DEF 14A of Malibu Boats, Inc.
Filed Sep 19, 2024 · FY20240001590976-24-000083
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS DIRECTORS OF MALIBU BOATS, INC. The Board is divided into three classes with staggered three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Our directors are currently divided among the three classes as follows:
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Class I | Class II | Class III | | The Class I directors are Messrs. Chhina, Connolly and Lanigan, and their terms will expire at the annual meeting of stockholders to be held in 2026; | The Class II directors are Mr. Buch, Ms. Lewis, Mr. Menneto and Mr. Murphy, and their terms will expire at the Annual Meeting; and | The Class III directors are Ms. Taylor and Messrs. Hooks and Stokely, and their terms will expire at the annual meeting of stockholders to be held in 2025. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth certain information about our directors as of August 30, 2024:
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Name | Age | Principal Position | | Michael K. Hooks | 62 | Chairman of the Board | | Steven D. Menneto | 59 | Chief Executive Officer and Director | | James R. Buch | 70 | Director | | Ivar S. Chhina | 61 | Director | | Michael J. Connolly | 58 | Director | | Mark W. Lanigan | 64 | Director | | Joan M. Lewis (1) | 58 | Director | | Peter E. Murphy | 61 | Director | | John E. Stokely | 71 | Director | | Nancy M. Taylor | 64 | Director |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
(1)On September 16, 2024, Joan M. Lewis notified the Board that she would not stand for re-election at the 2024 Annual Meeting. Ms. Lewis will continue to serve on the Board until the 2024 Annual Meeting, when her current term will expire.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Michael K. Hooks Chairman of the Board and Director | | Mr. Hooks has served as the Chair of our Board since February 2014. For an interim period after the departure of our former Chief Executive Officer in 2024, Mr. Hooks served as Executive Chair of the Board from February 2024 to August 2024 and a member of the Office of Chief Executive Officer from May 2024 to August 2024. Mr. Hooks was a director of the LLC from May 2006 until our recapitalization in connection with the IPO in February 2014. He is a co-founder and has been managing partner of Westhook Capital LLC since 2017, and he is a co-founder and has been a managing director of Black Canyon Capital LLC since 2004. Previously, Mr. Hooks was a co-head of the Los Angeles office of Credit Suisse First Boston and a managing director in the Los Angeles office of Donaldson, Lufkin & Jenrette. He previously served on the boards of directors of Metco Landscape Holdings, LLC, JDC Healthcare Management, Saunders & Associates, TASI Holdings, Virgin America, Logan’s Roadhouse and Switchcraft, as well as the Supervisory Board of Pfeiffer Vacuum Technology, at the time a public company listed on the New York Stock Exchange. Mr. Hooks received a degree in Economics from Princeton University and an M.B.A. with distinction from the Wharton School of Business. Based on his extensive experience as an investment banker advising companies on their financing and strategic alternatives, his experience as a private equity manager working with companies and their management teams to grow and improve their businesses, and his deep knowledge of Malibu Boats, Inc. given his initial tenure as a board member of the LLC, we believe Mr. Hooks is qualified to serve on the Board. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Steven D. Menneto Chief Executive Officer and Director | | Mr. Menneto became our Chief Executive Officer and a member of our Board in August 2024. He served in various positions at Polaris, Inc., a manufacturer of powersports vehicles, since 1997, most recently as President of the Off Road Vehicle Division from December 2019 to July 2024. From May 2009 to December 2019, Mr. Menneto was President of the Motorcycle Division of Polaris, and prior to May 2009, he held various roles in sales at Polaris. Mr. Menneto previously served on the board of directors of Polaris Acceptance Inc., a floor plan financing joint venture with Wells Fargo Bank, N.A., and Motorcycle Industry Council, a not-for-profit trade association. Mr. Menneto received a B.S. in Business Administration from Northeastern University and received an M.B.A. from Rensselaer Polytechnic Institute. Based on his extensive experience as a senior executive of a manufacturer focused on the outdoor sports industry, we believe Mr. Menneto is qualified to serve on the Board. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| James R. Buch Director | | Mr. Buch has been a member of our Board since February 2014. Now retired, he held the position of chief executive officer of UMA Enterprises, Inc., which is a private company and one of the largest distributors of home décor products in North America, from May 2017 through September 2019. From 2012 to 2016, he served as president and chief executive officer of Lynx Grills, a manufacturer of grills and outdoor kitchen products for residential consumers. In 2011 and 2012, Mr. Buch was interim president and chief executive officer of Sunbrite TV, a manufacturer of high-definition televisions, and he was a consultant and operating advisor to various private equity and investment firms from 2008 to 2010, assisting businesses on multiple fronts, including growth strategies, restructuring and business model assessment. Mr. Buch has also served and continues to serve on board and advisory councils for a number of private and nonprofit organizations. He received a bachelor’s degree and an M.B.A. from California State University-Fullerton. Based on his extensive leadership and advisory experience with manufacturers of consumer products, we believe Mr. Buch is qualified to serve on the Board. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Ivar S. Chhina Director | | Mr. Chhina has been a member of our Board since February 2014. Now retired, from 2009 to 2011, he served as the chief financial officer and executive vice president for Recreational Equipment, Inc. (REI), a national retailer of outdoor recreational equipment and apparel, and previously served on REI’s board from 2006 to 2009, where he was chair of its audit and finance committee as well as board vice chair. From 2001 to 2007, Mr. Chhina was chairman and chief executive officer, and previously chief operating officer and chief restructuring officer of Interdent, Inc., a health care services company. From 1991 to 2001, Mr. Chhina held senior executive, finance and operational roles with several portfolio companies of Mehta & Company, a private equity firm for which he was an operating partner and is currently a venture partner. Mr. Chhina also currently serves on the boards of directors and as chair of the audit committees for Sage Dental Management LLC, Femwell Group Health LLC, and Walker Edison Holdco, and as a board observer for Evology LLC (dba Aptive Environmental), all of which are private companies; and as a board director for Agribank, FCB, a wholesale bank for the U.S. Farm Credit System, for which he also currently serves as chair of the audit committee. Previously, he held executive positions and/or board directorships with several companies, including as interim chief executive officer, and later as a director/advisor to the managing member of JDC Management LLC, on the board of directors of Lone Peak Holdings LLC, PPV Holding Company LLC, Troy Lee Designs Inc., Stat Health Holding LLC, DDP DMO Superholdings LLC, and Dimensional Dental Management LLC. He has also served on and chaired boards and committees of charitable and educational entities, including as a board director and member of the audit and finance committee of the Pacific Science Center, as a director and chair of the finance committee of the Washington chapter of The Nature Conservancy, and as a director, board chair and finance chair of Fort Mason Center. Mr. Chhina received an M.A. in international policy studies from the Middlebury College Monterey Institute and a dual B.A. in economics and political science from the University of Nevada Reno. We believe Mr. Chhina is qualified to serve on the Board based on his financial expertise, knowledge of the recreational products industry and extensive experience advising, operating and directing businesses across multiple industries. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Michael J. Connolly Director | | Mr. Connolly has been a member of our Board since February 2014. He has been the chief executive officer of Fourth Street Capital, Inc., which manages a portfolio of retail, flex-industrial, warehouse and multifamily real estate holdings, since October 2021. He has been a founding partner of Breakaway Capital Management, LLC, a private investment fund manager which provided debt and structured equity capital to lower middle market companies, since 2015. From 2007 to 2013, he was a partner with Leonard Green & Partners, LP., a private equity firm. Previously, Mr. Connolly was an investment banker at UBS Securities, LLC, where he served as managing director and co-head of UBS’s Los Angeles investment banking office, and a senior vice president at Donaldson, Lufkin & Jenrette. He was previously on the board of Cascade Bancorp (Nasdaq: CACB), where he was the chairman of the board loan committee and member of the compensation and audit committees, and on the board of FP Holdings, LP, a private company and the parent company of the Palms Casino Resort. He is a member of the emeritus board of the Los Angeles Regional Food Bank. He received a bachelor’s degree from the University of California-Berkeley. Based on his extensive experience as an investment banker advising companies on their strategic alternatives and his experience as a private equity manager working with companies and their management teams to grow and improve their businesses, we believe Mr. Connolly is qualified to serve on the Board. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Mark W. Lanigan Director | | Mr. Lanigan has been a member of our Board since February 2014. Mr. Lanigan was a director of the LLC from May 2009 until our recapitalization in connection with the IPO in February 2014. He was a co-founder and has been a managing director of Black Canyon Capital LLC since 2004. Mr. Lanigan has also been a consultant with Tailwind Capital, a private equity firm, since 2015. Mr. Lanigan was formerly a co-head of the Los Angeles office and a member of the Investment Banking Executive Board of Credit Suisse First Boston and head of the Los Angeles office of Donaldson, Lufkin & Jenrette. He also serves on the boards of directors of LRW Holdings, LLC and Lone Peak Holdings, LLC, which are both private companies, and he previously served on the boards of directors of Benevis Holdings, LLC, JDC Healthcare Management, Virgin America, Archway Marketing Services, TASI Holdings, Inc. and Saunders & Associates. Mr. Lanigan graduated summa cum laude, Phi Beta Kappa with a degree in Economics from Colgate University and received a J.D. degree from Harvard Law School and an M.B.A. from Harvard Business School. We believe Mr. Lanigan is qualified to serve on the Board based on his extensive experience as an investment banker advising companies on their financing and strategic alternatives, his experience as a private equity manager working with companies and their management teams to grow and improve their businesses, and his deep knowledge of Malibu Boats, Inc. given his initial tenure as a board member of the LLC. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Joan M. Lewis Director | | Ms. Lewis became a member of our Board in July 2019. Ms. Lewis has served on the boards of several private and public companies and is an independent consultant to product/service companies and fast-growing technology start-ups. Previously, she was Global Officer and Senior Vice President, Consumer & Market Knowledge of The Procter & Gamble Company, a consumer-packaged goods company, from 2008 through December 2014. Prior to that, she held a number of other leadership positions with Procter & Gamble Consumer & Market Knowledge, including Vice President, Global Operations and Director, North America. Ms. Lewis previously served as Board Chair of comScore, Inc. in 2016 and as a member of the Audit Committee and Chair of the Technology and Innovation Committee of comScore, Inc. from 2015 to 2016. Ms. Lewis has also previously served on the Singapore Industry Advisory Board for Consumer Insights, the Advertising Research Foundation Board of Directors, and the Business Advisory Council for the Farmer School of Business at Miami University. She holds a B.S. from Miami University. We believe Ms. Lewis is qualified to serve on the Board based on her experience working as a consultant to product/service companies, her background in consumer and market knowledge, her history as an executive at a global company and her prior service as a director of a public company. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Peter E. Murphy Director | | Mr. Murphy has been a member of our Board since February 2014. He is the founder and chief executive officer of Wentworth Capital Management, a private investment and venture capital firm focused on media, technology and branded consumer businesses. From 2009 to 2011, he served as president of strategy & development of Caesars Entertainment, where he was responsible for corporate strategy and growth, mergers and acquisitions, corporate development and real estate development around the world. From 2007 to 2008, Mr. Murphy served as an operating partner at Apollo Global Management and, prior to that, he spent 18 years in senior executive roles with The Walt Disney Company, including as chief strategic officer of The Walt Disney Company and as chief financial officer of ABC, Inc. Until 2019, Mr. Murphy served as a board member and chairman of the audit committee of Tribune Media (NYSE: TRCO), and was a board advisor to DECA TV. He has previously served as chairman of the board of Revel Entertainment and on the boards of The Stars Group, Inc., Dial Global and Fisher Communications. Mr. Murphy received an M.B.A. from the Wharton School of Business and a bachelor’s degree, magna cum laude and Phi Beta Kappa, from Dartmouth College. We believe Mr. Murphy is qualified to serve on the Board because of his long history as an executive and director of national and international companies and experience facilitating international growth and strategy. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| John E. Stokely Director | | Mr. Stokely has been a member of our Board since February 2014. He has been the lead independent director of Pool Corporation (Nasdaq: POOL), a swimming supplies distributor, since 2000 and has been its chairman of the board since May 2017, and previously served as both a member of the audit committee and chair of the governance committee of Pool Corporation. In addition, Mr. Stokely was president, chief executive officer and chair of the board of Richfood Holdings, Inc., a food retailer and wholesale grocery distributor, and he served as president of JES, Inc., an investment and consulting firm. Previously, he also served on the boards and committees of a number of other publicly traded companies, including ACI Worldwide, Inc., AMF Bowling, Imperial Sugar Company (which was previously a publicly traded company), O’Charley’s Inc., Performance Food Group and Nash-Finch Company. Mr. Stokely received a bachelor’s degree from the University of Tennessee. We believe Mr. Stokely is qualified to serve on the Board because of his extensive experience as a director of publicly traded companies engaged in a variety of industries, strategic insights, distribution experience and senior leadership experience. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Nancy M. Taylor Director | | Ms. Taylor became a member of our Board of Directors in April 2023. She previously served as the President and Chief Executive Officer of Tredegar Corporation, a global manufacturing company, from 2010 until 2015 and was a member of Tredegar’s board of directors from early 2010 until June 2015. During her 24-year career with Tredegar, Ms. Taylor held a variety of leadership positions, including President of Tredegar Film Products, Senior Vice President, Strategy, and General Counsel. Ms. Taylor is currently a director of TopBuild Corp. (Nasdaq: BLD), where she has served as chair of the governance committee since May 2019 and a member of the audit committee and compensation committee. Ms. Taylor was a member of the board of directors of Verso Corporation from November 2019 through March 2022, where she served as chair of the audit committee and as a member of the compensation committee and the corporate governance and nominating committee, and LL Flooring Holdings, Inc. (NYSE: LL), where she served as chair of the board from November 2015 through July 2024 and as a member of the nominating and corporate governance committee and the compliance and regulatory affairs committee. Ms. Taylor also served on the board of the Boys & Girls Club of Metro Richmond (Virginia) from July 2014 and June 2024. Ms. Taylor holds a bachelor’s degree in Political Science from the College of the Holy Cross and a J.D. degree from The Catholic University of America, Columbus School of Law. We believe Ms. Taylor is qualified to serve on the Board based on her many years of experience in senior management in both operational and commercial leadership roles, including serving as chief executive officer of a publicly-traded global manufacturer, her strong knowledge of corporate governance and her experience as a director of various public companies. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
BOARD DIVERSITY MATRIX (As of August 30, 2024) The Board Diversity Matrix, below, provides the diversity statistics for the Board.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Total Number of Directors | | 10 | | | Part I: Gender Identity | Female | Male | Did Not Disclose Gender | | Directors | 2 | 8 | — | | Part II: Demographic Background | | | | | Asian | — | 1 | — | | White | 2 | 8 | — | | Two or More Races or Ethnicities | — | 1 | — | | Did Not Disclose Demographic Background | | — | |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE OFFICERS OF MALIBU BOATS, INC. The following sets forth certain information about our executive officers as of August 30, 2024:
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Name | Age | Principal Position | | Steven D. Menneto | 59 | Chief Executive Officer and Director | | Ritchie L. Anderson | 59 | President | | Bruce W. Beckman | 56 | Chief Financial Officer |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Please see “—Directors of Malibu Boats, Inc.” above for the biographical information for Steven D. Menneto. The biographical information for our other executive officers is set forth below.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Ritchie L. Anderson President | | Mr. Anderson has served as our President since February 2024. For an interim period after the departure of our former Chief Executive Officer in 2024, he served as a member of the Office of the Chief Executive Officer from May 2024 to August 2024. Previously, Mr. Anderson served as our Chief Operating Officer from September 2013 to February 2024. He joined the Company in July 2011 as our Vice President of Operations. Prior to joining Malibu Boats, Mr. Anderson was Vice President of Operations at MasterCraft Boat Company, where he spent 28 years in production management. While at MasterCraft, he held various roles in operations that included management responsibility for manufacturing, supply chain, quality, customer service, environmental and safety. Mr. Anderson has over 30 years of experience in the boat manufacturing industry. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Bruce W. Beckman Chief Financial Officer | | Mr. Beckman has served as our Chief Financial Officer since November 27, 2023. Prior to joining Malibu Boats, Mr. Beckman served as Senior Vice President, Finance at Entegris from February 2018 to November 2023 and as Vice President, Finance from April 2015 to February 2018. From 1990 to 2015, Mr. Beckman worked in numerous capacities for General Mills, Inc., including Vice President, Finance, Meals Division from July 2012 to January 2015, Director of Corporate Planning & Analysis from July 2008 to July 2012 and Director of Internal Controls from 2003 to 2005. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
