DEF 14A of Orion Group Holdings Inc
Filed Apr 3, 2024 · FY20230001402829-24-000020
PROPOSAL NO. 1 — ELECTION OF DIRECTORS10
PROPOSAL NO. 1 — ELECTION OF DIRECTORS10
NOMINEES FOR DIRECTOR20
NOMINEES FOR DIRECTOR20 Michael J. Caliel21 Quentin P. Smith, Jr.22
Continuing Directors22
Continuing Directors22 Thomas N. Amonett22 Margaret M. Foran23 Travis J. Boone24 Austin J. Shanfelter25 Mary E. Sullivan26
DIRECTOR COMPENSATION30
DIRECTOR COMPENSATION30
2023 executive compensation program in detail43
2023 executive compensation program in detail43 Base Salary43 Annual Cash Incentives Overview44 NEO Bonus Plan Design44 2023 GOALS AND ACHIEVEMENT41 Award Determination For 2023 Performance44 Long-Term Equity Incentives46 2023 Long-Term Incentive Award Grants47 2024 Long-Term Incentive Program48
Summary Compensation Table52
Summary Compensation Table52
Grants of Plan Based Awards52
Grants of Plan Based Awards52
Outstanding Equity Awards at Fiscal Year End 202354
Outstanding Equity Awards at Fiscal Year End 202354
OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR ENDED 202354
OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR ENDED 202354
CEO PAY RATIO DISCLOSURE55
CEO PAY RATIO DISCLOSURE55
Potential Payments Upon Termination or Change in Control58
Potential Payments Upon Termination or Change in Control58 Overview58 Employment Arrangements with Certain Officers58 Summary of Payments59
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS65
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS65
AMENDMENT TO THE COMPANY'S 2022 LONG-TERM INCENTIVE PLAN66
AMENDMENT TO THE COMPANY'S 2022 LONG-TERM INCENTIVE PLAN66
APPENDIX B - Amendment to the Company's 2022 Long-Term Incentive Plan91
APPENDIX B - Amendment to the Company's 2022 Long-Term Incentive Plan91
What is the purpose of the Annual Meeting?
| (5) Approval of an amendment to the Company’s 2022 Long-Term Incentive Plan. |
PROPOSAL NO. 1 — ELECTION OF DIRECTORS
PROPOSAL NO. 1 — ELECTION OF DIRECTORS At the Annual Meeting, stockholders will be asked to elect two (2) members of our Board. Under our Amended and Restated Bylaws, the Board may determine by resolution the number of directors that the Company will have from time to time. The size of the Board is currently set at eight persons; however, upon the conclusion of the Annual Meeting which is the effective date of Mr. Daerr’s retirement, the size of the Board will be reduced to seven directors. The nominees at this year’s Annual Meeting are: Michael J. Caliel and Quentin P. Smith, Jr. Our Certificate of Incorporation and Amended and Restated Bylaws provide for a classified Board of Directors, divided into three classes, with each class serving a staggered three-year term. As a result, stockholders elect approximately one-third of our Board each year. Both director nominees are serving a term that expires at the 2024 Annual Meeting. On the recommendation of its Nominating and Governance Committee, the Board has nominated each of these directors for re-election as Class II directors to serve an additional three-year term expiring at the 2027 Annual Meeting of Stockholders. Each director nominee has indicated to the Board his willingness to serve the full directorship term for which each has been nominated. However, if, prior to the Annual Meeting, either of these director nominees become unwilling or unable to serve, then (i) the shares represented by proxy will be voted for the election of such other person as may be nominated thereafter by the Board; (ii) the Board may leave the position unfilled; or (iii) the Board may reduce the authorized number of directors, as provided in our Amended and Restated Bylaws. Please see “The Board of Directors and Its Committees” section below for information about the director nominees and the other current members of the Board, each of whom will continue to serve following the Annual Meeting, but only to the extent described above. Our Amended and Restated Bylaws provide that our directors are elected by plurality vote; however, our Board has adopted Corporate Governance Guidelines that include a majority voting policy that applies only in uncontested elections. If an incumbent director fails to receive the required votes for re-election, our Board would expect such director nominee to tender his or her resignation, then the Board, after considering the recommendation of its Nominating and Governance Committee and any factors it deems relevant, would determine whether to accept the resignation. Any director whose resignation is under consideration will abstain from participating in that decision. The Board unanimously recommends that you vote “FOR” the election of each of the director nominees.
