UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, DC 20549f

 

SCHEDULE 14A

 

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No.     )

 

Filed by the Registrant

Filed by a Party other than the Registrant

 

Check the appropriate box:
	Preliminary Proxy Statement
	Confidential, for Use of the Commission Only (as permitted by Rule 14A-6(E)(2))
	Definitive Proxy Statement
	Definitive Additional Materials
	Soliciting Material under §240.14a-12

 

INGEVITY CORPORATION

 

 

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check all boxes that apply):
	No fee required.
	Fee paid previously with preliminary materials.
	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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Dear Ingevity Stockholders:

It is our pleasure to invite you to attend the 2023 annual meeting of stockholders (the “Annual Meeting”) of Ingevity Corporation (the “Company”). The Annual Meeting will be held virtually via live audio webcast on April 27, 2023, at 9:30 a.m. Eastern Time.

You can participate in the Annual Meeting, submit questions and vote your shares of the Company’s common stock (the “Common Stock”) by visiting www.virtualshareholdermeeting.com/NGVT2023. Further details regarding participation, voting and the business to be conducted at the Annual Meeting appear in the following notice of the Annual Meeting and this proxy statement.

Ingevity has much to be proud of in 2022. As a company, we delivered record performance over 2021, despite an environment that remained dynamic and challenging. Throughout it all, the Ingevity team remained nimble and aggressive. Our operations worked safely and remained flexible through market-driven continuous revisions to production schedules. The supply chain team diligently sourced the materials and vehicles needed to make and deliver our products. The commercial team worked with our customers through dramatically rising production costs. Our growth and innovation colleagues remained focused on identifying future avenues for growth.

Our segments performed well while dealing with the lingering effects of the COVID-19 pandemic, particularly in China, and global disruptions in our supply chains and logistics. Our Performance Chemicals business enjoyed an unprecedented year of record growth across all of its businesses. We saw strength in all our end markets – industrial specialties, pavement technologies and engineered polymers. Performance Materials revenue outperformed 2021, and I am proud of how the team worked continuously to adjust production and delivery schedules as auto production surged and then fell off in different global geographies.

In 2022, we made significant progress in evolving our business to meet future customer demands in all our businesses. Our Performance Chemicals team’s completion of our polyols expansion in our facility in DeRidder, Louisiana, increases volumes of our engineered polymers and provides shorter global lead times for our customers. The acquisition of Ozark Materials allows us to provide a full suite of product offerings to our road construction customers. We continue to enjoy success in the development of different alternative fatty acids, which both reduces our reliance on crude tall oil (“CTO”) and allows us to enter new markets where CTO based products aren’t competitive.

Across Ingevity, we continue to identify and invest in opportunities to increase our exposure to electric vehicles. In 2022, we made a strategic investment in Nexeon Limited, a company that is developing silicon-based anode technology that utilizes activated carbon. Our ability to manufacture carbon that is optimized for use in these anodes is an exciting opportunity for us. We continue to identify other opportunities to support the electric battery industry using our products and production and engineering capabilities.

We continue to be a leader in sustainability. In late 2022, Ingevity was recognized by Newsweek^® magazine on their list of America’s Most Responsible Companies in 2023, placing 58th out of 500 public companies, ranking 10th in the materials and chemicals industry and number one in South Carolina. Additionally, we were awarded a Gold rating by EcoVadis, placing us in the top 3% of responding companies. We aim to continuously improve the sustainable nature of our company, and, as a result, we joined the United Nations Global Compact, committing ourselves to sustainable development.

We have a world class team that continues to develop and grow. We welcomed a new chief human resources officer, Christine Stunyo, to lead our people and talent efforts, and we bolstered the diversity of experience and perspectives of our board of directors by welcoming Shon Wright and Will Slocum in 2022, and Bruce Hoechner in 2023. At the start of 2022, we rolled out the “IngeviWay in Action” – an initiative that raises the bar on expectations to build, inspire and lead, and better aligns how we work and collaborate as a team to create the Ingevity of the future.

 

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Thank you for your interest and investment in Ingevity. We hope you share our enthusiasm for our Company. We are excited about the future and confident in our ability to continue to be a best-in-class specialty chemicals company that is a leader in sustainability and our markets.

A notice of internet availability of proxy materials or proxy card is being mailed, and the attached proxy statement is being made available, beginning on March 10, 2023, to each holder of record of Common Stock as of the record date, February 27, 2023. Please see “Questions and Answers about the Annual Meeting, Proxy Solicitation and Voting Information” for additional information about how to attend, vote, examine the list of stockholders and submit questions during the Annual Meeting.

Whether or not you plan to attend the Annual Meeting virtually, we urge you to vote and submit your proxy in advance of the Annual Meeting by one of the methods described in the proxy materials. Your vote will mean that you are represented at the Annual Meeting even if you do not attend virtually. Thank you for your ongoing support of Ingevity.

Best regards,

John C. Fortson
President and CEO

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This summary highlights information about Ingevity Corporation and certain information contained elsewhere in this proxy statement (the “Proxy Statement”) for our 2023 Annual Meeting of Stockholders (the “Annual Meeting”). This summary does not contain all of the information that you should consider in deciding to vote. Please read the entire Proxy Statement carefully before voting.

Agenda Items and Board Recommendations

 

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2022 Business Highlights

 

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Sustainability Highlights

Advancing Environmental Stewardship

Committed to Social Responsibility

 

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Corporate Governance

 

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Snapshot of Director Nominees

Board Demographics

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Corporate Governance Highlights

We recognize that strong corporate governance practices contribute to long-term stockholder value. We are committed to sound governance practices, including those described below.

 

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Executive Compensation Governance Practices

The LD&C Committee continues to implement and maintain practices in our compensation programs and related areas that reflect responsible corporate governance and compensation policies. These practices include the following:

 

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PROPOSAL 1
ELECTION OF DIRECTORS
	OUR BOARD RECOMMENDS A VOTE FOR EACH NOMINEE.

 

Our Nominating & Governance Committee has recommended, and the Board of Directors has nominated for election as directors at the Annual Meeting, the ten nominees named below. Each nominee currently serves as a director of the Company.

Each director elected at the Annual Meeting will serve until the 2024 annual meeting of stockholders and until his or her successor has been elected and qualified. Each director nominee has consented to being named in this Proxy Statement and to serving as a director if elected. If any nominee is unable to stand for election for any reason, the Common Stock represented at our Annual Meeting by proxy may be voted for another candidate proposed by our Board, or our Board may choose to reduce its size.

The information below summarizes the particular experience, qualifications, attributes and skills of each nominee. The Nominating & Governance Committee and the Board believe that, as a group, these nominees provide our Board with a strong balance of experience, leadership, qualifications, attributes and skills, and that each individual nominee can make a significant contribution to the Board and should serve as a director of the Company.

Vote Required:

At any meeting of stockholders for the election of directors at which a quorum is present, the election will be determined by a majority of the votes cast by the stockholders entitled to vote in the election, except that in the case of a contested election, the election will be determined by a plurality of the votes cast by the stockholders entitled to vote in the election. The election of directors is not contested at this Annual Meeting. Abstentions and broker non-votes will have no effect on the outcome of the election of directors.

Recommendation of the Board

 

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Director Nominees

 

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	JOHN C. FORTSON
	SKILLS AND EXPERIENCE Mr. Fortson has served as our President and Chief Executive Officer since September 2020. From 2015 to April 2021, he served as the Company’s Chief Financial Officer, and from 2015 to February 2021, he served as the Company’s Treasurer. Mr. Fortson has more than 23 years of experience in executive, management, strategic planning, financial, M&A and sustainability matters and has held leadership positions in the chemicals, manufacturing, global aerospace and defense industries. ADDITIONAL INFORMATION Mr. Fortson has served as a member of non-profit company boards, including as a member of the Medical University of South Carolina Heart and Vascular Advisory Board (2017-present). Mr. Fortson has a bachelor’s degree from the United States Military Academy at West Point and a master’s degree in business administration from Duke University’s Fuqua School of Business.	PROFESSIONAL HIGHLIGHTS President and Chief Executive Officer of Ingevity since September 2020. Served as Chief Financial Officer and Treasurer of Ingevity from 2015-2021. Vice President, Chief Financial Officer, and Treasurer, AAR Corporation (2013–October 2015). Managing Director, Bank of America Merrill Lynch (2007–2013).
Age: 55 Director since: 2020

 

In addition, many of our directors have experience as members of non-profit, academic and philanthropic institutions, which adds additional perspective to their roles at Ingevity.

 

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Board and Corporate Governance Matters

Role of the Board of Directors

The Board is responsible for overseeing and providing guidance on the Company’s strategy, business and performance, and protecting stockholder interests and value. In addition, the Board is responsible for appointing, overseeing and evaluating the executive officers who manage the Company’s day-to-day operations. The Board oversees management’s activities to ensure that the Company’s assets are properly safeguarded; that the Company maintains appropriate financial and other internal controls; and that the Company complies with responsible corporate governance practices, and applicable laws, regulations and ethical standards. One of the Board’s most important functions is oversight of risk management, including cybersecurity. This is discussed further below under the section titled “Board’s role in risk oversight.”

The Board actively oversees the development and execution of our strategies, including those related to business, operations and finance, as well as strategies focused on legal and regulatory matters, corporate responsibility and sustainability, stockholder engagement, innovation and protection of intellectual property, cybersecurity, talent development and executive succession.

In carrying out its responsibilities, the Board has created and delegated responsibilities to five committees:

Each committee’s responsibilities are described under “Committees of our Board of Directors.”

Corporate Governance Guidelines

The Board is committed to sound corporate governance policies and practices that are designed to enable Ingevity to operate responsibly and with integrity, to compete effectively, to sustain its business and to build long-term stockholder value. Our Board-approved Corporate Governance Guidelines (the “Guidelines”) are available on our website at https://ir.ingevity.com/corporate-governance/corporate-governance-documents.

The Guidelines form a transparent framework for the effective governance of Ingevity, addressing matters such as the respective roles and responsibilities of the Board and management, the Board’s leadership structure, director independence and Board and committee membership criteria. The Guidelines are reviewed at least annually by the Nominating & Governance Committee in light of changing regulations, evolving best practices and other governance developments.

 

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Board Leadership Structure

Our Board regularly reviews its leadership structure, how the structure is functioning, and whether the structure continues to be in the best interest of our stockholders. The Company’s current Board leadership structure consists of the following:

 

INDEPENDENT CHAIR	JEAN S. BLACKWELL
	Main Responsibilities: ■ Presides over Board and stockholder meetings ■ Provides advice and counsel to CEO ■ Acts as liaison between independent directors and CEO ■ Provides input to the LD&C and Nominating & Governance Committees regarding the annual CEO performance evaluation, Board evaluation, and succession planning ■ Chairs the Executive Committee

 

PRESIDENT & CEO	JOHN C. FORTSON
	Main Responsibilities: ■ Manages Ingevity’s day-to-day business and operations ■ Manages and develops Ingevity’s executive leadership team ■ Ensures proper execution of Ingevity’s corporate strategy

 

Our Guidelines do not contain a firm policy regarding separation of the offices of CEO and Chair. Instead, the Guidelines give the Board flexibility to make the determination that is in the best interests of the stockholders based on applicable circumstances at the time of the decision. Except in connection with a leadership transition in 2020, the Company has always separated the roles of Chair and CEO. The Board believes that separating the positions of CEO and Chair allows for clear delineation of the role of the Chair and minimizes duplication of effort between the CEO and the Chair. The separation of roles also allows the CEO to focus on executing Ingevity’s strategic plan and managing its operations and performance, and facilitates effective oversight by the Chair and improved communications and relations between the Board, the CEO, and other senior leaders of the Company.

The Guidelines provide that if the Chair is not independent, the Board must appoint a Lead Independent Director. During the leadership transition in 2020, Mr. Lynch served as the Lead Independent Director.

Ms. Blackwell has served as Independent Chair of the Board since February 2021. Our Board Chair is elected to serve a two-year term, unless otherwise determined by the Board. Upon the recommendation of the Nominating & Governance Committee and following its own review, the Board elected Ms. Blackwell in February 2023 to continue her service as Board Chair for another two-year term. Because Ms. Blackwell is an independent director, the Board has not deemed it necessary to appoint a lead independent director.

Committees of our Board of Directors

Our Board has established five standing committees to help the Board fulfill its responsibilities. Committee members are elected annually by the Board based on the recommendations of the Nominating & Governance Committee. Each committee operates under a charter, all of which are available at https://ir.ingevity.com/corporate-governance/corporate-governance-documents.

In July 2022, on the recommendation of the Nominating & Governance Committee, the Board established the Sustainability and Safety Committee. The creation of this committee acknowledges that sustainability is core to Ingevity’s mission, underscores the importance of sustainability and safety to Ingevity, and enables more focused oversight of these important topics. At the same time, the Nominating & Governance Committee and the Board evaluated and made adjustments to other committee memberships and leadership roles.

The Board has determined that each member of its standing committees is independent under the relevant SEC and New York Stock Exchange (“NYSE”) standards, including the heightened independence standards required for members of audit and compensation committees. For more information on independence standards, see “Director independence.”

 

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Each of the Audit Committee, LD&C Committee, Nominating & Governance Committee, and Sustainability & Safety Committee is responsible for annually reviewing their charter and performance. The Nominating & Governance Committee further reviews each of the committee charters annually, including the Executive Committee charter.

Director Nominees and Selection

The Board strives to select as director candidates a mix of individuals with experience at policy-making levels in substantive areas that are relevant to the Company’s activities, as well as other characteristics that will contribute to the overall ability of the Board to perform its duties and meet changing conditions.

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The Nominating & Governance Committee is responsible for evaluating and recommending qualified director candidates to the Board for its consideration. In evaluating potential director nominees, the Nominating & Governance Committee considers the following, among other things:

In addition, the Nominating & Governance Committee also considers character, financial literacy, and relevant skills in light of the Board’s needs.

