DIRECTOR COMPENSATION

In October 2021, the Compensation Committee engaged the services of FW Cook to review the design and competitiveness of the Company’s non-employee director compensation program. FW Cook’s non-employee director compensation review found that total per-director compensation remained below the median of peer group practice. Following the 2021 FW Cook review, effective as of January 1, 2022, cash compensation for non-employee directors was increased from $85,000 to $90,000 annually and equity compensation for non-employee directors was increased from $115,000 to $130,000 annually.

Standard Board Fees

Our non-employee directors currently receive the following standard cash compensation (payable in equal quarterly installments):

 

Standard Cash Compensation		Total ($)
Annual Retainer Fee			90,000
Lead Director			25,000
Chairman of the Audit Committee			15,000
Chairman of the Compensation Committee			15,000
Chairman of the Nominating and Corporate Governance Committee			15,000

Directors may elect to receive, in lieu of their regular cash compensation as outlined above, an amount of shares of Company stock equal in value to the cash compensation that otherwise would be paid at the time such cash compensation would have been payable.

In addition, each of the non-employee directors receives grants of restricted stock with an annual value equal to $130,000 paid in four equal quarterly installments with each such quarterly grant vesting immediately.

All members of our Board of Directors are reimbursed for their usual and customary expenses incurred in connection with attending all Board and other committee meetings.

The following table sets forth information concerning compensation paid to our non-employee directors during the fiscal year ended December 31, 2021.

Non-Employee Director Compensation Table for Fiscal Year 2021

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($)(1)(2)				Non-Equity Incentive Plan Compensation ($)				All Other Compensation ($)				Total ($)
Lyle G. Ganske			103,750	(3)			115,000				—				—				218,750
Scott Hall			85,000				115,000				—				—				200,000
Nicole Parent Haughey			85,000				115,000				—				—				200,000
Margot Hoffman			97,500				115,000				—				—				212,500
Michael S. Lipscomb(4)			27,500				28,750				—				—				56,250
Thomas Swidarski			97,500				115,000				—				—				212,500
La Vonda Williams(5)			21,250				28,750				—				—				50,000
James H. Woodward Jr.			97,500				115,000				—				—				212,500

 

(1)

These amounts reflect the aggregate grant date fair value of restricted stock awards granted in fiscal year 2021 in accordance with ASC Topic 718. For additional information on the valuation assumptions regarding the restricted stock awards, refer to Note 12 to our financial statements for the year ended December 31, 2021, which is included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.

(2)	Stock grants to non-employee directors are paid in four equal quarterly installments. As of December 31, 2021, there were no outstanding unvested stock awards to non-employee directors.

(3)

Mr. Ganske has elected to receive, in lieu of regular cash compensation, an amount of shares of Company stock equal in value to the cash compensation that otherwise would be paid at the time such cash compensation would otherwise have been payable. As a result, for 2021, all of Mr. Ganske’s cash retainers were paid in shares of Company stock.

(4)	Mr. Lipscomb retired from the Board effective as of April 27, 2021.

(5)	Ms. Williams joined the Board effective as of October 19, 2021.

 

		Altra Industrial Motion Corp.    2022 PROXY STATEMENT			13

Stock Ownership Guidelines

Our Board of Directors established stock ownership guidelines applicable to the Company’s non-employee directors pursuant to which each non-employee director should retain the value of Company stock equivalent to five (5) times his annual cash retainer. All of the Company’s non-employee directors have a five (5) year period to accumulate these specific values.

The following categories satisfy a participant’s ownership guidelines: (i) shares of common stock owned directly; (ii) shares of common stock owned indirectly (e.g., by a spouse or a trust); (iii) shares of common stock represented by amounts invested in a 401(k) plan or deferred compensation plan maintained by the Company or an affiliate; and (iv) restricted stock (vested and unvested), earned performance shares (vested and unvested), restricted stock units (vested and unvested), or phantom stock. Unexercised options, unearned performance shares, and pledged shares are not counted toward meeting the guidelines.

The Company’s Board of Directors has the discretion to enforce the stock ownership guidelines on a case-by-case basis. Violations of the Company’s stock ownership guidelines may, without limitation and in the Board’s discretion, result in the participant not receiving future grants of long-term incentive plan awards or annual equity retainer or result in the participant being required to retain all or a portion of future grants of long-term incentive plan awards or annual equity retainers until compliance is achieved.

Compensation Committee Interlocks and Insider Participation.

During our last completed fiscal year, no member of the Compensation Committee was an employee, officer, or former officer of Altra. None of our executive officers served on the board of directors or compensation committee of any entity in 2021 that had an executive officer serving as a member of our Board or Compensation Committee.

Certain Relationships and Related Person Transactions

Transactions with Directors and Management

Under our Code of Business Conduct and Ethics, all transactions involving a conflict of interest, including holding a financial interest in a significant supplier, customer, or competitor of the Company, are generally prohibited. However, holding a financial interest of less than 2% in a publicly held company and other limited circumstances are excluded transactions. Each director and officer is prohibited from using his or her position to influence the Company’s decision relating to a transaction with a significant supplier, customer, or competitor with which he or she is affiliated.

In addition, our Audit Committee Charter provides that the Audit Committee shall review, discuss and approve any transactions or courses of dealing with related parties (e.g., including significant stockholders of the Company, directors, corporate officers or other members of senior management or their family members) that are significant in size (including but not necessarily limited to transactions that exceed $120,000) or involve terms or other aspects that differ from those that would likely be negotiated with independent parties.

In December 2020, Altra invested $5.0 million for a minority equity interest in a privately held manufacturing software company, MTEK Industry AB (“MTEK”), over which the Company does not exert significant influence. During the second and third quarters of 2021, two Altra subsidiaries purchased software licenses, services and hardware from MTEK totaling approximately $367,130.

In September 2021, Alex Christenson (“Mr. A. Christenson”), the son of Carl Christenson, our CEO, began performing consulting services relating to product development, implementation and commercialization for MTEK (the “Engagement”). Mr. A. Christenson has received and continues to receive compensation from MTEK for consulting services at an annualized rate of approximately $142,800 per year, commensurate with market practice and comparable to that of consultants providing similar services.

In accordance with Altra policy, Mr. Christenson disclosed the Engagement which was reviewed and approved by the Audit Committee. The Company anticipates that in the future it may continue to purchase software licenses, services and hardware from MTEK as well as potentially make additional equity investments in MTEK. The Audit Committee will review and approve any such future investments or commercial transactions involving MTEK.

Indemnification Agreements

We have entered into indemnification agreements with each of our directors and executive officers. We believe that these agreements are necessary to attract and retain qualified persons as directors and executive officers. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We also intend to enter into indemnification agreements with our future directors and executive officers.

 

14		2022 PROXY STATEMENT    Altra Industrial Motion Corp.

