UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.   )

 

Check the appropriate box:

Lydall, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

NOTICE OF ANNUAL MEETING

To: The Owners of Lydall, Inc. Common Stock

You are cordially invited to attend the Annual Meeting of Stockholders.

The Annual Meeting of Stockholders will be held for the purposes of:

All stockholders are invited to attend the Annual Meeting. However, whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. Therefore, we urge you to vote promptly and submit your proxy by telephone, via the Internet, or by signing, dating and returning the enclosed proxy card in the enclosed prepaid envelope. If you decide to attend the Annual Meeting, you have the right to vote in person even if you have previously submitted your proxy. If you hold your stock in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

Sincerely,

Chad A. McDaniel
Senior Vice President, General Counsel,
Chief Administrative Officer and Secretary

Manchester, CT
March 10, 2016

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 29, 2016.

This proxy statement, along with the Lydall, Inc. 2015 Annual Report and Form 10-K,
are available free of charge on our website at:
www.lydall.com and by clicking on Investor Relations.

TABLE OF CONTENTS

INFORMATION ABOUT THE ANNUAL MEETING			1
PROPOSAL 1 — ELECTION OF DIRECTORS			5
Nominees and Qualifications			6
PROPOSAL 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION			9
PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR			10
Principal Fees and Services			10
CORPORATE GOVERNANCE			11
General			11
Committees			11
Nomination Process			13
Nominations by Stockholders			14
Leadership Structure			14
Independence Determination			14
Compensation Committee Interlocks and Insider Participation			14
Risk Oversight			14
Related Party Transactions			15
Board Attendance			15
Communications With Directors			16
Additional Disclosures			16
REPORT OF THE AUDIT REVIEW COMMITTEE			17
COMPENSATION DISCUSSION AND ANALYSIS			18
Overview — Executive Summary			18
Key Compensation Decisions			18
Compensation Objectives			19
Create Incentives that Motivate Performance			19
Align Management and Stockholder Interests			19
Attract, Motivate and Retain Executives			19
Implementing Compensation Objectives			20
Overseeing Executive Compensation Programs			20
Determining Compensation			20
Role of Management			20
Role of Consultants			20
Elements of Compensation			21
Base Salary			21
Annual Incentive Performance Program			22
Sign-on Bonus			24
Long-Term Equity Incentive Awards			24
Grants Made as Part of 2015 Compensation			24
Payouts of Prior Awards Based on 2015 Performance			26
Adjustment or Recovery of Awards			26
Other Compensation			26

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Lydall, Inc.
One Colonial Road
Manchester, CT 06042-2378

 

PROXY STATEMENT

 

Lydall, Inc. (“we”, “Lydall” or the “Company”) is providing these proxy materials in connection with the solicitation by our Board of Directors (the “Board”) of proxies to be voted at our 2016 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Friday, April 29, 2016 beginning at 9:00 a.m. at the Hilton Hartford, 315 Trumbull Street, Hartford, Connecticut and at any postponements or adjournments thereof. This Proxy Statement is being mailed or otherwise furnished to stockholders on or about March 18, 2016. You should review this information together with our 2015 Annual Report to Stockholders, which accompanies this Proxy Statement.

Information about the Annual Meeting

Why did you send me this Proxy Statement?

We sent you this Proxy Statement and the enclosed proxy card because the Board is soliciting your proxy to vote at the Annual Meeting to be held on Friday, April 29, 2016 or any postponements or adjournments thereof. This Proxy Statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this Proxy Statement.

Who can vote at the Annual Meeting?

Only stockholders of record of Lydall’s Common Stock at the close of business on March 4, 2016 (the “Record Date”) are entitled to vote at the Annual Meeting and any postponement or adjournment thereof. As of the Record Date, there were 17,118,347 shares of Common Stock issued and outstanding, the holders of which are entitled to one vote per share.

How many shares must be present to conduct the Annual Meeting?

We must have a “quorum” present in person or by proxy to hold the Annual Meeting. A quorum is a majority of the outstanding shares entitled to vote. Votes withheld from any nominee, abstentions and broker non-votes (defined below) will be counted as present or represented for the purpose of determining the presence or absence of a quorum for the Annual Meeting.

What matters are to be voted upon at the Annual Meeting?

Three proposals are scheduled for a vote:

How does the Board recommend that I vote?

The Board recommends that you vote:

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How do I vote before the Annual Meeting?

With respect to the election of directors, you may vote “FOR” any or all of the nominees or withhold authority to vote for any or all nominees. For the advisory vote on the compensation of the Company’s Named Executive Officers, and the ratification of the selection of PricewaterhouseCoopers LLP as our independent auditor, you may vote “FOR” or “AGAINST” or abstain from voting.

If you hold your shares in your own name, you may vote as follows:

		Telephone — To vote by telephone, please follow the instructions on the enclosed proxy card. If you vote by telephone, it is not necessary to mail your proxy card.
		Internet — To vote over the Internet, please follow the instructions on the enclosed proxy card. If you vote on line, it is not necessary to mail your proxy card.
		Mail — To vote by mail, please complete, sign and mail the proxy card in the enclosed prepaid envelope.
		In Person — If you wish to vote in person, written ballots will be available at the Annual Meeting.

How do I vote if my broker holds my shares in “street name”?

If you hold your shares beneficially in street name, you may vote by submitting voting instructions to your broker, bank or other nominee. For directions on how to vote shares held beneficially in street name, please refer to the voting instruction card provided by your broker, bank or other nominee.

May I vote at the Annual Meeting?

Yes, if you hold your shares in your own name, you may vote your shares at the Annual Meeting if you attend in person. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting in person. If you hold your shares in street name, in order to vote in person at the Annual Meeting, you must request a proxy from your broker, bank or other nominee.

What should I do if I receive more than one set of proxy materials?

You may receive more than one set of these proxy materials, including multiple copies of this Proxy Statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive to ensure that all your shares are voted.

How many votes do I have?

Each share of Common Stock that you own as of the close of business on the Record Date entitles you to one vote on each nominee and on each other matter voted upon at the Annual Meeting.

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May I change my vote?

Yes, if you own shares in your own name, you may change your vote or revoke your proxy at any time before the vote at the Annual Meeting by executing a valid proxy bearing a later date and delivering it to us prior to the Annual Meeting at Lydall, Inc., One Colonial Road, Manchester, Connecticut 06042, Attn: Secretary. You may withdraw your vote at the Annual Meeting and vote in person by giving written notice to our Secretary. You may also revoke your vote without voting by sending written notice of revocation to our Secretary at the above address. However, if you are a beneficial owner whose shares are held of record by a broker, bank or other nominee, you must contact your broker, bank or other nominee to change your vote.

How are my shares voted if I submit a proxy but do not specify how I want to vote?

If you submit a properly executed and signed proxy card and return it without indicating how you would like to vote your shares, the persons named in the proxy card (or, if applicable, their substitutes) will vote your shares as the Board recommends, which is:

What is a broker non-vote?

If you are a beneficial owner whose shares are held of record by a broker, bank or other nominee, you must instruct the broker, bank or other nominee how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker, bank or other nominee does not have discretionary authority to vote. This is called a “broker non-vote.” In particular, brokers will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange (“NYSE”). If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares on the proposal to ratify the appointment of PricewaterhouseCoopers LLP even if the broker does not receive voting instructions from you. However, your broker does not have discretionary authority under NYSE rules to vote on the election of directors or on the advisory vote on executive compensation without instructions from you, and in the absence of instructions from you, a broker non-vote will occur and your shares will not be voted on these matters.

Your vote is important and we strongly encourage you to vote your shares by following the instructions provided on the voting instruction card. Please return your voting instructions to your broker, bank or other nominee and contact the person responsible for your account to ensure that your shares are voted on your behalf.

What vote is required to elect directors?

Under our Bylaws, Directors are elected by a plurality of the votes cast by stockholders entitled to vote at the Annual Meeting. This means that the nominees receiving the highest number of votes, whether or not a majority of the total number of votes cast, will be elected. Neither votes that are withheld nor broker non-votes will affect the outcome of the election of Directors.

What happens in an uncontested election if an incumbent director does not receive a majority of the votes cast on his or her election?

Our Board has adopted a majority voting policy with respect to the election of Directors, which is set forth in the Corporate Governance Guidelines of the Company. Under this policy, in uncontested elections, an incumbent Director nominee is required to tender his or her resignation if the number of shares voted “for” a Director’s election is less than 50% of the number of the votes cast with respect to that Director’s election. For this purpose, votes cast include votes to withhold authority but exclude broker non-votes.

The Corporate Governance Committee will make a recommendation to the Board as to whether to accept or reject the tendered resignation, or take any other action. The Board will act on the tendered resignation, taking into account the Corporate Governance Committee’s recommendation, and publicly disclose its decision and rationale within 90 days from the date of the certification of the election results. The Corporate Governance Committee, in making its recommendation, and the Board, in making its decision, may each consider any factors or other information that they consider appropriate and relevant and may act in their sole and absolute

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discretion. The Director who has tendered his or her resignation in accordance with this policy may not participate in the consideration of such tendered resignation by either the Corporate Governance Committee or the Board.

If an incumbent Director’s resignation is not accepted by the Board, such Director will continue to serve until the next Annual Meeting and until his or her successor is duly elected and qualified, or his or her earlier resignation or removal. If a Director’s resignation is accepted by the Board, then the Board, in its sole discretion, may fill the resulting vacancy or otherwise take action pursuant to the applicable provisions of the Company’s Bylaws and the Company’s Restated Certificate of Incorporation in effect at such time.

What vote is required to approve, on an advisory basis, the compensation of the Company’s Named Executive Officers?

This matter is being submitted to enable stockholders to approve, on an advisory basis, the compensation of the Company’s Named Executive Officers. In order to be approved on an advisory basis, this proposal must receive the affirmative vote of a majority of the shares present or represented at the Annual Meeting and entitled to vote and voting on the matter. Brokers are not entitled to vote on this proposal in the absence of voting instructions from the beneficial owner. Abstentions and broker non-votes are not considered to have been voted on this matter and have the practical effect of reducing the number of affirmative votes required to achieve a majority for the matter by reducing the total number of shares from which the majority is calculated. This proposal is an advisory vote and the result will not be binding on the Board or the Company.

What vote is required to ratify the appointment of PricewaterhouseCoopers LLC as Lydall’s independent auditor for the fiscal year ending December 31, 2016?