PROPOSAL NO. 5 — APPROVAL OF AN AMENDMENT TO THE COMPANY’S LONG-TERM INCENTIVE PLAN
PROPOSAL NO. 5 — APPROVAL OF AN AMENDMENT TO THE COMPANY’S LONG-TERM INCENTIVE PLAN We are asking our stockholders to approve an amendment to the Orion Group Holdings, Inc. 2022 Long-Term Incentive Plan. Our 2022 LTIP was initially adopted by our Board of Directors on May 19, 2022, and approved by our stockholders at the 2022 Annual Meeting. The maximum number of shares of common stock authorized for issuance under the 2022 LTIP is 2,175,000 shares. Approval of the proposed amendment of the 2022 LTIP is needed to replenish the pool of shares available for the grant of stock-based compensation. As of the Record Date, approximately 370,000 shares of our common stock remained available for grants under the 2022 LTIP, which (assuming a grant price of $9.24 per share, which was the closing price of our common stock on the Record Date), is fewer than the number of shares of common stock that our Compensation Committee believes will be needed to make the planned, competitive long-term incentive grants over the next year to our key employees and independent directors. On March 20, 2024, our Compensation Committee recommended and on March 21, 2024 our Board of Directors authorized, subject to stockholder approval, an amendment to the 2022 LTIP to, among other things, increase the number of shares available for issuance under the 2022 LTIP by 1,560,000 shares. If approved by the stockholders, the request to increase the number of shares for future issuance under the 2022 LTIP will result in an additional potential dilution of approximately 4.7 percent. This additional potential dilution was calculated by dividing the requested increase of 1,560,000 shares to the shares reserve by the sum of (i) the total number of shares available for issuance under the 2022 LTIP prior to its amendment, (ii) all unvested shares and unexercised stock options previously awarded and outstanding under the 2022 LTIP and any prior plan, and (iii) the total number of shares of outstanding common stock of the Company as of March 22, 2024. Our Board recommends a vote for the proposed amendment to the 2022 LTIP as it will enable our Compensation Committee to continue to grant equity awards at market competitive levels to our key employees, thereby preserving cash for other strategic uses while at the same time aligning the interests of our senior management with our stockholders. The Board unanimously recommends that you vote “FOR” the approval of an amendment to the Company’s 2022 Long-Term Incentive Plan. CORPORATE GOVERNANCE We conduct our business under the direction of our Board. Members of the Board devote the time, energy, and attention as necessary to ensure diligent performance of their duties. The Board has adopted corporate governance practices designed to aid the Board and management in the fulfillment of their respective duties and responsibilities to our stockholders.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
THE BOARD OF DIRECTORS AND ITS COMMITTEES The following table sets forth the names, ages and positions of our director nominees and our continuing directors as of the Record Date.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
| Nominees for Director(1) | | | | | | | Name | Current Position | Age | Class | Director Since | Term Expires | | Michael J. Caliel | Director | 64 | II | 2019 | 2024 | | Quentin P. Smith, Jr. | Director | 72 | II | 2022 | 2024 | | Continuing Directors | | | | | | | Name | Current Position | Age | Class | Director Since | Term Expires | | Thomas N. Amonett | Director | 80 | I | 2007 | 2026 | | Travis J. Boone | Director, President and CEO | 50 | I | 2022 | 2026 | | Margaret M. Foran | Director | 69 | I | 2019 | 2026 | | Austin J. Shanfelter | Chairman of the Board of Directors | 66 | III | 2007 | 2025 | | Mary E. Sullivan | Director | 67 | III | 2019 | 2025 |
THE BOARD OF DIRECTORS AND ITS COMMITTEES
| (1) After almost 17 years of esteemed service, Mr. Richard L. Daerr, Jr. announced on March 21, 2024 that he has chosen not to stand for re-election but will retire from the Board and Committee appointments effective as of the closing of the 2024 Annual Stockholder Meeting on May 16, 2024. |
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The following graphs and charts provide insight into the composition of the Board immediately following the Annual Meeting (assuming both of the director nominees are re-elected).
NOMINEES FOR DIRECTOR
NOMINEES FOR DIRECTOR The following sets forth certain biographical information for each of the director nominees, including his position with the Company and his business experience during the past five years.
Member of Audit and Compensation Committees
| | Mr. Caliel has served on our Board as a Class II director since his appointment to the Board in January 2019, and since that date has also served as a member of the Audit and Compensation Committees. Mr. Caliel is an accomplished former Chief Executive Officer and Director with more than four decades of public company experience in the industrial, energy and infrastructure sectors. He has extensive knowledge of, and experience in, public company governance, strategy development, mergers and acquisitions, international operations and finance. He is the Executive Chairman of Team Inc. | | (NYSE: TISI), a leading global provider of integrated, digitally-enabled asset performance assurance and optimization solutions. From 2019 until 2022, Mr. Caliel served as Board Chair and a member of the Compensation Committee for PLH Group, a leading full-service construction and specialty contractor serving the electric power and pipeline markets. Mr. Caliel also previously served as lead operating director at DBi Services, a leading asset management and infrastructure services company, and also as an independent director at FCX Performance, a leading process flow control provider. From 2015 until its merger with Granite Construction in June 2018, Mr. Caliel served as President, Chief Executive Officer and Director for Layne Christensen Company (NASDAQ: LAYN), a global water management, infrastructure services and drilling company. Prior to this, from 2011 to 2014, Mr. Caliel was President and Chief Executive Officer of Invensys Operations Management, a division of Invensys PLC (LSE: ISYS.L), a global technology, software and consulting company. Invensys PLC was acquired by Schneider Electric in January 2014. From 2006 to 2011, Mr. Caliel served as President, Chief Executive Officer and Director of Integrated Electrical Services, Inc. (NASDAQ: IESC), a national provider of electrical and communication infrastructure services. Mr. Caliel is a National Association of Corporate Directors Certified Director and a former Governance Fellow. Mr. Caliel is well qualified to serve on our Board. He has extensive industry related operating and corporate experience, including international business experience. He has served as Chief Executive Officer of a public company and has been a member of the board of directors of multiple public companies. | |
Member of Audit and Compensation Committees
