DEF 14A of NWPX Infrastructure, Inc.
Filed Apr 24, 2025 · FY20240001437749-25-012966
PROXY SUMMARY
| Name | Principal Position | Salary | Stock Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | Scott Montross | Director, President, and CEO | $727,846 | $1,075,635 | $1,363,842 | $1,548 | $3,168,871 | | Aaron Wilkins | Senior Vice President (“SVP”), CFO, and Corporate Secretary | 430,000 | 400,034 | 483,442 | 15,108 | 1,328,584 | | Miles Brittain | Executive Vice President | 430,000 | 400,034 | 483,442 | 17,136 | 1,330,612 | | Eric Stokes | SVP and General Manager (“GM”) of SPP | 357,616 | 347,216 | 335,051 | 14,627 | 1,054,510 | | Michael Wray | SVP and GM of Precast | 357,616 | 347,216 | 335,051 | 15,587 | 1,055,470 |
PROPOSAL #1: ELECTION OF DIRECTORS
PROPOSAL #1: ELECTION OF DIRECTORS
PROPOSAL #1: ELECTION OF DIRECTORS
| | YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL. |
PROPOSAL #1: ELECTION OF DIRECTORS
At the Annual Meeting, two directors will be elected, each to serve for a three-year term. Unless otherwise specified on the proxy, it is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy for the election of the nominees named below. The Board of Directors believes that the nominees will stand for election and will serve if elected as a director. However, if the person nominated by the Board fails to stand for election or is unable to accept election, the proxies will be voted for the election of such other person as the Board may recommend. The Company’s Articles of Incorporation and Bylaws provide that the Board of Directors shall be composed of not less than six and not more than nine directors. The size of the Board is currently fixed at seven directors. Under the Company’s Articles of Incorporation and Bylaws, the Company’s directors are divided into three classes, with each class to be as nearly equal in number as possible. The term of office of only one class of directors expires each year, and their successors are generally elected for terms of three years, and until their successors are elected and qualified. The term of a director elected by the Board to fill a vacancy expires at the next annual shareholders’ meeting. There is no cumulative voting for election of directors. The Nominating and Governance Committee has responsibility for identifying director nominees who collectively have the complementary experience, qualifications, skills, and attributes to guide the Company and function effectively as a Board. The Nominating and Governance Committee believes that the nominees presented in this proxy have the key personal attributes that are important to an effective Board of Directors: integrity, candor, analytical skills, willingness to engage management and each other in a constructive and collaborative fashion, and ability and commitment to devote significant time and energy to serve on the Board and its committees. The Company considers the following specific experiences, qualifications, and skills to be critical in light of its strategic priorities, business objectives, operations, and structure. DIRECTOR SKILLS AND QUALIFICATIONS STRATEGIC SKILLS Industries, End Markets, and Growth Areas. Experience in industries, end markets, and growth areas that the Company serves enables a better understanding of the issues facing these businesses. Manufacturing Experience. Growing sales outside of the engineered steel pressure pipe water transmission market, particularly in the precast concrete and engineered solutions market, is one of the Company’s long-term growth strategies. Hence, exposure to manufacturing economies is an important qualification for Company directors. Regulated Industries/Government Experience. The Company’s customers and project stakeholders are subject to a broad array of government regulations, and demand for products and services can be impacted by changes in law or regulation in areas such as safety, environmental, and energy efficiency. It is important to have directors with experience in government and regulated industries that provide insight and perspective in working constructively and proactively with governments and municipalities.
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Innovation and Technology. The Company strives to lead the industry in water transmission and infrastructure innovation. Expertise in product development, testing, and introduction is critical to continuing new growth paths for the Company’s business. Artificial Intelligence. Experience with artificial intelligence provides valuable perspectives surrounding future investments in automation from the back office to the production floor as the Company builds out its technology infrastructure. Human Capital. The Company is committed to developing its human capital, including culture, health, and safety. Experience managing a large workforce brings understanding to the oversight of one of the Company’s key resources. Marketing. Driving growth in existing and new markets is critical for Company growth. The Company’s directors who have that expertise and a much-desired perspective in marketing will aid in delivery of the Company’s products and services. Environmental/Sustainability. Manufacturing efficiency includes reducing environmental impact through all areas of the business. Experience in climate and sustainability-related strategic planning, risk mitigation, and management can help the Company identify value-creation strategies and creation of goals that will have the most impact. CORE COMPETENCIES Senior Leadership Experience. Experience serving as CEO or a senior executive as well as hands-on leadership experience in core management areas – such as strategic and operational planning, financial reporting, compliance, risk management, and leadership development – provide a practical understanding of complex organizations. Risk Management. In light of the Board of Directors’ role in risk, the Company seeks directors who can help identify, manage, and mitigate key risks, including cybersecurity, regulatory compliance, competition, brand integrity, human capital, climate change, and intellectual property. Financial Expertise. The Company believes an understanding of finance and financial reporting processes is important for its directors to enable them to monitor and assess the Company’s operating and strategic performance and to ensure accurate financial reporting and robust controls. Northwest Pipe Company seeks directors with background and experience in capital markets, corporate finance, mergers and acquisitions, accounting, and financial reporting. Cybersecurity. Experience in cybersecurity, intelligence, and data protection, including U.S. cybersecurity policy and the U.S. Government’s cybersecurity efforts and cybersecurity threats, contribute to the Board of Directors’ oversight of cybersecurity risks. Public Company Board Experience. Service on the boards and board committees of other public companies provides an understanding of corporate governance practices and trends and insights into board management, relations between the board, the CEO, and senior management, agenda setting, and succession planning.