Under the Company’s Bylaws, the affirmative vote of a majority of the shares present or represented at the Annual Meeting and entitled to vote and voting on the matter will constitute the stockholders’ approval. Because this proposal is considered a discretionary item for which a broker will have discretionary voting power, if you do not give instructions with respect to this proposal, there will be no broker non-votes with respect to this proposal. Abstentions are not considered to have been voted on this matter and have the practical effect of reducing the number of affirmative votes required to achieve a majority for the matter by reducing the total number of shares from which the majority is calculated.

Who will count the votes?

Votes will be counted by one or more inspectors of election appointed by the Board.

Who pays for the solicitation of proxies?

We will pay for the entire cost of soliciting proxies. We will also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners. In addition, our Directors and employees may solicit proxies in person, by telephone, via the Internet, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies.

How can I find out the results of the voting at the Annual Meeting?

We will announce preliminary results at the Annual Meeting. We will report final results in a filing with the “SEC” on a Current Report on Form 8-K within four business days after the Annual Meeting.

What is “householding” and how does it work?

The SEC’s “householding” rules permit us to deliver only one set of proxy materials to stockholders who share an address unless otherwise requested. This procedure reduces printing and mailing costs. If you share an address with another stockholder and have received only one set of proxy materials, you may request a separate copy of these materials at no cost to you by writing to Lydall, Inc. One Colonial Road, Manchester, Connecticut 06042, Attn: Secretary, or by calling us at (860) 646-1233. Alternatively, if you are currently receiving multiple copies of the proxy materials at the same address and wish to receive a single copy in the future, you may contact us by calling or writing to us at the telephone number or address given above.

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If you are a beneficial owner (i.e., your shares are held in the name of a broker, bank or other nominee), the broker, bank or other nominee may deliver only one copy of the notices of stockholder meetings and related proxy statements to stockholders who have the same address unless the broker, bank or other nominee has received contrary instructions from one or more of the stockholders. If you wish to receive a separate copy of the notices of stockholder meetings and proxy statements, now or in the future, you may contact us at the address or telephone number above and we will promptly deliver a separate copy. Beneficial owners sharing an address, who are currently receiving multiple copies of the notice of stockholder meetings and proxy statements and wish to receive a single copy in the future, should contact their broker, bank or other nominee to request that only a single copy be delivered to all stockholders at the shared address in the future.

PROPOSAL 1 — ELECTION OF DIRECTORS

The current term of office of all of the Company’s Directors expires at the Annual Meeting and when their successors are elected and qualified. The Corporate Governance Committee of the Board believes the Company is well-served by its current Directors, and accordingly, the Committee has nominated Dale G. Barnhart, Kathleen Burdett, W. Leslie Duffy, Matthew T. Farrell, Marc T. Giles, William D. Gurley, Suzanne Hammett, and S. Carl Soderstrom, Jr. for election as Directors of the Company until the next annual meeting of stockholders to be held in 2017 and until their successors are elected and qualified. Each nominee is currently serving as a Director of the Company, and each nominee has consented to serve if re-elected. If any nominee becomes unavailable to serve as a Director before the Annual Meeting, the Corporate Governance Committee may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Corporate Governance Committee.

In connection with its consideration of Director nominations for the Annual Meeting, the Corporate Governance Committee considered the factors described in the Corporate Governance section of this Proxy Statement, under “Nomination Process.” The Corporate Governance Guidelines of the Company specify that at least a majority of the members of the Board, as well as all of the members of the Audit Review Committee, the Compensation Committee and the Corporate Governance Committee, shall be “independent” within the meaning of the applicable NYSE rules. The Corporate Governance Committee has determined that each of the nominees for re-election, other than Mr. Barnhart, is “independent” as defined by the NYSE rules and that each of the nominees for re-election, including Mr. Barnhart, are free from the influence of any particular stockholder or group of stockholders whose interests may diverge from the interests of the Company’s stockholders as a whole. There are no family relationships between any Director, nominee for Director or executive officer of the Company. In addition, the Corporate Governance Committee has determined that each member of our Audit Review Committee is “financially literate” within the meaning of the NYSE rules and is an “audit committee financial expert” as defined under rules promulgated by the SEC. The Corporate Governance Committee has also determined that each member of the Compensation Committee meets the enhanced independence rules of the NYSE.

Under the Restated Certificate of Incorporation of the Company, the Board is empowered to establish the number of Directorships between three and fifteen. The Board has currently fixed the number of Directorships at eight.

Unless otherwise instructed, it is the intention of the persons named in the accompanying proxy card to vote for the Director nominees designated by the Corporate Governance Committee. Proxies cannot be voted for a greater number of persons than the number of nominees named.

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF ALL PERSONS NOMINATED BY THE CORPORATE GOVERNANCE COMMITTEE AS DIRECTORS OF THE COMPANY.

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Nominees and Qualifications

The following table contains certain biographical information pertaining to each nominee for election as a Director of the Company, including their business experience and other directorships. Each nominee brings a unique background and set of skills to our Board, giving the Board as a whole competence and experience in a wide variety of areas, including executive management, manufacturing, marketing, finance, legal, corporate governance, mergers and acquisitions, private equity and service on other public company boards of directors. Included in the table below is a discussion of each nominee’s principal experience, qualifications, attributes and skills that led the Corporate Governance Committee to conclude that he or she should serve as one of our Directors.

Name, Title, Age and Date Became a Director		Business Experience, Other Directorships and Qualifications
Dale G. Barnhart   President and Chief Executive Officer, Lydall, Inc.   Age: 63   Director Since: 2007		President and Chief Executive Officer of the Company since 2007. Mr. Barnhart was the Chief Executive Officer of Synventive Molding Solutions, a manufacturer of hot runner systems, machine nozzles, temperature controllers and sprue bushings for the injection molding industry, from 2005 to 2007. Prior to that, Mr. Barnhart was a consultant working with two private equity groups and was President of Invensys Climate Control, a provider of products and services to the heating, ventilating and air conditioning and commercial refrigeration markets.   As the President and Chief Executive Officer of the Company, Mr. Barnhart brings an in-depth understanding of the Company’s business, including its employees, products and markets, to our Board. In addition, Mr. Barnhart provides valuable insight through his prior executive management experience with other manufacturing businesses that are comparable to Lydall, including setting an overall strategic direction for company growth and implementing plans to effectively execute growth strategies including in international markets. Mr. Barnhart is also experienced in Lean Six Sigma, the business management strategy utilized by the Company to improve efficiency, reduce costs and meet customer expectations.
Kathleen Burdett   Former Vice President and Chief Financial Officer, Dexter Corporation   Age: 60   Director Since: 2003   Committees (since):		Ms. Burdett served as Vice President and Chief Financial Officer of Dexter Corporation (“Dexter”), a developer and manufacturer of nonwoven products primarily used in the food packaging, medical, and hygiene markets, specialty polymers primarily used in the aerospace and electronics markets and precise, reproducible biological, and biochemical products used for applications in the life sciences industry, from 1994 until Dexter’s merger with Invitrogen Corporation (“Invitrogen”), in 2000. From 2000 until her retirement in 2002, Ms. Burdett served as a consultant to Invitrogen. Prior to that, Ms. Burdett served as the Controller and Principal Accounting Officer of Dexter and as a member of the Board of Directors of Life Technologies, Inc. (“Life Technologies”), a majority owned subsidiary of Dexter, and as Chair of the Audit Committee and as a member of the Executive Committee and the Compensation Committee of Life Technologies.   As the former Vice President and Chief Financial Officer of a publicly held manufacturing company that manufactured and sold nonwoven fiber products, Ms. Burdett is familiar with the markets in which the Company’s Performance Materials business operates. In addition to her relevant industry experience, Ms. Burdett has experience serving as a Director of another publicly held company where she chaired its Audit Committee and served as a member of its Executive and Compensation Committees.
•   Audit Review Committee (2003)
•   Audit Review Committee, Chairperson (2004)
•   Corporate Governance Committee (2008)

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PROPOSAL 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION

At the 2011 Annual Meeting, the Board recommended and our stockholders approved the annual submission of stockholder advisory votes on the compensation of the Company’s Named Executive Officers (“Named Executive Officers” or “NEOs”), which is commonly referred to as “Say-on-Pay.” Accordingly, the Company submits a Say-on-Pay vote to its stockholders on an annual basis. Although the Say-on-Pay vote is non-binding, the Board and the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding the Company’s executive compensation programs.

The goal of the Company’s executive pay program is to align the interests of executives and stockholders and create long-term value for the Company’s stockholders. To this end, for 2015, the compensation of the NEOs and certain other members of management, consisted of four basic components, three of which were tied to performance against financial metrics and/or the market price of the Company’s stock:

For more information, please see “Compensation Discussion and Analysis: Overview — Executive Summary” and the discussion that follows.

For all of the NEOs, the annual cash bonus earned and the long term equity awards granted are tied to a mix of revenue, operating income, gross margin, free cash flow and/or earnings per share metrics — specific financial metrics that the Compensation Committee believes align to the creation of stockholder value. If a minimum threshold for a financial metric is not satisfied, no cash bonus is paid with respect to that metric, and the performance shares tied to that metric are forfeited. Similarly, stock options granted to the NEOs only have value if the share price of the Company’s stock appreciates from the date of grant.

Stockholders are urged to read the “Compensation Discussion and Analysis,” which discusses how the Company’s compensation policies and procedures implement the Company’s compensation philosophy, as well as the “2015 Summary Compensation Table” and other related compensation tables and the narrative disclosures that describe the compensation of the Company’s NEOs in fiscal 2015. The “Compensation Discussion and Analysis” highlights in more detail how the compensation of the NEOs in fiscal 2015 reflected our pay-for-performance philosophy and other key features of our executive compensation program that are designed to align the interests of the NEOs and stockholders. The Board and the Compensation Committee believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in implementing the Company’s compensation philosophy and in achieving its goals, and that the compensation of the NEOs in fiscal 2015 reflects and supports these compensation policies and procedures.

In accordance with Section 14A of the Securities Exchange Act (the “Exchange Act”), the Company is asking stockholders to indicate their approval of the compensation paid to the Company’s NEOs as described in this proxy statement. Accordingly, the Company is asking stockholders to vote “FOR” the following non-binding advisory resolution at the Annual Meeting:

“RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and any related material disclosed in this proxy statement, is hereby approved.”

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The outcome of this advisory vote does not overrule any decision by the Company or the Board (or any committees thereof), create or imply any changes to the fiduciary duties of the Company or the Board (or any committees thereof), or create or imply any additional fiduciary duties for the Company or the Board (or any committees thereof).

