CORPORATE GOVERNANCE AND OTHER BOARD MATTERS
Corporate Governance Overview
We are committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens Board and management accountability and helps build public trust in the Company. Our corporate governance framework includes the following:
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Annual election of directors •
Five of our six director nominees are independent, one is female, one is diverse, and one is a veteran •
Audit Committee, Nominating and Corporate Governance Committee, Compensation Committee and Sustainability Committee •
Code of Business Conduct and Ethics | | | •
Policy for Confidential Submission of Complaints or Concerns •
Frequent executive sessions of independent members of the Board and Committees •
Supplier Code of Conduct •
Global Human and Labor Rights Policy •Lead Independent Director
•Director election subject to a Majority Voting Policy
| •Regular Board self-evaluations
•Annual ESG Report
•Board and Committee review of strategic, operational and compliance risks
•Director and Executive Officer Stock Ownership Guidelines
•Pay for Performance alignment
•Coordinated investor outreach
•No poison pill
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Board Independence
The Board has determined that each of the following directors and director nominees is “independent” as defined by Rule 5605(a)(2) of the listing standards of the NASDAQ Stock Market (“NASDAQ”):
Gina A. Norris
William R. Thomas
W. Kelvin Walker
Scott D. Weaver
John H. Wilson
The Board also determined that Gregory J. Fisher, who served on the Board of Directors during fiscal year 2022, was “independent” as defined by Rule 5605(a)(2) of the listing standards of NASDAQ. The Board has determined that each of the current members of the Audit Committee, Nominating and Corporate Governance Committee, Compensation Committee and Sustainability Committee of the Board of Directors is “independent” within the rules set forth in the listing standards of NASDAQ. In assessing the director independence standards, the Board considered that Scott Weaver was employed by the Company from 1993 until June 2000. The Board concluded, based on all the facts and circumstances, that this past relationship with the Company does not affect Mr. Weaver’s independence as a director under NASDAQ’s independence definition.
Board Structure and Committee Composition
As of the date of this proxy statement, the Board has six directors and the following four committees: Audit Committee, Nominating and Corporate Governance Committee, Compensation Committee, and Sustainability Committee. The membership and function of each committee is described below. The Audit Committee, Nominating and Corporate Governance Committee, Compensation Committee, and Sustainability Committee each operate under a written charter adopted by the Board of Directors. A current copy of each charter is available under the “Investors” section of the Company’s website at www.encorewire.com.
During the Company’s calendar year ended December 31, 2022, the Board of Directors held a total of five meetings. Each director attended all five meetings, other than Gregory J. Fisher, who attended two meetings (constituting all meetings prior to his resignation), and W. Kelvin Walker, who attended two meetings (constituting all meetings after his appointment). Each director attended at least 75% of the number of board meetings and meetings held by all committees on which such director served. Directors are encouraged to attend annual meetings of the stockholders of the Company. All of the Company’s directors virtually attended the 2022 annual meeting of the stockholders of the Company.
Board Leadership Structure
The Board of Directors does not have a formal policy with respect to whether the Chief Executive Officer should also serve as Chairman of the Board. This flexibility allows the Board to determine whether the two roles should be combined or separated based on its evaluation of the circumstances in existence and the specific needs of the Company and the Board at any time it is considering either or both roles. In November 2014, the Board of Directors unanimously elected Daniel L. Jones, the current Chief Executive Officer of the Company, as Chairman of the Board. In connection with this appointment, the Board of Directors created the position of Lead Independent Director of the Board and appointed John H. Wilson to such position, effective as of the same date. The appointment of a Lead Independent Director ensures that the Company benefits from effective oversight of the independent directors of the Board and promotes communication between management and the Board about issues such as management development, executive compensation and Company performance. The Board recognizes that no single leadership model is right for all companies at all times and that, depending on the circumstances, other leadership models, such as separating the Chairman and Chief Executive Officer roles, might be appropriate. Accordingly, the Board expects to periodically review its leadership structure.
The Board believes that its current Board leadership structure is appropriate for the Company, because it gives the Company’s stockholders the benefit of Board leadership by Mr. Jones, an executive with extensive day-to-day knowledge of the Company’s operations, strategic plan execution and future needs, promotes strategy development and execution and facilitates information flow between management and the Board of Directors, which are essential to effective governance. The Board continually evaluates the Company’s leadership structure and could in the future decide to separate the Chairman and Chief Executive Officer positions, if it understands that doing so would serve the best interests of the Company and the Company’s stockholders.
Lead Independent Director
John H. Wilson was elected by the independent members of the
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Director election subject to a Majority Voting Policy
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Regular Board to serve as the Lead Independent Director in November 2014. The Board adopted a Lead Independent Director Charter that sets forth the powers and responsibilities of the Lead Independent Director. The Lead Independent Director position responsibilities currently include presiding at all meetings of the Board at which the Chairman is not present; serving as the principal liaison between the Chairman and the independent members of the Board; approving all information sent to the Board; approving meeting agendas for the Board; approving the frequency of Board meetings and Board meeting schedules; calling meetings of the independent members of the Board when necessary; being available for consultation and direct communication with major stockholders upon request; overseeing the development, recommendation and implementation of a process for the assessment of the effectiveness of the Board, each committee and the Board members; and such other responsibilities as the Board delegates. In performing these responsibilities, the Lead Independent Director is expected to consult with the chairpersons of other Board committees as appropriate and solicit their participation in order to avoid the appearance of diluting the authority or responsibility of the Board committees and their chairpersons.self-evaluations Risk Oversight
The Board of Directors oversees the Company’s risk management, satisfying itself that the Company’s risk management practices are consistent with its corporate strategy and are functioning appropriately. The Board does not have a separate risk committee, but instead believes that the entire Board is responsible for overseeing the Company’s risk management.
The Board conducts certain risk oversight activities through its committees. The Audit Committee oversees the Company’s compliance risk, including reviewing reports of the Company’s compliance with the Sarbanes-Oxley Act. The Nominating and Corporate Governance Committee’s role in risk oversight includes recommending director candidates who have appropriate experience that will enable them to provide competent oversight of the Company’s material risks. The Compensation Committee monitors the risks to which the Company’s compensation policies and practices could subject the Company. The Sustainability Committee sets and monitors initiatives and policies related to sustainability matters and, in connection with such initiatives and policies, coordinates the preparation of an annual ESG report.
