EXECUTIVE COMPENSATION AND OTHER INFORMATION
Compensation Discussion and Analysis
In
this Proxy Statement, we refer to Messrs. Hanna, Pratt, Hawkins, and Lieffrig and Ms. Craft collectively as our named executive officers or NEOs. Mr. Hanna is our Chief Executive Officer, Mr. Pratt is our Chief Financial Officer and
Mr. Hawkins, Mr. Lieffrig, and Ms. Craft were our next three highest compensated executive officers serving as of December 31, 2021. In this Proxy Statement, we refer to the NEOs and Messrs. Whitney, Skenesky, and Porter, and
Mses. Wescott and Van Trease collectively as executive officers.
Business Performance Highlights and Alignment with
Compensation
We entered 2021 with a continued focus on optimizing our operating metrics and improving our return on invested capital
(ROIC). As the COVID-19 pandemic continued, we continued to focus on keeping our employees safe and providing support to our customers. The health and safety of our team members was paramount, and we took
significant steps to ensure we operated safely, consistent with national and local guidelines, while maintaining business continuity across the country for our customer-facing, production team members, and support staff. Despite the many disruptions
arising from the pandemic, our focus on consistent execution for our customers yielded positive results as market conditions improved, growing total revenues and completing three acquisitions during the year.
To support and enhance the Companys focus on driving the achievement of short-term (annual) profitability targets as well as long-term
(three-year) financial return targets, the compensation plans for amounts paid out in 2021 for the executive officers were based on pre-tax income (PTI) for corporate officers and division earnings
before interest and taxes (Divisional EBIT) for division officers. PTI/Divisional EBIT accounted for 100% of the annual profitability bonus target in compensation plans for amounts paid out in 2021. We believe the metric chosen is the
right short-term performance objective to enhance value for our shareholders. Similarly, the metric used to determine the achievement of long-term performance-based restricted stock units (RSUs) is based upon the achievement of
three-year ROIC targets. In addition, in an effort to retain key managers, attract new talent, and build an ownership mentality for executive officers, the Compensation Committee continued its approval of granting a mix of time-based and
performance-based RSUs. Beginning with 2019, the time-based grants vest over three years rather than five, and performance-based grants continued to vest at the end of each three-year performance period. This approach more closely aligns our equity
compensation with our peer companies and common market practices. As we do each year, we will continue to reevaluate our forms of equity and consider the most appropriate grant approach.
Executive Compensation Practices at a Glance
We strive to have compensation programs that serve to attract and retain our best people, align the interests of our employees with that of our
shareholders by focusing incentive compensation on pay for performance, and at the same time assure good corporate governance. Over the years, always with a focus on enhancing long-term shareholder value, we have implemented many changes, including
granting RSUs with longer-term targets, stock ownership guidelines, a compensation recoupment policy, a risk-hedging policy, change in control arrangements, limited perquisites, net settlement features in equity grants to reduce the effect of
dilution, and setting realistic stretch targets specifically focused on our rental industry metrics.
25
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What We Do |
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What We Do Not Do |
Pay for Performance under Our Cash Bonus Plan: We link pay to performance and shareholder interests by establishing an annual cash
bonus plan based on financial metrics and personal annual priorities established in advance by the CEO and/or the Compensation Committee.
Performance-Based Long Term Incentive Compensation: 50% of the RSUs granted to our executive officers have performance-based vesting subject to
goals associated with corporate or divisional ROIC performance. Compensation
Recoupment Policy: The policy may require an executive officer in the event of a financial restatement to reimburse the Company with respect to any incentive compensation (including cash and equity awards) received during the past three
years. Capped Incentives under Our Annual Cash Bonus Plan: Bonuses under our
annual cash bonus plan are capped for our executive officers the cap is tied to their base salary for the relevant year, and in no case is it greater than 200% of their target bonus.
Equity Awards Vesting: Performance-based awards vest at the end of each
three-year performance period. Time-based awards are subject to a three-year vesting schedule.
Stock Ownership and Holdback Guidelines: Our executive officers and directors are subject to stock ownership and holdback guidelines.
Compensation Committee Independence and Experience: The Compensation Committee
is comprised solely of independent directors who have extensive experience.
Thorough Compensation Risk Assessment: The Compensation Committee regularly conducts a comprehensive risk assessment of the Companys executive
compensation programs and practices every two years to ensure prudent risk management.
Independent Compensation Advisor: The Compensation Committee utilizes its own independent advisor.
Annual Stockholder Advisory Vote: We conduct an annual shareholder advisory vote
on the compensation of our NEOs. |
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No Single Trigger Change of Control Payments: We generally do not have single trigger severance payments owing
solely on account of the occurrence of a change of control event. No Guaranteed
Bonuses: We do not provide guaranteed minimum bonuses or uncapped incentives under our annual cash bonus plan.
No Re-Pricing of Equity Awards: Our equity plans prohibit repricing of equity awards without shareholder
approval. No Special Perquisites or Retirement Benefits: We do not provide
special perquisites or retirement benefits to our executive officers that are not generally made available to all of our employees except that any executive officer employed with the Company for at least 10 years may remain on the Companys
health insurance policy after retiring if he or she pays 100% of the premiums.
No Tax Gross-Ups: We do not provide tax gross-ups.
No Hedging in Company Securities: Our employees and directors are prohibited
from engaging in any hedging transaction with respect to company equity securities.
No Pledging of Company Securities: Our employees and directors are prohibited from engaging in any pledging transaction with respect to company equity
securities. |
26
The following sections describe all features of our executive compensation in more detail.
Compensation Philosophy and Objectives
The purpose of the Companys executive compensation program is to attract and retain exceptional managerial talent and to reward
performance by establishing measurable objectives to drive future performance, thus aligning our executive officers interests with those of our shareholders. We believe the most effective compensation program is one that is designed to reward
the achievement of specific annual, long-term, and strategic goals of the Company. Our primary objective is to align our executive officers interests with the interests of our shareholders by rewarding the achievement of established goals that
contribute to increased long-term shareholder value. To that end, part of our executive officers compensation is directly tied to identifiable, objective goals by which performance can be measured. In addition, in structuring our executive
compensation program, we consider the compensation of our executive officers relative to the compensation paid to similarly-situated executives of our peer group companies and the broader general market.
Advisory Vote on Executive Compensation
At the 2021 Annual Meeting, 97.8% of the shares of Common Stock present and entitled to vote on the advisory vote on the executive compensation
proposal were in favor of our named executive officer compensation. The Board of Directors and Compensation Committee reviewed these final vote results and determined that, given the significant level of support, our executive compensation policies
and decisions discussed in the Compensation Discussion and Analysis were appropriate to achieve our objectives.
We
believe it is important for our shareholders to have an opportunity to vote on executive compensation on an annual basis. The advisory vote provides shareholders with the opportunity to express their views regarding our executive compensation
philosophy, policies, programs, and decisions, as disclosed in this Proxy Statement for the applicable year. Our Board of Directors and Compensation Committee value the opinions of our shareholders and, to the extent there is any significant vote
against our compensation practices for executive officers, we will consider our shareholders concerns and assess whether any actions should be taken. In addition to our annual advisory votes on executive compensation, we are committed to
ongoing engagement with our shareholders on executive-compensation and corporate-governance issues. These dialogue opportunities take place throughout the year through meetings, telephone calls, and correspondence involving our senior management and
may, on occasion, also involve directors and representatives of our shareholders. We appreciate and welcome the support and feedback from our shareholders on these critical compensation topics as we seek to ensure we attract and retain the best
leadership, reward measurable performance, and maximize shareholder value.
Accordingly, our Board of Directors recommends that you vote
FOR Proposal 3 at the Annual Meeting. For more information, see Proposal 3Non-Binding Advisory Vote To Approve the Compensation of the Companys Named Executive Officers in this
Proxy Statement.
Executive Compensation Program Design
The Compensation Committee has the responsibility for establishing, implementing, and continually monitoring the compensation of the
Companys executive officers. The Compensation Committee oversees and approves the design of the executive compensation program to ensure that the total compensation paid to our executive officers is fair, reasonable, competitive, and aligned
with the goals and objectives of the Company. For the fiscal year ended December 31, 2021, the principal components of compensation for executive officers were:
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2. |
Non-equity annual performance-based incentive compensation
(Annual Cash Bonus) pursuant to the Non-Equity Performance-Based Incentive Plan (the Cash Bonus Plan); |
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3. |
Long-term equity incentive compensation; |
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4. |
Double trigger change in control severance benefits for our CEO, CFO and COO; and |
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5. |
Involuntary termination severance plan for the NEOs and the following officers approved by the Compensation
Committee for participation in the plan: Messrs. Whitney, Skenesky, and Porter, and Mses. Wescott and Van Trease. |
The
Compensation Committee determined that these five elements, with a significant percentage of total compensation allocated to at-risk performance-based incentives, best align the interests of our
executive officers with our shareholders and achieve our overall goals for executive compensation. The Annual Cash Bonus rewards achievement of annual incentive goals and the long-term equity incentive compensation rewards achievement of long-term
growth in shareholder value and sustained financial health of the Company. There is no pre-established policy or target for the allocation between either cash and
non-cash or short-term and long-term incentive compensation. Rather, the Compensation Committee reviews relevant market compensation data from its compensation consultant and other sources and uses its
judgment to determine the appropriate level and mix of incentive compensation on an annual basis.
Compensation Consultant and Peer
Group Selection
The Compensation Committee periodically seeks input from its outside compensation consultant on a range of external
market factors, including evolving compensation trends, appropriate peer companies, and market survey data. In November 2020 and March 2021, the Compensation Committee retained Pearl Meyer to conduct a review and analysis of our current compensation
program to be considered by the Compensation Committee in establishing the compensation levels and severance guidelines for our non-employee directors and executive officers. After consideration of several
factors relating to the independence of Pearl Meyer, including those guidelines set forth in the NASDAQ listing standards, the Compensation Committee determined that Pearl Meyer is independent.
In late 2020, Pearl Meyer provided an analysis with relevant market data and alternatives to consider when making compensation decisions for
our executive officers. The analysis compared each element of total compensation against a peer group of publicly-traded companies and compensation survey data (the Compensation Peer Group). The Compensation Peer Group consisted of
companies against which we compete for recruiting and retaining qualified line and staff executives and independent non-employee directors. In selecting the Compensation Peer Group, the Compensation Committee
also sought to comply with best-practice parameters by including companies in a similar industry or geography and with similar financial metrics, such as revenue, market capitalization, and net income. The Compensation Committee generally reviews
total compensation and considers it compared to the Compensation Peer Group.
Other factors were also taken into consideration when
determining executive officer remuneration levels, including:
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1) |
Divisional size (revenues or earnings) contribution to Company-wide results relative to other divisions.
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2) |
Divisional business complexity relative to other divisions of the Company. |
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3) |
Stature/experience/length of service of executive officer in role relative to market comparisons.
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4) |
Geographic location of executive officer and relative market comparisons. |
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5) |
Definition and extent of responsibilities of executive officer role by the Company versus peer group sources.
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6) |
Divisional leadership transition or new business initiatives. |
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7) |
Appropriate weighting or relativeness of different peer group sources. |
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8) |
Other factors the Compensation Committee may deem appropriate. |
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In connection with Pearl Meyers updated peer analysis in 2021, the Compensation
Committee and the Board approved updating the Compensation Peer Group to eliminate and replace companies that were no longer publically-traded or relevant and to follow best practice in choosing replacements. Selection parameters focused on
companies in a similar industry, geography, or with similar financial metrics such as revenue, market capitalization, and net income.
The
following companies were previously part of the peer group and at the approval of the Compensation Committee and the Board they were removed as they were acquired and became no longer publicly individually reportable: Aircastle LTD, Coherent, Inc.,
General Finance Corporation, Mobile Mini, Inc.; additionally, Ritchie Bros. Auctioneers Incorporated and Simpson Manufacturing were deleted from the peer group because they have less commonality with the Company.
The revised Compensation Peer Group as of 2021 is as follows:
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Air Transport Services Group, Inc. |
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CAI International, Inc. |
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Civeo Corporation |
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Cohu, Inc. |
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Form Factor, Inc. |
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GATX Corporation |
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H&E Equipment Service, Inc. |
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Harmonic, Inc. |
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Herc Holding Inc. |
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Montrose Environmental Group, Inc. |
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Triton International LTD |
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US Ecology, Inc. |
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Willis Lease Finance Corp. |
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WillScot Mobile Mini Holdings Corporation |
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Process of Setting and Approving Executive Compensation; Role of Chief Executive Officer
The Compensation Committee approves annual compensation levels and equity awards to all of our executive officers. The process is described
below:
The five steps below describe the process of setting and approving executive compensation and the role of the Chief Executive
Officer in a typical year.