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.

PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR

The Audit Review Committee has appointed PricewaterhouseCoopers LLP (“PwC”) to serve as independent auditor to conduct an audit of the Company’s consolidated financial statements for the fiscal year ending December 31, 2016. PwC has audited the consolidated financial statements of the Company since 1995. Representatives of PwC are expected to be present at the Annual Meeting, will have the opportunity to make a statement at the Annual Meeting if they desire to do so, and are expected to be available to respond to appropriate questions.

In accordance with SEC rules and PwC policies, audit partners are subject to rotation requirements to limit the number of consecutive years of service an individual partner may provide audit service to the Company. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The current lead PwC engagement partner was designated commencing with the 2014 audit.

Appointment of the Company’s independent auditor is not required to be submitted to a vote of the stockholders of the Company for ratification. However, the Audit Review Committee has recommended that the Board submit this matter to the stockholders as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Review Committee will reconsider whether to retain PwC and may retain that firm, or another, without resubmitting the matter to the Company’s stockholders. Even if the appointment is ratified, the Audit Review Committee may, in its discretion, direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the Company and the stockholders.

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITOR FOR FISCAL YEAR 2016.

Principal Fees and Services

The following table presents fees for professional audit services for the audit of the Company’s annual consolidated financial statements for fiscal years ended December 31, 2015 and December 31, 2014, and fees for other services rendered by PwC during those periods:

Fee Category		Fiscal 2015				% of Total				Fiscal 2014				% of Total
Audit fees		$	1,134,000				100	%		$	1,413,500				94	%
Audit-related fees			—				—				—				—
Tax fees			—				—				91,200				6	%
All other fees			—				—				—				—
Total Fees		$	1,134,000				100	%		$	1,504,700				100	%

The decrease in the 2015 audit fees compared to the 2014 audit fees relates primarily to the absence in 2015 of the non-recurring fees incurred in 2014 in connection with the acquisition of the Industrial Filtration businesses.

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Audit fees are related to services rendered in connection with the annual audit of the Company’s consolidated financial statements, including Sarbanes-Oxley Section 404 controls testing, the quarterly reviews of the consolidated financial statements included in the Company’s quarterly reports on Form 10-Q and international statutory audits. The majority of the work was performed by full-time, permanent employees of PwC. Tax fees primarily relate to various tax-related consultations.

All of the services described above were approved by the Audit Review Committee pursuant to the SEC rules that require audit committee pre-approval of audit and non-audit services. On an ongoing basis, management communicates specific projects and categories of services for which advance approval of the Audit Review Committee is required. The Audit Review Committee reviews these requests and advises management and the independent auditor if the Audit Review Committee pre-approves the engagement of the independent auditor for such projects and services. On a periodic basis, the independent auditor reports to the Audit Review Committee the actual spending for such projects and services as compared with the approved amounts. The Audit Review Committee may delegate the ability to pre-approve audit and permitted non-audit services to a sub-committee or the Chair of the Audit Review Committee, provided that any such pre-approvals are reported at the next Audit Review Committee meeting.

The Audit Review Committee has considered whether the services provided by PwC, other than audit services, are compatible with maintaining that firm’s independence and has concluded that PwC is independent.

CORPORATE GOVERNANCE

General

Pursuant to the Delaware General Corporation Law and the Company’s Bylaws, the Company’s business, property and affairs are managed by or under the direction of the Board. Members of the Board are kept informed of the Company’s business through discussions with the Chief Executive Officer and other officers, by reviewing materials provided to them, and by participating in meetings of the Board and its committees.

The Company is committed to good corporate governance practices and has adopted Corporate Governance Guidelines to provide a framework for the effective governance of the Company. The Corporate Governance Committee periodically reviews the Corporate Governance Guidelines and recommends changes, as appropriate, to the Board for approval.

The Board has three standing committees to assist the Board in executing its responsibilities: the Audit Review Committee, the Compensation Committee and the Corporate Governance Committee. In accordance with NYSE rules, each Committee is comprised solely of non-employee, independent Directors, within the meaning of the applicable NYSE rules. The Board has adopted a charter for each of the three standing committees, and the Company has a Code of Ethics and Business Conduct (the “Code”) applicable to all Directors, officers and employees. Links to the Corporate Governance Guidelines, charters and Code can be found on Lydall’s website at www.lydall.com. All materials available at www.lydall.com are also available to stockholders in print without charge, upon written request to Lydall, Inc., One Colonial Road, Manchester, CT 06042-2378, Attention: General Counsel.

Committees

The table below shows current membership and indicates the chairperson (*) for each of the standing Board committees.

Audit Review		Compensation		Corporate Governance
Kathleen Burdett*		Matthew T. Farrell		Kathleen Burdett
Matthew T. Farrell		Marc T. Giles		W. Leslie Duffy
Suzanne Hammett		William D. Gurley*		Marc T. Giles
S. Carl Soderstrom, Jr.		Suzanne Hammett		William D. Gurley
				S. Carl Soderstrom, Jr.*

The Audit Review Committee assists the Board in fulfilling its responsibility to oversee the integrity of the Company’s financial reporting process (including the performance of the Company’s systems of accounting and financial controls and the Company’s internal audit function), the outside auditor’s qualifications and independence, the Company’s process for monitoring compliance with applicable

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legal, regulatory and ethics programs, overseeing the procedures for employee complaints and concerns regarding questionable accounting or auditing matters, overseeing the annual independent audit of the Company’s financial statements, and the preparation of the Audit Review Committee Report required by the SEC to be included in the Company’s proxy statement.

The Audit Review Committee meets periodically with management to consider the adequacy of the Company’s internal controls and its financial reporting process, and reviews pending or threatened legal proceedings involving the Company and other material contingent liabilities. It also discusses these matters with the Company’s internal auditors, independent auditor, and appropriate Company financial and legal personnel. The Audit Review Committee reviews the Company’s financial statements and discusses them with management and the independent auditors before those financial statements are filed with the SEC.

The Audit Review Committee meets regularly in private session with the independent auditor, has the sole authority to retain and dismiss the independent auditor, pre-approves audit and non-audit services, and periodically reviews the independent auditor’s performance and independence from management. The independent auditor has unrestricted access to, and reports directly to, the Audit Review Committee.

The Audit Review Committee also reviews and approves the Company’s decision to enter into all swaps transactions, has adopted and reviews annually a policy relating to the Company’s use of the non-financial end-user exception (“Swaps Policy”) and reports to the Board annually on the Company’s compliance with the Swaps Policy.

Audit Committee Financial Expert — The Board has determined that each member of the Audit Review Committee is “financially literate” within the meaning of the NYSE rules and is an “audit committee financial expert” as that term is defined under Item 407(d)(5)(ii) of Regulation S-K.

The Compensation Committee has responsibility for the Company’s compensation of management, incentive plans and programs. The duties and responsibilities of the Compensation Committee include: making recommendations to the Board regarding the Company’s incentive and equity-based compensation plans and non-CEO compensation policy; reviewing and approving the Company’s goals and objectives relevant to compensation (such as the goal of attracting and retaining highly qualified individuals and motivating individual performance leading to increased stockholder value); determining and approving the Chief Executive Officer’s annual compensation, including incentive awards; reviewing the Company’s Compensation Discussion and Analysis (“CD&A”) with management and, based upon such review, considering whether it will recommend to the Board that the CD&A be included in the Company’s proxy statement; preparing the Compensation Committee Report for inclusion in the annual proxy statement; approving all grants of stock awards pursuant to the Company’s stock incentive compensation plans; approving all employment agreements and compensation arrangements for the CEO, the Named Executive Officers and other direct reports of the CEO; reviewing whether risks associated with the Company’s compensation policies and practices are reasonably likely to have a material adverse effect on the Company; reviewing the form and amount of compensation for non-management Directors and recommending changes to the Board; and retaining or obtaining advice from compensation advisors after taking into consideration certain independence factors related to said compensation advisors.

The Corporate Governance Committee has responsibility for developing Board membership and overseeing corporate governance of the Company. The Corporate Governance Committee is responsible for: identifying individuals who are qualified to become Board members consistent with criteria approved by the Board; selecting the Director nominees for the next Annual Meeting; making recommendations to the Board as to the membership and chairperson of each standing committee; developing and recommending to the Board a set of corporate governance guidelines applicable to the Company designed to provide for effective and efficient governance of the Company; overseeing the evaluation of the Board; and providing guidance on matters relating to corporate governance.

Other duties and responsibilities of the Corporate Governance Committee include: assessing whether a director nominee who does not receive a “majority of the votes cast” in an uncontested election of directors should continue to serve as a director; reviewing annually the relationships between directors, the Company and members of management and recommending to the Board whether each director qualifies as “independent”; periodically reviewing the Board’s leadership structure to assess whether it is appropriate given the specific characteristics or circumstances of the Company; overseeing the development of a succession plan for the Chief Executive Officer; evaluating the Chief

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Executive Officer’s performance annually and overseeing the evaluation of the Company’s executive officers; and reviewing and approving all director and officer indemnification and insurance arrangements.

Nomination Process

The Corporate Governance Committee is responsible for identifying individuals who are qualified to be Directors, consistent with criteria approved by the Board, and selecting the Director nominees for each Annual Meeting. The Corporate Governance Committee evaluates the skills and expertise needed by the Board and the skills and expertise that are possessed by current Board members. The Corporate Governance Committee seeks persons of the highest ethical standards and proven integrity, and with demonstrated ability and sound judgment, to serve as members of the Board.

When considering candidates for Director, the Corporate Governance Committee takes into account a number of factors, including the following criteria approved by the Board: (i) whether the candidate is independent under the NYSE rules, the rules and regulations under the Exchange Act and the independence standards adopted by the Board; (ii) whether the candidate has skills and expertise needed by the Board; (iii) whether the candidate has demonstrated ability and judgment; (iv) whether the candidate has prior experience as a corporate Director; (v) whether the candidate has prior public company experience; (vi) whether the candidate has prior experience in manufacturing companies; and (vii) the extent to which the candidate has other time commitments and obligations that might interfere with his or her duties and responsibilities as a Director. All members of the Audit Review Committee must meet the additional standards for independence applicable to members of an audit committee under Section 10A(m) of the Exchange Act and the NYSE rules and must satisfy the financial literacy requirements of the NYSE rules. At least one member of the Audit Review Committee must be an “audit committee financial expert,” as defined under rules promulgated by the SEC. All members of the Compensation Committee must meet the additional standards for independence applicable to members of a compensation committee under the NYSE rules.

