UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

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Vertiv Holdings Co

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Vertiv Holdings Co 1050 Dearborn Dr. Columbus, Ohio 43085   April 28, 2022

Annual Meeting of Stockholders – June 15, 2022

Dear Stockholder,

On behalf of the Board of Directors of Vertiv Holdings Co (“Vertiv”), I invite you to participate in Vertiv’s 2022 Annual Meeting of Stockholders on June 15, 2022 at 11 a.m. Eastern time.

The accompanying proxy statement contains important information about the stockholder meeting, our nominees for election to our Board of Directors, and executive compensation, among other important disclosures.

Whether or not you plan to participate in the meeting, it is important that your shares be represented. Please vote your shares via the internet or the toll-free telephone number provided or, if you received a paper copy of a proxy card or voter instruction form by mail, you may vote your shares by completing, signing, dating, and returning your proxy card or voter instruction form in the postage-paid envelope.

We value you as one of our stockholders, we appreciate your investment in Vertiv, and we welcome your participation in our upcoming stockholder meeting.

 

		Kind regards,
		David M. Cote Executive Chairman of the Board

 

				Notice of Annual Meeting of Stockholders   To be held on June 15, 2022   11:00 a.m. (EST)

Notice is hereby given that the 2022 annual meeting of stockholders (the “Annual Meeting”) of Vertiv Holdings Co, a Delaware corporation (the “Company,” “Vertiv” or “we”), will be held on June 15, 2022 at 11:00 a.m. (Eastern Time), via live webcast at the following address www.virtualshareholdermeeting.com/VRT2022. We are holding the meeting for the following purposes:

 

1.	Election of Directors. Elect nine directors to our Board of Directors, each for a term of one year expiring at the 2023 annual meeting of stockholders and until such director’s successor has been duly elected and qualified;

 

2.	Say-On-Pay. Approve, on an advisory basis, the 2021 compensation of our named executive officers as disclosed in the accompanying proxy statement; and

 

3.	Independent Auditor. Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022.

Only stockholders of record as of the close of business on April 18, 2022 (the “Record Date”) will be entitled to virtually attend or vote at the Annual Meeting or any adjournment or postponement thereof. A complete list of these stockholders will be available on the bottom panel of your screen during the meeting after entering the 16-digit control number included on the Notice of Internet Availability of Proxy Materials or any proxy card that you received, or on the materials provided by your bank or broker.

To facilitate voting, Internet and telephone voting are available. The instructions for voting are on the proxy card. If you hold your shares through a bank, broker, or other holder of record, please follow the voter instruction form you received from the holder of record.

The 2022 Annual Meeting will be virtual. You may attend the Annual Meeting and vote your shares electronically during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/VRT2022. You will need the 16-digit control number that is printed on your proxy card, voter instruction form or Notice of Internet Availability of Proxy Materials, to enter the Annual Meeting. Vertiv recommends that you log in 15 minutes before the Annual Meeting to ensure you are logged in when the Annual Meeting starts.

Your vote is important. Please act as soon as possible to vote your shares, whether or not you plan to virtually attend the Annual Meeting. Additionally, please mark, sign, date, and return the accompanying proxy card or voter instruction form in the postage-paid envelope or vote by telephone or via the Internet. Instructions are included on your proxy card, voter instruction form or Notice of Internet Availability of Proxy Materials.

April 28, 2022

 

		Stephanie L. Gill Chief Legal Counsel and Corporate Secretary

 

 

Important notice regarding the availability of proxy materials for the annual meeting to be held on June 15, 2022: Vertiv's Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 31, 2021 are also available at www.proxyvote.com.

These materials were first sent or made available to shareholders on April 28, 2022.

Table of Contents

 

PROXY SUMMARY			1
GENERAL INFORMATION			5
PROPOSAL  1: ELECTION OF DIRECTORS			9
Nominees for Election			9
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE			14
Board Composition			14
Director Independence			14
Board of Directors Leadership Structure			14
Board of Directors Role in Risk Oversight			15
Attendance at Board of Directors and Committee Meetings and Annual Meeting			15
Board Committees			16
Policy Regarding Director Nominations			18
Communication with the Board of Directors			18
Code of Conduct			18
Director Compensation			19
DIRECTORS AND EXECUTIVE OFFICERS			21
EXECUTIVE COMPENSATION			24
Compensation Discussion and Analysis			24
COMPENSATION TABLES			32
Summary Compensation Table			32
Grants of Plan-Based Awards in Fiscal 2021			33
Understanding Our Summary Compensation Table and Grants of Plan-Based Awards in Fiscal 2021 Table			34
Outstanding Equity Awards at 2021 Fiscal Year-End			34
Option Exercises and Stock Vested During Fiscal 2021			35
Estimated Payments Upon Termination or Change in Control			37
CEO Pay Ratio			38
PROPOSAL  2: ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS			39
PROPOSAL  3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			40
INFORMATION REGARDING INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			41
Pre-Approval Policy			41
Fees			41
Audit Fees			41
Audit-Related Fees			41
Tax Fees			42
All Other Fees			42
Change of the Company’s Independent Registered Public Accounting Firm			42
AUDIT COMMITTEE REPORT			43
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			44
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			46
Related Party Transactions Policies and Procedures			46
Business Combination			46
Other Related Party Transactions			47
Delinquent Section 16(a) Reports			48
ADDITIONAL INFORMATION			48
List of Stockholders of Record			48
Submission of Stockholder Proposals at Next Year’s Annual Meeting			48
Consideration of Stockholder-Recommended Director Nominees			48
Stockholder Communications with the Board of Directors			49
Note About Forward-Looking Statements			49
ANNEX A  NON-GAAP FINANCIAL MEASURES			50
Reconciliation of Non-GAAP Financial Measures			51

 

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Proposal 1: Election of Directors

At the Annual Meeting, stockholders will vote to elect the nine nominees named in this proxy statement as directors. Each of the directors elected at the Annual Meeting will hold office until the 2023 annual meeting of stockholders and until his/her successor has been duly elected and qualified. Our Board of Directors has nominated each of David M. Cote, Rob Johnson, Jacob Kotzubei, Matthew Louie, Roger Fradin, Steven S. Reinemund, Joseph van Dokkum, Robin L. Washington and Edward L. Monser to serve as directors for terms expiring at the 2023 annual meeting of stockholders and until each of their successors has been duly elected and qualified. The persons named as proxies will vote to elect each of David M. Cote, Rob Johnson, Jacob Kotzubei, Matthew Louie, Roger Fradin, Steven S. Reinemund, Joseph van Dokkum, Robin L. Washington and Edward L. Monser unless a stockholder indicates that his or her shares should be withheld with respect to one or more of such nominees.

In the event that any nominee for director becomes unavailable or declines to serve as a director at the time of the Annual Meeting, the persons named as proxies will vote the proxies in their discretion for any nominee who is designated by the current Board of Directors to fill the vacancy. All the nominees are currently serving as directors and we do not expect that the nominees will be unavailable or will decline to serve. Information about each of the director nominees is set forth below.

 

Nominees for Election

The following sets forth certain information about our directors as of the date of this proxy statement.

Directors

		DAVID M. COTE   Age: 69 Director Since: 2020 Director and Executive Chairman of the Board
Background:   Mr. Cote has served as our Executive Chairman of our Board of Directors since February 7, 2020. From April 2018 until the Business Combination, Mr. Cote served as Chief Executive Officer, President and Secretary, and Chairman of the Board of Directors of GSAH. Mr. Cote served as Chairman and Chief Executive Officer of Honeywell from July 2002 to March 2017. Most recently, Mr. Cote was Executive Chairman of the Board at Honeywell until April 23, 2018. He joined Honeywell as President and Chief Executive Officer in February 2002. Prior to joining Honeywell, he served as Chairman, President and Chief Executive Officer of TRW Inc., a provider of products and services for the aerospace, information systems and automotive markets, from August 2001 to February 2002. From February 2001 to July 2001, he served as TRW’s President and Chief Executive Officer and from November 1999 to January 2001 he served as its President and Chief Operating Officer. Mr. Cote was Senior Vice President of General Electric Company and President and Chief Executive Officer of GE Appliances from June 1996 to November 1999. Mr. Cote was a director of the Federal Reserve Bank of New York from March 2014 to March 2018, as well as a director of Juniper Industrial Holdings, Inc. from March 2020 until its merger with Janus International Group Inc. in June 2021.   Qualifications:   Mr. Cote was selected to serve on our Board due to his significant leadership experience and his extensive management and investment experience, including in the industrial sector.

 

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		ROB JOHNSON   Age: 55 Director Since: 2020 Director and Chief Executive Officer
Background:   Mr. Johnson has served as our Chief Executive Officer and one of our directors since February 7, 2020. From December 2016 until the Business Combination in February 2020, Mr. Johnson served as the Chief Executive Officer of Vertiv and was Vertiv’s first CEO. Prior to December 2016, he had been an operating partner at venture capital firm Kleiner Perkins Caufield & Byers (“Kleiner Perkins”) from 2014 to 2016. From 2013 to 2014, Johnson worked in executive positions at Consolidated Container Corporation. Prior to Consolidated Container Company, Mr. Johnson had a five-year tenure, between 2008 and 2013, in executive positions at A123 Systems (formerly NASDAQ: AONE), a global manufacturer of lithium ion batteries. On October 16, 2012, A123 Systems voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code and, on January 29, 2013, A123 Systems completed the sale of substantially all of its assets and operations. Mr. Johnson was the Chief Executive Officer of American Power Conversion (formerly NASDAQ: APCC) (“APC”) from 2006 until 2007, where he managed the company’s sale to Schneider Electric (OTC: SBGSY) for $6.1 billion in 2007. Prior to his CEO role at APC, Mr. Johnson was a general manager at APC with responsibility for power management, thermal management, IT infrastructure, along with software and controls. Before his roles at APC, Mr. Johnson led Systems Enhancement Corporation, a company he founded to create innovative software and hardware solutions for the data center industry. He sold that company to APC in 1997. Mr. Johnson earned a Bachelor of Science and honorary Ph.D. in Engineering Management from The Missouri University of Science and Technology. He was elected into the Engineering Management Academy of Sciences. He served on several boards in the past and is the co-author of “Executing Your Business Transformation,” a guide for companies navigating major changes published in 2010. Rob Johnson is the brother of Patrick Johnson who serves as our Executive Vice President of Integrated Rack Solutions.   Qualifications:   Mr. Johnson was selected to serve on our Board due to his knowledge of the data center industry and his experience operating Vertiv for the past 5 years.

