UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
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| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material Pursuant to | |
SKYLINE CHAMPION CORPORATIONSkyline Champion Corporation
(Name of Registrant as Specified Inin Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule0-11
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LETTER TO OUR SHAREHOLDERS
Keith Anderson Former Chief Executive Officer | Dear Shareholder: We are pleased to invite you to our 2019 Annual Meeting of Shareholders, which will take place on Tuesday, July 30, 2019 at 9:00 AM, Eastern Time, at the Hilton Garden Inn located at 200 Wilshire Drive, Troy, MI 48084. Annual meetings play an important role in maintaining communications and understanding among our management, Board of Directors and shareholders, and we hope you will join us. On the pages following this letter you will find: | |||||||
| ◾ | The notice of our 2019 Annual Meeting of Shareholders, which lists the items of business to be considered at the Annual Meeting; and | |||||||
| ◾ | Our 2019 proxy materials, which describe the items of business listed in the notice and provide other information you will likely find useful in deciding how to cast your vote. | |||||||
We have elected to provide our proxy materials over the Internet under the Securities and Exchange Commission’s “notice and access” shareholders a Notice Regarding the Availability of Proxy Materials (the “Notice”) with instructions for accessing the proxy materials, including our proxy statement and Annual Report to Shareholders, and for voting via the Internet. Providing our proxy materials to shareholders electronically allows us to conserve natural resources and reduce our printing and mailing costs related to the distribution of our proxy materials. If you wish to receive paper copies of our proxy materials you may do so by following the instructions contained in the Notice. I have announced my retirement as CEO of the Company effective June 1, 2019 but am prepared to continue to serve on your Board of Directors ifre-elected. Mark Yost has been named as our next CEO. I have been honored to serve as CEO and greatly appreciate the shareholder support I have received during my tenure. I would ask that you continue your support and interest in Skyline Champion Corporation as Mark leads the Company forward. Sincerely,
Keith Anderson Former CEO June 5, 2019 | ||||||||
NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual
Meeting of Shareholders (the “Annual Meeting”) of Skyline Champion Corporation (“Skyline Champion”) will be held at the Hilton Garden Inn, 200 Wilshire Drive, Troy, Michigan, 48084, on Wednesday, September 26, 2018, at 9:00 a.m., Eastern Time, for the following purposes:Information
DATE & TIME Tuesday, July 30, 2019 9:00 AM Eastern Time | LOCATION Hilton Garden Inn 200 Wilshire Drive Troy, MI 48084 | RECORD DATE You may vote if you owned Skyline Champion common stock at the close of business on June 5, 2019. |
Items of Business
| 1 | To elect seven members of the Board of Directors, each to serve until the next annual meeting of shareholders or until |
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To ratify the appointment of Ernst & Young LLP as Skyline Champion’s independent registered public accounting firm. |
| 3 | To consider anon-binding advisory vote on fiscal 2019 compensation paid to Skyline Champion’s named executive officers. |
| 4 | To transact |
TheVoting Matters and Board of Directors of Skyline recommends that you voteFOR each of the nominees for director,FOR the approval, on anon-bindingRecommendations advisory basis, of the 2018 compensation paid to the named executive officers, FOR the approval of the 2018 Equity Incentive Plan, andFORthe ratification of the selection of Ernst & Young LLP as the independent auditor for fiscal year 2019.
Your vote is very important. Please note that in the absence of your specific instructions as to how to vote, brokers may only vote on the ratification of the appointment of the independent auditor, but no other proposals described in this proxy statement. In order for your vote to be counted, please make sure that you submit your vote to your broker.
The Board of Directors has fixed the close of business on September 4, 2018, as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting.
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IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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The Board of Directors of Skyline Champion Corporation is soliciting your proxy to vote at our 2018 Annual Meeting of Shareholders (the “2018 Annual Meeting”) to be held at 9:00 a.m., Eastern Time, on Wednesday, September 26, 2018 for the purposes summarized in the accompanying Notice of Annual Meeting of Shareholders. Our Annual Report for the fiscal year ended March 31, 2018 is made available with this proxy statement, and all of the materials included herein are available on our website at www.skylinechampion.com.
References in this proxy statement to “Skyline Champion,” the “Company,” “we,” “us,” and “our” refer to Skyline Champion Corporation.
The mailing address of our principal executive offices is Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515. We will make arrangements with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy materials to the beneficial owners of shares and will reimburse them for their expenses in so doing.
Why are we soliciting proxies?
We are furnishing this proxy statement and form of proxy to the holders of Skyline Champion’s common stock, par value $0.0277 per share, in connection with the solicitation by our Board of Directors of proxies for use at the 2018 Annual Meeting.
When and where is the 2018 Annual Meeting?
The 2018 Annual Meeting will be held at 9:00 a.m., Eastern Time, on Wednesday, September 26, 2018, at the Hilton Garden Inn, 200 Wilshire Drive, Troy, Michigan, 48084, or at any future date and time following an adjournment or postponement of the meeting.
What business will be conducted at the 2018 Annual Meeting?
The business to be considered at the 2018 Annual Meeting is described in the accompanying Notice of Annual Meeting of Shareholders. Skyline Champion’s Board of Directors is not currently aware of any other business that will come before the meeting.
Who can vote?
The record date for voting is September 4, 2018. Only shareholders of record at the close of business on September 4, 2018 are entitled to notice of and to vote at the 2018 Annual Meeting and any adjournment or postponement of the meeting. On September 4, 2018, there were 56,511,252 shares of our common stock outstanding. Each share is entitled to one vote on each of the matters to be presented at the 2018 Annual Meeting. There are no cumulative voting rights for the election of directors.
Who can attend the 2018 Annual Meeting?
Attendance at the 2018 Annual Meeting will be limited to record or beneficial owners of Skyline Champion common stock as of September 4, 2018 (or their authorized representatives). When you arrive at the meeting, you must present photo identification, such as a driver’s license. If your shares are held by a bank, broker or other nominee, you must also present your bank or broker statement evidencing your beneficial ownership of Skyline Champion’s common stock to gain admission to the 2018 Annual Meeting. Skyline Champion reserves the right to deny admittance to anyone who cannot show sufficient proof of share ownership as of September 4, 2018. Please contact our Investor Relations team at (248)614-8211 if you need to obtain directions on how to attend the 2018 Annual Meeting and vote in person.
What does it mean if I receive more than one proxy card or voting instruction form?
If you receive more than one proxy card or voting instruction form, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each proxy card or voting instruction form to ensure that all of your shares are voted.
How do I vote?
Whether or not you plan to attend the 2018 Annual Meeting, it is important that you vote.
If you own shares in your own name (a record owner), you can vote any one of four ways:
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If your shares are held in a brokerage account in your broker’s name, you will receive voting instructions from your bank, broker or other nominee that you must follow in order for your shares to be voted. Internet and telephone voting may be offered to shareholders owning shares through most banks and brokers.
How can I change or revoke my vote?
You may revoke the authority granted by your execution of a proxy at any time prior to the 2018 Annual Meeting by:
filing a timely written notice of revocation addressed to the attention of: Secretary, Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515;
mailing a duly executed proxy bearing a later date;
re-voting by Internet or telephone prior to the date and time described in this proxy statement; or
voting in person at the 2018 Annual Meeting and requesting that your proxy be revoked.
Only your latest vote will be counted.
What constitutes a quorum at the 2018 Annual Meeting?
The holders of a majority of the outstanding shares of common stock as of the close of business on the record date must either be present in person or represented by proxy to constitute a quorum at the 2018 Annual Meeting. Shares that are present that vote to abstain or do not vote on one or more of the matters to be voted upon are counted as present for establishing a quorum. All votes cast at the 2018 Annual Meeting will be tabulated by Computershare Trust Company, N.A.
What vote is required for each proposal?
| Board Recommendation | Broker Discretionary Voting Allowed | Abstentions | Required Vote | ||||||
1. Election of Directors | FOR ALL | No | No | Plurality of | ||||||
2. Ratification of Auditors | FOR | Yes | No Effect | Majority of Votes Cast | ||||||
3. Advisory Approval of Executive Compensation | FOR | No | No Effect | Majority of Votes Cast |
By order of the Board of Directors,
Roger K. Scholten
Senior Vice President, General Counsel, and Secretary
June 5, 2019
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If you do not give your broker voting instructions, your broker (1) will be entitled to vote your shares on the ratification of our independent accounting firm, but (2) will not be entitled to vote your shares on the election of directors, the equity incentive plan, or the advisory vote on executive compensation.
We urge you to provide instructions to your bank, broker or other nominee so that your votes may be counted on all of these important matters.
Who solicits proxies and bears the costs of solicitation?
Proxies may be solicited, without extra compensation, by officers, agents and employees of Skyline Champion who may communicate with shareholders, banks, brokerage houses and others by telephone, facsimile, email or in person to request that proxies be furnished. All expenses incurred in connection with this solicitation will be paid for by Skyline Champion.
Who should I contact if I have any questions?
If you have any questions about the 2018 Annual Meeting, voting or your ownership of our common stock, please contact our Investor Relations team at (248)614-8211.
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PROPOSAL TWO: Ratification of the Appointment of the Independent Registered Public Accounting Firm | 13 | |||
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PROPOSAL THREE: Advisory Resolution to Approve Executive Compensation | 16 | |||
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Summaryof Fiscal 2019 Compensation Changes for Our Named Executive Officers | 18 | |||
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Summary Compensation Table for Fiscal 2019 | 30 | |||
Grants of Plan-Based Awards Table in Fiscal 2019 | 31 | |||
Outstanding Equity Awards Table at Fiscal 2019 Year End | 33 | |||
Option Exercises and Stock Vested Table in Fiscal 2019 | 34 | |||
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SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS | 41 | |||
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Explanatory Note About the Skyline Champion Corporation Transaction |
As previously reported by Skyline Champion Corporation (“Skyline Champion,” the “Company,” “we,” “us,” or “our”), on June 1, 2018 (the “Closing Date”), Skyline Corporation and Champion Enterprises Holdings, LLC (“Champion Holdings”) completed the transactions contemplated bycombined their operations pursuant to the Share Contribution & Exchange Agreement (the “Exchange Agreement”), dated as of January 5, 2018, by and between Skyline Corporation and Champion Holdings. Under the Exchange Agreement, (i) Champion Holdings contributed to Skyline Corporation all of the issued and outstanding equity interests of each of Champion Holdings’ wholly-owned operating subsidiaries, Champion Home Builders, Inc., a Delaware corporation (“CHB”), and CHB International B.V., a Dutch private limited liability company (“CIBV”) (the shares of stock of CHB and CIBV contributed to Skyline Corporation, the “Contributed Shares”), and (ii) in exchange for the Contributed Shares, Skyline Corporation issued to the members of Champion Holdings, in the aggregate, 47,752,008 shares of Skyline Corporation’s common stock (the transactions described in (i) and (ii), together, the “Exchange”). In connection with the Exchange, Skyline Corporation changed its name to Skyline Champion Corporation. Skyline Champion was the legal acquirer, but Champion Holdings was determined to be the accounting acquirer in the Exchange. More information about the Exchange can be found in the Form8-K filed by Skyline Champion on June 6, 2018.
Our Board of Directors is soliciting your vote for the following:
PROPOSAL ONE: Election of Directors
We are asking you to vote “FOR” the following candidates for election to our Board of Directors. Additional information on Director Nominees is available beginning on page 3.
Nominee | Age | Director Since1 | Independent | Current Committee Membership | ||||
Keith Anderson | 57 | 2018 | No | |||||
Timothy Bernlohr | 60 | 2018 | Yes | Compensation; Nominating and Governance Committee | ||||
Michael Berman | 61 | 2018 | Yes | Audit; Nominating and Governance Committee | ||||
John C. Firth | 61 | 2006 | Yes | Audit; Nominating and Governance Committee | ||||
Michael Kaufman | 47 | 2018 | Yes | Compensation; Nominating and Governance | ||||
Gary E. Robinette | 70 | 2018 | Yes | Audit; Compensation | ||||
Mark Yost | 46 | 2019 | No |
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Messrs. Anderson, Bernlohr, and Robinette served on the Board of Directors of Champion |
PROPOSAL TWO: Ratification of Auditors
We are asking you to ratify the appointment by the Audit Committee of Ernst & Young LLP (“EY”) as our independent auditors for fiscal 2020. Additional information on independent auditor appointment is available beginning on page 15.
| Audit Fees | Tax Fees | Total Fees | ||||||||||
Fiscal 2019 | $ | 2,864,756 |
| $ | 294,110 |
| $ | 3,158,866 |
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Fiscal 2018 | $ | 1,158,093 |
| $ | 149,105 |
| $ | 1,307,198 |
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PROPOSAL THREE: Executive Compensation
We are asking you to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. Additional information on our executive compensation program is available beginning on page 17.
2019 Proxy Statement | SKYLINE CHAMPION 1
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Skyline Champion’s Board of Directors is currently comprised of eight members.members but is anticipated to be reduced to seven members following the 2019 Annual Meeting of Shareholders (the “2019 Annual Meeting”). Directors are elected annually at Skyline Champion’s annual meeting of shareholders, and each director holds office until the next annual meeting of the shareholders and until their successors are elected and qualified. Directors need not be shareholders of Skyline Champion.
Our Board of Directors, upon the recommendation of the Nominating and Governance Committee, voted to nominate Keith Anderson, Timothy Bernlohr, Michael Bevacqua,Berman, John C. Firth, Richard W. Florea, Michael Kaufman, Daniel R. Osnoss and Gary E. Robinette, and Mark Yost forre-election at the 20182019 Annual Meeting. Richard W. Florea, former President and Chief Executive Officer of Skyline Corporation prior to the Exchange, has not beenre-nominated. Information relating to each nominee, including histheir period of service as a director of the Company, principal occupation and other biographical material is shown later in this proxy statement.
It is intended that the votes authorized by the enclosed proxy will be cast for the election of the eightseven director nominees. In the event that one or more of the nominees unexpectedly becomes unavailable for election, the votes will be cast, pursuant to authority granted by the enclosed proxy, for such person or persons as may be designated by the current Board of Directors or the Board may be reduced accordingly. All of the nominees have consented to be named in the proxy statement and have indicated their intent to serve if elected.
The Board of Directors recommends that shareholders vote FOR all eightseven director nominees. The voting standard for director elections is a plurality standard. This means that the individuals who receive the highest number of votes are elected as directors up to the maximum number of directors to be elected at the meeting.
THE BOARD OF DIRECTORS DEEMS “PROPOSAL NO. 1 – ELECTION OF
DIRECTORS” TO BE IN THE BEST INTERESTS OF SKYLINE CHAMPION AND OUR SHAREHOLDERS AND RECOMMENDS A VOTE “FOR” EACH NOMINEE.
 | THE BOARD OF DIRECTORS DEEMS “PROPOSAL NO. 1 – ELECTION OF DIRECTORS” TO BE IN THE BEST INTERESTS OF SKYLINE CHAMPION AND OUR SHAREHOLDERS AND RECOMMENDS A VOTE “FOR” EACH NOMINEE. |
2 SKYLINE CHAMPION | 2019 Proxy Statement
PROPOSAL ONE: ELECTION OF DIRECTORS General Information About the Board of Directors |
The current members of the Skyline Champion Board of Directors each of whom has been nominated forre-election at the 20182019 Annual Meeting represent a desirable range of viewpoints, backgrounds, skills, experience and expertise. The biography of each nominated director and a description of certain specific experiences, qualifications, attributes and skills of each director that led the Board to conclude that the individual should serve as a director are described below:
Keith Anderson,56, became a director of Skyline Champion on June 1, 2018 in connection with the Exchange. Mr. Anderson was, between November 1, 2016 and the Closing Date, Chief Executive Officer of both Champion Holdings and CHB. Previously, from June 2015 through October 30, 2016, Mr. Anderson was President and Chief Executive Officer of Champion Holdings and Chief Executive Officer of CHB. Since 2016 he has served on the board of managers of Southwest Stage Funding, LLC d/b/a Cascade Financial Services. He has also been a director ofthe non-profit organization Manufactured Housing Institute since 2015, and currently serves on the Manufactured Housing Advisory council for both Fannie Mae and Freddie Mac. Prior to joining Champion Holdings, Mr. Anderson was Executive Vice President and Chief Operating Officer of Walter Investment Management Corp. from June 2012 to November 2014. From November 1995 to June 2012, Mr. Anderson held various executive management positions at GreenTree Servicing, LLC ending with President and Chief Executive Officer. Mr. Anderson holds a B.S. in Accounting from Illinois State, and an M.B.A. from DePaul University.
Keith Anderson Chief Executive Officer Age: 57 | Background: Mr. Anderson became a director of Skyline Champion on June 1, 2018 in connection with the Exchange. Mr. Anderson was named Chief Executive Officer of Skyline Champion on June 1, 2018 and retired from that role effective June 1, 2019. He served between November 1, 2016 and the Closing Date as Chief Executive Officer of both Champion Holdings and Champion Home Builders, Inc. (“CHB”). Previously, from June 2015 through October 30, 2016, Mr. Anderson was President and Chief Executive Officer of Champion Holdings and Chief Executive Officer of CHB. Since 2016, he has served on the board of managers of Southwest Stage Funding, LLC d/b/a Cascade Financial Services. He has also been a director of thenon-profit organization Manufactured Housing Institute since 2015, and currently serves on the Manufactured Housing Advisory council for both Fannie Mae and Freddie Mac. Prior to joining Champion Holdings, Mr. Anderson was Executive Vice President and Chief Operating Officer of Walter Investment Management Corp. from June 2012 to November 2014. From November 1995 to June 2012, Mr. Anderson held various executive management positions at GreenTree Servicing, LLC ending with the role of President and Chief Executive Officer. Mr. Anderson holds a B.S. in Accounting from Illinois State, and an M.B.A. from DePaul University. Qualifications: Mr. Anderson’s extensive experience as a senior executive and director, including with Champion Holdings, |
Michael Berman Independent Age: 61 Committees: Audit (Chair) Nominating and Governance | Background: Mr. Berman joined the Skyline Champion Board of Directors in November 25, 2018. Mr. Berman is the Chief Executive Officer of MB Capital Associates. From 2011 through 2018, he was Chief Financial Officer and Executive Vice President of General Growth Properties, a retail real estate investment company. Previously he was Executive Vice President and Chief Financial Officer of Equity LifeStyle Properties, an owner and operator of manufactured home communities. Mr. Berman was employed in the investment banking department of Merrill Lynch & Co. from 1988 through 2002. Mr. Berman also serves as a director of Brixmor Property Group, Inc., one of the nation’s largest owner-operators of grocery anchored shopping centers. Mr. Berman holds a M.B.A. from Columbia University Graduate School of Business, a law degree from Boston University School of Law, and a B.A. from Binghamton University. Qualifications: Mr. Berman’s broad real estate, investment, and corporate financial experience, coupled with his manufactured housing community experience, make him highly qualified to serve on our Board. |
Timothy Bernlohr, 59, became a director of Skyline Champion on June 1, 2018 in connection with the Exchange. Mr. Bernlohr is currently Chairman of the Board of Directors of Skyline Champion. He served as Chairman of the Board of Managers of Champion Enterprises Holdings, LLC from 2010 through May 2018. Since 2003, Mr. Bernlohr has served as a chairman, CEO, director, trustee, or strategic advisor to over 100 public and private corporations in the United States and Europe. Mr. Bernlohr is the founder and managing member of TJB Management Consulting, LLC, which he founded in 2005. Previously, Mr. Bernlohr was President and Chief Executive Officer of RBX Industries, Inc. until the company was acquired in 2005. Prior to joining RBX Industries, Inc. in 1997, Mr. Bernlohr spent 16 years in the International and Industry Products division of Armstrong World Industries, where he served in a variety of management positions. Mr. Bernlohr currently serves as a director and the chairman of the compensation committee of WestRock Company; a director and the chairman of the audit committee of Atlas Air Worldwide Holdings, Inc.; and a director and the chairman of the compensation committee of International Seaways. Mr. Bernlohr holds a B.A. in Arts and Sciences from Pennsylvania State University. Mr. Bernlohr’s experience as a consultant, senior executive and director, including with Champion Holdings, and certain public companies, make him highly qualified to serve on our Board.2019 Proxy Statement | SKYLINE CHAMPION 3
Michael Bevacqua, 52, became a director of Skyline Champion on June 1, 2018 in connection with the Exchange. Mr. Bevacqua was a member of the Champion Enterprises Holdings, LLC Board of Managers from 2010 through May 2018. Mr. Bevacqua joined Bain Capital Credit, LP in 1999. He is a Managing Director in Distressed and Special Situations and the head of the Restructuring team. Prior to his current role, he was responsible for investments in the Automotive, Building Products, Transportation, Equipment Rental, Waste Services and Aerospace & Defense sectors at Bain Capital Credit, LP. Previously, Mr. Bevacqua was a Vice President at First Union Capital Markets, an Associate in Corporate Finance at NationsBanc Capital Markets and an officer in the United States Marine Corps. Mr. Bevacqua received an M.B.A. from Pennsylvania State University and a B.S. from Ithaca College. Mr. Bevacqua’s investing and corporate finance experience, as well as his experience as director of Champion Holdings, make him highly qualified to serve on our Board.
PROPOSAL ONE: ELECTION OF DIRECTORS
John C. Firth,60, was elected as a director of Skyline Corporation in 2006 and continues to serve as a director of Skyline Champion. Mr. Firth currently serves as President of Quality Dining, Inc. and is a member of
Timothy J. Bernlohr Independent Age: 60 Committees: Compensation Nominating and Governance | Background: Mr. Bernlohr became a director of Skyline Champion on June 1, 2018 in connection with the Exchange and has served as Chairman of the Board of Directors of Skyline Champion since that time. He served as Chairman of the Board of Managers of Champion Enterprises Holdings, LLC from 2010 through May 2018. Mr. Bernlohr is the founder and managing member of TJB Management Consulting, LLC, which specializes in providing project-specific consulting services to businesses in transformation, including restructurings, interim executive management and strategic planning services. Mr. Bernlohr founded the consultancy in 2005. Mr. Bernlohr was President and Chief Executive Officer of RBX Industries, Inc., which was a nationally recognized leader in the design, manufacture and marketing of rubber and plastic materials to automotive, construction and industrial markets, until it was sold in 2005. Prior to joining RBX Industries, Inc. in 1997, Mr. Bernlohr spent 16 years in the International and Industry Products division of Armstrong World Industries, where he served in a variety of management positions. Mr. Bernlohr also serves as a director and chairman of the compensation committees of WestRock Company and International Seaways Inc., and as a director and chairman of the Audit committee of Atlas Air Worldwide Holdings, Inc. Within the last five years he was a director of Chemtura Corporation, Rock-Tenn Company, Cash Store Financial Services Inc. and Overseas Shipholding Group, Inc. Mr. Bernlohr holds a B.A. in Arts and Sciences from Pennsylvania State University. Qualifications: Mr. Bernlohr’s experience as a consultant, senior executive and director, including with Champion Holdings, and certain public companies, make him highly qualified to serve on our Board. |
John C. Firth Independent Age: 61 Committees: Nominating and Governance (Chair) Audit | Background: Mr. Firth was elected as a director of Skyline Corporation in 2006 and continues to serve as a director of Skyline Champion. Mr. Firth currently serves as President of Quality Dining, Inc. and is a member of its Board of Directors. Quality Dining operates over 200 restaurants in seven states and employs over 8,000 people. From March 1994 through April 2005, Quality Dining’s shares were traded on the Nasdaq stock market. Prior to being named President of Quality Dining, Mr. Firth served in a variety of capacities including Executive Vice President, Principal Financial Officer and General Counsel. Before joining Quality Dining in 1996, Mr. Firth was a partner in a South Bend, Indiana law firm. He was appointed to the Indiana Corporate Law Commission by Indiana Governor Joseph E. Kernan (2004 to 2006). Mr. Firth received B.A. and J.D. degrees from the University of Notre Dame. Qualifications: The Board benefits from Mr. Firth’s executive management experience, strategic vision, corporate governance acumen, business judgment and financial expertise. |
Michael Kaufman Independent Age: 47 Committees: Compensation Nominating and Governance | Background: Mr. Kaufman became a director of Skyline Champion on June 1, 2018 in connection with the Exchange. Mr. Kaufman is the Chief Executive Officer of MAK Capital, an investment advisory firm based in New York, New York, which he founded in 2002. Mr. Kaufman holds a B.A. degree in Economics from the University of Chicago, where he also received his M.B.A. He also earned a law degree from Yale University. He also serves as a director and Chairman of the Board of Agilysys, Inc. Qualifications: Mr. Kaufman’s investment and finance experience, long-standing ties to Champion Holdings, and familiarity with the manufactured home industry make him highly qualified to serve on our Board. |
4 SKYLINE CHAMPION | 2019 Proxy Statement
its Board of Directors. Quality Dining operates over 200 restaurants in seven states and employs over 8,000 people. From March 1994 through April 2005, Quality Dining’s shares were traded on the Nasdaq stock market. Prior to being named President of Quality Dining, Mr. Firth served in a variety of capacities including Executive Vice President, Principal Financial Officer and General Counsel. Before joining Quality Dining in 1996, Mr. Firth was a partner in a South Bend, Indiana law firm. He was appointed to the Indiana Corporate Law Commission by Indiana Governor Joseph E. Kernan (2004 to 2006). Mr. Firth served on the Board of Directors of Smart Temps, LLC,a start-up companyPROPOSAL ONE: ELECTION OF DIRECTORS which offers industry-leading, cloud-based solutions for real-time temperature management and monitoring, from February 2010 until the company was sold to a public company in January 2017. The Board benefits from his executive management experience, strategic vision, corporate governance acumen, business judgment and financial expertise.
Richard W. Florea,56, served as a director and President and Chief Executive Officer of Skyline Corporation from July 2015 through May 2018 and has remained a director of Skyline Champion following his resignation as an officer of the Company. Prior to joining Skyline Corporation, Mr. Florea served as President and Chief Operating Officer for Truck Accessories Group, LLC, a producer of fiberglass caps and tonneaus for lightand mid-sized trucks. From 1998 through 2009, he was President and Chief Operating Officer of Dutchmen Manufacturing, Inc., a maker of travel trailers. Mr. Florea was a division sales manager for Skyline from 1994 to 1998. Mr. Florea has substantial knowledge of the manufactured housing and recreational vehicle industries, and his demonstrated ability to grow businesses and develop value creation strategies benefits Skyline Champion’s dealer partners and customers, all of which he brings to his Board participation.
Michael Kaufman, 46, became a director of Skyline Champion on June 1, 2018 in connection with the Exchange. Mr. Kaufman is the Chief Executive Officer of MAK Capital, a financial investment advisory firm based in New York, New York, which he founded in 2002. Mr. Kaufman holds a B.A. degree in Economics from the University of Chicago, where he also received his M.B.A. He also earned a law degree from Yale University. Mr. Kaufman’s investment and finance experience, long-standing ties to Champion Holdings, and familiarity with the manufactured home industry make him highly qualified to serve on our Board.
Daniel R. Osnoss, 36, became a director of Skyline Champion on June 1, 2018 in connection with the Exchange. Mr. Osnoss served as a member of the Champion Enterprises Holdings, LLC Board of Managers since 2012. Mr. Osnoss is a Senior Managing Director at Centerbridge Partners, which he joined in 2009. Mr. Osnoss currently serves as a director of Versant Health, Inc. and Visionworks of America, Inc. Previously, Mr. Osnoss was an Associate at Berkshire Partners, a private equity firm. Prior to Berkshire Partners, he was an Investment Banking Analyst in the Leveraged Finance Group at Goldman Sachs. Mr. Osnoss received an M.B.A. from Harvard Business School and a B.A. from Yale College. Mr. Osnoss’s investing and corporate finance experience, as well as his experience as a director of Champion Holdings, among other companies, make him highly qualified to serve on our Board.
