If your Luxfer ordinary shares are
held in “street name” by your broker, bank, trust, or other nominee, only that holder can vote your Luxfer ordinary shares,
and the vote cannot be cast unless you provide instructions to your broker, bank, trust, or other nominee or obtain a legal proxy from
your broker, bank, trust, or other nominee. You should follow the directions provided by your broker, bank, trust, or other nominee regarding
how to instruct such person to vote your Luxfer ordinary shares.
Please note that holders of Luxfer
ordinary shares through a broker, bank, trust, or other nominee may be required to submit voting instructions to their applicable broker
or nominee at or prior to the deadline applicable for the submission by registered holders of Luxfer ordinary shares. Such holders should,
therefore, follow the separate instructions that will be provided by their broker, bank, trust, or other nominee.
In addition to furnishing proxy
materials electronically, we take advantage of the SEC’s “householding” rules to reduce the delivery cost of materials.
Under such rules, only one set of proxy materials is delivered to multiple shareholders sharing an address, unless we have received contrary
instructions from one or more of the shareholders.
If you are a shareholder sharing
an address and wish to receive a separate copy of the proxy materials, you may so request by contacting Computershare by phone at 1-866-641-4276
or by email at investorvote@computershare.com (please include “Proxy Materials Luxfer Holdings PLC” in the subject line and
include your full name and address). A separate copy will be promptly provided following receipt of your request, and you will receive
separate materials in the future.
If you currently share an
address with another shareholder but are nonetheless receiving separate copies of the materials, you may request delivery of a single
copy in the future by contacting Computershare at the phone number or email address shown above.
Each ordinary share is
entitled to one vote on each matter that is properly brought before the Annual General Meeting.
You are also
being asked to consider and vote upon the following special resolution:
If you are a beneficial
holder, the instructions that accompany your proxy materials will indicate how you may vote. If you wish to attend the meeting and vote
in person, you must bring a legal proxy from the organization that holds your Luxfer ordinary shares or a brokerage statement showing
ownership of Luxfer ordinary shares as of the close of business, Eastern Daylight Time, on the Voting Record Date.
If you are a beneficial
owner, you must contact the record holder of your shares to revoke a previously authorized proxy or voting instructions.
Your shares will be counted
towards the quorum if you submit a proxy or vote at the Annual General Meeting. If there is not a quorum, the Annual General Meeting shall
be adjourned to another day (being not less than 10 days later, excluding the day on which the meeting is adjourned and the day for which
it is reconvened) and at such other time or place as the Chair of the meeting may decide.
EXECUTIVE
COMPENSATION HIGHLIGHTS |
Our executive compensation
program is designed to motivate behaviors that cultivate sustainable growth and shareholder value creation, provide rewards commensurate
with individual and Company performance, reward executives for achieving financial and strategic objectives, and provide an appropriate
balance between short-term and long-term and fixed and variable pay. The majority of our Named Executive Officers’ compensation
is variable and contingent on performance. In designing our executive compensation program, establishing performance measures, and setting
executive compensation packages, we conduct benchmarking analyses, no less than every three years but oftentimes annually, to ensure
compensation is competitive with market practices. Total compensation packages, as well as base salary, annual cash incentive opportunities,
and target equity awards, are evaluated against compensation levels at our comparative peer group companies. While target incentive opportunities
are set by reference to a comparable market rate, our incentive plans provide for payouts to be based upon performance, which can result
in payouts above or below target levels. Our compensation programs are designed to provide an appropriate balance of short and long-term
compensation, fixed and variable pay, and cash and equity-based compensation, as well as reflect our philosophy of providing pay for
performance.
2022 EXECUTIVE COMPENSATION
STRUCTURE
_____________________
| (1) | Reflects 2022 annualized compensation
for Andy Butcher, current Chief Executive Officer, as if Mr. Butcher had served in such role for the entirety of fiscal year 2022. Excludes
compensation paid to Alok Maskara, former Chief Executive Officer, in 2022. In accordance with the terms of his employment contract, Mr.
Maskara received compensation upon his resignation from the Company. |
| (2) | Calculated as an average of
Stephen Webster’s, Peter Gibbons’, Jeffrey Moorefield’s, and Graham Wardlow’s compensation for the entirety of
fiscal year 2022. Excludes compensation paid to Heather Harding, former Chief Financial Officer, in 2022. While Ms. Harding received compensation
consistent with the above-detailed structure in January and February 2022, she was paid a flat rate retainer as an advisor to the Chief
Financial Officer for the remainder of fiscal year 2022. |
Generally, the variable pay
earned by our executives in 2022 was lower than that earned in 2021. The Company as a whole achieved Management EBITA and Cash Conversion
at levels below Target, with Management EBITA exceeding the Threshold level but falling below Target level and Cash Conversion falling
below Threshold. Lower cash incentive payouts were driven by unprecedented increases in the cost of raw materials, which placed considerable
pressure on delivery of Management EBITA and Cash Conversion in many business units. The performance periods with respect to the performance-based
equity awards remain ongoing. These Executive Compensation Highlights should be read in connection with the Executive Compensation information
included in this Proxy Statement, including the sections entitled “Executive Compensation Discussion and Analysis” and “Executive
Compensation Tables” on pages 47 through 82.
| | 2023 PROXY STATEMENT |
RESOLUTIONS 1-6
ELECTION
OF DIRECTORS
On the recommendation of the Nominating
and Governance Committee, the Board of Directors has nominated the Directors listed below for election or re-election for a one-year term
expiring on the completion of the 2024 Annual General Meeting. Management has no reason to believe that any Directors named below would
be unable to serve their full term if elected.
Biographies of the Director nominees
are included in the section entitled “Director Biographical Information” on page 24. These biographies include, for
each Director, their age; business experience; the publicly held and other organizations of which they are or have been Directors within
the past five years; and a discussion of the specific experience, qualifications, attributes, or skills that led to the conclusion that
each should serve as a Director.
Resolutions 1 - 6 are ordinary resolutions.
The text of Resolutions 1 - 6 are as follows:
|
1. |
IT
IS RESOLVED that Andy Butcher be re-elected as a Director of the Company. |
|
2. |
IT
IS RESOLVED that Patrick Mullen be re-elected as a Director of the Company. |
|
3. |
IT
IS RESOLVED that Richard Hipple be re-elected as a Director of the Company. |
|
4. |
IT
IS RESOLVED that Clive Snowdon be re-elected as a Director of the Company. |
|
5. |
IT
IS RESOLVED that Sylvia A. Stein be elected as a Director of the Company. |
|
6. |
IT
IS RESOLVED that Lisa Trimberger be re-elected as a Director of the Company. |
Under our Articles of Association,
the election or re-election of each Director requires the affirmative vote of a majority of the votes cast in person or by proxy at the
Annual General Meeting. A nominee who does not receive a majority of the votes cast on the relevant resolution will not be elected to
our Board. Your proxies cannot be voted for a greater number of persons than the number of Directors named in this Proxy Statement.
The Board of Directors recommends a vote “FOR” the election of each Director nominee. |
| | 2023 PROXY STATEMENT |
RESOLUTION 7
APPROVAL OF DIRECTORS’
REMUNERATION REPORT
In accordance with sections 439
and 440 of the UK Companies Act 2006 (the “Companies Act”), our shareholders have the opportunity to cast an advisory vote
to approve the Directors’ Remuneration Report for the year ended December 31, 2022. The Directors’ Remuneration Report is
contained within the Company’s UK Report and Accounts for the year ended December 31, 2022, which is furnished with this Proxy Statement
and available on our website under “Annual Reports.”
Resolution 7 is an ordinary resolution.
The text of Resolution 7 is as follows:
|
7. |
IT IS RESOLVED, by non-binding advisory
vote, that the Directors’ Remuneration Report for the year ended December 31, 2022 be approved. |
As Resolution 7 is an advisory vote,
the result of the vote is advisory only and will not be legally binding on the Board of Directors or any committee thereof to take any
action or refrain from taking any action. However, our Board values the opinions of our shareholders as expressed through advisory votes
and other communications and will carefully consider the outcome of the advisory vote.
The Board of Directors and Remuneration Committee recommend a vote “FOR” the approval of the Directors’ Remuneration Report for the year ended December 31, 2022. |
| | 2023 PROXY STATEMENT |
RESOLUTION 8
APPROVAL OF EXECUTIVE COMPENSATION
In accordance with the requirements
of Section 14A of the Securities Exchange Act of 1934 and the related rules of the SEC, our shareholders have the opportunity to cast
an advisory vote to approve the compensation of our Named Executive Officers disclosed in the sections of this Proxy Statement entitled
“Executive Compensation Discussion and Analysis” and “Executive Compensation Tables” on pages
47 through 82.
Executive compensation is an important
matter to the Board of Directors, the Remuneration Committee, and our shareholders. We have designed our executive compensation program
to align executive and shareholder interests by rewarding the achievement of specific annual, long-term, and strategic goals that are
intended to create long-term shareholder value. We believe that our executive compensation program (i) provides competitive compensation
that will motivate and reward executives for achieving financial and strategic objectives; (ii) provides rewards commensurate with performance
to incentivize the Named Executive Officers to perform at their highest levels; (iii) encourages growth and innovation; (iv) attracts
and retains the Named Executive Officers and other key executives; and (v) aligns our executive compensation with shareholders’
interests through the use of equity incentive awards.
The Remuneration Committee has overseen
the development and implementation of our executive compensation program in line with the foregoing compensation objectives. The Remuneration
Committee also continuously reviews, evaluates, and updates our executive compensation program to ensure that we provide competitive compensation
that motivates the Named Executive Officers and other key executives to perform at their highest levels, while increasing value to our
shareholders.
Resolution 8 is an ordinary resolution.
The text of Resolution 8 is as follows:
| 8. | IT IS RESOLVED, by non-binding
advisory vote, that the compensation of the Company’s Named Executive Officers for the year ended December 31, 2022 be approved. |
As Resolution 8 is an advisory vote,
the result of the vote is advisory only and will not be legally binding on the Board of Directors or any committee thereof to take any
action or refrain from taking any action. However, our Board values the opinions of our shareholders as expressed through advisory votes
and other communications and will carefully consider the outcome of the advisory vote.
The Board of Directors and Remuneration Committee recommend a vote “FOR” the approval of the compensation of the Named Executive Officers for the year ended December 31, 2022. |
| | 2023 PROXY STATEMENT |
RESOLUTION 9
FREQUENCY OF “SAY-ON-PAY” VOTES
In accordance with the requirements
of Section 14A of the Securities Exchange Act of 1934 and the related rules of the SEC, our shareholders have the opportunity to cast
an advisory vote to approve the compensation of our Named Executive Officers. Resolution 9 affords shareholders the opportunity to cast
an advisory vote on how often we should include a say-on-pay proposal in our proxy materials for future annual shareholder meetings or
any special shareholder meeting for which we must include executive compensation information in that meeting’s proxy statement (a
“Say-on-Pay Vote”). Under this Resolution 9, shareholders may vote to hold a Say-on-Pay Vote every year, every two years,
or every three years.
As an advisory vote, this proposal
is not binding on Luxfer, the Board of Directors, or the Remuneration Committee. However, the Board of Directors and the Remuneration
Committee value the opinions expressed by shareholders in their votes on this proposal and will consider the outcome of the vote when
making future decisions regarding the frequency of conducting Say-on-Pay Votes.
At the 2022 Annual General Meeting,
the Company’s shareholders voted to hold a Say-on-Pay Vote on the compensation of the Company’s
Named Executive Officers every 1 year, consistent with the recommendation of the Board. In light of these results and other factors, on
June 8, 2022, the Board resolved that it would hold an advisory vote on the compensation of its Named Executive Officers every 1 year
until the Board holds the next shareholder advisory vote on the frequency of Say-on-Pay Votes, which shall occur at the 2023 Annual General
Meeting. It is expected that the next Say-on-Pay Vote will occur at the 2024 Annual General Meeting.
Resolution 9 is an ordinary resolution.
The text of Resolution 9 is as follows:
| 9. | IT IS RESOLVED, by non-binding
advisory vote, that a Say-on-Pay Vote be held every 1 year. |
As Resolution 9 is an advisory vote,
the result of the vote is advisory only and will not be legally binding on the Board of Directors or any committee thereof to take any
action or refrain from taking any action. However, our Board values the opinions of our shareholders as expressed through advisory votes
and other communications and will carefully consider the outcome of the advisory vote.
The Board of Directors and Remuneration Committee recommend a vote of “EVERY 1 YEAR” as to the frequency of Say-on-Pay Votes on executive compensation. |
| | 2023 PROXY STATEMENT |
RESOLUTION 10
APPOINTMENT OF INDEPENDENT AUDITOR
The Audit Committee has selected
and appointed PricewaterhouseCoopers LLP (“PwC”) to audit the Company’s financial statements for the fiscal year ending
December 31, 2023. The Board, upon the recommendation of the Audit Committee, is asking Luxfer shareholders to ratify the re-appointment
of PwC as the Independent Auditor of the Company. Although approval is not required by our Articles of Association, the Board of Directors
is submitting the re-appointment of PwC to our shareholders because we value our shareholders’ views on our Independent Auditor.
If the re-appointment of PwC is not ratified by shareholders, it will be considered a notice to the Board of Directors and the Audit Committee
to consider the selection of a different firm. Even if the appointment is ratified, the Audit Committee, in its discretion, may select
a different Independent Auditor at any time during the year if it determines that such a change would be in the best interests of the
Company and our shareholders. In accordance with the Companies Act 2006, any appointment of the Company’s Independent Auditor will
continue to be subject to shareholder ratification.
The Audit Committee is directly
responsible for the appointment, remuneration, retention, and oversight of the Independent Auditor retained to audit the Company’s
financial statements. PwC has been retained as the Company’s Independent Auditor since 2015. In determining whether to re-appoint
PwC as the Company’s Independent Auditor, the Audit Committee took into account a number of factors, including PwC’s independence
and objectivity; PwC’s capability and expertise in handling our industry, including the expertise and capability of the lead engagement
partner; historic and recent performance, including the extent and quality of PwC’s communications with the Audit Committee; the
results of management and Audit Committee evaluations of PwC’s overall performance; the appropriateness of PwC’s fees, both
on an absolute basis and as compared with its peers; and the length of time that PwC has been engaged. Consistent with regular rotation
requirements, a new lead engagement partner was appointed to lead PwC's audit of Luxfer's financial statements in 2020. The members of
the Audit Committee and the Board of Directors believe that the continued retention of PwC as the Company’s Independent Auditor
is in the best interests of the Company and our shareholders.
We expect that a representative
of PwC will be present at the Annual General Meeting and will have the opportunity to make a statement, if he or she desires, as well
as be available to respond to any questions.
Resolution 10 is an ordinary resolution.
The text of Resolution 10 is as follows:
| 10. | IT IS RESOLVED that
the re-appointment of PricewaterhouseCoopers LLP as the Independent Auditor of the Company until conclusion of the 2024 Annual General
Meeting be ratified. |
Ratification of the re-appointment
of PricewaterhouseCoopers LLP as the Independent Auditor of Luxfer Holdings PLC for the year ending December 31, 2023 requires the affirmative
vote of a majority of the votes cast in person or by proxy at the Annual General Meeting.
The Board of Directors and the Audit Committee recommend a vote “FOR” the ratification of the re-appointment of PricewaterhouseCoopers LLP as the Independent Auditor of the Company until conclusion of the 2024 Annual General Meeting. |
| | 2023 PROXY STATEMENT |
RESOLUTION 11
INDEPENDENT AUDITOR’S REMUNERATION
The Board, upon the recommendation
of the Audit Committee, is asking Luxfer’s shareholders to authorize the Audit Committee of the Board of Directors to set the Independent
Auditor’s remuneration.
The Audit Committee is directly
responsible for the appointment, remuneration, retention, and oversight of the Independent Auditor retained to audit Luxfer's financial
statements. The Audit Committee, with the input of management, is responsible for the audit fee negotiations associated with the Company’s
retention of PricewaterhouseCoopers LLP. The Audit Committee and the Board of Directors believe that the remuneration level set for our
Independent Auditor is competitive and in the best interests of the Company and our shareholders.
Resolution 11 is an ordinary resolution.
The text of Resolution 11 is as follows:
| 11. | IT IS RESOLVED that
the Audit Committee of the Board of Directors be authorized to set the Independent Auditor’s remuneration. |
Authorization of the Audit Committee
to set the Independent Auditor’s remuneration requires the affirmative vote of a majority of the votes cast in person or by proxy
at the Annual General Meeting.
The Board of Directors and the Audit Committee recommend a vote “FOR” the authorization of the Audit Committee to set the Independent Auditor’s remuneration. |
| | 2023 PROXY STATEMENT |
RESOLUTION 12
AUTHORITY TO ALLOT SHARES AND TO GRANT RIGHTS TO SUBSCRIBE
FOR OR CONVERT SECURITIES INTO SHARES
This Resolution 12 is required under
the Companies Act for the Company to allot, or issue, shares and to grant rights to subscribe for or convert any security into shares.
This authorization is customary for public limited companies incorporated under the laws of England and Wales, required as a matter of
UK law, and is not otherwise required for companies listed on the New York Stock Exchange or organized within the United States.
Under the Companies Act, Directors
are, with certain exceptions (such as in connection with employees’ share schemes), unable to allot shares without being authorized
either by the Company’s Articles of Association or by shareholder resolution. Unlike most companies listed on the New York Stock
Exchange with perpetual authority to allot shares provided for in their Charter or Articles of Incorporation, our Board’s power
to allot shares is restricted in terms of the number of shares and the time period during which they may be allotted.
The Company sought a similar authority
at the 2016 Annual General Meeting of Shareholders, which has since expired. Therefore, the Company is now requesting that the Board of
Directors be authorized to allot shares up to an aggregate nominal amount of $8,752,767, which is equivalent to approximately 33% of the
aggregate nominal value of the issued ordinary share capital of the Company as of April 1, 2023 (the latest practicable date prior to
the publication of this Proxy Statement).
Unless previously renewed, revoked
or varied, the authority sought under this Resolution 12 will, if granted, (i) apply in substitution for all existing authorities under
section 551 of the Companies Act; and (ii) expire upon conclusion of the 2024 Annual General Meeting or, if earlier, the close of business
on the date that is fifteen (15) months after the date on which the resolution is passed, which is consistent with the approach taken
by UK public companies. The authority sought under this Resolution 12 permits the Company to make, before expiration of said authority,
any offer or agreement that would or might require shares in the Company to be allotted, or rights to subscribe for or convert securities
into shares in the Company to be granted, and to allot shares or grant rights to subscribe for or covert securities into shares in furtherance
of any such offer made before expiration of said authority, notwithstanding that the authority conferred by this resolution has expired.
The Board of Directors has no present
intention to exercise the authority sought under this Resolution 12, other than to satisfy awards pursuant to the Luxfer Holdings PLC
Non-Executive Directors Equity Incentive Plan, amended and restated as of June 8, 2022. However, the Board believes that it is important
for the Company to retain the flexibility to allot shares on an accelerated basis should the Directors determine it is necessary or advisable
and in the best interests of shareholders, without incurring the costs or delays associated with calling a special meeting and preparing
and circulating proxy materials to approve specific allotment of shares.
Granting the Board this authority
is a routine matter for public limited companies incorporated in England and Wales and is consistent with English market practice. We
are not asking our shareholders to approve an increase in our authorized share capital or to approve a specific issuance of shares. Instead,
approval of this Resolution 12 will only grant the Board of Directors the authority to allot shares upon the terms set forth below. In
addition, we note that, because we are a NYSE-listed company, our shareholders continue to benefit from the protections afforded to them
under the rules and regulations of the NYSE and SEC, including those rules that limit our ability to issue shares in specified circumstances.
| | 2023 PROXY STATEMENT |
Resolution 12 is an ordinary resolution.
The text of Resolution 12 is as follows:
| (a) | the Board of Directors be generally and unconditionally
authorized, for the purposes of section 551 of the Companies Act, to exercise all powers of the Company to allot shares in the Company
and to grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of $8,752,767
to such persons and at such times and on such terms as the Directors think proper, provided that this authority shall, unless renewed,
varied, or revoked by the Company, expire upon conclusion of the next Annual General Meeting of the Company or, if earlier, the close
of business on the date that is fifteen (15) months after the date on which this Resolution 12 is passed; |
| (b) | the Directors be authorized to make, before
the authority set out in paragraph (a) above has expired, any offer or agreement which would or might require shares in the Company to
be allotted or rights to subscribe for or convert securities into shares in the Company to be granted after such expiry, and the Directors
may allot shares or grant rights to subscribe for or convert securities into shares in pursuance of any such offer or agreement, notwithstanding
that such authority has expired; |
| (c) | subject to paragraph (d) below, all existing
authorities conferred on the Board of Directors pursuant to section 551 of the Companies Act be revoked; and |
| (d) | paragraph (c) above shall be without prejudice
to the continuing authority of the Board of Directors to allot shares, or grant rights to subscribe for, or convert any security into
shares, pursuant to an offer or agreement made by the Company before the expiry of the authority to which such offer or agreement was
made, and to any allotment of shares or grant of rights already made pursuant to any such authority. |
Authorization of the Board
of Directors to allot shares requires the affirmative vote of a majority of the votes cast in person or by proxy at the Annual General
Meeting.
The Board of Directors recommends a vote “FOR” the authorization of the Board of Directors to allot shares and to grant rights to subscribe for or convert securities into shares. |
| | 2023 PROXY STATEMENT |
RESOLUTION 13
AUTHORITY TO DISAPPLY PREEMPTION RIGHTS TO EQUITY SECURITIES
ALLOTTED OR SOLD FOR CASH
This Resolution 13 is required under
the Companies Act for the Company to disapply preemption rights to equity securities (as defined in section 560 of the Companies Act)
allotted for cash and/or ordinary shares (as defined in section 560 of the Companies Act) held by the Company as treasury shares sold
for cash. Under the Companies Act, certain statutory preemption rights apply automatically in favor of shareholders where equity securities
are to be allotted or sold for cash. Per these statutory preemption rights, equity securities allotted or sold for cash must first be
offered, on the same or more favorable terms, to existing shareholders of the Company on pro-rata basis, unless these statutory preemption
rights are disapplied by the approval of the shareholders. The statutory preemption rights do not apply where equity securities are issued
for non-cash consideration (such as in a stock-for-stock acquisition) and do not apply to the issue of non-equity shares (that is, shares
that have the right to participate only up to a specified amount in any income or capital distribution) or where equity securities are
issued pursuant to an employee option or similar equity plan.
The Company is now requesting that,
when the Board of Directors allots (issues) equity securities for cash or sells ordinary shares held as treasury shares for cash, it not
be required to offer preemption rights to existing shareholders, provided such allotment and/or sale is limited to an aggregate amount
of $1,326,177, which is equivalent to approximately 5% of the aggregate nominal value of the issued ordinary share capital of the Company
as of April 1, 2023 (the latest practicable date prior to the publication of this Proxy Statement).
Unless previously renewed, revoked
or varied, the authority sought under this Resolution 13 will, if granted, (i) apply in substitution for all existing authorities under
sections 570 and 573 of the Companies Act; and (ii) expire upon conclusion of the 2024 Annual General Meeting or, if earlier, the close
of business on the date that is fifteen (15) months after the date on which the resolution is passed, which is consistent with the approach
taken by UK public companies. The authority sought under this Resolution 13 permits the Company to make, before expiration of said authority,
any offer or agreement that would or might require equity securities in the Company to be allotted and/or treasury shares to be sold for
cash, and to allot and/or sell such equity securities, without first offering them to shareholders in proportion to their existing holdings,
in furtherance of any such offer made before expiration of said authority, notwithstanding that the authority conferred by this resolution
has expired.
The Company sought a similar authority
at the 2016 Annual General Meeting of Shareholders, which has since expired. The Board of Directors has no present intention to exercise
the authority sought under this Resolution 13, other than to satisfy options and other awards pursuant to the Luxfer Holdings PLC Non-Executive
Directors Equity Incentive Plan, amended and restated as of June 8, 2022. However, the Board of Directors believes that it is important
for the Company to retain the flexibility to allot equity securities and/or sell treasury shares for cash and disapply preemption rights
in connection therewith, on an accelerated basis should the directors determine it is necessary or advisable and in the best interests
of shareholders, without incurring the costs or delays associated with calling a special meeting and preparing and circulating proxy materials.
Granting the Board this authority
is a routine matter for public limited companies incorporated in England and Wales and is consistent with English market practice. Similar
to the authorization sought in Resolution 12, this authority is fundamental to our business and, if applicable, will facilitate our ability
to raise capital. We are not asking you to approve an increase in our authorized share capital. Instead, approval of this Resolution 13
will only grant the Board the authority to allot equity securities and/or sell treasury shares for cash upon the terms set forth below.
Without this authorization, in each case where we issue equity securities or sell treasury shares for cash, we would first have to offer
those shares on the same or more favorable terms to all of our existing shareholders. This requirement, which does not otherwise apply
to US companies listed on the NYSE, could cause delays in regular capital raising activities for the Company. Furthermore, the Board will
only be authorized to disapply preemption rights if it is authorized to allot shares, for which
| | 2023 PROXY STATEMENT |
authority is being sought under Resolution
12. The approval of this Resolution 13 by the Company’s shareholders will not substitute for any approvals that may be required
under the rules of the NYSE and/or by the SEC.
Resolution 13 is a special resolution.
The text of Resolution 13 is as follows:
| 1. | IT IS RESOLVED that, subject to Resolution 12 being
duly passed as an ordinary resolution, the Board of Directors be generally authorized, in accordance with sections 570 and 573 of the
Companies Act, to allot equity securities (as defined in section 560 of the Companies Act) for cash, pursuant to the authority conferred
on the Board by Resolution 12 above, and/or to sell ordinary shares (as defined in section 560 of the Companies Act) held by the Company
as treasury shares for cash, in each case as if section 561 of the Companies Act did not apply to any such allotment or sale. This power: |
| (a) | shall be limited to the allotment of equity
securities or sale of treasury shares up to an aggregate nominal amount of $1,326,177 for any purpose; |
| (b) | shall expire upon conclusion of the 2024 Annual
General Meeting or, if earlier, the close of business on the date that is fifteen (15) months after the date on which this resolution
is passed (unless previously renewed, varied or revoked by the Company), save that the Board may, before such expiry, make an offer or
agreement which would or might require equity securities to be allotted and/or treasury shares to be sold after such expiry, and the Directors
may allot equity securities and/or sell treasury shares, in pursuance of any such offer or agreement as if the power conferred by this
Resolution 13 had not expired; and |
| (c) | is in substitution for all subsisting authorities
(but without prejudice to any allotment of equity securities already made pursuant to such previous authorities). |
Authorization of the Board of Directors
to disapply preemption rights with respect to equity securities allotted and/or treasury shares sold for cash requires the affirmative
vote of at least 75% of the votes cast in person or by proxy at the Annual General Meeting.