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BOARD SKILLSET MATRIX
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| | Scott Montross (CEO) | Michael Franson (Lead Director) | Amanda Julian | Keith Larson | Irma Lockridge | John Paschal | Richard Roman (Chairperson) | | Strategic Skills | | | | | | | | | Industries, End Markets, and Growth Areas | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Manufacturing Experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Regulated Industries/Government Experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Innovation and Technology | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Artificial Intelligence | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Human Capital | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Marketing | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Environmental/Sustainability | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Core Competencies | | | | | | | | | Senior Leadership Experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Risk Management | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Financial Expertise | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Cybersecurity | ■ | ■ | ■ | ■ | ■ | ■ | ■ | | Public Company Board Experience (current | past) | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
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| ■ | Technical Expertise (direct hands-on experience or subject-matter expert during his/her career) | | ■ | Managerial Expertise (expertise derived through direct managerial experience) | | ■ | Working Knowledge (experience derived through serving as a member of a relevant board committee or serving as an executive officer or on the board of a public company in the relevant industry) |
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NOMINEES AND CONTINUING DIRECTORS The following table sets forth the names of and certain information about the Board of Directors’ nominees for election as a director and those directors who will continue to serve after the Annual Meeting.
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| | | Director | Expiration of | Expiration of | | Nominees | Age | Since | Current Term | Nominated Term | | Michael Franson | 70 | 2016 | 2025 | 2028 | | Irma Lockridge | 52 | 2023 | 2025 | 2028 | | Continuing Directors | | | | | | Amanda Julian | 49 | 2020 | 2027 | | | Keith Larson | 67 | 2007 | 2027 | | | Scott Montross | 60 | 2013 | 2026 | | | John Paschal | 66 | 2019 | 2026 | | | Rich Roman | 73 | 2003 | 2027 | |
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NOMINEES FOR DIRECTOR MICHAEL FRANSON
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| Years of Service: 20 Age: 70 Committees: • Audit Committee • Compensation Committee - Chairperson Independent: Yes Other directorships: None LEAD DIRECTOR | Specific Experience, Qualifications, Attributes, and Skills: | | | | • | Significant management and finance experience gained through senior leadership positions | | | • | Extensive experience with merger and acquisition transactions | | | • | Expertise in information technology | | | • | Deep understanding of corporate finance including investment banking, financial analysis, capital fundraising, and financial advisory services | | | Board of Director Tenure: | | | | Michael Franson has been a director of the Company since August 2016. Mr. Franson previously served on the Board from 2001 until 2005, and again from 2007 until 2014. | | | | Business Experience: | | | | Mr. Franson has served as an independent consultant advising clients on mergers and acquisitions and strategic financial matters since July 2016 and as a Senior Advisor for Harrison Co., a boutique investment banking firm, since 2021. From 2014 to 2016, Mr. Franson was Managing Director and Global Head of Technology M&A at KPMG Corporate Finance LLC. From 2005 to 2014, Mr. Franson was a co-founder and President of St. Charles Capital LLC, an investment banking firm focused on mergers and acquisitions, raising private capital, and providing financial advisory services. From 2000 to 2005, Mr. Franson was a Managing Director at the Wallach Company, which was subsequently sold to KeyCorp, the parent of KeyBanc Capital Markets. | | | | Education: | | | | Mr. Franson holds a BS in Marketing from California State University at Chico and an MBA in Finance from the University of Oregon, Charles H. Lundquist College of Business. | |
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IRMA LOCKRIDGE
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| Years of Service: 2 Age: 52 Committees: • Compensation Committee • Nominating and Governance Committee Independent: Yes Other Directorships: Trinity Capital (NASDAQ: TRIN) | Specific Experience, Qualifications, Attributes, and Skills: | | | | • | Extensive experience in human resources, talent management, organizational design, and executive compensation | | | • | Strong experience in strategy development, systems, and corporate communication | | | • | Deep expertise in leadership development, succession planning, fostering corporate culture, and workplace belonging | | | • | Broad experience in financial management, information technology systems, cybersecurity, and manufacturing processes | | | Board of Director Tenure: | | | | Irma Lockridge has been a director of the Company since February 2023. | | | | Business Experience: | | | | Ms. Lockridge has served as the Chief People and Systems Officer at CoorsTek, a global engineered ceramics manufacturer, since April 2016. Ms. Lockridge’s responsibilities include leading the human resources function, corporate communications, and information systems. Prior to CoorsTek, Ms. Lockridge served as senior vice president of human resources in several businesses including Newell Brands, Western Union, TeleTech, and Colorado Casualty/Liberty Mutual Insurance. Ms. Lockridge has previous experience on both publicly traded and private company boards and currently serves on the board of directors of Trinity Capital. | | | | Education: | | | | Ms. Lockridge holds a BA in Management from the Wharton Business School at the University of Pennsylvania and has attended several leadership academies at the Harvard Business School. | |
