UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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Pool Corporation
(Name of Registrant as Specified in its Charter)
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Notice of 2022 Annual Meeting
and Proxy Statement
Tuesday, May 3, 2022
9:00 a.m. Central Time
Online at
www.virtualshareholdermeeting.com/POOL2022
Dear Fellow Shareholder,
It is my pleasure to invite you to attend our 2022 annual meeting of stockholders (the Annual Meeting) on Tuesday, May 3, 2022, at 9:00 a.m. Central Time. In light of the COVID-19 pandemic and in an effort to maintain the health and well-being of our stockholders, employees, directors, and officers, we will be hosting an entirely virtual meeting this year. You will be able to virtually attend the Annual Meeting, vote, and submit your questions by following the instructions in the accompanying proxy materials.
Your vote is important to us. The accompanying Annual Notice of Meeting and Proxy Statement describe the matters being voted on and contain other information relating to Pool Corporation. Please read these materials carefully. Whether or not you plan to virtually attend the meeting, please ensure that your shares are represented by giving us your proxy. You can do so by telephone, by Internet, or by signing and dating the enclosed proxy form and returning it promptly by mail.
I want to once again thank our 5,500 employees for their tireless efforts in this challenging environment. I continue to be grateful for and proud of our field and support employees who won in a year of extremes. They did a fantastic job despite the adversity, and I am humbled by their results. It is my privilege to work with them each and every day.
We value your investment in Pool Corp, and we thank you for the trust you place in us.
Sincerely,
Peter D. Arvan
President, Chief Executive Officer, and Director
POOL CORPORATION
_____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Pool Corporation (the Company, we, us or our) will hostcordially invites you to electronically attend its 20192022 annual meeting of stockholders (the Annual Meeting) on Wednesday,Tuesday, May 1, 2019,3, 2022, at 9:00 a.m., Central Time, at our corporate headquarters, located at 109 Northpark Boulevard, Covington, Louisiana 70433.Time. The Annual Meeting will be held in a virtual meeting format only. You will not be able to physically attend the Annual Meeting. You will be able to virtually attend the Annual Meeting, vote and submit your questions by visiting www.virtualshareholdermeeting.com/POOL2022, entering the 16-digit control number included on your proxy card, and following the instructions for participation and voting.
At the Annual Meeting, you will be asked to:
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1. | elect eight directors, each to serve a one-year term or until their successors have been elected and qualified; |
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2. | ratify the retention of Ernst & Young LLP, certified public accountants, as our independent registered public accounting firm for the 2019 fiscal year; |
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3. | cast a non-binding advisory vote to approve the compensation of our named executive officers as disclosed in the attached Proxy Statement (the say-on-pay vote); and |
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4. | consider any other business which may properly arise at the Annual Meeting. |
1.elect the nine director nominees named in our attached Proxy Statement, each to serve a one-year term or until their successors have been elected and qualified;
2.ratify the retention of Ernst & Young LLP, certified public accountants, as our independent registered public accounting firm for the 2022 fiscal year;
3.cast a non-binding advisory vote to approve the compensation of our named executive officers as disclosed in our attached Proxy Statement (the say-on-pay vote); and
4.consider any other business which may properly arise at the Annual Meeting.
The accompanying Proxy Statement describes the matters being voted on and contains other information relating to Pool Corporation.
The Board of Directors has set Tuesday, March 14, 201915, 2022, as the record date for the Annual Meeting. This means that only record owners of the Company’s common stock at the close of business on that date are entitled to notice of, and to vote at, the Annual Meeting and at any adjournment or postponement of the Annual Meeting.
By Order of the Board of Directors,
Jennifer M. Neil
Corporate Secretary
Covington, Louisiana
March 28, 201929, 2022
Every stockholder’s vote is important. Please sign, date and return the enclosed proxy card, or authorize your proxy by telephone or via the internet. See “Frequently Asked Questions Regarding Attendance and Voting” for information about voting by telephone or internet.
POOL CORPORATION
TABLE OF CONTENTS
POOL CORPORATION
109 Northpark Boulevard
Covington, Louisiana 70433
PROXY STATEMENT
Frequently Asked Questions Regarding Attendance and Voting
Q: Why am I receiving these materials?
A: The Board of Directors (the Board) of Pool Corporation (the Company, we, us or our) is providing theseThis proxy materialsstatement summarizes information you need to you in connection with its solicitation of proxies for usevote at the 2019our 2022 annual meeting of our stockholders (the Annual Meeting). Stockholders to be held on Tuesday, May 3, 2022, at 9:00 a.m. Central Time via live webcast on the internet, and any adjournment of the meeting. We are sending this proxy statement to you because our Board of Directors (the Board) is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement is being sent to record date stockholders on or about March 29, 2022.
Q: Who may vote and how many shares must be represented to hold the Annual Meeting?
A: Only shareholders of record at the close of business on March 14, 2019,15, 2022, may vote. As of that date, there were 40,125,612 shares of our Common Stock outstanding. The holders of a majority of those shares will constitute a quorum, which is necessary to conduct the record date, are entitledbusiness of the Annual Meeting. This means at least a majority of the outstanding shares eligible to vote must be represented at the Annual Meeting either virtually or by proxy. If you submit your proxy or if you attend the Annual Meeting virtually, your shares will be counted for the purpose of determining a quorum, even if you abstain from voting on some or all matters introduced at the Annual Meeting. Also, if you hold your shares in “street name,” your shares will be counted in determining a quorum if your bank, broker or other holder of record votes your shares on any matter.
Q: Who may vote?How many votes do I have?
A: With respect to the election of directors, each stockholder is entitled to one vote for every share of common stock, $0.001 par value (Common Stock) owned on the record date for each position to be filled. For alleach other matters,matter, each stockholder is entitled to one vote on each matter presented for each share of our Common Stock owned on the record date. On March 14, 2019, there were approximately 39,599,011 shares of our Common Stock outstanding. This Proxy Statement is being mailed to stockholders on or about March 28, 2019.per share.
Q: When and where will the Annual Meeting be held?
A:The Annual Meeting will be held in a virtual meeting format only on Wednesday,Tuesday, May 1, 2019,3, 2022, at 9:00 a.m., Central Time at our corporate headquarters, located at 109 Northpark Boulevard, Covington, Louisiana 70433.
Q: How can I obtain directionsvia live webcast on the internet. We encourage you to access the meeting prior to the Annual Meeting?
A: To obtain directions tostart time. Online check-in will begin at 8:45 a.m. Central Time, and you should allow ample time for the Annual Meeting, please contact Investor Relations at (985) 892-5521.check-in procedures.
Q: What proposals will be voted uponon at the Annual Meeting?
A: At the Annual Meeting, you will be asked to:
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(1) | elect eight directors to the Board of Directors, each to serve a one-year term or until their successors have been elected and qualified; |
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(2) | ratify the retention of Ernst &Young LLP as our independent registered public accounting firm for the 2019 fiscal year; and |
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(3) | cast a non-binding advisory vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement (the say-on-pay vote). |
(1)elect the nine director nominees named in this Proxy Statement to the Board of Directors, each to serve a one-year term or until their successors have been elected and qualified;
(2)ratify the retention of Ernst & Young LLP, certified public accountants, as our independent registered public accounting firm for the 2022 fiscal year; and
(3)cast a non-binding advisory vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement (the say-on-pay vote).
The Board does not know of any additional matters to be presented at our Annual Meeting other than those described in this Proxy Statement.
Q: What areHow does the Board’s voting recommendations?Board recommend that I vote?
A: The Board unanimously recommends that you vote your shares FOR the election of each of the director nominees and FOR proposals 2 and 3 described above.
Q: How docan I vote?vote my shares without attending the Annual Meeting?
A: IfThe answer depends on whether you arehold shares directly in your name (holder of record), or through a bank, broker, trustee or other holder of record (beneficial owner).
• (that is,Holder of record. You are the holder of record if your shares are registered in your own name with our transfer agent),registrar, Computershare Trust Company, N.A. In this case, we sent these proxy materials directly to you. You may vote your shares electronically during the Annual Meeting, or you may grant us your proxy to vote your shares by using the enclosed proxy card. You can also votecard or by telephone or the internet. Voting instructions are provided on theThe proxy card included in the proxy materials.provides voting instructions.
If you•Beneficial owner. You are a street name holder (that is,the beneficial owner if you hold your shares indirectly through a bank, broker, trustee or other holder of record),record. (Beneficial owners holding their shares at a bank or through a brokerage account are sometimes called “street name” holders.) In this case, we sent these proxy materials to the holder of record, and they were forwarded to you must vote in accordance with thea voting instruction formcard. As the shares’ beneficial owner, you may direct your bank, broker, trustee, or other holder of record how to vote, and you are also invited to attend the meeting. Please refer to the information provided by your bank, broker, or other holder of record. The availability of telephone or internet voting will depend upon the voting process of your bank, broker or other holder of record.
If you come to the Annual Meeting, you can, of course, vote in person. If you are a street name holder and wish to vote at the meeting, you must first obtain a proxy from your bank, brokertrustee, or other holder of record authorizing youfor further information on how to vote.virtually attend the Annual Meeting, vote and submit questions.
Q: How many votes must be represented to holdcan I vote my shares in person and participate in the Annual Meeting?
A: In orderYou may attend the virtual Annual Meeting if you are a stockholder of record as of March 15, 2022, the record date. You will be able to carryattend the Annual Meeting, vote and submit your questions by visiting www.virtualshareholdermeeting.com/POOL2022. Please enter the 16-digit control number included on your proxy card and follow the instructions for participation and voting.
You may vote your shares electronically at the Annual Meeting if you are the holder of record. If you are the beneficial owner, you may also vote electronically at the Annual Meeting if you obtain a legal proxy from your broker, bank or other nominee. However, even if you plan to virtually attend the Annual Meeting, we recommend that you vote your shares in advance, so that your vote will be counted if you are unable to attend the Annual Meeting.
Q: Will I be able to participate in the virtual Annual Meeting in the same way that I would be able to participate in an in-person meeting?
A: Yes. We have taken steps to ensure that the format of the virtual Annual Meeting affords stockholders the same rights and opportunities to participate as they would at an in-person meeting. You can access the rules of conduct for the meeting on the businessmeeting website at www.virtualshareholdermeeting.com/POOL2022. You may also submit questions in advance of the meeting.
You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your control number found on your proxy card or voting instruction form. Questions may also be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/POOL2022. We will respond to as many inquiries at the Annual Meeting as time allows, although questions may be limited on a per stockholder basis due to time constraints. Off-topic, personal or other inappropriate questions will not be answered.
Q: What if I have technical difficulties during the check-in time or during the Annual Meeting?
A: If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the login page at www.virtualshareholdermeeting.com/POOL2022. Please be sure to check in by 8:45 a.m. Central Time on Tuesday, May 3, 2022, the day of the Annual Meeting, a quorum must be present. This means at least a majority of the outstanding shares eligible to vote must be represented atso we may address any technical difficulties before the Annual Meeting either by proxy or in person. If you submit your proxy instructions or if you attend the Annual Meeting in person, your shares will be counted for the purpose of determining a quorum, even if you abstain from voting on some or all matters introduced at the Annual Meeting. Also, if you hold your shares in street name, your shares will be counted in determining a quorum if your bank, broker or other holder of record votes your shares on any matter.live webcast begins.
Q: Could other matters be decided at the Annual Meeting?
A: We are not aware of any matters to be presented other than those described in this Proxy Statement. By signing and returning a proxy card, however, you will give to the persons named as proxies discretionary voting authority with respect to any other matter that may properly come before the Annual Meeting, and they intend to vote on any such matter in accordance with their best judgment.as recommended by the Board of Directors.
Q: What if I do not indicate my voting instructions for one or more of the matters on my proxy card?
A: If you execute and return your proxy but do not give voting instructions, your shares will be voted as recommended by the Board. This means that unless your proxy is otherwise marked, properly executed proxies will be voted FOR the election of each of the director nominees and FOR proposals 2 and 3 (the ratification of the retention of the independent registered public accounting firm for fiscal year 20192022 and the say-on-pay vote).
Q: What happens if I do not return my proxy? What is discretionary voting authority, and what is a broker non-vote?
A: If you are a holder of record and do not return a proxy, your shares will not be voted.
If you are a street name holder and do not providebeneficial owner, you are entitled to give voting instructions to your bank, broker, or other holder of record, and they must vote your shares may be voted on any matter on whichaccording to your broker has discretionary authority to vote. Underinstructions. If you do not provide instructions, then under the rules of the New York Stock Exchange (NYSE), brokers generally have discretionary authority to vote on “routine” matters but not on “non-routine” matters. A “broker non-vote” occurs when a broker holding shares for a street name holder returns a valid proxy, butbeneficial owner does not vote on a particular proposal because it does not have discretionary authority to vote on the matter and has not receivedgive voting instructions fromto the stockholder for whom it is holding shares.bank, broker, or other holder of record on matters deemed “non-routine.” Broker non‑votes will benon-votes are treated as present for purposes of determining the existence of a quorum at the Annual Meeting.
TheProposal 2, the ratification of the appointmentretention of the independent registered public accounting firm, is considered a routine matter; thematter, and your broker has discretionary authority to vote on this proposal if you do not provide voting instructions. The remaining proposals listed in this Proxy Statement (the election of directors and the say-on-pay vote) are classified as non‑routinenon-routine matters under the NYSE rules. Therefore, if you are a street name holderbeneficial owner and do not provide voting instructions to your broker, your broker may only castnot vote on these proposals, and the result is a vote with regard to the ratification of the appointment of the independent registered public accounting firm.
broker non-vote.
Q: What isare the voting options and the vote required and how will my vote be counted, to elect the director nominees and to approve each proposal? What are the other proposals discussed in this proxy statement?
effects of abstentions and broker non-votes? |
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| Proposal | | Voting Options | | Vote Required to AdoptApprove the Proposal | | Effect of Abstentions | | Effect of Broker Non-Votes |
No. 1 - Elect eight directorsthe nine director nominees named in this Proxy Statement | | For,You may vote for or against or abstain on each director nominee, or you may abstain. | | Affirmative vote of aTo be elected, each director must receive an affirmative majority of the votes cast. This means that the votes cast “for” a nominee’s election must exceed the votes cast “against” the nominee. | | N/A | | No effect because only votes cast are considered | | No effect because only votes cast are considered |
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| No. 2 - Ratify retention of independent registered public accounting firm | | For,You may vote for or against the proposal, or abstainyou may abstain. | | Affirmative vote of a majority of the shares of Common Stock present in personvirtually or by proxy and entitled to vote | | Treated as votes against | | N/ABrokers have discretionary authority to vote on this proposal, so there should be no broker non-votes on this item. |
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| No. 3 - Say-on-pay vote | | For,You may vote for or against the proposal, or abstainyou may abstain. | | Affirmative vote of a majority of the shares of Common Stock present in personvirtually or by proxy and entitled to vote | | Treated as votes against | | No effect because shares are not entitled to be voted |
In uncontested elections, our directors are elected by the affirmative vote of the holders of a majority of the shares of our Common Stock voted. In contested elections (where the number of director nominees exceeds the number of directors to be elected), our directors are elected by a plurality of shares of our Common Stock voted. Under our Bylaws, all other matters require the affirmative vote of the holders of a majority of the shares of our Common Stock present in personvirtually or by proxy and entitled to vote, except as otherwise provided by statute, our Certificate of Incorporation or our Bylaws.
Q: Can I change or revoke my proxy?
A: Yes. ToYou may change or revoke your proxy at any time before the shares are voted at the Annual Meeting you must either:by doing one of the following:
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a) | mail (i) a new proxy card with a later date or (ii) a written revocation addressed to: |
a)mail (i) a new proxy card with a later date or (ii) a written revocation addressed to:
Pool Corporation
Jennifer M. Neil, Corporate Secretary
109 Northpark Boulevard
Covington, LA 70433-5001
or
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b) | attend the Annual Meeting and vote in person. |
b)virtually attend the Annual Meeting and vote electronically.
If you hold your shares in street name, you may submit new voting instructions by contacting your broker, bank or other nominee. You may also vote in person at the Annual Meeting if you obtain a legal proxy from your broker, bank or other nominee.
Q: Why did I receive more than one set of proxy materials?
A: Receiving more than one set of proxy materials generally means you have shares held in different names or different accounts. It’s important that you respond to all the proxy solicitation requests to ensure that all of your shares are voted.
Q: Who will pay the expenses incurred in connection with the solicitation of my vote?
A: We pay the cost of preparing proxy materials and soliciting your vote. We will, upon request, reimburse brokers and other nominees for the cost of mailing materials to beneficial owners. Some of our employees, who will receive no additional compensation, may solicit proxies by telephone facsimile or electronic mail. We also pay all Annual Meeting expenses.
Q: Who presides over the Annual Meeting?
A: Our Chairman of the Board will preside over the Annual Meeting. The Chairman will have the power to declare the actions of any shareholder as out of order, and he may also disregard any proposed nomination of a director nominee or any other matter that is not presented in accordance with our Bylaws.
What happens if the Annual Meeting is postponed or adjourned?
A: Unless a new record date is fixed, your proxy will still be goodvalid and may be voted at the postponed or adjourned Annual Meeting. You will still be able to change or revoke your proxy at any time until it is voted.
Q: Who counts the votes?
A: Broadridge Financial Solutions tabulates the votes.
Important notice regarding the availability of proxy materials for the Annual Meeting to be held on May 1, 2019:3, 2022:
The Company’s 20192022 Proxy Statement and Annual Report to Stockholders for the fiscal year ended December 31, 20182021 are available at http://ir.poolcorp.com/Proxyproxy-statements-annual-reports.
Election of Directors
(Proposal 1)
General
Our Bylaws provide that the size of our Board may be increased or decreased from time to time by resolution of the Board. On October 30, 2018,May 24, 2021, the Board increased the size of the Board to eightnine members and, upon recommendation of the Nominating and Corporate Governance Committee, appointed DebraMartha “Marty” S. Oler.Gervasi.
TheEach of our current directors is standing for reelection at the Annual Meeting, and each has been nominated by our Board, uponbased on the recommendation of the Nominating and Corporate Governance Committee, has nominated each of our eight current directors to serve another one-year term.Committee. Other than Ms. Oler,Gervasi, each of the nominees was previously elected a director of the Company by our stockholders, and each of the nominees has indicated his or her intention to serve if elected. However, if any director nominee is unable or unwilling to take office at the Annual Meeting, your proxy may be voted in favor of another person or other persons nominated by the Board. OnceIf elected, each director nominee will hold officeserve a one-year term expiring at our 2023 annual meeting of stockholders or until his or her successor has been elected and qualified or until the director’s earlier resignation or removal.
Our Bylaws include a majority voting standard in uncontested director elections. This means that if the number of shares voted against any sitting director is more than the number of shares voted for the election of any sitting director is less than the number of votes withheld or against election with respect to that director, thatthe director must submit a letter to the Board offering to resign. The Board, after considering the recommendation of the Nominating and Corporate Governance Committee, must make a decisiondecide whether to accept, reject or take other action with respect to the resignation within 90 days from certification of the election results.
Board Membership Criteria
At least annually, our Nominating and Corporate Governance Committee evaluates the effectiveness of our Board and Board committees and reviews the appropriateness of the composition and size of our Board and Board committees. As reflected in our Corporate Governance Guidelines, it our policy that in identifying, evaluating, and considering potential nominees, our Nominating and Corporate Governance Committee looks for candidates with relevant educational, business and industry experience and demonstrated character and judgement. Further, the committee seeks to identify individuals with the highest personal and professional ethics, integrity and values, who can commit themselves to representing the long-term interests of our stockholders. Nominees must also have an inquisitive and objective perspective, practical wisdom and mature judgment. Nominees must be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serving on our Board for an extended period of time.
In reviewing the composition of our Board and potential nominees, our Nominating and Corporate Governance Committee also considers the director independence and committee requirements of The Nasdaq Stock Market LLC (Nasdaq) listing rules and all legal requirements. Our Board seeks independent directors with a broad diversity of experience, professions, skills, geographic representation and backgrounds that will enhance the quality of the Board’s deliberations and decisions.
Our Nominating and Corporate Governance Committee and Board believe the nominees fulfill the criteria described above. In addition, the Board has determined that seven of our nine director nominees (including all committee members) are independent under Nasdaq listing rules. All four current members of our Audit Committee are “audit committee financial experts,” as defined by the Securities and Exchange Commission (SEC) rules. In addition to these attributes, each of the nominees has a strong background and relevant experience which led our Nominating and Corporate Governance Committee and Board to conclude that he or she should serve as a director of our Company. We describe these qualifications individually for each nominee below.
Board Diversity
The Board recognizes that its success hinges on its ability to meet a broad spectrum of challenges, and successfully navigating these challenges demands not only a diverse set of perspectives, backgrounds, and skills, but strong communication and collaboration among the whole Board. To that end, the Board’s composition and culture is crucial. Our goal is a balanced and diverse board, with members who bring a diversity of skills, expertise, experiences, perspectives, tenures and personal characteristics, including with regard to race, gender, age, and ethnicity. We are also committed to a balanced approach to director tenure, allowing the Board to benefit from the knowledge and experience of longer-serving directors as well as fresh perspectives from newer directors. Four of our seven independent directors have served on our Board less than eight years, and the average tenure of our independent director nominees is twelve years.
As noted in the table below, we are in compliance with Nasdaq Rule 5605(f), which requires companies to have at least two diverse board members. This table provides certain highlights of the composition of our Board members as of March 15, 2022. Each of the categories listed in the table below reflects the meanings in Nasdaq Rule 5605(f).
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| Board Diversity Matrix (as of March 15, 2022) |
| Total Number of Directors | 9 |
| Female | Male | Non-Binary | Did Not Disclose Gender |
| Part I: Gender Identity | | | | |
| Directors | 2 | 7 | — | — |
| Part II: Demographic Background | | | | |
| Number of Directors Who Identify in Any of the Categories Below: |
| African American or Black | — | — | — | — |
| Alaskan Native or Native American | — | — | — | — |
| Asian | — | — | — | — |
| Hispanic or Latinx | — | 1 | — | — |
| Native Hawaiian or Pacific Islander | — | — | — | — |
| White | 2 | 6 | — | — |
| Two or More Races or Ethnicities | — | — | — | — |
| LGBTQ+ | — |
| Did Not Disclose Demographic Background | — |
Information about our Director Nominees
Below is biographical information about each of our director nominees, including information regarding tenure as a director, business experience and qualifications, education and other company directorships. The summaries are not comprehensive, but describe the primary experiences, attributes and skills that led the Nominating and Corporate Governance Committee and our Board to determine thatnominate these individuals shouldto serve as directors of our Company. In addition to the qualifications referred to below, we believe each individualof our directors has a reputation for demonstrating integrity, honesty, and high ethical standards and has demonstrated sound business judgment.
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| Business experience: Mr. Arvan has served as our president and chief executive officer since January 2019. He served as our executive vice president from January 2017 to January 2019 and as our chief operating officer from August 2017 to January 2019. Prior to joining Pool Corporation, Mr. Arvan served as chief executive officer of Roofing Supply Group from 2013 to 2015 and as president of GE/SABIC Polymershapes from 2004 to 2013.
Other qualifications: Mr. Arvan graduated cum laude from the State University of New York at Utica with a Bachelor of Professional Studies in Business Administration. Among other qualifications, Mr. Arvan brings to the Board senior leadership experience, strong operating expertise and marketing and strategic planning knowledge. |
Peter D. Arvan
Age: 56
Director since: 2019
Areas of expertise include: •Operations •Management •Marketing •Strategic Planning
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| Business experience: Ms. Gervasi currently serves as a senior advisor and executive coach with My Next Season, a consulting company. From 2012 to 2020, she served as the chief human resources officer and later as an executive advisor to the CEO and board of directors of The Hartford Financial Services Group, Inc. (The Hartford), an insurance and investment company, where she also served as senior vice president of human resources from 2010 to 2012. Prior to joining The Hartford, Ms. Gervasi held a variety of human resource positions with General Electric and Saudi Basic Industries (SABIC), where she gained a strong foundation in managing global workforces. Other qualifications: Ms. Gervasi earned a bachelor’s degree in American Studies and Business from the University of St. Joseph, and she holds a Master of Business Administration in human resources from the Lally School of Management and Technology at Rensselaer Polytechnic Institute. Among other qualifications, Ms. Gervasi brings to the Board extensive leadership and human capital experience and a strong history of talent management. |
Martha S. Gervasi
Age: 60
Director since: May 24, 2021
Areas of expertise include: •Human resources/compensation •Mergers and acquisitions •International operations •Corporate governance •Succession planning
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| Business experience: Mr. Graven is a co-founder and managing member of Triad Investment Company, LLC, a private investment company, since 1994. From 1990 to 1994, he served as president, chief operating officer and director of Steel Technologies, Inc., a former Nasdaq-listed steel processing company, where he also served in various positions including executive vice president, chief financial officer, vice president of finance and corporate controller, from 1979 to 1990. Other directorships: From 1993 to 2008, Mr. Graven was a director of Performance Food Group Company (NYSE, formerly Nasdaq: PFGC), a foodservice distribution company, serving on its audit, compensation and corporate governance committees. From 1981 to 1994, he served as a director of Steel Technologies, Inc. and from 1988 to 1994 as a director of Processing Technologies, Inc., a joint venture of LTV Steel, Mitsui Steel Development Company and Steel Technologies, Inc. Other qualifications: Mr. Graven received a Bachelor of Science from Murray State University and is a certified public accountant. Among other qualifications, Mr. Graven brings to the Board broad leadership and corporate governance experience as well as comprehensive experience in financial and risk management matters.
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Timothy M. Graven
Age: 70
Director since: 2015
Areas of expertise include: •Finance •Management •Compensation •Corporate governance •Audit
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: 1993
Business experience:
Mr. Code was a founding partner of CHS Capital, a Chicago-based private equity investment firm with five funds totaling over $2.7 billion in assets from 1998 until his retirement in 2012. Since 2012, he has focused on personal and philanthropic investments both individually and in association with a multi-family office.