 

		JOSEPH VAN DOKKUM   Age: 68 Director Since: 2020 Director
Background:   Mr. van Dokkum has served as one of our directors since February 7, 2020. Mr. van Dokkum is Chairman of Imperative Science Ventures, a venture capital firm focused on science breakthroughs since 2019. From 2009 to 2019, he was an Operating Partner with Kleiner Perkins in Menlo Park, CA, where he worked closely with his investment partners and the leadership of their start-up and growth portfolio companies to accelerate commercialization and scale the businesses. Prior to 2009, Mr. van Dokkum served for seven years as President of UTC Power, a division of United Technologies Corporation (NYSE: UTX), where he was instrumental in organically growing UTC Power’s power generation products and service offerings, including fuel cells, renewable power solutions and combined cooling, heating and power applications for the commercial building markets. Prior to his tenure with UTC Power, Mr. van Dokkum was with Siemens (OTC: SIEGY) for 17 years. For the last six of those years, he served as President and Chief Executive Officer of Siemens Power Transmission & Distribution, Inc. during which time he augmented the company’s traditional power equipment, such as switchgear, power breakers, transformers and regulators, with intelligent systems and controls. This effort returned profitability to the business and enabled the expansion of the product portfolio through numerous acquisitions. Mr. van Dokkum serves on the boards of Ionic Materials, Inc. since 2013 and Ndustrial since 2017, and served as a director on the board of Solidia Technologies from 2011 until his retirement in December 2021. He earned his Bachelor’s and Master’s Degrees in Electrical Engineering from the Institute of Technology, Albertus Magnus.   Qualifications:   Mr. van Dokkum was selected to serve on our Board due to his extensive leadership experience and industry knowledge.

 

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		ROGER FRADIN   Age: 68 Director Since: 2020 Director
Background:   Mr. Fradin has served as one of our directors since February 7, 2020. From June 2018 until the Business Combination, Mr. Fradin served as one of GSAH’s directors. Mr. Fradin joined Honeywell in 2000 when Honeywell acquired Pittway Corporation. Mr. Fradin served as president and chief executive officer of Honeywell’s Automation and Control Solutions business from January 2004 to April 2014. Mr. Fradin served as vice chairman of Honeywell from April 2014 until his retirement in February 2017. Mr. Fradin is also a consultant for The Carlyle Group and an advisor to Seal Rock Partners. Mr. Fradin received his M.B.A. and B.S. degrees from The Wharton School at the University of Pennsylvania, where he has also served as a member of the faculty. Mr. Fradin has served as the chairman of Victory Innovation, a Carlyle Group company, and a director of L3Harris Technologies Inc. (NYSE: LHX) since 2016, Resideo Technologies Inc (NYSE: REZI) since 2018, Janus International Group Inc (NYSE: JBI) since 2021, Juniper II Corporation (NYSE: JUN) since 2021, and was formerly a director of MSC Industrial Direct Co., Inc. (Nasdaq: MSM) from 1998 to 2019 and Pitney Bowes Inc. (NYSE: PBI) from 2019 – 2021.   Qualifications:   Mr. Fradin was selected to serve on our Board due to his deep industrial expertise, specifically in the automation and control solutions sectors, as well as for his experience overseeing acquisitions.

 

		JACOB KOTZUBEI   Age: 53 Director Since: 2020 Director
Background:   Mr. Kotzubei has served as one of our directors since February 7, 2020. Mr. Kotzubei joined Platinum Equity, a private equity firm, in 2002 and is a Partner at the firm. Mr. Kotzubei serves as a director or manager of a number of Platinum Equity’s portfolio companies. Prior to joining Platinum Equity in 2002, Mr. Kotzubei worked for 4.5 years for Goldman Sachs’ Investment Banking Division in New York City. Previously, he was an attorney at Sullivan & Cromwell LLP in New York City, specializing in mergers and acquisitions. Mr. Kotzubei serves on the board of directors of Ryerson Holding Corporation (NYSE: RYI) since 2010, and is a former director of Key Energy Services, Inc. (NYSE: KEG) (2016 to February 2022) and Verra Mobility Corporation (NASDAQ: VRRM) (2018 to 2021). Mr. Kotzubei received a Bachelor’s degree from Wesleyan University and holds a Juris Doctor from Columbia University School of Law, where he was elected a member of the Columbia Law Review.   Qualifications:   Mr. Kotzubei was selected to serve on our Board due to his experience in executive management oversight, private equity, capital markets, mergers and acquisitions and other transactional matters.

 

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		MATTHEW LOUIE   Age: 44 Director Since: 2020 Director
Background:   Mr. Louie has served as one of our directors since February 7, 2020. Mr. Louie joined Platinum Equity in 2008 and is a Managing Director at the firm. Mr. Louie serves as a director or manager of a number of Platinum Equity’s portfolio companies. Prior to joining Platinum Equity in 2008, Mr. Louie was an investment professional at American Capital Strategies, a middle- market focused private equity firm. Prior to American Capital, Mr. Louie worked in venture capital and growth equity at both Canaan Partners and Agilent Technologies, and in investment banking at Donaldson, Lufkin & Jenrette. Mr. Louie holds undergraduate degrees in both Economics as well as Political Science from Stanford University and a MBA from Harvard Business School.   Qualifications:   Mr. Louie was selected to serve on our Board due to his experience related to private equity, capital markets, transactional matters and post-acquisition oversight of operational performance at portfolio companies.

 

		EDWARD L. MONSER   Age: 71 Director Since: 2020 Director
Background:   Mr. Monser has served as one of our directors since February 7, 2020. Mr. Monser serves on the board of directors for Air Products & Chemicals, Inc. (NYSE: APD) since 2013, where he is the Lead Director and a member of the Governance and the Management Development and Compensation Committees, and formerly served as a director and member of the Audit and Compensation Committees for Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP), serving on the Board from 2018 until his retirement in April 2022. From 2010 to 2018, Mr. Monser served as president of Emerson (NYSE: EMR), where he had more than 30 years of experience in senior operational positions and played a key role in its globalization. From 2001 to 2015, he was a member of Emerson’s Office of the Chief Executive and served as its Chief Operating Officer. Mr. Monser is active in promoting international understanding and trade and was vice chairman of the U.S.-India Strategic Partnership Forum. He has served on the advisory Economic Development Board for China’s Guangdong Province, the board of advisors for South Ural State University in Chelyabinsk, Russia and the board of the U.S.-China Business Council, where he was also vice chairman. Mr. Monser received a Bachelor’s Degree in electrical engineering from Illinois Institute of Technology in 1980 and has a Bachelor’s Degree in education from Eastern Michigan University. He is an alumnus of the executive education program at the Stanford University Graduate School of Business.   Qualifications:   Mr. Monser was selected to serve on our Board due to his extensive experience in key management positions, including at Emerson when Vertiv was part of that company.

 

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		STEVEN S. REINEMUND   Age: 74 Director Since: 2020 Director
Background:   Mr. Reinemund has served as one of our directors since February 7, 2020. From June 2018 until the Business Combination, Mr. Reinemund served as one of GSAH’s directors. Mr. Reinemund served as Dean of Business at Wake Forest University from July 2008 to June 2014, an organization he joined after a 23-year career with PepsiCo, Inc. (NASDAQ: PEP) (“PepsiCo”). At PepsiCo, Mr. Reinemund served as Executive Chairman from October 2006 to May 2007, and as Chairman and Chief Executive Officer from May 2001 to October 2006. Prior to being Chief Executive Officer, he was PepsiCo, Inc.’s President and Chief Operating Officer from September 1999 to May 2001. Mr. Reinemund began his career with PepsiCo, Inc. in 1984 at Pizza Hut, Inc. and held other positions until he became president and Chief Executive Officer of Frito-Lay’s North American snack division in 1992. He became Chairman and Chief Executive Officer of Frito-Lay’s worldwide operations in 1996. Mr. Reinemund was a director of Johnson & Johnson (NYSE: JNJ) from 2003 to 2008, American Express Company (NYSE: AXP) from 2007 to 2015, Exxon Mobil Corporation (NYSE: XOM) from 2007 to 2020, Marriott International, Inc. (Nasdaq: MAR) from 2007 to 2020, Chick-fil-a from 2015 to 2021, and GS Acquisition Holdings Corp. II from 2020 until its merger with Mirion Technologies in October 2021. Mr. Reinemund currently serves as a director and chair of the compensation committee of Walmart Inc. (NYSE: WMT) since 2010, chairman of Kohana Coffee Holdings since 2021, and a director and chair of the audit committee of Catalyst Partners Acquisition Corp (NASDAQ: CPARU) since 2021. He also serves on the Board of Directors at USNA Foundation. A graduate of the United States Naval Academy in 1970, Mr. Reinemund served five years as an officer in the United States Marine Corps, achieving the rank of Captain. He received an MBA from the University of Virginia and has been awarded honorary doctorate degrees by Johnson and Wales University and Bryant University. Qualifications:   Mr. Reinemund was selected to serve on our Board due to his considerable business leadership roles, mergers and acquisitions experience and his relevant board expertise.

 

		ROBIN L. WASHINGTON   Age: 59 Director Since: 2020 Director
Background:   Robin L. Washington serves on the Board of Directors of Alphabet, Inc. (NASDAQ: GOOG) since April 2019, where she is chair of the leadership development and compensation committee, Honeywell International, Inc. (NYSE: HON) since April 2013, Salesforce.com (NYSE: CRM) since September 2013, where she chairs the audit committee, and privately held companies, Beacon Biosignals and StockX. Ms. Washington served as Executive Vice President and Chief Financial Officer of Gilead Sciences, Inc., from May 2008—November 2019 where she oversaw Global Finance, Facilities and Operations, Investor Relations and the Information Technology organizations. Prior to Gilead, Ms. Washington was the Chief Financial Officer of Hyperion Solutions Inc. from January 2006 until it was acquired by Oracle Corporation in March 2007. Prior to that, she spent nearly 10 years at Peoplesoft, Inc. where she served in a number of executive financial positions. Ms. Washington is also a member of the Presidents Council & Ross Business School Advisory Board, University of Michigan; the UCSF Benioff Children’s Hospital Oakland Board of Directors; and a trustee of both the Financial Accounting Foundation and Mastercard Foundation. She is a certified public accountant and holds a bachelor’s degree in business administration from the University of Michigan and an MBA from Pepperdine University.   Qualifications:   Ms. Washington was selected to serve on the board due to her extensive experience in management, operations and accounting in the life sciences and technology sectors along with her financial expertise.

 

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Board Composition

 

Our Board of Directors consists of nine directors. In accordance with our certificate of incorporation and bylaws, the number of directors on our Board of Directors will be determined from time to time by the Board of Directors.

Each director is to be elected annually and to hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. Vacancies and newly created directorships on the Board of Directors may be filled at any time by the remaining directors.

Director Independence

 

The rules of the New York Stock Exchange (“NYSE”) require that a majority of our Board of Directors be independent. An independent director is defined generally as a person that, in the opinion of the company’s Board of Directors has no material relationship with the listed company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the company) that would be inconsistent with a determination that the director is independent in accordance with independence requirements under our Corporate Governance Guidelines and as implemented by NYSE. Our Board has determined that seven of our Directors, being each of Roger Fradin, Robin L. Washington, Joseph van Dokkum, Edward L. Monser, Jacob Kotzubei, Matthew Louie and Steven S. Reinemund, are independent under applicable SEC and NYSE rules.

