DEF 14A of Cavco Industries, Inc.
Filed Jun 21, 2022 · FY20220001564590-22-023759
Election of Directors
Election of Directors The Company’s Restated Certificate of Incorporation and Third Amended and Restated Bylaws (the “Bylaws”) provide for the division of the Board into three classes, with the Directors in each class holding office for staggered terms of three years each. Each class of Directors is to consist, as nearly as possible, of one-third of the total number of Directors constituting the entire Board. There are presently three Directors in Class I whose terms expire at the 2022 annual meeting. Each Director holds office until his or her successor has been elected and qualified or until the Director’s resignation or removal. Mr. Greenblatt, Mr. Kerley and Ms. Sze, members of the Board whose terms expire at the annual meeting, will stand for re-election. They have been nominated for service as Directors by our Corporate Governance and Nominating Committee, and the full Board pursuant to the procedures described under “Director Compensation—Director Nominating Process” herein. Unless contrary instructions are indicated in the proxy, it is intended that the shares represented by the accompanying proxy will be voted for the election of these nominees or, if a nominee becomes unavailable (which the Company does not anticipate), for such substitute nominee as the Board shall designate. In order to be elected as a Director, a nominee must receive an affirmative vote of the majority of votes cast with respect to that Director nominee’s election, which means the number of votes cast “FOR” a Director nominee’s election must exceed the number of votes cast “AGAINST” that Director nominee’s election.
Election of Directors
| | The Board recommends that the shareholders vote “FOR” the election of Mr. Greenblatt, Mr. Kerley and Ms. Sze to serve as Class I Directors until the 2025 Annual Meeting. |
Election of Directors
| 4 2022 Proxy Statement | |
Nominees for Director Standing for Election in Class I
Nominees for Director Standing for Election in Class I
Nominees for Director Standing for Election in Class I
| Age 60 Director since October 2008 Committees: Audit, Corporate Governance and Nominating (Chair), Legal and Compliance Oversight | David A. Greenblatt Mr. Greenblatt is Chairman of our Corporate Governance and Nominating Committee and a member of our Audit Committee and our Legal and Compliance Oversight Committee. Mr. Greenblatt is the retired Senior Vice President and Deputy General Counsel for Eagle Materials, Inc. (“Eagle Materials”) (NYSE: EXP), a company specializing in construction products and building materials headquartered in Dallas, Texas, where he worked from 2005 to 2012. He currently is a licensed practicing attorney in Texas and is the President of White Sand Investments, LLC, a privately-held real estate investment and management company. From 2000 to 2002, he was Senior Vice President – Mergers & Acquisitions for Eagle Materials. Mr. Greenblatt also held various roles with Centex Corporation (“Centex”) (NYSE: CTX), a Dallas based homebuilder (now a part of PulteGroup, Inc.) (NYSE: PHM), including Vice President and General Counsel of its Investment Real Estate Group, Vice President and Assistant General Counsel of Centex and General Counsel of Cavco. Prior to joining Centex, Mr. Greenblatt was an associate in the corporate and securities group at the law firm of Hughes & Luce, LLP (now K&L Gates, LLP) in Dallas. | | | Qualifications: In addition to his executive management and legal experience, Mr. Greenblatt brings to the Company’s Board his knowledge of the Company and industry by having served as the Company’s General Counsel while he was employed by Centex. | | Age 72 Director since February 2019 Committees: Audit (Chair), Corporate Governance and Nominating, Legal and Compliance Oversight | Richard A. Kerley Mr. Kerley is Chairman of our Audit Committee, a member of our Corporate Governance and Nominating Committee and a member of our Legal and Compliance Oversight Committee. Since 2010, Mr. Kerley has been a Director with ModivCare Inc. (Nasdaq: MODV), formerly known as The Providence Service Corporation (Nasdaq: PRSC), a technology-enabled healthcare services company that provides a platform of integrated supportive care solutions for public and private payers and their patients., where he serves as Audit Committee Chairman and Compensation Committee Chairman. From 2014 until May 31, 2019, Mr. Kerley was a Director of The Joint Corp. (Nasdaq: JYNT), a rapidly growing franchisor and operator of chiropractic clinics, where he served as Compensation Committee Chairman and a member of the Audit Committee. From 2008 to 2014, he was Chief Financial Officer and a Director of Peter Piper, Inc., a privately held pizza and entertainment restaurant chain until it was acquired by CEC Entertainment, Inc. in 2014. From 2005 to 2008, Mr. Kerley was Chief Financial Officer of Fender Musical Instruments Corporation, a privately held manufacturer and wholesaler of musical instruments and equipment. Mr. Kerley spent over 30 years at Deloitte & Touche LLP, a multinational accounting and professional services firm, where he served as an audit partner from 1981 to 2005. | | | Qualifications: Mr. Kerley brings to our Board valuable insight with his extensive audit, financial and operational expertise. | | Age 55 Director since May 2019 Committees: Audit and Compensation | Julia W. Sze Ms. Sze is a member of our Audit Committee and a member of our Compensation Committee. Ms. Sze is a Chartered Financial Analyst charterholder with over 25 years of experience in the investment management field. She has been an Impact Investment Strategy Advisor with Julia W. Sze Consulting, since 2017. From 2004 until 2011, Ms. Sze served as Chief Investment Officer for families and foundations at two major U.S. banks. From 1991 until 2003, she was a fundamental analyst and portfolio manager leading funds in the Asia Pacific equity markets. Since 2018, Ms. Sze has been a lecturer at UC Berkeley’s Haas School of Business and in 2022, she joined the faculty at the University of New Mexico’s Anderson School of Management. At both business schools, she teaches sustainable investment management and impact investing. Ms. Sze serves as a director of Tern Bicycles, a privately-held, Taiwan-based urban transport business with sales across the globe. Ms. Sze previously served as a member of the Board of Directors and Chair of the Assets and Liabilities Committee of New Resource Bank (OTC: NRBC) from 2016 until it merged with Amalgamated Bank in 2017. From 2006 to 2017, Ms. Sze served on the Investment Committee and Board of Trustees of the Marin Community Foundation that manages over $5 billion in philanthropic capital on behalf of donors. | | | Qualifications: Ms. Sze brings to our Board significant experience in strategic planning, financial oversight and business development as well as best practices in sustainability and corporate governance. |