Mr. Code serves as a director of Legacy Acquisition Corp., an acquisition company focused on consumer packaged goods and other consumables. Mr. Code also serves as a member of various private, profit and non-profit boards of directors, | | | | | |
| Business experience: From 2017 to 2019, Mrs. Oler served as senior vice president/president, North American sales and service of W.W. Grainger, Inc. (Grainger), a distributor of maintenance, repair and operating supplies used by businesses and institutions, gaining strong expertise in business turnarounds and leading transformational initiatives, including a Canadian business turnaround, sales end market segmentation and new pricing models. She joined Grainger as regional sales vice president in 2002 and held several roles with increasing responsibility. Prior to joining Grainger, Mrs. Oler gained extensive sales and leadership experience with Alliant FoodService, Inc. from 1996 to 2002, Kraft Foods from 1986 to 1996 and I. Feldman & Company from 1973 to 1986. Other directorships: Mrs. Oler serves as a director of Horizon Global Corporation (NYSE: HZN), a leading manufacturer of branded towing and trailering equipment, and OMNIA Partners, a procurement and supply chain management company. Other qualifications: Mrs. Oler holds a Bachelor of Science from the University of Maryland. Among other qualifications, Mrs. Oler brings to the Board extensive leadership and general management experience, a strong history of strategic go-to-market and sales team development, a proven track record of driving revenue growth, and significant customer service experience. |
Debra S. Oler
Age: 67
Director since: 2018
Areas of expertise include: •Business development •Management •Turnarounds and business transformation •Marketing •Distribution knowledge
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| Business experience: Mr. Perez de la Mesa served as our president and chief executive officer from 2001 until his retirement at the end of 2018; he served as our president and chief operating officer from 1999 to 2001. Prior to leading Pool Corporation, he gained extensive general, financial and operations management experience with Watsco, Inc. from 1994 to 1999, Fresh Del Monte Produce B.V. from 1987 to 1994, International Business Machines Corp. from 1982 to 1987, and Sea-Land Service Inc./R.J. Reynolds, Inc. from 1977 to 1982. Other directorships: Mr. Perez de la Mesa serves as a director of Advanced Drainage Systems, Inc. (NYSE:WMS), a publicly traded manufacturer of pipe and related waterworks products in North America, and as a director of Morsco, the U.S. subsidiary of Reece, Ltd., an Australian publicly traded distributor of plumbing, HVAC and waterworks products. Mr. Perez de la Mesa also serves as a director for several private companies, and he currently is lead director of Imperial Dade, lead director of US LBM, and chairman of ORS Medco. From 2004 to 2018, he served as a director of ARC Document Solutions, a leading reprographics company. Other qualifications: Mr. Perez de la Mesa, Cuban-American, holds a Bachelor of Business Administration from Florida International University of Iowa Foundation, where he serves as chair of the investment committee, Resource Land Holdings, Creation Investments, Pure Foods, Golden Bake, LaSalle Capital, Quality Control Corporation, Chicago Fellowship and Boat House Holdings LLC. Other qualifications:
Mr. Code holds a Bachelor of Arts and a Master of Business Administration from St. John’s University. Among other qualifications, Mr. Perez de la Mesa brings to the Board extensive management experience, more than 20 years of industry knowledge, a broad strategic vision for the Company and a strong financial acumen.
|
Manuel J. Perez de la Mesa
Age: 65
Director since: 2001 Vice Chairman since: 2019
Areas of expertise include: •Management •Strategic planning •International operations •Finance •Industry knowledge
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| Business experience: Since 2000, Mr. Seymour has conducted personal investments in both public and private companies and provided business advisory services through HFS LLC, particularly in the area of strategic planning services for companies in a wide variety of industries. He previously served as executive vice president of Envoy Corporation, a publicly-traded provider of electronic data interchange and transaction processing services for the healthcare market, from 1997 to 1999 when it merged with Quintiles Transnational. Mr. Seymour has previous general, financial and operations management experience with Jefferson Capital Partners from 1996 to 1997, Trigon Blue Cross Blue Shield from 1994 to 1996, and First Financial Management Corporation from 1983 to 1994, serving from 1990 to 1994 as president and chief executive officer of its subsidiary, First Health Services Corporation, and previously as senior vice president, corporate development. Other directorships: Mr. Seymour served as a member of various private boards of directors, including the advisory board of Calvert Street Capital Partners, a private equity firm. He was previously a director of Envoy Corporation and chairman of ACI Worldwide, Inc. (Nasdaq: ACIW), a global provider of software for electronic payments and electronic commerce. Other qualifications: Mr. Seymour earned a Bachelor of Arts from the University of Missouri and a Master of Business Administration from Keller Graduate School of Management. Among other qualifications, Mr. Seymour brings to the Board senior leadership experience, information technology knowledge, strategic planning experience, and operating and acquisition expertise. |
Harlan F. Seymour
Age: 72
Director since: 2003
Areas of expertise include: •Strategic planning •Business development •Operations •Information technology •Finance
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| | | | | |
| Business experience: Since 2001, Mr. Sledd is the managing partner of Pinnacle Ventures, LLC, a venture capital firm, and Sledd Properties, LLC, an investment company. Mr. Sledd served as interim president and chief executive officer of Owens and Minor, Inc. (NYSE: OMI), a distributor of medical and surgical supplies, from November 2018 to March 2019. He previously served as chief executive officer of Performance Food Group Company (NYSE: PFGC) from 1987 to 2001 and from 2004 to 2006. Other directorships: Mr. Sledd is a director of Owens & Minor, Inc.; he is also a director of Universal Corporation (NYSE: UVV), a diversified agriculture business, and serves on its audit, finance and pension investment committees. Mr. Sledd was chairman of Performance Food Group from 1995 to 2008 and a director from 1987 to 2008. Other qualifications: Mr. Sledd graduated from the University of Tennessee with a Bachelor of Science in Business Administration. Among other qualifications, he brings to the Board executive leadership experience, including his past service as a chief executive officer of a public company, along with extensive strategic planning, brand marketing experience and financial expertise. |
Robert C. Sledd
Age: 69
Director since: 1996
Areas of expertise include: •Finance •Operations •Marketing •Business development •Strategic planning
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| Business experience: From 1996 to 1999, Mr. Stokely served as president, chief executive officer and chairman of Richfood Holdings, Inc., a regional Fortune 500 wholesale food distributor and operator of retail grocery stores, prior to its acquisition by SuperValu Inc. Other directorships: Mr. Stokely is a director of Malibu Boats, Inc., a manufacturer of performance sports boats, and serves on its audit committee and nominating and governance committee. He was previously a director of O’Charley’s Inc., a national restaurant chain, Nash Finch Company, a wholesale food distributor, Performance Food Group Company (NYSE: PFGC), Imperial Sugar Company and ACI Worldwide, Inc. (Nasdaq: ACIW). Other qualifications: Mr. Stokely holds a Bachelor of Arts from the University of Tennessee. Among other qualifications, he brings to the Board experience in providing strategic, financial and risk management advice to companies engaged in a variety of industries, unique strategic insight, distribution and retail expertise and extensive senior leadership experience. Additionally, Mr. Stokely’s previous experience as chief executive officer of Richfood Holdings, Inc. afforded him with significant acquisition experience. |
John E. Stokely
Age: 69 Director since: 2000 Lead independent director since: 2003 Chairman since: 2017
Areas of expertise include: •Finance •Management •Operations •Corporate governance •Distribution
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| Business experience: Mr. Whalen served as the president and chief executive officer of the A.T. Cross Company (subsequently Costa Inc.) from 1999 to 2014, when the company was sold. A.T. Cross manufactured and marketed writing instruments and personal accessories under the Cross brand name and premium sunglasses under the Costa brand name. From 1991 to 1999, Mr. Whalen held various senior positions with Bausch & Lomb Inc., including corporate vice president, president Europe, Middle East, and Africa Division and president North America Ray-Ban Division. Earlier in his career, Mr. Whalen was vice president business development with G. Heileman Brewing Company and a consultant for Booz Allen Hamilton. Other directorships: Mr. Whalen serves as a director of Delta Apparel Inc. (NYSE: DLA), a diversified, branded apparel company, and is chairman of its compensation committee and a member of its audit committee. Mr. Whalen previously served as a director of Phoenix Footwear Group, Inc. and A.T. Cross Company. Other qualifications: Mr. Whalen graduated from Trinity College with a Bachelor of Arts with honors, and he received a Master of Business Administration from the University of Chicago. Among other qualifications, Mr. Whalen brings to the Board a background in developing and implementing operating strategies for global companies, distribution and retail expertise and extensive senior leadership experience. Additionally, Mr. Whalen’s previous success engineering a major restructuring as well as identifying and integrating a number of acquisitions affords him with unique strategic and operational insight. |
David G. Whalen
Age:64
Director since: 2015
Areas of expertise include: •Marketing •Finance •Mergers and acquisitions •International operations •Strategic planning
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Corporate Governance
Corporate Governance Documents
Our internet address is www.poolcorp.com. Under our website’s “Investors” tab, you will find the following corporate governance documents available free of charge via hyperlink:
•Corporate Governance Guidelines;
•charters for the Audit, Compensation, Nominating and Corporate Governance, and Strategic Planning Committees;
•Code of Business Administration from the University of Iowa. Among other qualifications, Mr. Code brings to the Board extensive financial expertise, many years of senior leadershipConduct and business development experience,Ethics; and significant acquisition and initial public offering experience.
Areas of experience include:
Finance
Mergers and acquisitions
Strategic opportunities
Management
Compensation
Timothy M. Graven (67)
Director since: 2015
Business experience:
Mr. Graven is a co-founder and managing member of Triad Investment Company, LLC, a private investment company, since 1994. From 1990 to 1994, he served as president, chief operating officer and director of Steel Technologies, Inc., a former Nasdaq‑listed steel processing company, where he also served in various positions including executive vice president, chief financial officer, vice president of finance and corporate controller from 1979 to 1990.
Other directorships:
From 1993 to 2008, Mr. Graven was a director of Performance Food Group Company (PFG), a foodservice distribution company, serving on its audit, compensation, and corporate governance committees. From 1981 to 1994, he served as a director of Steel Technologies, Inc. and from 1988 to 1994 as a director of Processing Technologies, Inc., a joint venture of LTV Steel, Mitsui Steel Development Company and Steel Technologies, Inc.
Other qualifications:
Mr. Graven received a Bachelor of Science from Murray State University and is a certified public accountant. Among other qualifications, Mr. Graven brings to the Board broad leadership and corporate governance experience as well as comprehensive experience in financial and risk management matters.
Areas of experience include:
Finance
Management
Compensation
Corporate governance
Audit
Debra S. Oler (64)
Director since: October 30, 2018
Business experience:
Since 2017, Ms. Oler has served as senior vice president/president, North American sales and service of W.W. Grainger, Inc. (Grainger), a distributor of maintenance, repair and operating supplies used by businesses and institutions. Since joining Grainger as regional sales vice president in 2002, Ms. Oler has held several roles with increasing responsibility. Prior to joining Grainger, Ms. Oler gained extensive sales and leadership experience with Alliant FoodService, Inc. from 1996 to 2002, Kraft Foods from 1986 to 1996 and I. Feldman & Company from 1973 to 1986.
Other qualifications:
Ms. Oler holds a Bachelor of Science from the University of Maryland. Among other qualifications, Ms. Oler brings to the Board extensive leadership and general management experience, a strong history of strategic go-to-market and sales team development, a proven track record of driving revenue growth, and significant customer service experience.
Areas of experience include:
Business development
Management
Marketing
Finance
Distribution knowledge
Manuel J. Perez de la Mesa (62)
Director since: 2001
Business experience:
Mr. Perez de la Mesa served as our president and chief executive officer from 2001 until his retirement at the end of 2018; he served as our president and chief operating officer from 1999 to 2001. Prior to leading Pool Corporation, he gained extensive general, financial and operations management experience with Watsco, Inc. from 1994 to 1999, Fresh Del Monte Produce B.V. from 1987 to 1994, International Business Machines Corp. from 1982 to 1987, and Sea‑Land Service Inc./R.J. Reynolds, Inc. from 1977 to 1982.
Other directorships:
Mr. Perez de la Mesa is a director of Hamilton HoldCo, LLC, the U.S. subsidiary of the Reece Group, a leading distributor of plumbing, waterworks and HVAC-R products in Australia and New Zealand, and AEA TCB Holdings LP, a distributor of glass and plastic rigid packaging in North America. He previously served as a director of ARC Document Solutions, a leading reprographics company.
Other qualifications:
Mr. Perez de la Mesa holds a Bachelor of Business Administration from Florida International University and a Master of Business Administration from St. John’s University. Among other qualifications, Mr. Perez de la Mesa brings to the Board extensive management experience, 20 years of industry knowledge, a broad strategic vision for the Company, and a strong financial acumen.
Areas of experience include:
Management
Strategic planning
International operations
Finance
Industry knowledge
Harlan F. Seymour (69)
Director since: 2003
Business experience:
Since 2000, Mr. Seymour conducts personal investments in both public and private companies and provides business advisory services through HFS LLC, particularly in the area of strategic planning services for companies in a wide variety of industries. He previously served as executive vice president of Envoy Corporation, a publicly traded provider of EDI and transaction processing services for the healthcare market, from 1997 to 1999 when it merged with Quintiles Transnational. Mr. Seymour has previous general, financial and operations management experience with Jefferson Capital Partners from 1996 to 1997, Trigon Blue Cross Blue Shield from 1994 to 1996, and First Financial Management Corporation from 1983 to 1994, serving from 1990 to 1994 as president and chief executive officer of its subsidiary, First Health Services Corporation and previously as senior vice president, corporate development.
Other directorships:
Mr. Seymour serves as a member of various private boards of directors, including Rx Innovation, a company that provides technology solutions to pharmacies and utilizes pharmacy transactions data to improve patient outcomes and the advisory board of Calvert Street Capital Partners, a private equity firm. He was previously a director of Envoy Corporation and chairman of ACI Worldwide, Inc. (ACI), a global provider of software for electronic payments and electronic commerce.
Other qualifications:
Mr. Seymour earned a Bachelor of Arts from the University of Missouri and a Master of Business Administration from Keller Graduate School of Management. Among other qualifications, Mr. Seymour brings to the Board senior leadership experience, information technology knowledge, strategic planning, operating and acquisition expertise.
Areas of experience include:
Strategic planning
Business development
Operations
Information technology
Finance
Robert C. Sledd (66)
Director since: 1996
Business experience:
Since 2001, Mr. Sledd is the managing partner of Pinnacle Ventures, LLC, a venture capital firm, and Sledd Properties, LLC, an investment company. He previously served as chief executive officer of PFG from 1987 to 2001 and from 2004 to 2006.
Other directorships:
Mr. Sledd is the chairman of Owens & Minor, Inc., a distributor of medical and surgical supplies; he is also a director of Universal Corporation, a diversified agriculture business, and serves on its audit, finance and pension investment committees. Mr. Sledd was chairman of PFG from 1995 to 2008 and a director from 1987 to 2008.
Other qualifications:
Mr. Sledd graduated from the University of Tennessee with a Bachelor of Science in Business Administration. Among other qualifications, he brings to the Board executive leadership experience, including his past service as a chief executive officer of a public company, along with extensive strategic planning, brand marketing experience and financial expertise.
Areas of experience include:
Finance
Operations
Marketing
Business development
Strategic planning
John E. Stokely (66)
Director since: 2000
Lead independent director since: •2003other relevant documents.
Chairman since: 2017
Business experience:
From 1996 to 1999 Mr. Stokely served as president, chief executive officer and chairman of Richfood Holdings, Inc., a regional Fortune 500 wholesale food distributor and operator of retail grocery stores prior to its acquisition by SuperValu Inc.
Other directorships:
Mr. Stokely is a director of Malibu Boats, Inc., a manufacturer of performance sports boats, and serves on its audit committee and nominating and governance committee. He was previously a director of O’Charley’s Inc., a national restaurant chain, Nash Finch Company, a wholesale food distributor, PFG, Imperial Sugar Company, and ACI.
Other qualifications:
Mr. Stokely holds a Bachelor of Arts from the University of Tennessee. Among other qualifications, he brings to the Board experience in providing strategic, financial, and risk management advice to companies engaged in a variety of industries, unique strategic insight, distribution and retail expertise and extensive senior leadership experience. Additionally, Mr. Stokely’s previous experience as chief executive officer of Richfood Holdings, Inc. afforded him with significant acquisition experience.
Areas of experience include:
Finance
Management
Operations
Corporate governance
Distribution
David G. Whalen (61)Matrix
Director since: 2015
Business experience:
Mr. Whalen served asThe following matrix highlights specific experience, qualifications, attributes, skills and background information that the president and chief executive officer of the A.T. Cross Company (subsequently Costa Inc.), from 1999 to 2014 when the company was sold. A.T. Cross manufactured and marketed writing instruments and personal accessories under the Cross brand name and premium sunglasses under the Costa brand name. From 1991 to 1999, Mr. Whalen held various senior positions with Bausch & Lomb Inc., including corporate vice president, president Europe, Middle East, and Africa division and president North America Ray-Ban Division. Earlier in his career, Mr. Whalen was vice president business development with G. Heileman Brewing Company and a consultant for Booz Allen Hamilton.
Other directorships:
Mr. Whalen serves as a director of Delta Apparel Inc., an international apparel design, marketing, manufacturing and sourcing company, and is a member of its corporate governance and compensation committees. Mr. Whalen previously served as a director of Phoenix Footwear Group, Inc. and A.T. Cross Company.
Other qualifications:
Mr. Whalen graduated from Trinity College with a Bachelor of Arts with honors, and he received a Master of Business Administration from the University of Chicago. Among other qualifications, Mr. Whalen brings to the Board background in developing and implementing operating strategies for global companies, distribution and retail expertise, and extensive senior leadership experience. Additionally, Mr. Whalen’s previous success engineering a major restructuring as well as identifying and integrating a number of acquisitions affords him with unique strategic and operational insight.
Areas of experience include:
Marketing
Finance
Mergers and acquisitions
International operations
Strategic planning
The Board of Directors unanimously recommends that our stockholders vote FOR the election of each of the director nominees.
Our Nominating and Corporate Governance Committee recommended to our full Board of Directors the foregoing nominees, and our Board has nominated themconsidered for election by our stockholders. At least annually, our Nominating and Corporate Governance Committee evaluates the effectiveness of our Board and Board committees and reviews the appropriateness of the composition and size of our Board and Board committees. In considering potential nominees, our Nominating and Corporate Governance Committee looks for candidates with the highest personal and professional ethics, integrity and values, who can commit themselves to representing the long-term interests of our stockholders. Nominees must also have an inquisitive and objective perspective, practical wisdom and mature judgment. Nominees must be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serving on our Board for an extended period of time.
In reviewing the composition of our Board and potential nominees, our Nominating and Corporate Governance Committee also considers theeach director independence and committee requirements of The Nasdaq Stock Market LLC (Nasdaq) listing rules and all legal requirements. Our Board seeks independent directors with a broad diversity ofnominee. A particular director nominee may possess additional experience, professions,qualifications, attributes or skills, geographic representation and backgrounds that will enhance the quality of the Board’s deliberations and decisions. Our Nominating and Corporate Governance Committee does not assign specific weights to particular criterion and no particular criterion is necessarily applicable to all prospective nominees. Prospective nomineeseven if they are not discriminated against on the basis of gender, age, race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.indicated below.
Our Nominating and Corporate Governance Committee and Board believe the nominees fulfill the criteria described above. In addition, the Board has determined that seven of our eight director nominees (including all committee members) are independent under Nasdaq listing rules. All four current members of our Audit Committee are “audit committee financial experts,” as defined by the Securities and Exchange Commission (SEC) rules. In addition to these attributes, each of the nominees has a strong and unique background and experience which led our Nominating and Corporate Governance Committee and Board to conclude that he or she should serve as a director of our Company. We describe these qualifications individually for each nominee above. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Peter Arvan | Martha Gervasi | Timothy Graven | Debra Oler | Manuel Perez de la Mesa | Harlan Seymour | Robert Sledd | John Stokely | David Whalen |
| Knowledge, skills and experience: | | | | | | | | | |
| Senior executive management | ü | ü | ü | ü | ü | ü | ü | ü | ü |
| Finance/accounting | ü | | ü | | ü | ü | ü | ü | ü |
| Audit committee financial expert | | | ü | | | | ü | ü | ü |
Strategic planning/
business development | ü | ü | ü | ü | ü | ü | ü | ü | ü |
| Marketing | ü | | | ü | | | ü | | ü |
| Mergers and acquisitions | ü | ü | | | ü | ü | | ü | ü |
| Operational expertise | ü | | ü | ü | ü | ü | ü | ü | ü |
| International operations | ü | ü | | | ü | ü | | | ü |
| Corporate governance/compliance | | ü | ü | | ü | ü | | ü | |
Human resources/
executive compensation | | ü | ü | ü | ü | ü | ü | | ü |
| Information technology | ü | | ü | | | ü | | | |
| Distribution expertise | ü | | ü | ü | ü | | ü | ü | |
Our Company has grown rapidly through internal growth and acquisitions to become the world’s largest wholesale distributor of swimming pool supplies, equipment and related leisure products and one of the top three distributors of irrigation products in the United States. We currently operate in 39 states, one U.S. territory and 12 foreign countries. Accordingly, our nominees have experience in a variety of areas important to our Company, such as managing and overseeing large public and private companies, corporate governance and executive compensation, strategic planning, mergers and acquisitions, financing growing businesses, international operations, information technology and marketing, and experience in our industry. Our Nominating and Corporate Governance Committee and Board believe that these nominees together provide us with the range and depth of experience and capabilities needed to oversee the management of our Company.
Director Independence
To be considered independent under the listing rules of Nasdaq, directors must be free from any relationship with management or the Company, which, in the opinion of the Board, would interfere with the exercise of independent judgment. The Board has determined
that each of our current directors, other than Mr. Arvan, our president and chief executive officer, and Mr. Perez de la Mesa, our former president and chief executive officer, meets the definition of an independent director as defined by Nasdaq listing rules. The Board’s independent directors regularly meet in executive session (without management present) at each Board and committee meeting.
Board Leadership Structure
The principal responsibility of the chief executive officer (CEO) is to operate and manage the business.Company. The principal responsibilities of the Board are to represent the Company’s stockholders and manage the operations of the Board and that of its committees.
Mr. Stokely currently serves as the Board’s chairman. His responsibilities in this capacity include the following:
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▪ | assign tasks to the Board’s committees; |
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▪ | determine the appropriate schedule of Board meetings after consultation with our CEO and other Board members; |
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▪ | consult with our CEO and other Board members on the agenda of the Board; |
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▪ | assess the quality, quantity, and timeliness of the flow of information from management to the Board; |
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▪ | direct the retention of consultants who report directly to the Board; |
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▪ | oversee compliance with and implementation of corporate governance policies; |
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▪ | coordinate, develop the agenda for, and moderate executive sessions of the Board’s independent directors; |
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▪ | assist the chairman of the Compensation Committee in his evaluation of our CEO’s performance; and |
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▪ | perform such other functions as the Board may direct. |
▪assign tasks to the Board’s committees;
▪determine the appropriate schedule of Board meetings after consultation with our CEO and other Board members;
▪consult with our CEO and other Board members on the agenda of the Board;
▪assess the quality, quantity and timeliness of the flow of information from management to the Board;
▪direct the retention of consultants who report directly to the Board;
▪oversee compliance with and implementation of corporate governance policies;
▪coordinate, develop the agenda for and moderate executive sessions of the Board’s independent directors;
▪act as the Board’s principal intermediary with senior management between meetings;
▪assist the chairman of the Compensation Committee in his evaluation of our CEO’s performance; and
▪perform such other functions as the Board may direct.
Director Attendance at Meetings
Our Board held fiveeight meetings in the 20182021 fiscal year. As stated in our Corporate Governance Guidelines, we encourage and expect directors to attend Board meetings and meetings of the Board committees on which they serve. In the 20182021 fiscal year, each of our directors attended 75% or more of the total number of Board meetings and meetings of the Board committees on which they served.
We encourage each member ofexpect our Boarddirectors to attend the annual meeting and all of ourstockholders, just as we expect them to attend Board meetings. All of the directors in office at the time attended the 2018last year’s annual meeting.
Board’s Role in Risk Oversight and Assessment
Our employees, managers and officers conduct our business under the direction of our CEO and the oversight of our Board to enhance our long-term value for our stockholders. The core responsibility of our Board is to exercise its fiduciary duty to act in the best interests of our Company and our stockholders. In discharging this obligation, our Board and committees perform a number of specific functions, including risk assessment, review and oversight. While management is responsible for the day-to-day management of risk, our Board is responsible for oversight of our risk management programs, ensuring that an appropriate culture of risk management exists within the Company, and assisting management in addressing specific risks, such as strategic, risks, financial, risks, regulatory, riskscybersecurity, compensation and operational risks.
Our Board’s objective is to have systems and processes in place that bring material risks facing our Company to the Board’s attention and permit the Board to effectively oversee the management of these risks. As reflected in our Code of Business Conduct and Ethics, our Board seeks to establish a “tone at the top” communicating our Board’s strong commitment to ethical behavior and compliance with the law. In furtherance of these goals, our Board regularly includes agenda items at its meetings relating to its risk oversight obligations and meets with various members of management on a range of topics, including corporate governance and regulatory obligations, disaster recovery and business continuity planning, succession planning, safety and risk management, environmental, social and corporate governance (ESG) matters, insurance, information technology, and operations. Our Board also sets and regularly reviews quantitative and qualitative authority levels for management. Further, our Board oversees the strategic direction of our Company, and in doing so considers the potential rewards and risks of our Company’s business opportunities and challenges and monitors the development and management of risks that may impact our strategic goals.
While risk oversight is a full Board responsibility, we also empower our various Board committees to address risk oversight in their respective areas and regularly report on their activities to our full Board. For example, ourOur Strategic Planning Committee routinely reviews with management external and internal risks that may impact our strategic goals and our Compensation Committee assesses risks related to compensation. Our Audit Committee regularly reviews our disclosure controls and procedures and internal control over financial reporting, our Code of Business Conduct and Ethics and other legal and regulatory matters affecting our Company, including compliance policies. Our Audit Committee also discusses our major financial risk exposures and steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. The Audit Committee also assists
our Board in reviewing our cybersecurity risk with management. Our director of internal audit reports to and regularly meets in executive session with our Audit Committee.
Environmental, Social and Governance (ESG)
We are committed to sustainable business practices, which include offering eco-friendly products to our customers, closely monitoring our sourcing activities, and being good stewards within the communities we serve. Currently, we are taking steps to trim our carbon footprint and to improve product choices that allow our customers to reduce their environmental impact. Further, we are installing more energy-efficient systems throughout our sales center network. We are continually striving to ensure success in our business while protecting resources for future generations. Our sustainability goals include the reduction of greenhouse gases and other harmful air emissions, water conservation, energy conservation, and carbon footprint minimization. We continue to improve the ways in which we handle, distribute, transport and dispose of all products, particularly the chemicals and fertilizers that we sell.
For more information on our ESG efforts, please read our 2021 Annual Report on Form 10-K or visit the Responsibility tab of our website at www.poolcorp.com.
Compensation-Related Risk
Our Compensation Committee assesses risks associated with our compensation policies and practices. We do not believe that our compensation policies or practices are reasonably likely to have a material adverse effect on our Company. While risk taking is a necessary part of growing a business, our compensation philosophy is focused on aligning compensation with the long-term interests of our stockholders as opposed to rewarding short-term management decisions that could pose long-term risks. For example:
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▪ | our annual cash award programs are capped for all members of senior management, including our Named Executive Officers (NEOs); |
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▪ | our Share Ownership Guidelines require our NEOs to hold Company stock; |
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▪ | we maintain a clawback policy for executive compensation; |
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▪ | our Insider Trading Policy prohibits hedging, pledging or monetization transactions involving our stock; |
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▪ | our long-term equity-based compensation cliff vests over a period of three to five years for all management recipients; and |
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▪ | beginning with 2016 grants, restricted stock awards contain performance-based criteria in addition to the time‑based vesting criteria discussed above. |
▪our annual cash award programs are capped for all members of senior management, including our Named Executive Officers (NEOs);
▪our Share Ownership Guidelines require our NEOs to hold Company stock;
▪we maintain a clawback policy for executive compensation;
▪our Insider Trading Policy prohibits hedging, pledging or monetization transactions involving our stock (see section below titled “Anti-Hedging Policy”);
▪our long-term equity-based compensation cliff vests over a period of three to five years for all management recipients; and
▪restricted stock awards contain performance-based criteria in addition to the time-based vesting criteria discussed above.
Moreover, equity awards are granted annually, which means executives always have unvested awards that could significantly decrease in value if our business is not managed for the long term.
Access to Management and Employees
Directors have full and unrestricted access to our management and employees. Additionally, key members of management attend Board meetings from time to time to present information about the results, plans and operations within their areas of responsibility.
Communications with the Board
Stockholders and other interested parties mayIf you wish to communicate with the members of our Board, by mailyou may send correspondence addressed to the full Board, a specific member of the Board or to a particular committee of the Board atto 109 Northpark Boulevard, Covington, Louisiana 70433. Communications are distributed, to the Board, or to a specific member of the Board, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Board has requested that certain items that are unrelated to the duties and responsibilities of the Board be excluded, such as junk mail, mass mailings, resumes and other forms of job inquiries and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable may be excluded.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our employees, officers (including our principal executive officer, principal financial officer and principal accounting officer) and directors. Our Code of Business Conduct and Ethics is posted on our website at www.poolcorp.com and can also be obtained free of charge by sending a request to our corporate secretary at 109 Northpark Boulevard, Covington, Louisiana 70433. As permitted by SEC and Nasdaq rules, we intend to satisfy the disclosure requirement regarding an amendment to, or a waiver from, a provision of our Code of Business Conduct and Ethics by posting such information on our website.
