COMPASS MINERALS INTERNATIONAL INC (Form: 8-K, Received: 01/05/2021 16:36:53)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 31, 2020

Compass Minerals International, Inc.

(Exact name of registrant as specified in its charter)


Delaware	001-31921	36-3972986
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

9900 West 109th Street

Suite 100

Overland Park, KS 66210

(Address of principal executive offices)

(913) 344-9200

(Registrant's telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, $0.01 par value

CMP

The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Compass Minerals International, Inc. (the “Company”) launched an enterprise-wide optimization effort at the end of 2019 designed to drive improvements across all facets of the Company and unlock the true value of our assets. Focus areas include (1) operations and increasing production with greater efficiency, (2) logistics and leveraging our transportation footprint across businesses, (3) strategic sourcing and partnering with key suppliers to more effectively source globally, (4) commercial effectiveness and improving the customer experience, (5) working capital management and improving our order-to-cash processes, and (6) improved employee engagement. The Company expects the optimization effort to result in increased shareholder value by delivering sustainable earnings growth and margin improvements.

On December 31, 2020, the Compensation Committee of our Board of Directors (the “Compensation Committee”) approved annual long-term incentive program (“LTIP”) equity awards to our executive officers under our 2020 Incentive Award Plan that will be granted on January 13, 2021. The 2021 LTIP target grant value mix is 60% performance stock units (“PSUs”) and 40% restricted stock units (“RSUs”).

The RSUs will vest in three equal annual installments, beginning on the first anniversary of the grant date. The RSUs will be forfeited unless a performance hurdle tied to our 2021 EBITDA performance is satisfied, which will be subject to certification of performance by the Compensation Committee. Each RSU represents the right to receive one share of our common stock. Dividend equivalents are not paid on the RSUs until the RSU performance hurdle is satisfied. If the RSU performance hurdle is satisfied, the accumulated dividend equivalents are paid, and, subsequently, dividend equivalents are paid on the RSUs when dividends are declared. If the RSU performance hurdle is not satisfied, the RSU will be forfeited and no dividend equivalents will be paid.

In support of our enterprise-wide optimization effort, PSUs granted to executive officers in 2021 will be earned based on the achievement of adjusted EBITDA growth performance criteria set forth in the table below over a three-year performance period. The PSUs are designed to reward our leadership team if the rigorous adjusted EBITDA growth performance criteria are achieved through successful execution of our enterprise-wide optimization effort and to encourage retention.


Performance Level	3-Year Adjusted EBITDA Growth*	Payout as % of Target Number of PSUs
Threshold	8.0%	50%
Target	11.5%	100%
Stretch	13.0%	200%
Maximum	15.0%	300%

*Calculated on a cumulative compound annual growth rate basis. Full year 2020 adjusted EBITDA used as the base for the growth determination will be the greater of actual adjusted EBITDA for 2020 or a pre-determined “floor” of $335 million.

Any PSUs that are earned will cliff-vest on January 13, 2024 (three years after the grant date) to the extent the performance criteria are met and subject to certification of performance by the Compensation Committee. Each PSU represents the right to receive one share of our common stock. Dividend equivalents are accumulated and paid only on PSUs vested and actually earned. If the threshold performance level is not achieved, no PSUs will be vested or earned and the PSUs will be forfeited and no dividend equivalents will be paid.

The Compensation Committee approved 2021 LTIP grants for our executive officers with the award value listed in the table below.


Name and Principal Position	Restricted Stock Units ($)	Performance Stock Units at Target ($)
Kevin S. Crutchfield President and Chief Executive Officer	$1,391,000	$2,086,500
James D. Standen Chief Financial Officer	$360,000	$540,000
Mary L. Frontczak Chief Legal and Administrative Officer and Corporate Secretary	$324,000	$486,000
S. Bradley Griffith Chief Commercial Officer	$370,800	$556,200
George J. Schuller, Jr. Chief Operations Officer	$482,600	$723,900

The number of RSUs target number of and PSUs that will be granted will be based on the award value divided by the Company’s closing stock price on the January 13, 2021 grant date.

The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the form of restricted stock unit award grant notice and form of performance stock unit award grant notice, copies of which are filed as Exhibit 10.1 and 10.2 to this Current Report on Form 8-K and are incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

On January 5, 2021, the Company issued a press release regarding fourth quarter 2020 snow-event data. A copy of the press release is attached as Exhibit 99.1 and incorporated by reference herein.

The information contained in this Item 7.01 and Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.						Exhibit Description
10.1						Form of RSU Award Grant Notice.
10.2						Form of PSU Award Grant Notice.
99.1						Press Release issued by Compass Minerals International, Inc. on January 5, 2021.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



	COMPASS MINERALS INTERNATIONAL, INC.