Nominees for Director Standing for Election in Class I
| Cavco Industries, Inc. | www.cavco.com 5 |
Continuing Directors
Continuing Directors
Class II Directors
Class II Directors
Terms Expiring in 2023
Terms Expiring in 2023
Terms Expiring in 2023
| Age 64 Director since January 2019 Committees: Compensation, Corporate Governance and Nominating, Legal and Compliance Oversight (Chair) | Susan L. Blount Ms. Blount is the Chair of our Legal and Compliance Oversight Committee and a member of the Compensation Committee and the Corporate Governance and Nominating Committee. From 2005 to 2015, Ms. Blount served as Senior and then Executive Vice President and General Counsel for Prudential Financial, Inc. (“Prudential”) (NYSE: PRU), a leading provider of insurance, retirement and asset management products and services. In that role, Ms. Blount led Prudential’s global law, compliance, business ethics and external affairs functions. Since 2016, she has served as adjunct professor at the University of Texas School of Law (“Texas Law”). She is a founding member of Texas Law’s Center for Women in Law where she served as Interim Executive Director from March 2019 to January 2020. Since April 2021, Ms. Blount has served as a Director of CS Disco, a legal technology company that applies artificial intelligence and cloud computing to help lawyers and legal teams. | | | Qualifications: Ms. Blount brings to our Board significant experience in corporate governance, risk management, executive compensation, legal, compliance, strategy, insurance and financial services. | | Age 56 Director since July 2008 Committees: None | William C. Boor Mr. Boor is the President and Chief Executive Officer (“CEO”) of Cavco, commencing on April 15, 2019 and has been a member of Cavco’s Board since July 2008. Mr. Boor was previously CEO of Great Lakes Brewing Company, a large craft brewing company based in Cleveland, Ohio, a position he had held since September 2015. From December 2014 to September 2015, Mr. Boor was principal of MIB Holding Co LLC (“MIB Holdings”), a mining development company. From 2007 to 2014, Mr. Boor served in various executive positions with Cliffs Natural Resources, Inc. (“Cliffs”), including Executive Vice President for Corporate Development, Chief Strategy & Risk Officer and President of Ferroalloys. Prior to his employment with Cliffs, Mr. Boor held key leadership roles at American Gypsum, Centex, Weyerhaeuser Co. (NYSE: WY) and Procter & Gamble Co. (NYSE: PG). | | | Qualifications: Mr. Boor brings to our Board diverse experience in financial management, investor relations, management, manufacturing, marketing, and process engineering, and is our President and CEO. |
Terms Expiring in 2023
| 6 2022 Proxy Statement | |
Continuing Directors
Continuing Directors
Class III Directors
Class III Directors
Terms Expiring in 2024
Terms Expiring in 2024
Terms Expiring in 2024
| Age 61 Chairman of the Board since April 2019; Director since April 2004 Committees: None | Steven G. Bunger Mr. Bunger is our Non-Executive Chairman of the Board. Since 2014, Mr. Bunger has served as President and CEO of Pro Box Portable Storage, Inc., a provider of portable storage solutions in Arizona, Oklahoma and Colorado. From 2001 to 2012, he served as Chairman of the Board of Mobile Mini, Inc. (“Mobile Mini”), one of the nation’s largest providers of portable storage containers and mobile offices in the U.S., Canada and the U.K. Mr. Bunger joined Mobile Mini in 1983 and served as the President and CEO from 1997 to 2012. He also held numerous executive roles with Mobile Mini including Vice-President of Operations and Marketing and Executive Vice President and Chief Operating Officer. | | | Qualifications: Mr. Bunger brings to the Company’s Board a breadth of operational, managerial and marketing experience from running one of the world’s leading providers of portable storage solutions. Additionally, Mr. Bunger has extensive acquisition experience which he uses to guide the Company’s management and Board in evaluating growth opportunities. | | Age 52 Director since January 2020 Committees: Compensation (Chair) | Steven W. Moster Mr. Moster is Chairman of our Compensation Committee. Since 2014, Mr. Moster has served as the CEO and Executive Director of Viad Corp (“Viad”) (NYSE: VVI). He has served in various executive management roles within Global Experience Specialists (a division of Viad) including Executive Vice President– Chief Sales & Marketing Officer from 2008 to February 2010, Executive Vice President– Products and Services from 2006 to 2008 and Vice President– Products & Services Business from 2005 to 2006. Prior to his work at Viad, Mr. Moster was an Engagement Manager for McKinsey & Co., a top-tier management consulting firm, in Atlanta, and a Research Scientist with Kimberley-Clark Corporation (NYSE: KMB), a Fortune 500 company, also in Atlanta. | | | Qualifications: Mr. Moster brings to our Board successful experience leading a well-established public company, executing growth strategies and improving operating efficiencies. |
Terms Expiring in 2024
| Cavco Industries, Inc. | www.cavco.com 7 |
Board Experience and Expertise
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Susan L. Blount | 95,000 | 108,729 | 203,729 | | Steven G. Bunger | 90,000 | 144,972 | 234,972 | | David A. Greenblatt | 97,500 | 108,729 | 206,229 | | Richard A. Kerley | 100,000 | 108,729 | 208,729 | | Steven W. Moster | 80,000 | 108,729 | 188,729 | | Julia W. Sze | 82,500 | 108,729 | 191,229 |
Overview of the Company’s Compensation Program
Overview of the Company’s Compensation Program The Company’s fiscal year 2022 compensation programs consisted of cash compensation comprised of a base salary and either a cash bonus and/or cash incentive compensation. In addition, the 2022 program included awards of time-based RSUs of the Company’s common stock and performance-based restricted stock units (“PRSUs”), pursuant to the Company’s 2005 Stock Incentive Plan.
