DEF 14A of Tejon Ranch Co
Filed Mar 28, 2024 · FY20230001193125-24-080637
THE ELECTION OF DIRECTORS
THE ELECTION OF DIRECTORS The Board currently consists of eight directors whose terms expire at the 2024 Annual Meeting. Each director, if elected, shall hold office until the next annual meeting and will serve until his or her successor is elected and qualified, or until his or her earlier death, resignation, or removal. The nominees of the Board for election at the 2024 Annual Meeting are Steven A. Betts, Gregory S. Bielli, Anthony L. Leggio, Norman J. Metcalfe, Rhea Frawn Morgan, Geoffrey L. Stack, Daniel R. Tisch, and Michael H. Winer. Each of the nominees is currently a director of the Company. All directors were last elected by shareholders at the 2023 Annual Meeting of Shareholders. Shareholder nominations of persons for election to the Board must be made pursuant to timely written notice to the Secretary of the Company pursuant to, and contain the information required by, the Company’s Certificate of Incorporation and Bylaws. See “Shareholder Proposals for 2025 Annual Meeting” for additional information on the procedure for shareholder nominations. Except as noted below, each proxy solicited by and on behalf of the Board will be voted “FOR” the election of the nominees named above (unless such authority is withheld, as provided in the proxy), and unless otherwise instructed, one-eighth of the votes to which the shareholder is entitled will be cast for each of the nominees. All of the nominees of the Board have consented to being named in this Proxy Statement and to serve if elected. In the event that any one or more of the nominees shall become unable to serve or for good cause refuses to serve as director (an event that is not anticipated), the proxy holders will vote for substitute nominees in their discretion. If one or more persons other than those named below as nominees for the 2024 Annual Meeting are nominated as candidates for director by persons other than the Board, the enclosed proxy may be voted in favor of any one or more of said nominees of the Board and in such order of preference as the proxy holders may determine in their discretion.
Consideration of Director Nominees
Consideration of Director Nominees The Board believes the Board, as a whole, should possess the requisite combination of skills, professional experience, and diversity of backgrounds to oversee the Company’s business. The Board also believes that each individual director should possess certain attributes, as discussed below. Accordingly, the Board and the Nominating and Corporate Governance Committee (the “Nominating Committee”) consider the qualifications of directors and director candidates individually, as well as in the broader context of the Board’s overall composition and the Company’s current and future needs. The Nominating Committee is responsible for selecting nominees for election to the Board. In considering candidates for the Board, the Nominating Committee evaluates the entirety of each candidate’s credentials, attributes, and other factors (as described in greater detail in the Company’s Corporate Governance Guidelines) but does not have any specific minimum qualifications that a nominee must meet. However, the Nominating Committee seeks as director’s individuals with substantial management experience who possess the highest personal values, judgment, and integrity; an understanding of the environment in which the Company does business; and diverse experience with the key business, financial, and other challenges that the Company faces. In addition, in considering the nomination of existing directors, the Nominating Committee takes into consideration (i) each director’s contribution to the Board; (ii) any material change in the director’s employment or responsibilities with any other organization; (iii) the director’s ability to attend meetings and fully participate in Board and committee activities on which the director serves; (iv) whether the director has developed any relationships with the Company or another organization, or other circumstances that may have arisen, that might make it inappropriate for the director to continue serving on the Board; and (v) the director’s age and length of service on the Board. The Nominating Committee recognizes that a diversity of backgrounds and cultures, including on the basis of gender, race, ethnicity, underrepresented communities, viewpoints, and practical experiences, can enhance the effectiveness of the Board, and analyzes this as a part of its evaluation of each candidate. The Nominating Committee takes into account how each candidate’s diversity, background, experience, qualifications, attributes, and skills may complement, supplement, or duplicate those of other prospective candidates. The Nominating Committee reviews its effectiveness in balancing these considerations when assessing the composition of the Board, which as discussed below is one of the committee’s responsibilities. In addition, the Board is committed to having a membership that reflects a diversity of ethnicity, race, and gender. Based on the parameters described above, the Board has determined that the directors standing for reelection have the qualifications, experience, and attributes appropriate for a director of the Company. As reflected below, each director has a varied background in the real estate industry, finance, public policy and/or agriculture. These are all areas that are integral to the strategy, operations, and successful oversight of the Company.
Board Composition and Leadership Structure
Board Composition and Leadership Structure The Board is currently composed of eight directors whose terms will expire at the 2024 Annual Meeting. The Board’s leadership is structured so that the Chairman of the Board and Chief Executive Officer (“CEO”) are separate positions. The Chairman of the Board is also an independent director. The Board believes that this structure is appropriate for our Company and our shareholders at this time because it provides an additional layer of managerial oversight and risk management as to management and management’s activities and allows the Board to act independently of management. The Board believes Mr. Metcalfe’s finance background and capital structure experience within the real estate industry at a time when the Company will be evaluating various new sources of capital make him qualified to serve as Chairman of the Board at this time.
Director Qualifications and Biographical Information
Director Qualifications and Biographical Information The Nominating Committee considered the character, experience, qualifications, and skills of each director, including the current director nominees, when determining whether each should serve as a director of the Company. In keeping with its stated criteria for director nominees described in the section entitled “Consideration of Director Nominees” above, the Nominating Committee determined that each director has substantial management experience, exhibits the highest personal values, judgment, and integrity, and possesses both an understanding of the environment in which the Company does business and diverse experience with the key business, financial, and other challenges that the Company faces. Each director is or has been a leader in his or her respective field and brings diverse talents and perspectives to the Board. The Nominating Committee also considered the experience and qualifications outlined below in the biographical information for each director, including the current director nominees, as well as other public company board service. The Nominating Committee noted the following particular attributes and qualities it considers when evaluating director nominees. The Nominating Committee believes that nominees with business, governmental, and strategic management experience gained from service as a chief executive officer or similar position is a critical leadership component to Board service. The Nominating Committee also seeks nominees with backgrounds in finance, banking, economics, public administration, legal, and the securities and financial markets, in order to have directors who can assess and evaluate the Company’s financial and competitive position. Although the directors listed below each possess a number of these attributes, the Nominating Committee considered the specific areas noted below for each director when determining which of the director’s qualifications best suit the needs of the Company and qualify them to serve as a director of the Company.
Key Qualifications, Characteristics and Skills of Our Directors
Key Qualifications, Characteristics and Skills of Our Directors
Key Qualifications, Characteristics and Skills of Our Directors
| | Independent | Leadership | Industry | Operating & Investment | Financial | Business Development | Corporate Governance & Law | Other Boards | | Betts, Steven A. | ● | ● | ● | | | ● | ● | ● | | Bielli, Gregory S. | | ● | ● | ● | ● | ● | | ● | | Leggio, Anthony L. | ● | ● | ● | | ● | ● | ● | ● | | Metcalfe, Norman J. | ● | ● | ● | ● | ● | | | ● | | Morgan, Rhea Frawn | ● | ● | ● | ● | ● | | | | | Stack, Geoffrey L. | ● | ● | ● | ● | | ● | | ● | | Tisch, Daniel R. | ● | ● | | ● | ● | | | ● | | Winer, Michael H. | ● | ● | ● | ● | ● | | | ● |
Key Qualifications, Characteristics and Skills of Our Directors
The following table sets forth information regarding the nominees for directors at the 2024 Annual Meeting.
