UNITED STATES
☑
Preliminary Proxy Statement |
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
Definitive Proxy Statement |
Definitive Additional Materials |
Soliciting Material under §240.14a-12 |
(Name of Registrant as Specified in its Charter) |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
No fee required. |
☐ | Fee paid previously with preliminary materials |
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||
3501 County Road 6 EastElkhart, IN 46514(574) 535-1125
April 9, 20194, 2022
Tracy D. Graham Chairman, Lippert Board of Directors |
Dear Fellow Stockholders:Stakeholders:
You are cordially invited to join us for our 20192022 Annual Meeting of Stockholders, which will be held at the Hotel Crescent Court, 400 Crescent Court, Dallas, Texas 75201in a virtual format only on May 23, 201919, 2022, at 9:00 A.M., CDT. ET.
The Notice of Annual Meeting of Stockholders and the Proxy Statement that follow describe the business to be conducted at the annual meeting. Members of our Board of Directors and executive officer team willplan to be present at the meeting and will be available to answer questions regarding the Company.
Your vote is very important.Whether or not you expect to attend the meeting, we encourage you to submit your proxy through the Internet or by mail. This will ensure that your shares are represented at the meeting. Even if you submit a proxy, you may revoke it at any time before it is voted. If you attend the meeting and wish to vote in person,via the online platform, you will be able to do so even if you have previously submitted a proxy through the Internet or by mail.
We appreciate your continued support of our Company.
Sincerely, | |
TRACY D. GRAHAM |
Chairman of the Board |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 3
LCI INDUSTRIES
3501 County Road 6 East
Elkhart, Indiana 46514
Notice of Annual Meeting of Stockholders to be held May 23, 201919, 2022
NOTICE IS HEREBY GIVEN to the holders of common stock of LCI Industries that the Annual Meeting of Stockholders of LCI Industries (the “Company”) will be held in a virtual format only on May 19, 2022, at 9:00 A.M. ET, for the following purposes:
(1) | To elect as recommended by the Board of Directors; | |
(2) | To approve, in a non-binding advisory vote, the compensation of the Company’s named executive officers as described in the accompanying Proxy Statement; | |
(3) | To ratify the appointment of KPMG LLP as independent auditor for the Company for the year ending December 31, | |
(4) | To transact such other corporate business as may properly come before the meeting or any adjournment or postponement thereof. |
The Board of Directors has fixed March 29, 201925, 2022, as the record date for the meeting, and only holders of record of the Company’s common stock at the close of business on that date will be entitled to vote on all matters to be considered at the meeting or any adjournment or postponement thereof.
A list of all stockholders entitled to vote at the meeting will be available for inspection for the ten days prior to the meeting at the office of the Company and will be available for inspection atonline during the time of the meeting, at the place thereof.meeting.
By Order of the Board of Directors, | |
ANDREW J. NAMENYE Executive Vice President, and Corporate Secretary |
Dated: April 9, 2019
4, 2022
Elkhart, IN
NOTICE TO HOLDERS OF COMMON STOCK
YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE VOTE YOUR SHARES THROUGH THE INTERNET OR, IF YOU RECEIVED A PRINTED COPY OF THE PROXY CARD BY MAIL, BY SIGNING, DATING, AND MAILING THE PROXY CARD IN THE ENVELOPE PROVIDED. | ||
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL STOCKHOLDER MEETING TO BE HELD ON MAY 19, 2022. | ||
THIS NOTICE OF ANNUAL MEETING, PROXY STATEMENT, AND OUR INCLUDING OUR HTTP://WWW.PROXYVOTE.COM. | ||
4 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
TABLE OF CONTENTS
31 | ||||
31 | ||||
32 | Business Performance Highlights | |||
32 | Compensation Discussion and Analysis | |||
47 | Report of the Compensation Committee | |||
48 | Summary Compensation Table | |||
51 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS The statements included in this Proxy Statement regarding future performance and results, expectations, plans, strategies, priorities, commitments, and other statements that are not historical facts are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are based upon current beliefs, expectations, and assumptions and are subject to significant risks, uncertainties, and changes in circumstances that could cause actual results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. Readers of this Proxy Statement are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 5
This summary highlights information contained elsewhere in this proxy statement.Proxy Statement. This summary does not contain all the information you should consider, and you should read the entire proxy statementProxy Statement and our 20182021 Annual Report carefully before voting.
2019
2022 ANNUAL MEETING OF STOCKHOLDERS
Date and Time: | May ET |
Place: | |
Record Date: | March 25, 2022 |
VOTING MATTERS AND BOARD RECOMMENDATION
Voting Matter | Board Recommendation | Page Number with More Information | |
Proposal 1: | Election of ten Directors | FOR each nominee | 17 |
Proposal 2: | Advisory vote to approve the compensation of the Company’s named executive officers | FOR | 62 |
Proposal 3: | To ratify the appointment of KPMG LLP as independent auditor for the Company for the year ending December 31, 2022 | FOR | 63 |
DIRECTOR NOMINEES
Nominee | Age | Director Since | Principal Occupation | Independent | Other Public Boards | Committee Memberships | ||||
A | C | CG&N | R | S&A | ||||||
James F. Gero* | 74 | 1992 | Private Investor | ✔ | 1 | ✔ | ✔ | |||
Frank J. Crespo | 56 | 2015 | Senior Vice President and Chief Supply Chain Officer of Indigo Agriculture, Inc. | ✔ | 0 | ✔ | Chair | |||
Brendan J. Deely | 53 | 2011 | Chief Executive Officer of Banner Solutions | ✔ | 0 | ✔ | Chair | |||
Ronald J. Fenech | 61 | 2017 | Founder of Grand Design Recreational Vehicle Co. | 0 | ✔ | ✔ | ||||
Tracy D. Graham | 45 | 2016 | Chief Executive Officer and Managing Principal of Graham-Allen Partners | ✔ | 0 | ✔ | ✔ | ✔ | ||
Virginia L. Henkels | 50 | 2017 | Former Executive Vice President, Chief Financial Officer and Treasurer of Swift Transportation Company | ✔ | 2 | Chair | ✔ | |||
Jason D. Lippert | 46 | 2007 | Chief Executive Officer of the Company | 0 | ||||||
Kieran M. O’Sullivan | 57 | 2015 | President, Chief Executive Officer and Chairman of the Board of CTS Corporation | ✔ | 1 | ✔ | Chair | |||
David A. Reed | 71 | 2003 | President of a privately-held family investment management company | ✔ | 0 | ✔ | Chair |
A - Audit C - Compensation CGNS - Corporate Governance, Nominating, and Sustainability | For more information, visit page 19. |
R - Risk SACD - Strategy, Acquisition, and Capital Deployment
* - Chairman of the Board
6 NOTI CE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
For more information, visit page 9.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 7
CORPORATE GOVERNANCE HIGHLIGHTS
1
CORPORATE GOVERNANCE HIGHLIGHTS
Independent Chairman of the Board |
✓ | Annual Election of All Directors |
Directors Elected by Majority Vote in Uncontested Director Elections |
✓ | Annual Board and Committee Evaluations |
Extensive Board Oversight of Risk Management, Including Separate Risk Committee |
✓ | Single Class Voting Structure (One Share, One Vote) |
✓ | Code of Ethics for Senior Financial Officers |
No Supermajority Voting Requirements |
✓ | No Shareholder Rights Plan (Poison Pill) |
✓ | Board Oversight of Environmental, Sustainability, and Social Matters |
2018
2021 COMPENSATION
SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary | Bonus | Stock Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | ||||||||||||||
Jason D. Lippert Chief Executive Officer | 2018 | $ | 975,000 | $ | — | $ | 4,544,581 | $ | 327,982 | $ | 145,132 | $ | 5,992,695 | ||||||||
2017 | $ | 975,000 | $ | — | $ | 7,183,896 | $ | 1,966,213 | $ | 138,324 | $ | 10,263,433 | |||||||||
2016 | $ | 856,800 | $ | — | $ | 5,643,142 | $ | 3,770,241 | $ | 119,612 | $ | 10,389,795 | |||||||||
Brian M. Hall Chief Financial Officer | 2018 | $ | 386,539 | $ | — | $ | 331,138 | $ | 43,731 | $ | 39,975 | $ | 801,383 | ||||||||
2017 | $ | 321,154 | $ | — | $ | 294,550 | $ | 551,253 | $ | 33,940 | $ | 1,200,897 | |||||||||
2016 | $ | 225,727 | $ | 50,000 | $ | 204,489 | $ | 99,611 | $ | 32,174 | $ | 612,001 | |||||||||
Andrew J. Namenye Vice President - Chief Legal Officer and Secretary | 2018 | $ | 368,269 | $ | 215,673 | $ | 139,840 | $ | 109,327 | $ | 35,688 | $ | 868,797 | ||||||||
Jamie M. Schnur Chief Administrative Officer | 2018 | $ | 401,066 | $ | — | $ | 512,781 | $ | 84,098 | $ | 44,095 | $ | 1,042,040 | ||||||||
2017 | $ | 401,066 | $ | — | $ | 379,819 | $ | 1,432,427 | $ | 46,167 | $ | 2,259,479 | |||||||||
2016 | $ | 389,385 | $ | — | $ | 808,663 | $ | 1,274,402 | $ | 48,042 | $ | 2,520,492 | |||||||||
Nick C. Fletcher Chief Human Resources Officer | 2018 | $ | 358,517 | $ | — | $ | 116,604 | $ | 42,049 | $ | 42,619 | $ | 559,789 | ||||||||
2017 | $ | 358,517 | $ | — | $ | 275,808 | $ | 674,698 | $ | 41,891 | $ | 1,350,914 | |||||||||
2016 | $ | 295,800 | $ | 150,000 | $ | 219,065 | $ | 563,314 | $ | 39,015 | $ | 1,267,194 | |||||||||
Scott T. Mereness Former President | 2018 | $ | 548,383 | $ | — | $ | 2,368,152 | $ | — | $ | 4,323,649 | $ | 7,240,184 | ||||||||
2017 | $ | 606,721 | $ | — | $ | 3,828,712 | $ | 1,223,531 | $ | 84,774 | $ | 5,743,738 | |||||||||
2016 | $ | 589,050 | $ | — | $ | 4,259,260 | $ | 2,875,865 | $ | 99,094 | $ | 7,823,269 |
Name Principal Position | Year | Salary | Bonus | Stock Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | |||||||||||||||||||||
Jason D. Lippert President and Chief Executive Officer | 2021 | $ | 1,085,620 | $ | -- | $ | 5,245,239 | $ | 4,500,000 | $ | 162,891 | $ | 10,993,750 | |||||||||||||||
2020 | $ | 1,013,462 | $ | -- | $ | 5,316,527 | $ | 2,990,184 | $ | 189,578 | $ | 9,509,751 | ||||||||||||||||
2019 | $ | 1,004,250 | $ | -- | $ | 7,567,765 | $ | 1,226,253 | $ | 297,369 | $ | 10,095,637 | ||||||||||||||||
Brian M. Hall Executive Vice President and Chief Financial Officer | 2021 | $ | 500,000 | $ | -- | $ | 1,078,559 | $ | 1,050,000 | $ | 60,588 | $ | 2,689,147 | |||||||||||||||
2020 | $ | 465,231 | $ | -- | $ | 912,109 | $ | 623,085 | $ | 57,737 | $ | 2,058,162 | ||||||||||||||||
2019 | $ | 450,000 | $ | -- | $ | 789,224 | $ | 274,739 | $ | 56,817 | $ | 1,570,780 | ||||||||||||||||
Ryan R. Smith Group President – North America | 2021 | $ | 750,000 | $ | -- | $ | 1,225,688 | $ | 4,375,000 | $ | 78,504 | $ | 6,429,192 | |||||||||||||||
2020 | $ | 576,923 | $ | -- | $ | 389,097 | $ | 2,179,414 | $ | 44,024 | $ | 3,189,458 | ||||||||||||||||
Jamie M. Schnur Group President – Aftermarket | 2021 | $ | 600,000 | $ | -- | $ | 1,333,487 | $ | 2,100,000 | $ | 67,737 | $ | 4,101,224 | |||||||||||||||
2020 | $ | 492,308 | $ | -- | $ | 847,323 | $ | 923,085 | $ | 63,902 | $ | 2,326,618 | ||||||||||||||||
2019 | $ | 450,000 | $ | 200,000 | $ | 1,267,413 | $ | 305,266 | $ | 76,545 | $ | 2,299,224 | ||||||||||||||||
Andrew J. Namenye Executive Vice President, Chief Legal Officer, and Corporate Secretary | 2021 | $ | 445,578 | $ | -- | $ | 710,954 | $ | 743,750 | $ | 51,525 | $ | 1,951,807 | |||||||||||||||
2020 | $ | 425,945 | $ | -- | $ | 682,995 | $ | 461,308 | $ | 52,878 | $ | 1,623,126 | ||||||||||||||||
2019 | $ | 412,000 | $ | -- | $ | 763,712 | $ | 207,581 | $ | 54,269 | $ | 1,437,562 | ||||||||||||||||
For more information, visit page 21.48.
2
EXECUTIVE COMPENSATION HIGHLIGHTS
✓ | Pay for performance |
✓ | Establish challenging performance goals in incentive plans |
✓ | Maintain robust stock ownership guidelines for |
✓ | Require termination of employment in addition to a change in control for accelerated equity vesting (double trigger) |
✓ | Require non-competition agreement for receipt of equity awards |
✓ | Subject executives’ cash and equity-based incentives to clawback |
Limit executive perquisites |
Do not provide excise tax gross-ups |
8 | NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES |
LCI released its inaugural Corporate Social Responsibility (CSR) Report in January 2022. The CSR Report elaborates on the Company’s commitments, such as reducing its environmental footprint, updating policies, and enhancing procedures and standards relating to team members’ health and safety. The CSR Report is available on the Company’s website at www.lci1.com/sustainability.
ENVIRONMENTAL
The Company’s approach to sustainability is guided by our passion to protect and invest in the communities that we call home. We integrate sustainability into our everyday actions by conscious resource selection and process improvements that aim to lessen our environmental footprint. Our teams embrace lean initiatives, and we continuously invest in comprehensive training, advanced machinery, and eco-friendly energy alternatives to provide safer processes and a healthier environment.
3
ECO-FRIENDLY OPERATIONS | |||
400 TONS of Toxic Chemicals Eliminated | We eliminate nearly 400 tons of dangerous Volatile Organic Compounds (VOC) every year by powder-coating our products instead of using coatings comprised of harmful materials. | ||
8.75GwH Produced from our Solar Solutions | By replacing conventional energy sources with the solar energy produced at our 7 solar operations, we have saved: • the equivalent CO2 emissions produced by 697,758 gallons of gasoline; and • the equivalent greenhouse gas emissions of 1,349 passenger vehicles driven for a year. | ||
1,000+ TONS of Plastic Scraps Reground | We regrind more than 1,000 tons (2,293,057 lbs.) of ABS plastic scraps annually from two thermoforming plants and send them back to our supplier to recycle and reuse. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES | 9 |
OUR CORE VALUES
Our core values define us. Our Company culture and shared values drive our attitudes, behaviors, and actions, every day, at every facility. The Company has a Leadership Development Team dedicated to bringing the Company’s core values to life through transformative company culture initiatives and numerous learning opportunities for our team members.
SOCIAL RESPONSIBILITY
People are our priority, and community is our core. We’re striving to make lives better through meaningful relationships with our co-workers, our customers, and our communities. The Company’s team members feel a deeper sense of purpose at work, and we continue to build a better work environment by aligning our cultural and business strategies with the needs of our many team members. One way we measure success is by how we touch the lives of people inside and outside our walls. Our team members drive our social impact
philosophy with their passionate hearts and minds. Since 2017, our team members have collectively spent more than 500,000 hours volunteering at over 2,000 non-profit organizations, supporting charitable fundraising events, and caring for our fellow team members in need. Through monetary donations, product donations, and company-wide fundraising events, the Company gives back over $1 million every year to support the needs of our communities.
2021 SOCIAL IMPACT
10 | NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES | 11 |
LCI INDUSTRIES
3501 County Road 6 East
Elkhart, Indiana 46514
2019 - 2022 ANNUAL MEETING OF STOCKHOLDERS
General Information
The Board of Directors of LCI Industries, a Delaware corporation (the “Company,” “we,” “us,” or “our”), is soliciting proxies for use at the Annual Meeting of Stockholders to be held at the Hotel Crescent Court, 400 Crescent Court, Dallas, Texas 75201in a virtual format on May 23, 201919, 2022, at 9:00 A.M. ET, CDT, or any adjournment or postponement thereof, at which holders of record of the Company’s Common Stock, par value $0.01 per share (the “Common Stock”), at the close of business on March 29, 201925, 2022 (the “Record Date”) shall be entitled to vote on all matters considered at the meeting. You may access the Annual Meeting of Stockholders via the Internet through www.virtualshareholdermeeting.com/LCII2022.
The Company’s stockholders will receive a Notice of Internet Availability of Proxy Materials (the “Notice”), which was or will be sent to stockholders on or about April 9, 2019,4, 2022, containing information on the availability of the proxy materials on the Internet. Stockholders will not receive a printed copy of the proxy materials unless previously requested or requested in the manner described in the Notice. The Notice explains how to access and review this Proxy Statement and our 20182021 Annual Report to Stockholders, and how you may vote by proxy.
All valid proxies received by the Company (whether by mail or via the Internet) in time for the Annual Meeting will be voted in the manner indicated on the proxies and, if no voting instructions are indicated, “FOR” the Directors named in Proposal 1, and “FOR” Proposals 2 and 3. If specific instructions are indicated, the proxies will be voted in accordance with such instructions. Each proxy may be revoked at any time after it is submitted, except as to matters upon which, prior to such revocation, a vote shall have been cast pursuant to the authority conferred by such proxy. A proxy may be revoked by giving written notice of revocation to the Secretary of the Company, or by giving a proxy with a later date, or by attending the Annual Meeting and voting in person.virtually. Attendance at the Annual Meeting alone will not revoke a proxy.
If you are the record holder of your shares (that is, you hold shares of the Company’s Common Stock in your own name and not through your broker or another nominee), you may choose to submit your proxy via the Internet. The website to submit your proxy via the Internet is www.proxyvote.com.www.proxyvote.com. You may submit your proxy via the Internet 24 hours a day until 11:59 P.M., Eastern Time, on May 22, 2019.18, 2022. You will be able to confirm that your instructions have been properly recorded. If your shares are held in “street name” (that is, in the name of a bank, broker, or other holder of record), you will receive instructions from the holder of record that you must follow in order for your shares to be voted. Submitting your proxy via the Internet also will be available to stockholders owning shares held in “street name.” If you submit your proxy via the Internet, you do not need to return a proxy card.
Directions to the Annual Meeting may be obtained by contacting our Corporate Secretary.
The cost of solicitation by the Company, including postage, printing, and handling, and the expenses incurred by brokerage firms, custodians, nominees, and fiduciaries in forwarding proxy material to beneficial owners, will be borne by the Company. The solicitation is to be made primarily by mail, but may be supplemented by telephone calls, emails, and personal solicitation. Management may also use the services of Directors and employeesteam members of the Company to solicit proxies, without additional compensation.
THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 20182021, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS), IS PART OF THE ANNUAL REPORT TO STOCKHOLDERS THAT ACCOMPANIES THIS PROXY STATEMENT. ADDITIONAL COPIES WILL BE FURNISHED TO ANY STOCKHOLDER WITHOUT CHARGE UPON REQUEST TO THE COMPANY AT 3501 COUNTY ROAD 6 EAST, ELKHART, INDIANA 46514, TELEPHONE (574) 535-1125, E-MAIL LCII@LCI1.COM. THE ANNUAL REPORT ON FORM 10-K IS ALSO AVAILABLE THROUGH LINKS ON THE COMPANY’S WEBSITE AT WWW.LCI1.COM/INVESTORS AND AT WWW.PROXYVOTE.COM.WWW.PROXYVOTE.COM.
12 | NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES |
4
The Company’s Common Stock trades on the New York Stock Exchange (“NYSE”) under the symbol “LCII.”
Stockholders of record will be entitled to one vote on each matter for each share of Common Stock held on the Record Date. At the close of business on the Record Date, there were 24,998,12125,411,470 shares of our Common Stock outstanding and eligible to vote at the Annual Meeting. A majority in voting power of the outstanding shares of Common Stock entitled to vote at the meeting must be present or represented by proxy at the meeting in order to have a quorum for the transaction of business. Abstentions and broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum.
“Broker non-votes” means shares held of record by a broker for which the broker has not received voting instructions from the beneficial owner of the shares and lacks the authority to vote the shares in its discretion. Proposals 1 and 2 fall within this category. Accordingly, if you hold your shares in “street name” and wish your shares to be voted on Proposals 1 and 2, you must give your broker voting instructions. Proposal 3 is considered to be a discretionary item, and your broker will be able to vote on this proposal even if it does not receive instructions from you.
If the persons present or represented by proxy at the meeting constitute the holders of less than a majority in voting power of the outstanding shares of Common Stock as of the Record Date, the Annual Meeting may be adjourned by the stockholders who are present, by a majority in voting power thereof, to a subsequent date for the purpose of obtaining a quorum. Votes will be tabulated by the inspector of election appointed for the meeting, who will separately tabulate affirmative and negative votes, abstentions, and, if applicable, broker non-votes.
Vote Required on Proposals
The votes required to approve each of the proposals, and the impact of abstentions and broker non-votes, if any, on each of the proposals, are as follows:
Proposal Number | Subject | Vote Required | Impact of Abstentions and Broker Non-Votes, if any |
Election of Directors | A nominee must receive a majority of the votes cast with respect to his or her election, which means that the number of votes cast “for” a nominee must exceed the number of votes cast “against” that nominee. | Abstentions and broker non-votes will not affect the outcome of this proposal. | |
Advisory vote on executive compensation | Approval by the affirmative vote of the holders of a majority in voting power of the outstanding shares of Common Stock that are present | Abstentions will have the same effect as votes cast against this proposal. Broker non-votes will not affect the outcome of this proposal. | |
Ratification of appointment of independent auditor | Approval by the affirmative vote of the holders of a majority in voting power of the outstanding shares of Common Stock that are present | Abstentions will have the same effect as votes cast against this proposal. Broker non-votes will not affect the outcome of this proposal. |
We are not currently aware of any other business to be acted upon at the Annual Meeting. If, however, other matters are properly brought before the meeting, or any adjournment or postponement of the meeting, your proxy includes a grant of discretionary authority to the individuals appointed to vote your Common Stock or act on those matters according to their best judgment, including to adjourn the Annual Meeting.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES | 13 |
The Board of Directors recommends that you vote: |
The Board of Directors recommends that you vote:
Proposal 2: | Proposal 3: | |||
FOR | FOR | FOR | ||
each of the nominees for the Board of Directors named in this Proxy Statement (Proposal 1). | ||||
5
PRINCIPAL HOLDERS OF VOTING SECURITIES
Principal Holders of Voting Securities
Set forth below is information with respect to each person known to the Company on March 29, 201924, 2022, to be the beneficial owner of more than 5%five percent of any class of the Company’s voting securities. Unless otherwise noted, the stockholders listed in the table have sole voting and investment power with respect to the shares of Common Stock owned by them.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Approximate Percent of Class(1) |
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | 3,606,789 | 14.4% |
The Vanguard Group, Inc.(3) 100 Vanguard Boulevard Malvern, PA 19355 | 2,514,157 | 10.1% |
Neuberger Berman Group LLC(4) Neuberger Berman Investment Advisers LLC 1290 Avenue of the Americas New York, NY 10104 | 1,313,768 | 5.3% |
JPMorgan Chase & Co(5) 270 Park Avenue New York, NY 10017 | 1,261,840 | 5.0% |
Name Location | Amount and Nature of Beneficial Ownership(1) | Approximate Percent of Class(1) | ||
BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10055 | 4,243,113 | 16.7% | ||
The Vanguard Group (3) 100 Vanguard Boulevard Malvern, PA 19355 | 2,695,475 | 10.6% | ||
Neuberger Berman Group LLC (4) Neuberger Berman Investment Advisers LLC 1290 Avenue of the Americas New York, NY 10104 | 1,350,063 | 5.3% | ||
Kayne Anderson Rudnick Investment Management, LLC.(5) 1800 Avenue of the Stars, 2nd Floor Los Angeles, CA 90067 | 1,284,973 | 5.1% |
(1) | Beneficial ownership is determined in accordance with rules of the Securities and Exchange Commission (“SEC”) |
(2) | Based on information reported to the SEC in an amended Schedule 13G filed by BlackRock, Inc. (“BlackRock”) on |
(3) | Based on information reported to the SEC in an amended Schedule 13G filed by The Vanguard Group (“Vanguard”) on |
(4) | Based on information reported to the SEC in an amended Schedule 13G filed by Neuberger Berman Group LLC (“Neuberger”) on February |
(5) | Based on information reported to the SEC in a Schedule 13G filed by |
14 | NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES |
6
Security Ownership of Certain Beneficial Owners and Management
Set forth below is information with respect to beneficial ownership aton March 29, 201924, 2022, of the Company’s voting securities by each Director, each of whom (other than Frederick B. Hegi, Jr.) is a nominee for election except for Mr. Fenech, by each of our executive officers named in the Summary Compensation Table herein, and by all current Directors and executive officers of the Company as a group. Unless otherwise noted, the stockholders listed in the table have sole voting and investment power with respect to the shares of Common Stock owned by them, and their address is c/o LCI Industries, 3501 County Road 6 East, Elkhart, Indiana 46514.