Board of Directors Leadership Structure

 

We currently separate the roles of chairman of the Board of Directors and Chief Executive Officer. Mr. Cote serves as Executive Chairman of our Board of Directors. This structure enables the Board of Directors to effectively exercise its role in oversight of Vertiv while allowing our Chief Executive Officer to focus on the management of the day-to-day conduct of our business.

Mr. Cote’s role as Executive Chairman includes providing strategic advice and counsel based on his experience and expertise. In his support of the management team in their decision-making and implementation of strategy, management and the Executive Chairman may communicate daily, and Mr. Cote attends regular meetings with management. Mr. Cote also acts as the liaison between management and the Board of Directors.

 

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Board of Directors Role in Risk Oversight

 

It is the duty of our Board of Directors to serve as a prudent fiduciary for stockholders and to oversee the management of our Company. The specific risk areas of focus for the Board of Directors and each of its Committees are summarized below.

 

Board/Committee		Primary Areas of Risk Oversight
Board of Directors		•  Our Board of Directors engages in the oversight of risk in various ways.   •  Sets goals and standards for our employees, officers, and directors.   •  Reviews the structure and operation of our various departments and functions. In these reviews, our Board of Directors discusses with management material risks affecting those departments and functions and management’s approach to mitigating those risks.   •  Reviews and approves management’s operating plans and any risks that could affect the results of those operating plans.   •  In collaboration with the Audit Committee, oversees the Company’s cybersecurity initiatives, product security, enterprise resource planning and SOX compliance, and internal controls.   •  In its review of Annual Reports on Form 10-K (including any amendments thereto), our Board of Directors reviews our business and related risks, including as described in the “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the reports.   •  When our Board of Directors reviews particular transactions and initiatives that require its approval, or that otherwise merit its involvement, it generally includes related analysis and risk mitigation plans among the matters addressed with senior management. The day-to-day identification and management of risk is the responsibility of our management.   •  As the market environment, industry practices, regulatory requirements and our business evolve, we expect that senior management and our Board of Directors will respond with appropriate risk mitigation strategies and oversight.
Audit Committee		•  Our Audit Committee engages in the oversight of risk in various ways.   •  Discusses with management the major financial, legal, compliance and other significant risks faced by the Company   •  Discusses guidelines and policies governing the process by which our senior management assesses and manages the Company’s exposure to risk.   •  Works directly with members of senior management, our independent auditors and, if appropriate, and our internal audit team to review and assess (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditors.   •  Assisting the Board’s oversight of, among other things, data and cybersecurity policies, procedures and activities, compliance with laws and regulatory requirements including SOX, internal controls, and enterprise resource planning.   •  Reviews our business and related risks quarterly in connection with the preparation of Quarterly Reports on Form 10-Q and Annual Reports on form 10-K.
Compensation Committee		•  Our Compensation Committee engages in the oversight of risk in various ways.   •  Oversees the management of risks relating to our executive compensation programs and employee benefit plans.   •  Reviews at least annually our executive compensation programs, meets regularly with management to understand the financial, human resources and stockholder implications of compensation decisions and reports as appropriate to our Board of Directors.
Nominating and Corporate Governance Committee		•  Our Nominating and Corporate Governance Committee engages in the oversight of risk in various ways.   •  Oversees the management of risks relating to our corporate governance structure and director selection process.

Attendance at Board of Directors and Committee Meetings and Annual Meeting

 

During the year ended December 31, 2021:

 

•

the Board of Directors held 5 meetings;

 

•

the Audit Committee held 9 meetings;

 

•

the Nominating and Corporate Governance Committee held 4 meetings; and

 

•

the Compensation Committee held 5 meetings.

 

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In the year ended December 31, 2021, no member of our Board of Directors attended fewer than 75% of the aggregate of: (i) the total number of meetings of the Board of Directors (held during the period for which he or she has been a director) and (ii) the number of meetings held by all Committees of the Board of Directors (during the periods that he or she served on such Committees).

According to our Corporate Governance Guidelines, our directors are expected to make reasonable best efforts to attend the Annual Meeting, meetings of the Board of Directors and meetings of Committees on which they serve. All directors attended our 2021 annual meeting of stockholders. Directors are expected to review meeting materials prior to Board of Directors and Committee meetings and management will make appropriate personnel available to answer any questions a director may have about any aspect of the Company’s business.

Board Committees

 

Our Board has three standing Committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, each of which is composed solely of independent directors. Each Committee operates under a charter that was approved by our Board and has the composition and responsibilities described below. The charter of each Committee is available on the investors page of our website at www.vertiv.com.

Audit Committee

The members of our Audit Committee are Steven S. Reinemund, Robin L. Washington and Edward L. Monser. Mr. Reinemund serves as the Chairman of the Audit Committee.

Each member of the Audit Committee is financially literate and our Board has determined that Mr. Steven S. Reinemund qualifies as an Audit Committee “financial expert” as defined in applicable SEC rules and has the requisite accounting or related financial management expertise.

We have adopted an Audit Committee charter, which details the purpose and principal functions of the Audit Committee, including:

 

•

assisting Board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditors;

 

•

preparing any report required to be prepared by the Committee pursuant to the rules of the Securities and Exchange Commission;

 

•

the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services of the Company;

 

•

pre-approving the independent auditors’ annual engagement letter, including the proposed fees contained therein, as well as all audit and all permitted non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us;

 

•

reviewing the performance of the independent auditors, including the lead partner of the independent auditors, and making decisions regarding the replacement or termination of the independent auditors when circumstances warrant;

 

•

obtaining and reviewing a report, at least annually, from the independent auditors describing (1) the independent auditor’s internal quality-control procedures; (2) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditors, or by any inquiry or investigation by any governmental or professional authority, within the preceding five years respecting one or more independent audits carried out by the independent auditors, and any steps taken to deal with such issues; and (3) all relationships between the independent auditors and the Company (including a description of each category of services provided by the independent auditors to the Company and a list of the fees billed for each such category);

 

•

evaluating the independence of the independent auditors;

 

•

meeting to review and discuss with the independent auditors their annual audit plan, including the timing and scope of audit activities, and monitoring such plan’s progress and results during the year;

 

•

reviewing with management and the independent auditors the following information which is required to be reported by the independent auditor: (1) all critical accounting policies and practices to be used; (2) all alternative treatments of financial information that have been discussed by the independent auditors and management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors; (3) all other material written communications between the independent auditors and management, such as any management letter and any schedule of unadjusted differences; and (4) any of our material financial arrangements which do not appear on our financial statements;

 

•

reviewing with management, the independent auditors and, if appropriate, our director of internal auditing, our annual audited financial statements and quarterly financial statements;

 

•

reviewing the type and presentation of information to be included in any earnings, or financial press releases as well as review of any financial information and earnings guidance provided to analysts or rating agencies;

 

•

resolving all disagreements between the independent auditors and management regarding financial reporting;

 

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•

reviewing with management the Company’s administrative, operational and accounting internal controls, including any special audit steps adopted in light of the discovery of material control deficiencies;

 

•

establishing and maintaining free and open means of communication between and among the Committee, the independent auditors and management, including providing such parties with appropriate opportunities to meet separately and privately with the Committee on a periodic basis;

 

•

pre-approving the hiring and termination of the key leaders in the Company’s financial organization, meaning the Chief Financial Officer and the Company’s internal audit manager;

 

•

reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K

promulgated by the SEC prior to us entering into such transaction; and

 

•

reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.

Compensation Committee

The members of our Compensation Committee are Roger Fradin, Joseph van Dokkum and Steven S. Reinemund. Mr. Fradin serves as the chairman of the Compensation Committee.

We have adopted a Compensation Committee charter, which details the purposes and responsibilities of the Compensation Committee, including:

 

•

reviewing at least annually any executive compensation plans of the Company and the Company’s goals and objectives of such plans, and, if the Compensation Committee deems it appropriate, adopting or amending executive compensation plans;

 

•

evaluating annually the performance of the Chief Executive Officer in light of our goals and objectives, including the goals and objectives of any executive compensation plans, and determining and approving, and recommending to the Board for approval, the Chief Executive Officer’s compensation level based on this evaluation;

 

•

evaluating annually the performance of the other executive officers, if any, of the Company in light of the goals and objectives of any executive compensation plans of the Company, and either as a Committee or together with the other independent directors, determining and approving the compensation of such other executive officers;

 

•

reviewing and approving any employment agreements, severance or termination arrangements and any other compensatory contracts or arrangements to be made with any executive officer of the Company;

 

•

administering our equity-based compensation plans;

 

•

reviewing compensation arrangements for the Company’s employees to evaluate whether incentive and other forms of pay encourage unnecessary or excessive risk taking, and reviewing and discussing, at least annually, the relationship between risk management policies and practices, corporate strategy and the Company’s compensation arrangements;

 

•

reviewing and discussing with management the Compensation Discussion and Analysis required in the proxy statement or annual report, as well as preparing a report to be included in our annual proxy statement or annual report; and

 

•

evaluating annually the appropriate level of compensation for non-employee directors.

The charter also provides that the Compensation Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser and is directly responsible for the appointment, compensation and oversight of the work of any such consultant, counsel or adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the Compensation Committee will consider the independence of each such consultant, counsel, or adviser, including the factors required by the NYSE and the SEC.

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Joseph van Dokkum, Roger Fradin and Edward L. Monser. Mr. van Dokkum serves as the chairman of the Nominating Committee.

We have adopted a Nominating and Corporate Governance Committee charter, which details the purposes and responsibilities of the Nominating and Corporate Governance Committee, including:

 

•

identifying, recruiting and, if appropriate, interviewing candidates to fill positions on the Board of Directors and, if appropriate, establishing procedures to be followed by stockholders in submitting recommendations for Board of Directors candidates;

 

•

developing and recommending to our Board of Directors a set of corporate governance guidelines and any other applicable codes of ethics or conduct, consistent with the requirements of any applicable laws, regulations and listing standards;

 

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•

overseeing the annual evaluation of our Board of Directors, and evaluating and reporting to the Board of Directors on the performance and effectiveness of the Board of Directors; and

 

•

reviewing on an annual basis the corporate governance principles adopted by the Board of Directors and recommending any desirable changes to the Board of Directors.

The charter also provides that the Nominating and Corporate Governance Committee may, in its sole discretion, retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and is directly responsible for approving the search firm’s fees and other retention terms.

We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, our Board of Directors considers: experience, skills, expertise, diversity, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, conflicts of interest, applicable listing standards and such other relevant factors that the Nominating and Corporate Governance Committee considers appropriate in the context of the needs of the Board of Directors.

