Compensation
Discussion and Analysis
This
Compensation Discussion and Analysis section provides a detailed description of our compensation philosophy, programs, practices,
and policies used in making compensation decisions with respect to our 2019 Named Executive Officers (“NEOs”). As
of December 29, 2019, our NEOs were:
|
|
|
|
Executive
|
Position
|
|
A.
Patrick Beharelle
|
Chief
Executive Officer
|
|
Derrek
L. Gafford
|
Executive
Vice President and Chief Financial Officer
|
|
James
E. Defebaugh
|
Executive
Vice President, Chief Legal Officer, and Secretary
|
|
Taryn
R. Owen
|
Executive
Vice President, President, PeopleReady(1)
|
|
Carl
R. Schweihs
|
Executive
Vice President, President, PeopleManagement
|
|
(1)
In fiscal 2019, Ms. Owen served as President of PeopleScout. She assumed the role of Executive Vice President, President,
PeopleReady as of December 30, 2019.
Executive Summary
Our
2019 executive compensation reflected a year of managing through a challenging economic environment while making meaningful improvements
in many parts of the Company’s business. The Company maintained revenue at nearly $2.4 billion while returning $39 million
of capital to shareholders in stock repurchases. The Company also continued to make progress on its digital strategy by filling
a job order every nine seconds through its JobStackTM mobile application and improving clients’ recruiting processes
though the AffinixTM platform.
Adjusted
EBITDA is a key financial metric used in our incentive compensation programs for our NEOs and is discussed in more detail
below. The Compensation Committee used a Compensation Adjusted EBITDA, as defined below, for compensation purposes to determine
payouts under the short-term and long-term incentive programs. A key adjustment to the Compensation Adjusted EBITDA was the exclusion
of the effect of acquisition or divestiture activity in order to emphasize the importance of the Company’s organic growth.
|
|
Compensation
Adjusted EBITDA achieved in 2019 was below the threshold level set by the Compensation Committee for the Short-Term Incentive
(“STI”) awards and accordingly our NEOs received no bonus related to the Company Adjusted EBITDA performance component
of the STI plan. In 2017, the Compensation Committee decided to change the Long-Term Incentive (“LTI”) plan’s
target metric from EBITDA growth to 3-year average Return on Equity (“ROE”). Over the 2017-2019 performance period,
average ROE was above the threshold level, but below the target level, set by the Compensation Committee for an award and, as
a result, some of our NEOs earned a modest, below target, award under the LTI plan.
Pay
For Performance Alignment
The
Compensation Committee designs our executive compensation program to appropriately align the interests of the Company’s
management team with shareholders. We generally expect executive compensation payouts to reflect Company and individual performance.
Key pay-for-performance features of our 2019 compensation program included:
|
·
|
Performance-based
equity. In 2019, our equity award mix continued to emphasize performance-based equity, and since 2017 such awards have been
earned based on the Company’s ROE.
|
|
·
|
CEO’s
performance-based compensation. Mr. Beharelle’s STI and performance share unit awards comprised 50% of his total target
compensation plan.
|
|
·
|
Incentive
compensation linked to strategic business plans. The
Company’s long-term business plan emphasizes the continuous growth of EBITDA and return of value to shareholders. The
financial and non-financial goals under the 2019 incentive award programs were linked directly to the annual and long-term strategic
business plans reviewed and approved by the Compensation Committee and the Board.
|
|
·
|
Actual
incentive awards reflect short- and long-term performance. The Company’s actual 2019 Compensation Adjusted EBITDA performance
was below the threshold level for 2019. This performance resulted in no STI payments for the 2019 Company financial performance
component of the STI plan. Company ROE performance for the 2017-2019 performance period did reach the required threshold under
the LTI plan, resulting in a modest number of shares being earned for the 2017-2019 long-term performance share unit award.
|
TrueBlue, Inc. 2020 Proxy Statement P. 33
|
Compensation
Discussion and Analysis
Compensation
Program Summary
Our
compensation program is made up of several components which have a specific purpose and contribute to a well-balanced, competitive
program.
|
Component
|
Form
|
Characteristic
|
Purpose
|
Fixed
|
Base
Salary
|
Cash
|
Paid
Annually
|
An
annually fixed level of pay that reflects the role, scope, and complexity of each NEO’s position relative to the market
and to other NEOs.
|
Performance
|
Short-Term
Incentive
|
Performance
Cash Award
|
Completely
at Risk
|
Individual
performance-based compensation payable only upon achievement of specific individual leadership objectives.
|
Short-Term
Incentive
|
Performance
Cash Award
|
Completely
at Risk
|
Company
performance-based compensation payable only upon achievement of Company-wide or business unit-specific performance metrics.
|
Long-Term
Incentive
|
Performance
Share Units
|
Completely
at risk
|
Company
performance-based compensation that delivers shares of our stock only if the Company meets certain performance metrics over
a multi-year period.
|
Time-Based
|
Long-Term
Incentive
|
Restricted
Shares
|
Time
vested over 3 or 4 years
|
Retention-based
compensation.
|
Fixed
|
Other
|
Health,
welfare, and retirement programs
|
Generally
available
|
NEOs
participate in the same benefit programs that are offered to other highly compensated employees.
|
The
2019 NEO total compensation program incorporated the elements described in the previous table in a manner that emphasized pay
for performance in both short- and long-term incentive elements. As seen in the charts below, a significant portion of each NEO’s
compensation is at risk and dependent on the achievement of challenging annual and long-term performance targets. These charts
reflect the percentages
|
|
|
of
our 2019 CEO and other NEO compensation that represent base salary (“Base Salary”), short-term incentive target (“STI
Target”), performance share unit target (“PSU Target”), and restricted share awards (“RSA”). These
charts show Mr. Beharelle’s compensation plan as CEO and the average of the other NEOs’ compensation plans, excluding
Mr. Schweihs.
|
2019
Target Compensation Mix
CEO
|
|
Other
NEOs Average
|
|
|
|
TrueBlue, Inc. 2020 Proxy Statement P. 34
|
Compensation
Discussion and Analysis
Compensation
Program Objectives
The
Compensation Committee designs our executive compensation program with the goal of achieving the following objectives:
· Attracting
and retaining the key executive talent needed to achieve our long-term business strategies;
· Basing
a significant portion of each NEO’s annual compensation opportunity on both Company and individual performance;
· Establishing
performance targets for incentive compensation that align with both our short- and long-term business strategies;
|
|
|
· Reflecting
the role, scope, and complexity of each NEO’s position relative to other NEOs;
· Balancing
the need to be competitive with our industry peers with our commitment to control costs;
· Motivating
NEOs to create long-term shareholder value; and
· Targeting
total compensation near the median of our peers.
Strong
Governance and Best Pay Practices
Our
executive compensation philosophy is reflected in the programs and practices we embrace and how they align with shareholders’
long-term interests. Below is a summary of these programs and practices.
|
|
What We Do
|
|
|
What We Do Not Do
|
|
|
|
|
|
ü
|
Pay for performance by delivering a significant portion of compensation through performance and equity-based plans
|
|
ü
|
No excessive or guaranteed pay targets. All
potential payouts are capped and tied to measurable targets
|
ü
|
Request annual shareholder advisory say-on-pay
votes
|
|
ü
|
No re-pricing of options or equity grants
|
ü
|
Target total compensation near the median
of relevant peers
|
|
ü
|
No pension benefits
|
ü
|
Maintain robust stock ownership guidelines for all NEOs
|
|
ü
|
No gross-up of excise taxes upon change-in-control
|
ü
|
Engage an independent compensation consultant
|
|
ü
|
No hedging or short sales of Company stock
|
ü
|
Retain double trigger change-in-control agreements
|
|
ü
|
No rewards for excessive risk-taking
|
ü
|
Conduct an annual risk analysis of compensation
programs
|
|
ü
|
No excessive executive perquisites
|
ü
|
Maintain a clawback policy
|
|
ü
|
No cash buyouts of underwater options
|
ü
|
Require minimum vesting period for equity
grants
|
|
|
|
Shareholder
Feedback
The
Company provides shareholders an annual “say-on-pay” advisory vote on its executive compensation program. At our 2019
Annual Meeting of Shareholders, shareholders expressed substantial support for the compensation of our NEOs, with 97% of the votes
cast for approval of the “say-on-pay” advisory vote. The Compensation Committee discussed and considered shareholder
feedback provided directly to management during shareholder engagement activities. The Compensation Committee considered this
shareholder feedback and the results of the 2019 advisory vote in evaluating the Company’s executive compensation programs
and, given the strong level of support expressed by our shareholders, took no specific actions based on that vote. Our next “say-on-pay”
advisory vote, following the vote at the annual meeting, is expected to be at our annual meeting in 2021.
|
|
|
Effective
Risk Management
As
part of its oversight of our compensation program the Compensation Committee regularly reviews our various compensation plans. The Compensation Committee concluded that the plans do not create risks reasonably likely to have a material
adverse effect on the Company and the plans encourage appropriate, but not excessive, levels of risk-taking.
The
2019 STI Plan focused on multiple goals such as EBITDA growth, resource management, leadership development, change management,
and Company profitability, and provided relatively moderate awards for achieving these goals. Another component of the
Company’s balanced compensation approach is the LTI plan, which provides a significant portion of the NEOs’
compensation, which included restricted share awards and performance share unit (“PSU”) awards. The vesting
and performance requirements of these awards provide meaningful alignment with shareholder interests.
|
TrueBlue, Inc. 2020 Proxy Statement P. 35
|
Compensation
Discussion and Analysis
The
Compensation Committee believes the following features of our 2019 compensation program served to mitigate excessive or unnecessary
risk-taking:
Compensation
Risk Mitigation Features
|
Pay
Mix
|
Compensation
is a mix of base salary and short- and long-term incentives providing compensation opportunities measured by a variety of
time horizons to balance our near- and long-term strategic goals.
|
Metrics
|
Short-
and long-term incentives included financial and non-financial metrics or objectives that required substantial performance
on a broad range of significant initiatives and/or sustained financial performance and growth.
|
Caps
|
Annual
non-equity incentives are capped with a maximum limit on the amount that could be earned.
|
Performance
Goals
|
Goals
are approved by our independent directors and take into account our historical performance, current strategic initiatives,
and the expected economic environment.
|
Equity
|
Equity
incentive programs and stock ownership guidelines are designed to align management and shareholder interests by providing
vehicles for executive officers to accumulate and maintain an ownership position in the Company.
|
Risk
Mitigation Policies
|
Clawback
Policy
Stock
Ownership Guidelines
Insider Trading Policy
Anti-hedging
policies
Minimum
vesting periods for restricted shares
|
TrueBlue, Inc. 2020 Proxy Statement P. 36
|
Compensation
Discussion and Analysis
Executive
Compensation Process, Governance, and Philosophy
Compensation
Committee Oversees NEO Compensation
The
Compensation Committee oversees, regularly reviews, and approves compensation programs for our CEO and other NEOs. The
Compensation Committee also reviews and approves corporate goals and objectives relevant to the compensation plans applicable
to the NEOs and, together with the Governance Committee, evaluates the performance of the CEO in light of the corporate
goals and objectives established for the CEO.
In
determining executive compensation plans and setting incentive targets, the Compensation Committee considers its compensation objectives, compensation practices of our peers, the roles and responsibilities of each NEO, and internal pay
equity. The Compensation Committee seeks to align compensation with our current and long-term business strategy and goals.
