Our Board of Directors has an Audit Committee, a Compensation Committee, a Corporate Governance Committee and a Compliance Committee.
Audit Committee
Our Audit Committee currently consists of Mr. Lipparelli (Chair), Ms. Dozier and Mr. Marnell. Each current and proposed member of the Audit Committee is an independent director, as defined by the Nasdaq Stock Market listing standards, and meets the independence criteria of Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our Board of Directors has determined that Mr. Lipparelli qualifies as an “audit committee financial expert,” as that term is defined in the rules and regulations established by the SEC.
The Audit Committee operates under an amended and restated written charter adopted by the Board of Directors. The primary duties and responsibilities of the Audit Committee are to (i) serve as an independent and objective party to monitor our financial reporting process and internal control system, (ii) review and appraise the audit performed by our independent auditors, who report directly to the Committee, and (iii) provide an open avenue of communication among the independent auditors, financial and senior management and the Board of Directors. The charter also requires the Audit Committee (or designated members of the Audit Committee) to review and pre-approve the annual engagement letter and the performance of all audit and non-audit accounting services to be performed by our independent registered public accounting firm (independent auditors), other than certain de minimis exceptions permitted by Section 202 of the Sarbanes-Oxley Act of 2002. The Audit Committee also reviews the independence of our independent auditors and is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The responsibilities and activities of the Audit Committee are described in greater detail in the report included in this proxy statement under the caption “Report of the Audit Committee.”
The Audit Committee held four meetings during the year ended December 31, 2020. The Audit Committee also held executive sessions on several occasions during the year with company management not present.
Compensation Committee
Our Compensation Committee currently consists of Mr. Miodunski (Chair), Ms. Dozier and Mr. Wright. Each current and proposed member of the Compensation Committee is an independent director, as defined by the Nasdaq Stock Market listing standards. All members of our Compensation Committee are also “non-employee directors” as defined by Rule 16b-3 under the Exchange Act.
The Compensation Committee operates under a written amended and restated charter adopted by the Board of Directors. The Compensation Committee is responsible for reviewing periodically our compensation plans, philosophy and programs, and overseeing the evaluation and compensation of our executive officers. The Compensation Committee also administers our incentive compensation plans, including our 2015 Incentive Award Plan (the “2015 Plan”). Under the Compensation Committee charter, our Chief Executive Officer has been delegated the authority to grant awards under the Company’s equity compensation plans to persons who are employees of the Company at or below the senior vice president level who are not serving as executive officers of the Company nor deemed to be a “named executive officer” of the Company within the meaning of SEC rules and regulations, provided that no such grant for any one individual may exceed 10,000 shares and all such grants after April 1, 2018 may not exceed 100,000 shares in the aggregate, in each case without the prior approval of the Compensation Committee. Under the 2015 Plan, the Compensation Committee may delegate its duties and responsibilities to subcommittees of our directors and/or officers for awards to certain non-executive employees, subject to certain limitations that may be imposed under applicable law or regulation, including Section 16 of the Exchange Act, and/or stock exchange rules, as applicable.
The Compensation Committee has the authority, to the extent it deems necessary or appropriate, to retain a compensation consultant to assist in the evaluation of executive officer compensation. The Compensation Committee also has the sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee also has the authority, to the extent it deems necessary or appropriate, to retain other advisors. Golden will provide appropriate funding, as determined by the Compensation Committee, for payment of compensation to any consulting firm or other advisors hired by the Compensation Committee.
The Compensation Committee held four meetings during the year ended December 31, 2020. Our Chief Executive Officer does not participate in deliberations concerning, and was not present for the vote on, his compensation arrangements. Additional information regarding the Compensation Committee’s processes and procedures for establishing and overseeing executive compensation is disclosed under the heading “Executive Compensation — Compensation Discussion and Analysis.”
Corporate Governance Committee
Our Corporate Governance Committee currently consists of Mr. Wright (Chair), Mr. Marnell and Mr. Miodunski. Each current and proposed member of the Corporate Governance Committee is an independent director, as defined by the Nasdaq Stock Market listing standards.
The Corporate Governance Committee operates under a written amended and restated charter adopted by the Board of Directors. The primary role of the Corporate Governance Committee is to (i) review and periodically reassess the overall corporate governance guidelines and policies for Golden, (ii) consider and make recommendations to the full Board of Directors concerning the appropriate size, organization, function and needs of the Board of Directors, including establishing criteria for Board of Directors membership and considering, recruiting and recommending candidates (including those recommended by shareholders) to fill new Board of Directors positions, and (iii) annually recommending a slate of nominees to the Board of Directors to be considered for election or re-election at the Company’s annual meeting of shareholders. The Corporate Governance Committee is also responsible for reviewing and evaluating the performance of the Board of Directors, including overseeing the annual self-evaluation process for the Board of Directors and each of our standing committees.
The Corporate Governance Committee will review director candidates and present qualified candidates to the full Board of Directors for nomination. Qualified candidates will be considered without regard to race, color, religion, gender, ancestry, national origin or disability. The Corporate Governance Committee will consider each candidate’s general business and industry experience, his or her ability to act on behalf of shareholders, potential concerns regarding independence or conflicts of interest and other factors relevant in evaluating Board of Directors nominees. Additionally, the Board of Directors will consider whether or not the candidate would be found suitable to be issued a gaming license. This is a requirement of continued Board of Directors membership, as our directors are subject to a variety of regulatory and licensing requirements in the various jurisdictions in which we operate gaming facilities. If any gaming authority with jurisdiction over our business were to find any of our directors unsuitable for licensing or unsuitable to continue having a relationship with us, we would have to sever our relationship with that person. If the Corporate Governance Committee approves a new candidate for further review following an initial screening, the Corporate Governance Committee will establish an interview process for the candidate. Generally, the candidate will meet with the members of the Corporate Governance Committee, along with our Chief Executive Officer, and President and Chief Financial Officer. Contemporaneously with the interview process, the Corporate Governance Committee will conduct a comprehensive conflicts-of-interest assessment of the new candidate. The Corporate Governance Committee will consider reports of the interviews and the conflicts-of-interest assessment to determine whether to recommend the candidate to the full Board of Directors. The Corporate Governance Committee will also take into consideration the candidate’s personal attributes, including, without limitation, personal integrity, loyalty to us and concern for our success and welfare, willingness to apply sound and independent business judgment, awareness of a director’s vital part in good corporate citizenship and image, time available for meetings and consultation on company matters, and willingness to assume fiduciary responsibility.
Recommendations for candidates to be considered for election to the Board of Directors at our annual shareholder meetings may be submitted to the Corporate Governance Committee by our shareholders. Candidates recommended by our shareholders will be considered under the same standards as candidates that are identified by the Corporate Governance Committee. In order to make such a recommendation, a shareholder must submit the recommendation in writing to the Corporate Governance Committee, in care of our Secretary at our corporate office address, at least 120 days prior to the mailing date of the previous year’s Annual Meeting proxy statement. To enable the Committee to evaluate the candidate’s qualifications, shareholder recommendations must include the following information:
•The name and address of the nominating shareholder and of the director candidate;
•A representation that the nominating shareholder is a holder of record of our common stock and entitled to vote at the current year’s Annual Meeting;
•A description of any arrangements or understandings between the nominating shareholder and the director candidate or candidates being recommended pursuant to which the nomination or nominations are to be made by the shareholder;
•A resume or biographical information detailing the educational, professional and other information necessary to determine if the nominee is qualified to hold a Board of Directors position;
•Such other information regarding each nominee proposed by such shareholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had such nominee been nominated by the Board of Directors; and
•The consent of each nominee to serve as a director if so elected.
The Corporate Governance Committee held four meetings during the year ended December 31, 2020.
Compliance Committee
Our Compliance Committee currently consists of: Mr. Lipparelli (Chair) and Mr. Wright (each of whom is a director of Golden), and Charles H. Protell, our President, Chief Financial Officer and Treasurer. In addition, the Nevada Gaming Control Board requires all non-restricted casino licensees in Nevada to include an independent committee member on its Compliance Committee and we therefore have engaged Tom Jingoli, Executive Vice President and Chief Operating Officer for Konami Gaming, Inc., to serve in that role.
The Compliance Committee was formed by the Board of Directors and operates under a written charter adopted by the Board of Directors. Previously, our compliance committee was an administrative committee established and operated by our management in accordance with applicable gaming laws. The primary purpose of the Compliance Committee is to oversee the proper implementation of our Gaming Compliance and Reporting Plan (the “Compliance Plan”) that is required by our order of registration with the Nevada Gaming Commission. Among other things, the role of the Compliance Committee is to: (i) ensure the effective implementation of the Compliance Plan; (ii) review and reassess periodically the adequacy of the Compliance Plan and the applicable reporting system utilized by our corporate compliance officer, and recommend any changes as deemed appropriate; (iii) identify and bring to the attention of the Board of Directors current and emerging corporate gaming and regulatory compliance trends and issues that may affect our business operations, performance, public image or compliance with applicable local, state and federal laws; (iv) provide oversight and periodic review of our regulatory compliance policies, programs and systems; and (v) generally make recommendations to the Board of Directors on gaming and regulatory compliance matters.
The Compliance Committee held four meetings during the year ended December 31, 2020.
Board of Directors’ Role in Risk Oversight
Our Board of Directors has an active role, as a whole and at the committee level, in overseeing management of our exposure to risk. The Board of Directors is regularly updated regarding risks that we face, including those that may impact our financial and operational performance, our credit and liquidity profile and other elements of our strategic plans. The Audit Committee assists our Board of Directors in this function and is charged with oversight of our policies regarding risk assessment and management, including our policies regarding management of financial risk exposure and review of related party transactions. Our other standing committees also have responsibilities with respect to risk oversight. The Compensation Committee is responsible for overseeing the management of risks relating to executive compensation plans and arrangements. The Corporate Governance Committee manages risks associated with the independence of the Board, including considering whether any director nominees have relationships or potential conflicts of interest that could affect their independence. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors is informed of risks we face through reports from our committees and management.
Human Capital Management
Golden is committed to recruiting, developing and retaining a superior workforce. We have a long history and deep cultural commitment to service and authenticity.
Employees
As of December 31, 2020, we had over 6,700 employees, of which approximately 1,800 were covered by various collective bargaining agreements. In response to the COVID-19 pandemic and its disruptive impact on our operations, we made significant reductions to our headcount and, during the period of the mandatory property closures and suspension of our distributed gaming operations, placed over 90% of our team members on furlough status in order to preserve liquidity. We started bringing our team members back from furlough upon re-opening of our properties during the second quarter of 2020 and ended the year with a headcount of over 6,700 employees, which represents over 80% of the pre-pandemic headcount. Further, we have devoted significant attention to the public health orders related to the COVID-19 pandemic in order to protect our team members from potential COVID-19 exposure by implementing new protocols and processes to limit the spread of the virus. Such measures included the use of hand sanitizers and face coverings, enhanced cleaning and disinfecting protocols, temperature checks, testing and tracing and implementation of social distancing measures in restaurants, bars, and other food and beverage outlets, gaming floors, spas and pools, meeting rooms and other back-of-the house areas.
Mission and Values
In 2020, we continued to emphasize our organizational mission and values, as well as our “I CARE” guest service initiative. Our mission is to create authentic entertainment experiences where premium service is delivered without pretension at an exceptional value. This makes the average, everyday working person feel that they belong and that this is “their place.”
Our organizational values are:
•To provide exceptional service
•To be accountable
•To show up with integrity
•To have speed with purpose
Our human capital initiatives reflect our commitment to aligning our workforce with the mission and values of the Company.
Recruitment
In 2020, we offered employment to 2,043 candidates from a total pool of over 22,000 applications. We recruit applicants by utilizing various recruitment platforms and sources in an effort to secure a diverse pool of applicants and ensure sustainability of our talent pipeline. Golden offers referral and retention incentives to remain competitive in a limited labor market.
Team Member Benefits
We engage with a nationally recognized compensation and benefits consulting firm to independently evaluate the effectiveness and competitiveness of our benefits program within the industry. As a diverse organization, we offer our team members several options for annual benefits enrollment, including enrollment by telephone, online or through an app, and we support multi-lingual options. Our comprehensive benefits program provides our team members with the flexibility to choose their preferred medical, dental and vision plans. In addition, we offer telemedicine, flexible spending and health savings accounts, life insurance and a retirement plan that provides an annual discretionary match. We also offer a variety of optional benefits to promote the health and security of our employees and their families, including disability insurance and expanded life insurance coverage, critical illness and accident insurance, legal, identity theft, auto and home insurance, and pet insurance. We view mental health services as a fundamental part of our benefits program and offer a comprehensive suite of related benefits, including online mental health counseling through our team member assistance program. Additionally, we offer extended benefits to employees with disabilities and chronic health conditions, including no cost Medicare and Medicaid assistance programs and prescription savings solutions for team members with chronic health conditions.
Training and Development
In 2020, we expanded our use of online learning tools, internally branded as “GEMS.” While we use the system for a wide variety of trainings, our primary focus in 2020 was safety and compliance, with an emphasis on COVID-19 safety trainings. Overall, we introduced 16 different compliance and safety training modules in 2020, with over 47,000 individual course completions in that learning track.
Diversity and Gender Equity
As of December 31, 2020, our organizational makeup was 50.5% female and 49.5% male, with approximately 41% of management roles held by women. The average rate of pay for female salaried employees fell within 10% of the overall average pay for male employees in the same category in 2020.
As of December 31, 2020, the ethnic distribution of our overall workforce was 52% Caucasian and 48% non-Caucasian (all other races). The breakdown for salaried team members was 72.5% Caucasian and 27.5% non-Caucasian (all other races) with 24.6% of management roles held by non-Caucasian team members.
As of December 31, 2020, 63% of our overall workforce were over the age of 40 and 37% under the age of 40. Of those over the age of 40, 10% were over the age of 65. Individuals over the age of 40 represented 67% of the salaried workforce.