Policy Regarding Director Nominations

 

Our Nominating and Corporate Governance Committee utilizes a broad approach for identification of director nominees and may seek recommendations from our stockholders and/or engage a search firm. In evaluating and determining whether to ultimately recommend a person as a candidate for election as a director, the Nominating and Corporate Governance Committee evaluates all factors that it deems appropriate, including the number of current directors, as well as the qualifications set forth in our Corporate Governance Guidelines, including experience, skills, expertise, diversity, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, conflicts of interest and such other relevant factors that it considers appropriate in the context of the needs of the Board of Directors.

In its discretion, the Nominating and Corporate Governance Committee will also consider recommendations of qualified nominees by stockholders by evaluating the same factors as described above.

In addition to the process described above, our bylaws permit stockholders to nominate directors for election at an annual meeting of stockholders. To nominate a director, the stockholder must meet certain deadlines established by our bylaws and provide certain information required by our bylaws. For a description of the process for nominating directors in accordance with our bylaws, see “Additional Information” in this proxy statement.

Communication with the Board of Directors

 

Any stockholder or other interested parties who would like to communicate with our Board of Directors, the independent directors as a group or any specific member or members of our Board of Directors should send such communications to the attention of our Corporate Secretary, at Vertiv Holdings Co, 1050 Dearborn Dr, Columbus, Ohio 43085. Communications should contain instructions on which member or members of the Board of Directors the communication is intended for, if applicable. In general, such communication will be forwarded to the intended recipients. However, the Corporate Secretary may, in her discretion, decline to forward any communications that are abusive, threatening or otherwise inappropriate.

Code of Conduct

 

We have adopted a Code of Conduct that applies to all of our directors, officers, and other employees, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Conduct is available on the investor page of our website, www.vertiv.com. We intend to make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Conduct on our website.

 

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Director Compensation

 

Director Compensation Policy

The following table shows the cash compensation structure for non-employee directors for 2021. There was no increase from the prior year, and there has been no increase for 2022.

 

		Cash Retainer
Chairman of the Board			$  200,000
Committee Chair – Audit			$  150,000
Committee Chair – Compensation			$  130,000
Committee Chair – Nom & Governance			$  115,000
Other Board Member			$  100,000

In addition, each non-employee director received an annual equity grant consisting of stock options with four-year annual ratable vesting. Consistent with executive compensation, the Board believed that stock option awards served as an appropriate long-term incentive because our directors would only realize value if the stock price increased, aligning their long-term interests with those of our public stockholders. Stock options have an exercise price equal to the closing price of our stock on the grant date. As a result, the Compensation Committee believes that stock options are an important and effective part of director compensation because the value of the awards to our directors is directly tied to and predicated on increases in our stock price after the grant date, for which our stockholders benefit. If our stock price decreases following the grant date (as has occurred since the options were granted during 2021), then the directors do not realize value on their stock options. In determining the amount of options to grant in 2021, the Board and Compensation Committee primarily considered the number of shares that would be appropriate, rather than targeting a specific value, and so granted the same number of options as granted during the prior year.

We believe that our director compensation levels are necessary and appropriate in order to attract and retain outstanding talent who possess the proper skill sets to drive Vertiv’s short- and long-term strategies. The Committee has also reviewed peer group data. Our Executive Chairman receives a higher level of compensation, with the primary focus of his compensation in the form of equity awards, due to the active role he plays and significant time commitment he makes in leading the Board and helping management implement our strategy. Further, our Committee Chairs receive higher levels of cash retainers in acknowledgement of the additional workload in leading these Committees.

Vertiv reimburses directors for reasonable and necessary out-of-pocket expenses incurred in attending Board and Committee meetings or performing other services in their capacities as directors. The Board expects to review director compensation periodically to ensure that the director compensation package remains competitive such that Vertiv is able to recruit and retain qualified directors.

Director Compensation Table

The following table sets forth information concerning the compensation for our directors during fiscal 2021, except that Mr. Johnson’s compensation is reported in the Summary Compensation Table below under “Executive Compensation.”

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($)				Option Awards ($)(1)(2)				All Other Compensation ($)(3)				Total ($)
David M. Cote			200,000				—				744,348				—				944,348
Joseph van Dokkum			115,000				—				248,114				—				363,114
Roger Fradin			130,000				—				248,114				—				378,114
Jacob Kotzubei			100,000				—				248,114				—				348,114
Matthew Louie			100,000				—				248,114				—				348,114
Edward L. Monser			100,000				—				248,114				—				348,114
Steven S. Reinemund			150,000				—				248,114				—				398,114
Robin L. Washington			100,000				—				248,114				—				348,114

 

(1)

On February 4, 2021, each director received options to purchase 38,647 shares of Class A common stock (115,942 shares in the case of Mr. Cote), with a per share exercise price of $20.56, which was the closing price of our Class A common stock on the grant date. These options were approved at a meeting of the Compensation Committee on February 2, 2021, subject to approval by the Board at a meeting on February 3, 2021, with the grants to be effective on February 4, 2021. The amounts reported in this column represent the aggregate grant date fair value of such option awards computed in accordance with FASB ASC Topic 718. Assumptions used in calculating these amounts are described in Note 15 to our audited financial statements for the year ended December 31, 2021. The options reported in this table vest annually over four years following grant, subject to the director’s continued service.

 

 

-  2022 Proxy Statement    |    19

(2)	As of December 31, 2021, each of the non-employee directors held unexercised stock options (vested and unvested) with respect to 77,294 shares (or 231,884 shares in the case of Mr. Cote). There were no unvested stock awards held by any non-employee director.

(3)

This column requires reporting the amount of other compensation, including personal benefits or perquisites that exceed $10,000 in the aggregate. This table excludes reimbursements for expenses incurred in attending Board and Committee meetings or performing other services in their capacities as directors. Our directors may be accompanied by a spouse or guests on our chartered aircraft while on business travel, which does not result in aggregate incremental cost to the Company.

 

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DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information about our directors and executive officers as of the date of this proxy statement.

 

Name		Age		Position
David M. Cote		69		Executive Chairman of the Board*
Rob Johnson		55		Chief Executive Officer and Director*
Joseph van Dokkum		68		Director*
Roger Fradin		68		Director*
Jacob Kotzubei		53		Director*
Matthew Louie		44		Director*
Ed Monser		71		Director*
Steve Reinemund		74		Director*
Robin Washington		59		Director*
David J. Fallon		52		Chief Financial Officer
Giordano Albertazzi		56		President of Americas
Edward Cui		48		President of North Asia
Erin Dowd		55		Chief Human Resources Officer
Jason M. Forcier		50		Chief Operations Officer and Executive Vice President, Infrastructure and Solutions
Stephanie Gill		51		Chief Legal Counsel and Corporate Secretary
Sheryl Haislet		56		Chief Information Officer
Patrick Johnson		51		Executive Vice President of Integrated Rack Solutions
Stephen Liang		63		Chief Technology Officer
Gary Niederpruem		47		Chief Strategy and Development Officer
Anand Sanghi		51		President of Australia, New Zealand, Southeast Asia & India
Philip O’Doherty		61		Managing Director of E&I Engineering
Karsten Winther		52		President of Europe, Middle East and Africa

 

*	Biographical information for each of our directors is set forth under “Proposal 1: Election of Directors—Nominees for Election” above.

David J. Fallon. Mr. Fallon has served as our Chief Financial Officer since February 2020. From July 2017 until the Business Combination in February 2020, Mr. Fallon served as the Chief Financial Officer of Vertiv and has more than 25 years of experience in financial management with global companies. Prior to joining Vertiv, from 2010 to 2017, Mr. Fallon served as Chief Financial Officer at CLARCOR, Inc. (formerly NYSE: CLC), which was a $1.4 billion filtration company with operations in North America, Europe, Asia, Africa and Australia. From 2009 to 2010, Mr. Fallon served as Vice President of Finance for CLARCOR, Inc. CLARCOR, Inc. was purchased by Parker-Hannifin (NYSE: PH) in February 2017. From 2002 to 2009, Mr. Fallon served as Chief Financial Officer and Vice President of Finance for Noble International (formerly NASDAQ: NOBL), which was a $1.1 billion auto supplier with global manufacturing operations. Prior to joining Noble International, Mr. Fallon served as Treasury Manager at Textron Automotive from 2000 to 2002, a financial analyst at DaimlerChrysler from 1997 to 2000 and as a senior accountant at Deloitte & Touche from 1991 to 1995. Mr. Fallon earned a MBA from the Wharton School of Business and a BS in Business Administration from the University of Dayton. He is certified as a Chartered Financial Analyst^® and a Certified Public Accountant (inactive).

Giordano Albertazzi. Mr. Albertazzi has served as our President of Americas since March 2022. Previously, he served as our President of Europe, Middle East and Africa since February 2020. From 2016 until the Business Combination in February 2020, Mr. Albertazzi served as the President of Vertiv in Europe, Middle East and Africa and was responsible for Vertiv’s operations and business development within the region. Mr. Albertazzi began his career at Kone Elevators, where he progressed through operations and product development leadership. Mr. Albertazzi joined Emerson Network Power, a group of Emerson Electric (NYSE: EMR) in 1998 and held positions with increasing responsibility, including Plant Manager from 1999 to 2001, EMEA Marketing and Product Management Director from 2002 to 2004, and Managing Director for the Italian market unit from 2004 to 2006. In 2006, Mr. Albertazzi was promoted to Vice President Services for the Liebert Europe business. In 2011, Mr. Albertazzi was appointed Vice President Services for the broader Europe, Middle East and Africa region until he was promoted in 2014 to Vice President Sales. Mr. Albertazzi holds a Bachelor’s Degree in mechanical engineering from the Polytechnic University of Milan and Master’s Degree in management from Stanford Graduate School of Business.

 

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Edward Cui. Mr. Cui has served as our President of North Asia since March 2022, and is responsible for China operations, supply chain, service, marketing, engineering and sales. Mr. Cui previously served as the VP Engineering in Asia Pacific from November 2020 to February 2022 where he was responsible for Engineering Innovations and New Product Development. Mr. Cui has been with Vertiv since 1997, with roles as VP of Engineering from November 2020 until February 2022 with leadership of three R&D centers, VP of Sales from February 2017 until October 2020, VP of Marketing from October 2013 until January 2017, VP of Wind Power product line from July 2007 until September 2013, and key positions in strategic marketing and planning. He started his career at Avansys, Huawei in July 1997 with roles growing in responsibility from design engineer to deputy director of product management to director of operations. Edward holds a Bachelor of Science in Electrical Automation/Electrical Engineering and a Master of Science in Power Electronics/Electrical Engineering from Tsinghua University, and an EMBA degree from Washington University in St. Louis.