Overview of the Company’s Compensation Program
| Component | Description | | Base Salaries | Utilized an independent compensation consultant to benchmark salaries | | Short-Term Annual Cash Bonus Compensation | A target-based short term incentive program (“STIP”) For several positions, a portion of the STIP potential is assigned to individual performance targets Bonus payouts capped at 200% of target | | Long-Term Equity Compensation | Issued time-based RSUs and PRSUs Time vested equity grants defined as a targeted dollar value on date of grant PRSUs to be earned based upon achievement of 3-year targets; settlements are capped at 200% of target award |
Objectives of the Company’s Fiscal Year 2022 Compensation Program
| • | create substantial and competitive long-term compensation opportunities for individual executive officers based not only on long-term, corporate performance but also on sustained, long-term individual performance. |
Independent Compensation Consultant
Independent Compensation Consultant Pursuant to the authority granted to it in its Charter, the Compensation Committee engaged Pearl Meyer Partners, LLC (“Pearl Meyer”) as an independent compensation consultant to provide advice related to the Company’s executive compensation programs. None of the Company’s management participated in the Compensation Committee’s decision to retain Pearl Meyer. Pearl Meyer reported directly to the Compensation Committee. The Compensation Committee may replace Pearl Meyer or hire additional consultants at any time. Pearl Meyer attends meetings of the Compensation Committee, as requested, and communicates with the Compensation Committee Chair. However, the Compensation Committee ultimately has sole responsibility to make suggestions and recommendations to the Board related to potential compensation for the Company’s executive officers. The Compensation Committee regularly reviews the services provided by its outside consultants and believes that Pearl Meyer is independent in providing executive compensation consulting services. The Compensation Committee conducted a review of its relationship with Pearl Meyer in November 2021 and determined that Pearl Meyer’s work for the Compensation Committee had not raised any conflicts of interest consistent with the guidance provided by the SEC and Nasdaq. In making this determination, the Compensation Committee noted that during fiscal year 2022:
Independent Compensation Consultant
| • | Pearl Meyer did not provide any services to the Company, or its management, other than services to the Compensation Committee. Pearl Meyer’s services were limited to executive and director compensation consulting. Specifically, Pearl Meyer does not provide to the Company, directly or indirectly through affiliates, any non-executive compensation services, including, but not limited to, pension consulting or human resource outsourcing; |
Independent Compensation Consultant
| • | Fees paid to Pearl Meyer by the Company were less than 1% of Pearl Meyer’s total revenue; |
Independent Compensation Consultant
| • | Pearl Meyer maintains a Conflicts Policy containing specific policies and procedures designed to ensure independence; |
Independent Compensation Consultant
| Cavco Industries, Inc. | www.cavco.com 27 |
Independent Compensation Consultant
| • | None of the Pearl Meyer consultants on the Company’s matters had any business or personal relationship with the members of the Compensation Committee; |
Independent Compensation Consultant
| • | None of the Pearl Meyer consultants on the Company matters, or Pearl Meyer, had any business or personal relationship with executive officers of the Company; and |
Independent Compensation Consultant
| • | None of the Pearl Meyer consultants on the Company matters directly own Company stock. |
Independent Compensation Consultant
The Compensation Committee continues to monitor the independence of its compensation consultant on a periodic basis.
Role of Management in Establishing and Awarding Compensation
Role of Management in Establishing and Awarding Compensation The Compensation Committee annually reviews and approves the base salary levels and incentive opportunity levels for all NEOs. Regarding other compensation matters, including non-NEO executive compensation, management provides recommendations to the Compensation Committee; however, the Compensation Committee does not delegate any of its responsibilities to others in setting compensation for the executive officers. The CEO, with the assistance of management, makes recommendations concerning the Company’s performance objectives upon which short-term and long-term incentive compensation is based. Additionally, the CEO annually reviews the performance of the other executive officers and presents his conclusions and recommendations as to salary adjustments and annual equity awards to the Compensation Committee for its consideration. The Compensation Committee exercises its discretion in determining any adjustments or awards to the Company’s officers, including the NEOs. The Compensation Committee does not receive any recommendations from the CEO regarding his own compensation.
Benchmarking Methodology
Benchmarking Methodology Market pay levels are one of many elements used by the Company to maintain competitive pay opportunities for our executive officers. For the design of the Company’s fiscal year 2022 executive and non-employee director compensation programs, Pearl Meyer recommended and the Compensation Committee approved a peer group of 20 national companies in the building products and homebuilding industry. The peer group companies that were used for executive compensation benchmarking and performance benchmarking in fiscal year 2022 are set forth below. We believe that this peer group provides an appropriate benchmark comparison for Cavco.
Benchmarking Methodology
| American Woodmark Corporation Apogee Enterprises, Inc. Armstrong World Industries, Inc. Beazer Homes USA, Inc. Century Communities, Inc. Ethan Allen Interiors, Inc. Green Brick Partners, Inc. Gibraltar Industries, Inc. Installed Building Products, Inc. La-Z-Boy Incorporated | LGI Homes, Inc. M.D.C. Holdings, Inc. M/I Homes, Inc. PGT Innovations, Inc. Quanex Building Products Corp. Simpson Manufacturing Co. Inc. Skyline Champion Corp. Trex Company, Inc. TRI Pointe Group Inc. WillScot Mobile Mini Holdings Corp. |
Benchmarking Methodology
This peer group data provided by Main Data Group (“MDG”), an affiliate of Pearl Meyer, and proprietary survey data provided by Pearl Meyer were used to identify compensation design changes to the Company’s fiscal year 2022 program. The data MDG provided included compensation benchmarking and corporate governance analytics. All data and analytics were regularly updated and information was gathered using the peer group’s public SEC filings. Analysis was conducted by employment position title. MDG’s incentive statistics project a “target” payout. From this statistical data, a ratio is calculated which compares the compensation of Cavco’s executives to the compensation companies in the peer group pay their executives. The ratio reflects the comparison of Cavco’s executive compensation versus the median executive compensation for the peer group. The ratio comparison includes base compensation, STIP, long-term incentives and total direct compensation.