There is no formal weighting of any of these factors; the Compensation Committee uses its informed judgment in determining
pay targets and amounts. The Compensation Committee reviews and discusses annual pay elements each year. The Compensation
Committee uses the at-target amounts of these key elements to determine the annual at-goal total direct compensation of
our NEOs, which is a useful measure of pay because it reflects the intended aggregate value of those key elements of pay
at the time the pay decision is made. It evaluates other programs as needed based on changes in compensation objectives,
alignment with overall Company direction and business strategy, competitive trends, accounting rules, and changes in
tax and other laws and regulations. Based on a review of these factors and the Compensation Committee’s determinations,
the Board approved our executive compensation program.
Independent
Compensation Consultant
In
2019, the Compensation Committee reaffirmed its consulting relationship with Mercer (US), Inc. (“Mercer”). On an annual
basis, the Committee evaluates the independence of Mercer to ensure
|
|
|
that
no conflicts of interest of any kind exist between Mercer and the Company, including personal or business relationships
between Mercer and the Company, Company directors, Company executive officers, Company stock ownership by Mercer, or engagement
of Mercer by the Company for other material services. However, the Company’s senior vice president of human resources
may engage Mercer, on occasion, to provide compensation market expertise for non-NEO positions. Mercer attends key meetings
of the Compensation Committee and is available to the Compensation Committee as necessary.
Information
provided by Mercer is considered by the Compensation Committee but does not directly determine any of the Company’s
actual compensation arrangements. The Compensation Committee applies its informed judgment when establishing the compensation
elements, targets, and final awards.
Peer
and External Market Data
Our
executive compensation program is customarily reviewed every two (2) years. For executive compensation during 2018 and
2019, this review occurred in September of 2017. For this review, the Compensation Committee retained its own external
independent compensation consultant, Mercer, to provide an in-depth external review of our executive compensation programs compared to a peer group.
The
Committee received a report from Mercer (“2017 Mercer Report”) of external peer group pay practices relating
to base salaries, actual and target STI, LTI, and total compensation. The 2017 Mercer Report was based on information
compiled from both peer group proxy data and published salary surveys compiled by Mercer. The data from this peer group
was combined with national published surveys compiled by Mercer (Mercer: US Global Premium Executive Remuneration Suite)
and Towers Watson (Survey Report on Top Management Compensation). The companies in the peer group were selected because
they were engaged in staffing or outsourced human resources services or they operated in industries with multi-unit
branches on a national basis.
|
The
selected peer group for the 2018-2019 Executive Compensation Program
Kelly Services, Inc.
|
CDI
Corp.
|
Unifirst
Corporation
|
United Rentals, Inc.
|
G&K
Services, Inc.
|
Kforce
Inc.
|
TriNet Group, Inc.
|
Healthcare
Services Group, Inc
|
H&E
Equipment Services, Inc.
|
Volt
Information Sciences, Inc.
|
Insperity,
Inc.
|
AMN
Healthcare Services, Inc.
|
|
On
Assignment, Inc.
|
|
TrueBlue, Inc. 2020 Proxy Statement P. 37
|
Compensation Discussion and Analysis
Based
on the 2017 Mercer Report, the Company’s size relative to the selected peer group is shown below:
Revenue
Peer Group
Market
Capitalization Peer Group
The
2017 Mercer Report found the following with respect to the Company’s executive compensation:
|
·
|
Base
salary was slightly below the median percentile, with variability by position;
|
|
·
|
Short-term
cash incentive targets were at the 25th percentile with variability by position;
|
|
·
|
Target
long-term equity incentive grant value was positioned between the market 25th percentile
and the market median with variability by position;
|
|
·
|
Total
compensation was between the market 25th percentile and market median.
|
Mercer
noted that the relative position of NEO compensation had been impacted by the increased size of the Company since the prior review.
The Company strives for total compensation to approximate the median of the market, and recognized that compensation, on average
or by particular element, was generally below this level for the NEOs. In response, in 2017, the Compensation Committee increased
compensation targets to more closely approximate a target pay position that was in line with the market median and the relative
value of each role within the organization. In the fall of 2019, the Compensation Committee engaged Mercer to conduct an updated
assessment for the NEOs’ compensation in 2020 and beyond.
2019 NEO Compensation
Base
Salaries
We
provide base salary as a means of providing NEOs a stable amount of cash compensation. In alignment with our pay for
performance philosophy, salary represents only a portion (20%
|
for our CEO) of each NEO’s compensation. At the beginning
of 2019, the following changes were made to the base salaries of our NEOs relative to 2018.
|
|
|
|
|
|
|
NEO
|
2018
Base
Salary
|
2019
Base
Salary
|
Percentage
Increase
|
|
A.
Patrick Beharelle
|
$600,000
|
$
700,000
|
16%
|
|
Derrek
L. Gafford
|
$475,000
|
$
475,000
|
—%
|
|
James
E. Defebaugh
|
$400,000
|
$
400,000
|
—%
|
|
Taryn
R. Owen
|
$400,000
|
$
400,000
|
—%
|
|
Carl
R. Schweihs
|
|
$350,000(1)
|
n/a
|
|
(1)
Mr. Schweihs was promoted into his role as EVP, President, PeopleManagement on June 1, 2019 and received a prorated portion
of this base salary during 2019.
Use
of Adjusted EBITDA and Return on Equity for Incentive Plans
The
Compensation Committee set targets for Company and business unit performance under the 2019 Short-Term Incentive Plan based on
the year-over-year growth in Adjusted EBITDA, a non-generally accepted accounting principal measure defined below. For purposes
of the 2019 Short-Term Incentive Plan, consistent with the adjusted EBITDA measure used in our investor presentations, the Compensation
Committee excluded from EBITDA one-time acquisition costs, costs related to Work Opportunity Tax Credit third-party processing
fees, CEO transition fees, workforce reduction costs, amortization
|
|
|
TrueBlue, Inc. 2020 Proxy Statement P. 38
|
Compensation
Discussion and Analysis
of software as a service assets,
one-time costs related to software implementation, and a negative adjustment related to a workers’ compensation
benefit related to a former workers’ compensation carrier (“Adjusted EBITDA”). In addition, in 2019,
the Compensation Committee calculated Adjusted EBITDA for compensation purposes by excluding the impact of acquisitions
and divestitures to reward executives for organic growth of the Company (“Compensation Adjusted EBITDA”).
The Compensation Committee decided that excluding such non-recurring items in assessing management performance more closely
aligned management incentives with shareholder interests.
The
Company used Adjusted EBITDA as a metric in incentive arrangements because Adjusted EBITDA is a key metric reviewed by,
and considered important to, our investors in measuring our performance. In addition, Adjusted EBITDA incentivizes management
to appropriately control costs while increasing revenue.
Beginning
with the 2017 PSU awards, the Compensation Committee changed the performance metric from a three-year cumulative Adjusted
EBITDA target to a three-year average Return on Equity (“ROE”) target. The Compensation Committee made this
change after considering a number of other potential targets and metrics, including stock price, total shareholder
return, earnings per share, and other relative and absolute metrics. The Compensation Committee also considered some of
the limitations of return metrics, such as the impact from alternative uses of capital.
After
consideration, the Compensation Committee selected ROE as the most appropriate performance metric for aligning the NEOs’
interests with the Company’s long-term goals and shareholder interests. The Compensation Committee determined that return
metrics have a high correlation with value creation for shareholders. Among other benefits, maintaining long-term ROE encourages
our NEOs to make business decisions with a view to returning value to shareholders over the long term. For purposes of determining
the potential payout of the 2017 PSU awards, the Compensation Committee used the average ROE over the three-year performance period.
Consistent with
|
|
|
the
Adjusted EBITDA calculation, the adjusted net income calculation for ROE presented to shareholders during the period,
and used for compensation purposes, was adjusted to exclude the effects of certain non-recurring costs and benefits to
more accurately reflect the long-term consistent performance of the Company.
Short-Term
Incentive Plan
The
2019 Short-Term Incentive Plan for Messrs. Beharelle, Gafford, Defebaugh and Schweihs measured and rewarded performance
against two components: (1) individual performance; and (2) Company performance. Ms. Owen’s 2019 Short-Term Incentive
Plan included a third component: business unit performance, for the operational area directly under her control. The
following table shows the performance components (Individual, Company, and Business Unit, as applicable) of the Short-Term
Incentive Plan for 2019. Consistent with the objective that potential compensation reflects the role and responsibilities
of each NEO, the short-term incentive potential varies by NEO to reflect the individual’s market value and role
within the Company.
The
Compensation Committee established, and the Board approved, threshold, target, and maximum potential payouts according
to potential growth results for the Company. Award levels are interpolated between levels beginning at the threshold level
where 25% of the target is awarded, up to the maximum level where 200% of the target is awarded. The short-term non-equity
incentive is completely at-risk, and no cash award will be made unless the individual, Company, or business unit growth
thresholds are met.
For
2019, Mr. Schweihs’s promotion to Executive Vice President (“EVP”) and President of PeopleManagement
was effective June 1, 2019, the Compensation Committee determined Mr. Schweihs’s Short-Term Incentive Award
for 2019 would be prorated between his prior role as Senior Vice President (“SVP”), Strategic Accounts (for
five-twelfths of the year) and EVP, President of PeopleManagement (for seven-twelfths of the year).
|
TrueBlue, Inc. 2020 Proxy Statement P. 39
|
Compensation
Discussion and Analysis
Short-Term
Incentive Plan Opportunity ($)
Executive
|
Individual
Performance
|
Company
Adjusted EBITDA Growth
|
Business
Unit
Adjusted EBITDA Growth
|
Total
Non-Equity Incentive
Opportunity
|
|
Up
to
|
Threshold
(0%)
|
Target
(7.5%)
|
Maximum
(15%)
|
Threshold
(0%)
|
Target
(7.5%)
|
Maximum
(15%)
|
Threshold
|
Target
|
Maximum
|
A.
Patrick Beharelle
|
$350,000
|
$87,500
|
$350,000
|
$700,000
|
—
|
—
|
—
|
$437,500
|
$700,000
|
$1,050,000
|
Derrek
L. Gafford
|
$118,750
|
$59,375
|
$237,500
|
$475,000
|
—
|
—
|
—
|
$178,125
|
$356,250
|
$
593,750
|
James
E. Defebaugh
|
$100,000
|
$40,000
|
$160,000
|
$320,000
|
—
|
—
|
—
|
$140,000
|
$260,000
|
$
420,000
|
Taryn
R. Owen
|
$100,000
|
$10,000
|
$
40,000
|
$
80,000
|
$30,000
|
$120,000
|
$240,000
|
$140,000
|
$260,000
|
$
420,000
|
Carl
Schweihs, EVP
|
$148,750
|
$
6,563
|
$
26,250
|
$
52,500
|
—
|
—
|
—
|
$155,313
|
$175,000
|
$
201,250
|
Carl
Schweihs, SVP
|
$
54,600
|
$13,650
|
$
54,600
|
$109,200
|
—
|
—
|
—
|
$ 68,250
|
$109,200
|
$
163,800
|
2019
Individual Performance
Mr.