DIRECTOR COMPENSATION
Director Compensation Program
Under our non-employee director compensation program, non-employee members of our Board of Directors receive an annual cash retainer of $60,000 for their service on our Board of Directors, payable in arrears in quarterly installments. Members of the Audit Committee, Compensation Committee, Corporate Governance Committee and Compliance Committee of our Board of Directors receive additional annual cash retainers for such service in the following amounts, also payable in arrears in quarterly installments: $25,000 for the Chairman of the Audit Committee, $12,500 for each other member of the Audit Committee, $20,000 for the Chairman of the Compensation Committee, $10,000 for each other member of the Compensation Committee, $15,000 for the Chairman of the Corporate Governance Committee, $7,500 for each other member of the Corporate Governance Committee, $20,000 for the Chairman of the Compliance Committee, and $10,000 for each other member of the Compliance Committee. In addition, non-employee members of our Board of Directors receive an annual time-based restricted stock unit (“RSU”) award under the 2015 Plan of such number of units as is equal to $162,500 divided by the 20-day trailing average closing price of our common stock for the 20-calendar day period preceding the date of grant. Each annual award vests in full on the first anniversary of the grant date. All such awards vest in full in the event of a “Change in Control” (as defined in the 2015 Plan) or the director’s termination of service due to death or disability. Our average non-employee director compensation structure is set near the peer group median, with a competitive mix of equity and cash. The peer group is the same companies used for our executive compensation study.
Director Stock Ownership Guidelines
Under our Stock Ownership Guidelines, non-employee directors are expected to own Golden common stock with a market value equal to five times the value of the non-employee director’s annual cash retainer (excluding any annual cash retainer for committee membership or chairmanship), which is currently $60,000 per year, for as long as he or she remains a non-employee director. Under the Stock Ownership Guidelines, applicable ownership of common stock includes: shares held of record or beneficially by the non-employee director, by his or her spouse, or by trusts for the benefit of the non-employee director, his or her spouse, or members of his or her immediate family; shares held in a 401(k) or deferred compensation plan for the benefit of the non-employee director; the after-tax value of RSUs held by the non-employee director, whether vested or unvested; the after-tax value of “earned” performance-based shares or performance-based restricted stock units (“PSUs”) held by the non-employee director, whether or vested or unvested; and the after-tax value of vested, in-the-money stock options held by the non-employee director. Each non-employee director is expected to meet the requirements set forth in the Stock Ownership Guidelines by the fifth anniversary of his or her first appointment or election as a non-employee director.
2020 Director Compensation Table
The following table sets forth a summary of the compensation paid to our non-employee directors pursuant to the Company’s compensation policies for the year ended December 31, 2020. Mr. Sartini is not paid any fees or other compensation for services as a member of our Board of Directors.
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Name
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Fees Earned or Paid in Cash
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Stock Awards (1)
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Total
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Lyle A. Berman (2)
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$
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60,000
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$
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224,144
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$
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284,144
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Ann D. Dozier (2)
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85,436
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224,144
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309,580
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Mark A. Lipparelli (2)
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105,000
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224,144
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329,144
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Anthony A. Marnell III (2)
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80,000
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224,144
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304,144
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Robert L. Miodunski (2)
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87,500
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224,144
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311,644
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Terrence L. Wright (2)
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95,119
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224,144
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319,263
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(1)Represents full grant date fair value of the awards granted to the non-employee directors in 2020, as calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 — Stock Compensation. The full grant date fair value is the amount Golden will expense over the awards’ vesting period. The amounts do not reflect the actual amounts that may be realized by the non-employee directors. A discussion of the assumptions used in the valuation of the stock awards may be found in Note 8 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020.
(2)As of December 31, 2020, our non-employee directors held the following outstanding option awards and unvested RSU awards:
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Name
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Shares Underlying Option Awards
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Unvested RSU Awards
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Lyle A. Berman
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50,000
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16,591
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Ann D. Dozier
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—
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16,591
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Mark A. Lipparelli
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36,140
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16,591
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Anthony A. Marnell III
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—
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16,591
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Robert L. Miodunski
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50,000
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16,591
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Terrence L. Wright
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50,000
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16,591
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EXECUTIVE OFFICERS
Biographical information for the executive officers of Golden as of the date of this proxy statement (other than our Chairman of the Board and Chief Executive Officer, Blake L. Sartini, whose biographical information is provided above under “Election of Directors”) is set forth below. Executive officers serve at the discretion of our Board of Directors and until their successors have been duly elected and qualified, unless sooner removed by our Board of Directors. There are no family relationships between our directors and executive officers, other than Blake L. Sartini, II, our Senior Vice President of Distributed Gaming, who is the son of Blake L. Sartini.
Executive Officers:
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Name
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Age
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Position
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Blake L. Sartini
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62
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Chairman of the Board and Chief Executive Officer
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Charles H. Protell
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46
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President, Chief Financial Officer and Treasurer
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Stephen A. Arcana
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56
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Executive Vice President and Chief Operating Officer
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Blake L. Sartini, II
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35
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Senior Vice President of Distributed Gaming
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Thomas E. Haas
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60
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Senior Vice President and Chief Accounting Officer
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Charles H. Protell joined Golden as Executive Vice President, Chief Strategy Officer and Chief Financial Officer in November 2016. He was promoted to President in August 2019. Mr. Protell also serves as Treasurer for the Company. Prior to joining Golden, Mr. Protell served as managing director at Macquarie Capital’s investment banking group since May 2011, and as co-founder and a managing director at REGAL Capital Advisors from January 2009 until its acquisition by Macquarie Capital in May 2011. Prior to co-founding REGAL Capital Advisors, Mr. Protell held various investment banking roles at Credit Suisse, Deutsche Bank and CIBC World Markets. Mr. Protell received a bachelor of science degree in commerce from the University of Virginia.
Stephen A. Arcana joined Golden as Executive Vice President and Chief Operating Officer in July 2015 in connection with the Sartini Gaming merger. Prior to the merger, Mr. Arcana served as the chief operating officer for Golden Gaming from August 2003 to July 2015. From November 1995 to March 2003, Mr. Arcana held several executive positions with Station Casinos, LLC. Prior to joining Station Casinos, LLC, Mr. Arcana held a variety of hotel operations and food and beverage positions over a ten-year period with the Sands Hotel in Atlantic City, New Jersey. Mr. Arcana received a bachelor of science degree in hotel and restaurant management from Widener University School of Hotel and Restaurant Management in Chester, Pennsylvania.
Blake L. Sartini, II joined Golden as Senior Vice President of Distributed Gaming in July 2015 in connection with the Sartini Gaming merger. In his current position, he oversees all distributed gaming operations in Nevada and Montana, as well as the Nevada tavern locations operating under the brand names Sierra Junction, PT’s Pub, PT’s Place, PT’s Gold, PT’s Ranch, Sean Patrick’s, Sierra Gold and SG Bar. From January 2010 until the merger, Mr. Sartini, II served in various roles with Sartini Gaming, including as Vice President of Operations for Golden Route Operations, LLC (“GRO”), a subsidiary of Sartini Gaming, from September 2014, as assistant director for GRO from January 2012 to September 2014, and as a marketing manager from January 2010 to January 2012. Prior to joining Sartini Gaming, Mr. Sartini, II served as senior business associate with the Ultimate Fighting Championship for its international event operations and talent relations in the United Kingdom. Mr. Sartini, II received a bachelor of science degree in business administration from Chapman University in Orange, California.
Thomas E. Haas joined Golden in October 2017 in connection with the acquisition of American Casino & Entertainment Properties LLC (“American”), was appointed as Senior Vice President of Accounting in March 2018, and assumed his current position of Senior Vice President and Chief Accounting Officer in March 2020. Mr. Haas had served as senior vice president of finance and principal accounting officer of American since August 2015, and continued to serve in that role following the American acquisition until his promotion to Senior Vice President of Accounting of Golden in 2018. Mr. Haas joined American in April 2004 as the director of compliance and was promoted to vice president finance in August 2006. Prior to joining American, Mr. Haas held financial and accounting management positions with Mikohn Gaming, Inc. and GES Exposition Services. Mr. Haas started his career with Deloitte & Touche. Mr. Haas earned a bachelor of science in business administration, accounting and finance, degree from the University of Arizona.
OWNERSHIP OF SECURITIES
Security Ownership of Certain Beneficial Owners and Management
The following table contains information about the beneficial ownership of our common stock as of April 1, 2021 for (i) each shareholder known by us to beneficially own more than 5% of our common stock, (ii) each of our directors, (iii) each of our named executive officers, and (iv) all of our directors and named executive officers as a group. The percentage of ownership indicated in the following table is based on 28,462,290 shares of our common stock outstanding on April 1, 2021.
Information on beneficial ownership has been furnished by each director and executive officer, and with respect to beneficial owners of more than 5% of our common stock, by the Schedules 13D and 13G filed with the SEC by them. Beneficial ownership is determined in accordance with the rules of the SEC. Except as indicated by footnote and subject to community property laws where applicable, to our knowledge, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days after April 1, 2021 are deemed outstanding, as well as any shares of common stock that such person has the right to acquire upon the vesting of restricted stock units within 60 days after April 1, 2021, while such shares are not deemed outstanding for purposes of computing the percentage ownership of any other person. Except as otherwise indicated, the mailing address of each shareholder is c/o Golden Entertainment, Inc., 6595 S. Jones Boulevard, Las Vegas, Nevada 89118.
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Name
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Number of Shares
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Percentage
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Directors and named executive officers
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Blake L. Sartini (1)
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7,203,322
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25.3
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%
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Lyle A. Berman (2)
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1,055,455
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3.7
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%
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Blake L. Sartini, II (3)
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1,045,244
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3.7
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%
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Anthony A. Marnell III (4)
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906,970
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3.2
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%
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Charles H. Protell (5)
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470,071
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1.7
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%
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Stephen A. Arcana (6)
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466,659
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1.6
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%
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Sean H. Higgins (7)
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287,362
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1.0
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%
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Robert L. Miodunski (8)
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89,831
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*
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Mark A. Lipparelli (9)
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73,471
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*
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Terrence L. Wright (10)
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67,331
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*
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Thomas E. Haas (11)
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14,352
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*
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Ann D. Dozier (12)
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11,879
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*
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All directors and named executive officers as a group (12 persons)
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11,691,947
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41.1
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%
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Other 5% shareholders
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Nantahala Capital Management, LLC (13)
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2,031,172
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7.1
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%
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* Represents beneficial ownership of less than 1.0% of the outstanding shares of common stock.
(1)Includes (i) 6,172,887 shares of common stock held by The Blake L. Sartini and Delise F. Sartini Family Trust (the “Sartini Trust”), of which Mr. Sartini is a co-trustee, of which 2,100,000 shares of common stock have been pledged as collateral for brokerage or margin accounts for Mr. Sartini. Mr. Sartini shares the power to vote and dispose of such shares with his spouse, Delise F. Sartini, who is also a co-trustee of the Sartini Trust, (ii) options to purchase 904,000 shares of common stock that may be exercised within 60 days of April 1, 2021, and (iii) 126,435 shares of common stock held by Mr. Sartini. Excludes 750,000 shares of common stock held by D’Oro Holdings, LLC (“D’Oro Holdings”), for which the Sartini Trust and Mr. and Mrs. Sartini have disclaimed any beneficial ownership. Blake L. Sartini, II, the adult son of Mr. and Mrs. Sartini, is the sole manager of D’Oro Holdings with sole power to vote and dispose of such shares.
(2)Includes (i) 776,721 shares of common stock held by the Lyle A. Berman Revocable Trust, all of which have been pledged as collateral for brokerage or margin accounts for Mr. Berman, (ii) options to purchase 50,000 shares of common stock that may be exercised within 60 days of April 1, 2021, (iii) 211,403 shares of common stock held by Berman Consulting Corporation, a corporation wholly owned by Mr. Berman, and (iv) 17,331 shares of common stock held by Mr. Berman.
(3)Includes (i) options to purchase 255,000 shares of common stock that may be exercised within 60 days of April 1, 2021, (ii) 40,244 shares of common stock held by Mr. Sartini, II, and (iii) 750,000 shares of common stock held by D’Oro Holdings, of which Mr. Sartini, II is sole manager with sole power to vote and dispose of such shares. Certain family trusts, of which Mr. Sartini, II is the trustee, are the sole members of D’Oro Holdings. Mr. Sartini, II disclaims beneficial ownership of the shares held by D’Oro Holdings except to the extent of his pecuniary interest therein.
(4)Includes (i) 127,946 shares of common stock held by Mr. Marnell, (ii) 651,611 shares of common stock held by the AM3 2012 Trust, of which Mr. Marnell is the co-trustee, and in such capacity holds sole power to vote and dispose of such shares, (iii) 93,418 shares of common stock held by the Alisa Marnell Trust, of which Mr. Marnell is the co-trustee, and in such capacity holds sole power to vote and dispose of such shares, and (iv) 33,995 shares of common stock held by the Lyndy Marnell 2003 Trust, of which Mr. Marnell is the spouse of the trustee. Mr. Marnell disclaims beneficial ownership of the shares held by the AM3 2012 Trust, Alisa Marnell Trust and Lyndy Marnell 2003 Trust.
(5)Includes (i) options to purchase 275,000 shares of common stock that may be exercised within 60 days of April 1, 2021, and (ii) 195,071 shares of common stock held by Mr. Protell.
(6)Includes (i) options to purchase 410,000 shares of common stock that may be exercised within 60 days of April 1, 2021, and (ii) 56,659 shares of common stock held by Mr. Arcana.
(7)Includes (i) options to purchase 207,812 shares of common stock that may be exercised within 60 days of April 1, 2021, and (ii) 79,550 shares of common stock held by Mr. Higgins’ estate.
(8)Includes (i) options to purchase 50,000 shares of common stock that may be exercised within 60 days of April 1, 2021, and (ii) 39,831 shares of common stock held by Mr. Miodunski.
(9)Includes (i) options to purchase 36,140 shares of common stock that may be exercised within 60 days of April 1, 2021, and (ii) 37,331 shares of common stock held by Mr. Lipparelli.
(10)Includes (i) options to purchase 50,000 shares of common stock that may be exercised within 60 days of April 1, 2021, and (ii) 17,331 shares of common stock held by Mr. Wright.
(11)Represents 14,352 shares of common stock held by Mr. Haas.
(12)Represents 11,879 shares of common stock held by Ms. Dozier.
(13)Based solely on information contained in Schedule 13G/A filed with the SEC on February 12, 2021 by Nantahala Capital Management, LLC (“Nantahala”). According to such Schedule, Nantahala, Wilmot B. Harkey and Dan Mack have shared voting and dispositive power over 2,031,172 shares. Nantahala is a registered investment adviser. Mr. Harkey and Mr. Mack are the managing members of Nantahala. The address for Nantahala, Mr. Harkey and Mr. Mack is 130 Main St. 2nd Floor, New Canaan, CT 06840.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Introduction
Golden owns and operates a diversified entertainment platform, consisting of a portfolio of gaming assets that focus on resort casino operations and distributed gaming (including gaming in our branded taverns). We conduct our business through two reportable operating segments: Casinos and Distributed Gaming. In our Casinos segment, we own and operate ten resort casinos, nine in Nevada (including The STRAT Casino, Hotel & SkyPod on the Las Vegas Strip) and one in Maryland. Our Distributed Gaming segment involves the installation, maintenance and operation of slots and amusement devices in non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores in Nevada and Montana, and the operation of branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area.