| | Mr. Smith has served on our Board as a Class II director since his appointment to the Board in January 2022. On March 24, 2022, Mr. Smith was appointed as a member of both the Audit and Compensation Committees. Mr. Smith joined the Board with comprehensive business development, operational, and governance experience across a spectrum of industries. Mr. Smith is founder and President of Cadre Business Advisors, LLC, a business management consulting firm that specializes in strategic planning, business performance improvement and capital formation. Prior to forming Cadre Business Advisors, Mr. Smith was a Partner-in-Charge of the Desert Southwest business consulting practice for Arthur Anderson. | | Mr. Smith previously served as Chairman and CEO of Denver Group Holdings, Inc./Data Line Holdings, Inc., which, at the time of the acquisition, was the largest independent information processing service bureau in the western US. Mr. Smith also serves on the Board of Directors of Banner Health. Among Mr. Smith's Board experience with various civic organizations, he has previously served as Chairman of the Board for Employee Solutions, Inc., a publicly traded company formerly acquired; Chairman of the Board for iCrossing, Inc., a privately-held company formerly acquired; as a Director for STORE Capital, a publicly traded company; and, as a Director for Arizona Public Service Company, a publicly traded company. Mr. Smith is well qualified to serve on our Board due to his more than 40 years of varied and challenging business experience. His private and public company expertise in strategic planning, business development and business performance improvement are of particular note. Mr. Smith’s re-election would support the ongoing diversification efforts of the Board, thus continuing to expand its variety of skill sets and professions, but also by continuing to reflect the demographics of the communities served by the Company in terms of race, ethnicity, age, and gender. | |
Continuing Directors
Continuing Directors
Member of Nominating & Governance Committee
Member of Nominating & Governance Committee
Member of Nominating & Governance Committee
| | Ms. Sullivan has served on our Board as a Class III director since her appointment to the Board in January 2019, and serves as the Chair of the Audit Committee and as a member of the Nominating and Governance Committee. Ms. Sullivan currently serves as Chief Financial Officer for Susser Holdings II, L.P. From 2000 to 2015, Ms. Sullivan worked for Susser Holdings Corporation (NYSE: SUSS), a company engaged in convenience store and fuel distribution operations, as Vice President of Finance and as Executive Vice President, Treasurer and Chief Financial Officer. From 2012 to 2015, Ms. Sullivan also served as Executive Vice President, Treasurer and Chief Financial Officer of | | Susser Holdings’ subsidiary, Susser Petroleum Partners (NYSE: SUSP/SUN). From 1999 to 2000, Ms. Sullivan served as Director of Finance for the City of Corpus Christi, Texas. Prior to this, Ms. Sullivan served as Controller of Elementis Chromium, LP, a chrome chemical manufacturer, from 1993 to 1999. From 1979 to 1992, Ms. Sullivan served in accounting positions and as Treasurer for Central Power and Light Company. Ms. Sullivan also has been a director of Susser Bank, a privately-owned community bank, since 2018, and of its parent company, Susser Banc Holdings Corporation since 2021, serving as the Audit Committee Chair from July 2018 to November 2021. Ms. Sullivan is well qualified to serve on our Board due to her more than 40 years of financial and accounting business experience. She meets the standards as an audit committee financial expert and is currently serving as Chair of the Company’s Audit Committee. Ms. Sullivan is a Certified Public Accountant, a Certified Management Accountant, a Chartered Financial Analyst, Chartered Global Management Accountant, and a Project Management Professional. Ms. Sullivan is a National Association of Corporate Directors Certified Director. | |
Compensation Committee
| ❖ | To approve incentive and bonus plans applicable to senior management and administer awards under incentive compensation and equity-based plans; |
Annual Performance Evaluations
Annual Performance Evaluations The Board and its committees conduct annual self-performance evaluations and review each committee charter. In addition, our Corporate Governance Guidelines are reviewed and reassessed for adequacy annually.
Board Membership Matrix
Board Membership Matrix The following tables reflect the composition, competencies and experience summary of our current Board of Directors.
Board Membership Matrix
| Qualification | Austin J. Shanfelter (Chairman) | Thomas N. Amonett | Travis J. Boone | Michael J. Caliel | Richard L. Daerr, Jr. | Margaret M. Foran | Mary E. Sullivan | Quentin P. Smith, Jr. | | Regulatory Compliance | | | | | | | | | | Independent Director per SEC & NYSE | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | | Independent Director per ISS & GL | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | | Audit Committee Financial Expert | | | | | | | ✓ | | | Personal | | | | | | | | | | Prior Public Board Experience | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | | Prior Private Board Experience | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | | # of other current public boards | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 0 | | Previous NACD Fellowship | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | | | Ethnic diversity | | | ✓ | | | | | ✓ | | Gender diversity | | | | | | ✓ | ✓ | | | Birth Year | Aug. 1957 | Oct. 1943 | July 1973 | May 1959 | Aug. 1944 | Nov. 1954 | Nov. 1956 | June 1951 | | Director Since | May 2007 | May 2007 | Nov. 2022 | Jan. 2019 | May 2007 | Oct. 2019 | Jan. 2019 | Jan. 2022 | | Retired or Employed Full Time | Retired | Retired | Employed | Employed | Retired | Employed | Employed | Employed | | Public Company Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Private Company Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Not-for-Profit Experience | | | | | ✓ | ✓ | ✓ | ✓ | | Government Experience | | | | | ✓ | | ✓ | | | Academia | | | | | ✓ | ✓ | | | | Community Leadership / Philanthropic Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Board Committees | | | | | | | | | | Audit | | Member | | Member | | | Chair | Member | | Nominating and Governance | | Chair | | | | Member | Member | | | Compensation | | | | Member | Member | Chair | | Member | | Decision-Making Experience at Executive Level ("DM") or Other Substantial Experience ("S") | | | | | | | | | | Current or recent public company CEO | ✓ | ✓ | ✓ | ✓ | | | | ✓ | | Prior Committee expertise | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | | Relevant industry expertise | ✓ | ✓ | ✓ | ✓ | ✓ | | | | | Consolidation/M&A expertise | | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ |
Board Membership Matrix
| Strategic Planning | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Accounting | | | | ✓ | | ✓ | ✓ | | | Marketing / Finance | | | | ✓ | ✓ | ✓ | ✓ | ✓ | | Technology / New media | | | ✓ | | | | ✓ | ✓ | | Human Resources / Compensation | ✓ | | | | | | ✓ | ✓ | | Health, Safety, Environment & Sustainability | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | International Business | | ✓ | ✓ | ✓ | ✓ | ✓ | | | | Corporate Governance | | ✓ | | | ✓ | ✓ | | ✓ | | Legal / Compliance | | | | | ✓ | ✓ | | |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The following table describes the compensation earned by persons who served as non-employee directors on our Board during 2023. Mr. Boone, who serves as our President and Chief Executive Officer in addition to serving as a director, is not entitled to any additional compensation as a director. All amounts paid to Mr. Boone are reported in the charts under “Executive Compensation.”
