DEF 14A of Titan Machinery Inc., Apr 25, 2023

DEF 14A of Titan Machinery Inc.

Filed Apr 25, 2023 · FY20230001409171-23-000030

Open on EDGAR

  1. BOARD OF DIRECTORS

    BOARD OF DIRECTORS The Board consists of three classes of directors, which classes are, as of the date of this Proxy Statement, composed of: •two Class I directors who hold office until the 2023 Annual Meeting; •three Class II directors who hold office until the 2024 Annual Meeting; and •two Class III directors who hold office until the 2025 Annual Meeting; or, in all cases, until their successors are elected and qualified. The Governance/Nominating Committee has recommended, and the Board has approved, Tony Christianson and Christine Hamilton as director nominees for the two Class I director positions to be elected at the 2023 Annual Meeting. The following information states the principal occupations for at least the past five years of the 2023 director nominees and the remaining directors whose terms will continue beyond the Annual Meeting:

  2. BOARD OF DIRECTORS

    | 2023 Nominees Upon election, these Directors will Hold Office Until the 2026 Annual Meeting | Age | Position/Committee Membership/Biography | | Tony Christianson | 70 | Director; Governance/Nominating Committee; Compensation Committee | | | | Mr. Christianson has been a director of Titan Machinery since January 2003. Since 1981, Mr. Christianson has been the Chairman of Cherry Tree Companies, an affiliated group of investment banking and wealth management firms in Minneapolis, Minnesota. Mr. Christianson also currently serves as managing partner of Adam Smith Companies, LLC, a holding company with investments in several companies, and as a director of MetaFarms, Inc., a privately-held SAS provider of information management for animal protein production. Among other attributes, skills and qualifications, Mr. Christianson has comprehensive experience in the financial services and investment industries, as well as his experience as a public and private company director, which provides particular value to the Board with a seasoned view on financing, investment, acquisition and operating strategies, public company regulatory compliance issues, and investor relations. | | Christine Hamilton | 67 | Director; Chair of Governance/Nominating Committee; Audit Committee | | | | Ms. Hamilton has been a director of Titan Machinery since March 1, 2018. Ms. Hamilton is the co-owner and managing partner of Christiansen Land and Cattle, Ltd., a large diversified farming and ranching operation in central South Dakota, and is also the co-owner of Dakota Packing, Inc., a wholesale meat distribution business. Ms. Hamilton is a former director for the Federal Reserve Bank, Ninth District, located in Minneapolis, Minnesota, and is a current director of SAb Biotherapeutics, a publicly-traded clinical stage biopharmaceutical company, where she serves as chair of its compensation committee and a member of its nominating and corporate governance committee. Among other attributes, skills and qualifications, Ms. Hamilton brings to the Board her extensive experience in the agri-business sector and her unique knowledge of operating strategies, priorities and challenges facing our customers in the agriculture sector. | | Directors Who Hold Office Until the 2024 Annual Meeting | | Position/Committee Membership/Biography | | Stan Erickson | 72 | Lead Independent Director; Audit Committee | | | | Mr. Erickson has been a director of Titan Machinery since March 1, 2017. Mr. Erickson currently serves as the President and Chief Executive Officer of Liberty Capital, Inc., which provides capital and investment services. Mr. Erickson co-founded Liberty Capital in 2013 after retiring from a 32-year career at Ziegler Inc., a Caterpillar dealer, where he most recently served as President and Chief Operating Officer. Mr. Erickson is a veteran of the United States Marine Corps and currently serves on the board of directors of Electromed, Inc., a publicly-traded company, where he serves as chair of the audit committee and a member of the nominating and governance committee. Among other attributes, skills and qualifications, Mr. Erickson has significant senior leadership experience in the equipment industry, as well as his experience as a public company director, which provides the Board with a strong perspective on financing, investment, acquisition and operating strategies, public company regulatory compliance issues, and investor relations. | | Jody Horner | 61 | Director; Chair of Compensation Committee; Audit Committee | | | | Ms. Horner has been a director of Titan Machinery since August 1, 2015. In February 2015, Ms. Horner was appointed President of Midland University, a private liberal arts college located in Fremont, Nebraska. Prior to joining Midland University, Ms. Horner spent over 30 years at Cargill, Inc., holding several leadership positions including President of Cargill Meat Solutions, President of Cargill Case Ready, President of Cargill Salt, Vice President - Corporate Global Diversity, and Vice President - Human Resources. At Cargill, Ms. Horner was a member of several corporate committees including the Global Business Conduct & Ethics Committee and the Global Enterprise Process, Data and Technology Committee. Ms. Horner currently serves as a director and board chair of H.J. Baker & Bro., LLC, a privately-held sulphur and animal nutrition industry company. Among other attributes, skills and qualifications, Ms. Horner brings valuable insight to the Board based on her extensive experience in leadership positions and her broad knowledge of financial matters, operating strategies, agri-business markets, and human resources. |

  3. BOARD OF DIRECTORS

    | Richard Mack | 55 | Director; Chair of Audit Committee | | | | Mr. Mack has been a director of Titan Machinery since June 4, 2015. From June 2014 through his retirement in January 2018, Mr. Mack served as Executive Vice President and Chief Financial Officer for The Mosaic Company, a leading international producer and marketer of phosphate and potash crop nutrients. Prior to that, Mr. Mack held the position of Senior Vice President, General Counsel and Corporate Secretary for Mosaic from the date of its initial public offering in 2004 until his promotion to Executive Vice President in 2009. In the decade prior to Mosaic's formation, he served in various legal capacities at Cargill, Inc., and was a founding executive of Mosaic and Cargill Ventures. Mr. Mack was also the founder of the Streamsong Resort, which is owned by Mosaic. Mr. Mack served from 2018 through 2022 as a director and audit committee chair of Anuvia Plant Nutrient Holdings, Inc., which is a privately-held crop nutrient company; and a director and finance committee chair of H.J. Baker & Bro., LLC, a privately-held sulphur and animal nutrition industry company. Among other attributes, skills and qualifications, Mr. Mack brings to the Board significant experience as a public company executive, along with extensive knowledge of public company finance and financial statements, capital markets, corporate governance, agri-business markets, mergers and acquisitions, operating strategies, and international business. | | Directors Who Hold Office Until the 2025 Annual Meeting | | Position/Committee Membership/Biography | | David Meyer | 70 | Board Chair and Chief Executive Officer | | | | Mr. Meyer is our Board Chair and Chief Executive Officer. Mr. Meyer worked for JI Case Company in 1975. From 1976 to 1980, Mr. Meyer was a partner in a Case/New Holland Dealership with locations in Lisbon, North Dakota and Wahpeton, North Dakota. In 1980, Mr. Meyer, along with a partner, founded Titan Machinery Inc. Mr. Meyer has served on both the Case CE and CaseIH Agriculture Dealer Advisory Boards. Mr. Meyer is the past chairman and past board member of the North Dakota Implement Dealers Association. Mr. Meyer currently serves as a Trustee of the University of Minnesota Foundation, Director on the North Dakota Community Foundation, and Director on the Evans Scholars Foundation (ESF) of the Western Golf Association (WGA). Among other attributes, skills and qualifications, Mr. Meyer is uniquely qualified to serve as a director and the Board's Chair due to his in-depth knowledge of the Company's history, business and industry, and his ability to effectively identify strategic priorities and leading the discussion and execution of strategy. | | Frank Anglin | 60 | Director; Governance/Nominating Committee; Compensation Committee | | | | Mr. Anglin has been a director of Titan Machinery since February 1, 2022. Mr. Anglin has served as the Vice President, West and South Regions, for Istate Truck Centers since September 2019. Previously, Mr. Anglin served as Chief Executive Officer, President and Director for Boyer Trucks from July 2018 to August 2019 and as CEO and Board Director for Midwest Can and Container Specialties Inc. from January 2017 to May 2018. He also served as CEO, President, and Director for Western Peterbilt and Western Truck Centers. Prior to that he held a variety of management positions during his tenure at General Electric and CNH Industrial (“CNH”). Among other attributes, skills and qualifications, Mr. Anglin brings to the Board his substantial leadership experience in the equipment manufacturing and truck dealership industries, which provides the Board with a seasoned perspective on dealership operations, equipment manufacturing, operating strategies, financing, and investment strategies. |

  4. Board Skills and Experience Matrix

    Board Skills and Experience Matrix The following matrix provides information regarding the members of our Board, including certain types of knowledge, skills, experiences and attributes possessed by one or more of our directors, which our Board believes are relevant to our business and industry structure, and the tenure of our directors. The matrix does not encompass all of the knowledge, skills, experiences or attributes of our directors, and the fact that a particular knowledge, skill, experience or attribute is not listed does not mean that a director does not possess it. In addition, the absence of a particular knowledge, skill, experience or attribute with respect to any of our directors does not mean the director in question is unable to contribute to the decision-making process in that area. The type and degree of knowledge, skill and experience listed below may vary among the members of the Board. As shown by the tenure of our directors below, the Board also believes it is desirable to maintain a mix of experienced, longer-tenured directors who possess deep institutional knowledge along with newer directors who have different expertise, backgrounds and fresh perspectives.

