As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/27/20  Aptargroup Inc                    DEF 14A     5/06/20    1:8.6M                                   Toppan Merrill Bridge/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Statement                          HTML   1.19M 

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.          )

 

 

 

 

 

 

 

 

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS

To Our Stockholders:

It is my pleasure to invite you to attend our annual meeting of stockholders of AptarGroup, Inc. (“Aptar”) on May 6, 2020. At the meeting, we will review Aptar’s performance for fiscal year 2019 and vote on the following matters:

We will also transact any other business that is properly raised at the meeting or any postponements or adjournments of the meeting.

Information Regarding Attending the Annual Meeting:

In light of public health concerns regarding the novel coronavirus (COVID-19) pandemic and related travel restrictions, the Board of Directors has determined that it is prudent that this year’s annual meeting be held in a virtual-only format via live audio webcast. You may attend the virtual annual meeting at www.virtualshareholdermeeting.com/ATR2020. To participate in the annual meeting, you will need the 16-digit control number that appears on your Notice of Internet Availability of Proxy Materials, proxy card or the instructions that accompanied your proxy materials. Refer to the “Frequently Asked Questions” section of the proxy statement for detailed procedures regarding attending, submitting questions and voting at the virtual annual meeting.

A list of stockholders entitled to vote at the meeting will be available for examination during normal business hours for ten days prior to the meeting for any purpose germane to the meeting at Aptar’s corporate headquarters at 265 Exchange Drive, Suite 100, Crystal Lake, Illinois 60014. The stockholder list will also be available during the meeting at www.virtualshareholdermeeting.com/ATR2020.

Your Vote Is Important:

The vote of each stockholder is important to us. Whether or not you expect to attend the virtual annual meeting, I urge you to vote by the Internet or by telephone as soon as possible. If you received a printed copy of the proxy materials, you may also complete, sign and date your proxy card and return it in the envelope that was included with the printed materials.

We look forward to your attendance at the virtual annual meeting on May 6 and addressing your questions and comments.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on May 6, 2020: The Proxy Statement and the 2019 Annual Report/Form 10‑K are available at www.proxyvote.com.

 

 

 

TABLE OF CONTENTS

 

 

 

PROXY SUMMARY

Our commitment to the environment and cost reduction

AptarGroup, Inc. (“Aptar” or “Company”) is pleased to take advantage of the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their stockholders over the Internet. We believe that this e-proxy process expedites stockholders’ receipt of proxy materials, while also lowering the costs and reducing the environmental impact of our annual meeting. On March 27, 2020, we mailed to most of our stockholders a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access our proxy statement and annual report and vote online. On the same date, we mailed to all other stockholders a copy of the proxy statement and annual report by mail unless they have elected to receive the annual meeting materials over the Internet.

Our Director Nominees

 

Our Business Highlights

We continue to perform well against peers and deliver strong shareholder returns.

In 2019, we achieved the following financial and operational benchmarks.

*     Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, business transformation charges, acquisition-related costs, and other special items. See the reconciliation to net income included on page 23 of the Company’s Annual Report on Form 10‑K for the year ended December 31, 2019.

Our Corporate Governance Facts

Our directors exhibit an effective mix of diversity, experience and perspective

Our Executive Compensation Philosophy and Objectives

 

Environmental, Social and Governance Enhancements

We are committed to advancing a more sustainable and equitable consumer economy that yields benefits for all.

In 2019, we achieved the following corporate social responsibility benchmarks.

 

 

PROPOSAL 1—ELECTION OF DIRECTORS

The Board of Directors is currently comprised of ten members divided into three classes, with one class of directors elected each year for a three year term. The Board of Directors proposes the following nominees, all of whom are currently serving as directors, to be elected to a term expiring at the 2023 annual meeting.

If any of the director nominees is unable or fails to stand for election, the persons named in the proxy intend to vote for a substitute nominee nominated by the Corporate Governance Committee of the Board of Directors.

We believe all of the members of the Board of Directors are individuals of outstanding character and sound judgment that have the business experience and acumen necessary to work together effectively and to make valuable contributions to the Board of Directors and management. As a U.S.‑based company with significant international operations, particularly in Europe, we seek to maintain a balanced Board consisting of directors that are U.S. citizens and directors that are citizens from countries other than the U.S. Additionally, we value the following attributes: operating experience in packaging or packaging-related businesses; skill sets which may include experience in finance, strategic planning, marketing, pharmaceutical products and manufacturing; diversity, including a mix of genders and multi‑cultural viewpoints; and previous board of directors experience. Aptar was recognized by the Women’s Forum of New York as a “Corporate Champion” for gender diversity in the boardroom. Currently, our Audit, Management Development and Compensation, and Corporate Governance Committees are all chaired by women.

Set forth below is biographical and other background information concerning each director nominee and each continuing director. This information includes each person’s principal occupation as well as a discussion of the specific experience, qualifications, attributes and skills of each person that led to the Board of Directors’ conclusion that he or she should continue to serve as a director. In addition, set forth below is the year during which each person began serving on the Board of Directors and his or her age.