The information contained in this Compensation Discussion and Analysis (“CD&A”) and the executive compensation disclosures below is provided for the individuals who were our named executive officers for the year ended December 31, 2020, who we refer to collectively as the “NEOs”:
•Blake L. Sartini, Chief Executive Officer and Chairman of the Board of Directors;
•Charles H. Protell, President, Chief Financial Officer and Treasurer;
•Stephen A. Arcana, Executive Vice President and Chief Operating Officer;
•Blake L. Sartini, II, Senior Vice President of Distributed Gaming;
•Sean T. Higgins, former Executive Vice President of Government Affairs; and
•Thomas E. Haas, Senior Vice President and Chief Accounting Officer.
Sean T. Higgins served as our Executive Vice President of Government Affairs until September 2020, at which time his employment with the Company was terminated by reason of his death.
2020 was unprecedented and the most challenging year in our history due to impact of the COVID-19 pandemic on the Company’s business, forcing management to react quickly to protect the Company and shareholder value. Following emergency executive orders issued by the Governors of Nevada, Maryland, and Montana, in the week of March 16, 2020, all of our properties were temporarily closed to the public and our distributed gaming operations at third-party locations were suspended. Our operations resumed at various times during the second and third quarters of 2020 and the reopening process required extraordinary efforts from our senior management team as they worked to ensure our properties and distributed gaming operations reopened safely with implementation of number of protocols intended to protect team members, gaming patrons and guests from potential COVID-19 exposure and in compliance with various regulations across multiple jurisdictions. Our management team’s success in navigating the Company through these challenging times and restoring investor confidence in the Company’s business is reflected in our stock price recovery, which had increased by 460% as of December 31, 2020 from the low on March 23, 2020. Further, as of April 1, 2021, our closing stock price had exceeded its December 31, 2019 and 2020 levels by 37% and 33%, respectively. In addition, to alleviate the impact of the pandemic, Golden implemented various mitigating actions to preserve liquidity, including delaying material capital expenditures, reducing operating expenses and implementing a cost reduction program with respect to discretionary expenditures. The implementation of these actions allowed the Company to create efficiencies and permanently eliminate certain costs to further strengthen the Company and position Golden for success as we emerge from the pandemic.
The disruptions arising from the COVID-19 pandemic had a significant adverse impact on our financial condition and results of operations for the year ended December 31, 2020, which resulted in a thorough review of both financial and operational performance for 2020 as discussed in “2020 Executive Compensation Decisions — Annual Incentive Program — Structure.”
Executive Summary — Golden Executive Compensation Program
The Compensation Committee has designed our compensation programs and practices to drive financial performance and senior management focus on our business strategy. Our compensation programs and practices are intended to reward superior corporate performance and provide long-term incentives to employees in roles critical to our future.
Our Compensation Committee has adopted a number of practices and policies designed for a company our size and the marketplace in which we compete for executive talent, all to create an executive compensation program that places a significant emphasis on “pay-for-performance.” Our Compensation Committee selects and engages its own independent advisor, and engaged Aon to serve as its independent compensation consultant for 2020. The Compensation Committee reviewed external market data and peer group data with its independent consultant, and designed our executive compensation program to link executive pay to Company performance and to shareholder interests, by weighting total target compensation to the achievement of corporate performance metrics and strong stock price performance.
Annual Incentive Bonuses. Our Compensation Committee approved a 2020 performance-based annual incentive program (the “2020 Annual Incentive Program”). Our NEOs’ target incentive opportunities were set consistent with competitive market levels. The 2020 Annual Incentive Program was based on Adjusted EBITDA with payout opportunities ranging from 0% to 200% of target. Based on a comprehensive and rigorous review of both financial and non-financial performance during 2020 as discussed in the “Introduction” section above, the Compensation Committee approved a 92% of target payout for our NEOs. In addition, to conserve our cash position and to align our NEOs with shareholders in a year where plan adjustments were essential to reward our management team for superior operational performance during the pandemic and to further increase the retention and incentive value of such annual incentive payouts, the Compensation Committee approved 2020 payouts in the form of RSUs, vesting over three years, rather than cash.
Long-Term Incentive Awards. Our Compensation Committee approved a 2020 long-term incentive structure for our NEOs consisting of 50% RSUs (vesting over three years in equal installments) and 50% PSUs (earned based on two-year average Adjusted EBITDA performance). Payout opportunities range from 0% to 200% of target. The number of earned shares is then subject to an additional one-year vesting period, with such shares vesting on the third anniversary of the grant date. For additional information, refer to “2020 Executive Compensation Decisions — 2020 Long-Term Equity Incentive Awards” below.
Executive Employment Agreements. We have entered into employment agreements with each of Messrs. Sartini, Protell, Arcana and Sartini, II. These agreements have “double trigger” severance payments that are not owing solely on account of the occurrence of a change in control event, nor do they provide tax gross-ups for “excess parachute payments.” Refer to “Executive Employment Agreements and Equity Award Acceleration” below. Mr. Haas is not a party to an employment agreement.
Stock Ownership Guidelines. Our Compensation Committee maintains Stock Ownership Guidelines applicable to our executive officers and senior vice presidents. Under the Stock Ownership Guidelines, our executive officers and senior vice presidents are expected to own shares of our common stock with a market value as follows:
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Position
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Required Salary Multiple
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Chief Executive Officer
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6x Annual Base Salary
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Chief Financial Officer and Chief Operating Officer
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3x Annual Base Salary
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All Other Executives
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1x Annual Base Salary
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For a description of the Stock Ownership Guidelines, including the treatment of outstanding equity awards under the ownership criteria in the Stock Ownership Guidelines, refer to “Stock Ownership Guidelines” below.
Corporate Governance Highlights
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What We Do (Best Practice)
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What We Don’t Allow
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ü
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Enforce strict insider trading policies and enforce blackout trading periods for executives and directors
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X
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No change-in-control severance multiple in excess of three times salary and target bonus
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ü
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Set meaningful stock ownership guidelines for executives and directors
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X
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No single-trigger or modified single-trigger change-in-control arrangements
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ü
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Disclose performance goals and performance results for our performance-based annual incentive program and our PSUs
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X
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No excise tax gross-ups upon a change in control
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ü
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Set a maximum individual payout limit on our performance-based annual incentive program and our PSUs
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X
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No re-pricing or cash buyout of underwater stock options or stock appreciation rights without shareholder approval
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ü
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In fiscal year 2020, approximately 80% of our Chief Executive Officer’s total pay opportunity was variable “at risk” compensation. Our other NEOs also had on average approximately 72% of their total compensation in variable “at risk” programs.
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X
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No enhanced retirement formulas
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ü
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Maintain severance and change-in-control provisions that are consistent with market practice, including double-trigger requirements for change-in-control protection
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X
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No guaranteed annual or multi-year compensation
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ü
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Retain an independent compensation consultant reporting directly to the Compensation Committee
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X
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No market timing with granting of equity awards
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Executive Compensation Program Objectives
The primary objectives of our executive compensation program are: (i) our executive compensation program should be competitive with compensation paid by companies in the same market in which we compete for executive talent; (ii) our compensation program should align executive compensation with our corporate strategies, business objectives and the interests of our shareholders by rewarding successful execution of our business plan and key corporate objectives; and (iii) the majority of executives’ total compensation should be in the form of variable compensation, comprised of annual cash incentive awards and long-term equity incentive awards, with compensation dependent upon corporate performance results and the creation of long-term shareholder value.
Setting Executive Compensation
Role of the Compensation Committee
The Compensation Committee operates under a written amended and restated charter adopted by the Board of Directors. The Compensation Committee is responsible for reviewing periodically our compensation plans, philosophy and programs, and overseeing the evaluation and compensation of our executive officers. The Compensation Committee also administers our incentive compensation plans.
Our executive compensation program is reviewed annually by the Compensation Committee. In the first quarter of each year, the Compensation Committee reviews the performance of each of our executive officers during the previous year. At this time, the Compensation Committee also reviews our actual corporate performance for the prior year and makes the final annual incentive payment determinations based on such performance and the Compensation Committee’s evaluation of each executive’s individual performance for the prior year. In connection with this annual review, the Compensation Committee also reviews and adjusts, as appropriate, base salaries and annual target bonus levels for the NEOs and reviews and grants long-term
equity incentive awards to the NEOs, in each case based on the Compensation Committee’s performance evaluations, competitive market data provided by its independent compensation consultant, and other factors considered appropriate by the Compensation Committee, including internal pay equity. During the year, the Compensation Committee may also evaluate and make compensation adjustments or grants of additional discretionary bonuses and/or long-term incentive awards to our executives and certain other eligible employees, as and to the extent deemed appropriate by the Compensation Committee. The Compensation Committee is supported by management and its independent compensation consultant, as further described below.
Compensation Determination Process
The Compensation Committee determines each element of an executive’s initial compensation package within the framework of the objectives of its executive compensation program based on numerous factors, including:
•The individual’s particular background, track record and circumstances, including training and prior relevant work experience;
•The individual’s role with us and the compensation paid to similar persons in the peer companies represented in the compensation data that the Compensation Committee reviews;
•The demand for individuals with the specific expertise and experience of the executive;
•Internal equity among the executive group;
•Competitive market data for the role;
•Performance goals and other expectations for the position; and
•Uniqueness of industry skills.
In general, the terms of our executive employment agreements are initially negotiated by management and legal counsel for the Company. The agreements for executives over whose compensation the Compensation Committee has authority are presented to the Compensation Committee for its consideration and approval.
During the review and approval process for the employment agreements for executives under its purview, and during its annual review of executive compensation, the Compensation Committee considers the appropriate amounts for each component of compensation and the compensation design appropriate for the individual executive. We seek to achieve an appropriate mix between equity incentive awards and cash payments in order to meet our objectives. In determining each element of compensation for any given year, the Compensation Committee considers and determines each element individually and then reviews the resulting total compensation and determines whether it is reasonable and competitive.
Role of Management
The Compensation Committee relies on input and recommendations of our Chief Executive Officer when evaluating factors relative to the compensation of the NEOs. Our Chief Executive Officer provides the Compensation Committee with his assessment of the performance of these individuals and his perspective on the factors described above in developing his recommendations for their compensation, including salary adjustments, cash bonuses and equity incentives. The Compensation Committee discusses our Chief Executive Officer’s recommendations, reviews competitive market data from our independent consultant, and then approves or modifies the recommendations in collaboration with the Chief Executive Officer.
Our Chief Executive Officer’s compensation is determined solely by the Compensation Committee, which approves any adjustments to his base salary, cash bonus or equity incentives from year to year. The Compensation Committee reviews the Chief Executive Officer’s performance for the year and competitive market data from our independent consultant, and makes determinations regarding his compensation independently and without him present. As required by the Nasdaq listing standards, the Chief Executive Officer does not participate in deliberations concerning, or vote on, his compensation arrangements.
In addition to recommendations put forth by our Chief Executive Officer, other members of our executive team are involved in the compensation process by assembling data to present to the Compensation Committee. Other members of our executive management team also may attend portions of the Compensation Committee meetings from time to time.
Role of the Independent Compensation Consultant
For 2020, the Compensation Committee engaged Aon, an independent compensation consultant, to provide independent executive compensation advisory services, including establishing an appropriate peer group for setting 2020 compensation and conducting a 2020 annual total compensation study for executive and key manager positions. Aon did not provide any other
services to us in 2020 beyond its engagement as an advisor to the Compensation Committee on executive and director compensation matters. After review and consultation with Aon and management, the Compensation Committee determined that Aon was independent and that there was no conflict of interest resulting from retaining Aon during the year ended December 31, 2020. In reaching these conclusions, the Compensation Committee considered the factors set forth in Exchange Act Rule 10C-1 and Nasdaq listing standards.
Peer Companies and Competitive Market Data
The Compensation Committee annually approves a peer group to be used for comparative market data as well as executive compensation program design. The peer group is constructed with input from the Compensation Committee’s independent compensation consultant and management, and is ultimately approved by the Compensation Committee after review. In late 2019, the Compensation Committee worked with Aon to assess the Company’s peer group and approved an updated peer group for use by the Compensation Committee for purposes of determining 2020 compensation. The peer group approved by the Compensation Committee in late 2019 for the NEOs consisted of 10 companies in the gaming and hospitality industries. The Compensation Committee used this peer group consisting of the companies presented in the table below in connection with its evaluation of competitive target total compensation opportunities for executive officers in early 2020:
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Company
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Ticker
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Boyd Gaming Corporation
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BYD
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Cedar Fair, L.P.
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FUN
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Choice Hotels International, Inc.
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CHH
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Churchill Downs Incorporated
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CHDN
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Caesars Entertainment, Inc.
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CZR
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The Marcus Corporation
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MCS
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Monarch Casino & Resort, Inc.
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MCRI
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Penn National Gaming, Inc.
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PENN
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Red Rock Resorts, Inc.
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RRR
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Vail Resorts, Inc.
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MTN
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The parameters for determining the appropriate peer group annually are a combination of the following:
•Gaming, hotel, and leisure companies;
•Revenues of approximately 0.4x to 3x Golden’s annual revenues;
•Companies using Golden as a peer company;
•Peer companies of the peer companies; and
•Companies Golden competes with for management talent and business.
Peer group disclosure is supplemented with survey market data for selected roles, where broader U.S. market comparisons are relevant. We believe the review of both peer group and survey data provides an appropriate comprehensive market overview for determining compensation adjustments. With respect to the survey data presented to the Compensation Committee, the identities of the individual companies included in the survey were not provided to the Compensation Committee, and the Compensation Committee did not refer to individual compensation information for such companies.
The Committee uses competitive compensation data from the annual total compensation study of peer companies and surveys to inform decisions about overall compensation opportunities and specific compensation elements. Additionally, the Committee uses multiple reference points when establishing targeted compensation levels. The Committee does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies or the broader United States market. Instead, the Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as Company, business and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning.
