DEF 14A of Mohawk Industries Inc
Filed Apr 5, 2024 · FY20230001193125-24-088459
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| 27 | EXECUTIVE COMPENSATION | | 27 | 2023 Summary Compensation Table | | 28 | 2023 Grants of Plan-Based Awards | | 29 | Outstanding Equity Awards at 2022 Year-End | | 30 | 2023 Option Exercises and Stock Vested | | 30 | 2023 Nonqualified Deferred Compensation | | 31 | Equity Compensation Plan Information | | 31 | Potential Payments upon Termination of Employment or Change in Control | | 33 | CEO Pay Ratio | | 34 | Pay Versus Performance | | 37 | Certain Relationships and Related Transactions | | 37 | Compensation Committee Interlocks and Insider Participation | | 38 | PROPOSAL 3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION | | 39 | PRINCIPAL STOCKHOLDERS OF THE COMPANY | | 40 | DELINQUENT SECTION 16(a) REPORTS | | 41 | CORPORATE GOVERNANCE | | 41 | Board Membership Criteria | | 41 | Board Leadership | | 42 | Sustainability | | 43 | Risk Oversight | | 43 | Annual Board and Committee Self-Evaluations | | 43 | Nomination Process for the Board of Directors | | 44 | Board Refreshment | | 44 | Communication with Directors | | 44 | Availability of Information | | 44 | Financial Statements | | 45 | STOCKHOLDER PROPOSALS | | 46 | OTHER MATTERS | | 47 | ANNEX A — NON-GAAP RECONCILIATION |
Nominees for Director
Nominees for Director
Class II Directors (If Elected, Terms Expire 2027)
Class II Directors (If Elected, Terms Expire 2027)
Class II Directors (If Elected, Terms Expire 2027)
| Bruce C. Bruckmann | Director Since: 1992 Board Committees: Audit Committee, Nominating & Corporate Governance Committee Skills: |
Class II Directors (If Elected, Terms Expire 2027)
Biographical Information: Mr. Bruckmann (age 70) has been a director of the Company since October 1992. Mr. Bruckmann has been a Managing Director of Bruckmann, Rosser, Sherrill & Co., Inc., a private equity investment firm, since January 1995. From March 1994 to January 1995, Mr. Bruckmann served as Managing Director of Citicorp Venture Capital, Ltd. (“CVC, Ltd.”) and as an executive officer of 399 Venture Partners, Inc. (formerly Citicorp Investments, Inc.). From 1983 until March 1994, Mr. Bruckmann served as Vice President of CVC, Ltd. Mr. Bruckmann is also a director of H&E Equipment Services L.L.C., a renter and distributor of industrial and construction equipment. Mr. Bruckmann is a former director and Chairman of the Board of Directors of MWI Veterinary Supply Co., a distributor of animal health products to veterinarians, and he is a former director of Town Sports International, Inc., a fitness club operator, AmerisourceBergen, a distributor of human health products, CORT Business Services, a renter of residential and commercial furniture and furnishings, Chromcraft Revington, a manufacturer of residential furniture, California Pizza Kitchen, a casual restaurant chain and Heritage — Crystal Clean Inc., a waste management and used oil re-refining business. Mr. Bruckmann also serves as a director for Eos Fitness, a private company. Qualifications: Mr. Bruckmann brings significant experience in corporate finance and capital markets, together with service on other public company boards of directors.
Class II Directors (If Elected, Terms Expire 2027)
| Jerry W. Burris | Director Since: 2022 Board Committees: Compensation Committee, Nominating & Corporate Governance Committee Skills: |
Class II Directors (If Elected, Terms Expire 2027)
Biographical Information: Mr. Burris (age 60) has been a director of the Company since February 2022. He is the President and Chief Executive Officer of Midwest Can Company, a manufacturer of portable fuel cans and specialty containers, a position he has held since 2018. Mr. Burris served as President and Chief Executive Officer of Associated Materials Group, Inc., a manufacturer of professionally installed exterior building products, from 2011 to 2014. Prior to 2011, he served as President, Precision Components of Barnes Group Inc., and was the President of Barnes Industrial, a global precision components business within Barnes Group. Prior to joining Barnes Group, Mr. Burris held a number of senior management positions at General Electric including President and Chief Executive Officer of Advanced Materials Quartz and Ceramics; General Manager of Global Services at GE Healthcare; head of global supply chain sourcing with GE Industrial Systems and Honeywell Integration. Mr. Burris has served as a director of Midwest Can Company since 2017 and as a director of nVent Electric plc since 2018. During the past five years, Mr. Burris also previously served as a director of Fifth Third Bancorp and Pentair plc. Mr. Burris brings significant executive leadership experience in management of global manufacturing operations and related processes, such as supply chain management, quality control and product development, together with service on another public company board of directors.
Class II Directors (If Elected, Terms Expire 2027)
| Mohawk Industries, Inc. | 2024 Proxy Statement | 5 |
Class II Directors (If Elected, Terms Expire 2027)
| John M. Engquist | Director Since: 2020 Board Committees: Lead Independent Director, Audit Committee, Nominating & Corporate Governance Committee Skills: |
Class II Directors (If Elected, Terms Expire 2027)
Mr. Engquist (age 70) has been a director of the Company since February 2020. Mr. Engquist was appointed Executive Chairman of the Board of H&E Equipment Services, Inc., a public integrated equipment services company, on January 1, 2019. Previously, Mr. Engquist served as Chief Executive Officer and Director of H&E Inc. since its formation in September 2005. Mr. Engquist also served as President of H&E Inc. from September 2005 until November 2012. He had served as President, Chief Executive Officer and Director of H&E LLC from its formation in June 2002 until its merger with and into H&E Inc. in February 2006. He served in executive leadership roles with predecessor companies of H&E LLC prior to 2002. Mr. Engquist serves as a director on the boards of a number of private companies. He is a director and currently serves on several committees for the LSU Foundation Board of Directors. Mr. Engquist serves on the Board of Directors and on the Finance Committee of Franciscan Missionaries of Our Lady Health System, Inc. based in Baton Rouge, Louisiana. He also serves on the Leadership Council of St. Jude Children’s Research Hospital in Memphis, Tennessee. Mr. Engquist brings significant executive and board experience with a public integrated equipment services company, including service as a Chief Executive Officer, President and Executive Chairman.
Class II Directors (If Elected, Terms Expire 2027)
| 6 | 2024 Proxy Statement | Mohawk Industries, Inc. |
Continuing Directors
Continuing Directors
Class III Directors Continuing in Office (Terms Expire 2025)
Class III Directors Continuing in Office (Terms Expire 2025)
Class III Directors Continuing in Office (Terms Expire 2025)
| Joseph A. Onorato | Director Since: 2008 Board Committees: Audit Committee (Chair), Compensation Committee Skills: |
Class III Directors Continuing in Office (Terms Expire 2025)
Biographical Information: Mr. Onorato (age 75) has been a director of the Company since February 2008. From July 1998 until his retirement in September 2000, Mr. Onorato served as Senior Vice President and Chief Financial Officer for the Automotive Aftermarket Group of Dana Corporation, a global leader in the engineering, manufacturing and distribution of components and systems for worldwide vehicular and industrial manufacturers. In July 1998, Dana Corporation merged with Echlin, Inc. (“Echlin”), a worldwide manufacturer of motor vehicle parts. At the time of the merger, Mr. Onorato was Senior Vice President and Chief Financial Officer for Echlin. He is a certified public accountant and previously worked with PricewaterhouseCoopers. Mr. Onorato also served on the board of directors for Affinia Group Intermediate Holdings, Inc., where he was chairman of the Audit Committee, and BPI Holdings International, Inc., both motor vehicle components manufacturers. In addition, Mr. Onorato has served as a member of the Dean’s Advisory Council at the Quinnipiac University School of Business. Qualifications: Mr. Onorato brings significant executive and financial experience with public, global manufacturing companies, including service as both a Chief Financial Officer and as a Treasurer, together with service on another public company board of directors.