  5. Board Skills and Experience Matrix

    | | F. Anglin | T. Christianson | S. Erickson | C. Hamilton | J. Horner | R. Mack | D. Meyer | | Knowledge, Skills and Experience | | | | | | | | | Other Public Company Board Experience | | X | X | X | | | | | Executive Leadership | X | X | X | X | X | X | X | | Industry Knowledge | X | X | X | X | | X | X | | Finance and Accounting | | X | X | X | X | X | X | | Corporate Strategy and Execution | X | X | X | X | X | X | X | | Sales and Marketing | X | | | | | X | X | | Corporate Governance and Compliance | X | X | X | X | X | X | X | | Operations and Supply Chain | X | | X | | X | X | X | | International Operations | X | | | | X | X | X | | Human Capital and Executive Compensation | X | | X | X | X | X | X | | Risk Management | X | X | X | X | X | X | X | | Technology and Data Security | | X | X | | | | | | Director Independence | X | X | X | X | X | X | | | Board Tenure | | | | | | | | | Years | 2 | 16 | 6 | 5 | 8 | 8 | 16 |

  6. Board Diversity Matrix

    Board Diversity Matrix The Company is committed to diversity and inclusion, and believes it is important that the Board is composed of individuals representing the diversity of the communities and customers we serve. The Governance/Nominating Committee seeks director nominees with a diverse range of experience, skills, knowledge and backgrounds. The Board Diversity Matrix set forth below reports self-identified diversity statistics for the current Board as of the date of this Proxy Statement in the format required by Nasdaq’s rules.

  7. Board Diversity Matrix

    | Board Diversity Matrix (As of April 25, 2023) | | | | | | Board Size: | | | | | | Total Number of Directors | | 7 | | | | Gender: | Female | Male | Non-Binary | Gender Undisclosed | | Number of Directors Based on Gender Identity | 2 | 5 | 0 | 0 | | Number of Directors Who Identify in Any of the Categories Below: | | | | | | African American or Black | 0 | 1 | 0 | 0 | | Alaskan Native or American Indian | 0 | 0 | 0 | 0 | | Asian | 0 | 0 | 0 | 0 | | Hispanic or Latinx | 0 | 0 | 0 | 0 | | Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | | White | 2 | 4 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ+ | 0 | | | | | Demographic Background Undisclosed | 0 | | | |

  8. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  9. (PROPOSAL 1)

    (PROPOSAL 1)

  10. 2023 Director Nominees

    2023 Director Nominees The Governance/Nominating Committee recommended to the Board that the following persons be nominated and elected as directors at the Annual Meeting, which persons were then formally nominated by the Board:

  11. 2023 Director Nominees

    | Tony Christianson | | Christine Hamilton |

  12. 2023 Director Nominees

    The nominees are currently Class I Directors whose terms expire at the upcoming 2023 Annual Meeting. Each of the nominees has consented to being named as a nominee. If elected, each nominee will serve a three-year term until the 2026 Annual Meeting or until his or her successor is elected and qualified. If any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies that are returned and signed will be voted for the nominee designated by the Board to fill the vacancy. THE BOARD RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS SET FORTH IN THIS PROPOSAL 1.

  13. NON-EMPLOYEE DIRECTOR COMPENSATION

    NON-EMPLOYEE DIRECTOR COMPENSATION Our non-employee directors receive cash and restricted stock awards as compensation for their service as directors pursuant to our Non-Employee Director Compensation Plan, which, for fiscal 2023, was as follows:

  14. NON-EMPLOYEE DIRECTOR COMPENSATION

    | | Cash Retainer ($) | Restricted Stock Awards ($) | | Compensation for each non-employee director | 55,000 | 80,000 | | Additional cash retainers: | | | | Audit Committee Chair | 25,000 | | | Compensation Committee Chair | 10,000 | | | Governance/Nominating Committee Chair | 10,000 | | | Lead Independent Director | 15,000 | |

  15. NON-EMPLOYEE DIRECTOR COMPENSATION

    We also reimburse our non-employee directors for reasonable expenses incurred in connection with their service as directors. The restricted stock awards are granted on the date of the annual meeting of stockholders each year, and vest on the date of the next annual meeting of stockholders. Directors who are appointed to the Board during the year receive a prorated cash retainer and restricted stock award, the equity component of which is granted on the director's effective start date and has the same vesting date as awards to directors who serve for the full year. Under the terms of the Non-Employee Director Compensation Plan, the cash portion of the non-employee director retainer (both the Board annual retainer and any committee or lead independent director retainer) is to be paid in arrears in equal quarterly installments on the first day of each fiscal quarter. Restricted stock awards under the Non-Employee Director Compensation Plan are granted on the date of the annual meeting of stockholders each year, and vest on the date of the next annual meeting of stockholders or such other date as determined by the Compensation Committee. In addition, pursuant to the Non-Employee Director Compensation Plan, unvested restricted stock awarded to a director is forfeited upon termination from service, unless the reason for termination from service is as a result of death, permanent disability (as determined by the Compensation Committee) or mandatory retirement pursuant to the Board’s retirement policy, in which case the unvested restricted stock award will vest on a prorated basis based upon the term of service as compared to the vesting period. The following table provides compensation information for our non-employee directors during fiscal 2023:

  16. NON-EMPLOYEE DIRECTOR COMPENSATION

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | | Frank Anglin | 55,000 | 80,000 | 135,000 | | Tony Christianson | 55,000 | 80,000 | 135,000 | | Stan Dardis (2) | 19,175 | — | 19,175 | | Stan Erickson | 70,000 | 80,000 | 150,000 | | Christine Hamilton | 65,000 | 80,000 | 145,000 | | Jody Horner | 65,000 | 80,000 | 145,000 | | Richard Mack | 80,000 | 80,000 | 160,000 |

  17. NON-EMPLOYEE DIRECTOR COMPENSATION

    (1)These amounts represent the grant date fair value for each grant awarded in fiscal 2023, valued in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 718, Compensation—Stock Compensation. Each director received an award of 2,889 restricted shares based on the $27.69 closing price for our Common Stock on the grant date of June 6, 2022. (2)Mr. Dardis received pro rata cash compensation for his partial service during fiscal 2023 (February 1, 2022 through his retirement date of June 6, 2022).

  18. Fiscal 2023 Executive Compensation as Compared to our Peer Group

    Fiscal 2023 Executive Compensation as Compared to our Peer Group In fiscal 2023, the Compensation Committee did not engage a compensation consultant to perform a formal compensation study. However, the Compensation Committee reviewed the publicly reported compensation of the executive officers of our peer group, and compared this data to the target total direct compensation of our named executive officers, consisting of base salary, annual performance cash bonus, and the grant date fair value of restricted stock equity awards. The results of the peer group comparison are considered important and informative by the Compensation Committee. However, the Compensation Committee does not target compensation at a particular benchmark of the peer group analysis or otherwise make any determination of, or change to, compensation in reaction to market data alone. Rather, the Compensation Committee uses this information as one of several considerations to make its judgments and determinations of appropriate compensation levels for our named executive officers.

