DEF 14A of Titan Machinery Inc., Apr 22, 2024

DEF 14A of Titan Machinery Inc.

Filed Apr 22, 2024 · FY20240001409171-24-000036

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: •three Class II directors who hold office until the 2024 Annual Meeting; •three Class III directors who hold office until the 2025 Annual Meeting; and •three Class I directors who hold office until the 2026 Annual Meeting; or, in all cases, until their successors are elected and qualified. The Governance/Nominating Committee has recommended, and the Board has approved, Stan Erickson, Jody Horner, and Richard Mack as director nominees for the three Class II director positions to be elected at the 2024 Annual Meeting. The following information states the principal occupations for at least the past five years of the 2024 director nominees and the remaining directors whose terms will continue beyond the Annual Meeting:

  2. BOARD OF DIRECTORS

    | 2024 Nominees Upon election, these Directors will Hold Office Until the 2027 Annual Meeting* (subject to age based retirement obligations) | Age | Position/Committee Membership/Biography | | Stan Erickson | 73 | 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 is chair of the audit committee and a member of the nominating and governance committee. Mr. Erickson also currently serves on the board of directors of McAninch Corporation, a privately-held construction company based in Des Moines, Iowa. Among other attributes, skills and qualifications, Mr. Erickson has significant senior leadership experience in the equipment industry, as well as 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 | 62 | 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 | 56 | 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 in 2009 to Executive Vice President (while continuing his role as General Counsel and Corporate Secretary). In the decade prior to Mosaic's formation, he served in various legal positions 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. Mr. Mack currently serves as 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 | Executive Chairman of the Board of Directors (former Chief Executive Officer, until February 1, 2024) | | | | Mr. Meyer is our Executive Chairman of the Board of Directors, effective February 1, 2024. Prior thereto, he was Board Chair and Chief Executive Officer of Titan Machinery since 1980. 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 Construction 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 of 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 Executive Chair due to his in-depth knowledge of the Company's history, business and industry, and his ability to effectively identify strategic priorities and to lead the discussion and execution of strategy. | | Frank Anglin | 61 | 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. From July 2018 to August 2019, Mr. Anglin served as Chief Executive Officer, President and Director for Boyer Trucks. From January 2017 to May 2018, he served as CEO and Board Director for Midwest Can and Container Specialties Inc. Prior to that, he served as CEO, President, and Director for Western Peterbilt Inc., and held a variety of management positions during his tenure at General Electric and CNH Industrial. 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 OF DIRECTORS

    | Richard Lewis | 53 | Director | | | | Mr. Lewis has been a director of Titan Machinery since February 1, 2024. A resident of Australia, Mr. Lewis currently serves as director and the principal executive of Iron Capital Group, a company founded by Mr. Lewis in 2015. Iron Capital Group offers equipment leasing solutions to earthmoving and mining customers in Australia and North America. Previously, Mr. Lewis was employed in various positions in the equipment finance and dealership industries. Mr. Lewis served as a director of the Australian Tractor and Machinery Association from 2002-2008, holding the position of chairperson for his final two years. In 2011, Mr. Lewis became a director of J.J. O’Connor & Sons Pty. Ltd. and was serving as Board Chair at the time of Titan’s acquisition of the O’Connors’ dealership business in October 2023. Among other attributes, skills, and qualifications, Mr. Lewis has significant leadership experience in the Australian equipment industry, as well as in-depth knowledge of the equipment finance industry, operating strategies, financing and international business. | | Directors Who Hold Office Until the 2026 Annual Meeting | | Position/Committee Membership/Biography | | Tony Christianson | 71 | 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 | 68 | 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. |

  5. BOARD OF DIRECTORS

    | Bryan Knutson | 45 | Director; President and Chief Executive Officer | | | | Mr. Knutson has served as a director and President and Chief Executive Officer of Titan Machinery since February 1, 2024. Prior to that, Mr. Knutson was our Chief Operating Officer since 2017, adding the position of President in 2022. Prior to these executive roles, Mr. Knutson led Titan Machinery's North American Agriculture and Construction Equipment Operations and has implemented lasting positive changes across the organization, leveraging his first-hand experience as a Sales Consultant, General Manager, and various Senior Field positions during his tenure at the Company, which commenced in September 2002. Mr. Knutson is past Chairman of the Board of the Pioneer Equipment Dealers Association, which represents Equipment Dealers in Minnesota, North Dakota, and South Dakota. He has served long tenures on both the Case IH Agriculture and Case Construction Dealer Advisory Boards. Among other attributes, skills, and qualifications, Mr. Knutson brings to the Board his in-depth knowledge of the Company’s operations, history, and culture, knowledge of the equipment dealership industry, and the ability to identify strategic priorities for the Company. |

  6. 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 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.