The Board helps ensure that management is properly focused on risk by, among other things, reviewing and discussing the performance of senior management and conducting succession planning for key leadership positions at the Company. The Board also takes an active role in monitoring cyber security risks and is
committed to the prevention, timely detection, and mitigation of the effects of any such incidents on the Company. In addition to regular reports from each of the Board’s committees, the Board receives regular reports from the Company’s management on the Company’s material risks and the degree of its exposure to those risks.
Audit•
Annual ESG Report •
Board and Committee The current members of the Audit Committee are Scott D. Weaver (Chair), John H. Wilson, Gina A. Norris and W. Kelvin Walker, each of whom meets the independence requirements of the applicable NASDAQ and Securities and Exchange Commission (“SEC”) rules. The same individuals served as members of the Audit Committee during 2022, with Mr. Walker being appointed to such committee as of his appointment to the Board in August 2022. The Audit Committee met four times in 2022. The role of the Audit Committee is to review, with the Company’s auditors, the scope of the audit procedures to be applied in the conduct of the annual audit as well as the results of the annual audit. The Audit Committee works closely with management as well as the Company’s independent auditors. A current copy of the Audit Committee Charter is available under the “Investors” section of the Company’s website at www.encorewire.com
The Board has determined that Scott D. Weaver, John H. Wilson, Gina A. Norris and W. Kelvin Walker are the “audit committee financial experts” of the Company, as defined in the rules established by the NASDAQ and the SEC.
Nominating and Corporate Governance Committee
The current members of the Nominating and Corporate Governance Committee are William R. Thomas (Chair as of August 1, 2022), John H. Wilson, Scott D. Weaver, Gina A. Norris and W. Kelvin Walker. The same individuals served as members of the Nominating and Corporate Governance Committee during 2022, with Mr. Walker being appointed to such committee as of his appointment to the Board in August 2022. The Nominating and Corporate Governance Committee met four times in 2022. The Nominating and Corporate Governance Committee assists the Board by identifying individuals qualified to become Board members, advises the Board concerning Board membership, leads the Board in an annual review of Board performance,strategic, operational and recommends director nominees to the Board. The Nominating and Corporate Governance Committee also periodically assesses each director’s compliance with the Company’s stock ownership guidelines. A current copy of the Nominating and Corporate Governance Committee Charter is available under the “Investors” section of the Company’s website at www.encorewire.com.risks
Compensation Committee
The current members of the Compensation Committee are John H. Wilson (Chair), Scott D. Weaver, William R. Thomas, Gina A. Norris and W. Kelvin Walker. The same individuals served as members of the Compensation Committee during 2022, with Mr. Walker being appointed to such committee as of his appointment to the Board in August 2022. The Compensation Committee met once in 2022. The role of the Compensation Committee is to review the performance of officers, including those officers who are also members of the Board, and to set their compensation. The Compensation Committee also periodically assesses each executive officer’s compliance with the Company’s stock ownership guidelines and supervises and administers all compensation and benefit policies, practices and plans of the Company. The Compensation Committee also administers the 2020 Long Term Incentive Plan, except to the extent the Board elects to administer it. A current copy of the Compensation Committee Charter is available under the “Investors” section of the Company’s website at www.encorewire.com.
Sustainability Committee
The current members of the Sustainability Committee are Gina A. Norris (Chair), John H. Wilson, William R. Thomas, Scott D. Weaver and W. Kelvin Walker. The same individuals served as members of the Sustainability Committee during 2022, with Mr. Walker being appointed to such committee as of his appointment to the Board in August 2022. The Sustainability Committee met twice in 2022. The role of the Sustainability Committee is to set the Company’s general strategy relating to sustainability matters, as well as to develop, implement and monitor initiatives and policies at the Company based on such strategy. The Sustainability Committee also oversees communications with investors and other stockholders of the Company with respect to sustainability matters. A current copy of the Sustainability Committee Charter is available under the “Investors” section of the Company’s website at www.encorewire.com.
Consideration of Director Nominees
Stockholder nominees
The policy of the Nominating and Corporate Governance Committee is to consider properly submitted nominations for candidates for membership on the Board, as described below under “Identifying and Evaluating Nominees for Directors.” In evaluating such nominations, the Nominating and Corporate Governance Committee shall address the membership criteria as described below in “Director Qualifications.” Any stockholder director nomination proposed for consideration by the Nominating and Corporate Governance Committee should include the nominee’s name and qualifications for Board membership and should be addressed to:
Nominating and Corporate Governance Committee
c/o Corporate Secretary
Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
Director Nominee Skills and Qualifications
The Board has adopted criteria that apply to nominees recommended by the Nominating and Corporate Governance Committee for a position on the Board. Among the qualifications provided by the criteria, nominees must be of the highest ethical character and share the values of the Company. Nominees must have reputations consistent with that of the Company and should be highly accomplished in their respective fields, possessing superior credentials and recognition. Nominees should also be active or former senior executive officers of public or significant private companies or leaders in their industry. Experience in the electrical wire and cable industry is not mandatory but is considered by the Board among the criteria for selection as a nominee. Nominees should also have the demonstrated ability to exercise sound business judgment.
The skills matrix below highlights our director nominees’ key skills and qualifications that are directly relevant to our business, strategy and operations. The Board reviews this matrix and the overall Board composition periodically in order to ensure the appropriate balance of diversity, knowledge and experience.
| | | | | | | | | | | | | | | | | | | | | SKILLS AND QUALIFICATIONS(1)
| DANIEL L. JONES | GINA A. NORRIS | WILLIAM R. THOMAS | W. KELVIN WALKER | SCOTT D. WEAVER | JOHN H. WILSON | Building Materials Industry Experience promotes our Board’s ability to establish and direct the execution of our strategy, evaluate opportunities and guide management | X | | X | | X | X | Senior Leadership Experience enhances our Board’s ability to recognize opportunities and address challenges that management faces in leading our business | X | X | X | X | X | X | Financial Reporting Expertise strengthens the Board’s oversight of our financial statements and internal controls | X | X | X | X | X | X | Risk Assessment / Risk Management Experience strengthens the Board’s oversight of complex risks facing the Company | X | X | X | X | X | X | Public Company Board Experience equips our Board to maintain robust governance and board practices designed to put owners first | X | | X | | X | X |
1.The lack of an “X” for a particular item does not mean that the director does not possess that qualification, skill or experience, but rather the “X” indicates that the item is a particularly prominent qualification, skill or experience that the director brings to the Board.
