DEF 14A of SiteOne Landscape Supply, Inc.
Filed Mar 26, 2024 · FY20230001104659-24-038609
Amending our anti-hedging policy to prohibit pledging of Company stock by directors and executive officers
Amending our anti-hedging policy to prohibit pledging of Company stock by directors and executive officers ✔ Continuing the evolution of human capital management and sustainability enhancements, including: — Creating a management-led steering committee, which we now call our Stakeholder Impact Committee, comprised of certain executive leadership team members and functional leaders representing safety, human resources, transportation, category and marketing, information security and other relevant teams —
Governance Highlights
Governance Highlights Since our IPO, we have undertaken an extensive board refreshment process to transition to a board with the independence, skills and qualifications reflective of our business. Of particular importance, we have prioritized enhancing the diversity of our Board, which is now comprised of a majority of directors who are women or from diverse backgrounds. We have a highly experienced Board that brings a range of relevant skills and qualifications to the Company. Key highlights of the composition of our nominees for director and continuing directors include:
Governance Highlights
| Board Independence* | | Board Diversity* | | Board Gender Diversity* | | | 88% | 7 of 8 directors are independent | 63% | 5 of 8 directors are female or diverse | 38% | 3 of 8 directors are female |
Governance Highlights
| Board Refreshment* | | Average Tenure (in years)* | | | 50% | 4 of 8 directors added since 2017 | 6.6 | Average director tenure |
Governance Highlights
| Performance Stock Mix | | | 50% | Long-term executive compensation in the form of performance stock units for Fiscal Year 2024 |
Governance Highlights
* Includes Ms. Judy Sansone, who has been nominated as a Class II director to serve for a three-year term expiring at the 2027 Annual Meeting of Stockholders. In addition, our governance “best practices” include the following:
Governance Highlights
| Independent Committees | • All of our committees are composed solely of independent directors | | Empowered Lead Director | • Our independent directors elect our independent Lead Director • Our Lead Director has meaningful responsibilities including: — serving as liaison between independent directors and the Chairman; — chairing executive sessions of independent directors; and — consulting with the CEO on matters relating to management effectiveness and Board performance | | Board Leadership Evaluation and Succession Planning | • The Board annually evaluates the CEO’s performance • The Board annually conducts a rigorous review and assessment of the succession planning process for the CEO and other executive officers | | Majority Vote Threshold | • Our Charter and By-laws may be amended by a majority vote of our stockholders | | Board & Committee Evaluations | • The Board and each of our committees conduct detailed annual self-evaluations | | Limits on Outside Board Service | • Outside directors are limited to service on four other public company boards • Currently, our Chairman and CEO does not serve on any other public company boards | | Anti-Hedging/Pledging Policy | • Our insider trading policy prohibits our directors and executive officers from entering into pledging, hedging or monetization transactions designed to limit the financial risk of ownership of the Company’s securities • None of our directors or executive officers have any pledged SiteOne stock | | No “Poison Pill” | • We do not have a “poison pill” plan in place | | Executive Sessions | • The Board and Board committees meet regularly in executive session • In 2023, the independent directors met in executive session at each of the Board’s four quarterly meetings • At least once a year, the independent directors meet in an executive session with the CEO (without the other executive officers), with the Lead Director presiding at such sessions | | Sustainability Reporting | • We publicly disclose an annual IMPACT Report which demonstrates the impact that our Vision has on SiteOne’s stakeholder groups • IMPACT Report discloses to the framework recommendations of SASB and TCFD |
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS Our stockholders will be asked to re-elect Doug Black and Jack L. Wyszomierski, both of whom are currently serving on the Board, and elect Judy Sansone, as Class II directors to each serve for a three-year term expiring at the 2027 Annual Meeting of Stockholders or until their respective successors have been elected and qualified, subject to their earlier death, resignation, retirement, disqualification or removal:
PROPOSAL 1: ELECTION OF DIRECTORS
| Name | Position with SiteOne | | Doug Black | Chairman and Chief Executive Officer | | Judith (Judy) Sansone | Nominee for Director | | Jack L. Wyszomierski | Director |
PROPOSAL 1: ELECTION OF DIRECTORS
Our Board continually assesses and evaluates its composition, taking into account, among other things, the experience, skills, background and diversity of its members. At this time, the Board believes it is in the best interests of the Company and its stockholders to increase the size of the Board from seven directors to eight directors. Accordingly, the Nominating and Corporate Governance Committee has nominated Ms. Sansone as a Class II director to be elected by the Company’s stockholders at the Annual Meeting, whom we believe adds highly relevant skills and perspectives to our Board. Ms. Sansone was selected from a pool of diverse and highly experienced candidates following a thorough search process, which included recommendations from current directors and a third-party search firm. The relevant experiences, qualifications, attributes and skills of each nominee that led the Board to recommend them as a nominee for director are described in the section entitled “— Nominees for Director and Continuing Directors.” The Nominating and Corporate Governance Committee has reviewed the qualifications of each of the nominees and has recommended to the Board that each nominee be submitted to a vote at the Annual Meeting. Each of the nominees have indicated their willingness to serve, if elected. However, should any nominee be unable or unwilling to serve, the Board may designate a substitute nominee, in which case the persons designated as proxies will cast votes for the election of such substitute nominee. In lieu of designating a substitute nominee, the Board, in its discretion, may reduce the number of directors, or allow the vacancy to remain open until a suitable candidate is located and nominated. The Company did not receive any stockholder nominations for director. Proxies cannot be voted for more than the number of nominees named in this Proxy Statement.
Required Vote
Required Vote Director nominees are elected by a plurality of the votes cast at the Annual Meeting, meaning that the nominees receiving the highest number of “FOR” votes will be elected.
Required Vote
| | Recommendation of the Board THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE NOMINEES NAMED ABOVE FOR ELECTION AS A DIRECTOR. |
NOMINEES FOR DIRECTOR AND CONTINUING DIRECTORS
NOMINEES FOR DIRECTOR AND CONTINUING DIRECTORS Set forth below is information relating to each nominee’s and continuing director’s business experience, qualifications, attributes and skills and the reasons the Nominating and Corporate Governance Committee and the Board believe that each individual is a valuable member of the Board. The persons who have been nominated for election and are to be voted upon at the Annual Meeting are listed first, with continuing directors following thereafter. The age of each individual below is as of March 26, 2024.
