DEF 14A of Compass Diversified Holdings
Filed Apr 14, 2025 · FY20240001140361-25-013771
Shareholder Alignment and Long-Term Value Creation
Shareholder Alignment and Long-Term Value Creation We recently revised our Management Services Agreement to better align management compensation with shareholder interests and increase Board oversight. Key changes include implementing a sliding scale for management fees, eliminating integration service fees on acquisitions, and establishing an incentive management fee, which is subject to approval by the Board’s compensation committee and is paid only when certain financial hurdles are met. Collectively, these changes will reduce long-term costs for shareholders and ensure a stronger alignment between our leadership team and the shareholders we serve. During 2024, we repurchased over 400,000 common shares returning over $9.2 million to shareholders. This reflects our commitment to deploy and distribute capital to maximize shareholder value. While our primary focus remains funding our strategic growth initiatives and optimizing return on invested capital, we made the decision to opportunistically repurchase shares when we believed our stock was trading below its intrinsic value. This disciplined approach allowed us to deliver long-term value for our shareholders while maintaining financial flexibility.
Shareholder Alignment and Long-Term Value Creation
| 03 | 2025 Proxy |
2025 Governance Updates
2025 Governance Updates In January of 2025, the Company amended its Management Services Agreement. The key changes include implementing a sliding scale for base management fees, introducing an incentive management fee, eliminating integration services fees for acquisitions, and excluding excess cash from the management fee calculation. We believe that, collectively, these changes will significantly reduce long-term costs for shareholders, further align management compensation with shareholder interests and increase the oversight of our Board's Compensation Committee. On January 3, 2025, Mr. Gordon Burns informed our Board that he would not be standing for re-election at the Company’s 2025 Annual Meeting. Effective as of the same date, Ms. Nancy Mahon assumed the role of chair of our Nominating and Corporate Governance Committee. On February 14, 2025, Mr. James Bottiglieri informed our Board that he would be retiring from his position and not standing for re-election at the Company’s 2025 Annual Meeting. The departures of Mr. Burns and Mr. Bottiglieri, who served on our Board for terms of 17 and 20 years, respectively, were not the result of any disagreements with the Board, the Company or management. Rather, these departures were the culmination of a planned Board refresh designed to reduce the Board’s overall tenure and infuse the Board with new and diverse skills, perspectives, and experiences.
2025 Governance Updates
| 10 | 2025 Proxy |
2025 Governance Updates
PROPOSAL 1: ELECTION OF DIRECTORS Our Board, upon the recommendation of the Nominating/Governance Committee, has nominated the following six (6) directors for election to the Board: Larry L. Enterline, Alexander S. Bhathal, Harold S. Edwards, Heidi Locke Simon, Nancy B. Mahon, and Teri R. Shaffer. If elected, each director will hold office until the 2026 Annual Meeting of Shareholders and/or until their successor is elected and qualified. Our Board recommends that you vote FOR ALL six (6) of the director nominees to be elected to our Board, in each case, for a one-year term ending at the 2026 Annual Meeting of Shareholders. Please see the following pages for additional information on the director nominees.
2025 Governance Updates
| 11 | 2025 Proxy |
2025 Governance Updates
Our Board of Directors 2025 Director Nominees The names, ages (as of April 1, 2025), and positions of our director nominees are as follows:
2025 Governance Updates
| Name | Age | Position | | Larry L. Enterline | 72 | Chair of the Board, Independent Director | | Alexander S. Bhathal | 49 | Independent Director | | Harold S. Edwards | 59 | Independent Director | | Heidi Locke Simon | 57 | Independent Director | | Nancy B. Mahon | 60 | Independent Director | | Teri R. Shaffer | 63 | Independent Director |
2025 Governance Updates
The following describes the experience, education and other qualifications of each of the director nominees to be voted on for election at the 2025 Annual Meeting. Each of the six (6) nominees currently serves on our Board.
