Document
20[
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
 
Filed by the Registrant  x                             Filed by a Party other than the Registrant  ¨
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Preliminary Proxy Statement.
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)).
x
Definitive Proxy Statement.
¨
Definitive Additional Materials.
¨
Soliciting Material Pursuant to §240.14a-12.
  
Kraton Corporation
 
 
(Name of Registrant as Specified In Its Charter)
  
 
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
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Dear Fellow Stockholders,
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On behalf of the Board of Directors, I am pleased to invite you to attend the Annual General Meeting of Stockholders of Kraton Corporation on Wednesday, May 23, 2018 at 1:00 p.m., central time, at The Sheraton North Houston, 15700 John F. Kennedy Boulevard, Houston, Texas 77032. The meeting will focus on the items listed in the Notice of Annual General Meeting of Stockholders and Proxy Statement that follows. Your vote on these matters is very important regardless of whether you plan to attend the meeting, thus I encourage you to review the proxy material and vote by internet, phone or mail as soon as possible.
As we prepare to host this year's Annual General Meeting, we do so as a company entering our third year as a transformed company. In 2017, we continued our roadmap in becoming an admired Fortune 500 specialty chemical company by, among other actions, committed execution on our corporate strategy, embracing the three fundamental pillars of sustainability, and enhancing the diversity of our Board.
Continued Execution of our Corporate Strategy
For Kraton, 2017 was a year of favorable execution and progress on multiple fronts. On our integration plan, we delivered the $65 million of operational cost-outs and synergies associated with the acquisition of our Chemical segment, one year ahead of our original 2018 target. Moreover, in executing our corporate strategy, the favorable business performance we delivered in 2017 translated into solid cash generation, allowing us to exceed our debt reduction targets for the year. Additionally, regarding the ongoing cost reset initiatives in our Polymer segment, as of year-end 2017, we realized approximately $45 million of our $70 million goal. We remain focused on building upon these successes into 2018.
Embracing the Three Fundamental Pillars of Sustainability
In 2017, Kraton published its first Corporate Sustainability Report reflecting the combined sustainability programs of our Polymer and Chemical segments. We identified our key sustainability priority areas and progressed in setting our long-term sustainability targets. This year, we continue to strive to deliver on our promise of “Sustainable Solutions and Endless Innovation”; whereby we believe we can create long-term stakeholder value in an otherwise resource-constrained world. Specifically, we seek to be sustainable across all three fundamental pillars: environmentally; socially; and in our governance. To accomplish these goals, we continue to focus on key areas, such as raw material use, operational efficiency, ecosystem impact, health and safety, human rights and corporate culture transparency. We look forward to the publication of our 2017 Corporate Sustainability Report, which will be available on www.kraton.com later this spring.
Enhancing Board Diversity
As part of our ongoing commitment to creating a balanced Board with diverse viewpoints and broad ranging experiences, we welcomed two new directors in August 2017 to infuse unique ideas and fresh perspectives into the boardroom. Ms. Bausch is the President of the Fluid Technologies division at Carlisle Companies Inc., and Mr. Blinn was, most recently, the President and Chief Executive Officer of Flowserve Corporation. Each are accomplished business leaders with significant experience directly relevant to our strategic vision and business. In our commitment to board refreshment, we focus on how the background, experience and skill set of each member complements those of their fellow directors to create a balanced board. One that embodies our principles of diversity and that will lead our business into the future. 
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Sincerely,
 
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Kevin M. Fogarty Director and President and Chief Executive Officer
 
 








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KRATON CORPORATION
15710 John F. Kennedy Boulevard, Suite 300
Houston, Texas 77032

NOTICE OF ANNUAL GENERAL MEETING OF STOCKHOLDERS
To be held May 23, 2018, at 1:00 p.m., central time

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Stockholders of Kraton Corporation (the “Annual Meeting”) will be held on Wednesday, May 23, 2018, at 1:00 p.m., central time, at The Sheraton North Houston, 15700 John F. Kennedy Boulevard, Houston, Texas 77032 for the following purposes:
1.
To elect three Class III directors, each to serve for a three-year term and until a successor is duly elected and qualified;
2.
To conduct an advisory vote on the compensation of our named executive officers;
3.
To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2018 fiscal year;
4.
To approve and adopt an amendment to the Kraton Corporation 2016 Equity and Cash Incentive Plan to increase the number of shares available for issuance thereunder; and
5.
To transact other business that may properly come before the meeting and any postponement or adjournment of the meeting.
Our board of directors fixed the close of business on March 26, 2018 as the record date for determining our stockholders who are entitled to notice of, and to vote at, the Annual Meeting. A list of such stockholders will be open to examination by any stockholder at the Annual Meeting and for a period of ten days prior to the Annual Meeting during ordinary business hours at our executive offices located at 15710 John F. Kennedy Boulevard, Suite 300, Houston, Texas 77032.
We plan to commence mailing a Notice of Internet Availability of Proxy Materials containing instructions on how to access our Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (our “2017 Annual Report”) via the Internet and how to vote online. The Notice of Internet Availability of Proxy Materials also contains instructions on how you can receive a paper copy of the proxy materials. Our 2017 Annual Report, Notice of Internet Availability of Proxy Materials and proxy card are first being made available online on or about April 13, 2018.
HOUSTON, TEXAS
By Order of the Board of Directors of Kraton Corporation,
 
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James L. Simmons,
Senior Vice President, General Counsel and Secretary
April 13, 2018
 

YOUR VOTE IS IMPORTANT! PLEASE VOTE BY TELEPHONE, OVER THE INTERNET OR BY MARKING, SIGNING AND RETURNING YOUR PROXY OR VOTING INSTRUCTION CARD AS SOON AS POSSIBLE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING.



TABLE OF CONTENTS

Annual Meeting Information
1
Proposals and Voting Recommendations
1
Director Nominees
1
Corporate Governance Highlights
2
Performance Highlights
2
Adherence to Executive Compensation Best Practices
2
Principles and Philosophy of the Compensation Program
3
2017 Named Executive Officer Compensation
4
Continuing Stockholder Outreach in 2017
5
Our Compensation Consultants
5
Overview
9
Nominees for Election as Class III Directors: Term Expiring 2021
10
Incumbent Class I Directors: Term Expiring 2019
11
Incumbent Class II Directors: Term Expiring 2020
12
Executive Officers Who are Not Directors
13
Our Board of Directors
15
Independence of the Board
16
Committees of the Board of Directors
17
Board Leadership Strategy and Role in Risk Oversight
18
Involvement in Certain Legal Proceedings
18
Board and Committee Effectiveness
19
Board Selection and Refreshment
20
Director Resignation Policy
21
Certain Relationships and Related Party Transactions
21
Corporate Governance Guidelines
22
Code of Ethics and Business Conduct
22
Holdings of Major Stockholders
23
Holdings of Officers and Directors
24
Section 16(a) Beneficial Ownership Reporting Compliance
24
Executive Summary
25
Roles in Determining Executive Compensation
28
Determining Executive Compensation
29
Principles and Philosophy of the Compensation Program
33
Compensation Decisions and Results
36
Other Compensation for our NEOs
43
Components of Post-Employment Compensation
44
Other Compensation Policies
44
Compensation Risk Assessment
46
Summary Compensation Table
48
Pay Ratio
49



Equity Compensation Plan Information
50
Grants of Plan-Based Awards
50
Outstanding Equity Awards at 2017 Fiscal Year-End
51
Option Exercises and Stock Vested
52
Pension Benefits
52
Nonqualified Deferred Compensation
53
Termination and Change in Control Payments
54
Components of Non-Management Director Compensation
57
Director Compensation for Fiscal 2017
57
Primary Responsibilities
59
Oversight of Independent Registered Public Accounting Firm
59
2017 Audited Financial Statements
60
Fees Paid to Independent Registered Public Accounting Firm
61
Audit Committee Pre-Approval Policies and Procedures
62
Proposal 4 - Vote to Approve and Adopt the Amendment to the Kraton Corporation 2016 Equity and Cash Incentive Plan
Background and Purpose of the Proposal
63
Consequences of Failing to Approve the Proposal
63
Selected Data on Current Outstanding and Unissued Awards
64
Highlights of the Amended Plan
64
Summary of Material Terms of the Amended Plan
65
New Plan Benefits
68
Federal Income Tax Consequences of Awards
68
Inclusion of Proposal in Our Proxy Statement and Proxy Card under the SEC's Rules
71
Bylaw Requirements for Stockholder Submission of Nominations and Proposals
71
Incorporation by Reference
72
Annual Report on Form 10-K
72
Delivery of Documents to Stockholders Sharing an Address
72
 
 
 







PROXY STATEMENT SUMMARY
This summary contains highlights of important information you will find elsewhere in our proxy statement and is qualified in its entirety by the more detailed information included elsewhere in our proxy statement. This summary does not contain all of the information you should consider before voting. Please read the entire proxy statement before voting. We refer to our website throughout this proxy statement; however, no information on our website or any other website is incorporated by reference into or otherwise made a part of this proxy statement.
References in this proxy statement to (1) “we,” “us,” “our,” or the “Company” refer to Kraton Corporation and, as the context requires, our direct and indirect subsidiaries, (2) "Board" refer to the board of directors of Kraton Corporation, (3) "NEO" refer to named executive officer, (4) "other NEOs" refer to our named executive officers, excluding our CEO, as a group, and (5) "Compensation Committee," "Audit Committee" or "NCG Committee" refer to the compensation committee, audit committee or nominating and corporate governance committee, respectively, of the Board.
Annual Meeting Information
Time and Date: Wednesday, May 23, 2018, at 1:00 p.m., central time
Location: The Sheraton North Houston, 15700 John F. Kennedy Boulevard, Houston, Texas 77032
Record Date: March 26, 2018
Availability of Materials: Our 2017 Annual Report, Notice of Internet Availability of Proxy Materials and proxy card are first being made available online on or about April 13, 2018.
Proposals and Voting Recommendations
Proposal
Board of Directors'
Recommendation
Page  
Election of Class III Directors
FOR ALL
Advisory vote on the compensation of our named executive officers
FOR
Ratification of the appointment of our Independent Registered Public Accounting Firm
FOR
Vote to approve and adopt an amendment to the Kraton Corporation 2016 Equity and Cash Incentive Plan to increase the number of shares available for issuance thereunder
FOR
Director Nominees
We ask that you vote for the election of each of our Class III directors. Detailed information about each director can be found in “Proposal 1 — Election of Class III Directors” beginning on page 9.
Name
Age
Director
Since
Other Current
Public Boards  
Committee Membership
Current Position
Shelley J. Bausch
52
2017
NCG
President of Carlisle Fluid Technologies
Kevin M. Fogarty
52
2009
1
Executive
CEO of Kraton Corporation
Karen A. Twitchell
62
2009
2
Audit
Retired EVP and CFO of Landmark Aviation
Compensation+
Financial Expert + Committee Chair



1


Corporate Governance Highlights
Our governance policies and structure promote thoughtful consideration of business action and appropriate risk taking with the continuing goal of strengthening long-term stockholder value and ensuring sustainable growth. Please read “Corporate Governance,” beginning on page 15, for a description of our program, highlights of which include:
Corporate Governance Highlights
Resignation Policy for Uncontested Director Elections
Code of Ethics and Business Conduct for all Directors and Employees
Fully Independent Board Committees
Board Orientation and Continuing Education
Board Risk Oversight
Independent Board (Excluding our CEO)
Diverse Board
Independent Directors Meet without Management
Stockholder Outreach Program
Annual Board and Committee Self-evaluations
Performance Highlights
Results against the performance metrics under our incentive compensation plans demonstrated the following 2017 business highlights:
Reduction of Debt to
 
3-Year Relative Total Shareholder Return in the
 
Net Income of
$1,525 million  
 
 
$97.5 million  
and
 
96th
 
and
Net Debt to
 
Percentile(2)
 
Adjusted EBITDA
$1,450 million(1)

 
 
$374.2 million(1)

(1)
For a reconciliation of U.S. generally accepted accounting principles ("GAAP") to non-GAAP financial measures, refer to “Annex A — Non-GAAP Reconciliations.”
(2)
Based on relative TSR from December 31, 2014 to December 31, 2017 using the 2017 TSR Peer Group.
Adherence to Executive Compensation Best Practices
To mitigate compensation-related risk, drive performance and increase long-term stockholder value, our Compensation Committee is committed to, among other principles, the following executive compensation best practices:
What We Do
What We Don't Do
ü Emphasis on Pay-for-Performance
û  No Single-Trigger Change in Control Plans
ü Stock Ownership and Retention Guidelines
û  No Individual Employment Agreements
ü Clawback Policy
û  No Excise Tax Gross-Ups
ü Minimum Vesting Periods for Awards
û  No Liberal Share Recycling
ü Fungible Share Design
û  No Equity Plan Evergreen Provision
ü Perform Annual Compensation Risk Assessment
û  No Tax Gross-Ups for Non-Relocation Based Personal Benefits
ü Use of Independent Compensation Consultant
û  No Hedging or Pledging



2


Principles and Philosophy of the Compensation Program
In addition to adhering to executive compensation best practices, our Compensation Committee focuses on (1) upholding a pay-for-performance philosophy, (2) establishing total direct compensation at or near the 50th percentile of our peer group, and (3) granting variable compensation, primarily in the form of long-term equity incentives. Our Compensation Committee’s philosophy and principles are summarized below and are further discussed in the section entitled “Compensation Discussion and Analysis” beginning on page 25.
The tables below depict the targeted amounts for the key compensation elements of total direct compensation for our CEO and for our other NEOs for 2017, and quantitatively highlight our Compensation Committee’s focus on variable compensation, primarily in the form of long-term equity incentives, and compensation subject to specific quantitative performance criteria.
CEO Total Direct Targeted Compensation
 
Other NEOs Total Direct Targeted Compensation
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Analysis of Total Direct Targeted Compensation
CEO
Other NEOs
Proportion of pay subject to specific quantitative performance criteria
60%
51%
Proportion of pay at-risk (variable compensation)
80%
66%
Proportion of pay delivered in the form of long-term equity
60%
46%
Pay-For-Performance
It is our Compensation Committee’s intention that a significant portion of our NEOs' total compensation be comprised of performance-based compensation tied to overall business and individual performance in a given year. Our Compensation Committee’s pay-for-performance philosophy aligns executive compensation with the creation of long-term stockholder value. Specifically:
Grants of restricted stock performance units ("PRSUs") represent two-thirds of the variable equity compensation mix and have a three-year performance period;
Grants of restricted stock awards ("RSAs") have a three-year cliff vest;
Total variable compensation paid to our CEO in 2017 accounted for approximately 60% of his total reported compensation;
Payout under the 2015 grants of PRSUs was 93.1%, with the 3-year relative total shareholder return (25% of the metric weighting) in the 95.6 percentile; and
Actual payouts under our annual cash incentive compensation program in 2017 were reflective of our financial performance, being 107.6% of target for our NEOs.