Key Qualifications, Characteristics and Skills of Our Directors
| | Director Since | Age | | Steven A. Betts | 2014 | 66 | | Mr. Betts is Managing Director of Development for Holualoa Companies, a 36-year-old real estate investment and development company with three-quarters of a billion dollars in commercial, multifamily and hospitality assets held and under development all across the U.S. and in Europe. He has held this position since August 2020. Prior to this, he served as a strategic advisor to Holualoa since 2015. Mr. Betts is also President of Betts Real Estate Advisors, a consulting company he founded in 2017. He has served as a strategic advisor to the Southwest Division of Hines, one of the largest commercial investment and development companies in the world, since 2015; as a strategic advisor to Concord Wilshire Capital, a hospitality and residential investor and developer in Florida and California since 2020. He is the Chairman of University Realty, a subsidiary of Enterprise Partners, an affiliate of Arizona State University. He was also the Director of Development for Chanen Development Company, an affiliate of Chanen Construction, headquartered in Phoenix, from November 2013 to the end of 2018. Briefly, from June to October 2013, he served as the interim CEO of the PhoenixMart project. Mr. Betts also served as the Senior Vice President and Managing Director of Assets for the ASU Foundation from March 2012 through May 2013. Prior to these endeavors, Mr. Betts was President and CEO of SunCor Development Company (“SunCor”) from 2005 to 2010, a half-billion-dollar-plus asset-based subsidiary of the publicly traded Pinnacle West Capital Corporation. SunCor was a developer of master planned communities throughout the Mountainwest and large-scale commercial projects in Metropolitan Phoenix. Mr. Betts holds numerous private board and committee posts, including Chairman of the Board of University Realty, a subsidiary company of Arizona State University’s Enterprise Partners, the Executive Committee and Board of the Greater Phoenix Economic Council, Board member of the Arizona Community Foundation, Board Member of the McCain Institute for International Leadership, Trustee and Past Chairman of the Arizona Chapter of The Nature Conservancy, member and a past-Chairman of the Urban Land Institute-Arizona District Council and Governance Committee. Mr. Betts received his law degree with honors from DePaul University and a B.A. with honors from Augustana College. Our Board believes that Mr. Betts’ master planned community, multi-family, and commercial development background makes him very qualified to serve as a director. | | | | Gregory S. Bielli | 2013 | 63 | | Mr. Bielli is President and CEO of Tejon Ranch Co., a position he’s held since December 2013 and from which he intends to retire on December 31, 2024. Prior to this position, Mr. Bielli served as the Chief Operating Officer for the Company from September 2013 through November 2013. Mr. Bielli has over 30 years of experience in real estate, land acquisition, development, and financing. Prior to Tejon Ranch, he was a regional president of Newland Communities, one of the country’s largest and most successful master planned community developers. Mr. Bielli served as President of Newland’s Western Region from 2006 until September 2013. Mr. Bielli earned a bachelor’s degree in political science from the University of Arizona in 1983. Mr. Bielli is currently a member of the CalChamber Executive Committee (Chairman), Member of the Executive Board of Southern California Leadership Council (Co-Chairman); and a member of ULI’s Community Development Council. Our Board believes Mr. Bielli’s experience in real estate operations, specifically master planned communities, and his position as CEO of the Company, makes him well qualified to serve as a director. | | |
Key Qualifications, Characteristics and Skills of Our Directors
| | Director Since | Age | | Anthony L. Leggio | 2012 | 71 | | Mr. Leggio has been President of Bolthouse Properties, LLC, a diversified real estate development company with commercial, residential, and agricultural holdings since January 2006. Prior to serving at Bolthouse Properties, Mr. Leggio served as Vice President and General Counsel of Wm. Bolthouse Farms from July 2001 until December 2005. Previously, Mr. Leggio was Managing Partner of the law firm of Clifford and Brown for nearly 25 years. Mr. Leggio served as a director of Valley Republic Bank from 2008 until its merger with Tri Counties Bank in March 2022. Since the merger he has been a director of Tri Counties Bank. Mr. Leggio also serves as a director of private companies Three Way Chevrolet Company since 2000, H.F. Cox Trucking since 1993, Mark Christopher Chevrolet since 2001, and W.B. Camp Companies since 2009. Mr. Leggio received his B.S. degree from the University of the Pacific and his J.D. from the University of the Pacific, McGeorge School of Law. Our Board believes Mr. Leggio’s real estate development and agricultural experience, his tenure as chief executive officer of a real estate development company and his legal experience make him well qualified to serve as a director. | | | | Norman J. Metcalfe | 1998 | 81 | | Mr. Metcalfe has served as Chairman of the Company’s Board of Directors since 2014. Mr. Metcalfe has an extensive history and background in real estate development and homebuilding. He previously was Vice Chairman and Chief Financial Officer of The Irvine Company, one of the nation’s largest real estate and community development companies. Mr. Metcalfe retired from The Irvine Company in 1997. Prior to The Irvine Company, Mr. Metcalfe spent over 20 years in various real estate, corporate finance, and investment positions with the Kaufman and Broad/SunAmerica family of companies. These positions included President and Chief Investment Officer of SunAmerica Investments and Chief Financial Officer of Kaufman and Broad Home Corporation (currently known as KB Home). Mr. Metcalfe served as a director of CalAtlantic Homes from 2000 until February 2018. Mr. Metcalfe received a B.S. and an M.B.A. from the University of Washington. Our Board believes Mr. Metcalfe’s extensive financial experience, understanding of capital structure within the real estate industry, and experience in publicly held companies make him very qualified to serve as a director. | | | | Rhea Frawn Morgan | 2021 | 67 | | Ms. Morgan is the retired Managing Member and Chief Executive of LDC Advisors, LLC. from 2015-2023. LDC Advisors is a real asset advisory firm specializing in advisory and management of large-scale real estate development projects for private and institutional owners. She is a real estate development and advisory professional who has been responsible throughout her career for more than $10 billion of assets owned by institutional investors, including private equity and public pension funds. From 2008-2014, operating as an independent fiduciary, Ms. Morgan managed a multi-billion-dollar investment portfolio invested in real estate assets including master planned communities under development, active adult/resort projects, land in various stages of entitlement and planning, and raw land held for future development. Ms. Morgan has multiple master’s degrees from the University of Pennsylvania and Northeastern University in Boston, MA, and a Doctor of Education degree in Organizational Leadership from Northeastern. She is a member of the Urban Land Institute’s Women’s Leadership Initiative District Council, the Women’s Housing Leadership Group, and the National Association of Women in Real Estate Businesses. Our Board believes that Ms. Morgan’s master planned community development background and experience with private equity and public pension funds makes her qualified to serve as a director. | | |
Key Qualifications, Characteristics and Skills of Our Directors
| | Director Since | Age | | Geoffrey L. Stack | 1998 | 80 | | Mr. Stack is one of the Founding Partners of the Sares-Regis Group, a commercial and residential real estate development and management firm since its inception in 1993. He currently sits on the Investment Committee for the Company. Mr. Stack was responsible for all residential operations of Sares-Regis, including development, acquisitions, finance, and management activities until 2018. Mr. Stack graduated from Georgetown University and received an M.B.A. in Real Estate Finance at the Wharton School, University of Pennsylvania. Mr. Stack is a past trustee of the Urban Land Institute (“ULI”) and the former Chairman of the ULI Foundation. He is also the past Chairman of the National Multifamily Housing Council. Our Board believes Mr. Stack’s real estate development experience and his experience as the managing director of a real estate company make him well qualified to serve as a director. | | | | Daniel R. Tisch | 2012 | 73 | | Mr. Tisch has been the managing member of TowerView LLC, an investment fund of the Tisch Family, since 2001. Since January 2012, Mr. Tisch has also served as a director of Vornado Realty Trust, a real estate investment trust. Mr. Tisch graduated from Brown University and has over 45 years of investing experience. Mr. Tisch worked for major Wall Street firms from 1973 to 1989 and has been managing investment partnerships since then. Our Board believes that Mr. Tisch’s investment industry background and his experience in capital raising and risk management make him well qualified to serve as a director. | | | | Michael H. Winer | 2001 | 68 | | Mr. Winer was employed as a senior investment manager by Third Avenue Management LLC (or its predecessor), a New York City-based asset manager, from 1994 through 2018, when he retired. Mr. Winer managed The Third Avenue Real Estate Value Fund, an open-end mutual fund that invests in the securities of publicly traded real estate and real estate-related companies in developed countries, by adhering to a strict value-investing approach. Mr. Winer has no continuing affiliation with Third Avenue Management LLC or the Third Avenue Real Estate Value Fund. From 2009 through 2016, Mr. Winer served as a director of Newhall Holding Company LLC. In 2016, Newhall merged with two other California master-planned communities. Since the merger in May 2016, Mr. Winer has served as a director of the merged entity, Five Point Holdings LLC, where he is the Chair of the Compensation Committee and serves on the Audit Committee and Nominating and Corporate Governance Committee. He also has served as a director of private company 26900 Newport Inc. since 1998. Since 2016, Mr. Winer has been a member of the Board of Trustees of two not-for-profit organizations: The Pacific Legal Foundation (from which he resigned in September of 2018) and the Future Citizens Foundation (dba The First Tee of Monterey County). Mr. Winer received a B.S. degree in accounting from San Diego State University and is a certified public accountant in California (inactive). Our Board believes that Mr. Winer’s investment industry background and specifically, his experience with real estate investing, make him very qualified to serve as a director on our Board. | | |
Executive Summary
| 1) | Given the long-term nature of our assets, attracting and retaining talented executives oriented towards real estate development is particularly important to the long-term health of our business. We develop our peer group recognizing that the competitive market for talent primarily consists of companies that are farther along in the development process than we are. As such, those companies typically have higher revenue than our current revenue, so we use market capitalization as the primary metric. |
Pay-for-Performance
| • | Annual Cash Incentives. Decreases in total revenue from a lack of real estate sales, lower water sales, and reductions from equity in earnings of unconsolidated joint ventures led to positive adjusted EBITDA, the annual corporate incentive bonus quantitative metric, to be at 92% of target. This metric is discussed further below under “Annual Incentive Plan.” |
Pay-for-Performance
| • | Annual Short-term Milestone Objectives. Short-term milestones that are critical to the achievement of the Company’s long-term growth objectives are generally identified each year. For 2023, there were four milestone objectives with one achieved at a maximum level and three achieved at target levels. More information is provided on these milestone objectives within the Annual Incentive Plan section. |
Pay-for-Performance
| • | 2021-2023 Price-Vested Units. The NEOs failed to meet the 2021 price vesting unit price appreciation objectives, as the stock price at December 31, 2023 was less than the target price of $20.20. As a result, no Price Vested Unit grants vested. Price Vested Units are measured at year-end with vesting typically the following March. The Price-Vested Units are described in the Equity Compensation section. |
Overview
Overview Our executive compensation program is designed to align with our strong pay-for-performance philosophy and ties a substantial portion of executive compensation to the achievement of annual and long-term strategic objectives directly linked to the creation of shareholder value. The objectives of our executive compensation program are (i) to drive performance against critical strategic milestone goals designed to create long-term shareholder value through the enhancement of our land asset values and positive execution within TRCC and our other operating assets (ii) pay our executives at a level and in a manner that ensures Tejon Ranch is capable of attracting, motivating, and retaining top executive talent in order for us to achieve our long-term strategic goals and recognize the full potential of our real estate assets. Our compensation strategy is to provide a competitive opportunity for senior executives, taking into account their total compensation packages, which include a combination of base salary, an annual cash-based incentive bonus, and long-term performance-based and time-based equity awards. Our long-term and short-term performance incentive plans are designed to reward the NEOs for success in moving projects forward along the real estate development continuum. Success in achieving these performance objectives is critical to the creation of value within our land assets. Due to the long-term nature of the real estate development process in California, the increase in value of land within our projects is not immediately recognized in stock market value largely due to the timing of revenue generation, which does not begin to occur until the execution phase of development operations. Therefore, we measure, and reward, progress based on achievement of milestone related goals as a large component of our incentive program. We also measure success on annual EBITDA performance, because generating EBITDA allows us to fund our real estate development activities. We view our long-term incentive program in three-year increments tied to the time period of our milestone grants, which we make every three years. Our performance milestones are tied to a variety of factors that will create long-term value for our shareholders such as planning and design, achievement of land entitlements, capital acquisition, successful defense of litigation against our entitlements, development of projects, and finally sales and leasing within the projects. The current three-year performance milestone period is from 2023 through 2025.
