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ITEM 11.
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EXECUTIVE AND DIRECTOR COMPENSATION
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Non-Employee Director Compensation
Our Board of Directors approves the compensation for members of our Board of Directors and Board committees based on the recommendations of our Nominating and Corporate Governance Committee. We target compensation for service on our Board of Directors and Board committees generally at the 50
th
percentile for board service at companies in our peer group of companies, using the same peer group used for executive compensation purposes and described under the heading “Peer Group”. Generally,
our Nominating and Corporate Governance Committee reviews and discusses the compensation data and analysis provided by management using a third-party compensation database. Our Chief Executive Officer participates in the discussions on compensation for members of our Board of Directors. Directors who are employees receive no additional compensation for serving on our Board of Directors.
The following table describes the compensation arrangements with our non-employee directors as of the end of fiscal 2019.
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Compensation
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Fiscal 2019
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Annual Cash Retainers:
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Non-Executive Chair of the Board
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$135,000
(1)
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Board Member
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60,000
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Audit Committee Chair
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30,000
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Audit Committee Member
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15,000
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Compensation Committee Chair
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25,000
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Compensation Committee Member
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10,000
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Nominating and Corporate Governance Committee Chair
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25,000
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Nominating and Corporate Governance Committee Member
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10,000
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Equity Awards
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95,004
(2)
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Charitable Matching Contribution Program
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$2,000 maximum aggregate annual match
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(1)
We pay an annual cash retainer to our Non-Executive Chair of the Board. We do not pay any other cash compensation to him or her for service on our Board of Directors. The Non-Executive Chair also receives an annual equity award, similar to the other non-employee directors.
(2)
On June 28, 2018, we granted a restricted stock award of 1,952 shares, having a value of $95,004 on the date of grant that vests over three years in equal annual installments on the anniversaries of the award to each of our non-employee directors who was serving on our Board the date of the 2018 Annual Meeting of Shareholders and whose term continued after our 2018 Annual Meeting of Shareholders. In addition, Messrs. Parker and Pompa, who joined our Board during fiscal 2019, each received a restricted stock award on the day they joined our Board.
Restricted Stock Awards and Restricted Stock Unit Awards
Restricted stock awards to non-employee directors are issued pursuant to our 2009 Non-Employee Director Stock Incentive Plan, as amended (2014) (the "Director Stock Plan"). Each non-employee director receives a restricted stock award on the date he or she is first elected to our Board and annually on the date of our annual meeting of shareholders if his or her term continues after such meeting. The number of shares of restricted stock subject to the award is determined by our Board of Directors, after recommendation by our Nominating and Corporate Governance Committee and in consideration of various factors, including market data and trends. We target the equity-based compensation received by non-employee directors at approximately the 50
th
percentile of our peer group of companies. Restricted stock awards vest in three equal annual installments over a three-year vesting period. Upon issuance of the restricted stock, each holder is entitled to the rights of a shareholder, including the right to vote the shares of restricted stock and receive any cash dividends and any other distributions.
Non-employee directors have the option to defer receipt of all or a portion of any restricted stock award and will receive a restricted stock unit award for that portion of the restricted stock award deferred. Restricted stock unit awards are also issued pursuant to our Director Stock Plan. Each non-employee director electing to receive a restricted stock unit award in lieu of a restricted stock award receives a credit of shares of our common stock in an amount equal to the number of shares he or she has elected to defer. The account is also credited, as of the crediting date, with an amount equal to the dividend paid on one share of our common stock multiplied by the number of shares credited to each account. Non-employee directors receiving restricted stock unit awards may elect to receive the amounts credited to their account at a fixed date, at age 70, or following death or retirement from our Board of Directors. The restricted stock unit awards and related accumulated dividends are paid out in the form of shares of our common stock (plus cash in lieu of fractional shares) either in a lump sum or in installments, at the participating director’s election. This is an unfunded book-entry, “phantom stock unit” plan, as no trust or other vehicle has been established to hold any shares of our common stock.
Director Deferred Compensation Plan
Our Deferred Compensation Plan for Non-Employee Directors (the "Director Deferred Compensation Plan") was adopted by our Board of Directors to encourage our non-employee directors to increase their ownership of shares of our common stock, thereby aligning their interests in the long-term success of Apogee with that of our other shareholders. Under the plan, participants may
elect to defer all or a portion of their annual cash retainer into deferred stock accounts. There is no Company match on amounts deferred by our non-employee directors under such plan. Each participating director receives a credit of shares of our common stock in an amount equal to the amount of annual cash retainer deferred divided by the fair market value of one share of our common stock as of the crediting date. These accounts also are credited, as of the crediting date, with an amount equal to the dividend paid on one share of our common stock multiplied by the number of shares credited to each account. Participating directors may elect to receive the amounts credited to their accounts at a fixed date, at age 70, or following death or retirement from our Board of Directors. The deferred amounts are paid out in the form of shares of our common stock (plus cash in lieu of fractional shares) either in a lump sum or in installments, at the participating director’s election. This plan is an unfunded, book-entry, “phantom stock unit” plan, as no trust or other vehicle has been established to hold any shares of our common stock.
Charitable Matching Contributions Program for Non-Employee Directors
Under our Charitable Matching Contributions Program for Non-Employee Directors, we match cash or publicly-traded stock contributions made by our non-employee directors to charitable organizations that are exempt from federal income tax up to a maximum aggregate amount of $2,000 per eligible non-employee director per calendar year.
Stock Ownership Guidelines for Non-Employee Directors
Our Board of Directors believes that non-employee directors should have a significant equity interest in Apogee and established voluntary stock ownership guidelines for directors in 2002. The guidelines encourage share ownership by our directors in an amount having a market value of $180,000 (three times the current annual Board retainer of $60,000) to be achieved within five years of first being elected as a director. In calculating share ownership of our non-employee directors, we include shares of restricted stock and restricted stock units issued pursuant to our Director Stock Plan, and phantom stock units issued pursuant to our Director Deferred Compensation Plan, but do not include unexercised stock options. Shares are valued based on the average closing price of our common stock for the most recently completed fiscal year.
As of March 1, 2019, the last trading day of fiscal 2019, all of our non-employee directors exceeded our stock ownership guidelines, except for Mr. L. Johnson, who joined our Board on June 22, 2017, and Mr. Pompa who joined our Board on October 2, 2018. Both Messrs. L. Johnson and Pompa are currently on pace to meet our guidelines within five years of election to our Board.
Fiscal 2019 Non-Employee Director Compensation Table
The following table presents the compensation paid to our non-employee directors for fiscal 2019.
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Name
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Fees Earned or Paid in Cash ($)
(1)
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Stock Awards ($)
(2)
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All Other Compensation
($)
(3)
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Total ($)
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Bernard P. Aldrich
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135,000
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95,004
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35,955
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265,959
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Jerome L. Davis
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85,000
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95,004
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17,505
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197,509
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Sara L. Hays
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80,000
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95,004
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18,583
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193,587
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Lloyd E. Johnson
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85,000
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95,004
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3,794
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183,798
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John T. Manning
(4)
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28,334
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—
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551
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28,885
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Robert J. Marzec
(4)
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29,750
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—
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13,667
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43,417
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Donald A. Nolan
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81,667
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95,004
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11,617
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188,288
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Herbert K. Parker
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66,667
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110,838
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(5)
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3,201
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180,706
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Mark A. Pompa
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31,250
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71,233
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(6)
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492
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102,975
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Richard V. Reynolds
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85,000
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95,004
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22,496
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202,500
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Patricia K. Wagner
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85,000
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95,004
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2,486
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182,490
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(1)
Includes cash retainers deferred by non-employee directors under our Director Deferred Compensation Plan, as further described under the heading “Director Deferred Compensation Plan”. During fiscal 2019, Messrs. Davis, Marzec, Nolan and Pompa made deferrals of all or a portion of their annual cash retainers pursuant to our Director Deferred Compensation Plan.
(2)
The amounts in this column are calculated based on the fair market value of our common stock on the date the award was made in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). On June 28, 2018, each of our non-employee directors whose term continued after our 2018 Annual Meeting of Shareholders received a restricted stock award or, if a director elected to defer receipt of all or a portion of his or her restricted stock award, a restricted stock unit award of 1,952 shares. The closing price of our common stock on the NASDAQ Global Select Market on June 28, 2018, the date of grant, was $48.67. The table below sets forth certain information with respect to the aggregate number of shares of unvested restricted stock, restricted stock units, including shares from dividends credited to the account, and vested options to purchase shares of our common stock held by our non-employee directors as of March 2, 2019, the end of fiscal 2019. Our non-employee directors did not hold any stock options as of March 2, 2019.
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Name
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Aggregate Number of Shares of Restricted Stock (#)
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Aggregate Number of Shares of Deferred Restricted Stock Units (#)
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Bernard P. Aldrich
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3,761
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—
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Jerome L. Davis
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—
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7,198
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Sara L. Hays
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3,761
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—
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Lloyd E. Johnson
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1,147
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1,969
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John T. Manning
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—
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—
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Robert J. Marzec
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—
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—
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Donald A. Nolan
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—
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7,198
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Herbert K. Parker
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2,330
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—
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Mark A. Pompa
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—
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1,768
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Richard V. Reynolds
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—
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7,198
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Patricia K. Wagner
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3,761
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—
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(3)
This column includes dividends and dividend equivalents paid on shares of restricted stock and restricted stock unit awards, respectively, issued pursuant to our Director Stock Plan, dividend equivalents paid on phantom stock units pursuant to our Director Deferred Compensation Plan and matching contributions pursuant to our Charitable Matching Contributions Program for Non-Employee Directors. The table below sets forth the amounts contributed or paid by the Company for our non-employee directors pursuant to such plans with respect to fiscal 2019.
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Name
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Dividends Paid on Shares of Restricted Stock ($)
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Dividend Equivalents Paid on Shares of Deferred Restricted Stock Units ($)
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Dividend Equivalents Paid on Phantom Stock Units ($)
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Matching Contributions under our Charitable Matching Contributions Program for
Non-Employee Directors ($)
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Total All Other Compensation ($)
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Bernard P. Aldrich
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2,394
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—
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31,561
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2,000
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35,955
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Jerome L. Davis
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—
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4,324
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11,181
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2,000
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17,505
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Sara L. Hays
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2,394
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—
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14,189
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2,000
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18,583
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Lloyd E. Johnson
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833
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961
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—
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2,000
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3,794
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John T. Manning
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551
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—
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—
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—
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551
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Robert J. Marzec
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551
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—
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11,116
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2,000
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13,667
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Donald A. Nolan
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—
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4,324
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5,293
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2,000
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11,617
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Herbert K. Parker
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1,201
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—
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—
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2,000
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3,201
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Mark A. Pompa
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—
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309
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183
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—
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492
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Richard V. Reynolds
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—
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4,324
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16,172
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2,000
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22,496
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Patricia K. Wagner
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2,486
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—
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—
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—
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2,486
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(4)
Messrs. Manning and Marzec retired from our Board on June 28, 2018.
5)
Mr. Parker was elected to our Board on April 26, 2018. He received a restricted stock award for 378 shares on April 26, 2018. The closing price of our common stock on the NASDAQ Market on April 26, 2018, the date of grant, was $41.89. Mr. Parker also received a restricted stock award for 1,952 shares on June 28, 2018, the date of our 2018 Annual Meeting.
(6)
Mr. Pompa was elected to our Board on October 2, 2018. He received a restricted stock award for 1,768 shares on October 2, 2018. The closing price of our common stock on the NASDAQ Market on October 2, 2018, the date of grant, was $40.29.
EXECUTIVE COMPENSATION
Compensation Committee Report
The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis section with management and the Committee's independent compensation consultant and has recommended to the Board of Directors that the Compensation Discussion and Analysis be included as follows in our Annual Report on Form 10-K.
Compensation Committee of the
Board of Directors of Apogee
Jerome L. Davis,
Chair
Sara L. Hays
Donald A. Nolan
Patricia K. Wagner
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes Apogee's executive compensation program for fiscal 2019, and certain elements of the fiscal 2020 program. In particular, this section explains how our Compensation Committee (the "Committee") made decisions related to compensation for our executives, including our Named Executive Officers listed in Item 10, for fiscal 2019.
Executive Summary
About Apogee
Our Company is a world leader in the design and development of value-added glass solutions for enclosing commercial buildings and value-added glass and acrylic for picture framing and displays. We have four segments, with manufacturing and fabrication located in the U.S., Canada and Brazil. For fiscal 2019, we had revenue of approximately $1.4 billion. See Item 1. Business for more information about our Company and its four segments.
Strategy
Our strategies are to diversify revenue streams within the commercial construction industry and structure the business to provide more stable revenue growth and profit generation over an economic cycle. Strategies are focused on diversification of end sectors served through growth from new geographies, new products and new markets, while improving margins through productivity and project selection initiatives. See Item 1. Business for information on our strategies.