Corporate Governance

The Nominating and Corporate Governance Committee’s Role and Responsibilities

Primary responsibility for Altra’s corporate governance practices rests with the Nominating and Corporate Governance Committee (the “Governance Committee”). The Governance Committee is responsible for, among other things, (i) overseeing the Company’s policies and procedures for the Board’s nomination of persons to stand for election to serve on the Board of Directors by stockholders and consideration of any stockholder nominations of persons to stand for election to the Board of Directors; (ii) identifying, screening and reviewing individuals qualified to serve as directors and recommending candidates for nomination for election or to fill vacancies; (iii) reviewing annually the composition and size of the Board; (iv) aiding the Board and its committees in their annual self-evaluations; (v) developing, recommending and overseeing implementation of the Company’s corporate governance guidelines and principles; (vi) reviewing, monitoring and addressing conflicts of interest of directors and executives officers; (vii) providing oversight and guidance with respect to environmental, social and governance (ESG) matters and the Company’s ESG activities; and (viii) reviewing on a regular basis the overall corporate governance of the Company and recommending improvements when necessary. To learn more about our commitment to corporate social responsibility, please see the “Environmental, Social and Governance” section of our website at https://ir.altramotion.com/corporate-responsibility/default.aspx. The contents of the ESG section of our website are referenced for general information only and are not incorporated into this Proxy Statement. Described below are some of the significant corporate governance practices that have been instituted by the Board of Directors at the recommendation of the Governance Committee.

Director Independence

The Governance Committee annually reviews the independence of all directors and reports its findings to the full Board. The Governance Committee has determined that the following directors are independent within the meaning of the NASDAQ Rules and relevant federal securities laws and regulations: Lyle G. Ganske, J. Scott Hall, Nicole Parent Haughey, Margot L. Hoffman, Ph.D., Thomas W. Swidarski, La Vonda Williams and James H. Woodward, Jr. Additionally, our Board determined that Michael S. Lipscomb, who previously served on our Board during 2021, was independent within the meaning of the NASDAQ Rules and relevant federal securities laws and regulations.

Board Evaluation

The Board of Directors has adopted a policy whereby the Governance Committee will assist the Board and its committees in evaluating their performance and effectiveness on an annual basis. As part of this evaluation, the Governance Committee assesses the progress in the areas targeted for improvement during previous evaluations and develops recommendations to enhance the respective Board or committee effectiveness over the next year.

Director Nomination Process

The Governance Committee reviews the skills, characteristics, and experience of potential candidates for election to the Board of Directors and recommends nominees for director to the full Board for approval. In addition, the Governance Committee assesses the overall composition of the Board of Directors, including factors such as size, composition, diversity, skills, significant experience and time commitment to Altra.

It is the Governance Committee’s policy to utilize a variety of means to identify prospective nominees for the Board, and it considers referrals from other Board members, management, stockholders, and other external sources such as retained executive search firms. The Governance Committee utilizes the same criteria for evaluating candidates irrespective of their source.

The Governance Committee believes that any nominee must meet the following minimum qualifications:

 

•

Candidates should be persons of high integrity who possess independence, forthrightness, inquisitiveness, good judgment, and strong analytical skills.

 

•

Candidates should demonstrate a commitment to devote the time required for Board duties including, but not limited to, attendance at meetings.

 

•

Candidates should possess a team-oriented ethic consistent with Altra’s core values and be committed to the interests of all stockholders as opposed to those of any particular constituency.

The Governance Committee seeks nominees with a broad diversity of experience, professions, skills, geographic representation, and backgrounds. Accordingly, when considering director candidates, the Governance Committee will seek individuals with backgrounds and qualities that, when combined with those of Altra’s other directors, provide a blend of skills and experience that will further enhance the Board’s effectiveness. The Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability, or any other basis proscribed by law.

To recommend a candidate for consideration, a stockholder should submit a written statement of the qualifications of the proposed nominee, including full name and address, to the Nominating and Corporate Governance Committee Chairman, c/o Altra Industrial Motion Corp., 300 Granite Street, Suite 201, Braintree, Massachusetts 02184.

 

		Altra Industrial Motion Corp.    2022 PROXY STATEMENT			15

Corporate Governance Guidelines

The Governance Committee has developed and recommended the Company’s Statement of Governance Principles, Policies and Procedures (the “Governance Principles”) which has been approved by our full Board. Altra’s Governance Principles are available on the Company’s website at https://ir.altramotion.com/governance/governance-documents/default.aspx. The contents of this section of our website are referenced for general information only and are not incorporated into this Proxy Statement .

Majority Voting Policy in Uncontested Director Elections

Our Board has adopted a majority voting policy in uncontested Director elections which is set forth in Altra’s Governance Principles. Under the policy, any nominee for Director who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election in an election of Directors that is not a contested election is expected to tender his or her resignation as a Director to the Board promptly following the certification of the election results. The Governance Committee will consider each resignation tendered under the policy and recommend to the Board whether to accept or reject it. The Board will act on each tendered resignation, taking into account the Governance Committee’s recommendation, within 90 days following the certification of the election results.

Business Conduct and Compliance

Altra maintains a Code of Business Conduct and Ethics (the “Code of Ethics”) that is applicable to all directors, officers and employees of the Company and all subsidiaries and entities controlled by the Company. It sets forth Altra’s policies and expectations on a number of topics, including conflicts of interest, protection and proper use of company assets, relationships with customers and vendors (business ethics), accounting practices, and compliance with laws, rules and regulations. A copy of the Code of Ethics is available on the Company’s website at https://ir.altramotion.com/governance/governance-documents/default.aspx. The information on our website is not incorporated by reference into, or a part of, this Proxy Statement. Individuals can report suspected violations of the Code of Ethics anonymously by contacting the Altra Compliance and Ethics Hotline at 1-866-368-1905 (or at any of the international phone numbers listed in Schedule 2 to the Code of Ethics). In the event the Company amends or waives any of the provisions of the Code of Ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or controller that relates to any element of the definition of “code of ethics” enumerated in Item 406(b) of Regulation S-K under the Securities Act of 1934, as amended, Altra intends to disclose these actions on the Company’s website.

Altra also maintains policies regarding insider trading and communications with the public (the “Insider Trading Policy”) and procedures for the Audit Committee regarding complaints about accounting matters (the “Whistleblower Policy”). The Insider Trading Policy sets forth the Company’s limitations regarding trading in Company securities and the handling of material non-public information. The Insider Trading Policy is applicable to directors, officers and employees of Altra and its subsidiaries, as well as any agent or consultant who has access to or has received material, non-public information, about the Company in the course of an engagement by or association with the Company, together with certain other persons or entities affiliated with or related to any of the foregoing (collectively, the “Covered Parties”) and is designed to help ensure compliance with federal securities laws.

The Insider Trading Policy contains a strict policy against any Covered Parties engaging in short-term or speculative transactions or hedging or monetization transactions involving the Company’s stock or other securities. All Covered Parties are prohibited from (i) selling the Company’s securities “short” – that is, selling securities that are not owned by the particular director, employee or other Covered Party, (ii) buying or selling puts (i.e., options to sell), calls (i.e., options to purchase), future contracts, or other forms of derivative securities relating to the Company’s securities, and (iii) engaging in hedging, monetization transactions or similar arrangements involving the Company’s securities, such as zero-cost collars and forward sale contracts. Additionally, each Company director and officer is prohibited from purchasing the Company’s securities on margin, borrowing against any account in which the Company’s securities are held, or pledging the Company’s securities as collateral for a loan; however, this prohibition does not apply to pledges of the Company’s securities in effect prior to February 12, 2013. The Insider Trading Policy does require, however, that existing pledges be minimized and terminated as soon as practicable.