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash((1)) | Stock Compensation((2)) | Total | | Thomas N. Amonett | $95,000 | $90,000 | $185,000 | | Michael J. Caliel | $85,000 | $90,000 | $175,000 | | Richard L. Daerr, Jr.(3) | $88,500 | $90,000 | $178,500 | | Margaret M. Foran | $95,000 | $90,000 | $185,000 | | Austin J. Shanfelter(4) | $154,166 | $90,000 | $244,166 | | Quentin P. Smith, Jr. | $85,000 | $90,000 | $175,000 | | Mary E. Sullivan | $95,000 | $90,000 | $185,000 |
DIRECTOR COMPENSATION
| (1) Amounts in this column represent retainers and chairmanship fees as detailed in the chart. |
DIRECTOR COMPENSATION
| (2) Each of our non-employee directors was awarded 34,091 shares of common stock on May 18, 2023. |
DIRECTOR COMPENSATION
| (3) Mr. Daerr served as Lead Independent Director from September 2022 until March 1, 2023. For such service, Mr. Daerr was compensated $7,000 which is included in the “Fees Earned or Paid in Cash” portion of the table. |
DIRECTOR COMPENSATION
| (4) Mr. Shanfelter served as Executive Chair from September 2022 until March 1, 2023. On March 2, 2023, Mr. Shanfelter reverted to an Independent Director. His compensation for his Board Service and as Board Chair for 2023 were prorated for the 10-month period relating to Mr. Shanfelter’s status as an Independent Director. |
DIRECTOR COMPENSATION
The Compensation Committee of the Board of Directors retained Meridian Compensation Partners, LLC (“Meridian”), an independent consulting firm, to assist in determining the components and amounts of director compensation for 2023 based on comparisons of board compensation in similarly situated companies. Our director compensation program typically consists of both cash and equity compensation. In 2023, the Compensation Committee granted equity awards to our non-employee directors valued at $90,000 per director and currently expects to grant equity awards to non-employee directors during fiscal 2024. The schedule of director fees for 2023 were as follows:
DIRECTOR COMPENSATION
| Fee Description | Annual Amount | | Board Service Annual Cash Retainer* | $85,000 | | Board Chair Annual Additional Cash Fee* | $100,000 | | Each Committee Chair, Additional Annual Cash Fee | $10,000 | | Board Service Annual Equity Grant | $90,000 | | *Annual amount was prorated for Mr. Shanfelter’s status as independent director and Chair effective March 2, 2023, such that he received $70,833 and $83,333, respectively, for such service in 2023. | |
DIRECTOR COMPENSATION
All cash retainers are paid quarterly in arrears. The Company also reimburses non-employee directors for reasonable travel and lodging expenses incurred for attending Board and committee meetings.
SUMMARY OF 2023 EXECUTIVE COMPENSATION DECISIONS
| ❖ | Annual Bonuses: For 2023, the Committee established goals under our NEO Bonus Plan (“NBP”) for Adjusted EBITDA (60% weight), Strategic Objectives (30%) and Individual Objectives (10%). The Committee established target level bonus awards for 2023 for Mr. Boone at 100% of his annual salary, Mr. Thanisch at 75% of his annual salary, and Mr. Buchler at 60% of his annual salary. Based upon 2023 actual financial and operational performance, including Adjusted EBITDA of $23.8 million relative to a target of $27.5 million and successful execution of several key corporate strategic and individual objectives, the Committee approved bonuses at 100% of target for Mr. Boone, 100% of target for Mr. Thanisch, and 86.5% of target for Mr. Buchler. Mr. Earle did not begin his employment with the Company until the fourth quarter of 2023, and therefore he was not eligible to receive a bonus for 2023 per the terms of the NBP. |
SUMMARY OF 2023 EXECUTIVE COMPENSATION DECISIONS
| ❖ | Equity Awards: Due to management transition and strategic planning activity during 2022, that continued into 2023, the Committee did not approve any routine equity awards for our NEOs during 2023. In 2023, the Committee approved the performance conditions applicable to the new-hire grants of Performance Stock Units (“PSUs”) to Mr. Boone and Mr. Thanisch that were offered to them in 2022. More specifically, the Committee determined that the 2023 PSUs may be earned based upon Company financial performance over a three-year period, with 75% tied to return on invested capital (“ROIC”) and 25% tied to achievement of a stock price of at least $6.00 per share for the 20 consecutive trading days at the end of the performance period. The Committee also approved a new hire equity grant in November 2023 consisting of time-vested restricted stock and PSUs for Mr. Earle. The performance conditions for Mr. Earle’s PSUs, which were approved by the Committee in March 2024, provide that Mr. Earle’s 2023 PSUs may be earned based upon Company financial performance over a three-year period ending December 31, 2026, with 50% tied to ROIC and 50% tied to relative total shareholder return among the Company’s peer group. We anticipate returning to a more routine annual grant of equity awards beginning in 2024, as discussed later in this CD&A. |
OUR EXECUTIVE COMPENSATION PRACTICES
| What We Do | What We Don’t Do | | Pay for performance | No tax gross ups | | Significant emphasis on at-risk pay | No repricing of stock option awards | | Robust executive and director stock ownership requirements | No hedging of Company stock | | Independent Compensation Consultant | No special benefits or perquisites for NEOs | | Double-trigger vesting of equity awards upon a change of control | No accelerated vesting of equity awards upon termination, except after a change of control | | Equity and cash incentive compensation subject to clawback (new for 2023) | |
CEO PAY AT A GLANCE: ensuring stability through transition
| | Mr. Boone 2022 Target Compensation | Mr. Boone 2023 Target Compensation | Mr. Boone 2024 Target Compensation | Notes | | Base Salary | $750,000 | $750,000 | $800,000 | Actual 2022 salary prorated for hire date in September 2022 | | Target Annual Incentive | 100% of base salary | 100% of base salary | 100% of base salary | Actual bonus for 2023 was $750,000, representing 100% of target | | Target Long-term Incentive | ◾ $1,200,000 in restricted stock vesting 1/3 per year over three years, $200,000 of which were intended to replace forfeited stock from Mr. Boone’s previous employer | ◾ $650,000 in PSUs that cliff vest at the end of the three year performance period ◾ 25% based upon ROIC ◾ 75% based upon achievement of a minimum stock price of $6.00 for at least 20 consecutive trading days at the end of the performance period | ◾$990,000 in PSUs that cliff vest at the end of a three-year performance period ◾50% based upon ROIC ◾50% based on relative total shareholder return among the Company’s peer group ◾$660,000 in restricted stock vesting 1/3 per year over three years | Mr. Boone’s initial letter agreement in 2022 anticipated a combined grant of time-based restricted stock and PSUs. Due to management transition and strategic planning activity, the granting of the PSUs was delayed until March 29, 2023. |