 

 

NOMINEES FOR ELECTION AT THIS MEETING TO TERMS EXPIRING 2023

 

 

 

DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2021

 

 

 

 

DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2022

 

 

 

 

CORPORATE GOVERNANCE

Aptar’s corporate governance documents are available through the Corporate Governance link on the Investor Relations page of the Aptar website at: investors.aptar.com, and include the following:

The information provided on our website is not part of this proxy statement and is therefore not incorporated herein by reference.

Corporate Governance Principles

The Board has adopted a set of Corporate Governance Principles to provide guidelines for Aptar and the Board to promote effective corporate governance. The Corporate Governance Committee is responsible for overseeing and reviewing the Corporate Governance Principles and recommending any changes to the Board. The Corporate Governance Principles cover topics including, but not limited to:

Code of Business Conduct and Ethics

Ethical business conduct is a shared value of our Board, management and employees. Aptar’s Code of Business Conduct and Ethics (“Code of Conduct”) applies to our Board as well as our employees and officers, including our principal executive officer and our principal financial and accounting officer. The Code of Conduct summarizes the long‑standing principles of conduct that Aptar follows to ensure that business is conducted with integrity and in compliance with the law, including, but not limited to:

Aptar encourages all employees, officers and directors to promptly report any violations of the Code of Conduct to the appropriate persons identified in the Code of Conduct. In the event that an amendment to, or a waiver from, a provision of the Code of Conduct that applies to any of our directors or executive officers is necessary, Aptar intends to post such information on its website as and when required by the SEC and the New York Stock Exchange (“NYSE”).

Sustainability

Aptar is committed to economic, social and environmental sustainability. Our sustainability report can be found on the Sustainability page of the Aptar website at www.aptar.com.

Policy Against Hedging and Pledging

Our Board has adopted a policy that prohibits executive officers and directors, and discourages employees, from engaging in hedging or pledging transactions involving any equity security of Aptar.

Common Stock Ownership Guidelines

In 2015, the Board adopted stock ownership guidelines that require all non-executive directors to hold shares of Aptar common stock having a value of at least five times the annual cash retainer.

 

Under the guidelines, directors must achieve the respective level of ownership within a phase‑in period consisting of five years from the measurement date of April 17, 2015, which is the date when the guidelines were adopted, or if they became a director after the measurement date, within five years from becoming a director. As of December 31, 2019, every non-executive director (including the Chairman of the Board) is either in compliance with the guidelines or within the phase‑in period.

Board Structure

The Chairman of the Board is an independent director who is not an executive officer or employee of the Company. The Company believes that having an independent Chairman enhances the oversight ability of the Board. An independent Chairman can also provide stability and continuity during senior management transitions.

The Board has three primary committees, all with the following characteristics:

An affirmative vote of at least 70% of the Board is required to change the size, membership or powers of these committees, to fill vacancies in them, or to dissolve them.

Under the corporate governance requirements of the NYSE listing standards, if an audit committee member simultaneously serves on the audit committee of more than three public companies, the board must determine that such simultaneous service would not impair the ability of such member to effectively serve on the listed company’s audit committee. The Board has determined that the service of Ms. Montiel on the audit committee of more than three public companies does not impair her ability to serve effectively as a member of our Audit Committee.

For further information on this committee’s procedures for consideration of executive compensation, see our “Compensation Discussion and Analysis.”

Under the Management Development and Compensation Committee charter, this committee has the authority to retain compensation consultants, independent legal counsel and other outside advisers as deemed necessary. For 2019, the Management Development and Compensation Committee engaged Willis Towers Watson to be the Management Development and Compensation Committee’s compensation consultant. The Management Development and Compensation Committee has determined that Willis Towers Watson is independent according to the advisor independence factors outlined by the NYSE.

For further information on this committee’s procedures for director nominations, see “Nomination of Directors.”

Risk Oversight

The Board is responsible for the Company’s risk oversight, which is designed to drive the identification, analysis, discussion and reporting of our high priority enterprise risks.  The risk oversight program facilitates constructive dialog at the senior management and Board levels to proactively identify and manage enterprise risks. In connection with this process, the Board receives, analyzes and discusses a presentation annually that is prepared by senior management. This presentation includes an assessment and discussion of various risks, including but not limited to:

At each Audit Committee meeting, the Audit Committee discusses whether any new financial risks have arisen and the steps management has taken to monitor and control any such exposures.

Risk Assessment of Compensation Policies and Practices

The Company has concluded that there are not any compensation policies or practices that are reasonably likely to have a material adverse effect on the Company. The Board concurred with this conclusion. In conducting its risk assessment related to compensation policies and practices, the Company considered, among other things, that the policies and practices do not offer the opportunity for excessive awards, the Company has reasonable stock ownership guidelines, the policies and practices are reviewed and approved by the Management Development and Compensation Committee, the Company has an established, robust control environment and the Company conducts a regular monthly business review that monitors quality of reporting and prevents excessive risk taking.