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CONTINUING DIRECTORS AMANDA JULIAN, PHD, MA
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| Years of Service: 5 Age: 49 Committees: • Environmental and Social Governance Committee - Chairperson • Nominating and Governance Committee Independent: Yes Other directorships: None | Specific Experience, Qualifications, Attributes, and Skills: | | | | • | Extensive experience with organizational development and strategic human capital | | | • | Deep experience in strategic planning, communications, leadership management, and finance gained through senior leadership positions | | | • | Broad experience with corporate governance issues | | | Board of Director Tenure: | | | | Amanda Julian has been a director of the Company since July 2020. | | | | Business Experience: | | | | Ms. Julian has been a senior partner of NeoPsy Systems, a firm specializing in management and organizational psychology, since June 2001. Ms. Julian has over 20 years of experience working with investors and top-level senior executives in building great companies. Ms. Julian provides investor and management teams with an understanding of how to maximize leadership effectiveness and build value creation through long-term strategic planning. Specifically, Ms. Julian specializes in applied research to assist in executive selection, executive development, organizational assessment, and strategic planning. | | | | Education: | | | | Ms. Julian holds a PhD and MA in Industrial Psychology from Bowling Green State University and obtained her undergraduate degree from the University of Colorado Boulder. | |
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KEITH LARSON
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| Years of Service: 18 Age: 67 Committees: • Audit Committee - Chairperson • Compensation Committee • Environmental and Social Governance Committee Independent: Yes Other directorships: AST SpaceMobile, Inc. (NASDAQ:ASTS) | Specific Experience, Qualifications, Attributes, and Skills: | | | | • | Extensive management, operational, technology, networking, and cybersecurity experience as well as corporate governance for a multinational public company | | | • | Deep understanding of public policy and global economic indicators, risk assessment, and financial administration gained through leadership positions in Asia and western Europe | | | • | Significant expertise in manufacturing, product design, and supply chain management | | | Board of Director Tenure: | | | | Keith Larson has been a director of the Company since May 2007. | | | | Business Experience: | | | | Mr. Larson recently joined the board of directors of AST SpaceMobile, Inc., which is creating a space-based cellular broadband network. Mr. Larson served on the board of directors of Rogers Corporation, a publicly-held company, from December 2020 to May 2023, and is an advisor to other privately-held companies. Mr. Larson was a Vice President of Intel Corporation and Senior Managing Director of Intel Capital, until his retirement after 22 years in April 2019. As a Managing Director of Intel Capital, Mr. Larson managed a team of investment professionals focused on identifying, making, and managing strategic investments. Mr. Larson formerly served on the board of regents of a university and on a state government council, which oversaw approximately $80 billion in investments. | | | | Education: | | | | Mr. Larson attended UCLA and holds a BS in Business Administration, Accounting (Cum Laude) from the University of Southern California. | |
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SCOTT MONTROSS
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| Years of Service: 12 Age: 60 Committees: None Independent: No Other directorships: None | Specific Experience, Qualifications, Attributes, and Skills: | | | | • | Extensive commercial and operational experience in the steel industry through various executive positions and his current tenure as the Company’s President and CEO | | | • | In-depth understanding of industry manufacturing, critical infrastructure, product design and development, and supply chain logistics | | | • | Significant management and finance experience including corporate reporting, accounting, controls, and mergers and acquisitions | | | Board of Director Tenure: | | | | Scott Montross has been a director of the Company since January 2013. | | | | Business Experience: | | | | Mr. Montross has served as President and CEO of the Company since January 2013. Mr. Montross joined the Company in May 2011 and served as the Company’s Executive Vice President and Chief Operating Officer until December 2012. Prior to joining the Company, Mr. Montross spent a total of 24 years in the steel industry. Mr. Montross served as Executive Vice President, Flat Products Group for EVRAZ North America’s Oregon Steel Division from 2010 to 2011, as Vice President and General Manager of EVRAZ North America from 2007 to 2010, as Vice President of Marketing and Sales for Oregon Steel Mills, Inc. from 2003 to 2007, and as Vice President of Marketing and Sales for National Steel Corporation from 2002 to 2003. | | | | Education: | | | | Mr. Montross holds a BA in Liberal Arts from Colgate University. | |
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JOHN PASCHAL
