DEF 14A of PureCycle Technologies, Inc.
Filed Mar 28, 2024 · FY20230001193125-24-080705
PROPOSAL ONE — ELECTION OF DIRECTORS
PROPOSAL ONE — ELECTION OF DIRECTORS The following seven directors have been recommended by our N&CG Committee and approved by our Board. The nominees will serve for a one year term until the 2025 annual meeting of shareholders and until their successors are duly elected and qualified or until their earlier death, disability, resignation, disqualification or removal. The Board expects each nominee to be able to serve if elected.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Director Nominees and Qualifications
Director Nominees and Qualifications Steven Bouck, 67, joined the Board in 2022. He is an independent director, Chair of the Compensation Committee and member of the Audit and Finance Committee. Mr. Bouck served as the Executive Projects Manager for Waste Connections, Inc., a solid waste services company, from July 2018 until March 2022. Prior to that, Mr. Bouck served in executive leadership roles with Waste Connections as President, from September 2004 to July 2018, and as Executive Vice President and Chief Financial Officer, from February 1998 to September 2004. Mr. Bouck held various positions with First Analysis Corporation, an investment research and private equity firm, from 1986 to 1998, focusing on financial services to the environmental industry. Mr. Bouck holds B.S. and M.S. degrees in Mechanical Engineering from Rensselaer Polytechnic Institute, and a Masters in Business Administration in Finance from the Wharton School of Business. The Company believes that Mr. Bouck is well qualified to serve as a member of the Board due to his corporate leadership experience, particularly in the environmental industry. Tanya Burnell, 47, joined the Board in 2021. She is an independent director, Chair of the Audit and Finance Committee and a member of the Compensation Committee. Since 2021, Ms. Burnell has served as Vice President, Growth Equity and Sustainability, of CC Industries, Inc., an affiliate of Henry Crown and Company, a privately owned investment company. From 2013 to 2021, Ms. Burnell served as a Director of CC Industries, Inc. In her role, Ms. Burnell focuses primarily on sourcing and executing new investment opportunities, and providing strategic, financial and operational oversight to operating companies. Previously, Ms. Burnell was a Director and Co-Head of Corporate Development for UL Solutions, a global safety science company, and held various positions in the Investment Banking Division of Citigroup, a global financial institution. Ms. Burnell holds a Bachelor of Science in Business Administration from the University of Richmond, and a Master of Business Administration from the University of Chicago Booth School of Business. The Company believes that Ms. Burnell is well qualified to serve as a member of the Board due to her expertise and experience in finance, operational oversight, and strategy. Ms. Burnell is the director designated by Pure Crown (as defined below) pursuant to the letter agreement described under “Director Nominations—Agreements to Nominate Certain Directors.” Daniel Coombs, 67, joined the Board in 2022 and currently serves as Executive Chairman. Prior to joining PureCycle’s Board, Mr. Coombs most recently served from January 2017 through July 2020 as executive vice president global manufacturing, projects and refining for LyondellBasell Industries N.V., a multinational chemical company and licensor of polyethylene and polypropylene technologies. Mr. Coombs previously served as executive vice president for LyondellBasell’s global business lines: olefins and polyolefins from January 2016 to January 2017, intermediates and derivatives from May 2015 to January 2016, and technology from May 2015 to September 2018. Mr. Coombs previously spent 37 years at Chevron Phillips Chemical Company, a petrochemical company, and Phillips Petroleum, a petroleum company, serving as senior vice president global manufacturing from December 2013 to May 2015, specialties, aromatics and styrenics from January 2012 to November 2013, and deputy general manager, Qatar Chemical Company, a chemical and plastics company from 2010 through 2011. Mr. Coombs earned his Bachelor of Science in Chemical Engineering from The Ohio State University, a Master of Science from the University of Tulsa and a Master of Business Administration from Texas A&M University. Mr. Coombs is an American Institute of Chemical Engineers Foundation Trustee and Chairman for the Corporate Council. In addition, Mr. Coombs is a registered professional engineer. The Company believes that Mr. Coombs is well qualified to serve as a member of the Board due to his broad experience in the chemicals and plastics industries. Mr. Coombs became Executive Chairman in August and is one of two directors designated by Sylebra Capital (as defined below) pursuant to the Board Representation Agreement (as defined below) described under “Director Nominations—Agreements to Nominate Certain Directors.” Jeffrey Fieler, 54, joined the Board in 2021. From December 1, 2023, through February 18, 2024, Mr. Fieler also served as PCT’s interim Chief Financial Officer (“I-CFO”). Mr. Fieler serves as the Chief Investment Officer and Portfolio Manager, from June 2021, of Veztemida Capital Management, an asset manager. From June 2010 to March 2018, Mr. Fieler served as the Founder and Portfolio Manager of Sylebra Capital Management, a global investment manager, where he managed an active portfolio in the global technology, media and telecommunications sectors with assets under management in excess of $1.5 billion. From May 2003 until June 2010 Mr. Fieler was at Coatue Management, a global investment manager, where he managed investment research and portfolio positions related to the Internet, Media and Telecom industries. He served as partner of Coatue Management from May 2003 until January 2007 and as a Senior Partner from January 2007 until June 2010. From March 2000 until May 2003, Mr. Fieler was a Managing Director and Senior Internet Analyst at Bear Stearns, an investment bank. Mr. Fieler has a Masters in Business Administration from the New York University Stern School of Business and a B.A. from Brown University. The Company believes that Mr. Fieler is well qualified to serve as a member of the Board due to his broad experience in finance and investing. Mr. Fieler is one of two directors designated by Sylebra Capital pursuant to the Board Representation Agreement described under “Director Nominations—Agreements to Nominate Certain Directors.” Allen Jacoby, 57, joined the Board in 2022. He is an independent director, Chair of the N&CG Committee, and the Lead Independent Director (“LID”) since May 2022. Mr. Jacoby serves as the Chief Strategy Officer and Senior Vice President of Corporate Development for Milliken and Company (“Milliken”), an American industrial manufacturer, since June 2021, and since 2022 also serves as Head of Innovation. Prior to this role, he was the Senior Vice President of the Plastics Additives business at Milliken, from May 2013 to June 2021, and the Business Manager of Industrial Textiles, from September 2009 to May 2013. Mr. Jacoby has served on the boards of the Plastics Industry Association and The Alliance to End Plastic Waste. Mr. Jacoby has a bachelor’s degree in Chemical Engineering from Purdue University and a Masters of Business Administration from The Wharton Business School, with dual majors in finance and entrepreneurial management. The Company believes that Mr. Jacoby is well qualified to serve as a member of the Board due to his more than 30 years of leadership experience in the chemicals and plastics industries in research and development, sales, manufacturing, business leadership, strategy and mergers and acquisitions.
Director Nominees and Qualifications
Fernando Musa, 58, joined the Board in 2021. He is an independent director and is a member of the Compensation Committee, Audit and Finance Committee and N&CG Committee. Mr. Musa served as LID from March 2021 until May 2022. Since March 2020, Mr. Musa has served as an Operating Partner of Advent International, a global private equity firm. Since March 2020, he has served as a Senior Advisor of Bain & Company, a global management consultancy firm, and from March to December 2020 was a member of the Advisory Board of Oxiteno, a multinational manufacturer of surfactants and chemicals. Previously, Mr. Musa served as the Global CEO of Braskem S.A., a petrochemical company, from May 2016 to December 2019, as CEO of Braskem America from May 2012 to April 2016, and as Braskem’s Vice President of Planning and Business Development in 2011. In 2010, Mr. Musa was responsible for Braskem’s Quattor Planning and Integration process. Prior to joining Braskem, Mr. Musa was a Partner of Pragma Gestão de Patrimônio Ltda., a wealth management firm, from 2008 to 2009. From 1998 to 2007, Mr. Musa was Managing Partner and Co-Head of the Latin American Practice of Monitor Group, a multinational strategy consulting practice. From 1997 to 2001, Mr. Musa served as Founding Partner of MGDK, a local consulting firm focused on turnaround and venture capital. In 1995 and 1996, Mr. Musa was a Strategic Planning Director at Editora Abril, a publishing and printing company, and was a Business Analyst and Engagement Manager at McKinsey, a worldwide management consulting firm, from 1990 to 1995. Mr. Musa also participated in the Management Trainee Program at The Dow Chemical Company in 1989. Mr. Musa received a degree in Mechanical Engineering from the Instituto Tecnológico da Aeronáutica in 1988, and also received a Masters in Business Administration from Insead in 1992. The Company believes that Mr. Musa is well qualified to serve as a member of the Board due to his vast experience in chemical sciences and his over 30 years of experience in strategic management and finance in leadership roles. Dustin Olson, 47, serves as the Company’s Chief Executive Officer (“CEO”) since August 9, 2022. Prior to his appointment to CEO, Mr. Olson served as PCT’s Chief Operating Officer, from March 9, 2022, to August 9, 2022, and Chief Manufacturing Officer from January 2021. Previously, Mr. Olson served as the Vice President of Advanced Polymer Solutions of LyondellBasell, a multinational chemical company and licensor of polyethylene and polypropylene technologies, from August 2018 to December 2020, where he had commercial responsibilities for all advanced polymer solution activities across Asia-Pacific, Africa, the Middle East and India. From June 2017 to August 2018, Mr. Olson served as LyondellBasell’s Director of Polypropylene Compounds, where he was commercially and functionally responsible for polypropylene compounds activities across Asia-Pacific, Africa, the Middle East and India. In addition, Mr. Olson also served as Director of Manufacturing for Compounding, Catalyst and Ethanol for LyondellBasell from June 2015 to June 2017, where he was responsible for all compounding, catalyst and ethanol manufacturing activities across the Americas. Mr. Olson received a B.S. in Chemical Engineering from the University of Missouri-Rolla, a Masters in Chemical Engineering from the University of Houston, and a Masters in Business Administration from Rice University’s Jesse H. Jones Graduate School of Management. The Company believes that Mr. Olson is well qualified to serve as a member of the Board due to his vast experience in the chemicals and plastics industries business leadership and strategy.
