DEF 14A of Eagle Materials Inc
Filed Jun 23, 2023 · FY20230001564590-23-007778
TABLE OF CONTENTS
| | Page | | Executive Compensation | 44 | | Summary Compensation Table | 44 | | Grants of Plan-Based Awards | 46 | | Outstanding Equity Awards at Fiscal Year-End | 47 | | Option Exercises and Stock Vested | 49 | | Nonqualified Deferred Compensation in FY 2023 | 50 | | Potential Payments Upon Termination or Change in Control | 51 | | Change in Control Continuity Agreements | 51 | | Payments Made Upon Any Termination | 52 | | CEO Pay Ratio | 54 | | Pay Versus Performance | 55 | | Stock Ownership | 59 | | Management | 59 | | Certain Beneficial Owners | 61 | | Related Party Transactions | 62 | | Delinquent Section 16(a) Reports | 62 | | Employee, Officer and Director Hedging | 63 | | Code of Conduct | 63 | | Proposal No. 2: Advisory Vote on Compensation of Our Named Executive Officers | 64 | | Recommendation of the Board | 64 | | Proposal No. 3: Advisory Vote on Frequency of Future Advisory Votes on the Compensation of our NEOs | 65 | | Recommendation of the Board | 65 | | Proposal No. 4: Approval of the Eagle Materials Inc. 2023 Equity Incentive Plan | 66 | | Recommendation of the Board | 74 | | Proposal No. 5: Approval of the Expected Appointment of Independent Auditors | 75 | | Recommendation of the Board | 75 | | Relationship with Independent Public Accountants | 76 | | Audit Committee Report | 77 | | Other Matters Which May be Presented for Action at the Meeting | 78 | | Delivery of Documents to Stockholders | 78 | | Stockholder Proposals and Nominations for the 2024 Annual Meeting | 78 | | Appendix A: Eagle Materials Inc. 2023 Equity Incentive Plan | 79 |
PROPOSAL NO. 1: ELECTION OF DIRECTORS AND RELATED MATTERS
PROPOSAL NO. 1: ELECTION OF DIRECTORS AND RELATED MATTERS
(Class II Directors)
(Class II Directors) George J. Damiris Director Since: 2016 Age: 61 Committees: Compensation Career Highlights: Ms. Carter has been a director of Installed Building Products, Inc., an installer of insulation and complementary building products, since 2014. She serves as IBP’s lead independent director, the Chair of its Nominating and Governance Committee and a member of the Audit Committee. From 2010 to 2015, Ms. Carter served as Executive Vice President, Chief Legal Officer and Secretary for RealPage, Inc. Since 1998, Ms. Carter has served as the President and founder of Living Mountain Capital, L.L.C., a business advisory firm. She is the Chair of the NACD North Texas Chapter. Skills and Qualifications: Ms. Carter brings to the Board and the committees on which she serves her proven leadership and business experience gained as a general counsel and director at other public companies. Ms. Carter also brings strategy, business development, M&A experience and corporate governance and finance knowledge gained from over 20 years of executive and board experience at other public companies. Career Highlights: In January 2020, Mr. Nicolais founded and is Managing Partner of Roble Drive Investment Company, a private investment firm, following his retirement as Vice Chairman and Chief Executive Officer of Highlander Partners L.P., an investment partnership—an office he held from January 2017 through December 2019. Previously, Mr. Nicolais served Highlander Partners as President from April 2004 through December 2016. From August 2002 until March 2004, Mr. Nicolais served as Managing Director of Stephens, Inc., an investment banking firm. Prior to joining Stephens, Inc., he was a partner in the private investment firm of Olivhan Investments, L.P. from March 2001 until August 2002. From August 1986 to December 2000, he was employed by Donaldson, Lufkin & Jenrette Securities Corporation’s Investment Banking Division, most recently in the position of Managing Director and co-head of that firm’s Dallas office. Skills and Qualifications: Mr. Nicolais brings to the Board and the committees on which he serves his extensive knowledge of capital markets, mergers and acquisitions and financial analysis and financial oversight experience gained through his work as an investment banker and investment manager. Career Highlights: In 2002, Ms. Ricciardello retired after a 20-year career with Reliant Energy Inc., a leading independent power producer and marketer. She served in various financial management positions with the company, including Comptroller, Vice President and most recently Senior Vice President and Chief Accounting Officer. Ms. Ricciardello has been a director of ProPetro Holding Corp. since January 2023. Ms. Ricciardello also served as a director of Devon Energy from 2007 to January 2021. She also served on the Noble Corporation board from 2003 until May 2020, on the EnLink Midstream board from 2014 until 2018, on the Midstates Petroleum board from 2010 until 2013 and on the U.S. Concrete board from 2003 until 2010. Ms. Ricciardello currently sits on the advisory board of the NACD TriCities Chapter (Houston). Skills and Qualifications: Ms. Ricciardello is a licensed Certified Public Accountant and a financial executive with over 30 years of experience. She brings to the Board her extensive experience with corporate finance, accounting and tax matters and her experience as a board member for energy and construction products companies. Career Highlights: From 1998 until 2006 Mr. Stewart served as President and CEO of GE Aero Energy, a division of GE Power Systems and as an officer of General Electric Company. Mr. Stewart retired from General Electric in 2006. Mr. Stewart’s career at General Electric began in 1998 as a result of General Electric’s acquisition of the gas turbine business of Stewart & Stevenson Services, Inc. Mr. Stewart began his career at Stewart & Stevenson in 1972 and while at Stewart & Stevenson served in various positions including as Group President and member of the board of directors. Mr. Stewart has been a director of Kirby Corporation since 2008, currently serving as Chair of the Audit Committee. Mr. Stewart has also served as a director of Plug Power Inc. from July of 2003 to March of 2006. Mr. Stewart was a director of Lufkin Industries, Inc. from 2009 until its acquisition by GE Oil & Gas in 2013 and served a director of Exterran Corp. from 2015 to 2018. Skills and Qualifications: Mr. Stewart brings to the Board and the committee on which he serves his proven leadership and business experience as the former CEO of a manufacturing company. Mr. Stewart also brings corporate governance experience gained from membership on the boards of other public companies and as an officer with General Electric. Director Since: 2011 Age: 74 Committees: Compensation (Chair)
Continuing Directors Whose Terms Expire at our 2024 Annual Meeting
Continuing Directors Whose Terms Expire at our 2024 Annual Meeting
(Class III Directors)
(Class III Directors) Margot L. Carter Director Since: 2017 Age: 53 Committees: Compensation Governance Other Public Boards: Installed Building Products, Inc. Career Highlights: Mr. Beckwitt is the Co-Chief Executive Officer and Co-President of Lennar Corporation, positions he has held since November 2020. He also serves on the Lennar Board of Directors. He joined Lennar in March 2006 as an Executive Vice President, became President in April 2011 and was promoted to CEO in April 2018. Mr. Beckwitt served on the Board of Directors of D.R. Horton, Inc. from 1993 to November 2003. From 1993 to March 2000, he held various executive officer positions at D.R. Horton, including President of the Company. From March 2000 to April 2003, Mr. Beckwitt was the owner and principal of EVP Capital, L.P., a venture capital and real estate advisory company. From 1986 to 1993, Mr. Beckwitt worked in the Mergers and Acquisitions and Corporate Finance Departments at Lehman Brothers. Mr. Beckwitt also served as a director of Five Point Holdings from May 2016 to June 2020. Skills and Qualifications: Mr. Beckwitt brings to the Board and the committee on which he serves his extensive executive experience gained through his service as the Chief Executive Officer and executive officer of public companies within the homebuilding industry, as well as finance-related experience with a major investment banking firm. Career Highlights: Mr. Gregorio is the President of Performance Materials and Coatings at Dow. With annual sales of $9 billion, this business provides innovative solutions to global markets in infrastructure and transportation as well as other segments. Mr. Gregorio also has executive oversight for Dow’s business in the Latin America Region. Mr. Gregorio joined Dow in 1984. He has significant market and international experience after working at several Dow locations globally. He was recognized as #1 on the Empower Top 100 Ethnic Minority Senior Business Leader Role Models list for 2020. Skills and Qualifications: Mr. Gregorio, a senior executive at a global manufacturing company, brings to the Board and the committee on which he serves extensive executive and industrial business management experience acquired through several assignments that included supply chain, commercial, innovation and M&A transactions. We also benefit from his experience and reputation building inclusive growth-oriented organizations. Career Highlights: Mr. Haack has been the Company’s President and Chief Executive Officer since July 1, 2019. Prior to that time, he has served as President and Chief Operating Officer since August 2018 and was Executive Vice President and Chief Operating Officer from December 2014 through August 2018. Mr. Haack was employed at Halliburton Energy Services for the 17 years prior to joining the Company, most recently as Global Operations Manager at Halliburton’s Sperry Drilling division. Skills and Qualifications: Mr. Haack brings to the Board his extensive knowledge of the Company’s operations, as well as his executive and operations experience gained in heavy industry over the previous 20 years.
Continuing Directors Whose Terms Expire at our 2025 Annual Meeting
Continuing Directors Whose Terms Expire at our 2025 Annual Meeting
(Class I Directors)
(Class I Directors) F. William Barnett Director Since: 2003Age: 74 Committees: Governance (Chair) Career Highlights: Mr. Damiris served as Chief Executive Officer and President of HollyFrontier Corporation from 2016 through 2019 and as a director from 2015 through 2019. He previously served as Executive Vice President and Chief Operating Officer from September 2014 to January 2016 and as Senior Vice President, Supply and Marketing from January 2008 until September 2014. Prior to his retirement in 2019, Mr. Damiris also served as a director of Holly Logistics Services, L.L.C., the general partner of the general partner of Holly Energy Partners, L.P., since February 2016, as CEO since November 2016 and as President since February 2017. Mr. Damiris has served as a director of MRC Global Inc. since 2021. Skills and Qualifications: Mr. Damiris brings to the Board and the Compensation Committee his extensive management and operational experience gained from his time as a senior executive at a large, public industrial company.