The Whistleblower Policy was established to set forth the Audit Committee’s procedures to receive, retain, investigate and act on complaints and concerns of employees and stockholders regarding accounting, internal accounting controls and auditing matters, including complaints regarding attempted or actual circumvention of internal accounting controls. Accounting complaints may be made directly to the Chairman of the Audit Committee in writing as follows: Audit Committee Chairman, c/o Altra Industrial Motion Corp., 300 Granite Street, Suite 201, Braintree, Massachusetts 02184. A copy of the Audit Committee’s Whistleblower Policy and procedures may be requested from the Corporate Secretary, Altra Industrial Motion Corp., 300 Granite Street, Suite 201, Braintree, Massachusetts 02184.

Succession Planning

The Board of Directors recognizes that a sudden or unexpected change in leadership could cause the Company to experience management transition issues that could adversely affect the Company’s operations, relations with employees and results. Altra strives to create and maintain a respectful, rewarding, diverse, and inclusive work environment that allows our employees to develop meaningful careers. Working with Altra’s management team,

 

16		2022 PROXY STATEMENT    Altra Industrial Motion Corp.

the Board and Compensation Committee oversee matters including succession planning and development, compensation, benefits, talent recruiting and retention, employee engagement and diversity, equity and inclusion. Moreover, the Board of Directors and Altra’s management team believe that having a robust succession planning process in place is one critical element of a comprehensive program of good corporate governance. As a result, the Board and the Governance Committee periodically review succession plans for the Chief Executive Officer position and other key executive positions.

Communication with Directors

Stockholders or other interested parties wishing to communicate with the Board, the non-employee directors, or any individual director may do so by contacting the Lead Director of the Board by mail, addressed to Lead Director, c/o Altra Industrial Motion Corp., 300 Granite Street, Suite 201, Braintree, Massachusetts 02184.

All communications to the Board will remain unopened and be promptly forwarded to the Lead Director, who shall in turn forward them promptly to the appropriate director(s). Such items as are unrelated to a director’s duties and responsibilities as a Board member may be excluded from this policy by the Lead Director, including, without limitation, solicitations and advertisements; junk mail; product-related communications; job referral materials such as resumes; surveys; and material that is determined to be illegal or otherwise inappropriate. Before being discarded, the director(s) to whom such information is addressed is generally informed that the information has been removed, and that it will be made available to such director(s) upon request.

 

		Altra Industrial Motion Corp.    2022 PROXY STATEMENT			17

OUR EXECUTIVE OFFICERS

The following table sets forth names, ages and positions of the persons who are our executive officers as of March 16, 2022:

 

Name		Age				Position
Carl R. Christenson			62			Chairman and Chief Executive Officer
Todd B. Patriacca			52			Executive Vice President, Chief Financial Officer and Treasurer
Glenn E. Deegan			55			Chief Legal and Human Resources Officer
Craig Schuele			58			Executive Vice President of Marketing and Business Development

Carl R. Christenson, 62, has been our Chairman since April 2014, our Chief Executive Officer since January 2009 and a director since July 2007. Prior to his current position, Mr. Christenson served as our President and Chief Operating Officer from January 2005 to December 2008. From 2001 to 2005, Mr. Christenson was the President of Kaydon Bearings, a manufacturer of custom-engineered bearings and a division of Kaydon Corporation. Prior to joining Kaydon, Mr. Christenson held a number of management positions at TB Wood’s Incorporated and several positions at the Torrington Company. Mr. Christenson currently serves as a director at IDEX Corporation, a NYSE listed industrial manufacturer of highly engineered products. Mr. Christenson previously served as a director at Vectra Co., f/k/a OM Group, Inc., a NYSE listed technology-driven diversified industrial company, from 2014 to 2015. Mr. Christenson also is a member of the Board of Trustees of Manufacturers Alliance for Productivity and Innovation. Mr. Christenson holds a M.S. and B.S. degree in Mechanical Engineering from the University of Massachusetts and an M.B.A. from Rensselaer Polytechnic. In addition to more than twenty-five years of experience in manufacturing companies, Mr. Christenson brings vast knowledge of the Company’s business, structure, history and culture to the Board and the CEO position.

Glenn E. Deegan, 55, has been our Chief Legal and Human Resources Officer since May 2021. Prior to his current position, Mr. Deegan served as Executive Vice President since December 2019, Vice President, Legal and Human Resources since June 2009 and as our General Counsel and Secretary since September 2008. From March 2007 to August 2008, Mr. Deegan served as Vice President, General Counsel and Secretary of Averion International Corp., a publicly held global provider of clinical research services. Prior to Averion, from June 2001 to March 2007, Mr. Deegan served as Director of Legal Affairs and then as Vice President, General Counsel and Secretary of MacroChem Corporation, a publicly held specialty pharmaceutical company. From 1999 to 2001, Mr. Deegan served as Assistant General Counsel of Summit Technology, Inc., a publicly held manufacturer of ophthalmic laser systems. Mr. Deegan previously spent over six years engaged in the private practice of law and also served as law clerk to the Honorable Francis J. Boyle in the United States District Court for the District of Rhode Island. Mr. Deegan holds a B.S. from Providence College and a J.D. from Boston College Law School.

Todd B. Patriacca, 52, has been our Executive Vice President, Chief Financial Officer and Treasurer since February of 2022. Prior to his current position, Mr. Patriacca served as our Vice President of Finance, Corporate Controller and Treasurer since February 2010 and previously also held the role of Assistant Treasurer since October 2008. Previous to that, he served as Vice President of Finance and Corporate Controller since May 2007 and as Corporate Controller since May 2005. Prior to joining us, Mr. Patriacca was Corporate Finance Manager at MKS Instruments Inc. (“MKS”), a semi-conductor equipment manufacturer since March 2002. Prior to MKS, Mr. Patriacca spent over ten years at Arthur Andersen LLP in the Assurance Advisory practice. Mr. Patriacca is a Certified Public Accountant and holds a B.A. in History from Colby College and an M.B.A. and an M.S. in Accounting from Northeastern University.

Craig Schuele, 58, has been our Executive Vice President since December 2019 and our Vice President of Marketing and Business Development since May 2007 and held the same position with our predecessor since July 2004. He is responsible for global marketing as well as coordinating Altra’s merger and acquisition activity. Prior to his current position, Mr. Schuele was our Vice President of Marketing since March 2002, and previous to that he was our Director of Marketing. Mr. Schuele joined our predecessor in 1986 and holds a B.S. degree in Management from Rhode Island College.

 

18		2022 PROXY STATEMENT    Altra Industrial Motion Corp.

COMPENSATION DISCUSSION AND ANALYSIS

The following discussion provides an overview and analysis of our compensation programs and policies and the major factors that shape the creation and implementation of those programs and policies. In this discussion and analysis, and in the more detailed tables and narrative that follow, we will discuss compensation and compensation decisions for fiscal 2021 relating to the following persons, whom we refer to as our named executive officers or our NEOs:

 

Name		Position
Carl R. Christenson		Chairman and Chief Executive Officer
Christian Storch(1)		Executive Vice President and Chief Financial Officer
Glenn E. Deegan		Chief Legal and Human Resources Officer
Todd B. Patriacca		Vice President of Finance, Corporate Controller and Treasurer(2)
Craig Schuele		Executive Vice President of Marketing and Business Development

 

(1)	Mr. Storch retired from the Company effective January 31, 2022.