Erin Dowd. Ms. Dowd has served as our Chief Human Resources Officer since January 2021 and is responsible for the development and execution of our global human resources strategy including talent management, employee engagement, performance development and total rewards. Previously, Ms. Dowd served as Vice President of HR from 2018 until January 2021 for Vertiv’s global business units. Prior to joining Vertiv, Ms. Dowd spent more than 20 years in human resources leadership with The Compass Group from 1994 until 2001 and Hewlett Packard (NYSE: HPE) from 2001 until 2018, where she held HR leadership roles in sales, services, delivery, and most recently was Vice President of HR for the Global Functions. Ms. Dowd is a decorated U.S. Army veteran, having retired from service with the rank of Colonel. Ms. Dowd earned her bachelor’s degree from the University of New Hampshire and holds a master’s degree in business from Tennessee State University. Further, Ms. Dowd holds several certifications in coaching, performance development and employee relations law.

Jason M. Forcier. Mr. Forcier has served as our Chief Operations Officer and Executive Vice President, Infrastructure and Solutions since February 2020. From May 2019 until the Business Combination in February 2020, Mr. Forcier served as the Chief Operations Officer of Vertiv and, prior to that role, as Executive Vice President of Infrastructure and Solutions of Vertiv since October 2017, where he has global responsibility for manufacturing, operations, supply chain and quality, as well as leading the large infrastructure and solutions lines of business. Prior to joining Vertiv, Mr. Forcier spent eight years at A123 Systems, a global manufacturer of lithium ion batteries, where he was the Chief Executive Officer from 2013 until 2017 and member of the board of management. Mr. Forcier joined and established the automotive business of A123 Systems in 2009 and was a member of the executive management team that led the company through its initial public offering on Nasdaq. On October 16, 2012, A123 Systems voluntarily filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code and, on January 29, 2013, A123 Systems completed the sale of substantially all of its assets and operations. Prior to joining A123 Systems, Mr. Forcier served as Vice President and General Manager of the global electronics business of Lear Corporation (NYSE: LEA) from 2008 until 2009 and as the North American President, Automotive Electronics Division of Robert Bosch LLC from 1996 until 2008. Over the course of his 12-year career with Bosch, he was also a co-founder and Chief Executive Officer of ETAS, Inc., a Bosch Subsidiary. Mr. Forcier earned a Bachelor’s Degree in mechanical engineering from GMI Engineering & Management Institute (now Kettering University) and a Master’s Degree in business administration from the University of Michigan.

Stephanie Gill. Ms. Gill has served as our Chief Legal Counsel and Corporate Secretary since January 2021 and is responsible for Vertiv’s global legal strategy, corporate compliance and regulatory functions. Prior to joining Vertiv, Ms. Gill spent 15 years with CNX Resources Corporation (NYSE: CNX), formerly CONSOL Energy Inc., a publicly traded energy company, from 2005 until December 2020. At CNX, Ms. Gill held a variety of positions of increasing responsibility, culminating in her being appointed Vice President and General Counsel in December 2014. Ms. Gill started her legal career as an associate at Jones Day in 1996. After Ms. Gill’s tenure at Jones Day, she joined the corporate group at Buchanan Ingersoll & Rooney in 1999, where she was promoted to shareholder effective 2005, working with public and private companies in various industries. While in law school, Ms. Gill also served as a law clerk in the United States Bankruptcy Court for the Western District of Pennsylvania. Ms. Gill is a graduate of The Wharton School of Business of The University of Pennsylvania with a bachelor of science degree in economics and a concentration in accounting and of The Dickinson School of Law of Penn State University, where she received her doctorate of jurisprudence and was the managing editor of The Law Review.

Sheryl Haislet. Ms. Haislet has served as our Chief Information Officer since February 2020. Prior to joining Vertiv, from October 2015 to September 2019, Ms. Haislet was the Chief Information Officer and Vice President of Information Technology and Digital Office at Adient plc, a $17 billion global automotive seating manufacturer. Prior to joining Adient, Ms. Haislet spent 25 years with Johnson Controls (NYSE: JCI). At Johnson Controls, Ms. Haislet held a variety of positions of increasing seniority, culminating in her being appointed Chief Information Officer and Vice President of Information Technology, Power Solutions, in October 2014. Ms. Haislet holds an executive MBA from the Quantic School of Business and Technology, a Graduate Certificate in SAP from Central Michigan University, a Masters in computer information systems from Grand Valley State University and a BA from the University of Michigan.

 

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Patrick Johnson. Mr. Johnson has served as our Executive Vice President of Integrated Rack Solutions (previously Information Technology and Edge Infrastructure) since November 2017. Mr. Johnson started his career with Systems Enhancement Corporation, which was sold to APC in 1997. Mr. Johnson held various positions with APC for 10 years until it was acquired by Schneider Electric in 2007. From 2010 to 2016, Mr. Johnson was Vice President of Rack Systems at Schneider Electric and was then promoted to Senior Vice President of Datacenter Systems, having responsibility for the product lines of Racks, Rack PDUs, Thermal and Software. In late 2016, Mr. Johnson joined Artesyn Embedded Technologies, where he served as Senior Vice President of Strategic Initiatives until November 2017. Mr. Johnson earned a BS in engineering management from The Missouri University of Science and Technology. Patrick Johnson is the brother of Rob Johnson who serves as our Chief Executive Officer.

Stephen Liang. Mr. Liang has served as our Chief Technology Officer since February 2021 and was previously our President of Asia Pacific from February 2020 to February 2021. Mr. Liang previously served as the President of Vertiv in Asia Pacific from 2016 until the Business Combination in February 2020, where he was responsible for Vertiv’s operations and business development in the Asia Pacific region. Mr. Liang began working at Emerson Electric (NYSE: EMR) in 1994 in the Astec business, a business specializing in power supply solutions for the computing and communications industries. While at Astec, Mr. Liang served as Executive Vice President of Operations from April 1994 until October 2001. In October 2001, Mr. Liang was promoted to President of Emerson Network Power China, leading the merging of four organizations and migrating R&D and production facilities and served in this role until 2006, when he was promoted to the position of President of China and Energy Systems Asia. In 2008, Mr. Liang became President, Emerson Network Power Asia Pacific, responsible for all of Network Power’s Asia Pacific businesses including China, India and Australia, until he was promoted to Group Vice President, Telecom & President Asia Pacific in 2013, when Mr. Liang also took on management responsibility for the global telecom business. Mr. Liang holds a Bachelor’s Degree and a Master’s Degree in mechanical engineering from the Massachusetts Institute of Technology.

Gary Niederpruem. Mr. Niederpruem has served as our Chief Strategy and Development Officer since February, 2020. From 2018 until the Business Combination in February 2020, Mr. Niederpruem served as the Chief Strategy and Development Officer of Vertiv and was responsible for leading the marketing, strategy and M&A functions. Mr. Niederpruem has more than 20 years of experience in analyzing market trends, engaging customers and setting corporate-wide and business unit offering strategies to align with the market. Mr. Niederpruem has driven strategy and growth initiatives through both organic and inorganic activities. Prior to joining Vertiv, Mr. Niederpruem held a variety of P&L and product management leadership roles at Emerson Electric (NYSE: EMR) and Danaher (NYSE: DHR). From 2011 to 2014, Mr. Niederpruem was the General Manager of the Integrated Modular Solutions business and Vice President of Product Management of Emerson Electric. In 2014, he was named Vice President of Global Marketing for Emerson Network Power, a group of Emerson Electric, and, in mid-2016, he assumed oversight for the strategy function of Emerson Network Power, when he was promoted to Executive Vice President, Marketing, Strategy and Development, a role in which he served until 2018. Mr. Niederpruem attended John Carroll University where he received a Bachelor’s Degree in marketing and logistics and he has a Master’s Degree in business from the University of Notre Dame.

Philip O’Doherty. Mr. O’Doherty has served as our Managing Director of E&I Engineering since November 2021, and is responsible for the management of the E&I Engineering portfolio of power distribution solutions, including busbar trunking, switchgear, energy management and modular power solutions. Prior to joining Vertiv, Mr. O’Doherty spent more than 30 years in the engineering industry, starting his career at Dupont in 1982 where he worked for 5 years before embarking on his entrepreneurial journey. In 1986, Mr. O’Doherty established his own business manufacturing electrical switchgear and control systems, that business was E&I Engineering. Mr. O’Doherty was the majority owner and operator of E&I Engineering until the time of its acquisition by the Company in November 2021. Mr. O’Doherty has played a fundamental role in growing the business from its small beginnings, now having operations on a global scale with manufacturing locations in Ireland, UK, US and UAE. Mr. O’Doherty holds a Bachelor’s Degree in electrical and electronic engineering from Queens University Belfast.

Anand Sanghi. Mr. Sanghi has served as our President for Vertiv Australia, New Zealand, Southeast Asia and India (ASI) since February 2021. Mr. Sanghi is responsible for Vertiv’s business development and operations in those regions. Mr. Sanghi has spent more than 26 years in the technology and engineering space in the Asia-Pacific region. Mr. Sanghi joined Emerson Network Power, a group of Emerson Electric (NYSE: EMR), in 2001 as director of planning and achieved positions of increasing responsibility before being appointed president of Vertiv Asia in 2017, a role that he served in until February 2021. Prior to joining Emerson Network Power, Mr. Sanghi led a start-up business and held positions with Emerson Electric from 1999 until 2000 and Copeland Corporation from 1994 until 1999. Mr. Sanghi earned his Bachelor’s Degree in electrical and electronics engineering from the Indian Institute of Technology and his MBA from the Indian Institute of Management.

Karsten Winther. Mr. Winther has served as our President for Europe, Middle East and Africa since March 2022, and previously served as the vice president of sales for Europe, Middle East and Africa from 2018 until March 2022. Mr. Winther has over 20 years of tech industry experience in management, sales and marketing functions, including strong focus on channel and vertical markets. He has led transformation of large-scale sales organizations. Before joining Vertiv in 2018, Mr. Winther held regional and country sales roles at Epson, a multinational electronics company, from May 2000 until August 2012 and NEC, a multinational information technology and electronics corporation, from September 2012 until March 2016, and Cobham SATCOM, a satellite communications equipment company, from April 2016 until April 2018, where he led global sales, marketing and service. Mr. Winther studied Business Economics & Management at Copenhagen Business School and also completed a 2-year Rising Star program at Esade in Barcelona, with emphasis on Strategy, Finance, Innovation, CSR and Leadership.

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Our executive compensation program is structured to reward performance consistent with our short-term and long-term goals, to reflect our business strategy and our organizational structure, to support our goal of delivering long-term value to our stockholders and to align with our near-term strategic and operational goals. This Compensation Discussion and Analysis (“CD&A”) reviews the objectives and components of our executive compensation program and discusses the 2021 compensation earned by our chief executive officer, chief financial officer and the next three highly compensated executive officers (collectively, our “named executive officers” or “NEOs”), who are listed below.

