DEF 14A of Pool Corp, Mar 30, 2021

DEF 14A of Pool Corp

Filed Mar 30, 2021 · FY20200000945841-21-000058

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  2. General

    General Our Bylaws provide that the size of our Board may be increased or decreased from time to time by resolution of the Board. The Board currently consists of nine directors. However, on February 23, 2021, Andrew W. Code notified the Board that he will retire from service on the Board effective immediately on the date of the Annual Meeting and, accordingly, will not stand for re-election at the 2021 Annual Meeting. Thus, as of the Annual Meeting, the Board will consist of eight directors. The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated each of our eight remaining directors to serve another one-year term. Each of the nominees was previously elected a director of the Company by our stockholders, and each of the nominees has indicated his or her intention to serve if elected. However, if any director nominee is unable or unwilling to take office at the Annual Meeting, your proxy may be voted in favor of another person or other persons nominated by the Board. Once elected, each director will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal. Our Bylaws include a majority voting standard in uncontested director elections. This means that if the number of shares voted for the election of any sitting director is less than the number of votes withheld or against election with respect to that director, that director must submit a letter to the Board offering to resign. The Board, after considering the recommendation of the Nominating and Corporate Governance Committee, must make a decision whether to accept, reject or take other action with respect to the resignation within 90 days from certification of the election results.

  3. Information about our Director Nominees

    Information about our Director Nominees Our Board is comprised of a diverse group of individuals of varying backgrounds and experiences. Below is biographical information about each of our director nominees, including information regarding tenure as a director, business experience and qualifications, education and other company directorships. The summaries are not comprehensive, but describe the primary experiences, attributes and skills that led the Nominating and Corporate Governance Committee and our Board to determine that these individuals should serve as directors of our Company. In addition to the qualifications referred to below, we believe each individual has a reputation for demonstrating integrity, honesty, high ethical standards and sound business judgment.

  4. 2020 Executive Compensation Program Highlights

    | | What we do: | | What we don’t do: | | ü | Our executive pay is predominantly performance-based and not guaranteed. | û | We do not provide excessive perquisites to our executives. | | ü | All of our variable compensation plans have caps on plan formulas. | û | Directors and NEOs are prohibited from pledging and hedging their shares of company stock. | | ü | Our equity plans contain “double trigger” change of control vesting provisions. | û | Our equity plans prohibit the repricing of underwater stock options. | | ü | We benchmark pay relative to the market and review our peer group annually. | û | We do not provide any change of control cash payments to our executive officers. | | ü | We maintain share ownership guidelines. | û | We do not have any related party transactions with our executive officers. | | ü | We maintain executive compensation clawback provisions. | | | | ü | The Compensation Committee, like all of our Board committees, is comprised solely of independent directors. | | | | ü | Our Compensation Committee periodically retains its own independent compensation consultant. | | | | ü | Restricted stock awards include performance-based vesting criteria. | | |

  5. 2020 Executive Compensation Program Highlights

    ▪A majority of each NEO’s target compensation has been and continues to be at-risk. The charts below show the 2020 plan design, or target, compensation mix by component: ▪Consistent with its long-standing policy of placing greater emphasis on the performance-based components of compensation, the Compensation Committee approved only a marginal increase in base salaries during 2020 for each NEO (roughly 3% on average), with the exception of Ms. Neil, who received a 22% increase in recognition of her performance and experience in her role as well as in consideration of the market pay for comparable executives. ▪The Compensation Committee approved an annual cash performance potential for each NEO, with 2020 plan design targeted at 100% of base salary for Mr. Arvan, 87.5% of base salary for Mr. Cook, and 75% of base salary for Messrs. Joslin and St. Romain and Ms. Neil. Each NEO received a maximum payout under the 2020 annual cash performance awards, which was 200.0% of base salary for Mr. Arvan and averaged 156.3% of base salary for our other NEOs. ▪The Compensation Committee continued to emphasize the importance of our long-term growth by providing substantial pay-for-performance compensation opportunities through the medium-term Strategic Plan Incentive Program (SPIP) and the Amended and Restated 2007 Long-Term Incentive Plan (2007 LTIP). For the 2020 SPIP grant, which is based on the diluted EPS growth in the three-year performance period from 2020 to 2022, adjusted diluted EPS at December 31, 2019 of $5.83 serves as the baseline for the performance period. Cash payments to our NEOs under the SPIP for the performance period ended December 31, 2020 were 200% of base salary, which is the maximum possible attainment under the program. These SPIP payments represented an adjusted diluted EPS CAGR of 21.1% for the 2018 to 2020 performance period. ▪The Compensation Committee determined the 2020 equity grants for all NEOs based on total compensation targets approximating the peer group median for total compensation; grants of restricted stock awards to our NEOs contain a performance-based vesting criterion (return on invested capital).

  6. Results Compared to Peers

    Results Compared to Peers Our Compensation Committee designs total compensation for our executives to target or approximate the peer median for total compensation (sometimes referred to as “compensation by design”), but ultimately our executives’ total compensation varies depending on our performance. Our peer group is comprised of public companies primarily engaged in wholesale distribution and of similar size based on both revenues and market capitalization. See “Process of Setting Compensation - Benchmarking and Establishment of Peer Group” for further information on our peer group. The table below presents compound annual growth rates (CAGR) for our EPS and stock price performance as well as our total stockholder return (TSR) performance compared to our peer group median as of December 31, 2020. In addition to our peer group, we believe it is helpful to measure our performance against the S&P 500 Index because (a) it is comprised of similar-sized public companies that represent the most likely alternative investments for investors and (b) we have no direct public company peers given the niche nature of our industry. Note that effective October 2020, the Company joined the S&P 500 Index. Given that our compensation philosophy stresses the long-term growth of stockholder value, we believe that longer-term performance data provides the most appropriate comparisons.

  7. Results Compared to Peers

    | | Pool Corporation | | | | | | | Adjusted(1) Diluted EPS CAGR | Stock Price CAGR | TSR CAGR | Peer Group Median TSR(2) CAGR | S&P 500 Index CAGR(3) | | 1-year | 44.4% | 75.4% | 76.5% | 25.7% | 16.3% | | 3-year | 25.4% | 42.2% | 42.9% | 6.3% | 12.0% | | 5-year | 23.8% | 35.8% | 36.4% | 13.2% | 12.9% | | 10-year | 22.0% | 32.4% | 32.8% | 9.5% | 11.6% |

  8. Results Compared to Peers

    (1)The adjusted diluted EPS CAGR amounts are based on adjusted diluted 2020 EPS of $8.42, which excludes a $0.70 per diluted share benefit from the impact of Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09) and a non-cash goodwill impairment charge of $0.15 per diluted share. The 1-year diluted EPS CAGR is also based on adjusted 2019 diluted EPS of $5.83, which excludes a $0.57 benefit from the impact of ASU 2016-09. The 3-year diluted EPS CAGR is also based on adjusted 2017 diluted EPS of $4.27, which excludes a $0.24 benefit from the impact of ASU 2016-09. (2)We calculated TSR based on changes in the market price of each company’s common stock plus dividends paid during the respective periods, if applicable, using information from company financial statements and various financial websites including www.nasdaq.com. In calculating TSR, we used stock-split adjusted amounts for both historical market prices and dividends paid. (3)As reported by Nasdaq. As reflected in the table below, 2020 total target compensation for our NEOs as a group was largely in-line with the peer group median. Actual compensation for our NEOs was 32% higher than the peer group median given our exceptional results compared to the peer group, as noted in the table above. See “Process of Setting Compensation - Benchmarking and Establishment of Peer Group” for more information regarding our peer group.