Our Fiscal 2019 Performance
For fiscal 2019, our Company achieved record revenues of approximately $1.4 billion, an increase of 6% over the prior year, and had earnings per diluted share ("EPS") of $1.63 and adjusted earnings per diluted share of $3.01. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 8. Financial Statements and Supplementary Data for more information on our Company's performance during fiscal 2019.
Executive Compensation Philosophy and Practices
Our compensation programs are designed to attract, motivate and retain executive talent to achieve success in both the short- and long-term for our Company; pay for sustainable performance in an ever-changing environment; and align the interests of our executive officers with our shareholders. We continue to refine our executive compensation program to reflect changes in our business strategy and evolving executive compensation practices.
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Our Executive Compensation Practices (What We Do):
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Executive Compensation Practices We Have Not Implemented or Have Discontinued (What We Don’t Do):
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We seek alignment of pay and performance each year. A significant portion of our compensation program is performance-based through the use of our short-term and long-term incentive plans.
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We do not have employment contracts for our Named Executive Officers.
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We review “tally sheets” and realizable pay and performance for our Named Executive Officers and use that information as a factor in making compensation decisions.
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We do not pay annual incentive compensation if our Company is not profitable for the year.
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We mitigate undue compensation risk by utilizing caps on potential payments, multiple financial performance metrics, and different metrics for our annual cash incentives and long-term performance awards, as well as having robust Board and Board Committee processes to identify and manage risk.
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We do not believe any of our Company’s compensation programs create risks that are reasonably likely to have a material adverse effect on our Company.
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We have change-in-control severance agreements with all of our Named Executive Officers that provide benefits only upon a “double trigger.”
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We do not provide for excise tax “gross-ups” or “single triggers” in our change-in-control severance agreements.
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Our equity award agreements for grants made pursuant to our Stock Incentive Plan have “double trigger” change-in-control provisions for all employees.
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We provide minimal perquisites to our executives.
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We do not provide tax reimbursement or tax “gross-ups” on any perquisites.
We do not provide automobile allowances or pay for club memberships for our Named Executive Officers.
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We have adopted stringent share ownership guidelines, and we review compliance annually.
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We do not reprice underwater stock options or stock appreciation rights.
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We evaluate share utilization by annually reviewing overhang and burn rates.
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The Committee benefits from its utilization of a compensation consulting firm that fully meets the stringent independence requirements under the final rules of the Dodd-Frank Act.
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The Committee’s compensation consulting firm does not provide any other services to our Company other than those requested by our Compensation Committee for executive compensation.
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We have a clawback policy that applies to our Named Executive Officers and certain other executives.
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The Committee’s independent compensation consulting firm does not provide any specific recommendations for compensation for our Named Executive Officers.
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We have a formal hedging policy that prohibits all employees and directors from engaging in hedging transactions in our Company’s securities.
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The Role of Shareholder Vote on Say on Pay Proposal
Our Company provides our shareholders with the opportunity to cast an advisory vote on our Say on Pay Proposal annually. At our Company’s annual meeting of shareholders held on June 28, 2018, 95% of the votes cast on the Say on Pay Proposal were voted in favor of ratification of the proposal. Management met with certain investors during fiscal 2019 to discuss operations, strategy, compensation and corporate governance matters. The Committee did not make any changes to its programs in response to this vote or based on interactions with our shareholders. The Committee will continue to take into account the outcome of our Company’s Say on Pay Proposal and input from our shareholders when making future compensation decisions.
Our Executive Compensation Program
Total compensation includes a mix of short-term and long-term compensation and fixed and performance-based compensation.
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•
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Short-term compensation
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▪
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Annual performance-based cash incentives
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▪
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Restricted stock award (40%)
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◦
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The number of time-based restricted stock awards granted to an executive in any given year is based on market compensation data as well as individual performance in the prior year.
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▪
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Cash-based performance awards (60%)
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◦
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Two-year performance-based awards on end-to-end cycles that are only earned upon achievement of certain two-year financial performance measures with any amounts earned paid over two-years. These awards are granted every other year and settled in cash.
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▪
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Our Chief Executive Officer also participates in a performance-based evaluation incentive program that encourages him to drive continued growth, operational improvement and successful implementation of our strategic plan and to remain with our Company. Amounts earned by our Chief Executive Officer pursuant to this program are mandatorily deferred pursuant to our Deferred Compensation Plan.
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▪
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We believe a two-year performance period for 60% of our long-term incentive awards is more appropriate for our Company due to the cyclical nature of the commercial construction industry, variability of project execution schedules as determined by our customers, and limited visibility to industry conditions and revenues more than two years out. In addition, we believe the end-to-end cycles of the awards compensate for having only two-year performance periods instead of three-year performance periods used by many other public companies. Our Compensation Committee regularly reviews and considers the appropriate performance period for our long-term performance-based awards.
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Target Compensation Mix
The charts below illustrate the short-term and long-term mix, and fixed and performance-based mix of the primary compensation elements at target for our Chief Executive Officer and Other Named Executive Officers. This information is used by the Committee as a guideline in making compensation awards for our Named Executive Officers.
(1)
Our two-year performance-based awards have end-to-end performance cycles, are granted every other year and are cash-settled. During fiscal 2019, we granted the opportunity to earn the fiscal 2019 - 2020 performance-based awards to all our Named Executive Officers. We will not make any two-year performance-based awards to our Named Executive Officers until fiscal 2021, after the completion of the current fiscal 2019 - 2020 award cycle. We have included the annualized (50%) value of such awards at target in the charts above. These awards are a component of long-term compensation for both years in the performance cycle.
(2)
During fiscal 2019, we granted the fiscal 2019 CEO evaluation incentive, which has a one-year performance period. All of the fiscal 2019 CEO evaluation incentive is included at target in the chart above.
Highlights of Fiscal 2019 Compensation Actions
The following highlights the Committee’s key compensation decisions for fiscal 2019. These decisions were made after reviewing compensation data provided by the Committee’s independent compensation consultant.
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•
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Base Salaries
. For fiscal 2019, the Committee did not award any base salary increases to our Chief Executive Officer, Chief Financial Officer or General Counsel but awarded a base salary increase of 5.1% to our Senior Vice President and Treasurer.
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•
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Annual Cash Incentive Payouts
. Our fiscal 2019 annual cash incentives paid out at an average of 35.2% of target. Our Chief Executive Officer earned an annual cash incentive equal to 37.0% of his fiscal 2019 base salary, and our Other Named Executive Officers earned fiscal 2019 annual cash incentives ranging from 14.1% to 26.4% of their fiscal 2019 base salaries. The financial performance metrics for these awards were net sales, earnings before taxes ("EBT") and days working capital ("DWC").
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•
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Restricted Stock Awards
. On April 26, 2018, the Committee awarded restricted stock awards to our Named Executive Officers that vest over three years. Our Chief Executive Officer received an award valued at $727,420 and our Other Named Executive Officers received awards with values ranging from $102,631 to $258,300.
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•
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Fiscal 2019 - 2020 Performance-Based Awards
. On June 28, 2018, the Committee established the fiscal 2019 - 2020 cash-based performance awards to our Named Executive Officers. Our Chief Executive Officer received an award with a value of $2,711,500 at target and our Other Named Executive Officers received awards with values ranging from $233,100 to $783,000 at target. These awards are end-to-end awards and will only be granted every other year. Our Company will not award additional two-year cash-based performance awards until completion of the current fiscal 2019 - 2020 award cycle. The financial performance metrics for these awards are cumulative net sales, cumulative EPS and average return on invested capital ("ROIC").
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•
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Chief Executive Officer Evaluation Incentive
. Our Chief Executive Officer earned $198,688 under the fiscal 2019 CEO evaluation incentive awards, which was mandatorily deferred pursuant to our Deferred Compensation Plan.
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Overview of Primary Compensation Elements
The table below provides an overview of the three primary compensation elements used in our executive compensation program.
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Compensation Element
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Objective
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How Determined
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Market Positioning
(1)
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How Impacted by Performance
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Base Salary and Benefits
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Attract and retain executive officers through competitive pay and benefit programs.
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Individual performance, experience, tenure, competitive market data and executive potential.
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Targeted to be around the 50
th
percentile relative to competitive market practices.
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Based on individual performance.
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Annual Cash Incentive Compensation
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Create an incentive for achievement of pre-defined annual Company performance results.
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For target bonus award opportunity percentages - competitive market data and trends, and internal equity.
For actual bonus payouts - performance against pre-established criteria in our annual cash incentive plan.
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Our overall performance results will yield total cash compensation levels as follows:
- Below target performance:
total cash at or below the
25th percentile.
- Target performance: total
cash slightly below the
50th percentile.
- Above target performance:
total cash above the 50th
percentile.
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Payout dependent on achievement of one-year Company financial performance goals.
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Long-Term Incentive Compensation:
- Restricted Stock
(40% awarded
annually)
- Two-Year
Performance-Based
Awards (60%
awarded every other
year)
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Align the interests of executives with shareholders and to focus on long-term sustained performance, entrepreneurial style and quality products and services while creating appropriate retention incentives through the use of multi-year vesting schedules.
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Individual performance, company performance, market data and trends, internal equity and executive potential.
New hire, promotion and special awards. Internal equity and market data and trends.
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Targeted generally to be at or slightly above the 50
th
percentile for target performance and up to the 75
th
percentile for maximum performance.
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Performance that increases our stock price increases the value of the restricted stock awards.
Cash payout of the two-year performance-based awards is dependent on achievement of two-year Company financial performance goals.
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(1)
Actual pay levels may be above or below the targeted level depending on all of the factors outlined in the "How Determined" column above.
Compensation Process
Our compensation program is evaluated annually taking into consideration changes to our business strategy, the economy and our competitive marketplace, as well as evolving executive compensation practices.
During the first quarter of each fiscal year, the performance of each of our Named Executive Officers is evaluated based on a subjective assessment of (i) his or her executive leadership; and (ii) achievement of agreed-upon individual business objectives for the just-completed fiscal year. The annual performance evaluation of our Chief Executive Officer is administered by our Nominating and Corporate Governance Committee, with all non-employee directors participating in the performance evaluation, and the results of the Chief Executive Officer’s annual performance evaluation are reviewed by the Committee and our full Board. Our Chief Executive Officer conducts or participates in the annual performance evaluation of our Other Named Executive Officers and reviews the results with members of the Committee.
In establishing the elements and levels of compensation for a fiscal year, the Committee considers the annual performance evaluations of our Named Executive Officers and reviews its compensation consultant’s independent analyses of market compensation levels based on comparable positions, using both published survey sources and company peer group data to determine our competitive positioning relative to the market. Our Chief Executive Officer makes recommendations to the Committee on compensation for our Other Named Executive Officers, but does not participate in the determination of his own compensation.
The Committee continuously monitors our compensation programs and annually reviews a compensation “tally sheet,” which lists total direct compensation (base salary, annual cash incentive compensation, and long-term incentive awards) perquisites, other elements of executive compensation, broad-based employee benefits and wealth accumulation through Company equity and retirement plans for our Named Executive Officers; however, the compensation tally sheets are not used to make actual pay decisions. The Committee assesses historical pay and performance to ensure continued alignment of our compensation programs. However, the Committee generally does not consider compensation earned in prior years in establishing the elements and levels of compensation for a Named Executive Officer in the current fiscal year.
Consulting Assistance, Peer Group and Competitive Market
Compensation Consultant Independence.
In fiscal 2019, the Committee retained the services of Pearl Meyer to assist with the review of overall compensation for our executive officers. Pearl Meyer reports directly to the Committee, and the Committee can replace Pearl Meyer or hire additional consultants at any time. During fiscal 2019, Pearl Meyer attended five Committee meetings in person or by telephone, including executive sessions, as requested, and consulted with the Chair of the Committee between meetings.
As required under the Dodd-Frank Act, the Committee has analyzed whether the work of Pearl Meyer as its compensation consultant raises any conflict of interest, taking into consideration the following factors under this rule: (i) Pearl Meyer does not provide any other services to our Company; (ii) the amount of fees from our Company paid to Pearl Meyer is less than 1% of Pearl Meyer’s total revenue; (iii) Pearl Meyer’s policies and procedures were designed to ensure independence; (iv) Pearl Meyer does not have any business or personal relationship with an executive officer of our Company or any member of the Committee; and (v) neither Pearl Meyer, nor any member of its consulting team, owns any stock of our Company. The Committee has determined, based on its analysis of the above factors, that Pearl Meyer is independent of our Company and the work of Pearl Meyer (and the individual compensation advisors employed by Pearl Meyer) as compensation consultant to the Committee has not created any conflict of interest. The Committee will continue to monitor the independence of its compensation consultant on an annual basis.
Peer Group.
The selection criteria identified for determining and reviewing our Company’s peer group generally include:
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•
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Companies with revenue within a similar range (0.33 to 3.0 multiple).
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•
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Companies with market capitalization within a similar range (0.33 to 3.0 multiple).
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•
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Companies with market capitalization to revenue ratio of 0.5 or greater.
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•
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Companies in the same or similar industries.