Anti-Hedging Policy
We do not believe that our directors, officers, employees or insiders should engage in short-term or speculative transactions involving our Common Stock. As such, our Insider Trading Policy prohibits directors, officers, employees and insiders from engaging in any of the following activities with respect to our Common Stock:
•trading in our Common Stock on a short-term basis - any Common Stock purchased in the open market must be held for a minimum of six months and ideally longer (such short-term trading by directors and executive officers is prohibited by law);
•sales of our Common Stock not owned or not delivered within 20 days of the sale, i.e. “short sales”;
•hedging or monetization transactions involving our Common Stock (including prepaid variable forward contracts, equity swaps, collars and contributing our Common Stock to an exchange fund in exchange for an interest in the fund); and
•the purchase or sale of publicly traded “equity” options in our Common Stock.
Board Committees
Board committees work on key issues in greater detail than would be possible at full Board meetings. The Board has appointed four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Strategic Planning Committee. The table below outlines the chairs and members of each committee along with the number of committee meetings held in 2021. | | | | | | | | | | | | | | | | | | | | | | | |
| Audit
Committee | | Compensation
Committee | | Nominating and
Corporate Governance
Committee | | Strategic Planning
Committee |
| Martha Gervasi | | | ü | | | | ü |
| Timothy Graven | Chair | | | | ü | | |
| Debra Oler | | | ü | | | | ü |
| Harlan Seymour | | | Chair | | ü | | Chair |
| Robert Sledd | ü | | ü | | | | |
| John Stokely | ü | | | | Chair | | |
| David Whalen | ü | | | | | | ü |
| Meetings held in 2021 | 8 | | 6 | | 2 | | 1 |
Each of these Board committees, which we briefly describe below, is comprised entirely of independent directors and operates under a written charter,directors. The committee charters, which sets forth the committees’ authorities and responsibilities. The charters are posted on our website at www.poolcorp.com in the “Investors” section under the “Governance” link.link, contain descriptions that are more detailed.
The following table lists our 2018 Board committees, the chairs of each committee, the directors who served on them following the 2018 annual meeting and the number of committee meetings held in 2018.
|
| | | | |
| | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | Strategic Planning Committee |
| Andrew W. Code | | ü | | |
| Timothy M. Graven | Chair | | ü | |
| Harlan F. Seymour | | Chair | ü | Chair |
| Robert C. Sledd | ü | ü | | |
| John E. Stokely | ü | | Chair | |
| David G. Whalen | ü | | | ü |
| Meetings held in 2018 | 8 | 5 | 4 | 1 |
The following sections briefly describe our Board committees and outline certain of their principal functions. These descriptions are qualified in their entirety by the full text of the Board committee charters.
Audit Committee
The Audit Committee assists the Board in monitoring:fulfilling its oversight responsibility with respect to:
| |
▪ | management’s process for ensuring the integrity of our financial statements; |
| |
▪ | the independent registered public accounting firm’s qualifications and independence; |
| |
▪ | the performance of our internal audit function and independent registered public accounting firm; |
| |
▪ | information technology security and risk, including cyber security; and |
| |
▪ | management’s process for ensuring our compliance with legal and regulatory requirements. |
•management’s process for ensuring the integrity of our financial statements;
▪the independent registered public accounting firm’s qualifications and independence;
▪the performance of our internal audit function and independent registered public accounting firm;
▪information technology security and risk, including cyber security; and
▪management’s process for ensuring our compliance with legal and regulatory requirements.
The Board has determined that each Audit Committee member meets the requirements for independence, experience and expertise, including financial literacy, as set forth in the applicable SEC and Nasdaq rules. The Board has further determined that the four members of the Audit Committee, Messrs. Graven, Sledd, Stokely and Whalen, are “audit committee financial experts” as defined in the SEC rules.
Compensation Committee
OurThe Compensation Committee is responsible for oversight ofoversees our executive compensation programs and makes recommendations to our entire Board with respect to director compensation, cash award plans for senior management, and equity-based plans for all employees. All members of the Compensation Committee are independent based on the applicable definition of independence for compensation committee members in Nasdaq listing standardsemployees, and Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the Exchange Act). The Compensation Committee’s specific responsibilities and duties are outlined in detail in our Compensation Committee Charter.director compensation. The Compensation Committee has full and final authority in connection with the administration of our equity compensation plans and, in its sole discretion, may grant equity-based awards under such plans.
The Compensation Committee has the authority to engage the services of outside advisers, experts and others. Specifically, the Compensation Committee may periodically retain an independent compensation consultant to review the overall structure and design of our compensation programs and their suitability in meeting our compensation objectives. In addition, when the Compensation Committee considers changes to specific compensation programs, they may use an outside consultant to review the design and suitability of that specific program.
In 2015, in an effort to continue to ensure that our executive compensation properly aligns with the interests
All members of our stockholders and remains comparable with the market, the Compensation Committee engaged Lyons, Benenson & Company Inc. (Lyons), a compensation consultant, to review our 2016 executive compensation program and peer group composition. Alsoare independent as set forth in 2015, the Compensation Committee engaged Lyons to conduct a review of non‑employee director and chairman compensation. Lyons reported directly to the Compensation Committee chairman and was advised by the Compensation Committee to compare our director compensation program against our peer group. As required byapplicable SEC and Nasdaq rules, the Compensation Committee assessed the independence of Lyons, determined that Lyons is independent from management and concluded that Lyons’ work did not raise any conflict of interest. The Compensation Committee has not retained Lyons since 2015 because we have not made material changes to our compensation structures since then.
rules. For more information regarding the processes used by the Compensation Committee to determine executive compensation, see the section titled “Compensation Discussion and Analysis” below.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee’s primary purpose is to provide oversight on a broad range of issues surrounding the composition of the Board, including:
•identifying qualified individuals to be considered for nomination to serve as directors;
| |
▪ | identifying qualified individuals to be considered for nomination as a director; |
| |
▪ | recommending to the Board director nominees for the next annual meeting of stockholders; |
| |
▪ | assisting the Board in committee member selection; |
| |
▪ | evaluating the overall effectiveness of the Board and committees of the Board; and |
| |
▪ | reviewing and considering corporate governance practices. |
▪recommending to the Board director nominees for election at the next annual meeting of stockholders;
▪assisting the Board in committee member selection;
▪evaluating the overall effectiveness of the Board and committees of the Board; and
▪reviewing and considering corporate governance practices.
The Nominating and Corporate Governance Committee has the authority to recommend to the Board candidates for Board membership. Stockholders may also make recommendations for director nominations by sending a letter to the Nominating and Corporate Governance Committee in care of our Corporate Secretarycorporate secretary at 109 Northpark Boulevard, Covington, Louisiana 70433. Stockholders making nominations must also comply with the notice procedures set forth in our Bylaws. The Nominating and Corporate Governance Committee evaluates such candidates in the same manner as other candidates. For additional information, see “Stockholder Proposals and Board Nominations.”
Strategic Planning Committee
The Strategic Planning Committee assists senior management in the analysis and preparation of our strategic plan and then reports and makes recommendations regarding our strategic plan to the full Board. Our strategic planning process involves defining the Company’s strategy and making decisions on allocating resources, including capital and people, to pursue this strategy. Our strategic plan, which we update and review with the Board periodically, incorporates specific goals for growth and business development over the next three to five years.
Compensation Committee Interlocks and Insider Participation
During the last fiscal year, Messrs.Mr. Seymour, CodeMs. Gervasi, Mrs. Oler, and Mr. Sledd served on the Compensation Committee and none of them served at any time as officers or employees of the Company or any of its subsidiaries. None of our executive officers served in the last fiscal year as a member of the board of directors or compensation committee of another entity, one of whose executive officers served as a member of our Board or Compensation Committee.
Information about our Executive Officers
The following table presents, as of March 14, 2019,15, 2022, certain information about our current executive officers. We expect that each of thesethe officers will remain in his or her current position following the Annual Meeting.
|
| | | | | | | |
| Name and age | Positions and recent business experience | |
Peter D. Arvan (53)(56) | President and Chief Executive Officer §▪President and Chief Executive Officer since January 2019
§▪Chief Operating Officer from August 2017 to January 2019
§▪Executive Vice President from January 2017 to January 2019
§▪Chief Executive Officer of Roofing Supply Group from 2013 to 2015
§▪President of GE/SABIC Polymershapes from 2004 to 2013
| |
A. David Cook (63)Melanie M. Hart (49) | Group Vice President
§ Group Vice President since 2007
§ Vice President from 1997 to 2007
§ Director of National Sales Development of our principal operating subsidiary from 1993 to 1997
| |
Mark W. Joslin (59) | Senior Vice President, Chief Financial Officer
§ Senior Vice President, Chief Financial Officer, since 2015Treasurer
§▪ Vice President, Chief Financial Officer from 2004 to 2015and Treasurer since August 2021
§▪ Vice President of Corporate Development of Eastman Chemical Company (Eastman) from 2002 to 2004
§ Vice President and Controller of Eastman from 1999 to 2002
| |
Kenneth G. St. Romain (56) | Group Vice President
§ Group Vice President since 2007
§ General Manager from 2001 to 2007
§ Regional Manager from 1987 to 2001
| |
Jennifer M. Neil (45) | Vice President, Corporate Secretary, Chief Legal Officer
§ Vice President since 2018
§ Corporate Secretary since 2005
§ Chief Legal Officer since 2003
| |
Melanie M. Housey Hart (46) | Vice President, Corporate Controller, Chief Accounting Officer
§Vice President since February 2019
§▪Chief Accounting Officer sincefrom 2008 to 2021
§▪Corporate Controller sincefrom 2007 to 2021
§▪Senior Director of Corporate Accounting from 2006 to 2007
§▪Senior Manager at Ernst & Young LLP from 2001 to 2006
| |
| Jeffrey M. Clay (47) | President, Horizon Distributors, Inc. ▪President of Horizon Distributors, Inc. since 2020 ▪Founder and President of Belltown Power Texas from 2016 to 2020 ▪Vice President of Strategy & Corporate Development at Roofing Supply Group from 2012 to 2016 | |
| Jennifer M. Neil (48) | Vice President, Corporate Secretary, Chief Legal Officer ▪Vice President since 2018 ▪Corporate Secretary since 2005 ▪Chief Legal Officer since 2003 | |
| Kenneth G. St. Romain (59) | Group Vice President ▪Group Vice President since 2007 ▪General Manager from 2001 to 2007 ▪Regional Manager from 1987 to 2001 | |
PRINCIPAL STOCKHOLDERS
In accordance with Rule 13d-3 under the Exchange Act, the table below sets forth as of March 14, 2019, certain information regarding beneficial ownership of Common Stock by (i) each of our directors, (ii) each of the executive officers listed in the Summary Compensation Table included in “Executive Compensation” (Named Executive Officers), (iii) all of our directors and executive officers as a group and (iv) each stockholder known by us to be the beneficial owner of more than 5% of our outstanding Common Stock. Unless otherwise noted below, all information is presented as of March 15, 2022. Based on information furnished to us by such stockholders, unless otherwise indicated, all shares indicated as beneficially owned are held with sole voting and investment power. Our executive officers and directors are prohibited from pledging the Company’s Common Stock as collateral for a loan, including through the use of traditional margin accounts with a broker.
|
| | | | |
| Name of Beneficial Owner | Number of Shares Beneficially Owned (1) | | Percentage of Outstanding Common Stock |
| Directors | | | |
| Andrew W. Code | 25,832 |
| (2) | * |
| Timothy M. Graven | 4,226 |
| | * |
| Debra S. Oler | — |
| | * |
| Manuel J. Perez de la Mesa | 1,605,643 |
| (3) | 4% |
| Harlan F. Seymour | 16,861 |
| | * |
| Robert C. Sledd | 26,176 |
| | * |
| John E. Stokely | 21,623 |
| | * |
| David G. Whalen | 4,296 |
| | * |
Named Executive Officers (4) | | | |
| Peter D. Arvan | 38,433 |
| | * |
| A. David Cook | 59,392 |
| | * |
| Mark W. Joslin | 127,356 |
| | * |
| Kenneth G. St. Romain | 303,336 |
| (5) | * |
| | | | |
| All executive officers and directors as a group (14 persons) | 2,284,445 |
| (6) | 6% |
| Greater than 5% Beneficial Owners | | | |
| BlackRock, Inc. | 3,535,555 |
| (7) | 9% |
| JPMorgan Chase & Co | 2,023,366 |
| (8) | 5% |
| Neuberger Berman Group LLC | 2,160,251 |
| (9) | 5% |
| The Vanguard Group, Inc. | 3,462,928 |
| (10) | 8% |
| T. Rowe Price Associates, Inc. | 1,846,373 |
| (11) | 5% |
| | | | | | | | | | | |
| Name of Beneficial Owner | Number of Shares Beneficially Owned (1) | | Percentage of
Outstanding
Common Stock |
| Directors | | | |
| Peter Arvan | 61,325 | | | * |
| Martha Gervasi | 200 | | | * |
| Timothy Graven | 5,716 | | | * |
| Debra Oler | 1,490 | | | * |
| Manuel Perez de la Mesa | 1,054,961 | | (2) | 3% |
| Harlan Seymour | 10,351 | | | * |
| Robert Sledd | 5,819 | | (3) | * |
| John Stokely | 13,113 | | | * |
| David Whalen | 5,907 | | | * |
Named Executive Officers (4) | | | |
| Melanie Hart | 23,721 | | (5) | * |
| Jeffrey Clay | 5,093 | | | * |
| Jennifer Neil | 9,832 | | | * |
| Kenneth St. Romain | 70,308 | | | * |
| Mark Joslin | 85,196 | | (6) | * |
| | | |
| All executive officers and directors as a group (13 persons) | 1,267,836 | (7) | 3% |
| Greater than 5% Beneficial Owners | | | |
| BlackRock, Inc. | 4,432,438 | | (8) | 11% |
| The Vanguard Group, Inc. | 4,411,856 | | (9) | 11% |
_______________
* Less than one percent.
| |
(1)(1)Includes shares of unvested restricted stock for executive officers and directors as these shares convey the right to vote and receive dividends. (2)Includes (i) 139,432 shares that Mr. Perez de la Mesa has the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 14, 2022; (ii) 6,000 shares beneficially owned by Mr. Perez de la Mesa’s wife; (iii) 320,995 shares held by a trust for which Mr. Perez de la Mesa serves as a trustee; and (iv) 527,882 shares held in five irrevocable trusts for the benefit of Mr. Perez de la Mesa’s adult children. (3)Includes 2,300 shares beneficially owned by Mr. Sledd’s wife and 1,654 shares that Mr. Sledd has the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 14, 2022. (4)Information regarding shares beneficially owned by Mr. Arvan, our chief executive officer, appears above under the caption “Directors.” (5)Includes 13,000 shares that Mrs. Hart has the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 14, 2022.
(6)Mr. Joslin, who was an NEO during 2021, retired from his position effective August 9, 2021. Accordingly, Mr. Joslin’s shares are not included in the total holdings of our directors and executive officers as a group. (7)Includes 154,086 shares that such persons have the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 14, 2022. Also includes 848,877 shares held in trusts and 8,300 shares held by family members of such persons. (8)Based on the holder’s Schedule 13G/A filed with the SEC on January 27, 2022. BlackRock, Inc. has sole voting power over 4,049,361 shares and sole dispositive power with respect to all shares. The business address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. (9)Based on the holder’s Schedule 13G/A filed with the SEC on February 10, 2022. The Vanguard Group, Inc. (Vanguard) has shared voting power over 67,603 shares, sole dispositive power over 4,246,617 shares and shared dispositive power over 165,239 shares. The business address of Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
| Includes shares of unvested restricted stock for executive officers and directors as these shares convey the right to vote and receive dividends. |
| |
(2)
| Includes 14,965 shares held by a family trust for which Mr. Code serves as co-trustee and 8,000 held directly by a charitable foundation of which Mr. Code is a director and president (although neither Mr. Code nor any members of his immediate family have a pecuniary interest in such shares). |
| |
(3)
| Includes (i) 689,340 shares that Mr. Perez de la Mesa has the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 13, 2019; (ii) 5,000 shares beneficially owned by Mr. Perez de la Mesa’s wife; (iii) 212,230 shares held by a trust for which Mr. Perez de la Mesa serves as a trustee; and (iv) 640,032 shares held in three irrevocable trusts for the benefit of Mr. Perez de la Mesa’s adult children. |
| |
(4)
| Information regarding shares beneficially owned by Mr. Perez de la Mesa, who was an NEO prior to his retirement effective December 31, 2018, appears above under the caption “Directors.”
|
| |
(5)
| Includes 211,432 shares that Mr. St. Romain has the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 13, 2019. |
| |
(6)
| Includes 932,218 shares that such persons have the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 13, 2019. Also includes 867,227 shares held in family trusts, 8,000 shares held in a charitable foundation and 5,000 shares held by family members of such persons. |
| |
(7)
| Based on the holder’s Schedule 13G/A filed with the SEC on February 6, 2019. BlackRock, Inc. has sole voting power over 3,385,750 shares and sole dispositive power with respect to all shares. The business address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
| |
(8)
| Based on the holder’s Schedule 13G filed with the SEC on January 11, 2019. JPMorgan Chase & Co has sole voting power over 1,869,807 shares, shared voting power over 2,810 shares, sole dispositive power over 2,018,918 shares and shared dispositive power over 2,879 shares. The business address of JPMorgan Chase & Co is 270 Park Avenue, New York, New York 10017. |
| |
(9)
| Based on the holder’s Schedule 13G/A filed with the SEC on February 13, 2019. Neuberger Berman Group LLC (Neuberger) has shared voting power with respect to 2,141,416 shares with Neuberger Berman Investment Advisers LLC and shared dispositive power with respect to all shares. Neuberger Berman Equity Funds has shared voting power and shared dispositive power over 1,493,349 shares. The business address of Neuberger is 1290 Avenue of the Americas, New York, New York 10104. |
| |
(10)
| Based on the holder’s Schedule 13G/A filed with the SEC on February 12, 2019. The Vanguard Group, Inc. (Vanguard) has sole voting power over 21,952 shares, shared voting power over 5,275 shares, sole dispositive power over 3,439,721 shares and shared dispositive power over 23,207 shares. The business address of Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. |
| |
(11)
| Based on the holder’s Schedule 13G/A filed with the SEC on February 14, 2019. T. Rowe Price Associates, Inc. (T. Rowe Price) has sole voting power over 528,639 shares and sole dispositive power over all shares. The business address of T. Rowe Price is 100 E. Pratt Street, Baltimore, Maryland 21202. |
EQUITY COMPENSATION PLAN INFORMATION
All of our existing equity compensation plans were approved by our stockholders. The following table provides information about shares of Common Stock that may be issued under our existing equity compensation plans as of December 31, 2018.2021.
| | | Plan description | Plan description | Number of shares of Common Stock to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of shares of Common Stock remaining available for future issuance under equity compensation plans | Plan description | Number of shares of Common Stock to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of shares of Common Stock remaining available for future issuance under equity compensation plans |
| Equity Compensation Plans Approved by Stockholders: | Equity Compensation Plans Approved by Stockholders: | | | | Equity Compensation Plans Approved by Stockholders: | |
| | 2007 Long-Term Incentive Plan (2007 LTIP) | 1,879,151 |
|
| $48.19 |
| 4,453,450 |
| (1) | | 2007 Long-Term Incentive Plan (2007 LTIP) | 651,617 | | $123.98 | | 4,109,524 | | (1) |
| | Employee Stock Purchase Plan | — |
| — |
| 100,463 |
| | | Employee Stock Purchase Plan | — | | — | | 68,173 | | |
| Equity Compensation Plans Not Approved by Stockholders | Equity Compensation Plans Not Approved by Stockholders | — |
| — |
| — |
| | Equity Compensation Plans Not Approved by Stockholders | — | | — | | — | | |
| | Total | 1,879,151 |
|
| $48.19 |
| 4,553,913 |
| | | Total | 651,617 | | $123.98 | | 4,177,697 | | |
(1) Includes 1,108,023933,872 shares that may be issued as restricted stock.
For a complete description of our equity compensation plans, see Note 6 in our 20182021 Annual Report on Form 10-K.
COMPENSATION DISCUSSION AND ANALYSIS
This compensation discussion and analysis section (the CD&A) describes and analyzes our executive compensation philosophy and program in the context of the compensation paid during the last fiscal year to our named executive officers (collectively, our Named Executive Officers or NEOs). This list includes our chief executive officer (CEO), our current and former chief financial officerofficers (CFO) and our next three most highly-compensated executive officers as of December 31, 2018.2021.
For fiscal 2018,2021, our Named Executive Officers were:
| |
▪ | Manuel J. Perez de la Mesa, President, Chief Executive Officer and Director; |
| |
▪ | Mark W. Joslin, Senior Vice President and Chief Financial Officer; |
| |
▪ | Peter D. Arvan, Executive Vice President and Chief Operating Officer; |
| |
▪ | A. David Cook, Group Vice President; and |
| |
▪ | Kenneth G. St. Romain, Group Vice President. |
▪Peter D. Arvan, President, Chief Executive Officer and Director;
▪Melanie M. Hart, Vice President, Chief Financial Officer and Treasurer;
▪Jeffrey M. Clay, President, Horizon Distributors;
▪Jennifer M. Neil, Vice President, Secretary and Chief Legal Officer;
▪Kenneth G. St. Romain, Group Vice President; and
▪Mark W. Joslin, former Senior Vice President, Chief Financial Officer and Treasurer.
In February 2021, Mr. Perez de la Mesa retired from hisJoslin informed the Board that he intended to retire as Senior Vice President and Chief Financial Officer but intended to remain in the position as president and CEO effective December 31, 2018;until later in 2021 in order to ensure a successful transition. Also in February 2021, the Board appointed Mrs. Hart to be Mr. ArvanJoslin’s successor. At that time, Mrs. Hart was serving as presidentour Vice President, Corporate Controller and CEOChief Accounting Officer. Mr. Joslin retired from the position effective January 1, 2019.
August 9, 2021.
In this CD&A,the discussion that follows, we firstwill provide an Executive Summary of our actions and highlights from 2018.2021. We next explain the principles that guide our Compensation Committee’s executive compensation decisions, our Compensation Philosophy and Objectives. We then describe the Compensation Committee’s Process of Setting Compensation, including any supporting role played by the NEOs themselves. Finally, we discuss in detail each of the Components of Compensation, which includes, for each component, a design overview as well as the actual results yielded for each NEO in 2018.2021.
Executive Summary
Our Company is the world’s largest wholesale distributor of swimming pool supplies, equipment and related leisure products and is one of the top threeleading distributors of irrigation and landscape products in the United States. We operate 364At December 31, 2021, we operated 410 sales center locations worldwide, from which our approximately 4,0005,500 employees serveserved roughly 120,000 wholesale customers. For more information about our business, please see Item 1, “Business,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2021.
Our consistent base business sales growth reflects industry growth plus market share gains from our existing customers expanding their businesses and our success in newer market initiatives such as hardscapes and commercial pools. Improvements in general external market factors in the United States, including consumer confidence, employment, housing, and economic expansion, largely support our base business growth. We feel these positive external trends have promoted increased consumer spending on higher value products that enhance swimming pools and outdoor living spaces.
Overview of Fiscal 20182021
The unprecedented demand we experienced beginning in the second quarter of 2020 continued through 2021 as families spent more time at home and sought ways to create and expand outdoor living and entertainment spaces. These trends drove an increase in new pool construction and greater expenditures for maintenance and remodeling products. Our Company’semployees rose to the occasion, successfully serving our customers in an environment marked by a sharp rise in demand coupled with historic supply chain disruptions. Their efforts yielded remarkable results, including the achievement of a significant milestone in our company’s history. In 2021, we surpassed $5.0 billion in annual net sales, including $1.0 billion of sales in our seasonally slowest fourth quarter. Our employees accomplished these results while remaining focused on protecting the health and well-being of our customers and the safety of our entire team. Our financial accomplishments for fiscal 20182021 included the following:
| |
▪ | record annual sales of nearly $3.0 billion, up 8% from 2017; |
| |
▪ | record operating income of $313.9 million, up 10% over 2017; |
| |
▪ | record operating margin of 10.5%, a 30 basis point increase over last year; and |
| |
▪ | record 2018 diluted EPS of $5.62, an increase of 25% over 2017, including a tax-related benefit of $0.36 per share. |
▪record annual sales of $5.3 billion, up 35% over 2020;
Despite▪record operating income of $832.8 million, up 79% over 2020;
▪record operating margin of 15.7%, a shorter-than-normal season due390 basis point increase over 2020; and
▪record 2021 diluted EPS of $15.97, an increase of 78% over 2020, including tax-related benefits of $0.74 per share in 2021 and $0.70 per share in 2020.
Net sales increased 35% compared to both a late start and an early end brought on by unfavorable weather, we delivered2020, with 29% of this increase from base business sales growth. Strong consumer demand for outdoor living products drove our sales growth, which also benefited from inflation and warmer weather trends across most of 8% in 2018, on top of sales growth of 8% in 2017. We attribute our solid sales growththe United States. Gross profit reached $1.6 billion for the year ended December 31, 2021, a 43% increase over 2020. Gross margin improved 180 basis points to 30.5%, reflecting benefits from actions we took to address inflation and even stronger profit growth tomanage supply chain disruptions along with favorable impacts realized from increased purchase volumes. As a combinationresult of strong execution and continuing favorable market conditions. Base businessrevenue growth coupled with diligent expense control, operating expenses as a percentage of net sales growth of 7% was fueled by market share gains and continued demand for discretionary products, such as building materials, lighting, and pool equipment. We also delivered double-digit growth for commercial pool product salesimproved 210 basis points year over year, contributing to the 390 basis point expansion in North America, where demand and market share gains were strong. Our focus on organic growth, process discipline and value creation allowed us to convert this top-line growth intoour operating income growth of 10% over last year.margin.
Return to Stockholders
We have delivered consistent positive returns to our stockholders over time, and in 20182021 we continued our long history of increasing dividends and conducting share repurchases. Total shareholder return, which is the appreciation in our stock price plus dividends per share, rose 53% during the year, and we returned $257.6 million of cash to shareholders through share repurchases and dividends.