  9. Results Compared to Peers

    | Total Compensation Above (Below) Peer Group Medians(1) | | | | Position | 2020 Actual | 2020 Plan Design | | CEO | —% | (20)% | | All Other NEOs | 60% | 22% | | All NEOs | 32% | 2% |

  10. Results Compared to Peers

    (1)Our Compensation Committee set our compensation plan design for fiscal 2020 in February 2020. At that time, peer group compensation data for 2019 was not available. Therefore, the peer group median amounts used for comparison in the above table were calculated primarily using 2018 compensation data. After review of all existing programs, consideration of current market and competitive conditions, and alignment with our overall compensation objectives and philosophy, we believe that the total compensation program for our executives is appropriately focused on enhancing corporate performance and increasing value for stockholders. We believe that a significant part of our executive pay is properly tied to stockholder value through our long-term equity awards and incentive performance measures.

  11. Process of Setting Compensation

    Process of Setting Compensation Our Compensation Committee is responsible for the oversight of our executive compensation. The Compensation Committee approves compensation plans for senior management and equity-based plans for all employees. In its evaluation of executive compensation, the Compensation Committee considers many factors, including the Company’s overall performance; each individual executive’s role and responsibilities, performance, tenure and experience; and peer group performance. The Compensation Committee normally meets in February of each year to set executive compensation plans for that fiscal year. To do this, it uses the most current data available for peer group compensation, although this data is generally a year or more old.

  12. Role of Compensation Consultant

    Role of Compensation Consultant Our Compensation Committee periodically engages an independent compensation consultant to review and comment on executive and director compensation. In 2019, in an effort to continue to ensure that our executive compensation program properly aligns with the interests of our stockholders and remains comparable with the market, the Compensation Committee engaged Pearl Meyer & Partners, LLC (Pearl Meyer) to review our 2019 executive and non-employee director compensation program as well as our peer group composition. Based on Pearl Meyer’s findings, the Compensation Committee continues to believe that this structure and mix of pay elements successfully promotes our compensation objectives and philosophy, and accordingly, retained this structure in 2020.

  13. Benchmarking and Establishment of Peer Group

    Benchmarking and Establishment of Peer Group As noted above, we believe that total target compensation for our NEOs should be closely aligned to the median total compensation of our peer group. We establish compensation targets for each executive position in the aggregate and by component based on a design that we believe will best achieve our strategic and financial objectives. The Compensation Committee compares our primary compensation components – base salary, annual cash incentive, SPIP and equity awards – individually and in the aggregate to the compensation of the most highly compensated executive officers of our “peer group” companies (the peer group is sometimes referred to as the “market”). These comparisons are based on compensation information published in the annual proxy statements of the peer group companies, except for the value of stock options. Rather than use the estimated grant date fair values as reported in the proxy statements, we estimate stock option values by multiplying the number of stock options awarded by 40% of the stock’s closing price on the grant date (assuming this price equals the exercise price). We believe this adjustment makes the estimated compensation amounts for stock options more comparable between companies by eliminating potential differences related to fair value assumptions for expected term, volatility and dividend yield. The Compensation Committee reviews management’s evaluation of potential peer companies, approves the annual peer group and also reviews the annual executive compensation analysis that is prepared by management and, in some years, by the compensation consultant. In developing our peer group, we evaluate the following criteria: ▪organizational structure (public companies); ▪type of business (primarily wholesale distribution); ▪company size (based on revenue and market capitalization); and ▪peer group size (number of peer companies). In performing our evaluation, we focus on public companies that we believe would provide a comparable cross-industry subset of distributors. While we evaluate companies that may have some manufacturing or retail operations, we generally exclude companies from consideration if the majority of the business is not wholesale distribution. Since our Global Industry Classification Standard (GICS) industry group (2520 - Consumer Durables & Apparel) is broad and our GICS industry (252020 - Leisure Equipment & Products) would not provide an adequate peer group size, we believe that using a cross-industry subset of wholesale distributors for our peer group provides a more meaningful executive compensation benchmarking analysis than using companies based on one of our industry sectors. With assistance from Pearl Meyer, the Compensation Committee reviewed our 2019 peer group and made the following changes for 2020: •removed the non-core distribution businesses (Acuity Brands, Inc., Boise Cascade Company, Helen of Troy Limited, and Steelcase Inc.) and Kaman Corporation, as it divested of its distribution business in late 2019; •removed Wesco Aircraft Holdings, Inc. as it is no longer a public company and ScanSource, Inc. because its most recently filed proxy statement at the time reported compensation for only two executives; and •added Foundation Building Materials, Inc., GMS Inc. and WESCO International, Inc., all of which are distribution companies with revenue and market capitalization within our criteria ranges. Accordingly, our 2020 peer group consisted of the following companies:

  14. Benchmarking and Establishment of Peer Group

    | ⋅Applied Industrial Technologies, Inc. | ⋅GMS Inc. | ⋅Sally Beauty Holdings, Inc. | | ⋅Beacon Roofing Supply, Inc. | ⋅HD Supply Holdings, Inc. | ⋅SiteOne Landscape Supply, Inc. | | ⋅BMC Stock Holdings, Inc. | ⋅MRC Global Inc. | ⋅UFP Industries, Inc. | | ⋅Builders FirstSource, Inc. | ⋅MSC Industrial Direct Company, Inc. | ⋅Watsco, Inc. | | ⋅Fastenal Company | ⋅NOW Inc. | ⋅WESCO International, Inc. | | ⋅Foundation Building Materials, Inc. | ⋅Patterson Companies, Inc. | |

  15. Benchmarking and Establishment of Peer Group

    The table below presents our revenue and market capitalization compared to the median of our 2020 peer group (based on data available in the fall of 2019 when the 2020 peer group was established).

  16. Benchmarking and Establishment of Peer Group

    | (in millions) | Revenue | Market capitalization | | POOL(1) | $2,998 | $7,869 | | Peer group median(2) | 4,172 | 2,083 |

  17. Benchmarking and Establishment of Peer Group

    (1)POOL’s revenue reflects our most recent annual net sales (fiscal year 2018) at the time of our analysis, and our market capitalization is as of October 3, 2019. (2)The peer group median revenue represents the median annual net sales based on annual public filings available as of October 2019; the peer group median market capitalization is as of October 3, 2019. The Compensation Committee reviews each component of our NEOs’ compensation compared to the peer group, and they also review the prior year’s total compensation for our NEOs versus the peer group. However, the Compensation Committee ultimately focuses on whether total compensation by design aligns closely with the peer group median total compensation amounts. While we compare our CEO position to the CEO positions for our peer group, we compare our other NEOs to the peer group in the aggregate as opposed to by position because we believe it affords a better comparison overall as the positions and responsibilities for this group vary from company to company. Market medians and the ranges around them only represent beginning reference points. The Compensation Committee also uses its subjective judgment to set compensation, incorporating factors such as individual performance and skills, long-term potential, tenure in the position and retention considerations. The Compensation Committee also reviews the total annual compensation that each executive could potentially receive and, for perspective, reviews the previous year’s compensation value for each executive. The Compensation Committee has considered the impact that paying below the median of our peers might have on attracting, retaining and motivating senior management. The Compensation Committee believes that the fundamental philosophy of emphasizing pay-for-performance is the right one for our Company, and that our core compensation program as currently designed (base salary, annual cash incentive, SPIP and equity awards) can provide competitive or superior total compensation for senior management compared to our peer group given a reasonable economic environment. The Compensation Committee continues to believe that the design of our compensation program reflects a greater weighting to performance-based and at-risk compensation than the peer group median, as evidenced by the comparisons of our compensation components to the related peer group median amounts (see tables included in the “Components of Compensation” section below). Provided that our performance meets or exceeds expectations in future years, the Compensation Committee expects our NEOs will realize total compensation comparable or superior to the peer group median over time.