1. The Compensation Committee reviews an independent compensation consultants
analysis (performed every other year) to evaluate for each executive officer (1) a target total compensation amount; (2) the appropriate allocation of base salary, annual bonus, and long-term equity incentive compensation; (3) risk of
any compensation element that could have an adverse impact on the Company; and (4) if there should be any change to the forms of compensation to better align our executive officers interests with those of our shareholders.
2. For the Chief Executive Officer, the allocation of base salary, annual bonus, and long-term equity incentive
compensation and the applicable performance target levels are determined by the Compensation Committee, in consultation with the Chairman of the Board of Directors and separately with all of the independent directors. The Chief Executive Officer has
no role in setting his compensation.
3. For each of the other executive officers, the Chief Executive Officer
recommends the allocation of base salaries, annual bonuses, and long-term equity incentive compensation and the applicable performance target levels. These recommendations are presented to the Compensation Committee for the Compensation
Committees consideration and, if appropriate, approval.
4. Shortly after the end of the fiscal year, the
Chief Executive Officer reviews the performance of each executive officer (other than himself) against his or her established personal objectives for the year and general management responsibilities and then determines achievement level attained.
5. At the end of the fiscal year, the Compensation Committee reviews the Chief Executive Officers
performance. The Compensation Committee then determines, based on the market data and the Chief Executive
29
Officers performance, and after consultation with the Chairman of the Board of Directors and separately with all independent directors, the compensation of the Chief Executive Officer.
2020 and 2021 Annual Base Salary
The table below sets forth the annual base salary of each of our named executive officers in 2020 and 2021. Based on the performance results of
2020, the outlook for the Company in 2021, the updated analysis conducted by the Compensation Committees compensation consultant, and Mr. Hannas input for the named executive officers other than himself, the Compensation Committee
considered and approved the increased base salaries due to merit adjustments for the named executive officers in 2021 as shown in the table below.
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Name |
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2020 Base Salary |
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2021 Base Salary |
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Joseph F. Hanna |
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$ |
645,000 |
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$ |
664,000 |
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Keith E. Pratt |
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$ |
455,000 |
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$ |
466,000 |
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Philip B. Hawkins |
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$ |
310,000 |
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$ |
318,000 |
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John P. Lieffrig |
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$ |
248,000 |
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$ |
254,000 |
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Melodie Craft |
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$ |
323,000 |
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$ |
335,000 |
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2021 Non-Equity Performance-Based Incentive Compensation
The 2021 Cash Bonus Plan is comprised of two components. The first component compensates the executive officers for his or her efforts leading
to the Companys success at meeting its annual profitability goals. Annual profitability targets is pre-tax income for corporate executive officers (Messrs. Hanna, Pratt, and Whitney and Mses. Wescott,
and Craft) and division earnings before interest and taxes for division executive officers (Messrs. Hawkins, Skenesky, and Lieffrig, and Ms. Van Trease). (In February 2022, Ms. Van Trease was promoted to a corporate executive officer
position and Mr. Porter was promoted to a division executive officer position, therefore, Ms. Van Trease was still a division executive officer at the time the 2021 Cash Bonus Plan was calculated and Mr. Porter was not a division
executive officer at that time). The second component measures the executive officers success at accomplishing his or her personal annual priorities. These two components are used to assure an emphasis on annual profitability and to define
each executive officers specific role with measurable goals to achieve annual and long-term increases in shareholder value. The weighting of these two components varies depending on the individual executive officers ability to influence
profitability; however, generally, the profitability component is approximately two-thirds to three-quarters of the total so as to better align compensation with total shareholder return.
Component 1Profitability:
The profitability goal for the corporate NEOs (Messrs. Hanna, Pratt, and Ms. Craft) is based 100% on the Companys PTI, and for the
division NEOs (Messrs. Hawkins and Lieffrig) is based 100% on Divisional EBIT.
PTI and Divisional EBIT are calculated from results
reported on the Companys income statement, excluding one-time acquisition-related transaction costs disclosed by the Company in its annual and quarterly reports.
We use a collaborative process between our Chief Executive Officer, Chief Financial Officer, and various other executive officers to determine
the annual profitability goal for each of the executive officers of the Company. The goals are then recommended to the Compensation Committee. The Compensation Committee then reviews each executive officers compensation history and performance
before determining final levels for such profitability goals.
The annual profitability goals for each division and the Company are
established at the beginning of each fiscal year based upon a realistic stretch philosophy. The Companys management determines the potential
30
annual financial performance for each division and the Company based upon its outlook for the opportunity levels in the markets in which it operates, strategic and tactical initiatives, and other
key factors and special circumstances, applying a realistic stretch view to what potentially can be accomplished. We expect that although it would take a significant amount of effort on the part of each individual, 100% of the target
annual profitability level can be achieved for the year. We assume any amount in excess of the target annual profitability goal would be difficult to achieve without extraordinary effort or the occurrence of significant and unforeseen changes in the
competitive landscape. Each executive officer has a designated percentage of base salary for the calendar year that can be earned for achieving 100% of his or her respective annual profitability goal. For 2021, based on input from Pearl Meyer and
consistent with common practices in the market, the threshold for the 2021 Cash Bonus Plan is such that 80% achievement will result in 50% bonus eligibility. Achievement below 80% results in zero payout. At 120% achievement, the plan pays a maximum
of two times the bonus target for profitability. Achievement and resulting bonus payouts for performance between Threshold and Target, and for performance between Target and Maximum, are determined based upon straight-line interpolation.
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% of Goal Achieved |
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% of Bonus Earned |
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Below |
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< 80 |
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0 |
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Threshold |
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80 |
% |
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50 |
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Target |
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100 |
% |
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100 |
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Maximum |
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120 |
% |
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200 |
% |
Component 2Personal Annual Priorities:
The second component for the Cash Bonus Plan measures each executive officers success at accomplishing his or her personal annual
priorities. Final determination of the personal annual priorities for each executive officer rests with the Chief Executive Officer (other than the personal annual priorities of the Chief Executive Officer, which are determined by the Compensation
Committee, after consultation with the Chairman of the Board of Directors and separately with all independent directors). These personal annual priorities are measured periodically throughout the year and paid annually, using a collaborative process
between the Chief Executive Officer or the Executive Vice President and each executive officer. The personal annual priorities generally are comprised of a maximum of four (4) items deemed to be the most critical priorities that require action
to be taken for the current evaluation period. Each priority is weighted according to (1) the critical nature of the priority relative to other priorities; and (2) the amount of time and effort involved in accomplishing the priority
relative to other priorities.
Listed below under 2021 Cash Bonus Plan Percentages is a schedule identifying
each named executive officer and the percentage amounts of base salary for the calendar year 2021 that could have been earned under this component for achieving a 100% rating for all personal priorities. Each personal annual priority goal represents
a challenge and complete success is not always solely in the control of the executive officer. There are factors that may affect the outcome, including changes in market conditions and unanticipated variables. Each personal annual priority is
measured and the overall weighted average of achievement for all personal annual priorities is multiplied by the total percentage of base salary allotted to personal annual priorities available to each executive officer. The Compensation Committee
annually uses its discretion to allocate specific percentages of profitability and personal annual priorities for each executive officer.
2021 Cash Bonus Plan Percentages:
Based on each named executive officers performance results in 2020, the outlook for the Company in 2021, and Mr. Hannas input
for executive officers other than himself, the Compensation Committee considered and approved the cash bonus plan percentages for the profitability goal and the personal annual priorities components in 2021 for the named executive officers as shown
in the table below (which includes percentages applicable if
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the target is met for each goal, as well as the maximum percentages applicable if the target is exceeded for each goal).
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Name |
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Profitability (at 100% of Achievement) |
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Maximum Profitability (at maximum overage percentage) |
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Personal Annual Priorities (at 100% of Achievement) |
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Maximum Personal Annual Priorities (at 100% of Achievement) |
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Total Annual Bonus as a Percentage of Base Salary (at 100% of Achievement) |
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Maximum Annual Bonus as a Percentage of Base Salary |
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Joseph F. Hanna |
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75.00 |
% |
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150.00 |
% |
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25.00 |
% |
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25.00 |
% |
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100.00 |
% |
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175.00 |
% |
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Keith E. Pratt |
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40.00 |
% |
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80.00 |
% |
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20.00 |
% |
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20.00 |
% |
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60.00 |
% |
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100.00 |
% |
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Philip B. Hawkins |
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40.00 |
% |
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80.00 |
% |
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20.00 |
% |
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20.00 |
% |
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60.00 |
% |
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100.00 |
% |
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John P. Lieffrig |
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40.00 |
% |
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80.00 |
% |
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20.00 |
% |
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20.00 |
% |
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60.00 |
% |
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100.00 |
% |
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Melodie Craft |
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25.00 |
% |
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50.00 |
% |
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25.00 |
% |
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25.00 |
% |
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50.00 |
% |
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75.00 |
% |
Under the terms of the 2021 Cash Bonus Plan, in the event of a named executive officers termination by
the Company without cause or a resignation for good reason, which occurs prior to the end of the fiscal year, the bonus will be prorated based on the number of days such named executive officer was employed prior to such termination for the year of
termination, with the bonus amount calculated as follows: (i) for the profitability component, the target bonus amount, and (ii) for the priorities component, full satisfaction of the specified priorities. In the event of a change of
control, the bonus will be prorated based on the number of days the named executive officer was employed prior to the change of control, with the bonus amount calculated as follows: (i) for the profitability component, the target bonus amount,
and (ii) for the priorities component, full satisfaction of the specified priorities.
2021 Goals and Results:
With respect to annual profitability goals:
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Messrs. Hanna and Pratt and Ms. Crafts Company profitability goal for PTI was $129,054,000 and results
achieved were $123,802,000 or 95.94% of plan. |
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Messrs. Hawkins and Lieffrig had division-specific profitability goals of Divisional EBIT of $68,785,000 and
$13,041,000, respectively. Results achieved were $66,670,000 (96.93%) and $18,816,000 (144.29%), respectively. |
Therefore, based on the terms of the 2021 Cash Bonus Plan, total profitability goal bonus amounts earned for each of Messrs. Hanna, Pratt,
Hawkins, and Lieffrig and Ms. Craft were $447,011, $167,344, $105,607, $203,034, and $75,156, respectively.
With respect to personal
annual priorities goals:
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Mr. Hanna achieved 80.50% of his 2021 personal annual priorities goals, consisting of managing strategic
growth initiatives, improving operational performance across the enterprise, and other strategic and tactical initiatives for the Company. |
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Mr. Pratt achieved 96% of his 2021 personal annual priorities goals, consisting of continued focus to
maximize shareholder value, build out corporate development capabilities to support team goals, and strategic projects to strengthen our growth and adjacency opportunities, and other strategic and tactical initiatives. |
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Mr. Hawkins achieved 93.75% of his 2021 personal annual priorities goals, consisting of improvement on the
core business, enhanced focus on improving region specific utilization, and other strategic initiatives. |
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Mr. Lieffrig achieved 100% of his 2021 personal annual priorities goals, consisting of business strategy
execution, smart growth for Portable Storage, focus on customized training programs to support selling and customer engagement, and continued safety programs for all the branch locations. |
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Ms. Craft achieved 100% of her 2021 personal annual priorities goals, consisting of Corporate Secretary
responsibilities, enhancements of risk management framework, improved safety performance, oversight of corporate legal matters, and other organizational excellence initiatives. |
Each of Messrs. Hanna, Pratt, Hawkins, and Lieffrig and Ms. Craft received $133,498, $89,399, $59,573, $50,759, and $83,646,
respectively, based on the achievement of their 2021 personal annual priorities goals.
The Annual Bonus amounts under the Cash Bonus Plan
paid to each of the named executive officers are also listed in column (g) in the Summary Compensation Table in this Proxy Statement.
Long-Term Incentive Compensation
Except for the additional time-based grant awarded to Mr. Hanna in 2021 by the Board as further discussed below, the Compensation
Committee has approved 50% of a NEOs equity value to be granted as performance-based RSUs vesting at the end of each three-year performance period and 50% of a NEOs equity value to be granted as service-based RSUs vesting over three
years. Performance RSUs are earned based upon achievement of a three-year corporate ROIC target (for corporate executive officers) and on division-specific ROIC targets for divisional executive officers. Having each divisional officers
performance tied directly to his or her respective divisions performance allows for that officer to be measured with diminished influence, positive or negative, of any other divisions performance.