Not all Directors need to fulfill all criteria; rather, the Corporate Governance Committee seeks candidates whose skills balance or complement the skills of other Board members.

No Director may sit on more than four boards of publicly-traded companies in addition to the board of the company by which he or she is employed.

The Corporate Governance Committee has not adopted a written policy with regard to the consideration of diversity when evaluating candidates for Director. However, in practice, the Corporate Governance Committee considers diversity of viewpoint, professional experience, education and skill in assessing candidates for the Board to ensure breadth of experience, knowledge and abilities within the Board. The Corporate Governance Committee does not assign specific weights to particular criteria that the Corporate Governance Committee reviews and no particular criterion is a prerequisite for the consideration of any prospective nominee.

When seeking candidates for Director, the Corporate Governance Committee may solicit suggestions from incumbent Directors, management or others. In some cases, the Corporate Governance Committee has employed a search firm to identify appropriate candidates and perform screening interviews and reference checks for candidates who are then interviewed by the Corporate Governance Committee and presented to the Board if appropriate.

Unless otherwise requested by the Corporate Governance Committee, a Director shall offer not to stand for re-election at any annual meeting that follows his or her seventieth birthday. In addition, a Director shall tender his or her resignation following any change in the Director’s employment status or principal position, or any other significant change in his or her personal circumstances. The Board may ask the Director not to resign, or may defer acceptance of the resignation. Mr. Duffy turned 76 on December 31, 2015 and offered not to stand for re-election at the Annual Meeting. After considering Mr. Duffy’s many contributions to the Board and his specialized experience in areas of critical importance to the Company, the Corporate Governance Committee recommended to the full Board that Mr. Duffy be asked to agree to stand for re-election at the Annual Meeting as a Director. The Board approved the recommendation of the Corporate Governance Committee, and Mr. Duffy agreed to continue to serve as a Director and to stand for re-election.

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Nominations by Stockholders

The Corporate Governance Committee will consider in accordance with the criteria described above written proposals from stockholders for nominees for Director, provided such proposals meet the requirements set forth in the Company’s Bylaws. For a description of the procedures a stockholder must follow to nominate a person for election to the Board, please see “Stockholder Proposals and Director Nominations” below.

Leadership Structure

The Board, upon the recommendation of the Corporate Governance Committee, has determined that the roles of the Chair of the Board and the Chief Executive Officer should remain separated. Accordingly, the Board has appointed Mr. Duffy, an independent director within the meaning of NYSE rules, as the Chair of the Board. The Company has had a non-management Chair since 1998. The Board and the Corporate Governance Committee believe this leadership structure continues to be appropriate for the Company at the present time because the bifurcated leadership structure:

Independence Determination

The Board has concluded that Kathleen Burdett, W. Leslie Duffy, Matthew T. Farrell, Marc T. Giles, William D. Gurley, Suzanne Hammett, and S. Carl Soderstrom, Jr. (all of the non-employee Directors) are “independent” for purposes of the applicable NYSE rules, that the members of the Audit Review Committee are also “independent” for purposes of Section 10A(m)(3) of the Exchange Act and that the members of the Compensation Committee are also “independent” under the enhanced independence rules of the NYSE for compensation committee members. The Board based its independence determinations in part on a review of the responses of the Directors to questions regarding employment and compensation history, affiliations, family and other relationships (which responses indicated that no relationships or transactions exist), together with an examination of those companies with whom the Company transacts business. Although the Board maintains categorical standards to assist in determining whether non-employee Directors are independent, given the absence of any relationships or transactions between non-employee Directors and the Company, the categorical standards were not used in connection with the Board’s determinations in February 2015 or 2016. The categorical standards are set forth in the Company’s Corporate Governance Guidelines (available on www.lydall.com).

Compensation Committee Interlocks and Insider Participation

As discussed above, all members of the Compensation Committee are independent Directors under the enhanced independence rules of the NYSE for compensation committee members. No executive officer of the Company has served as a Director or a member of a compensation committee of another company where any member of the Compensation Committee is an executive officer.

Risk Oversight

The Board oversees the Company’s risk management processes directly and through its committees.

Management has adopted an ongoing risk management process that it uses to identify and assess Company risks. Periodically, management advises the Board and the appropriate Board committee of the following:

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The Board fulfills its oversight role by discussing with management the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices, through:

In addition, the Board may request regular reports directly from personnel of the Company responsible for oversight of particular risks within the Company. This process enables the Board and its committees to coordinate and supervise risk oversight, particularly with respect to risks that are overseen by different committees of the Board and different personnel within the Company.

The Company provides detailed risk factors impacting its business in its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q filed with the SEC.

Related Party Transactions

The Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, as a general matter, the Company prefers to avoid related party transactions.

The Company follows a policy for the review and prior approval by the Corporate Controller’s Department of all related party transactions. In addition, annually, the Corporate Secretary obtains responses of the Directors and executive officers to questions as to whether a family member of a Director or executive officer is employed by the Company and whether a Director or executive officer has any other relationship with the Company. The Company compiles a list of those companies reported (if any) and compares it against the record of companies with whom the Company transacts business, noting the dollar amount of transactions with such companies, if any. The Company then provides a report to the members of the Audit Review Committee, which reviews the information.

The Company did not engage in any related party transactions requiring disclosure during fiscal year 2015.

Board Attendance

During fiscal year 2015, the Board held eight meetings (including three special meetings). The Audit Review Committee held seven meetings (including two special meeting); the Compensation Committee held five meetings; and the Corporate Governance Committee held four meetings. Each of the Directors attended at least 75% of the aggregate of the number of meetings of each of the Board and of each of the Board committees of which he or she was a member during fiscal year 2015. The Board’s practice is to meet in executive session without members of management present at every regularly scheduled Board meeting held in person and at special meetings as circumstances warrant. These sessions are presided over by the Chair of the Board.

A Board meeting is scheduled in conjunction with the Company’s Annual Meeting, and in accordance with the Corporate Governance Guidelines, all of the Director nominees are expected to attend the Annual Meeting. All Directors and nominees attended last year’s Annual Meeting.

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Communications With Directors

Stockholders of Lydall and other parties may contact the Chair of the Board by email at: chairman@lydall.com and if interested in communicating with the Board, or any Director, may write to them at the following address:

Lydall, Inc.
One Colonial Road
Manchester, CT 06042

Communications are distributed to the Board, or to any individual Directors as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Board has requested that certain items that are unrelated to the duties and responsibilities of the Board should be excluded, such as product inquiries and complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will be excluded, with the provision that any communication that is filtered out must be made available to any non-management Director upon request.

Additional Disclosures

In accordance with NYSE rules, in the event that any member of the Audit Review Committee simultaneously serves on the audit committees of more than three public companies, the Board will assess whether such simultaneous service impairs the ability of such member to effectively serve as a member of the Audit Review Committee, and the Company will disclose such assessment either on or through the Company’s website or in its annual proxy statement or Annual Report on Form 10-K filed with the SEC. No member of the Company’s Audit Review Committee currently serves on the audit committees of more than three public companies.

In addition, the Company will disclose, either on or through the Company’s website or in its annual proxy statement or Annual Report on Form 10-K filed with the SEC, any contributions by the Company to a tax exempt organization in which any non-management or independent Director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year exceeded the greater of $1 million or 2% of such tax exempt organization’s consolidated gross revenues. No such contributions have been made by the Company to any such tax exempt organization.

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REPORT OF THE AUDIT REVIEW COMMITTEE

The Audit Review Committee (the “Committee”) operates under a written Charter adopted and approved by the Board. The Charter, which defines the functions and responsibilities of the Committee, is reviewed annually. A link to the Committee’s Charter can be found on www.lydall.com. The Committee has determined that its Charter and practices are consistent with the listing standards of the NYSE and the provisions of the Sarbanes-Oxley Act of 2002.

During 2015, all Directors who served on the Committee were “independent” for purposes of the NYSE rules and Section 10A(m)(3) of the Exchange Act. The Board has determined that none of the Committee members has a relationship with the Company that may interfere with his/her independence from the Company and its management, and that each member is an “audit committee financial expert” as defined by the SEC.

Periodically, the Committee meets with management to consider the adequacy of the Company’s internal controls and the objectivity and appropriateness of its financial reporting. The Committee also discusses these matters with PwC, the Company’s independent auditors, appropriate Company financial personnel, and internal auditors, both separately and jointly. Independent and internal auditors of the Company have unrestricted access to the Committee.

Management has primary responsibility for the Company’s financial statements and the overall reporting process, including the Company’s system of internal controls. The independent auditors audit the annual financial statements prepared by management, express an opinion as to whether those financial statements fairly present the financial position, results of operations and cash flows of the Company in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”), and discuss with the Committee the Company’s significant accounting policies, accounting estimates and management judgments reflected in the financial statements, audit adjustments arising from the audit, and other matters in accordance with Auditing Standard No. 1301 (Communications with Audit Committees) as adopted by the Public Company Accounting Oversight Board (“PCAOB”).

The Committee reviewed the Company’s audited financial statements for the fiscal year ended December 31, 2015, and met with both management and PwC to discuss those financial statements. Management has represented to the Committee that the financial statements were prepared in accordance with U.S. GAAP. PwC has reported to the Committee that such financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the Company in accordance with U.S. GAAP.

At each regularly scheduled Committee meeting during 2015, the Committee monitored and discussed with management and PwC the status of the Company’s compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. The Committee also reviewed and discussed with PwC and management their reports and attestations on internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.

The Committee annually reviews PwC’s independence and performance in connection with the determination to retain PwC. PwC has provided to the Committee the written disclosures and the letter required by PCAOB’s Ethics and Independence Rule 3526 (Communication with Audit Committees Concerning Independence), and the Committee discussed and confirmed with PwC their independence. As a result of their evaluation, the Committee has concluded that PwC has the ability to provide the necessary expertise to audit the Company’s businesses on a global basis, and the Committee approved the appointment of PwC as Lydall’s independent registered public accounting firm for 2016.

Based on the foregoing, the Committee has recommended to the Board, and the Board approved, that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Kathleen Burdett, Chair
Matthew T. Farrell
Suzanne Hammett
S. Carl Soderstrom, Jr.