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•
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Companies with business model similarity, which may include the following:
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◦
|
Coatings for special purposes (
e.g.
, protective, UV, etc.);
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◦
|
Construction materials, primarily for commercial or industrial applications;
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◦
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Specialized/customized product lines;
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◦
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Heavy-duty manufacturing operations and project-directed manufacturing; and
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◦
|
Project-based businesses.
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•
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Companies in the same geographic location (to a lesser degree).
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•
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Companies included in the prior-year peer group, to help ensure year-over-year consistency (where appropriate).
|
Our 15-company peer group is listed below.
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Aegion Corporation
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H.B. Fuller Company
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AZZ Inc.
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LCI Industries
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BMC Stock Holdings, Inc.
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Masonite International Corporation
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Eagle Materials Inc.
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NCI Building Systems, Inc.
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EnPro Industries, Inc.
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Quaker Chemical Corporation
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Gibralter Industries, Inc.
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Quanex Building Products Corporation
|
Graco Inc.
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Tennant Company
|
Griffon Corporation
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Competitive Market
.
The Committee relies on its independent compensation consultant to help define the appropriate competitive market using a combination of the peer group companies and published compensation surveys. The information on the competitive market is used by the Committee:
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•
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As an input in designing our compensation plans and philosophy;
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•
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As an input in developing base salary adjustments, annual cash incentive targets and long-term incentive ranges;
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•
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To benchmark the form and mix of long-term awards;
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•
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To assess the competitiveness of total direct compensation awarded to our Named Executive Officers and certain of our other executives; and
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•
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To benchmark dilution and overhang levels (dilutive impact on our shareholders of equity compensation) and annual burn rate (the aggregate shares awarded as a percentage of total outstanding shares).
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Fiscal 2019 Individual Compensation Actions
Fiscal 2019 Annual Performance Accomplishments
.
The performance during fiscal 2019 of each of our Named Executive Officers was evaluated based on a subjective assessment of (i) his or her executive leadership; and (ii) achievement against his or her individual business objectives for fiscal 2019. Below is certain information regarding each Named Executive Officer’s key achievements during fiscal 2019.
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•
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Mr. Puishys.
Mr. Puishys key accomplishments during fiscal 2019 include:
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◦
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Achieved revenues of $1.4 billion, a 6% increase over the prior year.
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◦
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Returned approximately $61 million directly to shareholders through a combination of dividends and share repurchases.
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◦
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Led talent management and leadership transitions at four business units and three key functional positions at Apogee.
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◦
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Made strategic growth investments in our Architectural Glass segment to expand segment’s participation in new U.S. non-residential fabricated glass markets positioning the segment for sales commencing during fiscal 2020.
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◦
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Advanced synergies resulting in increased cross-selling of finished products and intercompany supply and positioning our Company for improved performance.
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◦
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Made capital investments for facility improvements and equipment to position our Company for productivity and operating margin improvements.
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◦
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Advanced the integration of EFCO Corporation, acquired during fiscal 2018, through new leadership in key roles and continued implementation of Apogee Lean Enterprise positioning EFCO for productivity and operating margin improvements.
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•
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Mr. Porter.
Mr. Porter’s key accomplishments during fiscal 2019 include:
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◦
|
Achieved revenues of $1.4 billion, a 6% increase over the prior year.
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◦
|
Achieved operating margin of 4.3% and adjusted operating margin of 8.3%.
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◦
|
Achieved EPS of $1.63 and adjusted EPS of $3.01.
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◦
|
Performed a capital structure analysis that led to $61 million being directly returned to shareholders through a combination of dividends and share repurchases.
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◦
|
Provided direct management oversight to two Architectural Framing System segment business units to support leadership transitions and performance improvement; both business units had double digit revenue growth and margin improvement for the year.
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◦
|
Achieved $50 million in orders from our building retrofit program and expanded our building retrofit program with additional staffing and capabilities.
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◦
|
Provided support for a growth strategy to expand the Architectural Glass segment’s participation in new U.S. non-residential fabricated glass markets positioning the segment for sales commencing during fiscal 2020.
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|
•
|
Ms. Beithon.
Ms. Beithon’s key accomplishments during fiscal 2019 include:
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◦
|
Led corporate governance initiatives leading to certain amendments to our Company’s by-laws, proposed amendments to our Company’s articles of incorporation and amendments to our corporate governance guidelines.
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◦
|
Managed and resolved various claims and litigation matters.
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◦
|
Provided legal support for growth strategies and business development activities.
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◦
|
Provided legal and environmental support for new real estate holdings and leases.
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◦
|
Provided legal support for the integration of EFCO Corporation and other post-acquisition matters.
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◦
|
Led Section 16 officer reporting compliance efforts, resulting in no late filings during fiscal 2019.
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•
|
Mr. Jewell.
Mr. Jewell’s key accomplishments during fiscal 2019 include:
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◦
|
Led a robust three-year strategic planning process for our Company and its four segments.
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◦
|
Advanced synergies resulting in increased intercompany material supply, cross-selling of finished product, facility utilization and collaboration among the business units across segments.
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◦
|
Improved market and economic outlook analysis and reporting.
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◦
|
Conducted an analysis of optimal long-term segment strategies and requirements.
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◦
|
Evaluated various business development initiatives and opportunities.
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◦
|
Conducted a preliminary portfolio alignment analysis.
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•
|
Mr. Johnson.
Mr. Johnson’s key accomplishments during fiscal 2019 include:
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◦
|
Managed our real estate holdings and leases, including the sale of a former fabrication facility resulting in sales proceeds of $10 million.
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◦
|
Obtained government incentives related to facility capital improvements resulting in fiscal 2019 cash benefits of more than $8 million.
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◦
|
Led tax planning initiatives that resulted in an effective tax rate of 22.1% for fiscal 2019.
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◦
|
Managed the repurchase of shares of our common stock that resulted in the return of $43 million directly to our shareholders.
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◦
|
Negotiated appropriate levels of insurance coverage for fiscal 2019 at competitive rates and improved terms with quality carriers.
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Base Salary
.
Base salary reflects a fixed portion of the overall compensation package and is the base amount from which certain other compensation elements are determined. In making salary adjustments, the Committee considers the executive’s base salary relative to the market, our compensation philosophy and other factors, such as individual performance against business plans, leadership, initiatives, experience, knowledge and job criticality. After discussing these items, the Committee decided it was appropriate to provide merit increases to all of our Named Executive Officers for fiscal 2020, except Mr. Puishys.
The table below provides information on the base salaries of our Named Executive Officers for fiscal 2019 and fiscal 2020.
Base Salary
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Name
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|
Fiscal 2019
Base Salary ($)
|
|
Increase in Fiscal 2019 (%)
|
|
Fiscal 2020
Base Salary ($)
|
|
Increase in Fiscal 2020 (%)
|
Joseph F. Puishys
|
|
935,000
|
|
—
|
|
935,000
|
|
—
|
James S. Porter
|
|
435,000
|
|
—
|
|
448,000
|
|
3.0
|
Patricia A. Beithon
|
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360,000
|
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—
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|
371,000
|
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3.1
|
Brent C. Jewell
|
|
350,000
|
|
N/A
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|
361,000
|
|
3.1
|
Gary R. Johnson
|
|
259,000
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|
5.1
|
|
269,000
|
|
3.9
|
Annual Cash Incentive Compensation
.
Annual cash incentive awards are designed to reward short-term performance results. These results are based on achievement relative to objective financial goals set forth in the annual operating plan approved by our Board of Directors. For fiscal 2019, annual cash incentive awards to our Named Executive Officers other than Mr. Jewell were
made pursuant to our shareholder-approved Apogee Enterprises, Inc. Executive Management Incentive Plan (the “Executive MIP”), as described below. The Executive MIP was approved by shareholders in fiscal 2016.
Executive MIP
. Our Executive MIP was designed to be an annual bonus “pool” plan. Each fiscal year, the Committee establishes a bonus pool equal to a percentage of one or more performance factors from a list of approved factors set forth in our Executive MIP. If the bonus pool generated for any fiscal year is not sufficient to fund all potential payouts to participants under the plan, the awards earned by each participant will be reduced proportionately based on each participant’s percent of the pool.
Each fiscal year, the Committee selects the executives of our Company who will participate in our executive management incentive plan for that year and assigns a percentage of the bonus pool to each participating executive, with the total percentage not to exceed 100% of the bonus pool for any given fiscal year. The percentage of the bonus pool assigned to each participating executive establishes the maximum annual cash incentive award payout for that individual participant for the current fiscal year; however, no one individual payout under the Executive MIP can exceed $3,000,000 in any given fiscal year.
The actual annual cash incentive awards to be paid to participants after the annual bonus pool has been established may be adjusted downward based on the achievement of one or more additional predetermined, objective performance goals based on the annual operating plan approved by our Board of Directors. At least one of the additional predetermined, objective performance goals must be met at the threshold level in order for any annual cash incentive to be paid to an executive.
In addition, if our Company is not profitable, no annual cash incentives will be paid even if the other goals are at or above threshold
.
Generally, if the threshold performance level for all performance goals is achieved, 50% or less of the target award will be earned; if target performance level for all performance goals is achieved, 100% of the target award will be earned; and if maximum performance level for all performance goals is achieved, 200% of the target award will be earned. If the threshold performance level for only one performance goal is achieved and the threshold performance is not achieved for any of the other performance goals, less than 50% of the target award will be earned based on the weighting allocated to that specific performance goal. For any performance between these levels, awards will be interpolated. The Committee has the discretion to further reduce payouts under our Executive MIP, as appropriate.
Fiscal 2019 Annual Cash Incentive Payouts
. The performance factor used to establish the fiscal 2019 bonus pool under our Executive MIP was 5% of Apogee’s operating income. In fiscal 2019, we had operating income of $67,284,000, generating a bonus pool of $3,364,200.
The table below sets forth certain information with respect to the fiscal 2019 annual cash incentive award payout ranges as a percentage of fiscal 2019 salary for our Named Executive Officers.
Fiscal 2019 Annual Cash Incentive Compensation Ranges
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Name
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Threshold Payout as a Percentage of Fiscal 2019 Salary
(%)
(1)
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Target Payout as a Percentage of Fiscal 2019 Salary
(%)
(2)
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|
Maximum Payout as a Percentage of Fiscal 2019 Salary
(%)
(3)
|
Joseph F. Puishys
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|
5.25
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|
105.00
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|
210.00
|
James S. Porter
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|
3.75
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|
75.00
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|
150.00
|
Patricia A. Beithon
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3.00
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|
60.00
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|
120.00
|
Brent C. Jewell
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2.25
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|
45.00
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|
90.00
|
Gary R. Johnson
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|
2.00
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|
40.00
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|
80.00
|
(1)
Assumes threshold performance level is achieved for only the performance goal with the lowest weighting and is not achieved for any other performance goals. If actual results are below threshold performance level for all performance goals, the payout will be zero.
(2)
Assumes target performance level is achieved for all performance goals.
(3)
Assumes maximum performance level is achieved or exceeded for all performance goals.
The following table outlines the performance goal, weighting and actual performance achievement for the fiscal 2019 performance cycle.
Fiscal 2019 Annual Cash Incentive Performance Levels and Actual Performance
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Performance Goal
|
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Weight (%)
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Threshold
|
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Target
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Maximum
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Actual Performance
|
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% Performance Achieved (%)
|
Net Sales
|
|
25.0
|
|
$
|
1,388,500,000
|
|
|
$
|
1,453,991,000
|
|
|
$
|
1,518,001,000
|
|
|
$
|
1,402,637,000
|
|
|
60.77
|
EBT
|
|
65.0
|
|
$
|
107,201,000
|
|
|
$
|
123,056,000
|
|
|
$
|
137,016,000
|
|
|
$
|
58,662,000
|
|
|
—
|
DWC
|
|
10.0
|
|
57.2 days
|
|
|
54.9 days
|
|
|
52.9 days
|
|
|
52.8 days
|
|
|
200.00
|
The following table sets forth certain information with respect to the fiscal 2019 annual cash incentive compensation payouts for each of our Named Executive Officers.