The 2019 to 2021 Company RSU grant three-year ROIC target was 8.6%. The actual three-year cumulative ROIC total achieved was 9.0% (104.6% of
goal). Therefore, Mr. Hanna earned 8,360 RSUs, Mr. Pratt earned 3,680 RSUs, and Ms. Craft earned 1,670 RSUs. 2019 to 2021 modular division RSU grant three-year cumulative Divisional ROIC target was 7.53%. The actual three-year
cumulative Divisional ROIC total achieved was 8.32% (110.4% of goal). Therefore, Mr. Hawkins earned 3,840 RSUs. 2019 to 2021 portable storage division RSU grant three-year cumulative Divisional ROIC target was 13.64%. The actual three-year
cumulative Divisional ROIC total achieved was 14.47% (106% of goal). Therefore, Mr. Lieffrig earned 2,157 RSUs.
Additionally for
2021, the Board approved an additional time-based grant for Mr. Hanna of 6,410 RSUs that vest 50% on each anniversary of the grant date until fully vested. This grant was made for Mr. Hanna in recognition for his leadership in successfully
navigating the company through the COVID pandemic in 2020.
Executive Officer Stock Ownership and Stock Holdback Guidelines
The Board of Directors believes that, in order to better align the interests of management and shareholders, executive officers should have a
significant financial (equity) stake in the Company. Each executive officer has a target level of Company Common Stock value to achieve within seven (7) years of his or her date of hire. The target level of Common Stock value to be achieved is
a multiple of each executive officers base salary. The multiples of executive officer base salary are four (4) times for the Chief Executive Officer and two (2) times for all other executive officer positions. In evaluating whether
the Common Stock value ownership guideline has been met, all shares of Common Stock owned, Employee Stock Ownership Plan (ESOP) shares and 50% of the value (market price less strike price) of all vested unexercised stock options are
considered. The Board of Directors evaluates whether exceptions should be made for any executive officer on whom this requirement would impose a financial hardship.
It is the Companys policy that each executive officer has a 10% holdback provision for RSU equity grant settlements to facilitate
earlier achievement of stock ownership under the Companys stock ownership guidelines.
33
Equity Granting Policy
In 2007, the Board of Directors adopted an equity granting methodology whereby there is one annual equity grant date, which is the date when
the blackout window opens after the year-end earnings are released. All designated non-employee directors, executive officers, and key employees are eligible to receive
an equity grant on the annual equity grant date with an exercise price (for stock options or SARs) or grant price (for RSUs), equal to the NASDAQ Stock Market close price on that day. The Board of Directors may authorize the Chief Executive Officer
an additional allotment of options or shares to be granted at his discretion to new hires and promotion candidates, other than executive officers, over the course of a given timeframe, with the grant date and exercise or grant price based on the
last trading day of each month of the employment event. This allotment is not available to executive officers, as all grants to executive officers must be made by the Compensation Committee.
Compensation Recoupment Policy
In 2011, the Board of Directors adopted a Compensation Recoupment Policy that applies to executive officers if the Company is required to
restate its financial statements. The Board believes it is desirable and in the best interests of the Company and its shareholders to maintain and enhance a culture that is focused on integrity and accountability and believes that this policy
discourages conduct detrimental to the Companys sustained growth. This Compensation Recoupment Policy requires any current or former executive officer, in the event of a financial restatement, to reimburse the Company with respect to any
incentive compensation (including cash and equity awards) received during the past three years that is in excess of that which would have been received if such compensation had been based upon the financial statements as so restated. The
Compensation Recoupment Policy is posted on our website at www.mgrc.com under the Investors/Corporate Governance section.
Risk-Hedging
Policies
Pursuant to the Companys Insider Trading and Blackout Policy, officers and directors of the Company are prohibited from
engaging in short-term or speculative securities transactions with respect to the Companys Common Stock. These prohibited transactions can have the effect of reducing or canceling the risk of an investment in the Common Stock, particularly in
the short-term. These prohibited transactions may create the appearance that the executives are trading on inside information. Additionally, certain forms of hedging or monetization transactions allow a shareholder to lock in much of the value of
his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the holder to continue to own the covered securities but without full risks and rewards of ownership.
Therefore, Company personnel are also specifically prohibited from engaging in short sales, hedging transactions, buying or selling puts or calls, buying any of the Companys securities on margin, pledging transactions, and engaging in
derivative transactions related to the Companys securities (such as exchange-traded options). The Companys Insider Trading Policy further provides that Company personnel who purchase or sell Company securities in the open market may not
correspondingly sell or purchase any Company securities of the same class during the six months following the purchase. The Insider Trading Policy is posted on our website at www.mgrc.com under the Investors/Corporate Governance section.
Perquisites and Other Personal Benefits
Executive officers are entitled to and eligible only for the same fringe benefits for which all of our employees are eligible. We do not have
programs in place to provide personal perquisites for any employee. Our healthcare and other insurance programs, including the programs participation costs, are the same for all eligible employees, except that any executive officer employed
with the Company for at least 10 years may remain on the Companys health insurance policy after retiring from the Company, provided that such executive officer pays 100% of the premiums. Our annual matching contributions to the Companys
Employee Stock Ownership and 401(k) Plan (KSOP), expressed as a percentage of eligible wages, up to a stated percentage of eligible wages
34
(and any discretionary contributions that we may make to the KSOP, expressed as a percentage of eligible wages), are also the same for all eligible employees, including each named executive
officer, subject to all applicable Internal Revenue Service contribution limits and formulas for plans of these types.
Change in Control Arrangements
The Company maintains a Change in Control Severance Plan for our CEO, CFO, and COO. The Change in Control Severance Plan
as approved in 2013 contained an initial two-year term with no automatic renewal, though the Compensation Committee has renewed it since that time. The Compensation Committee adopted the Change in Control
Severance Plan to help ensure appropriate behavior by individuals in key management roles in evaluating, presenting, and acting upon change in control opportunities involving the Company that may arise. The Compensation Committee believes that
maintaining this Change in Control Severance Plan is in the best interests of shareholders in helping to ensure (a) the individuals in those management roles most likely to influence a change in control opportunity are appropriately
incentivized to act in the best interests of shareholders; (b) continuity of management before and during an impending transaction, or the need for continuity in management after a change in control; and (c) the Companys continuing
ability to attract talented senior management members, as well as to avoid executives departing due to limited or no remuneration protections in the event of a change in control transaction. Further, the Compensation Committee believes that stable
corporate leadership exhibiting the desired management behaviors is imperative for shareholders to be in a position to realize a favorable premium in the potential sale of the Company.
Key provisions of the adopted Change in Control Severance Plan include:
|
1) |
Current executive roles covered by the Change in Control Severance Plan include the CEO, CFO, and COO.
|
|
2) |
No single trigger payouts; all severance benefits are contingent upon a change of control (as
defined in the Change in Control Severance Plan) coupled with an involuntary termination by the Company without cause or a resignation for good reason, within 12 months of a change in control. |
|
3) |
No payouts for cause-based terminations. |
|
4) |
Change in Control severance benefits include: (a) two times annual base salary; (b) amount equal to
two times target bonus for the year of termination; (c) medical benefits under COBRA for up to 24 months for CEO and 12 months for CFO/COO; (d) 12 months reasonable outplacement assistance; and (e) full acceleration of equity awards
(except for equity awards subject to performance-based vesting conditions). |
|
5) |
No tax gross-up provisions on payouts. |
|
6) |
Participants must execute a general release to receive severance benefits. |
Acceleration Under Equity Plan
Existing
equity compensation plans provide for full acceleration of equity awards upon a qualifying termination after a change in control for all employees of the Company. In the case of equity compensation awards that are subject to performance goals, in
the event of a change in control or a termination of employment by the Company without cause, all outstanding equity awards that are subject to performance-based vesting conditions will become vested assuming achievement of target performance on a pro-rated basis based on the date of such termination of employment or change in control. The period over which such equity compensation awards may be exercised shall be governed by the applicable provisions of the
Companys stock plans and related award agreements. In addition, the covered employee shall enjoy any additional rights provided under the terms of an equity compensation award, including but not limited to the terms of the Companys 2016
Stock Incentive Plan, 2007 Stock Incentive Plan, or any other Company equity plan. The Compensation Committee believes that providing this vesting acceleration assists us in attracting and retaining key employees, including
35
our executives, and promotes stability and continuity of our key employees, which we believe is in the best interests of our shareholders. For details, see Potential Payments upon
Termination or Change in Control in this Proxy Statement.
Involuntary Termination Severance Plan
The Compensation Committee established a formal Involuntary Termination Severance Plan (the Severance Plan) to address involuntary
termination severance eligibility and payments for executive officer-level positions. The Compensation Committee believes that maintaining this Severance Plan is in the best interests of shareholders in helping to ensure the Companys
continuing ability to attract and retain talented senior executives. Our CEO, CFO, COO and other executive officers selected by the Compensation Committee are covered by the Severance Plan.
Key provisions of the Severance Plan include:
|
1) |
Upon termination by the Company without cause outside of the change in control period, severance benefits
include: (a) for our CEO, CFO, and COO, a severance payment of up to the equivalent of 12 months of base salary and target bonus for the year of termination, and for other participants, a severance payment of up to the equivalent of 6 months of
base salary, (b) for our CEO, CFO, and COO medical benefits under COBRA for the shorter of their cash severance period and 12 months, and for other participants, medical benefits under COBRA for the shorter of their cash severance period and 6
months, and (c) 6 months reasonable outplacement assistance. |
|
2) |
Upon termination by the Company without cause or resignation for good reason within 12 months after a change in
control, each participant other than our CEO, CFO, and COO will be entitled to receive (a) a severance payment of up to the equivalent of 6 months of base salary, (b) medical benefits under COBRA for the shorter of their cash severance
period and 6 months, and (c) 6 months reasonable outplacement assistance. Severance benefits following a change in control for our CEO, CFO, and COO are governed by the Change in Control Severance Plan discussed above. |
|
3) |
No acceleration of vesting of outstanding equity awards (except in the event of a change in control, as
provided for in existing equity plan and related equity agreements). |
|
4) |
No payouts for cause-based terminations. |
|
5) |
No tax gross-up provisions on payouts. |
|
6) |
Participants must execute a general release to receive severance benefits. |
In addition, the Companys annual cash bonus plan for executive officers generally provides that upon such executive officers
termination of employment without cause or resignation for good reason, which occurs prior to the end of the plan term, such executive officer would receive a pro-rated bonus based on the number of days of employment prior to such termination for
the plan year, with the bonus amount calculated based on full satisfaction of the target components under the plan.
Tax and Accounting Implications
Deductibility of Executive Compensation
Section 162(m) of the Code generally limits our corporate tax deduction for compensation paid to certain executive officers to
$1 million per year. Prior to December 22, 2017, when the Tax Cuts and Jobs Act of 2017 (TCJA) was signed into law, this limitation did not apply to compensation that qualified as performance-based compensation
under Section 162(m) of the Code. Under the TCJA, this performance-based exception was repealed for taxable years beginning after December 31, 2017, except with respect to certain grandfathered compensation.
The Compensation Committee intends to maximize our ability to deduct executive compensation for tax purposes to the extent structuring our
executive compensation for tax purposes is in alignment with our compensation philosophy. The Compensation Committee nonetheless reserves the right to use its judgment to
36
authorize compensation payments that may not be deductible when the committee believes that such payments are appropriate and in the best interests of our shareholders, after taking into account
changing business conditions or the executive officers performance.
Accounting for Stock-Based Compensation
We accrue our named executive officers salaries and incentive awards as an expense when earned. For our stock-based compensation, the
Financial Accounting Standards Boards Accounting Standards Codification Topic 718, CompensationStock Compensation (ASC 718), requires us to recognize compensation expense within our income statement for all share-based
payment arrangements, which includes employee stock option plans. The expense is based on the grant-date fair value of the equity award granted and is recognized ratably over the requisite service period. The Compensation Committee considers the
expense of equity awards as part of its overall evaluation of our equity compensation program.
