DEF 14A of Legacy Housing Corp
Filed Nov 7, 2024 · FY20230001558370-24-014911
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS Our Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) provides that the number of directors is fixed by Board resolution. Our Board of Directors consists of five directors. The Board has nominated Skyler M. Howton to fill the vacant position created by the departure of Francisco J. Coll in May, 2024. The remaining four directors have consented to re-nomination and have agreed to serve if re-elected.
PROPOSAL 1: ELECTION OF DIRECTORS
| Name | Age | Principal Occupation | Director Since | | Curtis D. Hodgson | 70 | Executive Chairman—Legacy Housing | 2018 | | Kenneth E. Shipley | 65 | Founder, Executive Vice President and Director—Legacy Housing | 2018 | | Jeffrey K. Stouder (1) | 53 | Vice President, Global Controller—E2open, LLC | 2020 | | Brian J. Ferguson (1) | 45 | Attorney & CPA | 2023 | | Skyler M. Howton (2) | 37 | Attorney | 2024 |
PROPOSAL 1: ELECTION OF DIRECTORS
| (1) Member of the Audit Committee, the Compensation Committee and the Nominations and Corporate Governance Committee. |
PROPOSAL 1: ELECTION OF DIRECTORS
| (2) If elected to the Board of Directors, it is anticipated that Ms. Howton will be appointed to the Audit Committee, the Compensation Committee and the Nominations and Corporate Governance Committee. |
PROPOSAL 1: ELECTION OF DIRECTORS
Unless you indicate otherwise, shares represented by executed proxies will be voted “FOR” the election as directors of the persons listed above. As of the date of this proxy statement, the Company has no reason to believe that any nominee will be unable to serve or for good cause will not serve as a director. However, if for any reason a nominee becomes unable to serve or for good cause will not serve if elected, the Nominations and Corporate Governance Committee may recommend, and the Board may propose, a substitute nominee at the annual meeting and the proxies identified in the proxy card will vote to approve the election of the substitute nominee. If substitute nominees are proposed, we will, in full compliance with all applicable state and federal laws and regulations, file an amended proxy statement and proxy card that, as applicable, (1) identifies the substitute nominee(s), (2) discloses that such nominees have consented to being named in the revised proxy statement and to serve if elected and (3) includes the disclosure required by Item 7 of Schedule 14A with respect to such nominees.
Director Qualifications
Director Qualifications Our Board of Directors, acting through our Nominations and Corporate Governance Committee, is responsible for nominating directors that have the experience, qualifications, skills, and attributes necessary to guide the Company and effectively serve on the Board. To that end, we have highlighted specific experience, qualifications, and skills that we believe qualify each individual to serve as a director of Legacy.
Director Biographies
Director Biographies The following is a brief account of our directors’ business experience: Curtis D. Hodgson co-founded our company in 2005, served as our Co-Chief Executive Officer from January 2018 to February 2019, and currently serves as Executive Chairman of the Board. He has been a member of our Board of Directors since January 2018. Prior to that, Mr. Hodgson served as a partner of the company’s predecessor, Legacy Housing, Ltd., and controlled its general partner. Over the past 38 years, Mr. Hodgson has owned and operated several manufactured home retail operations and manufactured housing communities in Texas. Mr. Hodgson has significant expertise in the manufactured housing industry. Mr. Hodgson earned a B.S. in Engineering from the University of Michigan and J.D. from The University of Texas. Mr. Hodgson’s prior experience on the Board, with the Company, and in the manufactured housing industry make him well qualified to serve on the Board. Kenneth E. Shipley co-founded our company in 2005, served as our Co-Chief Executive Officer from January 2018 to February 2019, served as our President and sole Chief Executive Officer from February 2019 to June 2022, and currently serves as Executive Vice President of the Company. He has been a member of our Board of Directors since January 2018. Prior to that, Mr. Shipley served as a partner of the company’s predecessor, Legacy Housing, Ltd. Mr. Shipley has more than 30 years of experience in the manufactured home industry. Since 1981, he has also owned and operated Bell Mobile Homes in Lubbock, Texas, a manufactured home retailer. Mr. Shipley’s prior experience on the Board, with the Company, and in the manufactured housing industry make him well qualified to serve on the Board. Jeffrey K. Stouder was elected to our Board of Directors at the 2020 annual meeting of stockholders. He has served as the Vice President and Global Controller at E2open, LLC, a leading provider of cloud-based supply chain software and solutions, since August 2019. Previously, he served as the Chief Financial Officer at Global Resale, LLC, a global leader in aftermarket services and reverse logistics for IT hardware, from 2018 to 2019. From 2015 to 2018, Mr. Stouder served as the Corporate Controller at NBG Home, the largest provider of affordable home décor products, with manufacturing and distribution facilities across the United States