  7. Board Skills and Experience Matrix

    | | F. Anglin | T. Christianson | S. Erickson | C. Hamilton | J. Horner | B. Knutson | R. Lewis | 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 | X | X | | Industry Knowledge | X | X | 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 | X | X | | Sales and Marketing | X | | | | | X | X | X | X | | Corporate Governance and Compliance | X | X | X | X | X | | | X | X | | Operations and Supply Chain | X | | X | | X | X | X | X | X | | International Operations | X | | | | X | | X | X | X | | Human Capital and Executive Compensation | X | | X | X | X | X | X | X | X | | Risk Management | X | X | X | X | X | | X | X | X | | Technology and Data Security | | X | X | | | | | | | | Director Independence | X | X | X | X | X | | X | X | | | Board Tenure | | | | | | | | | | | Years | 3 | 17 | 7 | 6 | 9 | 1 | 1 | 9 | 17 |

  8. 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.

  9. Board Diversity Matrix

    | Board Diversity Matrix (As of April 22, 2024) | | | | | | Board Size: | | | | | | Total Number of Directors | | 9 | | | | Gender: | Female | Male | Non-Binary | Gender Undisclosed | | Number of Directors Based on Gender Identity | 2 | 7 | 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 | 6 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ+ | 0 | | | | | Demographic Background Undisclosed | 0 | | | |

  10. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  11. (PROPOSAL 1)

    (PROPOSAL 1)

  12. 2024 Director Nominees

    2024 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:

  13. 2024 Director Nominees

    | Stan Erickson | | Jody Horner | | Richard Mack |

  14. 2024 Director Nominees

    The nominees are currently Class II Directors whose terms expire at the upcoming 2024 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 2027 Annual Meeting or until his or her successor is elected and qualified; provided, that under the terms of the Company's Corporate Governance Guidelines, Mr. Erickson will be subject to an age-based retirement obligation in March 2025. 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.

  15. 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 2024, was as follows:

  16. 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 | |

  17. NON-EMPLOYEE DIRECTOR COMPENSATION

    We also reimburse our non-employee directors for reasonable expenses incurred in connection with their service as directors. 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 chair 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 pro rata 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 2024:

  18. NON-EMPLOYEE DIRECTOR COMPENSATION

    | Name (1) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2) | Total ($) | | Frank Anglin | 55,000 | 80,000 | 135,000 | | Tony Christianson | 55,000 | 80,000 | 135,000 | | 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 |

  19. NON-EMPLOYEE DIRECTOR COMPENSATION

    (1)Mr. Lewis is not included in the table as he became a Director effective February 1, 2024, and did not receive compensation in fiscal 2024. (2)These amounts represent the grant date fair value for each grant awarded in fiscal 2024, valued in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 718, Compensation—Stock Compensation. Each director included in this table received an award of 2,989 restricted shares based on the $26.77 closing price for our Common Stock on the grant date of June 5, 2023.