Director Compensation
Director Compensation Our director compensation, as recommended by the Compensation Committee and approved by the Board, is intended to attract, retain, and reward Board members who are not employees of the Company. In consideration of the individual time commitments and the goal of aligning compensation with our shareholders’ long-term returns, our non-employee directors receive a combination of equity-based compensation in the form of restricted stock units (“RSUs”), and cash compensation. The Compensation Committee approved the following change to the director compensation program, effective May 8, 2023: an increase in the annual equity retainer from $110,000 to $125,000. In accordance with the above, non-employee directors received an annual grant of RSUs on May 10, 2023, with a targeted value of $125,000. For purposes of the 2023 RSU grants, the number of RSUs was calculated using the average of the closing price of the Company’s common stock as reported on the Nasdaq Exchange for the twenty consecutive trading days prior to the May 10, 2023, grant date. The RSUs generally vest on the earlier of one year following the grant date or the regular annual meeting of shareholders which occurs in the calendar year following the calendar year in which the grant occurs. The base cash retainer is $75,000 and was not increased in 2023. Non-employee directors also receive cash compensation for service on committees and as lead director. The annual cash compensation for the Board members is set forth below:
Director Compensation
| Annual Fee | | | Base Cash Retainer | $75,000 | | Lead Independent Director | $35,000 | | Audit and Finance Committee Chair | $30,000 | | Compensation Committee Chair | $20,000 | | Nominating and Corporate Governance Committee Chair | $15,000 | | Non-Chair Audit and Finance Committee Members | $15,000 | | Non-Chair Compensation Committee Members | $10,000 | | Non-Chair Nominating & Corporate Governance Committee Members | $7,500 |
Director Compensation
We do not provide any tax gross-ups to our non-executive directors, all of whom are solely responsible for their respective tax obligations as a result of their equity and cash compensation for Board service. Non-employee directors and the Executive Chairman are reimbursed for reasonable expenses incurred in connection with their activities as directors, including attendance at director-education seminars and conferences. Directors who also serve as executive employees do not receive any compensation for their service on the Board. The following table sets forth the total compensation received by our directors in 2023. Information regarding compensation paid to our directors who are also named executive officers, including Mr. Olson and Mr. Fieler, is not included in the table below and is instead set forth in the 2023 Summary Compensation Table.
2023 Director Compensation
2023 Director Compensation
2023 Director Compensation
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation ($) | Total ($) | | Steven Bouck | 95,000 | 148,620 | | 243,620 | | Tanya Burnell | 115,000 | 148,620 | | 263,620 | | Dan Coombs(3) | | 107,802 | 668,349 | 776,151 | | Timothy Glockner(4) | 28,125 | | | 28,125 | | Allen Jacoby | 117,500 | 148,620 | | 266,120 | | Fernando Musa | 100,000 | 148,620 | | 248,620 | | Dr. John Scott(5) | 34,375 | | | 34,375 |
2023 Director Compensation
| (1) Fees were paid in calendar year 2023 including cash retainer and relevant committee fees. |
2023 Director Compensation
| (2) Reflects the grant date fair value of 2023 RSU awards, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718. For information regarding assumptions used in calculating these values, see Note 5 to the Consolidated Financial Statements included in our Annual Report on Form 10-K. As of December 31, 2023, the following outstanding equity awards were held by the non-employee directors: 20,193 RSUs for each of the current non-employee directors set forth above; and 9,827 RSUs for Mr. Coombs (which RSUs were awarded for his service as Executive Chairman as further described in footnote (3) below). |
2023 Director Compensation
| (3) Mr. Coombs was appointed to our Board on June 1, 2022, as an independent director. Effective August 5, 2022, Mr. Coombs agreed to serve as the Company’s Executive Chairman for a one-year term running through August 4, 2023, which was renewed effective August 5, 2023, and is being paid compensation for such service in lieu of further director compensation during the remainder of such term. During his service as Executive Chairman, Mr. Coombs receives a base salary at an annual rate of $450,000. Mr. Coombs had an opportunity to earn a discretionary cash bonus of up to $225,000 at the end of his initial one-year term as Executive Chairman based on the Board’s subjective evaluation of the success of Mr. Coombs’ oversight activities, and the Board determined that he would receive the full cash bonus of$225,000 for his service through August 4, 2023. Mr. Coombs is not eligible for a cash bonus for his service for the one-year period beginning August 5, 2023. In addition, Mr. Coombs was granted an award of RSUs with a target value of $108,000 (9,827 RSU shares with a grant date fair value of $107,802), which RSUs will generally vest on August 4, 2024, subject to Mr. Coombs’ continued service with the Company through the vesting date. Mr. Coombs anticipates transitioning to a “non-employee” director status in 2024. The amounts reported in the “All Other Compensation” column of this table reflect cash amounts received in his role as Executive Chairman. |
2023 Director Compensation
| (4) Mr. Glockner resigned from the Board effective as of the date of our 2023 annual meeting of shareholders, May 10, 2023. The amounts listed are for his service prior to his resignation. |
2023 Director Compensation
| (5) Dr. Scott resigned from the Board effective May 12, 2023. The amounts listed are for his service prior to his resignation. |
Leadership Structure
Leadership Structure Our Board regularly reviews the Board’s leadership structure and the standing committees’ responsibilities and composition. The structure and composition of PureCycle’s Board and its committees are intended to leverage the diverse perspectives of the Board members and promote effective oversight. Our Board leadership structure is currently composed of an Executive Chairman (“Chairman”), a Lead Independent Director (“LID”), an independent Audit and Finance, N&CG and Compensation Committee Chair and the CEO. Mr. Coombs serves as the Board’s Chairman. The Chairman’s activities include, but are not limited to, the following:
Leadership Structure
| • | Serves as a liaison between the Board and CEO. |
Leadership Structure
| • | Serves in a strategic and leadership capacity and provides CEO oversight and support in PureCycle’s ramp up in UPR resin production. |
Leadership Structure
Mr. Jacoby currently serves as the Board’s LID. The LID’s activities include, but are not limited to, the following:
Leadership Structure
| • | Develop, in collaboration with the Chairman and CEO, an annual set of topics to be addressed in Board agendas with a focus on the areas of board responsibility. |
Leadership Structure
| • | Review and consult with the Chairman on the quality, quantity and timeliness of information sent to the Board. |
Leadership Structure
| • | Preside over executive sessions of independent Board members. |
Leadership Structure
| • | Lead the Board’s evaluation of the CEO. |
Leadership Structure
| • | Call meetings of the independent members of the Board. |
Leadership Structure
| • | Communicate feedback to the Chairman from sessions of the independent directors. |
Leadership Structure
| • | Provide advice and counsel to the Chairman and other senior management, where appropriate. |
Leadership Structure
| • | Maintain availability for communications with major shareholders and other stakeholders, as appropriate. |
Leadership Structure
| • | Consult with the Chairman on the retention of outside consultants retained specifically for the Board and authorize the retention of consultants when engagement for directors at the exclusion of the Chairman is deemed appropriate in the LID’s judgment. |
Leadership Structure
| • | Coordinate with the Chairman on development of crisis management procedures. |
Leadership Structure
| • | Serve as interim chairman in the event of an unforeseen vacancy in the Board Chairmanship. |
Leadership Structure
Our Board believes separating the roles of Chairman and CEO combined with having an LID is in PCT’s and our shareholders’ best interests. The leadership structure with the division of responsibilities listed above supports the Board’s risk oversight efforts because it enables the Chairman to support both the Board and the CEO with balancing long-term strategic development and operations planning and implementation as PCT continues to expand as we begin commercial UPR resin production.
