PROXY STATEMENT SUMMARY			1
CORPORATE GOVERNANCE AND BOARD MATTERS
Director Independence			5
Board Leadership Structure			5
Communication with the Board			6
Board and Committee Composition and Meetings			6
Board and Committee Evaluations			7
Board’s Oversight of Risk Management			7
Consideration of Director Nominees and Diversity			8
Transactions with Related Persons			9
Director Compensation			9
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1—Election of Directors			12
PROPOSAL 2—Ratification of Independent Registered Public Accounting Firm			18
Audit and Non-Audit Fees			18
Pre-Approval Procedures for Audit and Non-Audit Services			19
Audit Committee Report			19
PROPOSAL 3—Advisory Vote to Approve Named Executive Officer Compensation			20
EXECUTIVE COMPENSATION AND RELATED MATTERS
Compensation Discussion & Analysis			21
Compensation Committee Report			33
Summary Compensation Table			34
Grants of Plan-Based Awards in 2020			37
Outstanding Equity Awards at 2020 Fiscal Year End			38
Option Exercises and Stock Vested in 2020			39
Pension Benefits in 2020			39
Non-Qualified Deferred Compensation in 2020			40
Potential Payments Upon Termination or Change in Control			41
CEO Pay Ratio			44
SECURITY OWNERSHIP
Security Ownership of Directors and Executive Officers			45
Security Ownership of Certain Beneficial Owners			46
Delinquent Section 16(a) Reports			46
EQUITY COMPENSATION PLAN INFORMATION			47
Q&A – PROXY MATERIALS AND ANNUAL MEETING			48

 

This summary highlights information contained elsewhere in this proxy statement. It does not contain all the information that you should consider—please read the entire proxy statement before voting. These materials were first sent to our shareholders on April 8, 2021. Our principal executive offices are located at 1 Leggett Road, Carthage, Missouri 64836.

2021 Annual Meeting of Shareholders

 

Tuesday, May 25, 2021 10:00 a.m. Central Time   Virtual Meeting Only – advance registration required to attend. Visit register.proxypush.com/LEG   Record Date: March 16, 2021				Proposal		Recommendation		Page
				1  –  Election of Eleven Directors		FOR		12
				2  –  Ratification of PWC as Independent Registered Public Accounting Firm		FOR		18
				3  –  Advisory Vote to Approve Named Executive Officer Compensation		FOR		20

Business Highlights

 

 

		1

 

Board Nominees

All of Leggett’s directors are elected for a one-year term by a majority of shares present and entitled to vote at the 2021 Annual Meeting of Shareholders (the “Annual Meeting”). The 2021 director nominees are:

 

Mark A. Blinn Independent

Robert E. Brunner Independent

Mary Campbell Independent

J. Mitchell Dolloff

Retired President & CEO Flowserve Corporation

Retired Executive VP Illinois Tool Works

Chief Merchandising Officer Qurate Retail Group

President & COO Leggett & Platt, Incorporated

Manuel A. Fernandez Independent

Karl G. Glassman

Joseph W. McClanathan Independent

Judy C. Odom Independent Lead Director

Managing Director SI Ventures

Chairman & CEO Leggett & Platt, Incorporated

Retired President & CEO — Household Products Division Energizer Holdings, Inc.

Retired Chair & CEO Software Spectrum

Srikanth Padmanabhan  Independent

Jai Shah Independent

Phoebe A. Wood Independent

Vice President and President – Engine Business Segment Cummins, Inc.

Group President Masco Corporation

Retired Vice Chair & CFO Brown-Forman Corp.

 

		Mark Blinn		Robert Brunner		Mary Campbell		Mitchell Dolloff		Manuel Fernandez		Karl Glassman		Joseph McClanathan		Judy Odom		Srikanth Padmanabhan		Jai Shah		Phoebe Wood
Independent Director
L&P Director since		2019		2009		2019		2020		2014		2002		2005		2002		2018		2019		2005
Age		59		63		53		55		74		62		68		68		56		54		67
L&P Board Committees
Audit																						Chair
Compensation				Chair
N&CG														Chair
Other Public Company Boards		3		2		0		0		1		0		1		1		0		0		3
EXPERIENCE AND QUALIFICATIONS
Financial/Accounting
Global Business
R&D/Innovation/Tech
Manufacturing/Operations
Corporate Governance
Strategic Planning
HR/Compensation
Risk Management
IT/Cybersecurity
L&P Industry Experience

Diversity – Our Nominating & Corporate Governance Committee recognizes the value of cultivating a Board with a diverse mix of opinions, perspectives, skills, experiences, and backgrounds. A diverse board enables more balanced, wide-ranging discussion in the boardroom, which, we believe, enhances the decision-making processes. The matrix above reflects some aspects of the Board’s diversity. In addition, six of our nine independent director nominees (67%) are diverse, including three women and three nominees who self-identify as racial or ethnic minorities.

 

		2		2021 Proxy Statement

 

Executive Compensation

L&P seeks to align our executives’ and shareholders’ interests through pay-for-performance. In 2020, 84% of our CEO’s target pay was allocated to variable compensation and 65% was delivered in equity-based awards.

Our compensation structure strives to strike an appropriate balance between short-term and longer-term compensation that reflects the short- and longer-term interests of the business. We believe this structure helps us attract, retain and motivate high-performing executives who will achieve outstanding results for our shareholders.

Recent Changes to Long-Term Incentive Structure

For over ten years, 100% of our executives’ and senior managers’ long-term incentive (LTI) awards have been performance-based. In 2018, we modified our LTI awards to consist of performance stock units (PSUs) with vesting based 50% on relative Total Shareholder Return (rTSR) and 50% on the compound annual growth rate of the Company’s Earnings Before Interest and Taxes (EBIT CAGR).

In 2019, we gathered feedback from participants on the updated LTI programs and benchmarked our programs against the broader market. At the end of this process, the Compensation Committee determined that the 2020 LTI awards for our executive officers would be reallocated as follows:

 

•

Two-thirds of the target award value will be granted as PSUs based on rTSR and EBIT CAGR over a three-year performance period.

 

•

One-third of the target award value will be granted as restricted stock units (RSUs) vesting in one-third increments over three years.

We believe the 2020 changes moved our LTI practices closer to market, make us more competitive for talent, and continue to support our business objectives.

Key Components of Our Executive Officers’ 2020 Compensation Program

 

Following the reallocation of LTI in 2020, our executive officers’ pay package consists of:   Base Salary: Our executives’ salaries reflect their responsibilities, performance and experience while taking into account market data, peer benchmarking and internal equity.   Annual Incentive: Short-term cash incentive with payouts ranging from 0% to 150% based on Return on Capital Employed (ROCE) and cash flow targets based on the Company’s earning guidance for the year.   Long-Term Incentive – 2/3 allocated to PSUs: Three-year PSUs with payouts ranging from 0% to 200% based on (1) rTSR measured against the industrial, materials and consumer discretionary sectors of the S&P 500 and S&P Midcap 400 and (2) the Company’s EBIT CAGR.   Long-Term Incentive – 1/3 allocated to RSUs: The RSUs vest in 1/3 increments on the first, second and third anniversaries of the grant date, further tying our executives’ pay to the Company’s performance.

 

 

		3

 

Response to COVID-19

In the spring of 2020, the Company initiated a variety of cost-cutting measures in response to the economic downturn and uncertainty caused by the COVID-19 pandemic. Upon recommendation of the Company’s senior management team, the Compensation Committee reduced the base salaries of all executive officers, including the NEOs, by 50%. The reductions went into effect April 12, 2020 and were initially set for an indefinite time period. As demand rebounded for many of our businesses and the economy stabilized, the Committee prospectively reinstated all executive officer 2020 base salaries to their initial levels, effective July 5, 2020.

The Committee made no discretionary adjustments to the 2020 Annual Incentive payouts or the PSUs vesting at the end of 2020 for executive officers. With a majority of our NEOs’ compensation tied to performance-based programs, the Committee closely monitored the impact of the economic downturn on the projected payouts for the 2020 Annual Incentive and the outstanding PSU awards. While the Committee considered a number of potential adjustments to mitigate the 2020 downturn on these programs, the Committee ultimately determined that the structure and potential rewards over the long term continued to provide appropriate retention and motivation for our executive officers without making any changes during the year.