Richard Beckwitt Director Since: 2014 Age: 62 Committees: Audit
Richard Beckwitt Director Since: 2014 Age: 62 Committees: Audit Governance Other Public Boards: Lennar Corporation Career Highlights: Mr. Ellen retired as Chief Financial Officer and Executive Vice President at Dr Pepper Snapple Group, Inc. in July 2018, having served in that capacity since April 2010. Mr. Ellen also served as the Chief Financial Officer and Senior Vice President - Finance of Snap-on Inc. from November 2002 to March 2010. Skills and Qualifications: Mr. Ellen brings to the Board and the Audit Committee his extensive management, finance and audit experience gained from over 25 years serving as chief financial officer with public and private companies and prior experience with a major public accounting firm. Career Highlights: Mr. Powers served as the Company’s President and Chief Executive Officer from March 2016 until his retirement on July 1, 2019. Prior to his promotion to President and Chief Executive Officer of the Company, Mr. Powers served as Executive Vice President – Gypsum of the Company and as President of American Gypsum Company LLC, a subsidiary of the Company (“American Gypsum”), since January 2005. Mr. Powers previously served as Executive Vice President – Marketing, Sales and Distribution of American Gypsum, beginning in June 2002. Skills and Qualifications: Mr. Powers brings to the Board his extensive executive and operations experience in the construction products industry, including over 35 years of experience in the gypsum wallboard industry, and his knowledge of the Company and its business and operations.
BOARD COMPENSATION
| (1) total compensation valued at $230,000, of which $105,000 is paid in cash and the remainder is provided in the form of an equity grant valued at $125,000; or |
Non-Employee Director Compensation for Fiscal Year 2023
Non-Employee Director Compensation for Fiscal Year 2023 The table below summarizes the compensation paid by the Company to our non-employee directors for the fiscal year ended March 31, 2023.
Non-Employee Director Compensation for Fiscal Year 2023
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(2) | Total ($) | | F. William Barnett(3) | $— | $— | $— | $— | $— | $5,203 | $5,203 | | Richard Beckwitt(4) | — | 287,618 | — | — | — | 5,530 | 293,148 | | Ed H. Bowman(3) | — | — | — | — | — | 5,243 | 5,243 | | Margot L. Carter(5) | 70,000 | 125,018 | — | — | — | 489 | 195,507 | | George J. Damiris(6) | — | 287,618 | — | — | — | 1,125 | 288,743 | | Martin M. Ellen(7) | 125,000 | 125,018 | — | — | — | 2,341 | 252,359 | | Mauro Gregorio(8) | — | 261,541 | — | — | — | 1,349 | 262,890 | | Michael R. Nicolais(9) | — | 318,169 | 106,076 | — | — | 6,613 | 430,858 | | David B. Powers(5) | 105,000 | 125,018 | — | — | — | 489 | 230,507 | | Mary P. Ricciardello(8) | — | 196,220 | 65,424 | — | — | 768 | 262,412 | | Richard R. Stewart(5) | 105,000 | 125,018 | — | — | — | 4,039 | 234,057 |
Non-Employee Director Compensation for Fiscal Year 2023
| (1) The amounts in this column reflect the value of restricted stock awards made to the directors in the fiscal year ended March 31, 2023 and are consistent with the grant date fair value of the award computed in accordance with FASB ASC Topic 718. For assumptions used in determining these values, refer to footnote (L) to the Company’s audited financial statements for the fiscal year ended March 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on May 19, 2023 (“Fiscal 2023 Form 10-K”). |
Non-Employee Director Compensation for Fiscal Year 2023
| (2) The amounts in this column represent dividend payments made in fiscal 2023 to the directors with respect to restricted stock held by such directors. |
Non-Employee Director Compensation for Fiscal Year 2023
| (3) Messrs. Barnett and Bowman retired from the Board effective August 5, 2022. |
Non-Employee Director Compensation for Fiscal Year 2023
| (4) Mr. Beckwitt is the Chair of the Governance Committee. He elected to receive 100% of his director compensation in the form of equity (including his chairperson fee). |
Non-Employee Director Compensation for Fiscal Year 2023
| (5) Ms. Carter and Messrs. Powers and Stewart selected the compensation package where they receive a portion of their director compensation in the form of equity and a portion in cash. |
Non-Employee Director Compensation for Fiscal Year 2023
| (6) Mr. Damiris is the Chair of the Compensation Committee. He elected to receive 100% of his director compensation in the form of equity (including his chairperson fee). |
Non-Employee Director Compensation for Fiscal Year 2023
| (7) Mr. Ellen is Chair of the Audit Committee. He selected the compensation package where he receives a portion of his director compensation in the form of equity and a portion in cash. Mr. Ellen received his chairperson fee in cash. |
Non-Employee Director Compensation for Fiscal Year 2023
| (8) Mr. Gregorio and Ms. Ricciardello elected to receive 100% of their director compensation in the form of equity. |
Non-Employee Director Compensation for Fiscal Year 2023
| (9) Mr. Nicolais served as Chairman of the Board during fiscal 2023. He elected to receive 100% of his director compensation in the form of equity (including his chairperson fee). |
Non-Employee Director Compensation for Fiscal Year 2023
The following chart shows the number of outstanding stock options, RSUs and shares of restricted stock held by each non-employee director as of March 31, 2023.
Non-Employee Director Compensation for Fiscal Year 2023
| Name | Stock Options(1) | RSUs(2) | Restricted Stock(3) | | F. William Barnett | — | — | — | | Richard Beckwitt | 2,070 | — | 4,405 | | Ed H. Bowman | — | — | — | | Margot L. Carter | — | — | — | | George J. Damiris | — | — | — | | Martin M. Ellen | — | — | 1,852 | | Mauro Gregorio | — | — | — | | Michael R. Nicolais | 18,669 | 3,935 | 5,368 | | David B. Powers | — | — | — | | Mary P. Ricciardello | 4,747 | — | — | | Richard R. Stewart | — | — | 3,550 |
Non-Employee Director Compensation for Fiscal Year 2023
| (1) All of these stock options were fully exercisable as of March 31, 2023. |
Non-Employee Director Compensation for Fiscal Year 2023
| (2) The RSUs granted to non-employee directors (and any accrued dividend equivalent RSUs) are not payable until the non-employee director’s service on the board terminates because of the director’s death or the director’s retirement in accordance with the Company’s director retirement policy, or under such circumstances as are approved by the Compensation Committee. The number of RSUs reflected in this column includes the following aggregate dividend equivalent units, which are accrued by holders of our RSUs at any time we pay a cash dividend on our Common Stock: Mr. Nicolais – 635 RSUs. |
Non-Employee Director Compensation for Fiscal Year 2023
| (3) The restrictions on these restricted stock awards will not lapse until the non-employee director’s service on the board terminates because of the director’s death or the director’s retirement in accordance with the Company’s director retirement policy, or under such circumstances as are approved by the Compensation Committee. Any cash dividends declared and paid by the Company during the restricted period are paid in cash with respect to such restricted stock. |
Compensation Committee
| • | review and recommend to the Board the compensation of non-employee directors; |
Our Core Tenet: Pay for Performance
We believe that a significant portion of an executive’s compensation should be “at risk” – that is, contingent on the achievement of performance goals and other important company objectives, such as in the areas of ESG or safety, and the individual’s performance and continued employment. Our performance-based compensation philosophy is evidenced by the charts below showing that 86% of our Chief Executive Officer’s target compensation opportunity for fiscal 2023 and 78% of our other continuing Named Executive Officers’ target compensation opportunity for fiscal 2023 was performance-based or at-risk. To achieve our compensation objectives for fiscal 2023, our executive compensation program used a combination of short-term and long-term elements: (1) annual salary, (2) annual incentive bonus, and (3) long-term incentive compensation in the form of stock options and restricted stock, both with time and performance vesting conditions. Each element of long-term and short-term compensation is discussed more fully below under the heading “Primary Elements of Executive Compensation” on page 33 of this Proxy Statement. The key features of our executive compensation program include the following:
Our Core Tenet: Pay for Performance
| (1) We seek to align the interests of executives with those of our stockholders by: | | • Creating a direct and substantial link between the executive’s annual cash incentive bonus and our annual operating earnings, | | • Structuring long-term compensation as equity awards, so that executives have an appropriate incentive to contribute to the creation of long-term stockholder value, and | | • Requiring executives to meet stock ownership guidelines that will result in each executive holding a meaningful equity stake in the Company. | | (2) We seek to encourage improved performance by: | | • Establishing our annual incentive bonus potential based on our operating earnings, with the ability for the Committee to reduce the bonus based on individual performance goals, and | | • Tying the ability to earn a substantial portion of our equity-based awards to the achievement of financial goals. |
Our Compensation Practices
| • | Maintain stock ownership guidelines requiring executives to align their long-term interests with those of our stockholders. |
Our Compensation Practices
| • | Have employment agreements currently in effect with our executives. |
Our Compensation Practices
| • | Allow re-pricing of options (prohibited under our 2013 Incentive Plan – and under the 2023 Plan submitted as Proposal No. 4 in this Proxy Statement). |
Authority of the Compensation Committee
| • | Set the salary and other cash and equity compensation for our CEO based on such evaluation; |
Authority of the Compensation Committee
| • | Grant cash awards (including annual incentive bonuses) under our annual bonus programs and equity awards (including options, restricted stock and restricted stock units) under the 2013 Incentive Plan to our officers and other key employees; |
Authority of the Compensation Committee
| • | Review and recommend to the Board the compensation of our non-employee directors; and |
Authority of the Compensation Committee
| (1) the salary of each Named Executive Officer for such fiscal year; | | (2) the overall size of the annual incentive bonus pools based on a percentage of our operating earnings or EBITDA in which the Named Executive Officers will have the opportunity to participate during such year and the percentage of the pool assigned to each Named Executive Officer; | | (3) whether the Compensation Committee will make any long-term incentive compensation awards in such fiscal year; |
Authority of the Compensation Committee
| (4) if the Compensation Committee decides to make long-term compensation awards for such fiscal year, the amount, nature of and terms applicable to such awards, including the form any such awards will take (e.g., options, restricted stock, restricted stock units and/or cash), the performance- or time-vesting criteria (or both) that will apply to any such awards, and the exercisability or payment schedules that will apply to any such awards if the performance criteria are satisfied; and | | (5) the Eagle Materials Special Situation Program for such fiscal year and the overall funding levels for such program based on operating earnings. |
Authority of the Compensation Committee
| (1) reviews and approves the annual incentive bonus pools; | | (2) determines the extent to which the performance criteria for the prior fiscal year applicable to any long-term incentive awards were satisfied; | | (3) determines the amount of the downward adjustment, if any, to be made to the annual incentive bonus payment to each Named Executive Officer based on individual performance; and | | (4) if applicable, makes awards under the Eagle Materials Special Situation Program. |
Role of Management
Role of Management Our CEO participates to a limited extent in the administration of our compensation program for Named Executive Officers, other than himself. Following the end of each fiscal year, the CEO provides input to the Compensation Committee on the performance of each of the other Named Executive Officers during the fiscal year and recommends compensation adjustments (salary adjustments for the upcoming fiscal year, any downward adjustments to annual incentive bonus levels for the recently completed fiscal year, and annual incentive bonus levels for the upcoming fiscal year) and, if applicable, long-term incentive award levels for such Named Executive Officers. The CEO also provides input on the structure of our long-term incentive awards (if any) for such Named Executive Officers, including the long-term incentive award levels and the performance or other criteria that determine vesting and other terms and conditions applicable to the awards. The Compensation Committee considers the CEO’s input, along with other information presented by its independent compensation consultants or otherwise available to it, in making its final compensation decisions with respect to the Named Executive Officers.