Fiscal 2019 Annual Cash Incentive Compensation Payouts
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Performance Goals
|
|
Potential Payout
|
|
Actual Payout
|
Name and Metric
|
|
Weighting (%)
|
|
Target Payout as a Percent of Fiscal 2019 Salary (%)
|
|
Target Payout Level ($)
|
|
Percentage of Target (%)
|
|
Guideline Amount ($)
|
|
Approved Payout Amount ($)
(1)
|
|
Percent of Fiscal 2019 Salary (%)
|
Joseph F. Puishys
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
25
|
|
26.25
|
|
245,437
|
|
60.77
|
|
149,226
|
|
|
149,226
|
|
|
15.96
|
|
EBT
|
|
65
|
|
68.25
|
|
638,138
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
DWC
|
|
10
|
|
10.50
|
|
98,175
|
|
200.00
|
|
196,350
|
|
|
196,350
|
|
|
21.00
|
|
|
|
100
|
|
105.00
|
|
981,750
|
|
35.20
|
|
345,576
|
|
|
345,576
|
|
|
36.96
|
|
James S. Porter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
25
|
|
18.75
|
|
81,562
|
|
60.77
|
|
49,590
|
|
|
49,590
|
|
|
11.40
|
|
EBT
|
|
65
|
|
48.75
|
|
212,063
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
DWC
|
|
10
|
|
7.50
|
|
32,625
|
|
200.00
|
|
65,250
|
|
|
65,250
|
|
|
15.00
|
|
|
|
100
|
|
75.00
|
|
326,250
|
|
35.20
|
|
114,840
|
|
|
114,840
|
|
|
26.40
|
|
Patricia A. Beithon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
25
|
|
15.00
|
|
54,000
|
|
60.77
|
|
32,832
|
|
|
32,832
|
|
|
9.12
|
|
EBT
|
|
65
|
|
39.00
|
|
140,400
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
DWC
|
|
10
|
|
6.00
|
|
21,600
|
|
200.00
|
|
43,200
|
|
|
43,200
|
|
|
12.00
|
|
|
|
100
|
|
60.00
|
|
216,000
|
|
35.20
|
|
76,032
|
|
|
76,032
|
|
|
21.12
|
|
Brent C. Jewell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
25
|
|
11.25
|
|
39,375
|
|
60.77
|
|
23,940
|
|
|
23,940
|
|
|
6.84
|
|
EBT
|
|
65
|
|
29.25
|
|
102,375
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
DWC
|
|
10
|
|
4.50
|
|
15,750
|
|
200.00
|
|
31,500
|
|
|
31,500
|
|
|
9.00
|
|
|
|
100
|
|
45.00
|
|
157,500
|
|
35.20
|
|
55,440
|
|
|
55,440
|
|
|
15.84
|
|
Gary R. Johnson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
25
|
|
10.00
|
|
25,900
|
|
60.77
|
|
15,747
|
|
|
15,747
|
|
|
6.08
|
|
EBT
|
|
65
|
|
26.00
|
|
67,340
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
DWC
|
|
10
|
|
4.00
|
|
10,360
|
|
200.00
|
|
20,720
|
|
|
20,720
|
|
|
8.00
|
|
|
|
100
|
|
40.00
|
|
103,600
|
|
35.20
|
|
36,467
|
|
|
36,467
|
|
|
14.08
|
|
(1)
The individual approved payout amount for each of Messrs. Puishys, Porter Johnson and Ms. Beithon is less than the maximum allocation of the bonus pool under our Executive MIP for such individual.
Long-Term Incentive Compensation
.
We utilize two instruments to deliver long-term incentive compensation. The mix of long-term incentive instruments is determined annually by the Committee, and for fiscal 2019 were restricted stock awards and two-year performance-based awards. We issue two-year performance-based awards only in the first year of the two-year performance cycle (granted every other year using an end-to-end performance cycle).
Restricted Stock Awards
. Each year, the Committee approves a fixed dollar value of the restricted stock award for each executive for the just-completed fiscal year. For our Chief Executive Officer, the Committee begins its deliberations with a preliminary targeted fixed dollar value, as a percentage of base salary, which is compared to competitive levels of long-term incentives for comparable Chief Executive Officer positions in the market, based on data provided by the Committee’s independent compensation consultant, and increases or decreases the preliminary targeted fixed dollar value after considering the results of the Chief Executive
Officer annual performance evaluation by our non-employee directors. For our Other Named Executive Officers, our Chief Executive Officer recommends to the Committee a preliminary targeted fixed dollar value, as percentage of base salary, which is compared to competitive levels of long-term incentives for comparable positions in the market, based on data provided by the Committee's independent compensation consultant and also recommends increases or decreases in the preliminary targeted fixed dollar value for each of our Other Named Executive Officers based on his or her contributions to the Company's performance, future leadership potential, and subjective evaluation of his or her individual performance for the just completed fiscal year. Restricted stock awards generally vest in three equal annual installments commencing on April 30 of the year following the date of the award. Upon issuance of the restricted stock, each holder is entitled to the rights of a shareholder, including the right to vote the shares of restricted stock and receive any dividends and any other distributions.
On April 26, 2018, the Committee determined that Messrs. Puishys, Porter and G. Johnson and Ms. Beithon had substantially met his or her individual business objectives for fiscal 2018; however, the Committee used negative discretion in determining the final fixed dollar value of such awards by reducing the preliminary targeted fixed dollar value of the awards based on the Company’s performance during fiscal 2018. Mr. Jewell joined our Company on May 29, 2018 and was awarded a restricted stock award for 6,000, that vests in two equal annual installments commencing on May 29, 2019. Information regarding the restricted stock awards made to all Named Executive Officers during fiscal 2019 is set forth below.
Fiscal 2019 Restricted Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Shares of Restricted Stock Awarded (#)
|
|
Value of Award ($)
(1)
|
|
Percentage of Fiscal 2019 Salary (%)
|
|
Grant Price
($)
(2)
|
Joseph F. Puishys
|
|
17,365
|
|
727,420
|
|
|
78
|
|
41.89
|
|
James S. Porter
|
|
5,250
|
|
219,923
|
|
|
51
|
|
41.89
|
|
Patricia A. Beithon
|
|
3,750
|
|
157,088
|
|
|
44
|
|
41.89
|
|
Brent C. Jewell
|
|
6,000
|
|
258,300
|
|
|
74
|
|
43.05
|
|
Gary R. Johnson
|
|
2,450
|
|
102,631
|
|
|
40
|
|
41.89
|
|
(1)
The value of the award was calculated by multiplying the number of shares of restricted stock awarded by, the closing price of our common stock on the NASDAQ Stock Market on the date of grant. The awards to Messrs. Puishys, Porter and G. Johnson and Ms. Beithon were made on April 26, 2018. The award to Mr. Jewell was made on May 29, 2018, which was the date he joined our Company.
(2)
The closing price of our common stock on the NASDAQ Stock Market on the date of grant.
Two-Year Performance-Based Awards
. Our Company has granted two-year performance-based awards as a component of long-term incentive compensation since fiscal 2013. The Committee believes that two-year performance-based awards provide incentive for executives to focus on the achievement of specific two-year financial performance goals that are aligned with business fundamentals. The Committee also believes that these awards, which are settled in cash, are better instruments for delivering long-term incentive compensation than equity-based awards, as they are not dilutive to our shareholders. The two-year performance-based awards are designed to reward sustainable, profitable growth consistent with our strategic plan. The Committee evaluates this program regularly and again determined that a two-year performance cycle provides the necessary line of sight to set realistic targets aligned with our Company’s objectives given the cyclicality of our business even though it is a performance cycle less than what proxy advisory firms prefer to see. For the fiscal 2019-2020 cash-based performance awards the financial performance metrics are cumulative net sales, cumulative EPS and average ROIC.
The two-year performance-based awards are end-to-end awards, meaning that a new cycle begins only when the prior cycle is completed as shown below. They have two-year performance periods and pay out in two equal annual installments after completion of the performance period. Generally, two-year performance-based awards are made in the first quarter of the first fiscal year of the two-year performance period. The two-year performance periods do not overlap; therefore, a grant of this award is made every other year.
Non-overlapping cycles avoid the potential confusion associated with using different targets on the same metric or different metrics in the same year. The earned award is paid out in two equal installments, with 50% of the earned award paid in the first quarter of the year following completion of the performance cycle and the remaining 50% paid one-year later (approximately three-years after commencement of the performance cycle), with each payment contingent on the executive being employed by our Company on the date the payment is made. The Committee believes this payment approach for the earned award promotes retention. 17.2% of our Chief Executive Officer’s two-year performance-based award is mandatorily deferred pursuant to our Deferred Compensation Plan.
|
|
|
|
|
|
|
|
Two-Year Performance-Based Awards and Payout Cycle
|
Award
|
Fiscal 2017
|
Fiscal 2018
|
Fiscal 2019
|
Fiscal 2020
|
Fiscal 2021
|
Fiscal 2022
|
Fiscal 2017 - 2018 Award
|
Performance Period
|
50% Paid
|
50% Paid
|
|
Fiscal 2019 - 2020 Award
|
|
Performance Period
|
50% Paid
|
50% Paid
|
|
|
•
|
Performance award cycles are measured on a fiscal year basis (March - February).
|
|
|
•
|
Award payouts are made 50% at the end of the two-year performance cycle (usually in May) and 50% in the following year (usually in March) promoting continued retention for plan participants.
|
The Committee determines the dollar value of two-year performance-based awards granted to each participating executive at the target performance level based on consideration of individual performance, our Company performance, market data and trends, internal equity, executive potential and input from our Chief Executive Officer with respect to our Other Named Executive Officers and other participating executives. The dollar value at the threshold performance level is determined as a percentage of base salary. Generally, if the threshold performance level for all performance goals is achieved, 50% or less of the target award will be earned; if target performance for all performance goals is achieved, 100% of the target award will be earned; and if maximum performance level for all performance goals is achieved, 200% of the target award will be earned. If threshold performance level for only one performance goal is achieved and the threshold performance is not achieved for any of the other performance goals, less than 50% of the target award will be earned based on the weighting allocated for that specific performance goal. For any performance between these levels, awards will be interpolated.
On April 26, 2018, after completion of the fiscal 2018 audit, the Committee determined the amount earned for the fiscal 2017 - 2018 cash-based performance awards, and the first and second installments of such awards were paid on May 11, 2018 and March 15, 2019, respectively. The payouts of the fiscal 2017 - 2018 cash-based performance awards were reported in our 2018 proxy statement.
On June 27, 2018, the Committee established the fiscal 2019 - 2020 cash-based performance awards. The Committee determined the dollar value for the fiscal 2019 - 2020 cash-based performance awards as a percentage of fiscal 2019 base salary at the threshold, target and maximum award levels for each of our Named Executive Officers. The financial performance metrics for these awards are average ROIC, cumulative EPS and cumulative net sales.
The table below sets forth certain information with respect to our fiscal 2019 - 2020 performance-based awards payout ranges as a percentage of salary at threshold, target and maximum performance.
Fiscal 2019-2020 Performance-Based Award Payout Ranges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold Payment
(1)
|
|
Target Payout
(2)
|
|
Maximum Payout
(3)
|
Name
|
|
Fiscal Years
|
|
Award Amount ($)
|
|
As a Percentage of Fiscal 2019 Salary (%)
|
|
Award Amount ($)
|
|
As a Percentage of Fiscal 2019 Salary (%)
|
|
Award Amount ($)
|
|
As a Percentage of Fiscal 2019 Salary (%)
|
Joseph F. Puishys
|
|
2019-2020
|
|
451,917
|
|
|
48
|
|
2,711,500
|
|
|
290
|
|
5,423,000
|
|
|
580
|
James S. Porter
|
|
2019-2020
|
|
130,500
|
|
|
30
|
|
783,000
|
|
|
180
|
|
1.566,000
|
|
|
360
|
Patricia A. Beithon
|
|
2019-2020
|
|
93,600
|
|
|
26
|
|
561,600
|
|
|
156
|
|
1,123,200
|
|
|
312
|
Brent C. Jewell
|
|
2019-2020
|
|
84,000
|
|
|
24
|
|
504,000
|
|
|
144
|
|
1,008,000
|
|
|
288
|
Gary R. Johnson
|
|
2019-2020
|
|
38,850
|
|
|
15
|
|
233,100
|
|
|
90
|
|
466,200
|
|
|
180
|
(1)
Assumes threshold performance level is achieved for only one of the performance goals and is not achieved for any other performance goals. If actual results are below threshold performance level for all performance goals, the payout will be zero.
(2)
Assumes target performance level is achieved for all performance goals.
(3)
Assumes maximum performance level is achieved for all performance goals.
Chief Executive Officer Evaluation Incentive
.
In order to encourage Mr. Puishys to continue to drive growth, operational improvement and successful implementation of our Company’s strategic plan and to remain with our Company, our Board of Directors established an evaluation incentive program for Mr. Puishys. This incentive is a one-year, evaluation-based, cash incentive award.
Any amounts earned pursuant to the CEO evaluation incentive program are mandatorily deferred into our Deferred Compensation Plan. In the case of death, disability or retirement, Mr. Puishys, or his estate, as applicable, will receive a pro-rata portion of the incentive. In the case of a change-in-control, as defined in the incentive agreement, the incentive will be adjusted by the Committee in its sole discretion. The incentive is subject to our Company’s clawback policy.
Fiscal 2019 CEO Evaluation Incentive
. The amount of incentive earned, if any, is based upon the average rating Mr. Puishys receives on the annual performance evaluation conducted by our Board and his achievement of his fiscal 2019 individual business objectives. Our Chief Executive Officer’s performance criteria for fiscal 2019 were based upon integration of EFCO Corporation, bench strength/succession planning, new market growth and Architectural Framing Systems segment synergies.
