FLOWSERVE CORP
For the period ended May 16, 2024. Filed Apr 2, 2024.
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What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
May 16, 2024 · Filed Apr 2, 2024
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PAY VERSUS PERFORMANCE
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive “compensation actually paid” (as calculated under SEC regulations) and certain financial performance of the Company. For further information concerning the Company’s pay for performance philosophy and how the Company aligns executive compensation with Company performance, refer to “Executive Compensation – Compensation Discussion and Analysis.”
| PEO = Principal Executive Officer NEO = Named Executive Officer · Value of Initial Fixed $100 Investment Based on: | ||||||||
|---|---|---|---|---|---|---|---|---|
| Year | Summary Compensation Table (SCT) Total for PEO1 | Compensation Actually Paid (CAP) to PEO2 | Average SCT Total for Non- PEO NEOs3 | Average CAP to Non-PEO NEOs4 | Total Shareholder Return (TSR)5 | Peer Group TSR6 | Net Income ($M)7 | Adjusted Operating Income8 |
| 2023 | $10,583,487 | $15,439,806 | $2,392,478 | $2,962,426 | $91.48 | $150.04 | $187 | $463 |
| 2022 | $8,702,893 | $6,339,788 | $2,028,865 | $1,628,059 | $66.62 | $127.07 | $189 | $200 |
| 2021 | $12,478,106 | $8,468,743 | $2,420,811 | $1,933,079 | $64.63 | $134.48 | $126 | $284 |
| 2020 | $8,332,455 | $691,731 | $1,782,163 | $1,322,337 | $76.13 | $111.05 | $130 | $367 |
| (1) | The dollar amounts reported are the amounts in the “Total” column of the Summary Compensation Table in each applicable year. |
| (2) | The dollar amounts reported represent the amount of “compensation actually paid”, as computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid during the applicable year. In accordance with SEC rules, the following adjustments were made to the Summary Compensation total compensation to determine the compensation actually paid: |
| Year | Reported Total for PEO | Reported Value of Equity Awards(a) | Equity Award Adjustments(b) | Reported Value of Change in Pension(c) | Change in Pension Adjustments(d) | CAP to PEO |
|---|---|---|---|---|---|---|
| 2023 | $10,583,487 | $(6,270,244) | $11,273,271 | $(422,246) | $275,538 | $15,439,806 |
| 2022 | $8,702,893 | $(5,942,446) | $3,636,080 | $(377,658) | $320,919 | $6,339,788 |
| (a) | The reported value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. |
| (b) | The valuation assumptions used to determine fair values as of each applicable year-end or vesting date did not materially differ from those used to determine fair value at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: |
| Year | Year End Fair Value of Equity Awards Granted in the Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Change from Prior Year End to Vesting Date in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Total Equity Award Adjustments |
|---|---|---|---|---|
| 2023 | $8,588,061 | $1,966,755 | $718,455 | $11,273,271 |
| 2022* | $5,671,960 | $(2,190,990) | $155,110 | $3,636,080 |
- The Company identified a mathematical error in the “compensation actually paid” valuations conducted for 2022, resulting in the overstatement of certain equity values reported for the PEO. The value for performance-based awards was not appropriately adjusted to reflect the change in the probable outcome of performance conditions at year end. The Company has corrected these inadvertent errors in the reconciliations shown here.