  20. We are committed to considering our stockholders' views on executive compensation

    We are committed to considering our stockholders' views on executive compensation We receive direct feedback from stockholders on our compensation programs through our annual advisory vote on the compensation paid to our named executive officers (commonly known as a "say-on-pay vote"). We hold the say-on-pay vote at each annual meeting of stockholders. At our 2023 Annual Meeting of Stockholders, our say-on-pay proposal received approval from 58.61% of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter, which was a substantial departure from the strong support received for our say-on-pay proposals from stockholders in recent years (96.24% approval in 2022, 98.6% approval in 2021 and 93.86% approval in 2020). The Compensation Committee and full Board take our say-on-pay vote results very seriously and were disappointed by the lower level of support received for our say-on-pay vote at our 2023 Annual Meeting of Stockholders. Based on certain proxy advisory firms’ ratings, vote recommendations and proxy reports last year, and based on feedback from our stockholders, we believe the lower support for the say-on-pay proposal at the 2023 Annual Meeting was attributable to the Executive Transition Agreement (the "Transition Agreement") that the Company entered into in April 2022 with our former Chief Financial Officer, Mark Kalvoda, with respect to his transition from employment with the Company. The Transition Agreement provided for the accelerated vesting of shares of restricted stock that Mr. Kalvoda held as of the date of termination of his employment; the proxy advisory firms considered this acceleration of vesting to be a problematic pay practice resulting in their "against" vote recommendation for the 2023 say-on-pay proposal. The Company discussed in its 2023 Proxy Statement the reasons for entering into the Transition Agreement with Mr. Kalvoda, stating that the Board had approved the Transition Agreement believing it to be in the best interests of the Company and its stockholders. Given the lower level of support for the Company's 2023 say-on-pay vote, attributable to the acceleration of the vesting of Mr. Kalvoda's restricted stock under the Transition Agreement, the Company is providing below additional facts and context relevant to the Board's decision in April 2022 to approve the Transition Agreement. In early 2022, Mr. Kalvoda discussed with Company’s Chief Executive Officer that he intended to give his 60-day notice of voluntary termination, which notice was required to be given under his employment agreement for termination other than for good reason. Mr. Kalvoda's timeline of his departure (following the 60-day notice) would have resulted in a termination date for his employment on or about May 31, 2022. Around the same time as Mr. Kalvoda's conversation with the Company's Chief Executive Officer respecting his intended departure, the Company signed a letter of intent for the acquisition of Heartland Ag, the largest acquisition in the Company’s history. The Company's Chief Executive Officer and Mr. Kalvoda discussed the timeline of Mr. Kalvoda's departure, and they agreed that he would not submit a written notice of termination until the Chief Executive Officer had discussed the matter with the Board. The Board was then briefed on the matter, and deliberated on the best course of action. The Board's deliberations included consideration of the following factors: •The Board believed that Mr. Kalvoda's expertise and involvement were critical to the Heartland Ag negotiations and execution of the acquisition. In fact, the Heartland Ag transaction subsequently closed in the first week of August 2022. •The Company did not have a seasoned internal candidate who could seamlessly replace Mr. Kalvoda as the Company's Chief Financial Officer, so an external search would be necessary. •The executive search firm contacted by the Company estimated that the search process could take four to six months. •The Board desired that Mr. Kalvoda remain employed by the Company after the new Chief Financial Officer commenced employment, to facilitate an effective transition. After consideration of these factors, the Company's Chief Executive Officer and Board determined that Mr. Kalvoda's potential departure at the end of May 2022 would expose the Company to risks related to the negotiations and execution of the Heartland Ag acquisition, along with risks that stockholders would have concerns over the fact that the Company would not have a permanent Chief Financial Officer in place for a period of several months during this critical time. The Board believed that the Company’s interests would be best served by Mr. Kalvoda remaining employed with the Company through the end of fiscal year 2023 (January 31, 2023). In furtherance of the Board's conclusions, the Company’s Chief Executive Officer asked Mr. Kalvoda whether he would be willing to defer his departure date until January 2023. Mr. Kalvoda responded that he would consider this request, which then led to negotiations of the terms under which Mr. Kalvoda would agree to this extended employment. The key points of negotiation relevant to his willingness to consider a later departure date were as follows: •Under the terms of his employment agreement, Mr. Kalvoda was entitled to receive an equity award of shares of restricted stock on June 1, 2022, in an amount equal to his base salary ($500,000), of which 25% of these shares (or 4,766 shares) of restricted stock would vest on April 1, 2023. •Mr. Kalvoda then currently held 18,312 shares of restricted stock scheduled to vest on April 1, 2023, 12,524 shares of restricted stock scheduled to vest on April 1, 2024, and 2,964 shares of restricted stock scheduled to vest on April 1, 2025. •A departure in late January 2023, was only two months from April 1, 2023 when 23,078 shares of restricted stock that Mr. Kalvoda held would otherwise vest (inclusive of the 4,766 shares of restricted stock from the June 1, 2022 grant). Mr. Kalvoda’s position was that it was inequitable that he work eight additional months and forfeit all unvested shares of restricted stock, when he could instead simply extend his employment an additional two months until April 1, 2023 and receive the benefit of the vesting of 23,078 shares of restricted stock. Therefore, if he was willing to defer his departure date by eight months, he may just as well defer the date for ten months and receive the benefit of the April 1, 2023 vesting of additional shares of restricted stock. However, the Company did not want Mr. Kalvoda's employment to linger past the point when the Company had transitioned to a new Chief Financial Officer, estimated to occur in early 2023. Moreover, if the Company agreed to the later April 1, 2023 departure date, it would be responsible for almost $150,000 of additional compensation expense in the form of salary, bonus, employee benefits, and associated payroll taxes, arising from Mr. Kalvoda's extended months of employment, which the Company did not want to incur. The Company's Chief Executive Officer negotiated with Mr. Kalvoda on the terms of the transition, primarily focused on the timeline and vesting of restricted stock. Upon the conclusion of these negotiations, the Company's Chief Executive Officer recommended to the Board that it approve the following terms for the Transition Agreement: •Mr. Kalvoda would continue his employment with the Company through January 15, 2023. •Mr. Kalvoda's outstanding unvested restricted stock would vest on January 15, 2023, so long as he remained employed in good standing with the Company through that date. •Mr. Kalvoda would forego and not be entitled to receive his June 1, 2022 equity award of shares of restricted stock. •Mr. Kalvoda would be eligible to earn a pro rata cash incentive bonus for fiscal 2023.