Independence of Directors

Our Corporate Governance Principles provide that the Board must be composed of a substantial majority of independent directors with an objective of having the Board consist entirely of independent directors (other than the CEO). No director qualifies as independent unless the Board affirmatively determines that the director has no material relationship with Aptar either directly or indirectly as a partner, stockholder or officer of an organization that has a relationship with Aptar.

*Current President and CEO

In addition, the Board determined that Alain Chevassus, who did not stand for re-election at the 2019 annual meeting, was an independent director. Steve Hagge, who also did not stand for re-election at the 2019 annual meeting, was not independent due to his service as our former President and CEO.

The Board has made its independence determination based on the following categorical standards, in addition to any other relevant facts and circumstances. These standards provide that a director generally will not be independent if:

The Board considers the following to be immaterial when making independence determinations:

Executive Sessions

Independent directors meet regularly in executive sessions without management. The Non-Executive Chairman of the Board, Mr. Fotiades, presides over these sessions. An executive session is held in conjunction with each regularly scheduled Board meeting and other sessions may be held from time to time as required.

Nomination of Directors

In identifying and evaluating nominees for director, the Corporate Governance Committee takes into account the applicable requirements for directors under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the listing standards of the NYSE. The Corporate Governance Committee also takes into account the outside positions of the director nominees, together with their contributions to Aptar’s Board and their other business and professional commitments, to ensure that each director had, and will have, sufficient capacity to serve on Aptar’s Board. Mr. Fotiades is CEO and a director of Cantel Medical Corp., and a director of another public company besides Aptar. Mr. Fotiades has advised the Aptar Board that by December 31, 2020, he will take action so that he will have fewer commitments. Consistent with our Corporate Governance Principles, Mr. Fotiades’ commitments were considered when the Board formed its recommendation that Mr. Fotiades should continue to serve as a director of Aptar.

The Board has established a maximum age limit for director nominees. Nominees must be 74 years old or younger at the time of election or re-election. In addition, the Corporate Governance Committee may take into consideration such factors and criteria as it deems appropriate, including, but not limited to:

In addition to candidates recommended by members of the Board or management, the Corporate Governance Committee also considers individuals recommended by stockholders. The Corporate Governance Committee evaluates candidates recommended for director by stockholders in the same way that it evaluates any nominee recommended by members of the Board or management. In order to recommend a candidate, stockholders must submit the individual’s name and qualifications in writing to the Corporate Governance Committee (in care of the Secretary at Aptar’s principal executive offices at 265 Exchange Drive, Suite 100, Crystal Lake, Illinois 60014) and otherwise in accordance with all of the procedures outlined under “Other Matters—Stockholder Proposals and Nominations” for a director nomination.

The Corporate Governance Committee may engage outside advisers to identify potential director candidates from time to time. The effectiveness of the nomination process is evaluated by the Board each year as part of its annual self‑evaluation and more formally by the Corporate Governance Committee as it evaluates and identifies director candidates.

Majority Voting Policy

Our amended and restated by‑laws require majority voting for the election of directors in uncontested elections. This means that a director nominee in an uncontested election must receive a number of votes “FOR” that director’s election that exceeds the number of votes cast “AGAINST” that director’s election. Our Corporate Governance Principles further provide that any incumbent director who does not receive a majority of “FOR” votes will promptly tender to the Board his or her resignation from the Board. The Corporate Governance Committee will consider the tendered resignation and recommend to the Board whether to accept or reject the tendered resignation, or whether other action should be taken. The Board will consider the recommendation and publicly disclose its decision within 120 days after the annual meeting. The director who tenders his or her resignation will not participate in the recommendation of the Corporate Governance Committee or the decision of the Board with respect to his or her resignation.

Communications with the Board of Directors

The Board has established a process for stockholders and other interested parties to communicate with the Board or an individual director, including the Non-Executive Chairman or the independent directors as a group. A stockholder or other interested party may contact the Board or an individual director by writing to their attention at Aptar’s principal executive offices at 265 Exchange Drive, Suite 100, Crystal Lake, Illinois 60014. Communications received in writing are distributed to the Board or to individual directors as appropriate in accordance with procedures approved by Aptar’s independent directors.

BOARD MEETING ATTENDANCE

The Board met 8 times in 2019. During 2019, no director attended fewer than 75% of the aggregate number of meetings of the Board held during such director’s term and the committees on which each director then served. Aptar does not have a formal policy regarding director attendance at the annual meeting of stockholders. Mr. Tanda attended the 2019 annual meeting.

Current Committee Membership and Meetings Held in 2019

X*—Chairperson; (I)—Independent Director

BOARD COMPENSATION

*Employees of Aptar do not receive any additional compensation for serving as members of the Board or any of its committees. Each director is reimbursed for out‑of‑pocket expenses incurred while attending Board and committee meetings. No retirement benefits or perquisites are provided to non‑employee directors.