2025 Governance Updates
| Larry L. Enterline Chair of our Board Since 2022 Director Since 2019 | Larry L. Enterline has served as Chair of our Board since July 2022 and as a director of the Company since July 2019. Mr. Enterline has been the chief executive officer of Vulcan Holdings Inc., a private investment holding and consulting services company he founded, since 2010. Previously, Mr. Enterline was the executive chairman of Greentech Environmental, an air purification systems provider from August 2021 to December 2022. Prior to that, Mr. Enterline was the chief executive officer and a director of Fox Factory Holding Corp. (NASDAQ: FOXF), a former subsidiary of the Company, from 2011 through 2019, and its executive chair from 2019 through 2021. Mr. Enterline served in various executive and management roles earlier in his career, including chief executive officer of COMSYS IT Partners Inc., an IT staffing and solutions company, senior vice president of worldwide sales and service organization at Scientific-Atlanta Inc., a Georgia-based manufacturer of cable television, telecommunications and broadband equipment. Mr. Enterline is a graduate of Case Western Reserve University and the Monte Ahuja College of Business at Cleveland State University. |
2025 Governance Updates
| 12 | 2025 Proxy |
2025 Governance Updates
| Alexander S. Bhathal Director Since 2022 | Alexander S. Bhathal has served as a director of the Company since January 2022. Mr. Bhathal is executive chair and managing partner of RAJ Capital family investment office which he founded in 2006 and its Revitate management investment platform, which supports high-potential alternative investment strategies in real estate, sports, and consumer sectors. Since 2013, Mr. Bhathal has served as co-owner and executive director of Sacramento Basketball Holdings, which owns the Sacramento Kings franchise of the National Basketball Association (NBA), the Stockton Kings of the NBA G-League, Minor League Baseball’s River Cats, Golden 1 Center, and Downtown Commons entertainment and sports district. In 2024, Mr. Bhathal led the acquisitions of Portland Thorns of the National Women’s Soccer League and the Women’s National Basketball Association Portland expansion team and he currently serves as alternate governor for both teams. Mr. Bhathal also serves on the board of directors of Mark IV Capital and Aspyr Holdings (Orange Theory Fitness Franchises) and as chair of the California Coast Chapter of Young Presidents’ Organization (YPO). Previously, Mr. Bhathal served as the chief executive officer of RAJ Swim, a company that designs, manufactures, and markets designer and private label swimwear under nationally recognized brands. Mr. Bhathal is a graduate of the University of California Los Angeles and the USC Marshall School of Business at the University of Southern California and completed the Presidents Program in Leadership at Harvard Business School. |
2025 Governance Updates
| Harold S. Edwards Director Since 2006 | Harold S. Edwards has served as a director of the Company since April 2006. Mr. Edwards has been the president and chief executive officer of Limoneira Company (NASDAQ: LMNR), since 2003. Previously, Mr. Edwards was the president of Puritan Medical Products, a division of Airgas Inc. Prior to that, Mr. Edwards held management positions with Fisher Scientific International, Inc., Cargill, Inc., Agribrands International and the Ralston Purina Company. Mr. Edwards is currently a member of the board of directors of Limoneira Company. Mr. Edwards served on the boards of directors of Calavo Growers, Inc. (NASDAQ:CVGW) from 2005 to 2022 and Inventure Foods, Inc. (NASDAQ:SNAK) from 2014 to 2017. Mr. Edwards is a graduate of Lewis and Clark College and The Thunderbird School of Global Management at Arizona State University. |
2025 Governance Updates
| 13 | 2025 Proxy |
2025 Governance Updates
