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public. The Compliance Policy is posted under the "Governance" tab of the Company's website athttp://www.comfortsystemsusa.comgovernance.comfortsystemsusa.com and is also available upon request to Comfort Systems USA, Inc., Office of the General Counsel, 675 Bering Drive, Suite 400, Houston, Texas 77057.

Independence

        The Board has adopted Independence Guidelines to assist the Board in making independence determinations relating to members of the Board. The criteria are consistent with the NYSE listing standards regarding director independence. For a director to be considered independent, the Board must determine that the director does not have a material relationship, directly or indirectly, with the Company. The Independence Guidelines are published on our website,http://www.comfortsystemsusa.comgovernance.comfortsystemsusa.com, and are also available by written request to Comfort Systems USA, Inc., Office of the General Counsel, 675 Bering Drive, Suite 400, Houston, TX 77057.

        The Board has considered the independence of its members in light of the Independence Guidelines and the rules and regulations under the Exchange Act and NYSE, including each director's affiliations and relationships, and has determined that Ms. Skidmore and Messrs. Anderson, Bulls, Krusi, Myers, Schultz Tang, and Wagner and Ms. Skidmore,Tang, who together constitute a majority of the Board, qualify as independent directors of the Company.

Director Nomination by Stockholders

        The Board will consider director candidates recommended by stockholders for inclusion on the slate of directors nominated by the Board. Any stockholder may submit onea candidate or candidates for consideration in conformity with the Bylaws and as set forth hereafter under the caption "Stockholder Proposals." Stockholders desiring to recommend a candidate must submit the recommendation to the Governance and Nominating Committee c/o the Corporate Secretary, Comfort Systems USA, Inc., 675 Bering Drive, Suite 400, Houston, Texas 77057. If a nominating stockholder is not a record holder, the stockholder must provide the same evidence of eligibility as set forth in Exchange Act Rule 14a-8(b)14a- 8(b)(2).

        At the time the nominating stockholder submits the recommendation, the candidate must submit all personal information that the Company would be required to disclose in a proxy statement in accordance with Exchange Act rules. In addition, at that time the candidate must:

•

Certify that he or she meets the requirements to be: (a) independent under the NYSE's listing standards and the Board's Independence Guidelines, (b) a non-management director under Rule 16b-3 of the Exchange Act, and (c) an outside director under Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time, and pertinent regulations promulgated thereunder by the Internal Revenue Service (collectively, the "Code");



•

Consent to serve on the Board, if nominated and elected; and



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Agree to complete, upon request, a customary director's questionnaire.

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        The Governance and Nominating Committee will evaluate any candidate recommended by a stockholder to determine whether he or she is highly qualified. ParticularThe committee evaluates candidates recommended by stockholders in the same way it evaluates candidates proposed from other sources. In selecting nominees, particular consideration will beis given to those individuals who have substantial achievement in their personal and professional pursuits and whose talents, experience, and integrity would be expected to contribute to the best interests of the Company and to long-term stockholder value. In evaluating candidates, the committee considers various qualities and skills that it believes will benefit the Board and the stockholders, including without limitation general management experience, specialization in the Company's principal business activities or finance, significant experience in issues encountered by public companies, and contribution to the diversity of the Board. The committee evaluates candidates recommended by stockholders in the same way it evaluates candidates proposed from other sources.

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Communications with the Board

        Stockholders and other interested parties may communicate directly with the Board by writing to Comfort Systems USA, Inc., Board of Directors, 675 Bering Drive, Suite 400, Houston, Texas 77057. The Chairman of the Board will review these communications and will determine appropriate steps to address them. A stockholder wishing to communicate directly with the non-management members of the Board may address the communication to "Non-Management Directors, c/o Board of Directors" at the address listed above. These communications will be handled by the Lead Director and ChairChairman of the Audit Committee,Board, who is currently designated to preside at meetings of non-management directors. Finally, communications can be sent directly to individual directors by addressing letters to their individual name, c/o the Board of Directors, at the address listed above. All communications received by the Company are sent directly to the Board or appropriate director.

Board Leadership Structure and the Board's Role in Risk OversightSelf-Evaluation Process

        The Board does not have a formal policy regarding whether the position of Chairman of the Board may be filled by the Company's Chief Executive Officer. Instead, the Board has adopted a fluid approach to the Board's leadership structure that allows for variations depending on the circumstances and changing needs of the Company over time.

        Mr. MurdyMyers has served as a director since 2005 and has served as the Company's Chairman of the Board since June 2000, and was formerlyMay 2014. The Board has determined that Mr. Myers meets the Company's Chief Executive Officer. Mr. Lane was appointed asindependence requirements of the Company's Chief Executive Officer in December 2011,NYSE listing standards, the Board's Independence Guidelines, and the roles of Chief Executive Officerrules and Chairman were separated at that time. Mr. Murdy will not stand for reelection atregulations under the Annual Meeting pursuant to the Company's mandatory retirement policy for directors and will no longer be a member of the Board of Directors following the Annual Meeting. The Board expects to nominate and appoint Mr. Myers, who has served as a director since 2005, as Mr. Murdy's replacement as Chairman of the Board effective as of the date of the Annual Meeting.Exchange Act. The Board has carefully considered its leadership structure and determined that currently it is in the best interest of the Company and its stockholders for the roles of Chairman of the Board and Chief Executive Officer to be filled by different individuals. This structure allows the Chief Executive Officer to focus on the Company's day-to-day operations.

        Mr. Myers currently serves as the Company's Lead Director. Following Mr. Myers' assumption of the position of Chairman,Since the Company will havehas an independent, non-executive Chairman and, as a result,of the Board, the Company has determined that the role of a Lead Director will no longer beis not currently necessary. The Board may appoint a Lead Director to coordinate the activities of the independent directors in the future at its discretion.

        Pursuant to the Board's policy, the Board conducts an annual self-evaluation process as follows: (i) each director evaluates the Board as a whole; (ii) each member of the Audit Committee, the Compensation Committee and the Governance and Nominating Committee evaluates the respective committees on which he or she serves; and (iii) each director prepares an individual self-evaluation. In connection with itsthis annual self-evaluation, the Board considers whether the current leadership structure continues to be appropriate for the Company. The Board believes that directors should be responsive to the Company's evolving circumstances and objectives, and adapt the Board's leadership structure when necessary.

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The Board's Role in Risk Oversight

        The Company's full Board is actively involved in overseeing the Company's risk management process and the Company's risk appetite. These activities are aligned with the Company's strategy. Additionally, the Audit Committee, Compensation Committee, and Governance and Nominating Committee consider risks that fall within their respective areas of responsibilities. A group of the Company's top executives serve on a committee (the "Risk Committee") that is directly responsible for the Company's risk management process. The Company's President and Chief Executive Officer, a member of the Board, serves on the Risk Committee; however, the Risk Committee is a committee of management, not of the Board. The Risk Committee meets at least annually to define and improve the risk-mapping process and considers any appropriate updates at least quarterly. Any risks that are identified through the Company's compliance and ethics program are included in the Risk Committee's processes, along with operational, financial, and strategic risks. The Risk Committee presents comprehensive reports directly to the Board at least annually.