** The Chairman is not an executive of Aptar.

After conducting a review of director compensation in 2019, the Board approved an increase in the annual cash retainer for directors from $75,000 to $100,000 and in the value of equity awards from $130,000 to $140,000. This increase is intended to facilitate the continued attraction and retention of directors with the skills, expertise and experience valued by Aptar and positions the total compensation for directors near the market median for the general industry survey data and Aptar’s peer group used to evaluate executive compensation (described below under “Compensation Determination” in the “Compensation Discussion and Analysis” discussion). No changes in compensation were made to committee chair positions. The Chairman of the Board position is compensated with $90,000 in an additional retainer and $20,000 in additional equity awards. Thus, after the 2019 additions in director compensation, the Chairman of the Board was compensated with $190,000 in cash and $160,000 in equity awards.

The following table includes fees paid in cash during 2019 and the grant date fair value of RSUs granted during 2019 to each non-employee director. Mr. Tanda, our Chief Executive Officer, does not receive additional compensation for his service as a director of Aptar. Please see the 2019 Summary Compensation Table for the compensation received by Mr. Tanda in his capacity as Chief Executive Officer of the Company.

2019 DIRECTOR COMPENSATION

(1)The amounts reported in this column represent the grant date fair value of RSUs granted during 2019, calculated using the closing market price of our common stock on April 30, 2019 ($111.24). As of December 31, 2019, Mr. Fotiades held 1,436 RSUs and each other non-employee director held 1,257 RSUs.

(2)The aggregate number of options which were granted prior to May 6, 2015 and which remained outstanding as of December 31, 2019 for each non-employee director is as follows: G. Fotiades—38,000; A. Kramvis—9,500; and J. Smith—40,251. None of the other non-employee directors held outstanding options as of December 31, 2019.

(3)Amounts reported include charitable contributions by Aptar under Aptar’s matching gift program.

(4)Messrs. Chevassus and Hagge retired from the Board in May 2019 and as a result, did not receive compensation after the 2019 annual meeting.

 

PROPOSAL 2—ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

Pursuant to Section 14A of the Exchange Act, Aptar stockholders are being offered the opportunity to cast a non-binding advisory vote at the annual meeting to approve the compensation of Aptar’s Named Executive Officers (“NEOs”) as disclosed in the Compensation Discussion and Analysis (“CD&A”) and tabular disclosures of this proxy statement. This is not a vote on the Company’s general compensation policies or the compensation of the Board. We currently intend to submit an advisory vote on the compensation of our NEOs to our stockholders annually.

Aptar’s compensation philosophy and objectives are to fairly reward our executives for growing our business and increasing value to stockholders and to retain our experienced management team.

The overall compensation program for NEOs includes an annual performance incentive element that rewards the NEOs for the Company’s short-term performance and improvement in Company performance from the prior year, as well as equity-based elements (RSUs and long-term performance incentive awards in the form of performance-based RSUs, or PRSUs) that provide for long-term compensation that is driven by our share performance and, therefore, is aligned with our stockholders’ interests. The specific objectives of our compensation program are that a substantial portion of the NEOs’ compensation should be performance-based and should be delivered in the form of equity-based awards. Our CD&A describes our compensation philosophy and objectives in more detail.

The Board of Directors values the opinions of our stockholders. Although the resolution is advisory and non-binding, the Board will consider the outcome of the advisory vote when making future compensation decisions.

 

 

PROPOSAL 3—APPROVAL OF AN AMENDMENT TO THE 2018 EQUITY INCENTIVE PLAN

Background

As of March 13, 2020, there were 694,345 shares of common stock that remained available for future issuances under the AptarGroup, Inc. 2018 Equity Incentive Plan (“2018 Plan”) (assuming outstanding performance stock units are counted at target). Given the limited number of shares that currently remain available under the 2018 Plan, the Board and management believe it is important that the Plan Amendment—described below—be approved in order to maintain Aptar’s ability to attract and retain key personnel and continue to provide them with strong incentives to contribute to Aptar’s future success and to further align their interests with stockholder interests. The Board believes that Aptar has used equity in a reasonable manner under the 2018 Plan and its prior equity plans, with a three-year average burn rate of approximately 2.08% of Aptar's outstanding shares of common stock.

Proposed Amendment

On March 26, 2020, the Board approved an amendment to the 2018 Plan, subject to approval by Aptar’s stockholders, that would increase the total remaining number of shares available for issuance under the 2018 Plan by 1,000,000 (the “Plan Amendment”). After adding the current shares of common stock that remained available for future issuances under the 2018 Plan—694,345 to the additional shares approved by the Plan Amendment—1,000,000,  there will be a total of 1,694,345 shares available for future issuance under the 2018 Plan.

Under the original terms of the 2018 Plan, the maximum number of shares of common stock authorized to be issued was 950,000; however, if the Plan Amendment is approved, the maximum number of shares of common stock authorized to be issued under the 2018 Plan will increase from 950,000 to 1,950,000). If the Plan Amendment is not approved by Aptar’s stockholders, Aptar will continue to operate the 2018 Plan pursuant to its current provisions. A copy of the 2018 Plan, as amended by the Plan Amendment, is attached as Appendix A to this proxy statement.