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Approximate Percent of Class(1) | ||||
Frank J. Crespo | 9,958 | (2) | * | |||
Brendan J. Deely | 16,652 | (2) | * | |||
Ronald J. Fenech | 3,378 | (3) | * | |||
James F. Gero | 281,019 | (4) | 1.1 | % | ||
Tracy D. Graham | 7,199 | (3) | * | |||
Frederick B. Hegi, Jr. | 161,524 | (5) | * | |||
Virginia L. Henkels | 5,858 | (6) | * | |||
Jason D. Lippert | 262,714 | (7) | 1.0 | % | ||
Kieran M. O’Sullivan | 9,494 | (8) | * | |||
David A. Reed | 39,463 | (9) | * | |||
Brian M. Hall | 8,341 | (7) | * | |||
Andrew J. Namenye | 319 | (7) | * | |||
Jamie M. Schnur | 16,225 | (7) | * | |||
Nick C. Fletcher | 0 | (7) | * | |||
Scott T. Mereness | 280,390 | (10) | 1.1 | % | ||
All current Directors and executive officers as a group (14 persons) | 822,144 | 3.3 | % |
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Approximate Percent of Class(1) |
Frank J. Crespo | 14,167(2) | * |
Brendan J. Deely | 12,891(3) | * |
Ronald J. Fenech | 27,587(4) | * |
James F. Gero | 305,228(5) | 1.2% |
Tracy D. Graham | 11,408(3) | * |
Virginia L. Henkels | 10,067(6) | * |
Jason D. Lippert | 289,727(7) | 1.0% |
Stephanie K. Mains | 1,235(3) | * |
Kieran M. O’Sullivan | 18,703(3) | * |
David A. Reed | 13,672(8) | * |
John A. Sirpilla | 4,275(3) | * |
Brian M. Hall | 19,528(7) | * |
Andrew J. Namenye | 9,706(7) | * |
Jamie M. Schnur | 16,932(7) | * |
Ryan R. Smith | 8,520(7) | * |
All current Directors and executive officers as a group (16 persons) | 767,243 | 3.0% |
* Represents less than 1% of the outstanding shares of Common Stock.
(1) | Beneficial ownership is determined in accordance with rules of the SEC, and includes general voting power and/or investment power with respect to securities. Shares of |
(2) | Includes |
(3) | Includes |
(4) |
(5) | Includes and sole dispositive power over 995,945 shares. |
(6) | Includes |
(7) | Excludes the following respective equity units that are not issuable within 60 days. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 15
DSUs | RSUs | PSUs | |||||||
Jason D. Lippert | 5,428 | 70,462 | 62,100 | ||||||
Brian M. Hall | 541 | 6,576 | 5,857 | ||||||
Andrew J. Namenye | — | 3,167 | 3,726 | ||||||
Jamie M. Schnur | 968 | 12,503 | 7,145 | ||||||
Nick C. Fletcher | 509 | 4,934 | 2,497 |
RSUs | PSUs | |
Jason D. Lippert | 34,554 | 88,472 |
Brian M. Hall | 6,985 | 15,966 |
Ryan R. Smith | 13,470 | 15,618 |
Jamie M. Schnur | 8,545 | 20,184 |
Andrew J. Namenye | 7,015 | 12,809 |
(8) | Includes |
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers and directors, and persons who beneficially own more than 10%ten percent of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Officers, directors, and greater-than-ten-percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.SEC.
Based on its review of the copies of such forms received by it,and representations from its directors and executive officers, the Company believes during 20182021 all such filing requirements applicablewere satisfied, except that a Form 4 to its officers and directors were satisfied.report one transaction for Mr. Schnur was not timely filed.
16 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
7
Proposal 1. ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the direction of our Board of Directors. The Company’s Restated Certificate of Incorporation currently provides that the number of directors shall consist of not less than three nor more than twelve persons. Our bylaws provide that the number of directors, not less than three nor more than twelve persons, shall be determined from time to time by resolution of the Board. The Board of Directors currently consists of teneleven Directors. As discussed further below, it is proposed that, at the 20192022 Annual Meeting, the stockholders elect a Board of nineten Directors to serve for a term of one year or until their successors are elected and qualify. The Board has resolved that, effective at the 20192022 Annual Meeting, the number of directors of the Company will be reduced to nine.ten. Proxies cannot be voted for a greater number of persons than nine,ten, which is the number of nominees named in this Proxy Statement. Following discussions with the tentheleventh director, Mr. Frederick B. Hegi, Jr.,Ronald Fenech, regarding his anticipated availability during the upcoming year, the Board of Directors did not nominate Mr. HegiFenech to stand for re-election at the 20192022 Annual Meeting. The Board of Directors thanks Mr. HegiFenech for his years of service and dedication to the Board and his many contributions to the Company.
On May 25, 2017, the Board of Directors amended the
The Company’s bylaws require Directors to alter the vote required for the election of directors in uncontested elections from a plurality tobe elected under a majority voting standard.standard in uncontested elections. In any contested election, Directors will continue to be elected by a plurality vote. In an uncontested election, which the election of directors at the 20192022 Annual Meeting will be, each of the nominees, as an incumbent director, was required to submit an irrevocable resignation, contingent on (i) that person not receiving a majority of the votes cast in his or her election, and (ii) acceptance of that resignation by the Board of Directors in accordance with the policies and procedures adopted by the Board of Directors for such purpose. In the event a nominee in an uncontested election fails to receive a majority of the votes cast, the Corporate Governance, Nominating, and NominatingSustainability Committee will make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent Director, or whether other action should
be taken. The Board of Directors will act on the resignation, taking into account the Committee’s recommendation, and publicly disclose (by a press release and filing an appropriate disclosure with the SEC) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision, within 90 days following certification of the election results. The Corporate Governance, Nominating, and NominatingSustainability Committee, in making its recommendation, and the Board of Directors, in making its decision, each may consider any factors and other information that they consider appropriate and relevant. If the Board of Directors accepts a Director’s resignation pursuant to this process, the Board of Directors may fill the resulting vacancy.
Director Qualifications and Selection Process
The Corporate Governance, Nominating, and NominatingSustainability Committee of the Board leads the search for individuals qualified to become Directors and selects nominees to be presented for stockholder approval at each Annual Meeting. The Committee considers candidates for Board membership suggested by members of the Committee and other Board members,Directors, as well as by Management and stockholders. In this regard, the Corporate Governance, Nominating, and NominatingSustainability Committee considers the composition of the Board with respect to experience, balance of professional interests, required expertise, and other factors. In addition, the Committee will endeavor to include candidates who reflect diverse backgrounds, including diversity of race, ethnicity, and gender, when assembling an initial pool of qualified candidates from which to fill Board vacancies. The objective of the Committee will be to identify and recommend the most capable candidates who have experience in the areas of expertise needed at that time and meet the criteria for nomination.
The Corporate Governance, Nominating, and NominatingSustainability Committee uses the same criteria for evaluating candidates suggested by stockholders as it does for those proposed by Board membersDirectors or Management. To be considered for membership on the Board, a candidate must meet the following criteria, which are also set forth in the Company’s Governance Principles: (a) should possess the highest personal and professional ethics, integrity, and values, and be committed to representing the long-term interests of the stockholders; (b) should have an inquisitive and objective perspective, practical wisdom, and mature judgment; (c) must be willing to devote sufficient time to carry out his or her duties and responsibilities effectively; (d) should be committed to serving on the Board for an extended period of time; (e) should be prepared to resign in the event of any significant change in his or her personal circumstances which may impair his or her ability to effectively serve on the Board; (f) Directors who also serve as CEOs or in equivalent positions should not serve on more than two boards of public companies in addition to the Company’s Board; and (g) Directors who are not CEOs or equivalent should not serve on more than four boards of public companies in addition to the Company’s Board.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 17
The Corporate Governance, Nominating, and NominatingSustainability Committee seeks candidates who have demonstrated exceptional ability and judgment and who can, in conjunction with other Directors, most effectively serve the long-term interests of our stockholders. The particular experience, qualifications, and skills of each nominee described on pages 919 through 1222 of this Proxy Statement reflect that our Board, taken as a whole, provides a broad diversity of knowledge of our Company and industry, expertise in finance and investment, experience with technology-based and growth-oriented companies and global markets, competence in accounting and financial reporting, and leadership in business and with socially-responsible organizations.
The Corporate Governance, Nominating, and NominatingSustainability Committee recommended to the Board each of the nominees for election as Directors as set forth herein. No candidates for Director nominees were submitted to the Committee by any stockholder in connection with the 20192022 Annual Meeting.
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Stockholders may propose nominees for consideration by the Corporate Governance, Nominating, and NominatingSustainability Committee by submitting the names of such nominees and supporting information to:
Corporate Secretary
LCI Industries4100 Edison Lakes Parkway3501 County Road 6 EastSuite 210Mishawaka,Elkhart, Indiana 4654546514
The proposed nominee must meet the qualifications for Directors described above and in the Company’s Governance Principles.
In addition, any stockholder who wishes to nominate a Director candidate at an annual meeting may do so by following the procedures and providing the information set forth under “Stockholder Proposals for the 20202023 Annual Meeting” and in Section 1.13 of the Company’s bylaws.
18 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
Our Director Nominees
Following the recommendation of the Corporate Governance, Nominating, and NominatingSustainability Committee, the Board of Directors has nominated the nineten persons named below for election to the Board of Directors at the Annual Meeting. Each of Messrs. Gero, Crespo, Deely, Fenech, Graham, Lippert, O’Sullivan, and Reed and Ms. Henkels werethe nominees was elected to his or her present term of office at the Annual Meeting of Stockholders held on May 24, 2018.20, 2021.
| Tracy D. Graham Mr. Mr. Committees:Audit; Corporate Governance, Nominating, and |
Frank J. Crespo | ||||
Mr. Crespo, Mr. Crespo has over 30 years of executive and leadership experience in procurement, supply chain, and logistics in global electronics, high technology, and industrial markets for marquee and publicly-owned corporations, as well as with the U.S. Navy. Committees: | ||||
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 19
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| Brendan J. Deely | |||
Mr. Deely, Mr. Deely has extensive experience with respect to corporate management, operations, and compensation matters, and extensive experience with Committees:Compensation; Corporate Governance, Nominating, and |
| James F. Gero Mr. Mr. Gero has extensive experience with respect to corporate management and leadership, strategic planning, and compensation matters, and has public company board experience. Committees:Audit; Corporate Governance, Nominating, and Sustainability | |||
Virginia L. Henkels Ms. Henkels, 53, has been a member of our Board of Directors since 2017. |
10
solutions from 2018 until it was acquired by The Jordan Companies in November 2021. Formerly a CPA, Ms. Henkels has extensive experience with finance, accounting, capital markets, and investor relations, as well as experience in strategy development, risk management, mergers and acquisitions, audit, corporate culture, and corporate governance. Committees: Audit (chair); Compensation |
Jason D. Lippert | ||||
Mr. Lippert, Mr. Lippert has particular knowledge of the industries and customers to which we sell our products, as well as extensive experience with strategic planning, acquisitions, marketing, manufacturing, and the sale of our products. | ||||
20 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT| LCIINDUSTRIES
Stephanie K. Mains Ms. Mains, 54, has been a member of our Board of Directors since March 2021. Ms. Mains has served as Chief Executive Officer of LSC Communications MCL, LLC, a portfolio company of Atlas Holdings, since April 2021. Ms. Mains has over 30 years of experience across diverse industry segments, including aviation, energy, and transportation, and in the last 15 years, building and expanding global service businesses serving industrial, oil and gas, utility, distributed power, and electrification spaces. Prior to her current role, she held the interim Chief Executive Officer role for GE Power Conversion, a $1B advanced electrification and digital solutions business, leading the business to a profitable turnaround through COVID-19 in 2020. From 2015-2019, she served as the President and Chief Executive Officer of Industrial Solutions, a GE and later ABB company. She led Industrial Solutions, a $2.7B GE business delivering technologies that distribute, protect and control electricity, through a transformation and divestiture to ABB. From 2013-2015, Ms. Mains served as President and Chief Executive Officer of GE Distributed Power Global Services, where she integrated and grew a $2.2B global business platform, servicing technologies that provide at the point of use power to the oil and gas, utilities, mining, and industrial segments. From 2006 until 2013, she held positions of increasing responsibility in GE Energy from General Manager to Vice President. During this time, she led the global build-out and transformation of a $4B service operation providing power equipment and services to utility and oil and gas customers. Prior to joining GE Energy, she spent 16 years across multiple GE businesses in financial and leadership positions, including Chief Financial Officer of GE Aviation Services-Contractual Services and Material Solutions, a $4B aviation material services business. Ms. Mains also serves on the board of directors of Diamondback Energy, Inc., an independent oil and natural gas company; Gates Industrial Corporation plc, a global manufacturer of innovative, highly engineered power transmission and fluid power solutions; and Stryten Manufacturing, a manufacturer of premium battery solutions, which is a private portfolio company of Atlas Holdings. Ms. Mains has extensive experience building and leading global businesses across multiple industrial and services segments. She has expertise in strategy and portfolio development, financial management, acquisitions and integrations, digital transformation, global expansion, manufacturing and service capability development, customer engagement models, organization talent development, and global cultural evolution. Committees: Audit; Compensation | ||||
Kieran M. O’Sullivan | ||||
Mr. O’Sullivan, Mr. O’Sullivan has over 25 years of leadership experience in operations, strategy, mergers and acquisitions, and finance roles in the manufacturing services, electronics, and automotive business segments, experience in global markets, as well as experience as a sitting President and Chief Executive Officer of a publicly-owned corporation. Committees: Audit; |
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David A. Reed | ||||
Mr. Reed, Mr. Reed has accounting and financial acumen, with particular knowledge of financial reporting and taxation, and has public company board experience. Committees: | ||||
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 21
| John A. Sirpilla Mr. Sirpilla, 55, has been a member of our Board of Directors since 2019. Mr. Sirpilla is Chief Executive Officer and the founder of Encourage LLC, a small family office focused on investing in retail, medical development, and health management. From 2003 to 2012, Mr. Sirpilla served as President of Camping World Accessory Stores, a 140-store nationwide retail chain serving the RV industry. In 2012, Mr. Sirpilla was promoted to Chief Business Development Officer for the parent company of Camping World and Good Sam, where he led store operations, logistics, and new business development until his retirement in 2017. Mr. Sirpilla is a current Board member of the Pro Football Hall of Fame, Aultman Health Foundation, and TecTraum Inc., and serves as Chairman of the Board for the Stark County Catholic Schools. Mr. Sirpilla has over 30 years of executive and leadership experience in the RV industry, as well as extensive knowledge and expertise in investments and strategic planning. Committees: Risk; Strategy, Acquisition, and Capital Deployment |
Unless contrary instructions are indicated, the persons named as proxies in the form of proxy solicited from holders of theour Common Stock will vote for the election of the nominees indicated above. If any such nominees should be unable or unwilling to serve, the persons named as proxies will vote for such other person or persons as may be proposed by the Board of Directors. The Board of Directors has no reason to believe that any of the named nominees will be unable or unwilling to serve.
The Board of Directors recommends a vote FOR |
election of each of the |
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CORPORATE GOVERNANCE AND RELATED MATTERS
Statement Regarding Corporate Governance
The Company regularly monitors developments in the area of corporate governance, including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform Act of 2010 (the “Dodd-Frank Act”), and rules promulgated by the SEC and the NYSE. The Company compliesCompany’s corporate governance policies and procedures are designed to comply with all laws and rules applicable to corporate governance, and the Company has continually implemented “best practices” as the Companyit deems appropriate to protect and enhance stockholders’ interests.
The Company’s Governance Principles, as well as the Charters of the Audit Committee, the Compensation Committee, the Corporate Governance, Nominating, and NominatingSustainability Committee, the Risk Committee, and the Strategy, Acquisition, and AcquisitionCapital Deployment Committee, and the Key Practices of the Audit Committee, the Compensation Committee, and the Corporate Governance, Nominating, and NominatingSustainability Committee, in addition to the Company’s Guidelines for Business Conduct, Code of Ethics for Senior Financial Officers, and Whistleblower Policy, can be accessed on the Company’s website at www.lci1.com/investors under “Corporate Governance.“Governance - Governance Documents.” A copy of any corporate governance document will be furnished, without charge, upon written request to Corporate Secretary, LCI Industries, 4100 Edison Lakes Parkway, Suite 210, Mishawaka,3501 County Road 6 East, Elkhart, Indiana 46545.46514. Information on our website is not incorporated by reference into this Proxy Statement.
Board of Directors and Director Independence
Directors are elected annually by the Company’s stockholders for one-year terms. The Board currently consists of eightnine independent Directors, one Director, Jason D. Lippert, who is employed by the Company as its President and Chief Executive Officer, and one Director, Ronald J. Fenech, who is affiliated with a customer of the Company.
The Board of Directors reviews, at least annually, the independence of each Director. During these reviews, the Board considers transactions and relationships between each Director (and his or her immediate family and affiliates) and the Company and Management to determine whether any such
transactions or relationships are inconsistent with a determination that the Director is independent. The review is based primarily on responses of the Directors to questions in a directors’ and officers’ questionnaire regarding employment, business, familial, compensation, and other relationships. In reviewing the independence of the Directors, the Board applies the standards that it has adopted to assist it in making determinations of independence and that are contained in the Company’s Governance Principles, which are available on the Company’s website at www.lci1.com/investors under “Corporate Governance.“Governance - Governance Documents.” In March 2019,2022, the Board determined that none of Messrs. Gero, Crespo, Deely, Graham, Hegi, O’Sullivan, Reed, or Reed,Sirpilla, nor Ms. Henkels or Ms. Mains, has any material relationship with the Company or its subsidiaries. Accordingly, the Board has determined that each of these eightnine Directors meets the “independence” standards of the NYSE.
As part of its review of the independence of the Directors, the Board considered the fact that one of the Company’s customers is an entity that manufactures pontoon boats, Barletta Boat Company, LLC (“Barletta”). The President and 38% ownerPrior to the sale of Barletta William Fenech, is the brother ofto Winnebago Industries, Inc. in August 2021, Ronald Fenech, one of our Directors. Ronald Fenech is alsoDirectors, was a co-owner and director of Barletta, holding a 38% ownership interest,interest. His brother, William Fenech, is the president of Barletta and isalso a director of that entity.former 38% owner. Although the purchases by Barletta from the Company were, and future purchases will be, entered into in the ordinary course of business on an arm’s length basis, and contained, and will contain, customary terms and conditions on substantially the same terms as comparable transactions with unrelated third parties, in 2018,2021, Barletta paid the Company amounts that exceed the limitation in the director “independence” standards of the NYSE. As a result, the Board determined that Mr. Fenech is not an independent Director. Mr. Fenech does not serve on any of the Audit Committee, Compensation Committee, or Corporate Governance, Nominating, and NominatingSustainability Committee.
The independent Directors have complete access to, and are encouraged to communicate with, the Company’s Chief Executive Officer and any other executives of the Company. During the year ended December 31, 2018,2021, the Board of Directors held eight9 meetings. All Directors attended at least 75% of the regularly scheduled and special meetings of the Board and the Board committees on which they served.
Board members
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 23
Directors are expected to attend the Company’s annual meetings. At the Company’s 20182021 Annual Meeting, all members of the Board were present.Directors standing for election attended virtually.
13
Leadership Structure
The Company has continuously maintained separate positions for Chairman of the Board and for Chief Executive Officer in order to provide an independent and unbiased level of review and oversight of senior management. James F. GeroManagement. Tracy D. Graham currently serves as Chairman of the Board, and Jason D. Lippert serves as President and Chief Executive Officer. The Chairman of the Board coordinates the activities of the independent Directors, serves as a liaison on Board-related issues between the independent Directors and the CEO, and performs any other duties and responsibilities that the Board of Directors may determine. While the Board elects a Chairman of the Board annually, it is generally expected that he or she will serve for more than one year.
The role of the Chairman of the Board also includes:
presiding at executive sessions, with the authority to call meetings of the non-employee Directors; |
advising on the selection of committee chairs; |
approving the agenda, schedule, and information sent to the Directors for Board meetings and assuring that there is sufficient time for discussion of all items on Board meeting agendas; |
working with the CEO to prepare a schedule of strategic discussion items; and |
guiding the Board’s governance processes, including the annual Board self-evaluation and succession planning. |
The Board periodically reviews its leadership structure to evaluate whether it remains appropriate for the Company.
Executive Sessions
The non-employee Directors meet regularly in executive sessions without Management. An executive session is held in conjunction with each regularly scheduled Board meeting and is led by the Chairman of the Board. At least once a year, a meeting of only the independent Directors is held. Additional executive sessions may be called by the Chairman of the Board in his discretion or at the request of the Board.
Board Committees
The Company has five standing committees of the Board of Directors: the Audit Committee, the Compensation Committee, the Corporate Governance, Nominating, and NominatingSustainability Committee, the Risk Committee, and the Strategy, Acquisition, and AcquisitionCapital Deployment Committee. All members of the Audit Committee, the Compensation Committee, and the Corporate Governance, Nominating, and NominatingSustainability Committee are independent Directors who meet the independence and experience standards of the NYSE and the SEC. The Board annually selects the Directors who serve on the committees. Except as outlined below, eachEach committee functions pursuant to a written Charter and, other than the Risk Committee and Strategy, Acquisition, and AcquisitionCapital Deployment Committee, written Key Practices adopted by the Board of Directors and reviewed annually by each committee.
24 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
The following table reflects the current membership of each Board Committee:
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Name | Audit Committee | Compensation Committee | Corporate Governance, Nominating, and Sustainability Committee | Risk Committee | Strategy, Acquisition, and Capital Deployment Committee |
Tracy D. Graham | ● | ● | |||
Frank J. Crespo | Chair | ● | |||
Brendan J. Deely | ● | Chair | ● | ||
Ronald J. Fenech | ● | ● | |||
James F. Gero | ● | ● | |||
Virginia L. Henkels | Chair | ● | |||
Stephanie K. Mains | ● | ● | |||
Kieran M. O’Sullivan | ● | Chair | |||
15
16
David A. Reed | ● | Chair | |||
John A. Sirpilla | ● | ● |
Audit Committee
The purpose of the Audit Committee of the Board of Directors is to assist the Board in its oversight of (i) the conduct of the Company’s financial reporting processes and the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) the independence, qualifications, and performance of the Company’s independent auditor; (iv) the adequacy and effectiveness of the Company’s systems of internal control over financial reporting and disclosure controls and procedures, and the performance of the Company’s internal audit function; and (v) the Company’s compliance with ethical standards adopted by the Company. The Committee also prepares an annual report for inclusion in the Company’s Proxy Statement. The Audit Committee selects the Company’s independent auditor, which selection is submitted to the stockholders for ratification in this Proxy Statement. See “Proposal 3. Ratification of Appointment of Auditors.”
All of the Audit Committee members meet the independence and experience requirements of the NYSE and the SEC. Ms. Henkels serves as Chair of the Audit Committee, and each member of the Committee has been determined by the Board of Directors to be an “audit committee financial expert” as defined by the SEC. This Committee held 7 meetings during the year ended December 31, 2021.
Compensation Committee
The purpose of the Compensation Committee of the Board of Directors is (i) to assist the Board in discharging its responsibilities in respect of
compensation of the Company’s executive officers; and (ii) to prepare an annual report on executive compensation for inclusion in the Company’s Proxy Statement.
The Compensation Committee is responsible for reviewing the performance and development of the Company’s Management in achieving corporate goals, and to ensure that the Company’s senior executives are compensated consistent with the long-term objectives of the Company as well as competitive practices. This Committee provides oversight and guidance in the development of compensation and benefit programs for senior executives of the Company, determines the compensation terms for the Company’s Chief Executive Officer and other executive officers, administers the LCI Industries Equity Award and Incentive Plan, as Amended and Restated (the “2011 Plan”), and the LCI Industries 2018 Omnibus Incentive Plan (the “2018 Plan”), approves equity awards, and coordinates with the Corporate Governance, Nominating, and Sustainability Committee with respect to compensation of Directors. The Compensation Committee approved the compensation, consisting of salary, incentive bonus, equity awards, and benefits paid for 2021 to the “Named Executive Officers.” See “Executive Compensation - Compensation Discussion and Analysis.”
Mr. Crespo serves as Chairman of the Compensation Committee. All members of the Compensation Committee meet the independence requirements of the NYSE and the SEC. This Committee held 5 meetings during the year ended December 31, 2021.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 25
Corporate Governance, Nominating, and Sustainability Committee
The purpose of the Corporate Governance, Nominating, and Sustainability Committee of the Board of Directors is to assist the Board in (i) identifying qualified individuals to become Directors; (ii) determining the composition of the Board of Directors and its Committees; (iii) monitoring a process to assess Board effectiveness; (iv) developing and implementing the Company’s corporate governance principles and business guidelines; (v) evaluating potential candidates for executive positions; and (vi) oversight of sustainability and social responsibility matters.
The Corporate Governance, Nominating, and Sustainability Committee oversees the development of executive succession plans, coordinates with the Compensation Committee with respect to compensation of Directors, reviews and approves related person transactions, and resolves any conflicts of interest involving a Director. The Committee reviews and, if necessary, recommends revisions to the Company’s Guidelines for Business Conduct, Code of Ethics for Senior Financial Officers, and other governance policies adopted from time to time. The Committee also oversees, reviews, and reports to the Board on a periodic basis with regards to sustainability and social responsibility matters, including impacts to the Company’s business and strategy, the Company’s public reporting on these topics, and any recommendations with respect to oversight and related policies.
The Corporate Governance, Nominating, and Sustainability Committee leads the search for individuals qualified to become Directors and selects nominees to be presented for stockholder approval at each Annual Meeting of Stockholders and to fill vacancies on the Board of Directors. See “Proposal 1. Election of Directors - Director Qualifications and Selection Process.”
Mr. Deely serves as Chairman of the Corporate Governance, Nominating, and Sustainability Committee. This Committee held 2 meetings during the year ended December 31, 2021.