  19. Peer Group

    Peer Group The Compensation Committee engaged Aon Hewitt ("Aon") in 2020 as our independent compensation consultant to assess and update the Company's peer group for compensation benchmarking purposes. The Company’s executive officers did not participate in the selection of the companies for inclusion in the peer group. The Compensation Committee asked Aon to develop a peer group by considering companies that: •were compatible with the Company’s compensation strategy; •were an accurate reflection of the typical external labor market; •were consistent with the Company’s size and complexity of operations; and •could be easily described to external constituents. Based on these considerations, the peer group for the Company consists of the following companies (1):

  20. Peer Group

    | Alamo Group, Inc. | MarineMax, Inc. | | Applied Industrial Technologies, Inc. | McGrath RentCorp | | DXP Enterprises, Inc. | Monro, Inc. | | GATX Corporation | Rush Enterprises, Inc. | | H&E Equipment Services, Inc. | Toromont Industries Ltd. | | Herc Holdings Inc. | Tractor Supply Company | | Lindsay Corporation | Triton International Limited |

  21. Peer Group

    (1) The original peer group developed in 2020 included Rocky Mountain Enterprises and Cervus Equipment Corporation. We have removed each of these companies from the peer group due to the fact that they are no longer public companies.

  22. Annual Performance Cash Bonus

    Annual Performance Cash Bonus We establish competitive annual performance cash bonus opportunities for our named executive officers that motivate attainment of, and link annual cash compensation to, the achievement of the annual financial performance objectives of the business. The annual performance bonus is paid in cash. Each executive has a target bonus (hereafter the "Target Bonus"), which is a percentage of the executive's annual base salary, under the annual cash bonus plan. The Target Bonus for each of Mr. Kalvoda, Mr. Knutson and Mr. Larsen was 75% of his base salary. Mr. Meyer elected to not participate in the fiscal 2023 annual cash bonus plan. Under Mr. Kalvoda's employment agreement in place at the start of fiscal 2023 he was eligible to earn a cash bonus for fiscal 2023 ranging from 0% to 150% of his annual base salary, with a target of 75% of his annual base salary or $375,000 (75% X $500,000). Under Mr. Kalvoda's transition agreement dated April 25, 2022 (the "Transition Agreement"), his employment agreement was amended to provide that his cash bonus for fiscal 2023 would be paid on a pro rata basis (50 weeks worked divided by 52 weeks in full year = 96.15%). Considering the proration factor (96.15%), his eligible maximum bonus amount was $721,125 and his Target Bonus amount was $360,563. Under the terms of the annual performance cash bonus opportunity established for Mr. Knutson, he was eligible to earn a cash bonus for fiscal 2023 ranging from 0% to 150% of his annual base salary, with a target of 75% of his annual base salary or $375,000 (75% X $500,000). Under Mr. Larsen's employment agreement he was eligible to earn a pro rata cash bonus for fiscal 2023 based on his time of service for the year: i.e., number of days employed for the fiscal year (92) divided by 365 days = 25.21%. Therefore, Mr. Larsen would earn a cash bonus equal to the regularly calculated amount of the annual bonus multiplied by 25.21%. Mr. Larsen was eligible to earn a cash bonus for fiscal 2023 ranging from 0% to 150% of his annual base salary, with a target of 75% of his annual base salary. Considering the proration factor (25.21%), his eligible maximum bonus amount was $151,233 and his Target Bonus amount was $75,616. For the annual cash bonus plan, our Compensation Committee establishes the financial performance categories for the fiscal year and the weight for each of the categories. The performance categories for the fiscal 2023 annual cash bonus plan were: 1. Adjusted Pre-Tax Income: Calculated as GAAP pre-tax income adjusted to exclude the pre-tax income impact from gains or losses that occur outside of the ordinary course of our business. 2. Return on Assets ("ROA"): Calculated as Adjusted Pre-Tax Income (see above) divided by our average monthly total assets less available cash. 3. Total Revenue: The Company's GAAP total revenue from its statement of operations. The Compensation Committee chose these metrics because they are meaningful indicators of performance results and closely align with the interests of the Company's stockholders. Following the Russian invasion of Ukraine and the resulting uncertainty of the impact of this invasion on our Ukraine operations, the Compensation Committee determined in June 2022 that the original performance metrics should be adjusted to eliminate the operating results of Titan Machinery Ukraine for fiscal 2023 from both the performance metrics targets and Company performance against these targets. The Compensation Committee's decision was rooted in an effort to seek to maintain the viability and integrity of the 2023 cash incentive plan as a means to motivate performance to achieve important Company financial performance objectives for 2023. Therefore, the results of our Ukraine operations have been disregarded for purposes of the cash incentive program for fiscal 2023. The Compensation Committee allocated a portion of the eligible bonus amount to each of the financial performance categories as follows:

  23. Annual Performance Cash Bonus

    | Financial Performance Category | % Allocation of Eligible Bonus Amount | | Adjusted Pre-Tax Income | 40% | | Return on Assets | 30% | | Total Revenue | 30% |

  24. Annual Performance Cash Bonus

    The threshold, target and maximum financial goals for each metric are determined by the Compensation Committee in consideration of the Company's budget and financial estimates for the fiscal year. The threshold, target, and maximum goals for each of the three financial performance categories for the fiscal 2023 cash incentive plan are stated in the discussion below. For fiscal 2023, the payout percentage at each of the goals is stated as follows: •20% of Target Bonus payable upon achievement of threshold goal; •100% of Target Bonus payable upon achievement of target goal; and •200% of Target Bonus payable upon achievement of maximum goal. If the threshold goal is not satisfied for any financial performance category, then no bonus is payable for that category. If actual performance by the Company for any financial performance category falls between the threshold and target goals or between the target and maximum goals, then the percentage payout for that category is calculated proportionately based on where the actual performance falls within the range between the threshold and target goals or the range between the target and maximum goals, as applicable. No additional payment in excess of the maximum bonus amount is earned for performance exceeding the maximum goals. The calculated percentage payout for each financial metric, based on actual performance for the year, is referred to below as the "bonus payout percentage". For each of the three financial performance categories, the cash bonus earned by the executive is calculated as follows: [the dollar amount of the target bonus for the executive - $360,563 for Mr. Kalvoda, $375,000 for Mr. Knutson, and $75,616 for Mr. Larsen] X [% of the eligible bonus amount allocated to the financial performance category - i.e., 40% for Adjusted Pre-Tax Income, 30% for ROA, and 30% for Total Revenue] X [the bonus payout percentage for the category based on actual results]. The cash bonus paid to the executive is equal to the sum of the bonus amounts earned for each financial performance category. As described above, Mr. Meyer elected to not participate in the fiscal 2023 annual cash bonus plan, and accordingly he was not paid a cash bonus. Under the fiscal 2023 cash bonus plan, Mr. Kalvoda earned a bonus of $654,134, as described below.

  25. Annual Performance Cash Bonus

    | | Percent of Base Salary Eligible for Cash Bonus | Eligible Max Cash Bonus Amount | Target Bonus | Bonus Earned | Bonus Earned as a % of Target | | Mark Kalvoda | 150% | $721,125 | $360,563 | $654,134 | 181.42% |

  26. Annual Performance Cash Bonus

    Under the fiscal 2023 cash bonus plan, Mr. Knutson earned a bonus of $680,327 as described below.

  27. Annual Performance Cash Bonus

    | | Percent of Base Salary Eligible for Cash Bonus | Eligible Max Cash Bonus Amount | Target Bonus | Bonus Earned | Bonus Earned as a % of Target | | Bryan Knutson | 150% | $750,000 | $375,000 | $680,327 | 181.42% |

  28. Annual Performance Cash Bonus

    Under the fiscal 2023 cash bonus plan, Mr. Larsen earned a bonus of $137,184 as described below.

  29. Annual Performance Cash Bonus

    | | Percent of Base Salary Eligible for Cash Bonus | Eligible Max Cash Bonus Amount | Target Bonus | Bonus Earned | Bonus Earned as a % of Target | | Robert Larsen | 150% | $151,233 | $75,616 | $137,184 | 181.42% |

  30. Annual Performance Cash Bonus

    The threshold, target and maximum goals, the applicable bonus payout percentages at these goal levels, and the bonus calculation for each financial performance category are stated below:

  31. 1.Adjusted Pre-Tax Income (40%)

    | | Adjusted Pre-Tax Income Goals | Payout Percentages | | Threshold | $73,573,677 | 20% | | Target | $81,748,530 | 100% | | Maximum | $102,185,663 | 200% |

  32. 1.Adjusted Pre-Tax Income (40%)

    Our fiscal 2023 Adjusted Pre-Tax Income was $137,137,808, resulting in a bonus payout percentage of 200%. Mr. Kalvoda earned a bonus of $288,450 for this financial performance category, calculated as follows: $360,563 [Target Bonus] X 40% [weight for the performance category] X 200% [bonus payout percentage]. Mr. Knutson earned a bonus of $300,000 for this financial performance category, calculated as follows: $375,000 [Target Bonus] X 40% [weight for the performance category] X 200% [bonus payout percentage]. Mr. Larsen earned a bonus of $60,493 for this financial performance category, calculated as follows: $75,616 [Target Bonus] X 40% [weight for the performance category] X 200% [bonus payout percentage].