Beharelle’s individual performance incentive for 2019 was based on specific performance goals involving his areas
of responsibility including growth, strategic alignment, profit and loss responsibilities, strategic planning, change
leadership, and talent development. At the end of the year, each director, except Mr. Beharelle, independently evaluated
each area of Mr. Beharelle’s performance. The evaluations were aggregated and discussed at the December 2019 meeting
of the Governance Committee. All members of the Compensation Committee were present and participated in this evaluation
discussion. The Governance Committee made its performance evaluation recommendations. The Compensation Committee considered
this recommendation and determined the amount of compensation that was appropriate to reward for this performance, concluding
that Mr. Beharelle performed at a level that entitled him to receive 85% of his individual non-equity incentive, or $297,500.
The
individual performance goals for all other NEOs focused on the following categories: growth, strategic alignment, profit and loss
responsibilities, strategic planning, change leadership, and talent development. Based on Mr. Beharelle’s recommendations,
as reviewed and approved by the Compensation Committee, Mr. Gafford received 100%, Mr. Defebaugh received 100%, Ms. Owen received
90%, and Mr. Schweihs received 100%, of his or her respective individual performance non-equity incentive opportunity.
|
|
|
2019
Company Performance
The
Company’s Adjusted EBITDA growth target for non-equity incentive purposes in 2019 was 7.5% over 2018, with the
threshold set at 0% and maximum set at 15%. In setting the 2019 Short-Term Incentive Plan in late 2018, the Compensation
Committee also determined that the Adjusted EBITDA would be further adjusted for items impacting Company performance, such as
excluding the impact of acquisition and divestiture activities. As a result of these EBITDA adjustments for compensation
purposes, Compensation Adjusted EBITDA was $107.9 million, which was a 15.7% decrease over the prior year, and as a result
the NEOs earned none of their target award for the Company performance incentive opportunity as shown in the table
below.
2019
Business Unit Performance
The
2019 short-term incentive opportunity for Ms. Owen included a component focused on the performance for the specific business
unit under her management. Ms. Owen’s performance for this component was measured on the Adjusted EBITDA growth
for PeopleScout. The 2019 Adjusted EBITDA growth target for Ms. Owen’s business unit was 7.5% over 2018, with the
threshold at 0% and maximum at 15%. Actual growth of PeopleScout’s Adjusted EBITDA was a decrease of 22%, resulting
in no short-term incentive bonus earned by Ms. Owen for business unit performance as shown in the table below.
|
TrueBlue, Inc. 2020 Proxy Statement P. 40
|
Compensation
Discussion and Analysis
Short-Term
Incentive Awards Earned in 2019
The table below provide a summary of
the 2019 short-term incentive awards actually earned.
Non-Equity
Dollars Earned
|
|
Total
Target
|
NEO
|
Individual
|
Company
|
Business
|
Total
Non-Equity
Incentive Earned
|
|
Non-Equity
Incentive Potential
|
A.
Patrick Beharelle
|
$297,500
|
—
|
—
|
$297,500
|
|
$700,000
|
Derrek
L. Gafford
|
$118,750
|
—
|
—
|
$118,750
|
vs
|
$356,250
|
James
E. Defebaugh
|
$100,000
|
—
|
—
|
$100,000
|
|
$260,000
|
Taryn
R. Owen
|
$
90,000
|
—
|
—
|
$
90,000
|
|
$260,000
|
Carl
R. Schweihs, EVP
|
$148,750
|
—
|
—
|
$148,750
|
|
$175,000
|
Carl
R. Schweihs, SVP
|
$
54,600
|
—
|
—
|
$
54,600
|
|
$109,200
|
Long-Term
Equity Incentive Plan
The
Long-Term Equity Incentive Plan was designed to align the interests of the NEOs with those of the shareholders. The combination
of vesting requirements and stock ownership guidelines is intended to promote retention and a long-term commitment
to the Company. As in previous years, the 2019 annual equity awards for NEOs were comprised of a combination of restricted
shares and performance share units. The Compensation Committee chose these two forms of equity after considering a number
of other forms of long-term equity. The Compensation Committee reaffirmed its conclusion that performance share units
more directly link pay to specific long-term performance goals than stock options and restricted stock by putting pay
at risk and are based on meeting performance
|
|
|
goals
that are aligned with the Company’s business objectives. The value of the long-term equity awards are allocated
equally between performance share units and restricted share grants to provide an appropriate balance between long-term
performance incentives and retention goals.
Our
pay for performance philosophy and the meaningful goals we apply to our executive compensation program are evidenced by
our payouts over the past six (6) years for our performance share unit awards as shown in the table on the following page.
Our NEOs, including our CEO, did not receive a performance share unit payout for two (2) of the last six (6) years and
performance share units make up a large portion of the annual target compensation of our NEOs.
|
TrueBlue, Inc. 2020 Proxy Statement P. 41
|
Compensation
Discussion and Analysis
Historic
Performance Share Unit Award Payouts
Performance
Share Unit Award Period
As
disclosed in prior proxy statements, PSU awards spanning 2015-2017 and 2016-2018 were not earned since we did not meet the minimum
performance conditions under the plan approved by the Compensation Committee.
|
|
|
The
following table shows the total target awards granted in 2019 as a percentage of base salary and the mix between restricted shares
and performance share units for our CEO and each of the other NEOs.
|
NEO
|
Total
Equity
as
a % of Base Salary
|
Restricted
Shares
as a % of Base Salary
|
Performance
Share Units
as a % of Base Salary
|
A.
Patrick Beharelle
|
300%
|
150%
|
150%
|
Derrek
L. Gafford
|
150%
|
75%
|
75%
|
James
E. Defebaugh
|
100%
|
50%
|
50%
|
Taryn
R. Owen
|
100%
|
50%
|
50%
|
Carl
R. Schweihs, EVP(1)
|
40%
|
40%
|
—%
|
Carl
R. Schweihs, SVP(2)
|
30%
|
30%
|
—%
|
(1)
Mr. Schweihs received a promotional equity award upon his promotion to EVP, President of PeopleManagement as reflected in the
table.
(2)
The annual equity award made to Mr. Schweihs in early 2019, while he was serving as SVP, was based on the SVP target
percentages shown in this table. Future annual equity awards will be based on his EVP role at 50%.
TrueBlue, Inc. 2020 Proxy Statement P. 42
|
Compensation
Discussion and Analysis
2019
Award of Restricted Shares
The
number of restricted shares granted was calculated by dividing the target dollar value of the award by the average closing
price of the Company’s stock during the sixty (60) trading days preceding and including the grant date. The annual
grant date is the second trading day after the announcement of fourth quarter and year-end results, which, for the 2019
grant, was February 11, 2019. One-third of the annual restricted shares vest each year on the anniversary date of the
award.
2019
Award of Performance Share Units
Beginning
with the 2017 performance share unit awards, the Compensation Committee changed the performance metric from a three-year
cumulative Adjusted EBITDA target to a three-year average Return on Equity (“ROE”) target. The Compensation
Committee made this change after considering a number of other potential targets and metrics, including stock price, total
shareholder return, earnings per share, and other relative and absolute metrics. The Compensation Committee also considered
some of the limitations of return metrics such as the impact from alternative uses of capital. The Compensation Committee
engaged both outside counsel and Mercer to provide insight and feedback for the various options.
After
consideration, the Compensation Committee selected ROE as the most appropriate performance metric for aligning executives with
the Company’s long-term goals and shareholder interests. Materials reviewed by the Committee determined that return metrics
have a high correlation with value creation for shareholders. Among other benefits, maintaining long-term
|
|
|
ROE
encourages our NEOs to make business decisions with a view to returning value to shareholders over the long term.
Performance
shares vest based on the Company’s three-year cumulative average ROE. ROE is defined as adjusted net income, as
described above, divided by average equity, which is measured quarterly during the period. The three-year cumulative
ROE is compared to the growth target to determine achievement. The target ROE is set at the beginning of the performance
period. The performance share unit award is completely at-risk, and no performance share units will vest at any level
unless the threshold three-year ROE target is met.
The
target number of performance share units awarded was calculated by dividing the target dollar value of the award by 80%
of the average closing price of the Company’s stock during the sixty (60) trading days preceding and including the
grant date. This 20% discount was recommended by Mercer to take into account the contingent nature of the units and the
risk of forfeiture. Performance share units will vest and be converted into Common Stock only if the established targets
are met at the completion of the three-year performance period.
The
Compensation Committee established, and the Board approved, threshold, target, and maximum vesting rates according to
potential growth results for the Company. Award levels will be interpolated between levels beginning at the 50% threshold
level up to the 150% maximum level. The number of performance share units earned at the end of the three-year award period
will be determined by the average ROE during the performance period as shown by the table below.
|
|
|
Performance
Target
|
%
of Target Shares Awarded
|
3-Year
Average Return on Equity
|
Maximum
|
18%
|
150%
|
Target
|
14%
|
100%
|
Threshold
|
10%
|
50%
|
2019
Promotion Awards
On
July 1, 2019, Mr. Schweihs received a grant of restricted shares valued at $140,000, or 40% of his base salary as an award for
his promotion to EVP, President of PeopleManagement. The number of shares granted for this award was calculated by dividing the
target dollar value of the award by the average closing price of the Company’s stock during the sixty (60) trading days
preceding and including the grant date. This promotional award will vest ratably over four (4) years.
|
|
|
2017
Performance Share Unit Award Payment Determination (2017–2019 Performance Period)
For
the 2017 performance share unit award, Messrs. Beharelle, Gafford, and Defebaugh and Ms. Owen were awarded performance
shares as a component of their total long-term equity award. During the 2017-2019 performance period the Company realized
an average ROE of 14.1% which was above the threshold average ROE of 13% and below the target average ROE of 16%, resulting
in 68.2% of the target number of performance share units being converted to shares and vesting.
|
TrueBlue, Inc. 2020 Proxy Statement P. 43
|
Compensation
Discussion and Analysis
Other Compensation Elements
Nonqualified
Deferred Compensation Plan
The
NEOs, on the same basis as our other highly compensated employees, as defined in Internal Revenue Service (“IRS”)
regulations, are entitled to participate in the Deferred Compensation Plan. The NEOs are not entitled to participate
in the Company’s 401(k) plan. The Company’s Deferred Compensation Plan allows participants to maintain their
balances in the Deferred Compensation Plan upon termination of employment if a participant has attained the age of sixty-five
(65) years or attained the age of forty (40) years and achieved five (5) years of credited service.
Under
the Deferred Compensation Plan, eligible employees may defer up to 75% of base salary and up to 100% of amounts received
under the Short-Term Incentive Plan. The Deferred Compensation Plan also includes in-service accounts that allow distribution
of contributions during employment and installment payments for distributions (up to ten (10) years) for additional flexibility
for tax purposes and retirement planning. Under the Deferred Compensation Plan, the Company can match employee contributions
at double the rate matched under the Company’s 401(k) plan and such matching funds will be immediately vested.
In 2019, the match was 50% of contributions to the plan up to $19,000. Details of amounts actually contributed to each
NEOs’ plans for 2019 deferrals are provided in the Nonqualified Deferred Compensation Table in the Executive Compensation
Tables section. Under the Deferred Compensation Plan, the Company can also make additional contributions with different
vesting schedules for retention purposes, but no additional contributions were made during 2019.
Although
we currently invest deferred amounts in separate investment funds managed by third parties, we are not required to do
so. All deferred amounts are subject to the risk of loss in the event we become insolvent. The Deferred Compensation
Plan is administered by a benefits committee consisting of employees, including NEOs, who are eligible to participate
on the same basis as other eligible employees.