 

Robert Johnson Chief Executive Officer		David Fallon Chief Financial Officer		Stephen Liang Chief Technology Officer		Jason Forcier Chief Operations Officer and EVP, Infrastructure & Solutions		Stephanie Gill Chief Legal Counsel and Corporate Secretary

We are dedicated to a pay-for-performance philosophy with compensation tied to, and which rewards our executive officers for, both short-term and long-term performance of the Company. This CD&A summarizes the details of executive compensation decisions along with several of our business highlights in 2021, which was our first full fiscal year as a public operating company following our Business Combination in February 2020.

Features of our executive compensation program for 2021 included:

 

•

No salary or equity increases in 2021 or 2022 for NEOs. Our Compensation Committee did not increase continuing NEOs’ annualized base salaries, or approve higher grant date fair values of equity grants, for 2021. The Compensation Committee has approved the same base salaries and target bonuses, and lower grant date fair values for equity grants, for NEOs in the beginning of 2022.

 

•

No 2021 bonus payments to any NEO. None of our NEOs received a cash bonus for 2021 performance because we did not meet our threshold financial performance goals. This shows that our variable pay is truly at risk.

 

•

CEO Pay-for-Performance. Our CEO’s pay opportunities again primarily consisted of performance-based compensation, particularly equity compensation in the form of stock options that have value only if our stock price increases following the grant date.

2021 Summary

 

1		Acquisition of E&I Engineering

In November 2021, we completed our first major acquisition as a public company when we acquired E&I Engineering Ireland Limited and its affiliate, Powerbar Gulf LLC (“E&I”). E&I is a leading independent provider of electrical switchgear and power distribution systems, pioneering unique in-house integrated power solution designs and technology tailored to individual client project needs.

 

•

This acquisition meaningfully completes Vertiv’s data center offering by adding a leading independent provider of switchgear, busway and modular power solutions and expands Vertiv’s addressable market by at least $7 billion in an attractive global market currently growing at mid-single digits.

 

•

The transaction rounds out our product portfolio, allowing for complete power train offerings for data centers and vital commercial and industrial markets.

 

 

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•

The combination amplifies Vertiv’s growth opportunities and profitability while enabling us to deliver solutions that manage a customer’s entire power infrastructure as an integrated system.

 

•

We expect to use this growth opportunity, combined with our investments in new products, service offerings and the Vertiv Operating System, to create value.

 

2		Financial Results(1)

During 2021, we saw strong growth in revenue and orders as well as record backlog. However, like many other companies, we were negatively impacted by the continued effects of the COVID-19 pandemic and the challenging global supply chain, including steep inflationary costs on materials, freight and labor. The following is a summary of 2021 financial results:

 

•

Year-over-year revenue growth. End-market demand remained strong with net sales up 14.4% (to $5.0 billion) versus prior year and currency adjusted organic net sales growth(1) of 10.9%.

 

•

Record backlog. Backlog reached another record level of $3.2 billion at the end of December 2021, increasing 73% from the end of 2020.

 

•

Increased investment in research and development. We continued to invest in new product development with R&D spending of $266.4 million in 2021 (5.3% of revenue).

 

•

Profitability. Full year net income was $120 million, operating profit was $260 million and adjusted operating profit(1) was $471 million.

 

•

Supply chain challenges. Part shortages, particularly in the second half of 2021, constrained sales volumes and drove higher inventory levels and labor inefficiency.

 

•

Impact of inflation. Inflation ramped up much faster than expected, especially in the Americas, and impacted a number of items including costs and the supply chain.

 

•

Price actions. We took significant price actions in 2021, but price realization did not keep pace with inflation due to the large backlog driving a lag between pricing action and price realization.

 

•

Free cash flow. 2021 net cash provided by operating activities was $211 million, an increase of $2 million versus the prior year. Free cash flow(1) for 2021 was $136 million, a decrease of $27 million versus the prior year primarily driven by an increase in capital expenditures of $29 million. Liquidity(2) at the end of the fourth quarter 2021 remained strong at $875 million.

 

(1)	See Annex A for a reconciliation of and information regarding the non-GAAP metrics.

(2)	Liquidity is calculated as cash and cash equivalents plus availability under the ABL Revolving Credit Facility as of December 31, 2021.

 

3		Commitment to Stockholders

Vertiv actively engages with stockholders throughout the year to better understand their issues and concerns, including their perspective on executive compensation. Our initial “say-on-pay” advisory vote by stockholders occurred in 2021, where we received approval of approximately 96% of votes cast. Our stockholders also held a frequency on “say-on-pay” advisory vote in 2021, with an annual advisory vote receiving a majority of votes cast. As a result, we will hold an annual “say-on-pay” advisory vote, including in 2022. Feedback from stockholders, as well as the annual “say-on-pay” advisory vote, informs the Compensation Committee’s consideration of executive compensation programs. The Board and the Compensation Committee aim to align business performance and executive compensation to drive value creation by directly tying compensation to key performance metrics, including stock performance.

 

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4		Compensation Packages Strongly Aligned with Stockholder Interests

The following charts show the mix of the primary compensation elements for 2021 for our CEO and for our other NEOs, including salary, target annual cash incentive, long-term incentives (in the form of stock options, with the grant date fair value reflected in the chart) and other benefits. As reflected in the charts below, we have structured executive compensation, particularly for the CEO, to be performance-based and aligned with stockholder value.

 

 

Our CEO’s primary compensation for 2021, and for 2022 to date, is summarized below:

 

CEO Compensation		2021				2022
Base Salary			$     950,000				$     950,000
Target Cash Bonus (as % of Base Salary)			125%				125%
Actual Cash Bonus			$                 0				Subject to 2022 performance
Approximate Grant Date Fair Value of Stock Options			$  4.0 million				$  3.3 million

 

5		Continued Best Practices in Compensation

 

✓

Robust stock ownership guidelines. We require executive officers and directors to hold meaningful amounts of stock and to meet these guidelines within five years of first becoming subject to the guidelines, as further described under “Stock Ownership Guidelines for Company Officers and Directors.” All of our executive officers and directors are on their way to meeting these guidelines within the initial five-year period.

 

✓	Clawback policy. Under our clawback policy, our Board of Directors (the “Board”) may seek to recover incentive compensation from an executive officer in the event of an accounting restatement as a result of material non-compliance with any financial reporting requirement.

 

✓	Prohibition of hedging and pledging. Our insider trading policy prohibits our officers, directors, and employees from hedging or pledging our shares.

 

✓	Alignment with stockholders’ interests. Our incentive program aligns with stockholder interests by heavily weighting incentives in favor of long-term equity awards. In particular, stock options are performance-based because they have value only if our stock price increases.

 

✓

Emphasis on variable cash pay. A significant portion of our executives’ cash compensation opportunity was performance-based, tying to near-term objectives and actual performance that we believe align with long-term growth. Our CEO’s target bonus was 125% of his salary so that more than half of his target cash compensation was directly dependent upon his annual performance. As shown by the fact that cash bonuses were not paid to any of our NEOs for 2021 performance, this variable compensation is truly at risk.

 

✓

Only “double-trigger” executive change-in-control benefits. We do not provide “single-trigger” change-in-control benefits to executive officers; instead, we only provide “double-trigger” benefits, which generally means the executive needs to have a qualifying termination event (e.g., termination without cause or resignation by the executive for good reason) to receive a change-in-control benefit.

 

✓

No 280G gross-ups. We have not agreed to provide our executive officers, including any NEO, with a “gross-up” or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Section 280G (related to a change-in-control) of the Code. We did not provide other tax gross-ups to our NEOs during 2021, beyond one executive being eligible for tax equalization payments due to international assignments and a newly hired executive receiving reimbursements for one-time relocation expenses.

 

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✓	Use of peer group data. Our Compensation Committee has developed a peer group to provide an additional measure of comparison in its review of compensation.

 

✓	Avoid excessive risk taking. Based upon a risk assessment, we believe that our compensation policies do not encourage excessive or unnecessary risk-taking.

Objectives of Executive Compensation Program

The following table provides an overview of the specific objectives of the primary elements of our 2021 executive compensation program, each as further described below.

 

Pay Element		Objectives
Base Salary (page 27)		Attract and retain world-class leadership talent by using relevant market data to determine executive pay, while also considering tenure, experience, scope of duties and short-term and long-term performance.
Vertiv Annual Incentive Plan (page 28)		Reward ingenuity, creative thinking, improved processes, project completion and exceptional contributions through cash bonuses.
Long-Term Incentive Compensation (page 29)		Encourage our executive team to drive long-term stock price growth through the grant of stock options that require an increase in stockholder value to deliver any value to the executive, while also encouraging retention through multi-year vesting.
Retirement, Termination/CIC and Other Benefits (pages 29-30)		Attract and retain key management members and, for severance and CIC matters, to motivate executives to take actions that are in the best interests of Vertiv.

Compensation Philosophy and Process

The Compensation Committee is focused on maintaining an executive compensation program that emphasizes variable, at-risk compensation and has an appropriate balance of near-term and long-term objectives.

Executive compensation is approved by the Compensation Committee, which consists solely of independent directors, and then the Board approves the CEO’s compensation. Our Compensation Committee meets regularly throughout the year to review our executive compensation program and to ensure alignment of the interests of our executives with those of our stockholders. Meeting agendas contain items proposed by management or the Compensation Committee members. Pursuant to our Equity Grant Policy, implemented at the February 24, 2021 meeting of the Compensation Committee, annual equity awards to directors and continuing executive officers are to be approved at the first meeting of the Compensation Committee (and, where applicable, the Board) held during the first quarter of the year. Under our 2020 Stock Incentive Plan, the Compensation Committee may delegate authority to our Chief Executive Officer to make grants to non-executive employees, but may not delegate any authority with respect to grants to executive officers.

Our Compensation Committee members engage in active discussions of compensation matters with management and with each other as part of their decision-making process. Each meeting includes an executive session with only the independent directors. On at least an annual basis, the Compensation Committee reviews relevant market data using a peer group representing a set of companies in the industries (mix of industrial and network equipment and services companies) in which we compete. For further information about our process, see “Peer Group Companies” below.

Components of Compensation for 2021

 

1		Base Salary

Base salaries for 2021 remained unchanged for continuing NEOs from those in effect at the end of 2020 after the restoration of salaries following a temporary decrease at the start of the COVID-19 pandemic. The salaries generally take into account each named executive officer’s existing pay as well as the executive’s position, responsibilities, qualifications, experience and location, the market for the position and the base salaries of other executive officers.

The Compensation Committee considers base salary as one component of a total compensation package that needs to be balanced appropriately for each named executive officer.

 

-  2022 Proxy Statement    |    27

The table below shows the annualized base salaries in effect during 2021 and continuing into 2022.