Board Committees and Meetings
| • | review and recommend director compensation; |
2023 Key Leadership Changes
2023 Key Leadership Changes Effective December 1, 2023, Mr. Somma resigned as the Company’s Chief Financial Officer (“CFO”). In connection with his departure, the Company and Mr. Somma entered into a Separation and Release Agreement (“Separation Agreement”) under which Mr. Somma received a cash payment of $300,000, full accelerated vesting of the remaining unvested RSUs that were part of his original grant upon joining the Company in November 2021, pro-rated vesting of all remaining outstanding awards under the PureCycle Technologies, Inc. 2021 Equity and Incentive Compensation Plan through December 1, 2023, and the right to certain COBRA reimbursements. (For more information about Mr. Somma’s total compensation, please see the Separation Agreements and Compensation Tables sections below). Interim CFO Effective December 1, 2023, the Board named Mr. Fieler as PCT’s interim Chief Financial Officer (“I-CFO”). Mr. Fieler served as I-CFO through February 18, 2024, when PCT named our new CFO, Jaime Vasquez. Upon appointment as I-CFO, the Board determined Mr. Fieler was no longer an independent director and he resigned from his Board committee assignments but continued serving as a non-independent member of the Board. Mr. Fieler’s I-CFO compensation structure reflected the temporary nature of his role during the leadership transition months rather than as an executive compensation package designed to attract and retain his services long term. Consequently, the compensation philosophy and other metrics discussed below, and applicable to NEO compensation design and decisions, were not the basis of Mr. Fieler’s I-CFO compensation design. Specifically, Mr. Fieler’s compensation for his I-CFO role was based upon Mr. Somma’s compensation value, but was entirely stock based—he did not receive any cash compensation for such service. For the duration of his I-CFO service, he received monthly compensation equal to approximately $42,500 in PCT common stock based on the weighted average closing price of PCT’s common stock for the twenty trading dates including the last day of the month of service. Additionally, following his I-CFO service, and pro-rated based on the number of months served (relative to a consecutive twelve month period), on February 28, 2024, Mr. Fieler received a bonus (as further described below) valued at $90,000 and paid in the form of 18,181 PCT shares, based on the weighted average closing price of PCT’s common stock for the twenty trading days preceding the grant date. As I-CFO, Mr. Fieler was not eligible for an annual long-term incentive (“LTI”) grant or short term cash incentive (“STI”) compensation for 2023 and will not be eligible for 2024. Mr. Fieler continued to receive his cash and equity compensation as a member of the Board during his service as I-CFO. New CFO Jaime Vasquez was appointed CFO on February 19, 2024. Mr. Vasquez will receive an annual base salary of $510,000, is eligible to participate in the Company’s 2024 STI plan, with a target payment of seventy percent (70%) of his base salary and participate in the 2024 LTI program, with a grant date value targeted at one hundred and twenty-five percent (125%) of his base salary. Mr. Vasquez’s annual STI and LTI awards will not be pro-rated based on his date of employment. Mr. Vasquez will also receive reimbursement of a maximum of $26,000 to establish a residence in the Orlando, Florida area. Mr. Vasquez will be eligible to participate in the Company’s Executive Severance Plan (the “Severance Plan”). Because Mr. Vasquez started his CFO role in 2024, this proxy does not include other details about his compensation, but we expect to provide his 2024 compensation detail in our 2025 proxy statement.
Pay Practices Supporting Good Governance
| (1) Based on current and expected annual equity awards, the Company anticipates each of Messrs. Olson and Kalter will meet the minimum holdings requirement within the five-year period. |
Peer Group for Executive Compensation
Peer Group for Executive Compensation We used data from a peer group to assist the Compensation Committee in setting each NEO’s compensation, and we generally seek to approximate the median of our peer group (described below) with respect to the total direct compensation (base salary, target STI, and target LTI) of our NEOs. However, given our status as company with limited revenue at this juncture and the need to retain key talent, 2023 LTI awards to our NEOs were generally designed to exceed this level. Further, market data is just one of several factors that we examine in determining compensation levels and we determine design and market levels based on PCT’s status as a newly operating company. Pay for any NEO may be above or below market based on other factors, including an individual NEO’s performance, experience, responsibilities or tenure in a role, any special skills, and market demand. The initial peer group (which was approved in November 2021 and used for 2022 compensation decisions) was based on various objective and subjective criteria including the following:
Peer Group for Executive Compensation
| • | Competitors for Business—industry competitors; companies subject to similar economic opportunities and challenges; |
Peer Group for Executive Compensation
| • | Competitors for Talent—direct and related industry companies in which PureCycle could reasonably compete for executive talent; |
Peer Group for Executive Compensation
| • | Scale—companies of similar market cap and the Company’s expected revenue size once operating at scale, but companies may exceed this size range if direct competitors are in a niche industry; |
Peer Group for Executive Compensation
| • | Niche Industry—PCT operates in a niche industry where direct competitors include private companies and subsidiaries of large conglomerates. Given the limited number of direct competitors of appropriate scale, inclusion of some companies that operate outside the industry is necessary to provide a statistically relevant sample set; and |
Peer Group for Executive Compensation
| • | IPO/SPAC—As a recently post-SPAC business combination public company, PCT is a pre-revenue company, which impacts scaling of potential peer companies. SPACs are often emerging growth companies with limited pay disclosure, which eliminates some of them as potential peers for pay benchmarking purposes at this time. |
Peer Group for Executive Compensation
In 2022, as a result of certain mergers & acquisition (“M&A”) activity and changes in financial size, FW Cook recommended, and the Compensation Committee agreed, to add five new peer companies (Archaea Energy Inc., Danimer Scientific, Inc., Li-Cycle Holdings Corp., Origin Materials, Inc., and Trex Company, Inc.) to replace three companies that have been acquired through M&A activity (Covanta Holding Corporation, Renewable Energy Group, and US Ecology Holdings, Inc.) and two peer companies that are no longer deemed appropriate (ESCO Technologies Inc. and CIRCOR International, Inc.). The range of annual revenues for peer group members was determined so that our expected annual revenue once operating at scale would be comparable to the median of the peer group. This revised peer group was used for compensation decisions for our NEOs for fiscal 2023 and consists of the following companies:
Peer Group for Executive Compensation
| 2023 Peer Group | | | | | Advansix Inc. | Casella Waste Systems, Inc. | Heritage-Crystal Clean, Inc. | Montrose Environmental Group, Inc. | | Amyris, Inc. | Danimer Scientific, Inc. | Li-Cycle Holdings Corp. | Origin Materials, Inc. | | Archaea Energy Inc. | Energy Recovery, Inc. | Livent Corporation | Tredegar Corporation | | Bloom Energy Corporation | Enviri (f/k/a Harco Corporation) | Loop Industries, Inc. | Trex Company, Inc. |
Pay Elements
| Element | Key Characteristics | Purpose | 2023 Changes | | STI | Variable compensation, generally paid in cash, and subject to pre-established annual financial and operational targets and personal performance. | Incent executives to achieve and exceed annual financial and strategic objectives. | Used new metrics under 2023 STI program to include goals based on liquidity and Ironton viability. | | LTI | Variable compensation, with multi-year vesting schedules and a mix of performance stock awards (“PSUs”) (based on achievement of three-year goals), stock options that vest after three years, and restricted stock units (“RSUs”) that vest ratably over four years. | Align interest of executives with shareholders and serve as an appropriate retention tool. | Added non-qualified stock options as a component of annual equity grants as they are more directly aligned with increasing share value. Because stock options are most dilutive and due to their volatility, they are used for members of our executive leadership team that have direct influence on the strategy and performance of the organization at the highest levels. Used new metrics under 2023 LTI program to includes goals based on project growth, advance growth projects and expansion into additional plastics recycling | | Benefits | Includes medical, dental, vision, short-term and long-term disability, and certain other benefits. | Competitive health and welfare benefits. | No significant changes. | | Perquisites | Designed not to represent a significant part of annual compensation. | Provide certain benefits to our executives designed to ensure ability to meet the rigors associated with an executive position of a publicly listed company. | No significant changes. |
Pay Elements
Base Salary General. We set base salaries for new executive officers at the time of hire and review base salaries for our executive officers on an annual basis to help ensure they remain market competitive and consistent with our peer group, and reflect the scope and responsibility of their positions, as well as their prior experiences. Base salaries for 2023 for our NEOs were reviewed and discussed at a regular meeting of the Compensation Committee and were effective April 2, 2023. Base salary for the CEO is recommended by the Compensation Committee and approved by the Board. We also review base salaries upon a meaningful change in an executive officer’s responsibilities or role. We take into consideration several factors in setting initial base salary or when annually reviewing base salaries for our executive officers, including: current base salary; positioning relative to competitive market data and peer companies; scope of the position; prior professional experience; and internal pay comparisons. The fiscal 2023 base salaries, determined by the Compensation Committee based on its consideration of those factors, and any percent increase over the fiscal 2022 base salaries, are provided in the table below.