The
Compensation Committee believes the Deferred Compensation Plan is necessary as a competitive, meaningful retirement
benefit for those employees who are eligible to participate, which includes the NEOs, and does not impose any significant
risk to or burden on the Company.
Employee
Stock Purchase Plan
The
NEOs, on the same basis as other employees, are entitled to participate in the Company Employee Stock Purchase Plan. This plan
allows NEOs to contribute up to 10% of their earnings toward the monthly purchase of Common Stock. The employee’s purchase
price is 85% of the lesser of the fair market value of the shares on either the first day or the last day of each month.
|
|
|
Employment
Agreements
The
Company has entered into employment agreements with each of the NEOs, under which each NEO may be entitled to payments
upon termination of employment under the circumstances described below under “Post-Employment Payments.”
The Compensation Committee believes that the termination payments under the employment agreements are necessary to attract
and retain high caliber executives in a competitive labor market and to motivate them to contribute to our short- and
long-term success for the benefit of our shareholders. The Compensation Committee designed the termination payments, which
are competitive with our compensation peer group and general industry practices, to achieve a balance between these objectives
and the potential impact on shareholders. The major provisions intended to achieve this balance generally include the
following:
· The
termination benefits are payable only if the NEO’s employment is terminated without cause or if the NEO terminates his or her employment with good reason other than death or disability.
· Cash
severance payments are limited to separation payments at a rate equal to the NEO’s base salary for eighteen (18)
months for Mr. Beharelle and twelve (12) months for the other NEOs. In addition, under their employment agreement or
incentive plan terms, the NEOs would receive a prorated short-term incentive subject to the performance conditions set by the
Compensation Committee.
· Equity
awards vest at separation, or at the completion of a performance period, as if the NEO continued to be employed during
the applicable severance period.
· The
separation benefits are conditioned upon the execution by the NEOs of a release of claims against the Company, and continued
compliance with non-competition and other covenants made by the NEOs.
Change-in-Control
Agreements
The
Company has entered into change-in-control agreements with certain executive officers, including all NEOs, which were
approved by all the independent directors. These agreements are described in greater detail under “Post-Employment
Payments” below. The change-in-control agreements are intended to protect the interests of our shareholders by
providing short- term security for the executives in the event management and the Board are presented with a business
combination or other opportunity that is determined to be in the best interest of our shareholders. The Compensation
Committee designed the change-in-control agreements to achieve a balance between the benefits of providing executives
with security and the potential impact on the shareholders. The major provisions intended to achieve this balance include:
|
TrueBlue, Inc. 2020 Proxy Statement P. 44
|
Compensation
Discussion and Analysis
· The change-in-control agreements
require a “double trigger,” i.e., both a change-in-control and either a termination without cause by the
Company or a termination for good reason by the executive.
· The
basic benefit is limited to an amount equal to two (2) times (three (3) times in the case of the CEO) the sum of (i) the
executive’s annual base salary rate in effect for the year in which the termination occurs, and (ii) the
executive’s short-term incentive target award, in addition to the immediate vesting of outstanding, unvested equity
awards.
· If
the “parachute” amount payable would trigger an excise tax under Section 4999 of the Internal Revenue Code,
then payments will be cut back so as not to trigger the excise tax if doing so will result in a greater net after the
payment to the executive (sometimes called a “best-net” cutback).
· The
agreements do not include an obligation to pay a “gross up” in the event excise taxes are payable.
· The
agreements include restrictive covenants covering non-competition, non-solicitation, non-disparagement, and confidentiality.
|
|
|
Retirement
Provisions for Short- and Long-Term Incentives
We
expect our NEOs to supplement their retirement income through our Short- and Long-Term Incentive Plans. Consistent with
this policy, the Compensation Committee approved the following retirement provisions for the treatment of short-term incentive
and outstanding long-term awards:
· Retirement
treatment will apply if the NEO has achieved: (a) at least ten (10) years of service; and (b) at least age fifty- five
(55).
· Awards
will be prorated and paid as follows:
· Short-Term
Incentive: the current year’s
award will be prorated based on the days worked during the fiscal year and be paid after the end of the year based on
actual performance results;
· Restricted
Stock: at the time of retirement, a
prorated number of shares that would normally vest at the next scheduled vesting date will be vested based on days worked
since the last vesting date; and
· Performance
Share Units: awards will be prorated
based on the number of days worked during the performance period and become vested after the end of the performance
period based on actual performance results.
|
Additional Policies
Stock
Ownership Guidelines
During
2019, the following stock ownership guidelines applied to the NEOs based on a multiple of annual restricted share grants.
NEO
|
Multiple
of Annual
Restricted Stock Grant
|
Effective
Multiple
of 2019 Salary
|
A.
Patrick Beharelle
|
4x
|
6.00
|
Derrek
L. Gafford
|
3x
|
2.25
|
James
E. Defebaugh
|
3x
|
1.50
|
Taryn
R. Owen
|
3x
|
1.50
|
Carl
Schweihs(1)
|
3x
|
.75
|
(1)
This information reflects Mr. Schweihs’s 2019 salary as EVP, President of PeopleManagement.
TrueBlue, Inc. 2020 Proxy Statement P. 45
|
Compensation
Discussion and Analysis
The
Compensation Committee has established stock ownership guidelines for executive officers as follows: a multiple of four (4)
times the annual restricted stock grant for the CEO and a multiple of three (3) times the annual restricted stock grant for
executive vice presidents.
NEOs
are expected to achieve their targets within five (5) years of becoming subject to the ownership guidelines. As of the
date of this proxy, all NEOs met these guidelines or were within the five (5) year period and on track to meet these guidelines.
The
ownership guidelines recognize the significant range of equity awards each NEO is eligible to receive annually, while
continuing to require a substantial personal commitment to the Company’s long-term financial performance. The
guidelines may be satisfied by shares owned outright (regardless of whether acquired through a Company plan or other acquisition),
unvested restricted shares, or shares held in the NEO’s account under our employee stock purchase plan. Unvested
performance share units may not be used to satisfy the stock ownership guidelines. Compliance with the guidelines is reviewed
on an ongoing basis. NEOs who have not satisfied the applicable guidelines after becoming subject to them are encouraged
to retain 50% of the net amount of their shares (after applicable taxes) on each vesting date for their restricted stock
awards.
Clawback
Policy
Our
Clawback Policy applies to all current and former NEOs and certain other executives (including the chief accounting officer)
who receive incentive-based compensation. Under this policy, the Company may seek to recover the incentive compensation
awarded or paid where: (i) the incentive compensation was calculated based wholly or in part upon the achievement of certain
financial results that were subsequently the subject of a restatement; (ii) in the Compensation Committee’s view,
the executive engaged in fraud or illegal conduct that materially contributed to or caused the restatement; and (iii)
a lower payment would have been made to the executive based upon the restated financial results. The Compensation Committee
retains discretion regarding the application of the policy and may determine not to seek recovery from an executive if
it determines that to do so would be unreasonable or that it is not in the best interest of the Company and its shareholders.
Insider
Trading and Anti-Hedging Policy
Under
the Company’s Insider Trading Policy, all directors and NEOs are prohibited from hedging the economic interest in our securities
that they hold. In addition, we prohibit Company
|
|
|
personnel,
including the NEOs, from engaging in any short- term, speculative securities transactions, including purchasing Company
securities on margin, engaging in short sales, buying or selling put or call options, and trading in options (other than
those granted by the Company).
Tax
Considerations
As
one of the factors in the review of compensation matters, the Committee considers the anticipated tax treatment to the
Company. Section 162(m) of the Internal Revenue Code limits our ability to deduct compensation over $1 million paid to
certain NEOs. Under the tax rules in effect before 2018, compensation that qualified as “performance-based” under
Section 162(m) was deductible without regard to this $1 million limit. In 2017 and prior years, the Compensation Committee
designated short-term incentive awards and performance share awards that were intended to qualify for this exception.
However, the Tax Cuts and Jobs Act of 2017 (“Tax Act”), which became effective on January 1, 2018, eliminated
this performance-based compensation exception beginning January 1, 2018, subject to a special rule that
“grandfathers” certain awards and arrangements that were in effect on or before November 2, 2017. As a result,
compensation structured by the Compensation Committee in 2017 and prior years with the intent of qualifying as
performance-based under Section 162(m) that is paid on or after January 1, 2018 may not be fully deductible, depending on the
application of the special grandfathering rule. Also, from and after January 1, 2018, compensation awards in excess of $1
million to our NEOs, generally, will not be deductible.
While
the 2017 Tax Act will likely limit the deductibility of compensation paid to our NEOs, the Compensation Committee, consistent
with its past practice, will continue to design compensation programs that are intended to be in the best long-term interest
of the Company and our shareholders, with deductibility of compensation being one of a variety of factors considered.
Pension
Benefits
The
Company does not maintain a defined benefit pension plan or supplemental pension plan.
|
TrueBlue, Inc. 2020 Proxy Statement P. 46
|
Executive
Compensation Tables
Summary Compensation Table
The
following table shows all compensation paid by the Company in fiscal 2017, 2018, and 2019 to our Chief Executive Officer (“CEO”),
Chief Financial Officer (“CFO”), and the other three most highly paid executive officers, with the exception of Ms.
Owen and Mr. Schweihs. Ms. Owen and Mr. Schweihs were first determined to be one of the three most highly paid executive officers
in 2018 and 2019, respectively, so compensation is reported for only the years they were NEOs. The individuals listed in the following
tables are the “named executive officers” or “NEOs” referred to in this proxy statement.
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)(1)
|
Non-Equity
Incentive Plan
Compensation
($)(2)
|
All
Other
Compensation
($)
|
Total
($)
|
A.
