DEF 14A of Terreno Realty Corp
Filed Mar 22, 2024 · FY20230001193125-24-074635
To be Held on May 7, 2024
| | Page | | Outstanding Equity Awards at Fiscal Year End | 38 | | Stock Vested Table | 40 | | Nonqualified Deferred Compensation | 40 | | Pay Versus Performance | 42 | | Payments upon Termination of Employment and Change of Control | 46 | | Director Compensation | 51 | | Equity Compensation Plan Information | 52 | | Certain Transactions | 52 | | Security Ownership | 53 | | Stockholder Proposals | 55 | | 2023 Annual Report | 55 | | Other Matters | 55 |
Committee Membership
| • | discharge our board of directors’ responsibilities relating to compensation of our directors and executives; |
PROPOSAL 1 – ELECTION OF DIRECTORS
PROPOSAL 1 – ELECTION OF DIRECTORS Our board of directors currently consists of eight directors, each of whom has a term that expires at the annual meeting. Based on the recommendation of the nominating and corporate governance committee, our board of directors proposes that the nominees described below each be elected to serve until the 2025 annual meeting of stockholders and until their successors are duly elected and qualify. All of the nominees are currently serving as our directors. Ms. Linda Assante will not be standing for re-election as a member of our board of directors. Upon the expiration of Ms. Assante’s term as a director at the annual meeting, the number of directors that will constitute our board of directors will be decreased from eight to seven. The biographical descriptions for the nominees include the specific experience, qualifications, attributes and skills that led to the conclusion by our board of directors in the last sentence of each biography that such person should serve as a director.
PROPOSAL 1 – ELECTION OF DIRECTORS
| Nominee | Principal Occupation, Business Experience, Other Directorships Held and Age | | W. Blake Baird Age 63 | Mr. Baird co-founded Terreno Realty Corporation and has served as chairman of our board of directors and our chief executive officer since February 2010. Mr. Baird was managing partner and co-founder of Terreno Capital Partners LLC, a private real estate investment firm, from September 2007 to February 2010. Mr. Baird served as president of AMB Property Corporation (NYSE: AMB) from January 2000 to December 2006. AMB, now Prologis, Inc. (NYSE: PLD), is a leading global developer, owner and operator of industrial real estate. Mr. Baird also served as a director of AMB from 2001 to 2006 and chairman of its investment committee. Mr. Baird joined AMB as its chief investment officer in 1999. Prior to that, Mr. Baird was a managing director of Morgan Stanley & Co., most recently as head of Real Estate Investment Banking for the Western United States. Mr. Baird spent 15 years at Morgan Stanley and Dean Witter, the last 11 focusing on real estate. Mr. Baird currently serves as a director of Sunstone Hotel Investors, Inc. (NYSE: SHO), a lodging REIT. Previously, Mr. Baird was a Director of Alexander & Baldwin, Inc. (NYSE: ALEX), a Honolulu-headquartered real estate and agribusiness company, from 2006 to 2012 and Matson, Inc. (NYSE: MATX), a Honolulu-headquartered ocean transportation and logistics company, from 2012 to 2020. Mr. Baird is a former member of the Young Presidents’ Organization and a former member of the Board of Governors of the National Association of Real Estate Investment Trusts. Mr. Baird holds a B.S. in Economics from the Wharton School (magna cum laude) and a B.A. in History from the College of Arts and Sciences (magna cum laude) at the University of Pennsylvania. He also holds an M.B.A. from New York University. Our board of directors has determined that Mr. Baird’s qualifications to serve on our board of directors include his deep industrial real estate expertise across markets and cycles, as well as extensive public REIT operating experience, from his seven years of experience as president of AMB and his experience as our co-founder, chairman and chief executive officer. | | Michael A. Coke Age 55 | Mr. Coke co-founded Terreno Realty Corporation and has served as our president and as a director since February 2010. Mr. Coke also served as our chief financial officer from February 2010 until May 2013. Mr. Coke was managing partner and co-founder of Terreno Capital Partners LLC, a private real estate investment management firm, from September 2007 to February 2010. From January 1999 to March 2007, Mr. Coke served as chief financial officer of AMB, now Prologis, Inc. (NYSE: PLD), which is a leading global developer, owner and operator of industrial real estate. While at AMB, Mr. Coke also served as executive vice president until May 2007, and |
PROPOSAL 1 – ELECTION OF DIRECTORS
| Nominee | Principal Occupation, Business Experience, Other Directorships Held and Age | | | was AMB’s chief accounting officer from 1998 until January 2007. Mr. Coke was a member of AMB’s investment committee and was responsible for capital markets, accounting, tax, information systems, dispositions, valuations, risk management and financial planning. During his tenure at AMB, Mr. Coke was a three time recipient of Realty Stock Review’s Annual Outstanding CFO Award. From October 2005 to May 2007, Mr. Coke served as president and chief executive officer of IAT Aviation Facilities, Inc., a listed Canadian Income Trust. Prior to AMB, Mr. Coke spent seven years with Arthur Andersen LLP, where he most recently served as an audit manager. At Arthur Andersen, he primarily served public and private real estate companies, including several public REITs, and specialized in real estate auditing and accounting, mergers, initial public offerings and business acquisition due diligence. Mr. Coke was a director and chairman of the audit committee of DuPont Fabros Technology, Inc. (formerly NYSE: DFT), a wholesale data center REIT from 2007 to 2017 and a director of Digital Realty Trust, Inc. (NYSE: DLR), a leading global provider of data center, colocation and interconnection solutions from 2017 to 2021. Mr. Coke currently serves as a director and chair of the audit committee of Broadstone Net Lease, Inc. (NYSE: BNL), a REIT that acquires, owns and manages primarily single-tenant commercial real estate properties that are net leased to a diversified group of tenants. Mr. Coke received a bachelor’s degree in business administration and accounting from California State University at Hayward. Additionally, Mr. Coke is a member of the Board of Trustees of California State University East Bay Education Foundation. He is a former Certified Public Accountant. Our board of directors has determined that Mr. Coke’s qualifications to serve on our board of directors include his deep industrial real estate expertise across markets and cycles, as well as extensive public REIT operating experience, from his ten years of experience at AMB, most recently as chief financial officer, and his experience as our co-founder, president and previously as our chief financial officer. | | Gary N. Boston Age 55 | Mr. Boston has served on our board of directors since October 2022. Mr. Boston was Senior Portfolio Manager at APG Asset Management, a leading global manager of pension assets from July 2005 to May 2016. Mr. Boston served as a director of Retail Value Inc. (NYSE: RVI) from 2018 until its dissolution in June 2022. Mr. Boston holds a Bachelor of Arts from Duke University and a Masters of Business Administration from the Wharton School of Business. Our board of directors has determined that Mr. Boston’s qualifications to serve on our board of directors include his professional background and experience, including his investment track record in public securities, education and previously held senior-executive level positions. | | LeRoy E. Carlson Age 78 | Mr. Carlson has served on our board of directors since February 2010. Mr. Carlson has been a principal of NNC Apartment Ventures, LLC, a well-established firm specializing in the long-term investment in multi-family assets on the West Coast, since 1999. Mr. Carlson formerly served as executive vice president, chief operating officer, chief financial officer and board member of BRE Properties, Inc. (now Essex Property Trust, NYSE: ESS), a large multi-family NYSE–listed REIT based in San Francisco, California. In his role as chief operating officer, Mr. Carlson oversaw the company’s capital market activities, asset management and development and played a key role in two company mergers with an aggregate value of approximately two billion dollars. Mr. Carlson retired from BRE Properties, Inc. in October 2002. Prior to joining BRE Properties, Inc., Mr. Carlson served as vice president, chief financial officer and as a director of Real Estate Investment Trust of California from 1990 to March 1996. He was a partner and chief financial officer of William Walters Company, a southern California based asset management company and investor, from 1976 to 1990. Mr. Carlson is a Certified Public Accountant in California. He is a graduate of the University of Southern California. Our board of directors has determined that Mr. Carlson’s qualifications to serve on our board of directors include |