Risk Committee
The purpose of the Risk Committee is to provide oversight of Company-wide risk management practices to assist the Board in (i) overseeing that the executive team has identified and assessed all the risks that the organization faces and has established a risk management infrastructure
capable of addressing those risks; (ii) overseeing in conjunction with other Board-level committees or the full Board, if applicable, risk, such as strategic, financial, credit, market, liquidity, cyber and physical security, property, information technology, legal, regulatory, reputational, and other risks; (iii) overseeing the division of risk-related responsibilities to each Board committee as clearly as possible and performing a gap analysis to determine that the oversight of any risks are not missed; and (iv) in conjunction with the full Board, approving the Company’s enterprise-wide risk management framework. The Company faces a number of material risks, including financial and operational risks. Accordingly, the Company conducts regular enterprise risk management reviews to identify and assess these risks, and to implement effective plans to manage them.
Mr. O’Sullivan serves as Chairman of the Risk Committee. This Committee held 4 meetings during the year ended December 31, 2021.
Strategy, Acquisition, and Capital Deployment Committee
The purpose of the Strategy, Acquisition, and Capital Deployment Committee is to assist the Board in fulfilling its oversight responsibilities relating to the formulation and execution of strategy for the Company, risks and opportunities relating to such strategy, and strategic decisions regarding investments, acquisitions, and divestitures by the Company. The Strategy, Acquisition, and Capital Deployment Committee (i) works with Management in the development of the Company’s strategy; (ii) monitors execution of the Company’s strategic plan, both domestically and internationally, against stated goals and objectives, and provides guidance and feedback as necessary; (iii) in conjunction with Management, develops an acquisition strategy that aligns with the Company’s long-term strategic plan; (iv) reviews each proposed acquisition by the Company above an established threshold in the context of various factors, including whether to recommend approval of the acquisition; (v) from time to time, reviews and recommends to the Board of Directors whether to exit an existing business or dispose of assets; and (vi) reviews and analyzes actions and results against stated goals and objectives.
Mr. Reed serves as Chairman of the Strategy, Acquisition, and Capital Deployment Committee. This Committee held 10 meetings during the year ended December 31, 2021.
26 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
Compensation-Related Risk
To identify risks that could be created by our compensation policies and practices, the Compensation Committee reviews enterprise risk management assessments, and evaluates our controls to determine if they adequately mitigate compensation-related risks. If appropriate, controls are modified or supplemented. The Compensation Committee assessed our executive compensation programs and concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee believes our executive compensation programs, including the design of long-term incentive plans, oversight by the Compensation Committee, and sufficiency of control features, prevent unintentional material risk. In addition, stock ownership guidelines, the long-term nature of equity awards, share retention, and incentive compensation forfeiture, taken together, motivate Management to carefully consider risk in making business decisions and evaluating growth opportunities, and mitigate excessive risk-taking to achieve short-term results.
COMPENSATION RECOUPMENT POLICY
Compensation Recoupment Policy
The Board of Directors has adopted a compensation recoupment policy for executive officers that allows for the recovery of performance-based compensation amounts paid under an incentive compensation plan, including any discretionary bonus amounts and equity awards, under the 2011 Plan or the 2018 Plan, or any successor plan, the amount, payment, and/or vesting of which was calculated based wholly, or in part, on the application of financial performance criteria. The policy applies in the event there is a required financial restatement due to material noncompliance with any financial reporting requirements under the securities laws, as determined by the Board of Directors, which results
in performance-based compensation that would have been a lower amount if such compensation had been calculated based on such restated results. The policy is administered by the Compensation Committee, as more fully described in the policy, which is included in the Compensation Committee Key Practices.
DIRECTOR STOCK OWNERSHIP REQUIREMENTS
Director Stock Ownership Requirements
To help align the personal interests of non-employee Directors with the interests of stockholders, all non-employee Directors are required to hold Company Common Stock, RSUs, or DSUs equivalent to 5x each non-employee Director’s annual cash retainer (exclusive of any cash retainer for serving as a Board or Committee chair). Equity interests that count toward satisfaction of the guidelines include shares owned outright by, or held in trust for the benefit of, the individual and his or her immediate family members residing in the same household, plus RSUs, DSUs, and stock awards (whether vested or unvested). Stock options (whether vested or unvested) do not count toward satisfaction of the guidelines. Non-employee Directors are required to achieve ownership in accordance with the guidelines within threefive years of the date they assume their position. As of the date of this Proxy Statement, all non-employee Directors satisfy the stock ownership requirements or are within that three-yearfive-year period.
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TEAM MEMBERS AND DIRECTORS GUIDELINES FOR BUSINESS CONDUCT
Employees and Directors Guidelines for Business Conduct
The Company has Guidelines for Business Conduct that all management employeesManagement team members and Directors are required to annually sign and to follow in conducting the Company’s business, and a Code of Ethics for Senior Financial Officers governing the conduct of its President and Chief Executive Officer, President, Chief Financial Officer, and the financial officers of the Company and its subsidiaries.
MANAGEMENT AND BOARD SUCCESSION
Management and Board Succession
The Board periodically reviews with the Chief Executive Officer and maintains a succession plan for executive officers, after considering recommendations from the Corporate Governance, Nominating, and NominatingSustainability Committee. The plan is designed to ensure an effective transition of managementManagement of our operations to qualified executives upon the retirement of senior executives. The Board is also responsible for maintaining an emergency succession plan that is reviewed periodically with Management.
CONTACTING THE BOARD OF DIRECTORS
Contacting the Board of Directors
Any stockholder, or other interested party, who wishes to communicate with the Board of Directors, or our non-employee Directors as a group, or any member of the Board, may do so electronically by
sending an e-mail to LCII@lci1.com or by writing to any Director c/o LCI Industries, 4100 Edison Lakes Parkway, Suite 210, Mishawaka,3501 County Road 6 East, Elkhart, Indiana 46545.46514. Communications received electronically or in writing will be distributed to the Chairman or the other members of the Board, as appropriate, depending on the facts and circumstances described in communications received. For example, communications regarding accounting, internal accounting, internal accounting controls, and auditing matters generally will be forwarded to the Chair of the Audit Committee.
PROHIBITION ON HEDGING BY DIRECTORS AND TEAM MEMBERS
The Board of Directors has adopted a Hedging Policy that prohibits the Company’s Directors, executive officers, team members, and their designees from purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s Common Stock. This prohibition applies to all shares of the Company’s Common Stock owned directly or indirectly by such persons. The Hedging Policy does not preclude the Company’s Directors, officers, team members, and their designees from engaging in general portfolio diversification.
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The following table summarizes compensation paid to non-employee Directors during fiscal 2018:2021:
Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Total | ||||||
James F. Gero | $ | 172,500 | $ | 165,958 | $ | 338,458 | |||
Frank J. Crespo | $ | 97,500 | $ | 154,714 | $ | 252,214 | |||
Brendan J. Deely | $ | 97,500 | $ | 154,714 | $ | 252,214 | |||
Ronald J. Fenech | $ | 82,500 | $ | 152,375 | $ | 234,875 | |||
Tracy D. Graham | $ | 82,500 | $ | 152,375 | $ | 234,875 | |||
Frederick B. Hegi, Jr. | $ | 82,500 | $ | 152,375 | $ | 234,875 | |||
Virginia L. Henkels | $ | 93,330 | $ | 153,545 | $ | 246,875 | |||
John B. Lowe, Jr. | $ | 20,625 | $ | — | $ | 20,625 | |||
Kieran M. O’Sullivan | $ | 99,000 | $ | 154,894 | $ | 253,894 | |||
David A. Reed | $ | 100,500 | $ | 155,164 | $ | 255,664 | |||
Total | $ | 928,455 | $ | 1,396,114 | $ | 2,324,569 |
Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | All Other Compensation(3) | Total | ||||||||
Tracy D. Graham | $ | 165,538 | $ | 140,045 | $ | 3,895 | $ | 309,478 | ||||
Frank J. Crespo | $ | 121,812 | $ | 140,045 | $ | 13,792 | $ | 275,649 | ||||
Brendan J. Deely | $ | 105,000 | $ | 140,045 | $ | 3,895 | $ | 248,940 | ||||
Ronald J. Fenech | $ | 103,500 | $ | 140,045 | $ | 12,296 | $ | 255,841 | ||||
James F. Gero | $ | 152,154 | $ | 140,045 | $ | 21,859 | $ | 314,058 | ||||
Virginia L. Henkels | $ | 128,225 | $ | 140,045 | $ | 14,188 | $ | 282,458 | ||||
Stephanie K. Mains | $ | 72,750 | $ | 167,405 | $ | 3,436 | $ | 243,591 | ||||
Kieran M. O’Sullivan | $ | 102,231 | $ | 140,045 | $ | 3,895 | $ | 246,171 | ||||
David A. Reed | $ | 133,400 | $ | 140,045 | $ | 5,197 | $ | 278,642 | ||||
John A. Sirpilla | $ | 91,500 | $ | 140,045 | $ | 3,895 | $ | 235,440 | ||||
Total | $ | 1,176,110 | $ | 1,427,810 | $ | 86,348 | $ | 2,690,268 |
(1) | Represents the Directors’ annual cash retainer amount and the additional annual cash fee paid to the Chairman of the Board and the Committee Chairs, as applicable, for the period of time they served in the respective positions in |
(2) | In May |
Name | RSUs Held at December 31, |
Tracy D. Graham | 1,036 |
Frank J. Crespo | 1,036 |
Brendan J. Deely | 1,036 |
Ronald J. Fenech | 1,036 |
James F. Gero | |
Virginia L. Henkels | |
Stephanie K. Mains | 1,235 |
Kieran M. O’Sullivan | |
David A. Reed | |
John A. Sirpilla | 1,036 |
(3) | Represents the dollar value of dividend equivalents credited on stock awards in the applicable year when those amounts were not factored into the grant date fair value of the award. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 29
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DISCUSSION OF DIRECTOR COMPENSATION
Discussion of Director Compensation
The Corporate Governance, Nominating, and NominatingSustainability Committee has responsibility for recommending to the Board compensation and benefits for non-employee Directors. In discharging this duty, the Committee is guided by three goals: (1) compensation should fairly pay Directors for the time and service they provide; (2) compensation should align the interests of Directors with the long-term interests of stockholders; and (3) the structure of the compensation should be simple, transparent, and easy for stockholders to understand. The Corporate Governance, Nominating, and NominatingSustainability Committee believes these goals are served by providing non-employee Directors with an annual retainer fee, fees for each meeting attended, or any combination thereof, and an annual stock-based award. Prior to determining compensation for non-employee Directors for fiscal 2018,2021, the Corporate Governance, Nominating, and NominatingSustainability Committee also consulted with Exequity LLP,Willis Towers Watson, the Committee’s independent compensation consultant, regarding Director compensation mix and total compensation for Board and Committee service.
For fiscal 2018,2021, non-employee Directors received a combination of an annual cash retainer of $82,500,$90,000, which covers a Director’s attendance at up to 2520 Board and Committee meetings, and an annual grant of RSUs valued at approximately $140,000 on the date of grant, which occurs on the date of the Annual Meeting following their election to the Board for a one-year term. Attendance at any meetings in excess of the 2520 earns additional compensation of $1,500 per meeting. The Chairman of the Board and the Chair of each of the Audit Committee, the Compensation Committee, the Corporate Governance, Nominating, and NominatingSustainability Committee, the Risk Committee, and the Strategy, Acquisition, and AcquisitionCapital Deployment Committee received an additional annual fee for the additional responsibilities related to their respective positions. The following table sets forth the additional annual fees for the Board and Committee Chairs that were in effect during 2018:2021:
Annual Fee for Board or Committee Chair | Amount | |||
Board of Directors | $ | 90,000 | ||
Audit Committee | $ | 20,000 | ||
Compensation Committee | $ | 16,500 | ||
Corporate Governance, Nominating, and Sustainability Committee | $ | 15,000 | ||
Risk Committee | $ | 15,000 | ||
Strategy, Acquisition, and Capital Deployment Committee | $ | 20,000 |
Annual retainer fees, meeting attendance fees, and chair fees are paid on a quarterly basis.
Non-employee Directors who join the Board of Directors other than on the date of an Annual Meeting receive pro-rated retainer amounts and equity awards.
To
As described in more detail in footnote (1) to the table above, to encourage our Directors’ long-term ownership of the Common Stock of the Company, non-employee Directors historically have been able tomay elect to receiveaccept DSUs in lieu of cash compensation in payment of Directors’ fees. An initial election to defer compensation for a calendar year must be made prior to December 31st of the preceding calendar year. The number of shares of DSUs, credited at the fair market value of the stock on the date credited, is equivalent to 115% of the deferred fee. The DSUs are distributed in the form of shares of Common Stock of the Company at the end of the deferral period selected by the Director, subject to earlier distribution upon death, disability, or certain changes-in-control of the Company, and are intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended. Until shares representing the DSUs are distributed, the Director does not have any rights of a stockholder of the Company with respect to such shares, other than to receive dividend equivalents in DSUs with the same deferral period, if dividends are issued to stockholders. Due to an administrative error, our Directors were not given the ability to timely make an election to defer compensation for 2018, and therefore our Board of Directors permitted our non-employee Directors to elect to receive shares of Common Stock, instead of DSUs, in lieu of cash compensation for 2018. In addition, in order to provide a reasonable substitute for the 115% value in the historical DSU election option, in 2018 each non-employee Director who was elected at the 2018 Annual Meeting was also granted an award of additional RSUs that had a value equal to 15% of the amount of such Director’s annual cash retainer and any applicable Board or Committee chair fees. Directors were provided the opportunity to elect to receive DSUs in lieu of cash compensation in payment of Directors’ fees in 2019.
Directors who are employeesteam members of the Company do not receive additional fees or other compensation for serving as Directors.
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A MESSAGE FROM OUR COMPENSATION COMMITTEE
2021 was a year of incredible growth for LCI Industries. While the ongoing COVID-19 pandemic created challenges for LCI Industries in 2020, including a period of uncertainty and temporary suspension of production for non-essential manufacturing, it also increased RV retail demand as consumers looked for affordable and safe alternative vacation options that avoided large gatherings, air travel, and hotel lodging. This section provides information relatingrecord RV retail demand continued throughout 2021. Combined with the impact of six strategic acquisitions and organic growth in the Aftermarket Segment, LCI Industries achieved a 60 percent increase in consolidated net sales in 2021 compared to 2020 – ending 2021 with record net sales of $4.5 billion.
Led by our talented executive team, Lippert team members came together in 2021 to innovate across all areas of the business and to meet unprecedented demand levels. Their dedication propelled the business forward, resulting in continued growth opportunities that we believe will deliver value to both customers and stockholders in 2022 and beyond.
As the Compensation Committee, we strive to pay for performance and ensure the goals and objectives of the executive leadership team are aligned with those of stockholders, and retain and motivate Management to drive long-term success for LCI Industries. As you review the following Compensation Discussion and Analysis (“CD&A”), you will see that the strong business performance we achieved in 2021 informed our decisions related to executive compensation payouts. We also consider the market and the unique situation in Elkhart County, Indiana, where our geographic proximity to so many other RV companies means competition for talent is high. This presents a unique challenge as many of our local competitors are privately held, with largely cash-based compensation programs.
At the same time, we remain very committed to stockholder input. As a result of the 2021 say-on-pay vote, the Compensation Committee spent significant effort gathering feedback from stockholders along with that of proxy advisory firms, and incorporated that feedback into our compensation decisions. In response to stockholder concerns, we decided to forgo the use of any one-time awards in 2021. We also expanded our stock ownership guidelines to include all of our named executive officers. In addition, LCI Industries has increased its focus on environmental, social, and governance (“ESG”) factors. An overview of our stockholder input efforts and additional key themes we heard is included on page 36 of the CD&A.
The Compensation Committee of the Board of Directors oversees LCI Industries’ executive compensation philosophy and reviews and approves compensation for our named executive officers. While LCI Industries’ Management and our independent compensation consultant provide input, it is the sole responsibility of the Compensation Committee to approve our executive compensation philosophy, plans, policies, programs, and decisions.
The Compensation Committee
Frank J. Crespo, Chairman
Brendan J. Deely
Virginia L. Henkels
Stephanie K. Mains
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BUSINESS PERFORMANCE HIGHLIGHTS
Despite significant ongoing operational challenges, specifically involving labor, freight, and supply chains, our executive leadership team led us to deliver record achievements in 2021. We believe this performance was the compensation paiddirect result of the dedication of our team members, who worked tirelessly to overcome these headwinds by leveraging our automation and continuous improvement initiatives. Some highlights from 2021:
• | Adjusted EBITDA1 of $511.7 million, up $183.5 million, or 56%, year-over-year. |
COMPENSATION DISCUSSION AND ANALYSIS
LCI Industries supplies highly engineered components primarily to the original equipment manufacturers (“OEMs”) during 2018.
Named Executive Officers
Our Named Executive Officersof recreational vehicles, buses, trailers, trucks, boats, trains, manufactured housing, and their related aftermarkets. We strive to be a leading supplier for component parts manufacturing in the markets in which we compete. Executing on this strategy requires a team of highly engaged and motivated leaders, who are determinedrewarded in accordanceline with the rules of the SEC,performance they deliver.
To ensure our leaders are driven to deliver excellence for our team members, our customers, and for 2018 include: Jason D. Lippert, our Chief Executive Officer; Brian M. Hall,stockholders, our Chief Financial Officer; Andrew J. Namenye, our Vice President - Chief Legal Officer and Secretary; Jamie M. Schnur, our Chief Administrative Officer; Nick C. Fletcher, our Chief Human Resources Officer; and Scott T. Mereness, our former President.executive compensation program is designed to link business priorities with performance.
Compensation Discussion and Analysis
OUR EXECUTIVE COMPENSATION PHILOSOPHY | |
Our executive compensation program is based on a pay-for-performance philosophy and is designed to: | |
● | Enable the Company to attract, motivate, and retain highly-qualified senior executives who have the skills to drive our continued profitability, growth, and success; |
● | Provide fair and equitable compensation that rewards executives for achieving specified financial goals and other key metrics; |
● | Link a substantial portion of executives’ total potential compensation to the Company’s performance on both a long-term and short-term basis; and |
● | Align the interests of our executives with those of our stockholders. |
This Compensation Discussion and Analysis (“CD&A”) describes the major elements of our compensation programs for the Named Executive Officers, as well as the objectives, philosophy, process, and decisions underlying the2021 compensation of our Named Executive Officers. Because Mr. Mereness’s employment with us terminated effective November 16, 2018, this CD&Anamed executive officers (“NEOs”) listed below. It also provides information regarding our compensation programs applicable to Mr. Mereness to the extent they apply based on his status with the Company at the relevant time. This CD&A should be read together with the executive compensation tables and related footnotes found later in this Proxy Statement.
Response to 2018 Stockholder Advisory Vote
At the Annual Meeting of Stockholders held on May 24, 2018, our stockholders approved, in an advisory vote, the compensation paid to our NEOs for 2017. In the advisory vote, 97% of the votes cast voted in favor of the 2017 compensation. Although the vote was non-binding, the Compensation Committee (or, in this CD&A, the “Committee”) reviewed the results of the vote and considered the approval rate as an indication that stockholders support the Company’s executive compensation philosophy and decisions, including the restructured aspects of the compensation program for our Chief Executive Officer and President that were effective for 2017.
Our Board of Directors has determined that our stockholders should vote on an advisory say-on-pay proposal each year. Accordingly, our Board of Directors recommends that you vote FOR Proposal 2 at the Annual Meeting. For more information, see “Proposal 2 - Advisory Vote on Executive Compensation” in this Proxy Statement.
Compensation Philosophy
Our executive compensation policy is designed to enable the Company to attract, motivate, and retain highly-qualified senior executives by providing a competitive compensation opportunity based significantly on performance. The Committee’s intent is to provide fair and equitable compensation in a way that rewards these executives for achieving specified financial goals and other key metrics. Our performance-related awards are structured to link a substantial portion of these executives’ total potential compensation to the Company’s performance on both a long-term and short-term basis, to recognize individual contribution as well as overall business results, and to align executive and stockholder interests. A significant portion of the total compensation paid to our NEOs is in the form of long-term equity.
Our compensation policy has demonstrated over time that sound business decisions by these executives are in the best interests of the Company and our stockholders, as well as the executives. Accordingly, the Committee rewards performance in excess of pre-established targets of return on invested capital (“ROIC”) and growth in earnings per share (“EPS”), and the Committee avoids establishing goals that could divert our executives’ attention from the fundamentals of effective and efficient operations.
We believe the Company’s compensation programs through 2018 have been instrumental in driving our strong financial performance and stockholder returns in recent years. Since 2013, the Committee has primarily emphasized ROIC and EPS in the Company’s executive compensation programs. The Company’s method of measuring ROIC is based on operating profit and average invested capital (defined on page 26). Revenue growth was included as a secondary performance measure in the annual incentive plan in 2015 and 2016, and employee attrition reduction was the secondary performance measure in 2017. In 2018, the Committee chose gross margin improvement as the secondary performance measure because it was one of the Company’s strategic business goals for 2018. The Committee believes a focus on ROIC in the Company’s compensation program incentivizes the CEO and his executive team to increase operating profits through organic growth and capital-efficient acquisitions, which aligns directly with the Company’s long-term growth strategy. Since Mr. Lippert was appointed CEO, ROIC has become ingrained in our corporate culture. The Committee has also strongly supported alignment with stockholder interests by emphasizing EPS in its equity compensation programs. The Committee believes that focusing executives on EPS growth and ROIC performance aligns directly with long-term stockholder value creation.
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Compensation Process
The Committee is responsible for reviewing the performanceoverview of our executive officers in achieving our long-term businesscompensation program, which we continue to refine based on stockholder feedback, competitive market practice, and Company performance.
Named Executive Officer | Role |
Mr. Jason D. Lippert | President and Chief Executive Officer (CEO) |
Mr. Brian M. Hall | Executive Vice President and Chief Financial Officer (CFO) |
Mr. Ryan R. Smith | Group President – North America |
Mr. Jamie M. Schnur | Group President – Aftermarket |
Mr. Andrew J. Namenye | Executive Vice President, Chief Legal Officer, and Corporate Secretary |
(1) | Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes, depreciation and amortization expense, and other adjustments made in order to present comparable results from period to period, which consisted of the inventory fair value step-up from the acquisitions of Schaudt, Ranch Hand, and CURT during the twelve-month periods ended December 31, 2021 and 2020, respectively. Refer to Appendix A to this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure. |
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SUMMARY OF OUR 2021 DECISIONS
The Compensation Committee makes decisions regarding named executive officer total compensation (base salary, annual cash incentive objectives and ensuring that such executives are compensated consistent with those objectives, as well as competitive practices. The Committee approves the compensationpayments, and benefit programs for our senior executives, and confirms compensation paid to those NEOs who have employment agreements is in compliance with the agreements.
The Committee reviews the executive compensation programannual equity grants) in connection with our annual performance review process, which typically begins in November of each fiscal year, with changes to base compensation effective January 1st.process. The Committee typically sets base salary structures and annual incentive targets after taking into consideration a combination of financial performance results, management recommendations, and market and industry datatable below summarizes its decisions as well as external data from a peer group of similarly-sized and type of companies. Although notupdates to the determinative factor, the Committee believes peer group data provides a useful point of reference to ensure our compensation structures allow us to remain competitive in our markets. The Committee uses an outside compensation consultant to assist it in analyzing our compensation programs for 2021 and determining appropriate levels2022.
Factors That Guide Total Compensation Decisions | • Our executive compensation philosophy • Degree of achievement of key strategic financial and operational goals • Recommendations of our President and CEO (other than with respect to his own compensation) • Advice of an independent compensation consultant • Stockholder input • Market pay practices • Current and historical executive compensation • Executive compensation peer group comparison |
2021 Compensation See pages 39 – 62 | BASE SALARY |
Effective January 1, 2021, Messrs. Lippert, Hall, and Namenye received base salary increases of 3%, 5.8%, and 3%, respectively, to more closely align their base salaries with the competitive market practice for their respective roles. Messrs. Schnur and Smith received base salary increases of 20% and 25%, respectively, reflecting the scope and increased responsibilities of their roles, and to more closely align their base salaries with the competitive market practice for such roles. | |
ANNUAL CASH INCENTIVE | |
In February 2021, the Compensation Committee approved the annual Adjusted EBIT goals for the 2021 Annual Incentive Plan (the “AIP”). For 2021, the AIP was simplified to focus on one metric, Adjusted EBIT, reflecting its importance to our growth and aligning more closely with our local competitors and peer group. Actual Adjusted EBIT results achieved in 2021 were very strong. In February 2022, the Committee met and determined the degree to which the Adjusted EBIT goal under the 2021 AIP was achieved in 2021. Adjusted EBIT in 2021 was $398 million, resulting in a 200% of target payout multiple for the CEO and a 175% of target payout multiple for the other named executive officers. Adjusted EBIT is a non-GAAP financial measure. Refer to Appendix A to this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure. | |
EQUITY GRANT DECISIONS | |
On March 1, 2021, Mr. Lippert received an annual equity grant with a target value of $5,350,000. Messrs. Hall, Namenye, Schnur, and Smith received annual equity grants with a target value ranging from $725,000 to $1,360,000. The value of the equity award granted to each NEO was based on his performance over the long term and during the prior year, his long-term potential and retention considerations, and market practices for comparable positions. | |
For all of the named executive officers, these annual equity grants consisted of approximately 60% performance stock units (“PSUs”) and 40% restricted stock units (“RSUs”). These PSUs are based on return on invested capital (“ROIC”) performance measured at the end of the two-year period from 2021- 2022, and any of these PSUs that are earned will vest in March 2024, following a one-year holding period. | |
RSUs for all of the named executive officers vest over a three-year period, with one-third vesting each year on the anniversary of the grant date. | |
In February and March 2022, the Compensation Committee discussed, reviewed, and approved executive compensation matters for 2022. | |
BASE SALARY | |
2022 Compensation Program Changes | Effective January 1, 2022, the NEOs received base salary increases ranging from 1.3% to 12.2%, to more closely align their base salaries with the competitive market practice for their respective roles. INCENTIVE PLAN Based on feedback received from investors, a portion of the 2022 annual cash incentive available to the NEOs has been shifted to equity and incorporated into each NEO’s annual equity long-term incentive grant to better align the NEOs’ interests with those of our stockholders. Furthermore, the PSUs awarded to the NEOs in March 2022 provide that the number of units that could be earned is based on whether and to what extent ROIC performance goals for a three-year period from January 1, 2022 through December 31, 2024 are satisfied — increasing the PSU performance measurement period from two years to three years. |
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SUPPORTING OUR PAY-FOR- PERFORMANCE PHILOSOPHY
In support of our pay-for-performance philosophy and achievement of strong Company performance, the majority of the total direct compensation opportunity that our President and benefits. The decision to retain consultantsCEO and if so, which consultants to retain,other named executive officers receive is made solely by“at-risk” and dependent upon future performance.