WHAT GUIDES OUR PROGRAM
| Objectives | Our Approach | | Pay for Performance | Provide the majority of NEO pay in the form of short-term cash incentives and long-term equity incentives whose realized value is primarily dependent upon our financial performance | | Stockholder Alignment | Encourage and facilitate meaningful long-term share ownership by our NEOs through annual long-term incentive (“LTI”) awards and robust share ownership guidelines supplemented by anti-hedging and clawback policies | | Attract and retain highly qualified talent | Target NEO compensation opportunities to be competitive for similarly situated executives in our peer group Provide a significant portion of NEO compensation in the form of LTI awards that vest or are earned over multiple years |
PRINCIPAL ELEMENTS OF COMPENSATION
| Pay Elements | Form | Description | | Base Salary | Cash (fixed) | Fixed cash payment for performing day-to-day responsibilities Critical in attracting and retaining qualified personnel | | Annual Cash Bonus | Cash (variable) | Competitive annual incentive opportunity for achieving short-term financial goals and strategic objectives measured within the current year | | LTI Awards | Equity (variable) | Restricted stock with time-based vesting restrictions that provide immediate retention value and direct alignment with stockholders by encouraging long-term share ownership PSUs with vesting tied to achievement of ROIC and relative TSR among the Company’s peer group over a three-year performance period. |
THE ROLE OF MANAGEMENT
| ❖ | Recommending Company financial and strategic performance objectives applicable to the bonuses of the other NEOs and assisting the Committee with evaluating the Company’s performance against such objectives; and |
THE ROLE OF MANAGEMENT
| ❖ | Recommending any LTI awards for other NEOs. |
THE ROLE OF THE INDEPENDENT CONSULTANT
THE ROLE OF THE INDEPENDENT CONSULTANT In furtherance of the Committee’s responsibility, the Committee engages an independent advisor to assist the Committee in evaluating our executive compensation. Meridian Compensation Partners (“Meridian”) has served as an independent advisor to the Committee since their initial engagement in 2020. Meridian reports directly and exclusively to the Committee. During 2023, Meridian provided the Committee competitive marketplace compensation data for executives and directors and commented on the competitiveness and reasonableness of our executive and director compensation programs, as well as trends and developments impacting executive pay. The Committee regularly reviews the services provided by its outside consultants and based on the information provided by Meridian, determined that they were independent in providing executive compensation consulting services.
THE ROLE OF PEER GROUPS AND MARKET DATA
THE ROLE OF PEER GROUPS AND MARKET DATA Providing a competitive pay package is critical to attracting and retaining experienced talent. In order to help ensure pay levels are competitive, we consider external survey data and data from peer group compensation disclosures as important market reference points to assist well-informed compensation decisions. The Committee periodically reviews the appropriateness of our pay posture in light of Company and individual performance, as well as other factors specific to individual executives (such as tenure and internal equity concerns). No single position in the referenced surveys or within our peer group fully captures the breadth of the responsibilities of certain of our NEOs. For 2023 NEO compensation decisions, the Committee considered market data provided by Meridian that reflected compensation for a peer group of 16 publicly traded engineering and construction firms. While we have very few direct “peers” in the market, the companies in this group were identified in consultation with Meridian as potential competitors for talent with businesses of similar financial size and scope. Each year, the Committee reviews the peer group in order to determine whether the companies in the group remain appropriate. Each of the 16 companies included in the 2023 peer group compensation review is listed below. These same peers are being used for purposes of measuring relative TSR for the PSUs that were awarded to the NEOs in March 2024.
THE ROLE OF PEER GROUPS AND MARKET DATA
| COMPENSATION AND TSR PERFORMANCE PEER GROUP | | | Company Name | Industry Focus | | Ampco-Pittsburgh Corporation | Steel | | Argan, Inc. | Construction & Engineering | | Construction Partners, Inc. | Construction & Engineering | | Eagle Materials | Construction Materials | | Great Lakes Dredge & Dock | Construction & Engineering | | Gulf Island Fabrication | Oil & Gas Equipment & Services | | IES Holdings | Construction & Engineering | | INNOVATE Corp. | Construction & Engineering | | Insteel Industries | Building Productions | | L.B. Foster Company | Industrial Machinery | | Limbach Holdings, Inc. | Construction & Engineering | | Matrix Service Company | Construction & Engineering | | Northwest Pipe Company | Construction & Engineering | | Sterling Infrastructure, Inc. | Construction & Engineering | | Team, Inc. | Environmental & Facilities Svcs. | | VSE Corporation | Diversified Support Services |
THE ROLE OF PEER GROUPS AND MARKET DATA
At the time of the annual review, our annual revenues fell within the middle range of the peer group. As in past years, the Committee will review and revise this group as appropriate in 2024. To supplement the peer group data (which were collected from proxy compensation disclosures), Meridian also provided compensation statistics from a review of compensation survey data. Data reflected compensation rates across a broad group of general industry companies with revenues comparable to our own. Using a robust survey sample in combination with peer group data (along with the practice of reviewing market quartiles as opposed to averages) mitigates the impact of outliers, year-over-year volatility of compensation levels, and the risk of selection bias.
Annual Cash Incentives Overview
Annual Cash Incentives Overview Annual cash incentive opportunities for Messrs. Boone, Buchler and Thanisch during 2023 were provided through our NEO Bonus Plan (“NBP”), as described below. Mr. Earle, who was hired in the fourth quarter of 2023, was not eligible to receive an annual cash incentive opportunity for 2023 per the terms of the NBP.