The Nominating & Governance Committee considers recommendations for director candidates from Board members, stockholders, and other third parties, such as search firms that are engaged to identify candidates. The Nominating & Governance Committee evaluates candidates recommended by stockholders using the same criteria it uses for all other candidates. Any stockholder wishing to recommend a director candidate should provide the Nominating & Governance Committee with the information required by the Company’s Bylaws to be provided with respect to director nominees submitted by stockholders. For more information, see “Questions and Answers Regarding Stockholder Communications, Stockholder Proposals, and Company Documents.”

During 2022, the Board appointed two new directors (William J. Slocum and Benjamin G. (Shon) Wright) and during 2023, the Board appointed one new director (Bruce D. Hoechner). Mr. Wright and Mr. Hoechner were recommended by third-party search firms. Mr. Slocum was personally known to senior management of the Company through Inclusive Capital Partners’ investment in Ingevity.

Director independence

Our Guidelines and the NYSE require that a majority of our directors be independent under the applicable rules and regulations of the SEC and the general listing standards of the NYSE. Our Board, with the assistance of the Nominating & Governance Committee, annually (or more frequently if circumstances require) assesses the independence of each director.

In conducting its independence assessment, the Board reviews all relevant facts and circumstances, including each director’s affiliations and relationships, potential conflicts of interest, and all specific criteria included in the NYSE’s general listing standards. An independent director is a director who our Board affirmatively determines has no material relationship with the Company (either directly or as a partner, stockholder, or officer of an organization that has a relationship with the Company) other than in connection with his or her role as a director.

In February 2023, the Nominating & Governance Committee and Board conducted their review of each director’s affiliations that are relevant to independence. These affiliations were provided by the directors in their responses to annual questionnaires distributed by the Company in December 2022. Once the Company received the list of affiliations, it conducted additional diligence on each relationship and ran searches against the Company’s books and records to determine whether any financial transactions existed with the affiliates. Results of the diligence and searches were reported to the Nominating & Governance Committee and the Board.

After reviewing the affiliations and report described above, upon the recommendation of the Nominating & Governance Committee, the Board affirmatively determined that all directors other than Mr. Fortson (Ingevity’s President and CEO) are independent, in accordance with applicable rules and regulations of the SEC and the general listing standards of the NYSE.

 

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Evaluating Board performance and effectiveness

The Nominating & Governance Committee assists the Board in annually assessing the effectiveness of the Board and its committees in carrying out their respective roles, as described below.

Examples of actions the Board has taken in recent years in response to the annual evaluation process include:

Board meetings and executive sessions

Our Board meets on a regularly scheduled basis during the year to review significant developments affecting Ingevity and to act on matters requiring Board approval. The Board may hold special meetings between scheduled Board meetings when appropriate.

The Board met eight times during 2022. Each director attended at least 75% of the aggregate of (i) the number of meetings of the Board held during the period he or she was a director and (ii) the number of meetings of all committees of the Board held during the period he or she served on such committees. All directors then on the Board attended the 2022 Annual Meeting of Stockholders.

Our Guidelines require that the non-management members of our Board meet in executive session without management present at each regularly scheduled Board meeting. Likewise, our committees generally meet in executive session without management present at each regularly scheduled committee meeting.

 

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Board’s role in risk oversight

The Board, acting as a full Board and through its committees, oversees risk management on behalf of the Company. Our Board believes it has in place effective processes to identify and oversee the material risks facing the Company.

Ingevity’s enterprise risk management processes help management and the Board identify, prioritize and manage risks that have the potential to present the most significant obstacles to achieving the Company’s business objectives or that otherwise present significant risk to the Company. These risk management processes are regularly refreshed, including priorities and planned remediations. Management reports regularly to the Board on this process.

Set forth below are key areas of risk overseen by the Board, directly or through its committees.

Legal, compliance, and regulatory risks

Our Board, both directly and through the Audit Committee, receives regular updates on various legal, compliance and regulatory matters, such as developments in litigation, compliance risks and our compliance programs. In addition, regular updates provided to the Audit Committee by our General Counsel, Chief Compliance Officer, and internal audit function provide insight into our risk assessment and risk management policies and processes.

Financial and accounting risks

The Audit Committee oversees the management of financial, accounting, internal controls, and liquidity risks. This oversight includes interaction at Audit Committee meetings with the Chief Financial Officer; management from our financial, accounting, internal audit, and treasury functions; and representatives from our independent registered public accounting firm. The Audit Committee also discusses with management our major financial risk exposures and the steps management has taken to monitor, control and remediate such exposure.

Governance risks

The Nominating & Governance Committee oversees risks related to Board organization, Board membership (including director refreshment and succession), Board structure and other corporate governance matters.

Executive compensation program risks

The LD&C Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs and with respect to succession planning for management. For more information, see “Compensation Discussion and Analysis.”

Sustainability & ESG risks

The Sustainability & Safety Committee reviews and monitors our corporate responsibility and sustainability programs, including ESG matters and oversight of people, product and process safety risk. In addition to reporting to the Sustainability & Safety Committee, management’s practice is to periodically review corporate responsibility and sustainability matters, including ESG programs and policies, in joint session with the full Board. As shown below, although the Sustainability & Safety Committee has primary responsibility for these matters, other committees, and occasionally the full Board, oversee specific sustainability-related matters.

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Cybersecurity risks

The Board oversees our cybersecurity program and management of the associated risks. The Board receives updates at least annually from management, including our Chief Information Officer, on cybersecurity matters and our risk management program. The Board also receives updates periodically from third-party cybersecurity experts on the risk landscape generally.

Board oversight of ESG matters

Under its charter, the Sustainability & Safety Committee has responsibility for overseeing and reviewing the Company’s integration of economic, environmental and social principles into its business strategy and decision making; reviewing and monitoring Ingevity’s policies, procedures and performance with respect to environmental, corporate responsibility and sustainability programs, matters affecting employee, public, process and product safety and matters affecting community engagement; reviewing the Company’s annual Sustainability Report; and making recommendations to the Board regarding the foregoing matters as the Sustainability & Safety Committee deems appropriate. In addition to the reviews completed by the Sustainability & Safety Committee, Ingevity’s management also presents on ESG matters to the full Board at least once annually.

Our latest Sustainability Report and other information regarding our ESG initiatives and progress are available on our website at https://www.ingevity.com/about/sustainability.

Management development and succession planning

One of our Board’s most critical functions is executive succession planning, which is reviewed at least once annually and more often as needed. The LD&C Committee, which has the primary responsibility for overseeing the development of succession plans for all of our executive officers, regularly discusses succession in collaboration with our CEO and CHRO, and reports on the discussions to the Board.

Board oversight of DEI and human capital matters

Under its charter, the LD&C Committee is responsible for overseeing and reviewing Ingevity’s inclusion and diversity policies and programs and human capital matters, including employee engagement initiatives. The LD&C Committee receives periodic updates from management on, and discusses, the Company’s DEI vision and development strategy.

Additional information regarding DEI and human capital matters are available on our website at https://www.ingevity.com/diversity-equity-inclusion.

Director education program

Each director receives educational information about the Company and expectations of their role as part of an orientation upon joining the Board. Once on the Board, directors participate in an ongoing education program that incorporates site visits; management presentations; presentations by the Company’s independent auditors, investment banks and internal and external legal counsel; third-party expert speakers on various topics; and the distribution of analyst reports and pertinent articles on the Company’s business and industry. The Nominating & Governance Committee annually reviews the Board education program and recommends changes that it deems appropriate.

Retirement age, term limits and significant change in job responsibilities

In 2022, the Board revised our Guidelines to require directors to submit a letter of resignation in the year in which they turn 72 in the interest of facilitating Board refreshment. The Board will determine on a case-by-case basis whether to accept such a resignation. None of our current directors has attained or will attain the age of 72 in 2023.

The Board has not established a policy enforcing a term limit because it believes that, on balance, such a policy would sacrifice the contribution of directors who have been able to develop, over a period of time, extensive insight into the Company and its operations. The Board annually evaluates each director’s contributions during the Board and committee evaluation process.

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Our Guidelines require any director who has a significant change in his or her full-time job responsibilities to submit a resignation. The Board then considers whether to accept any such resignation taking into account all relevant factors. In 2022, Ms. Narwold and Mr. Wright submitted resignations as required by this policy. Ms. Narwold’s resignation stemmed from her announced retirement from Albemarle. The Board decided not to accept Ms. Narwold’s resignation for reasons including her significant contributions to the Board to date, her industry and legal expertise and her willingness to continue to serve as a director. Mr. Wright’s resignation stemmed from a promotion he received at Cummins that increased the scope of his duties significantly. The Board decided not to accept Mr. Wright’s resignation for reasons including Mr. Wright’s deep industry knowledge, significant management and operational experience and his willingness to continue to serve as a director.

Overboarding policy

The Guidelines provide that independent directors generally may not serve on more than five public company boards (including Ingevity’s Board). However, a director who is actively employed as a CEO of a public company may not serve on more than three public company boards (including Ingevity’s Board), and a director who serves as an officer (other than CEO) at another public company may not serve on more than four public company boards (including Ingevity’s Board).

Stockholder outreach and engagement

We value and are committed to regular, meaningful engagement with our stockholders and other stakeholders, including customers, suppliers, employees and our communities. In 2022, we hosted 50 calls with stockholders and potential stockholders and discussed a variety of topics, including capital allocation, strategy, sustainability and financial results. Senior leadership participated in roughly half of the calls.

 

 

In 2022, we also attended 12 conferences/roadshows hosted by analysts resulting in 85 meetings with stockholders or potential stockholders.

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How to contact the Board

Interested parties, including stockholders, may communicate with all or selected members of the Board as follows:

Correspondence should be addressed to the Board or any individual director(s) or group or committee of directors either by name or title (for example, “Chair of the Board,” “Chair of the Nominating & Governance Committee,” or “All Independent Directors”). All such correspondence will be forwarded as directed, except that we reserve the right not to forward any soliciting or advertising materials or any abusive, threatening, or otherwise inappropriate materials.

Code of Conduct

In 2022, the Board amended and restated Ingevity’s codes of conduct and ethics, combining its previous three separate codes into one, consolidated code. The new combined code is referred to as the “Code of Conduct.” The Code of Conduct results from actions taken by management in 2022 to strengthen and reinforce Ingevity’s ethics and compliance program and culture. It applies to all Ingevity-controlled entities and their respective employees, officers and directors, including the Board. The revised Code of Conduct emphasizes our commitment to doing things the right way to ensure our employees and others understand our “IngeviWay” value for integrity and ethical behavior. The revised Code of Conduct also contains new and expanded information to enable better decision making on topics such as employee and leader responsibilities, data privacy and protection, DEI and third-party interactions.

The Code of Conduct focuses the Board, management and our employees on areas of ethical risk, provides guidance and examples to help personnel recognize and deal with ethical issues, prominently features mechanisms to report unethical conduct, and helps to foster a culture of honesty and accountability. The Code of Conduct is available on our website at http://ir.ingevity.com/governance/codes-of-conduct. All employees, including executives, and all non-employee directors are required annually to review the Code of Conduct and to participate in Code of Conduct training.

Any waiver for directors or executive officers from the provisions of the Code of Conduct must be made by the Nominating & Governance Committee or by the Board at the recommendation of the Audit Committee or the Nominating & Governance Committee. Any such waiver will be disclosed within four business days of the waiver (or an implicit waiver) on our website at http://ir.ingevity.com/governance/codes-of-conduct, and will remain posted for a period of at least 12 months. Any amendment to the Code of Conduct (other than technical, administrative, or other non-substantive amendments) for which disclosure is required pursuant to Item 5.05 of Form 8-K under the Exchange Act will also be disclosed on that page of our website.

We have provided employees with a number of avenues to report ethics and compliance violations or similar concerns, including an anonymous telephone hotline, with options specific to the countries in which we operate to allow for reporting in local languages.

Governance materials on our website

We maintain several governance documents on our website, which are listed below.

Our Code of Conduct is available at: https://ir.ingevity.com/corporate-governance/codes-of-conduct

The following materials are available at https://ir.ingevity.com/corporate-governance/corporate-governance-documents:

 

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The following materials are available at: https://www.ingevity.com/about/sustainability/:

These materials are also available in print at no charge to any stockholder who requests a copy by writing to Corporate Secretary, Ingevity Corporation, 4920 O’Hear Ave, Suite 400, N. Charleston, SC 29405, or by email to: corporatesecretary@ingevity.com.

Related party transactions

The Board evaluates related party transactions consistent with Item 404 of Regulation S-K. Under its charter, the Nominating & Governance Committee is charged with reviewing all potential related party transactions and making recommendations to the Board regarding approval of any such transactions.

The Company solicited information from directors and director nominees regarding potential related party transactions beginning in December 2022. Based on a review of the reported affiliations and results from searches run against the Company’s books and records to determine whether any financial transactions existed with the affiliates, the Nominating & Governance Committee has advised the Board that it has not identified any related party transactions since the beginning of the fiscal year ended December 31, 2022, and none are currently proposed.

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Director Compensation

 

Ingevity’s Director compensation approval process

The Board annually reviews and approves non-employee director compensation at the recommendation of the LD&C Committee. This review involves a survey of director compensation at peer companies and other similarly situated companies and a discussion with our independent compensation consultant, Pearl Meyer, regarding director compensation practices.