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Director Compensation for 20132015

        In 2013,2015, each director who iswas not an employee of the Company or one of its subsidiaries received, in equal quarterly increments, a flatinstallments, an annual fee calculatedbased on service as follows: $50,000$60,000 for general service on the Board; $5,000 per committee membership, provided that$20,000 to serve as the annual payment for committee membership will in no event exceed $10,000;chair of the Audit Committee; $10,000 to serve as the chair of a committee; $10,000 for service as the lead director;Compensation Committee or the Governance and Nominating Committee; and $30,000 for serviceto serve as the chairman of the board. This compensation structure is a departure from that used in previous years, when directors were paid a quarterly retainer and also for attendance at Board and committee meetings. The Governance and Nominating Committee implemented the new pay structure in 2013 because it is consistent with current trends in director compensation, decreases administrative obligations, and encourages directors to view their role as an ongoing commitment.Board.

        The Company's 2012 Equity Incentive Plan, which was adopted by the Board and approved by stockholders in May 2012, provides that each non-employee director who continues in office or is first elected at an annual stockholder meeting receives a grant of 10,000 shares of Common Stock, vesting immediately upon grant. The Board has adopted stock ownership guidelines that require directors to own not less than (i) 1,000 shares of stock within ninety days of their initial election by stockholders; (ii) 10,000 shares by the second anniversary of the director's election; and (iii) 20,000 shares by the fourth anniversary of the director's initial election. All directors currently comply with these ownership requirements.

        In 2014, upon the advice of the Governance and Nominating Committee and in connection with its annual review of director compensation, the Compensation Committee amended the annual award to directors pursuant to the 2012 Equity Incentive Plan to provide that eachEach non-employee director who continues in office or is elected at an annual stockholder meeting receives an award of fully-vested shares of Common Stock having a fair market value on the grant date equal to $125,000, provided that in no event will the number of shares granted to each non-employee director in connection with the annual award exceed 12,500. The Board has adopted stock ownership guidelines that require directors to own not less than (i) 1,000 shares of Common Stock within 90 days of their initial election by stockholders; (ii) 10,000 shares by the second anniversary of the director's initial election; and (iii) 20,000 shares by the fourth anniversary of the director's initial election. All directors currently comply with these ownership guidelines.

        Directors who are employees of the Company or one of its subsidiaries receive no additional compensation for serving as directors. The following table discloses the cash, equity awards and other compensation earned, paid or awarded, as the case may be, to each of the Company's non-employee directors during 2013.2015.

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        In March 2016, upon the recommendation of the Governance and Nominating Committee, which was based on an analysis of several factors, including survey data from the National Association of Corporate Directors and the Board's historical non-employee director compensation practices, the Board approved the following increases to non-employee director compensation. These changes will take effect following the Annual Meeting:

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The annual fee for service as the chair of the Audit Committee will increase from $20,000 in 2015 to $30,000.



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The annual fee for service as the chair of the Compensation Committee or the Governance and Nominating Committee will increase from $10,000 to $20,000.



•

The annual fee for service as the chairman of the Board will increase from $30,000 to $50,000.



•

Each non-employee director who continues in office or is elected at an annual stockholder meeting will receive an award of fully-vested shares of Common Stock having a fair market value on the grant date equal to $140,000, provided that in no event will the number of shares granted to each non-employee director in connection with the annual award exceed 12,500.



•

The annual fee for service on the Board will remain unchanged at $60,000.

PROPOSAL NUMBER 2
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS

        The Audit Committee has re-appointed Ernst & Young LLP as the Company's independent auditors for the year ending December 31, 2014.2016. Ernst & Young LLP was the Company's independent auditor for the year ended December 31, 2013.2015.

        We expect that representatives of Ernst & Young LLP will be present at the Annual Meeting to respond to appropriate questions, and they will have the opportunity to make a statement if they desire.

        The affirmative vote of holders of a majority of the shares of Common Stock voted at the Annual Meeting is required to ratify the appointment of Ernst & Young LLP as the Company's independent auditors for 2014.2016. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider its selection, but it still may decide to retain Ernst & Young LLP. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent accounting firm at any time during the year if the committee determines that such a change would be in the best interests of the Company and its stockholders.

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Relationship with Independent Auditors

        The Audit Committee has selected Ernst & Young LLP as independent auditors for the Company for the year ending December 31, 2014.2016. Ernst & Young LLP acted as independent auditors for the Company for the year ended December 31, 2013.2015. Fees to the Company and its subsidiaries for professional services rendered by Ernst & Young LLP during 20132015 and 20122014 were as follows:

        In 2012 and 2013,2014, services under the caption "Tax Fees" consisted principally of fees related to tax advice.

        The amount of audit fees for 20132015 is based on a fees estimate determined with input from Ernst & Young LLP for audit services provided to us by Ernst & Young in connection with the audit of our 20132015 financial statements. The final audit fees for those services may be more or less than the amount reflected on this table.

        The Audit Committee has established pre-approval policies and procedures applicable to all services provided by the Company's independent auditors to the Company, pursuant to which the committee reviews for approval each service expected to be provided by the independent auditors, and is provided with sufficient detailed information so that it can make well-reasoned assessments of the impact of the services on the independence of the auditors. In 2013,2015, all of the fees paid to the

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Company's auditors were approved by the Audit Committee. Pre-approvals include pre-approved cost levels or budgeted amounts (or a range of cost levels or budgeted amounts). Any proposed service that would exceed pre-approved cost levels or budgeted amounts also requires pre-approval. Substantive changes in terms, conditions, or fees resulting from changes in the scope, structure or other items regarding pre-approved services will also be pre-approved if necessary. The pre-approvals may include services in categories of audit services (including consultation to support such audits), audit-related services (items reasonably related to the performance of the audit or review of the financial statements), tax services (tax compliance, tax planning, and tax advice), and other services (services permissible under the SEC's auditor independence rules, typically routine and recurring type services that would not impair the independence of the auditor).

The Board of Directors recommends that
stockholders voteFOR Proposal Number 2.