  33. 2.Return on Assets (30%)

    | | Return on Assets | Payout Percentages | | Threshold | 7.95% | 20% | | Target | 8.84% | 100% | | Maximum | 11.05% | 200% |

  34. 2.Return on Assets (30%)

    Our fiscal 2023 Return on Assets was 13.79%, resulting in a bonus payout percentage of 200%. Mr. Kalvoda earned a bonus of $216,338 for this financial performance category, calculated as follows: $360,563 [Target Bonus] X 30% [weight for the performance category] X 200% [bonus payout percentage] Mr. Knutson earned a bonus of $225,000 for this financial performance category, calculated as follows: $375,000 [Target Bonus] X 30% [weight for the performance category] X 200% [bonus payout percentage]. Mr. Larsen earned a bonus of $45,370 for this financial performance category, calculated as follows: $75,616 [Target Bonus] X 30% [weight for the performance category] X 200% [bonus payout percentage]. 3.Total Revenue (30%)

  35. 2.Return on Assets (30%)

    | | Total Revenue Goals | Percentage Payout | | Threshold | $1,780,619,848 | 20% | | Target | $1,978,466,498 | 100% | | Maximum | $2,473,083,122 | 200% |

  36. 2.Return on Assets (30%)

    Our total revenue was $2,166,757,505, resulting in a bonus payout percentage of 138.07%. The bonus payout percentage is determined linearly between the payout percentage of 100% (at target goal of $1,978,466,498) and the payout percentage of 200% (at maximum goal of $2,473,083,123). Mr. Kalvoda earned a bonus of $149,347 for this financial performance category, calculated as follows: $360,563 [Target Bonus] X 30% [weight for the performance category] X 138.07% [bonus payout percentage] Mr. Knutson earned a bonus of $155,327 for this financial performance category, calculated as follows: $375,000 [Target Bonus] X 30% [weight for the performance category] X 138.07% [bonus payout percentage]. Mr. Larsen earned a bonus of $31,321 for this financial performance category, calculated as follows: $75,616 [Target Bonus] X 30% [weight for the performance category] X 138.07% [bonus payout percentage].

  37. Long-Term Equity Incentive Awards

    Long-Term Equity Incentive Awards Under the terms of Mr. Meyer's current employment agreement, he was entitled to receive an equity incentive award on June 1, 2022 in an amount determined by dividing his annual base salary in effect on the date of grant by the closing sale price of the Common Stock on that date, under such terms as determined by the Compensation Committee. Mr. Meyer declined the award for fiscal 2023. Under the terms of Mr. Kalvoda's Transition Agreement, he did not receive an equity incentive award in fiscal 2023. Mr. Knutson received an award of 19,062 shares of restricted stock with a grant date fair value of $499,996 (19,062 shares at $26.23 per share, the closing price of our Common Stock on June 1, 2022). One-fourth of Mr. Knutson's 2022 restricted stock award vests on each of April 1, 2023, 2024, 2025, and 2026, respectively. Mr. Larsen received an initial award of 1,178 shares of restricted stock with a grant date fair value of $50,018 (1,178 shares at $42.46 per share, the closing price of our Common Stock on December 1, 2022). One-fourth of Mr. Larsen's 2022 restricted stock award vests on each of April 1, 2023, 2024, 2025, and 2026, respectively. All awards of restricted stock were made under the Amended and Restated Titan Machinery Inc. 2014 Equity Incentive Plan (the "2014 Equity Plan"), which is administered by our Compensation Committee. Consistent with our compensation philosophies related to performance based compensation, long-term stockholder value creation and alignment of our management's interests with those of our stockholders, we may make future awards of long-term compensation in the form of stock options, restricted stock units, or restricted stock awards to our named executive officers and other key employees. In the future, we may, from time to time, make one-time awards to recognize promotion or consistent long-term contribution, or for specific incentive purposes. We may also make awards in connection with the hiring of new employees.

  38. Employment Agreements

    Employment Agreements We have written employment agreements with David Meyer to serve as our Chief Executive Officer, Robert Larsen to serve as our Chief Financial Officer, and Bryan Knutson to serve as our President & Chief Operating Officer. Mr. Meyer’s current employment agreement has a rolling three-year term with automatic annual one-year extensions (running from February 1 through January 31), subject to earlier termination, as described below. Pursuant to the agreement, Mr. Meyer is entitled to be paid a base salary of $500,000 per year, subject to annual review and adjustment by our Compensation Committee. For fiscal 2023, consistent with the past several years, Mr. Meyer agreed to a reduced base salary of $475,000. Pursuant to the agreement, Mr. Meyer is also eligible for an annual performance cash bonus of up to 200% of his base salary pursuant to terms, conditions and annual objectives established by our Compensation Committee, as further discussed above under "Annual Performance Cash Bonus." The agreement also provides for yearly equity incentive awards in a dollar amount equal to his base salary, as further discussed above under "Long-Term Equity Incentive Awards," pursuant to terms, conditions and annual objectives established by our Compensation Committee. In fiscal 2023, Mr. Meyer, consistent with his actions for the past several years, elected not to receive any equity awards and also elected to not participate in the annual performance cash bonus program. Mr. Meyer is eligible to participate in any employee benefit plans and programs generally available to our employees. Mr. Larsen’s current employment agreement has a rolling three-year term with automatic annual one-year extensions (running from February 1 through January 31), subject to earlier termination, as described below. Pursuant to the agreement, Mr. Larsen is paid a base salary as established by, and subject to annual review and adjustment, by our Compensation Committee. As of January 31, 2023, Mr. Larsen's base salary was $400,000 per year. Mr. Larsen is also eligible for an annual performance cash bonus of up to 150% of his base salary pursuant to terms, conditions and annual objectives established by the Compensation Committee, subject to the pro rata adjustment for the initial partial year of employment. The agreement also provides for yearly equity incentive awards in a dollar amount equal to his base salary, as further discussed above under "Long-Term Equity Incentive Awards," pursuant to terms, conditions and annual objectives established by our Compensation Committee. Mr. Larsen also received a tuition reimbursement from the Company in the amount of $47,907, which amount he owed to his former employer upon leaving his prior employment. Mr. Larsen is eligible to participate in any employee benefit plans and programs generally available to our employees. Mr. Knutson’s current employment agreement has a rolling three-year term with automatic annual one-year extensions (running from February 1 through January 31), subject to earlier termination, as described below. Pursuant to the agreement, Mr. Knutson is paid a base salary as established by, and subject to annual review and adjustment, by our Compensation Committee. As of January 31, 2023, Mr. Knutson's base salary was $500,000 per year. The agreement provides for yearly equity incentive awards in a dollar amount equal to his base salary, as further discussed above under "Long-Term Equity Incentive Awards," pursuant to terms, conditions and annual objectives established by our Compensation Committee. Mr. Knutson is also eligible for an annual cash bonus and equity incentive award pursuant to terms, conditions and annual objectives established by the Compensation Committee. Mr. Knutson is eligible to participate in any employee benefit plans and programs generally available to our employees. The employment agreements with Messrs. Meyer, Larsen, and Knutson each contain a restrictive covenant prohibiting them from owning, operating or being employed by competing agricultural or construction equipment stores during their employment with us and for a period of 24 months following termination of their employment with us. Each agreement is terminable by either us or Messrs. Meyer, Larsen, and Knutson, as applicable, at any time upon 60 days written notice for any reason, or immediately by us for cause. Each of the employment agreements for Mr. Meyer, Mr. Larsen, and Mr. Knutson include severance payment provisions in the event of termination of employment. See "Potential Payments upon Termination or Change-In-Control" for additional information regarding these severance payment provisions. On April 25, 2022, the Company and Mr. Kalvoda entered into a Transition Agreement governing the terms of his resignation from the Company. The Transition Agreement provided as follows: •Mr. Kalvoda would continue to serve as Chief Financial Officer until a new Chief Financial Officer was in place and, thereafter, he would continue as an employee through January 15, 2023, to facilitate the transition; •His base salary would continue as previously agreed upon; •He would earn a pro rata fiscal 2023 cash bonus based on time worked (i.e., 50 weeks divided by 52 weeks equals 96.15%); •He would not receive an equity award in fiscal 2023; and •The vesting of his 33,800 unvested restricted shares would accelerate as of the termination of employment on January 15, 2023. The Board approved the Transaction Agreement, believing it to be in the best interests of the Company for the following reasons: •The Company needed to retain Mr. Kalvoda to facilitate an orderly transition and Mr. Kalvoda was otherwise ready to resign from his position for reasons other than good reason (as defined in his employment agreement); •The time for a search and hiring of a replacement for Mr. Kalvoda was estimated to be four to six months, during which time Mr. Kalvoda’s services were needed by the Company; •The transition from Mr. Kalvoda to his replacement would be best accomplished by having these persons work together for a number of weeks; •The Company was in the midst of its acquisition of Heartland Ag (closed on August 1, 2022) that required Mr. Kalvoda’s expertise and significant involvement; •Mr. Kalvoda would agree to a release of claims and certain covenants for the benefit of the Company; and •The modest incremental benefits provided to Mr. Kalvoda under the Transition Agreement were significantly outweighed by the need for the Company to retain Mr. Kalvoda for an orderly transition.