PROPOSAL 1 – ELECTION OF DIRECTORS
| Nominee | Principal Occupation, Business Experience, Other Directorships Held and Age | | | his over 30 years of experience in the real estate industry and his prior experiences as a director, chief operating officer and chief financial officer of a NYSE-listed REIT. | | Irene H. Oh Age 46 | Ms. Oh has served on our board of directors since January 2023. Ms. Oh has served as Executive Vice President and Chief Risk Officer of East West Bancorp (Nasdaq: EWBC) and East West Bank since October 2023. Ms. Oh previously served as Executive Vice President and Chief Financial Officer of East West Bancorp and East West Bank from January 2010 to October 2023. Ms. Oh was a director of PS Business Parks, Inc. (NYSE: PSB) from April 2021 until its merger with Blackstone Inc. affiliates in July 2022. Ms. Oh serves on the board of directors and the audit committee of the United Way of Greater Los Angeles. Ms. Oh received a bachelor’s degree from California State University, Los Angeles and a master’s degree in accounting from the University of Southern California and is a Certified Public Accountant. Our board of directors has determined that Ms. Oh’s qualifications to serve on our board of directors include her professional background and experience, education and her experience as a chief risk officer and former chief financial officer of a Nasdaq-listed company. | | Douglas M. Pasquale Age 69 | Mr. Pasquale has served on our board of directors since February 2010. Mr. Pasquale has served as Founder and CEO of Capstone Enterprises Corporation, an investment and consulting firm, since January 1, 2012. Mr. Pasquale currently serves as Chairman of the Board of Sunstone Hotel Investors (NYSE: SHO), a lodging REIT, and previously served as Executive Chairman from March 7, 2022 until August 31, 2022 and as Interim CEO from September 2, 2021 through March 7, 2022. Mr. Pasquale served as Senior Advisor of HCP, Inc. (NYSE: HCP), an investor primarily in real estate serving the healthcare industry in the United States, from August 2017 through December 31, 2018. With the acquisition of Nationwide Health Properties (NYSE: NHP) by Ventas, Inc. (NYSE: VTR) in July 2011, Mr. Pasquale served as Senior Advisor to Ventas’s Chairman and CEO from July 2011 to December 2011. He served on the Ventas Board of Directors from July 2011 to May 2017. Prior to NHP’s acquisition, Mr. Pasquale served as Chairman of the Board of NHP from May 2009 to July 2011, as President and Chief Executive Officer of NHP from April 2004 to July 2011, and Executive Vice President and Chief Operating Officer of NHP from November 2003 to April 2004. Mr. Pasquale was a director of NHP from November 2003 to July 2011. Mr. Pasquale previously served in various roles (most recently Chairman and Chief Executive Officer) at ARV Assisted Living, Inc., an owner and operator of assisted living facilities, from June 1998 to September 2003 and concurrently served as President and Chief Executive Officer of Atria Senior Living Group, Inc. from April 2003 to September 2003. Mr. Pasquale also served as President and Chief Executive Officer of Richfield Hospitality Services, Inc. and Regal Hotels International-North America, a hotel ownership and management company, from 1996 to 1998, and as its Chief Financial Officer from 1994 to 1996. In addition to serving as Chairman of the Board of Sunstone, Mr. Pasquale serves as lead director of Alexander & Baldwin, Inc. (NYSE: ALEX), a Honolulu-headquartered real estate and agribusiness company, and as a director of Dine Brands Global, Inc. (NYSE: DIN), which franchises Applebee’s and IHOP restaurants. He is also a member of the Board of Trustees of ExplorOcean. Mr. Pasquale is a successful leader in the real estate industry with extensive experience and strong skills in management, mergers and acquisitions and strategic planning. Mr. Pasquale received his B.S. in Accounting and his M.B.A. with highest honors from the University of Colorado. Our board of directors has determined that Mr. Pasquale’s qualifications to serve on our board of directors include his over 20 years of experience in the real estate industry and his experience as chairman, president and chief executive officer of a NYSE-listed REIT. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| Nominee | Principal Occupation, Business Experience, Other Directorships Held and Age | | Dennis Polk Age 57 | Mr. Polk has served on our board of directors since February 2010. Mr. Polk has served as the Hyve Solutions Executive for TD SYNNEX Corporation (NYSE: SNX) since August 2023 and previously served as Executive Chair of the Board of Directors of TD SYNNEX Corporation from September 2021 to August 2023. Prior to SYNNEX Corporation (“SYNNEX”) merging with Tech Data Corporation in September 2021, Mr. Polk served as President, Chief Executive Officer and a Board Member of SYNNEX from March 2018 to August 2021. Mr. Polk joined SYNNEX in 2002 and, prior to his appointment as Chief Executive Officer in March 2018, served in several roles, including Chief Operating Officer and Chief Financial Officer. TD SYNNEX Corporation is a business process services company focused on distribution of information technology products, manufacturing and logistics services. Mr. Polk is a member of the board of directors of Concentrix Corporation (Nasdaq: CNXC), a leading global provider of customer experience solutions and technology, and was appointed in connection with its spin-off from SYNNEX in December 2020. A graduate of Santa Clara University, Mr. Polk received his bachelor’s degree in accounting and is an inactive Certified Public Accountant. Our board of directors has determined that Mr. Polk’s qualifications to serve on our board of directors include his experience as a board member, chief executive officer, chief operating officer and chief financial officer of NYSE-listed companies. |
PROPOSAL 1 – ELECTION OF DIRECTORS
RECOMMENDATION – Our board of directors unanimously recommends a vote “FOR” each named nominee.
Vote Required – Majority Vote Standard for Election of Directors
Vote Required – Majority Vote Standard for Election of Directors Our bylaws provide that the vote standard for election of directors is a “majority vote of the votes cast” standard in uncontested elections of directors. This means that in an uncontested election, a nominee is elected as a director if he or she receives more “for” votes than the total number of “against” votes. In an election where the number of nominees is greater than the number of directors to be elected at the meeting, the nominees will be elected by a plurality of the votes cast in the election of directors. Under our corporate governance guidelines, any director who fails to be elected by a majority vote is required to tender his or her resignation to our board of directors, subject to acceptance. The nominating and corporate governance committee will make a recommendation to our board of directors on whether to accept or reject the resignation or whether other action should be taken. Our board of directors will then act on the nominating and corporate governance committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of election results. If the resignation is not accepted, the director will continue to serve until the next annual meeting and until the director’s successor is duly elected and qualifies. The director who tenders his or her resignation will not participate in our board of director’s decision.