2022 Non-employee Director compensation

The 2022 non-employee director compensation program consisted of the following:

Cash retainers

Cash retainers are paid to the non-employee directors quarterly in advance. Non-employee directors may elect to receive their annual cash retainer (both standard and leadership retainers) in the form of deferred stock units (“DSUs”) in lieu of cash under the 2016 Omnibus Incentive Plan, as amended, and the Non-Employee Director Deferred Compensation Plan (“Director DCP”). If a director makes such an election, the cash retainer is converted into an amount of DSUs using the closing price of the Company’s Common Stock on the business day that the cash retainer would have otherwise been paid to the director. DSUs representing cash retainers are fully vested upon grant and are settled when the director terminates his or her service with the Board. DSUs in lieu of cash retainers do not confer voting rights but are entitled to dividend-equivalents, which accrue from the grant date and are delivered in cash when the underlying DSUs are settled.

Restricted Stock Unit awards

Each non-employee director receives an annual award grant of Ingevity restricted stock units (“DRSUs”) under the 2016 Omnibus Incentive Plan, as amended, equivalent to approximately $118,000 at the time of grant. The grant date for the DRSUs is the business day after the annual stockholders meeting. The DRSUs vest on the first anniversary of the grant date, and shares of Common Stock underlying DRSUs are delivered to the directors as soon as practicable thereafter. DRSUs do not confer voting rights but are entitled to dividend-equivalents, which accrue from the grant date and are delivered in cash when the underlying DRSUs are settled.

If a director with DRSUs ceases to be a director before the vesting date other than due to death, disability, or termination for cause, the director will vest and settle in a pro rata number of the DRSUs (rounded up to the nearest whole number) unless otherwise approved by the Board. If a director with DRSUs ceases to be a director due to death or disability, all DRSUs will vest. If a director with DRSUs is terminated for cause, all unvested and unsettled DRSUs will be forfeited, together with the associated dividend-equivalents.

 

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Non-employee directors may elect to receive their annual DRSU award in the form of DSUs. DRSUs converted into DSUs with respect to the annual stock award are subject to the same conditions for vesting and dividend-equivalents as DRSUs. However, DSUs are not settled until the director terminates service from the Board.

Other compensation

Directors are entitled to reimbursement for out-of-pocket expenses incurred in connection with their Board service. Ingevity does not provide perquisite allowances to non-employee directors.

Stock ownership guidelines; prohibition on hedging

Under our stock ownership guidelines, each non-employee director is expected to hold an amount of Common Stock equal to five times the annual base cash retainer. For 2022, the holding amount is $450,000. Non-employee directors have five years from the date they join the Board to meet the requirement.

Common Stock owned by a director or his or her immediate family members residing in the same household, either outright or in family trusts, and Common Stock held in retirement plan accounts are deemed to be owned for purposes of these guidelines, as are vested and unvested DRSUs and DSUs.

A non-employee director in the first five years of service on the Board who has not yet met these guidelines must hold 50% of his or her vested DSUs and DRSUs. A non-employee director who does not meet these guidelines within five years must hold 100% of his or her vested DSUs or DRSUs until the guidelines are met.

As of December 31, 2022, each non-employee director who has served on the Board for at least five years has attained the minimum stock ownership levels, and the remaining directors are on track for compliance.

Our directors are not permitted to engage in hedging activities with respect to our stock. See “Compensation Discussion and Analysis – Other Compensation Policies and Practices – Anti-hedging” for more information about the Company’s anti-hedging policy.

2022 Director compensation table

The following table includes information concerning compensation for service as a director paid to or earned by our directors during the fiscal year ended December 31, 2022 (note that Mr. Fortson’s compensation is set forth in the “Summary Compensation Table” and not included below).

 

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PROPOSAL 2 NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF INGEVITY’S NAMED EXECUTIVE OFFICERS (SAY-ON-PAY)

 

In accordance with the requirements of Section 14A of the Exchange Act, we are asking stockholders to approve, on an advisory basis, the following resolution concerning the compensation of our named executive officers (“NEOs”):

RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of our named executive officers as described in this Proxy Statement, including the Compensation Discussion and Analysis and the tabular compensation disclosures and related narrative discussion.

In considering this proposal, we encourage you to review the Compensation Discussion and Analysis (“CD&A”) and the tabular compensation disclosures and accompanying narrative discussion that follow. The CD&A describes our executive compensation philosophy, programs, and objectives, while the tabular compensation disclosures and accompanying narrative discussion provide detailed information on the compensation of our NEOs.

We believe our compensation policies and procedures are competitive, focused on pay-for-performance principles, and strongly aligned with the long-term interests of our stockholders. Our executive compensation philosophy is based on the belief that compensation should be set at levels that enable us to attract and retain employees who are committed to achieving high performance and who demonstrate the ability to do so. We strive to provide executive compensation packages that are driven by Ingevity’s overall financial performance, stockholder value, the success of areas of our business directly impacted by each executive’s performance, and the performance of the individual executive. We view our compensation program as a strategic tool that supports the successful execution of our business strategy and reinforces a performance-based culture. To that end, our executive compensation program emphasizes long-term compensation over short-term compensation, with a significant portion weighted toward equity awards. This approach strongly aligns our executives’ compensation with the interests of our stockholders.

Because your vote is advisory, it will not be binding upon the Board. However, the Board and LD&C Committee value stockholders’ opinion as expressed through their votes on this proposal, and will carefully consider the outcome of this proposal in connection with their ongoing evaluation of the Company’s executive compensation program.

Vote required

An affirmative vote of the majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal is required to approve, on an advisory basis, the compensation paid to Ingevity’s NEOs.

Recommendation of the Board

 

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Compensation Discussion and Analysis

This section outlines the Company’s executive compensation programs and practices for our Named Executive Officers, who are listed below.

 

 

2022 Named Executive Officers

 

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Executive Summary

Executive compensation philosophy

Ingevity’s executive compensation program reflects the Company’s “pay-for-performance” philosophy. Compensation is directly linked to business plans and individual performance, with short- and long-term incentive programs based on metrics tied to the achievement of key financial objectives and individual performance. We are focused on achieving long-term, sustainable stockholder value.

We designed our executive compensation program to attract, motivate, and retain highly talented executives. In setting compensation, the LD&C Committee considers both our peer group and national survey data (“Comparative Compensation Data”). We also consider other factors, including each executive’s role and level of responsibility, the importance of the executive’s contributions toward meeting the Company’s goals and objectives, individual performance and experience, internal pay equity, and the economic and business environment in which the Company operates.

The Company’s executive compensation program is meant to:

Company performance in 2022

For information on Ingevity’s performance in 2022, see the “Proxy Summary,” above.

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Elements of our compensation program

The major elements of our executive compensation program are summarized below.

Additional elements of NEO compensation are described under “Other Compensation and Benefits.”

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2022 pay mix

The mix of compensation elements awarded in 2022 to our CEO, Mr. Fortson, and the other NEOs is illustrated below. The chart reflects base salary and target STIP and LTIP, and does not include “All Other Compensation” shown in the “Summary Compensation Table” or the one-time, service-based RSU grant for Ms. Cozad.

 

Say-On-Pay results

The LD&C Committee values the input received from our stockholders on the Company’s executive compensation practices. As shown below, in the past three years, our stockholders have overwhelmingly approved the compensation of our named executive officers.

 

 

Although these votes were non-binding, the LD&C Committee considered the approval rate as an indication that Ingevity stockholders support the Company’s executive compensation philosophy and decisions.

How We Set Compensation

Role of the LD&C committee and the CEO

CEO compensation

The LD&C Committee, on behalf of the Board, is responsible for reviewing and approving the goals and objectives of Ingevity’s CEO, evaluating the CEO’s performance in light of such goals and objectives, and setting the CEO’s compensation based on such evaluation. The LD&C Committee meets with the CEO to discuss his performance and compensation and seeks feedback on the CEO’s performance from senior management, including the officers that report to the CEO. Ultimately, decisions regarding the CEO’s compensation are made by the LD&C Committee, meeting in executive session, without the CEO or any other executive present. In setting compensation for the CEO, the LD&C Committee also takes into account other considerations as the committee deems appropriate, including overall leadership and external survey data compiled from our peer group of companies by Pearl Meyer, the LD&C Committee’s independent compensation consultant (the “Compensation Consultant”), other Comparative Compensation Data, and the advice of the Compensation Consultant.

 

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Compensation for other executives

The LD&C Committee, on behalf of the Board, is also responsible for reviewing and approving the compensation of senior executives reporting to the CEO, including the other NEOs. In approving compensation for the other NEOs, the LD&C Committee takes into account the assessment of their performance by the CEO and others in their respective organizations, addressing such factors as achievement of individual goals and objectives, contribution to Ingevity’s performance and corporate goals, and other considerations as the committee deems appropriate, including Comparative Compensation Data and the advice of the Compensation Consultant. In making his recommendations to the LD&C Committee, the CEO is also supported by the CHRO.

Role of the compensation consultant

The LD&C Committee has retained the Compensation Consultant as its independent compensation consultant to advise the LD&C Committee about the composition of the compensation peer group, specific compensation levels for the NEOs, and whether the compensation program is appropriately designed to discourage excessive risk, among other compensation related services. The Compensation Consultant also compiles the Comparative Compensation Data. The LD&C Committee has the sole discretion and is directly responsible for the appointment, termination, compensation, and oversight of the work of the Compensation Consultant.

Although the LD&C Committee retained the Compensation Consultant directly, in carrying out assignments, the Compensation Consultant also interacts with management when appropriate. Specifically, the Compensation Consultant interacts with the CHRO, other leaders in the Company’s human resources organization, and other members of management with respect to compensation and benefits data, best practices, peer group developments, and executive compensation trends. In addition, the Compensation Consultant may seek input and feedback from members of management regarding its consulting work product before presenting it to the LD&C Committee to confirm alignment with Ingevity’s business strategy, determine what additional data may be needed, or identify other issues.

The LD&C Committee regularly meets with the Compensation Consultant in executive session independent of management. Further, the LD&C Committee Chair speaks on occasion with the Compensation Consultant on executive compensation matters independently of management.

The Compensation Consultant does not provide any services to Ingevity other than its consulting services to the LD&C Committee related to executive and director compensation. The LD&C Committee determined that, in fiscal 2022, the work performed for the LD&C Committee by the Compensation Consultant did not raise any conflict of interest. In making its determination, the LD&C Committee considered the independence of the Compensation Consultant in light of SEC rules and regulations and NYSE listing standards.

Role of peer group analysis

Consistent with Ingevity’s goal to provide compensation that remains competitive, the LD&C Committee considers, among other things, the executive compensation practices of companies in a peer group selected based on recommendations from the Compensation Consultant. In selecting the peer group for 2022 executive compensation, the LD&C Committee considered such factors as:

The LD&C Committee generally targets compensation commensurate with the market median based on our Comparative Compensation Data. Compensation decisions also take into account other relevant factors, including an executive’s role and responsibilities, performance, the importance of the executive’s contributions towards meeting the Company’s goals and objectives, experience and tenure, internal pay equity, special hiring situations, retention concerns, and other relevant factors.

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The peer group is reviewed periodically for appropriateness and comparability. The LD&C Committee most recently reviewed peer group composition in July 2022 with the Compensation Consultant and discussed the peer group companies’ businesses, revenues, and relative performance. After its discussion, the LD&C Committee approved the following peer group with respect to the 2022 executive compensation program, which is unchanged from 2021, except that we excluded W.R. Grace and Co., Omnova Solutions Inc. and Kraton Corp., each of which was acquired.

NEO compensation elements

When taken as a whole, along with other elements of our executive compensation program, the pay elements described below are intended to provide a level of compensation sufficient to attract and retain an effective management team, while being generally targeted to the market median based on our Comparative Compensation Data. In addition, our compensation program is designed to discourage excessive risk-taking by using several forms of long-term equity instruments, multiple performance metrics, short- and long-term programs, and active LD&C Committee oversight.

Base salary

Base salaries are intended to provide a level of fixed compensation sufficient to attract and retain an effective management team when considered in combination with the long-term and short-term incentive awards and other elements of our executive compensation program. The relative levels of base salary for executive officers are designed to reflect each executive officer’s scope of responsibility, experience and performance, competitive pay levels, market trends, economic factors, and other relevant factors.

The LD&C Committee generally reviews and approves base salaries annually in February, with new salaries effective as of February 1 of the same year. The LD&C Committee may make other salary adjustments periodically in connection with promotions or changes in roles or responsibilities, to reward individual performance, for reasons related to retention, or to ensure market competitiveness. The committee’s review focuses on whether base salaries are equitably aligned within Ingevity and are at sufficiently competitive levels to attract and retain top talent. In addition, consideration is given to Comparative Compensation Data and such other factors as the LD&C Committee considers appropriate. The LD&C Committee also reviews base salary compensation with the Compensation Consultant.

In 2022, the LD&C Committee reviewed and approved the base salaries shown below. With respect to Mr. White, a further adjustment to base salary was made in November 2022 to acknowledge his strong performance and align with the LD&C Committee’s philosophy of aligning base salary with market median.

Before the base salary adjustments shown below, our CEO’s base salary was below the 25th percentile of the companies in our peer group and our other NEOs’ base salaries were at or near the median (+/- 15%) based on our peer group and Comparative Compensation Data, except for Mr. White’s base salary, which was greater than 30% below the 25th percentile. Base pay increases for the NEOs were made to recognize individual performance, experience, roles and responsibilities, and, where applicable, to bring compensation more in line with the Comparative Compensation Data.

 

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The full-year base salaries for our NEOs in 2022 were as follows:

Short-Term Incentive Plan and 2022 awards

Ingevity’s STIP consists of an annual cash incentive that is designed to reward participants for achieving Ingevity’s annual financial performance targets and personal performance goals.

Target STIP payouts

The incentive award range that each NEO may earn is determined near the beginning of the year and expressed as a percentage of such NEO’s base salary. STIP payouts may never exceed 200% of base salary.

For 2022, the LD&C Committee established the following threshold, target, and maximum STIP incentive opportunities for the NEOs:

Performance metrics

In 2022, the LD&C Committee modified the STIP metrics to introduce individual performance as a weighted measure as an incentive for, and measurement of, an individual’s success in meeting company and individual short-term goals. The committee believes this modified plan continues to emphasize profitability and maintains focus on growth while emphasizing individual accountability of the NEOs.