  18. (Summary Compensation Table, Column 3)

    (Summary Compensation Table, Column 3) Salaries provide executives with a base level of income and help achieve the objectives outlined above by attracting and retaining strong talent. Our plan design is for total executive compensation at comparable performance levels to be at the peer group’s median total compensation. However, because of our desire to emphasize those elements of compensation that are performance-based, our practice has generally been to set base salary levels below the market median for each executive officer. In determining an executive’s base salary, the Compensation Committee reviews Company and individual performance information and peer group executive compensation information. Changes in our NEOs’ base salaries from year to year reflect general changes in market pay for executive talent, changes in responsibility for individual NEOs from time to time and, to a lesser extent, the individual’s job performance over time. Additionally, base salary levels for all NEOs have been substantially below market historically as compared to our peers. We do not generally provide our NEOs with automatic annual salary increases or other cost of living adjustments. The 2020 base salary levels for our NEOs continued to remain low by design as compared to our peer group. The table below presents the percentage by which our NEOs’ 2020 base salaries are below the peer group median base salary amounts.

  19. (Summary Compensation Table, Column 3)

    | Base Salary (Below) Peer Group Medians (1) | | | Position | 2020 Actual | | CEO | (37)% | | All Other NEOs | (27)% | | All NEOs | (30)% |

  20. (Summary Compensation Table, Column 3)

    (1)Our Compensation Committee set our compensation plan design for fiscal 2020 in February 2020. At that time, peer group compensation data for 2019 was not available. Therefore, the peer group median amounts used for comparison in the above table were calculated primarily using 2018 compensation data. In February 2020, the Compensation Committee increased executive officer salaries to the following amounts:

  21. (Summary Compensation Table, Column 3)

    | Name | Salary | Increase | | Peter D. Arvan | $500,000 | 4.2% | | Mark W. Joslin | 318,000 | 4.3% | | A. David Cook | 333,200 | 2.5% | | Kenneth G. St. Romain | 325,000 | 2.5% | | Jennifer M. Neil | 250,000 | 22.0% |

  22. (Summary Compensation Table, Column 3)

    The average salary increase for the NEOs was 7.1%. Ms. Neil received the greatest percentage increase, 22.0%, in recognition of her performance and experience in her role as well as in consideration of the market pay for comparable executives. Even with these increases, our NEOs’ 2020 base salaries as a group were 30% below the peer group median, as shown in the table above.

  23. Annual Incentive Plan

    Annual Incentive Plan

  24. (Summary Compensation Table, Column 5)

    (Summary Compensation Table, Column 5)

  25. (Grants of Plan-Based Awards, Columns 3-4)

    (Grants of Plan-Based Awards, Columns 3-4) We use an annual cash incentive award (annual bonus) to focus executive behavior on short-term goals for growth, financial performance and other specific financial and business improvement metrics. We offer executives the opportunity to earn goal-oriented awards that are responsive to changing internal and external business conditions from year to year. Early each year, the Compensation Committee evaluates the prior year’s performance against the applicable target goals and approves annual bonus payments for that year and reviews and approves goals for each NEO for the current year. Annual bonus payments, if any, are normally made in late February or early March after the end of the performance period in which the bonuses were earned. Under our Pool Corporation Executive Officer Annual Incentive Plan (the AIP), the Compensation Committee has the discretion to structure the annual bonus program as it deems appropriate, including designing an “umbrella plan” under which one or more performance goals are established to fund a pool, from which individual awards, which may be subject to additional performance criteria, are then made. 2020 Plan Design In February 2020, the Compensation Committee established the performance metrics applicable to awards under the AIP for 2020 and the maximum bonus payable to each NEO under the AIP. Similar to our 2019 plan, our Compensation Committee included return on invested capital (ROIC) as a threshold performance metric, which must be achieved in order for any payments to be made under the AIP. Under this plan design, if the Company achieved ROIC of 10% or higher for fiscal year 2020, a bonus pool would be funded to satisfy annual bonus payments to all of our executive officers, including the NEOs. The Compensation Committee then set individual bonus metrics (described below) to determine the amounts awarded to each of our NEOs. Our ROIC calculation numerator is net income before after-tax interest and other non-operating expenses, net, and the denominator is the sum of total long-term debt (including the current portion) and stockholders’ equity at fiscal year end. Calculated in this way, our ROIC for the year ended December 31, 2020 was 35.7%. Because our 2020 ROIC was greater than 10%, the bonus pool for 2020 under the AIP was funded. For 2020, our NEOs’ annual bonus targets were based on the following two objective performance criteria categories: ▪specific financial measures (operating income and operational cash flow); and ▪specific business objectives tailored to each NEO’s area of responsibility. The metrics for all NEOs are designed to be challenging and encourage improvement over the status quo. For 2020, the Compensation Committee used adjusted operating income as the primary performance financial metric for annual bonuses, as set forth in the table below. The Compensation Committee may authorize adjustments to operating income as specified by our compensation plans. We believe operating income is a strong indicator of medium-term and long-term stockholder value as it has had a strong long-term correlation with our stock price over time, it is performance-based, and its use in our cash award plans supports our business goal of providing a superior return to our stockholders. Further, operating income is not impacted by tax benefits related to share-based compensation expense or changes to federal tax rates. The Compensation Committee has evaluated whether our reliance on operating income creates unnecessary risk and does not believe that it does. The annual bonus provided Mr. Arvan an up to 200% of salary opportunity (with a plan design of 100%), Mr. Cook an up to 175% of salary opportunity (with a plan design of 87.5%), Messrs. Joslin and St. Romain and Ms. Neil an up to 150% of salary opportunity (with a plan design of 75%). The table below details compensation opportunities available to each of our NEOs under various 2020 performance scenarios. The extent to which objectives are achieved determines the award earned.

  26. Annual Cash Performance Opportunity

    Annual Cash Performance Opportunity

  27. (expressed as a percentage of base salary)

    (1)Based on our potential adjusted operating income (in millions) for the year ended December 31, 2020. The cash award earned is prorated based on operating income between $330.8 million and $396.6 million. (2)Based on our adjusted net cash provided by operating activities as a percentage of net income for the year ended December 31, 2020. Messrs. Joslin, Cook and St. Romain have the opportunity to earn an additional 5% of base salary for operational cash flow between 100% and 110%, except that their overall bonus may not exceed 150% of base salary in the case of Messrs. Joslin and St. Romain and 175% of base salary for Mr. Cook. The cash award earned is prorated based on adjusted cash provided by operating activities as a percentage of net income between 80% and 110%. (3)Each executive’s respective business objectives reflects operational improvements related to his or her specific responsibilities, as described below. The table below presents the annual bonus earned by each NEO for 2020 under the AIP. We believe the 2020 actual annual bonus payouts reflect our strong performance in 2020, including 38% adjusted operating income growth and a 76.5% one-year total stockholder return. These payouts also reflect the variability of our annual cash award based on performance, which is by design given that our NEOs’ base salaries are significantly below our peer group median base salary amounts. In 2020, each of our NEOs earned the maximum award available under the AIP. All of the 2020 annual cash awards were based on actual objectives achieved and the Compensation Committee did not include any additional discretionary award amounts.

  28. (expressed as a percentage of base salary)

    | | | | Components as a % of Base Salary | | | | | Annual Bonus Earned | Bonus as a Percentage of Base Salary | Operating Income(1) | Operational Cash Flow(2) | Other Specific Business Objectives(3) | | Mr. Arvan | $1,000,000 | 200.0% | 140.0% | 30.0% | 30.0% | | Mr. Joslin | 477,000 | 150.0% | 100.0% | 15.0% | 35.0% | | Mr. Cook | 583,100 | 175.0% | 80.0% | 15.0% | 80.0% | | Mr. St. Romain | 487,500 | 150.0% | 80.0% | 15.0% | 55.0% | | Ms. Neil | 375,000 | 150.0% | 100.0% | N/A | 50.0% |

  29. (expressed as a percentage of base salary)

    The table below presents the percentage variances between our NEOs’ annual cash award amounts (2020 actual and 2020 plan design) and the peer group median annual cash award amounts, which reflect 2018 or 2019 annual cash awards based on publicly available information as of February 2020 when the Compensation Committee set our 2020 compensation. The actual cash awards for our NEOs were 29% higher than the peer group median given our exceptional results compared to the peer group, including our one-year TSR of 76.5% compared to the peer group median TSR of 25.7%.