Identifying and Evaluating Nominees for Directors
The Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating nominees for director. Upon the need to add a new director or fill a vacancy on the Board, the Nominating and
Corporate Governance Committee will consider prospective candidates. Candidates for director may come to the attention of the Nominating and Corporate Governance Committee through current Board members, professional search firms, stockholders, or other persons as provided by the Charter of the Nominating and Corporate Governance Committee. As described above, the Nominating and Corporate Governance Committee considers properly submitted stockholder nominations for candidates to the Board. Following verification of stockholder status of persons proposing candidates, recommendations are aggregated and considered by the Nominating and Corporate Governance Committee along with the other recommendations. In evaluating such nominations, the Nominating and Corporate Governance Committee shall address the membership criteria as described above in “Director Qualifications,” which seeks to achieve a balance of knowledge, experience, and expertise on the Board.
Diversity
The Company believes that its current directors bring a diverse set of skills and experience, as well as age, cultural and geographic diversity to the Company that are important to the execution of the Company’s strategic goals. In evaluating the qualifications of individual Board members, the Nominating and Corporate Governance Committee considers many factors, including a general understanding of management, operations, manufacturing, finance, and other disciplines relative to the success of the Company in today’s business environment; understanding of the wire industry; educational and professional background; and personal accomplishment. For more information on our director nominee’s skills and qualifications, refer to the skills matrix under “Corporate Governance and Other Board Matters — Consideration of Director Nominees — Director Nominee Skills and Qualifications.” When considering the overall composition of the Board, the Nominating and Corporate Governance Committee believes that a Board of Directors, comprised of a diverse group of individual Board members, should represent a wide spectrum of personal experiences, perspectives, talents and areas of expertise at the policy-making levels of significant financial, industrial or commercial enterprises. As such, the Board seeks to add highly qualified female and racially diverse individual Board members. The Board added Gina A. Norris as a director at the 2020 annual meeting of stockholders of the Company. Ms. Norris currently serves as the Chair of the Company’s Sustainability Committee, which has oversight of our sustainability initiatives, and as a member of the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee. Further, the Board added W. Kelvin Walker as a director in August 2022. Mr. Walker currently serves as a member of the Audit Committee, the Nominating and Corporate Governance Committee, the Compensation Committee and the Sustainability Committee. The Board’s continued objective is to recommend a group that can best perpetuate the success of our business and represent stockholder interests through the exercise of sound judgment using its diversity of experience and perspectives.
Board Diversity Matrix
The following matrix is provided in accordance with applicable NASDAQ listing requirements:
| | | | | | | | | | | | | | | Board Diversity Matrix as of March 20, 2023 | Total Number of Directors | 6 | | FEMALE | MALE | NON-BINARY | DID NOT DISCLOSE GENDER | | | | | | Part I: Gender Identity | | | | | Directors | 1 | 5 | | | Part II: Demographic Background | | | | | African American or Black | | 1 | | | Alaskan Native or Native American | | | | | Asian | | | | | Hispanic or Latinx | | | | | Native Hawaiian or Pacific Islander | | | | | White | 1 | 4 | | | Two or More Races or Ethnicities | | | | | LGBTQ+ | | | | | Did Not Disclose Demographic Background | | | | |
The Nominating and Corporate Governance Committee considers diversity in the broadest context, including race, national origin, gender and sexuality, individuals with disabilities, veteran status, as well as diversity of professional experience, employment history, and experience on other boards of directors and as management of other companies.In this regard we note that William R. Thomas, a nominee for director, is a veteran of the U.S. Air Force.
Stockholder Communications with the Board
The Board provides a process for stockholders of the Company to send written communications to the entire Board. Stockholders of the Company may send written communications to the Board of Directors c/o Corporate Secretary, Encore Wire Corporation, 1329 Millwood Road, McKinney, Texas 75069. All communications will be compiled by the Corporate Secretary of the Company and submitted to the Board on a periodic basis.
Report of the Audit Committee
To the Stockholders of Encore Wire Corporation:
The Audit Committee of the Board of Directors oversees the Company’s financial reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial reporting process, including the Company’s system of internal controls and the preparation of the Company’s financial statements in accordance with generally accepted accounting principles. The Company’s independent auditors are responsible for auditing those financial statements. The Audit Committee’s responsibility is to monitor and review these processes.
It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews or procedures. Members of the Audit Committee are not employees of the Company and may not represent themselves to be or to serve as accountants or auditors of the Company. As a result, the Audit Committee has relied, without independent verification, on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States and on the representations of the independent auditors included in their report on the Company’s financial statements.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements in the Company’s annual report referred to below, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee also reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards.
The Audit Committee has discussed with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission. The Audit Committee has received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with the independent auditors the independent auditor’s independence.
The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the considerations and discussions with management and the independent auditors do not assure that the Company’s financial statements are presented in accordance with generally accepted accounting principles, that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that the Company’s independent accountants are in fact “independent.”
The Audit Committee discussed with the Company’s independent auditors the overall scope and plans for their audits. The Audit Committee has met with the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting. In addition, the Audit Committee met with management during the year to review the Company’s Sarbanes-Oxley Section 404 compliance efforts related to internal controls over financial reporting. The Audit Committee held four meetings during 2022.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the annual report on Form 10-K for the year ended December 31, 2022 for filing with the Securities and Exchange Commission. The Audit Committee and the Board have also recommended the selection of Ernst & Young LLP as the Company’s independent auditors.
AUDIT COMMITTEE
Scott D. Weaver, Chair
John H. Wilson
W. Kelvin Walker
Gina A. Norris
The above report of the Audit Committee and the information disclosed above related to Audit Committee independence under the heading “Board Independence” shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or to the liabilities of Section 18 of the Exchange Act, and such information shall not be deemed to be incorporated by reference into any filing made by the Company under the Exchange Act or under the Securities Act of 1933, as amended (the “Securities Act”).