(2)	Mr. Patriacca became the Company’s Executive Vice President, Chief Financial Officer and Treasurer effective February 1, 2022.

Executive Summary

Overview

The Compensation Committee believes that executive compensation should be structured to encourage and reward performance that leads to meaningful results for the Company. Both our cash and equity incentive compensation programs are tied primarily to performance metrics designed to measure sales and earnings growth and working capital management of Altra, as well as absolute and relative stock price performance. Our strategy is to compensate our executives at competitive levels through programs that emphasize performance-based incentive compensation in the form of annual cash payments and equity-based awards. Our executives have the opportunity to earn above-median compensation for above-market performance while below-market performance will result in below-median compensation.

Operating Performance

During fiscal year 2021, we managed through a challenging environment, including supply chain constraints, labor shortages, inflation pressures, and the continued impact of COVID-19. We ended the year with a strong book-to-bill ratio and record backlog levels. Our strong cash generation allowed us to make continued progress de-levering our balance sheet. Having reached our target leverage ratio during 2021, we are positioned with greater capital deployment optionality allowing us to actively manage our portfolio to accelerate topline growth and deliver margin expansion, while maintaining a strong and flexible balance sheet. To this end, on December 31, 2021, we acquired all of the issued and outstanding equity interests of Nook Industries, LLC (“Nook”), a leader in the U.S. engineered linear motion industry to expand our current portfolio of linear product offerings.

During 2021, even as we managed through a challenging environment, we continued to focus on executing against our well-established strategic priorities, which include:

 

•

Applying our world-class Altra Business System to maximize value capture and nurture our extraordinary teams while leveraging best-practices across the entire organization,

 

•

Expediently de-levering our balance sheet towards our target levels by capitalizing on our strong cash generation and prioritizing debt paydown,

 

•

Focusing on margin enhancement by deploying established profit improvement initiatives such as strategic pricing initiatives, supply chain management efforts, and cost controls, and,

 

•

Driving topline organic growth by capitalizing on cross-selling momentum, technology sharing to accelerate innovation, and improving market conditions.

 

		Altra Industrial Motion Corp.    2022 PROXY STATEMENT			19

Our 2021 financial highlights, as reported in the Company’s earnings release filed as an exhibit to the Company’s Form 8-K filed with the SEC on February 16, 2022 (the “2021 Earnings Release”), were as follows:

 

		2021				2020				YOY Change
Net Sales		$	1,899.8 million			$	1,726.0 million				10.1%
Non-GAAP Net Income		$	210.7 million			$	186.9 million				12.7%
Non-GAAP Diluted EPS		$	3.22			$	2.88				11.8%

Our 2021 non-GAAP diluted earnings per share was the strongest in Altra’s history. Additionally, our strong non-GAAP adjusted free cash flow of $176.4 million allowed us to pay down approximately $155 million of debt and make significant progress de-levering our balance sheet. We exited the year with Net Debt to Non-GAAP Adjusted EBITDA leverage as reported in the 2021 Earnings Release below 3.0x, reaching our target leverage level of between 2.0x to 3.0x.

Elements of Compensation

Total compensation for our executive officers consists of the following elements of pay:

 

•

Base salary;

 

•

Annual cash incentive bonus dependent on achievement of Company financial performance objectives;

 

•

Long-term incentive compensation through grants of equity-based awards, which have traditionally been in the form of restricted stock or restricted stock units, stock options, and performance share awards;

 

•

Participation in retirement benefits through a 401(k) Savings Plan;

 

•

The opportunity to defer compensation through a Non-Qualified Savings Advantage Plan;

 

•

Severance benefits payable upon termination under specified circumstances to our key executive officers;

 

•

Medical and dental benefits that are available to substantially all our employees. We share the expense of such health benefits with our employees, with the cost depending on the level of benefits coverage an employee elects to receive. Our health plan offerings are the same for our executive officers and our other non-executive employees; and

 

•

Our named executive officers are provided with the same short-term and long-term disability insurance benefits as our other salaried employees. Additionally, our named executive officers are provided with life insurance and supplemental long-term disability benefits that are not available to all salaried employees.

2021 Compensation Structure

In 2020, the Compensation Committee engaged the services of FW Cook to review the competitive positioning of the Company’s executive compensation program. The Compensation Committee received a report from FW Cook (the “2020 FW Cook Report”), which among other things: (i) reported that, in the aggregate, the total target direct compensation (the sum of base salary, target bonus and the annualized grant date present value of long-term incentive grants) for the Company’s executive officers generally approximated the median of market practice; and (ii) reported that the mix of components comprising both total target direct compensation and long term incentive compensation was generally aligned with the average of the Company’s peer group.

Based on its review of the compensation of the Company’s executives, and taking into account the findings and recommendations in the 2020 FW Cook Report, the Compensation Committee made no significant changes to compensation levels and structure for 2021. As a result, the Company’s compensation structure continued to feature the following:

 

•

The general structure of the Company’s Management Incentive Compensation Program was retained, limiting the maximum award under the plan to 2.0x the target award for the Company’s executives; and

 

•

The Company’s long-term incentive program includes a performance share component based on relative total shareholder return measured over a three (3) year period to better align executive compensation with the return received by the Company’s stockholders; and

 

•

One-half of the Chief Executive Officer’s target long term incentive award is comprised of performance shares and one-half of the other named executive officers’ target long term incentive award is comprised of performance shares.

 

20		2022 PROXY STATEMENT    Altra Industrial Motion Corp.

In 2021, FW Cook delivered a report evaluating the Company’s compensation peer group (the “2021 FW Cook Report”). The 2021 FW Cook Report recommended modest changes to the Company’s compensation peer group, largely to take into account the impact of recent corporate transactions of certain members of the peer group, which were considered in establishing the Company’s compensation peer group for 2022.

Practices and Policies to Promote Effective Compensation Governance

Examples of practices and policies that the Committee has implemented to ensure effective governance of compensation plans include:

 

WHAT WE DO
		Three-year performance period for performance share awards
		Incentive compensation programs feature multiple and varied performance measures aligned with Company performance metrics
		Clawback policy
		Stock ownership requirements for all executive officers
		No perquisites for named executive officers

WHAT WE DON’T DO
		No tax gross-up provisions (except as applicable to management employees generally)
		No “single trigger” change of control benefits
		No above-market return on deferred compensation plans
		No hedging or pledging of Altra securities is permitted
		No long-term incentive compensation is denominated or paid in cash (other than performance share or RSU dividend equivalents)

 

Compensation Committee

The Compensation Committee of the Board of Directors, as further discussed in this Proxy Statement under the caption “Committees of the Board of Directors,” has responsibility for establishing, implementing, and monitoring adherence with the Company’s compensation program. The role of the Compensation Committee is to oversee, on behalf of the Board and for the benefit of the Company and its stockholders, the Company’s compensation and benefit plans and policies, to review and approve equity grants to directors and executive officers and to determine and approve annually all compensation relating to the CEO and the other executive officers of the Company. The Compensation Committee utilizes the Company’s Human Resources Department and reviews data from market surveys and proxy statements to assess the Company’s competitive position with respect to base salary, annual incentives, and long-term incentive compensation. The Compensation Committee has the authority to engage the services of independent compensation consultants and engaged FW Cook in 2020 to conduct a review of the competitiveness of the Company’s executive compensation programs and in 2021 to assist with peer group development and provide guidance on executive compensation levels and program design. The Compensation Committee meets regularly to review executive compensation programs, determine compensation levels and performance targets, review management performance, and approve final executive bonus distributions and performance share award earnouts, as applicable.