PROPOSAL NUMBER 3
ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE
OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE
COMPENSATION DISCLOSURE RULES OF THE SEC

        The Board recognizes that executive compensation is an important matter for our stockholders. As described in detail in the "Compensation Discussion and Analysis" ("CD&A") section of and elsewhere in this Proxy Statement, the Compensation Committee is tasked with the implementation of our executive compensation philosophy, and the core of that philosophy has been and continues to be to pay ourthe Named Executive Officers based on Company performance. In particular, the Compensation Committee strives to attract, retain and motivate exceptional executives, to reward past performance measured against established goals and provide incentives for future performance, and to align executives' long-term interests with the interests of our stockholders. To do so, the Compensation Committee uses a combination of short- and long-term incentive compensation to reward near-term excellent performance and to encourage executives' commitment to our long-range, strategic business goals. It is always the intention of the Compensation Committee that our executive officers be compensated competitively and consistently with our strategy, sound corporate governance principles, and stockholder interests and

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concerns. As discussed further in the CD&A, the Compensation Committee retains compensation consultants and consults compensation databases to ensure that compensation for key positions is properly aligned with market expectations. Further, the Company's commitment to aligning pay to performance can be seen in the overall trend of itscompensation for the Named Executive Officers' compensation.Officers.

        As described in the CD&A, we believe our compensation program is effective, appropriate, and strongly aligned with the long-term interests of our stockholders and that the total compensation packagepackages provided to the Named Executive Officers (including potential payouts upon a termination or change ofin control) are reasonable and not excessive. As you consider this Proposal Number 3, we urge you to read the CD&A section of this Proxy Statement for additional details on our executive compensation program, including the more detailed information about our compensation philosophy and objectives and the past compensation of the Named Executive Officers, and to review the tabular disclosures regarding Named Executive Officer compensation together with the accompanying narrative disclosures in the "Summary of Executive Compensation" section of this Proxy Statement.

        Congress has enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), which requires a non-binding advisory "Say on Pay" vote and gives our stockholders the opportunity to express their views on the compensation of the Named Executive Officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Named Executive Officers and the philosophy, policies, and practices described in this Proxy

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Statement. We value the opportunity to give our stockholders an opportunity to provide us with such a vote on executive compensation at the Annual Meeting.

        As an advisory vote and as prescribed by Dodd-Frank, Proposal Number 3 is not binding on the Board or the Compensation Committee, will not overrule any decisions made by the Board or the Compensation Committee, and will not require the Board or the Compensation Committee to take any action. Although the vote is non-binding, the Board and the Compensation Committee value the opinions of our stockholders, and will carefully consider the outcome of the vote when making future compensation decisions for Named Executive Officers. In particular, to the extent there is any significant vote against the Named Executive Officers' compensation as disclosed in this Proxy Statement, we will consider our stockholders' concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. Unless the Board modifies its policy on the frequency of "Say on Pay" votes, the next "Say on Pay" vote will be held in 2015.2017.

        The Board of Directors is asking that stockholders cast a non-binding, advisory vote FOR the following resolution:

        "RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED on an advisory basis."

The Board of Directors recommends that
stockholders voteFOR Proposal Number 3.

PROPOSAL NUMBER 4
APPROVAL OF AMENDMENT TO ARTICLE FIVE OF THE COMPANY'S SECOND
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

Description of Amendment

        On December 21, 2015, the Delaware Chancery Court (the "Court") issued an opinion in In re VAALCO Energy, Inc. Stockholder Litigation, Consol. C.A. No. 11775-VCL, invalidating as a matter of law provisions of the certificate of incorporation and bylaws of VAALCO Energy, Inc., a Delaware corporation ("VAALCO"), that permitted the removal of VAALCO's directors by its stockholders only for cause. The Court held that, in the absence of a classified board or cumulative voting, VAALCO's "only for cause" director removal provisions conflict with Section 141(k) of the Delaware General Corporation Law (the "DGCL") and are therefore invalid. Specifically, Section 141(k) of the DGCL

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provides that any director, or the entire Board of Directors, may be removed, with or without cause, by the holders of a majority of the voting power of the outstanding stock then entitled to vote in an election of directors, except that, whenever the holders of any class or series of stock is entitled to elect one or more directors, such director or directors may be removed without cause only by the holders of a majority of the voting power of the outstanding shares of such class or series of stock.

        Article Five of the Second Amended and Restated Certificate of Incorporation of the Company currently contains a similar "only for cause" director removal provision, and the Company does not have a classified board of directors or cumulative voting. In light of the VAALCO decision, the Board of Directors of the Company resolved that it is advisable and in the best interests of the Company and its stockholders to amend Article Five of the Second Amendment and Restated Certificate of Incorporation of the Company to eliminate the "only for cause" director removal provision (the "Amendment"). Following the effectiveness of the Amendment, any member of the Board of Directors may be removed, with or without cause, by the holders of a majority of the voting power of the outstanding stock then entitled to vote in an election of directors. The Amendment may be viewed as increasing the accountability of the Company's directors to stockholders by providing stockholders with the opportunity to remove directors without cause.

        If the proposed Amendment is approved at the Meeting, the Company will file the Amendment, which is set forth in Appendix A, with the Secretary of State of the State of Delaware. The Amendment will become effective upon filing. However, as previously announced on January 15, 2016, by the filing of a Form 8-K, the Company will not attempt to enforce the "only for cause" director removal provision prior to the effectiveness of the Amendment.

Vote Required

        The affirmative vote of a majority of the outstanding shares of Common Stock entitled to vote thereon is required for approval of this Proposal. Abstentions and broker non-votes will have the same effect as a vote against Proposal Number 4.

Our Board recommends that
stockholders voteFOR Proposal Number 4.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth information about the beneficial ownership of shares of Common Stock as of March 1, 20142016: (i) individually by the Chief Executive Officer, each of the other executive officers of the Company in 20132015 as named in the Summary Compensation Table (the "Named Executive Officers"), and current directors and nominees for director of the Company, (ii) by all executive officers and directors of the Company as a group, and (iii) each person known to the Company as reported on schedules filed with the SEC to be the beneficial owner of more than 5% of the outstanding Common Stock of the Company.

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        Except as noted below, each of the persons listed has sole investment and voting power with respect to the shares indicated.

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Table of share ownership as of December 31, 2013 is reported in a Schedule 13G/A filed with the SEC on February 12, 2014.Contents

COMPENSATION DISCUSSION AND ANALYSIS

Overview

        This Compensation Discussion and Analysis ("CD&A") provides an overview and analysis of the Company's executive compensation program and policies, the material compensation decisions made with respect to fiscal year 2015 compensation, and the material factors considered in making those decisions. The CD&A focuses on the compensation paid to the Company's "named executive officers" ("Named Executive Officers") unless noted otherwise. For 2015, the Named Executive Officers are:

Brian E. Lane, President and Chief Executive Officer
William George, Executive Vice President and Chief Financial Officer
James Mylett, Senior Vice President—Service
Trent T. McKenna, Senior Vice President, General Counsel and Secretary
Julie S. Shaeff, Senior Vice President and Chief Accounting Officer

The Board has delegated to itsthe Compensation Committee (referred to in this section simply as the "Committee") the duty of designing and overseeing the Company's executive compensation program. The Committee is comprised entirely of independent (pursuant to NYSE, SEC and SECInternal Revenue Service rules, and the Company's own Independence Guidelines) members of the Board. The Company's executive compensation program is designed to attract, motivate, and retain talented executives so that the Company can achieve its best results and maximize long-term stockholder return, to align the long-term interests of Company executives with the interests of stockholders, and to attract, motivate, and retain talented executives sopay compensation that is directly tied to the Company can achieve its best results and maximize stockholder return. The program is rooted in principles of "pay-for-performance," and all executive and senior officersperformance of the Company are eligible to participateand the Common Stock.