If Mr. Puishys met or exceeded his individual business objectives, he had the potential to earn an evaluation incentive award between $233,750 at target and $467,500 at maximum, which will then be mandatorily deferred pursuant to our Deferred Compensation Plan. There is no threshold performance level for such an evaluation incentive award and the Compensation Committee may determine, in its sole discretion, to reduce the amount of incentive earned or to not award any incentive, depending upon actual performance achieved.
On April 25, 2019, our Board of Directors determined that Mr. Puishys had substantially met certain areas of his fiscal 2019 individual business objectives and awarded our Chief Executive Officer $198,688, which was mandatorily deferred pursuant to our Deferred Compensation Plan, as required by the award agreement.
Other Benefit Programs
.
Executive officers, including our Named Executive Officers, are eligible to participate in our 401(k) Retirement Plan, described under the heading “401(k) Retirement Plan”, and our Employee Stock Purchase Plan, which allows participants to purchase shares of our Company’s common stock by contributing up to $500 per week, with our Company contributing an amount equal to 15% of the participant’s weekly contributions, on substantially the same terms as all of our other employees. Our executive officers also receive the same health and welfare benefits as those offered to all other full-time employees, with the exception that we offer enhanced long-term disability benefits to our executive officers.
Additionally, our executive officers may participate in voluntary non-qualified deferred compensation plans, as described under the headings “Deferred Compensation Plan” and “Legacy Deferred Compensation Plan”.
We have entered into change-in-control severance agreements with each of our Named Executive Officers. The Committee does not consider specific amounts payable under these arrangements when establishing annual compensation. See “Change-in-Control Severance Agreements” and “Executive Benefits and Payments Upon Termination and Change-in-Control” for more information on these arrangements.
Generally, we do not make perquisites available to our Named Executive Officers, other than the reimbursement of financial and estate planning fees of up to $2,000 annually, enhanced long-term disability benefits, payment of relocation expenses, reimbursement of annual executive health physical costs up to $3,000 annually and reimbursement of spousal/guest travel expenses for certain Company events. We do not provide tax reimbursement or tax “gross-ups” on any perquisites.
Executive Stock Ownership Guidelines
Stock ownership guidelines for executives have been in place since 2001. The Committee monitors compliance with our stock ownership guidelines annually. Each executive has five years from the date he or she becomes subject to the stock ownership guidelines to meet his or her ownership guideline. If an executive is promoted and the target is increased, an additional three-year period is provided to meet the ownership guideline. For purposes of calculating stock ownership, we include unvested shares of restricted stock but do not include unexercised stock option awards. Shares owned are valued based on the average closing price of our common stock for the just completed fiscal year.
The graph below shows the stock ownership guideline for each of our Named Executive Officers and summarizes the shares held as a multiple of base salary for our Named Executive Officers as of March 2, 2019, the last day of fiscal 2019. Currently, all of our Named Executive Officers exceed their ownership requirements, except for Mr. Jewell, who joined our Company on May 29, 2018 and is currently on pace to meet our guideline within five years of joining our Company. None of our Named Executive Officers has pledged shares of our common stock as collateral for personal loans or other obligations.
Hedging Policy
Our Board of Directors believes that the interests of our executive officers, employees and members of our Board of Directors should be aligned with the interests of our shareholders. As a result, we have adopted a hedging policy that prohibits all employees and members of our Board of Directors from engaging in the purchase or sale of financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) that are designed to hedge or offset any decrease in the market value of our Company’s securities.
Clawback Policy
Our Board of Directors adopted a policy regarding “clawbacks” for Named Executive Officers and other key executives for performance-based short-term and long-term incentive compensation plans as of March 3, 2014. The policy provides the Board the discretion to clawback incentive compensation awarded or paid during the three-year period preceding the date of a restatement of the Company’s financial statements due to material noncompliance with any financial reporting requirement under the U.S. federal securities laws.
Compensation Risk Analysis
During fiscal 2019, the Committee, with the assistance of its independent compensation consultant and management, assessed the risk in our compensation plans, practices and policies. In performing this risk assessment, the Committee considered:
|
|
•
|
The mix of fixed and variable compensation;
|
|
|
•
|
The mix of short-term and long-term incentive compensation;
|
|
|
•
|
The extent to which performance metrics are directly reflected in our audited financial statements or other objective reports;
|
|
|
•
|
The relative weighting of the performance metrics;
|
|
|
•
|
The likelihood that achievement of performance metrics could have a material impact on our financial performance in succeeding fiscal periods;
|
|
|
•
|
The various compensation risk control mitigation features in our compensation plans, including balanced financial performance metrics that include revenue, earnings and operational metrics;
|
|
|
•
|
Multiple financial performance metrics for our annual cash incentive and long-term cash-based incentive plans;
|
|
|
•
|
Different financial performance metrics for our annual cash incentive and long-term cash-based incentive plans;
|
|
|
•
|
Appropriate maximum caps on our annual cash incentive and long-term performance-based incentive plans and annual equity awards;
|
|
|
•
|
Management stock ownership guidelines; and
|
|
|
•
|
Our clawback and hedging policies.
|
The Committee annually assesses the risk of our compensation programs, policies and practices. The Committee does not believe any of our Company’s compensation programs create risks that are reasonably likely to have a material adverse effect on our Company.
Summary Compensation Table
The following Summary Compensation Table sets forth the total compensation in all capacities for fiscal 2019, 2018 and 2017 awarded to our Named Executive Officers.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Fiscal Year
|
|
Salary
($)
(1)
|
|
Bonus ($)
|
|
Stock Awards ($)
(2)
|
|
Non-Equity Incentive Plan Compensation
($)
(3)
|
|
Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)
(4)
|
|
All Other Compensation
($)
(5)
|
|
Total ($)
|
Joseph F. Puishys
|
|
2019
|
|
935,000
|
|
|
—
|
|
|
727,420
|
|
|
544,264
|
|
|
—
|
|
|
43,852
|
|
|
2,250,536
|
|
Chief Executive Officer and President
|
|
2018
|
|
928,077
|
|
|
—
|
|
|
935,002
|
|
|
2,013,116
|
|
|
—
|
|
|
43,387
|
|
|
3,919,582
|
|
|
2017
|
|
901,058
|
|
|
—
|
|
|
1,018,429
|
|
|
2,045,000
|
|
|
—
|
|
|
52,739
|
|
|
4,017,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James S. Porter
|
|
2019
|
|
435,000
|
|
|
—
|
|
|
219,923
|
|
|
114,840
|
|
|
—
|
|
|
17,455
|
|
|
787,218
|
|
Executive Vice President and Chief Financial Officer
|
|
2018
|
|
432,571
|
|
|
—
|
|
|
250,700
|
|
|
522,093
|
|
|
—
|
|
|
15,961
|
|
|
1,221,325
|
|
|
2017
|
|
425,628
|
|
|
—
|
|
|
274,806
|
|
|
484,397
|
|
|
—
|
|
|
16,728
|
|
|
1,201,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia A. Beithon
|
|
2019
|
|
360,000
|
|
|
—
|
|
|
157,088
|
|
|
76,032
|
|
|
(15,210
|
)
|
|
18,715
|
|
|
596,625
|
|
General Counsel and Corporate Secretary
|
|
2018
|
|
357,923
|
|
|
—
|
|
|
179,850
|
|
|
374,000
|
|
|
24,347
|
|
|
18,030
|
|
|
954,150
|
|
|
2017
|
|
350,942
|
|
|
—
|
|
|
197,599
|
|
|
320,305
|
|
|
21,824
|
|
|
18,144
|
|
|
908,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brent C. Jewell
(6)
|
|
2019
|
|
267,885
|
|
|
44,560
|
|
|
258,300
|
|
|
55,440
|
|
|
—
|
|
|
13,557
|
|
|
639,742
|
|
Senior Vice President, Business Development and Strategy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary R. Johnson
|
|
2019
|
|
257,058
|
|
|
—
|
|
|
102,631
|
|
|
36,467
|
|
|
13,590
|
|
|
11,249
|
|
|
420,995
|
|
Senior Vice President and Treasurer
|
|
2018
|
|
245,272
|
|
|
—
|
|
|
77,935
|
|
|
148,952
|
|
|
17,641
|
|
|
8,992
|
|
|
498,792
|
|
|
2017
|
|
242,562
|
|
|
—
|
|
|
87,284
|
|
|
147,419
|
|
|
13,068
|
|
|
13,435
|
|
|
503,768
|
|
(1)
Our fiscal 2019 and 2018 years each had 52 weeks and our fiscal 2017 year had 53 weeks; the amounts shown in this column for fiscal 2017 include 53 weeks of salary.
(2)
The amounts shown in this column represent the grant date fair value of the restricted stock awards made in fiscal 2019, 2018 and 2017. These amounts are calculated in accordance with US GAAP based on the closing share price of our common stock on the date of grant. See Note 12, Share-Based Compensation, to our audited financial statements for the fiscal year ended March 2, 2019.
(3)
The amounts in this column for fiscal 2019 for our Chief Executive Officer represents the annual cash incentive award of $345,576 and evaluation incentive of $198,688, which was deferred into our Deferred Compensation Plan, and for our Other Named Executive Officers represents only the annual cash incentive awards. The fiscal 2019 annual cash incentive awards were made pursuant to our Executive MIP.
Our Executive MIP is discussed under the heading “Executive MIP” and the fiscal 2019 annual cash incentive awards and fiscal 2019 CEO evaluation incentive made pursuant to such plan are discussed under the heading “Fiscal 2019 Annual Cash Incentive Payouts”, “Fiscal 2019 CEO Annual Evaluation Incentive,” and “Grants of Plan-Based Awards.”
The amount in this column for fiscal 2018 represents the full earned amount of the fiscal 2017 - 2018 performance-based awards for the two-year performance cycle made pursuant to our Stock Incentive Plan, reported in a single year as required by applicable SEC rules. Actual payments of the earned fiscal 2017 - 2018 performance-based awards were made in two-equal installments following the performance period and are contingent on active employment on each applicable payment date. For our Chief Executive Officer, $307,896 of the $1,785,794 of the amount earned of the fiscal 2017 - 2018 performance-based award was mandatorily deferred pursuant to our Deferred Compensation Plan, and the balance of the award was paid out in two equal annual installments. The first payment of the fiscal 2017 - 2018 performance-based awards was made on May 11, 2018 and the second payment was made on March 15, 2019. The amount in this column for fiscal 2018 for our Chief Executive Officer also includes the fiscal 2018 CEO evaluation incentive award of $227,322 that was made pursuant to our Executive MIP, which was mandatorily deferred into our Deferred Compensation Plan.
The following table sets forth information with respect to fiscal 2018 non-equity incentive plan compensation for our Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fiscal Year
|
|
Annual Cash Incentive Awards Earned ($)
|
|
Two-Year Performance-Based Awards Earned ($)
|
|
CEO Evaluation Incentive ($)
|
Joseph F. Puishys
|
|
2018
|
|
—
|
|
1,785,794
|
|
227,322
|
James S. Porter
|
|
2018
|
|
—
|
|
522,093
|
|
—
|
Patricia A. Beithon
|
|
2018
|
|
—
|
|
374,000
|
|
—
|
Brent C. Jewell
|
|
2018
|
|
N/A
|
|
N/A
|
|
—
|
Gary R. Johnson
|
|
2018
|
|
—
|
|
148,952
|
|
—
|
The amounts in this column for fiscal 2017 for our Chief Executive Officer represent the fiscal 2017 annual cash incentive award of $1,600,000 and fiscal 2017 CEO evaluation incentive award of $445,000, which was deferred into our Deferred Compensation Plan, and for our Other Named Executive Officers represents only the fiscal 2017 annual cash incentive awards. The fiscal 2017 annual cash incentive awards and fiscal 2017 CEO evaluation incentive award were both made pursuant to our Executive MIP.
(4)
The following table shows each component of the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column for each of our Named Executive Officers for fiscal 2019, 2018 and 2017.
|
|
|
|
|
|
|
|
Name
|
|
Fiscal Year
|
|
Change in Pension Value ($)
|
|
Above Market Earnings on Amounts Deferred Pursuant to our Legacy Deferred Compensation Plan ($)
|
Joseph F. Puishys
|
|
2019
|
|
—
|
|
—
|
|
|
2018
|
|
—
|
|
—
|
|
|
2017
|
|
—
|
|
—
|
James S. Porter
|
|
2019
|
|
—
|
|
—
|
|
|
2018
|
|
—
|
|
—
|
|
|
2017
|
|
—
|
|
—
|
Patricia A. Beithon
|
|
2019
|
|
(18,187)
|
|
2,977
|
|
|
2018
|
|
20,482
|
|
3,865
|
|
|
2017
|
|
18,961
|
|
2,863
|
Brent C. Jewell
|
|
2019
|
|
—
|
|
—
|
Gary R. Johnson
|
|
2019
|
|
—
|
|
13,590
|
|
|
2018
|
|
—
|
|
17,641
|
|
|
2017
|
|
—
|
|
13,068
|
(5)
The following table shows each component of the “All Other Compensation” column for each of our Named Executive Officers for fiscal 2019.