  39. Summary Compensation Table for Fiscal 2023

    Summary Compensation Table for Fiscal 2023 The table below sets forth certain information regarding compensation earned during the last three fiscal years by the Company's named executive officers.

  40. Summary Compensation Table for Fiscal 2023

    | Name and Principal Position | Fiscal Year | Salary ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | David Meyer, Chief Executive Officer (5) | 2023 | 475,000 | — | — | 11,875 | 486,875 | | | 2022 | 475,000 | — | — | 8,700 | 483,700 | | | 2021 | 475,000 | — | — | 8,550 | 483,550 | | Robert Larsen, Chief Financial Officer | 2023 | 100,000 | 50,018 | 137,184 | 49,240 | 336,442 | | | 2022 | — | — | — | — | — | | | 2021 | — | — | — | — | — | | Bryan Knutson, President & Chief Operating Officer | 2023 | 470,000 | 499,996 | 680,327 | 10,475 | 1,660,798 | | | 2022 | 395,000 | 409,995 | 572,574 | 8,813 | 1,386,382 | | | 2021 | 363,333 | 365,000 | 397,988 | 8,563 | 1,134,884 | | Mark Kalvoda, former Chief Financial Officer (6) | 2023 | 528,649 | — | 654,134 | 1,464,866 | 2,647,649 | | | 2022 | 405,000 | 409,995 | 572,574 | 9,079 | 1,396,648 | | | 2021 | 391,667 | 394,999 | 430,770 | 8,385 | 1,225,751 |

  41. Summary Compensation Table for Fiscal 2023

    (1)Amounts shown are not reduced to reflect the named executive officers' elections, if any, to contribute portions of their salaries to 401(k) plans. Mr. Kalvoda's salary amount for fiscal 2023 includes a payment for unused PTO in the amount of $79,482.53. (2)Amounts represent the grant date fair value of time-based restricted stock awards granted in each fiscal year. Fair value of these awards is determined based on the closing market price of the Company's stock on the date of grant. See the Grants of Plan-Based Awards for Fiscal 2023 table for further information regarding the equity awards granted in fiscal 2023 and the Outstanding Equity Awards at January 31, 2023 table for information regarding all outstanding equity awards. (3)Amount represents the cash bonus compensation earned in each fiscal year under our annual performance cash bonus plan. (4)For each fiscal year, amounts for Messrs. Meyer, Larsen, Knutson and Kalvoda represent a Company match to the 401(k) plan. For Mr. Larsen, this number also includes tuition reimbursement of $47,907. The amount of "All Other Compensation" presented for Mr. Kalvoda for fiscal 2023 includes the value of previously awarded shares of restricted stock for which vesting was accelerated to the date of Mr. Kalvoda's departure pursuant to the terms of the Transition Agreement. The aggregate value for these shares of restricted stock for which vesting was accelerated was $1,450,020 (33,800 vested shares of restricted stock x $42.90, the closing market price on the vesting date). As each of these shares of restricted stock were awarded to Mr. Kalvoda prior to fiscal 2023, the value of such shares would also have been reported in the "Stock Awards" column of the summary compensation table during the fiscal year in which such shares were awarded. (5)As discussed above, for fiscal years 2023, 2022, and 2021, Mr. Meyer elected not to receive an equity award or to participate in the annual performance cash bonus plan. (6)Mr. Kalvoda served as Chief Financial Officer from February 1, 2022 through November 30, 2022, and as a non-executive employee of the Company from December 1, 2022 through January 15, 2023.

  42. Grants of Plan-Based Awards for Fiscal 2023

    Grants of Plan-Based Awards for Fiscal 2023 The following table sets forth information regarding awards to Messrs. Meyer, Larsen, Knutson and Kalvoda, our named executive officers, of plan-based awards (annual performance cash bonus and long-term equity incentive) in fiscal 2023:

  43. Grants of Plan-Based Awards for Fiscal 2023

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards($)(1) | | | All Other Stock Awards: Number of Shares of Stock(#) | Grant Date Fair Value of Stock and Option Awards ($)(4) | | Name | Grant Date | Threshold | Target | Maximum | | | | David Meyer | — | — | — | — | — | — | | Robert Larsen (2) | 12/1/2022 | 15,123 | 75,616 | 151,233 | 1,178 | 50,018 | | Bryan Knutson (3) | 6/1/2022 | 75,000 | 375,000 | 750,000 | 19,062 | 499,996 | | Mark Kalvoda | — | 72,113 | 360,563 | 721,125 | — | — |

  44. Grants of Plan-Based Awards for Fiscal 2023

    (1)Amounts shown in the table reflect the potential amount of annual cash performance bonuses that could have been earned in fiscal 2023 by Mr. Larsen, Mr. Knutson and Mr. Kalvoda, based on meeting the threshold goals, target goals and maximum goals amounts, as defined in our fiscal 2023 annual performance cash bonus plan. Actual amounts earned by the named executive officers for fiscal 2023 are reported in the Summary Compensation Table on page 31 under the column entitled "Non-Equity Incentive Plan Compensation." The amounts in the table have been adjusted for the pro rata adjustment required under the employment terms for Mr. Kalvoda and Mr. Larsen. (2)Mr. Larsen received an initial award of restricted stock on 12/1/2022. The risk of forfeiture for these awards will lapse ratably on April 1st of each year from 2023 to 2026. (3)Mr. Knutson received an award of restricted stock on 6/1/2022. The risk of forfeiture for these awards will lapse ratably on April 1st of each year from 2023 to 2026. (4)This amount represents the grant date fair value of the restricted stock determined in accordance with FASB ASC Topic 718.

  45. Outstanding Equity Awards at January 31, 2023

    Outstanding Equity Awards at January 31, 2023 The following table sets forth certain information regarding equity awards granted to our named executive officers outstanding as of January 31, 2023:

  46. Outstanding Equity Awards at January 31, 2023

    | | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | David Meyer | — | — | — | — | — | — | — | — | — | | Robert Larsen | — | — | — | — | — | 1,178 | 51,761 | — | — | | Bryan Knutson | — | — | — | — | — | 50,130 | 2,202,712 | — | — | | Mark Kalvoda | — | — | — | — | — | — | — | — | — |

  47. Outstanding Equity Awards at January 31, 2023

    (1)For Mr. Larsen, 294 shares vest on April 1, 2023; 294 shares vest on April 1, 2024; 294 shares vest on April 1, 2025; and 296 shares vest on April 1, 2026. For Mr. Knutson, 21,071 shares vest on April 1, 2023; 16,563 shares vest on April 1, 2024; 7,729 shares vest on April 1, 2025; and 4,767 shares vest on April 1, 2026. (2)The market value of the unvested shares has been computed using the closing price of our Common Stock of $43.94 on January 31, 2023 (the last day of fiscal 2023).