The Board of Directors recommends a vote “FOR” the authorization of the Board of Directors to disapply preemption rights with respect to equity securities allotted and/or treasury shares sold for cash. |
| | 2023 PROXY STATEMENT |
OUR
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The Nominating and Governance Committee
is responsible for reviewing with the Board, on an annual basis, the current composition of the Board and the appropriate skills, qualifications,
and characteristics required of Directors. The Board assesses membership criteria annually, on an individual basis and in the context
of the overall composition, size, and structure of the Board and its Committees as a whole, taking into consideration the anticipated
future needs of the Board and the Company’s long-term strategic plans. In addition to intellect, integrity, and sound judgment,
this assessment takes into account various factors, including diversity of perspectives, background and other demographics, length of
tenure of incumbent Directors, and independence. The Board seeks members from diverse professional backgrounds, who have a broad spectrum
of experience and a reputation for integrity.
In evaluating nominees for the Board
of Directors, the Board and the Nominating and Governance Committee took into account the qualities they seek in Directors and the Directors’
individual qualifications, skills, and background that enable the Directors to effectively and productively contribute to the Board’s
oversight of the Company, as discussed below in each biography under “Qualifications.” When evaluating re-nomination
of existing Directors, the Committee also considers the nominees’ past and ongoing contributions to the Board, length of tenure,
ongoing commitments, and, with the exception of Mr. Butcher, who is an employee, their independence.
DIRECTORS STANDING FOR ELECTION OR RE-ELECTION |
In accordance with our
Articles of Association, the Board shall be comprised of not less than two and not more than ten Directors. The Board, based on the recommendation
of the Nominating and Governance Committee, proposed that the following six nominees be elected at the Annual General Meeting, each of
whom will hold office until the next Annual General Meeting or until his or her successor shall have been appointed and qualified:
All nominees are currently Directors
of the Company and were elected by shareholders at the 2022 Annual General Meeting, with the exception of Sylvia A. Stein, who joined
the Board on August 1, 2022 and is standing for election for the first time.
Please refer to the section
entitled “Director Nominee Skills and Characteristics” on page 27 of this Proxy Statement for additional details regarding
the specific experience, training , and skills of each nominee. Specifically, the experience and training highlighted in this section
were identified by the Nominating and Governance Committee as critical knowledge areas, which contribute to the well-rounded vast experience
levels of the Director nominees and thus the effective operation of the Board.
| | 2023 PROXY STATEMENT |
DIRECTOR BIOGRAPHICAL INFORMATION |
Andy Butcher
Chief Executive Officer and Executive Director
|
Background
Andrew Butcher was appointed
Luxfer's Chief Executive Officer effective May 6, 2022, at which time he also became an Executive Director.
Mr. Butcher served as President
of our global Luxfer Gas Cylinders business from April 2014 to May 2022, having been the President of Luxfer Gas Cylinders - North America
from 2009 to 2014. Mr. Butcher joined Luxfer in Nottingham, United Kingdom, in 1991. He has held positions of increasing responsibility
throughout his career at Luxfer, including leading the development of Luxfer's composite cylinder business beginning in 2002, first as
General Manager and then as Executive Vice President. He currently serves as a Director and Executive Officer of various subsidiaries
and affiliates of the Company. Mr. Butcher holds a Master of Arts degree in Engineering from Cambridge University and an M.B.A. from Keele
University.
Qualifications
Mr. Butcher’s qualifications
to be a member of our Board include his more than 30 years of experience with Luxfer, his value-enhancing growth and acquisition experience,
his educational background, and his knowledge of advanced materials.
|
Age:
54 |
Director since:
2022 |
Board Committees:
None |
Other public company boards:
None |
|
|
|
|
Patrick Mullen
Board Chair |
Background
Patrick Mullen was appointed
a Non-Executive Director in September 2021 and serves as a member of the Nominating and Governance Committee and the Remuneration Committee.
He was appointed Board Chair in March 2022.
Mr. Mullen served as the
President and CEO of Chicago Bridge & Iron Company (“CB&I”), an engineering, procurement, and construction company,
until 2018. Prior to his 20 years at CB&I, he spent 12 years with Honeywell’s UOP division, a supplier of petroleum refining,
gas processing, and petrochemical production technology. From 2014 to 2019, Mr. Mullen served as a Director of Vectren Corporation, a
domestic energy delivery company, and from 2017 to 2018, he served as a Director of CB&I. He has served on the boards of the National
Safety Council and Chevron Lummus Global, a developer and licensor of refining hydroprocessing technologies and alternative source fuels.
From 2014 to 2020, Mr. Mullen was a member of the National Association of Corporate Directors, having been named a Board Leadership Fellow
in 2019. Mr. Mullen earned his Bachelor of Science degree in Chemical Engineering from the University of Notre Dame and his Master of
Business Administration degree from the Kellogg Graduate School of Management at Northwestern University.
Qualifications
Mr. Mullen’s qualifications
to be a member of our Board include his executive management and leadership experience and his extensive global industrial and engineering
background. He also brings experience serving on the boards of other publicly traded companies. |
Age:
58
|
Director since:
2021 |
Board Committees:
Nominating and Governance; Remuneration |
Other public company boards:
None |
|
|
|
|
|
| | 2023 PROXY STATEMENT |
Richard Hipple
Non-Executive Director |
Background
Richard Hipple was appointed
a Non-Executive Director in November 2018, at which time he was appointed the Chair of the Remuneration Committee and a member of the
Audit Committee.
Mr. Hipple served as the
Chairman and Chief Executive Officer of Materion Corporation, a producer of high-performance advanced engineering materials, from 2006
until his retirement in 2017, as well as President and Chief Operating Officer from 2005 to 2006. Prior to that, Mr. Hipple worked in
the steel industry for twenty-six years in numerous capacities, including project engineering, strategic planning, supply chain management,
operations, sales and marketing, and executive management. Mr. Hipple has served as a Director of KeyCorp (NYSE: KEY), a bank-based financial
services company, since 2012 and is Chair of the Audit Committee and a member of the Nominating and Corporate Governance Committee. Since
2017, he has also served as a Director of Barnes Group, Inc. (NYSE: B), a global industrial manufacturing company, and is a member of
the Compensation and Management Development and Corporate Governance Committees. Mr. Hipple is also a current member of the National Association
of Corporate Directors. From 2007 through 2018, Mr. Hipple served on the Board of Ferro Corporation, a supplier of technology-based functional
coatings and color solutions. Mr. Hipple is Chair Emeritus and a Trustee of the Cleveland Institute of Music and has served as a Director
of the Greater Cleveland Partnership, as well as the Manufacturers Alliance for Productivity and Innovation. Mr. Hipple received his Bachelor
of Engineering degree from Drexel University.
Qualifications
Mr. Hipple’s qualifications
to be a member of our Board include his extensive executive management and leadership experience with a global manufacturer of high-performance
engineered materials, his experience in business development and strategic transformation, and his broad involvement in both domestic
and international acquisitions. He also brings experience serving on the boards of other publicly traded companies.
|
Age:
70 |
Director since:
2018
|
Board Committees:
Remuneration (Chair); Audit |
Other public company boards:
KeyCorp; Barnes Group, Inc. |
|
|
|
|
|
Clive Snowdon
Non-Executive Director
|
Background
Clive Snowdown was appointed
a Non-Executive Director in July 2016 and has served as Chair of the Nominating and Governance Committee since April 2020. He acts as
a financial expert on the Audit Committee, which he joined in August 2016.
Mr. Snowdon currently serves
as the Aerospace Industry Advisor to Cooper Parry Corporate Finance, a corporate finance advisory. He previously acted as Chairman of
the Midlands Aerospace Alliance, an association supporting the aerospace industry across the Midlands region of England, from 2007 to
2016, and a Trustee of the Stratford Town Trust from 2015 to 2023. In May 2016, Mr. Snowdon stepped down from the Board of Hill &
Smith Holdings PLC, an international group of companies operating in the infrastructure and galvanizing markets, where he was a Senior
Non-Executive Director since May 2007, Chair of the Remuneration Committee, and a member of the Audit and Nominating and Governance Committees.
In 2011, Mr. Snowdon retired
from Umeco PLC, a provider of advanced composite materials, after serving as Chief Executive since 1997. Mr. Snowdon was also the Executive
Chairman of Shimtech Industries Group Limited until 2015. From 1992 to 1997, he served as Managing Director of Burnfield PLC after working
as Finance Director. He has also held senior positions with Vickers plc, BTR plc, and Hawker Siddeley Group. Mr. Snowdon is a Chartered
Accountant. He received his Bachelor of Arts degree in Economics from the University of Leeds.
Qualifications
Mr. Snowdon’s qualifications
to be a member of our Board include his experience as a former Chief Executive of a UK public company, his strong understanding of UK
plc and corporate governance requirements, and his significant experience in mergers and acquisitions.
|
Age:
69
|
Director since:
2016
|
Board Committees:
Nominating & Governance
(Chair); Audit |
Other public company boards:
None |
|
|
|
|
|
| | 2023 PROXY STATEMENT |
Sylvia A. Stein
Non-Executive Director
|
Background
Sylvia A. Stein was appointed
a Non-Executive Director in August 2022 and serves as a member of the Audit Committee and Nominating and Governance Committee.
Ms. Stein is the Vice President,
General Counsel, Corporate Secretary, and Chief Compliance Officer of Modine Manufacturing Company (NYSE: MOD), a global provider of thermal
management systems and components. Ms. Stein joined Modine in January 2018 as Vice President, General Counsel, and Corporate Secretary,
and she was named Chief Compliance Officer in February 2020. In her current role, Ms. Stein leads the company’s global legal, compliance,
and intellectual property functions, provides strategic governance and legal advice to Modine’s Board of Directors and business
units, and serves as a key advisor to the company’s CEO and Executive Management team. Before joining Modine, Ms. Stein served as
Associate General Counsel, Marketing & Regulatory, at Kraft Heinz Food Company (NASDAQ: KHC), a global food and beverage manufacturer,
which she joined in 2001. Earlier in her career, Ms. Stein was member of the complex commercial litigation practice at Latham & Watkins,
LLP in Chicago, Illinois. Prior to that, she served as a federal judicial law clerk.
Ms. Stein holds a Bachelor’s
degree in Economics from Northwestern University and a Juris Doctor from the University of Michigan Law School. She presently serves on
the Board of Directors and Governance Committee of Just the Beginning – A Pipeline Organization, a non-profit organization dedicated
to developing interest in the law among young persons from underrepresented ethnic backgrounds, and is Vice President of the Board of
the Westside Justice Center, a charitable organization providing legal aid to the Chicago community.
Qualifications
Ms. Stein’s qualifications
to be a member of our Board include her extensive in-house legal experience in advising global public companies, particularly in matters
related to business strategy, sustainability, regulatory compliance, mergers and acquisitions, and talent management, as well as her involvement
in developing and executing growth-driven business strategy and pragmatic risk management procedures.
|
Age:
57 |
Director since:
2022 |
Board Committees:
Audit; Nominating & Governance |
Other public company boards:
None |
|
|
|
|
|
|
|
|
|
Lisa Trimberger
Non-Executive Director
|
Background
Lisa Trimberger has served
as a Non-Executive Director since September 2019. Since April 2020, she has served as Chair of the Audit Committee, upon which she acts
as a financial expert. Ms. Trimberger has also served as a member of the Remuneration Committee since September 2019.
Ms. Trimberger retired as an
Audit Partner of Deloitte & Touche LLP in 2014 after spending thirty-one years with the firm. As a lead Client Service Partner, Ms.
Trimberger audited and interacted with the management and boards of publicly traded companies. She worked on significant transactions,
as well as control and risk-assessment issues. Additionally, she was actively involved in the firm’s quality review practice, serving
as a Deputy Professional Practice Partner and Engagement Quality Control Review Partner. During her tenure with Deloitte, Ms. Trimberger
also served as Co-Chair of the firm’s Nominating and Governance Committee and was a leader of the firm’s National Women’s
Initiative for the development and retention of women professionals. Currently, Ms. Trimberger is a principal and owner of a private investment
company, Mack Capital Investments LLC. She also serves as Trustee of the Board, Chair of the Audit Committee, and a member of the Nominating
and Governance Committee of Corporate Office Properties Trust (NYSE:OFC), a real estate investment trust. Ms. Trimberger also serves as
a Trustee on the Board of Trustees of EPR Properties (NYSE: EPR), a diversified experiential net lease real estate investment trust, where
she is also a member of the Audit and Finance Committees.
Ms. Trimberger is a Certified
Public Accountant and holds a Bachelor of Science degree in Accounting from St. Cloud State University. Ms. Trimberger is a member of
the National Association of Corporate Directors (NACD), as well as the National Association of Real Estate Investment Trusts. She is an
NACD Board Leadership Fellow and earned the CERT Certificate in Cybersecurity Oversight, as developed by NACD, Ridge Global, and Carnegie
Mellon University’s CERT division. Ms. Trimberger also completed the Women’s Director Development Executive Program at J.L.
Kellogg School of Management at Northwestern University.
Qualifications
Ms. Trimberger’s qualifications
to be a member of our Board include her experience as an Audit Partner in a Big Four accounting firm, her public board experience, and
her significant experience as a financial expert in areas including financial and audit oversight, risk management, and corporate governance. |
Age:
62 |
Director since:
2019 |
Board Committees:
Audit (Chair); Remuneration |
Other public company boards:
Corporate Office Properties Trust; EPR Properties |
|
|
|
|
|
| | 2023 PROXY STATEMENT |
DIRECTOR NOMINEE SKILLS AND CHARACTERISTICS |
DIRECTOR
QUALIFICATIONS AND SKILLS |
The Nominating and Governance Committee
annually reviews the performance and contributions of existing Board members to the extent they are candidates for re-election and considers
all aspects of each candidate’s qualifications and skills in the context of the Company’s needs. Accordingly, the Committee
and the Board evaluate director nominees based on several criteria with a view of (i) bringing to the Board a variety of experience and
backgrounds and (ii) establishing a core team of business advisors with relevant financial and management expertise.
Among the qualifications and skills
of a candidate considered important by the Committee are: a commitment to representing the long-term interests of shareholders; leadership
ability; willingness to take appropriate risk; professional and personal ethics, integrity and values; practical wisdom and sound judgement;
international business experience; and business and professional experience in fields such as materials engineering, industrial manufacturing,
technology and cybersecurity, operations, product development, legal, and human resources. Candidates with substantial experience outside
of the business community, such as in the public, academic, or scientific communities, are also considered by the Board and Committee.
Board composition, effectiveness, and processes are all subject areas of our annual Board evaluation, which is described in more detail
below.
Our Board members offer a range
of skills and experiences relevant to the Board’s oversight role. As part of our annual Directors’ and Officers’ Questionnaire,
our Board members were asked to identify their specific skills and experiences as they pertain to each category below. The following table
summarizes the key skills and experiences identified by each Director that our Board considered important in its decision to nominate
that individual for election or re-election to our Board. Further details about each Director’s qualifications are set forth in
their individual biographies.
| | 2023 PROXY STATEMENT |
Diversity factors such as age, gender,
race, and ethnic background are important characteristics considered in identifying director candidates and determining nominees. The
Committee also considers the tenure of incumbent Directors to ensure a mix of shorter-tenured Directors who provide fresh perspectives
and longer-tenured Directors who provide experience in the Company and its business. While Luxfer has not adopted a formal diversity policy
in connection with the evaluation of director candidates or the selection of nominees, the Board realizes that diversity amongst its members
promotes differing perspectives and overall Board effectiveness. As such, promoting diversity is consistent with our goal of creating
a Board that best serves the needs of the Company and the interests of our shareholders.
DIRECTOR
SELECTION PROCESS |
The Nominating and Governance Committee selects director
candidates and nominees using a procedure by which it:
| • | reviews the experience, qualifications, attributes, and skills of existing
Directors; |
| • | determines the experience, qualifications, attributes, and skills desired
and/or required in new Directors; |
| • | solicits suggestions from the Chief Executive Officer and Directors on
potential candidates; |
| • | considers candidates recommended by shareholders; |
| • | retains a search consultant as needed to identify candidates; |
| • | evaluates the experience, qualifications, attributes, and skills of all
candidates recommended for consideration; |
| • | contacts the preferred candidate(s) to assess their interest; |
| • | interviews the preferred candidate(s) to assess their experience, qualifications,
attributes, and skills; and |
| • | recommends candidate(s) for consideration by the Board of Directors. |
Working closely with the full Board,
the Nominating and Governance Committee develops criteria for open Board positions, taking into account the needs of the Board and the
Company at the time. The Committee commenced a search for a new Non-Executive Director in early 2022, following the procedure set forth
above. The Committee began by analyzing the current Directors’ experience, qualifications, and skills to identify gaps in the Board’s
skill set. This analysis resulted in the creation of a new Director profile. The Committee did not utilize the services of a search consultant
to identify Sylvia A. Stein as a potential director candidate. Rather, the Committee utilized contacts within the Directors’ professional
networks, and Ms. Stein was identified as a potential candidate based on her background in advising global public companies, particularly
in matters related to business strategy, sustainability, regulatory compliance, mergers and acquisitions, and talent management. Following
interviews with the Committee, Chief Executive Officer, and the Board, the Committee proposed, and the Board approved, the appointment
of Sylvia A. Stein as a Non-Executive Director in June 2022.
| | 2023 PROXY STATEMENT |
RECOMMENDATIONS,
NOMINATIONS, AND PROXY ACCESS |
Our Nominating and Governance Committee
Charter provides that the Nominating and Governance Committee will consider persons properly recommended by shareholders or interested
parties to become nominees for election as Directors in accordance with the criteria described above under “Director Nominee Skills
and Characteristics” and the requirements of our Articles of Associations. Recommendations for consideration by the Nominating and
Governance Committee, together with appropriate biographical information concerning each proposed nominee, should be sent in writing to
c/o Company Secretary, Luxfer Holdings PLC, 8989 North Port Washington Road, Suite 211, Milwaukee, Wisconsin, 53217, United States.
Further information relating to
shareholder nominations and proposals can be found in the section entitled “2024 Annual General Meeting: Shareholder Proposals and
Nominations” on page 91.
|
Board Composition
and Independence |
|
Board and Committee Practices |
|
Shareholder Rights |
• 83% independent Board
• 100% independent Board Committees
• Independent Board Chair
• Regular executive sessions
• Full access to management, employees, and outside advisors
• No Directors serve on more than 2 boards of other public companies |
• Annual Board, Committee, and individual Director evaluation process
• Comprehensive onboarding and continuing education program
• Regular Board refreshment and a mix of tenure, including recommended
Director retirement age
• Active consideration of diversity in Director nomination process |
• Annual election of all Directors
• Majority vote standard for Director elections
• Equal classes of stock with equal voting power
• No restrictions on shareholders’ rights to call special meetings
• No poison pill
• Processes for Director nomination by shareholders and communication
with the Board |
|
Board Oversight Areas |
|
Executive Compensation Program and Policies |
• Long-term strategic plans and capital allocation
• Enterprise risk management
• Governance and ethics policies and practices
• ESG, sustainability, and cybersecurity integrated in Company’s
long-term strategy
• CEO and management succession planning
• Human capital management |
• Comprehensive clawback policy for cash incentive and equity awards
• No guaranteed bonuses or special grants to executives
• Share plans include minimum vesting periods and do not contain evergreen
provisions
• Robust stock ownership guidelines for executive officers and directors
• No hedging or pledging of company securities by executive officers
and directors |
| | 2023 PROXY STATEMENT |
The Board determines the independence
of each Director based upon the NYSE listing standards, SEC regulations, and the Directors’ answers to questions on independence
included in our annual Directors' and Officers' Questionnaire. Based on these standards, the Board of Directors has affirmatively determined
that all Non-Executive Directors standing for election at the AGM (i.e., Patrick Mullen, Richard Hipple, Clive Snowdon, Sylvia A. Stein,
and Lisa Trimberger) are independent and have no material relationship with the Company that would interfere with their exercise of independent
judgment. The Company’s Board of Directors has historically included and, to date, includes the Chief Executive Officer as the sole
Executive Director. The Board has affirmatively determined that Andy Butcher, currently the only Executive Director, is not independent
because he serves as Luxfer’s Chief Executive Officer.
In determining independence, the
Board considers several factors related to the materiality of each Director's relationship with Luxfer, including the Director's affiliations
with other organizations, such as employment, director, officer, shareholder, commercial, industrial, banking, consulting, legal, accounting,
charitable, and familial affiliations. Given the nature of the advanced materials industry, an important factor the Board considers is
whether the Director serves as an employee of another company that is a customer, supplier, or competitor of Luxfer. While the Board has
reviewed relevant relationships and found no significant relationships that would interfere with a Director’s independent judgment,
the Board discloses the following relationships as part of its commitment to transparency:
| • | Richard Hipple serves as a Director of KeyCorp,
a provider of retail and commercial banking services in the United States. A Metals Equity Research Analyst at KeyCorp has conducted research
on Luxfer in the past and continues to do so; however, KeyCorp began research coverage of Luxfer prior to Mr. Hipple joining the Luxfer
Board of Directors, and Mr. Hipple has not been involved in any such research. Moreover, KeyCorp does not provide financing to Luxfer,
although it has provided banking services to Luxfer prior to Mr. Hipple joining the Board. Because Luxfer’s relationship with KeyCorp
is at arms-length and Mr. Hipple has not been directly involved in any of Luxfer’s dealings with KeyCorp, the Board does not view
this relationship significant enough to affect Mr. Hipple's independence as a Director of Luxfer. |
| • | Prior to her retirement in 2014, Lisa Trimberger
served as an Audit Partner at Deloitte & Touche LLP. Prior to Ms. Trimberger joining the Board, Deloitte was providing and continued
to provide non-audit advisory services to the Company through March 2022. Because Luxfer's relationship with Deloitte is at arms-length
and is not independent audit-related the Board does not view this previous relationship significant enough to affect Ms. Trimberger's
independence as a Director of Luxfer. |
The Board believes it is important
to maintain flexibility in choosing the leadership structure that best meets the needs of the Company and its shareholders, based on circumstances
that exist at the time and the qualifications of available individuals. We do not have a policy requiring the positions of Board Chair
and Chief Executive Officer to be held by different persons. However, these two positions have historically been separate and are expected
to remain separate. The Board believes this structure is advantageous because it provides the appropriate balance between strategy development
and oversight of management. It also allows the CEO to focus attention on driving business performance rather than Board governance. Additionally,
this structure is consistent with corporate best practices, the Institutional Shareholder Services’ (ISS) recommendation, the views
of Luxfer’s shareholders, and the UK Corporate Governance Code. The responsibilities of an independent Board Chair include, among
other things:
| • | leading the Board, including the oversight and coordination of the Board's
and its Committees' work; |
| • | serving as a liaison between the CEO, other
members of senior management, the Non-Executive Directors, and the Committee Chairs; |
| • | presiding at all meetings of the Board, including executive sessions of
the independent Non-Executive Directors; |
| • | presiding at all meetings of the shareholders; |
| • | setting the Board's meeting agendas and ensuring there is sufficient time
for discussion of all agenda items; |
| • | recommending agendas for shareholder meetings
and providing guidance to the Board on positions the Board should take on issues to come before shareholder meetings; |
| • | participating in discussions with the Nominating
and Governance Committee on matters related to Board and Committee organization, composition, membership terms, and meeting structure;
and |
| | 2023 PROXY STATEMENT |
| • | participating in discussions with the Nominating
and Governance Committee and Remuneration Committee on matters related to the hiring, evaluation, and compensation of, and the succession
planning for, the CEO, other executives, and Directors. |
Luxfer’s Board of Directors
is currently led by Patrick Mullen, who was appointed Board Chair in March 2022. Mr. Mullen is a Non-Executive Director and is considered
independent under the NYSE listing standards and relevant SEC regulations. Luxfer believes that Patrick Mullen’s service as Board
Chair is appropriate because of his extensive global industrial experience, including his previous executive leadership and management
roles within industrial manufacturing companies; history of serving on the boards of other public companies; and knowledge of the manufacturing
and engineering industries in general.
Luxfer maintains an Enterprise
Risk Management (ERM) program, which is the Company’s overall framework for identifying, assessing, monitoring, and mitigating the
Company’s most significant risks. A wide breadth of potential risks relevant to the Company are evaluated under our ERM program,
including those that could present financial, operational, or strategic risk. Through the ERM program, we apply standard risk management
assessments and terminology aligned with the Committee of Sponsoring Organizations (COSO) Enterprise Risk Management Framework to each
of Luxfer’s business units and corporate functions.
Luxfer’s Board oversees
the management of risks relevant to the Company as part of regular Board and Committee meetings. Topics reviewed by the Board as part
of its risk oversight responsibilities include, but are not limited to, the implementation of the Company’s strategic plan; its
acquisitions and divestitures; its capital structure, allocation, and liquidity; material litigation; compliance with laws and regulation;
sustainability, climate, and ESG-related risks; and its organizational structure. While the full Board has overall responsibility for
risk oversight, the Board delegates oversight responsibility for specific risks across its Committees, considering the Committees’
responsibilities, and the skills and experience of the Committees’ members. In particular, the Audit Committee oversees the Company’s
annual ERM processes, including the establishment of the Risk Framework and completion of the annual Risk Assessment by management.
Luxfer’s management
has day-to-day responsibility for identifying, evaluating, managing, and mitigating the Company’s risk. On an annual basis, Luxfer
management establishes and/or updates, as appropriate, a Risk Framework and completes a Risk Assessment. Our Risk Framework and Assessments
are accompanied by an internal manual to ensure a consistent and methodical assessment of the risks to which the Company is exposed. The
manual provides guidance to help quantify the materiality of each risk, including its timing, likelihood, magnitude, scope, and financial
impact. Each risk identified in the Risk Framework is reviewed by management and our Internal Audit team. Risks are prioritized based
on their relative likelihood and magnitude of the range of expected financial impact. Management and the Internal Audit team review and
consolidate risk assessment results at the enterprise level, ensuring they reflect the combined impact of interrelated risks such that
they would be managed effectively. Risks identified as “top risks” are reviewed annually with Luxfer’s Executive Leadership
Team, the Audit Committee, and the Board of Directors as a whole.
After material risks are reviewed,
our ERM program involves the development, recommendation, and implementation of response plans appropriate to each risk. Response plans
are developed and recommended by regional risk management teams, and then reviewed and modified as necessary by Internal Audit. Once approved,
the response plans are implemented under the oversight of management teams across the relevant locations or functions. Throughout the
year, Internal Audit, with oversight from the Board and/or specific Board Committee, monitors the implementation and progress of response
plans. Results from such monitoring are reported to the Board of Directors as part of regular Committee updates during each quarterly
meeting or as otherwise needed.