Key Features of Our Executive Officer Compensation Program

 

What We Do

What We Don’t Do

✓

Pay for Performance – A significant majority of our named executive officers’ (NEOs) compensation is at-risk variable compensation.

×

No Single-Trigger Change in Control – Our CIC-related cash severance and equity awards (other than legacy stock options) have a double trigger.

✓

Multiple Performance Metrics – Variable compensation is based on more than one measure to encourage balanced incentives.

×

No Hedging or Pledging – We do not permit our executive officers to engage in either hedging or pledging activities with respect to Leggett shares.

✓

Incentive Award Caps – All of our variable compensation plans have maximum payout limits.

×

No Excessive Perquisites – Perquisites represent less than 1% of our NEOs’ compensation.

✓

Benchmarking – We compare our compensation package to market surveys and a customized peer group, and the Committee engages an independent consultant.

×

No Employment Agreements – All of our NEOs are employed at-will, except for Mr. Tate’s 24-month Separation Agreement which will expire in September 2021 (see page 43).

✓

Tally Sheets – The Compensation Committee reviews the NEOs’ overall compensation packages and potential severance payouts.

×    No Repricing of Options or Cash Buyouts   ×    No Share Recycling   ×    No Dividends on Equity Awards Prior to Vesting   ×    No Tax Gross-Ups

✓

Stock Ownership Requirements – All NEOs are subject to robust stock ownership requirements.

✓

Confidentiality & Non-Compete Agreements – All NEOs are subject to confidentiality and non-compete agreements.

✓

Clawbacks – Our policies exceed the mandates of Sarbanes-Oxley.

 

		4		2021 Proxy Statement

 

Leggett & Platt has a long-standing commitment to sound corporate governance principles and practices. The Board of Directors has adopted Corporate Governance Guidelines that establish the roles and responsibilities of the Board and management. The Board has also adopted a Code of Business Conduct and Ethics applicable to all Company employees, officers and directors, as well as a separate Financial Code of Ethics applicable to the Company’s CEO, CFO, and principal accounting officer. These documents can be found at http://www.leggett.com/governance. Information on our website does not constitute part of this proxy statement.

Director Independence

 

 

 

 

Board Leadership Structure

 

 

 

 

		5

Corporate Governance and Board Matters

 

Communication with the Board

 

 

Shareholders and all other interested parties who wish to contact our Board of Directors may e-mail our Lead Director, Ms. Odom, at leaddirector@leggett.com. They can also write to Leggett & Platt Lead Director, P.O. Box 637, Carthage, MO 64836. The Corporate Secretary’s office reviews this correspondence and periodically provides the Lead Director all communications except items unrelated to Board functions. The Lead Director may forward communications to the full Board or to any of the other independent directors for further consideration.

Board and Committee Composition and Meetings

 

 

Given the extraordinary conditions of 2020 brought on by the COVID-19 pandemic, Leggett’s Board of Directors held eleven meetings in 2020, and its committees met the number of times listed in the table below. All directors attended at least 75% of the Board meetings and their respective committee meetings. Directors are expected to attend the Company’s Annual Meeting, and all of them attended the 2020 Annual Meeting.

The Board has a standing Audit Committee, Compensation Committee, and Nominating & Corporate Governance (N&CG) Committee. These committees consist entirely of independent directors, and each operates under a written charter adopted by the Board. The Audit, Compensation, and N&CG Committee charters are posted on our website at http://www.leggett.com/governance.

 

Audit Committee Phoebe A. Wood (Chair) Mark A. Blinn Mary Campbell Judy C. Odom Srikanth Padmanabhan   Meetings in 2020: 4		The Audit Committee assists the Board in the oversight of: •  Independent registered public accounting firm’s qualifications, independence, appointment, compensation, retention and performance. •  Internal control over financial reporting. •  Guidelines and policies to govern risk assessment and management. •  Performance of the Company’s internal audit function. •  Integrity of the financial statements and external financial reporting. •  Legal and regulatory compliance. •  Complaints and investigations of any questionable accounting, internal control or auditing matters.
Compensation Committee Robert E. Brunner (Chair) Manuel A. Fernandez Joseph W. McClanathan Jai Shah   Meetings in 2020: 6		The Compensation Committee assists the Board in the oversight and administration of: •  Corporate goals and objectives regarding CEO compensation and evaluation of the CEO’s performance in light of those goals and objectives. •  Non-CEO executive officer compensation. •  Cash and equity-based compensation for directors. •  Incentive compensation and equity-based plans that are subject to Board approval. •  Employment agreements and severance benefit agreements with the CEO and executive officers, as applicable. •  Related person transactions of a compensatory nature.
Nominating & Corporate Governance Committee Joseph W. McClanathan (Chair) Robert E. Brunner Manuel A. Fernandez Jai Shah   Meetings in 2020: 3		The N&CG Committee assists the Board in the oversight of: •  Corporate governance principles, policies and procedures. •  Identifying qualified candidates for Board membership and recommending director nominees. •  Recommending committee members and Board leadership positions. •  Director independence and related person transactions.

 

		6		2021 Proxy Statement

Corporate Governance and Board Matters

 

Board and Committee Evaluations

 

 

The Board and each of its Committees conduct an annual self-evaluation of their practices and charter responsibilities. In addition, the Board periodically conducts director peer reviews of the qualifications and contributions of its individual members. In 2020, the Board retained an outside consultant to assist in evaluations of the Board, its Committees, and individual directors, which were based on in-depth interviews with all directors.

Board’s Oversight of Risk Management

 

 

 

 

		7

Corporate Governance and Board Matters

 

Consideration of Director Nominees and Diversity

 

The Nominating & Corporate Governance Committee is responsible for identifying and evaluating the best available qualified candidates for election to the Board of Directors. The Committee’s procedure and the Company’s bylaws can be found at http://www.leggett.com/governance. Following its evaluation, the N&CG Committee recommends to the full Board a slate of director candidates for inclusion in the Company’s proxy statement and proxy card.

Incumbent Directors. In the case of incumbent directors, the N&CG Committee reviews each director’s overall service during his or her current term, including the number of meetings attended, level of participation, quality of performance and any transactions between the director and the Company.

New Director Candidates. In the case of new director candidates, the N&CG Committee first determines whether the nominee will be independent under NYSE rules, then identifies any special needs of the Board. The N&CG Committee will consider individuals recommended by Board members, Company management, shareholders and, if it deems appropriate, a professional search firm.

The N&CG Committee believes director candidates should meet and demonstrate the following criteria:

 

•

Character and integrity.

 

•

A commitment to the long-term growth and profitability of the Company.

 

•

A willingness and ability to make a sufficient time commitment to the affairs of the Company to effectively perform the duties of a director, including regular attendance at Board and committee meetings.

 

•

Significant business or public experience relevant and beneficial to the Board and the Company.

Board Diversity. The N&CG Committee recognizes the value of cultivating a Board with a diverse mix of opinions, perspectives, skills, experiences, and backgrounds. A diverse board enables more balanced, wide-ranging discussion in the boardroom, which, we believe, enhances the decision-making processes. Having diverse representation and a variety of viewpoints is also important to our shareholders and other stakeholders.

As such, the N&CG Committee actively seeks director candidates from a wide variety of backgrounds, without discrimination based on race, ethnicity, color, ancestry, national origin, religion, sex, sexual orientation, gender identity, age, disability, or any other status protected by law. In furtherance of this non-discrimination policy, for each search, the Committee will ensure that the pool includes female and racial or ethnic minority candidates.

All nominations to the Board will be based upon merit, experience and background relevant to the Board’s current and anticipated needs, as well as Leggett’s businesses.

Director Recommendations from Shareholders. The N&CG Committee does not intend to alter its evaluation process, including the minimum criteria set forth above, for candidates recommended by a shareholder. Shareholders who wish to recommend candidates for the N&CG Committee’s consideration must submit a written recommendation to the Secretary of the Company at 1 Leggett Road, Carthage, MO 64836. Recommendations must be sent by certified or registered mail and received by December 15^th for the N&CG Committee’s consideration for the following year’s Annual Meeting. Recommendations must include the following:

 

•

Shareholder’s name, number of shares owned, length of period held and proof of ownership.