20182021 Executive Compensation Program Highlights
▪Our executive compensation program is designed and implemented by the Compensation Committee, which strives to incorporate compensation best practices into our program design. The following summary highlights our commitment to executive compensation practices that align the interests of our executives and stockholders: | |
▪ | Our executive compensation program is designed and implemented by the Compensation Committee, which strives to incorporate compensation best practices into our program design. The following summary highlights our commitment to executive compensation practices that align the interests of our executives and stockholders: |
|
| | | | | | | | | |
| What we do: | | | What we don’t do: |
| | | | |
| ü | Our executive pay is predominantly performance-based and not guaranteed. | | û | We do not provide excessive perquisites to our executives. |
| ü | All of our variable compensation plans have caps on plan formulas. | | û | Directors and NEOs are prohibited from pledging and hedging their shares of company stock. |
| ü | Our equity plans contain “double trigger” change of control vesting provisions. | | û | Our equity plans prohibit the repricing of underwater stock options. |
| ü | We benchmark pay relative to the market and review our peer group annually. | | û | We do not provide any change of control cash payments to our executive officers. |
| ü | We maintain share ownership guidelines. | | û | We do not have any related party transactions with our executive officers. |
| ü | We maintain executive compensation clawback provisions. | | | |
| ü | The Compensation Committee, like all of our Board committees, is comprised solely of independent directors. | | | |
| ü | Our Compensation Committee periodically retains its own independent compensation consultant. | | | |
| ü | Beginning in 2016, restrictedRestricted stock awards include performance-based vesting criteria. | | | |
| |
▪ | A majority of each NEO’s target compensation has been and continues to be at-risk. The charts below show the 2018 plan design, or target, compensation mix by component: |
| |
▪ | Consistent with its long-standing policy of placing greater emphasis on the performance-based components of compensation, the Compensation Committee approved only a marginal increase in base salaries during 2018 for each NEO (less than 3% on average), with the exception of Mr. Arvan, who received a 10% increase in recognition of his promotion to chief operating officer in August 2017 and his expanded responsibilities in his new role. |
| |
▪ | For fiscal year 2018, we modified our annual cash performance award plan so that operating income is the primary financial measure. Previously, diluted EPS served as the primary financial metric for annual bonuses. Like EPS, operating income is an important driver of value creation for our stockholders, has had a strong long-term correlation with our stock price over time, and is performance-based. Further, operating income is not impacted by tax benefits related to share-based compensation expense or recent changes to federal tax rates. |
| |
▪ | The Compensation Committee approved an annual cash performance potential for each NEO, with 2018 plan design targeted at 100% of base salary for Messrs. Perez de la Mesa, Arvan and Cook, and 75% of base salary for Messrs. Joslin and St. Romain. Actual 2018 annual cash performance awards were 71.3% of base salary for Mr. Perez de la Mesa and averaged 73.2% of base salary for our other NEOs. |
| |
▪ | The Compensation Committee continued to emphasize the importance of our long-term growth by providing substantial pay‑for‑performance compensation opportunities through the medium-term Strategic Plan Incentive Program (SPIP) and the Amended and Restated 2007 Long-Term Incentive Plan (2007 LTIP). For the 2018 SPIP grant, which is based on the diluted EPS growth in the three-year performance period from 2018 to 2020, adjusted diluted EPS at December 31, 2017 of $3.99 serves as the baseline for the performance period, except that the Compensation Committee further considered the impact going forward of the lower tax rate under the Tax Cuts and Jobs Act (the TCJA) and therefore increased the baseline EPS to $4.74, thereby increasing the rigor of the award. |
▪Consistent with its long-standing policy of placing greater emphasis on performance-based components of compensation, in February 2021, the Compensation Committee approved 2021 base salaries for our NEOs that remained well below the market medians. The Compensation Committee approved salary increases for the NEOs ranging from 2.2% to 25.0%, in each case considering market pay for comparable positions as well as increasing responsibilities within their roles. Mrs. Hart received the greatest increase, 25.0%, in connection with her appointment to the role of CFO.
▪The Compensation Committee approved an annual cash performance opportunity for each NEO, with 2021 plan design targeted at 100% of base salary for Mr. Arvan and 75% of base salary for each of the other NEOs. Each NEO earned a maximum payout under the 2021 annual cash performance awards, which was 200% of base salary for Mr. Arvan and 150% of base salary for each of our other NEOs.
▪The Compensation Committee continued to emphasize the importance of our long-term growth by providing substantial pay-for-performance compensation opportunities through our Strategic Plan Incentive Program (SPIP), a medium-term cash award plan, and through the issuance of equity awards under our Amended and Restated 2007 Long-Term Incentive Plan (2007 LTIP).
▪In response to significant changes in market conditions resulting from the pandemic and a corresponding sharp rise in our baseline EPS for the 2021 SPIP grant, the Compensation Committee amended the plan and changed the three‑year diluted EPS compound annual growth rate (CAGR) for the minimum payout under the SPIP to 5% (previously 10%) and to 10% (previously 15%) for the target payout. The EPS CAGR for the maximum payout remained 20%, consistent with our historical grants. The Committee believes this change was necessary to deliver a meaningful incentive to our executives while continuing to maintain the plan’s rigor. Under the 2021 SPIP grant, which is based on the diluted EPS growth in the three-year performance period from 2021 to 2023, adjusted diluted EPS at December 31, 2020 of $8.42 serves as the baseline for the performance period.
Cash payments to our NEOs under the SPIP for the performance period ended December 31, 20182021, were 102%200% of base salary, (out of a
which is the maximum possible 200%attainment under the program, except for maximum performance) for our NEOs, with the exception of Mr. Arvan who joined the companyClay, whose amount was pro-rated based on his
hire date in January of 2017 and thus received a pro-rated payout of 51% of his base salary.March 2020. These SPIP payments representedwere based upon an adjusted diluted EPS CAGR of 15.1%42.4% for the 2016 to 2018 three-year
performance period.
| |
▪ | The Compensation Committee determined the 2018 equity grants for all NEOs based on total compensation targets approximating the peer group median for total compensation; grants of restricted stock awards to our NEOs contain performance-based vesting criteria (return on invested capital). |
| |
▪ | With regard to Mr. Perez de la Mesa’s 2018 compensation, the Compensation Committee kept the same compensation plan design intact with a salary increase of 2.0%, the same annual cash performance program potential, and the same medium-term SPIP and long-term equity components. |
▪The Compensation Committee determined the 2021 equity grants for all NEOs based on total compensation targets approximating the peer group median for total compensation. Grants of restricted stock awards to our NEOs contain a performance-based vesting criterion (return on invested capital).
Results Compared to Peers
Our Compensation Committee designsWhen designing total compensation for our executives, the Compensation Committee aims to target or approximate the peer group median for total compensation (sometimes referred to as “compensation by design”), but ultimately our executives’ total compensation varies depending on our performance. Our peer group is comprised of public companies primarily engaged in wholesale distribution and of similar size based on both revenues and market capitalization. See “Process of Setting Compensation - Benchmarking and Establishment of Peer Group” for further information on our peer group.
The table below presents compound annual growth rates (CAGR) for our EPS and stock price performance as well as our total stockholder return (TSR) performance compared to our peer group median as of December 31, 2018.2021. In addition to our peer group, we believe it is helpful to measure our performance against the S&P MidCap 400500 Index, of which we have been a member since 2020, because (a) it is comprised of similar‑sizedsimilar-sized public companies that represent the most likely alternative investments for investors and (b) we have no direct public company peers given the niche nature of our industry. Given that our compensation philosophy stresses the long-term growth of stockholder value, we believe that longer-term performance data provides the most appropriate comparisons.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pool Corporation | | | | | | |
| | Adjusted(1) Diluted EPS CAGR | |
Stock Price
CAGR | | TSR
CAGR | | | Peer Group Median TSR(2) CAGR | | S&P 500 Index CAGR(3) | |
| 1-year | | 80.3 | % | | 51.9 | % | | 52.7 | % | | | 41.5 | % | | 26.9 | % | |
| 3-year | | 42.4 | % | | 56.2 | % | | 56.8 | % | | | 25.5 | % | | 23.9 | % | |
| 5-year | | 34.3 | % | | 40.2 | % | | 40.8 | % | | | 14.2 | % | | 16.3 | % | |
| 10-year | | 26.0 | % | | 34.1 | % | | 34.4 | % | | | 12.5 | % | | 14.3 | % | |
|
| | | | | | | | | | | | | | | | | |
| | | Pool Corporation | | | | | | |
| | | Adjusted(1)
Diluted EPS
CAGR | |
Stock Price
CAGR | | TSR
CAGR | | | Peer Group
Median
TSR(2) CAGR | | S&P MidCap
400 Index
CAGR(3) | |
| 1-year | | 23.2 | % | | 14.7 | % | | 16.0 | % | | | (16.4 | )% | | (12.5 | )% | |
| 3-year | | 22.0 | % | | 22.5 | % | | 23.7 | % | | | (0.5 | )% | | 5.9 | % | |
| 5-year | | 20.7 | % | | 20.7 | % | | 21.6 | % | | | 1.5 | % | | 4.4 | % | |
| 10-year | | 16.2 | % | | 23.5 | % | | 24.3 | % | | | 12.7 | % | | 11.7 | % | |
| |
(1)(1)The adjusted diluted EPS CAGR amounts are based on adjusted diluted 2021 EPS of $15.18, which excludes a $0.74 benefit from the impact of Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), and a $0.05 benefit from the recovery of a previously impaired note.
| The adjusted diluted EPS CAGR amounts are based on adjusted diluted 2018 EPS of $5.26, which excludes a $0.36 per diluted share benefit from the impact of Accounting Standards Update 2016-09, Improvements to Employee Share‑Based Payment Accounting (ASU 2016-09).
|
The 1-year diluted EPS CAGR is also based on adjusted 20172020 diluted EPS of $4.27,$8.42, which excludes a $0.24$0.70 benefit from the impact of ASU 2016-09 and the impact of a non-cash goodwill and other asset impairment charge of $0.15.
The 3-year diluted EPS CAGR is also based on adjusted 2018 diluted EPS of $5.26, which excludes a $0.36 benefit from the impact of ASU 2016-09.
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(2)The 5-year diluted EPS CAGR is also based on adjusted 2016 diluted EPS of $3.48, which excludes a $0.01 impact of a non-cash goodwill impairment charge. The 10-year diluted EPS CAGR is also based on adjusted 2011 diluted EPS of $1.50, which excludes a $0.03 impact of a non-cash goodwill impairment charge. (2)We calculated TSR based on changes in the market price of each company’s common stock plus dividends paid during the respective periods, if applicable, using information from company financial statements and various financial websites including www.nasdaq.com. In calculating TSR, we used stock-split adjusted amounts for both historical market prices and dividends paid. (3)As reported by Nasdaq.
| We calculated TSR based on changes in the market price of each company’s common stock plus dividends paid during the respective periods, if applicable, using information from company financial statements and various financial websites including www.nasdaq.com. In calculating TSR, we used stock-split adjusted amounts for both historical market prices and dividends paid.
|
| |
(3)
| As reported by Nasdaq. |
As reflected in the table below, 20182021 total target compensation for our NEOs as a group was largely in-line with the peer group median. Actual compensation for our NEOs was 10%20% higher than the peer group median amount. For the 2018 fiscal year, we attributegiven our higher-than-peer payexceptional results compared to the following factors:peer group, as noted in the table above. See “Process of Setting Compensation - Benchmarking and Establishment of Peer Group”
In 2018, our total NEO compensation included that of our outgoing CEO, Mr. Perez de la Mesa, who retired effective December 31, 2018, as well as the compensation of his successor, Mr. Arvan;
Over the one-and three-year periods ended December 31, 2018, our TSR CAGR was 16.0% and 23.7% compared tofor more information regarding our peer group median TSR CAGR of (16.4)% and (0.5)%, respectively, which resultedgroup.
| | | | | | | | | | | | | | |
Total Compensation Above (Below) Peer Group Medians(1) |
| Position | | 2021 Actual | | 2021 Plan Design |
| CEO | | 11 | % | | (9) | % |
| All Other NEOs | | 38 | % | | 3 | % |
| All NEOs | | 20 | % | | (7) | % |
(1)Our Compensation Committee set our compensation plan design for fiscal 2021 in higher payouts of performance awards than our peers; further, our stock price CAGR also exceedsFebruary 2021. At that of the S&P MidCap 400 Index for all periods presented above; and
As discussed in the footnote below, thetime, peer group compensation data used in our comparison is generally a year or more old.
|
| | | | | | |
Total Compensation Above (Below) Peer Group Medians(1) |
| Position | | 2018 Actual | | 2018 Plan Design |
| CEO | | (28 | )% | | (23 | )% |
| All Other NEOs | | 44 | % | | 50 | % |
| Total NEOs | | 10 | % | | 16 | % |
| |
(1)
| Our Compensation Committee set our compensation plan design for fiscal 2018 in February 2018. At that time, peer group compensation data for 2017for 2020 was not available. Therefore, the peer group median amounts used for comparison in the above table were calculated primarily using 2016 compensation data. |
The actual amounts in the above table above reflect the reported amounts per the Summary Compensation Table, except for the value of stock options. For bothwere calculated primarily using 2019 compensation data.
We have reviewed our stock options and our peer group’s stock options, rather than use the estimated grant date fair values as reported in the proxy statements, we estimated stock option values by multiplying the number of stock options awarded by 40% of the stock’s closing price on the grant date (assuming this price equals the exercise price). We believe this eliminates potential differences related to fair value assumptions for expected term, volatility and dividend yield, thus improving the comparability to our peer group.
After review of all existing programs consideration ofand considered current market and competitive conditions and alignmentalong with our overall compensation objectives and philosophy, wephilosophy. We believe that the total compensation program for our executives is appropriately focused
on enhancing corporatecompany performance and increasing value for stockholders. We believe that a significant part of our executiveexecutives’ pay is properly tiedlinked to stock appreciation or stockholder value through stock options, restricted stockour long-term equity awards and incentive cash performance measures.plans.
Results of 20182021 Say-on-Pay Vote
At our 20182021 annual meeting of stockholders, our stockholders overwhelmingly approved our executive compensation by a vote of 99.4%98.6% of the votes cast (excluding broker non-votes). Because our Compensation Committee usually establishes NEO compensation is principally established in February of each year, the results of the 2018 say‑on‑pay2021 say-on-pay vote were not taken into consideration in setting the 20182021 executive officer compensation. However, the Compensation Committee did consider the strong stockholder support we received on the 20172020 say-on-pay vote, which was approved by 99.0%99.6% of the votes cast (excluding broker non-votes).
The Board and our Compensation Committee appreciate and value the views of our stockholders. Our Compensation Committee is mindfulWe were pleased with this significant vote of the strong supportconfidence in our stockholders expressedpay practices, and as a result continueswe continue to believe that our general approach to and design of executive compensation properly align the interests of our stockholders and our performance. Going forward, the Compensation Committee will continue to review stockholder advisory votes on executive compensation and take them into consideration when making future executive compensation decisions.
Compensation Philosophy and Objectives
We believe ourOur employees are our most important asset. The Compensation Committee and management have designed compensation programs intended to create a performance culture. The primary objectives of our compensation program are to attract, motivate, reward and retain talented executives who are critical to our success. The overriding principle of our executive compensation philosophy isWe believe that compensation must be firmly linked to continuous improvements in corporatecompany performance and sustained increases in stockholder value. We believedesign NEO compensation so that a substantial portion of executive compensation should beis at-risk based on performance, and that the majority of the at-risk compensation opportunity should beis predicated on medium- and long-term rather than short-term results. We strive to develop our executives’ capabilities and focus them on achievingreward superior long-term returns for our stockholders, while assuring that our programs do not lead to unnecessary risk taking.
Our executive compensation philosophy applies to all employees, with increasingly greater proportions of total compensation being at-risk as an employee’s responsibility increases. While we place great value on long-term performance and the corresponding improvement in stockholder value, we seek to balance the relationship between total stockholder return and short-term and long-term compensation in order to complement our annual and long-term business objectives and encourage the fulfillment of those objectives through executive performance.objectives.
In pursuing these objectives, we seek to design and maintain a program that will accomplish the following:
•align total compensation by design to the median total compensation of our peer group;
•align compensation with our performance in achieving financial and non-financial objectives;
•tie compensation to individual and group performance;
•closely align incentive compensation with stockholders’ interests; and
•promote equity ownership by executives through long-term performance compensation.
While we have not established specific target percentages of total compensation for short-term and long-term compensation, we do take into consideration the individual components in relation to the total opportunity we seek to provide.opportunity. Under our program, our performance impacts both short-term and long-term compensation, ascompensation; superior performance will result in additional compensation through our annual cash performance program and medium-term SPIP andas well as increased value of our equity grants over the long term. Our goal is for the portion of compensation that is at-risk (both short-term and long-term) to constitute a substantial and meaningful portion of total compensation for each executive and for sustained long-term growth to result in the greatest compensation opportunities.
Process of Setting Compensation
Our Compensation Committee is responsible for the oversight of our executive compensation. The Compensation Committee approves compensation plans for senior management and equity-based plans for all employees. In its evaluation of executive compensation, the Compensation Committee considers many factors, including the Company’s overall performance; each individual executive’s role and responsibilities, performance, tenure and experience; and peer group performance.
The Compensation Committee normally meets in February of each year to set executive compensation plans for that fiscal year. To do this, it uses the most current data available for peer group compensation, although this data is generally a year or more old.
Role of Management
The Compensation Committee also relies on data, analysis and recommendations from our CEO. While the CEO provides recommendations with respect to potential senior management compensation and the Compensation Committee reviews such recommendations, the Compensation Committee ultimately uses its collective judgment to determine senior management compensation. The CEO does not provide recommendations for his own compensation ascompensation; the Compensation Committee independently determines and approves his compensation. Although the CEO attends Compensation Committee meetings at which executive compensation matters are considered, he is not present when the Compensation Committee deliberates or votes on his compensation. Our Company’s management also assists the Compensation Committee with developing the peer group analysis each year.
Role of Compensation Consultant
Our Compensation Committee periodically engages an independent compensation consultant to review and comment uponon executive and director and executive compensation. In 2015,2019, in an effort to continue to ensure that our executive compensation program properly aligns with the interests of our stockholders and remains comparable with the market, the Compensation Committee engaged Lyons, BenensonPearl Meyer & Company Inc. (Lyons)Partners, LLC (Pearl Meyer) to review our 20162019 executive and non-employee director compensation program andas well as our peer group composition. TheBased on Pearl Meyer’s findings, the Compensation Committee continues to believe that this structure and component mix of pay elements successfully promotes our compensation objectives and philosophy, and accordingly, has retained this structure since 2016. The Compensation Committee did not retain a compensation consultant to review our 2017 or 2018 executive compensation structure because the structure did not differ materially from our 2016 executive compensation.in 2020 and 2021.
Benchmarking and Establishment of Peer Group
As noted above, we believe that total target compensation for our NEOs should be closely aligned to the median total compensation of our peer group. We establish compensation targets for each executive position in the aggregate and by component based on a design that we believe will best achieve our strategic and financial objectives. The Compensation Committee compares our mainprimary compensation components – base salary, annual bonus,cash incentive, SPIP and equity awards – individually and in the aggregate to the compensation of the most highly compensated executive officers of companies it uses as itsour “peer group” companies (the peer group is sometimes referred to as the “market”). These comparisons are based on compensation information published in the annual proxy statements of the peer group companies, except for the value of stock options. Rather than use the estimated grant date fair values as reported in the proxy statements, we estimate stock option values by multiplying the number of stock options awarded by 40% of the stock’s closing price on the grant date (assuming this price equals the exercise price). We believe this adjustment makes the estimated compensation amounts for stock options more comparable between companies by eliminating potential differences related to fair value assumptions for expected term, volatility and dividend yield.
The Compensation Committee reviews management’s evaluation of potential peer companies, approves the annual peer group and also reviews the annual executive compensation analysis that is prepared by management and, in some years, by the compensation consultant. In developing our peer group, we evaluate the following criteria:
| |
▪ | organizational structure (public companies); |
| |
▪ | type of business (primarily wholesale distribution); |
| |
▪ | company size (based on revenue and market capitalization); and |
| |
▪ | peer group size (number of peer companies). |
▪organizational structure (public companies);
▪type of business (primarily wholesale distribution);
▪company size (based on revenue and market capitalization); and
▪peer group size (number of peer companies).
In performing our evaluation, we focus on public companies that we believe would provide a comparable cross-industry subset of distributors. While we evaluate companies that may have some manufacturing or retail operations, we generally exclude companies from consideration if the majority of the business is not wholesale distribution. Since our Global Industry Classification Standard (GICS) industry group (2520 - Consumer Durables & Apparel) is broad and our GICS industry (252020 - Leisure Equipment & Products) would not provide an adequate peer group size, we believe that using a cross-industry subset of wholesale distributors for our peer group provides a more meaningful executive compensation benchmarking analysis than using companies based on one of our industry sectors.
The Compensation Committee reviewed our 20172020 peer group and made the following changes for 2021:
•removed Nu Skin Enterprises, Inc. because their business is not primarily wholesale distribution. The Compensation Committee added Acuity Brands,four companies whose market capitalization fell well below the bottom of our criteria range (Foundation Building Materials, Inc., MRC Global Inc., NOW Inc., and Sally Beauty Holdings, Inc.);
•removed WESCO International, Inc. after they completed a merger placing their annual sales outside of our criteria range; and
•added Henry Schein, Inc., Resideo Technologies, Inc. and Univar Solutions Inc., all of which are distribution company within ourcompanies with revenue and market capitalization within our criteria ranges, toranges.
Accordingly, our 2018 peer group.
Our 20182021 peer group consisted of the following 15 companies:
|
| | | | | | | |
ž Acuity Brands, Inc.
| ž Fastenal Company
| ž Sally Beauty Holdings, Inc.
|
ž⋅Applied Industrial Technologies, Inc.
| ž Helen of Troy Limited
⋅GMS Inc. | ž ScanSource,⋅Resideo Technologies, Inc.
|
ž⋅Beacon Roofing Supply, Inc.
| ž Kaman Corporation
⋅HD Supply Holdings, Inc. | ž Steelcase⋅SiteOne Landscape Supply, Inc.
|
ž⋅BMC Stock Holdings, Inc.
| ž MRC Global,⋅Henry Schein, Inc.
| ž Universal Forest Products,⋅Univar Solutions Inc.
|
ž Boise Cascade Company
⋅Builders FirstSource, Inc. | ž⋅MSC Industrial Direct Company,Co., Inc.
| ž Watsco,⋅UFP Industries, Inc.
|
ž Builders FirstSource, Inc.
⋅Fastenal Company | ž NOW Inc.
| ž Wesco Aircraft Holdings, Inc.
|
ž Essendant Inc.
| ž ⋅Patterson Companies, Inc.
| ⋅Watsco, Inc. |
The table below presents our revenue and market capitalization compared to the median of our 20182021 peer group (based on data available in the fall of 20172020 when the 20182021 peer group was established).
| | | | | | | | | | | | | | |
| (in millions) | | Revenue | | Market capitalization |
POOL(1) | | $ | 3,200 | | | $ | 13,579 | |
Peer group median(2) | | 4,988 | | | 3,576 | |
|
| | | | | | | | |
| (in millions) | | Revenue | | Market capitalization |
POOL (1) | | $ | 2,571 |
| | $ | 4,550 |
|
Peer group median (2) | | 3,266 |
| | 2,025 |
|
| |
(1)(2)The peer group median revenue represents the median annual net sales based on annual public filings available as of October 2020; the peer group median market capitalization is as of October 8, 2020. | POOL’s revenue reflects our most recent annual net sales (fiscal year 2016) at the time of our analysis, and our market capitalization is as of October 2, 2017. |
| |
(2)
| The peer group median revenue represents the median annual net sales based on annual public filings available as of October 2017; the peer group median market capitalization is as of October 2, 2017. |
The Compensation Committee reviews each component of our NEOs’ compensation compared to the peer group and the prior year’s total compensation for our NEOs versus the peer group. However, the Compensation Committee ultimately focuses on whether total compensation by design aligns closely with the peer group median total compensation amounts.compensation. While we compare our CEO position to the CEO positions for our peer group, we compare our other NEOs to the peer group in the aggregate as opposed to by position because we believe it affords a better comparison overall as the positions and responsibilities for this group vary from company to company.
Market medians and the ranges around them represent only represent beginning reference points. The Compensation Committee also uses its subjective judgment to set compensation, that reflectsincorporating factors such as individual performance and skills, long-term potential, tenureexperience in the position and retention considerations. The Compensation Committee also reviews the total annual compensation that each executive could potentially receive and, for perspective, reviews the previous year’s total compensation value for each executive.
The Compensation Committee has considered the impact that paying below the median of our peers might have on attracting, retaining and motivating senior management. The Compensation Committee believes that the fundamental philosophy of emphasizing pay-for-performance is the right one for our Company, and that our core compensation program as currently designed (base salary, annual bonus,cash incentive, SPIP and equity awards) can provide competitive or superior total compensation for senior management compared to our peer group given a reasonable economic environment. The Compensation Committee continues to believe that the design of our compensation program reflects a greater weighting to performance-based and at-risk compensation than the peer group median, as evidenced by the comparisons of our compensation components to the related peer group median amounts (see tables included in the “Components of Compensation” section below). Provided that our performance meets or exceeds expectations in future years, the Compensation Committee expects our NEOs will realize total compensation comparable or superior to the peer group median over time.
Components of Compensation
Our annual executive compensation program is relatively simple in format and includes four primary components:
|
| | | | | | | | | | | | | |
| Compensation Component | | Key Characteristics | | Purpose |
| Base salary | | Conservative level of fixed cash compensation based on responsibility experience and tenureexperience | | Provide a fixed, baseline level of cash compensation |
Annual cash award incentive
(annual bonus) | | Annual cash payment tied to performance during the fiscal year relative to pre-established performance goals | | Reward for achieving our annual financial and business goals |
| Strategic Plan Incentive Program (SPIP) | | Medium-term cash performance opportunity | | Provide a three-year, performance-based award subject to the achievement of specified earnings objectives, signifying achievement of strategic initiatives |
| Long-term equity awards | | Variable compensation comprised of performance-based restricted stock awards, stock options or a combination of the two | | Align executive performance with stockholder interests and long-term goals |
As discussed in “Compensation Philosophy and Objectives” above, we believe that employees at senior levels should have a larger proportion of total compensation delivered through pay-for-performance cash awards and long-term equity compensation. As a result, their compensation will be more significantly impacted, both upwardpositively and downward,negatively, by our financial performance and stockholder return. Because of this correlation, the Compensation Committee believes our executives have a greater percentage of their compensation at-risk than the executives in our peer group. We discuss each compensation component in more detail below.
Base Salary
(Summary Compensation Table, Column 3)
SalariesBase salaries provide executives with a base levelfixed element of incomecompensation and help achieve the objectives outlined above by attracting and retaining strong talent. Our plan design is for total executive compensation at comparable performance levels to be at the peer group’s median total compensation.compensation, assuming comparable performance levels. However, because of our base salary is more conservative by design and thus consistent with our overall philosophyemphasis on performance-based elements of focusing on at-risk or performance-based pay. In determining an executive’s base salary, the Compensation Committee reviews Company and individual performance information and peer group executive compensation, information.
Changes in our NEOs’ base salaries from yearfor our NEOs have historically been substantially below market as compared to year reflectour peers.
We review salaries annually and may make adjustments in response to general changes in market pay for executive talent, changes in responsibility for individual NEOs from time to time and, to a lesser extent, the individual’s job performance over time. Additionally, base salary levels for all NEOs have been substantially below market historically as compared to our peers. We generally do not generally provide our NEOs with automatic annual salary increases or other cost of living adjustments.
The 20182021 base salary levels for our NEOs continued to remain low by design as compared to our peer group. The table below presents the percentage by which our NEOs’ 20182021 base salaries are below the peer group median base salary amounts.
|
| | | | | | | |
Base Salary Below(Below) Peer Group Medians (1)
|
| Position | | 20182021
Actual |
| CEO | | 38(35) | % |
| All Other NEOs | | 16(34) | % |
TotalAll NEOs | | 23(36) | % |
| |
(1)(1)Our Compensation Committee set our compensation plan design for fiscal 2021 in February 2021. At that time, peer group compensation data for 2020 was not available. Therefore, the peer group median amounts used for comparison in the above table were calculated primarily using 2019 compensation data.
| Our Compensation Committee set our compensation plan design for fiscal 2018 in February 2018. At that time, peer group compensation data for 2017 was not available. Therefore, the peer group median amounts used for comparison in the above table were calculated primarily using 2016 compensation data. |
In February 2018,2021, the Compensation Committee increased executive officer salaries to the following amounts:
|
| | | | | | | |
| Name | | Salary | | Increase |
| Manuel J. Perez de la Mesa | | $ | 500,000 |
| | 2.0 | % |
| Mark W. Joslin | | 295,000 |
| | 2.8 | % |
| Peter D. Arvan | | 440,000 |
| | 10.0 | % |
| A. David Cook | | 317,000 |
| | 3.3 | % |
| Kenneth G. St. Romain | | 310,000 |
| | 3.3 | % |
| | | | | | | | | | | | | | |
| Name | | Salary | | Increase |
| Peter Arvan | | $ | 525,000 | | | 5.0 | % |
| Melanie Hart | | 250,000 | | 25.0 | % |
| Jeffrey Clay | | 280,000 | | 7.7 | % |
| Jennifer Neil | | 270,000 | | 8.0 | % |
| Kenneth St. Romain | | 335,000 | | 3.1 | % |
| Mark Joslin | | 325,000 | | 2.2 | % |
The average salary increase for the NEOs was 4.3%8.5%. Mr. Perez de la Mesa received a 2.0% increase, and Mr. ArvanMrs. Hart received the greatest percentage increase, 10.0%25.0%, in recognition of his promotion to chief operating officer in August 2017 and his expanded responsibilities in his new role. Mr. Perez de la Mesa,connection with her appointment as our CEO, received the highest base salary as compared to our other NEOs in recognition of his substantially greater responsibilities. Mr. Perez de la Mesa’s duties and responsibilities encompassed all aspects of our management and operations and were greater in scope and collectively more significant in nature than those of any other NEO.CFO. Even with these increases, our NEOs’ 20182021 base salaries as a group were 23%36% below the peer group median, as shown in the table above.