  48. Option Exercises and Stock Vested for Fiscal 2023

    Option Exercises and Stock Vested for Fiscal 2023

  49. Option Exercises and Stock Vested for Fiscal 2023

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) (1) | Value Realized on Vesting ($) (2) | | David Meyer | — | — | — | — | | Robert Larsen | — | — | — | — | | Bryan Knutson | — | — | 18,485 | 514,807 | | Mark Kalvoda | — | — | 57,558 | 2,111,680 |

  50. Option Exercises and Stock Vested for Fiscal 2023

    (1)For Mr. Knutson, the amount represents shares of restricted stock as to which the risk of forfeiture lapsed on April 1, 2022. For Mr. Kalvoda, the number represents 23,758 shares of restricted stock as to which the risk of forfeiture lapsed on April 1, 2022 and 33,800 shares as to which the risk of forfeiture lapsed on January 15, 2023. (2)Calculated for Mr, Knutson based on the closing share price of our Common Stock of $27.85 on April 1, 2022, the date the risk of forfeiture lapsed with regard to Mr. Knutson's 18,485 shares of restricted stock. Calculated for Mr. Kalvoda based on the closing share price of our Common Stock of $27.85 on April 1, 2022, the date the risk of forfeiture lapsed with regard to Mr. Kalvoda's 23,758 shares of restricted stock and the closing share price of our Common Stock of $42.90 on Friday, January 13, 2023, with regard to Mr. Kalvoda's 33,800 shares of restricted stock that the risk of forfeiture lapsed on Sunday, January 15, 2023.

  51. Potential Payments upon Termination or Change-In-Control

    Potential Payments upon Termination or Change-In-Control The following is a discussion of the agreements, plans or arrangements that provide for payments or benefits to our named executive officers in connection with any termination of employment or change in control of the Company. As provided under "Compensation Discussion and Analysis - Employment Agreements," we are party to an employment agreement with Mr. Meyer, which provides that if Mr. Meyer is terminated by us without "cause" prior to the expiration of the term or if he resigns for "good reason," we are obligated to pay severance in an amount equal to two times the sum of (i) his annual base salary, plus (ii) the amount of the annual incentive bonus last paid prior to the termination, and we are also required to allow Mr. Meyer to continue to participate in our group medical and dental plans at our expense for a period of 24 months. If such termination occurred on January 31, 2023, Mr. Meyer would have been entitled to a severance payment of $950,000 (paid in equal monthly installments over 24 months) calculated as follows: two times the sum of (i) the current base salary of $475,000, plus (ii) the amount of the last annual incentive bonus paid of $0. In addition, we would pay for the cost of Mr. Meyer's continued participation in our group medical and dental plans for the 24 month period following termination (currently $2,015.01 per month). Mr. Meyer's employment agreement does not contain any special provisions or additional payments applicable to a termination following a change in control. Upon termination of employment for any reason, Mr. Meyer's unvested equity awards (currently none) are forfeited. Under Mr. Meyer's employment agreement, “cause” is defined to mean the occurrence of any of the following: (i) the commission of a felony; (ii) any intentional and/or willful act of fraud or material dishonesty; (iii) the willful and/or continued failure, neglect, or refusal to perform in all material respects his job duties, or to fulfill his fiduciary responsibilities to the Company; or (iv) a material breach of the Company’s material policies or codes of conduct or other agreement. In addition, "good reason” is defined to mean any of the following: (i) an action that results in a substantial diminution in duties, status or position; (ii) the relocation of the principal office for Company business to a location more than forty (40) miles from the Company’s current headquarters; or (iii) material breach by the Company of any terms or conditions of the employment agreement. We are party to an employment agreement with Mr. Larsen, which provides that if Mr. Larsen is terminated by us without "cause" prior to the expiration of the term or if he resigns for "good reason" (in either case, not following a "change in control"): (a) we are obligated to pay severance in an amount equal to the sum of (i) his annual base salary plus (ii) the amount of the average annual incentive bonus paid to Mr. Larsen in the three years preceding termination; (b) his non-vested restricted equity awards that vest based solely on continued employment will vest; and (c) we are required to allow Mr. Larsen to continue to participate in our group medical and dental plans under the same cost sharing arrangement that applied on the last day of employment for a period of 12 months. If such termination occurred on January 31, 2023, (not following a "change in control"), Mr. Larsen would have been entitled to a severance payment of $400,000 (paid in equal monthly installments over 12 months) calculated as follows: the sum of (i) the current base salary of $400,000, plus (ii) the amount of the average annual incentive bonus paid in the three years preceding termination of $0. In addition, the Company would pay for the cost of his participation in our group medical and dental plans for the 12 month period following termination (currently $2,015.01 per month). Assuming a termination date of January 31, 2023, the value of the non-vested equity awards that would continue to vest over the established vesting schedules would be $51,761, calculated based upon the closing price of our Common Stock on January 31, 2023 of $43.94. If Mr. Larsen is terminated by the Company without "cause" within 12 months following a "change in control" or if he resigns for "good reason" within 12 months following a "change in control", the Company is obligated to pay severance in an amount equal to two times the sum of (i) the annual base salary then in effect, plus (ii) the amount of the average annual incentive bonus paid to Mr. Larsen in the three years preceding the termination. These severance payments would be made in 24 equal monthly installments. Also, Mr. Larsen's time-based equity awards would become fully vested and earned as of the first day following the expiration of the rescission period under the release. If such termination occurs we would also be required to allow Mr. Larsen to continue to participate in our group medical and dental plans under the same cost sharing arrangement that applied on the last day of employment for a period of 24 months following termination. If Mr. Larsen was terminated on January 31, 2023 following a "change in control", he would have been entitled to a severance payment of $800,000 (paid in equal monthly installments over 24 months) calculated as follows: two times the sum of (i) the current base salary of $400,000, plus (ii) the amount of the average annual incentive bonus paid in the three years preceding termination of $0. In addition, the Company would pay for the cost of his participation in our group medical and dental plans for the 24 month period following termination (currently $2,015.01 per month). Assuming a termination date of January 31, 2023, the value of the equity awards that would vest on a change in control would be $51,761, calculated based upon the closing price of our Common Stock on January 31, 2023 of $43.94.

