Unvested equity awards outstanding on the date of termination are generally cancelled, except for
employees who qualify as retirement eligible under the terms of our equity incentive plans, whose awards are accelerated upon termination of service. Mses. Hill and Miller retired from our company at the end of fiscal year 2020 and qualified as
retirement eligible under these plans. As a result, all of their unvested PUs and MSUs were eligible to vest on a prorated basis after their respective performance periods based on actual performance.
For additional information regarding potential NEO benefits under these plans, including the treatment of equity awards under various termination
scenarios, see Payments Upon Termination as of January 2, 2021 in Executive Compensation Tables.
Severance Following
Involuntary Termination Not for Cause
Our NEOs (excluding Mses. Hill and Miller) are eligible to receive severance benefits upon involuntary
termination not for cause, in accordance with the terms and conditions of the Severance Plan. In the event of a qualifying termination, our CEO would be eligible to receive two times the sum of his annual salary, his target AIP award
for the year of termination, and the cash value of 12 months of his qualified medical and dental insurance premiums; our other still-participating NEOs would be eligible to receive one times his or her respective sum of these amounts.
Eligible NEOs would also be eligible to receive up to $25,000 in outplacement services for up to one year following termination of employment. Any payments made under the Severance Plan would be offset by any payments received by the NEO under any
statutory, legislative and regulatory requirement or, if applicable, the COC Severance Plan.
Severance Following Change of Control
Our NEOs (excluding Mses. Hill and Miller) are eligible for severance payments upon termination not for cause or by the executive for
good reason within 24 months of a change of control of our company, in accordance with the terms and conditions of the COC Severance Plan. In the event of a qualifying termination following a change of control, our
CEO would be eligible to receive three times the sum of his annual salary, his target AIP award for the year of termination, and the cash value of 12 months of his qualified medical and dental insurance premiums; our other still-participating
NEOs would be eligible to receive two times his or her respective sum of these amounts. Eligible NEOs would also be eligible to receive a pro rata AIP award for the year of termination and up to $25,000 in outplacement services for up to one
year following termination of employment. Any payments under the COC Severance Plan would be offset by any payments received by the NEO under the Severance Plan and any other statutory, legislative and regulatory requirement.
Under our equity incentive plans, unvested equity awards granted to our NEOs would generally vest only if the NEO is terminated without cause
or resigns for good reason within 24 months after the change of control. Outstanding PUs and MSUs granted beginning in 2018 would vest based on actual performance, if determinable, and otherwise based on target performance.
Our NEOs are not eligible to receive any excise tax gross-up on amounts payable under the COC Severance Plan. If
an NEO would otherwise incur excise taxes under Section 4999 of the Code, payments under the COC Severance Plan would be reduced so that no excise taxes would be due if the reduction results in a greater
after-tax benefit to the NEO.
COMPENSATION-SETTING TOOLS
Market Survey Data
The Committee annually considers market survey data to target TDC, looking at companies of similar size with respect to annual revenues that span all
industries to reflect the broad talent market across which we seek our executives. The Committee reviews results from a third-party survey to understand market compensation practices and assess our competitiveness, narrowing the scope of the results
to account for variations caused by company size.
In February 2020, the Committee was presented with
industry-wide data from the most recent Willis Towers Watson U.S. Compensation General Industry Database, which was narrowed in scope to focus on data of the 48 participants with $6 billion to
$10 billion in annual revenue. The Committee reviewed the data with executive matches based on job and functional responsibility on an aggregated basis, with no consideration of the surveys component companies, which were not determined
or known by the Committee.
The Committee uses the survey data as a reference point to target TDC and the components thereof, giving consideration to
the market median, responsibilities, individual performance, tenure, retention and succession.
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Avery Dennison Corporation | 2021 Proxy Statement
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