Luxfer’s Board oversees the
Company’s long-term business strategy, which includes, among other matters, our strategic framework; business performance and development
strategies; growth plans; and approach to commercial excellence, human capital management, lean operations, innovation, and sustainability.
Working with Luxfer’s Executive Leadership Team and other key personnel, our Board engages in an in-depth strategic review of Luxfer’s
outlook and strategies at least once per year to consider specific issues relevant to the overall conduct of our business, including financial
performance, emerging challenges and opportunities, enterprise risks, safety, sustainability, culture, mergers & acquisitions, and
other strategic matters. The Company’s strategic plan is approved by the Board annually and serves as
| | 2023 PROXY STATEMENT |
a foundation upon which goals and actions
are established. Throughout the year, the Board monitors management’s progress against these goals.
MANAGEMENT
SUCCESSION PLANNING |
The Board views its role in succession
planning and talent development as a key responsibility. At least once annually, usually as part of the annual talent review process,
the Board discusses and reviews the succession plans for the Chief Executive Officer, Chief Financial Officer, Executive Leadership Team,
and other key contributors. The Directors become familiar with potential successors for key management positions through various means,
including annual talent reviews, presentations to the Board, regular updates to the Chair of the Nominating and Governance Committee,
and communications outside of meetings. Our succession planning process is an organization-wide practice designed to proactively identify,
develop, and retain the leadership talent critical to the future success of the Company.
BOARD,
COMMITTEE AND DIRECTOR EVALUATIONS |
Annual evaluation of Board performance
helps ensure that the Board and its Committees function effectively and in the best interest of our shareholders. The Nominating and Governance
Committee is responsible for establishing and overseeing a process for evaluation. The Board conducts an annual evaluation of the Board
and each Committee. The evaluation process consists of a written evaluation comprising both quantitative scoring and qualitative comments
on a range of topics, including the composition and structure of the Board and Committees, the type and frequency of communications and
information provided to the Board and its Committees, the Board's and its Committees’ effectiveness in carrying out their functions
and responsibilities, the effectiveness of the Committee structure, Directors’ preparation and participation in the meetings, and
the values and culture displayed by the Directors. With the assistance of the Company Secretary, the evaluation responses are compiled
by the Chair of the Nominating and Governance Committee. The Nominating and Governance Committee Chair leads a discussion of the evaluation
results at the following Board and Committee meetings. Following review of the evaluation results, particular areas of focus and key actions
are identified. Throughout the year, the Nominating and Governance Committee monitors progress against the key actions identified and
provides status updates to the full Board as part of regular Board meetings. Additionally, verbal evaluations are conducted in independent
executive sessions at the end of every Board and Committee meeting.
In addition to Board and Committee
evaluations, the Nominating and Governance Committee recently implemented, and the Directors complete, peer and self-evaluations of individual
Director performance, which are aimed at identifying individual Director strengths and development areas. The results of Director evaluations
are anonymous and discussed solely by the individual Director and Chair of the Nominating and Governance Committee.
Board education is an ongoing,
year-round process, which begins when a Director joins our Board. Upon joining the Board, new Directors are provided with an orientation
to the Company, including our businesses, strategy, and governance. On an ongoing basis, Directors receive educational presentations
on a variety of topics related to their responsibilities as Directors and the industries in which Luxfer operates. These presentations
are provided by external advisors and/or our senior management team. In 2022, topics for Board education included Luxfer values and culture;
anti-bribery; anti-trust compliance; global insider dealing; global business ethics; capital markets; merger and acquisition strategy,
including strategic options; SEC climate and cybersecurity proposals; cybersecurity; ESG; and diversity and unconscious biases.
| | 2023 PROXY STATEMENT |
Luxfer is committed to the highest
standards of corporate governance and ethics. As such, the Board of Directors has adopted a set of Corporate Governance Guidelines. These
guidelines describe the principles and best practices that the Board follows in carrying out its responsibilities in order to (i) ensure
that the Company is run in a transparent and ethical manner and (ii) support the Company’s core objectives in furtherance of its
values. Additionally, the Board has adopted the Code of Ethics and Business Conduct, which is the designated code of ethics applicable
to our Chief Executive Officer, Executive Officers, Board of Directors, and anyone conducting business on Luxfer’s behalf.
The Board reviews best practices
and developments in corporate governance, and, if appropriate, revises the Corporate Governance Guidelines, Code of Ethics and Business
Conduct, Committee Charters, and other governance instruments at least once annually in accordance with the rules and best practices of
the SEC and NYSE. Copies of these documents are available on our website at https://www.luxfer.com/investors/governance/.
Luxfer's Code of Ethics and Business
Conduct and Corporate Governance Guidelines address conflicts of interest. As provided in the Code of Ethics and Business Conduct, a “conflict
of interest” occurs when an individual’s private interest (or the interest of a member of their family) interferes, or even
appears to interfere, with the interests of the Company. A conflict of interest can arise when an employee, Executive Officer, or Director
(or a member of their family) takes actions or has interests that may make it difficult to perform their work for Luxfer objectively and
effectively. Conflicts of interest also arise when an employee, Executive Officer, or Director (or a member of their family) receives
improper personal benefits as a result of their position in Luxfer or another organization. The Company periodically, but no less frequent
than annually, solicits information from Directors and Executive Officers in order to monitor potential conflicts of interest. Directors
and Executive Officers are expected to always be mindful of their fiduciary obligations to the Company, and they must seek determinations
and prior authorizations or approvals of potential conflicts of interest from (i) the Board Chair or Nominating and Governance Committee,
as appropriate, in the case of Directors or (ii) Luxfer’s General Counsel, or where a conflict arises, the Nominating and Governance
Committee, in the case of Executive Officers.
In 2022, there were no conflicts
of interest.
RELATED
PARTY TRANSACTIONS |
In
addition to standards set forth in our Corporate Governance Guidelines, Luxfer has established a Related
Party Transactions Policy. In accordance with the Related Party Transactions Policy and consistent
with Section 314.00 of the NYSE Listed Company Manual, as amended on April 2, 2021 and August 26, 2021, the Audit Committee must conduct
a reasonable prior review of all “Related Party Transactions” and prohibit such a transaction if it determines it to be inconsistent
with the interests of the company and its shareholders. A “Related Party Transaction” is any transaction directly or indirectly
involving a Related Party that is required to be disclosed under Item 404(a) of Regulation S-K of the Securities Act. Under Item 404(a),
the Company is required to disclose any transaction, arrangement, or relationship, or any series of similar transactions, arrangements
or relationships (including any indebtedness or guarantee of indebtedness), since the beginning of the Company’s last fiscal year,
or any currently proposed transaction, in which (a) the amount involved will or may be expected to exceed $120,000 in any fiscal year;
(b) the Company was or is to be a participant; and (c) any Related Party had or will have a direct or indirect material interest.
In considering whether to approve
a Related Party Transaction, the Audit Committee takes into account, all of the relevant terms, facts, and circumstances available to
it, including but not limited to the following (if applicable): (i) the information made available in the notice described in Section
3.0 of the Company’s Related Party Transactions Policy; (ii) the purpose of the transaction and its potential risks and benefits
to the Company; (iii) the interests of all Related Parties in the Related Party Transaction; (iv) the role, if any, the Related Parties
played in arranging the transaction; (v) whether the transaction was or is proposed to be undertaken in the ordinary course of the Company’s
and the Related Party’s business; (vi) whether the Related Party Transaction is material to the Company; (vii) whether the terms
and conditions of the Related Party Transaction are fair to the Company and usual and customary in the market; (viii) whether the Related
Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar
circumstances; (ix) the availability of other sources for comparable products or services; (xi) in the event
| | 2023 PROXY STATEMENT |
the Related Party is a Director, an Immediate
Family Member of a Director, or an entity in which a Director is a partner, shareholder, or executive officer, the impact of the transaction
on the Director’s independence, and if the Director serves
on the Remuneration Committee, such Director’s status as a “non-employee director” under Rule 16b-3 of the Securities
Exchange Act of 1934, as amended and, if applicable, an “outside director” under Section 162(m) of the Internal Revenue Code
of 1986, as amended; and (xii) the information required to be disclosed by the Company pursuant to Item 404(a) of Regulation S-K of the
Securities Act if the Company were to enter into the Related Party Transaction.
In 2022, there were no Related Party
Transactions.
Various Luxfer policies address
security ownership, including the Insider Trading and Dealing Policy and the Stock Ownership Guidelines. Particularly, Luxfer's Insider
Trading and Dealing Policy prohibits a number of transactions by “Covered Persons.” “Covered Persons” include
Directors, Executive Officers, and various Luxfer employees and consultants in management, corporate, finance, IT, and investor relations
roles. Specifically, the Policy prohibits the following in relation to Company securities: short-term trading, short sales, options trading,
trading on margin, and hedging. All Covered Persons – including family members of Covered Persons, members of a Covered Person's
household, and entities controlled by Covered Persons – are expected to comply with the Insider Trading and Dealing Policy, as well
as applicable securities laws and regulations.
Further, Luxfer has established
Stock Ownership Guidelines, which apply to all Directors, Executive Officers, and any other key employees that the Remuneration Committee
may identify from time to time in consultation with management. The Company’s Articles of Association do not currently require Directors
to hold a minimum number of shares in the Company in order to qualify for appointment to the Board of Directors; however, the Stock Ownership
Guidelines provide the Company's expectations as to the minimum amount of shares such persons should own in the Company. These minimum
amounts are based on the total value of the shares owned by a person being equal to a certain multiple of such person’s annual base
salary or retainer fee. Additionally, the Stock Ownership Guidelines include share retention ratios to assist in a person's continuous
progress toward their respective ownership guideline. Directors and Executive Officers are expected to achieve the minimum ownership guidelines
within five years of the effective date of the Stock Ownership Guidelines or their appointment or election, whichever occurs later.
| | 2023 PROXY STATEMENT |
ENVIRONMENT, SOCIAL AND GOVERNANCE INITIATIVES |
Luxfer remains committed to operating
safe, clean, and environmentally compliant facilities while supporting our employees, communities, and offering excellent customer service.
Foundational to a sustainability strategy that positions Luxfer for long-term growth, we will uphold these commitments through strong
governance practices and policies, ensuring that we always do business based on our mission and values. Luxfer’s Board of Directors
is responsible for overseeing the Company’s long-term business strategy, which includes, among other things, the Company’s
approach to ESG matters. The Board considers our governance-related policies and practices; our systems of risk oversight and management;
how we advance environmental sustainability; health and safety; human rights; human capital management and corporate culture; cybersecurity;
and the manner in which we serve our customers and support our communities.
In December, we published our 2022
Sustainability Report, a biennial report highlighting our ongoing efforts to drive sustainability in our operations. Building on our
inaugural report published in 2020, the 2022 Sustainability Report includes (i) more granular environmental and social data through 2021;
(ii) an update on our progress towards meeting our 2025 Environmental Goals; (iii) greater discussion on sustainability governance and
climate-related risks; and (iv) insight into new and ongoing sustainability initiatives. We invite you to read the full report on our
website at https://www.luxfer.com/environment-social-and-governance/.
In 2022, we continued tracking energy
and emissions data through our internal ESG Scorecard, which measures progress across a wide range of ESG key performance indicators.
In addition to recording data, the ESG Scorecard is the mechanism through which we track performance against our 2025 Environmental Goals,
which includes our commitment to reducing our absolute carbon dioxide equivalent (“CO2e”) emissions by 20% by 2025
using a 2019 baseline. Having finalized our full year 2022 emissions figures, we are pleased to have exceeded our 2025 emissions reduction
goal ahead of schedule with a 29% decrease in our total absolute CO2e emissions in 2022 from our 2019 baseline. In addition to updates
provided in annual reports and other sustainability-related publications, we plan to provide additional details on final full-year 2022
and 2023 emissions data, and an update on progress towards all our 2025 Environmental Goals, in a future sustainability report anticipated
in 2024.
Each Luxfer site compiles greenhouse
gas emission inventories and monitors electricity and natural gas usage. All other greenhouse gases produced as a result of manufacturing
operations, such as propane and direct CO2 are also recorded. Scope 1 emissions consist of all direct emissions from fuel combustion,
natural gas, propane, and all other sources of direct emissions. Scope 2 emissions consist of all indirect emissions attributable to the
Company through the consumption of purchased electricity, steam, heating, or cooling. This data is compiled and converted to emissions
to calculate our total CO2e output. Our US and Canada facilities use standard CO2 conversion factors published by
the US Environmental Protection Agency, and our UK facilities use CO2 conversion factors published by the UK Government. Broadly
speaking, the gases that compile the bulk of our emissions have very similar CO2e equivalency regardless of where they are
sourced. Year-on-year figures are used to identify any anomalies, and similar sites are compared to one another to ensure consistency
and understanding of this data. At present, we do not collect details of any Scope 3 emissions.
The table below provides a summary
of the Company’s Scope 1 and Scope 2 greenhouse gas emissions for 2022 and 2021.
|
2022(1) |
2021 |
(mtCO2e)(2) |
(mtCO2e/$1mSV)(3) |
(mtCO2e)(1) |
(mtCO2e/$1mSV)(3) |
Scope 1 |
51,660 |
119.47 |
72,222 |
178.1 |
Scope 2 |
20,226 |
46.8 |
31,431 |
77.6 |
Total |
71,886 |
166.3 |
103,653 |
255.7 |
_____________________
| (1) | 2022 absolute and intensity
emissions include emissions and sales from our facility in Pomona, California. |
| (2) | Metric tons of CO2
equivalent. |
| (3) | Total sales were used to calculate
emissions intensity. Sales figures include intra-company sales and exclude scrap. (2022: $423.4 million; 2021: $405.53 million) |
| | 2023 PROXY STATEMENT |
In 2022, our total absolute emissions
(i.e., total metric tons of CO2e) decreased by 30.6% compared to 2021. Absolute Scope 1 emissions decreased 28.5% and absolute
Scope 2 emissions decreased 35.7% year-over-year. We attribute this decrease to various energy- and emissions-saving projects implemented
in late 2021 and throughout 2022, which are described in greater detail below. These projects also impacted our total emissions intensity
(i.e., CO2e emissions per $million in sales), which decreased by 35.0% in 2022 compared to 2021. Scope 1 emissions intensity
decreased by 32.9% and Scope 2 emissions intensity decreased by 39.7% year-over-year. While emissions intensity are useful metrics to
normalize our emissions, sales value is affected by exchange and inflation rate effects. Accordingly, it is important to note that the
Company’s efforts to pass through inflationary costs in 2022 has impacted our sales value and likewise impacted our emissions intensity
metrics.
FACILITIES AND OPERATIONS |
Throughout 2021 and 2022, we invested
in multiple energy- and emissions-reduction projects across our global facilities, such as LED lighting, upgrades to compressors and pumps,
and the replacement of old equipment with energy-efficient models. In total, these projects saved over 4,700,000 kWh of electricity annually.
The SF6 abatement project carried out at the Luxfer MEL Technologies plant in Manchester, UK, which involved installing new technology
in their magnesium operations, significantly contributed to the Company’s ability to achieve its 2025 emissions reduction target
ahead of schedule. This project alone reduced the Company’s total emissions by approximately 36,000 metric tons of CO2e annually.
Other projects carried out in 2022 to improve our environmental footprint include:
| • | Luxfer MEL Technologies in Flemington, NJ installed
LED lighting equipped with motion sensors throughout the facility, reducing the sites energy consumption by approximately 243,000 kWh
of electricity, or 172 metric tons of CO2e emissions, annually. |
| • | Luxfer Magtech in Cincinnati, OH upgraded 290
traditional lights to LED in October 2022, representing an annual emissions savings of approximately 127 metric tons annually. |
| • | Luxfer Gas Cylinders in Riverside, CA worked
to reduce electricity consumption by installing new high-efficiency pumps used to hydrotest their Type 3 SCBA cylinders, amounting to
41,040 kWh of electricity, or 17.8 metric tons of CO2e emissions, annually. |
| • | Through an audit of its water usage, Luxfer
MEL Technologies in Tamaqua, PA located and repaired a large on-site leak which is estimated to save over 300,000 gallons of municipal
freshwater annually. |
| • | Luxfer Graphic Arts in Manchester, UK installed
new energy-efficient technology to coat their copper engraving plates with laminate instead of traditional lacquer which increases the
recyclability of the copper, reduces downstream disposal and operational costs, and by 2024, is expected to save approximately 265 kg
of CO2e. |
Attracting and retaining talent
remains a challenge in the post-COVID landscape. To succeed in today’s competitive labor market, Luxfer takes a proactive approach
to human capital management by pursuing several priorities that we believe are critical in recruiting, retaining, motivating, and developing
top talent. Such priorities include: (i) ensuring occupational health and safety; (ii) promoting financial, physical, and emotional well-being;
(iii) providing opportunities for growth and development; and (iii) maintaining diverse and inclusive workplaces.
Our Board of Directors and Executive
Leadership Team play a key role in setting our human capital management strategy and driving accountability for meaningful progress. Informed
by data, our human capital management initiatives are supported by local leadership, with significant functional oversight by our local
human resource teams. All Luxfer facilities collect data on employee retention, talent acquisition, training, and safety. Metrics are
recorded quarterly on our internal scorecard and are reported to executive management regularly.
| | 2023 PROXY STATEMENT |
OCCUPATIONAL HEALTH & SAFETY |
The occupational health and safety
of employees is fundamental to delivering sustainable economic performance. Luxfer has established well-defined health and safety policies
and procedures, as well as ongoing employee training, as part of the Company’s commitment to being an industry leader in safety.
Gap analyses are regularly conducted and safety goals and objectives for all locations are developed. As part of the Company’s enterprise-wide
risk management system, these objectives are monitored, and performance related to them is regularly reviewed and discussed.
Employees are encouraged to submit
suggestions, ideas, and observations about safety hazards, which are incorporated into a “safety moment” at the beginning
of each meeting, to increase awareness and reinforce positive safety behavior. Additional efforts include monthly safety meetings with
employees, safety audits by management, safety audits by certain employees, and the inclusion of safety initiatives as part of select
employees’ incentive plans.
The Company utilizes a mixture of
leading and lagging indicators to assess the health and safety performance of its operations. Leading indicators include reporting and
closure of all near miss events and safety concerns identified. Lagging indicators include the recordable Incident Frequency Rate, which
is defined by the US Occupational Safety and Health Administration as the number of work-related injuries per 100 full-time workers during
a one-year period. Recordable accidents and Lost Time Accidents are also recorded. These safety measures are integrated into the performance
evaluations of our executives and are reported to the Board on a quarterly basis. Luxfer’s lagging safety indicators from 2019 to
2022 is shown in the table below.
|
2022 |
2021 (1) |
2020 |
2019 |
Recordable Accidents |
20 |
31 |
25 |
33 |
Lost Time Accidents |
8 |
15 |
8 |
5 |
Incident Frequency Rate |
1.59 |
2.62 |
1.85 |
2.09 |
_____________________
| (1) | 2021 safety data excludes the
following facilities: (i) Niagara, Canada; (ii) Aluminum operations in Riverside, CA, US; (iii) Graham, NC; (iv) Aluminum operations in
Worcester, U.K; and (v) Shanghai, China. Data from our facility in Pomona, CA is included beginning April 2021. |
Luxfer's workforce is one of our
greatest sources of sustainable value. Our ability to deliver on our objectives and build lasting relationships with our customers depends
on the capabilities, attraction, and retention of the talented individuals who come to work every day. As such, we continuously strive
to offer competitive pay and benefits and maintain a work-life balance for our employees in order to foster job satisfaction and increase
retention.
Fair
Wages and Competitive Benefits. The Company’s compensation philosophy aims to attract, retain, and motivate employees
through its incentive and benefit programs. Luxfer offers competitive base pay and, depending on position, variable incentive pay associated
with both individual and Company performance, including both short-term incentive pay and long-term equity awards. Full-time employees
and, in some cases, part-time employees who have met the minimum service hour requirements, are eligible to participate in various retirement
savings plans, such as the Company’s 401(k) defined contribution plan in the US and various pension schemes available to UK employees.
We also offer paid time off, group medical, dental, and vision plans, in addition to various life, disability, and paid family sick leave
options, which vary by jurisdiction.
Employee
Share Plans. Luxfer encourages participation in its US Employee Stock Purchase Plan (“ESPP”) and UK Share Incentive
Plan (“SIP”), which provide employees an opportunity to become Luxfer shareholders at a reduced price. Under the ESPP, US
employees can purchase Company stock at a 15% discount through payroll deductions. Under the SIP, UK employees can purchase Company stock
through payroll deductions and, in turn, the Company grants participating employees one free share per every two shares purchased.
Fitness
and Wellness Programs. Luxfer is proud to offer several optional fitness and wellness programs and healthy living incentives
to our employees. Our Employee Healthy Lifestyle Program is available to our US employees and offers partial reimbursement for certain
gym and fitness center memberships, weight loss programs, and group exercise classes. US
| | 2023 PROXY STATEMENT |
employees are also eligible to participate
in a smoking cessation program through which employees who complete a 90-day program are rewarded with lowered insurance rates.
Emotional
Well-Being. We support the social and emotional health of our employees by providing access to wellness clinics and funded
mental health counseling services. As a part of Luxfer’s group medical insurance plan, US employees have convenient access to mental
health services through live video visits with a board-certified doctor or licensed therapist. Luxfer also provides access to the Employee
Assistance Program, which is designed to support employees and their families with a variety of work-life services and resources, including
legal assistance, financial budgeting, and more. Through the Employee Assistance Program, employees are connected to a credentialed counselor,
free of charge, to provide professional, confidential services to help them and their loved ones improve their quality of life.
GROWTH AND TALENT DEVELOPMENT |
Providing opportunities for professional
growth and development is key to Luxfer’s retention strategy. Luxfer maintains talent and succession planning processes, including
regular review by the Executive Leadership Team and reports to the Board of Directors. Employees are provided training, learning, and
development opportunities at all levels of the Company. We operate leadership and management development programs, which provide a consistent
approach to the development of the Company’s future leaders and managers. With a multi-faceted curriculum, these programs provide
critical problem-solving, communication, business management, and leadership skills. Luxfer also maintains various training and development
programs for employees at the workforce level, in addition to regular coaching and support from their supervisors and performance evaluations.
Management utilizes a variety of tools to evaluate employee performance, including skills assessments, self-evaluations, and the achievement
of personal objectives. Personal objectives (a list of goals the employee will strive to achieve) are set at the beginning of each year
in the form of a balanced scorecard. Managers approve the personal objective scorecard and review the employee’s performance in
relation to their scorecard throughout the year. For eligible employees, annual cash incentives are tied to the achievement of personal
objectives. Moreover, setting personal objectives gets employees involved with the Company’s overall strategy and improves engagement,
thereby supporting Luxfer’s growth and profitability.
To further support our employees’
personal development, Luxfer offers a company-wide online training and development platform designed to increase access to critical business,
leadership, management, productivity, collaboration, and computer software skills. Available to all Luxfer employees, the platform provides
access to over 180,000 courses, videos, books, and audio books on a variety of topics from world-class experts. The content is made to
suit different learning styles; all one click away in the same user interface. Employees can access the content 24/7 on any desktop computer
or mobile device, providing them with the opportunity to improve their performance anytime, anywhere.
DIVERSE AND SUPPORTIVE WORKPLACE |
The professional conduct of our
employees furthers the Company’s mission, promotes productivity, minimizes disputes, and enhances our reputation. As such, Luxfer
is committed to creating and maintaining a diverse, global workforce that provides fair and equitable opportunities, thereby advancing
Luxfer’s innovation culture and customer first values. With continued focus on diversity and equity, Luxfer’s diversity initiatives
include, but are not limited to, practices and policies on recruitment and selection, including targeted sourcing of personnel from diverse
backgrounds; compensation and benefits; professional development and training; advancement opportunities; and the ongoing development
of a diverse and inclusive work environment.
To ensure effective teamwork and
achievement of common business goals, all Luxfer personnel are required to complete a variety of anti-harassment, non-discrimination,
diversity, and unconscious bias trainings annually. Luxfer’s talent acquisition teams and hiring managers undergo additional training
to ensure that a diverse slate of candidates is considered for all job openings. Further, Luxfer monitors the composition of its current
workforce for diversity, age, and gender demographics. The quality of this data is continually improved to ensure that a diverse and talented
workforce is maintained. This data is used to enhance employment and recruitment practices to provide the most inclusive work environment
possible.
| | 2023 PROXY STATEMENT |
THIRD PARTY RELATIONS AND SUPPLY CHAIN COMPLIANCE |
To
ensure that our partners conduct business with a high degree of integrity and in a socially and environmentally responsible manner, all
third parties with whom we do business (including suppliers, distributors, contractors, agents, service providers, and customers) are
expected to adhere to our Third Party Code of Conduct.
Based on our own Code of Ethics and Business Conduct,
the Third Party Code of Conduct applies to all third party representatives worldwide. Under the Code, third parties are expected
to respect, acknowledge, uphold, and comply with the following key themes and extend these standards to their supply chain:
| • | employee health and safety; |
| • | child labor, forced labor, and human trafficking; |
| • | business ethics, anti-corruption, and anti-bribery; |
| • | environmental responsibility; |
| • | conflict-free mineral sourcing; and |
| • | product and service quality. |
Beginning in 2021, the establishment
of new commercial contracts and the continuation of existing commercial arrangements with Luxfer require that third parties complete and
return an acknowledgement form as a means to verify compliance with the Third Party Code of Conduct. To ensure ongoing compliance, Luxfer
requests that third parties renew their signature on the form once every three years. Presently, acknowledgement of the Third Party Code
of Conduct applies only to vendors and suppliers who do $50,000 or greater in business with Luxfer annually. In 2022, 49% of suppliers
and distributors who meet this threshold attested compliance in writing to Luxfer’s Third Party Code of Conduct. Our goal in 2023
is to continue implementing the appropriate internal processes to achieve a 90% attestation rate from third parties who meet this threshold.
This metric is tracked quarterly by each Luxfer location on our internal ESG Scorecard and is reviewed twice annually with the CEO and
senior management. We look forward to further refining our internal processes so that we may extend this requirement to 100% of our supply
chain in the future.
To further improve the sustainability
performance of our supply chain, examinations of new and existing vendors are conducted regularly. We utilize several methods to ensure
that our standards are met, including vendor risk assessments. Through this approach, vendor assessments are conducted based on multiple
factors, including risk profile, engagement type and activity, and geography. These assessments evaluate the vendor’s ability to
meet both our internal and industry standards for quality, safety, and reliability. Pursuant to our Third Party Code of Conduct, third
parties are required to allow representatives from Luxfer and, if requested, Luxfer’s customers full access to their production
facilities, records, and workers for confidential interviews. We use appropriate due diligence procedures to vet our vendors prior to
entering into any business arrangements and reject those who do not fulfill our requirements or meet our standards.