The allocation of an executive’s target total cash compensation and his annual long-term incentive awards may vary from year to year. However, the Compensation Committee believes that all executive officers should have a significant amount of their total compensation package in the form of performance-based incentive compensation (annual cash bonus incentives) and long-term incentive compensation (long-term equity-based awards).
The compensation levels of the NEOs reflect to a significant degree the varying roles and responsibilities of our executives. As a result of the Compensation Committee’s assessment of Mr. Sartini’s roles and responsibilities within our company, there is a significant compensation differential between him and the other NEOs.
Key Elements of Executive Compensation Program
The three key elements of our executive compensation program are: (i) Base Salary, providing a market-based level of salary for performance of an executive’s primary responsibilities; (ii) Annual Incentive Program, providing annual cash incentives and creating a direct link between executive compensation and short-term company performance; and (iii) Long-Term Equity Incentives, focusing executives on the enhancement of long-term shareholder value, encouraging equity ownership and providing retention incentives to key executive talent. All of these elements of compensation are taken into account when compensation decisions are made by the Compensation Committee.
2020 Executive Compensation Decisions
Base Salary
In 2020, the base salaries of Messrs. Sartini, Protell, Arcana, Sartini, II, Higgins, and Haas remained unchanged from 2019 levels and were as follows:
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NEO
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2019 Base Salary
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2020 Base Salary
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Blake L. Sartini
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$
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1,000,000
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$
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1,000,000
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Charles H. Protell
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750,000
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750,000
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Stephen A. Arcana
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600,000
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600,000
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Blake L. Sartini, II
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425,000
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425,000
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Sean H. Higgins
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450,000
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450,000
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Thomas E. Haas
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250,000
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250,000
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|
Any future adjustments to base salary for our NEOs will be reflective of factors such as the scope of their responsibilities, background, track record, training and experience, as well as competitive external market positioning and the overall market demand for such executives. As with total executive compensation, we intend that executive base salaries should be competitive with the range of salaries for executives in similar positions and with similar responsibilities. An executive’s base salary will be evaluated together with components of the executive’s other compensation to ensure that the executive’s target and actual total compensation are consistent with our overall compensation philosophy.
Annual Incentive Program — Structure
Under Golden’s 2020 Annual Incentive Program, each NEO’s annual bonus is generally tied to corporate goals established at the beginning of each fiscal year by the Compensation Committee, and if there is more than one corporate performance goal, with the relative weightings between those goals also approved by the Compensation Committee. A portion of an NEO’s annual bonus may also be determined in the discretion of the Compensation Committee based on the participant’s individual performance and such other factors as the Compensation Committee deems appropriate. A participant must generally remain employed through the date of payment of his or her annual bonus under the annual incentive program in order to remain eligible to receive such bonus.
The 2020 Annual Incentive Program provided annual bonus opportunities for the NEOs and other employees designated as participants by the Compensation Committee. The methodology for determining annual bonuses under the 2020 Annual Incentive Program was designed to motivate and reward participants for their contributions to Golden, based on Adjusted EBITDA performance. Target bonuses as a percent of base salary under the 2020 Annual Incentive Program for the NEOs were as follows:
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NEO
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Target
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Blake L. Sartini
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125
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%
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Charles H. Protell
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100
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%
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Stephen A. Arcana
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100
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%
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Blake L. Sartini, II
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50
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%
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Sean H. Higgins (1)
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65
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%
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Thomas E. Haas
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35
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%
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(1) Mr. Higgins did not receive a bonus under our 2020 Annual Incentive Program due to considerations discussed in “Introduction” above.
The corporate financial metric for purposes of the 2020 Annual Incentive Program was Adjusted EBITDA. We use Adjusted EBITDA because it is an objective and quantifiable measurement of the Company’s financial performance. It provides meaningful historical comparisons, is an appropriate and consistent measurement within our industry, and is the primary driver of enhanced total shareholder return. For purposes of the 2020 Annual Incentive Program, “Adjusted EBITDA” means the Company’s consolidated net income for 2020, plus interest expense, federal, state, local and foreign income taxes (net of any federal, state, local and foreign income tax credits), depreciation and amortization expense, stock-based compensation expense, any fees and expenses related to completed or proposed acquisitions or dispositions or any amendments to the Company’s credit facilities or any loan documents thereunder, pre-opening losses, charges and expenses relating to the opening of new locations operated, or to be operated, by the Company or any subsidiary, any loss on disposal of assets, executive severance and sign-on bonuses, class action litigation expenses, and any non-recurring, non-cash or extraordinary charges reducing consolidated net income, including impairments and other losses; and minus any gain on disposal of assets increasing consolidated net income, any non-recurring or extraordinary gains or charges increasing consolidated net income, any net benefit from federal, state, local and foreign income taxes increasing consolidated net income, and interest income and non-cash gains increasing such consolidated net income. Adjusted EBITDA was calculated excluding the cost of awards payable under the 2020 Annual Incentive Program. For a discussion of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income for fiscal year 2020 and fiscal year 2019, refer to page 30 of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 12, 2021.
Threshold, target, and maximum performance levels for Adjusted EBITDA and corresponding payout opportunities were approved by the Compensation Committee at the beginning of 2020, prior to the COVID-19 pandemic. The following table summarizes the approved 2020 performance and payout schedule:
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Performance Level
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Performance Requirement
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Adjusted EBITDA Achievement (in millions)
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Payout as a % of Target
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Below Threshold
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Below 85% of target
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Below $169.7
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—%
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Threshold
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85% of target
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$169.7
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50%
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Target
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100% of target
|
|
$199.6
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100%
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Maximum
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115% of target
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$229.5
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200%
|
Due to the COVID-19 pandemic and the impacts on our business as described in the “Introduction” above, 2020 actual Adjusted EBITDA financial results were below threshold.
During 2020, the Compensation Committee thoroughly reviewed management’s financial and operational performance related to the pandemic. The Compensation Committee considered the fact that fiscal year 2020 was exceptionally challenging given the impact of COVID-19 on our financial condition and results of operations. In determining how to address 2020 annual incentive compensation, the Compensation Committee decided it was appropriate to bifurcate the fiscal year into two components:
•“Open” months: The Compensation Committee determined there were approximately seven months in which our properties were generally open for business, although with health and regulatory restrictions on our operations. For these months, the financial performance of our business was compared to the original threshold, target, and maximum Adjusted EBITDA requirements, as included in the original approved annual financial plan.
•“Closed” months: The Compensation Committee determined there were approximately five months in which our operations were, in effect, “closed” with COVID-19 issues negatively impacting our business operations in an extraordinary fashion. For these months, management’s operational performance was assessed in terms of positioning the business for success following the pandemic.
As part of their 2020 performance assessment, the Compensation Committee’s underlying decision parameters with regard to determining earned amounts, if any, were:
•Must be representative of 2020 financial and operational performance;
•Must align with the shareholder experience;
•Must not exceed target opportunities; and
•Must not exceed any prior year’s best performance level.
The following table summarizes the Compensation Committee’s bifurcated 2020 performance assessment:
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Performance Component
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Adjusted EBITDA
Target (in millions)
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Adjusted EBITDA
Actual (in millions)
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Adjusted
Performance (%)
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Adjusted
Payout (%) (1)
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“Open” Months
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$
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116.4
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$
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119.9
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103.0
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%
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“Closed” Months
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83.2
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74.9
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90.0
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Total
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$
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199.6
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$
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194.8
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97.6
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%
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92.0
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%
|
(1) To determine the adjusted performance levels, the financial component included approximately seven “open” months of adjusted performance, and approximately five “closed” months of adjusted performance. Based on this adjusted calculation, the final payout was determined to be 92% of target.
The Compensation Committee’s operational assessment at 92% payout is based on the following management team’s accomplishments for 2020:
•Navigated increasing and changing health and regulatory requirements;
•Closed and then reopened casino properties and distributed gaming operations throughout 2020 across multiple jurisdictions;
•Preserved cash liquidity, minimized operating cash needs, negotiated payment relief in contractual obligations without raising debt or equity capital;
•Managed significant short-term fluctuations in employee benefits, furloughs, rehiring, COVID-19 testing and various staffing levels across platform;
•After reopening, even with health and regulatory restrictions, third quarter margin improvements generated more Adjusted EBITDA than pre-COVID-19 operating performance; and
•Stock price recovery and expansion.
To conserve the Company’s cash position, enhance executive retention, and align management with our shareholders in an extraordinary year, and pursuant to its authority under the annual incentive program, the Compensation Committee approved payment in the form of RSUs (instead of cash) with a three-year ratable vesting period. The earned cash incentive value for each NEO was converted into a number of RSUs based on the closing price per share of our common stock ($29.00) on the grant date (March 12, 2021). The RSUs were granted on the same terms as the other 2021 RSU awards granted to the NEOs, as further described below under “Long-Term Equity Incentives.” The final 2020 annual incentive amounts and the corresponding RSUs granted to the NEOs in satisfaction of their 2020 annual incentives are reflected in the “Summary Compensation Table” and related footnotes below.
Long-Term Equity Incentives
Compensation through the annual grants of equity awards under the 2015 Plan is intended to align executives’ and shareholders’ long-term interests by creating a direct link between a portion of executive compensation and increases in the price of our common stock. As is the case when the amounts of base salary and annual incentives are determined, a review of all elements of compensation is conducted by the Compensation Committee when determining equity awards to ensure that total compensation conforms to our overall compensation philosophy and objectives, as described above.
2020 Long-Term Equity Incentive Awards
The Compensation Committee approved the long-term incentive awards for the NEOs in 2020. Specifically, the Compensation Committee awarded 50% of each executive’s target long-term incentive value in the form of RSUs and 50% of such value in the form of PSUs for a “target” number of shares.
The RSUs will vest over three years in equal installments on each anniversary of the date of grant. For information about the accelerated vesting provisions that apply to these awards under the employment agreements with the NEOs, refer to “Executive Employment Agreements and Equity Awards Acceleration” below.
The PSUs that will be eligible to vest will be determined based on the Company’s attainment of performance goals set by the Compensation Committee for each of 2020 and 2021. The percentage achievement for each year relative to the performance objective for such year will be averaged at the end of the two-year period and applied to the “target” number of PSUs granted to each executive officer. The Compensation Committee believes that setting performance goals for one year periods will allow the Compensation Committee to set challenging targets that better reflect the Committee’s expectations and any changes in the Company’s business from year to year, and will minimize the potential risk of either windfall payouts or retention issues that could be associated with setting less precise performance goals that cover a full two-year period. In addition, the final value delivered is highly dependent on sustained stock price performance over three years. The PSUs will be earned based on the following methodology:
•The performance goals for purposes of the PSUs will be the same as those that are set by the Compensation Committee for purposes of the Company’s annual incentive program, and the Adjusted EBITDA objectives for 2020 for purposes of the PSUs were the same as those discussed above in connection with the 2020 Annual Incentive Program. Earned shares will be dependent on the Company’s two-year average performance as a percent of target.
•At “threshold” performance, 50% of the “target” number of PSUs will be earned, at “target” performance, 100% of the “target” number of PSUs will be earned, and at “maximum” performance, 200% of the “target” number of PSUs will be earned, with linear interpolation applied between performance levels.
•Following the performance period, the number of “earned” PSUs will then be subject to one additional year of time-based vesting and will vest on March 14, 2023 (the third anniversary of the date of grant), subject to the executive’s continued employment through such vesting date.
2019 PSU Awards
The NEOs were awarded PSUs in 2019, which were eligible to be earned based on the average performance for 2019 and 2020. The average achievement percentage determined for the two-year period was subject to a reduction of 15% if the Company’s average ratio of net debt-to-Adjusted EBITDA for 2019 and 2020 exceeded a maximum ratio set by the Compensation Committee.
On March 12, 2021, the Compensation Committee certified the Company’s results for the 2019 PSU awards and determined that 92.7% of the “target” awards granted to the NEOs were “earned” based on the Company’s performance during 2019 and 2020 and will be eligible to vest on March 14, 2022, subject to an NEO’s continued employment through such date. The payout calculation is as follows:
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PSU Award Achievement
|
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Percentage
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Percentage of Adjusted EBITDA Target achieved for 2020
|
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97.6
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%
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(1)
|
|
Percentage of Adjusted EBITDA Target achieved for 2019
|
|
98.0
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%
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(2)
|
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Average achievement for 2019 and 2020
|
|
97.8
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%
|
|
|
Net Leverage Modifier
|
|
100.0
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%
|
(3)
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|
|
|
92.7
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%
|
(4)
|
(1) As described above, Golden’s Adjusted EBITDA as calculated for this purpose was 97.6% of target Adjusted EBITDA. The Adjusted EBITDA for purposes of the 2019 PSUs for 2020 was determined in the same manner as described above in connection with the 2020 Annual Incentive Program.
(2) The Adjusted EBITDA objectives for purposes of the 2019 PSUs for 2019 were as follows: threshold performance level at $163,600,000, representing 85% of target Adjusted EBITDA, the target performance level at $192,500,000, and the maximum performance level at $221,400,000, representing 115% of target Adjusted EBITDA. Golden’s Adjusted EBITDA as calculated for this purpose was 98.0% of target Adjusted EBITDA for 2019.
(3) The average achievement percentage determined for the two-year period was subject to a reduction of 15% if the Company’s average ratio of net debt-to-Adjusted EBITDA for 2019 and 2020 exceeded 5.75x. The Company’s net debt-to-Adjusted EBITDA ratio for 2019 and 2020 was 5.7x and 5.4x, respectively. As a result, the average net debt-to-Adjusted EBITDA ratio was 5.5x, and therefore no reduction was imposed.
(4) Determined by linear interpolation of 97.8% performance achievement between the “threshold” and “target” payout opportunities. Earned shares from the 2019 PSU grant are subject to an additional one-year vesting through March 14, 2022.
Based on the attained payout factor of 92.7%, the NEOs will be eligible to vest in the following number of shares related to the 2019 PSUs on March 14, 2022: Blake L. Sartini, 82,007 shares; Charles H. Protell, 34,443 shares; Stephen A. Arcana, 34,443 shares; Blake L. Sartini, II, 17,430 shares; Sean T. Higgins, 18,452 shares; and Thomas E. Haas, 2,871 shares.
Other Benefits
We provide our executives with the following types of other benefits: (i) perquisites; (ii) health, dental, life, and disability insurance; and (iii) retirement benefits. We will periodically review the levels of perquisites and other individual benefits provided to executive officers to ensure they fit within the overall compensation philosophy and competitive external market practices. From time to time, we may also agree to pay sign-on bonuses to executives who agree to commence employment with us.