 

•

Candidate’s name, address, phone number and age.

 

•

A resume describing, at a minimum, the candidate’s educational background, occupation, employment history and material outside commitments (memberships on other boards and committees, charitable foundations, etc.).

 

•

A supporting statement which describes the shareholder’s and candidate’s reasons for nomination to the Board of Directors and documents the candidate’s ability to satisfy the director qualifications described above.

 

•

The candidate’s consent to a background investigation and to stand for election if nominated by the Board and to serve if elected by the shareholders.

 

•

Any other information that will assist the N&CG Committee in evaluating the candidate in accordance with this procedure.

 

		8		2021 Proxy Statement

Corporate Governance and Board Matters

 

Director Nominations for Inclusion in Leggett’s Proxy Materials (Proxy Access). The Board has approved a proxy access bylaw, which permits a shareholder, or group of up to 20 shareholders, owning at least 3% of our outstanding shares continuously for at least three years, to nominate and include in Leggett’s proxy materials up to the greater of two nominees or 20% of the Board, provided the shareholders and nominees satisfy the requirements specified in our bylaws. Notice of proxy access nominees for the 2022 Annual Meeting must be received no earlier than January 25, 2022 and no later than February 24, 2022.

Notice of Other Director Nominees. For shareholders intending to nominate a director candidate for election at the 2022 Annual Meeting outside of the Company’s nomination process, our bylaws require that the Company receive notice of the nomination no earlier than January 25, 2022 and no later than February 24, 2022. This notice must provide the information specified in Section 2.2 of the bylaws.

Transactions with Related Persons

 

 

According to our Corporate Governance Guidelines, the N&CG Committee reviews and approves or ratifies transactions in which a related person has a direct or indirect material interest, the Company or a subsidiary is a participant, and the amount involved exceeds $120,000. If the transaction with a related person concerns compensation, the Compensation Committee conducts the review.

The Company’s executive officers and directors are expected to notify the Company’s Corporate Secretary of any current or proposed transaction that may be a related person transaction. The Corporate Secretary will determine if it is a related person transaction and, if so, will include it for consideration at the next meeting of the appropriate Committee. Approval should be obtained in advance of a related person transaction whenever practicable. If it becomes necessary to approve a related person transaction between meetings, the Chair of the appropriate Committee is authorized to act on behalf of the Committee. The Chair will provide a report on the matter to the full Committee at its next meeting.

The full policy for reviewing transactions with related persons, including categories of pre-approved transactions, is found in our Corporate Governance Guidelines available on our website at http://www.leggett.com/governance.

The Company had no related persons transactions in the past year.

Director Compensation

 

 

Our non-management directors receive an annual retainer, consisting of a mix of cash and equity, as set forth in the table below. Due to extraordinary circumstances in 2020 brought on by the COVID-19 pandemic, our directors took reductions to their cash retainers and equity retainers as explained below. Our management directors (Mr. Glassman and Mr. Dolloff) do not receive additional compensation for their Board service.

 

Cash Compensation
Director Retainer		$	90,000
Audit Committee Retainer
Chair			25,000
Member			10,000
Compensation Committee Retainer
Chair			20,000
Member			8,000
N&CG Committee Retainer
Chair			15,000
Member			7,000
Equity Compensation – Restricted Stock or RSUs
Director Retainer			150,000
Lead Director Additional Retainer			125,000

 

 

		9

Corporate Governance and Board Matters

 

 

Director Compensation in 2020

Our non-management directors received the following compensation in 2020:

 

Director		Fees Earned or Paid in Cash(1)(2)				Stock Awards(3)				Non-Qualified Deferred Compensation Earnings(4)				All Other Compensation(5)				Total
Mark A. Blinn			$  87,500				$  87,068								$  5,674				$180,242
Robert E. Brunner			102,375				87,068				$12,221				74,477				276,141
Mary Campbell			87,500				87,068				854				14,355				189,177
R. Ted Enloe, III(6)			39,375												6,112				45,487
Manuel A. Fernandez			91,875				87,068				4,268				43,098				226,309
Joseph W. McClanathan			99,375				87,068				446				32,300				219,189
Judy C. Odom			93,000				159,607				8,165				44,284				305,056
Srikanth Padmanabhan			87,500				87,068								5,674				180,242
Jai Shah			90,125				87,068				1,056				29,809				208,058
Phoebe A. Wood			98,625				87,068				12,275				52,157				250,125

 

		10		2021 Proxy Statement

Corporate Governance and Board Matters

 

(1)

These amounts include cash compensation deferred into stock units or stock options under our Deferred Compensation Program, described at page 28. The following directors deferred cash compensation into stock units: Brunner—$102,375, Campbell—$43,750, Fernandez—$91,875, McClanathan—$99,375, Odom—$46,500, and Shah—$90,125. Ms. Campbell deferred an additional $43,750 to acquire stock options.

 

(2)	These amounts reflect the temporary 50% reduction in quarterly cash retainers discussed above.

 

(3)

These amounts reflect the grant date fair value of the annual restricted stock or RSU awards. The nominal value of each director’s equity retainer was $150,000 plus an additional $125,000 retainer for Ms. Odom’s service as Lead Director. As discussed above, given the stock price volatility in the spring of 2020, the directors’ 2020 equity awards were based upon the same stock price used for the executives’ awards earlier in the year, resulting in the directors receiving fewer shares with a lower grant date value.

 

(4)	These amounts include the 20% discount on stock unit dividends acquired under our Deferred Compensation Program and RSUs.

 

(5)

Items in excess of $10,000 that are reported in this column consist of (i) dividends paid on the annual restricted stock or RSU awards and dividends paid on stock units acquired under our Deferred Compensation Program: Brunner—$48,883, Fernandez—$20,129, Odom—$32,659, and Wood—$52,157; and (ii) the 20% discount on stock units purchased with deferred cash compensation: Brunner—$25,594, Campbell—$10,938, Fernandez—$22,969, McClanathan—$24,844, Odom—$11,625, and Shah—$22,531.

 

(6)	Mr. Enloe was a director until he retired at the end of his term at the 2020 Annual Meeting.

All non-management directors held unvested stock or stock units as of December 31, 2020 as set forth below. The restricted stock and RSUs will vest on May 24, 2021.

 

Director		Restricted Stock				Restricted Stock Units
Mark A. Blinn			3,272
Robert E. Brunner							3,352
Mary Campbell							3,352
Manuel A. Fernandez							3,352
Joseph W. McClanathan			3,272
Judy C. Odom							6,145
Srikanth Padmanabhan			3,272
Jai Shah							3,352
Phoebe A. Wood							3,352

Only one director held outstanding stock options as of December 31, 2020: Ms. Campbell’s 4,274 options granted in lieu of cash compensation under our Deferred Compensation Program.

 

		11

 

PROPOSAL ONE:    Election of Directors

 

At the 2021 Annual Meeting, eleven directors are nominated to hold office until the 2022 Annual Meeting of Shareholders, or until their successors are elected and qualified. All nominees have been previously elected by our shareholders. If any nominee named below is unable to serve as a director (an event the Board does not anticipate), proxies will be voted for a substitute nominee, if any, designated by the Board.

In recommending the slate of director nominees, our Board has chosen individuals of character and integrity, with a commitment to the long-term growth and profitability of the Company. We believe each of the nominees brings significant business or public experience relevant and beneficial to the Board and the Company, as well as a work ethic and disposition that foster the collegiality necessary for the Board and its committees to function efficiently and best represent the interests of our shareholders.

Additional information concerning the directors is found in the Proxy Summary at page 2.