Objectives
| • | motivate our executives to manage our business to meet our near, medium, and long-term objectives and reward them for meeting these objectives and for exceptional performance; |
Principal Elements of Compensation and Total Direct Compensation
Principal Elements of Compensation and Total Direct Compensation We have designed our executive compensation programs to include three principal elements—base salary, annual cash incentive bonus (for our executive vice presidents) and long-term equity incentives, in the form of common stock awards, which are integrated into our compensation programs and are intended to achieve the objectives set forth above. We believe that a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives. We believe that attractive base salaries can also motivate and reward executives. We believe that annual cash incentive bonus payments can incentivize our executives to attain near-term and medium term business objectives. However, while important, such near-term business objectives, even if achieved, may not produce superior long-term stockholder value. Accordingly, we do not have an annual cash incentive bonus plan for Messrs. Baird or Coke, which allows them to construct and evaluate our short-term objectives while more effectively thinking solely of long-term stockholder value creation. Our executive vice presidents are eligible to receive an annual cash incentive bonus based upon their individual performances, as further described below. We believe that long-term equity incentives align the interests of our executives and stockholders by motivating executives to increase stockholder value and rewarding executives when stockholder value increases. In 2023, the compensation committee used the following peer companies, which are companies engaged in the industrial real estate industry or are of comparable size and scope, to benchmark executive compensation, which we refer to herein as our peer companies: Primary Industrial Peers: EastGroup Properties, Inc. First Industrial Realty Trust, Inc. Innovative Industrial Logistics Properties Trust LXP Industrial Trust Rexford Industrial Realty, Inc. STAG Industrial, Inc. Size Based Peers: Agree Realty Corporation Apartment Income REIT Corp. Brixmor Property Group Inc. National Storage Affiliates Trust Medical Properties Trust, Inc. Kite Realty Group Trust Spirit Realty Capital, Inc. Philips Edison & Company, Inc. Rayonier Inc. Ryman Hospitality Properties, Inc. Base Salaries. In order to attract and retain the most talented and experienced executives in our industry, we set the base salaries of executive officers at levels that are competitive with our peer companies that compete with us for executive talent. Base salaries are established in part based on the individual experience, skills and expected contributions during the coming year and the executive’s performance during the prior year. Increases in base salary are left to the discretion of the compensation committee. During 2023, no changes were made to Messrs. Baird, Coke, Cannon and Meyer’s base salaries. Annual Cash Incentive Bonus. In order to more fully align compensation with long term stockholder value creation as stated above, and in order to increase the overall equity component in their pay mix, we do not have, nor are we currently planning to adopt, an annual cash incentive bonus plan for Messrs. Baird or Coke, although we reserve our right to do so in the future. Our executive vice presidents, Messrs. Cannon and Meyer, received an annual cash incentive bonus primarily based upon the achievement of individual performance objectives, which for 2023 included capital deployment, ESG initiatives, operational targets and raising equity capital (all in accordance with the Company’s annual business plan) and long-term strategic goals. Time-Vesting Restricted Stock Awards. We believe that providing our executives with equity incentives will create longer-term alignment with stockholders and further meet the Company’s objectives of building equity ownership and meaningful value in the Company for the Company’s executives. As such, our executives are eligible to receive grants of time-vesting restricted stock under our 2019 Equity Incentive Plan. On August 1, 2023, the compensation committee granted 25,489 shares of restricted common stock with a grant date fair value, computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, of $1,500,028 to each of Messrs. Baird and Coke and 11,046 shares of restricted common stock with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $650,057 to each of Messrs. Cannon and Meyer in recognition of cumulative accomplishments, progress on our long-term strategic plan adopted in 2020 and in order to provide competitive compensation with our peer companies, retain our key executives and align their long-term interests with those of our stockholders. These shares of restricted stock vest with respect to 100% of the shares on the fifth anniversary of the date of grant, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. Realized value for such awards increases or decreases based on the increase or decrease in the value of our common stock over the vesting period, further aligning the incentive with stockholder value creation. Long-Term Incentive Plan. In order to directly align the long-term incentive compensation of our executives with the achievement of enhanced value for our stockholders and to provide executives with the potential to earn equity awards subject to the long-term performance of our common stock, the compensation committee administers the Company’s Long-Term Incentive Plan (the “Long-Term Incentive Plan”). Under our Long-Term Incentive Plan, our executives performance share target awards are expressed as a number of shares of common stock and settled in shares of common stock. Participants receive a target award with respect to each index specified below, and each target award consists of the same number of shares of our common stock. Generally, performance measurement periods under the Long-Term Incentive Plan run for three calendar years and begin on January 1 of each year. These performance-based awards are variable incentive, at-risk awards. The performance goals to achieve any payout are high-reach and formulaic rather than qualitative. No dividends are paid to our executives related to these awards during the performance measurement periods. The amount earned under our Long-Term Incentive Plan for any performance measurement period is determined by our success in attaining or exceeding performance goals linked to each of the following two metrics during the performance measurement period:
Principal Elements of Compensation and Total Direct Compensation
| (1) Messrs. Cannon and Meyer became eligible to receive equity grants under our Long-Term Incentive Plan commencing with the three-year measurement period of January 1, 2014 to December 31, 2016. |
Principal Elements of Compensation and Total Direct Compensation
Note that the target dollar values reported above differ from the grant date fair values computed in accordance with FASB ASC Topic 718, which are reported in the “Summary Compensation Table” below. At-Risk Compensation. For 2023, approximately 84% of Messrs. Baird and Coke’s direct compensation was at-risk equity, of which approximately 54% was variable incentive equity based solely on three-year total stockholder return outperformance under the Long-Term Incentive Plan and approximately 30% was variable incentive equity based on changes in stock price during the restricted stock vesting period.
Other Elements of Compensation
Other Elements of Compensation Retirement Benefits. We maintain a 401(k) retirement plan in which all employees are eligible to participate on the same terms. Under the 401(k) retirement plan, we make contributions of up to 3% of the participant’s annual compensation. Our contributions are 100% vested when made and are subject to applicable IRS limits and regulations. Deferred Compensation Plan. On November 6, 2019, we adopted the Terreno Realty Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of our officers, non-employee directors and other key employees in which the participant may elect to defer cash compensation and/or equity awards granted under the 2019 Equity Incentive Plan. The amounts deferred are not included in the executive’s current taxable income and, therefore, are not currently deductible by us. See “Nonqualified Deferred Compensation” for more information. Severance Agreements. We have severance agreements with each of Messrs. Baird, Coke, Cannon and Meyer. A summary of these severance agreements appears in the section of this proxy statement entitled “Payments Upon Termination of Employment and Change of Control.” These agreements provide for various payments and benefits to the executives if their employment with us is terminated in certain circumstances. The circumstances in which payments may be made and the potential amounts of those payments are described in more detail below. These agreements are intended to ensure the ongoing commitment and continued attention and dedication of these executive officers to their assigned duties and to the best interest of our stockholders in the event of a change in control or other potential termination events.
Other Compensation Practices and Policies
Other Compensation Practices and Policies Equity Award Grant Practices. The compensation committee generally makes annual equity awards to our named executive officers under the Long-Term Incentive Plan during the third quarter of each year and to our non-executive employees under the 2019 Equity Incentive Plan during the first quarter of each year. In 2022, 2023 and 2024, awards were made to our non-executive employees at the compensation committee’s regularly scheduled meetings in February. The grant date of those awards is the date of the meeting, which date is determined without regard to current or anticipated stock price levels or the release of material non-public information and is set during the prior calendar year. The compensation committee may also make equity grants during the course of the year, primarily for new hires, promotions to retain valued employees, to award exceptional performance or otherwise. Generally, these grants are subject to performance or time vesting, and are issued on the date of compensation committee approval or upon a date certain following the grant approval date, such as the date on which a new hire commences his or her employment with the Company. Section 162(m). The SEC requires that we comment on our policy with respect to Section 162(m) of the Code, which limits the deductibility on our tax return of compensation over $1 million to the chief executive officer and certain other highly compensated executive officers. Although certain qualifying “performance-based compensation” was previously exempt from this deduction limit, the Tax Cuts and Jobs Act made certain changes to Section 162(m) of the Code. Pursuant to such changes, “performance-based compensation” is no longer exempt under Section 162(m) of the Code effective for tax years beginning after January 1, 2018, subject to a transition rule for written binding contracts which were in effect on November 2, 2017 and which were not modified in any material respect on or after such date. We believe that, because we intend to maintain our qualification as a REIT under the Code and pay distributions sufficient to minimize federal income taxes, the payment of compensation that does not satisfy the requirements of Section 162(m) will generally not affect our net income. To the extent that compensation does not qualify for a deduction under Section 162(m), a larger portion of stockholder distributions may be subject to federal income taxation as dividend income rather than return of capital. We do not believe that Section 162(m) will materially affect the taxability of stockholder distributions, although no assurance