Perquisites. Pursuant to the terms of their employment agreements, we provide certain perquisites to our NEOs with employment agreements. Each NEO with employment agreement is entitled to an allowance for health insurance premiums, participation in the executive supplemental health insurance program, and term life insurance and disability coverage at our expense. In addition, our NEOs with employment agreements are entitled to reimbursement of country club dues, reimbursement of disability coverage and reimbursement of personal automobile lease and related expenses, and Mr. Sartini is also entitled to reimbursement of premiums under certain individually-obtained life insurance policies (not to exceed $200,000 annually). With respect to Messrs. Sartini, Arcana and Sartini, II, these perquisites were in effect for them prior to their joining the Company in connection with the Sartini Gaming merger in 2015.
Health, Dental, Life and Disability Insurance. We offer all of our regular employees, including the NEOs, health, life, disability and dental insurance.
Retirement Benefits. All of our regular employees, including the NEOs, who meet certain defined requirements may participate in our 401(k) plan. We have the discretion to match employee contributions. Under our current matching policy, we match one-fourth of the first four percent of gross earnings contributed by our employees, up to a maximum match of one percent. Our Board of Directors has discretion to make additional contributions to our 401(k) plan.
Employment Agreements
We have entered into employment agreements with each of the NEOs, aside from Mr. Haas, that provide for certain severance benefits in the event that an NEO’s employment is involuntarily or constructively terminated. We recognize the challenges executives often face securing new employment following termination. To mitigate these challenges and to secure the focus of the management team on our affairs, all executive officers are entitled to receive severance payments under their employment agreements upon certain types of termination. The terms of these employment agreements are described below under “Executive Employment Agreements and Equity Award Acceleration.” We believe that reasonable severance benefits for our executive officers are important because there may be limited opportunities for our executive officers to find comparable employment within a short period of time following certain qualifying terminations. In addition to normal severance, we provide Mr. Sartini with enhanced benefits in the event of a qualifying termination following a change-in-control as a means of reinforcing and encouraging his continued attention and dedication to his duties without personal distraction or conflict of interest in circumstances that could arise from the occurrence of a change-in-control. We believe that the interests of shareholders are best served if the interests of our senior management are aligned with them, and providing change-in-control benefits for Mr. Sartini should eliminate any reluctance to pursue potential change-in-control transactions that may be in the best interests of shareholders.
We also extend severance benefits because they are essential to help the Company fulfill the objectives of attracting and retaining key leadership and managerial talent. These agreements are intended to be competitive within our industry and company size and to attract highly qualified individuals and encourage them to be retained by us. While these arrangements form an integral part of the potential total compensation provided to these individuals and are considered by the Compensation Committee when determining executive compensation, the decision to offer these benefits does not influence the Compensation Committee’s determinations concerning other levels of pay or benefits.
Consideration of Say-on-Pay Vote Results
At the 2020 annual meeting of shareholders, the shareholders approved, on an advisory basis, the compensation of our NEOs at that time, as disclosed pursuant to the compensation disclosure rules of the SEC, with over 98% of shareholder votes cast in favor of our say-on-pay resolution (excluding abstentions and broker non-votes). As the Compensation Committee evaluated our executive compensation policies and practices following the 2020 annual meeting of shareholders, the committee was mindful of the strong support our shareholders expressed for our compensation philosophy and objectives. As a result, the Compensation Committee decided to retain our general approach to executive compensation, with an emphasis on incentive compensation that rewards our executive officers when they deliver value for our shareholders. The Compensation Committee will continue to consider the outcome of say-on-pay advisory votes when making future compensation decisions for the NEOs.
Compensation Risk Assessment
The Compensation Committee is responsible for overseeing the risks relating to compensation policies and practices affecting senior management on an ongoing basis. The Compensation Committee believes our governance policies and compensation structure result in a compensation system that is not reasonably likely to lead to management decisions that would have a material adverse effect on the Company. The following features of our programs mitigate this risk:
•The Compensation Committee retains an independent compensation consultant to assist with annual compensation decisions;
•The Compensation Committee approves the Annual Incentive Program financial goals at the start of the fiscal year, and approves the performance achievement level and final payments earned after the end of the fiscal year;
•In fiscal year 2020, the Annual Incentive Program and PSUs capped potential payouts at 200% of the target opportunity to mitigate potential windfalls;
•We utilize a mix of cash and equity incentive programs, and all equity awards granted to our NEOs are subject to multi-year vesting;
•We utilize a portfolio of equity award types;
•We utilize competitive general and change-in-control severance programs to help ensure executives continue to work towards our shareholders’ best interests in light of potential employment uncertainty; and
•Executives are subject to minimum stock ownership guidelines and limitations on trading in our securities.
Stock Ownership Guidelines
In March 2018, the Compensation Committee adopted Stock Ownership Guidelines applicable to our executive officers and senior vice presidents. Under the Stock Ownership Guidelines, applicable ownership of common stock includes:
•Shares held of record or beneficially by the executive, by his or her spouse, or by trusts for the benefit of the executive, his or her spouse, or members of his or her immediate family;
•Shares held in a 401(k) or deferred compensation plan for the benefit of the executive;
•The after-tax value of RSUs held by the executive, whether vested or unvested;
•The after-tax value of “earned” performance-based shares or PSUs held by the executive, whether vested or unvested; and
•The after-tax value of vested, in-the-money stock options held by the executive.
Each executive is expected to meet the requirements set forth in the Stock Ownership Guidelines by the fifth anniversary of his or her first appointment to such office.
Policy Regarding Certain Transactions in Company Securities
Our Insider Trading Policy prohibits our directors, officers and employees from engaging in the following transactions: (i) short sales of our securities and (ii) buying or selling puts or calls or other publicly traded options with respect to our securities. Aside from such prohibitions, we do not maintain any other policies regarding hedging transactions by our directors, officer and employees.
Tax and Accounting Implications
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the annual amount of compensation that publicly held companies may deduct for federal income tax purposes for any “covered employee” (as defined in Section 162(m)). Section 162(m) was amended under the Tax Cuts and Jobs Act and with limited exceptions, beginning with fiscal year 2019, compensation above $1,000,000 is generally non-deductible for any covered employee. The Company’s objectives are not always consistent with the requirements for full deductibility. Therefore, deductibility is not the sole factor used in setting the appropriate compensation levels paid by the Company and decisions leading to future compensation levels may not be fully deductible under Section 162(m). We believe this flexibility enables us to respond to changing business conditions or to an executive’s exceptional individual performance.
Accounting for Share-Based Compensation
Golden accounts for share-based payments, including its long-term equity incentive program, in accordance with the requirements of the ASC 718.
Compensation Committee Report *
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management. Based on such review and discussions with management, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Golden Entertainment Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020 and in this proxy statement.
The foregoing report is provided by the following directors, who constitute the Compensation Committee.
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COMPENSATION COMMITTEE
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Robert L. Miodunski (Chair)
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Ann D. Dozier
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Terrence L. Wright
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*The material in this report is not soliciting material, is not deemed filed with the SEC, and is not incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made on, before, or after the date of this proxy statement and irrespective of any general incorporation language in such filing.
2020 Summary Compensation Table
The following table sets forth the compensation for the last three fiscal years awarded to or earned by our NEOs.
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Name and Principal Position
|
|
Year
|
|
Salary (1)
|
|
Bonus
|
|
Stock Awards (3)
|
|
Non-Equity Incentive Plan Compensation (4)
|
|
All Other Compensation (5)
|
|
Total
|
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|
|
|
|
|
|
|
|
|
|
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|
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|
|
Blake L. Sartini
|
|
2020
|
|
$
|
1,038,462
|
|
|
$
|
—
|
|
|
$
|
2,750,002
|
|
|
$
|
1,149,995
|
|
|
$
|
287,324
|
|
|
$
|
5,225,783
|
|
|
Chief Executive Officer and
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|
2019
|
|
1,000,000
|
|
|
—
|
|
|
2,500,020
|
|
|
1,164,935
|
|
|
270,711
|
|
|
4,935,666
|
|
|
Chairman of the Board
|
|
2018
|
|
1,000,000
|
|
|
—
|
|
|
2,521,042
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|
|
—
|
|
|
278,821
|
|
|
3,799,863
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|
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|
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|
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Charles H. Protell
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2020
|
|
778,846
|
|
|
—
|
|
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1,499,998
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|
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689,997
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|
|
89,594
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|
|
3,058,435
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|
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President, Chief Financial
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2019
|
|
651,923
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|
|
—
|
|
|
2,387,000
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|
|
613,554
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|
|
83,375
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|
|
3,735,852
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|
|
Officer and Treasurer
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|
2018
|
|
558,251
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|
|
—
|
|
|
1,058,848
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|
|
—
|
|
|
68,377
|
|
|
1,685,476
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|
|
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|
|
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|
|
|
|
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|
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|
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Stephen A. Arcana
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2020
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|
623,077
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|
|
—
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|
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1,199,998
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|
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551,986
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|
|
93,989
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|
|
2,469,050
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|
|
Executive Vice President and
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|
2019
|
|
600,000
|
|
|
—
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|
|
1,050,000
|
|
|
559,169
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|
|
88,058
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|
|
2,297,227
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|
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Chief Operating Officer
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2018
|
|
563,266
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|
|
—
|
|
|
1,058,848
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|
|
—
|
|
|
88,058
|
|
|
1,710,172
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|
|
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|
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|
|
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|
|
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|
|
Blake L. Sartini, II
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2020
|
|
441,346
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|
|
—
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|
|
637,494
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|
|
195,489
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|
|
60,299
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|
|
1,334,628
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|
|
Senior Vice President of
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|
2019
|
|
425,000
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|
|
—
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|
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531,372
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|
|
198,039
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|
|
48,892
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|
|
1,203,303
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|
Distributed Gaming
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2018
|
|
405,769
|
|
|
—
|
|
|
535,742
|
|
|
—
|
|
|
41,834
|
|
|
983,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sean T. Higgins (2)
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2020
|
|
345,849
|
|
|
—
|
|
|
675,008
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|
|
—
|
|
|
86,682
|
|
|
1,107,539
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|
Former Executive Vice
President of Governmental
|
|
2019
|
|
450,000
|
|
|
—
|
|
|
562,516
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|
|
272,595
|
|
|
42,814
|
|
|
1,327,925
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|
|
Affairs
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|
2018
|
|
450,000
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|
|
—
|
|
|
567,220
|
|
|
—
|
|
|
47,634
|
|
|
1,064,854
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Thomas E. Haas
|
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2020
|
|
259,615
|
|
|
—
|
|
|
99,994
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|
|
80,504
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|
|
9,081
|
|
|
449,194
|
|
|
Senior Vice President and
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|
|
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|
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Chief Accounting Officer
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(1)For 2020, each of the NEOs earned an additional paycheck as a result of an extra pay period during 2020.
(2)Sean T. Higgins served as our Executive Vice President of Government Affairs until September 2020, at which time his employment with the Company was terminated by reason of his death.
(3)Represents the grant date fair value of the RSUs and PSUs granted to the NEOs in the applicable fiscal year under ASC 718. The grant date fair value is the amount at the grant date Golden expected to expense over the awards’ vesting period. The amounts do not reflect the actual amounts that may be realized by the executive officers. The grant date fair value of the PSUs granted to the NEOs in 2020, 2019 and 2018 was calculated based on the probable achievement of the performance goals as determined at the date of grant, which was determined to be 100% of the target level of performance. The full grant date fair value of the 2020 PSU awards to the NEOs, assuming the highest level of possible performance, is as follows: Mr. Sartini, $2,750,002; Mr. Protell, $1,499,998; Mr. Arcana, $1,199,998; Mr. Sartini, II, $637,494, Mr. Higgins, 675,008; and Thomas E. Haas, $99,994. A discussion of the assumptions used in the valuation of the stock awards may be found in Note 8 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020.
(4)Represents amounts earned under our annual incentive program for 2020 and 2019. The amounts in this column for 2020 represent the aggregate grant date fair value, calculated in accordance with ASC 718, of the RSUs granted in satisfaction of the 2020 annual incentives for the NEOs, as reflected in the table below. The grant date fair value is the amount at the grant date Golden expected to expense over the awards’ vesting period. The amounts do not reflect the actual amounts that may be realized by the executive officers. For the RSUs, the grant date fair value is equal to the share price on March 12, 2021, the date of the grant.
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|
|
|
|
|
|
|
Final 2020 Annual Incentive Award
|
/
|
Closing Price on Grant Date
|
=
|
RSUs Granted
|
|
ASC 718 Grant Date Fair Value of RSUs
|
|
Blake L. Sartini
|
|
$
|
1,150,000
|
|
|
$
|
29.00
|
|
|
39,655
|
|
|
$
|
1,149,995
|
|
|
Charles H. Protell
|
|
690,000
|
|
|
29.00
|
|
|
23,793
|
|
|
689,997
|
|
|
Stephen A. Arcana
|
|
552,000
|
|
|
29.00
|
|
|
19,034
|
|
|
551,986
|
|
|
Blake L. Sartini, II
|
|
195,500
|
|
|
29.00
|
|
|
6,741
|
|
|
195,489
|
|
|
Thomas E. Haas
|
|
80,500
|
|
|
29.00
|
|
|
2,776
|
|
|
80,504
|
|
(5)The following table contains a breakdown of the compensation and benefits included under “All Other Compensation” for the year ended December 31, 2020:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Cost Reimbursement
|
|
Life Insurance Benefits
|
|
Other (a)
|
|
Total
|
|
Blake L. Sartini
|
|
$
|
42,637
|
|
|
$
|
186,812
|
|
|
$
|
57,875
|
|
|
$
|
287,324
|
|
|
Charles H. Protell
|
|
49,683
|
|
|
911
|
|
|
39,000
|
|
|
89,594
|
|
|
Stephen A. Arcana
|
|
53,578
|
|
|
911
|
|
|
39,500
|
|
|
93,989
|
|
|
Blake L. Sartini, II
|
|
35,387
|
|
|
912
|
|
|
24,000
|
|
|
60,299
|
|
|
Sean T. Higgins
|
|
33,737
|
|
|
692
|
|
|
52,253
|
|
|
86,682
|
|
|
Thomas E. Haas
|
|
5,270
|
|
|
3,311
|
|
|
500
|
|
|
9,081
|
|
(a) For each NEO, amounts shown consist of disability coverage. For Messrs. Sartini, Protell, and Arcana amounts shown also consist of an automobile allowance and country club dues (including an aggregate of $42,875 representing a car allowance and company paid car provided to Mr. Sartini). For Mr. Sartini, II, amounts shown consist of an automobile allowance. For Mr. Higgins, in connection with termination of his employment, Golden made a lump-sum cash payment to Mr. Higgins’ estate of $31,154, representing the payout of accrued paid time off in connection with his termination of employment. Also, in connection with termination of his employment, Golden made a payment of $2,986, representing the anticipated premiums for health insurance coverage for his dependents through December 31, 2020.