3


2017 Named Executive Officer Compensation
 
Fixed
 
Variable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base Salary
 
Cash Incentive Compensation
+
Restricted Stock Awards
+
Restricted Stock Performance Units
=
Target Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive
 
Long-Term Incentive Compensation (3-Years)
 
 
 
Below is a summary of the compensation for 2017 for our NEOs. See "Compensation Discussion and Analysis" for additional information and see “Named Executive Officer Compensation Tables —Summary Compensation Table,” for year-over-year comparisons and the notes accompanying the table for additional information.
Base Salary
Each of our NEOs remains at or near the 50th percentile for our peer group in base salary, consistent with our overall compensation philosophy. Our Compensation Committee’s base salary determinations reflect their focus on market-based pay compared to peer companies.
Named Executive Officer
2017 Base Salary ($)
Change From 2016
2018 Base Salary ($)
Change From 2017
Kevin M. Fogarty
925,000
5.7%
1,000,000
8.1%
Stephen E. Tremblay
475,000
500,000
5.3%
Holger R. Jung
400,000
400,000
Marcello C. Boldrini
380,000
n/a
400,000
4.8%
Vijay Mhetar
310,000
n/a
325,000
5.3%
Cash Incentive Compensation
Based on our attainment of net debt reduction and Adjusted EBITDA, being the performance metrics that our Compensation Committee adjudged as aligned with the creation of stockholder value, our NEOs received an above-target payout, at 107.6% of target, for annual cash incentive compensation in 2017 as follows:
Named Executive Officer
Target Bonus
Payout Range for 2017 ($)
Actual Payout  ($)
Kevin M. Fogarty
1.0 x Base Salary
0 - 1,850,000
995,300
Stephen E. Tremblay
.70 x Base Salary
0 - 665,000
357,770
Holger R. Jung
.60 x Base Salary
0 - 480,000
258,240
Marcello C. Boldrini
.60 x Base Salary
0 - 456,000
183,996(1)
Vijay Mhetar
.50 x Base Salary
0 - 310,000
166,780
________________
(1)
Amount prorated to Mr. Boldrini's April 1, 2017 start date.



4


Long-Term Equity Incentive Compensation
In 2017, our NEOs were granted long-term equity awards with two-thirds consisting of PRSUs, with a three-year performance period, and one-third consisting of RSAs, with a three-year cliff vesting.
Named Executive Officer
RSAs (#)
PRSUs (#)(1)
Kevin M. Fogarty
34,050
68,100
Stephen E. Tremblay
9,557
19,115
Holger R. Jung
7,168
14,336
Marcello C. Boldrini
4,330(2)
8,659
Vijay Mhetar
4,181(2)
8,363
________________
(1)
The PRSUs are disclosed at target. The PRSUs will vest three-years from the date of grant in an amount, if at least the threshold level of performance is achieved, ranging from 0.5x target to 2.0x target level depending on performance against the Compensation Committee's established metrics.
(2)
These amounts do not reflect the RSAs granted to Mr. Boldrini and Dr. Mhetar as part of their respective sign-on compensation. For information on such grants, please refer to "Named Executive Officer Compensation—Grants of Plan Based Awards."
Continuing Stockholder Outreach in 2017
At our 2017 Annual General Meeting of Stockholders, approximately 99% of stockholders who cast an advisory vote on our say on pay proposal voted in favor of our executive compensation programs. Throughout 2017, our Compensation Committee continued its outreach efforts to discuss our compensation policies and procedures with our major stockholders. Our Compensation Committee values these discussions and encourages stockholders to provide feedback about our executive compensation programs as described under “Corporate Governance—Communications with the Board ” on page 16. For a more thorough discussion of our stockholder outreach, see “Compensation Discussion and Analysis—Executive Summary—Results of 2017 Say-on-Pay Vote and Engagement” on page 27.
Our Compensation Consultants
Farient Advisors LLC ("Farient") assisted our Compensation Committee in compiling compensation data, conducting analyses, gathering market analysis, and evaluating the competitiveness of, and providing recommendations with respect to, the compensation of our executive officers, including our NEOs, and the design of the compensation program for 2017 and 2018.





5


QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
Who is making this solicitation of proxies?
                                                        
This solicitation is made by Kraton Corporation on behalf of its Board. A Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) is first being mailed on or about April 13, 2018 to stockholders of Kraton Corporation. We will bear the cost of this proxy solicitation. We may furnish copies of our proxy solicitation material to brokers, custodians, nominees and other fiduciaries for forwarding to beneficial owners of shares of our common stock, and ordinary course handling charges may be paid for such forwarding service.
Our officers and other management employees, who will receive no additional compensation for their services, may solicit proxies by mail, email, Internet, facsimile, telephone or in person. We have retained Georgeson LLC, 1920 Avenue of the Americas, 9th Floor, New York, NY 10104, to provide services in connection with our 2018 Annual General Meeting of Stockholders (our "Annual Meeting"), including the solicitation of proxies, at an anticipated cost of $8,000, plus reimbursement of out-of-pocket expenses.
Where will the Annual Meeting take place?
                                                        
The Annual Meeting will be held on Wednesday, May 23, 2018, at 1:00 p.m., central time, at The Sheraton North Houston, 15700 John F. Kennedy Boulevard, Houston, Texas 77032.
Who may vote at the Annual Meeting?
                                                        
All stockholders of record as of the close of business on March 26, 2018, the record date for the Annual Meeting, are entitled to vote at the meeting. Holders of our common stock are entitled to one vote per share. At the close of business on the record date, there were 31,894,854 shares of our common stock outstanding.
Who may attend the Annual Meeting?
                                                        
All stockholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting.
How do I vote?
                                                        
Because many stockholders cannot attend the Annual Meeting, it is necessary that a large number of stockholders be represented by proxy. You may vote in person or by proxy in one of the following ways:
In Person - we will provide a ballot to our stockholders who attend the Annual Meeting and wish to vote in person;
In Writing - if you request a paper proxy card, simply complete, sign and date the proxy card, then follow the instructions on the proxy card; or
By Telephone or Internet - follow the instructions on the Notice of Internet Availability or proxy card and have the Notice of Internet Availability or proxy card available when you access the Internet website or place your telephone call.
If you hold shares through a brokerage firm, bank or other custodian, you may vote by telephone or the Internet only if the custodian offers that option. Please refer to your proxy card or the information provided by your brokerage firm, bank or other custodian to determine which options are available for voting the proxy. You may receive more than one proxy card, depending on how you hold your shares. You should vote each proxy card provided to you using one of the methods described above.




6


Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
                                                        
Under rules adopted by the U.S. Securities and Exchange Commission ("SEC"), we have decided to use the Internet as the primary means of furnishing proxy materials to our stockholders. Accordingly, on or about April 13, 2018, we will mail the Notice of Internet Availability to our stockholders. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice of Internet Availability or request a printed set of the proxy materials.
If you received the Notice of Internet Availability, then you will not receive a paper copy of the proxy materials unless you request one. We encourage our stockholders to take advantage of the availability of the proxy materials on the Internet to contribute to our sustainability endeavors and to help reduce cost to us associated with the physical printing and mailing of proxy materials.
What am I being asked to vote on, how does the Board recommend that I vote, and what are the standards for determining whether a proposal has been approved?
                                                        
Proposal
Recommended Vote
Voting Approval Standard(1)
Effect of Abstention
Effect of Broker Non-Vote(3)
1
Election of Class III directors
FOR ALL
More votes “FOR” than “WITHHELD”(2)
No effect
No effect
2
Advisory Approval on the Compensation of our Named Executive Officers
FOR
Majority of the votes cast
No effect
No effect
3
Ratification of the Appointment of our Independent Registered Public Accounting Firm
FOR
Majority of the votes cast
No effect
Not applicable
4
Vote to approve and adopt an amendment to the Kraton Corporation 2016 Equity and Cash Incentive Plan to increase the number of shares available for issuance thereunder
FOR
Majority of the votes cast
Vote against
No effect
(1)
Shares present in person or by proxy must be at least a majority of the shares entitled to vote to constitute a quorum. “Shares present” includes shares represented in person or by proxy at the Annual Meeting.
(2)
Any director nominee in an uncontested election who receives a greater number of votes “withheld” than votes “for” in such election shall, promptly following the certification of the voting results for such election, tender an offer of resignation for consideration by our NCG Committee. See “Corporate Governance—Director Resignation Policy”.
(3)
A broker non-vote occurs when a broker holding shares for a beneficial owner votes on some matters on the proxy card, but not on others, because the broker does not have instructions from the beneficial owner or discretionary authority (or declines to exercise discretionary authority) with respect to those other matters.
What happens if I do not indicate how I wish to vote on one or more of the proposals?
                                                        
If you return your signed proxy card but do not indicate how you wish to vote, the persons named as proxies herein will vote your shares “FOR ALL” with respect to the election of our Class III director nominees (Proposal No. 1), “FOR” the resolution to approve the compensation to our named executive officers (Proposal No. 2), “FOR” the ratification of our appointment of KPMG LLP (Proposal No. 3), and “FOR” the approval and adoption of the amendment to the Kraton Corporation 2016 Equity and Cash Incentive Plan (Proposal No. 4). We are not aware of any other matters that may come before the Annual Meeting. If any other matter properly comes before the Annual Meeting, the proxy holders will vote the proxies according to their judgment.



7


What happens if I vote by proxy and later change my mind?
                                                        
If you are the record holder of your shares, you may revoke your proxy by:
writing to our Secretary at our principal executive office;
delivering a properly executed proxy card dated after the date of the proxy card you want to revoke;
voting at a later time, but prior to 11:59 p.m. eastern time on May 22, 2018, by telephone or the Internet; or
attending the Annual Meeting and casting your vote in person.
If you are a beneficial owner of your shares, you must contact your brokerage firm, bank or other custodian to revoke any prior voting instructions.
Who are the proxies for the Annual Meeting?
                                                        
The named proxies for the Annual Meeting, Stephen E. Tremblay and James L. Simmons (or their duly authorized designees), will follow submitted proxy voting instructions. They will vote as the Board recommends as to any submitted proxies that do not direct how to vote on any item, and will vote on any other matters properly presented at the Annual Meeting in their judgment.
What constitutes a quorum?
                                                        
We need a quorum of stockholders in order to transact business at our Annual Meeting. A quorum is the presence, in person or by proxy, of the holders of record of a majority in voting power of the outstanding shares of common stock entitled to vote at the meeting. If you have properly voted by proxy, via mail, telephone or the Internet, you will be considered part of the quorum. We will count abstentions, withhold votes and broker non-votes as present for the purpose of establishing a quorum. If a quorum is not present, the chairman or the holders of a majority of the shares of common stock present in person or by proxy at the Annual Meeting may adjourn the meeting, without notice other than an announcement at the meeting, until the required quorum is present.
If my broker holds my shares in “street name,” will my broker automatically vote my shares?
                                                        
Under the rules of the New York Stock Exchange ("NYSE"), if your broker holds your shares in its name and you do not instruct your broker how to vote, your broker will have discretion to vote your shares on our sole “routine” matter – the ratification of the appointment of our independent registered public accounting firm. Your broker will not have discretion to vote on any of the other proposals, absent direction from you, because they are considered “non-routine” matters. It is therefore very important that you vote your proxy or voting instruction card so that your vote can be counted.
Who will count the votes?
                                                        
Representatives of Broadridge will tabulate the votes.
What shares are reflected on my proxy card?
                                                        
The shares listed on your proxy card represent, as of the record date, all the shares of our common stock held in your name, as distinguished from shares held by a broker in “street” name. You should receive a separate voting instruction card from your broker if you hold shares in “street” name.
What is the Company’s contact information for purposes of the proxy solicitation?
                                                        
You can contact us by mail sent to the attention of the Secretary at our principal executive offices located at 15710 John F. Kennedy Boulevard, Suite 300 Houston, Texas 77032. You can call us by dialing 281-504-4700. You can access our proxy materials online at www.proxyvote.com.



8


PROPOSAL 1
ELECTION OF CLASS III DIRECTORS
Our Board is presently comprised of nine directors, divided into three classes, designated as Class I, Class II and Class III, each serving staggered three-year terms. With the exception of Kevin M. Fogarty, our President and Chief Executive Officer ("CEO"), all of our directors are independent under the listing standards of the NYSE and SEC rules.
The Board has nominated for re-election Shelley J. Bausch, Kevin M. Fogarty and Karen A. Twitchell, as Class III directors, to serve until their respective successors are duly elected and qualified at the annual general meeting of stockholders held in 2021 or their earlier death, resignation or removal.
Each of Mmes. Bausch and Twitchell and Mr. Fogarty has consented to being named in this proxy statement and to serving as a director if elected at the Annual Meeting. If for any reason, any of Mmes. Bausch and Twitchell and Mr. Fogarty becomes unable or unwilling to serve at the time of the Annual Meeting, the Board may reduce the size of the Board accordingly, or the persons named as proxies in the proxy will have the authority to vote for substitute nominees. We do not anticipate that any nominee named in the proxy statement will be unable or unwilling to serve.
The Board recommends that stockholders vote “FOR” each of the Company’s named nominees for Class III director.
Overview
Set forth below is a brief biography of our Class III director nominees and all other members of the Board who will continue in office. Set forth below is also a brief biography of each of our executive officers who is not a director.
Also included for each director is a brief discussion of the specific experiences, qualifications, attributes or skills that led our NCG Committee to conclude that the applicable director should serve on our Board at this time. Additionally, each of our nominees and directors meets the requirements of applicable law and NYSE listing standards, is judged by our NCG Committee to be a person of high character and integrity, and serves our goal of having a well-rounded board, including our consideration of principles of diversity. For a further discussion of the guidelines and qualifications our NCG Committee considers, please see “Corporate Governance—Board Selection and Refreshment,” below.





9


Nominees for Election as Class III Directors: Term Expiring 2021
Shelley J. Bausch
 
 
Independent
Age: 52
Director since: 2017
Board Committee: NCG
Current Public Directorships: None
 
Ms. Bausch is the President of Carlisle Fluid Technologies at Carlisle Companies, Inc. From 2014 to October 2017, Ms. Bausch served as the Global Vice President, Global Industrial Coatings at PPG Industries, Inc. Ms. Bausch began her career at Dow Corning Corporation in 1988, and most recently served as its Business Vice President, Finished Products from 2011 to 2014.
 
 
 
Skills and Qualifications:
 
Significant experience in the chemicals industry, including internationally
 
Senior leadership experience
 
Broad experience in manufacturing, marketing, commercial operations, strategic planning, and organizational management
Kevin M. Fogarty
 
Our President and CEO

Age: 52
Director since: 2009
Board Committee:      Executive
Current Public Directorships:
P.H. Glatfelter Company

 
Mr. Fogarty was appointed our President and CEO in January 2008. Prior to being appointed President and CEO, Mr. Fogarty served as our Executive Vice President of Global Sales and Marketing from June 2005. Mr. Fogarty joined us from Invista, where he had served as President for Polymer and Resins since May 2004. For the 13 years prior to his most recent position with Invista, Mr. Fogarty held a variety of roles within the Koch Industries, Inc. family of companies, including KoSa.
 