Class III Directors Continuing in Office (Terms Expire 2025)
| William H. Runge III | Director Since: 2014 Board Committees: Audit Committee, Compensation Committee (Chair) Skills: |
Class III Directors Continuing in Office (Terms Expire 2025)
Biographical Information: Mr. Runge (age 72) has been a director of the Company since July 2014. Mr. Runge has been a Managing Director with Alvarez & Marsal since June 2002, a premier business advisory firm for companies seeking to transform operations, catapult growth and accelerate results. In that capacity, Mr. Runge has served in Chief Financial Officer, Chief Operating Officer, Chief Executive Officer and Controller roles in the manufacturing, distribution and service industries. Prior to his work with Alvarez & Marsal, Mr. Runge spent more than 10 years with the corporate restructuring group of Arthur Andersen in Atlanta, where he served as Partner-in-Charge for the Southeast Region. Qualifications: Mr. Runge brings extensive experience working with companies to transform operations, catapult growth and accelerate results, together with experience serving as an independent advisor, a CFO, COO, CEO and Controller in the manufacturing, distribution and service industries.
Class III Directors Continuing in Office (Terms Expire 2025)
| W. Christopher Wellborn | Director Since: 2002 Skills: |
Class III Directors Continuing in Office (Terms Expire 2025)
Biographical Information: Mr. Wellborn (age 68) has been a director of the Company since our acquisition of Dal-Tile International Inc. (“Dal-Tile”) in March 2002. He has served as the Company’s Chief Operating Officer since November 2005 and as its President and Chief Operating Officer since November 2009. Mr. Wellborn was Executive Vice President, Chief Financial Officer and Assistant Secretary of Dal-Tile from August 1997 through March 2002. From March 2002 to November 2005, he served as President — Dal-Tile. From June 1993 to August 1997, Mr. Wellborn was Senior Vice President and Chief Financial Officer of Lenox, Inc. Mr. Wellborn, our President and Chief Operating Officer, brings over 30 years of experience in the manufacturing and finance sectors, with approximately 20 years as an executive in the flooring industry.
Class III Directors Continuing in Office (Terms Expire 2025)
| Mohawk Industries, Inc. | 2024 Proxy Statement | 7 |
Class I Directors Continuing in Office (Terms Expire 2026)
Class I Directors Continuing in Office (Terms Expire 2026)
Class I Directors Continuing in Office (Terms Expire 2026)
| Karen A. Smith Bogart | Director Since: 2011 Board Committees: Nominating & Corporate Governance Committee (Chair), Compensation Committee Skills: |
Class I Directors Continuing in Office (Terms Expire 2026)
Biographical Information: Dr. Bogart (age 66) has been a director of the Company since May 2011. She is President of Smith Bogart Consulting, an advisement firm focused on business growth, turn-around and capability. She has led start-up firms in consumer products and printing services. Prior to 2007, she was a Senior Vice President of Eastman Kodak Company. She was Chairman and President of Greater Asia, responsible for Kodak’s businesses and operations across Asia, and she also managed many of Kodak’s largest global businesses in the consumer, professional and health sectors. She currently is a director for Michelman Inc., a privately held specialty chemicals company. She formerly was a director for Monolithic Power Systems, Inc., a public semiconductor company (NASDAQ), and Silver Maple Ventures, an on-line crowd-funding firm. Qualifications: Dr. Bogart brings broad executive experience, including in the consumer products sector and in Asia, with domestic and multi-national public and private companies in various industries, together with service on another public company board of directors.
Class I Directors Continuing in Office (Terms Expire 2026)
| Jeffrey S. Lorberbaum | Director Since: 1994 Skills: |
Class I Directors Continuing in Office (Terms Expire 2026)
Biographical Information: Mr. Lorberbaum (age 69) has been a director of the Company since our acquisition of Aladdin Mills Inc. (“Aladdin”) in March 1994. He has served as Chairman of the Board since May 2004 and as the Company’s Chief Executive Officer since January 2001. From January 1995 until January 2001, Mr. Lorberbaum served as President and Chief Operating Officer of the Company. Mr. Lorberbaum joined Aladdin in 1976 and served as Vice President — Operations from 1986 until February 1994 when he became President and Chief Executive Officer. Qualifications: Mr. Lorberbaum, our Chairman and CEO, brings over 30 years of management and executive experience in the flooring industry and is a significant stockholder.
Class I Directors Continuing in Office (Terms Expire 2026)
| Bernard P. Thiers | Director Since: 2024 Skills: |
Class I Directors Continuing in Office (Terms Expire 2026)
Biographical Information: Mr. Thiers (age 68) has been a director of the Company since February 2024. Mr. Thiers previously served as President – Flooring Rest of the World from January 2009 until his retirement on February 1, 2024 and currently serves the Company as a senior advisor. Mr. Thiers joined Unilin (which became a significant operating subsidiary in the Company’s Flooring Rest of the World segment) in 1984 as a plant manager and served in roles of increasing management significance since that time. From 1996 to 2006, he served as Managing Director of Unilin Flooring and, from 2006 until his 2009 promotion, he served as President — Unilin Flooring. Qualifications: Mr. Thiers, as a former executive officer of the Company, brings nearly 40 years of management and executive experience in the flooring industry generally and in the Company’s Flooring Rest of the World segment specifically.
Contractual Obligations with Respect to the Election of Directors
Contractual Obligations with Respect to the Election of Directors In connection with the merger of Aladdin with a wholly-owned subsidiary of the Company in February 1994, the Company agreed to nominate up to two persons designated by the former stockholders of Aladdin for election or re-election, as the case may be, to the Board of Directors of the Company and to use its best efforts to cause such nominees to be elected to the Board of Directors. At such time as the former stockholders of Aladdin have disposed of 50% or more of the common stock issued to them in the merger, the Company will be required to nominate only one such person to the Board of Directors, and at such time as the former stockholders of Aladdin have disposed of 75% or more of the common stock issued to them in the
Contractual Obligations with Respect to the Election of Directors
| 8 | 2024 Proxy Statement | Mohawk Industries, Inc. |
Contractual Obligations with Respect to the Election of Directors
merger, the Company will no longer be required to nominate any of such persons to the Board of Directors. The former stockholders of Aladdin currently may designate one director, and Jeffrey S. Lorberbaum is currently such designee.
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION Our directors’ interests, like our management’s, are aligned with those of our stockholders through meaningful stock ownership. Continuing non-management directors are granted shares of the Company’s common stock on an annual basis, constituting a substantial portion of their compensation. To further enhance alignment, our director stock ownership guidelines require directors with five or more years of tenure to own shares with a value equivalent to three times their annual retainer. In 2022, the Compensation Committee amended the Non-Employee Director Compensation Plan to increase director compensation beginning in 2023 as follows: the annual retainer is $100,000; the annual retainer for the Governance Committee Chair is $15,000; the annual retainer for the Compensation Committee Chair is $20,000; and the annual retainer for the Audit Committee Chair is $25,000. In 2024, the Compensation Committee further amended the Non-Employee Director Compensation Plan to provide an annual retainer of $35,000 for the Lead Independent Director beginning in 2025. The following table presents certain summary information concerning director compensation for our non-management directors paid by the Company during the year ended December 31, 2023.
2023 DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | | Bruce C. Bruckmann | 100,000 | 177,174 | 277,174 | | Jerry W. Burris | 100,000 | 177,174 | 277,174 | | John M. Engquist | 100,000 | 177,174 | 277,174 | | Joseph A. Onorato | 125,000 | 177,174 | 302,174 | | William H. Runge III | 120,000 | 177,174 | 297,174 | | Karen A. Smith Bogart | 115,000 | 177,174 | 292,174 |
2023 DIRECTOR COMPENSATION
| (1) Includes payment of the annual retainer and retainers for committee chairs, as applicable. Dr. Bogart elected to take her 2022 service year retainer 50% in the form of cash ($57,500), and 50% in the form of Common Stock (457 shares). Messrs. Engquist, Onorato and Runge elected to take their 2022 service year retainer 100% in the form of Common Stock (795, 995 and 956 shares, respectively). All such shares were issued on January 3, 2023 pursuant to the Company’s Non-Employee Director Compensation Plan (the “Director Plan”), which is a sub-plan of the Mohawk Industries, Inc. 2017 Incentive Plan (the “2017 Plan”). Fractional shares of Common Stock were paid in cash in the following amounts: $384.38 (Mr. Engquist), $321.98 (Mr. Onorato), $175.61 (Mr. Runge) and $215.56 (Dr. Bogart). |
2023 DIRECTOR COMPENSATION
| (2) The amounts reported in the Stock Awards column reflect the grant date fair value calculated in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“ASC 718”). The grant date fair value of the restricted stock units is equal to the number of units issued multiplied by the closing trading price of the Company’s stock on the day of grant. On January 3, 2023, each of the non-employee directors received 1,658 restricted stock units, with a grant date fair value of $106.86 per share and which vest in approximately equal installments on each of the first three anniversaries of the date of grant. As of December 31, 2023, our non-employee directors held the following aggregate number of restricted stock units: |
2023 DIRECTOR COMPENSATION
| | Restricted Stock Units (#) | | Mr. Bruckmann | 2,225 | | Mr. Burris | 1,658 | | Mr. Engquist | 2,225 | | Mr. Onorato | 2,225 | | Mr. Runge | 2,225 | | Dr. Bogart | 2,225 |
2023 DIRECTOR COMPENSATION
Employees of the Company or its subsidiaries who are also directors do not receive any fee or remuneration for services as members of the Board of Directors or any Committee of the Board of Directors. Bernard Thiers, who was appointed to the Board in February 2024, has served in a senior advisory role following his February 1, 2024 retirement to further ensure a successful transition of the business and its strategies. Mr. Thiers does not participate in the Non-Employee Director Compensation Plan.