can be given in this regard due to the variety of factors that affect the tax position of each stockholder. For these reasons, the compensation committee’s compensation policy and practices are not directly guided by considerations relating to Section 162(m). Non-Binding Advisory Vote on Executive Compensation. In determining executive compensation for 2023, the compensation committee also considered the results of the non-binding, advisory vote on the compensation of our named executive officers at our 2023 and 2022 annual meetings of stockholders. Approximately 93% and 94%, respectively, of the shares voted on the matter at both our 2023 and 2022 annual meetings of stockholders, were cast in support of our compensation decisions and policies. The compensation committee considered stockholder support reflected by these results and determined to use the same approach and philosophy in 2023 as we used in 2022 in determining executive compensation. Policy Concerning Hedging and Pledging Transactions. Our insider trading policy prohibits our officers, directors and employees from engaging in transactions of a speculative nature involving our securities. The policy prohibits short sales and other hedging transactions and also generally prohibits transactions involving derivative securities, such as options, warrants, restricted stock units, stock appreciation rights or similar rights whose value is derived from the value of our equity securities. The policy prohibits all of our directors and officers from margining our securities, holding our securities in a margin account or pledging our securities as collateral for a loan unless such pledge is pre-approved by our audit committee. There have been no such approvals of any pledges to date. Further, our code of business conduct and ethics prohibits new investment and other trading in the member companies of the FTSE Nareit Equity Industrial Index. Clawback Policy. Our compensation recovery policy requires recovery from executive officers of incentive-based compensation that is earned, granted or vested based on the achievement of a financial reporting measure in the event of a required restatement of previously issued financial statements. The recoverable compensation includes any compensation received after the effective date of the clawback policy and in the three-year fiscal period preceding the date the Company was required to prepare the restatement that is in excess of the amount that would have been received had it been calculated based on the restated financial statements. Recovery is required regardless of fault or a covered officer’s role in the financial reporting process. Notwithstanding the foregoing, we are not required to ecoup such excess compensation if recovery would be impractical and either (i) the third-party costs associated with recovery would exceed the amount to be recovered or (ii) recovery would cause a tax qualified plan to fail to remain tax qualified. The clawback policy complies with Rule 10D-1 under the Exchange Act, adopted by the SEC in October 2022, and has been filed as an exhibit to the Company’s Annual Report on Form 10-K Risk Considerations in our Compensation Programs. The compensation committee monitors our compensation policies and practices for our employees to determine whether they encourage unnecessary or excessive risk-taking. The compensation committee has reviewed our compensation structures and policies as they pertain to risk and has determined that our compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on the Company. Pay Ratio Disclosure Rule. Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”). Our PEOs for purposes of determining such ratio is Mr. Baird, our chief executive officer, and Mr. Coke, our president. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. As set forth in the table below, our 2023 PEO to median employee pay ratio was 24.3 to 1.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The table below summarizes the total compensation paid or awarded to each of our named executive officers for 2023, 2022 and 2021. For a more thorough discussion of our executive compensation programs, see “Compensation Discussion and Analysis” which begins on page 26 of this proxy statement.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) | All Other Compensation ($) (8) | Total ($) | | W. Blake Baird Chairman and Chief Executive Officer, Co-Founder | 2023 2022 2021 | 800,000 800,000 800,000 | — — — | 4,236,901 3,620,541 3,031,603(2) (3) (4) | 9,900 9,150 8,700 | 5,046,801 4,429,691 3,840,303 | | Michael A. Coke President, Co-Founder | 2023 2022 2021 | 800,000 800,000 800,000 | — — — | 4,236,901 3,620,541 3,031,603(2) (3) (4) | 9,900 9,150 8,700 | 5,046,801 4,429,691 3,840,303 | | Jaime J. Cannon Executive Vice President and Chief Financial Officer | 2023 2022 2021 | 400,000 367,500 339,125 | 375,000 400,000 420,000 | 1,745,496 1,539,561 1,298,059(5) (6) (7) | 9,900 9,150 8,700 | 2,530,396 2,316,211 2,065,884 | | John T. Meyer Executive Vice President and Chief Operating Officer (9) | 2023 2022 2021 | 400,000 367,500 339,125 | 375,000 400,000 420,000 | 1,745,496 1,539,561 1,298,059(5) (6) (7) | 9,900 9,150 8,700 | 2,530,396 2,316,211 2,065,884 |
SUMMARY COMPENSATION TABLE
| (1) We do not have, nor are we currently planning to adopt, an annual cash incentive bonus plan for Messrs. Baird and Coke although we reserve our right to do so in the future. For Messrs. Cannon and Meyer, the amounts reported reflect annual cash incentive bonuses paid in 2024, 2023 and 2022 for performance in 2023, 2022 and 2021, respectively, to the extent any such bonuses were paid as reported above. For a further discussion of the annual cash incentive bonuses with respect to Messrs. Cannon and Meyer, see “Annual Cash Incentive Bonus” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
SUMMARY COMPENSATION TABLE
| (2) Includes aggregate awards granted by our compensation committee in 2023 under our Long-Term Incentive Plan for the performance period from January 1, 2023 to December 31, 2025 with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $2,736,873 determined based on the probable outcome of the award. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2023 fiscal year for a discussion of the relevant assumptions used in calculating the value. The amount reflected was not actually received by the executive in 2023 and does not necessarily represent the amount that will actually be realized by the executive under the Long-Term Incentive Plan award. The amount actually earned under the Long-Term Incentive Plan award, if any, will not be earned until the end of the performance measurement period. The aggregate target potential future payout for the performance measurement period is 34,938 shares and the maximum aggregate potential future payout for the performance measurement period for each executive is 104,814 shares. Any amount earned by the executive pursuant to the award will be paid in shares of our common stock after the end of the performance period. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
SUMMARY COMPENSATION TABLE
Also includes an award of 25,489 shares of restricted stock granted to each of Messrs. Baird and Coke on August 1, 2023 under our 2019 Equity Incentive Plan with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $1,500,028. These shares of restricted stock vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. This amount reflects the grant date fair value and may not correspond to the actual value that will be recognized. Refer to notes 2 and 10 to our consolidated financial statements in our annual report on Form 10-K for the 2023 fiscal year for a discussion of the relevant assumptions used in calculating the value. For a further description of the award, see the “Outstanding Equity Awards at Fiscal Year End” table below.
SUMMARY COMPENSATION TABLE
| (3) Includes aggregate awards granted by our compensation committee in 2022 under our Long-Term Incentive Plan for the performance period from January 1, 2022 to December 31, 2024 with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $1,820,514 determined based on the probable outcome of the award. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2022 fiscal year for a discussion of the relevant assumptions used in calculating the value. The amount reflected was not actually received by the executive in 2022 and does not necessarily represent the amount that will actually be realized by the executive under the Long-Term Incentive Plan award. The amount actually earned under the Long-Term Incentive Plan award, if any, will not be earned until the end of the performance measurement period. The aggregate target potential future payout for the performance measurement period is 19,324 shares and the maximum aggregate potential future payout for the performance measurement period for each executive is 57,972 shares. Any amount earned by the executive pursuant to the award will be paid in shares of our common stock after the end of the performance period. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
SUMMARY COMPENSATION TABLE
Also includes an award of 28,944 shares of restricted stock granted to each of Messrs. Baird and Coke on August 2, 2022 under our 2019 Equity Incentive Plan with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $1,800,027. These shares of restricted stock vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. This amount reflects the grant date fair value and may not correspond to the actual value that will be recognized. Refer to notes 2 and 10 to our consolidated financial statements in our annual report on Form 10-K for the 2022 fiscal year for a discussion of the relevant assumptions used in calculating the value. For a further description of the award, see the “Outstanding Equity Awards at Fiscal Year End” table below.
SUMMARY COMPENSATION TABLE
| (4) Includes aggregate awards granted by our compensation committee in 2021 under our Long-Term Incentive Plan for the performance period from January 1, 2021 to December 31, 2023 with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $1,531,544 determined based on the probable outcome of the award. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2021 fiscal year for a discussion of the relevant assumptions used in calculating the value. The amount reflected was not actually received by the executive in 2021 and does not necessarily represent the amount that will actually be realized by the executive under the Long-Term Incentive Plan award. The amount actually earned under the Long-Term Incentive Plan award, if any, will not be earned until the end of the performance measurement period. The aggregate target potential future payout for the performance measurement period is 22,818 shares and the maximum aggregate potential future payout for the performance measurement period for each executive is 68,454 shares. Any amount earned by the executive pursuant to the award will be paid in shares of our common stock after the end of the performance period. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
SUMMARY COMPENSATION TABLE
Also includes an award of 21,995 shares of restricted stock granted to each of Messrs. Baird and Coke on August 3, 2021 under our 2019 Equity Incentive Plan with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $1,500,059. Of the 21,995 shares of restricted stock granted to each of Messrs. Baird and Coke, 7,332 fully vested on August 4, 2022 and 14,663 shares will fully vest on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. This amount reflects the grant date fair value and may not correspond to the actual value that will be recognized. Refer to notes 2 and 10 to our consolidated financial statements in our annual report on Form 10-K for the 2021 fiscal year for a discussion of the relevant assumptions used in calculating the value. For a further description of the award, see the “Outstanding Equity Awards at Fiscal Year End” table below.