Consistent with the Committee.
The Chief Executive Officer participates in the Committee’s meetings at the Committee’s request. To aid the Committee in making its determination, tally sheets summarizing totalCompany’s overall executive compensation for the last three fiscal years, as well as the current inventory of stock-based awards held by thephilosophy, named executive officers are provided. The Chief Executive Officer provides recommendations annuallyrewarded for their strong leadership and Company performance, while providing them with equity incentives to ensure alignment of their interests with those of our stockholders. For Mr. Lippert, 88% of his total direct compensation opportunity (base salary, target annual cash incentive, and target equity grants) is at-risk, as shown below. On average, the Committee regarding thetotal direct compensation of allopportunity at risk for our other named executive officers is 78%.
The majority of the total direct compensation opportunity for our named executive officers — 88% for our President and CEO and, on average, 78% for our other named executive officers — is “at-risk” based on the achievement of specific performance goals and stock price performance. |
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ALIGNING PAY WITH PERFORMANCE
We emphasize variable pay rather than himself.fixed pay, with target opportunities based on market practices and payments based on performance. The Committee, not Management, is responsible for the final determinationstructure of the amount and form of executive compensation.
In July 2013, the Committee engaged Exequity LLP (“Exequity”), an independent consultant that reports directly to the Committee. Exequity’s role is to provide the Committee with ongoing general advisory services, which may include assistance with review of executive pay proposals and program designs, various data analyses, support with respect to relevant legal and regulatory considerations impactingour executive compensation and benefit programs, and updates on market trends. A representativeprogram ensures that as an executive’s scope of Exequity regularly attendsresponsibility increases, a greater portion of his compensation comes from performance-based pay. For 2021, the Committee meetings and provides data and advice to the Committee throughout the year. Exequity provides no services or advice to any executive or employee of the Company, and provided no other services to the Company for 2018. The Committee is empowered to retain or replace Exequity or to hire additional consultants at any time.
In evaluating the competitiveness of our compensation programs for 2018, Exequity reviewed, and provided to the Committee, market data regarding the compensation practices of a peer group of 20 publicly traded companies listed below:
The peer group outlined above is the same as the peer group used by the Committee when evaluating our compensation programs for 2017 except that the Committee replaced CLARCOR Inc. with Brunswick Corporation based on Exequity’s recommendation.
In February 2018, in consultation with Exequity and following discussions with the CEO, the Committee approved the compensation arrangement for the CEO and senior officers of the Company and its wholly-owned subsidiary Lippert Components for fiscal year 2018, including with respect to Named Executive Officers of the Company, which, in addition to base salary, included an annual management incentive program and value-based equity awards consisting of PSUs and time-based RSUs. Based on the Committee’s review of the tally sheets and external peer data, the Committee determined the amounts of compensation to be paid to our NEOs for 2018 were reasonable, and were appropriate based on our financial results of operations and the individual performance of each of the executives.
The Committee expects to rely on the same general compensation structure going forward, but reserves the right to make structural modifications to the key elements of the compensation provided to executive officers from year to year. The Committee periodically reviews our compensation policy utilizing both internal and external sources of information and analysis relating to financial results of operations,
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individual performance, long-term return to stockholders, compensation-related risk assessment, and compensation afforded by other employers to comparable-level executives. If appropriate, changes are recommended. For example, the Committee made certain adjustments related to 2018 compensation for our executives. Under the Company’s 2018 Annual Incentive Program approved by the Committee for the Company’s senior officers (the “2018 AIP”), the Committee retained the principal performance measure of adjusted ROIC, but up to 10% of the bonus payment amount was subject to the level of achievement of gross margin improvement targets, instead of an employee attrition reduction goal as it was under the 2017 Annual Incentive Program (the “2017 AIP”). In addition, in 2018 the Committee changed the type of annual equity awards granted. Instead of DSUs, the Committee granted RSUs to the NEOs, which, like DSUs, are time-based vesting awards that vest over a period of three years. The Committee also granted PSUs instead of performance shares, but the awards continued to be based on the same underlying performance measures over the same time periods and continued to have a subsequent approximately one-year vesting period. Further, the Committee granted PSUs based on ROIC to certain other NEOs, rather than just to the CEO and President, as it had done in 2017. The Committee made additional adjustments to the 2019 compensation program. See “Compensation Program Changes for 2019” on page 30.
Principal Elements of Compensation of Named Executive Officers
The principalperformance-based components of our executive compensation program were designed as follows:
Short-Term Incentive | Long-Term Incentive | ||
Annual Cash Incentive | Performance-Based Equity (60%) | Time-Based Equity (40%) | |
Objective | Reward achievement of short-term (annual) Company financial performance goals | Reward long-term financial results and drive stockholder value creation | Reinforce ownership in the Company Provide direct alignment with stockholders |
Form | Cash | Performance Stock Units (PSUs) | Restricted Stock Units (RSUs) |
Time Horizon | 1 year | 2-year measurement period followed by 1-year holding period | 3 years |
Metrics | Adjusted EBIT | ROIC | Stock price appreciation Continued employment |
COMPENSATION FACTORS AND GOVERNANCE
The Compensation Committee applies a number of compensation governance features related to executive compensation, which are summarized below. We believe that these mechanisms help to align executive and stockholder interests.
WHAT WE DO • Deliver executive compensation primarily through performance-based at-risk pay • Maintain a peer group for benchmarking pay • Set challenging short- and long-term incentive objectives • Place a cap on the annual cash incentive payments that executives can receive • Provide strong oversight that ensures adherence to equity grant regulations • Maintain a clawback policy for annual cash incentive and equity compensation, as well as an anti-hedging/pledging policy • Require stock ownership by all of our NEOs, with minimum ownership levels defined by role • Have double-trigger change-in-control arrangements • Conduct an annual risk assessment to mitigate any compensation program-related risk having a material adverse effect on the Company • Offer market-competitive benefits for executives that are consistent with the benefits provided to the rest of our employees • Consult with an independent consultant on compensation levels and practices |
WHAT WE DON’T DO • No hedging or pledging of equity • No guarantees or minimums related to base salary increases, annual cash incentives, or equity grants • No gross-ups upon change in control • No excessive perquisites • No supplemental executive retirement plans |
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Stockholder Input on Executive Compensation
We value the opinions of our stockholders and regularly solicit input on our executive compensation program. In evaluating the design of our executive compensation and the compensation decisions for each of our named executive officers, the Compensation Committee considers stockholder feedback, including the advisory “say-on-pay” vote at our annual meeting. In 2021, 23% of the votes cast approved the compensation of our named executive officers. We responded with a proactive outreach program led by our Compensation Committee Chair in 2018place during this time, Tracy Graham.
In the spring of 2021, we reached out and solicited feedback from the holders of 71% of institutionally held shares. The following stockholder engagement activities allowed us to gather input with respect to our executive compensation program:
● | General investor engagement events: The Company participated in various investor engagement events that gave Management the opportunity to engage with institutional stockholders to discuss the current and forward-looking business environment. |
- | Management attended the virtual Baird 2021 Global Consumer, Technology & Services Conference, and CL King Best Ideas Conference, among others. |
- | The Company participated in Non-Deal Roadshows (NDRs) with the majority of our covering analysts, which attracted a high volume of investors, given the virtual environment. |
● | Investor outreach regarding compensation: The Company’s CFO, Brian Hall, and the Compensation Committee Chair in place during this time, Tracy Graham, participated in a series of outreach calls with some of the Company’s top stockholders in December 2020 and January 2021. The conversations with stockholders were focused on compensation, and the Company’s leadership received helpful feedback on how investors evaluate this topic, what they consider best practices, and suggestions to the Compensation Committee on how to adjust the current remuneration framework. A summary of this feedback and the Company’s response is below. |
Stockholder Feedback | The Company’s Response | |
Short-Term Incentives | Stockholders expressed that the discretion applied to the 2020 AIP awards, which adjusted payouts upwards, was not favorable. | Changes made to the 2020 AIP awards were restricted to the removal of the month of April from the performance measurement period for the financial metric used. The decision to apply the Committee’s discretion was due to lockdowns imposed on certain facilities during that month. The Compensation Committee recognizes negative investor feedback to that change and refrained from making similar alterations this year. |
Long-Term Incentives | Stockholders requested that the Company discontinue use of one-time LTI awards and instead use the existing compensation programs to reward executives, even in the case of acquisitions. | The Company did not grant one-time awards in 2021. While certain one-off awards granted in the past are not yet fully vested, the Company did not provide any bonus or grants which are not part of the regular Annual Incentive Plan or the LTI plan. |
Stockholders opposed grants of PSUs linked to acquisitions instead of awards linked to executives’ performance across the board. | In the current executive compensation programs, acquisitions are no longer a metric to measure executive performance. PSUs within the LTI plan rely on ROIC as the performance metric. | |
Stockholders requested more information about the Compensation Committee’s process to evaluate and define performance metrics used in the STI and LTI plans. | The Company provides more information about the process of evaluating metrics in the below sections “Role of the Compensation Committee” and “Role of the Independent Compensation Consultant.” |
To strengthen our pay-for-performance culture, the Compensation Committee considers the feedback obtained from our investor outreach when making decisions relating to compensation for our named executive officers. We remain committed to ongoing, proactive stockholder outreach throughout 2022 and into the future. The Board strongly believes in engagement, communication, and transparency with the Company’s stockholders. The Company regularly participates in investor conferences and holds numerous meetings with institutional stockholders to discuss our financial performance, strategy, corporate governance, ESG practices, human capital management, and executive compensation program. The Company is committed to ongoing engagement with its investors on all appropriate matters, including executive compensation and governance.
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Role of the Compensation Committee
The Compensation Committee administers the executive compensation program for all named executive officers as well as other executives within the Company. While Company Management provides input, it is the responsibility of the Compensation Committee to evaluate and approve our executive compensation philosophy, plans, policies, programs, and decisions.
The following table provides the steps the Compensation Committee follows to ensure the total compensation for our named executive officers is competitive, appropriately tied to performance, and does not promote undue risk taking.
STEP 1: Input on Compensation | STEP 2: Compensation Committee Decisions | STEP 3: Performance Goals |
At the beginning of each year, Management, including the President and CEO, provides recommendations to the Compensation Committee on the compensation of the named executive officers. The CEO does not make recommendations on his own pay. These recommendations take into consideration the competitive market pay data provided by the Compensation Committee’s independent consultant and applicable to the RV industry in Elkhart County, Indiana, as well as an evaluation of the named executive officer’s role, contributions and performance in achieving Company performance, and long-term potential. (See more below on the Compensation Committee’s independent compensation consultant.) | The Compensation Committee considers these recommendations together with the input of its independent compensation consultant and subsequently the Compensation Committee determines the named executive officers’ compensation, ensuring that it is aligned with our compensation philosophy. All aspects of the CEO’s compensation are determined solely by the Compensation Committee, with input from its independent compensation consultant. For the coming year, the Compensation Committee reviews and approves: ● Variable pay target opportunities for annual cash incentive compensation and long-term equity incentives ● Performance metrics for the annual cash incentive and equity grants | The Compensation Committee ensures that performance metrics are consistent with the financial, operational, and strategic goals set by the Board, that the performance goals are sufficiently ambitious, and that amounts paid (when specified performance levels are achieved) are consistent with our executive compensation philosophy. |
Role of the Independent Compensation Consultant
Though the Compensation Committee has ultimate responsibility for compensation-related decisions, it retains Willis Towers Watson as a consultant on executive compensation matters. Willis Towers Watson provides market analyses and input that inform the Committee’s decisions, provides updates on market trends and the regulatory environment as it relates to executive compensation, reviews various executive compensation proposals presented by Management to the Compensation Committee, and works with the Compensation Committee to validate and strengthen the pay-for-performance relationship and alignment with stockholders.
Pursuant to the rules of the SEC, the Committee has reviewed the SEC’s independence factors for compensation advisers and concluded that no conflict of interest exists that would prevent Willis Towers Watson from independently representing the Committee.
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Role of the Executive
Compensation Peer Group
To help ensure we provide our named executive officers with fair and market-competitive compensation and to support retention of our key leaders, we annually review the compensation we offer our executives against executives within our peer group of companies.
In 2021, this peer group consisted of companies determined to be:
● | Similar in size (revenue and market capitalization), complexity, and global reach to LCI Industries; |
● | In the auto parts and equipment industry or a similar industry; and |
● | In competition with LCI Industries for executive talent. |
We design our total compensation packages to provide pay for performance, tracking when our results exceed or fall short of our financial and operational goals. |
Challenges We Face in
the RV Industry
Defining our executive compensation peer group is a challenge given the complexity of our business as well as our concentrated geographic footprint. The Compensation Committee considers the unique situation in Elkhart County, Indiana, where our geographic proximity to so many other RV companies means competition for talent is high. Attracting talent to Elkhart County is an ever-present challenge as well. Thus, while many of our competitors are not publicly-traded companies, and therefore do not disclose their compensation practices for benchmarking, we must consider local pay practices as we make decisions about executive compensation. We look at market data alongside our decades of industry experience and knowledge of local RV industry pay practices and models to help ensure the Company can incentivize and engage our talented senior leadership team and broader workforce who are key to our continued business success.
Our peer group is regularly reviewed by the Compensation Committee with consideration given to our strategy and the advice of its independent compensation consultant. The Compensation Committee used the peer group on the right in making 2021 executive compensation decisions.
2021 PEER GROUP A. O. Smith American Axle & Manufacturing Brunswick Carlisle Companies Dana Donaldson Graco Hubbell, Inc. ITT, Inc. Lincoln Electric Holdings Meritor Modine Manufacturing Patrick Industries Terex Corp Thor Industries Visteon Watts Water Technologies Winnebago Industries |
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ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
Our executive compensation consists of fixed pay and variable pay, including cash and non-cash components. The table below summarizes the various elements of executive compensation and their objectives:
Objective | Type of Compensation | Key Features | |
Base Salary | Provide competitive fixed pay that is tied to the market and allows us to attract, retain, and motivate executives within the auto parts and equipment industry and broader market | Cash | ● Reflects individual skills, experience, responsibilities, and performance over time ● Influences annual cash and long-term incentive opportunities |
Short-Term Incentive — Annual Cash Incentive | Encourage focus on short-term business performance | Cash | ● Performance-based reward tied to achievement of short-term (annual) financial performance goal ● Pays only if threshold performance levels are met or exceeded |
Long-Term Incentive — Performance Stock Units (PSUs) | Increase multi-year profitability and stock price | Equity | ● Performance-based rewards tied to achievement of long-term performance goals ● Vests only if threshold performance levels are met or exceeded ● Links value to stock price |
Long-Term Incentive — Restricted Stock Units (RSUs) | Closely align executive and stockholder interests and aid in retention | Equity | ● Promotes retention and enhances executive stock ownership ● Links value to stock price |
Other Benefits | Aid in attracting and retaining executive talent | Benefit | ● Severance provisions to protect Company and NEOs from certain termination events ● Broad-based benefits available to all team members ● A Deferred Compensation Program |
Analysis of 2021 Compensation Decisions
Base Salary
We establish base salaries for named executive officers that reflect each executive’s experience, expertise, and the complexity of their role, as well as current competitive compensation data. The Compensation Committee reviews base salaries of our named executive officers annually, and it approves any increases after considering factors such as performance, market competitiveness, and affordability.
2021 Base Salary Decisions
Effective January 1, 2021, Messrs. Lippert, Hall, and Namenye received base salary increases of 3%, 5.8%, and 3%, respectively, to more closely align their base salaries with the competitive market practice for their respective roles. Messrs. Schnur and Smith received base salary increases of 20% and 25%, respectively, reflecting the scope and increased responsibilities of their roles, and to more closely align their base salaries with the competitive market practice for such roles.
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Name | 2020 Approved Salary(1) | 2021 Approved Salary | Percent Change | |||||||||
Mr. Jason D. Lippert | $ | 1,054,000 | $ | 1,085,620 | 3.0 | % | ||||||
Mr. Brian M. Hall | $ | 472,500 | $ | 500,000 | 5.8 | % | ||||||
Mr. Ryan R. Smith | $ | 600,000 | $ | 750,000 | 25.0 | % | ||||||
Mr. Jamie M. Schnur | $ | 500,000 | $ | 600,000 | 20.0 | % | ||||||
Mr. Andrew J. Namenye | $ | 432,600 | $ | 445,578 | 3.0 | % |
(1) | Actual salary in 2020 was less than approved salary, as the NEOs voluntarily reduced their base salaries by 10%-25% for an eight-week period from April through June 2020 to support cost savings as a result of the uncertainties created by the COVID-19 pandemic. |
2022 Base Salary Decisions
The NEOs received base salary increases effective January 1, 2022. These increases more closely align the NEOs’ base salaries with the competitive market practice for their respective roles.
Name | 2021 Approved Salary | 2022 Approved Salary | Percent Change | |||||||||
Mr. Jason D. Lippert | $ | 1,085,620 | $ | 1,100,000 | 1.3 | % | ||||||
Mr. Brian M. Hall | $ | 500,000 | $ | 525,000 | 5.0 | % | ||||||
Mr. Ryan R. Smith | $ | 750,000 | $ | 800,000 | 6.7 | % | ||||||
Mr. Jamie M. Schnur | $ | 600,000 | $ | 620,000 | 3.3 | % | ||||||
Mr. Andrew J. Namenye | $ | 445,578 | $ | 500,000 | 12.2 | % |
Annual Cash Incentive
Under our 2021 AIP, we provide named executive officers with the opportunity to earn a cash incentive award when they deliver strong annual Company financial performance. Annual cash incentives are paid based on the Company’s achievement of annual performance goals determined by the Compensation Committee within the first 90 days of each year.
Annual Incentive Plan
In February 2021, the Compensation Committee approved the annual performance metrics, goals, and payout structure for the 2021 AIP. For 2021, the AIP was simplified to focus on one metric, Adjusted EBIT, as it is a key indicator of the strength of our business, it aligns with our local competitors and peer groups, and the Compensation Committee believes that it drives long-term performance-basedstockholder return.
The 2021 Adjusted EBIT target goal was set at $265 million, a 19% increase over the prior year. Each named executive officer has the opportunity to earn a predetermined target cash incentive amount (“Target Incentive”) if the Company achieves the Adjusted EBIT target goal for the year. The actual payout can range from 0% to 200% of the Target Incentive for the CEO and 0% to 175% of the Target Incentives defined for the other NEOs depending on the Company’s level of achievement of the Adjusted EBIT goal as shown in the table below:
2021 Adjusted EBIT Goals | Incentive Payout (CEO) | Incentive Payout (Other NEOs) | ||||||
Below Threshold | $ | -- | 0% of Target Incentive | 0% of Target Incentive | ||||
Threshold | $ | 225,250,000 | 50% of Target Incentive | 50% of Target Incentive | ||||
Target | $ | 265,000,000 | 100% of Target Incentive | 100% of Target Incentive | ||||
Maximum | $ | 362,250,000 | 200% of Target Incentive | 175% of Target Incentive |
Under the 2021 AIP, to the extent the overall threshold for Adjusted EBIT of $225,250,000 is achieved or exceeded, the payment amount for each participant would be calculated by multiplying the participant’s Target Incentive amount by the applicable incentive payout percentage as set forth in the table above. When Adjusted EBIT performance is between inflection points set forth above, linear interpolation is used to determine the payout amount.
For purposes of the 2021 AIP, Adjusted EBIT means the Company’s 2021 consolidated net income before interest and taxes, as adjusted by the Committee for events that are unusual in nature or infrequently occurring, including without limitation, a change in control, acquisitions, divestitures, restructuring activities, or asset write-downs, or for changes in applicable tax laws or accounting principles.
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2021 Annual Incentive Plan Payouts (paid in March 2022)
In February 2022, the Committee met and determined the degree to which the Adjusted EBIT goal under the 2021 AIP was achieved. Actual Adjusted EBIT results in 2021 were very strong at $398 million, resulting in a payout level of 200% of the Target Incentive amount for the CEO and 175% of the respective Target Incentive amounts for the other named executive officers. Adjusted EBIT is a non-GAAP financial measure. Refer to Appendix A to this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure.
As a result of the Compensation Committee’s determinations as described above, the following table sets forth the cash incentive payment amount to each named executive officer under the 2021 AIP:
Name | 2021 Target Incentive | Cash Payout Under 2021 AIP | Actual as a % of Target | |||||||||
Mr. Jason D. Lippert | $ | 2,500,000 | $ | 4,500,000 | (1) | 180 | %(1) | |||||
Mr. Brian M. Hall | $ | 600,000 | $ | 1,050,000 | 175 | % | ||||||
Mr. Ryan R. Smith | $ | 2,500,000 | $ | 4,375,000 | 175 | % | ||||||
Mr. Jamie M. Schnur | $ | 1,200,000 | $ | 2,100,000 | 175 | % | ||||||
Mr. Andrew J. Namenye | $ | 425,000 | $ | 743,750 | 175 | % |
(1) | In determining the final cash incentive payment amount to the Mr. Lippert under the 2021 AIP, the Board of Directors elected to exercise negative discretion to reduce his cash payout based on Company policy infractions related to the use of Company email. |
Equity Grants
Equity grants help to align executive interests with those of our stockholders. The Compensation Committee uses both PSUs and RSUs in our annual equity long-term incentive grants to retain and motivate our executives to achieve long-term performance.
Annual Equity Long-Term Incentive Grants
Annual equity grants are typically made in March of each year.
The following criteria are evaluated for each of our named executive officers when determining the value of their annual equity award:
● | Performance over the long term; |
● | Performance during the prior year; |
● | Long-term potential; |
● | Retention considerations; and |
● | Market practices for comparable positions. |
In February 2021, the Compensation Committee approved the amounts, terms, and conditions for the equity grants to be awarded in March 2021 of PSUs and RSUs for the Company’s senior officers, including the named executive officers, pursuant to the 2018 Plan. For each of the named executive officers, a total dollar value for the equity grant was established based on the criteria listed above (“Equity Value”). That Equity Value is converted to units based on the 15-day average trading price through the date of grant. For 2021, the Equity Value was allocated based on a mix of 60% PSUs and 40% RSUs.
2021 Annual Performance Stock Units (PSUs) | 2021 Annual Restricted Stock Units (RSUs) | |
Definition | Notional units that will be settled in shares of LCII common stock on a one-for-one basis, if and to the extent certain performance metrics are achieved and subject to any additional vesting period | Notional units that will be settled in shares of LCII common stock following the applicable vesting dates |
% of Annual Equity Grant | 60% | 40% |
Performance Metric | ROIC | Time/Service |
Vesting | Two-year measurement period (2021-2022) with number of PSUs earned based on achievement of performance goals; followed by one-year holding period prior to vesting (March 2024) | Annually over three years |
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Performance Stock Units: 2021 ROIC PSUs
The PSUs awarded to the named executive officers consisted of PSUs based on the Company’s ROIC (as hereinafter defined) for the two-year period from 2021-2022 followed by a one-year holding period prior to vesting in March 2024 (the “2021 ROIC PSUs”). The ROIC performance goal for the two-year period was set at 20.8% (“Target”). The 2021 ROIC PSUs provide that the number of PSUs that could be earned range from 0% to 200% of the Equity Value allocated and converted to PSUs at the ROIC Target (“ROIC PSUs Target Number”) based on whether and to what extent the ROIC performance goal is met as shown in the table below:
ROIC Performance | Multiple of ROIC PSUs Target Number |
<16.60% | 0.00x |
16.60% (Threshold) | 0.50x |
18.70% | 0.75x |
20.80% (Target) | 1.00x |
21.85% | 1.50x |
22.90% (Maximum) | 2.00x |
If ROIC performance is between inflection points, linear interpolation will be used to determine the number of earned 2021 ROIC PSUs.
The term “ROIC,” or “Return on Invested Capital,” means Operating Profit divided by Average Invested Capital, where: (i) “Operating Profit” is the Company’s fiscal year consolidated operating
profit, as detailed in the Company’s financial statements filed with the SEC; and (ii) “Average Invested Capital” is the average of the prior year end and current year quarterly (Total Stockholders Equity + Indebtedness) – (Cash, Cash Equivalents, and Short-Term Investments).
“Total Stockholders’ Equity” is the Company’s total stockholders’ equity as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC.
“Indebtedness” is the Company’s indebtedness as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC.
“Cash, Cash Equivalents, and Short-Term Investments” is the sum of the cash, cash equivalents, and short-term investments as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC.
In addition, the Committee may adjust ROIC to exclude the impact of the following: (i) accretion expense; (ii) goodwill impairment; (iii) charges for reorganizing or restructuring; (iv) charges from asset write-downs; (v) acquisitions or divestitures; (vi) foreign exchange gains or losses; and (vii) extraordinary, unusual, transition, one-time, and/ or non-recurring items as determined by the Committee from time to time.