Class II — Nominees for terms expiring in 2027
Class II — Nominees for terms expiring in 2027
Class II — Nominees for terms expiring in 2027
| Name | Principal Occupation and Other Information | | Doug Black | Age: 59 Director Since: April 2016 Committees: N/A Doug Black has served as SiteOne’s Chief Executive Officer since April 2014, and as the Chairman of the Board since June 2017. Prior to joining SiteOne, Mr. Black was President and Chief Operating Officer of Oldcastle Inc., an integrated building materials manufacturer and distributor and a wholly owned subsidiary of Irish-based CRH plc. During his 18-year career with Oldcastle, Mr. Black led the company’s entry into building products distribution and then held several senior leadership roles, including Chief Operating Officer and Chief Executive Officer of Oldcastle Architectural Products and Chief Operating Officer and Chief Executive Officer of Oldcastle Materials. Prior to Oldcastle, Mr. Black’s business career began at McKinsey & Company in 1992 where he led strategy, sales force effectiveness and plant improvement projects in the telecommunications, airline, lumber, paper and packaging industries. While serving as a U.S. Army Engineer Officer from 1986 to 1990, he completed construction projects in the Southeastern U.S., Central America and South America. Mr. Black earned an M.B.A. from Duke University’s Fuqua School of Business as a Fuqua Scholar and a B.S. in Mathematical Science/Civil Engineering from the U.S. Military Academy, West Point, where he was an AP all-American fullback and NCAA Scholar Athlete. Mr. Black’s intimate knowledge of our day-to-day operations as Chief Executive Officer, his prior role as a management consultant and his extensive experience working in our industry qualify him to serve on the Board. | | | |
Class II — Nominees for terms expiring in 2027
| Name | Principal Occupation and Other Information | | Judith (Judy) Sansone | Age: 63 Director Since: N/A Committees: N/A Judy Sansone was nominated by the Board in February 2024 for election at the Annual Meeting. From October 2020 to October 2023, Ms. Sansone served as the Executive Vice President and Chief Commercial Officer of Sysco Corporation, the largest global distributor of food and related products primarily to the foodservice or food-away-from-home industry, where she was responsible for, among other things, commercial strategy and growth, merchandising and digital development. Ms. Sansone currently serves as an Advisor for Sysco. From May 2020 to October 2020, Ms. Sansone was the owner of Consultgenix, LLC, a business consultancy firm. Prior to that, Ms. Sansone spent over forty years at CVS Health Corporation, where she held a number of executive roles, including serving as SVP, Front Store Business & Chief Merchant from September 2011 to May 2020. She holds an associate degree from Holyoke Community College. Ms. Sansone’s extensive business-to-business and business-to-consumer marketing, merchandising and ecommerce experience qualifies her to serve on our Board. | | | | | Jack L. Wyszomierski | Age: 68 Director Since: April 2016 Committees: Audit; Nominating & Corporate Governance (Chair) Public Company Directorships: Athersys, Inc., Exelixis, Inc. and Xoma Corp. Jack L. Wyszomierski has served as one of our directors since April 2016. From June 2004 to June 2009, Mr. Wyszomierski served as the Executive Vice President and Chief Financial Officer of VWR International, LLC, a supplier of laboratory supplies, equipment and supply chain solutions to the global research laboratory industry. From 1982 to 2003, Mr. Wyszomierski held positions of increasing responsibility within the finance group at Schering-Plough Corporation, a health care company, culminating with his appointment as Executive Vice President and Chief Financial Officer in 1996. Prior to joining Schering-Plough, he was responsible for capitalization planning at Joy Manufacturing Company, a producer of mining equipment, and was a management consultant at Data Resources, Inc. Mr. Wyszomierski currently serves on the Board of Directors of Athersys, Inc., Exelixis, Inc. and Xoma Corp. He previously served on the Board of Directors of Unigene Laboratories, Inc. He holds an M.S. in Industrial Administration and a B.S. in Administration, Management Science and Economics from Carnegie Mellon University. Mr. Wyszomierski’s extensive executive, financial reporting and accounting experience, and his service as a director and audit committee member of other public companies, qualify him to serve on the Board. | | | |
Class III — Continuing directors whose terms expire in 2025
Class III — Continuing directors whose terms expire in 2025
Class III — Continuing directors whose terms expire in 2025
| Name | Principal Occupation and Other Information | | Fred M. Diaz | Age: 58 Director Since: August 2017 Committees: Audit; Human Resources & Compensation Public Company Directorships: Archer Aviation Inc., Smith & Wesson Brands, Inc. and Valero Energy Corporation Fred M. Diaz has served as one of our directors since August 2017. From April 2018 to March 2020, Mr. Diaz served as President, Chief Executive Officer and Chairman of the Board of Mitsubishi Motors North America, Inc. He previously served in executive management roles at Nissan, most recently as Division Vice President and General Manager, North America, Trucks and Commercial Vehicles, of Nissan North America, Inc. Prior to that, Mr. Diaz served as Senior Vice President, Sales, Marketing and Operations, of Nissan USA. Before joining Nissan in 2013, Mr. Diaz spent 24 years at Chrysler Corporation, where he held a number of executive management roles, including President and Chief Executive Officer of Chrysler’s Ram Truck brand and President and Chief Executive Officer, Chrysler de Mexico and Latin America. He currently serves as a member of the Board of Directors of Archer Aviation Inc., Smith & Wesson Brands, Inc. and Valero Energy Corporation. He is also a National Association of Corporate Directors (“NACD”) Board Leadership Fellow. Mr. Diaz is a graduate of Texas Lutheran University and holds an M.B.A. from Central Michigan University. Mr. Diaz’s extensive experience in sales, operations, marketing and management qualify him to serve on the Board. | | | | | W. Roy Dunbar | Age: 62 Director Since: March 2017 Committees: Human Resources & Compensation Public Company Directorships: McKesson Corporation, Johnson Controls International PLC and Duke Energy Corporation W. Roy Dunbar has served as one of our directors since March 2017. He was Chairman of the Board of Network Solutions, a technology company and web service provider, and was the Chief Executive Officer from January 2008 until October 2009. Mr. Dunbar also served as the President of Global Technology and Operations for MasterCard Incorporated from September 2004 until January 2008. Prior to MasterCard, Mr. Dunbar worked at Eli Lilly and Company for 14 years, serving as President of Intercontinental Operations, and earlier as Chief Information Officer. He currently serves on the Board of Directors of McKesson Corporation, Johnson Controls International PLC and Duke Energy Corporation and previously served on the boards of Humana Inc., Lexmark International and iGate. Mr. Dunbar was named to NACD Directorship 100 in 2015 and is a NACD Board Leadership Fellow. He is a graduate of Manchester University in the United Kingdom and holds an M.B.A. from Manchester Business School. Mr. Dunbar’s strong leadership skills, service as a director and compensation committee member of other public companies and deep experience across a number of functional disciplines, including the application of information technology across different business sectors, qualify him to serve on the Board. | | | |
Class III — Continuing directors whose terms expire in 2025
| Name | Principal Occupation and Other Information | | Larisa J. Drake | Age: 52 Director Since: May 2019 Committees: Nominating & Corporate Governance Larisa J. Drake has served as one of our directors since May 2019. Ms. Drake is currently Executive Vice President and Chief Marketing Officer at Equity LifeStyle Properties, a publicly traded real estate investment trust that owns and operates over 450 communities in North America. Ms. Drake has held positions of increasing responsibility in marketing and sales since joining Equity LifeStyle Properties in 2013. Prior to that, Ms. Drake was an officer at Discover Financial Services where she led marketing initiatives over the course of 14 years for Discover Card, the third largest credit card brand in the United States. Before joining Discover, Ms. Drake was part of the advertising agency, Leo Burnett. She holds a B.S. in Communication Studies from Northwestern University; an M.L.A. from The University of Chicago; and an M.B.A. from the Kellogg School of Management. Ms. Drake’s expertise in delivering business results by leveraging both traditional and technology-driven marketing strategies qualify her to serve on our Board. | | | |
Class I — Continuing directors whose terms expire in 2026
Class I — Continuing directors whose terms expire in 2026
Class I — Continuing directors whose terms expire in 2026
| Name | Principal Occupation and Other Information | | William (Bill) W. Douglas III | Age: 63 Director Since: April 2016 Committees: Audit (Chair) Public Company Directorships: Coca-Cola Hellenic (listed on the London Stock Exchange and the Athens Stock Exchange) William (Bill) W. Douglas III serves as our Lead Director and has been one of our directors since April 2016. In June 2016, Mr. Douglas retired as Executive Vice President of Coca-Cola Enterprises, Inc. (“CCE”). During Mr. Douglas’s tenure at CCE, it was one of the largest independent bottlers and distributors for The Coca-Cola Company and operated across the United States and Western Europe. Mr. Douglas served as Executive Vice President, Supply Chain at CCE until April 2015. Prior to that, he was Executive Vice President & Chief Financial Officer of CCE from May 2008 to November 2013, Senior Vice President and Chief Financial Officer of CCE from May 2005 to May 2008, and Vice President, Controller and Principal Accounting Officer from July 2004 until May 2005. Prior to joining CCE, Mr. Douglas served as Chief Financial Officer of Coca-Cola HBC, one of the largest bottlers of non-alcoholic beverages in Europe. He currently serves on the Board of Directors of Coca-Cola Hellenic, which is listed on the London Stock Exchange and the Athens Stock Exchange. Mr. Douglas received a degree in Accounting from the J.M. Tull School of Accounting at the University of Georgia. Mr. Douglas’s extensive executive, financial reporting, mergers and acquisitions, and supply chain experience qualify him to serve on the Board. | | | | | Jeri L. Isbell | Age: 66 Director Since: October 2016 Committees: Human Resources & Compensation (Chair); Nominating & Corporate Governance Public Company Directorships: Atkore Inc. Jeri L. Isbell has served as one of our directors since October 2016. She was Vice President-Human Resources and Corporate Communications at Lexmark International, Inc., a leading developer, manufacturer, and supplier of printing, imaging, device management, managed print services, document workflow and business process, and content management solutions, a position she held from 2003 until her retirement in December 2016. During her 24-year tenure at Lexmark, she also held a number of leadership positions including Vice President of Compensation and Benefits, Vice President of Finance and Division Chief Financial Officer, and U.S. Controller. Ms. Isbell began her career at IBM. She currently serves as a member of the Board of Directors of Atkore Inc. Ms. Isbell holds a B.B.A. in Accounting from Eastern Kentucky University and an M.B.A. from Xavier University. She is a certified public accountant. Ms. Isbell was honored with a NACD Directorship 100 designation in 2021, is also a NACD Board Leadership Fellow and is NACD Directorship Certified™. Ms. Isbell’s human resources and communications leadership positions provide the Board with insight into key issues and market practices in these areas for public companies. | | | |
Our 2023 Executive Compensation Program
| | Pay Element | | | | | | | Base Salary | Short-Term Incentive | Performance Stock Units | Restricted Stock Units | Stock Options | | Who Receives | All Executive Officers | | | | | | When Granted | Annually | | | | | | Form of Delivery | Cash | | Equity | | | | Performance Period | None | 1 Year | 3 Year | Vest Over 4 Years | Vest Over 4 Years, 10-year maximum term | | 2023 Performance Metrics | None | Adjusted EBITDA, NPS, Organic Daily Sales Growth, individual strategic performance | Relative earnings growth, ROIC, stock price | Stock price | Stock price |
Summary of 2023 NEO Target Total Direct Compensation
| | | Target STI | | | Target Total Direct Compensation | | NEO | Base Salary | % Salary | $ Amount | Target LTI | | | Doug Black | $925,000 | 125% | $1,156,250 | $3,600,000 | $5,681,250 | | John Guthrie | $525,000 | 60% | $315,000 | $750,000 | $1,590,000 | | Briley Brisendine | $490,000 | 60% | $294,000 | $750,000 | $1,534,000 | | Scott Salmon | $440,000 | 60% | $264,000 | $650,000 | $1,354,000 | | Joseph Ketter | $385,000 | 60% | $231,000 | $600,000 | $1,216,000 |
2024 Incentive Plan Design Changes
2024 Incentive Plan Design Changes For the 2024 Fiscal Year, the Human Resources and Compensation Committee approved changes to the award mix for our NEOs under the LTIP, which will consist of 50% RSUs and 50% PSUs. We believe this update to the award mix under our LTIP further demonstrates our commitment to designing an executive compensation program that encourages high performance and results that will create value for us and our stockholders while avoiding unnecessary risks. The Human Resources and Compensation Committee retained the existing vesting and performance conditions for the RSUs and PSUs. For the 2024 Fiscal Year, the Human Resources and Compensation Committee also approved modest changes to the customer-centric metric in our Short-Term Annual Incentive Plan. We retained the use of Company Net Promoter Score (“Company NPS”) and added metrics related to customer retention and per-customer value. We believe these updates capture a broader view of our customer relationships with a goal of maintaining our strong reputation, and retaining and deepening our relationships with our existing customers. The Human Resources and Compensation Committee retained the other metrics and weightings for the balance of our Short-Term Annual Incentive Plan.
