UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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¨ | Soliciting Material Pursuant to §240.14a-12 |
Corning Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Corning Incorporated is filing the attached additional materials in support of the Board of Directors recommended vote at our 2014 Annual Shareholders Meeting.
March
2014 |
Investor Relations
©
Corning Incorporated 2014
2
Forward Looking and Cautionary Statements
Certain statements in this presentation constitute forward
looking statements
within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Such forward looking
statements are based on current expectations and involve
certain risks and uncertainties. Actual results might differ from
those projected in the forward looking statements. Additional
information concerning factors that could cause actual results to
materially differ from those in the forward looking statements is
contained in the Securities and Exchange Commission filings on
the Company and at the end of this presentation. |
Investor Relations
©
Corning Incorporated 2014
3
The World Leader in Specialty Glass and Ceramics
Business Segment
Primary Products
Primary Competitors
(Largely Non-US Companies)
Display Technologies
Glass substrates for LCD flat panel
televisions, computer monitors, laptops,
and other consumer electronics
Asahi Glass Co. Ltd.
Nippon Electric Glass Co. Ltd.
Environmental Technologies
Ceramic substrates and diesel filters for
emission control systems
Ibiden Co., Ltd.
NGK Insulators Ltd.
Optical Communications
Optical fiber, cable, and hardware and
equipment for telephone and Internet
communication networks
Prysmian Group
TE Connectivity Ltd.
Life Sciences
Glass and plastic labware, as well as
label-free technology, media, and
reagents for cell culture, genomics, and
bioprocessing applications
Thermo Fisher Scientific, Inc.
Life Technologies Corporation
Specialty Materials
Cover glass for consumer electronics,
advanced optics, and specialty glass
solutions for a number of industries
Asahi Glass Co. Ltd.
Nippon Electric Glass Co. Ltd.
Hoya Corp.
Agilent Technologies, Inc.
Our largest segment
Display Technologies
generated over
70% of our total core net income in 2013 |
Investor Relations
©
Corning Incorporated 2014
4
Our Strategic Framework
Corning is a 163-year old company with a long track record of
success. We are driven by our desire to create life-changing
innovation. We believe our unique capabilities and culture are a
sustainable competitive advantage that can deliver earnings
growth and value to shareholders over long time periods.
We grow primarily through global innovation. Innovation comes
with risks, so we proactively work to bring balance and stability to
the company.
We participate in diverse markets to reduce our
volatility, and we have a conservative financial strategy to offset
our relatively high operating leverage. Finally --
and most
importantly --
we always live our values to ensure the trust of all
our stakeholders. |
Investor Relations
©
Corning Incorporated 2014
5
The 2013 Say on Pay Vote and Our Response
Our 2013 Say-on-Pay vote (71%) led us to a comprehensive review of our
programs and shareholder outreach effort
We reached out to over 30 of our largest shareholders, representing more
than 40% of our outstanding shares
Shareholders sent us the following messages during our outreach:
Explain peer grouping better
Strengthen and explain the linkage of pay to performance in a down cycle
Increase the proportion of pay that is performance-based
Extend performance time horizon for long-term plan
We heard the message from our shareholders and
took decisive action to respond to their concerns |
Investor Relations
©
Corning Incorporated 2014
6
Our Response to the 2013 Say on Pay Vote
Investor Feedback
Responsive Program Refinements
Explain Peer Grouping
Clarify the use of a compensation peer group relative
to Cornings key competitors
Heightened disclosure of financial performance peers in
addition to compensation benchmark peers
Strengthen Pay for Performance Link in Down
Cycle
100% of NEOs
annual bonus under the annual
Performance Incentive Plan will be capped at 150% of
target (vs. our normal cap of 200% of target) if the
profitability goal is budgeted to be lower than the prior
years actual result and TSR for that year is positive
If TSR is negative for such year, the bonus opportunity
will be capped at 100%
Increase Proportion of Pay that is Performance
Based
Increased the weighting of Cash Performance Units
(CPUs) from 50 to 60% of LTI opportunity, as of 2014
Longer Performance Periods
Extend the performance time horizon for the long-
term incentive program
Extended the performance timeline for CPUs to reflect
average performance over three years (vs. the current
one year performance period), based on performance
goals that are set each year |
Investor Relations
©
Corning Incorporated 2014
7
Key Elements of Compensation:
Strengthening Links Between Pay and Performance
Key Pay
Elements
Form of
Compensation
Delivered
Short-Term/Annual Incentives
Performance
Metrics
Long-Term Incentives
Restricted
Stock and
Stock
Options
Performance
Incentive Plan (Cash)
Goal Sharing
(Company-Wide
Unit Plan;
Paid in Cash)
Cash Performance Units
(CPUs)
Weighted Average of
Business Unit Plans
2013:
Each are 25% of
LTI Target
2013:
Net Profit After Tax (NPAT)
(Adj.)
2014:
Core EPS (75%)
and Core Net Sales Growth
(25%) (Adj.)
2013:
50% of LTI Target;
Based on 50% Operating Cash
Flow (Adjusted) and 50% EPS
(Adj.)
