10-K: O-I Glass, Inc. Adopts Second Amended and Restated Directors Deferred Compensation Plan

O-I Glass, Inc. has adopted a second amended and restated directors deferred compensation plan to allow board members to defer their compensation.

Summary

• O-I Glass, Inc. has implemented a Second Amended and Restated Directors Deferred Compensation Plan, effective December 5, 2023.
• The plan allows non-employee members of the Board of Directors to defer receipt of all or part of their cash compensation.
• Directors can choose to allocate deferred compensation into a Cash Account, which accrues interest based on Moody's A-rated corporate bond yields, or a Company Stock Account, which is credited with Company Stock Units.
• Deferral elections must be made by December 31 of the year before the compensation is earned, with exceptions for new directors.
• Re-deferral of payments is allowed once per year, at least 12 months before the original payment date, and must extend the payment by at least five years.
• Distributions can be made as a lump sum or in annual installments, following a specified date or separation from service.
• The plan is unfunded, and participants have no greater rights than unsecured general creditors of the company.
• The plan is intended to comply with Section 409A of the Internal Revenue Code.

Sentiment

Score: 7

Explanation: The document is a standard legal document outlining a compensation plan. It is well-structured and compliant, indicating a positive but neutral sentiment from an investment perspective.

Positives

• The plan provides flexibility for directors to manage their compensation and tax liabilities.
• The plan offers options for both cash-based and stock-based deferral accounts.
• The interest rate on the Cash Account is tied to a reliable market benchmark.
• The plan allows for re-deferral of payments, providing additional flexibility.
• The plan is designed to comply with Section 409A of the Internal Revenue Code, ensuring tax compliance.

Negatives

• The plan is unfunded, meaning participants are unsecured general creditors of the company.
• The plan does not provide any guaranteed rate of return on the Cash Account, as it is tied to market rates.
• The plan does not provide any voting rights or other stockholder rights to participants holding Company Stock Units.

Risks

• The plan is subject to changes in interest rates, which could affect the returns on the Cash Account.
• The value of Company Stock Units is subject to market fluctuations.
• The plan is unfunded, meaning participants are subject to the credit risk of the company.
• Changes in tax laws could affect the tax treatment of deferred compensation.
• The plan is subject to the risk of non-compliance with Section 409A of the Internal Revenue Code.

Future Outlook

The plan is intended to comply with Section 409A of the Internal Revenue Code, and the Administrator may adopt amendments to ensure compliance.

Management Comments

• The plan is intended to permit certain members of the Board of Directors to elect to defer receipt of all or part of their Compensation.
• Any construction or interpretation of the Plan by the Administrator shall be final and binding on all parties.

Industry Context

Deferred compensation plans are common for board members of public companies, allowing them to manage their tax liabilities and align their interests with the long-term performance of the company.

Comparison to Industry Standards

• The plan's structure, offering both cash and stock-based deferral options, is consistent with industry standards for director compensation.
• The use of Moody's A-rated corporate bond yields as a benchmark for interest accrual is a common practice in deferred compensation plans.
• The plan's compliance with Section 409A of the Internal Revenue Code is a standard requirement for such plans.
• The flexibility in distribution options, including lump sum and installment payments, is also typical of these types of plans.
• Many companies offer similar plans, including those in the S&P 500, such as Coca-Cola, PepsiCo, and other large cap companies.

Stakeholder Impact

• Shareholders may benefit from the alignment of director interests with long-term company performance.
• Directors will have more control over their compensation and tax planning.
• The plan is not expected to have a significant impact on employees, customers, or suppliers.

Next Steps

• Directors will need to make deferral elections by December 31 of each year.
• The Administrator will manage the plan and may adopt amendments to ensure compliance with Section 409A.
• The Company will provide annual statements to participants regarding their account balances.

Key Dates

Keywords

deferred compensation, directors, stock units, cash account, compensation plan, Section 409A, board of directors, deferral election, re-deferral, unfunded plan