We encourage and facilitate reporting
of environmental, social, or governance non-compliance in our operations and throughout our supply chain through our confidential, anonymous
whistleblowing hotline. Concerned individuals may report violations anonymously via our hotline, which is available 24/7 and offers multilingual
support for reporters in more than 170 languages.
As customer preferences and business-efficiency
demands lead to a more connected and digitized world, cybersecurity and privacy risks have become critical business issues. Because there
is no single method to protect against every type of potential attack, we have adopted a risk management approach addressing cyber threats,
which includes (i) Board-level oversight; (ii) preventing hackers from penetrating our systems (“cybersecurity”); (iii) containment
and recovery measures in the event of an attack (“cyber resilience”); (iv) policies and employee training; (v) third-party
cybersecurity measures; and (vi) compliance with applicable laws and regulations.
Board-Level
Oversight. Luxfer’s Board of Directors is responsible for overseeing cybersecurity,
information security, and technology risk, and receives regular reports on IT matters from the Company’s senior management. The
day-to-day management of Luxfer’s cybersecurity program is handled by our IT Steering Committee, who maintains the operation of
Luxfer’s cybersecurity program and ensures effective implementation of IT policies and practices.
| | 2023 PROXY STATEMENT |
Cybersecurity.
We have operationalized a series of measures that seek to prevent attacks from compromising our systems. Luxfer has a breadth of controls
in place to protect against cyberattacks, including firewalls, threat monitoring systems, protected cloud architecture, and more frequent
security patching. We have phased out vulnerable operating systems and updated legacy servers with advanced security. Applications that
run and manage our core operating data are fully backed up.
Cyber
Resilience. We have an IT Incident Response Plan in place to quickly identify, track, and respond to potential or confirmed
cybersecurity incidents. To protect our assets, we regularly assess security controls to manage potential events, cyber patterns, and
attack modes. Although no cybersecurity incidents have been material to the Company to date, we continue to maintain insurance coverage
for business continuity risks.
Policies
and Employee Training. We have global policies covering IT security standards and annual compliance training for employees.
Our employees are also trained through regular phishing simulations.
Third-Party
Cybersecurity Measures. Our IT staff perform thorough due diligence and risk
analyses on third party vendors, verifying that sufficient security testing is performed on all software before installation on Luxfer’s
network. Access and permissions to all software and programs are regularly monitored and reviewed by IT managers.
Compliance
with Regulations. We make every effort to comply with the UK General Data Protection Regulation and other applicable laws relating
to the security of personally identifiable information of our customers, employees, and anyone with whom we do business. Our Data Protection
Policy is reviewed and audited by our internal audit team once annually.
COMMUNICATION WITH SHAREHOLDERS AND INTERESTED PARTIES |
We believe that effective corporate
governance includes year-round engagement with our shareholders, stakeholders, and any interested party. We regularly meet with our shareholders,
including both large and small investors, to discuss business strategy, performance, compensation philosophy, corporate governance, and
environmental and social topics. In a typical year, Luxfer engages dozens of shareholders, including our largest shareholders two to three
times per year. In 2022, we had more than 100 calls and meetings with investors, including those scheduled as part of investor conferences,
non-deal roadshows, and post-earnings follow up meetings. To continuously improve our shareholder communication and outreach, we review
the feedback we receive during these meetings with our Board of Directors. Our Directors, along with management; carefully consider and
evaluate this information; and modify the Company’s approach to advance our shareholder engagement efforts.
If you wish to provide us with
feedback, please send an email to investor.relations@luxfer.com. Alternatively, if you wish to communicate with the Board of Directors,
specific Directors as a group, or any individual Director, you may send a letter addressed to the relevant party, c/o Company Secretary,
Luxfer Holdings PLC, 8989 North Port Washington Road, Suite 211, Milwaukee, Wisconsin, 53217, United States. Any such communications
will be forwarded directly to the addressee(s). Additional information can be found on our website at https://www.luxfer.com/contact/.
| | 2023 PROXY STATEMENT |
BOARD MEETINGS AND COMMITTEES |
The Board meets regularly during
the year, holds special meetings, and acts by unanimous written consent wherever circumstances require. In each regularly scheduled Board
and committee meeting, the independent Directors also met in executive session, without the Chief Executive Officer or other members of
management present. Directors are expected to attend all scheduled meetings of the Board of Directors, all meetings of the committee(s)
on which they serve, and all shareholder meetings. The Board held six regularly scheduled meetings in 2022, four of which occurred in-person
and two of which occurred virtually via videoconference. Additionally, the Board held six special meetings in which matters such as Board
and executive leadership succession planning and transitions were discussed. These six meetings occurred virtually via videoconference.
All incumbent Directors attended 100% of the meetings of the Board and Committee(s) on which they served during 2022, and all Directors
who served during fiscal year 2022 attended at least 93% of the meetings of the Board and committee(s) on which they served. All Directors
then serving attended the 2022 Annual General Meeting of Shareholders.
The Board has three standing committees
comprised solely of independent Directors: the Nominating and Governance Committee, the Remuneration Committee, and the Audit Committee.
The functions performed by these committees, which are set forth in more detail in their Charters, are summarized below.
_____________________
| Committee Chair |
(1) | Andy Butcher joined the Company’s Board of Directors upon his appointment as Chief Executive Officer,
effective May 6, 2022. |
(2) | Patrick Mullen joined the Nominating and Governance Committee and the Remuneration Committee effective
January 1, 2022. Mr. Mullen was appointed Board Chair effective March 11, 2022. |
(3) | Sylvia A. Stein was appointed a Non-Executive Director effective August 1, 2022, at which time she joined
the Audit Committee and Nominating and Governance Committee. |
(4) | Alok Maskara served as Chief Executive Officer and Executive Director during fiscal year 2022. He elected
to leave the Company, effective May 6, 2022, in pursuit of another opportunity. |
(5) | David Landless served as a Non-Executive Director during fiscal year 2022. He did not seek re-election
at the 2022 Annual General Meeting and stepped down from the Board, effective June 8, 2022.
|
| | 2023 PROXY STATEMENT |
ROLE |
The Audit Committee oversees
the Company's accounting, financial reporting, and internal control policies and procedures. Responsibilities of the Audit Committee include,
among other things, overseeing financial reporting, controls, integrity of the Company’s financial statements, and audit quality
and performance; monitoring and overseeing the independence and performance of our independent auditor, with responsibility for the selection,
evaluation, remuneration, and, if applicable, discharge of such independent auditors; approving, in advance, all of the audit and non-audit
services provided to the Company by the independent auditor; facilitating open communication among our Board, senior management, internal
audit, and the independent auditor; and overseeing our enterprise risk management and financial compliance programs.
A
full description of the Committee’s role is set forth in the Audit Committee Charter, available at https://www.luxfer.com/investors/governance/. |
MEMBERS |
Lisa Trimberger (Chair as
of April 2020), Richard Hipple (effective November 2018), Clive Snowdon (effective August 2016), and Sylvia A. Stein (effective August
2022).
The Board has affirmatively
determined that all members of the Audit Committee are independent in accordance with the NYSE listing standards and SEC regulations. |
REPORT |
The Audit Committee Report can be found under the section entitled “2022 Audit Committee Report” on page 84 of this Proxy Statement. |
FINANCIAL
LITERACY AND EXPERTISE |
The Board has determined that Lisa Trimberger, Richard Hipple, Clive Snowdon, and Sylvia A. Stein are financially literate under NYSE rules and listing standards. The Board has further determined that Lisa Trimberger and Clive Snowdon qualify as financial experts pursuant to SEC standards. |
NOMINATING AND GOVERNANCE COMMITTEE |
ROLE |
The Nominating and Governance
Committee advises the Board on matters relating to corporate governance, Board structure, and Board composition. Responsibilities include,
among other things, establishing criteria for Director candidates and identifying individuals for nomination to become Directors, including
engaging advisors to assist in the search process where appropriate, and considering potential candidates recommended by shareholders;
developing plans and making recommendations in relation to the organization, composition, membership terms, and meeting structure of the
Board and its committees; overseeing and making recommendations regarding executive succession planning; administering the annual performance
evaluation of the Board and its committees; overseeing Luxfer's corporate governance and compliance structure and practices; and overseeing
and recommending to the Board changes to our Corporate Governance Guidelines, Committee Charters, and other governing instruments.
A
full description of the Committee’s role is set forth in the Nominating and Governance Committee Charter, available at https://www.luxfer.com/investors/governance/. |
MEMBERS |
Clive Snowdon (Chair
since April 2020), Patrick Mullen (effective January 2022), Sylvia A. Stein (effective August 2022), and David Landless (through June
2022).
The Board has affirmatively
determined that all members of the Nominating and Governance Committee are independent in accordance with the NYSE listing standards and
SEC regulations. |
| | 2023 PROXY STATEMENT |
ROLE |
The Remuneration Committee
sets and administers the policies that govern executive, director and senior management compensation. Responsibilities of the Remuneration
Committee include, among other things, evaluating Executive Officer and senior management performance; establishing and administering
executive compensation, including base salaries, annual cash incentives, and equity awards; reviewing and approving the Executive Compensation
Discussion and Analysis included in the annual Proxy Statement; recommending actions regarding the Chief Executive Officer's compensation
for approval by the Non-Executive Directors of our Board; approving individual compensation actions for all Executive Officers other than
the CEO; and overseeing the Company’s human capital practices as such practices related to the Company’s broader ESG strategy.
A
full description of the Committee’s role is set forth in the Remuneration Committee Charter, available at https://www.luxfer.com/investors/governance/. |
MEMBERS |
Richard Hipple (Chair as of
November 2018), Patrick Mullen (effective January 2022), and Lisa Trimberger (effective September 2019).
The Board has affirmatively
determined that all members of the Remuneration Committee are independent in accordance with the NYSE listing standards and SEC regulations. |
REPORT |
The Remuneration Committee Report can be found
under the section entitled “2022 Remuneration Committee Report” on page 46 of this Proxy Statement.
Additionally,
the Directors’ Remuneration Report is available on our website at https://www.luxfer.com/investors/reports-and-presentations/annual-reports/. |
REMUNERATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
No member of the Remuneration Committee is involved in a relationship requiring disclosure as an interlocking Director/Executive Officer or otherwise under Item 404 of Regulation S-K. |
INDEPENDENT COMPENSATION CONSULTANT |
The Remuneration Committee engaged Meridian Compensation Partners LLC as its independent compensation consultant in 2022. Additional information regarding Meridian’s role and engagement can be found under the sub-section entitled “Compensation Governance and Processes” on page 53 of this Proxy Statement. |
| | 2023 PROXY STATEMENT |
Our director compensation program
reflects our belief that a significant portion of the Directors’ compensation should be tied to long-term growth in shareholder
value. Director compensation is recommended by the Remuneration Committee and approved by the Board of Directors. We use a combination
of annual retainer fees and equity-based incentive awards to attract and retain qualified Directors.
The Remuneration Committee's annual
compensation review includes a periodic analysis of data, comparing the Company's director compensation levels against a peer group of
publicly held companies. In conducting such review, the Remuneration Committee may utilize publicly available market data, compensation
survey data, and advice provided by compensation consultants. The Remuneration Committee then reaches a recommendation regarding our director
compensation program and the compensation paid to our Directors. The Remuneration Committee's recommendation is subsequently provided
to the full Board for review and final approval.
In 2022, Meridian, the Remuneration
Committee’s independent compensation consultant, provided the Committee with a benchmark study, as well as advice and recommendations
on the composition of the peer group and competitive data used for benchmarking our director compensation program. The Remuneration Committee
used the information provided by Meridian, as well as other trend data, to reach an independent recommendation regarding the compensation
paid to our Directors. This recommendation was provided to the full Board for review and final approval.
In 2022, the annual retainer payable
to Non-Executive Directors, not including the Board Chair, for service on Luxfer’s Board of Directors and its committees was US$82,000.
The annual retainer payable to the Board Chair for service on Luxfer’s Board of Directors and its committees was US$115,000. Andy
Butcher, our current CEO, and Alok Maskara, our former CEO, were the only Executive Directors in 2022. They received no separate compensation
for their Board service. Directors do not receive additional fees for meeting attendance or service on Board committees. Following the
Remuneration Committee's compensation review, the Board did not implement an increase to the annual retainers paid to Non-Executive Directors
in 2022 or 2023.
Director equity awards are designed
to (i) align the interests of Luxfer's Directors with the interests of the Company's shareholders, (ii) act as a retention tool, (iii)
promote sound corporate governance, and (iv) demonstrate a commitment to the Company. Equity awards provided to Non-Executive Directors
are granted under the Luxfer Holdings PLC Non-Executive Directors Equity Incentive Plan (“EIP”). The plan under which awards
are granted to Executive Directors is the Luxfer Holdings PLC Long-Term Umbrella Incentive Plan (“LTIP”). UK-based Executive
Directors are eligible to participate in Luxfer’s UK Share Incentive Plan (“SIP”), which is open to all UK employees
and UK-based Executive Directors. In the US, Luxfer has also established an Employee Stock Purchase Plan (“ESPP”), which is
open to all US employees and US-based Executive Directors.
EIP.
Annual awards are made to Non-Executive Directors under the EIP as part of their fees in accordance with the Directors’ Remuneration
Policy, which was approved by shareholders at the 2022 Annual General Meeting with 97% of votes casted in favor thereof. The value of
the award is defined in the Directors’ Remuneration Policy and, as of 2022, is 100% of the retainer fee paid to a Non-Executive
Director. These awards are made the day after Luxfer's Annual General Meeting each year and vest the day before the following year’s
AGM. Annual awards are typically made as restricted stock units. They are paid out immediately on vesting, together with dividends that
have accumulated during the vesting period. New Non-Executive Directors cannot participate in the annual awards until they have served
six months on the Board of Directors; however, the awards they would have earned from the date of their appointment are added to the next
annual award, provided they are re-elected at the AGM.
LTIP.
The LTIP was adopted as part of Luxfer’s initial public offering in 2012. It is used to grant awards to Executive Directors, Executive
Officers, senior managers, and junior managers. A variety of different awards can be granted under the LTIP. The maximum value of awards
that can be granted to the Executive Director under the LTIP is defined in the Directors’ Remuneration Policy.
| | 2023 PROXY STATEMENT |
SIP.
The purpose of the SIP is to provide benefits to employees, including UK-based Executive Directors and Officers, to give such employees
a continuing stake in Luxfer. Shares awarded under the SIP are allocated based on payroll contributions made by employees of the Company.
ESPP.
The purpose of the ESPP is to provide benefits to employees, including US-based Executive Directors and Officers, so as to give such employees
a continuing stake in Luxfer. Shares awarded under the ESPP are allocated based on payroll contributions made by employees of the Company.
Copies of the above-mentioned EIP,
LTIP, SIP and ESPP are on file with the SEC.
Additionally, Luxfer has established
Stock Ownership Guidelines, which apply to all Directors and provide the Company's expectation as to the minimum number of shares such
Directors should own in the Company. A copy of the Stock Ownership Guidelines can be found on our website at www.luxfer.com/investors/governance/board/.
Further information on the Stock Ownership Guidelines is provided in the section entitled “Security Beneficial Ownership
and Reporting” on page 88.
NON-EXECUTIVE DIRECTOR COMPENSATION TABLE |
The following table summarizes the
compensation that the Company paid for the period ended December 31, 2022 to the Non-Executive Directors serving on our Board of Directors
at any time from January 1, 2022 through December 31, 2022. In 2022, the average total Non-Executive Director compensation, excluding
Sylvia A. Stein who served for only five months of the year, was US$128,894.
|
Retainers
(US$) |
Equity Awards (1) (2)
(US$) |
Total
(US$) |
Patrick Mullen (3) |
106,750 |
— |
106,750 |
Richard Hipple (4) |
82,000 |
55,076 |
137,076 |
Clive Snowdon (5) |
82,000 |
55,076 |
137,076 |
Sylvia A. Stein (6) |
34,167 |
— |
34,167 |
Lisa Trimberger (7) |
82,000 |
55,076 |
137,076 |
David Landless (8) |
49,250 |
77,240 |
126,490 |
| (1) | Represents the fair value of
restricted stock units granted under the EIP in 2021 and which vested on June 7, 2022, at a share price of US$16.51, less the issue cost
of US$1.00 per share, as compensation for their services. |
| (2) | These time-based restricted
stock units carry with them the right to receive accumulated dividends (in shares) during the period of the award. The dividends are not
credited until the award vests. The value of the dividend shares that vested in 2022, less the issue cost of US$1.00 per share, for each
of the Non-Executive Directors were as follows: Richard Hipple US$1,504 (97 shares), Clive Snowdon US$1,504 (97 shares), Lisa Trimberger
US$1,504 (97 shares), and David Landless US$2,125 (137 shares), These values have not been included in the table above. |
| (3) | As of December 31, 2022, Patrick
Mullen had 11,548 unvested restricted stock units. The foregoing figure includes 196 dividends (in shares) accumulated through December
31, 2022. |
| (4) | As of December 31, 2022, Richard
Hipple had 5,067 unvested restricted stock units. The foregoing figure includes 86 dividends (in shares) accumulated through December
31, 2022. |
| (5) | As of December 31, 2022, Clive
Snowdon had 5,067 unvested restricted stock units. The foregoing figure includes 86 dividends (in shares) accumulated through December
31, 2022. |
| (6) | Sylvia A. Stein was appointed
to the Board on August 1, 2022. Her 2022 retainer fee reflects her service from August 1, 2022, the date of appointment, through December
31, 2022. |
| (7) | As of December 31, 2022, Lisa
Trimberger had 5,067 unvested restricted stock units. The foregoing figure includes 86 dividends (in shares) accumulated through December
31, 2022. |
| (8) | David Landless did not seek
re-election at the 2022 Annual General Meeting and stepped down from the Board effective June 8, 2022. His 2022 retainer fee reflects
his service as Board Chair from January 1, 2022 - March 31, 2022 and as a Non-Executive Director from April 1, 2022 - June 8, 2022. |
| | 2023 PROXY STATEMENT |
2022
REMUNERATION COMMITTEE REPORT
The Remuneration Committee has reviewed
and discussed the following Executive Compensation Discussion and Analysis, as required by Item 402(b) of Regulation S-K, with management.
Based upon on such review and discussion, the Remuneration Committee recommended to the Board that the Executive Compensation Discussion
and Analysis be included in this Proxy Statement on Schedule 14A for the Annual General Meeting, to be filed with the SEC pursuant to
Section 14(a) of the Securities Exchange Act of 1934, as amended, and incorporated by reference in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2022.
In accordance with the recommendation
of the Remuneration Committee, the Board of Directors approved inclusion of the Executive Compensation Discussion and Analysis in this
Proxy Statement, and its incorporation by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2022.
THE REMUNERATION COMMITTEE
|
|
|
|
|
|
Richard Hipple |
Patrick Mullen |
Lisa Trimberger |
Committee Chair |
Committee Member |
Committee Member |
| | 2023 PROXY STATEMENT |
2022
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
This Executive Compensation
Discussion and Analysis describes Luxfer’s compensation practices and the executive compensation policies, decisions, and actions
of our Remuneration Committee. Through this Executive Compensation Discussion and Analysis and elsewhere in this Proxy Statement, we refer
to the following group of individuals as the “Named Executive Officers.” This Executive Compensation Discussion and Analysis
specifically relates to the compensation earned during 2022 by the current and former Named Executive Officers identified below.
|
|
|
Andy Butcher (1)
Chief Executive Officer |
Stephen Webster (2)
Chief Financial Officer |
|
|
|
|
Peter Gibbons
Vice President & General Manager,
Luxfer Graphic Arts |
Jeffrey Moorefield (3)
Vice President & General Manager,
Luxfer Magtech |
Graham Wardlow
Managing Director,
Luxfer MEL Technologies |
|
|
|
Alok Maskara (4)
Former Chief Executive Officer |
Heather Harding (5)
Former Chief Financial Officer |
|
| (1) | Andy Butcher has served as Chief Executive Officer since May 6, 2022. |
| (2) | Stephen Webster has served as Chief Financial Officer since March 1, 2022. |
| (3) | Jeffrey Moorefield was appointed an executive officer on April 1, 2022. |
| (4) | Alok Maskara resigned as Chief Executive Officer effective May 5, 2022. Per Item 402 of Regulation S-K,
any individual serving as principal executive officer during the last completed fiscal year shall be considered a Named Executive Officer
and included in this Executive Compensation Discussion and Analysis. |
| (5) | Heather Harding retired from employment with the Company effective March 1, 2022. Per Item 402 of Regulation
S-K, any individual serving as principal financial officer during the last completed fiscal year shall be considered a Named Executive
Officer and included in this Executive Compensation Discussion and Analysis. |
| | 2023 PROXY STATEMENT |
The following section provides background
on our Named Executive Officers, other than Andy Butcher, Luxfer’s Chief Executive Officer, about whom information is provided in
the section entitled “Director Biographical Information” with respect to the election of Directors on page 24.
|
Stephen Webster
Chief Financial Officer
Age: 51
Stephen Webster was appointed Chief Financial Officer
effective March 1, 2022. From September 2016 to March 2022, Mr. Webster served as Luxfer’s Corporate Controller. Prior to joining
Luxfer, Mr. Webster held various finance leadership roles at global businesses, serving as Head of Global Accounting at Seadrill Limited,
an OSE-listed offshore drilling company, and ERP Business Integration Lead, IFRS Project Lead, and Financial Accounting Director at JT
International, a global tobacco company. He has extensive experience in corporate financial management and external reporting under both
US GAAP and IFRS. Mr. Webster is a Chartered Accountant and holds a degree in International Management and Modern Languages from the University
of Bath.
|
|
|
|
Peter Gibbons
Vice President and General Manager, Luxfer Graphic Arts
Age: 52
Peter Gibbons was appointed
Vice President and General Manager of Luxfer Graphic Arts in July 2019. From July 2017 to July 2019, Mr. Gibbons served as Director of
IT and Sourcing. Upon his appointment as Director of IT and Sourcing, Mr. Gibbons became a member of the Executive Leadership Team. Mr.
Gibbons joined Luxfer in 2004 as European Financial Controller of the Magnesium Elektron Alloys business. From 2013 to 2014, he served
as Luxfer’s Group Financial Controller, and from 2014 to 2017, Mr. Gibbons was the Divisional Finance Director of Luxfer’s
Magnesium Elektron Alloys business.
|
|
|
|
Jeffrey Moorefield
Vice President and General Manager, Luxfer Magtech
Age: 59
Jeffrey Moorefield was appointed
Vice President and General Manager of Luxfer Magtech on April 1, 2022, at which time he also became an Executive Officer of the Company.
Mr. Moorefield previously served as Luxfer’s Vice President of Operations from March 2019 to March 2022. Before joining Luxfer,
Mr. Moorefield served as Senior Vice President of Global Operations at Tennant Company, a provider of floor cleaning machines, products,
and services. Prior to that, he served as Global Vice President of Operations for various business segments within Pentair Plc, a provider
of water treatment solutions and sustainable applications. Mr. Moorefield holds a Bachelor of Science degree in Industrial Technology
from Western Kentucky University.
|
| | 2023 PROXY STATEMENT |
|
Graham Wardlow
Managing Director, Luxfer MEL Technologies
Age: 55
Graham Wardlow was appointed Managing
Director of Luxfer MEL Technologies (LMT) in October 2017, following the merger of Luxfer’s MEL Chemicals and Magnesium Elektron
Alloys businesses. The Magnesium Powder’s business was subsequently incorporated into LMT in early 2023. Mr. Wardlow joined Magnesium
Elektron in 1984 and undertook several technical and commercial roles before becoming Managing Director of the Magnesium Elektron Alloys
business in 2008 and Divisional Managing Director of MEL Chemicals in May 2017. Mr. Wardlow holds a degree in Materials Engineering from
Imperial College, University of London, as well as an M.B.A. from Keele University. |
|
|
|
Alok Maskara
Former Chief Executive Officer
Age: 52
Alok Maskara served as Luxfer’s
Chief Executive Officer, and a member of the Board of Directors, from July 1, 2017 to May 5, 2022. Mr. Maskara elected to leave the Company
in pursuit of another opportunity. As of May 5, 2022, he was no longer considered an Executive Officer of Luxfer. Before joining Luxfer,
Mr. Maskara served as President of various business segments at Pentair Plc, a provider of water treatment solutions and sustainable applications,
for eight years. He previously held various leadership positions at General Electric Corporation and McKinsey & Company. Mr. Maskara
holds an M.B.A. from the J.L. Kellogg Graduate School of Management at Northwestern University, an M.S. in Chemical Engineering from the
University of New Mexico, and a Bachelor of Technology degree in Chemical Engineering from the Indian Institute of Technology, Mumbai.
|
|
|
|
Heather Harding
Former Chief Financial Officer
Age: 54
Heather Harding served as
Luxfer’s Chief Financial Officer from January 1, 2018 to March 1, 2022. As of her retirement from Luxfer on March 1, 2022, Ms. Harding
is no longer an Executive Officer of the Company. From 2012 to 2017, Ms. Harding served as Vice President of Finance for Eaton Lighting,
a business unit of Eaton Corporation, a power management company. Prior to that, she was Vice President of Finance for various operating
units within Cooper Industries and Emerson Electric. Ms. Harding is a Certified Public Accountant and holds a Bachelor of Science degree
in Accounting from Southern Illinois University at Carbondale. |
| | 2023 PROXY STATEMENT |
EXECUTIVE COMPENSATION FRAMEWORK |
|
Executive Compensation Philosophy and Objectives
Our goal is to provide executive compensation programs
that:
•
deliver competitive levels of compensation to attract,
motivate, and retain executive talent;
•
align executive
compensation with shareholder interests and long-term
Company value; and
•
tie executive compensation
to Company performance. |
|
Executive Compensation Program Design
Our executive compensation program is designed
to:
•
provide appropriate balance
between short-term and long-term pay and fixed and variable
pay;
•
include multiple components,
each designed consistent with our compensation philosophy, including a base salary, an annual cash incentive, long-term equity awards,
and other benefits;
•
cultivate sustainable
growth and long-term value creation, without imposing unnecessary risks; and
•
reward executives
for achieving financial and strategic objectives. |
|
Executive Compensation Governance and Process
Executive compensation decisions
are made independent from management, subject to Remuneration Committee review, as well as approval and/or ratification by the independent
Non-Executive Directors of the Board. In reviewing and establishing compensation levels and components, we consider the following factors:
•
benchmark and market data for
executives serving in similar positions at peer companies;
•
individual knowledge,
experience, and capabilities of the executives;
•
the executive’s scope of responsibility,
authority, and accountability; and
•
the level of compensation relative to the Company’s
other executives and the Company’s and/or business unit’s size and revenue. |
EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES |
Luxfer seeks to create and maintain
a culture of high performance, teamwork, and accountability. Our executive compensation programs are one of the tools we utilize to accomplish
this objective. Philosophically, we aim to treat our executives fairly when considering factors such as (i) the complexity of their jobs;
(ii) the market for their executive talent; (iii) their individual performance; (iv) the financial and strategic performance of the Company
overall, or where applicable, the executive’s particular business unit; (iv) the need to attract and retain the executives; and
(v) the geographic location of the executive.