  52. Potential Payments upon Termination or Change-In-Control

    Under Mr. Larsen's employment agreement, “cause” is defined to mean any of the following: (i) material breach of the employment agreement; (ii) willful refusal to perform assigned duties without justification, or willful misconduct or gross negligence in the performance of duties; (iii) a material breach of the Company’s material policies or codes of conduct or of material obligations under any other agreement; (iv) the willful engagement in dishonesty, fraud, illegal conduct, with respect to or in the course of the business or affairs of the Company, which materially and adversely harms the Company; (v) conviction of, or a plea of nolo contendere to, a felony or other crime involving moral turpitude; and (vi) death or permanent disability. In addition, “good reason” is defined to mean any of the following: (i) the assignment to Mr. Larsen of material duties inconsistent with his status or position as Chief Financial Officer, or other action that results in a material change in Mr. Larsen's status, responsibilities, duties, authority, base salary, compensation, or position, or change in reporting relationship; (ii) the relocation of the principal office for Company business to a location more than forty (40) miles from the Company’s current headquarters; (iii) material breach by the Company of any terms or conditions of the employment agreement; or (iv) the failure of the Company to require a successor to assume the terms of the employment agreement. In addition, “change in control” is defined to mean the occurrence of any of the following: (i) one person (or more than one person acting as a group) acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50% of the total voting power of the stock of the Company; (ii) a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or (iii) the sale of all or substantially all of the Company’s assets. Under the terms of the Company's various restricted stock agreements, if Mr. Larsen's employment with the Company terminated on account of his death, any unvested shares of restricted stock would become 100% vested. In addition, if Mr. Larsen's employment with the Company terminated on account of his disability or retirement, any unvested shares of restricted stock would become 100% vested. For this purpose, "disability" means that Mr. Larsen's employment is severed due to disability under the Company's long-term disability plan, and "retirement" means Mr. Larsen's retirement from the Company on or after attaining age 64 and completion of 5 years of service (or pursuant to early retirement with the consent of the Compensation Committee). Mr. Larsen is not currently retirement eligible under the restricted stock agreements. If Mr. Larsen's employment with the Company had terminated on January 31, 2023 on account of his death or disability, the value of the restricted stock awards that would have vested would be $51,761. We are also party to an employment agreement with Mr. Knutson, which provides that if Mr. Knutson is terminated by us without "cause" prior to the expiration of the term or if he resigns for "good reason" (in either case, not following a "change in control"): (a) we are obligated to pay severance in an amount equal to the sum of (i) his annual base salary plus (ii) the amount of the average annual incentive bonus paid to Mr. Knutson in the three years preceding termination; (b) his non-vested restricted equity awards that vest based solely on continued employment will vest; and (c) we are required to allow Mr. Knutson to continue to participate in our group medical and dental plans under the same cost sharing arrangement that applied on the last day of employment for a period of 12 months. If such termination occurred on January 31, 2023, (not following a "change in control"), Mr. Knutson would have been entitled to a severance payment of $855,040.39 (paid in equal monthly installments over 12 months) calculated as follows: the sum of (i) the current base salary of $500,000, plus (ii) the amount of the average annual incentive bonus paid in the three years preceding termination of $355,040.39. In addition, the Company would pay for the cost of his participation in our group medical and dental plans for the 12 month period following termination (currently $738.48 per month). Assuming a termination date of January 31, 2023, the value of the non-vested equity awards that would continue to vest over the established vesting schedules would be $2,202,712, calculated based upon the closing price of our Common Stock on January 31, 2023 of $43.94. If Mr. Knutson is terminated by the Company without "cause" within 12 months following a "change in control" or if he resigns for "good reason" within 12 months following a "change in control", the Company is obligated to pay severance in an amount equal to two times the sum of (i) the annual base salary then in effect, plus (ii) the amount of the average annual incentive bonus paid to Mr. Knutson in the three years preceding the termination. These severance payments would be made in 24 equal monthly installments. Also, Mr. Knutson's equity awards would become fully vested and earned as of the first day following the expiration of the rescission period under the release. If such termination occurs we would also be required to allow Mr. Knutson to continue to participate in our group medical and dental plans under the same cost sharing arrangement that applied on the last day of employment for a period of 24 months following termination. If Mr. Knutson was terminated on January 31, 2023 following a "change in control", he would have been entitled to a severance payment of $1,710,080.77 (paid in equal monthly installments over 24 months) calculated as follows: two times the sum of (i) the current base salary of $500,000, plus (ii) the amount of the average annual incentive bonus paid in the three years preceding termination of $355,040.39. In addition, the Company would pay for the cost of his participation in our group medical and dental plans for the 24 month period following termination (currently $738.48 per month). Assuming a termination date of January 31, 2023, the value of the equity awards that would vest on a change in control would be $2,202,712, calculated based upon the closing price of our Common Stock on January 31, 2023 of $43.94.

  53. Potential Payments upon Termination or Change-In-Control

    Under Mr. Knutson's employment agreement, “cause” is defined to mean any of the following: (i) material breach of the employment agreement; (ii) willful refusal to perform assigned duties without justification, or willful misconduct or gross negligence in the performance of duties; (iii) a material breach of the Company’s material policies or codes of conduct or of material obligations under any other agreement; (iv) the willful engagement in dishonesty, fraud, illegal conduct, with respect to or in the course of the business or affairs of the Company, which materially and adversely harms the Company; (v) conviction of, or a plea of nolo contendere to, a felony or other crime involving moral turpitude; and (vi) death or permanent disability. In addition, “good reason” is defined to mean any of the following: (i) the assignment to Mr. Knutson of material duties inconsistent with his status or position as Chief Operating Officer, or other action that results in a material change in Mr. Knutson's status, responsibilities, duties, authority, base salary, compensation, position, or change in reporting relationship; (ii) the relocation of the principal office for Company business to a location more than forty (40) miles from the Company’s current headquarters; (iii) material breach by the Company of any terms or conditions of the employment agreement; or (iv) the failure of the Company to require a successor to assume the terms of the employment agreement. In addition, “change in control” is defined to mean the occurrence of any of the following: (i) one person (or more than one person acting as a group) acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50% of the total voting power of the stock of the Company; (ii) a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or (iii) the sale of all or substantially all of the Company’s assets. Under the terms of the Company's various restricted stock agreements, if Mr. Knutson's employment with the Company terminated on account of his death, any unvested shares of restricted stock would become 100% vested. In addition, if Mr. Knutson's employment with the Company terminated on account of his disability or retirement, any unvested shares of restricted stock would become 100% vested. For this purpose, "disability" means that Mr. Knutson's employment is severed due to disability under the Company's long-term disability plan, and "retirement" means Mr. Knutson's retirement from the Company on or after attaining age 64 and completion of 5 years of service (or pursuant to early retirement with the consent of the Compensation Committee). Mr. Knutson is not currently retirement eligible under the restricted stock agreements. If Mr. Knutson's employment with the Company had terminated on January 31, 2023 on account of his death or disability, the value of the restricted stock awards that would have vested would be $2,202,712 . In order to receive the severance and continued benefits described above, each officer would be required to sign a release of claims against us, fulfill his non-competition obligations, cooperate with transitioning his duties and execute a non-disparagement agreement with us. We have arrived at these terms based on the advice and experience of our advisors and directors, including their knowledge of practices and agreements at public companies. Under the terms of Mr. Kalvoda's Transition Agreement, it was agreed that he would work through January 15, 2023, and that he would receive the following termination benefits and was subject to the following obligations: •He would receive a pro rata portion of his fiscal 2023 cash bonus, based on his length of service during fiscal 2023 (50 weeks worked divided by 52 weeks equals 96.15%); •Accelerated vesting of his 33,800 unvested shares of restricted stock on date of termination of employment, which shares of restricted stock would have otherwise been forfeited upon his termination of employment; •He is subject to a non-competition and a non-solicitation covenant for a period of 24 months after his termination of employment and post-termination confidentiality obligations each as set forth in his original employment agreement and a non-disparagement covenant under the terms of the Transition Agreement. Mr. Kalvoda’s fiscal 2023 cash bonus and vested shares of restricted stock that accelerated upon termination of employment are subject to clawback by the Company if he fails to comply with these non-competition, non-solicitation or confidentiality covenants; and •Upon his termination of employment, Mr. Kalvoda signed a release of claims in favor of the Company.

  54. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE

  55. Pay Versus Performance Table for Fiscal 2023

    Pay Versus Performance Table for Fiscal 2023 In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Act, below is disclosure regarding executive compensation for our principal executive officer ("PEO," also known as our Chief Executive Officer) and other named executive officers and certain company performance measures for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.

  56. Pay Versus Performance Table for Fiscal 2023

    | Fiscal Year (a) | Summary Compensation Table Total for PEO (1) (b) | Compensation Actually Paid to PEO (2) (c) | Average Summary Compensation Table Total for non-PEO NEOs (3) (d) | Average Summary Compensation Actually Paid to non-PEO NEOs (4) (e) | Value of Initial Fixed $100 Investment Based on: | | Net Income (7) (Thousands) (h) | Adjusted Pre-Tax Income (8) (Thousands) (i) | | | | | | | Total Shareholder Return (5) (f) | Peer Group Total Shareholder Return (6) (g) | | | | 2023 | 486,875 | 486,875 | 1,548,296 | 1,892,269 | 359.87 | 123.04 | 101,868 | 137,138 | | 2022 | 483,700 | 483,700 | 1,391,515 | 1,850,998 | 252.25 | 152.98 | 66,047 | 88,136 | | 2021 | 483,550 | 483,550 | 1,180,318 | 1,752,898 | 174.45 | 140.50 | 19,356 | 38,097 |