NEO Bonus Plan Design
NEO Bonus Plan Design Under the NBP, annual target incentive opportunities are expressed as a percentage of base salary and are established by the Committee based on the NEO’s level of responsibility and his ability to impact overall results. Actual bonus payouts under the plan are typically contingent upon achievement of specific financial, strategic, and individual goals, as shown:
NEO Bonus Plan Design
| Corporate Financial Performance Adjusted (EBITDA) | + | Strategic Goal Achievement Factor | + | Individual Goal Achievement Factor | = | Earned Bonus |
Financial Performance (60% weight)
| | Performance Goals | | | Actual | Percent of Target Earned | | Category | Threshold | Target | Maximum | | | | EBITDA $MM | $22.0 | $27.5 | $33.0 | $23.8 | 66.4% |
Award Determination For 2023 Performance
| Executive | Approved Payout Factor | Target Bonus | Approved Bonus | | Mr. Boone | 100.0% | $750,000 | $750,000 | | Mr. Thanisch | 100.0% | $318,750 | $318,750 | | Mr. Buchler | 86.5% | $225,000 | $194,640 |
Long-Term Equity Incentives
Long-Term Equity Incentives Consistent with the Company’s compensation philosophy, the Committee believes that LTI awards should promote improvements to stockholder value and strongly align the interests of our NEOs with those of our stockholders. Specifically, NEOs should hold a meaningful amount of unvested equity, which not only aligns their long-term interests with those of our stockholders, but also serves as an effective retention tool. As noted above, considering the continued on-boarding of our new executives and our desire to finalize previously offered equity awards, during 2023, the Committee did not grant any routine equity awards, but approved LTI grants to our three new NEOs: Mr. Boone, Mr. Thanisch, and Mr. Earle, as described below. Mr. Earle’s new hire LTI grants were made upon his hiring in November 2023 and are weighted 60% ($300,0000) in time-based restricted stock that vest in equal annual tranches over a period of three years and 40% ($200,000) in PSUs based on stock price at market close on the start date of employment that cliff vest after a three-year performance period in respect of fiscal years 2024, 2025 and 2026. The performance conditions for Mr. Earle’s PSUs were approved by the Compensation Committee in March 2024. These PSUs may be earned at the end of a three-year performance period based upon relative total shareholder return among the Company’s peer group (weighted at 50%) and ROIC performance over the same time period (weighted at 50%). Mr. Boone & Mr. Thanisch: The 2022 letter agreements for each of Messrs. Boone and Thanisch provided for LTI awards in the form of PSUs and time-based restricted stock. The time-based restricted stock was granted in 2022. Due to the timing of goal-setting and budget approval following our strategic planning activity, the grant date of the PSUs was delayed until March 2023 when the performance conditions for those PSU awards were approved by the Committee (the “2023 PSU awards”). The 2023 PSU awards, described in more detail below, were the only equity awards granted to Messrs. Boone and Thanisch in 2023. These PSUs may be earned at the end of a three-year performance period based upon achievement of a specified level of stock price performance (weighted at 25%) and ROIC achieved over the same time period (weighted at 75%):
Long-Term Equity Incentives
| 2023 Performance Unit Design | | | Return on Invested Capital (75% Weight) | Absolute Stock Price (25% Weight) | | ◾ Shares may be earned at the end of three years based upon achievement of a pre-established target level of average annual ROIC over a three-year period. ◾ The Compensation Committee chose ROIC as a performance measure due to the importance of capital efficiency to our business strategy, and its importance as a long-term measure of value creation. | ◾ Shares may be earned at the end of three years based upon achievement of a $6.00 or higher average closing stock price for the 20 consecutive trading days at the end of the three-year performance period. ◾ The Compensation Committee chose absolute stock price as a performance measure for the 2023 PSU awards to enhance shareholder alignment and to emphasize the importance of growing shareholder value. |
2023 Long-Term Incentive Award Grants
2023 Long-Term Incentive Award Grants The table below shows the long-term incentive awards granted in 2023 to each of the NEOs.
2023 Long-Term Incentive Award Grants
| NEO | PSUs (#) | Time-Based Restricted Stock (#) | Total Grant Value | | Mr. Boone (1) | 241,636 | -- | $650,000 | | Mr. Thanish (1) | 87,273 | -- | $240,000 | | Mr. Earle (2) | -- | 61,602 | $300,000 | | Mr. Buchler | -- | -- | $ -- |
2023 Long-Term Incentive Award Grants
| (1) Mr. Boone's and Mr. Thanisch's PSUs are listed at target and cliff vest at the end of three years based on 75% ROIC and 25% Absolute Stock Price. The number of performance units that may ultimately be paid ranges from 0% to 200% with respect to the ROIC portion of the award and either 0% or 100% for the Absolute Stock Price portion of the award. Mr. Boone and Mr. Thanisch received their time-based restricted stock in August and September 2022, respectively, as part of their sign-on packages. |
2023 Long-Term Incentive Award Grants
| (2) Mr. Earle's 41,068 PSUs were included as part of his offer package in November 2023, but the applicable performance conditions were not approved by the Compensation Committee until March 2024, so have not been included in this table as they were not considered to have been granted until 2024. |
2024 Long-Term Incentive Program
2024 Long-Term Incentive Program Due to executive transition, our 2022 and 2023 NEO LTI grants were not representative of a “routine” year for our executive compensation program. For 2024, the Committee approved grants that included both time-based restricted stock and PSUs, as summarized below.
2024 Long-Term Incentive Program
| 40% of total value) | 30% of total value) | TSR 30% of total value) | | 2024 Long-Term Incentive Plan Design | | | | Time-Vested Restricted Stock (40% of total value) | Performance Stock Units ROIC (30% of total value) | Performance Stock Units Relative TSR (30% of total value) | | ◾ Shares will vest in equal annual increments over three years. | ◾ Shares may be earned at the end of three years based upon achievement of a pre-established target level of average annual ROIC over a three-year period. | ◾ Shares may be earned at the end of three years based upon our total shareholder return (TSR) performance relative to our performance peer group. |
AGREEMENTS WITH OUR NAMED EXECUTIVE OFFICERS
AGREEMENTS WITH OUR NAMED EXECUTIVE OFFICERS As of the Record Date, each of our NEOs, other than Mr. Buchler, was party to an employment agreement with the Company that includes a fixed term that expires in September 2026. The post-employment compensation provisions of each of these employment agreements is described under the related heading below. Each of the employment agreements provides severance benefits in the event of certain qualifying termination events. In the case of Mr. Buchler, he also entered into a letter agreement in 2023 providing specific severance benefits that were contingent upon his remaining employed during a retention period intended to transition the role of the General Counsel to a new hire. Upon the adoption of a Severance Plan, a Change-in-Control Plan, and a Retirement Policy, our Compensation Committee anticipates that future executive officers may no longer be offered employment agreements and the existing employment agreements with our current NEOs will not be renewed beyond September 2026.