 

Mark A. Blinn
Independent Director   Director Since: 2019   Age: 59     Committees:   Audit		Professional Experience:   Mr. Blinn was President and Chief Executive Officer and a director of Flowserve Corporation, a leading provider of fluid motion and control products and services for the global infrastructure markets, from 2009 until his retirement in 2017. He previously served Flowserve as Chief Financial Officer from 2004 to 2009 and in the additional role of Head of Latin America from 2007 to 2009. Prior to Flowserve, Mr. Blinn’s positions included Chief Financial Officer of FedEx Kinko’s Office and Print Services Inc. and Vice President, Corporate Controller and Chief Accounting Officer of Centex Corporation.   Education:   Mr. Blinn holds a bachelor’s degree, a law degree, and an MBA from Southern Methodist University.   Public Company Boards:   Mr. Blinn currently serves as a director of Texas Instruments, Incorporated, a global semiconductor design and manufacturing company, Kraton Corporation, a leading global producer of polymers for a wide range of applications, and Emerson Electric Co., a global technology and engineering company for industrial, commercial and residential markets.   Director Qualifications: As the former CEO and CFO of Flowserve, Mr. Blinn has exceptional leadership experience in operations and finance, as well as strategic planning and risk management. His board service at other global, public companies provides additional perspective on current finance, oversight, and governance matters.

 

		12		2021 Proxy Statement

Proposals to be Voted on at the Annual Meeting

 

Robert E. Brunner
Independent Director   Director Since: 2009   Age: 63     Committees:   Compensation, Chair   Nominating & Corporate   Governance		Professional Experience:   Mr. Brunner was the Executive Vice President of Illinois Tool Works (ITW), a Fortune 250 global, multi-industrial manufacturer of advanced industrial technology, from 2006 until his retirement in 2012. He previously served ITW as President—Global Auto beginning in 2005 and President—North American Auto from 2003.   Education:   Mr. Brunner holds a degree in finance from the University of Illinois and an MBA from Baldwin-Wallace University.   Public Company Boards:   Mr. Brunner currently serves as the independent Board Chair of Lindsay Corporation, a global manufacturer of irrigation equipment and road safety products, and as a director of NN, Inc., a diversified industrial company that designs and manufactures high-precision components and assemblies on a global basis.   Director Qualifications: Mr. Brunner’s experience and leadership with ITW, a diversified manufacturer with a global footprint, provides valuable insight to our Board on the automotive strategy, business development, mergers and acquisitions, operations, and international issues.
Mary Campbell
Independent Director   Director Since: 2019   Age: 53     Committees:   Audit		Professional Experience:   Ms. Campbell was appointed Chief Merchandising Officer of Qurate Retail Group and Chief Commerce Officer of QVC US, in 2018. Qurate Retail Group is comprised of a select group of retail brands including QVC, HSN, Zulily, Ballard Designs, Frontgate, Garnet Hill, and Grandin Road and is a leader in video commerce, a top-10 ecommerce retailer, and a leader in mobile and social commerce. During her more than 20 years with the company, Ms. Campbell held various leadership positions across the Merchandising, Planning and Commerce Platforms functions. Most recently, and prior to her current position, she served Qurate Retail Group as Chief Merchandising and Interactive Officer in 2018 and as Chief Interactive Experience Officer from 2017 to 2018. She also served as Executive Vice President, Commerce Platforms for QVC from 2014 to 2017.   Education:   Ms. Campbell holds a bachelor’s degree in psychology from Central Connecticut State University.   Director Qualifications: Through her positions at Qurate Retail Group and QVC, Ms. Campbell has extensive knowledge in consumer driven product innovation, marketing and brand building, and traditional and new media platforms, as well as leading teams for long term growth and evolution.

 

		13

Proposals to be Voted on at the Annual Meeting

 

J. Mitchell Dolloff
Management Director   Director Since: 2020   Age: 55     Committees:   None		Professional Experience:   Mr. Dolloff was appointed the Company’s President and Chief Operating Officer, President—Bedding Products effective January 1, 2020. He has served the Company as Executive Vice President—Chief Operating Officer since January 1, 2019; President—Specialized Products & Furniture Products from 2017 to 2019; Senior Vice President and President of Specialized Products from 2016 to 2017; Vice President and President of the Automotive Group from 2014 to 2015; President of Automotive Asia from 2011 to 2013; Vice President of Specialized Products from 2009 to 2013; and in various other capacities for the Company since 2000.   Education:   Mr. Dolloff holds a degree in economics from Westminster College (Fulton, Missouri), as well as a law degree and an MBA from Vanderbilt University.   Director Qualifications: As the Company’s President and Chief Operating Officer, Mr. Dolloff provides in-depth global operational knowledge to the Board and will complement the Board’s oversight and strategy roles as those plans are implemented throughout the Company.
Manuel A. Fernandez
Independent Director   Director Since: 2014   Age: 74     Committees:   Compensation   Nominating & Corporate   Governance		Professional Experience:   Mr. Fernandez co-founded SI Ventures, a venture capital firm focusing on IT and communications infrastructure, and has served as the managing director since 2000. Previously, he served as the Chairman, President and Chief Executive Officer at Gartner, Inc., a research and advisory company, from 1989 to 2000. Prior to Gartner, Mr. Fernandez was President and CEO of three technology-driven companies, including Dataquest, an information services company, Gavilan Computer Corporation, a laptop computer manufacturer, and Zilog Incorporated, a semiconductor manufacturer. Mr. Fernandez was the Executive Chairman of Sysco Corporation, a marketer and distributor of foodservice products, from 2012 until his retirement in 2013, having previously served as Non-executive Chairman since 2009 and as a director since 2006.   Education:   Mr. Fernandez holds a degree in electrical engineering from the University of Florida and completed post-graduate work in solid-state engineering at the University of Florida.   Public Company Boards:   Mr. Fernandez currently serves as the lead independent director of Performance Food Group Company, a foodservice products distributor. He was previously the non-executive chairman of Brunswick Corporation, a market leader in the marine industry, and a director of Time, Inc., a global media company.   Director Qualifications: Mr. Fernandez’ venture capital experience, leadership of several technology companies as CEO and service on a number of public company boards offers Leggett outstanding insight into corporate strategy and development, information technology, international growth, and corporate governance.

 

		14		2021 Proxy Statement

Proposals to be Voted on at the Annual Meeting

 

Karl G. Glassman
Management Director   Director Since: 2002   Chairman Since: 2020   Age: 62     Committees:   None		Professional Experience:   Mr. Glassman was appointed Chairman of the Board effective January 1, 2020 and continues to serve as Chief Executive Officer since his appointment in 2016. He previously served as President from 2013 to 2019, Chief Operating Officer from 2006 to 2015, Executive Vice President from 2002 to 2013, President of the former Residential Furnishings Segment from 1999 to 2006, Senior Vice President from 1999 to 2002, and in various capacities since 1982.   Education:   Mr. Glassman holds a degree in business management and finance from California State University—Long Beach.   Public Company Boards:   Mr. Glassman previously served as a director of Remy International, Inc., a leading global manufacturer of alternators, starter motors and electric traction motors.   Director Qualifications: As the Company’s CEO, Mr. Glassman provides comprehensive insight to the Board from strategic planning to implementation at all levels of the Company around the world, as well as the Company’s relationships with investors, the financial community and other key stakeholders. Mr. Glassman also serves on the Board of Directors of the National Association of Manufacturers.
Joseph W. McClanathan
Independent Director   Director Since: 2005   Age: 68     Committees:   Compensation   Nominating & Corporate   Governance, Chair		Professional Experience:   Mr. McClanathan served as President and Chief Executive Officer of the Household Products Division of Energizer Holdings, Inc., a manufacturer of portable power solutions, from 2007 through his retirement in 2012. Previously, he served Energizer as President and Chief Executive Officer of the Energizer Battery Division from 2004 to 2007, as President—North America from 2002 to 2004, and as Vice President—North America from 2000 to 2002.   Education:   Mr. McClanathan holds a degree in management from Arizona State University.   Public Company Boards:   Mr. McClanathan currently serves as a director of Brunswick Corporation, a market leader in the marine industry.   Director Qualifications: Through his leadership experience at Energizer and as a former director of the Retail Industry Leaders Association, Mr. McClanathan offers an exceptional perspective to the Board on manufacturing operations, marketing and development of international capabilities.