and internationally. From 2000 to 2015, he served at Dell, Inc. in various accounting and finance positions including SEC Reporting Manager, Global Sales Controller, and Finance Director for Dell Services. Mr. Stouder began his career at Arthur Andersen LLP in the Dallas office, where he worked in the audit practice as staff, senior, and audit manager from 1994 to 2000. Mr. Stouder received his B.B.A. and M.S. Accounting degrees from Texas Tech University and is a certified public accountant. Mr. Stouder’s 25 years of experience in accounting, finance, audit, corporate governance, mergers, and investor relations make him well qualified to serve on the Board. Brian J. Ferguson was elected to our Board of Directors in 2023. He has practiced law as a Texas attorney since 2005 and was a certified as public accountant in 2006. He currently owns and manages a portfolio of oil and gas interests concentrated in West Texas and real estate holdings in the Rio Grande Valley. In addition, Mr. Ferguson has consulted on audit, compliance, and regulatory issues for publicly traded companies and registered investment advisors since 2005. He is a 2002 graduate of the University of Texas Undergraduate School of Business and Graduate School of Business. He graduated from the University of Texas School of Law in 2005. He was commissioned as an officer in the United States Air Force, where he continues to serve in the Reserve component. Mr. Ferguson’s experience on audit, compliance, and regulatory issues make him well qualified to serve on of the Board. Skyler M. Howton is standing for election to our Board of Directors for the first time. She has practiced law as a Dallas-based attorney since 2013, and she currently serves as the Mass Torts Practice Group Leader at the Rogge Dunn Group, PC, where she handles product liability claims against major corporations nationwide. Ms. Howton has also represented small, large, and Fortune 50 companies over her more than ten years’ experience at AM Law 100 firms. Ms. Howton is a 2009 graduate of Pepperdine University and a 2012 graduate of Baylor Law School, where she served as Articles Editor of the Baylor Law Review. In 2022, Ms. Howton returned to Baylor Law School to obtain an LLM in Litigation Management. Ms. Howton is active in the Dallas community. Ms. Howton served as a Dallas CASA for more than five years. Ms. Howton currently serves as a committee chair for Attorneys Serving the Community, a position she has held for nearly ten years, and as a Vice President on the Board of Directors for the Dallas Women Lawyers Association. Ms. Howton’s experience on compliance, regulatory, and corporate governance issues make her well qualified to serve on the Board. The Board of Directors recommends a vote “FOR” the election of each of the directors listed above.
Employment Agreements
Employment Agreements The Company maintains employment agreements with Messrs. Hodgson, Shipley, Bates and Fiedelman. Curtis Hodgson’s Employment Agreement. On January 5, 2022, we entered into an amended and restated employment agreement with Curtis D. Hodgson to serve as our Executive Chairman for a term beginning January 1, 2022 and terminating (post-extension) on December 4, 2024. Under the employment agreements, Mr. Hodgson’s annual base salary is $200,000, and he is eligible to receive an annual incentive bonus as determined by the board of directors. The agreement contains customary provisions for the termination of Mr. Hodgson’s employment. Mr. Hodgson is entitled to receive his base salary for the remaining portion of the employment period in the event he is terminated without cause, and an amount equal to two years’ compensation at his then current rate of pay in the event he is terminated within one year after a change of control (as defined in the agreement). Mr. Hodgson’s employment agreement also contains customary confidentiality, intellectual property, non-solicitation and non-competition covenants. Kenneth E. Shipley’s Employment Agreement. On November 27, 2018, we entered into an employment agreement with Kenneth E. Shipley to serve as our Co-Chief Executive Officer. From February 2019 to June 2022, Mr. Shipley served as our President and sole Chief Executive Officer, and in June 2022, Mr. Shipley became our Executive Vice President. Mr. Shipley’s initial term of the employment agreement expired on December 31, 2021, and his current term of employment automatically extends for one year, every year on December 31. Under his employment agreement, Mr. Shipley’s annual base salary is $50,000, and he is entitled to receive such health, death, disability, and other insurance benefits, and to participate in such retirement and other plans, as are made available to other executive officers of the Company. The employment agreement provides for customary provisions for the termination of Mr. Shipley’s employment. Mr. Shipley is entitled to receive his base salary for the remaining portion of the employment period if he is terminated without cause. Additionally, in the event Mr. Shipley’s employment with us is terminated within one year after a change of control (as defined in the employment agreement) for certain reasons, we have agreed to pay Mr. Shipley an amount equal to two years’ compensation at his then current rate of pay. The employment agreements also contains customary confidentiality, intellectual