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| Years of Service: 6 Age: 66 Committees: • Environmental and Social Governance Committee • Nominating and Governance Committee - Chairperson Independent: Yes Other directorships: None | Specific Experience, Qualifications, Attributes, and Skills: | | | | • | Extensive understanding of the steel manufacturing industry | | | • | Broad experience with human capital, operations, and governance issues gained through hands-on leadership | | | • | Significant expertise in manufacturing, product design and development, supply chain, and logistics | | | Board of Director Tenure: | | | | John Paschal has been a director of the Company since August 2019. | | | | Business Experience: | | | | Mr. Paschal was the President of the Temtco Steel Division of Kloeckner Metals Corporation until his retirement in December 2020. Mr. Paschal and his late uncle, Bill Taylor of Taylor Machine Works, co-founded Temtco Steel in 1979 with an emphasis on high-strength steel and value-added services. Temtco Steel was sold to Kloeckner Metals in 2008. | | | | Education: | | | | Mr. Paschal holds a BS in Business Administration from Mississippi State University. | |
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RICHARD ROMAN
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| Years of Service: 22 Age: 73 Committees: • Audit Committee Independent: Yes Other directorships: None CHAIRPERSON | Specific Experience, Qualifications, Attributes, and Skills: | | | | • | Extensive understanding of Company organization through previous tenure as the Company’s President and CEO | | | • | Deep experience in corporate finance, insurance and risk management, mergers and acquisitions, capital markets, government regulations, and employee benefits | | | • | Significant expertise in manufacturing operations, budgeting, planning, strategy, communications, and regulatory issues | | | Board of Director Tenure: | | | | Richard Roman has been a director of the Company since January 2003 and the Chairperson of the Board since January 2013. | | | | Business Experience: | | | | Mr. Roman served as the Company’s CEO from March 2010 until December 2012 and as the Company’s President from October 2010 until December 2012. Previously, Mr. Roman was the President of Columbia Ventures Corporation, a private investment company which historically has focused principally on the international metals and telecommunications industries. Prior to joining Columbia Ventures Corporation in 1992, Mr. Roman was a partner at Coopers & Lybrand, an independent public accounting firm. | | | | Education: | | | | Mr. Roman holds a BA in History and Economics from Grinnell College and an MBA from the University of Chicago. | |
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BOARD COMPOSITION The Company’s Corporate Governance Principles specify that the criteria used by the Nominating and Governance Committee in the selection, review, and evaluation of possible candidates for vacancies on the Board of Directors should include factors relating to whether the candidate would meet the definition of “independent” as well as skills, occupation, and experience in the context of the needs of the Board. All candidates for election to the Board must be individuals of character, integrity, and honesty. The Company does not have a formal policy with respect to the consideration of diversity in identifying director candidates; however, the Company seeks a breadth of experience and perspectives that come from board members who possess a variety of professional backgrounds, lived experiences, and skills. From time to time, the Nominating and Governance Committee has employed a third party to help identify or screen prospective directors and may continue to do so at its discretion. The Company also believes a range of service tenures on the Board of Directors facilitates more comprehensive Board oversight. Directors with extended periods of service to Northwest Pipe Company provide the Board with a deep knowledge of the Company, while newer directors lend fresh perspectives.
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DIRECTOR COMPENSATION The Compensation Committee is responsible for recommending to the Board of Directors the level and form of compensation and benefits for directors. Mr. Montross, as a member of the Board who is also an employee, does not receive additional compensation for serving as director. In June 2024, the Compensation Committee, with the assistance of management, considered broad market-based survey data and recommended that certain nonemployee director compensation elements be increased. For nonemployee directors, the Compensation Committee has approved the following director compensation:
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| | Effective Prior to | Effective | | Director Positions | June 2024 | June 2024 | | Chairperson of the Board annual retainer | $125,000 | $135,000 | | Annual retainer, except for Chairperson of the Board | 55,000 | 65,000 | | Lead Director | 25,000 | 25,000 | | Audit Committee Chairperson | 20,000 | 20,000 | | Audit Committee non-chair member | 8,000 | 10,000 | | Compensation Committee Chairperson | 12,000 | 15,000 | | Compensation Committee non-chair member | 6,125 | 7,500 | | Environmental and Social Governance Committee Chairperson | 10,000 | 10,000 | | Environmental and Social Governance Committee non-chair member | 5,000 | 5,000 | | Nominating and Governance Committee Chairperson | 10,000 | 10,000 | | Nominating and Governance Committee non-chair member | 5,000 | 5,000 |
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In addition, each nonemployee director receives an annual award of $80,000 payable solely in shares of the Company’s Common Stock pursuant to the Company’s equity incentive plan. The members of the Board of Directors are also reimbursed for travel expenses incurred in attending board meetings and out-of-pocket expenses related to board education. DIRECTOR COMPENSATION TABLE The following table reflects compensation earned by the directors for the year ended December 31, 2024, with the exception of Mr. Montross, CEO, whose compensation is included in the Summary Compensation table on page 40.