2023 DIRECTOR COMPENSATION
| 12 | 2024 Proxy Statement | Mohawk Industries, Inc. |
Market Data
Market Data We consider the compensation levels, programs and practices of certain other companies to assist us in setting our executive compensation so that it is market competitive. We review compensation data of a peer group that consists of companies of comparable size on both a revenue and market capitalization basis that are engaged, to varying degrees, in businesses similar to ours. We believe that we compete, to varying degrees, for business and talent with the companies in this peer group. The Compensation Committee considers the 50th percentile of the Company’s peer group as a guide for setting total direct compensation (base salary plus annual incentive plus long-term incentive) for our executives. For purposes of setting compensation levels for 2023, the peer group was comprised of the following companies (which is the same peer group used in 2022):
Market Data
| Builders FirstSource, Inc. Carrier Global Corporation Eastman Chemical Company Fortune Brands Home & Security JELD-WEN Holding, Inc. Leggett & Platt Masco Corporation Newell Brands | Owens Corning PPG Industries, Inc. RPM International Inc. The Sherwin-Williams Company Stanley Black & Decker, Inc. Trane Technologies plc Whirlpool Corporation |
Market Data
The Compensation Committee obtained information on the compensation levels, programs and practices of the companies within the peer group from market surveys periodically conducted by the Rewards Solutions practice at Aon plc (“Aon”), a compensation consultant engaged by the Company. In November 2023, the Compensation Committee considered whether the work of Aon raised any conflict of interest. The Compensation Committee considered various factors and determined that with
Market Data
| Mohawk Industries, Inc. | 2024 Proxy Statement | 17 |
Market Data
respect to executive and director compensation-related matters, no conflict of interest was raised by the work of Aon. The factors considered by the Compensation Committee included, but were not limited to, Aon’s representation to the Compensation Committee that fees unrelated to compensation work paid by the Company to Aon were less than 0.05% of Aon’s total revenues.
Company and Individual Performance Metrics
Company and Individual Performance Metrics We rely significantly on performance-based measurements to determine the compensation earned by our executives. To customize our compensation program and recognize individual performance and contribution to the Company, we focus on goals relating to earnings per share (EPS), total stockholder return (TSR) and individual performance. We select these financial and individual metrics for our incentive programs because we believe that they create appropriate incentives, aligned with those of our stockholders, to improve the operational efficiency and financial performance of the Company. We also believe they are good indicators of our overall performance, including whether the Company and its business units are achieving our annual or long-term business objectives, and lead to the creation of long-term value for our stockholders.
2023 Review of Compensation
| • | Mr. Lorberbaum, the Company’s Chief Executive Officer, received total direct compensation below the 25th percentile of the peer group, which is broken down as follows: base salary above the 75th percentile of the peer group; total cash compensation, which includes base salary and annual cash incentive awards, above the 25th percentile of the peer group; and long-term incentive compensation below the 25th percentile of the peer group. |
2023 Review of Compensation
| • | Mr. Brunk, the Company’s Chief Financial Officer, received total direct compensation below the 25th percentile of the peer group, which is broken down as follows: base salary below the 25th percentile of the peer group, total cash compensation below the 25th percentile of the peer group and long-term incentive compensation below the 25th percentile of the peer group. |
2023 Review of Compensation
| • | Mr. Wellborn, the Company’s President and Chief Operating Officer, received total direct compensation below the 25th percentile of the peer group, which is broken down as follows: base salary above the 75th percentile of the peer group, total cash compensation above the 75th percentile of the peer group and long-term incentive compensation below the 25th percentile of the peer group. |
2023 Review of Compensation
| • | Mr. De Cock, the Company’s President — Flooring North America, received total direct compensation below the 50th percentile of the peer group, which is broken down as follows: base salary above the 75th percentile of the peer group, total cash compensation, which includes base salary and annual cash incentive awards, above the 75th percentile of the peer group and long-term incentive compensation above the 25th percentile of the peer group. |
2023 Review of Compensation
| • | Mr. Thiers, the Company’s former President — Flooring Rest of the World, received total direct compensation below the 50th percentile of the peer group, which is broken down as follows: base salary above the 75th percentile of the peer group, total cash compensation, which includes base salary and annual cash incentive awards, below the 75th percentile of the peer group and long-term incentive compensation below the 25th percentile of the peer group. |
2023 Review of Compensation
In making its determinations of 2023 executive compensation, the Compensation Committee at its February 2023 meeting considered (i) the results of the Aon assessment discussed above and a tally sheet detailing the various elements of compensation for our named executive officers, including base salary and annual and long-term incentives, (ii) results of performance of our named executive officers against applicable financial and personal performance goals for 2022, and (iii) other factors described in “Compensation Philosophy and Objectives” above. Then, together with Mr. Lorberbaum’s recommendations for compensation for the named executive officers other than himself, the Compensation Committee made determinations concerning 2023 adjustments to base salaries and awards under the annual and long-term incentive compensation plans.
Annual Incentive Awards
Annual Incentive Awards As discussed above, the named executive officers are eligible to earn annual incentive awards under the Annual Incentive Plan. Pursuant to the plan, each of our named executive officers is eligible to participate in a bonus pool that is established based on the Company achieving a threshold level of performance, and which determines each named executive officer’s maximum bonus opportunity, subject to negative discretion by the Compensation Committee to determine the actual amount of annual incentive payouts, as described below. The governing parameters of the Annual Incentive Plans are as follows: (i) no annual incentive awards are payable under the plan unless the Company achieves positive consolidated adjusted operating income for the year; (ii) actual incentive awards earned by the named executive officers are based on the level of achievement of applicable performance goals established by the Compensation Committee; and (iii) each named executive officer has a maximum bonus award limit based on a percentage of the bonus pool (which we refer to as the “Maximum Pool Award Limit”). In 2023, the Company achieved the threshold financial goal of positive consolidated adjusted operating income, making each named executive officer eligible to participate in the bonus pool. The bonus pool for 2023 performance was set by the Compensation Committee at approximately $7.7 million. For 2023, the Maximum Pool Award Limit for each of Messrs. Lorberbaum and Wellborn was approximately $2.1 million and $1.9 million of the bonus pool, respectively, and the Maximum Pool Award Limit for Messrs. Brunk, De Cock and Thiers was approximately $1.2 million of the bonus pool. For 2023 performance, the Compensation Committee exercised its discretion to award less than the Maximum Pool Award Limit for each named executive officer that participated in the Annual Incentive Plan. As noted above, actual cash incentive awards earned by the named executive officers are determined based on performance against applicable performance goals established by the Compensation Committee and target incentive opportunities. In February 2023, the Compensation Committee established annual incentive award opportunity ranges for each of our named executive officers serving at the time, reflected as a percentage of each named executive officer’s 2023 base salary that would be payable based on performance against applicable goals related to adjusted EPS (“Incentive Plan Financial Goals”). The Annual Incentive Plan for 2023 included an award opportunity at the threshold, target and maximum performance levels.