Gary E. Robinette, 69, became a director of Skyline Champion on June 1, 2018 in connection with the Exchange. Mr. Robinette served as a member of the Champion Enterprises Holdings, LLC Board of Managers starting in 2010. Mr. Robinette has been the President and Chief Executive Officer of Ply Gem Industries Inc. since October 2006, at which time he was also elected to Champion Enterprises Holdings’ Board of Directors. Mr. Robinette was elected Vice Chairman of the Ply Gem Board of Directors in May 2013 and was appointed Chairman of the Ply Gem Board of Directors in 2015. Prior to joining Ply Gem, Mr. Robinette served as Executive Vice President and COO at Stock Building Supply, formerly a Wolseley company, since September 1998, and was also a member of the Wolseley North American Management board of directors. Mr. Robinette held the position of President of Erb Lumber Inc., a Wolseley company, from 1993 to 1998 and served as Chief Financial Officer and Vice President of Carolina Holdings, which was the predecessor company of Stock Building Supply. Mr. Robinette received a B.S. in accounting from Tiffin University and a M.B.A. from Xavier University, where he is a member of the board of trustees. He is also a member of the Policy Advisory Board of Harvard University’s Joint Center for Housing Studies and serves on the board of directors for three companies sponsored by private equity firms. Mr. Robinette’s extensive experience as a senior executive at
Gary E. Robinette Independent Age: 70 Committees: Compensation (Chair) Audit | Background: Mr. Robinette became a director of Skyline Champion Qualifications: Mr. Robinette’s extensive experience as a senior executive at companies in the housing industry, as well as his experience as director of Champion Holdings and other companies, make him highly qualified to serve on our Board. |
Mark J. Yost Age:46 | Background: Mr. Yost became a director of Skyline Champion on April 30, 2019 in connection with being named Chief Executive Officer effective June 1, 2019. Mr. Yost joined Champion Holdings in June 2013 as Chief Financial Officer and Executive Vice President. In November 2016 he was named President of CHB. Previously Mr. Yost served as Chief Financial Officer and Executive Vice President for Severstal North America. Mr. Yost received his B.S. in finance and M.B.A. degrees from the University of Michigan. Qualifications: Mr. Yost’s significant experience in the manufactured housing industry as a senior executive of Champion Holdings U.S. operations, as well as his extensive corporate finance, M&A, and strategic planning experience make him highly qualified to serve as a director for our Company. |
companies in the housing industry, as well as his experience as director of Champion Holdings and other companies, make him highly qualified to serve on our Board.
Board Composition and Director Independence
Our business and affairs are managed under the direction of our Board of Directors.
The Board seeks directors who represent a range of viewpoints, backgrounds, skills, experience and expertise. Directors should possess the attributes necessary to be an effective member of the Board, including personal and professional integrity, high ethical values, sound business judgment, demonstrated business and professional skills and experience and a commitment to the long-term interests of Skyline Champion and its shareholders. In evaluating candidates, the Nominating and Governance Committee also considers potential conflicts of interest, diversity, the extent to which a candidate would fill a present or anticipated need and a candidate’s willingness and ability to devote adequate time to the activities of the Board. In any particular situation, the Nominating and Governance Committee may focus on individuals possessing a particular background, experience or qualifications which the committee believes would be important to enhance the effectiveness of the Board. The Nominating and Governance Committee will consider director candidates recommended by shareholders. See “Shareholder Proposals” below for further information.
In connection with the Exchange, the Company entered into an investor rights agreement (the “Investor Rights Agreement”) with Champion Holdings and certain funds, each of which is affiliated with one of Bain Capital Credit, LP (“Bain”), Centerbridge Partners, L.P. (“Centerbridge”) or MAK Capital (“MAK” and, such funds, collectively, the “Principal Shareholders”), which provides for, among other things,included certain agreements relating to the composition of the Board, including that so long asBoard. Under the Principal Shareholders collectively hold greater than 50% of the Company’s outstanding shares,Investor Rights Agreement, the Company shall use its reasonable best effortsis obligated to cause the Board to nominate for election (i) Messrs. Firth and Florea, until the first annual meeting following June 1, 2020, (ii) the Chief Executive Officer of the Company, and (ii) up to six directors nominated by the Principal Shareholders, each of which shall be entitled to nominate one affiliated director and one independent director, subject to certain limitations. After the Principal Shareholders no longer collectively hold greater than 50% of the Company’s outstanding shares, the Company shall use its reasonable best efforts to cause the Board to nominate for election (i) the Chief Executive Officer of the Company, (ii) up to one affiliated director nominated by each Principal Shareholder (subject to certain ownership thresholds), and (iii) the number of independent directors necessary to satisfy the rules of the New York Stock Exchange (“NYSE”), including Mr. Firth, until the first
2019 Proxy Statement | SKYLINE CHAMPION 5
PROPOSAL ONE: ELECTION OF DIRECTORS
annual meeting following June 1, 2020, and up to one independent director nominated by each Principal Shareholder (subject to certain ownership thresholds). Messrs. Bevacqua, Kaufman and Osnoss have been nominated by Bain MAK and Centerbridge respectively.have sold their holdings in the Company and do not meet the ownership thresholds to nominate a director. MAK continues to meet the ownership threshold and has nominated Mr. Kaufman.
In addition, because the Principal Shareholders controlcontrolled a majority of the voting power of our common stock until September 25, 2018, the Company iswas a “controlled company” within the meaning of the NYSE corporate governance standards. Under these rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements that:
the Company has a board of directors that is composed of a majority of “independent directors,” as defined under NYSE rules;
| ◾ | the Company has a board of directors that is composed of a majority of “independent directors,” as defined under NYSE rules; |
the Company has a compensation committee that is composed entirely of independent directors; and
| ◾ | the Company has a compensation committee that is composed entirely of independent directors; and |
the Company has a nominating and corporate governance committee that is composed entirely of independent directors.
| ◾ | the Company has a nominating and corporate governance committee that is composed entirely of independent directors. |
The Company is currently utilizing allrelied upon these exemptions until the Board determined on May 20, 2019 that Mr. Kaufman qualifies as an independent director, at which time the Company ceased to rely upon any of thesethe controlled company exemptions.
At the first meeting of the newly constituted Board following the Exchange, the Board acknowledged the value of diversity. In both its adopted Corporate Governance Guidelines and Nominating and Governance Committee Charter the Board established diversity as an attribute in evaluating potential new directors. Moreover, the Board has engaged Heidrick & Struggles to assist in a search for two new directors.
The Board of Directors has determined that Messrs. Berman, Bernlohr, Firth, Kaufman and Robinette are “independent directors” as that term is defined under the NYSE Listed Company Manual and the U.S. Securities and Exchange (“SEC”)
rules and regulations.
In making this determination, the Board considered the relationships that Messrs. Berman, Bernlohr, Firth, Kaufman, and Robinette have with the Company and all other facts and circumstances that the Board deemed relevant in determining their independence, including ownership interests in the Company.Company and arrangements between the Company and the director or his affiliates.
Neither we nor any of our subsidiaries are party to any material proceedings to which any of our directors, officers, affiliates, 5% or more shareholders, or any of their respective associates are a party. We do not believe that any of our directors, officers, affiliates, 5% or more shareholders, or any of their respective associates are adverse to us or any of our subsidiaries or have a material interest that is adverse to us or any of our subsidiaries.
Meetings and Committees
The Board has three standing committees: Audit, Compensation, and Nominating and Governance. Each committee is composed solely of independent directors as that term is defined in applicable rules of the SEC and the NYSE.
In addition, all members of the Compensation Committee qualify as“non-employee directors” as defined by Rule16b-3 under the Securities Exchange Act of 1934. Each committee has a charter that describes the committee’s responsibilities. These charters are available under the “Corporate Governance” link at www.skylinechampion.com or upon written request to our Corporate Secretary at Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515.
During the fiscal year ended March 31, 2018,30, 2019, the Board of Directors held nineten meetings. Each incumbent director during that year attended 75%90% or more of the total number of meetings of the Board and the committees of the Board on which he served during the period that he served on the Board, other than Thomas Eisele.Board. Members of the Board of Directors are expected to attend and be present at the annual meeting of shareholders, and all then incumbent directors attended the 2017 Annual Meeting.2018 annual meeting of shareholders.
Our
6 SKYLINE CHAMPION | 2019 Proxy Statement
PROPOSAL ONE: ELECTION OF DIRECTORS
The table below lists the members and summarizes the responsibilities of the three committees. Membership of the committees is expected to change as shown below following the annual shareholders meeting due to the changes in the composition of the Board of Directors has three standing committees. More information about our committees can be found below.discussed on page 5.
Audit Committee
Current Members:
John C. Firth Gary E. Robinette
No. of Meetings during fiscal year ended March
| The Audit Committee oversees the accounting and financial reporting processes of the Company and the audits of the Company’s financial statements. The Audit Committee is responsible for assisting the Board in its oversight of (i) the integrity of the consolidated financial statements of the Company, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications and independence, (iv) the performance of the Company’s internal audit function, and (v) the Company’s internal control over financial reporting. It is also responsible for deciding whether to appoint, retain or terminate the Company’s independent auditors andpre-approving the audit, audit-related, tax and other services, if any, to be provided by the independent auditors. The Committee is also responsible for preparing the disclosures required by Item 407(d)(3)(i) of RegulationS-K and the reports required by the SEC rules to be included in the Company’s annual proxy statement.
The Board has determined that each of Messrs. |
Compensation Committee
Current Members:
Michael Kaufman
Gary E. Robinette, Chair
No. of Meetings during fiscal year ended March
| The Compensation Committee assists the Board in fulfilling its responsibilities relating to the compensation of the Company’s officers, directors, and employees, including assessing the adequacy of the Company’s overall compensation programs and principles and administering the Company’s compensation, benefit and equity-based plans. It is responsible for reviewing the Company’s overall compensation strategy and assessing whether such strategy provides the appropriate rewards and incentives for the Company’s management and employees, taking into account whether such rewards and incentives encourage undue or inappropriate risk taking by such personnel. The Committee is also responsible for reviewing and approving the corporate goals and objectives that may be relevant to the compensation of the Company’s | |
Nominating and Governance Committee
Current Members:
John C. Firth, Chair
Michael Kaufman
No. of Meetings during fiscal year ended March
| The Nominating and Governance Committee assists the Board in identifying individuals qualified to be directors, consistent with criteria approved by the Board, recommends director nominees to the Board for the next meeting of shareholders at which directors will be elected or to fill vacancies or newly created directorships, oversees the evaluation of the Board, its committees and management, and develops and implements sound corporate governance practices. | |
2019 Proxy Statement | SKYLINE CHAMPION 7
Skyline Champion is committed to good corporate governance. |
We strive to maintain strong corporate governance practices that protect and enhance accountability for the benefit of Skyline Champion and all of its shareholders. We regularly review and continually refine our governance practices and policies to align with evolving practices and issues raised by our shareholders. WeAs the Company has transitioned in the past year from a “controlled company” within the meaning of the NYSE corporate governance standards, our Board and committee membership has undergone considerable change. Yet we believe that our corporate governance structure, with its strong emphasis on Board independence and strong Board and committee involvement, provideshas continued to provide sound and robust oversight of management.
Our Board believes that sound governance practices and policies provide an important framework to assist it in fulfilling its duty to shareholders. The Board has adopted Corporate Governance Guidelines and relies on the guidelines to provide that framework. The guidelines are not absolute rules and can be modified to reflect changes in Skyline Champion’s organization or business environment. The Board reviews the guidelinesCorporate Governance Guidelines on an annual basis and, if necessary, modifies the guidelines to reflect current good governance practices and policies.
Skyline Champion’s Corporate Governance Guidelines, the charters of the committees of our Board and our Code of Conduct described below may be found in the Governance Documents section under the Governance tab on our website at www.skylinechampion.com or in print upon the submission of a request under the Contact Investor Relations section under the Resources tab on our website.
We believe part of effective corporate governance includes active engagement with our shareholders. We value the views of our shareholders and other stakeholders, and we communicate with them regularly and solicit input on a number of topics such as business strategy, capital allocation, corporate governance, and executive compensation.
This section describes key corporate governance facts about our Company and practices that we have adopted.
The Board monitors our overall corporate performance, the integrity of our financial controls, risk management and legal compliance procedures. It appoints senior management and oversees succession planning and senior management’s performance and compensation. The Board also oversees our short- and long-term strategic and business planning, and reviews with management its business plan, financing plans, budget, and other key financial and business objectives.
Members of the Board stay informed about our business through discussions with our Chief Executive Officer and other members of our senior management team, by reviewing materials provided to them by management on a regular basis and in preparation for Board and committee meetings, and by participating in meetings of the Board and its committees. Senior management regularly reviews key portions of our business with the Board. These practices afford Board members the opportunity to actively participate in risk management assessment and raise questions and engage in discussions with management regarding areas of potential risk.
Skyline Champion’s governance processes address matters relating to Board operations that are fundamental to shareholder interests. The independent directors meet regularly without management present to evaluate Skyline Champion’s results, plans, and challenges, as well as management’s performance and the strength and development of Skyline Champion’s named executive officers.
The Board is actively engaged in overseeing and reviewing Skyline Champion’s strategic direction and objectives, taking into account (among other considerations) Skyline Champion’s risk profile and exposures. The Board conducts an annualin-depth review of the business, which includes consideration of strategic, operational, competitive, financial, compliance, and other risk exposures. Skyline Champion currently separates the ChairmanBoard Chair and CEO functions, with each position held by a different individual. The Board considers the current constituency of management in evaluating whether a combined role is efficient and effective. At the present time,
it is the assessment of the Board that separating these positions allows the CEO to focus on the Company’s business, while the ChairmanBoard Chair can focus on corporate governance matters, as well as leadership development and succession planning.matters.
Although the Board as a whole has responsibility for risk oversight, three standing committees also oversee Skyline Champion’s risk profile and exposures relating to matters within the scope of each committee’s authority and reports to the Board about their
8 SKYLINE CHAMPION | 2019 Proxy Statement
CORPORATE GOVERNANCE OVERVIEW
deliberations. The committees are the Audit Committee, Compensation Committee, and the Nominating and Governance Committee. The Audit Committee considers audit, accounting, and compliance risk, and it receives reports from its outside auditors, internal audit staff, and the Chief Financial Officer, among others. The Audit Committee is also responsible for the review of Skyline Champion’s major risk exposures (whether financial, operational, or otherwise), and the steps management has taken to monitor and control such exposures, and for evaluating management’s process to assess and manage Skyline Champion’s enterprise risk issues. The Compensation Committee considers the level of risk implied by Skyline Champion’s compensation programs, including incentive compensation programs in which the CEO and other employees participate. The Nominating and Governance Committee monitors potential risks to the effectiveness of the Board, notably Director succession and the composition of the Board, and the principal policies that guide Skyline Champion’s governance. Each of the committees operates under a written charter to promote clarity in their responsibilities and accountability amongst their members. These committees work in a coordinated way to address recurring matters and respond to unanticipated events.
Corporate Governance Guidelines
The Board is guided by our Corporate Governance Guidelines. We believe our Corporate Governance Guidelines demonstrate our continuing commitment to good corporate governance. The Board reviews our Corporate Governance Guidelines from time to time, as needed, and at least once annually. Our Corporate Governance Guidelines are posted in the Governance Documents section under the Governance tab on our website at www.skylinechampion.com/governance/governance-documents. No material on our website is part of this proxy statement.
Skyline Champion’s Code of Conduct applies to all members of the Board and all Skyline Champion employees, including our Chief Executive Officer and senior management. The Code of Conduct outlines the principles and policies governing our Company. The standards in this Code should be viewed as the minimum standards that the Company expects from its employees, officers, and directors, but the Code does not supersede the Company’s specific policies and procedures.
Process for Selecting Nominees and Shareholder Nominations
Nominations of persons for election to the Board of the Skyline Champion may be made at any annual meeting of shareholders by or at the direction of the Board or by a proposing shareholder entitled to vote for the election of directors at the meeting (the “Nominating Shareholder”). Such shareholder nominations must be made pursuant to timely notice given in writing to the Company’s Secretary. See “Shareholder Proposals” below. The Nominating Shareholder’s notice must set forth, as to each person whom the Nominating Shareholder proposes to nominate for election orre-election as a director, (i) the name, age, business address, and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of Skyline Champion which are beneficially owned by such person, (iv) any other information relating to such person that is required to be disclosed in solicitation of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including without limitation such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), and (v) the qualifications of the nominee to serve as a director of the Company (as set forth below).
Skyline Champion has split the roles of CEO and Board chair.
Asnon-executive chair of our Board, Mr. Bernlohr is responsible for chairing Board meetings, executive sessions of the independent director, and meetings of shareholders, attending meetings of the Board’s committees as appropriate, and assisting management in representing Skyline Champion to external groups as needed and as determined by the Board. The Board elects its chair annually.
Our CEO oversees theday-to-day affairs of Skyline Champion and directs the formulation and implementation of our strategic plans. We believe that this leadership structure is currently the most appropriate for Skyline Champion because it allows our CEO to focus primarily on our business strategy and operations while leveraging the experience of our chair to direct the business of the Board.
Our Board periodically reviews this structure and recognizes that, depending on the circumstances, a different leadership model might be appropriate. The Board has no fixed policy on whether the roles of chair and CEO should be separate or combined, which maintains flexibility based on Skyline Champion’s needs and the Board’s assessment of the Company’s leadership. Our corporate
2019 Proxy Statement | SKYLINE CHAMPION 9
Director Criteria, Qualifications and Experience; DiversityCORPORATE GOVERNANCE OVERVIEW
Skyline Champion believes good
governance starts with a Board whose independence ensures candid and constructive engagement with management about all aspects of Skyline Champion’s business. Skyline Champion’s director nomination process seeks persons with the initiative, time, skills, and experience to be effective contributors.
The following represents thenon-exclusive list of criteria considered by the Nominating and Governance Committee in assessing whether any proposed candidate/nominee should be considered for membership on the Board: (i) the satisfaction of applicable “independence” and eligibility requirements, such as those required of members of the Audit Committee and the Compensation Committee; (ii) the person’s professional experiences, including achievements, and whether those experiences and achievements would be useful toguidelines do provide that the Board given its existing composition,appoint a lead independent director in discharging its responsibilities; (iii) the person’s subject matter expertise, e.g., finance, accounting, legal, management, technology, strategic visioning, marketing, andevent the desirability of that particular expertise givenCEO is elected chair or the existing composition of the Board; (iv) the viewpoint, background, and demographics of the person and whether the person would positively contribute to the overall diversity of the Board; (v) the person’s professional ethics, integrity, and values; (vi) the person’s intelligence and ability to make independent analytical inquiries; (vii) the person’s stated willingness and ability to devote adequate time to Board activities, including attending meetings and development sessions and adequately preparing for those activities; (viii) the person’s service on more than three public company boards, excluding the Board, unless the Nominating and Governance Committee concludes, based upon a review of all of the facts and circumstances, that such service on more than three other public company boards would not impair the ability of the proposed candidate/nominee to discharge their responsibilities as a member of the Board, and, provided further, the proposed candidate/nomineechair otherwise does not serve on more than five other public company boards; (ix) the person’s principal business responsibilities; (x) whether the person would be able to serve on the Board for an extended period of time; (xi) whether the person has, or potentially could have, a conflict of interest which would affect the person’s ability to serve on the Board or to participate in decisions that are material to the Company; and (xii) whether and to what extent the person has an ownership interest in the Company. The foregoing criteria represent anon-exclusive list of factors to be considered when evaluating potential candidates and responding to properly submitted nominees. In each case, the then existing composition of the Board, its current and prospective needs, the operating requirements of the Company, and the long-term interests of the Company’s shareholders will be included in the mix of factors to be reviewed and assessed when performing this evaluation. The review and application of these criteria will initially be conducted by the Nominating and Governance Committee, and, following that action, the matter will then be presented to the Board for action, if appropriate and advisable. If any Board member, not a member of the Nominating and Governance Committee, requests an independent review of any candidate against these criteria, the full Board shall conduct such a review.qualify as independent.
Compensation Committee Interlocks and Insider Participation
All compensation and related matters are reviewed by the Compensation Committee. Messrs. Bevacqua,Mr. Kaufman and Osnoss areis affiliated with Bain, MAK, and Centerbridge, respectively.a Principal Shareholder. For additional information regarding transactions between the Principal Shareholders and the Company, please see “Certain Relationships and Related Transactions” below.
Board’s Role in Strategic Planning
While the formulation and implementation of Skyline Champion’s strategic plan is primarily the responsibility of management, the Board plays an active role with respect to the Company’s strategy. This includes not only monitoring progress made in executing the strategic plan, but also regularly evaluating the strategy in light of evolving operating and economic conditions. The Board carries out its role primarily through regular reviews of the Company’s strategic plan and discussions with management, which include both broad-based presentations and morein-depth analyses and discussions of specific areas of focus. In addition, regular Board meetings throughout the year include presentations and discussions with management on significant initiatives implementing the strategic plan; developments affecting an area of the Company’s business; and on trends, competition, and emerging challenges and opportunities. The Board also reviews the strategic plan, including actions taken and planned to implement the strategy, as part of its review and approval of the annual budget.
Board’s Role in Risk Oversight
The Board’s oversight of risk management enhances the directors’ understanding of the risks associated with the Company’s strategic plan and its ability to provide guidance to and oversight of senior management in executing the Company’s strategy.
Our Board undertakes its responsibility to oversee risks to Skyline Champion through a risk governance framework designed to:
identify critical risks; |
| ◾ | allocate responsibilities for overseeing those risks to the Board and its committees; and, |
| ◾ | evaluate the Company’s risk management processes. |
The Board does not view risk in isolation. Rather, it considers risks in its business decisions in the ordinary course of the Board’s decisions and as part of the Company’s business strategy. This includes assessing potential cybersecurity risks and an ongoing review of the Company’s comprehensive cybersecurity program.
Certain Relationships and Related Person Transactions
REGISTRATION RIGHTS AGREEMENT
On June 1, 2018, the Company, the Principal Shareholders, Champion Holdings and certain other parties entered into a registration rights agreement providing for, among other things, customary demand registration rights in favor of the Principal Shareholders and “piggyback” registration rights in favor of the Principal Shareholders, and Arthur J. Decio. Bain and Centerbridge have sold their holdings in the Company and, as a result, no longer have any material rights or obligations under the registration rights agreement. MAK continues to hold registration rights in their favor.
INVESTOR RIGHTS AGREEMENT
On June 1, 2018, the Company, the Principal Shareholders and Champion Holdings entered into the Investor Rights Agreement. The Investor Rights Agreement provides for, among other things, certain information rights and certain agreements relating to the composition of the Board of Directors. As the result of Bain and Centerbridge selling their holdings in the Company, they do not meet the ownership thresholds to participate in the Investor Rights Agreement.
TRANSITION SERVICES AGREEMENT
On June 1, 2018, the Company and Champion Holdings entered into a transition services agreement, pursuant to which the Company will provide certain services to Champion Holdings, including accounting and financial reporting services, tax services, cash and capital management services and services relating to Champion Holdings’ members and liquidation. The costs to the Company under this Agreement to date have been minimal.
10 SKYLINE CHAMPION | 2019 Proxy Statement
Set forth below is the biographical information concerning our executive officers as of September 4, 2018.March 30, 2019. Each of the executive officers was appointed by the Board of Directors upon the closing of the Exchange on June 1, 2018.
Name | Age | Position | ||||
Keith Anderson | 57 | Chief Executive Officer | ||||
Laurie Hough | 49 | Executive Vice President, Chief Financial Officer and Treasurer | ||||
Mark Yost | 46 | President—US Operations | ||||
Roger Scholten | 64 | Senior Vice President, General Counsel and Corporate Secretary | ||||
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Timothy Burkhardt | 47 | Vice President and Controller | ||||
Keith Anderson became a directorserved as Chief Executive Officer of Skyline Champion Corporation from June 1, 2018 until his retirement on June 1, 2018 in connection with the Exchange. Mr. Anderson was, between2019. Between November 1, 2016 and the Closing Date, Mr. Anderson was Chief Executive Officer of both Champion Holdings and CHB. Previously, from June 2015 through October 30, 2016, Mr. Anderson was President and Chief Executive Officer of Champion Holdings and Chief Executive Officer of CHB. Since 2016 he has served on the board of managers of Southwest Stage Funding, LLC d/b/a Cascade Financial Services. He has also been a director ofthe non-profit organization Manufactured Housing Institute since 2015, and currently serves on the Manufactured Housing Advisory council for both Fannie Mae and Freddie Mac. Prior to joining Champion Holdings, Mr. Anderson was Executive Vice President and Chief Operating Officer of Walter Investment Management Corp. from June 2012 to November 2014. From November 1995 to June 2012, Mr. Anderson held various executive management positions at GreenTree Servicing, LLC ending with President and Chief Executive Officer. Mr. Anderson holds a B.S. in Accounting from Illinois State, and an M.B.A. from DePaul University.
Laurie Hough has served as Executive Vice President, Chief Financial Officer and Treasurer of Skyline Champion Corporation since June 1, 2018. Ms. Hough was, between October 2016 and June 1, 2018, the Closing Date, the SeniorExecutive Vice President and Chief Financial
2019 Proxy Statement | SKYLINE CHAMPION 11
CORPORATE GOVERNANCE OVERVIEW
Officer of both Champion Holdings and CHB. Previously, Ms. Hough served as Vice President and Controller of Champion Holdings and CHB from July 2013 to October 2016, and Vice President of Accounting & Financial Reporting from October 2010 to July 2013. Prior to her time at Champion Holdings, Ms. Hough was Manager of Financial Consolidations at Chrysler Group LLC and Audit Manager at PwC. Ms. Hough is a licensed CPA and obtained her B.S. in Accounting from Oakland University.
Mark J. Yost joined Champion in June 2013 as Chief Financial Officer and Executive Vice President. In November 2016 he was named President. Mr. Yost was named Chief Executive Officer on June 1, 2019. Previously Mr. Yost served as Chief Financial Officer and Executive Vice President for Severstal North America. Mr. Yost received his B.S. in finance and M.B.A. degrees from the University of Michigan.
Roger Scholten has served as Senior Vice President, General Counsel, and Corporate Secretary of Skyline Champion Corporation since June 1, 2018. Previously he was, between October 20072017 and the Closing Date, the Senior Vice President and General Counsel of both Champion Holdings and CHB. Mr. Scholten obtained his B.A. in Public Management from Northwestern College and his J.D. and Masters in Public Affairs from the University of Iowa.
Mark YostTimothy Burkhardt was, between 2013 and the Closing Date, the Executivehas served as Vice President and Controller of bothSkyline Champion Holdings and CHB. Mr. Yost obtained his B.A. in Business and Accounting from the University of Michigan, Dearborn, and a M.B.A from the Ross School of Business at the University of Michigan, Ann Arbor.
Timothy BurkhardtCorporation since June 1, 2018. He was, between October 2016 and the Closing Date, the Vice President and Controller of both Champion Holdings and CHB. Previously, Mr. Burkhardt served as Director of Financial Reporting of Champion Holdings from October 2012 to October 2016. Mr. Burkhardt is a licensed CPA and obtained his B.A. and M.B.A. in Accounting from Michigan State University.
12 SKYLINE CHAMPION | 2019 Proxy Statement
Compensation Discussion and Analysis
PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The compensation discussion and analysisAudit Committee has selected EY as the independent registered public accounting firm of the Company for the year ending March 28, 2020. The Board of Directors has directed that follows describes Skyline Corporation’s (“Skyline’s”) compensation philosophy, policies and practices and discusses compensation decisions madethe selection of the independent registered public accounting firm be submitted for ratification by the compensation committeeshareholders at the 2019 Annual Meeting. If a quorum is present, the proposal to ratify the appointment of EY as independent registered public accounting firm will require approval by a majority of the boardvotes cast in person or by proxy at the 2019 Annual Meeting. Shareholder ratification of directorsthe appointment is not required by law or otherwise. The Board is submitting this proposal to our shareholders for ratification because it believes it to be a good corporate practice.