  21. Risk Mitigation

    Risk Mitigation As discussed above, the Compensation Committee annually reviews and seeks to address risks arising out of the Company’s executive compensation program. The Compensation Committee strives to implement an executive compensation program that is simple and transparent, and devoid of perks and other benefits not provided to all employees. The Compensation Committee has established a cap on the amount eligible to be earned by each executive under the Company's annual cash incentive program, with no additional cash bonus being payable upon the achievement of greater than the established maximum goal for each financial metric that is part of the annual cash incentive program. The Compensation Committee has developed and monitors minimum stock ownership guidelines for executives, aligning the interests of executives with stockholders. In addition, further supporting risk mitigation, the Board has adopted a robust anti-hedging/pledging policy and a clawback policy compliant with SEC regulations.

  22. Fiscal 2024 Executive Compensation as Compared to our Peer Group

    Fiscal 2024 Executive Compensation as Compared to our Peer Group In fiscal 2024, 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. During fiscal 2025, the Compensation Committee approved the retention of an independent compensation consultant to provide analysis and recommendations on the Company's peer group, the Company’s executive compensation program, and the Company's non-employee director compensation program.

  23. 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):

  24. 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 |

  25. 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.

  26. 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. Larsen and Mr. Knutson was 75% of his base salary. Mr. Meyer elected to not participate in the fiscal 2024 annual cash bonus plan. Under the terms of the annual performance cash bonus opportunity established for Mr. Knutson, he was eligible to earn a cash bonus for fiscal 2024 ranging from 0% to 150% of his annual base salary, with a target of 75% of his annual base salary or $393,750 (75% X $525,000). Under the terms of the annual performance cash bonus opportunity established for Mr. Larsen, he was eligible to earn a cash bonus for fiscal 2024 ranging from 0% to 150% of his annual base salary, with a target of 75% of his annual base salary or $315,000 (75% X $420,000). 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 2024 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. For fiscal 2024, the only adjustment from GAAP pre-tax income for purposes of this calculation of Adjusted Pre-Tax Income was the exclusion of the Company's Australian operations (which the Company acquired in October 2023). 2. Return on Assets ("ROA"): Calculated as Adjusted Pre-Tax Income (see above) divided by our average monthly total assets less available cash. For fiscal 2024, the only adjustment from GAAP for this calculation of ROA was the exclusion of the Company's Australian operations (which the Company acquired in October 2023). 3. Total Revenue: The Company's GAAP total revenue from its statement of operations. For fiscal 2024, the only adjustment from GAAP total revenue for purposes of this calculation of total revenue was the exclusion of the Company's Australian operations (which the Company acquired in October 2023). The Compensation Committee allocated a portion of the eligible bonus amount to each of the financial performance categories as follows:

  27. Annual Performance Cash Bonus

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

  28. 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, with the target goals deemed a realistic, but challenging goal and the maximum goal deemed a "stretch" goal for high performance. The threshold, target, and maximum goals for each of the three financial performance categories for the fiscal 2024 cash incentive plan are stated in the discussion below. For fiscal 2024, 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 i.e., $393,750 for Mr. Knutson, and $315,000 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 stated above, Mr. Meyer elected to not participate in the fiscal 2024 annual cash bonus plan, and accordingly he was not paid a cash bonus. Under the fiscal 2024 cash bonus plan, Mr. Knutson earned a bonus of $323,425 as described below.

  29. Annual Performance Cash Bonus

    | | Maximum 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% | $787,500 | $393,750 | $323,425 | 82.14% |

  30. Annual Performance Cash Bonus

    Under the fiscal 2024 cash bonus plan, Mr. Larsen earned a bonus of $258,740 as described below.

