DEF 14A of Hooker Furnishings Corp
Filed May 3, 2024 · FY20240001185185-24-000462
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The Company proposes the election of W. Christopher Beeler, Jr., Maria C. Duey, Paulette Garafalo, Christopher L. Henson, Jeremy R. Hoff, Tonya H. Jackson, and Ellen C. Taaffe to hold office until the next Annual Meeting of Shareholders is held and their successors are elected. Each director nominee has consented to being named as a nominee for election at the Annual Meeting. The Board of Directors of the Company presently consists of these seven directors whose terms expire at the time of the 2024 Annual Meeting upon election of their successors. The shares represented by proxies will be voted as specified by the shareholder. If the shareholder returns a properly executed proxy card but does not specify their choice, the shares will be voted in favor of the election of the nominees listed on the proxy card. If any nominee should not continue to be available for election, the shares represented by those proxies will be voted for the election of such other person as the Board of Directors may recommend. As of the date of this proxy statement, the Board of Directors has no reason to believe that any of the nominees named below will be unable or unwilling to serve.
Board Matrix
Board Matrix The matrix below summarizes as of the date of this proxy statement certain of the key experiences, qualifications, skills, and attributes that the directors proposed for election bring to the Board to enable effective oversight. This matrix is intended to provide a summary of the directors’ qualifications and is not a complete list of each director’s strengths or contributions to the Board. Additional details on each director’s experiences, qualifications, skills, and attributes are set forth in their biographies that follow. In addition, none of the directors self-identified LGBTQ+ status or any additional racial or ethnic demographic background other than the backgrounds shown in the matrix below.
Board Matrix
| Board Matrix For Directors Proposed for Election | | | | | | | | | | Beeler | Duey | Garafalo | Henson | Hoff | Jackson | Taaffe | | Knowledge, Skills and Experience | | | | | | | | | Industry Experience | Manufacturing | Home Durables | Fashion/ Apparel/ Retail | Finance | Home Durables | Technology / Manufacturing | Home Durables | | Public Company Executive Experience | | ● | ● | ● | ● | ● | ● | | Corporate Governance | ● | ● | ● | ● | ● | ● | ● | | Finance/Accounting | ● | ● | | ● | | | | | Marketing / Product Development | | | ● | | ● | | ● | | Mergers and Acquisitions | ● | ● | | ● | ● | | ● | | Manufacturing / Operations | ● | | ● | | | ● | | | Retail / Consumer | | | ● | ● | ● | | ● | | Supply Chain | | | | | | ● | | | Risk Management | | | ● | ● | | ● | | | Strategic Planning | ● | ● | ● | ● | ● | ● | ● | | Technology / Digital / Cybersecurity | | | | | | ● | | | Demographics * | | | | | | | | | Race/Ethnicity | | | | | | | | | African American | | | | | | ● | | | White / Caucasian | ● | ● | ● | ● | ● | | ● | | Gender | | | | | | | | | Female | | ● | ● | | | ● | ● | | Male | ● | | | ● | ● | | | | Board Tenure | | | | | | | | | 1 - 5 years | | ● | | ● | ● | | | | 6 - 10 years | | | ● | | | ● | ● | | > 10 years | ● | | | | | | |
Board Matrix
* The Demographic disclosures are based on self-identified reporting by each director. W. Christopher Beeler, Jr., 72, has been board chair since June 2023, a director since 1993 and served as lead director from 2011 until June 2016. He was a director since 1986 of Virginia Mirror Company, Inc. and Virginia Glass Products Corporation, both of which manufacture and fabricate architectural glass products, and was Chairman of both from 2000 until their sale in late 2022. He also served as President of those companies from 1988 until August 2011 and as CEO of those companies from 1997 until August 2011. In addition, he served on the board of directors and as a member of the audit committee of BB&T of Virginia (a wholly owned subsidiary of Truist Financial Corporation, formerly BB&T Corporation) from 1999-2006 and is a certified public accountant licensed in the Commonwealth of Virginia. Mr. Beeler currently serves as the board chair and a member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Mr. Beeler served as chair of the Audit Committee from 2000 until 2005 and from 2016 until 2023 and chair of the Nominating and Corporate Governance Committee from 2006 until 2011 and lead director from 2011 until 2016. Mr. Beeler’s executive experience, which encompasses traditional corporate management functions such as accounting, treasury and cash management, sales, information technology, manufacturing, distribution, and human resources, including his financial oversight responsibilities, which complement Mr. Hoff’s experience, as well as short-range and long-range planning well qualifies him to serve as a director and the board chair. Maria C. Duey, 61, joined the board in March 2021. Since 2018, Ms. Duey has served as Chief Executive Officer of Leonine Advisory and Support Services, a consulting firm specializing in strategic planning and mergers and acquisitions serving private equity firms, family offices and small businesses. From 2015-2017, Ms. Duey served as Vice-President of Corporate Development and Investor Relations at Horizon Global, a manufacturer of towing and trailering products serving the automotive aftermarket, retail and original equipment (OE) channels. From 1996-2014, she was employed by Masco Corporation, one of the leading manufacturers of branded home improvement and building products, serving as Vice-President-Investor Relations and Corporate Communications from 2005-2014. Ms. Duey serves as chair of the Compensation Committee and a member of the Nominating and Corporate Governance Committee and the Audit Committee. In 2023, Ms. Duey was named a Certified Corporate Director with the National Association of Corporate Directors. The knowledge and experience that Ms. Duey has in the areas of mergers and acquisitions, strategic planning, investor relations and corporate communications, as well as her executive experience, well qualifies her to serve as a director. Paulette Garafalo, 67, has been director since 2017. She has been Executive Chairman of Paul Stuart, a men’s and women’s classic apparel retailer and wholly owned subsidiary of Mitsui, Inc., since July 2022. She served as Chief Executive Officer and President of Paul Stuart from 2016 to July 2022. She served as President of Brooks Brothers, a men’s and women’s apparel retailer, from 2010 to 2016. Ms. Garafalo serves as a member of the Compensation Committee, the Nominating and Corporate Governance Committee and the Audit Committee and served as Compensation Committee Chair from 2017 until 2023. Ms. Garafalo’s executive experience, which encompasses traditional corporate management functions, and her extensive experience in retail and luxury consumer brands well qualifies her to serve as a director. The knowledge and experience Ms. Garafalo has gained as CEO of Paul Stuart further broadens her experience and qualifications to serve as a director. Christopher L. Henson, 62, joined the board in October 2022. Mr. Henson served as the Head of Banking and Insurance of Truist Bank from 2019 until his retirement in September 2021. He joined Truist Financial Corporation’s predecessor BB&T’s executive management team in 2004 and served various executive positions including City Executive, Regional President, State President, Chief Financial Officer, and Chief Operating Officer before being promoted to President and Chief Operating Officer from 2016 to 2019. He also serves as Chair of the Board of Trustees of High Point University. Mr. Henson serves as chair of the Audit Committee and a member of the Compensation Committee and the Nominating and Corporate Governance Committee. Mr. Henson’s extensive knowledge of finance and banking as well as experience in a wide variety of leadership roles well qualify him to serve as a director. Jeremy R. Hoff, 50, has been a director and Chief Executive Officer since February 1, 2021. He was President of Hooker Legacy Brands from February 2020 through January 2021 and served as President of the Hooker Branded Segment from April 2018 to January 2020. Mr. Hoff joined the Company in August of 2017 as President of Hooker Upholstery. Prior to that, Mr. Hoff served as President of Theodore Alexander USA from December 2015 to August 2017 and Senior Vice President of sales at A.R.T. Furniture Inc. from April 2015 to November 2015 and Vice-President of Sales from March 2011 to April 2015. Mr. Hoff’s role as the Chief Executive Officer as well as his extensive background in the furnishings industry, including his various former positions at the Company, well qualifies him to serve as a director. Tonya H. Jackson, 60, has been a director since 2017. She has served as Senior Vice President and Chief People Officer for Lexmark, a global imaging and IoT solutions provider since 2023. In this role, she is responsible for talent acquisition and development, strategic internal communications, compensation and benefits, workforce analytics, and diversity, equity and inclusion. She served as Senior Vice President and Chief Product Delivery Officer for Lexmark from 2020 - 2023. She served as Senior Vice President and Chief Supply Chain Officer from 2016 until 2020, Vice-President of Supply Chain Operations at Lexmark from 2015 until 2016 and Vice President of Worldwide Supplies Operations from 2013 until 2015. Ms. Jackson serves as a member of the Compensation Committee and Audit Committee and is Chair of the Nominating and Governance Committee. In 2021, Ms. Jackson was named a Certified Corporate Director with the National Association of Corporate Directors (NACD). In 2022, Ms. Jackson earned the CERT Certificate in Cybersecurity Oversight from Carnegie Mellon University. Ms. Jackson’s senior executive experience at a large, global corporation and her extensive experience in operations and supply chain management well qualifies her to serve as a director.