Determination of Executive Compensation
Determination of Executive Compensation Human Resources and Compensation Committee The Human Resources and Compensation Committee is responsible for reviewing and approving the compensation and benefits of our executives (including our NEOs), directors and certain consultants, approving equity incentive compensation and other incentive arrangements and approving employment and related agreements. In performing these duties, the Human Resources and Compensation Committee is supported by its independent consultant and certain members of executive management, as described below. Independent Consultant For the 2023 Fiscal Year, the Human Resources and Compensation Committee engaged FW Cook as its independent consultant. FW Cook reports to and is directed by the Human Resources and Compensation Committee and provides no other services to the Company. The Human Resources and Compensation Committee considered the independence of FW Cook in light of applicable SEC rules and NYSE listing standards and concluded that FW Cook was appropriately independent and free from potential conflicts of interest. Industry Peer Group To assist in evaluating our compensation program for 2023, in August 2022, the Human Resources and Compensation Committee reviewed our Company’s industry peer group, considering among other factors, total market capitalization and revenue, and whether the peer is a company with which we compete for talent and/or has a similar business model. At that time, the Human Resources and Compensation Committee approved the removal of DXP Enterprises, Inc. and H&E Equipment Services, Inc. (as both were considered less relevant as peers considering their smaller size relative to SiteOne and the other peer companies) to maintain a robust sample size and position the Company within a reasonable range of median in various measures of company size. The 15-company peer group approved and used by the Human Resources and Compensation Committee in evaluating 2023 target pay decisions is outlined below.
Determination of Executive Compensation
Use of Market Data The Human Resources and Compensation Committee reviews competitive market data from our industry peer group and general industry surveys as part of its process to set the target pay opportunities for our NEOs. Our executive compensation program aims to provide for total compensation for our executives at approximately the 50th percentile of our peer group, with flexibility to position an individual executive above or below the 50th percentile based on factors including, but not limited to, contribution, performance and uniqueness of role. Executive Management Certain members of the executive management team are involved in the executive compensation determination process. For example, our Executive Vice President, Human Resources provides requested information and perspectives on the compensation program, and our General Counsel provides legal and regulatory advice and perspectives. In addition, our CEO makes specific recommendations for compensation levels and program designs for executives (other than himself) and our Chief Financial Officer provides input on financial metrics and goals. Our CEO, Executive Vice President, Human Resources and General Counsel generally attend Human Resources and Compensation Committee meetings but are excused when their individual compensation is being discussed.
Elements of Our Executive Compensation Program
| Pay Component | Objective of Pay Component | | Base Salary | • To attract and retain a high-performing leadership team | | Short-Term Annual Cash Incentives | • To reward achievement of short-term business objectives and results, and individual performance goals viewed as drivers of stockholder value | | Long-Term Equity Incentives | • To align executive and stockholder interests, create “ownership culture,” promote retention and “pay-for-performance” | | Other Benefits | • To provide a safety net of protection in the case of illness, disability, death or retirement, through health, disability and life insurance, 401(k) retirement plan and other employee benefits |
Elements of Our Executive Compensation Program
Short-Term Annual Cash Incentives Our short-term annual cash incentives are designed to focus our NEOs on achieving superior performance against business objectives and results for the Company as a whole and, in addition, reward them for the achievement of specific individual performance and/or other goals which the Human Resources and Compensation Committee and CEO (in the case of NEOs other than himself) subjectively determine based on their assessment of the executive’s performance during the year. By conditioning a significant portion of our NEOs’ potential total cash compensation on the Company’s achievement of clearly defined metrics and goals, we reinforce our focus on creating a strong pay-for-performance culture. For the 2023 Fiscal Year, all of our NEOs were eligible to receive short-term annual cash incentives based on the achievement of pre-established annual Company financial and performance metrics and goals approved by the Human Resources and Compensation Committee. Each NEO had a target incentive opportunity expressed as a percentage of his base salary paid during the year. The threshold, target and maximum percentages of base salary and actual percentages of target for our NEOs for the 2023 Fiscal Year were as follows:
Elements of Our Executive Compensation Program
(1) Expressed as a percentage of base salary. For the 2023 Fiscal Year, each of the various components of the annual incentive awards were subject to a cap, as set forth below. The Human Resources and Compensation Committee selected Adjusted EBITDA as the primary financial performance metric for our NEOs’ short-term annual cash incentive opportunity, measured against the Adjusted EBITDA goals established by the Human Resources and Compensation Committee in the beginning of the 2023 Fiscal Year and increased mid-year for acquisitions completed prior to the Human Resources and Compensation Committee’s August 8, 2023 meeting. The Human Resources and Compensation Committee reviewed the Company’s 2023 Fiscal Year outlook in establishing the initial Adjusted EBITDA target range, noting that 2023 results were projected to fall below 2022 Fiscal Year actual results given margin contraction from higher input costs that had already materialized with respect to fourth quarter results for the 2022 Fiscal Year. However, the Human Resources and Compensation Committee determined to set our initial Adjusted EBITDA target range at $450 – 464 million, with the high end of that range equal to our record-setting 2022 Fiscal Year results. The Human Resources and Compensation Committee set the target based on its judgment that the Company needed to exceed prior year performance to merit an above-target payout. Subsequently, in order to mitigate the impact of acquisitions not reflected in the levels of achievement for the Adjusted EBITDA performance metric originally approved by the Human Resources and Compensation Committee in February 2023, in August 2023, the Human Resources and Compensation Committee increased the threshold, target and stretch goals to take into account anticipated Adjusted EBITDA contributions from acquisitions completed prior to the Human Resources and Compensation Committee’s August 8, 2023 meeting. If actual performance fell within the Adjusted EBITDA target range, then the payout is at target for such metric. To ensure our Company continues to deliver outstanding customer service, the Human Resources and Compensation Committee also utilized Company NPS as a component of each NEO’s short-term annual cash incentive. In addition, to drive continued sales growth, the Human Resources and Compensation Committee also utilized Organic Daily Sales Growth as a component of our NEOs’ short-term annual cash incentives. The Human Resources and Compensation Committee subjectively assessed Mr. Black’s achievement for the strategic performance goals, and for the other NEOs, Mr. Black evaluated the performance of each NEO based on his individual strategic performance goals and made a recommendation to the Human Resources and Compensation Committee. The following table shows the weighting of the 2023 Fiscal Year performance metrics for each NEO, expressed as a percentage of each NEO’s 2023 Fiscal Year total short-term annual cash incentive opportunity.