 
 
Skills and Qualifications:
 
As the CEO of our Company, Mr. Fogarty sets the strategic direction of the Company under the guidance of the Board and provides valuable insight to the Board into the day to day business issues facing our Company
 
Extensive sales, marketing and high-level leadership experience in the chemical industry, including experience in the specialty chemicals business, with broad international business experience
Karen A. Twitchell
 
 
Independent
Age: 62
Director since: 2009
Board Committees:      Compensation and Audit
Current Public Directorships:
KMG Chemical, Inc.
Trecora Resources (Audit Chair)
 
From 2010 to 2013, Ms. Twitchell served as the Executive Vice President and Chief Financial Officer of Landmark Aviation. From 2001 to 2009, Ms. Twitchell was a Vice President and Treasurer of LyondellBasell Industries and Lyondell Chemical Company. Prior to that, she served as a Vice President and Treasurer of Kaiser Aluminum Corporation and Southdown, Inc. Before joining Southdown, Ms. Twitchell was an investment banker with Credit Suisse First Boston in its corporate finance department.
 
 
 
Skills and Qualifications:
 
Broad experience in financial management and corporate finance, including investment banking, treasury and investor relations
 
Extensive chemical industry experience
 
Longstanding experience in senior corporate positions with knowledge of financial management oversight and enterprise risk management




10


Incumbent Class I Directors: Term Expiring 2019
 
Mark A. Blinn
 
 
 
Independent
Age: 56
Director since: 2017
Board Committee: Audit
Current Public Directorships:
Texas Instruments, Inc. (Audit Chair)
 
Mr. Blinn served in various positions at Flowserve Corporation, including, most recently as the Chief Executive Officer and President from 2009 to March 2017 and Chief Financial Officer from 2004 to 2009. Prior to Flowserve, Mr. Blinn held senior finance, treasury and planning positions at FedEx Kinko’s Office and Print Services, Inc., Centex Corp., FirstPlus Financial Inc., Electronic Data Systems Corp. and Commercial Capital Funding Inc. Mr. Blinn also was formerly an attorney with Smith, Barshop, Stoffer and Millsap, where he represented large financial institutions, foreign corporations and insurance companies in litigation issues.
 
 
 
 
Skills and Qualifications:
 
 
Strong corporate finance, public company accounting and financial reporting experience, having served as a Chief Financial Officer
 
 
Longstanding experience in senior corporate positions , including as Chief Executive Officer, with knowledge of financial management oversight
 
 
Public company board experience, with knowledge on corporate governance and board function
 
Anna C. Catalano
 
 
 
Independent
Age: 58
Director since: 2011
Board Committee: Compensation
Current Public Directorships:
Willis Towers Watson
HollyFrontier Corporation
 
Ms. Catalano served in various capacities for BP plc, and its predecessor Amoco Corporation, from 1979 until her retirement in 2003, including from 2000 to 2003, as Group Vice President, Global Marketing, for BP plc.
 
 
 
 
Skills and Qualifications:
 
 
International experience, having served as President of Amoco Orient Oil Company, lived in Beijing for two years, and is fluent in Mandarin
 
 
Senior leadership experience, possessing extensive knowledge of marketing and communications
 
 
Broad public company experience, with a wealth of knowledge on corporate governance, executive compensation and board function
 
 
Prior Public Directorships (Last Five Years):
 
 
 
Mead Johnson Nutrition Company, Chemtura Corporation, Hercules Incorporated, SSL International plc, and U.S. Dataworks, Inc.
 
 
 
Barry J. Goldstein
 
 
 
Independent
Age: 75
Director since: 2009
Board Committees:      Audit and NCG
Current Public Directorships:
BMC Stock Holdings, Inc.
 
Mr. Goldstein retired as Executive Vice President and Chief Financial Officer of Office Depot, Inc. in October 2000, which he first joined as Chief Financial Officer in May 1987. Mr. Goldstein was previously with Grant Thornton from 1969 through May 1987, where he was named a Partner in 1976.
 
 
 
 
 
 
Skills and Qualifications:
 
 
Accounting experience, having served as the Chief Financial Officer of Office Depot for 13 years, as a partner in a major public accounting firm for over a decade, and as the chairman of six audit committees, four of them public
 
 
Senior leadership, possessing extensive knowledge of corporate finance
 
 
Broad public company experience and knowledge of corporate governance having served on the board of seven companies, four of them public
 
 
Prior Public Directorships (Last Five Years):
 
 
 
Interline Brands, Inc. and Generac Holdings Inc.
 
 



11


 
Dan F. Smith
 
Chairman of the Board
 
Independent
Age: 71
Director since: 2009
Board Committees: Compensation and Executive (chair)
Current Public Directorships:
Orion Engineered Carbons, S.A.
Nexeo Solutions, Inc.
TPG Pace Energy Holdings Corp.

 
Mr. Smith began his career as an engineer with Atlantic Richfield Company in 1968. He was elected President of Lyondell Chemical Company in August 1994 and Chief Executive Officer in December 1996. He was also elected Chief Executive Officer of Equistar Chemicals, LP in December 1997 and Millennium Chemicals Inc. in November 2004, each a wholly-owned subsidiary of Lyondell. Mr. Smith retired from each of these Chief Executive Officer positions in December 2007.
 
 
 
 
 
 
Skills and Qualifications:
 
 
Industry knowledge with a long and distinguished career in the chemical industry and a degree in chemical engineering
 
 
Senior leadership with several years of service as the Chief Executive Officer of a major chemical company
 
 
Sophisticated public company experience having served as Chairman of the board of directors of Lyondell Chemical Company
 
 
Prior Public Directorships (Last Five Years):
 
 
 
Northern Tier Energy LLC
 
 
Incumbent Class II Directors: Term Expiring 2020
Dominique Fournier
 
 
Independent
Age: 67
Director since: 2012
Board Committees:      Executive and NCG (Chair)
Current Public Directorships: None
 
Mr. Fournier was the Chief Executive Officer of Infineum International Limited, a joint venture specialty chemical company between Shell and ExxonMobil, from January 2005 until December 2011. From 1976 to 2004, he held various manufacturing and marketing positions in ExxonMobil’s (and its predecessor Exxon) chemical businesses as well as senior leadership positions, including AIB Vice President, from 1998 to 2004, and Managing Director – Exxon Chemical France, from 1996 to 1997.
 
 
 
Skills and Qualifications:
 
Knowledge of the industry, including manufacturing, marketing and executive management, and executive level knowledge of the Company and the specialty chemicals business by virtue of commercial relationships
 
International business experience in Asia and with joint ventures
 
Brings geographical diversity to the Board, as a French national
John J. Gallagher, III
 
 
Independent
Age: 54
Director since: 2011
Board Committees:      Audit (Chair) and NCG
Current Public Directorships: None
 
Mr. Gallagher is the Chief Executive Officer of Stellar CJS Holdings, LLC, a privately held investment company formed in 2009. Previously, Mr. Gallagher was the Chief Operating Officer - Melt Delivery & Control Systems / Fluid Technologies / Finance and Shared Services of Milacron LLC, a supplier of plastics processing equipment, technologies and services. From 2005 to 2007, Mr. Gallagher was Executive Vice President and Chief Financial Officer of Celanese Corporation and, from 2007 to 2009, he was Executive Vice President and President, Acetyls and Celanese Asia. From 1995 to 2005, Mr. Gallagher served in executive positions with Great Lakes Chemical Corp., UOP, LLC, and AlliedSignal, Inc. From 1986 to 1994, Mr. Gallagher worked for Price Waterhouse, LLP and is a certified public accountant.
 
 
 
Skills and Qualifications:
 
Significant expertise in corporate finance, public company accounting and financial reporting, including as a chief financial officer
 
Senior leadership, possessing international business experience in Asia
 
Over twenty years of industry knowledge of the chemical business



12


Executive Officers Who are Not Directors
Our Board elects our officers, and our officers serve until their resignation or termination or until their successors are duly elected and qualified.
Marcello C. Boldrini. Mr. Boldrini, age 56, was appointed our Senior Vice President and Chemical Segment President in April 2017. Prior to joining Kraton, Mr. Boldrini was the President Asia and President Global Metals and Mining for Houghton International. From October 2014 to July 2015, Mr. Boldrini was an independent management consultant. From 2010 to 2014, Mr. Boldrini held various executive management positions with Momentive, a global specialty chemical company, including most recently, the Executive Vice President and Chief Marketing Officer. Prior to his experience at Momentive, Mr. Boldrini spent over nineteen years at multiple chemical companies including Ashland, Unilever and Quaker Chemical Mr. Boldrini holds a MS in Chemistry from the University of Milan, Italy and an M.B.A. from Bocconi University in Italy.
Heba K. Botros. Ms. Botros, age 48, our Vice President, Corporate Development and Strategy, was appointed in December 2016.  Ms. Botros joined us from Celgard LLC, a Polypore Company, where she held a number of positions from 2007 through 2016, including most recently as Vice President of Global Sales and Marketing.  Prior to her employment at Celgard, Ms. Botros was employed by General Electric Company, Advanced Materials Division, and Altria Group.  Ms. Botros holds an M.B.A., Strategic Management Focus, and a BSc in Accounting & Marketing, each from the University of Wisconsin - Milwaukee. Ms. Botros is also Six-Sigma Green Belt certified and is a Certified Public Accountant.
Melinda S. Conley. Ms. Conley, age 52, our Senior Vice President and Chief Human Resources Officer, was appointed as our principal human resources officer in May 2012. Prior to joining us, from 2006 to 2011, Ms. Conley served in various capacities; including Vice President, Total Rewards for Dean Foods, a multi-billion dollar publicly-traded food and beverage company, with responsibility for all compensation and benefits. Prior to that role, she served as Vice President, Human Resources, where she was responsible for all aspects of human resources within the largest division. Ms. Conley previously held multiple human resources positions within the United States and England, with increasing responsibility, at companies including Capital One Financial Corporation, Monsanto Corporation, AlliedSignal, and Ford Motor Company. In addition, she practiced litigation at the firm of Figari & Davenport. Ms. Conley earned a B.A. in Speech Communication and an M.A. from the School of Labor and Employment Relations at the University of Illinois at Urbana-Champaign, and received her J.D. from Southern Methodist University.
J. Fernando C. Haddad. Mr. Haddad, age 54, our Senior Vice President, Global Operations was appointed in April 2015. He is responsible for our global manufacturing, supply planning, and environmental, safety, & health. Prior to joining us, Mr. Haddad worked as the Global Manufacturing & Supply Chain Director for UOP, a Honeywell Company, from 2013 to 2014. Prior to Honeywell, he spent 19 years with Dow Corning, where he held increasingly more senior manufacturing and supply chain leadership positions, including Global Operations Director for the Silicon Metal Business from 2009 to 2013. Mr. Haddad holds a Bachelor of Science degree in Chemical Engineering from the State University of Campinas (Brazil) and an M.B.A. from Faculdade Getulio Vargas (Brazil).
Holger R. Jung. Dr. Jung, age 55, our Senior Vice President and Polymer Segment President, is responsible for all sales, marketing and market development activities for our Polymer segment. Dr. Jung joined us from Invista, a Koch Industries subsidiary, where he held a number of positions of increasing responsibility, serving most recently since 2008 as Vice President of Invista’s North American Polyester & Intermediates business, overseeing the successful sale of that business to Indorama in 2011. Dr. Jung commenced his employment with Hoechst AG in 1990 prior to the sale of Hoechst’s polyester businesses to Koch in 1998, in positions including research and development chemist, technical service manager, and positions with oversight for quality management, strategic planning, and for the marketing and sales functions of KoSa’s European Polyester Specialty Polymer Business. Dr. Jung holds a Ph.D. in polymer chemistry from the University of Marburg in Germany.



13


Vijay Mhetar. Dr. Mhetar, age 47, our Senior Vice President, Chief Technology Officer, was appointed in January 2017.  Dr. Mhetar is responsible for global research & development and technical service activities as well as implementation of our company-wide innovation strategy. Dr. Mhetar joined us from General Cable Corporation, a wire and cable manufacturer, where he held a number of positions from 2008 through 2017, including most recently as Senior Vice President - Global Technology.  Prior to his employment at General Cable, Dr. Mhetar was employed by General Electric Company, Plastics as their Global Technology Manager.  Dr. Mhetar holds a Ph.D., Chemical Engineering from Texas A&M University and a Masters in Technology from the Indian Institute of Technology in Bombay, India. Dr. Mhetar is also Six-Sigma Black Belt certified.
Suzanne Pesgens. Ms. Pesgens, age 47, our Vice President and Chief Procurement Officer, was appointed in January 2016. Ms. Pesgens joined us from Arizona Chemical Company, LLC where she was the Director of Global Procurement since 2010. Prior to Arizona Chemical Company, LLC, she held a variety of roles from 1999 to 2010 in purchasing or marketing at a joint venture between Akzo Nobel and Monsanto Corporation (now Eastman Chemical Company). Ms. Pesgens earned a Master of Science degree in Chemical Engineering from Eindhoven University of Technology (Eindhoven, Netherlands) and an M.B.A. from Rotterdam School of Management at Erasmus University (Rotterdam, Netherlands).
Christopher H. Russell. Mr. Russell, age 52, our Chief Accounting Officer, was appointed our principal accounting officer in June 2015. From 2014 to 2015, Mr. Russell served as Chief Accounting Officer for Prince International Corporation, a leading manufacturer and distributor of mineral based products. Previously, from 2011 to 2014, Mr. Russell was employed with GE Power and Water, a subsidiary of General Electric Company, as the Global Controller for its Aero Derivatives business. Before that, he served as Vice President, Financial Reporting and Technical Accounting for Intelsat, a provider of satellite communications worldwide. Mr. Russell worked with Ernst & Young LLP from 1995 to 2007. Mr. Russell earned a B.S. in accounting from the University of North Texas and is a Certified Public Accountant.
James L. Simmons. Mr. Simmons, age 52, our Senior Vice President, General Counsel and Secretary, was appointed our chief legal officer in December 2014. Mr. Simmons joined us in January 2010 and served in various capacities in the legal department, including most recently as Deputy General Counsel and Assistant Secretary. From 2004 to 2010, Mr. Simmons served in a number of roles, with increasing responsibilities, in the legal department of HCC Insurance Holdings, Inc., including as Vice President & Corporate Secretary from 2007 to 2010. Mr. Simmons earned B.A. and M.A. degrees from Stephen F. Austin State University and his J.D. degree from the University of Houston Law Center.
Stephen E. Tremblay. Mr. Tremblay, age 59, our Executive Vice President and Chief Financial Officer was appointed our principal financial officer in 2008. From 1997 to 2007, Mr. Tremblay held various financial positions, including Chief Financial Officer, at Vertis, Inc., a provider of print advertising and media technology. Mr. Tremblay held senior finance positions at Wellman, Inc., a provider of polyester fiber and resins, from 1990 to 1997 and was a member of the accounting and auditing practice at Ernst & Young LLP, from 1983 to 1990. Mr. Tremblay earned a B.S. degree in business administration from Bryant University and is a Certified Public Accountant.