Board Matrix
Ellen C. Taaffe, 62, has been a director since July 2015. Ms. Taaffe serves as a member of the Nominating and Corporate Governance, Audit, and Compensation Committees. Ms. Taaffe served as chair of the Nominating and Corporate Governance Committee from 2017 until 2023. She currently is a Clinical Professor of Management and Organizations at Northwestern University's Kellogg School of Management, where she is also Director of the Women's Leadership Program since 2016. She has been a Consultant, Speaker, and Executive Leadership Coach since 2015 and was President of Ravel, formerly Smith-Dahmer Associates LLC, a brand and product strategy consulting firm from 2010-2015. Prior to that, Ms. Taaffe was a senior brand management executive at the Whirlpool Corporation, Royal Caribbean Cruises Ltd., and PepsiCo. She has served on the board of directors of John B. Sanfilippo & Son Inc., a Chicago- based baking and snack nut, and snack bars processor, distributor, and marketer, since 2011 where she is Lead Director, Chair of the Compensation and Human Resources Committee, and a member of the Audit and Nominating and Governance Committees. In 2021, Ms. Taaffe was named a Certified Corporate Director with the NACD. In 2023, her book, The Mirrored Door: Break Through the Hidden Barriers that Lock Successful Women in Place won the NYC Big Book Award. Her executive experience at various public companies, her current governance leadership of a public-company board of directors and expertise in and knowledge of go to market strategies and traditional and marketing best practices in high-ticket consumer durables, well qualifies her to serve as a director of the Company. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THESE NOMINEES.
Procedures for Shareholder Recommendations of Director Nominees
Procedures for Shareholder Recommendations of Director Nominees The Committee will consider a director candidate recommended by a shareholder of record for election at the 2025 Annual Meeting if, in addition to meeting other applicable requirements, the shareholder submits a notice of the recommendation in writing to the Secretary of the Company in accordance with the procedures for the nomination of directors in the Company’s bylaws (including Article III, Section 3 of the bylaws) and it is received at the Company’s principal executive offices on or before January 3, 2025. The notice must include the candidate’s name and address and a description of the candidate’s qualifications for serving as a director and contain the information conforming to the requirements outlined in our bylaws (including Article III, Section 3 of the bylaws). The Nominating and Corporate Governance Committee may refuse to consider the recommendation of any person not made in compliance with this procedure.
Director Compensation
Director Compensation The Compensation Committee is responsible for recommending director compensation to the Board of Directors. Non-employee directors are compensated based on their term of service, which typically begins with the election of directors at the Company’s Annual Meeting, and which is referred to as a “service year.” In fiscal 2022, the Compensation Committee retained Pearl Meyer to review the Company’s compensation structure and positioning relative to the 16-company peer group developed in February 2022 for the executive total renumeration review, with a secondary review against All-Industry benchmarks. The Compensation Committee recommended the non-employee directors compensation components remain unchanged for the 2023-2024 service year. Non-Employee Director Compensation for the 2023-2024 Service Year For the 2023-2024 service year, non-employee directors received an annual board cash retainer of $55,000, the Board Chair received an additional cash stipend of $30,000, the Audit Committee Chair received an additional cash stipend of $15,000 and the Chairs of the Compensation and Nominating and Corporate Governance committees received additional cash stipends of $10,000 each. These fees were paid to directors in June 2023. For the 2023-2024 service year, all non-employee directors also received annual grants of restricted stock under the Company’s 2020 Stock Incentive Plan. Each non-employee director received a $70,000 stock grant. The restricted stock awards were determined by dividing $70,000 by the fair market value (as defined in the 2020 Stock Incentive Plan) of the Company’s Common Stock three business days after the award date and rounding to the nearest whole share. The restricted stock will become fully vested, and the restrictions applicable to the restricted stock will lapse, on:
Director Compensation
| ■ | the next annual meeting date after the grant date if the non-employee director remains on the Board to that date; or |
Director Compensation
| ■ | if earlier, when the director dies or is disabled or a change in control of the Company. |
Director Compensation
Under the terms of the 2020 Stock Incentive Plan, as amended, directors may defer receipt of their annual restricted stock award beyond the vesting date (generally the next annual meeting date following the grant date) to a specified date in the future, attainment of a specified age, or to the director’s termination of service as a director with the Company. Any such restricted stock award that is deferred will ultimately be delivered in shares of the Company’s Common Stock shortly after the deferral date. During the deferral period, the Company’s commitment to the director to deliver the shares remains an unsecured liability of the Company. The Company’s anti-hedging policy applies to persons it has deemed to be “key insiders.” Key insiders include the Company’s directors, its executive officers and other persons who in the normal course of their duties receive Company-wide business and financial information before public release. The policy prohibits key insiders from engaging in certain forms of hedging or monetization transactions, specifically prohibiting zero-cost collars and forward stock sales, with respect to the Company’s Common Stock. In addition to its anti-hedging provision, the Company’s Insider Trading Policy prohibits key insiders, employees, officers, directors or certain of their family members from engaging in certain types of other transactions related to the Company’s Common Stock, including transactions in derivative securities, using margin accounts, and pledging shares as collateral. Directors are reimbursed for reasonable expenses incurred in connection with attending Board and committee meetings or performing their duties as directors, as well as Board-related professional education. Mr. Hoff, who serves as CEO, received no additional compensation for his role as a director. Mr. Hoff’s compensation for services rendered to the Company in his officer capacities is reported in the Summary Compensation Table following the Compensation Discussion and Analysis on page 33. The following table sets forth non-employee director compensation paid in fiscal year 2024 for the 2023-2024 Board service year.