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| Name | Fees Earned or Paid in Cash | Stock Awards (1) | Total | | Michael Franson | $107,500 | $80,000 | $187,500 | | Amanda Julian | 75,000 | 80,000 | 155,000 | | Keith Larson | 91,813 | 80,000 | 171,813 | | Irma Lockridge | 71,813 | 80,000 | 151,813 | | John Paschal | 75,000 | 80,000 | 155,000 | | Richard Roman | 139,000 | 80,000 | 219,000 |
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| (1) On June 13, 2024, 2,404 shares of Common Stock were granted to Mss. Julian and Lockridge and Messrs. Franson, Larson, Paschal, and Roman. The amount included in this column represents the amount recognized by the Company in 2024 for financial statement reporting purposes for the fair value of the Common Stock awarded. The assumptions used to calculate the grant date fair value for the stock awards are in Note 14 of the Notes to Consolidated Financial Statements in Part II – Item 8. “Financial Statements and Supplementary Data” of the 2024 Annual Report to Shareholders. |
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PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
| | WHAT THE COMPANY DOES | | WHAT THE COMPANY DOESN’T DO | | ✔ | Pay for Performance. The Company closely aligns pay and performance, with a significant portion of target total direct compensation at-risk. The Compensation Committee validates this alignment annually and ensures performance-based compensation represents a significant portion of executive compensation. | ✘ | No Guaranteed Annual Salary Increases or Bonuses. Annual salary increases are based on evaluations of individual performance and the competitive market. In addition, the Company does not provide guarantees on cash bonus or incentive stock awards. | | ✔ | Robust Performance Goals. The Company establishes clear and measurable financial goals as well as safety targets and holds its executives accountable for achievement to earn a payout under the incentive plans. The Company uses operational metrics for incentive compensation plans and performance-based long-term incentives to drive top- and bottom-line growth over multiple time frames. | ✘ | No Excise Tax Gross-Ups and No Accelerated Bonus Payments Upon Change in Control (“CIC”). Excise tax gross-ups are not provided for any executive officers. Plans provide that stock awards outstanding upon a CIC would be paid based on time/performance through the CIC dates. | | ✔ | Claw Back Practices. Require the recoupment of incentive compensation from Section 16 officers for a financial restatement consistent with Nasdaq listing standards. | ✘ | No Excessive Risks. Compensation practices are appropriately structured and avoid incentivizing employees to engage in excessive risk-taking. | | ✔ | Maximum Payout Caps for Incentive Plans. Annual cash incentive compensation plan and equity performance plan payouts are capped. | ✘ | No Incentivizing of Short-Term Results to the Detriment of Long-Term Goals and Results. Pay mix is heavily weighted toward long-term incentives aligned with shareholder interests. | | ✔ | Robust Stock Ownership Requirements. The Company requires executive officers to hold meaningful amounts of stock in multiple(s) of annual salary. | ✘ | No Excessive Perks. The Company does not provide perquisites except in cases where there is a compelling business or security reason. | | | | ✘ | No Hedging or Pledging. The Company does not allow directors, officers, or employees to hedge or pledge its stock. |
Process for Setting Executive Compensation
| • | The Compensation Committee exercises business judgment in determining the appropriate level and mix of executive compensation; cash compensation is used to provide a base salary, and to incentivize and reward executives based on their contributions to the Company, and equity-based compensation is used to tie the interests of the executives to the interests of the Company’s shareholders. There is no pre-established policy or target for the allocation between either cash and noncash or short-term and long-term incentive compensation, which enables the Compensation Committee the flexibility to adjust allocations dynamically as business conditions warrant. | | • | The Compensation Committee uses qualitative individual performance objectives as a factor in making its decisions. The Compensation Committee and the CEO annually review the performance of each executive officer (other than the CEO whose performance is reviewed by the Compensation Committee after an evaluation from the Chairperson). Based on these reviews, the Compensation Committee makes compensation decisions, including salary adjustments and annual discretionary incentive compensation awards, for the executive officers. | | • | The Compensation Committee evaluates and considers the Company’s annual performance within the context of its long-term strategic plan, identifying areas in which expectations were exceeded, achieved, or fell below stated goals. The structure of all incentive compensation plans is reviewed periodically to assure their linkage to the current objectives, strategies, and performance goals. Compensation practices are appropriately structured and avoid incentivizing employees to engage in excessive risk-taking. | | • | The Compensation Committee evaluates and considers a variety of growth and profitability measures relative to historical performance and future internal plans for awarding performance-based cash incentive compensation. | | • | The Compensation Committee evaluates and considers performance criteria for awarding equity incentive awards. | | • | The Compensation Committee generally does not utilize specific benchmark levels. Rather, the Compensation Committee considers broad, market-based survey data of comparable companies, such as that provided by Mercer LLC, Equilar, CompAnalyst, Willis Towers Watson, and WorldatWork.org, in addition to the review of the proxy data of peer companies when assessing the competitiveness of compensation levels and pay mix for the CEO, CFO, and other executives. | | • | From time to time, the Compensation Committee has retained independent consultants to advise the Committee on executive or director compensation matters, to assess total compensation program levels and program elements for executive officers or directors, and to evaluate marketplace trends in executive or director compensation. The Compensation Committee retained an independent consultant, Willis Towers Watson, in 2024 to perform a market review of executive compensation and incentive plans. |
Performance-Based Cash Incentive Compensation