Annual Incentive Awards
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Annual Incentive Award Opportunity (Percentage of Base Salary)
Annual Incentive Award Opportunity (Percentage of Base Salary)
Annual Incentive Award Opportunity (Percentage of Base Salary)
| | Threshold | Target | Maximum | | Jeffrey S. Lorberbaum | 54% | 90% | 150% | | W. Christopher Wellborn | 54% | 90% | 135% | | James F. Brunk | 45% | 75% | 113% | | Paul F. De Cock | 45% | 75% | 113% | | Bernard P. Thiers | 45% | 75% | 113% |
Annual Incentive Award Opportunity (Percentage of Base Salary)
For 2023, the Compensation Committee established the Incentive Plan Financial Goals set forth in the following table to guide the Compensation Committee’s determination of actual bonus amounts under the Annual Incentive Plan. Calculations between the various performance levels are linear (which means they were determined using straight-line interpolation). For Messrs. Lorberbaum, Brunk and Wellborn, the Annual Incentive Plan Financial Goals related to Company EPS. For the President of the Flooring North America segment (Mr. De Cock) and the President of Flooring Rest of the World segment (Mr. Thiers), the Annual Incentive Plan Financial Goals related to Company EPS and business unit EPS (collectively weighted at 25% and 75%).
2023 Incentive Plan Financial Goals
2023 Incentive Plan Financial Goals
2023 Incentive Plan Financial Goals
| | Company EPS | Flooring Rest of the World EPS(1)(2) | Flooring North America EPS(1) | | Threshold | $6.10 | $1.69 | $0.59 | | Target | $9.29 | $3.03 | $1.72 | | Maximum | $12.11 | $3.83 | $3.01 | | 2023 Performance* | $9.19 | $3.66 | $1.30 |
2023 Incentive Plan Financial Goals
| * Adjustments were made to exclude the impact of miscellaneous non-operating expenses. |
2023 Incentive Plan Financial Goals
| (1) Business unit EPS is determined by dividing the adjusted operating income for each applicable business unit, less an allocation for tax and interest expenses, by the number of weighted-average diluted common shares outstanding. |
2023 Incentive Plan Financial Goals
| (2) EPS for Flooring Rest of the World converted to U.S. dollars using the euro to dollar exchange rate of 1.09 for 2023. |
2023 Incentive Plan Financial Goals
The Compensation Committee determined awards under the Annual Incentive Plans after reviewing the Company’s level of achievement of the Annual Incentive Plan Financial Goals, together with a qualitative assessment of Company and management performance during 2023, which included investing $613.0 million in capital projects for capacity expansions, cost reduction initiatives and upgrades for recent acquisitions as well as maintenance across the segments, generating $716.3 million of free cash flow, completing and integrating multiple acquisitions, reducing inventory levels and identifying and executing several restructuring initiatives. In connection with its qualitative assessment of management’s performance, the Compensation Committee noted that many factors impacting Company performance were outside of management’s control. These factors included increased interest rates, constrained residential investments and further tightening of consumer discretionary spending. During 2023, increased mortgage rates suppressed the housing market, as consumers chose to postpone new housing purchases due to decreased affordability. Many consumers were unwilling to exchange a lower interest rate for a higher rate and opted to remain in their homes that they had financed at significantly lower interest rates in previous years. Increased interest rates and other macroeconomic factors also continued to impact discretionary spending power and demand, which in turn impacted new single-family home construction and residential remodeling in most of the Company’s major markets. As consumers continued to face a higher cost of living, discretionary spending and demand for flooring products declined; and, as a result, the Company’s flooring customers reduced inventories. In addition, the Company’s operations in 2023 were impacted by geopolitical events. Taking these items into account, as well as performance against other qualitative performance measures, the Compensation Committee determined to pay out awards at an adjusted level of performance in order to retain the Company’s management in a competitive market for talented executives.
2023 Incentive Plan Financial Goals
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2023 Incentive Plan Financial Goals
Our named executive officers received payouts of the following annual incentive awards for the 2023 plan year, which are reflected in the “Non-Equity Incentive Plan” column of the Summary Compensation Table in this proxy statement:
2023 Incentive Plan Financial Goals
| | 2023 Award under the Annual Incentive Plan(1) | | Jeffrey S. Lorberbaum | $1,951,478 | | W. Christopher Wellborn | $1,691,873 | | James F. Brunk | $713,215 | | Paul F. De Cock | $716,065 | | Bernard P. Thiers | $800,951 |
2023 Incentive Plan Financial Goals
| (1) To further foster alignment with our stockholders, the Compensation Committee determined that $700,000, $600,000, $200,000, $200,000 and $100,000 of the payouts of the 2023 annual incentive awards for Messrs. Lorberbaum, Wellborn, Brunk, De Cock and Thiers, respectively, should be paid in the form of restricted stock units that vest ratably over a period of three years (the “AIP Equity Component”). Accordingly, on February 23, 2024, each of Messrs. Lorberbaum, Wellborn, Brunk, De Cock and Thiers received 6,774, 5,806, 1,935, 1,935 and 968 restricted stock units, respectively, determined by dividing their AIP Equity Component by the average daily closing prices for the Common Stock for the last thirty (30) consecutive trading days from and including February 7, 2024 (which is the date that is five trading days before the February 2024 Compensation Committee Meeting). |
Long-Term Incentive Plan
Long-Term Incentive Plan With respect to awards granted under the Senior Executive LTIP in the first quarter of 2023, the Compensation Committee determined that RSU awards would have two components: fixed and variable. The fixed component of the RSU grant was based on a percentage of each participant’s salary and not dependent on personal, Company or business unit performance. The variable component of the RSU grant was based on a combination of performance metrics related to total shareholder return and business unit performance as well as personal performance, as further described below. Awards granted under the Senior Executive LTIP vest ratably over the three-year period following the grant date. The Grants of Plan-Based Awards table included in this proxy statement shows the actual number of Senior Executive LTIP awards that each of our named executive officers received in 2023. Fixed LTIP Component. In order to recruit and retain key executives, the Compensation Committee designed the plan in 2023 to include a fixed LTIP component based on a percentage of each participant’s 2022 base salary as follows:
Long-Term Incentive Plan
| | RSUs Granted in 2023 based on Fixed Percentage of Participant’s 2022 Base Salary | | Jeffrey S. Lorberbaum | 3,521 | | W. Christopher Wellborn | 3,042 | | James F. Brunk | 1,622 | | Paul F. De Cock | 1,964 | | Bernard P. Thiers | 1,791 |
Long-Term Incentive Plan
Variable LTIP Component. Similar to the Annual Incentive Plan, in order for 2023 awards to be granted under the variable component of the Senior Executive LTIP, the Company had to achieve positive adjusted consolidated operating income for 2022. Having achieved this threshold, the Compensation Committee evaluated the number of RSUs to grant to the named executive officers under the variable component of the Senior Executive LTIP based on (i) the Company’s stock performance over the three-year period ending in 2022 as compared to the S&P 500 (“TSR Component”), (ii) business unit performance in 2022 (“Business Unit Component”), and (iii) personal performance objectives, each as described below, together with a qualitative assessment of Company and management performance during the performance period.
Long-Term Incentive Plan
| 22 | 2024 Proxy Statement | Mohawk Industries, Inc. |
Long-Term Incentive Plan
TSR Component. The financial goals for determining the number of stock awards granted in 2023 for the TSR Component of the Senior Executive LTIP were based on total stockholder return (TSR) over the three-year period ending in 2022 as compared to the S&P 500. To determine awards in 2022, the Compensation Committee assigned each participant a target value of stock awards (based on a percentage of 2022 base salary), which would be awarded if the Company achieved TSR at the 50th percentile of the S&P 500. The actual value of restricted stock units awarded could range from 50% to 200% of the target value subject to achieving TSR between the 25th and 75th percentile of the peer group, as set forth in the table below. Calculations between the various performance levels are linear (which means they were determined using straight line interpolation).
Long-Term Incentive Plan
| | | Percentage of Base Salary Earned in RSUs | | | | | TSR Below 25th Percentile | TSR at 25th Percentile | TSR at 50th Percentile | TSR at 75th Percentile | | Jeffrey S. Lorberbaum | 0% | 35% | 70% | 140% | | W. Christopher Wellborn | 0% | 35% | 70% | 140% | | James F. Brunk | 0% | 25% | 50% | 100% | | Paul F. De Cock | 0% | 25% | 50% | 100% | | Bernard P. Thiers | 0% | 25% | 50% | 100% |
Long-Term Incentive Plan
The Company achieved the TSR at the 10th percentile of the peer group for the three-year period, which resulted in RSUs not being awarded in 2023 for the TSR Component in 2022. Business Unit Component. The financial goals for determining the number of stock awards granted in 2023 for the Business Unit Component of the Senior Executive LTIP were based on Company and Business Unit EPS targets for 2022. The Compensation Committee assigned each participant a target value of stock awards (based on a percentage of 2022 base salary), which would be awarded if the Company or applicable Business Unit achieved the target EPS. The actual value of restricted stock units awarded could range from 0% to 60% of base salary in the case of Messrs. Lorberbaum and Wellborn and 0% to 40% of base salary in the case of Messrs. Brunk, Thiers and De Cock. Calculations between the various performance levels are linear (which means they were determined using straight-line interpolation).