 

		15

Proposals to be Voted on at the Annual Meeting

 

Judy C. Odom
Lead Independent   Director   Director Since: 2002   Age: 68     Committees:   Audit		Professional Experience:   Until her retirement in 2002, Ms. Odom was Chief Executive Officer and Board Chair at Software Spectrum, Inc., a global business to business software services company, which she co-founded in 1983. Prior to founding Software Spectrum, she was a partner with the international accounting firm, Grant Thornton.   Education:   Ms. Odom is a licensed Certified Public Accountant and holds a degree in business administration from Texas Tech University.   Public Company Boards:   Ms. Odom is a director of Sabre, Inc., which provides technology solutions for the global travel and tourism industry, and she was previously a director of Harte-Hanks, a direct marketing service company.   Director Qualifications: Ms. Odom’s director experience with several companies offers a broad leadership perspective on strategic and operating issues. Her experience co-founding Software Spectrum and growing it to a global Fortune 1000 enterprise before selling it to another public company provides the insight of a long-serving CEO with international operating experience.
Srikanth Padmanabhan
Independent Director   Director Since: 2018   Age: 56     Committees:   Audit		Professional Experience:   Mr. Padmanabhan has served Cummins Inc., a global manufacturer of engines and power solutions, as a Vice President since 2008 and President of its Engine Business segment since 2016. Previously, he served Cummins as Vice President—Engine Business from 2014 to 2016, Vice President and General Manager of Emission Solutions from 2008 to 2014, and in various other capacities since 1991.   Education:   Mr. Padmanabhan holds a bachelor’s degree in mechanical engineering from the National Institute of Technology in Trichy, India, a Ph.D. in mechanical engineering from Iowa State University, and has completed the Advanced Management Program at Harvard Business School.   Director Qualifications: With nearly 30 years at Cummins in a variety of leadership roles, Mr. Padmanabhan offers considerable knowledge of the automotive industry and the industrial sector. He brings extensive experience in managing operations, technology and innovation across a multi-billion-dollar global business. He has lived and worked in India, the United States, Mexico, and the United Kingdom.

 

		16		2021 Proxy Statement

Proposals to be Voted on at the Annual Meeting

 

Jai Shah
Independent Director   Director Since: 2019   Age: 54     Committees:   Compensation   Nominating & Corporate   Governance		Professional Experience:   Mr. Shah serves as a Group President of Masco Corporation, a Fortune 500 global leader in the design, manufacture and distribution of branded home improvement and building products. In this position since 2018, Mr. Shah has responsibility for operating companies with leading brands in architectural coatings, decorative and outdoor lighting, decorative hardware and wellness businesses in North America. Mr. Shah is also responsible for Masco’s Corporate Strategic Planning activities. He previously served as President of Delta Faucet Company, a Masco business unit, from 2014 to 2018, as Vice President and Chief Human Resources Officer for Masco from 2012 to 2014, and in various capacities since 2003. Prior to Masco, Mr. Shah held a number of senior management positions at Diversey Corporation and served as Senior Auditor for KPMG Peat Marwick Chartered Accountants.   Education:   Mr. Shah is a Certified Public Accountant and Chartered Professional Accountant (Canada) and holds an MBA from the University of Michigan, as well as bachelor’s and master’s degrees in accounting from the University of Waterloo in Ontario, Canada.   Director Qualifications: Mr. Shah’s range of experience at Masco in a variety of operational, financial and corporate roles offers the Board a broad perspective on relevant issues facing global corporations, including growth strategy development and implementation, talent management, and adapting to e-business and market innovations.
Phoebe A. Wood
Independent Director   Director Since: 2005   Age: 67     Committees:   Audit, Chair		Professional Experience:   Ms. Wood has been a principal in CompaniesWood, a consulting firm specializing in early stage investments, since her 2008 retirement as Vice Chairman and Chief Financial Officer of Brown-Forman Corporation, a diversified consumer products manufacturer, where she had served since 2001. Ms. Wood previously held various positions at Atlantic Richfield Company, an oil and gas company, from 1976 to 2000.   Education:   Ms. Wood holds a degree in psychology from Smith College and an MBA from UCLA.   Public Company Boards:   Ms. Wood is a director of Invesco, Ltd., an independent global investment manager, Pioneer Natural Resources, an independent oil and gas company, and PPL Corporation, a utility and energy services company. She previously served as a director of Coca-Cola Enterprises, Inc., a major bottler and distributor of Coca-Cola products.   Director Qualifications: From her career in business and various directorships, Ms. Wood provides the Board with a wealth of understanding of the strategic, financial and accounting issues the Board addresses in its oversight role.

The Board recommends that you vote FOR the election of each of the director nominees.

 

		17

Proposals to be Voted on at the Annual Meeting

 

PROPOSAL TWO: Ratification of Independent Registered Public Accounting Firm

 

The Audit Committee is directly responsible for the appointment of the Company’s independent registered public accounting firm and has selected PricewaterhouseCoopers LLP (“PwC”) for the fiscal year ending December 31, 2021. PwC has been our independent registered public accounting firm continuously since 1991.

The Audit Committee regularly evaluates activities to assure continuing auditor independence, including whether there should be a regular rotation of the independent registered public accounting firm. As with all matters, the members of the Audit Committee and the Board perform assessments in the best interests of the Company and our investors and believe that the continued retention of PwC meets this standard.

Although shareholder ratification of the Audit Committee’s selection of PwC is not required by the Company’s bylaws or otherwise, the Board is requesting ratification as a matter of good corporate practice. If our shareholders fail to ratify the selection, it will be considered a direction to the Audit Committee to consider a different firm. Even if this selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change is in the best interest of the Company and our shareholders.

PwC representatives are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate shareholder questions.

The Board recommends that you vote FOR the ratification of PwC

as the independent registered public accounting firm.

Audit and Non-Audit Fees

The Audit Committee is directly responsible for the compensation, retention, performance and oversight of the independent external audit firm, directly involved in the selection of the lead engagement partner, and responsible for the audit fee negotiations associated with retaining PwC. The fees billed or expected to be billed by PwC for professional services rendered in fiscal years 2020 and 2019 are shown below.

 

Type of Service		2020				2019
Audit Fees(1)		$	2,396,996			$	2,617,888
Audit-Related Fees(2)			132,970				22,768
Tax Fees(3)			231,406				208,531
All Other Fees(4)			14,075				3,870
Total		$	2,775,447			$	2,853,057

 

(1)

Includes rendering an opinion on the Company’s consolidated financial statements and the effectiveness of internal control over financial reporting; quarterly reviews of the Company’s financial statements; statutory audits, where appropriate; comfort and debt covenant letters; and services in connection with regulatory filings.

 

(2)

Includes assessment of controls; consulting on accounting and financial reporting issues; and audits of employee benefit plans.

 

(3)

Includes preparation and review of tax returns and tax filings; tax consulting and advice related to compliance with tax laws; tax planning strategies; and tax due diligence related to acquisitions and joint ventures. Of the tax fees listed above in 2020, $161,368 relates to compliance services and $70,038 relates to consulting and planning services.

 

(4)

Includes use of an international tax reporting software and an internet-based accounting research tool provided by PwC.

 

		18		2021 Proxy Statement

Proposals to be Voted on at the Annual Meeting

 

Pre-Approval Procedures for Audit and Non-Audit Services

The Audit Committee has established a procedure for pre-approving the services performed by the Company’s auditors. All services provided by PwC in 2020 were approved in accordance with the adopted procedures. There were no services provided or fees paid in 2020 for which the pre-approval requirement was waived.

The procedure provides standing pre-approval for:

Audit Services: quarterly reviews of the Company’s financial statements; statutory audits, where appropriate; comfort and debt covenant letters; consents and assistance in responding to SEC comment letters; and services in connection with regulatory filings.

Audit-Related Services: consultation on new or proposed transactions, statutory requirements, or accounting principles; reports related to contracts, agreements, arbitration, or government filings; continuing professional education; financial statement audits of employee benefit plans; and due diligence and audits related to acquisitions and joint ventures.

Tax Services: preparation or review of Company and related entity income, sales, payroll, property, and other tax returns and tax filings and permissible tax audit assistance; preparation or review of expatriate and similar employee tax returns and tax filings; tax consulting and advice related to compliance with applicable tax laws; tax planning strategies and implementation; and tax due diligence related to acquisitions and joint ventures.

Any other audit, audit-related, or tax services provided by the Company’s auditors require specific Audit Committee pre-approval. The procedure requires the Audit Committee to specifically pre-approve the terms of the annual audit services engagement letter with the Company’s auditor, including all audit procedures required to render an opinion on the Company’s annual financial statements and on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee must also specifically approve, if necessary, any changes in terms of the annual audit engagement resulting from changes in audit scope, Company structure or other matters. The Audit Committee must also specifically approve in advance all other permissible Non-Audit Services to be performed by the Company’s auditors.