Our Executive Compensation Practices
| WHAT WE DO | WHAT WE DO NOT DO | | ✓ Utilize multiple performance metrics in our incentive plans tied to our short- and long-term goals equity vehicles | • No tax gross-ups for executive officers on perquisites or change-in-control-related payments | | ✓ Employ objective short-term goals for the majority of our NEOs’ annual incentive opportunities | • No hedging of TRC stock | | ✓ Provide a majority of equity compensation opportunity through performance-based compensation elements | • No pledging of TRC stock | | ✓ Align a significant portion of long-term equity opportunity to project milestones that are linked to shareholder value creation | • No holding of TRC stock in margin accounts | | ✓ Maintain an executive compensation recovery (clawback) policy, consistent with SEC and NYSE requirements, to ensure accountability | • No repricing or replacing underwater equity awards without stockholder approval | | ✓ Require executives and directors to own Company stock to reinforce the alignment of their interests with those of our shareholders | • No “single trigger” cash severance or stock grant vesting based solely upon the occurrence of a change in control. | | ✓ Utilize an independent compensation consultant who reports directly to the Compensation Committee | • No large bonus payouts without justifiable performance linkage | | ✓ Recognize an independent Chairman of the Board in our corporate governance structure | • No guaranteed annual incentive payout | | ✓ Provide an annual shareholder “say on pay” vote | • No timing of equity awards in coordination with the release of material non-public information | | ✓ Conduct an Annual Compensation Risk Assessment | • No excessive perquisites |
Our Executive Compensation Practices
| Pay Principals | Long–term Incentives | Annual Cash Incentives | Base Pay | Benefits | | Total compensation should reinforce business objectives and values. | ● | ● | ● | ● | | A significant portion of a NEO’s total compensation should be variable and based on company and individual performance. | ● | ● | | | | Incentive compensation should balance long-term, intermediate, and short-term performance. | ● | ● | | | | Incentive compensation should align the interests of NEO’s with shareholders. | ● | ● | | | | Compensation should foster a culture of collaboration, which shares focus and commitment to our Company | ● | ● | | | | Compensation opportunities should be competitive. | ● | ● | ● | ● | | A portion of compensation should provide NEOs with a stable predictable source of income and benefits. | | | ● | ● |
2023 Executive Compensation Plan Framework
| 3. | Time-vested restricted stock units are the final component of our LTIP. This element in the plan design recognizes the inherent risk in the approval of and development execution of large-scale land development and helps balance the performance orientation of our approach with the objective of retaining our executive team. Further, time vested restricted stock units underscore an ownership orientation on the part of our executives. The grants vest one-third each year for three years, subject to continued employment or service with us on each applicable vesting date. This component of our LTIP delivers 50% of the long-term compensation opportunity for the CEO and 30% of the long-term compensation for the other NEOs. |
The Role of the Compensation Consultant
The Role of the Compensation Consultant The Compensation Committee engages an independent compensation consultant each year to provide a competitive compensation assessment with respect to the executive officers to assist the Compensation Committee in making annual compensation decisions. Since 2018, Semler Brossy Consulting Group, LLC (“Semler Brossy”), has been engaged by the Compensation Committee each year to provide industry compensation data, and to provide the Compensation Committee with advice regarding NEOs’ compensation, including base salaries, annual incentive pay and long-term equity compensation, and similar advice regarding non-employee directors’ compensation. The Compensation Committee has also consulted with Semler Brossy to update the peer company compensation data on an annual basis and address specific questions that arise as the committee fulfills their responsibilities as outlined in the compensation committee charter. The advisor provides support in addressing changes in trends and best practices for executive compensation, incentive, and equity and/or other best practices that are requested by the Compensation Committee, in order to help inform the Compensation Committee’s decisions. Semler Brossy reports directly to the Compensation Committee, which maintains the authority to direct Semler Brossy’s work and engagement. Semler Brossy interacts with management to gain access to company information that is required to perform services and to understand the culture and policies of the organization. Semler Brossy attends compensation committee meetings, and the Compensation Committee and Semler Brossy meet in executive session with no members of management present, as needed, to address various compensation matters, including deliberations regarding our CEO’s compensation. In assessing Semler Brossy’s independence from management in providing executive compensation services to the Compensation Committee, the Compensation Committee considered that Semler Brossy is only engaged by, takes direction from, and reports to, the Compensation Committee for such services and, accordingly, only the Compensation Committee has the right to terminate or replace Semler Brossy as its compensation consultant at any time. The Compensation Committee also analyzed whether the work of Semler Brossy as a compensation consultant with respect to executive and director compensation raised any conflict of interest, taking into consideration the following factors:
The Role of the Compensation Consultant
| ✓ the provision of other services to our company by Semler Brossy and its affiliates; | | ✓ the amount of fees we paid to Semler Brossy and its affiliates as a percentage of Semler Brossy’s total revenue; | | ✓ any business or personal relationship of Semler Brossy or the individual compensation advisors employed by it with any executive officer of our company; | | ✓ any business or personal relationship of the individual compensation advisors with any Compensation Committee member; | | ✓ Semler Brossy’s policies and procedures that are designed to prevent conflicts of interest; and | | ✓ any ordinary shares of our company owned by Semler Brossy, or the individual compensation advisors employed by it. |
The Role of the Compensation Consultant
The Compensation Committee has determined, based on its analysis of the above factors, that the work of Semler Brossy and the individual compensation advisors employed by Semler Brossy as compensation consultants to our company has not created any conflict of interest.
Compensation Risk Assessment
| ✓ Annual incentive awards for each NEO are limited to the fixed maximum specified in the incentive plan. Cash awards under the annual incentive plan are limited to 150% of the target cash award. | | ✓ Annual incentive awards are based on a review of a variety of performance factors, thus diversifying the risk associated with any single aspect of performance, while amounts received from performance stock awards are based on Company results rather than an individual executive officer’s performance | | ✓ The variable compensation program places a greater weight on long-term pay opportunity as compared to short-term opportunity. | | ✓ The annual incentive plan allocates the highest weighting on overall corporate performance. | | ✓ Stock awards are not tied to formulas that could focus our NEOs on driving specific short-term outcomes. | | ✓ The Compensation Committee, which is composed of independent members of our Board, approves final incentive plan cash and stock awards in its discretion after reviewing executive and corporate performance. | | ✓ All incentive awards are subject to our clawback policy. | | ✓ The majority of long-term value is delivered in shares of the Company with a multi-year vesting schedule, which aligns the interests of our NEOs to the long-term interests of shareholders. | | ✓ NEOs are subject to our executive stock ownership requirements. |
Market Comparison Review—2023 Peer Group
Market Comparison Review—2023 Peer Group Because we aim to attract and retain the most highly qualified executive officers in an extremely competitive market, the Compensation Committee believes that it is important when making its compensation decisions to be informed as to the current practices of comparable public companies with which we compete for top talent. To this end, the Compensation Committee reviews market data for each executive officer’s position, compiled by Semler Brossy, including information relating to the mix and levels of compensation for executive officers in the real estate industry, with a focus on total direct compensation. In order to recruit and retain the executives, we need to successfully manage and monetize our assets; we compare compensation to companies with greater current revenues when compared to our Company. To this point, we consider market capitalization the strongest metric to orient our peer group size around rather than revenue, as market capitalization more accurately reflects the long-term value of our assets than revenue. We view real estate development peers with larger revenue as peers whose assets are further along in their lifecycle than our current assets, which in turn makes them our strongest competitors for talent. Although the Compensation Committee does not believe that it is appropriate to establish compensation levels based solely on market comparisons or industry practices, the Committee believes that information regarding pay practices at other companies is useful in three respects. First, marketplace information is one of the many factors that the Compensation Committee considers in assessing the reasonableness of total compensation. Second, it recognizes that our compensation practices must be generally competitive for executive talent in the real estate, land development, and agriculture industries and the market overall. Third, it recognizes that marketplace information reflects emerging and changing components and forms of compensation. While the Compensation Committee considers peer compensation levels and practices when making its compensation decisions, it does not target total compensation at any particular point within a range established by a comparison of the financial performance or compensation levels of our peer companies. Each year, the Compensation Committee, with guidance from our compensation consultant, evaluates the composition of our peer group. The goal is to identify companies that are engaged in real estate development activities and are appropriate for comparison purposes based on business activities, revenues, and market capitalization. During 2023, the Compensation Committee made no changes to the peer group. At this time, the Compensation Committee believes that market capitalization is a more appropriate criterion for comparison to peer companies than business activities and revenues, considering that our primary assets remain under development and are not yet producing their full revenue potential. Generally, our peer companies have monetized the majority of their real estate assets and, therefore, have higher revenues and market capitalization, by comparison to our Company. The 2023 peer group is shown below:
Market Comparison Review—2023 Peer Group
| Agree Realty | Kite Realty Group | | Alexander & Baldwin | Limoneira | | Alico | One Liberty Properties | | BRT Apartments Corp | Retail Opportunity Investments | | CTO Realty Growth Inc. | Saul Centers | | Five Point Holdings | St. Joe Co. | | Forestar Group | Stratus Properties |
Annual Incentive Plan
Annual Incentive Plan Our practice is to award annual incentive bonuses based upon the achievement of performance objectives established at the beginning of each year. The attainment of each year’s quantitative financial goals for each of the NEOs is uncertain and is dependent upon factors such as real estate sales and leasing programs, the timing of entitlement activities for our developments, and the uncertainty inherent in our farming and mineral operations due to the commodity nature of the products we produce and the fact that we do not know the production each year or the ultimate price we will receive for our products each year. The achievement of individual objectives tied to land entitlement, development, litigation settlement, and conservation efforts is highly dependent on working with groups outside of the Company, such as government agencies, local county planning departments, and environmental resource groups, all of which make the timing of achieving specific steps in the process very complicated. Accordingly, goal achievement under the annual bonus plan is not guaranteed. The following chart provides the performance level weightings for the Chief Executive Officer and the other NEOs.