Compensation Policies and Practices and Risk Management
The Compensation Committee considers potential risks when reviewing and approving the compensation programs for our executive officers
and other employees. We have designed our compensation programs, including our incentive compensation plans, with specific features to address potential risks while rewarding employees for achieving long-term financial and strategic objectives
through prudent business judgment and appropriate risk-taking. The following elements have been incorporated in our programs available for our executive officers:
|
|
|
A Balanced Mix of Compensation ComponentsThe target compensation mix for our executive officers is composed
of base salary, annual cash bonus incentives, and long-term equity awards. |
|
|
|
Multiple Performance FactorsOur incentive compensation plans use both company-wide metrics and individual
annual priorities, which encourage a focus on the achievement of objectives for the overall benefit of the Company. |
|
|
|
Different Performance MetricsWe generally use different performance metrics between our cash bonus and
performance RSU programs, providing a balance and mitigating against the potential for undue risk in meeting a single goal. |
|
|
|
Realistic Performance GoalsFinancial performance goals in our performance-based incentive plans are set at
levels that are intended to be attainable without the need to take inappropriate risks. |
|
|
|
Capped Incentive AwardsPayouts for both the annual cash bonus incentive awards and our performance RSUs are
capped for our executive officers. |
|
|
|
Stock Ownership GuidelinesOur stock ownership guidelines align the interests of our executive officers with
preservation and appreciation of stockholder value over time. |
|
|
|
Multi-Year VestingEquity awards vest over multiple years, requiring long-term commitment on the part of
employees. |
|
|
|
Competitive PositioningThe Compensation Committee considers our executive compensation program structure
and levels relative to our peers. The Compensation Committee generally targets total compensation to be in a market competitive range relative to our peer group and compensation survey data. |
|
|
|
Corporate Governance ProgramsWe have implemented corporate governance guidelines, a code of conduct, a
compensation recoupment policy, and other corporate governance measures and internal controls. |
The Compensation
Committee also reviews the key design elements of our compensation programs in relation to industry practices, as well as the means by which any potential risks may be mitigated, such as
37
through our internal controls and oversight by management and the board. As a result of this review, the Compensation Committee concluded that, based on a combination of factors, our
compensation policies and practices do not incentivize excessive risk-taking that could have a material adverse effect on the Company.
Compensation
Committee Report
Notwithstanding anything to the contrary set forth in any of the Companys previous filings under the
Securities Act of 1933, as amended (the Securities Act), or the Exchange Act, that might incorporate future filings, including this Proxy Statement, with the SEC, in whole or in part, the following report shall not be deemed to be
incorporated by reference into any such filings, nor shall the following report be deemed to be incorporated by reference into any future filings under the Securities Act or the Exchange Act, unless specifically stated to be incorporated by
reference therein.
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis
required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in this Proxy Statement.
Submitted by the Compensation Committee:
Elizabeth A. Fetter, Chair
Kimberly A. Box
William J. Dawson
M. Richard Smith
Dennis P. Stradford
38
Summary Compensation Table
The following table provides summary information concerning the compensation earned during the fiscal years ended December 31, 2021,
December 31, 2020, and December 31, 2019, by each of our named executive officers.
Summary Compensation Table(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
|
(i) |
|
|
(j) |
|
Name and
Principal Position |
|
Year |
|
|
Salary ($) |
|
|
Bonus ($) |
|
|
Stock Awards ($)(2) |
|
|
Option Awards ($)(2) |
|
|
Non-Equity Incentive Plan Compensation ($)(3) |
|
|
Nonqualified Deferred Compensation Earnings ($) |
|
|
All Other Compensation ($)(4) |
|
|
Total ($) |
|
Joseph F. Hanna
President and Chief Executive Officer |
|
|
2021 2020
2019 |
|
|
$ $ $ |
663,344 644,462
623,846 |
|
|
|
|
|
|
$ $ $ |
1,875,010 1,249,594
1,000,524 |
|
|
|
|
|
|
$ $ $ |
580,509 626,724
919,939 |
|
|
|
|
|
|
$ $ $ |
142,817 147,619
68,332 |
|
|
$ $ $ |
3,261,680 2,668,399
2,612,641 |
|
|
|
|
|
|
|
|
|
|
|
Keith E. Pratt
Executive Vice President and Chief Financial Officer |
|
|
2021 2020
2019 |
|
|
$ $ $ |
465,619 454,488
435,538 |
|
|
|
|
|
|
$ $ $ |
523,045 450,304
440,422 |
|
|
|
|
|
|
$ $ $ |
256,742 266,021
370,121 |
|
|
|
|
|
|
$ $ $ |
70,621 73,929
42,682 |
|
|
$ $ $ |
1,316,027 1,244,742
1,288,763 |
|
|
|
|
|
|
|
|
|
|
|
Philip B. Hawkins
Senior Vice President and Division Manager, Mobile Modular |
|
|
2021 2020
2019 |
|
|
$ $ $ |
317,723 309,731
299,308 |
|
|
|
|
|
|
$ $ $ |
366,677 274,404
229,786 |
|
|
|
|
|
|
$ $ $ |
165,180 192,467
276,949 |
|
|
|
|
|
|
$ $ $ |
48,228 41,614
35,611 |
|
|
$ $ $ |
897,808 818,216
841,654 |
|
|
|
|
|
|
|
|
|
|
|
John P. Lieffrig
Vice President and Division Manager, Portable Storage |
|
|
2021 2020
2019 |
|
|
$ $ $ |
253,793 247,785
239,677 |
|
|
|
|
|
|
$ $ $ |
299,328 160,420
160,372 |
|
|
|
|
|
|
$ $ $ |
253,793 156,501
171,177 |
|
|
|
|
|
|
$ $ $ |
34,309 26,285
23,017 |
|
|
$ $ $ |
841,223 590,991
594,243 |
|
|
|
|
|
|
|
|
|
|
|
Melodie Craft
Vice President, Legal Affairs and Risk Management and Corporate Secretary |
|
|
2021 2020
2019 |
|
|
$ $ $ |
334,585 322,704
311,723 |
|
|
|
|
|
|
$ $ $ |
301,822 225,152
199,866 |
|
|
|
|
|
|
$ $ $ |
158,802 158,391
206,478 |
|
|
|
|
|
|
$ $ $ |
29,152 14,040
12,027 |
|
|
$ $ $ |
824,361 720,287
730,094 |
|
(1) |
Amounts disclosed in this and other tables may minimally vary from amounts presented within the CD&A
narrative due to rounding to the nearest dollar for tabular purposes. |
(2) |
The amounts in columns (e) and (f) reflect the aggregate grant date fair value amounts, in accordance with
ASC the 718, of awards granted pursuant to the 2016 Plan. RSUs were granted to our NEOs on February 25, 2021, with a grant date fair value of $1,124,819 for Mr. Hanna; $237,748 for Mr. Pratt; $149,664 for Mr. Hawkins; $99,776 for
Mr. Lieffrig; and $137,192 for Ms. Craft. The grant date fair value of each RSU granted to the NEOs is equal to the closing share price of our common stock of on the date of grant of $77.95. In addition, the Board approved an additional
time-based RSU grant for Mr. Hanna with a grant date fair value amount of $499,660 that vests 50% on each anniversary of the grant date until fully vested. The performance-based RSUs were granted to our NEOs on February 25, 2021, with a
grant date fair value of $750,191 for Mr. Hanna; $285,297 for Mr. Pratt; $217,013 for Mr. Hawkins; $199,552 for Mr. Lieffrig; and $164,630 for Ms. Craft, based on target level of performance. If the maximum level of
performance were achieved, each NEO would earn 200% of the target number of performance-based RSUs awarded. Based on the closing price of our common stock on the grant date, the maximum value of the performance-based RSUs awarded to each NEO is as
follows: Mr. Hanna $1,250,318; Mr. Pratt $475,495; Mr. Hawkins $299,328; Mr. Lieffrig $199,552; and Ms. Craft $274,384. Assumptions used in the calculation of these amounts are included in
the notes of the Companys audited financial statements for the fiscal year ended December 31, 2021, included in the 2021 Annual Report. These amounts reflect the Companys accounting expense and do not correspond to the actual value
that may be realized by the named executive officers. |
(3) |
The amounts in column (g) reflect amounts earned by the named executive officers during the fiscal year
ended December 31, 2021, and paid in 2022 pursuant to the Cash Bonus Plan. See Non-Equity Performance-Based Incentive Plan Compensation in this Proxy Statement for additional detail.
|
39
(4) |
The amounts in column (i) reflect the cash contributions allocated to each named executive officer pursuant
to the provisions of the Companys Employee Stock Ownership and 401(k) Plan and dividend equivalent payouts for vested RSUs and PSUs that were not factored into the grant date fair values of such RSUs and PSUs. The table below details the
amounts paid to each named executive officer. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Year |
|
|
Employee Stock Ownership and 401(k) Plan Cash Contribution ($) |
|
|
RSU and PSU Dividend Payment ($) |
|
|
Total ($) |
|
Joseph F. Hanna |
|
|
2021 2020
2019 |
|
|
$ $ $ |
11,600 11,400
11,200 |
|
|
$ $ $ |
131,217 136,219
57,132 |
|
|
$ $ $ |
142,817 147,619
68,332 |
|
|
|
|
|
|
Keith E. Pratt |
|
|
2021 2020
2019 |
|
|
$ $ $ |
11,600 11,400
11,200 |
|
|
$ $ $ |
59,021 62,529
31,482 |
|
|
$ $ $ |
70,621 73,929
42,682 |
|
|
|
|
|
|
Philip B. Hawkins |
|
|
2021 2020
2019 |
|
|
$ $ $ |
11,600 11,400
11,200 |
|
|
$ $ $ |
36,628 30,214
24,411 |
|
|
$ $ $ |
48,228 41,614
35,611 |
|
|
|
|
|
|
John P. Lieffrig |
|
|
2021 2020
2019 |
|
|
$ $ $ |
11,600 11,400
11,200 |
|
|
$ $ $ |
22,709 18,885
11,817 |
|
|
$ $ $ |
34,309 26,285
23,017 |
|
|
|
|
|
|
Melodie Craft |
|
|
2021 2020
2019 |
|
|
$ $ $ |
11,600 11,400
11,200 |
|
|
$ $ $ |
17,552 2,640
827 |
|
|
$ $ $ |
29,152 14,040
12,027 |
|
CEO Compensation Pay Ratio
We believe our executive compensation program must be internally consistent and equitable to motivate our employees to create shareholder
value. We monitor the relationship between the compensation of our executive officers and the compensation of our non-managerial employees. For 2021, the total compensation of Joseph F. Hanna, our President
and Chief Executive Officer, of $3,261,680, as shown in the Summary Compensation Table above, (the CEO Compensation), was approximately 59 times the total compensation of a median employee of $55,325, calculated
in the same manner.
Our CEO to median employee pay ratio is calculated in accordance with the SECs rules pursuant to Item 402(u) of
Regulation S-K. We identified the median employee by examining the 2021 total cash compensation for all individuals, excluding our CEO, who were employed by us on December 31, 2021, the last day of our
payroll year. We included all employees, whether employed on a full-time, part-time or seasonal basis. We did not make any assumptions, adjustments or estimates with respect to total cash compensation, and we did not annualize the compensation for
any full-time employees that were not employed by us for all of 2021. We believe the use of total cash compensation for all employees is a consistently-applied compensation measure because we do not widely distribute annual equity awards to
employees.