Date: January 5, 2021	By:	/s/ James D. Standen
		Name: James D. Standen
		Title: Chief Financial Officer

Exhibit 10.1


COMPASS MINERALS INTERNATIONAL, INC. 2020 INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT AWARD GRANT NOTICE

Compass Minerals International, Inc., a Delaware corporation (the “Company”), hereby grants to the participant listed below (the “Participant”) the restricted stock units (the “RSUs”) described in this Restricted Stock Unit Grant Notice (this “Grant Notice”), subject to the Compass Minerals International, Inc. 2020 Incentive Award Plan (as amended from time to time the “Plan”) and the Rules, Policies and Procedures for Equity Awards Granted to Employees, effective as of May 15, 2020 (the “Rules”), each of which is incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice have the meanings specified in the Plan or the Rules, as applicable. In addition, the RSUs are subject to the Company’s Compensation Clawback Policy, dated February 2016, and any successor policy thereto (the “Clawback Policy”). This Grant Notice will constitute an “Award Agreement” under the terms of the Plan.


Participant:			_______________________
Grant Date:			_______________________
Number of RSUs:			_______________________
Vesting Schedule:			Subject to the Rules [and to the achievement of the Performance Hurdle / Performance Goal set forth below], the RSUs will vest on [to be specified in individual grant notices] ([the] [each, a] “Vesting Date”).
Dividend Equivalents:			Participant will be entitled to receive Dividend Equivalents in accordance with terms set forth in the Rules.
Payment:			Subject to the Rules [and to the achievement of the Performance Hurdle / Performance Goal set forth below], the Participant will receive a number of shares of Common Stock (in either certificate or book entry form) equal to [1/3 of] the number of RSUs subject to this Grant Notice within 60 days following [the Vesting Date] [the applicable Vesting Date] [(but in no event prior to the date the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) determines the extent to which the Performance Hurdle / Performance Goal has been satisfied)]; provided, however, that if the Participant’s service with the Company and its Subsidiaries ends prior to [the] [any] Vesting Date under circumstances that entitle the Participant to payment under the Rules, then the time of payment and the number of shares that the Participant will receive will be determined in accordance with the Rules. [For the avoidance of doubt, the RSUs will be automatically forfeited for no consideration if the Performance Hurdle / Performance Goal is not achieved.]
[Performance Hurdle / Performance Goal:]			[The Company must achieve $_________ or more of EBITDA, as determined by the Compensation Committee of the Company’s Board of Directors, for 20__.]

By Participant’s signature below, Participant agrees to be bound by the terms of this Grant Notice, the Plan, the Clawback Policy and the Rules. Participant has reviewed the Plan, this Grant Notice, the Clawback Policy and the Rules in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice, the Clawback Policy and the Rules. If there is any conflict between the terms and conditions of this Grant Notice and the Rules, the Rules will control. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Compensation Committee of the Company’s Board of Directors upon any questions arising under this Grant Notice, the Plan, the Clawback Policy and the Rules.


COMPASS MINERALS INTERNATIONAL, INC.									PARTICIPANT
By:
Name:									Participant Name:
Title:

Exhibit 10.2


COMPASS MINERALS INTERNATIONAL, INC. 2020 INCENTIVE AWARD PLAN

PERFORMANCE STOCK UNIT AWARD GRANT NOTICE

Adjusted EBITDA Performance Criteria for Key Leaders

In order to promote the success of Compass Minerals International, Inc., a Delaware corporation (the “Company”) and provide an incentive for the participant listed below (the “Participant”) with respect to incentives linked to the Performance Goals described below, and to promote the retention of the Participant during the Performance Period described below, the Company hereby grants to the Participant the performance stock units (the “PSUs”) described in this Performance Stock Unit Grant Notice (this “Grant Notice”), subject to the Compass Minerals International, Inc. 2020 Incentive Award Plan (as amended from time to time, the “Plan”) and the Rules, Policies and Procedures for Equity Awards Granted to Employees, effective as of May 15, 2020 (the “Rules”), each of which is incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice have the meanings specified in the Plan or the Rules, as applicable. In addition, the PSUs are subject to the Company’s Compensation Clawback Policy, dated February 2016, and any successor policy thereto (the “Clawback Policy”). This Grant Notice will constitute an “Award Agreement” under the terms of the Plan.