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COMPENSATION DISCUSSION AND ANALYSIS

Overview — Executive Summary

The goal of the Company’s executive pay program is to align the interests of executives and stockholders and create long-term value for the Company’s stockholders. To this end, for 2015, the compensation of the Named Executive Officers primarily consisted of four basic components, three of which were tied to performance against financial metrics and/or the market price of the Company’s stock:

Our executive compensation structure is designed to achieve the Company’s short-term and long-term financial and operational objectives and to align the interests of stockholders and executives. In that respect, the actual 2015 compensation of the NEOs reflects the philosophy of making a substantial portion of each executive’s compensation variable depending on the Company’s performance. The chart below shows the 2015 compensation pay mix for the CEO.

The CEO compensation pay mix is calculated based on (1) 2015 Base Salary, (2) 2015 Cash Bonus paid in February 2016, and (3) 2015 Long-Term Incentive grant made on December 5, 2014.

Key Compensation Decisions

The following highlights the key decisions made by the Committee related to 2015 compensation for the NEOs:

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At the request of the Compensation Committee, management conducted its annual assessment of the risk profile of the Company’s compensation programs in February 2016. As a result of this review, the Compensation Committee determined that the risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Compensation Objectives

Create Incentives that Motivate Performance

The key elements of executive compensation that depend on the Company’s financial and operating performance include:

Align Management and Stockholder Interests

The Committee provides compensation and adopts policies designed to align the interests of executives with those of the stockholders. These include:

Attract, Motivate and Retain Executives

The Committee strives to attract, motivate and retain executive officers by:

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Implementing Compensation Objectives

Overseeing Executive Compensation Programs

The Committee has been appointed by the Board to oversee matters relating to executive compensation. Reporting to the Board, the Committee has overall responsibility for the Company’s compensation and incentive plans and programs. For a more detailed description of the Committee’s responsibilities and its composition, please see the discussion under the heading “Corporate Governance — Committees” in this proxy statement.

Determining Compensation

The Committee determines and approves the Chief Executive Officer’s compensation and approves the compensation for each of the other Named Executive Officers based upon the recommendations of the Chief Executive Officer. From time-to-time, the Committee engages independent compensation consultants to provide market and competitive information to assist it in understanding the competitive landscape for all of the Named Executive Officers and in developing compensation programs for them.

In determining compensation for the Named Executive Officers for fiscal 2015, including the grant of stock options and PSAs in December 2014, the Committee considered the following:

In addition, the Committee reviews compensation data (which summarize each component of the five-year compensation histories of each NEO) and an accumulated wealth analysis (which summarizes the long-term equity-based compensation accumulated by each NEO over the past five years). The Committee also evaluates each individual’s total compensation compared with other executives within the organization.

The Committee does not assign specific weights to any of these factors described above and, ultimately, the Committee’s compensation decisions are subjectively reached based on the Committee’s business judgment.

Periodically throughout the year, the Committee discusses the philosophy for overall compensation, reviews and discusses adequacy and appropriateness of the structure of compensation, considers whether to modify compensation and the relative mix of compensation elements and, on occasion, makes changes to compensation that it deems appropriate.

Role of Management

The Chief Executive Officer assists the Committee with respect to the compensation packages for the NEOs other than himself. This assistance includes making recommendations regarding salary and incentive compensation levels based on management’s review of performance, achievement of goals and objectives, and competitive market information. Executive officers do not play a role in their own compensation determinations or that of others (except that the Chief Executive Officer is directly involved, with the support of senior leaders in the Human Resources Department, in the compensation determinations of other executive officers), except to discuss their own respective individual performance with the Chief Executive Officer. The final approval of compensation for the executive officers is performed in private session, with no executive officer (including the CEO) attending. No executive officers are involved in determining Director compensation.

Role of Consultants

The Committee considers information and advice obtained from its compensation consultant, Meridian Compensation Partners LLC (“Meridian”), in determining the compensation packages for the NEOs and all directors who are not employees of Lydall (the “Outside

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Directors”). Meridian is retained directly by the Committee. The Committee has determined that no conflicts of interest exist between the Company and Meridian based on SEC Rule 10C-1(b)(4) and the corresponding NYSE independence factors regarding compensation advisor independence.

In September 2014, the Committee commissioned and received an “Executive Compensation Analysis” report from Meridian. Inputs from the report, among other factors, were considered for setting NEO compensation for 2015. For the analysis, Meridian used data from the 2014 Aon Hewitt TCM survey and the 2014 Equilar’s Top 25 Survey. The Equilar data was based on companies with less than $1 billion in revenue, while the Aon Hewitt data was based on companies with between $200 million and $1.5 billion in revenue. In both cases, the average revenue was similar in size to that of the Company.

The Meridian analysis described above was used by the Committee to supplement its general understanding of current compensation practices. The Committee does not target payment for any compensation element or total compensation to any specified level of the companies included in the survey data. The Committee does not have any policies for allocating between long-term and currently paid-out compensation, between cash and non-cash compensation, among different forms of non-cash compensation, or among different forms of long-term awards.

Elements of Compensation

As noted above, the 2015 compensation for the NEOs consisted of base salary, eligibility for an annual cash performance bonus under the AIP Program, long-term equity incentive awards and other compensation, including benefits and perquisites. Each element of compensation is explained below.

Base Salary

Adjustments were made to increase the base salaries of the NEOs (except Mr. Deakin) for 2015 ranging from 0% to 11.9% as shown in more detail in the table below. In making these adjustments, the Committee took into consideration the following: competitive pay practices (as informed by the Company’s experiences in recruiting new executive officers and the Meridian analysis referred to above); the executive’s individual performance, responsibilities, and experiences (as informed by the Board’s annual evaluation of the CEO and by the input received from the CEO with respect to the other NEOs); the Company’s performance and financial condition; the results of the Say-on-Pay vote held at the annual meeting of stockholders in 2015; and external market and economic conditions.

Except for Mr. Deakin who joined the Company in 2015, all the adjustments to NEO base salaries were approved by the Committee at a regularly scheduled meeting of the Committee held on December, 5, 2014 and were effective as of December 29, 2014.

The base salaries of the NEOs and the percentage increases for 2015 were as follows:

Name		Base Salary for 2014				Percentage Increase				Base Salary for 2015
Dale G. Barnhart(1)		$	520,000				10.00	%		$	572,000
Scott M. Deakin(2)			N/A				N/A			$	390,000
Joseph A. Abbruzzi		$	287,018				4.52	%		$	300,000
Chad A. McDaniel(3)		$	236,900				11.86	%		$	265,000
David H. Williams		$	283,250				2.38	%		$	290,000
Robert K. Julian(4)		$	360,500				0	%		$	360,500

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Annual Incentive Performance Program (“AIP Program”)

The Company’s AIP Program, determination of eligibility and amount of the cash performance bonus payable to each of the NEOs is described below:

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The Performance Metrics selected by the Committee for 2015 and as defined in the AIP Program are:

AIP Table 1

Performance Metric		Metric Definition
Operating Income			Operating income from continuing operations of the Company for the performance period, as set forth in the audited financial statements of the Company
Free Cash Flow			Cash flow from operations minus capital expenditures
Gross Margin			Percentage resulting from (a) the excess, if any, of net sales from continuing operations over cost of sales from continuing operations, divided by (b) net sales from continuing operations
Revenue			Total net sales, adjusted to exclude foreign exchange fluctuations

The 2015 AIP Performance Metrics, their relative weights and the performance and payout ranges are shown in the table below:

AIP Table 2

Performance Metric		Weight				Threshold(1)								Target								Maximum(1)
						Performance				Payout				Performance				Payout				Performance				Payout
Operating Income			25	%			90	%			50	%			100	%			100	%			110	%			200	%
Free Cash Flow			25	%			90	%			50	%			100	%			100	%			110	%			200	%
Gross Margin			25	%			-100 Basis Points				50	%			Target Basis Points				100	%			+100 Basis Points				200	%
Revenue			25	%			95	%			50	%			100	%			100	%			110	%			200	%

The Performance Metric Targets, actual performance results and AIP Bonus Payout Factor for 2015 are shown in the table below:

AIP Table 3

Performance Metric		Performance Metric Targets(1)				Actual Performance Results(1)				AIP Bonus Payout Factor				Combined AIP Bonus Payout Factor(2)
Operating Income		$	50,458,000			$	52,461,000				140	%			119%
Free Cash Flow		$	33,313,000			$	30,307,000				55	%
Gross Margin			22.0	%			23.3	%			200	%
Revenue		$	546,341,000			$	535,725,000				81	%

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The Target Bonus Percentage, Target Bonus Amount, Combined AIP Bonus Payout Factor and Final AIP Payout for each of the NEOs for 2015 are shown in table below:

AIP Table 4

Name		Target Bonus Percentage				Target Bonus Amount				Combined AIP Bonus Payout Factor				Final AIP Payout
Dale G. Barnhart			100	%		$	592,000				119	%		$	704,480
Scott M. Deakin(1)			60	%		$	71,100				119	%		$	84,609
Joseph A. Abbruzzi(2)			40	%		$	124,416				161	%		$	200,054
Chad A. McDaniel			40	%		$	115,414				119	%		$	137,343
David H. Williams(3)			40	%		$	120,358				0	%		$	0
Robert K. Julian(3)			55	%		$	76,260				0	%		$	0

Sign-on Bonus

In association with Mr. Deakin’s hiring on September 8, 2015 as CFO, he was awarded a sign-on bonus in the amount of $216,000 which was paid to him in January 2016.

Long-Term Equity Incentive Awards

The Committee believes that executives and other employees who are in a position to make a substantial contribution to the long-term success of the Company and to build stockholder value should have a significant equity stake in the Company. The Company uses equity grants to focus on the retention of executive officers and to enhance the alignment of the interests of executive officers with the goals of improving Company profitability and advancing stockholder interests over the long term.

Grants Made as Part of 2015 Compensation

The Company awarded stock options and PSAs to the NEOs as part of their 2015 compensation. Except for an award made to Mr. Deakin who was hired in 2015, no time-based restricted stock awards (“RSAs”) were made as part of the 2015 compensation packages for the NEOs, as the Committee has decided to limit the use of RSAs (which have value regardless of company performance) to special circumstances, such as hiring or retention awards, in favor of PSAs (which only have value if the specified performance goal is achieved). The Committee approved the following equity awards for the NEOs as part of their 2015 compensation package. The amounts of awards were subjectively determined by the Committee based on the factors described above under “Determining Compensation.”

