Costa's total compensation moved higher in 2018

Hank Hayes • May 2, 2019 at 6:45 PM

KINGSPORT — Eastman Chairman and CEO Mark Costa’s total compensation moved from $14.4 million in 2017 to $15.9 million in 2018, according to the company’s 2019 proxy statement.

Costa took over the top job at Eastman in 2014, succeeding Jim Rogers.

Costa’s compensation included $1.2 million in base salary, $9.6 million in stock awards, $2.9 million in option awards, $1.5 million in non-equity incentive plan compensation, about $186,200 in change in pension value and non-qualified deferred compensation earnings and approximately $373,000 in other compensation.

The proxy statement noted Costa partially met a commitment in the company’s overall financial and business performance, including progress in transformation to a more specialty product earnings mix; partially met an employee safety and wellness commitment; met a commitment in growth and innovation; met a productivity commitment; and met an organizational capabilities commitment.

“In 2018, we continued to make progress in our transformation to a leading innovative additives and advanced materials company despite significant challenges in the fourth quarter,” the proxy statement said. “ … Fourth quarter and full-year results were negatively impacted by deteriorating business conditions attributed to uncertainty from the U.S.-China trade dispute and a slowdown in the European economy resulting in more volatile raw material prices and greater than normal seasonal customer inventory destocking.”

Despite those challenges, the proxy statement pointed out, Eastman increased adjusted earnings per share by 8 percent; had 6 percent higher sales revenue of $10.2 billion, an all-time high; generated $1.08 billion in free cash flow; and returned $718 million to stockholders through a combination of share repurchases and an increased dividend.

For 2018, the variable portion of cash compensation paid to about 900 management level employees, including the executive team, was determined under Eastman’s Unit Performance Plan (UPP).

The 2018 UPP payout pool was determined based 75 percent on the company’s earnings before interest and taxes and 25 percent on free cash flow.

Eastman’s Compensation Committee compared total annual cash compensation against about 20 companies, including DowDuPont Inc., Air Products and Chemicals, Monsanto and PPG Industries Inc.

“The compensation of the executive officers is appropriate based on Eastman’s performance and the competitive market,” the proxy statement pointed out.

Eastman is a Kingsport-based global advanced materials and specialty additives company that produces a broad range of products found in items people use every day.

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