Business Unit Opportunity (Percentage of Base Salary)
For 2022, the Compensation Committee established the Business Unit EPS Goals set forth in the following table to guide the Compensation Committee in determining actual RSU awards in 2023 under the Business Unit Component of the long-term incentive plans. Calculations between the various performance levels are linear (which means they were determined using straight-line interpolation). For Messrs. Lorberbaum, Wellborn and Brunk, the Incentive Plan Financial Goals consisted of the Company EPS. For Mr. Thiers, the President of the Flooring Rest of the World segment, and Mr. De Cock, the President of Flooring North America, the Incentive Plan Financial Goals consisted of the Company EPS and business unit EPS (collectively weighted at 25% and 75%).
2022 Business Unit Financial Goals
| | Performance Against Target | 2023 RSUs Based on Company and Business Unit EPS | | Jeffrey S. Lorberbaum | 62% | 2,183 | | W. Christopher Wellborn | 62% | 1,886 | | James F. Brunk | 62% | 671 | | Paul F. De Cock | 15% | 196 | | Bernard P. Thiers | 15% | 179 |
2022 Business Unit Financial Goals
Individual Performance Objectives. In February 2023, the Compensation Committee reviewed individual performance objectives and accomplishments for each of the named executive officers during 2022. The various objectives are particular to each individual officer, and the Compensation Committee considers each officer’s personal contribution to the Company during the year when making its determinations for the variable Senior Executive LTIP component. Qualitative Assessment of Variable Component. In conducting its qualitative assessment of management performance in 2022, the Compensation Committee considered the Company’s investment of approximately $580.7 million in capital projects for capacity expansions, cost reduction initiatives and upgrades for recent acquisitions as well as maintenance across the segments. The largest investments during this period were in the Company’s LVT portfolio to upgrade its product offering and improve profitability; premium water-proof laminate expansion in North America and Europe; quartz countertop expansion in North America; and porcelain slab expansion in Europe. Our named executive officers were awarded RSUs under the variable Senior Executive LTIP component as set forth in the table below. The number of RSUs ultimately granted was determined by dividing the named executive officer’s award value by the average daily closing prices for the Common Stock for the last thirty
2022 Business Unit Financial Goals
| | Total Variable LTIP Award Granted in 2023 (# of RSUs) | | Jeffrey S. Lorberbaum | 6,878 | | W. Christopher Wellborn | 5,943 | | James F. Brunk | 2,834 | | Paul F. De Cock | 2,816 | | Bernard P. Thiers | 2,568 |
Severance Pay Arrangements
Severance Pay Arrangements Our named executive officers participate in our general employee severance plan which provides a specified number of weeks of severance pay based on continuous service time to the Company and the reason for termination of employment. Our named executive officers, other than Mr. De Cock and Mr. Thiers (until his February 1, 2024 retirement), are employees at-will and do not have long-term contracts with us. See “Employment Agreements with Named Executive Officers” for a description of our agreements with Mr. De Cock and Mr. Thiers, including severance benefits provided thereunder and “Potential Payments Upon Termination or Change in Control” for a quantification of the severance benefits.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table presents certain summary information concerning compensation paid or accrued by the Company for services rendered in all capacities during the years ended December 31, 2023, 2022, and 2021 for (i) the Principal Executive Officer of the Company, (ii) the Principal Financial Officer of the Company and (iii) each of the three other most highly compensated executive officers of the Company (determined as of December 31, 2023) (collectively, the “Named Executive Officers”).
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($)(1) | All Other Compensation ($)(2) | Total ($) | | Jeffrey S. Lorberbaum Chief Executive Officer | 2023 | 1,388,121 | — | 1,069,537(3) | 1,951,478 | 19,281 | 4,428,417 | | | 2022 | 1,347,690 | — | 2,055,992 | 836,915 | 19,357 | 4,259,954 | | | 2021 | 1,308,437 | — | 1,901,669 | 1,962,655 | 17,935 | 5,190,696 | | James F. Brunk Chief Financial Officer | 2023 | 683,100 | | 458,300(3) | 713,215 | 17,128 | 1,871,742 | | | 2022 | 621,000 | | 646,094 | 321,368 | 16,005 | 1,604,467 | | | 2021 | 566,667 | — | 791,464 | 637,500 | 13,698 | 2,009,329 | | W. Christopher Wellborn President and Chief Operating Officer | 2023 | 1,211,089 | — | 3,769,907(4) | 1,691,873 | 16,136 | 6,689,005 | | | 2022 | 1,164,509 | — | 1,776,485 | 723,160 | 15,838 | 3,679,992 | | | 2021 | 1,130,591 | — | 1,735,290 | 1,526,298 | 15,881 | 4,408,060 | | Paul F. De Cock President — Flooring NA | 2023 | 774,457 | — | 491,623(3) | 716,065 | 21,973 | 2,004,118 | | | 2022 | 751,900 | — | 922,855 | 338,355 | 22,180 | 2,035,290 | | | 2021 | 730,000 | — | 3,090,202 | 821,250 | 17,935 | 4,659,388 | | Bernard P. Thiers (5) President — Flooring ROW | 2023 | 759,016 | — | 448,323(3) | 800,951 | — | 2,008,290 | | | 2022 | 709,548 | — | 880,276 | 251,309 | — | 1,841,133 | | | 2021 | 736,491 | — | 2,357,675 | 780,653 | — | 3,874,818 |
2023 Summary Compensation Table
| (1) Represents the amount of incentive bonus earned under the Annual Incentive Plan, including the AIP Equity Component which settled on February 23, 2024 in the form of restricted stock units having a grant date value equal to the AIP Equity Component. For more information regarding the Annual Incentive Plan, see “Compensation Discussion and Analysis.” |
2023 Summary Compensation Table
| (2) Amounts for 2023 include 401(k) matching contributions and disability and insurance coverage benefits for Messrs. Lorberbaum, Brunk, Wellborn and De Cock. Amounts also include auto benefits for Messrs. Lorberbaum, Brunk and De Cock, with Mr. De Cock’s auto benefit totaling $10,044. With respect to Mr. Wellborn, amount also includes payment for an annual physical. |
2023 Summary Compensation Table
| (3) Represents restricted stock units awarded pursuant to the Senior Executive LTIP for performance during the period ended December 31, 2022 and awarded on February 28, 2023. The grant date fair value of the restricted stock units is equal to the number of units issued times the closing trading price of the Company’s stock on the grant date ($102.85). |
2023 Summary Compensation Table
| (4) Represents (i) restricted stock units awarded pursuant to the Senior Executive LTIP for performance during the period ended December 31, 2022 and awarded on February 28, 2023 and (ii) restricted stock units granted on April 26, 2023 as a retention award. The grant date fair value of the restricted stock units awarded pursuant to the Senior Executive LTIP is equal to the number of units issued times the closing trading price of the Company’s stock on the grant date ($102.85). The grant date fair value of the restricted stock units awarded pursuant to Mr. Wellborn’s retention award are equal to the number of units issued times the closing trading price of the Company’s stock on the grant date ($94.86) |
2023 Summary Compensation Table
| (5) Mr. Thiers’ salary is paid in euro and calculated pursuant to his service agreement. Amounts reported in U.S. dollars fluctuate based on changes in foreign exchange rates. This amount represents the approximate dollar value of his base salary and annual incentive award, converted to U.S. dollars using the euro to dollar exchange rate of 1.09 for 2023, 1.06 for 2022 and 1.13 for 2021. |
2023 Summary Compensation Table
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2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards
| Name | Grant Date | Estimated Future Payouts under Non-Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | Grant Date Fair Value of Stock Awards ($)(3) | | | | Threshold ($) | Target ($) | Maximum ($) | | | | Jeffrey S. Lorberbaum | | 749,585 | 1,249,309 | 2,082,181 | | | | | 2/28/23 | | | | 10,399 | 1,069,537 | | James F. Brunk | | 307,395 | 512,325 | 768,488 | | | | | 2/28/23 | | | | 4,456 | 458,300 | | W. Chris Wellborn | | 653,988 | 1,089,980 | 1,634,970 | | | | | 2/28/23 | | | | 8,985 | 924,107 | | | 4/26/23 | | | | 30,000 | 2,845,800 | | Paul F. De Cock | | 348,506 | 580,843 | 871,264 | | | | | 2/28/23 | | | | 4,780 | 491,623 | | Bernard P. Thiers | | 323,286 | 538,810 | 808,215 | | | | | 2/28/23 | | | | 4,359 | 448,323 |
2023 Grants of Plan-Based Awards
| (1) Represents threshold, target and maximum bonus opportunities under the Annual Incentive Plan. The actual amount of incentive bonus earned by each Named Executive Officer in 2023 under the Annual Incentive Plan is reported under the Non-Equity Incentive Plan Compensation column in the “Summary Compensation Table.” Additional information regarding the design of the Annual Incentive Plan is included in the “Compensation Discussion and Analysis.” |
2023 Grants of Plan-Based Awards
| (2) All RSUs were granted under the 2017 Plan. |
2023 Grants of Plan-Based Awards
| (3) Represents the per unit grant date fair value of $102.85 on February 28, 2023 and $94.86 on April 26, 2023. The grant date fair value of RSUs is equal to the number of units issued times the closing trading price of the Company’s stock on the day of grant. |
Outstanding Equity Awards at 2023 Year-End
Outstanding Equity Awards at 2023 Year-End The following table sets forth information on outstanding equity awards for each of the Named Executive Officers on December 31, 2023.