Benchmarking Methodology
| Cavco Industries, Inc. | www.cavco.com 29 |
Annual Short-Term Incentive Cash Compensation
Annual Short-Term Incentive Cash Compensation In fiscal 2022, Mses. Aden and Reynolds, Messrs. Bigbee, Boor, Dragash and Niño, each participated in a corporate STIP which consists of an annual cash incentive bonus based upon Company and individual objective based performance. Mr. Cira is not included in the corporate STIP program; rather, Mr. Cira’s STIP program is at the discretion of the President and CEO of the Company and he is eligible to receive 0.5% of pre-tax income for the manufacturing operations he oversees and up to $100,000 based on individual performance objectives. 1. Company Performance: Mses. Aden and Reynolds, Messrs. Bigbee, Boor, Dragash and Niño were each granted an opportunity to earn a company performance-based cash bonus under the Company’s STIP program. For fiscal year 2022, the target corporate performance STIP payouts expressed as a percentage of base salary and the threshold and maximum payouts for each individual were as follows:
Annual Short-Term Incentive Cash Compensation
| Name | Threshold (x of Target) | Target | Maximum (x of Target) | | William C. Boor | 0.5x | 120% | 2x | | Allison K. Aden | 0.5x | 80% | 1.5x | | Matthew A. Niño (1) | 0.5x | 25% | 1.5x | | Mickey R. Dragash | 0.6x | 70% | 1.2x | | Simone L. Reynolds (2) | NA | NA | NA | | Paul W. Bigbee | 0.5x | 25% | 1.5x |
Annual Short-Term Incentive Cash Compensation
| (1) In addition to the corporate performance-based STIP program described above, Mr. Niño was also eligible to receive 5% of pre-tax income for the retail operations he oversees. |
Annual Short-Term Incentive Cash Compensation
| (2) Ms. Reynold’s STIP program was not based on a percentage of salary, but with $140,000 allocated to corporate profit-based objectives (with 67% paid at threshold, 100% at target and 200% at maximum) and $85,000 being based on individual performance objectives. As Ms. Reynolds’ employment terminated on January 31, 2022, her STIP was calculated based on terms per her Separation Agreement, which resulted in a payment of $233,884. |
Annual Short-Term Incentive Cash Compensation
| 30 2022 Proxy Statement | |
Annual Short-Term Incentive Cash Compensation
For fiscal year 2022, the corporate STIP program performance criteria was based on the financial forecast approved by the Committee, as follows: (1) 90% based on fiscal year 2022 adjusted factory-built housing segment pre-tax profit; and (2) 10% based on fiscal year 2022 adjusted financial services segment pre-tax profit. Factory-built housing segment target pre-tax profit was based on the forecasted pre-tax profit, with threshold attainment being at 90% of that figure and stretch attainment being 110% of that figure. In the financial services segment, target pre-tax profit was based on the forecasted pre-tax profit, with threshold attainment being at 70% of that figure and stretch attainment being 130% of that figure. A graphical depiction of the fiscal year 2022 corporate STIP program and actual results is set forth below:
Annual Short-Term Incentive Cash Compensation
| 90% of factory-built housing – Earnings driven corporate STIP | 10% of financial services – Earnings driven corporate STIP | | | |
Annual Short-Term Incentive Cash Compensation
For fiscal year 2022, Mr. Boor, Ms. Aden and Messrs. Niño, Dragash and Bigbee received corporate performance STIP payouts of $1,950,529, $311,070, $72,807, $269,009 and $80,088, respectively. As noted above, in addition to the corporate performance-based STIP program described above, Mr. Niño also received $1,091,122 related to the retail operations he oversees. Under his individual STIP program, Mr. Cira received a payment of $1,113,990. See further information below. These payments are reflected in the Non-Equity incentive column in the Summary Compensation Table. 2. Individual Objective Based Performance: For Ms. Aden, an award of 20% of her base salary is based upon individual performance objectives as mutually agreed upon between her and the President and CEO. For Mr. Dragash, an award of 30% of his salary is based upon individual performance objectives as mutually agreed upon between him and the President and CEO. For Messrs. Niño and Bigbee, an award of 25% of their base salary is based upon individual performance objectives as mutually agreed upon between them and the President and CEO, and CFO. Ms. Aden and Messrs. Bigbee, Cira, Dragash, and Niño’s STIP payouts were $53,407, $55,000, $100,000, $97,500 and $50,000, respectively, for the achievement of individual performance objectives, which represented full attainment in all cases.
Long-Term Equity Compensation
Long-Term Equity Compensation The third component of executive officer compensation is long-term equity compensation. The Company’s fiscal year 2022 long-term equity incentive program consisted of (1) time-based RSUs; and (2) PRSUs. The performance element of the PRSU focuses on value creation, growth, and operational improvement, with each measure receiving an equal allocation and measured individually on threshold, target and maximum levels. Value creation is measured by total shareholder return relative to industry comparables. Growth is defined as the market share improvement when compared to the manufactured housing industry. Operational improvement is based upon improvement in the number of units produced per employee equivalent. Shares under the PRSU awards will be measured and issued at the end of a three year period.
Long-Term Equity Compensation
| Cavco Industries, Inc. | www.cavco.com 31 |
Long-Term Equity Compensation
Considering an uncertain economic environment and increased material costs, the levels of performance were set in conjunction with the Company’s overall annual budget and were considered to be challenging, but achievable at target levels and difficult at maximum levels. On May 24, 2021, Messrs. Boor, Niño, Cira, Dragash and Bigbee and Ms. Reynolds were granted the equity awards set forth in the following table under the Cavco Industries, Inc. 2005 Stock Incentive Plan. The amounts below also include, for (i) Ms. Aden a grant of equity awards upon employment with the Company [and (ii) for Mr. Boor an award on June 28, 2021 of 1,150 RSUs and 1,150 PRSUs as a result of modifications to his compensation for the fiscal year as part of his annual compensation review. The awards made to Messrs. Boor and Dragash were consistent with the terms of their employment agreements. RSUs are subject to a time-based vesting schedule such that 33% of the shares vest on the first anniversary of the grant date, 33% on the second anniversary of the grant date, and 34% on the third anniversary of the grant date.