2020 Grants of Plan-Based Awards Table
The following table sets forth information regarding the Company’s 2020 Annual Incentive Program, the grants by the Company of long-term incentive awards with respect to shares of the Company’s common stock to our NEOs during the year ended December 31, 2020.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
Approval Date
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards (2)
|
|
All Other Stock Awards: Number of Shares of Stock Units (3)
|
|
Grant date Fair Value of Stock Awards (4)
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blake L.
|
|
—
|
|
|
—
|
|
|
$
|
625,000
|
|
|
$
|
1,250,000
|
|
|
$
|
2,500,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Sartini
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
155,192
|
|
|
1,375,001
|
|
|
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,596
|
|
|
155,192
|
|
|
310,384
|
|
|
—
|
|
|
1,375,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles H.
|
|
—
|
|
—
|
|
375,000
|
|
|
750,000
|
|
|
1,500,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Protell
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84,650
|
|
|
749,999
|
|
|
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,325
|
|
|
84,650
|
|
|
169,300
|
|
|
—
|
|
|
749,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen A.
|
|
—
|
|
—
|
|
300,000
|
|
|
600,000
|
|
|
1,200,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Arcana
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67,720
|
|
|
599,999
|
|
|
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,860
|
|
|
67,720
|
|
|
135,440
|
|
|
—
|
|
|
599,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blake L.
|
|
—
|
|
—
|
|
106,250
|
|
|
212,500
|
|
|
425,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Sartini, II
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,976
|
|
|
318,747
|
|
|
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,988
|
|
|
35,976
|
|
|
71,952
|
|
|
—
|
|
|
318,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sean T.
|
|
—
|
|
—
|
|
146,250
|
|
|
292,500
|
|
|
585,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Higgins
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,093
|
|
|
337,504
|
|
|
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,047
|
|
|
38,093
|
|
|
76,186
|
|
|
—
|
|
|
337,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas E.
|
|
—
|
|
—
|
|
43,750
|
|
|
87,500
|
|
|
175,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Haas
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,643
|
|
|
49,997
|
|
|
|
|
3/13/2020
|
|
3/13/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,822
|
|
|
5,643
|
|
|
11,286
|
|
|
—
|
|
|
49,997
|
|
(1)Represents bonus opportunities under our 2020 Annual Incentive Program. The Compensation Committee determined to pay each of the NEOs their fiscal year 2020 annual incentive awards in the form of RSUs, as described in the footnotes to the “2020 Summary Compensation Table.”
(2)Represents PSUs granted on March 13, 2020. Provided that the executives continue to render services to the Company through the applicable vesting date, the vesting of the PSUs is subject to the Company’s attainment of an Adjusted EBITDA target for fiscal years 2020 and 2021. Between 0%-200% of such “target” number of shares subject to the awards may be earned based on the Company’s attainment of performance goals set (or to be set) by the Compensation Committee for each of 2020 and 2021 (which will be the same performance goals approved by the Compensation Committee under Golden’s annual incentive program for each such year 2020 and 2021). The percentage achievement for each year relative to the performance objectives for such year will be averaged at the end of the two-year period and applied to the “target” number of shares. The number of “earned” shares will be then be subject to one additional year of time-based vesting, with such shares vesting on the third anniversary of the date of grant. For information about the accelerated vesting provisions that apply to these awards under the employment agreements with the NEOs, if any, refer to “2020 Executive Compensation Decisions — 2020 Long-Term Equity Incentive Awards” above.
(3)Represents RSUs granted to the executives in 2020. Provided that the executives continue to render services to the Company through the applicable vesting date, the RSUs will vest in three equal installments on the first three anniversaries of the date of grant. For information about the accelerated vesting provisions that apply to these awards under the employment agreements with the NEOs, if any, refer to “Executive Employment Agreements and Equity Award Acceleration” below.
(4)Represents the grant date fair value of the RSUs and PSUs granted to the NEOs, as calculated under ASC 718. The grant date fair value is the amount Golden will expense over the awards’ vesting period. The amounts do not reflect the actual amounts that may be realized by the executive officers. A discussion of the assumptions used in the valuation of the stock awards may be found in Note 8 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020.
2020 Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth certain information relating to equity awards outstanding as of December 31, 2020 for each of our NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Awards (1)
|
|
Stock Awards
|
|
Name
|
|
Grant Date
|
|
Number of Securities Underlying Unexercised Options - Exercisable
|
|
Number of Securities Underlying Unexcercised Options -Unexercisable
|
|
Options Exercise Price (2)
|
|
Option Expiration Date
|
|
Number of Shares, or Units, of Stock That Have Not Vested
|
|
Market Value of Shares, or Units of Stock That Have Not Vested (11)
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blake L.
|
|
8/27/2015
|
|
440,000
|
|
—
|
|
$
|
7.34
|
|
|
8/26/2025
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
|
Sartini
|
|
8/26/2016
|
|
264,000
|
|
—
|
|
12.51
|
|
|
8/26/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
3/20/2017
|
|
187,500
|
|
12,500
|
|
13.50
|
|
|
3/20/2027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
11/7/2017
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
26,911
|
(9)
|
—
|
|
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
14,630
|
(3)
|
290,991
|
|
—
|
|
—
|
|
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
30,905
|
(4)
|
614,700
|
|
—
|
|
—
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
58,977
|
(5)
|
1,173,052
|
|
—
|
|
—
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
82,007
|
(6)
|
1,631,119
|
|
—
|
|
—
|
|
|
|
3/13/2020
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
155,192
|
(7)
|
3,086,769
|
|
155,192
|
(10)
|
3,086,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles H.
|
|
11/28/2016
|
|
250,000
|
|
—
|
|
12.57
|
|
|
11/28/2026
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Protell
|
|
3/20/2017
|
|
23,438
|
|
1,562
|
|
13.50
|
|
|
3/20/2027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
11/7/2017
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
17,940
|
(9)
|
—
|
|
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
6,145
|
(3)
|
122,224
|
|
—
|
|
—
|
|
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
12,980
|
(4)
|
258,172
|
|
—
|
|
—
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
24,770
|
(5)
|
492,675
|
|
—
|
|
—
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
34,443
|
(6)
|
685,071
|
|
—
|
|
—
|
|
|
|
8/5/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
100,000
|
(8)
|
1,989,000
|
|
—
|
|
—
|
|
|
|
3/13/2020
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
84,650
|
(7)
|
1,683,688
|
|
84,650
|
(10)
|
1,683,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen A.
|
|
8/27/2015
|
|
170,000
|
|
—
|
|
7.34
|
|
|
8/26/2025
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Arcana
|
|
8/26/2016
|
|
140,000
|
|
—
|
|
12.51
|
|
|
8/26/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
3/20/2017
|
|
93,750
|
|
6,250
|
|
13.50
|
|
|
3/20/2027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
11/7/2017
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
17,940
|
(9)
|
—
|
|
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
6,145
|
(3)
|
122,224
|
|
—
|
|
—
|
|
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
12,980
|
(4)
|
258,172
|
|
—
|
|
—
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
24,770
|
(5)
|
492,675
|
|
—
|
|
—
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
34,443
|
(6)
|
685,071
|
|
—
|
|
—
|
|
|
|
3/13/2020
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
67,720
|
(7)
|
1,346,951
|
|
67,720
|
(10)
|
1,346,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blake L.
|
|
8/27/2015
|
|
110,000
|
|
—
|
|
7.34
|
|
|
8/26/2025
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Sartini, II
|
|
8/26/2016
|
|
70,000
|
|
—
|
|
12.51
|
|
|
8/26/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
3/20/2017
|
|
70,313
|
|
4,687
|
|
13.50
|
|
|
3/20/2027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
3,109
|
(3)
|
61,838
|
|
—
|
|
—
|
|
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
6,568
|
(4)
|
130,638
|
|
—
|
|
—
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
12,535
|
(5)
|
249,321
|
|
—
|
|
—
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
17,430
|
(6)
|
346,683
|
|
—
|
|
—
|
|
|
|
3/13/2020
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
35,976
|
(7)
|
715,563
|
|
35,976
|
(10)
|
715,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sean T.
|
|
3/28/2016
|
|
132,812
|
|
—
|
|
8.86
|
|
|
9/24/2021
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Higgins
|
|
3/20/2017
|
|
75,000
|
|
—
|
|
13.50
|
|
|
9/24/2021
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
6,953
|
(4)
|
138,295
|
|
—
|
|
—
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
18,452
|
(6)
|
367,010
|
|
—
|
|
—
|
|
|
|
3/13/2020
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
38,093
|
(10)
|
757,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Awards (1)
|
|
Stock Awards
|
|
Name
|
|
Grant Date
|
|
Number of Securities Underlying Unexercised Options - Exercisable
|
|
Number of Securities Underlying Unexcercised
Options -Unexercisable
|
|
Options Exercise Price(2)
|
|
Option Expiration Date
|
|
Number of Shares, or Units, of Stock That Have Not Vested
|
|
Market Value of Shares, or Units of Stock That Have Not Vested (11)
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas E.
|
|
3/14/2018
|
|
—
|
|
—
|
|
$
|
—
|
|
|
—
|
|
512
|
(3)
|
$
|
10,184
|
|
|
—
|
|
$
|
—
|
|
|
Haas
|
|
3/14/2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
1,082
|
(4)
|
21,521
|
|
—
|
|
—
|
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
2,065
|
(5)
|
41,073
|
|
—
|
|
—
|
|
|
|
|
3/18/2019
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
2,871
|
(6)
|
57,104
|
|
—
|
|
—
|
|
|
|
|
3/13/2020
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
5,643
|
(7)
|
112,239
|
|
5,643
|
(10)
|
112,239
|
|
(1)Provided that the executive continues to render services to the Company through the applicable vesting date, the options vest as to 25% of the shares on the first anniversary of the grant date and vest as to the remaining shares in 36 equal monthly installments thereafter. The options have a ten-year term from the date of grant. For information about the accelerated vesting provisions that apply to these awards under the employment agreements with the NEOs, if any, refer to “Executive Employment Agreements and Equity Award Acceleration” below.
(2)The net proceeds received from the sale of our $60.0 million subordinated promissory note from the Jamul Indian Village were distributed to shareholders during the summer of 2016. In connection with this special dividend, the Compensation Committee made appropriate and equitable adjustments to the Company’s outstanding stock options in July 2016 by reducing the exercise prices of outstanding options by $1.71 per share, in accordance with the terms of the 2015 Plan, the underlying stock option agreements, and applicable tax law.
(3)Represents RSUs granted on March 14, 2018 that had not vested as of December 31, 2020, but have since vested on March 14, 2021.
(4)Represents PSUs granted on March 14, 2018. In March 2020, the Compensation Committee determined that the PSUs were “earned” at 70.4% of “target” levels based on the Company’s performance during 2018 and 2019 and thus, are reflected at such level in the table above. This number of “earned” shares was subject to one additional year of time-based vesting and such shares have since vested on March 14, 2021.
(5)Represents RSUs granted on March 18, 2019 that had not vested as of December 31, 2020. Provided that the executives continue to render services to the Company through the applicable vesting date, the RSUs will vest in two equal installments on March 14, 2021 and 2022. For information about the accelerated vesting provisions that apply to these awards under the employment agreements with the NEOs, if any, refer to “Executive Employment Agreements and Equity Award Acceleration” below.
(6)Represents PSUs granted on March 18, 2019. On March 12, 2021, the Compensation Committee determined that the PSUs were “earned” at 92.7% of “target” levels based on the Company’s performance during 2019 and 2020 and are reflected at such level in the table above. This number of “earned” shares is subject to one additional year of time-based vesting and such shares will vest on March 14, 2022. For information about the accelerated vesting provisions that apply to these awards under the employment agreements with the NEOs, if any, refer to “2020 Executive Compensation Decisions — 2020 Long-Term Equity Incentive Awards” above.
(7)Represents RSUs granted on March 13, 2020. Provided that the executives continue to render services to the Company through the applicable vesting date, the RSUs will vest in three equal installments on March 14, 2021, 2022 and 2023. For information about the accelerated vesting provisions that apply to these awards under the employment agreements with the NEOs, if any, refer to “Executive Employment Agreements and Equity Award Acceleration” below.
(8)Represents RSUs granted to Mr. Protell on August 5, 2019 in connection with his promotion to President. Such RSUs will vest on the fifth anniversary of the date of grant provided Mr. Protell continues to render services to the Company through the applicable vesting date. For information about the accelerated vesting provisions that apply to these awards under the employment agreements with the NEOs, if any, refer to “Executive Employment Agreements and Equity Award Acceleration” below.
(9)Represents PSUs granted on November 7, 2017. On March 12, 2021, the Compensation Committee determined that these PSUs were forfeited as of such date due to the failure to meet the performance objectives under such awards.
(10)Represents PSUs granted on March 13, 2020. Provided that the executives continue to render services to the Company through the applicable vesting date, the vesting of the PSUs is subject to the Company’s attainment of an Adjusted EBITDA target for fiscal years 2020 and 2021. Between 0%-200% of such “target” number of shares subject to the awards may be earned based on the Company’s attainment of performance goals set by the Compensation Committee for each of 2020 and 2021 (which will be the same performance goals approved by the Compensation Committee under Golden’s annual incentive program for each such year 2020 and 2021). At “threshold” performance, 50% of the “target” number of PSUs will be earned, at “target” performance, 100% of the “target” number of PSUs will be earned, and at “maximum” performance, 200% of the “target” number of PSUs will be earned, with linear interpolation applied between performance levels. The percentage achievement for each year relative to the performance objectives for such year will be averaged at the end of the two-year period and applied to the “target” number of shares. The number of “earned” shares will be then be subject to one additional year of time-based vesting, with such shares vesting on the third anniversary of the date of grant. The PSUs are reflected at “target” levels. For information about the accelerated vesting provisions that apply to these awards under the employment agreements with the NEOs, if any, refer to “2020 Executive Compensation Decisions — 2020 Long-Term Equity Incentive Awards” above.