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Restricted Stock Units
The annual RSUs granted in 2021 to the named executive officers vest over a three-year period, with one-third vesting each year on the anniversary of the grant date. The Compensation Committee believes the RSUs granted to our executives and team members constitute an effective incentive to achieving long-term Company success and are an important compensation annual equity-based awards consistingcomponent to our executives and team members. The number of RSUs granted to each named executive officer in 2021 was value-based after consideration by the Compensation Committee of factors and events relative to the Company’s performance, the expense related to the RSUs, resulting dilution, the element of motivation that equity awards provide, and other personal benefits. While the components of compensation are considered separately in this discussion, the Committee took into account the full compensation package providedfactors.
2021 Equity Long-Term Incentive Grant
The Equity Value awarded to each of the NEOs. The following table describes these principal elements of compensationnamed executive officers, the amount allocated to PSUs and RSUs, and the objectivesconversions to number of each:
Target | |||
For additional information regarding these compensation elements and 2018 compensation decisions, see “2018 Executive Performance and Compensation.”
23
To encourage our executives’ long-term ownership of our Common Stock, the Committee historically has granted annual awards of DSUs under the 2011 Plan and, beginning in 2018, granted RSUs under the 2011 Plan. The Committee shifted the type of award from DSUs to RSUs for administrative ease and due to the fact that executives have not typically elected to defer the awards. The award agreements for all types of equity awards include, among other provisions, termination, change-in-control, and clawback provisions.
The Committee does not limit DSU or RSU grants based on the current level15-day average trading value price of equity ownership$146.41 through the date of our NEOs orgrant, are as follows:
Name | ROIC PSUs Target Number | ROIC PSUs Target Value | RSUs Number | RSUs Value | Target Value of Equity Grants | |||||||||||||||
Mr. Jason D. Lippert | 21,925 | $ | 3,210,000 | 14,617 | $ | 2,140,000 | $ | 5,350,000 | ||||||||||||
Mr. Brian M. Hall | 4,508 | $ | 660,000 | 3,006 | $ | 440,000 | $ | 1,100,000 | ||||||||||||
Mr. Ryan R. Smith | 5,123 | $ | 750,000 | 3,416 | $ | 500,000 | $ | 1,250,000 | ||||||||||||
Mr. Jamie M. Schnur | 5,574 | $ | 816,000 | 3,716 | $ | 544,000 | $ | 1,360,000 | ||||||||||||
Mr. Andrew J. Namenye | 2,972 | $ | 435,000 | 1,981 | $ | 290,000 | $ | 725,000 |
Performance Results for 2019 ROIC & Diversification PSUs
The PSUs granted in 2019 (“2019 PSUs”) provided that the unvested portionnumber of their prior awards. OnPSUs that could be earned was based on whether and to what extent ROIC performance goals for 2021 were satisfied, as well as whether and to what extent the contrary,diversification goals for 2021 were satisfied. In early 2022, the Compensation Committee believesdetermined that ROIC was achieved at 24%, resulting in performance at 148.6% of target, and that the greaterdiversification goals were not achieved, resulting in performance at 0% of target. The 2019 PSUs earned based on ROIC performance (“2019 ROIC PSUs”) are displayed below.
2019 ROIC PSUs (Granted at $82.16) | 2019 ROIC PSUs Target Value | 2019 ROIC PSUs Earned at 148.6% of Target(2) | ||||||||||
Mr. Jason D. Lippert | 31,646 | $ | 2,600,000 | 51,093 | ||||||||
Mr. Brian M. Hall | 3,652 | $ | 300,000 | 5,896 | ||||||||
Mr. Ryan R. Smith(1) | N/A | N/A | N/A | |||||||||
Mr. Jamie M. Schnur | 4,017 | $ | 330,000 | 6,485 | ||||||||
Mr. Andrew J. Namenye | 3,360 | $ | 276,000 | 5,425 |
(1) | Mr. Smith did not receive a 2019 ROIC PSU grant. |
(2) | Includes dividends earned. |
The earned 2019 ROIC PSUs vested on March 7, 2022.
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Performance Results for 2020 ROIC PSUs
The ROIC PSUs granted in 2020 (“2020 ROIC PSUs”) provided that the number of PSUs that could be earned was based on whether and to what extent ROIC performance goals for the two-year period from January 1, 2020 through December 31, 2021 were satisfied. In early 2022, the Compensation Committee determined that ROIC was achieved at 24%, resulting in performance at 200% of their equity interest in the Company, the more closely aligned our executives’ personal interests become with the interests of our stockholders.target. The 2020 ROIC PSUs earned are displayed below.
Other Compensation Programs
2020 ROIC PSUs (Granted at $111.69) | 2020 ROIC PSUs Target Value | 2020 ROIC PSUs Earned at 200% of Target(2) | ||||||||||
Mr. Jason D. Lippert | 28,741 | $ | 3,210,000 | 60,716 | ||||||||
Mr. Brian M. Hall | 4,701 | $ | 525,000 | 9,930 | ||||||||
Mr. Ryan R. Smith(1) | N/A | N/A | N/A | |||||||||
Mr. Jamie M. Schnur | 4,191 | $ | 468,000 | 8,854 | ||||||||
Mr. Andrew J. Namenye | 3,492 | $ | 390,000 | 7,376 |
(1) | Mr. Smith did not receive a 2020 ROIC PSU grant. |
(2) | Includes dividends earned. |
The earned 2020 ROIC PSUs will vest on March 1, 2023, following a one-year holding period.
RETIREMENT SAVINGS PROGRAMS
In order2021, we provided retirement benefits to be competitive with market employment and compensation practices, we maintainour named executive officers through the following benefit programs:
401(k) Plan
defined contribution retirement savings plan, which is the same plan available to all team members. We do not maintain any defined benefit retirement plans or other pension or profit-sharing plans. To provide retirement benefits for executives, the Company maintains a discretionary 401(k) plan, covering all eligible employees, pursuant to which
In 2021, the Company matched a portion of contributions to the 401(k) plan up to the 20182021 statutory maximum of $11,000$11,600 per employee.team member. The aggregate amount of the Company’s contributions with respect to the NEOsnamed executive officers was $66,000$58,000 for 2018.2021. Although our 401(k) plan permits profit-sharing contributions, the Company has not made any such contributions to the plan.
Deferred Compensation Plan
To provide a means for deferral of taxation on compensation, the Company maintains an Executive Non-QualifiedNon- Qualified Deferred Compensation Plan (“Deferral(the “Deferral Plan”) for certain executives, including the NEOs.named executive officers. The Company does not make any contributions to the Deferral Plan, but is responsible for certain costs of Deferral Plan administration, which are not significant. Pursuant to the Deferral Plan, the NEOsnamed executive officers are eligible to defer all or a portion of their earned base salary and incentive compensation. Each participant is fully vested in all deferred compensation and earnings on investments credited to his or her account because the Deferral Plan participant has made all the contributions. Pursuant to the Deferral Plan, payments to the participants will be made from our general unrestricted assets, and the obligations pursuant to the Deferral Plan are unfunded and unsecured.
Perquisites and All Other Benefits
OTHER BENEFITS
As a competitive employeeteam member benefit, we provide employeeteam member health insurance in which the NEOsnamed executive officers participate, the aggregate cost of which for the NEOsnamed executive officers was $63,507$53,838 for 2018.2021. We also provide other employeeteam member benefits in which the NEOsnamed executive officers participate, including life and disability insurance, and an automobile allowance together with related expenses. We do not provide or reimburse our executives for personal use of an airplane, or for financial planning, tax preparation, or home security.
Severance
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SEVERANCE
In February 2015, the Compensation Committee approved and adopted a form of Executive Employment Agreement for senior officers that has an initial three-year term with automatic one-year renewals and that provides severance payments or other benefits under certain circumstances following termination. The Compensation Committee believes the Executive Employment Agreements serve as appropriate retention tools for the Company’s executives by providing security in the event of an unplanned termination of employment for reasons other than cause. Furthermore, from time to time, we examine various strategic alternatives, and the provisions of the agreementsExecutive Employment Agreements are important to retain these key peopleexecutives whose continued employment might be at risk for reasons other than cause. The specific terms of the employment agreementsExecutive Employment Agreements are summarized in “Potential Payments on Termination or Change-in-Control.”Change-in Control” on page 55.
The 2011 Plan and the 2018 Plan, and the related award agreements, contain provisions regarding treatment of outstanding equity awards upon a change in control of the Company and upon certain terminations of employment, as further described in “Potential Payments on Termination or Change-in-Control.”Change-in- Control” on page 55.
On November 16, 2018,
OTHER KEY FEATURES OF OUR
EXECUTIVE COMPENSATION PROGRAM
As we look to the Company and Mr. Mereness agreed to Mr. Mereness’s resignation as the Company’s President, and from all other officer and director positions with the Company and its affiliated entities, effective at the close of business on November 16, 2018 (the “Termination Date”). Mr. Mereness’s employment also terminated on November 16, 2018. On November 16, 2018, Mr. Mereness and the Company entered into a Separation and General Release Agreement (the “Separation Agreement”). In the Separation Agreement, Mr. Mereness provided a general release of claims in favorfuture of the Company, and related entities and persons. Mr. Mereness also reaffirmed his ongoing obligations under his Executive Employment Agreement, dated aswe have adopted policies to help drive sustainable growth by further aligning the financial interests of February 26, 2015 (the “Mereness Employment Agreement”), including the restrictive covenants contained therein, as modified by the Separation Agreement to broaden the definition of “Competitor” in the Mereness Employment Agreement.our
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The Separation Agreement also provided that Mr. Mereness would receive the severance compensationexecutives and other benefits set forth in the Mereness Employment Agreement. The typestockholders with long-term stock price performance. This will help limit excessive risk-taking and amount of severance compensationexecutive misconduct through stock ownership guidelines and benefits that Mr. Mereness was entitled to receive were substantially those provided by the Mereness Employment Agreement in the event of a termination without cause and included: (i) $1,213,442, which was an amount equivalent to two times Mr. Mereness’s annual base salary (at the highest annualized rate in effect at any time within two years of the Termination Date); (ii) $1,213,442, which was an amount equivalent to two times Mr. Mereness’s average bonus or incentive compensation paid during the prior three years (with the average capped at Mr. Mereness’s current base salary); (iii) $218,420, the agreed-upon amount payable related to the 2018 AIP; (iv) accelerated vesting of certain equity awards; (v) $17,796, which was an amount equivalent to 12 months of COBRA premiums; and (vi) outplacement services for at least six months. In addition, in lieu of the 90 days’ prior written notice required under the Mereness Employment Agreement, the Company agreed to pay to Mr. Mereness $151,680, which is approximately equal to his base salary for such period.clawback policy, as outlined below.
On January 22, 2019, the Company filed a lawsuit against Mr. Mereness, alleging that Mr. Mereness used our confidential information to usurp a corporate opportunity. Through this suit, we are seeking to retroactively terminate Mr. Mereness for cause and to recover related damages, including recovery of all amounts paid pursuant to the Separation Agreement and rescission or recovery of Mr. Mereness’s stock awards. We cannot predict the outcome of the litigation.
Executive Stock Ownership RequirementsGuidelines
To further align the personal interests of senior executives with the interests of our stockholders, we have establishedupdated our guidelines for ownership of the Company’s Commoncommon stock to include all of our NEOs, effective January 26, 2022. Stock by our Chief Executive Officer and Chief Financial Officer (each, a “Restricted Executive”)ownership guidelines are set forth as a multiple of the executive’s cash base salary as of December 31, 20182021, as set forthdisplayed in the following table:
Named Executive Officer | Title | Multiple of Base Salary | Cash Equivalent |
Jason D. Lippert | Chief Executive Officer | 5.00 | $4,875,000 |
Brian M. Hall | Chief Financial Officer | 3.00 | $1,200,000 |
Position | Stock Ownership Guideline |
CEO | 5 times base salary |
All Other NEOs | 4 times base salary |
Equity interests that count toward satisfaction of the guidelines include shares owned outright by, or held in trust for the benefit of, a Restricted Executivethe executive and his or her immediate family members residing in the same household, plus DSUs and RSUs (whether vested or unvested), as well as performance shares and PSUs (if unearned, the target number is included, or if earned, the earned number is included, whether vested or unvested). Restricted ExecutivesThese executives are required to achieve ownership in accordance with the guidelines within three years of the date they assume their position.position or the date the guidelines were updated, whichever occurs later. At December 31, 2018,2021, all of the Restricted ExecutivesNEOs were in compliance with the guidelines or were still within the applicable three-year achievement period.
Clawback Policy
The Dodd-Frank Act requires the SEC to adopt rules requiring companies to develop and implement a policy to recapture excess incentive compensation that was paid to certain executives if based on erroneous financial statements (“clawback”). Final rules have not yet been adopted implementing the clawback requirements. Rather than continue to wait for such rules, in 2014, the Board of Directors determined it was prudent to adopt a compensation recoupment policy for executive officers that allows for the recovery of performance-based compensation amounts paid under an incentive compensation plan, including any discretionary bonus amounts and equity awards under the 2011 Plan or 2018 Plan, or any successor plan, the amount, payment, and/or vesting of which was calculated based wholly, or in part, on the application of financial performance criteria. The policy applies in the event there is a required financial restatement due to material noncompliance with any financial reporting requirements under the securities laws, as determined by the Board of Directors, which results in performance-based compensation that would have been a lower amount if such compensation had been calculated based on such restated results. The policy is administered by the Compensation Committee, as more fully described in the policy. The Company may amend its policy when the SEC promulgates the final rules.
Additionally, all awards of incentive compensation are granted subject to the 2011 Plan or the 2018 Plan, as applicable, each of which provides that the Compensation Committee may review any equity award if the amount, payment, or vesting of such award was based on an entry in the financial statements that is the subject of a restatement, and cancel all or any portion of such awards and require the participant to repay to the Company all or any portion of the gain realized on the exercise of equity awards and the value realized on other awards.
Impact of Tax Deductibility ofTreatment on Compensation
Section 162(m) of the Internal Revenue Code (the “Code”) limits the deductibility of compensation paid by a publicly-held company to certain executive officers to $1 million per covered officer in any fiscal year. Previously, this limitation applied onlyThe Committee believes that stockholder interests are best served if its discretion and flexibility in structuring and awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expenses to the Company. The Committee also takes into account whether components of our compensation which was not considered performance-based under the Section 162(m) rules, and the 2011 Plan was structured so that certain performance-based incentive compensation could qualify as performance-based compensation notprogram may be subject to the $1 million limitation. However, in December 2017, the performance-based exception was repealed as part of the Tax Cuts and Jobs Act (the “TCJA”), such that compensation paid in excess of $1 million to certain of our executives will not be deductible going forward, unless it qualifies for transition relief applicable to certain performance-based arrangements in place as of November 2, 2017.
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Section 409A of the Code
Our compensation plans and arrangements are designed to complypenalty tax associated with Section 409A of the Code which places strict restrictions on plans that provide forand aims to structure the deferralelements of compensation.
2018 Executive Performance and Compensation
In the first quarter of 2018, the Committee approved the compensation arrangement for the CEO and senior officers of the Company and Lippert Components for fiscal year 2018, including with respect to the Named Executive Officers, which, in addition to base salary, included an annual management incentive program and, in most cases, value-based equity awards consisting of PSUs and RSUs. This arrangement continued our policy of pay-for-performance and compensation practices designed to align executive and stockholder interests.
The end-of-year base salaries for the following Named Executive Officers were adjusted as follows:
Executive | Title | 2017 Base Salary | 2018 Base Salary | % Change | ||||||
Jason D. Lippert | Chief Executive Officer | $ | 975,000 | $ | 975,000 | — | % | |||
Brian M. Hall(1) | Chief Financial Officer | $ | 350,000 | $ | 400,000 | 14 | % | |||
Andrew J. Namenye(1) | Vice President - Chief Legal Officer and Secretary | $ | 350,000 | $ | 375,000 | 7 | % | |||
Jamie M. Schnur | Chief Administrative Officer | $ | 401,066 | $ | 401,066 | — | % | |||
Nick C. Fletcher | Chief Human Resources Officer | $ | 358,517 | $ | 358,517 | — | % | |||
Scott T. Mereness(2) | Former President | $ | 606,721 | $ | 606,721 | — | % |
Under the 2018 AIP approved by the Committee for the Company’s senior officers, participants earn incentive compensation based on the results of Company financial performance measurements for the program year, which for 2018 was based on goals for adjusted ROIC, up to 10% of which was subject to the level of achievement of gross margin improvement goals.
For purposes of the 2018 AIP and the ROIC PSUs, “ROIC” means Operating Profit divided by Average Invested Capital, where:
Operating Profit is the Company’s fiscal year consolidated operating profit, as detailed in the Company’s financial statements filed with the SEC; and
Average Invested Capital is the average of the prior year end and current year quarterly (Total Stockholders Equity + Indebtedness) - (Cash, Cash Equivalents, and Short-Term Investments), where:
Total Stockholders’ Equity is the Company’s total stockholders’ equity as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC;
Indebtedness is the Company’s indebtedness as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC; and
Cash, Cash Equivalents, and Short-Term Investments is the sum of the cash, cash equivalents, and short-term investments as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC.
Under the 2018 AIP, certain adjustments, including unrealized fair value adjustments on derivative instruments and the tax impact of the TCJA, as discussed in the 2018 Annual Report, were taken into account in the calculation of ROIC for determining final payouts under the 2018 AIP.
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The 2018 AIP provided for the following performance goals related to ROIC in 2018 for the CEO:
ROIC Achieved | Multiple of Base Salary | |||||
Below Threshold | <20 | % | 0 | x | ||
Overall Threshold | 20 | % | 0.25 | x | ||
25 | % | 0.50 | x | |||
Target | 30 | % | 1.00 | x | ||
35 | % | 2.00 | x | |||
Maximum | 40 | % | 3.00 | x |
These same ROIC performance goals were applicable to our President, but because his employment terminated prior to the end of 2018, we paid Mr. Mereness an agreed-upon amount of $218,420 in respect of the 2018 AIP. As a result, the remainder of this discussion related to the CEO’s and President’s 2018 ROIC goals and potential payouts relate solely to our CEO.
To the extent that the overall threshold of 20% ROIC was achieved or exceeded, the bonus payment amount for the CEO would equal a multiple of base salary for 2018, as set forth in the table above, subject to reduction depending on the level of achievement of the gross margin improvement described below. If ROIC performance was between inflection points set forth above, linear interpolation was to be usedcompliant with or exempt from Section 409A to determine the cash bonus payouts.avoid such potential adverse tax consequences.
Target ROIC performance was set at 30%, approximating the 75th percentile of the 2017 peer group, and a bonus of 50% of target would be earned for achieving 25% ROIC, the 2017 peer group median. As additional reference points, the Company’s historical three-year average ROIC for the periods ending in 2016 and 2017 was 31% and 34%, respectively. While target ROIC was consistent with the 75th percentile of the 2017 peer group, the Committee believed setting goals based on internal performance was more appropriate than setting relative goals or measuring relative performance in compensation programs.46 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
For the NEOs other than the CEO and the former President, the 2018 AIP provided for the following performance goals related to ROIC in 2018:
ROIC Achieved | Multiple of Target Cash | |||||
Below Threshold | <20 | % | 0x | |||
Overall Threshold | 20 | % | 0.25 | x | ||
25 | % | 0.50 | x | |||
Target | 30 | % | 1.00 | x | ||
35 | % | 2.00 | x | |||
Maximum | 40 | % | 3.00 | x |
To the extent that the overall threshold of 20% ROIC was achieved or exceeded, the bonus payment amount for each of the other NEOs would equal a multiple of his target cash established for 2018, as set forth in the table above. If ROIC performance was between inflection points set forth above, linear interpolation was to be used to determine the multiple of target cash. Each such NEO’s target cash amount was established as a percentage of his base salary, as set forth below:
Amounts determined as set forth above were subject to reduction depending on the level of achievement of the gross margin improvement described below.
No 2018 AIP bonus payments for any of the NEOs would be earned for ROIC performance below threshold, and no additional amounts would be earned for ROIC performance above the maximum level.
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For all of the NEOs, once the bonus payment amount was determined, up to 10% of that bonus payment amount was subject to an additional performance goal related to the achievement of gross margin improvement as set forth below, and was to be paid only to the extent that goal was also achieved in 2018:
Gross Margin Improvement | Bonus Payment % Paid |
<0.085% | 90% |
0.085% | 91% |
0.170% | 92% |
0.225% | 93% |
0.340% | 94% |
0.425% | 95% |
0.510% | 96% |
0.595% | 97% |
0.680% | 98% |
0.765% | 99% |
0.850% | 100% |
All bonus payment amounts under the 2018 AIP were payable in cash.
In February 2019, the Committee met and determined the degree to which the ROIC and gross margin improvement goals were achieved in 2018. ROIC was adjusted for unrealized fair value adjustments on derivative instruments and the tax impact of the TCJA, as described in the 2018 Annual Report. The ROIC achieved for 2018 was 22.48%, resulting in a 37.4% ROIC payout multiple. Further, the Company’s gross margin decreased in 2018. As a result, none of the potential 10% bonus payout under the gross margin improvement goal was actually paid out. The following table sets forth the resulting 2018 AIP bonus cash payment amount to each NEO other than Mr. Mereness:
Name | Target Cash | ROIC - Related Amount | Impact of Gross Margin Improvement Goal | Cash Payment Under 2018 AIP | ||||||||
Jason D. Lippert | $ | 975,000 | $ | 364,424 | $ | (36,442 | ) | $ | 327,982 | |||
Brian M. Hall | $ | 130,000 | $ | 59,701 | $ | (5,970 | ) | $ | 53,731 | |||
Andrew J. Namenye | $ | 325,000 | $ | 121,474 | $ | (12,147 | ) | $ | 109,327 | |||
Jamie M. Schnur | $ | 250,000 | $ | 93,442 | $ | (9,344 | ) | $ | 84,098 | |||
Nick C. Fletcher | $ | 125,000 | $ | 46,721 | $ | (4,672 | ) | $ | 42,049 |
As an inducement to Mr. Namenye to join the Company in September 2017, the Committee had agreed that he would be paid a cash bonus related to 2018 in the amount of $325,000. As calculated pursuant to the terms of the 2018 AIP, Mr. Namenye’s cash bonus would have been $109,327. As a result, in March 2019, the Committee approved a special cash bonus payment to Mr. Namenye of the difference between those two amounts, or $215,673.REPORT OF THE COMPENSATION COMMITTEE
In February 2018, the Committee also approved terms and conditions for additional incentive grants of PSUs and RSUs for the Company’s senior officers, including the NEOs, pursuant to the 2011 Plan, except that (i) Mr. Namenye received a grant of RSUs only, which had been agreed to as part of the inducement for Mr. Namenye to join the Company in September 2017, and (ii) Mr. Fletcher elected to only receive a grant of PSUs based on ROIC. Two types of PSUs were awarded to the other NEOs: (i) PSUs subject to the Company’s ROIC performance (“ROIC PSUs”); and (ii) PSUs subject to the Company’s EPS performance (“EPS PSUs”).
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The ROIC PSUs provide that the number of PSUs that could be earned was based on whether and to what extent ROIC performance goals for the one-year period of January 1, 2018 through December 31, 2018 are satisfied, and that any earned PSUs will vest on March 1, 2020. The Company’s ROIC (as it may be adjusted) for fiscal 2018 must be 30% in order for the target number of ROIC PSUs to be earned, and must be 45% for fiscal 2018 for the maximum number of ROIC PSUs to be earned, which maximum amount is 400% of the target number of ROIC performance stock units. The multiple of the target number of ROIC PSUs that could be earned based on ROIC results for 2018 is set forth in the table below:
If ROIC performance was between inflection points, linear interpolation would be used to determine the number of earned ROIC PSUs. The target number of ROIC PSUs granted to each NEO is set forth in the table below. The number of ROIC PSUs granted at target to each NEO was determined by dividing the target equity value assigned to each NEO by the 15-day average trading price through the date of grant.
The EPS PSUs provide that the number of PSUs that will be earned will be based on whether and to what extent cumulative growth of adjusted EPS exceeds a benchmark determined by the Committee over the two-year performance period of January 1, 2018 through December 31, 2019, and that any earned PSUs will vest on March 1, 2021. The number of EPS PSUs that can be earned is: (i) if a threshold annualized growth percentage of approximately 7% is achieved, 50% of the target number of PSUs will be earned; (ii) if a target annualized growth percentage of approximately 14% is achieved, 100% of the target number of PSUs will be earned; and (iii) if a maximum annualized growth percentage of approximately 22% is achieved, 150% of the target number of PSUs will be earned. The number of shares earned will be interpolated for percentage growth between threshold and maximum. The target number of EPS PSUs granted to each NEO is set forth in the table below. The number of EPS PSUs granted at target to each NEO was determined by dividing the target equity value assigned to each NEO by the 15-day average trading price through the date of grant.
The RSUs granted in 2018 to the NEOs vest over a three-year period, with one-third vesting each year on the anniversary of the grant date. The Committee believes the RSUs granted to our executives and employees constitute an effective incentive to achieving long-term Company success, and are an important compensation component to our executives and employees. The number of RSUs granted to each of our NEOs for 2018 was value-based after consideration by the Committee of factors and events relative to the Company’s performance, the expense related to the RSUs, resulting dilution, the element of motivation that equity awards provide, and other factors. The number of RSUs granted to each NEO is set forth in the table below and was determined by dividing the equity value assigned to each NEO by the 15-day average trading price through the date of grant. The NEOs received aggregate awards for 19,602 RSUs representing 21% of the total RSUs granted to all employees in 2018. The aggregate expense to the Company applicable to the RSUs granted in 2018 to the NEOs was $2,079,772, which will be expensed over the vesting term of those RSUs.