Elements of Our Executive Compensation Program
| | % of Total Short-Term Annual Cash Incentive Opportunity | | | | | | Adjusted EBITDA(1) | Company NPS(2) | Organic Daily Sales Growth(2) | Strategic Performance(2)(3) | | Doug Black | 70% | 5% | 5% | 20% | | John Guthrie | 70% | 5% | 5% | 20% | | Briley Brisendine | 70% | 5% | 5% | 20% | | Scott Salmon | 70% | 5% | 5% | 20% | | Joe Ketter | 70% | 5% | 5% | 20% |
Elements of Our Executive Compensation Program
(1) The Adjusted EBITDA component of the short-term annual cash incentive opportunity is capped at 250% of target. (2) Company NPS, Organic Daily Sales Growth and Strategic Performance components of the short-term annual cash incentive opportunity are each capped at 150% of target. For more detail on individual strategic performance goals, see the table detailing individual criteria on page 41. The following table shows the threshold, target, stretch, maximum and actual performance levels, along with the payout multiple of target incentive opportunity, for the Adjusted EBITDA component of the 2023 Fiscal Year short-term annual cash incentive opportunities for our NEOs.
Elements of Our Executive Compensation Program
(1) Adjusted EBITDA was calculated using EBITDA for the Company for the 2023 Fiscal Year, as further adjusted for items such as stock-based compensation expense, (gain) loss on sale of assets, financing fees, acquisitions and other adjustments. See Appendix A to this Proxy Statement for a reconciliation of Adjusted EBITDA to Net income (loss), the corresponding GAAP financial measure. (2) Acquisitions completed after the Human Resources and Compensation Committee’s August 8, 2023 meeting were excluded from the calculation of Adjusted EBITDA for purposes of determining short-term annual cash incentive compensation. (3) The Adjusted EBITDA weighted performance multiplier is determined by linear interpolation of the percentage achievement between threshold and target goals, between target and stretch and between stretch and max goals. The following table shows the threshold, target, maximum and actual performance levels, along with the multiple of target incentive opportunity, for the Company NPS component of the 2023 Fiscal Year short-term annual cash incentive opportunities for our NEOs.
Elements of Our Executive Compensation Program
| Company NPS(1) | Level of Achievement(2) | Payout as % of Target Opportunity | | Threshold | 72 | 50% | | Target | 80 | 100% | | Maximum | 85 | 150% | | Actual | 84.9 | 149% |
Elements of Our Executive Compensation Program
(1) Company NPS is based on responses from a customer survey regarding customer experience. Respondents to the survey are categorized as detractors (0-6 score for likelihood to recommend), passives (7-8) and promoters (9-10). Company NPS is then calculated by subtracting the percentage of detractors from the percentage of promoters. (2) The Company NPS weighted performance multiplier is determined by linear interpolation of the percentage achievement between threshold and target goals and between target and max goals. The following table shows the threshold, target, maximum and actual performance levels, along with the multiple of target incentive opportunity, for the Organic Daily Sales Growth component of the 2023 Fiscal Year incentive opportunities for our NEOs.
Elements of Our Executive Compensation Program
| Organic Daily Sales Growth(1) | Level of Achievement(2) | Payout as % of Target Opportunity | | Threshold | 0% | 50% | | Target | 5% | 100% | | Maximum | 7% | 150% | | Actual | 0.2% | 52% |
Elements of Our Executive Compensation Program
| | Eligible Earnings(1) | Target % of Salary | Target Bonus $ | Payout as % Target | Actual Bonus | | Doug Black | $918,269 | 125% | $1,147,836 | 76% | $870,060 | | John Guthrie | $521,634 | 60% | $312,981 | 71% | $221,590 | | Briley Brisendine | $487,308 | 60% | $292,385 | 78% | $228,937 | | Scott Salmon | $437,308 | 60% | $262,385 | 70% | $184,128 | | Joseph Ketter | $382,981 | 60% | $229,789 | 73% | $168,435 |
Elements of Our Executive Compensation Program
(1) Eligible earnings reflect the actual base salaries earned by each NEO during the 2023 Fiscal Year. The award paid to each of our NEOs is also shown in the “Summary Compensation Table” on page 47 under the “Non-Equity Incentive Plan Compensation” column. Long-Term Equity Incentives The Human Resources and Compensation Committee makes annual equity grants to our executives as part of our compensation program under our 2020 Omnibus Equity Incentive Plan (the “2020 Plan”). In addition, the Human Resources and Compensation Committee may, from time to time, provide an equity award to one or more of our NEOs to retain and reward key talent or to reflect increased responsibilities. No such equity awards were made during 2023. The Human Resources and Compensation Committee may also review and approve equity awards for promotions. For more information regarding the equity awards granted to our NEOs under the 2020 Plan during the 2023 Fiscal Year, see the “Grants of Plan-Based Awards for 2023 Fiscal Year” table on page 48. Awards Granted During 2023 under the 2020 Plan To support our “pay-for-performance” culture, compensation is weighted toward at-risk compensation. Our long-term equity incentive program, which consisted of approximately 33% stock options, 33% RSUs and 33% PSUs for the 2023 Fiscal Year, is designed to serve stockholders’ best interests through sustained long-term financial and stock price performance.
Elements of Our Executive Compensation Program
| | In connection with its annual review of our executive compensation program, including input from FW Cook and feedback received from our stockholders during the 2023 Fiscal Year, in February 2024, our Human Resources and Compensation Committee approved an award mix for our NEOs under the LTIP consisting of 50% RSUs and 50% PSUs for the 2024 Fiscal Year. We believe this update to the award mix under our LTIP further demonstrates our commitment to designing an executive compensation program that encourages high performance and results that will create value for us and our stockholders while avoiding unnecessary risks. We also believe this updated LTIP design evidences our responsiveness to stockholder feedback to enhance the alignment of our executives’ interests with our stockholder interests and allow our executives to share in our stockholders’ success. |
Elements of Our Executive Compensation Program
The table below sets forth the number of stock options, RSUs and PSUs awarded to each NEO in the 2023 Fiscal Year:
Elements of Our Executive Compensation Program
| Name | Number of Options Awarded | Number of RSUs Awarded | Number of PSUs Awarded | Targeted Fair Value for All 2023 Awards | | Doug Black | 16,871 | 8,034 | 8,034 | $3,600,000 | | John Guthrie | 3,514 | 1,673 | 1,673 | $750,000 | | Briley Brisendine | 3,514 | 1,673 | 1,673 | $750,000 | | Scott Salmon | 3,046 | 1,450 | 1,450 | $650,000 | | Joseph Ketter | 2,811 | 1,339 | 1,339 | $600,000 |
Elements of Our Executive Compensation Program
Performance Stock Units PSUs are earned based upon the Company’s performance, over a three-year period, measured by pre-tax income plus amortization (“EBTA”) growth relative to a select peer group, subject to adjustment based upon the application of a ROIC modifier, as set forth below. The “Performance Period” for the PSUs awarded in February 2023 is a three-year period commencing January 2, 2023 and ending December 28, 2025. The Performance Period for the PSUs awarded in February 2022 is a three-year period commencing January 3, 2022 and ending December 29, 2024. The Performance Period for the PSUs awarded in February 2021 is a three-year period commencing January 4, 2021 and ending December 31, 2023. Vesting of PSUs is contingent upon each NEO’s continued employment, subject to certain exceptions as set forth in the PSU agreement. The table below sets forth the performance criteria for the PSUs:
Elements of Our Executive Compensation Program
| Performance Level | Relative EBTA Growth | % Target Award | Performance Level | Avg. ROIC | Modifier to PSUs Earned Based on Relative EBTA Growth(1) | | <Threshold | <25th percentile | 0% | | | | | Threshold | 25th percentile | 50% | Below Target | <12% | -20% | | Target | 50th percentile | 100% | Target | 12%-20% | 0% | | Maximum | >=75th percentile | 200% | Above Target | >20% | +20% |
Elements of Our Executive Compensation Program
| Name | PSUs Awarded in February 2020 | Number of PSUs Settled in May 2023(1)(2) | Value of Earned PSUs in May 2023(3) | | Doug Black | 6,641 | 13,282 | $1,966,931 | | John Guthrie | 1,229 | 2,458 | $364,005 | | Briley Brisendine | 1,475 | 2,950 | $436,866 | | Scott Salmon | 1,229 | 2,458 | $364,005 | | Joseph Ketter | 1,106 | 2,212 | $327,575 |
Elements of Our Executive Compensation Program
(1) The Company’s 3-year EBTA grew at a cumulative compound annual growth rate of 50.2% for the 2020-2022 PSU cycle, which ranked at the 89th percentile of the PSU performance peer group for that cycle and resulted in a payout of 200% of target as certified by the Human Resources and Compensation Committee on May 10, 2023. (2) The Company’s 3-year average ROIC performance of 24.9% for the 2020-2022 PSU cycle did not modify the final payout, as the overall payout is capped at 200% of target. (3) The value of the earned PSUs was based on our closing stock price ($148.09) on May 11, 2023. Other Benefits The benefits provided to our NEOs are generally the same as those provided to our other salaried associates and include, but are not limited to, medical, dental, health, accident, hospitalization and disability insurance, and a tax-qualified 401(k) plan. In addition, NEOs receive company-paid life insurance benefits of 2X base salary. Tax and Accounting Considerations The Human Resources and Compensation Committee and management have taken into account the accounting and tax impact, including Section 162(m) (“Section 162(m)”) of the Internal Revenue Code, of various program designs to balance the potential cost to us with the value to the executive. Section 162(m), as most recently amended in December 2017 in connection with tax reform legislation, limits the deductibility of compensation paid to “covered employees” in excess of $1,000,000 in any taxable year. While the Human Resources and Compensation Committee may consider the impacts of Section 162(m) when determining executive compensation, it may authorize compensation payments that do not comply with the exemptions in Section 162(m) when it believes that such payments are appropriate to attract and retain executive talent. The Human Resources and Compensation Committee and management also consider the accounting implications of our executive officer compensation program. The expenses associated with executive compensation issued to our executive officers and other key associates are reflected in our financial statements. We account for stock-based compensation programs in accordance with the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation-Stock Compensation, which requires companies to recognize in the income statement the grant date value of equity-based compensation issued to associates over the vesting period of such awards.