14


CORPORATE GOVERNANCE
Our Board of Directors
Overview
Our Board is currently comprised of nine members. The exact number of members of our Board will be determined from time to time by resolution of a majority of our full Board, but may at no time consist of fewer than three members.
Our Board is divided into three classes, with each director serving a three-year term and one class being elected at each year’s annual general meeting of stockholders. Mr. Fogarty and Mmes. Bausch and Twitchell are nominees to serve as Class III directors (term expiring in 2021). Ms. Catalano and Messrs. Blinn, Goldstein and Smith serve as Class I directors (term expiring in 2019). Messrs. Fournier and Gallagher serve as Class II directors (term expiring in 2020).
Our Board and the NCG Committee consider it a priority to ensure that the Board is composed of directors who bring diverse perspectives and exhibit a variety of tenure, skills, professional experience and backgrounds.
 
 
 
 
Snapshot of our Board
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
All directors possess:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
œ
High Integrity and Ethical Behavior
`
Strategic Thinking
 
¸
Diverse Cultural Experiences
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
î
Senior Leadership or Board Experience
4
Corporate Governance Knowledge
 
M
Compliance and Risk Management Knowledge
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our directors also possess a balance of other relevant skills:
Average Age 61 Years
 
 
 
 
 
 
 
 
 
 
 
 
 
è
Financial / Accounting
 
7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
C
Chemical Industry and Manufacturing
 
8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ë
Executive Compensation and Benefits
 
6
 
Average Tenure 6 Years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ï
Research and Development (IP)
 
 
 
 
6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
P
Sustainability
 
 
 
 
4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
¬
Technology and Cybersecurity
 
 
 
 
 
2
 
Gender Diversity 33%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ù
Sales and Commercial
 
 
 
6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



15


Meetings and Attendance
Our Board met six times during 2017, excluding three meetings by a special financing committee (as described below), and acted on other occasions by written consent. During the last full fiscal year, no incumbent director attended fewer than 75 percent of the aggregate of the total number of meetings of the full Board (held during the period for which he or she has been a director) and the total number of meetings held by all committees of the Board on which he or she served (during the periods that he or she served).
Attendance at the Annual Meeting
We encourage our directors to attend our Annual Meeting, but their attendance is not required. All of our current directors who were serving at the time of the 2017 Annual General Meeting of Stockholders attended the meeting.
Executive Sessions
Our non-management directors, all of whom are independent under NYSE listing standards and SEC rules, meet regularly in executive session. Mr. Smith, as the non-management Chairman of the Board, serves as the presiding director at each executive session.
Communications with the Board
Our Board has established procedures by which our stockholders and other interested parties may communicate with any member of our Board, the chairman of any of our Board committees or with our non-management directors as a group by mail addressed to the applicable recipient, in the care of: Secretary, Kraton Corporation, 15710 John F. Kennedy Boulevard, Suite 300, Houston, Texas 77032. Such communications should specify the intended recipient or recipients. All such communications, other than unsolicited commercial solicitations, will be forwarded to the appropriate recipient, for review.
Independence of the Board
Our Board has determined that each of our non-management directors is independent under the listing standards of the NYSE and SEC rules, and references in this proxy statement to these directors as “independent directors” are in that capacity. Mr. Fogarty is not considered to be an independent director for these purposes because he is our President and CEO. In making its subjective determination that each non-management director is independent, the Board reviewed and discussed information provided by the directors with regard to each director’s business and personal activities as they may relate to our Company and management. The Board also considered the information in the context of the NYSE’s objective listing standards, as well as the types of relationships addressed in the NYSE listing standards and disclosure rules of the SEC regarding transactions with related parties.
In assessing the independence of any director who served on the Board at any time during the 2017 fiscal year, the Board took into account certain transactions, relationships, and arrangements involving certain directors and concluded that such transactions, relationships, and arrangements did not impair the independence of the director. The Board considered payments in the past three years in the ordinary course of business between the Company and: (i) for Mr. Smith, Nexeo Solutions, Inc., (ii) for Mr. Demetriou, Jacobs Engineering Group Inc., (iii) for Ms. Bausch, PPG Industries, Inc. and Carlisle Companies, Inc., and (iv) for Ms. Catalano, HollyFrontier Corporation. No such payments between the Company and any above-listed company were significant for either party.




16


Committees of the Board of Directors
Standing Committees of the Board
We have four standing committees of the Board: Audit Committee, Compensation Committee, NCG Committee and Executive Committee. The charter for each committee can be found in the Investor Relations section of our website at www.kraton.com. In 2017, our Board created a special financing committee, comprised of Messrs. Gallagher and Goldstein, and Ms. Twitchell, to evaluate and approve matters relating to financings. The special financing committee met three times in 2017. The current membership, primary responsibilities and number of meetings held in 2017 for each of our four standing committees of the Board are summarized below:
 
Committee
 
Current Members(1)
 
Primary Responsibility
Meetings in 2017
 
 
 
 
 
 
 
 
 
 
Audit
 
John J. Gallagher, III*
Manages the engagement of our independent auditors.
Monitors the qualifications, independence and performance of our independent auditors and the qualifications and performance of our internal auditors.
Discusses with management, the independent auditors, and the internal auditors the accuracy, effectiveness and integrity of the Company’s accounting policies, internal controls, audit results, financial statements, financial reporting practices, and others select financial matters.
Evaluates the hiring of current and former employees of our independent auditors.
Monitors compliance with legal and regulatory requirements, listing standards and corporate governance, including our Code of Ethics and Business Conduct, related party transactions, whistleblower activity and disclosure policy.
Assists the Board in fulfilling its risk oversight, particularly with regard to market based risk, financial reporting, and effectiveness of the Company’s compliance programs.
9

 
 
Mark A. Blinn
 
 
 
 
Barry J. Goldstein
 
 
 
 
Karen A. Twitchell
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nominating & Corporate Governance
 
Dominique Fournier *
 
Identifies and recommends director candidates and committee assignments to the Board.
Reviews, develops and recommends governance principles applicable to the Company.
Oversees the evaluation of the Board and monitors the orientation and continuing education of directors.
5

 
 
Shelley J. Bausch
 
 
 
 
Anna C. Catalano
 
 
 
 
John J. Gallagher, III
 
 
 
Barry J. Goldstein
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation
 
Karen A. Twitchell*
 
Manages the engagement, compensation, evaluation, and independence determination of compensation advisers.
Oversees and manages our executive compensation policies, plans, programs, and practices, and makes recommendations to the Board on the same.2
Determines our compensation philosophy and objectives.
Advises our Board on director compensation and perquisites.
Oversees our executive talent development.
Reviews public disclosure regarding executive compensation.
Assists the Board in fulfilling its risk oversight, particularly with respect to compensation programs and practices.
5

 
 
Anna C. Catalano
 
 
 
 
Dominique Fournier
 
 
 
 
Dan F. Smith
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Executive
 
Dan F. Smith*
 
Acts on matters (1) when, due to an emergency or crisis, a meeting of the full Board cannot be convened in a timely manner and (2) as delegated to the committee by the Board.
0
 
 
Kevin M. Fogarty
 
 
 
 
Dominique Fournier
 
 
 
 
 
 
 
 
 
 
_______________
*     Chairperson
(1)
Our Board has determined that (1) all the committee members of each of the Audit Committee, NCG Committee and Compensation Committee are independent for purposes of applicable NYSE listing standards and SEC rules, and (2) each of Messrs. Blinn, Gallagher and Goldstein, and Ms. Twitchell qualifies as an “audit committee financial expert.”
(2)
Our Compensation Committee may (1) delegate responsibilities to subcommittees comprised of one or more members of our Compensation Committee, and (2) establish committees comprised of our officers, directors or employees to administer defined benefit and other pension plans as provided in plan documentation or otherwise.



17


Compensation Committee Interlocks and Insider Participation
None of our Compensation Committee members were formerly, or during 2017, an officer of ours or employed by us. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or our Compensation Committee.
Board Leadership Structure and Role in Risk Oversight
Leadership Structure
Our Board believes it is preferable at this time for one of our independent directors to serve as Chairman of the Board. Therefore, we separate the roles of Chairman of the Board and CEO. Our Chairman of the Board leads the Board’s oversight of the management of the Company and presides at meetings of the Board and the stockholders. Our CEO is responsible for implementing the policies adopted by the Board and exercising general superintendence over all the business and affairs of the Company. At this time, we believe our leadership structure is appropriate for our Company because our independent Chairman, Mr. Smith, can bring his extensive experience in the petrochemical industry, and in executive management generally, to bear on matters relating to our Board’s oversight of the execution of our strategy, while Mr. Fogarty is able to use his extensive experience in the chemical industry and knowledge of the day-to-day operations of our business to focus his abilities on executing that strategy.
Role in Risk Oversight
Our executive management is responsible for managing the risks inherent in our business, and our Board oversees our executive team in the execution of its risk management function. To assist in this oversight function, our Board has designated the Audit Committee to oversee the development and execution of the Company’s risk management process. Management identifies and assesses the risks inherent in the business based on the likelihood of the risk occurring and the consequence to the Company if the risk were to be realized. Annually, internal audit conducts a risk assessment to assist management in the identification and assessment of risks. The results of the risk assessment are communicated to executive management for evaluation and identification of the most significant risks facing the Company, including a description of any mitigating controls in place and further mitigating actions that may be planned. Management manages identified risks through their ongoing oversight of operational activities and continued evaluation of the Company’s business goals and objectives. On a quarterly basis, the executive management team meets to reassess the significant risks, as well as to consider the status of any emerging risks. Annually, all risks identified by executive management and any changes to risks are presented for discussion to the Board, with quarterly updates provided to the Audit Committee.
Involvement in Certain Legal Proceedings
None of our current directors or executive officers has, in the past ten years, been involved in any legal proceedings that are material to an evaluation of their ability to serve as a director or executive officer.




18


Board and Committee Effectiveness
The Board and its Committees are committed to a rigorous annual self-evaluation process to ensure their effective functioning. Through evaluation, directors review the performance of the Board as a whole and the Committees on which they serve. The evaluation covers areas where the Board feels it functions effectively, and importantly, areas where the Board believes it can improve.
Our Board and its Committees evaluate, among others, the following topics:
Effectiveness at discharging their respective allocated duties and responsibilities
Organization of the Board and respective Committees, including composition, diversity, structure and refreshment
Board and Committee meetings, information needs and quality of materials presented
Satisfaction with individual director performance, including Committee and Board chairs
Access to management, internal and external resources, and continuing education possibilities
Areas where the Board and Committees should increase their focus
Comprehensive Steps to Achieve Board and Committee Effectiveness
Initiation
è
Our NCG Committee reviews and approves the proposed self-evaluation materials for the Board, each Committee and each director nominee up for election at the next Annual General Meeting of Stockholders. Upon approval, our General Counsel, or his delegate, distributes the materials.
â
 
 
Evaluation
è
The questionnaires solicit each director's insights, recommendations and opinions regarding the full Board and their applicable Committees, on various topics, including those listed above. The full Board also completes a full peer evaluation of the directors to be nominated and the upcoming Annual General Meeting of Stockholders.
â
 
 
Consolidation
è
The General Counsel, or his delegate, aggregates and consolidates the results and comments for presentation to the full Board and each Committee, highlighting areas of concern and trends. Responses are not attributed to individuals to promote candor. At the election of the NCG Committee, in 2018 an independent third-party may conduct oral interviews with directors one-on-one to generate additional feedback.
â
 
 
Presentation
è
In collaboration with the General Counsel, the Chairperson of each Committee and the Chairman of the Board present the results of each Committee or the full Board, respectively, the the constituent members for discussion.
â
 
 
Action
è
As an outcome of the self-evaluation process, the Board Chairman and the Committee Chairpersons suggest changes for areas of improvement. Examples of changes made in response the evaluation process include:
Increased Committee-specific education for new directors;
Additional oversight with respect to crisis management;
Enhancement of the time devoted to strategic matters; and
Board refreshment, including adding directors, increasing diversity, and evaluating Board and Committee composition.




19


Board Selection and Refreshment
Our NCG Committee is responsible for reviewing the composition of, and refreshing, the Board and its Committees, through its recommendations to the Board. Our NCG Committee uses a director selection process, highlighted to the left below, to ensure the efficient execution of its responsibilities.
Director Recruitment Process
 
Assess. Our NCG Committee commences its director recruitment and Board refreshment process by using its business judgment to deliberatively evaluate the needs of the Board going forward against the composition of the current Board, considering those directors who wish to continue to serve on the Board. The ongoing assessment includes a review of the corporate strategy, input from management on the evolving business needs, the annually updated director skills matrix and the results of the annual Board and Committee self-evaluations.
Assess
 
Assess the current Board composition and recent Board evaluation results to develop a list of sought after backgrounds, skills and qualifications
 
â
 
Identify
 
Identify. Our NCG Committee identifies director candidates through the recommendations of directors, management and stockholders, and the engagement of third-party consulting firms. The NCG Committee provides guidance to retained consulting firms about the preferred qualifications and backgrounds of a candidate, and uses such firms to perform reviews and evaluations. Our NCG Committee will consider director candidates recommended by our stockholders. Please refer to the text of our Bylaws (including Section 1.12 “Notice of Stockholder Business and Nominations”), which are on file with the SEC, and “Stockholder Proposals and Nominations for our 2019 Annual Meeting” in this proxy statement for additional information.
Identify candidates from third-party search firms, stockholders, management and directors
 
â
 
Evaluate
 
Review the universe of information on, and interview, prospective nominees
 
â
 
Appoint and Recommend
 
Appoint director and recommend approval of director at the next stockholder meeting covering the applicable class of directors
 
Ms. Bausch and Mr. Blinn were elected to the Board by our other directors effective August 11, 2017. Each of Ms. Bausch and Mr. Blinn were identified to the Board as a director candidate from a search conducted by SpencerStuart, a third-party consulting firm retained by our NCG Committee and paid a fee for its services. These services consisted of researching and recommending potential candidates, and performance background evaluations.
â
 
Two directors were added to our Board in 2017
 
Evaluate. Our NCG Committee evaluates all incumbent directors being considered for re-nomination and all director nominees, regardless of the individual, stockholder or consulting firm recommending such candidate, according to established Board-approved criteria. Our NCG Committee considers all candidates in light of the entirety of their credentials and considering the full universe of information made available to the committee. As highlighted below and in compliance with our NCG Committee’s charter, our Board has guidelines for nominees selected to serve on our Board. In addition our Board is dedicated to upholding its principles of diversity.
Guidelines for Nominees Selected to Serve on Our Board
ability to meet any requirements of applicable law
ability to meet any requirements of NYSE listing standards
integrity and strength of character
high ethical standards and history in matters of compliance
ability to represent the interests of all stockholders
business experience
specific areas of expertise
ability to devote sufficient time for attendance at and preparation for Board meetings