There are no family relationships between or among any of our executive officers or directors. Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC reports of ownership and reports of changes in ownership of our equity securities. To our knowledge, based solely on our review of reports filed electronically with the SEC during the fiscal year ended June 30, 2024, including any amendments thereto, and written responses to annual directors’ and officers’ questionnaires that no other reports were required, all Section 16(a) reports required to be filed during the fiscal year ended June 30, 2024 were timely filed.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
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Identifying and Evaluating Director Nominee Candidates
Identifying and Evaluating Director Nominee Candidates A class of directors is elected each year by the stockholders of Malibu Boats, Inc. at the annual meeting of the stockholders. The Nominating and Governance Committee will review the qualifications of prospective candidates to determine whether they will make good candidates for membership on the Board. As set forth in the Corporate Governance Principles, in considering candidates for membership on the Board, the Nominating and Governance Committee will consider the prospective candidate’s character, judgment, experience, expertise, age, diversity, independence under applicable law and freedom from other conflicts, as well as other factors that the Nominating and Governance Committee may deem relevant in light of the needs of the Board and the Company and that are in the best interests of the Company. Such factors include relevant experience, the ability to dedicate sufficient time, energy and attention to performance of Board duties, financial expertise, experience with a company in the powerboat or recreational products industry and whether the prospective candidate is a director-selected prospective candidate or a stockholder-recommended prospective candidate. In addition, the Nominating and Governance Committee will consider the diversity of a prospective candidate while identifying nominees for director. The Nominating and Governance Committee is also committed to identifying candidates with gender, ethnic and geographic diversity. The Nominating and Governance Committee seeks to elect directors that will collectively represent a diversity of backgrounds and experiences.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The following table sets forth certain information concerning the compensation of the members of the Board who are not also our employees (“Non-Employee Directors”) for the fiscal year ended June 30, 2024. The compensation paid to Mr. Springer, who was one of our employees during fiscal year 2024, is presented in the Summary Compensation Table and the related tables included below. During his service on the Board, Mr. Springer was not entitled to receive additional compensation for his service as a director.
DIRECTOR COMPENSATION
| Name (a) | Fees Earned or Paid in Cash ($) (b)(1) | Stock Awards ($) (c)(2)(3) | Total ($) (h) | | Michael K. Hooks | 106,625(4) | 109,995 | 216,620 | | James R. Buch | 72,197 | 109,995 | 182,192 | | Ivar S. Chhina | 87,238 | 109,995 | 197,233 | | Michael J. Connolly | 80,219 | 109,995 | 190,214 | | Mark W. Lanigan | 82,224(4) | 109,995 | 192,219 | | Joan M Lewis | 72,197 | 109,995 | 182,192 | | Peter E. Murphy | 159,697 | 109,995 | 269,692 | | John E. Stokely | 72,197 | 109,995 | 182,192 | | Nancy M. Taylor | 72,197 | 109,995 | 182,192 |
DIRECTOR COMPENSATION
(1)Amounts reported reflect the cash retainers paid to each Non-Employee Director for fiscal year 2024, except as noted in footnote (4). For Mr. Murphy, the amount includes an additional fee of $87,500 payable for his service as Chair of the Special Matters Committee of the Board for the period from the 4th calendar quarter of 2021 through the second calendar quarter of 2023, which amount was approved and paid in a lump-sum during the 2nd quarter of fiscal 2024. For Mr. Hooks, amounts reported include the compensation paid to Mr. Hooks in fiscal 2024 for his service as a Non-Employee Director. The compensation payable to Mr. Hooks for his service as Executive Chairman and a member of the Office of the Chief Executive Officer is reported in the Summary Compensation Table below. (2)Amounts reported represent the aggregate grant date fair value of the annual equity awards granted to the Non-Employee Directors on October 26, 2023. The aggregate grant date fair value of these awards was computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The reported award values have been determined using the $45.34 closing price of a share of our Class A common stock on grant date. (3)As of June 30, 2024, no Non-Employee Director held any unvested stock units or unvested shares of Class A common stock. (4)Messrs. Hooks and Lanigan each elected to receive all of their annual retainers and any additional retainers in the form of stock units instead of cash. Accordingly, Messrs. Hooks and Lanigan received 2,400 and 1,853 fully vested stock units, respectively, for service rendered during fiscal 2024. Stock units are contractual rights to receive shares of Class A common stock in the future, but are not actual shares of Class A common stock. However, the retainers that each of these Non- Employee Directors elected to receive in units or shares are reported as though they had been paid in cash and not converted to units or shares. We have a Directors’ Compensation Policy that applies to the Non-Employee Directors. Under our Directors’ Compensation Policy, each Non-Employee Director is entitled to receive an annual retainer of $65,000, payable in four equal quarterly installments. Any Non-Employee Director serving as the Chairperson of the Board is entitled to receive an additional $40,000 annual retainer, payable in four equal quarterly installments. Any Non-Employee Director serving as chair of our Compensation Committee, Audit Committee or Nominating and Governance Committee is entitled to receive an additional annual retainer of $15,000, $20,000 and $10,000, respectively. The annual retainer and any additional retainers are each pro-rated for partial years of service. The Non-Employee Directors have the right
DIRECTOR COMPENSATION
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DIRECTOR COMPENSATION
to elect to receive their annual retainers and any additional annual retainers in the form of stock units or shares of Class A common stock in lieu of cash, which shares or units would be issued as of the last day of the quarter in which the retainers relate and the shares or units would be valued as of the award date. Each Non-Employee Director serving as a non-chair member of the Compensation Committee or Audit Committee is entitled to receive a $5,000 annual retainer, while any non-chair members of the Nominating and Governance Committee is entitled to receive a $2,000 annual retainer. On the date of each annual meeting, each Non-Employee Director then in office will be entitled to receive a fully vested annual equity award consisting of either stock units or shares of Class A common stock. The annual equity award will be valued at $110,000, and will be converted into shares or units based on the price of a share of Class A common stock on the grant date. Any Non-Employee Director who joins the Board after the date of an annual meeting will be entitled to a pro-rata annual equity award upon joining the Board. For any Non-Employee Director who elects to receive stock units, the stock units will not be payable in shares of Class A common stock until the first to occur of (1) a change in control for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), (2) the Non-Employee Director’s separation from service from the Board, and (3) an in-service distribution date elected by the Non-Employee Director. For any payment event, Non-Employee Directors may elect to receive payment of their stock units in a lump-sum or in installments over a period of 5 years or 10 years. All stock units are entitled to receive dividend equivalent payments, which are reinvested into additional stock units. Each of our Non-Employee Directors is provided the opportunity to use one of our performance sport boats during his or her term of service as a director. We believe permitting our Non-Employee Directors to use one of our boats encourages the directors to familiarize themselves with our products and to better understand the consumer experience. Directors are provided with use of the boat at no charge, but are responsible for paying all insurance, maintenance, gas and other fees, costs and charges (other than registration or use fees and taxes) related to their operation of the boat. At the end of each director’s term of service, the director has the option of either returning the boat to us or purchasing the boat at a purchase price equal to 75% of the dealer invoice price. Each of our Non-Employee Directors is reimbursed for out-of-pocket expenses for attendance at Board and committee meetings.