Performance-Based Cash Incentive Compensation Northwest Pipe Company provides incentive compensation to retain, incentivize, and reward employees for high performance and achievement of corporate goals. The incentive compensation program provides for an award of cash incentive compensation to executive officers and others as a reward for the Company’s growth, profitability, and safety performance, and places a significant percentage of each executive officer’s compensation at risk. Awards are based on the Company’s achievement of certain financial performance measures and total recordable incident rate. In 2024, each Named Executive Officer was awarded a short-term incentive plan providing for cash payments for the achievement of certain levels of adjusted income before income taxes and total recordable incident rate for the 2024 fiscal year. Adjusted income before income taxes is calculated by adjusting the Company’s income before income taxes as reported in its audited financial statements for certain events that occur during the year, such as the acquisition of businesses, the sales of significant capital assets, or other extraordinary or unusual developments. For 2024, there were no adjustments to the Company’s income before income taxes. The Company’s total recordable incident rate is calculated in accordance with OSHA’s record keeping requirements. The following scale shows the payout as a percentage of base salary that may be awarded. Payouts for performance between the rankings are interpolated on a straight-line basis:
Performance-Based Cash Incentive Compensation
| 90% of Payout Based on Adjusted Income Before Income Taxes Performance in 2024 | 10% of Payout Based on Total Recordable Incident Rate Performance in 2024 | Payout as a Percentage of Base Salary for the CEO | Payout as a Percentage of Base Salary for the CFO and Executive Vice President | Payout as a Percentage of Base Salary for the other NEOs | | > $44,850,000 | < 2.4 | 200% | 120% | 100% | | $34,500,000 | 2.7 | 100% | 60% | 50% | | $17,250,000 | 3.2 | 50% | 30% | 25% | | < $17,250,000 | > 3.2 | 0% | 0% | 0% |
Performance-Based Cash Incentive Compensation
The 2024 short-term incentive plan also included a shared free cash flow (“FCF”) goal providing for a payout modifier for the achievement of certain levels of FCF. FCF is calculated as cash flows from operating activities less purchases of property and equipment. The following scale shows the modifier as a percentage of the short-term incentive plan payout calculated before the application of the FCF goal.
Performance-Based Cash Incentive Compensation
| Free Cash Flow in 2024 | Modifier of Short-term Incentive Plan Payout Before Application of the FCF Goal | | > $29,000,000 | 5% | | $22,000,000 to $29,000,000 | 0% | | $11,000,000 to $22,000,000 | -5% | | < $11,000,000 | -10% |
Performance-Based Cash Incentive Compensation
Cash payments under this short-term incentive plan were made in March 2025, and were determined by multiplying base salary times the payout percentage of 187.4% for Mr. Montross, 112.4% for Messrs. Wilkins and Brittain, and 93.7% for Messrs. Stokes and Wray. Performance-based cash incentive compensation is reflected in the ‘Non-Equity Incentive Plan Compensation’ column in the Summary Compensation table on page 40.
Performance-Based Cash Incentive Compensation
| | PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Equity Incentive Awards
Equity Incentive Awards Northwest Pipe Company provides equity incentive awards to executive officers and certain designated key employees. The equity incentive awards are designed to ensure that the executive officers and key employees have a continuing stake in the Company’s success. In addition, the awards emphasize pay-for-performance. Terms and conditions of the awards are determined on an annual basis by the Compensation Committee. When granted, RSUs are service-based and entitle the holder to receive Common Stock at the end of the vesting period (generally over periods up to three years), subject to continued employment. RSUs are designed to attract and retain executive officers and others by providing them with the benefits associated with the increase in the value of the Common Stock during the vesting period, while incentivizing them to remain with the Company long-term. When granted, PSAs are service-based awards with a performance-based vesting condition. PSAs serve several purposes. They have value to the holder only if the goals are achieved during their performance measurement period, and they serve as a retention tool because the performance measurement periods generally extend over one year. Additionally, the holders benefit further if they are successful in increasing the value of the Company’s Common Stock. When PSAs are granted, they typically include vesting conditions that entitle the holder to receive between zero and 200 percent of the target award. In 2024, each Named Executive Officer received an award of PSAs and RSUs valued at an amount equal to a specific percentage of their respective annual base salary, with 75 percent of each award represented by PSAs and 25 percent of each award represented by RSUs. The PSAs awarded in 2024 will vest based on the Company’s EBITDA Margin before extraordinary or unusual items (“EBITDA Margin Performance”) over the measurement period. The following scale shows the adjustment to the number of PSAs that may be awarded following the measurement period with payouts for performance between the rankings interpolated on a straight-line basis:
Equity Incentive Awards
| EBITDA Margin Performance | Payout as a Percentage of Target Award | | > 16.9% | 200% | | 12.0% | 100% | | 9.0% | 50% | | < 9.0% | 0% |
Equity Incentive Awards
One-third of the PSAs awarded in 2024 vested on March 31, 2025 based on EBITDA Margin Performance for the 2024 fiscal year; the actual number of shares of Common Stock that were issued was determined by multiplying the PSAs by a payout percentage of 133%. One-third of the PSAs will vest on March 31, 2026 based on EBITDA Margin Performance for the 2024-2025 fiscal years and one-third of the PSAs will vest on March 31, 2027 based on EBITDA Margin Performance for the 2024-2026 fiscal years. In the event a “change in control” of the Company (as defined in the Performance Share Unit Agreement) occurs at any time prior to March 31, 2027, the PSAs will become immediately vested for a number of shares based on the performance results obtained through the date of the change in control, unless provisions were made for the substitution, assumption, exchange, or other continuation or settlement of the PSAs, or if the Performance Share Unit Agreement would otherwise continue in accordance with its terms in the circumstances.