Patrick Beharelle
Chief
Executive Officer
|
2017
|
$525,000
|
—
|
$
|
952,460
|
|
$
|
118,125
|
|
$
|
71,555
|
|
$1,667,140
|
2018
|
$628,846
|
—
|
$
|
1,415,268
|
|
$
|
380,467
|
|
$
|
70,960
|
|
$2,495,541
|
2019
|
$700,000
|
—
|
$
|
2,323,556
|
|
$
|
297,500
|
|
$
|
70,120
|
(3)
|
$3,391,176
|
Derrek
L. Gafford
Executive Vice President and
Chief Financial Officer
|
2017
|
$450,000
|
—
|
$
|
653,109
|
|
$
|
101,250
|
|
$
|
10,376
|
|
$1,214,735
|
2018
|
$475,000
|
—
|
$
|
1,467,225
|
|
$
|
241,100
|
|
$
|
9,250
|
|
$2,192,575
|
2019
|
$475,000
|
—
|
$
|
788,364
|
|
$
|
118,750
|
|
$
|
9,500
|
(4)
|
$1,391,614
|
James
E. Defebaugh
Executive
Vice President,
Secretary, and Chief Legal Officer
|
2017
|
$380,000
|
—
|
$
|
459,958
|
|
$
|
76,000
|
|
$
|
9,000
|
|
$
924,958
|
2018
|
$400,000
|
—
|
$
|
435,695
|
|
$
|
188,400
|
|
$
|
9,250
|
|
$1,033,345
|
2019
|
$400,000
|
—
|
$
|
442,595
|
|
$
|
100,000
|
|
$
|
9,500
|
(4)
|
$
952,095
|
Taryn
R. Owen
Executive Vice President,
President, PeopleReady
|
2018
|
$400,000
|
—
|
$
|
435,695
|
|
$
|
354,600
|
|
$
|
16,262
|
|
$1,206,557
|
2019
|
$400,000
|
—
|
$
|
442,595
|
|
$
|
90,000
|
|
$
|
30,387
|
(5)
|
$
962,982
|
|
|
|
|
|
|
|
Carl
R. Schweihs
Executive
Vice President,
President, PeopleManagement
|
2019
|
$317,917
|
—
|
$
|
239,810
|
(6)
|
$
|
109,521
|
(7)
|
$
|
9,500(
|
4)
|
$
676,748
|
|
—
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
|
|
|
(1)
The value in this column represents the aggregate amount of both restricted shares and performance share units granted to
NEOs and calculated according to FASB ASC 718. These amounts do not necessarily correspond to the actual value that will be
realized by the NEO, or the manner of calculating the restricted share or performance share unit award used by the
Compensation Committee. For example, in 2019, Mr. Beharelle received a target value of $1,050,000 in restricted shares with the
actual number of shares granted being calculated using the average closing price of our stock during the sixty (60) trading
days preceding and including the grant date, which was approximately $23.66. In 2019, Mr. Beharelle also received a target value
of $1,050,000 in performance share units with the actual number of performance shares being calculated using 80% of the
average closing price of our stock during the sixty (60) trading days preceding and including the grant date, which was
approximately $18.93. The FASB ASC 718 grant date fair value of Mr. Beharelle’s restricted shares was $1,032,699 and
the FASB ASC 718 grant date fair target value of Mr. Beharelle’s performance share units was $1,290,857, which is
included in the table above. Performance share units will vest three (3) years after the grant date if certain long-term
Company performance goals are met, as discussed in more detail in the Compensation Discussion and Analysis section of this
proxy statement. Equity awards are described in more detail in the Compensation Discussion and Analysis section of this proxy
statement and in the Grants of Plan-Based Awards table. For additional information, refer to Note 11 to the Financial
statements and supplementary data found in Item 8 of Part II of our 2019 Form 10-K (listed under Stock-Based Compensation).
The value of the performance share units granted in 2019 is based upon the target outcome of the performance conditions at
the grant date. The maximum value of the 2019 performance share units assuming that the highest level of performance
conditions is achieved, based on the grant date share price of $23.27, is $1,936,297 for Mr. Beharelle, $656,982 for Mr.
Gafford, $368,853 for Mr. Defebaugh, and $368,853 for Ms. Owen. Mr. Schweihs did not receive any performance share units in 2019
as the grants took place prior to his promotion to Executive Vice President.
TrueBlue, Inc. 2020 Proxy Statement P. 47
|
Executive
Compensation Tables
(2)
The amounts set forth in this column for the respective fiscal year were earned during such fiscal year and paid in the early
part of the following fiscal year to each of the NEOs under our Short-Term Incentive Plan. For additional information on
the determination of the amounts related to Non-Equity Incentive Plan Compensation, see the discussion in the Compensation
Discussion and Analysis entitled “Short-Term Incentive Plan.”
(3)
This amount includes the aggregate incremental cost to the Company of personal benefits provided to Mr. Beharelle in 2019 for
certain housing, utilities, internet, insurance, automobile, meal and travel costs, including those related to the Company’s
annual circle of excellence trip, and donations and fundraisers for the benefit of Skills For Chicagoland’s Future in the
amount of $70,120. These personal benefits include $52,200 for housing.
(4) These amounts represent matching funds paid by the Company to participants in the Nonqualified Deferred Compensation Plan.
(5)
This amount includes the aggregate incremental cost to the Company of personal benefits provided to Ms. Owen in 2019 for
certain housing, utilities, internet, and travel costs in the amount of $22,387, and matching funds paid by the Company to
participants in the Nonqualified Deferred Compensation Plan in the amount of $8,000. The personal benefits include $12,872
for housing and utilities, $4,370 for travel to and from our Chicago office, and $4,419 as the cash value of the
Company’s annual circle of excellence trip.
(6)
This amount includes Mr. Schweihs’s one-time promotional award made in connection with his promotion to EVP, President
of PeopleManagement. The promotional award was a restricted stock award valued at $140,000. The award will vest ratably over
four (4) years.
(7)
This amount includes five-twelfths of Mr. Schweihs’s non-equity short-term incentive award as SVP, $22,750, and
seven-twelfths of his short-term incentive award as EVP, $86,771. For additional information on the determination of the
amounts related to Non-Equity Incentive Plan Compensation, see the discussion in the Compensation Discussion and Analysis
entitled “Short-Term Incentive Plan.”
TrueBlue, Inc. 2020 Proxy Statement P. 48
|
Executive
Compensation Tables
Grants of Plan-Based Awards
Name/Type
of Award
|
Grant
Date
|
Action
Date(1)
|
Estimated
Possible Payouts Under
Non-Equity Incentive Plan Awards(2)
|
Estimated
Future
Payouts Under Equity Incentive
Plan Awards(3)
|
All
other stock
awards:
number of
shares of
stock or
units
(#)(4)
|
Grant
Date
Fair Value
of Equity
Based
Awards(5)
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
|
|
|
|
|
|
|
|
|
|
|
A.
Patrick Beharelle
|
|
|
|
|
|
|
|
|
|
|
Cash
Incentive
|
|
12/13/2018
|
$437,500
|
$700,000
|
$1,050,000
|
_
|
_
|
_
|
_
|
_
|
Restricted
Stock
|
2/11/2019
|
12/13/2018
|
_
|
_
|
_
|
_
|
_
|
_
|
44,379
|
$1,032,699
|
Performance
Share Units
|
2/11/2019
|
12/13/2018
|
_
|
_
|
_
|
27,737
|
55,473
|
83,210
|
_
|
$1,290,857
|
|
|
|
|
|
|
|
|
|
|
|
Derrek
L. Gafford
|
|
|
|
|
|
|
|
|
|
|
Cash
Incentive
|
_
|
12/13/2018
|
$178,125
|
$356,250
|
$593,750
|
_
|
_
|
_
|
_
|
_
|
Restricted
Stock
|
2/11/2019
|
12/13/2018
|
_
|
_
|
_
|
_
|
_
|
_
|
15,057
|
$350,376
|
Performance
Share Units
|
2/11/2019
|
12/13/2018
|
_
|
_
|
_
|
9,411
|
18,822
|
28,233
|
_
|
$437,988
|
|
|
|
|
|
|
|
|
|
|
|
James
E. Defebaugh
|
|
|
|
|
|
|
|
|
|
|
Cash
Incentive
|
_
|
12/13/2018
|
$140,000
|
$260,000
|
$420,000
|
_
|
_
|
_
|
_
|
_
|
Restricted
Stock
|
2/11/2019
|
12/13/2018
|
_
|
_
|
_
|
_
|
_
|
_
|
8,453
|
$196,701
|
Performance
Share Units
|
2/11/2019
|
12/13/2018
|
_
|
_
|
_
|
5,284
|
10,567
|
15,851
|
_
|
$245,894
|
|
|
|
|
|
|
|
|
|
|
|
Taryn
R. Owen
|
|
|
|
|
|
|
|
|
|
|
Cash
Incentive
|
|
12/13/2018
|
$140,000
|
$260,000
|
$420,000
|
_
|
_
|
_
|
_
|
_
|
Restricted
Stock
|
2/11/2019
|
12/13/2018
|
_
|
_
|
_
|
_
|
_
|
_
|
8,453
|
$196,701
|
Performance
Share Units
|
2/11/2019
|
12/13/2018
|
_
|
_
|
_
|
5,284
|
10,567
|
15,851
|
_
|
$245,894
|
|
|
|
|
|
|
|
|
|
|
|
Carl
R. Schweihs
|
|
|
|
|
|
|
|
|
|
|
Cash
Incentive(6)
|
|
12/13/2018
|
$119,036
|
$147,583
|
$185,646
|
_
|
_
|
_
|
_
|
_
|
Restricted
Stock
|
2/11/2019
|
12/13/2018
|
_
|
_
|
_
|
_
|
_
|
_
|
4,616
|
$107,414
|
Restricted
Stock
|
7/1/2019
|
9/12/2019
|
_
|
_
|
_
|
_
|
_
|
_
|
6,051
|
$132,396
|
(1)
This column reflects the date that the Compensation Committee approved the Company performance targets, business unit
performance targets, and individual performance targets and awards pursuant to the Short-Term Incentive Plan, and also set
the Company performance targets for the performance share unit awards under the Long-Term Equity Incentive Plan.
(2)
These columns show what the potential payout for each NEO would have been under the Short-Term Incentive Plan in 2019, if
the threshold, target, or maximum goals were satisfied for all Company performance measures. The amount also reflects the
individual performance goals component of the Short-Term Incentive Plan. The potential payouts were performance-driven and
therefore completely at risk. For actual payouts under the Short-Term Incentive Plan for 2019, please see the Summary
Compensation Table. The business measurements, performance goals, and salary multipliers for determining the payout are
described in the Compensation Discussion and Analysis section. The amounts shown for Mr. Schweihs reflect five-twelfths of
his non-equity short- term incentive plan opportunity as Senior Vice President for Strategic Accounts and seven-twelfths of
his non-equity short-term incentive plan opportunity as Executive Vice President and President of PeopleManagement.
(3)
These columns show the number of performance share units granted in 2019 to the NEOs under the Long-Term Equity Incentive Plan.
The target number of performance share units granted was calculated using the target value for the award which is based on a percentage
of the NEO’s salary. The 2019 performance share units vest three (3) years after the date of grant, if at all. The amounts
shown reflect the potential payout for performance share units for each
TrueBlue, Inc. 2020 Proxy Statement P. 49
|
Executive
Compensation Tables
NEO
under the Long-Term Equity Incentive Plan if the threshold, target, or maximum Company performance goals are satisfied. The performance
goals and award multipliers for determining the potential vesting amounts are described in the Compensation Discussion and Analysis
section. The number of performance share units granted was calculated using the target value for the award (a percentage of the
NEO’s salary) divided by 80% of the average closing price of Company shares during the sixty (60) trading days preceding
and including the grant date, which was $18.93.
(4)
This column shows the number of restricted stock awards granted in 2019 to the NEOs under the Long-Term Equity Incentive
Plan. The target number of restricted shares granted was calculated using the target value for the award which is based on a
percentage of the NEO’s salary. The number of restricted shares granted on February 11, 2019, was calculated using the
average closing price of Company shares during the sixty (60) trading days preceding and including the grant date, which was
$23.66. For these restricted stock awards, 33.33% of each award vests annually over a three (3) year period. This column also
shows the number of restricted stock awards granted in 2019 to Mr. Schweihs on July 1, 2019, which was calculated using the
average closing price of Company shares during the sixty (60) trading days preceding and including the grant date, which was
$23.14. Mr. Schweihs’s July 1, 2019 grant will vest ratably over four (4) years.
(5)
This column shows the grant date fair value of equity awards in accordance with FASB ASC Topic 718. For restricted stock,
grant date fair value was calculated using the closing price of the Company stock on the date of grant. The closing price of
Company stock on February 11, 2019 was $23.27 and on July 1, 2019 was $21.88. For performance share units, the February 11,
2019, grant date fair value was calculated using the closing price of Company stock on the date of grant and the target
number of performance share units. The performance goals and award multipliers for determining the potential vesting amounts
are described in the Compensation Discussion and Analysis section. The amounts shown are consistent with the estimate of
aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic
718, excluding the effect of estimated forfeitures. For additional information on the calculation and valuation of equity
awards, refer to the Compensation Discussion and Analysis section and refer to Note 11 to the Consolidated Financial
Statements found in Item 8 of Part II of our 2019 Form 10-K (listed under Stock-Based Compensation).