SUMMARY COMPENSATION TABLE
| (5) Includes aggregate awards granted by our compensation committee in 2023 under our Long-Term Incentive Plan for the performance period from January 1, 2023 to December 31, 2025 with a grant date fair value, |
SUMMARY COMPENSATION TABLE
| computed in accordance with FASB ASC Topic 718, of $1,095,439 determined based on the probable outcome of the award. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2023 fiscal year for a discussion of the relevant assumptions used in calculating the value. The amount reflected was not actually received by the executive in 2023 and does not necessarily represent the amount that will actually be realized by the executive under the Long-Term Incentive Plan award. The amount actually earned under the Long-Term Incentive Plan award, if any, will not be earned until the end of the performance measurement period. The aggregate target potential future payout for the performance measurement period is 13,976 shares and the aggregate maximum potential future payout for the performance measurement period for each executive is 41,928 shares. Any amount earned by the executive pursuant to the award will be paid in shares of our common stock after the end of the performance period. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
SUMMARY COMPENSATION TABLE
Also includes an award of 11,046 shares of restricted stock granted to each of Messrs. Cannon and Meyer on August 1, 2023 under our 2019 Equity Incentive Plan with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $650,057. These shares of restricted stock vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. This amount reflects the grant date fair value and may not correspond to the actual value that will be recognized. Refer to notes 2 and 10 to our consolidated financial statements in our annual report on Form 10-K for the 2023 fiscal year for a discussion of the relevant assumptions used in calculating the value. For a further description of the award, see the “Outstanding Equity Awards at Fiscal Year End” table below.
SUMMARY COMPENSATION TABLE
| (6) Includes aggregate awards granted by our compensation committee in 2022 under our Long-Term Incentive Plan for the performance period from January 1, 2022 to December 31, 2024 with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $739,549 determined based on the probable outcome of the award. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2022 fiscal year for a discussion of the relevant assumptions used in calculating the value. The amount reflected was not actually received by the executive in 2022 and does not necessarily represent the amount that will actually be realized by the executive under the Long-Term Incentive Plan award. The amount actually earned under the Long-Term Incentive Plan award, if any, will not be earned until the end of the performance measurement period. The aggregate target potential future payout for the performance measurement period is 7,850 shares and the aggregate maximum potential future payout for the performance measurement period for each executive is 23,550 shares. Any amount earned by the executive pursuant to the award will be paid in shares of our common stock after the end of the performance period. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
SUMMARY COMPENSATION TABLE
Also includes an award of 12,864 shares of restricted stock granted to each of Messrs. Cannon and Meyer on August 2, 2022 under our 2019 Equity Incentive Plan with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $800,012. These shares of restricted stock vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. This amount reflects the grant date fair value and may not correspond to the actual value that will be recognized. Refer to notes 2 and 10 to our consolidated financial statements in our annual report on Form 10-K for the 2022 fiscal year for a discussion of the relevant assumptions used in calculating the value. For a further description of the award, see the “Outstanding Equity Awards at Fiscal Year End” table below.
SUMMARY COMPENSATION TABLE
| (7) Includes aggregate awards granted by our compensation committee in 2021 under our Long-Term Incentive Plan for the performance period from January 1, 2021 to December 31, 2023 with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $647,976 determined based on the probable outcome of the award. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2021 fiscal year for a discussion of the relevant assumptions used in calculating the value. The amount |
SUMMARY COMPENSATION TABLE
| reflected was not actually received by the executive in 2021 and does not necessarily represent the amount that will actually be realized by the executive under the Long-Term Incentive Plan award. The amount actually earned under the Long-Term Incentive Plan award, if any, will not be earned until the end of the performance measurement period. The aggregate target potential future payout for the performance measurement period is 9,654 shares and the aggregate maximum potential future payout for the performance measurement period for each executive is 28,962 shares. Any amount earned by the executive pursuant to the award will be paid in shares of our common stock after the end of the performance period. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
SUMMARY COMPENSATION TABLE
Also includes an award of 9,532 shares of restricted stock granted to each of Messrs. Cannon and Meyer on August 3, 2021 under our 2019 Equity Incentive Plan with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $650,082. Of the 9,532 shares of restricted stock granted to each of Messrs. Cannon and Meyer, 2,200 fully vested on August 4, 2022 and 7,332 will fully vest on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. This amount reflects the grant date fair value and may not correspond to the actual value that will be recognized. Refer to notes 2 and 10 to our consolidated financial statements in our annual report on Form 10-K for the 2021 fiscal year for a discussion of the relevant assumptions used in calculating the value. For a further description of the award, see the “Outstanding Equity Awards at Fiscal Year End” table below.
SUMMARY COMPENSATION TABLE
| (8) Represents the amount of our contributions to the executive’s 401(k) plan. |
SUMMARY COMPENSATION TABLE
| (9) Mr. Meyer was promoted to the position of Executive Vice President, Chief Operating Officer on January 8, 2024. Prior to January 8, 2024, Mr. Meyer served as our Executive Vice President. |
GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS The table below contains information regarding each grant of a plan-based award made to each of our named executive officers during 2023.
GRANTS OF PLAN-BASED AWARDS
| | Estimated Future Payouts under Equity Incentive Plan Awards (1) | | | | | | Name | Aggregate Target# of Shares | Aggregate Maximum # of Shares | Grant Date Fair Value of Equity Incentive Plan Award ($) | All other Stock Awards: Number of Shares of Stock (#) (2) | Grant Date Fair Value of Stock Awards ($) | | W. Blake Baird | 34,938 | 104,814 | 2,736,873 | 25,489 | 4,236,901 (3) | | Michael A. Coke | 34,938 | 104,814 | 2,736,873 | 25,489 | 4,236,901 (3) | | Jaime J. Cannon | 13,976 | 41,928 | 1,095,439 | 11,046 | 1,745,496 (4) | | John T. Meyer | 13,976 | 41,928 | 1,095,439 | 11,046 | 1,745,496 (4) |
GRANTS OF PLAN-BASED AWARDS
| (1) Amounts presented represent potential future payouts under our Long-Term Incentive Plan awards granted by our compensation committee on January 6, 2023 for the performance measurement period from January 1, 2023 to December 31, 2025. The size of the actual awards, if any, will depend on our achievement of specified performance metrics during and through the end of the performance period. Actual awards, if earned, will be paid out in shares of our common stock in early 2026. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see footnotes 2 and 5 to the “Summary Compensation Table” above and “Long-Term Incentive Plan” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
GRANTS OF PLAN-BASED AWARDS
| (2) Represents shares of restricted common stock that were issued on August 1, 2023. These shares of restricted stock vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
GRANTS OF PLAN-BASED AWARDS
| (3) Represents a grant date fair value, computed in accordance with FASB ASC Topic 718, of $2,736,873 determined based on the probable outcome of the award granted by our compensation committee in 2023 under our Long-Term Incentive Plan for the performance period from January 1, 2023 to December 31, 2025. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2023 fiscal year for a discussion of the relevant assumptions used in calculating the value. Refer also to footnote 2 to the “Summary Compensation Table” above. Also includes an award of 25,489 shares of restricted stock granted to each of Messrs. Baird and Coke on August 1, 2023 with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $1,500,028. Refer to notes 2 and 10 to our consolidated financial statements in our annual report on Form 10-K for the 2023 fiscal year for a discussion of the relevant assumptions used in calculating the value. Refer also to footnote 2 to the “Summary Compensation Table” above. |
GRANTS OF PLAN-BASED AWARDS