| Heidi Locke Simon Director Since 2023 | Heidi Locke Simon has served as a director of the Company since July 2023. Previously, Ms. Locke Simon was a partner at Bain & Company, a global management consulting organization, where she worked from 1993 to 2012. Prior to that she was an investment banking analyst at Goldman, Sachs & Co. Ms. Locke Simon has served as a director of Teekay Corporation Ltd. (NYSE:TK) since September 2017, and as its chair from December 2024 to present, and as chair of Teekay Tankers Ltd. (NYSE:TNK) from December 2024 to present. She also currently serves as the chair of Teekay Corporation Ltd.’s audit committee and as a member of Teekay Tankers Ltd.’s audit committee. She is a National Association of Corporate Directors (NACD) Certified Director and holds the CERT Cybersecurity Governance Certification from Carnegie Mellon. Ms. Locke Simon is a graduate of Middlebury College and the Harvard Business School. |
2025 Governance Updates
| Nancy B. Mahon Director Since 2023 | Nancy B. Mahon has served as a director of the Company since May 2023. Ms. Mahon has been the chief sustainability officer of The Estée Lauder Companies Inc. since January of 2023. Previously, Ms. Mahon was the senior vice president, global corporate citizenship and sustainability at Estée Lauder from April 2016 to January 2023. Prior to that, she served as the senior vice president, social initiatives, MAC Cosmetics, Bobbi Brown & La Mer from July 2011 to March 2016. She has served as a trustee of the New York University School of Law Foundation since October 2018. She also served on the board of directors of TPG Pace Beneficial Finance Corporations I and II (NYSE: TPGY-UN and YTPG) from October 2020 to April 2023. Ms. Mahon was the chairperson of The Presidential Advisory Council on HIV/AIDS (PACHA) of the U.S. Department of Health and Human Services from December 2011 to December 2016. She completed the Rock Center for Corporate Governance Directors' College executive education program at Stanford Law School. She received a certificate in brand marketing from The Wharton School, certification as a woman on boards of directors from Yale School of Management, and is admitted to the State Bar of California, the United States Court of Appeals for the Ninth Circuit, and the United States District Court for the Northern District of California. Ms. Mahon is a graduate of Yale University and the New York University School of Law. |
2025 Governance Updates
| 14 | 2025 Proxy |
2025 Governance Updates
| Teri R. Shaffer Director Since 2022 | Teri R. Shaffer has served as a director of the Company since July 2022. Previously, Ms. Shaffer was the Americas and Regional financial audit information technology leader for Ernst & Young from 2016 to July 2022 and served in various other leadership roles at Ernst & Young since 1984. Ms. Shaffer also serves on the board of directors of the Federal Home Loan Bank Office of Finance, since April 2025. She is a National Association of Corporate Directors (NACD) Certified Director, a Harvard Business School Certified Director, Qualified Risk Director (QRD), a Certified Public Accountant, and a Certified Information Security Manager. She holds the CERT Cybersecurity Governance Certification from Carnegie Mellon. Ms. Shaffer is a graduate of Oklahoma State University and the Hult International Business School. |
VOTING RECOMMENDATION
| The following describes the experience, education and other qualifications of the director appointed by our Allocation Member to serve as a member of our Board again for fiscal year 2025. The appointed director served on our Board during 2024 and is not standing for election at the 2025 Annual Meeting. | | | Elias J. Sabo Director Since 2018 | Elias J. Sabo has served as Chief Executive Officer of the Company and as a director since May 2018. Mr. Sabo is one of the founding partners of our Manager and has been instrumental in guiding the organization’s strategic growth since 1998. As a member of the Investment Committee, he plays a critical role in identifying and evaluating transaction opportunities, applying the investment principles established by the Company. Mr. Sabo also directs the financing activities of the Company and, together with the executive leadership