Code of Business Conduct and Ethics
In connection with the Company’s long-standing commitment to conduct its business in compliance with applicable laws and regulations and in accordance with its ethical principles, the Board of Directors has adopted a Code of Business Conduct and Ethics applicable to all employees, officers, directors, and advisors of the Company. The Code of Business Conduct and Ethics of the Company is available under the “Investors” section of the Company’s website at www.encorewire.com and is incorporated herein by reference.
Environmental, Social and Governance
In connection with the Company's commitment to operating all aspects of its business with integrity, contributing to our local community in a variety of ways, promoting a culture of diversity and inclusion, and using our natural resources thoughtfully and responsibly, the Board of Directors established the Sustainability Committee in 2021 to assist the Board in its oversight of environmental and social strategy, risks, and risk mitigation.
Sustainability remains a vital part of Encore Wire's rich history and long-term commitment to our community. Our corporate culture, which is grounded in efficiency, rigorous cost management and unparalleled customer service, has provided us the opportunity to grow into a leader in our industry. Our environmental initiatives over the past decade, from our copper scrap program to zero waste initiatives to sustainable water management, have allowed us to produce and deliver our innovative products at a lower cost to our customers. These results and our experience have demonstrated that responsible corporate citizenship and sustainable performance are fundamental to the future health of our Company.
In March 2023, we published the Company’s first Environmental, Social, and Governance (ESG) Report. This comprehensive report outlines the Company’s approach to integrating ESG management into our corporate strategy and highlights our sustainability achievements to date. The strategies detailed in the 2022 ESG Report have formalized our commitment to sustainability. We look forward to continuing to improve our position as a sustainable and responsible company in our industry.
All current and future information on our policies, social impact and environmental programs, as well as a copy of our 2022 ESG Report, are available under the “Sustainability” section of the Company’s website at www.encorewire.com.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS
AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of March 16, 2023, the beneficial ownership of Common Stock of the Company (the only equity securities of the Company presently outstanding) by (i) each director and nominee for director of the Company, (ii) the named executive officers listed in the Summary Compensation Table elsewhere in this proxy statement, (iii) all directors and named executive officers of the Company as a group and (iv) each person who was known to the Company to be the beneficial owner of more than five percent of the outstanding shares of Common Stock.
| | | | | | | | | | | | | Common Stock | | Beneficially Owned (1) | NAME | NUMBER OF SHARES | PERCENT OF CLASS | Directors and Nominees for Director | | | | Daniel L. Jones | 792,120 | | (2) | 4.33% | Gina A. Norris | 3,600 | | | * | William R. Thomas | 11,100 | | | * | W. Kelvin Walker | 850 | | | * | Scott D. Weaver | 26,600 | | | * | John H. Wilson | 11,600 | | | * | Named Executive Officers (excluding directors and nominees named above) | Bret J. Eckert | 175,000 | | (3) | * | All Directors and Named Executive Officers as a group (7 persons) | 1,020,870 | | | 5.55% | Beneficial Owners of More than 5% (excluding persons named above) | BlackRock Inc. 40 East 52nd Street New York, NY 10022 | 2,893,210 | | (4) | 16.11% | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 2,084,624 | | (5) | 11.60% | Dimensional Fund Advisors LP Palisades West, Building One, 6300 Bee Cave Road Austin, TX 78746 | 1,590,369 | | (6) | 8.85% |
* Less than one percent.
(1) Except as otherwise indicated or with respect to restricted stock units (which are hypothetical awards of Common Stock that do not entitle the holder to any rights as a stockholder until such awards are settled in Common Stock), each stockholder named in the table has sole voting and investment power with respect to all shares of Common Stock indicated as being beneficially owned by such stockholder.
(2)Includes 145,000 shares of Common Stock underlying stock options that are exercisable within 60 days, 166,667 restricted stock units that do not carry voting rights that vest over the next one to three years, 5,542 shares held in Mr. Jones's account under the Company's 401(k) Plan, 10,125 shares of Common Stock owned by Mr. Jones’s spouse and 337 shares owned by Mr. Jones’s son. Mr. Jones disclaims beneficial ownership of the shares owned by his spouse and his son.
(3)Includes 116,668 restricted stock units that do not carry voting rights that vest over the next one to three years.
(4) As reported in Amendment No. 2 to Schedule 13G filed by BlackRock, Inc. (“BlackRock”) on January 26, 2023 with the SEC. BlackRock has sole power to vote or to direct the vote of 2,847,664 shares of common stock and sole power to dispose or to direct the disposition of 2,893,210 shares of Common Stock.
(5) As reported in Amendment No. 9 to Schedule 13G filed by The Vanguard Group, Inc. (“Vanguard Group”) on February 9, 2023 with the SEC. Vanguard Group holds sole voting power with respect to none of such shares and sole power to dispose or to direct the disposition of 2,051,246 shares of Common Stock.
(6) As reported in Amendment No. 10 to Schedule 13G filed by Dimensional Fund Advisors LP (“Dimensional”) on February 10, 2023 with the SEC. Dimensional has sole power to vote or to direct the vote of 1,567,608 shares of common stock and sole power to dispose or to direct the disposition of 1,590,369 shares of Common Stock. Dimensional, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-advisor and/or manager, neither Dimensional nor its subsidiaries possess voting and/or investment power over the securities owned by the Funds and may be deemed to be the beneficial owner of such shares. However, all shares reported by Dimensional are owned by the Funds. Dimensional disclaims beneficial ownership of such securities.
EXECUTIVE COMPENSATION
Compensation Discussion & Analysis
Compensation Highlights
Our compensation programs are designed to both attract and retain top-level executive talent and align the long-term and short-term interests of our executives with those of our stockholders. We received support from more than 94% of the stockholders present in person or by proxy at our 2022 annual meeting of stockholders in support of our Advisory Vote on Executive Compensation in 2021, which our Compensation Committee considers to be among the most important items of feedback about our compensation programs. We recognize and reward our named executive officers through compensation arrangements focused on the Company’s performance, and we ensure a strong alignment of interests with our stockholders by including a significant amount of equity-based compensation in the overall mix of pay. Our pay mix includes base salary, annual cash bonuses, and a long-term incentive plan under which we grant restricted stock units (“RSUs”) subject to vesting.