The following table sets forth information regarding outstanding options, full value awards and common shares outstanding as of March 13, 2020, for all Aptar equity award plans. These figures represent an update to those provided in our Form 10-K for the fiscal year ended December 31, 2019, filed on February 24, 2020, and in the section of this proxy statement entitled "Equity Compensation Plan Information.” The outstanding options and full value awards disclosed below are not entitled to any dividends or dividend equivalents.(1)

Importance of the Plan. The Board believes that the 2018 Plan is an important part of Aptar’s overall compensation program.  The purpose of the 2018 Plan is to promote the long‑term financial interests of Aptar and its affiliates by (i) attracting and retaining employees, non-employee directors, consultants, independent contractors, and agents; (ii) motivating award recipients by means of growth-related incentives; (iii) providing competitive incentive compensation opportunities; and (iv) further aligning the interests of award recipients with those of our stockholders.

The 2018 Plan incorporates the following features:

Description of the 2018 Plan

The 2018 Plan became effective on May 2, 2018 and will terminate on May 2, 2028 unless terminated sooner by the Board or Committee. A summary of the material features of the 2018 Plan is provided below. The summary is qualified in its entirety by, and made subject to, the complete text of the 2018 Plan (as amended by the Plan Amendment) attached as Appendix A to this proxy statement.

2018 Plan Share Limits

The Plan Amendment would increase the total number of shares available for issuance under the 2018 Plan by 1,000,000, from 950,000 to 1,950,000 (reduced by the number of shares of common stock subject to awards granted under the AptarGroup, Inc. 2016 Equity Incentive Plan on or after March 9, 2018). All of the available shares under the 2018 Plan may be issued in connection with incentive stock options (“ISOs”) under Section 422 of the Code. The number of shares of common stock that remain available for future grants under the 2018 Plan will be reduced by the sum of the aggregate number of shares of common stock which become subject to an outstanding award. Shares of common stock available under the 2018 Plan may be treasury shares reacquired by Aptar or authorized and unissued shares, or a combination of both.

Under the terms of the 2018 Plan, to the extent that shares of common stock subject to an outstanding award granted under either the 2018 Plan or any equity compensation plan previously maintained by Aptar on behalf of employees or non-employee directors (a “Prior Plan”) are not issued or delivered by reason of (i) the expiration, termination, cancellation, or forfeiture of such award or (ii) the cash settlement of such award, then such shares of common stock will again be available under the 2018 Plan. The number of shares that again become available pursuant to this paragraph will be equal to one share for each share subject to an award described in this paragraph; provided, however, any shares from a Prior Plan that become available again under the 2018 Plan pursuant to this paragraph will be added to the available share reserve based on the share deduction ratio set forth in such Prior Plan.

The 2018 Plan prohibits “liberal share recycling”—meaning that shares of common stock will not again be available under the 2018 Plan (i) if tendered to satisfy all or a portion of tax withholding obligations relating to an award, (ii) if withheld to pay the exercise price of stock options or SARs awarded or (iii) if repurchased by Aptar on the open market with the proceeds of an option exercise.

Non-Employee Director Award Limit

The aggregate value of cash compensation and the grant date fair value of shares that may be awarded or granted during any fiscal year to any non-employee director may not exceed $500,000, provided that this value will be multiplied by two for awards granted to a non-employee director in the year in which he or she commences services on the Board.

Terms of the Plan

Administration; Eligibility. The 2018 Plan is administered by the Committee.  The 2018 Plan empowers the Committee, among other things, to (i) select participants; (ii) make awards in such forms and amounts as the Committee will determine; (iii) impose limitations, restrictions and conditions upon awards as the Committee deems appropriate; (iv) approve forms to carry out the purposes and provisions of the 2018 Plan; (v) interpret the 2018 Plan; (vi) adopt, amend, and rescind administrative guidelines and other rules and regulations relating to the 2018 Plan; (vii) correct any defect or omission or reconcile any inconsistency in the 2018 Plan or award granted

under the 2018 Plan; and (viii) make all other determinations and take all other actions necessary or advisable for the implementation and administration of the 2018 Plan.  The Committee may, in its sole discretion and for any reason at any time, take action such that (i) any or all outstanding options and SARs will become exercisable in part or in full, (ii) all or a portion of the restriction period applicable to any outstanding awards will lapse, (iii) all or a portion of the performance period applicable to any outstanding awards will lapse and (iv) the performance goals (if any) applicable to any outstanding awards will be deemed to be satisfied at the target, maximum or any other interim level.

All grants of awards under the 2018 Plan are within the discretion of the Committee.  The Committee does not have authority to reprice any stock option or SAR granted under the 2018 Plan without stockholder approval.

Under the terms of the 2018 Plan, participants in the 2018 Plan consist of such employees, non-employee directors, consultants, independent contractors and agents and persons expected to become employees, non-employee directors, consultants, independent contractors and agents of Aptar and its affiliates as the Committee in its sole discretion may select from time to time.  As of March 13, 2020, all Aptar employees (approximately 14,000 individuals) and non‑employee directors (9 individuals) are eligible to participate in the 2018 Plan if selected by the Committee.