property, non-solcitation and non-competition covenants. Duncan Bates’ Employment Agreement. On June 7, 2022, we entered into an employment agreement with Duncan Bates to serve as our President and Chief Executive Officer for an initial term beginning June 7, 2022 and ending June 7, 2027. The employment agreement provides for Mr. Bates to receive a base salary of $300,000 per year and a restricted stock award of 14,700 shares of Company common stock as a signing bonus, which vested one-half each on the first and second anniversary of the effective date. Mr. Bates is eligible for an annual incentive bonus that will be determined by the Board. The employment agreement grants Mr. Bates (i) qualified stock options valued at $1,000,000 that vest at a rate of 10% per year, (ii) an option to purchase 300,000 shares of Company common stock at an exercise price of $36 per share, which shall vest one-tenth on each anniversary of the effective date and have a term of ten years and (iii) an option to purchase 600,000 shares of Company common stock at an exercise price of $48 per share, which shall vest one-tenth on each anniversary of the effective date and have a term of ten years; each of these grants shall be subject to the terms of the Company’s 2018 Incentive Compensation Plan. Mr. Bates is also entitled to receive such health, death, disability, and other insurance benefits, and to participate in such retirement and other plans, as are made available to other executive officers of the Company. The employment agreement provides for customary provisions for the termination of the Mr. Bates’ employment. Mr. Bates is entitled to receive an amount equal to one years’ base salary and bonus if he is terminated without cause. Additionally, in the event Mr. Bates’ employment with us is terminated within two years after a change of control (as defined in the employment agreement) for certain reasons, we have agreed to pay Mr. Bates an amount equal to one years’ compensation at his then current rate of pay. The employment agreements also contains customary confidentiality, intellectual property, non-solicitation and non-competition covenants. Jeffrey M. Fiedelman’s Employment Agreement. On September 10, 2023, we entered into an employment agreement with Jeffrey M. Fiedelman to serve as our Chief Financial Officer for an initial term beginning September 10, 2023 and ending September 10, 2028. The employment agreement provides for Mr. Fiedelman to receive a base salary of $275,000 per year. Mr. Fiedelman is eligible for an annual incentive bonus that will be determined by the Board. The employment agreement grants Mr. Fiedelman qualified stock options valued at $500,000 that vest at a rate of 20% per year and shall be subject to the terms of the Company’s 2018 Incentive Compensation Plan. Mr. Fiedelman also is entitled to receive such health, death, disability, and other insurance benefits, and to participate in such retirement and other plans, as are made available to other executive officers of the Company. The employment agreement provides for customary provisions for the termination of the Mr. Fiedelman’s employment. Mr. Fiedelman is entitled to receive an amount equal to one years’ base salary and bonus if he is terminated within two years after a change of control (as defined in the employment agreement) for certain reasons. The employment agreements also contains customary confidentiality, intellectual property, non-solicitation and non-competition covenants.
Summary Compensation Table
Summary Compensation Table The table below shows the compensation paid to or earned by our NEOs for the years ending December 31, 2023 and December 31, 2022.
Summary Compensation Table
| | | | | Stock | Option | All Other | | | Name and Position | Years | Salary ($) | Bonus ($) | Awards ($) | Awards ($) | Compensation ($) | Total ($) | | Curtis D. Hodgson | 2023 | 200,000 | — | — | — | — | 200,000 | | Executive Chairman | 2022 | 200,000 | — | 3,741,000 | — | — | 3,941,000 | | Kenneth E. Shipley | 2023 | 50,000 | — | — | — | — | 50,000 | | Executive Vice President (former President and Chief Executive Officer) | 2022 | 50,000 | — | — | — | — | 50,000 | | R. Duncan Bates | 2023 | 300,000 | 100,000 | — | — | — | 400,000 | | President and Chief Executive Officer (1) | 2022 | 167,308 | 50,000 | 235,347 | 4,579,757 | — | 5,032,412 | | Jeffrey V. Burt | 2023 | 256,500 | — | — | — | — | 256,500 | | Chief Accounting Officer (4) | 2022 | 266,923 | — | — | — | — | 266,923 | | Ronald C. Arrington | 2023 | 153,462 | — | — | — | — | 153,462 | | Chief Financial Officer (2) | 2022 | 125,385 | 10,000 | — | 535,157 | — | 670,542 | | Jeffrey M. Fiedelman | 2023 | 76,154 | — | — | 349,740 | — | 425,894 | | Chief Financial Officer (3) | 2022 | — | — | — | — | — | — |
Summary Compensation Table
| (1) Mr. Bates joined the Company as President and Chief Executive Officer in June 2022. |
Summary Compensation Table
| (2) Mr. Arrington joined the Company as Chief Financial Officer in May 2022 and left the Company in September 2023. |
Summary Compensation Table
| (3) Mr. Fiedelman joined the Company as Chief Financial Officer in September 2023. |
Summary Compensation Table
| (4) Mr. Burt left the Company in December 2023. |
Grants of Plan Based Awards
Grants of Plan Based Awards The following table lists grants of plan-based awards to each of our NEOs for the year ending December 31, 2023.