DIRECTOR COMPENSATION
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DIRECTOR COMPENSATION
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COMPENSATION DISCUSSION AND ANALYSIS
As noted above, fiscal 2024 presented a challenging operating environment as we faced softening retail demand leading to elevated channel inventories. However, we were able to maintain strong cash flow generation, which allowed us to further strengthen the health of our balance sheet and return capital to our shareholders. Some of our business highlights are provided below. •We introduced nine new models across our brands in fiscal 2024. We also continued our introduction of new features and options, which consumers are increasingly buying. •We introduced four new models for Malibu and Axis in fiscal 2024, including the 23 LSV, 23 MXZ, M242, and A245. •Pursuit introduced two new models in fiscal year 2024, including the OS 405, an offshore boat which is the smaller brother to the OS445 and the DC 306. •Cobalt introduced two new models in fiscal 2024, including the R33 Surf, our largest surf boat ever and the CS23 Surf. Both models feature Malibu's proprietary Surf Gate technology. •Maverick Boat Group introduced the new Pathfinder 2200 TRS, the smaller version of the Pathfinder 2400 TRS. •We completed the expansion of the Roane County facility. In addition to producing Cobalt's small boats, we have integrated our Malibu Electronics wiring harness operation into the facility. Because of our challenging fiscal 2024 performance, the value of our Named Executive Officers’ vested and unvested equity holdings was significantly reduced during 2024, and the Named Executive Officers’ 2024 performance-based bonus payments were significantly reduced. SUMMARY OF FISCAL 2024 COMPENSATION DECISIONS Our Compensation Committee’s primary executive compensation objective in fiscal 2024 was to structure a balanced mix of compensation elements that would incentivize our Named Executive Officers to create long-term stockholder value, while at the same time addressing the Company's leadership changes and ensuring the attraction and retention of critical executive talent at an inflection point for the Company's leadership. The Compensation Committee believes that the Named Executive Officers should be rewarded for successfully creating long-term stockholder value, and should be required to forfeit compensation opportunities if they are not able to grow long-term stockholder value, and also believes that attracting and retaining the best executive talent is in the long-term interest of our stockholders. The Board and Compensation Committee believe that our currently employed executive officers—and in particular Messrs. Menneto, Anderson and Beckman—are critical to driving our performance and delivering long-term stockholder value, and that it is important to structure our executive compensation so that it properly motivates the executive officers to drive long-term value creation. Primary objective of fiscal 2024 compensation decisions: Incentivize Named Executive Officers to create long-term stockholder value while also focusing on attracting and retaining a top tier executive team During our 2020 fiscal year, we made several important design changes to our executive compensation program to enhance the performance-based nature of the program. Our redesigned executive compensation program was introduced for our 2020 fiscal year and has continued in substantially the same form since fiscal year 2020. Stockholders first had the chance to express their views on our redesigned executive compensation program at our calendar 2020 annual meeting, and at that meeting and each annual meeting since 2020, over 98% of the votes cast on our say-on-pay proposal were in support of our say-on-pay proposal. The Compensation Committee believes that stockholders broadly support our redesigned executive compensation program, which includes the following key design features: •Continued 60% Weighting for Performance-Based Equity Awards in November 2023. In November 2023, the Compensation Committee granted Mr. Springer and Mr. Anderson a long-term equity award that, based on the number of shares granted, consisted of 60% performance-based restricted shares and 40% time-based restricted shares. Mr. Black and Mr. Hooks were granted time-based equity awards because of their interim roles, while Mr. Beckman joined the Company after the Company granted its equity awards for fiscal 2024, and was granted time based-awards in connection with his commencement of employment. We expect to continue our same performance-based equity award program implemented in fiscal 2020 for fiscal 2025.
COMPENSATION DISCUSSION AND ANALYSIS
PEER COMPANIES With assistance from Exequity, we have used the following objective peer group selection methodology to determine our peer group companies: •We initially screened U.S. publicly traded companies with a Global Industry Classification Standard (GICS) sector classification of leisure products; •Due to the limited number of GICS leisure products companies, we expanded the GICS screen to include adjacent industry sectors such as apparel, accessories and luxury goods, auto parts and equipment, automobile manufacturers, construction machinery and heavy trucks, consumer electronics, homebuilding, home furnishings, housewares and specialties, industrial machinery, automotive retail and specialty stores; •We applied an objective financial screen at the time of analysis focusing on GICS-screened companies with total trailing 12-month revenues ranging from approximately 0.5x to 3.0x times ours, and also applied a secondary objective financial screen focusing on GICS-screened companies with a relatively similar market capitalization, enterprise value, trailing 12-month EBITDA, and/or total number of employees as us; •We then also considered the peer group companies used by certain proxy advisory firms and companies with similar business profiles (such as cyclicality) based on input from our Compensation Committee and the Board. The Compensation Committee, with the assistance of Exequity, performed a review of our peer group in June 2022 and selected the following companies as our peer group companies for fiscal 2023 compensation decisions:
COMPENSATION DISCUSSION AND ANALYSIS
| Peer Group Companies | | | | Acushnet Holdings Corp. | Callaway Golf Company | Dorman Products, Inc. | | Fox Factory Holding Corp. | Helios Technologies | Johnson Outdoors Inc. | | Lifetime Brands, Inc. | Marine Products Corporation | Marine Max, Inc. | | MasterCraft Boat Holdings, Inc. | OneWater Marine Inc. | Smith & Wesson Brands | | Shyft Group Inc. (formerly Spartan Motors, Inc.) | Sturm, Ruger & Company, Inc. | Universal Electronics Inc. | | Vista Outdoor Inc. | Winnebago Industries, Inc. | YETI Holdings, Inc. |
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee, with the assistance of Exequity, conducted a review of our peer group in August 2023 to see if any new peer companies should be added or if any existing peer companies should be removed. Based on Exequity’s review, the Compensation Committee determined not to make any changes to our existing peer group. Therefore, we continued to use this peer group to inform fiscal 2024 compensation decisions. As of August 2023, our market capitalization, total revenues and trailing 12-month EBITDA were at the 55th percentile, 50th percentile, and 69th percentile, respectively, relative to our group of peer companies. The Compensation Committee believes that our current peer group provides a reasonable reference point for compensation decisions for our Named Executive Officers. The Compensation Committee believes it is important to understand and reference what similarly-situated companies are paying their executives, and it intends to use this information as one of the data points it considers when making compensation decisions for the Named Executive Officers using its business judgment. While the Compensation Committee does not utilize a formal benchmarking strategy, we believe the targeted total cash compensation (which is base salary plus target bonus) for the Named Executive Officers approximates (or is slightly above) the 50th percentile range of the targeted total cash compensation provided by our current group of peer companies to similarly situated executives. We believe long term incentive opportunities for our Named Executive Officers were generally above this 50th percentile range but below the 75th percentile range, which is consistent with the Compensation Committee’s objective of using equity awards to incentivize Named Executive Officers to create long-term stockholder value. THE ROLE OF STOCKHOLDER SAY-ON-PAY VOTES
Annual Incentive Compensation Opportunity
Annual Incentive Compensation Opportunity Annual Incentive Plan. In October 2023, the Compensation Committee approved our annual incentive plan for fiscal 2024. The fiscal 2024 annual cash incentive bonus for each Named Executive Officer other than Mr. Black and Mr. Hooks was payable based on our achievement of equally weighted annual net income and Adjusted EBITDA targets for fiscal 2024 established by our Compensation Committee. The Compensation Committee continued to include a net income performance metric during fiscal 2024 in order to reduce the weighting of the Adjusted EBITDA performance metric and to have 50% of each executive’s performance-based bonus opportunity payable based on the achievement of the GAAP performance measure. For Mr. Black, because of his interim role, his annual incentive opportunity for fiscal 2024 was based on our achievement of the same annual net income and Adjusted EBITDA targets as for the other Named Executive Officers, as well as individual performance objectives established for his position.