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		Threshold(1)				Target				Maximum(1)
Earnings per share Achievement			90	%			100	%			120	%
Payout Factor (% of PSA vesting)			50	%			100	%			150	%

To the extent earnings per share targets are achieved, these PSAs will vest immediately upon such certification by the Committee. The Company has not disclosed the specific fiscal year 2017 earnings per share target because it represents confidential, commercially-sensitive information that the Company does not disclose to the public and that could cause competitive harm if known in the marketplace. Both earnings per share and the factors that influence earnings per share, such as revenue and efforts to control costs, are inherently competitive and if disclosed would provide valuable insight into areas of focus for the Company. The Committee set the 2017 earnings per share target for the PSAs at a level that it believed would be challenging but possible for the Company to achieve.

The following is a summary of the long-term incentive awards made to the NEOs on the dates indicated as part of their 2015 compensation:

Name		Time-Based Stock Option Awards (December 5, 2014)								Three-Year PSAs (December 5, 2014)								RSAs (September 8, 2015)								Total Value of Grants(1) ($)
		Number of Shares				Grant Date Fair Value(1) ($)				Number of Shares at Target				Grant Date Fair Value(1) ($)				Number of Shares				Grant Date Fair Value(1) ($)
Dale G. Barnhart			46,400				549,798				19,700				550,812												1,100,610
Scott M. Deakin																			15,000				384,300				384,300
Joseph A. Abbruzzi			10,500				124,416				4,500				125,820												250,236
Chad A. McDaniel			10,500				124,416				4,500				125,820												250,236
David H. Williams			8,400				99,532				3,600				100,656												200,188
Robert K. Julian			19,000				225,133				8,000				223,680												448,813

Specifically with respect to the equity awards granted to the CEO in connection with his 2015 compensation, the Committee considered the CEO’s continued contributions relative to the ongoing execution of the Company’s strategic transformation, the successful integration of the Industrial Filtration business, performance among various business segments, and other accomplishments in deciding to make equity awards totaling $1,100,610.

The time-based stock option awards granted to the NEOs in December 2014 are reflected in the Summary Compensation Table as 2014 compensation because these awards were actually granted in 2014, even though they relate to the 2015 compensation packages for the NEOs. For the same reason, these awards were reflected in last year’s proxy statement in the table titled “Grants of Plan-Based Awards for 2014.” The amounts reported in the Option Awards column of the “Fiscal Year 2015 Summary Compensation Table” relate to the stock options granted by the Company in December 2015 as a component of 2016 compensation. These awards, which are described below in “Fiscal 2016 Executive Compensation,” are reflected in the table titled “Grants of Plan-Based Awards for 2015.”

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The Company does not have a program, plan or practice to select equity grant dates in connection with the release of favorable or negative news. The Company generally grants equity awards at the regularly scheduled December meeting of its Board. With respect to 2015 compensation, stock option grants were made and PSAs were awarded to the NEOs at a meeting of the Compensation Committee on December 5, 2014. See “Fiscal 2016 Executive Compensation Components” below for a discussion of the timing of equity grants with respect to 2016 compensation.

Payouts of Prior Awards Based on 2015 Performance

The 2015 earnings per share target for the PSAs granted in 2013 was set at $1.32 by the Committee. On February 18, 2016, the Committee determined that the 2015 EPS exceeded maximum level performance, as actual EPS for 2015 was $2.71. Accordingly, all of the PSAs awarded to the NEOs (other than Messrs. Deakin, Williams and Julian) that were based on 2015 EPS vested at 120% of target.

Adjustment or Recovery of Awards

The Company has included provisions relating to the clawback or recoupment of compensation in several of its plans.

Under the Amended and Restated Lydall 2003 Stock Incentive Compensation Plan (the “2003 Stock Plan”), any award recipient who breaches his or her non-competition, non-interference, non-solicitation or confidentiality obligations to the Company may be obligated, subject to the Committee’s sole discretion, to return to the Company the economic value of any award that was realized or obtained by the recipient at any time during the six-month period prior to the date the recipient’s employment with the Company terminated. Additionally, the Committee may annul any award granted under the 2003 Stock Plan if the recipient’s employment is terminated for cause and, in such event, the Committee may, in its sole discretion, require the recipient to return to the Company the economic value of any award that was realized or obtained by the recipient at any time during the six-month period prior to the date the recipient’s employment with the Company terminated. Although the 2003 Stock Plan expired on October 24, 2012 and no further awards may be granted subsequent to that date, outstanding awards granted under the 2003 Stock Plan remain in effect and are subject to the above-described recovery provisions.

Awards under the Lydall, Inc. 2012 Stock Incentive Plan (the “2012 Stock Plan”), approved by stockholders at the 2012 Annual Meeting, are subject to the forfeiture and recoupment provisions of the 2012 Stock Plan, which provides that if the Plan Administrator (as defined in the 2012 Stock Plan) determines in good faith that a participant has engaged in fraudulent conduct relating to the Company, then such participant’s outstanding awards shall be forfeited and, with respect to the year in which such fraudulent conduct occurred, the participant will be required to reimburse the Company for the economic value that was realized by such participant that was based on or resulted from such fraudulent conduct. In addition, any award shall be subject to recoupment as required by the applicable provisions of any law (including the clawback provisions added by the Dodd-Frank Act), government regulation or stock exchange listing requirement (and any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

Effective January 1, 2012, the AIP Program provides that cash bonus payments are subject to recoupment if the Committee determines that a participating employee committed wrongdoing that contributed to a material misstatement, intentional or gross misconduct, a breach of a fiduciary duty to the Company or its stockholders, or fraud. In addition, at its discretion, the Committee may require a participating employee to disgorge and repay any bonus received based upon financial statements that are later restated, other than restatements due solely to facts external to the Company, such as a change in accounting principles or a retroactive change in law. Cash bonus payments also may be recouped in accordance with the applicable provisions of any law, regulation, stock exchange listing requirement or Company policy.

Other Compensation

Severance and Change in Control Agreements — Each of the NEOs, have entered into agreements with the Company that provide for payment under specified conditions after a change in control of the Company or upon the executive’s termination under certain circumstances, as described under “Executive Compensation — Potential Payments Upon Termination or Change-In-Control”. In exchange for and immediately prior to the receipt of the termination benefits provided for under these agreements, the NEOs are required to execute and deliver a general release of all claims in favor of the Company. As a general practice, the Company enters into change of control agreements with key members of management to ensure that they are incentivized to act in the best interests of the Company’s stockholders in the event of a prospective or actual change in control and to enhance executive retention.

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401(k) Defined Contribution Plan — The Company provides a tax-qualified defined contribution retirement plan to eligible non-union and union employees, including NEOs, in the form of a 401(k) savings plan. For non-union participants, the Lydall 401(k) Plan provides that the Company make a matching contribution based on participant salary deferrals to the 401(k) plan, subject to IRS limits. The compensation eligible for the matching contribution includes any cash bonuses, but excludes the value of any equity compensation. In 2015, the Company provided matching contributions to the 401(k) plan for the NEOs at the rates of 100% of the first 3% of salary deferral by a participant, plus 50% of the next 2% of salary deferral by a participant.

Health & Welfare Plans — The Company offers a health care plan that provides medical, dental, prescription drug, and vision coverage to its employees, including the NEOs. The Company also offers fitness reimbursement up to $400 to its employees, including the NEOs.

Perquisites — The Company limits perquisites provided to NEOs to relocation expenses, tax gross-ups for relocation expenses and car allowances, which includes gas usage. Perquisites awarded to the NEOs in 2015 are disclosed in the “All Other Compensation” column of the Summary Compensation Table.

All NEOs are currently covered under an Executive Life Program and an Executive Disability Insurance Program. The programs provide for life insurance benefits at four times base salary for the Chief Executive Officer and three times base salary for the other NEOs, and annual executive disability proceeds at a target level of 100% of an NEOs base salary, in each case up to applicable insurance limits (including individual insurability). The full amount of the premiums paid by the Company for these benefits is reflected in the “All Other Compensation” column of the Summary Compensation Table below. If an NEO died or became disabled on December 31, 2015, the NEO would have been eligible for the benefits set forth in the table below:

Name		Executive Life Proceeds ($)				Annual Executive Disability Proceeds ($)(2)
Dale G. Barnhart			2,368,000				180,000
Scott M. Deakin(1)			0				0
Joseph A. Abbruzzi			931,500				36,000
Chad A. McDaniel			903,000				52,500
David H. Williams			870,000				86,256

Other Fiscal 2015 and 2016 Compensation Matters

Separation of Robert K. Julian, Chief Financial Officer

On April 13, 2015, the Company announced that Mr. Julian, Executive Vice President and Chief Financial Officer, would be departing the Company effective May 1, 2015. Mr. Julian did not receive any severance benefits in connection with the cessation of his employment.

Separation of David H. Williams, President, Performance Materials

On December 11, 2015, the Company announced that Mr. Williams, President of Performance Materials, would be departing the Company effective January 10, 2016. Mr. Williams received severance benefits consistent with the terms of his agreement dated June 27, 2012, which included one year of salary, bonus, executive life insurance, health benefits, and optional outplacement services (for a total of $385,562) paid over twelve months. Details of Mr. Williams’ severance are described under Potential Payments Upon Termination or Change in Control section below.

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Fiscal 2016 Executive Compensation Components

At the Company’s annual meeting of stockholders held in April 2015, over 98% of the votes cast on the Say-on-Pay proposal were voted in favor of the proposal. The Compensation Committee believes this affirms stockholders’ support of the Company’s approach to executive compensation, and maintained this general approach in 2015. The Compensation Committee will continue to consider the annual vote results for the Company’s Say-on-Pay proposals when making future compensation decisions for the NEOs.

The 2016 compensation for the NEOs consists of similar elements as were included with respect to 2015. Compensation for 2016 was subjectively determined based on the factors described above under “Determining Compensation.” The Compensation Committee did not assign any specific weights to the various factors it considered.

Adjustments were made to increase the base salaries of the NEOs for 2016 ranging from 0% to 3.8% based on the factors discussed under the section “Base Salary” above. The 2016 base salaries of the NEOs, effective December 28, 2015, are as follows:

Employee Name		Base Salary for 2016
Dale G. Barnhart		$	592,000
Scott M. Deakin		$	402,000
Joseph A. Abbruzzi		$	310,500
Chad A. McDaniel		$	301,000
David H. Williams		$	290,000

The Compensation Committee did not make any program design changes to the AIP Program for 2016. However, the Compensation Committee modified the financial goal weights applicable to employees of the Performance Materials business segment, increasing the weight of the Revenue Performance Metric from twenty-five (25%) percent to thirty-five (35%) percent and decreasing the weight of the Operating Income Performance Metric from twenty-five (25%) percent to fifteen (15%) percent.