Objectives of Our Compensation Programs

We believe that compensation paid to executive officers should be closely aligned with the performance of the Company on both a short-term and long-term basis, and that such compensation should assist the Company in attracting and retaining key executives critical to the Company’s success. To this end, our compensation program for executive officers is structured to achieve the following objectives:

Recruiting and Retention of Talented Professionals

We believe that the dedication, creativity, competence, and experience of our workforce enable us to compete, given the realities of the industry in which we operate. We aim to compensate our executives at competitive levels to attract and retain highly qualified professionals critical to our success. There are many important factors in attracting and retaining qualified individuals, compensation being one of them.

Alignment of Individual and Short-Term and Long-Term Organizational Goals

We seek to align the short-term interests of our executives with those of our stockholders by structuring a significant portion of executive compensation as a performance-based bonus. In particular, the level of cash incentive compensation is determined based on achievement of annual performance targets, which we believe encourages superior short-term performance and operating results for the organization.

 

		Altra Industrial Motion Corp.    2022 PROXY STATEMENT			21

We strive to align the long-term interests of our executives with those of our stockholders and foster an ownership mentality in our executives by giving them a meaningful stake in our success through our equity incentive programs. Our equity compensation program for executives is designed to link the long-term compensation levels of our executives to the creation of lasting stockholder value.

What We Reward, Why We Pay Each Element of Compensation and How Each Element Relates to Our Compensation Objectives

Base salary, as well as benefits such as 401(k) participation, severance, health care and life and disability insurance, are intended to provide a level of income and benefits commensurate with the executive’s position, responsibilities, and contributions to the Company. We believe the combined value of base salary, annual cash incentives and fringe benefits should be competitive with the salary, bonus and general benefits provided to similarly situated executives in the industry.

We compensate our executives through programs that emphasize performance-based incentive compensation. We have structured annual cash and long-term equity compensation to motivate executives to achieve the business goals set by us and reward the executives for achieving such goals. For 2021, depending on the executive, target annual cash incentives comprised approximately 19%-22% of target total direct compensation and target long term incentives comprise approximately 35%-64% of target total direct compensation.

Through our annual cash bonus program, we attempt to tailor performance goals to our current priorities and needs. Through our long-term, equity incentive compensation, we attempt to align the interests of our executive officers with those of our stockholders by rewarding our executives based on absolute and relative stock price performance over time through awards of restricted stock units and performance shares, as well as through grants of stock options.

How We Determine the Amounts We Pay

To assess the Company’s competitive position with respect to base salary, annual incentives, and long-term incentive compensation, the Compensation Committee utilizes FW Cook, Company’s compensation consultant, and the Company’s Human Resources Department, and reviews data from market surveys and proxy statements.

Compensation Peer Group

The Compensation Committee established the below compensation peer group for 2021 compensation decisions.

 

Barnes Group Inc.		Enerpac Tool Group (formerly Actuant)		John Bean Technologies Corporation		Tennant Company
Chart Industries, Inc.		Franklin Electric Co., Inc.		Nordson Corporation		The Timken Company
Colfax Corporation		Graco Inc.		Regal Beloit Corporation		Watts Water Technologies, Inc.
Crane Co		IDEX Corporation		Rexnord Corporation		Woodward Inc.
EnPro Industries, Inc.		ITT Inc.		SPX Corporation

We believe that our compensation peer group for 2021 is representative of the market in which we compete for talent. The size of the group has been established to provide sufficient benchmarking data across the range of senior positions in our Company. Our compensation peer group companies were chosen because they are similar to Altra in terms of size, industry, and business mix. We believe the quality of these organizations will allow Altra to maintain a high level of continuity in the peer group, providing a consistent measure for benchmarking compensation. Our revenues and market capitalization were in the median range of the peer companies at the time the 2021 peer group compensation data was provided.

Base Salary

Base salaries for executives are determined by the Compensation Committee or the Board based upon job responsibilities, level of experience, individual performance, comparisons to the salaries of executives in similar positions at other companies within the compensation peer group, as well as internal comparisons of the relative compensation paid to the members of our executive team.

In addition, our CEO makes recommendations to the Compensation Committee with respect to the base compensation of our executives other than himself. In the case of the CEO, the Compensation Committee evaluates his performance and makes a recommendation of base compensation to the Board. These recommendations are then evaluated, discussed, modified as appropriate and ultimately approved by the Compensation Committee or the Board. Pursuant to the employment agreements the Company has entered into with Messrs. Christenson and Storch, the Board may not reduce, but may

 

22		2022 PROXY STATEMENT    Altra Industrial Motion Corp.

increase, their base salaries so long as their employment agreements are in effect. For further discussion of the employment agreements, see the section entitled “Employment Agreements” in this Proxy Statement. On February 9, 2021, the Compensation Committee approved increases to the 2021 base salaries for our named executive officers generally in line with the overall merit increase budget for our employee population. For the year 2021, the named executive officers received base salaries as set forth in the table below.

 

Named Executive Officer		2020 Base Salary				2021 Base Salary				Percentage Increase
Carl R. Christenson		$	927,000			$	952,492				2.75%
Christian Storch		$	494,400			$	507,996				2.75%
Glenn E. Deegan		$	396,550			$	407,455				2.75%
Todd B. Patriacca		$	283,250			$	291,039				2.75%
Craig Schuele		$	319,300			$	328,080				2.75%

Annual Cash Incentives

Our executive officers are eligible to participate in the Company’s Management Incentive Compensation Program (“MICP”). Under the MICP, the Compensation Committee establishes an annual target bonus opportunity for each of our executive officers based upon the Company’s achievement of certain Company financial factor (“CFF”) performance targets. The CFF performance targets in 2021 were based on adjusted EBITDA, working capital management, core growth and earnings per share (“EPS”) growth goals. Overall, this combination of performance targets is designed to emphasize profitability and productivity, and drive sales growth.

The adjusted EBITDA target consists of earnings before interest, income taxes, depreciation and amortization and is adjusted further for certain non-recurring items, including, but not limited to, realized and unrealized gains and losses resulting from changes in currency exchange rates and the sale or disposition of fixed assets, restructuring and consolidation costs, and the impact of intangible asset impairments. The working capital management target is based on the number of working capital turns calculated as of the end of the year. The core growth target is established by our Compensation Committee. The EPS growth component of the MICP is based on the growth of non-GAAP adjusted diluted earnings per share. Our executive officers are not entitled to a bonus under the MICP if the Company does not achieve at least 80% of the adjusted EBITDA target.