(11)The market value per share was determined using the closing price per share of our common stock of $19.89 on December 31, 2020, the last trading day of 2020.
2020 Option Exercises and Stock Vested
The following table sets forth certain information relating to the exercise of stock options and the vesting of stock awards for each of our NEOs during the year ended December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of Shares Acquired on Exercise
|
|
Value Realized on Exercise
|
|
Number of Shares Acquired on Vesting
|
|
Value Realized on Vesting (1)
|
|
Blake L. Sartini
|
|
—
|
|
$
|
—
|
|
|
44,118
|
|
$
|
390,885
|
|
|
Charles H. Protell
|
|
—
|
|
—
|
|
|
18,529
|
|
164,167
|
|
|
Stephen A. Arcana
|
|
—
|
|
—
|
|
|
18,529
|
|
164,167
|
|
|
Blake L. Sartini, II
|
|
—
|
|
—
|
|
|
9,377
|
|
83,080
|
|
|
Sean T. Higgins (2)
|
|
—
|
|
—
|
|
|
64,581
|
|
808,297
|
|
|
Thomas E. Haas
|
|
—
|
|
—
|
|
|
1,544
|
|
13,680
|
|
(1)Represents RSUs that vested during 2020. The value realized is calculated by multiplying the closing market price of the Company’s common stock on March 14, 2020 of $8.86 by the number of RSUs that vested on that date.
(2)In addition to the vesting of RSUs on March 14, 2020, the Company accelerated the vesting of 54,655 RSUs valued at $720,354 in connection with termination of Mr. Higgins’ employment by reason of his death.
Pension Benefits
None of the NEOs were eligible to participate in a qualified or non-qualified defined benefit pension plan during 2020.
Non-Qualified Deferred Compensation
None of the NEOs were eligible to participate in a non-qualified deferred compensation plan during 2020.
Executive Employment Agreements and Equity Award Acceleration
Employment Agreements
Golden entered into at-will employment agreements with each of Messrs. Sartini and Arcana on October 1, 2015 and Mr. Protell on November 15, 2016. Golden entered into an at-will employment agreement with Mr. Sartini, II on October 1, 2015, which was amended and restated on March 10, 2017. The Company does not have an employment agreement with Mr. Haas at this time. Under each employment agreement, in addition to the executive’s annual base salary, the executive is entitled to participate in Golden’s incentive compensation programs applicable to the executive officers. The executive officers are also eligible to participate in all health benefits, insurance programs, pension and retirement plans and other employee benefit and compensation arrangements. Each executive officer with an employment agreement is also provided with other benefits as set forth in the respective employment agreement. In the event of a termination without “cause” or a “constructive
termination” (each, a “Qualifying Termination”), each employment agreement provides for the payment of severance to the executive in connection with his termination of employment, as well as continued health benefits, as described below, and acceleration of vesting of the executive’s stock awards (other than as such accelerated vesting is revised in the award agreements for the PSUs or as otherwise described below for Mr. Protell’s August 2019 RSU award). In the event of an executive’s termination of employment by reason of his death or disability, all of his stock awards will vest. The employment agreements also contain customary confidentiality, non-solicitation and non-compete provisions.
Under Mr. Sartini’s employment agreement, as amended, Mr. Sartini serves as our Chief Executive Officer, with such duties and responsibilities as are commensurate with the position, and reports directly to our Board of Directors. Mr. Sartini’s employment agreement, as amended, provides for an annual base salary of $1,000,000 and Mr. Sartini’s target bonus for purposes of the Company’s annual incentive compensation plan is equal to 125% of his annual base salary. In the event of a Qualifying Termination, Mr. Sartini will be entitled to receive a lump-sum payment equal to the Severance Multiplier (defined below) multiplied by the sum of his annual base salary and annual target bonus, as in effect immediately prior to the date of termination, plus continued health benefits at our expense for a period of 18 months, plus a lump-sum cash payment equal to (i) the number of months by which the product of the Severance Multiplier multiplied by 12 exceeds 18, multiplied by (ii) his monthly health insurance premium at the date of termination. The “Severance Multiplier” in Mr. Sartini’s employment agreement is three for the first three years of the agreement, two and one-half for the next year of the agreement, and two thereafter, provided that the Severance Multiplier will be three in the event of a Qualifying Termination occurring within 12 months following a “Change in Control” (as defined in the 2015 Plan).
Under Mr. Protell’s employment agreement, as amended, Mr. Protell serves as our President and Chief Financial Officer, with such duties and responsibilities as are commensurate with the position, and reports directly to our Chief Executive Officer. Mr. Protell’s employment agreement, as amended, provides for an annual base salary of $750,000, and Mr. Protell’s target bonus for purposes of the Company’s annual incentive compensation plan is equal to 100% of his annual base salary. In the event of a Qualifying Termination, Mr. Protell will be entitled to receive a lump-sum payment equal to the sum of his annual base salary and annual target bonus, as in effect immediately prior to the date of termination, multiplied by two. In the event of a Qualifying Termination, Mr. Protell will also be entitled to receive continued health benefits at our expense for a period of 18 months, plus a lump-sum cash payment equal to six times his monthly health insurance premium at the date of termination.
The RSUs granted to Mr. Protell in August 2019 in connection with his promotion to President will vest on the fifth anniversary of the grant date provided that he continues to render services to the Company through the vesting date. In the event of Mr. Protell’s Qualifying Termination within twelve months following a change in control of the Company, the RSUs will vest in full. In addition, in the event of a Qualifying Termination that occurs outside of the foregoing period, a pro-rated portion of the RSUs will vest based on the duration of the period from the date of grant through the date of termination. In addition, all of the RSUs will vest in the event Mr. Protell’s employment is terminated due to his death or disability.
Under Mr. Arcana’s employment agreement, as amended, Mr. Arcana serves as our Executive Vice President and Chief Operating Officer, with such duties and responsibilities as are commensurate with the position, and reports directly to our Chief Executive Officer. Mr. Arcana’s employment agreement, as amended, provides for an annual base salary of $600,000, and Mr. Arcana’s target bonus for purposes of the Company’s annual incentive compensation plan is equal to 100% of his annual base salary. In the event of a Qualifying Termination, Mr. Arcana will be entitled to receive a lump-sum payment equal to the sum of his annual base salary and annual target bonus, as in effect immediately prior to the date of termination, multiplied by two. In the event of a Qualifying Termination, Mr. Arcana will also be entitled to receive continued health benefits at our expense for a period of 18 months, plus a lump-sum cash payment equal to six times his monthly health insurance premium at the date of termination.
Under Mr. Sartini, II’s amended and restated employment agreement, as amended, Mr. Sartini, II serves as our Senior Vice President of Distributed Gaming, with such duties and responsibilities as are commensurate with the position, and reports directly to our Executive Vice President and Chief Operating Officer, except in the event of such officer’s incapacity or unavailability, in which case Mr. Sartini, II shall report directly to our Chief Executive Officer. Mr. Sartini, II’s amended and restated employment agreement, as amended, provides for an annual base salary of $425,000, and Mr. Sartini, II’s target bonus for purposes of the Company’s annual incentive compensation plan is equal to 50% of his annual base salary. In the event of a Qualifying Termination, Mr. Sartini, II will be entitled to receive a lump-sum payment equal to the sum of his annual base salary and annual target bonus, as in effect immediately prior to the date of termination, multiplied by 1.25. In the event of a Qualifying Termination, Mr. Sartini, II will also be entitled to receive continued health benefits at our expense for a period of 15 months.
The employment agreements generally define “cause” to include: (i) the executive’s commission of a felony, (ii) the executive’s theft or embezzlement of property of Golden or the commission of any similar act involving moral turpitude, (iii) the failure of the executive to substantially perform his material duties and responsibilities, which failure (if curable) is not cured within 30 days after the executive’s receipt of written notice from our Board of Directors, (iv) the executive’s material violation of a significant company policy, which violation (if curable) is not cured within 30 days after the executive’s receipt of written notice from us and which violation has a material adverse effect on Golden or its subsidiaries or affiliates, (v) the failure of the executive to qualify (or thereafter the disqualification of the executive) under any regulatory or licensing requirement of any jurisdiction or regulatory authority to which the executive may be subject by reason of his position with Golden (unless waived by our Board of Directors or the Compensation Committee in its sole discretion or, in the case of Mr. Sartini’s employment agreement only, unless the failure to qualify is in a jurisdiction that Golden has entered into without Mr. Sartini’s prior consent), or (vi) the revocation of a Company gaming license, as a result of any act or omission by the executive, which revocation has an adverse effect on Golden or its subsidiaries or affiliates. The employment agreements generally define “constructive termination” as the occurrence of any of the following events or circumstances: (i) a material adverse change in the executive’s responsibilities, authority, status, position, offices, titles, duties or reporting requirements (including directorships), (ii) a reduction in the executive’s base salary or a material adverse change in the executive’s annual compensation or benefits, (iii) a requirement to relocate in excess of 50 miles from the executive’s then-current place of employment without the executive’s consent, or (iv) the breach by Golden of any material provision of the employment agreement or failure to fulfill any other contractual duties owed to the executive.
Equity Award Acceleration
RSUs granted to our NEOs other than Mr. Haas are eligible for accelerated vesting on the terms described in each executive officer’s respective employment agreement with the Company, if any. RSUs granted to Mr. Haas will be eligible for accelerated vesting in the event of his termination without “cause” following a change in control (with “cause” as defined in the award agreement and the term change in control having the meaning given to such term in the 2015 Plan).
PSUs are excluded from the accelerated vesting terms of the employment agreements with the NEOs. Instead, the accelerated vesting of those awards is governed by the terms of the award agreements. With respect to those executives who are a party to an employment agreement, in the event of the executive officer’s termination without “cause” or resignation in connection with a “constructive termination,” or a termination upon the executive’s death or disability, PSUs will remain eligible to vest based on the actual performance achieved under the terms of the awards, or, if such termination occurs following the end of the two-year performance period, the “performance-adjusted vesting eligible” PSUs will vest on the date of termination. With respect to PSUs granted to Mr. Haas, in the event of his termination without “cause” following a change in control, Mr. Haas will vest in the “performance-adjusted vesting eligible” PSUs on the date of such termination, as determined as of the date of the change in control in accordance with the award agreement (as described below).
In the event of a change in control, the number of “performance-adjusted vesting eligible” PSUs will be determined as of the date of the change in control in accordance with the award agreement (with the performance achievement percentages based on actual performance for any completed year and “target” performance for any incomplete year), and the resulting number of “performance-adjusted vesting eligible” PSUs will vest on the third anniversary of the date of grant (subject to earlier acceleration in the event of a qualifying termination (or, with respect to Mr. Haas, his termination without “cause”), as described above).
If the PSUs are not assumed by the acquirer of the Company in a change in control, the number of “performance-adjusted vesting eligible” PSUs will vest in full immediately prior to the consummation of the change in control transaction. The terms cause, constructive termination and disability have the meanings given to such terms in each executive’s respective employment agreement (or, with respect to Mr. Haas, in the award agreement) and the term change in control has the meaning given to such term in the 2015 Plan.
Risk Assessments
With respect to risk related to compensation matters, the Compensation Committee considers, in establishing and reviewing our executive compensation program, whether the program encourages unnecessary or excessive risk taking and has concluded that it does not. Executives’ base salaries are fixed in amount and thus do not encourage risk-taking. Bonuses and PSU awards are capped and are tied to overall corporate performance with performance goals that must be approved and certified by the Compensation Committee. A portion of compensation provided to our NEOs was in the form of long-term equity incentives that help further align executives’ interests with increasing shareholder value, with a significant percentage of those long-term equity incentives tied to corporate performance and all awards tied to three-year vesting schedules. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk-taking, as the value of the equity awards fluctuate dollar for dollar with our stock price and do not represent significant downward/upward risk and reward.
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are Messrs. Miodunski and Wright and Ms. Dozier. There were no relationships among members of the Compensation Committee, members of our Board of Directors or executive officers of Golden who served during the year ended December 31, 2020 that require disclosure under Item 407(e) of Regulation S-K promulgated under the Exchange Act.
Payments Upon Termination or Change-In-Control
The information below describes and quantifies certain compensation that would have been payable to each NEO if the NEO’s employment had terminated, or a change in control had occurred, on December 31, 2020, given the NEO’s compensation as of such date and, if applicable, based on our closing stock price on December 31, 2020, the last trading day of the year. These benefits are in addition to benefits available generally to salaried employees upon a termination of employment, such as payment of accrued but unpaid base salary, accrued but unpaid annual bonus, and vacation pay and distributions under our 401(k) plan (assuming the executive participated in the plan). The terms of their respective separation arrangements with the Company are described above in “Executive Employment Agreements and Equity Award Acceleration.” PSUs are excluded from the accelerated vesting terms of the employment agreements with the NEOs. Instead, the accelerated vesting of those awards is governed by the terms of the award agreements, which are described above in “2020 Executive Compensation Decisions — 2020 Long-Term Equity Incentive Awards.”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the Company without Cause or by Executive for Good Reason Following a Change in Control
|
|
Termination upon
Death or Disability
|
|
Termination by the Company without Cause or by Executive for Good Reason
|
|
Blake L. Sartini
|
|
|
|
|
|
|
|
Cash Severance (1)
|
|
$
|
6,750,000
|
|
|
$
|
—
|
|
|
$
|
4,500,000
|
|
|
Health Benefits (2)
|
|
32,357
|
|
|
—
|
|
|
32,357
|
|
|
Acceleration of Vesting of Equity Awards (3)
|
|
18,631,719
|
|
|
18,631,719
|
|
|
18,631,719
|
|
|
Total
|
|
$
|
25,414,076
|
|
|
$
|
18,631,719
|
|
|
$
|
23,164,076
|
|
|
Charles H. Protell
|
|
|
|
|
|
|
|
Cash Severance (4)
|
|
$
|
3,000,000
|
|
|
$
|
—
|
|
|
$
|
3,000,000
|
|
|
Health Benefits (2)
|
|
40,732
|
|
|
—
|
|
|
40,732
|
|
|
Acceleration of Vesting of Equity Awards (3)
|
|
8,904,269
|
|
|
8,904,269
|
|
|
8,904,269
|
|
|
Total
|
|
$
|
11,945,001
|
|
|
$
|
8,904,269
|
|
|
$
|
11,945,001
|
|
|
Stephen A. Arcana
|
|
|
|
|
|
|
|
Cash Severance (4)
|
|
$
|
2,400,000
|
|
|
$
|
—
|
|
|
$
|
2,400,000
|
|
|
Health Benefits (2)
|
|
41,715
|
|
|
—
|
|
|
41,715
|
|
|
Acceleration of Vesting of Equity Awards (3)
|
|
8,057,744
|
|
|
8,057,744
|
|
|
8,057,744
|
|
|
Total
|
|
$
|
10,499,459
|
|
|
$
|
8,057,744
|
|
|
$
|
10,499,459
|
|
|
Blake L. Sartini, II
|
|
|
|
|
|
|
|
Cash Severance (4)
|
|
$
|
796,875
|
|
|
$
|
—
|
|
|
$
|
796,875
|
|
|
Health Benefits (2)
|
|
26,072
|
|
|
—
|
|
|
26,072
|
|
|
Acceleration of Vesting of Equity Awards (3)
|
|
4,595,954
|
|
|
4,595,954
|
|
|
4,595,954
|
|
|
Total
|
|
$
|
5,418,901
|
|
|
$
|
4,595,954
|
|
|
$
|
5,418,901
|
|
|
Sean T. Higgins
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Health Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Acceleration of Vesting of Equity Awards (5)
|
|
3,207,141
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
3,207,141
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Thomas E. Haas
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Health Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Acceleration of Vesting of Equity Awards (6)
|
|
354,360
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
354,360
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)In the event of a Qualifying Termination on December 31, 2020, Mr. Sartini would have been entitled to receive a lump-sum payment equal to the Severance Multiplier, multiplied by the sum of his annual base salary (as in effect immediately prior to the date of termination) and his target bonus for the year in which such termination occurs (which was 125% of base salary for 2020). The “Severance Multiplier” in Mr. Sartini’s employment agreement is three for the first three years of the agreement, two and one-half for the next year of the agreement, and two thereafter, provided that the Severance Multiplier will be three in the event of a Qualifying Termination occurring within 12 months following a “Change in Control” (as defined in the 2015 Plan).