 

		Salary
Mr. Johnson			$  950,000
Mr. Fallon			$  575,000
Mr. Liang			$  590,400	(1)
Mr. Forcier			$  500,000
Ms. Gill			$  465,000

 

(1)	Mr. Liang’s salary is shown in U.S. dollars and so changes from 2020 reflect a different currency exchange rate.

 

2		Vertiv Annual Incentive Plan

Our focus for the 2021 Vertiv Incentive Plan was to align employees under a common set of goals tied to earnings per share and free cash flow, both of which help us to maintain our focus on Vertiv’s performance and driving stockholder value, while also recognizing our overall performance and individual contributions to our long-term goals.

 

•

Financial Performance Goals. In early 2021, the Compensation Committee approved Adjusted Earnings Per Share (“EPS”) and Free Cash Flow (each as defined below) as corporate financial metrics for purposes of bonuses for the NEOs. At that time, the Compensation Committee determined that it was also appropriate to retain the ability to take into account individual and other business performance measures in increasing or decreasing the final individual payout level.

 

•

NEO Bonus Determinations. In early 2022, the Compensation Committee reviewed the performance of the corporate financial metrics. As shown in the table below, the financial performance results did not meet threshold levels. As a result, the Compensation Committee did not approve any cash bonus payouts to NEOs.

 

•

Individual Performance. In determining that no cash bonus would be paid to any NEO, the Compensation Committee did not conclude that their individual performance did not merit any recognition. Instead, the Compensation Committee looked at the overall financial performance results of the Company for the year, together with challenges faced, before deciding not to approve bonus payouts for any of the NEOs.

 

•

Bonus Details. The table below shows the annual target bonus opportunities for 2021 for each of the named executive officers. The target cash bonus levels (as a percentage of salary at year-end) were set to reflect the executive’s relative responsibility for the company’s performance and to appropriately allocate the total cash opportunity between base salary and incentive-based compensation.

 

		2021 Target Bonus Opportunity (% of Base Salary)				2021 Actual Bonus ($)
Mr. Johnson			125	%			0
Mr. Fallon			100	%			0
Mr. Liang			80	%			0
Mr. Forcier			100	%			0
Ms. Gill			60	%			0

Corporate Financial Results

The following table shows our corporate performance for the two financial metrics under the Vertiv Incentive Plan for 2021:

 

Global Plan Metric		Weighting				Threshold				Target				Actual				Achievement%
Adjusted EPS(1)			50	%		$	0.83			$	1.04			$	0.76				0
Adjusted Free Cash Flow(2)			50	%		$	228M			$	285M			$	175.5M	(2)			0
Overall Corporate Results																			0

 

(1)

Adjusted EPS was chosen as an important measure of near-term profitability which in turn creates stockholder value. Adjusted EPS represents the Company’s earnings per share after removing specific non-cash or non-recurring items. Additionally, the diluted shares outstanding is adjusted for the potentially dilutive impact of the Company’s private warrants.

(2)

Adjusted Free Cash Flow was chosen because it reflects cash generated from operations that may be reinvested in our businesses or returned to stockholders. Free Cash Flow is defined as Cash from Operations—Capital Expenditures (including capitalized software) plus Proceeds from Sale of Property, Plant, Equipment. As set forth on Annex A, the result was adjusted to exclude merger and acquisition costs for purposes of the Vertiv Incentive Plan.

 

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3		Long-Term Incentive Compensation

Annual Equity Grants. In furtherance of our performance-based compensation philosophy and strong alignment with stockholder interests, in 2021, our annual equity compensation for continuing NEOs consisted solely of stock options that vest annually over four years. Each named executive officer was granted an award of stock options in the amounts set forth in the table entitled “Grants of Plan-Based Awards in Fiscal 2021” and with pro rata vesting annually over four years from the grant date.

The amount granted to each continuing NEO was generally based on each individual’s duties and responsibilities, internal pay equity considerations, and prior equity grants to each individual. The Compensation Committee believed that time-vesting stock options were the appropriate long-term performance vehicle at this stage of being a newly public operating company. Granting stock options is beneficial to the Company for the following reasons:

 

•

Stock options provide the most direct tie to shareholder value realization.

 

•

The ultimate value of the options will align directly with our stockholders’ return through our stock price performance, which in turn depends on our sustainable operational and financial performance, thereby discouraging excessive risk-taking.

 

•

The stock options only have value to the executive if the stock price increases after the grant date, meaning both management and the stockholders benefit.

 

•

Vertiv benefits from the retention value provided through multi-year vesting and long-term exercise period.

 

•

Taking into account the facts that 2021 was our first full year as a public company and that grants were occurring during a global pandemic and time of economic uncertainty, long-term financial metric goals would not be effective vesting conditions to provide incentives.

 

•

The stock options offer complementary incentives to our annual bonus plan, which is based on financial metrics that are set annually, and the cash bonus opportunities already represents a meaningful portion of target compensation.

 

•

Stock options tie to absolute rather than relative value, which is appropriate because our focus is on the benefit to our particular stockholders.

New Hire Equity Grants. We granted a combination of RSUs and stock options as a part of a new hire package to Ms. Gill, which the Compensation Committee believed was appropriate for a new hire primarily to provide sufficient initial incentive to join our company and to ensure the executive’s potential share ownership in alignment with our stockholders, particularly since our continuing NEOs have direct share ownership. These RSUs vest in equal installments on the third, fifth and seventh anniversaries of grant, a longer vesting schedule intended to increase the retention impact of the award to account for the fact that it has no exercise price, while the stock options vest annually over four years.

 

4		Retirement Benefits

Vertiv’s tax-qualified employee savings and retirement plan (the “401(k) Plan”) covers certain full- and part-time employees in the United States, including our U.S.-based NEOs. Under the 401(k) Plan, employees may elect to reduce their current compensation up to the statutorily prescribed annual limit and have the amount of such reduction contributed to the 401(k) Plan. The Board believes that the 401(k) Plan provides an important and highly valued means for employees to save for retirement. Vertiv provides a match of 50% of the first 6% of the named executive officers’ eligible base salary. Our eligible NEOs each participated in the 401(k) Plan on the same terms as Vertiv’s other employees in 2021.

Mr. Liang participated in Vertiv’s Hong Kong defined contribution Occupational Retirement Scheme Ordinance (the “ORSO”), which is a retirement program available to Vertiv’s Hong Kong employees generally, including Mr. Liang. Under the ORSO, a participant contributes 5% of his or her base salary and Vertiv contributes an amount equal to 10% of the participant’s base salary to the ORSO. In accordance with regulations and local practice, individuals with service in Vertiv of more than 10 years, such as Mr. Liang, may withdraw all contribution amounts attributable to both employee and employer contributions upon a termination of employment for any reason.

 

5		Termination and Change-in-Control Benefits

The protection of competitive and confidential information and the retention of top talent are of the utmost importance to Vertiv. For this reason, Vertiv’s named executive officers are subject to confidentiality, non-compete and non-solicitation covenants. Each named executive officer was subject to our Executive Employment Policy and our “double-trigger” Executive Change of Control Plan, in each case that provide for severance benefits following a qualifying termination of employment, which is intended to alleviate concerns about job security that could affect performance and keep the named executive officers focused on their day to day responsibilities. A detailed description of these severance and change of control benefits, along with estimates of the value of the benefits potentially payable under these arrangements, are set out below under the caption “Potential Payments upon Termination or Change-in-Control.”

 

-  2022 Proxy Statement    |    29

6		Other Benefits

All of the named executive officers in the United States were eligible for coverage under Vertiv’s health insurance programs, including medical, dental and vision, a health savings account and flexible spending accounts. Additionally, the named executive officers were eligible for life insurance, short- and long-term disability benefits and paid time off.

During 2021, we permitted our CEO and other officers to use chartered aircraft for business purposes and, in limited circumstances, for personal use. The Compensation Committee believes that permitting our CEO to use the private aircraft for personal use provides Vertiv the benefit of increased efficiency, security and health protections to our CEO. In 2021, we entered into a time-sharing agreement with our CEO pursuant to which he reimburses us for variable costs associated with personal use of our chartered aircraft above an amount approved by the Compensation Committee. There were no tax gross-ups provided on the personal aircraft usage.

We may provide additional benefits in particular circumstances. For example, Vertiv has agreed to provide Mr. Liang reimbursement for fees paid in connection with the filing of his U.S. and Hong Kong tax returns as well as other items described in the footnotes to the Summary Compensation Table. We also provide reimbursement of relocation expenses, such as those provided to Ms. Gill for 2021 as set forth in the Summary Compensation Table below.

Peer Group Companies

The Compensation Committee believes that we should provide market-competitive pay, with higher amounts based on tenure, job responsibilities and performance, and that long-term incentive compensation should be a significant component of executive compensation. The Compensation Committee expects to review annual benchmarking using a peer group representing a set of companies in the industries in which we compete.

The Compensation Committee worked with management to represent similar companies in terms of size, industry, revenue and market cap, with a focus on a method for considering other companies that are subject to the same impacts in our market and industry. The peer group used when evaluating 2021 compensation consisted of the companies below (the “Compensation Peer Group”), which we have broken into two subgroups solely for the purpose of explaining how we developed the peer group. In addition, we consider other companies that are competitors for talent, whose compensation practices we may review from time to time in order to better understand the competitiveness of Vertiv’s compensation programs with the goal of preserving talent.

 

Industry Affiliation (comparable companies in the Technical Products and Services space with a revenue range of 0.5 to 2.0 times that of Vertiv)						Similar Scope and Size (manufacturing and services companies from general industry with revenues ranging from 0.5 to 2.0 times that of Vertiv)
Ametek Anixter* Celestica Ciena CommScope First Solar Hubbell		Itron Juniper Networks NCR Legrand ON Semiconductor Regal Beloit (now Regal Rexnord) Sensata Technologies				Carlisle Companies Crane Co. Donaldson Co. Dover Corp. Fortive Gates Industrial		Pentair Rockwell Automation The Timken Company

 

*	Anixter was acquired in 2020 by WESCO and so will be removed from the peer group for 2022.

Compensation Risk Assessment

As part of our risk management activities, the Company reviews with the Compensation Committee its compensation policies and practices applicable to employees that could affect the Company’s assessment of risk and risk management. The Compensation Committee and management believe that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

Tax and Accounting Considerations

The tax and accounting impacts of our executive compensation program are among many factors that may be considered in determining the size and structure of our executive compensation program. Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), denies a publicly-traded corporation a federal income tax deduction for remuneration in excess of $1 million per year per person paid to executives designated in Section 162(m) of the Code, including, but not limited to, its chief executive officer, chief financial officer and the next three highly compensated executive officers. We have not adopted a policy that requires that all compensation be deductible.

 

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Stock Ownership Guidelines for Company Officers and Directors

Our directors, named executive officers and other designated individuals are expected to own Company stock based on the following multiple-of-salary ownership threshold guidelines.