2015 Performance Highlights

        To put the Company's 2015 compensation decisions in context, the following summarizes the Company's key financial and business results for 2015, a year in which headwinds continued in the same executivemarket for new construction in the United States. Even with these headwinds, the Company experienced exceptional performance in 2015:

•

Revenues increased to $1,580,519,000 in 2015 as compared to $1,410,795,000 in 2014.



•

Free cash flow for 2015 was $78,397,000 as compared to free cash flow of $24,724,000 in 2014.



•

The Company reported net income attributable to Comfort Systems USA, Inc. for the year ended December 31, 2015 of $49,364,000, or $1.30 per diluted share, as compared to $23,063,000, or $0.61 per diluted share, for 2014. For purposes of our 2015 annual incentive plan, our non-GAAP EPS was also $1.30, as further described below.



•

During 2015 the Company continued to make substantial incremental investments in service growth and improving its information technology infrastructure.

        As a result of this performance, the Named Executive Officers each received their respective maximum award under the corporate financial incentive portion of the Company's 2015 annual incentive plan, as further described below.

Executive Compensation Highlights

•

A majority of officers' compensation plans that are availableis at risk (as defined below).



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A majority of officers' compensation is tied to the Company's Chieffinancial performance and growth in stockholder value.



•

Forty percent of officers' equity awards are subject to the Company achieving specific performance criteria over a three-year time horizon.

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•

Both executives and directors are subject to share ownership guidelines.



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The Company has adopted a compensation clawback policy and an anti-hedging/pledging policy that applies to all executive officers.



•

The Committee engages an independent compensation consultant to advise on executive compensation.

Consideration of Stockholder Advisory Vote

        In designing the overall executive compensation program, the Committee also values and considers stockholder input. While evaluating the Company's 2015 executive compensation program, the Committee considered the stockholder advisory vote on the compensation paid to the Named Executive Officer.Officers that was taken in 2015. The Committee considered the outcome of that advisory vote—more than 99% in favor—to indicate that the Company's stockholders generally support the Company's overall approach to executive compensation. In line with the Committee's consistent effort to analyze and improve the executive compensation program, the Committee determined that it was appropriate to add free cash flow as a performance metric under the Company's annual incentive plan in order to diversify the executive compensation program and to incentivize the Named Executive Officers to focus on this important financial metric.

Compensation Philosophy and Objectives

        The Committee evaluates each element of the overall executive compensation planprogram to ensure that it helps meet the Committee's objectives of:

•��

holding cash compensation to a reasonable percentage of the Company's profits;providing competitive base pay consistent with job scope, experience and related skills;



•

holding equity compensationlinking bonus opportunities to a reasonable percentage of the Company's total outstanding stock;performance;



•

making certain thatgranting equity compensation at competitive levels, a significant portion of which is performance-based, with ownership guidelines;



•

avoiding unnecessary and imprudent risks are avoided;risks; and



•

minimizing turnover of senior-level Company employees, which in part, contributes to the stability and continuity of senior leadership.

        Against that backdrop, the Committee's philosophyCompany's executive compensation program is designed to:

•

pay competitive levels of salary and total compensation;



•

link executive pay to Company performance;performance by making a significant portion of pay variable and not fixed;



•

align the interests of management with the long-term interests of stockholders; and



•

reward long-term results.

To achieve these objectives, the Committee implements a "pay-for-performance" philosophy using the guiding principles that: (i) compensation should be incentive-driven, with both a balanced short-term and long-term focus; (ii) a significant portion of pay for senior officers should be "at risk"; (iii) the most

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a significant portion of annual incentive compensation should be tied to the overall performance of the Company; and (iv) a portion of annual incentive compensation should be tied to individual performance criteria.

        The Committee believes that, due to

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Role of the Company's unique position in its industry, there are no one-to-one comparables in the broader market for the purposes of determining appropriate compensation for its Named Executive Officers. However, the Committee considers survey data in its review of executive compensation, as further discussed below in the sections titled "Use of Compensation Survey Data—Executive Compensation" and "Chief Executive Officer Compensation."CEO

        Management, led by the CEO, at least annually makes recommendations to the Committee regarding the establishment and modification of compensation packages for individuals in the Company's senior management. The Committee considers management's recommendations during its regularly scheduled sessions, and may choose to adopt the recommendations or modify them at the Committee's sole discretion.

The Company's Named Executive Officers and other members of senior management serve as at-will employees of the Company without any guaranteed period of employment. However, the Committee believes that severance and change-in-control agreements provide appropriate assurances to attract and retain qualified and talented individuals to serve as the Company'sis responsible for making all decisions regarding executive officers, permit the Company's executive officers to focus fully on improving the Company's operations and long-term success, and preserve stockholder value by providing continuity of management during a transition period.compensation.

Characteristics of Our Programs that Align Management with Shareholders:

•

A majority of officers' compensation is at risk.



•

A majority of officers' compensation is tied to annual financial performance and growth in shareholder value.



•

Forty percent of officers' equity awards are subject to the Company achieving specific performance criteria.



•

Both executives and directors are subject to share ownership guidelines.



•

The Company has adopted a compensation clawback policy that applies to all executive officers.



•

The Committee engages an independent compensation consultant to advise on executive compensation.

Independent Compensation ConsultantConsultant; Use of Market Data

        In 2013,2015, the Committee retained Pearl Meyer & Partners ("PMP"PM&P") to advise the Committee on the design of the Company's annual incentive program.plan and to provide a comprehensive analysis of executive compensation survey data and market trends. The Committee regularly reviews the services provided by its outside consultants and believes that PMPPM&P is independent in providing executive compensation consulting services. In making this determination, the Committee noted that during 2013:2015:

•

PMPPM&P did not provide any services to the Company or management other than services requested by or with the approval of the Committee, and its services were limited to executive and director compensation consulting. Specifically, PMPPM&P does not provide, directly or indirectly through affiliates, any non-executive compensation services, including pension consulting or human resource outsourcing;



•

PMPPM&P maintains a conflicts policy, which was provided to the Committee with specific policies and procedures designed to ensure independence;

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•

Fees paid to PMPPM&P by the Company during 20132015 were less than 1% of PMP'sPM&P's total revenue;



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None of the PMPPM&P consultants working on Company matters had any business or personal relationship with Committee members;



•

None of the PMPPM&P consultants working on Company matters (or any consultants at PMP)PM&P) had any business or personal relationship with any executive officer of the Company; and



•

None of the PMPPM&P consultants working on Company matters own Company stock.