Outstanding Equity Awards at 2023 Year-End
| | Stock Awards | | | Name | Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(7) | | Jeffrey S. Lorberbaum | 3,608(1) | $373,428 | | | 9,979(2) | 1,032,827 | | | 10,399(3) | 1,076,297 | | James F. Brunk | 475(1) | 49,163 | | | 3,136(2) | 324,576 | | | 4,456(3) | 461,196 | | | 2,729(4) | 282,452 | | W. Christopher Wellborn | 3,292(1) | 340,722 | | | 8,622(2) | 892,377 | | | 8,985(3) | 929,948 | | | 30,000(5) | 3,105,000 | | Paul F. De Cock | 2,057(1) | 212,900 | | | 4,479(2) | 463,577 | | | 4,780(3) | 494,730 | | | 10,563(6) | 1,093,271 | | Bernard P. Thiers | 2,570(1) | 265,995 | | | 4,272(2) | 442,152 | | | 4,359(3) | 451,157 | | | 5,282(6) | 546,687 |
Outstanding Equity Awards at 2023 Year-End
| (1) Restricted stock units granted on March 4, 2021, in connection with each executive’s long-term incentive plan award for 2020 and scheduled to vest ratably over three years on each of the first three anniversaries of the grant date. |
Outstanding Equity Awards at 2023 Year-End
| (2) Restricted stock units granted on March 4, 2022, in connection with each executive’s long-term incentive plan award for 2021 and scheduled to vest ratably over three years on each of the first three anniversaries of the grant date. |
Outstanding Equity Awards at 2023 Year-End
| (3) Restricted stock units granted on February 28, 2023, in connection with each executive’s long-term incentive plan award for 2022 and scheduled to vest ratably over three years on each of the first three anniversaries of the grant date. |
Outstanding Equity Awards at 2023 Year-End
| (4) Restricted stock units granted on April 1, 2021, as a sign-on equity award in connection with Mr. Brunk’s promotion to Chief Financial Officer. The RSUs are scheduled to vest fully on the fifth anniversary of the grant date. |
Outstanding Equity Awards at 2023 Year-End
| (5) Restricted stock units granted on April 26, 2023, as a retention payment to Mr. Wellborn. The RSUs are scheduled to vest ratably over two years on each of the first and second anniversary of the grant date. |
Outstanding Equity Awards at 2023 Year-End
| (6) Restricted stock units granted on July 28, 2021, as retention payments to Messrs. Thiers and De Cock. The RSUs are scheduled to vest ratably over three years on each of the third, fourth and fifth anniversary of the grant date. |
Outstanding Equity Awards at 2023 Year-End
| (7) Based on the closing trading price of the Common Stock on December 29, 2023, the last trading day of the year ($103.50). |
Outstanding Equity Awards at 2023 Year-End
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2023 Option Exercises and Stock Vested
2023 Option Exercises and Stock Vested The following table sets forth certain information regarding option exercises and RSUs that vested during 2023:
2023 Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Jeffrey S. Lorberbaum | — | — | 12,291 | 1,308,131 | | James F. Brunk | — | — | 3,267 | 347,707 | | W. Christopher Wellborn | — | — | 10,796 | 1,149,018 | | Paul F. De Cock | — | — | 13,775 | 1,352,843 | | Bernard P. Thiers | — | — | 7,234 | 769,915 |
2023 Option Exercises and Stock Vested
| (1) Based on the closing trading price on the applicable vesting dates. For shares vesting on March 4, 2023, the value realized on vesting is based on the closing trading price on Friday, March 3, 2023. |
2023 Nonqualified Deferred Compensation
2023 Nonqualified Deferred Compensation
2023 Nonqualified Deferred Compensation
| Name | Executive Contributions in the Last FY ($) | Registrant Contributions in the Last FY ($) | Aggregate Earnings in Last FY ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at FYE ($)(2) | | Jeffrey S. Lorberbaum | — | — | — | — | — | | James F. Brunk | — | — | 171,251 | — | 1,342,985 | | W. Christopher Wellborn | — | — | 497,187 | — | 2,953,452 | | Paul De Cock | — | — | — | — | — | | Bernard P. Theirs | — | — | — | — | — |
2023 Nonqualified Deferred Compensation
| (1) Aggregate earnings are not included in the “Summary Compensation Table” because such earnings are not above-market or preferential interest rates. |
2023 Nonqualified Deferred Compensation
| (2) Includes amounts of employee contributions representing compensation earned and deferred in prior years that were reported in the Summary Compensation Table for the year in which earned or that would have been so reported if the officer had been a named executive officer in such year. |
2023 Nonqualified Deferred Compensation
The Senior Management Deferred Compensation Plan is a nonqualified deferred compensation plan pursuant to which certain members of senior management of the Company, including the named executive officers, may elect to defer up to 25% of their annual base salary and up to 100% of their incentive cash bonus. Deferral elections are due before January 1 of each year, and are irrevocable. The Company directs a trustee to invest the assets which are held in an irrevocable rabbi trust. In order to provide for an accumulation of assets comparable to the contractual liabilities accruing under the plan, the Company may direct the trustee in writing to invest the assets held in the trust to correspond to the hypothetical investments made for participants in accordance with their direction. Deferred amounts are credited with earnings or losses based on the rate of return of mutual funds in which the assets are invested. The participant must make an election regarding payment terms at least twelve (12) months before payment, which may be either a lump sum, or annual installments from two (2) to ten (10) years. If a participant dies before receiving the full value of the deferral account balances, the designated beneficiary would receive the remainder of that benefit. All accounts would be immediately distributed upon a change in control of the Company.
2023 Nonqualified Deferred Compensation
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Potential Payments upon Termination of Employment or Change in Control
Potential Payments upon Termination of Employment or Change in Control Each of our named executive officers, other than Messrs. De Cock and Thiers, are entitled to participate in the Company’s severance plan that is available to all employees. In addition, as described above under “Employment Agreements with Named Executive Officers,” the Company is party to an employment agreement with Mr. De Cock which specifies the payments and benefits to which Mr. De Cock is entitled upon a termination of employment for specified reasons. Similarly, as of December 31, 2023, the Company was party to an employment agreement with Mr. Thiers which specified the payments and benefits to which Mr. Thiers would have been entitled upon a termination of employment for specified reasons. Mr. Thiers’ service agreement expired on December 31, 2023 pursuant to its terms, and Mr. Thiers retired from his role as President — Rest of the World on February 1, 2024. Following his retirement, any RSUs held by Mr. Thiers will continue to vest on their normal terms subject to forfeiture if Mr. Thiers competes with the Company during the vesting period pursuant to the terms of the 2017 Plan.
Potential Payments upon Termination of Employment or Change in Control
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Potential Payments upon Termination of Employment or Change in Control
The following table shows the estimated value of benefits payable to each of the named executive officers (i) if their service had been terminated under various circumstances as of December 31, 2023, or (ii) upon a change in control of the Company as of December 31, 2023. The amounts shown in the table exclude accrued but unpaid base salary, unreimbursed employment-related expenses, accrued but unpaid vacation pay (which payments and reimbursements would be made to all salaried employees), distributions under our 401(k) retirement plan (which plan is generally available to all of our salaried employees), payments under the Company’s severance plan (which plan is generally available to all of our salaried employees), and the value of equity awards that were vested by their terms as of December 31, 2023. The table also excludes the named executive officers’ vested account balances under the Senior Management Deferred Compensation Plan (the estimated value of which is reflected above under “2023 Nonqualified Deferred Compensation”).