(2)For Mr. Sartini, represents the value of continued health benefits at our expense for a period of 18 months following termination, plus a lump-sum cash payment equal to (i) his monthly health insurance premium at the date of termination, multiplied by (ii) the amount by which the Severance Multiplier multiplied by 12 exceeds 18. For each of Messrs. Protell and Arcana, represents the value of continued health benefits at our expense for a period of 18 months following termination, plus a lump-sum cash payment equal to six times his monthly health insurance premium at the date of termination. For Mr. Sartini, II, represents the value of continued health benefits at our expense for a period of 15 months following termination.
(3)For those executives other than Mr. Haas, all of an executive’s time-based stock awards will accelerate in the event of his Qualifying Termination or his termination by reason of death or disability.
Includes the value of the acceleration of the outstanding stock options held by each executive, calculated by multiplying the number of stock options that would have vested by the amount by which the closing price of the Company’s common stock on December 31, 2020 ($19.89) exceeded the exercise price per share of such options (ranging from $7.34 to $13.50). Also includes the value of the acceleration of outstanding RSUs held by each executive based on the closing price of the Company’s common stock on December 31, 2020 ($19.89) (which vesting, in the case of Mr. Protell’s August 2019 RSU award, is pro-rated based on the duration of the period from the date of grant through the date of termination if such Qualifying Termination does not occur within twelve months following a change in control).
With respect to the PSUs granted in 2018 and 2019, in the event of an executive officer’s Qualifying Termination or the NEO’s death or disability on December 31, 2020, such number of PSUs would have vested based on the performance achievement percentage based on actual performance for such PSUs on the certification date for such PSUs (or, if a change in control also occurred on such date, on the date of the change in control). In March 2020, the Compensation Committee determined that the 2018 PSUs were “earned” at 70.4% of “target” levels based on the Company’s performance during 2018 and 2019 and so the 2018 PSUs are reflected at such level in the table above. This number of “earned” shares is subject to one additional year of time-based vesting, with such shares vesting on March 14, 2021. In March 2021, the Compensation Committee determined that the 2019 PSUs were “earned” at 92.7% of “target” levels based on the Company’s performance during 2019 and 2020 and the 2019 PSUs are reflected at such level in the table above. The number of “earned” shares is subject to one additional year of time-based vesting, with such shares vesting on March 14, 2022.
With respect to the PSUs granted in 2020, the values were calculated assuming that the requisite Company performance is attained at “target” levels. In the event of an executive officer’s Qualifying Termination or the NEOs death or disability, the 2020 PSUs will remain earned based on the actual performance achieved under the terms of the awards, or, if such termination occurs following December 31, 2021, the “performance-adjusted earned” PSUs will vest on the date of termination. With respect to the 2020 PSUs, in the event of a change in control, the number of “performance-adjusted earned” PSUs will be determined as of the date of the change in control in accordance with the award agreement (with the performance achievement percentages based on actual performance for any completed year and “target” performance for any incomplete year), and the resulting number of “performance-adjusted earned” PSUs will vest on the third anniversary of the date of grant (subject to earlier acceleration in the event of a Qualifying Termination or death or disability, as described above).
(4)In the event of a Qualifying Termination on December 31, 2020: each of Messrs. Protell and Arcana would have been entitled to receive a lump-sum payment equal to two multiplied by the sum of his annual base salary (as in effect immediately prior to the date of termination) and his target bonus for the year in which such termination occurs (which was 100% of base salary for 2020); and Mr. Sartini, II would have been entitled to receive a lump-sum payment equal to 1.25 multiplied by the sum of his annual base salary (as in effect immediately prior to the date of termination) and his target bonus for the year in which such termination occurs (which was 50% of base salary for 2020). The severance provisions in the employment agreements are described above under “Executive Employment Agreements and Equity Award Acceleration.”
(5)Following Mr. Higgins’ termination of employment during 2020 by reason of his death, his estate remains earned in the outstanding PSUs held by Mr. Higgins at his death. In the event a change in control had occurred on December 31, 2020, all of the outstanding PSUs held by Mr. Higgins would have accelerated. For more information about the PSUs reflected in this column for Mr. Higgins, see footnote (3).
(6)In the event of Mr. Haas’ termination without cause following a change in control, all of his outstanding RSUs will vest upon such termination.
With respect to the PSUs granted to Mr. Haas in 2018 and 2019, in the event of his termination without cause on December 31, 2020, provided a change in control had occurred on or prior to such date, such number of PSUs would have vested based on the performance achievement percentage based on actual performance for such PSUs on the certification date for such PSUs (or, if a change in control also occurred on such date, on the date of the change in control). In March 2020, the Compensation Committee determined that the 2018 PSUs were “earned” at 70.4% of “target” levels based on the Company’s performance during 2018 and 2019 and so the 2018 PSUs are reflected at such level in the table above. This number of “earned” shares is subject to one additional year of time-based vesting, with such shares vesting on March 14, 2021. In March 2021, the Compensation Committee determined that the 2019 PSUs were “earned” at 92.7% of “target” levels based on the Company’s performance during 2019 and 2020 and the 2019 PSUs are reflected at such level in the table above. This number of “earned” shares is subject to one additional year of time-based vesting, with such shares vesting on March 14, 2022.
With respect to the PSUs granted in 2020, the values were calculated assuming that the requisite Company performance is attained at “target” levels. In the event of Mr. Haas’ termination without cause following a change in control, Mr. Haas will vest in the “performance-adjusted earned” PSUs, as determined as of the date of the change in control. With respect to the 2020 PSUs, in the event of a change in control, the number of “performance-adjusted earned” PSUs will be determined as of the date of the change in control in accordance with the award agreement (with the performance achievement percentages based on actual performance for any completed year and “target” performance for any incomplete year), and the resulting number of “performance-adjusted earned” PSUs will vest on the third anniversary of the date of grant (subject to earlier acceleration in the event of Mr. Haas’ termination without cause, as described above).
The table includes the value of the acceleration of outstanding RSUs and PSUs held by Mr. Haas that would vest in the event of his termination without cause following a change in control (assuming both the termination and such change in control occurred on December 31, 2020) based on the closing price of the Company’s common stock on December 31, 2020 ($19.89).
Chief Executive Officer Pay Ratio
In 2020, the annual total compensation of Mr. Sartini, our Chief Executive Officer, was $5,225,783, as reported in the “2020 Summary Compensation Table.” Based on the methodology described below, we determined that the median employee in terms of total 2020 compensation of all Company employees (including full-time and part-time employees, other than Mr. Sartini) received $22,941 in annual total compensation for 2020. Therefore, the ratio of 2020 total compensation of Mr. Sartini to the median employee was 228 to 1. The pay ratio provided is a reasonable estimate calculated in a manner consistent with SEC rules.
To determine median employee compensation for purposes of our 2020 proxy statement pay ratio disclosure, we took the following steps:
•Our employee population as of December 31, 2020 was approximately 6,700 full-time and part-time employees.
•With respect to employees other than Mr. Sartini, we used salary, wages and tips as reported to the Internal Revenue Service on Form W-2 for 2020. We identified the median employee using this compensation measure, which was consistently applied to all employees included in the calculation.
•Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2020 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation presented in the pay ratio calculation. Such approach is also consistent with the calculation of the compensation of our NEOs, as reported in the “2020 Summary Compensation Table.”
NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Proposal Two)
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, the Company’s shareholders are entitled to vote at the Annual Meeting to provide advisory approval of the compensation of our NEOs as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our NEOs’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall total compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Pursuant to the Dodd-Frank Act, the shareholder vote on executive compensation is an advisory vote only, and it is not binding on us or our Board of Directors or the Compensation Committee. We currently conduct a shareholder non-binding advisory vote on executive compensation annually.
As described more fully in the Compensation Discussion and Analysis section of this Proxy Statement, the Company’s executive compensation program is designed to attract and retain superior employees in key positions to enable our Company to succeed in the highly competitive market for talent, while simultaneously aligning actual pay to Company performance and shareholder returns. We intend to provide a competitive target compensation package to our executives, tie a significant portion of pay to performance and utilize programs that align the interests of our executives with those of our shareholders. Our Compensation Committee and our Board of Directors believe that our executive compensation program fulfills these goals and is reasonable, competitive and appropriately aligned with our Company performance and the performance of our executives. We urge shareholders to read the Compensation Discussion and Analysis section of this Proxy Statement, which describes in detail how the Company’s executive compensation policies and procedures operate and are intended to operate in the future.
We are asking our shareholders to indicate their support for the advisory approval of the Company’s executive compensation as described in this Proxy Statement. Accordingly, we ask that our shareholders vote “FOR” the following resolution:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the Company’s executive compensation as disclosed in the Company’s Proxy Statement for the Annual Meeting of Shareholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2020 Summary Compensation Table and the other related tables and disclosure.”
While this advisory vote is non-binding, our Board of Directors values the opinions that shareholders express in their votes and will, as a matter of good corporate practice, take into account the outcome of the vote when considering future compensation decisions.
Shareholder approval, on an advisory basis, of this Proposal Two requires the affirmative vote of the holders of a majority of the shares of our common stock present or represented by proxy and entitled to vote at the Annual Meeting.
The Board of Directors recommends that you vote “FOR” the advisory approval of the Company’s executive compensation as disclosed in this Proxy Statement.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal Three)
Our Board of Directors and management are committed to the quality, integrity and transparency of our financial reports. Independent registered public accounting firms play an important part in our system of financial control. In accordance with the duties set forth in its written charter, the Audit Committee of our Board of Directors has appointed Ernst & Young LLP (“EY”) as our independent registered public accounting firm for the year ended December 31, 2021. EY has served as our independent registered public accounting firm since 2018.
Shareholders are not required to ratify the appointment of EY as our independent registered public accounting firm. However, our Board of Directors is submitting the appointment of EY for shareholder ratification at the Annual Meeting as a matter of good corporate practice. Representatives of EY are expected to be present at the Annual Meeting and will have an opportunity to make a statement and to respond to appropriate questions.
If our shareholders do not ratify the appointment of EY, the Audit Committee may reconsider EY’s appointment, but is not required to do so. Even if the shareholders ratify the appointment of EY at the Annual Meeting, the Audit Committee, in its sole discretion, may direct the appointment of a new independent registered public accounting firm at any time during the year without notice to, or the consent of, the shareholders, if they determine that such a change would be in our best interests and the best interests of our shareholders.
Shareholder approval of this Proposal Three requires the affirmative vote of the holders of a majority of the shares of our common stock present or represented by proxy and entitled to vote at the Annual Meeting.
The Board of Directors recommends that you vote “FOR” the ratification of the appointment of our independent registered public accounting firm for the year ending December 31, 2021.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit and Non-Audit Fees
The following table summarizes the aggregate fees for professional audit and other services rendered by EY during the years ended December 31, 2020 and 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
Audit Fees (1)
|
|
$
|
1,356,000
|
|
|
$
|
1,550,000
|
|
|
Audit-Related Fees (2)
|
|
130,000
|
|
|
130,000
|
|
|
Tax Fees
|
|
335,950
|
|
|
335,000
|
|
|
Total Fees
|
|
$
|
1,821,950
|
|
|
$
|
2,015,000
|
|
(1)Audit fees consist of fees billed for quarterly reviews and the annual audit of our consolidated financial statements, including annual audit and attestation services required by the State of Maryland. Audit fees for 2019 also include the issuance of consents, review of documents filed with the SEC and professional services relating to our debt offering.
(2)Audit-related fees consist of fees billed for internal control compliance and other agreed upon procedures.
The Audit Committee has reviewed the fees billed by EY during the year ended December 31, 2020 and, after consideration, has determined that the receipt of these fees by EY is compatible with the provision of independent audit services. The Audit Committee discussed these services and fees with EY and our management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC, including those designed to implement the Sarbanes-Oxley Act of 2002, as well as by the Public Company Accounting Oversight Board.
Pre-Approval of Audit and Non-Audit Services
As provided in the charter of the Audit Committee, and in order to maintain control and oversight over the services provided by our independent registered public accounting firm, it is the policy of the Audit Committee to pre-approve all audit and non-audit services to be provided by the independent registered public accounting firm (other than with respect to de minimis exceptions permitted by the Sarbanes-Oxley Act of 2002), and not to engage the independent registered public accounting firm to provide any non-audit services prohibited by law or regulation. For administrative convenience, the Audit Committee has delegated pre-approval authority for certain matters to the Chair of the Audit Committee, but any decision by the Chair on pre-approval must be reported to the full Audit Committee at its next regularly scheduled meeting. During the years ended December 31, 2020 and 2019, all services were pre-approved in accordance with these procedures.