20


In addition to the guidelines for nominees selected to serve on our Board, our Board also determined that prospective nominees should exhibit exemplary qualifications in one or more of the following areas: business leadership experience, especially at the highest executive levels; financial reporting experience, especially as it relates to public companies; corporate finance experience; experience in the chemical industry; expertise in marketing; and/or international business experience.
Diversity
Our NCG Committee has not adopted a specific policy with respect to diversity. However, the NCG Committee does consider principles of diversity as an important factor in evaluating nominees to recommend for service on our Board. When considering diversity for the purposes of overall Board composition, the committee considers diversity in a broad context, including, without limitation, race, age, sex, nationality, business experience, skills, international experience, education, other public company board experience and other relevant factors. In addition, the Board values diversity factors such as race, sex and national origin in evaluating individual nominees and includes such factors as important criteria in identifying candidates for service on the Board.
Director Resignation Policy
We have adopted a director resignation policy to recognize principles associated with majority voting for directors. Our Corporate Governance Guidelines provide that any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall, promptly following the certification of the voting results for such election, tender his or her offer of resignation for consideration by our NCG Committee.
The NCG Committee will recommend to the Board whether to accept the offered resignation or other action to be taken, and the Board will act on the offered resignation within 90 days following the certification of voting results for such election and promptly thereafter publicly disclose its decision regarding the offered resignation and, if applicable, the reasons for rejecting the resignation offer. The NCG Committee and the Board may consider any factors and alternatives they deem appropriate in making their recommendation or decision. Any director who is required to tender his or her offer of resignation pursuant to these provisions will not participate in the NCG Committee recommendation or Board action regarding such offered resignation. In the event that each member of the NCG Committee failed to receive the required vote in favor of his or her election, then those independent directors who did not receive a majority withhold vote would appoint a committee amongst themselves to consider the resignation offers and recommend to the Board whether to accept them.
Certain Relationships and Related Party Transactions
Our Board adopted a written policy relating to the approval of related party transactions. Under our policy, we encourage our employees, officers and directors to avoid entering into any transaction that may cause a conflict of interest. In addition, they must report any potential conflict of interest, including related party transactions, to their supervisors or our law department. Pursuant to its charter, our Audit Committee is required to evaluate each related party transaction for the purpose of making recommendations to the disinterested members of our Board as to whether the transactions are fair, reasonable and within our policy, and should be ratified and approved by the Board.
In evaluating such proposed transactions, the Audit Committee is required to consider the relevant facts and circumstances and the controls implemented to protect our interests and the interests of our stockholders, including:
the benefits of the transaction to our Company;
the terms of the transaction and whether they are arm’s-length and in the ordinary course of our Company’s business;
the direct or indirect nature of the related party’s interest in the transaction;



21


the size and expected term of the transaction; and
other facts and circumstances that bear on the materiality of the related party transaction under applicable law and listing standards.
Ms. Bausch, a member of our Board, serves as the President of the Fluid Technologies division of Carlisle Companies Inc. The Construction Materials division of Carlisle Companies, Inc. has from time to time purchased our products. Our total sales to the Construction Materials division in 2017 were approximately $5.5 million and our outstanding receivable was approximately $0.3 million as of December 31, 2017.
Mr. Demetriou, a former member of our Board who resigned on May 25, 2017, serves as the Chief Executive Officer of Jacobs Engineering Group, Inc., which since 2006, has from time to time supplied site maintenance and engineering services for our Belpre, Ohio, facility. Our total purchases from Jacobs in 2017 were approximately $12.8 million and our outstanding payable was approximately $0.7 million as of December 31, 2017.
Pursuant to its charter, our Audit Committee evaluated Ms. Bausch’s and Mr. Demetriou's related party transaction and made a recommendation to the disinterested members of our Board that the transactions were fair, reasonable and within our policy. The transactions were entered into, and payments were made, in the ordinary course of business and on competitive terms, and our directors did not participate in negotiations regarding, nor approve, any such payments or relationships. The disinterested members of our Board ratified and approved the ongoing commercial transactions.
Corporate Governance Guidelines
We are committed to having sound corporate governance practices that maximize stockholder value in a manner consistent with legal requirements and the highest standards of integrity. In that regard, our Board has adopted guidelines that provide a framework for the governance of our company. In addition, we periodically review these guidelines and regularly monitor developments in the area of corporate governance. Our Corporate Governance Guidelines are posted under the Corporate Governance portion of the Investor Relations section on our website at www.kraton.com and are available to any stockholder upon request.
Code of Ethics and Business Conduct
We have adopted a Code of Ethics and Business Conduct that is applicable to all of our directors, officers and other employees. The Code of Ethics and Business Conduct is posted under the Corporate Governance portion of the Investor Relations section on our website at www.kraton.com and is available to any stockholder upon request. If there are any material changes to or material waivers of the Code of Ethics and Business Conduct that apply to our CEO and/or senior financial officers, we will disclose them on our website in the same location.




22


STOCK OWNERSHIP INFORMATON
Beneficial ownership of our stock is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Except as disclosed in the footnotes to the tables below and subject to applicable community property laws, we believe that each stockholder identified in the tables possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder.
Holdings of Major Stockholders
Percentages of beneficial ownership by beneficial owners of 5% or more of the shares of our common stock reported below are based on 31,894,854 shares of common stock outstanding on the March 26, 2018 record date:
Name and Address of Beneficial Owner
Amount and Nature
of Beneficial Ownership  
  Percent of  Class  
BlackRock, Inc.
    55 East 52nd St., New York, NY 10055
3,921,367(1)
12.3%
The Vanguard Group
100 Vanguard Blvd., Malvern, PA 19355
2,936,149(2)
9.2%
Frontier Capital Management Co., LLC
99 Summer St., Boston, MA 02110
2,810,445(3)
8.8%
Dimensional Fund Advisors LP
Building One, 6300 Bee Cave Rd., Austin, TX 78746
2,625,070(4)
8.2%
_______________
(1)
Information is based on a Schedule 13G/A filed with the SEC on January 19, 2018 and represents the number of shares beneficially owned as of December 31, 2017. BlackRock, Inc. holds sole power to vote 3,847,425 shares and sole power to dispose of 3,921,367 shares held by the following subsidiaries: BlackRock (Netherlands) B.V., BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Investment Management (Australia) Limited, BlackRock Japan Co., Ltd., BlackRock Investment Management (UK) Ltd, and BlackRock Investment Management, LLC., with BlackRock Fund Advisors beneficially owning 5% or more of the outstanding shares of common stock.
(2)
Information is based on a Schedule 13G/A filed with the SEC on February 9, 2018. As of December 31, 2017, The Vanguard Group, an investment adviser, held sole power to vote 39,228 shares and sole power to dispose of 2,936,149 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 36,541 shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 9,230 shares as a result of its serving as investment manager of Australian investment offerings.
(3)
Information is based on a Schedule 13G/A filed with the SEC on February 7, 2018. As of December 31, 2017, Frontier Capital Management Co. LLC, an investment adviser, held sole power to vote 1,300,325 shares and sole power to dispose of 2,810,445 shares.
(4)
Information is based on a Schedule 13G filed with the SEC on February 9, 2018. Dimensional Fund Advisors LP (“Dimensional”), reports the sole power to vote 2,513,932 shares and the sole power to dispose of 2,625,070 shares, as of December 31, 2017. Dimensional, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). All securities reported on the Schedule 13G are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. The Funds have the right to receive or the power to direct the receipt of dividends from, or the proceeds from, the sale of such securities held in their respective accounts. To the knowledge of Dimensional, the interest of any one such Fund does not exceed 5% of the class of securities.



23


Holdings of Officers and Directors
Percentages of beneficial ownership by our directors, our NEOs, and by all directors and executive officers as a group reported below are based on 31,894,854 shares of common stock outstanding on the March 26, 2018 record date, plus, with respect to any person, the number of shares that may be acquired pursuant to stock options that are or will become exercisable by such person within 60 days.
Name and Address of Beneficial Owner(1) 
Amount and Nature of  Beneficial Ownership(2)  
  Percent of  Class  
Shelley J. Bausch
3,051
*
Mark A. Blinn
3,051
*
Marcello C. Boldrini
14,150
*
Anna C. Catalano
23,066
*
Kevin M. Fogarty
641,962
2.0%
Dominique Fournier
21,823
*
John J. Gallagher, III
32,883
*
Barry J. Goldstein
27,668
*
Holger R. Jung
57,582
*
Vijay Mhetar
15,196
*
Dan F. Smith
56,674
*
Stephen E. Tremblay
168,641
*
Karen A. Twitchell
23,668
*
All Directors and Executive Officers as a Group (19 persons)
1,185,429
3.7%
_______________
*
Represents beneficial ownership of less than 1%.
(1)
The address for the beneficial owners is 15710 John F. Kennedy Boulevard, Suite 300 Houston, Texas 77032.
(2)
Shares shown in the table above include shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account. The totals in this column include the following shares, beneficial ownership of which the officer or director has the right to acquire within 60 days of the Record Date: Mr. Fogarty—387,537; and Mr. Tremblay—79,317.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires our directors and executive officers, as defined under the Exchange Act, and persons who own more than 10% of our stock to file initial reports of ownership and reports of changes in ownership of our stock with the SEC. Such executive officers, directors and stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely upon a review of the copies of such forms furnished to us and written representations from our directors and executive officers, all Section 16(a) reports applicable to our executive officers and directors and 10% beneficial owners were filed on a timely basis.



24


COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the material elements of the executive compensation program of our Compensation Committee for the following NEOs:
Named Executive Officer
Current Position Held
Kevin M. Fogarty
President and Chief Executive Officer
Stephen E. Tremblay
Executive Vice President and Chief Financial Officer
Holger R. Jung
Senior Vice President and Polymer Segment President
Marcello C. Boldrini(1)
Senior Vice President and Chemical Segment President
Vijay Mhetar(1)
Senior Vice President, Chief Technology Officer
_______________
(1)    Dr. Mhetar and Mr. Boldrini joined the Company in January 2017 and April 2017, respectively.

Executive Summary
Principal Components of Compensation to our NEOs in 2017
Our executive compensation program includes a mix of fixed and variable pay with performance periods ranging from one to three years. Our Compensation Committee established performance metrics for our annual cash incentive program ("ICP") and our long-term incentive program ("LTIP") that align with the Company’s strategy and stockholder interests. The following table outlines the primary elements of our Compensation Committee’s executive compensation program for 2017:
 
 
Element (1)
 
Description & Metrics
 
Purpose
 
 
 
 
 
 
 
 
 
F I X E D
 
Base Salary
 
Delivered in cash and evaluated each year, effective April 1, based primarily on surveys and market data
 
Provide competitive pay to attract and retain our executive officers.
 
 
 
 
 
 
 
 
 
V A R I A B L E
 
Annual Cash Incentive Compensation
 
Delivered in cash and based on: (1) Adjusted EBITDA; and (2) attainment of Net Debt reduction
 
Motivate and reward our executives to achieve key annual business objectives.
 
 
 
 
 
 
 
 
 
Long-Term Equity Incentive Compensation
 
Restricted Stock Awards ("RSAs")
 
Three-year cliff vest; Based on stock price appreciation/depreciation
 
Align interests of executives with long-term stockholder value to support our growth strategy and drive long-term performance, particularly in a volatile industry.
 
 
 
 
 
 
 
 
Restricted Stock Performance Units ("PRSUs")
 
Three-year cliff vest payout based on: (1) cumulative Return on Capital Employed ("ROCE"), and (2) relative Total Shareholder Return ("rTSR")
 
_______________
(1)
Excludes discussion of our benefits which principally include, for our NEOs, contributions to the Kraton Savings Plan, contributions to the Benefits Restoration Plan, premiums for Supplemental Disability Insurance and certain perquisites. All elements of compensation are reviewed against a combination of the compensation elements of our stated peer group, and the market review of total direct compensation and of each discrete element of total direct compensation (base salary, annual cash incentive compensation, and long-term equity incentive compensation).



25


2017 Performance Highlights
For us, 2017 was marked by substantial growth and achievement against several of our significant milestones. Our overarching strategy in 2017 consisted of three elements: revitalization of organic growth, operational excellence, and portfolio management. Results against the performance metrics under our incentive compensation plans demonstrated the following 2017 business highlights:
Reduction of Debt to
 
3-Year Relative TSR in the
 
Net Income of
$1,525 million  
 
 
$97.5 million  
and
 
96th
 
and
Net Debt to
 
Percentile(2)
 
Adjusted EBITDA of
$1,450 million(1)

 
 
$374.2 million(1)

(1)
For a reconciliation of GAAP to non-GAAP financial measures, please refer to “Annex A Non-GAAP Reconciliations.”
(2)
Based on relative TSR from December 31, 2014 to December 31, 2017 using the 2017 TSR Peer Group.
 
The following graph charts the three-year TSR for each of (1) our common stock, and (2) our 2017 TSR Peer Group, in the aggregate, all from December 31, 2014 to December 31, 2017. The calculation assumes a $100 investment on December 31, 2014 and the reinvestment of all dividends.
Our two-year TSR, from December 31, 2015 to December 31, 2017 represents continued stock price appreciation following the acquisition of Arizona Chemical and during the continued execution of our corporate strategy.
——●—— Kraton Corp.
——■—— 2017 TSR Peer Group
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12184944&doc=7
Additional Company Financial Highlights for 2017
ü
As of year-end 2017, we had realized approximately $45 million of the target $70 million savings which are a part of the ongoing cost reset initiatives in our Polymer segment that began in 2015.
ü
Delivered the $65 million of operational cost improvements and general & administrative synergies associated with the acquisition of our Chemical segment, one year ahead of our original 2018 target.
ü
Optimized our capital structure by closing a Euro denominated tranche of our term loan facility and repricing the existing USD denominated tranche of our term loan facility.