Director Compensation
| | Non-Employee Director Compensation | | | | Name | Cash Fees(1) | Stock Awards(2)(3) | Total | | W. Christopher Beeler, Jr. | $85,000 | $70,000 | $155,000 | | Maria C. Duey | 65,000 | 70,000 | $135,000 | | Paulette Garafalo | 55,000 | 70,000 | $125,000 | | Christopher L. Henson | 70,000 | 70,000 | $140,000 | | Tonya H. Jackson | 65,000 | 70,000 | $135,000 | | Ellen C. Taaffe | 55,000 | 70,000 | $125,000 |
Director Compensation
| (1) Includes annual retainer fee, committee chair fees and board chair fee paid to each director in June 2023, as described in greater detail above. |
Director Compensation
| (2) These amounts are the aggregate grant date fair value of shares of restricted stock awarded to each non-employee director on June 9, 2023 under the Company’s 2020 Stock Incentive Plan. Fair value is determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For a discussion of assumptions used in calculating award values, refer to note 15 of the Company’s consolidated financial statements included in the Company’s 2024 Annual Report on Form 10-K. |
Director Compensation
| (3) As of January 28, 2024 each non-employee director had the following unvested stock awards outstanding: |
Director Compensation
| Name | Restricted Stock(#) | | W. Christopher Beeler, Jr. | 3,966 | | Maria C. Duey | 3,966 | | Paulette Garafalo | 3,966 | | Christopher L. Henson | 3,966 | | Tonya H. Jackson | 3,966 | | Ellen C. Taaffe | 3,966 |
COMPENSATION HIGHLIGHTS FOR FISCAL 2024
| Pay Element | Fiscal 2024 Actions | | Base Salary | Due to the challenging macroeconomic environment for the home furnishings industry and the adverse impact to the Company's performance, in keeping with the practice of not automatically increasing base salaries unless there were significant changes in responsibilities, the Compensation Committee determined it was in the best interests of the Company and its shareholders to recommend the base salaries of the Company's named executive officers remain unchanged. | | Annual Cash Incentive | The Compensation Committee recommended target annual cash incentive opportunity (as a percentage of base salary) remained unchanged. | | Long-term equity-based incentives | The Compensation Committee awarded long-term incentives to each of the named executive officers in the form of performance stock units tied to pre-established goals relating to EPS and service-based restricted stock units to support executive retention, both of which are expected to be delivered in the form of shares of the Company’s common stock. The Compensation Committee recommended target long-term incentives (as a percentage of base salary) remained unchanged. |
Executive Compensation Policies and Practices
| What we do | | What we don't do | | | • | Rigorous goal setting for annual and long-term performance-based compensation | • | No excessive perquisites | | • | Pay for performance | • | No income tax gross ups | | • | Anti-hedging/pledging policy | • | No discretionary bonuses | | • | Claw-back policy | • | No adjustments to pre-established bonus targets after Board approval | | • | Assessment of compensation risk | | | | • | Engagement with shareholders | | | | • | Dual trigger CIC for performance grants and Restricted Stock Unit Awards | | | | • | Executive Stock Ownership Guidelines | | |
Compensation Program
| ■ | Base salary and short-term incentives. Base salaries are typically set for each calendar year and the annual cash incentive is set for each fiscal year. The annual cash incentive is determined based on the Company’s financial performance during the current fiscal year. The Compensation Committee sets base salaries and potential annual cash incentive amounts for each executive position based on a number of factors, including competitive market data, executive responsibilities, individual performance and the Committee members’ business judgment. |
Compensation Program
| ■ | Longer-term compensation. Long-term incentives are designed to reward executives if the Company achieves specific performance goals or growth in shareholder value over multi-year periods. The amounts payable to executives under performance incentives vary based on the extent to which the specified goals are achieved or surpassed. In general, the Company grants long-term incentives in the form of performance stock units or “PSUs” (delivered solely in shares) and restricted stock units. These awards are discussed in greater detail below beginning on page 27. |
Process for Determining Executive Compensation
Process for Determining Executive Compensation The Committee sets base salaries, determines the amount and terms of annual cash incentive opportunities, and determines long-term incentive compensation and other benefits for the Company’s executive officers. The Committee follows the processes and considers the information discussed below in setting executive compensation. Competitive Pay Data The Compensation Committee engaged Pearl Meyer in 2022 to review the Company’s compensation structure and positioning and to update the Company’s peer group. Pearl Meyer recommended this group because its members shared various financial and operational attributes with the Company, while not being limited to home furnishings companies. The peer group represents companies in related industries (e.g., office furniture, household/housewares, home building); of a similar size, with annual revenues ranging from 60% to 350% of the Company’s annual revenue; and similar operational complexity. The Board believes these companies represent the type of companies against which the Company competes for management talent. The peer group consists of the following companies:
Process for Determining Executive Compensation
The Compensation Committee has used this peer group as one of several factors in making compensation decisions and to establish a baseline from which to set executive compensation. The Committee compared total compensation as well as the individual compensation elements for each executive officer to the peer group in fiscal 2024. The Committee will refresh the peer group and compensation study in the future, as needed. The Committee does not tie compensation for its executive officers to any particular level or target based on this comparable compensation data. Instead, the Committee considers this pay comparability data as one of many factors when determining the appropriateness of individual elements of compensation, as well as the total compensation, payable to the Company’s executive officers. Company Performance Each year the Committee considers which financial performance measures to use in setting annual and longer-term incentive compensation for the named executive officers. Longer-term incentives typically have been linked to the achievement of a different set of performance measures, such as earnings per share (EPS) for performance grants. Historically, the Committee has awarded long-term performance grants tied to growth in the Company’s EPS, both in absolute terms and relative to EPS growth for the peer group companies. The Committee believes that EPS and EPS growth have been appropriate performance measures for long-term compensation incentives because these metrics lend themselves, in a simple and objective manner, to year-over-year comparisons and to comparison with the financial performance of peer companies. As in prior years, our performance grants awarded during fiscal year 2024 were based on absolute EPS growth and relative EPS growth. However, as discussed on page 32, the Committee elected to replace relative EPS growth for fiscal year 2025 with total shareholder return relative to our compensation peer group. The Committee generally selects performance measures for annual incentive compensation that correspond to financial measures used by management in making day-to-day operating decisions and in setting strategic goals. In addition, these types of measures are used by the Board in evaluating Company performance. The Committee generally consults with the Chief Executive Officer and other senior executives before setting performance levels for annual and longer-term incentive compensation. The input provided by management is one of many factors the Committee considers in establishing the applicable measures and performance levels for incentive compensation. The other factors the Committee considers include the annual operating budget which is approved by the Board. The Board’s approval of the annual budget includes its review of industry and macroeconomic trends, industry sales growth, cost containment and expected capital expenditures. Individual Performance The Committee annually assesses the individual performance of each executive officer and considers it when setting a named executive officer’s base salary. The Committee may elect not to increase certain executives’ base salaries on an annual basis (e.g., due to modest increases in cost of living and/or to increase an emphasis on linking total compensation to performance-based incentives), instead using potential annual and longer-term incentive-based payments to compensate individual executives. The Committee reserves the right to adjust base salaries as it determines to be appropriate; however, the Committee does not have a practice of automatically providing for annual increases in base salaries and therefore a decision not to increase an executive’s base salary is not based on an assessment of an executive’s performance. Each executive’s performance is measured against specific personal objectives established early in the prior year. The Chief Executive Officer’s annual personal objectives are established in consultation with the Committee. Other executive officers establish their individual objectives in consultation with the Chief Executive Officer. These objectives may include both subjective and quantifiable individual and departmental performance and developmental initiatives that are within each officer’s area of operation and are consistent with the Company’s strategic plans. The Committee’s assessment of each named executive officer’s performance with respect to these objectives is conducted primarily through conversations with the Chief Executive Officer and a review of Company performance. The Committee believes that consideration of individual performance objectives is important because it creates incentives for executive officers to make specific contributions to the Company’s financial growth based on their individual areas of responsibility, and because it allows the Company to reward those specific contributions. Allocating Between Compensation Elements The Committee does not have a fixed standard for determining how an executive officer’s total compensation is allocated among the various elements of the Company’s compensation program. Instead, the Committee uses a flexible approach so that it can structure the compensation elements in a manner that will, in its judgment, best achieve the specific objectives of the Company’s compensation program. However, the Committee believes that a meaningful portion of a named executive officer’s compensation should be performance-based.