Long-Term Equity Compensation
| Name | RSUs (#) | PRSUs (#) at Target | | William C. Boor | 4,500 | 4,500 | | Allison K. Aden | 920 | 920 | | Matthew A. Niño | 250 | 250 | | Brian R. Cira | 400 | 400 | | Mickey R. Dragash | 600 | 600 | | Simone L. Reynolds | 400 | 400 | | Paul W. Bigbee | 250 | 250 |
Employment Agreements in Effect for 2022
Employment Agreements in Effect for 2022 The Company entered into Employment Agreements with Messrs. Boor and Dragash effective as of April 15, 2019. Following is a description of the key provisions of these Employment Agreements. During fiscal 2022, the Company did not have written or oral employment or severance agreements with Messrs. Niño, Cira or Bigbee. During fiscal 2022, the Company had severance agreements with Mses. Aden and Reynolds and a change in control agreement with Mr. Bigbee. William C. Boor’s Employment Agreement Mr. Boor’s employment agreement provides for: (a) a base annual salary of $825,000 per year, subject to periodic review and adjustment by the Compensation Committee; (b) an annual award of time-based stock options, pursuant to the Company's 2005 Stock Incentive Plan, that vest 33% on the first anniversary of the grant date, 33% on the second anniversary of the grant date, and 34% on the third anniversary of the grant date; (c) an annual award of PRSUs, with each award providing for: (i) a three-year performance period with targets set by the Compensation Committee of the Board; (ii) performance-based vesting at a level of 50% for “threshold” performance, 100% for “target” performance, and 200% for “stretch” performance based on total shareholder return, growth and efficiency metrics as compared to Cavco’s Investor Peer Group and favorable value creation relative to industry metrics as reported by the Manufactured Housing Institute; (d) and an opportunity for annual cash bonus for achieving performance goals established by the Compensation Committee of “threshold,” “target,” or “stretch,” which will result in a cash bonus equal to 50%, 100%, or 200% of the target amount, respectively. The employment agreement for Mr. Boor also includes provisions for certain payments to be made upon his termination under certain circumstances, including during the twelve month period following a change of control event. If Mr. Boor is terminated without cause, or if he terminates the agreement for good reason, he will receive: (a) a severance payment equal to his then current base salary, plus the average bonuses paid to him over the previous three (3) calendar years multiplied by (i) one point five (1.5) if termination
Employment Agreements in Effect for 2022
| 32 2022 Proxy Statement | |
Employment Agreements in Effect for 2022
occurs prior to the sixth anniversary of employment, or (ii) one (1) if termination occurs after the sixth anniversary of employment; (b) accelerated vesting of his options awarded under the employment agreement; provided, however, that if termination occurred prior to six (6) years after the effective date of his employment agreement, 50% of such options shall vest; (c) prorated performance-based share awards based on actual performance; and (d) Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) coverage for up to twelve months following termination. In the event Mr. Boor is terminated due to death or disability, all of his unvested stock options awarded to him under his employment agreement would vest immediately and his performance-based share awards would be prorated based on actual performance. Should Mr. Boor be terminated without cause during the twelve month period following a change in control event, he will receive: (a) a severance payment equal to the sum of: (i) three (3) times his then current base salary plus (ii) three (3) times the average bonuses paid to him over the previous three (3) calendar years; (b) all of his unvested stock options awarded to him under his employment agreement would vest immediately; (c) his performance-based share awards would vest as if he reached a “target” level of performance; and (d) COBRA coverage for up to twelve (12) months following termination. The employment agreement also includes customary provisions regarding confidentiality of information, non-disparagement, non-competition, and non-solicitation. Mickey R. Dragash’s Employment Agreement Mr. Dragash’s employment agreement provides for: (a) a base annual salary of $325,000 per year, subject to periodic review and adjustment by the Compensation Committee; (b) an annual award of time-based stock options, pursuant to the Company's 2005 Stock Incentive Plan, equal to 37.5% of his base salary that vest 33% on the first anniversary of the grant date, 33% on the second anniversary of the grant date and 34% on the third anniversary of the grant date; (c) an annual award of performance-based restricted shares having an award value equal to approximately 37.5% of his base salary, with each award providing for: (i) a three-year performance period with performance targets established by the Compensation Committee; (ii) performance-based vesting at a level of 60% for “threshold” performance, 100% for “target” performance, and 120% for “stretch” performance; and (d) an opportunity for annual cash bonus for achieving performance goals established by the Compensation Committee of “threshold,” “target,” or “stretch”, which will result in a cash bonus equal to 60%, 100%, or 120% of the target amount, respectively. The employment agreement for Mr. Dragash also includes provisions for certain payments to be made upon his termination under certain circumstances, including during the twelve month period following a change of control. If Mr. Dragash is terminated without cause or if he terminates the agreement for good reason, he will receive: (a) a severance payment equal to his then current base salary, plus the average bonuses paid to him over the previous three (3) calendar years; (b) accelerated vesting of his options awarded under the Employment Agreement; provided, however, that if termination occurs on or after the first anniversary of the effective date of his Employment Agreement, but prior to six (6) years after the effective date of his Employment Agreement, 50% of such options shall vest; (c) prorated performance-based share awards based on actual performance; and (d) COBRA coverage for up to twelve (12) months following termination. In the event Mr. Dragash is terminated due to death or disability, all of his unvested stock options awarded to him under his Employment