The number of ROIC PSUs (at target), EPS PSUs (at target), and RSUs granted to the NEOs was as follows:
Name | ROIC PSUs (at Target) | EPS PSUs (at Target) | RSUs | ||||||
Jason D. Lippert | 8,567 | 22,844 | 11,422 | ||||||
Brian M. Hall | 1,187 | 1,296 | 638 | ||||||
Andrew J. Namenye | N/A | N/A | 1,318 | ||||||
Jamie M. Schnur | 2,197 | 1,766 | 870 | ||||||
Nick C. Fletcher | 1,099 | N/A | N/A | ||||||
Scott T. Mereness | 5,331 | 11,635 | 5,354 |
Based on the target number of shares for the ROIC PSUs and the EPS PSUs, of the equity awards granted by the Committee to the NEOs in 2018, approximately 75% were performance-based and 25% vest over time alone.
In connection with Mr. Mereness’s termination of employment, he forfeited all ROIC PSUs and EPS PSUs held by him. Pursuant to the terms of the Separation Agreement, Mr. Mereness’s 2018 grant of RSUs, as well as dividend equivalents accrued through the Termination Date, vested, resulting in his receipt of 5,451 shares of the Company’s Common Stock.
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In February 2019, the Committee met and determined the degree to which the ROIC performance goals under the ROIC PSUs were achieved in 2018. The ROIC, as adjusted for unrealized fair value adjustments on derivative instruments and the tax impact of the TCJA, as described in the 2018 Annual Report, as contemplated by the terms of the ROIC PSUs, achieved for 2018 was 22.48%, resulting in 37.4% of the target number of ROIC PSUs for each of the NEOs (other than Mr. Namenye and Mr. Mereness) being earned, or 3,202 ROIC PSUs for Mr. Lippert, 444 ROIC PSUs for Mr. Hall, 821 ROIC PSUs for Mr. Schnur, and 411 ROIC PSUs for Mr. Fletcher. These earned ROIC PSUs will vest on March 1, 2020.
As previously disclosed, in February 2017, the Committee approved terms and conditions for long-term incentive grants of performance shares based on EPS (“EPS Performance Shares”) for the Company’s senior officers, including the NEOs, pursuant to the 2011 Plan. The number of EPS Performance Shares that could be earned was based on whether and to what extent the cumulative growth of adjusted EPS exceeded a benchmark of $5.14 per share over the two-year period from January 1, 2017 through December 31, 2018. In February 2019, the Committee met and determined the degree to which the EPS performance goals under the EPS Performance Shares were achieved. The annualized growth percentage of EPS over 2017-2018 was approximately 6%, resulting in none of the EPS Performance Shares being earned by any of the NEOs who held such EPS Performance Shares. Mr. Mereness previously forfeited all EPS Performance Shares pursuant to the terms of the Separation Agreement.
Compensation Program Changes for 2019
In February and March 2019, the Committee discussed,We have reviewed and approved executive compensation matters for 2019. For 2019, the Committee retained the general structure and components of the 2018 executive compensation program,discussed with a few modifications. Under the 2019 annual cash incentive program, the performance measures were changed from goals for adjusted ROIC, up to 10% of which was subject to the level of achievement of gross margin improvement goals, to revenue and earnings before interest and taxes, each as adjusted. With respect to the annual equity awards, the Committee determined to grant PSUs that are based on ROIC (as it may be adjusted) of the Company for 2021, and included an opportunity for additional PSUs to be earned depending on the extent to which the Company’s revenues are diversified in 2021. The Committee continued its practice of granting RSUs that vest over a three-year period as part of the annual equity grants to executive officers. In addition, the Committee granted a special award of additional RSUs that vest over a three-year period to Messrs. Lippert, Hall, Schnur, and Fletcher in connection with each such NEO’s agreement to extend the time period of the restrictive covenants in his employment agreement by an additional 12 months.
Compensation Committee Report
The Compensation Committee has reviewed and discussedManagement the Compensation Discussion and Analysis with Management.Analysis. Based on this review and discussion, the Compensation Committeewe have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’sour 2021 Annual Report on Form 10-K for10-K.
Respectfully submitted,
The Compensation Committee of the year ended December 31, 2018.Board of Directors
Frank J. Crespo, Chairman
Brendan J. Deely
Virginia L. Henkels
Stephanie K. Mains
The foregoing Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC,, nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into a filing.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 47
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Summary Compensation Table
The following table sets forth the annual compensation awarded to or earned by our Named Executive Officers for the years ended December 31, 2018, 2017,2021, 2020, and 2016:2019:
SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary | Bonus(1) | Stock Awards(2) | Non-Equity Incentive Plan Compensation(3) | All Other Compensation(4) | Total | ||||||||||||||
Jason D. Lippert Chief Executive Officer | 2018 | $ | 975,000 | $ | — | $ | 4,544,581 | $ | 327,982 | $ | 145,132 | $ | 5,992,695 | ||||||||
2017 | $ | 975,000 | $ | — | $ | 7,183,896 | $ | 1,966,213 | $ | 138,324 | $ | 10,263,433 | |||||||||
2016 | $ | 856,800 | $ | — | $ | 5,643,142 | $ | 3,770,241 | $ | 119,612 | $ | 10,389,795 | |||||||||
Brian M. Hall(5) Chief Financial Officer | 2018 | $ | 386,539 | $ | — | $ | 331,138 | $ | 43,731 | $ | 39,975 | $ | 801,383 | ||||||||
2017 | $ | 321,154 | $ | — | $ | 294,550 | $ | 551,253 | $ | 33,940 | $ | 1,200,897 | |||||||||
2016 | $ | 225,727 | $ | 50,000 | $ | 204,489 | $ | 99,611 | $ | 32,174 | $ | 612,001 | |||||||||
Andrew J. Namenye(6) Vice President - Chief Legal Officer and Secretary | 2018 | $ | 368,269 | $ | 215,673 | $ | 139,840 | $ | 109,327 | $ | 35,688 | $ | 868,797 | ||||||||
Jamie M. Schnur Chief Administrative Officer | 2018 | $ | 401,066 | $ | — | $ | 512,781 | $ | 84,098 | $ | 44,095 | $ | 1,042,040 | ||||||||
2017 | $ | 401,066 | $ | — | $ | 379,819 | $ | 1,432,427 | $ | 46,167 | $ | 2,259,479 | |||||||||
2016 | $ | 389,385 | $ | — | $ | 808,663 | $ | 1,274,402 | $ | 48,042 | $ | 2,520,492 | |||||||||
Nick C. Fletcher Chief Human Resources Officer | 2018 | $ | 358,517 | $ | — | $ | 116,604 | $ | 42,049 | $ | 42,619 | $ | 559,789 | ||||||||
2017 | $ | 358,517 | $ | — | $ | 275,808 | $ | 674,698 | $ | 41,891 | $ | 1,350,914 | |||||||||
2016 | $ | 295,800 | $ | 150,000 | $ | 219,065 | $ | 563,314 | $ | 39,015 | $ | 1,267,194 | |||||||||
Scott T. Mereness(7) Former President | 2018 | $ | 548,383 | $ | — | $ | 2,368,152 | $ | — | $ | 4,323,649 | $ | 7,240,184 | ||||||||
2017 | $ | 606,721 | $ | — | $ | 3,828,712 | $ | 1,223,531 | $ | 84,774 | $ | 5,743,738 | |||||||||
2016 | $ | 589,050 | $ | — | $ | 4,259,260 | $ | 2,875,865 | $ | 99,094 | $ | 7,823,269 |
Name and Principal Position | Year | Salary(1) | Bonus(2) | Stock Awards(3) | Non-Equity Incentive Plan Compensation(4) | All Other Compensation(5) | Total | ||||||||||||||||||||
Jason D. Lippert | 2021 | $ | 1,085,620 | $ | -- | $ | 5,245,239 | $ | 4,500,000 | $ | 162,891 | $ | 10,993,750 | ||||||||||||||
President and Chief Executive Officer | 2020 | $ | 1,013,462 | $ | -- | $ | 5,316,527 | $ | 2,990,184 | $ | 189,578 | $ | 9,509,751 | ||||||||||||||
2019 | $ | 1,004,250 | $ | -- | $ | 7,567,765 | $ | 1,226,253 | $ | 297,369 | $ | 10,095,637 | |||||||||||||||
Brian M. Hall | 2021 | $ | 500,000 | $ | -- | $ | 1,078,559 | $ | 1,050,000 | $ | 60,588 | $ | 2,689,147 | ||||||||||||||
Executive Vice President and Chief Financial Officer | 2020 | $ | 465,231 | $ | -- | $ | 912,109 | $ | 623,085 | $ | 57,737 | $ | 2,058,162 | ||||||||||||||
2019 | $ | 450,000 | $ | -- | $ | 789,224 | $ | 274,739 | $ | 56,817 | $ | 1,570,780 | |||||||||||||||
Ryan R. Smith(6) | 2021 | $ | 750,000 | $ | -- | $ | 1,225,688 | $ | 4,375,000 | $ | 78,504 | $ | 6,429,192 | ||||||||||||||
Group President - North America | 2020 | $ | 576,923 | $ | -- | $ | 389,097 | $ | 2,179,414 | $ | 44,024 | $ | 3,189,458 | ||||||||||||||
Jamie M. Schnur | 2021 | $ | 600,000 | $ | -- | $ | 1,333,487 | $ | 2,100,000 | $ | 67,737 | $ | 4,101,224 | ||||||||||||||
Group President - Aftermarket | 2020 | $ | 492,308 | $ | -- | $ | 847,323 | $ | 923,085 | $ | 63,902 | $ | 2,326,618 | ||||||||||||||
2019 | $ | 450,000 | $ | 200,000 | $ | 1,267,413 | $ | 305,266 | $ | 76,545 | $ | 2,299,224 | |||||||||||||||
Andrew J. Namenye | 2021 | $ | 445,578 | $ | -- | $ | 710,954 | $ | 743,750 | $ | 51,525 | $ | 1,951,807 | ||||||||||||||
Executive Vice President, Chief Legal Officer, and Corporate Secretary | 2020 | $ | 425,945 | $ | -- | $ | 682,995 | $ | 461,308 | $ | 52,878 | $ | 1,623,126 | ||||||||||||||
2019 | $ | 412,000 | $ | -- | $ | 763,712 | $ | 207,581 | $ | 54,269 | $ | 1,437,562 | |||||||||||||||
(1) | With respect to |
(2) | In March 2019, the Committee approved a special |
The amounts in this column represent the aggregate grant date fair value of the stock awards granted in that year determined in accordance with Accounting Standards Codification Topic 718 (“ASC 718”). For a discussion of assumptions made in determining the grant date fair value, see Note |
48 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
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The amounts included in the previous table above for the annual stockequity awards that are subject to performance conditions represent the value at the grant date based on the probable outcome of the applicable performance conditions. The following table presents the grant date fair value of the performance-based stock awards included in the “Stock Awards” column and the grant date fair value of these awards assuming that the highest level of performance conditions would be achieved, other than for Mr. Namenye who did not receive any performance-based awards in any of the years presented:achieved:
2018 ROIC PSUs | 2018 EPS PSUs | 2017 EPS Performance Shares | 2017 ROIC Performance Shares | 2016 EPS Performance Shares | ||||||||||||||||||||||||||
Name | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | ||||||||||||||||||||
Jason D. Lippert | $ | 908,959 | $ | 3,635,835 | $ | 2,423,748 | $ | 3,635,835 | $ | 3,909,596 | $ | 3,909,596 | $ | 1,971,046 | $ | 3,900,000 | $ | 2,736,290 | $ | 2,736,290 | ||||||||||
Brian M. Hall | $ | 125,941 | $ | 503,763 | $ | 137,506 | $ | 206,258 | $ | 221,776 | $ | 221,776 | N/A | N/A | $ | 43,813 | $ | 43,813 | ||||||||||||
Jamie M. Schnur | $ | 233,102 | $ | 932,407 | $ | 187,373 | $ | 281,059 | $ | 285,892 | $ | 285,892 | N/A | N/A | $ | 131,439 | $ | 131,439 | ||||||||||||
Nick C. Fletcher | $ | 116,604 | $ | 466,416 | N/A | N/A | $ | 207,637 | $ | 207,637 | N/A | N/A | $ | 43,813 | $ | 43,813 | ||||||||||||||
Scott T. Mereness | $ | 565,619 | $ | 2,262,476 | $ | 1,234,474 | $ | 1,851,710 | $ | 1,991,377 | $ | 1,991,377 | $ | 1,226,534 | $ | 2,426,884 | $ | 1,958,338 | $ | 1,958,338 |
2021 ROIC PSUs | 2020 ROIC PSUs | 2020 EBITDA PSUs | 2019 PSUs | |||||||||||||||||||||||||||||
Name | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | ||||||||||||||||||||||||
Jason D. Lippert | $ | 3,147,115 | $ | 6,294,230 | $ | 2,774,944 | $ | 5,549,888 | $ | 691,588 | $ | 1,383,176 | $ | 2,719,087 | $ | 5,438,174 | ||||||||||||||||
Brian M. Hall | $ | 647,078 | $ | 1,294,156 | $ | 453,882 | $ | 907,764 | $ | 155,639 | $ | 311,278 | $ | 313,768 | $ | 627,536 | ||||||||||||||||
Ryan R. Smith | $ | 735,355 | $ | 1,470,710 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Jamie M. Schnur | $ | 800,092 | $ | 1,600,184 | $ | 404,641 | $ | 809,282 | $ | 172,921 | $ | 345,842 | $ | 345,168 | $ | 690,336 | ||||||||||||||||
Andrew J. Namenye | $ | 426,601 | $ | 853,202 | $ | 337,153 | $ | 674,306 | $ | 121,074 | $ | 242,148 | $ | 288,695 | $ | 577,389 | ||||||||||||||||
The following table presents the grant date fair value of the RSU and DSU awards included in the “Stock Awards” column:
Name | 2018 RSUs | 2017 DSUs | 2016 DSUs – Time-Based | 2016 DSUs – 2016 AIP | ||||||||
Jason D. Lippert | $ | 1,211,874 | $ | 1,303,254 | $ | 898,514 | $ | 2,008,338 | ||||
Brian M. Hall | $ | 67,692 | $ | 72,774 | $ | 160,676 | N/A | |||||
Andrew J. Namenye | $ | 139,840 | N/A | N/A | N/A | |||||||
Jamie M. Schnur | $ | 92,307 | $ | 93,927 | $ | 193,253 | $ | 483,971 | ||||
Nick C. Fletcher | N/A | $ | 68,171 | $ | 175,252 | N/A | ||||||
Scott T. Mereness | $ | 568,059 | $ | 610,801 | $ | 643,034 | $ | 1,657,888 |
Name | 2021 Annual RSUs | 2020 Annual RSUs | 2019 Extension RSUs | 2019 Annual RSUs | ||||||||||||
Jason D. Lippert | $ | 2,098,124 | $ | 1,849,995 | $ | 2,376,809 | $ | 2,471,869 | ||||||||
Brian M. Hall | $ | 431,481 | $ | 302,588 | $ | 285,258 | $ | 190,198 | ||||||||
Ryan R. Smith(6) | $ | 490,333 | $ | 389,097 | N/A | N/A | ||||||||||
Jamie M. Schnur | $ | 533,395 | $ | 269,761 | $ | 713,066 | $ | 209,179 | ||||||||
Andrew J. Namenye | $ | 284,353 | $ | 224,768 | $ | 300,051 | $ | 174,966 | ||||||||
The amounts in this column represent: (i) for |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 49
Amounts shown in this column include the following payments the Company made to or on behalf of our NEOs: |
Name | Year | Dividend Equivalent Unit Value(A) | 401(k) Matching Contribution | Health Insurance | Other Perquisites(B) | Total All Other Compensation | |||||||||||||||||
Jason D. Lippert | 2021 | $ | 127,331 | $ | 11,600 | $ | 10,849 | $ | 13,111 | $ | 162,891 | ||||||||||||
2020 | $ | 156,260 | $ | 11,400 | $ | 9,323 | $ | 12,595 | $ | 189,578 | |||||||||||||
2019 | $ | 249,954 | $ | 11,200 | $ | 9,470 | $ | 26,745 | $ | 297,369 | |||||||||||||
Brian M. Hall | 2021 | $ | 26,183 | $ | 11,600 | $ | 11,629 | $ | 11,176 | $ | 60,588 | ||||||||||||
2020 | $ | 26,808 | $ | 11,400 | $ | 10,118 | $ | 9,411 | $ | 57,737 | |||||||||||||
2019 | $ | 26,067 | $ | 11,200 | $ | 9,470 | $ | 10,080 | $ | 56,817 | |||||||||||||
Ryan R. Smith | 2021 | $ | 29,754 | $ | 11,600 | $ | 8,882 | $ | 28,268 | $ | 78,504 | ||||||||||||
2020 | $ | 11,436 | $ | 11,400 | $ | 9,323 | $ | 11,865 | $ | 44,024 | |||||||||||||
Jamie M. Schnur | 2021 | $ | 32,371 | $ | 11,600 | $ | 11,629 | $ | 12,137 | $ | 67,737 | ||||||||||||
2020 | $ | 24,904 | $ | 11,400 | $ | 10,118 | $ | 17,480 | $ | 63,902 | |||||||||||||
2019 | $ | 41,861 | $ | 11,200 | $ | 9,470 | $ | 14,014 | $ | 76,545 | |||||||||||||
Andrew J. Namenye | 2021 | $ | 17,259 | $ | 11,600 | $ | 10,849 | $ | 11,817 | $ | 51,525 | ||||||||||||
2020 | $ | 20,074 | $ | 11,400 | $ | 10,118 | $ | 11,286 | $ | 52,878 | |||||||||||||
2019 | $ | 17,512 | $ | 11,200 | $ | 9,470 | $ | 16,087 | $ | 54,269 | |||||||||||||
Name | Year | Dividend Equivalent Unit Value(A) | 401(k) Matching Contribution | Health Insurance | Severance(B) | Other Perquisites(C) | Total All Other Compensation | ||||||||||||||
Jason D. Lippert | 2018 | $ | 101,562 | $ | 11,000 | $ | 11,495 | N/A | $ | 21,075 | $ | 145,132 | |||||||||
2017 | $ | 92,278 | $ | 10,800 | $ | 9,579 | N/A | $ | 25,667 | $ | 138,324 | ||||||||||
2016 | $ | 69,510 | $ | 10,600 | $ | 10,607 | N/A | $ | 28,895 | $ | 119,612 | ||||||||||
Brian M. Hall | 2018 | $ | 7,400 | $ | 11,000 | $ | 11,495 | N/A | $ | 10,080 | $ | 39,975 | |||||||||
2017 | $ | 4,159 | $ | 10,800 | $ | 5,944 | N/A | $ | 13,037 | $ | 33,940 | ||||||||||
2016 | $ | 4,848 | $ | 10,600 | $ | 10,606 | N/A | $ | 6,120 | $ | 32,174 | ||||||||||
Andrew J. Namenye | 2018 | $ | 3,125 | $ | 11,000 | $ | 11,495 | N/A | $ | 10,068 | $ | 35,688 | |||||||||
Jamie M. Schnur | 2018 | $ | 11,460 | $ | 11,000 | $ | 11,495 | N/A | $ | 10,140 | $ | 44,095 | |||||||||
2017 | $ | 5,363 | $ | 10,800 | $ | 10,077 | N/A | $ | 19,927 | $ | 46,167 | ||||||||||
2016 | $ | 7,171 | $ | 10,600 | $ | 6,848 | N/A | $ | 23,423 | $ | 48,042 | ||||||||||
Nick C. Fletcher | 2018 | $ | 2,606 | $ | 11,000 | $ | 6,905 | N/A | $ | 22,108 | $ | 42,619 | |||||||||
2017 | $ | 1,285 | $ | 10,800 | $ | 10,077 | N/A | $ | 19,729 | $ | 41,891 | ||||||||||
2016 | $ | 5,220 | $ | 10,600 | $ | 5,495 | N/A | $ | 17,700 | $ | 39,015 | ||||||||||
Scott T. Mereness | 2018 | $ | 39,288 | $ | 11,000 | $ | 10,622 | $ | 4,244,143 | $ | 18,596 | $ | 4,323,649 | ||||||||
2017 | $ | 48,101 | $ | 10,800 | $ | 6,021 | N/A | $ | 19,852 | $ | 84,774 | ||||||||||
2016 | $ | 49,747 | $ | 10,600 | $ | 10,308 | N/A | $ | 28,439 | $ | 99,094 |
(A) | Represents the dollar value of dividend equivalents credited on stock awards in the applicable year, when those amounts were not factored into the grant date fair value of the award. |
32
(B) |
Other perquisites included automobile allowance and related expenses, costs of spousal travel for Company events, and long-term disability insurance. |
(6) |
50 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
33
Grants of Plan-Based Awards Table
The following table summarizes the RSUs and PSUs granted to the NEOs in 2018:2021, as well potential payouts under the 2021 AIP:
GRANTS OF PLAN-BASED AWARDS IN 20182021
Grant Date | Date of Compensation Committee Approval | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units | Grant Date Fair Value of Stock and Option Awards(5) | |||||||||||||||||||||||||
Name | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||
Jason D. Lippert | 03/01/18 | 02/27/18 | — | — | — | 11,422 | (2) | $ | 1,211,874 | |||||||||||||||||||||
03/01/18 | 02/27/18 | 11,422 | (3) | 22,844 | (3) | 34,266 | (3) | — | $ | 2,423,748 | ||||||||||||||||||||
03/01/18 | 02/27/18 | 2,142 | (4) | 8,567 | (4) | 34,268 | (4) | — | $ | 908,959 | ||||||||||||||||||||
243,750 | 975,000 | 2,925,000 | ||||||||||||||||||||||||||||
Brian M. Hall | 03/01/18 | 02/27/18 | — | — | — | 638 | (2) | $ | 67,692 | |||||||||||||||||||||
03/01/18 | 02/27/18 | 648 | (3) | 1,296 | (3) | 1,944 | (3) | — | $ | 137,506 | ||||||||||||||||||||
03/01/18 | 02/27/18 | 297 | (4) | 1,187 | (4) | 4,748 | (4) | — | $ | 125,941 | ||||||||||||||||||||
32,500 | 130,000 | 390,000 | ||||||||||||||||||||||||||||
Andrew J. Namenye | 03/01/18 | 02/27/18 | 81,250 | 325,000 | 325,000 | — | — | — | 1,318 | (2) | $ | 139,840 | ||||||||||||||||||
Jamie M. Schnur | 03/01/18 | 02/27/18 | — | — | — | 870 | (2) | $ | 92,307 | |||||||||||||||||||||
03/01/18 | 02/27/18 | 883 | (3) | 1,766 | (3) | 2,649 | (3) | — | $ | 187,373 | ||||||||||||||||||||
03/01/18 | 02/27/18 | 549 | (4) | 2,197 | (4) | 8,788 | (4) | — | $ | 233,102 | ||||||||||||||||||||
62,500 | 250,000 | 750,000 | ||||||||||||||||||||||||||||
Nick C. Fletcher | 03/01/18 | 02/27/18 | 275 | (4) | 1,099 | (4) | 4,396 | (4) | — | $ | 116,604 | |||||||||||||||||||
31,250 | 125,000 | 375,000 | ||||||||||||||||||||||||||||
Scott T. Mereness | 03/01/18 | 02/27/18 | — | — | — | 5,354 | (2) | $ | 568,059 | |||||||||||||||||||||
03/01/18 | 02/27/18 | 5,818 | (3) | 11,635 | (3) | 17,453 | (3) | — | $ | 1,234,474 | ||||||||||||||||||||
03/01/18 | 02/27/18 | 1,333 | (4) | 5,331 | (4) | 21,324 | (4) | — | $ | 565,619 | ||||||||||||||||||||
151,680 | 606,721 | 1,820,163 |
Estimated Possible Payouts Under Non- Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards |
| ||||||||||||||||||
Name | Grant Date | Date of Compensation Committee Approval | Threshold | Target | Maximum | Threshold | Target | Maximum | All Other Stock Awards: Number of Shares of Stock or Units | Grant Date Fair Value of Stock and Option Awards(4) | ||||||||||
Jason D. Lippert | 03/01/21 | 02/27/21 | -- | -- | -- | 14,617(2) | $2,098,124 | |||||||||||||
03/01/21 | 02/27/21 | 10,963(3) | 21,925(3) | 43,850(3) | -- | $3,147,115 | ||||||||||||||
02/27/21 | $1,250,000 | $2,500,000 | $5,000,000 | �� | ||||||||||||||||
Brian M. Hall | 03/01/21 | 02/27/21 | -- | -- | -- | 3,006(2) | $431,481 | |||||||||||||
03/01/21 | 02/27/21 | 2,254(3) | 4,508(3) | 9,016(3) | -- | $647,078 | ||||||||||||||
02/27/21 | $300,000 | $600,000 | $1,050,000 | |||||||||||||||||
Ryan R. Smith | 03/01/21 | 02/27/21 | -- | -- | -- | 3,416(2) | $490,333 | |||||||||||||
03/01/21 | 02/27/21 | 2,562(3) | 5,123(3) | 10,246(3) | -- | $735,355 | ||||||||||||||
02/27/21 | $1,250,000 | $2,500,000 | $4,375,000 | |||||||||||||||||
Jamie M. Schnur | 03/01/21 | 02/27/21 | -- | -- | -- | 3,716(2) | $533,395 | |||||||||||||
03/01/21 | 02/27/21 | 2,787(3) | 5,574(3) | 11,148(3) | -- | $800,092 | ||||||||||||||
02/27/21 | $600,000 | $1,200,000 | $2,100,000 | |||||||||||||||||
Andrew J. Namenye | 03/01/21 | 02/27/21 | -- | -- | -- | 1,981(2) | $284,353 | |||||||||||||
03/01/21 | 02/27/21 | 1,486(3) | 2,972(3) | 5,944(3) | -- | $426,601 | ||||||||||||||
02/27/21 | $212,500 | $425,000 | $743,750 | |||||||||||||||||
(1) | Amounts shown in this column represent the potential cash payout amounts under the |
(2) | Represents |
(3) | Represents |
Amounts represent the grant date fair value of the awards determined in accordance with ASC 718. For a discussion of assumptions made in determining the grant date fair value, see Note |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 51
34
Grants of Plan-Based Awards
In February 2018,2021, the Compensation Committee approved the 20182021 AIP, under which participants could earn incentive compensation based on the level of achievement of certain financial performance measurements in 2018,2021, which for 20182021 was based on goals for ROIC and gross margin improvement.Adjusted EBIT. In February 2018,2021, the Compensation Committee grantedapproved the grant of the 2021 ROIC PSUs EPS PSUs, and the annual RSUs under the 20112018 Plan to the Named Executive Officers.named executive officers. For additional information regarding the 20182021 AIP and these equity awards, see “Compensation Discussion and Analysis - 2018 Executive Performance and Compensation.Analysis of 2021 Compensation Decisions.”