Executive Compensation Decisions for Fiscal Year 2024
| ■ | an annual cash incentive opportunity (based on the Company’s fiscal year financial performance), |
Executive Compensation Decisions for Fiscal Year 2024
| ■ | long-term equity-based incentives for each named executive officer, and |
Executive Compensation Decisions for Fiscal Year 2024
| Executive Officer | Base Salary | Annual Incentive at Target | Long-term Incentive at Target | | Jeremy R. Hoff | $600,000 | $600,000 | $600,000 | | Paul A. Huckfeldt | 375,000 | 225,000 | 225,000 | | Anne J. Smith | 330,000 | 198,000 | 198,000 | | Tod R. Phelps | 300,000 | 180,000 | 180,000 |
Executive Compensation Decisions for Fiscal Year 2024
Base Salary Based on Pearl Meyer’s independent analysis of the Company’s named executive officers’ compensation in 2022, the Committee determined that the base salary of the named executive officers remain unchanged for calendar year 2023. Although the study data was from the prior year, it was deemed satisfactory by the Committee, since the information was used only as a guideline, not a benchmark. The Committee’s process for setting base salary and other compensation included an annual review of individual performance and such other relevant factors as accomplishments in the executive’s current role, changes in responsibilities, job performance and the Committee’s assessment of the market rate for these positions. The Committee does not automatically increase base pay annually, but instead bases salary increases on the preceding factors. Annual Cash Incentive The Committee believes it is in the best interests of the Company and its shareholders to base the annual cash incentive directly on the achievement of an objective performance metric. The Committee generally considers consolidated net income to be the appropriate performance metric for the annual cash incentive for senior management because it believes that items included in net income, such as consolidated income tax expense, discontinued operations, interest expense and other income and expense, reflect upon the appropriateness of management decision-making and therefore provide an effective tool for measuring senior management performance over the course of a fiscal year. The Committee approved an annual cash incentive for the 2024 fiscal year. Each named executive officer had the opportunity to earn a payment, expressed as a percentage of their calendar year 2023 base salary, if the Company achieved 80% or more of its fiscal 2024 consolidated net income target. No cash bonus would be payable unless at least 80% of the consolidated net income target was met. The bonus opportunity was capped at a maximum amount if the Company reached 125% or more of its consolidated net income target for fiscal year 2024. For net income achieved at levels between the target percentages shown in the table below, a bonus percentage is interpolated such that each 1% increase in net income or operating income between the target levels results in additional bonus earned. The annual cash incentive target is established based on budgeted net income. Budgeted net income is established by management in its annual operating budget, which is approved by the Board. Target payouts for each named executive officer were established based on a number of factors including:
Executive Compensation Decisions for Fiscal Year 2024
Each additional percentage of net income realized between the percentages shown above is interpolated and multiplied by the officer’s bonus base, such that each additional percentage of net income realized between the threshold amounts shown above results in a larger bonus payout, as shown in the table below:
Executive Compensation Decisions for Fiscal Year 2024
The net income target for the 2024 fiscal year was set at $17.9 million on a consolidated basis. The net income target had previously been approved by the Board in consultation with management, and after considering the Company’s profit potential, the impact of national and international economic conditions on the Company and the home furnishings industry as a whole. Based on these factors, the Committee concluded that the target and threshold levels were appropriate to motivate and appropriately reward executive officers to attain the desired level of performance for fiscal 2024. The 80% threshold performance level for the annual cash incentive was believed to be an achievable goal. The 100-124% target performance level was believed to be aggressive, but attainable. Performance at or above the 125% level was believed to be realizable, but only with exceptional performance. The Company did not achieve at least the threshold level of its fiscal year 2024 consolidated net income. As a result, no named executive officer received the annual cash incentive.
Executive Compensation Decisions for Fiscal Year 2024
| Executive Officer | Fiscal 2024 Annual Cash Incentive Earned | | Jeremy R. Hoff | $- | | Paul A. Huckfeldt | - | | Anne J. Smith | - | | Tod R. Phelps | - |
Executive Compensation Decisions for Fiscal Year 2024
Long-Term Incentives During fiscal 2024, consistent with the Committee’s objective of giving greater weight to the performance-based element of total compensation, the Committee granted two types of long-term incentive awards, performance stock units (PSU) and time-based restricted stock units (RSU) to the named executive officers in April 2023 for the performance period beginning in fiscal year 2024 through fiscal year 2026. The awards were designed to directly link a significant portion of a named executive officer’s compensation to the growth in value of the Company and to further enhance existing retention incentives under the Company’s executive compensation program. Performance-based Restricted Stock Unit Each PSU entitles the executive officer to receive one share of the Company’s common stock based on the achievement of two specified performance targets if the executive officer remains continuously employed by the Company through the end of the three-year performance period (subject to limited exceptions). One target is based on annual average growth in the Company’s EPS over the performance period and the other target is based on EPS growth over the performance period compared to that of the peer companies described at page 22. The PSUs vest subject to the Company’s attainment of pre-established financial goals related to the sum of two amounts, (1) the Company’s absolute EPS Growth and (2) relative EPS growth, over a three-year performance period that began January 30, 2023 and ends February 1, 2026, as approved by the Committee. The payout or settlement of the PSUs shall be made in shares of the Company’s common stock (based on the fair market value of the shares of the Company’s common stock on the date of settlement or payment). The PSUs do not convey any voting rights or dividend or dividend equivalent rights to the executive officer. The amount set forth in the table below is based on the average annual growth of the Company’s fully diluted EPS from continuing operations over the performance period. The Company’s EPS growth must average at least 5% annually over the performance period for a payment to be made.
Executive Compensation Decisions for Fiscal Year 2024
| | Payout in Shares of Company Stock Based on EPS Growth (%) for Performance Period | | | | | | | Threshold | Target | | | Maximum | | Executive Officer | 5% | 10% | 15% | 20% | 25% | | Jeremy R. Hoff | 3,524 | 10,571 | 14,095 | 17,619 | 21,143 | | Paul A. Huckfeldt | 1,602 | 4,805 | 6,407 | 8,009 | 9,610 | | Anne J. Smith | 1,409 | 4,229 | 5,638 | 7,048 | 8,457 | | Tod R. Phelps | 1,057 | 3,171 | 4,228 | 5,286 | 6,343 |
Executive Compensation Decisions for Fiscal Year 2024
| | Payout in Shares of Company Stock Based on Relative EPS Growth for Performance Period | | | | | | | Threshold | Target | Maximum | | Executive Officer | Less than 50th percentile | 50th percentile, but less than 60th percentile | 60th percentile, but less than 80th percentile | Equal to or greater than 80th percentile | | Jeremy R. Hoff | 0 | 7,928 | 10,571 | 15,857 | | Paul A. Huckfeldt | 0 | 3,604 | 4,805 | 7,208 | | Anne J. Smith | 0 | 3,171 | 4,229 | 6,343 | | Tod R. Phelps | 0 | 2,379 | 3,171 | 4,757 |
Executive Compensation Decisions for Fiscal Year 2024
The Committee selected EPS as the measure for the performance targets because EPS, and especially changes in EPS, directly reflect changes in the value of the Company over time, which the Committee believes best reflects the long-term interests of the shareholders. Using a simple, well-defined performance measure for these awards reduces the risk of manipulating that measure for short-term gain and reduces the risk of unintended consequences that could result from paying bonuses based on factors other than earnings, such as sales growth or non-financial measures which could misalign shareholder and management objectives. For example, a focus on sales growth or a non-financial metric such as customer satisfaction could provide an incentive to increase sales through greater discounting or create excessively generous return and allowance policies at the expense of overall profitability. Restricted Stock Units The Committee also awarded to each named executive officers RSUs that will vest if the executive remains continuously employed with the Company (subject to limited exceptions) until the three-year anniversary date of each grant which is April 10, 2026. The awards may be paid in shares of Company stock, cash or a combination of both, as determined by the Committee in its discretion. They are designed to encourage retention and to provide an incentive for increasing shareholder value. The number of RSUs awarded to each executive officer is set forth in the table below:
Executive Compensation Decisions for Fiscal Year 2024
| Executive Officer | Number of RSUs | | Jeremy R. Hoff | 10,892 | | Paul A. Huckfeldt | 2,403 | | Anne J. Smith | 2,114 | | Tod R. Phelps | 3,267 |
Executive Compensation Decisions for Fiscal Year 2024
| ■ | the Committee has the unlimited authority to reduce long-term performance grant awards or pay no award at all; |
Executive Compensation Decisions for Fiscal Year 2024
| ■ | long-term performance grants are mostly performance-based, which aligns compensation with the interests of the shareholders; |
Executive Compensation Decisions for Fiscal Year 2024
| ■ | overall compensation is balanced between fixed and variable pay, and variable pay is linked to annual performance and performance over multi-year periods; |
Executive Compensation Decisions for Fiscal Year 2024
| ■ | the multi-year cliff-vesting feature of restricted stock units promotes long-term retention, helps to mitigate inappropriate short-term risk taking and helps to align management and shareholder interests; |
Executive Compensation Decisions for Fiscal Year 2024
| ■ | profitability goals, which serve as inputs for variable annual cash incentive compensation and long-term performance grants, are approved by the Board; |
Executive Compensation Decisions for Fiscal Year 2024
| ■ | the long-term performance grants have been based on cumulative absolute and relative EPS growth over multi-year periods, which helps reduce the potential for short-term focus at the expense of longer-term growth; |
Executive Compensation Decisions for Fiscal Year 2024
| ■ | a consistent compensation philosophy has been applied year-over-year and does not change significantly with short-term changes in business conditions; |
Executive Compensation Decisions for Fiscal Year 2024
Other Policies and Practices Cash Incentives. The Committee has adopted certain guidelines for administering annual cash incentive compensation. Generally, an executive must remain employed to the last day of a fiscal year to be eligible to receive an annual cash incentive payment for that fiscal year. However, executives who terminate employment during the last quarter of a fiscal year due to death or disability, or who retire after they have attained age 55 and completed 10 years of service, are entitled to receive the same payment that they would have received had they remained employed to the end of the fiscal year. Executives who meet either of these requirements and who terminate employment in the second or third quarter of a fiscal year are entitled to receive 50% or 75%, respectively, of the payment they would have received had they remained employed to the end of the fiscal year. The guidelines establish procedures for the Committee to review and approve annual cash incentive determinations after the Chief Executive Officer and Chief Financial Officer confirm whether the performance conditions for the fiscal year have been achieved and whether any other applicable conditions have been met for that fiscal year. Stock Ownership Guidelines. The Committee adopted stock ownership requirements in April 2019 such that the CEO is required to hold at least three-times his base salary in Company stock and each other executive officer is required to hold two-times their base salary, as measured by the Company’s closing stock price as of the end of the most recently completed fiscal year. Each executive officer is allowed six years to accumulate the required number of shares. Hedging Policy. Executive officers, along with directors and certain other “key insiders,” are prohibited from engaging in certain types of transactions related to the Common Stock of the Company, including zero-cost collars and forward stock sales, as well as transactions in derivative securities, using margin accounts and pledging shares as collateral. See the discussion on page 15 for additional details regarding prohibited transactions.