Annual Incentive Plan
(Summary Compensation Table, Column 6)5)
(Grants of Plan-Based Awards, Columns 3-4)
We use an annual cash performanceincentive award (annual bonus) to focus executive behavior on short-term goals for growth, financial performance and other specific financial and business improvement metrics. We offer our executives the opportunity to earn goal-oriented awards that are responsive to changing internal and external business conditions from year to year. EachEarly each year, objectives are set for the Company, our business units and individual executives. Actual performance is later measured against these objectives. At the first Compensation Committee meeting each year, which is generally held in February,evaluates the Committeeprior year’s performance against the target goals and then approves annual bonus payments for the prior year’s performancethat year and reviews and approves goals for each NEO for the current year. Annual bonus payments, if any, are normally made in late February or early March after the end of the performance period in which the bonuses were earned.
Under our Pool Corporation Executive Officer Annual Incentive Plan (the AIP), the Compensation Committee has the discretion to structure the annual bonus program as it deems appropriate, including designing an “umbrella plan” under which one or more performance goals are established to fund a pool from which individual awards, which may be subject to additional performance criteria, are then made.
20182021 Plan Design
While annual incentive plan payments to our NEOs are based on objective financial measures and each NEO’s attainment of certain business objectives, similar to our 2017 plan, our Compensation Committee added return on invested capital (ROIC) as an additional performance metric, which serves as a threshold performance goal. In February 2018,2021, the Compensation Committee established the performance metrics applicable to awards under the AIP for 20182021 and the maximum bonus payable to each NEO under the AIP. Similar to our 2020 plan, our Compensation Committee included return on invested capital (ROIC) as a threshold performance metric, which must be achieved in order for any payments to be made under the AIP. Under this plan design, if the Company achieved ROIC of 10% or higher for fiscal year 2018,2021, a bonus pool of $3,723,500 would be funded to satisfy annual bonus payments to all of our executive officers, including the NEOs.officers. The Compensation Committee then usedset individual bonus metrics (described below) to determine the amounts awarded to each of our NEOs.
To establish our baseline performance goal for performance-based awards issued in 2018, we reviewed our peer companies’ proxy statements and Lyons’ report on executive compensation arrangements presented to our Compensation Committee at the end of 2015. We established the baseline ROIC of 10% for awards granted in 2018 after reviewing the three-year average ROIC (as prepared by Lyons) for our peers for periods dating back to 2008.
For consistency purposes, we adopted theOur ROIC calculation used by Lyons in their analysis whereby the numerator is net income before after-tax interest and other non-operating expenses, net, and the denominator is the sum of total long-term debt (including the current portion) and stockholders’ equity at fiscal year end. Calculated in this way, our ROIC for the year ended December 31, 20182021 was 28.2%29.2%.
Because our 20182021 ROIC was greater than 10%, the bonus pool for 20182021 under the AIP was funded. In addition, the Compensation Committee then set additional performance criteria (described below) for each individual NEO in order for the officer to earn his allocated portion of the bonus pool.
For 2018,2021, our NEOs’ annual bonus targets were based on the following two objective performance criteria categories:
| |
▪ | specific financial measures (operating income and operational cash flow); and |
| |
▪ | specific business objectives tailored to each NEO’s area of responsibility. |
▪specific financial measures (operating income and operational cash flow); and
▪specific business objectives tailored to each NEO’s area of responsibility.
The metrics for all NEOs are designed to be challenging and encourage improvement over the status quo. For 2018,2021, the Compensation Committee used operating income as the primary performance financial metric for annual bonuses, as set forth in the table below. The Compensation Committee may authorize adjustments to operating income as specified by our compensation plans. The Compensation Committee approved 2018 annual bonus payments based on our reported operating income of $313.9 million. We believe operating income is a strong indicator of medium-term and long-term stockholder value as it has had a strong long‑termlong-term correlation with our stock price over time, it is performance-based, and its use in our cash award plans supports our business goal of providing a superior return to our stockholders. Further, operating income is not impacted by tax benefits related to share-based compensation expense or recently enactedchanges to federal tax reform.rates. The Compensation Committee has evaluated whether our reliance on operating income creates unnecessary risk and does not believe that it does.
The annual bonus plans for our CEO, CFOs and Group Vice President also include operational cash flow as a financial metric. As explained in more detail below, the Compensation Committee authorized the use of adjusted net cash provided Messrs. Perez de la Mesa,by operations in order to determine the achievement of this metric.
Under the annual bonus program, Mr. Arvan and Cook anhad the opportunity to earn up to 200% of his base salary opportunity (with a plan design of 100%) of base salary), and Messrs. Joslin and St. Romain anthe other NEOs each had the opportunity to earn up to 150% of their base salary opportunity (with a plan design of 75%) of base salary). The table below details compensation opportunities available to each of our NEOs under various 20182021 performance scenarios. The extent to which objectives are achieved determines the award earned.
Annual Cash Performance Opportunity
(expressed as a percentage of base salary) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Operating Income(1) | | Operational Cash Flow(2) | | Other Specific Business Objectives(3) | | Maximum
Opportunity |
| $ | 451.8 | | $ | 478.4 | | $ | 505.0 | | $ | 531.6 | | $ | 544.9 | | $ | 560.8 | | | 80% | 90% | 100% | 110% | | |
| Mr. Arvan | 15.0% | 30% | 45.0% | 60% | 100% | 140% | | —% | 10.0% | 20.0% | 30.0% | | 30.0% | | 200% |
| Mrs. Hart | 12.5% | 25% | 37.5% | 50% | 75% | 100% | | —% | 6.3% | 12.5% | 12.5% | | 37.5% | | 150% |
| Mr. Clay | 10.0% | 20% | 30.0% | 40% | 60% | 80% | | N/A | N/A | N/A | N/A | 15 | % | 70.0% | | 150% |
| Ms. Neil | 12.5% | 25% | 37.5% | 50% | 75% | 100% | | N/A | N/A | N/A | N/A | | 50.0% | | 150% |
| Mr. St. Romain | 10.0% | 20% | 30.0% | 40% | 60% | 80% | | —% | 5.0% | 10.0% | 10.0% | | 60.0% | | 150% |
| Mr. Joslin | 12.5% | 25% | 37.5% | 50% | 75% | 100% | | —% | 5.0% | 10.0% | 10.0% | | 40.0% | | 150% |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Operating Income(1) | | Operational
Cash Flow(2) | | Other
Specific
Business
Objectives(3) | | Maximum
Opportunity |
| | $ | 294.8 |
| $ | 305.7 |
| $ | 316.6 |
| $ | 327.5 |
| $ | 338.4 |
| $ | 348.3 |
| | 80% | 95% | 105% | 110% | | |
| Mr. Perez de la Mesa | 15.0 | % | 30 | % | 45.0 | % | 60 | % | 100 | % | 140 | % | | —% | 10% | 23% | 30% | | 30% | | 200% |
| Mr. Joslin | 12.5 | % | 25 | % | 37.5 | % | 50 | % | 75 | % | 100 | % | | —% | 5% | 10% | 10% | | 40% | | 150% |
| Mr. Arvan | 15.0 | % | 30 | % | 45.0 | % | 60 | % | 100 | % | 140 | % | | —% | 10% | 23% | 30% | | 30% | | 200% |
| Mr. Cook | 10.0 | % | 20 | % | 30.0 | % | 40 | % | 60 | % | 80 | % | | —% | 5% | 10% | 10% | | 110% | | 200% |
| Mr. St. Romain | 10.0 | % | 20 | % | 30.0 | % | 40 | % | 60 | % | 80 | % | | —% | 5% | 10% | 10% | | 60% | | 150% |
(2)Based on our adjusted net cash provided by operating activities as a percentage of net income for the year ended December 31, 2021. Mrs. Hart and Messrs. St. Romain and Joslin have the opportunity to earn an additional 5% of base salary for operational cash flow between 100% and 110%, except that their overall bonus may not exceed 150% of base salary. The cash award earned is prorated based on adjusted cash provided by operating activities as a percentage of net income between 80% and 110% for Mr. Arvan and between 80% and 100% for Mrs. Hart and Messrs. St. Romain and Joslin.
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(1)(3)Each executive’s respective business objectives reflects operational improvements related to his or her specific responsibilities, as described below. | Based on our potential operating income (in millions) for the year ended December 31, 2018. The cash award earned is prorated based on operating income between $294.8 million and $348.3 million. |
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(2)
| Based on our net cash provided by operating activities as a percentage of net income for the year ended December 31, 2018. The cash award earned is prorated based on cash provided by operating activities as a percentage of net income between 80% and 110% for Mr. Perez de la Mesa and Mr. Arvan and between 80% and 105% for Messrs. Joslin, Cook and St. Romain. |
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(3)
| Each executive’s respective business objectives reflects operational improvements related to his specific responsibilities, as described below. |
The table below presents the annual bonus earned by each NEO for 20182021 under the AIP. We believe the 20182021 actual annual bonus payouts reflectedreflect our strong performance in 2018,2021, including 10%79% operating income growth and a 16%52.7% one-year total stockholder return. These payouts also reflect the variability of our annual cash award based on performance, which is by design given that our NEOs’ base salaries are significantly below our peer group median base salary amounts. The total payoutsIn 2021, each of our NEOs earned the maximum award available under the annual bonus ranged from 57.4%AIP.
When the Compensation Committee set the NEOs’ objectives for 2021, the supply chain disruptions that defined much of 2021 had not yet fully emerged. Our management team took swift action to 95.5%procure product and stock our warehouses, allowing us to continue to serve our customers during a time of robust demand. These actions drove record-shattering results, including exceeding $5.0 billion of net sales and realizing operating profit nearly 50% higher than the top end of the operating income performance objective, normally considered a “stretch” goal for our executives. While these significant inventory purchases negatively impacted operational cash flow, stocking our warehouses was key to maintaining a high level of customer service and driving strong shareholder returns in 2021. In consideration of the strategic response to the supply chain disruption, the Compensation Committee approved an adjustment to operating cash flows to exclude the impact of the significant inventory purchases we made to address the immediate needs in 2021 and ensure that our sales centers are well prepared for 2022.
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| | | | | Components as a % of Base Salary |
| Annual Bonus Earned | | Bonus as a Percentage of Base Salary | | Operating Income(1) | | Operational Cash Flow(2) | | Other Specific Business Objectives(3) |
| Mr. Arvan | $ | 1,050,000 | | | 200.0 | % | | 140.0 | % | | 30.0 | % | | 30.0 | % |
| Mrs. Hart | 375,000 | | | 150.0 | % | | 100.0 | % | | 12.5 | % | | 37.5 | % |
| Mr. Clay | 420,000 | | | 150.0 | % | | 80.0 | % | | N/A | | 70.0 | % |
| Ms. Neil | 405,000 | | | 150.0 | % | | 100.0 | % | | N/A | | 50.0 | % |
| Mr. St. Romain | 502,500 | | | 150.0 | % | | 80.0 | % | | 10.0 | % | | 60.0 | % |
| Mr. Joslin | 487,500 | | | 150.0 | % | | 100.0 | % | | 10.0 | % | | 40.0 | % |
(1)We achieved operating income of $832.8 million for the year ended December 31, 2021.
(2)Net cash provided by operations was 48% of net income for the year ended December 31, 2021. For the purpose of determining the achievement of the operational cash flow measure, the Compensation Committee authorized the use of
adjusted net cash provided by operations, which included the reversal of adjustments made in 2020. Adjusted cash provided by operations also excludes the benefit of deferred taxes as allowed under Hurricane Ida tax relief and, as discussed more fully above, the impact of significant inventory purchases we made during the year. Adjusted net cash provided by operations for the year ended December 31, 2021 was 112% of net income.
(3)Each of the NEO’s respective business objectives reflects our focus on continued growth and improvement in execution over our past performance. In each case, these objectives represent stretch goals that each executive may or may not be able to achieve. The table below describes each NEO’s base salary and consisted ofother specific business objectives, the bonus opportunity as a calculated award of approximately 23.4% to 64.6%percentage of base salary for the achievement of specific individual business objectives. All of the 2018 annual cash awards were based on actual objectives achievedeach and the Compensation Committee did not include any additional discretionary award amounts.payout level achieved as a percentage of base salary for each.
| | | | | | | | | | | | | | | | | |
| Other Specific Business Objectives by NEO |
| Objective | | Opportunity | | Achievement |
| Mr. Arvan | | | | |
| § return on invested capital | | 10.0 | % | | 10.0 | % |
| § organizational planning and development | | 10.0 | % | | 10.0 | % |
| § specific tactical goals | | 10.0 | % | | 10.0 | % |
| | | 30.0 | % | | 30.0 | % |
| | | | | |
| Mrs. Hart | | | | |
| § successful transition into CFO role | | 12.5 | % | | 12.5 | % |
| § leadership and team development | | 25.0 | % | | 25.0 | % |
| | | 37.5 | % | | 37.5 | % |
| | | | | |
| Mr. Clay | | | | |
| § group profit | | 50.0 | % | | 50.0 | % |
| § network expansion | | 5.0 | % | | 5.0 | % |
| § gross margin | | 5.0 | % | | 5.0 | % |
| § strategic projects | | 5.0 | % | | 5.0 | % |
| § leadership and team development | | 5.0 | % | | 5.0 | % |
| | | 70.0 | % | | 70.0 | % |
| | | | | |
| Ms. Neil | | | | |
| § business development and organizational support | | 25.0 | % | | 25.0 | % |
| § corporate governance and compliance | | 10.0 | % | | 10.0 | % |
| § litigation management | | 10.0 | % | | 10.0 | % |
| § safety and workplace training | | 5.0 | % | | 5.0 | % |
| | | 50.0 | % | | 50.0 | % |
| | | | | |
| Mr. St. Romain | | | | |
| § group profit | | 40.0 | % | | 40.0 | % |
| § improve customer experience | | 5.0 | % | | 5.0 | % |
| § operating margin | | 10.0 | % | | 10.0 | % |
| § organizational vitality improvement | | 5.0 | % | | 5.0 | % |
| | | 60.0 | % | | 60.0 | % |
| | | | | |
| Mr. Joslin | | | | |
| § strategic projects | | 20.0 | % | | 20.0 | % |
| § expense management and profitability improvement | | 15.0 | % | | 15.0 | % |
| § credit and collections initiatives | | 5.0 | % | | 5.0 | % |
| | | 40.0 | % | | 40.0 | % |
|
| | | | | | | | | | | | | | | |
| | | | | | Components as a % of Base Salary |
| | Annual Bonus Earned | | Bonus as a Percentage of Base Salary | | Operating Income(1) | | Operational Cash Flow(2) | | Other Specific Business Objectives(3) |
| Mr. Perez de la Mesa | $ | 356,661 |
| | 71.3 | % | | 41.2 | % | | 6.7 | % | | 23.4 | % |
| Mr. Joslin | 202,737 |
| | 68.7 | % | | 34.4 | % | | 3.3 | % | | 31.0 | % |
| Mr. Arvan | 313,862 |
| | 71.3 | % | | 41.2 | % | | 6.7 | % | | 23.4 | % |
| Mr. Cook | 302,637 |
| | 95.5 | % | | 27.6 | % | | 3.3 | % | | 64.6 | % |
| Mr. St. Romain | 177,886 |
| | 57.4 | % | | 27.6 | % | | 3.3 | % | | 26.5 | % |
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(1)
| We achieved operating income of $313.9 million for the year ended December 31, 2018. |
| |
(2)
| Net cash provided by operations was 51% of net income for the year ended December 31, 2018. For the purpose of determining the achievement of the operational cash flow measure, the Compensation Committee authorized the use of adjusted net cash provided by operations, which excludes the timing difference from pre-price increase inventory purchases executed in the last half of 2018; adjusted cash flows from operations was 90% of net income. |
| |
(3)
| Each of the NEO’s respective business objectives reflects our focus on continued growth and improvement in execution over our past performance. In each case, these objectives represent stretch goals that each executive may or may not be able to achieve. The table below describes each NEO’s other specific business objectives, the bonus opportunity as a percentage of base salary for each, and the payout level achieved as a percentage of base salary for each. |
|
| | | | | | | |
| Other Specific Business Objectives by NEO |
| | | | | |
| Objective | | Opportunity | | Achievement |
| Mr. Perez de la Mesa | | | | |
| | § return on invested capital | | 10.0 | % | | 3.4 | % |
| | § organizational planning and development | | 10.0 | % | | 10.0 | % |
| | § executive management development | | 10.0 | % | | 10.0 | % |
| | | | 30.0 | % | | 23.4 | % |
| | | | | | |
| Mr. Joslin | | | | |
| | § expense management and profitability improvement | | 15.0 | % | | 7.0 | % |
| | § strategic projects | | 20.0 | % | | 19.0 | % |
| | § credit and collections initiatives | | 5.0 | % | | 5.0 | % |
| | | | 40.0 | % | | 31.0 | % |
| | | | | | |
| Mr. Arvan | | | | |
| | § return on invested capital | | 10.0 | % | | 3.4 | % |
| | § organizational planning and development | | 10.0 | % | | 10.0 | % |
| | § executive management development | | 10.0 | % | | 10.0 | % |
| | | | 30.0 | % | | 23.4 | % |
| | | | | | |
| Mr. Cook | | | | |
| | § group profit | | 90.0 | % | | 50.8 | % |
| | § working capital management | | 10.0 | % | | 7.5 | % |
| | § strategic sourcing | | 5.0 | % | | 5.0 | % |
| | § gross margin | | 2.5 | % | | 1.3 | % |
| | § employee attrition reduction | | 2.5 | % | | — | % |
| | | | 110.0 | % | | 64.6 | % |
| | | | | | |
| Mr. St. Romain | | | | |
| | § group profit | | 40.0 | % | | 16.5 | % |
| | § working capital management | | 10.0 | % | | 7.5 | % |
| | § packaged pool product management | | 5.0 | % | | 2.5 | % |
| | § gross margin | | 2.5 | % | | — | % |
| | § employee attrition reduction | | 2.5 | % | | — | % |
| | | | 60.0 | % | | 26.5 | % |
| | | | | | |
The table below presents the percentage variances betweena comparison of our NEOs’ annual cash award amounts (2018(2021 actual and 20182021 plan design) andto the peer group median annual cash award amounts, which reflect 20162019 or 20172020 annual cash awards based on publicly available information as of February 20182021 when the Compensation Committee set our 20182021 compensation. The actual cash awards for our NEOs were 36% higher than the peer group median given our exceptional results compared to the peer group, including our one-year TSR of 52.7% compared to the peer group median TSR of 41.5%.
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Annual Cash Award
Above (Below) Peer Group Medians |
| Position | | 2021 Actual | | 2021
Plan Design |
| CEO | | 37 | % | | (32) | % |
| All Other NEOs | | 43 | % | | (28) | % |
| All NEOs | | 36 | % | | (32) | % |
|
| | | | | | |
Annual Cash Award Above (Below) Peer Group Medians |
| Position | | 2018 Actual | | 2018 Plan Design |
| CEO | | (47 | )% | | (26 | )% |
| All Other NEOs | | 23 | % | | 50 | % |
| Total NEOs | | (8 | )% | | 16 | % |
Medium-Term Cash Award
(Summary Compensation Table, Column 6)5)
(Grants of Plan-Based Awards, Columns 3-4)
The Compensation Committee adopted the SPIP to provide senior management with an additional performance-based award basedcontingent upon the achievement of specified earnings objectives. The SPIP is a cash-based, pay‑for‑performancepay-for-performance award program that links our medium-term financial performance with the total cash compensation paid to senior management. The SPIP serves to complement our annual bonus program and the longer-term value creation potential provided by equity awards. Since the SPIP ties a large percentage of total potential compensation directly to our business results, the Compensation Committee believes this program underscores our pay‑for‑performancepay-for-performance philosophy and helps focus executive attention on longer-term strategic goals.
Payouts through the SPIP are based on the three-year compound annual growth rate (CAGR) of our diluted EPS. We believe EPS growth is one of the metrics that has shown a strong correlation with our stock price growth over the long term. The Compensation Committee believes that while the SPIP targets are aggressive, they are reasonable and provide both a fair reward and strong upside potential for our executives.
Under the terms of the SPIP, our NEOs are eligible to earn a maximum cash award of up to 200% of their base salary, with minimum targets based on a three-year EPS CAGR. For the 2021 SPIP grant, in response to significant changes in market conditions resulting from the pandemic and a corresponding sharp rise in our baseline EPS, the Compensation Committee amended the plan and changed the three‑year diluted EPS CAGR offor the minimum payout under the SPIP to 5% (previously 10%. ) and to 10% (previously 15%) for the target payout. The EPS CAGR for the maximum payout remained 20%, consistent with our historical grants. The Committee believes this change was necessary to deliver a meaningful incentive to our executives while continuing to maintain the plan’s rigor.
The Compensation Committee may authorize EPS adjustments as specified under the SPIP. By way of example, the table below presents the award, expressed as a percentage of an NEO’s salary, to be earned for the three-year performance period beginning January 1, 20182021 and ending December 31, 2020.2023. For this 20182021 grant, 20172020 adjusted diluted EPS of $3.99$8.42 serves as the baseline for the performance period, except that the Compensation Committee further considered the impact going forward of the lower tax rate under the TCJA and therefore increased the baseline EPS to $4.74, thereby increasing the rigor of the award.period.
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| CAGR | 2023 EPS | Salary % | | CAGR | 2023 EPS | Salary % |
| 5% | $ | 9.75 | | 50% | | 12% | $ | 11.83 | | 120% |
| 6% | 10.03 | | 60% | | 14% | 12.47 | 140% |
| 7% | 10.31 | | 70% | | 16% | 13.14 | 160% |
| 8% | 10.61 | | 80% | | 18% | 13.83 | 180% |
| 9% | 10.90 | | 90% | | 20% | 14.55 | 200% |
| 10% | 11.21 | | 100% | | | | |
|
| | | | | | | | | | |
| CAGR | 2020 EPS | Salary % | | CAGR | 2020 EPS | Salary % |
| 10% |
| $6.31 |
| 50% | | 16% |
| $7.40 |
| 120% |
| 11% | 6.48 |
| 60% | | 17% | 7.59 |
| 140% |
| 12% | 6.66 |
| 70% | | 18% | 7.79 |
| 160% |
| 13% | 6.84 |
| 80% | | 19% | 7.99 |
| 180% |
| 14% | 7.02 |
| 90% | | 20% | 8.19 |
| 200% |
| 15% | 7.21 |
| 100% | | | | |
The following table presents our three-year EPS CAGR and corresponding payouts as a percentage of base salaries for each of the last three fiscal years.
| | | | | | | | | | | | | | | | | |
Three-Year
Performance Period | | SPIP Payout as a Percentage of NEO Base Salaries | | Three-Year EPS CAGR | |
January 1, 2019 - December 31, 2021(1) | | 200.0 | % | | 42.4 | % | |
January 1, 2018 - December 31, 2020(2) | | 200.0 | % | | 21.1 | % | |
January 1, 2017 - December 31, 2019(3) | | 67.8 | % | | 11.8 | % | |
|
| | | | | | | |
Three-Year Performance Period | | SPIP Payout as a Percentage of NEO Base Salaries (1) | | Three-Year EPS CAGR | |
January 1, 2016 - December 31, 2018 (2) | | 101.6 | % | | 15.1 | % | |
January 1, 2015 - December 31, 2017 (3) | | 156.0 | % | | 17.8 | % | |
January 1, 2014 - December 31, 2016 (4) | | 186.0 | % | | 19.3 | % | |
| |
(2)Our earnings per share for the year ended December 31, 2020 was $8.97. We calculated the three-year EPS CAGR using 2020 adjusted diluted EPS of $8.42, which excludes a $0.15 impact from non-cash impairments and a $0.70 per diluted share tax benefit from ASU 2016-09. (3)Our earnings per share for the year ended December 31, 2019 was $6.40. We calculated the three-year EPS CAGR using 2019 adjusted diluted EPS of $4.86, which excludes a $1.54 per diluted share benefit from the lower federal tax rate under the TCJA and the tax benefit from ASU 2016-09. (1)
| Mr. Arvan joined our company in January 2017 and was not a participant in the SPIP for the performance period ended December 31, 2017; he did receive a pro‑rated payout for the performance period ended December 31, 2018. |
| |
(2)
| We calculated the three-year EPS CAGR using 2018 adjusted diluted EPS, which excludes a $1.20 per diluted share benefit from the lower federal tax rate under the TCJA and the tax benefit from ASU 2016-09. |
| |
(3)
| We calculated the three-year EPS CAGR using 2017 adjusted diluted EPS, which excludes a $0.28 per diluted share benefit from the impact of the TCJA and a $0.24 per diluted share benefit from the impact of ASU 2016-09. |
| |
(4)
| We calculated the three-year EPS CAGR using 2016 adjusted diluted EPS, which excludes a $0.01 per diluted share impact of a non-cash goodwill impairment charge. |
The following table presents
currently outstanding SPIP
awardsawards: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Grant Year | | Three-Year
Performance Period | | Baseline EPS | | EPS for Minimum Payout(4) | | EPS for Target Payout(4) | | EPS for Maximum Payout (4) |
| 2020 | | January 1, 2020 - December 31, 2022 | | $ | 5.83 | | (1) | $ | 7.76 | | | $ | 8.87 | | | $ | 10.07 | |
| 2021 | | January 1, 2021 - December 31, 2023 | | $ | 8.42 | | (2) | $ | 9.75 | | | $ | 11.21 | | | $ | 14.55 | |
| 2022 | | January 1, 2022 - December 31, 2024 | | $ | 15.18 | | (3) | $ | 17.57 | | | $ | 20.20 | | | $ | 26.23 | |
(1)The Compensation Committee set the baseline EPS at $5.83 per diluted share, which excludes a $0.57 per diluted share tax benefit related to ASU 2016-09.
(2)The Compensation Committee set the baseline EPS at $8.42 per diluted share, which excludes a $0.70 per diluted share tax benefit related to ASU 2016-09 and a $0.15 impact from non-cash impairment charges.
(3)The Compensation Committee set the baseline EPS at $15.18 per diluted share, which excludes a $0.70 per diluted share tax benefit related to ASU 2016-09 and a $0.05 benefit from the recovery of a previously impaired note.