Grants of Plan Based Awards
| | | | | | | | | All Other | All Other | | | | | | | | | | | Stock Awards: | Option Awards: | Exercise or | | | | | | | | | | Number of | Number of | Base Price | | | | Estimated Future Payouts Under | | | Estimated Future Payouts Under | | | Securities | Securities | of Option | | | | Non-Equity Incentive Plan Awards | | | Equity Incentive Plan Awards | | | Underlying | Underlying | Award | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | Award (#) | Award (#) | ($ per share) | | Jeffrey M. Fiedelman (1) | 12/1/23 | | | | | | | | 21,496 | 23.26 |
Grants of Plan Based Awards
| (1) Mr. Fiedelman received the award upon joining the Company as Chief Financial Officer in September 2023. |
Outstanding Equity Awards
Outstanding Equity Awards The following table lists outstanding equity awards held by our NEOs as of December 31, 2023.
Outstanding Equity Awards
| | | Estimated Future Payouts Under | | | | Estimated Future Payouts Under | | | | | | | Non-Equity Incentive Plan Awards | | | | Equity Incentive Plan Awards | | | | | | | | | | | | | | Equity incentive | | | | | | | | | | Equity incentive | plan awards: | | | | | | | | | | plan awards: | market or payout | | | | Number of | Number of | | | | | number of | value of | | | | Securities | Securities | | | Number of | Market Value of | unearned | unearned | | | | Underlying | Underlying | | | Shares or Units | Shares or Units | shares, units | shares, units | | | | Unexercised | Unexercised | Options | Option | of Stock That | of Stock That | or other rights | or other rights | | | | Options | Options | Exercise | Expiration | Have Not | Have Not | that have not | that have not | | Name | Grant Date | # Exercisable | # Unexercisable | Price ($) | Date | Vested (#) | Vested (#) (1) | vested (#) | vested ($) | | Duncan Bates (2) | 6/7/22 | 6,246 | 56,214 | 16.01 | 6/7/32 | | | | | | | 6/7/22 | 30,000 | 270,000 | 36.00 | 6/7/32 | | | | | | | 6/7/22 | 60,000 | 540,000 | 48.00 | 6/7/32 | | | | | | | 6/7/22 | | | | | 7,350 | 185,367 | | | | Jeffrey M. Fiedelman (3) | 12/1/23 | — | 21,496 | 23.26 | 12/1/28 | | | | |
Outstanding Equity Awards
| (1) Market value amounts represent the product of the closing price of our common stock on December 29, 2023 of $25.22 per share, multiplied by the number of unvested shares. |
Outstanding Equity Awards
| (2) Mr. Bates received the awards upon joining the Company as Chief Executive Officer in June 2022. |
Outstanding Equity Awards
| (3) Mr. Fiedelman received the award upon joining the Company as Chief Financial Officer in September 2023. |
Options Exercised and Stock Vested
Options Exercised and Stock Vested The following table includes certain information with respect to the options exercised and stock vested by the NEOs during the year ended December 31, 2023.
Options Exercised and Stock Vested
| | Option Awards | | Stock Awards | | | | Number of Shares | Value | Number of Shares | Value | | | Acquired on | Realized on | Acquired on | Realized on | | Name | Exercise (#) | Exercise ($) | Vesting (#) | Vesting ($) | | Duncan Bates | | | 7,350 | 156,923 | | Jeffrey V. Burt | | | 8,571 | 188,648 | | Ronald C. Arrington | 6,246 | 33,354 | | |
Pension Benefits and Nonqualified Deferred Compensation
Pension Benefits and Nonqualified Deferred Compensation We do not provide any pension benefits, nonqualified defined contribution or other deferred compensation plans for our NEOs.