Participant:			_______________________
Grant Date:			_______________________
Target Number of PSUs:			_______________________
Vesting Schedule:			Subject to achievement of the Performance Criteria set forth below, and subject to the Rules, the PSUs will vest on [to be specified in individual grant notice] (the “Vesting Date”).
Dividend Equivalents:			Participant will be entitled to receive Dividend Equivalents (as such term is defined in the Plan) in accordance with the terms set forth in the Rules.
Payment:			Subject to the Rules, the Participant will receive a number of shares of Common Stock (in either certificate or book entry form) equal to the number of PSUs with respect to which the Performance Criteria have been satisfied within 60 days following the Vesting Date (but in no event prior to the date the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) determines the extent to which the Performance Criteria has been satisfied); provided, however, that if the Participant’s incurs a Termination of Service (other than due to the Participant’s Retirement) prior to the Vesting Date under circumstances that entitle the Participant to payment under the Rules, then the time of payment and the number of shares that the Participant will receive will be determined in accordance with the Rules.

Performance Period and Performance Criteria:

The Company must achieve the following Performance Criteria:

Performance Period

Adjusted EBITDA Growth Performance Criteria

The PSUs earned for the Performance Period will be based on the Company’s achievement of Annual Adjusted EBITDA Growth targets (as set forth below).

Annual Adjusted EBITDA Growth

(% Basis)

[____]

Threshold

Target

Stretch

Maximum

Growth Achieved

[__]

PSU Vesting Percentage

50%

100%

200%

300%


			Annual Adjusted EBITDA Growth performance achievement and PSU Vesting Percentages between Threshold and Target levels, between Target and Above-Target levels and between Above-Target and Maximum levels will be determined based on linear interpolation between the applicable targets.
			The number of PSUs eligible to be earned and vest will be equal to the product of (i) the Target Number of PSUs and (ii) the PSU Vesting Percentage, as determined based on the Company’s achievement of the Adjusted EBITDA Growth Performance Criteria set forth above.
			If the Company’s Annual Adjusted EBITDA Growth performance achievement during the Performance Period is less than the Threshold level, then no portion of the PSUs will become vested or earned. If the Company’s Annual Adjusted EBITDA Growth performance achievement during the Performance Period exceeds the Maximum level, then the number of PSUs vested and earned will equal the number based on PSU Vesting Percentage for Maximum performance.


Adjustments			The Annual Adjusted EBITDA Growth targets set forth above are based upon certain revenue and expense assumptions about the future business of the Company as of the Grant Date. Accordingly, the Performance Criteria (including, without limitation, the base calculations used to determine the Performance Criteria) may be adjusted by such items the Compensation Committee determines as appropriate in its discretion in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available with respect to the PSUs, by either changing the performance targets and/or adjusting the calculation of the results, in each case consistent with the Plan and the Rules, including such adjustments to reflect the effect of business results from acquisitions and divestitures, costs related to such acquisitions and divestitures, and such other items the as may have an impact on the Company’s EBITDA; provided, that, notwithstanding the foregoing, the Annual Adjusted EBITDA Growth targets set forth above (and if applicable, the base Adjusted EBITDA used to determine Annual Adjusted EBITDA Growth) will not be adjusted to reflect any increased Adjusted EBITDA resulting from acquisitions or lost Adjusted EBITDA resulting from divestitures unless the aggregate impact of such acquisitions or divestitures upon Adjusted EBITDA is determined by the Compensation Committee in its discretion to exceed $3 million during the Performance Period.
Definitions:			“Adjusted EBITDA”: EBITDA means earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA means EBITDA on a Company-wide basis, as may be adjusted by the Compensation Committee, including without limitation in the manner described in “Adjustments” above.
			“Annual Adjusted EBITDA Growth”: means the cumulative compound annual growth rate of Adjusted EBITDA over the Performance Period, expressed as a percentage. For the purpose of the Performance Period, subject to adjustment as described above, the Annual Adjusted EBITDA Growth will be calculated using a base Adjusted EBITDA for [calendar year __] equal to [$___] [the greater of (i)] the Company’s Adjusted EBITDA achieved with respect to [calendar year __] [or (ii) $[__]].

By Participant’s signature below, Participant agrees to be bound by the terms of this Grant Notice, the Plan, the Clawback Policy and the Rules. Participant has reviewed the Plan, this Grant Notice, the Clawback Policy and the Rules in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice, the Clawback Policy and the Rules. If there is any conflict between the terms and conditions of this Grant Notice and the Rules, the Rules will control. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Compensation Committee upon any questions arising under this Grant Notice, the Plan, the Clawback Policy and the Rules.