  30. (expressed as a percentage of base salary)

    | Annual Cash Award Above (Below) Peer Group Medians | | | | Position | 2020 Actual | 2020 Plan Design | | CEO | 8% | (46)% | | All Other NEOs | 43% | (29)% | | All NEOs | 29% | (36)% |

  31. (Grants of Plan-Based Awards, Columns 3-4)

    (Grants of Plan-Based Awards, Columns 3-4) The Compensation Committee adopted the SPIP to provide senior management with an additional performance-based award contingent upon the achievement of specified earnings objectives. The SPIP is a cash-based, pay-for-performance award program that links our medium-term financial performance with the total cash compensation paid to senior management. The SPIP serves to complement our annual bonus program and the longer-term value creation potential provided by equity awards. Since the SPIP ties a large percentage of total potential compensation directly to our business results, the Compensation Committee believes this program underscores our pay-for-performance philosophy and helps focus executive attention on longer-term strategic goals. Payouts through the SPIP are based on the three-year compound annual growth rate (CAGR) of our diluted EPS. We believe EPS growth is one of the metrics that has shown a strong correlation with our stock price growth over the long term. The Compensation Committee believes that while the SPIP targets are aggressive, they are reasonable and provide both a fair reward and strong upside potential for our executives. Under the terms of the SPIP, our NEOs are eligible to earn a maximum cash award of up to 200% of their base salary, with minimum targets based on a three-year EPS CAGR of 10% for grants prior to 2021. The Compensation Committee may authorize EPS adjustments as specified under the SPIP. By way of example, the table below presents the award, expressed as a percentage of an NEO’s salary, to be earned for the three-year performance period beginning January 1, 2020 and ending December 31, 2022. For this 2020 grant, 2019 adjusted diluted EPS of $5.83 serves as the baseline for the performance period.

  32. (Grants of Plan-Based Awards, Columns 3-4)

    | CAGR | 2022 EPS | Salary % | CAGR | 2022 EPS | Salary % | | 10% | $7.76 | 50% | 16% | $9.10 | 120% | | 11% | 7.97 | 60% | 17% | 9.34 | 140% | | 12% | 8.19 | 70% | 18% | 9.58 | 160% | | 13% | 8.41 | 80% | 19% | 9.82 | 180% | | 14% | 8.64 | 90% | 20% | 10.07 | 200% | | 15% | 8.87 | 100% | | | |

  33. (Grants of Plan-Based Awards, Columns 3-4)

    The following table presents our three-year EPS CAGR and corresponding payouts as a percentage of base salaries for each of the last three fiscal years.

  34. (Grants of Plan-Based Awards, Columns 3-4)

    | Three-Year Performance Period | SPIP Payout as a Percentage of NEO Base Salaries(1) | Three-Year EPS CAGR | | January 1, 2018 - December 31, 2020(2) | 200.0% | 21.1% | | January 1, 2017 - December 31, 2019(3) | 67.8% | 11.8% | | January 1, 2016 - December 31, 2018(4) | 101.6% | 15.1% |

  35. (Grants of Plan-Based Awards, Columns 3-4)

    (1)Mr. Arvan joined our company in January 2017, and he received a pro-rated payout for the performance period ended December 31, 2018. (2)We calculated the three-year EPS CAGR using 2020 adjusted diluted EPS of $8.42, which excludes a $0.15 impact from non-cash impairments and a $0.70 per diluted share tax benefit from ASU 2016-09. (3)We calculated the three-year EPS CAGR using 2019 adjusted diluted EPS of $4.86, which excludes a $1.54 per diluted share benefit from the lower federal tax rate under the TCJA and the tax benefit from ASU 2016-09. (4)We calculated the three-year EPS CAGR using 2018 adjusted diluted EPS of $4.42, which excludes a $1.20 per diluted share benefit from the lower federal tax rate under the TCJA and the tax benefit from ASU 2016-09. The following table presents currently outstanding SPIP awards:

  36. (Grants of Plan-Based Awards, Columns 3-4)

    | Grant Year | Three-Year Performance Period | Baseline EPS | EPS for Minimum Payout(4) | EPS for Target Payout(4) | EPS for Maximum Payout (4) | | 2019 | January 1, 2019 - December 31, 2021 | $5.26(1) | $7.00 | $8.00 | $9.09 | | 2020 | January 1, 2020 - December 31, 2022 | $5.83(2) | $7.76 | $8.87 | $10.07 | | 2021 | January 1, 2021 - December 31, 2023 | $8.42(3) | $9.75 | $11.21 | $14.55 |

  37. (Grants of Plan-Based Awards, Columns 3-4)

    (1)The Compensation Committee set the baseline EPS at $5.26 per diluted share, which excludes a $0.36 per diluted share tax benefit related to ASU 2016-09. (2)The Compensation Committee set the baseline EPS at $5.83 per diluted share, which excludes a $0.57 per diluted share tax benefit related to ASU 2016-09. (3)The Compensation Committee set the baseline EPS at $8.42 per diluted share, which excludes a $0.70 per diluted share tax benefit related to ASU 2016-09 and a $0.15 impact from non-cash impairment charges. (4)Prior to the 2021 SPIP grant, the minimum payout was based on three-year diluted EPS CAGR of 10%, the target payout was based on three-year diluted EPS CAGR of 15%, and the maximum payout was based on three-year diluted EPS CAGR of 20%. For the 2021 SPIP grant, the Compensation Committee considered the extraordinary earnings growth in 2020, which serves as the baseline for the 2021 grant, and reduced the three-year diluted EPS CAGR for the minimum payout to 5% and the three-year diluted EPS CAGR for the target payout to 10%. The three-year diluted EPS CAGR for the maximum payout remains unchanged at 20%. The Compensation Committee believes this adjustment provides both a fair reward and strong upside potential for our executives while maintaining the rigor of the award.

  38. Long-Term Equity Award

    Long-Term Equity Award

  39. (Summary Compensation Table, Column 4)

    (Summary Compensation Table, Column 4)

  40. (Grants of Plan-Based Awards, Column 6)

    (Grants of Plan-Based Awards, Column 6)

  41. (Outstanding Equity Awards at Fiscal Year-End)

    (Outstanding Equity Awards at Fiscal Year-End) Equity grants are a key element of our total compensation package. We offer both stock options and performance-based restricted stock awards to our NEOs, both of which provide retention value through the imposition of cliff vesting conditions and also focus our NEOs on Company performance. The Compensation Committee determines individual equity grant awards based on relevant market data and each respective employee’s responsibility and performance. We believe that restricted stock awards reward performance because the ultimate value of the shares depends on our Company’s long-term performance. Restricted stock awards convey all the rights of a stockholder, including the right to vote and receive dividends, but recipients may not sell or transfer the shares until they are fully vested. Similarly, we believe that long-term equity awards in the form of stock options align executive performance with stockholder interests because employees have a vested interest in our stock performance and the option’s value only appreciates from stock price improvement after the grant date. The Compensation Committee believes that in times of economic volatility, restricted stock awards can play an important role in retention and motivation that stock options alone cannot. We use the following service-based equity vesting schedules to encourage employee equity holding and employment retention:

  42. (Outstanding Equity Awards at Fiscal Year-End)

    | Employee’s Length of Service to the Company | Award Vesting Schedule | | Less than five years | 100% vest five years after the grant date | | More than five years | 50% vest three years after the grant date 50% vest five years after the grant date |

  43. (Outstanding Equity Awards at Fiscal Year-End)