| (c) | The value shown represents the aggregate change in the actuarial present value of accumulated benefits under defined benefit pension plans as reported in the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column in the Summary Compensation Table for the applicable year. |
| (d) | The change in pension adjustments for each applicable year reflects the service cost attributable to services rendered during the applicable year. |
| 2024 PROXY STATEMENT | 64 |
|---|
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| (3) | The dollar amounts reported represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding our CEO) in the “Total” column of the Summary Compensation Table in each applicable year. The NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Amy Schwetz, Lamar Duhon, Kirk Wilson and Susan Hudson (ii) for 2022 and 2021, Amy Schwetz, Elizabeth Burger, Keith Gillespie, and Tamara Morytko; and (iii) for 2020, Amy Schwetz, Elizabeth Burger, Keith Gillespie, Lanesha Minnix and John Roueche. |
| (4) | The dollar amounts reported represent the average amount of “compensation actually paid” to the applicable non-PEO NEOs as a group (as described in footnote (3), as computed in accordance with SEC rules. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group during the applicable year. In accordance with the SEC rules, the following adjustments were made to average total compensation for the NEOs as a group for each year to determine the compensation actually paid: |
| Year | Average Reported SCT Total for non-PEO NEOs | Average Reported Value of Equity Awards(a) | Average Equity Award Adjustments(b) | Average Reported Value of Change in Pension(c) | Average Change in Pension Adjustments(d) | Average CAP to Non-PEO NEOs |
|---|---|---|---|---|---|---|
| 2023 | $2,392,478 | $(1,044,417) | $1,666,331 | $(118,556) | $66,590 | $2,962,426 |
| 2022 | $2,028,865 | $(943,024) | $575,528 | $(130,776) | $97,466 | $1,628,059 |
| (a) | The average reported value of equity awards represents the average total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year for non-PEO NEOs. |
| (b) | The amounts deducted or added in calculating the total average equity award adjustments for non-PEO NEOs are as follows: |
| Year | Average Year End Fair Value of Equity Awards Granted in the Year | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Change from Prior Year End to Vesting Date in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Total Average Equity Award Adjustments |
|---|---|---|---|---|
| 2023 | $1,424,103 | $160,929 | $81,299 | $1,666,331 |
| 2022* | $900,110 | $(345,536) | $20,954 | $575,528 |
- The Company identified a mathematical error in the “compensation actually paid” valuations conducted for 2022, resulting in the overstatement of certain equity values reported for each of the NEOs. The Company has corrected these inadvertent errors in the reconciliations shown here.
| (c) | The value shown represents the average aggregate change in the actuarial present value of accumulated benefits under defined benefit pension plans as reported in the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column in the Summary Compensation Table for the applicable year for non-PEO NEOs. |
| (d) | The average change in pension adjustments for each applicable year reflects the service cost attributable to services rendered during the applicable year for non-PEO NEOs. |
| (5) | Cumulative TSR is calculated by dividing (a) the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by (b) the Company’s share price at the beginning of the measurement period. The beginning of the measurement period for all rows in the table is December 31, 2019. |
| (6) | The peer group used for this purpose is the S&P 500 Industrials Index. |
| (7) | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
| (8) | Represents the Company’s Adjusted Operating Income as used in determining incentive compensation payouts under the Company’s Annual Incentive Plan. For information on how this is calculated from our audited financial statements, see Annex I: Reconciliation of Reported Results to Non-GAAP Financial Results. |
| 2024 PROXY STATEMENT | 65 |
|---|
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Financial Performance Measures
As described in greater detail in the “Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected with an objective to incentivize our NEOs to increase the value of our enterprise for our shareholders. The most important financial performance measures used by the Company to link executive “compensation actually paid” to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:
| • | Relative Total Shareholder Return |
|---|---|
| • | Adjusted Operating Income |
| • | Return on Invested Capital |
| • | Free Cash Flow as a % of Adjusted Net Income |
Analysis of the Information Presented in the Pay versus Performance Table
As described in more detail in the section “Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all such Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with “compensation actually paid” (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, the Company is providing the following graphical presentations of the relationships between information presented in the Pay versus Performance table.
Compensation Actually Paid, Cumulative TSR and Cumulative TSR of the Peer Group
Pay Versus TSR 2020-2023
| 2024 PROXY STATEMENT | 66 |
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Compensation Actually Paid and Net Income
Pay Versus Net Income 2020-2023
Compensation Actually Paid and Adjusted Operating Income
Pay Versus Adjusted OI 2020-2023
| 2024 PROXY STATEMENT | 67 |
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