Annual Incentive Compensation Opportunity
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Annual Incentive Compensation Opportunity
Upon Mr. Hooks’ appointment as our Executive Chair, he became eligible to earn a discretionary bonus of $10,000 per month of service in the role of Executive Chair to provide Mr. Hooks a performance-based incentive opportunity in addition to his fixed monthly fee. The Company also awarded Mr. Beckman a one-time bonus of $225,000 upon his commencement of employment to partially reimburse him for foregone compensation, while Mr. Black was eligible to earn a $50,000 bonus upon his successful completion of his term as interim Chief Financial Officer. The Compensation Committee views all of these bonus opportunities as one-time bonuses payable outside of the Company’s normal executive compensation program as a result of the management transitions that occurred during fiscal 2024. Annual net income for purposes of the incentive plan was defined as our net income as publicly reported in our press release announcing our financial results for fiscal 2024, but adjusted to exclude the results of any businesses acquired during fiscal 2024. Our fiscal 2024 net income target was set at $138.9 million dollars, and reflected the anticipated softening retail demand for fiscal 2024. The Compensation Committee believed that achievement of this target would require the Named Executive Officers to successfully execute on our fiscal 2024 business plan in order to earn an annual bonus for fiscal 2024. Adjusted EBITDA for purposes of the incentive plan was defined as our Adjusted EBITDA as publicly reported in our press release announcing our financial results for fiscal 2024, but adjusted to exclude the results of any businesses acquired during fiscal 2024. The fiscal 2024 Adjusted EBITDA target for the Company was set at $225.5 million. As with the net income target, the Compensation Committee believed that achievement of this target would require the Named Executive Officers to successfully execute on our fiscal 2024 business plan and reflected the anticipated softening retail demand for fiscal 2024. The threshold and maximum annual net income and Adjusted EBITDA amounts were each set as a percentage of the applicable target amount described above. The threshold performance level for each metric was set at an amount equal to 90% of the applicable target amount, while the maximum performance level for each metric was set at an amount equal to 130% of the applicable target amount. Although the annual net income and Adjusted EBITDA metrics are equally weighted independent performance metrics, in order for any bonus to become payable, our plan design required that both annual net income and Adjusted EBITDA performance must be achieved at a minimum of the threshold performance level. Our annual bonus plan payout scale and the associated incentive payments as a percentage of each Named Executive Officer’s target bonus amount were as follows:
Annual Incentive Compensation Opportunity
| Net Income/Adjusted EBITDA Performance Level | Net Income/Adjusted EBITDA Amount as a % of Target | % of Target Bonus Becoming Payable | | Below Threshold | <90% | 0% | | Threshold | 90% | 35% | | Target | 100% (Net income of $138.9 million and Adjusted EBITDA of $225.5 million) | 100% | | Above Target | 110% | 134% | | Above Target | 120% | 167% | | Maximum | 130% | 200% | | Above Maximum | >130% | 200% |
Annual Incentive Compensation Opportunity
The bonus payment for performance between any of the performance levels specified above is interpolated on a straight-line basis. In addition, under our plan design, the Compensation Committee also retained the discretion to reduce each Named Executive Officer’s incentive bonus amount based on any reason determined to be appropriate by the Compensation Committee. For our 2024 fiscal year, we achieved annual net income (loss) of ($56.4) million and Adjusted EBITDA of $82.2 million as publicly reported in our financial results. Because both our achieved annual net income and Adjusted EBITDA performance results were below the threshold performance level, none of the Named Executive Officers received any
Annual Incentive Compensation Opportunity
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Annual Incentive Compensation Opportunity
incentive bonus payment based on our net income and Adjusted EBITDA performance for fiscal 2024. The Compensation Committee determined not to make any adjustments to our previously approved performance targets, and determined that it was appropriate not to make any incentive bonus payments to the Named Executive Officers for our 2024 performance. As described above, because of Mr. Black’s interim role, a portion of his fiscal 2024 bonus opportunity was tied to individual performance, and he was awarded a partial bonus equal to $22,400 based on his individual performance during fiscal 2024. Total Fiscal 2024 Cash Bonus Payments. For each Named Executive Officer, the fiscal 2024 target incentive bonus amount and total fiscal 2024 cash bonus payment are listed below.
Annual Incentive Compensation Opportunity
| Named Executive Officer | FY 2024 Target Bonus ($) | FY 2024 Annual Incentive Payment ($) | | Jack D. Springer | 1,012,000 | — | | Ritchie L. Anderson | 585,000 | — | | David S. Black | 112,000 | 22,400 | | Bruce W. Beckman | 315,000 | — |
Annual Incentive Compensation Opportunity
Please see Appendix A for the definition of Adjusted EBITDA which is a non-GAAP financial measure and a reconciliation of Adjusted EBITDA to net income as reported under GAAP. The table does not include the $10,000 monthly performance-based bonus paid to Mr. Hooks for his service as our Executive Chair, the one-time bonus paid to Mr. Beckman in connection with commencement of employment or the $50,000 special bonus paid to Mr. Black for his services in the interim Chief Financial Officer role.
Long-Term Incentives
Long-Term Incentives Structure of Fiscal 2024 Equity Awards. The long-term equity incentive awards granted to Mr. Anderson and Mr. Springer as part of our annual equity award grant process consisted of a combination of time-based restricted shares and performance-based restricted shares. The number of shares subject to the long-term equity award for each of Mr. Anderson and Mr. Springer consisted of 60% performance-based restricted shares and 40% time-based restricted shares. The table below summarizes the fiscal 2024 equity award grants for each of Mr. Anderson and Mr. Springer:
Long-Term Incentives
| Name | Relative TSR Performance Awards | Adjusted EBITDA Performance Awards | Time-Based Shares or Units | | Jack D. Springer | $856,254 | $— | $1,038,786 | | | 17,364 target shares | 17,363 target shares | 23,151 shares | | Ritchie L. Anderson | $428,105 | $— | $4,519,377 | | | 8,682 target shares | 8,681 target shares | 104,275 shares |
Long-Term Incentives
Mr. Anderson’s time-based awards shown above include a one-time retention award that was made to Mr. Anderson in February 2024 following Mr. Springer’s departure. Mr. Anderson’s February 2024 award was made to recognize his promotion to the Office of the Chief Executive Officer together with Mr. Hooks, and to provide him with a meaningful equity incentive to continue working to grow our business. In addition to the shares included in the table above as part of our annual equity award grant process, Mr. Hooks, Mr. Beckman and Mr. Black were also awarded time-based restricted stock or units because of either the interim nature of their roles or, in the case of Mr. Beckman, as an incentive to attract him to the Company.
Long-Term Incentives
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Long-Term Incentives
Time-Based Shares. Time-based restricted shares or units are included as part of each Named Executive Officer’s long- term equity award to provide an equity incentive linked to the value realized by our stockholders that becomes earned based on the executive’s continued employment with us. Each of Mr. Springer's and Mr. Anderson's time- based shares granted in fiscal 2024 become vested in over a period of four years. Mr. Hooks' Executive Chair award was fully vested at grant, while Mr. Black's awards vest over a period of three years or four years and Mr, Beckman's awards vest over a period of either two years or four years. Performance-Based Shares. The performance-based shares granted to Mr. Anderson and Mr. Springer consisted of an approximately equal number of relative TSR awards and Adjusted EBITDA awards. Relative TSR Awards. The relative TSR awards have a three-year performance period and are eligible to become vested based on our three-year actual total stockholder return as measured against the total stockholder return of the Russell 2000 Index over the same three-year period. The relative TSR performance requirements and the vesting schedule for the relative TSR awards can be illustrated by the following table.