Annual Incentive Plan
| | Gregory S. Bielli President, Chief Executive Officer | Allen E. Lyda EVP, Chief Operating Officer | Brett A. Brown EVP, Chief Financial Officer | Hugh F. McMahon EVP, Real Estate | Robert D. Velasquez SVP, Chief Accounting Officer | Michael R.W. Houston, SVP, General Counsel | | | Corporate Quantitative Measurements | | | | | | | Adjusted EBITDA | 40% | 40% | 40% | 40% | 40% | 40% | | Total Corporate Quantitative Measurements | 40% | 40% | 40% | 40% | 40% | 40% | | | Corporate Short-Term Objectives | | | | | | | Complete construction on Building 5 at TRCC by the end of the fourth quarter 2023 | 10% | 10% | 10% | 10% | 10% | 10% | | Real Estate Committee presentation to recommend proceeding forward with multifamily development by the end of the second quarter 2023 | 10% | 10% | 10% | 10% | 10% | 10% | | Seek Kern County approval to change retail site to industrial by the end of the second quarter 2023 | 10% | 10% | 10% | 10% | 10% | 10% | | Submit Supplemental Environmental Impact Report for Centennial by the end of the third quarter 2023 | 10% | 10% | 10% | 10% | 10% | 10% | | Total Corporate Short-Term Objectives | 40% | 40% | 40% | 40% | 40% | 40% | | | Individual Quantitative/Qualitative Measurements | | | | | | | Individual Objectives | 20% | 20% | 20% | 20% | 20% | 20% | | Total Individual Quantitative/Qualitative Weighting | 20% | 20% | 20% | 20% | 20% | 20% | | Total Weighting | 100% | 100% | 100% | 100% | 100% | 100% |
Annual Incentive Plan
Generally, the Chief Executive Officer’s individual objectives are tied to land entitlement, outreach in support of entitlement, execution of development, capital formation, and conservation goals as well as operational, strategic planning, and staffing objectives. The individual objectives for the other NEOs are generally related to land entitlement, development, and operational goals that support the achievement of corporate development and financial goals. The annual incentive plan is structured, and bonus levels are determined based upon the level of achievement of threshold, target, and maximum performance of quantitative and qualitative objectives. If achievement of a performance objective is below threshold, no incentive bonus is earned for that objective, and if achievement is greater than maximum, the maximum bonus level is earned. The Chief Executive Officer and the other NEOs have different cash incentive opportunity levels, which are expressed as a percentage of their respective base salaries. The target bonus levels expressed as a percentage of base salary are reviewed along with information provided by our independent compensation consultant. The threshold, target, and maximum levels (expressed as a percentage of base salary) of each NEO’s annual incentive opportunity are outlined below.
Annual Incentive Plan
| | Threshold | Target | Maximum | | Gregory S. Bielli, President, Chief Executive Officer | 62.50% | 125.00% | 187.50% | | Allen E. Lyda, EVP, Chief Operating Officer | 45.00% | 90.00% | 135.00% | | Brett A. Brown, EVP, Chief Financial Officer | 40.00% | 80.00% | 120.00% | | Hugh F. McMahon, EVP, Real Estate | 35.00% | 70.00% | 105.00% | | Robert D. Velasquez, SVP, Chief Accounting Officer | 25.00% | 50.00% | 75.00% | | Michael R. W. Houston, SVP, General Counsel | 30.00% | 60.00% | 90.00% |
Short-Term Milestone Objectives – Corporate
Short-Term Milestone Objectives – Corporate Annual short-term milestone corporate objectives are generally those items identified each year that are critical to successfully moving forward the Company’s long-term objectives related to land entitlement and development execution within our four development projects. For 2023, the short-term objectives were as follows:
Short-Term Milestone Objectives – Corporate
| • | Complete construction on building 5 at TRCC by the end of the fourth quarter of 2023. (25% weighting). Building successfully completed and 100% leased during the fourth quarter of 2023. The successful development and leasing of this building provides additional market support to continue forward with our industrial building development plans. The successful development of land in TRCC allows for future revenue creation and growth in land values. Objective was accomplished at target, as the building was completed in December 2023. |
Short-Term Milestone Objectives – Corporate
| • | Real Estate Committee presentation to recommend proceeding forward with multifamily development by the end of the second quarter 2023. (25% weighting). The achievement of this objective was critical to the success of our development goals within TRCC, by allowing multi-family development within the project. This allows us to include a housing element into TRCC to support job and value creation through continued growth of commercial and industrial development. This project will also provide other ancillary benefits to TRCC, such as support of local restaurants, hotels, the outlet center, and local convenience stores. Objective was achieved at target, as the presentation was made to the Real Estate Committee in March 2023, met Board approved metrics and was approved to proceed. |
Short-Term Milestone Objectives – Corporate
| • | Seek Kern County approval to change retail site to industrial by the end of the second quarter 2023. (25% weighting). This objective is important to the continued growth of industrial product and absorption of land within TRCC, which allows for future value creation through lease revenues and increases in land values. A letter was received from Kern County approving the change in February 2023. Objective was determined accomplished at maximum achievement during the first quarter of 2023. |
Short-Term Milestone Objectives – Corporate
| • | Submit Supplemental Environmental Impact Report Notice of preparation, or NOP, for Centennial by the end of the third quarter 2023 (25% weighting). This is an important objective for the Company to achieve to continue advancement of our Centennial master planned community. As a result of delays in litigation, which include an appeal of the courts decisions, and in coordination with LA County, the submittal has been delayed intentionally. The NOP is expected to be filed second quarter of 2024. Based on actions of the court outside of the control of management, the Compensation Committee determined objective was accomplished at target. |
2023 Performance Achievement
| 2) | Total incentive award as a percentage of salary is determined using 2023 Annual Base Salary. |
2023 Performance Achievement
| 3) | The Compensation Committee also approved a $600,000 discretionary bonus to recognize Mr. Bielli’s strong performance throughout the year. |
Equity Compensation
Equity Compensation The Compensation Committee believes that the long-term value of the Company will be driven by the execution of its long-term strategies. Accordingly, Tejon uses long-term equity incentives to align senior management’s interests with shareholders’ interests. The Compensation Committee believes that management should own stock and that teamwork among the management group is important in meeting business goals. Therefore, long-term milestone incentives are goal-based, with common performance measures for all participants to encourage teamwork.
Equity Compensation
| Long-Term Equity Compensation Vehicle | Grant Frequency | CEO Weighting | Other NEO’s Weighting | Vesting | Purpose | | Performance Related Milestone Grants | Every three years | 35% | 55% | Cliff vesting at the end of the three- year period | To tie equity compensation to longer-term real estate development milestones | | Price Vesting Units | Every three years – CEO Annually – other NEO’s | 15% | 15% | Cliff vesting at the end of the three- year period | To measure and tie equity compensation opportunity to stock price appreciation | | Time-Vested Restricted Stock | Every three years – CEO Annually – other NEO’s | 50% | 30% | Three-year annual vesting | To encourage share ownership and retention of executives |
Equity Compensation
When granting shares, whether the shares are performance or time vested, the Company’s practice is to determine annually a dollar amount of equity compensation to be provided, and to grant a number of Price vested units and time vested shares that have a fair market value equal to that amount on the date of grant. The 2023 objectives are:
Equity Compensation
| Milestone 1. | Begin construction of the first phase of the multi-family development at TRCC by the fourth quarter of 2025. The achievement of this goal is important to the Company as it will be its first residential project, turns TRCC into a true mixed-use development, and provides a new housing option for the employees of the many businesses operating at TRCC. |
Equity Compensation
| Milestone 2. | Complete a capital raise of at least $150 million in proceeds (not more than 50% from debt sources) to fund the construction of Phase 1 of Mountain Village with Board of Director approval by the fourth quarter of 2025. The achievement of this goal is extremely important to providing the capital necessary to move to the execution phase of development for Mountain Village. |
Equity Compensation
| Milestone 3. | File the application, prepare and distribute the Notice of Preparation for an Environmental Impact Report for entitlement of the Grapevine North master planned community with Kern County by the fourth quarter of 2025. Beginning this project is important to the long-term residential development opportunities for the Company as entitlement provides an additional land use for this land that is currently part of our agricultural operations. California’s entitlement process continues to get more difficult and the longer we wait to begin the process, regulatory requirements will only get more stringent. |
Equity Compensation
Shares associated with the above performance milestones were granted in 2023 with a target measurement date of December 31, 2025. These shares cliff vest at the end of the three-year performance period based on performance and are either achieved or forfeited.