Pay Elements
Annual Cash Incentives STI Overview. Our annual incentive compensation program is designed to motivate and reward Company employees, including the NEOs, to create long-term value by achieving key short-term business objectives. The inclusive design is intended to align and motivate our entire PCT team to diligently pursue and prioritize achieving our annual performance objectives. We set annual incentive compensation targets for our NEOs starting with a multiple of base salary. The Compensation Committee annually reviews and determines each NEO’s cash incentive opportunity, the payout of which is based on achievement of pre-established overall Company operational and strategic goals (a Company performance element) and each NEO’s individual impact (an individual performance element). If appropriate, the Compensation Committee may review and adjust performance criteria during the year. Actual NEO cash incentives earned may be more or less than the target amount depending on a combination of company and individual performance. The Compensation Committee evaluates NEO performance based on both an objective analysis and subjective analysis: (a) objective analysis is a fixed formula result which includes reviewing detailed financial models showing variations in compensation at differing levels of achievement and (b) subjective analysis is the Compensation Committee’s assessment of the objective analysis result in context of contributions toward strategic or operational objectives and actual value realized—meaning the Compensation Committee, in its judgement, may exercise discretion, positive or negative, to adjust the total value of incentive compensation in light of financial and non-financial performance. The Compensation Committee believes our STI program structure aligns with strategic priorities and underscores the importance of both financial and non-financial performance and successfully motivates employees, including NEOs, to achieve holistic performance that both promotes PCT’s long-term value opportunities for our shareholders and is reasonable in relation to actual annual performance. Actual STI payouts with respect to the Company performance element can range from 0% (if threshold levels of performance are not met) to 200% of the target award (if maximum levels of performance are met for all of the performance measures). Actual STI payouts with respect to the individual performance element can range from 0% to 200% of the target award based on the Compensation Committee’s subjective evaluation of each NEO’s performance. When determining the target award for each NEO, the Compensation Committee generally references the median of our peer group for target total cash compensation (sum of base salary and target annual cash incentive) for the position in which such NEO serves. The annual award for the CEO is recommended by the Compensation Committee and approved by the Board. 2023 Short-Term Cash Incentive Award Targets The 2023 STI design provided NEOs with an opportunity to earn cash incentive payments based on Company performance goal achievements (weighted at 70%) and individual performance achievement (weighted at 30%), with potential payouts ranging from 0% to 200% of target. The Compensation Committee approved the fiscal 2023 award opportunities for our NEOs under the Company’s STI program as set forth below (which were unchanged, as percentages of base salary, from 2022 award opportunities):
Pay Elements
| NEO | Target Payout (as a % of Base Salary) | 2023 STI Target Award | | Dustin Olson | 100% | $773,000 | | Jeffrey Fieler(1) | N/A | N/A | | Lawrence Somma(2) | 70% | $355,255 | | Brad Kalter (2) | 70% | $284,204 |
Pay Elements
| (2) STI target awards are prorated based on salary adjustments that occurred during 2023 for Mr. Somma and Mr. Kalter. |
Pay Elements
| | Level of Performance | | | | Performance Metric and Weighting | Threshold (50%) payout | Target (100% payout) | Maximum (200% payout) | | Demonstrate Ironton’s Commercial Viability (50%) | Deliver Adjusted EBITDA >$0MM over a consecutive three-month window | Deliver Adjusted EBITDA >$9.42MM over a consecutive three-month window | Deliver Adjusted EBITDA >$11.7MM over a consecutive three-month window | | Ensure enough liquidity to be able to meet all commitments for fiscal 2023 (50%) | Raise $100MM capital | Raise $500MM capital | Raise $800MM capital |
Pay Elements
| Performance Metric | Actual Results | Formulaic Payout Percentage for each Metric | Metric Weight | Final Weighted Payout Percentage | | Demonstrate Ironton’s Commercial Viability | The Company did not meet the Adjusted EBITDA threshold performance | 0% | 50% | 0% | | Ensure enough liquidity to be able to meet all commitments for fiscal 2023 | $322 million of capital raised | 78% | 50% | 39% | | Total Strategic Company Performance Goals Payout % | | | | 39% |
Pay Elements
Individual Performance Achievements The Compensation Committee did not identify pre-established performance goals for the individual performance criteria in 2023. Rather, the Compensation Committee reviewed each of Messrs. Olson’s and Kalter’s individual efforts toward pursuing the Company’s performance goals and contributions to progress made despite challenging circumstances. Both Messrs. Olson and Kalter pursued and supported Company strategic objectives, meeting the Compensation Committee and Board’s individual performance expectations. Although both Messrs. Olson and Kalter contributed to our near and long-term growth opportunities, given our challenging 2023 overall performance, the Compensation Committee concluded that our long-term value would be best served by using its discretion to match Messrs. Olson’s and Kalter’s individual performance results with overall Company performance. Accordingly, the Compensation Committee determined that the payout percentage for the individual performance component of the STI for Messrs. Olson and Kalter would be 39% of target. When combined with the final weighted payout percentage for the strategic Company performance goals of 39%, this resulted in an overall payout percentage under the STI of 39% of target. In general, 2023 STI program participants must remain continuously employed by the Company until the award payment date in order to receive a payout of an award under the 2023 STI. The following table indicates the actual STI program payment made to each NEO for fiscal 2023:
Pay Elements
| NEO | 2023 STI Target Award ($) | Total Payout % (as a % of Target) | Actual STI Payout ($) | | Dustin Olson | 773,000 | 39% | 301,470 | | Lawrence Somma(1) | 355,255 | N/A | N/A | | Brad Kalter | 284,204 | 39% | 110,839 | | Jeffrey Fieler(2) | N/A | N/A | N/A |
Pay Elements
| (1) Mr. Somma forfeited the right to receive a payout under the 2023 STI due to his resignation effective December 1, 2023. |
Pay Elements
As described below, the Company entered into an independent contractor agreement with Mr. Fieler in connection with his appointment as I-CFO. Under the terms of the independent contractor agreement, Mr. Fieler was eligible for a minimum bonus at the conclusion of his service as I-CFO of $360,000, subject to pro-ration based on the number of months (relative to a full year) during which Mr. Fieler served as I-CFO. The bonus could have been increased up to a total of $720,000 (subject to pro-ration as described above) based on Mr. Fieler’s performance as I-CFO in the discretion of the Compensation Committee. At the conclusion of Mr. Fieler’s service as I-CFO in February 2024, the Compensation Committee determined not to increase his bonus above the $360,000 level, and such amount was pro-rated to be $90,000. In accordance with the terms of the bonus, it was paid in the form of 18,181 PCT shares, based on the weighted average closing price of PCT’s common stock for the twenty consecutive trading days preceding the grant date of the shares. Because the shares were earned and paid in 2024, their value does not appear in the 2023 Summary Compensation Table, but we expect to include the value of such shares in the Summary Compensation Table in our 2025 proxy statement. Long-Term Incentive Equity Awards LTI Overview We believe our LTI program opportunities, along with our stock ownership guidelines, align the interests of our executive officers with the interests of our shareholders. We provide our NEOs an opportunity to earn market and peer group competitive long-term incentives in the form of PSU, stock option and RSU awards. In determining the size of these long-term incentive awards for each NEO, we consider market data, the scope and complexity of the executive’s position, experience, and internal pay comparisons. Previously, one-half of the long-term incentive value was delivered in the form of RSUs and one-half was delivered in the form of PSUs. For fiscal 2023, the Compensation Committee determined that non-qualified stock options would be added to the awards to our NEOs with the following allocation: PSUs (25%), stock options (25%), and RSUs (50%). These LTI awards were approved by the Compensation Committee (and recommended to the Board by the Compensation Committee for the CEO) at its regular meeting held in the first fiscal quarter of 2023. We believe this allocation of equity awards provides an appropriate balance between rewarding achievement of Company-specific performance measures and delivering long-term incentive value through stock performance. Given the early-stage challenges typical for pre-revenue companies, the Compensation Committee believes above-market target equity awards are appropriate and seeks to set annual LTI award targets above the median of our peer group. As the Company matures, the Compensation Committee expects to adjust annual LTI target awards and provide target values that are closer to the market median. PSU Awards PSU awards are paid out in shares of our common stock following completion of a three-year performance period if certain performance goals are achieved as determined by the Compensation Committee. The Compensation Committee establishes performance measures and weighting for the entire three-year performance period, as well as thresholds and maximums. Factors the Compensation Committee considers when establishing the performance goals for the three-year period include our status as a pre-revenue company, as well as near-term and long-term strategic goals. At the end of the three-year performance period, we expect management to present a summary of performance against the performance goals and the Compensation Committee to make a final determination of actual achievement against these goals. Actual payouts can range from 0% (if the threshold performance levels are not met) to 200% of the target award (if maximum performance levels are met). The PSUs granted in 2023 will be earned based on achievement of three weighted pre-established performance objectives related to: (i) domestic project growth (weighted 50%), (ii) advance international growth projects (weighted 35%), and (iii) expansion into additional plastics recycling (weighted 15%), and will vest on the date the attainment of such performance objectives is determined by the Compensation Committee (or, with respect to the CEO, by the Board), subject to the participant’s continued employment with the Company through December 31, 2025. The actual number of shares (if any) issued in settlement of the PSUs may range from 50% (if threshold performance is achieved) to 200% of target. In general, we do not disclose the specific, forward-looking goals that we established for the 2023 PSUs because (1) these goals relate to executive compensation to be earned and/or paid in future years and do not affect a fair understanding of the NEOs’ compensation for 2023 and (2) we believe that disclosure of such goals while the applicable performance period is ongoing would cause us competitive harm. However, we expect to disclose such goals in future proxy statements once the applicable performance periods have ended as part of our discussion of the amounts earned by our NEOs under these awards. Settlement of 2021 — 2023 PSU Award Due to operational challenges, the Company did not meet 2021-2023 LTI minimum performance threshold objectives. Applicable NEO PSUs were therefore forfeited and returned to the pool of shares eligible for award under the Plan. The table below shows the applicable goals, achievement and actual results with respect to the 2021-2023 PSU awards.