In December 2015, the Compensation Committee granted stock option awards and PSAs (the “2016 PSAs”) related to the NEO compensation packages for 2016. Similar to the awards made in connection with the compensation packages for 2015, the December 2015 time-based stock option awards vest in equal installments over four years, while the 2016 PSAs will be determined upon certification by the Committee that the Company has achieved an established earnings per share target for fiscal year 2018. The performance and payout range for the 2016 PSAs is shown below:

		Threshold(1)				Target				Maximum(1)
Earnings per share Achievement			80	%			100	%			120	%
Payout Factor (% of PSA vesting)			50	%			100	%			150	%

The following is a summary of the time-based stock option awards and the 2016 PSAs that were granted to the NEOs on December 4, 2015:

Name		Time-Based Stock Option Award(2)								2016 PSAs								Total Grant Date Fair Value(1)
		Number of Shares				Grant Date Fair Value(1)				Number of Shares at Target				Grant Date Fair Value(1)
Dale G. Barnhart			39,300			$	600,504				16,340			$	600,332			$	1,200,836
Scott M. Deakin			13,100			$	200,168				5,450			$	200,233			$	400,401
Joseph A. Abbruzzi			8,200			$	125,296				3,410			$	125,283			$	250,579
Chad A. McDaniel			9,000			$	137,520				3,750			$	137,775			$	275,295
David H. Williams			0			$	0				0			$	0			$	0

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Specifically with respect to the equity awards granted to the CEO in connection with his 2016 compensation, the Committee considered the Company’s strong performance, the CEO’s continued contributions relative to the ongoing execution of the Company’s strategic transformation, other accomplishments and competitive pay practices in deciding to make equity awards totaling $1,200,836.

While the stock options and 2016 PSAs reflected in the table above related to each NEO’s compensation package for 2016, they are reflected in the Summary Compensation Table as a 2015 compensation item and in the table titled “Grants of Plan-Based Awards For 2015” because they were granted or awarded in 2015.

Stock Ownership; Limits on Hedging and Pledging

The Board has developed and implemented share ownership guidelines that cover Outside Directors and certain senior executive officers, including all of the NEOs. The share ownership guidelines are designed to link the personal financial interests of the covered individuals to the Company’s success and better align their interests with the interests of the Company’s stockholders.

The Stock Ownership guideline for the Outside Directors and the NEOs are as follows:

Position		Targeted Stock Ownership Amount
Outside Directors		4 × Annual stock retainer
CEO		4 × Annual Base Salary
CFO		2 × Annual Base Salary
Other NEOs		1 × Annual Base Salary

The Company’s Corporate Governance Guidelines establish share ownership guidelines for Outside Directors (the “Outside Director Ownership Guidelines”). Under the Outside Director Ownership Guidelines, each of the Company’s Outside Directors should acquire the specified level of ownership within five years of their election as an Outside Director of the Company (unless a waiver is granted by the Compensation Committee) or, as to any increased stock ownership level resulting from an increase in the annual stock retainer, five years from the date of such increase. Currently, all of the Company’s Outside Directors own a sufficient number of the Company’s shares to meet the applicable stock ownership levels established by the Outside Director Ownership Guidelines.

Under the Company’s Stock Ownership Guidelines for Senior Executive Officers (the “Officer Ownership Guidelines”), the targeted stock ownership amount for each covered individual will be determined as of the later of January 1, 2014 or the date such individual first becomes subject to the Officer Ownership Guidelines (the “Date of Determination”) and will be based on the individual’s annual base salary in effect as of such date. For purposes of determining whether a covered individual’s stock ownership amount satisfied the Officer Ownership Guidelines, the fair market value of the Company’s Common Stock will be equal to the average closing price of the Company’s Common Stock over the 365-day period immediately preceding the Date of Determination. The deadline to achieve compliance with the Officer Ownership Guidelines is the later of December 31, 2014 or the date which is five (5) years after each individual was appointed to the executive officer position. The targeted stock ownership amount for each individual will be recalibrated every three (3) years after January 1, 2014 based on the then current base salary of each officer and the average closing price of the Company’s Common Stock over the preceding 365-day period. Once achieved, ownership of the applicable targeted amount of stock must be maintained for as long as an individual is covered by the Officer Ownership Guidelines. Currently, the Chief Executive Officer owns, and the remaining NEOs own or are on track to own, a sufficient number of the Company’s shares to meet the applicable stock ownership levels established by the Officer Ownership Guidelines, as amended.

Qualifying ownership interests for purposes of the Officer Ownership Guidelines include:

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The Company’s Securities Law Compliance policy prohibits Directors and Executive Officers from engaging in hedging activities involving Lydall securities. Pledging of Lydall stock is discouraged, but not prohibited. The policy requires Directors and Executive Officers to obtain pre-clearance prior to entering into any pledge of Lydall stock or margin loan involving Lydall stock, and the Company may prohibit such activities at any time. None of the Company’s Directors or NEOs has any Lydall securities pledged or involved in margin loans.

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), limits the deductibility of compensation in excess of $1 million paid to specified executive officers of public companies, unless certain specific and detailed criteria are satisfied. The Committee considers the anticipated tax treatment to the Company and the executive officers in its review and establishment of compensation programs and payments. However, to ensure that the Committee maintains the flexibility to structure executive compensation in ways that best promote the interests of the Company, the Committee will not necessarily always seek to limit executive compensation to that deductible under Section 162(m) of the Code. The 2016 PSAs and the stock option awards granted in December 2015 are intended to qualify as “performance-based compensation” and therefore not be subject to the Section 162(m) limitation on deductibility.

Compensation Committee Report on Executive Compensation

The Compensation Committee (the “Committee”) is composed of Independent Directors, as defined under applicable NYSE rules, Rule 16b-3 of the Exchange Act and Section 162(m) of the Code. The Committee was appointed by the Board and chartered to oversee and approve the compensation and incentive programs of Lydall executive officers and Directors and to review all other incentive programs of the Company. The Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussion, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Matthew T. Farrell
Marc T. Giles
William D. Gurley, Chair
Suzanne Hammett

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EXECUTIVE COMPENSATION TABLES

Fiscal Year 2015 Summary Compensation Table

The following table shows the compensation awarded to, earned by or paid to the Named Executive Officers for the fiscal years 2015, 2014 and 2013.

Name and Principal Position (a)		Year (b)				Salary ($) (c)				Bonus(2) ($) (d)				Stock Awards(3) ($) (e)				Option Awards(3) ($) (f)				Non-Equity Incentive Plan Compensation(4) ($) (g)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h)				All Other Compensation(5) ($) (i)				Total ($) (j)
Dale G. Barnhart, President and Chief Executive Officer			2015				574,508				—				600,332				600,504				704,480				—				63,285				2,543,109
			2014				522,600				—				1,208,412				549,798				754,000				—				63,563				3,098,373
			2013				522,000				—				511,197				225,050				532,058				—				58,218				1,848,523
Scott M. Deakin, Executive Vice President and Chief Financial Officer(1)			2015				124,685				216,000				584,533				200,168				84,609				—				4,949				1,214,944
Joseph A. Abbruzzi, President – Industrial Filtration(1)			2015				301,315				—				125,283				125,296				200,054				—				85,984				837,932
			2014				288,271				—				569,635				124,416				207,404				—				93,587				1,283,313
Chad A. McDaniel, Senior Vice President, General Counsel and Chief Administrative Officer			2015				280,996				—				137,775				137,520				137,343				—				33,432				727,066
			2014				238,135				—				535,660				124,416				150,115				—				33,233				1,081,559
			2013				137,168				100,000				109,350				112,045				56,727				—				19,535				534,825
David H. Williams, former President –  Performance Materials			2015				291,115				—				0				0				0				—				385,815				676,930
			2014				284,417				—				429,456				99,532				127,320				—				33,159				973,884
			2013				276,121				—				92,527				43,520				1,375				—				71,380				484,923
Robert K. Julian, former Executive Vice President and Chief Financial Officer			2015				120,629				—				0				0				0				—				35,507				156,136
			2014				361,887				—				552,480				225,133				326,337				—				44,696				1,510,533
			2013				351,427				275,000				238,350				65,997				224,219				—				44,956				1,199,949

Name		Car Allowance ($)				Personal Gas Usage ($)				Fitness Reimbursement ($)				Executive Disability Insurance Premium ($)				Executive Life Insurance Premium ($)				Relocation ($)				Relocation Tax Gross-up ($)				401(k) Employer Match ($)				Severance Pay ($)				All Other Compensation Total ($)
Dale G. Barnhart			13,800				1,620								8,004				29,261												10,600								63,285
Scott M. Deakin			4,800				149																																4,949
Joseph A. Abbruzzi			11,040				1,498								1,802				9,864				33,600				17,580				10,600								85,984
Chad A. McDaniel			13,800				1,051				400				2,908				4,673												10,600								33,432
David H. Williams			11,040				1,310								2,686				7,281												10,600				352,898				385,815
Robert K. Julian			4,600				780								6,418				13,109												10,600								35,507

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Grants of Plan-Based Awards For 2015

The following table provides information regarding stock options, equity incentive awards and cash incentive awards granted during 2015 to the Named Executive Officers.

						Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2)												Estimated Future Payouts Under Equity Incentive Plan Awards(3)												All Other Stock Awards: Number of Shares of Stock or Units(4) (#) (i)				All Other Option Awards: Number of Securities Underlying Options(5) (#) (j)				Exercise or Base Price of Option Awards(6) ($/share) (k)				Grant Date Fair Value of Stock and Option Awards(7) ($) (l)
Name (a)		Grant Date(1) (b)				Threshold ($) (c)				Target ($) (d)				Maximum ($) (e)				Threshold (#) (f)				Target (#) (g)				Maximum (#) (h)
Dale G. Barnhart							74,000				592,000				1,184,000
			12/04/15																8,170				16,340				24,510																600,332
			12/04/15																																39,300				36.74				600,504
Scott M. Deakin							8,888				71,100				142,200
			09/08/15																												15,000												384,300
			12/04/15																2,725				5,450				8,175																200,233
			12/04/15																																13,100				36.74				200,168
Joseph A. Abbruzzi							15,552				124,416				248,832
			12/04/15																1,705				3,410				5,115																125,283
			12/04/15																																8,200				36.74				125,296
Chad A. McDaniel							14,427				115,414				230,828
			12/04/15																1,875				3,750				5,625																137,775
			12/04/15																																9,000				36.74				137,520
David H. Williams							15,045				120,358				240,716
Robert K. Julian							9,533				76,260				152,520

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Outstanding Equity Awards at Fiscal Year-End 2015

The following table lists outstanding equity awards for each Named Executive Officer as of December 31, 2015.