Equity Incentive Awards
| | PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Equity Incentive Awards
One-third of the RSUs awarded in 2024 vested on January 15, 2025, and one-third of the RSUs will vest on January 15, 2026 and January 15, 2027, based upon continued service with the Company on that date. In the event a “change in control” of the Company (as defined in the RSU Agreement) occurs at any time prior to January 15, 2027, a pro-rata number of RSUs will be calculated based on time elapsed between the most recently achieved vesting date and the next succeeding vesting date as of the date of the change in control, and those RSUs will be immediately vested, unless provisions were made for the substitution, assumption, exchange, or other continuation or settlement of the RSUs, or if the RSU Agreement would otherwise continue in accordance with its terms in the circumstances. Equity incentive awards are reflected in the ‘Stock Awards’ column in the Summary Compensation table on page 40. These amounts represent the target value of the award issued, but not what was actually received by the Named Executive Officer.
Insider Trading Policy
| Name and Principal Position | Year | Salary | Stock Awards (1) | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | Scott Montross | 2024 | $727,846 | $1,075,635 | $1,363,842 | $1,548(2) | $3,168,871 | | Director, President, | 2023 | 700,793 | 977,844 | 720,939 | 14,748(3) | 2,414,324 | | and CEO | 2022 | 642,675 | 977,851 | 899,745 | 13,748(3) | 2,534,019 | | Aaron Wilkins | 2024 | 430,000 | 400,034 | 483,442 | 15,108(4) | 1,328,584 | | SVP, CFO, and | 2023 | 391,250 | 365,012 | 241,499 | 12,270(4) | 1,010,031 | | Corporate Secretary | 2022 | 355,000 | 310,237 | 355,000 | 11,259(4) | 1,031,496 | | Miles Brittain | 2024 | 430,000 | 400,034 | 483,442 | 17,136(4) | 1,330,612 | | Executive Vice President | 2023 | 391,250 | 365,012 | 241,499 | 16,536(4) | 1,014,297 | | | 2022 | 358,750 | 310,237 | 358,750 | 14,696(4) | 1,042,433 | | Eric Stokes | 2024 | 357,616 | 347,216 | 335,051 | 14,627(3) | 1,054,510 | | SVP and GM of SPP | 2023 | 342,285 | 327,539 | 176,063 | 14,009(3) | 859,896 | | | 2022 | 322,905 | 278,411 | 322,905 | 12,954(3) | 937,175 | | Michael Wray | 2024 | 357,616 | 347,216 | 335,051 | 15,587(4) | 1,055,470 | | SVP and GM of Precast | 2023 | 338,575 | 312,709 | 174,154 | 14,958(4) | 840,396 | | | 2022 | 308,275 | 265,803 | 308,275 | 11,676(4) | 894,029 |
Insider Trading Policy
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | | Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO (1) | Average Summary Compensation Table Total for Non-PEO NEOs (2) | Average Compensation Actually Paid to Non-PEO NEOs (1) (2) | Total Shareholder Return (3) | Peer Group Total Shareholder Return (3) (4) | Net Income (in thousands) | Net Income Before Income Tax (in thousands) | EBITDA Margin (5) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (Supplemental) | | 2024 | $3,168,871 | $4,862,401 | $1,192,294 | $1,765,030 | $144.88 | $176.10 | $34,206 | $42,371 | 13.6% | | 2023 | 2,414,324 | 2,096,903 | 931,155 | 840,299 | 90.84 | 139.43 | 21,072 | 29,279 | 11.4 | | 2022 | 2,534,019 | 3,018,741 | 976,283 | 1,114,471 | 101.17 | 110.84 | 31,149 | 41,350 | 13.6 | | 2021 | 1,943,875 | 1,852,570 | 758,955 | 723,332 | 95.47 | 135.23 | 11,523 | 15,158 | 9.5 | | 2020 | 1,962,273 | 2,352,277 | 675,609 | 757,896 | 84.96 | 114.68 | 19,050 | 25,634 | 14.4 |
Insider Trading Policy
| (1) SEC rules require certain adjustments be made to the Summary Compensation table totals to determine “compensation actually paid” as reported in the Pay versus Performance Table. “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. In general, “compensation actually paid” is calculated as Summary Compensation table total compensation adjusted to include the fair market value of equity awards as of December 31 of the applicable year or, if earlier, the vesting date (rather than the grant date). NEOs do not participate in a defined benefit plan so no adjustment for pension benefits is included in the table below. The following table details these adjustments for 2024: |
Compensation Actually Paid and Total Shareholder Return
Compensation Actually Paid and Total Shareholder Return
Compensation Actually Paid and Total Shareholder Return
| | The Company achieved new annual records in revenue (under the current configuration of business segments), gross profit, and gross margin in 2024. Both of the Company’s operating segments posted record revenues. The operating results were driven by improved markets for steel pressure pipe and continued strength in demand for the Company’s precast concrete products in the Utah market. Compensation actually paid continues to move in relation with TSR. |
