Compensation Philosophy and Policies
Whirlpool Corporation is dedicated to achieving global leadership in all of our product categories and to delivering superior stockholder value. To achieve our objectives, we manage to a pay-for-performance compensation philosophy based upon the following guiding principles:
- Compensation should be incentive-driven with a focus on both short-term and long-term results
- A significant portion of pay should be performance-based, with the portion varying in direct relation to an executive’s level of responsibility
- Components of compensation should be linked to the drivers of sustainable stockholder value over the long-term
- Compensation should be tied to an evaluation of business results and individual performance
Overview of 2020 Executive Salary and Incentive Compensation Elements
| Element | Form | Characteristics/Purpose | 2020 Metrics |
|---|---|---|---|
|
Element
Base Salary
|
Form
Cash
|
Characteristics/Purpose
Fixed component based on responsibility, experience and individual performance
|
2020 Metrics
N/A
|
|
Element
Short-Term Incentives
|
Form
Annual Performance Cash Award
|
Characteristics/Purpose
Performance-based variable cash incentive to reward for achieving annual financial and individual performance goals
|
2020 Metrics
Ongoing EBIT— 50% Free Cash Flow—50% +/– 50% Modifier for Individual Performance Results |
|
Element
Long-term Incentives
|
Form
Performance Stock Units
|
Characteristics/Purpose
Motivate and reward employees for the achievement of company financial and strategic performance over a preset three-year period and promote retention
|
2020 Metrics
Cumulative Ongoing Earnings Per Share—50% ROIC—50% |
|
Element
|
Form
Stock Options
|
Characteristics/Purpose
Provide incentive for long-term stock price appreciation and promote retention
|
2020 Metrics
Stock price appreciation
|
All of our Named Executive Officers have ESG priorities included as part of their individual performance objectives.
We reinforce emerging best practices and avoid what are considered poor pay practices:
| We Reinforce Best Practices | We Avoid Poor Pay Practices |
|---|---|
|
We Reinforce Best Practices
Pay for performance |
We Avoid Poor Pay Practices
Allow hedging or pledging of Whirlpool Corporation stock by executive officers or directors |
|
We Reinforce Best Practices
Use an independent compensation consultant that is solely engaged to provide executive compensation services to Whirlpool Corporation |
We Avoid Poor Pay Practices
Provide excise tax gross-ups |
|
We Reinforce Best Practices
Cap short-term and long-term incentive award payouts at market-competitive levels |
We Avoid Poor Pay Practices
Enter into employment contracts except as required by local law or prevailing local market practice |
|
We Reinforce Best Practices
Maintain robust stock ownership guidelines for our executives (7x salary multiple for CEO; 5x for other named executive officers) |
We Avoid Poor Pay Practices
Pay dividends or dividend equivalents on grants of any Performance Stock Units (“PSUs”) or Restricted Stock Units (“RSUs”) prior to vesting |
|
We Reinforce Best Practices
Subject all variable pay to a compensation recovery “clawback” |
We Avoid Poor Pay Practices
Reprice or reload stock options |
|
We Reinforce Best Practices
Have “double-trigger” change-in-control agreements |
|
|
We Reinforce Best Practices
Carefully manage risk in our compensation programs to protect against unintended outcomes |
|
|
We Reinforce Best Practices
Provide market-competitive perquisites deemed necessary to attract and retain top talent |
Preserving Liquidity During COVID-19
Whirlpool Corporation took a number of actions at the outset of the pandemic to preserve liquidity during a period of significant uncertainty, including salaried employee furloughs, collective vacations, and voluntary retirement program actions in certain countries. In addition, we made the difficult decision to reduce our workforce in many regions and countries. In conjunction with these actions, each member of our Executive Committee, including our Chairman and CEO, took a 25% reduction in base salary during April and May of 2020, in recognition of the impact of these liquidity-preservation measures on our broader employee base, and to enhance the financial flexibility of the company. Similarly, our non-employee directors agreed to forego their cash retainer for Board service during the second quarter of 2020.