POST-EMPLOYMENT COMPENSATION
POST-EMPLOYMENT COMPENSATION Under their employment agreements, Messrs. Boone, Buchler, Earle and Thanisch are entitled to certain severance benefits in the case of a qualifying termination. Severance payments following a change in control are subject to a double trigger and we do not provide excise tax gross-up payments. Absent a change in control, in the event of a resignation for “good reason” or a termination without “cause” (as such terms are defined in the agreement), each of our NEOs is entitled to continued payment of their respective base salary at the time for one year after termination and a lump sum payment equal to any earned but unpaid bonus with respect to the Company’s most recently completed fiscal year. Following a change in control, in the event a resignation for “good reason” or a termination without “cause”, each of our NEOs is entitled to receive a lump sum payment equivalent to a multiple of the NEO’s base salary and a multiple of the most recent bonus awarded to the NEO (a “Change-in-Control Severance Payment”). In the case of Mr. Buchler, his employment agreement provided for a Change-in-Control Severance payment equal to 30 months of salary and 2.5 times the most recent bonus awarded to him. In the case of Messrs. Boone, Earle and Thanisch, each of their respective employment agreements provide for a Change-in-Control Severance payment equal to 36 months of salary and 3.0 times the bonus paid to the NEO for the most recently completed fiscal year prior to the NEO’s termination date. With respect to unvested equity, NEOs may exercise vested stock options following termination, but upon termination all unvested restricted stock and PSUs lapse according to the terms of our long-term incentive plan. Severance payments following a change in control are subject to a double trigger, and we do not provide any tax gross-up payments. Consistent with the terms of his employment agreement, Mr. Buchler entered into a letter agreement on July 31, 2023 which superseded his employment agreement and provided that: (i) he would receive severance benefits (including salary continuation and certain other severance payments and allowances) for twelve months after his retirement, (ii) he would remain eligible to receive a 2023 bonus under the NEO Bonus Plan, (iii) all of his outstanding restricted stock awards and PSUs will continue to vest through the first anniversary of his retirement, (iv) all of his outstanding stock options will continue to be exercisable through the earlier of the tenth anniversary of award or the first anniversary of his retirement, and (v) the Restricted Period under his employment agreement will end on the first anniversary of his retirement date. The Company provides these contractual severance benefits in order to help support retention of valuable executive talent, to ease any transition between executive officers and to ensure that executives remain focused on the best interests of stockholders — particularly in the context of any potential transaction. The Committee believes that the severance benefits agreed to in the case of these termination events are reasonable in light of the potential value delivered to stockholders in return. See “Executive Compensation — Potential Payments Upon Termination or Change in Control” below.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name | Year | Salary(1) | Bonuses | Non-Equity Incentive Plan Compensation(2) | Equity Awards(3) | All Other Compensation(4) | Total | | | | | | | Stock Awards | | | | Travis J. Boone President & CEO | 2023 | $750,000 | $0 | $750,000 | $650,000 | $277,710 | $2,427,710 | | | 2022 | $216,346 | $188,000 | $0 | $1,200,000 | $5,708 | $1,610,054 | | G. Scott Thanisch EVP, CFO & Treasurer | 2023 | $425,000 | $0 | $318,750 | $240,000 | $97,429 | $1,081,179 | | | 2022 | $122,596 | $94,000 | $0 | $360,000 | $7,916 | $584,512 | | E. Chipman Earle, EVP, CCO, CAO, GC & Corporate Secretary | 2023 | $31,538 | $0 | $0 | $300,000 | $2,581 | $334,119 | | FORMER OFFICER | | | | | | | | | Peter R. Buchler EVP, GC, CCO, CAO & Corporate Secretary | 2023 | $375,000 | $0 | $194,625 | $0 | $49,579 | $619,204 | | | 2022 | $375,000 | $14,719 | $0 | $150,000 | $37,948 | $577,667 | | | 2021 | $368,750 | $0 | $0 | $408,800 | $38,057 | $815,607 |
Summary Compensation Table
| (1) Salary paid during each respective year. Messrs. Boone and Thanisch were employed beginning September 12, 2022. Mr. Earle was employed beginning November 27, 2023. |
Summary Compensation Table
| (2) For information regarding the NBP for fiscal 2023, please see the discussion entitled “2023 Executive Compensation Program in Detail – Annual Cash Incentives Overview” in the Compensation Discussion and Analysis section of this proxy statement. |
Summary Compensation Table
| (3) Represents the grant date fair value of equity awards granted during the fiscal year as determined under ASC Topic 718. Includes both our time-based restricted shares and our PSUs. We value our restricted shares and PSUs at the closing price of a share of our common stock on the grant date. For more information on how we value our equity awards, please see Note 15 of the notes to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. For more information on the equity awards granted during fiscal 2023, please see the next table (“Grants of Plan-Based Awards”). |
Summary Compensation Table
| (4) The 2023 figure for each NEO includes: (a) an automobile allowance for Mr. Boone ($14.185), Mr. Thanisch ($14,815), Mr. Buchler ($14,815), and Mr. Earle ($1,154); (b) relocation allowance for Mr. Boone ($182,464) and Mr. Thanisch ($10,000); and (c) a housing allowance for Mr. Boone ($50,737) and Mr. Thanisch ($44,206). Additionally, the Company paid a matching contribution under the 401(k) Plan ($13,200 for Mr. Boone; $11,284 for Mr. Thanisch; and $12,115 for Mr. Buchler, respectively) as well the monthly premiums of $1,427 per month for a medical expense reimbursement plan for each of Messrs. Boone ($17,124), Thanisch ($17,124), Buchler ($17,124), and Earle ($1,427). |
Grants of Plan Based Awards
Grants of Plan Based Awards The table below provides additional information regarding equity and non-equity incentive plan awards granted to our NEOs during the fiscal year ended December 31, 2023.