The Remuneration Committee believes
that the most effective executive compensation program aligns executive initiatives with our shareholders’ interests. The Committee
seeks to accomplish such alignment by rewarding the achievement of short-term and long-term financial and strategic goals that create
lasting shareholder value. Through regular assessment and revision of the Company’s executive compensation program, the Committee
continues to align executive compensation with Luxfer’s growth and shareholder value creation. In reviewing our executive compensation
philosophy, strategy, and program design and in setting compensation levels for our Named Executive Officers, the Remuneration Committee
considers, among other factors, the key financial and operating metrics that drive Luxfer’s growth and shareholder value; the objectives
of and risks related to our operations and compensation program; and the components and level of executive compensation at companies within
our peer group.
Within that framework, it
is critical that we meet our executive compensation objectives to:
| • | motivate and reward executives for achieving financial and strategic objectives; |
| • | attract and retain high caliber executives; |
| • | align management and shareholder interests by encouraging employee stock
ownership; |
| • | encourage growth and innovation; and |
| • | provide rewards commensurate with individual and Company performance. |
| | 2023 PROXY STATEMENT |
The Remuneration Committee reviews
total compensation for executives and the relative levels of each compensation component against these objectives. We expect that our
executives will, in aggregate, be paid fairly compared to the compensation peer group approved by the Remuneration Committee and considering
Company performance, individual performance, tenure, and experience.
EXECUTIVE COMPENSATION PROGRAM DESIGN |
Our
executive compensation program is designed to motivate behaviors that cultivate sustainable growth and shareholder value creation, provide
rewards commensurate with individual and Company performance, reward executives for achieving financial and strategic objectives, and
provide an appropriate balance between short-term and long-term and fixed and variable pay. The majority of our Named Executive Officers’
compensation is variable and contingent on performance. In designing our executive compensation program, establishing performance measures,
and setting executive compensation packages, we conduct benchmarking analyses, no less than every three years, to ensure compensation
is competitive with market practices. Total compensation packages, as well as base salary, annual cash incentive opportunities, and target
equity awards, are evaluated against the 25th and 50th percentile of comparative peer group companies. While target
incentive opportunities are set by reference to a comparable market rate, our incentive plans provide for payouts to be based upon performance,
which can result in payouts above or below target levels. Further information regarding our 2022 executive compensation program is provided
in the section entitled “2022 Executive Compensation Program” starting on page 53.
2022 EXECUTIVE COMPENSATION
STRUCTURE
| (1) | Reflects 2022 annualized compensation for Andy Butcher, current Chief Executive Officer, as if Mr. Butcher
had served in such role for the entirety of fiscal year 2022. Excludes compensation paid to Alok Maskara, former Chief Executive Officer,
in 2022. In accordance with the terms of his employment contract, Mr. Maskara received compensation upon his resignation from the Company. |
| (2) | Calculated as an average of Stephen Webster’s, Peter Gibbons’, Jeffrey Moorefield’s,
and Graham Wardlow’s compensation for the entirety of fiscal year 2022. Excludes compensation paid to Heather Harding, former Chief
Financial Officer, in 2022. While Ms. Harding received compensation consistent with the above-detailed structure in January and February
2022, she was paid a flat rate retainer as an advisor to the Chief Financial Officer for the remainder of fiscal year 2022. |
| | 2023 PROXY STATEMENT |
COMPENSATION GOVERNANCE AND PROCESSES |
Remuneration Committee
(Independent) |
Non-Executive Directors
(Independent) |
Compensation Consultant
(Independent) |
Shareholders and Other Key Stakeholders |
• Evaluate
and approve incentive plan design and performance measures relevant to executive compensation
• Review and approve the compensation of each Named
Executive Officer, other than the CEO
• Recommend the approval of CEO compensation to independent
Non-Executive Directors |
• Review
and approve the compensation of the CEO
• Review and ratify the compensation of the other Named
Executive Officers
• Review
and ratify the Company’s executive compensation framework and components |
• Provides advice on executive compensation programs,
competitive compensation levels, peer groups, emerging trends, and best practices
• Provides design advice for incentive compensation
plans and other compensation programs
|
• Provide feedback on various executive compensation
practices and governance during periodic meetings with management, which is reviewed and discussed by the Remuneration Committee and
independent Non-Executive Directors of the Board
|
Remuneration
Committee. The Remuneration Committee is responsible for overseeing the establishment, maintenance, administration, and periodic
review and evaluation of the Company’s compensation programs and policies that govern executive compensation. The Committee determines,
and recommends to the Board, the Company’s framework or broad policy on executive compensation, the cost of such framework, and
the specific compensation packages for each of the Company’s executives. Among other things, the Remuneration Committee is responsible
for:
| • | reviewing and approving executive compensation packages; |
| • | making recommendations to the Non-Executive Directors of the Board with
respect to our CEO’s compensation; |
| • | overseeing our annual cash incentive program, including the establishment
of appropriate performance measures; |
| • | overseeing our long-term equity compensation plans; |
| • | approving awards to executives under the foregoing plans; |
| • | annually evaluating risk considerations associated with our executive compensation
program; and |
| • | annually approving and/or ratifying all compensation decisions for the
Named Executive Officers included in the Summary Compensation Table below. |
The Remuneration Committee
evaluates the performance of our Chief Executive Officer and the performance of our other executive officers. Our CEO assists the Remuneration
Committee in evaluating the performance of our other executive officers, including the Named Executive Officers other than the CEO. Our
CEO does not participate in certain portions of Remuneration Committee or Board meetings when his compensation is discussed and determined.
Based on these assessments, the members of the Remuneration Committee, each of whom is an independent director, make the final compensation
decisions for the Named Executive Officers other than the CEO, and make recommendations to the Board on the CEO’s compensation.
Management.
The Company’s CEO and CFO work closely with the Remuneration Committee in administering the executive compensation program
and attend meetings of the Committee. Specifically, the CEO and CFO are involved in the design and implementation of the executive compensation
program, making recommendations to the Remuneration Committee on compensation components, performance measures, equity awards, and executive
compensation packages. The CEO assists the Remuneration Committee in evaluating performance of the Company’s executive officers
and makes recommendations to the Committee regarding compensation for executive officers other than himself.
| | 2023 PROXY STATEMENT |
Non-Executive Directors.
The independent Non-Executive Directors of the Board make decisions with respect to and approve the CEO’s compensation.
They also review and ratify (i) the Company’s executive compensation framework and compensation components and (ii) the compensation
of the Company’s executive officers, including the Named Executive Officers other than the CEO.
Independent
Compensation Consultant. The Committee’s independent compensation consultant, Meridian
Compensation Partners LLC (“Meridian”), provides research, survey information and analysis, incentive design expertise, and
other analyses related to executive compensation levels and design. Meridian also updates the Committee on trends and developments related
to executive compensation practices and provides its views to the Committee on best practices when evaluating executive compensation programs
and policies. Meridian was retained by the Remuneration Committee in 2022 and provides advice at times the Remuneration Committee
deems appropriate. Any other work undertaken by Meridian for the Company must be approved by the Remuneration Committee. The Remuneration
Committee assessed the independence of Meridian and determined that Meridian is independent and does not have any conflict of interest.
In 2022, the fees paid by the Committee to Meridian were nominal and did not exceed prescribed limits requiring further disclosure.
Shareholders
and Other Key Stakeholders. At our 2022 Annual General Meeting, 94% of votes cast were in favor of approving the compensation
paid to our Named Executive Officers in 2021, and 99.6% of votes cast were cast in favor of holding a “Say-on-Pay” vote annually,
consistent with the Board’s recommendation. We meet with our key investors throughout the year to understand the topics that matter
most to them as they relate to executive compensation. In these meetings, we seek the views of our shareholders and other stakeholders
with respect to our existing policies and practices. Overall, investors engaged in 2022 reacted positively to our executive compensation
governance and programs, noting the continued alignment between executive compensation and the Company’s long-term financial and
strategic goals, particularly growth and the long-term EPS goal of $2.00 or more by 2025 announced in 2022. We will continue to utilize
rigorous governance processes to monitor and evaluate our executive compensation programs, as well as implement best practices in compensation
governance. We welcome feedback on our executive compensation practices and will continue to engage with our investors and stakeholders
in 2023.
2022 EXECUTIVE COMPENSATION PROGRAM |
The 2022 target compensation for
our Named Executive Officers is shown in the table below. The target compensation figures detailed in this table were calculated as if
the Named Executive Officers – particularly Andy Butcher, Stephen Webster, Alok Maskara, and Heather Harding – had served
in their respective CEO and CFO roles for the entirety of fiscal year 2022. These total target compensation figures do not include indirect
forms of compensation, such as retirement and other benefits.
|
|
|
Annual Cash Incentive |
|
Equity Awards |
|
|
Base
Salary |
Perquisites |
Target
(% of salary) |
Target
(US$) |
|
Target
(% of salary) |
Target
(US$) |
Total Target
Compensation |
Andy Butcher |
$615,000 |
$40,000 |
100% |
$615,000 |
|
180% |
$1,107,000 |
$2,377,000 |
Stephen Webster (1) |
$246,660 |
$24,666 |
50% |
$123,330 |
|
65% |
$160,329 |
$554,985 |
Peter Gibbons |
$195,000 |
$20,000 |
40% |
$78,000 |
|
40% |
$78,000 |
$371,000 |
Jeffrey Moorefield |
$206,000 |
$20,000 |
40% |
$82,400 |
|
40% |
$82,400 |
$390,800 |
Graham Wardlow (1) |
$258,993 |
$24,666 |
40% |
$103,597 |
|
65% |
$168,345 |
$555,601 |
Alok Maskara |
$736,000 |
$40,000 |
100% |
$736,000 |
|
180% |
$1,324,800 |
$2,836,800 |
Heather Harding |
$375,000 |
$20,000 |
65% |
$243,750 |
|
100% |
$375,000 |
$1,013,750 |
| (1) | Stephen Webster and Graham
Wardlow are employed in the United Kingdom and paid in GBP sterling. The foregoing amounts have been translated into US dollars at the
following average exchange rate for 2022: £1: US$1.2333. |
| | 2023 PROXY STATEMENT |
In setting compensation for our
executives, including our Named Executive Officers, the Remuneration Committee uses competitive compensation data from a total compensation
study of selected peer companies and other relevant survey sources to inform its decisions about overall compensation levels and specific
compensation components. Additionally, the Committee uses multiple reference points when establishing target compensation levels. The
Committee applies judgement and discretion in establishing target compensation levels, considering not only competitive market data but
also factors such as company, business unit, and individual performance; scope of responsibility; critical needs and skill sets; experience;
leadership potential; succession planning; and the geographic location of the executive. In setting compensation for 2022, the Committee
referenced the output from the total compensation analysis and benchmarking study performed by Meridian in December 2020. In its analysis,
Meridian utilized data from 2020 proxy statements and other public sources related to a group of peer companies (the “Comparator
Group”) to provide a comparison between market pay levels and the target total compensation of Luxfer’s executives.
Based on Meridian's review and recommendations,
as well as the foregoing criteria, the Committee used the following Comparator Group for benchmarking purposes:
• Chart Industries, Inc. |
• Kadant, Inc. |
• SPX FLOW, Inc. |
• Ciner Resources LP |
• Kaiser Aluminum Corporation |
• Standex International Corporation |
• ESCO Technologies, Inc. |
• L.B. Foster Company |
• The Gorman-Rupp Company |
• Haynes International, Inc. |
• Lydall, Inc. |
• TimkenSteel Corporation |
• Helios Technologies, Inc. |
• Quaker Chemical Corporation |
• TriMas Corporation |
All companies included in the Comparator
Group were (i) publicly traded on a major exchange; (ii) similar in business size to our business units and global in nature; and (iii)
engaged in the same or a similar industry to ours. As provided by Meridian as part of this total compensation study completed in December
2020, the Comparator Group companies had revenues ranging from approximately US$370 million to US$1,389 million, with median revenues
of approximately US$765 million. On a similar basis, Luxfer’s revenue for the year ended December 31, 2020 was US$324.8 million.
Please note that this Comparator Group was used only for purposes of a total compensation study. This Comparator Group, and the data related
thereto, should not be referenced for purposes of a valuation or a market capitalization comparison.
While the Remuneration Committee
generally conducts comprehensive total compensation studies for all executives on a triennial basis, additional analyses and studies were
commissioned in 2022 upon the appointment of Andy Butcher as Chief Executive Officer and Stephen Webster as Chief Financial Officer. In
setting Andy Butcher’s 2022 target compensation, the Remuneration Committee considered the target pay levels of the then-current
CEO; reasonable adjustments based on the factors noted above, including experience, location, and market; the findings of Meridian’s
2020 benchmark study; and the target compensation for CEOs of companies within Luxfer’s GICS code as of March 1, 2022. Many of the
Comparator Group companies referenced in Meridian’s study were also included in Luxfer’s GICS code as of March 1, 2022. The
companies within Luxfer’s GICS code as of March 1, 2022 included the following:
• Albany International Corp. |
• Greenland Technologies Holding Corporation |
• Perma-Pipe International Holdings, Inc. |
• Barnes Group Inc. |
• Helios Technologies, Inc. |
• Proto Labs, Inc. |
• Chart Industries, Inc. |
• Hillman Solutions Corp. |
• Omega Flex, Inc. |
• CIRCOR International, Inc. |
• Hurco Companies, Inc. |
• RBC Bearings Incorporated |
• Columbus McKinnon |
• Kadant Inc. |
• Standex International Corporation |
• Energy Recovery, Inc. |
• Kornit Digital Ltd. |
• SPX Corporation Industrial |
• Enerpac Tool Group Corp. |
• L.B. Foster Company |
• SPX FLOW, Inc. |
• EnPro Industries, Inc. |
• Mayville Engineering Company, Inc. |
• Tennant Company |
• ESCO Technologies, Inc. |
• Mueller Water Products, Inc. |
• The Eastern Company |
• Evoqua Water Technologies Corp. |
• Nisun Intl. Enterprise Development Group Co. |
• The Gorman-Rupp Company |
• Fathom Digital Manufacturing Corporation |
• NN, Inc. |
• The L.S. Starrett Company |
• Graham Corporation |
• Park-Ohio Holdings Corp. |
|
| | 2023 PROXY STATEMENT |
These companies had revenues ranging
from approximately US$100 million to US$1,529 million, with median revenues of approximately US$710 million. On a similar basis, Luxfer’s
revenue for the year ended December 31, 2021 was US$374.1 million.
In setting Stephen Webster’s
2022 target compensation, the Remuneration Committee considered the target pay levels of the then-current CFO; adjustments based on the
factors noted above, including experience, location, and market; the findings of Meridian’s 2020 benchmark study; and a separate
study commissioned from Meridian. This study focused on target compensation for UK-based CFOs of publicly traded companies. The comparator
companies set forth in this study included Exscientia plc, Argo Blockchain plc, Adaptimmune Therapeutics plc, Vaccitech plc, Venator Materials
PLC, and Mereo BioPharma Group plc. These companies had revenues ranging from approximately US$200 million to US$2,300 million, with median
revenues of approximately US$650 million. On a similar basis, Luxfer’s revenue for the year ended December 31, 2021 was US$374.1
million.
In order to assess the appropriateness
and effectiveness of Luxfer's 2022 executive compensation program, Luxfer's overall financial, strategic, and operational performance
is evaluated.
|
2022 Financial Performance |
|
Strategy and Portfolio |
|
Shareholder Value |
● 13.2% net sales increase
● 19.2% organic revenue growth 3
● Adjusted EPS increase of $0.07 3
● GAAP
net income increase of $0.11 per diluted share
● Reduced pension deficit from $91 million in 2014
to near-zero in 2022
● Net debt to EBITDA ratio of 1.1x 3
|
● Pursuing a strategy of Profitable Growth
● Launched Luxfer Business System – a critical
tool to realize growth potential embedded in our business
● Focused on attractive end markets with secular drivers
● Manufacturer of market leading products
● Value-add niche applications
|
● Returned $25 million to shareholders via dividends
and share repurchases
● Progressed towards long-term EPS goal of $2.00 or
more by 2025
● Entered final phase of Transformation Plan to simplify
Company structure and generate cost savings, priming Company for future growth
|
|
Innovation |
|
Environment, Social and Governance |
● Capital
redeployment in new product innovation
● New cylinder products developed in green energy and
alternative fuels
● New Elektron products accelerated in the medical
and electronic end-markets |
● Published 2022 Sustainability Report, achieving ISS
QualityScores of 1 in each category and improved rating of AA from MSCI
● Invested in our people through introduction of development
programs and other opportunities
● Expanded DEI recruitment practices and increased
diversity training
● Executed several successful leadership and Board
transitions
|
In 2022, our Named Executive Officers
continued to show exceptional performance and leadership in navigating the Company through post-pandemic recovery, including unprecedented
supply chain disruptions and increased raw material costs. The Named Executive Officers executed on long-term strategy, having launched
the Luxfer Business System in 2022, and completed various near-term and long-term initiatives to unlock sustainable growth, progressing
toward our long-term EPS goal of $2.00 or more by 2025. Notwithstanding their significant accomplishments, the impact of these external
disruptions led to a meaningful reduction in Named Executive Officer compensation in 2022, particularly annual cash incentives for most
executives.
_____________________________
3 Organic revenue
growth, adjusted earnings per share (EPS), and EBITDA are non-GAAP measures. For a reconciliation and explanation of these non-GAAP measures,
see Appendix A.
| | 2023 PROXY STATEMENT |
2022 COMPENSATION COMPONENTS |
Our compensation programs
are designed to provide an appropriate balance of short and long-term compensation, fixed and variable pay, and cash and equity-based
compensation, as well as reflect our philosophy of providing pay for performance. Our Named Executive Officers’ total compensation
in fiscal 2022 was comprised of:
| ● | an
annual cash incentive; |
| ● | retirement
benefits; and |
| ● | other
benefits, such as various insurance coverages, employee share purchase plan participation, and vacation and holiday entitlement. |
The table set forth below provides an overview of the key components
of our Named Executive Officers’ 2022 compensation. Further information regarding each component is provided in this section.
|
Base Salary |
Annual Cash incentive |
Equity Awards |
What? |
Cash |
Cash |
Equity |
When? |
Annually |
Annually |
Time-Based (40%)
●
4-year vesting period
Performance-Based (60%)
●
3-year performance period, with immediate grant and
vesting on the third anniversary of the award date |
How?
Measures, Weight, and Payout |
Consideration of various factors, including market rate, experience, business unit/company and individual performance, and critical skills |
Financial Performance (80-100%)
(1)
●
Management EBITA (40-50%)
●
Cash Conversion (40-50%)
Strategic & Operational
Objectives (0-20%) (1)
Comprised of various strategic and operational
objectives included in the Balanced Scorecard
Payout: 0-200% Target |
Time-Based
●
Value delivered through long-term share price performance
Performance-Based
●
Earnings Per Share (EPS) Growth (24%)
●
Total Shareholder Return (TSR) (36%)
Payout: 0-180% Target |
Why? |
Provides competitive rates of fixed pay to attract and retain executives |
Attracts executives and incentivizes high performance by linking Company and/or business unit, and in some cases individual, performance with compensation |
Time-Based
●
Promotes retention of key executives
and aligns interests with shareholders
Performance-Based
●
Creates strong alignment with shareholder
interests by linking long-term compensation to key performance metrics and share price. Provides a balance of internal and market-based
measures to assess long-term performance.
|
_____________________
| (1) | The CEO’s and CFO’s
annual cash incentives are based solely on financial performance measures, with Management EBITA and Cash Conversion weighted equally
at 50%. The other Named Executive Officers’ annual cash incentives are based on both financial (80%) and strategic
and operational performance measures (20%). For these Named Executive Officers, Management EBITA and Cash Conversion are weighed equally
at 40%, and each of said Named Executive Officers’ performance against strategic and operational objectives is weighted at 20%. |
| | 2023 PROXY STATEMENT |
Annually, the Committee reviews
total compensation for Named Executive Officers, and the relative levels of each of these forms of compensation, against the objectives
of the compensation program to (i) align the interests of the Named Executive Officers with those of our shareholders; (ii) attract, retain,
and incentivize talented executives; (iii) provide competitive compensation that motivates and rewards the Named Executive Officers for
achieving financial and strategic objectives; and (iv) provide compensation commensurate with performance.
We provide each Named Executive
Officer with a fixed base salary. Base salaries are set upon appointment to a specific role and periodically adjusted for performance,
scope of responsibility, inflation, and other factors. In setting base salaries, the Remuneration Committee generally references comparable
positions at peer companies based on available market data, which includes published survey data and proxy statement data for our Comparator
Group. The Committee considers compensation at comparable companies as one of many factors in setting base salaries. Differences in base
salaries among the Named Executive Officers are based on numerous factors, such as competitive conditions for the Named Executive Officer’s
position within the Comparator Group and in the broader employment market, as well as the Named Executive Officer’s level of responsibility,
experience, location, business unit size and revenue, and individual performance.
In December 2021, the Committee
reviewed the Named Executive Officers’ base salaries in accordance with its normal procedures. Following this review, the Committee
implemented a 3% salary increase to the base salaries of Andy Butcher (in his previous role as President of Luxfer Gas Cylinders), Peter
Gibbons, Jeffrey Moorefield, Graham Wardlow, Alok Maskara, and Heather Harding. This broad-based salary increase was intended to address
inflation. Effective January 1, 2022, the Committee approved a 33% increase to Stephen Webster’s base salary upon his assumption
of the CFO role. Similarly, Andy Butcher received a 70% annualized increase to his base salary upon his appointment as CEO, resulting
in a 48% increase in base salary paid year-over-year. Further information regarding the Committee’s considerations when setting
Mr. Webster’s and Mr. Butcher’s 2022 target compensation upon appointment to their respective CFO and CEO roles is included
in the section entitled “Comparative Framework” on page 54, The Named Executive Officers’ 2021 and 2022 base salaries
are further detailed in the table below.
|
|
2021 Base
Salary
(US$) |
2022 Base Salary
(US$) (1) |
Increase
(%) |
Andy Butcher |
Chief Executive Officer
(April 1-December 31, 2022) (2) |
— |
$615,000 |
70% |
President, Luxfer Gas Cylinders
(January 1-March 31, 2022) (2) |
$362,000 |
$372,000 |
3% |
Stephen Webster (3) |
Chief Financial Officer |
$203,737 |
$246,660 |
33% (4) |
Peter Gibbons |
Vice President and General Manager
Luxfer Graphic Arts |
$150,000 |
$195,000 |
3% (5) |
Jeffrey Moorefield |
Vice President and General Manager
Luxfer Magtech |
$200,000 |
$206,000 |
3% |
Graham Wardlow (3) |
Managing Director
Luxfer MEL Technologies |
$275,320 |
$258,993 |
3% (6) |
Alok Maskara |
Former Chief Executive Officer
(January 1-May 31, 2022) (7) |
$715,000 |
$736,000 |
3% |
Heather Harding |
Former Chief Financial Officer
(January 1-February 28, 2022) |
$365,000 |
$375,000 |
3% |
_____________________
| (1) | Represents annualized base
salary. The base salaries actually paid to the Named Executive Officers in 2021 and 2022 are set forth in the Summary Compensation Table
on page 75. |
| (2) | Although Andy Butcher’s
appointment as Chief Executive Officer took effect May 6, 2022, his base salary was increased effective April 1, 2022. |
| (3) | Stephen Webster and Graham
Wardlow are employed in the United Kingdom and paid in GBP sterling. The foregoing amounts have been translated into US dollars at the
average exchange rates for each of the years: 2021: £1: US$1.3766 and 2022: £1: US$1.2333. |
| (4) | Represents an increase in
base salary from £150,000 to £200,000 per annum, which took effect January 1, 2022, as a result of promotion to Chief Financial
Officer role. |
| (5) | Results in a 3% increase
to fixed, base pay. In 2021, Peter Gibbons received perquisites in the amount of $15,000 and an expatriate allowance of $50,000. The expatriate
allowance was discontinued in 2022, with Mr. Gibbons’ base salary increasing by $45,000 and his prerequisite allowance increasing
by $5,000 to $20,000. |
| (6) | Represents an increase in
base salary from £205,000 to £210,000 per annum. |
| (7) | Although Alok Maskara resigned
as Chief Executive Officer effective May 5, 2022, he was paid his base salary through May 31, 2022, representing accrued but unused vacation
entitlement. |
| | 2023 PROXY STATEMENT |
The goal of Luxfer’s annual
cash incentive is to retain, motivate, and incentivize high caliber individuals and promote the achievement of Luxfer's key financial
and strategic goals by:
| ● | providing above-market award opportunities for superior performance; |
| ● | placing emphasis on combined company-wide and business unit results; |
| ● | recognizing, as appropriate, individual and non-financial factors that
contribute to Luxfer’s overall success; and |
| ● | emphasizing teamwork and collaboration across all business units. |
To achieve these objectives, cash
incentives are tied to financial and, in the case of Named Executive Officers other than the CEO and CFO, individual performance measures
aligned with the Company’s long-term strategy.
2022 Target Cash Incentives
The Remuneration Committee sets
a target cash incentive for each Named Executive Officer annually. The target cash incentive represents a percentage of each Named Executive
Officer’s base salary. When setting the target cash incentive for each Named Executive Officer, the Remuneration Committee considers
Meridian’s recommendations, the median target cash incentives for the Comparator Group, relevant survey data, and – in the
case of Named Executive Officers other than the CEO – the recommendations of the CEO. The target cash incentive for each Named Executive
Officer varies depending on a wide range of factors, including competitive conditions for the Named Executive Officer’s position
within the Comparator Group and in the broader employment market, as well as the Named Executive Officer’s performance, level of
responsibility, and experience.
Following the completion of the
fiscal year, the target cash incentive is used by the Remuneration Committee, together with its assessment of Company performance against
established performance measures (the “Performance Payout Factor”), to determine the cash incentive payout. The Performance
Payout Factor can range from 0% to 200%.