If our shareholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain EY, but may still retain the firm. Even if the selection is ratified, the Audit Committee in its discretion may appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that a change would be in the best interests of Skyline during fiscal 2018 (as defined below), in each case, with respectChampion and our shareholders. Representatives of EY are expected to attend the following executive officers (referred2019 Annual Meeting. They will have an opportunity to herein as Skyline’s “named executive officers”):make a statement if they desire to do so and will be available to respond to appropriate shareholder questions.
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In accordance with the Share Contribution & Exchange Agreement, dated as of January 5, 2018, by and between Skyline and Champion Enterprises Holdings, LLC (the “Exchange Agreement”), effective on June 1, 2018, each of the named executive officers was removed, without cause, from his position as an executive officer of Skyline and the employment of Mr. Florea was terminated. In connection with the closing of the transactions contemplated by the Exchange Agreement (the “Exchange”) on June 1, 2018, Skyline changed its name to Skyline Champion Corporation and certain of the named executive officers received compensation and benefits from Skyline Champion Corporation as described in that definitive proxy statement filed by Skyline with the U.S. Securities and Exchange Commission on April 25, 2018. Following the Exchange, the Compensation Committee of the Board of Directors of Skyline Champion Corporation is responsible for determining the compensation of the executive officers of Skyline Champion Corporation.
References to the compensation committee in this Compensation Discussion and Analysis section refer to the compensation committee of the board of directors of Skyline, as constituted during fiscal 2018. In connection with the completion of the Exchange, Skyline Champion Corporation changed its fiscal year to be a2019 Proxy Statement | 52-SKYLINE CHAMPION or53-week 13 period that ends on the Saturday nearest March 31. As such, all references to fiscal 2018 in this Compensation Discussion and Analysis are to theten-month period ended March 31, 2018. Reference to fiscal 2017 and 2016 for Skyline are to the12-month periods ended May 31, 2017 and 2016, respectively.
Overview of the Skyline’s Executive Compensation Program
Skyline’s compensation policy regarding its named executive officers was to provide an annual base salary, annual incentive bonus and employee benefits program that were competitive with those of companies of similar size, location, and industry as Skyline. The compensation committee also from time to time awarded equity-based compensation to key members of the executive team.
In addition, the compensation committee valued the opinions of Skyline shareholders and considered the outcome of Skyline’sannual say-on-pay shareholder vote in determining the structure of Skyline’s executive compensation program, as well as in making compensation decisions. On September 29, 2017, 99% of votes cast voted in favor of Skyline’s fiscal 2017 executive compensation program, and Skyline interpreted this approval as an indication that its shareholders generally had favorable views of the aspects of Skyline’s executive compensation program.
Process for Determining Executive Compensation
The compensation committee
The compensation committee was responsible for determining the compensation for Skyline’s named executive officers, including reviewing and approving corporate goals and objectives relevant to the named executive
officers’ compensation, evaluating named executive officer performance in light of these goals
The Audit Committee reports to and objectives and setting the named executive officers’ compensation level basedacts on this evaluation, and making recommendations to the board of directorsbehalf of Skyline regarding incentive compensation plans, equity based plans. In accordance with its charter, the Compensation Committee could delegate its authority to subcommittees consistingChampion’s Board of one or more of its members.
The role of management
When setting named executive officer compensation for fiscal 2018, the compensation committee considered recommendations from Skyline’s management. The named executive officers for whom compensation recommendations and proposals were discussed were not present during those discussions with the committee. When setting the fiscal 2018 compensation for Skyline’s Chief Executive Officer, the Chief Executive Officer was also not present during the discussions. The compensation committee retained the discretion to accept, adjust, or reject any recommendations and proposals concerning named executive officer compensation.
Role of compensation consultant
Prior to fiscal 2018, the compensation committee had retained Korn Ferry to assist the committee in reviewing and evaluating certain aspects of Skyline’s executive compensation programs, including developing a peer group, which consistedDirectors by providing oversight of the following companies: Thor Industries Inc., Winnebago Industries, Builders Firstsource, Patrick Industries Inc., Cavco Industries Inc., Nobility Homes Inc., Deer Valley Corporation, Meritage Homes Corporation, Hovnanian Enterprises Inc., MDC Holdings Inc., Beazer Homes USA Inc., William Lyon Homes and LGI Homes Inc. While the compensation committee did not use the service of a compensation consultant during fiscal 2018, it continued to use peer group data previously provided by Korn Ferry to assist it in making compensation decisions.
Components of Skyline’s Executive Compensation Program
Base salary
Eachintegrity of the named executive officers was paidCompany’s financial statements, the Company’s independent and internal auditors, and the Company’s compliance with legal and regulatory requirements. The Audit Committee operates under a base salary. Base salaries for the named executive officers had been reviewedwritten charter adopted by the compensation committee on an annual basisBoard, which is reviewed annually and were periodically increased based on factors such as market conditions, peer group data, the executive officer’s responsibilities and Skyline’s performance. The base salaries of the named executive officers were not increased during fiscal 2018.
Short-term incentive plan
In fiscal 2018, Skyline sponsored an Executive and Key Manager Bonus Compensation Plan (“Bonus Plan”), the payouts of which were calculated as a percentage of Skyline’s adjusted net income, which was net income before corporate bonus expense, plus transactions costs, less net gain on the sale of property, plant and equipment, subject to adjustment for extraordinary items. Each of the named executive officers participated in this Bonus Plan in fiscal 2018. The plan reserved 10% of Skyline’s annual adjusted net income in the form a bonus pool, and each named executive officer was allocated a portion of that bonus pool based on his position at Skyline and level of responsibility, as follows: Mr. Florea, 2.5%; Mr. Pilarski, 0.75%; Mr. Newport, 1.5%; Mr. Davis, 0.5%; and Mr. Decio, 0.75%. For the period beginning June 1, 2017 and ending June 3, 2018, each named executive officer earned a bonus under this plan in the amount as follows: Mr. Florea, $209,351; Mr. Pilarski, $62,805; Mr. Newport, $125,610; Mr. Davis, $41,870; and Mr. Decio, $62,805.
Long-term incentive awards
Messrs. Florea and Newport were the only named executive officers who held equity awards prior to the Exchange. These awards were granted in the form of stock options and restricted stock. The compensation
committee historically only granted equity-based awards to Skyline’s most senior executive officers. In fiscal 2018, the compensation committee granted Mr. Florea awards of stock options and restricted stock. No other named executive officer received equity awards in fiscal 2018. When determining the grants to be made to Mr. Florea, the compensation committee considered peer group data provided by Korn Ferry, as described above. Stock options granted by Skyline were scheduled to vest in five annual installments and restricted stock was scheduled to vest in one installment on the fifth anniversary of the grant date.
Retirement plans
Skyline had a 401(k) plan where all employees, including the named executive officers, became eligible to participate in the 401(k) plan as of the June 1 or December 1 immediately following completion of six months of employment. Participants in the 401(k) plan had the ability to self-direct investments pursuant to various investment choices permittedis available under the plan. Employee deferrals under the 401(k) plan were 100% vested. Skyline, in any year, had the discretion to contribute employer contributions on a matching basis (based on participant 401(k) deferrals), or as a profit sharing contribution on the basis of compensation earned by participants. No employer contributions were required in any year, and none were made in fiscal 2018.
Employee benefits
All of Skyline’s full-time employees, including Skyline’s named executive officers, were eligible to participate in Skyline’s health and welfare plans, including medical and dental benefits, life insurance benefits and short-term and long-term disability insurance. Skyline’s named executive officers participated in these plans on the same basis as other eligible employees. Skyline did not maintain any supplemental health or welfare plans for Skyline’s named executive officers.
Tax effects of executive compensation
Section 162(m) of the Internal Revenue Code, when applicable, disallows a tax deduction for compensation paid to certain individuals in a taxable year in excess of $1 million, excluding certain performance-based and other compensation that is subject to a special grandfathering rule.“Corporate Governance” link at www.skylinechampion.com. The compensation committee considered the deductibility limitations of Section 162(m) as one factor when it structured Skyline’s executive compensation arrangements, but retained flexibility to approve compensation arrangements that promoted the objectives of Skyline’s compensation program, but that may not have qualified for full or partial tax deductibility.
Compensation risk assessment
During fiscal 2018, the compensation committee assessed Skyline’s compensation policies and practices to evaluate whether they created risks that were reasonably likely to have a material adverse effect on Skyline. Based on its assessment, the compensation committee concluded that Skyline’s compensation policies and practices, in conjunction with Skyline’s existing processes and controls, did not create incentives to take risks that were reasonably likely to have a material adverse effect on Skyline.
COMPENSATION COMMITTEE REPORT
The compensation committee has reviewed and discussed the Compensation Discussion and Analysis that appears above with management. Based on such review and discussion, the compensation committee has recommended to the Company’s Board that the Compensation Discussion and Analysis that appears above be included herein.
Respectfully submitted,
THE COMPENSATION
COMMITTEE*
Michael Bevacqua
Michael Kaufman
Daniel R. Osnoss
Gary E. Robinette, Chair
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Summary Compensation Table
The following table sets forth information concerning the compensation earned by, awarded or paid to Skyline’s named executive officers for the fiscal periods ended March 31, 2018, May 31, 2017 and May 31, 2016, as applicable.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity ($) (3) | Total ($) | |||||||||||||||||||||
Richard W. Florea | 2018 | 309,475 | — | 184,500 | 181,373 | 209,351 | 884,699 | |||||||||||||||||||||
President and Chief Executive Officer | 2017 | 369,000 | 14,000 | 179,000 | 170,000 | — | 732,000 | |||||||||||||||||||||
| 2016 | 305,000 | (2) | 150,000 | — | 421,000 | — | 876,000 | |||||||||||||||||||||
Jon S. Pilarski | 2018 | 191,544 | — | — | — | 62,805 | 254,349 | |||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||
Jeffrey A. Newport | 2018 | 208,654 | — | — | — | 125,610 | 334,264 | |||||||||||||||||||||
Chief Operating Officer | 2017 | 230,000 | 8,000 | 37,000 | 49,000 | — | 324,000 | |||||||||||||||||||||
Robert C. Davis | 2018 | 161,749 | — | — | — | 41,870 | 203,619 | |||||||||||||||||||||
Vice President, Manufacturing | ||||||||||||||||||||||||||||
Terrence M. Decio | 2018 | 204,314 | — | — | — | 62,805 | 267,119 | |||||||||||||||||||||
Vice President, Marketing andSales | 2017 | 244,000 | 4,000 | — | — | — | 248,000 | |||||||||||||||||||||
| 2016 | 240,000 | — | — | — | — | 240,000 | ||||||||||||||||||||||
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Grants of Plan-Based Awards Table
The following table sets forth information regarding plan-based awards made to each of Skyline’s named executive officers during fiscal 2018.
| Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of Stock (#) (2) | All Other Option Awards: Number Of Securities Underlying Options (#) (3) | Exercise or Base Price of Option Awards ($/Sh) (4) | Grant Date Fair Value of Stock and Option Awards ($) (5) | |||||||||||||||||||
Name | Target ($) | |||||||||||||||||||||||
Richard W. Florea | — | 209,351 | — | — | — | — | ||||||||||||||||||
| 7/13/17 | — | 30,000 | — | — | 184,500 | |||||||||||||||||||
| 7/13/17 | — | — | 47,000 | 6.15 | 181,373 | |||||||||||||||||||
Jon S. Pilarski | — | 62,805 | — | — | — | — | ||||||||||||||||||
Jeffrey A. Newport | — | 125,610 | — | — | — | — | ||||||||||||||||||
Robert C. Davis | — | 41,870 | — | — | — | — | ||||||||||||||||||
Terrence M. Decio | — | 62,805 | — | — | — | — | ||||||||||||||||||
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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Employment agreement with Mr. Florea
Skyline entered into an Executive Employment Agreement effective and dated as of June 25, 2015 with Richard W. Florea, Skyline’s President and Chief Executive Officer. Mr. Florea’s employment with Skyline terminated on June 1, 2018.
The initial term of the employment agreement continued until May 31, 2017 and automatically renewed for successiveone-year periods unless one of the parties gave60-day prior notice of termination to the other party or the agreement was earlier terminated in accordance with its terms. The employment agreement provided Mr. Florea with an annual base salary of $360,000 (which was subsequently increased as reflected in the Summary Compensation Table above), and eligibility for an annual performance bonus for each of Skyline’s fiscal years in an amount up to 50% of his base salary based on the achievement of certain financial and
operational goals for Skyline and Mr. Florea, as established by the Skyline board of directors. Mr. Florea’s entitlement to the annual performance bonus was superseded in fiscal year 2017 and fiscal 2018 by the Bonus Plan, which is described in the “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program—Short-term incentive plan” above.
Mr. Florea was also entitled to participate in the medical, life, and disability insurance plans, retirement plans, and other employee benefit plans and policies as established by Skyline from time to time upon the same terms as available to other executive officers of Skyline.
The employment agreement also provided for payments and benefits upon termination of Mr. Florea’s employment under certain conditions, as described under “Potential Payments Upon Termination or Change in Control” below.
Offer letters with Messrs. Pilarski, Newport and Davis
Skyline is party to offer letters with each of Messrs. Pilarski and Davis and, prior to his termination of employment on July 6, 2018, Mr. Newport. These offer letters set forth employees’ initial base salaries, which have been subsequently increased.
Mr. Newport’s offer letter also stated that he would be eligible to participate in an executive annual or quarterly bonus program once the program is reactivated or once a new program is initiated and that he and his dependents would be eligible to participate in Skyline’s group health benefits and that he will be able to participate in Skyline’s 401(k) plan subject to satisfying the applicable eligibility criteria.
In addition to base salary, Mr. Davis’s offer letter provides for three weeks of vacation and eligibility for him and his dependents to participate in Skyline’s group health insurance benefits.
Mr. Decio is not party to an offer letter with Skyline.
Outstanding Equity Awards at March 31, 2018
The following table and footnotes set forth information regarding outstanding equity awards held by the named executive officers as of March 31, 2018.
Option Awards (11) | Stock Awards (11) | |||||||||||||||||||||||
| Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of shares or units of stock that have not vested (#) (2) | Market value of shares or units of stock that have not vested ($) (3) | ||||||||||||||||||
Richard W. Florea | 80,000 | (4) | 120,000 | $ | 3.12 | 6/25/2025 | — | $ | — | |||||||||||||||
| 3,600 | (5) | 14,400 | $ | 14.90 | 1/10/2027 | — | $ | — | ||||||||||||||||
| — | 47,000 | $ | 6.15 | 7/13/2027 | — | $ | — | |||||||||||||||||
| — | — | $ | — | — | 12,000 | (6) | $ | 264,000 | ||||||||||||||||
| — | — | $ | — | — | 30,000 | (7) | $ | 660,000 | ||||||||||||||||
Jon S. Pilarski | — | — | $ | — | — | — | $ | — | ||||||||||||||||
Jeffrey A. Newport | 10,000 | (8) | 15,000 | $ | 4.55 | 2/1/2026 | — | $ | — | |||||||||||||||
| 1,200 | (9) | 4,800 | $ | 12.39 | 2/27/2027 | — | $ | — | ||||||||||||||||
| — | — | $ | — | — | 3,000 | (10) | $ | 66,000 | ||||||||||||||||
Robert C. Davis | — | — | $ | — | — | — | $ | — | ||||||||||||||||
Terrence M. Decio | — | — | $ | — | — | — | $ | — | ||||||||||||||||
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Option Exercises and Stock Vested
No named executive officers exercised stock options or became vested in stock awards during fiscal 2018.
Pension Benefits and Nonqualified Deferred Compensation
Pursuant to Skyline’s 1989 Deferred Compensation Plan (the “Deferred Compensation Plan”), participants in the Deferred Compensation Plan (or their estates or beneficiaries) will commence receiving payments of deferred compensation in fixed amounts no later than ninety (90) days following the participant’s retirement, permanent disability or death. If a participant’s employment is terminated due to “retirement” (as defined in the Deferred Compensation Plan) on or after the participant’s eligibility date that is listed in Exhibit A to the Deferred Compensation Plan, Skyline will begin paying in monthly installments to the participant a fixed annual deferred compensation amount as set forth in the Deferred Compensation Plan, such annual amount to be paid for a period of ten years following the participant’s retirement.
Messrs. Pilarski and Decio are participants in the Deferred Compensation Plan and are entitled to annual deferred compensation amounts of $60,000 and $75,000, respectively. As of the end of fiscal 2018, Mr. Decio was vested in his benefits under the Deferred Compensation Plan, and under the general terms of the Deferred Compensation Plan, Mr. Pilarski will become eligible to receive amounts deferred under the Deferred Compensation Plan which are due to him as a result of his retirement when he reaches age 62. However, notwithstanding the foregoing, under the terms of the Deferred Compensation Plan, if there is a change in control of Skyline (defined as a change in ownership of more than 50% of Skyline’s common stock in one transaction) the rights of the participants will vest at the time of the closing of such transaction. The Exchange constituted a change in control of Skyline for purposes of this plan and, in connection with the Exchange, Mr. Pilarski became fully vested in his benefits under the Deferred Compensation Plan.
The following table provides the present value of the accumulated benefits under the Deferred Compensation Plan for each of Messrs. Decio and Pilarski.
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Potential Payments Upon Termination or Change in Control
The employment agreement with Mr. Florea provided for severance payments and benefits in connection with specified termination events, subject to Mr. Florea’s timely and effective execution of a separation agreement provided by Skyline containing a release of claims and other customary terms and continued performance of the restrictive covenants described below. The other named executive officers were not entitled to any severance payments under any plans of or agreements with Skyline. Under the Exchange Agreement, however, they are eligible for severance benefits in accordance with the severance terms provided under that agreement, subject to such named executive officer signing and delivering a termination and release agreement, which may include restrictive covenants at Skyline’s discretion.
Mr. Florea
Under his employment agreement, Mr. Florea was entitled to receive severance benefits if his employment was terminated under certain circumstances. If Skyline terminated Mr. Florea’s employment without “Cause” (as defined in the employment agreement) in contemplation of a “Change in Control” (as defined in the employment agreement) or without Cause within six months after the occurrence of a Change in Control, then he was entitled to the following severance benefits: (i) his then-current base salary for an18-month period; and (ii) all stock options granted to Mr. Florea on June 25, 2015 would have immediately vested. These severance benefits would have been payable to Mr. Florea in equal quarterly installments with the first installment payable on the first day of the seventh month after the date on which his employment was terminated. However, if Mr. Florea accepted other employment or other consulting engagements within the above-referenced18-month severance period, his remaining severance payments would have been reduced by the total amount of the base salary earned by or paid to Mr. Florea in connection with his subsequent employment or engagement.
If Mr. Florea’s employment agreement was terminated for any reason other than in connection with a Change in Control as described in the preceding paragraph, he would have received his earned but unpaid base salary through the date of termination, any reimbursable business expenses, and any accrued but unpaid vested amounts under any of Skyline’s employee benefit plans, and if the termination was without “Cause,” severance payments equal to his then-current base salary for a9-month period.
As described above, Mr. Florea’s employment was terminated following the end of fiscal 2018 in connection with the Exchange. At the time of his termination of employment, he entered into a separation and release agreement, the terms of which amended the severance provisions of his employment agreement to provide for a lump sum severance payment.
Messrs. Pilarski and Newport
Pursuant to the Exchange Agreement, if Mr. Pilarski or Mr. Newport are still employed as of the Exchange, and if Mr. Pilarski or Mr. Newport’s employment is terminated, other than for cause, within 12 months after the consummation of the Exchange, then the terminated named executive officer will be entitled to severance pay equal to: (A) in the case of Mr. Newport, 26 weeks of pay, at the base rate of pay in effect for Mr. Newport at the time of termination, or (B) in the case of Mr. Pilarski, 52 weeks of pay, at the base rate of pay in effect for Mr. Pilarski at the time of termination. The executives will receive their severance in substantially equal installments on the same schedule as payments are made under Skyline’s regularly scheduled payroll practice. Receipt of severance payments is conditioned on the named executive officer’s execution of a termination and release agreement, which may, at Skyline’s discretion, include restrictive covenants.
Mr. Newport’s employment with the Company terminated on July 6, 2018 and, in connection with such termination, he became entitled to the severance described above.
Messrs. Davis and Decio
Pursuant to the Exchange Agreement, if Mr. Davis or Mr. Decio are still employed as of the occurrence of the Exchange, and if Mr. Davis or Mr. Decio’s employment is terminated, other than for cause, within 12 months after the Exchange occurs, then the terminated named executive officer will be entitled to severance pay equal to equal to one week of pay, at his base rate of pay in effect at the time of termination, for each full year of continuous service with Skyline, with a minimum of four weeks and a maximum of 26 weeks. The executives will receive their severance in substantially equal installments on the same schedule as payments are made under Skyline’s regularly scheduled payroll practice. Receipt of severance payments is conditioned on the named executive officer’s execution of a termination and release agreement, which may, at Skyline’s discretion, include restrictive covenants.
Mr. Pilarski
Please refer to the section above titled “Pension Benefits and Nonqualified Deferred Compensation” for a discussion of the impact of a change of control on Mr. Pilarski’s entitlement to benefits under the Deferred Compensation Plan.
Equity Awards
Under the Exchange Agreement, each incentive equity award that Skyline had granted to each of Messrs. Florea and Newport under the 2015 Plan (all of which were subject to vesting or other lapse restrictions) that was outstanding upon the occurrence of the Exchange fully vested in connection with the consummation of the Exchange, and such vesting was subject to each of Messrs. Florea and Newport executing and delivering to Skyline a release of claims with respect to such equity awards prior to the occurrence of the accelerated vesting.
Please also see the section above titled “Potential Payments Upon Termination or Change in Control – Mr. Florea” for a description of a provision in Mr. Florea’s employment providing for double-trigger accelerated vesting of Mr. Florea’s 2015 stock option award in connection with a change in control of Skyline.
Restrictive covenants
Pursuant to his employment agreement, Mr. Florea is bound by certain restrictive covenants, including covenants relating to confidentiality and assignment of intellectual property rights, as well as covenants not to compete with Skyline or to solicit Skyline’s customers, prospective customers, employees or other service providers during employment and generally for a period equal to the time that Mr. Florea receives severance payments following termination of his employment without Cause.
Estimated severance payments
The following tables set forth the dollar value of the estimated payments and benefits that would have become due to Mr. Florea in each of the termination scenarios described above, assuming the applicable triggering event occurred on March 31, 2018. As described above, Mr. Florea’s employment terminated without cause in connection with the Exchange and he was paid $556,200 of severance shortly after the consummation of the Exchange. The actual values associated with the accelerated vesting of Mr. Florea’s stock options and restricted stock were different than the values reflected in the below table because the actual amounts were based on a per share price at the close of trading on the date that the Exchange was consummated. Severance amounts for other named executive officers are not included because they would not have been entitled to severance had their employment terminated on March 31, 2018 because the Exchange had not been consummated on this date.
Richard W. Florea | ||||||||
Name | Termination by Skyline Without Cause in Connection with a Change in Control (1) | Termination by Skyline Without Cause Not in Connection with a Change in Control | ||||||
Severance payments | $ | 556,200 | $ | 278,100 | ||||
Accelerated vesting of stock options | 3,112,790 | (1) | 755,200 | (1) | ||||
Accelerated vesting of restricted stock | 924,000 | (1) | — | |||||
Total | 4,592,990 | 1,033,300 | ||||||
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During fiscal 2018, directors who were not employees of Skyline received an annual fee of $20,000 payable in quarterly installments and received $1,000 for each meeting of the board of directors or committee he attended. In addition, thenon-executive Chairman received an annual fee of $110,000. The Chairman of the Audit Committee received $4,000 annually and the remaining members of the Audit Committee received $3,000 annually, payable in quarterly installments. Chairmenmeet the independence and financial literacy requirements of the other committees who were not employees of Skyline received an additional $3,000 annually, and members of the other committees who were not employees of Skyline received an additional $2,000 annually, payable in quarterly installments. Members of a Special Committee formed to explore strategic alternatives each received a fee of $15,000.
Director Compensation for fiscal 2018
The following table summarizes payments made to directors for fiscal 2018. Mr. Florea received no compensation as a director of Skyline. The compensation received by Mr. Florea as an executive officer of Skyline during fiscal 2018 is reflected in the section titled “Summary Compensation Table” above.
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Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the total annual compensation of Skyline employeesNYSE and the total annual compensation of the Chief Executive Officer. This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K. Because Securities and Exchange Commission rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported below.SEC.
For fiscal 2018, the median of the annual total compensation of all Skyline employees (other than its Chief Executive Officer) was $31,045. For fiscal 2018, the annual total compensation of the Skyline Chief Executive Officer, as reported in the “Total” column of our 2018 Summary Compensation Table, was $884,699. Based on this information, the ratio of annual total compensation of the Chief Executive officer to the median of the annual total compensation of all other employees for fiscal 2018 is estimated to be 28.5 to 1.
To identify the median of the annual total compensation of all employees, as well as to determine the annual total compensation of the median employee, we took the following steps:
As of December 31, 2017, Skyline’s employee population consisted of approximately 1,231 individuals, all of whom were located in the United States. This population consisted of all of full-time and part-time, and seasonal employees. This population does not include independent contractors or leased workers who were engaged through an unaffiliated third-party staffing agency.
To identify the “median employee” from the employee population, we used gross wages for 2017. We did not annualize the compensation of any individuals who were employed for less than the full calendar year.
We identified Skyline’s median employee using this compensation measure, which was consistently applied to all of Skyline’s employees who were included in the calculation. Since all of Skyline’s employees were located in the United States, as was Skyline’s Chief Executive Officer, we did not make anycost-of-living adjustments in identifying the “median employee.”
Once we identified Skyline’s median employee, we combined all of the elements of such employee’s compensation for fiscal 2018 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K, resulting in annual total compensation of $31,045.
Skyline Champion’s Compensation Committee oversees the compensation program and compensation awarded. In addition, it adopts changes to the program and awards compensation as appropriate to reflect the Company’s circumstances and to promote the main objectives of the program.
These objectives include:
to compete for and retain managerial talent,
to reward profitable growth and increase shareholder returns, and
to effectively tie pay to performance.
The Board is asking the shareholders to indicate their support for the named executive officers’ compensation for fiscal year 2018. For the avoidance of doubt, the named executive officers include Messrs. Florea, Pilarski, Newport, Davis and Decio, each of whom was removed, without cause, from his position as an executive officer in connection with the Exchange. Their compensation was approved by the compensation committee of the board of directors of Skyline prior to the Exchange, and no members of such committee currently serve on the Compensation Committee of the Skyline Champion Board of Directors. The Board believes the executive compensation program was designed appropriately and is working to ensure that management’s interests are aligned with the shareholders’ interests to support long-term value creation.
Shareholders may vote for or against the following resolution, or abstain from voting. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the named executive officers. The proposed resolution is:
RESOLVED, that the compensation paid to Skyline Champion’s named executive officers for fiscal year 2018, as disclosed in the executive compensation discussion included in the 2018 Proxy Statement, is hereby approved.
Because this proposal asks for anon-binding, advisory vote, there is no “required vote” that would constitute approval. We value the opinions expressed by our shareholders in this advisory vote, and our Compensation Committee, whichManagement is responsible for overseeingthe preparation, presentation and administering our executive compensation programs, will consider the outcome of the vote when designing our compensation programs and making future compensation decisions for our named executive officers. Abstentions and brokernon-votes, if any, will not have any effect on the results of those deliberations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF
PROPOSAL 2, ON AN ADVISORY BASIS.