Equity Award and Incentive Plans
On May 18, 2011, our stockholders approved the 2011 Plan, and approved an amendment to the 2011 Plan on May 22, 2014. Executive officers and other employees of the Company and its subsidiaries and affiliates, and non-employee Directors, consultants, and others who provide substantial services to the Company and its subsidiaries and affiliates, were eligible to be granted awards under the 2011 Plan. Under the 2011 Plan, the Compensation Committee was authorized to grant stock options, including both incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, DSUs, performance-based awards, annual incentive awards, and related rights and interests.
On May 24, 2018, our stockholders approved the 2018 Plan, which provides that the number of shares of our Common Stock that may be the subject of awards and issued under the 2018 Plan is 1,500,000, plus shares subject to any awards outstanding as of
May 24, 2018 under the 2011 Plan that subsequently expire, are forfeited or canceled, are settled for cash, are not issued in shares, or are tendered or withheld to pay the exercise price or satisfy any tax withholding obligations related to the award. Following our stockholders’ approval of the 2018 Plan, no further awards may be made under the 2011 Plan. Executive officers and other employeesteam members of the Company and its subsidiaries and affiliates, and non-employee Directors, consultants, and others who provide substantial services to the Company and its subsidiaries and affiliates, are eligible to be granted awards under the 2018 Plan. Under the 2018 Plan, the Compensation Committee is authorized to grant stock options, stock appreciation rights, restricted stock awards, stock unit awards, other stock-based awards, and cash incentive awards. There were 1,570,2741,195,993 shares of our Common Stock available for future awards under the 2018 Plan as of December 31, 2018,2021, which number is calculated using the target number of outstanding PSU awards.
35
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the number of shares of Common Stock underlying outstanding unvested equity awards held by each NEO as of December 31, 2018:2021:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Stock Awards | Stock Awards | ||||||||||||||||||||||||||||||
Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested(1) | Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested(1) | |||||||||||||||||||||
03/07/19 | 11,460 | (2) | $ | 1,786,270 | -- | -- | |||||||||||||||||||||||||
03/07/19 | 11,020 | (2) | $ | 1,717,687 | -- | -- | |||||||||||||||||||||||||
03/01/20 | 13,493 | (3) | $ | 2,103,154 | -- | -- | |||||||||||||||||||||||||
Jason D. Lippert | 11/20/14 | 1,233 | (2) | $ | 82,364 | — | $ | — | 03/01/20 | 60,716 | (4) | $ | 9,463,803 | -- | -- | ||||||||||||||||
02/10/16 | 5,771 | (3) | $ | 385,503 | — | $ | — | 03/01/21 | 14,995 | (5) | $ | 2,337,271 | -- | -- | |||||||||||||||||
02/24/17 | 8,302 | (3) | $ | 554,574 | — | $ | — | 03/01/21 | -- | -- | 22,492 (6) | $ 3,505,828 | |||||||||||||||||||
03/01/18 | 11,728 | (4) | $ | 783,430 | — | $ | — | ||||||||||||||||||||||||
02/10/16 | 52,106 | (5) | $ | 3,480,681 | — | $ | — | ||||||||||||||||||||||||
03/15/17 | 18,646 | (6) | $ | 1,245,553 | — | $ | — | 03/07/19 | 881 | (2) | $ | 137,321 | -- | -- | |||||||||||||||||
03/01/18 | 3,202 | (7) | $ | 213,894 | — | $ | — | 03/07/19 | 1,322 | (2) | $ | 206,060 | -- | -- | |||||||||||||||||
03/01/18 | — | $ | — | 11,728 | (8) | $ | 783,397 | 03/01/20 | 2,207 | (3) | $ | 344,005 | -- | -- | |||||||||||||||||
Brian M. Hall | 11/20/14 | 303 | (2) | $ | 20,240 | — | $ | — | 03/01/20 | 9,930 | (4) | $ | 1,547,789 | -- | -- | ||||||||||||||||
02/10/16 | 1,033 | (3) | $ | 69,004 | — | $ | — | 03/01/21 | 3,084 | (5) | $ | 480,703 | -- | -- | |||||||||||||||||
02/24/17 | 467 | (3) | $ | 31,196 | — | $ | — | 03/01/21 | -- | -- | 4,625 (6) | $ 720,899 | |||||||||||||||||||
03/01/18 | 655 | (4) | $ | 43,754 | — | $ | — | ||||||||||||||||||||||||
02/10/16 | 835 | (5) | $ | 55,778 | — | $ | — | ||||||||||||||||||||||||
03/01/18 | 444 | (7) | $ | 29,659 | — | $ | — | 03/07/19 | 2,007 | (2) | $ | 312,831 | -- | -- | |||||||||||||||||
03/01/18 | — | $ | — | 666 | (8) | $ | 44,455 | 03/07/19 | 3,306 | (2) | $ | 515,306 | -- | -- | |||||||||||||||||
Andrew J. Namenye | 03/01/18 | 1,353 | (4) | $ | 90,380 | — | $ | — | |||||||||||||||||||||||
Ryan R. Smith | 03/01/20 | 2,837 | (3) | $ | 442,203 | -- | -- | ||||||||||||||||||||||||
03/01/21 | 3,504 | (5) | $ | 546,168 | -- | -- | |||||||||||||||||||||||||
03/01/21 | -- | -- | 5,255 (6) | $ 819,097 | |||||||||||||||||||||||||||
03/07/19 | 969 | (2) | $ | 151,038 | -- | -- | |||||||||||||||||||||||||
03/07/19 | 3,306 | (2) | $ | 515,306 | -- | -- | |||||||||||||||||||||||||
03/01/20 | 1,967 | (3) | $ | 306,596 | -- | -- | |||||||||||||||||||||||||
Jamie M. Schnur | 11/20/14 | 660 | (2) | $ | 44,088 | — | $ | — | 03/01/20 | 8,854 | (4) | $ | 1,380,073 | -- | -- | ||||||||||||||||
02/10/16 | 1,242 | (3) | $ | 82,966 | — | $ | — | 03/01/21 | 3,812 | (5) | $ | 594,176 | -- | -- | |||||||||||||||||
02/24/17 | 599 | (3) | $ | 40,013 | — | $ | — | 03/01/21 | -- | -- | 5,718 (6) | $ 891,265 | |||||||||||||||||||
03/01/18 | 894 | (4) | $ | 59,719 | — | $ | — | ||||||||||||||||||||||||
02/10/16 | 2,505 | (5) | $ | 167,334 | — | $ | — | ||||||||||||||||||||||||
03/01/18 | 821 | (7) | $ | 54,843 | — | $ | — | 03/07/19 | 811 | (2) | $ | 126,411 | -- | -- | |||||||||||||||||
03/01/18 | — | $ | — | 907 | (8) | $ | 60,554 | 10/08/19 | 1,198 | (7) | $ | 186,732 | -- | -- | |||||||||||||||||
Nick C. Fletcher | 11/20/14 | 286 | (2) | $ | 19,105 | — | $ | — | |||||||||||||||||||||||
03/01/20 | 1,639 | (3) | $ | 255,471 | -- | -- | |||||||||||||||||||||||||
Andrew J. Namenye | 03/01/20 | 7,376 | (4) | $ | 1,149,697 | -- | -- | ||||||||||||||||||||||||
02/10/16 | 1,127 | (3) | $ | 75,284 | — | $ | — | 03/01/21 | 2,032 | (5) | $ | 316,728 | -- | -- | |||||||||||||||||
02/24/17 | 437 | (3) | $ | 29,192 | — | $ | — | 03/01/21 | -- | -- | 3,049 (6) | $ 475,248 | |||||||||||||||||||
02/10/16 | 837 | (5) | $ | 55,912 | — | $ | — | ||||||||||||||||||||||||
03/01/18 | 411 | (7) | $ | 27,455 | — | $ | — | ||||||||||||||||||||||||
Scott T. Mereness | 11/20/13 | 1,007 | (2) | $ | 67,268 | — | $ | — | |||||||||||||||||||||||
11/20/14 | 1,936 | (2) | $ | 129,325 | — | $ | — |
(1) | Market value determined based on the closing market price of our Common Stock on December 31, |
(2) | Represents |
Represents RSU awards, including dividends thereon, where applicable, that vest ratably each year on the first through the third anniversaries of the respective March 1st following the grant date. |
Represents |
(5) | Represents RSU awards, including dividends thereon, where applicable, that vest ratably each year |
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Represents PSU awards, including dividends thereon, where applicable, that are earned based on achievement of |
(7) | Represents RSU awards, including dividends thereon, where applicable, that vest ratably each year on the first through the third anniversaries of the respective December 1st following the grant date. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 53
Option Exercises and Stock Vested
The following table presents the value realized by the NEOs on the vesting of DSUs and other stock-based awards in 2018.2021. None of our NEOs holdshold any stock options, and therefore no stock options were exercised in 2018.2021.
OPTION EXERCISES AND STOCK VESTED IN 20182021
Stock Awards | ||||||
Name | Number of Shares Acquired On Vesting(1) | Value Realized on Vesting(2) | ||||
Jason D. Lippert | 72,564 | $ | 7,639,188 | |||
Brian M. Hall | 3,565 | $ | 360,708 | |||
Andrew J. Namenye | — | $ | — | |||
Jamie M. Schnur | 7,351 | $ | 737,477 | |||
Nick C. Fletcher | 3,457 | $ | 358,386 | |||
Scott T. Mereness | 74,065 | $ | 7,060,825 |
Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting(1) | Value Realized on Vesting(2) | ||||||
Jason D. Lippert | 83,687 | $ | 10,111,087 | |||||
Brian M. Hall | 9,349 | $ | 1,126,030 | |||||
Ryan R. Smith | 7,474 | $ | 1,043,263 | |||||
Jamie M. Schnur | 11,927 | $ | 1,457,918 | |||||
Andrew J. Namenye | 8,679 | $ | 1,069,896 |
(1) | Includes |
(2) | Value realized calculated by multiplying the number of shares vested by the |
Non-Qualified Deferred Compensation
The Company maintains an Executive Non-Qualified Deferred Compensation Plan. The Company does not make any contributions to the Deferral Plan, but is responsible for certain costs of administration, which are not significant. Pursuant to the Deferral Plan, the NEOs are eligible to defer all or a portion of their earned base salary and incentive compensation. The Deferral Plan participant is fully vested in all deferred compensation and earnings credited to the participant’s account because the participant has made all the contributions. Pursuant to the Deferral Plan, payments to the participants will be made from the Company’s general unrestricted assets, and the obligations pursuant to the Deferral Plan are unfunded and unsecured.
The Deferral Plan participant’s account is deemed invested (but is not actually invested) among various deemed investment alternatives selected by the participant. The Company has elected to invest a portion of the compensation deferred by the participant in life insurance policies for the benefit of the Company. The investments within these life insurance policies track the deemed investments selected by the participant in order to generate the funds needed to make payments to the participants. The deemed investments selected by the participant determine the amount of earnings and losses that are credited to the participant’s account.
54 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
37
The following table summarizes activity in the Deferral Plan by those NEOs who participated in 2018:2021:
NON-QUALIFIED DEFERRED COMPENSATION IN 20182021
Name | Executive Contributions in 2018(1) | Aggregate Earnings in 2018(2) | Aggregate Withdrawals/ Distributions in 2018 | Aggregate Balance at December 31, 2018(3) | Executive Contributions in 2021(1) | Aggregate Earnings in 2021(2) | Aggregate Withdrawals/ Distributions in 2021 | Aggregate Balance at December 31, 2021(3) | ||||||||||||||||||||
Jason D. Lippert | $ | 786,485 | $ | (404,625 | ) | $ | — | $ | 8,113,163 | (4) | $ | 1,196,074 | $ | 1,735,534 | $ | -- | $ | 14,966,119 | (4) | |||||||||
Brian M. Hall | $ | 330,752 | $ | (8,970 | ) | $ | — | $ | 321,782 | $ | -- | $ | 60,837 | $ | -- | $ | 516,630 | (5) | ||||||||||
Ryan R. Smith | $ | 250,000 | $ | 6,298 | $ | -- | $ | 256,298 | ||||||||||||||||||||
Jamie M. Schnur | $ | 311,543 | $ | 462,114 | $ | -- | $ | 3,979,385 | (6) | |||||||||||||||||||
Andrew J. Namenye | $ | — | $ | — | $ | — | $ | — | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||||||
Jamie M. Schnur | $ | 716,214 | $ | (112,563 | ) | $ | — | $ | 2,428,278 | (5) | ||||||||||||||||||
Nick C. Fletcher | $ | 202,410 | $ | (6,863 | ) | $ | — | $ | 195,547 | |||||||||||||||||||
Scott T. Mereness | $ | 200,000 | $ | (91,470 | ) | $ | — | $ | 1,085,845 | (6) |
(1) | The executive contributions in |
(2) | Amounts represent earnings or losses on the executives’ contributions, and have not been included in the Summary Compensation Table. |
(3) | Amounts reported in this column previously were reported as compensation to the NEO in the Summary Compensation Table for the previous years. |
(4) | Includes cumulative contributions by the participant of |
(5) | Includes cumulative contributions by the participant of |
(6) | Includes cumulative contributions by the participant of |
Potential Payments on Termination or Change-In-Control
Executive Employment Agreements
Each of the NEOs is party to an Executive Employment Agreement with the Company. The Executive Employment Agreements have an initial three-year term with automatic one-year renewals, and provide severance payments or other benefits under certain circumstances following termination.
In the event of a termination by the Company without cause (as defined in the agreement) or by the executive for good reason (as defined in the agreement), the executive (including each of the NEOs) would be entitled to: (i) an amount equivalent to two years of base salary (at the highest annualized rate in effect at any time within two years of the termination date)1, (ii) an amount equivalent to two times his or her average bonus during the prior three years (with the average capped at his or her then-current base salary)2, (iii) amounts payable under the then-current management incentive plan, (iv) accelerated vesting of time-based equity awards, (v) a lump sum amount equivalent to 12 months of COBRA premiums, and (vi) outplacement services for at least six months. The salary and bonus amounts would be paid out in equal weekly payments on the regular payroll cycle over the 24-month period following the termination.
In the event of a termination on account of death, the executive would be entitled to: (i) an amount equivalent to one year of base salary, (ii) incentive compensation (excluding equity awards) that the executive would have been entitled to receive at the end of the year, (iii) accelerated vesting of time-based equity awards, and (iv) performance stock awards remaining outstanding subject to their terms. The base salary portion would be paid out in equal weekly payments on the regular payroll cycle, and incentive compensation would be calculated and paid in accordance with the terms of the applicable plan.
1 Mr. Smith’s Executive Employment Agreement provides for an amount equivalent to three years of base salary (at the highest annualized rate in effect at any time within two years of the termination date).
2 Mr. Smith’s Executive Employment Agreement provides for an amount equivalent to three times his average bonus during the prior three years (with the average capped at his then-current base salary).
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 55
In the event of a termination on account of disability, the executive would be entitled to: (i) the difference between the executive’s base salary and the amount of disability payments received pursuant to disability insurance provided in accordance with the agreement, for a period of one year, (ii) incentive compensation (excluding equity awards) that the executive would have been entitled to receive at the end of the year, (iii) accelerated vesting of time-based equity awards, (iv) performance stock awards remaining outstanding subject to their terms, and (v) a lump sum amount equivalent to 12 months of COBRA premiums. The base salary portion would be paid out in equal weekly payments on the regular payroll cycle, and incentive compensation would be calculated and paid in accordance with the terms of the applicable plan.
Executives must sign and not revoke a general release in favor of the Company in order to receive severance or disability amounts under the Executive Employment Agreements. The Executive Employment Agreements for each of the NEOs, excluding Mr. Smith, also include restrictive covenants with respect to non-competition and non-solicitation for a 36-month period following termination of employment and with respect to confidentiality. Mr. Smith’s Executive Employment Agreement includes restrictive covenants with respect to non-competition and non-solicitation for a 48-month period following termination of employment and with respect to confidentiality.
38
The 2011 Plan and Award Agreements
The 2011 Plan and the related award agreements provide for accelerated vesting under certain circumstances. With respect to DSUs granted under the 2011 Plan, in the event of a termination of employment by the Company without cause, a termination by the executive for good reason, death, disability, or a change in control of the Company, all unvested DSUs would become fully vested.
With respect to performance shares granted under the 2011 Plan, in the event of an executive’s death or disability, or a change in control of the Company, before the end of the performance period, the number of performance shares deemed earned will be the target amount, and if one of those events occurs after the end of the performance period, the number of performance shares deemed earned will be based on actual performance, and in either case, the number of performance shares earned will be prorated based on the portion of the vesting period that had occurred before the date of the event, and the performance shares so earned will become fully vested. In the event the executive’s employment is terminated by the Company without cause or is terminated by the executive for good reason, after the end of the performance period but before the vesting date, the performance shares will become fully vested.
With respect to RSUs granted under the 2011 Plan, which includes the RSUs granted to the NEOs in 2018, all unvested RSUs would become fully vested in the event of (i) the executive’s death or disability; (ii) a termination of employment by the Company without cause or a termination by the executive for good reason; (iii) a change in control of the Company in which the surviving or successor entity does not continue, assume, or replace unvested RSUs; and (iv) a termination of employment by the Company without cause or a termination by the executive for good reason within 24 months after a change in control of the Company in which the surviving or successor entity continues, assumes, or replaces unvested RSUs.
With respect to PSUs granted under the 2011 Plan, which includes the PSUs granted to the NEOs in 2018, in the event of: (i) an executive’s death or disability, (a) if that event occurs before the last day of the performance period, the target number of PSUs, prorated, will be deemed earned and will fully vest, and (b) if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest; (ii) a termination of employment by the Company without cause or a termination by the executive for good reason, if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest; and (iii) a change in control of the Company in which the surviving or successor entity does not continue, assume, or replace unvested PSUs or a termination of employment by the Company without cause or a termination by the executive for good reason within 24 months after a change in control of the Company in which the surviving or successor entity continues, assumes, or replaces unvested PSUs, (a) if that event occurs before the last day of the performance period, the target number of PSUs, prorated, will be deemed earned and will fully vest, and (b) if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest.
The 2018 Plan and Award Agreements
The 2018 Plan and the related award agreements provide for accelerated vesting under certain circumstances. Although no equity awards had beenWith respect to RSUs granted to any of the NEOs as of December 31, 2018, forms of award agreements under the 2018 Plan, had been adopted bywhich includes the Compensation Committee. With respect to RSUs to be granted to executives under the 2018 Plan,NEOs in 2019, 2020, and 2021, all unvested RSUs would become fully vested in the event of: (i) the executive’s death or disability; (ii) an approved retirement, a termination of employment by the Company without cause, or a termination by the executive for good reason, except for RSUs with respect to which less than one year has elapsed since the grant date; (iii) a change in control of the Company in which the surviving or successor entity does not continue, assume, or replace unvested RSUs; and (iv) a termination of employment by the Company without cause or a termination by the executive for good reason within 24 months after a change in control of the Company in which the surviving or successor entity continues, assumes, or replaces unvested RSUs.
56 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
With respect to the PSUs to be granted under the 2018 Plan, which include all PSUs granted in 2019, 2020, and 2021, in the event of: (a) an executive’s death or disability, (1) if that event occurs before the last day of the performance period, the target number of PSUs, prorated, will be deemed earned and will fully vest, and (2) if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest; (b) an executive’s approved retirement, a termination of employment by the Company without cause, or a termination by the executive for good reason, if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest; and (c) a change in control of the Company in which the
surviving or successor entity does not continue, assume, or replace unvested PSUs or a termination of employment by the Company without cause or a termination by the executive for good reason within 24 months after a change in control of the Company in which the surviving or successor entity continues, assumes, or replaces unvested PSUs, (1) if that event occurs before the last day of the performance period, the target number of PSUs, prorated, will be deemed earned and will fully vest, and (2) if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest.
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Potential Payments on Termination or Change-in-Control Table
The table below reflects the estimated value of compensation and benefits payable to each of the NEOs other than Mr. Mereness, upon the occurrence of certain events. The amounts in the table are based on a hypothetical termination or change in control date of December 31, 2018. The amounts actually payable to Mr. Mereness in connection with his employment termination effective November 16, 2018 are described immediately following the table below.2021.