The Compensation Committee annually establishes a target bonus opportunity for each executive officer which represents the percentage of base salary to be received by the executive officer as a cash bonus if the Company meets its CFF performance targets. For 2021, the CFF targets were comprised of the following components: adjusted EBITDA (weighted 75%), working capital management (weighted 15%), and core growth (weighted 10%). Actual adjusted EBITDA results are plotted on an established adjusted EBITDA target performance grid to determine a multiplier (“EBITDA Multiplier”) used to calculate the adjusted EBITDA portion of the CFF. Actual working capital turns are plotted on an established working capital turns performance grid to determine a multiplier (“Working Capital Turns Multiplier”) used to calculate the working capital turns portion of the CFF. Actual core growth is plotted on an established core growth performance grid to determine a multiplier (“Core Growth Multiplier”) used to calculate the core growth portion of the CFF. The resulting overall CFF multiplier is applied to the target bonus opportunity and may then be further adjusted upward, but not downward, by plotting actual non-GAAP adjusted diluted earnings per share on an established EPS performance grid (“EPS Multiplier”). The maximum award under the MICP is limited to 2.0x the target award for the Company’s executives.

The Company’s actual results for fiscal 2021 were: (i) adjusted EBITDA, which is the non-GAAP adjusted EBITDA reported in the Company’s slide deck filed as an exhibit to the Company’s Form 8-K filed with the SEC on February 16, 2022 further adjusted to exclude the impact of certain other items, of approximately $384.4 million which exceeded the adjusted EBITDA target and resulted in an EBITDA Multiplier of 1.00, (ii) working capital turns of approximately 6.44 which was less than the working capital management target and resulted in a Working Capital Turns Multiplier of 0.96, (iii) core growth of 7.89% which exceeded the core growth target resulting in a Core Growth Multiplier of 2.30; and (iv) non-GAAP adjusted diluted earnings per share of $3.22 which exceeded the EPS target and resulted in an EPS Multiplier of 1.10. Based upon these results, the Compensation Committee approved bonuses to each of Messrs. Christenson, Storch, Deegan, Schuele and Patriacca as set forth in the table below.

 

		Altra Industrial Motion Corp.    2022 PROXY STATEMENT			23

The following tables illustrate the calculation of the 2021 bonus payments for the named executive officers.

 

 

Officer		2021 Target Bonus – Percentage of Base Salary				2021 Actual Bonus Payout $				2021 Actual Bonus Payout – Percentage of Base Salary				2021 Actual Bonus Payout – Percentage of Target Bonus
Carl R. Christenson			110%			$	1,295,427				136%				124%
Christian Storch			70%			$	439,660				87%				124%
Glenn E. Deegan			60%			$	302,266				74%				124%
Craig Schuele			50%			$	202,819				62%				124%
Todd B. Patriacca			50%			$	179,920				62%				124%

Any bonuses earned are fully paid in cash following the end of the year earned and after the completion of the consolidated financial statement audit.

To further clarify the bonus calculation, the following is an example calculation for Mr. Christenson:

Calculation of CFF

 

CFF Components
Component		Multiplier		Weighting
EBITDA		1.00		75%
WCT		0.96		15%
Core Growth		2.30		10%

CFF = (1.00*.75) + (0.96*.15) + (2.30*.10) = 1.124

Calculation of Bonus

 

Base Salary		MICP Target %		MICP Target $		CFF		EPS Multiplier		MICP Bonus Payment(1)
$952,492		110%		$1,047,741		1.124		1.1		$1,295,427

 

(1)	(1,295,427 = 1,047,741 * 1.124 * 1.1)

 

24		2022 PROXY STATEMENT    Altra Industrial Motion Corp.

Long-Term Incentive Compensation

The Compensation Committee awards long-term incentive grants to the Company’s executive officers as a component of total compensation to further align executive officers’ compensation with the long-term performance of the Company and to aid in retention. We believe that equity-based compensation ensures that our executives have a continuing stake in the long-term success of the Company. We issue equity-based compensation in the form of restricted stock, or restricted stock units, and stock options, all of which generally vest ratably over a period of years, and performance shares, which generally include a measurement period for the applicable performance metric of at least three years and may also vest over a period of years after the amount of the award is fixed. Our 2021 equity-based long-term incentive compensation mix for our named executive officers was as follows:

 

The purpose of our long-term equity incentives is to encourage stock ownership, offer long-term performance incentives and more closely align the executive’s compensation with the return received by the Company’s stockholders. In setting the target award levels for each component of our long-term equity incentive compensation program, the Compensation Committee considered compensation peer group benchmarking data.

Restricted Stock Unit and Stock Options Granted in 2021

The Compensation Committee has established a target long-term incentive opportunity for each executive officer to be received annually by the executive officer in the form of grants of time vested restricted stock units (“RSUs”) and stock options. On February 9, 2021, the Compensation Committee approved the following grants of RSUs and stock options for each of the named executive officers set forth below:

 

Officer		2021 Number of RSUs Granted(1)				2021 RSU Value at Time of Grant
Carl R. Christenson			14,833			$	881,055
Christian Storch			3,849			$	228,598
Glenn E. Deegan			2,573			$	152,796
Craig Schuele			1,381			$	82,020
Todd B. Patriacca			980			$	58,208

 

(1)	RSU awards vest in equal annual installments on August 15, 2021, August 15, 2022, August 15, 2023 and August 15, 2024.

 

Officer		2021 Number of Stock Options Granted(1)				2021 Stock Option Value at Time of Grant
Carl R. Christenson			59,331			$	1,343,254
Christian Storch			15,394			$	348,520
Glenn E. Deegan			10,290			$	232,966
Craig Schuele			5,524			$	125,063
Todd B. Patriacca			3,920			$	88,749

 

(1)	Stock option awards vest in equal annual installments on August 15, 2021, August 15, 2022, August 15, 2023 and August 15, 2024. The stock option awards expire on the tenth anniversary of the grant date.

 

		Altra Industrial Motion Corp.    2022 PROXY STATEMENT			25

Performance Share Awards Granted in 2021

The Compensation Committee has also established a target long-term incentive opportunity for each executive officer to be received annually by the executive officer as a performance share award.

The performance objective for the 2021 performance share awards measures the Company’s total shareholder return (“TSR”) against the TSR for a peer group of companies (consisting of the 19 companies in our 2021 compensation peer group) over a measurement period of three years beginning on January 1, 2021 and ending on December 31, 2023. Award payouts for the performance shares are based on the percentile rank of the Company’s TSR compared to the TSR of peer group companies over the performance period. In the event that the Company’s TSR over the performance period is negative, the payout of performance shares is capped at the target level, regardless of the relative TSR performance level. The chart below illustrates potential payouts at various levels of performance:

 

Relative TSR Performance Level(1)		Vesting Percentage (% of Target Award)				Payout if Altra TSR is negative
75th Percentile			150%				100%
50th Percentile			100%				100%
25th Percentile			50%				50%
Below 25th Percentile			0%				0%

 

(1)	Results between performance levels are subject to linear interpolation.

Information regarding the number of 2021 performance share awards granted to named executive officers and the grant date fair value of such performance share awards, calculated in accordance with ASC Topic 718, is set forth in the table below.