| (4) Represents a grant date fair value, computed in accordance with FASB ASC Topic 718, of $1,095,439 determined based on the probable outcome of the award granted by our compensation committee in 2023 under our Long-Term Incentive Plan for the performance period from January 1, 2023 to December 31, 2025. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2023 fiscal year for a discussion of the relevant assumptions used in calculating the value. Refer also to footnote 5 to the “Summary Compensation Table” above. Also includes an award of 11,046 shares of restricted stock granted to each of Messrs. Cannon and Meyer on August 1, 2023 with a grant date fair value, computed in accordance with FASB ASC Topic 718, of $650,057. Refer to notes 2 and 10 to our consolidated financial statements in our annual report on Form 10-K for the 2023 fiscal year for a discussion of the relevant assumptions used in calculating the value. Refer also to footnote 5 to the “Summary Compensation Table” above. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END The table below contains information regarding outstanding equity awards held by each of our named executive officers as of December 31, 2023.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| | Stock Awards | | | | | Name | Number of Shares that Have Not Vested | Market Value of Shares that Have Not Vested ($)(11) | Equity Inventive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Inventive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | W. Blake Baird | 20,235 16,440 14,663 28,944 25,489(1) (2) (3) (4) (5) | 1,268,127 1,030,295 918,930 1,813,920 1,597,396 | — — — — — —(12) | — — — — — —(12) | | | — | — | 19,324(13) | 1,211,035(14) | | | — | — | 34,938(15) | 2,189,564(14) | | Michael A. Coke | 20,235 16,440 14,663 28,944 25,489(1) (2) (3) (4) (5) | 1,268,127 1,030,295 918,930 1,813,920 1,597,396 | — — — — —(12) | — — — — —(12) | | | — | — | 19,324(13) | 1,211,035(14) | | | — | — | 34,938(15) | 2,189,564(14) | | Jaime J. Cannon | 10,118(6) | 634,095 | | | | | 8,220 7,332 12,864 11,046 — —(7) (8) (9) (10) | 515,147 459,496 806,187 692,253 — — | — 7,850 13,976(16) (13) (15) | — 491,960 875,876(16) (14) (14) | | John T. Meyer | 10,118(6) | 634,095 | | | | | 8,220 7,332 12,864 11,046 — —(7) (8) (9) (10) | 515,147 459,496 806,187 692,253 — — | — 7,850 13,976(16) (13) (15) | — 491,960 875,876(16) (14) (14) |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (1) Represents unvested shares of restricted common stock that were issued to Messrs. Baird and Coke, respectively, on July 26, 2019. On such date, Messrs. Baird and Coke were each granted 20,235 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (2) Represents unvested shares of restricted common stock that were issued to Messrs. Baird and Coke, respectively, on August 4, 2020. On such date, Messrs. Baird and Coke were each granted 16,440 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (3) Represents unvested shares of restricted common stock that were issued to Messrs. Baird and Coke, respectively, on August 3, 2021. On such date, Messrs. Baird and Coke were each granted 14,663 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (4) Represents unvested shares of restricted common stock that were issued to Messrs. Baird and Coke, respectively, on August 2, 2022. On such date, Messrs. Baird and Coke were each granted 28,944 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (5) Represents unvested shares of restricted common stock that were issued to Messrs. Baird and Coke, respectively, on August 1, 2023. On such date, Messrs. Baird and Coke were each granted 25,489 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (6) Represents unvested shares of restricted common stock that were issued to each of Messrs. Cannon and Meyer on July 26, 2019. On such date, Messrs. Cannon and Meyer were each granted 10,118 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (7) Represents unvested shares of restricted common stock that were issued to each of Messrs. Cannon and Meyer on August 4, 2020. On such date, Messrs. Cannon and Meyer were each granted 8,220 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (8) Represents unvested shares of restricted common stock that were issued to each of Messrs. Cannon and Meyer on August 3, 2021. On such date, Messrs. Cannon and Meyer were each granted 7,332 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (9) Represents unvested shares of restricted common stock that were issued to Messrs. Cannon and Meyer, respectively, on August 2, 2022. On such date, Messrs. Cannon and Meyer were each granted 12,864 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (10) Represents unvested shares of restricted common stock that were issued to Messrs. Cannon and Meyer, respectively, on August 1, 2023. On such date, Messrs. Cannon and Meyer were each granted 11,046 shares of restricted common stock, which vest with respect to 100% of the shares on the fifth anniversary of the grant date, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (11) The dollar amounts indicated under the “Market Value of Shares That Have Not Vested” column represent the fair value of the unvested shares of restricted common stock, calculated based on the closing price per share of our common stock on the last trading day of 2023 of $62.67. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (12) Subsequent to December 31, 2023, the compensation committee determined that the executives did not earn any shares under the Long-Term Incentive Plan for the performance period ending on December 31, 2023. Therefore, no amounts are reflected in the table with respect to such award. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (13) Represents the number of shares that would be paid to the executive under our Long-Term Incentive Plan for the performance measurement period ending on December 31, 2024, assuming the target performance measurements have been met at the end of such performance measurement period. The size of the actual award, if any, will depend on our achievement of specified performance metrics during and through the end of such performance period. Actual awards, if earned, are measured in a number of shares and will be paid out in shares of common stock in early 2025. For purposes of this table, the estimated dollar amount of the |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| aggregate target awards was calculated based on the closing price per share of common stock on the last day trading day of 2023 of $62.67. No actual shares have been issued to date pursuant to this award. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (14) The dollar amount indicated is the estimated dollar value of the applicable target Long-Term Incentive Plan award described in the “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” column and the related footnotes. No actual shares have been issued to date pursuant to such awards. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (15) Represents the number of shares that would be paid to the executive under our Long-Term Incentive Plan for the performance measurement period ending on December 31, 2025, assuming the target performance measurements have been met at the end of such performance measurement period. The size of the actual award, if any, will depend on our achievement of specified performance metrics during and through the end of such performance period. Actual awards, if earned, are measured in a number of shares and will be paid out in shares of common stock in early 2026. For purposes of this table, the estimated dollar amount of the aggregate target awards was calculated based on the closing price per share of common stock on the last day trading day of 2023 of $62.67. No actual shares have been issued to date pursuant to this award. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis – Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (16) Subsequent to December 31, 2023, the compensation committee determined that the executives did not earn any shares under the Long-Term Incentive Plan for the performance period ending on December 31, 2023. Therefore, no amounts are reflected in the table with respect to such award. |
STOCK VESTED TABLE
STOCK VESTED TABLE The following table sets forth the number of shares of common stock that vested and the aggregate dollar value realized as a result of the vesting of restricted stock during fiscal year 2023 with respect to our named executive officers. During fiscal year 2023, no shares of common stock vested with respect to Messrs. Cannon and Meyer.
STOCK VESTED TABLE
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting | Value Realized on Vesting ($) (1) | | W. Blake Baird | 13,456 | 791,886 | | Michael A. Coke | 13,456 | 791,886 |
STOCK VESTED TABLE
| (1) The value realized upon vesting was determined by multiplying the number of shares that vested by the price per share of our common stock at the time of vesting. |
NONQUALIFIED DEFERRED COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION Under the Deferred Compensation Plan, we allow a select group of management and our non-employee directors to defer receiving certain of their cash and equity-based compensation. Participants in the Deferred Compensation Plan who are employees may defer all or a portion of their annual base salaries and their annual cash bonuses. Participants who are non-employee directors may defer all or a portion of their cash directors’ fees. Employee participants may defer all or a portion of any performance share awards that they receive under our Long-Term Incentive Plan and 2019 Equity Incentive Plan, subject to certain restrictions. In addition, non-employee director participants may defer all or a portion of any unrestricted stock awards that they receive under our 2019 Equity Incentive Plan. Dividends paid, if any, on deferred equity awards will also be deferred under the Deferred Compensation Plan. Any amounts deferred are not included in the executive’s current taxable income and, therefore, are not currently deductible by us. In connection with this plan, the Company has established a “rabbi trust” overseen by an independent trustee (the “Rabbi Trust”) wherein the trustee is directed to make investments of the deferred cash amounts which track as closely as possible to those selected by each participant in order to generally match its liabilities to the participants under the deferred compensation plan with equivalent assets and thereby limit market risk. Generally, distributions under the Deferred Compensation Plan will be paid in the form of payment designated by the participant upon separation from service for any reason including death and retirement (or six months thereafter, in the case of any participant who is a “specified employee” within the meaning of Code Section 409A). Distributions may be paid either (i) as a lump sum payment or (ii) in annual installments over a five year or ten year period. Participants will designate their form of payment at the time of their initial deferral election and may not modify the form of payment designated in such election. The following table shows deferrals made by our named executive officers and non-employee directors to the Deferred Compensation Plan during the year ended December 31, 2023.