2014:
60% of LTI Target;
Based on 70% Operating Cash
Flow (Adj.) and 30% on Core Net
Sales Growth
2014:
Restricted Stock
25% of LTI Target;
Options 15% of
LTI Target |
Investor Relations
©
Corning Incorporated 2014
8
Performance Metric Goal Setting:
Rigorous and Performance-Based
CEO target compensation starts at the median of the peer group, moving up
or down based on company performance
Use business-driven, bottom-up and corporate, top-down budgets subject
to multiple levels of review in setting meaningful performance metrics on
executive compensation
Use a flat spot
in our annual incentive plan that is intended to avoid
imprudent risk-taking to achieving cliff goals
The flat spot
requires targets to be exceeded by a meaningful margin
before significantly increasing payouts |
Investor Relations
©
Corning Incorporated 2014
9
Putting Peer Comparisons in Context
The majority of our businesses do not have unique, identifiable U.S. peers
Most of our businesses compete with non-U.S. companies, or privately held
companies that do not provide comparable executive compensation
disclosure
Direct competitors are not suitable for a compensation peer group because
they are non-U.S. and/or much larger companies
We must look to globally diversified companies or innovation companies in
other industries to find companies of similar size and complexity; such
companies are good for compensation comparison purposes, but not
for
direct financial performance comparisons
Our goal is to position target compensation for our CEO within a
competitive
range of the peer group median |
Investor Relations
©
Corning Incorporated 2014
10
Distinguishing Compensation Peers and Competitors
Corning Business
Segment
Primary Competitors
(Largely Non-US Companies)
Compensation Peers
Display Technologies
Asahi Glass Co. Ltd.
Nippon Electric Glass Co. Ltd.
Advanced Micro Devices, Inc.
Agilent Technologies, Inc.
Applied Materials, Inc.
BorgWarner, Inc.
Boston Scientific Corporation
Broadcom Corporation
Cummins Inc.
Danaher Corporation
Dover Corporation
Eaton Corporation PLC
Harris Corporation
Juniper Networks, Inc.
Medtronic, Inc.
Monsanto Company
Motorola Solutions, Inc.
NetApp, Inc.
PPG Industries, Inc.
Praxair, Inc.
QUALCOMM, Inc.
Rockwell Automation, Inc.
TE Connectivity Limited
Texas Instruments Incorporated
Thermo Fisher Scientific, Inc.
Environmental Technologies
Ibiden Co., Ltd.
NGK Insulators Ltd.
Optical Communications
Prysmian Group
TE Connectivity Ltd.
Life Sciences
Thermo Fisher Scientific, Inc.
Life Technologies Corporation
Specialty Materials
Asahi Glass Co. Ltd.
Nippon Electric Glass Co. Ltd.
Hoya Corp.
Agilent Technologies, Inc. |
Investor Relations
©
Corning Incorporated 2014
11
Distinguishing Compensation Peers and Competitors
Size Metric
Cornings Percent Rank*
Revenue
39%
Market Capitalization
52%
Net Income
78%
Total Assets
83%
Employees
61%
*Based on compensation data in proxy statements filed in
2013.
Our key competitors are not suitable for a compensation peer group
We use a mix of complex, globally diversified companies for the compensation
peer group
The compensation peer group is reasonably aligned with Corning in terms of
complexity, market value, and financial comparability
|
Investor Relations
©
Corning Incorporated 2014
12
Sound Compensation Governance and Risk Management
Thoughtful Oversight and State-of-the-Art Compensation Governance
Board engagement with shareholders and demonstrated responsiveness to input
Mix
of
cash
and
equity
payouts
tied
to
both
short-term
financial
performance
and
long-term
value
creation
Significant share ownership requirements (6x salary for CEO, 3x for other
NEOs) Capped payout levels for annual incentives
Anti-hedging and pledging policies
Clawback policy
Eliminated tax gross-ups
100% independent Compensation Committee with experienced mix of directors
Independent compensation consultant |
Appendix A: Performance Comparisons |
Investor Relations
©
Corning Incorporated 2014
14
2013 Financial Performance Peer Group Comparison
Our largest competitors and most relevant financial performance peers are not U.S.
companies. Therefore, the best companies for financial performance comparison
purposes are not the same as those in the Compensation Peer Group we use for
compensation benchmarking.
The
following
tables
contains
certain
financial
performance
data
of
Corning
and
each
of
our
business
segments,
compared
with
our
largest
competitors
in
each
of
those
segments,
including
core
sales
and
NPAT
compound
annual
growth rates (CAGR). Overall, we performed well in 2013 in each of our
business segments. Our performance was particularly strong in our Display
Technologies segment, which accounted for more than 70% of our core net income in
2013. |
Investor Relations
©
Corning Incorporated 2014
15
2013 Financial Performance Peer Group Comparison (Contd)
|
Investor Relations
©
Corning Incorporated 2014
16
2013 Financial Performance Peer Group Comparison (Contd)
|
Investor Relations
©
Corning Incorporated 2014
17
Forward Looking and Cautionary Statements
This
presentation
contains
forward-looking
statements
(within
the
meaning
of
the
Private
Securities Litigation Reform Act of 1995), which are based on current expectations
and assumptions about Cornings financial results and business
operations, that involve substantial risks and uncertainties that could
cause actual results to differ materially. These risks and uncertainties
include: the effect of global political, economic and business conditions;
conditions in the financial and credit markets; currency fluctuations; tax rates;
product demand and industry capacity; competition; reliance on a
concentrated customer base; manufacturing efficiencies; cost reductions;
availability of critical components and materials; new product
commercialization; pricing fluctuations and changes in the mix of sales between
premium and non-premium products; new plant start-up or
restructuring costs; possible disruption in commercial
activities
due
to
terrorist
activity,
armed
conflict,
political
or
financial
instability,
natural disasters, adverse weather conditions, or major health concerns; adequacy
of insurance; equity company activities; acquisition and divestiture
activities; the level of excess or obsolete inventory; the rate of
technology change; the ability to enforce patents; product and components
performance issues; retention of key personnel; stock price fluctuations; and
adverse litigation or regulatory developments. These and other risk factors are
detailed in Cornings filings with the Securities and Exchange
Commission. Forward-looking statements speak only as of the day that
they are made, and Corning undertakes no obligation to update them in light
of new information or future events. |
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