Engagement of an Independent Compensation Consultant
Engagement of an Independent Compensation Consultant In February 2022, the Compensation Committee retained Meridian Compensation Partners (“Meridian”) to review levels and incentive components of our executives’ compensation in an effort to align the compensation of our officers competitively with the market for fiscal 2023. The primary role of Meridian was to provide the Compensation Committee with market data and information regarding compensation trends in our industry and to make recommendations regarding base salaries, the design of our incentive programs and executive compensation levels. The Compensation Committee has assessed the independence of Meridian pursuant to SEC and NYSE rules and concluded that no conflict of interest exists that would prevent Meridian from independently advising the Compensation Committee.
Compensation Peers
Compensation Peers The data used by Meridian in its survey of compensation (the “compensation study”) was from compensation disclosures included in the proxy statements of members of our peer group, as well as Equilar survey data where available for particular positions. At the beginning of fiscal 2023 (spring 2022), Meridian reviewed the Company’s current peer group for appropriateness and provided the Compensation Committee with recommendations for adjustments. Meridian analyzed the Company’s peer group and potential modifications based on industry relevance, revenue and market capitalization size. Based on Meridian’s analysis and with consideration to management’s input, the Compensation Committee approved the removal of five peers used in fiscal 2022: U.S. Concrete, which had been acquired; Cleveland-Cliffs, Inc., which had grown too large relative to the Company; Granite Construction, which was a poor business/industry match; and EnPro Industries, Inc. and Silgan Holdings, which were poor business/industry matches with no overlap in peer company and advisory firm peer groups. The Compensation Committee also approved the addition of six companies to the peer group: ATI Inc., Arcosa Inc., Compass Minerals International Inc., H.B. Fuller Company, Quaker Houghton and SunCoke Energy, Inc. Based on Meridian’s recommendation, the Compensation Committee utilized the following 16-company peer group in analyzing fiscal 2023 compensation (“compensation peer group”): can Materials Company We are aware that institutional shareholder advisors, such as Institutional Shareholder Services, Glass Lewis and others, utilize methodologies to determine “peer groups” that may differ from our process. We believe that the methodologies they use may result in a peer group that does not provide a close “fit” for Eagle. For example, if the institutional shareholder advisor relies upon GICS codes to identify potential peers, the resulting peer group would include many companies whose operations we view as sufficiently dissimilar to ours as to make comparisons significantly less meaningful. Additionally, if the sole financial metric used by an institutional shareholder advisor to construct a peer group is revenue, the resulting peer group can create a poor fit for two reasons. First, we conduct a portion of our cement operations through the 50% owned Texas Lehigh joint venture. Because of applicable accounting rules we are unable to include the revenue of this joint venture in our revenue line item—we instead account for that entity in a separate line item valuing the equity interest in an unconsolidated joint venture. Second, in our industry, with large up-front capital projects, we believe that cash flow and operating earnings are as or more important than revenues when evaluating peers. For these reasons and in light of the peer analysis described above, we believe that the compensation peer group identified by our Compensation Committee for fiscal 2023 provides a more appropriate and meaningful basis for assessing our executive compensation.
Primary Elements of Executive Compensation
| • | Annual incentive bonus |
Primary Elements of Executive Compensation
| • | Long-term incentive compensation |
Annual Incentive Bonus
Annual Incentive Bonus The Compensation Committee is responsible for approving the annual incentive bonus for our CEO and the other Named Executive Officers. Annual incentive bonuses paid to our Named Executive Officers for fiscal 2023 (other than Mr. Wentzel) were made under the Eagle Materials Inc. Salaried Incentive Compensation Program for Fiscal Year 2023 (the “Eagle Annual Incentive Program”). The Eagle Annual Incentive Program and the Company’s other incentive programs for fiscal 2023 were structured to create financial incentives and rewards that are directly related to corporate performance and the participating Named Executive Officer’s individual performance during the fiscal year. The Compensation Committee believes these programs are consistent with our pay-for-performance compensation philosophy in that they place a significant portion of the executive’s compensation “at risk.” Generally, under these programs, a significant portion of the executive’s total compensation is dependent upon the performance of the Company as well as the individual’s performance. The Company’s annual incentive bonus programs also reflect the Committee’s philosophy of aligning the interests of our executives with those of the stockholders. These programs create this alignment by providing that an officer’s annual bonus potential varies directly with our operating earnings (Eagle program) or EBITDA (divisional programs). In addition, individual performance and achievement of goals (as discussed in more detail below under “Approving the Annual Incentive Bonus”) may affect the actual incentive bonus amount through the exercise of “negative discretion.” The Committee believes that operating earnings or EBITDA is an appropriate metric for annual incentive bonuses because it is tied closely to operations, can be directly impacted by the efforts of the pool participants, and is a measure that our stockholders have indicated they track and value. Eagle Annual Incentive Program For fiscal 2023, Messrs. Haack, Kesler, Stewart and Newby were participants in the Eagle Annual Incentive Program. Under this program, during the first quarter of the fiscal year, a percentage of our operating earnings is designated by the Compensation Committee as a pool for bonuses, and each participating Named Executive Officer is assigned a share of such pool, representing the executive’s maximum bonus opportunity. At the end of the fiscal year, the size of the pool is determined, based on the amount of operating earnings generated during such fiscal year, and annual incentive bonuses are paid to each participating executive in the form of a lump sum cash payment reflecting each executive’s share of the pool, subject to the exercise of “negative discretion” by the Compensation Committee to reduce (but not increase) the amount of the cash payment based on the executive’s individual performance during the fiscal year. The amount of the annual incentive bonus paid to an executive is based on the level of our operating earnings, the share of the pool designated for such executive, and an assessment of such executive’s individual performance. The Eagle Annual Incentive Program for Fiscal 2023 was adopted by the Compensation Committee in May 2022 and it mirrored the structure of the fiscal 2022 program. The program was to be funded with 1.2% of the Company’s operating earnings for fiscal 2023, the same percentage used in the prior year. The bonus pool itself is not subject to a separate cap or maximum; it is merely a function of multiplying the pre-determined percentage by our operating earnings for the applicable fiscal year. However, our 2013 Incentive Plan does provide an absolute cap on cash that any employee may receive in any fiscal year under such programs ($5 million). In setting the percentage of operating earnings which would fund the pool for the Eagle Annual Incentive Program, the Compensation Committee considered several factors, including our compensation philosophy that a significant portion of the executive’s compensation should be “at risk” and subject to the Company’s success (level of operating earnings), as well as the anticipated operating earnings for fiscal 2023. In allocating each Named Executive Officer’s opportunity under the pool, the Compensation Committee considered the amount of annual incentive bonus compensation opportunities of executives in other companies who fulfill similar roles as illustrated in the compensation study prepared by Meridian, the share of the pool historically allocated to officers in such roles by the Company, the recommendation of Mr. Haack for each participant (other than himself), as well as the Compensation Committee’s assessment of the executive’s importance and contribution to the organization, the executive’s importance in driving the achievement of Company goals and profitability, the executive’s level of responsibility, and the anticipated operating earnings for fiscal 2023. The Compensation Committee set the bonus potential for the Named Executive Officers as follows:
Annual Incentive Bonus
| Name | Annual Incentive Bonus Potential (% of Pool) | | Michael R. Haack | 28.0 | | D. Craig Kesler | 17.5 | | Robert S. Stewart | 15.0 | | Matt Newby | 6.5 |
Annual Incentive Bonus