NONQUALIFIED DEFERRED COMPENSATION
| | Executive Contributions in 2023 ($) | Aggregate Earnings (Loss) in 2023 ($) (3) | Aggregate Distributions in 2023 ($) | Aggregate Balance at 12/31/2023 ($) (4) | | W. Blake Baird | 1,959,183(1) | 1,169,216 | — | 10,627,427 | | Michael A. Coke | 1,959,183(1) | 1,208,093 | — | 10,699,855 | | Jaime J. Cannon | 816,385(1) | 506,600 | — | 4,472,987 | | John T. Meyer | 816,385(1) | 498,038 | — | 4,462,438 | | Linda Assante | 125,008(2) | 35,519 | — | 365,285 | | David M. Lee (5) | 13,750 | 4,677 | (50,246) | 470,874 |
NONQUALIFIED DEFERRED COMPENSATION
| (1) Amounts represent the dollar value of the stock award granted under the Long-Term Incentive Plan with respect to the performance period that ended on December 31, 2022. Each of Messrs. Baird and Coke were issued 33,456 shares of common stock and each of Messrs. Cannon and Meyer were issued 13,941 shares of common stock in connection with the award. |
NONQUALIFIED DEFERRED COMPENSATION
| (2) Amounts include approximately $125,008 in the form of unrestricted common stock granted at the 2023 annual meeting of stockholders and deferral of cash fees paid during the year ended December 31, 2022. Such amounts are reflected in the table under the “Director Compensation” section below. |
NONQUALIFIED DEFERRED COMPENSATION
| (3) Aggregate earnings in 2023 represent the income and net unrealized gain or loss reported by the trustee of the Deferred Compensation Plan due to stock price appreciation of deferred shares and dividends credited to such shares. None of the earnings set forth in this column are considered above-market or preferential as determined under SEC rules, and, therefore, none of such amounts are reflected in the “Summary Compensation Table” or in the table under the “Director Compensation” section below. |
NONQUALIFIED DEFERRED COMPENSATION
| (4) The balances, if any, shown represent compensation already reported in the “Summary Compensation Table” in the proxy statement in recent years, except for any earnings that were not above-market or preferential as determined under SEC rules. |
NONQUALIFIED DEFERRED COMPENSATION
| (5) Mr. Lee served on our board of directors until the 2023 Annual Meeting of Stockholders on May 2, 2023. |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.”
PAY VERSUS PERFORMANCE
| | | | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for Chief Executive Officer (1) | Compensation Actually Paid to Chief Executive Officer (2) | | Summary Compensation Table Total for President (1) | Compensation Actually Paid to President (2) | | Average Summary Compensation Table Total for Non-PEO NEOs (3) | Average Compensation Actually Paid to Non-PEO NEOs (4) | | Total Shareholder Return (5) | MSCI U.S. REIT Index Total Shareholder Return (6) | Net Income (millions) (7) | FTSE Nareit Equity Industrial Index Total Stockholder Return (8) | | (a) | (b) | | (c) | (b) | | (c) | (d) | | (e) | (f) | (g) | (h) | (i) | | 2023 | $5,046,801 | | 4,277,319 | $5,046,801 | | 4,277,319 | $2,530,396 | | 2,225,627 | $113.65 | $113.96 | $150.7 | $119.27 | | 2022 | $4,429,691 | ($ | 1,627,319) | $4,429,691 | ($ | 1,627,319) | $2,316,211 | ($ | 156,194) | $68.87 | $75.71 | $197.2 | $72.42 | | 2021 | $3,840,303 | | 7,538,940 | $3,840,303 | | 7,538,940 | $2,065,884 | | 3,529,118 | $156.04 | $149.09 | $87.3 | $169.18 | | 2020 | $3,464,667 | | 5,681,333 | $3,464,667 | | 5,681,333 | $1,761,652 | | 2,444,185 | $111.56 | $93.96 | $79.4 | $113.26 |
PAY VERSUS PERFORMANCE
| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for each of Mr. Baird (our chief executive officer) and Mr. Coke (our president) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Executive Compensation Tables – Summary Compensation Table.” |
PAY VERSUS PERFORMANCE
| (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Baird and Mr. Coke, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Baird or Mr. Coke during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Baird and Mr. Coke’s total compensation for each year to determine the compensation actually paid: |
PAY VERSUS PERFORMANCE
| Year | Reported Summary Compensation Table Total for PEO ($) | Reported Value of Equity Awards ($) (a) | Equity Award Adjustments ($) (b) | Compensation Actually Paid to PEO ($) | | 2023 | 5,046,801 | (4,236,901) | 3,467,419 | 4,277,319 | | 2022 | 4,429,691 | (3,620,541) | (2,436,469) | (1,627,319) | | 2021 | 3,840,303 | (3,031,603) | 6,730,240 | 7,538,940 | | 2020 | 3,464,667 | (2,656,117) | 4,872,793 | 5,681,333 |
PAY VERSUS PERFORMANCE
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” columns in the Summary Compensation Table for the applicable year. |
PAY VERSUS PERFORMANCE
| (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; and (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
PAY VERSUS PERFORMANCE
| (3) The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers (“NEOs”) as a group (excluding Messrs. Baird and Coke, who have served as our chief executive officer and our president since 2010) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Jaime J. Cannon and John T. Meyer, (ii) for 2022, Jaime J. Cannon and John T. Meyer; (iii) for 2021, Jaime J. Cannon, Andrew T. Burke and John T. Meyer; and (iv) for 2020, Jaime J. Cannon, Andrew T. Burke and John T. Meyer. Andrew Burke served as our executive vice president and was considered a NEO in each of 2021 and 2020. Mr. Burke resigned on April 15, 2022. |
PAY VERSUS PERFORMANCE
| (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Messrs. Baird and Coke), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group for each year to determine the compensation actually paid, using the same methodology described above in footnote 2: |
PAY VERSUS PERFORMANCE
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Value of Equity Awards (a) | | Average Equity Award Adjustments (b) | | Average Compensation Actually Paid to Non-PEO NEOs | | | 2023 | $2,530,396 | ($ | 1,745,196) | | 1,440,727 | | 2,225,627 | | 2022 | $2,316,211 | ($ | 1,539,561) | ($ | 932,844) | ($ | 156,194) | | 2021 | $2,065,884 | ($ | 1,298,059) | | 2,761,293 | | 3,529,118 | | 2020 | $1,761,652 | ($ | 1,190,102) | | 1,872,635 | | 2,444,185 |
PAY VERSUS PERFORMANCE
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” columns in the Summary Compensation Table for the applicable year. |
PAY VERSUS PERFORMANCE
| (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; and (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
PAY VERSUS PERFORMANCE
| (5) Total Stockholder Return is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
PAY VERSUS PERFORMANCE
| (6) Represents the total stockholder return of the MSCI U.S. REIT Index TSR (RMS). |
PAY VERSUS PERFORMANCE
| (7) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
PAY VERSUS PERFORMANCE
| (8) Represents the total stockholder return of the FTSE Nareit Industrial Index. |
PAY VERSUS PERFORMANCE
Financial Performance Measures As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incenting our NEOs to increase the per share value of our enterprise for our shareholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:
PAY VERSUS PERFORMANCE
| • | Relative Total Stockholder Return or “TSR” as compared to the MSCI U.S. REIT Index and FTSE Nareit Equity Industrial Index |
PAY VERSUS PERFORMANCE
| • | Cash-basis same store net operating income |
PAY VERSUS PERFORMANCE
| • | Funds From Operations per share |
PAY VERSUS PERFORMANCE
| • | Capital Deployment and Disposition Volume |
PAY VERSUS PERFORMANCE
Analysis of the Information Presented in the Pay versus Performance Table As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Compensation Actually Paid and Total Stockholder Return The amount of compensation actually paid to Messrs. Baird and Coke and the average amount of compensation actually paid to the Company’s other NEOs as a group is aligned with the Company’s Total Stockholder Return over the three years presented in the table. The alignment of compensation actually paid with the Company’s TSR over the period presented is because a significant portion of the compensation actually paid to Messrs. Baird and Coke and to the other NEOs is comprised of equity awards. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” approximately 84% of Messrs. Baird and Coke’s direct compensation was at-risk equity, of which approximately 54% was variable incentive equity based solely on three-year total stockholder return outperformance under the Long-Term Incentive Plan and approximately 30% was variable incentive equity based on changes in stock price during the restricted stock vesting period. Compensation Actually Paid and Net Income As demonstrated by the preceding table, the amount of compensation actually paid to Messrs. Baird and Coke and the average amount of compensation actually paid to the Company’s other NEOs as a group is generally aligned with the Company’s net income over the three years presented in the table. While the Company does not use net income as a performance measure in the overall executive compensation program, the measure of net income is a contributor to the Company’s total stockholder return. Cumulative Total Stockholder Return of the Company and Cumulative Total Stockholder Return of the MSCI U.S. REIT Index and the FTSE NAREIT Industrial Index As demonstrated by the following table, the Company’s total stockholder return over the three year period presented was 17.8%, while the cumulative total stockholder return of the MSCI U.S. REIT Index was 23.8% and the FTSE Nareit Equity Industrial Index was 39.5%. The Company’s three-year total stockholder return underperformed the MSCI U.S. REIT index and the FTSE Nareit Equity Industrial Index. For more information regarding the Company’s performance and the companies that the Compensation Committee considers when determining compensation, refer to “Executive Compensation – Compensation Discussion and Analysis.”