Pay Elements
| 2021-2023 PSU Metric - Goals | Weighting | Threshold 50% | Target 100% | Maximum 200% | | Total Production in FY (MM lbs)(1) | 100% | 133MM | 178MM | 222MM |
Pay Elements
| 2021-2023 PSU Metric - Achievement | Weighting | FY 2021 | FY 2022 | FY 2023 | 2021-2023 | Attainment | | Total Production in FY (MM lbs)(1) | 100% | — | — | 97MM | 97MM | 0% |
Pay Elements
Non-qualified Stock Options In 2023, the Compensation Committee allocated 25% of NEO long term incentive compensation in the form of a non-qualified stock option with a ten-year term, that cliff vests at the end of a three-year period. The Company believes stock options are a good mechanism to link executive compensation to long-term company performance because their value is realized through an increase in the market value of the Company’s common stock, thereby linking that element of compensation to Company performance. In determining the grant date fair values of these option awards we use the Black-Scholes option pricing model with the following assumptions: expected annual dividend yield, expected volatility, risk-free rate of return, expected option term (in years). Restricted Stock Unit Awards The Compensation Committee also grants RSUs. RSU awards generally vest in four equal annual installments following the grant date, in each case subject to the participant’s continued employment with the Company through the applicable vesting date. We believe that the RSU awards serve as a retention tool for our executive officers and that the long-term value of such awards aligns our executive officers’ goals with those of our shareholders. Our NEOs received the following initial long-term incentive award opportunities in 2023:
Pay Elements
| NEO | Target LTI Value ($)(1) | Options (#) | PSUs (#) | RSUs (#) | | Dustin Olson | 3,000,000 | 169,300 | 131,578 | 263,157 | | Jeffrey Fieler(2) | N/A | — | — | — | | Lawrence Somma(3) | 1,225,000 | 69,130 | 53,728 | 107,456 | | Brad Kalter | 925,000 | 52,200 | 40,570 | 81,140 |
Pay Elements
| (1) Mr. Somma’s and Mr. Kalter’s 2023 LTI target value is based on a percentage of their initial base salary rates in 2023 as approved by the Compensation Committee: 200% for Mr. Somma and 175% for Mr. Kalter. The Compensation Committee also approved a special increase in the LTI target value (for 2023 only) for each of Mr. Somma and Mr. Kalter equal to $225,000. The increase in such targets compared to 2022, as well as the special increase for 2023 only, were implemented to incentivize retention. |
Pay Elements
| (3) Mr. Somma is eligible for a prorated payout of his 2023 LTI awards based on his termination date December 1, 2023. |
Other Compensation Related Matters
Other Compensation Related Matters Retirement Benefits We offer a tax-qualified retirement savings plan to our employees, under which participating employees may contribute a portion of their eligible compensation into their plan accounts. Each of the NEOs was eligible to participate in the plan during fiscal 2023. The Company makes contributions under the 401(k) plan matching the employee’s own contributions dollar for dollar up to 4% of the employee’s contributions, subject to IRS limits. Offer Letters We are party to an offer letter with Mr. Olson that was entered into in connection with his initial commencement of employment as our Chief Manufacturing Officer in January 2021. The offer letter provides for the basic terms of Mr. Olson’s employment, including an initial annual base salary rate of $400,000, a target STIP opportunity equal to 20% of base salary, and other customary employee benefits. The offer letter provides that the Company will reimburse Mr. Olson for up to $100,000 in relocation expenses. The offer letter also contemplates an anticipated future equity award, the value of which is expected to be between $1,000,000 and $3,000,000, which is expected to be granted following the commissioning of the Ironton Facility. Mr. Olson’s offer letter was not revised in association with his promotion to Chief Operating Officer on March 9, 2022, or his August 5, 2022, appointment as Chief Executive Officer, although certain elements of his compensation were adjusted in connection with those appointments. In connection with his commencement of employment in November 2021, we provided an offer letter to Mr. Somma, which offer letter provides for the basic terms of his employment, including an initial annual base salary rate of $500,000, a 2022 target STIP opportunity equal to 70% of his base salary, an expected long-term incentive award target of $700,000, and certain customary employee benefits. The offer letter also provides that Mr. Somma will participate in the Severance Plan, which is further described below. The offer letter also provides that Mr. Somma will enter into a restrictive covenant agreement. In connection with his commencement of employment in January 2021, we provided an offer letter to Mr. Kalter, which offer letter provides for the basic terms of his employment, including an initial annual base salary rate of $375,000, participation in annual and long-term incentive plans, a sign-on payment of $150,000 (paid in 2021), and certain customary employee benefits. The offer letter also provides that Mr. Kalter will participate in the Severance Plan. The offer letter also provides that Mr. Kalter will enter into a restrictive covenant agreement. Independent Contractor Agreement In connection with Mr. Fieler’s appointment as I-CFO, which was effective as of December 1, 2023, the Company and Mr. Fieler executed an independent contractor agreement (“ICA”). Pursuant to the terms of the ICA, Mr. Fieler’s appointment was on a month-to-month basis, with the ability for either party to terminate the appointment on not less than 30 days’ notice without cause. Mr. Fieler did not receive any cash compensation for his service as I-CFO. For the duration of Mr. Fieler’s service as interim CFO, Mr. Fieler received monthly compensation in the form of shares of the Company’s common stock valued at $42,500, with the number of shares to be based on the weighted average closing price of the Company’s common stock for the twenty (20) trading days prior to and including the last trading day of each month. Additionally, Mr. Fieler was eligible for a minimum bonus at the conclusion of his service as interim CFO of $360,000, pro-rated based on the number of months (relative to a full year) in which Mr. Fieler served as I-CFO. The bonus award could be increased up to a value of $720,000 (subject to pro-ration as described above) based on Mr. Fieler’s performance as I-CFO in the discretion of the Compensation Committee. Payment of the bonus, when earned, was to be made in shares, with the number of shares based on the weighted average closing price of the Company’s common stock for the twenty (20) trading days prior to and including the last trading day of the month in which Mr. Fieler’s service as I-CFO ended. Mr. Fieler was not eligible for an annual long-term-incentive grant as his tenure as I-CFO was not expected to exceed twelve months. Mr. Fieler continued to receive his cash and equity compensation as a member of the Board. Mr. Fieler’s appointment as I-CFO lasted through February 18, 2024, when the Company named its new CFO, Jaime Vasquez. For the duration of his I-CFO service, Mr. Fieler received monthly compensation equal to $42,500 in shares of the Company’s common stock. Additionally, following his I-CFO service, the Compensation Committee approved and Mr. Fieler received a bonus equal to $90,000, paid in 18,181 shares of the Company’s common stock. Mr. Fieler received no further compensation in connection with his appointment as I-CFO. Separation Agreements During Mr. Somma’s employment with the Company, he had an offer letter that provided for the basic terms of his employment, including an initial annual base salary rate of $500,000, a 2022 target STI opportunity equal to 70% of his base salary, an expected long-term incentive award target of $700,000, and certain customary employee benefits. The offer letter also provided that Mr. Somma would participate in the Severance Plan. The offer letter also provided that Mr. Somma would enter into a restrictive covenant agreement. On December 1, 2023, we entered into a Separation Agreement with Lawrence Somma to memorialize the terms of his departure from the Company. The Separation Agreement provided for customary releases of claims in favor of the Company in exchange for the following: a lump sum payment of $300,000; full vesting of all remaining RSUs granted on November 23, 2021, prorated vesting through December 1, 2023, of RSUs granted on March 2, 2022, and March 22, 2023; prorated vesting through December 1, 2023, for non-qualified stock options granted on March 22, 2023; prorated vesting through December 1, 2023, for performance restricted stock units granted on March 2, 2022, and March 22, 2023, with such vested PSUs subject to the Company’s actual achievement of performance goals for such awards; and reimbursement for the portion of Mr. Somma’s COBRA premiums that exceeds his active employee rates for coverage for him and his dependents for up to 12 months following the separation. The Separation Agreement also includes reaffirmation of Mr. Somma’s obligations under his restrictive covenant agreement. Tax Considerations Code Section 162(m) imposes an annual deduction limit of $1 million on the amount of compensation paid to each “covered employee,” which includes certain current and former officers (including the NEOs). Compensation paid to our NEOs over this limit is generally nondeductible. The Compensation Committee structures our executive compensation program so that a sizable portion of total executive compensation is linked to the performance of our Company, even though amounts in excess of the Code Section 162(m) limit are generally not deductible.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table provides information regarding the compensation of our NEOs for the 2023, 2022, and 2021 fiscal years, as applicable.