Equity Compensation
| | Target Shares | | Gregory S. Bielli (1) | — | | Allen E. Lyda (1) | — | | Brett A. Brown | 47,933 | | Hugh F. McMahon | 41,359 | | Robert D. Velasquez | 27,356 | | Michael R.W. Houston | 35,092 |
Equity Compensation
| (1) During 2023, the Compensation Committee was evaluating the possibility of developing a different performance milestone program for Mr. Bielli and Mr. Lyda, to match their future contributions more appropriately to the achievement of long-term milestone objectives. The Compensation Committee determined to grant two-year performance milestone grants during 2024, tied to the above milestones to be measured at the end of 2024 and 2025, if applicable. |
Equity Compensation
Mr. Bielli and Mr. Lyda were granted price-vested units with a measurement date of December 31, 2023, and a target achievement of 7.5% over the grant share price with a maximum payout of 1.25 times the grant price on the measurement date. The grant date price was $17.90 resulting in a target price of $19.24. The 2023 ending stock price of $17.20 was below the target price, so no price-vested units granted in 2023 vested. During 2023, price-vested units that are tied to stock price appreciation over the three-year period 2023-2025 were granted to the remaining NEOs. For measurement purposes, target achievement represents a 5% CAGR from the grant price and maximum payout is two times the grant price upon the measurement date at the end of 2025. Grant date price was $17.90, resulting in a target share price of $20.72.
Equity Compensation
| | Target Value | Target Shares | | Gregory S. Bielli | $235,994 | 13,184 | | Allen E. Lyda | $59,661 | 3,333 | | Brett A. Brown | $58,497 | 3,268 | | Hugh F. McMahon | $67,304 | 3,760 | | Robert D. Velasquez | $44,517 | 2,487 | | Michael R.W. Houston | $27,374 | 1,650 |
2024 CEO Compensation
2024 CEO Compensation For so long as he remains the Company’s President and CEO in 2024, Mr. Bielli will receive a base salary of $824,000. Mr. Bielli will also be entitled to a target annual incentive opportunity for 2024 equal to 125% of his base salary. With respect to long-term equity incentives, the aggregate target value of Mr. Bielli’s grants is $3,403,000, consisting of (i) $1,215,000 in time-based RSUs vesting on December 31, 2024, (ii) $1,945,000 in performance-based RSUs tied to milestone-based goals and eligible to vest at the end of 2024, and (iii) $243,000 in performance-based RSUs tied to stock price-based goals and eligible to vest at the end of 2024. Additionally, Mr. Bielli entered into a letter agreement with the Company dated March 20, 2024, pursuant to which Mr. Bielli will provide consulting and advisory services from January 1, 2025, until the earlier of 12 months or termination of the agreement. In exchange for his services, Mr. Bielli will receive a monthly cash consulting fee equal to $85,000 per month for such services.
Change in Control Benefits
Change in Control Benefits The Compensation Committee believes that our shareholders’ interests will be best served if the interests of executive management are aligned with them, and that providing management with change in control benefits supports that objective by focusing executives on shareholder interests when considering strategic alternatives. Change in control benefits, as provided in a change in control agreement with selected NEOs, are only provided upon a termination of employment without cause or a resignation for good reason in connection with a change in control. None of the agreements with our NEOs or other compensation plans, or any other arrangements with employees, provide for a gross-up payment or reimbursement for excise taxes that could be imposed on the executives. Equity awards are “double trigger” and have accelerated vesting only upon a change in control and termination of employment without cause or a resignation for good reason in connection with a change in control. Please refer to the Potential Payments Upon Termination or Change in Control table on page 52 of this Proxy Statement for a more detailed description and an estimate of the value of these benefits. In addition to the foregoing change in control severance benefits, the NEOs who participate in the pension plan and SERP will also continue to be entitled to any existing benefits thereunder as determined in accordance with the terms of the applicable plan.
Separation or Severance Benefits
Separation or Severance Benefits In some circumstances, the Compensation Committee believes it is in the Company’s best interest to provide a severance benefit in order to provide a smooth transition period for the Company when an executive leaves, even if the Company does not have a contractual obligation to provide any payments or benefits upon separation. Separation benefits in the form of salary continuation and health benefits may be provided to departing executives on a case-by-case basis. These benefits have historically endured for approximately one year. A more detailed description of separation benefits payable to our NEOs is included below under “Fiscal Year 2023 Potential Payments Upon Termination or Change in Control” beginning on page 52 of this Proxy Statement. Unless the Compensation Committee determines otherwise, if an NEO’s employment with the Company is terminated for any reason, including death or disability, prior to vesting of all or any part of a restricted stock award or performance unit award, the NEO will forfeit to the Company the portion of the award that has not vested.
Fiscal Year 2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | (1) Bonus ($) | (2) Stock Awards ($) | (3) Non-Equity Incentive Plan Compensation ($) | (4) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | (5) All Other Compensation ($) | Total ($) | | Gregory S. Bielli | 2023 | 800,000 | 600,000 | 1,415,997 | 1,038,944 | — | 15,521 | 3,870,462 | | Chief Executive Officer | 2022 | 721,000 | — | — | 1,178,835 | — | 12,052 | 1,911,887 | | | 2021 | 721,000 | — | — | 1,135,670 | — | 15,629 | 1,872,299 | | Allen E. Lyda * | 2023 | 397,753 | — | 238,643 | 355,810 | 106,310 | 15,942 | 1,114,458 | | Chief Operating Officer | 2022 | 382,455 | — | 258,149 | 438,580 | — | 15,245 | 1,094,429 | | | 2021 | 371,315 | — | 250,636 | 421,107 | — | 9,966 | 1,053,024 | | Brett A. Brown * | 2023 | 252,750 | — | 1,033,492 | 208,655 | — | 17,707 | 1,512,604 | | Executive Vice President, Chief Financial Officer | | | | | | | | | | Hugh F. McMahon | 2023 | 299,120 | — | 942,238 | 206,546 | 24,135 | 7,980 | 1,480,019 | | Executive Vice President, Real Estate | 2022 | 287,616 | — | 194,132 | 256,026 | — | 13,116 | 750,890 | | | 2021 | 279,239 | — | 188,496 | 246,309 | — | 22,475 | 736,519 | | Robert D. Velasquez | 2023 | 296,770 | — | 623,224 | 147,672 | — | 16,686 | 1,084,352 | | Senior Vice President, Chief Accounting Officer | 2022 2021 | 285,356 281,139 | — — | 128,404 126,511 | 180,844 164,305 | — — | 16,778 14,210 | 611,382 586,165 | | Michael R. W. Houston ** | 2023 | 105,010 | — | 664,297 | 72,657 | — | — | 841,964 | | Senior Vice President, General Counsel | | | | | | | | |
Fiscal Year 2023 Summary Compensation Table
| * Mr. Lyda served as the Company’s Chief Financial Officer until May 7, 2023, when he maintained the title of Chief Operating Officer going forward. Mr. Brown joined the Company as Chief Financial Officer on May 8, 2023. His annual base salary is $390,000. |
Fiscal Year 2023 Summary Compensation Table
| ** Mr. Houston rejoined the Company on August 21, 2023. His annual base salary is $292,000. |
Fiscal Year 2023 Summary Compensation Table
| 1. | The Compensation Committee also approved a $600,000 discretionary bonus to recognize Mr. Bielli’s strong performance throughout the year. |
Fiscal Year 2023 Summary Compensation Table
| 2. | The figures in this column represent equity awards for the Chief Executive Officer and for the other NEOs as follows: (i) grant date fair value of time-based grants; (ii) the grant date fair value of the price-vested units; and (iii) 2023-2025 performance milestone grants (granted in 2023). |
Fiscal Year 2023 Summary Compensation Table
| | Time Based Restricted Stock Award | Price- Vested Units | Performance Milestone Grants | Total Actual Award | | Gregory S. Bielli | $1,180,004 | $235,993 | — | $1,415,997 | | Allen E. Lyda | $178,982 | $59,661 | — | $238,643 | | Brett A. Brown | $116,994 | $58,497 | $858,001 | $1,033,492 | | Hugh F. McMahon | $134,608 | $67,304 | $740,326 | $942,238 | | Robert D. Velasquez | $89,035 | $44,517 | $489,672 | $623,224 | | Michael R.W. Houston | $54,747 | $27,374 | $582,176 | $664,297 |
Fiscal Year 2023 Summary Compensation Table
The value of stock awards is the grant date fair value of awards computed in accordance with FASB ASC Topic 718. The grant date fair value for grants with performance conditions includes the estimated probable outcome of the performance condition. Further information regarding stock awards can be found in Note 11, Stock Compensation Plan, to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The grant date fair value, assuming maximum levels of achievement, of the price-vested unit awards granted in 2023 are as follows: $471,986 for Mr. Bielli, $119,322 for Mr. Lyda, $175,492 for Mr. Brown, $201,912 for Mr. McMahon, $133,552 for Mr. Velasquez, and $82,121 for Mr. Houston.
Fiscal Year 2023 Summary Compensation Table
| 3. | Non-equity incentive plan compensation is described in the Compensation Discussion and Analysis under “Annual Incentive Plan” beginning on page 34. Incentive bonuses are paid in cash. |
Fiscal Year 2023 Summary Compensation Table
| 4. | The change in pension value is based upon the same assumptions and measurements that are used for the audited financial statements for the applicable fiscal year. For 2023, the net change was a positive $123,030 for Mr. Lyda and a positive $24,135 for Mr. McMahon. Mr. Lyda also had a decline of $16,720 in value of nonqualified deferred compensation. See Note 15, Retirement Plan, to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There are no above-market or preferential earnings related to the Company’s nonqualified deferred compensation plan. |
Fiscal Year 2023 Summary Compensation Table
| 5. | Amounts in this column reflect costs associated with Company-provided vehicles and related maintenance, and Company-paid life insurance premiums. |
Grants of Plan-Based Awards in Fiscal Year 2023
Grants of Plan-Based Awards in Fiscal Year 2023 The following table provides information about awards granted to the NEOs in the fiscal year ended December 31, 2023.