At the 2018 Annual Meeting, shareholders will be asked to approve the Skyline Champion Corporation 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan was adopted by the Board on August 31, 2018, acting on the recommendation of our Compensation Committee, and will become effective upon receiving shareholder approval at the 2018 Annual Meeting.
Equity awards will be an important part of ourgo-forward compensation program. The use of equity awards will align the interests of our executive officers, directors and key employees with those of our shareholders, encourage long-term retention and incentivize long-term value creation.
The Board believes that the 2018 Plan will promote the interests of shareholders and is consistent with principles of good corporate governance, including:
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Existing Equity Plan Information
On June 25, 2015, prior to the Exchange, the Board of Directors of Skyline Corporation adopted the 2015 Skyline Corporation Stock Incentive Plan (the “2015 Plan”), and shareholders of Skyline Corporation subsequently approved the 2015 Plan. If the 2018 Plan is approved by shareholders, the Company will grant all future equity awards under the 2018 Plan, and will not make any additional grants under the 2015 Plan. Upon its approval, the 2018 Plan will be our only equity plan under which we may grant stock options and other stock-based awards in the future.
The table below includes information regarding awards outstanding under the 2015 Plan and the number of shares available for future awards under the 2015 Plan as of September 4, 2018.
| Number of shares (as of September 4, 2018) | As a percentage of stock outstanding (56,511,252 shares as of September 4, 2018) | |||||||
Shares subject to outstanding stock options under the 2015 Plan | — | — | % | |||||
Shares subject to awards, other than stock options, outstanding under the 2015 Plan | — | — | % | |||||
Total shares subject to existing outstanding equity awards | — | — | % | |||||
Shares available for future awards under 2015 Plan (1) | 332,000 | 0.6 | % | |||||
TOTAL: | 332,000 | 0.6 | % | |||||
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Reasons for Seeking Shareholder Approval
The Board believes that equity awards will be an important part of our compensation program. Shareholder approval of the 2018 Plan would facilitate the Company’s ability to attract and retain key employees (including executive officers),non-employee directors, and key consultants and advisors with equity and equity-based incentives. The shares available for future issuance under the 2015 Plan will not be sufficient to meet the Company’s needs in respect of equity awards. Based on the advice of Lyons, Benenson & Company, the Compensation Committee’s independent compensation consultant, and after reviewing the Company’s historic grant rates and expected compensation philosophy with respect togo-forward equity awards, the Company believes that the shares proposed to be made available for issuance under the 2018 Plan will be sufficient to meet the Company’s anticipated needs for future awards over the next three to five years.
Description of the 2018 Plan
A copy of the 2018 Plan is attached to this Proxy Statement as Appendix A. The following description of certain features of the 2018 Plan is qualified in its entirety by reference to the full text of the plan.
Purposes. The 2018 Plan is intended to advance the Company’s interests by providing for the grant to participants of equity-based awards. The purposes of the 2018 Plan are to attract, retain, and reward key employees andnon-employee directors of, and consultants and advisors to, the Company and its subsidiaries, to incentivize them to generate shareholder value, to enable them to participate in the growth of the Company and to align their interests with the interestintegrity of the Company’s shareholders.
Plan Administration. The 2018 Plan is administered by our Compensation Committee, except with respect to such matters that are not delegated to the Compensation Committee by the Board (our Compensation Committee or the Board, as applicable, is referred to in this Proposal No. 3 as “our Compensation Committee”). Our Compensation Committee has the discretionary authority, subject only to the express provisions of the 2018 Plan, to, among other things, administer and interpret the 2018 Plan and any awards granted under the 2018 Plan, determine eligibility for, grant and determine the terms of awards under the 2018 Plan (including, the exercise price, base value from which appreciation is measured, or purchase price, if any, applicable to any such award), determine the form of settlement of awards under the 2018 Plan and to do all things necessary to carry out the purposes of the 2018 Plan. Our Compensation Committee’s determinations with respect to the 2018 Plan or any award granted thereunder are conclusive and binding.
Authorized Shares. Subject to adjustment, the maximum number of shares of our common stock that may be delivered in satisfaction of awards under the 2018 Plan is 6,000,000 shares of common stock. Shares withheld by the Company in payment of the exercise or purchase price of an award or in satisfaction of tax withholding requirementsfinancial statements and the full numberestablishment of shares covered by a SAR, any portion of which is settled in shares, will be counted as issued undereffective internal control over financial reporting. EY, the 2018 Plan. However, shares of common stock underlying awards that are settled in cash or otherwise expire, become unexercisable, terminate, or are forfeited to or repurchased by the Company without the issuance of shares will not be counted as issued under the 2018 Plan. Shares of our common stock underlying awards that were granted in substitution for one or more equity awards of an acquired company that were converted, replaced, or adjusted in connection with a corporate transaction will not reduce or be added to (in the event such award is settled, expires, becomes unexercisable, terminates or is forfeited without the delivery of shares) the number of shares of common stock that may be delivered in satisfaction of awards under the 2018 Plan. The number of shares of our common stock available for delivery under the 2018 Plan will not be increased by any shares delivered under the 2018 Plan that are subsequently repurchased using proceeds directly attributable to option exercises. Shares of common stock to be issued under the 2018 Plan may be authorized but unissued shares of our common stock or previously-issued shares acquired by the Company. As of August 31, 2018, the closing price of a share of our common stock was $28.91.
Eligibility. Our Compensation Committee may select participants from among the key employees,non-employee directors, consultants and advisors of the Company and its subsidiaries. As of August 31, 2018, approximately 100 employees, 4non-employee directors and 10 consultants and advisors are currently eligible to participate in the 2018 Plan.
Limitations on Awards toNon-Employee Directors.The aggregate value of all compensation granted or paid to anynon-employee director with respect to any calendar year, including awards granted under the 2018 Plan and compensation outside of the 2018 Plan, for such calendar year may not exceed $400,000.00.
Types of Awards. The 2018 Plan provides for grants of options, SARs, restricted and unrestricted stock and stock units, performance awards, and other awards convertible into or otherwise based on shares of our common stock. Dividend equivalents may also be provided in connection with an award under the 2018 Plan. However, dividends and dividend equivalents may not be paid in respect of stock subject to an award unless and until the award has vested, and, except in connection with certain corporate transactions, no dividends or dividend equivalents may be paid with respect to options or SARs while they remain unexercised.
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Vesting. Our Compensation Committee has the authority to determine the vesting schedule applicable to each award, and to accelerate the vesting or exercisability of any award.
No Repricing. Except in connection with a corporate transaction involving the Company, without the prior approval of the our shareholders, we may not amend the terms of an outstanding option or SAR to reduce the exercise price or base value of the award, cancel outstanding options or SARs in exchange for options or SARs with an exercise price or base value that is less than the exercise price or base value of the original award, or cancel outstanding options or SARs that have an exercise price or base value greater than the fair market value of a share of our common stock on the date of such cancellation in exchange for cash or other consideration.
Termination of Employment. Our Compensation Committee determines the effect of termination of employment or service on an award. Unless otherwise provided by our Compensation Committee, upon a termination of employment all unvested options and SARs will terminate and all other unvested awards will be forfeited.
Performance Criteria. The 2018 Plan provides that grants of performance awards may be made based upon, and subject to achieving, “performance objectives” over a specified performance or vesting period. Performance objectives and any targets with respect thereto determined by our Compensation Committee need not be based upon an increase, a positive or improved result or avoidance of loss and may be applied to the participant individually, or to a business unit or division of the Company as a whole and may relate to any or any combination of the following or any other criterion or criteria determined by our Compensation Committee (measured either absolutely or comparatively (including, without limitation, by reference to an index or indices or the performance of one or more companies) and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof and subject to such adjustments, if any, as our Compensation Committee specifies): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on anafter-tax basis; net income; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; shareholder return; sales of particular services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs,split-ups and the like; reorganizations; center openings (including openings in new markets); new service or product lines; or recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings. Our Compensation Committee may provide in the case of any performance award that one or more of the performance objectives applicable to an award will be adjusted to reflect events occurring during the performance period of such award that affect the applicable performance objectives.
Transferability. Awards under the 2018 Plan may not be transferred except by will or by the laws of descent and distribution, unless (for awards other than ISOs) otherwise provided by our Compensation Committee in accordance with the terms of the 2018 Plan.
Recovery of Compensation.Subject to applicable law, our Compensation Committee may provide in any case that any outstanding award under the 2018 Plan (whether or not vested or exercisable) and the proceeds from the exercise or disposition of any award or shares of common stock acquired under any such award will be subject to forfeiture and disgorgement to the Company, with interest and other related earnings, if the participant to whom such award was granted violates (i) anon-competition,non-solicitation, confidentiality or other restrictive covenant by which he or she is bound or (ii) any Company policy applicable to the participant that provides for forfeiture or disgorgement with respect to incentive compensation that includes awards under the 2018 Plan. In addition, our Compensation Committee may require forfeiture and disgorgement to the Company of any outstanding award under the 2018 Plan and the proceeds from the exercise or disposition of any shares of common stock acquired under any such award, with interest and related earnings, to the extent required by law or applicable stock exchange listing standards, including, without limitation, Section 10D of the Exchange Act or any applicable Company policy.
Merger, Dissolution or Liquidation Transactions. In the event of a consolidation, merger or similar transaction or series of related transactions, a sale or transfer of all or substantially all of the Company’s assets or a dissolution or liquidation of the Company, our Compensation Committee may, among other things, provide for continuation or assumption of some or all outstanding awards, for new grants in substitution of outstanding awards, for the
accelerated vesting or delivery of shares under awards or for acash-out of outstanding awards, in each case on such terms and with such restrictions as it deems appropriate. Except as our Compensation Committee may otherwise determine, awards not assumed or substituted in connection with the transaction will immediately terminate upon the consummation of such transaction. Our Compensation Committee need not treat participants or awards under the 2018 Plan (or portions thereof) in a uniform manner in connection with a covered transaction.
Adjustment. In the event of certain corporate transactions (including a stock dividend, stock split or combination of shares, extraordinary cash dividend, recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of FASB ASC 718), our Compensation Committee shall make appropriate adjustments to the maximum number of shares that may be delivered under the 2018 Plan, and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to awards, the exercise prices of such awards or any other terms of awards affected by such change. Our Compensation Committee may also make the types of adjustments described above to take into account distributions and other events other than those listed above if it determines that such adjustments are appropriate to avoid distortion and preserve the value of awards.
Amendment and Termination. Our Compensation Committee may amend the 2018 Plan or outstanding awards, or terminate the 2018 Plan as to future grants of awards, except that our Compensation Committee may not alter the terms of an award if it would affect materially and adversely a participant’s rights under the award without the participant’s consent (unless expressly provided in the 2018 Plan or reserved by our Compensation Committee). Shareholder approval will be required for any amendment to the extent such approval is required by law or applicable stock exchange requirements, as determined by our Compensation Committee.
Certain Material U.S. Federal Income Tax Consequences
The following discussion summarizes certain material federal income tax consequences associated with the grant and exercise of awards under the 2018 Plan under the federal tax law as in effect on the date of this Proxy Statement. The summary does not purport to cover federal employment tax or other federal tax consequences that may be associated with the 2018 Plan, nor does it cover state, local ornon-U.S. taxes.
ISOs. In general, a participant realizes no taxable income upon the grant of an ISO and does not realize any ordinary income in connection with the exercise of the ISO. However, the exercise of an ISO may result in an alternative minimum tax liability to the participant. With certain exceptions, a disposition of shares purchased under an ISO within two years from the date of grant or within one year after exercise results in ordinary income to the participant (and a the availability of a deduction to the Company) equal to the value of the shares at the time of exercise less the exercise price. Any additional gain recognized in the disposition is treated as a capital gain for which the Company is not entitled to a deduction. If the participant does not dispose of the shares until after the expiration of theseone-andtwo-year holding periods, any gain or loss recognized upon a subsequent sale is treated as a long-term capital gain or loss for which the Company is not entitled to a deduction.
NSOs. In general, in the case of an NSO, a participant has no taxable income at the time of grant but realizes income in connection with the exercise of the option in an amount equal to the excess (at the time of exercise) of the fair market value of the shares acquired upon exercise over the exercise price. A corresponding deduction is generally available to the Company. Upon a subsequent sale or exchange of the shares, any recognized gain or loss after the date of exercise is treated as capital gain or loss for which the Company is not entitled to a deduction.
SARs. The grant of a SAR does not itself result in taxable income, nor does taxable income result merely because a SAR becomes exercisable. In general, a participant who exercises a SAR for shares of stock or receives payment upon the exercise of a SAR will have ordinary income equal to the amount of any cash and the fair market value of any stock received. A corresponding deduction is generally available to the Company.
Restricted Stock. A participant who is awarded or purchases shares subject to a substantial risk of forfeiture generally does not have income until the risk of forfeiture lapses. When the risk of forfeiture lapses, the
participant has ordinary income equal to the excess of the fair market value of the shares at that time over the purchase price, if any, and a corresponding deduction is generally available to the Company. However, a participant may make an election under Section 83(b) of the Code to be taxed on restricted stock when it is acquired rather than later, when the substantial risk of forfeiture lapses. A participant who makes an effective 83(b) election will realize ordinary income equal to the fair market value of the shares as of the time of acquisition less any price paid for the shares. A corresponding deduction will generally be available to the Company. If a participant makes an effective 83(b) election, no additional income results by reason of the lapsing of the restrictions.
For purposes of determining capital gain or loss on a sale of shares awarded under the 2018 Plan, the holding period in the shares begins when the participant recognizes taxable income with respect to the transfer. The participant’s tax basis in the shares equals the amount paid for the shares plus any income realized with respect to the transfer. However, if a participant makes an effective 83(b) election and later forfeits the shares, the tax loss realized as a result of the forfeiture is limited to the excess of what the participant paid for the shares (if anything) over the amount (if any) realized in connection with the forfeiture.
Restricted Stock Units. In general, the grant of a restricted stock unit does not itself result in taxable income. Instead, the participant is taxed upon vesting and settlement (and a corresponding deduction is generally available to the Company at such time), unless he or she has made a proper election to defer receipt of the shares (or cash if the award is cash settled) under Section 409A of the Code. If the shares delivered are restricted for tax purposes, the participant will instead be subject to the rules described above for restricted stock.
Stock Awards.A participant who receives a stock award generally is required to recognize ordinary income in an amount equal to the excess of the fair market value of the shares on the date the shares are granted over the purchase price (if any) paid for the shares. The Company generally will be entitled to a corresponding deduction.
Certain Change of Control Payments. Under theso-called “golden parachute” provisions of the Code, the vesting or accelerated exercisability of awards in connection with a change in control of the Company may be required to be valued and taken into account in determining whether participants have received compensatory payments, contingent on the change in control, in excess of certain limits. If these limits are exceeded, a substantial portion of amounts payable to the participant, including income recognized by reason of the grant, vesting or exercise of awards under the 2018 Plan, may be subject to an additional 20% federal tax and may not be deductible to the Company.
New Plan Benefits
Our Compensation Committee has not granted any awards under the 2018 Plan subject to shareholder approval of the 2018 Plan. Our Compensation Committee has full discretion to determine the amount of the awards to be made to participants under the 2018 Plan, subject to the limits described above underDescription of the 2018 Plan—Limitations on Awards toNon-Employee Directors. Therefore, it is not possible to determine the benefits or amounts that will be received by or allocated to participants under the 2018 Plan. For information on equity awards made in fiscal 2018 to named executive officers, please refer to the “Summary Compensation Table” and “Grants of Plan-Based Awards Table” under the heading “Executive Compensation” elsewhere in this Proxy Statement.
Vote Required
The affirmative vote of a majority of the votes cast by the shareholders entitled to vote at the Annual Meeting is required for the approval with respect to the 2018 Plan. Abstentions and brokernon-votes are not considered votes cast for the foregoing purpose, and will have no effect on the results of this vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 3 AND THE APPROVAL OF THE 2018 OMNIBUS LONG-TERM INCENTIVE PLAN.
Equity Compensation Plan Information
The following table provides information as of March 31, 2018 with respect to shares of our common stock that may be issued under existing equity compensation plans.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Securities Remaining Available For Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a)) (c) | |||||||||
Equity compensation plans approved by security holders | 331,000 | $ | 5.03 | 318,000 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 331,000 | $ | 5.03 | 318,000 | ||||||||
As set forth in Section 12240.4 of the SEC’s Division of Corporate Finance Financial Reporting Manual, which covers situations involving acquisitions where the registrant elects to adopt the fiscal year of the accounting acquirer, the Company was required to file the audited consolidated financial statements of Champion Holdings that would be included in an Annual Report on Form10-K for the period ended March 31, 2018. The Audit Committee reviewed and discussed the Champion Holdings’ audited financial statements for the year ended March 31, 2018 with management and the Board of Directors and discussed with Ernst & Young LLP, Champion Holdings’ independent registered public accounting firm, duringis responsible for auditing those financial statements in accordance with the year ended March 31, 2018,standards of the Public Company Accounting Oversight Board (“PCAOB”) and expressing an opinion on the conformity of Skyline Champion’s audited financial statements with generally accepted accounting principles and on the effectiveness of Skyline Champion’s internal controls over financial reporting. In this context, the Audit Committee met 12 times in fiscal 2019 with management, EY and the Company’s internal auditors, to discuss, among other things, the audited financial statements of the Company and the matters required to be discussed by Public Company Accounting Oversight Board (United States) (PCAOB) Auditing Standard No. 1301,Communicationsthe applicable requirements of PCAOB and the SEC.
Management represented to the Committee that the Company’s fiscal 2019 consolidated financial statements were prepared in accordance with Audit Committees. In addition,generally accepted accounting principles, and the Audit Committee reviewed and discussed the fiscal 2019 consolidated financial statements with management and EY.
The Committee has discussed with EY the matters required to be discussed by applicable auditing standards, including significant accounting policies and the quality, not just the acceptability, of the accounting principles utilized. The Committee has also received from the independent registered public accounting firm written disclosures regarding Ernst & Young LLP’s independence as required by the applicable standards of the PCAOB. The Audit Committee also discussed with the independent registered public accounting firm the auditors’ independence from management and Skyline Champion, including a review of audit andnon-audit fees and the matters covered byEY the written disclosures and the letter providedrequired by applicable requirements of the PCAOB regarding the independent registered public accounting firm. Based onauditor’s communications with the above mentioned review and discussion with managementAudit Committee regarding independence, and the Audit Committee has discussed with EY the firm’s independence. The Audit Committee concluded that EY is independent auditors,from the AuditCompany and management.
In reliance on these reviews and discussions, the Committee recommended to the Board of Directors that Champion Holding’sthe audited consolidated financial statements be filed as an exhibit toincluded in the CurrentCompany’s Annual Report on Form8-K,10-K as amended, filed withfor the SEC on June 14, 2018.
The Exchange was accounted for as a reverse acquisition under the acquisition method of accounting as provided by the Financial Accounting Standards Board Accounting Standards Codification 805,Business Combinations. Champion Holdings is considered the accounting acquirer. The Exchange was completed on June 1, 2018, and therefore, the historical results of operations for Champion Holdings reflected in the audited financials for fiscal year ended March 31, 2018 filed by Skyline Champion do not reflect30, 2019, for filing with the effects of the Exchange nor do they include any results of operations of Skyline.SEC.
This report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Skyline Champion specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.AUDIT COMMITTEE
The Audit Committee
Timothy BernlohrMichael Berman, Chair
John C. Firth
Gary E. Robinette
14 SKYLINE CHAMPION | 2019 Proxy Statement
Audit
AUDITOR FEES ANDPRE-APPROVAL POLICY
Auditor Fees and Other FeesServices
The following table sets forth the aggregate fees billed to Skyline Champion or Champion Holdings (prior to the Exchange) by Ernst & Young LLPEY for professional services rendered for the fiscal years ended March 31, 20182019 and April 1, 2017:2018:
| Year Ended | Year Ended | |||||||
| Fees | March 31, 2018 | April 1, 2017 | ||||||
Audit fees (1) | $ | 1,158,093 | $ | 623,011 | ||||
Tax fees (2) | $ | 149,105 | $ | 50,395 | ||||
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| $ | 1,307,198 | $ | 673,406 | |||||
Type of Fee
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Year Ended
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Year Ended
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Audit Fees
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$
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2,864,756
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$
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1,158,093
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Tax Fees (c)
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294,110
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149,105
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TOTAL FEES
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$
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3,158,866
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$
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1,307,198
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Audit fees associated with the annual audit of Skyline Champion’s consolidated financial statements and the audit of Skyline Champion’s internal control over financial reporting. It also includes fees associated with quarterly reviews of Skyline Champion’s unaudited consolidated financial statements and agreed upon procedures and attestation services related to our secondary offerings. |
| (b) | Audit fees include fees billed |
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Pre-Approval Policiesof Auditor Fees and ProceduresServices
It is the Audit Committee’s policy that it mustpre-approve all audit and permissiblenon-audit services to be performed by Skyline Champion’s independent auditors, the fees to be paid for those services and the time period over which those services are to be provided. On an annual basis, the independent auditors present a listing of all services they expect to perform for Skyline Champion in the ensuingone-year period, including fee estimates, in sufficient detail to enable the Audit Committee to perform an independent review of each proposed service. The Audit Committee reviews this list and approves appropriate services which, in the Audit Committee’s judgment, will not impair the auditors’ independence. With respect to any additional services proposed to be performed by the independent auditors during the year, management will evaluate the impact on the independent auditor’s independence and obtain Audit Committee approval for such service.
The Audit Committee has considered whether the provision of thenon-audit services described above is compatible with maintaining Ernst & Young LLP’sEY’s independence and has determined in their judgment that the provision of such services is compatible with maintaining Ernst & Young LLP’sEY’s independence.
On June 4, 2018, the Audit Committee approved the engagement of Ernst & Young LLPEY as the independent registered public accounting firm of the Company for the year ending March 30, 2019.2019 and all fees described above. On June 4, 2018, the Audit Committee dismissed Skyline Champion’s former registered public accounting firm, Crowe Horwarth LLP. Within the past two fiscal years, the accountant’s report provided by Crowe Horwarth LLP did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except for the audit report on the financial statements of the Company as of and for the fiscal year ended May 31, 2017, which identified a material weakness in the Company’s internal control over financial reporting as of May 31, 2017 as it relates to the accuracy and valuation of raw material and inventories. During the two most recent fiscal years, there were no disagreements between the Company and Crowe Horwarth LLP relating to any matter of accounting principals or practices, financial statement disclosure, or auditing scope and procedure.
2019 Proxy Statement | SKYLINE CHAMPION 15
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The Audit Committee has selected Ernst & Young LLP
PROPOSAL THREE: ADVISORY RESOLUTION TO
APPROVE EXECUTIVE COMPENSATION
We are asking you to approve an advisory resolution approving the compensation of our named executive officers as the independent registered public accounting firmdisclosed in this proxy statement. This vote is commonly referred to as a “Say on Pay” vote and is required by Section 14A of the CompanySecurities Exchange Act of 1934. Although this resolution is not binding, we value your opinion and our Compensation Committee will consider the outcome of this vote when making future decisions.
We believe our executive compensation program promotes the achievement of positive results for our shareholders, aligns pay and performance, and allows us to attract and retain the year ending Marchtalented executives that drive our long-term financial success. We urge you to read the “Compensation Discussion and Analysis” section of this proxy statement beginning on page 17, which describes in more detail how our executive compensation program operates and how it is designed to achieve our compensation objectives. We also encourage you to review the “Summary Compensation Table” and other compensation tables and narratives, found on pages 30 2019. Thethrough 42.
We have adopted a policy providing for an annual “Say on Pay” vote. Accordingly, the next advisory vote on the compensation of our named executive officers will occur in 2020.
Our Board recommends that, on an advisory basis, shareholders vote in favor of Directors has directedthe following resolution:
RESOLVED, that the selectioncompensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 of RegulationS-K, including the independent registered public accounting firm be submitted for ratification by the shareholders at the 2018 Annual Meeting. If a quorumCompensation Discussion and Analysis, compensation tables and narrative discussion is present, the proposal to ratify the appointment of Ernst & Young LLP as independent registered public accounting firm will require approval by a majority of the votes cast in person or by proxy at the 2018 Annual Meeting. Shareholder ratification of the appointment is not required by law or otherwise. The Board is submitting this proposal to our shareholders for ratification because it believes it to be a good corporate practice.
If our shareholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain Ernst & Young LLP, but may still retain the firm. Even if the selection is ratified, the Audit Committee in its discretion may appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that a change would be in the best interests of Skyline Champion and our shareholders. Representatives of Ernst & Young LLP are expected to attend the 2018 Annual Meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate shareholder questions.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 4 TO BE IN THE BEST INTERESTS OF SKYLINE CHAMPION AND OUR SHAREHOLDERS AND RECOMMENDS A VOTE “FOR” APPROVAL THEREOF.hereby APPROVED.
| | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF |
16 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Our NEOs for fiscal 2019 are:
Keith Anderson Chief Executive Officer | Laurie Hough Executive Vice President, Chief Financial Officer and Treasurer | Mark Yost President – US Operations | Joe Kimmell Regional Vice President, US Northeast Region | Wade Lyall Regional Vice President, US South Region | Richard W. Florea Former Chief Executive Officer of Skyline Corporation | Jon S. Pilarski Former Chief Financial Officer of Skyline Corporation |
2019 Proxy Statement | SKYLINE CHAMPION 17
COMPENSATION DISCUSSION AND ANALYSIS
Summary of Fiscal 2019 Compensation Changes for our Named Executive Officers
In the chart below we describe some of the changes we made to our executive compensation program for fiscal 2019 in connection with the Exchange.
Compensation Category | Changes We Made in Fiscal 2019 | Why We Made These Changes | ||
Base Salary | Upon the completion of the Exchange, we increased the salaries of our CEO, our CFO and our President – U.S. Operations. | The Compensation Committee approved these salary increases in recognition of the increased scope of each role as a result of the Company becoming a larger, publicly-traded company and to bring each of these key executives’ salaries more in line with the competitive market place for talent (as further described below). | ||
Annual Incentive Bonus | The target annual incentive for our CFO was increased from 70% of base salary to 75% of base salary. The plan design was adjusted for fiscal 2019 to include metrics tied to the achievement of post-Exchange synergies and net sales growth. | The increase in the target bonus opportunity for our CFO was for the same reasons as articulated above under “Base Salary”. The Compensation Committee added the bonus performance metrics to focus management on achieving the desired synergies associated with the Exchange and net sales growth to align bonus payouts with operational metrics for the period. | ||
Long-Term Equity Award | In connection with the Exchange, the Compensation Committee and the Company adopted a new long-term incentive equity plan for the Company with the intent of making annual time- and performance-vesting long-term equity grants to our key executives and managers, as appropriate. | Consistent with competitive practice (as further described below), and to align the interests of our NEOs with the long-term goals of the Company and our shareholders, we believed it was appropriate to introduce a Long-Term Incentive Equity program. | ||
Restricted Shares of Company Common Stock | Granted to the NEOs who, prior to the Exchange, were employed by Champion Holdings or its subsidiaries in exchange for their unvested Class C units and unvested Class A units in Champion Holdings. | In connection with the Exchange, the parties to the Exchange agreed that it would be in the best interests of the Company to permit the exchange of unvested Class C units and Class A units in Champion Holdings for restricted shares of the Company as a way of incentivizing and rewarding the relevant NEOs. | ||
Skyline Champion believes strongly in itspay-for-performance philosophy. In fiscal 2019, our CEO’s total direct compensation (at target) was 30% fixed (base salary) and 70% variable and, for our NEOs (excluding our CEO) on average roughly 43% of their total direct compensation (at target) was fixed and approximately 57% was variable. Variable compensation includes annual bonuses and long-term equity awards, the amounts earned or payable in respect of which are based on the attainment of performance goals and/or our stock price. Compensation mix is discussed in more detail on page 27.