(6)
In accordance with the standing Company policy, Mr. Schweihs’s cash incentive as EVP, President of PeopleManagement was
ratified by the Compensation Committee on September 12, 2019 following his promotion. Mr. Schweihs’s targets for his cash
incentive as SVP of Strategic Accounts were approved by the Compensation Committee on December 13, 2018.
TrueBlue, Inc. 2020 Proxy Statement P. 50
|
Executive
Compensation Tables
Outstanding Equity Awards at Fiscal
Year-End
The
following table provides information on the holdings of stock options, restricted stock awards, and performance share units of
the NEOs as of December 29, 2019. This table includes unvested shares of restricted stock and performance share units. The market
value of the restricted stock awards and performance share units is based on the closing market price of the Company’s stock
on December 29, 2019, which was $23.62. For additional information about restricted stock awards and performance share units,
see the description of equity incentive compensation in the Compensation Discussion and Analysis section. Grants that are not
listed in the vesting schedule are 100% vested.
Stock
Awards
|
|
|
|
|
|
|
|
Name
|
Grant
Date
|
Number
of
Shares or Units
of Stock That
Have Not Vested
(#)(1)
|
Market
Value of
Shares or Units of
Stock That Have
Not Vested ($)
|
Equity
Incentive Plan
Awards: Number of
Unearned Shares, Units
or Other Rights That
Have Not Vested (#)(2)
|
Equity
Incentive Plan:
Market Value of
Unearned Shares, Units
or Other Rights
That Have Not Vested ($)
|
A.
Patrick Beharelle
|
2/10/2017
|
19,920
|
$
|
470,510
|
—
|
—
|
2/9/2018
|
12,620
|
$
|
298,084
|
23,663
|
$
|
558,920
|
9/14/2018
|
7,490
|
$
|
176,914
|
—
|
_
|
2/11/2019
|
44,379
|
$
|
1,048,232
|
55,473
|
$
|
1,310,272
|
Derrek
L. Gafford
|
2/10/2017
|
13,660
|
$
|
322,649
|
—
|
—
|
2/9/2018
|
8,564
|
$
|
202,282
|
16,057
|
$
|
379,266
|
9/14/2018
|
25,411
|
$
|
600,208
|
—
|
—
|
2/11/2019
|
15,057
|
$
|
355,646
|
18,822
|
$
|
444,576
|
James
E. Defebaugh
|
2/10/2017
|
9,613
|
$
|
227,059
|
—
|
—
|
2/9/2018
|
4,808
|
$
|
113,565
|
9,015
|
$
|
212,934
|
2/11/2019
|
8,453
|
$
|
199,660
|
10,567
|
$
|
249,593
|
Taryn
R. Owen
|
2/10/2017
|
5,312
|
$
|
125,469
|
—
|
—
|
2/9/2018
|
4,808
|
$
|
113,565
|
9,015
|
$
|
212,934
|
2/11/2019
|
8,453
|
$
|
199,660
|
10,567
|
$
|
249,593
|
Carl
R. Schweihs
|
2/5/2016
|
390
|
$
|
9,212
|
—
|
—
|
2/1/2017
|
2,285
|
$
|
53,972
|
—
|
—
|
2/10/2017
|
1,664
|
$
|
39,304
|
—
|
—
|
2/9/2018
|
2,110
|
$
|
49,838
|
—
|
—
|
2/11/2019
|
4,616
|
$
|
109,030
|
—
|
—
|
7/1/2019
|
6,051
|
$
|
142,925
|
—
|
—
|
(1)
This column includes restricted stock awards as of December 29, 2019, and performance share units that were granted in 2017
and that became determinable as of December 29, 2019, but which had not yet vested. The 2017 performance share unit grant
resulted in 68.2% of the target number of units being earned as of December 29, 2019. For additional information on the
payment determination for performance share units granted in 2017, please see the Compensation Discussion and Analysis
section above. The number of performance share units which will vest is 14,321 for Mr. Beharelle, 9,820 for Mr. Gafford, 6,910
for Mr. Defebaugh, and 3,819 for Ms. Owen. For restricted stock awards, 33.33% of each award vests every year for three (3)
years, except Mr. Beharelle’s
TrueBlue, Inc. 2020 Proxy Statement P. 51
|
Executive
Compensation Tables
September
14, 2018 award, which vests at the rate of 25% each year for four (4) years, Mr. Gafford’s September 14, 2018 award of which
100% vests on September 14, 2020, and all of Mr. Schweihs’s outstanding awards which vest at the rate of 25% each year
for four (4) years.
(2)
This column includes performance share unit awards. The awards vest on or about the second day after the release of our
annual earnings following the performance period, if at all, according to predetermined targets. For additional information on
the vesting schedule and Company performance goals for performance share units granted in 2019, please see the Compensation
Discussion and Analysis section. For performance share unit awards granted in 2018 and 2019, additional information on
performance goals can be found in our prior proxy statements. The February 9, 2018 and February 11, 2019 grants all assume
100% of the award, or the target number of shares, will be earned. The February 10, 2017 grant became determinable as of
December 29, 2019 and is not included in this column.
Stock Vested
The
following table provides information for the NEOs regarding: (i) stock option exercises during 2019, to the extent any occurred,
including the number of shares acquired upon exercise and the value realized; and (ii) the number of shares acquired upon the
vesting of restricted stock awards and performance share units and the value realized before payment of applicable withholding
tax and broker commissions. The value realized represents long-term gain over several years, which is not part of the compensation
awarded in 2019 as reported in the Summary Compensation Table.
Name
|
Stock
Awards
|
Number
of Shares
Acquired on Vesting (#)
|
Value
Realized
on Vesting ($)(1)
|
A.
Patrick Beharelle
|
21,419
|
$482,482
|
Derrek
L. Gafford
|
11,628
|
$265,791
|
James
E. Defebaugh
|
7,574
|
$173,562
|
Taryn
R. Owen
|
7,323
|
$166,599
|
Carl
R. Schweihs
|
4,031
|
$
93,639
|
(1)
The dollar amount realized upon vesting was calculated by multiplying the number of shares of stock by the market value of the
underlying shares on the vesting date. This column includes the vesting of performance share units for the 2016 performance share
unit grant which resulted in zero shares being earned. This column does not include the vesting of the 2017 performance share
units which vested on the second day after the release of our annual earnings. For additional information on the vesting of the
2017 performance share units, please see the Outstanding Equity Awards at Fiscal Year-End section above.
Pension Benefits
The
Company does not maintain a defined benefit pension plan or supplemental pension plan.
TrueBlue, Inc. 2020 Proxy Statement P. 52
|
Executive
Compensation Tables
Nonqualified Deferred Compensation
The
Company maintains a Nonqualified Deferred Compensation Plan that allows certain highly compensated employees, including the NEOs,
to defer portions of their base salary and annual non-equity incentive and thereby defer taxes. The following table provides additional
information about the amounts deferred by our NEOs:
Name
|
Executive
Contributions
in Last FY ($)(1)
|
Registrant
Contributions
in Last FY ($)(2)
|
Aggregate
Earnings (Loss)
in Last FY ($)(3)
|
Aggregate
Withdrawals/
Distributions ($)
|
Aggregate
Balance at Last
FYE ($)
|
A.
Patrick Beharelle
|
—
|
—
|
—
|
—
|
—
|
Derrek
L. Gafford
|
$71,250
|
$9,500
|
$72,899
|
—
|
$644,165
|
James
E. Defebaugh
|
$20,000
|
$9,500
|
$15,647
|
—
|
$213,620
|
Taryn
R. Owen
|
$16,000
|
$8,000
|
$32,765
|
—
|
$172,753
|
Carl
R. Schweihs
|
$42,645
|
$9,500
|
$33,674
|
$28,093
|
$249,946
|
(1)
The amounts contributed to this plan by the Company’s NEOs are set forth in this column and are included in the amounts
shown as “Salary” in the Summary Compensation Table above.
(2)
These amounts were earned as a match to contributions made by the NEO to the Company Nonqualified Deferred Compensation Plan
in 2019 but were paid in early 2020. The Company’s contribution is included in the columns “Registrant
Contributions in Last FY” and “Aggregate Balance at Last FYE.” These amounts are included in the amounts
shown as “All Other Compensation” in the Summary Compensation Table above.
(3)
These amounts were earned, or lost, by the NEO according to investment gains and losses based on the performance of certain
investment choices selected by the participants in the Nonqualified Deferred Compensation Plan. Participants may change their
investment elections at any time under the same rules that apply under the 401(k) plan.
The
participants in the Nonqualified Deferred Compensation Plan may annually elect to defer up to 75% of their salary and up to 100%
of their annual non-equity incentive. Participants are always 100% vested in the elective deferral contributions to the plan.
The amounts deferred into this plan and all earnings remain subject to the claims of the Company’s general creditors until
distributed to the participant. Participants may receive their funds after the termination of their employment or during employment
in the case of an unforeseen emergency, the disability of the participant, or a change-in-control. Participants also have the
option to receive a distribution of deferred funds during employment if such a distribution was established prior to the deferral.
Any Company matching contributions are
|
|
|
discretionary.
Whether a matching contribution will be made for a plan year and the amount of any such match is determined each year
by the Company. Matching funds are immediately vested.
The
deemed rates of return for the earnings options may be positive or negative and thus may result in gains or losses to
a participant’s plan balance. No assets are required to actually be invested in such funds. The deemed investment
options may be changed by the participant periodically throughout the year. For certain key employees, the distribution
election must be made at least six (6) months before the actual payment of the participant’s account balance.
|
TrueBlue, Inc. 2020 Proxy Statement P. 53
|
Post-Employment
Payments
Post-Employment Payments
The
Company has entered into employment agreements and change-in-control agreements with each of the NEOs pursuant to which
each NEO may be entitled to payments upon termination of employment under the circumstances described below. The payments
are subject to the fulfillment of certain conditions, including compliance with a non-competition agreement, which are
also described below. The information below is a summary of certain material provisions of these agreements and does not
attempt to describe all aspects of the agreements. The rights of the parties are governed by the actual agreements and
are in no way modified by the abbreviated summary set forth in this proxy statement.
Following
the description of the agreements, there is a table showing the potential payments the NEOs could have received under
these agreements, assuming their employment with the Company was terminated without cause by the Company or for good reason
by the NEO on December 29, 2019.
Employment
Agreement for A. Patrick Beharelle
Mr.
Beharelle’s employment agreement provides that if the Company terminates his employment without cause, or if Mr.
Beharelle terminates his employment with good reason other than for his death or disability, and he successfully completes
a transition period during which, among other things, he develops a transition plan for the CEO position and assists the
Company in identifying and recruiting a successor CEO, then he will be entitled to the following:
· separation
payments at a rate equal to his base salary at the time of termination for a period of eighteen (18) months;
· payment
of Mr. Beharelle’s then applicable short-term incentive award subject to performance conditions set by the Board
and prorated for the portion of the short-term incentive for the period Mr. Beharelle is actually employed by the Company;
· if
Mr. Beharelle elects to continue group health plan coverage for him and his family under the Consolidated Omnibus Budget Reconciliation
Act of 1985 (“COBRA”), Mr. Beharelle will receive reimbursements for up to eighteen (18) months for the portion of
his COBRA premiums that exceed the amount that he would have incurred in premiums for coverage as an active employee under the
Company’s group health plan; and
|
|
|
· additional
equity vesting as follows: (a) to the extent that Mr. Beharelle’s unvested equity awards are scheduled to vest based
solely on his continued employment within eighteen (18) months
following such termination such portion of the awards will become fully vested on the termination date; and (b) Mr.