Also at the beginning of fiscal 2023, the Compensation Committee worked with Mr. Haack to develop individual annual incentive goal categories by plan and position throughout the Company, including with respect to the Named Executive Officers (other than himself). For participants in the Eagle Annual Incentive Program, the participants’ individual performance against the goals would be evaluated by the Committee in the exercise of “negative discretion” to reduce (but not increase) the amount of the portion of the pool that would be paid to the participant at the end of the fiscal year. This pool amount was not quantifiable until the end of fiscal 2023, at which time the Compensation Committee determined that the aggregate amount available for the Eagle Annual Incentive Program pool for fiscal 2023 was $7,485,172 (a maximum of $5,015,066 of which could be paid out to Named Executive Officers). For comparison purposes, the equivalent pool amount in fiscal 2022 was $6,172,484 (a maximum of $5,339,199 of which could be paid out to Named Executive Officers). Divisional Annual Incentive Program For certain employees who do not participate in the Eagle Annual Incentive Program, the Company maintains divisional annual incentive plans, which the Committee believes better tie such employees’ annual incentive compensation to metrics that they can directly influence than a Company-wide program. Under these programs, a percentage of a division’s EBITDA is allocated to the bonus pool and each participating employee is assigned a share of the pool, representing the employee’s maximum bonus opportunity. At the end of the fiscal year, the size of the pool is determined and annual bonuses are paid to participating employees in the form of a lump sum cash payment in accordance with their shares of the pool, subject to the exercise of negative discretion by our CEO (or, in the case of bonuses paid to Named Executive Officers, the Compensation Committee) based on the employee’s individual performance during the fiscal year. For fiscal 2023, Mr. Wentzel participated in a Divisional Annual Incentive Bonus Program—the Eagle Materials Inc. American Gypsum Company Salaried Incentive Compensation Program for Fiscal Year 2023. Under this program, the bonus pool equaled 2.0% of the EBITDA of American Gypsum, which is the same percentage the Compensation Committee has set for the past several years. In deciding to keep the percentage of EBITDA used to fund this bonus pool the same as the prior year, the Compensation Committee considered several factors, including our compensation philosophy that a significant portion of the executive’s compensation should be “at risk” and subject to the Company’s success (level of earnings). The divisional bonus pools are not subject to a separate cap or maximum, but are merely a function of multiplying the pre-determined percentage by the applicable operating earnings for the applicable fiscal year; however, our 2013 Incentive Plan does provide an absolute cap on cash that any employee may receive in any fiscal year under such programs ($5 million). The aggregate amounts available for the American Gypsum program for fiscal 2023 was $7,561,204, which was not quantifiable until the end of fiscal 2023 and includes amounts available for payment to officers and employees other than the Named Executive Officers. For comparison purposes, the equivalent amount in fiscal 2022 was $5,719,545. In May 2022, the Compensation Committee set the annual incentive bonus potential for Mr. Wentzel under the American Gypsum program. In determining Mr. Wentzel’s allocation of the pool, the Compensation Committee considered the recommendation of Mr. Haack, the amount of annual incentive bonus compensation payable to executives in other companies who fulfill similar roles as illustrated in the compensation study prepared by Meridian, the portion of the pool historically allocated to his position and the Compensation Committee’s assessment of his importance and contribution to his division’s performance, his importance as an officer within his division in driving the achievement of divisional goals and profitability and his level of responsibility. The Compensation Committee set Mr. Wentzel’s incentive bonus potential at 12.5% of his divisional bonus pool, subject to a cap of $675,000 set by the Committee. Special Situation Program In the first quarter of fiscal 2023 (May 2022), the Compensation Committee approved the Eagle Materials Inc. Special Situation Program for Fiscal Year 2023 (the “SSP”), which is a special annual incentive program intended to recognize outstanding individual performance during the fiscal year. The SSP also provides flexibility to reward performance when special circumstances arise in which our CEO determines that an individual has performed well but not been adequately compensated pursuant to other components of compensation, including instances where an individual’s compensation has been adversely affected by unexpected changes in market conditions such as a cyclical downturn or in recognition of transactions and events not contemplated at the time the Compensation Committee set compensation for the applicable year. SSP awards are made by our CEO, except that awards to senior executive officers require Compensation Committee approval (and our CEO does not have a role in the determination of any SSP award to himself). Awards under the SSP are not predetermined for any individuals at the beginning of the fiscal year. All full-time employees of the Company or any of our subsidiaries are eligible to receive awards under this program. At the beginning of fiscal 2023, the Compensation Committee determined that 0.20% of the Company’s EBITDA for the ensuing fiscal year would fund the SSP, along with the portions of the Eagle and divisional incentive compensation plans and divisional long-term cash compensation plans not paid out. In setting the percentage of EBITDA which would fund the SSP, the Compensation Committee considered several factors, including the anticipated EBITDA for fiscal 2023. All of our Named Executive Officers are eligible to participate in the SSP. Approving the Annual Incentive Bonus In May 2023, the Compensation Committee approved the incentive bonus pool for fiscal 2023 for the Company. In addition, at the end of fiscal 2023, Mr. Haack provided performance evaluations of each Named Executive Officer (other than himself) to the Compensation Committee, which evaluations included an assessment of the achievement of their individual goals and objectives, along with his recommendation for the annual incentive bonus for each such Named Executive Officer. With respect to Mr. Haack, the Compensation Committee performed its own evaluation of his performance and the extent to which the goals and objectives established for him for fiscal 2023 had been achieved. Mr. Haack
Annual Incentive Bonus
At the end of fiscal 2023, the Compensation Committee conducted its performance evaluation of Mr. Haack after receiving input from the entire Board. Mr. Haack also provided information used by the Compensation Committee to evaluate the achievement of his goals and objectives for fiscal 2023 under the Eagle Annual Incentive Program. Based on this evaluation, which included both quantitative as well as discretionary factors, the Compensation Committee believes Mr. Haack performed at a high level during fiscal 2023 and his goals and objectives were substantially met. The Committee’s evaluation resulted in Mr. Haack receiving 96% of his bonus potential for fiscal 2023. The Compensation Committee approved an annual incentive bonus for Mr. Haack under the Eagle Annual Incentive Program of $2,012,014. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to the following areas (among others) over the past fiscal year; half of Mr. Haack’s bonus related to factors advancing the Company’s ESG priorities.
Annual Incentive Bonus
| • | overall financial performance versus plan, achieving record profitability levels; |
Annual Incentive Bonus
| • | leadership on ESG initiatives, including the publication of the Company’s updated Environmental and Social Disclosure Report and the ongoing development and implementation of strategies to reduce greenhouse gas emissions (e.g., continued development of Portland Limestone Cement product and increased use of alternative fuels); |
Annual Incentive Bonus
| • | integration of acquired businesses; |
Annual Incentive Bonus
| • | development and implementation of M&A strategies to optimize and grow the Company’s asset portfolio; |
Annual Incentive Bonus
| • | promotion of a safety performance culture and achieving record safety results; and |
Annual Incentive Bonus
| • | results achieved at the Company’s operating units, including record wallboard production and sales. |
Annual Incentive Bonus
Mr. Kesler At the end of fiscal 2023, Mr. Haack reviewed Mr. Kesler’s performance. Based in part on this review, the Compensation Committee determined that Mr. Kesler had substantially met his goals and awarded Mr. Kesler 96% of his incentive bonus potential, approving an annual incentive bonus for Mr. Kesler under the Eagle Annual Incentive Program of $1,257,509. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including the input of Mr. Haack regarding Mr. Kesler’s performance and his achievement of his goals related to his areas of responsibility, including: Mr. Kesler’s work on cyber security assessment and improvements, capital management, and the integration of acquired businesses into the Company’s financial and IT systems. Mr. Stewart At the end of fiscal 2023, Mr. Haack reviewed Mr. Stewart’s performance. Based in part on this review, the Compensation Committee determined that Mr. Stewart had substantially met his goals and awarded Mr. Stewart 95% of his incentive bonus potential, approving an annual incentive bonus for Mr. Stewart under the Eagle Annual Incentive Program of $1,066,637. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to his areas of responsibility, the input of Mr. Haack regarding Mr. Stewart’s performance, and the following areas (among others) over the past fiscal year: Mr. Stewart’s work on the Company’s revised Environmental & Social Report, succession planning and talent and organizational development (including with respect to diversity), and his involvement in the Company’s strategic budgeting process. Mr. Newby At the end of fiscal 2023, Mr. Haack reviewed the performance of Mr. Newby. Based in part on this review, the Compensation Committee determined that Mr. Newby had substantially met his goals and awarded Mr. Newby 95% of his incentive bonus potential, approving an annual incentive bonus for Mr. Newby under the Eagle Annual Incentive Program of $462,209. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to his areas of responsibility, the input of Mr. Haack regarding the performance of Mr. Newby, and the following areas (among others) over the past fiscal year: Mr. Newby’s work on the Company’s process for negotiating and entering into material contracts, legal support of acquisitions, and oversight of the Company’s employee hotline. Mr. Wentzel At the end of fiscal 2023, Mr. Haack reviewed the performance of Mr. Wentzel. Based in part on this review, the Compensation Committee determined that Mr. Wentzel had met his goals and awarded Mr. Wentzel 100% of his incentive bonus potential (as capped by the Committee), approving an annual incentive bonus for Mr. Wentzel under the Eagle Materials Inc. American Gypsum Company Salaried Incentive Compensation Program for Fiscal Year 2023 of $675,000. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to his areas of responsibility, the input of Mr. Haack regarding the performance of Mr. Wentzel, and the following areas (among others) over the past fiscal year: Mr. Wentzel’s promotion of a safety performance culture, management of his business unit’s increase in production capacity, engineering project management to increase flexibility and capacity at plants, and succession planning and management.