18 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
How We Make Compensation Decisions
The Compensation Committee oversees our executive compensation program and determines all executive officer compensation.
COMPENSATION PHILOSOPHY AND OBJECTIVES
We have apay-for-performance philosophy. The Compensation Committee believes that the best way to implement this philosophy is by tying a significant portion of our executives’ total direct compensation to the attainment of both annual financial goals and multi-year stock price appreciation.
The Compensation Committee has established the following objectives for our executive compensation program:
| ◾ | Align the interests of executive officers with the financial interests of our shareholders. |
| ◾ | Encourage the achievement of our key strategic, operational and financial goals. |
| ◾ | Link incentive compensation to Company and stock price performance, which the Compensation Committee believes promotes a unified vision for senior management and creates common motivation among our executives. |
| ◾ | Attract, retain and motivate executives with the talent necessary to drive our long-term success. |
| ◾ | Provide the Compensation Committee the flexibility to respond to the continually changing environment in which we operate. |
The key elements of our executive compensation program are base salaries, annual incentive bonuses and long-term equity awards. The Compensation Committee generally reviews our executive compensation program and plans annually and, following this review, makes determinations regarding base salaries, annual incentive bonus targets and long-term equity awards. The Compensation Committee makes decisions regarding each element of pay to further the objectives described above. The specific ways in which each element of compensation supports these objectives are described beginning on page 21.
The Compensation Committee recognizes the impact that an adjustment to one element of compensation may have on other elements. For example, an increase in an officer’s base salary will result in a larger target annual bonus amount since that amount is determined as a percentage of base salary. Thus, the Compensation Committee considers the individual elements, their relationships and each executive officers’ total compensation when making compensation decisions.
The Compensation Committee generally considers the value of stock-based compensation as an element of our executive compensation program at the time of grant of an equity award, not at the time of exercise or vesting.
COMPENSATION CONSULTANT
The Compensation Committee engages a compensation consultant, which it uses to obtain access to independent compensation data, analysis and advice. The Compensation Committee retained Lyons, Benenson & Company Inc. (“LB&Co.”) to assist it in making decisions regarding the compensation of our executive officers for fiscal 2019. The Compensation Committee did not use the service of a compensation consultant during fiscal 2018. Under its charter, the Compensation Committee has the authority to hire, oversee and terminate compensation consultants, as well as to approve compensation consultant fees and any other terms of the engagement.
The Compensation Committee has retained an independent compensation consultant. | Compensation Committee members have direct access to the compensation consultant without going through management. LB&Co. did not provide services to Skyline Champion other than those it provided to the Compensation Committee. The Compensation Committee assesses its compensation consultant’s independence annually. It assessed LB&Co.’s independence in fiscal 2019 in accordance with the standards of the NYSE and any applicable rules and regulations of the SEC. The Compensation Committee concluded that no conflict of interest exists that would prevent LB&Co. from independently advising the Compensation Committee. |
The Compensation Committee’s compensation consultant frequently attends Compensation Committee meetings and provides analysis and recommendations that inform the Compensation Committee’s decisions. LB&Co. assisted the Compensation Committee in fiscal 2019 by analyzing and providing recommendations with regard to total direct compensation for the Company’s executive team.
LB&Co. also assisted the Compensation Committee in setting appropriate performance criteria for the Company’s equity program and by providing general compensation advice.
2019 Proxy Statement | SKYLINE CHAMPION 19
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION RISK ASSESSMENT
During fiscal 2019, the Compensation Committee assessed the Company’s compensation policies and practices to evaluate whether they created risks that were reasonably likely to have a material adverse effect on Skyline Champion. Based on its assessment, the Compensation Committee concluded that Skyline Champion’s compensation policies and practices, in conjunction with its existing generally applicable processes and controls, did not create incentives for employees to take risks that were reasonably likely to have a material adverse effect on the Company.
MANAGEMENT’S ROLE
Although management does not have any decision-making authority regarding executive compensation, the CEO assists the Compensation Committee by recommending base salary levels, annual incentive bonus objectives and targets, and individual long-term equity awards for executives other than himself. Management also assists the Compensation Committee with the preparation of meeting agendas and prepares materials for those meetings as directed by the Compensation Committee.
Notwithstanding the Compensation Committee’s use of outside advisers and management’s participation in the executive compensation process, the Compensation Committee makes all executive compensation decisions using its own independent judgment.
CONSIDERATION OF THE MOST RECENT ADVISORY“SAY-ON-PAY” VOTE
At the 2018 annual shareholders meeting, our shareholders approved our executive compensation program, with more than 98% of the votes cast in favor of the program. This represented a significant majority of our shareholders and the Compensation Committee viewed this as positive support for our executive compensation program. The Compensation Committee continues to actively monitor shareholder feedback and support of the Company’s pay practices.
PEER GROUP
The Compensation Committee reviewed market compensation data provided by its independent consultant to determine whether the compensation opportunities of the named executive officers are appropriate and competitive.
The Compensation Committee used the following peer group of companies to benchmark the fiscal 2019 compensation disclosed in this proxy statement. The Compensation Committee selected this peer group in May 2018 based on an analysis by LB&Co. and the Compensation Committee’s independent judgment. These peers fell within a reasonable range (both above and below Skyline Champion) of comparative factors such as revenue, return on invested capital, operating margin andone- and three-year total shareholder return. These peers are considered to be within complementary Global Industry Classification System (GICS)sub-industries—namely Homebuilding, Building Products, Automobile Manufacturers and Auto Parts and Equipment.
AV Homes, Inc. | Meritage Homes Corporation | |
Beazer Homes USA, Inc. | NCI Building Systems, Inc. | |
Cavco Industries, Inc. | Patrick Industries, Inc. | |
Century Communities, Inc. | Quanex Building Products Corporation | |
LCI Industries | TRI Pointe Group, Inc. | |
LGI Homes, Inc. | William Lyon Homes | |
M.D.C. Holdings, Inc. | Winnebago Industries, Inc. | |
M/I Homes, Inc. |
In addition to the peer group, the Compensation Committee uses broader survey data to benchmark compensation practices. In fiscal 2019, the Compensation Committee considered a national survey produced by Willis Towers Watson.
The Compensation Committee considers a blend of peer group data and broader survey data in benchmarking compensation. The Compensation Committee believes that this mix of data provides the most comprehensive view of executive compensation practices at companies against whom we compete for talent, and allows the Compensation Committee to ensure that Skyline Champion continues to provide appropriate and competitive compensation. This mix of data also allows the Compensation Committee to obtain broader market context with regard to certain positions that may not exist in a comparable form at every company in our peer group or that may not be classified as a named executive officer at every company in our peer group. In addition to the peer group and survey data that the Compensation Committee uses to assess the competitive marketplace, the Compensation Committee also takes into account the Company’s performance as well as each executive’s individual performance, internal pay equity and succession planning.
20 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee generally uses competitive data as a reference in setting the base salaries, target annual incentive bonus opportunities and the long-term equity award grant date values of our named executive officers. Both our annual and long-term incentive plans are designed to further reward our named executive officers and other employees when the Company performs well both on an annual basis and over the longer term. In particular, if the Company delivers sustained performance gains, the long-term equity awards are targeted to provide an opportunity for total direct compensation beyond the median of the blended peer/survey data.
What We Pay and Why: Elements of Compensation
The key elements of compensation for our named executive officers are base salary, an annual incentive bonus and annual long-term equity awards. Together, these elements, in addition to theone-time exchange of vested Class C units and unvested Class C and Class A units in Champion Holdings for unrestricted and restricted shares of the Company (described on page 23), make up total direct compensation for fiscal 2019. We do not consider compensation paid to our NEOs in connection with the exchange described in the immediately preceding sentence as a key element ofgo-forward compensation because the SRAs representone-time,non-recurring awards that are a continuation of awards granted to certain of our NEOs by Champion Holdings.
| Base Salary | + | Annual Incentive Bonus | + | Long-Term Equity Awards | = | Total Direct Compensation |
This section describes these elements and details the amounts earned by our named executive officers in fiscal 2019.
We pay competitive base salaries to retain key executive officers and attract the new talent necessary for our long-term success. An executive officer’s base salary generally reflects the executive officer’s responsibilities, tenure and job performance, as well as the market for the officer’s services. The Compensation Committee reviews officer base salaries annually. When the Compensation Committee reviews base salaries, it considers the reports and advice provided by its independent compensation consultant, the peer group and survey data described above, and the recommendations of our CEO (for executives other than himself).
For fiscal 2019, the Compensation Committee approved the following base salaries for Messrs. Anderson and Yost and Ms. Hough. No changes were made to the base salaries of the remaining NEOs. As previously noted, Mr. Florea’s employment with Skyline Corporation ended on June 1, 2018.
Name | Fiscal 2019 Base | |||
Keith Anderson | 625,000 | |||
Mark Yost | 475,000 | |||
Laurie Hough | 375,000 | |||
Joe Kimmell | 250,000 | |||
Wade Lyall | 250,000 | |||
Richard Florea | 370,800 | |||
Jon Pilarski | 229,500 | |||
We pay annual incentive bonuses to drive the achievement of our short-term (annual) financial goals. The amount of the incentive bonus depends on our performance, which is measured at year end relative to the objective performance goals established by the Compensation Committee at the beginning of each fiscal year. Bonuses are not guaranteed.
The Compensation Committee sets robust performance targets for our annual incentive plan to drive the achievement of Skyline Champion’s financial goals. The Compensation Committee determines all incentive bonuses in accordance with the Skyline Champion Corporation Annual Performance-Based Bonus Plan (“Bonus Plan”).
The Bonus Plan authorizes the Compensation Committee to reduce the amount of any bonus paid to a named executive officer below the amount that otherwise would be payable based on actual performance. The Compensation Committee may also decide not to pay a bonus even when performance goals have been satisfied.
2019 Proxy Statement | SKYLINE CHAMPION 21
COMPENSATION DISCUSSION AND ANALYSIS
We calculate bonuses using the following formula:
Base Salary | x | Target Percentage of Base Salary | x | Performance Adjustment Factor | = | Annual Incentive Payment |
Base salaries, which are the first component of this formula, are discussed above. The “target percentage of base salary” is an individual’s incentive bonus target expressed as a percentage of base salary. This percentage differs among our named executive officers depending on their level of responsibility and is set forth below for fiscal 2019. Because Mr. Florea’s employment with Skyline Corporation terminated on June 1, 2018, he was not eligible for an annual incentive bonus with respect to fiscal 2019.
Name | Base Salary | Annual Incentive Target % | Annual Incentive Target $ | ||||||||||||
Keith Anderson | 625,000 | 100 | 625,000 | ||||||||||||
Mark Yost | 475,000 | 80 | 380,000 | ||||||||||||
Laurie Hough | 375,000 | 75 | 281,250 | ||||||||||||
Joe Kimmell | 250,000 | 75 | 187,500 | ||||||||||||
Wade Lyall | 250,000 | 75 | 187,500 | ||||||||||||
Jon Pilarski
|
| 229,500
|
|
| 30
|
|
| 68,850
|
| ||||||
The last component of the bonus formula – the “performance adjustment factor” – is a percentage representing percentage of achievement of the performance goals set by the Compensation Committee at the beginning of each fiscal year.
Step One: Select Performance Measure | For fiscal 2019, the Compensation Committee decided that each NEO would have two to three metrics upon which performance would be measured. The following chart provides detail on the metrics established by the Compensation Committee for fiscal 2019.
The metrics selected for Messrs. Anderson and Yost and Ms. Hough were as follows: 1) Consolidated, Adjusted EBITDA – weighted 75%, representing an increased alignment with the NEO’s direct responsibilities (For Mr. Yost this was replaced with US Ops Adjusted EBITDA); 2) Synergy Achievement – weighted 15%; and 3) Net Sales growth vs. the competition – weighted 10% (defined as analyst expectations of Skyline Champion’s direct competitors).
The metrics selected for Messrs. Kimmell and Lyall were as follows: 1) US Ops Adjusted EBITDA – weighted 75%; and 2) Individual performance goals – weighted 25%.
|
| ||||||||||||||||
Adjusted EBITDA | Synergy Achievement
| Net Sales Growth Vs. Competition
| ||||||||||||||||
Company Consol.
| US Operations
| |||||||||||||||||
Step Two: Select Performance Targets | Threshold
| $
| 63,070,000
|
| $
| 70,901,000
|
| $
| 1,000,000
|
|
| 10.0
| %
| |||||
Target
|
$
|
74,200,000
|
|
$
|
83,413,000
|
|
$
|
2,000,000
|
|
|
12.0
|
%
| ||||||
Over Perform
|
$
|
85,330,000
|
|
$
|
95,925,000
|
|
$
|
3,000,000
|
|
|
14.0
|
%
| ||||||
Maximum
|
$
|
96,460,000
|
|
$
|
108,437,000
|
|
$
|
4,000,000
|
|
|
16.0
|
%
| ||||||
22 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Step Three: Select Performance Adjustment Factors | The Compensation Committee then established the following performance payout scale for each Company and individual performance goals for fiscal 2019: ◾ 50% if the threshold goal was achieved ◾ 100% if the target goal was achieved ◾ 150% if the over-perform goal was achieved ◾ 200% if the maximum goal was achieved If the threshold performance goal for a particular target was not achieved, no incentive bonus would be paid with respect to that target. The performance adjustment factors are determined using straight-line interpolation when our actual performance falls between two performance goals. | |||||||||
Step Four: Assess Performance Against Targets and Determine Payouts | For fiscal 2019, the Compensation Committee confirmed that the Company achieved $97.1 million in Consolidated Adjusted EBITDA, $111.4 million in US Ops Adjusted EBITDA, $9.0 million in net Synergy Achievement, and Net Sales growth vs. competition of 12%, resulting in a weighted average percentage of achievement of Company goals of 190%. For Mr. Kimmell and Mr. Lyall, the Compensation Committee did not set specific individual goals and instead deemed the individual goal portion of their annual incentive bonuses met at the same level of achievement of Company goals. Based on these results, the Compensation Committee confirmed the performance adjustment factor to be applied to each NEOs target incentive amount to be as follows: Mr. Anderson, Mr. Yost, and Ms. Hough 190%; Mr. Kimmel and Mr. Lyall 200%. | |||||||||
The following table shows each named executive officer’s base salary, incentive target percentage of base salary, and target and maximum bonus amounts. The table also shows each officer’s actual fiscal 2019 bonus.
Name | Base Salary ($) | Incentive Target Percentage (%) | Target Incentive Amount ($) | Performance Payout (% Of Target) | Actual Fiscal 2019 Incentive Bonus $ | ||||||||||||||||||||
Keith Anderson | 625,000 | 100 | 625,000 | 190 | 1,187,500 | ||||||||||||||||||||
Mark Yost | 475,000 | 80 | 380,000 | 190 | 722,000 | ||||||||||||||||||||
Laurie Hough | 375,000 | 75 | 281,250 | 190 | 534,375 | ||||||||||||||||||||
Joe Kimmell | 250,000 | 75 | 187,500 | 200 | 375,000 | ||||||||||||||||||||
Wade Lyall | 250,000 | 75 | 187,500 | 200 | 375,000 | ||||||||||||||||||||
Jon Pilarski
|
| 229,500
|
|
| 30
|
|
| 68,850
|
|
| 125
|
|
| 86,062
|
| ||||||||||
EXCHANGE OF LEGACY CHAMPION HOLDINGS MANAGEMENT INCENTIVE UNITS FOR SKYLINE CHAMPION SHARES
In connection with the Exchange, the Company exchanged the vested and unvested Class C units and unvested Class A units in Champion Holdings held by NEOs for unrestricted (in the case of vested Class C units) and restricted shares of the Company, which are governed by the terms of stock restriction agreements (“SRAs”). The restricted shares that were received in exchange for Class C units in Champion Holdings are subject to performance- and time-based vesting conditions, and the restricted shares that were exchanged for Class A units in Champion Holdings are subject to time-based vesting conditions.
The time-vesting restricted shares retained the same time-vesting schedule that had applied to the Class C units and Class A units, respectively, which for the Class C units was vesting at 20% per year over a five-year period, and which, for the Class A units, was vesting at 50% on each of the first and second anniversaries of thefollow-on offering event (as defined below). The agreements governing the Class C units and Class A units in Champion Holdings also provided for accelerated vesting in connection with a change of control of Champion Holdings. The Class C unit agreements were amended prior to the Exchange to clarify that the Exchange would not be considered a change of control, but otherwise retained the ability for Class C units of Champion Holdings to undergo accelerated vesting upon a change of control. This accelerated vesting provision was retained in the corresponding SRAs.
In addition, and in connection with the Exchange, the agreements governing the Class C units of Champion Holdings were amended to provide that certainfollow-on public offerings of the Company’s stock would cause the unvested time-vesting Class C units of Champion Holdings to undergo accelerated vesting. This accelerated vesting provision was retained in the corresponding SRAs.
2019 Proxy Statement | SKYLINE CHAMPION 23
COMPENSATION DISCUSSION AND ANALYSIS
Vesting of the performance-vesting portion of the Class C units in Champion Holdings was subject to the achievement of certain return thresholds in connection with a change of control. As discussed above with respect to the time-vesting Class C units, the agreements governing the Class C units were amended to clarify that the Exchange would not be considered a change of control. The performance-vesting conditions were retained in the SRAs, but were amended to be based on meeting specified per share volume weighted average price (“VWAP”) targets within the time period beginning on the 120th day following afollow-on public offering of the Company’s stock and ending on the 179th day following suchfollow-on public offering, or upon a change of control, each as defined in the SRAs.
During the three months ended September 29, 2018, a significant portion of the outstanding performance- and time-vesting restricted shares that were received in exchange for Class C units in Champion Holdings vested in conjunction with twofollow-on public offerings, the first of which occurred on August 7, 2018 (the“follow-on offering event”), and the second of which occurred on September 25, 2018 (the “secondary offering”). In advance of, and in connection with, the secondary offering, the Company amended the SRAs applicable to the restricted shares that were exchanged for the Class C units to expand the time period during which the VWAP targets could be measured to include the date of the secondary offering. The Company determined that there was no change in the incremental fair value of such restricted shares as a result of such amendments.
Champion Holdings granted to Ms. Hough and Messrs. Kimmell and Lyall Class A units the day before the effective date of the Exchange. However, the grant date fair value of the Class A unit awards was determined by reference to the closing price of the Company’s common stock on the effective date of the Exchange, and the Company (as opposed to Champion Holdings) took the accounting charge with respect to such grants. As a result, from an accounting perspective, the awards were granted on the effective date of the Exchange.
The table below summarizes (i) the incremental fair value of the Class C unit awards that were modified as a result of the Exchange, and (ii) the grant date fair value of the Class A unit awards that were exchanged for restricted shares of the Company, in each case using fair values up to and including the closing stock price on the effective date of the Exchange (June 1, 2018) of $33.39.
Name | Value of Class C Unit | Value of Class A Unit | ||||||||
Keith Anderson | 25,595,927 | — | ||||||||
Mark Yost | 10,201,618 | — | ||||||||
Laurie Hough | 3,574,180 | 1,930,109 | ||||||||
Joe Kimmell | 3,693,535 | 1,206,114 | ||||||||
Wade Lyall
|
| 3,693,535
|
|
| 1,206,114
|
| ||||
We grant long-term equity awards to tie our executives’ long-term compensation directly to the Company’s stock price and to drive the achievement of our strategic goals. We also believe that long-term equity awards are an important retention tool.
In fiscal 2019, following the Exchange, we granted each of our named executive officers three types of long-term equity awards.
| 1) | Stock options – comprising approximately 1/3 of the total long-term equity grant, |
| 2) | Performance stock units (“PSUs”)* – comprising approximately 1/3 of the total long-term equity grant, and |
| 3) | Restricted stock units (“RSUs”) – comprising approximately 1/3 of the total long-term equity grant. |
| * | Note: The value of these awards reflected in the table below on page 26 and in the Summary Compensation Table on page 30 is the grant date fair value determined for accounting purposes using the Monte Carlo simulation model, which applies a valuation factor to the target award to estimate the probable outcome of the performance conditions and resulted in a lower grant date fair value than the target value described above. |
All of our long-term equity grants were made pursuant to the Company’s 2018 Equity Incentive Plan (“Equity Incentive Plan”).
In determining the number of options, PSUs, and RSUs to award, the Compensation Committee considered the named executive officer’s role at the Company; benchmarking data; our recent financial performance; the performance of our common stock; the fair market value, expense and dilutive effect of any potential awards; succession planning; and the importance of retaining the officer’s services. The Compensation Committee also solicited the advice of its independent compensation consultant and the opinion of the Company’s CEO except with respect to the awards to the CEO. The CEO generally gives the Compensation Committee an initial recommendation for annual long-term equity awards for the other named executive officers. The Compensation Committee reviews this recommendation and makes its own independent determination.
24 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Stock Options
Each stock option represents the right to purchase one share of our common stock at the exercise, or “strike,” price. Except in the case of certain incentive stock options, the Equity Incentive Plan requires that the strike price of a stock option be no less thanone-hundred percent of the closing price of a share of the Company’s common stock as reported on the New York Stock Exchange on the date of the stock option grant. However, the Equity Incentive Plan also permits the Compensation Committee to choose a higher strike price. The Committee generally has a practice of selecting a strike price that is equal to the greater of the volume-weighted average price (“VWAP”) or the fair market value (at market closing) of our common stock on the grant date. The Compensation Committee generally believes that the volume-weighted average price is more representative of the value of our common stock on the grant date than a price at any single point and time because it incorporates all trades made on the grant date. However, in order to avoid granting any below fair market value stock options (which is expressly prohibited in our Equity Incentive Plan), in the event that our VWAP is lower than the closing price, the Compensation Committee has a practice of granting the options with an exercise price equal to the closing price on the date of grant. With respect to the stock options that were granted to the NEOs on January 3, 2019, the Compensation Committee approved using a VWAP equal to all of the trades of the Company’s common stock for the 15 trading days ending on January 2, 2019. The strike price calculated through this method is greater than the closing price of a share of our common stock on the date of grant.
Subject to continued employment by or service to the Company on each vesting date, our option awards generally vest in equal annual installments on each of the first three anniversaries of the vesting commencement date. The awards expire on the tenth anniversary of the grant date. In addition, if the NEO’s employment or other service relationship with the Company or any of the Company’s subsidiaries is terminated without “cause” (as defined in the Equity Incentive Plan) or if the NEO resigns employment for “good reason” (as defined in the option award agreement), then the nextone-third of shares subject to the stock option that would have vested had such NEO remained employed or in service shall vest upon such termination of employment or service. Further, the unvested portion of the stock option shall vest in full upon the NEO’s termination of employment or service due to death or disability (“disability” as defined in the Equity Incentive Plan).
The NEO’s stock option award agreement also incorporates provisions with respect to perpetual confidentiality, as well asnon-competition and solicitation provisions that apply during employment and for eighteen months following the NEO’s termination of employment. A breach by the NEO of such provisions could result in the NEO’s termination of employment for cause and the termination of the stock option award.
We believe that granting stock options supports ourpay-for-performance philosophy by aligning management and shareholder interests. That is, our executives only realize gains to the extent our share price rises over that of the strike price, thereby tying compensation that can be realized to stock price appreciation. In addition to promoting alignment of management and shareholder interests, the three-year vesting schedule andten-year exercise term of our options ensures that our executives are appropriately focused on Skyline Champion’s long-term strategic goals. This vesting schedule also operates as a retention tool.
Performance Stock Units
PSUs may vest at the conclusion of a three-year performance period on the basis of the Company’s achievement of selectedpre-established performance goals. Depending on the level of achievement, PSUs represent the right to receive between 0% and 150% of a targeted number of shares of our common stock. For PSUs granted in fiscal 2019, the Compensation Committee used a relative total shareholder return as the PSU performance measure. Performance was measured using the Company’s percentile ranking within a performance peer group comprising the following companies: Cavco Industries, Inc., Beazer Homes USA, Inc., Century Communities, Inc., LGI Homes, Inc., M/I Homes, Inc., M.D.C Holdings, Inc., Meritage Home Corporation, NCI Building Systems, Inc., Quanex Building Products Corporation, TRI Pointe Group, Inc., and William Lyon Homes.
The funding formula governing the earnout of the PSUs is set forth below.
| Percentile Rank | Payout% | |||
Threshold | 50th | 50% | ||
Target | 65th | 100% | ||
Maximum | 80th | 150% | ||
The actual payout percentage is determined using straight-line interpolation for performance that falls between the threshold and the target levels or between the target and the maximum levels. If the threshold performance goal is not achieved, the PSUs do not vest and no shares will be earned. For fiscal 2019 PSUs will vest, if at all, at the end of the three-year performance period concluding on July 1, 2021. The PSUs will also vest upon a change in control (as such term is defined in the PSU award agreement) provided that the NEO is employed by or otherwise providing services to the Company on the date of such change in control.
2019 Proxy Statement | SKYLINE CHAMPION 25
COMPENSATION DISCUSSION AND ANALYSIS
In addition, if the NEO’s employment or other service relationship with the Company or any of the Company’s subsidiaries is terminated without “cause” (as defined in the Equity Incentive Plan) or if the NEO resigns employment for “good reason” (as defined in the PSU award agreement), in either case prior to the vesting of the PSUs, a specified percentage of the PSUs as described in the PSU award agreement shall remain outstanding and eligible to vest based on actual performance for one year following such termination of employment or service.
The NEO’s PSU award agreement also incorporates provisions with respect to perpetual confidentiality, as well asnon-competition and solicitation provisions that apply during employment and for eighteen months following the NEO’s termination of employment. A breach by the NEO of such provisions could result in the NEO’s termination of employment for cause and the termination of the PSU award.
The Compensation Committee considers PSUs to be a key component of ourpay-for-performance philosophy because the PSUs directly tie the amount of equity that can be earned to Skyline Champion’s shareholder return, which directly aligns the interests of our executives and our shareholders. For this reason, the Compensation Committee believes relative total shareholder return to be an appropriate reflection of the Company’s performance. In addition, the multi-year performance period serves as a retention tool and ensures that our executives are appropriately focused on Skyline Champion’s long-term strategic and financial goals.
Restricted Stock Units
The Company granted RSUs that, subject to continued employment by or other service to the Company on each vesting date, generally vest in equal installments on each of the first three anniversaries of the vesting commencement date to deliver a meaningful long- term incentive that balances risk and potential reward. These awards also serve as an effective incentive for our superior executive performers to remain with the Company and continue such performance. RSU awards are only earned if the individual continues to be employed by or otherwise provides service to the Company through the applicable vesting dates of the awards.
In addition, if the NEO’s employment or other service relationship with the Company or any of the Company’s subsidiaries is terminated without “cause” (as defined in the Equity Incentive Plan) or if the NEO resigns employment for “good reason” (as defined in the RSU award agreement), then the nextone-third of RSUs that would have vested had such NEO remained employed or in service shall vest upon such termination of employment or service. Further, the unvested RSUs subject to the award shall vest upon the NEO’s termination of employment or service due to death or disability (“disability” as defined in the Equity Incentive Plan). Delivery of the shares underlying the vested RSUs will occur upon the earlier of the third anniversary of the grant date or the occurrence of a change in control (as such term is defined in the RSU award agreement).
The NEO’s RSU award agreement also incorporates provisions with respect to perpetual confidentiality, as well asnon-competition and solicitation provisions that apply during employment and for eighteen months following the NEO’s termination of employment. A breach by the NEO of such provisions could result in the NEO’s termination of employment for cause and the termination of the RSU award.