 

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The LD&C Committee selected the following metrics as the basis for 2022 STIP because the committee believes they are important and effective measures of short-term performance.

 

Individual performance

Performance goals are typically established near the beginning of the year and generally include both leadership objectives and strategic business objectives. Individual NEO performance is evaluated by the LD&C Committee by comparing actual performance to the pre-established individual goals, as well as by considering individual accomplishments and other relevant performance criteria.

A description of each NEO’s performance and compensation decisions with respect to 2022 is set forth below under “NEO Performance and Compensation Decisions.”

Performance targets and 2022 STIP payouts

The 2022 STIP targets and actual performance and payouts are set forth below. At the time the LD&C Committee set the target performance levels, the goals were believed to be challenging, but achievable, and the maximum level of performance was believed to be achievable, but only with exceptional performance. The terms of the STIP permit the LD&C Committee to make certain discretionary adjustments to exclude the effect of certain non-recurring items of gain or loss, or other adjustments reflecting substantial out of the ordinary matters.

 

 

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The resulting payments for our NEOs based on the 2022 STIP financial results were as follows:

Long-Term Incentive Plan and 2022 awards

Ingevity’s LTIP is designed to recognize the performance of our executives who drive the development and execution of our long-term business strategies and goals. These awards are designed to further align executives’ interests with those of Ingevity’s stockholders, reward executives for stockholder value creation, maintain the competitiveness of our total compensation packages, foster executive stock ownership, and promote retention. LTIP awards are granted under the 2016 Omnibus Incentive Plan, as amended (the “Omnibus Plan”) which provides for, among other things, “double trigger” vesting of any LTIP awards that qualify as replacement awards in connection with a change of control, as described under the heading “Severance Arrangements.”

 

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For 2022, the awards granted annually under the Company’s LTIP were delivered in three forms, as described below.

The LD&C Committee believes this allocation provides a good balance of performance-oriented and retention elements, however the LTIP elements will change for 2023 as described under “LTIP Changes for 2023” below.

The target values of individual NEO awards as a percentage of base compensation are set early each year by the LD&C Committee. The number of RSUs and PSUs awarded is based on the closing price of the Company’s Common Stock on the grant date, while the number of Options awarded is based on a Black-Scholes calculation using the closing price of the Company’s Common Stock on the grant date.

Each NEO’s 2022 total LTIP opportunity, and the breakdown of the LTIP components, is shown below.

 

Performance-based Restricted Stock Units

The following performance metrics apply with respect to the PSU awards granted in 2022:

70% - Adjusted three-year cumulative earnings per share (“Cumulative EPS”*); and
30% - Average adjusted return on invested capital (“Average ROIC”*).

For the PSU awards granted in 2020, the LD&C Committee used Period-End ROIC*, measured using the final year in the performance period. After meeting with the Compensation Consultant and exploring peer group data and Comparative Compensation Data, the LD&C Committee determined that Average ROIC* was a more appropriate performance metric and would drive management accountability more effectively throughout the performance period. Average ROIC has been a PSU performance metric since 2021.

The 2022 weighting of Cumulative EPS and Average ROIC represents a change from the 2021 PSU awards, where each element was weighted at 50%. The LD&C Committee changed the weighting mainly to reduce the impact of capital-intensive growth initiatives over the short term and to create an environment that sets a balance between generating returns and taking advantage of opportunities for growth. The LD&C Committee made additional changes to the performance metrics for PSU awards granted in 2023, as described in “LTIP Changes for 2023” below.

 

 

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The LD&C Committee established threshold, target, and maximum performance targets for the three-year performance period from January 1, 2022, through December 31, 2024, with respect to each metric. At the time the performance levels were set, the target level of performance was believed to be challenging, but achievable, and the maximum level was believed to be achievable, but only with exceptional performance. The 2022 PSU awards will vest (or not) after the LD&C Committee certifies Ingevity’s performance at the end of the performance period.

There is no payout for performance under threshold. Payout at threshold is at 25% of PSUs granted, at target is 100% of PSUs granted, and at maximum is 200% of PSUs granted. Linear interpolation is used to determine award payouts between these pre-determined points.

 

PSU metric adjustments

Under the Omnibus Plan, the LD&C Committee may adjust results for PSU metrics from time to time to exclude the effect of certain non-recurring items of gain or loss or other significant out of the ordinary matters (such as mergers, acquisitions, and dispositions; entry into joint ventures; significant restructurings; or changes in accounting rules or tax codes) if they had not been factored in when performance targets were established. Any such adjustments are made to ensure that executives are neither unduly rewarded nor penalized for successfully implementing Board-approved strategic initiatives, or as a result of external events that were unforeseen or outside of their control.

 

LTIP changes for 2023

The LD&C Committee regularly reviews the LTIP plan design with management and the Compensation Consultant to ensure it aligns with company strategy and best practices in the marketplace and is well balanced. As part of the most recent review, the LD&C Committee adopted changes to the LTIP plan design related to the type of equity and the performance metrics for PSUs. The changes, as shown below, enhance alignment with stockholder value and continue to deliver a well balanced, market competitive plan design.

 

Payout of 2020 PSU award

The PSU awards granted in 2020 (“2020 PSU Awards”) had adjusted period-end return on invested capital (“Period-End ROIC”⁽¹⁾) and Cumulative EPS⁽¹⁾ as the performance targets for the related 2020-2022 performance period. The performance targets for these grants were established in the beginning of 2020, reflecting the long-term goals in place at that time.

The LD&C Committee approved payment to the NEOs of the 2020 PSU Awards, based upon the achievement of Period-End ROIC and Cumulative EPS⁽¹⁾ performance goals at or around the target level. As a result, these PSUs were paid at 85% of the target amount. In determining performance results, the committee determined that it would be appropriate to make adjustments for acquisitions and investments made during the 2020-2022 performance period, and certain unanticipated, extraordinary costs during such performance period, such as the impact of the COVID-19 pandemic. Therefore, the committee approved adjustments to actual performance, which resulted in a $0.29 positive adjustment to Cumulative EPS⁽¹⁾ results, and a 1.6 percent positive adjustment to ROIC⁽¹⁾.

 

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Actual performance, as certified by the LD&C Committee is reflected below:

 

The payment calculation for the 2020 PSU Awards that settled in February 2023 is shown below:

 

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NEO performance and compensation decisions

A description of the performance highlights for 2022 of each NEO and related compensation decisions is set forth below.

 

 

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Other compensation and benefits

Sign-on and special equity or cash awards in 2022

From time to time, the LD&C Committee may authorize a special equity award under circumstances where the committee deems such an award appropriate and in the best interests of the Company, such as to recognize extraordinary performance or to enhance retention. In addition, sign-on or cash awards are often granted in connection with bringing on a new executive and compensating them for forfeited compensation from their prior place of employment.

Effective on February 28, 2022, Ms. Cozad was granted a special RSU award with a grant date fair value of $150,038. These RSUs will vest in full on February 28, 2025, the three-year anniversary of the grant date. The committee believes the award value and the three-year vesting schedule are appropriate under the circumstances to recognize Ms. Cozad for her leadership as interim Chief Human Resources Officer from August 2021 to June 2022, while concurrently fulfilling her normal job responsibilities as Executive Vice President, General Counsel and Secretary.

The special RSU grant to Ms. Cozad mentioned above is included in the “Summary Compensation Table” and the “Grant of Plan-Based Awards in 2022” table.

Offer letters

The Company has entered into an offer letter with each of the following NEOs regarding employment terms (“Offer Letters”): Mr. Fortson, Ms. Hall, Ms. Cozad, and Mr. White. The Offer Letters generally list the compensation arrangements for the applicable NEO, including the STIP and LTIP details, details regarding sign-on or one-time equity or cash compensation, and details on stock ownership guidelines and other applicable Company policies. Offer Letters for Mses. Hall and Cozad include assistance with relocation benefits.

Severance arrangements

Severance and change of control agreements

The Company has a Severance and Change of Control agreement with each of the NEOs. The purpose of the agreements is to ensure that Ingevity:

 

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The following is a summary of the benefits provided for upon termination under the Severance and Change of Control agreements.

 

The agreements also include one-year post-termination restrictive covenants in the form of non-solicitation of customers and employees and non-competition provisions. All severance payable is further subject to the NEO signing an appropriate release of claims. None of the agreements include any tax gross-ups arising from any excise tax imposed by the Code on excess parachute payments. The benefits to be received are further described under “Potential Payments Upon Certain Termination Events or a Change of Control.”

Equity awards – omnibus plan

The treatment of Ingevity’s equity awards in the event of a change of control is governed by the award agreements and our Omnibus Plan. In particular, in the event of a change of control where the NEO receives a “replacement award,” there will be no accelerated vesting, exercisability, or payment of an outstanding award unless the NEO’s employment is terminated without Cause, other than as a result of death or disability, or the NEO resigns for Good Reason within two years of the change of control event. In such cases, upon the second trigger, NEO holders of such awards will be entitled to accelerated vesting; awards will be exercisable and/or will be settled. If a NEO does not receive a replacement award or if an award is not otherwise assumed by the acquirer, then upon the occurrence of a change of control, all outstanding unvested awards will be fully vested (with the exception of PSUs, which will vest on a pro-rata basis as further described in the table below) and exercisable.

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A summary of the treatment upon certain termination scenarios appears below.

 

Relevant definitions:

 

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Benefits to be received are further described under “Potential Payments Upon Certain Termination Events or a Change of Control.”

Retirement Savings Plan

The Company maintains the Ingevity Corporation Retirement Savings Plan, adopted as of January 1, 2016 (as amended, the “RSP”). The RSP allows participants to make pay contributions on a pre-tax, Roth, and after-tax basis. The RSP provides for a Company match of up to 6% and an additional 3% automatic non-contributory Company contribution. Contributions and Company matches are 100% vested immediately, while any automatic non-contributory Company contribution is 100% vested after the first 3 years of employment.

Retirement Restoration Plan

The Company maintains a Retirement Restoration Plan that mirrors benefits provided under the WestRock Pension Plan, a qualified defined benefit plan sponsored and maintained by our former parent company, WestRock Company. The Retirement Restoration Plan is a non-qualified plan that was adopted by the Company to honor historical WestRock obligations under an Employee Matters Agreement between WestRock and the Company as part of the separation. Benefit amounts under the plan were frozen at the time of the separation. No additional employees may become participants under the plan and no current participants are accruing any additional benefits (other than what was in place and frozen at the time of separation). Mr. Woodcock is the only NEO with a benefit under the plan.

Nonqualified Deferred Compensation Plan

The Company maintains the Ingevity Corporation Deferred Compensation Plan, effective January 1, 2016 (the “DCP”). The purpose of the DCP is to attract and retain key employees by enabling participants to defer voluntarily the receipt of certain amounts, including compensation not otherwise eligible for deferral under the RSP, to provide matching contributions on certain deferrals, to restore lost defined contribution benefits due to Code limits, and to provide retirement and other benefits to participants through an individual account program. The DCP allows participants to defer up to 80% of their base compensation and 80% of their STIP. The restoration component of the DCP provides for a Company match of up to 6% and an additional 3% automatic non-contributory Company contribution.

Relocation and other benefits

We provide relocation assistance to employees, including our NEOs. There were no relocation benefits provided to an NEO during 2022. We also provide limited other benefits to our executives, including our NEOs, to promote their security and well-being, thereby allowing them to focus on Company business. Other benefits paid to NEOs in 2022 include financial counseling and executive physicals. The value of the benefits is credited to the NEOs as imputed income. Other than with respect to relocation benefits, the Company does not provide any tax gross-ups.

In addition, NEOs participate in each of the benefit plans or arrangements that generally are made available to all U.S.-based salaried employees, including vacation benefits, medical and dental benefits, and life, accidental death and disability insurance.

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Other compensation policies and practices

NEO stock ownership policy

Our stock ownership guidelines align the long-term interests of our NEOs with those of our stockholders and discourage excessive risk-taking. Our guidelines require stock ownership levels as a value of Common Stock equal to a multiple of base salary. NEOs must retain 50% of net shares of Common Stock received under LTIP awards until the following stock ownership levels are met:

In determining compliance with these guidelines, stock ownership includes fully-vested Common Stock and unvested RSUs. Unvested PSUs and vested but unexercised stock options are not included. Executives generally have five years from the date of their designation to achieve the targeted level of ownership. If the required level of ownership is not achieved within the first five years, the holding requirement increases from 50% to 100% of net shares of Common Stock received under LTIP awards until the ownership levels are met.

As of December 31, 2022, Messrs. Fortson and Woodcock have met their ownership guidelines, and Mses. Hall and Cozad and Mr. White are on track to achieve their target ownership levels in a timely manner.

Anti-hedging

Ingevity’s insider trading policy prohibits members of our Board, officers, and other employees from trading in options, warrants, puts and calls, or similar instruments involving Company securities or selling Company securities “short.” The policy also prohibits holding Company securities in margin accounts.

Recoupment policy

We maintain a compensation recoupment (or “clawback”) policy covering our NEOs. In the event of a material restatement of the Company’s financial statements filed with the SEC, the Board will review the facts and circumstances that led to the requirement for the restatement. In that review, the Board will consider whether any covered current or former executive received Incentive Compensation (as defined in the policy) that was awarded or paid based in whole or in part on the apparent achievement of financial results that were determined by reference to the originally filed financial information, that would not have been awarded or paid based on the Company’s restated results. The Board will further consider whether any such current or former executive engaged in Misconduct (as defined in the policy) that resulted in or substantially contributed to the need for the material restatement.

If the Board determines that any covered executive engaged in Misconduct and received Incentive Compensation within the three-year period preceding the restatement that would not have been payable if the original financial information had reflected the restated results of operations, the Board has the power to direct that the Company recover all or a portion of the excess Incentive Compensation.