2023 Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | | Dustin Olson Chief Executive Officer | 2023 | 758,135 | | 2,368,410 | 494,356 | 301,470 | 24,195 | 3,946,566 | | | 2022 | 571,355 | 463,864 | 3,218,639 | — | 55,983 | 13,204 | 4,323,045 | | | 2021 | 400,000 | 721,000 | 5,547,341 | — | — | 26,222 | 6,694,563 | | Jeffrey Fieler(5) Interim Chief Financial Officer | 2023 | — | — | 148,620 | — | — | 100,000 | 248,620 | | Lawrence Somma Former Chief Financial Officer | 2023 | 468,269 | — | 967,104 | 201,860 | — | 349,674 | 1,986,907 | | | 2022 | 500,000 | 283,500 | 851,765 | — | 36,750 | 20,595 | 1,692,610 | | | 2021 | 64,423 | 250,000 | 3,299,996 | — | — | 1,667 | 3,616,086 | | Brad Kalter General Counsel & Corporate Secretary | 2023 | 398,154 | — | 730,260 | 152,424 | 110,839 | 22,224 | 1,413,902 | | | 2022 | 394,792 | 223,927 | 608,406 | — | 29,027 | 20,938 | 1,277,090 |
2023 Summary Compensation Table
| (1) Amounts in this column reflect the aggregate grant date fair values of performance-based restricted stock unit (“PSU”), and service-based restricted stock unit (“RSU”) awards granted by the Company to the NEOs (other than Mr. Fieler) in 2023, in each case calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718. For performance-based awards, grant date fair values reflect the value at the grant date based on the probable outcome of the applicable performance conditions. Assuming maximum achievement with respect to the applicable performance conditions, the grant date fair values of the 2023 long-term incentive program PSU awards granted on March 22, 2023, would be as follows: for Mr. Olson, $1,578,936; for Mr. Somma, $644,736; and for Mr. Kalter, $486,840. For information regarding the assumptions used in calculating the value of these awards, see note 5 (Equity-Based Compensation) to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023. For more information regarding the awards disclosed in this column, see “Long-Term Incentive Equity Awards” above. For Mr. Fieler, the amount in this column represents his equity retainer for services as a director, which would have otherwise been reported in the “Stock Awards” column of the “2023 Director Compensation Table.” |
2023 Summary Compensation Table
| (2) Amounts in this column reflect the grant date fair value of the option awards granted by the Company to the NEOs (other than Mr. Fieler) in 2023, calculated in accordance with FASB ASC Topic 718. For information regarding the assumptions used in calculating the value of these awards, see note 5 (Equity-Based Compensation) to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023. See the “2023 Grants of Plan-Based Awards” table for more information on these grants. |
2023 Summary Compensation Table
| (3) Reflects cash incentive amounts paid to the NEOs (other than Mr. Fieler) under the Company’s STI program for 2023, as further described above under “2023 Short-Term Cash Incentive Awards.” |
2023 Summary Compensation Table
| (4) The chart below provides a breakdown of the amounts reported in All Other Compensation column: |
2023 Summary Compensation Table
| NEO | Director Compensation(a) | Airline Compensation(b) | Group Term Life | 401(k) Company Match | Executive Physical | Separation Payment(c) | Total | | Dustin Olson | — | — | $332 | $19,527 | $4,336 | — | $24,195 | | Jeffrey Fieler | $100,000 | — | — | — | — | — | $100,000 | | Lawrence Somma | — | $750 | $953 | $17,401 | $4,328 | $326,243 | $349,674 | | Brad Kalter | — | — | $953 | $17,431 | $3,841 | — | $22,225 |
2023 Summary Compensation Table
| (a) This amount represents the cash retainer fees that Mr. Fieler earned for his service as a director during 2023, which would have otherwise been reported in the “Fees Earned or Paid in Cash” column of the 2023 Director Compensation Table.” |
2023 Summary Compensation Table
| (b) Represents a fixed cash amount that is paid under our travel and entertainment policy as an incentive to travel in coach for business travel. |
2023 Summary Compensation Table
| (c) Consists of a cash payment of $300,000 and $26,243 COBRA reimbursement in connection with his separation. |
2023 Summary Compensation Table
| (5) The compensation reported in this table for Mr. Fieler includes only compensation he received for his services as a director during 2023. For more information about Mr. Fieler’s compensation for his I-CFO role, which is not reportable as 2023 compensation, see, 2023 Key Leadership Changes above. |
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table presents additional information regarding plan-based awards granted to our NEOs in fiscal 2023.
2023 Grants of Plan-Based Awards
| Name | Grant Date(1) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units(4) (#) | All Other Option Awards: Number of Securities Underlying Options(5) (#) | Exercise or Base Price of Option Awards(5) ($/Sh) | Grant Date Fair Value of Stock and Option Awards(6) ($) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Dustin Olson | 3/22/2023 | 275,550 | 773,000 | 1,546,000 | 65,789 | 131,578 | 263,156 | | | | 789,468 | | | 3/22/2023 | | | | | | | 263,157 | | | 1,578,942 | | | 3/22/2023 | | | | | | | | 169,300 | 5.72 | 494,356 | | Jeffrey Fieler | 5/10/2023 | | | | | | | 20,193 | | | 148,620 | | Lawrence Somma | 3/22/2023 | 124,339 | 355,255 | 710,510 | 26,864 | 53,728 | 107,456 | | | | 322,368 | | | 3/22/2023 | | | | | | | 107,456 | | | 644,736 | | | 3/22/2023 | | | | | | | | 69,130 | 5.72 | 201,860 | | Brad Kalter | 3/22/2023 | 99,471 | 284,204 | 568,408 | 20,285 | 40,570 | 81,140 | | | | 243,420 | | | 3/22/2023 | | | | | | | 81,140 | | | 486,840 | | | 3/22/2023 | | | | | | | | 52,200 | 5.72 | 152,424 |
2023 Grants of Plan-Based Awards
| (1) The Compensation Committee approved the 2023 LTI awards to each of the NEOs on March 22, 2023. The LTI awards are generally subject to continued employment through the applicable performance or vesting period. |
2023 Grants of Plan-Based Awards
| (2) Represent payout opportunities for the NEOs under the 2023 STI program. |
2023 Grants of Plan-Based Awards
| (3) Represents the potential payout for the PSUs granted on March 22, 2023. For the PSUs, threshold payout is 50% of target and maximum payout is 200% of target, and actual payout is based on three-year operational metrics. |
2023 Grants of Plan-Based Awards
| (4) Represents the RSU awards for 2023. RSUs are time-based and do not have a performance requirement for vesting. The time-based awards generally vest 25% per year over 4 years on March 22, 2024, March 22, 2025, March 22, 2026, and March 22, 2027, except for Mr. Fieler’s award, which was granted in connection with his service as a director and vests on the earlier of (a) the one-year anniversary of the date of grant and (b) the date of the Company’s regular annual meeting of shareholders which occurs in the calendar year following the calendar year in which the date of grant occurs. |
2023 Grants of Plan-Based Awards
| (5) Represents the number of Options awarded on the grant date, which cliff vest at the end of a three-year period on March 22, 2026. |
2023 Grants of Plan-Based Awards
| (6) Represents the grant date fair value, calculated in accordance with FASB ASC Topic 718, based on the closing price of our stock on the date of grant for RSUs and PSUs and a Black-Scholes value for Options. The values reported in this column for the PSUs were calculated at target. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table summarizes information about all outstanding unvested equity awards held by our NEOs as of December 29, 2023.