Fiscal 2019 Long-Term Equity Awards
In fiscal 2019, as noted below, the Compensation Committee approved stock option, PSU, and RSU awards to our named executive officers as part of our annual long-term equity award process.
Name | Grant Date Fair Value of Stock Options ($) | Grant Date Fair Value of PSUs ($) | Grant Date Fair Value of RSUs ($) | Total Grant Date Fair Value ($) | ||||||||||||
Keith Anderson | 171,938 | 158,375 | 534,000 | 864,313 | ||||||||||||
Mark Yost | 65,336 | 60,183 | 202,920 | 328,439 | ||||||||||||
Laurie Hough | 51,581 | 47,513 | 160,200 | 259,294 | ||||||||||||
Joe Kimmell | 22,924 | 21,115 | 71,200 | 115,239 | ||||||||||||
Wade Lyall
|
| 22,924
|
|
| 21,115
|
|
| 71,200
|
|
| 115,239
|
| ||||
Each of the NEOs was issued awards under the Equity Incentive Plan for the first time and as such no historical data is available to be reported for periods prior to fiscal 2019.
26 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
As our executives assume more responsibility, we generally increase the percentage of their compensation that is performance-based. We do not have apre-established policy or target for allocation between specific compensation components. The following charts, however, show that the majority of target total direct compensation for both our CEO and our other named executive officers as a group is not fixed but rather is variable and will be earned or paid, as applicable, based on Company and/or individual performance and/or stock price. The following charts and tables reflect the target total direct compensation (base salary, target annual incentive bonus and long-term equity grants (in the case of PSUs, assuming target performance) set by the Compensation Committee.
| CEO Annual Total Direct Compensation | Average NEO Annual Total Direct Compensation | |
 | ||
The table below illustrates how the target annual total direct compensation set by the Compensation Committee for each of our continuing named executive officers was allocated between fixed and variable compensation for fiscal 2019, as well as the breakdown of variable compensation that was based on annual and long-term Company performance and/or stock price. Note that due to theone-time nature of the event, the information in the graphs above and table below do not include the value of the exchange or grant of Class C units and Class A units in Champion Holdings for restricted and unrestricted shares of the Company that took place in connection with the Exchange.
| Percentage of Annual Total Direct Compensation | Percentage of Annual Variable Compensation | |||||||||||||||
| Fixed | Variable | Annual | Long-Term | |||||||||||||
Keith Anderson | 30 | % | 70 | % | 42 | % | 58 | % | ||||||||
Mark Yost | 40 | % | 60 | % | 53 | % | 47 | % | ||||||||
Laurie Hough | 41 | % | 59 | % | 52 | % | 48 | % | ||||||||
Joe Kimmell | 45 | % | 55 | % | 62 | % | 38 | % | ||||||||
Wade Lyall
|
| 45
| %
|
| 55
| %
|
| 62
| %
|
| 38
| %
| ||||
EMPLOYMENT AGREEMENTS
As part of the Exchange transition process, the Company entered into employment agreements with Keith Anderson, Laurie Hough, and Mark Yost. As part of Mr. Yost’s promotion to CEO, the Company anticipates revising his current employment agreement. Neither Mr. Kimmell nor Mr. Lyall is party to an employment agreement with the Company.
The employment agreements were entered into with each of Messrs. Anderson and Yost and Ms. Hough as of June 4, 2018. The employment agreements provide for a base salary, annual target and maximum bonus opportunities, participation in the
2019 Proxy Statement | SKYLINE CHAMPION 27
COMPENSATION DISCUSSION AND ANALYSIS
Company’s broad-based employee benefit plans, severance benefits in the event of certain types of termination of employment (as described in more detail under “Potential Payments Upon Termination orChange-in-Control”), and reimbursement of reasonable business-related expenses (subject to any limitations or restrictions imposed by our Board).
SEVERANCE ARRANGEMENTS
The Company may consider providing Messrs. Kimmell and Lyall with severance benefits under the terms of the Champion Home Builders, Inc. Separation Allowance Plan (“Separation Plan”). The Separation Plan applies broadly to eligible participants who have at least twelve months service with the Company and allows for management discretion in determining, on acase-by-case basis, a separation allowance and a period of benefits continuance in the event the participant’s employment is involuntarily terminated by the Company. The Separation Plan generally provides for severance payments based on the recipient’s position and years of service with the Company and excludes from participation any executive officer or other person with an individual separation agreement or other written agreement that provides for post-termination benefits. The Exchange Agreement provides that Mr. Pilarski will be entitled to severance if his employment is terminated by the Company other than for cause within 12 months after the consummation of the Exchange.
BENEFIT, RETIREMENT AND DEFERRED COMPENSATION PLANS
Our executive officers participate in the same employee benefit plans that are made available to Skyline Champion employees generally. We do not provide any perquisites to our executive officers. These benefits are intended to be part of a competitive compensation package.
Our currently employed NEOs are eligible to participate in our 401(k) plan (the “401(k) Plan”) on the same terms as are generally provided to our full-time U.S. salaried employees. In fiscal 2019, the Company approved an amendment to the 401(k) Plan to provide Company matching contributions in respect of a portion of the participants’ elective deferrals under the 401(k) Plan. In addition, Skyline Corporation sponsored and maintained the Skyline Corporation 1989 Deferred Compensation Plan (the “Deferred Compensation Plan”) for certain employees of Skyline Corporation. The Company assumed sponsorship of the Deferred Compensation Plan in connection with the Exchange. Mr. Pilarski is the only NEO who is a participant in the Deferred Compensation Plan. The 401(k) Plan and the Deferred Compensation Plan are described in the footnotes and text that accompany the compensation tables that follow this Compensation Discussion and Analysis.
PROHIBITION ON HEDGING AND PLEDGING
The Company has adopted as part of the Insider Trading Policy a prohibition of all Skyline Champion associates from engaging in any hedging or pledging transactions involving Skyline Champion stock. This prohibition applies to both our named executive officers and ournon-employee directors.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
We consider objectives such as attracting, retaining and motivating leaders when we design our executive compensation programs. We also consider thetax-deductibility of compensation, but it is not our sole consideration. U.S. tax reform which became effective in 2017 expanded the types of compensation that are subject to limitations on deductibility, consequently, we expect that tax deductibility will be less of a consideration with respect to our program design for our named executive officers in the future.
28 SKYLINE CHAMPION | 2019 Proxy Statement
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Skyline Champion Corporation Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into Skyline Champion’s Annual Report on Form10-K for the fiscal year ended March 30, 2019.
THE COMPENSATION COMMITTEE
Gary E. Robinette, Chair
Timothy Bernlohr
Michael Kaufman
2019 Proxy Statement | SKYLINE CHAMPION 29
Summary Compensation Table for Fiscal 2019
The table below shows the compensation paid to or earned by our named executive officers in fiscal 2019, 2018 and 2017.
Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Stock Awards ($) (3) | Option Awards ($) (4) | Non-Equity Incentive Plan Compensation ($) (5) | Change in ($) | All Other Compensation | Total ($) | ||||||||||||||||||||||||||||||||||||
Keith Anderson CEO |
| 2019 |
| 520,833 |
| — |
| 26,288,302 |
| 171,938 |
| 1,187,500 |
| — |
| — |
| 28,168,573 | |||||||||||||||||||||||||||
Laurie Hough CFO |
| 2019 |
| 312,500 |
| — |
| 5,712,002 |
| 51,581 |
| 534,375 |
| — |
| 2,596 | (6) |
| 6,613,054 | ||||||||||||||||||||||||||
Mark Yost President—US Ops |
| 2019 |
| 395,833 |
| — |
| 10,464,721 |
| 65,336 |
| 722,000 |
| — |
| 2,375 | (6) |
| 11,650,265 | ||||||||||||||||||||||||||
Joe Kimmell RVP—US Northeast Region |
| 2019 |
| 208,333 |
| — |
| 4,991,964 |
| 22,924 |
| 375,000 |
| — |
| 1,731 | (6) |
| 5,599,952 | ||||||||||||||||||||||||||
Wade Lyall RVP—US South Region |
| 2019 |
| 208,333 |
| — |
| 4,991,964 |
| 22,924 |
| 375,000 |
| — |
| — |
| 5,598,221 | |||||||||||||||||||||||||||
Richard W. Florea Former Skyline Corporation President and CEO |
| 2019 |
| 61,800 |
| — |
| — |
| — |
| — |
| — |
| 582,400 | (7) |
| 644,200 | ||||||||||||||||||||||||||
| 2018 |
| 309,475 |
| — |
| 184,500 |
| 181,373 |
| 209,351 |
| — |
| — |
| 884,699 | ||||||||||||||||||||||||||||
| 2017 |
| 369,000 |
| 14,000 |
| 179,000 |
| 170,000 |
| — |
| — |
| — |
| 732,000 | ||||||||||||||||||||||||||||
Jon S. Pilarski Former Skyline Corporation Chief Financial Officer |
| 2019 |
| 229,500 | (2) |
| — |
| — |
| — |
| 86,062 |
| 15,138 | (8) |
| 1,587 | (6) |
| 332,287 | ||||||||||||||||||||||||
| 2018
|
|
| 191,544 |
| — |
| — |
| — |
| 62,805 |
| — |
| — |
| 254,349 | |||||||||||||||||||||||||||
| (1) | Mr. Florea ceased serving as CEO of Skyline Corporation upon the consummation of the Exchange, and his employment with Skyline Corporation terminated at that same time. The salary figure for Mr. Florea shown in this table for fiscal 2019 represents the salary earned by Mr. Florea for the portion of fiscal 2019 during which he was employed by Skyline Corporation. Messrs. Anderson, Yost, Kimmell and Lyall and Ms. Hough each commenced employment with the Company on June 1, 2018, and salary figures reflected in the summary compensation table for each such NEO reflects base salary earned from that date through the end of fiscal 2019. |
| (2) | Mr. Pilarski ceased serving as CFO of Skyline Corporation upon the consummation of the Exchange, and continued to be employed by the Company through the remainder of fiscal 2019. The salary figure for Mr. Pilarski shown in this table for fiscal 2019 represents all base salary earned by Mr. Pilarski for fiscal 2019. |
| (3) | Amounts in this column represent the aggregate grant date fair value of restricted stock (including Class A units of Champion Holdings exchanged for restricted stock of the Company), RSU, and PSU awards granted in the relevant fiscal year computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 718, Compensation – Stock Compensation (“ASC 718”), disregarding the effects of estimated forfeitures, together with the incremental fair value associated with the modification and exchange of Class C unit awards of Champion Holdings for restricted shares in connection with the Exchange. See “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Exchange of Legacy Champion Holdings Management Incentive Units for Skyline Champion Shares” above. For each NEO, the incremental fair value associated with the modification and exchange of Class C unit awards of Champion Holdings for restricted shares in connection with the Exchange is as follows: (i) Mr. Anderson: $25,595,927; (ii) Ms. Hough: $3,574,180; (iii) Mr. Yost: $10,201,618; and (iv) Messrs. Kimmell and Lyall: each $3,693,535. For each NEO who received from Champion Holdings a grant of Class A units, the grant date fair value of such awards (determined by reference to the closing price of a share of our common stock on June 1, 2018) is as follows: (i) Ms. Hough: $1,930,109; and (ii) Messrs. Kimmell and Lyall: each $1,206,114. The grant date fair value of the PSUs was calculated based on the probable outcome of applicable performance conditions, which assume that the target level of performance is achieved, and for awards made for fiscal 2019, if performance vesting conditions were assumed to be achieved at maximum, the grant date fair values would instead be as follows: (i) Mr. Anderson: $237,563; (ii) Ms. Hough: $71,269; (iii) Mr. Yost: $90,274; and (iv) Messrs. Kimmell and Lyall: each $31,673. For the assumptions made in the valuation of these RSU, PSU and restricted stock (with respect to Class A units of Champion Holdings) awards in fiscal 2019, see Note 13 to the Company’s audited consolidated financial statements included in Item 15 of the Company’s Annual Report on Form10-K for fiscal 2019. For the assumptions made in the valuation of these restricted stock awards in fiscal 2018 and 2017 see Note 9 to Skyline Corporation’s consolidated financial statements (unaudited) included in Skyline Corporation’s Quarterly Report on Form10-Q for the quarter ended March 3, 2018 and Note 13 to Skyline Corporation’s audited consolidated financial statements included in Item 8 of Skyline Corporation’s Annual Report on Form10-K for fiscal 2017. |
| (4) | Amounts in these this column represent the aggregate grant date fair value of stock option awards granted in the relevant fiscal year computed in accordance with ASC 718, disregarding the effects of estimated forfeitures. For the assumptions made in the valuation of these stock and option awards in fiscal 2019, see Note 13 to the Company’s audited consolidated financial statements included in Item 15 of the Company’s Annual Report on Form10-K for fiscal 2019. For the assumptions made in the valuation of these stock option awards in fiscal 2018 and 2017 see Note 9 to Skyline’s consolidated financial statements (unaudited) included in Skyline Corporation’s Quarterly Report on Form10-Q for the quarter ended March 3, 2018 and Note 13 to Skyline Corporation’s audited consolidated financial statements included in Item 8 of Skyline Corporation’s Annual Report on Form10-K for fiscal 2017. |
30 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION TABLES
| (5) | Amounts represent bonuses earned in fiscal 2019 under the Company’s Bonus Plan. See “Compensation Discussion and Analysis—What We Pay and Why: Elements of Compensation—Annual incentive bonus” above. |
| (6) | Effective January 1, 2019, the Company began matching a certain percentage of participant contributions to the Company’s 401(k) plan. These amounts represent the matching contributions made by the Company to the NEO’s 401(k) plan account for the period beginning on January 1, 2019 and ending on March 30, 2019. See “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Additional Information—Retirement and Deferred Compensation Plans” above. |
| (7) | Reflects severance of $556,200 paid to Mr. Florea in fiscal 2019, as well as a $26,200 dividend paid to Mr. Florea in fiscal 2019 with respect to his incentive equity in Skyline Corporation. The dividend amount had not previously been factored into the grant date fair value of such incentive equity. |
| (8) | Reflects the aggregate change in the actuarial present value of Mr. Pilarski’s accumulated benefit under the Deferred Compensation Plan measured from April 1, 2018 to March 30, 2019. The change in actuarial present value of such benefit is due to the decrease in the period of time until payments begin under the Deferred Compensation Plan. Details on the Deferred Compensation Plan can be found below under the heading “Nonqualified Deferred Compensation Plan.” |
Grants of Plan-Based Awards in Fiscal 2019
The following table lists grants of plan-based awards to each of our named executive officers during fiscal 2019.
Grant | Estimated Future Payouts Non-Equity Incentive Plan |
Estimated Future Payouts Equity Incentive Plan | All Other Number of Of Stock | All Other Number of Options | Exercise ($/Sh) (5) | Grant Date Of Stock and Awards ($) (6) | ||||||||||||||||||||||||||||||||||||||||||
Name | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||
Keith Anderson |
| 312,500 |
|
| 625,000 |
|
| 1,250,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||
| 06/01/18 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 25,595,927 | (7) | ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| 21,875 |
|
| 43,750 |
|
| 65,625 |
|
| — |
|
| — |
|
| — |
|
| 158,375 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 37,500 |
|
| — |
|
| — |
|
| 534,000 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 43,750 |
|
| 15.00 |
|
| 171,938 |
| ||||||||||||||||
Laurie Hough |
| 140,625 |
|
| 281,250 |
|
| 562,500 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||
| 06/01/18 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,574,180 | (7) | ||||||||||||||||
| 06/01/18 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 57,805 |
|
| — |
|
| — |
|
| 1,930,109 | (8) | ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| 6,563 |
|
| 13,125 |
|
| 19,688 |
|
| — |
|
| — |
|
| — |
|
| 47,513 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 11,250 |
|
| — |
|
| — |
|
| 160,200 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 13,125 |
|
| 15.00 |
|
| 51,581 |
| ||||||||||||||||
Mark Yost |
| 190,000 |
|
| 380,000 |
|
| 760,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||
| 06/01/18 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 10,201,618 | (7) | ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| 8,313 |
|
| 16,625 |
|
| 24,938 |
|
| — |
|
| — |
|
| — |
|
| 60,183 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 14,250 |
|
| — |
|
| — |
|
| 202,920 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 16,625 |
|
| 15.00 |
|
| 65,336 |
| ||||||||||||||||
Joe Kimmell |
| 93,750 |
|
| 187,500 |
|
| 375,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||
| 06/01/18 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,693,535 | (7) | ||||||||||||||||
| 06/01/18 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 36,122 |
|
| — |
|
| — |
|
| 1,206,114 | (8) | ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| 2,917 |
|
| 5,833 |
|
| 8,750 |
|
| — |
|
| — |
|
| — |
|
| 21,115 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,000 |
|
| — |
|
| — |
|
| 71,200 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,833 |
|
| 15.00 |
|
| 22,924 |
| ||||||||||||||||
Wade Lyall |
| 93,750 |
|
| 187,500 |
|
| 375,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||
| 06/01/18 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,693,535 | (7) | ||||||||||||||||
| 06/01/18 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 36,122 |
|
| — |
|
| — |
|
| 1,206,114 | (8) | ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| 2,917 |
|
| 5,833 |
|
| 8,750 |
|
| — |
|
| — |
|
| — |
|
| 21,115 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,000 |
|
| — |
|
| — |
|
| 71,200 |
| ||||||||||||||||
| 01/03/19 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,833 |
|
| 15.00 |
|
| 22,924 |
| ||||||||||||||||
Richard W. Florea |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||||||
Jon S. Pilarski |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||||||
2019 Proxy Statement | SKYLINE CHAMPION 31
COMPENSATION TABLES
| (1) | Amounts in these columns represent amounts payable at threshold, target and max under the terms of the Bonus Plan bonuses with respect to fiscal 2019. See “Compensation Discussion and Analysis—What We Pay and Why: Elements of Compensation—Annual incentive bonus” above. |
| (2) | Amounts in these columns represent shares that may vest in respect of PSUs at threshold, target and maximum levels depending on the achievement of certain total shareholder return performance metrics. See “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Long-term equity awards—Performance Stock Units.” |
| (3) | Amounts in this column represent (i) the number of RSUs granted to each NEO in fiscal 2019, which are subject to the vesting conditions described above in “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Fiscal 2019 long-term equity awards—Restricted Stock Units,”, and (ii) the number of shares of restricted stock granted to each of Ms. Hough and Messrs. Kimmell and Lyall in respect of their Class A units in Champion Holdings, which are subject to the vesting conditions described above in Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Exchange of Legacy Champion Holdings Management Incentive Units for Skyline Champion Shares.” |
| (4) | Represents stock options granted to the NEOs in fiscal 2019, which are subject to the vesting conditions described above under “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Long-term equity awards—Stock Options.” |
| (5) | The exercise price is equal to the VWAP (as defined above) of the all trades of the Company’s common stock for the 15 trading days ending January 2, 2019, and such VWAP is greater than the closing price of a share of the Company’s common stock on the date of grant. |
| (6) | Reflects the grant date fair value of stock option, RSU and PSU awards granted in fiscal 2019 determined in accordance with ASC 718. Also includes the incremental fair value of restricted shares of our common stock that were granted to the NEOs in exchange for Class C units of Champion Holdings. See footnotes (3) and (4) to the Summary Compensation Table. |
| (7) | Represents the incremental fair value associated with the modification of awards of Class C units in Champion Holdings that were exchanged for restricted shares of the Company in connection with the Exchange. See “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Exchange of Legacy Champion Holdings management Incentive Units for Skyline Champion Shares” above and footnote (3) to the Summary Compensation Table. |
| (8) | Represents grant date fair value of restricted shares granted in respect of Class A units of Champion Holdings, determined in accordance with ASC 718. |
32 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION TABLES
Outstanding Equity Awards at Fiscal 2019 Year End
The following table lists outstanding equity awards previously granted to our named executive officers as of March 30, 2019. Neither Mr. Florea nor Mr. Pilarski held outstanding equity awards in the Company as of March 30, 2019, and accordingly are not included in the table.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of (#) (1) | Option ($) (2) | Option Expiration Date | Number of (#) | Market Value or Units of ($) (4) | Equity Number of (#) (5) | Equity Market or ($) (6) | ||||||||||||||||||||||||||||
Keith Anderson | — | 43,750 | $ | 15.00 | 1/3/2029 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | 37,500 | (3) | 712,500 | — | — | ||||||||||||||||||||||||||||
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
43,750 |
|
|
831,250 |
| |||||||||||||
Laurie Hough | — | 13,125 | $ | 15.00 | 1/3/2029 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | 11,250 | (3) | 213,750 | — | — | ||||||||||||||||||||||||||||
| — | — | — | — | — | 13,125 | 249,375 | ||||||||||||||||||||||||||||||
| — | — | — | — | 57,805 | (7) | 1,098,295 | — | — | ||||||||||||||||||||||||||||
Mark Yost | — | 16,625 | $ | 15.00 | 1/3/2029 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | 14,250 | (3) | 270,750 | — | — | ||||||||||||||||||||||||||||
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
16,625 |
|
|
315,875 |
| |||||||||||||
Joe Kimmell | — | 5,833 | $ | 15.00 | 1/3/2029 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | 5,000 | (3) | 95,000 | — | — | ||||||||||||||||||||||||||||
| — | — | — | — | — | — | 5,833 | 110,827 | |||||||||||||||||||||||||||||
| — | — | — | — | 36,122 | (7) | 686,318 | — | — | ||||||||||||||||||||||||||||
Wade Lyall | — | 5,833 | $ | 15.00 | 1/3/2029 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | 5,000 | (3) | 95,000 | — | — | ||||||||||||||||||||||||||||
| — | — | — | — | — | — | 5,833 | 110,827 | |||||||||||||||||||||||||||||
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
36,122 |
(7) |
|
686,318 |
|
|
— |
|
|
— |
| |||||||||||||
| (1) | Represents options to purchase common stock granted to each NEO under the Company’s 2018 Equity Incentive Plan, which are, subject to the NEO’s continued employment by or service to the Company on each vesting date, scheduled to vest in equal annual installments on each of the first three anniversaries of July 1, 2018. See “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Long-term equity awards—Stock Options” above. |
| (2) | The exercise price is equal to the VWAP (as defined above) of the all trades of the Company’s common stock for the 15 trading days ending January 2, 2019, and such VWAP is greater than the closing price of a share of the Company’s common stock on the date of grant. |
| (3) | Represents RSUs granted to each NEO under the Company’s 2018 Equity Incentive Plan, which are, subject to the NEO’s continued employment by or service to the Company on each vesting date, scheduled to vest in equal annual installments on each of the first three anniversaries of July 1, 2018. See “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Fiscal 2019 long-term equity awards—Restricted Stock Units” above. |
| (4) | The amounts in this column have been calculated by multiplying $19.00 (the closing price of the Company’s common stock on the last trading day of fiscal 2019, which was March 29, 2019) by the number of shares of stock underlying the RSU award. |
| (5) | Represents the number of PSUs that may be earned by each NEO under the Company’s 2018 Equity Incentive Plan assuming target performance is achieved. See “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Fiscal 2019 long-term equity awards—Performance Stock Units” above. |
| (6) | The amounts in this column have been calculated by multiplying $19.00 (the closing price of the Company’s common stock on the last trading day of fiscal 2019, which was March 29, 2019) by the number of shares of stock underlying the award. |
| (7) | Reflects restricted shares of the Company’s common stock that were exchanged for Class A units of Champion Holdings. 50% of such restricted shares are, subject to continued employment by the NEO on each such vesting date, scheduled to vest on each of August 7, 2019 and August 7, 2020. See “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Exchange of Legacy Champion Holdings Management Incentive Units for Skyline Champion Shares” above. |
2019 Proxy Statement | SKYLINE CHAMPION 33
COMPENSATION TABLES
Option Exercises and Stock Vested in Fiscal 2019
The following table includes information with respect to the options exercised by, and the RSUs vested in, for our named executive officers during fiscal 2019.
| Option Awards | Stock Awards | |||||||||||||||||||
Name | Number of Shares Acquired on Exercise (a) (#) | Value Realized on Exercise (b) ($) | Number of Shares Acquired on Vesting (c) (#) | Value Realized on (d) ($) | ||||||||||||||||
Keith Anderson
|
|
—
|
|
|
—
|
|
|
1,463,707
|
|
|
44,211,510
|
| ||||||||
Laurie Hough
|
|
—
|
|
|
—
|
|
|
203,137
|
|
|
5,993,030
|
| ||||||||
Mark Yost
|
|
—
|
|
|
—
|
|
|
579,803
|
|
|
17,939,448
|
| ||||||||
Joe Kimmell
|
|
—
|
|
|
—
|
|
|
110,618
|
|
|
3,249,129
|
| ||||||||
Wade Lyall
|
|
—
|
|
|
—
|
|
|
110,618
|
|
|
3,249,129
|
| ||||||||
Richard W. Florea
|
|
265,000
|
|
|
6,140,700
|
|
|
42,000
|
|
|
1,402,380
|
| ||||||||
Jon S. Pilarski
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||
| (a) | Represents the number of shares of common stock underlying stock options exercised during fiscal 2019. |
| (b) | Amounts were calculated based on difference between (i) the closing price of the Company’s common stock on the exercise date and (ii) the exercise price of the stock options. |
| (c) | Represents the number of restricted shares of the Company’s common stock that vested during fiscal 2019 under the terms of the SRAs. |
| (d) | Amounts were calculated by multiplying the closing price of the Company’s common stock on the vesting date by the number of shares acquired on vesting. |
Nonqualified Deferred Compensation Plan
Pursuant to the Deferred Compensation Plan, participants in this plan (or their estates or beneficiaries) will commence receiving payments of deferred compensation in fixed amounts no later than ninety (90) days following the participant’s retirement, permanent disability or death. If a participant’s employment is terminated due to “retirement” (as defined in the Deferred Compensation Plan) on or after the participant’s eligibility date that is listed in Exhibit A to the Deferred Compensation Plan, the Company will begin paying in monthly installments to the participant a fixed annual deferred compensation amount as set forth in the Deferred Compensation Plan, such annual amount to be paid for a period of ten years following the participant’s retirement.
Mr. Pilarski is a participant in the Deferred Compensation Plan and is entitled to annual deferred compensation of $60,000. As of September 4, 2018, the record dateend of fiscal 2019, Mr. Pilarski was eligible to receive amounts deferred under the Deferred Compensation Plan which are due to him as a result of his retirement when he reaches age 62. The Exchange constituted a change in control of Skyline Corporation for purposes of the Deferred Compensation Plan and, in connection with the Exchange, Mr. Pilarski became fully vested in his benefits under the Deferred Compensation Plan.
The following table provides the present value of the accumulated benefits under the Deferred Compensation Plan for Mr. Pilarski.
Name | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($) (1) | Payments Made During Last Fiscal Year ($) | ||||||||||
Jon S. Pilarski | 1989 Deferred Compensation Plan | — | 388,446 | — | ||||||||||
| (1) | In the event of death following retirement, Mr. Pilarski’s beneficiary is entitled to $40,000 per year for the remaining portion of theten-year payout period following death. The figures in this table assume that Mr. Pilarski will not receive the death benefit amount during any portion of the time that he is receiving payments under the Deferred Compensation Plan. |
34 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION TABLES
Potential Payments Upon Termination or Change in Control
We are party to employment agreements with Messrs. Anderson and Yost and Ms. Hough. Messrs. Kimmel and Lyall may be entitled to severance benefits under the Separation Plan, and Mr. Pilarski may be entitled to severance benefits under the Exchange Agreement, each as described above. The equity awards held by our NEOs also have certain termination protections and certain awards are subject to accelerated vesting on a change in control. This section describes the payments and benefits that may be payable upon certain terminations of employment or a change of control and the events that trigger them. For ease of reference, this section uses the abbreviation “CIC” for the 2018 Annual Meeting,term “change in control.”