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Perquisites ($)
|
|
Executive Health Physical Reimbursement ($)
|
|
Company Matching Contributions to Defined Contribution Plans
($)
(a)
|
|
Dividends or Earnings on Stock Awards ($)
(b)
|
|
Total All Other Compensation ($)
|
Joseph F. Puishys
|
|
9,623
(c)
|
|
650
|
|
9,625
|
|
23,954
|
|
43,852
|
James S. Porter
|
|
1,365
(d)
|
|
—
|
|
9,345
|
|
6,745
|
|
17,455
|
Patricia A. Beithon
|
|
1,140
(e)
|
|
—
|
|
12,745
|
|
4,830
|
|
18,715
|
Brent C. Jewell
|
|
2,175
(f)
|
|
—
|
|
8,442
|
|
2,940
|
|
13,557
|
Gary R. Johnson
|
|
2,937
(g)
|
|
—
|
|
5,677
|
|
2,635
|
|
11,249
|
(a)
This column reports the amounts we set aside or accrued during fiscal 2019 under our 401(k) Retirement Plan and Employee Stock Purchase Plan as matching contributions on our Named Executive Officers’ contributions to such plans. Such contribution amounts are set forth in the table below. Our Named Executive Officers are eligible to participate in our 401(k) Retirement Plan and Employee Stock Purchase Plan on the same basis as all eligible employees.
|
|
|
|
|
|
Name
|
|
401(k) Retirement Plan Matching Contributions ($)
|
|
Employee Stock Purchase Plan 15% Matching Contributions ($)
|
Joseph F. Puishys
|
|
9,625
|
|
—
|
James S. Porter
|
|
7,785
|
|
1,560
|
Patricia A. Beithon
|
|
9,625
|
|
3,120
|
Brent C. Jewell
|
|
8,442
|
|
—
|
Gary R. Johnson
|
|
5,677
|
|
—
|
(b)
This column represents dividends paid on unvested restricted stock.
(c)
Includes $2,000 for reimbursement of financial planning fees, $1,140 in premiums paid for enhanced long-term disability insurance, $3,000 for an enhanced access medical care program, and $3,483 for reimbursement of spousal travel.
(d)
Consists of $1,140 in premiums paid for enhanced long-term disability insurance and $225 for reimbursement of spousal travel.
(e)
Consists of premiums paid for enhanced long-term disability insurance
(f)
Includes $2,000 for reimbursement of financial planning fees, $175 in premiums paid for enhanced long-term disability insurance.
(g)
Includes $1,960 for reimbursement of financial planning fees and $977 in premiums for enhanced long-term insurance.
(6)
Mr. Jewell joined our Company on May 29, 2018.
Grants of Plan-Based Awards
The following table sets forth information for our Named Executive Officers concerning the following plan-based awards made during fiscal 2019: (i) estimated possible payouts for fiscal 2019 annual cash incentive awards; (ii) the grant date value of the restricted stock awards; and (iii) estimated possible payouts for the fiscal 2019 CEO evaluation incentive award.
Fiscal 2019 Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
|
|
All Other Stock
Awards: Number
of Shares of
Stock or
Units (#)
(2)
|
|
Grant Date
Fair Value of
Stock and
Option
Awards ($)
(3)
|
|
Estimated Possible Payouts under
|
|
|
Non-Equity Incentive Plan Awards
(1)
|
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
Joseph F. Puishys
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019 annual cash
incentive
|
|
4/26/18
|
|
49,088
|
|
|
981,750
|
|
|
1,936,500
|
|
|
—
|
|
|
—
|
|
Restricted stock
|
|
4/26/18
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,365
|
|
|
727,420
|
|
Fiscal 2019 CEO evaluation
incentive
|
|
4/26/18
|
|
—
|
|
(4)
|
233,750
|
|
|
467,500
|
|
|
—
|
|
|
—
|
|
Fiscal 2019 - 2020 cash-based
performance award
|
|
6/28/18
|
|
451,917
|
|
|
2,711,500
|
|
|
5,423,000
|
|
|
—
|
|
|
—
|
|
James S. Porter
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019 annual cash
incentive
|
|
4/26/18
|
|
16,313
|
|
|
326,250
|
|
|
652,500
|
|
|
—
|
|
|
—
|
|
Restricted stock
|
|
4/26/18
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,250
|
|
|
219,923
|
|
Fiscal 2019 - 2020 cash-based
performance award
|
|
6/27/18
|
|
130,500
|
|
|
783,000
|
|
|
1,566,000
|
|
|
—
|
|
|
—
|
|
Patricia A. Beithon
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019 annual cash
incentive
|
|
4/26/18
|
|
10,800
|
|
|
216,000
|
|
|
432,000
|
|
|
—
|
|
|
—
|
|
Restricted stock
|
|
4/26/18
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,750
|
|
|
157,088
|
|
Fiscal 2019 - 2020 cash-based
performance award
|
|
6/27/18
|
|
93,600
|
|
|
561,600
|
|
|
1,123,200
|
|
|
—
|
|
|
—
|
|
Brent C. Jewell
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019 annual cash
incentive
|
|
5/29/18
|
|
7,875
|
|
|
157,500
|
|
|
315,000
|
|
|
—
|
|
|
—
|
|
Restricted stock
|
|
5/29/18
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,000
|
|
|
258,300
|
|
Fiscal 2019 - 2020 cash-based
performance award
|
|
6/27/18
|
|
84,000
|
|
|
504,000
|
|
|
1,008,000
|
|
|
—
|
|
|
—
|
|
Gary R. Johnson
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019 annual cash
incentive
|
|
4/26/18
|
|
5,180
|
|
|
103,600
|
|
|
207,200
|
|
|
—
|
|
|
—
|
|
Restricted stock
|
|
4/26/18
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,450
|
|
|
102,631
|
|
Fiscal 2019 - 2020 cash-based
performance award
|
|
6/27/18
|
|
38,850
|
|
|
233,100
|
|
|
466,200
|
|
|
—
|
|
|
—
|
|
(1)
These columns show the range of possible payouts under the fiscal 2019 annual cash incentive awards, fiscal 2019 - 2020 cash-based performance awards, and fiscal 2019 CEO evaluation incentive award. All of the fiscal 2019 annual cash incentive awards to our Named Executive Officers, with the exception of Mr. Jewell, and the fiscal 2019 CEO evaluation incentive were made pursuant to our Executive MIP described under the heading “Executive MIP”. Amounts to be earned pursuant to the fiscal 2019 annual cash incentive awards are based on results achieved against financial performance goals. The fiscal 2019 CEO evaluation incentive award is based on the assessment by our Board of Mr. Puishys’ achievement of his individual business objectives for fiscal 2019 as reflected in the CEO’s annual performance evaluation conducted by our Board. All of the fiscal 2019 - 2020 cash-based performance awards were made pursuant to our Stock Incentive Plan and are based on the results achieved against financial performance goals over the two-year performance period. Since the two-year performance periods for the two-year performance-based awards do not overlap, there will be no two-year cash-based performance awards made in fiscal 2020.
Amounts shown in the “Threshold” column assume threshold performance level is achieved for only the performance goal with the lowest weighting and is not achieved for any other performance goals. Amounts shown in the “Target” and “Maximum” columns assume target and maximum performance levels, respectively, are achieved for all performance goals. The fiscal 2019 annual cash incentive award payouts and fiscal 2019 CEO evaluation incentive are included in the
“Summary Compensation Table” in the column titled “Non-Equity Incentive Plan Compensation” and described under the headings “Fiscal 2019 Annual Cash Incentive Payouts” and “Fiscal 2019 CEO Evaluation Incentive”, respectively.
(2)
For our Named Executive Officers, except Mr. Jewell, these restricted stock awards were based on performance during fiscal 2018 and vest in three equal annual installments commencing on April 30, 2019. Mr. Jewell’s restricted stock award was made when he joined our Company on May 29, 2018 and vests in two equal annual installments commencing on May 29, 2019. Dividends or other distributions (whether cash, stock or otherwise) with respect to the shares of restricted stock will be paid during the vesting period. In the event of total disability or death prior to the end of the vesting period, the shares of restricted stock will be distributed at the end of the vesting period to the participant, in the event of disability, or to his or her estate, in the event of death. Our restricted stock program is described under “Restricted Stock Awards”.
(3)
The fair value of the restricted stock awards was calculated in accordance with FASB ASC Topic 781 by multiplying the number of shares of our common stock by the closing price of our common stock on the NASDAQ Global Select Market on the date of grant. The closing price of our common stock on the NASDAQ Stock Market was $41.89 on April 26, 2018, the date of grant for Messrs, Puishys, Porter and G. Johnson and Ms. Beithon and $43.05 on May 29, 2018, the date of grant for Mr. Jewell.
(4)
There is no threshold performance level for the fiscal 2019 CEO evaluation incentive award.
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the equity awards held by our Named Executive Officers as of March 2, 2019, the last day of fiscal 2019.
Outstanding Equity Awards at 2019 Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Option Grant Date
|
|
Number of Securities Underlying Unexercised Options Exercisable (#)
|
|
Option Exercise Price ($)
(1)
|
|
Option Expiration Date
|
|
Number of Shares or Units of Stock That Have Not Vested (#)
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($)
(2)
|
Joseph F. Puishys
|
|
8/22/2011
(3)
|
|
|
100,341
|
|
|
8.34
|
|
|
8/22/2021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,192
(4)
|
|
|
295,158
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,437
(5)
|
|
|
412,075
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,365
(6)
|
|
|
625,661
|
|
James S. Porter
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,100
(4)
|
|
|
75,663
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,067
(5)
|
|
|
110,504
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,250
(6)
|
|
|
189,158
|
|
Patricia A. Beithon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,510
(4)
|
|
|
54,405
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,200
(5)
|
|
|
79,266
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,750
(6)
|
|
|
135,113
|
|
Brent C. Jewell
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,000
(7)
|
|
|
216,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary R. Johnson
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
667
(4)
|
|
|
24,032
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
953
(5)
|
|
|
34,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,450
(6)
|
|
|
88,274
|
|
(1)
The exercise price for all stock option is 100% of the closing price of our common stock on the NASDAQ Stock Market on the date of grant.
(2)
The market value is calculated by multiplying the closing price of $36.03, the closing price of our common stock on the NASDAQ Stock Market on March 1, 2019, the last trading day of fiscal 2019, by the number of shares of restricted stock that had not vested as of March 2, 2019, the last day of fiscal 2019.
(3)
Represents a stock option award that vested in equal, annual installments on the first three anniversaries of the date of grant and has a 10-year term.
(4)
Represents an unvested restricted stock award granted on April 30, 2016, which vests in three equal annual installments commencing on April 30, 2017.
(5)
Represents an unvested restricted stock award granted on April 27, 2017, which vests in three equal annual installments commencing on April 30, 2018.
(6)
Represents an unvested restricted stock award granted on April 26, 2018, which vests in three equal installments commencing on April 30, 2019.
(7)
Represents an unvested restricted stock award granted on May 29, 2018, which vests in two equal annual installments commencing on May 29, 2019.
Option Exercises and Stock Vested
The following table sets forth information on stock option and SAR award exercises and restricted stock awards vested during fiscal 2019 for each of our Named Executive Officers.
Fiscal 2019 Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of Shares Acquired on Exercise (#)
|
|
Value Realized on Exercise ($)
(1)
|
|
Number of Shares Acquired on Vesting (#)
(2)
|
|
Value Realized on Vesting ($)
(3)
|
Joseph F. Puishys
|
|
—
|
|
|
—
|
|
|
20,146
|
|
|
828,202
|
|
James S. Porter
|
|
—
|
|
|
—
|
|
|
5,180
|
|
|
212,950
|
|
Patricia A. Beithon
|
|
17,104
|
|
|
340,199
|
|
|
3,613
|
|
|
148,530
|
|
Brent C. Jewell
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Gary R. Johnson
|
|
—
|
|
|
—
|
|
|
1,625
|
|
|
66,804
|
|
(1)
The value realized is the difference between the exercise price per share and the closing price of our common stock on the NASDAQ Global Select Market on the date of exercise multiplied by the number of shares acquired on exercise of the option.
(2)
Includes shares of restricted stocks that became vested and were distributed during fiscal 2019.
(3)
The value realized is calculated by multiplying $41.11, the closing price of our common stock on the NASDAQ Global Select Market on April 30, 2018, by the shares of restricted stock that became vested on April 30, 2018.
Retirement Plan Compensation
Legacy Officers’ Supplemental Executive Retirement Plan
Our Legacy Officers’ Supplemental Executive Retirement Plan (“Legacy SERP”) is a non-qualified, defined benefit retirement plan in which only six current or former members of senior management participate, including Ms. Beithon, who is our only current Named Executive Officer that is a participant in the plan. Our Legacy SERP was amended in October 2008 so that no benefits will accrue to participants after December 31, 2008.