Grants of Plan-Based Awards in Fiscal Year 2023
| | | | Estimated Future Payouts under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($) | | Name | Year | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Gregory S. Bielli | | | | | | | | | | | | Annual Incentive Plan | 2023 | 12/31/23 | 500,000 | 1,000,000 | 1,500,000 | | | | | | | Time-Vested Stock Grant | | 06/16/23 | | | | | | | 65,922 | 1,180,004 | | Price-Vested Units | | 06/16/23 | | | | — | 13,184 | 19,776 | | 235,993 | | Total | | | | | | | | | | 1,415,997 | | Allen E. Lyda | | | | | | | | | | | | Annual Incentive Plan | 2023 | 12/31/23 | 178,989 | 357,978 | 536,967 | | | | | | | Time-Vested Stock Grant | | 06/16/23 | | | | | | | 9,999 | 178,982 | | Price-Vested Units | | 06/16/23 | | | | — | 3,333 | 9,999 | | 59,661 | | Total | | | | | | | | | | 238,643 | | Brett A. Brown | | | | | | | | | | | | Annual Incentive Plan | 2023 | 12/31/23 | 101,100 | 202,200 | 303,300 | | | | | | | Time-Vested Stock Grant | | 06/16/23 | | | | | | | 6,536 | 116,994 | | Price-Vested Units | | 06/16/23 | | | | — | 3,268 | 9,804 | | 58,497 | | Performance Milestone Grants | | 06/16/23 | | | | — | 47,933 | — | | 858,001 | | Total | | | | | | | | | | 1,033,492 | | Hugh F. McMahon | | | | | | | | | | | | Annual Incentive Plan | 2023 | 12/31/23 | 104,692 | 209,384 | 314,076 | | | | | | | Time-Vested Stock Grant | | 06/16/23 | | | | | | | 7,520 | 134,608 | | Price-Vested Units | | 06/16/23 | | | | — | 3,760 | 11,280 | | 67,304 | | Performance Milestone Grants | | 06/16/23 | | | | — | 41,359 | — | | 740,326 | | Total | | | | | | | | | | 942,238 | | Robert D. Velasquez | | | | | | | | | | | | Annual Incentive Plan | 2023 | 12/31/23 | 74,193 | 148,385 | 222,578 | | | | | | | Time-Vested Stock | | 06/16/23 | | | | | | | 4,974 | 89,035 | | Price-Vested Units | | 06/16/23 | | | | — | 2,487 | 7,461 | | 44,517 | | Performance Milestone Grants | | 06/16/23 | | | | — | 27,356 | — | | 489,672 | | Total | | | | | | | | | | 623,224 | | Michael R.W. Houston | | | | | | | | | | | | Annual Incentive Plan | 2023 | 12/31/23 | 31,503 | 63,006 | 94,509 | | | | | | | Time -Vested Stock | 2023 | 08/21/23 | | | | | | | 3,300 | 54,747 | | Price-Vested Units | | 08/21/23 | | | | | 1,650 | 4,950 | | 27,374 | | Performance Milestone Grants | | 08/21/23 | | | | | 35,092 | | | 582,176 | | Total | | | | | | — | | — | | 664,297 |
Grants of Plan-Based Awards in Fiscal Year 2023
| 1. | The annual non-equity incentive award is based on the achievement of both quantitative and qualitative, annual business objectives. The objectives vary based on the NEO’s responsibilities. For 2023, based upon the percentage of achievement shown in the “Annual Incentive Plan” section of the Compensation Discussion and Analysis, Mr. Bielli earned an incentive of $1,038,944; Mr. Lyda $355,810; Mr. Brown $208,655; Mr. McMahon $206,546; Mr. Velasquez $147,672; and Mr. Houston $72,657. |
Grants of Plan-Based Awards in Fiscal Year 2023
| 2. | Price-vested units were granted to all of the NEO’s, which vest upon the achievement of specific stock price levels measured at the end of 2023 and 2025. For additional details, see the “Equity Compensation” section of the Compensation Discussion and Analysis beginning on page 40. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table provides information on the current holdings of restricted stock, and performance unit awards of the NEOs. This table includes unvested stock grants, as well as performance share grants subject to performance conditions that have not yet been satisfied. Each equity grant that was outstanding as of December 31, 2023, is shown separately for each NEO. The market value of the stock awards is based on the closing market price of Tejon stock as of December 31, 2023, which was $17.20 per share. The market value as of December 31, 2023, shown below assumes satisfaction of performance objectives at the target level of achievement.
Outstanding Equity Awards at 2023 Fiscal Year-End
| | Stock Awards | | | | | Name | Number of Shares or Units of Stock That have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards Market of Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Gregory S. Bielli: | | | | | | Time-Based Stock Awards (1) | — | — | | | | Price Vested Units (2) | | | — | — | | Milestone Performance Units (3) | | | — | — | | Allen E. Lyda: | | | | | | Time-Based Stock Awards (1) | 9,723 | 167,235 | | | | Price Vested Units (2) | | | 9,707 | 166,960 | | Milestone Performance Units (3) | | | — | — | | Brett A. Brown: | | | | | | Time-Based Stock Awards (1) | 6,536 | 112,419 | | | | Price Vested Units (2) | | | 3,268 | 56,210 | | Milestone Performance Units (3) | | | 47,933 | 824,448 | | Hugh F. McMahon: | | | | | | Time Based Stock Awards (1) | 14,831 | 255,093 | | | | Price Vested Units (2) | | | 11,060 | 190,232 | | Milestone Performance Units (3) | | | 41,359 | 711,375 | | Robert D. Velasquez: | | | | | | Time-Based Stock Awards (1) | 9,833 | 169,128 | | | | Price Vested Units (2) | | | 7,351 | 126,437 | | Milestone Performance Units (3) | | | 27,356 | 470,523 | | Michael R.W. Houston: | | | | | | Time-Based Stock Awards (1) | 3,300 | 56,760 | | | | Price Vested Units (2) | | | 1,650 | 28,380 | | Milestone Performance Units (3) | | | 35,092 | 603,582 |
Outstanding Equity Awards at 2023 Fiscal Year-End
| 1. | Time-based stock awards vest in equal annual installments over a three-year period from the grant date. Unvested time-based stock awards outstanding as of December 31, 2023, were as follows: |
Outstanding Equity Awards at 2023 Fiscal Year-End
| Name | March 2021 Time Based Grants | March 2022 Time Based Grants | March 2023 Time Based Grants | Total Time-Based Stock Awards | | Gregory S. Bielli | — | — | — | — | | Allen E. Lyda | 3,222 | 6,501 | — | 9,723 | | Brett A. Brown | — | — | 6,536 | 6,536 | | Hugh F. McMahon | 2,422 | 4,889 | 7,520 | 14,831 | | Robert D. Velasquez | 1,626 | 3,233 | 4,974 | 9,833 | | Michael R. W, Houston | — | — | 3,300 | 3,300 |
Outstanding Equity Awards at 2023 Fiscal Year-End
| 2. | Outstanding price-vested units are performance shares that may vest on the measurement date of December 31, 2023, 2024, and 2025, respectively, in each case, based upon the achievement of target stock appreciation levels. Shares earned will be awarded in the following year. The shares shown are based upon reaching target levels of performance. Included in this number are shares to be measured in 2023 and will be settled in 2024. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| Name | 2023 Price-Vested Awards Not Vested | 2024 Price-Vested Awards Not Vested | 2025 Price-Vested Awards Not Vested | Total Performance Share Awards | | Gregory S. Bielli | — | — | — | — | | Allen E. Lyda | 4,832 | 4,875 | — | 9,707 | | Brett A. Brown | — | — | 3,268 | 3,268 | | Hugh F. McMahon | 3,634 | 3,666 | 3,760 | 11,060 | | Robert D. Velasquez | 2,439 | 2,372 | 2,487 | 7,351 | | Michael R.W. Houston | — | — | 1,650 | 1,650 |
Outstanding Equity Awards at 2023 Fiscal Year-End
No shares were earned in respect of the 2021-2023 price-vested units, as the 2023 year-end stock price of $17.20 was below the target price level.
Outstanding Equity Awards at 2023 Fiscal Year-End
| 3. | Performance Milestone Shares consist of shares that may vest upon achievement of specific milestone objectives approved by the Compensation Committee. The measurement date for achievement of objectives is December 2025. For additional detail, see the “Equity Compensation” section of the Compensation Discussion and Analysis beginning on page 40. |
Stock Vested in Fiscal Year 2023
Stock Vested in Fiscal Year 2023 The following table provides information for the NEOs regarding the value realized, and the number of shares acquired, upon the vesting of stock awards, before payment of any applicable withholding tax and broker commissions.