Minimum Vesting and Performance Period Requirements. The 2018 Plan includes a minimum vesting and, if applicable, a minimum performance period of one year with respect to 95% of the shares subject to the 2018 Plan (however we have historically not issued awards with minimum vesting periods of less than one year).  Vesting may accelerate upon a change in control, a termination of employment or service, including in the case of a termination without cause, constructive discharge, or termination of employment or service due to death, disability, or retirement, or as otherwise determined by the Committee.  The minimum vesting and performance period restrictions are not required with respect to the number of shares that does not exceed five percent of the total number of shares available for awards under the 2018 Plan.

Options. An option entitles the holder to receive upon exercise up to the maximum number of shares of common stock subject to the option at an option price that is fixed at the time the option is granted.  Options may be either ISOs or other options, except that, as long as required by Section 422 of the Code, no ISO may be awarded to any employee of an Aptar affiliate that is not an Aptar “subsidiary corporation” (as such term is used in Section 422(b) of the Code) or any non-employee director, consultant, or independent contractor agent.  The exercise price of an option may not be less than 100% of the fair market value of a share of common stock at the time the option is granted (or 110% in the case of an ISO granted to a holder of more than 10% of the common stock (a “10% Holder”)), unless the option was an award granted upon the assumption of, or substitution for, an outstanding equity award previously granted by another company in connection with a corporate transaction (a “Substitute Award”), in which case the exercise price will instead be subject to other requirements under the 2018 Plan.  Subject to the minimum vesting requirements in the 2018 Plan, an option will be exercisable at such time or times as the Committee determines at the time of grant, provided that an option may not be exercised later than 10 years after its date of grant (five years in the case of an ISO granted to a 10% Holder).  The 2018 Plan allows optionees, to the extent permitted by the Committee, to pay the exercise price of options in cash or common stock (valued at its fair market value on the date of exercise) or a combination of cash and common stock, with the proceeds from the sale of the shares purchased through an arrangement with a broker, or by authorizing Aptar to withhold whole shares that would otherwise be delivered upon the exercise of the option.  No dividend equivalents will be paid on any options.

SARs. An SAR entitles the holder to receive upon exercise the excess of the fair market value of a specified number of shares of common stock at the time of exercise over a base price.  Aptar will pay that amount to the holder in common stock (valued at its fair market value on the date of exercise), or to the extent provided for in an applicable award agreement, cash or a combination of cash and common stock, as the Committee may determine.  An SAR may be granted in tandem with a previously or contemporaneously granted option or independent of any option.  The base price of an independent SAR will be fixed by the Committee at not less than 100% of the fair market value of a share of common stock on the date of grant, unless the SAR is a Substitute Award, in which case the base price will instead be subject to other requirements under the 2018 Plan.  An SAR granted in tandem with an option will entitle the optionee, in lieu of exercising the option, to receive (i) the excess of the fair market value of a share of common stock on the date of exercise over the option price multiplied by (ii) the number of shares as to which the optionee is exercising the SAR.  If an SAR is granted in tandem with an option, the option will be cancelled to the extent the SAR is exercised, and the SAR will be cancelled to the extent the option is exercised.  Subject to the minimum vesting requirements in the 2018 Plan, each SAR will be exercisable at such time or times as the Committee determines at the time of grant, provided that an SAR may not be exercised later than 10 years after its date of grant.  No dividend equivalents will be paid on any SAR.

Restricted Stock. Subject to the minimum vesting requirements in the 2018 Plan, the Committee may grant restricted common stock with such restriction periods as the Committee designates.  A restricted stock award may be subject to other conditions of vesting, including performance goals, as the Committee establishes.  Except as otherwise provided in the 2018 Plan, the participant may not sell, assign, transfer, pledge, or otherwise encumber shares of restricted stock.  Except for restrictions on transfer and other restrictions as the Committee may impose, the participant will have all the rights of a holder of common stock as to restricted stock; provided that cash dividends payable on the common stock during the restriction period or the performance period, as the case may be, will be subject to the same restrictions as those on the shares of restricted stock.

Restricted Stock Units. Subject to the minimum vesting requirements in the 2018 Plan, the Committee may award RSUs with such restriction periods as the Committee designates.  An RSU may be subject to other conditions to vesting, including performance goals, as the Committee may establish.  Each RSU represents the right to receive one share or, to the extent permitted in the applicable award agreement, the fair market value in cash of one share upon the expiration of the restriction period.  A participant holding RSUs will not have the rights of a holder of common stock.  Any dividend equivalents paid to a holder of an RSU will be subject to the same vesting conditions as the underlying award.

Performance Goals. Performance goals may include, but are not limited to, the corporate‑wide or affiliate, business segment, division, operating unit, or individual measures set forth below.  In its discretion, the Committee may establish any other objective or subjective corporate-wide or affiliate, division, operating unit or individual measures as performance goals, whether or not listed in the 2018 Plan.