  31. Annual Performance Cash Bonus

    | | Maximum 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% | $630,000 | $315,000 | $258,740 | 82.14% |

  32. 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:

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

    | | Adjusted Pre-Tax Income Goals | Payout Percentages | | Threshold | $132,200,958 | 20% | | Target | $146,889,953 | 100% | | Maximum | $183,612,441 | 200% |

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

    Our fiscal 2024 Adjusted Pre-Tax Income was $146,925,763, resulting in a bonus payout percentage of 100.1%. The bonus payout percentage is determined linearly between the payout percentage of 100% (at target goal of $146,889,953) and the payout percentage of 200% (at maximum goal of $183,612,441). Mr. Knutson earned a bonus of $157,654 for this financial performance category, calculated as follows: $393,750 [Target Bonus] X 40% [weight for the performance category] X 100.1% [bonus payout percentage]. Mr. Larsen earned a bonus of $126,123 for this financial performance category, calculated as follows: $315,000 [Target Bonus] X 40% [weight for the performance category] X 100.1% [bonus payout percentage].

  35. 2.Return on Assets (30%)

    | | Return on Assets | Payout Percentages | | Threshold | 9.52% | 20% | | Target | 11.91% | 100% | | Maximum | 17.86% | 200% |

  36. 2.Return on Assets (30%)

    Our fiscal 2024 Return on Assets was 9.87%, resulting in a bonus payout percentage of 31.5%. The bonus payout percentage is determined linearly between the payout percentage of 20% (at threshold goal of 9.52%) and the payout percentage of 100% (at target goal of 11.91%). Mr. Knutson earned a bonus of $37,194 for this financial performance category, calculated as follows: $393,750 [Target Bonus] X 30% [weight for the performance category] X 31.5% [bonus payout percentage]. Mr. Larsen earned a bonus of $29,755 for this financial performance category, calculated as follows: $315,000 [Target Bonus] X 30% [weight for the performance category] X 31.5% [bonus payout percentage]. 3.Total Revenue (30%)

  37. 2.Return on Assets (30%)

    | | Total Revenue Goals | Percentage Payout | | Threshold | $2,367,404,027 | 20% | | Target | $2,630,448,919 | 100% | | Maximum | $3,288,061,149 | 200% |

  38. 2.Return on Assets (30%)

    Our total revenue was $2,688,635,134, resulting in a bonus payout percentage of 108.8%. The bonus payout percentage is determined linearly between the payout percentage of 100% (at target goal of $2,630,448,919) and the payout percentage of 200% (at maximum goal of $3,288,061,149). Mr. Knutson earned a bonus of $128,577 for this financial performance category, calculated as follows: $393,750 [Target Bonus] X 30% [weight for the performance category] X 108.8% [bonus payout percentage]. Mr. Larsen earned a bonus of $102,862 for this financial performance category, calculated as follows: $315,000 [Target Bonus] X 30% [weight for the performance category] X 108.8% [bonus payout percentage].

  39. 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, 2023 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 2024. Mr. Knutson received an award of 19,834 shares of restricted stock with a grant date fair value of $525,006 (19,834 shares at $26.47 per share, the closing price of our Common Stock on June 1, 2023). One-fourth of Mr. Knutson's 2023 restricted stock award vests on each of April 1, 2024, 2025, 2026, and 2027, respectively. Mr. Larsen received an award of 15,867 shares of restricted stock with a grant date fair value of $419,999 (15,867 shares at $26.47 per share, the closing price of our Common Stock on June 1, 2023). One-fourth of Mr. Larsen's 2023 restricted stock award vests on each of April 1, 2024, 2025, 2026, and 2027, 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 (either time-based or performance-based), 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.