Outstanding Equity Awards at 2023 Fiscal Year-End
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested(1) ($) | | Dustin Olson | 1/4/2021 | | | | | 38,793(2) | 157,112 | | | | | 7/8/2021 | | | | | 90,305(3) | 365,735 | | | | | 3/2/2022 | | | | | | | 58,823(5a) | 238,233 | | | 3/2/2022 | | | | | 44,118(5b) | 178,678 | | | | | 5/20/2022 | | | | | | | 21,766(5a) | 88,152 | | | 5/20/2022 | | | | | 16,325(6a) | 66,116 | | | | | 8/5/2022 | | | | | | | 113,332(5a) | 458,995 | | | 8/5/2022 | | | | | 84,999(6b) | 344,246 | | | | | 3/22/2023 | 0 | 169,300(7a) | 5.72 | 3/22/2033 | | | | | | | 3/22/2023 | | | | | | | 131,578(7b) | 532,891 | | | 3/22/2023 | | | | | 263,157(7c) | 1,065,786 | | | | Jeffrey Fieler | 5/10/2023 | | | | | 20,193(8) | 81,782 | | | | Lawrence Somma(4) | 3/2/2022 | | | | | | | 37,603(5a) | 152,292 | | | 3/22/2023 | 16,035(7d) | 0 | 5.72 | 2/29/2024 | | | | | | | 3/22/2023 | | | | | | | 16,437(7b) | 66,570 | | Brad Kalter | 7/8/2021 | | | | | 37,507(3) | 151,903 | | | | | 3/2/2022 | | | | | | | 42,017(5a) | 170,169 | | | 3/2/2022 | | | | | 31,513(5b) | 127,628 | | | | | 3/22/2023 | 0 | 52,200(7a) | 5.72 | 3/22/2033 | | | | | | | 3/22/2023 | | | | | | | 40,570(7b) | 164,309 | | | 3/22/2023 | | | | | 81,140(7c) | 328,617 | | |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Based on the closing stock price of $4.05 on December 29, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (2) Reflects restricted shares received in satisfaction of the incentive units granted by PureCycle Technologies LLC to Mr. Olson prior to the Company going public, 25% of which vested on January 4, 2022, and 1/36 of which vest on a monthly basis thereafter. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (3) RSUs awarded on July 8, 2021,vest at the rate of 25% per year, subject to satisfaction of vesting criteria for the applicable year, with vesting dates of July 8, 2022, July 8, 2023, July 8, 2024, and July 8, 2025. LTI awards are generally subject to continued employment through the applicable vesting date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (4) Mr. Somma was awarded RSUs on November 23, 2021, vest at the rate of 25% per year, subject to satisfaction of vesting criteria for the applicable year, with vesting dates of November 15, 2022, November 15, 2023, November 15, 2024, and November 15, 2025. In accordance with Mr. Somma’s separation agreement, the remaining RSUs granted on November 23, 2021,fully vested on December 29, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (5a) PSUs awarded to Mr. Olson and Mr. Kalter on March 2, 2022 and to Mr. Olson on May 20, 2022, and August 5, 2022, become eligible to vest upon Compensation Committee certification of achievement of performance metrics for the three-year performance period ending on December 31, 2024. LTI awards are generally subject to continued employment through the applicable vesting period. Mr. Somma’s PSUs were prorated based on his December 1, 2023,resignation date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (5b) RSUs awarded on March 2, 2022, vest at the rate of 25% per year, subject to satisfaction of vesting criteria for the applicable year, with vesting dates of March 2, 2023, March 2, 2024, March 2, 2025, and March 2, 2026. LTI awards are generally subject to continued employment through the applicable vesting date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (6a) RSUs awarded on May 20, 2022,vest at the rate of 25% per year, subject to satisfaction of vesting criteria for the applicable year, with vesting dates of May 20, 2023, May 20, 2024, May 20, 2025, and May 20, 2026. LTI awards are generally subject to continued employment through the applicable vesting date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (6b) RSUs awarded on August 5, 2022,vest at the rate of 25% per year, subject to satisfaction of vesting criteria for the applicable year, with vesting dates of August 5, 2023, August 5, 2024, August 5, 2025, and August 5, 2026. LTI awards are generally subject to continued employment through the applicable vesting date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (7a) Non-qualified options awarded on March 22, 2023,cliff vest on March 22, 2026, and expire in 2033. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (7b) PSUs awarded on March 22, 2023,become eligible to vest upon Compensation Committee certification of achievement of performance metrics for the three-year performance period ending on December 31, 2025. LTI awards are generally subject to continued employment through the applicable vesting period. Mr. Somma’s PSU opportunities were prorated based on his December 1, 2023,resignation date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (7c) RSUs awarded on March 22, 2023,vest at the rate of 25% per year, subject to satisfaction of vesting criteria for the applicable year, with vesting dates of March 22, 2024, March 22, 2025, March 22, 2026, and March 22, 2027. LTI awards are generally subject to continued employment through the applicable vesting date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (7d) A prorated portion of Mr. Somma’s non-qualified stock option (based on his December 1, 2023,resignation date) vested in connection with his departure and remained exercisable for 90 days after his resignation. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (8) Reflects RSUs granted in connection with Mr. Fieler’s service as a director that vest on the earlier of (a) the one-year anniversary of the date of grant and (b) the date of the Company’s regular annual meeting of shareholders which occurs in the calendar year following the calendar year in which the date of grant occurs. |
2023 Option Exercises and Stock Vested
2023 Option Exercises and Stock Vested The following table provides details regarding the equity awards held by our NEOs that vested during 2023.
2023 Option Exercises and Stock Vested
| Name | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Dustin Olson | — | | 129,441 | $1,170,078(1)(2)(3)(4)(7) | | Jeffrey Fieler | — | | 13,447 | 104,349(8) | | Lawrence Somma | — | | 225,625 | 946,533(5)(6) | | Brad Kalter | — | | 29,257 | $257,814(1)(3) |
2023 Option Exercises and Stock Vested
| (1) The value realized on vesting of stock awards includes RSUs that vested on March 2, 2023, based on a market value of $5.62 for all NEOs (other than Mr. Fieler). |
2023 Option Exercises and Stock Vested
| (2) The value realized on vesting of stock awards includes RSUs that vested on May 20, 2023, based on a market value of $6.60 for Mr. Olson. |
2023 Option Exercises and Stock Vested
| (3) The value realized on vesting of stock awards includes RSUs that vested on July 8, 2023, based on a market value of $10.60 for Mr. Olson and Mr. Kalter. |
2023 Option Exercises and Stock Vested
| (4) The value realized on vesting of stock awards includes RSUs that vested on August 5, 2023, based on a market value of $10.97 for Mr. Olson. |
2023 Option Exercises and Stock Vested
| (5) The value realized on vesting of stock awards includes RSUs that vested on November 15, 2023, based on a market value of $4.21 for Mr. Somma. |
2023 Option Exercises and Stock Vested
| (6) The value realized on vesting of stock awards includes RSUs that vested on December 29, 2023, based on a market value of $4.05 for Mr. Somma. |
2023 Option Exercises and Stock Vested
| (7) The value realized on vesting of stock awards for Mr. Olson also includes restricted shares received in satisfaction of the incentive units granted by PureCycle Technologies LLC to Mr. Olson prior to the Company going public, a portion of which vested on January 4, 2022, and which continued to vest monthly thereafter. |
2023 Option Exercises and Stock Vested
| (8) The value realized on vesting of stock awards includes Mr. Fieler’s director RSUs awarded in 2022 that vested on May 10, 2023, based on a market value of $7.76. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control As discussed above in “2023 Key Leadership Changes”, Mr. Fieler’s I-CFO compensation structure reflected the temporary nature of his role during the leadership transition months rather than an executive compensation package designed to attract and retain his services long term. Consequently, he was not eligible to participate in the severance plan described below; as a result none of the severance compensation discussions below are applicable to Mr. Fieler.