    Restricted stock awards to our employees contain performance-based vesting criteria in addition to the service-based vesting criteria discussed above. The awards provide for a three-year performance period for the metric to be achieved. If the performance metric fails to be met, the performance period may be extended; however, if the metric is not met by the end of the extended performance period, then all shares of performance-based restricted stock will be immediately forfeited and canceled for these grants. Under the performance-based vesting criteria for restricted stock awards granted in 2020, these shares will vest (subject to satisfaction of the service condition) based on our achievement of a three-year ROIC target of 10% established at the beginning of the performance period. We believe ROIC is an important indicator of financial health and company growth and is consistent with our compensation philosophy that compensation must be linked to continuous improvements in corporate performance. Further, after reviewing our peer companies’ proxy statements, we noted that ROIC was among the most widely used of the financial metrics for performance-based compensation. For more information on our ROIC calculation and 2020 results, please see the “Annual Incentive Plan” section above. In 2020, the Compensation Committee allowed each of the NEOs to elect to receive his or her equity grant in the form of performance-based restricted stock awards, stock options, or a combination of the two. The Compensation Committee believes that both stock options and restricted stock awards are closely aligned with the interests of stockholders and by offering our NEOs this choice, it serves our objectives of retention and motivation. In 2020, each of our NEOs elected to receive 100% of their respective equity awards in the form of performance-based restricted stock awards. Based on the total grant date fair value of equity-based awards granted in 2020, the equity-based awards granted to Mr. Arvan as CEO were approximately 3.0 times the average total fair value of the equity-based awards to our other NEOs in recognition of his substantially greater responsibilities. Mr. Arvan’s duties and responsibilities encompassed all aspects of our management and operations and were greater in scope and collectively more significant in nature than those of our other NEOs. Based on the 2020 equity grants and as noted in the table below, 2020 total equity compensation for all of our NEOs was in line with the peer group median for the most recent fiscal year reported. The table below presents the percentage variances between our 2020 actual total equity compensation amounts and the peer group median total equity compensation amounts. As previously discussed, we valued peer stock option awards based on the number of stock options awarded multiplied by 40% of the option’s exercise price.

  44. (Outstanding Equity Awards at Fiscal Year-End)

    | Total Equity Compensation Above (Below) Peer Group Medians (1) | | | Position | 2020 Actual | | CEO | (24)% | | All Other NEOs | 32% | | All NEOs | —% |

  45. (Outstanding Equity Awards at Fiscal Year-End)

    (1)Our Compensation Committee granted equity awards for fiscal 2020 in February 2020. At that time, peer group compensation data for 2019 was not available. Therefore, the peer group median amounts used for comparison in the above table were calculated primarily using 2018 compensation data. Currently, the Compensation Committee grants annual equity awards during the first quarter of each year, typically in February. This annual grant coincides with the annual performance review and compensation adjustment cycle. If granted, stock options are granted with an exercise price equal to our stock’s closing price on the grant date. The Compensation Committee may also grant equity awards to employees hired during the year. As an employee’s responsibility increases, equity grants become a greater percentage of his or her total compensation, equating to more at-risk compensation for higher level employees. Stock Ownership Guidelines The Compensation Committee believes that our executives and directors should have a significant equity interest in the Company to create an owner’s perspective in managing our Company and to further align their interests and actions with the interests of our stockholders. Our Board maintains stock ownership guidelines that generally require within five years of appointment for NEOs or three years of appointment for directors, our NEOs and directors hold shares of Common Stock or stock equivalents with a market value as follows:

  46. (Outstanding Equity Awards at Fiscal Year-End)

    | Position | Equity Ownership Guidelines | | CEO | 5x base salary | | Vice presidents | 2x base salary | | Directors (other than the CEO) | 3x annual cash retainer |

  47. (Outstanding Equity Awards at Fiscal Year-End)

    The Compensation Committee reviews compliance with the stock ownership guidelines annually, and all NEOs and directors are presently in compliance with the guidelines.

  48. (Nonqualified Deferred Compensation)

    (Nonqualified Deferred Compensation) The Pool Corporation 401(k) Plan (the 401(k) Plan), which is generally available to both management and non-management personnel, allows eligible employees to defer eligible compensation up to the Internal Revenue Code limit. For 2020, the limit was $19,500, or $26,000 for participants who attained the age of 50 during the plan year. We contribute a 100% match on the first 3% of eligible compensation deferred, a 50% match on deferrals between 3% and 5% and no match on deferrals over 5%. The PoolCorp Nonqualified Deferred Compensation Plan (the Deferred Compensation Plan) allows certain employees who occupy key management positions (including all of the NEOs) to defer eligible cash compensation and enables participants to receive matching contributions on the same percentage of eligible compensation as offered under the 401(k) Plan. Our total Company matching contributions given to a participant under the 401(k) Plan and the Deferred Compensation Plan during any one year may not exceed 4% of a participant’s eligible cash compensation. The purpose of the Deferred Compensation Plan is to make total retirement benefits for our employees who earn over the qualified plan limits commensurate with those available to other employees as a percentage of pay. We do not provide any defined benefit pension arrangements nor do we provide any other compensation arrangements to our NEOs other than those discussed in this proxy statement or available to all Company employees.

  49. (Summary Compensation Table, Column 6)

    (Summary Compensation Table, Column 6) Our philosophy is that perquisites should be limited. In line with this philosophy, our executives are offered few benefits that are not generally available to all of our employees. We provide certain employees, including the NEOs, with a company vehicle, including maintenance, insurance and fuel. We allow these employees to use their vehicles for personal and business reasons. Officers may choose to purchase their company vehicle at book value at any point. Additionally, we waive medical and dental monthly premiums for each of the NEOs. The Company does not own any aircraft or have any contract for air charter service and does not reimburse NEOs for club or like memberships. Excluding benefits available to all full-time employees, NEO benefits and other compensation represent approximately 2.2% of the NEO total compensation in the aggregate.

  50. FISCAL 2020 SUMMARY COMPENSATION TABLE

    FISCAL 2020 SUMMARY COMPENSATION TABLE

  51. FISCAL 2020 SUMMARY COMPENSATION TABLE

    | Name and Principal Position | Year | Salary | Stock Awards (1) | Non-Equity Incentive Plan Compensation (2) | All Other Compensation (3) | Total | | Peter D. Arvan | 2020 | $500,000 | $2,481,713 | $2,000,000 | $75,624 | $5,057,337 | | President and Chief | 2019 | 480,000 | 2,088,580 | 647,246 | 74,394 | 3,290,220 | | Executive Officer | 2018 | 440,000 | 1,518,330 | 537,478 | 60,180 | 2,555,988 | | Mark W. Joslin | 2020 | 318,000 | 943,843 | 1,113,000 | 57,730 | 2,432,573 | | Senior Vice President and | 2019 | 305,000 | 825,792 | 400,520 | 55,193 | 1,586,505 | | Chief Financial Officer | 2018 | 295,000 | 828,180 | 502,586 | 67,456 | 1,693,222 | | A. David Cook | 2020 | 333,200 | 924,042 | 1,249,500 | 65,153 | 2,571,895 | | Group Vice President | 2019 | 325,000 | 857,924 | 430,084 | 90,084 | 1,703,092 | | | 2018 | 317,000 | 828,180 | 624,847 | 70,586 | 1,840,613 | | Kenneth G. St. Romain | 2020 | 325,000 | 947,143 | 1,137,500 | 65,846 | 2,475,489 | | Group Vice President | 2019 | 317,000 | 825,792 | 398,858 | 84,114 | 1,625,764 | | | 2018 | 310,000 | 828,180 | 492,981 | 81,217 | 1,712,378 | | Jennifer M. Neil | 2020 | 250,000 | 477,422 | 875,000 | 51,485 | 1,653,907 | | Vice President, Secretary and | 2019 | 205,000 | 388,797 | 296,789 | 46,946 | 937,532 | | Chief Legal Officer | 2018 | 200,000 | 375,442 | 366,069 | 57,917 | 999,428 |