Benefits under our Legacy SERP are based on a participant’s highest average compensation for the five highest consecutive, completed calendar years of annual compensation during the last 10 years of employment. For purposes of calculating Legacy SERP benefits, compensation is divided into two categories: base salary and bonus compensation. Bonus compensation is the participant’s annual cash incentive compensation but does not include equity or deferred compensation (when received).
Benefits under our Legacy SERP are calculated as an annuity equal to a participant’s years of service to our Company multiplied by the sum of 2% of his or her average monthly base salary and 4% of his or her average monthly bonus compensation, offset by benefits to be received under social security, our 401(k) Retirement Plan and our other defined contribution pension plans from contributions made by our Company. The maximum number of years of service that will be credited to any participant is 20 years. Benefits payable are generally a single life annuity unless the participant has made an election to receive a joint and survivor annuity or 10-year term certain and life annuity (both of which would be a reduced monthly benefit). A lump-sum payment is not available.
Under our Legacy SERP, the normal retirement age is 65 and a participant must be at least 55 years old to be eligible for benefits. If a participant retires from or terminates his or her employment with our Company on or after age 55 and elects to receive benefits prior to age 65, the participant’s monthly benefit will be reduced five-ninths of one percent for each of the first 60 months and five-eighteenths of one percent for each of the next 60 months by which the annuity starting date precedes the calendar month in which the participant would attain age 65.
Fiscal 2019 Pension Benefits Table
The following table shows the present value of accumulated benefits under our Legacy SERP as of March 2, 2019, the measurement date used in preparing our fiscal 2019 audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 2, 2019, years of service credit and payments during fiscal 2019 for Ms. Beithon, our only Named Executive Officer who participates in our Legacy SERP.
Our Chief Executive Officer is not a participant in our Legacy SERP
.
Fiscal 2019 Pension Benefits Table
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Years Credited Service
|
|
Present Value of Accumulated Benefit ($)
(1)
|
|
Payments During Last Fiscal Year ($)
|
Patricia A. Beithon
|
|
9
|
|
589,590
|
|
—
|
|
(1)
The present value of accumulated benefits is based on the assumptions used in determining our Legacy SERP benefit obligations and net periodic benefit cost for financial reporting purposes, except that no pre-retirement mortality assumption is used for these calculations. A complete description of the accounting policies
and assumptions we used to calculate the present value of accumulated benefits can be found in Note 9, Employee Benefit Plans - Officers’ Supplemental Executive Retirement Plan (SERP), Obligations and Funded Status of Defined-Benefit Pension Plans and Additional Information, to our audited financial statements included in this Annual Report on Form 10-K for the fiscal year ended March 2, 2019.
401(k) Retirement Plan
We provide our tax-qualified 401(k) Retirement Plan to substantially all of our U.S.-based, non-union employees and union employees at two of our manufacturing facilities, who are scheduled to work more than 1,000 hours in a plan year. A participating employee may elect to contribute up to 60% of eligible earnings on a pre-tax basis into his or her 401(k) Retirement Plan account. We make a matching contribution for all of our eligible U.S.-based, non-union employees equal to 100% of the first 1% and 50% of the next 5% of the eligible compensation that the employee contributes to the plan, and matching contributions are made by our Company for union employees according to the terms of union contracts. Our employees are fully vested in their own contributions and become fully vested in our matching contributions after two-years of vesting service.
Non-Qualified Deferred Compensation
Deferred Compensation Plan
Our Deferred Compensation Plan is a non-qualified deferred compensation plan for a select group of management and other highly compensated employees of our Company and our subsidiaries, including our Named Executive Officers. For the 2018, 2017 and 2016 calendar years, approximately 212, 193 and 179 of our employees, respectively, were eligible to participate in our Deferred Compensation Plan and approximately 219 employees are eligible for the 2019 calendar year. Our Deferred Compensation Plan allows for deferrals by participants of up to 75% of base salary and sales commissions, and up to 100% of bonuses and other cash or equity-based compensation approved by the Committee, and also provides that we may establish rules permitting a participant to defer performance-based compensation up to six months prior to the end of a performance period. There is no maximum dollar limit on the amount that may be deferred by a participant each year. A participant in our Deferred Compensation Plan may elect to have the participant’s account credited with earnings and investment gains and losses by assuming that deferred amounts were invested in one or more of 17 hypothetical investment fund options selected by the participant, which had investment returns ranging from (18.02%) to 7.54% for calendar 2018.
An Apogee common stock fund is not one of the investment options available under our Deferred Compensation Plan
. Participants are permitted to change their investment elections at any time. We may also make discretionary contributions to a participant’s account under our Deferred Compensation Plan, and our Company will designate a vesting schedule for each such contribution. The participants are always 100% vested in the amount they defer and the earnings, gains and losses credited to their accounts. Participants are entitled to receive a distribution from their account upon: a separation from service, a specified date, death, disability, retirement (as defined in our Deferred Compensation Plan), or unforeseeable emergency that results in “severe financial hardship” that is consistent with the meaning of such term under Section 409A of the Internal Revenue Code. Distributions are in a lump sum, installments or a combination of lump sum with installments based upon the participant’s election as allowed under our Deferred Compensation Plan. Our Deferred Compensation Plan is an unfunded obligation of Apogee, and participants are unsecured creditors of Apogee.
Legacy Deferred Compensation Plan
Our Legacy Deferred Compensation Plan is a non-qualified deferred compensation plan for a select group of management or highly compensated employees of our Company and subsidiaries; however, in October 2010, the plan was amended to prohibit any future participant deferrals to the plan after our fiscal 2011. A participant in our Legacy Deferred Compensation Plan may choose to have his or her account credited with the applicable interest rate as set forth in the plan or credited with earnings and investment gains and losses by assuming the deferred amounts were invested in one or more of 17 hypothetical investment fund options selected by the participant, which had investment returns ranging from (18.02%) to 7.54% for calendar 2018. For amounts deferred for plan years beginning on or after January 1, 2010, the applicable interest rate, which is not considered to be an “above-market” interest rate, is the monthly average yield for the last calendar month of the prior fiscal year on U.S. Treasury securities adjusted to a constant maturity of 10 years. For amounts deferred for plan years beginning prior to January 1, 2010, the applicable interest rate, which may be considered to be an “above-market” interest rate, is the greater of the following rates: (i) the sum of one and one-half percent (1-1/2%) plus the monthly average yield for the last calendar month of the prior fiscal year on U.S. Treasury securities adjusted to a constant maturity of 10 years; or (ii) one-half of the rate of Apogee’s after-tax return on beginning shareholders’ equity for the prior fiscal year. Our Legacy Deferred Compensation Plan is an unfunded obligation of Apogee, and participants are unsecured creditors of Apogee. Distributions are in either a lump sum or installments.
Deferred Compensation Table
The table below provides information on our Named Executive Officers’ compensation earned with respect to fiscal 2019 and deferred under our Deferred Compensation Plan and Legacy Deferred Compensation Plan.
Fiscal 2019 Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Name of Plan
|
|
Executive Contributions in Last Fiscal Year ($)
|
|
Registrant Contributions in Last Fiscal Year ($)
|
|
Aggregate Earnings in Last Fiscal Year
($)
(1)
|
|
Aggregate Withdrawals / Distributions ($)
|
|
Aggregate Balance at Last Fiscal Year End ($)
|
Joseph F. Puishys
|
|
Deferred Comp.
|
|
—
|
|
|
198,688
(2)
|
|
|
—
|
|
|
—
|
|
|
2,382,759
(3)
|
|
|
|
Legacy Deferred Comp.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
James S. Porter
|
|
Deferred Comp.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Legacy Deferred Comp.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Patricia A. Beithon
|
|
Deferred Comp.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Legacy Deferred Comp.
|
|
—
|
|
|
—
|
|
|
2,977
|
|
|
—
|
|
|
60,418
(4)
|
|
Brent C. Jewell
|
|
Deferred Comp.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Legacy Deferred Comp.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Gary R. Johnson
|
|
Deferred Comp.
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
71,970
(5)
|
|
|
|
Legacy Deferred Comp.
|
|
—
|
|
|
—
|
|
|
13,590
|
|
|
—
|
|
|
275,782
(5)
|
|
(1)
Pursuant to SEC rules, all earnings on non-qualified deferred compensation during fiscal 2019 in excess of 3.46%, 120% of the applicable federal rate compounded annually, have been deemed “above-market earnings.” During fiscal 2019, the interest paid on amounts deferred for plan years beginning prior to January 1, 2010, pursuant to our Legacy Deferred Compensation Plan was 8.45%. These amounts are reported in the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column of the “Summary Compensation Table”.
(2)
The amount reported for Mr. Puishys is reported in the “Summary Compensation Table” in the “Non-Equity Incentive Plan Compensation” column.
(3)
A portion of the amount reported for Mr. Puishys is reported in the “Summary Compensation Table” in the “Non-Equity Incentive Plan Compensation” column for fiscal 2019, 2018 and 2017; and a portion of this amount was earned prior to fiscal 2017; however, all of the amounts earned prior to fiscal 2017 were reported in the “Summary Compensation Table” in the year earned.
(4)
The amount reported for Ms. Beithon is not reported in the “Summary Compensation Table” because all of this amount was earned by her prior to fiscal 2017; however, all of this amount was reported in the “Summary Compensation Table” in the years earned.
(5)
Portions of the amounts reported for Mr. G. Johnson for our Deferred Compensation Plan are reported in the “Summary Compensation Table” for fiscal 2017 and amounts earned by him prior to 2017 were included in the “Summary Compensation Table” in the years earned. The amount reported for Mr. G. Johnson for our Legacy Deferred Compensation Plan is not reported in the “Summary Compensation Table”, because all of this amount was earned by him prior to fiscal 2017; however, all of this amount would have been reported in the “Summary Compensation Table” in the years earned, provided Mr. G. Johnson was a Named Executive Officer in such years.
Potential Payments Upon Termination or Following a Change-in-Control
Payments Made Upon Termination
We do not have any employment agreements, employment arrangements or general severance plans covering our Named Executive Officers. Except as discussed below, if the employment of any of our Named Executive Officers is voluntarily or involuntarily terminated, no additional payments or benefits will accrue or be owed to him or her, other than what the Named Executive Officer has accrued and is vested in under our benefit plans discussed above, including under the heading “Retirement Plan Compensation.” Any severance benefits payable to our Named Executive Officers not triggered by a change-in-control would be determined by the Compensation Committee at its discretion.
Except in connection with a change-in-control, a voluntary or involuntary termination will not trigger an acceleration of the vesting of any outstanding equity awards.
Payments Made Upon Disability
Under the terms of the Apogee Enterprises, Inc. Short-Term and Long-Term Disability Plans, each of our Named Executive Officers who participates in such plans is eligible for a disability benefit. All of our Named Executive Officers have elected to participate in our enhanced Long-Term Disability Plan and are eligible for a disability benefit that is equal to 100% of his or her monthly base salary during the first three months of disability and 60% of his or her monthly base salary up to a maximum of $15,000 per month thereafter.
If the employment of any of our Named Executive Officers is terminated due to disability, the terms of our stock option and restricted stock agreements provide for the immediate vesting of such awards.
Pursuant to the terms of the CEO evaluation incentive award and the portion of his two-year performance-based awards received by Mr. Puishys that must be mandatorily deferred. Mr. Puishys will receive the full-value of the deferred amounts if his employment is terminated due to disability.
Payments Made Upon Death
The terms of our stock option and restricted stock agreements provide for the immediate vesting of such awards in the event of the Named Executive Officer’s death.
Pursuant to the terms of the CEO evaluation incentive awards and the portion of his two-year performance-based awards received by Mr. Puishys that must be mandatorily deferred, Mr. Puishys’ estate will receive the full-value of the deferred amounts in the event of his death.
Change-in-Control Severance Agreements
The Committee believes that offering a change-in-control program provides executive officers a degree of security in the event of a corporate transaction and allows for better alignment of executive officer and shareholder interests. We have entered into a change-in-control severance agreement (the “CIC Severance Agreement”) with each of our Named Executive Officers. Our CIC Severance Agreement is designed to retain our executive officers and provide for continuity of management in the event of an actual or threatened “Change-in-Control of Apogee” (as defined in the CIC Severance Agreement).
Our CIC Severance Agreement contains a “double trigger” for benefits, which means that there must be both a “Change-in-Control of Apogee” and a termination of the executive’s employment for the provisions to apply. It provides that, in the event of a “Change-in-Control of Apogee,” each executive officer who is a party to an agreement will have specific rights and receive specified benefits if the executive officer is terminated without “Cause” (as defined in the CIC Severance Agreement) or the executive officer voluntarily terminates his or her employment for “Good Reason” (as defined in the CIC Severance Agreement) within two-years after the “Change-in-Control of Apogee.” In these circumstances, Messrs. Puishys, Porter and Jewell, and Ms. Beithon will each receive a severance payment equal to two times his or her annual base salary and annual cash incentive at target level performance for such fiscal year. Mr. G. Johnson will receive a severance payment equal to his annual base salary and annual cash incentive at target level performance for such fiscal year. In addition, all unvested restricted stock awards held by the executive officer that have not vested by the employment termination date will be immediately vested on such date. Our CIC Severance Agreement provides that, for a 12- or 24-month period following a “Change-in-Control of Apogee,” our Company will continue to provide medical and dental insurance coverage for the executive officer and the executive officer’s dependents or will reimburse the executive officer for the cost of obtaining substantially similar benefits. No benefits will be paid to the executive officer pursuant to the CIC Severance Agreement unless the executive officer executes and delivers to Apogee a release of claims.