Management provides quarterly reports to the Audit Committee regarding the nature and scope of any non-audit services performed and any fees paid to the auditors for all services. The Audit Committee has determined that the provision of the approved Non-Audit Services by PwC in 2020 is compatible with maintaining PwC’s independence.

Audit Committee Report

The current Audit Committee is composed of five non-management directors who are independent as required by SEC and NYSE rules. The Audit Committee operates under a written charter adopted by the Board which is posted on the Company’s website at http://www.leggett.com/governance.

Management is responsible for the Company’s financial statements and financial reporting process, including the system of internal controls. PwC, our independent registered public accounting firm, is responsible for expressing an opinion on the conformity of the audited consolidated financial statements with accounting principles generally accepted in the United States.

The Audit Committee is responsible for monitoring, overseeing and evaluating these processes, providing recommendations to the Board regarding the independence of and risk assessment procedures used by our independent registered public accounting firm, selecting and retaining our independent registered public accounting firm, and overseeing compliance with various laws and regulations.

At its meetings, the Audit Committee reviewed and discussed the Company’s audited financial statements with management and PwC. The Audit Committee also discussed with PwC all items required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and the SEC.

The Audit Committee received the written disclosures and letter from PwC required by applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence and has discussed PwC’s independence with them.

 

		19

Proposals to be Voted on at the Annual Meeting

 

The Audit Committee has relied on management’s representation that the financial statements have been prepared in conformity with accounting principles generally accepted in the United States and on the opinion of PwC included in their report on the Company’s financial statements.

Based on review and discussions with management and PwC referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s 2020 Annual Report on Form 10-K.

 

		Phoebe A. Wood (Chair)		Mary Campbell		Srikanth Padmanabhan
		Mark A. Blinn		Judy C. Odom

PROPOSAL THREE: Advisory Vote to Approve Named Executive Officer Compensation

 

Pursuant to Section 14A of the Securities Exchange Act of 1934, Leggett’s shareholders have the opportunity to vote on an advisory resolution, commonly known as “Say-on-Pay,” to approve the compensation of Leggett’s named executive officers, as described in the Executive Compensation section beginning on page 21.

Since Say-on-Pay was implemented in 2011, our shareholders have supported the compensation of our named executive officers with over 90% of the vote (with 95% support in 2020). Our Board has adopted a policy providing for an annual Say-on-Pay vote.

Our Compensation Committee is committed to creating an executive compensation program that enables us to attract and retain a superior management team that has targeted incentives to build long-term value for our shareholders. The Company’s compensation package uses a mix of cash and equity-based awards to align executive compensation with our annual and long-term performance. These programs reflect the Committee’s philosophy that executive compensation should provide greater rewards for superior performance, as well as accountability for underperformance. At the same time, we believe our programs do not encourage excessive risk-taking by management. The Board believes that our philosophy and practices have resulted in executive compensation decisions that are appropriate and that have benefited the Company over time.

For these reasons, the Board requests our shareholders approve the compensation paid to the Company’s named executive officers as described in this proxy statement, including the Compensation Discussion and Analysis, the executive compensation tables and the related footnotes and narrative accompanying the tables.

Because your vote is advisory, it will not be binding upon the Board; however, the Compensation Committee and the Board has considered and will continue to consider the outcome of the vote when making decisions for future executive compensation arrangements.

The Board recommends that you vote FOR the Company’s named executive officer compensation package.

Discretionary Vote on Other Matters

 

 

We are not aware of any business to be acted upon at the Annual Meeting other than the three items described in this proxy statement. Your signed proxy, however, will entitle the persons named as proxy holders to vote in their discretion if another matter is properly presented at the meeting. If one of the director nominees is not available as a candidate for director, the proxy holders will vote your proxy for such other candidate as the Board may nominate.

 

		20		2021 Proxy Statement

 

Compensation Discussion & Analysis

 

 

Our Compensation Committee, currently consisting of four independent directors, is committed to creating and overseeing an executive compensation program that enables Leggett & Platt to attract and retain a superior management team that has targeted incentives to build long-term value for our shareholders. To meet these objectives, the Committee has implemented a compensation package that:

 

•

Emphasizes performance-based equity programs.

 

•

Sets incentive compensation targets intended to drive performance and shareholder value.

 

•

Balances rewards between short-term and long-term performance to foster sustained excellence.

 

•

Motivates our executive officers to take appropriate business risks.

This Compensation Discussion and Analysis describes our executive compensation program and the decisions affecting the compensation of our Named Executive Officers (NEOs):

 

Name		Title
Karl G. Glassman		Chairman and Chief Executive Officer (CEO)
Jeffrey L. Tate		Executive Vice President and Chief Financial Officer (CFO)
J. Mitchell Dolloff		President and Chief Operating Officer (COO), President—Bedding Products
Steven K. Henderson		Executive Vice President (EVP), President—Specialized Products and Furniture, Flooring & Textile (FF&T) Products
Scott S. Douglas		Senior Vice President (SVP)—General Counsel and Secretary

Executive Summary

 

 

This section provides an overview of our NEOs’ compensation structure, Leggett’s pay practices, and the Committee’s compensation risk management. Additional details regarding the NEOs’ pay packages, the Committee’s annual review of the executive officers’ compensation, and our equity pay practices are covered in the sections that follow.

 

		21

Compensation Discussion & Analysis

 

Structuring the Mix of Compensation

The Committee uses its judgment to determine the appropriate percentage of fixed and variable compensation, the use of short-term and long-term performance periods, and the split between cash and equity-based compensation. The final payment and value of the variable elements depends on actual performance and could result in no payout if threshold performance levels are not achieved. The following table shows the key attributes of our 2020 executive compensation structure used to drive performance and build long-term shareholder value.

 

Compensation Type		Fixed or Variable		Cash or Equity-Based		Term		Basis for Payment
Base Salary		Fixed		Cash		1 year		Individual responsibilities, performance and experience with reference to external benchmarking
Annual Incentive		Variable		Cash		1 year		Return on capital employed and cash flow
Long-Term Incentive – two-thirds allocated to Performance Stock Units		Variable		Equity- Based		3 years		Total shareholder return (TSR)(1) relative to peer group and the compound annual growth rate of earnings before interest and taxes (EBIT CAGR)
Long-Term Incentive – one-third allocated to Restricted Stock Units		Variable		Equity- Based		3 years		Value based on the Company’s share price as 1/3 of the award vests each year following the grant date

 

(1)

TSR is the change in stock price over the performance period plus reinvested dividends, divided by the beginning stock price. Leggett’s three-year TSR is measured relative to approximately 300 peer companies making up the industrial, materials and consumer discretionary sectors of the S&P 500 and S&P Midcap 400.

 

 

Incentive Payouts in 2020

Our executives’ 2020 annual incentive payouts under the Key Officers Incentive Plan (KOIP) tracked the Company’s operational results in 2020, in which we generated cash flow, as defined in the KOIP, of $687.6 million (versus a target of $500 million, resulting in a 150% payout) and 36.9% return on capital employed (versus a target of 37.0%, resulting in a 99.4% payout). The KOIP, including the calculations and targets for adjusted cash flow and return on capital employed (ROCE), is described on page 25.

 

		22		2021 Proxy Statement

Compensation Discussion & Analysis

 

The Performance Stock Units (PSUs) granted in 2018 vested on December 31, 2020, with payouts based 50% on the Company’s relative TSR and 50% on EBIT CAGR. Leggett’s cumulative TSR from 2018 to 2020 was 4.2%, which placed us in the 40th percentile of the peer group resulting in a 56% payout. The Company’s -0.6% EBIT CAGR over the three-year performance period was below the 2% payout threshold resulting in a 0% payout. The Company’s PSUs, including the calculation of EBIT CAGR and relative TSR, as well as the vesting schedules, are described on page 27.

CEO Incentive Compensation Vesting in 2020

 

 

Sound Pay Practices

The Company is committed to executive compensation practices that align the interests of our executives with our shareholders:

 

What We Do

What We Don’t Do

✓

Pay for Performance – A significant majority of our NEOs’ compensation is at-risk variable compensation.