Potential Payments Upon Termination or Change of Control
Potential Payments Upon Termination or Change of Control We are party to employment agreements with NEOs Hodgson, Shipley, Bates and Fiedelman. This section describes the payments and benefits that may be payable upon certain terminations of employment or a change of control and the events that trigger them. Certain equity awards held by these NEOs are subject to accelerated vesting on a change in control. This section describes the payments and benefits that may be payable upon certain terminations of employment or a change of control and the events that trigger them. Our payment obligations under each employment agreement are contingent upon the NEO executing and delivering a reasonable general release of claims in favor of the Company. Mr. Shipley does not have this this requirement. The employment agreements for these NEOs require the NEO to satisfy the following obligations:
Potential Payments Upon Termination or Change of Control
| 1. | During his employment and for 12 months following his termination of employment the NEO must comply with the provisions of a covenant not to compete, except for Mr. Fiedelman who must comply for 6 months if he terminates employment voluntarily or for 12 months if he is terminated by the Company for cause, death or disability, or without cause. |
Potential Payments Upon Termination or Change of Control
| 2. | During his employment and for 24 months following his termination of employment, the NEO must comply with a customary non-solicitation covenant. |
Potential Payments Upon Termination or Change of Control
| 3. | During his employment and at all times subsequent to the last day of his employment, the NEO must comply with a customary confidentiality covenant. |
Potential Payments Upon Termination or Change of Control
There are four categories of events related to a termination of employment that can trigger payments or other benefits to our NEOs: (i) death and disability; (ii) involuntary termination; (iii) voluntary termination; and (iv) change of control (followed by an involuntary termination). The following chart describes each category. Death or Disability. Upon the termination of any NEO’s employment as a result of death or disability, the Company does not have any continuing obligation after termination to the NEO or the NEO’s estate. Involuntary Termination. The Company may terminate an NEO for cause or without cause. Termination for cause occurs when we decide to terminate a NEO based on our good faith determination that one of certain events have occurred. In this case, the Company does not have any continuing obligation after termination to the NEO. Termination without cause occurs when we decide to terminate the NEO’s employment for any reason other than for cause or disability. For Mr. Hodgson, Mr. Shipley and Mr. Bates, the Company is obligated to provide benefits for 12 months following termination. For Mr. Hodgson and Mr. Shipley, the Company is obligated to pay their base salary for the remainder of their employment period as states in their employment agreements in as if they were still employed by the Company. For Mr. Bates, the Company is obligated to pay his base salary for 12 months following termination plus a prorated bonus amount, both paid as if he was still on the employed by the Company. For Mr. Fiedelman, the Company does not have any continuing obligation. Voluntary Termination. The NEO may terminate his employment voluntarily, in which case the Company does not have any continuing obligation to the NEO. Change of Control. For Mr. Hodgson and Mr. Shipley, if their employment is terminated within 12 months after a change in control (as defined in their employment agreements), the Company is obligated to pay their base salary for 24 months following termination. For Mr. Bates and Mr. Fiedelman, if their employment is terminated within 24 months after a change in control (as defined in their employment agreements), the Company is obligated to pay their base salary for 12 months following termination in a lump sum payment. Mr. Bates and Mr. Fiedelman hold equity awards that are subject to accelerated vesting upon a change of control. The following table and footnotes present potential payments to each NEO as if the NEO’s employment had been terminated on December 31, 2023 involuntarily, without cause , and/or if a change in control had occurred on such date.