  40. Employment Agreements

    Employment Agreements During fiscal 2024, we had 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 and Chief Operating Officer. On October 17, 2023, the Company and Mr. Meyer entered into an amendment to Mr. Meyer’s existing employment agreement with the Company. This amendment provided that Mr. Meyer’s employment as the Company’s Chief Executive Officer would end effective February 1, 2024, at which time Mr. Meyer would accept the role of Executive Chairman of the Board of Directors for a 12-month period beginning February 1, 2024 and ending January 31, 2025. In this role, Mr. Meyer will continue to earn his annual base salary of $500,000, but he will not be eligible for annual cash bonuses, equity incentive awards, or severance in the event of termination. Mr. Meyer reports to the Board of Directors and is responsible for such executive duties as reasonably assigned to him by the Board including consultation with and transition assistance to the Company’s Chief Executive Officer. Mr. Knutson’s current employment agreement has an initial three-year term with automatic annual one-year extensions (running from February 1 through January 31), subject to earlier termination, as described below under "Potential Payments Upon Termination or Change-In-Control". 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 and subject to ratification by the Board of Directors. As of February 1, 2024, Mr. Knutson's base salary was $575,000 (reflecting an increase of $50,000 from his previous base salary). The agreement provides that Mr. Knutson may receive 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 up to 200% of his base salary pursuant to terms, conditions and annual objectives established by the Compensation Committee. In fiscal 2024, Mr. Knutson was eligible for an annual cash bonus of up to 150% of his annual base salary. Mr. Knutson 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 under "Potential Payments Upon Termination or Change-In-Control". 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, 2024, Mr. Larsen's base salary was $420,000 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. The agreement also provides that Mr. Larsen may receive 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 is eligible to participate in any employee benefit plans and programs generally available to our employees.

  41. Summary Compensation Table for Fiscal 2024

    Summary Compensation Table for Fiscal 2024 The table below sets forth certain information regarding compensation earned during the last three fiscal years by the Company's named executive officers.

  42. Summary Compensation Table for Fiscal 2024

    | 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) | 2024 | 491,667 | — | — | 12,292 | 503,959 | | | 2023 | 475,000 | — | — | 11,875 | 486,875 | | | 2022 | 475,000 | — | — | 8,700 | 483,700 | | Robert Larsen, Chief Financial Officer | 2024 | 413,333 | 419,999 | 258,740 | 11,317 | 1,103,389 | | | 2023 | 100,000 | 50,018 | 137,184 | 49,240 | 336,442 | | Bryan Knutson, President & Chief Operating Officer | 2024 | 516,667 | 525,006 | 323,425 | 11,313 | 1,376,411 | | | 2023 | 470,000 | 499,996 | 680,327 | 10,475 | 1,660,798 | | | 2022 | 395,000 | 409,995 | 572,574 | 8,813 | 1,386,382 |

  43. Summary Compensation Table for Fiscal 2024

    (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. (2)Amounts represent the grant date fair value of time-based restricted stock awards granted in each fiscal year. The 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 2024 table for further information regarding the equity awards granted in fiscal 2024 and the Outstanding Equity Awards at January 31, 2024 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, and Knutson represent a Company match to the 401(k) plan. For Mr. Larsen for fiscal 2023, this number also includes tuition reimbursement of $47,907. (5)As discussed above, for fiscal years 2024, 2023, and 2022, Mr. Meyer elected not to receive an equity award or to participate in the annual performance cash bonus plan.

  44. Grants of Plan-Based Awards for Fiscal 2024

    Grants of Plan-Based Awards for Fiscal 2024 The following table sets forth information regarding awards to Messrs. Meyer, Larsen and Knutson, our named executive officers, of plan-based awards (annual performance cash bonus and long-term equity incentive) in fiscal 2024:

  45. Grants of Plan-Based Awards for Fiscal 2024

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards($)(1) | | | All Other Stock Awards: Number of Shares of Stock(#)(2) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | Name | Grant Date | Threshold | Target | Maximum | | | | David Meyer | — | — | — | — | — | — | | Robert Larsen | 6/1/2023 | 63,000 | 315,000 | 630,000 | 15,867 | 419,999 | | Bryan Knutson | 6/1/2023 | 78,750 | 393,750 | 787,500 | 19,834 | 525,006 |

  46. Grants of Plan-Based Awards for Fiscal 2024

    (1)Amounts shown in the table reflect the potential amount of annual cash performance bonuses that could have been earned in fiscal 2024 by Mr. Larsen and Mr. Knutson, based on meeting the threshold goals, target goals and maximum goals amounts, as defined in our fiscal 2024 annual performance cash bonus plan. Actual amounts earned by the named executive officers for fiscal 2024 are reported in the Summary Compensation Table on page 35 under the column entitled "Non-Equity Incentive Plan Compensation." (2)Mr. Larsen and Mr. Knutson each received an award of restricted stock on June 1, 2023. The risk of forfeiture for these awards will lapse ratably on April 1st of each year from 2024 to 2027. (3)This amount represents the grant date fair value of the restricted stock determined in accordance with FASB ASC Topic 718.