Long-Term Incentive Compensation
Long-Term Incentive Compensation Consistent with the Compensation Committee’s philosophy of linking compensation to performance, 50% of our long-term incentive compensation program for fiscal 2023 has been structured to tie executives’ ability to earn equity awards to the achievement of specific Company performance levels. To enhance retention of key employees, once earned, the performance awards contain a further time-vesting component. The remaining 50% of our long-term compensation program has been structured as purely time-vesting, which the Compensation Committee believes, based on the input of Meridian, is in-line with the practice of our peers and enhances the retention of key employees. A more detailed description of the fiscal 2023 awards is found below. Value-Adjusted Burn Rate The Compensation Committee strives to be a good steward of the equity available for award under our 2013 Incentive Plan. Our three-year value-adjusted average burn rate (a measure of historical dilution as calculated by ISS) is well below our industry norms. The Company’s three-year average value-adjusted burn rate (which is based on the number of options granted in each fiscal year times a Black-Scholes value plus the number of shares granted in such fiscal year times the stock price, divided by the weighted-average common shares outstanding for such fiscal year times the stock price) is 0.45%. The 2023 benchmark of this measure for our industry published by ISS is 1.33%. Grant Practice All of the Named Executive Officers participate in our long-term incentive compensation program. In fiscal 2023, the Compensation Committee approved equity grants as described below. The date on which an equity award is granted is the date specified in the resolutions of the Compensation Committee authorizing the grant. The grant date must fall on or after the date on which the resolutions are adopted by the Committee. As provided in the 2013 Incentive Plan, for stock options, the exercise price is the closing price of our Common Stock on the grant date, as reported by the NYSE. Fiscal 2023 Grants In structuring the long-term incentive program for fiscal 2023, the Compensation Committee worked with Mr. Haack to establish a mix of performance-based and time-vesting awards. Consistent with prior years, the performance metric selected was return on equity (“ROE”), which represents our earnings as a percentage of our stockholders’ equity, a performance metric that our stockholders have told us they find meaningful and that the Committee views as a measure of the Company’s prudent deployment of capital. Target award amounts were allocated equally (based on target grant date fair values as described below) between performance-vesting and time-vesting awards, and the Committee allocated such awards between restricted stock and stock options based in part on the stated preference of the recipient. With respect to performance-based equity awards, the Committee determined a target award value that would be received upon the achievement of a strong ROE (15.0%), with up to 120% of the target value earned if exceptional ROE (20.0%) were achieved and 80% of the target value earned if acceptable ROE (10.0%) were achieved. None of the performance-based equity awards would be earned if the return on equity were below this acceptable level. Both performance-based and time-vesting equity awards would vest over a four-year period to enhance the retention of these key employees. Effective May 19, 2022, the Compensation Committee approved equity awards under the 2013 Incentive Plan to a group of key employees, including the Named Executive Officers, in alignment with the above structure. As part of the compensation study delivered to the Compensation Committee in May 2022, Meridian had provided information regarding long-term compensation as well as total direct compensation paid to the compensation peer group. In determining the value of the equity to be granted, the Compensation Committee took into consideration the Meridian compensation study, the input of Mr. Haack, the Compensation Committee’s assessment of the executive’s importance and contribution to the organization, and the executive’s level of responsibility. The target grant date fair value was allocated 50% to performance-based equity (with a Company ROE financial metric) and 50% to time-vesting equity. In general, recipients of equity awards had their target grant date fair value allocated between restricted stock and stock options as determined by the Compensation Committee after taking into consideration the stated preference of the recipient. The following table shows the stock options and restricted stock granted to each of the Company’s Named Executive Officers (other than Mr. Graass) effective May 19, 2022:
Long-Term Incentive Compensation
| Name | Target Value of Equity Awards(1) | Target Number of Performance Vesting Stock Options | Target Shares of Performance Vesting Restricted Stock | Number of Time Vesting Stock Options | Shares of Time Vesting Restricted Stock | | Michael R. Haack | $4,500,000 | 11,589 | 13,370 | 11,589 | 13,370 | | D. Craig Kesler | 1,000,000 | 2,576 | 2,972 | 2,576 | 2,972 | | Robert S. Stewart | 900,000 | — | 3,566 | — | 3,566 | | Matt Newby | 700,000 | — | 2,773 | — | 2,773 | | Steven L. Wentzel | 600,000 | — | 2,377 | — | 2,377 |
Long-Term Incentive Compensation
______________________
Long-Term Incentive Compensation
| (1) Grant date fair value of the award computed in accordance with FASB ASC Topic 718. See Summary Compensation Table on page 44 of this Proxy Statement. Half of the target value is allocated to performance-based awards and half of the target value is allocated to time-vesting awards. |
Long-Term Incentive Compensation
The Committee believes that the structure of the fiscal 2023 long-term compensation program is consistent with the Compensation Committee’s philosophy of linking compensation to our performance. Performance-Based Equity Awards These awards are comprised of shares of restricted stock and stock options which are earned based upon the achievement by the Company of a certain level of average ROE for the fiscal year ended March 31, 2023, as detailed below:
Long-Term Incentive Compensation
| Return on Equity for FYE 3/31/23 | Percent of Target Earned | | > 20.0% | 120% | | > 15.0% | 100% | | > 10.0% | 80% | | < 10.0% | 0% |
Long-Term Incentive Compensation
The exact percentage of shares earned is calculated based on straight-line interpolation between the points specified above with fractional points rounded to the nearest tenth of a percent. The earned performance-based equity was to become fully vested one-fourth promptly after the certification date and one-fourth on March 31 for each of the following three years (in each case assuming continued service through such dates). The terms and conditions of the performance-based equity are substantially the same as prior performance-based awards, except that the performance period is as described above. Any performance-based equity that was not earned at the end of fiscal 2023 was to be forfeited. In accordance with the terms of the 2013 Incentive Plan, the exercise price of the stock options is the closing price of the Company’s Common Stock on the date of grant, May 19, 2022 ($126.22). In May 2023, the Compensation Committee certified that the Company’s 32.2% average ROE for the fiscal year ended March 31, 2023 satisfied the Company’s performance goal such that 120% of the target number of shares/options was earned. In calculating the average ROE, in accordance with the award agreement, the Committee excluded the impact of certain extraordinary items not related to operating performance, including downward adjustment from the gain from the sale of non-core businesses. Time-Vesting Equity Awards These awards comprise shares of restricted stock and stock options which vest ratably over four years on March 31, 2023; March 31, 2024; March 31, 2025; and March 31, 2026 (in each case assuming continued service through such dates). The Compensation Committee believes that including time-vesting equity as part of long-term compensation is consistent with competitive pay practices, supports the Company’s philosophy that a significant portion of an executive’s pay should be at risk, enhances the retention of key employees, while at the same time creating a strong incentive for management to operate the business in a manner that creates additional value for stockholders. The terms and conditions of the time-vesting equity are substantially the same as prior time-vesting awards. As in the case of prior equity awards, the time-vesting equity will also vest upon a change in control of the Company. See “Change in Control Benefits” below. In accordance with the terms of the 2013 Incentive Plan, the exercise price of the stock options is the closing price of the Company’s Common Stock on the date of grant, May 19, 2022 ($126.22).
Change in Control Benefits
Change in Control Benefits To better ensure the retention of our employees in the event of a potentially disruptive corporate transaction, we have provided our employees, including our Named Executive Officers, with certain change in control protections. We believe that such protections, which are consistent with the practices of our peer companies, are in the best interest of our stockholders because they enable our executive leadership team to fully focus on the benefits of a corporate transaction for stockholders, rather than the potential adverse consequences of the transaction on their careers and compensation. Change in Control Continuity Agreements To better ensure the retention of our executive leadership team in the event of a potentially disruptive corporate transaction, the Board has approved change in control continuity agreements with Messrs. Haack, Kesler, Stewart and Newby. The change in control continuity agreements provide that, in the event of a change in control during the term, a two-year protection period will commence during which the relevant executive will be entitled to compensation and benefits on terms that are generally no less favorable than those that applied prior to the change in control. In the event of an executive’s involuntary termination of employment without cause or resignation for good reason during the two-year protection period, subject to the execution of a release of claims, he would be entitled to (a) cash severance equal to the product of (i) a severance multiple of 3 (for Mr. Haack), 2.5 (for Mr. Kesler) or 2 (for Messrs. Stewart and Newby), multiplied by (ii) the sum of his annual base salary and target annual bonus; (b) a prorated annual bonus for the year of termination; (c) a payment in lieu of employer retirement savings plan contributions that he would have received had his employment continued for 18 months (for Mr. Haack), 15 months (for Mr. Kesler) or 12 months (for Messrs. Stewart and Newby) post-termination; (d) a payment equal to the premium for continued participation in health insurance plans for 18 months (for Mr. Haack), 15 months (for Mr. Kesler) or 12 months (for Messrs. Stewart and Newby) post-termination; and (e) outplacement benefits of up to $30,000. The change in control continuity agreements subject the executives to a perpetual confidentiality covenant and noncompetition covenants for 18 months (for Mr. Haack), 15 months (for Mr. Kesler) or 12 months (for Messrs. Stewart and Newby) post-termination. If any payments or benefits under the change in control continuity agreements would be subject to Sections 280G and 4999 of the Internal Revenue Code, such payments or benefits would be reduced to the extent that such reduction would place the executive in a better after-tax position. The initial term of the change in control continuity agreements is three years from the effective date of June 20, 2019 (for Messrs. Haack, Kesler and Stewart) and May 31, 2022 (for Mr. Newby), subject in each case to automatic renewal for an additional year on each anniversary of the effective date. All of our change in control continuity agreements have a “double-trigger” termination right (requiring both a change in control and a qualifying termination of employment in order to receive the change in control severance payments), and they do not apply the severance multiple to long-term incentive award values or have tax gross-ups. Under our change in control continuity agreements a “change in control” is defined generally as (i) the acquisition by any person or entity of 35% or more of our outstanding Common Stock or the voting power of outstanding securities entitled to vote in the election of directors; (ii) a change in the composition of our Board such that the current members of the Board cease to constitute a majority of the Board; (iii) the consummation of a merger, asset disposition, share exchange or similar transaction, unless (1) more than 50% of the stock following such transaction is owned by persons or entities who were stockholders of the Company prior to such transaction, (2) following such transaction, no person or entity owns 35% or more of the common stock of the entity resulting from such transaction, and (3) at least a majority of the members of the resulting corporation’s board of directors were members of our Board; or (iv) our stockholders approve a complete liquidation or dissolution of the Company See “Potential Payments Upon Termination or Change in Control” beginning on page 51 of this Proxy Statement. Equity Awards Awards granted in fiscal 2023 under our 2013 Incentive Plan are subject to accelerated vesting upon the occurrence of a “change in control” as defined in the applicable award agreement if they are not assumed or replaced with equivalent awards in connection with such change in control. Under the award agreements or incentive program documents, a “change in control” is defined generally as:
Change in Control Benefits
| (i) the acquisition by any person or entity of 50% or more of the outstanding shares of any single class of our Common Stock or 40% or more of outstanding shares of all classes of our Common Stock; |
Change in Control Benefits
| (ii) a change in the composition of our Board such that the current members of the Board cease to constitute a majority of the Board; or |
Change in Control Benefits
| (iii) | the consummation of a merger, dissolution, asset disposition, consolidation or share exchange, unless (a) more than 50% of the stock following such transaction is owned by persons or entities who were stockholders of the Company prior to such transaction, (b) following such transaction, no person or entity owns 40% or more of the common stock of the corporation resulting from such transaction, and (c) at least a majority of the members of the resulting corporation’s board of directors were members of our Board. |
Change in Control Benefits
If a change in control occurs, any unvested outstanding stock options, restricted stock, or restricted stock units would generally become immediately fully vested, and, in the case of stock options, exercisable or, in the case of restricted stock or RSUs, payable, unless the transaction resulting in the change in control provides that the award is to be replaced with an award of equivalent shares of the surviving parent corporation. See “Potential Payments Upon Termination or Change in Control” beginning on page 51 of this Proxy Statement. We believe the provision of these change in control benefits is a valuable executive talent retention incentive and is consistent with the objectives of our overall executive compensation program.