Long-Term Incentives
| Performance Level | TSR Achieved Relative to the TSR of the Russell 2000 Index | % of Relative TSR Awards Vesting | | Below Threshold | <80% | 0% | | Threshold | 80% | 50% | | Target | 100% | 100% | | Above Target | 120% | 150% | | Maximum | 140% | 200% | | Above Maximum | >140% | 200% |
Long-Term Incentives
The relative TSR award vesting for performance between any of the performance levels specified above is interpolated on a straight-line basis. Adjusted EBITDA Awards. The fiscal 2024 Adjusted EBITDA awards will be eligible to become vested following the end of a three-year performance period based on our Adjusted EBITDA performance through the end of the performance period. Consistent with prior years, in order to achieve the Adjusted EBITDA target for fiscal 2026, we will be required to grow our Adjusted EBITDA over the three-year performance period at a compounded annual growth rate equal to at least 10%. In order to reinforce the importance of achieving a 10% compounded annual Adjusted EBITDA growth rate, no Adjusted EBITDA awards are eligible to vest if our actual Adjusted EBITDA performance is below our target performance level. However, the Adjusted EBITDA awards are eligible to vest up to a maximum 150% payout level if we are able to grow our annual Adjusted EBITDA at a rate of or in excess of 15%. The Adjusted EBITDA performance requirements and the vesting schedule for the Adjusted EBITDA awards can be illustrated by the following table.
Long-Term Incentives
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Long-Term Incentives
| Performance Level | Compounded Annual Adjusted EBITDA Growth Rate Achieved | % of Adjusted EBITDA Awards Vesting | | Below Threshold | <10% | 0% | | Target | 10% | 100% | | Above Target | 11% | 110% | | Above Target | 12% | 120% | | Above Target | 13% | 130% | | Above Target | 14% | 140% | | Maximum | ≥15% | 150% |
Long-Term Incentives
The Adjusted EBITDA award vesting for performance between any of the performance levels specified above is interpolated on a straight-line basis. Adjusted EBITDA has substantially the same meaning as under the annual incentive plan described above. The annual incentive plan also uses an Adjusted EBITDA-based performance metric, however the 10% compounded annual growth rate requirement over three years used to establish the Adjusted EBITDA award target for fiscal 2026 is intended to incentivize sustained long-term earnings growth. As a result, we believe that the Adjusted EBITDA awards (which comprise 50% of the performance-based shares awarded to Mr. Anderson and Mr. Springer incentivize growth and long-term performance. In contrast, the Adjusted EBITDA targets under the annual incentive plan (which represented 50% of the fiscal 2024 target bonus opportunity under our executive bonus plan) are established on an annual basis and are intended to incentivize short-term execution of our earnings objectives for the relevant fiscal year. Payouts of Previously Granted Performance-Based Awards. The performance period applicable to certain previously granted relative TSR awards ended in November 2023 and the performance period applicable to certain previously granted Adjusted EBITDA awards ended on June 30, 2024. Our relative TSR performance for the three-year performance period ended on November 3, 2023 against the Russell 2000 Index resulted in a long-term incentive plan payout for the relative TSR awards equal to 57.2% of each executive’s target number of relative TSR awards as a result of our performance against the Russell 2000 Index. This below-target TSR award payout, coupled with what is expected to be a 0% payout for the TSR awards scheduled to vest in November 2024, has resulted in significant forfeitures by our executives and we believe is evidence of the performance-based nature of our executive incentive compensation plan design at work. The Adjusted EBITDA awards granted in November 2021 were eligible to become earned at 100% of the target number of Adjusted EBITDA shares awarded if we achieved an Adjusted EBITDA target of $253.0 million, and were eligible to become earned at 150% of the target number of shares awarded if we achieved or exceeded $289.1 million of Adjusted EBITDA. Our fiscal 2024 Adjusted EBITDA performance resulted in all of the Adjusted EBITDA awards being forfeited, which we again believe is evidence of our performance-based executive compensation program.
Severance and Change in Control Benefits
Severance and Change in Control Benefits We believe that severance protections, particularly in the context of the uncertainty surrounding any potential change in control transaction, play a valuable role in attracting and retaining quality executive officers. We provide severance protections to each of Mr. Anderson and Mr. Beckman pursuant to the terms of his employment agreement, Mr; Hooks and Mr. Black were not entitled to any cash-based severance protections while they served as Named Executive Officers, and neither executive received any severance benefits when their interim roles concluded. Mr Springer was party to an employment agreement prior to his departure and received termination benefits pursuant to the Transition, Release and Consulting Agreement we entered into with him in connection with his departure. As described in more detail below under the heading “Potential Payments Upon Termination or Change in Control,” each of Mr. Anderson and Mr. Beckman would be entitled to severance benefits in the event of a termination of employment by us without “cause” or by the executive for “good reason”. Severance benefits for Mr. Anderson and Mr. Beckman include 12 months of continued base salary payments.
Severance and Change in Control Benefits
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Severance and Change in Control Benefits
Cash severance benefits for Mr. Anderson and Mr. Beckman are not enhanced in connection with a change in control of the Company, and Mr. Anderson and Mr. Beckman would only receive 12 months of continued base salary payments if their employment is terminated involuntarily in connection with a change in control. However, under the terms of our shareholder approved Long Term Incentive Plan, (and the terms of our new 2024 Performance Incentive Plan), all outstanding equity awards will fully vest if the awards are not assumed or substituted by a surviving entity in connection with a change in control or, if assumed or substituted, an executive’s employment is terminated without “cause” or for “good reason” within 18 months following such change in control. For the TSR awards and Adjusted EBITDA awards granted in fiscal 2022, 2023 and 2024, actual performance will be measured through the date of the change in control, and the change in control provisions in the Long Term Incentive Plan will apply to any TSR award or Adjusted EBITDA award shares actually becoming earned based on performance. No Named Executive Officer is entitled to receive a “gross-up” or similar payment for any excise taxes that may become payable in connection with a change in control pursuant to Sections 280G and 4999 of the Code.
Clawback Policy
Clawback Policy During fiscal 2024, the Board adopted a new clawback policy that permits us to clawback or recover cash and equity incentive compensation in the event of a material restatement of our financial statements or if a covered executive commits fraud during the course of employment that causes financial or reputational harm to us. This clawback policy retains the flexibility to clawback performance-based cash and equity compensation in the event a covered executive commits fraud, even though this clawback right is broader than required by the new SEC and Nasdaq rules. All of the currently employed Named Executive Officers are subject to the clawback policy. LOOKING FORWARD On July 18, 2024, the Board appointed Mr. Steven D. Menneto as the Company’s Chief Executive Officer, effective August 5, 2024. We are excited about Mr. Menneto’s appointment and look forward to him leading the next chapter for our Company. We hope to improve on our fiscal 2024 results under Mr. Menneto’s leadership. In connection with Mr. Menneto’s appointment, we entered into an employment agreement with him. Pursuant to his employment agreement, Mr. Menneto is entitled to receive a base salary of $920,000. For fiscal year 2025, Mr. Menneto will receive a cash bonus of 55% of his annual base salary, or $506,000, for fiscal year 2025, subject to Mr. Menneto being continuously and actively employed through the end of fiscal year 2025. Beginning in fiscal year 2026, Mr. Menneto will be eligible for a target annual cash bonus of not less than 110% of his annual base salary and a maximum annual cash bonus opportunity of not less than 200% of his target annual cash bonus, based upon the achievement of performance criteria established, in its sole discretion, by the Board or the Compensation Committee. The employment agreement also provides for the grant of restricted stock units with respect to 58,427 shares of the Company’s common stock (the “Sign-On RSUs”). The Sign-On RSUs were granted to Mr. Menneto to provide him with an equity award that provides him with the opportunity to earn compensation he forfeited when he left Polaris, his prior employer. 14,363 of the Sign-On RSUs will vest on the first anniversary of the Effective Date and the remaining 44,064 of the Sign-On RSUs will vest in substantially equal annual installments over a three-year period, subject to Mr. Menneto’s continuous and active service with the Company. In addition, Mr. Menneto will receive an equity grant under the LTIP on the same basis as the Company’s other senior executive officers with a grant date target value equal to $800,000 in November 2024 and with a target amount for Mr. Menneto’s equity grant in November 2025 equal to $2.7 million.The Compensation Committee retains the discretion to establish the terms of Mr. Menneto’s November 2024 and 2025 equity grants under his employment agreement, and expects that at least 60% of Mr. Menetto’s awards will be performance-based consistent with the terms of our executive compensation program described above. Mr. Menneto is also eligible to participate in all employee benefit plans and vacation programs and is eligible for the use of a company-owned boat from each of the Company’s brands and reimbursement of certain relocation costs.