Summary Compensation Table
Summary Compensation Table The following table sets forth the compensation of our NEOs for the 2023 Fiscal Year and the two immediately preceding fiscal years.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($)(1) | Option Awards ($)(2) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Doug Black Chairman and Chief Executive Officer | 2023 | 918,269 | 1,218,761 | 2,399,916 | 870,060 | 23,342 | 5,430,348 | | | 2022 | 871,634 | 1,158,135 | 2,266,540 | 1,160,363 | 17,509 | 5,474,181 | | | 2021 | 850,000 | 997,710 | 1,999,781 | 2,188,749 | 12,553 | 6,048,793 | | John Guthrie Executive Vice President, Chief Financial Officer | 2023 | 521,634 | 253,851 | 499,759 | 221,590 | 14,053 | 1,510,887 | | | 2022 | 493,269 | 238,443 | 466,440 | 335,176 | 13,038 | 1,546,366 | | | 2021 | 442,308 | 191,191 | 383,142 | 554,530 | 12,452 | 1,583,623 | | Briley Brisendine Executive Vice President, General Counsel and Secretary | 2023 | 487,308 | 253,851 | 499,759 | 228,937 | 14,029 | 1,483,884 | | | 2022 | 466,635 | 238,443 | 466,440 | 317,078 | 12,994 | 1,501,590 | | | 2021 | 442,692 | 207,816 | 416,372 | 560,814 | 12,454 | 1,640,148 | | Scott Salmon Executive Vice President, Strategy and Development | 2023 | 437,308 | 220,043 | 433,144 | 184,128 | 23,560 | 1,298,183 | | | 2022 | 417,308 | 204,363 | 399,704 | 274,171 | 13,824 | 1,309,370 | | | 2021 | 377,019 | 182,878 | 366,527 | 470,801 | 12,334 | 1,409,559 | | Joseph Ketter Executive Vice President, Human Resources | 2023 | 382,981 | 203,067 | 399,986 | 168,435 | 13,851 | 1,168,320 | | | 2022 | 367,307 | 187,295 | 366,334 | 244,076 | 12,825 | 1,177,837 | | | 2021 | 348,462 | 157,940 | 316,350 | 436,166 | 12,293 | 1,271,211 |
Summary Compensation Table
(1) Represents the actual sum of regular pay, paid time off, holiday and back pay earned for the 2023, 2022 and 2021 fiscal years, as applicable. (2) The amount reported reflects the aggregate grant date fair value of the option awards and stock awards granted in the respective year, computed in accordance with FASB ASC Topic 718, modified to exclude any forfeiture assumptions related to service-based vesting conditions. See Note 7, “Employee Benefit and Stock Incentive Plans,” to the financial statements included in our Annual Report on Form 10-K for the 2023 Fiscal Year filed with the SEC on February 22, 2024 for a discussion of the relevant assumptions used in calculating these amounts. The maximum award value for the PSUs granted in Fiscal Year 2023 (determined as described above in “— Elements of Our Executive Compensation Program — Long-Term Equity Incentives” on page 42) is $2,399,916 for Mr. Black, $499,759 for Mr. Guthrie, $499,759 for Mr. Brisendine, $433,144 for Mr. Salmon and $399,986 for Mr. Ketter. The maximum award value for the PSUs granted in Fiscal Year 2022 is $2,266,540 for Mr. Black, $466,440 for Mr. Guthrie, $466,440 for Mr. Brisendine, $399,704 for Mr. Salmon and $366,334 for Mr. Ketter. The maximum award value for the PSUs granted in Fiscal Year 2021 is $1,999,781 for Mr. Black, $383,142 for Mr. Guthrie, $416,372 for Mr. Brisendine, $366,527 for Mr. Salmon and $316,350 for Mr. Ketter. (3) Includes short-term annual cash incentives earned with respect to the 2023, 2022 and 2021 fiscal years. For more detail, see above under “— Elements of Our Executive Compensation Program — Short-Term Annual Cash Incentives” on page 38. For the 2023 Fiscal Year, reflects: (i) Company 401(k) match of $13,200 for each NEO; (ii) in the case of Mr. Black and Mr. Salmon, $9,289 and $9,615, respectively, for spouses’ attendance at an annual customer event attended by customers and their spouses or significant others and (iii) life and accidental death insurance premiums paid by the Company on behalf of each NEO.
Grants of Plan-Based Awards for 2023 Fiscal Year
Grants of Plan-Based Awards for 2023 Fiscal Year The following table provides information concerning plan-based awards granted to the NEOs in the 2023 Fiscal Year.
Grants of Plan-Based Awards for 2023 Fiscal Year
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Option Awards: Number of Securities Underlying Options (#)(4) | All Other Stock Awards: Number of Securities Underlying Awards (#)(5) | Exercise or Base Price of Awards ($) | Grant Date Fair Value of Stock and Option Awards ($)(6) | | | | Threshold ($) | Target ($) | Maximum ($)(2) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Doug Black | — | 573,918 | 1,147,836 | 2,525,240 | — | — | — | — | — | — | — | | | 2/9/2023 | — | — | — | 4,017 | 8,034 | 16,068 | — | — | — | 1,199,958 | | | 2/9/2023 | — | — | — | — | — | — | 16,871 | — | 149.36 | 1,218,761 | | | 2/9/2023 | — | — | — | — | — | — | — | 8,034 | — | 1,199,958 | | John Guthrie | — | 156,490 | 312,981 | 688,557 | — | — | — | — | — | — | — | | | 2/9/2023 | — | — | — | 837 | 1,673 | 3,346 | — | — | — | 249,879 | | | 2/9/2023 | — | — | — | — | — | — | 3,514 | — | 149.36 | 253,851 | | | 2/9/2023 | — | — | — | — | — | — | — | 1,673 | — | 249,879 | | Briley Brisendine | — | 146,192 | 292,385 | 643,246 | — | — | — | — | — | — | — | | | 2/9/2023 | — | — | — | 837 | 1,673 | 3,346 | — | — | — | 249,879 | | | 2/9/2023 | — | — | — | — | — | — | 3,514 | — | 149.36 | 253,851 | | | 2/9/2023 | — | — | — | — | — | — | — | 1,673 | — | 249,879 | | Scott Salmon | — | 131,192 | 262,385 | 577,246 | — | — | — | — | — | — | — | | | 2/9/2023 | — | — | — | 725 | 1,450 | 2,900 | — | — | — | 216,572 | | | 2/9/2023 | — | — | — | — | — | — | 3,046 | — | 149.36 | 220,043 | | | 2/9/2023 | — | — | — | — | — | — | — | 1,450 | — | 216,572 | | Joseph Ketter | — | 114,894 | 229,789 | 505,535 | — | — | — | — | — | — | — | | | 2/9/2023 | — | — | — | 670 | 1,339 | 2,678 | — | — | — | 199,993 | | | 2/9/2023 | — | — | — | — | — | — | 2,811 | — | 149.36 | 203,067 | | | 2/9/2023 | — | — | — | — | — | — | — | 1,339 | — | 199,993 |
Grants of Plan-Based Awards for 2023 Fiscal Year
(1) For a discussion of the payout opportunities under our short-term annual cash incentive plan for the 2023 Fiscal Year, see above under “— Elements of Our Executive Compensation Program — Short-Term Annual Cash Incentives” on page 38. Actual amounts paid to each of our NEOs is shown in the “Summary Compensation Table” on page 47 under the “Non-Equity Incentive Plan Compensation” column. (2) The annual incentive opportunity with respect to the Adjusted EBITDA, Company NPS, Organic Daily Sales Growth and individual strategic performance component for each NEO was capped at 250%, 150%, 150% and 150% of target, respectively, for the 2023 Fiscal Year. (3) Includes the PSUs granted to each of our NEOs under the 2020 Plan, which will be earned based on the Company’s performance over the three-year performance period commencing on January 2, 2023 and ending December 28, 2025. See “— Elements of Our Executive Compensation Program — Performance Stock Units” on page 43. (4) Reflects stock options granted under the 2020 Plan, which vest in four equal installments on each of the first through fourth anniversaries of the grant date. (5) Includes the time-based RSUs granted to each of our NEOs under the 2020 Plan, which vest annually in four equal installments beginning on February 9, 2024. Reflects the aggregate grant date fair value of the option awards, computed in accordance with FASB ASC Topic 718, modified to exclude the effect of estimated forfeitures and using a Black-Scholes option pricing model. RSUs and PSUs have grant date fair values equal to the fair market value of the underlying stock on the date of grant. See Note 7, “Employee Benefit and Stock Incentive Plans,” to the financial statements in our Annual Report on Form 10-K for the 2023 Fiscal Year filed with the SEC on February 22, 2024 for further discussion of the relevant assumptions used in calculating these amounts.