The Committee continues to monitor the independence of its compensation consultant on a periodic basis.

        In connection with its engagement by the Committee, during 2013 PMP provided2015 the Committee consulted with recommendationsPM&P regarding the Company's annual incentive plan design and administration. Atadministration and also the Committee's direction, PMP worked withcomprehensive analysis done by PM&P regarding market trends and the Company's managementexecutive compensation survey data provided by Equilar, as described below. In 2013, the Committee engaged PM&P to gather necessary data and to develop proposals for presentation to the Committee. PMP providedprovide the Committee with detailed analysis and recommendations on the structure of the Company's annual incentive plan in terms of design, metrics, and payout opportunities,opportunities. In 2014 and compared these features2015, the Committee continued to comparable companies and PMP's understanding of related best practices. The Committee incorporated PMP's analysis inrefine the design and administration of its annual incentive plan for 2013.

Considerationbased on a number of Stockholder Advisory Votefactors, including PM&P's recommendations, market trends in the Company's industry and Recent Developmentsgeneral economic conditions.

        In designingSince 2010, the overallCommittee has reviewed executive compensation plan,levels annually based on competitive compensation data provided by Equilar, an information services firm with products focusing on analyzing and benchmarking executive and director information. The Committee does not attempt to maintain executive compensation at a pre-defined percentile, but the Committee also values and considers stockholder input. While evaluatingdoes use the comparative data in an effort to be better informed in its compensation-related decisions.

        The Committee believes that, due to the Company's 2014unique position in its industry, there are no directly comparable companies in the broader market for the purpose of determining appropriate compensation for its Named Executive Officers and, for this reason, does not use a "peer group" to

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evaluate Named Executive Officer compensation. It does, however, review executive compensation plan, the Committee considered the 2013 stockholder advisory vote on theagainst compensation paid to executives holding similar positions in the companies contained in the peer group established for the Company by Institutional Shareholder Services (ISS), which includes Aegion Corporation, Cubic Corporation, Foster Wheeler AG (recently acquired and no longer in this ISS peer group), Granite Construction Incorporated, Layne Christensen Company, Pike Corporation, Sterling Construction Company, Inc., Barnes Group Inc., Dycom Industries, Inc., GATX Corporation, Greate Lakes Dredge & Dock Corporation, MYR Group Inc., Primoris Services Corporation, and Wabash National Corporation. The Committee uses Equilar data from companies included in the ISS peer group to provide a general market review of the reasonableness of CEO and CFO total compensation levels, and the Committee uses a combination of the ISS peer group and Equilar survey data from certain other industry companies to provide a general market review of the reasonableness of total compensation levels for the Senior Vice President—Service, General Counsel and Chief Accounting Officer; however, the Committee does not use the ISS peer group for any other purpose or otherwise formally benchmark the compensation of the Named Executive Officers.

Chief Executive Officer Compensation

        The Committee consideredmeets in executive session to evaluate the outcomeChief Executive Officer's performance and determines his total compensation. The Committee conducts an assessment of that advisory vote—more than 80% in favor—to indicate thatthe Chief Executive Officer's performance as well as an assessment of such other factors as the Company's stockholders generally supportperformance, individual tenure, position tenure and succession planning, and sets the Chief Executive Officer's salary based on the Committee's assessment of these factors. Although the Committee does not attempt to target the Chief Executive Officer's pay at any specific percentile of similarly situated executive pay, the Committee does use the data provided by Equilar as context in reviewing the Company's overall approachcompensation levels and approving recommended compensation actions. Based on compensation data provided by Equilar, the Chief Executive Officer's compensation is below the market median when compared to executive compensation.

        As previously described, the Committee retained an independent compensation consultant when designingother companies in the Company's 2013 annual incentive compensation plan. Together with PMP, the Committee conducted an extensive review of the Company's annual incentive compensation plan and adopted material revisions to its structure which were intended to allow for greater individual performance differentiation.

        The Company continues to refine its compensation program to better align the program with the Company's compensation objectives and the Committee's compensation philosophy.peer group established by ISS (described above).

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Elements of Compensation

        The Company's executive compensation program consists of four basic elements:

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        While salaries, together with health and relatedretirement benefits, are designed to provide basic compensation and financial stability to the executives, the purpose of annual incentive compensation is primarily to encourage the executives to focus on the execution of the Company's business strategy and plan for the current year. Long-term incentives, granted in the form of equity awards, are designed to align executives' interests with those of stockholders and thereby (i) strengthen their concern for the welfare of the Company over the longer term and (ii)also to encourage them to remain with the Company. Unlike annual incentive compensation, which, as discussed below, tends to focus on short-termmore current Company and individual performance, long-term incentives focus on sustained results and growing stockholder value.

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Relative Size of Major Compensation Elements

        The combination of base salary, annual incentive awards, and long-term incentive awards comprise total direct compensation.compensation for the Named Executive Officers. In setting executive officer compensation, the compensation committeeCompensation Committee considers the aggregate compensation payable to the executive, assuming target performance is achieved, and the form of the compensation. The compensation committeeCompensation Committee seeks to achieve the appropriate balance between immediatecurrent cash rewardscompensation and incentives for the achievement of both annual and long-term financial and non-financial objectives.

Allocation Among ComponentsCompensation Elements

        In 2013,2015, the portion of the CEO's total compensation (assuming target performance was achieved and based on grant date values at target) that was at risk is illustrated as follows:

        In 2013,2015, the portion of the total of Messrs. GeorgeGeorge's, McKenna's and McKenna'sMylett's and Ms. Shaeff's total compensation (assuming target performance was achieved and based on grant date values at target) that was at risk is illustrated as follows, based on an average of their respective compensation:

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Base Salary

        The Committee determines base salary by considering several factors: (i) the executive's individual experience; (ii) the executive's previous job performance; and (iii) the executive's individual skills. Only after weighing the previous three factors does the Committee consider comparable indicators. The Committee uses management's performance assessments, Company performance, third-party evaluations,survey data provided by Equilar, and its own analysis of job performance to set each executive's base salary at least annually. Based on the factors described above, on December 17, 2014, the Committee approved an increase in each Named Executive Officer's base salary as indicated in the table below.