The Board may consider such factors as it shall deem relevant in determining the appropriate recoupment and the means of recovery. The Board may seek recoupment from any of the following sources: future payments of incentive compensation, cancellation of outstanding equity awards, future equity awards, and direct repayment.

On October 26, 2022, the SEC approved final rules regarding clawback policies. We will amend our clawback policy to comply with the new rules as required by the SEC and the NYSE (when it adopts related listing rules).

Equity grant practices

The LD&C Committee has adopted guidelines for the granting of equity-based compensation, including, among other things, a requirement that annual awards be approved by the LD&C Committee at a regularly scheduled first quarter committee meeting, and a prohibition on back-dating of awards.

 

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Risk analysis

At least annually, the LD&C Committee reviews Ingevity’s executive and non-executive compensation programs to assess whether they encourage or create excessive risk-taking not in the best interest of the Company or its stockholders. The most recent assessment occurred in April 2022.

In conducting this assessment, the LD&C Committee reviewed various components and design features of all of the Company’s executive and non-executive plans and programs as presented by management and the Compensation Consultant and analyzed them in the context of risk mitigation. Management and the Compensation Consultant presented their conclusions to the LD&C Committee, which were that Ingevity’s compensation arrangements are not constructed or administered in a way that is likely to create risks that could materially and adversely affect the Company.

Among the factors considered in the assessment and reviewed by the LD&C Committee were:

Based on its review, the LD&C Committee’s deliberations, and such other matters as the LD&C Committee deemed relevant, the LD&C Committee believes Ingevity’s well-balanced mix of salary and short-term and long-term incentives, as well as the performance metrics that are included in the incentive programs, are appropriate and consistent with the Company’s risk management practices and overall strategies.

Tax and accounting considerations

The LD&C Committee considers tax and accounting considerations in structuring our executive compensation program.

Section 162(m) of the Code generally disallows tax deductions for compensation paid by public companies to certain executive officers for compensation over $1 million in any year. Nonetheless, the LD&C Committee believes that stockholder interests are best served if the LD&C Committee’s discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expenses. Thus, the LD&C Committee reserves the ability to approve compensation that is not deductible for income tax purposes, where the LD&C Committee determines that such compensation is appropriate.

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Leadership Development and Compensation Committee Report

The LD&C Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the LD&C Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for fiscal 2022.

THE LEADERSHIP DEVELOPMENT AND COMPENSATION COMMITTEE

Diane H. Gulyas, Chair
Jean S. Blackwell
Bruce D. Hoechner
Frederick J. Lynch
Daniel F. Sansone

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Compensation Tables and Other Matters

Summary Compensation Table

The table below includes the total compensation of our NEOs for the fiscal year ended December 31, 2022.

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Grants of Plan-Based Awards in 2022

The following table reports plan-based awards granted to the NEOs during fiscal 2022. The material terms of our short- and long-term incentive compensation awards are described in “Compensation Discussion and Analysis — Compensation Design; Pay Elements.”

 

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Outstanding Equity Awards at 2022 Fiscal Year End

The table below shows the equity awards that have been awarded by the Company to our NEOs and which remained outstanding as of December 31, 2022. Market and payout values are based on $70.44, the closing price of the Company’s Common Stock on December 31, 2022.

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Option Exercises and Stock Vested During Fiscal 2022

This table shows the stock options that were exercised by, and the RSUs that vested for, each of our NEOs during 2022.

 

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Pension Benefits Table – 2022

The following table provides information with respect to the Company’s non-qualified defined benefit plan (which we refer to as the “Retirement Restoration Plan”). The Company maintains the Retirement Restoration Plan, a non-qualified plan that mirrors benefits provided under a qualified defined benefit pension plan sponsored and maintained by our former parent, WestRock (the “WestRock Pension Plan”). The Retirement Restoration Plan was adopted by the Company to honor obligations under the Employee Matters Agreement between the Company and WestRock to pay certain assumed historic liabilities transferred as a result of the separation of WestRock and the Company.

Mr. Woodcock is the only NEO who has a benefit under the Retirement Restoration Plan. None of our other NEOs currently accrues a benefit under this plan with respect to service with the Company.

Understanding our Pension Benefits Table

The WestRock Pension Plan (now frozen) provides an unreduced benefit payable at age 65 (or 62, if the employee has 20 years of service). The retirement benefit payable is equal to 1.6% of final average earnings (or pay) times years of benefit service (up to a maximum of 40 years), minus an employee’s primary social security benefit multiplied by 1.25% times years of benefit service (up to a maximum of 40 years of service). The formula is illustrated below:

[1.6% x Years of Benefit x Final Average Pay] Service (up to 40)

Less

[1.25% x Years of Benefit x Primary Social Security Benefit] Service (up to 40)

The Retirement Restoration Plan mirrors benefits provided under the WestRock Pension Plan following the same formula but recognizing compensation in excess of Code limits. Mr. Woodcock, while a participant in this plan, no longer accrues any benefit under this plan. Benefits are payable in annuity form only, and a lump sum is not available. The underlying plan, the WestRock Pension Plan, to which our Retirement Restoration Plan relates, was frozen on December 31, 2015. Accordingly, the values above represent a historic liability accrued under the WestRock Pension Plan with respect to service performed for WestRock, not Ingevity.

Non-Qualified Deferred Compensation at 2022 Fiscal Year End

The Company maintains a non-qualified deferred compensation plan that permits executives to defer up to 80% of their base salary and 100% of their short-term incentive compensation. The plan also operates as an excess benefit plan enabling employees to defer salary, Company matching, and other non-contributing contributions in excess of Code limits that apply to the RSP. The DCP provides for a Company match of up to 6% and an additional 3% automatic non-contributory Company contribution.

There is no guaranteed investment return with respect to any of these funds. The funds mirror those options available to all employees who participate in the Company’s broad-based qualified RSP including two additional funds. The Company adopted the use of a Rabbi Trust, which is funded through the purchase of Company-owned life insurance.

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The table below includes information on each of our NEO’s non-qualified deferred compensation plan accounts for 2022.

Potential Payments Upon Certain Termination Events or a Change of Control

Please refer to “Compensation Discussion & Analysis – Other Compensation and Benefits – Severance Arrangements” for a discussion of the benefits payable to our NEOs upon certain termination events and the definition of certain capitalized terms below.

The table below shows the benefits that would be payable to each of our NEOs if he or she had experienced the termination or change of control events indicated below on December 31, 2022. The table below does not include amounts under the RSP or DCP, accrued but unused vacation, disability benefits, or other benefits payable to the Company’s full-time U.S. employees. Actual amounts to be received on a termination event will vary based upon the closing price of the Company’s Common Stock on the date of termination, applicable proration requirements, and performance achievement for certain incentive awards. Further, the amounts below do not give any impact to the payment timing or other requirements under Section 409A of the Code, as amended. Other than as described below, no NEOs would receive any payments in the event they were terminated for “cause” or left voluntarily.

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CEO Pay Ratio—2022

In accordance with SEC rules, we are providing the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of the Company’s median employee.  The ratio is a reasonable estimate calculated in a manner consistent with SEC rules and the methodology described below.

We calculated each employee’s annual total cash compensation as of December 31, 2022 to identify our median employee.  The following pay elements were included in determining the annual total cash compensation for each employee. 

Our calculation includes all full time, part time and temporary employees of the Company and its subsidiaries (except the CEO) as of December 31, 2022.   We excluded all 10 of our employees located in India and all 13 employees located in Brazil under the de minimis exemption.  Our total U.S. and Non-U.S. employee population as of December 31, 2022 was 2,123.

The calculation of our median employee includes all employees who joined the Company as part of the Ozark acquisition, and were employed on December 31, 2022. For this group of employees, we annualized compensation that was paid to them pre-acquisition to better align with the non-Ozark employee calculation.

We applied a foreign currency exchange rate as of December 31, 2022 to all compensation elements paid in currencies other than U.S. Dollars.

After calculating the annual total cash compensation described above for each employee, we removed the CEO from the listing and found the employee with the median total cash compensation.  Once this individual was determined we calculated that employee’s annual total compensation in the same manner as the “Total Compensation” shown for our CEO in the “Summary Compensation Table.”

The annual total compensation for 2022 for our CEO was $5,394,470 and for the Median Employee was $89,409.  The resulting ratio of our CEO’s total compensation to the Median Employee for 2022 is 60:1.

We believe this pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K, the applicable SEC regulation, based on our payroll and employment records and the methodology described above.

Given the varying methodologies used to determine pay ratio estimates, the Company’s pay ratio reported above should not be used as a basis for comparison between companies.

Pay Versus Performance

The table below includes the compensation of our NEOs and company performance metrics for fiscal years ended December 31, 2022, 2021, and 2020.

Year	Summary Compensation Table Total for First PEO	Summary Compensation Table Total for Second PEO	Summary Compensation Table Total for Third PEO	Compensation Actually Paid to First PEO	Compensation Actually Paid to Second PEO	Compensation Actually Paid to Third PEO	Average Summary Compensation Table Total for Non-PEO NEOs	Average Compensation Actually Paid to Non-PEO NEOs	Value of Initial Fixed $100 Investment Based on:		Net Income	Diluted EPS($)
									Total Shareholder Return	Peer Group Shareholder Return(1)
2022	5,394,470	n/a	n/a	7,321,335	n/a	n/a	1,632,294	1,902,483	81	127	211.6	5.50
2021	4,822,288	n/a	n/a	3,458,254	n/a	n/a	2,158,730	1,915,624	82	149	118.1	2.95
2020	2,831,502	1,736,323	146,618	2,393,213	1,843,148	-7,807,582	1,576,121	1,106,292	87	119	181.4	4.37
(1) S&P 600 Chemicals

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The table below shows the additions and deductions to calculate Compensation Actually Paid as well as the executives covered in each fiscal year.

 

	2020					2021			2022
	1st PEO	2nd PEO	3rd PEO	Average Non-PEO NEO		1st PEO	Average Non-PEO NEO		1st PEO	Average Non-PEO NEO
	John C. Fortson	Richard B. Kelson	D. Michael Wilson	Michael P. Smith; S. Edward Woodcock; Katherine P. Burgeson		John C. Fortson	Mary Dean Hall; Stacy L. Cozad; Michael P. Smith; S. Edward Woodcock		John C. Fortson	Mary Dean Hall; Stacy L. Cozad; S. Edward Woodcock; Richard A. White
SCT Total	2,831,502	1,736,323	146,618	1,576,121		4,822,288	2,158,730		5,394,470	1,632,294
Deduction for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable FY	(1,636,289)	(113,246)	0	(533,400)		(2,475,054)	(1,077,066)		(2,820,065)	(630,718)
Increase of Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End	2,727,897	220,071	0	719,028		2,360,413	1,051,388		3,312,410	735,497
Increase of Fair Value of Awards Granted during Applicable FY that Vested as of Applicable FY End, determined as of Vesting Date	0	0	0	73,511		0	0		0	0
Increase/deduction for Awards Granted during Prior FYs that were Outstanding and Unvested as of Applicable FY End, determined based on change in Fair Value from Prior FY End to Applicable FY End	(672,008)	0	0	(259,354)		(1,109,324)	(178,326)		1,512,795	196,153
Increase/deduction for Awards Granted during Prior FYs that Vested During Applicable FY, determined based on change in Fair Value from Prior FY End to Vesting Date	(857,888)	0	(978,694)	(321,375)		(140,069)	(39,102)		(78,275)	(30,741)
Deduction of Fair Value of Awards Granted during Prior FY that were Forfeited during Applicable FY, determined as of Prior FY End	0	0	(6,975,507)	(66,686)		0	0		0	0
Increase based on Dividends or Other Earnings Paid during Applicable FY prior to Vesting Date	0	0	0	0		0	0		0	0
Increase based on Incremental Fair Value of Options/SARs Modified during Applicable FY	0	0	0	0		0	0		0	0
Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” Column of the Summary Compensation Table for Applicable FY	0	0	0	(81,553)		0	0		0	0
Increase for Service Cost and, if applicable, Prior Service Cost for Pension Plans	0	0	0	0		0	0		0	0
Total Adjustments	(438,289)	106,825	(7,954,200)	(469,829)		(1,364,034)	(243,106)		1,926,865	270,190
Compensation Actually Paid	20,393,213	1,843,148	(7,807,582)	1,106,292		3,458,254	1,915,624		7,321,335	1,902,483

 

 

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Assumptions used to calculate fair value for stock options.

For each fiscal year end date identified in the table above, fair value of outstanding stock option awards, as of the identified vesting dates of each such award, is calculated using updated market input assumptions (i.e., risk free interest rate, average life of the options (in years), volatility, and dividend yield) using the Black Scholes pricing model.

Assumptions used to calculate fair value for PSUs.

For each fiscal year end date identified in the table above, fair value of PSU awards assumes target performance. To determine the year-end fair values used in the Compensation Actually Paid calculations, we have updated the performance expectations to reflect the latest performance estimates for unvested and outstanding PSU awards at each fiscal year end date.

Tabular List

The table below represents the most important financial performance measures used by Ingevity to link compensation actually paid to our named executive officers, for the most recently completed fiscal year, to Company performance.

STIP Adjusted EBITDA(1)

STIP Adjusted Revenue(1)

Diluted EPS

(1)	See Appendix A for definitions and reconciliations of these non-GAAP financial measures to the nearest GAAP measure.

 

 

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Descriptions between Compensation Actually Paid and company performance

The charts below provide an illustration of the relationship between Compensation Actually Paid, Ingevity TSR, Peer Group TSR, Ingevity GAAP Net Income, and Ingevity Diluted EPS.