Outstanding Equity Awards at 2023 Fiscal Year End
Outstanding Equity Awards at 2023 Fiscal Year End
Outstanding Equity Awards at 2023 Fiscal Year End
| | | Option Awards(2)(3) | | | | Stock Awards | | | | | Name | Grant Date(1) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($)(4) | Option Expiration Date | Number of RSUs that have not Vested (#)(5) | Market Value of RSUs that have not Vested ($)(6) | Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights that have not Vested (#)(7) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested ($)(6) | | Doug Black | 2/9/2023 | — | 16,871 | 149.36 | 2/9/2033 | 8,034 | 1,305,525 | 8,034 | 1,305,525 | | | 2/10/2022 | 5,038 | 15,114 | 179.40 | 2/10/2032 | 4,738 | 769,925 | 6,317 | 1,026,513 | | | 2/11/2021 | 10,382 | 10,382 | 166.15 | 2/11/2031 | 3,009 | 488,963 | — | — | | | 2/5/2020 | 29,888 | 9,962 | 101.63 | 2/5/2030 | 1,660 | 269,750 | — | — | | | 2/6/2019 | 66,873 | — | 51.59 | 2/6/2029 | — | — | — | — | | | 2/14/2018 | 67,187 | — | 77.04 | 2/14/2028 | — | — | — | — | | | 2/17/2017 | 41,629 | — | 38.73 | 2/17/2027 | — | — | — | — | | John Guthrie | 2/9/2023 | — | 3,514 | 149.36 | 2/9/2033 | 1,673 | 271,863 | 1,673 | 271,863 | | | 2/10/2022 | 1,037 | 3,112 | 179.40 | 2/10/2032 | 975 | 158,438 | 1,300 | 211,250 | | | 2/11/2021 | 1,990 | 1,989 | 166.15 | 2/11/2031 | 576 | 93,600 | — | — | | | 2/5/2020 | 3,689 | 1,845 | 101.63 | 2/5/2030 | 307 | 49,888 | — | — | | | 2/6/2019 | 3,541 | — | 51.59 | 2/6/2029 | — | — | — | — | | | 2/14/2018 | 3,359 | — | 77.04 | 2/14/2028 | — | — | — | — | | Briley Brisendine | 2/9/2023 | — | 3,514 | 149.36 | 2/9/2033 | 1,673 | 271,863 | 1,673 | 271,863 | | | 2/10/2022 | 1,037 | 3,112 | 179.40 | 2/10/2032 | 975 | 158,438 | 1,300 | 211,250 | | | 2/11/2021 | 2,163 | 2,162 | 166.15 | 2/11/2031 | 626 | 101,725 | — | — | | | 2/5/2020 | 6,641 | 2,214 | 101.63 | 2/5/2030 | 369 | 59,963 | — | — | | | 2/6/2019 | 13,083 | — | 51.59 | 2/6/2029 | — | — | — | — | | | 2/14/2018 | 13,437 | — | 77.04 | 2/14/2028 | — | — | — | — | | | 2/17/2017 | 18,590 | — | 38.73 | 2/17/2027 | — | — | — | — | | | 5/12/2016 | 35,000 | — | 26.67 | 5/12/2026 | — | — | — | — | | | 9/8/2015 | 1,035 | — | 12.84 | 9/8/2025 | — | — | — | — | | Scott Salmon | 2/9/2023 | — | 3,046 | 149.36 | 2/9/2033 | 1,450 | 235,625 | 1,450 | 235,625 | | | 2/10/2022 | 889 | 2,667 | 179.40 | 2/10/2032 | 835 | 135,688 | 1,114 | 181,025 | | | 2/11/2021 | 1,903 | 1,903 | 166.15 | 2/11/2031 | 551 | 89,538 | — | — | | | 2/5/2020 | 5,534 | 1,845 | 101.63 | 2/5/2030 | 307 | 49,888 | — | — | | | 3/11/2019 | 26,406 | — | 52.26 | 3/11/2029 | — | — | — | — | | Joe Ketter | 2/9/2023 | — | 2,811 | 149.36 | 2/9/2033 | 1,339 | 217,588 | 1,339 | 217,588 | | | 2/10/2022 | 815 | 2,444 | 179.40 | 2/10/2032 | 766 | 124,475 | 1,021 | 165,913 | | | 2/11/2021 | 1,644 | 1,643 | 166.15 | 2/11/2031 | 476 | 77,350 | — | — | | | 2/5/2020 | 4,981 | 1,660 | 101.63 | 2/5/2030 | 276 | 44,850 | — | — | | | 2/6/2019 | 8,722 | — | 51.59 | 2/6/2029 | — | — | — | — | | | 2/14/2018 | 8,750 | — | 77.04 | 2/14/2028 | — | — | — | — | | | 2/17/2017 | 10,108 | — | 38.73 | 2/17/2027 | — | — | — | — | | | 7/27/2015 | 46,690 | — | 12.84 | 7/27/2025 | — | — | — | — |
Outstanding Equity Awards at 2023 Fiscal Year End
The 2016 Omnibus Equity Incentive Plan (the “2016 Plan”) and applicable equity award agreement govern the terms of the options, RSUs and PSUs granted to our NEOs prior to the adoption of the 2020 Plan, including, among other things, the vesting and forfeiture provisions. The 2020 Plan and applicable equity award agreement govern the terms of the options, RSUs and PSUs granted to our NEOs since 2021. The options granted under the 2016 Plan and 2020 Plan vest in four equal installments on each of the first through fourth anniversaries of the date of grant. (3) Prior to our IPO and the adoption of the 2020 Plan and our 2016 2016 Plan, certain of our NEOs received stock options pursuant to our Amended and Restated SiteOne Landscape Supply, Inc. Stock Incentive Plan (f/k/a CD&R Landscapes Parent, Inc. Stock Incentive Plan) (the “Stock Incentive Plan”). The options granted under the Stock Incentive Plan vested in five equal installments on each of the first through fifth anniversaries of the date of grant. (4) Option exercise prices for options granted prior to April 29, 2016 reflect equitable adjustments by the Board in connection with the declaration and payment of the one-time cash dividend in April 2016. (5) The RSUs will vest and settle into shares of common stock in four equal annual installments on each of the first through fourth anniversaries of the date of grant, subject to the NEO’s continued employment (except for the 2/9/2023 grants to Mr. Black and Mr. Guthrie who satisfied the conditions for retirement under the 2020 Plan or the applicable award agreements). (6) Based on the closing price of the Company’s stock on December 29, 2023 ($162.50), the final trading day of the 2023 Fiscal Year. (7) The PSUs will vest and settle into common stock as described above in “Elements of Our Executive Compensation Program — Performance Stock Units” on page 43. Option Exercises and Stock Vested in 2023 Fiscal Year
Outstanding Equity Awards at 2023 Fiscal Year End
| | Option Awards | | Stock Awards | | | Name | Number of shares acquired on exercise (#) | Value realized on exercise ($)(1) | Number of shares acquired on vesting (#)(2) | Value realized on vesting ($)(2)(3) | | Doug Black | 121,960 | 16,561,959 | 13,547 | 2,129,372 | | John Guthrie | 3,000 | 355,230 | 2,619 | 411,376 | | Briley Brisendine | — | — | 2,805 | 441,049 | | Scott Salmon | — | — | 3,065 | 458,987 | | Joseph Ketter | — | — | 2,085 | 327,842 |
Outstanding Equity Awards at 2023 Fiscal Year End
(1) The value realized on option exercises is the difference between the market price of the underlying securities at exercise and the exercise or base price of the options. (2) A participant is vested in the right to receive PSUs granted in 2021 under the applicable PSU award agreement as of December 31, 2023 (the end of the performance cycle). However, pursuant to the terms of the award, the actual number of shares to be awarded to the participant is not known until the Human Resources and Compensation Committee determines the applicable performance levels of the underlying (i) relative EBTA growth and (ii) absolute ROIC after the end of the performance cycle. Accordingly, the values in the table above reflect the target number of PSUs awarded in 2021 multiplied by the closing price of the Company’s stock on December 29, 2023 ($162.50), the final trading day of the 2023 Fiscal Year. The final value realized will not be known until after the Human Resources and Compensation Committee completes its determination in verifying the financial information used to calculate the applicable performance level achievements, which may result in a greater or lesser value than shown above. After completion of this process, the actual transfer of common stock is made to participants. As a result, the following amounts have been added to the “Stock Awards” column above to reflect the PSUs that have vested but not settled and, therefore, no value has been received by our NEOs as of March 26, 2024:
Outstanding Equity Awards at 2023 Fiscal Year End
| | Estimated PSU Stock Awards | | | | Number of shares vested (#) | Value realized on vesting ($) | | Doug Black | 6,018 | 977,925 | | John Guthrie | 1,153 | 187,363 | | Briley Brisendine | 1,253 | 203,613 | | Scott Salmon | 1,103 | 179,238 | | Joseph Ketter | 952 | 154,700 |
Outstanding Equity Awards at 2023 Fiscal Year End
The value realized on vesting is determined by multiplying the number of units vested by our closing stock price on the date the units vested. For 2023, units granted on February 6, 2019 vested on February 6, 2023, units granted on March 11, 2019 vested on March 11, 2023, units granted on February 5, 2020 vested on February 5, 2023, units granted on February 11, 2021 vested on February 11, 2023 and units granted on February 10, 2022 vested on February 10, 2023, and the closing stock price on those dates was $155.52, $135.60, $159.86, $146.87 and $146.87, respectively.