(4)Prior to the 2021 SPIP grant, the minimum payout was based on three-year diluted EPS CAGR of 10%, the target payout was based on three-year diluted EPS CAGR of 15%, and the maximum payout was based on three-year diluted EPS CAGR of 20%. For the 2021 SPIP grant, in response to significant changes in market conditions resulting from the pandemic and a corresponding sharp rise in our baseline EPS, the Compensation Committee amended the plan and changed the three‑year diluted EPS CAGR for the minimum payout under the SPIP to 5% and to 10% for the target payout. The EPS CAGR for the maximum payout remained 20%, consistent with open performance periods as of January 1, 2019:our historical grants. The Committee believes this change was necessary to deliver a meaningful incentive to our executives while continuing to maintain the plan’s rigor.
|
| | | | | | | | | | | | | | |
| Grant Year | | Three-Year Performance Period | | Baseline EPS (1) | | Minimum EPS for Payout (10% CAGR) | | Maximum EPS for Payout (20% CAGR) |
| 2017 | | January 1, 2017 - December 31, 2019 | |
| $3.48 |
| |
| $4.63 |
| |
| $6.01 |
|
| 2018 | | January 1, 2018 - December 31, 2020 | |
| $4.74 |
| |
| $6.31 |
| |
| $8.19 |
|
| 2019 | | January 1, 2019 - December 31, 2021 | |
| $5.26 |
| |
| $7.00 |
| |
| $9.09 |
|
| |
(1)
| For the 2017 grant, 2016 adjusted diluted EPS of $3.48 serves as the baseline for the performance period. For the 2018 grant, 2017 adjusted diluted EPS of $3.99 serves as the baseline for the performance period, except that the Compensation Committee further considered the impact going forward of the lower tax rate under the TCJA and therefore increased the baseline EPS to $4.74, thereby increasing the rigor of the award. For the 2019 grant, the Compensation Committee set the baseline EPS at $5.26 per diluted share, which excludes a $0.36 per diluted share benefit from ASU 2016-09 from 2018 diluted EPS. |
Long-Term Equity Award
(Summary Compensation Table, Columns 4-5)Column 4)
(Grants of Plan-Based Awards, Columns 5-8)Column 6)
(Outstanding Equity Awards at Fiscal Year-End)
Equity grants are a key element of our total compensation package. Our approach to long-term equityWe offer both stock options and performance-based restricted stock awards to our NEOs, consists of stock options and restricted stock awards, both of which provide retention value through the imposition of cliff vesting conditions. Beginning in 2016, in an effort to place an even greater emphasisconditions and also focus our NEOs on performance, the Compensation Committee granted performance‑based restricted stock awards to our NEOs. While still subject to time-based cliff vesting conditions, these awards are further subjected to performance-based vesting criteria as discussed in more detail below.Company performance.
The Compensation Committee determines individual equity grant awards based on relevant market data and each respective employee’s responsibilityresponsibilities and performance. We believe that restricted stock awards reward performance because the ultimate value of the shares depends on our Company’s long-term performance. Restricted stock awards convey all the rights of a stockholder, including the right to vote and receive dividends, but recipients may not sell or transfer the shares until they are fully vested. Similarly, we believe that long-term equity awards in the form of stock options align executive performance with stockholder interests because employees have a vested interest in our stock performance and the option’s value only appreciates from stock price improvement after the grant date. Similarly, we believe that restricted stock awards reward performance because the ultimate value of the shares depends upon our Company’s long-term performance. Restricted stock awards convey all the rights of a stockholder, including the right to vote and receive dividends, but recipients may not sell or transfer the shares until they are fully vested. The Compensation Committee believes that in times of economic volatility, restricted stock awards can play an important role in retention and motivation that stock options alone cannot.
We use the following service-based equity vesting schedules to encourage employee equity holding and employment retention:
|
| | | | | | | |
| Employee’s Length of Service to the Company | | Award Vesting Schedule |
| Less than five years | | 100% vest five years after the grant date |
| More than five years | | 50% vest three years after the grant date 50% vest five years after the grant date |
Beginning with the 2016 equity grants, restrictedRestricted stock awards to our employees contain performance-based vesting criteria in addition to the service-based vesting criteria discussed above. The awards provide for a three-year performance period for the metric to be achieved. If the performance metric fails to be met, the performance period may be extended; however, if the metric is not met by the end of the extended performance period, then all shares of performance-based restricted stock will be immediately forfeited and canceled for these grants.
Under the performance-based vesting criteria for restricted stock awards granted in 2018,2021, these shares will vest (subject to satisfaction of the service condition) based on our achievement of a three-year ROIC target of 10% established at the beginning of the performance period. We believe ROIC is an important indicator of financial health and company growth and is consistent with our compensation philosophy that compensation must be linked to continuous improvements in corporate performance. Further, after reviewing our peer companies’ proxy statements, we noted that ROIC was among the most widely used of the financial metrics for performance-based compensation. For more information on our ROIC calculation and 20182021 results, please see the “Annual Incentive Plan” section above.
In 2018,2021, the Compensation Committee allowed each of the NEOs to elect to receive his or her equity grant in the form of performance‑basedperformance-based restricted stock awards, stock options, or some reasonablea combination of the two. The Compensation Committee believes that both stock options and restricted stock awards are closely aligned with the interests of stockholders and by offering our NEOs this choice, it serves our objectives of retention and motivation. Mr. Perez de la Mesa elected to receive 50%In 2021, each of his equity award as performance‑based restricted stock awards and 50% as stock options. Messrs. Joslin, Arvan, Cook and St. Romain eachour NEOs elected to receive 100% of their respective equity awards in the form of performance-based restricted stock awards.
In determining the above awards, we used a ratio of 2.5 stock options to 1.0 restricted share. This ratio reflects the Compensation Committee’s estimate of equivalent fair value amounts for stock options and restricted stock awards. This estimate is based on the average of a range of fair value estimates for stock option awards, assuming that the stock options would have an expected term of 10 years (held for the full contractual term) and an estimated dividend yield rate of 1.5%. By way of example, Mr. Perez de la Mesa was entitled to receive 36,000 stock option equivalents. He could have elected to receive either 36,000 stock options, 14,400 restricted stock awards, or a combination of the two forms of equity. Mr. Perez de la Mesa chose to receive his 2018 equity grant in the form of 50% stock options and 50% restricted stock awards, which resulted in an award of 18,000 stock options and 7,200 restricted stock awards.
Based on the total grant date fair value of equity-based awards granted in 2018,2021, the equity-based awards granted to Mr. Perez de la MesaArvan as CEO were approximately 1.84.5 times the average total fair value of the equity-based awards to our other NEOs in recognition of his substantially greater responsibilities. Mr. Perez de la Mesa’sArvan’s duties and responsibilities encompassed all aspects of our management and operations and were greater in scope and collectively more significant in nature than those of our other NEOs.
Based on the 20182021 equity grants and as noted in the table below, 20182021 total equity compensation for all of our NEOs was in line withless than the peer group median for the most recent fiscal year reported.
The table below presents the percentage variances between our 2018 actual total equity compensation amounts and the peer group median total equity compensation amounts. As previously discussed, allwe valued peer stock option awards are valued based on the number of stock options awarded multiplied by 40% of the option’s exercise price.
.
|
| | | | | | | |
Total Equity Compensation Above (Below) Peer Group Medians (1)
|
| Position | | 2018
2021
Actual |
| CEO | | (32(11) | )% |
| All Other NEOs | | 65(6) | % |
TotalAll NEOs | | 12(15) | % |
| |
(1)(1)Our Compensation Committee granted equity awards for fiscal 2021 in February 2021. At that time, peer group compensation data for 2020 was not available. Therefore, the peer group median amounts used for comparison in the above table were calculated primarily using 2019 compensation data.
| Our Compensation Committee granted equity awards for fiscal 2018 in February 2018. At that time, peer group compensation data for 2017 was not available. Therefore, the peer group median amounts used for comparison in the above table were calculated primarily using 2016 compensation data. |
Currently, the Compensation Committee grants annual equity awards at theirduring the first meetingquarter of theeach year, which is normally heldtypically in February. This annual grant coincides with the annual performance review and compensation adjustment cycle. StockIf granted, stock options are granted atwith an exercise price equal to our stock’s closing price on the grant date. The Compensation Committee may also grant equity awards to employees hired during the year. As an employee’s responsibility increases, equity grants become a greater percentage of his or her total compensation, equating to more at-risk compensation for higher level employees.
Stock Ownership Guidelines
The Compensation Committee believes that our executives and directors should have a significant equity interest in the Company to create an owner’s perspective in managing our Company and to further align their interests and actions with the interests of our stockholders. Our Board maintains stock ownership guidelines that generally require within five years of appointment for NEOs or three years of appointment for directors, our NEOs and directors hold shares of Common Stock or stock equivalents with a market value as follows:
|
| | | | | | | |
| Position | | Equity Ownership Guidelines |
| CEO | | 5x base salary |
| Vice presidents | | 2x base salary |
| Directors (other than the CEO) | | 3x annual cash retainer |
The Compensation Committee reviews compliance with the stock ownership guidelines annually, and all NEOs and directors are presently in compliance with the guidelines.
Retirement and Savings Plans
(Summary Compensation Table, Column 7)6)
(Nonqualified Deferred Compensation)
The Pool Corporation 401(k) Plan (the 401(k) Plan), which is generally available to both management and non-management personnel, allows eligible employees to defer eligible compensation up to the Internal Revenue Code limit. For 2018,2021, the limit was $18,500,$19,500, or $24,500$26,000 for participants who attained the age of 50 during the plan year. We contribute a 100% match on the first 3% of eligible compensation deferred, a 50% match on deferrals between 3% and 5% and no match on deferrals over 5%.
The PoolCorp Nonqualified Deferred Compensation Plan (the Deferred Compensation Plan) allows certain employees who occupy key management positions (including all of the NEOs) to defer eligible cash compensation and enables participants to receive matching contributions on the same percentage of eligible compensation as offered under the 401(k) Plan. Our total Company matching contributions given to a participant under the 401(k) Plan and the Deferred Compensation Plan during any one year may not exceed 4% of a participant’s eligible cash compensation. The purpose of the Deferred Compensation Plan is to make total retirement benefits for our employees who earn over the qualified plan limits commensurate with those available to other employees as a percentage of pay.
We do not provide any defined benefit pension arrangements nor do we provide any other compensation arrangements to our NEOs other than those discussed in this proxy statement or available to all Company employees.
Perquisites
(Summary Compensation Table, Column 7)6)
Our philosophy isWe believe that perquisites should be limited. In line with this philosophy, our executives are offered few benefits that are not generally available to all of our employees. We provide certain employees, including the NEOs, with a company vehicle, including maintenance, insurance and fuel. We allow these employees to use their vehicles for personal and business reasons. Officers may choose to purchase their company vehicle at book value at any point. Additionally, we waive medical and dental monthly premiums for each of the NEOs. The Company does not own any aircraft or have any contract for air charter service and does not reimburse NEOs for club or like memberships. Excluding benefits available to all full‑timefull-time employees, NEO benefits and other compensation represent approximately 3.5%3.1% of the NEO total compensation in the aggregate.
Other Compensation Matters
Post-Employment Matters
Under Mr. Arvan’s employment agreement, if the Company terminates his employment other than for cause, he will receive his base salary for a period of six months. In the event Mr. Arvan’s employment is terminated before his 2017 and 2018 equity awards vest, he will retain a pro rata share of such grants. The agreement also provides that Mr. Arvan may not compete with the Company for two years following the termination of his employment. Our other NEOs have also signed employment agreements, which entitle them to receive their respective base salaries for a period of three months if terminated for reasons other than cause, and which prevent them from competing with the Company for one year following such termination.
The Compensation Committee believes these provisions are necessary to recruit highly talented executives and are conservative considering current market conditions and competing businesses. Further, the Compensation Committee believes that these post‑employmentpost-employment payment levels are below the general practice among comparable companies. Our NEOs are not entitled to any change of control or “parachute” payments or benefits other than accelerated vesting of their outstanding equity awards in the case of a qualifying termination within two years of a change of control as further described in the “Potential Payments Upon Termination of Employment or Change of Control” section of our Executive Compensation discussion.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF POOL CORPORATION
FOR THE YEAR ENDED DECEMBER 31, 20182021
The Compensation Committee of the Board of Directors has reviewed and discussed with management the Company’s Compensation Discussion and Analysis set forth above and based on that review and discussion has recommended to the Board of Directors that such Compensation Discussion and Analysis be incorporated by reference in the Company’s Annual Report on Form 10-K and included in this Proxy Statement.
COMPENSATION COMMITTEE
Harlan F. Seymour, Chairman
Andrew W. CodeMartha S. Gervasi
Debra S. Oler
Robert C. Sledd
The Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and shall not be deemed filed under such Acts.
EXECUTIVE COMPENSATION
The Summary Compensation Table below summarizes the total compensation of our NEOs in 2018.2021. Based on the totals of the amounts included in the 20182021 Summary Compensation Table, base salary accounted for approximately 17%12% of the total compensation for the NEOs while our annual and medium-term cash awards accounted for approximately 27%45% of the total compensation for the NEOs. As discussed in our “Compensation Philosophy and Objectives” in the CD&A above, our NEOs have a larger proportion of their total compensation opportunity delivered through pay-for-performance cash awards and long-term equity. For example, Mr. Perez de la Mesa,Arvan, our CEO, during 2018, had the largest proportion of total compensation delivered through pay-for-performance cash awards and long-term equity compensation.
FISCAL 20182021 SUMMARY COMPENSATION TABLE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Salary | | Stock Awards (2) | | Non-Equity Incentive Plan Compensation (3) | | All Other Compensation (4) | | Total |
| Peter D. Arvan | | 2021 | | $ | 525,000 | | | $ | 2,889,832 | | | $ | 2,100,000 | | | $ | 60,552 | | | $ | 5,575,384 | |
| President and Chief Executive Officer | | 2020 | | 500,000 | | | 2,481,713 | | | 2,000,000 | | | 75,624 | | | 5,057,337 | |
| | 2019 | | 480,000 | | | 2,088,580 | | | 647,246 | | | 74,394 | | | 3,290,220 | |
Melanie M. Hart (1) | | 2021 | | 250,000 | | | 516,229 | | | 875,000 | | | 44,257 | | | 1,685,486 | |
| Vice President and | | | | | | | | | | | | |
| Chief Financial Officer | | | | | | | | | | | | |
Jeffrey M. Clay (1) | | 2021 | | 280,000 | | | 464,343 | | | 793,352 | | | 40,067 | | | 1,577,762 | |
| President, Horizon Distributors, Inc. | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Jennifer M. Neil | | 2021 | | 270,000 | | | 464,343 | | | 945,000 | | | 81,219 | | | 1,760,562 | |
| Vice President, Secretary and | | 2020 | | 250,000 | | | 477,422 | | | 875,000 | | | 51,485 | | | 1,653,907 | |
| Chief Legal Officer | | 2019 | | 205,000 | | | 388,797 | | | 296,789 | | | 46,946 | | | 937,532 | |
| Kenneth G. St. Romain | | 2021 | | 335,000 | | | 877,458 | | | 1,172,500 | | | 102,867 | | | 2,487,825 | |
| Group Vice President | | 2020 | | 325,000 | | | 947,143 | | | 1,137,500 | | | 65,846 | | | 2,475,489 | |
| | 2019 | | 317,000 | | | 825,792 | | | 398,858 | | | 84,114 | | | 1,625,764 | |
| Mark W. Joslin | | 2021 | | 243,750 | | | 866,950 | | | 1,137,500 | | | 150,679 | | | 2,398,879 | |
| Former Senior Vice President and | | 2020 | | 318,000 | | | 943,843 | | | 1,113,000 | | | 57,730 | | | 2,432,573 | |
| Chief Financial Officer | | 2019 | | 305,000 | | | 825,792 | | | 400,520 | | | 55,193 | | | 1,586,505 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position (1) | | Year | | Salary | | Stock
Awards (2) | | Option Awards (3) | | Non-Equity Incentive Plan Compensation (4) | | All Other Compensation (5) | | Total |
| Manuel J. Perez de la Mesa | | 2018 | | $ | 500,000 |
| | $ | 993,816 |
| | $ | 809,460 |
| | $ | 864,879 |
| | $ | 114,310 |
| | $ | 3,282,465 |
|
| President and Chief | | 2017 | | 490,000 |
| | 1,053,360 |
| | 957,600 |
| | 1,244,600 |
| | 114,215 |
| | 3,859,775 |
|
| Executive Officer | | 2016 | | 480,000 |
| | 1,050,360 |
| | 859,650 |
| | 1,698,357 |
| | 89,151 |
| | 4,177,518 |
|
| Mark W. Joslin | | 2018 | | 295,000 |
| | 828,180 |
| | — |
| | 502,586 |
| | 67,456 |
| | 1,693,222 |
|
| Senior Vice President and | | 2017 | | 287,000 |
| | 877,800 |
| | — |
| | 668,796 |
| | 90,148 |
| | 1,923,744 |
|
| Chief Financial Officer | | 2016 | | 279,000 |
| | 727,020 |
| | — |
| | 874,175 |
| | 59,605 |
| | 1,939,800 |
|
| Peter D. Arvan | | 2018 | | 440,000 |
| | 1,518,330 |
| | — |
| | 537,478 |
| | 60,180 |
| | 2,555,988 |
|
| Executive Vice President and | | 2017 | | 400,000 |
| | 1,500,014 |
| | — |
| | 337,960 |
| | 36,979 |
| | 2,274,953 |
|
| Chief Operating Officer | | | | | | | | | | | | | | |
| A. David Cook | | 2018 | | 317,000 |
| | 828,180 |
| | — |
| | 624,847 |
| | 70,586 |
| | 1,840,613 |
|
| Group Vice President | | 2017 | | 307,000 |
| | 877,800 |
| | — |
| | 756,141 |
| | 73,321 |
| | 2,014,262 |
|
| | | 2016 | | 301,000 |
| | 727,020 |
| | — |
| | 902,471 |
| | 49,418 |
| | 1,979,909 |
|
| Kenneth G. St. Romain | | 2018 | | 310,000 |
| | 828,180 |
| | — |
| | 492,981 |
| | 81,217 |
| | 1,712,378 |
|
| Group Vice President | | 2017 | | 300,000 |
| | 877,800 |
| | — |
| | 682,800 |
| | 83,352 |
| | 1,943,952 |
|
| | | 2016 | | 290,000 |
| | 727,020 |
| | — |
| | 909,510 |
| | 68,927 |
| | 1,995,457 |
|
| |
(1)
| Mr. Perez de la Mesa retired from his position as president and CEO effective December 31, 2018; the Board appointed Mr. Arvan as president and CEO effective January 1, 2019. |
| |
(2)
| Amounts shown do not reflect compensation actually received by the NEOs. Instead, these amounts reflect the total estimated grant date fair value for the stock awards, which is based on the closing price of our Common Stock on the date of grant in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) |
(2)Amounts shown do not reflect compensation actually received by the NEOs. Instead, these amounts reflect the total estimated grant date fair value for the performance-based restricted stock awards, which is based on the closing price of our Common Stock on the date of grant in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. For more information on the stock grants awarded to our NEOs in 2018,2021, please see the Fiscal 20182021 Grants of Plan-Based Awards table below.
| |
(3)
| Amounts shown do not reflect compensation actually received by the NEOs. Instead, these amounts reflect the total estimated grant date fair value for option awards, determined using the Black-Scholes option valuation method in accordance with FASB ASC Topic 718. Information related to assumptions used in the calculation of the estimated fair value of option awards granted in 2016, 2017 and 2018 are included in Note 6 to our audited financial statements included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on February 27, 2019. |
| |
(4)
| The amounts for each NEO consist of payouts under our annual cash performance award program and our SPIP, as set forth below: |
|
| | | | | | | | | | |
| Name | | Year | | Annual Cash Performance Award | | SPIP Payout |
| Mr. Perez de la Mesa | | 2018 | | $ | 356,661 |
| | $ | 508,218 |
|
| | | 2017 | | 480,200 |
| | 764,400 |
|
| | | 2016 | | 806,400 |
| | 891,957 |
|
| Mr. Joslin | | 2018 | | 202,737 |
| | 299,849 |
|
| | | 2017 | | 221,076 |
| | 447,720 |
|
| | | 2016 | | 355,725 |
| | 518,450 |
|
| Mr. Arvan | | 2018 | | 313,862 |
| | 223,616 |
|
| | | 2017 | | 337,960 |
| | — |
|
| Mr. Cook | | 2018 | | 302,637 |
| | 322,210 |
|
| | | 2017 | | 277,221 |
| | 478,920 |
|
| | | 2016 | | 343,140 |
| | 559,331 |
|
| Mr. St. Romain | | 2018 | | 177,886 |
| | 315,095 |
|
| | | 2017 | | 214,800 |
| | 468,000 |
|
| | | 2016 | | 370,620 |
| | 538,890 |
|
| | | | | | | | | | | | | | | | | | | | |
| Name | | Year | | Annual Cash
Performance Award | | SPIP Payout |
| Mr. Arvan | | 2021 | | $ | 1,050,000 | | | $ | 1,050,000 | |
| | 2020 | | 1,000,000 | | | 1,000,000 | |
| | 2019 | | 321,951 | | | 325,295 | |
| Mrs. Hart | | 2021 | | 375,000 | | | 500,000 | |
| Mr. Clay | | 2021 | | 420,000 | | | 373,352 | |
| Ms. Neil | | 2021 | | 405,000 | | | 540,000 | |
| | 2020 | | 375,000 | | | 500,000 | |
| | 2019 | | 157,861 | | | 138,928 | |
| Mr. St. Romain | | 2021 | | 502,500 | | | 670,000 | |
| | 2020 | | 487,500 | | | 650,000 | |
| | 2019 | | 184,028 | | | 214,830 | |
| Mr. Joslin | | 2021 | | 487,500 | | | 650,000 | |
| | 2020 | | 477,000 | | | 636,000 | |
| | 2019 | | 193,822 | | | 206,698 | |
| |
(5)(4)For details of the components of this category, please see the following All Other Compensation Table below. | For details of the components of this category, please see the following All Other Compensation Table below. |
ALL OTHER COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Year | | Company Matching
Contributions
to Defined
Contribution
Plans | | Vehicle (1) | | Other (2) |
| Mr. Arvan | | 2021 | | $ | 29,488 | | | $ | 17,130 | | | $ | 13,934 | |
| | 2020 | | 45,868 | | | 17,602 | | | 12,154 | |
| | 2019 | | 40,662 | | | 17,349 | | | 16,383 | |
| Mrs. Hart | | 2021 | | 11,600 | | | 15,975 | | | 16,682 | |
| Mr. Clay | | 2021 | | 10,646 | | | 19,392 | | | 10,029 | |
| Ms. Neil | | 2021 | | 45,772 | | | 23,234 | | | 12,213 | |
| | 2020 | | 20,737 | | | 19,412 | | | 11,336 | |
| | 2019 | | 15,835 | | | 19,432 | | | 11,679 | |
| Mr. St. Romain | | 2021 | | 58,886 | | | 23,453 | | | 20,528 | |
| | 2020 | | 28,946 | | | 20,394 | | | 16,506 | |
| | 2019 | | 32,393 | | | 21,346 | | | 30,375 | |
| Mr. Joslin | | 2021 | | 21,462 | | | 84,268 | | | 44,949 | |
| | 2020 | | 27,965 | | | 15,439 | | | 14,326 | |
| | 2019 | | 21,252 | | | 17,265 | | | 16,676 | |
The following table describes
(1)Reflects amounts related to vehicle depreciation, maintenance and insurance expenses for vehicles provided to the componentsNEOs, which may be used for both business and personal purposes. Mr. Joslin’s 2021 total includes $63,761 related to his purchase of his company vehicle.
(2)Includes medical, dental, and disability insurance premiums and the All Other Compensation columnrelated tax gross-up amounts. In 2021, for Mr. Joslin this amount also includes $28,750 he received for unused paid time off at the time of his retirement. In 2019, for Messrs. Arvan and St. Romain, this amount also includes fringe-related travel expenses and the Summary Compensation Table.related tax gross-up amounts.
|
| | | | | | | | | | | | | | |
| Name | | Year | | Company Matching Contributions to Defined Contribution Plans | | Vehicle (1) | | Other (2) |
| Mr. Perez de la Mesa | | 2018 | | $ | 69,776 |
| | $ | 33,194 |
| | $ | 11,340 |
|
| | | 2017 | | 87,526 |
| | 14,379 |
| | 12,310 |
|
| | | 2016 | | 65,513 |
| | 14,386 |
| | 9,252 |
|
| Mr. Joslin | | 2018 | | 38,546 |
| | 15,437 |
| | 13,473 |
|
| | | 2017 | | 56,810 |
| | 19,846 |
| | 13,492 |
|
| | | 2016 | | 37,646 |
| | 12,539 |
| | 9,420 |
|
| Mr. Arvan | | 2018 | | 31,088 |
| | 17,471 |
| | 11,621 |
|
| | | 2017 | | 14,770 |
| | 13,537 |
| | 8,672 |
|
| Mr. Cook | | 2018 | | 42,918 |
| | 13,633 |
| | 14,035 |
|
| | | 2017 | | 48,374 |
| | 14,585 |
| | 10,362 |
|
| | | 2016 | | 20,594 |
| | 21,564 |
| | 7,260 |
|
| Mr. St. Romain | | 2018 | | 39,704 |
| | 26,117 |
| | 15,396 |
|
| | | 2017 | | 48,373 |
| | 19,420 |
| | 15,559 |
|
| | | 2016 | | 35,794 |
| | 19,628 |
| | 13,505 |
|
| |
(1)
| Reflects amounts related to vehicle depreciation, maintenance and insurance expenses for vehicles provided to the NEOs, which may be used for both business and personal purposes. Mr. Perez de la Mesa’s 2018 total includes $23,399 in other compensation related to his purchase of a company vehicle, and Mr. St. Romain’s 2018 total includes $6,819 in other compensation related to the sale of his company vehicle. |
| |
(2)
| Includes medical, dental, and disability insurance premiums and the related tax gross-up amounts. |
PAY RATIO DISCLOSURE
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC recently adopted a rule requiring public companies to disclose the ratio of the compensation of its CEO to the median compensation of its employees.
The following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other employees. As allowed byunder the SEC’s final rule,SEC rules, we useddecided to keep the same median employee in our 2018 pay ratio calculation as identified in our year one calculation. In 2017, wefor the second of three years allowed. We identified our median employee by examining the 20172020 total cash compensation for all employees, excluding the CEO, who were employed by us on December 31, 2017.2020. As permitted, we excluded certain non-U.S. employees representing less than 5% of our total employee population of approximately 4,200.4,500 at the time. Specifically, we excluded from our employee population all individuals employed in Australia (75)(78), the United Kingdom (25)(24), Mexico (30),(18) and Colombia (2)Croatia (6), totaling 132126 employees, or just overunder 3% of our employee population. As both our total employee population and excluded employee population as of December 31, 2018 is consistent with last year’s, and our compensation arrangements remain similar, we believe it is appropriate to useAfter identifying the same median employee for our 2018 disclosure. We do not believe any changes made in 2018 would significantly affect our pay ratio disclosure.
Webased on total cash compensation, we calculated the annual total compensation for our medianthis employee using the same methodology we use for our NEOs as set forth in the 20182021 Summary Compensation Table above. See the table below for the results of our analysis.
| | | | | |
| Median employee annual total compensation | $ | 61,709 | |
| Mr. Arvan annual total compensation | $ | 5,575,384 | |
| Ratio of CEO to median employee compensation | 90:1 |
The SEC rules permit companies to choose between different methodologies for median pay calculations. Other public companies may calculate their pay ratio differently than we do, and you should not assume that our pay ratio data is comparable to that of other companies.
|
| | | |
| Median employee annual total compensation | $ | 43,800 |
|
| Mr. Perez de la Mesa annual total compensation | $ | 3,282,465 |
|
| Ratio of CEO to median employee compensation | 75:1 |
|
The Grants of Plan-Based Awards Tabletable below sets forth information about the cash plan awards and equity plan awards to our NEOs in 2018.2021.