						Option Awards(1)																Stock Awards(2)
Name (a)		Date of Grant				Number of Securities Underlying Unexercised Options (#) Exercisable (b)				Number of Securities Underlying Unexercised Options (#) Unexercisable (c)				Option Exercise Price ($)(e)				Option Expiration Date (f)				Number of Shares or Units of Stock That Have Not Vested (#) (g)				Market Value of Shares or Units of Stock That Have Not Vested $(h)(3)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)(4)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)(5)
Dale G. Barnhart			12/09/10				7,500	*							7.80				12/09/20
			12/19/11				12,500								8.94				12/19/21
			12/05/12				22,500	*			7,500				13.29				12/05/22
			02/18/13																												32,171				1,141,427
			12/06/13				11,764	*			11,765	*			16.98				12/06/23
			03/07/14																												30,000				1,064,400
			12/05/14				11,600	*			34,800	*			27.96				12/05/24												19,700				698,956
			12/04/15								39,300	*			36.74				12/04/25												16,340				579,743
Scott M. Deakin			09/08/15																				15,000	(6)			532,200
			12/04/15								13,100	*			36.74				12/04/25												5,450				193,366
Joseph A. Abbruzzi			12/05/12				2,500				2,500				13.29				12/05/22
			02/18/13																												4,449				157,851
			12/06/13				2,075				2,075				16.98				12/06/23
			02/21/14																				3,830	(6)			135,888
			03/07/14																												15,000				532,200
			12/05/14				2,625	*			7,875	*			27.96				12/05/24												4,500				159,660
			12/04/15								8,200	*			36.74				12/04/25												3,410				120,987
Chad A. McDaniel			05/29/13				6,250				6,250				14.58				05/29/23												7,500				266,100
			12/06/13				2,275				2,275				16.98				12/06/23
			02/28/14																				2,666	(6)			94,590
			03/07/14																												15,000				532,200
			12/05/14				2,625	*			7,875	*			27.96				12/05/24												4,500				159,660
			12/04/15								9,000	*			36.74				12/04/25												3,750				133,050
David H. Williams(8)			08/02/12				7,500				5,000				12.48				08/02/22				3,750	(7)			133,050
			12/05/12				0				2,500				13.29				12/05/22
			02/18/13																												5,823				206,600
			12/06/13				2,276	*			2,274	*			16.98				12/06/23
			03/07/14																												15,000				532,200
			12/05/14				2,100	*			6,300	*			27.96				12/05/24												3,600				127,728

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Option Exercises and Stock Vested For 2015

The following table shows stock option exercises and vesting of restricted stock awards by the NEOs during 2015, including the aggregate value of gains on the date of exercise and stock acquired on vesting and the value realized on vesting.

		Option Awards								Stock Awards
Name (a)		Number of Shares Acquired on Exercise (#)(b)				Value Realized on Exercise ($)(c)(1)				Number of Shares Acquired on Vesting(2) (#)(d)				Value Realized on Vesting(3) ($)(e)
Dale G. Barnhart			—				—				—				—
Scott M. Deakin			—				—				—				—
Joseph A. Abbruzzi			2,500				55,326				6,915				242,874
Chad A. McDaniel			—				—				1,334				42,501
David H. Williams			7,500				173,039				3,750				111,413
Robert K. Julian			24,225				345,677				—				—

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Potential Payments Upon Termination or Change-in-Control

The Company has entered into agreements with its NEOs pursuant to which each NEO may be entitled to specified compensation and benefits upon the termination of his employment.

The agreements with each of Mr. Barnhart, Mr. Deakin, Mr. Abbruzzi and Mr. McDaniel provide that, if an executive’s employment is terminated by the Company without “cause,” or by the executive for “good reason,” and such termination of employment does not occur within 18 months of a “change in control” (except that the agreement with Mr. Abbruzzi does not include a “good reason” trigger; and the agreements with Mr. Deakin and Mr. McDaniel do not include “good reason” triggers other than in the event of a change in control), the Company shall pay the executive a severance benefit equal to the sum of (i) an amount equal to the executive’s annual base salary in effect immediately preceding the date of termination, and (ii) an amount equal to the average of the executive’s annual bonuses for the three calendar years immediately preceding the date of termination (the “Severance Benefit”). The Severance Benefit generally shall be paid in equal installments spread over the twelve-month period beginning on the date of termination, unless the executive is deemed to be a “specified employee,” as that term is defined in Section 409A of the Internal Revenue Code of 1986, as amended (a “Specified Employee”), in which case different payment rules apply. In the event that the executive elects to continue coverage under the Company’s health plan pursuant to COBRA, for a period of up to twelve months, the Company also shall pay the same percentage of the executive’s premium for COBRA coverage for the executive and, if applicable, his or her spouse and dependent children, as the Company paid at the applicable time for coverage under such plan for actively employed members of senior management. In addition, for the period beginning on the date of the executive’s termination of employment and ending on the earlier of (i) the date that is 12 months after the date of such termination of employment or (ii) the date on which the executive becomes eligible for life insurance benefits from another employer, the Company will continue to provide the life insurance benefits that the Company would have provided to the executive if the executive had continued in employment with the Company for such period, but only if the executive timely pays the portion of the premium for such coverage that members of senior management of the Company generally are required to pay for such coverage, if any. Finally, the executive is entitled to receive up to twelve months of outplacement services at a cost not to exceed $10,000. The Company’s obligation to provide the foregoing severance benefits is subject to the executive’s execution and delivery, without revocation, of a valid release of all claims against the Company.

In the event that an executive’s employment is terminated by the Company without “cause,” or by the executive for “good reason” (except that the agreement with Mr. Abbruzzi does not include a “good reason” trigger), and such termination of employment occurs within 18 months of a “change in control” (collectively, a “Change In Control Trigger”), the Company shall pay the executive a severance benefit equal to two times the sum of (i) his/her annual rate of base salary in effect immediately preceding his/her termination of employment, and (ii) the average of his/her last three years highest annual bonuses earned under the Company’s annual bonus plan for any of the five calendar years preceding his/her termination of employment (the “COC Severance Benefit”). The COC Severance Benefit shall be paid in a lump sum within thirty days after the date of termination, unless the executive is deemed to be a Specified Employee, in which case different payment rules apply. Upon the occurrence of such a Change In Control Trigger, the Company shall pay the executive a bonus for the year of termination in an amount equal to a specified portion of the executive’s target bonus opportunity for the year of termination. In general, for a period of up to 24 months, the executive is entitled to remain covered by the medical, dental, executive life insurance and, if reasonably commercially available through nationally reputable insurance carriers, executive long-term disability plans that covered the executive immediately prior to the termination of his employment, as if he had remained in the employ of the Company. The executive is entitled to receive the outplacement services described above and the vesting of all unvested stock options and restricted stock awards shall be accelerated in full. Finally, the executive is entitled to an automobile allowance for a period of up to 24 months. The Company’s obligation to provide the foregoing severance benefits is subject to the executive’s execution and delivery, without revocation, of a valid release of all claims against the Company.

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Set forth below is a summary of the payments that would have been made to the each of the NEOs (except Mr. Julian and Mr. Williams) had the below-specified triggering events occurred on December 31, 2015.

BENEFITS BY TRIGGERING EVENT ON DECEMBER 31, 2015		Dale G. Barnhart				Scott M. Deakin				Joseph A. Abbruzzi				Chad A. McDaniel
Death
Bonus – Bonus for the year of death equal to a pro rata portion of the average of the three highest annual bonuses earned in the five years preceding year of death			581,654				0				0				0
COBRA for family for 12 months, less employee contribution.			6,276				0				0				0
Executive Life Insurance proceeds			2,368,000				0				931,500				903,000
Aggregate Total in Event of Death			2,955,930				0				931,500				903,000
Disability
Base salary – 12 months, less payments made to NEO under any Company disability programs			292,000				0				0				0
Bonus – Pro rata bonus for the calendar year of termination			704,480				0				0				0
COBRA(1) for NEO and family for 12 months, less employee contribution			12,436				0				0				0
Life Insurance(1),(2) coverage for 12 months less employee contribution			29,261				0				0				0
Disability Insurance proceeds			300,000				0				156,000				172,500
Aggregate Total in Event of Disability			1,338,177				0				156,000				172,500
Cause(3) Termination or Voluntary Resignation (other than Good Reason Self-Quit)
No additional benefits
Aggregate Total in Event of Cause(3) Termination or Voluntary Resignation			0				0				0				0
Non-Cause Termination or Good Reason(4) Self-Quit
Severance – base salary for 12 months(5)			592,000				402,000				310,500				301,000
Bonus – in an amount equal to the average of the three preceding years’ annual bonuses earned, paid over 12 months(5)			581,654				0				166,522				103,421
COBRA(1) for NEO and family for maximum of 12 months, less employee contribution			12,436				0				15,626				15,626
Life Insurance coverage for 12 months less employee contribution(1),(2)			29,261				0				9,864				4,673
Outplacement services not to exceed $10,000			10,000				10,000				10,000				10,000
Aggregate Total in Event of Non-Cause Termination or Good Reason Self-Quit			1,225,351				412,000				512,512				434,720
Change of Control Termination Benefit Including Good Reason Self-Quit After Change of Control(6)
Severance – Lump-sum severance benefit equal to two times the sum of annual base salary plus an average of the three highest annual bonuses earned in the five years preceding year of(7)			2,347,308				804,000				954,044				808,842
Year of Termination Bonus – equal to a pro rata portion of target bonus opportunity, payable in a lump sum(7),(8)			592,000				71,100				124,416				115,414
Medical, dental, life and if applicable, long term disability coverage for 24 months under the Company’s plans, for NEO and family, less employee contribution(2)			100,397				26,559				55,834				47,664
Stock option/award vesting acceleration(9)			4,130,300				725,566				1,259,668				1,417,532
Outplacement services not to exceed $10,000			10,000				10,000				10,000				10,000
Car allowance for 24 months			27,600				28,800				22,080				27,600
Aggregate Total in Event of Change of Control			7,207,605				1,666,025				2,426,044				2,427,052