Potential Payments upon Termination of Employment or Change in Control
| | Involuntary Termination ($) | Termination For Cause; Voluntary Resignation ($) | Death ($) | Disability ($) | Retirement ($) | Change in Control ($) | | Jeffrey S. Lorberbaum | | | | | | | | Value of Equity Acceleration | — | — | 2,482,551(2) | 2,482,551(2) | 2,482,551(4) | 2,482,551(2) | | Insurance | — | — | 1,388,121(3) | — | — | — | | W. Christopher Wellborn | | | | | | | | Value of Equity Acceleration | — | — | 5,268,047(2) | 5,268,047(2) | 5,268,047(4) | 5,268,047(2) | | Insurance | — | — | 1,211,089(3) | — | — | — | | James F. Brunk | | | | | | | | Value of Equity Acceleration | — | — | 1,117,386(2) | 1,117,386(2) | — | 1,117,386(2) | | Insurance | — | — | 683,100(3) | — | — | — | | Paul De Cock | | | | | | | | Cash Severance | 2,710,600(1) | — | — | — | — | — | | Value of Equity Acceleration | — | — | 2,264,477(2) | 2,264,477(2) | — | 2,264,477(2) | | Insurance | — | — | 774,457(3) | — | — | — | | Bernard P. Thiers | | | | | | | | Cash Severance | 1,327,250(1) | — | — | — | — | — | | Value of Equity Acceleration | — | — | 1,705,991(2) | 1,705,991(2) | 1,705,991(4) | 1,705,991(2) | | Total | 4,037,850 | — | 16,895,218 | 12,838,451 | 9,456,588 | 12,838,451 |
Potential Payments upon Termination of Employment or Change in Control
| (1) With respect to Mr. Thiers, amount shown is 1.85 times his 2023 base salary, payable in a lump sum, pursuant to his employment agreement, which expired pursuant to its terms on December 31, 2023. For purposes of the table, we have assumed that the Company elected to terminate Mr. Thiers’ employment immediately in exchange for the lump sum disclosed above. Pursuant to his employment agreement, which expired pursuant to its terms on December 31, 2023, Mr. Thiers was not entitled to any continuation of benefits during the 22-month notice period. With respect to Mr. De Cock, amount shown is the sum of (i) two times his 2023 base salary and (ii) two times his annual cash bonus that would have been paid at the target level for 2023, payable quarterly in eight equal installments following termination. |
Potential Payments upon Termination of Employment or Change in Control
| (2) Reflects the value of unvested RSUs that vest upon the designated event, in each case based on the closing market price of the Common Stock on December 29, 2023, the last trading day of the year ($103.50). Pursuant to the 2017 Plan, unvested stock options and RSUs vest upon a change in control, assuming that such awards are not assumed or otherwise equitably converted in connection with the change in control. If the awards are assumed or otherwise equitably converted in connection with the change in control, then the outstanding unvested stock options and RSUs granted under the 2017 Plan will vest if the executive’s employment is terminated without cause or he resigns with good reason (as defined in the 2017 Plan) within one year following the change in control. For purposes of this table, we have assumed that the outstanding, unvested RSUs were not assumed in connection with the change in control. Under the 2017 Plan, unvested stock options and RSUs vest upon the executive’s termination of employment due to death or disability. |
Potential Payments upon Termination of Employment or Change in Control
| (3) Reflects life insurance benefit equal to one times the then-current annual salary. The Company does not provide life insurance benefits to Mr. Thiers. |
Potential Payments upon Termination of Employment or Change in Control
| (4) Pursuant to the terms of the 2017 Plan, an executive participating in the plan is eligible for retirement upon reaching the age of 60 following 10 years of continuous service to the Company. Upon retirement, any RSUs held by the executive continue to vest on their normal terms subject to forfeiture if the executive competes with the Company during the vesting period. Mr. Lorberbaum and Mr. Wellborn are eligible for retirement. Mr. Thiers was also eligible for retirement as of December 31, 2023, and retired effective February 1, 2024. |
Potential Payments upon Termination of Employment or Change in Control
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CEO Pay Ratio
CEO Pay Ratio The following ratio compares the fiscal year 2023 annual total compensation of our median-paid employee (which we identified in 2023) with the fiscal year 2023 annual total compensation of Jeffrey S. Lorberbaum, our CEO. The pay ratio included below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K (the “pay ratio rule”). We selected October 1, 2023 as the date to identify our median employee. The compensation measure that we used in 2023 to identify our median employee was base wages paid to all employees other than our CEO, as reflected in our payroll records. This compensation measure was consistently applied to all our employees included in the calculation. We annualized base wages for all full-time employees. We also annualized base wages for part-time employees based on their projected annual hours. As of October 1, 2023, we had a total of 43,657 worldwide employees, 16,867 of which resided in the United States. For purposes of identifying the median employee in 2023, we included all of our employees in the median employee analysis after making certain exclusions as permitted under the de minimis exception of the SEC rules.(1) We used average exchange rates over December 2023 to convert compensation data from the local currencies in which it was paid into U.S. dollars. We calculated the annual total compensation for the median employee using the same methodology we use for our named executive officers as set forth in the Summary Compensation Table in this proxy statement. The annual total compensation of our CEO for fiscal year 2023 was $4,428,417 and the annual total compensation for fiscal year 2023 of our median employee was $42,888. The resulting ratio of the annual total compensation of our CEO to the annual total compensation of our median employee for 2023 is 103:1.
CEO Pay Ratio
| (1) As is permitted under SEC rules, we removed 1,720 global employees (approximately 3.94% of our total employee population) from the data set. These countries and the applicable employee headcounts as of the sample date were as follows: Bulgaria (1,408), Romania (222), Czech Republic (29), Greece (26), Ukraine (16), Slovakia (14), India (3), Belarus (1) and Vietnam (1). |
CEO Pay Ratio
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Pay Versus Performance
Pay Versus Performance As required by Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between “compensation actually paid” or “CAP”, as defined in Item 402(v), and certain financial performance metrics for each of the last four completed fiscal years. In determining the CAP to our NEOs, we are required to make various adjustments to amounts that have been reported in the Summary Compensation Table (“SCT”) in previous years, as the SEC’s valuation methods for this section differ from those required in the SCT. The table below summarizes compensation values both previously reported in our SCT, as well as the adjusted values required in this section for the 2023, 2022, 2021 and 2020 fiscal years. Note that for our NEOs other than our principal executive officer (the “PEO”), compensation is reported as an average.