FISCAL 20182021 GRANTS OF PLAN-BASED AWARDS
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Grant Date | Estimated Future
Payouts Under
Non-Equity Incentive
Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards
Target
(#) | Grant Date
Fair Value of Stock and
Option
Awards
($) |
Threshold
($) | Target
($) | Maximum
($) |
| Mr. Arvan | 02/24/2021 | (1) | N/A | N/A | N/A | 8,800 | (4) | 2,889,832 |
| 02/24/2021 | (2) | N/A | 525,000 | | 1,050,000 | | N/A | | N/A |
| 02/24/2021 | (3) | 262,500 | | 525,000 | | 1,050,000 | | N/A | | N/A |
| Mrs. Hart | 02/24/2021 | (1) | N/A | N/A | N/A | 1,572 | | 516,229 |
| 02/24/2021 | (2) | N/A | 187,500 | | 375,000 | | N/A | | N/A |
| 02/24/2021 | (3) | 125,000 | | 250,000 | | 500,000 | | N/A | | N/A |
| Mr. Clay | 02/24/2021 | (1) | N/A | N/A | N/A | 1,414 | (4) | 464,343 |
| 02/24/2021 | (2) | N/A | 210,000 | | 420,000 | | N/A | | N/A |
| 02/24/2021 | (3) | 140,000 | | 280,000 | | 560,000 | | N/A | | N/A |
| Ms. Neil | 02/24/2021 | (1) | N/A | N/A | N/A | 1,414 | (4) | 464,343 |
| 02/24/2021 | (2) | N/A | 202,500 | | 405,000 | | N/A | | N/A |
| 02/24/2021 | (3) | 135,000 | | 270,000 | | 540,000 | | N/A | | N/A |
| Mr. St. Romain | 02/24/2021 | (1) | N/A | N/A | N/A | 2,672 | (4) | 877,458 |
| 02/24/2021 | (2) | N/A | 251,250 | | 502,500 | | N/A | | N/A |
| 02/24/2021 | (3) | 167,500 | | 335,000 | | 670,000 | | N/A | | N/A |
| Mr. Joslin | 02/24/2021 | (1) | N/A | N/A | N/A | 2,640 | (4) | 866,950 |
| 02/24/2021 | (2) | N/A | 243,750 | | 487,500 | | N/A | | N/A |
| 02/24/2021 | (3) | 162,500 | | 325,000 | | 650,000 | | N/A | | N/A |
(1)Reflects performance-based restricted stock granted under our 2007 LTIP.
(2)Reflects grants under our annual cash bonus program. See Compensation Discussion and Analysis, “Annual Incentive Plan.” The target and maximum amounts included in this table reflect the potential payments based on 2021 performance; the actual annual performance award payment amounts for 2021 are included in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table. The target payouts in this table reflect 100% of the 2021 base salary amount for Mr. Arvan and 75% of the 2021 base salary amounts for the other NEOs. The maximum potential payouts are 200% of 2021 base salary for Mr. Arvan and 150% of 2021 base salary amounts for the other NEOs.
(3)Reflects grants under our SPIP for the three-year performance period that commenced January 1, 2021 and will end December 31, 2023. For all NEOs, target SPIP payout amounts are based on 100% of 2021 base salaries, the threshold SPIP payment amounts reflect 50% of the 2021 base salaries, and the maximum potential SPIP payout amounts reflect 200% of 2021 base salaries.
(4)Each of these performance-based restricted stock grants cliff vests 50% after three years and 50% after five years, except for Mr. Arvan’s and Mr. Clay’s grants, which vest 100% after five years, in all cases subject to the achievement of applicable performance criteria. See Compensation Discussion and Analysis “Long-Term Equity Award” for a discussion of the criteria.
|
| | | | | | | | | | | | | | | |
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards Target (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) |
Threshold
($) | Target ($) | Maximum ($) |
| Manuel J. Perez de la Mesa | 02/28/2018 | (1) | N/A |
| N/A |
| N/A |
| N/A | | 18,000 | (4) | 138.03 | 809,460 |
|
| | 02/28/2018 | (1) | N/A |
| N/A |
| N/A |
| 7,200 | (5) | N/A | | N/A | 993,816 |
|
| | 02/28/2018 | (2) | N/A |
| 500,000 |
| 1,000,000 |
| N/A | | N/A | | N/A | N/A |
|
| | 02/28/2018 | (3) | 250,000 |
| 500,000 |
| 1,000,000 |
| N/A | | N/A | | N/A | N/A |
|
| Mark W. Joslin | 02/28/2018 | (1) | N/A |
| N/A |
| N/A |
| 6,000 | (5) | N/A | | N/A | 828,180 |
|
| | 02/28/2018 | (2) | N/A |
| 221,250 |
| 442,500 |
| N/A | | N/A | | N/A | N/A |
|
| | 02/28/2018 | (3) | 147,500 |
| 295,000 |
| 590,000 |
| N/A | | N/A | | N/A | N/A |
|
| Peter D. Arvan | 02/28/2018 | (1) | N/A |
| N/A |
| N/A |
| 11,000 | (5) | N/A | | N/A | 1,518,330 |
|
| | 02/28/2018 | (2) | N/A |
| 440,000 |
| 880,000 |
| N/A | | N/A | | N/A | N/A |
|
| | 02/28/2018 | (3) | 220,000 |
| 440,000 |
| 880,000 |
| N/A | | N/A | | N/A | N/A |
|
| A. David Cook | 02/28/2018 | (1) | N/A |
| N/A |
| N/A |
| 6,000 | (5) | N/A | | N/A | 828,180 |
|
| | 02/28/2018 | (2) | N/A |
| 317,000 |
| 634,000 |
| N/A | | N/A | | N/A | N/A |
|
| | 02/28/2018 | (3) | 158,500 |
| 317,000 |
| 634,000 |
| N/A | | N/A | | N/A | N/A |
|
| Kenneth G. St. Romain | 02/28/2018 | (1) | N/A |
| N/A |
| N/A |
| 6,000 | (5) | N/A | | N/A | 828,180 |
|
| | 02/28/2018 | (2) | N/A |
| 232,500 |
| 465,000 |
| N/A | | N/A | | N/A | N/A |
|
| | 02/28/2018 | (3) | 155,000 |
| 310,000 |
| 620,000 |
| N/A | | N/A | | N/A | N/A |
|
| |
(1)
| Granted under our 2007 LTIP. |
| |
(2)
| Reflects grants under our Annual Bonus Program. See Compensation Discussion and Analysis, “Annual Incentive Plan.” The target and maximum amounts included in this table reflect the potential payments based on 2018 performance; the actual annual performance award payment amounts for 2018 are disclosed in the “Non‑Equity Incentive Plan Compensation” column in the Summary Compensation Table. The target payouts included in this table reflect 100% of the 2018 base salary amount for Messrs. Perez de la Mesa, Arvan and Cook and 75% of the 2018 base salary amounts for Messrs. Joslin and St. Romain. The maximum potential payouts are 200% for Messrs. Perez de la Mesa, Arvan and Cook and 150% for Messrs. Joslin and St. Romain.
|
| |
(3)
| Reflects grants under our SPIP for the three-year performance period that commenced January 1, 2018 and will end December 31, 2020. Target SPIP payout amounts are based on 100% of 2018 base salaries for each NEO. The threshold SPIP payments reflect 50% of the 2018 base salaries and the maximum potential SPIP payouts reflect 200% of 2018 base salaries. |
| |
(4)
| This stock option grant cliff vests 50% after three years and 50% after five years. |
| |
(5)
| Each of these restricted stock grants cliff vests 50% after three years and 50% after five years, except for Mr. Arvan’s grant, which vests 100% after five years, in all cases subject to the achievement of applicable performance criteria. See Compensation Discussion and Analysis “Long-Term Equity Award” for a discussion of the criteria.
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | Stock Awards |
| Name | Grant
Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities
Underlying
Unexercised Options (#) Unexercisable | Option
Exercise Price
($/Sh) | Option
Expiration
Date | Number of
Shares or Units
of Stock that Have Not Vested (#) | Market Value of Shares or Units
that Have Not Vested
($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
| Mr. Arvan | 01/03/17 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 14,335 | (1) | 8,113,610 | (14) |
| 02/28/18 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 11,000 | (2) | 6,226,000 | (14) |
| 02/27/19 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 13,000 | (3) | 7,358,000 | (14) |
| 02/26/20 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 11,280 | (4) | 6,384,480 | (14) |
| 02/24/21 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 8,800 | (5) | 4,980,800 | (14) |
| Mrs. Hart | 02/27/13 | 2,500 | — | | | 45.61 | | 02/27/23 | N/A | | N/A | | N/A | | N/A | |
| 02/27/14 | 2,500 | — | | | 58.26 | | 02/27/24 | N/A | | N/A | | N/A | | N/A | |
| 02/26/15 | 1,250 | — | | | 69.85 | | 02/26/25 | N/A | | N/A | | N/A | | N/A | |
| 02/25/16 | 2,750 | — | | | 80.78 | | 02/25/26 | N/A | | N/A | | N/A | | N/A | |
| 03/01/17 | 1,375 | 1,375 | (6) | 117.04 | | 03/01/27 | N/A | | N/A | | 550 | (8) | 311,300 | (14) |
| 02/28/18 | 1,250 | 1,250 | (7) | 138.03 | | 02/28/28 | N/A | | N/A | | 500 | (9) | 283,000 | (14) |
| 02/27/19 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 1,720 | (10) | 973,520 | (14) |
| 02/26/20 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 1,595 | (11) | 902,770 | (14) |
| 02/24/21 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 1,572 | (12) | 889,752 | (14) |
| Mr. Clay | 03/23/20 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 2,410 | (13) | 1,364,060 | (14) |
| 02/24/21 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 1,414 | (5) | 800,324 | (14) |
| Ms. Neil | 03/01/17 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 1,600 | (8) | 905,600 | (14) |
| 02/28/18 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 1,360 | (9) | 769,760 | (14) |
| 02/27/19 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 2,420 | (10) | 1,369,720 | (14) |
| 02/26/20 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 2,170 | (11) | 1,228,220 | (14) |
| 02/24/21 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 1,414 | (12) | 800,324 | (14) |
| Mr. St. Romain | 03/01/17 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 3,750 | (8) | 2,122,500 | (14) |
| 02/28/18 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 3,000 | (9) | 1,698,000 | (14) |
| 02/27/19 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 5,140 | (10) | 2,909,240 | (14) |
| 02/26/20 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 4,305 | (11) | 2,436,630 | (14) |
| 02/24/21 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 2,672 | (12) | 1,512,352 | (14) |
| Mr. Joslin | 03/01/17 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 3,750 | (8) | 2,122,500 | (14) |
| 02/28/18 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 3,000 | (9) | 1,698,000 | (14) |
| 02/27/19 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 5,140 | (10) | 2,909,240 | (14) |
| 02/26/20 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 4,290 | (11) | 2,428,140 | (14) |
| 02/24/21 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 2,640 | (12) | 1,494,240 | (14) |
(1)These shares vested on January 3, 2022.
(2)These shares will vest on February 28, 2023 if the performance-based vesting criteria is met.
(3)These shares will vest on February 27, 2024 if the performance-based vesting criteria is met.
(4)These shares will vest on February 26, 2025 if the performance-based vesting criteria is met.
(5)These shares will vest on February 24, 2026 if the performance-based vesting criteria is met.
(6)These options vested on March 1, 2022.
(7)These options will vest on February 28, 2023.
(8)These shares vested on March 1, 2022.
|
| | | | | | | | | | | | | | | |
| | | Option Awards | Stock Awards |
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($/Sh) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
| Mr. Perez de la Mesa | 05/05/09 | 89,252 | - | | 18.44 | | 05/05/19 | N/A | | N/A | | N/A | | N/A | |
| | 02/23/10 | 160,000 | - | | 20.32 | | 02/23/20 | N/A | | N/A | | N/A | | N/A | |
| | 03/02/11 | 160,000 | - | | 24.50 | | 03/02/21 | N/A | | N/A | | N/A | | N/A | |
| | 02/28/12 | 105,000 | - | | 37.13 | | 02/28/22 | N/A | | N/A | | N/A | | N/A | |
| | 02/27/13 | 90,000 | - | | 45.61 | | 02/27/23 | N/A | | N/A | | N/A | | N/A | |
| | 02/27/14 | 18,750 | 18,750 | (1) | 58.26 | | 02/27/24 | 7,500 | (6) | 1,114,875 | (13) | N/A | | N/A | |
| | 02/26/15 | 18,750 | 18,750 | (2) | 69.85 | | 02/26/25 | 7,500 | (7) | 1,114,875 | (13) | N/A | | N/A | |
| | 02/25/16 | - | 30,000 | (3) | 80.78 | | 02/25/26 | N/A | | N/A | | N/A | | N/A | |
| | 05/04/16 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 12,000 | (9) | 1,783,800 | (13) |
| | 03/01/17 | - | 22,500 | (4) | 117.04 | | 03/01/27 | N/A | | N/A | | 9,000 | (10) | 1,337,850 | (13) |
| | 02/28/18 | - | 18,000 | (5) | 138.03 | | 02/28/28 | N/A | | N/A | | 7,200 | (12) | 1,070,280 | (13) |
| Mr. Joslin | 05/05/09 | 13,000 | - | | 18.44 | | 05/05/19 | N/A | | N/A | | N/A | | N/A | |
| | 02/27/14 | N/A | N/A | | N/A | | N/A | 5,000 | (6) | 743,250 | (13) | N/A | | N/A | |
| | 02/26/15 | N/A | N/A | | N/A | | N/A | 5,000 | (7) | 743,250 | (13) | N/A | | N/A | |
| | 02/25/16 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 9,000 | (8) | 1,337,850 | (13) |
| | 03/01/17 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 7,500 | (10) | 1,114,875 | (13) |
| | 02/28/18 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 6,000 | (12) | 891,900 | (13) |
| Mr. Arvan | 01/03/17 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 14,335 | (11) | 2,130,898 | (13) |
| | 02/28/18 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 11,000 | (12) | 1,635,150 | (13) |
| Mr. Cook | 05/05/09 | 20,000 | - | | 18.44 | | 05/05/19 | N/A | | N/A | | N/A | | N/A | |
| | 02/27/14 | N/A | N/A | | N/A | | N/A | 5,000 | (6) | 743,250 | (13) | N/A | | N/A | |
| | 02/26/15 | N/A | N/A | | N/A | | N/A | 5,000 | (7) | 743,250 | (13) | N/A | | N/A | |
| | 02/25/16 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 9,000 | (8) | 1,337,850 | (13) |
| | 03/01/17 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 7,500 | (10) | 1,114,875 | (13) |
| | 02/28/18 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 6,000 | (12) | 891,900 | (13) |
(10)These shares vested 50% on February 27, 2022 and 50% will vest on February 27, 2024 if the performance-based vesting criteria is met.
Note: Table continues(11)These shares will vest 50% on next page.February 26, 2023 and 50% on February 26, 2025 if the performance-based vesting criteria is met.
(12)These shares will vest 50% on February 24, 2024 and 50% on February 24, 2023 if the performance-based vesting criteria is met.
(13)These shares will vest on March 23, 2025 if the performance-based vesting criteria is met. |
| | | | | | | | | | | | | | | |
| | | Option Awards | Stock Awards |
| Name | Grant
Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of
Securities
Underlying Unexercised
Options (#) Unexercisable | Option
Exercise
Price
($/Sh) | Option
Expiration
Date | Number of
Shares or Units
of Stock that Have Not Vested (#) | Market Value of Shares or Units
that Have Not Vested
($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
| Mr. St. Romain | 05/05/09 | 60,000 | - | | 18.44 | | 05/05/19 | N/A | | N/A | | N/A | | N/A | |
| | 02/23/10 | 60,000 | - | | 20.32 | | 02/23/20 | N/A | | N/A | | N/A | | N/A | |
| | 03/02/11 | 60,000 | - | | 24.50 | | 03/02/21 | N/A | | N/A | | N/A | | N/A | |
| | 02/28/12 | 27,000 | - | | 37.13 | | 02/28/22 | N/A | | N/A | | N/A | | N/A | |
| | 02/27/13 | 15,000 | - | | 45.61 | | 02/27/23 | N/A | | N/A | | N/A | | N/A | |
| | 02/27/14 | 3,125 | 3,125 | (1) | 58.26 | | 02/27/24 | 3,750 | (6) | 557,438 | (13) | N/A | | N/A | |
| | 02/26/15 | 3,125 | 3,125 | (2) | 69.85 | | 02/26/25 | 3,750 | (7) | 557,438 | (13) | N/A | | N/A | |
| | 02/25/16 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 9,000 | (8) | 1,337,850 | (13) |
| | 03/01/17 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 7,500 | (10) | 1,114,875 | (13) |
| | 02/28/18 | N/A | N/A | | N/A | | N/A | N/A | | N/A | | 6,000 | (12) | 891,900 | (13) |
| |
(1)
| These options vested on February 27, 2019. |
| |
(2)
| These options will vest on February 26, 2020. |
| |
(3)
| These options vested 50% on February 25, 2019 and 50% will vest on February 25, 2021. |
| |
(4)
| These options will vest 50% on March 1, 2020 and 50% on March 1, 2022. |
| |
(5)
| These options will vest 50% on February 28, 2021 and 50% on February 28, 2023. |
| |
(6)
| These shares vested on February 27, 2019. |
| |
(7)
| These shares will vest on February 26, 2020. |
| |
(8)
| These shares vested 50% on March 15, 2019 and 50% will vest on February 25, 2021 if the performance-based vesting criteria is met. |
| |
(9)
| These shares will vest 50% on May 4, 2019 and 50% on May 4, 2021 if the performance-based vesting criteria is met. |
| |
(10)
| These shares will vest 50% on March 15, 2020 and 50% on March 1, 2022 if the performance-based vesting criteria is met. |
| |
(11)
| These shares will vest on January 3, 2022 if the performance-based vesting criteria is met. |
| |
(12)
| These shares will vest 50% on March 15, 2021 and 50% on February 28, 2023 if the performance-based vesting criteria is met. |
| |
(13)
| Based on the market value of $148.65 per share of our Common Stock on December 31, 2018. |
The table below summarizes the number of shares acquired and the dollar amounts realized by NEOs from the exercise of stock options and the vesting of restricted stock in 2018.2021.
OPTION EXERCISES AND STOCK AWARDS VESTED | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number of
Shares Acquired
Upon Exercise (#) | | Value Realized
Upon Exercise ($) | | Number of
Shares Acquired
Upon Vesting (#) | | Value Realized
Upon Vesting ($) |
| Peter Arvan | | — | | | $ | — | | | — | | | $ | — | |
| Melanie Hart | | — | | | — | | | 1,050 | | | 345,030 | |
| Jeffrey Clay | | — | | | — | | | — | | | — | |
| Jennifer Neil | | — | | | — | | | 3,160 | | | 1,036,669 | |
| Kenneth St. Romain | | 12,500 | | | 5,164,609 | | | 7,500 | | | 2,457,765 | |
| Mark Joslin | | — | | | — | | | 7,500 | | | 2,457,765 | |
|
| | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of
Shares Acquired
Upon Exercise (#) | | Value Realized
Upon Exercise ($) | | Number of
Shares Acquired
Upon Vesting (#) | | Value Realized
Upon Vesting ($) |
| Manuel J. Perez de la Mesa | | 100,748 |
| | $ | 13,824,468 |
| | 7,500 |
| | $ | 1,068,975 |
|
| Mark W. Joslin | | 66,000 |
| | 8,434,507 |
| | 11,000 |
| | 1,556,010 |
|
| Peter D. Arvan | | — |
| | — |
| | — |
| | — |
|
| A. David Cook | | 58,000 |
| | 7,584,350 |
| | 11,000 |
| | 1,556,010 |
|
| Kenneth G. St. Romain | | 40,000 |
| | 5,024,630 |
| | 6,750 |
| | 956,168 |
|
NONQUALIFIED DEFERRED COMPENSATION
Under our Deferred Compensation Plan, certain executives, including our NEOs, may elect to defer all or a portion of their base salary and annual non-equity incentive compensation. Participants choose to invest their deferrals in one or more specified investment funds. Participants may change their fund selection at any time, subject to certain limitations. The table below shows the funds available and their annual rates of return for the calendar year ended December 31, 20182021 as reported by T. Rowe Price. Earnings are determined by the results of the individual investments.
| | | | | | | | | | | | | | | | | | | | |
| Name of Fund | | Rate of Return | | Name of Fund | | Rate of Return |
| Artisan International Fund | | 9.02 | % | | TRP Retirement 2015 Fund | | 9.54 | % |
| Goldman Sachs Small Cap Value Fund | | 26.71 | % | | TRP Retirement 2020 Fund | | 10.47 | % |
| Delaware Value Fund | | 22.37 | % | | TRP Retirement 2025 Fund | | 11.88 | % |
| TRP Growth Stock Fund | | 20.03 | % | | TRP Retirement 2030 Fund | | 13.55 | % |
| TRP Mid-Cap Growth Fund | | 15.06 | % | | TRP Retirement 2035 Fund | | 15.08 | % |
| TRP Government Money Fund | | 0.01 | % | | TRP Retirement 2040 Fund | | 16.35 | % |
| Vanguard 500 Index Fund | | 28.66 | % | | TRP Retirement 2045 Fund | | 17.20 | % |
| TRP Small Cap Stock Fund | | 17.14 | % | | TRP Retirement 2050 Fund | | 17.35 | % |
| JP Morgan Mid-Cap Value | | 30.08 | % | | TRP Retirement 2055 Fund | | 17.29 | % |
| Dodge & Cox Income Fund | | (0.91) | % | | TRP Retirement 2060 Fund | | 17.41 | % |
| TRP Retirement 2005 Fund | | 8.05 | % | | TRP Retirement 2065 Fund | | 18.18 | % |
| TRP Retirement 2010 Fund | | 8.75 | % | | TRP Value Fund | | 29.93 | % |
|
| | | | | | | | |
| Name of Fund | | Rate of Return | | Name of Fund | | Rate of Return |
| Artisan International Fund | | (10.86 | )% | | TRP Retirement 2015 Fund | | (4.17 | )% |
| Goldman Sachs Small Cap Value Fund | | (14.02 | )% | | TRP Retirement 2020 Fund | | (4.94 | )% |
| Delaware Value Fund | | (2.91 | )% | | TRP Retirement 2025 Fund | | (5.62 | )% |
| TRP Growth Stock Fund | | (1.03 | )% | | TRP Retirement 2030 Fund | | (6.28 | )% |
| TRP Mid-Cap Growth Fund | | (2.04 | )% | | TRP Retirement 2035 Fund | | (6.87 | )% |
| TRP Government Money Fund | | 1.48 | % | | TRP Retirement 2040 Fund | | (7.32 | )% |
| Vanguard 500 Index Fund | | (4.43 | )% | | TRP Retirement 2045 Fund | | (7.57 | )% |
| TRP Small Cap Stock Fund | | (3.24 | )% | | TRP Retirement 2050 Fund | | (7.58 | )% |
| JP Morgan Mid-Cap Value | | (11.65 | )% | | TRP Retirement 2055 Fund | | (7.62 | )% |
| Dodge & Cox Income Fund | | (0.31 | )% | | TRP Retirement 2060 Fund | | (7.57 | )% |
| TRP Retirement 2005 Fund | | (3.26 | )% | | TRP Value Fund | | (9.44 | )% |
| TRP Retirement 2010 Fund | | (3.61 | )% | | | | |
Benefits under our Deferred Compensation Plan will be paid to our NEOs as each executive elects, but no earlier than one full year after the end of the plan year for which compensation is deferred or six months after termination of employment. However, upon a showing of financial hardship and certain other requirements, an NEO may be allowed to access funds in his or her deferred compensation account earlier than the beginning of the year following the executive’s retirement or termination. In the event of a change of control, all vested accrued benefits will automatically be accelerated and payable in full. The time and schedule of payments may also be accelerated if the participant becomes disabled, to fulfill a qualified domestic relations order, if the amount is less than $10,000 or to pay employment taxes. Benefits can be received either as a lump sum payment or in installments.
The following table summarizes the nonqualified deferred compensation earned by our NEOs in 2018.2021. All amounts relate to our Deferred Compensation Plan. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Executive
Contributions
in Last FY | | Company Contributions in Last FY (1) | | Aggregate
Gains in
Last FY | | Aggregate
Withdrawals/
Distributions | | Aggregate
Balance
at Last FYE | |
| Peter Arvan | | $ | 52,414 | | | $ | 17,888 | | | $ | 102,326 | | | $ | — | | | $ | 924,548 | | (2) |
| Melanie Hart | | — | | | — | | | — | | | — | | | — | | |
| Jeffrey Clay | | — | | | — | | | — | | | — | | | — | | |
| Jennifer Neil | | 100,966 | | | 34,172 | | | 116,654 | | | — | | | 923,383 | | (3) |
| Kenneth St. Romain | | 117,772 | | | 47,286 | | | 104,453 | | | — | | | 1,529,305 | | (4) |
| Mark Joslin | | 13,550 | | | 9,862 | | | 272,988 | | | — | | | 3,347,792 | | (5) |
(1)These amounts are included in the Summary Compensation Table within All Other Compensation. |
| | | | | | | | | | | | | | | | | | | | | |
| Name | | Executive Contributions in Last FY | | Company Contributions in Last FY (1) | | Aggregate Losses in Last FY | | Aggregate Withdrawals/ Distributions | | Aggregate Balance at Last FYE | |
| Manuel J. Perez de la Mesa | | $ | 87,221 |
| | $ | 58,776 |
| | $ | (101,509 | ) | | $ | — |
| | $ | 2,063,534 |
| (2) |
| Mark W. Joslin | | 48,182 |
| | 24,287 |
| | (145,162 | ) | | — |
| | 2,778,242 |
| (3) |
| Peter D. Arvan | | 89,553 |
| | 15,108 |
| | (6,086 | ) | | — |
| | 127,418 |
| (4) |
| A. David Cook | | 198,750 |
| | 30,982 |
| | (36,552 | ) | | (67,299 | ) | | 583,886 |
| (5) |
| Kenneth G. St. Romain | | 79,409 |
| | 28,704 |
| | (58,716 | ) | | — |
| | 866,425 |
| (6) |
| |
(1)(3)Includes Company contributions of $13,918 in 2020 and $5,928 in 2019 disclosed in the Summary Compensation Table (All Other Compensation). (4)Includes Company contributions of $18,402 in 2020 and $21,193 in 2019 disclosed in the Summary Compensation Table (All Other Compensation). (5)Includes Company contributions of $16,563 in 2020 and $10,052 in 2019 disclosed in the Summary Compensation Table (All Other Compensation).
| These amounts are included in the Summary Compensation Table within All Other Compensation. |
| |
(2)
| Includes Company contributions of $76,727 in 2017 and $54,913 in 2016 disclosed in the Summary Compensation Table (All Other Compensation). |
| |
(3)
| Includes Company contributions of $46,010 in 2017 and $27,046 in 2016 disclosed in the Summary Compensation Table (All Other Compensation). |
| |
(4)
| Includes Company contributions of $8,769 in 2017 disclosed in the Summary Compensation Table (All Other Compensation). |
| |
(5)
| Includes Company contributions of $37,574 in 2017 and $9,994 in 2016 disclosed in the Summary Compensation Table (All Other Compensation). |
| |
(6)
| Includes Company contributions of $37,573 in 2017 and $25,195 in 2016 disclosed in the Summary Compensation Table (All Other Compensation). |
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE OF CONTROL
Effect on Outstanding Equity Awards of Termination of Employment or Change of Control upon Outstanding Equity Awards
Beginning with grants in 2015, ourOur equity awards are subject to “double trigger” accelerated vesting upon a change of control, which is explained in more detail below.
Stock options granted to NEOs, prior to 2015, subject to certain limitations, will:
| |
▪ | immediately vest and become fully exercisable upon a change of control, death or disability; |
| |
▪ | remain exercisable and continue to vest in accordance with the original vesting schedule upon retirement (which is defined as attainment of the age of 55 years or more and continuous service to us for a period of at least ten years), provided the recipient complies with certain restrictive covenants; |
| |
▪ | be forfeited, whether or not then exercisable, upon termination for cause; and |
| |
▪ | remain exercisable for the shorter of 90 days or the remaining term upon a termination without cause, unless the Compensation Committee, in its discretion, allows the options to continue to vest in accordance with their original schedule and maintain their original termination date. |
For grants in 2015▪immediately vest and beyond, the provisions above are generally applicable, except that in connection with a change of control, the stock options will onlybecome fully exercisable upon an executive’s death or disability;
▪immediately vest and become fully exercisable if the executive experiences a qualifying termination within two years after thea change of control. Acontrol; a qualifying termination includes a termination by the Company without cause or a termination by the executive for good reason (which is defined as a diminution of the executive’s compensation or responsibilities, or a relocation of more than 50 miles).;
▪remain exercisable and continue to vest in accordance with the original vesting schedule upon retirement (which is defined as attainment of the age of 55 years or more and continuous service to us for a period of at least ten years), provided the recipient complies with certain restrictive covenants;
▪be forfeited, whether or not then exercisable, upon termination for cause; and
▪remain exercisable for the shorter of 90 days or the remaining term upon a termination without cause, unless the Compensation Committee, in its discretion, allows the options to continue to vest in accordance with their original schedule and maintain their original termination date.