Potential Payments Upon Termination or Change of Control
| | | Involuntary | | | | Termination | | | Change of | Without | | | Control | Cause | | Name | ($) | ($) | | Duncan Bates | | | | Salary continuation | 300,000 | 300,000 | | Annual bonus | — | — | | Equity awards (1) | 703,098 | — | | Curtis D. Hodgson | | | | Salary continuation (3) | 400,000 | 100,000 | | Annual bonus | — | — | | Equity awards | — | — | | Kenneth E. Shipley | | | | Salary continuation (4) | 100,000 | 45,835 | | Annual bonus | — | — | | Equity awards | — | — | | Jeffrey M. Fiedelman | | | | Salary continuation | 275,000 | — | | Annual bonus | — | — | | Equity awards (2) | 42,132 | — |
Potential Payments Upon Termination or Change of Control
| 1) | Mr. Bates’ equity awards include unvested restricted stock and stock options that are subject to vesting upon a change of control. Restricted stock value is based on the Company’s closing stock price at December 31, 2023. Stock option value is based on the difference between the Company’s closing stock price at December 31, 2023 and the exercise price. |
Potential Payments Upon Termination or Change of Control
| 2) | Mr. Fiedelman’s equity awards include unvested stock options that are subject to vesting upon a change of control. Stock option value is based on the difference between the Company’s closing stock price at December 31, 2023 and the exercise price. |
Potential Payments Upon Termination or Change of Control
| 3) | Mr. Hodgson’s employment period terminates on December 4, 2024. |
Potential Payments Upon Termination or Change of Control
| 4) | Mr. Shipley’s has a one year employment period that automatically renews, The current employment period terminates in November, 2024. |
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure In accordance with Section 953(b) of the Dodd-Frank Act, and Item 402(u) of Regulation S-K, we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee. In determining the median compensated employee, SEC rules allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations. Therefore, our reported pay ratio may not be comparable to that reported by other companies due to differences in industry, business models and scale, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their respective pay ratios. Excluding our CEO, we identified our median employee by preparing a list of all 572 individuals employed by the Company as of December 31, 2023, and examined the total compensation paid to each such individual as reflected in the Company’s payroll records. We included all employees (other than our CEO), whether employed on a full-time, part-time, seasonal or temporary basis. We annualized the compensation for any permanent employees who were not employed by us for all of 2023. The 2023 annual total compensation of our CEO was $400,000. The 2023 annual total compensation of our median employee was $32,240, and the ratio of these amounts is 12:1.
Pay versus Performance
Pay versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain measures of financial performance of the Company. The following table provides information regarding Compensation Actually Paid (“CAP”) to our Principle Executive Officer (“PEO”) and non-PEO NEOs during the last two fiscal years, as well as total shareholder return and net income.
Pay versus Performance
| | | | | | | | Value of Initial | | | | | | | | Average | | Fixed $100 | | | | | | | | Summary | Average | Investment | | | | Summary | Compensation | Summary | Compensation | Compensation | Compensation | Based On: | | | | Compensation | Actually | Compensation | Actually | Table Total for | Actually Paid to | Cumulative | | | | Total for | Paid to | Total for | Paid to | Non-PEO | Non-PEO | Total | | | | PEO | PEO | PEO | PEO | NEOs | NEOs | Shareholder | Net Income | | Year | ($) (1) (3) | ($) (1) (3) | ($) (1) (3) | ($) (1) (3) | ($) (2) (4) | ($) (2) (4) | Return ($) | (in thousands) ($) | | 2023 | 400,000 | 587,176 | — | — | 219,171 | 26,046 | 95.28 | 54,460 | | 2022 | 5,032,412 | 8,751,772 | 50,000 | 50,000 | 1,626,155 | 1,711,072 | 71.63 | 67,773 |
Pay versus Performance
| 1) | During 2023, our PEO was Duncan Bates |
Pay versus Performance
| 2) | During 2023, our Non-PEO NEOs were Curtis D. Hodgson, Kenneth E. Shipley, Jeffrey V. Burt, Ronald C. Arrington and Jeffrey M. Fiedelman |
Pay versus Performance
| 3) | During 2022, our PEOs were Kenneth E. Shipley and Duncan Bates |
Pay versus Performance
| 4) | During 2022, our Non-PEO NEOs were Curtis D. Hodgson, Jeffrey V. Burt, and Ronald C. Arrington |
Pay versus Performance
Adjustments to the Summary Compensation Table Total to arrive at CAP for our PEO are shown below. No adjustments were necessary for defined benefit and pension plans or dividends. The assumptions used for determining the fair values shown in this table are consistent with those used to determine the fair values disclosed as of the grant date of such awards.
Pay versus Performance
| | | | Plue: Fair | | | Plus: Increase / | | | | | | Less: Grant | Value of | Plus: Increase / | Plus: Increase / | (Decrease) in | Less: Fair Value | | | | Summary | Date Fair Value | Unvested Equity | (Decrease) in | (Decrease) in | Fair Value of | of Equity Awards | | | | Compensation | of Equity Awards | at Fiscal Year End | Fair Value of | Fair Value of | Equity Vested | at Prior Year-End | Compensation | | | Total for | Granted in | (Current Year | Equity Vested | Unvested Equity | During Fiscal Year | Forfeited in | Actually Paid | | | PEO | Fiscal Year | Awards) | During Fiscal Year | at Fiscal Year End | (Prior Year Awards) | Current Fiscal Year | to PEO | | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | 2023 (1) | 400,000 | — | — | — | 404,432 | (217,256) | — | 587,176 | | 2022 (1) | 5,032,412 | (4,815,104) | 8,534,464 | — | — | — | — | 8,751,772 | | 2022 (2) | 50,000 | — | — | — | — | — | — | 50,000 |
Pay versus Performance
| 1) | Data shown for PEO Duncan Bates |
Pay versus Performance
| 2) | Data shown for PEO Kenneth Shipley |
Pay versus Performance
Adjustments to the Summary Compensation Table Total to arrive at CAP for non-PEO NEOs (shown as an average) are presented below. No adjustments were necessary for defined benefit and pension plans or dividends.