Other than the Separation Plan, our payment obligations under each employment or equity award agreement are contingent upon the NEO satisfying the following obligations:
| ◾ | During his or her employment and for 18 months following his or her termination of employment, the NEO must comply with the provisions of a covenant not to compete. |
| ◾ | During his or her employment and for 18 months following his or her termination of employment, the NEO may not solicit or induce our associates to leave us or hire any of our associates. |
| ◾ | During his or her employment and at all times subsequent to the last day of his or her employment, the NEO must hold in strict confidence and safeguard any and all protected information, including our trade secrets. |
| ◾ | The NEO must return our property and must execute an agreement releasing us from any claims. |
TERMINATION SCENARIOS THAT CAN TRIGGER PAYMENTS AND BENEFITS
There are three categories of events related to a termination of employment that can trigger payments or other benefits to our NEOs: (i) death and disability; (ii) involuntary termination; and (iii) change of control (followed by an involuntary termination). The following chart describes each category.
Category | Specific Event | Requirements and payments | ||
Death or Disability | Death | Upon the termination of Messrs. Anderson and Yost and Ms. Hough’s employment as a result of death, they are each entitled to earned but unpaid base salary, reimbursement of business expenses, and payment of annual bonus compensation earned in the year preceding death, but not yet paid as of such NEO’s death. Further, the unvested portion of the stock option held by the NEO shall vest in full upon the NEO’s termination of employment or service due to death. | ||
| Disability | In connection with a termination of employment due to disability, the NEO would become entitled to the same payments (including accelerated vesting of his or her incentive equity award) as described under “Death” in the preceding row, as well as any benefits to which the executive may become (or to which he or she may have already been entitled) pursuant to the Company’s short- and long-term disability plans in effect from time to time. | |||
Involuntary Termination | For Cause | Termination for cause occurs when we decide to terminate a NEO based on our good faith determination that one of certain events have occurred. These events are described in detail in the Mr. Anderson’s, Mr. Yost’s and Ms. Hough’s employment agreements. Except for base salary that is earned, but not yet paid on the date of such termination, and reimbursements for business expenses, we will not owe any payments to a NEO as a result of a termination for cause. |
2019 Proxy Statement | SKYLINE CHAMPION 35
COMPENSATION TABLES
Category | Specific Event | Requirements and payments | ||
| Without Cause | Termination by us without cause under Mr. Anderson’s, Mr. Yost’s, and Ms. Hough’s employment agreements occurs when we terminate the NEO’s employment for any reason other than for cause or disability. Pursuant to their respective employment agreements, in the event Mr. Anderson, Mr. Yost, or Ms. Hough is terminated by the Company without cause, he or she will be provided the following severance benefits: (i) continued payment of their annual base salary for a period of twelve months following the date of termination, (ii) the annual bonus that was awarded but has not yet been paid in the year prior to the year of termination, and (iii) continued participation in, and partial subsidy of the premium cost of, any employer sponsored benefit plans for a period of twelve months following the date of termination. The foregoing severance payments are subject to the named executive officer executing a general release of claims for the benefit of the Company. None of the employment agreements provide a guaranteed term of employment, nor do they provide taxgross-ups on any compensation. However, if the NEO’s employment or other service relationship with the Company or any of the Company’s subsidiaries is terminated without cause (as defined in the Equity Incentive Plan), then the nextone-third of shares subject to the stock option and the nextone-third of RSUs, respectively, that would have vested had such NEO remained employed or in service shall vest upon such termination of employment or service. As separately described in the PSU award agreement, a specified percentage of PSUs (as described in the PSU agreement) shall remain outstanding and eligible to vest based on actual performance for one year following such termination of employment or service. In addition, if Messrs. Kimmell’s or Lyall’s employment with the Company is involuntarily terminated by the Company, then they may be considered for severance benefits under the Separation Plan. The Separation Plan applies broadly to eligible participants who have at least twelve months service with the Company and allows for management discretion in determining, on acase-by-case basis, a separation allowance and a period of benefits continuance in the event the participant’s employment is involuntarily terminated by the Company without cause. For Regional Vice Presidents, the guidelines under the Separation Plan provide for two weeks of severance for every year of service to the Company, with a minimum separation allowance of 12 weeks, and a maximum of 39 weeks. Outplacement services are also suggested under the Separation Plan. Pursuant to the Exchange Agreement, if Mr. Pilarski’s employment is terminated, other than for cause, within 12 months after the consummation of the Exchange, then he will be entitled to severance pay equal to 52 weeks of pay, at the base rate of pay in effect for Mr. Pilarski at the time of termination. Mr. Pilarski’s employment was terminated by the Company without cause on May 31, 2019, and as a result he will receive the severance payments described in this paragraph. | |||
Involuntary Termination | For Good Reason | Termination by Mr. Anderson, Ms. Yost, or Ms. Hough for good reason is subject to the occurrence of certain conditions described in the NEO’s respective employment agreement. Pursuant to their respective employment agreements, in the event Mr. Anderson, Mr. Yost or Ms. Hough terminate their employment with the Company for good reason, they will be provided with the same severance benefits to which they would be entitled in the event of their termination of employment with the Company without cause (including accelerated vesting of certain incentive equity awards). | ||
| Without Good Reason | Termination by the NEO without good reason occurs when the NEO terminates his or her employment for any reason other than good reason, as described above. The effective date of termination is the date set forth in a notice from the NEO to us, which notice must be given to us at least 45 days prior to the effective date of termination. Except for base salary that is earned, but not yet paid on the date of such termination, and reimbursements for business expenses, we will not owe any payments to an NEO as a result of a termination without good reason. |
36 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION TABLES
Category | Specific Event | Requirements and payments | ||
Change In Control | The PSUs held by the NEOs vest upon a change in control (as such term is defined in the PSU award agreement) provided that the NEO is employed on the date of such change in control. Subject to the NEO’s continuous employment on the date of the change in control, the restricted shares held by the NEOs and that were exchanged for units in Champion Holdings also vest upon a change in control (as such term is defined in the SRA for such restricted shares) with the vesting of restricted shares that were exchanged for Class C performance-vesting units of Champion Holdings subject to the achievement of certain performance thresholds in connection with the change in control. | |||
Other | In addition, under his employment agreement, Mr. Florea was entitled to receive severance benefits if his employment was terminated under certain circumstances. If Skyline Corporation terminated Mr. Florea’s employment without cause (as defined in Mr. Florea’s employment agreement) in contemplation of change in control (as defined in the employment agreement) or without cause within six months after the occurrence of a change in control, then he was entitled to the following severance benefits: (i) his then-current base salary for an18-month period; and (ii) all stock options granted to Mr. Florea on June 25, 2015 would have immediately vested. These severance benefits would have been payable to Mr. Florea in equal quarterly installments with the first installment payable on the first day of the seventh month after the date on which his employment was terminated. However, if Mr. Florea accepted other employment or other consulting engagements within the above-referenced18-month severance period, his remaining severance payments would have been reduced by the total amount of the base salary earned by or paid to Mr. Florea in connection with his subsequent employment or engagement. As described above, Mr. Florea’s employment was terminated on June 1, 2018 in connection with the Exchange. At the time of his termination of employment, he entered into a separation and release agreement, the terms of which amended the severance provisions of his employment agreement to provide for a lump sum severance payment (as opposed to installment payments) equal to $556,200, which was the equivalent of 18 months’ of Mr. Florea’s annual base salary at the time of his termination of employment. In addition, Mr. Florea held stock options and restricted stock awards in Skyline Corporation. The compensation committee of Skyline Corporation exercised its discretion to cause all such awards that were unvested immediately prior to the Exchange to become vested in connection with the Exchange. See the Option Exercises and Stock Vested in Fiscal 2019 table above for additional details regarding these awards. Finally, as discussed above, Mr. Pilarski is a participant in the Deferred Compensation Plan, which provides that rights of participants in the Deferred Compensation Plan shall vest at the time of a transaction constituting a change in control of Skyline Champion (change of control defined as a change in ownership of more than 50% of Skyline Champion’s stock in one transaction). Because the Exchange constituted a change in control of Skyline Corporation for purposes of the Deferred Compensation Plan, Mr. Pilarski became fully vested in his benefits under the Deferred Compensation Plan at the time of the Exchange. |
2019 Proxy Statement | SKYLINE CHAMPION 37
COMPENSATION TABLES
ESTIMATED SEVERANCE AND CHANGE IN CONTROL PAYMENTS
The following table and footnotes present potential payments to each named executive officer under various circumstances as if the named executive officer’s employment had been terminated on March 30, 2019, the last day of fiscal 2019 and/or if a change in control had occurred on such date. The table below does not include figures with respect to accelerated vesting of restricted shares that were exchanged in connection for Class C units in Champion Holdings because all such shares had vested in full prior to March 30, 2019. The table below also does not include figures with respect to the accelerated vesting of Mr. Pilarski’s benefits under the Deferred Compensation Plan because all such benefits were vested at the time of the Exchange.
Name | Death or Disability | Change in Control | Involuntary Termination Without Cause | Involuntary Termination With Good Reason | ||||||||||||
Keith Anderson | ||||||||||||||||
Salary Continuation | — | — | 625,000 | (4) | 625,000 | (4) | ||||||||||
Health insurance subsidy | — | — | 6,826 | (5) | 6,826 | (5) | ||||||||||
Annual Incentive Bonus | — | — | — | — | ||||||||||||
Long Term Equity Award
|
| 887,500
| (1)
|
| 831,250
| (2)
|
| 295,832
| (6)
|
| 295,832
| (6)
| ||||
Laurie Hough | ||||||||||||||||
Salary Continuation | — | — | 375,000 | (4) | 375,000 | (4) | ||||||||||
Health insurance subsidy | — | — | — | |||||||||||||
Annual Incentive Bonus | — | — | — | — | ||||||||||||
Long Term Equity Award | 266,250 | (1) | 249,375 | (2) | 88,750 | (6) | 88,750 | (6) | ||||||||
Restricted shares exchanged for Class A units of Champion Holdings
|
| —
|
|
| 1,098,295
| (3)
|
| —
|
|
| —
|
| ||||
Mark Yost | ||||||||||||||||
Salary Continuation | — | — | 475,000 | (4) | 475,000 | (4) | ||||||||||
Health insurance subsidy | — | 10,753 | (5) | 10,753 | (5) | |||||||||||
Annual Incentive Bonus | — | — | — | — | ||||||||||||
Long Term Equity Award
|
| 337,250
| (1)
|
| 315,875
| (2)
|
| 112,414
| (6)
|
| 112,414
| (6)
| ||||
Joe Kimmell | ||||||||||||||||
Salary Continuation | — | — | 86,544 | (7) | — | |||||||||||
Annual Incentive Bonus | — | — | — | — | ||||||||||||
Long Term Equity Award | 118,332 | (1) | 110,827 | (2) | 39,430 | (6) | — | |||||||||
Restricted shares exchanged for Class A units of Champion Holdings
|
| —
|
|
| 686,318
| (3)
|
| —
|
|
| —
|
| ||||
Wade Lyall | ||||||||||||||||
Salary Continuation | — | — | 144,240 | (8) | — | |||||||||||
Annual Incentive Bonus | — | — | — | — | ||||||||||||
Long Term Equity Award | 118,332 | (1) | 110,827 | (2) | 39,430 | (6) | — | |||||||||
Restricted shares exchanged for Class A units of Champion Holdings
|
| —
|
|
| 686,318
| (3)
|
| —
|
|
| —
|
| ||||
Jon Pilarski | ||||||||||||||||
Salary Continuation | — | — | 229,500 | (9) | — | |||||||||||
Annual Incentive Bonus | — | — | — | — | ||||||||||||
Long Term Equity Award
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| ||||
| (1) | Represents the combined value of unvested RSUs and stock options that become vested as described herein. The value of the unvested RSUs was calculated by multiplying the closing market price of our common stock on March 29, 2019 ($19.00) by the number of unvested RSUs. The value of unvested stock options that become vested as described herein was calculated by multiplying the number of shares underlying the unvested stock options by the difference between the closing market price of our common stock on March 29, 2019 and the option exercise price ($15.00). |
38 SKYLINE CHAMPION | 2019 Proxy Statement
COMPENSATION TABLES
| (2) | Represents the unvested number of PSUs at target held by the NEO on March 30, 2019 multiplied by the closing market price of our common stock on March 29, 2019 ($19.00). PSUs are the only awards that by their terms have single trigger vesting. |
| (3) | Represents as of March 30, 2019 the number of unvested restricted shares of Company common stock that were exchanged for Class A units of Champion Holdings multiplied by the closing market price of our common stock on March 29, 2019 ($19.00). |
| (4) | Represents 12 months’ of payments equal to the NEO’s rate of pay based on the NEO’s annual base salary rate of pay on March 30, 2019. |
| (5) | Represents the Company’s portion of the medical and dental premiums for the12-month severance period. No value is reported for Ms. Hough who, as of March 30, 2019, did not participate in the Company’s medical and dental plans. |
| (6) | Representsone-third of the shares underlying the NEO’s stock option (which was unvested on March 30, 2019) multiplied by the positive difference of the closing price of a share of the Company’s common stock as of May 29, 2019 over the exercise price of such stock option, plus the product ofone-third of the NEO’s RSUs (which was unvested on March 30, 2019) multiplied by the closing price of a share of the Company as of May 29, 2019. |
| (7) | Represents severance under the Separation Plan (assuming the Company would exercise its discretion to pay to Mr. Kimmell severance benefits thereunder upon the Company’s termination of his employment without cause) based on two weeks of severance for every year of Mr. Kimmell’s service to the Company (i.e., 9 years), with a minimum of 12 weeks severance, and a maximum of 39 weeks severance. |
| (8) | Represents severance under the Separation Plan (assuming the Company would exercise its discretion to pay to Mr. Lyall severance benefits thereunder upon the Company’s termination of his employment without cause) based on two weeks of severance for every year of Mr. Lyall’s service to the Company (i.e., 15 years), with a minimum of 12 weeks severance, and a maximum of 39 weeks severance. |
| (9) | Represents 12 months’ of continuation payments based on Mr. Pilarski’s annual base salary rate of pay on March 30, 2019. |
The following information about the relationship between the compensation of our employees and the compensation of Mr. Anderson, our Chief Executive Officer, is provided in compliance with the requirements of Item 402(u) of RegulationS-K of the Securities Exchange Act of 1934 (“Item 402(u)”).
We took the following steps in identifying the median of the annual total compensation of all our employees. We determined that, as of March 30, 2019, the last day of our 2019 fiscal year, our employee population was equal to approximately 7,000 individuals, all located in the United States and Canada. This number includes all the individuals determined to be employees for federal tax purposes, whether full-time, part-time, or temporary, as of that date.
We next identified the employee receiving the median amount of compensation in our employee population. To do this we compared the amount of base salary and wages, paid time off and cash incentive compensation received by each employee, other than Mr. Anderson, as reflected in our payroll records. This compensation measure was annualized for permanent employees who were employed on the measuring date but who did not work for the full calendar year. The compensation measure was consistently applied to all of our employees.
As required by Item 402(u), once we identified our median employee we calculated that employee’s annual total compensation for the 2019 fiscal year in the same manner as we calculated Mr. Anderson’s total fiscal 2019 compensation reported in the Summary Compensation Table on page 30.
In fiscal 2019, the estimated median of the annual total compensation of our employees, excluding Mr. Anderson, determined as described in the preceding paragraph, was $35,691. Mr. Anderson’s total compensation for fiscal 2019, as reported in the Summary Compensation Table on page 30 of this proxy statement, was $28,168,573. The resulting estimated ratio of the annual total compensation of Mr. Anderson to the median of the annual total compensation of all employees was 789 to 1. We should note, however, that in connection with the Exchange, the Company exchanged the unvested Class C units held by Mr. Anderson in Champion Holdings for time-vesting restricted shares and performance-vesting restricted shares subject to SRAs. In connection with the exchange of Class C units for restricted shares, the awards governing the Class C units were modified as described above under “Compensation Discussion and Analysis—Components of Skyline’s Executive Compensation Program, What We Pay and Why: Elements of Compensation—Exchange of Legacy Champion Holdings management Incentive Units for Skyline Champion Shares.” Thisone-time modification resulted in an incremental fair value of nearly $26 million. If we were to exclude the incremental fair value of thisone-time modification, Mr. Anderson’s total compensation would be $2,572,646, which would result in a ratio of 72 to 1.
The pay ratio provided above was calculated in a manner consistent with Item 402(u) and we believe it constitutes a reasonable estimate. However, as contemplated by Item 402(u), we relied on methods and assumptions that we determined to be appropriate for calculating the pay ratio at Skyline Champion. Other public companies will use methods and assumptions that differ from the ones we chose but are appropriate for their circumstances. Given the various methodologies that public companies are permitted to use to determine an estimate of their pay ratios, the estimated pay ratio reported above should not be used as a basis for comparison between companies.
2019 Proxy Statement | SKYLINE CHAMPION 39
Ournon-employee directors are compensated for their services as described below. Mr. Anderson and directors associated with Principal Shareholders did not receive any compensation for serving as a director.
Director Compensation Program
The following table describes the components of ournon-employee director compensation program for fiscal 2019. The Compensation Committee periodically reviews this program and recommends changes to the Board as appropriate.
Compensation Element | Director Compensation Program (a) | |
Director Annual Cash Retainer | $65,000 | |
Annual Equity Retainer | $100,000 (b) | |
Board Chair Annual Retainer | $115,000 | |
Committee Chair Fee | $18,500 for the Audit Committee $18,500 for the Compensation Committee $15,000 for the Nominating and Governance Committee | |
Committee Member Fee | $10,000 for the Audit Committee $10,000 for the Compensation Committee $7,500 for the Nominating and Governance Committee |
| (a) | In addition to the compensation elements disclosed above, we reimburse our directors for travel and other necessary business expenses incurred in the performance of their services to us. |
| (b) | The annual equity retainer consists of RSUs that vest on theone-year anniversary of the vesting commencement date. RSUs granted tonon-employee directors in fiscal 2019 will vest on July 1, 2019, generally subject to continued service through such date. RSUs will vest in full in the event a director’s service is terminated by the Company without “cause” or by reason of the director’s “disability” (as each such term is defined in the Equity Incentive Plan) or if the director’s service terminates due to the director’s death. Delivery of the shares underlying the vested RSUs shall occur upon the earlier of (i) the first anniversary of the grant date, (ii) the first anniversary of death or disability (in the event the director’s service is terminated as a result thereof), and (iii) the occurrence of a change in control (as defined in the RSU award agreement). Thenon-employee director’s RSU award agreement also incorporates provisions with respect to perpetual confidentiality. A breach by thenon-employee director of such provisions could result in suchnon-employee director’s termination of RSU for cause and the termination of the RSU award. |
40 SKYLINE CHAMPION | 2019 Proxy Statement
DIRECTOR COMPENSATION
Non-Employee Director Compensation in Fiscal 2019
The following table provides each element ofnon-employee director compensation for fiscal 2019.
Name | Fees Earned or Paid in Cash ($) (a) | Stock Awards ($) (b) | Total ($) | |||||||||
Timothy Bernlohr | 131,855 | 94,938 | 226,793 | |||||||||
Michael Berman | 33,500 | 94,938 | 128,438 | |||||||||
Michael Bevacqua (c) | — | — | — | |||||||||
Michael Kaufman (c) | — | — | — | |||||||||
Daniel R. Osnoss (c) | — | — | — | |||||||||
Gary Robinette | 88,251 | 94,938 | 183,189 | |||||||||
Ian Samuels (c)(d) | — | — | — | |||||||||
David Smith (c)(d) | — | — | — | |||||||||
Michael Treisman (c)(d) | — | — | — | |||||||||
Richard W. Florea | 56,979 | 94,938 | 151,917 | |||||||||
John C. Firth | 113,792 | 94,938 | 208,730 | |||||||||
Arthur J. Decio (e) | 5,000 | — | 5,000 | |||||||||
Samuel S. Thompson (e) | 13,000 | — | 13,000 | |||||||||
John W. Rosenthal, Sr. (e) | 11,500 | — | 11,500 | |||||||||
Matthew W. Long (e) | 12,250 | — | 12,250 | |||||||||
Thomas L. Eisele (e) | 10,250 | — | 10,250 | |||||||||
| (a) | Represents the cash compensation earned in fiscal 2019 for Board, Committee, and Board and Committee chair service. |
| (b) | Represents the aggregate grant date fair value of the stock awards made in fiscal 2019 as determined in accordance with ASC Topic 718, disregarding the effects of estimated forfeitures. In January 2019, we granted 6,667 shares of restricted common stock to eachnon-employee director then in office. |
| (c) | Directors affiliated with our Principals Shareholders did not receive compensation for their services. |
| (d) | Messrs. Samuels, Smith, and Treisman left the Board on August 23, 2018. |
| (e) | Messrs. Decio, Thompson, Rosenthal, Long, and Eisele left the Board on June 1, 2018 in connection with the Exchange. |
The following table provides information on the number of shares underlying unvested RSUs and the aggregate option awards held by each of ournon-employee directors as of March 30, 2019:
Name | Restricted Stock Units (#) | Outstanding Option Awards (#) | ||||||
Timothy Bernlohr | 6,667 | — | ||||||
Michael Berman | 6,667 | — | ||||||
John Firth | 6,667 | — | ||||||
Richard Florea | 6,667 | — | ||||||
Gary Robinette | 6,667 | — | ||||||
2019 Proxy Statement | SKYLINE CHAMPION 41
DIRECTOR COMPENSATION
Share Ownership of Certain Beneficial Owners
As of May 24, 2019, our directors and executive officers beneficially owned including share based awards expected to vest or will become exercisable within 60 days, in the aggregate, 13,150,1452,724,698 shares of Skyline Champion common stock (or collectively approximately 23.3%4.8% of the outstanding shares of Common Stock).
The following table describes the shares of Skyline Champion common stock that each of the following persons beneficially owned as of September 4, 2018:May 24, 2019:
each of Skyline Champion’s current directors;
Name**
| Position
|
Shares of
| Percent
| |||||||
DIRECTORS: |
| |||||||||
Keith Anderson | Chief Executive Officer, Director |
| 1,227,429 |
|
| 2.2 | % | |||
Timothy Bernlohr | Chairman of the Board, Director |
| 57,298 |
|
| * |
| |||
Michael Berman | Director |
| 6,667 |
|
| * |
| |||
Michael Bevacqua (1) | Director |
| — |
|
| * |
| |||
John C. Firth | Director |
| 17,167 |
|
| * |
| |||
Richard W. Florea | Director |
| 129,648 |
|
| * |
| |||
Michael Kaufman (2) | Director |
| — |
|
| * |
| |||
Daniel R. Osnoss (3) | Director |
| — |
|
| * |
| |||
Gary E. Robinette | Director |
| 57,298 |
|
| * |
| |||
NAMED EXECUTIVE OFFICERS (4): |
| |||||||||
Mark Yost | President—US Operations |
| 509,815 |
|
| * |
| |||
Laurie Hough | Executive Vice President, Chief Financial Officers & Treasurer |
| 259,500 |
|
| * |
| |||
Joe Kimmell | Regional Vice President—US Northeast Region |
| 89,074 |
|
| * |
| |||
Wade Lyall | Regional Vice President—US South Region |
| 131,096 |
|
| * |
| |||
All executive officers and directors of Skyline Champion as a group (16 persons) (5) |
| 2,724,698 |
|
| 4.8 | % | ||||
GREATER THAN 5% SHAREHOLDERS: |
| |||||||||
Wellington Management Group LLP (6) |
| 7,894,705 |
|
| 13.9 | % | ||||
MAK Champion Investment LLC and related investment funds (7) |
| 4,039,759 |
|
| 7.1 | % | ||||
Skyline Champion’s named executive officer;
| ◾ | each of Skyline Champion’s current directors; |
all of Skyline Champion’s current directors and executive officers as a group; and
| ◾ | Skyline Champion’s named executive officers; |
| ◾ | all of Skyline Champion’s current directors and executive officers as a group; and |
each other person known by Skyline to beneficially own more than five percent of the outstanding shares of Skyline common stock.
| ◾ | each other person known by Skyline to beneficially own more than five percent of the outstanding shares of Skyline common stock. |
Information with respect to the directors and executive officers is based on our records and data supplied by each of the directors and executive officers. Information with respect to beneficial owners of more than five percent of the outstanding shares of our common stock is based on filings those persons have made with the SEC.
Name ** | Position | Shares of Common Stock Beneficially Owned | Percent of Class | |||||||||
DIRECTORS: | ||||||||||||
Keith Anderson | Chief Executive Officer, Director | 1,370,974 | 2.4 | % | ||||||||
Timothy Bernlohr | Chairman of the Board, Director | 50,631 | * | |||||||||
Michael Bevacqua (1) | Director | — | — | |||||||||
John C. Firth | Director | 10,500 | * | |||||||||
Richard W. Florea | Director | 165,250 | * | |||||||||
Michael Kaufman (2) | Director | 10,405,817 | 18.4 | % | ||||||||
Daniel R. Osnoss (3) | Director | — | — | |||||||||
Gary E. Robinette | Director | 50,631 | * | |||||||||
Name ** | Position | Shares of Common Stock | Percent of | |||||||||
NAMED EXECUTIVE OFFICERS (4): | ||||||||||||
Jon S. Pilarski (4) | Former Chief Financial Officer | — | * | |||||||||
Jeffery A. Newport (4) | Former Chief Operating Officer | 34,000 | * | |||||||||
Robert C. Davis (4) | | Former Vice President, Manufacturing | | — | * | |||||||
Terence M. Decio (4) | | Former Vice President, Marketing and Sales | | 30,080 | * | |||||||
All executive officers and directors of Skyline as a group (16 persons) (5) | 13,150,145 | 23.3 | % | |||||||||
GREATER THAN 5% SHAREHOLDERS: | ||||||||||||
Centerbridge Capital Partners, L.P. and related investment funds (6) | 10,461,521 | 18.5 | % | |||||||||
MAK Champion Investment LLC and related investment funds (7) | 10,405,817 | 18.4 | % | |||||||||
Sankaty Champion Holdings, LLC and related investment funds (8) | 10,576,720 | 18.7 | % | |||||||||
| * | Indicates less than 1.0% of the total number of outstanding shares of Skyline common stock calculated in accordance with Rule13d-3 under the Exchange Act. |
| ** | Unless otherwise indicated, the address for all persons is P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515 |
| (1) |
|
| (2) |
|
| (3) | Mr. Osnoss, a Senior Managing Director of Centerbridge Partners, L.P. and direct and indirect owner of interests in Centerbridge Capital Partners, L.P., Centerbridge Capital Partners SBS, L.P. and Centerbridge Capital Partners Strategic, L.P. disclaims beneficial ownership of shares owned by such funds, as described in note 6 below, except to the extent of his pecuniary interest therein. The address of Mr. Osnoss is c/o Centerbridge Partners, 375 Park Avenue, New York, New York 10152. |
42 SKYLINE CHAMPION �� | 2019 Proxy Statement
DIRECTOR COMPENSATION
| (4) |
|
| (5) | In addition to the shares held by directors and the Skyline Champion named executive officers identified in the table above, the shares held by Skyline Champion executive officers include |
| (6) | The |
| (7) | The shares included in the table consist of: |
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors,Our executive officers, directors, and persons who beneficially own more than ten percent10% of our common stock are required to file withreport any transactions in our common stock to the SEC initialand to share those reports with us. As a matter of beneficial ownership of our
stock and reports of changes in that beneficial ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by the SEC to furnish us with copies of all Section 16(a) forms they file with the SEC.