Summary Compensation Table
Summary Compensation Table The following table summarizes all fiscal 2021, 2022 and 2023 compensation earned by or paid to our Named Executive Officers, who consist of our Chief Executive Officer, our Chief Financial Officer and the three most highly compensated executive officers (other than the Chief Executive Officer and Chief Financial Officer) who were serving as executive officers at fiscal year-end.
Summary Compensation Table
| Name and Principal Position | Fiscal Year Ended March 31, | Salary(1) ($) | Stock Awards(2) ($) | Option Awards(3) ($) | Non-Equity Incentive Plan Compensation(4) ($) | All Other Compensation(5) ($) | Total ($) | | Michael R. Haack | 2023 | $1,000,000 | $3,375,000 | $1,125,000 | $2,012,014 | $102,774 | $7,614,788 | | President and Chief | 2022 | 900,000 | 4,000,000 | — | 1,641,881 | 93,869 | 6,635,750 | | Executive Officer | 2021 | 824,000 | 1,750,000 | 1,750,000 | 1,350,000 | 87,074 | 5,761,074 | | D. Craig Kesler | 2023 | 515,036 | 750,000 | 250,000 | 1,257,509 | 57,063 | 2,829,608 | | Executive Vice | 2022 | 500,035 | 1,000,000 | — | 1,260,730 | 55,938 | 2,816,703 | | President – Finance and | 2021 | 500,035 | 500,000 | 500,000 | 1,036,352 | 54,902 | 2,591,289 | | Administration & CFO | | | | | | | | | Robert S. Stewart | 2023 | 494,833 | 900,000 | — | 1,066,637 | 49,783 | 2,511,253 | | Executive Vice | 2022 | 480,420 | 900,000 | — | 1,084,814 | 48,702 | 2,513,936 | | President – Strategy, | 2021 | 480,420 | 900,000 | — | 891,744 | 47,807 | 2,319,971 | | Corporate Development and Communications | | | | | | | | | Matt Newby (6) | 2023 | 392,268 | 700,000 | — | 462,209 | 41,398 | 1,595,875 | | Executive Vice President | | | | | | | | | General Counsel and | | | | | | | | | Secretary | | | | | | | | | Steven L. Wentzel (7) | 2023 | 350,100 | 600,000 | — | 675,000 | 37,694 | 1,662,794 | | President - American | 2022 | 339,900 | 600,000 | — | 672,047 | 36,862 | 1,648,809 | | Gypsum Company LLC | 2021 | 330,000 | 600,000 | — | 606,038 | 34,125 | 1,570,163 | | James H. Graass (8) | 2023 | 102,053 | 1,869,806(9) | 33,638(9) | — | — | 2,005,497 | | Retired Executive Vice President | 2022 | 451,000 | 800,000 | — | 1,084,814 | 47,693 | 2,383,507 | | General Counsel and | 2021 | 451,000 | 800,000 | — | 891,744 | 47,087 | 2,189,831 | | Secretary | | | | | | | |
Summary Compensation Table
| (1) Includes amounts deferred on a pre-tax or after-tax basis at the election of the executive under our Retirement Plan, which is described in greater detail under “Retirement Plan” on page 39 of this Proxy Statement. |
Summary Compensation Table
| (2) Except as noted in any footnoted number, the amounts in this column reflect the value of restricted stock awards made to the Named Executive Officer in each of the fiscal years presented and are consistent with the grant date fair value of the award computed in accordance with FASB ASC Topic 718. For assumptions used in determining these values, refer to (a) footnote (L) to the Company’s audited financial statements for the fiscal year ended March 31, 2023 included in the Fiscal 2023 Form 10-K; (b) footnote (L) to the Company’s audited financial statements for the fiscal year ended March 31, 2022 included in the Form 10-K, filed with the SEC on May 20, 2022 (“Fiscal 2022 Form 10-K”); and (c) footnote (L) to the Company’s audited financial statements for the fiscal year ended March 31, 2021 included in the Form 10-K, filed with the SEC on May 21, 2021 (“Fiscal 2021 Form 10-K”). Unless otherwise noted, the amounts in this column assume achievement of less than the highest level of performance conditions, and the following reflects the amounts for this award assuming the highest level of performance conditions (i.e., the maximum amounts payable): Fiscal 2023: Mr. Haack - $3,712,500; Mr. Kesler - $825,000; Mr. Stewart - $990,000; Mr. Newby - $770,000; and Mr. Wentzel - $660,000. Fiscal 2022: Mr. Haack - $4,400,000; Mr. Kesler - $1,100,000; Mr. Stewart - $990,000; Mr. Wentzel - $660,000; and Mr. Graass - $880,000. Fiscal 2021: Mr. Haack - $1,925,000; Mr. Kesler - $550,000; Mr. Stewart - $990,000; Mr. Wentzel - $660,000; and Mr. Graass - $880,000. |
Summary Compensation Table
| (3) Except as noted in any footnoted number, the amounts in this column reflect the value of option awards made to the Named Executive Officer in each of the fiscal years presented and are consistent with the grant date fair value of the award computed in accordance with |
Summary Compensation Table
| FASB ASC Topic 718. For assumptions used in determining these values, refer to (a) footnote (L) to the Company’s audited financial statements for the fiscal year ended March 31, 2023 included in the Fiscal 2023 Form 10-K; (b) footnote (L) to the Company’s audited financial statements for the fiscal year ended March 31, 2022 included in the Fiscal 2022 Form 10-K; and (c) footnote (L) to the Company’s audited financial statements for the fiscal year ended March 31, 2021 included in the Fiscal 2021 Form 10-K. Unless otherwise noted, the amounts in this column assume achievement of less than the highest level of performance conditions, and the following reflects the amounts for this award assuming the highest level of performance conditions (i.e., the maximum amounts payable): Fiscal 2023: Mr. Haack - $1,237,500; and Mr. Kesler - $275,000. Fiscal 2021: Mr. Haack - $1,925,000; and Mr. Kesler - $550,000. |
Summary Compensation Table
| (4) The amounts in this column represent payments to the Named Executive Officer under the applicable annual incentive compensation program for the applicable fiscal year. |
Summary Compensation Table
| (5) The amounts shown in this column represent: (a) Company profit sharing contributions to the account of the Named Executive Officer under our Retirement Plan (the Retirement Plan is described in greater detail under “Retirement Plan” on page 39 of this Proxy Statement); (b) Company contributions to the account of the Named Executive Officer under our SERP (the SERP is described in greater detail under “SERP” on page 40 of this Proxy Statement); (c) premium costs to the Company of life insurance policies obtained by the Company in connection with our SCP (the SCP is described in greater detail under “Salary Continuation Plan” on page 40 of this Proxy Statement); and (d) wellness awards. The table below provides further details of the amounts reflected in the All Other Compensation column: |
Summary Compensation Table
| Name | Fiscal Year Ended March 31, | Profit Sharing Plan Contribution ($) | SERP Contribution ($) | Insurance Premiums under Salary Continuation Plan ($) | Wellness Award ($) | Service Award ($) | Total of All Other Compensation ($) | | Michael R. Haack | 2023 | $30,500 | $67,000 | $5,274 | $- | $- | $102,774 | | | 2022 | 29,000 | 59,100 | 5,274 | 495 | - | 93,869 | | | 2021 | 28,500 | 53,300 | 5,274 | - | - | 87,074 | | D. Craig Kesler | 2023 | 30,500 | 20,629 | 5,274 | 660 | - | 57,063 | | | 2022 | 29,000 | 21,004 | 5,274 | 660 | - | 55,938 | | | 2021 | 28,500 | 21,128 | 5,274 | - | - | 54,902 | | | | | | | | | - | | Robert S. Stewart | 2023 | 30,500 | 18,623 | - | 660 | - | 49,783 | | | 2022 | 29,000 | 19,042 | - | 660 | - | 48,702 | | | 2021 | 28,500 | 19,307 | - | - | - | 47,807 | | Matt Newby | 2023 | 30,500 | 5,684 | 3,974 | 529 | 711 | 41,398 | | Steven L. Wentzel | 2023 | 30,500 | 4,255 | 2,279 | 660 | - | 37,694 | | | 2022 | 29,000 | 4,743 | 2,459 | 660 | - | 36,862 | | | 2021 | 28,500 | 3,075 | 2,285 | 265 | - | 34,125 |
Summary Compensation Table
| (6) Mr. Newby was not a Named Executive Officer in fiscal year 2022 or 2021. In accordance with SEC disclosure requirements, his compensation disclosure is provided only for the fiscal year in which he served as a Named Executive Officer. |
Summary Compensation Table
| (7) Mr. Wentzel retired effective June 1, 2023. |
Summary Compensation Table
| (8) Mr. Graass retired effective June 3, 2022. |
Summary Compensation Table
| (9) These amounts do not relate to new equity awards to Mr. Graass—rather, they represent the fair value of the retirement-related acceleration of the vesting of Mr. Graass’s outstanding earned restricted stock awards, as well as the additional charge related to the extension of the exercisability of an outstanding stock option award in connection with his retirement. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth the grants of plan-based awards made during fiscal 2023 to the Named Executive Officers.