Beharelle’s unvested equity awards scheduled to vest based upon attainment of specified performance goals shall vest
after the end of the applicable performance period based on actual performance results, prorated for the portion of the
performance period employed (for which purpose Mr. Beharelle will be deemed to have continued employment for a period of
eighteen (18) months following termination but not beyond the end of the applicable performance period(s)).
The
foregoing separation benefits are conditioned upon the execution by Mr. Beharelle of a release of claims against the Company
and continued compliance by Mr. Beharelle with all covenants with the Company. Pursuant to his employment and non-compete
agreements, Mr. Beharelle’s covenants with the Company include, without limitation, covenants requiring a duty of
loyalty, non-disclosure of confidential information, assignment of inventions, non-competition, and non-solicitation for
eighteen (18) months following his termination. Mr. Beharelle is also party to a non-competition agreement with the Company.
Mr.
Beharelle’s employment agreement, through reference to Mr. Beharelle’s change-in-control agreement, also
provides that if he is deemed to receive an “excess parachute payment” as defined in Section 280G of the Internal
Revenue Code (the “Code”) by reason of his vesting of the unvested equity awards (taking into account any
other compensation paid or deemed paid to him), the amount of such payments or deemed payments shall be reduced or, alternatively,
the provisions of the employment agreement shall not act to vest unvested equity incentive awards to Mr. Beharelle, so
that no such payments or deemed payments shall constitute excess parachute payments. The determination of whether a payment
or deemed payment constitutes an excess parachute payment shall be in the sole discretion of the Board.
Employment
Agreements for Messrs. Defebaugh, Gafford, Schweihs, and Ms. Owen
Messrs.
Defebaugh, Gafford, Schweihs and Ms. Owen are parties to employment agreements and incentive plan terms, which provide that if
the Company terminates the NEO’s employment without cause, or if the NEO terminates his or her employment with good reason
other than for death or disability, then the NEO will be entitled to the following:
|
TrueBlue, Inc. 2020 Proxy Statement P. 54
|
Post-Employment
Payments
· separation
payments at a rate equal to the NEO’s base salary at the time of termination for a period of twelve (12) months;
· payment
of the NEO’s then applicable short-term incentive award subject to performance conditions set by the Board and prorated
for the portion of the period the NEO is actually employed by the Company;
· additional
equity vesting as follows: (a) to the extent that the NEO’s unvested equity awards that are scheduled to vest based
solely on his or her continued employment within twelve (12) months following such termination, such portion of the
awards will become fully vested; and (b) all of the NEO’s unvested equity awards scheduled to vest based on attainment
of specified performance goals shall vest after the end of the applicable performance period based on actual performance
results, prorated for the portion of the performance period employed (for which purpose such NEO will be deemed to have
continued employment for a period of twelve (12) months following termination but not beyond the end of the applicable
performance period(s)).
As
a condition precedent to being entitled to receive the benefits set forth above, the NEO must sign and deliver, and thereafter
not revoke a release of claims against the Company, remain in full compliance with all provisions of the sections of the
employment and non-compete agreement(s) relating to non-disclosure of confidential information and assignment of inventions,
and be and remain in full compliance with the non-competition agreement and any other covenants with the Company entered
into by the NEO. Each NEO is also party to a non-competition agreement with the Company.
In
addition to the provisions described above, the employment agreement for each NEO also provides that, if at the time of
termination of employment the NEO is considered a “specified employee” subject to the required six-month delay in
benefit payments under Section 409A(a)(2)(B)(i) of the Code, then any separation payments that would otherwise have been paid
within the first six (6) months after termination of employment shall instead be paid in a single lump sum on (or within
fifteen (15) days after) the six-month anniversary of such termination of employment and any remaining severance payments
shall be made monthly after such six-month anniversary.
Change-in-Control
Agreements
The
Company has entered into change-in-control agreements with various executive officers, including each of the NEOs. Each change-in-control
agreement by its terms expires each year on December 31st, provided that beginning on January 1st of each subsequent year, the
change-in-control agreements will automatically extend for an additional year, unless either party gives notice of termination
not later than September 30th of the
|
|
|
immediately
preceding year. Because no such notices of termination were provided, the change-in-control agreements were in effect
through December 29, 2019 and were extended through December 27, 2020. If a change-in-control occurs during the term,
the term will expire on the earlier of the third anniversary of the change-in-control or the date of the executive’s
death (such period is referred to as the “Severance Period”).
Change-in-control
means that during the term of the agreements any of the following events occur:
· any
individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) is or becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 33.33% of the combined
voting power of the then-outstanding voting stock of the Company;
· a
majority of the Board ceases to be comprised of incumbent directors; or
· the
consummation of a reorganization, merger, consolidation, plan of liquidation or dissolution, recapitalization or sale,
or other disposition of all or substantially all of the assets of the Company or the acquisition of the stock or assets
of another corporation, or other transaction (each, a “Business Transaction”), and as a result of which
less than 50% of the outstanding voting interests or securities of the surviving or resulting entity immediately after
the Business Transaction are owned in the aggregate by the former shareholders of the Company, as the same shall have
existed immediately prior to such Business Transaction, in substantially the same proportions as their ownership before
such Business Transaction.
The
Company will be required to pay the amounts described in the table below, if following the occurrence of a change-in-control
and during the Severance Period (or within ninety (90) days prior to the date of a change-in-control, if at the request of a
third party who has taken steps reasonably calculated to effect a change-in-control): (i) the Company terminates the
NEO’s employment other than for cause, or as a result of the NEO’s death or permanent disability; or (ii) the NEO
terminates the NEO’s employment for good reason. Each of (i) and (ii) is referred to in the change-in-control agreement
as a “Triggering Termination.” As a condition precedent to receiving any payments and benefits under the
change-in-control agreement, the NEO must execute and not later revoke a waiver and release agreement and be in compliance
with the restrictive covenants and terms of the change-in-control agreement. The material covenants of each NEO in the
change-in-control agreements include a duty of loyalty, non-disclosure, non-use, and protection of confidential information,
non-disparagement, non-competition, and non-solicitation of employees and customers. The non-competition and non-solicitation
provisions apply during the term of the
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TrueBlue, Inc. 2020 Proxy Statement P. 55
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Post-Employment
Payments
change-in-control agreement and for
a period of two (2) years following the termination of employment.
In
the event of a Triggering Termination, subject to the terms of the agreement, the Company is required to pay to the NEO (A)
an amount equal to two (2) times (except in the case of Mr. Beharelle, in which case it shall be three (3) times) the sum of
(i) the NEO’s annual base salary rate in effect for the year in which the termination date occurs, plus (ii) the
NEO’s target non-equity incentive (in an amount equal to the target non-equity incentive immediately prior to the
change-in-control or, if such target shall not have been established or shall be reduced after a change-in-control, the
highest aggregate incentive pay earned in any of the three (3) fiscal years immediately preceding the year in which the
change-in-control occurred), and (B) provide eighteen (18) months of health and welfare benefits. Such amounts shall be
payable as follows: 50% shall be payable within five (5) business days after the termination date and 50% shall be payable in
equal monthly installments over the twenty-four (24) months following the termination date, nevertheless the agreement
provides that the timing of payments may be adjusted if necessary to comply with Section 409A of the Code. The Company will
also provide employee benefits to the NEO comparable to the benefits that the NEO was receiving or entitled to receive
immediately prior to the termination date or will pay a lump sum payment in lieu of the continuation of such benefits, as
described in the change-in-control agreement.
In
addition to the amounts described above, if there is a Triggering Termination, the Company will pay in cash to the NEO
a lump sum amount equal to the sum of (i) any unpaid incentive compensation that has been earned, accrued, allocated,
or awarded to the NEO for any performance period ending prior to a Triggering Termination, plus (ii) the value of any
annual non-equity incentive or long-term incentive pay earned, accrued, allocated, or awarded with respect to the NEO’s
service during the performance period or periods that include the date on which the change-in-control occurred. Furthermore,
if there is a Triggering Termination, all stock options, restricted stock, performance share units, and any other equity
award shall become fully vested as of the date of termination.
For
NEOs other than Mr. Beharelle, notwithstanding any provision of the change-in-control agreement or any other agreement between
the NEO and the Company to the contrary, if any amount or benefit to be paid or provided under the change-in-control agreement
or any other agreement would be a payment that creates an obligation for the NEO to pay excise taxes under Section 280G of the
Code (an “excess parachute payment”), then the payments and benefits to be paid or provided under the change-in-control
agreement and any other agreement will be reduced to the minimum extent necessary
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(but in no event to
less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an excess parachute payment; provided that the foregoing reduction will not be made if such reduction would result in the NEO receiving an after-tax
amount less than 90% of the after-tax amount of the severance payments the NEO would have received under the change-in-control agreement or under any other agreement. In the event that any payment or benefit intended to be provided is required to be reduced pursuant to this provision, the NEO will be entitled to designate the payments and/or benefits to
be so reduced. For Mr. Beharelle, any excess parachute payment will be cut back so as not to trigger the excise tax if
doing so will result in a greater net after tax payment to Mr. Beharelle (“sometimes called a “best-net”
cutback).
In
addition to the foregoing limitation, the change-in-control agreements provide that to the extent that the NEO receives
payments by reason of the NEO’s termination of employment pursuant to any other employment or severance agreement
or employee plan (collectively, “Other Employment Agreements”), the amounts otherwise receivable under the
change-in-control agreement will be reduced by the amounts actually paid pursuant to the Other Employment Agreements,
but not below zero, to avoid duplication of payments so that the total amount payable or value of benefits receivable
under the change-in-control agreement, and under the Other Employment Agreements, is not less than the amounts payable
or value of benefits receivable had such benefits been paid in full under the change-in-control agreement.
Non-Competition
Agreements
Each
of the NEOs have entered into a non-competition agreement with the Company. Each non-competition agreement provides, among
other things, that during the NEO’s employment with the Company and for a period of twenty-four (24) months following
the termination of such employment for any reason, the NEO shall not, directly or indirectly:
· employ
or solicit for employment any Company employee who has been employed by the Company during the six (6) months prior to
the termination of the NEO’s employment or urge any such person to discontinue employment with the Company;
· seek
to employ any individual who has applied for and/ or accepted placement in a job by the Company with a customer, and about
whom the NEO obtained information or with whom the NEO interacted on behalf of the Company;
· solicit
any customer of the Company for the purpose of providing temporary and/or permanent staffing services on behalf of
a competing business;
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TrueBlue, Inc. 2020 Proxy Statement P. 56
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Post-Employment
Payments
· engage
in any conduct intended to induce or urge any customer to discontinue its business relationship with the Company; or
· do
any business with any Company customer in connection with the provision of temporary and/or permanent staffing services.