This Compensation Discussion and Analysis section addresses the following topics: (i) the members and role of the Company’s Compensation Committee; (ii) our compensation-setting process; (iii) our compensation philosophy; (iv) the components of our executive compensation program; and (v) our decisions for compensation awarded to, earned by, or paid to, the Company’s named executive officers in 2022.
The Board of Directors has determined that Daniel L. Jones, Chairman, President and Chief Executive Officer of the Company, and Bret J. Eckert, Executive Vice President and Chief Financial Officer of the Company, were the Company’s only named executive officers for the year ended December 31, 2022. Throughout this proxy statement, Mr. Jones and Mr. Eckert are referred to as the “named executive officers.” In this “Compensation Discussion and Analysis” section, the terms, “we,” “our,” “us,” and the “Committee” refer to the Compensation Committee.
The Compensation Committee
Committee Members and Independence
John H. Wilson (Chair), Scott D. Weaver, William R. Thomas, Gina A. Norris and W. Kelvin Walker are the current members of the Compensation Committee. Each member of the Compensation Committee qualifies as an independent director under NASDAQ listing standards.
Role of the Compensation Committee
The Compensation Committee administers the compensation program for the officers and certain key employees of the Company and makes all related decisions. The Compensation Committee also oversees the Company’s compensation and benefit policies, practices and plans of the Company, including administering the 2020 Long Term Incentive Plan. The Compensation Committee ensures that the total compensation paid to the officers is fair, reasonable and competitive. The Compensation Committee did not retain compensation advisors with respect to compensation earned during 2022, nor has it done so in the past. The Compensation Committee operates under a written charter adopted by the Board. The charter is available under the “Investors” section of the Company’s website at www.encorewire.com. The fundamental responsibilities of the Compensation Committee are:
•To review at least annually the goals and objectives and the structure of the Company’s plans for officer compensation, incentive compensation, equity-based compensation, and its general compensation plans and employee benefit plans (including retirement and health insurance plans); •To evaluate annually the performance of the Chief Executive Officer and Chief Financial Officer in light of the goals and objectives of the Company’s compensation plans, and to determine their compensation levels based on this evaluation;
•To review annually and determine the compensation level of all officers and certain key employees of the Company, in light of the goals and objectives of the Company’s compensation plans;
•In consultation with the Chief Executive Officer, to oversee the annual evaluation of management of the Company, including other officers and key employees of the Company; and
•To review, recommend to the Board, and administer all equity-based compensation plans.
Committee Meetings
The Compensation Committee meets as often as necessary to perform its duties and responsibilities. The Compensation Committee held one meeting during 2022, although executive officer performance and contributions are discussed throughout the year during the executive session of quarterly board meetings. We typically meet with the Chief Executive Officer and the Chief Financial Officer. We also meet in executive session without management.
We meet in executive session each year to evaluate the performance of the officers and certain key employees of the Company, to determine their incentive bonuses for the current year, to set their base salaries for the next calendar year, and to consider and approve any grants of equity incentive compensation.
Although many compensation decisions are made in the fourth quarter, our compensation planning process continues throughout the year. Compensation decisions are designed to promote our fundamental business objectives and strategy. Business and succession planning, evaluation of management performance, and consideration of the business environment are year-round processes as noted above.
Executive management plays a significant role in the compensation-setting process. The most significant aspects of executive management’s role are:
•Evaluating employee performance; and
•Recommending salary levels, bonus awards, long-term deferred cash awards, and equity incentive awards for employees.
The Chief Executive Officer and Chief Financial Officer also participate in Compensation Committee meetings at the Committee’s request to provide:
•Background information regarding the Company’s strategic objectives;
•Detailed background information regarding the accomplishments of the Company and management;
•Their evaluation of the performance of the other officers and key employees; and
•Compensation recommendations regarding other officers and employees.
Compensation Philosophy
Our compensation philosophy is reviewed each year and updated as needed by our Compensation Committee. None of our named executive officers have an employment agreement with the Company. We believe that our executive compensation program provides our named executive officers with a balanced compensation approach each year by providing a market-competitive base salary along with participation in incentive compensation plans that are focused on the Company’s long-term financial performance. Our executive compensation program is designed to ensure that the interests of our named executive officers are closely aligned with those of our stockholders and customers, with the ultimate objective of improving stockholder value. We believe that our
executive compensation program is effective in allowing our organization to attract and retain highly-qualified senior management team members who can deliver outstanding performance.
The Compensation Committee seeks to achieve the following goals with the Company’s officer compensation programs: to attract, retain, and motivate officers, and to reward them for value creation. The individual judgments made by the Compensation Committee are somewhat subjective and are based largely on the Compensation Committee’s perception of each officer’s contribution to both past performance and the long-term growth potential of the Company. These judgments start with an evaluation of the Company's overall performance and are then paired with an evaluation of that individual's performance that are used to compare their performance to that of their peers. The Compensation Committee chose this approach to reward individuals who have both contributed to the Company’s overall success and performed well compared to their peers, while not rewarding poor performance. The Compensation Committee does not establish specific performance targets for officers to avoid any incentive for officers to behave in a self-interested manner or in a manner otherwise detrimental to the Company to achieve such targets. The Compensation Committee believes that this approach promotes teamwork and aligns with the long-term interests of the stockholders.
At the core of our compensation philosophy is our guiding belief that pay should be linked to performance, and several factors underscore that philosophy. Performance is measured both from the macro level of Company earnings and performance, and the micro level of the specific officers’ performance. A substantial portion of officer compensation is determined by each officer’s contribution to the Company’s profitability and performance based largely on a review of each officer’s performance of his or her specific duties and responsibilities that the Chief Executive Officer conducts with the Compensation Committee.
The Compensation Committee believes that total compensation and accountability should increase with position and responsibility. Consistent with this philosophy, total compensation is higher for individuals with greater responsibility and greater ability to influence the Company’s results and strategic initiatives. As position and responsibility increases, a greater portion of the officer’s total compensation is performance-based pay.
In addition, our compensation methods focus management on achieving strong annual performance in a manner that supports and encourages the Company’s long-term success and profitability. Our bonus payouts are highly variable based on Company and individual performance. We believe that equity incentive compensation awards issued under the 2020 Long Term Incentive Plan or previously issued under the 2010 Stock Option Plan create long-term incentives that align the interests of management with the interests of long-term stockholders. Further, the Company’s stock ownership guidelines encourage our executive officers to focus on the long-term interests of the Company’s stockholders. Finally, we believe the Company’s overall compensation levels must be sufficiently competitive to attract and retain talented leaders.