Agreement would vest immediately and his performance-based share awards would be prorated based on actual performance. In the event Mr. Dragash is terminated without cause during the twelve month period following a change in control event, Mr. Dragash will receive: (a) a severance payment equal to the sum of: (i) 150% his then current base salary plus (ii) 150% of the average bonuses paid to him over the previous three (3) calendar years; (b) all of his unvested stock options awarded to him under his Employment Agreement would vest immediately; (c) his performance-based share awards would vest as if he reached a “target” level of performance; and (d) COBRA coverage for up to twelve months following termination. The Employment Agreement also includes customary provisions regarding confidentiality of information, non-disparagement, non-competition, and non-solicitation. Allison K. Aden’s Severance Agreement Ms. Aden’s Severance Agreement provides for certain payments to be made upon her termination under certain circumstances, including a change of control. If Ms. Aden is terminated without cause she will receive: (a) a severance payment equal to her then current base salary, plus annual target bonus amount
Employment Agreements in Effect for 2022
| Cavco Industries, Inc. | www.cavco.com 33 |
Employment Agreements in Effect for 2022
as of the year of termination, subject to and in accordance with the terms of the Company’s Executive Leadership Team STI program; (b) a pro-rated bonus payment, for the period of time she was actually employed and worked during the fiscal year, equal to her annual target bonus amount as of the year of termination; and (d) COBRA coverage for up to twelve months following termination. In the event there is a change of control and Ms. Aden is terminated without cause as a direct result of the change in control during the period between six months prior to or within twelve months after such change in control event, Ms. Aden will receive: (a) a severance payment equal to the sum of: (i) one year of her base salary in effect as of the termination date and (ii) her annual target bonus amount as of the year of termination; (b) a pro-rated bonus payment for the period of time she was actually employed and worked during the fiscal year, equal to her annual target bonus amount as of the year of termination; and (c) COBRA coverage for up to twelve months following termination. The payment of any severance benefits under the agreement is contingent upon Ms. Aden’s execution of a customary release of claims. Paul Bigbee’s Change of Control Agreement Pursuant to his Change of Control Agreement, in the event there is a change in control and Mr. Bigbee is terminated without cause as a direct result of the change in control during the period between six months prior to or within twelve months after a change in control event, Mr. Bigbee will receive: (a) a severance payment equal to the sum of: (i) one year of his base salary in effect as of the termination date and (ii) his annual target bonus amount as of the year of termination; (b) a pro-rated bonus payment for the period of time he was actually employed and worked during the fiscal year, equal to his annual target bonus amount as of the year of termination; and (c) COBRA coverage for up to twelve months following termination. The payment of any severance benefits under the agreement is contingent upon Mr. Bigbee’s execution of a customary release of claims. Simone L. Reynolds’ Severance Agreement Ms. Reynolds’ employment with the Company terminated effective January 31, 2022. The Company and Ms. Reynolds had a Severance Agreement documenting her receipt of benefits to be provided in such an event. These benefits included certain cash payments. In addition, additional consideration was provided for prorated estimated values that would have been received under LTIP incentive programs for which she was a part. The following table shows the amount Ms. Reynolds received in connection with her separation:
Employment Agreements in Effect for 2022
| Description | Amount ($) | | Severance Payment | | | - Current base salary | $275,000 | | - Prorated FY22 corporate STIP bonus | 233,884 | | - Annual corporate STIP bonus, at Target | 225,000 | | Additional Consideration | 87,000 | | Total | $820,884 |
Employment Agreements in Effect for 2022
Additionally, Ms. Reynolds was entitled to payment of COBRA premiums under the Company's group medical and dental plans for a period of up to twelve months following the date of termination, but she did not elect to receive COBRA coverage.
Employment Agreements in Effect for 2022
| 34 2022 Proxy Statement | |
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 and, pursuant to Item 402(u) of Regulation S-K, the Company’s recently acquired Commodore Homes consisting of 1,135 employees, we identified our median employee by preparing a list of all 5,193 individuals employed by the Company as of April 2, 2022, 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 and Commodore Homes employees), whether employed on a full-time, part-time, seasonal or temporary basis. We annualized the compensation for any employees that were not employed by us for all of fiscal year 2022. From that listing, we identified a small sample of 15 employees, consisting of the median employee and 14 other employees whose gross pay was very close to the median employee’s gross pay (“Median Group”). We then calculated annual total compensation for such employees using the same methodology we use to calculate NEO compensation for the summary compensation table and selected the median employee from the Median Group. The fiscal year 2022 annual total compensation of our CEO was $4,717,716, the fiscal year 2022 annual total compensation of our median employee was $46,764, and the ratio of these amounts is 101:1.
Summary Compensation Table