  52. FISCAL 2020 SUMMARY COMPENSATION TABLE

    (1)Amounts shown do not reflect compensation actually received by the NEOs. Instead, these amounts reflect the total estimated grant date fair value for the performance-based restricted stock awards, which is based on the closing price of our Common Stock on the date of grant in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. For more information on the stock grants awarded to our NEOs in 2020, please see the Fiscal 2020 Grants of Plan-Based Awards table below. (2)The amounts for each NEO consist of payouts under our annual cash performance award program and our SPIP, as set forth below:

  53. FISCAL 2020 SUMMARY COMPENSATION TABLE

    | Name | Year | Annual Cash Performance Award | SPIP Payout | | Mr. Arvan | 2020 | $1,000,000 | $1,000,000 | | | 2019 | 321,951 | 325,295 | | | 2018 | 313,862 | 223,616 | | Mr. Joslin | 2020 | 477,000 | 636,000 | | | 2019 | 193,822 | 206,698 | | | 2018 | 202,737 | 299,849 | | Mr. Cook | 2020 | 583,100 | 666,400 | | | 2019 | 209,832 | 220,252 | | | 2018 | 302,637 | 322,210 | | Mr. St. Romain | 2020 | 487,500 | 650,000 | | | 2019 | 184,028 | 214,830 | | | 2018 | 177,886 | 315,095 | | Ms. Neil | 2020 | 375,000 | 500,000 | | | 2019 | 157,861 | 138,928 | | | 2018 | 162,782 | 203,287 |

  54. FISCAL 2020 SUMMARY COMPENSATION TABLE

    (3)For details of the components of this category, please see the following All Other Compensation Table below.

  55. PAY RATIO DISCLOSURE

    PAY RATIO DISCLOSURE The following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other employees. We identified our median employee by examining the 2020 total cash compensation for all employees, excluding the CEO, who were employed by us on December 31, 2020. As permitted, we excluded certain non-U.S. employees representing less than 5% of our total employee population of approximately 4,500. Specifically, we excluded from our employee population all individuals employed in Australia (78), the United Kingdom (24), Mexico (18) and Croatia (6), totaling 126 employees, or just under 3% of our employee population. After identifying the median employee based on total cash compensation, we calculated the annual total compensation for this employee using the same methodology we use for our NEOs as set forth in the 2020 Summary Compensation Table above. See the table below for the results of our analysis.

  56. PAY RATIO DISCLOSURE

    | Median employee annual total compensation | $50,387 | | Mr. Arvan annual total compensation | $5,057,337 | | Ratio of CEO to median employee compensation | 100:1 |

  57. PAY RATIO DISCLOSURE

    The Grants of Plan-Based Awards table below sets forth information about the cash plan awards and equity plan awards to our NEOs in 2020.

  58. FISCAL 2020 GRANTS OF PLAN-BASED AWARDS

    FISCAL 2020 GRANTS OF PLAN-BASED AWARDS

  59. FISCAL 2020 GRANTS OF PLAN-BASED AWARDS

    | Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards Target (#) | Grant Date Fair Value of Stock and Option Awards ($) | | | | Threshold ($) | Target ($) | Maximum ($) | | | | Peter D. Arvan | 02/26/2020(1) | N/A | N/A | N/A | 11,280(4) | 2,481,713 | | | 02/26/2020(2) | N/A | 500,000 | 1,000,000 | N/A | N/A | | | 02/26/2020(3) | 250,000 | 500,000 | 1,000,000 | N/A | N/A | | Mark W. Joslin | 02/26/2020(1) | N/A | N/A | N/A | 4,290(4) | 943,843 | | | 02/26/2020(2) | N/A | 238,500 | 477,000 | N/A | N/A | | | 02/26/2020(3) | 159,000 | 318,000 | 636,000 | N/A | N/A | | A. David Cook | 02/26/2020(1) | N/A | N/A | N/A | 4,200(4) | 924,042 | | | 02/26/2020(2) | N/A | 291,550 | 583,100 | N/A | N/A | | | 02/26/2020(3) | 166,600 | 333,200 | 666,400 | N/A | N/A | | Kenneth G. St. Romain | 02/26/2020(1) | N/A | N/A | N/A | 4,305(4) | 947,143 | | | 02/26/2020(2) | N/A | 243,750 | 487,500 | N/A | N/A | | | 02/26/2020(3) | 162,500 | 325,000 | 650,000 | N/A | N/A | | Jennifer M. Neil | 02/26/2020(1) | N/A | N/A | N/A | 2,170(4) | 477,422 | | | 02/26/2020(2) | N/A | 187,500 | 375,000 | N/A | N/A | | | 02/26/2020(3) | 125,000 | 250,000 | 500,000 | N/A | N/A |

  60. FISCAL 2020 GRANTS OF PLAN-BASED AWARDS

    (1)Reflects performance-based restricted stock granted under our 2007 LTIP. (2)Reflects grants under our annual cash bonus program. See Compensation Discussion and Analysis, “Annual Incentive Plan.” The target and maximum amounts included in this table reflect the potential payments based on 2020 performance; the actual annual performance award payment amounts for 2020 are included in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table. The target payouts in this table reflect 100% of the 2020 base salary amount for Mr. Arvan, 87.5% of the 2020 base salary amount for Mr. Cook and 75% of the 2020 base salary amounts for Messrs. Joslin and St. Romain and Ms. Neil. The maximum potential payouts are 200% of 2020 base salary for Mr. Arvan, 175% of 2020 base salary for Mr. Cook and 150% of 2020 base salary for Messrs. Joslin and St. Romain and Ms. Neil. (3)Reflects grants under our SPIP for the three-year performance period that commenced January 1, 2020 and will end December 31, 2022. Target SPIP payout amounts are based on 100% of 2020 base salaries for each NEO. The threshold SPIP payment amounts reflect 50% of the 2020 base salaries and the maximum potential SPIP payout amounts reflect 200% of 2020 base salaries. (4)Each of these performance-based restricted stock grants cliff vests 50% after three years and 50% after five years, except for Mr. Arvan’s grant, which vests 100% after five years, in all cases subject to the achievement of applicable performance criteria. See Compensation Discussion and Analysis “Long-Term Equity Award” for a discussion of the criteria.

  61. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

  62. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($/Sh) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Mr. Arvan | 01/03/17 | N/A | N/A | N/A | N/A | N/A | N/A | 14,335(1) | 5,339,788(10) | | | 02/28/18 | N/A | N/A | N/A | N/A | N/A | N/A | 11,000(2) | 4,097,500(10) | | | 02/27/19 | N/A | N/A | N/A | N/A | N/A | N/A | 13,000(3) | 4,842,500(10) | | | 02/26/20 | N/A | N/A | N/A | N/A | N/A | N/A | 11,280(4) | 4,201,800(10) | | Mr. Joslin | 02/25/16 | N/A | N/A | N/A | N/A | N/A | N/A | 4,500(5) | 1,676,250(10) | | | 03/01/17 | N/A | N/A | N/A | N/A | N/A | N/A | 3,750(6) | 1,396,875(10) | | | 02/28/18 | N/A | N/A | N/A | N/A | N/A | N/A | 6,000(7) | 2,235,000(10) | | | 02/27/19 | N/A | N/A | N/A | N/A | N/A | N/A | 5,140(8) | 1,914,650(10) | | | 02/26/20 | N/A | N/A | N/A | N/A | N/A | N/A | 4,290(9) | 1,598,025(10) | | Mr. Cook | 02/25/16 | N/A | N/A | N/A | N/A | N/A | N/A | 4,500(5) | 1,676,250(10) | | | 03/01/17 | N/A | N/A | N/A | N/A | N/A | N/A | 3,750(6) | 1,396,875(10) | | | 02/28/18 | N/A | N/A | N/A | N/A | N/A | N/A | 6,000(7) | 2,235,000(10) | | | 02/27/19 | N/A | N/A | N/A | N/A | N/A | N/A | 5,340(8) | 1,989,150(10) | | | 02/26/20 | N/A | N/A | N/A | N/A | N/A | N/A | 4,200(9) | 1,564,500(10) | | Mr. St. Romain | 02/27/14 | 6,250 | — | 58.26 | 02/27/24 | N/A | N/A | N/A | N/A | | | 02/26/15 | 6,250 | — | 69.85 | 02/26/25 | N/A | N/A | N/A | N/A | | | 02/25/16 | N/A | N/A | N/A | N/A | N/A | N/A | 4,500(5) | 1,676,250(10) | | | 03/01/17 | N/A | N/A | N/A | N/A | N/A | N/A | 3,750(6) | 1,396,875(10) | | | 02/28/18 | N/A | N/A | N/A | N/A | N/A | N/A | 6,000(7) | 2,235,000(10) | | | 02/27/19 | N/A | N/A | N/A | N/A | N/A | N/A | 5,140(8) | 1,914,650(10) | | | 02/26/20 | N/A | N/A | N/A | N/A | N/A | N/A | 4,305(9) | 1,603,613(10) | | Ms. Neil | 02/25/16 | N/A | N/A | N/A | N/A | N/A | N/A | 1,800(5) | 670,500(10) | | | 03/01/17 | N/A | N/A | N/A | N/A | N/A | N/A | 1,600(6) | 596,000(10) | | | 02/28/18 | N/A | N/A | N/A | N/A | N/A | N/A | 2,720(7) | 1,013,200(10) | | | 02/27/19 | N/A | N/A | N/A | N/A | N/A | N/A | 2,420(8) | 901,450(10) | | | 02/26/20 | N/A | N/A | N/A | N/A | N/A | N/A | 2,170(9) | 808,325(10) |