Grants of Plan Based Awards
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Value of Stock and Option Awards(4) ($) | | Name and Type of Grant | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Travis J. Boone(2) | | | | | | | | | | | Performance Based Units | 3/29/2023 | ─ | ─ | ─ | 90,614 | 241,636 | 422,863 | ─ | $650,000 | | G. Scott Thanisch(2) | | | | | | | | | | | Performance Based Units | 3/29/2023 | ─ | ─ | ─ | 32,727 | 87,273 | 152,728 | ─ | $240,000 | | E. Chipman Earle(3) | | | | | | | | | | | Restricted Shares | 11/27/2023 | ─ | ─ | ─ | ─ | ─ | ─ | 61,602 | $300,000 | | Peter R. Buchler | | | | | | | | | | | | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ |
Grants of Plan Based Awards
1 Represents the threshold, target and maximum possible awards that could be earned by each NEO under our NBP for fiscal 2023 performance. The actual amount paid to each NEO under the NBP for 2023 performance is reported in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” No payouts were made under our NBP for the fiscal year ended December 31, 2023. 2 For Messrs. Boone and Thanisch, these PSUs were approved in 2022, but not granted until March 29, 2023. 3 For Mr. Earle, these time-based restricted shares will vest in three equal installments on the first three anniversaries of the grant date, subject to the holder’s continuous employment. 4Represents the grant date fair value of our equity awards, as determined under ASC Topic 718.
Outstanding Equity Awards at Fiscal Year End 2023
Outstanding Equity Awards at Fiscal Year End 2023 The following table reflects all outstanding equity awards held by our NEOs as of the year ended December 31, 2023:
Outstanding Equity Awards at Fiscal Year End 2023
| | | Option Awards(1) | | | | Stock Awards | | | | | | | | | | | All Other Stock Awards(2) | | Equity Incentive Plan Awards(3) | | | NEO | Grant Date | Number of Securities Underlying Unexercised Options | | Option Exercise Price ($) | 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(4) ($) | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units That Have Not Vested(3) ($) | | | | Exercisable (#) | Unexercisable (#) | | | | | | | | Travis J. Boone | 8/15/2022 | | | | | 297,396 | $1,469,136 | | | | | 3/29/2023 | | | | | | | 241,636 | $1,193,682 | | Scott Thanisch | 9/12/2022 | | | | | 87,272 | $431,124 | | | | | 3/29/2023 | | | | | | | 87,273 | $431,129 | | E. Chipman Earle | 11/27/2023 | | | | | 61,602 | $304,314 | | | | Peter R. Buchler | 11/20/2014 | 14,063 | | $11.35 | 11/20/2024 | | | | | | | 5/19/2016 | 25,449 | | $4.94 | 05/19/2026 | | | | | | | 5/25/2017 | 26,639 | | $7.22 | 05/25/2027 | | | | | | | 05/24/2018 | 31,475 | | $7.46 | 05/24/2028 | | | | | | | 05/21/2021 | | | | | 10,666 | $52,690 | | |
Outstanding Equity Awards at Fiscal Year End 2023
| (1) All unvested stock option awards vest one-third on the first, second and third anniversaries of the grant date, subject to the holder’s continued employment. All such options are fully vested. |
Outstanding Equity Awards at Fiscal Year End 2023
| (2) The 2022 grants to Messrs. Boone and Thanisch and the 2023 grant to Mr. Earle represent time-based restricted stock, one-third of which, subject to the holder’s continued employment, vest on the first, second and third anniversaries of the grant date. The 2021 grant to Mr. Buchler represents the final one-third portion of his 32,000 original grant of time-based restricted shares in 2021 which will vest in May 2024. |
Outstanding Equity Awards at Fiscal Year End 2023
| (3) The 2023 grants to Messrs. Boone and Thanisch represent PSUs that cliff vest on the third anniversary of the date of grant, subject to satisfaction of specific performance conditions and the holder’s continued employment. |
Outstanding Equity Awards at Fiscal Year End 2023
| (4) Based on the $4.94 closing price of a share of our common stock on the last trading day of the 2023 fiscal year. |
OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR ENDED 2023
OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR ENDED 2023
OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR ENDED 2023
| | Option Awards | | | Stock Awards | | Name | Number of Shares Acquired on Exercise (#) | Option Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting (*) ($) | | Travis J. Boone | - | - | 148,701 | $508,557 | | G. Scott Thanisch | - | - | 43,637 | $209,458 | | E. Chipman Earle | - | - | - | - | | Peter R. Buchler | - | - | 49,779 | $150,183 | | * Determined based on the closing price of a share of our common stock on the date of vesting. | | | | |
CEO PAY RATIO DISCLOSURE
CEO PAY RATIO DISCLOSURE We determined that the 2023 annual total compensation of the median compensated employee who was employed as of December 31, 2023, other than our CEO, Travis J. Boone, was $65,628. Mr. Boone’s 2023 annual total executive compensation as reported in the Summary Compensation Table totaled $2,427,710 and the ratio of these amounts was 37 to 1. As of December 31, 2023, we had a total of 1,757 employees, including temporary employees and independent contractors paid by third parties but excluding Mr. Boone. To identify the median employee compensation, we used a consistently applied compensation measure (“CACM”) of base salary plus overtime, bonuses, and auto allowance for fiscal 2023, annualizing the CACM for those employees hired during 2023. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation 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 pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may use different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
Relationship Between Company Performance and Compensation Actually Paid
Relationship Between Company Performance and Compensation Actually Paid Our “total shareholder return,” as set forth in the above table, during the period ended December 31, 2023 increased by 108% compared to (a) an increase in “compensation actually paid” to our PEO from $1,278,057 in 2022 to $3,887,191 in 2023 primarily due to additional compensation expense resulting from the management transition and (b) an increase in average “compensation actually paid” to our non-PEO NEOs from $390,689 in 2022 to $834,937 in 2023. In addition, our net loss during the two-year period ended December 31, 2023 increased by 42%, from $(12.6) million in 2022 to $(17.9) million in 2023 compared to the aforementioned changes in “compensation actually paid” to our PEO and non-PEO NEOs. For 2022, the year in which we had three PEOs, the figure used for PEO CAP is their combined CAP.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control