Summary Compensation Table
Summary Compensation Table The following table sets forth the compensation for services in all capacities to the Company for the three most recent fiscal years of the persons who were the Company’s named executive officers that year.
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Non- Qualified Deferred Compensation Earnings | All Other Compensation | Total | | | | ($)(1) | ($) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($) | | Jeremy R. Hoff, CEO and Director | 2024 | 600,000 | - | 600,000 | - | - | 15,181 | 1,215,181 | | | 2023 | 575,000 | - | 600,000 | - | - | 11,994 | 1,186,994 | | | 2022 | 450,000 | - | 337,500 | - | - | 10,669 | 798,169 | | Paul A. Huckfeldt, CFO and Sr. VP Fin. and Acctg. | 2024 | 375,000 | - | 225,000 | - | - | 13,681 | 613,681 | | | 2023 | 362,500 | - | 225,000 | - | - | 11,556 | 599,056 | | | 2022 | 295,833 | - | 246,000 | - | - | 10,554 | 552,387 | | Anne J. Smith, CAO, Sr. VP Administration, President-Domestic Upholstery | 2024 | 330,000 | - | 198,000 | - | 54,633 | 13,706 | 596,339 | | | 2023 | 325,000 | - | 198,000 | - | - | 11,406 | 534,406 | | | 2022 | 295,833 | - | 235,000 | - | - | 10,554 | 541,387 | | Tod R. Phelps, Chief Information Officer and Sr. VP - Operations | 2024 | 300,000 | - | 180,000 | - | - | 12,506 | 492,506 | | | 2023 | 291,667 | - | 180,000 | - | - | 10,797 | 482,464 | | | 2022 | 250,000 | - | 150,000 | 78,125 | - | 9,256 | 487,381 |
Summary Compensation Table
| (1) Amounts shown represent base salary paid during the fiscal year before any deductions into the Company’s 401(k) plan. Annual base salary adjustments generally become effective at the beginning of each calendar year and do not coincide with the beginning of a fiscal year. |
Summary Compensation Table
| (2) For each named executive officer, this amount is the sum of the grant date fair value of (a) the restricted stock units and (b) three-year performance grants that were awarded to the named executive officers in fiscal 2024. The value of these awards was determined in accordance with FASB ASC Topic 718. The three-year performance grants shown were computed assuming that the probable level of performance would be achieved (10% EPS growth and relative EPS growth in the 60th percentile for the performance period) and excluded the impact of estimated forfeitures related to service-based vesting conditions. For more information regarding the restricted stock units and the three-year performance grants, refer to the Grants of Plan-Based Awards table on page 40 and to the Outstanding Equity Awards at Fiscal Year-End table on page 41. The value of the PSU awards to the named executive officers assuming the maximum level of performance is achieved are as set forth in the table below. For more information regarding the calculation of restricted stock unit and performance grant values, refer to note 15 of the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2024 (the “2024 Form 10-K”), as filed with the SEC. |
Summary Compensation Table
| Name | PSU Grant Date Fair Value at Maximum Level of Performance ($) | | Jeremy R. Hoff | 693,000 | | Paul A. Huckfeldt | 315,000 | | Anne J. Smith | 277,200 | | Tod R. Phelps | 207,900 |
Summary Compensation Table
| (3) This column shows amounts earned under the annual cash incentive program, if any. For more information regarding the terms of the annual cash incentives for fiscal year 2024, see the Executive Compensation discussion at page 18. |
Summary Compensation Table
| (4) This column shows the change in the present value of the named executive officer’s accumulated benefit under the Supplemental Retirement Income Plan (“SRIP”) at the earliest full benefit retirement age. These changes in present value are not directly in relation to final payout potential and can vary significantly year-over-year based on (i) promotions and corresponding changes in salary; (ii) other one-time adjustments to salary or other reasons; (iii) actual age versus predicted age at retirement; (iv) the discount rate used to determine the present value of benefits; and (v) other relevant factors. A decrease in the discount rate results in an increase in the present value of the accumulated benefit without any increase in the benefits payable to the NEO at retirement and an increase in the discount rate has the opposite effect. The numbers reported are pension accounting values and were not realized by the named executive officers during the relevant fiscal year. None of the named executive officers received above-market or preferential earnings on compensation that was deferred on a non-tax-qualified basis. In fiscal year 2024, the change in pension value was -$2,002 for Mr. Huckfeldt and $54,633 for Ms. Smith. In fiscal year 2023, the change in pension value was -$141,096 for Mr. Huckfeldt and -$53,784 for Ms. Smith. In fiscal year 2022, the change in pension value was -$11,090 for Mr. Huckfeldt and -$3,133 for Ms. Smith. Messrs. Hoff and Phelps do not participate in the SRIP. |
Summary Compensation Table
| (5) All Other Compensation for fiscal year 2024 includes amounts reimbursed for disability income insurance premiums and matching contributions to the Company’s 401(k) plan. |
Summary Compensation Table
| Name | Disability Income Insurance Premium Reimbursement | 401(k) Match | Total | | Jeremy R. Hoff | $506 | $14,675 | $15,181 | | Paul A. Huckfeldt | 506 | 13,175 | 13,681 | | Anne J. Smith | 506 | 13,200 | 13,706 | | Tod R. Phelps | 506 | 12,000 | 12,506 |
Pay versus Performance
Pay versus Performance The following table shows the past four fiscal years’ total compensation for the named executive officers as set forth in the Summary Compensation Table, the total compensation actually paid (“CAP”) to the named executive officers, the Company’s total shareholder return (“TSR”), peer group’s total shareholder return over the same period, net income, and the EPS as the company-selected performance measure. Fiscal Year 2024 Pay versus Performance Table
Pay versus Performance
| Year | Summary compensation table total for CEO(1) | Compensation actually paid to CEO(2) | Average summary compensation table total for other NEOs(1) | Average compensation actually paid to other NEOs(2) | Total shareholder return(3) | Peer group total shareholder return(3) | Net income | EPS | | | ($) | ($) | ($) | ($) | ($) | ($) | ($, in thousands) | ($) | | 2024 | 1,215,188 | 1,444,583 | 567,507 | 617,865 | 127.27 | 107.46 | 9,865 | 0.91 | | 2023 | 1,186,994 | 1,067,309 | 538,642 | 462,562 | 102.45 | 79.71 | (4,312) | (0.37) | | 2022 | 798,169 | 406,826 | 577,484 | 244,027 | 71.56 | 96.59 | 11,718 | 0.97 | | 2021 | 923,559 | 463,541 | 534,790 | 585,697 | 126.19 | 123.64 | (10,426) | (0.88) |
Pay versus Performance
(1) The principal executive officers and other named executive officers for fiscal years 2021 - 2024 are the following:
Pay versus Performance