Deferral. A participant may defer receipt of all or a portion of any award in accordance with procedures established by the Committee and in accordance with Section 409A of the Code.

Transferability. Awards are not transferable other than (i) by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by Aptar or (ii) as a transfer of stock options without value to a “family member” (as defined in Form S‑8) if approved by the Committee.  Except to the extent permitted by the foregoing sentence, each award may be exercised or received during a participant’s lifetime only by the participant or the participant’s legal representative or similar person.  No award may be transferred by a participant for value or consideration.

Fair Market Value. Fair market value on any date means the closing price of a share of common stock on the New York Stock Exchange on that date (or, if such date is not a trading date, on the next preceding date that was a trading date).  On March 13, 2020, the closing price of our common stock on the New York Stock Exchange was $96.39.

Surrender. If provided by the Committee, a participant may surrender an award on such terms and conditions, and for such consideration, as the Committee determines.

Withholding. The Committee has the power to withhold, or require a participant to remit to Aptar, an amount sufficient to cover withholding taxes with respect to shares issuable and/or amounts payable pursuant to the 2018 Plan.  If permitted by the Committee, a participant may elect to satisfy such taxes by making a cash payment to

Aptar, having shares issuable under the 2018 Plan withheld, by delivering other shares to Aptar, or with the proceeds from the sale of shares through an arrangement with a broker.

Amendment of the Plan. The Committee may amend the 2018 Plan, subject to any requirement of stockholder approval required by applicable law, rule, or regulation.  No amendment may materially impair the rights of the holder of any outstanding award without his or her consent.

Effective Date and Term of the Plan. The 2018 Plan became effective on May 2, 2018 and will terminate on May 2, 2028 unless terminated earlier by the Board or Committee. Termination of the 2018 Plan will not affect the terms or conditions of any award granted prior to termination.

Clawback of Awards. Except to the extent prohibited by law, awards granted under the 2018 Plan and any cash payment or shares delivered pursuant to an award are subject to forfeiture and recovery by Aptar pursuant to any clawback or recoupment policy that Aptar may adopt from time to time, including any policy that Aptar may be required to adopt under the Dodd-Frank Act, or otherwise as required by law.

Historical Equity Awards Table.

The following table sets forth the number of stock options, stock appreciation rights, shares of restricted stock and restricted stock units granted over the lifetime of the 2018 Plan to the individuals and groups as indicated as of March 27, 2020:

Federal Income Tax Consequences

The following is a brief summary of the U.S. federal income tax consequences of awards made under the 2018 Plan.  This discussion does not address all aspects of the United States federal income tax consequences of participating in the 2018 Plan that may be relevant to participants in light of their personal investment or tax circumstances and does not discuss any state, local, or non-United States tax consequences of participating in the 2018 Plan.  Each participant is advised to consult his or her particular tax advisor concerning the application of the United States federal income tax laws to such participant’s particular situation, as well as the applicability and effect of any state, local, or non-United States tax laws before taking any actions with respect to any awards.

Options. A participant will not recognize any income upon the grant of a stock option.  A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding if the participant is an employee) upon exercise of a nonqualified stock option equal to the excess of the fair market value of the shares purchased over their exercise price, and Aptar will be entitled to a corresponding deduction, except to the extent limited by Section 162(m) of the Code.  A participant will not recognize income (except for purposes of the alternative minimum tax) upon exercise of an ISO.  If the shares acquired by exercise of an ISO are held for the longer of two years from the date the option was granted or one year from the date the shares were transferred, any gain or loss arising from a subsequent disposition of such shares will be taxed as long-term capital gain or loss, and Aptar will

not be entitled to any deduction.  If, however, such shares are disposed of within the above-described period, then in the year of such disposition the participant generally will recognize compensation taxable as ordinary income equal to the excess of the lesser of (i) the amount realized upon such disposition and (ii) the fair market value of such shares on the date of exercise over the exercise price, and Aptar will be entitled to a corresponding deduction, except to the extent limited by Section 162(m) of the Code.

SARs. A participant will not recognize any taxable income upon the grant of an SAR.  A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding if the participant is an employee) upon exercise of an SAR equal to the fair market value of any shares delivered and the amount of any cash paid by Aptar upon such exercise, and Aptar will be entitled to a corresponding deduction, except to the extent limited by Section 162(m) of the Code.

Restricted Stock. A participant will not recognize taxable income at the time shares subject to restrictions constituting a substantial risk of forfeiture are granted, and Aptar will not be entitled to a tax deduction at such time, unless the participant makes an election to be taxed at the time such restricted stock is granted.  If such election is made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding if the participant is an employee) at the time of grant in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for such shares.  If such election is not made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding if the participant is an employee) at the time the restrictions constituting a substantial risk of forfeiture lapse in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for such shares.  The amount of ordinary income recognized by a participant by making the above-described election or upon the lapse of the restrictions constituting a substantial risk of forfeiture is deductible by Aptar as a compensation expense, except to the extent limited by Section 162(m) of the Code.