Grants of Plan-Based Awards
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | Exercise or Base Price of Option | Grant Date Fair Value of Stock | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Awards ($/sh) | and Option Awards(1) | | Michael R. Haack | 5/17/22 | — | $2,095,848(2) | — | — | — | — | — | — | | | 5/19/22 | — | — | — | — | — | 13,370(3) | — | $1,687,500 | | | 5/19/22 | — | — | — | — | 13,370(4) | 16,044(4) | — | 1,687,500 | | | 5/19/22 | — | — | — | — | — | 11,589(3) | 126.22 | 562,500 | | | 5/19/22 | — | — | — | — | 11,589(4) | 13,907(4) | 126.22 | 562,500 | | D. Craig Kesler | 5/17/22 | — | 1,309,905(2) | — | — | — | — | — | — | | | 5/19/22 | — | — | — | — | — | 2,972(3) | — | 375,000 | | | 5/19/22 | — | — | — | — | 2,972(4) | 3,566(4) | — | 375,000 | | | 5/19/22 | — | — | — | — | — | 2,576(3) | 126.22 | 125,000 | | | 5/19/22 | — | — | — | — | 2,576(4) | 3,091(4) | 126.22 | 125,000 | | Robert S. Stewart | 5/17/22 | — | 1,122,776(2) | — | — | — | — | — | — | | | 5/19/22 | — | — | — | — | — | 3,566(3) | — | 450,000 | | | 5/19/22 | — | — | — | — | 3,566(4) | 4,279(4) | — | 450,000 | | Matt Newby | 5/17/22 | — | 486,536(2) | | — | — | — | — | — | | | 5/19/22 | — | — | — | — | — | 2,773(3) | — | 350,000 | | | 5/19/22 | — | — | — | — | 2,773(4) | 3,328(4) | — | 350,000 | | Steven L. Wentzel | 5/17/22 | — | 675,000(2) | — | — | — | — | — | — | | | 5/19/22 | — | — | — | — | — | 2,377(3) | — | 300,000 | | | 5/19/22 | — | — | — | — | 2,377(4) | 2,853(4) | — | 300,000 |
Grants of Plan-Based Awards
| (1) The amounts included in this column reflect the grant date fair value of the award computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in footnote (L) to the Company’s audited financial statements for the fiscal year ended March 31, 2023 included in the Fiscal 2023 Form 10-K. |
Grants of Plan-Based Awards
| (2) These amounts represent the maximum annual incentive payments potentially payable to the Named Executive Officers pursuant to the Eagle Annual Incentive Program or the Divisional Annual Incentive Bonus Programs, as applicable, for fiscal 2023. There are no thresholds or maximums for these awards—they are merely a function of multiplying the pre-determined percentage by the operating earnings for the fiscal year; provided, however, our 2013 Incentive Plan does provide an absolute cap on cash that any employee may receive in any fiscal year under such programs ($5 million). The actual pay-outs to the Named Executive Officers were as follows: Mr. Haack - $2,012,014; Mr. Kesler - $1,257,509; Mr. Stewart - $1,066,637; Mr. Newby - $462,209; and Mr. Wentzel - $675,000. These incentive programs are described in greater detail under “Annual Incentive Bonus” beginning on page 34 of this Proxy Statement. |
Grants of Plan-Based Awards
| (3) These amounts represent grants of time-vesting restricted stock made on May 19, 2022 under our 2013 Incentive Plan. One-fourth of the restricted stock vested on March 31, 2023, and restrictions on the remaining restricted stock will lapse ratably on March 31 of 2024, 2025 and 2026. These restricted stock grants are described in greater detail under “Long-Term Incentive Compensation—Fiscal 2023 Grants” beginning on page 38 of this Proxy Statement. |
Grants of Plan-Based Awards
| (4) These amounts represent grants of performance-based restricted stock made on May 19, 2022 under our 2013 Incentive Plan. The vesting of the restricted stock was subject to performance vesting criteria. On May 8, 2023, the Compensation Committee determined that 120% of the target award had been earned. One-fourth of the earned restricted stock vested on May 17, 2023, and restrictions on the remaining earned restricted shares will lapse on March 31 of 2024, 2025 and 2026. These restricted stock grants are described in greater detail under “Long-Term Incentive Compensation—Fiscal 2023 Grants” beginning on page 38 of this Proxy Statement. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table summarizes stock-based compensation awards outstanding at the end of fiscal 2023 for each of the Named Executive Officers.
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Michael R. Haack | 8,162 | — | — | $100.88 | 05/18/2027 | 4,359(6) | $639,683 | | | | | 8,084 | — | — | 106.24 | 05/17/2028 | 3,633(7) | 533,143 | | | | | 27,937 | — | — | 91.58 | 05/16/2029 | 8,618(8) | 1,264,692 | | | | | 26,490 | — | — | 91.58 | 05/16/2029 | 7,181(9) | 1,053,812 | | | | | 23,774 | 11,887(2) | — | 60.21 | 05/19/2030 | 16,044(10) | 2,354,457 | | | | | 9,906 | 9,906(3) | — | 60.21 | 05/19/2030 | 10,027(11) | 1,471,462 | | | | | — | 13,907(4) | — | 126.22 | 05/19/2032 | | | | | | | 2,898 | 8,691(5) | — | 126.22 | 05/19/2032 | | | | | | D. Craig Kesler | 7,120 | — | — | 106.24 | 05/17/2028 | 11,667(12) | 1,712,132 | | | | | 6,614 | — | — | 106.24 | 05/17/2028 | 1,245(6) | 182,704 | | | | | 9,646 | — | — | 91.58 | 05/16/2029 | 1,038(7) | 152,327 | | | | | 9,135 | — | — | 91.58 | 05/16/2029 | 2,154(8) | 316,100 | | | | | 10,190 | 3,396(2) | — | 60.21 | 05/19/2030 | 1,795(9) | 263,416 | | | | | 8,492 | 2,830(3) | — | 60.21 | 05/19/2030 | 3,566(10) | 523,311 | | | | | — | 3,091(4) | — | 126.22 | 05/19/2032 | 2,229(11) | 327,106 | | | | | 644 | 1,932(5) | — | 126.22 | 05/19/2032 | | | | | | Robert S. Stewart | | | | | | 2,242(6) | 329,014 | | | | | | | | | | 1,868(7) | 274,129 | | | | | | | | | | 1,938(8) | 284,402 | | | | | | | | | | 1,616(9) | 237,148 | | | | | | | | | | 4,279(10) | 627,943 | | | | | | | | | | 2,674(11) | 392,410 | | | | Matt Newby | 4,246 | — | — | 75.69 | 05/20/2026 | 747(6) | 109,622 | | | | | 3,008 | — | — | 100.88 | 05/18/2027 | 623(7) | 91,425 | | | | | 2,605 | — | — | 100.88 | 05/18/2027 | 862(8) | 126,499 | | | | | 3,165 | — | — | 106.24 | 05/17/2028 | 718(9) | 105,367 | | | | | 2,940 | — | — | 106.24 | 05/17/2028 | 3,328(10) | 488,384 | | | | | 3,859 | — | — | 91.58 | 05/16/2029 | 2,079(11) | 305,093 | | | | | 3,654 | — | — | 91.58 | 05/16/2029 | | | | | | | 2,039 | 679(2) | — | 60.21 | 05/19/2030 | | | | | | | 1,699 | 566(3) | — | 60.21 | 05/19/2030 | | | | |
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | | Steven L. Wentzel | 2,039 | — | | | 05/16/2029 | 1,495(6) | $219,391 | | | | | 1,699 | — | | | 05/16/2029 | 1,245(7) | 182,704 | | | | | | | | | | 1,292(8) | 189,601 | | | | | | | | | | 1,077(9) | 158,050 | | | | | | | | | | 2,853(10) | 418,678 | | | | | | | | | | 1,782(11) | 261,509 | | |
Outstanding Equity Awards at Fiscal Year-End
| (1) Based on the closing price per share of Common Stock on the NYSE on March 31, 2023 ($146.75). |
Outstanding Equity Awards at Fiscal Year-End
| (2) Represents performance-based stock options granted on May 19, 2020 under our 2013 Incentive Plan. The remaining earned stock options will vest on March 31, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (3) Represents time-vesting stock options granted on May 1, 2020 under our 2013 Incentive Plan. The remaining stock options will vest on March 31, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (4) Represents performance-based stock options granted on May 19, 2022 under our 2013 Incentive Plan. The Compensation Committee determined in May 2023 (i.e., after the end of fiscal 2023) that 120% of the target award was earned. One-fourth of the earned stock options became vested on May 8, 2023, and the remaining earned stock options will vest on March 31 of 2024, 2025 and 2026. |
Outstanding Equity Awards at Fiscal Year-End
| (5) Represents time-vesting stock options granted on May 19, 2022 under our 2013 Incentive Plan. The remaining stock options will vest ratably on March 31 of 2024, 2025 and 2026. |
Outstanding Equity Awards at Fiscal Year-End
| (6) Represents performance-based restricted stock granted on May 19, 2020 under our 2013 Incentive Plan. Restrictions on the remaining earned shares will lapse on March 31, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (7) Represents time-vesting restricted stock granted on May 19, 2020 under our 2013 Incentive Plan. Restrictions will lapse on the remaining shares on March 31, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (8) Represents performance-based restricted stock granted on May 19, 2021 under our 2013 Incentive Plan. Restrictions on the remaining earned shares will lapse ratably on March 31 of 2024 and 2025. |
Outstanding Equity Awards at Fiscal Year-End
| (9) Represents time-vesting restricted stock granted on May 19, 2021 under our 2013 Incentive Plan. Restrictions will lapse ratably on March 31 of 2024 and 2025. |
Outstanding Equity Awards at Fiscal Year-End
| (10) Represents performance-based restricted stock granted on May 19, 2022 under our 2013 Incentive Plan. The Compensation Committee determined in May 2023 (i.e., after the end of fiscal 2023) that 120% of the target award was earned. One-fourth of the earned restricted shares was paid to the Named Executive Officer on May 17, 2023, and restrictions will lapse ratably on the remaining earned restricted shares on March 31 of 2024, 2025 and 2026. |
Outstanding Equity Awards at Fiscal Year-End
| (11) Represents time-vesting restricted stock granted on May 19, 2022 under our 2013 Incentive Plan. Restrictions on the first one-fourth lapsed on March 31, 2023. Restrictions on the remaining shares will lapse ratably on March 31 of 2024, 2025 and 2026. |
Outstanding Equity Awards at Fiscal Year-End
| (12) Represents restricted stock granted on May 18, 2010 under our 2013 Incentive Plan. Restrictions will lapse upon the Named Executive Officer meeting the requirements of retirement, as defined in the award agreement. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table sets forth information regarding the exercise of stock options and the vesting of restricted stock during fiscal 2023 for each of our Named Executive Officers.
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) | | Michael R. Haack | 18,608 | $1,172,747 | 31,974 | $4,469,953 | | D. Craig Kesler | — | — | 7,482 | 1,058,626 | | Robert S. Stewart | — | — | 10,275 | 1,465,286 | | Matt Newby | — | — | 3,846 | 546,939 | | Steven L. Wentzel | 4,680 | 242,649 | 5,940 | 845,146 | | James H. Graass | 2,856 | 141,247 | 15,155 | 2,016,203 |
Option Exercises and Stock Vested
| (1) All of the amounts in this column represent shares of Common Stock received by the Named Executive Officer in connection with the lapsing of restrictions on restricted stock previously granted to the Named Executive Officers. |
Option Exercises and Stock Vested
| (2) The amount in this column represents the dollar amount realized by the Named Executive Officer valued at the time of the vesting of such shares. |
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The following is a summary of the potential payments payable to the Named Executive Officers upon termination of employment or a change in control of the Company under current compensation programs. Specifically, compensation payable to each Named Executive Officer upon voluntary termination, involuntary termination or in the event of death or disability and change in control is discussed below. The amounts shown in the tables below assume that such termination was effective as of March 31, 2023, and therefore do not necessarily reflect the actual amounts which would be paid out to the executives (or their beneficiaries) upon their termination. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event, the price of our Common Stock and the executive’s age.