 

 

 

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Compensation actually paid vs Diluted EPS

  

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PROPOSAL 3
NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION (SAY-ON-FREQUENCY)
	OUR BOARD RECOMMENDS A VOTE FOR THE FREQUENCY OF FUTURE ADVISORY VOTES ON COMPENSATION FOR OUR NAMED EXECUTIVE OFFICERS TO BE EVERY ONE YEAR.

 

Section 14A of the Exchange Act requires that we ask our stockholders, on an advisory basis, how frequently we should conduct an advisory vote on compensation for our named executive officers at least once every six years. Stockholders may vote whether they prefer that the Company hold an advisory vote on named executive officer compensation every one, two or three years. Stockholders who have no preference may abstain from voting on this proposal.

After careful consideration, the Board has determined that conducting a vote on named executive officer compensation every one year is the most appropriate alternative for the Company. The Board believes that an annual vote is appropriate because the LD&C Committee evaluates, adjusts and approves the compensation of our named executive officers on an annual basis. In addition, an annual vote promotes maximum corporate transparency by providing stockholders with the opportunity to provide frequent input on compensation matters.

Stockholders are not voting to approve or disapprove of the Board’s recommendation. Rather, stockholders are selecting from one of four choices: one year, two years, three years or abstain.

This vote is advisory, which means that it will not be binding on the Board. However, the Board and the LD&C Committee will carefully consider the outcome of the vote in establishing the frequency with which advisory named executive officer compensation votes will be held in the future.

Vote required:

An affirmative vote of the majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal is required for the selection of a particular frequency.

Recommendation of the Board

The Board recommends a vote for the frequency of future advisory votes on compensation for our named executive officers to be “EVERY ONE YEAR.”

 

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PROPOSAL 4
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
	OUR BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT ACCOUNTANTS FOR FISCAL 2023.

 

The Audit Committee is directly responsible for appointing, retaining, fixing the compensation of, and overseeing the work of our independent registered public accounting firm. PricewaterhouseCoopers LLC (“PwC”) acted as our independent registered public accounting firm for the fiscal year ended December 31, 2022 and the Audit Committee has retained PwC to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023.

Although it is not legally required to do so, the Board has elected to seek stockholder ratification of the appointment of PwC as a matter of good corporate governance. If stockholders do not ratify the appointment of PwC, the Audit Committee will reconsider the appointment. Regardless of the outcome of this proposal, the Audit Committee may, in its discretion, select a new independent registered public accounting firm at any time during the year if it believes such a change would be in the Company’s best interest.

Representatives of PwC will be present at the Annual Meeting. They will have the opportunity to make a statement if they so desire and will be available to respond to appropriate questions from stockholders.

Vote required:

An affirmative vote of the majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal is required for the ratification of the appointment of PwC as our independent registered public accounting firm for fiscal 2023.

Recommendation of the Board

 

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Audit Committee Matters

Audit and other fees

The following table shows the fees paid by the Company to PwC for audit and other services provided for the fiscal years 2022 and 2021.

Audit fees

Amount includes fees for professional services performed for the integrated audit of the Company’s annual consolidated financial statements included in the Company’s Form 10-K filing and review of financial statements included in the Company’s Form 10-Q filings. Amount also includes other services that are normally provided by PwC in connection with statutory and regulatory filings or engagements.

Audit-related fees

Amount includes fees paid for services that are reasonably related to the performance of the audit or review of the Company’s financial statements. For 2022 and 2021, amount includes services provided in connection with the Company’s implementation of a new enterprise resource planning system.

Tax fees

Amount includes fees and expenses for U.S. federal, state, and international tax planning and tax compliance services. There were no tax fees for 2022 or 2021.

All other fees

Amount includes fees for services in connection with attestations by PwC that are required by statute or regulation. Additionally, for 2022, amount includes services provided in connection with the Company’s implementation of a new enterprise resource planning system.

Pre-approval policy and procedures

The Audit Committee’s pre-approval policy requires that all services to be performed by the Company’s independent registered public accounting firm be pre-approved either on a case-by-case basis by the Audit Committee or its delegate or on a categorical basis based on the Audit Committee’s prior approval of a specific category of service and the expected cost thereof. Any request for services involving less than $150,000 may be approved by the Chair of the Audit Committee, provided that any such approval is presented to the full Audit Committee at its next regularly scheduled meeting.

The Audit Committee pre-approved all of the audit fees, audit-related fees, and all other fees paid to PwC in fiscal 2022.

 

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Audit Committee Report

The Audit Committee has reviewed and discussed the audited consolidated financial statements for the year ended December 31, 2022, including management’s annual assessment of and report on the Company’s internal control over financial reporting, with management and with PwC, the Company’s independent auditor. The Audit Committee has discussed with PwC the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee also received from PwC the written disclosures and letter required by applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence and has discussed with PwC the issue of their independence from the Company.

Based on the foregoing, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, for filing with the SEC.

THE AUDIT COMMITTEE

Daniel F. Sansone, Chair
Frederick J. Lynch
Karen G. Narwold
William J. Slocum
Benjamin G. Wright

 

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PROPOSAL 5
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE 2017 INGEVITY CORPORATION EMPLOYEE STOCK PURCHASE PLAN
	OUR BOARD RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE 2017 INGEVITY CORPORATION EMPLOYEE STOCK PURCHASE PLAN.

Overview

We are asking our stockholders to approve an amendment and restatement (the “Amendment”) of the 2017 Ingevity Employee Stock Purchase Plan (the “ESPP”) to increase the number of shares available for issuance under the ESPP by 300,000 shares, from 250,000 shares to 550,000 shares. Other than the Amendment, we have not made any material amendments to the ESPP since it became effective in 2017.

The ESPP was initially adopted by the LD&C Committee and the Board in 2016 and approved by our stockholders in 2017. The ESPP became effective on July 1, 2017. The purpose of the ESPP is to allow our employees to purchase shares of our Common Stock at a discount through payroll deductions. The LD&C Committee and Board believes the ESPP promotes the interests of Ingevity and our stockholders by attracting, retaining and motivating talented employees and aligning the interests of participating employees with those of our stockholders.

As of February 27, 2023, 46,832 shares remained available for issuance under the ESPP. Based on the current rate of shares being purchased under the ESPP and other factors, we estimate that the remaining shares would cover purchases through June 2023. The Amendment would increase the number of shares available for issuance under the ESPP by 300,000 shares, bringing the total number of shares available for issuance under the ESPP to 550,000 shares, which represents approximately 1.48% of our outstanding shares of Common Stock as of the close of business on February 27, 2023. There are no other material changes to the ESPP as a result of the Amendment. Based on the current rate of shares being purchased under the ESPP and other factors, we estimate that the additional shares authorized for issuance under the Amendment would be sufficient to cover purchases under the ESPP for approximately five years, however, this estimate could be affected by multiple factors, including organic headcount growth, future acquisitions and stock performance.

The ESPP is intended to qualify as an “employee stock purchase plan” that meets the requirements of Section 423 of the Code. Pursuant to the requirements of Section 423 of the Code, our stockholders must approve any increase in the number of shares available for issuance under the ESPP. The LD&C Committee and the Board believe that participation in the ESPP is important to our employees and our ongoing recruiting efforts and, therefore, the Amendment is important to our continued success. Accordingly, the LD&C Committee and the Board adopted the Amendment on February 16, 2023, subject to stockholder approval. The Amendment will become effective on April 27, 2023, subject to stockholder approval.

Summary description of the ESPP

The principal terms of the ESPP, as amended by the Amendment, are summarized below. This summary is not intended to be complete and is qualified in its entirety by the full text of the Amended and Restated 2017 Ingevity Employee Stock Purchase Plan, a copy of which is included as Appendix B to this Proxy Statement.

 

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Administration

Unless otherwise determined by our Board, the ESPP is administered by the LD&C Committee or its authorized delegate. As the administrator, the LD&C Committee may interpret and construe the plan, may make such rules and regulations and establish such procedures for the administration of the plan as it deems appropriate, and has the authority to exercise all powers and authorities necessary or advisable in the administration of the ESPP. The LD&C Committee’s decisions are final and binding. The LD&C Committee serves at the discretion of the Board and its members do not receive any compensation from the assets of the ESPP.

Eligibility and participation

Under the ESPP, eligible employees of Ingevity and its designated subsidiaries may be given the opportunity to purchase shares of our Common Stock through payroll deductions made from the eligible employee’s salary. Generally, all U.S. employees of Ingevity below grade 21 who have been employed for at least thirty days are eligible to participate in the ESPP. The administrator may, prior to the enrollment period for an offering, make determinations about which other employees shall be excluded from participating, such as employees who have been employed less than two years (or a lesser period), employees who customarily work twenty hours or less per week. As of February 27, 2023, approximately 1,600 employees are eligible to participate in the ESPP. Employees above grade 21, including executive officers, are not eligible to participate in the ESPP.

No employee who owns five percent or more of the total combined voting power or value of all classes of capital stock of Ingevity is eligible to participate in the ESPP. In addition, no participant may purchase shares of Common Stock that, following the purchase (and including all options held by such participant), would cause him or her to own five percent or more of the total combined voting power or value of all classes of capital stock of Ingevity.

By its terms and consistent with Section 423 of the Code, the ESPP provides that all eligible employees granted options under the plan or offering shall have the same rights and privileges, and the plan will not discriminate in favor of any particular class of employees.

Designated subsidiaries

The administrator may designate subsidiaries from time to time, in its sole discretion, to participate in the ESPP. Any subsidiaries of Ingevity may be designated to participate, including non-U.S. entities and corporations or other entities that become subsidiaries after the ESPP’s effective date.

Purchase of shares

The ESPP allows eligible employees to purchase shares of Common Stock at a discount. Eligible employees may elect to participate by completing an authorization form and timely filing it with Ingevity or its authorized delegate during the enrollment period. The enrollment period duration and timing may be established by the administrator but, unless otherwise determined, will generally be the one-month period preceding the purchase period. In the authorization form, the participant authorizes the after-tax payroll deductions from his or her compensation as a percent of compensation. However, no employee is permitted to purchase Common Stock with a value greater than $25,000 in any calendar year. In addition, no employee is permitted to purchase more than 5,000 shares of Common Stock or have more than 15% of his or her compensation deducted, each in any purchase period. The administrator may establish additional rules regarding a required minimum contribution level, the types of compensation from which deductions may be taken and other limitations on the dollar amounts that may be withheld.

Eligible employees who participate elect to use the money deducted from their compensation to purchase shares of Common Stock at a purchase price equal to 85% of the lower of (A) the fair market value of a share on the first day of the offering or (B) the fair market value of a share on the last day of the purchase period. The fair market value of a share on any given date shall be the closing price for a share as reported on the NYSE (or other exchange on which the stock is traded).

Purchase periods under the ESPP are generally three months long and begin on the first day of each calendar quarter and end on the last day of such calendar quarter. The administrator may determine a different starting date or duration for a purchase period however, in no event may any purchase period exceed 27 months.

 

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Withdrawal and termination of employment

Any employee may, preceding the termination of a purchase period, withdraw all payroll deductions then credited to his or her account by filing an amended authorization form with Ingevity or its authorized delegate on or before the last day of the purchase period. As soon as practicable after receipt of the amended authorization form, all payroll deductions credited to the employee’s account will be paid to him or her in cash (without interest) and no further payroll deductions will be made for such employee during the purchase period. Partial withdrawals of payroll deductions are not permitted.

If an employee’s employment is terminated for any reason prior to the end of any purchase period in which he or she is participating, no option will be granted to such employee and the payroll deductions credited to his or her account will be returned to the employee (or his or her beneficiary).

Rights not transferable

A participant’s rights under the ESPP are exercisable only by the participant and may not be sold, transferred, pledged, or assigned in any manner during his or her lifetime or by any other person during his or her lifetime.

Adjustments to shares

In the event of any change in capitalization of the Company (for example, a dividend or other distribution or a stock split), the Board will adjust, in such manner as it may deem equitable, the number of shares of stock covered by each unexercised option granted pursuant to the plan, as well as the price per share of Common Stock covered by each such option. In addition, in the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, our Board will adjust the number of shares of Common Stock available under the plan and the number of shares of Common Stock covered by options granted under the plan and the related purchase price.

The ESPP does not provide for an automatic annual increase in the number of shares reserved for issuance under the ESPP.

Amendment or termination

The Board may from time to time amend the ESPP to the extent it deems necessary or appropriate in light of and consistent with the requirements of Section 423 of the Code and the laws of the State of Delaware. The Board may also terminate the ESPP or any offering made under the ESPP at any time.

Federal income tax consequences

The following is a general summary of the material U.S. federal income tax consequences of the ESPP and is intended to reflect the current provisions of the Code and the regulations thereunder. This summary is not considered tax advice to any person and is not intended to be a complete statement of applicable law, nor does it address foreign, state, local or payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant. Accordingly, participants in the ESPP should consult their respective tax advisors to determine the tax consequences of their participation.

The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Under an employee stock purchase plan, an eligible employee recognizes no taxable income upon either the grant or the exercise of the option. The employee does not recognize taxable income until there is a sale or other disposition of the shares acquired under the ESPP or in the event the participant should die while still owning the purchased shares.

If the participant sells or otherwise disposes of the purchased shares within two years after his or her entry date into the purchase period in which such shares were acquired or within one year after the actual purchase date of those shares, then the participant will recognize ordinary income in the year of sale or disposition equal to the amount by which the closing selling price of the shares on the purchase date exceeded the purchase price paid for those shares. Ingevity will be entitled to a corresponding income tax deduction for the taxable year in which such disposition occurs equal to such excess. The participant will also

 

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recognize a capital gain to the extent the amount realized upon the sale of the shares exceeds the sum of the aggregate purchase price for those shares and the ordinary income recognized in connection with their acquisition.

