perquisites to our NEOs other than reimbursement of executive physicals.

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Other Compensation Policies and Practices

Risk Assessment of Compensation Practices

In the design and approval of the Company’s executive compensation program, the Compensation Committee considers risks that may be inherent in the program, but has designed the program to guard against excessive risk taking. The following are some features of the compensation program that are designed to help the Company manage compensation-related risk:

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As a result, the Compensation Committee believes that the design of the Company’s compensation program does not encourage employees to take unnecessary or excessive risks that could harm the Company’s long‑term value.

Compensation Decision-Making

Timeline and Essential Components of Compensation Decision-Making

The Compensation Committee oversees our executive compensation plan and policies, administers our equity plans, and approves all compensation for our NEOs. Portions of the Compensation Committee’s annual agenda items are summarized below:

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Parties Involved in Compensation Decision-Making

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Compensation Committee Interlocks and Insider Participation

At the end of fiscal year 2019, the following directors were members of the Compensation Committee: Sarah R. Coffin, Ronald DeFeo, William A. Foley, Bruce M. Lisman, and Robert A. Stefanko. Chairman F. Jack Liebau, Jr. participates on the Compensation Committee in an ex officio capacity. None of the Compensation Committee’s members have at any time been an officer or employee of the Company. In the past fiscal year, none of our NEOs have served as a member of the board of directors or compensation committee of any entity that has one or more NEOs serving on the Company’s Board or Compensation Committee.

Compensation Committee Report on Executive Compensation

The information contained in this report shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.

The Compensation Committee, in the performance of its duties and responsibilities, has reviewed and discussed with management the information provided under the section titled “Compensation Discussion and Analysis.” Based on discussions with management and our review of the “Compensation Discussion and Analysis” disclosure, we have recommended to the Board that the “Compensation Discussion and Analysis” be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The foregoing report has been furnished by the current members of the Compensation Committee, being:

Sarah R. Coffin, Chair and Presiding Director, Ronald DeFeo, William A. Foley, F. Jack Liebau, Jr. (ex officio), Bruce M. Lisman and Robert A. Stefanko.

Summary of Cash and Certain Other Compensation

The following table summarizes the compensation paid by us to our named executive officers, as determined in accordance with SEC rules, for the years ended December 31, 2019, 2018, and 2017.

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SUMMARY COMPENSATION TABLE