Annual Incentive Plan

        The Committee has designed anNamed Executive Officers are eligible to participate in a cash-based annual executive incentive compensation plan that is cash-based and pays for performance.receive incentive bonuses based on actual performance against key business and individual objectives. The annual incentive compensationplan consists of two distinct elements. In 2013,2015, the principal element of the plan rewarded the achievement of earnings-per-share ("EPS") target thresholds (theand free cash flow ("FCF") targets for Messrs. Lane, George and McKenna and Ms. Shaeff, and a combination of EPS and FCF targets and service growth (sales productivity and retention of service agreements) targets for Mr. Mylett (collectively, the "Corporate Financial Incentive"). In prior years, this element of the plan was based only on EPS performance, but the Committee introduced the FCF element in order to incentivize management's focus on the Company's cash-flow metrics. The Committee believes that EPS remains an important metric for the Company because it encourages a focus on profitability. The Committee chose to include service growth targets for Mr. Mylett to incentivize him to continue to enhance this part of our business for which he is directly responsible. The second smaller element of the plan rewarded the

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achievement of certain performance metrics individualized for each executive (the "Individual Performance Incentive"). Target incentive opportunities are summarized in the table below:

Corporate Financial Performance Incentive Criteria

        The Committee uses certain EPS levels in setting objective short-term incentive targets for the Company's Named Executive Officers.        At the beginning of each fiscal year, the Committee sets a threshold for EPS and FCF, a target for EPS and FCF, and a maximum EPS. In fiscal year 2013,for EPS and FCF for the threshold was $0.23,purposes of the target was $0.38,annual incentive plan, as set forth in the table immediately below. The EPS portion of the Corporate Financial Incentive represents

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70% of the total Corporate Financial Incentive, and the maximum was $0.88.FCF portion of the Corporate Financial Incentive represents 30% of the total Corporate Financial Incentive. If both the EPS threshold isand FCF thresholds are not met, no portion of the Corporate Financial Incentive is awarded. This EPS threshold is a minimum target, which means that ifIf only one of the EPS or FCF thresholds is met, then only that portion of the Corporate Financial Incentive is awarded. Likewise, at the beginning of each fiscal year, the Committee sets a threshold is exceeded,and a target for service growth. If the assigned percentageservice growth, EPS and FCF thresholds are not met, Mr. Mylett will not receive any portion of the Corporate Financial Incentive Award. The threshold, target and maximum metrics for each Named Executive Officer increases on a straight-line basis up toof the maximum EPS level.corporate goals for 2015 bonuses were:

Corporate Financial Performance Incentive Criteria

        The Committee establishes short-term incentive levels among the Named Executive Officers by assigning certain base salary percentages to each EPS level. The senior Named Executive Officers (Messrs. George and Lane) are assigned greaterFCF level, or in the case of Mr. Mylett, by assigning certain base salary percentages than junior Named Executive Officers (Ms. Shaeffto each EPS and Mr. McKenna). For fiscal year 2013, the base salary percentages for the senior Named Executive Officers were (as a percentage of base salary): threshold—18%; target—45%;FCF level and maximum—135%. For the junior Named Executive Officers, the base salary percentages were: threshold—8%; target—20%; and maximum—60%.each service growth level. Once set, the Committee has never previously adjusted the assigned base salary percentages, or the EPS levels, the FCF levels or, in the case of Mr. Mylett, the service growth levels, during the fiscal year; however, the Committee annually reserves the right to adjust these percentages if it believes that an adjustment is in the best interests of the Company. For the purpose of determining incentive compensation, (i) EPS is calculated by excludingfrom the Company's audited financial statements for the year ended December 31, 2015 with the following non-cash items:exceptions to GAAP: (A) goodwill impairment; (B) write-off of debt costs; (C) restructuring charges; and (D) any cumulative effect of a change in accounting principles.principles; and (E) any other unusual or non-recurring items as determined by the Committee, and (ii) FCF is calculated by excluding certain items related to acquisitions or sales of businesses less customary capital expenditures plus the proceeds from asset sales. For a discussion of how we calculate FCF, see the "Liquidity and Capital Resources" section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

        For fiscal year 2015, the base salary percentages for each corporate financial target level are set forth in the table below. For performance between threshold, target and maximum levels, the amounts that are earned is determined on a straight line basis.

2015 Corporate Financial Performance Incentive Target Levels

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        In setting the EPS and FCF target threshold, the Committee reviews management's recommendations and then considers the Company's historical financial performance as well as projections for the industry and other competing companies' historical financial performance and projections. The Committee strives to set EPS and FCF target thresholds that are aggressive but attainable with the intention that the Named Executive Officers will be encouraged to strive for continued improvementsimprovement in Company performance, ultimately benefiting the Company's stockholders, of the Company, and to continue that pushthose efforts even after the EPS and/or FCF target threshold hasthresholds have been met. The Committee believes that the added value the Company and its stockholders enjoy with each movementbenefit from the Company's achievement of EPS and/or FCF above the EPS thresholdor FCF thresholds is sufficient to justify the proportionate short-term incentive increases in amounts paid to the Named Executive Officers. To determine the assigned percentages for each Named Executive Officer, in addition to historical and projected Company financial performance, the Committee considers the degree to which a Named Executive Officer's efforts and job function are expected to influence and contribute to the Company's financial performance. SeniorAfter assigning target percentages to each Named Executive OfficersOfficer, the Committee then uses data provided by Equilar to assess the reasonableness of such assigned levels. The Committee did not adjust the assigned percentages for any Named Executive Officer in 2015.

        In setting the service initiative threshold, the Committee reviews management's recommendations and then considers the Company's historical service performance in addition to service performance disclosure of competing companies. When setting targets for sales productivity and service agreement retention, the Committee strives to set aggressive but achievable goals that will align management's incentives with the Company's continued improvement in service performance. To determine the assigned percentages for Mr. Mylett, the Committee considers a number of factors, including historical and projected sales productivity and service agreement retention and the degree to which the Committee believes Mr. Mylett's efforts are consideredexpected to have greater influence and control over Company financial performance, and, therefore, are assigned greater percentages thancontribute to the junior Named Executive Officers.success of the Company's service initiative.

        The Company's EPS and FCF for calculating incentive compensation targetsachievement levels for 20132015 was $0.69, resulting in$1.30 and $78.4 million, respectively. The Company's sales productivity level for 2015 was $838,534 and the senior Named Executive Officers receiving 100.8% of base pay under the EPS incentive award, whichCompany's service agreement retention level for 2015 was 92.3% of Mr. Lane's annual incentive compensation and 88.2% of Mr. George's annual

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incentive compensation for 2013. For the junior Named Executive Officers, the EPS incentive award represented 44.8% of base pay and 69.3% of Mr. McKenna's annual incentive compensation and 70.4% of Ms. Shaeff's annual incentive compensation for 2013.

90.5%. The potential and actual amounts awarded toearned by each of the Named Executive Officers under the annual incentive plan in 20132015 are summarized in the table below.