40
2021 GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) |
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards (2) |
|
|
All Other Stock Awards: Number of Shares of Stock or Units (#) |
|
All Other Option Awards: Number of Securities Underlying Options (#) |
|
|
Exercise or Base Price of Option Awards ($/Sh) |
|
|
Grant Date Fair Value of Stock and Option Awards (3) |
|
Name |
|
Grant Date |
|
|
Threshold ($) |
|
|
Target ($) |
|
|
Maximum ($) |
|
|
Threshold (#) |
|
|
Target (#) |
|
|
Maximum (#) |
|
|
|
|
|
|
|
|
|
|
|
|
Joseph F. Hanna |
|
|
|
|
|
$ |
248,754 |
|
|
$ |
663,344 |
|
|
$ |
1,202,311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,440 |
|
|
|
22,450 |
|
|
|
30,470 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,250,318 |
|
Keith E. Pratt |
|
|
|
|
|
$ |
93,124 |
|
|
$ |
279,371 |
|
|
$ |
488,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,575 |
|
|
|
6,100 |
|
|
|
9,150 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
475,495 |
|
Philip B. Hawkins |
|
|
|
|
|
$ |
63,545 |
|
|
$ |
190,634 |
|
|
$ |
333,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,880 |
|
|
|
3,840 |
|
|
|
5,760 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
299,328 |
|
John P. Lieffrig |
|
|
|
|
|
$ |
50,759 |
|
|
$ |
152,276 |
|
|
$ |
266,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,920 |
|
|
|
2,560 |
|
|
|
3,840 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
199,552 |
|
Melodie Craft |
|
|
|
|
|
$ |
41,823 |
|
|
$ |
167,293 |
|
|
$ |
271,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,640 |
|
|
|
3,520 |
|
|
|
5,280 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
274,384 |
|
(1) |
The amounts listed in these columns reflect the threshold, target and maximum amounts payable to the named
executive officers pursuant to the Cash Bonus Plan. See Non-Equity Performance-Based Incentive Plan Compensation for additional detail. The threshold assumptions assume achieving 80% of the
profitability target and no achievement of the personal annual priorities. |
(2) |
On February 25, 2021, each named executive officer received a grant of time-based RSUs that vest 33% on
each anniversary of the grant date until fully vested. Each unit represents a right to receive one share of Common Stock or an amount equal to the fair market value of the Common Stock underlying the unit on the vesting date. Additionally, the Board
approved an additional grant for Mr. Hanna of time-based RSUs that vest 50% on each anniversary of the grant date until fully vested. In addition, each named executive officer also received a grant of performance-based RSUs which are
subject to a performance-based vesting component at the end of a three-year performance period. Unless earlier forfeited under the terms of the performance-based RSUs, each RSU vests and converts into no less than 50% and no more than 200% of one
share of Common Stock. The performance RSUs vest 100% at the end of the three-year performance period if the performance goal is satisfied. |
(3) |
The amounts listed in this column reflect the maximum amount payable to the named executive officers under the
terms of the performance-based RSUs pursuant to the Cash Bonus Plan. Each RSU vests and converts into no less than 50% and no more than 200% of one share of Common Stock amounts payable to the named executive officers. The amounts in the table above
reflect the probable performance outcome of a maximum payout of 200%. See Non-Equity Performance-Based Incentive Plan Compensation for additional detail. |
41
2021 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of Securities Underlying Unexercised Options (#) |
|
|
Number of Securities Underlying Unexercised Options (#) |
|
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
|
|
Option Exercise Price ($) |
|
|
Option Expiration Date |
|
|
Number of Shares or Units of Stock That Have Not Vested (#) |
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($) |
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have
Not Vested ($) |
|
|
|
Exercisable |
|
|
Unexercisable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph F. Hanna |
|
|
65,300 |
|
|
|
0 |
(1) |
|
|
|
|
|
$ |
24.60 |
|
|
|
02/28/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,200 |
|
|
|
2,800 |
(2) |
|
|
|
|
|
$ |
34.57 |
|
|
|
03/02/2024 |
|
|
|
|
|
|
|
|
|
|
|
4,040 |
(3) |
|
$ |
324,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,004 |
(4) |
|
$ |
321,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,787 |
(5) |
|
$ |
223,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.360 |
(6) |
|
$ |
670,974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,921 |
(7) |
|
$ |
475,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,880 |
(8) |
|
$ |
712,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,020 |
(9) |
|
$ |
643,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,410 |
(10) |
|
$ |
514,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,020 |
(11) |
|
$ |
643,685 |
|
Keith E. Pratt |
|
|
16,520 |
|
|
|
0 |
(1) |
|
|
|
|
|
$ |
24.60 |
|
|
|
02/28/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,400 |
|
|
|
1,600 |
(2) |
|
|
|
|
|
$ |
34.57 |
|
|
|
03/02/2024 |
|
|
|
|
|
|
|
|
|
|
|
2,320 |
(3) |
|
$ |
186,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,760 |
(4) |
|
$ |
141,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,227 |
(5) |
|
$ |
98,479 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,680 |
(6) |
|
$ |
295,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,134 |
(7) |
|
$ |
171,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,200 |
(8) |
|
$ |
256,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,050 |
(9) |
|
$ |
244,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,050 |
(11) |
|
$ |
244,793 |
|
Philip B. Hawkins |
|
|
4,480 |
|
|
|
0 |
(1) |
|
|
|
|
|
$ |
24.60 |
|
|
|
02/28/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,400 |
|
|
|
880 |
(2) |
|
|
|
|
|
$ |
34.57 |
|
|
|
03/02/2024 |
|
|
|
|
|
|
|
|
|
|
|
1,280 |
(3) |
|
$ |
102,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
800 |
(4) |
|
$ |
64,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
641 |
(5) |
|
$ |
51,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,920 |
(6) |
|
$ |
154,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,301 |
(7) |
|
$ |
104,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,950 |
(8) |
|
$ |
156,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,920 |
(9) |
|
$ |
154,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,920 |
(11) |
|
$ |
154,099 |
|
|
|
|
|
|
|
|
|
|
|
John P. Lieffrig |
|
|
1,335 |
|
|
|
0 |
(1) |
|
|
|
|
|
$ |
31.97 |
|
|
|
08/31/2023 |
|
|
|
|
|
|
|
|
|
|
|
880 |
(3) |
|
$ |
70,629 |
|
|
|
|
1,880 |
|
|
|
600 |
(2) |
|
|
|
|
|
$ |
34.57 |
|
|
|
03/02/2024 |
|
|
|
|
|
|
|
|
|
|
|
600 |
(4) |
|
$ |
48,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
447 |
(5) |
|
$ |
35,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,340 |
(6) |
|
$ |
107,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
761 |
(7) |
|
$ |
61,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,140 |
(8) |
|
$ |
91,496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,280 |
(9) |
|
$ |
102,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,280 |
(11) |
|
$ |
102,733 |
|
|
|
|
|
|
|
|
|
|
|
Melodie Craft |
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
680 |
|
|
$ |
54,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,227 |
|
|
$ |
178,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,667 |
|
|
$ |
214,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,520 |
|
|
$ |
282,515 |
|
(1) |
Stock options vest at the rate of 20% on first anniversary of grant date and then vests 5% each anniversary
quarter thereafter. This award was fully vested as of 3/1/21. |
42
(2) |
Stock options vest at the rate of 20% on first anniversary of grant date and then vests 5% each anniversary
quarter thereafter, with vesting dates each quarter until fully vested on 3/2/22. |
(3) |
The RSUs vest 60% at the end of the three-year performance period if the performance goal is satisfied; then 20%
vests each anniversary thereafter, with vesting dates of 3/2/20, 3/2/21 and 3/2/22. Unless earlier forfeited under the terms of the performance based RSU, each RSU vests and converts into no less than 50% and no more than 200% of one share of
McGrath RentCorp common stock. |
(4) |
The March 1, 2018 (April 1, 2018 for Ms. Craft) restricted stock unit grant vests 20% on each
anniversary of the grant date until fully vested. Each unit represents a right to receive one share of common stock or an amount equal to the fair market value of the Common Stock underlying the unit on the vesting date, with vesting dates of
3/1/19, 3/1/20, 3/1/21, 3/1/22, 3/1/23. (4/1/19, 4/1/20, 4/1/21, 4/1/22, 4/1/23 for Ms. Craft). |
(5) |
The restricted stock unit shall vest 33% on the first annual anniversary of the grant; 33% on the second annual
anniversary of the grant; and 34% on the third annual anniversary of the grant. Each restricted stock unit represents a right to receive one share of common stock or an amount equal to the fair market value of the common stock underlying the unit on
the vesting date, with vesting dates of 2/28/20, 2/28/21, and 2/28/22. |
(6) |
The RSUs are subject to a performance based vesting component at the end of a three-year performance period.
Unless earlier forfeited under the terms of the performance based RSU, each RSU vests and converts into no less than 50% and no more than 200% of one share of McGrath RentCorp common stock. The RSUs vest 100% at the end of the three-year performance
period if the performance goal is satisfied, with a vesting date of 2/28/22. |
(7) |
The restricted stock unit shall vest 33% on the first annual anniversary of the grant; 33% on the second annual
anniversary of the grant; and 34% on the third annual anniversary of the grant, with vesting dates of 2/27/21, 2/27/22, and 2/27/23. Each restricted stock unit represents a right to receive one share of common stock or an amount equal to the fair
market value of the common stock underlying the unit on the vesting date. |
(8) |
The RSUs are subject to a performance based vesting component at the end of a three-year performance period.
Unless earlier forfeited under the terms of the performance based RSU, each RSU vests and converts into no less than 50% and no more than 200% of one share of McGrath RentCorp common stock. The RSUs vest 100% at the end of the three-year performance
period if the performance goal is satisfied, with vesting date of 2/27/23. |
(9) |
The restricted stock unit shall vest 33% on the first annual anniversary of the grant; 33% on the second annual
anniversary of the grant; and 34% on the third annual anniversary of the grant. Each restricted stock unit represents a right to receive one share of common stock or an amount equal to the fair market value of the common stock underlying the unit on
the vesting date, with vesting dates of 2/25/22, 2/25/23, and 2/25/24. |
(10) |
The restricted stock unit vests 50% on each anniversary of the grant date until fully vested, with vesting dates
of 2/25/22 and 2/25/23. Each unit represents a right to receive one share of common stock or an amount equal to the fair market value of the Common Stock underlying the unit on the vesting date. |
(11) |
The RSUs are subject to a performance based vesting component at the end of a three-year performance period.
Unless earlier forfeited under the terms of the performance based RSU, each RSU vests and converts into no less than 50% and no more than 200% of one share of McGrath RentCorp common stock. The RSUs vest 100% at the end of the three-year performance
period if the performance goal is satisfied, with vesting date of 2/25/24. |
43
2021 OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
Name |
|
Number of Shares Acquired on Exercise (#) |
|
|
Value Realized on Exercise ($) (1) |
|
|
Number of Shares Acquired on Vesting (#) |
|
|
Value Realized on Vesting ($) |
|
Joseph F. Hanna |
|
|
30,000 |
|
|
$ |
1,855,500 |
|
|
|
31,808 |
|
|
$ |
2,492,685 |
|
Keith E. Pratt |
|
|
|
|
|
|
|
|
|
|
14,293 |
|
|
$ |
1,119,246 |
|
Philip B. Hawkins |
|
|
|
|
|
|
|
|
|
|
6,969 |
|
|
$ |
545,474 |
|
John P. Lieffrig |
|
|
5,205 |
|
|
$ |
276,701 |
|
|
|
3,454 |
|
|
$ |
269,937 |
|
Melodie Craft |
|
|
|
|
|
|
|
|
|
|
1,430 |
|
|
$ |
113,525 |
|
(1) |
The value realized on exercise represents the number of shares of Common Stock acquired on exercise
of the applicable option multiplied by the NASDAQ Stock Market close price of our Common Stock on the applicable date of exercise, less the number of shares of Common Stock acquired on exercise of the option multiplied by the exercise price of the
option. |
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information regarding our equity compensation plans as of December 31, 2021:
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category |
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
|
|
Weighted-average exercise price of outstanding options, warrants and rights |
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected
in column (a)) |
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation plans approved by security holders |
|
|
274,630 |
|
|
$ |
29.66 |
|
|
|
1,414,352 |
|
Equity compensation plans not approved by security holders |
|
|
|
|
|
$ |
|
|
|
|
|
|
Total |
|
|
274,630 |
|
|
$ |
29.66 |
|
|
|
1,414,352 |
|
Our 2016 Stock Incentive Plan was approved by shareholders and has been filed as an exhibit to our Annual
Report on Form 10-K.
Potential Payments upon Termination or Change-in-Control
Under the terms of our Cash Bonus Plan, 2016 Plan and related equity award
agreements and KSOP, as well as our Change in Control Severance Plan and Involuntary Termination Severance Plan, payments may be made to each of our named executive officers upon his or her termination of employment or a change in control (as
defined in each plan) of the Company. See Compensation Discussion and Analysis and Equity Compensation Plan Information for a description of, and an explanation of, the specific circumstances that would trigger
payments under each plan, agreement, or policy. The following table sets forth the estimated payments that would be made to each of our named executive officers upon voluntary termination, including termination for good reason, termination not for
cause, termination for cause, termination in connection with a change in control, and termination due to death or permanent disability. The payments would be made pursuant to the plans, agreements, or Company policies identified in this paragraph.
The information set forth in the table below assumes the termination event occurred on December 31, 2021.