Stock Vested in Fiscal Year 2023
| Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Gregory S. Bielli | | | | Time Grants | 65,922 | 1,106,171 | | Total Gregory S. Bielli | 65,922 | 1,106,171 | | Allen E. Lyda | | | | Time Grants | 20,297 | 363,136 | | Price Vested Units | 8,125 | 154,132 | | Performance Milestone Grants | 42,097 | 798,580 | | Total Allen E. Lyda | 70,519 | 1,315,848 | | Hugh F. McMahon | | | | Time Grants | 7,745 | 146,923 | | Price Vested Units | 6,111 | 115,926 | | Performance Milestone Grants | 31,658 | 600,552 | | Total Hugh F. McMahon | 45,514 | 863,401 | | Robert D. Velasquez | | | | Time Grant | 5,174 | 98,151 | | Price Vested Units | 4,102 | 77,815 | | Performance Milestone Grants | 21,249 | 403,093 | | Total Robert D. Velasquez | 30,525 | 579,059 |
Stock Vested in Fiscal Year 2023
| 1. | The price vested units and performance milestone share grants that vested and settled during 2023 were originally granted in 2020. |
Pension Benefits in Fiscal Year 2023
Pension Benefits in Fiscal Year 2023 The Company’s pension plan is a tax-qualified retirement program that covers eligible employees of the Company. Effective January 31, 2007, the pension plan was frozen for new employees hired on or after February 1, 2007. An employee is eligible for normal retirement benefits on the first day of the month coinciding with or next following the employee’s Social Security retirement date. The amount of annual benefit, payable monthly, is based upon an employee’s average monthly compensation, which is based upon the employee’s highest five consecutive calendar years of compensation out of the employee’s final ten years of compensation. The amount of the annual benefit payable monthly is 1.45% of the average monthly compensation, offset by 0.65% of the final average compensation not in excess of one-twelfth of covered compensation, multiplied by total years of service (up to a maximum of 25 years). Effective April 2017, the Company froze the pension plan and SERP with respect to the accrual of future benefits. The supplemental executive retirement plan, or SERP, was established for the NEOs to replace any pension benefit the NEOs might lose due to the IRS-prescribed limit applicable to tax-qualified plans. The SERP benefit is calculated based on the same formula as the defined benefit plan.
Pension Benefits in Fiscal Year 2023
| Name | Plan Name | Number of Years Credited Service (#) | (1) Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | | Gregory S. Bielli | None | | | | | Allen E. Lyda | Defined Benefit Plan | 34 | 887,614 | — | | | Supplemental Executive Retirement Plan | 34 | 985,368 | — | | Brett A. Brown | None | | | | | Hugh F. McMahon | Defined Benefit Plan | 23 | 323,997 | — | | Robert D. Velasquez | None | | | | | Michael R.W. Houston | None | | | |
Pension Benefits in Fiscal Year 2023
| 1. | The present value of the accumulated benefit is based upon the same assumptions and measurements that are used in the preparation of the audited financial statements for the current year. See Note 15, Retirement Plans, to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for the valuation method and these assumptions. |
Fiscal Year 2023 Nonqualified Deferred Compensation Table
Fiscal Year 2023 Nonqualified Deferred Compensation Table The Company’s nonqualified deferred compensation plan allows the deferral of salary, bonuses, and vested restricted stock or performance units, and there are no limits on the extent of deferral permitted. The plan is available for the NEOs and directors of the Company. Each of the NEOs who has elected to defer compensation into the plan has elected to defer payment until termination of employment, at which time payment will be made in a lump sum in accordance with Internal Revenue Code Section 409A. The plan provides for withdrawals in the event of unforeseeable emergencies, such as financial hardship from illness or accident, loss of property due to casualty, or other similar extraordinary circumstances arising as a result of events beyond the control of the employee, as determined by the Company. A distribution based on an unforeseeable emergency is made only with the consent of the Company. The decision by each NEO to defer future compensation and the distribution date of any deferral is determined at the end of each fiscal year for awards that may be received in the coming year. The Company does not contribute to the nonqualified deferred compensation plan for the benefit of any NEO or director. Earnings from any cash contributed or stock that is converted to cash by a NEO or director are based upon the market return of the investment in which such officer or director directed his or her contribution. All holdings in the nonqualified deferred compensation plan are in the form of Company stock. No shares have been converted to cash within the plan.
Fiscal Year 2023 Nonqualified Deferred Compensation Table
| Name | Executive Contribution in Last FY ($) | Aggregate Earnings (Loss) in Last FY (2) ($) | Aggregate Withdrawals/ Distribution ($) | Aggregate Balance at Last FYE (1) ($) | | Gregory S. Bielli | — | — | — | — | | Allen E. Lyda | — | (16,720) | — | 175,354 | | Brett A. Brown | — | — | — | — | | Hugh F. McMahon | — | — | — | — | | Robert D. Velasquez | — | — | — | — | | Michael R.W. Houston | — | — | — | — |
Fiscal Year 2023 Nonqualified Deferred Compensation Table
| 1. | All amounts reported in the aggregate balance at last fiscal year-end were reported as compensation to the NEO in the Summary Compensation Table for previous years. |
Fiscal Year 2023 Nonqualified Deferred Compensation Table
| 2. | Aggregate earnings in the last fiscal year are based on the change in price of the Company’s stock from the prior year-end to December 31, 2023. This factor is used because all investments within the nonqualified deferred compensation plan are held in Company stock. |
Fiscal Year 2023 Potential Payments Upon Termination or Change in Control
Fiscal Year 2023 Potential Payments Upon Termination or Change in Control The Company has entered into agreements with selected NEOs that provide for specified benefits upon a change in control of the Company and/or upon certain terminations occurring outside of a change in control. A change in control is deemed to have occurred if (i) there is an acquisition by any person or group (excluding current ownership) of 20% or more of the outstanding shares of the Company; (ii) the Company sells all or substantially all of its assets; or (iii) the Company merges or consolidates with another entity. Benefits are payable to a NEO as a result of termination of employment in connection with a change in control if the NEO is terminated without “cause” (as defined below) during the two years after the occurrence of a change in control or the NEO is terminated prior to a change in control at the request of a third party who has taken steps to effect a change in control. The NEO will also receive benefits if he or she voluntarily terminates employment after a change in control if the NEO has been assigned substantial reductions in duties and responsibilities, received a reduction in base salary, or had an annual bonus opportunity eliminated or significantly reduced (i.e., a resignation for good reason). A NEO’s employment shall be deemed to have been terminated with “cause” if employment is terminated as a result of failure to perform his or her duties, willful misconduct or breach of fiduciary duty, fraud, or wrongful disclosure of confidential information. Change in control benefits include a continuation of base salary for a period of 36 months for the Chief Executive Officer and 30 months for the other NEOs, and a lump sum payment of three times the CEO’s average bonus and two and one-half times the other NEOs’ average bonus for the previous three years. The NEOs are also entitled to receive a continuation of health and other insurance benefits over the salary continuation period. Each NEO also has the right to a three-month period to continue use of any perquisites he or she may have had prior to the change in control. During the period of time described above during which benefits are to be received in connection with a change in control, the NEO must agree not to solicit any employees of the Company or disclose any confidential information related to the Company. Mr. Bielli and Mr. Lyda also have non-change in control benefits if terminated by the Company without cause or if they voluntarily terminate employment for “good reason” (as defined in the applicable NEO’s agreement). See footnotes 3 and 4 below for additional detail.
Fiscal Year 2023 Potential Payments Upon Termination or Change in Control
| | | Before Change in Control | After Change in Control (1) | | Name | Benefit | Termination w/o Cause or for Good Reason ($) | Termination w/o Cause or for Good Reason ($) | | Gregory S. Bielli (3) | Salary Continuation | 1,200,000 | 2,400,000 | | | Bonus – Target | 1,500,000 | 3,000,000 | | | Health Insurance | 28,944 | 57,888 | | | Other Compensation (2) | 163,880 | 163,880 | | | Equity Compensation | — | — | | | Total Value | 2,892,824 | 5,621,768 | | Allen E. Lyda (4) | Salary Continuation | 397,753 | 994,383 | | | Bonus – Target | 357,978 | 894,944 | | | Health Insurance | 19,296 | 48,240 | | | Other Compensation (2) | 202,862 | 202,862 | | | Equity Compensation | 194,429 | 334,196 | | | Total Value | 1,172,318 | 2,474,625 | | Brett A. Brown | Other Compensation (2) | 21,923 | 21,923 | | | Equity Compensation | | 993,076 | | | Total Value | 21,923 | 1,014,999 | | Hugh F. McMahon | Salary Continuation | | 747,800 | | | Bonus – Target | | 523,460 | | | Health Insurance | | 68,910 | | | Other Compensation (2) | 119,198 | 119,198 | | | Equity Compensation | | 1,156,700 | | | Total Value | 119,198 | 2,541,286 | | Robert D. Velasquez | Other Compensation (2) | 34,990 | 34,990 | | | Equity Compensation | | 766,088 | | | Total Value | 34,990 | 801,078 | | Michael R. W. Houston | Other Compensation (2) | 3,088 | 3,088 | | | Equity Compensation | — | 688,722 | | | Total Value | 3,088 | 691,810 |
Fiscal Year 2023 Potential Payments Upon Termination or Change in Control
| 1. | All stock grants provide for a double trigger vesting, meaning that an unvested award will vest in connection with a change in control, only if such transaction is followed by a termination without cause or for good reason. For purposes of this table, it is assumed all non-vested performance units and milestone units vest immediately at the target level. The value for vesting of performance unit awards and milestone performance awards is the closing market price on the last business day of 2023 of $17.20. |
Fiscal Year 2023 Potential Payments Upon Termination or Change in Control
| 2. | “Other Compensation” consists of accrued and unused vacation and personal paid leave at the time of termination and, if the NEO has the right to use a Company vehicle prior to termination, the continuation of that benefit for a three-month period. |
Fiscal Year 2023 Potential Payments Upon Termination or Change in Control
| 3. | If Mr. Bielli is involuntarily terminated by the Company without cause or voluntarily terminates employment for good reason, Mr. Bielli will receive an amount equal to eighteen months of base salary; an amount equal to eighteen months of target annual incentive; contribution of medical benefits for an eighteen-month period; and any stock awards that were scheduled to vest during the calendar year of termination will be deemed vested as of date of termination. |
Fiscal Year 2023 Potential Payments Upon Termination or Change in Control
| 4. | If Mr. Lyda is involuntarily terminated by the Company without cause or voluntarily terminates employment for good reason, Mr. Lyda will receive an amount equal to one time his annual base salary; an amount equal to one time an average annual bonus over the last three years; continuation of medical benefits for a one-year period; any stock grants that vest at time of separation and that vest during the twelve-month period after separation. |
Director Compensation in Fiscal Year 2023
Director Compensation in Fiscal Year 2023 In 2023, non-employee directors received 1,000 shares of stock and an annual retainer of $60,000 payable quarterly in the form of common stock or a combination of common stock and cash. Common stock is paid in arrears, based on the closing price of the Company’s common shares at each quarter end. In addition, the Chairman of the Board received an annual retainer of $25,000 payable in common stock, and the Chairman of each of the Audit, Compensation, Real Estate, and Nominating and Corporate Governance Committees received an annual retainer of $15,000 payable in common stock. Directors affiliated with a person or entity owning 10% or more of the Company’s total shares outstanding could elect to receive their entire annual retainer in cash. During 2023, the Compensation Committee requested Semler Brossy review director compensation. Based on the findings of that review, the annual retainer was increased to $80,000 per year. Directors are not paid any fees for board or committee meeting attendance. The Compensation Committee has approved stock retention guidelines for non-employee directors; the target retention value is five times the value of the annual director retainer or $300,000. All directors meet the stock retention guidelines, except for Ms. Morgan who has until 2026 to meet the guideline.