20132015 Corporate Financial Performance Incentive Achievement Levels

Individual Performance Incentive Guideposts

        In addition to and independent of the corporate financial performance portion of the short-termannual incentive plan, each executive is eligible to receive annual incentive compensation based on certain individual strategic objectives that relate to the executive's achievement of established quantitative and qualitativestrategic goals.

        At the beginning of each fiscal year, each Named Executive Officer, including the CEO, identifies individual performance goals and objectives for the upcoming year. Each Named Executive Officer's

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individual performance goals are discussed and identified in consultation with the CEO, in the case of Messrs. George, Mylett and McKenna, with the CFO in the case of Ms. Shaeff, and with the Board in the case of

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Mr. Lane. These goals and objectives vary depending on the roles and responsibilities for each Named Executive Officer. For fiscal year 2013,2015, specific goals for each Named Executive Officer included:

        Quantitative goals compose 70%Each of the value of theNamed Executive Officers' individual performance incentive,goals is quantifiable and the remaining 30% is composed of qualitative goals.four levels of attainment: Minimum (25% attainment), Meets (50% attainment), Exceeds (75% attainment) and Significantly Exceeds (100% attainment). The goals are measured on a scale of 0-200% and are

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weighted to reflect each goal's strategic importance. The maximum weighted score for the quantitative goals is 161% and the maximum weighted score for qualitative goals is 39%.

        The CEO presentsand the General Counsel present a summary evaluation of the level of achievement of these goals to the Committee the following year. In addition, each Named Executive Officer receives performance feedback from their respective direct supervisors throughout the year and a formal performance review at the end of each year, at which time the Named Executive Officer and his or her direct supervisor will evaluate the executive's satisfaction of the individual performance goals.

        In executive session, the Committee reviews and discusses its evaluation of Mr. Lane's performance over the past year and the performance summaries for each other Named Executive Officer. The Committee also considers significant individual contributions beyond established goals and each executive's overall effectiveness. In the Committee's sole discretion, based on its evaluation of these factors, the Committee then grades each executive's attainment of individual performance goals to determine the Named Executive Officer's final Individual Performance Score.

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20132015 Individual Performance Incentive Determination

        The Committee believes that corporate financial measures such as EPS, when joined together with an additional component to reflect individual achievement, are appropriate measures for determining annual incentive compensation. This two-part framework provides the executives with incentives to both achieve favorable results and sustain long-term growth for the Company, yet maintains the Committee's flexibility to awardreward outstanding individual performance.

        Mr. Mylett did not participate in this annual inventive program for 2013 because he did not begin employment with the Company until October 2013. In order to induce Mr. Mylett to accept its employment offer, the Company guaranteed Mr. Mylett a minimum annual incentive award for each of 2013, 2014, and 2015 of $200,000.

Long-term Incentives

        In 2013,2015, long-term incentive (LTI) awards("LTI") grants provided by the Company consisted of (i) stock options, (ii) time-vested restricted stock units ("RSUs"), and (iii) dollar-denominated performance stock units ("PSUs"), which are denominated in dollar amounts but, once earned, are settled with the Company's stockin shares of Common Stock based on the closing share price onmarket value of the dayCompany's Common Stock following the end of payment.the applicable performance period. The Committee designs the nature and distribution of its long-term incentiveLTI awards to encourage both performance and retention and to balance the performance compensation between the Company's performance relative to certain comparable companies, the Company's ongoing profitability, and the performance of the Company's Common Stock. The Committee believes that these awards promote a long-term view and further align the executives' interests with those of

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stockholders. The Committee adopted the current structure for long-term incentiveLTI awards in 2012 based, in part, on input from PMP. Certain awards granted prior toPM&P.

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2012, which were structured differently than the 2013 awards, were eligible to vest during 2013 and are described in greater detail below in the subsection titled "Restricted Stock Vested in 2013."

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        The Committee believes that long-term incentiveLTI compensation should be correlated with salary and short-term incentive compensation. As such, the Committee uses a percentage of each Named Executive Officer's base salary to determine the total dollar amount of the award of long-term incentiveLTI compensation to be granted to that Named Executive Officer. The Committee determines these percentage levels by analyzing each Named Executive Officer's tenure, responsibilities and professional experience and recommendations from PM&P based on market survey data as described above. For 2013,2015, the following percentage of base salary was used for each Named Executive Officer to determine the awards under the long-term incentiveLTI compensation plan: for Mr. Lane, 150% of base salary; for Mr. George, 140% of base salary; for Mr. Mylett, 100% of base salary; for Mr. McKenna, 100% of base salary; and for Ms. Shaeff, 75% of base salary.

        Once each Named Executive Officer's total grant value is determined, the number of RSUs and stock options and the value of PSUs is determined. The number of RSUs granted is then determined by dividing the total dollar amount of the RSUs to be granted by the closing price of the Company's stock on the date of grant. The number of stock options to be granted is determined by dividing the total dollar amount of the stock options to be granted by the estimated value of the options on the date of grant. For administering the Company's equity plan and in order to meet Section 16 filing deadlines, the Company approximates the value of the options as of the grant date by using a percentage derived from the historic relationship of stock price to the value of a stock option calculated using the Black-Scholes model. For 2013,2015, that multipleestimated value was 36.5%.$7.62 per stock option. PSUs are denominated in dollars.

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        As illustration, Mr. Lane's 20132015 award of long-term incentiveLTI compensation was calculated as follows:

Total Amount of Award:    150% of base salary of $500,000$585,000 equals $750,000.$877,500.

RSUs Awarded:    30% of $750,000$877,500 equals $225,000$263,250 in value of RSUs. $225,000$263,250 divided by $13.86$19.67 (the closing price of the Company's common stockCommon Stock on the date of grant) equals 16,23413,383 RSUs.

Stock Options Awarded:    30% of $750,000$877,500 equals $225,000$263,250 in value of stock options. $225,000$263,250 divided by $5.0589$7.62 (the approximate value of the stock options on the date of grant calculated by multiplying $13.86—the closing price of the Company's common stock on the date of grant—by 36.5%)using a Black-Scholes valuation model) equals 44,47634,547 stock options.

PSUs Awarded:    40% of $750,000$877,500 equals $300,000$351,000 in value of PSUs.

        The table below sets forth the long-term incentiveLTI compensation awards for each of the Company's Named Executive Officers:

        Mr. Mylett did not receive any LTI awards for 2013 because he did not begin employment with the Company until October 2013.