Restricted Stock Units. A participant will not recognize taxable income at the time an RSU award is granted, and Aptar will not be entitled to a tax deduction at that time.  Upon the payment or settlement of any such award with unrestricted shares of common stock or cash, the participant will recognize compensation taxable as ordinary income (subject to income tax withholding if the participant is an employee) in an amount equal to the fair market value of any shares delivered and the amount of any cash paid by Aptar.  This amount is deductible by Aptar as compensation expense, except to the extent limited by Section 162(m) of the Code.

Section 162(m) of the Code. Section 162(m) of the Code generally limits to $1 million the amount that a publicly held corporation is allowed each year to deduct for the compensation paid to each of the corporation’s chief executive officer, the corporation’s chief financial officer and certain other current and former executive officers of the corporation.

PROPOSAL 4—RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020

Aptar is asking stockholders to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP (“PwC”) as Aptar’s independent registered public accounting firm for the fiscal year ending December 31, 2020. PricewaterhouseCoopers LLP has audited Aptar’s consolidated financial statements annually for over 25 years.

As described in its charter, the Audit Committee is responsible for the appointment, retention, termination, compensation and oversight of Aptar’s independent registered public accounting firm. On an annual basis, the Audit Committee considers the engagement of the independent registered public accounting firm. In selecting PwC as Aptar’s independent registered public accounting firm for fiscal 2020, the Audit Committee evaluated, among other factors:

PwC rotates its lead audit engagement partner every five years; the Audit Committee interviews proposed candidates and selects the lead audit engagement partner.

Representatives of PwC are expected to attend the annual meeting and will have the opportunity to make a statement if they desire to do so. It is also expected that those representatives will be available to respond to appropriate questions.

Independent Registered Public Accounting Firm Fees

The following table sets forth the aggregate fees (rounded to the nearest thousand) charged to Aptar by PwC for audit services rendered in connection with the audited consolidated financial statements and reports for the 2019 and 2018 fiscal years and for other services rendered during the 2019 and 2018 fiscal years to Aptar and its subsidiaries.

Audit Fees primarily represent amounts billed for the audit of Aptar’s annual financial statements, including statutory audits of the financial statements at certain non-U.S. locations, the audit of our internal control over financial reporting, reviews of our quarterly financial statements, providing consents and reviewing documents to be filed with the SEC.

Audit-Related Fees primarily represent amounts billed for subscriptions to virtual accounting resources.

Tax Fees primarily represent amounts billed for services related to tax advice on the Company’s global tax structure. Tax Fees also include tax compliance and preparation services including federal, state and international tax compliance and assistance with tax audits and appeals.

All Other Fees primarily represent consulting services performed in connection with the Company’s cybersecurity and risk assessment for 2018 and financial due diligence services performed in connection with the Company’s acquisition activity for 2019.

The Audit Committee’s policies and procedures require pre‑approval for all audit and permissible non-audit services to be performed by Aptar’s independent registered public accounting firm. These services are pre‑approved by the entire Audit Committee; however, the Audit Committee may delegate to one or more of its members the authority to grant such pre‑approvals provided that any such decision of such member or members must be presented to the full Audit Committee at its next scheduled meeting.

EXECUTIVE OFFICER COMPENSATION

Compensation Discussion and Analysis

Executive Summary

Following is a discussion and analysis of our compensation programs as they apply to our NEOs for 2019, namely:

Financial and Operational Highlights

In 2019, Aptar achieved the following:

*     Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, business transformation charges, acquisition-related costs and other special items. See the reconciliation to net income included on page 23 of the Company’s Annual Report on Form 10‑K for the year ended December 31, 2019.

In 2019, we also continued our strong total shareholder returns. We achieved a 87% total shareholder return (“TSR”) over the past five years, compared to: 39% TSR by our peer group; 54% TSR by the S&P 400 Index; and 73% TSR by the S&P 500 Index.

 

 

Executive Compensation Highlights

Our compensation practices in place during 2019 for our NEOs included the following governance elements that we believe support our compensation philosophies and objectives:

The following table lists the material elements of Aptar’s 2019 executive compensation program applicable to the NEOs. The Management Development and Compensation Committee believes that the design of Aptar’s executive compensation program balances fixed and variable compensation elements, provides alignment with Aptar’s short and long‑term financial and strategic priorities through the annual and long-term incentive programs, and provides alignment with stockholder interests.

(1)For Touya, Schaffer and Gong, a portion of their API is based on the Adjusted EBITDA improvement and core sales growth in the NEOs’ areas of responsibility. See “Annual Performance Incentives” below.

(2)Total shareholder return (or TSR) is measured by share price appreciation of the Company’s common stock over a three year performance period and reinvestment of dividends, and is compared to the TSR of the S&P 400 MidCap Index over such three year performance period.

Return on invested capital (or ROIC) is defined as earnings before interest, less taxes, divided by the Company’s average capital (i.e., equity excluding currency effects + net debt).