The 2020 Long Term Incentive Plan enables the Company to provide stock-based incentives that align the interests of employees and directors with those of the stockholders of the Company, motivate employees and directors to achieve long-term results, reward employees and directors for their achievements, and attract and retain the types of employees and directors who will contribute to the Company’s long-term success.
The Compensation-Setting Process
This section describes the evaluation process of the Compensation Committee when considering compensation for named executive officers.
Overview
In setting compensation policies and making compensation decisions for the named executive officers, we do not use specific formula-driven plans. We do, however, consider multiple factors, including the Company’s overall performance in terms of revenue, profitability, growth and growth initiatives, and cost containment among others. We consider the overall economic and industry specific environments that management faces in any given period. We also heavily weigh the individual’s personal performance and how such individual contributed to the success of the rest of the management team. We discuss the performance of the Company and members of the executive staff with the Chief Executive Officer at quarterly Board meetings and at other appropriate points throughout the year. Many of the officers make presentations at quarterly Board meetings, enabling the Board to discuss that officer’s area of functional responsibility and performance personally. Our two named executive officers participate in all Board meetings. While the final amount of any compensation paid to the named executive officers is based
on our business judgment, and is not generated or calculated by reference to any particular formula or performance target, it is based on our assessment of their performance in managing the Company and performing their specific duties. We believe this methodology is superior to other more formula-based calculations that can lead to executives focusing on short-term and personal performance to the detriment of the Company’s team-oriented performance.
Economic Considerations
As part of the compensation evaluation process, we consider the overall economic and industry specific environments that management faces at any given period. In 2022, the Compensation Committee considered numerous macroeconomic factors that may have impacted the Company’s operational and financial performance, including:
•Difficulties procuring necessary raw materials;
•Staffing and labor-related challenges;
•Delivery and logistics-related challenges;
•Increasing cost of capital; and
•Inflationary environment.
The Compensation Committee believes that the overall financial and operational performance of the Company should be evaluated in consideration of current industry and macroeconomic challenges. We also believe that variable compensation for our named executive officers should reflect their individual performance in managing current economic considerations while remaining focused on maximizing long-term shareholder value.
Individual Contributions
We also heavily weigh the individual’s personal performance of each named executive officer and how such individual contributed to the success of the executive team.
In 2022, Mr. Jones and Mr. Eckert were our only named executive officers and, as an executive team, were responsible for sales, operations, procurement, accounting and finance, investor relations, legal, risk management, information technology, human resources, and all other facets of the Company’s business.
Our named executive officers were also responsible for the execution of our Sustainability and ESG-related initiatives, under the supervision of our Sustainability Committee.
The Compensation Committee acknowledges that these roles are often filled by multiple other named executive officer positions at companies in our industry and believes that variable compensation for our named executive officers should reflect the successful execution of these increased responsibilities and contributions to the Company.
In December 2022, Mr. Eckert was promoted to the position of Executive Vice President to properly reflect his expanded leadership role, his importance to the Company, and to formalize the organizational hierarchy that has evolved since he joined Encore Wire.
Operational and Financial Performance
In making compensation decisions related to the Company’s operational and financial performance for the named executive officers, we do not use specific formula-driven plans. We do, however, consider multiple performance factors, including the Company’s overall performance in terms of revenue, profitability, growth and growth initiatives, and cost containment among others.
In 2022, the Company reported the following full year results. Highlights include:
•Net Sales of $3.018 billion; compared to $2.593 billion for 2021; and $1.277 billion for 2020;
•EBITDA of $951.5 million; compared to $723.1 million for 2021; and $118.5 million for 2020;
•Net Income of $717.8 million; compared to $541.4 million for 2021; and $76.1 million for 2020;
•Diluted Earnings per Share of $36.91; compared to $26.22 for 2021; and $3.68 for 2020;
•Gross Profit Margin of 36.9%; compared to 33.5% for 2021; and 15.2% for 2020;
•Cash on hand of $730.6 million; compared to $439.0 million for 2021; and $183.1 million for 2020;
•Tangible Book Value per Share of $100.03; compared to $66.30 for 2021; and $40.60 for 2020;
•Copper unit volume sold increased 7.9% when compared to 2021;
•Aluminum unit volume sold increased when compared to 2021;
•Cash outlay for share repurchases of $247.6 million; compared to $43.3 million for 2021; and
•Total capital expenditures of $148.4 million; compared to $118.2 million for 2021.
We believe that compensation components for our named executive officers, as related to the operational and financial performance of the Company, should be evaluated relative to the historical results of the Company and their appropriate economic considerations, and relative to the recent performance of a group of the Company’s peers.
Peer Group
The Company competes in an industry consisting primarily of private companies or public companies with divisions or subsidiaries that compete with the Company. Because of the lack of directly comparable compensation information for named executive officers of producers of electrical building wire, we also periodically refer to surveys of compensation data with respect to executives in comparable positions at comparable companies. To determine variable compensation for 2022 for our named executive officers, we obtained summary compensation information from several data and analytics companies who analyze public company proxies every year. These databases contain U.S. public company proxy salary disclosures for key executives at each company.
We utilized this data to compare financial performance, share performance, and named executive officer compensation between Encore Wire and members of the Peer Group (as defined below).The peer group companies we evaluated are from the “Capital Goods” industry sector (consistent with Encore’s designation) with a market capitalization ranging from $2 billion to $10 billion as of December 31, 2021 (the "Peer Group").The Peer Group identified based on these criteria totaled 94 domestic public companies with summary percentiles demonstrating the average metric in the 90th, 75th, 50th, 25th, and 10th percentile ranges of the overall Peer Group.
Our analysis indicated that Peer Group companies had the following characteristics:
•Revenue: Median $2.3 billion; Average $3.4 billion;
•EBITDA: Median $354 million; Average $445 million;
•EPS: Median $2.76; Average $4.41; and
•Market Capitalization: Median $3.5 billion; Average $4.0 billion.
