DEF: Atmus Filtration Technologies Outlines Board Declassification and Governance Enhancements in 2025 Proxy Statement

Atmus Filtration Technologies' 2025 proxy statement details proposals to declassify the board, eliminate supermajority voting, and remove legacy parent provisions, alongside strong financial results and executive compensation highlights.

Summary

• Atmus Filtration Technologies has released its 2025 Proxy Statement, outlining key proposals for the upcoming Annual Meeting of Stockholders on May 20, 2025.
• The company aims to declassify its Board of Directors, phase-in annual director elections, eliminate supermajority voting provisions, and remove legacy parent provisions from its Certificate of Incorporation.
• In 2024, Atmus grew revenue to $1,670 million, a 2.5% increase from 2023, and achieved $330 million in adjusted EBITDA.
• The company completed a share exchange with Cummins, marking its full independence.
• Executive compensation highlights include adjustments to salary, target bonus, and long-term incentives for named executive officers (NEOs).
• The proxy statement also includes details on corporate governance, executive and director compensation, audit matters, and other important information for stockholders.

Sentiment

Score: 7

Explanation: The document presents a positive outlook with strong financial results and strategic initiatives, but also acknowledges potential risks and uncertainties.

Positives

• Revenue increased by 2.5% to $1,670 million despite challenging market conditions.
• Adjusted EBITDA reached $330 million, indicating strong profitability.
• The company successfully completed a share exchange with Cummins, achieving full independence.
• Atmus outperformed the S&P 500 and S&P 500 Industrial benchmarks in terms of cumulative total shareholder return throughout 2024.
• Supply chain transformation efforts resulted in improved on-shelf availability and cost savings.
• The company is investing in its Atmus culture and core values.

Risks

• The proxy statement contains forward-looking statements subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those projected.
• These risk factors are described in the company's 2024 Form 10-K and other reports filed with the SEC.

Future Outlook

With a solid balance sheet and liquidity, Atmus continues to be well-positioned to fund investments to drive growth and stockholder value creation.

Management Comments

• 2024 was an unforgettable year at Atmus, in which the completion of a successful share exchange marked our full independence as a company from Cummins.
• We established a reputation for disciplined execution and continued to deliver on our growth strategy.

Industry Context

Atmus is one of the global leaders of filtration products for on-highway commercial vehicles and off-highway agriculture, construction, mining and power generation vehicles and equipment.

Comparison to Industry Standards

• The Compensation Peer Group used to support 2024 compensation decisions was reviewed and adopted by the TMCC in May 2023 with assistance from its then current independent compensation consultant, Farient Advisors.
• The peer group was selected considering (i) companies that trade on the major U.S. stock exchanges and are primarily based in the U.S.; (ii) companies with an industrial machinery focus; (iii) companies with annual revenues of between $500 million and $5 billion; (iv) companies with a similar customer type mix, (v) and companies believed to represent a relevant competitor for executive talent.
• Atmus compensation peer group for 2024 is comprised of the following companies: A.O. Smith Corporation (AOS), Chart Industries, Inc. (GTLS), Donaldson Company Inc. (DCI), Dorman Products Inc. (DORM) (1), Enerflex Ltd. (EFXT) (1), EnPro Industries, Inc. (NPO), ESCO Technologies Inc. (ESE), Flowserve Corporation (FLS), Franklin Electric Co., Inc. (FELE), Gates Industrial Corporation plc (GTES), Graco Inc. (GGG), Helios Technologies (HLIO), Kadant Inc (KAI), IDEX Corporation (IEX), Nordson Corp (NDSN), Pentair plc (PNR), RBC Bearings (RBC), SPX Technologies, Inc. (SPX), Watts Water Technologies, Inc. (WTS).

Management Changes

Corporate Governance

Related Party Transactions

• On May 29, 2023, in connection with the IPO, Atmus entered into a separation agreement and a number of other agreements with Cummins to effect the separation of Atmus business from Cummins and to provide a framework for Atmus ongoing relationship with Cummins after the IPO and the separation, each of which remains in effect as of the date of this Proxy Statement.

Stakeholder Impact

• The proposed governance changes aim to create long-term value for stockholders.
• Executive compensation programs are designed to attract, motivate, and retain talented individuals.
• The company is committed to equal employment opportunities in assembling its Board of Directors.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The Annual Meeting of Stockholders will be held virtually on May 20, 2025.
• The Board will adopt conforming changes to the bylaws if the Charter amendment is approved.

Key Dates

Keywords

proxy statement, corporate governance, executive compensation, board declassification, annual meeting, Atmus Filtration Technologies, Cummins, adjusted EBITDA, revenue, directors