  47. Outstanding Equity Awards at January 31, 2024

    Outstanding Equity Awards at January 31, 2024 The following table sets forth certain information regarding equity awards granted to our named executive officers outstanding as of January 31, 2024:

  48. Outstanding Equity Awards at January 31, 2024

    | | 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 | — | — | — | — | — | 16,751 | 447,754 | — | — | | Bryan Knutson | — | — | — | — | — | 48,893 | 1,306,910 | — | — |

  49. Outstanding Equity Awards at January 31, 2024

    (1)For Mr. Larsen, 4,260 shares vest on April 1, 2024; 4,260 shares vest on April 1, 2025; 4,262 shares vest on April 1, 2026; and 3,969 shares vest on April 1, 2027. For Mr. Knutson, 21,521 shares vest on April 1, 2024; 12,687 shares vest on April 1, 2025; 9,725 shares vest on April 1, 2026; and 4,960 shares vest on April 1, 2027. (2)The market value of the unvested shares has been computed using the closing price of our Common Stock of $26.73 on January 31, 2024 (the last day of fiscal 2024).

  50. Option Exercises and Stock Vested for Fiscal 2024

    Option Exercises and Stock Vested for Fiscal 2024

  51. Option Exercises and Stock Vested for Fiscal 2024

    | | 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 | — | — | 294 | 8,952 | | Bryan Knutson | — | — | 21,071 | 641,612 |

  52. Option Exercises and Stock Vested for Fiscal 2024

    (1)Represents shares of restricted stock as to which the risk of forfeiture lapsed on April 1, 2023. (2)Calculated based on the closing share price of our Common Stock of $30.45 on April 1, 2023, the date the risk of forfeiture lapsed with regard to Mr. Larsen's 294 shares of restricted stock and Mr. Knutson's 21,071 shares of restricted stock.

  53. 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 in connection with his service as of Executive Chairman of the Board of Directors, effective as of February 1, 2024. Other than the 12-month contractual obligation of the employment agreement, we are not otherwise required to pay any severance to Mr. Meyer upon a termination of the 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, 2024, (not following a "change in control"), Mr. Larsen would have been entitled to a severance payment of $557,188 (paid in equal monthly installments over 12 months) calculated as follows: the sum of (i) the current base salary of $420,000, plus (ii) the amount of the average annual incentive bonus paid in the three years preceding termination of $137,188. 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 $2,083.35 per month). Assuming a termination date of January 31, 2024, the value of the non-vested equity awards that would continue to vest over the established vesting schedules would be $447,754, calculated based upon the closing price of our Common Stock on January 31, 2024 of $26.73. 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, 2024 following a "change in control", he would have been entitled to a severance payment of $1,114,377 (paid in equal monthly installments over 24 months) calculated as follows: two times the sum of (i) the current base salary of $420,000, plus (ii) the amount of the average annual incentive bonus paid in the three years preceding termination of $137,188. 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 $2,083.35 per month). Assuming a termination date of January 31, 2024, the value of the equity awards that would vest on a change in control would be $447,754, calculated based upon the closing price of our Common Stock on January 31, 2024 of $26.73. 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, 2024 on account of his death or disability, the value of the restricted stock awards that would have vested would be $447,754.

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

    We are also party to an employment agreement with Mr. Knutson, effective February 1, 2024, 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 or such fewer number of years during which he has been employed in his current position or if he has not yet received an incentive bonus in his current position then the target bonus under his employment agreement (100% of base salary); (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, 2024, (not following a "change in control"), and assuming the application of the terms of Mr. Knutson's current employment agreement, which became effective on February 1, 2024, Mr. Knutson would have been entitled to a severance payment of $1,075,296 (paid in equal monthly installments over 12 months) calculated as follows: the sum of (i) the current base salary of $575,000, plus (ii) the amount of the target incentive bonus of $575,000 (the target incentive is used if he has not been paid an incentive bonus while holding his current position, thereafter it would be the average of the incentive payment over the preceding three years or lesser number of years that he has served). 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 $765.00 per month). Assuming a termination date of January 31, 2024 and the application of the terms of his current agreement (effective February 1, 2024), the value of the non-vested equity awards that would vest following the termination would be $1,306,910, calculated based upon the closing price of our Common Stock on January 31, 2024 of $26.73 (the actual vesting date and corresponding value of stock would be as of the first day following the release having become effective). 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 or such lesser number of years served, or if he has not yet received an incentive bonus in his current position then the target bonus under his employment agreement (100% of base salary). 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, 2024 following a "change in control", under the terms of his current employment agreement effective February 1, 2024, he would have been entitled to a severance payment of $2,150,592 (paid in equal monthly installments over 24 months) calculated as follows: two times the sum of (i) the current base salary of $575,000, plus (ii) the amount of the target annual incentive bonus of $575,000. 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 $765 per month). Assuming a termination date of January 31, 2024, the value of the equity awards that would vest following a change in control would be $1,306,910, calculated based upon the closing price of our Common Stock on January 31, 2024 of $26.73. 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 President and Chief Executive 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, 2024 on account of his death or disability, the value of the restricted stock awards that would have vested would be $1,306,910 .