Compensation Actually Paid, Net Income, and Net Income Before Income Tax (“NIBT”)
Compensation Actually Paid, Net Income, and Net Income Before Income Tax (“NIBT”)
Compensation Actually Paid, Net Income, and Net Income Before Income Tax (“NIBT”)
| | Compensation actually paid continues to move in relation with the Company’s profitability. The design of the Company’s bonus programs are heavily weighted toward obtaining threshold, target, and maximum NIBT levels for the cash-based incentive compensation plan. In addition to NIBT, the Company has placed added emphasis on free cash flow and employee health and safety. In 2024, the Company achieved a new record in its safety performance. |
Compensation Actually Paid, Net Income, and Net Income Before Income Tax (“NIBT”)
| | PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Compensation Actually Paid and EBITDA Margin
Compensation Actually Paid and EBITDA Margin
Compensation Actually Paid and EBITDA Margin
| | In addition to cash-based incentive programs, the Company has set long-term goals associated with realizing improved EBITDA Margin, which is the metric for which the Company’s long-term share-based incentive compensation is measured. Since instituting greater focus on this metric, the Company has added new business units through the acquisitions of Geneva and ParkUSA, which due to greater diversification, has resulted in an enterprise with greater resilience to headwinds in markets or geographies. With the change to a fundamentally different company, the Compensation Committee has increased the compensation program’s target and maximum measures for the compensation program, maintaining an appropriate balance between rewarding employees and its valued shareholders. |
Compensation Actually Paid and EBITDA Margin
RELATIONSHIP BETWEEN TOTAL SHAREHOLDER RETURN OF THE COMPANY AND THE PEER GROUP
Compensation Actually Paid and EBITDA Margin
| | The Company chose its Peer Group based on relative size as well as industries served. Due to the broader product offerings at ParkUSA, the Company includes digital water companies, which tend to earn a higher trading valuation. The Company believes these peers are representative based on the strategic transformation that the Company aspires to realize from recent and future acquisitions coupled with organic growth of the ParkUSA products. Peer Group TSR is calculated from peer performance weighted on relative size based on market capitalization. Evaluated against the eleven peers, Northwest Pipe Company’s rankings excelled in 2024, ranking first for the single year as its share price increased to $48.26 at December 31, 2024 from $30.26 per share as of December 29, 2023. Over the five-year period, the Company ranked third in TSR and was outperformed by two larger peers. While proud of the Company’s record performance in 2024, the Company believes there is potential for greater shareholder returns when commercial construction markets in Texas stabilize. |
Compensation Actually Paid and EBITDA Margin
| | PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Compensation Actually Paid and EBITDA Margin
TABULAR LIST OF THE MOST IMPORTANT MEASURES The only performance measures used by the Company to link executive compensation actually paid to Company performance during the year ended December 31, 2024, in no particular order, are:
Compensation Actually Paid and EBITDA Margin
| • | Net Income Before Income Tax | | • | Earnings Before Interest, Income Taxes, Depreciation, and Amortization Margin (EBITDA Margin) | | • | Total Recordable Incident Rate | | • | Free Cash Flow |
Compensation Actually Paid and EBITDA Margin
POLICY REGARDING THE TIMING OF OPTION GRANTS The Company does not currently have any policies or practices on the timing of awards of options in relation to the disclosure of material nonpublic information by the Company because it does not generally award options. If the Company begins to award options, it will revisit whether a policy of this nature is appropriate. As a matter of general practice, the Company grants equity awards annually in late March or early April, and it does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Messrs. Franson and Larson and Ms. Lockridge served on the Compensation Committee in 2024. All members of the Committee were independent directors, and no member has ever been an officer or employee of the Company. During 2024, none of the executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on the Company’s Compensation Committee or Board. COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed the foregoing Executive Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee has recommended to the full Board of Directors that the Executive Compensation Discussion and Analysis be included in this Proxy Statement for filing with the SEC.