CEO Pay Ratio
CEO Pay Ratio The “CEO Pay Ratio” is a comparison of the CEO’s annual total compensation to the annual total compensation of our median employee (referred to herein as the “Median Employee”). CEO compensation for purposes of this disclosure represents the total compensation reported for Mr. Olson in the 2023 Summary Compensation Table above. The total annual compensation for each of Mr. Olson and our Median Employee, as well as the ratio, is set forth below:
CEO Pay Ratio
| • | Mr. Olson’s annual total compensation for 2023 (as described above) was $3,946,566. |
CEO Pay Ratio
| • | PCT’s Median Employee annual total compensation was $127,672. |
CEO Pay Ratio
| • | The ratio of CEO annual total compensation to Median Employee annual total compensation for 2023 was approximately 31 to 1. |
CEO Pay Ratio
To identify the median employee, we conducted an analysis of our total U.S. employee population that were active employees as of December 31, 2023, without the use of statistical sampling. We determined our median employee using “total compensation” paid during the full year 2023. Total compensation consisted of gross wages to include base wages, overtime, shift differential, incentives, paid time off, and perquisites, as applicable. We did not annualize gross wages for employees who were not employed for the full year in 2023. This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K of the SEC using the data and methodology summarized above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the median employee compensation amount and CEO pay ratio reported by other companies may not be comparable to the amount and ratio reported above.
Pay versus Performance
Pay versus Performance The table below discloses the total compensation for our NEOs for the past three fiscal years as disclosed in the Summary Compensation Table, the “compensation actually paid” to our principal executive officer (our “PEO”) and, on an average basis, our other NEOs (in each case, as determined under SEC rules) (collectively, the “PVP NEOs”), our total shareholder return (“TSR”), the TSR of the S&P Small Cap 600 Materials Index over the same period, our net income, and our company-selected financial performance measure, Adjusted EBITDA.
Pay versus Performance
| PAY VERSUS PERFORMANCE TABLE | | | | | | | | | | | | | | | Year(a) | Summary Compensation Table Total for PEO 1 (b)(1) | Compensation Actually Paid to PEO 1 (c)(1)(2) | Summary Compensation Table Total for PEO 2 (b)(1) | Compensation Actually Paid for PEO 2 (c)(1)(2) | | Average Summary Compensation Table Total for Non-PEO Named Executive Officers (d)(1) | Average Compensation Actually Paid to Non-PEO Named Executive Officers (e)(1)(2) | Value of Initial Fixed $100 Investment Based On: | | Net Income (Losses) (in thousands) (h) | | Company- Selected Measure: Adjusted EBITDA (in thousands) (i)(4) | | | | | | | | | | | Total Shareholder Return (f)(3) | Peer Group Total Shareholder Return (g)(3) | | | | | | 2023 | $3,946,566 | $3,084,231 | | | | $1,216,476 | $210,388 | $14.01 | 115.92 | ($ | 101,715) | ($ | 84,893) | | 2022 | $4,323,045 | $1,911,537 | $4,266,831 | ($ | 4,574,715) | $1,313,331 | $245,344 | $23.39 | $96.62 | ($ | 84,746) | ($ | 61,745) | | 2021 | — | — | $9,352,652 | | 7,655,192 | $14,889,283 | $7,444,210 | $33.11 | $102.88 | ($ | 77,502) | ($ | 40,584) |
Pay versus Performance
| (1) Dustin Olson (“PEO 1”) served as our principal executive officer starting August 5, 2022. Michael Otworth (“PEO 2” and, together with PEO 1, the “PEOs”) served as our principal executive officer from January 1, 2022, through August 4, 2022, and for all of 2021. For 2023, our non-PEO NEOs were Lawrence Somma, Jeffrey Fieler and Brad Kalter. For 2022, our non-PEO NEOs were Lawrence Somma, Brad Kalter and David Brenner. For 2021, our non-PEO NEOs were Lawrence Somma, Michael Dee and Dustin Olson. In this disclosure, we refer to each of 2023, 2022 and 2021 as a “Covered Year.” |
Pay versus Performance
| (2) For each of 2023, 2022 and 2021, the values included in this column for the CAP to our PEOs and the average CAP to our non-PEO NEOs reflect the following adjustments to the values included in column (b) and column (d), respectively: |
Pay versus Performance
| PEO 1 (Dustin Olson) | 2023 ($) | | Summary Compensation Table Total for PEO (column (b)) | 3,946,566 | | - aggregate change in actuarial present value of pension benefits | 0 | | + service cost of pension benefits | 0 | | + prior service cost of pension benefits | 0 | | - SCT “Stock Awards” column value | (2,368,410) | | - SCT “Option Awards” column value | (494,356) | | +year-end fair value of equity awards granted in the Covered Year that are outstanding and unvested as of the Covered Year-end | 1,826,587 | | +/- change in fair value (from prior year-end to Covered Year-end) of equity awards granted in prior years that are outstanding and unvested as of the Covered Year-end | (15,935) | | + vesting date fair value of equity awards granted and vested in the Covered Year | 0 | | +/- change in fair value (from prior year-end to vesting date) of equity awards granted in prior years that vested in the Covered Year | 312,182 | | - fair value as of prior-year end of equity awards granted in prior years that failed to vest in the Covered Year | (122,403) | | + dollar value of dividends/earnings paid on equity awards in the Covered Year | 0 | | + excess fair value for equity award modifications | 0 | | Compensation Actually Paid to PEO 1 (column (c)) | 3,084,231 |
Pay versus Performance
| AVERAGE FOR NON-PEO NEOS | 2023 ($) | | Average SCT Total for Non-PEO NEOs (column (d)) | 1,216,476 | | - aggregate change in actuarial present value of pension benefits | 0 | | + service cost of pension benefits | 0 | | + prior service cost of pension benefits | 0 | | - SCT “Stock Awards” column value | (615,328) | | - SCT “Option Awards” column value | (118,095) | | +year-end fair value of equity awards granted in the Covered Year that are outstanding and unvested as of the Covered Year-end | 463,611 | | +/- change in fair value (from prior year-end to Covered Year-end) of equity awards granted in prior years that are outstanding and unvested as of the Covered Year-end | 1,787 | | + vesting date fair value of equity awards granted and vested in the Covered Year | 0 | | +/- change in fair value (from prior year-end to vesting date) of equity awards granted in prior years that vested in the Covered Year | (182,888) | | - fair value as of prior-year end of equity awards granted in prior years that failed to vest in the Covered Year | (555,176) | | + dollar value of dividends/earnings paid on equity awards in the Covered Year | 0 | | + excess fair value for equity award modifications | 0 | | Average Compensation Actually Paid to Non-PEO NEOs (column (e)) | 210,388 |
Pay versus Performance
| (3) For each of 2023, 2022 and 2021, TSR for the Company and the peer group was calculated as the yearly percentage change in cumulative total shareholder return applied to a deemed fixed investment of $100 at market close on March 17, 2021, the day immediately prior to the first date on which the Company’s securities were registered under Section 12 of the Exchange Act. The yearly percentage change in cumulative TSR was measured as the quotient of (a) the sum of (i) the cumulative amount of dividends for the period from March 17, 2021,through and including the last day of the Covered Year (the “Measurement Period”), assuming dividend reinvestment, plus (ii) the difference between stock price per share at the end and the beginning of the Measurement Period, divided by (b) stock price per share at the beginning of the Measurement Period. For purposes of this PVP disclosure, our peer group is the S&P Small Cap 600 Materials index, which we use for purposes of the performance graph in our annual report (the “Peer Group”). Because fiscal years are presented in the table in reverse chronical order (from top to bottom), the table should be read from bottom to top for purposes of understanding cumulative returns over time. |
Pay versus Performance
| (4) Adjusted EBITDA means earnings before income, taxes, depreciation and amortization, less bonus expense and share-based compensation expense. |
Pay Versus Performance Relationship Descriptions
Pay Versus Performance Relationship Descriptions The following graphical comparisons provide descriptions of the relationships between certain figures included in the Pay Versus Performance table for each of 2023, 2022 and 2021, including: (a) a comparison between our cumulative total shareholder return and the total shareholder return of the Peer Group; and (b) comparisons between (i) the compensation actually paid to the PEO and the average compensation actually paid to our non-PEO NEOs and (ii) each of the performance measures set forth in columns (f), (h) and (i) of the Pay Versus Performance table.
Pay Versus Performance Relationship Descriptions
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