If a participant sells or disposes of the purchased shares more than two years after his or her entry date into the purchase period in which the shares were acquired and more than one year after the actual purchase date of those shares, the participant will recognize ordinary income in the year of sale or disposition equal to the lower of  (i) the amount by which the closing selling price of the shares on the sale or disposition date exceeded the purchase price for those shares or (ii) 15% of the closing selling price of the shares on the participant’s entry date into that purchase period. Any additional gain upon the disposition will be taxed as a long-term capital gain. Ingevity will not be entitled to an income tax deduction with respect to such disposition.

Specific benefits

Because the amount of benefits to be received by each employee in the ESPP is determined by his or her discretionary election and depends upon the fair market value of our Common Stock at various future dates, the amount of future benefits to be allocated to any individual or group of individuals under the plan in any particular year is not determinable.

No shares may be purchased under the ESPP by our CEO and other executive officers at future dates because executive officers are not eligible to participate.

Aggregate past purchases under the ESPP

As of February 27, 2023, 203,168 shares of Common Stock had been purchased under the ESPP.

Value of Ingevity Common Stock

The fair market value of Ingevity’s Common Stock as of February 27, 2023 was $87.81 per share.

Vote required

The affirmative vote of a majority of the shares of Common Stock present in person or by proxy and entitled to vote on the matter at the Annual Meeting is required for the approval of the Amendment.

Recommendation of the Board

 

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Ownership of Equity Securities

Principal stock owners

The following table lists any person (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act) who, to our knowledge, was the beneficial owner as of February 27, 2023, of more than 5% of our outstanding Common Stock.

 

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Executive Officers and Directors

The following table shows how much of our Common Stock our current directors, named executive officers (“NEOs”), and all executive officers and directors as a group beneficially owned as of March 3, 2023. Beneficial ownership is a technical term broadly defined by the SEC to mean more than ownership in the usual sense. In general, beneficial ownership includes any shares of Common Stock a director or officer can vote or transfer and any security the director or officer has the right to vote or transfer within 60 days. Except as described further below, each stockholder listed in the table has sole voting and investment power for all shares of Common Stock shown as beneficially owned by him or her. Individual directors and executive officers as well as directors and executive officers as a group beneficially own less than 1% of the shares of Common Stock outstanding as of March 3, 2023.

Delinquent Section 16(a) reports

To the Company’s knowledge, based solely on a review of the copies of the reports furnished to the Company and the reporting persons’ written representations that no additional reports were required, the Company believes that, during 2022, all persons required to report complied with the Section 16(a) requirements, with the exception of a report regarding the issuance of DSUs to Ms. Narwold on January 3, 2022, which was not timely filed within two business days of the grant date. The report was filed on January 28, 2022. The late filing was due to an administrative error.

 

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Questions and Answers About the Annual Meeting, Proxy Solicitation, and Voting Information

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 27, 2023 (the “Annual Meeting”): Our proxy statement for the Annual Meeting (the “Proxy Statement”) and Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“Annual Report”) are available at www.proxyvote.com.

Why did I receive these materials?

You received these materials (the “Proxy Materials”) because you owned shares of the Company’s Common Stock, par value $0.01 (the “Common Stock”) as of the close of business on February 27, 2023 (the “Record Date”) and are, therefore, entitled to vote at the Annual Meeting.

Why did I receive a Notice Regarding the Availability of Proxy Materials instead of printed Proxy Materials?

Most of our stockholders received a Notice Regarding the Availability of Proxy Materials (the “Notice”) instead of a full set of printed Proxy Materials. The Notice provides access to our Proxy Materials in a fast and efficient manner via the Internet. This reduces the amount of paper necessary to produce these materials, and cuts costs associated with mailing these materials to stockholders. On or around March 10, 2023, we began mailing the Notice to holders of our Common Stock as of the Record Date and posted our Proxy Materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, stockholders may choose to access our Proxy Materials on the website or may request to receive a printed set of our Proxy Materials. The Notice and website provide information regarding how you may request to receive Proxy Materials in printed form by mail or electronically by email for this Annual Meeting and on an ongoing basis.

What is included in the Proxy Materials?

The Proxy Materials include the Notice of the Annual Meeting, the Proxy Statement, and our Annual Report. These materials provide you with important information about the Company, the Annual Meeting, and the proposals to be voted on at the Annual Meeting.

What is a proxy and a proxy statement?

A proxy is your legal designation of another person to vote the shares of Common Stock you own as of the Record Date in the manner you direct. The person you designate to vote your shares of Common Stock is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. We have designated Stacy L. Cozad, our Executive Vice President, General Counsel, and Secretary, and Ryan C. Fisher, our Vice President and Deputy General Counsel, to serve as proxies for the Annual Meeting. The proxies also may be voted at any adjournments or postponements of the meeting. The Board is soliciting proxies for use at the Annual Meeting. A proxy statement is a document we give you when we are soliciting your vote pursuant to SEC regulations.

What is the difference between a stockholder of record and a beneficial owner?

If your shares of Common Stock are registered in your name on the books and records of our transfer agent, you are a “stockholder of record.” We therefore sent the Notice or Proxy Materials directly to you.

If your shares of Common Stock are held for you in the name of your broker or bank, your shares are held in “street name” and you are considered the “beneficial owner” of your shares and the broker or bank is considered to be the stockholder of record.

If you are a beneficial owner, the Notice or Proxy Materials have been forwarded to you by the broker or bank that holds your shares of Common Stock, and, as the beneficial owner, you have the right to direct your broker or bank on how to vote your shares by using the voting instruction form provided to you by your broker or bank.

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How do I vote?

Your voting method depends on whether you are a stockholder of record or a beneficial owner.

Stockholder of record

If you are a stockholder of record, you may vote using one of the following methods:

 

Even if you plan to attend the Annual Meeting virtually, we encourage you to vote your shares ahead of time.

Beneficial owner

If you are a beneficial owner, you may vote by following the instructions on the voting instruction form or notice provided to you by the bank or broker that holds your shares.

May I revoke my proxy and change my vote?

If you are a stockholder of record, you may revoke your proxy and change your vote at any time before the polls close at the Annual Meeting by doing one of the following:

If you are a beneficial owner, please check your voting instruction form or contact the bank or broker that holds your shares for instructions on how to revoke or change your voting instruction.

Who is entitled to vote at the Annual Meeting?

All Ingevity stockholders who owned Common Stock as of the close of business on the Record Date are entitled to vote at the Annual Meeting.

How many votes are entitled to be cast at the Annual Meeting?

Each Ingevity stockholder is entitled to one vote for each share of Common Stock owned as of the Record Date. There were 37,168,186 shares of Common Stock outstanding on the Record Date. There is no cumulative voting.

When and where is the Annual Meeting, and may I attend?

In order to allow greater access to the meeting to our stockholders and lower the barriers to stockholder participation, our Annual Meeting will be held in a virtual meeting format only with no physical meeting location, which will enable stockholders to participate from any location and at no cost.

 

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To participate in the virtual meeting, you will need the 16-digit control number included on your Notice, proxy card or voting instruction form. The meeting will begin promptly at 9:30 a.m., Eastern Time, and we encourage stockholders to access the meeting prior to the start time. Technical assistance will be available on the day of the Annual Meeting. If you experience difficulties joining the Annual Meeting, please call 844-986-0822 in the U.S., or 303-562-9302 for International assistance.

How may I ask a question during the Annual Meeting?

We are committed to ensuring that stockholders will be afforded the same rights and opportunities to participate in the Annual Meeting as they would at an in-person meeting. You will be able to attend the Annual Meeting online, vote your shares of Common Stock electronically, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/NGVT2023 and entering the 16-digit control number included on your Notice, proxy card, or voting instruction form.

We will try to answer as many stockholder-submitted questions as time permits, and in the event we receive more questions than we can answer during our allotted period of time, we will answer them in the order received. We reserve the right to edit profanity or other inappropriate language and to exclude questions regarding topics that are not pertinent to meeting matters or Company business, or that do not comply with the Annual Meeting rules of conduct. If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition. To the extent you have a question that was not answered during the Annual Meeting, please contact our Investor Relations team at investors@ingevity.com.

How many votes must be present to hold the Annual Meeting?

In order for us to conduct the Annual Meeting, a majority of the shares of Common Stock outstanding as of the Record Date must be present at the meeting (including by proxy). This is referred to as a quorum. If a share is represented for any matter at the Annual Meeting, it is deemed to be present for quorum purposes. Abstentions and shares of Common Stock held of record by a bank or broker or its nominee (“Broker Shares”) that are voted on any matter are included in determining the number of shares present at the Annual Meeting. However, broker non-votes will not be included in determining whether a quorum is present at such meeting.

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What proposals will be voted on at the Annual Meeting, what are the Board’s voting recommendations, and what is required for a proposal to pass?

The following table summarizes the Board’s voting recommendations for each proposal, the vote required for each proposal to pass, and the effect of abstentions and uninstructed shares on each proposal. If you are a stockholder of record who submits a proxy card without selecting an option for any of the proposals, the proxy holders will vote in accordance with the Board recommendations in the table below.

Will there be any other matters of business addressed at the Annual Meeting?

As of the date of this Proxy Statement, we are not aware of any other matter that will be properly brought before the Annual Meeting. If other matters are properly introduced, the persons named in the proxy as the proxy holders will vote on such matters in their discretion using their best judgment.

Who bears the expenses of solicitation?

We will bear the cost of solicitation of proxies by the Board in connection with the Annual Meeting. We will reimburse brokers, fiduciaries, and custodians for reasonable expenses incurred by them in forwarding Proxy Materials to beneficial owners of Common Stock held in their names. Proxies may be solicited by mail, in person, by telephone, facsimile, or other means of communication by our officers and other employees. These people will receive no additional compensation for these services but will be reimbursed for any expenses incurred by them in connection with these services. In addition, Ingevity’s officers, directors, and employees may solicit proxies but will receive no additional or special compensation for such work.

What is Ingevity’s principal executive office address?

The address of Ingevity’s principal executive office is: 4920 O’Hear Avenue, Suite 400, North Charleston, South Carolina 29405.

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What is “householding” and how does it affect me?

“Householding” refers to a procedure allowed by the SEC to reduce the number of copies of the Notice or Proxy Materials mailed to holders of our Common Stock residing at the same address. Under this procedure, we will deliver one Notice or one set of printed Proxy Materials to beneficial holders of our Common Stock residing at the same address, unless their broker, bank, or other nominee has received contrary instructions from any beneficial holder at that address. Likewise, we will deliver one Notice or one set of printed Proxy Materials to record holders of our Common Stock residing at the same address, unless we receive instructions from such stockholders to the contrary. If you reside at the same address as other stockholders of record and would like to receive a separate Notice or set of Proxy Materials, please contact us at 1-844-643-8489 (1-84-INGEVITY) or at Ingevity Corporation, 4920 O’Hear Avenue, Suite 400, North Charleston, South Carolina 29405, Attn: Corporate Secretary, and we will promptly deliver a separate set to you. If you and other stockholders of record residing at the same address received multiple Notices or sets of the Proxy Materials and would like to receive a single Notice or set in the future, please contact us as described above. Beneficial holders with questions about combined mailings should contact the bank or broker holding their shares.

What if a director is not elected?

Any director who is not elected at the Annual Meeting shall offer to tender his or her resignation to the Chair of the Board and the Nominating & Governance Committee. The Nominating & Governance Committee will promptly consider the resignation offer and make a recommendation to the Board as to whether to accept or reject the tendered resignation and whether other action should be taken. The Board will act on the tendered resignation within 90 days following the stockholders’ meeting at which the election occurred. The Nominating & Governance Committee, in making its recommendation, and the Board, in making its decision, may consider all the information, factors, and alternatives it considers appropriate. Any director who offers his or her resignation pursuant to this provision may not participate in the Nominating & Governance Committee deliberations and recommendation or in the Board’s deliberations and decision whether to accept or reject the resignation offer.

When will the voting results from the Annual Meeting be disclosed?

The Company will file a Current Report on Form 8-K with the SEC and post the filing to the Company’s website within four business days following the Annual Meeting.

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Questions and Answers Regarding Stockholder Communications, Stockholder Proposals, and Company Documents

How can I obtain copies of Ingevity’s Annual Report?

We will provide without charge, at the written request of any stockholder of record as of the Record Date, a copy of our Annual Report, including the financial statements, as filed with the SEC, excluding exhibits. We will provide copies of the exhibits to eligible stockholders making such a request.

Requests for copies of our Annual Report should be mailed to: Ingevity Corporation, 4920 O’Hear Avenue, Suite 400, North Charleston, South Carolina 29405, Attn: Corporate Secretary. You may also access a copy of our Annual Report via the Internet by visiting www.proxyvote.com.

How do I submit a proposal for inclusion next year’s proxy statement?

Under SEC rules, a proposal that a stockholder wishes to include in our proxy statement for the 2024 annual meeting of stockholders must be received by our Corporate Secretary no later than the close of business on November 10, 2023. Proposals must be in writing and delivered to: Ingevity Corporation, 4920 O’Hear Avenue, Suite 400, North Charleston, South Carolina 29405, Attn: Corporate Secretary. In addition, proposals must otherwise comply with the requirements of Rule 14a-8 of the Exchange Act. Accordingly, stockholders wishing to submit a proposal should refer to Rule 14a-8 of the Exchange Act, which sets standards for eligibility and specifies the types of proposals that are not appropriate for inclusion in our proxy statement.

How do I nominate a director for election at next year’s annual meeting of stockholders?