Pay versus Performance
| | | | Plue: Fair | | | Plus: Increase / | | | | | | Less: Grant | Value of | Plus: Increase / | Plus: Increase / | (Decrease) in | Less: Fair Value | | | | Summary | Date Fair Value | Unvested Equity | (Decrease) in | (Decrease) in | Fair Value of | of Equity Awards | | | | Compensation | of Equity Awards | at Fiscal Year End | Fair Value of | Fair Value of | Equity Vested | at Prior Year-End | Compensation | | | Total for | Granted in | (Current Year | Equity Vested | Unvested Equity | During Fiscal Year | Forfeited in | Actually Paid to | | | Non-PEO NEOs | Fiscal Year | Awards) | During Fiscal Year | at Fiscal Year End | (Prior Year Awards) | Current Fiscal Year | Non-PEO NEOs | | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | 2023 (1) | 219,171 | (69,948) | 77,214 | — | — | 4,704 | (205,095) | 26,046 | | 2022 (2) | 1,626,155 | (1,425,386) | 259,417 | 1,247,000 | 2,914 | 972 | — | 1,711,072 |
Pay versus Performance
| 1) | During 2023, our Non-PEO NEOs were Curtis D. Hodgson, Kenneth E. Shipley, Jeffrey V. Burt, Ronald C. Arrington and Jeffrey M. Fiedelman |
Pay versus Performance
| 2) | During 2022, our Non-PEO NEOs were Curtis D. Hodgson, Jeffrey V. Burt, and Ronald C. Arrington |
Pay versus Performance
The graph below illustrates the relationship between CAP and cumulative total shareholder return. The cumulative total shareholder return assumes $100 was invested for the period starting December 31, 2021 through the end of the listed fiscal year. The graph shows CAP for both PEOs, Duncan Bates and Kenneth Shipley. The graph below illustrates the relationship between CAP and net income. The graph shows CAP for both PEOs, Duncan Bates and Kenneth Shipley. We structure our executive compensation program to award compensation based on individual and Company performance, to be competitive in the market and to retain our executives.
2018 Incentive Compensation Plan
2018 Incentive Compensation Plan Our board of directors and the holders of a majority of our outstanding shares of common stock adopted our 2018 Incentive Compensation Plan (the “Plan”) prior to the closing of our IPO. The purpose of our Plan is to assist us in attracting, motivating, retaining and rewarding high quality executives and other employees, officers, directors, consultants and other persons who provide services to us. Administration. Our Plan is to be administered by our Compensation Committee, provided, however, that except as otherwise expressly provided in the Plan, the board of directors may exercise any power or authority granted to the committee under our Plan. Subject to the terms of our Plan, the committee is authorized to select eligible persons to receive awards, determine the type, number and other terms and conditions of, and all other matters relating to, awards, prescribe award agreements (which need not be identical for each participant), and the rules and regulations for the administration of the Plan, construe and interpret the Plan and award agreements, and correct defects, supply omissions or reconcile inconsistencies in them, and make all other decisions and determinations as the committee may deem necessary or advisable for the administration of our Plan. Eligibility. The persons eligible to receive awards under our Plan are the officers, directors, employees, consultants and other persons who provide services to us. An employee on leave of absence may be considered as still in the employ of our company for purposes of eligibility for participation in our Plan. Types of Awards. Our Plan provides for the issuance of stock options, stock appreciation rights, or SARs, restricted stock, deferred stock, dividend equivalents, bonus stock and awards in lieu of cash compensation, other stock based awards and performance awards. Performance awards may be based on the achievement of specified business or personal criteria or goals, as determined by the committee. Shares Available for Awards. The total number of shares of common stock that may be subject to the granting of awards under our Plan at any time during the term of the Plan will be equal to 2,500,000 shares. This limit will be increased by the number of shares with respect to which awards previously granted under our Plan that are forfeited, expire or otherwise terminate without issuance of shares, or that are settled for cash or otherwise do not result in the issuance of shares, and the number of shares that are tendered (either actually or by attestation) or withheld upon exercise of an award to pay the exercise price or any tax withholding requirements. Stock Options and Stock Appreciation Rights. The committee is authorized to grant stock options, including both incentive stock options, or ISOs, which can result in potentially favorable tax treatment to the participant, and non qualified stock options, and stock appreciation rights entitling the participant to receive the amount by which the fair market value of a share of common stock on the date of exercise exceeds the grant price of the stock appreciation right. The exercise price per share subject to an option and the grant price of a stock appreciation right are determined by the committee, but in the case of