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control Separation Benefit Agreements with Messrs. Black, Guthrie, Brisendine, Salmon and Ketter Severance protections, particularly in the context of a change-in-control transaction, can play a valuable role in attracting and retaining key executive officers. The potential occurrence of a change-in-control transaction would create uncertainty regarding the continued employment of our NEOs. This uncertainty results from the fact that many change-in-control transactions result in significant organizational changes, particularly at the NEO-level. In order to encourage our NEOs to remain employed with the Company during an important time when their prospects for continued employment are often uncertain, we provide our NEOs and other senior executives with severance benefits if the executive’s employment is terminated by the Company “without cause” or by the executive for “good reason” (each as defined below) in connection with a change-in-control and outside of a change-in-control. Because a termination by the executive for good reason may be conceptually the same as a termination by the Company without cause, and because in the context of a change-in-control, potential acquirers would otherwise have an incentive to constructively terminate the executive’s employment to avoid paying severance, it is appropriate to provide severance benefits in these circumstances. The Board evaluates the level of severance benefits to each NEO on a case-by-case basis, and in general, considers these severance protections to be an important part of the compensation provided to our NEOs and consistent with competitive practices. Accordingly, in November 2023, the Company entered into separation benefit agreements (collectively, the “Separation Agreements”) with each of the Company’s NEOs, as well as other senior executives of the Company. The Separation Agreements replace, on the one hand, the employment agreement previously entered into by the Company with Mr. Black and, on the other hand, the separation benefit agreements previously entered into by the Company with the other NEOs. The Separation Agreements provide that, if the NEO’s employment is terminated “without cause” or if the NEO terminates his employment for “good reason” outside of the 12-month period following a change-in-control, the NEO is entitled to receive the following: • all salary, prior year bonus, expense reimbursements and benefits earned or incurred but unpaid as of the date of termination (the “Base Termination Compensation”); • severance pay consisting of an amount equal to (a) 18 months of the NEO’s base salary, at the greater of the rate in effect (1) at the effective time of termination and (2) prior to the event giving rise to good reason, paid in monthly installments beginning on the 60th day following the termination date, and (b) the NEO’s annual bonus for the year in which his employment terminates based on actual results, prorated for the portion of the year that the NEO had remained employed and paid at the time executive annual bonuses are paid for the fiscal year of termination (but no later than 2.5 months after the end of such year); and • continued medical, dental and vision insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for 18 months at active employee rates, with the COBRA premium amount reimbursed to the NEO on a monthly basis (the “Benefit Continuation”). With respect to the description of severance pay described above, Mr. Black’s Separation Agreement provides that, in addition to the benefits described above, Mr. Black is also entitled to an annual bonus for the year in which his employment terminates, determined based on target results. If the NEO’s employment is terminated “without cause” or if the NEO terminates his employment for “good reason” within the 12-month period following a change-in-control, the NEO is entitled to receive the following: • the Base Termination Compensation; • severance pay consisting of an amount equal to two times the sum of (a) the NEO’s base salary, at the greater of the rate in effect (1) at the time of termination and (2) prior to the event giving rise to good reason and (b) the NEO’s annual bonus for the year in which his employment terminates determined based on target results, paid in a lump sum on the 40th day following the termination date; an amount equal to the NEO’s annual bonus for the year in which his employment terminates determined based on actual results, prorated for the portion of the year that the NEO had remained employed and paid at the time executive annual bonuses are paid for the fiscal year of termination (but no later than 2.5 months after the end of such year); and the Benefit Continuation. If the NEO’s employment is terminated for “cause” or the NEO voluntarily terminates his employment without “good reason” or if the NEO’s employment is terminated due to death, he is only entitled to receive the Base Termination Compensation. If the NEO’s employment is terminated due to disability, he is entitled to receive (a) the Base Termination Compensation and (b) continued medical, dental and vision insurance coverage for 18 months at active employee rates. Payment of the above termination compensation and/or benefits under the Separation Agreements (other than the Base Termination Compensation) is conditioned on each NEO signing and not revoking a general release of claims in favor of the Company and complying with the restrictive covenants set forth in any written agreement between the NEO and the Company. “Cause” is defined in the Separation Agreements as (a) conviction of, or plea of nolo contendere to, a crime constituting a felony in the U.S. or a specified type of misdemeanor, (b) willful or grossly negligent failure to perform material duties, (c) willful material violation of Company policy, (d) material breach of a binding agreement to which he is a party and (e) willful conduct that materially and demonstrably harms the Company or any of its subsidiaries. Notice and cure provisions apply. “Good Reason” is defined in the Separation Agreements as (a) a material reduction in base salary, (b) a material reduction in annual incentive compensation opportunity, (c) a material diminution in his authority, duties or responsibilities without consent (d) a relocation of the NEO’s principal place of employment by more than 50 miles, or (e) material breach by the Company or any of its subsidiaries of an agreement to which the NEO is the counterparty. Mr. Black’s Separation Agreement further provides that a failure to nominate Mr. Black to the Board also constitutes “Good Reason.” Notice and cure provisions apply.
Director Compensation
Director Compensation The Board has adopted a non-employee director compensation policy. The Human Resources and Compensation Committee has engaged FW Cook as an outside compensation consultant to ensure the compensation paid to our directors remains competitive, specifically as a result of a market benchmarking survey, using the same peer companies that are used to benchmark executive compensation. Under current policy, all non-employee directors are entitled to cash compensation as set forth below, payable in arrears on a quarterly basis:
Director Compensation
| | Annual Retainer | | Board: | | | All non-employee members | $80,000 | | Lead Director | $35,000 | | Audit Committee: | | | Chair | $32,500 | | Non-Chair members | $12,500 | | Human Resources and Compensation Committee: | | | Chair | $27,500 | | Non-Chair members | $10,000 | | Nominating and Corporate Governance Committee: | | | Chair | $22,500 | | Non-Chair members | $7,500 |
Director Compensation
Each non-employee director has the right to elect to receive all or a portion of his or her annual cash retainer in the form of, as applicable based on whether such non-employee director has met the stock ownership and retention requirements set forth in the Company’s Non-Employee Director Equity Ownership Policy, deferred share units (“DSUs”) or fully vested RSUs, in each case, using the fair market value of a share of the Company’s common stock on the applicable grant date. The DSUs are subject to the deferral requirements of Section 409A of the Internal Revenue Code of 1986, as amended. Non-employee directors may also elect to defer RSUs until the termination of their Board service (or a specified date). Under the policy, on the date of each annual meeting of our stockholders, each continuing non-employee director is eligible to receive a prospective equity award for the coming year of service with a grant date fair value of $130,000 in the form of DSUs. The DSUs granted to our non-employee directors under the 2020 Plan vest upon the earlier of (i) the first anniversary of the grant date and (ii) the next annual meeting of stockholders, in each case, subject to such non-employee director’s continued service as a director or other service provider. In the event of a non-employee director’s termination of service prior to the end of the vesting period due to a voluntary resignation from the board or involuntary removal without cause, a prorated portion of the DSUs will become vested. In the event of a director’s termination due to death or disability or change-in-control prior to the non-employee director’s termination of service, the vesting period will lapse and the DSUs will become fully vested. We have also agreed to reimburse all reasonable out-of-pocket expenses incurred by non-employee directors in attending in-person Board and committee meetings. In August 2022, the Board approved certain amendments to the non-employee director compensation policy. Pursuant to the amended non-employee director policy, our non-employee directors will receive either DSUs or RSUs depending on whether such director has met the stock ownership and retention requirements set forth in the Company’s Non-Employee Director Equity Ownership Policy on the applicable grant date. Those non-employee directors that have met the applicable stock ownership and retention requirements are entitled to receive RSUs and may elect to defer settlement of their RSUs until the termination of their Board service (or a specified date). Vested RSUs granted to non-employee directors settle into the Company’s common stock at the earlier to occur of the vesting date, termination of the director’s service on the Board, or until a change of control of the Company. Settlement may also be deferred at the director’s election until a specified date after the vesting date.