Performance Stock Unit Design

        Upon vesting, PSUs will be settled by granting Named Executive Officers shares of the Company's stock, with the number of such shares determined by dividing the dollar denomination of vested PSUs (which may be up to 200% of the original dollar denomination of such PSUs) by the closing pricemarket value of the Company's stock onfollowing the dateend of settlement.the applicable performance period. Vesting of the PSUs is

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based on the two metrics set forth in the table below, both of which are measured over a three-year performance period:

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        EPS:    The EPS measure, which is similar to the measure used for performance stock grants prior to 2012, compares the Company's actual EPS performance against its budgeted EPS performance over a three-year performance period. For each year in the performance period, the Company's actual EPS performance is compared against the budgeted EPS and expressed as a percentage. The EPS percentages for each of the three years in the performance period are then averaged together to determine the final performance measure upon which the payout, if any, will be earned by the Named Executive Officers. The applicable final performance measures and possible stock settlement amounts are described in the chart below.

        Total Shareholder Return (TSR)("TSR"):    The relative total shareholder returnTSR measure compares the Company's total shareholder return ("TSR")TSR to the total shareholder returnTSR of an identified peer group and payouts are determined by the Company's rank relative to others in the group. For each year in the three-year performance period, TSR is calculated by determining the difference between the average closing price of a company's common stockCommon Stock during the first thirty30 consecutive days of the fiscal year and the last thirty30 consecutive days of the fiscal year. The calculation assumes that dividends are reinvested in additional shares. The Company's TSR is then compared against the TSR for other companies in the group and assigned a percentile ranking. The Company's TSR percentile ranking for each of the three years in the performance period are then averaged together to determine the final percentile ranking upon which the payout, if any, will be earned by the Named Executive Officers. The applicable TSR percentile rankings and possible stock settlement amounts are described in the chart below.

        The following chart shows the range of potential settlement of the PSUs based on the two performance measures. The potential settlements range from 0% to 200% of the target award.

        As described above, the Named Executive Officers received 40% of their long-term incentive compensation for 2013 in the form of PSUs.

Long-term Incentive Awards Vested in 2013

        The Committee adopted the current structure for the long-term incentive plan in 2012 and one-third of the RSUs and stock options granted in 2012 were eligible to vest in 2013.

        For further information related to the RSUs that vested for each executive officer in 2013, see the section titled "Option Exercises and Stock Vested."

Restricted Stock Vested in 2013

        In 2013, restricted stock granted as performance awards in 2010 and 2011 was eligible to vest. The 2010 and 2011 awards were granted on a three-year equal vesting schedule, and vest only if the Company meets certain performance requirements prior to each vesting period. Once the Company's performance threshold is met, the awards vest on a sliding scale from 0 to 100% of the portion scheduled to vest of the total award of performance stock based on the Company's achievement of performance thresholds on a straight-line basis. For example, an executive receiving an award of 3,000 shares could have 1,000 shares vest on the first vesting date, fail to have 1,000 shares vest on the

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second vesting date, but then the Company could improve performancePSU Awards Vesting in 2014 and the executive could have the final 1,000 shares vest based on the Company meeting required performance targets.2015

        For each of thesePSU awards the Committee had to determine, on the first scheduled vesting date, whether, for the prior 12-month period, the Company had positive earnings from its continuing operations. If the Company had not had positive earnings, each employee recipient would have immediately and irrevocably forfeited his or her performance stock award in its entirety. On each of the scheduled vesting dates, the Committee also compares the Company's 36-month performance including the most recent 12-month period to the Company's average 3-year trailing EPS target as set annually by the Committee in connection with the Company's Incentive Compensation Plan. If the Company has not achieved 60% of the average 3-year trailing target, each employee recipient immediately and irrevocably forfeits his or her performance stock award scheduled to vest on such date. If the Company has achieved between 60% and 80% of the average 3-year trailing target, the performance stock awards vest on a straight-line basis on a sliding scale of 0 to 100% of the portion of the award scheduled to vest.

        The performance stock grants vest in three equal tranches, so for each executive officer one-third of each of their 2010 and 2011 awards was eligible to vest. The Company's average 3-year trailing target EPS was $0.41, resulting in a 60% to 80% target range of $0.25 to $0.33. For the purpose of determining incentive compensation, the Company's prior 12-month actual EPS was $0.36 and the 36-month average EPS was $0.35. As a result, the Company's prior 12-month and 36-month performance was sufficient to exceed the requisite range of the 3-year trailing target and, for each executive officer, 100% of eligible performance stock vested.

        For further information related to the performance shares that vested for each executive officer in 2013, see the section titled "Option Exercises and Stock Vested."

        For performance stock granted in 2011, dividends are accrued but not paid until vested, andif the performance stock fails to vest, no dividends will be paid. For the RSUs and PSUs granted in 2012 with respect to the 2012-2014 performance period were settled in early 2015. The following table shows the EPS and TSR levels achieved over such awards' three-year performance period and the payout factor for these awards:

        PSU awards granted in 2013 dividends are never paidwith respect to the 2013-2015 performance period were settled in early 2016. The following table shows the EPS and TSR levels achieved over such awards' three-year performance period and the payout factor. The difference in TSR achievement percentages from the PSU awards granted in 2012 for the period beforeyears 2013 and 2014 are due to adjustments in the units have vested.TSR peer group used for the 2012 grants and the 2013 grants, respectively:

Health and Related Benefits

        The Company's health and related plans include medical, dental, life, disability and accidental death and dismemberment coverage, and eligibility to participate in the Company's 401(k) retirement plan, and accidental death and dismemberment coverage.plan. The Company's health and related benefit programs are designed to be competitive with other similarly sized and situated companies. The plans offered to executive officers are offered through broad-based plans applicable to all employees. Within the Company's 401(k) retirement plan, the Company matches an employee's pre-tax contributions to the plan at a rate of 50% of up to 5% of an employee's annual pay or up to the maximum allowed contribution pursuant to 401(k) regulations.the Code.

Perquisites

        The Company does not provide perquisites to any Named Executive Officers that are not provided to other employees. However, the Named Executive Officers are beneficiaries of increased levels of disability coverage that are only available to senior executives of the Company. The Company pays these increased premiums on behalf of the executives.

Rule of 75

        The Company's LTI awards are issued subject to the Rule of 75, which provides that if an executive retires from the Company at a time when the sum of his or her age and his or her years of service at the Company is greater than or equal to 75, then upon the executive's retirement, the executive will have been deemed to have satisfied the continuous employment requirement for any

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equity grant to vest. Pursuant to the Rule of 75, all equity grants will continue to vest only if certain performance measures are satisfied, but the requirement that the executive be employed by the Company at the time of vesting will be deemed to be satisfied. None of the Named Executive Officers had satisfied the Rule of 75 as of December 31, 2015.

Change-in-Control Change in Control and Severance Benefits

        The Company has provided eachCompany's Named Executive Officers and other members of senior management serve as at-will employees of the Company without any guaranteed period of employment. However, the Committee believes that a senior executivesexecutive severance policy paired with change in control agreements