 

Officer		2021 Total Target Number of Performance Share Awards Granted				Value of 2021 Target Performance Share Awards at Time of Grant
Carl R. Christenson			29,666			$	1,911,380
Christian Storch			7,697			$	495,918
Glenn E. Deegan			5,145			$	331,492
Craig Schuele			2,762			$	177,956
Todd B. Patriacca			1,960			$	126,283

Performance Shares Earned for 2019-2021 Performance

Performance share awards (“PSA’s”) granted in February 2019 (“2019 Performance Shares”) to the named executive officers were based on relative TSR performance against our 2019 peer group during the three-year period ended December 31, 2021. The chart below illustrates potential payouts at various levels of performance:

 

Relative TSR Performance Level(1)		Vesting Percentage (% of Target Award)				Payout if Altra TSR is negative
75th Percentile			150%				100%
50th Percentile			100%				100%
25th Percentile			50%				50%
Below 25th Percentile			0%				0%

 

(1)	Results between performance levels are subject to linear interpolation.

 

26		2022 PROXY STATEMENT    Altra Industrial Motion Corp.

Our Compensation Committee determined that the relative total shareholder return percentile and corresponding payout percentages and shares earned were as follows for the 2019 Performance Share Awards:

 

Executive Officer		Target Shares				Relative TSR Ranking				PSA Performance Payout Percentage				Shares Earned(1)
Carl R. Christenson			61,274				47.37%				94.74%				60,406
Christian Storch			16,845				47.37%				94.74%				16,610
Glenn E. Deegan			11,621				47.37%				94.74%				11,463
Craig Schuele			6,558				47.37%				94.74%				6,470
Todd Patriacca			4,589				47.37%				94.74%				4,529

 

(1)	Dividends accrued on earned performance shares were included as additional shares of Common Stock in accordance with the terms of the award agreement.

Other Benefits

We have a 401(k) plan in which the named executive officers currently participate. We also provide life, disability, medical and dental insurance as part of our compensation package. The Compensation Committee considers all of these plans and benefits when reviewing the total compensation of our executive officers.

For 2021, the 401(k) plan offered a company match of $1.00 for every $1.00 contributed by a named executive officer to the plan up to 3% of the executive officer’s eligible compensation and $0.50 for every $1.00 contributed by a named executive officer to the plan for the next 2% of the executive officer’s eligible compensation (for an aggregate maximum total matching contribution of up to 4% of eligible compensation) subject to applicable IRS maximums. For 2021, the Company also contributed an amount equal to 2% of a named executive officer’s eligible compensation to their account regardless of the amount of the contributions made by the named executive officer.

The Company also affords executive officers the opportunity to participate in the Altra Industrial Motion Corp. Savings Advantage Plan, an unfunded, non-qualified deferred compensation plan (the “Savings Advantage Plan”). The Savings Advantage Plan contains two different benefit types, an excess deferral benefit and a first dollar benefit. The excess deferral benefit allows a participant to defer compensation under the plan upon reaching the compensation limit under Internal Revenue Code Section 401(a)(17) in place under our 401(k) plan. Deferrals made under the excess deferral benefit are eligible for the same matching and company contributions described above under our 401(k) plan. The first dollar benefit allows participants to defer compensation under the plan. There is no matching or company contribution applicable to the first dollar deferrals. The Company may also make additional discretionary contributions under the Savings Advantage Plan. All deferrals and contributions under the Savings Advantage Plan are recorded in bookkeeping accounts for the benefit of the participants and deemed invested in investments available under the 401(k) plan.

The named executive officers are provided with the same short-term and long-term disability benefits as our other salaried employees. Additionally, the named executive officers are provided with life insurance and supplemental long-term disability benefits that are not available to all salaried employees.

Perquisites

We do not provide the named executive officers with perquisites or other personal benefits such as company vehicles, club memberships, financial planning assistance, tax preparation or other similar benefits.

Stock Ownership Guidelines

The Compensation Committee has established stock ownership guidelines for certain of the Company’s senior executive positions, including those held by Messrs. Christenson, Storch, Deegan, Schuele and Patriacca, pursuant to which such executives should retain the value of Company stock equal to the following:

 

•

Chief Executive Officer — five times (5x) annual base salary.

 

•

Chief Financial Officer — three times (3x) annual base salary.

 

•

Other named executive officers — one time (1x) annual base salary.

The following categories satisfy a participant’s ownership guidelines: (i) shares of common stock owned directly; (ii) shares of common stock owned indirectly (e.g., by a spouse or a trust); (iii) shares of common stock represented by amounts invested in a 401(k) plan or deferred compensation plan maintained by the Company or an affiliate; and (iv) restricted stock (vested and unvested), earned performance shares (vested and unvested), restricted stock units (vested and unvested), or phantom stock. Unexercised options, unearned performance shares, and pledged shares are not counted toward

 

		Altra Industrial Motion Corp.    2022 PROXY STATEMENT			27

meeting the guidelines. All of these executive officers have a five (5) year period to accumulate the specific values referenced above. As of March 16, 2022, all of our named executive officers were in compliance with the stock ownership guidelines.

Violations of the Company’s stock ownership guidelines may, without limitation and in the Board’s discretion, result in the participant not receiving future grants of long-term incentive plan awards or annual equity retainer or result in the participant being required to retain all or a portion of future grants of long-term incentive plan awards or annual equity retainer until compliance is achieved.

Clawback Policy

The Company has adopted a clawback policy that permits us to seek to recover certain amounts of incentive compensation, including both cash and equity, granted on or after January 1, 2017 to any current or former executive officer (as defined in the Securities Exchange Act of 1934, as amended, and the listing standards of the national securities exchange on which the Company’s securities are listed) or such other senior executive who engaged in fraud or material misconduct, if payment of such compensation was based on the achievement of financial results that were subsequently the subject of a restatement of our financial statements due to fraud or material misconduct, and the executive engaged in improper conduct that materially contributed to the need for restatement, and a lower amount of incentive compensation would have been earned based on the restated financial results.

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code of 1986, as amended generally places a limit of $1,000,000 on the amount of compensation that we may deduct in any one year with respect to our applicable named executive officers. Prior to the Tax Cuts and Jobs Act of 2017, this limit generally did not apply to compensation that met the tax code exception for “qualifying performance-based compensation.” The Compensation Committee considers the anticipated tax treatment to the Company and its executive officers when reviewing the executive compensation programs. However, the Compensation Committee will not necessarily seek to limit executive compensation to amounts deductible under Section 162(m), particularly given the sweeping elimination of the exception for “qualified performance-based compensation,” as the Compensation Committee wishes to maintain flexibility to structure our executive compensation programs in ways that best promote the interests of the Company and its stockholders.

Change of Control Matters, Employment Contracts and Other Agreements

Employment Agreements

Two of our named executive officers, Messrs. Christenson and Storch, have entered into employment agreements with us. Mr. Christenson entered into his employment agreement in early January 2005, which was subsequently amended on March 3, 2009 (with such amendment effective as of January 1, 2009). The initial term of Mr. Christenson’s amended employment agreement expired on December 31, 2013, but the term of the agreement automatically renews for successive one-year terms unless either Mr. Christenson or Altra terminates the agreement upon 6 months prior notice to such renewal date. Mr. Storch entered into his employment agreement in December 2007, which was subsequently amended on November 5, 2012. The initial term of Mr. Storch’s amended employment agreement expired on December 31, 2013, but the term of the agreement automatically renews for successive one-year terms unless either Mr. Storch or Altra terminates the agreement upon 6 months prior notice to such renewal date. Each of the employment agreements contain usual and customary restrictive covenants, including 12 month non-competition provisions and non-solicitation/no hire of employees or customers provisions, non-disclosure of proprietary information provisions and non-disparagement provisions. In the event of a termination by the Company without “cause” or by the Executive for “good reason,” Messrs. Christenson and Storch are entitled to severance equal to 12 months’ salary, continuation of medical and dental benefits for the 12-month period following the date of termination, and an amount equal to their pro-rated bonus for the year of termination. In addition, upon such termination, all of Mr. Christenson’s unvested equity awards and fifty percent of Mr. Storch’s unvested equity awards shall automatically vest. Any payments upon termination are subject to certain conditions including compliance with the non-competition, non-solicitation, non-disclosure and non-disparagement provisions described above. Under the terms of his employment agreement, upon his death or disability, fifty percent of Mr. Storch’s unvested equity awards received from the Altra Equity Plan shall automatically vest.