The 2022 target cash incentives
for each Named Executive Officer (as a percentage of salary and its value in US dollars) is shown below, together with the maximum cash
incentive available.
|
Target Cash Incentive
(% of Salary) |
Target Cash Incentive
(US$) |
Maximum Cash Incentive
(US$) |
Andy Butcher |
100% |
554,250 (1) |
1,108,500 |
Stephen Webster |
50% |
120,450 |
240,900 |
Peter Gibbons |
40% |
78,000 |
156,000 |
Jeffrey Moorefield |
40% |
82,400 |
164,800 |
Graham Wardlow |
40% |
101,178 |
202,356 |
Alok Maskara |
100% |
736,000 |
1,472,000 |
Heather Harding |
65% |
243,750 |
487,500 |
_____________________
| (1) | In accordance with Mr. Butcher’s
employment contract, his 2022 cash incentive was calculated using the base salary paid to him as President of Luxfer Gas Cylinders for
January 1 - March 31, 2022 ($372,000 per annum, as pro-rated for said period), plus the base salary paid to him as Chief Executive Officer
for April 1 - December 31, 2022 ($615,000 per annum, as pro-rated for said period). As such, the base salary used to calculate his 2022
target cash incentive differs from the base salary actually paid to Mr. Butcher in 2022, as an increase in base salary upon his assumption
of the CEO role did not take effect until May 1, 2022. |
| | 2023 PROXY STATEMENT |
2022 Cash Incentive Measures
For 2022, the Remuneration Committee
maintained Management EBITA and Cash Conversion as the financial measures applicable to the 2022 cash incentive. With respect to Named
Executive Officers other than the CEO and CFO, the Remuneration Committee also measured said Named Executive Officers’ performance
against strategic and operational objectives. Strategic and operational objectives are set by the CEO and based on each Named Executive
Officer’s performance against Balanced Scorecard Metrics (further described below). When calculating the annual cash incentive,
Management EBITA and Cash Conversion are measured at a corporate (group) level for corporate Named Executive Officers (in this case, the
CEO and CFO) and at a business unit level for all other Named Executive Officers. (5)
|
Measure |
Description |
Weight
(%) |
CEO and CFO |
Management EBITA 4 |
Calculated as operating income adjusted for equity income/(loss) of unconsolidated affiliates, qualifying restructuring charges, impairment charges, acquisition-related charges/credits, amortization of finance costs, the unwind of deferred consideration, amortization of acquired intangibles, share-based compensation charges, and accounting impacts of stock revaluations. |
50% |
Cash
Conversion 4 |
Calculated as the ratio of Management EBITA to adjusted operating cash flow. Adjusted operating cash flow is reconciled from Management EBITA by adding back depreciation; loss/(gain) on the disposal of property, plants, and equipment; and changes in assets and liabilities net of effects of business acquisitions, non-restructuring capital expenditures, equity income of unconsolidated affiliates, and UK pension deficit funding contributions. Threshold, Target, and Maximum Cash Conversion levels may be adjusted in the event that Management EBITA exceeds the Maximum level, in which case Cash Conversion performance targets decrease at a ratio of 1:2. |
50% |
|
|
|
|
Business Unit Leaders |
Management EBITA 4 |
As outline above. |
40% |
Cash
Conversion 4 |
As outline above. |
40% |
Strategic and Operational
Objectives |
Strategic and operational objectives
for each of the Business Unit Leaders are determined and measured against Balanced Scorecard Metrics. The Balanced Scorecard Metrics for
2022 included three separate scorecards:
Growth Scorecard.
The Growth Scorecard includes the following metrics: a net promoter score, sales pipeline value as a percent of revenue, and new product
introduction sales value as a percent of sales revenue.
Operations Scorecard.
The Operations Scorecard includes metrics on quality, delivery, cost, and cash.
Human Capital Scorecard.
The Human Capital Scorecard includes metrics on voluntary turnover, employee development processes, and development plans implemented.
ESG
Scorecard. The ESG Scorecard includes metrics on
environmental performance and initiatives, specifically in relation to our 2025 environmental goals; safety; human capital; charitable
and community involvement; and compliance and governance. |
20% |
_____________________________
4 Management EBITA,
Cash Conversion, and adjusted operating cash flow are non-GAAP measures. For a reconciliation of these non-GAAP measures, see Appendix
A.
| | 2023 PROXY STATEMENT |
Chief
Executive Officer and Chief Financial Officer. Each year, the Remuneration Committee reviews and sets, and the Board approves,
the Management EBITA and Cash Conversion targets applicable to the CEO and CFO for the following year. The performance measures, together
with the corresponding Threshold, Target, and Maximum levels, applicable to our CEO and CFO in 2022, and the weight assigned to each performance
measure, were as follows:
|
Performance Payout Factor as a % of Base Salary |
Cash Conversion (1) |
Andy
Butcher
(CEO) |
Stephen Webster
(CFO) |
Alok Maskara
(Former CEO) |
Heather Harding
(Former CFO) |
Threshold = 80% |
25% |
12.5% |
25% |
16.25% |
Target = 90% |
50% |
25% |
50% |
32.5% |
Maximum = 100% |
100% |
50% |
100% |
65% |
Management EBITA (Group) (2) |
|
|
|
|
Threshold = US$49.0 million |
25% |
12.5% |
25% |
16.25% |
Target = US$52.1 million |
50% |
25% |
50% |
32.5% |
Maximum = US$58.5 million |
100% |
50% |
100% |
65% |
TOTAL |
|
|
|
|
Threshold |
50% |
25% |
50% |
32.5% |
Target |
100% |
50% |
100% |
65% |
Maximum |
200% |
100% |
200% |
130% |
_____________________
| (1) | Cash Conversion achieved in
2022 was 34%. |
| (2) | Management EBITA (Group) achieved
in 2022 was US$50.2M. |
Business
Unit Leaders. After the Remuneration Committee approves the overall compensation framework in December of each year, the CEO
and CFO review and set the Management EBITA targets applicable to the other Named Executive Officers for the following year. As in prior
years, Cash Conversion targets were set at 85% (Threshold), 100% (Target), and 115% (Max) for all business units. The performance measures,
together with the corresponding Threshold, Target, and Maximum levels, applicable to our other Named Executive Officers in 2022, and the
weight assigned to each metric, were as follows:
|
Performance Payout
Factor as a % of Base
Salary |
Cash Conversion (1) |
|
Threshold = 85% |
8% |
Target = 100% |
16% |
Maximum = 115% |
32% |
Management EBITA (Business Unit) |
|
Threshold |
8% |
Target |
16% |
Maximum |
32% |
Strategic and Operational Objectives
(Balanced Scorecard Metrics) |
|
Threshold |
-% |
Target |
8% |
Maximum |
16% |
TOTAL |
|
Threshold |
16% |
Target |
40% |
Maximum |
80% |
|
|
| (1) | Cash
Conversion Threshold, Target, and Maximum levels applicable to the Business Unit Leaders are slightly higher than those applied to the
CEO and CFO, as the Cash Conversion levels applicable to the CEO and CFO are based on the overall Cash Conversion of Luxfer as a whole,
which includes the overall net cash position for the corporate cost center, which is typically expected to be a net cash outflow. |
| | 2023 PROXY STATEMENT |
2022 Cash Incentive Payouts
Luxfer’s cash incentive program
provides for payout levels between 0% and 200% of the target incentive award for each Named Executive Officer. No payout is made if performance
is below the Threshold levels set forth in the foregoing tables. Additionally, our cash incentive program permits the Committee to withhold
cash incentives if the Company’s EBITA, as a whole, falls below the established Threshold, even if the business units achieve or
exceed their own EBITA Target. Although the cash incentive program uses a formulaic approach, the Remuneration Committee retains discretion
in administering the program, which discretion includes selecting the performance measures prior to commencement of the performance period;
setting and adjusting Threshold, Target, and Maximum levels; and assessing financial and operational results.
Following consideration of the financial
and individual performance measures (as applicable), the Remuneration Committee calculated a Performance Payout Factor applicable to each
Named Executive Officer. The Performance Payout Factor, target cash incentive, maximum cash incentive, and 2022 cash incentive payout
for each of our Named Executive Officers are set forth in the below table.
|
Target
Cash
Incentive
(% of
Salary) |
Target Cash
Incentive
(US$) |
Maximum Cash
Incentive
(US$) |
Performance
Payout Factor |
2022 Cash
Incentive Payout
(US$) |
Andy Butcher (1) |
100% |
554,250 |
1,068,500 |
36% |
196,759 |
Stephen Webster (2) |
50% |
123,330 |
246,660 |
36% |
43,782 |
Peter Gibbons |
40% |
78,000 |
156,000 |
0% |
— |
Jeffrey Moorefield |
40% |
82,400 |
164,800 |
0% |
— |
Graham Wardlow (2) |
40% |
103,597 |
207,194 |
185% |
191,999 |
Alok Maskara (3) |
100% |
736,000 |
1,472,000 |
— |
306,667 |
Heather Harding (4) |
65% |
243,750 |
487,500 |
— |
81,250 |
_____________________
(1) | Andy Butcher was appointed
Chief Executive Officer of the Company on March 23, 2022, with his appointment taking effect on May 6, 2022. The Company entered into
an employment contract with Mr. Butcher upon his appointment as Chief Executive Officer. In accordance with the terms of his employment
contract, Mr. Butcher’s annual cash incentive for 2022 was calculated using the total base salary actually paid to Mr. Butcher as
President of Luxfer Gas Cylinders for January 1 - March 31, 2022 ($372,000 per annum, as pro-rated for said period), plus the base salary
paid to Mr. Butcher as Chief Executive Officer for April 1 - December 31, 2022 ($615,000 per annum, as pro-rated for said period), which
totaled $554,250. |
(2) | Stephen Webster and Graham
Wardlow are employed in the United Kingdom and paid in GBP sterling. The foregoing amounts have been translated into US dollars at the
average exchange rate for 2022: £1: US$1.2333. |
(3) | Alok Maskara resigned from
his position as Chief Executive Officer of the Company, effective May 5, 2022, to pursue another opportunity. The terms of Mr. Maskara’s
resignation were formalized in a contract, under which Mr. Maskara received a cash incentive award for fiscal year 2022 of $306,667. This
figure represents Mr. Maskara’s target cash incentive, as pro-rated to reflect actual dates of service in fiscal year 2022. This
cash incentive was paid in conjunction with Mr. Maskara’s final paycheck and was in lieu of any amounts to which he may have been
entitled under the Company’s cash incentive program. |
(4) | Heather Harding retired from
her position as Chief Financial Officer of the Company effective March 1, 2022. From March 1, 2022 to December 31, 2022, Ms. Harding served
as a Strategic Advisor to the CFO, and her compensation was reduced by 80% from $31,250 to $6,250 per month. This arrangement was formalized
in a contract, under which Ms. Harding received an annual cash incentive for fiscal year 2022 of $81,250, irrespective of the Company’s
performance against the specified performance measures. This figure represents Ms. Harding’s target cash incentive and is based
on compensation actually paid in 2022, taking into account the reduction in her compensation following this change in position. It was
agreed that this cash incentive was in lieu of any amounts to which she may have been entitled under the Company’s cash incentive
program. |
Overall, the cash incentives
earned by each of our Named Executive Officers in 2022 were lower than those earned in 2021. The Company as a whole achieved Management
EBITA and Cash Conversion at levels below Target, with Management EBITA exceeding the Threshold level but falling below Target level and
Cash Conversion falling below Threshold. Lower cash incentive payouts were driven by unprecedented increases in the cost of raw materials,
which placed considerable pressure on delivery of Management EBITA and Cash Conversion in many business units. Luxfer MEL Technologies
successfully passed through raw material costs, resulting in exceptional EBITA performance. As maximizing both EBITA and Cash Conversion
is critical, and achieving Maximum EBITA unintentionally results in lower Cash Conversion, the Remuneration Committee approved an adjustment
to the Threshold, Target, and Maximum Cash Conversion levels and Performance Payout Factor applicable to Luxfer MEL Technologies to account
for additional inventory holding and non-cash profit resulting from higher raw material prices.
| | 2023 PROXY STATEMENT |
In terms of delivery against
strategic and operational objectives, which applies to the Named Executive Officers other than the CEO and CFO, performance against such
objectives were not considered with respect to Peter Gibbons and Jeffrey Moorefield, as no cash incentive payout is permitted if Management
EBITA and Cash Conversion performance is below the Threshold level. Mr. Wardlow achieved Target level on strategic and operational objectives,
having made significant progress in the post-COVID recovery landscape, including the pass through of raw material price increases, penetration
of new growth opportunities, and advances in talent development that resulted in retention rates above the industry average.
2022 CASH INCENTIVES EARNED
Equity awards granted pursuant to
the Luxfer Holdings PLC Long-Term Umbrella Incentive Plan, as amended and restated on June 8, 2022 (the “LTIP”) are intended
to (i) align executive awards with shareholder returns through personal financial investment; (ii) attract and retain high quality executives
in an environment where compensation levels are based on a global market; (iii) strengthen the alignment between executives and shareholders;
and (iv) motivate shareholder value creation. The LTIP provides the Remuneration Committee the discretion to grant time-based or performance-based
awards, including in the form of Restricted Stock Units (“RSUs”) and stock options, and use and set a range of performance
measures applicable to performance-based awards. These performance measures are to be appropriate and support Luxfer’s long-term
strategy at the time the award is made. Discretion over what type or combination of types of awards made is exercised by the Committee
based on what the Committee considers to be the market norm in the US and UK, as well as the circumstances in which the award is made.
Awards are made and satisfied using
shares held in an employee benefit trust. Participants are required to pay, at minimum, the nominal cost of an ordinary share. RSUs are
generally awarded to Named Executive Officers who are based in the United States, and stock options are awarded to Named Executive Officers
based in the United Kingdom.
In recent years and in 2022, the
Committee used the following forms of awards and performance measures in various combinations:
| | 2023 PROXY STATEMENT |
2022 Equity Award Measures and
Terms
While the Committee awarded a combination
of time-based (40%), TSR performance-based (36%), and EPS performance-based (24%) awards to the Named Executive Officers in 2022, the
Committee, following a program design review with Meridian, implemented changes to the methods by which EPS and TSR performance are measured,
as well as other terms of the awards. These changes are consistent with industry practice; provide a more comparable peer group to assess
performance against; and are intended to further align management and shareholder interests by supporting our long-term goal of $2.00+
adjusted EPS by 2025. A summary of said changes, as compared to historical practice, is provided below.
|
Historical
EPS Awards (5) |
2022 EPS Awards (5) |
Historical TSR Awards |
2022 TSR Awards |
Measure and Method |
●
Threshold, Target, and Maximum adjusted diluted EPS
levels set annually
●
Measured on an annual basis as adjusted diluted EPS
reported externally for financial year
●
Award based on achievement of Threshold, Target, or
Maximum level |
●
Measured on a 3-year growth basis, using adjusted
diluted EPS reported externally for financial year
●
EPS growth is measured annually using prior year actual
adjusted diluted EPS as the baseline.
●
The payout percentage for each individual year is
“banked,” and the average annual growth percentage over the 3-year performance period determines the final payout. |
●
Ranking of Luxfer’s relative TSR performance
against a group of 20 pre-selected peer companies for the last 90 days of the year ending 2 years from the year in which the award was
communicated
●
Payout dependent on quartile in which Luxfer’s
performance fell, with payout ranging from 0-150% |
●
Ranking of Luxfer’s relative TSR performance
against companies within Luxfer’s 8-digit GICS code for the last 90 days of the year ending 2 years from the year in which the award
was communicated
●
Payout dependent on decile in which Luxfer’s
performance fell, with assigned Performance Payout Factors assigned to each decile |
Performance Period |
1 year |
3 years |
3 years |
3 years |
Vesting Period |
Vest 33% on second, third,
and fourth anniversary of award communication date
Vesting conditional on the
Return on Capital Employed (RoCE) being equal to or exceeding a certain percentage after tax in the calendar year for which EPS is measured |
Vest 100% on third anniversary
of award communication date
Vesting conditional on the
Return on Capital Employed (RoCE) being equal to or exceeding a certain percentage after tax in the calendar year for which EPS is measured |
Vest 50% on third anniversary of award date and 50% on fourth anniversary of award communication date |
Vest 100% on third anniversary of award communication date |
Cap |
200% Target |
200% Target |
150% Target |
200% Target |
Other Terms |
$1.00 conversion or exercise price |
$1.00 conversion or exercise price |
$1.00 conversion or exercise price |
$1.00 conversion or exercise price |
2022
EPS Awards. The specific Threshold, Target, and Maximum levels for EPS Growth are not publicly disclosed at the time of award
due to the proprietary nature and competitive sensitivity of the information. However, the method used to calculate awards will be based
on actual performance through December 31, 2024, compared to the Company’s adjusted diluted EPS reported for financial year 2021.
Based on the adjusted diluted EPS growth achieved, 2022 EPS awards will be granted and immediately vest on March 14, 2025.
_____________________________
5 Adjusted diluted EPS
is a non-GAAP measure. For a reconciliation of this non-GAAP measure, see Appendix A.
| | 2023 PROXY STATEMENT |
2022
TSR Awards. Further information regarding the comparative group companies within Luxfer’s 8-digit GICS code is provided
on page 54. The performance payout level for each decile of the 2022 TSR awards is set forth below, Based on the relative level of shareholder
return achieved through December 31, 2024, 2022 TSR awards will be granted and immediately vest on March 14, 2025. Although the performance
period remains ongoing, the Company’s TSR performance was in the seventh decile as of December 31, 2022.
Relative TSR Ranking Versus Peers |
Payout Level |
First Decile (Top 10%) |
200% |
Second Decile (Between 11% - 20%) |
175% |
Third Decile (Between 21% - 30%) |
150% |
Fourth Decile (Between 31% - 40%) |
125% |
Fifth Decile (Between 41 - 50%) |
100% |
Sixth Decile (Between 51% - 60%) |
75% |
Seventh Decile (Between 61% - 70%) |
50% |
Eighth Decile (Between 71% - 80%) |
25% |
Ninth and Tenth Decile (Between 80%-100% -- i.e., Bottom 20%) |
0% |
2022
Time-Based Awards. In 2022, each Named Executive Officer received a time-based award in the form of RSUs or options equal to
40% of their target equity award. The time-based awards were granted on March 14, 2022 and vest evenly over four years.
2022 Target Equity Awards
In establishing equity award
levels (as a percentage of base salary) for each Named Executive Officer in 2022, the Committee referenced benchmark data, including compensation
surveys, Comparator Group information, and other data provided by Meridian, and took into consideration a variety of other factors, including
the number of awards outstanding and shares remaining available for issuance under the LTIP, the number of shares that would be issued
under contemplated awards over the range of performance periods, the total number of the Company’s outstanding shares, the resulting
implications for shareholder dilution, and the number of shares awarded to our executives year-over-year.
The table below summarizes
the total award, at Target, made available to each Named Executive Officer in 2022, as approved by the Remuneration Committee.
Named Executive
Officer |
# Time Based Awards
(40% award allocation)
4 Year Vesting
@ 25% per year |
# EPS Awards
(24% award allocation)
Vesting on 3rd Anniversary
of Award Communication
Date |
# TSR Awards
(36% award allocation)
Vesting on 3rd
Anniversary of
Award Communication Date |
Total Target
Award
(# of Awards) |
Andy Butcher (1) |
25,200 |
15,120 |
22,680 |
63,000 |
Stephen Webster |
4,000 |
2,400 |
3,600 |
10,000 |
Peter Gibbons |
1,600 |
960 |
1,440 |
4,000 |
Jeffrey Moorefield |
1,600 |
960 |
1,440 |
4,000 |
Graham Wardlow |
4,000 |
2,400 |
3,600 |
10,000 |
Alok Maskara (2) |
30,000 |
18,000 |
27,000 |
75,000 |
Heather Harding (3) |
— |
— |
— |
— |
_____________________
(1) | In his position as President
of Luxfer Gas Cylinders, Mr. Butcher was awarded 6,000 time-based restricted stock units and 9,000 performance-based awards (at Target
and subject to the achievement of EPS Growth and TSR performance measures over the 2022-2024 performance period) on March 14, 2022. An
additional equity award of 48,000 shares, at Target, was awarded to Mr. Butcher on May 6, 2022, reflecting the increase in his target
annual equity award as Chief Executive Officer. This additional equity award consists of 19,200 time-based RSUs and 28,800 performance-based
RSUs (at Target and subject to the achievement of EPS Growth and TSR performance measures over the 2022-2024 performance period). |
(2) | Alok Maskara resigned from
his position as Chief Executive Officer of the Company, effective May 5, 2022. The terms of Mr. Maskara’s resignation were formalized
in a contract, under which it was agreed that 2022 equity awards made to Alok Maskara were to be forfeited and lapse upon termination
of employment. |
(3) | As Heather Harding served as
a Named Executive Officer from January 1-February 28, 2022, she did not receive an equity award in 2022. |
| | 2023 PROXY STATEMENT |
Additional 2022 Equity Awards
To incentivize certain of the Named
Executive Officers to achieve the Company’s 2025 EPS goal of $2.00 or more, the Remuneration Committee approved additional EPS performance-based
awards to be awarded to Andy Butcher, Stephen Webster, Peter Gibbons, Jeffrey Moorefield, and Graham Wardlow. These additional EPS awards
are dependent on the Company’s attainment of a certain adjusted diluted EPS on or before December 31, 2025. Provided the adjusted
diluted EPS targets are attained, the awards will be granted and immediately vest on March 14, 2026. If the Company attains an adjusted
diluted EPS of $2.00 on or before December 31, 2025, the Target number of awards listed below will be awarded to each of the Named Executive
Officers. The Maximum number of awards will be awarded to each of the Named Executive Officers if the Company attains an adjusted diluted
EPS of more than $2.00 (the Maximum level is not publicly disclosed at the time of award due to the proprietary nature and competitive
sensitivity of the information). In the event that the Company attains an adjusted diluted EPS between the Target and Maximum level, a
pro-rated number of awards between the Target and Maximum levels will be awarded to the Named Executive Officers based on the adjusted
diluted EPS actually attained.
Named Executive Officer |
Additional EPS Award
(at Target) |
Additional EPS Award
(at Maximum) |
Andy Butcher |
32,000 |
64,000 |
Stephen Webster |
6,000 |
12,000 |
Peter Gibbons |
2,000 |
4,000 |
Jeffrey Moorefield |
2,000 |
4,000 |
Graham Wardlow |
6,000 |
12,000 |
| | 2023 PROXY STATEMENT |
Perquisites
Each of our Named Executive Officers
receives an annual perquisite allowance, which are paid as a monthly cash stipend. We believe providing
reasonable perquisites is a market-competitive practice to attract and retain top executive talent. Rather than offering individual perquisites,
we provide a monthly cash stipend to each of our Named Executive Officers to allow more flexibility and choice. Our Named Executive Officers
have full discretion on how the cash perquisite stipend is spent, and it is not tracked by the Company after the money is paid. Perquisite
allowances are intended to cover expenses incidental to the executive’s employment responsibilities, such as use of their personal
automobile and mobile phone for business purposes. Perquisite allowances are not considered in cash incentive and equity award calculations,
which are calculated with reference to base salary, and cannot be contributed to the Company’s 401(k) plan or otherwise considered
in pension calculations. Perquisite allowances for our Named Executive Officers in 2022 are set forth in the section entitled “2022
Target Compensation” on page 53 and included in the Summary Compensation Table below.
Retirement Benefit Programs
All of our Named Executive Officers
who are based in the US are eligible to participate in Luxfer's 401(k) Savings Plan in the same manner as all US employees. Participants
in the 401(k) Savings Plan are eligible for a 100% match on up to 6% of eligible pay saved, subject to IRS-qualified plan compensation
limits and highly compensated threshold limits. Eligible employees may not receive 401(k) benefits in excess of these limits.
Named Executive Officers based in
the UK are eligible to participate in the defined contribution pension scheme and may have participated in the Luxfer Group Pension and
Supplementary Pension Plans in the past, which are now frozen. These pension plans are further described below in the section entitled
“2022 Pension Benefits.” Alok Maskara was paid the equivalent of 25% of his annual base salary as a salary supplement in lieu
of contributions to the Company’s pension plans. In 2022, a portion of this supplement was paid into Luxfer's 401(k) Savings Plan
for Alok Maskara.
Employee Share Purchase Plans
Our Named Executive Officers are
eligible to participate in the Company’s US Employee Stock Purchase Plan (ESPP) and UK Share Incentive Plan (SIP), which provide
employees an opportunity to become Luxfer shareholders at a reduced price. Through payroll deductions, US employees can purchase Luxfer
shares, subject to certain limits, at a 15% discount under the ESPP. Similarly, under the SIP, UK employees can purchase Luxfer shares
through payroll deductions and, in turn, the Company awards participating employees one free share per every two shares purchased. The
Named Executive Officers are eligible to participate in the foregoing employee share purchase plans on the same basis as the Company’s
other employees.
Health and Welfare Benefits
We provide employee benefits –
such as medical, dental, and vision insurance; life insurance; and disability coverage – to our Named Executive Officers and other
employees. These benefits are available to all full-time US employees through our active employee plans. Luxfer provides complimentary
life, accidental death, and dismemberment insurance to its full-time US employees, with a benefit amount of US$50,000. Employees are also
offered voluntary life insurance coverage with a benefit amount of 5x such employee's salary (up to a maximum of US$500,000). Additionally,
long-term disability insurance coverage is provided complimentary, with a benefit amount of 60% of such employee's salary (up to a maximum
of US$6,000 per pay period). In addition to these benefits for active, full-time US employees, we provide post-retirement medical, dental,
vision, and life insurance coverage to certain retirees in accordance with the legacy company plans that applied at the time the retiree
was actively employed.
The UK equivalent of certain health
and welfare benefits and insurance coverages are made available to UK employees. UK employees that are invited and elect to join the healthcare
insurance program receive this benefit as a benefit-in-kind. UK employees that belong to a Company pension plan receive life insurance
coverage with a benefit amount of 7x such employee's salary. UK employees that have chosen not to join a Company pension plan receive
life insurance coverage with a benefit amount of 3x such employee's salary.
The value of these health and welfare
benefits are not required to be included in the Summary Compensation Table, as they are generally available on a non-discriminatory basis
to all full-time employees.
Vacation and Holiday Entitlement
We also provide vacation and other
paid holiday entitlement to all employees, including the Named Executive Officers, which we have determined to be comparable to those
provided at other similar companies.
| | 2023 PROXY STATEMENT |
As required by the pay versus performance
rules adopted by the SEC in 2022 (the “PVP Rules”) and in effect for the first time and applicable to this Proxy Statement,
the below Pay Versus Performance Table provides information about Named Executive Officer compensation set forth in this Proxy Statement,
as well as compensation for the Named Executive Officers set forth in our 2022 and 2021 Proxy Statements (each of 2020, 2021, and 2022,
a “Covered Year”). The Pay Versus Performance Table also provides information about the results for certain financial performance
measures during those same Covered Years.