 

Position		Multiple for Stock Ownership Guidelines
Directors		5 times Cash Retainer
Chief Executive Officer		5 times Salary
NEOs		3 times Salary
Other Section 16 Officers		2 times Salary
Section 16 Officers (not reporting to the CEO)		1 times Salary

Directors and officers are expected to comply with the multiple-of-retainer/salary stock ownership guidelines by the later of 5 years from appointment to the relevant role or February 7, 2025. Additionally, if an executive officer is promoted to a higher level, that person will only have three (3) years to achieve the higher stock ownership guideline (or if later, February 7, 2025). Once the individual has acquired a number of Company shares that satisfies the ownership multiple, such number of shares shall represent that person’s minimum ownership requirement (even if that person’s salary increases or the fair market value of such number of shares subsequently falls below the required ownership multiple) until (in the case of an executive officer) such person is promoted to a higher level.

For purposes of satisfying the requirements of the stock ownership guidelines, ownership includes stock owned privately, shares (or equivalent shares) awarded to, or purchased by, an officer or director pursuant to a qualified or non-qualified benefit or savings plan, or shares acquired on exercise of stock options or settlement of vested RSUs. Insiders may only sell Company stock during open window periods under the Company Securities Trading Policy and must notify and receive clearance prior to executing any stock sales or option exercises.

Compensation Committee Interlocks and Insider Participation

None of the directors who are currently or who were members of our Compensation Committee during 2021, are either currently, or have been at any time, an officer or employee of the Company. None of our executive officers currently serves, or served during 2021, as a member of the Board or Compensation Committee of any entity while one or more of its executive officers was serving as a member of our Board or Compensation Committee.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained herein with management. Based on its review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in this proxy statement.

The Compensation Committee

Roger Fradin, Chair

Joseph van Dokkum

Steven S. Reinemund

 

-  2022 Proxy Statement    |    31

COMPENSATION TABLES

Summary Compensation Table

The following table shows compensation of our named executive officers for fiscal years 2021, 2020 and 2019.

 

Name and principal position		Year				Salary ($)(1)				Bonus ($)(2)				Stock Awards ($)(2)(3)				Option Awards ($)(3)				Non-equity incentive plan compensation ($)(4)				All other compensation ($)(5)				Total ($)
Robert Johnson Chief Executive Officer			2021				950,000				—				—				3,999,997				—				230,840				5,180,837
			2020				893,365				4,104,000				12,608,000				1,399,999				475,000				146,825				19,627,189
			2019				950,000				—				—				—				2,308,500				37,144				3,295,644
David Fallon Chief Financial Officer			2021				575,000				—				—				1,541,998				—				20,595				2,137,593
			2020				540,721				1,047,750				2,758,000				859,998				488,750				8,550				5,703,769
			2019				575,000				—				—				—				1,397,250				40,307				2,012,557
Stephen Liang(6) Chief Technology Officer			2021				590,400				—				—				899,996				—				98,547				1,588,943
			2020				555,983				876,448				2,206,400				599,998				219,450				231,689				4,689,968
			2019				590,424				—				—				—				1,882,273				275,268				2,747,965
Jason Forcier Chief Operations Officer and EVP, Infrastructure & Solutions			2021				500,000				—				—				1,062,000				—				8,700				1,570,700
			2020				470,192				769,500				2,206,400				749,998				340,000				8,550				4,544,640
			2019				455,769				—				—				—				969,819				11,003				1,436,591
Stephanie Gill Chief Legal Officer and Corporate Secretary			2021				447,116				—				599,992				599,996				—				250,429				1,897,533

(1)	Base Salary. During 2020, there was a temporary reduction in salaries as a result of the pandemic from April to November 2020. As a result, the total salary reported in this column for 2021 is higher than 2020 although the annual base salary rates remained unchanged.

(2)	2020 Special Compensation Items.

 

(a)

One-Time Transaction Exit Bonus Reinvested in Company Stock. The amounts reported in the “Bonus” column for 2020 represent one-time payments of a transaction exit bonus pursuant to commitments made by the previous owner of the Vertiv business in connection with the consummation of the Business Combination, of which all or a substantial portion of the after-tax payments were invested in Company stock. In addition, this column for 2020 includes a payment made to Mr. Liang in 2020 reflecting adjustments for 2019 performance under his Mid-Term Incentive Plan, which is no longer in effect.

(b)

2020 One-Time Founder RSU’s. The amounts reported in the “Stock Awards” column for 2020 represent the aggregate grant date fair value of one-time RSU grants committed to by the previous owner of the Vertiv business and required pursuant to the negotiations in connection with the Business Combination and so do not represent typical annual grant award values.

 

(3)

Equity Grants. The amounts reported in these columns represent the aggregate grant date fair value of stock awards (RSUs) or stock options, as applicable, granted in the relevant fiscal year computed in accordance with FASB ASC Topic 718. Assumptions used in calculating these amounts are described in Note 15 to our audited financial statements in our Form 10-K for the year ended December 31, 2021, filed with the SEC.

 

(a)

New Hire Grant of RSUs. The grant of RSUs to Ms. Gill in 2021 represented a one-time new hire equity grant. All other equity grants to the NEOs during 2021 were stock options.

 

(4)	Annual Vertiv Incentive Plan. For 2021, none of the NEOs received payments under the 2021 Vertiv Incentive Plan, as further described in the “Compensation Discussion and Analysis” above.

(5)

Other Benefits. The amounts shown in this column for 2021 represent other compensation, including the cost of personal benefits or perquisites that exceed $10,000 in the aggregate. We maintain arrangements with third-party charter companies for use of chartered aircraft, used primarily for business purposes. The value of personal aircraft usage reported in this table is based on Vertiv’s actual invoiced amount from the charter company for the variable costs incurred on each trip. Because the aircraft is used primarily for business travel, this methodology excludes fixed costs that do not change based on usage, such as depreciation and management fees. To the extent an NEO’s spouse or guests accompany the officer when a flight is already going to a specific destination for a business purpose, there is no aggregate incremental cost to Vertiv of such personal use.

 

(a)

Robert Johnson. The amount for 2021 includes $222,140 for personal use of the chartered aircraft. Some trips had a business purpose, but may be deemed to have a personal benefit under SEC disclosure rules, and so we have included the costs of such trips in the interests of full transparency. There were no tax gross-ups provided on any of his aircraft usage. The remaining amount for 2021 reflects matching contributions to our 401(k) plan.

 

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(b)

David Fallon. The amount for 2021 includes $11,304 attributed to personal use of the chartered aircraft and $951 in other commuting expenses. Although the trips reflected in the foregoing amount had a business purpose, we have included the costs in the interests of full transparency as they may be deemed to have a personal benefit under SEC disclosure rules. There were no tax gross-ups provided on any of his aircraft usage. The remaining amount for 2021 reflects matching contributions to our 401(k) plan.

(c)

Stephen Liang. The amount for 2021 includes (i) a tax service fee in the amount of $26,948 in connection with the filing of his U.S. and Hong Kong tax returns, and (ii) the employer portion of the contribution to his ORSO pension account equal to $59,040. Although Mr. Liang is entitled to tax equalization payments due to his international assignment, he did not receive any such payments during 2021. The remaining amount for 2021 reflects commuting and housing benefits.

(d)

Jason Forcier. The amount for 2021 represents matching contributions to our 401(k) plan.

(e)

Stephanie Gill. The amount for 2021 includes one-time relocation support consisting of $214,607 for relocation to the location of our corporate headquarters (such as payment of moving expenses and assistance with housing costs and closing costs) and $28,397 in tax reimbursements associated with moving expenses. The remaining amount represents matching contributions to our 401(k) plan.

(6)	Currency Exchange. During fiscal 2021, a portion of Mr. Liang’s compensation was paid in Hong Kong dollars and was converted to U.S. dollars using a currency exchange rate.

Grants of Plan-Based Awards in Fiscal 2021

The following table sets forth each award granted to a named executive officer in fiscal 2021 under plans established by the Company.

 

												Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2)												All Other Stock Awards: Number of Shares of Stock or Units (#)(3)				All Other Option Awards: Number of Securities Underlying Options(3)				Exercise or Base Price of Option Awards ($/Sh)				Grant Date Fair Value of Stock and Option Awards($)(4)
Name		Type of Award		Grant Date				Approval Date(1)				Threshold ($)				Target ($)				Maximum ($)
Robert Johnson		Incentive Plan			—				—				593,750				1,187,500				2,375,000				—				—				—				—
		Options			2/26/21				2/24/21				—				—				—				—				598,802				20.93				3,999,997
David Fallon		Incentive Plan			—				—				287,500				575,000				1,150,000				—				—				—				—
		Options			2/26/21				2/24/21				—				—				—				—				230,838				20.93				1,541,998
Stephen Liang		Incentive Plan			—				—				236,160				472,320				944,640				—				—				—				—
		Options			2/26/21				2/24/21				—				—				—				—				134,730				20.93				899,996
Jason Forcier		Incentive Plan			—				—				250,000				500,000				1,000,000				—				—				—				—
		Options			2/26/21				2/24/21				—				—				—				—				158,982				20.93				1,062,000
Stephanie Gill		Incentive Plan			—				—				139,500				279,000				558,000				—				—				—				—
		Options			1/4/21				12/30/20				—				—				—				—				118,811				18.52				599,996
		RSUs			1/4/21				12/30/20				—				—				—				32,397				—				—				599,992

(1)

These stock options were approved at a meeting of the Compensation Committee on February 24, 2021 (when the closing price of our common stock was $20.80), to be effective on February 26, 2021 (when the closing price of our common stock was $20.93). The new hire grants to Ms. Gill were approved to be effective on her start date.

(2)

Under the Vertiv Incentive Plan for fiscal 2021, each NEO had a target bonus opportunity as specified in this table. For a discussion of the terms and payout determinations under the Vertiv Incentive Plan, which resulted in no payout to any NEO for 2021, see the “Compensation Discussion and Analysis” above.

(3)

The stock options and RSUs reported in this table were granted under our 2020 Stock Incentive Plan. The options vest 25% annually on each of the first four anniversaries of the grant date. The RSUs granted to Ms. Gill as a one-time new hire grant vest in three equal installments on the third, fifth and seventh anniversaries of the grant date. During 2021, dividend equivalents on the RSUs were accrued in the form of additional RSUs pursuant to the terms of the award agreements, vesting over the same schedule as the underlying RSUs and as reflected in the “Outstanding Equity Awards at 2021 Fiscal Year-End” table below.

(4)

The amounts reported in this column represent the aggregate grant date fair value of stock awards or option awards, as applicable, granted in the fiscal year, computed in accordance with FASB ASC Topic 718. Assumptions used in calculating these amounts are described in Note 15 to our audited financial statements in our Form 10-K for the fiscal year ended December 31, 2021.

 

-  2022 Proxy Statement    |    33