Clawback Policy
Under the employment agreement with Mr. Menneto, in the event the Board terminates his employment without “cause” or he resigns for “good reason” (as such terms are defined in the employment agreement), Mr. Menneto will be entitled to receive, subject to certain limitations including his execution of a release, a lump sum cash payment equal to 100% (or 200% if such termination occurs on or within 24 months after a change of control as defined in the LTIP) of the sum of (i) his highest salary during the one-year period prior to termination of employment plus (ii) his annual bonus earned with respect to the most recently completed fiscal year prior to termination or employment. In addition, in the event the Board terminates his employment without “cause” or he resigns for “good reason” or due to death or disability (as such terms are defined in the employment agreement), any unvested Sign-On RSUs will become fully vested on the date of such termination. Further, if the Board terminates Mr. Menneto’s employment without “cause” or he resigns for “good reason” within 24 months following a “change in control” (as such terms are defined in the employment agreement), Mr. Menneto’s unvested equity awards subject to time-based vesting will become fully vested and payable and his unvested equity awards subject to performance-based vesting will become vested and payable at target performance, in each case as of the termination date. In the event of a “qualified retirement” (as defined in the employment agreement), Mr. Menneto’s unvested equity awards subject to time-based vesting will become fully vested and payable and his unvested equity awards subject to performance-based vesting will vest based on actual performance at the end of each applicable performance period as if Mr. Menneto had remained actively employed by the Company through such date. Mr. Menneto’s employment agreement also includes certain restrictive covenants, including a confidentiality clause, post-termination non-competition clause, a post-termination non-solicitation clause, and a non-disparagement clause. In addition, under the employment agreement, the Company has agreed to indemnify and make Mr. Menneto whole with respect to certain actions that may be taken by his prior employer. POLICY WITH RESPECT TO SECTION 162(M) Section 162(m) of the Code generally prohibits a publicly-held company from deducting compensation paid to a current or former Named Executive Officer that exceeds $1.0 million during the tax year. Certain awards granted before November 2, 2017 that were based upon attaining pre-established performance measures that were set by the Compensation Committee under a plan approved by our stockholders, as well as amounts payable to former executives pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1.0 million deductibility limit. Prior to our 2018 annual meeting of stockholders, we were eligible for a special Section 162(m) grandfathering rule available for certain compensation paid or awarded by newly public companies. Each Named Executive Officer’s restricted stock awards and stock option awards granted before the date of our 2018 annual meeting have been structured to take advantage of this special grandfathering rule. Our ability to rely on this grandfathering rule expired on the date of our 2018 annual meeting of stockholders. The Compensation Committee currently notes the Section 162(m) deductibility limitation as one of the factors in its consideration of compensation matters. However, the Compensation Committee has the flexibility to take any compensation-related actions that it determines are in the best interests of the Company and our stockholders, including awarding compensation that may not be deductible for tax purposes. There can be no assurance that any compensation will in fact be deductible as a result of the limitations under Section 162(m).
EXECUTIVE COMPENSATION
| Name and Principal Position (a) | Year (b)(1) | Salary ($) (c) | Bonus ($) (d) | Stock Awards ($) (e)(2) | Option Awards ($) (f) | Non-Equity Incentive Plan Compensation ($) (g)(3) | Nonqualified Deferred Compensation Earnings ($) (h) | All Other Compensation ($) (i)(4) | Total ($) (j) | | Jack D. Springer (5) Former Chief Executive Officer | 2024 | 819,423 | — | 1,895,040 | — | — | — | 209,074 | 2,923,537 | | | 2023 | 875,000 | — | 3,169,642 | — | 481,250 | — | 9,900 | 4,535,792 | | | 2022 | 828,750 | — | 3,062,887 | — | 937,231 | — | 9,150 | 4,838,018 | | Ritchie L. Anderson (6) President and Former Member of Office of CEO | 2024 | 544,615 | — | 4,947,482 | — | — | — | 11,805 | 5,503,902 | | | 2023 | 475,000 | — | 929,005 | — | 267,187 | — | 10,045 | 1,681,237 | | | 2022 | 437,500 | — | 890,926 | — | 347,327 | — | 9,407 | 1,685,160 | | David S. Black (7) Former Interim Chief Financial Officer and Corporate Controller | 2024 | 273,269 | 50,000 | 497,001 | — | 22,400 | — | — | 842,670 | | | 2023 | 236,000 | — | 44,987 | — | 83,042 | — | 0 | 364,029 | | Bruce W. Beckman (7) Former Chief Financial Officer and Secretary | 2024 | 242,308 | 225,000 | 599,958 | — | — | — | 75,000 | 1,142,266 | | Michael K. Hooks (8) Former Executive Chair and Former Member of Office of CEO | 2024 | 217,241 | 43,448 | 229,990 | — | — | — | — | 490,679 |
PAY VS PERFORMANCE
PAY VS PERFORMANCE Under rules adopted pursuant to the Dodd-Frank Act, we are required to disclose certain information about the relationship between the compensation actually paid (“CAP”) to our named executive officers and certain measures of the company’s financial performance. The material that follows is provided in compliance with these rules however additional information regarding our compensation philosophy, the structure of our performance-based compensation programs, and compensation decisions made this year is described in our "Compensation Discussion and Analysis" section above. The table below provides information regarding CAP to our principal executive officer, or PEO, and other NEOs for each year from 2021 to 2024, compared to our total shareholder return (“TSR”) from June 30, 2020 through the end of each such year, and our net income, and Adjusted EBITDA for each such year. The methodology for calculating amounts presented in the columns “Compensation Actually Paid to PEO” and “Average Compensation Actually Paid to Non-PEO NEOs,” including details regarding the amounts that were deducted from, and added to, the Summary Compensation Table (“SCT”) totals to arrive at the values presented for CAP, are provided in the footnotes to the table. A narrative discussion of the relationship between CAP and the Company performance measures (i) listed in the table below and (ii) that the Company has deemed most important in linking CAP during Fiscal 2024 to Company performance is also presented below.
PAY VS PERFORMANCE
| | | | | | | | Value of Initial Fixed $100 Invested Based On: | | | | | Year (a) | Summary Compensation Table Total for PEO (Jack D Springer) ($) (b)(1)(2) | Compensation Actually Paid to PEO (Jack D Springer) ($) (c)(1)(3) | Summary Compensation Table Total for PEO (Michael Hooks) ($) (b)(1)(2) | Compensation Actually Paid to PEO (Michael Hooks) ($) (c)(1)(3) | Average Summary Compensation Table Total for Non-PEO NEOs ($) (d)(4) | Average Compensation Actually Paid to Non-PEO NEOs ($) (d)(5) | Total Shareholder Return ($) (f)(6) | Dow Jones Recreational Products Index Total Shareholder Return ($) (g)(7) | Net Income ($) ($M) (h)(8) | Adjusted EBITDA ($) ($M) (i)(9) | | 2024 | 2,923,537 | (3,046,395) | 490,679 | 708,011 | 2,496,279 | 1,544,238 | 67.45 | 102.82 | (56.4) | 82.2 | | 2023 | 4,535,792 | 5,847,922 | — | — | 1,128,644 | 591,110 | 112.92 | 128.93 | 107.91 | 284.04 | | 2022 | 4,838,018 | 2,059,911 | — | — | 1,683,805 | 557,849 | 101.46 | 108.84 | 163.43 | 246.53 | | 2021 | 4,480,177 | 7,487,216 | — | — | 1,932,208 | 3,351,361 | 141.15 | 150.49 | 114.3 | 190 |
PAY VS PERFORMANCE
(1)For the years reported in the table, Jack D. Springer was PEO from 2021 through 2024 and Michael Hooks was our PEO from February 2024 through June 2024. (2)Represents the total compensation paid to our PEO in each listed year, as shown in our Summary Compensation Table for such listed year. (3)Compensation actually paid does not mean that our PEO was actually paid those amounts in the listed year, but this is a dollar amount derived from the starting point of summary compensation table total compensation under the methodology prescribed under the relevant rules as shown in the adjustment table below.