In reviewing this information, there
are a few important things to consider:
| • | The information in columns (B) and (D) comes
directly from this and prior year’s Summary Compensation Tables, without adjustment unless otherwise noted (such totals being referred
to herein as the “SCT Total”); |
| • | As required by the PVP Rules, we describe the
information in columns (C) and (E) as “compensation actually paid” (“CAP”) to the applicable Named Executive Officers,
but these amounts do not necessarily reflect compensation that our Named Executive Officers actually earned for their service in the Covered
Years. Instead, CAP reflects a calculation involving a combination of realized pay (for cash amounts and some equity award amounts) and
realizable or accrued pay (primarily for pension benefits and other equity awards); |
| • | The PVP Rules require that we choose a peer
group for purposes of TSR comparisons, and we have chosen the same peer groups utilized by the Company for purposes of measuring total
shareholder return performance with respect to performance-based equity awards. Accordingly, these peer groups differ for each Covered
Year, as the Remuneration Committee revised said peer group in 2022, utilizing the companies included in the Company’s GICS Code
as of March 1, 2022, rather than comparable companies selected by the Remuneration Committee with reference to market data. The companies
comprising the peer group for each Covered Year are detailed in footnotes 3 through 5 of the Pay Versus Performance Table on page 68 (collectively
and individually referred to herein as the “PVP Peer Group”); and |
| • | As required by the PVP Rules, we provide information
about our cumulative TSR, cumulative PVP Peer Group TSR results, and US GAAP net income results during the Covered Years in the Pay Versus
Performance Table. |
Pursuant to the PVP Rules, the Company
is required to designate one financial measure as the “Company-Selected Measure,” or the most important financial measure
that demonstrates how the Company sought to link 2022 executive compensation to performance. For 2022, the Company selected Adjusted EBITA.
However, the Company believes that all of the measures designated under “Important Financial Performance Measures” section
on page 70 are important drivers of Company performance that are designed to link executive compensation to performance.
| | 2023 PROXY STATEMENT |
PAY
VERSUS PERFORMANCE TABLE |
(A) | (B) | | (C) | (D) | (E) | (F) | (G) | (H) | (I) |
| | | | | | Value of Initial Fixed $100 Investment Based
On: | | |
Year | SCT Total for PEO
(US$) | | PEO CAP
(US$) (6) | Average SCT Total for Non-PEO NEOs
(US$) (2) | Average
CAP for Non-PEO NEOs
(US$) (2) (6) | TSR (7) | Peer Group TSR (7) | Net Income
(US$) (8) | Adjusted EBITA (US$) (9) |
| Andy Butcher (1) | Alok Maskara | | Andy Butcher (1) | Alok Maskara | | | | | | |
2022 | 2,348,216 | 2,170,667 | | 1,075,717 | 346,905 | 530,489 | 344,447 | 73.4 | 74.9 (3) | 26,900,000 | 50,200,000 |
2021 | — | 2,339,733 | | — | 3,622,066 | 773,235 | 890,867 | 120.5 | 128.8 (4) | 29,900,000 | 48,700,000 |
2020 | — | 2,033,744 | | — | 1,161,313 | 565,323 | 407,641 | 92.0 | 117.9 (5) | 20,000,000 | 41,200,000 |
_____________________
| (1) | Andy Butcher’s
compensation is not included within column (B) and column (C) for the years 2021 and 2020, as he was not the PEO at that time. His compensation
is, however, included within columns (D) and (E) for 2021 and 2020 when he was employed as a Non-PEO Named Executive Officer. |
| (2) | Non-PEO Named
Executive Officers (“NEOs”) included within columns (D) and (E) in 2022 are: Stephen Webster, Peter Gibbons, Jeffrey Moorefield,
and Graham Wardlow. Heather Harding is not included as a Non-PEO NEO in 2022, given she resigned as CFO effective March 1, 2022 and served
in an advisory role for the remainder of fiscal year 2022. As a result, the compensation paid to Ms. Harding in 2022 distorts the 2022
average SCT and CAP figures included in columns (D) and (E), justifying exclusion. The Non-PEO NEOs included within columns (D) and (E)
for 2021 are: Andy Butcher, Stephen Webster, Graham Wardlow, and Heather Harding and for 2020 are: Andy Butcher, Graham Wardlow, Heather
Harding, and James Gardella. |
| (3) | For 2022, the
average Peer Group Total Shareholder Return was calculated with reference to the following companies: Albany International Corp.; Barnes
Group, Inc.; Chart Industries, Inc.; CIRCOR International, Inc.; Columbus McKinnon Corporation; Energy Recovery, Inc.; Enerpac Tool Group
Corp.; EnPro Industries, Inc.; ESCO Technologies Inc.; Evoqua Water Technologies Inc.; Fathom Digital Manufacturing Corporation; Graham
Corporation; Greenland Technologies Holding Corporation; Helios Technologies, Inc.; Hillman Solutions Corp.; Hurco Companies, Inc.; Kadant
Inc;. Kornit Digital Ltd.; L.B. Foster Company; Mayville Engineering Company, Inc.; Mueller Water Products, Inc.; Nisun International
Enterprise Development Group Co., Ltd; NN, Inc.; Omega Flex, Inc.; Park-Ohio Holdings Corp.; Perma-Pipe International Holdings, Inc.;
Proto Labs, Inc.; RBC Bearings Incorporated; SPX Corporation; SPX FLOW, Inc.; Standex International Corporation; Tennant Company; The
Eastern Company; The Gorman-Rupp Company; and The L.S. Starrett Company. |
| (4) | For 2021, the
average Peer Group Total Shareholder Return was calculated with reference to the following companies: Barnes Group, Inc.; Cabot Corporation;
Carpenter Technology Corporation; Colfax Corporation; Element Solutions, Inc; Ferroglobe PLC; Graco Inc;. Hexagon Composites ASA; Hexcel
Corporation; Kaiser Aluminum Corporation; Koppers Holdings Inc.; Materion Corporation; MSA Safety Incorporated; Mueller Industries, Inc.;
Neo Performance Materials Inc.; Schnitzer Steel Industries, Inc.; SunCoke Energy Inc.; TPI Composites Inc.; TriMas Corporation; and Worthington
Industries Inc. |
| (5) | For 2020, the
average Peer Group Total Shareholder Return was calculated with reference to the following companies: Barnes Group, Inc.; Cabot Corporation;
Carpenter Technology Corporation; Colfax Corporation; Element Solutions, Inc;, Graco Inc.; Grupo Simec SAB de CV; Hexagon Composites ASA;
Hexcel Corporation; Kaiser Aluminum Corporation; Koppers Holdings Inc.; Materion Corporation; MSA Safety Incorporated; Mueller Industries,
Inc.; Neo Performance Materials Inc.; Schnitzer Steel Industries, Inc.; SunCoke Energy Inc.; TPI Composites Inc.; TriMas Corporation;
and Worthington Industries Inc. |
| (6) | For each Covered
Year, in determining both the CAP for our PEO and the average CAP for our Non-PEO NEOs, we deducted or added back the following amounts
from or to the total amounts of compensation reported in column (b) and column (d) of the Summary Compensation Table for such Covered
Year: |
| • | The aggregate change in actuarial
present value of the accumulated benefit under all defined benefit and actuarial pension plans reported in the Summary Compensation Table; |
| • | Values reported in the Annual
LTIP Equity Awards column of the Summary Compensation Table; |
| • | For any equity awards granted
in the Covered Year that are outstanding and unvested as of December 31 of the relevant Covered Year, the year-end fair value of said
awards is added; |
| • | For any awards granted in years
prior to the Covered Year that are outstanding and unvested as of December 31 of the relevant Covered Year, the increase in fair value
is added (or the decrease in fair value is deducted) by comparing the fair value as of December 31 of the Covered Year to the fair value
at the end of the prior fiscal year; |
| | 2023 PROXY STATEMENT |
| • | For awards that are granted
and vest in the same Covered Year, the fair value as of the vesting date is added; |
| • | For awards granted in prior
years that vest in the Covered Year, the increase in fair value is added (or the decrease in fair value is deducted), by comparing the
fair value on the vesting date with the fair value at the end of the prior fiscal year; and |
| • | For awards granted in prior
years that are deemed to fail to meet the applicable vesting condition during the Covered Year, the fair value as of December 31 of the
prior fiscal year is deducted. |
| (7) | TSR as set
forth in the Pay Versus Performance Table assumes, in each case, an initial investment of $100 on January 1, of that year, in Luxfer ordinary
shares for our cumulative TSR, and in the PVP Peer Group for the PVP Peer Group cumulative TSR, based on market prices at the end of each
fiscal year reported, and reinvestment of dividends. |
| (8) | Net income
for the purposes of this pay versus performance disclosure is calculated as the consolidated net income of the Company and its subsidiaries,
determined in accordance with US GAAP. |
| (9) | For purposes
of this pay versus performance disclosure, adjusted EBITA is calculated based on operating income adjusted for share-based compensation
charges; loss on disposal of property, plant and equipment; restructuring charges; acquisitions and disposals costs; other charges, and
amortization. See Appendix A for a reconciliation of adjusted EBITA as used for external reporting to its most directly comparable GAAP
financial measure. |
RELATIONSHIPS
BETWEEN COMPENSATION ACTUALLY PAID AND CERTAIN PERFORMANCE MEASURES |
The PVP Rules require that comparisons
be made between certain columns in the Pay Versus Performance Table. Such comparisons can be provided graphically without further explanation,
and we have done so below. In accordance with that approach, the following charts and graphs show the relationships between (i) our cumulative
TSR, the cumulative TSR for the PVP Peer Group reflected in the Pay Versus Performance Table above, and our PEO CAP and average CAP for
Non-PEO NEOs, as applicable; (ii) the Company’s net income, and our PEO CAP and average CAP for Non-PEO NEOs, as applicable; and
(iii) the Company’s Adjusted EBITA, and our PEO CAP and average CAP for Non-PEO NEOs, as applicable, for each of the Covered Years.
| | 2023 PROXY STATEMENT |
IMPORTANT
FINANCIAL PERFORMANCE MEASURES |
The following is an unranked list of what we believe
to be important financial performance measures (including adjusted EBITA) we used to link executive compensation for our PEO and Non-PEO
NEOs to our performance in 2022:
| • | Adjusted EBITA (also referred to in this Proxy Statement as Management
EBITA); |
| • | Adjusted Diluted EPS Growth; and |
The foregoing financial performance measures were utilized
by the Remuneration Committee to assess Company performance and determine the cash incentives and equity awards paid to our PEO and Non-PEO
NEOs in 2022.
| | 2023 PROXY STATEMENT |
COMPENSATION-RELATED
POLICIES AND ARRANGEMENTS |
COMPENSATION-RELATED
RISK |
The Company’s executive and
broad-based compensation programs are intended to promote decision-making that supports a pay for performance philosophy and utilize the
following design features to mitigate risk:
• |
Balance of fixed and variable pay opportunities |
|
• |
Stock ownership guidelines and requirements |
• |
Oversight by Remuneration Committee comprised of independent
Non-Executive Directors |
|
• |
Regular risk assessments, particularly when implementing
any changes to compensation programs |
• |
Multiple performance measures and performance periods, as
well as capped payouts |
|
• |
Enhanced Clawback Policy |
• |
Performance measures and targets set at a Company-wide or
Business Unit level |
|
• |
Anti-Hedging Policy |
• |
Incentive Plan limits on individual awards, pool size, and
accelerated vesting |
|
• |
Institutional focus on ethical behavior through deployment
of Luxfer Values and Code of Ethics and Business Conduct |
• |
Remuneration Committee oversight of equity burn rate and
dilution |
|
|
The Remuneration Committee, in consultation
with management, conducts a review of the Company's compensation plans and practices with respect to risk. To aid in this review, the
Remuneration Committee consulted with Meridian, the Committee’s independent compensation consultant, to identify risk aggravators
and mitigating factors, particularly in the incentive programs offered to executives, and opine whether such programs and practices are
reasonably likely to have a material adverse effect on the Company. In considering Meridian’s analysis and its own discussions,
with and without management present, the Remuneration Committee concluded that the Company’s compensation programs and practices
are not reasonably likely to incentivize employees to take risks that could have a material adverse effect on the Company. The reasons
for concluding that Luxfer’s executive and broad-based compensation programs do not create material risk for the Company include
the fact that the Company (i) implements risk mitigation mechanisms; specifically, it utilizes a variety of short performance periods
ranging from one to three years, measures performance at a Company-wide and Business Unit level, considers discretionary individual performance
factors, and utilizes the Remuneration Committee to oversee awards to executives and employees; (ii) sufficiently monitors the appropriateness
of the compensation and benefit plans that are available to Luxfer's executives and employees; and (iii) leverages the expertise of third
party advisors, such as Meridian, where necessary to ensure that Luxfer’s compensation programs are appropriate when compared to
market.
Luxfer has established policies
and procedures, which apply to all employees, our Named Executive Officers, and Directors in relation to the clawback of certain incentive
compensation. Specifically, if, during the preparation of the current year’s financial results, a material misstatement of the
previous year’s results is discovered, a clawback of the annual cash incentive and long-term equity awards granted with respect
to such misstated financial results may occur. The Remuneration Committee has discretion in applying such policy to recover or recoup
incentive compensation in situations involving a material misstatement of financial results. Furthermore, the Remuneration Committee
may take into account any factors it deems reasonable in determining whether to seek recoupment of previously paid incentive compensation;
how much incentive compensation to recoup from individual Executive Officers, employees, and Directors; and the form of such incentive
compensation to be recouped. Given the SEC’s adoption of new Rule 10D-1, the Company will continue to monitor the New York Stock
Exchange’s listing standards applicable to Rule 10D-1 and revise, as necessary, its current clawback policy in accordance with
the requirements thereof.
| | 2023 PROXY STATEMENT |
TERMINATION
AND CHANGE IN CONTROL |
Certain of the Named Executive
Officers are party to employment contracts with Luxfer Holdings PLC or one of its subsidiaries. As per the Company’s normal practice,
the CEO and CFO are subject to employment contracts, and UK-based executives are subject to employment contracts as required by local
law. Accordingly, Andy Butcher, Stephen Webster, and Graham Wardlow are subject to employment contracts. Each employment contract contains
provisions regarding the termination of such executive’s employment and the Company's related severance obligations, including termination
for reasons other than Cause and in connection with a Change in Control. 6
Termination Arrangements
Andy
Butcher. In the event Mr. Butcher’s employment is terminated by the Company for reasons other than Cause, Mr. Butcher
is eligible to receive (i) a severance payment equal to twelve (12) months’ base salary at the annualized rate in effect on the
effective date of termination; (ii) a payment equal to the actual cash incentive earned for the fiscal year in which Mr. Butcher’s
employment terminates, as determined in accordance with the Executive Incentive Compensation Plan then in effect; however, if the actual
cash incentive earned has not been determined as of the effective date of termination, then the cash incentive will be paid at the Target
level and prorated to reflect actual dates of service during the fiscal year; (iii) in lieu of notice, a severance payment representing
Mr. Butcher’s cash incentive for the 12-month notice period, which will be paid at the Target level; (iv) immediate vesting of all
outstanding, unvested time-based equity awards; and (v) immediate vesting of any earned and outstanding performance-based equity awards
that are scheduled to vest in the twelve (12) month period following the effective date of termination.
Stephen
Webster. Mr. Webster will continue to receive the compensation and benefits detailed in his employment contract through the
end of the 12-month notice period (the “Notice Period”), provided the Company does not exercise its right of payment in lieu
of notice. Specifically, Mr. Webster will continue to earn a cash incentive during the Notice Period, and any outstanding equity awards
will continue to vest during the Notice Period, in accordance with the applicable vesting schedule. If, as of the termination date, the
actual cash incentive earned for the fiscal year has not been determined because the relevant performance period remains ongoing, Mr.
Webster’s cash incentive for the fiscal year in which his employment terminates will be paid at Target level and pro-rated to reflect
actual dates of service, including the Notice Period, during said fiscal year. Except in the event of termination for Cause or a Change
in Control, the Company reserves the right, in lieu of notice and without giving any reason, to (i) pay Mr. Webster his gross salary (less
such tax and national insurance, and any pension contributions, as may be properly deductible) for the Notice Period or outstanding balance
thereof; (ii) pay Mr. Webster a cash incentive for the fiscal year in which his employment terminates, which shall be the actual cash
incentive earned for said fiscal year, or, if the actual cash incentive has not been determined because the relevant performance period
remains ongoing, the cash incentive at Target level and pro-rated to reflect actual dates of service, including the Notice Period, during
said fiscal year; and (iii) immediately vest any equity awards that would have vested during the Notice Period or balance thereof.
Graham
Wardlow. Mr. Wardlow will continue to receive the compensation and benefits detailed in his employment contract through the
end of the 12-month Notice Period, provided the Company does not exercise its right of payment in lieu of notice. Specifically, Mr. Wardlow
will continue to earn a cash incentive during the Notice Period, and any outstanding equity awards will continue to vest during the Notice
Period, in accordance with the applicable vesting schedule. If, as of the termination date, the actual cash incentive earned for the fiscal
year has not been paid, Mr. Wardlow is not entitled to any separate cash incentive for the fiscal year in which his employment terminates.
Except in the event of termination for Cause or a Change in Control, the Company reserves the right, in lieu of notice and without giving
any reason, to pay Mr. Wardlow his gross salary (less such tax and national insurance, and any pension contributions, as may be properly
deductible) for the Notice Period or outstanding balance thereof, without any further liability on the part of the Company. Outstanding
equity awards as of the termination date are handled in accordance with the rules of the LTIP, which provide that, except in the event
of termination for Cause and subject to the Remuneration Committee’s discretion, (i) the portion of any time-based option that has
not become vested or exercisable as of the date of such termination shall immediately lapse and (ii) any performance-based option shall
vest in accordance with the rules of the LTIP, which considers performance as of the termination date and the total and elapsed number
of days in the performance period. The portion of any option that is or becomes vested or exercisable as of the date of termination will
lapse on the first anniversary of the date of termination to the extent not theretofore exercised. In the event of termination for Cause,
all options, whether then vested or exercisable or not, shall immediately lapse on such termination
._____________________
6 As Alok Maskara’s
and Heather Harding’s employment contracts were voluntarily terminated in accordance with their terms, and therefore the triggering
event is not assumed to have occurred on the last business day of the Company’s last completed fiscal year, an analysis of their
employment contracts is not provided herein.
| | 2023 PROXY STATEMENT |
Change in Control Arrangements
Andy
Butcher. If Mr. Butcher’s employment is terminated in connection with a Change in Control (other than for Cause) and
Mr. Butcher does not receive an offer of employment for an Equivalent Position with a Successor, then Mr. Butcher will be eligible to
receive (i) a redundancy payment equal to two times his base salary at the annualized rate in effect on the effective date of termination;
(ii) a payment equal to the actual cash incentive earned for the fiscal year in which employment terminates, as determined in accordance
with the Executive Incentive Compensation Plan then in effect; however, if the actual cash incentive earned has not been determined as
of the effective date of the termination, then the cash incentive will be paid at the Target level; (iii) immediate vesting of all outstanding,
unvested time-based equity awards, which may be settled in cash or shares in accordance with the rules of the LTIP; and (iv) immediate
vesting of any performance-based equity awards, which may be settled in cash or shares and which amount shall be calculated in accordance
with the rules of the LTIP. Subject to the Remuneration Committee’s discretion, the formula set forth in the LTIP considers performance
as of the termination date and the total and elapsed number of days in the performance period.
Stephen
Webster. If Mr. Webster’s employment is terminated in connection with a Change in Control and Mr. Webster does not receive
an offer of employment for an Equivalent Position with a Successor, then Mr. Webster will be eligible to receive (i) a redundancy payment
equal to two times his base salary at the annualized rate in effect on the termination date; (ii) a payment equal to the actual cash incentive
earned for the year in which his employment terminates, as determined in accordance with the Executive Incentive Compensation Plan then
in effect; however, if the actual cash incentive earned has not been determined as of the termination date because the relevant performance
period remains ongoing, then the cash incentive will be paid at Target level; (iii) immediate vesting of all outstanding, unvested time-based
equity awards, which may be settled in cash or shares in accordance with the rules of the LTIP; and (iv) immediate vesting of any performance-based
equity awards, which may be settled in cash or shares and which amount shall be calculated in accordance with the rules of the LTIP. Subject
to the Remuneration Committee’s discretion, the formula set forth in the LTIP considers performance as of the termination date and
the total and elapsed number of days in the performance period.
Graham
Wardlow. If Mr. Wardlow’s employment is terminated in connection with a Change in Control and Mr. Wardlow receives an
offer of employment for an Equivalent Position with a Successor, then Mr. Wardlow has no claim for compensation against the Company. Mr.
Wardlow’s employment contract does not provide for a particular compensation package upon a Change in Control, and any amounts paid
to him in such event would be subject to negotiated agreement with the Company or the outcome of any claim brought by him against the
Company. Upon a Change in Control, equity awards would be handled in accordance with the rules of the LTIP, which provide that all outstanding
awards shall become immediately vested. In the case of outstanding performance-based awards, the amount shall be calculated in accordance
with the rules of the LTIP. Subject to the Remuneration Committee’s discretion, the formula set forth in the LTIP considers performance
as of the termination date and the total and elapsed number of days in the performance period.
| | 2023 PROXY STATEMENT |
The table below summarizes the total
payout to each of the Named Executive Officers subject to an employment agreement in the event of termination by the Company for reasons
other than Cause, as well as termination following a Change in Control.
Name and
Principal Position |
Termination for Reasons
other than Cause |
|
Termination following
Change in Control |
Salary
Payment
(US$) |
Cash
Incentive
Payment
(US$) |
Outstanding
or Unvested
Equity
Awards
(US$) |
Total
Payout
(US$) |
|
Salary
Payment
(US$) |
Cash
Incentive
Payment
(US$) |
Outstanding or Unvested
Equity
Awards (US$) |
Total
Payout
(US$) |
Andy Butcher
Chief Executive Officer |
615,000 |
554,250 (1) |
546,456 |
1,715,706 |
|
1,230,000 |
554,250 (1) |
668,873 |
2,453,123 |
Stephen Webster
Chief Financial Officer (2) |
246,660 (3) |
123,330 (4) |
44,926 |
414,916 |
|
493,320 |
123,330 (4) |
141,520 |
758,170 |
Graham Wardlow
Managing Director,
Luxfer MEL Technologies (2) |
258,993 (3) |
— |
12,669 |
271,662 |
|
— |
— |
190,108 |
190,108 |
_____________________
| (1) | Using December 31, 2022 as
the date of the triggering event, the above figure represents the cash incentive at Target level, as the actual cash incentive earned
in the fiscal year is not typically finalized as of said date. Mr. Butcher’s 2022 cash incentive is calculated with reference to
the total base salary actually paid to him in the fiscal year. |
| (2) | Stephen Webster and Graham
Wardlow are employed in the United Kingdom and paid in GBP sterling. The foregoing payouts have been translated into US dollars at the
following average exchange rate for 2022: £1: US$1.2333. |
| (3) | Assumes that the Company exercises
its right to payment in lieu of the full 12-month notice period. |
| (4) | Using December 31, 2022 as
the date of the triggering event, the above figure represents the cash incentive at Target level, as the actual cash incentive earned
in the fiscal year is not typically finalized as of said date. |
| | 2023 PROXY STATEMENT |
EXECUTIVE
COMPENSATION
TABLES
SUMMARY
COMPENSATION TABLE |
The table below summarizes the total
compensation paid to or earned by each of the Named Executive Officers for the years ended December 31, 2022, 2021, and 2020.
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
Name and Principal
Position |
Year |
Salary
(US$)(1) |
Annual
Bonus
(US$) |
Annual
Equity
Awards
(US$)(2) |
Option
Awards
(US$) |
Annual Cash
Incentive
(US$)(3) |
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings (US$) |
All Other
Compensation
(US$)(4) |
Total
Compensation
(US$) |
Andy Butcher
Chief Executive Officer |
2022 |
554,250 |
— |
1,542,944 |
— |
196,759 |
— |
54,263 |
2,348,216 |
2021 |
362,000 |
— |
215,073 |
— |
347,520 |
— |
41,967 |
966,560 |
2020 |
352,254 |
— |
193,200 |
— |
72,400 |
— |
36,165 |
654,019 |
Stephen Webster (5)
Chief Financial Officer |
2022 |
246,660 |
— |
280,760 |
— |
43,782 |
— |
47,825 |
619,027 |
2021 |
203,737 |
— |
64,288 |
— |
93,375 |
— |
34,856 |
396,256 |
2020 |
181,930 |
— |
33,660 |
— |
32,915 |
— |
31,605 |
280,110 |
Peter Gibbons
Vice President & GM,
Luxfer Graphic Arts |
2022 |
195,000 |
— |
106,600 |
— |
— |
— |
36,575 |
338,175 |
2021 |
150,000 |
— |
48,216 |
— |
22,500 |
— |
80,912 |
301,628 |
2020 |
150,000 |
— |
53,408 |
— |
28,720 |
— |
77,137 |
309,265 |
Jeffrey Moorefield
Vice President & GM,
Luxfer Magtech |
2022 |
206,000 |
— |
106,600 |
— |
— |
— |
33,657 |
346,257 |
2021 |
200,000 |
— |
— |
— |
143,104 |
— |
32,000 |
375,104 |
2020 |
195,000 |
— |
107,341 |
— |
— |
— |
35,066 |
337,407 |
Graham Wardlow (5)
Managing Director,
Luxfer MEL Technologies |
2022 |
258,993 |
— |
280,760 |
— |
191,999 |
— |
86,747 |
818,499 |
2021 |
275,320 |
— |
143,383 |
— |
72,068 |
— |
87,145 |
577,916 |
2020 |
235,314 |
— |
128,297 |
— |
48,640 |
— |
77,759 |
490,010 |
Alok Maskara
Former Chief Executive Officer |
2022 |
306,667 |
— |
1,464,000 |
— |
306,667 |
— |
93,334 |
2,170,667 |
2021 |
715,000 |
— |
1,075,368 |
— |
1,330,615 |
— |
218,750 |
3,339,733 |
2020 |
657,000 |
— |
833,764 |
— |
337,500 |
— |
205,480 |
2,033,744 |
Heather Harding
Former Chief Financial Officer |
2022 |
125,000 |
— |
— |
— |
81,250 |
— |
9,717 |
215,967 |
2021 |
365,000 |
— |
304,687 |
— |
441,522 |
— |
41,000 |
1,152,209 |
2020 |
314,167 |
— |
232,648 |
— |
97,500 |
— |
36,500 |
680,815 |
_____________________
| (1) | Actual base salary paid to
most Named Executive Officers in 2020 was lower due to the impact of COVID-related furloughs and voluntary pay reductions. |
| (2) | The amounts in column (e) represent
the aggregate grant date fair value, computed in accordance with Accounting Standards Codification (ASC) 718, of restricted stock units
or options granted during each year under the LTIP. |
| (3) | The amounts in column (g) with
respect to 2022 reflect cash incentives awarded to the Named Executive Officers under the Luxfer Holdings Executive Incentive Plan, with
final payouts approved by the Committee at its March 2023 meeting and paid shortly thereafter.
|
| | 2023 PROXY STATEMENT |
| (4) | The table below shows the components
of column (i) for 2022, which includes perquisites; auto allowances; other personal benefits; and Luxfer contributions under the 401(k)
Savings Plan, the US Employee Stock Purchase Plan (the “ESPP”), and the UK Share Incentive Plan (the “SIP”): |
|
(A) |
(B) |
(C) |
(D) |
(E) |
(F) |
Name |
Executive
Perquisites
Package
(US$) |
Auto Allowance
(US$) |
Other Perquisites
and Personal
Benefits (US$) |
Contributions
Under
Defined
Contribution
Plan (US$) (f) |
Contributions
Under the ESPP
or SIP (US$) |
Total All Other
Compensation
(US$) |
Andy Butcher |
35,000 (a) |
— |
— |
18,300 |
963 |
54,263 |
Stephen Webster |
24,666 |
— |
5,624(b) |
16,444 |
1,091 |
47,825 |
Peter Gibbons |
20,000 |
— |
10,081(c) |
6,494 |
— |
33,205 |
Jeffrey Moorefield |
20,000 |
— |
— |
13,657 |
— |
33,657 |
Graham Wardlow |
24,666 |
— |
60,990(d) |
— |
1,091 |
86,747 |
Alok Maskara |
16,667 |
— |
69,042(e) |
7,625 |
— |
93,334 |
Heather Harding |
6,667 |
— |
— |
3,050 |
— |
9,717 |
| (a) | Andy Butcher
is given a paid allowance to cover personal automotive costs and other perquisites. Per his employment agreement, this amount is US$40,000
per annum and is included in column (A). |
| (b) | Stephen Webster
is eligible for a monthly compensation adjustment, paid as a fixed percentage of base salary, in lieu of contributions to a UK pension
scheme, this commenced in October 2022. For 2022, this compensation adjustment was valued at the equivalent of US$3,289 at an exchange
rate of £1: US$1.2333. This amount, along with other perquisites and personal benefits, are included within column (C). |
| (c) | The amount
shown in column (C) for Peter Gibbons reflects that, in accordance with his employment agreement, he is eligible to receive cash payments
to offset the loss of contributions to a UK pension scheme that he had with his previous Luxfer employer. This amount represents 8.5%
of Mr. Gibbons’ salary for 2022, less the amount of Luxfer contributions of US$6,494 paid into Mr. Gibbons’ 401(k) account.
|
| (d) | Graham Wardlow
is eligible for a monthly compensation adjustment, paid as a fixed percentage of base salary, in lieu of contributions to a UK pension
scheme. For 2022, this compensation adjustment was valued at the equivalent of US$58,273 at an exchange rate of £1: US$1.2333. This
amount, along with other perquisites and personal benefits, are included within column (C). |
| (e) | The amount
shown in column (C) for Alok Maskara reflects that, in accordance with his employment agreement, he is eligible to receive cash payments
to offset the loss of a Supplemental Executive Retirement Plan that he had with his previous employer. This amount represents 25% of Mr.