26


Results of 2017 Say-on-Pay Vote and Engagement
We received stockholder approval for our executive compensation program in 2017, with approximately 99% of the votes cast voting in favor of the proposal. Our Compensation Committee continually conducts outreach efforts to discuss its compensation philosophy, policies and procedures with our major stockholders, with the intent to:
1
Solicit candid feedback from stockholders and encourage discussion on compensation and governance practices
 
2
Report stockholder views directly to the Compensation Committee and the Board
 
3
Evaluate and design the executive compensation and corporate governance programs
As a result of this engagement process during 2017, we implemented the following for 2018:
What We Heard in 2017
How We Responded for 2018
Valued performance metrics based on our strategic focus to delever subsequent to the Arizona Chemical acquisition
Our ICP continues to include a metric based on the attainment of net debt reduction
Encouraged ongoing and enhanced focus on pay-for-performance
Continued employing cumulative ROCE and rTSR as the performance metrics for our LTIP
Continued the use of measures for our ICP that are determined entirely by Company performance
Maintained a weighting of PRSUs against a weighting of RSAs
Supported continued focus on both absolute and relative performance metrics
Absolute and relative performance metrics for our PRSUs remain equally balanced with ½ cumulative ROCE and ½ rTSR
Valued challenging and well aligned performance metrics
Reviewed an extensive universe of data, including peer group financial performance metrics, to gauge the Company's absolute and relative performance metrics. See "—Selecting Performance Metrics and Setting Associated Goals" below.
Positive response to our focus on variable compensation and vesting durations
RSAs and PRSUs continue having a three-year cliff vest
Stock options have not been issued for over four years
Encouraged clear and more detailed disclosure on performance metrics and Compensation Committee actions
Enhanced and clarified various sections of this CD&A to illustrate our performance metrics and calculations, and the timeline of Compensation Committee actions. See "—Roles in Determining Executive Compensation" and "—Selecting Performance Metrics and Setting Associated Goals" below.
Our Compensation Committee believes that its continuous outreach efforts ensure that the design of our executive compensation programs remains aligned with stockholder expectations. Accordingly, as captured below, for 2018 our Compensation Committee has continued using the same performance metrics for both our ICP and LTIP as were used in 2017:
 
 
2017 and 2018
ICP
è
   Adjusted EBITDA (¾)
Net Debt (¼)
 
 
 
 
 
 
LTIP
è
Cumulative ROCE (½)
Relative TSR (½)



27


Roles in Determining Executive Compensation
Our Compensation Committee
Our Compensation Committee discharges the responsibility of the Board in determining and recommending the compensation of our executive officers, including our NEOs. The Compensation Committee’s charter contains detailed information on the Compensation Committee’s duties and function and is available under the Corporate Governance portion of the Investor Relations section on our website at www.kraton.com.
Our Compensation Committee reviews the goals and objectives related to the compensation of our NEOs. During that review, the Compensation Committee considers the balance between short-term compensation and long-term incentive compensation, evaluates market practices, and sets the compensation levels of our NEOs based on that evaluation. In determining appropriate targeted compensation, our Compensation Committee considers individual performance, Company performance, rTSR, and compensation of persons holding comparable positions at our peer companies.
Our Compensation Committee has the ultimate authority and responsibility to engage and terminate any outside consultant to assist in determining appropriate compensation levels for our NEOs. The illustration below details the main items in our Compensation Committee's annual process in discharging its responsibility relating to the compensation of our executive officers:

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12184944&doc=12



28


Our CEO and Executive Management
Our CEO is typically consulted regarding the compensation of the other NEOs. Our Chief Human Resources Officer regularly attends the meetings of the Compensation Committee and provides input on compensation matters, as requested by the Compensation Committee. Our Compensation Committee then meets in executive session without our CEO to review and recommend any changes to the CEO’s recommendations and to consider other actions, from time to time, as authorized by the Compensation Committee’s charter.
Our Compensation Consultant and Its Independence
In 2016, our Compensation Committee engaged Farient as its independent compensation consultant. During 2016, Farient assisted our Compensation Committee in compiling compensation data, conducting analysis, providing consulting services, and gathering market analysis. Our Compensation Committee continued Farient’s engagement and, for 2017, Farient evaluated the competitiveness of, and provided recommendations with respect to, the compensation of our executive officers, including our NEOs, and the design of the program for 2017. See also, "Determining Executive CompensationOur Peer Groups and Survey Data".
Our Compensation Committee evaluates its compensation consultant yearly, including for satisfaction of independence requirements, and determined that Farient was independent. Our Compensation Committee assesses: (1) the adviser’s provision of other services to the Company; (2) the amount of fees received from the Company by the adviser, as a percentage of the adviser’s total revenue; (3) the adviser’s policies and procedures that are designed to prevent conflicts of interest; (4) any business or personal relationship of the adviser with a Compensation Committee member or an executive officer of the Company; and (5) any adviser-owned Company stock.
Determining Executive Compensation
Our Peer Groups and Survey Data
In order to ensure that our executive compensation program is competitive and has a strong link to relative stock price performance, our Compensation Committee reviews survey data and proxy data, and maintains two peer groups to evaluate and determine various components of our executive compensation program. The TSR Peer Group is used to (1) assess rTSR performance, (2) determine any payout related to the rTSR portion of our PRSUs, and (3) provide additional data points to assist the Compensation Committee in goal setting pursuant to the performance metrics.The Compensation Peer Group is used to understand and evaluate how certain NEO’s total direct compensation compares with the total direct compensation provided to individuals in similar roles within this peer group and then aligning such NEO’s total target compensation to, or near, the 50th percentile for the peer group. In addition to using our Compensation Peer Group to determine the compensation for our CEO and CFO, our Compensation Committee uses a combination of proxy data and additional survey data in determining the compensation for our other executive officers.




29


Our Peer Groups
For setting total direct compensation and our executive compensation program design each year, our Compensation Committee uses a Compensation Peer Group and a TSR Peer Group. With the assistance of Farient, each year our Compensation Committee comprehensively reviews, and subsequently revises, the prior peer groups and establishes the new peer groups. Companies are evaluated as a peer company based on their satisfaction of certain screening including, but not limited to, primary industry, comparable domestic and international revenue, business models and operations, and customer base.
The following table details our Compensation Peer Group for each of 2017 and 2018:
Company
2017
2018
Company
2017
2018
A. Schulman, Inc.
ü
ü
Newmarket Corp.
ü
ü
Albemarle Corp.
ü
ü
Olin Corp.(3)
ü
-
Chemtura Corp. (1)
ü
ü
OMNOVA Solutions, Inc.
ü
ü
Ferro Corp.
ü
ü
Platform Specialty Products Corp.
ü

ü
GCP Applied Technologies (2)
-
ü
PolyOne Corp.
ü
ü
H.B. Fuller Co.
ü
ü
Quaker Chemical Corp.
ü
ü
Ingevity Corporation (2)
-
ü
Rayonier Advanced Materials Inc.
ü
ü
Innophos Holdings, Inc.
ü
ü
Sensient Technologies Corp.
ü
ü
Innospec, Inc.
ü
ü
Stepan Co.
ü
ü
Int'l Flavors & Fragrances, Inc.
ü
ü
W.R. Grace & Co.
ü
ü
Minerals Technologies, Inc.
ü
ü
 
 
 
_______________
(1)
Although this company was acquired in 2017, data was available for 2018 evaluation. This company will be removed from our 2019 Compensation Peer Group. This company was not included in our 2018 TSR Peer Group.
(2)
Added to our 2018 Compensation Peer Group due to alignment with our business, customer focus and global operations.
(3)
This company is no longer classified as a diversified chemical company and has exceeded the appropriate revenue range for a peer, and therefore was removed from our 2018 Compensation Peer Group.
The following table details our TSR Peer Group for each of 2017 and 2018:
Company
2017
2018
Company
2017
2018
2017 Compensation Peer Group
ü
-
FutureFuel Corp.
ü
ü
2018 Compensation Peer Group
-
ü
GCP Applied Technologies, Inc.
ü
ü
Advanced Emissions Solutions, Inc.(1) 
-
ü
Huntsman Corporation
ü
ü
Ashland Global Holdings Inc.
ü
ü
Ingevity Corporation
ü
ü
Axalta Coating Systems Ltd.
ü

ü

KMG Chemicals, Inc.
ü
ü
Balchem Corporation
ü
ü
LSB Industries, Inc.
ü
ü
Celanese Corporation
ü
ü
PPG Industries, Inc.
ü
ü
Chase Corporation
ü
ü
PQ Group Holdings Inc.(1)
-
ü
Codexis, Inc.
ü
ü
RPM International Inc.
ü
ü
DowDuPont Inc.(2)
ü
ü
TerraVia Holdings, Inc.(3)
ü
-
Eastman Chemical Company
ü
ü
The Chemours Company
ü
ü
Ecolab Inc.
ü
ü
The Sherwin-Williams Company
ü
ü
Flotek Industries, Inc.
ü
ü
Valhi, Inc.
ü
ü
_______________
(1)    Added to the TSR Peer Group since the company was added to the Russell 3000 index.
(2)
Dow Chemical Company and EI du Pont de Nemours and Co. merged in 2017; Each were on the 2017 TSR Peer Group.
(3)    Removed from the TSR Peer Group since the company was removed from the Russell 3000 index.



30


Selecting Performance Metrics and Setting Associated Goals
Our Compensation Committee takes a holistic approach to selecting performance metrics and setting associated goals under the incentive compensation programs. Our Compensation Committee believes that the performance metrics appropriately assess our Company, by measuring both performance relative to our peer groups and absolute performance against the execution of our financial objectives. In conjunction with this compensation policy, our Compensation Committee increased the weighting of the rTSR metric under our PRSUs from 25% for grants made in 2016 to 50% for grants made in 2017.

Our Compensation Committee also believes that a single metric would be insufficient to capture our intended performance trajectory. It recognizes the importance of achieving an appropriate balance between rewarding executives for strong performance over both the short- and long-term and establishing realistic targets that continue to motivate and retain executives. As a result, the incentive compensation programs provide for measurable, rigorous performance targets that are achievable but challenge executives to drive business results that produce stockholder value. In setting the performance targets, our Compensation Committee considered each of the following elements:

Considerations in Setting Rigorous Performance Metrics and Goals
ü
The Company's short- and long-term strategy
ü
Publicly disclosed long-term financial targets
ü
The Company's historical performance
ü
Peer group data and market statistics regarding executive compensation performance metrics and historical performance
ü
Targets that are established to encourage a level of risk-taking that is appropriate, but not unreasonable in the context of the Company’s business strategy
ü
Targets that are structured to avoid excessive risk-taking by using a variety of performance goals that apply over performance periods of varying lengths
ü
For each of the performance metrics, our Compensation Committee may certify the payout anywhere from 0% to 200%

As a result of such considerations, our Compensation Committee selected the following performance metrics for the 2017 grants of PRSUs and the 2017 ICP for our NEOs:
2017 ICP
 
2017 PRSUs
Adjusted EBITDA
   (¾)
Net Debt (¼)
 
Cumulative ROCE (½)
Relative TSR (½)
Selecting Absolute and Relative Performance Metrics
During our Compensation Committee's stockholder outreach efforts, our stockholders emphasized the value of relative metrics, alongside absolute metrics, in ensuring further alignment between long-term equity compensation and stockholder interests. Accordingly, in 2017, and continuing in 2018, our Compensation Committee increased the weighting of rTSR, as a relative metric for our grants of PRSUs, to 50% compared to 25% in 2016.




31


The following outlines the goals, and goal setting process, for each performance metric:

Adjusted EBITDA:
 
Our Compensation Committee believes that Adjusted EBITDA, as a performance metric, correlates with delivering strong sustainable performance that, in turn, drives long-term value creation.
Threshold 0.3x
Target
1.0x
Stretch
2.0x
 
For 2017, our Compensation Committee set Adjusted EBITDA targets by evaluating the Company's historical performance, the historical performance of peers, the approved business plan and stockholder expectations. The 2017 target represents a 6% growth from 2016 actual Adjusted EBITDA, in line with the median 3-year and 5-year average Adjusted EBITDA growth of peers.
($ in millions)
 
$336
$375
$413
 
 

Net Debt:
 
Following the close of the Arizona Chemical acquisition in early 2016, the Company had $1.73 billion of net debt and by year-end 2016 the Company had reduced net debt to $1.61 billion. Recognizing the Company’s strategic deleveraging plan, our Compensation Committee continued to set net debt targets in line with stockholder expectations, Company forecasts and Company goals to achieve a consolidated net debt leverage of below four turns by year-end 2018.                                                                                                                   
Threshold 0.3x
Target
1.0x
Stretch
2.0x
 
($ in millions)
 
$1,513
$1,470
$1,420
 

Cumulative ROCE:
 
Our Compensation Committee believes that cumulative ROCE, as a performance metric, demonstrates our efficiency at using both equity and debt to generate returns, therefore driving long-term value creation. Cumulative ROCE, rather than a point-to-point evaluation, is designed to promote continuous performance during the performance period.
2017 PRSUs
Threshold 0.5x
Target 1.0x
Stretch 2.0x
 
2017
6.2%
6.5%
7.0%
 
2018
6.4%
6.8%
7.4%
 
In setting the targets, our Compensation Committee evaluated historical performance and set realistic targets for the Company's current business. Additionally, the cumulative ROCE goals were designed to align with competitive ranges for the Company's peer group.
 
2019
6.9%
7.3%
8.2%
 

Relative TSR:
In response to stockholder feedback, our Compensation Committee uses rTSR as a metric to provide an external benchmark of our relative performance. The achievement levels determined by our Compensation Committee have remained the same since inception of the metric and are prevalent from a market perspective. These levels ensure that it is challenging for the Company to achieve the top quartile performance repeatedly over multiple performance cycles.
Threshold 0.5x
Target
1.0x
Stretch
2.0x
(Percentile Rank)
30th
50th
75th



32


Principles and Philosophy of the Compensation Program
Total Direct Compensation Philosophy
Our Compensation Committee looks to total direct compensation for each NEO to determine the individual elements of compensation. Our Compensation Committee’s executive compensation philosophy is to provide a base salary and incentive compensation that attracts, motivates, retains and rewards high quality executives through competitiveness in the marketplace.
To assist our Compensation Committee in designing the 2017 compensation program, in 2016 Farient evaluated the total direct compensation paid to our executive officers against that paid to individuals holding comparable roles at companies in our Compensation Peer Group, and additional survey data. Our Compensation Committee considered each component of compensation and determined that the aggregate total direct compensation to our NEOs, as a group, was near the median for our peer group. Our Compensation Committee aims to establish total direct compensation for our executives at, or near, the 50th percentile of the Compensation Peer Group to facilitate recruitment and retention while avoiding excessive compensation. Our Compensation Committee reserves the right to exercise its independent business judgment in determining the compensation of our NEOs or deviating from this target.
2017 Total Direct Compensation
The tables below depict the targeted amounts for the key compensation elements of total direct compensation for our CEO and for our other NEOs for 2017. The long-term incentive equity awards consist of PRSUs and RSAs, subject to a three-year cliff vesting. The PRSU award values used in the table below reflect the Compensation Committee's approved values.
CEO Total Direct Targeted Compensation (2017)
 
Other NEOs Total Direct Targeted Compensation (2017)
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12184944&doc=11 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12184944&doc=4
Analysis of Total Direct Targeted Compensation
CEO
Other NEOs
Proportion of pay subject to specific quantitative performance criteria
60%
51%
Proportion of pay at-risk (variable compensation)
80%
66%
Proportion of pay delivered in the form of long-term equity
60%
46%



33


Targeted Total Direct Compensation Focuses on Equity and Variable Compensation
Targeted total direct compensation for 2017 for all NEOs reflects our Compensation Committee’s focus on granting a significant portion of total compensation in the form of variable compensation and long-term equity. In the Compensation Committee’s judgment, this focus is intended to align our NEOs’ long-term interests with those of our Company and our stockholders by linking a significant portion of the compensation with our Company’s performance. For 2017, our Compensation Committee targeted long-term equity compensation as the most significant element of total direct compensation: 60% for our CEO and 46% for our other NEOs.
The value of variable compensation fluctuates based on the performance of our Company and the market value of our common stock, taking into account both short-term business performance and long-term share performance. RSAs, PRSUs and grants under our ICP each constitute variable compensation. For 2017, our Compensation Committee targeted variable compensation for our CEO at approximately $3.78 million, or 80% of his targeted total direct compensation. Additionally, over the same period for our other NEOs, our Compensation Committee targeted variable compensation at approximately 66% of their average aggregate targeted total direct compensation.