  57. Pay Versus Performance Table for Fiscal 2023

    (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for David J. Meyer (our Chief Executive Officer) for each corresponding year in the “Total” column of the “Summary Compensation Table for Fiscal 2023.” (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Meyer, as computed in accordance with Item 402(v) of SEC Regulation S-K. There are no adjustments to Mr. Meyer’s compensation as required by Item 402(v) of SEC Regulation S-K, because he did not receive any equity awards and did not have an accumulated pension benefit during any of fiscal years shown in the "Summary Compensation Table for Fiscal 2023." (3) The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s non-PEO named executive officers as a group in the “Total” column of the “Summary Compensation Table for Fiscal 2023” in each applicable year. The names of the non-PEO named executive officers included for purposes of calculating the average amounts in each applicable year are Robert Larsen (our CFO), Bryan Knutson (our President and COO), and Mark Kalvoda (our former CFO) for fiscal 2023, and Mr. Knutson and Mr. Kalvoda for fiscal years 2022 and 2021. (4) The dollar amounts reported in column (e) represent the amount of “compensation actually paid” to the non-PEO named executive officers as a group, as computed in accordance with Item 402(v) of SEC Regulation S-K. The names of the Non-PEO named executive officers included for purposes of calculating the average amounts in each applicable year are Robert Larsen, Bryan Knutson, and Mark Kalvoda for fiscal 2023, and Mr. Knutson and Mr. Kalvoda for fiscal years 2022 and 2021. Mr. Larsen was employed for the final three months of fiscal 2023, November 1, 2022 through January 31, 2023, and Mr. Kalvoda was employed for the first 50 weeks of fiscal 2023, February 1, 2022 through January 15, 2023. None of the non-PEO named executive officers had an accumulated pension benefit during any of the fiscal years shown in the "Summary Compensation Table for Fiscal 2023." The “equity award adjustments” for each applicable year consist of the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that were outstanding and unvested as of the end of the applicable year; (ii) the amount of change as of the end of the applicable year (from the end of the prior year) in fair value of any equity awards granted in prior years that were outstanding and unvested as of the end of the applicable year; (iii) for equity awards that were granted and vested in the same applicable year, the fair value of the equity awards as of the vesting date; (iv) for equity awards granted in prior years that vested in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior year) in fair value of the equity awards; (v) for equity awards granted in prior years that were determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior year; and (vi) the dollar value of any dividends or other earnings paid on equity awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such equity awards or included in any other component of total compensation for the applicable year. The amounts deducted or added in calculating the “equity award adjustments” are as follows:

  58. Pay Versus Performance Table for Fiscal 2023

    | Fiscal Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Grant Date Fair Value of Equity Awards | Average Equity Award Adjustments (a) | Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | 1,548,296 | (183,338) | 527,311 | 1,892,269 | | 2022 | 1,391,515 | (409,996) | 869,479 | 1,850,998 | | 2021 | 1,180,318 | (380,000) | 952,580 | 1,752,898 |

  59. Pay Versus Performance Table for Fiscal 2023

    (a) The amounts deducted or added in calculating the total average equity award adjustments are as follows:

  60. Pay Versus Performance Table for Fiscal 2023

    | Fiscal Year | Average Year-End Fair Value of Outstanding and Unvested Equity Awards Granted in Applicable Year | Average Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Average Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Dollar Value of Dividends or Other Earnings Paid on Equity Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Average Equity Award Adjustments | | 2023 | 296,449 | 136,075 | — | 94,787 | — | — | 527,311 | | 2022 | 365,072 | 396,174 | — | 108,233 | — | — | 869,479 | | 2021 | 783,542 | 235,726 | — | (66,688) | — | — | 952,580 |

  61. Pay Versus Performance Table for Fiscal 2023

    (5) Cumulative Total Shareholder Return (“TSR”) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period (determined in accordance with Item 402(v) of SEC Regulation S-K), assuming dividend reinvestment, and the difference between the Company’s common share price at the end and the beginning of the measurement period by the Company’s common share price at the beginning of the measurement period. (6) Represents the S&P Retail Index cumulative TSR for the applicable performance period. (7) The dollar amounts reported represent the amount of net income (in thousands) reflected in the Company’s audited consolidated financial statements for the applicable year. (8) Adjusted Pre-Tax Income is defined as GAAP pre-tax income adjusted to exclude the pre-tax impact from gains or losses that occur outside of the ordinary course of our business during the applicable year. While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that adjusted pre-tax income is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in this table) used by the Company to link compensation actually paid to the Company’s named executive officers for the most recently completed fiscal year, to the Company’s performance.

  62. Analysis of the Information Presented in the Pay Versus Performance Table

    Analysis of the Information Presented in the Pay Versus Performance Table In accordance with Item 402(v) of SEC Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the “Pay Versus Performance Table for 2023.” Compensation Actually Paid and Cumulative TSR As demonstrated by the following graph, the amount of compensation actually paid to Mr. Meyer and the average amount of compensation actually paid to the Company’s non-PEO named executive officers as a group (excluding Mr. Meyer) is generally aligned with the Company’s cumulative TSR over the three years presented in the “Pay Versus Performance Table for Fiscal 2023.” The alignment of compensation actually paid with the Company’s cumulative TSR over the period presented is due in large part to the fact that a significant portion of the compensation actually paid to the non-PEO named executive officers is comprised of equity awards. As described in more detail above in this section, Mr. Meyer elected to forego an equity award during each of the applicable years. For each of the three years presented in the “Pay Versus Performance Table for 2023,” the Company’s cumulative TSR exceeded that of the S&P 500 Retail Index. The following table details the Company’s cumulative TSR in comparison to the Index’ cumulative TSR for each of the measurement periods (determined in accordance with Item 402(v) of Section Regulation S-K). Compensation Actually Paid and Net Income As demonstrated by the following table, the amount of compensation actually paid to Mr. Meyer was flat, since he only received a constant base salary, and the average amount of compensation actually paid to the Company’s non-PEO named executive officers as a group is generally aligned with the Company’s net income over the three years presented in the “Pay Versus Performance Table for 2023.” The Company uses adjusted pre-tax net income as a performance measure in the overall executive compensation program, which is highly correlated to the measure of net income. As described in more detail above in this section, the target annual cash incentive compensation as a percent of base salary was 75% for each of Mr. Larsen, Mr. Knutson, and Mr. Kalvoda. Compensation Actually Paid and Adjusted Pre-Tax Income As described in more detail above in this section, one of the three financial performance metrics used to determine the annual cash incentive payment is adjusted pre-tax income. As demonstrated by the following table, the amount of compensation actually paid to Mr. Meyer was flat, since he only received a constant base salary. The average amount of compensation actually paid to the Company’s non-PEO named executive officers as a group is generally aligned with the Company’s adjusted pre-tax income over each of the three years presented in the “Pay Versus Performance Table for 2023.”

  63. CEO Pay Ratio Disclosure

    CEO Pay Ratio Disclosure As required by Section 953(b) of Dodd-Frank Wall Street Reform and Consumer Protection Act, and applicable SEC rules, we are providing the following information about the relationship of the annual total compensation of the employee identified at median of our Company and the annual total compensation of David J. Meyer, our Chief Executive Officer. For fiscal 2023: •the annual total compensation of the employee identified at median of our Company (other than our Chief Executive Officer), was $67,839; and •the annual total compensation of our Chief Executive Officer for purposes of determining the CEO pay ratio was $494,654. Based on this information, for fiscal 2023, the ratio of the annual total compensation of Mr. Meyer, our Chief Executive Officer, to the median of the annual total compensation of all employees was estimated to be 7.3 to 1. 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 below. 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 utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the "median employee," the methodology and the material assumptions, adjustments, and estimates that we used were as follows: •We determined that, as of December 31, 2022, our employee population consisted of approximately 2,898 individuals in the United States and Europe. We selected December 31, 2022, which was within the last three months of fiscal 2023, as the date upon which we would identify the “median employee” to allow sufficient time to identify the median employee given our European operations. •We selected salary and wages as reported to the Internal Revenue Service on Form W-2 for our U.S. employees and used equivalent taxable income for our European employees as our consistently applied compensation measure as it represents the primary compensation component paid to all of our employees. In addition, this approach allows us to reasonably compare compensation for our U.S. employees with that of our employees in Europe. Compensation paid in foreign currencies was converted to U.S. dollars based on exchange rates in effect on December 31, 2022. In determining the annual total compensation of the median employee, such employee’s compensation was calculated in accordance with Item 402(c)(2)(x) of Regulation S-K, as required pursuant to SEC rules, except that we elected to include the Company-paid portion of a single health insurance premium and the Company-paid contribution to the employees' health savings account, which are normally excluded from the calculation of annual total compensation for purposes of the summary compensation table. As a result, Mr. Meyer’s compensation for purposes of the pay ratio calculation differs from the summary compensation table for fiscal 2023 to reflect the inclusion of the Company-paid portion of a single health insurance premium and the Company-paid contribution to his health savings account, which are excluded for summary compensation table purposes.