PAY VERSUS PERFORMANCE
| | Total Stockholder Return | | | | Measurement Period | Terreno Realty Corporation | MSCI U.S. REIT Index (RMS) | FTSE Nareit Equity Industrial Index | | January 1, 2021 – December 31, 2023 | 17.8% | 23.8% | 39.5% |
PAYMENTS UPON TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
PAYMENTS UPON TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL Severance agreements that we have entered into with our named executive officers require us to make certain payments and provide certain benefits to them in the event of a termination of their employment under certain circumstances, including following a change of control of our company. This section provides a discussion of those payments and benefits, along with certain other terms of those agreements. Severance Agreements. We entered into severance agreements with Messrs. Baird and Coke. Under the severance agreements, in the event that we terminate the executive’s employment without “cause” or the executive resigns for “good reason” (as each term is defined in their respective severance agreement), the executive will be entitled to receive, subject to the executive’s execution of a general release of claims, a cash severance payment that is equal to the sum of (i) the executive’s then-current annual base salary and (ii) the amount of the target value for each of his outstanding awards under the Long-Term Incentive Plan with a performance measurement period that has not ended as of the executive’s date of termination. If such termination occurs within 12 months following a “change in control” (as defined in their respective severance agreement) of the Company, the cash severance payment that the executive will be entitled to receive is equal to two times the sum of (i) the executive’s then-current annual base salary and (ii) the greater of the target value or the calculated value as of the date upon which a change in control occurred for each of his outstanding awards under the Long- Term Incentive Plan with a performance measurement period that had not ended as of the change in control, with the change in control date being deemed the last day of the performance measurement period. In the case of such a change in control, the calculated value of each such outstanding award under the Long-Term Incentive Plan will be determined, if applicable, using a closing stock price (as defined under the Long-Term Incentive Plan) that is equal to the fair market value, as determined by the compensation committee, of the total consideration paid or payable in the transaction resulting in the change in control for one share of our common stock. In addition, in the event that we terminate the executive’s employment without cause or the executive resigns for good reason, the executive will be eligible to continue to participate, subject to his copayment of premium amounts at the active employees’ rate, in the Company’s group health, dental and vision programs for a period of 18 months following termination. Under the terms of the severance agreements with Messrs. Baird and Coke, in the event either the executive’s employment is terminated on account of his death or disability, he is entitled to receive (or his estate in the case of death) a cash payment equal to the sum of the target value of each of his outstanding awards under the Company’s Long-Term Incentive Plan with a performance measurement period that has not ended as of the executive’s date of termination, subject to the executive’s execution of a general release of claims in the case of a termination due to disability. We also have severance agreements with each of Messrs. Cannon and Meyer that provide that, in the event that we terminate the executive’s employment without “cause” or the executive resigns for “good reason” (as each term is defined in their respective severance agreement), the executive will be entitled to receive, subject to the executive’s execution of a general release of claims, a cash severance payment that is equal to the sum of (i) the executive’s then-current annual base salary and (ii) the amount of the target value for each of his outstanding awards under the Long-Term Incentive Plan with a performance measurement period that has not ended as of the executive’s date of termination. If such termination occurs within 12 months following a “change in control” (as defined in their respective severance agreement) of the Company, the cash severance payment that the executive will be entitled to receive is equal to the sum of (i) the executive’s then-current annual base salary and (ii) the greater of the target value or the calculated value as of the date upon which a change in control) occurred for each of his outstanding awards under the Long-Term Incentive Plan with a performance measurement period that had not ended as of the change in control, with the change in control date being deemed the last day of the performance measurement period. In the case of such a change in control, the calculated value of each such outstanding award under the Long-Term Incentive Plan will be determined, if applicable, using a closing stock price (as defined under the Long-Term Incentive Plan) that is equal to the fair market value, as determined by the compensation committee, of the total consideration paid or payable in the transaction resulting in the change in control for one share of our common stock. In addition, in the event that we terminate the executive’s employment without cause or the executive resigns for good reason, the executive will be eligible to continue to participate, subject to his copayment of premium amounts at the active employees’ rate, in the Company’s group health, dental and vision programs for a period of 18 months following termination. Under the terms of the severance agreements with Messrs. Cannon and Meyer, if the executive’s employment is terminated on account of his death or disability, the cash severance payment he is entitled to receive is equal to the sum of the target value of each of his outstanding awards under the Long-Term Incentive Plan with a performance measurement period that has not ended as of the executive’s date of termination, subject to the executive’s execution of a general release of claims in the case of a termination due to disability. In addition, under the terms of the severance agreements with Messrs. Baird, Coke, Cannon and Meyer, in the event that the executive’s employment is terminated under the scenarios above, all of his time-based restricted stock will fully vest. No payments will be made to compensate Messrs. Baird, Coke, Cannon or Meyer for additional taxes, if any, imposed under Section 4999 of the Code for receipt of excess parachute payments. In addition, under the scenarios above, Messrs. Baird, Coke, Cannon and Meyer are entitled to receive any earned but unpaid base salary and any earned but unpaid incentive compensation (if any). The severance agreements with Messrs. Baird, Coke, Cannon and Meyer provide that during the term of the executive’s employment and for 12 months after the termination of his employment for any reason, the executive has agreed not to solicit our employees to leave their employment with us or to solicit any customer or supplier to terminate or otherwise modify adversely its business relationship with us. The following table sets forth the amounts that would have been paid to our named executive officers (i) upon death or disability; (ii) in the event of a termination by us without “cause” or by the executive for “good reason” other than in connection with a “change in control”; and (iii) in the event of a termination by us without “cause” or by the executive for “good reason” within 12 months after a “change in control”; in each case, occurring as of December 31, 2023.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Our board of directors has approved a compensation program for our independent directors in the form of cash and equity awards. We pay an annual fee of $55,000 to our independent directors, which is payable quarterly in cash. In addition, we reimburse our directors for reasonable out-of-pocket expenses incurred in connection with performance of their duties as directors, including, without limitation, travel expenses in connection with their attendance at board and committee meetings. We also reimburse our directors for approved director education programs. Our directors do not receive any perquisites or above-market nonqualified deferred compensation plan earnings. Our non-employee directors may elect, in accordance with our Deferred Compensation Plan, to defer all or a portion of their annual fees and their unrestricted stock awards that they receive under the 2019 Equity Incentive Plan. See “Nonqualified Deferred Compensation” for more information. In connection with the 2023 annual meeting of stockholders, each of our independent directors received approximately $125,008 in the form of unrestricted common stock. The following table summarizes the compensation of our non-employee directors in 2023. Messrs. Baird and Coke receive no compensation for their service as directors, and the compensation received by Messrs. Baird and Coke as employees during 2023 is presented in the “Summary Compensation Table” above.
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1)(2) | Total ($) | | Linda Assante | 55,000 | 125,008 | 180,008 | | Gary N. Boston | 55,000 | 125,008 | 180,008 | | LeRoy E. Carlson | 55,000 | 125,008 | 180,008 | | David M. Lee (3) | 13,750 | — | 13,750 | | Irene H. Oh | 55,000 | 125,008 | 180,008 | | Douglas M. Pasquale | 55,000 | 125,008 | 180,008 | | Dennis Polk | 55,000 | 125,008 | 180,008 |
DIRECTOR COMPENSATION
| (1) Amounts reflect the grant date fair value of the unrestricted stock awards granted to our non-employee directors in 2023 computed in accordance with FASB ASC Topic 718. |
DIRECTOR COMPENSATION
| (2) None of our non-employee directors held unvested equity awards as of December 31, 2023. |
DIRECTOR COMPENSATION
| (3) Represents fees earned through the 2023 Annual Meeting of Stockholders held on May 2, 2023. Mr. Lee did not stand for re-election at the 2023 Annual Meeting of Stockholders. |