| Year | CEO | Other NEOs | | 2024 | Jeremy R. Hoff | Paul A. Huckfeldt, Anne J. Smith, Tod R. Phelps | | 2023 | Jeremy R. Hoff | Paul A. Huckfeldt, Anne J. Smith, Tod R. Phelps | | 2022 | Jeremy R. Hoff | Paul A. Huckfeldt, Anne J. Smith, Tod R. Phelps, D. Lee Boone | | 2021 | Paul B. Toms, Jr. | Paul A. Huckfeldt, Anne J. Smith, D. Lee Boone, Jeremy R. Hoff, Douglas Townsend |
Pay versus Performance
(2) SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine compensation “actually paid” as reported in the Pay versus Performance table. The following table details these adjustments:
Pay versus Performance
| Year | Executives | Summary Compensation Table Total | Deduct Reported Change in Actuarial Present Value of Pension Benefits(a) | Add Pension Benefit Adjustments(b) | Deduct Reported Value of Equity Awards(c) | Add Equity Award Adjustments(d) | Compensation Actually Paid | | | | ($) | ($) | ($) | ($) | ($) | ($) | | 2024 | CEO | 1,215,188 | - | - | (600,000) | 829,395 | 1,444,583 | | | Other NEOs | 567,507 | (18,211) | 16,539 | (200,998) | 253,028 | 617,865 | | 2023 | CEO | 1,186,994 | - | - | (600,000) | 480,315 | 1,067,309 | | | Other NEOs | 538,642 | - | 38,785 | (201,000) | 86,135 | 462,562 | | 2022 | CEO | 798,169 | - | - | (337,500) | (53,843) | 406,826 | | | Other NEOs | 577,484 | - | 30,595 | (225,255) | (138,797) | 244,027 | | 2021 | CEO | 923,559 | (150,823) | - | (337,500) | 28,305 | 463,541 | | | Other NEOs | 534,790 | (46,588) | 23,660 | (174,003) | 247,838 | 585,697 |
Pay versus Performance
| (a) The amounts in this column represent the amounts reported in the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column of the Summary Compensation Table for each applicable year. In fiscal year 2024, the change in pension value was -$2,002 for Mr. Huckfeldt and $54,633 for Ms. Smith. In fiscal 2023, the change in pension value was -$141,096 for Mr. Huckfeldt and -$53,784 for Ms. Smith. In fiscal year 2022, the change in pension value was -$11,090 for Mr. Huckfeldt and -$3,133 for Ms. Smith. |
Pay versus Performance
| (b) The amounts deducted or added in calculating the pension value adjustments are as follows: |
Pay versus Performance
| Year | Executives | Service Cost (i) | Prior Service Cost (ii) | Total Pension Value Adjustment | | | | ($) | ($) | ($) | | 2024 | CEO | - | - | - | | | Other NEOs | 16,539 | - | 16,539 | | | | | | - | | 2023 | CEO | - | - | - | | | Other NEOs | 38,785 | - | 38,785 | | | | | | - | | 2022 | CEO | - | - | - | | | Other NEOs | 30,595 | - | 30,595 | | | | | | - | | 2021 | CEO | - | - | - | | | Other NEOs | 23,660 | - | 23,660 |
Pay versus Performance
| (c) The amounts in this column represent the grant date fair value of equity awards as reported in the “Stock Awards” column of the Summary Compensation Table for each applicable year. |
Pay versus Performance
| (d) The amounts deducted or added in calculating the equity award adjustments are as follows: |
Pay versus Performance
| Year | Executive | Year end fair value of equity awards granted during the year | Year over year change in fair value of outstanding and unvested equity awards | Fair value as of vesting date of equity awards granted and vested in the year | Year over year change in fair value of equity awards granted in prior years that vested in the year | Fair value at the end of the prior year of equity awards that failed to meet vesting conditions in the year | Value of dividends or other earnings paid on stock or option awards not otherwise reflected in fair value or total compensation | Total equity award adjustments | | | | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | 2024 | CEO | 801,490 | 161,469 | - | (9,439) | (124,125) | - | 829,395 | | | Other NEOs | 268,498 | 59,333 | - | (3,462) | (71,341) | | 253,028 | | 2023 | CEO | 674,246 | (6,959) | - | (5,586) | (181,386) | - | 480,315 | | | Other NEOs | 225,877 | (3,762) | - | (2,965) | (133,015) | - | 86,135 | | 2022 | CEO | 190,896 | (135,677) | - | 13,025 | (122,087) | - | (53,843) | | | Other NEOs | 89,220 | (110,917) | - | (19,780) | (97,320) | - | (138,797) | | 2021 | CEO | 243,511 | (51,597) | - | - | (163,610) | - | 28,304 | | | Other NEOs | 298,709 | 17,822 | - | (10,710) | (57,983) | - | 247,838 |
Pay versus Performance
(3) Total shareholder return (TSR) is determined based on the value of an initial fixed investment of $100 at the beginning of each fiscal year. The peer group TSR prepared by Zacks Investment Research, Inc. represents cumulative, weighted TSR of the same peer group under Standard Industrial Classification (SIC) Codes 2510 and 2511, which includes home furnishings companies that are publicly traded in the United States or Canada. For more information regarding the peer group TSR, refer to the performance graph that is included in the 2024 Form 10-K, as filed with the SEC. Relationship of Pay and Performance Measures CAP versus the Company’s TSR and peer group’s TSR As shown in the chart below, the CEO and other NEOs’ CAP alignment with TSR varied each year. This is due in large part to the significant emphasis the Company places on long-term equity incentives, which are sensitive to changes in share price and number of shares granted. Both Mr. Hoff’s base salary and long-term incentive grant increased in fiscal 2023 because of the previously mentioned compensation study performed by Pearl Meyer. For this reason, Mr. Hoff received a larger long-term incentive grant, which coupled with his base salary increase and an increase in fiscal 2023 year-end share price as compared to the grant date share price of those awards, significantly increased his fiscal 2023 CAP. His fiscal 2024 CAP was inflated by a higher fiscal 2024 year-end share price, which was the primary driver of the higher fiscal 2024 CAP. CAP versus Net Income As shown in the chart below, the Company’s net income and the CEO and other NEOs’ CAP varied significantly each year. This is due in large part to the significant emphasis the Company places on equity incentives, which are sensitive to changes in stock price. For instance, in fiscal 2023, more than 50% of Mr. Hoff’s compensation were equity-based grants, which were comprised of time-based restricted stock unit and performance stock units which are based on achievement of budgeted EPS. Mr. Hoff’s base salary was increased in fiscal 2023 because of the previously mentioned compensation study performed by Pearl Meyer. The unalignment in fiscal 2023 was due to net loss driven by the $24 million restructuring charges related to the exit of ACH brand and the repositioning of PRI brand. CAP versus Company-selected Measure (EPS) As shown in the chart below, the Company’s EPS and the CEO and other NEOs’ CAP varied significantly each year. This is due in large part to the significant emphasis the Company places on equity incentives, which are sensitive to changes in stock price as discussed above. EPS is measured based on the Company’s net income. The unalignment in fiscal 2023 was due to the net loss discussed above. Company Financial Performance Measures The items listed below represent the most important metrics used to determine CAP for fiscal year 2024 as further described in the Compensation Discussion and Analysis on page 18.