PAY VS PERFORMANCE
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PAY VS PERFORMANCE
| Jack D. Springer | 2024 | | Summary Compensation Table Total | $2,923,537 | | Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | (1,895,040) | | Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | 900,844 | | Adjust for Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | (4,411,947) | | Adjust for Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | — | | Adjust for Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | (563,789) | | Subtract Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | — | | Add Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | — | | Compensation Actually Paid | $(3,046,395) |
PAY VS PERFORMANCE
| Michael K. Hooks | 2024 | | Summary Compensation Table Total | $490,679 | | Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | (229,990) | | Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | — | | Adjust for Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | — | | Adjust for Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | 447,322 | | Adjust for Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | — | | Subtract Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | — | | Add Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | — | | Compensation Actually Paid | $708,011 |
PAY VS PERFORMANCE
*The assumptions used for determining the fair values shown in this table are materially consistent with those used to determine the fair values disclosed as of the grant date of such awards. **Note that we have not reported any amounts in our Summary Compensation Table with respect to “Change in Pension and Nonqualified Deferred Compensation “and, accordingly, the adjustments with respect to such items prescribed by the pay-versus-performance rules are not relevant to our analysis and no adjustments have been made. (4)This figure is the average of the total compensation paid to our NEOs other than our PEO in each listed year, as shown in our Summary Compensation Table for such listed year. The names of the non-PEO NEOs in each year are listed in the table below.
PAY VS PERFORMANCE
| 2024 | 2023 | 2022 | 2021 | | Ritchie Anderson | Ritchie Anderson | Ritchie Anderson | Ritchie Anderson | | Bruce Beckman | Wayne Wilson | Wayne Wilson | Wayne Wilson | | David Black | David Black | | |
PAY VS PERFORMANCE
(5)This figure is the average of compensation actually paid for our NEOs other than our PEO in each listed year. Compensation actually paid does not mean that these NEOs were actually paid those amounts in the listed year, but this is a dollar amount derived from the starting point of Summary Compensation Table total compensation under the methodology prescribed
PAY VS PERFORMANCE
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PAY VS PERFORMANCE
under the SEC's rules as shown in the table below, with the indicated figures showing an average of such figure for all NEOs other than our PEO in each listed year.
PAY VS PERFORMANCE
| | 2024 | | Summary Compensation Table Total | $2,496,279 | | Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | (2,014,814) | | Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | 1,580,392 | | Adjust for Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | (439,662) | | Adjust for Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | 4,120 | | Adjust for Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | (82,077) | | Subtract Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | — | | Add Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | — | | Compensation Actually Paid | $1,544,238 |
PAY VS PERFORMANCE
*Note that the fair value assumptions shown with respect to footnote 3 apply to the figures in this table as well. **Note that we have not reported any amounts in our Summary Compensation Table with respect to “Change in Pension and Nonqualified Deferred Compensation “ and, accordingly, the adjustments with respect to such items prescribed by the pay-versus-performance rules are not relevant to our analysis and no adjustments have been made. (6)Total shareholder return is calculated by assuming that a $100 investment was made on the day prior to the start of the first fiscal year reported in the table (June 30, 2020) assuming all dividends paid from the start of the measurement period through end of the measurement period (June 30, 2024) are reinvested. (7)The peer group used is the Dow Jones U.S. Recreational Products Index, as used in the company's performance graph found in the company’s 10-k. Total shareholder return is calculated by assuming that a $100 investment was made on the day prior to the start of the first fiscal year reported in the table (June 30, 2020) assuming all dividends paid from the start of the measurement period through end of the measurement period (June 30, 2024) are reinvested. (8)The dollar amounts reported are the Company's net income reflected in the Company’s audited financial statements. (9)In the Company's assessment Adjusted EBITDA is the financial performance measure that is the most important financial performance measure (other than total shareholder return and net income) used by the company in 2024 to link compensation actually paid to performance. The company defines adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization and non-cash, non-recurring or non-operating expenses, including settlement of litigation claims, certain professional fees, acquisition and integration-related expenses, non- cash compensation expense and adjustments to our tax receivable agreement liability.
PAY VS PERFORMANCE
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PAY VS PERFORMANCE
TABULAR LIST OF PERFORMANCE MEASURES The list below includes the three financial performance measures that in our assessment represent the most important financial performance measures used to link compensation actually paid to our NEOs, for 2024, to company performance.
PAY VS PERFORMANCE
| Tabular List | | Adjusted EBITDA | | Relative Total Shareholder Return | | Net Income |
PAY VS PERFORMANCE
DESCRIPTION OF RELATIONSHIPS BETWEEN COMPENSATION ACTUALLY PAID AND PERFORMANCE We believe the Company’s pay-for-performance philosophy is well reflected in the table above because the Compensation Actually Paid tracks well to the performance measures disclosed in such tables. The graphs below describe, in a manner compliant with the relevant rules, the relationship between Compensation Actually Paid and the individual performance measures described in the table above.
Compensation Actually Paid Versus TSR
Compensation Actually Paid Versus TSR
Compensation Actually Paid Versus TSR
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Compensation Actually Paid Versus Net Income
Compensation Actually Paid Versus Net Income
Compensation Actually Paid Versus Net Income
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Compensation Actually Paid Versus Adjusted EBITDA
Compensation Actually Paid Versus Adjusted EBITDA
Compensation Actually Paid Versus Adjusted EBITDA
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CEO PAY RATIO DISCLOSURE
CEO PAY RATIO DISCLOSURE Pursuant to the Exchange Act, we are required to disclose in this Proxy Statement the ratio of the total annual compensation paid to our PEO, to the median of the total annual compensation of all of our employees (excluding our PEO). In accordance with SEC rules, given that we had two PEOs during fiscal 2024, we opted to calculate the total compensation of our PEO by using the compensation paid to Mr. Hooks, our former Executive Chair, who served as our PEO on the date the median employee was selected. Based on SEC rules for this disclosure and applying the methodology described below, we have determined that Mr. Hooks' total compensation for the fiscal year ended June 30, 2024 was $490,679, and the median of the total compensation of all of our employees (excluding Mr. Hooks) for the fiscal year ended June 30, 2024 was $37,082. Accordingly, we estimate the ratio of Mr. Hooks' total compensation for the fiscal year ended June 30, 2024 to the median of the total compensation of all of our employees (excluding Mr. Hooks) for the fiscal year ended June 30, 2024 to be 13 to 1. When we originally identified the median employee for fiscal 2021, we did so by taking into account the total cash compensation for the fiscal year ended June 30, 2021 reflected in our payroll records for all individuals, excluding Mr. Springer, who were employed by us or one of our affiliates on June 30, 2021. We included all employees, whether employed on a full-time, part-time, or temporary basis. We did not make any assumptions, adjustments or estimates with respect to their total compensation for the fiscal year ended June 30, 2021 reflected in our payroll records, except that we converted the total compensation of our employees resident in Australia to US dollars using a conversion ratio of AUD $1.00 to USD $0.75. We applied the same methodology to select a new median employee for fiscal 2024. Once the median employee was identified as described above, that employee’s total annual compensation for the fiscal year ended June 30, 2024 was determined using the same rules that apply to reporting the compensation of our Named Executive Officers (including Mr. Hooks) in the “Total” column of the Summary Compensation Table. This information is being provided for compliance purposes. Neither the Compensation Committee nor our management used the pay ratio measure in making compensation decisions. Given the different methodologies that companies use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
CEO PAY RATIO DISCLOSURE
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