Peer Group Analysis
The Compensation Committee convened in December 2022 to analyze and evaluate the Peer Group data discussed above. Peer Group data analyzed included financial performance, share performance, and executive compensation-related metrics. Financial and share performance data were analyzed over a trailing twelve month period, as of September 30, 2022, and included Earnings Per Share (EPS), EBITDA, and Total Shareholder Return (TSR). Compensation-related metrics included fixed components, such as base salary and non-equity related compensation, and variable components, such as cash bonus, stock awards, and options awards, for Chief Executive Officer and Chief Financial Officer positions for the most recently reported fiscal year.
Following an analysis of the Peer Group data discussed above, the Compensation Committee concluded the following:
•As of September 30, 2022, Encore Wire’s Trailing Twelve Month Diluted Net EPS ranked in the 100th percentile when compared to the Peer Group;
•As of September 30, 2022, Encore Wire’s Trailing Twelve Month EBITDA ranked in the 91st percentile when compared to the Peer Group;
•As of September 30, 2022, Encore Wire’s Trailing Twelve Month TSR ranked in the 95th percentile when compared to the Peer Group;
•As of the most recently reported fiscal year, Encore Wire’s Total Compensation for Chief Executive Officer ranked in the 61st percentile when compared to the Peer Group; and
•As of the most recently reported fiscal year, Encore Wire’s Total Compensation for Chief Financial Officer ranked in the 87th percentile when compared to the Peer Group.
Compensation Components
We have historically kept our base salaries at competitive levels while trying to incentivize our executives with strong bonus and stock award programs that allow the executives to have significant upside when the Company performs well. To that end, the relative amount of our executives' base salaries are set at levels so that a significant portion of the total compensation that our executives can earn is performance-based pay as noted below. Base salary is largely determined based on the methodology discussed below in concert with the peer group data noted above.
Base Salary. Fixed cash compensation, subject to annual review and adjusted in response to changes in performance, duties, strategic importance, or competitive salary practices. The payment of a base salary is intended to provide a stable, fixed amount of income to our named executive officers for their day-to-day job performance. Base salaries represent a relatively small portion of total compensation. However, the amount of base salary paid to each named executive officer is a determinant of other elements of compensation. The Compensation Committee reviews base salaries annually. Annual salary adjustments are not automatic or guaranteed, but rather based on the Compensation Committee’s evaluation of the performance of each named executive officer, the value of the individual in the position to the Company relative to other positions and their level of experience, as well as current economic conditions.
Annual Cash Incentive. Cash incentive bonus payments are determined as described above, based primarily on each named executive officer’s contribution to the Company’s performance of key objectives and profitability. The Committee believes that profitability is one of the most useful measures of management’s effectiveness in creating value for the stockholders of the Company. We employ the methodology described above in concert with consideration of Peer Group data described above in determining the amount of cash incentive bonus awards.
Annual Equity Incentive. The Company’s named executive officers were eligible to receive equity awards granted under the 2020 Long Term Incentive Plan, as more fully described in Note 7 to the Financial Statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and incorporated herein by reference. The Company granted all equity awards in 2023 and 2022 under the 2020 Long Term Incentive Plan, with a price that is at the fair market value of the Company’s Common Stock as of the date of grant. The equity awards granted in January 2022 were made in connection with each named executive officer’s efforts and performance in fiscal year 2021 and are included in the summary compensation table below. The equity awards granted in January 2023 were made in connection with each named executive officer’s efforts and performance in fiscal year 2022 and will be included in the summary compensation table for next year’s proxy statement. The price for equity award grants is determined by reference to the closing price per share on NASDAQ at the close of business on the date of grant. Other than the 2020 Long Term Incentive Plan, as of December 31, 2022, the Company had not adopted any other equity incentive plans in which the named executive officers or directors may participate. The Compensation Committee makes equity awards at regular or special meetings of the Compensation Committee and sets the effective date at such meetings. The Company also made grants of equity incentive awards, including grants of unrestricted stock to directors and restricted stock units to employees subject to vesting, at the discretion of the Compensation Committee.
In determining the number of equity incentives to be granted to officers and the frequency of such grants, the Compensation Committee has considered the individual’s position, scope of responsibility, ability to affect profitability, the individual’s performance and the value of stock awards in relation to other elements of total compensation. In addition, since the Company believes that profitability is the most useful measure of management’s effectiveness in creating value for the stockholders, the Company’s profitability, when compared to historical results and recent Peer Group results, is also considered when determining the number of equity awards to be granted to officers.
Variable Compensation
As discussed above, a significant majority of named executive officer compensation is variable, given the weighting of performance based compensation in the form of cash incentives and equity awards granted under the 2020 Long Term Incentive Plan. For 2022 variable compensation, or “At-Risk Compensation” for our named executive officers was as follows:
The Compensation Committee believes that long-term equity awards are the strongest link between executive compensation and stockholder interests and therefore comprise the largest component of our named executive officers' total compensation. The Compensation Committee believes that this compensation mix appropriately aligns the interests of stockholders with the interests of our named executive officers.
2022 Compensation
This section describes the compensation decisions that the Compensation Committee made with respect to the named executive officers for 2022.
Executive Summary
In 2022 and in the first quarter of 2023, we continued to apply the compensation principles described above in determining the compensation of our named executive officers. In summary, the compensation decisions made for 2022 for the named executive officers were as follows:
•We raised the base salary for Mr. Jones to $1,050,000 for 2022 from $1,000,000 for 2021, and the base salary for Mr. Eckert to $500,000 for fiscal year 2022 from $475,000 for fiscal 2021; and
•We awarded cash incentive bonus payments to the named executive officers in the amount of $6,000,000 to Mr. Jones and $3,000,000 to Mr. Eckert in the fourth quarter of 2022 as compensation for performance in fiscal year 2022; and
•We granted 100,000 restricted stock units subject to time-based vesting to Mr. Jones and 75,000 restricted stock units to Mr. Eckert in the first quarter of 2023 as compensation for performance in fiscal year 2022.
Analysis
As discussed above, the Compensation Committee considers numerous factors when evaluating compensation components for named executive officers, including financial performance, shareholder return, and peer compensation. The Compensation Committee also believes that named executive officers should be evaluated for
the quality of their work in their service to the Company and their overall importance to the Company. This qualitative analysis is performed annually and factors considerably into decisions related to base salary and variable compensation components.