Pay versus Performance
| Most Important Performance Measures | | Consolidated net income | | Earnings per share (“EPS”) | | Absolute EPS growth | | Relative EPS growth |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information concerning individual grants of awards made under the Company’s annual cash incentive plan and 2020 Stock Incentive Plan during fiscal 2024:
Grants of Plan-Based Awards
| | | | Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | | | | Name | Award Type | Grant Date for Equity Incentive Plan and Stock Awards | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Units (#) (3) | Grant Date Fair Value Stock Awards ($) | | Jeremy R. Hoff | Annual Cash Incentive | | $300,000 | $600,000 | $990,000 | | | | | | | | Performance Grant | 4/10/2023 | | | | 11,452 | 21,142 | 37,000 | | $396,000(4) | | | RSU Grant | 4/10/2023 | | | | | | | 10,892 | 176,341(5) | | Paul A. Huckfeldt | Annual Cash Incentive | | 112,500 | 225,000 | 371,250 | | | | | | | | Performance Grant | 4/10/2023 | | | | 5,206 | 9,610 | 16,818 | | 180,000(4) | | | RSU Grant | 4/10/2023 | | | | | | | 2,403 | 38,905(5) | | Anne J.Smith | Annual Cash Incentive | | 99,000 | 198,000 | 326,700 | | | | | | | | Performance Grant | 4/10/2023 | | | | 4,580 | 8,458 | 14,800 | | 158,400(4) | | | RSU Grant | 4/10/2023 | | | | | | | 2,114 | 34,226(5) | | Tod R. Phelps | Annual Cash Incentive | | 90,000 | 180,000 | 297,000 | | | | | | | | Performance Grant | 4/10/2023 | | | | 3,436 | 6,342 | 11,100 | | 118,800(4) | | | RSU Grant | 4/10/2023 | | | | | | | 3,267 | 52,893(5) |
Grants of Plan-Based Awards
| (1) Represents the estimated payouts under the annual cash incentive program for the 2024 fiscal year, as of the time those incentives were granted to the named executive officers. For additional discussion regarding annual cash incentives and the actual amounts paid to the named officers for fiscal 2024, refer to the Compensation Discussion and Analysis which begins on page 18, including Annual Cash Incentive on page 25 and the Summary Compensation table on page 33. |
Grants of Plan-Based Awards
| (2) Represents the estimated future payouts under the performance grants awarded to the named executive officers in fiscal 2024. For additional discussion regarding these performance grants, refer to Compensation Discussion and Analysis, which begins on page 18, including Long-Term Performance Incentive on page 27 and the Summary Compensation Table on page 33. |
Grants of Plan-Based Awards
| (3) This is the number of service-based RSUs granted to the named executive officer. Each RSU entitles the named executive officer to receive one share of the Company’s common stock (or, at the discretion of the Committee, cash based on the fair market value of a share of the Company’s common stock on the date payment is made or both) if they remain continuously employed with the Company through the end of three-year service period that ends April 10, 2026. In addition to the service-based vesting requirement, 100% of an executive officer’s RSUs will vest upon a change of control of the Company and a prorated number of the RSUs will vest upon the death, disability, or retirement of the executive officer. |
Grants of Plan-Based Awards
| (4) Represents the three-year performance grants that were awarded to the named executive officers in fiscal 2024. The three-year performance grants shown were computed assuming that the probable level of performance would be achieved (10% EPS growth and relative EPS growth at the 60th percentile for the performance period) and excluded the impact of estimated forfeitures related to service-based vesting conditions. |
Grants of Plan-Based Awards
| (5) The grant date fair value of each RSU is based on the market price of the Company’s common stock on the grant date, reduced by the present value of the dividends expected to be paid on the shares during the service period, discounted at the appropriate risk-free rate of return. For more information concerning the calculation of performance grant fair values, refer to note 15 of the Company’s consolidated financial statements included in the Company’s 2024 Form 10-K. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth information concerning outstanding equity awards, which consist of performance grants and restricted stock units, held by the named executive officers at the end of fiscal 2024. There were no stock options outstanding as of the end of fiscal 2024.
Outstanding Equity Awards at Fiscal Year-End
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (1) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Jeremy R. Hoff | 4/8/2021 (1) | | | | | | | 4/8/2021 (2) | 3,024 | 75,660 | | | | | 4/11/2022 (1) | | | 21,686 | 542,584 | | | 4/11/2022 (2) | 11,172 | 279,523 | | | | | 4/10/2023 (1) | | | 21,142 | 528,973 | | | 4/10/2023 (2) | 10,892 | 272,518 | | | | Paul A. Huckfeldt | 4/8/2021 (1) | | | | | | | 4/8/2021 (2) | 2,742 | 68,605 | | | | | 4/11/2022 (1) | | | 9,858 | 246,647 | | | 4/11/2022 (2) | 2,464 | 61,649 | | | | | 4/10/2023 (1) | | | 9,610 | 240,442 | | | 4/10/2023 (2) | 2,403 | 60,123 | | | | Anne J. Smith | 4/8/2021 (1) | | | | | | | 4/8/2021 (2) | 2,446 | 61,199 | | | | | 4/11/2022 (1) | | | 8,674 | 217,023 | | | 4/11/2022 (2) | 2,169 | 54,268 | | | | | 4/10/2023 (1) | | | 8,458 | 211,619 | | | 4/10/2023 (2) | 2,114 | 52,892 | | | | Tod R. Phelps | 4/8/2021 (1) | | | | | | | 4/8/2021 (2) | 1,344 | 33,627 | | | | | 4/11/2022 (1) | | | 6,506 | 162,780 | | | 4/11/2022 (2) | 3,352 | 83,867 | | | | | 4/10/2023 (1) | | | 6,342 | 158,677 | | | 4/10/2023 (2) | 3,267 | 81,740 | | |
Outstanding Equity Awards at Fiscal Year-End
| (1) Performance grant awards outstanding as of January 28, 2024. Performance metrics for the grants awarded on April 8, 2021 were not met; consequently, there was no payout and there are no amounts shown in the table. Each performance grant entitles the executive officer to receive a payment based on the achievement of two specified performance conditions derived from the Company’s absolute and relative EPS growth over a three-year performance period as shown in the following table. The payout or settlement of which shall be made in shares of the Company’s common stock (based on the fair market value of the shares of the Company’s common stock on the date of settlement or payment). In all cases, the named executive officer also must remain continuously employed with the Company through the end of the performance period to be eligible for a payment, with prorated payments made due to retirement, death or disability. The performance grants provide for a lump sum cash payment to the executive officer if the Company undergoes a change of control. For additional discussion regarding the performance grants, refer to the Executive Compensation Discussion at page 18. |
Outstanding Equity Awards at Fiscal Year-End
| PSU Grant Date | Performance Period | | 4/8/2021 | February 1, 2021 - January 28, 2024 | | 4/11/2022 | January 31, 2022 - February 2, 2025 | | 4/10/2023 | January 30, 2023 - February 1, 2026 |
Outstanding Equity Awards at Fiscal Year-End
| (2) Restricted stock unit (“RSU”) awards outstanding at the end of the last completed fiscal year. Market value is based on the closing market price of the Company’s common stock on January 28, 2024 fiscal year. Each RSU entitles the executive officer to receive one share of common stock if they remain continuously employed with the Company through the end of a three-year service period as shown in the following table. At the discretion of the Committee, the RSUs may be paid in shares of the Company’s common stock, cash (based on the fair market value of a share of common stock on the date payment is made), or both. In addition to the service-based vesting requirement, 100% of the RSUs will vest upon a change of control of the Company and a prorated number of the RSUs will vest upon the death, disability or retirement of the executive officer. |
Outstanding Equity Awards at Fiscal Year-End
| RSU Grant Date | Service Period | | 4/8/2021 | April 8, 2021 - April 8, 2024 | | 4/11/2022 | April 11, 2022 - April 11, 2025 | | 4/10/2023 | April 10, 2023 - April 10, 2026 |
Outstanding Equity Awards at Fiscal Year-End
| (3) Performance metrics were not met for the 2022 fiscal year performance grant awards (granted on April 8, 2021) as of the end of the 2024 fiscal year, which was the end of the award’s three-year performance period. Consequently, no amount was outstanding at the end of the 2024 fiscal year. The amount reported for the 2023 and 2024 performance grant awards is based on the level of performance achieved as of the end of the 2024 fiscal year, even though actual performance will not be measured under each of those awards until the end of their respective three-year performance periods. If the interim performance exceeded the threshold for the award, the reported value of the award was based on assumed achievement of the next higher performance measure that exceeds the actual interim measure of performance (which was the maximum performance level for both absolute and relative EPS growth). Any payments under the 2023 and 2024 performance grant awards will be determined based on actual performance through 2025 and 2026, respectively, and not on any interim measure of performance. |
Option Exercised and Stock Vested Table
Option Exercised and Stock Vested Table The following table sets forth information concerning equity awards vested during fiscal 2024:
Option Exercised and Stock Vested Table
| Name (1) | Award Type | Grant Date | Number of Shares Earned upon Vesting | Value Realized on Vesting ($) | | Jeremy R. Hoff | RSU Grant | 4/7/2020 | 4,310 | $79,002 | | Paul A. Huckfeldt | RSU Grant | 4/7/2020 | 2,371 | 43,460 | | Anne J. Smith | RSU Grant | 4/7/2020 | 2,371 | 43,460 |