We do not provide a tax gross-up payment for any excise tax liability under Internal Revenue Code Section 4999 related to Section 280G excess parachute payments
.
Our CIC Severance Agreements contain a “best-net-benefit” provision which provides that, in the event that payments under the agreements trigger excise tax for the executive officer, the executive officer has the option of either reducing the severance payment, if the net benefit is greater than paying the excise tax, or paying the excise tax himself or herself.
To receive these severance benefits, the executive officer shall not: (1) solicit, directly or indirectly, any of our existing or prospective customers, vendors or suppliers for a purpose competitive to our business or to encourage such customers, vendors or suppliers to terminate business with us; (2) solicit, directly or indirectly, any of our employees to terminate his or her employment; or (3) engage in or carry on, directly or indirectly, in certain geographic markets a business competitive with our business, for a period of 12 or 24 months following termination of employment.
The CIC Severance Agreements continue through December 31 of each year and provide for automatic extension for one-year terms prior to a Change-in-Control unless we give prior notice of termination.
The terms of the agreements for two-year performance-based awards provide that in the event of a Change-in-Control prior to the end of a performance period, the performance period is deemed to end on the date of the Change-in-Control and our Named Executive Officers are entitled to retain performance-based awards, to the extent earned, as adjusted for the truncated performance period. The terms of the restricted stock agreements for awards made pursuant to our Stock Incentive Plan contain a “double trigger” for acceleration of vesting upon a Change-in-Control, which means that there must be both a Change-in-Control and the Named Executive Officer’s employment must be terminated by the Company without “Cause” (as defined in the restricted stock agreement) or by the Named Executive Officer for “Good Reason” (as defined in the restricted stock agreement) in order for all shares of restricted stock that have not vested by the Employment Termination Date to vest. In the event of a “Change-in-Control
of Apogee,” Mr. Puishys will receive the full-value of the CEO evaluation incentive awards and the portion of the CEO's two-year performance-based awards, that were mandatorily deferred.
Executive Benefits and Payments Upon Termination and Change-in-Control
The table below shows potential payments to our Named Executive Officers upon certain terminations pursuant to disability, death and a change-in-control of our Company. The table below assumes that disability, death or the termination of employment occurred or the change-in-control was effective as of March 1, 2019, the last trading day of fiscal 2019. The amounts shown are estimates of the amounts that would be paid to the executives upon termination of employment or the change-in-control, in addition to the base salary and bonus earned by our Named Executive Officers for fiscal 2019. We have not included payments or benefits that are fully vested and disclosed in the “Fiscal 2019 Pension Benefits” table or the “Fiscal 2019 Deferred Compensation” table. The actual amounts to be paid can only be determined at the actual time of a Named Executive Officer’s termination of employment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Type of Payment
|
|
Payments Upon Disability ($)
|
|
Payments Upon Death ($)
|
|
Payments After a Change-in-Control without Termination ($)
|
|
Payments Upon Involuntary or Good Reason Termination After a Change-in-Control Occurs ($)
|
|
Joseph F. Puishys
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,833,500
|
|
(1)
|
Health Insurance Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,454
|
|
|
Reimbursement of Legal Costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(2)
|
Acceleration of Vesting
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
1,332,894
|
|
(3)
|
1,332,894
|
|
(3)
|
—
|
|
|
1,332,894
|
|
(3)
|
Performance-Based Awards
|
|
—
|
|
(4)
|
—
|
|
(4)
|
465,565
|
|
(5)
|
465,565
|
|
(5)
|
CEO Evaluation Incentive
|
|
233,750
|
|
(6)
|
233,750
|
|
(6)
|
233,750
|
|
(6)
|
233,750
|
|
(6)
|
Deferred Compensation
|
|
2,184,071
|
|
(7)
|
2,184,071
|
|
(7)
|
2,184,071
|
|
(7)
|
2,184,071
|
|
(7)
|
Disability Payments
|
|
368,751
|
|
(8)
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
4,119,466
|
|
|
3,750,715
|
|
|
2,883,386
|
|
|
8,076,234
|
|
|
James S. Porter
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,522,500
|
|
(1)
|
Health Insurance Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,454
|
|
|
Reimbursement of Legal Costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(2)
|
Acceleration of Vesting
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
375,325
|
|
(3)
|
375,325
|
|
(3)
|
—
|
|
|
375,325
|
|
(3)
|
Performance-Based Awards
|
|
—
|
|
(4)
|
—
|
|
(4)
|
134,441
|
|
(5)
|
134,441
|
|
(5)
|
Disability Payments
|
|
243,750
|
|
(8)
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
619,075
|
|
|
375,325
|
|
|
134,441
|
|
|
2,058,720
|
|
|
Patricia A. Beithon
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,152,000
|
|
(1)
|
Health Insurance Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,574
|
|
|
Reimbursement of Legal Costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(2)
|
Acceleration of Vesting
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
268,784
|
|
(3)
|
268,784
|
|
(3)
|
—
|
|
|
268,784
|
|
(3)
|
Performance-Based Awards
|
|
—
|
|
(4)
|
—
|
|
(4)
|
96,427
|
|
(5)
|
96,427
|
|
(5)
|
Disability Payments
|
|
225,000
|
|
(8)
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
493,784
|
|
|
268,784
|
|
|
96,427
|
|
|
1,526,785
|
|
|
Brent C. Jewell
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,120,000
|
|
(1)
|
Health Insurance Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,138
|
|
|
Reimbursement of Legal Costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(2)
|
Acceleration of Vesting
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
216,180
|
|
(3)
|
216,180
|
|
(3)
|
—
|
|
|
216,180
|
|
(3)
|
Performance-Based Awards
|
|
—
|
|
(4)
|
—
|
|
(4)
|
86,537
|
|
(5)
|
86,537
|
|
(5)
|
Disability Payments
|
|
222,501
|
|
(8)
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
438,681
|
|
|
216,180
|
|
|
86,537
|
|
|
1,451,855
|
|
|
Gary R. Johnson
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
362,600
|
|
(9)
|
Health Insurance Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,826
|
|
|
Reimbursement of Legal Costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(2)
|
Acceleration of Vesting
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
146,642
|
|
(3)
|
146,642
|
|
(3)
|
—
|
|
|
146,642
|
|
(3)
|
Performance-Based Awards
|
|
—
|
|
(4)
|
—
|
|
(4)
|
40,023
|
|
(5)
|
40,023
|
|
(5)
|
Disability Payments
|
|
181,299
|
|
(8)
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
327,941
|
|
|
146,642
|
|
|
40,023
|
|
|
560,091
|
|
|
(1)
Equals the sum of (a) two times his or her annual base salary as of March 2, 2019, and (b) two times his or her fiscal 2019 annual cash incentive award at target level performance.
(2)
We will pay legal fees and expenses incurred to obtain or enforce any right or benefit under his or her CIC Severance Agreement.
(3)
Includes restricted stock awards, which would vest upon an assumed occurrence on March 1, 2019 of one of the following events: (a) disability; (b) death; or (c) termination following a Change-in-Control. The amount in this table represents such aggregate number of shares multiplied by $36.03, the closing price of our common stock on the NASDAQ Stock Market on March 1, 2019, the last trading day of fiscal 2019.
(4)
In the event employment is terminated due to disability or death prior to the end of the performance period for the fiscal 2019 - 2020 performance-based awards, our Named Executive Officer, or his or her estate, as applicable, will be entitled to retain and receive a prorated portion (based on the amount of time elapsed between the beginning of the performance period and the date of termination) of the fiscal 2019 - 2020 performance-based awards at the end of the performance period to the extent earned. In addition, with respect to the portion of Mr. Puishys’ fiscal 2019 - 2020 performance-based award that must be mandatorily deferred, in the event his employment is terminated due to disability or death prior to the end of the performance period, Mr. Puishys, or his estate, as applicable, will be entitled to retain and receive a prorated portion (based on the amount of time elapsed between the beginning of the performance period and the date of termination) to the extent earned.
(5)
The amount represents the payout of fiscal 2019 - 2020 performance-based awards assuming the performance period ended upon the assumed occurrence on March 1, 2019 (one year and one day before the end of the two-year performance period) of one of the following events: (a) a Change-in-Control without termination; or (b) termination following a Change-in-Control. In addition, for Mr. Puishys, the amount includes the payout of the portion of his fiscal 2019 - 2020 performance-based award that must be mandatorily deferred assuming the performance period ended upon the assumed occurrence on March 1, 2019 (one year and one day before the end of the two-year performance period) of one of the following events: (a) Change-in-Control without termination; or (b) termination following a Change-in-Control.
(6)
The amount represents the payout of the fiscal 2019 CEO evaluation incentive award at target assuming that the performance period and retention period ended upon the assumed occurrence on March 1, 2019 (one year and one day before the end of the one-year performance period) of one of the following events: (a) disability; (b) death; (c) a Change-in-Control without termination; or (d) termination following a Change-in-Control.
(7)
The amount represents the payout of Mr. Puishys’ balance in the Deferred Compensation Plan, which is attributable to the fiscal 2015 - 2018 CEO evaluation incentives and the portion of his fiscal 2015 - 2016 and fiscal 2017 - 2018 performance-based award incentives that were mandatorily deferred, assuming the retention period ended upon the assumed occurrence on March 1, 2019 of one of the following events: (a) disability; (b) death; (c) a Change-in-Control without termination; or (d) termination following a Change-in-Control.
(8)
This amount represents the annual disability payments during the first year of disability. Annual disability payments after the first year of disability would be $180,000 for each of Messrs. Puishys, Porter and Jewell and Ms. Beithon and $155,400 for Mr. G. Johnson.
(9)
Equals the sum of Mr. G. Johnson’s (a) annual salary as of March 1, 2019 and (b) fiscal 2019 annual cash incentive award at target level performance.
CEO Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Joseph F. Puishys, our Chief Executive Officer and President:
For the year ended March 2, 2019, our last completed fiscal year:
|
|
•
|
the median of the annual total compensation of all employees of our Company (other than our Chief Executive Officer) was $47,393; and
|
|
|
•
|
the annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table included, was $2,250,536.
|
Based on this information for 2019, we reasonably estimate that the ratio of our CEO's annual total compensation to the annual total compensation of our median employee was 47. Our pay ratio estimate has been calculated in a manner consistent with Item 402(u) of Regulation S-K.
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, the methodology and the material assumptions, adjustments, and estimates that we used were as follows:
We determined that, as of December 31, 2018, our employee population consisted of 7,043 individuals (including full-time and part-time employees, other than the Chief Executive Officer, who were employed on December 31, 2018) working at the Company together with our consolidated subsidiaries. Of these individuals, 6,042 were located in the U.S. and U.S. territories, and 1,001 were from our subsidiaries in Canada and Brazil. We chose to exclude all 192 of our employees from our Brazil subsidiary, which consists of 2.73% of our workforce, from the identification of "median employee," as permitted by SEC rules.
Our employee population, after taking into consideration the permitted adjustments described above, consisted of 6,851 members. In making this determination, we annualized the compensation of all employees included in the sample who were hired in calendar
year 2018, but did not work for us or our included subsidiaries for the entire twelve month period described below. Our adjusted employee population consisted of 6,042 employees in the U.S. and 809 employees located in Canada.
We identified our median employee based on the total cash and stock-based compensation earned during the twelve month period ended December 31, 2018. For purposes of determining the total compensation actually earned, we included: the amount of base salary (or, in the case of hourly workers, base wages including overtime pay) the employee received during the twelve months ended December 31, 2018, the amount of any cash incentives paid or deferred in such period (which include sales commissions as well as cash incentives that are generally paid for performance during the prior quarter or year), and the amount of any income from stock-based compensation, as reflected in our payroll records. For purposes of identifying the median employee, we applied the average exchange rate for calendar year 2018, which was U.S. dollars to Canadian dollars - 1.2957 CAD.
Once we identified our median employee, we then determined that employee's total compensation, including any perquisites and other benefits, in the same manner that we determine the total compensation of our named executive officers for purposes of the Summary Compensation Table disclosed above. The total compensation amount for our median employee for fiscal 2019 was determined to be $47,393. This total compensation amount was then compared to the total compensation of our CEO disclosed above in the Summary Compensation Table, of $2,250,536. The elements included in the CEO's total compensation are fully discussed above in the footnotes to the Summary Compensation Table.