COMPASS MINERALS INTERNATIONAL, INC.									PARTICIPANT
By:
Name:									Participant Name:
Title:


			Exhibit 99.1

FOR IMMEDIATE RELEASE

Compass Minerals Provides Fourth-Quarter Snow Data and Update on Salt Segment Sales

OVERLAND PARK, Kan. (Jan. 5, 2021) – Compass Minerals (NYSE: CMP), a leading global provider of essential minerals, reported today that fourth-quarter 2020 winter weather activity in its North American-served market was below fourth-quarter 2019 levels but in-line with the 10-year historic average. While winter weather in the fourth quarter of 2020 was average throughout most of its North American market, the Chicago to Milwaukee corridor experienced a minimal number of snow events, with just three for the entire period. Due to the timing of the majority of snow events falling late in the fourth quarter of 2020, the company anticipates the full effect of related salt sales to be realized during the first quarter of 2021 as customers begin to replenish inventories.

Eleven representative cities in the company’s primary North American highway deicing service area reported 45 snow events during the fourth quarter of 2020 compared to 49 snow events in the fourth quarter of 2019 and the 10-year average of 42.4 events. Approximately 36 percent of the snow events reported in the fourth quarter of 2020 occurred in the last eight days of December.

“Although we experienced a relatively average number of snow events during the fourth quarter in our North American markets, December was rather back weighted in terms of that event count, contributing to lower year-over-year salt sales for the period,” said Kevin S. Crutchfield, Compass Minerals president and CEO. “From an operational perspective, we continue to be pleased with the impacts of our optimization efforts on both production agility and efficiency. As we maintain our sharp focus on employee health and safety, improved performance and balance sheet strength, we are increasingly well-positioned to serve our customers’ needs in 2021 and beyond.”

The company sold approximately 2.2 million tons of highway deicing salt products during the fourth-quarter 2020 period compared to fourth-quarter 2019 sales volumes of 2.9 million tons. This total includes all highway maintenance products sold in the U.S., Canada and the U.K., as well as rock salt sold to the chemical industry. Sales of all salt products totaled approximately 2.8 million tons in the 2020 period compared to 3.6 million tons in the fourth quarter of 2019.

Snow Events Note: The number of snow events reported may not directly correlate to Compass Minerals’ deicing results due to a variety of factors, including the relative significance to the company of the cities represented and differences in the amount of salt purchased by customers to establish their pre-season stockpiles. The weather data should be used only as an indicator of the year-to-year variations in winter weather conditions in these cities. Compass Minerals draws its weather data from the U.S. National Weather Service and National Climatic Data Center and Environment Canada without weighting or other adjustments.

About Compass Minerals

Compass Minerals is a leading provider of essential minerals focused on safely delivering where and when it matters to help solve nature’s challenges for customers and communities. Its salt products help keep roadways safe during winter weather and are used in numerous other consumer, industrial and agricultural applications. Its plant nutrition business manufactures an innovative and diverse portfolio of products that improve the quality and yield of crops, while supporting sustainable agriculture. Additionally, its specialty chemical business serves the water treatment industry and other industrial processes. The company operates 21 production and packaging facilities with more than 3,000 personnel throughout the U.S., Canada, Brazil and the U.K. Visit compassminerals.com for more information about the company and its products.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements about the effect of snow events on salt sales, impacts of our optimization efforts and ability to serve customer needs. We use words such as “may,” “would,” “could,” “should,” “will,” “likely,” “expect,” “anticipate,” “believe,” “intend,” “plan,” “forecast,” “outlook,” “project,” “estimate” and similar expressions suggesting future outcomes or events to identify forward-looking statements or forward-looking information. These statements are based on the company’s current expectations and involve risks and uncertainties that could cause the company’s actual results to differ materially. The differences could be caused by a number of factors, including without limitation (i) impacts of the COVID-19 virus, (ii) weather conditions, (iii) pressure on prices and impact from competitive products, (iv) foreign exchange rates and the cost and availability of transportation for the distribution of the company’s products, (v) any inability by the company to successfully implement its strategic priorities or its cost saving or enterprise optimization initiatives, and (vi) the outcome of the company’s strategic evaluation of the Plant Nutrition South America business. For further information on these and other risks and uncertainties that may affect the company’s business, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the company’s Annual Reports on Form 10-K for the years ended Dec. 31, 2019 and 2020 and Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and Sept. 30, 2020 filed or to be filed with the SEC. The company undertakes no obligation to update any forward-looking statements made in this press release to reflect future events or developments. Because it is not possible to predict or identify all such factors, this list cannot be considered a complete set of all potential risks or uncertainties.


Media Contact			Investor Contact
Rick Axthlem			Douglas Kris
SVP and Chief Public Affairs Officer			Senior Director of Investor Relations
+1.913.344.9198			+1.917.797.4967
MediaRelations@compassminerals.com			InvestorRelations@compassminerals.com