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

    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 and non-solicitation 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.

  56. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE

  57. Pay Versus Performance Table for Fiscal 2024

    Pay Versus Performance Table for Fiscal 2024 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.

  58. Pay Versus Performance Table for Fiscal 2024

    | 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 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) | | | | 2024 | 503,959 | 503,959 | 1,239,900 | 842,774 | 218.92 | 157.55 | 112,441 | 146,926 | | 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 |

  59. Pay Versus Performance Table for Fiscal 2024

    (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for David J. Meyer (our former Chief Executive Officer and current Executive Chairman of the Board of Directors) for each corresponding year in the “Total” column of the “Summary Compensation Table for Fiscal 2024.” (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 fiscal year. (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 in each of fiscal years 2021-2024. 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) and Bryan Knutson (our President and COO) for fiscal year 2024; Mr. Larsen, Mr. Knutson, 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 average “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 and Bryan Knutson for fiscal year 2024; 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. 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:

  60. Pay Versus Performance Table for Fiscal 2024

    | 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 | | 2024 | 1,239,900 | (472,503) | 75,377 | 842,774 | | 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 |

  61. Pay Versus Performance Table for Fiscal 2024

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

  62. Pay Versus Performance Table for Fiscal 2024

    | 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 | | 2024 | 477,144 | (257,660) | — | (144,107) | — | — | 75,377 | | 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 |

  63. Pay Versus Performance Table for Fiscal 2024

    (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. In fiscal 2024, the results of the new Australian segment acquired in October 2023 were not included in the Adjusted Pre-Tax Income calculation. In fiscal 2023, the results of the Ukrainian entity were not included in the Adjusted Pre-Tax Income calculation due to the conflict between Russia and Ukraine. In years prior other items, such as fixed asset impairments, intangible asset impairments, and the foreign currency gain or loss of the hryvnia, Ukraine's local currency, was excluded as gains or losses that occurred outside of the ordinary course of business. 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.

  64. 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 2024.” Compensation Actually Paid and Cumulative TSR As demonstrated by the following graph, the amount of compensation actually paid to Mr. Meyer was essentially flat, since he only received a base salary that was fairly constant throughout the four year period, 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 cumulative TSR over the four years presented in the “Pay Versus Performance Table for Fiscal 2024.” 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 four years presented in the “Pay Versus Performance Table for 2024,” 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’s 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 essentially flat, since he only received a base salary that was fairly constant throughout the four-year period. 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 four years presented in the “Pay Versus Performance Table for 2024.” 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 for the applicable time periods. 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 essentially flat, since he only received a fairly constant base salary ($475,000 for the entire period up until June 1, 2023, when his base salary increased to $500,000). 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 four years presented in the “Pay Versus Performance Table for 2024.”

  65. 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 in fiscal year 2024 and current Executive Chairman of the Board of Directors. For fiscal 2024: •the annual total compensation of the employee identified at median of our Company (other than our Chief Executive Officer) was $84,830; and •the annual total compensation of our Chief Executive Officer for purposes of determining the CEO pay ratio was $514,172. Based on this information, for fiscal 2024, 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 6.1 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. For purposes of calculating our CEO pay ratio in fiscal 2024, we used the same median employee that we had initially identified in fiscal 2023. 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: •When we determined our median employee as of December 31, 2022 (the date as of which we last identified our median employee, which, as permitted by SEC rules and subject to certain exceptions, only needs to be identified every three years), 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 international 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 international 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. •As permitted by SEC rules, the employee population does not include the 356 employees of J.J. O'Connor & Sons Pty. Ltd., who became our employees upon the closing of our acquisition of J.J. O'Connor & Sons Pty. Ltd. in October 2023. •Compensation paid in foreign currencies was converted to U.S. dollars based on exchange rates in effect on December 31, 2023. •We did not annualize the pay of employees who were not employed by us for the entire fiscal year. 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 2024 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.