Summary Compensation Table The table below sets forth information concerning the compensation and benefits of the Company’s NEOs during fiscal years 2022, 2021 and 2020.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(3) | Total ($) | | William C. Boor | 2022 | 850,000 | — | 1,915,335 | — | 1,950,529 | 1,852 | 4,717,716 | | President and CEO | 2021 | 825,000 | — | 703,920 | 702,216 | 1,341,517 | 33,569 | 3,606,222 | | | 2020 | 793,269 | 425,000 | 702,276 | 1,095,393 | 1,359,067 | 33,872 | 4,408,877 | | Allison K. Aden | 2022 | 259,615 | — | 478,345 | — | 364,477 | 61,139 | 1,163,576 | | Executive Vice President, CFO & Treasurer (4) | | | | | | | | | | Matthew A. Niño | 2022 | 200,000 | — | 104,970 | — | 1,213,929 | 1,852 | 1,520,751 | | President, Retail (5) | 2021 | 200,000 | — | 50,280 | 52,016 | 766,286 | 1,852 | 1,070,434 | | Brian R. Cira | 2022 | 200,000 | — | 167,952 | — | 1,113,990 | 1,852 | 1,483,794 | | President, Manufacturing (6) | | | | | | | | | | Mickey R. Dragash | 2022 | 325,000 | — | 251,928 | — | 366,509 | 1,852 | 945,289 | | Executive Vice President, General Counsel, Chief | 2021 | 325,000 | — | 125,700 | 123,538 | 312,917 | 2,321 | 889,476 | | Compliance Officer & Secretary | 2020 | 325,000 | — | 122,490 | 119,577 | 334,955 | 8,545 | 910,567 | | Simone L. Reynolds | 2022 | 216,027 | — | 167,952 | — | 233,884 | 587,710 | 1,205,573 | | Former Executive Vice President, Chief Human Resources Officer (7) | | | | | | | | | | Paul W. Bigbee | 2022 | 220,000 | — | 104,970 | — | 135,088 | 1,852 | 461,910 | | Chief Accounting Officer (8) | 2021 | 155,385 | 100,000 | 27,575 | 26,856 | 101,777 | 4,934 | 416,527 |
Summary Compensation Table
| (1) Amounts in this column represent the aggregate grant date fair value of RSU and PRSU awards based on the closing price of the Company’s common stock on the date of grant. For Messrs. Boor, Urness, Niño, Dragash and Bigbee, the amounts in these columns represent the grant date fair value assuming performance is achieved at the target level, which is considered the probable outcome. The grant date fair value of the PRSUs assuming achievement of the maximum level of performance for Mr. Boor, Ms. Aden, Messrs. Niño, Cira, Dragash, Ms. Reynolds and Mr. Bigbee is $1,915,335, $358,759, $78,728, $125,964, $151,157, $125,964 and $78,728, respectively. |
Summary Compensation Table
| (2) Amounts in this column represent the aggregate grant date fair value computed in accordance with ASC 718. We describe the assumptions made in this valuation in Note 17 to the Consolidated Financial Statements in the Company’s 2022 Form 10-K. |
Summary Compensation Table
| (3) For the year ended April 2, 2022, the “All Other Compensation” column includes: (i) Mr. Boor, life insurance premium of $852 and 401(K) match of $1,000; (ii) Ms. Aden, life insurance premium of $497 and $60,642 for reimbursement of relocation expenses; (iii) Mr. Niño, life insurance premium of $852 and 401(K) match of $1,000; (iv) Mr. Cira, life insurance premium of $852 and 401(K) match of $1,000; (v) Mr. Dragash, life insurance premium of $852 and 401(K) match of $1,000; (vi) Ms. Reynolds, life insurance premium of $710, $500,000 pursuant to her Severance Agreement and $87,000 for additional consideration representing value on unvested LTI awards and (vii) Mr. Bigbee, life insurance premium of $852 and 401(K) match of $1,000. |
Summary Compensation Table
| (4) Ms. Aden joined the Company on August 29, 2021. |
Summary Compensation Table
| (5) Mr. Niño was not a NEO in fiscal year 2020. |
Summary Compensation Table
| (6) Mr. Cira was not a NEO in fiscal years 2020 or 2021. |
Summary Compensation Table
| (7) Ms. Reynolds was not a NEO in fiscal years 2020 or 2021 and employment was terminated effective January 31, 2022. |
Summary Compensation Table
| (8) Mr. Bigbee joined the Company on June 16, 2020. Prior to the appointment of Ms. Aden as CFO in August of 2021, Mr. Bigbee was the Company’s Principal Financial and Accounting Officer in fiscal 2022. 2021 Bonus of $100,000 includes $25,000 signing bonus and $75,000 bonus for performance as Principal Financial and Accounting Officer. |
Summary Compensation Table
| 36 2022 Proxy Statement | |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth certain information with respect to incentive plan compensation for the NEOs listed in the Summary Compensation Table.
Grants of Plan-Based Awards
| | Grant | Estimated future payouts under non-equity incentive plan awards ($) (1) | | | Estimated future payouts under equity incentive plan awards (#) (5) | | | All Other Awards: Number of Securities Underlying Awards | Market Price on Grant Date | Grant Date Fair Value of Stock Awards | | Name | Date | Threshold | Target | Maximum | Threshold | Target | Maximum | (#) | ($/Sh) | ($) (6) | | Boor | 05/24/2021 | 510,000 | 1,020,000 | 2,040,000 | 1,676 | 3,350 | 6,700 | 3,350 | 209.94 | 1,406,598 | | Boor | 06/28/2021 | | | | 576 | 1,150 | 2,300 | 1,150 | 221.19 | 508,737 | | Aden (2) | 08/30/2021 | 106,740 | 266,887 | 373,627 | 554 | 920 | 1,379 | 920 | 259.97 | 478,345 | | Niño (3) | 05/24/2021 | 25,000 | 100,000 | 125,000 | 126 | 250 | 374 | 250 | 209.94 | 104,970 | | Cira (4) | 05/24/2021 | NA | 100,000 | 100,000 | 201 | 400 | 599 | 400 | 209.94 | 167,952 | | Dragash | 05/24/2021 | 136,500 | 325,000 | 370,500 | 360 | 600 | 720 | 600 | 209.94 | 251,928 | | Reynolds | 05/24/2021 | 93,800 | 225,000 | 365,000 | 201 | 400 | 599 | 400 | 209.94 | 167,952 | | Bigbee | 05/24/2021 | 27,500 | 110,000 | 137,500 | 126 | 250 | 374 | 250 | 209.94 | 104,970 |
Grants of Plan-Based Awards
| (1) For full discussion of non-equity incentive awards, see “Annual Short-Term Incentive Cash Compensation” section above. |
Grants of Plan-Based Awards
| (2) Ms. Aden’s employment began on August 29, 2021. Therefore, amounts are prorated for the fiscal year. |
Grants of Plan-Based Awards
| (3) The minimum and maximum figures presented are estimated future payouts under the Corporate STIP program as described above. In addition, Mr. Niño’s STIP program also includes being eligible to receive 5% of pre-tax income for the retail operation he oversees, with no threshold or maximum attainment levels. |
Grants of Plan-Based Awards
| (4) The minimum and maximum figures presented are estimated future payouts under the Corporate STIP program as described above. In addition, Mr. Cira’s STIP program also includes being eligible to receive 0.5% of pre-tax income for the manufacturing operations he oversees, with no threshold or maximum attainment levels. |
Grants of Plan-Based Awards
| (5) Amounts in these columns represent stock awards that vest in three years, subject to performance conditions, at the target amount, which is considered the probable outcome. |
Grants of Plan-Based Awards
| (6) Amounts in this column represent value of stock price at the date of grant times the number of shares granted. |
Grants of Plan-Based Awards
| Cavco Industries, Inc. | www.cavco.com 37 |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table includes certain information with respect to the value of all outstanding equity awards previously awarded to the NEOs at the fiscal year ended April 2, 2022.