×

No Single-Trigger Change in Control – Our CIC-related cash severance and equity awards (other than legacy stock options) have a double trigger.

✓

Multiple Performance Metrics – Variable compensation is based on more than one measure to encourage balanced incentives.

×

No Hedging or Pledging – We do not permit our executive officers to engage in either hedging or pledging activities with respect to Leggett shares.

✓

Incentive Award Caps – All of our variable compensation plans have maximum payout limits.

×

No Excessive Perquisites – Perquisites represent less than 1% of our NEOs’ compensation.

✓

Benchmarking – We compare our compensation package to market surveys and a customized peer group, and the Committee engages an independent consultant.

×

No Employment Agreements – All of our NEOs are employed at-will, except for Mr. Tate’s 24-month Separation Agreement which will expire in September 2021 (see page 43).

✓

Tally Sheets – The Compensation Committee reviews the NEOs’ overall compensation packages and potential severance payouts.

×    No Repricing of Options or Cash Buyouts   ×    No Share Recycling   ×    No Dividends on Equity Awards Prior to Vesting   ×    No Tax Gross-Ups

✓

Stock Ownership Requirements – All NEOs are subject to robust stock ownership requirements.

✓

Confidentiality & Non-Compete Agreements – All NEOs are subject to confidentiality and non-compete agreements.

✓

Clawbacks – Our policies exceed the mandates of Sarbanes-Oxley.

 

		23

Compensation Discussion & Analysis

 

Additional Investment in Leggett Stock

In addition to having pay packages that are heavily weighted to Leggett equity-based awards, for many years our NEOs have voluntarily deferred substantial portions of their cash compensation into Company stock through the Executive Stock Unit (ESU) Program and the Deferred Compensation Program. Through participation in these programs, particularly the ESU Program, in which Company equity is held until the executive leaves the Company, our NEOs are further invested in the long-term success of the Company.

Managing Compensation Risk

The Committee regularly reviews whether our executive compensation policies and practices (as well as those that apply to our employees generally) are appropriate and whether they create risks or misalignments that are reasonably likely to have a material adverse effect on the Company.

We believe that our compensation programs align our executives’ incentives for risk taking with the long-term best interests of our shareholders. We mitigate risk by allocating incentive compensation across multiple components. This structure is designed to reduce the incentive to take excessive risk because it:

 

•

Rewards achievement on a balanced array of performance measures, minimizing undue focus on any single target.

 

•

Stresses long-term performance, discouraging short-term actions that might endanger long-term value.

 

•

Combines absolute and relative performance measures.

 

•

Uses multiple long-term incentive vehicles, including Performance Stock Units and Restricted Stock Units with 3-year vesting schedules.

Additional safeguards against undue compensation risk include stock ownership guidelines, caps on all incentive payouts, and clawbacks for performance-based compensation.

Impact of 2020 Say-on-Pay Vote

At our 2020 Annual Meeting, 95% of the votes cast on the Say-on-Pay proposal approved the compensation of our NEOs. The Committee believes that this shareholder vote strongly endorses the Company’s compensation philosophy and programs. The Committee took this support into account as one of many factors it considered in connection with the discharge of its responsibilities (as described in this Compensation Discussion and Analysis) in exercising its judgment in establishing and overseeing our executive compensation arrangements throughout the year.

Our Compensation Components and Programs

 

 

Base Salary

Base salary is the only fixed portion of our NEOs’ compensation package. Salary levels are intended to reflect specific responsibilities, performance and experience, while taking into account market compensation levels for comparable positions. Although base salary makes up less than one-fourth of our NEOs’ aggregate target compensation, it’s the foundation for the total package with the variable compensation components set as percentages of base salary:

 

Name		2020 Base Salary				Annual Incentive: Target Percentage of Base Salary		LTI Awards:         Target Percentage              of Base Salary
Karl G. Glassman, CEO		$	1,225,000			120%		458%
Jeffrey L. Tate, CFO			570,000			80%		250%
J. Mitchell Dolloff, COO			700,000			100%		300%
Steven K. Henderson, EVP			530,000			80%		200%
Scott S. Douglas, SVP			450,000			60%		175%

The Committee reviews and determines the NEOs’ base salaries (along with the rest of their compensation packages) during the annual review, which is discussed on page 30.

 

		24		2021 Proxy Statement

Compensation Discussion & Analysis

 

In the spring of 2020, the Company initiated a variety of cost-cutting measures in response to the economic downturn and uncertainty caused by the COVID-19 pandemic. Upon recommendation of the Company’s senior management team, the Committee reduced the base salaries of all executive officers, including the NEOs, by 50%. The reductions went into effect April 12, 2020 and were initially set for an indefinite time period. As demand rebounded for many of our businesses, the Committee prospectively reinstated all executive officer 2020 base salaries to their initial levels, effective July 5, 2020.

Annual Incentive

Our NEOs earn their annual incentive, a cash bonus paid under the Key Officers Incentive Plan, based on achieving certain performance targets for the year.

Our executive officers are divided into two groups under the KOIP for 2020, depending upon their areas of responsibility: (i) corporate participants (Glassman, Tate, Dolloff, and Douglas), whose performance criteria and payouts are based on the Company’s overall results, and (ii) Mr. Henderson as a profit center participant whose performance targets are set for the operations under his control. In prior years, the NEOs also had individual performance goals (IPGs) as part of their annual incentive, but the IPGs were suspended for 2020 due to several transitions in responsibilities during the year.

Each NEO has a target incentive amount—the amount received for achieving exactly 100% of all performance goals. The target incentive amount is the officer’s base salary multiplied by his target incentive percentage. At the end of the year, the target incentive amount is multiplied by the payout percentages for the various performance metrics (each with its own weighting) to determine the annual incentive payout.

Performance Metrics. The Committee chose ROCE⁽¹⁾ as the primary incentive target with a 60% weighting to improve earnings and maximize returns on key assets by carefully managing working capital and fixed asset investments. The annual incentive is also based upon cash flow⁽²⁾, which is critical to fund the Company’s ongoing operations, capital expenditures, dividends and deleveraging. With the elimination of IPGs for the 2020 annual incentive, the weighting for cash flow was increased to 40% in support of the Company’s goal to pay down the debt incurred to acquire Elite Comfort Solutions in 2019. Profit center participants are also subject to an adjustment ranging from a potential 5% increase for exceptional safety performance to a 20% deduction for their operations’ failure to achieve safety, audit and environmental standards.

 

(1)	Return on Capital Employed (ROCE) = Earnings Before Interest and Taxes (EBIT) ÷ quarterly average of Net Plant Property and Equipment (PP&E) and Working Capital (excluding cash and current maturities of long-term debt).

 

(2)	For corporate participants: Cash Flow = Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) +/- Change in Working Capital (excluding cash and current maturities of long-term debt) + Non-Cash Impairments – Capital Expenditures.

For profit center participants: the same formula is used, except (i) EBITDA is adjusted for currency effects and (ii) change in working capital excludes balance sheet items not directly related to ongoing activities.

ROCE and cash flow calculations are adjusted for all items of gain, loss or expense (i) from non-cash impairments; (ii) related to loss contingencies identified in the Company’s 10-K relating to the fiscal year immediately preceding the performance period; (iii) related to the impact of the coronavirus outbreak on the Company’s operations; (iv) related to the disposal of a segment of a business; or (v) related to a change in accounting principle. Financial results from acquisitions are excluded from calculations in the year of acquisition. Financial results from businesses divested during the year are included, but targets relating to the divested businesses will be prorated to reflect only that portion of the year prior to the divestiture. Financial results from businesses classified as discontinued operations are included in the calculations. Financial results exclude (i) certain currency and hedging-related gains and losses, (ii) gains and losses from asset disposals, and (iii) items that are outside the scope of the Company’s core, on-going business activities.

 

		25

Compensation Discussion & Analysis

 

Targets and Payout Schedules. Upon selecting the metrics, the Committee established performance targets and payout schedules. In setting the payout schedules, the Company evaluated various payout scenarios before selecting one that struck a balance between accountability to shareholders and motivation for participants. The payout for each portion of the annual incentive is capped at 150%.