44
The actual amounts to be paid out can only be determined at the time of an executives
separation from the Company and may differ materially from the amounts set forth in the table below. The amounts set forth in the table below do not reflect the withholding of applicable state and federal taxes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Voluntary Termination or Termination for Good Reason |
|
|
Involuntary Termination |
|
|
Termination Not For Cause or Termination for Good Reason & Change in Control(3) |
|
|
Death or Permanent Disability |
|
|
|
|
|
|
Not For Cause(1) |
|
|
For Cause |
|
|
|
|
|
|
|
Joseph F. Hanna |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan |
|
$ |
0 |
|
|
$ |
580,509 |
|
|
$ |
0 |
|
|
$ |
1,907,197 |
|
|
$ |
0 |
|
Accelerated Awards Under Equity Incentive Plans(2) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,966,567 |
|
|
|
0 |
|
Base Salary |
|
|
0 |
|
|
|
1,326,688 |
|
|
|
0 |
|
|
|
1,900,032 |
|
|
|
0 |
|
Continuation of Medical Benefits Under COBRA (present value) |
|
|
0 |
|
|
|
20,065 |
|
|
|
0 |
|
|
|
40,130 |
|
|
|
0 |
|
Reasonable Outplacement Assistance |
|
|
0 |
|
|
|
10,000 |
|
|
|
0 |
|
|
|
20,000 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
0 |
|
|
$ |
1,937,262 |
|
|
$ |
0 |
|
|
$ |
8,923,926 |
|
|
$ |
0 |
|
Keith E. Pratt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan |
|
$ |
0 |
|
|
$ |
256,742 |
|
|
$ |
0 |
|
|
$ |
815,485 |
|
|
$ |
0 |
|
Accelerated Awards Under Equity Incentive Plans(2) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,847,893 |
|
|
|
0 |
|
Base Salary |
|
|
0 |
|
|
|
931,238 |
|
|
|
0 |
|
|
|
1,396,857 |
|
|
|
0 |
|
Continuation of Medical Benefits Under COBRA (present value) |
|
|
0 |
|
|
|
30,617 |
|
|
|
0 |
|
|
|
30,617 |
|
|
|
0 |
|
Reasonable Outplacement Assistance |
|
|
0 |
|
|
|
10,000 |
|
|
|
0 |
|
|
|
20,000 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
0 |
|
|
$ |
1,228,597 |
|
|
$ |
0 |
|
|
$ |
4,110,852 |
|
|
$ |
0 |
|
Philip B. Hawkins |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan |
|
$ |
0 |
|
|
$ |
165,180 |
|
|
$ |
0 |
|
|
$ |
165,180 |
|
|
$ |
0 |
|
Accelerated Awards Under Equity Incentive Plans(2) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,135,917 |
|
|
|
0 |
|
Base Salary |
|
|
0 |
|
|
|
476,585 |
|
|
|
0 |
|
|
|
476,585 |
|
|
|
0 |
|
Continuation of Medical Benefits Under COBRA (present value) |
|
|
0 |
|
|
|
14,343 |
|
|
|
0 |
|
|
|
14,343 |
|
|
|
0 |
|
Reasonable Outplacement Assistance |
|
|
0 |
|
|
|
10,000 |
|
|
|
0 |
|
|
|
10,000 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
0 |
|
|
$ |
666,108 |
|
|
$ |
0 |
|
|
$ |
1,802,024 |
|
|
$ |
0 |
|
John P. Lieffrig |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan |
|
$ |
0 |
|
|
$ |
253,793 |
|
|
$ |
0 |
|
|
$ |
253,793 |
|
|
$ |
0 |
|
Accelerated Awards Under Equity Incentive Plans(2) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
713,236 |
|
|
|
0 |
|
Base Salary |
|
|
0 |
|
|
|
380,690 |
|
|
|
0 |
|
|
|
380,690 |
|
|
|
0 |
|
Continuation of Medical Benefits Under COBRA (present value) |
|
|
0 |
|
|
|
14,343 |
|
|
|
0 |
|
|
|
14,343 |
|
|
|
0 |
|
Reasonable Outplacement Assistance |
|
|
0 |
|
|
|
10,000 |
|
|
|
0 |
|
|
|
10,000 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
0 |
|
|
$ |
658,826 |
|
|
$ |
0 |
|
|
$ |
1,372,061 |
|
|
$ |
0 |
|
Melodie Craft |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan |
|
$ |
0 |
|
|
$ |
158,802 |
|
|
$ |
0 |
|
|
$ |
158,802 |
|
|
$ |
0 |
|
Accelerated Awards Under Equity Incentive Plans(2) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
412,857 |
|
|
|
0 |
|
Base Salary |
|
|
0 |
|
|
|
501,878 |
|
|
|
0 |
|
|
|
501,878 |
|
|
|
0 |
|
Continuation of Medical Benefits Under COBRA (present value) |
|
|
0 |
|
|
|
9,016 |
|
|
|
0 |
|
|
|
9,016 |
|
|
|
0 |
|
Reasonable Outplacement Assistance |
|
|
0 |
|
|
|
10,000 |
|
|
|
0 |
|
|
|
10,000 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
0 |
|
|
$ |
679,696 |
|
|
$ |
0 |
|
|
$ |
1,092,553 |
|
|
$ |
0 |
|
45
(1) |
In connection with a termination of employment not for cause that is unrelated to a change in control, the
amounts noted for each of the named executive officers are calculated by including such executive officers 2021 base salary actually earned and cash bonus paid pursuant to the 2021 Cash Bonus Plan, plus, in accordance with the Companys
involuntary termination severance plan described above, an additional one year of base salary for Messrs. Hanna and Pratt, and six months of base salary for Messrs. Hawkins and Lieffrig and Ms. Craft, as well as payment of the target bonus
amount pro-rated based on the date of termination under the 2021 Cash Bonus Plan for all the named executive officers. There would not be any acceleration of equity awards at the time of a termination
unrelated to a change in control. |
(2) |
Assumes termination on December 31, 2021, with a closing NASDAQ Stock Market price of $80.26 per share.
|
(3) |
In connection with a termination of employment not for cause or a termination of employment for good reason
within 12 months of a change in control of the Company, the CEO, CFO and, if one existed at the time, the COO, would receive 2021 base salary actually earned and payment of target bonus amount pro-rated based
on the date of termination under the 2021 Cash Bonus Plan, plus, in accordance with the Companys Change of Control Severance Plan, reasonable outplacement assistance, and (i) for the CEO, an additional two years of base salary, two times
target bonus under the 2021 Cash Bonus Plan, and 24 months of COBRA coverage and (ii) for the CFO and COO, an additional two years of base salary, two times target bonus under the 2021 Cash Bonus Plan and 12 months of COBRA coverage. In
connection with a termination of employment not for cause or termination of employment for good cause within 12 months of a change in control of the Company, all other named executive officers would receive 2021 base salary actually earned and
payment of target bonus amount pro-rated based on the date of termination under the 2021 Cash Bonus Plan, plus, in accordance with the Companys Involuntary Termination Severance Plan, an additional 6
months of base salary, 6 months of COBRA coverage and reasonable outplacement service. Under the Companys 2016 Stock Plan and applicable award agreements, if equity awards are not assumed or replaced by a successor corporation at the time of a
change in control, then the vesting of all outstanding unvested equity awards would accelerate and vest in full immediately prior to the specified effective date of a Change In Control or a Corporate Transaction, and if there is a termination of
employment not for cause within 12 months of a change in control of the Company, notwithstanding the assumption or replacement of the equity awards by a successor corporation, then (A) all time-based outstanding unvested equity awards would
accelerate and vest in full immediately upon such termination of employment, and (B) all performance-based outstanding unvested equity awards would accelerate and vest assuming achievement of target performance on a pro-rated basis based on the date of such termination of employment. |
Treatment of
Certain Compensation Elements Upon Termination
Executive Severance Policy. We do not have employment agreements. The
Compensation Committee has, however, established terms and conditions to address involuntary termination severance benefits for executive officer-level positions in connection with a change in control of the Company or otherwise. For details, see
both the Change of Control Severance Plan and Involuntary Termination Severance Plan discussions within the Compensation Discussion and Analysis section of this Proxy Statement.
Pension Benefits. All employees who participate in our KSOP are entitled to their vested amounts upon termination of their employment.
Health and Welfare Benefit and Executive Benefits and Perquisites Continuation. An executive officer is not entitled to any
continuation of his or her health and welfare benefits, executive benefits, or perquisites (other than pursuant to COBRA) following the termination of his or her employment, except that any executive officer employed with the Company for at least 10
years may remain on the Companys health insurance policy after he or she retires from the Company, provided he or she pays 100% of the premiums.
Long-Term Incentives. Except in the circumstances discussed above, an executive officer forfeits his or her stock options or unvested
shares of restricted stock upon termination of employment, and is not entitled to any
46
continuation of vesting or acceleration of vesting with respect to his or her options or unvested restricted stock awards. The executive would be, however, entitled to exercise any vested options
for a period of 90 days after termination and is entitled to continue to hold his or her shares of restricted stock that had previously vested (in the same manner as any other employee of the Company). In the event of a qualifying termination
following a change in control, an executive officer is entitled to the acceleration of vesting with respect to all of his or her equity awards, consistent with the Change in Control arrangements described above.
Relationships Amongst Directors or Executive Officers
There are no family relationships among any of the directors or executive officers of the Company, with the exception that David M. Whitney and
Kristina Van Trease are husband and wife.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company during 2021 consisted of Messrs. Dawson, Smith, Stradford, and Mses. Box and Fetter. No member of the
Compensation Committee is a present or former executive officer or employee of the Company or any of its subsidiaries. No executive officer of the Company has served on the board of directors or compensation committee of any entity which has one or
more executive officers serving as a member of the Companys Board of Directors or Compensation Committee.
47
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the indemnification agreements described below, there were no transactions in 2021 between the Company and a related person
required to be reported under applicable SEC rules.
Indemnification Agreements
The Company has entered into indemnification agreements with each of our directors and executive officers. These agreements require the Company
to indemnify our executive officers or directors against expenses and, in certain cases, judgments, settlements, or other payments incurred by an executive officer or director in suits brought by the Company, derivative actions brought by our
shareholders, and suits brought by other third parties. Indemnification has been granted under these agreements to the fullest extent permitted under California law in situations where an executive officer or director is made, or threatened to be
made, a party to the legal proceeding because of his or her service to the Company. In addition, these agreements require us to advance the expenses incurred by our directors and officers in any proceeding in which indemnification may be provided
under the applicable indemnification agreement. In addition, our bylaws provide that we may indemnify our directors, executive officers, or other persons treated as agents under the General Corporation Law of the State of California, and advance
related expenses, if approved by the shareholders or a disinterested vote of the Board of Directors.
Policies and Procedures Regarding Related Party
Transactions
Pursuant to the Audit Committee Charter, the Audit Committee is responsible for reviewing and discussing with management
any transactions or courses of dealing with related parties. The Audit Committee considers the following factors in determining whether to approve or disapprove (with referral to the Board of Directors) any such related party transaction or course
of action: (i) the financial accounting accorded the transaction or course of action; (ii) whether the terms or other aspects differ from those that would likely be negotiated with independent parties; and (iii) whether the proposed
disclosure of the transaction or course of dealing, if any, is in accordance with generally accepted accounting principles and SEC regulations.