34


Pay-For-Performance
Our Compensation Committee designs its pay-for-performance philosophy with the goals to align executive compensation with the creation of long-term stockholder value and to motivate and retain top executive talent.
Reported, Realized and Realizable Pay
Our Compensation Committee considers realized and realizable pay in determining our CEO’s compensation, which reflects its continuing focus on pay-for-performance. The charts below show, for each of the last three years, the difference between the compensation (1) for our CEO as reported in the summary compensation table, (2) that our CEO actually realized, and (3) that our CEO could have realized at the end of each given year based on our closing stock price on such date, as well as the factors affecting realized and realizable pay.
Factors Affecting Realized and Realizable Pay
Our CEO did not exercise any stock options in 2015 or 2016. Our CEO exercised 82,472 stock options in 2017.
In part due to a three-year rTSR in the 95.6 percentile, resulting in a 200% payout for the rTSR performance component, our Compensation Committee certified the payout at 93.1% of target for the 2015 grants of PRSUs.
The value of the Long-Term Equity Incentive Awards increased between Reported and Realizable pay for each of 2016 and 2017 due to stock price appreciation in those years. Our stock price increased $12 over 2016, and $19 over 2017.
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12184944&doc=5http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12184944&doc=6http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12184944&doc=3
$ in Thousands
 Base Salary
 
Long Term Equity Incentive Awards
 
Option Awards
 
Cash Incentive Compensation
 
Other Compensation(3)
________________
(1)
Reflects the value realized from the vesting of stock awards and the exercise of stock options, each as reported in the Option Exercises and Stock Vested table for the given year.
(2)
Reflects the value that could be realized from the vesting of stock awards granted in the given year, based on the closing price for our common stock on the NYSE on the last trading day of such year. This valuation: (i) assumes vesting at target levels for the 2016 and 2017 PRSUs, and (ii) uses a certified payout of 93.1% of target for the 2015 PRSUs.
(3)
Includes changes in pension value and non-qualified deferred compensation earnings.



35


Compensation Decisions and Results
 
Fixed
 
Variable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base Salary
 
Cash Incentive Compensation
+
Restricted Stock Awards
+
Restricted Stock Performance Units
=
Target Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive
 
Long-Term Incentive Compensation (3-Year Cliff Vesting)
 
 
 
Base Salary
Our Compensation Committee reviews the base salary of each NEO on an annual basis and determines if a change is warranted. For our CEO and for our CFO, our Compensation Committee reviewed proxy data from the Compensation Peer Group. For our other executive officers, our Compensation Committee reviewed published survey data. Our Compensation Committee targets each NEO’s base salary at, or near, the 50th percentile for base salaries in our Compensation Peer Group, consistent with our overall compensation philosophy.
Our Compensation Committee starts with a review to establish total direct compensation and then determines the component parts. For our CEO, base salary accounted for approximately 20% of 2017 targeted total direct compensation, and for our other NEOs base salary accounted for approximately 34% of 2017 targeted total direct compensation. Our Compensation Committee believes these levels provide a significant attraction and retention effect for our NEOs. In addition, our Compensation Committee believes that keeping the balance weighted towards variable performance-based compensation serves the best interests of the Company and its stockholders.
The base salary determinations for our CEO and for all NEOs were as follows:
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12184944&doc=9
Named Executive Officer
2017 Base Salary($)
Change From 2016 
2018 Base Salary($)
Change  From 2017
Kevin M. Fogarty
925,000
5.7%
1,000,000
8.1%
Stephen E. Tremblay
475,000
-
500,000
5.3%
Holger R. Jung
400,000
-
400,000
-
Marcello C. Boldrini
380,000
n/a
400,000
5.3%
Vijay Mhetar
310,000
n/a
325,000
4.8%



36


Annual Cash Incentive Compensation
Cash incentive awards for 2017 were made under the Kraton Corporation 2016 Equity and Cash Incentive Plan (the "2016 Plan"). The purpose of annual cash incentive compensation is to promote the interests of our Company and our stockholders by providing variable cash compensation opportunities based on the delivery of key performance metrics. Such purpose is designed to contribute to the short-term performance of our Company.
Formula and Metrics for Annual Cash Incentive Compensation
Our Compensation Committee based the 2017 annual cash incentive compensation on business performance, with the following assigned percentage weighting to the achievement of each:
2017 ICP
Adjusted EBITDA
   (¾)
Net Debt (¼)
Our Compensation Committee establishes target bonuses for our NEOs based on survey data and our Compensation Peer Group. The following Target Bonus factors, approved in February 2017, were used to calculate cash incentive compensation for our NEOs for the year ended December 31, 2017:
Named Executive Officer
Target Bonus
Change from 2016
Bonus Range ($)(1)
Kevin M. Fogarty
1.0 x Base Salary
-
0 - 1,850,000
Stephen E. Tremblay
.70 x Base Salary
-
0 - 665,000
Holger R. Jung
.60 x Base Salary
-
0 - 480,000
Marcello C. Boldrini
.60 x Base Salary
n/a
0 - 456,000
Vijay Mhetar
.50 x Base Salary
n/a
0 - 310,000
__________________
(1)
Depending on actual performance, annual cash incentive compensation can range from zero to 2x times target.
    
For 2017, the payout was determined based on our achievements of Adjusted EBITDA and net debt reduction. The Compensation Committee established threshold, target and stretch multipliers for these performance targets, which provided a multiplier that could range from 0.3, if the minimum, or threshold, level of performance is achieved, to 2.0, assuming the Company met or exceeded the maximum, or stretch, goal. For 2017, the Company Factor for each NEO was 1.076 (0.739 + 0.337). Our Compensation Committee determined the Company Factor based on the following calculation:
1
ADJUSTED EBITDA (¾)
Our achievement of Adjusted EBITDA contributed to the Company Factor as follows:
 
Weight
Threshold 0.3x
Target
1.0x
Stretch
2.0x
 
2017 Actual
2017 Factor
 
 
($ in millions)
 
($ in millions)
 
Adjusted EBITDA(1)
75
%
$
336

$
375

$
413

 
$
374.2

0.739
__________________

(1) 
For discussion on 2017 goal setting, please refer to "—Selecting Performance Metrics and Setting Associated Goals." For a reconciliation of Net Income to Adjusted EBITDA, refer to “Annex A—Non-GAAP Reconciliations.”



37


2
NET DEBT (¼)
Our reduction of net debt contributed to the Company Factor as follows:
 
Weight
Threshold 0.3x
Target
1.0x
Stretch
2.0x
 
2017 Actual
2017 Factor
 
 
($ in millions)
 
($ in millions)
 
Net Debt(1)
25
%
$
1,513

$
1,470

$
1,420

 
$
1,452.7

0.337
__________________
(1) 
For discussion on 2017 goal setting, please refer to "—Selecting Performance Metrics and Setting Associated Goals." For a reconciliation of Debt to Net Debt, refer to “Annex A — Non-GAAP Reconciliations.”

2017 Certified Annual Cash Incentive Compensation
Based on calculations outlined in the steps above, we paid total cash incentive compensation to our NEOs in the following amounts for the 2017 performance year:
Named Executive Officer
 
Company Factor
x
ICP Target ($)
=
2017 Total ($)
Kevin M. Fogarty
 
1.076
 
925,000
 
995,300
Stephen E. Tremblay
 
1.076
 
332,500
 
357,770
Holger R. Jung
 
1.076
 
240,000
 
258,240
Marcello C. Boldrini
 
1.076
 
171,000
 
183,996(1)
Vijay Mhetar
 
1.076
 
155,000
 
166,780
__________________
(1)     Amount prorated for Mr. Boldrini's April 1, 2017 start date.

Year-over-year Results
Targeted amounts of annual cash incentive compensation for our CEO increased 5.7% in 2017 as compared to 2016, due to an increase in base salary for our CEO. On average, in 2017 the total payout percentage for our NEOs was 107.6% of their target bonus, representing an increase from the actual payout percentage for each NEO of 74.8% in 2016.

2018 Design for Annual Cash Incentive Compensation
Based on stockholder engagement and analysis from Farient, our Compensation Committee decided not to adjust the design of the ICP program to ensure ongoing alignment with the creation of stockholder value. Any compensation paid under our 2018 ICP will be paid in cash, and we expect that such payments, if any, will be made on or before March 15, 2019.
All Target Bonus factors as described above have remained the same for 2018.
2017 and 2018 ICP
Adjusted EBITDA
   (¾)
Net Debt (¼)




38


Long-Term Equity Incentive Compensation
Equity awards made subsequent to May 18, 2016 are made under the 2016 Plan. The 2016 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and performance-based compensation awards, in addition to other equity or equity-based awards as the Board determines necessary from time to time. For 2017, the targeted long-term equity incentive compensation for our NEOs continued to be comprised of one-third RSAs and two-thirds PRSUs.
Target Long-Term Equity Incentives
PRSUs
(⅔)
RSAs (⅓)
RSAs are a useful retention tool that require an executive to continue to work for the Company during the three-year cliff vesting period. Additionally, RSAs have tangible value in our industry, which typically displays more volatility than other less cyclical industries. PRSUs, which are settled in shares of common stock of the Company, further align the interests of our executives with those of our stockholders because such awards vest, if at all, based upon the achievement of performance targets that indicate the successful operation of our business and the creation of stockholder value.

RSA and PRSU Grants for 2017 and 2018
In each of 2017 and 2018, our Compensation Committee approved long-term equity incentive compensation to our NEOs at targeted amounts, resulting in the following grants (PRSUs reported at target levels):
 
 
2017 Grants
 
2018 Grants
Named Executive Officer
 
RSAs (#)(1)
PRSUs (#)(2)
 
RSAs (#)(1)
PRSUs (#)(2)
Kevin M. Fogarty
 
34,050

68,100

 
24,023

48,047

Stephen E. Tremblay
 
9,557

19,115

 
5,913

11,827

Holger R. Jung
 
7,168

14,336

 
4,435

8,870

Marcello C. Boldrini
 
4,330(3)

8,659

 
3,326

6,653

Vijay Mhetar
 
4,181(3)

8,363

 
2,772

5,544

________________
(1)
The RSAs are subject to three-year cliff vesting.
(2)
The PRSUs will vest three-years from the date of grant in an amount, if at least the threshold level of performance is achieved, ranging from 0.5x target to 2.0x target level depending on performance against the Compensation Committee's established metrics for the achievement of cumulative ROCE and rTSR.
(3)
Do not reflect RSAs granted to Mr. Boldrini and Dr. Mhetar as part of their respective sign-on compensation. For information on such grants, please refer to "Named Executive Officer Compensation—Grants of Plan Based Awards."




39


Our Restricted Stock Performance Units
Our Compensation Committee determined that rTSR, as a relative external benchmark, and cumulative ROCE, as an absolute metric, render an appropriate mix of metrics for our PRSUs. Since 2015, our Compensation Committee weighted the relative and absolute metrics as follows:
2015 and 2016
 
2017 and 2018
Cumulative ROCE (¾)
Relative TSR (¼)
 
Cumulative ROCE (½)
Relative TSR (½)
Selecting Performance Metrics
During our Compensation Committee's stockholder outreach efforts, our stockholders emphasized the value of relative metrics, alongside absolute metrics, in ensuring further alignment between long-term equity compensation and stockholder interests. Accordingly, in 2017, and continuing in 2018, our Compensation Committee increased the weighting of rTSR, as a relative metric, for the PRSU grants.
Cumulative Return on Capital Employed (Cumulative ROCE)
Our Compensation Committee determines cumulative ROCE by comparing the cumulative net operating profit over the three-year performance period against a range of cumulative Return Percentage (defined below) levels over the same three-year performance period. The following steps outline how the Compensation Committee will determine the cumulative ROCE for outstanding PRSUs:
1
Calculate the Cumulative Net Operating Profit (for the three-year period)
We define net operating profit as Adjusted EBIT, net of non-cash compensation expense and net of taxes at a specified rate (29% for 2016 and 2017). We add our net operating profit for each year in the performance period to obtain the cumulative net operating profit.
2
Calculate the Cumulative Return Percentage Levels (for the three-year period)
Each year, our Compensation Committee determines the threshold, target or stretch Return Percentage levels by multiplying our average capital employed (being the annual average of total assets, less excess cash greater than $50 million, less total current liabilities, plus the current portion of long-term liabilities, all determined on a U.S. GAAP basis) by the Return Percentages for each year determined by the Compensation Committee (and disclosed annually) to ensure a meaningful improvement on our performance. For additional discussion of how our Compensation Committee sets 2017 goals, including the specific Return Percentages, please refer to "—Selecting Performance Metrics and Setting Associated Goals".
The below provides an example of the calculation described in Step 2:
 
Year One
 
Year Two
 
Year Three
 
Cumulative
Threshold (0.5x Target)
Avg. Capital Employed x Return Percentage
+
Avg. Capital Employed x Return Percentage
+
Avg. Capital Employed x Return Percentage
=
Threshold Return Percentage
Target (1.0x Target)
Avg. Capital Employed x Return Percentage
+
Avg. Capital Employed x Return Percentage
+
Avg. Capital Employed x Return Percentage
=
Target Return Percentage
Stretch (2.0x Target)
Avg. Capital Employed x Return Percentage
+
Avg. Capital Employed x Return Percentage
+
Avg. Capital Employed x Return Percentage
=
Stretch Return Percentage



40


3
Compare the Cumulative Net Operating Profit (Step 1) to the Cumulative Return Percentage Levels (green column from Step 2) to determine the payout factor for cumulative ROCE.
Our Compensation Committee then compares the cumulative net operating profit over the performance period to the range of cumulative Return Percentage levels over the same period to determine the vesting factor.
Relative TSR (rTSR)
Relative TSR is measured by the compound annual growth in our stock price over the three-year performance period (calculated using the closing price on the last trading day of the applicable years), plus reinvestment of dividends on the ex-dividend date. This number is then compared to the applicable TSR Peer Group (as discussed above), with the payout based on our percentile rank relative to such TSR Peer Group.
The Completed Performance Cycle for our 2015 PRSUs
In 2015 our Compensation Committee granted PRSUs with a three-year performance period through December 31, 2017 ("2015 PRSUs"). For the 2015 PRSUs, our Compensation Committee certified a payout at 93.1% of target based on the following results:
ROCE (¾)
 
Threshold                            (0.5x Target)
$453,089
 
 
Target                                 (1.0x Target)
$512,935
 
 
Stretch                              (2.0x Target)
$572,782
 
 
 
 
Actual Net Operating Profit (with taxes at 15%)
$462,020
 
 
Attainment of 57.461%
¾ Weighting x 57.46% Attainment = 43.1%
Relative TSR (¼)
 
Threshold                            (0.5x Target)
30th Percentile
 
 
Target                                 (1.0x Target)
50th Percentile
 
 
Stretch                              (2.0x Target)
75th Percentile
 
 
 
 
Actual relative TSR
96th Percentile
 
 
Attainment of 200%
¼ Weighting x 200% Attainment = 50%
Named Executive Officer(1)
# Shares at Target
Value of Grant(2)
# Shares at Vest
Realized Value(3)
Kevin M. Fogarty
91,650
$1,957,992
85,321
$3,794,225
Stephen E. Tremblay
27,155
$580,134
25,279
$1,124,157
Holger R. Jung
20,367
$435,117
18,960
$843,151
________________
(1)
Dr. Mhetar and Mr. Boldrini were not granted any 2015 PRSUs.
(2)
The grant-date fair value for PRSUs is computed in accordance with FASB ASC Topic 718 (disregarding the estimate of forfeitures related to service-based vesting conditions). For a discussion of the assumptions used in calculating the fair value of our stock-based compensation, refer to Note 5, Share-Based Compensation, in the Notes to Consolidated Financial Statements contained in our 2017 Annual Report.
(3)
The realized value was calculated based on the closing price of our common stock on February 27, 2018, the date that the 2015 PRSUs fully vested, which was $44.47.
Payouts Resulting From Rigorous Metrics for our PRSUs
Our recent results against the compensation targets for our PRSUs demonstrate that our Compensation Committee sets challenging goals. There was no payout under the PRSUs granted in 2013 and a 52.5% payout for the PRSUs granted in 2014. For the PRSUs granted in 2015, our Compensation Committee certified a 93.1% payout which was largely a result of three-year rTSR in the 95.6 percentile resulting in a 200% payout for that component.