 

 

(1)	The 2020 results for corporate participants (Glassman, Tate, Dolloff, and Douglas) were 36.9% ROCE (resulting in a 99.4% payout) and $687.6 million of cash flow (resulting in a 150% payout).

 

(2)	As a profit center participant, Mr. Henderson’s target for a 100% payout was 45.6% ROCE (39.3% actual) and $318.9 million free cash flow ($325.7million actual) for the Specialized and FF&T Segments.

The following table provides the details of the 2020 annual incentive payouts for our NEOs:

 

Name		Target Incentive Amount																Weighted Payout Percentage																		Annual Incentive Payout
Karl G. Glassman, CEO			$1,470,000												x			119.6%															=				$1,758,120
			Salary				x				Target %							Metric			Payout	%			x				Weight
			$1,225,000								120%							ROCE			99.4%								60%
																		Cash Flow			150%								40%
Jeffrey L. Tate, CFO			$456,000												x			119.6%															=				$545,376
			Salary				x				Target %							Metric			Payout %				x				Weight
			$570,000								80%							ROCE			99.4%								60%
																		Cash Flow			150%								40%
J. Mitchell Dolloff, COO			$700,000												x			119.6%															=				$837,200
			Salary				x				Target %							Metric			Payout	%			x				Weight
			$700,000								100%							ROCE			99.4%								60%
																		Cash Flow			150%								40%
Steven K. Henderson, EVP			$424,000												x			85.8%															=				$363,792
			Salary				x				Target %							Metric			Payout %				x				Weight
			$530,000								80%							ROCE			72%								60%
																		FCF			104%								40%
																		+1% Compliance Adjustment
Scott S. Douglas, SVP			$270,000												x			119.6%															=				$322,920
			Salary				x				Target %							Metric			Payout	%			x				Weight
			$450,000								60%							ROCE			99.4%								60%
																		Cash Flow			150%								40%

 

		26		2021 Proxy Statement

Compensation Discussion & Analysis

 

Long-Term Incentive, Equity-Based Awards

For over ten years, 100% of our executives’ and senior managers’ long-term incentive awards have been performance-based. In 2018, we modified our LTI awards to consist of PSUs with vesting based 50% on relative TSR and 50% on EBIT CAGR. In 2019, we gathered feedback from participants on the updated LTI programs and benchmarked our programs against the broader market. At the end of this process, the Committee determined that the 2020 LTI awards for our executive officers would be reallocated as follows:

 

•

Two-thirds of the target award value will be granted as PSUs based on relative TSR and EBIT CAGR over a three-year performance period.

 

•

One-third of the target award value will be granted as restricted stock units (RSUs) vesting in one-third increments over three years.

We believe the 2020 changes brought our LTI practices closer to market with an appropriate mix of performance-based and time-based awards to make us more competitive for talent while continuing to support our business objectives.

Three-Year Performance Stock Units. We grant performance stock units to our NEOs and other senior managers to tie their pay to the Company’s performance and shareholder returns. The payouts from these equity-based awards reflect our philosophy that executive compensation should provide greater rewards for superior performance, as well as accountability for underperformance.

Leggett’s long-term focus emphasizes profitable growth and the Company’s TSR relative to peer companies. The PSU awards support our operational and market-based goals by allocating 50% of payout to EBIT CAGR results and 50% to our relative TSR performance. The vesting schedules for the PSU awards are as follows:

 

 

(1)

Relative TSR is the Company’s Total Shareholder Return compared to a peer group consisting of all the companies in the industrial, consumer discretionary and materials sectors of the S&P 500 and S&P 400 (approximately 300 companies). Although Leggett is a member of the S&P 500, our market capitalization is significantly below that group’s median, so the Committee included the S&P Midcap 400 in the group as well. In addition, nearly all of our business units fall into these industry sectors.

 

(2)

EBIT CAGR is the Company’s or applicable Segments’ compound annual growth rate of Earnings Before Interest and Taxes (EBIT) in the third fiscal year of the performance period compared to the Company’s (or applicable Segments’) EBIT in the fiscal year immediately preceding the performance period. The calculation of EBIT CAGR will include results from businesses acquired during the performance period and will exclude results for any businesses divested during the performance period. EBIT CAGR will also exclude (i) results from non-operating branches, (ii) certain currency and hedging-related gains and losses, (iii) gains and losses from asset disposals, (iv) items that are outside the scope of the Company’s core, on-going business activities, and (v) with respect to Segments, all amounts relating to corporate allocations. EBIT CAGR will be adjusted to eliminate gain, loss or expense, as determined in accordance with standards established under Generally Accepted Accounting Principles, (i) from non-cash impairments; (ii) related to loss contingencies identified in footnotes to the financial statements in the Company’s 10-K relating to the fiscal year immediately preceding the performance period; (iii) related to the disposal of a segment of a business; or (iv) related to a change in accounting principle.

 

		27

Compensation Discussion & Analysis

 

Three-Year Restricted Stock Units. Beginning in 2020, one-third of our executives’ LTI awards were granted as RSUs vesting in one-third increments over three years. The unvested RSUs do not accrue dividends. The variable payout of the RSUs based on the Company’s stock price ties the executives’ compensation to the Company’s performance, but the time-based vesting offers an appropriate level of stability to their equity-based compensation.

In addition to Mr. Henderson’s LTI target award percentage approved by the Committee during the annual review as described on page 31, he also receives an annual award of 4,000 RSUs. This annual award was negotiated as part of Mr. Henderson’s pay package when he joined the Company in 2017.

Other Compensation Programs

The NEOs voluntarily defer substantial portions of their cash compensation into Leggett equity through the Executive Stock Unit Program and the Deferred Compensation Program to build an additional long-term stake in the Company. The Company also provides 401(k) and non-qualified excess plans in which some of our executives choose to participate.

Executive Stock Unit Program. All our NEOs participate in the ESU Program, our primary executive retirement plan. These accounts are held until the executive’s employment is terminated.

The ESU Program is a non-qualified retirement program that allows executives to make pre-tax deferrals of up to 10% of their compensation into diversified investments. We match 50% of the executive’s contribution in Company stock units, purchased at a 15% discount, which may increase up to a 100% match if the Company meets annual ROCE targets linked to the Key Officers Incentive Plan. The Company makes an additional 17.65% contribution to the diversified investments acquired with executive contributions. Matching contributions vest once employees have participated in the ESU Program for five years. Leggett stock units held in the ESU Program accrue dividends, which are used to acquire additional stock units at a 15% discount. At distribution, the balance of the diversified investments is paid in cash. Although the Company intends to settle the stock units in shares of the Company’s common stock, it reserves the right to distribute the balance in cash.

Deferred Compensation Program. The Deferred Compensation Program allows key managers to defer up to 100% of salary, incentive awards and other cash compensation in exchange for any combination of the following:

 

•

Stock units with dividend equivalents, acquired at a 20% discount to the fair market value of our common stock on the dates the compensation or dividends otherwise would have been paid.

 

•

At-market stock options with the underlying shares of common stock having an initial market value five times the amount of compensation forgone, with an exercise price equal to the closing market price of our common stock on the grant date (December 15 of the year in which the deferral election is made).

 

•

Cash deferrals accruing interest at a rate intended to be slightly higher than otherwise available for comparable investments.

Participants who elect a cash or stock unit deferral can receive distributions in a lump sum or in annual installments. Distribution payouts must begin no more than 10 years from the effective date of the deferral and all amounts subject to the deferral must be distributed within 10 years of the first distribution payout. Although the Company intends to settle the stock units in shares of the Company’s common stock, it reserves the right to distribute the balance in cash. Participants who elect at-market stock options, which have a 10-year term, may exercise them approximately 15 months after the start of the year in which the deferral was made.

Retirement K and Excess Plan. The Company’s defined benefit Retirement Plan was frozen in 2006 (see description on page 39). Employees who had previously participated in the Retirement Plan were offered a replacement benefit: a tax-qualified defined contribution Section 401(k) Plan (Retirement K). The Retirement K includes an age-weighted Company matching contribution designed to replicate the benefits lost by the Retirement Plan freeze. Employees who did not participate in the Retirement Plan when it was frozen in 2006 are eligible to contribute to the Company’s 401(k) plan with an alternate matching contribution schedule.

 

		28		2021 Proxy Statement