Name / Benefit | Involuntary Termination Without Cause or for Good Reason | Involuntary Termination Due to Disability(2) | Involuntary Termination Due to Death | Change in Control | Change in Control; Awards not Assumed or Involuntary Termination Without Cause or for Good Reason Within 24 Months after a Change in Control(3) | ||||||||||
Jason D. Lippert | |||||||||||||||
Base salary | $ | 1,950,000 | $ | 975,000 | $ | 975,000 | $ | — | $ | — | |||||
Annual bonus | $ | 1,950,000 | $ | — | $ | — | $ | — | $ | — | |||||
Current AIP | $ | 327,982 | $ | 327,982 | $ | 327,982 | $ | — | $ | — | |||||
Other benefits | $ | 44,954 | $ | 43,814 | $ | 43,814 | $ | — | $ | — | |||||
Acceleration of unvested equity | $ | 3,265,318 | $ | 7,508,988 | $ | 7,508,988 | $ | 5,748,674 | $ | 7,508,988 | |||||
Total Benefits(1) | $ | 7,538,254 | $ | 8,855,784 | $ | 8,855,784 | $ | 5,748,674 | $ | 7,508,988 | |||||
Brian M. Hall | |||||||||||||||
Base salary | $ | 800,000 | $ | 400,000 | $ | 400,000 | $ | — | $ | — | |||||
Annual bonus | $ | 463,064 | $ | — | $ | — | $ | — | $ | — | |||||
Current AIP | $ | 43,731 | $ | 43,731 | $ | 43,731 | $ | — | $ | — | |||||
Other benefits | $ | 38,466 | $ | 38,346 | $ | 38,346 | $ | — | $ | — | |||||
Acceleration of unvested equity | $ | 193,854 | $ | 292,918 | $ | 292,918 | $ | 176,218 | $ | 292,918 | |||||
Total Benefits(1) | $ | 1,539,115 | $ | 774,995 | $ | 774,995 | $ | 176,218 | $ | 292,918 | |||||
Andrew J. Namenye | |||||||||||||||
Base salary | $ | 750,000 | $ | 375,000 | $ | 375,000 | $ | — | $ | — | |||||
Annual bonus | $ | 216,666 | $ | — | $ | — | $ | — | $ | — | |||||
Current AIP | $ | 325,000 | $ | 325,000 | $ | 325,000 | $ | — | $ | — | |||||
Other benefits | $ | 38,018 | $ | 37,910 | $ | 37,910 | $ | — | $ | — | |||||
Acceleration of unvested equity | $ | 90,380 | $ | 90,380 | $ | 90,380 | $ | — | $ | 90,380 | |||||
Total Benefits | $ | 1,420,064 | $ | 828,290 | $ | 828,290 | $ | — | $ | 90,380 | |||||
Jamie M. Schnur | |||||||||||||||
Base salary | $ | 802,132 | $ | 401,066 | $ | 401,066 | $ | — | $ | — | |||||
Annual bonus | $ | 802,132 | $ | — | $ | — | $ | — | $ | — | |||||
Current AIP | $ | 84,098 | $ | 84,098 | $ | 84,098 | $ | — | $ | — | |||||
Other benefits | $ | 39,486 | $ | 38,346 | $ | 38,346 | $ | — | $ | — | |||||
Acceleration of unvested equity | $ | 281,629 | $ | 507,947 | $ | 507,947 | $ | 334,401 | $ | 507,947 | |||||
Total Benefits(1) | $ | 2,009,477 | $ | 1,031,457 | $ | 1,031,457 | $ | 334,401 | $ | 507,947 |
Name/Benefit | Involuntary Termination Without Cause or for Good Reason | Involuntary Termination Due to Disability(2) | Involuntary Termination Due to Death | Change in Control; Awards not Assumed or Involuntary Termination Without Cause or for Good Reason Within 24 Months after a Change in Control (3) | ||||||||||||
Jason D. Lippert | ||||||||||||||||
Base salary | $ | 2,171,240 | $ | 1,085,620 | $ | 1,085,620 | $ | -- | ||||||||
Annual bonus | $ | 2,171,240 | $ | -- | $ | -- | $ | -- | ||||||||
Current AIP | $ | 4,500,000 | $ | 4,500,000 | $ | 4,500,000 | $ | -- | ||||||||
Other benefits | $ | 68,823 | $ | 19,248 | $ | -- | $ | -- | ||||||||
Acceleration of unvested equity | $ | 7,944,382 | $ | 12,070,105 | $ | 12,070,105 | $ | 12,070,105 | ||||||||
Total Benefits(1) | $ | 16,855,685 | $ | 17,674,973 | $ | 17,655,725 | $ | 12,070,105 | ||||||||
Brian M. Hall | ||||||||||||||||
Base salary | $ | 1,000,000 | $ | 500,000 | $ | 500,000 | $ | -- | ||||||||
Annual bonus | $ | 1,000,000 | $ | -- | $ | -- | $ | -- | ||||||||
Current AIP | $ | 1,050,000 | $ | 1,050,000 | $ | 1,050,000 | $ | -- | ||||||||
Other benefits | $ | 67,675 | $ | 19,248 | $ | -- | $ | -- | ||||||||
Acceleration of unvested equity | $ | 1,168,090 | $ | 1,890,807 | $ | 1,890,807 | $ | 1,890,807 | ||||||||
Total Benefits(1) | $ | 4,285,765 | $ | 3,460,055 | $ | 3,440,807 | $ | 1,890,807 | ||||||||
Ryan R. Smith | ||||||||||||||||
Base salary | $ | 2,250,000 | $ | 750,000 | $ | 750,000 | $ | -- | ||||||||
Annual bonus | $ | 2,250,000 | $ | -- | $ | -- | $ | -- | ||||||||
Current AIP | $ | 4,375,000 | $ | 4,375,000 | $ | 4,375,000 | $ | -- | ||||||||
Other benefits | $ | 73,438 | $ | 19,248 | $ | -- | $ | -- | ||||||||
Acceleration of unvested equity | $ | 1,816,509 | $ | 2,082,683 | $ | 2,082,683 | $ | 2,082,683 | ||||||||
Total Benefits(1) | $ | 10,764,947 | $ | 7,226,931 | $ | 7,207,683 | $ | 2,082,683 | ||||||||
Jamie M. Schnur | ||||||||||||||||
Base salary | $ | 1,200,000 | $ | 600,000 | $ | 600,000 | $ | -- | ||||||||
Annual bonus | $ | 1,200,000 | $ | -- | $ | -- | $ | -- | ||||||||
Current AIP | $ | 2,100,000 | $ | 2,100,000 | $ | 2,100,000 | $ | -- | ||||||||
Other benefits | $ | 69,123 | $ | 19,248 | $ | -- | $ | -- | ||||||||
Acceleration of unvested equity | $ | 1,567,117 | $ | 2,292,224 | $ | 2,292,224 | $ | 2,292,224 | ||||||||
Total Benefits(1) | $ | 6,136,240 | $ | 5,011,472 | $ | 4,992,224 | $ | 2,292,224 | ||||||||
Andrew J. Namenye | ||||||||||||||||
Base salary | $ | 891,156 | $ | 445,578 | $ | 445,578 | $ | -- | ||||||||
Annual bonus | $ | 891,156 | $ | -- | $ | -- | $ | -- | ||||||||
Current AIP | $ | 743,750 | $ | 743,750 | $ | 743,750 | $ | -- | ||||||||
Other benefits | $ | 67,186 | $ | 19,248 | $ | -- | $ | -- | ||||||||
Acceleration of unvested equity | $ | 885,342 | $ | 1,402,622 | $ | 1,402,622 | $ | 1,402,622 | ||||||||
Total Benefits | $ | 3,478,590 | $ | 2,611,198 | $ | 2,591,950 | $ | 1,402,622 |
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Name / Benefit | Involuntary Termination Without Cause or for Good Reason | Involuntary Termination Due to Disability(2) | Involuntary Termination Due to Death | Change in Control | Change in Control; Awards not Assumed or Involuntary Termination Without Cause or for Good Reason Within 24 Months after a Change in Control(3) | ||||||||||
Nick C. Fletcher | |||||||||||||||
Base salary | $ | 717,034 | $ | 358,517 | $ | 358,517 | $ | — | $ | — | |||||
Annual bonus | $ | 717,034 | $ | — | $ | — | $ | — | $ | — | |||||
Current AIP | $ | 42,049 | $ | 42,049 | $ | 42,049 | $ | — | $ | — | |||||
Other benefits | $ | 39,652 | $ | 39,136 | $ | 39,136 | $ | — | $ | — | |||||
Acceleration of unvested equity | $ | 151,035 | $ | 206,946 | $ | 206,946 | $ | 179,492 | $ | 206,946 | |||||
Total Benefits(1) | $ | 1,666,804 | $ | 646,648 | $ | 646,648 | $ | 179,492 | $ | 206,946 |
(1) | Deferred compensation balances are not included above as the Deferral Plan participant is fully vested in all deferred compensation and earnings credited to the participant’s account because the participant has made all the contributions. For additional information regarding the NEOs’ deferred compensation balances under the Deferral Plan, see the Non-Qualified Deferred Compensation Table. |
(2) | Amounts payable by the Company will be reduced by the disability payments received by the executive. |
(3) | Upon involuntary termination without cause or for good reason the NEO would also receive the base salary, annual bonus, current AIP, and other benefits as noted in the “Involuntary Termination Without Cause or for Good Reason” column. |
58 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
As discussed above, on November 16, 2018, the Company and Mr. Mereness agreed to Mr. Mereness’s resignation as the Company’s President, and from all other officer and director positions with the Company and its affiliated entities, as well as his termination of employment. The Separation Agreement with Mr. Mereness, among other things, provides that Mr. Mereness would receive the severance compensation and other benefits set forth in the Mereness Employment Agreement. The type and amount of severance compensation and benefits that Mr. Mereness was entitled to receive were substantially those provided by the Mereness Employment Agreement in the event of a termination without cause and consist of:
41
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information regarding outstanding grants and shares available for grant under our existing equity compensation plans, including the 2011 Plan and the 2018 Plan. All information is as of December 31, 2018.2021.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) (a) | Weighted-average exercise price of outstanding options, warrants and rights(2) (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(3) (c) | ||||||
Equity compensation plans approved by security holders | 469,577 | $ | — | 1,552,472 | |||||
Equity compensation plans not approved by security holders | N/A | N/A | N/A | ||||||
Total | 469,577 | $ | — | 1,552,472 |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) (a) | Weighted-average exercise price of outstanding options, warrants and rights(2) (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(3) (c) | |||||||||
Equity compensation plans approved by security holders | 528,954 | $ | -- | 1,102,710 | ||||||||
Equity compensation plans not approved by security holders | N/A | N/A | N/A | |||||||||
Total | 528,954 | $ | -- | 1,102,710 |
(1) | Consists of |
(2) |
(3) | Pursuant to the 2018 Plan, which was approved by stockholders in May 2018, the Company may grant stock options, stock appreciation rights, restricted stock awards, stock unit awards, other stock-based awards, and cash incentive awards. Prior to the stockholders’ approval of the 2018 Plan, the Company could grant equity-based awards, such as stock options, restricted stock, performance shares, and DSUs, pursuant to the 2011 Plan. No further awards may be made under the 2011 Plan. The number of PSUs included in the amounts in this column in the table removes from the number of securities remaining available for future issuance (a) the actual number of PSUs earned for the completed performance periods of 2021 and (b) the maximum number of shares which the participant is eligible to receive if applicable performance metrics are fully achieved with respect to the PSUs described in footnote (1) above. If the target number of unearned PSU awards was used in this calculation, instead of the maximum number used in the table above, the number of shares available for grant of new awards under the 2018 Plan was |
42
We are providing the following information about the relationship of the annual total compensation of our employeesteam members and the annual total compensation of Jason D. Lippert, our President and Chief Executive Officer (“CEO”):
For 2018,2021, our last completed fiscal year:
Based on this information for fiscal year 2018,2021, we reasonably estimate that the ratio of our CEO’s annual total compensation to the annual total compensation of our median employeeteam member was 114:206:1. We used reasonable estimates in the methodology used to identify the median employeeteam member and calculate the annual total compensation of the median employeeteam member in a manner consistent with SEC rules and guidance. Our pay ratio estimate has been calculated in a manner consistent with Item 402(u) of Regulation S-K.
As of December 31, 2021, our employee population consisted of approximately 12,336 U.S. team members and 1,656 non-U.S. team members. We elected to exclude all of our team members located in Tunisia (129 individuals total) from our determination of the median team member pursuant to the de minimis exemption permitted under SEC rules, we are using the samerules. The median employee was selected from an adjusted team member population of 13,863 employees (excluding our CEO).
We identified our median employee based on the total payroll earnings actually paid during fiscal year 2021 to the above-mentioned 13,863 members of our workforce (including full-time and part-time), other than our CEO, who were employed on December 31, 2021.
For purposes of determining the total payroll earnings actually paid, we included: the amount of base salary the team member received during the year, the amount of any cash incentives paid to the team member in the year (which include annual
cash incentives that are generally paid in January or February for our pay ratio disclosureperformance during the prior fiscal year), and the value of any equity grants that vested during the year based on the value of the shares on the date of vesting. We did not include any adjustments for 2018 that we used for our pay ratio disclosure for 2017 becausethe value of benefits provided, but we did not experienceinclude certain adjustments for the annualization of pay for any change inteam members who were employed by us for only part of the year.
Once we identified our employee population compensation arrangements during 2018median team member, we then determined that we reasonably believe would significantly impact our pay ratio disclosure.
We determined the median employee’steam member’s total compensation, for 2018, including any perquisites and other benefits, in the same manner that we determine the total compensation of our Named Executive OfficersNEOs for purposes of the Summary Compensation Table disclosed above. The elements included in the CEO’s total compensation are fully discussed above in the footnotes to the Summary Compensation Table.
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TRANSACTIONS WITH RELATED PERSONS
The Company currently has over 9,000 employeesnearly 14,000 team members and seeks to employ the most qualified candidates. Consequently, the Company does not preclude the hiring of family members of incumbent Directors and executive officers. The compensation of each of the following employeesteam members was established in accordance with the Company’s employment and compensation practices applicable to employeesteam members with equivalent qualifications, experience, and responsibilities.
During 2018,2021, the Company employed Jason D. Lippert as President and Chief Executive Officer of the Company, who received total salary and incentive compensation of $5,992,695$10,993,750 (see “Executive Compensation - Summary Compensation Table”), and Lippert Components, Inc. employed Jarod Lippert as Vice President of Marketing and Public Relations, who received total compensation of $459,965,$404,476, and Jayde Lippert as Assistant GeneralBusiness Development Manager, who received total compensation of $79,811.$177,048. Jason D. Lippert, Jarod Lippert, and Jayde Lippert, brothers, have been employed by Lippert Components, Inc. in excess of 24, 17,27, 20, and fourseven years, respectively.
In addition, as
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As described earlier in this Proxy Statement, one of the Company’s customers, Barletta Boat Company, LLC (“Barletta”), is an entity that manufactures pontoon boats. The President and 38% ownerPrior to the sale of Barletta William Fenech, is the brother ofto Winnebago Industries, Inc. in August, 2021, Ronald Fenech, one of our Directors. Ronald Fenech is alsoDirectors, was a co-owner and director of Barletta, holding a 38% ownership interest,interest. His brother, William Fenech, is the president of Barletta and isalso a director of that entity.former 38% owner. Between January 1, 20182021, and March 25, 2019,23, 2022, Barletta paid the Company approximately $11,822,000$44,528,947 for the purchase of components. The Company anticipates that these purchases will continue during the remainder of 2019.2022. The purchases by Barletta from the Company were, and future purchases will be, entered into in the ordinary course of business on an arm’s length basis, and contained, and will contain, customary terms and conditions on substantially the same terms as comparable transactions with unrelated third parties.
Approval of Certain Related Person Transactions
The Corporate Governance, Nominating, and NominatingSustainability Committee is charged with reviewing and approving or ratifying any transaction between the Company and a related person, which is required to be disclosed under the rules of the SEC. For purposes of this practice, the terms “transaction” and “related person” have the meanings contained in Item 404 of Regulation S-K. In the course of its review and approval or ratification of a transaction, the Corporate Governance, Nominating, and NominatingSustainability Committee shall consider:
Any Corporate Governance, Nominating, and NominatingSustainability Committee member who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting such approval or ratification,ratification; provided, however, that such Director may be counted in determining the presence of a quorum at a meeting of the Committee which considers the transaction.
Compensation Committee Interlocks and Insider Participation
During a portion or all of fiscal 2018,2021, Messrs. Crespo, Deely, and Graham and Mses. Henkels and Mains served on the Compensation Committee of our Board of Directors, was comprised of Messrs. Deely, Graham, Lowe, and O’Sullivan and Ms. Henkels (from January 1, 2018 through May 24, 2018) and Messrs. Deely, Graham, and O’Sullivan and Ms. Henkels (from May 24, 2018 through December 31, 2018), all of whom are independent, outsidenon-employee Directors. No member of this Committee has had any relationship with our Company requiring disclosure in this Proxy Statement other than service as a Director. No executive officer of the Company serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our Board of Directors or Compensation Committee, and there are no “interlocks,” as defined by the SEC.
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Proposal 2. ADVISORY VOTE ON EXECUTIVE COMPENSATION
SEC rules require that the Company seek a non-binding advisory vote from its stockholders to approve the compensation of our NEOs as described in this Proxy Statement.
Our executive compensation policy is designed to enable the Company to attract, motivate, and retain highly qualified senior executives who have the skills to drive our continued profitability, growth, and success by providing a competitive compensation opportunity based significantly on performance. Our intent is to provide fair and equitable compensation in a way that rewards executives for achieving specified financial goals. Our performance-related awards are structured to link a substantial portion of our executives’ total potential compensation to the Company’s performance on both a long-term and short-term basis, to recognize individual contributions, as well as overall business results, and to align executive and stockholder interests. Accordingly, we reward performance in excess of pre-established targets of, adjusted EPSgenerally, Adjusted EBIT and ROIC and we avoided establishing goals that could divert our executives’ attention from the fundamentals of effective and efficient operations. A significant portion of the total compensation paid to our NEOs is in the form of long-term equity.
At the Annual Meeting of Stockholders held on May 24, 2018, our stockholders approved,20, 2021, in an advisory vote, the compensation paid to our NEOs for 2017. In the advisory vote, 97%23% of the votes cast voted in favor of the 20172020 compensation. We believe the compensation program changes that we have implemented this year, and have put in place going forward, help align executive and stockholder interests. Although the vote was non-binding, the Compensation Committee reviewed the results of the vote and consideredengaged in the high approval rate as an indication that our stockholders support the Company’s executive compensation philosophy and decisions, including the restructured aspectsstockholder outreach program described beginning on page 36 of the compensation program for our Chief Executive Officer and President that were effective for 2017 and were continued for 2018.this Proxy Statement.
We are requesting stockholder advisory approval of the compensation paid to our NEOs as described in this Proxy Statement, including the disclosures under “Executive Compensation - Compensation Discussion and Analysis,” the compensation tables, and the related information and discussion. The vote is intended to address the overall compensation paid to our NEOs and the policies and practices described in this Proxy Statement.
The vote is advisory and therefore not binding on the Company, the Compensation Committee, or the Board of Directors. However, we value the opinions of our stockholders, and we will carefully consider the outcome of the advisory vote on executive compensation when making future compensation decisions.
For the reasons stated, the Board of Directors recommends a vote FOR the following non-binding resolution:
“RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables, and related information and discussion, is hereby APPROVED.”
In connection with the stockholder preference expressed at the 2017 Annual Meeting, our Board of Directors has determined that stockholder advisory votes on executive compensation will occur on an annual basis. Therefore, the next advisory vote will occur at our 20202022 Annual Meeting.
The Board of Directors recommends that you vote FOR adoption of the resolution approving the compensation paid to our NEOs as described in this Proxy Statement. |
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Proposal 3. RATIFICATION OF APPOINTMENT OF AUDITORS
It is proposed the stockholders ratify the appointment by the Audit Committee of KPMG LLP (“KPMG”) as independent auditors for the purpose of auditing and reporting on the consolidated financial statements and internal control over financial reporting of the Company for the year ending December 31, 2019.2022. KPMG is an independent registered public accounting firm. It is expected that a representative of that firm will be present at the Annual Meeting of Stockholders to be held on May 23, 2019 and will be afforded the opportunity to make a statement and respond to appropriate questions from stockholders present at the meeting.
If the holders of a majority in voting power of the outstanding shares of Common Stock which are present in personvirtually or by proxy at the meeting and entitled to vote thereon do not approve the proposal, the Audit Committee will reconsider its choice, taking into consideration the views of the stockholders, and may, but will not be required to, appoint a different independent registered public accounting firm.
Fees for Independent Auditors
The following is a summary of the fees billed to the Company by KPMG for professional services rendered for the fiscal years ended December 31, 20182021 and 2017:2020:
2018 | 2017 | |||||
Audit Fees: | ||||||
Consists of fees billed for professional services rendered for the annual audit of the Company’s financial statements and for the reviews of the interim financial statements included in the Company’s Quarterly Reports | $ | 1,202,500 | $ | 1,000,000 | ||
Audit-Related Fees: | ||||||
Consists primarily of fees billed for transaction related services | $ | — | $ | — | ||
Tax Fees: | ||||||
Consists of fees billed for tax planning and compliance, assistance with the preparation of tax returns, tax services rendered in connection with acquisitions made by the Company and advice on other tax-related matters | $ | — | $ | 24,000 | ||
All Other Fees: | ||||||
Other Services | $ | — | $ | — | ||
Total All Fees | $ | 1,202,500 | $ | 1,024,000 |
2021 | 2020 | |||||||
Audit Fees: | ||||||||
Consists of fees billed for professional services rendered for the annual audit of the Company’s financial statements and for the reviews of the interim financial statements included in the Company’s Quarterly Reports | $ | 1,720,000 | $ | 1,345,000 | ||||
Audit-Related Fees: | ||||||||
Consists primarily of fees billed for transaction-related services | $ | -- | $ | -- | ||||
Tax Fees: | ||||||||
Consists of fees billed for tax planning and compliance, assistance with the preparation of tax returns, tax services rendered in connection with acquisitions made by the Company, and advice on other tax-related matters | $ | -- | $ | -- | ||||
All Other Fees: | ||||||||
Other Services | $ | -- | $ | -- | ||||
Total | $ | 1,720,000 | $ | 1,345,000 |
As part of its duties, the Audit Committee is required to pre-approve audit and non-audit services performed by the independent auditors in order to assure that the provision of such services does not impair the auditors’ independence. The Audit Committee does not delegate to Management its responsibilities to pre-approve services performed by the independent auditors. All services performed by KPMG were approved by the Audit Committee.
In making its recommendation to ratify the appointment of KPMG LLP as the Company’s independent auditors for the year ending December 31, 2019, the Audit Committee has determined the non-audit services provided by KPMG are compatible with maintaining the independence of KPMG LLP.
The Board of Directors recommends ratification of the appointment of KPMG LLP as independent auditors for the year ending December 31, |
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The Audit Committee serves as a representative of the Company’s Board of Directors, and is responsible for providing independent, objective oversight of the Company’s (i) financial reporting processes and financial statements, (ii) compliance with legal and regulatory requirements, (iii) appointment and performance of the independent auditor, (iv) system of internal control, and (v) compliance with ethical standards. The Audit Committee operates under a written charter, a copy of which is available on the Company’s website at www.lci1.com/investors under “Corporate Governance.“Governance.” The Audit Committee currently consists of Virginia L. Henkels (Chair), James F. Gero, Frederick B. Hegi, Jr.,Tracy D. Graham, Stephanie K. Mains, and Kieran M. O’Sullivan, and David A. Reed, each of whom satisfies the independence requirement of Rule 10A-3 under the Securities Exchange Act of 1934, as amended, and each of whom has been determined by the Board of Directors to be an “audit committee financial expert” as defined by the SEC.
Management is responsible for the Company’s internal controls and the financial reporting process. KPMG LLP, an independent registered public accounting firm acting as the Company’s independent auditor, is responsible for performing an audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”), and to issue a report thereon. KPMG is also responsible for issuing a report on the effectiveness of the Company’s internal control over financial reporting. As set forth in its Charter, the Committee acts only in an oversight capacity and relies on the work and assurances of Management and other advisors retained by the Company, and KPMG’s opinion on the Company’s consolidated financial statements.
The Audit Committee has reviewed and discussed with Management and KPMG the Company’s audited financial statements for the year ended December 31, 2018.2021. Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Audit Committee has reviewed and discussed with Management their assessment of the effectiveness of the Company’s internal control over financial reporting. The Audit Committee reviewed and discussed with KPMG the consolidated financial statements and KPMG’s evaluation of the Company’s internal control over financial reporting. The Audit Committee also discussed with KPMG the matters required to be discussed by the applicable rulesrequirements of the PCAOB.PCAOB and the SEC. In fulfilling the Audit Committee’s oversight responsibility of the external auditor, the Audit Committee reviews the policies and procedures for the engagement of the independent registered public accounting firm, including the scope of the audit, audit fees, auditor independence matters, performance of the auditor, lead partner selection, and auditor tenure. The current lead audit partner for the Company has held that position since 2018.2021. The Audit Committee has received the written disclosures and the letter from KPMG required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence and has discussed with KPMG their independence.
The Audit Committee considered whether non-audit services provided by, and fees paid to, KPMG are compatible with maintaining their independence. The Audit Committee concluded that non-audit services provided by KPMG during the year ended December 31, 2018, which consisted of tax planning and compliance, and other accounting and audit-related services, were compatible with KPMG’s independence.
Based on the review and discussions referenced above, the Audit Committee recommended to the Board of Directors the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20182021, filed with the SEC.
AUDIT COMMITTEE | |||
Virginia L. Henkels, Chair | Tracy D. Graham | Kieran M. O’Sullivan | |
James F. Gero | Stephanie K. Mains | ||
The foregoing report of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into a filing. | |||
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The foregoing report of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into a filing.
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As of the date of this Proxy Statement, the only business which Management intends to present, or knows that others will present, at the Annual Meeting is that set forth herein. If any other matter or matters are properly brought before the Annual Meeting, or
any adjournment or postponement thereof, it is the intention of the persons named in the proxy solicited from holders of the Common Stock to vote the proxy on such matters in accordance with their judgment, subject to NYSE rules.
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STOCKHOLDER PROPOSALS FOR THE 20202023 ANNUAL MEETING
In order for a stockholder proposal to be considered for inclusion in the Company’s Proxy Statement for the Annual Meeting to be held in 2020,2023, the Company must receive the written proposal at its principal executive offices on or before December 11, 2019.5, 2022. The proposal must comply with SEC regulations regarding the inclusion of stockholder proposals in company-sponsored proxy materials.
Additionally, the Company’s bylaws establish an advance notice procedure relating to director nominations and stockholder proposals that are not submitted for inclusion in the Company’s Proxy Statement, but that the stockholder instead wishes to present directly at an annual meeting. To be properly brought before the Annual Meeting to be held in 2020,2023, the stockholder must give timely written notice of the nomination or proposal to:
Corporate Secretary
LCI Industries4100 Edison Lakes ParkwaySuite 210Mishawaka, IN 46545 3501
County Road 6 East
Elkhart, Indiana 46514
To be timely, a stockholder’s notice must be delivered not later than the close of business on the 90th90th day, nor earlier than the close of business on the 120th120th day, prior to the first anniversary of the preceding year’s annual meeting. For the Annual Meeting to be held in 2020,2023, such notice must be delivered no earlier than January 24, 202019, 2023, and no later than February 23, 2020.18, 2023. In the event that the date of the annual meeting is advanced by more than 30 or delayed by more than 70 days from such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the 120th120th day prior to such annual meeting and not later than the close of business on the later of the 90th90th day prior to such annual meeting orand the 10th10th day following the day on which public announcement of the date of such meeting is first made. The notice must contain specified information about each nominee or the proposed business and the stockholder making the nomination or proposal. A copy of the Company’s bylaws, including the advance notice requirements, may be obtained upon request to the Company’s Secretary at the address noted above.
In addition to satisfying the foregoing requirements under our bylaws, to comply with the universal proxy rules (once effective), 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 Securities Exchange Act of 1934, as amended, no later than March 20, 2023. By Order of the Board of Directors ANDREW J. NAMENYE Executive Vice President, Chief Legal Officer, and Corporate Secretary April 4, 2022
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April 9, 2019
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Under the Company’s 2021 AIP approved by the Compensation Committee for the Company’s senior officers, participants earn incentive compensation based on the results of Company financial performance measurements for the program year which, for 2021, was based on Adjusted EBIT, a non-GAAP measure. The Company defines Adjusted EBIT as consolidated net income before interest and taxes (labeled “Operating profit” on the Company’s Consolidated Statement of Income), as adjusted by the Committee for events that are unusual in nature or infrequently occurring, including without limitation a change in control, acquisitions, divestitures, restructuring activities, or asset write-downs, or for changes in applicable tax laws or accounting principles. Adjusted EBIT is not calculated in accordance with, nor is it a substitute for, GAAP measures. The Company considers non-GAAP Adjusted EBIT as a profitability measure in evaluating and managing the Company’s operations and in evaluating the performance of its senior officers. The determination of Adjusted EBIT may not be comparable to similarly-titled measures used by other companies. A reconciliation of Adjusted EBIT to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, is provided below.
Year Ended | ||||
(in thousands) | December 31, 2021 | |||
Net income, as reported GAAP | $ | 287,739 | ||
Add back: | ||||
Provision for income taxes | $ | 94,305 | ||
Interest expense, net | $ | 16,366 | ||
Adjusted EBIT (non-GAAP) | $ | 398,410 |
The following table reconciles net income to EBITDA and Adjusted EBITDA.
Year Ended | Year Ended | |||||||
(in thousands) | December 31, 2021 | December 31, 2020 | ||||||
Net income, as reported GAAP | $ | 287,739 | $ | 158,440 | ||||
Add back: | ||||||||
Provision for income taxes | $ | 94,305 | $ | 51,041 | ||||
Interest expense, net | $ | 16,366 | $ | 13,453 | ||||
Depreciation expense | $ | 64,755 | $ | 60,107 | ||||
Amortiztion expense | $ | 47,565 | $ | 37,873 | ||||
EBITDA (non-GAAP) | $ | 510,730 | $ | 320,914 | ||||
Non-cash charge for inventory fair value step-up | $ | 993 | $ | 7,286 | ||||
Adjusted EBITDA (non-GAAP) | $ | 511,723 | $ | 328,200 |
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