41


Update on the Outstanding Performance Cycles for our 2016 and 2017 PRSUs
In 2017, we completed the first year of the three-year performance period for our 2017-2019 PRSUs and the second year of the three-year performance period for our 2016-2018 PRSUs. Although the cumulative ROCE levels will not be determined until the end of the performance period, and may vary significantly following each year’s financial results, the following tables shows the current financial status of the cumulative ROCE achievement for our outstanding PRSUs:
2016 - 2018 PRSUs
2016
 
2017
 
2018
 
2016 - 2017 Cumulative
 
Threshold                            (0.5x Target)
$2,441,929 x 6% $146,516
+
$2,625,503 x 7.5% $196,913
+
$TBD x 9%
=
$343,429
 
 
Target
$2,441,929 x 7% $170,935
+
$2,625,503 x 8.5% $223,168
+
$TBD x 10%
=
$394,103
 
 
Stretch                              (2.0x Target)
$2,441,929 x 8% $195,354
+
$2,625,503 x 9.5% $249,423
+
$TBD x 11%
=
$444,777
 
 
 
 
 
 
 
 
 
 
Actual Net Operating Profit (with taxes at 29%)
$150,214
+
$161,670
+
$TBD
=
$311,884
 
 
2017 - 2019 PRSUs
2017
 
2018
 
2019
 
FY 2017
 
Threshold                            (0.5x Target)
$2,625,503 x 6.2% $162,781
+
$TBD x 6.5%
+
$TBD x 7%
=
$162,781
 
Target
$2,625,503 x 6.4% $168,032
+
$TBD x 6.8%
+
$TBD x 7.4%
=
$168,032
 
 
Stretch                              (2.0x Target)
$2,625,503 x 6.9% $181,160
+
$TBD x 7.4%
+
$TBD x 8.2%
=
$181,160
 
 
 
 
 
 
 
 
 
 
Actual Net Operating Profit (with taxes at 29%)
$161,670
+
$TBD
+
$TBD
=
$161,670
 
 

2018 Design for Long-Term Equity Incentive Compensation
Based on stockholder feedback and analysis from Farient, for 2018 our Compensation Committee decided not to change the design of the LTIP. However, our Compensation Committee revised performance goals for the cumulative ROCE metric of the PRSUs as follows:
Setting Performance Goals
For the 2018 PRSUs, our Compensation Committee approved the three-year attainment level for cumulative ROCE and rTSR, based on our 2018 TSR Peer Group. The target levels for cumulative ROCE align with the Company’s 2018 Strategic Plan, as approved by the Board. Cumulative ROCE levels for prior PRSUs were overly aspirational in comparison to peers, particularly those with similar high asset intensity as us, and industry-wide performance. The cumulative ROCE levels for the 2018 PRSUs (using a 21% tax rate) more closely reflect the realistic performance trends of the Company and its peers.
Level
Actual ROCE
Cumulative ROCE
Relative TSR (Percentile Rank)
 
2017
2018
2019
2020
 
Threshold (0.5x Target)
6.2%
6.2%
6.5%
6.9%
30th
Target (1.0x Target)
6.2%
7.1%
7.5%
8.0%
50th
Stretch (2.0x Target)
6.2%
7.7%
8.8%
9.8%
75th



42


Other Compensation for our NEOs
Fringe Benefits/Perquisites
In 2017, we reimbursed Dr. Mhetar and Mr. Boldrini for relocation expenses to cover costs incurred by these individuals to relocate to our corporate headquarter upon joining the Company and provided associated tax gross-up payments. No other material fringe benefits or perquisites were provided to our NEOs in 2017.
Supplemental Disability Insurance
Our senior managers and executives, including our NEOs, participate in a supplemental disability insurance program for which the premiums are paid by the Company. The plan provides disability income protection at 60% of base salary and annual cash incentive compensation with no maximum benefit. For 2017, annual premiums for our NEOs ranged from approximately $260 to $20,000. The Compensation Committee determined that the provision of this benefit was appropriate in order to provide competitive, market-based benefits to our NEOs.
U.S. 401(k) Plan
Our NEOs are eligible to participate in the Kraton Savings Plan, a broad-based tax-qualified savings plan providing for employer and employee contributions for employees employed within the United States.
Non-Qualified Defined Benefits Restoration Plan
Our NEOs who participate in our U.S. 401(k) plan are eligible to participate in a non-qualified defined benefits restoration plan. This non-qualified plan is intended to restore certain benefits that may not be provided under the tax-qualified savings plan due to certain limitations imposed on tax-qualified plans by the Internal Revenue Code.
U.S. Pension Plan
Since he was hired prior to October 15, 2005, Mr. Fogarty was afforded an opportunity to participate in our broad-based tax-qualified noncontributory pension plan. Employees hired on or after October 15, 2005 are not eligible to participate in the pension plan. The pension plan was amended in 2005 to provide participants with a choice, which was effective as of January 1, 2006, between (1) continuing to accrue benefits under the final average pay formula provided for under the pension plan or (2) “freezing” benefits under the pension plan in exchange for an enhanced benefit under the Kraton Savings Plan. For participants who chose to receive the enhanced benefit under the Kraton Savings Plan, the final average earnings, service and social security benefit components of the pension formula (as defined in the plan) were frozen as of December 31, 2005. However, such participants will still be credited with service accumulated after December 31, 2005 for purposes of vesting of benefits under the pension plan.
2016 - 2018 Executive Officer Special Retention Award
On February 10, 2016, the Compensation Committee approved the payment of a special retention award (“Retention Awards”) to several of our executive officers, including our principal financial officer (such NEOs being referred to as the “Eligible Officers”), in recognition of significant contributions made in connection with the acquisition of Arizona Chemical and their continuing work on integrating our operations with those of Arizona Chemical. The Retention Awards payable to the Eligible Officers were paid in cash and in full on February 10, 2018. The Retention Awards are in addition to any bonuses the Eligible Officers may be entitled to receive under any other bonus plans of the Company. Mr. Tremblay received a Retention Award in an amount of $292,500.



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Components of Post-Employment Compensation
Executive Severance Program
Certain of our executives, including our NEOs, participate in the Kraton Corporation Executive Severance Program. The Compensation Committee provides severance to our executive officers because it is consistent with the market practice among our peer companies, and, in the business judgment of the Compensation Committee, is necessary for our recruitment and retention goals. Each of the participants in the program has executed a non-competition and confidentiality agreement.
The severance program provides for severance payments upon certain events terminating employment. In the event the NEO’s employment is terminated by us without “cause” or by the NEO for “good reason” (as each such term is defined in the severance program), Mr. Fogarty would be entitled to 24 months of salary, up to 24 months of medical benefit continuation and a lump-sum payment equal to 2 times the average bonus over the prior three years, and other NEOs would be entitled to 12 months of base salary, up to 12 months medical benefit continuation and a lump-sum payment equal to one times the average bonus over the prior three years. In the event such termination occurs within one year immediately following a change in control of the Company, Mr. Fogarty would be entitled to 36 months of salary, up to 36 months of medical benefit continuation and a lump-sum payment equal to three times the target bonus for that year for Mr. Fogarty, and other NEOs would be entitled to 24 months of base salary, up to 24 months of medical benefit continuation and a lump-sum payment equal to two times the target bonus for that year. The Compensation Committee elected these multiples based upon a market assessment of the severance benefits offered by our peer companies and a determination that these levels were consistent with market practice and, therefore, serve our recruitment and retention goals.
Other Compensation Policies
For 2017, the Compensation Committee reviewed and considered the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended, which provides that the Company generally may not deduct for federal income tax purposes annual compensation in excess of $1 million paid to certain employees. For taxable years beginning prior to December 31, 2017, the $1 million limit did not apply to performance-based compensation if, among meeting other requirements, the compensation was payable pursuant to stockholder-approved plans and was approved by directors who qualified as “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code.
Our Compensation Committee has been able to structure certain of the executive compensation plans and arrangements so that they will not be subject to the 162(m) deduction limit. However, although tax consequences are considered in its compensation decisions, our Compensation Committee has not adopted a policy that all compensation must be deductible. Rather, our Compensation Committee gives priority to the overall compensation objectives discussed above, which includes long-term stockholder value.
Moreover, the exemption from the Section 162(m) deduction limit for qualified performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2018.  As a result of the repeal, compensation paid to our covered executives in excess of $1 million will not be deductible by the Company even if it would otherwise meet the requirements of qualified performance-based compensation, except with respect to certain “grandfathered” arrangements.  The Compensation Committee will monitor developments and assess the impact of the nondeductibility of compensation in light of the changes to Section 162(m).  However, the Compensation Committee will retain the flexibility to authorize compensation that is not deductible consistent with our compensation policies and as determined to be in the bests interests of the Company and its shareholders.




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Financial Restatement
The 2009 Plan and the 2016 Plan provide that performance-based compensation granted under each such plan is subject to a right of recapture. In the event that a determination that the achievement of a performance goal was based on incorrect data and such goal was in fact not achieved, any compensation under the respective plan that was paid on the basis of the purported achievement of such goal must be returned.
Executive Compensation Recoupment Policy
The Company has also adopted an Executive Compensation Recoupment Policy. The policy covers our Section 16 reporting persons under the Exchange Act, which includes our NEOs. The policy provides that we will, to the extent permitted by applicable law, seek to recover, at the direction of the Compensation Committee after it has considered the costs and benefits of doing so, any annual incentive compensation payment, long-term incentive payment or other payment to a covered executive under the following circumstances:
the payment was predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of our financial statements as filed with the SEC;
the Compensation Committee determines that the covered executive engaged in fraud or willful misconduct that caused or substantially caused the substantial restatement; and
a lower payment would have been made to the covered executive based upon the restated financial results.
In each instance, we will to the extent practicable seek to recover from the covered executive the amount by which the Compensation Committee has determined that an incentive payment made in the prior three years to such covered executive for the relevant period exceeded the lower payment that would have been made based on the restated financial results.
The full text of the Executive Compensation Recoupment Policy was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on September 16, 2013 (available here).
Executive Stock Ownership Guidelines
To further align the financial interests of our executives with those of our stockholders, our Board has adopted executive stock ownership guidelines. The guidelines apply to our Section 16 reporting persons under the Exchange Act, which includes our NEOs.
Our guidelines provide that our executives should own an amount of shares equal to a multiple of the executive’s annual base salary as follows:
Covered Executive
Ownership Target  
Chief Executive Officer
5X
Chief Financial Officer
3X
Segment Presidents; Chief Technology Officer; SVP – Global Operations
1.5X
Other Executives
1X
Each executive covered by the guidelines is expected to comply with the ownership target within the five-year period commencing on January 1 of the year following the date on which such executive becomes subject to the guidelines. During the five-year period, such executives are expected to make reasonable progress, as determined by the Compensation Committee, toward their ownership targets. As of December 31, 2017, it was determined that all executives subject to the guidelines had reached, or were making reasonable progress toward, their respective ownership targets.



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Trading in Our Stock Derivatives
Our Stock Trading Policy prohibits our employees, including our NEOs, from speculative trading in our common stock, including the trading of stock derivatives.
Hedging and Pledging by Executive Officers and Directors
Our Stock Trading Policy prohibits the purchase by our directors or executive officers of financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to hedge or offset any decrease in the market value of equity securities of the Company held, directly or indirectly, by any director or executive officer. Our Stock Trading Policy prohibits pledging of any Company stock as security by our directors or executive officers.
Compensation Risk Assessment
As part of the process undertaken to design and implement our compensation plan, our Compensation Committee evaluated our compensation policies, practices and plans to evaluate whether they encourage excessive risk taking. In undertaking this evaluation, our Compensation Committee reviewed, in addition to our compensation policies and practices, our gain-sharing plans at our manufacturing locations, our annual cash incentive compensation plan, our discretionary recognition award program, our sales compensation plans and our equity incentive compensation program. In addition, the Compensation Committee consulted with Farient who opined that none of our compensation policies, practices, or plans, encourages employees to take unreasonable risks related to our business. Based upon the Compensation Committee’s review of the Company’s policies, practices, and procedures of compensating its employees, including non-executive officers, and the compensation consultants' assessment, the Compensation Committee has determined that risks arising from our compensation policies, practices, and procedures are not reasonably likely to have a material adverse effect on the Company.




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REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis included in this proxy statement. Based upon such review, the related discussions and such other matters deemed relevant and appropriate to the Compensation Committee, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by the Compensation Committee:
 
Anna C. Catalano
Dominique Fournier
Dan F. Smith
Karen A. Twitchell, Chair
 



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NAMED EXECUTIVE OFFICER COMPENSATION TABLES
Summary Compensation Table
The following table provides information concerning compensation we paid or accrued on behalf of our NEOs for each of our last three completed fiscal years.
Name  Principal Position
Year 
Salary  ($)  
Bonus
($)
Stock Awards
($)
(1)
Non-equity
Incentive Plan
Compensation
($)
(2) 
Change in Pension Value and Non-qualified Deferred
Compensation Earnings ($)
(3) 
All Other
Compensation
($)
(4)
Total ($)  
Kevin M. Fogarty
2017
912,500


3,086,292

995,300

1,845