Under the agreements, each of Messrs. Christenson and Storch is also eligible to participate in all compensation or employee benefit plans or programs and to receive all benefits and perquisites for which the Company’s salaried employees generally are eligible under any current or future plan or program on the same basis as other senior executives of the Company. Mr. Storch retired from the Company effective as of January 31, 2022 at which time his employment agreement was terminated.

Change of Control Provisions

Pursuant to the terms of the employment agreements discussed above under the caption “Employment Agreements,” we may be obligated to provide benefits to Messrs. Christenson and Storch upon termination of employment from the Company under certain circumstances. The benefits described

 

28		2022 PROXY STATEMENT    Altra Industrial Motion Corp.

under the caption “Employment Agreements” are in addition to the benefits to which the executives would be entitled upon a termination of employment generally (i.e. vested retirement benefits accrued as of the date of termination, stock awards that are vested as of the date of termination and the right to elect continued health coverage pursuant to COBRA).

The Company has entered into change of control agreements, effective as of February 16, 2015, with each of our named executive officers (collectively, the “Executives”). The change of control agreements provide that, subject to certain conditions, including compliance with non-competition, non-solicitation, non-disclosure and non-disparagement provisions, in the event that (a) the Executive is terminated without cause or such Executive terminates employment for good reason within 24 months following a change of control of the Company (as defined in the change of control agreements) or (b) the Executive is terminated without cause in anticipation of a change of control of the Company within 90 days prior to such change of control (each, a “triggering event”), such Executive will be entitled to certain benefits. Such benefits include (i) a lump sum amount payable in cash equal to the sum of (A) a multiple (shown below for each of the named executive officers) of the Executive’s annual base salary then in effect and (B) a multiple (shown below for each of the “named executive officers”) of the Executive’s target bonus amount for the year of termination and (ii) continuation of medical and dental benefits for up to 18 months (period shown below for each of the “named executive officers”) following the date of termination. In addition, upon termination following a change of control, the Executive will be entitled to an amount equal to such Executive’s pro-rated bonus for the year of termination and all of such Executive’s outstanding equity incentive awards will automatically vest in full and be exercisable as of the date of termination.

 

Executive		Title		Multiple of Base Salary and Target Bonus		Medical and Dental Continuation
Carl R. Christenson		Chairman and Chief Executive Officer		3x		18 Months
Christian Storch(1)		Chief Financial Officer		2x		18 Months
Glenn E. Deegan		Chief Legal and Human Resources Officer		2x		18 Months
Craig Schuele		Executive Vice President of Marketing and Business Development		2x		18 Months
Todd B. Patriacca		Executive Vice President, Chief Financial Officer and Treasurer		2x		18 Months

 

(1)	Mr. Storch retired from the Company effective January 31, 2022.

Because Messrs. Christenson and Storch also have employment agreements with the Company, the change of control agreements for these Executives provide that in the event of a triggering event, such Executive shall be entitled to receive benefits and payments under only one of the employment agreement or the change of control agreement, whichever is more favorable to the Executive at the time of such triggering event. Mr. Storch retired from the Company effective as of January 31, 2022 at which time his change of control agreement was terminated.

Executive Severance Policy

The Compensation Committee has approved an Executive Severance Plan, amended and restated effective as of February 12, 2019, applicable to executive officers of the Company, including our named executive officers (collectively for the purposes of this subsection, the “Participants”). The Executive Severance Plan provides that, subject to certain conditions including compliance with non-competition, non-solicitation, non-disclosure and non-disparagement provisions, in the event that a Participant is terminated without cause by the Company, such Participant for a period of 24 months for the CEO and 12 months for the other named executive officers following such termination (the “Severance Period”) will be entitled to (i) continue receiving his or her base salary, (ii) receive a cash payment equal to 100% of the Participant’s target annual bonus during the Severance Period and paid out in equal installments over the Severance Period; and (iii) continue to receive coverage under the Company’s group medical and dental insurance plans. In the event a Participant enters into a written agreement with the Company regarding severance, including a change of control agreement, the terms and conditions of such written agreement shall control with respect to the termination circumstances covered by such agreement and the Participant shall not be eligible to receive benefits under this policy.

Because Messrs. Christenson and Storch also have employment agreements with the Company, the Executive Severance Plan provides that in the event of a triggering event, such Participant shall be entitled to receive benefits and payments under only one of the employment agreement or the Executive Severance Plan, whichever is more favorable to the Participant at the time of such triggering event.

Amounts payable to our named executive officers due to termination of employment or a change of control under any employment agreements or otherwise are disclosed in further detail in the table entitled “Potential Post-Employment Payments to Named Executive Officers” contained in this Proxy Statement.

Advisory Vote on Executive Compensation

We have conducted advisory votes on executive compensation at each of our Annual Meetings since 2011. While these votes are not binding on the Company, our Board of Directors or our Compensation Committee, we believe that it is important for our stockholders to have an opportunity to vote on

 

		Altra Industrial Motion Corp.    2022 PROXY STATEMENT			29

this proposal on an annual basis as a means to express their views regarding our executive compensation philosophy, our compensation policies and programs, and our decisions regarding executive compensation, all as disclosed in our proxy statement. Our Board of Directors and our Compensation Committee value the opinions of our stockholders and, to the extent there is any significant vote against the compensation of our named executive officers as disclosed in the proxy statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. In addition to our annual advisory vote to approve executive compensation, we are committed to ongoing engagement with our stockholders on executive compensation and corporate governance issues. These engagement efforts take place throughout the year through meetings, telephone calls and correspondence involving our senior management, directors, and representatives of our stockholders.

At the 2021 Annual Meeting, approximately 97% of the votes cast on the advisory vote on executive compensation proposal were in favor of our named executive officer compensation as disclosed in the proxy statement, and as a result our named executive officer compensation was approved. The Board of Directors and Compensation Committee reviewed these final vote results and took them into account in evaluating our executive compensation policies and decisions.

We have determined that our stockholders should vote on a Say-on-Pay proposal each year, consistent with the preference expressed by our stockholders at the 2011 and 2017 Annual Meetings. It is expected that the next such vote will occur at the 2023 Annual Meeting of Stockholders. Accordingly, our Board of Directors recommends that you vote FOR Proposal 3 at the Annual Meeting. For more information, see “Proposal 3. Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers (“Say on Pay”)” in this Proxy Statement.

 

30		2022 PROXY STATEMENT    Altra Industrial Motion Corp.