Shares of restricted stock, including performance-based restricted stock, granted to NEOs, prior to 2015, subject to certain limitations, will:
| |
▪ | fully vest upon a change of control, death or disability; |
| |
▪ | continue to vest in accordance with the original vesting schedule upon retirement, provided the recipient complies with certain restrictive covenants; and |
| |
▪ | be forfeited upon any other termination of employment, whether voluntary or involuntary, unless the Compensation Committee, in its discretion, provides otherwise. |
For restricted stock grants in 2015 and beyond, the provisions above are generally applicable, except that in connection▪fully vest upon an executive’s death or disability;
▪fully vest, with a change of control, any applicable performance condition will beconditions waived, and the shares of restricted stock will only fully vest if the executive experiences a qualifying termination (as described above) within two years after thea change of control.control;
▪continue to vest in accordance with the original vesting schedule upon retirement, provided the recipient complies with certain restrictive covenants; and
▪be forfeited upon any other termination of employment, whether voluntary or involuntary, unless the Compensation Committee, in its discretion, provides otherwise.
Under the agreements, “cause” is generally defined as the recipient’s (i) conviction of a felony or any crime or offense lesser than a felony involving the property of the Company; (ii) conduct that has caused demonstrable and serious injury to the Company, monetary or otherwise; (iii) willful refusal to perform or substantial disregard of duties properly assigned; or (iv) breach of duty of loyalty to the Company or other act of fraud or dishonesty with respect to the Company.
Assuming a change of control or the executive’s termination of employment due to death or disability occurred on December 31, 2018, the following table sets forth the value of all unvested stock options and shares of restricted stock granted prior to 2015 and held by the NEOs at December 31, 2018 that would immediately vest upon such event.
|
| | | | | | | | | | | | | | | | | | |
| | | Number of Shares Underlying Unvested Awards | | Unrealized Value of Unvested Awards |
| Name | | Option Awards | | Stock Awards | | Option Awards (1) | | Stock Awards (2) | | Total Awards |
| Manuel J. Perez de la Mesa | | 18,750 |
| | 7,500 |
| | $ | 1,694,813 |
| | $ | 1,114,875 |
| | $ | 2,809,688 |
|
| Mark W. Joslin | | — |
| | 5,000 |
| | — |
| | 743,250 |
| | 743,250 |
|
| Peter D. Arvan | | — |
| | — |
| | — |
| | — |
| | — |
|
| A. David Cook | | — |
| | 5,000 |
| | — |
| | 743,250 |
| | 743,250 |
|
| Kenneth G. St. Romain | | 3,125 |
| | 3,750 |
| | 282,469 |
| | 557,438 |
| | 839,907 |
|
Assuming the executive’s termination of employment due to death or disability or a change of control and a qualifying termination occurred on December 31, 2018,2021, the following table sets forth the value of all unvested stock options and shares of restricted stock granted in each of the years from 2015 through 2018 and held by the NEOs at
December 31, 20182021 that would immediately vest upon such event (amounts do not includeevent.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of Shares
Unvested Awards | | Unrealized Value of
Unvested Awards |
| Name | | Option Awards | | Stock
Awards | | Option Awards (1) | | Stock Awards (2) | | Total Awards |
| Peter Arvan | | — | | | 58,415 | | | $ | — | | | $ | 33,062,890 | | | $ | 33,062,890 | |
| Melanie Hart | | 2,625 | | | 5,937 | | | 1,152,283 | | | 3,360,342 | | | 4,512,625 | |
| Jeffrey Clay | | — | | | 3,824 | | | — | | | 2,164,384 | | | 2,164,384 | |
| Jennifer Neil | | — | | | 8,964 | | | — | | | 5,073,624 | | | 5,073,624 | |
| Kenneth St. Romain | | — | | | 18,867 | | | — | | | 10,678,722 | | | 10,678,722 | |
| Mark Joslin | | — | | | 18,820 | | | — | | | 10,652,120 | | | 10,652,120 | |
(1)We calculated by multiplying the number of stock options by the closing price of our Common Stock as of December 31, 2021 and then deducting the aggregate exercise price for these options.
(2)We calculated by multiplying the number of shares referenced inof unvested restricted stock by the table above).
|
| | | | | | | | | | | | | | | | | | |
| | | Number of Shares Underlying Unvested Awards | | Unrealized Value of Unvested Awards |
| Name | | Option Awards | | Stock Awards | | Option Awards (1) | | Stock Awards (2) | | Total Awards |
| Manuel J. Perez de la Mesa | | 89,250 |
| | 35,700 |
| | $ | 4,415,985 |
| | $ | 5,306,805 |
| | $ | 9,722,790 |
|
| Mark W. Joslin | | — |
| | 27,500 |
| | — |
| | 4,087,875 |
| | 4,087,875 |
|
| Peter D. Arvan | | — |
| | 25,335 |
| | — |
| | 3,766,048 |
| | 3,766,048 |
|
| A. David Cook | | — |
| | 27,500 |
| | — |
| | 4,087,875 |
| | 4,087,875 |
|
| Kenneth G. St. Romain | | 3,125 |
| | 26,250 |
| | 246,250 |
| | 3,902,063 |
| | 4,148,313 |
|
| |
(1)closing price of our Common Stock as of December 31, 2021.
| We calculated by multiplying the number of unvested in-the-money stock options by the closing price of our Common Stock as of December 31, 2018 and then deducting the aggregate exercise price for these options. |
| |
(2)
| We calculated by multiplying the number of shares of unvested restricted stock by the closing price of our Common Stock as of December 31, 2018. |
Severance Payments upon Termination without Cause
Upon termination other than for cause, Mr. Arvan is entitled to receive his base salary for a period of six months after termination, and the other NEOs (except Mr. Joslin) are entitled to receive their respective base salaries for a period of three months. Prior to his retirement effective December 31, 2018, Mr. Perez de la Mesa was also entitled to receive his base salary for a period of six months following a termination other than for cause.
The table below presents the amounts that would be payable to each NEO upon termination without cause to each NEO serving as of December 31, 2018.2021.
| | | | | | | | |
| Name | | Cash Payout
upon Termination
Without Cause |
| Peter Arvan | | $ | 262,500 | |
| Melanie Hart | | 62,500 | |
| Jeffrey Clay | | 70,000 | |
| Jennifer Neil | | 67,500 | |
| Kenneth St. Romain | | 83,750 | |
|
| | | | |
| Name | | Maximum Cash Payout upon Termination Without Cause |
| Manuel J. Perez de la Mesa | | $ | 250,000 |
|
| Mark W. Joslin | | 73,750 |
|
| Peter D. Arvan | | 220,000 |
|
| A. David Cook | | 79,250 |
|
| Kenneth G. St. Romain | | 77,500 |
|
The NEOs are not entitled to any additional compensation, perquisites or other personal benefits upon a change of control, retirement or termination, except for future payments under our 401(k) Plan and Deferred Compensation Plan.
DIRECTOR COMPENSATION
The many responsibilities and risks of serving as a director of a public company require that we provide adequate compensation in order to attract and retain highly qualified and productive directors. Our directors play an important role in guiding our strategic direction and overseeing our management.
We compensate our non-executive directors at a level that approximates median market practice. In benchmarking director pay, we use the same compensation peer group that we use to benchmark executive compensation, as described earlier in the “Compensation Discussion and Analysis” section of this proxy statement.The Compensation Committee regularly reviews non-employee director compensation, periodically retaining an independent compensation consulting firm to assist with its review.
In 2018, no changes were madeMay 2021, following their review of non-executive director compensation compared to our non-employee director cash compensation structure, except that effective May 2018,the peer group, the Board increased Chairman Stokely’s annual cash retainer from $90,000$120,000 to $100,000. Our other non-employee directors receive an$155,000; the Board also increased the annual cash retainer of $55,000. Directors also receiveretainers for our other non-executive directors from $65,000 to $75,000. The annual fees paid to directors for serving on the Board’s committees asremained unchanged and are noted in the table below.
| | | | | | | | | | | | | | |
| Committee | | Chairman Fee | | Member Fee |
| Audit | | $ | 20,000 | | | $ | 10,000 | |
| Compensation | | 15,000 | | | 10,500 | |
| Nominating and Corporate Governance | | 15,000 | | | 7,500 | |
| Strategic Planning | | 15,000 | | | 7,500 | |
Our directors do not receive separate per meeting fees for attending Board or committee meetings, but we do reimburse them for reasonable out-of-pocket expenses they incur to attend Board and committee meetings and director education programs.
Directors receive annual equity awards and may also elect to receive equity grants in lieu of their cash compensation. In 2018,2021, each non-employee director was permitted to elect to receive his or her annual equity compensation in the form of (i) 2,165996 stock options with an exercise price equal to our Common Stock’s closing price on the grant date; or (ii) 866278 shares of restricted stock. The annual equity awards are granted on the date of the annual meeting of stockholders and, except under certain limited circumstances, the stock options and restricted stock vest no earlier than one year after the grant date, and any options granted are exercisable for up to ten years after the grant date. Excluding Ms. Oler, who joined the Board in October and thus did not receive an equity grant in 2018, eachAll of our non‑employee directors elected to receive their 2018his or her 2021 equity compensation in the form of restricted stock. Total non‑employee Board annual compensation for 2018 was $1,239,590.stock awards.
The table below summarizes the compensation we paid to our non-employeenon-executive directors during the year ended December 31, 2018.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid
in Cash | | Stock Awards (1) | | All Other Compensation | | Total |
| Martha Gervasi | | $ | 46,500 | | | $ | — | | | $ | — | | | $ | 46,500 | |
| Timothy Graven | | 99,167 | | | 119,860 | | | — | | | 219,027 | |
| Debra Oler | | 89,667 | | | 119,860 | | | — | | | 209,527 | |
Manuel Perez de la Mesa (2) | | 75,000 | | | 119,860 | | | 18,098 | | | 212,958 | |
| Harlan Seymour | | 109,167 | | | 119,860 | | | — | | | 229,027 | |
| Robert Sledd | | 92,167 | | | 119,860 | | | — | | | 212,027 | |
| John Stokely | | 168,333 | | | 119,860 | | | — | | | 288,193 | |
| David Whalen | | 89,167 | | | 119,860 | | | — | | | 209,027 | |
(1)Amounts shown do not reflect compensation actually received by the directors. Instead, these amounts reflect the total estimated grant date fair value of the stock awards, which is based on the closing price of our Common Stock on the date of grant in accordance with FASB ASC Topic 718.
(2)Mr. Perez de la Mesa, our former president and CEO, remains employed by us, and as such, is eligible to participate in our 401(k) plan, our deferred compensation plan, and medical, dental and long-term disability programs on the same basis as our officers. In 2021, we paid Mr. Perez de la Mesa a salary of $75,000, which is equal to the annual cash retainer we pay to each of our non-executive directors.
|
| | | | | | | | | | | | | |
| Name | | Fees Earned or Paid
in Cash | | Stock
Awards (1) | | | Total |
| Andrew W. Code | | $ | 65,433 |
| (2) | $ | 120,054 |
| | | $ | 185,487 |
|
| Timothy M. Graven | | 82,500 |
| | 120,054 |
| | | 202,554 |
|
| Debra S. Oler | | 9,166 |
| | — |
| | | 9,166 |
|
| Harlan F. Seymour | | 92,500 |
| | 120,054 |
| | | 212,554 |
|
| Robert C. Sledd | | 75,500 |
| | 120,054 |
| | | 195,554 |
|
| John E. Stokely | | 121,667 |
| | 120,054 |
| | | 241,721 |
|
| David G. Whalen | | 72,500 |
| | 120,054 |
| | | 192,554 |
|
| |
(1)
| Amounts shown do not reflect compensation actually received by the directors. Instead, these amounts reflect the total estimated grant date fair value of the stock awards, which is based on the closing price of our Common Stock on the date of grant in accordance with FASB ASC Topic 718. |
| |
(2)
| The amount reported in this column represents the grant date fair value of the stock awards Mr. Code opted to receive in lieu of cash compensation. |
As of December 31, 2018, options outstanding, options exercisable2021, stock awards and stock awardsoptions outstanding for each non-employeenon-executive director included the following:
| | | | | | | | | | | | | | | | | | | | |
| Director | | Stock Awards
Outstanding | | Options Outstanding | | Options Exercisable |
| Ms. Gervasi | | — | | | — | | | — | |
| Mr. Graven | | 278 | | | — | | | — | |
| Mrs. Oler | | 278 | | | — | | | — | |
| Mr. Perez de la Mesa | | 8,378 | | | 148,432 | | | 128,182 | |
| Mr. Seymour | | 278 | | | — | | | — | |
| Mr. Sledd | | 278 | | | 1,654 | | | 1,654 | |
| Mr. Stokely | | 278 | | | — | | | — | |
| Mr. Whalen | | 278 | | | — | | | — | |
|
| | | | | | |
| Director | | Options
Outstanding
and Exercisable | | Stock Awards
Outstanding |
| Mr. Code | | — |
| | 1,338 |
|
| Mr. Graven | | — |
| | 866 |
|
| Ms. Oler | | — |
| | — |
|
| Mr. Seymour | | — |
| | 866 |
|
| Mr. Sledd | | 8,696 |
| | 866 |
|
| Mr. Stokely | | — |
| | 866 |
|
| Mr. Whalen | | — |
| | 866 |
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our policy for transactions with related persons is included within our Audit Committee Charter. Our Audit Committee Charter requires that the Audit Committee review and approve all related person transactions of the type that would be required to be disclosed in this proxy statement and as may otherwise be required by Nasdaq.
The Audit Committee was not requested to, and did not approve, any transactions required to be reported under SEC rules in fiscal year 2018.2021.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Exchange Act requires our directors and executive officers and persons owningwho own more than 10% of a registered class of our equity securities to file with the SEC reports of ownership and changes in ownership ofownership.
To assist with these required reports, our Common Stock. Directors, executiveprocedures allow directors and officers and greater than 10% stockholders are required by SEC regulations to furnishprovide us with copies of all Section 16(a) forms they file.the relevant information regarding their transactions in POOL shares, and we prepare and file the reports on their behalf. In addition, our directors and officers have provided written statements regarding their POOL stock ownership. Based solely on a review of the copies of these reports furnished, management believesand statements, we believe that the directors, executive officers and greater than 10% stockholders complied with these requirements in a timely manner during the fiscal year 20182021 with the exception of one gift byForm 4 each for Ms. Gervasi, Mr. Perez de la Mesa, from a prior year that was reported on a Form 5.and Mr. Sledd.
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF POOL CORPORATION
FOR THE YEAR ENDED DECEMBER 31, 20182021
The Audit Committee reviews the Company’s accounting and financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls over financial reporting.
In this context, the Audit Committee has met and held discussions with management, the Company’s internal auditors and the Company’s independent registered public accounting firm. Management represented to the Audit Committee that the Company’s audited financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee has reviewed and discussed the audited financial statements with management and the Company’s independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm those matters required to be discussed by Auditing Standard No. 1301 (formerly Auditing Standard No. 16) - Communications with Audit Committeesthe applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and Auditing Standard No. 2410 (formerly Auditing Standard No. 18) - Related Parties.the Securities and Exchange Commission.
In addition, the Audit Committee has discussed with the Company’s independent registered public accounting firm the firm’s independence from the Company and management and has received the written disclosures and letter from the Company’s independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence.
The Audit Committee has discussed with the Company’s internal auditors and independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee has met with the internal auditors and the independent registered public accounting firm, 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 reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018,2021, for filing with the SEC. The Audit Committee has also approved the selection of the Company’s independent registered public accounting firm for the 20192022 fiscal year.
AUDIT COMMITTEE
Timothy M. Graven, Chairman
Robert C. Sledd
John E. Stokely
David G. Whalen
The Audit Committee Report set forth above shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and shall not be deemed filed under such Acts.
PROPOSAL TO RATIFY THE RETENTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal 2)
The Audit Committee has approved the retention of Ernst & Young LLP (EY) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019,2022, and recommends the ratification of such retention by the stockholders. The Audit Committee reviews the performance of the independent registered public accounting firm annually. If the stockholders do not ratify the selection of EY, the Audit Committee will reconsider the selection. Even if our stockholders ratify the appointment, the Audit Committee may, in its discretion, select a different independent auditor at any time during the year if it determines that such a change would be in the best interest of the Company and our stockholders.
RepresentativesWe expect representatives of EY are expected towill be present at the Annual Meeting, with the opportunity to make any statement they desire at that time, and they will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares of Common Stock present in personvirtually or by proxy at the Annual Meeting and entitled to vote is required for ratification of the retention of EY as the Company’s independent registered public accounting firm.
The Board of Directors unanimously recommends that our stockholdersyou vote FOR the ratification of the retention of EY as our independent registered public accounting firm for fiscal year 2019.2022.
Fees Paid to Independent Registered Public Accounting Firm
The following table presents fees for professional audit services rendered by EY for the audit of the Company’s annual financial statements for the years ended December 31, 20182021 and 2017,2020, and fees billed for other services rendered by EY.
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| | 2021 | | 2020 |
Audit fees (1) | | $ | 1,438,781 | | | $ | 1,258,644 | |
Audit-related fees (2) | | — | | | 105,000 | |
Tax fees (3) | | 4,634 | | | 4,634 | |
| Total | | $ | 1,443,415 | | | $ | 1,368,278 | |
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| | | 2018 | | 2017 |
Audit fees (1) | | $ | 1,220,698 |
| | $ | 1,192,000 |
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| Audit-related fees | | — |
| | — |
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Tax fees (2) | | 43,492 |
| | 29,892 |
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| Total | | $ | 1,264,190 |
| | $ | 1,221,892 |
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(1)(2)Audit-related fees relate to due diligence fees billed in 2020.
(3)Tax fees relate to tax compliance fees billed in 2021 and 2020. | Audit fees pertain to the audit of the financial statements included in our Annual Report on Form 10‑K, the audit of our internal control over financial reporting and the review of the financial statements included in our Quarterly Reports on Form 10‑Q. Audit fees for both years also include services for the statutory audits of certain of our international operations. |
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(2)
| Tax fees relate to employment tax advisory services billed in 2018 and 2017 and franchise tax advisory services billed in 2018. |
The Audit Committee preapproves all audit and permissible non-audit services before such services begin. Mr. Graven, Audit Committee chairman,Chairman, has the delegated authority to preapprove such services and these preapproval decisions are presented to the full Audit Committee at the next scheduled meeting. During fiscal years 20182021 and 2017,2020, the Audit Committee and/or the Audit Committee chairman preapproved 100% of the services performed by EY. A copy of our ProcedureYou may read the Procedures for PreapprovalPre-approval of Services by ourthe Company’s Independent Audit Firm is posted on our website at www.poolcorp.com. under the “Investors” tab.
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
(Proposal 3)
We are asking stockholders to vote to approve, on anfor their non-binding advisory (nonbinding) basis,approval of the 2021 compensation of our Named Executive Officers (NEOs) as disclosed in this proxy statement in accordance with the SEC’s rules. As described aboveearlier in detail under the headings “Compensation Discussion and Analysis” and “Executive Compensation,Compensation.”” our Our executive compensation programs are designed to attract, motivate, and retain our NEOs in a way that rewards performance and is aligned with our stockholders’ long-term interests.linked to continuous improvements in Company results and sustained increases in stockholder value. We believe that our executive compensation program reflects an overall pay-for-performance culture, which is strongly aligned with the long-term interests of our stockholders. In 2018,2021, we realized 23%78% growth in adjusted diluted earnings per share over 2017.2020. Our total stockholder return over the prior 1, 3, 5 and 10 year periods was 16.0%53%, 89.4%286%, 166.3%453% and 778.0%1,830%, respectively.
By design, our NEOs’ compensation is significantly more performance-weighted than the market, which we believe more closely aligns executive management’s interests withmarket. Under our stockholders, such thatcompensation plans, above market stockholder returns correlate with above market compensation and below market stockholder returns correlate with below market compensation. In this regard, theour NEOs’ primary fixed component of compensation, base salary, is significantly below market for our NEOs.market. As noted previously, our chief executive officer’s base salary represents 62%65% of the median salary of our peer group and our other NEOs’ salaries represent on average 77%66% of the median of peer group salaries.
The annual objectives under our annual cash award program are designed to be challenging and encompass improvement over the status quo with earnings per share being the single most important objective for most of our NEOs.
At our 2018 annual meeting of stockholders, our stockholders overwhelmingly approved our executive compensation by 99.4%. The final votes were as follows:
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| Number of Shares |
| For | | Against | | Abstain | | Broker Non-Votes |
| 35,909,667 | | 188,358 | | 40,064 | | 2,125,791 |
We believe that performance-based compensation with annual, medium-term and long-term components serve to align executive interests with long-term stockholder interests while mitigating the motivation to take undue risk in the management of the business. Under our program, our performance impacts both short-term and long-term compensation, as superior performance will result in additional compensation through our annual cash performance program and medium-term SPIP and increased value of our equity grants over the long term. Our goal is for the portion of compensation that is at-risk (both short-term and long-term) to constitute a substantial and meaningful portion of total compensation for each executive and for sustained long-term growth to result in the greatest compensation opportunities.
At our 2021 annual meeting of stockholders, our stockholders overwhelmingly approved our executive compensation by 98.6%. The final votes were as follows:
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| Number of Shares |
| For | | Against | | Abstain | | Broker
Non-Votes |
| 34,287,379 | | | 390,652 | | | 103,952 | | | 1,945,142 | |
We are asking stockholders to vote onFOR the following resolution:
RESOLVED, thatapproval of the compensation paid to the Named Executive OfficersCompany’s NEOs as disclosed in thethis proxy statement for the Company’s 2019 annual meeting of stockholders pursuant to Item 402 of Regulation S-K of the rules of the Securities and Exchange Commission is hereby APPROVED.
statement. This vote is not intended to address any specific item of compensation, but rather the overall 2021 compensation of ourthe NEOs and the philosophy, policies and practices described in this proxy statement.statement rather than any specific item of compensation.
The affirmative vote of the holders of a majority of the shares of Common Stock present virtually or by proxy at the Annual Meeting and entitled to vote is required to approve, on an advisory basis, the 2021 compensation of the NEOs as described in this proposalproxy statement. While this say-on-pay vote is advisory and therefore not binding onnon-binding, our Board and the Board orCompensation Committee value the Company. However, the Boardopinions of our stockholders and will reviewconsider the voting results and take them into consideration when making future decisions regarding executive compensation.
The Board of Directors unanimously recommends that our stockholdersyou vote to approveFOR the advisory approval of the compensation of our Named Executive Officers as disclosed in this Proxy Statement by voting FOR this say-on-pay proposal.Statement.
STOCKHOLDER PROPOSALS AND BOARD NOMINATIONS
To be considered for inclusion in the proxy materials related to our 20202023 annual meeting of stockholders, we must receive stockholder proposals no later than November 28, 2019.29, 2022. If such proposal is timely received and in compliance with all of the requirements of Rule 14a-8 under the Exchange Act, it will be included in the proxy statement and set forth on the form of proxy issued for such annual meeting of stockholders.
In addition, our Bylaws provide that in connection with an annual meeting of stockholders, a stockholder, or a group of up to 20 stockholders, owning 3% or more shares of our common stock continuously for the prior three years, may nominate and include in our proxy materials stockholder nominees for election to the Board constituting the greater of two stockholder nominees or 20% of the total number of directors in office (rounded down to the nearest whole number, which currently equates to one director based on our current nine-member Board), subject to compliance with the requirements set forth in the Bylaws. For our 2023 annual meeting of stockholders, the Company’s corporate secretary must receive notice no earlier than October 30, 2022 and no later than November 29, 2022.
In addition to satisfying the foregoing requirements under our Bylaws, to comply with the SEC’s recently-enacted universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 4, 2023. However, if the date of the 2023 annual meeting is more than 30 days before or after the anniversary date of the 2022 annual meeting, the notice must be provided by the later of the 60th day prior to the 2023 annual meeting or the 10th day following the day on which public announcement of the date of the 2023 annual meeting is first made, as provided by Rule 14a-19. These deadlines assume that the shareholder has not previously filed a proxy statement with the required information.
Our Bylaws also require that any stockholder who desires to nominate a director or present a proposal before the 20202023 annual meeting, but does not wish to have it included in our proxy statement, must notify the Company’s corporate secretary no earlier than July 1, 20192, 2022 and no later than November 28, 2019.29, 2022.
By Order of the Board of Directors,
Jennifer M. Neil
Corporate Secretary
Covington, Louisiana
March 28, 201929, 2022
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| VOTE BY INTERNET – Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M.p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web sitewebsite and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go towww.virtualshareholdermeeting.com/POOL2022
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
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POOL CORPORATION 109 NORTHPARK BLVD. COVINGTON, LA 7043370433 | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
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| VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M.p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructionsinstructions.
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| VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
| POOL CORPORATION | | | | | |
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| The Board of Directors recommends that you vote FOR each of the following proposals: | | |
| 1. | Election of Directors | For | Against | Abstain | | | | | |
| | Nominees: | | | | | | | | |
| | 1a. Andrew W. CodePeter D. Arvan | o | o | o | | | For | Against | Abstain |
| | 1b. Timothy M. GravenMartha “Marty” S. Gervasi | o | o | o | 2.
| Ratification of the retention of Ernst & Young LLP, certified public accountants, as our independent registered public accounting firm for the 20192022 fiscal year. | o | o | o |
| | 1c. Debra S. OlerTimothy M. Graven | o | o | o | 3.
| Say-on-pay vote: Advisory vote to approve the compensation of our named executive compensationofficers as disclosed in the proxy statement. | o | o | o |
| | 1d. Manuel J. Perez de la MesaDebra S. Oler | o | o | o | Note: Such other business as may properly come before the meeting or any adjournment thereof. | | |
| | 1e. Manuel J. Perez de la Mesa | o | o | o | | | | | |
| | 1f. Harlan F. Seymour | o | o | o | | | | | |
| | 1f.1g. Robert C. Sledd | o | o | o | | | | | | |
| | 1g.1h. John E. Stokely | o | o | o | | | | | | | | | | | | | |
| | 1h.1i. David G. Whalen | o | o | o | | | | | |
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| Please date and sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer officer.
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| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | | Date | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.www.proxyvote.com.
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POOL CORPORATION ANNUAL MEETING OF STOCKHOLDERS TUESDAY, MAY 3, 2022 AT 9:00 AM CENTRAL TIME
109 NORTHPARK BOULEVARD
COVINGTON, LOUISIANA 70433
THIS PROXY IS SOLICITED ON BEHALF OFBY THE BOARD OF DIRECTORS OF
POOL CORPORATION
We cordially invite you to electronically attend the Annual Meeting of Stockholders of Pool Corporation, which will be held on Tuesday, May 3, 2022, at 9:00 AM Central Time. The Annual Meeting will be held in a virtual meeting format only. You will not be able to physically attend the Annual Meeting. You will be able to attend the Annual Meeting, vote and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/POOL2022, entering the 16-digit control number included on your proxy card, and following the instructions for participation and voting.
The undersigned hereby appoints Jennifer M. Neil and Melanie M. Housey Hart, or either of them, as proxies, each with full power of substitution, and hereby authorizes each of them to represent and to vote, as designated on the reverse side of this proxy card and, in their discretion, on all other matters which may properly come before the meeting, all shares of Common Stock of Pool Corporation (the “Company”) held of record by the undersigned on March 14, 2019,15, 2022, at the annual meeting of stockholders to be held at the Company’s headquarters at 109 Northpark Boulevard, Covington, Louisiana 70433, on May 1, 2019,3, 2022, or any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no directions are given, this proxy will be voted FOR allthe election of theeach director nomineesnominee named on the reverse side and FOR proposals 2 and 3. The proxy holders named above will vote as recommended by the Board of Directors on any other matter that may properly come before the meeting.
Continued and to be signed on the reverse side |
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