Payments Made Upon Any Termination
| (5) See the “Change in Control Continuity Agreements” section above for a description of the components of these potential payments. |
CEO PAY RATIO
CEO PAY RATIO Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (the “SEC”) has adopted Item 402(u) of Regulation S-K requiring annual disclosure of a reasonable estimate of the ratio of the total annual compensation of our chief executive officer to the total annual compensation of the employee of the Company or one of its subsidiaries who is determined to have the median compensation of all employees of the Company and its subsidiaries, collectively (excluding the CEO). The rule also requires annual disclosure of such median employee’s total compensation for the applicable fiscal year and the CEO’s total compensation for the applicable fiscal year, in each case as determined in accordance with the rules governing the presentation of total compensation of the Named Executive Officers in the Summary Compensation Table presented on page 44 of this Proxy Statement. Our CEO is Mr. Haack. To identify the median-compensated employee for fiscal 2023, we examined the total gross compensation data for fiscal 2023. Based on this data, we determined the median-compensated employee. We then calculated such employee’s total fiscal 2023 compensation in accordance with the rules governing the presentation of the total compensation of the Named Executive Officers in the Summary Compensation Table. Based on this methodology, the fiscal 2023 total annual compensation for the median-compensated employee was $77,118. As reported on page 44 of this Proxy Statement, the fiscal 2023 total annual compensation of our CEO, Mr. Haack, was $7,614,788. The ratio of the CEO’s total compensation to the median-compensated employee’s total compensation of approximately 99:1. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation for our principal executive officer (“PEO”) and non-PEO Named Executive Officers and the financial performance of the Company. The table below addresses compensation actually paid (“CAP”) to the PEO and the non-PEO Named Executive Officers, which is a concept developed by the SEC for purposes of this tabular disclosure and does not imply that the covered executives actually received payments or value equal to the CAP during the applicable fiscal year. Although the Compensation Committee focuses on pay relative to performance in its executive compensation decisions, it has not historically utilized CAP as a key measure in implementing its pay-for-performance philosophy. For further information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to “Compensation Discussion and Analysis” beginning on page 28 of this Proxy Statement. The Company has selected Return on Equity as the company-selected financial performance measure presented in the table below. Although the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Return on Equity is the financial performance measure that represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the Company’s Named Executive Officers for the most recently completed fiscal year.
PAY VERSUS PERFORMANCE
| | | | Average Summary Compensation Table Total | Average Compensation | Value of Initial Fixed $100 Investment Based On: | | | | | Fiscal Year Ended March 31, | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Compensation for Non-PEO Named Executive Officers (3) | Actually Paid to Non-PEO Named Executive Officers (4) | Total Shareholder Return (5) | Peer Group Total Shareholder Return (5) | Net Income (dollars in thousands) (6) | Return on Equity (7) | | 2023 | $7,614,788 | $10,936,146 | $2,121,005 | $2,342,020 | $255.39 | $190.86 | $461,540 | 32.2% | | 2022 | 6,635,750 | 6,645,203 | 2,340,739 | 2,311,876 | 221.62 | 200.39 | 374,247 | 24.6% | | 2021 | 5,761,074 | 17,679,107 | 2,167,814 | 5,014,372 | 230.42 | 194.28 | 339,444 | 20.0% |
PAY VERSUS PERFORMANCE
| (1) Mr. Haack has been our PEO for all three fiscal years included in this table. The dollar amounts reported in this column are the amounts of total compensation reported for Mr. Haack for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to the Summary Compensation Table on page 44 of this Proxy Statement. |
PAY VERSUS PERFORMANCE
| (2) The dollar amounts reported in this column represent the amount of the CAP for Mr. Haack, as computed in accordance with Item 402(v)(2)(iii) of Regulation S-K. Mr. Haack did not participate during these fiscal years in any defined benefit or actuarial benefit plans of the type that would be required to be reported in the Summary Compensation Table. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Haack’s total compensation for each year to determine CAP: |
PAY VERSUS PERFORMANCE
| Fiscal Year Ended March 31, | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards (a) | Equity Award Adjustments (b) | Compensation Actually Paid to PEO | | 2023 | $7,614,788 | $(4,500,000) | $7,821,358 | $10,936,146 | | 2022 | 6,635,750 | (4,000,000) | 4,009,453 | 6,645,203 | | 2021 | 5,761,074 | (3,500,000) | 15,418,033 | 17,679,107 |
PAY VERSUS PERFORMANCE
| (a) This column deducts the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. |
PAY VERSUS PERFORMANCE
| (b) This column reflects the following adjustments in respect of stock awards and option awards for the covered fiscal year: (i) add the year-end fair value of any equity awards granted during the applicable year that are outstanding and unvested as of the end of the year; (ii) add the amount of change as of the end of the covered fiscal year (from the end of the prior fiscal year) in fair value (whether positive or negative) of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) add, for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) add, for awards granted in prior years that vest in the covered fiscal year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value (whether positive or negative); (v) subtract, for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the covered fiscal year, the amount equal to the fair value at the end of the prior fiscal year; and (vi) add the dollar value of any dividends or other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: |
PAY VERSUS PERFORMANCE
| Fiscal Year Ended March 31, | Year End Fair Value of Current Year Equity Awards that are Outstanding and Unvested | Year over Year Change in Fair Value of Prior Year Equity Awards that are Outstanding and Unvested | Fair Value as of Vesting Date of Current Year Equity Awards that Vested in the Current Year | Vesting Date Fair Value of Equity Awards Granted in Prior Years that Vested in the Current Year | Fair Value at End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Current Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $5,577,881 | $851,265 | $483,832 | $836,406 | $- | $71,974 | $7,821,358 | | 2022 | 3,595,107 | (230,786) | 469,703 | 139,562 | - | 35,867 | 4,009,453 | | 2021 | 10,258,679 | 2,348,248 | 1,311,816 | 1,621,794 | (126,911) | 4,407 | 15,418,033 |
PAY VERSUS PERFORMANCE
| (3) Our non-PEO Named Executive Officers in the fiscal years reported in this table are as follows: Fiscal 2023 includes Messrs. Kesler, Stewart, Newby, Wentzel and Graass; fiscal 2022 includes Messrs. Kesler, Stewart, Wentzel and Graass; and fiscal 2021 includes Messrs. Kesler, Stewart, Wentzel and Graass. The dollar amounts reported in this column represent the average of the amounts reported for the non-PEO Named Executive Officers as a group in the “Total” column of the Summary Compensation Table in each applicable year’s proxy statement. |
PAY VERSUS PERFORMANCE
| (4) The dollar amounts reported in this column represent the average amount of CAP for the non-PEO Named Executive Officers as a group, as computed in accordance with Item 402(v) of Regulation S-K. The non-PEO Named Executive Officers did not participate during these fiscal years in any defined benefit or actuarial benefit plans of the type that would be required to be reported in the Summary Compensation Table. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the non-PEO Named Executive Officers as a group for each year to determine the compensation actually paid, using the same methodology described above in footnote (2): |
PAY VERSUS PERFORMANCE
| Fiscal Year Ended March 31, | Average Reported Summary Compensation Table Total for Non-PEO Named Executive Officers | Average Reported Value of Equity Awards | Average Equity Award Adjustments (a) | Average Compensation Actually Paid to Non-PEO Named Executive Officers | | 2023 | $2,121,005 | $(1,020,689) | $1,241,703 | $2,342,020 | | 2022 | 2,340,739 | (825,000) | 796,137 | 2,311,876 | | 2021 | 2,167,814 | (825,000) | 3,671,558 | 5,014,372 |
PAY VERSUS PERFORMANCE
| (a) The amounts deducted or added in calculating the equity award adjustments are as follows: |
PAY VERSUS PERFORMANCE
| Fiscal Year Ended March 31, | Year End Fair Value of Current Year Equity Awards that are Outstanding and Unvested | Year over Year Change in Fair Value of Prior Year Equity Awards that are Outstanding and Unvested | Fair Value as of Vesting Date of Current Year Equity Awards that Vested in the Current Year | Vesting Date Fair Value of Equity Awards Granted in Prior Years that Vested in the Current Year | Fair Value at End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Current Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $746,770 | $193,674 | $91,300 | $191,963 | $- | $17,996 | $1,241,703 | | 2022 | 741,536 | (75,378) | 96,923 | 17,738 | - | 15,318 | 796,137 | | 2021 | 1,986,465 | 855,472 | 251,781 | 611,815 | (36,464) | 2,489 | 3,671,558 |
PAY VERSUS PERFORMANCE
| (5) Each year reflects what the cumulative $100 investment would be, including the reinvestment of dividends, if such amount were invested on March 31, 2020. The peer group used for this purpose is the following published industry index: Dow Jones US Building Materials & Fixtures. |
PAY VERSUS PERFORMANCE
| (6) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
PAY VERSUS PERFORMANCE
| (7) Return on Equity for a given fiscal year is defined as the net earnings of the Company for such fiscal year; divided by the Company’s average stockholders’ equity for such fiscal year (which is defined for any period to mean the Company’s total stockholders’ equity as of the beginning of such period plus the Company’s total stockholders’ equity at the end of such period; divided by 2). In calculating the average Return on Equity, the impact of certain extraordinary items not related to operating performance, including downward adjustment for the gain from the sale of non-core businesses, are excluded. |
PAY VERSUS PERFORMANCE
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Compensation Actually Paid versus Return on Equity
Compensation Actually Paid versus Return on Equity
Compensation Actually Paid versus Net Income
Compensation Actually Paid versus Net Income
Compensation Actually Paid versus Total Shareholder Return
Compensation Actually Paid versus Total Shareholder Return