Under our Bylaws, any stockholder of record may nominate persons for election as directors at an annual meeting of our stockholders by providing written notice of their intent to do so to our Corporate Secretary no later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting. If the annual meeting is held on a date that is more than 30 days before, or more than 60 days after, such anniversary, then such notice must instead be provided no earlier than the close of business on the 120th day prior to the meeting and no later than the close of business on the later of: (i) the 90th day prior to the meeting; or (ii) the seventh day following the day on which public announcement of the date of the meeting is first made by the Company. We anticipate holding our 2024 annual meeting of stockholders on or about the one-year anniversary of this year’s meeting. This means that written notice of any nominations intended to be made at our 2024 annual meeting of stockholders must be delivered to our Corporate Secretary no earlier than the close of business on December 28, 2023 and no later than the close of business on January 27, 2024. Any such notice must contain the information and conform to the requirements specified in our Bylaws. In addition, the Company will only consider nominations from a stockholder who is a stockholder of record: (i) at the time of giving such notice; (ii) on the record date for the determination of stockholders entitled to vote at the annual meeting; and (iii) at the time of the annual meeting.

In addition to the requirements in the preceding paragraph, stockholders who intend to solicit proxies in support of director nominees other than Ingevity’s nominees through the use of a “universal proxy card” must provide notice that sets forth the information required by Rule 14a-19 of the Exchange Act no later than February 27, 2024, which is 60 days prior to April 27, 2024, the one year anniversary of the Annual Meeting.

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How do I bring other business before next year’s annual meeting of stockholders?

Under our Bylaws, any stockholder of record who wishes to present a matter for consideration (other than the nomination of a director or matters that have been submitted for inclusion in our proxy statement for such annual meeting) at an annual meeting of our stockholders must provide written notice of their intent to do so to our Corporate Secretary no later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting. If the annual meeting is held on a date that is more than 30 days before, or more than 60 days after, such anniversary, then such notice must instead be provided no earlier than the close of business on the 120th day prior to the meeting and no later than the close of business on the later of: (i) the 90th day prior to the meeting; or (ii) the seventh day following the day on which public announcement of the date of the meeting is first made by the Company. We anticipate holding our 2024 annual meeting of stockholders on or about the one-year anniversary of this year’s meeting. This means that any notice regarding matters to be presented at our 2024 annual meeting of stockholders must be delivered to our Corporate Secretary no earlier than the close of business on December 28, 2023 and no later than the close of business on January 27, 2024. Any such notice must contain the information and conform to the requirements specified in our Bylaws.

In addition, the Company will only consider proposals from a stockholder who is a stockholder of record: (i) at the time of giving such notice; (ii) on the record date for the determination of stockholders entitled to vote at the annual meeting; and (iii) at the time of the annual meeting.

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Forward-Looking Statements

This Proxy Statement contains “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements generally include the words “will,” “plans,” “intends,” “targets,” “expects,” “outlook,” “guidance,” “believes,” “anticipates” or similar expressions. Forward-looking statements may include, without limitation, the potential benefits of any acquisition or investment transaction, expected financial positions, expected financial positions, guidance, results of operations and cash flows; financing plans; business strategies and expectations; operating plans; impact of COVID-19; capital and other expenditures; competitive positions; growth opportunities for existing products; benefits from new technology and cost-reduction initiatives, plans and objectives; litigation related strategies and outcomes; markets for securities and expected future repurchases of shares, including statements about the manner, amount and timing of repurchases. Actual results could differ materially from the views expressed. Factors that could cause actual results to materially differ from those contained in the forward-looking statements, or that could cause other forward-looking statements to prove incorrect, include, without limitation, adverse effects from general global economic, geopolitical, and financial conditions beyond our control, including inflation and war in Ukraine; risks related to our international sales and operations; adverse conditions in the automotive market; competition from substitute products, new technologies and new or emerging competitors; worldwide air quality standards; a decrease in government infrastructure spending; adverse conditions in cyclical end markets; the limited supply of or lack of access to sufficient crude tall oil and other raw materials; issues with, or integration of, future acquisitions and other investments; the provision of services by third parties at several facilities; adverse effects from the COVID-19 pandemic; supply chain disruptions; natural disasters and extreme weather events; or other unanticipated problems such as labor difficulties (including work stoppages), equipment failure or unscheduled maintenance and repair; attracting and retaining key personnel; dependence on certain large customers; legal actions associated with our intellectual property rights; protection of our intellectual property and other proprietary information; information technology security breaches and other disruptions; complications with designing or implementing our new enterprise resource planning system; government policies and regulations, including, but not limited to, those affecting the environment, climate change, tax policies, tariffs and the chemicals industry; and losses due to lawsuits arising out of environmental damage or personal injuries associated with chemical or other manufacturing processes, and the other factors detailed from time to time in the reports we file with the SEC, including those described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K as well as in our other filings with the SEC. These forward-looking statements speak only to management’s beliefs as of the date of this Proxy Statement. Ingevity assumes no obligation to provide any revisions to, or update, any projections and forward-looking statements contained in this Proxy Statement.

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Appendix A: Non-GAAP Financial Measures and Reconciliation Tables

Non-GAAP financial measures used in this proxy statement

Ingevity has presented certain financial measures in this Proxy Statement, defined below, which have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) These financial measures are not meant to be considered in isolation or as a substitute for the most directly comparable financial measure calculated in accordance with GAAP.

Metrics used in “2022 Business Highlights” and “NEO Performance and Compensation Decisions”

 

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Metrics used in “Short-Term Incentive Plan and 2022 Awards”

 

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Metrics used in “Long-Term Incentive Plan and 2022 Awards” and “Payout of 2020 PSU Award”

 

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Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) to Company STIP-Adjusted EBITDA (Non-GAAP)

Reconciliation of Net Cash Provided by Operating Activities (GAAP) to Free Cash Flow (Non-GAAP)

Reconciliation of Segment EBITDA (GAAP) to BU STIP-Adjusted EBITDA (Non-GAAP)

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Reconciliation of Revenue (GAAP) to Company STIP-Adjusted Revenue (Non-GAAP)

Reconciliation of Segment Revenue (GAAP) to BU STIP-Adjusted Revenue (Non-GAAP)

Reconciliation of Diluted EPS (GAAP) to Cumulative EPS (Non-GAAP)

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Reconciliation of Net Income (Loss) Attributable to Ingevity Stockholders (GAAP) to NOPAT (Non-GAAP)

Calculation of Period-End (2022) Invested Capital

Calculation of Period-End ROIC

 

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Appendix B: Amended and Restated 2017 Ingevity Employee Corporation Stock Purchase Plan

AMENDED AND RESTATED
2017 INGEVITY CORPORATION
EMPLOYEE STOCK PURCHASE PLAN

The purpose of the Plan is to provide Eligible Employees of Ingevity and each of its Designated Subsidiaries with the opportunity to purchase Stock in Ingevity through payroll deduction, thereby encouraging employees to share in the economic growth and success of the company through Stock ownership. Ingevity intends that the Plan constitute an “employee stock purchase plan” within the meaning of § 423 of the Code and, further, intends that any ambiguity in the Plan or any related offering be resolved to effect such intent.

This Plan amends and restates the 2017 Ingevity Corporation Employee Stock Purchase Plan approved by Ingevity’s shareholders in April 2017 (the “Prior Plan”) in its entirety, and shall become effective on April 27, 2023, subject to approval by Ingevity’s stockholders at Ingevity’s annual meeting of stockholders in 2023 (the “Annual Meeting”). In the event that Ingevity’s stockholders fail to approve the Plan as set forth herein at the Annual Meeting, then this Plan shall be deemed void ab initio and the Prior Plan shall continue in effect in accordance with its terms.

 

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Offerings to purchase shares of Stock shall be made to Participants in accordance with the Plan from time to time at the discretion of the Administrator. The Administrator will determine the terms of each Offering, provided that each Offering shall satisfy the requirements of § 423(b)(5) of the Code.

Subject to adjustment as provided in § 15, a maximum of 550,000 shares of Stock shall be reserved for purchase from Ingevity upon the exercise of options granted under § 9 of the Plan, such reserved shares of Stock consisting of 250,000 shares of Stock previously reserved and subject to issuance under the Prior Plan, and an additional 300,000 shares of Stock reserved under the Plan, as hereby amended and restated. Any shares of Stock which are subject to options granted as of the first day of a Purchase Period but which are not purchased on the related Purchase Date shall again become available under the Plan.

The Administrator shall be responsible for the administration of the Plan and shall have the power in connection with such administration to interpret the Plan, to establish rules and procedures it deems appropriate to administer the Plan, and to take such other action in connection with such administration as it deems necessary or equitable under the circumstances. The Administrator also shall have the power to delegate the duty to perform such administrative functions as the Administrator deems appropriate under the circumstances and any action taken in accordance with such delegation shall be considered the action of the Administrator. Any person or management committee to whom the duty to perform an administrative function is delegated shall act on behalf of and shall be responsible to the Administrator for such function. Any action or inaction by or on behalf of the Administrator under the Plan shall be final and binding on each Eligible Employee, each Participant and on each other person who makes a claim under the Plan based on the rights, if any, of any such Eligible Employee or Participant under the Plan.

Each person who is an Eligible Employee on the first day of an Enrollment Period shall be a Participant in the Plan for the related Purchase Period, and, unless such Eligible Employee withdraws from the Plan (or modifies his or her Authorization in accordance with § 8(b)), for subsequent Purchase Periods, if:

An Authorization shall require an Eligible Employee to provide such information and to take such action as the Administrator in its discretion deems necessary or helpful to the orderly administration of the Plan, including specifying (in accordance with § 8) his or her payroll deductions to purchase whole shares of Stock pursuant to the option granted under § 9. Unless a Participant files a new Authorization during an Enrollment Period, modifies an Authorization in accordance with § 8(b) or withdraws from the Plan pursuant to § 12 or § 13, his or her deductions and purchases will continue at the same rate for future Purchase Periods under the Plan as long as the Plan remains in effect. A Participant’s status as such shall terminate for a specific Purchase Period (for which he or she has an effective Authorization) when his or her Account has been withdrawn under § 12 or § 13, his or her Authorization has been modified to stop contributions under § 8(b) or the purchases and distributions contemplated under § 10 with respect to his or her Account have been completed, whichever comes first.

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Unless a Participant files an amended Authorization under § 8(b), § 12 or § 13 on or before the Purchase Date for a Purchase Period for which he or she has an effective Authorization, his or her option shall be exercised automatically on such Purchase Date for the purchase of as many whole shares of Stock as the balance credited to his or her Account as of that date will purchase at the Purchase Price for such shares of Stock if he or she also is an Eligible Employee on such Purchase Date.

Whole shares of Stock purchased upon the exercise of an option under the Plan may be registered in book entry form or represented in certificate form and shall be held for, or at the Participant’s direction and expense, delivered to the Participant and shall be registered in (1) his or her name or, if the Participant so directs on his or her Authorization filed with the Administrator on or before the Purchase Date for such option and if permissible under applicable law, (2) the names of the Participant and one such other person as may be designated by the Participant, as joint tenants with rights of survivorship. No Participant (or any person who makes a claim through a Participant) shall have any interest in any shares of Stock subject to an option until such option has been exercised and the related shares of Stock have been delivered to such person or have been transferred to an account for such person at a broker-dealer designated by the Administrator.

If a Participant’s employment as an Eligible Employee terminates on or before the Purchase Date for a Purchase Period for any reason whatsoever (including death but in such case only if the Administrator has timely notice of such death), his or her Account shall be distributed in cash as soon as practicable as if he or she had elected to withdraw his or her Account under § 12 immediately before the date his or her employment terminated. However, if a Participant is transferred directly between Ingevity and a Designated Subsidiary or between one Designated Subsidiary and another Designated Subsidiary while he or she has an Authorization in effect, his or her employment shall not be treated as terminated merely because of such transfer and any such Authorization shall (subject to all the terms and conditions of the Plan) remain in effect after such transfer.

Neither the balance credited to a Participant’s Account nor any rights to the exercise of an option or to receive shares of Stock under the Plan may be assigned, encumbered, alienated, transferred, pledged, or otherwise disposed of in any way by a Participant during his or her lifetime or by any other person during his or her lifetime, and any attempt to do so shall be without effect; provided, however, that the Administrator in its absolute discretion may treat any such action as an election by a Participant to withdraw the balance credited to his or her Account in accordance with § 12.

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The number of shares of Stock covered by outstanding options granted pursuant to the Plan and the related Purchase Price and the number of shares of Stock available under the Plan shall be adjusted by the Board in an equitable manner to reflect any change in the capitalization of, including, but not limited to such changes as dividends paid in the form of Stock or Stock splits. Furthermore, the Board shall adjust (in a manner which satisfies the requirements of § 424(a) of the Code) the number of shares of Stock available under the Plan and the number of shares of Stock covered by options granted under the Plan and the related Option Prices in the event of any corporate transaction described in § 424(a) of the Code. An adjustment made under this § 15 by the Board shall be conclusive and binding on all affected persons.

This Plan may be amended by the Board from time to time to the extent that the Board deems necessary or appropriate in light of, and consistent with, § 423 of the Code and the laws of the State of Delaware, and any such amendment shall be subject to the approval of Ingevity’s shareholders to the extent such approval is required under § 423 of the Code or the laws of the State of Delaware or to the extent such approval is required under applicable law or stock exchange listing requirements. The Board also may terminate the Plan or any Offering made under the Plan at any time.

All Authorizations and other communications from a Participant to the Administrator under, or in connection with, the Plan shall be deemed to have been filed with the Administrator when actually received in the form specified by the Administrator at the location, or by the person, designated by the Administrator for the receipt of such Authorizations and communications.

No offer under the Plan shall constitute an offer of employment, and no acceptance of an offer under the Plan shall constitute an employment agreement. Any such offer or acceptance shall have no bearing whatsoever on the employment relationship between any Eligible Employee and Ingevity or any subsidiary of Ingevity, including a Designated Subsidiary. Finally, no Eligible Employee shall be induced to participate in the Plan by the expectation of employment or continued employment.

The headings to sections in the Plan have been included for convenience of reference only. Except as otherwise expressly indicated, all references to sections (§) in the Plan shall be to sections (§) of the Plan. This Plan shall be interpreted and construed in accordance with the laws of the State of Delaware.

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