Outstanding Equity Awards at Fiscal Year-End
| | OPTION AWARDS | | | | STOCK AWARDS | | | | | Name and Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares of Units of Stock That Have Not Vested ($) (8) | 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 ($) (8) | | William C. Boor | | | | | | | | | | 7/9/2016 | 4,000 | — | 96.82 | 7/9/2023(1) | | | | | | 7/9/2017 | 4,000 | — | 130.10 | 7/9/2024(2) | | | | | | 7/9/2018 | 4,000 | — | 217.60 | 7/9/2025(2) | | | | | | 4/15/2019 | 6,732 | 3,468 | 125.69 | 4/15/2026(3) | | | | | | 6/21/2019 | 8,646 | 4,454 | 158.36 | 6/21/2026(3) | | | 6,539(5) | 1,594,470 | | 5/20/2020 | 3,564 | 7,236 | 167.60 | 5/20/2027(3) | | | 4,200(6) | 1,024,128 | | 5/24/2021 | — | — | — | N/A | 3,350(7) | 816,864 | 3,350(6) | 816,864 | | 6/28/2021 | — | — | — | N/A | 1,150(7) | 280,416 | 1,150(6) | 280,416 | | Allison K. Aden | | | | | | | | | | 8/30/2021 | — | — | — | N/A | 920(7) | 224,333 | 920(6) | 224,333 | | Matthew A. Niño | | | | | | | | | | 7/9/2019 | 750 | 750 | 153.94 | 7/9/2026(4) | | | | | | 5/20/2020 | 264 | 536 | 167.60 | 5/20/2027(3) | | | 300(6) | 73,152 | | 5/24/2021 | — | — | — | N/A | 250(7) | 60,960 | 250(6) | 60,960 | | Brian R. Cira | | | | | | | | | | 7/9/2019 | 500 | 500 | 153.94 | 7/9/2026(4) | | | | | | 5/24/2021 | — | — | — | N/A | 400(7) | 97,536 | 400(6) | 97,536 | | Mickey R. Dragash | | | | | | | | | | 2/6/2019 | 1,000 | — | 131.46 | 2/6/2026(3) | | | | | | 6/21/2019 | 1,518 | 782 | 158.36 | 6/21/2026(3) | | | 762(5) | 185,806 | | 5/20/2020 | 627 | 1,273 | 167.60 | 5/20/2027(3) | | | 750(6) | 182,880 | | 5/24/2021 | — | — | — | N/A | 600(7) | 146,304 | 600(6) | 146,304 | | Paul W. Bigbee | | | | | | | | | | 7/28/2020 | 87 | 263 | 183.83 | 7/28/2027(4) | | | 150(6) | 36,576 | | 5/24/2021 | — | — | — | N/A | 250(7) | 60,960 | 250(6) | 60,960 |
Outstanding Equity Awards at Fiscal Year-End
| (1) These options vested 50% on the grant date and 50% on the first anniversary of the grant date. |
Outstanding Equity Awards at Fiscal Year-End
| (2) These options vest 25% on the first anniversary of the grant date, 25% on the second anniversary of the grant date and 50% on the third anniversary of the grant date. |
Outstanding Equity Awards at Fiscal Year-End
| (3) These options vest 33% on the first anniversary of the grant date, 33% on the second anniversary of the grant date and 34% on the third anniversary of the grant date. |
Outstanding Equity Awards at Fiscal Year-End
| (4) These options vest 25% on the first anniversary of the grant date and 25% on each anniversary thereafter until fully vested. |
Outstanding Equity Awards at Fiscal Year-End
| (5) These stock awards vest at the end of three years, subject to performance conditions. The stock awards are shown in the table above at the achievement amount. |
Outstanding Equity Awards at Fiscal Year-End
| (6) These stock awards vest at the end of three years, subject to performance conditions. The stock awards are shown in the table above at the target amount. |
Outstanding Equity Awards at Fiscal Year-End
| (7) The stock awards vest 33% on the first anniversary of the grant date, 33% on the second anniversary of the grant date and 34% on the third anniversary of the grant date. |
Outstanding Equity Awards at Fiscal Year-End
| (8) Market value amounts represent the product of the closing price of our common stock on April 2, 2022 of $243.84 per share, multiplied by the number of unvested shares. |
Outstanding Equity Awards at Fiscal Year-End
| 38 2022 Proxy Statement | |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table includes certain information with respect to the options exercised by the executive officers named above during the fiscal year ended April 2, 2022.
Option Exercises and Stock Vested
| | OPTION AWARDS | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | | William C. Boor | 4,000 | 871,240 | | Matthew A. Niño | 2,250 | 344,340 |
Option Exercises and Stock Vested
| (1) The value realized for the option awards is the difference between the market price of the underlying security at exercise and the exercise or base price of the option. |
Potential Payments upon Termination or Change of Control
Potential Payments upon Termination or Change of Control The following table describes and quantifies the potential payments that we would provide to our NEOs in connection with termination of employment for good reason, cause, and/or change in control. The amounts that would actually be paid to an NEO upon a termination of employment would depend on the circumstances and timing of termination or change in control. The terms “Good Reason”, “Cause” and “Change in Control” are defined in the executives’ various employment agreements. All severance payments under the employment agreements are conditioned upon the delivery and non-revocation of a customary release by the executive in favor of the Company. Each of the employment agreements include customary provisions concerning the timing, limitation and alteration of payments to comply with Section 409A of the Internal Revenue Code. Consistent with the SEC’s rules and regulations concerning executive compensation disclosure, the potential value of benefits payable assumes that the termination occurred on April 2, 2022, and with a closing stock price of $243.84 per share on the last business day of fiscal year 2022. The value of the acceleration of stock vestings was computed based on the closing price of our stock on the last day of fiscal year 2022 for each equity award affected. Total termination benefits represent payments for severance, non-compete and non-disclosure covenants.
Potential Payments upon Termination or Change of Control
| Executive Officer | Voluntary Termination by Executive Without Good Reason ($) | Voluntary Termination by Executive With Good Reason ($) | Termination by Company Without Cause ($) | Termination by Company With Cause ($) | Death or Disability ($) | Change in Control ($) | | William C. Boor | — | 8,183,433 | 8,183,433 | — | 3,805,131 | 13,155,054 | | Allison K. Aden | — | 656,656 | 656,656 | — | — | 1,554,886 | | Matthew A. Niño | — | — | — | — | — | — | | Brian R. Cira | — | — | — | — | — | — | | Mickey R. Dragash | — | 1,630,639 | 1,630,639 | — | 566,265 | 1,935,101 | | Paul W. Bigbee | — | — | — | — | — | 570,985 |
Potential Payments upon Termination or Change of Control
| Cavco Industries, Inc. | www.cavco.com 39 |