an ISO must not be less than the fair market value of a share of common stock on the date of grant. For purposes of our Plan, the term “fair market value” means the fair market value of common stock, awards or other property as determined by the committee or under procedures established by the committee. The maximum term of each option or stock appreciation right, the times at which each option or stock appreciation right will be exercisable, and provisions requiring forfeiture of unexercised options or stock appreciation rights at or following termination of employment generally are fixed by the committee, except that no option or stock appreciation right may have a term exceeding ten years. Restricted and Deferred Stock. The committee is authorized to grant restricted stock and deferred stock. Restricted stock is a grant of shares of common stock which may not be sold or disposed of, and which may be forfeited in the event of certain terminations of employment, prior to the end of a restricted period specified by the committee. A participant granted restricted stock generally has all of the rights of a stockholder of our company, unless otherwise determined by the committee. An award of deferred stock confers upon a participant the right to receive shares of common stock at the end of a specified deferral period, subject to possible forfeiture of the award in the event of certain terminations of employment prior to the end of a specified restricted period. Prior to settlement, an award of deferred stock carries no voting or dividend rights or other rights associated with share ownership, although dividend equivalents may be granted, as discussed below. Other Terms of Awards. Awards may be settled in the form of cash, shares of common stock, other awards or other property, in the discretion of the committee. The committee may require or permit participants to defer the settlement of all or part of an award in accordance with such terms and conditions as the committee may establish, including payment or crediting of interest or dividend equivalents on deferred amounts, and the crediting of earnings, gains and losses based on deemed investment of deferred amounts in specified investment vehicles. The committee is authorized to place cash, shares of common stock or other property in trusts or make other arrangements to provide for payment of our obligations under our Plan. Awards under our Plan are generally granted without a requirement that the participant pay consideration in the form of cash or property for the grant (as distinguished from the exercise), except to the extent required by law. The committee may, however, grant awards in exchange for other awards under our Plan, awards under other company plans or other rights to payment from us, and may grant awards in addition to and in tandem with such other awards, rights or other awards. Acceleration of Vesting; Change in Control. The committee may, in its discretion, accelerate the exercisability, the lapsing of restrictions or the expiration of deferral or vesting periods of any award, and such accelerated exercisability, lapse, expiration and if so provided in the award agreement or otherwise determined by the committee, vesting will occur automatically in the case of a “change in control” of our company, as defined in our Plan (including the cash settlement of stock appreciation rights which may be exercisable in the event of a change in control). In addition, the committee may provide in an award agreement that the performance goals relating to any performance award will be deemed to have been met upon the occurrence of any “change in control.”
Director Compensation
Director Compensation Directors who are also officers or employees of the Company do not receive any special or additional remuneration for service on the board. We currently compensate each non employee director through annual restricted stock grants and by paying annual fees for their participation on the board and on respective board committees. Our directors receive compensation of $10,000 per quarter, as well as an annual award of $10,000 in restricted stock grants that vest as of the next annual meeting or in one year. We also compensate our directors for serving as a committee member and a committee chair. Our board of directors reviews director compensation annually or when circumstances exist requiring reexamination and adjusts it according to then current market conditions and good business practices. The following table provides information regarding compensation paid to each non-employee director during the year ended December 31, 2023:
Director Compensation
| | Fees Earned | | | | | or Paid in | Stock | | | | Cash ($) | Awards ($) (1) | Total ($) | | Francisco J. Coll | 45,500 | 10,000 | 55,500 | | Jeffrey K. Stouder | 57,000 | 10,000 | 67,000 | | Brian J. Ferguson (2) | 10,000 | 10,000 | 20,000 | | Joseph P. Lane (2) | 39,750 | — | 39,750 |
Director Compensation
| 1) | Amounts in this column reflect the fair value of restricted stock based on the closing price of the Company’s stock on the grant date |
Director Compensation
| 2) | Mr. Lane’s term ended December 1, 2023 and he was replaced by Mr. Ferguson |