In making qualitative compensation decisions with respect to Mr. Jones’s 2022 and 2023 base salary and 2022 cash and equity incentives, the Committee considered the following:
•Mr. Jones is a veteran executive in the wire industry and performed extremely well in leading the Company through significant challenges in 2022.Under his leadership the Company remained fully operational in the current environment, leading the team to achieve operating improvements and exceptional financial results, while overseeing multiple significant capital project expansions.During 2022, net sales increased to $3.018 billion compared to $2.593 billion in 2021 while achieving the highest earnings in the history of the Company. Earnings per share were $36.91 in 2022 compared to $26.22 in 2021. In addition, Mr. Jones has successfully led the repurposing of the previous distribution center, creating Plant 7, while managing the upgrades and capacity improvements throughout the rest of our facilities. Mr. Jones led the Sales team during 2022, driving both volume and margin growth over 2021 levels. Along with the rest of the executive team, Mr. Jones successfully increased headcount in a strained labor market while improving safety metrics year-over-year. As we look to the future, Mr. Jones and our executive team will be instrumental in effectively executing our significant capital expansion plans to ensure we pursue the growth needed to support these investments, while maintaining the level of service our customers expect from Encore.
•Mr. Jones performed his primary business objectives extremely well for 2022, which were to manage the Company’s operations in a cost effective manner, manage the sales team to drive volume growth while balancing the Board’s preference for profit versus volume, manage customer relationships, seek ways to expand the Company’s product offerings, help to ensure that the Company complies with regulatory requirements and meets related deadlines, manage risk and protect the Company’s strong balance sheet while driving earnings growth in a difficult industry environment during 2022.
•Mr. Jones’s base salary was increased to $1,200,000 effective January 1, 2023, to reflect his continued contributions to the Company’s success.
In making qualitative compensation decisions with respect to Mr. Eckert’s 2022 and 2023 base salary and 2022 cash and equity incentives, the Committee considered the following:
•Mr. Eckert is a veteran executive leader of public companies and performed extremely well again in 2022.As noted above, Mr. Eckert was promoted in December 2022 to the position of Executive Vice President to properly reflect his expanded leadership role, his importance to the Company, and to formalize the organizational hierarchy that has evolved since he joined Encore Wire.Under his leadership the Company remained fully operational in the current environment, leading the team to achieve operating improvements and exceptional financial results, while overseeing multiple significant capital project expansions.In addition, Mr. Eckert has successfully led the integration of our new, modern Service Center and the repurposing our previous Distribution Center into Plant 7, and the previous Plant 5 into our new Employee Center, while managing significant upgrades and capacity improvements throughout the plants.Operationally, Mr. Eckert was able to leverage existing capacity to capture volume growth in 2022 while driving continued profitability.Mr. Eckert also leads all of our procurement efforts, ensuring raw material sourcing remained strong in 2022, while deepening supplier relationships to handle future growth opportunities.During 2022, net sales increased to $3.018 billion compared to $2.593 billion in 2021 while achieving the highest earnings in the history of the Company. Earnings per share were $36.91 in 2022 compared to $26.22 in 2021.
•Mr. Eckert performed his primary business objectives extremely well for 2022, which were to manage the Company’s finances, lead investor engagement initiatives, oversee capital expenditure projects, oversee the Company’s sustainability efforts under the guidance of the Sustainability Committee, manage the Company’s operations in a cost effective manner, manage the legal team and help to ensure that the Company complies with regulatory requirements and meets related deadlines, manage risk and protect
the Company’s strong balance sheet while driving earnings growth in a difficult industry environment during 2022.
•Mr. Eckert’s base salary was increased to $625,000 effective January 1, 2023, to reflect his additional level of responsibilities and contributions to the Company’s success.
The Committee determined to increase the base salaries for 2023 for Mr. Jones and Mr. Eckert based on the items noted above which drove record financial performance during challenging conditions in 2022. The Committee recognized that the named executive officers had performed exceptionally well versus the rest of the industry, and that the Company’s earnings and prospects had done well in 2022.
Recognizing Encore Wire’s exceptional performance in the construction and building wire industries and the other factors discussed above, the Committee awarded Mr. Jones and Mr. Eckert cash bonuses of $6,000,000 and $3,000,000, respectively, in the fourth quarter of 2022.
The Compensation Committee also granted 100,000 time-vested restricted stock units to Mr. Jones and 75,000 to Mr. Eckert in January 2023, subject to our three-year vesting provision. These restricted stock units were granted to the named executive officers pursuant to the Company’s 2020 Long Term Incentive Plan based on their leadership and performance during 2022.The Compensation Committee intends to continue to create long-term incentives for Mr. Jones and Mr. Eckert to maintain their alignment with the interests of long-term stockholders.The Compensation Committee acknowledges that a significant majority of the named executive officer compensation is variable and believes that this compensation mix appropriately aligns the interests of stockholders with the interests of our named executive officers.
Director and Executive Officer Stock Ownership Guidelines In February 2015,
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Pay for Performance alignment •
Coordinated investor outreach •
No poison pill | | Board Independence
The Board has determined that each of the following directors and director nominees is “independent” as defined by Rule 5605(a)(2) of the listing standards of the NASDAQ Stock Market (“NASDAQ”):
Gina A. Norris
William R. Thomas
W. Kelvin Walker
Scott D. Weaver
John H. Wilson
The Board has determined that each of the current members of the Audit Committee, Nominating and Corporate Governance Committee, Compensation Committee and Sustainability Committee of the Board of Directors is “independent” within the rules set forth in the listing standards of NASDAQ. In assessing the director independence standards, the Board considered that Scott Weaver was employed by the Company from 1993 until June 2000. The Board concluded, based on all the facts and circumstances, that this past relationship with the Company does not affect Mr. Weaver’s independence as a director under NASDAQ’s independence definition.
Board Structure and Committee Composition
As of the date of this proxy statement, the Board has six directors and the following four committees: Audit Committee, Nominating and Corporate Governance Committee, Compensation Committee, and Sustainability Committee. The membership and function of each committee is described below. The Audit Committee, Nominating and Corporate Governance Committee, Compensation Committee, and Sustainability Committee each operate under a written charter adopted by the Board of Directors. A current copy of each charter is available under the “Investors” section of the Company’s website at www.encorewire.com.