Pay Versus Performance
| Year | SCT Total for PEO (1) | Compensation actually paid to PEO (2) | Average SCT Total for non-PEO NEOs (1) | Average Compensation actually paid to non-PEO NEOs (2) | Value of Initial Fixed $100 Investment based on: | | Net Income (in millions) (5) | Adjusted EPS (6) | | | | | | | TSR (3) | Peer Group TSR (3)(4) | | | | 2023 | 4,428,417 | 4,504,314 | 3,143,289 | 3,235,558 | 75.89 | 193.46 | $(439.5) | $9.19 | | 2022 | 4,259,954 | 2,404,723 | 2,290,221 | 724,896 | 74.95 | 123.39 | $25.2 | $12.85 | | 2021 | 5,190,696 | 6,087,743 | 3,148,501 | 3,608,823 | 133.58 | 164.32 | $1,033.2 | $14.86 | | 2020 | 3,636,376 | 3,695,354 | 2,309,547(7) | 1,966,889(7) | 103.35 | 120.37 | $515.6 | $8.83 |
Pay Versus Performance
| (1) The PEO and the non-PEO NEOs for each year are as follows: |
Pay Versus Performance
| a. | 2023: Jeffrey S. Lorberbaum, PEO; W. Christopher Wellborn, James F. Brunk, Bernard P. Thiers and Paul F. De Cock, non-PEO NEOs. |
Pay Versus Performance
| b. | 2022: Jeffrey S. Lorberbaum, PEO; W. Christopher Wellborn, James F. Brunk, Bernard P. Thiers and Paul F. De Cock, non-PEO NEOs. |
Pay Versus Performance
| c. | 2021: Jeffrey S. Lorberbaum, PEO; W. Christopher Wellborn, James F. Brunk, Bernard P. Thiers, Paul F. De Cock and Frank H. Boykin, non-PEO NEOs. Mr. Boykin served the Company as Chief Financial Officer through April 1, 2021. Mr. Boykin did not receive an equity award in 2021. |
Pay Versus Performance
| d. | 2020: Jeffrey S. Lorberbaum, PEO; W. Christopher Wellborn, James F. Brunk, Bernard P. Thiers, Paul F. De Cock, Frank H. Boykin and Glenn R. Landau, non-PEO NEOs. Mr. Landau resigned as Executive Vice President and Chief Financial Officer of the Company in April 2020. Pursuant to the terms of his separation agreement with the Company, Mr. Landau received a payment equal to nine months cash compensation and the continued vesting of 1,878 shares of restricted stock. Mr. Landau did not otherwise receive compensation from the Company after his departure from the Company in 2020. Mr. Boykin had previously served as the Company’s Chief Financial Officer through his retirement on March 31, 2019, and continued to serve as a consultant to the Company following his retirement in March 2019 and until his appointment as Chief Financial Officer on April 15, 2020. Mr. Boykin did not receive an equity award in 2020. |
Pay Versus Performance
| (2) The CAP was calculated beginning with the PEO’s SCT total and the non-PEO NEO’s average SCT total for each respective year. The table below describes the adjustments, each of which is required by SEC rules, to calculate CAP from the SCT total of our PEO and our non-PEO NEOs. |
Pay Versus Performance
| 34 | 2024 Proxy Statement | Mohawk Industries, Inc. |
Pay Versus Performance
| | 2023 | | 2022 | | 2021 | | 2020 | | | Adjustments | PEO | Non-PEO NEOs | PEO | non-PEO NEOs* | PEO | non-PEO NEOs* | PEO | non-PEO NEOs* | | SCT Total | $4,428,417 | 3,143,289 | $4,259,954 | 2,290,221 | $5,190,696 | 3,148,501 | $3,636,376 | 2,309,547 | | Adjustments for stock awards | | | | | | | | | | (Deduct): Aggregate value for stock awards included in SCT Total for the covered fiscal year | (1,069,537) | (1,292,038) | (2,055,992) | (1,056,428) | (1,901,669) | (1,594,926) | (1,364,847) | (664,280) | | Add: Fair value at year end of awards granted during the covered fiscal year that were outstanding and unvested at the covered fiscal year end | 1,076,297 | 1,360,508 | 1,530,131 | 786,225 | 1,971,916 | 1,594,330 | 1,561,867 | 624,831 | | Add (Deduct): Year-over-year change in fair value at covered fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at the covered fiscal year end | 17,392 | 15,194 | (872,284) | (1,035,142) | 423,886 | 268,176 | 44,064 | 30,128 | | Add: Vesting date fair value of awards granted and vested during the covered fiscal year | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | Add (Deduct): Change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during the covered fiscal year | 51,745 | 8,605 | (457,087) | (259,980) | 402,914 | 192,742 | (182,106) | (77,216) | | (Deduct): Fair value at end of prior fiscal year of awards granted in any prior fiscal year that failed to meet the applicable vesting conditions during the covered fiscal year | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (256,122) | | Add: Dividends or other earnings paid on awards in the covered fiscal year prior to vesting if not otherwise included in the SCT Total for the covered fiscal year | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | CAP Amounts (as calculated) | 4,504,314 | 3,235,558 | 2,404,723 | 724,896 | 6,087,743 | 3,608,823 | 3,695,354 | 1,966,889 |
Pay Versus Performance
| * Amounts presented are averages for the entire group of non-PEO NEOs in each respective year. |
Pay Versus Performance
| (3) The values disclosed in these TSR columns represent the measurement period value of an investment of $100 made on January 1, 2020 as of December 31, 2020, and then valued again on each of December 31, 2021, December 31, 2022 and December 31, 2023. |
Pay Versus Performance
| (4) The peer group used for purposes of this disclosure is the S&P 500 Household Durables Index, which we also utilize in the stock performance graph provided in our annual report pursuant to Item 201(e) of Regulation S-K. For purposes of this disclosure in our 2023 proxy statement, we used the proxy-disclosed peer group used for compensation benchmarking practices and reported in our Compensation Discussion and Analysis in our 2023 proxy statement (the “Prior Peer Group”). We chose to include the TSR of the S&P 500 Household Durables Index because we believe it is a better comparative index than the Prior Peer Group which requires adjustment from time to time due to acquisitions and divestitures. The TSR for the Prior Peer Group for each respective year reported in the table is as follows: $122.96 as of December 31, 2020, $196.28 as of December 31, 2021, $151.52 as of December 31, 2022, and $227.24 as of December 31, 2023. |
Pay Versus Performance
| (5) Net earnings attributable to Mohawk Industries, Inc. as reported in our Consolidated Statements of Operations included in our Form 10-K. |
Pay Versus Performance
| (6) Please see Annex A to this Proxy Statement for a reconciliation of Non-GAAP financial measures. |
Pay Versus Performance
| (7) Reflects an adjustment to Mr. Boykin’s reported base salary for the fiscal year ended December 31, 2020 to account for 8.5 months of base salary compensation, instead of 8 months as previously reported. |
Pay Versus Performance
| Mohawk Industries, Inc. | 2024 Proxy Statement | 35 |
Pay Versus Performance
Narrative Description of Relationships Between CAP, TSR, Net Income and Adjusted EPS
Pay Versus Performance
| • | PEO and average non-PEO NEO CAP compared to Company TSR and Peer TSR |
Pay Versus Performance
In fiscal year 2023, the Company’s TSR increased 1% compared to the prior year period, while the TSR of the Company’s peer group increased 57% compared to the prior year period. The PEO CAP increased 87% compared to the prior year period, and the non-PEO NEO CAP increased 346% compared to the prior period. In fiscal year 2022, the Company’s TSR decreased 44% compared to the prior year period, while the TSR of the Company’s peer group decreased 25% compared to the prior year period. Similarly, the PEO CAP decreased 60% compared to the prior year period, and the non-PEO NEO CAP decreased 80% compared to the prior period. In fiscal year 2021, the Company’s TSR increased 29% compared to the prior year period, while the TSR of the Company’s peer group increased 37% compared to the prior year period. Similarly, the PEO CAP increased 65% compared to the prior year period, and the non-PEO NEO CAP increased 83% compared to the prior period.
Pay Versus Performance
| • | PEO and average non-PEO NEO CAP compared to Company Net Income |
Pay Versus Performance
In fiscal year 2023, the Company’s net income decreased 1,803% compared to the prior year period. The PEO CAP increased 87% compared to the prior year period, and the non-PEO NEO CAP increased 346% compared to the prior period. In fiscal year 2022, the Company’s net income decreased 98% compared to the prior year period. Similarly, the PEO CAP decreased 60% compared to the prior year period, and the non-PEO NEO CAP decreased 80% compared to the prior period. In fiscal year 2021, the Company’s net income increased 100% compared to the prior year period. Similarly, the PEO CAP increased 65% compared to the prior year period, and the non-PEO NEO CAP increased 83% compared to the prior period.
Pay Versus Performance
| • | PEO and average non-PEO NEO CAP compared to Company Adjusted EPS |
Pay Versus Performance
In fiscal year 2023, the Company’s Adjusted EPS decreased 28% compared to the prior year period. The PEO CAP increased 87% compared to the prior year period, and the non-PEO NEO CAP increased 346% compared to the prior period. In fiscal year 2022, the Company’s Adjusted EPS decreased 14% compared to the prior year period. Similarly, the PEO CAP decreased 60% compared to the prior year period, and the non-PEO NEO CAP decreased 80% compared to the prior period. In fiscal year 2021, the Company’s Adjusted EPS increased 68% compared to the prior year period. Similarly, the PEO CAP increased 65% compared to the prior year period, and the non-PEO NEO CAP increased 83% compared to the prior period. Required Tabular Disclosure of Most Important Measures to Determine 2023 CAP
Pay Versus Performance
| • | Adjusted EPS |
Pay Versus Performance
| • | Total Stockholder Return (TSR) as compared to the S&P 500 |
Pay Versus Performance
| • | Adjusted Operating Income |
Pay Versus Performance
| 36 | 2024 Proxy Statement | Mohawk Industries, Inc. |