  63. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    (1)These shares will vest on January 3, 2022 if the performance-based vesting criteria is met. (2)These shares will vest on February 28, 2023 if the performance-based vesting criteria is met. (3)These shares will vest on February 27, 2024 if the performance-based vesting criteria is met. (4)These shares will vest on February 26, 2025 if the performance-based vesting criteria is met. (5)These shares vested on February 25, 2021. (6)These shares will vest on March 1, 2022 if the performance-based vesting criteria is met. (7)These shares vested 50% on March 15, 2021 and 50% will vest on February 28, 2023 if the performance-based vesting criteria is met. (8)These shares will vest 50% on February 27, 2022 and 50% on February 27, 2024 if the performance-based vesting criteria is met. (9)These shares will vest 50% on February 26, 2023 and 50% on February 26, 2025 if the performance-based vesting criteria is met. (10)Based on the market value of $372.50 per share of our Common Stock on December 31, 2020. The table below summarizes the number of shares acquired and the dollar amounts realized by NEOs from the exercise of stock options and the vesting of restricted stock in 2020.

  64. OPTION EXERCISES AND STOCK AWARDS VESTED

    OPTION EXERCISES AND STOCK AWARDS VESTED

  65. OPTION EXERCISES AND STOCK AWARDS VESTED

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired Upon Exercise (#) | Value Realized Upon Exercise ($) | Number of Shares Acquired Upon Vesting (#) | Value Realized Upon Vesting ($) | | Peter D. Arvan | — | $— | — | $— | | Mark W. Joslin | — | — | 8,750 | 1,891,150 | | A. David Cook | — | — | 8,750 | 1,891,150 | | Kenneth G. St. Romain | 102,000 | 24,626,128 | 7,500 | 1,616,138 | | Jennifer M. Neil | 2,250 | 329,347 | 2,500 | 535,545 |

  66. NONQUALIFIED DEFERRED COMPENSATION

    NONQUALIFIED DEFERRED COMPENSATION Under our Deferred Compensation Plan, certain executives, including our NEOs, may elect to defer all or a portion of their base salary and annual non-equity incentive compensation. Participants choose to invest their deferrals in one or more specified investment funds. Participants may change their fund selection at any time, subject to certain limitations. The table below shows the funds available and their annual rates of return for the calendar year ended December 31, 2020 as reported by T. Rowe Price. Earnings are determined by the results of the individual investments.

  67. NONQUALIFIED DEFERRED COMPENSATION

    | Name of Fund | Rate of Return | Name of Fund | Rate of Return | | Artisan International Fund | 7.56% | TRP Retirement 2015 Fund | 12.57% | | Goldman Sachs Small Cap Value Fund | 2.06% | TRP Retirement 2020 Fund | 13.19% | | Delaware Value Fund | 0.15% | TRP Retirement 2025 Fund | 14.69% | | TRP Growth Stock Fund | 36.93% | TRP Retirement 2030 Fund | 15.90% | | TRP Mid-Cap Growth Fund | 24.17% | TRP Retirement 2035 Fund | 17.05% | | TRP Government Money Fund | 0.27% | TRP Retirement 2040 Fund | 18.11% | | Vanguard 500 Index Fund | 18.37% | TRP Retirement 2045 Fund | 18.65% | | TRP Small Cap Stock Fund | 25.05% | TRP Retirement 2050 Fund | 18.68% | | JP Morgan Mid-Cap Value | 0.41% | TRP Retirement 2055 Fund | 18.55% | | Dodge & Cox Income Fund | 9.45% | TRP Retirement 2060 Fund | 18.47% | | TRP Retirement 2005 Fund | 11.24% | TRP Retirement 2065 Fund(1) | 11.02% | | TRP Retirement 2010 Fund | 11.90% | TRP Value Fund | 10.50% |

  68. NONQUALIFIED DEFERRED COMPENSATION

    (1) Rate of return since the fund’s inception in October 2020. Benefits under our Deferred Compensation Plan will be paid to our NEOs as each executive elects, but no earlier than one full year after the end of the plan year for which compensation is deferred or six months after termination of employment. However, upon a showing of financial hardship and certain other requirements, an NEO may be allowed to access funds in his or her deferred compensation account earlier than the beginning of the year following the executive’s retirement or termination. In the event of a change of control, all vested accrued benefits will automatically be accelerated and payable in full. The time and schedule of payments may also be accelerated if the participant becomes disabled, to fulfill a qualified domestic relations order, if the amount is less than $10,000 or to pay employment taxes. Benefits can be received either as a lump sum payment or installments. The following table summarizes the nonqualified deferred compensation earned by our NEOs in 2020. All amounts relate to our Deferred Compensation Plan.

  69. NONQUALIFIED DEFERRED COMPENSATION

    | Name | Executive Contributions in Last FY | Company Contributions in Last FY (1) | Aggregate Gains in Last FY | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE | | Peter D. Arvan | $211,758 | $34,468 | $104,174 | $— | $751,921(2) | | Mark W. Joslin | 35,909 | 16,563 | 394,330 | (387,750) | 3,050,413(3) | | A. David Cook | 119,315 | 19,713 | 106,502 | — | 819,062(4) | | Kenneth G. St. Romain | 57,891 | 18,402 | 54,861 | — | 1,259,425(5) | | Jennifer M. Neil | 39,631 | 13,918 | 105,972 | — | 671,591(6) |

  70. NONQUALIFIED DEFERRED COMPENSATION

    (1)These amounts are included in the Summary Compensation Table within All Other Compensation. (2)Includes Company contributions of $29,462 in 2019 and $15,108 in 2018 disclosed in the Summary Compensation Table (All Other Compensation). (3)Includes Company contributions of $10,052 in 2019 and $24,287 in 2018 disclosed in the Summary Compensation Table (All Other Compensation). (4)Includes Company contributions of $26,786 in 2019 and $30,982 in 2018 disclosed in the Summary Compensation Table (All Other Compensation). (5)Includes Company contributions of $21,193 in 2019 and $28,704 in 2018 disclosed in the Summary Compensation Table (All Other Compensation). (6)Includes Company contributions of $5,928 in 2019 and $15,672 in 2018 disclosed in the Summary Compensation Table (All Other Compensation).