Director Compensation for 2023 Fiscal Year
Director Compensation for 2023 Fiscal Year The following table summarizes the compensation paid to our non-employee directors for the 2023 Fiscal Year.
Director Compensation for 2023 Fiscal Year
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Fred M. Diaz | 100,700 | 130,000 | 230,700 | | William W. Douglas III | 145,700 | 130,000 | 275,700 | | Larisa J. Drake | 85,700 | 130,000 | 215,700 | | W. Roy Dunbar | 88,200 | 130,000 | 218,200 | | Jeri L. Isbell | 112,300 | 130,000 | 242,300 | | Jack L. Wyszomierski | 111,400 | 130,000 | 241,400 |
Director Compensation for 2023 Fiscal Year
(1) Reflects the grant date fair value of 878 DSUs granted to Messrs. Douglas, Dunbar and Wyszomierski and of 878 RSUs granted to Mr. Diaz and Mses. Drake and Isbell, each of which have met the stock ownership and retention requirements set forth in the Company’s Non-Employee Director Equity Ownership Policy as further described above, on May 11, 2023. The grant date fair values of the DSUs and RSUs are computed in accordance with FASB ASC Topic 718, modified to exclude any forfeiture assumptions related to service-based vesting conditions, determined by dividing the grant value by the closing price of our common stock on the grant date.
CEO Pay Ratio
CEO Pay Ratio For the 2023 Fiscal Year: (i) the total compensation of our median employee (excluding Mr. Black, our CEO) was $59,013; and (ii) the annual total compensation of Mr. Black, our CEO, was $5,430,348. Based on this information, the ratio of the annual total compensation of our CEO to our median employee was 92 to 1.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (“CAP”) and certain financial performance of the Company. The Human Resources & Compensation Committee does not utilize CAP as the basis for making compensation decisions.For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to “Compensation Discussion and Analysis” beginning on page 34. Because CAP includes multiple years of grants, the calculation of CAP each year is heavily impacted by the change in Company stock price and, therefore, may be higher or lower than the values shown in the “Summary Compensation Table” on page 47.
Pay Versus Performance
| Year | Summary Compensation Table for CEO ($)(1) | Compensation Actually Paid to CEO ($)(2) | Average Summary Compensation Table Total for Non-CEO NEOs ($)(3) | Average Compensation Actually Paid to Non-CEO NEOs ($)(2) | Value of Fixed $100 Investment Based On: | | Net Income (in millions) ($)(6) | Adjusted EBITDA (in millions) ($)(7) | | | | | | | Total Shareholder Return ($) (4) | Peer Group Total Shareholder Return ($)(5) | | | | 2023 | 5,430,348 | 10,254,450 | 1,365,319 | 2,265,867 | 179.64 | 217.61 | 173.4 | 410.7 | | 2022 | 5,474,181 | (7,208,968) | 1,383,791 | (1,091,239) | 129.69 | 146.67 | 245.4 | 464.3 | | 2021 | 6,048,793 | 17,892,904 | 1,489,575 | 3,737,437 | 267.83 | 168.96 | 238.4 | 415.1 | | 2020 | 4,875,559 | 17,020,954 | 1,197,365 | 3,611,711 | 175.36 | 126.46 | 121.3 | 260.2 |
Pay Versus Performance
Mr. Black was the CEO for each of 2023, 2022, 2021 and 2020. (2) Reflects the amount of “compensation actually paid,” as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following tables set forth the adjustments that were made to our NEOs’ total compensation in the Summary Compensation Table for each year to determine CAP. The Company does not have a defined benefit pension plan or pay dividends, so no pension or dividend adjustments were made.
Pay Versus Performance
| CEO Adjustments(a)(b) | 2023 ($) | 2022 ($) | 2021 ($) | 2020 ($) | | Summary Compensation Table Total | 5,430,348 | 5,474,181 | 6,048,793 | 4,875,559 | | Deduct Equity Awards included in Summary Compensation Table | (3,618,677) | (3,424,675) | (2,997,491) | (2,384,356) | | Add Fair Value of Awards Granted in Current Year and Outstanding and Unvested at Year-End | 3,976,083 | 2,294,950 | 5,505,353 | 5,361,872 | | Add Change in Fair Value of Awards Granted in Prior Year and Outstanding and Unvested at Year-End | 1,595,317 | (7,411,707) | 7,944,354 | 8,405,211 | | Add Change in Fair Value of Awards Granted in Prior Year that Vested during Year | 2,871,379 | (4,141,717) | 1,391,895 | 762,668 | | Total CAP | 10,254,450 | (7,208,968) | 17,892,904 | 17,020,954 |
Pay Versus Performance
| Non-CEO Adjustments(a)(b) | 2023 ($) | 2022 ($) | 2021 ($) | 2020 ($) | | Summary Compensation Table Total | 1,365,319 | 1,383,791 | 1,489,575 | 1,197,365 | | Deduct Equity Awards included in Summary Compensation Table | (690,865) | (641,866) | (584,358) | (452,406) | | Add Fair Value of Awards Granted in Current Year and Outstanding and Unvested at Year-End | 759,101 | 430,132 | 1,043,847 | 1,017,455 | | Add Change in Fair Value of Awards Granted in Prior Year and Outstanding and Unvested at Year-End | 299,085 | (1,485,813) | 1,500,370 | 1,557,527 | | Add Change in Fair Value of Awards Granted in Prior Year that Vested during Year | 533,227 | (777,483) | 288,003 | 291,770 | | Total CAP | 2,265,867 | (1,091,239) | 3,737,437 | 3,611,711 |
Pay Versus Performance
(a) The valuation assumptions used to calculate fair values of equity awards did not materially differ from those disclosed at the time of grant. Refer to the “Option Exercises and Stock Vested in 2023 Fiscal Year” table on page 50 for discussion of the valuation assumptions used for equity awards on vesting date. (b) PSUs that settled in 2023 and 2022 each resulted in a payout of 200% of target, computed in accordance with FASB ASC Topic 718. Refer to “Performance Stock Units” on page 43 for the value of PSUs settled in 2023 and discussion of the performance criteria used for PSUs. (3) For each of 2023, 2022 and 2020, the other NEOs were Messrs. Guthrie, Brisendine, Salmon and Ketter. For 2021, the other NEOs were Messrs. Guthrie, Brisendine, Salmon, Ketter and Greg Weller, our former Executive Vice President, Operations. (4) Total Shareholder Return (“TSR”) is cumulative for the measurement period beginning on December 27, 2019 and ending on December 31 of each of 2020 and 2021, December 30, 2022 and December 29, 2023 (which are the last trading days of each fiscal year), calculated in accordance with Item 201(e) of Regulation S-K. (5) The TSR peer group consists of the Dow Jones US Industrial Suppliers Index, which is used by the Company for purposes of compliance with Item 201(e) of Regulation S-K. (6) Reflects Net Income as shown in the Company’s Annual Report on Form 10-K for 2023, 2022, 2021 and 2020. We determined that Adjusted EBITDA is the financial performance measure that, in the Company’s assessment, represents the most important performance measure used by the Company to link CAP to the Company’s NEOs to Company performance for the most recently completed fiscal year. Adjusted EBITDA is a non-GAAP financial measure. See Appendix A to this Proxy Statement for a reconciliation of Adjusted EBITDA to Net income (loss), the corresponding GAAP financial measure.
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table The following charts show the relationship between CAP and the required financial performance measures in the Pay Versus Performance table above — Company TSR, Peer Group TSR, Net Income and the Company-selected measure of Adjusted EBITDA.