48
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company with respect to beneficial ownership of our Common Stock as of
April 20, 2022, by (i) each shareholder known to the Company to own beneficially more than 5% of our Common Stock; (ii) each of our directors; (iii) each executive officer named in the Summary Compensation Table above; and
(iv) all directors and executive officers of the Company as a group:
|
|
|
|
|
|
|
|
|
Beneficial Owner(1)(2) |
|
Shares Beneficially Owned(3) |
|
|
Percentage of Class of Shares Beneficially Owned |
|
The Vanguard Group(4)
100 Vanguard Blvd. Malvern, PA 19355 |
|
|
2,490,381 |
|
|
|
10.3 |
% |
Franklin Mutual Advisors, LLC(5)
101 John F. Kennedy Parkway Short Hills, NJ 07078-2789 |
|
|
2,148,035 |
|
|
|
8.9 |
% |
BlackRock, Inc.(6)
55 East 52nd Street New York, NY 10055 |
|
|
1,607,253 |
|
|
|
6.6 |
% |
Dimensional Fund Advisers LP(7)
Building One, 6300 Bee Cave Road Austin, TX 78746 |
|
|
1,375,312 |
|
|
|
5.7 |
% |
T. Rowe Price Associates, Inc.(8)
100 E. Pratt Street
Baltimore, MD 21202 |
|
|
1,356,176 |
|
|
|
5.5 |
% |
Victory Capital Management Inc.(9)
4900 Tiedeman Rd. 4th Floor
Brooklyn, OH 44144 |
|
|
1,292,117 |
|
|
|
5.3 |
% |
Joseph Hanna(10)(11) |
|
|
230,454 |
|
|
|
* |
|
Keith E. Pratt(10)(11) |
|
|
70,268 |
|
|
|
* |
|
Philip B. Hawkins(10)(11) |
|
|
27,807 |
|
|
|
* |
|
John P. Lieffrig(10)(11) |
|
|
17,560 |
|
|
|
* |
|
Melodie Craft (10)(11) |
|
|
2,740 |
|
|
|
* |
|
Kimberly A. Box(10) |
|
|
6,300 |
|
|
|
* |
|
Smita Conjeevaram(10) |
|
|
1,800 |
|
|
|
* |
|
William J. Dawson(10) |
|
|
21,300 |
|
|
|
* |
|
Elizabeth A. Fetter(10) |
|
|
6,500 |
|
|
|
* |
|
Bradley M. Shuster(10) |
|
|
9,000 |
|
|
|
* |
|
M. Richard Smith(10) |
|
|
29,700 |
|
|
|
* |
|
Dennis P. Stradford(10) |
|
|
10,200 |
|
|
|
* |
|
All executive officers and directors as a group (16 persons)(12) |
|
|
492,060 |
|
|
|
2.0 |
% |
* |
The percentage of shares beneficially owned by this director or executive officer constitutes less than 1% of
our Common Stock as of April 20, 2022. |
(1) |
Except as otherwise indicated, the address of each of the executive officers and directors is c/o McGrath
RentCorp, 5700 Las Positas Road, Livermore, California 94551. |
(2) |
To the Companys knowledge, except as set forth in the footnotes to this table, and subject to applicable
community property laws, each shareholder named in this table has sole voting and investment power with respect to the shares set forth opposite such shareholders name. |
49
(3) |
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or
investment power with respect to the securities. Shares of the Companys Common Stock subject to equity awards currently exercisable or that will become exercisable within 60 days of April 20, 2022, are deemed outstanding for computing the
percentage of the person holding such equity awards, but are not deemed outstanding for computing the percentage of any other person. Percentages are based on 24,345,398 shares of the Companys Common Stock outstanding as of April 20,
2022. |
(4) |
The Vanguard Group filed Amendment No. 10 to Schedule 13G with the SEC on February 9, 2022, and
reported beneficial ownership of 2,490,381 shares, sole dispositive power with respect to 2,431,780 shares of Common Stock, shared voting power with respect to 37,629 shares of Common Stock, and shared dispositive power with respect to 58,601 shares
of Common Stock. The Schedule 13G/A contained information as of December 31, 2021, and may not reflect current holdings of the Companys Common Stock. |
(5) |
Franklin Mutual Advisers, LLC filed Schedule 13G with the SEC on January 24, 2022, and reported beneficial
ownership of 2,148,035 shares, sole voting power with respect to 2,035,757 shares, and sole dispositive power with respect to 2,148,035 shares of Common Stock. The securities reported are beneficially owned by one or more open-end investment
companies or other managed accounts that are investment management clients of Franklin Mutual Advisers, LLC (FMA), an indirect wholly owned subsidiary of Franklin Resources, Inc. (FRI). When an investment management contract
(including a sub-advisory agreement) delegates to FMA investment discretion or voting power over the securities held in the investment advisory accounts that are subject to that agreement, FRI treats FMA as having sole investment discretion or
voting authority, as the case may be, unless the agreement specifies otherwise. Accordingly, FMA reports on Schedule 13G that it has sole investment discretion and voting authority over the securities covered by any such investment management
agreement, unless otherwise noted in Item 4 of Schedule 13G. As a result, for purposes of Rule 13d-3 under the Act, FMA may be deemed to be the beneficial owner of the securities reported in Schedule 13G. The Schedule 13G contained information as of
December 31, 2021, and may not reflect current holdings of the Companys Common Stock. |
(6) |
BlackRock, Inc. filed Amendment No. 13 to Schedule 13G with the SEC on February 1, 2022, and reported
beneficial ownership of 1,607,253 shares and sole voting power with respect to 1,579,049 shares of Common Stock. The Schedule 13G/A contained information as of December 31, 2021, and may not reflect current holdings of the Companys Common
Stock. |
(7) |
Dimensional Fund Advisors LP filed Amendment No. 6 to Schedule 13G with the SEC on February 14, 2022,
and reported beneficial ownership of 1,375,312 shares, sole voting power with respect to 1,346,967 shares, and sole dispositive power with respect to 1,375,312 shares of Common Stock. Dimensional Fund Advisors LP is an investment advisor registered
under Section 203 of the Investment Advisors Act of 1940. It furnishes investment advice to four investment companies who are registered under the Investment Company Act of 1940 and serves as an investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (the Funds). In its role as an investment advisor, sub-adviser, and/or manager,
Dimensional Fund Advisors LP or its subsidiaries (collectively, Dimensional) may possess voting and/or investment power over the Common Stock of the Company that is owned by the Funds, and may be deemed to be the beneficial owner of the
Common Stock of the Company held by the Funds. However, all securities reported here are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. The Schedule 13G/A contained information as of December 31, 2021, and
may not reflect current holdings of the Companys Common Stock. |
(8) |
T. Rowe Price Associates, Inc. (Price Associates) filed Amendment No. 20 to Schedule 13G with
the SEC on February 14, 2022, and reported beneficial ownership of 1,356,176 shares, sole voting power with respect to 562,677 shares, and sole dispositive power with respect to 1,356,176 shares of Common Stock. The Schedule 13G/A contained
information as of December 31, 2021, and may not reflect current holdings of the Companys stock. |
(9) |
Victory Capital Management Inc. filed Schedule 13G with the SEC on February 2, 2022, and reported
beneficial ownership of 1,292,117 shares, sole voting power with respect to 1,280,667 shares, and sole dispositive power with respect to 1,292,117 shares of Common Stock. The Schedule 13G contained information as of December 31, 2021, and may
not reflect current holdings of the Companys stock. |
50
(10) |
Includes portions of outstanding stock options or RSUs held by executive officers and directors that will be
exercisable within 60 days of April 20, 2022, as follows: 121,300 shares for Mr. Hanna; 32,520 shares for Mr. Pratt; 9,760 shares for Mr. Hawkins; 3,735 shares for Mr. Lieffrig; 340 shares for Ms. Craft; and 179,017
shares for all executive officers and directors as a group. |
(11) |
Includes the shares held by the KSOP for the benefit of the named individual. The number of shares included is
136 shares for Mr. Hanna; 225 shares for Mr. Pratt; 18,047 shares for Mr. Hawkins; 315 shares for Mr. Lieffrig; 217 shares for Ms. Craft; and 35,570 shares for all executive officers and directors as a group. These shares
are included because beneficiaries under the KSOP hold sole voting power over the shares (whether or not rights to the shares have vested). |
(12) |
See footnotes (10) and (11). |
Communications with the Board of Directors
Our Board of Directors believes that full and open communication between shareholders and members of our Board of Directors is in the best
interests of our shareholders. Shareholders may contact any director or committee of the Board of Directors by writing to the Compliance Officer, c/o McGrath RentCorp, 5700 Las Positas Road, Livermore, California 94551. The Compliance Officer will
review all such communications for relevance to activities of the Board of Directors and will promptly forward all relevant written communications to the Board of Directors. Comments or complaints relating to our accounting, internal accounting
controls, auditing matters, corporate fraud, or violations of federal or state laws may be referred directly to our Audit Committee by writing to the Chairman of the Audit Committee, c/o Compliance Officer, McGrath RentCorp, 5700 Las Positas Road,
Livermore, California 94551. Further details can be found in Reporting Questionable Accounting and Auditing Practices and Policy Prohibiting Retaliation Against Reporting Employees and Corporate Governance Guidelines found on
our website at www.mgrc.com under the Investors section.
Shareholder Recommendations for Membership on our Board of Directors
The Corporate Governance and Nominating Committee will consider shareholder recommendations of director nominees. To recommend director
nominee(s), a shareholder must submit the following relevant information in writing to the attention of the Compliance Officer at our principal executive offices: (1) the name, age, business, and residence address of the prospective candidate;
(2) a brief biographical description of the prospective candidate, including employment history for the past five years and a statement of the qualifications of the prospective candidate; (3) the class and number of shares of our Common
Stock, if any, which are beneficially owned by the prospective candidate; (4) a description of all arrangements or understandings between the shareholder and the prospective candidate pursuant to which the nomination is to be made by the
shareholder if the shareholder and the prospective candidate are different individuals; (5) the candidates signed consent to serve as a director if elected and to be named in our proxy statement; (6) a signed certificate providing
the class and number of shares of our Common Stock which are beneficially owned by the shareholder; and (7) any other information that is required to be provided by the shareholder pursuant to Regulation 14A under the Exchange Act. Once the
Corporate Governance and Nominating Committee receives the shareholder recommendation, it may deliver to the prospective candidate a questionnaire that requests additional information about the candidates independence, qualifications, and
other matters, including a possible interview, that would assist the Corporate Governance and Nominating Committee in evaluating the candidate, as well as certain information that must be disclosed about the candidate in our proxy statement or other
regulatory filings if nominated.
The Corporate Governance and Nominating Committee will not evaluate candidates differently based on who
has made the recommendation. The Corporate Governance and Nominating Committee will consider candidates from any reasonable source, in addition to shareholder recommendations. The Corporate Governance and Nominating Committee has the authority under
its charter to hire and pay a fee to consultants or search firms to assist in the process of identifying and evaluating candidates. No such consultants or search firms were used for the slate of director nominees up for election at the Annual
Meeting, and, accordingly, no fees have been paid to consultants or search firms in the 2021 fiscal year.
51
We have not received a director nominee recommendation from any shareholder (or group of
shareholders) that beneficially owns more than five percent of our Common Stock.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our Common Stock
(collectively, Reporting Persons) to file initial reports of ownership and changes in ownership of our Common Stock with the SEC and the NASDAQ Stock Market. Copies of these reports are also required to be delivered to us. See
Security Ownership of Certain Beneficial Owners and Management above for identification of those persons who qualify as Reporting Persons.
We believe, based solely on our review of the copies of such reports submitted on EDGAR and written representations from Reporting Persons,
that during the fiscal year ended December 31, 2021, all Reporting Persons complied with all applicable filing requirements in a timely manner except for six (6) Form 4s for executive officers that were filed late as a result of an
administrative error.
Code of Business Conduct and Ethics
Our Board of Directors adopted and approved a Code of Business Conduct and Ethics. This code applies to all of our employees and our non-employee directors and is posted on our website at www.mgrc.com under the Investors section. The code satisfies the Code of Ethics requirements under the Sarbanes-Oxley Act of 2002 as well as the
Code of Conduct requirements under the Market Place Rules of the NASDAQ Stock Market. The code, among other things, addresses issues relating to conflicts of interests, including internal reporting violations and disclosures, and
compliance with applicable laws, rules, and regulations. The purpose of the code is to promote, among other things, honest and ethical conduct, full, fair, accurate, timely, and understandable public disclosures, compliance with applicable laws or
regulations, and to ensure to the greatest possible extent that our business is conducted in a legal and ethical manner. Any waivers or approvals granted under this code with respect to our executive officers and directors may be granted only by the
Board of Directors. In addition, any waivers or approvals relating to the principal executive officer, the principal financial officer, the principal accounting officer or controller, or any person performing similar functions must also be obtained
from the Audit Committee. Any waivers or approvals to the code with respect to the remainder of the employees may be granted by our Compliance Officer, who is currently Melodie Craft. Any amendments to the code will be promptly disclosed to our
shareholders. Our Audit Committee has also established procedures for (a) the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters; and (b) the confidential,
anonymous submission by our employees of concerns regarding questionable accounting or auditing matters.
Corporate Governance Guidelines
Our Board of Directors adopted and approved a set of Corporate Governance Guidelines. The guidelines set forth the practices our Board follows
with respect to, among other things, the composition of the Board and Board committees, director responsibilities, director continuing education, and performance evaluation of the Board. The guidelines are posted on our website at www.mgrc.com under
the Investors section.