Director Compensation in Fiscal Year 2023
| Name | Fees Earned or Paid in Cash ($) | (1) Stock Awards ($) | Total ($) | | Steven A. Betts | 30,000 | 62,649 | 92,649 | | Anthony L. Leggio | 30,000 | 62,649 | 92,649 | | Norman J. Metcalfe | 30,000 | 72,651 | 102,651 | | Rhea Frawn Morgan | 30,000 | 47,639 | 77,639 | | Geoffrey L. Stack | — | 92,618 | 92,618 | | Daniel R. Tisch | — | 77,642 | 77,642 | | Michael H. Winer | 30,000 | 62,649 | 92,649 |
Director Compensation in Fiscal Year 2023
| 1. | The amounts reported reflect the grant date fair value of stock awards granted in 2023 to each director. Please see Note 11, Stock Compensation Plan, to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for additional information regarding the valuation of stock awards. The number of stock awards granted each year is determined on a quarterly basis by dividing one-fourth of the annual retainer by the closing stock price at the end of each quarter. At the end of 2023, there were no unvested outstanding equity awards for our directors. |
PAY RATIO DISCLOSURE
PAY RATIO DISCLOSURE As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our President and CEO and the annual total compensation of our median compensated employees: The 2023 annual total compensation of the median compensated of all our employees who were employed as of December 31, 2023, other than our CEO, was $64,629; our CEO’s 2023 annual total compensation was $3,870,462 as reflected in the Summary Compensation Table on page 45, and the ratio of these amounts was 59.9 to 1. The median compensated employee was identified as one of our skilled workers within our farming segment. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. Pay elements that were included in the annual total compensation for each employee in determining the median compensated employee were:
PAY RATIO DISCLOSURE
| • | Salary received in 2023 |
PAY RATIO DISCLOSURE
| • | Annual incentive payment received for performance in 2023 |
PAY RATIO DISCLOSURE
| • | Grant date fair value of stock awards granted in 2023 |
PAY RATIO DISCLOSURE
| • | Company provided vehicle and related maintenance, or auto allowance paid in 2023 |
PAY RATIO DISCLOSURE
This is the same approach used to determine the total annual compensation of our CEO, as reflected in the Summary Compensation Table. We determined the compensation of our median employee by calculating the annual total compensation including the compensation items just described for each of our employees. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and we did not annualize the compensation for any employee not employed for a full year. We excluded from the determination of our median compensated employee any employee that left the Company during 2023 and therefore was not employed on December 31, 2023. Based upon the compilation of this data we determined the median compensated employee as identified above.
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 aligns executive compensation with the Company’s performance, refer to Compensation Discussion and Analysis.
PAY VERSUS PERFORMANCE
| Year (a) | Summary Compensation Table Total for PEO(1) (b) | Compensation Actually Paid to PEO(2) (c) | Average Summary Compensation Table Total for Non-PEO NEOs(3) (d) | Average Compensation Actually Paid to Non-PEO NEOs(4) (e) | Value of Initial Fixed $100 Investment Based On: Total Shareholder Return(5) (f) | Net Income (thousands)(6) (g) | | 2023 | $3,870,462 | $3,560,636 | $1,265,247 | $1,472,122 | $119 | $3,265 | | 2022 | $1,911,887 | $934,909 | $818,900 | $528,582 | $130 | $15,808 | | 2021 | $1,872,299 | $4,434,996 | $791,903 | $1,010,230 | $132 | $5,348 |
PAY VERSUS PERFORMANCE
| 1 | The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Bielli (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to Compensation Discussion and Analysis – 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. Bielli, 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. Bielli during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, we adjusted Mr. Bielli’s total compensation for each year that reflect stock price changes and changes in performance achievement 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 | $3,870,462 | $(1,415,997) | $1,106,171 | $3,560,636 | | 2022 | $1,911,887 | $0 | $(976,978) | $934,909 | | 2021 | $1,872,299 | $0 | $2,562,697 | $4,434,996 |
PAY VERSUS PERFORMANCE
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. Mr. Bielli did not meet one of the performance measures from the shares granted in 2020, hence 76,787 shares did not vest, the fair value of these shares is deducted in calculating the equity award adjustment in 2022. |
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. In addition, adjustments have been made using the stock price and performance achievement as of year-end; (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 adjustments have been made using the stock price and performance achievement as of the date of measurement; 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 amounts deducted or added in calculating the equity award adjustments are as follows: |
PAY VERSUS PERFORMANCE
| Year | Year End Fair Value of Equity Awards Granted in the Year and Unvested at Year End | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Change in Fair Value from prior Year End to the Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $0 | $0 | $1,106,171 | $0 | $0 | $0 | $1,106,171 | | 2022 | $0 | $0 | $0 | $488,118 | $(1,465,096) | $0 | $(976,978) | | 2021 | $0 | $2,169,306 | $0 | $393,391 | $0 | $0 | $2,562,697 |
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 Mr. Bielli, who has served as our CEO since 2013) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Bielli) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Mr. Lyda, Mr. Brown, Mr. McMahon, Mr. Velasquez, and Mr. Houston; (ii) for 2022, Mr. Lyda, Mr. McMahon, and Mr. Velasquez, and (iii) for 2021, Mr. Lyda, Mr. McMahon, and Mr. Velasquez. |
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 Mr. Bielli), 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 (excluding Mr. Bielli) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Bielli) for each year to determine the compensation actually paid that reflect stock price changes and changes in performance achievement, using the same methodology described above in Note 2: |
PAY VERSUS PERFORMANCE
| Year | Average Reported Summary Compensation Table Total for NEO | Average Reported Value of Equity Awards(a) | Average Reported Award Adjustments(b) | Average Compensation Actually Paid to NEO | | 2023 | $1,265,247 | $(709,399) | $916,974 | $1,472,122 | | 2022 | $818,900 | $(193,562) | $(96,757) | $528,582 | | 2021 | $791,903 | $(141,411) | $359,738 | $1,010,230 |
PAY VERSUS PERFORMANCE
| (a) The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
PAY VERSUS PERFORMANCE
| Year | Average Year End Fair Value of Equity Awards Grant in the Year and Unvested at Year End | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Average Change in Fair Value from prior Year End to the Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Average Equity Award Adjustments | | 2023 | $630,867 | $158,145 | $167,783 | $569 | $(41,090) | $0 | $916,274 | | 2022 | $130,284 | $(28,219) | $0 | $(17,555) | $(181,266) | $0 | $(96,757) | | 2021 | $135,680 | $203,075 | $0 | $20,983 | $0 | $0 | $359,738 |
PAY VERSUS PERFORMANCE
| 5 | We calculated TSR by dividing 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. This value reflects what the cumulative value of $100 would be if such amount was invested on December 31, 2020. |
PAY VERSUS PERFORMANCE
| 6 | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
Compensation Actually Paid and Cumulative TSR
Compensation Actually Paid and Cumulative TSR As demonstrated by the following graph, there is no direct relationship between the Compensation Actually Paid to Mr. Bielli and the average Compensation Actually Paid to the Company’s NEOs as a group (excluding Mr. Bielli) and the Company’s cumulative TSR over the three years presented in the table. The absence of a direct relationship is because a significant portion of the Compensation Actually Paid to Mr. Bielli and to the other NEOs is comprised of equity awards that are long-term equity incentives that align with senior management’s long-term strategies and are generally qualitative in nature tied to achievement of specified milestones. As described in more detail in the section Compensation Discussion and Analysis, the value of total compensation awarded to the NEOs is to be comprised of short-term and long-term incentives in the form of performance shares, price-vested units, time-vested awards, and annual cash incentives.
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Income As demonstrated by the following table, there is no direct relationship between the Compensation Actually Paid to Mr. Bielli and the average Compensation Actually Paid to the Company’s NEOs as a group (excluding Mr. Bielli) and the Company’s net income over the three years presented in the table. The absence of a direct relationship is because a significant portion of the compensation actually paid to Mr. Bielli and to the other NEOs is comprised of equity awards that are long-term equity incentives that align with senior management’s long-term strategies and are generally qualitative in nature tied to achievement of specified milestones. The Company does not use net income as a performance measure in the overall executive compensation program, the measure of net income is correlated with the measure, Adjusted EBITDA, which the company does use when setting goals in the Company’s annual incentive compensation program that are awarded to the NEOs.