Option Exercised and Stock Vested Table
| (1) Mr. Phelps was not a named executive officer in April 2020 and did not receive the RSU grant. |
Pension Benefits
Pension Benefits The following table sets forth information concerning benefits provided for Mr. Huckfeldt and Ms. Smith under the Company’s Supplemental Retirement Income Plan (“SRIP”). Messrs. Hoff and Phelps, do not participate in the SRIP:
Pension Benefits
| Name | Plan Name | Plan Years of Service | Present Value of Accumulated Benefit($)(1) | | Paul A. Huckfeldt | SRIP | 18 | 796,534 | | Anne J. Smith | SRIP | 16 | 596,791 |
Pension Benefits
| (1) Assumes a discount rate of 5.05%, based on the Moody’s Composite Bond Rate as of January 31, 2024 (rounded to the nearest 5 basis points). |
Pension Benefits
The SRIP provides a monthly supplemental retirement benefit equal to a specified percentage of the executive’s final average monthly compensation (25% for both Mr. Huckfeldt and Ms. Smith), payable for a 15-year period following the executive’s termination of employment. Final average monthly compensation means the average monthly base salary and any annual incentive awards paid to the executive during the five-year period before their termination of employment with the Company. An executive becomes vested in 75% of the monthly supplemental benefit if the executive remains continuously employed with the Company until reaching age 60 and is vested in additional 5% increments for each subsequent year that the executive remains continuously employed with the Company. Executives who remain continuously employed to age 65 become fully vested in their monthly supplemental benefit. The monthly retirement benefit for each participant in the plan, regardless of age, will become fully vested and the present value of all plan benefits will be paid to participants in a lump sum upon a change in control of the Company (as discussed under Potential Payments upon Termination or Change in Control, below). Additional information regarding the SRIP can be found under Executive Compensation beginning on page 18.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control Supplemental Retirement Income Plan Upon a change in control of the Company, each SRIP participant, regardless of age, will become fully vested and receive the present value of their entire plan benefit in a lump sum payment. A “change in control” includes, subject to certain exceptions:
Potential Payments upon Termination or Change in Control
| ■ | acquisition, other than from the Company, of more than 50% of the outstanding shares or the combined voting power, of the Company’s Common Stock; or |
Potential Payments upon Termination or Change in Control
| ■ | a majority of members of the Board is replaced during a twelve-consecutive-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election. |
Potential Payments upon Termination or Change in Control
The benefits payable under the SRIP are described further under Pension Benefits above. The following table provides the estimated lump sum payment each participating named executive officer would have received under the SRIP if a change in control had occurred on the last day of fiscal 2023.
Potential Payments upon Termination or Change in Control
| Name | Change in Control – SRIP (1) | | Paul A. Huckfeldt | $821,678 | | Anne J. Smith | 694,574 |
Potential Payments upon Termination or Change in Control
| (1) Calculated based on historical average salary and bonus amounts for the five-year period ended January 31, 2024, and assuming a discount rate equal to 120% of the short-term (5.93%), mid-term (5.18%) or long-term (5.39%) applicable federal rate for the month of January 2024 depending on the number of years remaining to the participant’s retirement at age 65. |
Potential Payments upon Termination or Change in Control
If a SRIP participant were to die while employed by the Company and before payment of their vested benefit begins, their beneficiary will receive a death benefit equal to the participant’s vested benefit, which would be paid in 180 equal monthly payments. Performance Grants Outstanding performance grants awarded to the named executive officers provide for a lump sum cash payment to the executive officer if the Company undergoes a “change of control.” The payment would be made on the date of the change of control and would assume that the named executive officer remained continuously employed through the end of the applicable performance period and that the specified target levels defined in the grant agreement had been attained for the applicable performance period. A change of control includes, subject to certain exceptions:
Potential Payments upon Termination or Change in Control
| ■ | acquisition, other than from the Company, of more than 50% of the combined voting power of the Company’s Common Stock; or |
Potential Payments upon Termination or Change in Control
| ■ | a majority of the members of the Board is replaced during a twelve-consecutive-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; and |
Potential Payments upon Termination or Change in Control
| ■ | on or after the occurrence of the change of control, the participant’s employment is terminated involuntarily or constructively terminated without cause. |
Potential Payments upon Termination or Change in Control
For grants under the 2020 Stock Incentive Plan, the Compensation Committee (or, with respect to director awards, the Board) is permitted to provide for vesting of awards to eligible employees in connection with a change in control of the Company if there is also a termination of employment in connection with the change in control. This is often referred to as “double trigger” vesting. For these purposes, a termination is considered to be in connection with a change of control if it occurs upon or within two years after the change in control and is for one of the following two reasons: (i) an involuntary termination by the Company without “cause” or (ii) a “constructive termination” by the participant. The terms “cause” and “constructive termination” are defined in the applicable award agreements. In addition, the Committee may provide for the assumption or substitution of awards by a surviving corporation. Awards to non-employee directors may fully vest upon a change in control. The performance grants also provide for a pro-rated lump sum payment to be made in connection with the death, disability or retirement (as defined in the 2020 Stock Incentive Plan) of the named executive officer. The payment would be made upon the completion of the applicable performance period based on the performance levels actually achieved for the applicable performance period. The following table provides the estimated aggregate payments to which each named executive officer would have been entitled under his respective performance grants if a change of control, or the executive’s death, disability or retirement, had occurred on the last day of fiscal 2024 (subject to certain assumptions, as specified below).
Potential Payments upon Termination or Change in Control
| | Payout under Performance Grants ($)(1) | | | Name | Change of Control | Death, Disability or Retirement | | Jeremy R. Hoff | $792,000 | $395,604 | | Paul A. Huckfeldt | 360,000 | 179,820 | | Anne J. Smith | 316,800 | 158,242 | | Tod R. Phelps | 237,600 | 118,681 |
Potential Payments upon Termination or Change in Control
| (1) These amounts include the amounts payable under three-year performance grants awarded April 11, 2022 and April 10, 2023 which are described in the Outstanding Equity Awards at Fiscal Year-End table on page 41. Performance metrics were not met for the grants awarded on April 8, 2021 and are therefore not included in the amounts shown above. The payout amounts in connection with an executive’s death, disability or retirement assume that the probable level of performance is achieved for the applicable performance periods. |
Potential Payments upon Termination or Change in Control
Restricted Stock Units The Compensation Committee may provide that outstanding restricted stock units (RSUs) awarded to the named executive officers will vest earlier upon certain terminations of employment following a change of control and may also be eligible for earlier pro rata vesting in connection with a termination of employment on account of death, disability, or retirement (as defined in the 2020 Stock Incentive Plan). A “change of control” of the Company for purposes of the RSUs has the same meaning as for the performance grants described above. The RSU payment would be a lump sum paid on the date of the change of control or as soon as administratively practicable after the vesting date upon the executive’s death, disability, or retirement. The following table provides an estimate of the aggregate payments that each named executive officer would have received under the executive’s RSUs if a change of control, or the executive’s death, disability or retirement, had occurred on the last day of fiscal 2024.
Potential Payments upon Termination or Change in Control
| | Payout under Restricted Stock Units Upon ($)(1) | | | Name | Change of Control | Death, Disability or Retirement | | Jeremy R. Hoff | $627,702 | $350,077 | | Paul A. Huckfeldt | 190,377 | 129,134 | | Anne J. Smith | 168,360 | 114,471 | | Tod R. Phelps | 199,234 | 115,953 |
Potential Payments upon Termination or Change in Control
| (1) These amounts include the amounts payable under three-year RSUs awarded April 8, 2021, April 11, 2022 and April 10, 2023 which are described in the Outstanding Equity Awards at Fiscal Year-End table on page 41 and are calculated based on the closing price of the Company’s Common Stock as of the last trading day of fiscal 2024. |