Maskara’s salary for 2022, less the amount of Luxfer contributions of US$7,625 paid into Mr. Maskara’s 401(k) account. |
| (f) | The individual
amounts shown in column (D) for each Named Executive Officer reflect amounts contributed by Luxfer into individual 401(k). |
| (5) | Graham Wardlow
and Stephen Webster are employed in the United Kingdom and paid in GBP sterling. Their compensation has been translated into US dollars
at the following average exchange rates for each of the years: 2020: £1: US$1.2812, 2021: £1: US$1.3766, and 2022: £1:
US$1.2333. |
| | 2023 PROXY STATEMENT |
GRANTS OF PLAN-BASED AWARDS IN 2022 (1) |
|
Estimated Future Payouts Under
Cash Incentive Plan Awards (2) |
Estimated Future Payouts
Under Equity Plan Awards (3) |
|
|
|
|
|
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
(k) |
(l) |
(m) |
Name |
Grant
Date |
Remuneration
Committee
Approval Date |
Threshold
(US$) |
Target
(US$) |
Maximum
(US$) |
Threshold
(#) |
Target
(#) |
Maximum
(#) |
All
other
Stock
Awards:
Number
of
Shares
of
Stock
or Units
(#)(4) |
All other
Stock
Awards:
Number
of
Securities
Underlying
Options
(#)(5) |
Exercise
or Base
Price of
Option
Awards
(US$/
Sh) |
Grant
Date
Fair
Value of
Stock
and
Option
Awards
(US$)(6) |
Andy Butcher |
March 14 |
March 1 |
|
|
|
1,800 |
3,600 |
7,200 |
|
|
1.00 |
64,440 |
|
March 14 |
March 1 |
|
|
|
2,700 |
5,400 |
10,800 |
|
|
1.00 |
120,960 |
|
March 14 |
March 1 |
|
|
|
|
|
|
6,000 |
|
1.00 |
107,400 |
|
May 6 |
March 22 |
|
|
|
5,760 |
11,520 |
23,040 |
|
|
1.00 |
187,200 |
|
May 6 |
March 22 |
|
|
|
8,640 |
17,280 |
34,560 |
|
|
1.00 |
294,624 |
|
May 6 |
March 22 |
|
|
|
|
|
|
19,200 |
|
1.00 |
312,000 |
|
July 1 |
April 18 |
|
|
|
|
32,000 |
64,000 |
|
|
1.00 |
456,320 |
|
|
|
277,125 |
554,250 |
1,108,500 |
|
|
|
|
|
|
|
Stephen Webster |
March 14 |
March 1 |
|
|
|
1,200 |
2,400 |
4,800 |
|
|
1.00 |
42,960 |
|
March 14 |
March 1 |
|
|
|
1,800 |
3,600 |
7,200 |
|
|
1.00 |
80,640 |
|
March 14 |
March 1 |
|
|
|
|
|
|
|
4,000 |
1.00 |
71,600 |
|
July 1 |
April 18 |
|
|
|
|
6,000 |
12,000 |
|
|
1.00 |
85,560 |
|
|
|
60,225 |
120,450 |
240,900 |
|
|
|
|
|
|
|
Peter Gibbons |
March 14 |
March 1 |
|
|
|
480 |
960 |
1,920 |
|
|
1.00 |
17,184 |
|
March 14 |
March 1 |
|
|
|
720 |
1,440 |
2,880 |
|
|
1.00 |
32,256 |
|
March 14 |
March 1 |
|
|
|
|
|
|
1,600 |
|
1.00 |
28,640 |
|
July 1 |
April 18 |
|
|
|
|
2,000 |
4,000 |
|
|
1.00 |
28,520 |
|
|
|
39,000 |
78,000 |
156,000 |
|
|
|
|
|
|
|
Jeffrey Moorefield |
March 14 |
March 1 |
|
|
|
480 |
960 |
1,920 |
|
|
1.00 |
17,184 |
|
March 14 |
March 1 |
|
|
|
720 |
1,440 |
2,880 |
|
|
1.00 |
32,256 |
|
March 14 |
March 1 |
|
|
|
|
|
|
1,600 |
|
1.00 |
28,640 |
|
July 1 |
April 18 |
|
|
|
|
2,000 |
4,000 |
|
|
1.00 |
28,520 |
|
|
|
41,200 |
82,400 |
164,800 |
|
|
|
|
|
|
|
Graham Wardlow |
March 14 |
March 1 |
|
|
|
1,200 |
2,400 |
4,800 |
|
|
1.00 |
42,960 |
|
March 14 |
March 1 |
|
|
|
1,800 |
3,600 |
7,200 |
|
|
1.00 |
80,640 |
|
March 14 |
March 1 |
|
|
|
|
|
|
|
4,000 |
1.00 |
71,600 |
|
July 1 |
April 18 |
|
|
|
|
6,000 |
12,000 |
|
|
1.00 |
85,560 |
|
|
|
50,589 |
101,178 |
202,356 |
|
|
|
|
|
|
|
Alok Maskara |
March 14 |
March 1 |
|
|
|
9,000 |
18,000 |
36,000 |
|
|
1.00 |
322,200 |
|
March 14 |
March 1 |
|
|
|
13,500 |
27,000 |
40,500 |
|
|
1.00 |
604,800 |
|
March 14 |
March 1 |
|
|
|
|
|
|
30,000 |
|
1.00 |
537,000 |
| | 2023 PROXY STATEMENT |
_____________________
| (1) | The Remuneration Committee’s
practices for granting restricted stock units and options, including the timing of grants and approvals thereof, are described in the
section entitled “2022 Compensation Components - Equity Awards.” |
| (2) | The amounts shown in column
(d) reflect the Threshold payment for each Named Executive Officer under our cash incentive compensation plan. This amount is 50% of the
Target amounts shown in column (e). The amounts shown in column (f) are 200% of the Target amounts shown in column (e). These amounts
are based on the individual’s current annual base salary as in effect on December 1, 2022. |
| (3) | The amounts shown in column
(g), (h) and (i) reflect the Threshold, Target, and Maximum payment levels for performance-based restricted stock units and stock options
awarded to each Named Executive Officer in 2022. Performance-based restricted stock units and stock options were granted for two performance
measures: adjusted diluted EPS growth and relative TSR, as described in the section entitled “2022 Compensation Components
- Equity Awards.” Of the performance-based awards granted on March 14, 2022, 40% of this award is related to certain adjusted
diluted EPS targets and 60% is related to certain TSR targets. The amounts shown in column (g) reflect the total number of awards (including
both performance measures) at the Threshold level for each of the Named Executive Officers. These amounts are 50% of the total number
of awards at the Target level shown in column (h). The amounts shown in column (i) reflect the total number of awards at 200% of the Target
level for the adjusted diluted EPS growth awards and 200% of the Target level for the TSR awards. The award amounts were based on the
individual’s annual base salary at the time of the Remuneration Committee's approval in March 2022. Additional performance-based
restricted stock units and stock options were awarded in July 2022, which are subject to achieving certain adjusted diluted EPS levels
on or before December 31, 2025, as described in the section entitled “2022 Compensation Components - Equity Awards - Additional
2022 Equity Awards.” |
| (4) | All other award amounts in
column (j) reflect the 40% time-based awards made in 2022, as further described in the section entitled “2022 Compensation
Components - Equity Awards.” |
| (5) | Stephen Webster and Graham
Wardlow are employed in the UK and received time-based stock options with respect to their 40% time-based award entitlement for 2022,
as shown in column (k). These awards vest equally over a four-year period from the anniversary of grant date, and have an option cost
equivalent to the nominal value, as detailed in the section entitled “2022 Compensation Components - Equity Awards.” |
| (6) | The amounts shown in column
(m) reflect the grant date fair value of the awards of restricted stock units, performance share units, and stock options computed in
accordance with ASC 718. |
| | 2023 PROXY STATEMENT |
OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2022 |
Name |
Option
Awards |
|
Stock
Awards |
Number of
securities
underlying
unexercised
options
(#)
Exercisable |
Number of
securities
underlying
unexercised
options (#)
Un-
exercisable |
Equity
Incentive
Plan
Awards:
Number of
securities
underlying
unexercised
unearned
options (#) |
Option
Exercise
(US$) |
Option
Expiration Date |
|
Number of
shares of
stock or
units that
have not
vested
(#)(1) |
Market value
of shares of
stock or
units that
have not
vested
(US$)(2) |
Equity
Incentive
Plan Awards:
Number of
unearned
shares that
have not
vested (#)(3) |
Equity
Incentive Plan
Awards:
Market payout
value of
unearned
shares that
have not
vested (#)(4) |
Andy Butcher |
|
|
|
|
|
|
41,349 |
525,959 |
|
|
2020 |
|
|
|
|
|
|
|
|
3,485 |
44,329 |
2021 |
|
|
|
|
|
|
|
|
2,160 |
27,475 |
2022 |
|
|
|
|
|
|
|
|
37,688 |
479,391 |
Stephen Webster |
|
|
|
|
|
|
|
|
|
|
2019 |
— |
846 |
— |
1.00 |
March 14, 2025 |
|
|
|
|
|
2020 |
— |
1,640 |
— |
1.00 |
March 13, 2026 |
|
|
|
|
|
2021 |
— |
2,522 |
— |
1.00 |
March 15, 2027 |
|
|
|
|
|
2022 |
— |
4,101 |
9,792 |
1.00 |
March 15, 2028 |
|
|
|
|
|
Peter Gibbons |
|
|
|
|
|
|
5,488 |
69,807 |
|
|
2020 |
|
|
|
|
|
|
|
|
965 |
12,275 |
2021 |
|
|
|
|
|
|
|
|
— |
— |
2022 |
|
|
|
|
|
|
|
|
3,517 |
44,734 |
Jeffrey Moorefield |
|
|
|
|
|
|
5,157 |
65,597 |
|
|
2020 |
|
|
|
|
|
|
|
|
1,935 |
24,613 |
2021 |
|
|
|
|
|
|
|
|
— |
— |
2022 |
|
|
|
|
|
|
|
|
3,517 |
44,734 |
Graham Wardlow |
|
|
|
|
|
|
|
|
|
|
2019 |
— |
903 |
— |
1.00 |
March 14, 2025 |
|
|
|
|
|
2020 |
15 |
2,796 |
2,315 |
1.00 |
March 13, 2026 |
|
|
|
|
|
2021 |
— |
2,522 |
1,440 |
1.00 |
March 15, 2027 |
|
|
|
|
|
2022 |
— |
4,101 |
9,792 |
1.00 |
March 15, 2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________
| (1) | The grant dates and number
of restricted stock units remaining from these grants which have not yet vested are as follows: |
Name |
Grant Date |
Number of Restricted Stock Units Remaining |
Andy Butcher |
March 14, 2019 |
1,223 (a) |
March 13, 2020 |
4,180 (b) |
March 15, 2021 |
3,750 (c) |
March 15, 2021 |
5,760 (d) |
March 14, 2022 |
7,085 (e) |
May 6, 2022 |
19,351 (f) |
Peter Gibbons |
March 14, 2019 |
833 (a) |
March 13, 2020 |
1,156 (b) |
March 15, 2021 |
1,875 (c) |
March 14, 2022 |
1,624 (e) |
Jeffrey Moorefield |
March 14, 2019 |
670 (a) |
March 13, 2020 |
2,323 (b) |
March 14, 2022 |
2,164 (e) |
| _____________________ |
| (a) | These
awards were granted on March 14, 2019 and include “holding period” and “clawback” provisions. These awards represent
the 40% time-based element of the target award, at Target, allotted for 2019. Time-based restricted stock units accumulate additional
restricted stock units when the Company pays a dividend. |
| | 2023 PROXY STATEMENT |
Shares underlying the total
amount of restricted stock units are then issued when the restricted stock units vest. The award will vest evenly in four equal amounts
on the first four anniversaries of the grant date.
Given that the adjusted
diluted EPS performance for the year ended December 31, 2019 was below the US$1.65 earnings per share measurement required for the Threshold
allotment of share awards, no share awards have been earned in relation to the EPS performance metric.
| (b) | These awards were granted on
March 13, 2020 and include “holding period” and “clawback” provisions. These awards represent the 40% time-based
element of the target award, at Target, allotted for 2020. Time-based restricted stock units accumulate additional restricted stock units
when the Company pays a dividend. Shares underlying the total amount of restricted stock units are then issued when the restricted stock
units vest. The award will vest evenly in four equal amounts on the first four anniversaries of the grant date. |
Given that the adjusted
diluted EPS performance for the year ended December 31, 2020 was below the US$1.45 earnings per share measurement required for the Threshold
allotment of share awards, no share awards have been earned in relation to the EPS performance metric.
| (c) | These awards were granted on
March 15, 2021 and include “holding period” and “clawback” provisions. These awards represent the 40% time-based
element of the target award, at Target, allotted for 2021. Time-based restricted stock units accumulate additional restricted stock units
when the Company pays a dividend. Shares underlying the total amount of restricted stock units are then issued when the restricted stock
units vest. The award will vest evenly in four equal amounts on the first four anniversaries of the grant date. |
| (d) | These awards were granted on
March 15, 2021 and include “holding period” and “clawback” provisions. These awards represent the adjusted diluted
EPS performance element of the award allotted for 2021 as shown in the “Grants of Plan-Based Awards in 2022” table on page
77. Based on the financial performance of Luxfer for the year ended December 31, 2022 and an adjusted diluted EPS of US$1.29, the Maximum
level of awards associated with this performance metric has been achieved. As a result, these performance-based awards will vest in equal
amounts on March 15, 2023, March 14, 2024, and March 15, 2025. |
| (e) | These awards were granted on
March 14, 2022 and include “holding period” and “clawback” provisions. These awards represent the 40% time-based
element of the target award, at Target, allotted for 2022. Time-based restricted stock units accumulate additional restricted stock units
when the Company pays a dividend. Shares underlying the total amount of restricted stock units are then issued when the restricted stock
units vest. The award will vest evenly in four equal amounts on the first four anniversaries of the grant date. |
| (f) | These awards were granted on
May 6, 2022 and include “holding period” and “clawback” provisions. These awards represent the 40% time-based
element of the target award, at Target, allotted for 2022. Time-based restricted stock units accumulate additional restricted stock units
when the Company pays a dividend. Shares underlying the total amount of restricted stock units are then issued when the restricted stock
units vest. The award will vest evenly in four equal amounts on the first four anniversaries of the grant date. |
| (2) | The amounts in this column
were calculated by multiplying the closing market price of our ordinary shares on the last trading day of our most recently completed
fiscal year, which was US$13.72, less the issue cost of $1.00 per share, by the number of unvested restricted stock units. |
| (3) | Includes performance-based
EPS Growth awards and 2025 EPS awarded in fiscal year 2022, at Target performance level. Further information regarding these awards is
provided in footnote 4. |
For the 2020 TSR awards,
the number of performance share units shown in this column reflects the Threshold performance level, given relative total shareholder
return at the end of the measurement period ended December 31, 2022 was at Threshold.
For the 2021 TSR awards,
the number of performance share units shown in this column reflects the Threshold performance level, in accordance with SEC regulations,
given the performance level at December 31, 2022 was at Threshold. The measurement period continues until December 31, 2023.
For the 2022 TSR awards,
the number of performance share units shown in this column reflects the Threshold performance level, in accordance with SEC regulations,
given the performance level at December 31, 2022 was at Threshold. The measurement period continues until December 31, 2024.
| (4) | The amounts in this column
were calculated by multiplying the closing market price of our ordinary shares on the last trading day of our most recently completed
fiscal year, which was US$13.72, less the issue cost of $1.00 per share, by the number of unearned performance-based share awards that
have not vested. The following table shows the number of unearned performance-based share awards that have not vested and their respective
vesting date: |
| | 2023 PROXY STATEMENT |
Name |
Vesting Date |
Number of Performance Share
Units or Options |
Andy Butcher |
March 13, 2023 |
1,742 |
March 13, 2024 |
1,743 |
March 15, 2024 |
1,080 |
March 15, 2025 |
5,418 |
March 14, 2026 |
32,000 |
March 15, 2026 |
1,350 |
Stephen Webster (a) |
March 13, 2023 |
— |
March 13, 2024 |
— |
March 15, 2024 |
— |
March 15, 2025 |
2,892 |
March 14, 2026 |
6,000 |
March 15, 2026 |
900 |
Peter Gibbons |
March 13, 2023 |
482 |
March 13, 2024 |
483 |
March 15, 2024 |
— |
March 15, 2025 |
1,157 |
March 14, 2026 |
2,000 |
March 15, 2026 |
360 |
Jeffrey Moorefield |
March 13, 2023 |
967 |
March 13, 2024 |
968 |
March 15, 2024 |
— |
March 15, 2025 |
1,157 |
March 14, 2026 |
2,000 |
March 15, 2026 |
360 |
Graham Wardlow (a) |
March 13, 2023 |
1,157 |
March 13, 2024 |
1,158 |
March 15, 2024 |
720 |
March 15, 2025 |
3,612 |
March 14, 2026 |
6,000 |
March 15, 2026 |
900 |
Alok Maskara |
March 13, 2023 |
— |
March 13, 2024 |
— |
March 15, 2024 |
— |
March 15, 2025 |
— |
March 14, 2026 |
— |
March 15, 2026 |
— |
Heather Harding |
March 13, 2023 |
— |
March 13, 2024 |
— |
March 15, 2024 |
— |
March 15, 2025 |
— |
March 14, 2026 |
— |
March 15, 2026 |
— |
|
|
| (a) | As
Stephen Webster and Graham Wardlow are UK-based employees, they receive awards in the form of stock options, which expire two years following
the final vesting date of a specific stock option award. |
| | 2023 PROXY STATEMENT |
2022 OPTION EXERCISES AND STOCK VESTED TABLE |
The following table shows
a summary of the stock options exercised by the Named Executive Officers in 2022 and the restricted stock or restricted stock units vested
for the Named Executive Officers during 2022.
Name |
Option awards |
|
Stock awards |
Number of shares
acquired on exercise (#) |
Value realized on
exercise (US$) (1) |
|
Number of shares
acquired on vesting (#) |
Value realized on
vesting (US$) (2) |
Andy Butcher |
— |
— |
|
2,508 |
48,588 |
Stephen Webster |
3,107 |
49,462 |
|
— |
— |
Peter Gibbons |
— |
— |
|
1,332 |
25,738 |
Jeffrey Moorefield |
— |
— |
|
4,110 |
79,843 |
Graham Wardlow |
1,827 |
30,109 |
|
— |
— |
Alok Maskara |
— |
— |
|
41,608 |
718,748 |
Heather Harding |
— |
— |
|
3,761 |
72,807 |
_____________________
| (1) | Reflects
the amount of shares acquired on exercise at the share price on the date of exercise. The number of shares acquired is after the forfeiture
of shares to cover option cost and taxes due. |
| (2) | Reflects
the amount of shares acquired on vesting of the restricted stock units at the share price on the date of vesting. The number of shares
acquired is after the forfeiture of shares to cover issue cost and taxes due. In addition, restricted stock units carry with them the
right to receive accumulated dividends, in shares, during the period of the award. The dividends are not credited until the award vests.
The value realized on vesting includes the vesting of the required portion of these dividend shares. |
Luxfer’s pension plans, the
Luxfer Group Pension Plan and the Luxfer Group Supplementary Pension Plan (“Salaried Pension Plans”), were closed to new participants
in 1998 but remained open for accrual of future benefits based on career-average salary until April 5, 2016. The Salaried Pension Plans
are now frozen. Participants in the Salaried Pension Plans no longer earn additional credited service, and changes in salary for a participant
are not considered in determining pension benefits. The Salaried Pension Plans were frozen consistent with contemporary benefit practices.
The Named Executive Officers who
were employed by Luxfer on or before 1998 participate on the same basis as other salaried employees in the non-contributory Salaried Pension
Plans. Stephen Webster, Peter Gibbons, Jeffrey Moorefield, Alok Maskara, and Heather Harding do not participate in the Salaried Pension
Plans because they joined Luxfer following the Salaried Pension Plans’ closure to new participants in 1998.
The table below lists the number
of years of credited service and present value of accumulated pension benefits as of December 31, 2022, for each of the Named Executive
Officers who participated in the Salaried Pension Plans. The disclosed amounts are actuarial estimates only and do not necessarily reflect
the actual amounts that will be paid to the Named Executive Officers, which will only be known at the time they become eligible for payment.
Name |
Name of Plan |
Length of
Credited Service |
Present value of accumulated benefit
(US$) (1) |
Payments during
last fiscal year
(US$) |
Graham Wardlow |
Luxfer Group Pension Plan |
31 years, 7 months |
1,002,144 |
— |
Luxfer Group Supplementary Pension Plan |
4 years |
31,317 |
— |
Andy Butcher |
Luxfer Group Pension Plan |
21 years, 6 months |
902,171 |
— |
Luxfer Group Supplementary Pension Plan |
1 year, 3 months |
16,863 |
— |
_____________________
| (1) | The present
value of accumulated benefit is a UK benefit and is paid in GBP sterling. The amounts have been translated into US dollars at the December
31, 2022, exchange rate of £1: US$1.2045. |
| | 2023 PROXY STATEMENT |
CEO
PAY RATIO
In accordance with Item 402(u) of
Regulation S-K, we are required to provide certain information concerning the ratio between the annual total compensation of Luxfer’s
CEO, Andy Butcher, and the annual total compensation of the Company’s median compensated employee (“MCE”), in each case
generally calculated in the manner that annual total compensation is calculated for purposes of the Summary Compensation Table.
Methodology
Item 402(u) of Regulation S-K requires
the identification of a median compensated employee at least once every three years. We identified a different MCE during and for fiscal
year 2022 for the purposes of calculating the CEO Pay Ratio. As of December 31, 2022, Luxfer had approximately 1,350 employees worldwide.
Pursuant to the 5% de minimus exception established by the SEC, we excluded a total of 63 employees from this analysis, given the
number of employees working at these facilities. The countries and applicable number of employees that were excluded from this analysis
were as follows:
Country |
Headcount |
Australia |
3 |
Canada |
45 |
China |
15 |
From the remaining 1,287 employees,
we identified the MCE via payroll data, calculating annual total compensation for these 1,287 employees using the same methodology that
we use to determine the annual total compensation of our Named Executive Officers, as reported in the Summary Compensation Table. This
calculation included adding the MCE’s actual fiscal 2022 hourly pay; overtime pay; fiscal 2022 bonus or cash incentive, if any;
perquisites, such as mobile phone allowance, if any; amounts contributed by Luxfer to the MCE’s individual defined contribution
account in fiscal year 2022; Company contributions to the MCE’s ESPP or SIP account, if applicable; and any equity awards granted
to the MCE in 2022 (valued as of the grant date).
The MCE identified and used for
purposes of determining our CEO Pay Ratio for fiscal year 2022 was an office employee at one of the Company’s UK facilities.
Conclusion
The MCE’s total compensation
for fiscal year 2022 was US$53,215. Mr. Butcher’s compensation for purposes of the ratio totaled US$2,326,299, being the same as
that reported in the Summary Compensation Table on page 75 of this Proxy Statement. Based on the foregoing information, the ratio between
our CEO’s total 2022 compensation and the median total compensation of our workforce is estimated to be 44 to 1.
SEC rules and guidance for identifying
the median annual total compensation of employees and calculating the pay ratio based on the MCE's annual total compensation allow companies
to adopt a variety of methodologies; to apply certain exclusions; and to make reasonable estimates and assumptions that reflect employee
populations and compensation practices. Accordingly, the pay ratios reported by other companies may not be comparable to Luxfer's pay
ratio, as other companies may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
| | 2023 PROXY STATEMENT |
2022