The
non-competition agreement also provides that during the NEO’s employment with the Company and for a period of twelve
(12) months for Messrs. Defebaugh, Gafford, Schweihs and Ms. Owen, and eighteen (18) months for Mr. Beharelle, following the
termination of such employment, the NEO shall not, directly or indirectly, in any location in which the Company conducts or
plans to conduct business, work for or participate in a business similar to, or that competes with, the business of the
Company. The non-competition agreement also contains, among other things, provisions covering duty of loyalty and
non-disclosure, non-use, and protection of confidential information.
Restricted
Stock and Performance Share Unit Agreements
The
award agreements that govern the restricted stock and performance share unit grants to the NEOs also provide that the restricted
stock and performance share units, as applicable, will become fully vested if after a change of control, the NEO is terminated
without cause or terminates employment for good reason. Performance share units vest in such an event at the target level, provided
that the Compensation Committee shall have the discretion to determine whether the performance goals shall be deemed to have been
performed at the maximum
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level.
For purposes of the restricted stock and performance share unit agreements, “change of control” means the
first day that any one or more of the following conditions shall have been satisfied:
· the
sale, liquidation, or other disposition of all or substantially all of the Company’s assets in one or a series of
related transactions;
· an
acquisition (other than directly from the Company) of any outstanding voting securities by any person, after which such
person has beneficial ownership of 25% or more of the then outstanding voting securities of the Company, other than a
Board approved transaction;
· during
any consecutive twenty-four (24) month period, the individuals who, at the beginning of such period, constitute the Board
cease for any reason other than death to constitute at least a majority of the members of the Board, subject to certain
exceptions; or
· a
merger, consolidation, or reorganization of the Company, as a result of which the shareholders of the Company immediately
prior to such merger, consolidation, or reorganization own, directly or indirectly, immediately following such merger,
consolidation, or reorganization less than 50% of the combined voting power of the outstanding voting securities of the
entity resulting from such merger, consolidation, or reorganization.
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TrueBlue, Inc. 2020 Proxy Statement P. 57
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Post-Employment
Payments
Potential
Payout Upon an Involuntary Termination Without Cause or for Good Reason
The
table below quantifies the potential payouts to each of the NEOs based on his or her salary as of December 29, 2019. The table
shows two alternative scenarios: (i) termination before a change-in-control; and (ii) termination after a change-in-control.
Name(3)
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Potential
Payouts upon Involuntary Termination
by Company without Cause or by NEO for Good
Reason after a Change-in-Control(1)
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Potential
Payouts upon Involuntary Termination
by Company without Cause or by NEO for Good
Reason before a Change-in-Control(2)
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Cash
Payment(4)
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Restricted
Stock &
Performance
Share Vesting(5)(6)
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Continuation
of Health &
Welfare Benefits
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Cash
Payment(7)
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Restricted
Stock
& Performance
Share Vesting(8)(9)
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Continuation
of Health &
Welfare Benefits
|
A.
Patrick Beharelle
|
$4,200,000
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$3,862,933
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$39,430
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$1,347,500
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$2,571,840
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$39,430
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Derrek
L. Gafford
|
$1,662,500
|
$2,304,627
|
$30,197
|
$ 593,750
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$1,744,408
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$ 0
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James
E. Defebaugh
|
$1,320,000
|
$1,002,811
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$39,954
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$ 500,000
|
$
688,310
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$ 0
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Taryn
R. Owen
|
$1,320,000
|
$
901,221
|
$39,954
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$ 490,000
|
$
411,649
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$ 0
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Carl
R. Schweihs
|
$1,050,000
|
$
404,280
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$ 0
|
$ 459,521
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$
135,413
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$ 0
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(1)
Assumes that (a) the change-in-control agreement was effective as of December 29, 2019, (b) a change-in-control occurred on
or before such date, and (c) the NEO was terminated by the Company without cause on such date or the NEO terminated
NEO’s employment for good reason on such date. These amounts reflect the NEOs’ target non-equity short-term
incentive for 2019.
(2)
Assumes that (a) the employment agreement was effective as of December 29, 2019, (b) no change-in-control occurred on or
before such date, and (c) the NEO was terminated by the Company without cause on such date or the NEO terminated NEO’s
employment for good reason on such date. These amounts reflect actual 2019 non-equity short-term incentive
payments.
(3)
As discussed above, the amounts actually payable to the NEOs pursuant to the change-in-control agreement may be subject to reduction
if any amount or benefit to be paid under such agreement or any other agreement would be a payment that creates an obligation
for the NEO to pay excise taxes under Section 280G of the Code. For purposes of Section 280G, the value of the acceleration of
stock options, performance shares, and restricted stock is based on a time-based formula.
(4) These amounts are based on the NEOs’ salary as of 2019 fiscal year-end and the target non-equity short-term incentive for 2019.
(5)
The employment agreements for the NEOs provide for the accelerated vesting of all equity awards upon termination of
employment under the conditions noted in footnote (1) above.
(6)
The amounts shown are calculated by multiplying the number of unvested restricted stock awards and unvested performance share
awards (which are at the actual amount earned for the 2017 award (which was 68.2% of the target) and at the target amount for
the 2018 and 2019 awards) for such NEO with respect to which the vesting would accelerate as a result of termination under the
circumstances multiplied by the closing price of the Company’s stock on December 29, 2019, which was $23.62. Unvested restricted
stock and performance share units are set forth in the Outstanding Equity Awards at Fiscal Year-End table.
(7)
These amounts include the amount earned under the 2019 Short-Term Incentive Plan, which according to the terms of the plan
were payable upon each NEO’s termination of employment under the conditions noted in footnote (2) above.
(8)
The NEOs’ employment agreements provide for the accelerated vesting of those equity awards which would have vested in
the twelve-month period (eighteen-month period for Mr. Beharelle) following a termination of employment under the conditions
noted in footnote (2) above.
(9)
The performance share unit grant agreements provide that, upon termination of employment under the conditions noted in footnote
(2) above, a pro-rata portion of the performance shares vest and are paid out at the end of the performance period based on actual
performance. The amounts shown reflect the actual amount earned for the 2017 award (which was 68.2% of the target) and assumes
vesting at the target level over the performance period for the 2018 and 2019 awards.
TrueBlue, Inc. 2020 Proxy Statement P. 58
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CEO
Pay Ratio
This
section sets forth information concerning the ratio between the annual total compensation of the Company’s median employee
and the annual total compensation of our Chief Executive Officer (“CEO”), Patrick Beharelle.
For
the 2019 calendar year, the annual total compensation of the employee identified as our Company’s median employee was $7,736.
Our CEO’s annual total compensation in 2019 was $3,391,176. Accordingly, for 2019, the CEO pay ratio was estimated to be
438 to 1.
The
pay ratio identified for our Company reflects the fact that the significant majority of our employees are temporary employees
who work at our customers’ job sites, generally on a short-term project basis, and are not typically employed for a full
year. The wages of temporary employees cannot be annualized for the calculation of the CEO Pay Ratio.
To
identify the employee with the median annual total compensation, as well as to determine the annual total compensation of the
median employee, we adopted a variety of methodologies, applied certain exclusions, and made reasonable estimates based on our
payroll and employment records, in a manner consistent with SEC rules.
Our
“Measurement Date” was the second Sunday of October, which was October 13, 2019. On the Measurement Date, our active
U.S. and Canadian employees, excluding the CEO, consisted of 77,479 individuals. Our employee population was comprised primarily
of temporary employees. For our temporary employees, the definition of who was an active employee on the Measurement Date was
anyone who worked during the workweek ending on the Measurement Date. For our staff employees, anyone who was denoted as active
within our human resources systems on the Measurement Date was included in our employee population.
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To
identify the “median employee” from our employee population, we used taxable wages for the full 2019 calendar year.
We did not annualize the salary of any of our staff employees who were employed with the Company for part of the year.
Our
employee population, from which the median employee was identified, included our U.S. and Canadian employees, which make up the
predominate number of employees in the Company. We did not include any of the employees outside the U.S. and Canada as those employees
outside the U.S. and Canada were less than 5% of all employees.
The
Company’s total U.S. employee count in 2019 was 74,937 and the total Canada employee count was 2,543. The total number of
employees outside the U.S. and Canada for 2019 was 1,623. The combined total of all employees worldwide for 2019 was 79,103.
The
employees outside the U.S. and Canada for 2019 were located in the following jurisdictions:
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|
Country
|
Approximate
Number of
Employees
Excluded in 2019
|
|
India
|
1,184
|
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Poland
|
62
|
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Australia
|
110
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United
Kingdom
|
257
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New
Zealand
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8
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Mexico
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2
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TrueBlue, Inc. 2020 Proxy Statement P. 59
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Equity
Compensation Plan Information
Equity Compensation Plan Table
The
following table presents information on the Company’s equity compensation plans as of December 29, 2019:
Plan
category
|
Number
of securities to
be issued upon exercise
of outstanding options,
warrants and rights(1)
|
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 the first column)
|
Equity
compensation plans approved by security holders(2)
|
650,486
|
$23.29
|
3,908,302
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(1) This amount reflects the total number of outstanding nonqualified and incentive stock options, restricted stock units, and performance share units (vesting at the maximum amount) as of the fiscal year end.
(2) Equity
compensation plans approved by security holders include the following:
TrueBlue,
Inc. 2005 Long-Term Equity Incentive Plan (the “2005 Plan”). The 2005 Plan applies to directors, officers,
employees, and consultants of the Company and permits the granting of nonqualified and incentive stock options, restricted
stock, performance share units, restricted stock units, and stock appreciation rights. The total number of shares authorized
under this plan was 7,950,000. No further awards were made pursuant to this plan upon the shareholder approval of the 2016
TrueBlue Omnibus Incentive Plan. Under this 2005 Plan and as of December 29, 2019, there remains 51,941 restricted shares and
restricted stock units outstanding. Outstanding stock options as of the fiscal year end were 27,931 and are included in the
table above.
2016 TrueBlue Omnibus Incentive Plan (the “2016 Plan”). This 2016 Plan applies to directors,
officers, employees and consultants of the Company and permits the granting of nonqualified and incentive stock options,
restricted stock, performance share units, restricted stock units, and stock appreciation rights. Upon adoption, there were
1,542,944 shares authorized for issuance under this plan, reflecting the number of shares that remained available for
issuance under the 2005 Plan. Additionally, the shares underlying outstanding awards under the 2005 Plan that expire or are
terminated, surrendered, or forfeited become available for grant under the 2016 Plan. At the Annual Meeting of Shareholders on
May 9, 2018, an additional 1,800,000 shares were authorized under the 2016 Plan. As of December 29, 2019, the total number of
shares available for future issuance under the 2016 Plan was 3,622,063. There were 1,222,525 restricted shares, restricted
share units, and performance share units outstanding as of December 29, 2019. Outstanding stock options as of the fiscal year
end under this plan were zero (0). All future stock compensation awards will be awarded from this plan.
2010
TrueBlue Employee Stock Purchase Plan. On May 12, 2010, shareholders approved the Company’s 2010 Employee Stock Purchase
Plan. This plan provides an opportunity for regular employees who have met certain service qualifications to purchase shares of
Common Stock through payroll deductions of up to 10% of eligible after-tax compensation. These deductions are used to purchase
shares of Common Stock at 85% of the fair market value of Common Stock as of either the first day or last day of each month, whichever
is less. As of December 29, 2019, there were 286,239 shares available for future issuance under this plan.
TrueBlue, Inc. 2020 Proxy Statement P. 60
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