team, develops and implements the organization's strategic vision. As a member of the organization's Sustainability Committee, Mr. Sabo is responsible for driving the organization's ongoing commitment to environmental stewardship, corporate social responsibility, corporate governance and sustainability, as relevant to the Company. Mr. Sabo previously served as a director and as the chair of the board of Fox Factory Holding Corp. (NASDAQ: FOXF), a former CODI subsidiary from 2007 to 2017. Previously, Mr. Sabo was with CIBC Oppenheimer, Boundary Partners and Colony Capital. Mr. Sabo is a graduate of Rensselaer Polytechnic Institute. |
VOTING RECOMMENDATION
| The following describes the experience, education and other qualifications of the other directors currently serving on our Board. These directors are not standing for re-election at the 2025 Annual Meeting. | | | Gordon M. Burns Director Since 2008 | Gordon M. Burns has served as a director of the Company since May 2008. Mr. Burns has been a private investor since 1998. Previously, he was responsible for investment banking at UBS Securities and before that was a managing director at Salomon Brothers, Inc. Mr. Burns served on the board of directors of Aztar Corporation (NYSE:AZR), from 1998 through 2007. He is a co-founder and/or board member (past and present) for several private entities focused on cyber security. Mr. Burns is a graduate of Yale University and the Harvard Business School. Mr. Burns is not standing for re-election at the 2025 Annual Meeting. |
VOTING RECOMMENDATION
| James J. Bottiglieri Director Since 2005 | James J. Bottiglieri has served as a director of the Company since December 2005. Mr. Bottiglieri previously served as Chief Financial Officer of the Company and an Executive Vice President of the Company’s Manager from 2005 to 2013. Prior to that, Mr. Bottiglieri was senior vice president and controller of WebMD Health Corporation, Star Gas Corporation, and a predecessor firm to KPMG LLP. He also serves on the board of directors and as audit chair for Horizon Technology Finance Corporation (NASDAQ:HRZN) from 2010 to present. Mr. Bottiglieri is a graduate of Pace University. Mr. Bottiglieri is not standing for re-election at the 2025 Annual Meeting. |
VOTING RECOMMENDATION
| • | evaluating and making recommendations concerning the total compensation package for directors, including the terms and awards of any equity compensation, as well as reimbursement of directors’ expenses; |
VOTING RECOMMENDATION
| • | approving, modifying, overseeing and administering any long-term incentive plans adopted by the Company. |
VOTING RECOMMENDATION
| | | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | | Name/Title | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | Elias J. Sabo, CEO (1)(2) | 2024 | — | — | — | — | — | — | — | — | | | 2023 | — | — | — | — | — | — | — | — | | | 2022 | — | — | — | — | — | — | — | — | | Stephen Keller, Current CFO (2) | 2024 | 200,000 | 250,000 | — | — | — | — | 40,866 (3) | 490,866 | | Ryan J. Faulkingham Former CFO (2) | 2024 | 375,000 | — | — | — | — | — | 1,447,049 (4) | 1,822,049 | | | 2023 | 474,000 | 575,000 | — | — | — | — | 68,449 (4) | 1,117,449 | | | 2022 | 459,000 | 556,000 | — | — | — | — | 57,780 (4) | 1,072,780 |
Employment Agreement with Ryan J. Faulkingham. On November 30, 2013, our Manager
| Year | Summary compensation table total for PEO(1) | Compensation actually paid to PEO(1) | Average summary compensation table total for non-PEO NEOs(2)(3) | Average compensation actually paid to non-PEO NEOs(3) | Value of initial fixed $100 investment based on: | | Net income in (000’s) | | | | | | | Total shareholder return(4) | Peer group total shareholder return(5) | | | 2024 | — | — | $1,156,457 | $1,156,457 | $125.79 | $186.97 | $47,350 | | 2023 | — | — | $1,117,449 | $1,117,449 | $116.99 | $125.46 | $262,405 | | 2022 | — | — | $1,072,780 | $1,072,780 | $90.35 | $107.05 | $51,438 | | 2021 | — | — | $1,043,399 | $1,043,399 | $145.03 | $122.65 | $126,809 | | 2020 | — | — | $1,026,683 | $1,026,683 | $84.50 | $97.82 | $27,197 |