No Supermajority Vote on Approval of Mergers or Other Business Combinations
Our corporate governance documents do not contain a supermajority standard for the approval of a merger or a business combination. Such
transactions require the affirmative vote of a majority of the outstanding shares.
52
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Grant Thornton LLP has been selected by the Audit Committee to be the Companys independent auditors for the Companys fiscal year
ending December 31, 2022. Under the Sarbanes-Oxley Act of 2002 and the rules of the SEC promulgated thereunder, the Audit Committee is solely responsible for the appointment, compensation, and oversight of the work of our independent auditors
and shareholders are not required to ratify the selection of Grant Thornton LLP. However, we are submitting the selection of Grant Thornton LLP as our independent auditors to our shareholders for ratification as a matter of good corporate practice.
In the event that ratification of this selection of independent auditors is not approved by a majority of the shares of Common Stock entitled to vote at the Annual Meeting via online presence or by proxy, the Audit Committee will review our future
selection of independent auditors. Even if the appointment of Grant Thornton LLP is ratified by our shareholders, the Audit Committee, in its discretion, may direct the appointment of a different independent auditor at any time during the year if
the Audit Committee determines that such a change is in the best interests of the Company and our shareholders.
A representative of Grant
Thornton LLP is expected to be present at the Annual Meeting via online presence. The representative will have an opportunity to make a statement and will be available to respond to appropriate questions.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
Grant Thornton LLP performed
services for the Company in fiscal years 2021 and 2020 related to financial statement audit work, quarterly reviews, and quarterly earnings release reviews. Fees related to services rendered by Grant Thornton LLP for fiscal years 2021 and 2020 were
as follows:
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
Audit Fees(1) |
|
$ |
1,869,669 |
|
|
$ |
1,649,859 |
|
Audit-Related Fees(2) |
|
$ |
44,405 |
|
|
$ |
40,446 |
|
Tax Fees |
|
$ |
0 |
|
|
$ |
0 |
|
All Other Fees |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,914,074 |
|
|
$ |
1,690,305 |
|
|
|
|
|
|
|
|
|
|
(1) |
Audit fees represent fees for the audit of the Companys consolidated financial statements and internal
controls over financial reporting included in our 2021 Annual Report and the review of the Companys consolidated financial statements included in our quarterly reports on Form 10-Q and fees in connection
with statutory audits and regulatory filings or engagements. |
(2) |
Audit-Related Fees include fees associated with obtaining consents in connection with regulatory filings and
audit of the Companys Employee Stock Ownership and 401(k) Plans. |
Audit and Non-Audit
Services Pre-Approval Policy
Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by Grant Thornton LLP, the Companys independent registered public accounting firm, must be approved in advance by the Audit Committee to assure that such services do not impair the
auditors independence from the Company. In April 2004, the Audit Committee adopted an Audit and Non-Audit Services Pre-Approval Policy which sets forth the
procedures and conditions pursuant to which audit and non-audit services to be performed by the independent auditors are to be pre-approved. Pursuant to the policy,
certain services or categories of services described in detail in the policy may be pre-approved generally on an annual basis together with pre-approved maximum fee
53
levels for such services. The services eligible for annual pre-approval consist of audit services, audit-related services, tax services, and other
services. If not pre-approved on an annual basis, proposed services must otherwise be separately approved prior to being performed by the independent auditors. The Audit Committee may also pre-approve particular services on a case-by-case basis. In addition, any services that receive annual
pre-approval but exceed the pre-approved maximum fee level also will require separate approval by the Audit Committee. The Audit Committee may delegate authority to pre-approve audit and non-audit services to any member of the Audit Committee, but may not delegate such authority to management. The Companys independent auditors and
Chief Financial Officer are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with the pre-approval policy and the fees
for the services performed to date. The Audit Committee pre-approved all of the audit, audit-related, tax, and all other services described as Audit Fees in the table above.
Report of the Audit Committee of the Board of Directors
Notwithstanding anything to the contrary set forth in any of the Companys previous filings under the Securities Act or the Exchange
Act that might incorporate future filings, including this Proxy Statement, with the SEC, in whole or in part, the following report shall not be deemed to be incorporated by reference into any such filings, nor shall the following report be deemed to
be incorporated by reference into any future filings under the Securities Act or the Exchange Act, unless specifically stated to be incorporated by reference therein.
The Audit Committee currently has five (5) members, consisting of five (5) independent directors, Smita Conjeevaram, William J.
Dawson, Elizabeth A. Fetter, Bradley M. Shuster, and M. Richard Smith. Mr. Dawson serves as its Chairman. The Companys management is responsible for the Companys internal controls, financial reporting, compliance with laws and
regulations, and ethical business standards. The Companys independent registered public accounting firm, Grant Thornton LLP, is responsible for performing an independent audit of the Companys consolidated financial statements and
internal controls over financial reporting in accordance with generally accepted auditing standards of the Public Company Accounting Oversight Board (PCAOB) (United States) and to issue reports thereon. The Audit Committees
responsibility is to monitor and oversee these processes as well as the independence and performance of the Companys independent registered public accounting firm. However, the members of the Audit Committee are not professionally engaged in
the practice of accounting or auditing and are not experts in the fields of accounting or auditing. They rely, without independent verification, on the information provided to them and on the representations made by management and the independent
auditors.
The Audit Committee hereby reports as follows:
1. |
The Audit Committee has reviewed and discussed the audited consolidated financial statements for the year ended
December 31, 2021, and audit of internal controls over financial reporting as of December 31, 2021, with management. |
2. |
The Audit Committee has discussed with Grant Thornton LLP, the Companys independent registered public
accounting firm, the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. |
3. |
The Audit Committee has received an independence letter from Grant Thornton LLP as required by the standards of
the PCAOB regarding Grant Thorntons communications with the Audit Committee concerning independence and has discussed with Grant Thornton LLP its independence. |
54
4. |
Based on the reviews and discussions referred to in paragraphs (1) through (3) above, the Audit Committee
recommended to the Board of Directors, and the Board of Directors has approved, that the Companys audited consolidated financial statements be included in the 2021 Annual Report that was filed with the SEC on February 23, 2022.
|
Submitted by the Audit Committee:
William J. Dawson, Chair
Smita Conjeevaram
Elizabeth A. Fetter
Bradley M. Shuster
M. Richard Smith
Required
Vote
The affirmative vote of the holders of a majority of the shares of the Companys Common Stock present or represented at the
Annual Meeting and entitled to vote is required to approve the ratification of the selection of Grant Thornton LLP as our independent auditors for the year 2022. Abstentions will have the same effect as a vote against this proposal and broker non-votes, if any, will have no effect on this proposal. Because the ratification of auditors is considered a routine matter for which brokers may vote in the absence of shareholder
direction, there will not be any broker non-votes on this proposal.
THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF GRANT THORNTON LLP.
55
PROPOSAL NO. 3
NON-BINDING, ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANYS
NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) added Section 14A to the Exchange
Act, which requires that we provide our shareholders with the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this Proxy
Statement in accordance with the SECs compensation disclosure rules. At the Companys 2017 Annual Meeting, the Companys shareholders voted to recommend, on an advisory basis, that advisory votes on executive compensation be held
every year. Based on these voting results and consistent with the Companys recommendation, the Board of Directors is holding an advisory vote on the compensation of the Companys named executive officers at the 2022 Annual Meeting.
As described in detail under the heading Executive Compensation and Other InformationCompensation Discussion and
Analysis, our executive compensation program is designed to attract and retain exceptional talent, reward past performance, and establish and reward measurable objectives for future performance. Our primary objective is to align our
executive officers interests with the interests of our shareholders by rewarding the achievement of established goals that contribute to increased long-term shareholder value. Please read the Compensation Discussion and
Analysis in this Proxy Statement for additional details about our executive compensation programs, including information about the fiscal year 2021 compensation of our named executive officers.
As part of designing and implementing the compensation programs for all employees, the Company considers the risks that may be created and
whether any such risks may have an adverse impact on the Company, and whether, overall, the Companys compensation programs are reasonably likely to have a material adverse impact on the Company. In making this determination, the Company
considers the overall mix of compensation for employees as well as the various risk control and mitigation features of our compensation plans, including appropriate performance measures and targets and incentive plan payout maximums.
The Compensation Committee continually reviews the compensation programs applicable to our named executive officers to ensure they achieve the
desired goals of aligning our executive compensation structure with our shareholders interests and current market practices.
A more
complete explanation of these changes is included in the Compensation Discussion and Analysis section of this Proxy Statement.
We are asking our shareholders to indicate their support for our named executive officer compensation as described in this Proxy Statement.
This proposal, commonly known as a say-on-pay proposal, gives our shareholders the opportunity to indicate whether they approve of our named executive
officers compensation. This vote is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers and the philosophy, policies, and practices described in this
Proxy Statement in accordance with the SECs compensation disclosure rules. Accordingly, we will ask our shareholders to vote FOR the following resolution at the Annual Meeting:
RESOLVED, that the Companys shareholders approve, on an advisory basis, the compensation of the named executive officers, as
disclosed in the Companys Proxy Statement for the 2022 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary
Compensation Table, and the other related tables and disclosure.
The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee, or the Board of Directors. The Board of Directors and our Compensation Committee value the opinions of our
56
shareholders and, to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we will consider our shareholders
concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
Required Vote
The affirmative vote of the holders of a majority of the shares of the Companys Common Stock present or represented at the Annual Meeting
and entitled to vote is required to approve, on an advisory basis, the compensation of the Companys named executive officers. Abstentions will have the same effect as a vote against this proposal and broker
non-votes, if any, will have no effect on this proposal.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.
57
OTHER MATTERS
The Board of Directors knows of no other business which will be presented at the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form will be voted in respect thereof in accordance with the judgments of the persons voting the proxies.
By Order of the Board of Directors,
Melodie Craft
Vice President,
Legal Affairs and Risk Management
and Corporate Secretary
April 29, 2022
Livermore, California
58
McGrath RentCorp Using a black ink pen, mark your votes with an X as shown in this example. ☒ Please do not write outside the
designated areas. 2022 Annual Meeting Proxy Card q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A
Proposals The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3. 1. Election of Directors*: *Each to be elected and to serve until the 2023 Annual Meeting of Shareholders or until their successors are
elected and qualified. + For Withhold 01 - Kimberly A. Box ☐ 02 - Smita Conjeevaram ☐ 03 - William J. Dawson ☐ For Withhold 04 - Elizabeth A. Fetter ☐ 05 - Joseph F. Hanna ☐ 06 - Bradley M. Shuster ☐ For Withhold
07 - M. Richard Smith ☐ 08 - Dennis P. Stradford ☐ For Against Abstain 2. To ratify the appointment of Grant Thornton LLP as the independent auditors for the Company for the year ending December 31, 2022. For Against Abstain 3. To
approve, by non-binding advisory vote, the compensation of the Companys named executive officers. B Authorized Signatures This section must be completed for your vote to count. Please date and
sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) Please
print date below. Signature 1 Please keep signature within the box. Signature 2 Please keep signature within the box. 1UPX + 03MV0B
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE. q McGrath RentCorp The Board of Directors solicits this Proxy for the Annual Meeting of Shareholders to be held on Wednesday, June 8, 2022, at 2:00 p.m. (local time) virtually only
at meetnow.global/MVHCUKP. The undersigned hereby constitutes and appoints Melodie Craft and Keith E. Pratt, or each of them, with full power of substitution and revocation, attorneys and proxies of the undersigned at the Annual Meeting of
Shareholders of McGrath RentCorp or any adjournments thereof, and to vote, including the right to cumulate votes (if cumulative voting is required), the shares of Common Stock of McGrath RentCorp registered in the name of the undersigned on the
Record Date for the Annual Meeting. The Board of Directors recommends a vote FOR all the nominees named on the reverse side and FOR Proposals No. 2 and No. 3. The shares represented by this Proxy will be voted as directed on the reverse
side; if no specification is made, the shares will be voted FOR said nominees and proposals. The proxies are authorized to vote in their discretion upon such other business as may properly come before the Annual Meeting to the extent authorized by
Rule 14a-4(c) promulgated by the Securities and Exchange Commission. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders, the Proxy Statement and the 2021 Annual Report
to Shareholders furnished with this Proxy. PLEASE RETURN THIS SIGNED AND DATED PROXY IN THE ACCOMPANYING ADDRESSED ENVELOPE. (Items to be voted appear on reverse side)
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