  71. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE OF CONTROL

    POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE OF CONTROL

  72. Effect on Outstanding Equity Awards of Termination of Employment or Change of Control

    Effect on Outstanding Equity Awards of Termination of Employment or Change of Control Our equity awards are subject to “double trigger” accelerated vesting upon a change of control, which is explained in more detail below. Stock options granted to NEOs, subject to certain limitations, will: ▪immediately vest and become fully exercisable upon an executive’s death or disability; ▪immediately vest and become fully exercisable if the executive experiences a qualifying termination within two years after a change of control; a qualifying termination includes a termination by the Company without cause or a termination by the executive for good reason (which is defined as a diminution of the executive’s compensation or responsibilities, or a relocation of more than 50 miles); ▪remain exercisable and continue to vest in accordance with the original vesting schedule upon retirement (which is defined as attainment of the age of 55 years or more and continuous service to us for a period of at least ten years), provided the recipient complies with certain restrictive covenants; ▪be forfeited, whether or not then exercisable, upon termination for cause; and ▪remain exercisable for the shorter of 90 days or the remaining term upon a termination without cause, unless the Compensation Committee, in its discretion, allows the options to continue to vest in accordance with their original schedule and maintain their original termination date. Shares of restricted stock, including performance-based restricted stock, granted to NEOs, subject to certain limitations, will: ▪fully vest upon an executive’s death or disability; ▪fully vest, with any applicable performance conditions waived, if the executive experiences a qualifying termination (as described above) within two years after a change of control; ▪continue to vest in accordance with the original vesting schedule upon retirement, provided the recipient complies with certain restrictive covenants; and ▪be forfeited upon any other termination of employment, whether voluntary or involuntary, unless the Compensation Committee, in its discretion, provides otherwise. Under the agreements, “cause” is generally defined as the recipient’s (i) conviction of a felony or any crime or offense lesser than a felony involving the property of the Company; (ii) conduct that has caused demonstrable and serious injury to the Company, monetary or otherwise; (iii) willful refusal to perform or substantial disregard of duties properly assigned; or (iv) breach of duty of loyalty to the Company or other act of fraud or dishonesty with respect to the Company. Assuming the executive’s termination of employment due to death or disability or a change of control and a qualifying termination occurred on December 31, 2020, the following table sets forth the value of all unvested shares of restricted stock held by the NEOs at December 31, 2020 that would immediately vest upon such event.

  73. Effect on Outstanding Equity Awards of Termination of Employment or Change of Control

    | Name | Unvested Stock Awards | Value of Unvested Stock Awards (1) | | Peter D. Arvan | 49,615 | $18,481,588 | | Mark W. Joslin | 23,680 | 8,820,800 | | A. David Cook | 23,790 | 8,861,775 | | Kenneth G. St. Romain | 23,695 | 8,826,388 | | Jennifer M. Neil | 10,710 | 3,989,475 |

  74. Effect on Outstanding Equity Awards of Termination of Employment or Change of Control

    (1)We calculated by multiplying the number of shares of unvested restricted stock by the closing price of our Common Stock as of December 31, 2020.

  75. Severance Payments upon Termination without Cause

    Severance Payments upon Termination without Cause Upon termination other than for cause, Mr. Arvan is entitled to receive his base salary for a period of six months after termination, and the other NEOs are entitled to receive their respective base salaries for a period of three months. The table below presents the amounts that would be payable to each NEO upon termination without cause as of December 31, 2020.

  76. Severance Payments upon Termination without Cause

    | Name | Maximum Cash Payout upon Termination Without Cause | | Peter D. Arvan | $250,000 | | Mark W. Joslin | 79,500 | | A. David Cook | 83,300 | | Kenneth G. St. Romain | 81,250 | | Jennifer M. Neil | 62,500 |

  77. Severance Payments upon Termination without Cause

    The NEOs are not entitled to any additional compensation, perquisites or other personal benefits upon a change of control, retirement or termination, except for future payments under our 401(k) Plan and Deferred Compensation Plan.

  78. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION The many responsibilities and risks of serving as a director of a public company require that we provide adequate compensation in order to attract and retain qualified and productive directors. Our directors play an important role in guiding our strategic direction and overseeing our management. The Compensation Committee regularly reviews non-employee director compensation, periodically retaining an independent compensation consulting firm to assist with its review. In 2020, no changes were made to our non-employee director cash compensation structure. We pay Chairman Stokely an annual cash retainer of $120,000, and we pay annual cash retainers of $65,000 to each of our other non-employee directors. Directors also receive annual fees for serving on the Board’s committees, as noted in the table below.

  79. DIRECTOR COMPENSATION

    | Committee | Chairman Fee | Member Fee | | Audit | $20,000 | $10,000 | | Compensation | 15,000 | 10,500 | | Nominating and Corporate Governance | 15,000 | 7,500 | | Strategic Planning | 15,000 | 7,500 |

  80. DIRECTOR COMPENSATION

    Our directors do not receive separate per meeting fees for attending Board or committee meetings, but we do reimburse them for reasonable out-of-pocket expenses they incur to attend Board and committee meetings and director education programs. Directors receive annual equity awards and may also elect to receive equity grants in lieu of their cash compensation. In 2020, each director was permitted to elect to receive his or her annual equity compensation in the form of (i) 1,654 stock options with an exercise price equal to our Common Stock’s closing price on the grant date; or (ii) 551 shares of restricted stock. The annual equity awards are granted on the date of the annual meeting of stockholders and, except under certain limited circumstances, the stock options and restricted stock vest no earlier than one year after the grant date, and any options granted are exercisable for up to ten years after the grant date. Each of our directors elected to receive his or her 2020 equity compensation in the form of restricted stock, except Mr. Sledd, who chose to receive stock options. The table below summarizes the compensation we paid to our non-executive directors during the year ended December 31, 2020.

  81. DIRECTOR COMPENSATION

    | Name | Fees Earned or Paid in Cash | Stock Awards (1) | Option Awards (1) | All Other Compensation | Total | | Andrew W. Code | $75,500(2) | $119,958 | $— | $— | $195,458 | | Timothy M. Graven | 92,500 | 119,958 | — | — | 212,458 | | Debra S. Oler | 83,000 | 119,958 | — | — | 202,958 | | Manuel J. Perez de la Mesa (3) | 65,000 | 119,958 | — | 15,643 | 200,601 | | Harlan F. Seymour | 102,500 | 119,958 | — | — | 222,458 | | Robert C. Sledd | 85,500 | — | 120,000 | — | 205,500 | | John E. Stokely | 145,000 | 119,958 | — | — | 264,958 | | David G. Whalen | 82,500 | 119,958 | — | — | 202,458 |

  82. DIRECTOR COMPENSATION

    (1)Amounts shown do not reflect compensation actually received by the directors. Instead, these amounts reflect the total estimated grant date fair value of the stock and option awards, which is based on the closing price of our Common Stock on the date of grant in accordance with FASB ASC Topic 718. (2)The amount reported in this column represents the grant date fair value of the stock awards Mr. Code opted to receive in lieu of cash compensation. (3)Mr. Perez de la Mesa, our former president and CEO, remains employed by us, and as such, is eligible to participate in our 401(k) plan, our deferred compensation plan, and medical, dental and long-term disability programs on the same basis as our officers. In 2020, we paid Mr. Perez de la Mesa a salary of $65,000, which is equal to the annual cash retainer we pay to each of our non-employee directors. As of December 31, 2020, stock awards and stock options outstanding for each non-executive director included the following:

  83. DIRECTOR COMPENSATION

    | Director | Stock Awards Outstanding | Options Outstanding | Options Exercisable | | Mr. Code | 898 | — | — | | Mr. Graven | 551 | — | — | | Mrs. Oler | 551 | — | — | | Mr. Perez de la Mesa | 18,251 | 291,875 | 247,625 | | Mr. Seymour | 551 | — | — | | Mr. Sledd | — | 1,654 | — | | Mr. Stokely | 551 | — | — | | Mr. Whalen | 551 | — | — |