Based solely upon a review of the copies of such forms furnished to us and written representations frompractice, we assist our executive officers and directors in preparing and filing these reports. Based solely on a review of these reports or written representations that no other reports were required, we believe that during the year ended March 31, 2018 all Section 16(a) filing requirements applicable to our executive officers, directors and greater than ten percent beneficial owners wereof more than 10% of our common stock complied with on a timely basis.applicable filing requirements during fiscal 2019.
Certain Relationships and Related TransactionsEquity Compensation Plan Information
Management AgreementThe following table provides information as of March 30, 2019, with respect to our equity-based compensation plans under which shares of our common stock have been authorized for issuance.
Champion Holdings was a party to a management agreement with the Principal Shareholders pursuant to which it paid an annual management fee to the Principal Shareholders of $1.5 million plus reimbursable expenses. Under the agreement, the Principal Shareholders provided management, consulting, financial and other advisory services to Champion Holdings. The management agreement was terminated in connection with the completion of the Exchange. No future fees will be due or payable under the management fee agreement.
Registration Rights Agreement
On the Closing Date, the Company, the Principal Shareholders, Champion Holdings and certain other parties entered into a registration rights agreement providing for, among other things, customary demand registration rights in favor of the Principal Shareholders and “piggyback” registration rights in favor of the Principal Shareholders, and Arthur J. Decio.
Investor Rights Agreement
On the Closing Date, the Company, the Principal Shareholders and Champion Holdings entered into an investor rights agreement (the “Investor Rights Agreement”). The Investor Rights Agreement provides for, among other things, certain information rights and certain agreements relating to the composition of the Board of Directors.
Transition Services Agreement
On the Closing Date, the Company and Champion Holdings entered into a transition services agreement, pursuant to which the Company will provide certain services to Champion Holdings beginning on the Closing Date, including accounting and financial reporting services, tax services, cash and capital management services and services relating to Champion Holdings’ members and liquidation.
Any proposed arrangement that could give rise to a conflict of interest in which a director, officer or employee of the Company, any immediate member of their family, or any of their close associates is anticipated to receive a payment or other significant benefit, whether directly or indirectly, from the Company is to be reported to the Company’s legal or human resource department. Any such transaction involving an executive officer, director, or any of their respective immediate family members in which the amount involved exceeds $120,000 and in which any such persons will have (or may be reasonably expected to have) a direct or indirect material interest is to be reported to the Audit Committee for review and approval, except for employment relationships that has been approved by the Compensation Committee.
Plan Category | Number of (A) | Weighted-Average (B) | Number of Securities (C) | |||||||||
Equity compensation plans approved by shareholders | 450,366 | $ | 15.00 | 5,200,562 | ||||||||
Equity compensation plans not approved by shareholders | — | — | — | |||||||||
Total | 450,366 | $ | 15.00 | 5,200,562 | ||||||||
| (1) | ||
Shareholder Proposals
Shareholder Proposals to be Considered for Inclusion in Our Proxy Materials
Pursuant to SEC Rule14a-8, some shareholder proposals may be eligible for inclusion in Skyline Champion’s proxy statement for the 2019 annual meeting of shareholders. To be considered for inclusion in next year’s proxy statement, shareholder proposals must be received by our Secretary at our principal executive offices no later than the close of business on May 8, 2019.
Stockholder Proposals to be Brought Before an Annual Meeting
The Company’s bylaws provide that, for shareholder nominations to the Board or other proposals to be considered at an annual meeting, the shareholder must have been received by us at Secretary, Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515 not earlier than the close of business on the 120th day nor later than the close of business on the 90th day prior to the anniversary date of the prior year’s annual meeting, except that if the annual meeting is set for a date that is not within 30 days before or after such anniversary date, we must receive the notice not later than the close of business on the tenth day following the day on which we first provide notice or public disclosure of the date of such annual meeting. Assuming the date of our 2019 annual meeting is not so advanced or delayed, shareholders who wish to make a proposal at the 2019 annual meeting must notify us no earlier than May 29, 2019 and no later than June 28, 2019. Such notice must provide the information required by our bylaws with respect to each matter the shareholder proposes to bring before the 2019 annual meeting.
Other Shareholder Communications with the Board of Directors
Generally, shareholders who have questions or concerns should contact our investor relations team. For questions and communications shareholders wish to address directly to the Board, shareholders should address such communications to the Board, the particular committee, or particular director, c/o Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515. All such communications should include a representation from the submitting shareholder setting forth the shareholder’s address and the number of shares of Skyline Champion common stock beneficially owned by the shareholder.
The Secretary is primarily responsible for monitoring communications from shareholders and will provide copies or summaries of such communications to the Board, the relevant committee, or the director to whom such communication is addressed, as the Secretary considers appropriate. Each shareholder communication will be forwarded if it relates to a substantive matter and includes suggestions or comments that the Secretary considers to be important for the directors, or director, to know. In general, shareholder communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than shareholder communications relating to personal grievances and matters as to which we tend to receive repetitive or duplicative communications.
The Board will give appropriate attention to written communications on such issues and will respond as appropriate.
“Householding” of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies. Skyline Champion and some brokers “household” proxy materials, delivering a single proxy statement to
| (2) | ||
The weighted-average exercise price is calculated solely on the exercise prices of the outstanding options and does not reflect the shares that will be issued upon the vesting of outstanding awards of performance-based restricted stock units and restricted stock units, which have no exercise price. |
2019 Proxy Statement | SKYLINE CHAMPION 43
multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker or Skyline Champion that they or Skyline Champion will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account, or Skyline Champion if you hold shares directly in your name. You can notify Skyline Champion by sending a written request to Investor Relations, Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515 or by calling (248) 614-8211.
Other Business GENERAL INFORMATION
Other than the matters described in this proxy statement, the Board of Directors knows of no other business to be acted upon at the 2018 Annual Meeting. However, if any other business properly comes before the Annual Meeting, it is the intention of the persons named in the enclosed proxy to vote on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in obtaining the necessary vote. Therefore, whether or not you expect to attend the 2018 Annual Meeting, please sign the proxy and return it in the enclosed envelope. If you need directions to the meeting, please call Skyline Champion’s Investor Relations at (248)614-8211.Voting Information
Shareholders Entitled to Vote | The record date for voting is June 5, 2019. Only shareholders of record at the close of business on June 5, 2019 are entitled to notice of and to vote at the 2019 Annual Meeting and any adjournment or postponement of the meeting. On June 5, 2019 there were 56,657,191 shares of our common stock outstanding. Each share is entitled to one vote on each of the matters to be presented at the 2019 Annual Meeting. There are no cumulative voting rights for the election of directors. The holders of a majority of the outstanding shares of common stock as of the close of business on the record date must either be present in person or represented by proxy to constitute a quorum at the 2019 Annual Meeting. Shares that are present that vote to abstain or do not vote on one or more of the matters to be voted upon are counted as present for establishing a quorum. All votes cast at the 2019 Annual Meeting will be tabulated by Computershare Trust Company, N.A. | |
How to Vote (Record Owners) | Shareholders of record (that is, shareholders who hold their shares in their own name) may vote in any of the following ways: ◾By Internet. You may vote online by accessing www.proxypush.com/SKY and following theon-screen instructions. You will need the Control Number included on the Notice of Internet Availability of Proxy Materials (the “Notice”) or on your proxy card, as applicable. You may vote online 24 hours a day. If you vote online, you do not need to return a proxy card. ◾By Telephone. If you are located in the U.S., you may vote by calling toll free1-866-307-0847and following the instructions. You will need the Control Number included on the Notice or on your proxy card, as applicable. You may vote by telephone 24 hours a day. If you vote by telephone, you do not need to return a proxy card. ◾By Mail. If you requested printed copies of the proxy materials, you will receive a proxy card, and you may vote by signing, dating and mailing the proxy card in the envelope provided. ◾In Person. You may vote in person at the annual shareholders meeting by requesting a ballot from the inspector of election at the meeting. | |
How to Vote (Beneficial Owners) | If your shares are held in “street name” (that is, in the name of a bank, broker, or other holder of record), you may vote in any of the following ways: ◾By Internet. You may vote online by following the instructions provided in the Notice. You will need the Control Number included on the Notice or on your voting instruction form, as applicable. You may vote online 24 hours a day. If you vote online, you do not need to return a voting instruction form. ◾By Telephone. You may vote by telephone by following the instructions provided in the Notice. You will need the Control Number included on the Notice or on your voting instruction form, as applicable. You may vote by telephone 24 hours a day. If you vote by telephone, you do not need to return a voting instruction form. ◾By Mail. If you requested printed copies of the proxy materials, you will receive a voting instruction form, and you may vote by signing, dating and mailing it in the envelope provided. ◾In Person. You must obtain a legal proxy from the organization that holds your shares in order to vote your shares in person at the annual shareholders meeting. Follow the instructions on the Notice to obtain this legal proxy. | |
Deadline for Voting | For both shareholders of record and beneficial owners of shares held in street name, online and telephone voting is available through 11:59 p.m. ET on Monday, July 29, 2019. |
44 SKYLINE CHAMPION | 2019 Proxy Statement
2018 EQUITY INCENTIVE PLAN
SKYLINE CHAMPION CORPORATION
2018 EQUITY INCENTIVE PLANGENERAL INFORMATION
Changing Your Vote |
◾ filing a timely written notice of revocation addressed to the attention of: Secretary, Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515; ◾ mailing a duly executed proxy bearing a later date; ◾ re-voting by Internet or telephone prior to the date and time described in this proxy statement; or ◾ voting in person at the 2018 Annual Meeting and requesting that your proxy be revoked. Only your latest vote will be counted. | |
Effect of Not Voting | Shareholders of Record. If you are a shareholder of record and you: ◾ Do not vote via the internet, by telephone or by mail, your shares will not be voted unless you attend the annual shareholders meeting to vote them in person. ◾ Sign and return a proxy card without giving specific voting instructions, then your shares will be voted in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their discretion on any other matters properly presented for a vote. Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and you do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares generally may vote your shares on routine matters but cannot vote your shares onnon-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on anon-routine matter, the organization will not have the authority to vote your shares on this matter. This is generally referred to as a “brokernon-vote.” | |
Voting Standards | Proposals Two (ratification of EY) and Three (advisory vote on executive compensation) must be approved by the affirmative vote of a majority of the votes cast. Proposal One (election of director) must be approved by the affirmative vote of a plurality of the votes cast. Abstentions and brokernon-votes will not be counted in determining the number of votes cast on Proposals One, Two, or Three. | |
Routine and Non-Routine Proposals | Routine Proposals. Proposal Two (ratification of EY) is considered a routine matter. A broker or other nominee generally may vote on routine matters, and therefore we expect no brokernon-votes in connection with Proposal Two. Non-routine Proposals. Proposals One (election of directors) and Three (advisory vote on executive compensation) are considerednon-routine matters. A broker or other nominee cannot vote without instructions onnon-routine matters, and therefore there may be brokernon-votes on these proposals. | |
Counting the Votes | Representatives from Computershare Trust Company, N.A., our transfer agent, will tabulate the votes and act as inspector of election at the annual shareholders meeting. |
Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.
2019 Proxy Statement | SKYLINE CHAMPION 45
GENERAL INFORMATION
Proxy Information | ||
| Electronic Access to Proxy Materials and Annual Report |
◾ View our proxy materials for the annual shareholders meeting on the internet. ◾ Instruct us to send proxy materials to you by mail or email. Choosing to receive proxy materials by email will save us the cost of printing and mailing documents and will reduce the impact of our annual shareholders meeting on the environment. If you choose to receive future proxy materials by email, you will receive an email message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by email will remain in effect unless and until you rescind it. | |
Proxy Solicitation | Proxies may be solicited, without extra compensation, by officers, agents and employees of Skyline Champion who may communicate with shareholders, banks, brokerage houses and others by telephone, facsimile, email or in person to request that proxies be furnished. All expenses incurred in connection with this solicitation will be paid for by Skyline Champion. | |
“Householding of Proxy Materials” | The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies. Skyline Champion and some brokers “household” proxy materials, delivering a single proxy statement to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker or Skyline Champion that they or Skyline Champion will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account, or Skyline Champion if you hold shares directly in your name. You can notify Skyline Champion by sending a written request to Investor Relations, Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515 or by calling (248)614-8211. | |
Annual Shareholders Meeting Information | ||
Attendance at the Annual Shareholders Meeting | Attendance at the 2019 Annual Meeting will be limited to record or beneficial owners of Skyline Champion common stock as of June 5, 2019 (or their authorized representatives). When you arrive at the meeting, you must present photo identification, such as a driver’s license. If your shares are held by a bank, broker or other nominee, you must also present your bank or broker statement evidencing your beneficial ownership of Skyline Champion’s common stock to gain admission to the 2019 Annual Meeting. Skyline Champion reserves the right to deny admittance to anyone who cannot show sufficient proof of share ownership as of June 5, 2019. Please contact our Investor Relations team at (248)614-8211 if you need to obtain directions on how to attend the 2019 Annual Meeting and vote in person. Cameras, recording devices and other electronic devices will not be permitted at the annual shareholders meeting. | |
Other Matters | We are not aware of any matters that may come before the annual shareholders meeting other than the proposals disclosed in this proxy statement. If other matters do come before the annual shareholders meeting, the named proxies will vote in accordance with their best judgment. | |
Next Year’s Meeting | We plan to hold our 2020 annual shareholders meeting on or about July 30, 2020. | |
The Plan is intended to advance the interests of the Company by providing for the grant to Participants of Stock and Stock-based incentive awards. The purposes of the Plan are to attract, retain, and reward key Employees and Directors of, and consultants and advisors to, the Company and its subsidiaries, to incentivize them to generate shareholder value, to enable them to participate in the growth of the Company and to align their interests with the interests of the Company’s shareholders.
46 SKYLINE CHAMPION | 2019 Proxy Statement
GENERAL INFORMATION
Shareholder Proposal Information | ||
Shareholder Proposals and Other Items of Business |
Shareholder Proposals to be Brought Before an Annual Meeting. The Company’s bylaws provide that, for shareholder nominations to the Board or other proposals to be considered at an annual meeting, the shareholder’s notice of nomination or other proposal must have been timely received by us at Secretary, Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515. In order to be timely, the notice must be received by us not earlier than the close of business on the 120th day nor later than the close of business on the 90th day prior to the anniversary date of the prior year’s annual meeting, except that if the annual meeting is set for a date that is not within 30 days before or after such anniversary date, we must receive the notice not later than the close of business on the tenth day following the day on which we first provide notice or public disclosure of the date of such annual meeting. Assuming the date of our 2020 annual meeting is not so advanced or delayed, shareholders who wish to make a proposal at the 2020 annual meeting must notify us no earlier than April 1, 2020 and no later than May 1, 2020. Such notice must provide the information required by our bylaws with respect to each matter the shareholder proposes to bring before the 2020 annual meeting. All director nominations and proposals must be submitted in writing to our Corporate Secretary at Skyline Champion Corporation, P.O. Box 743, 2520By-Pass Road, Elkhart, Indiana 46515. | |
The Plan will be administered by the Administrator. The Administrator has discretionary authority, subject only to the express provisions of the Plan, to administer and interpret the Plan and any Awards; to determine eligibility for and grant Awards; to determine the exercise price, base value from which appreciation is measured, or purchase price, if any, applicable to any Award; to determine, modify or waive the terms and conditions of any Award; to determine the form of settlement of Awards (whether in cash, shares of Stock, other Awards, or other property); to prescribe forms, rules and procedures relating to the Plan and Awards, including Award agreements; and to otherwise do all things necessary or desirable to carry out the purposes of the Plan or any Award. Determinations of the Administrator made with respect to the Plan or any Award are conclusive and bind all persons.FORWARD-LOOKING STATEMENTS
|
(a)Number of Shares. Subject to adjustment as provided in Section 7(b), the maximum number of shares of Stock that may be delivered in satisfaction of Awards under the Plan is six million (6,000,000) shares. Up to the total number of shares available for awards to employee Participants may be issued in satisfaction of ISOs, but nothing in this Section 4(a) will be construed as requiring that any, or any fixed number of, ISOs be awarded under the Plan. For purposes of this Section 4(a), the number of shares of Stock delivered in satisfaction of Awards will be determined (i) by including shares of Stock withheld by the Company in payment of the exercise price or purchase price of the Award or in satisfaction of tax withholding requirements with respect to the Award, (ii) by including the full number of shares covered by a SAR any portion of which is settled in Stock (and not only the number of shares of Stock delivered in settlement), and (iii) by excluding any shares of Stock underlying Awards settled in cash or that expire, become unexercisable, terminate or are forfeited to or repurchased by the Company without the delivery of Stock. For the avoidance of doubt, the number of shares of Stock available for delivery under the Plan will not be increased by any shares of Stock delivered under the Plan that are subsequently repurchased using proceeds directly attributable to Stock Option exercises.
(b) TheAdministrator may grant Substitute Awards under the Plan. To the extent consistent with the requirements of Section 422 and the regulations thereunder and other applicable legal requirements (including
applicable stock exchange requirements), shares of Stock delivered under Substitute Awards will be in addition to and will not reduce the number of shares of Stock available for Awards under the Plan set forth in Section 4(a). Notwithstanding anything in Section 4(a) to the contrary, if any Substitute Award is settled in cash or expires, becomes unexercisable, terminates or is forfeited to or repurchased by the Company, in each case, without the delivery of shares of Stock, the shares of Stock previously subject to such Award will not be available for future grants under the Plan. The Administrator will determine the extent to which the terms and conditions of the Plan apply to Substitute Awards, if at all.
(c)Type of Shares. Shares delivered by the Company under the Plan may be authorized but unissued shares of Stock or previously issued shares acquired by the Company. No fractional shares will be delivered under the Plan.
(d)Non-Employee Director Limits. The aggregate value of all compensation granted or paid to any Director with respect to any calendar year, including Awards granted under the Plan and cash fees or other compensation paid by the Company to such Director outside of the Plan, in each case, for his or her services as a Director during such calendar year, may not exceed $400,000.00, calculating the value of any Awards based on the grant date fair value in accordance with the Accounting Rules and assuming maximum payout levels for all Awards.
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The Administrator may select Participants from among key Employees and Directors of, and consultants and advisors to, the Company and its subsidiaries. Eligibility for ISOs is limited to employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code. Eligibility for NSOs and SARs is limited to individuals who are providing direct services on the date of grant of the Award to the Company or to a subsidiary of the Company that would be described in the first sentence ofSection 1.409A-1(b)(5)(iii)(E) of the Treasury Regulations.
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(a)All Awards.
(1)Award Provisions. The Administrator will determine the terms of all Awards, subject to the limitations provided herein. By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant will be deemed to have agreed to the terms of the Award and the Plan. Notwithstanding any provision of this Plan to the contrary, Substitute Awards may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator. No term of an Award shall provide for automatic “reload” grants of additional Awards upon exercise of an Option or SAR or otherwise as a term of an Award.
(2)Term of Plan. No Awards may be made after ten years from the Date of Adoption, but previously granted Awards may continue beyond that date in accordance with their terms.
(3)Transferability. Neither ISOs nor, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), other Awards may be transferred other than by will or by the laws of descent and distribution. During a Participant’s lifetime, ISOs (and, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), SARs and NSOs) may be exercised only by the Participant. The Administrator may permit the transfer of Awards other than ISOs, subject to applicable securities and other laws and such limitations as the Administrator may impose.
(4)Vesting, etc. The Administrator shall determine the time or times at which an Award vests or becomes exercisable and the terms on which a Stock Option or SAR remains exercisable. Without limiting the
foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration. Unless the Administrator expressly provides otherwise, however, the following rules will apply if a Participant’s Employment ceases:
(A) Except as provided in (B) and (C) below, immediately upon the cessation of the Participant’s Employment each Stock Option and SAR that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited.
(B) Subject to (C) and (D) below, all vested and unexercised Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of 90 days following such cessation or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.
(C) Subject to (D) below, all vested and unexercised Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment due to his or her death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of one year following such cessation or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.
(D) All Stock Options and SARs (whether or not vested or exercisable) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation of Employment if the termination is for Cause or occurs in circumstances that in the determination of the Administrator would have constituted grounds for the Participant’s Employment to be terminated for Cause.
(5)Recovery of Compensation.Subject to applicable law, the Administrator may provide in any case that any outstanding Award (whether or not vested or exercisable) and the proceeds from the exercise or disposition of any Award or shares of Stock acquired under any Award will be subject to forfeiture and disgorgement to the Company, with interest and other related earnings, if the Participant to whom the Award was granted violates (i) anon-competition,non-solicitation, confidentiality or other restrictive covenant by which he or she is bound or (ii) any Company policy applicable to the Participant that provides for forfeiture or disgorgement with respect to incentive compensation that includes Awards under the Plan. In addition, the Administrator may require forfeiture and disgorgement to the Company of any outstanding Award and the proceeds from the exercise or disposition of any Award or shares of Stock acquired under any Award, with interest and other related earnings, to the extent required by law or applicable stock exchange listing standards, including, without limitation, Section 10D of the Securities Exchange Act of 1934, as amended, or any applicable Company policy. Each Participant, by accepting or being deemed to have accepted an Award under the Plan, agrees to be bound by the forfeiture and disgorgement provisions contained herein and agrees to cooperate fully with the Administrator, and to cause any and all permitted transferees of the Participant to cooperate fully with the Administrator, to effectuate any forfeiture or disgorgement required hereunder, subject to applicable law. Neither the Administrator nor the Company nor any other person, other than the Participant and his or her permitted transferees, if any, will be responsible for any adverse tax or other consequences to a Participant or his or her permitted transferees, if any, that may arise in connection with this Section 6(a)(5).
(6)Taxes.The delivery, vesting and retention of shares of Stock, cash or other property under an Award are conditioned upon full satisfaction by the Participant of all tax withholding requirements with respect to the Award. The Administrator shall prescribe such rules for the withholding of taxes with respect to any Award as it deems necessary. The Administrator may hold back shares of Stock from an Award or permit a
Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements (but not in excess of the maximum withholding amount consistent with the Award being subject to equity accounting treatment under the Accounting Rules).
(7)Dividend Equivalents, Etc.The Administrator may provide for the payment of amounts (on terms and subject to conditions established by the Administrator) in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award;provided,however, that (a) dividends or dividend equivalents relating to an Award that, at the dividend payment date, remains subject to a risk of forfeiture (whether service-based or performance-based) shall be subject to the same risk of forfeiture as applies to the underlying Award and (b) except as contemplated by Section 7 of the Plan, no dividends or dividend equivalents shall be payable with respect to Options or SARs. Any entitlement to dividend equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the requirements of Section 409A. Dividends or dividend equivalent amounts payable in respect of Awards that are subject to restrictions may be subject to such additional limitations or restrictions as the Administrator may impose.
(8)Rights Limited.Nothing in the Plan or any Award will be construed as giving any person the right to be granted an Award or to continued employment or service with the Company or any of its subsidiaries, or any rights as a shareholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in any Award will not constitute an element of damages in the event of the cessation of a Participant’s Employment for any reason, even if such cessation of Employment is in violation of an obligation of the Company or any of its subsidiaries to the Participant.
(9)Coordination with Other Plans.Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or its subsidiaries. For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or its subsidiaries may be settled in Stock (including, without limitation, Unrestricted Stock) if the Administrator so determines, in which case the shares delivered will be treated as awarded under the Plan (and will reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 4).
(10)Section 409A.
(A) Without limiting the generality of Section 11(b) hereof, each Award will contain such terms as the Administrator determines and will be construed and administered such that the Award either qualifies for an exemption from the requirements of Section 409A or satisfies such requirements.
(B) Notwithstanding Section 9 of this Plan or any other provision of this Plan or any Award agreement to the contrary, the Administrator may unilaterally amend, modify or terminate the Plan or any outstanding Award, including but not limited to changing the form of the Award, if the Administrator determines that such amendment, modification or termination is necessary or advisable to avoid the imposition of an additional tax, interest or penalty under Section 409A.
(C) If a Participant is deemed on the date of the Participant’s termination of Employment to be a “specified employee”This proxy statement contains forward-looking statements within the meaning of that term under Section 409A(a)(2)(B), then, with regard to any payment that is considered nonqualified deferred compensation under Section 409A, to the extent applicable, payable on account of a “separation from service”, such payment will be made or provided on the date that is the earlier of (i) the expiration of thesix-month period measured from the date of such “separation from service” and (ii) the date of the Participant’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 6(a)(10)(C) (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such delay) will be paid on the first business day following the expiration of the Delay Period in a lump sum and any
remaining payments due under the Award will be paid in accordance with the normal payment dates specified for them in the applicable Award agreement.
(D) For purposes of Section 409A, each payment made under this Plan will be treated as a separate payment.
(E) With regard to any payment considered to be nonqualified deferred compensation under Section 409A that is payable upon a change in control of the Company or other similar event, to avoid the imposition of an additional tax, interest or penalty under Section 409A, no amount will be payable unless such change in control constitutes a “change in control event” within the meaning ofSection 1.409A-3(i)(5) of the Treasury Regulations.
(b)Stock Options and SARs.
(1)Time and Manner of Exercise.Unless the Administrator expressly provides otherwise, no Stock Option or SAR will be deemed to have been exercised until the Administrator receives notice of exercise in a form acceptable to the Administrator that is signed by the appropriate person and accompanied by any payment required under the Award. Any attempt to exercise a Stock Option or SAR by any person other than the Participant will not be given effect unless the Administrator has received such evidence as it may require that the person exercising the Award has the right to do so.
(2)Exercise Price. The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise must be no less than 100% (in the case of an ISO granted to a10-percent shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the Fair Market Value of the shares of Stock subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant.
(3)Payment of Exercise Price. Where the exercise of an Award is to be accompanied by payment, payment of the exercise price must be made by cash or check acceptable to the Administrator or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of previously acquired unrestricted shares of Stock, or the withholding of unrestricted shares of Stock otherwise deliverable upon exercise, in either case that have a Fair Market Value equal to the exercise price; (ii) through a broker-assisted exercise program acceptable to the Administrator; (iii) by other means acceptable to the Administrator; or (iv) by any combination of the foregoing permissible forms of payment. The delivery of previously acquired shares of Stock in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.
(4)Maximum Term. The maximum term of Stock Options and SARs must not exceed 10 years from the date of grant (or five years from the date of grant in the case of an ISO granted to a10-percent shareholder described in Section 6(b)(2) above).
(5)Repricing.Except in connection with a corporate transaction involving the Company (which term includes, without limitation, any share dividend, share split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation,split-up,spin-off, combination, or exchange of shares) or as otherwise contemplated by Section 7 below, the Company may not, without obtaining shareholder approval, (i) amend the terms of outstanding Stock Options or SARs to reduce the exercise price or base value of such Stock Options or SARs; (ii) cancel outstanding Stock Options or SARs in exchange for Stock Options or SARs with an exercise price or base value that is less than the exercise price or base value of the original Stock Options or SARs; or (iii) cancel outstanding Stock Options or SARs that have an exercise price or base value greater than the Fair Market Value of a share of Stock on the date of such cancellation in exchange for cash or other consideration.
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(a)Mergers, etc. Except as otherwise expressly provided in an Award agreement or by the Administrator, the following provisions will apply in the event of a Covered Transaction:
(1)Assumption or Substitution. If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may provide for (i) the assumption or continuation of some or all outstanding Awards or any portion thereof or (ii) the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.
(2)Cash-Out of Awards.Subject to Section 7(a)(5) below, the Administrator may provide for payment (a“cash-out”), with respect to some or all Awards or any portion thereof, including only the then-vested portion thereof, equal in the case of each affected Award or portion thereof to the excess, if any, of (i) the Fair Market Value of a share of Stock times the number of shares subject to the Award or such portion, over (ii) the aggregate exercise or purchase price, if any, under the Award or such portion (or, in the case of a SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of shares of Stock) and other terms, and subject to such conditions, as the Administrator determines;provided,however, for the avoidance of doubt, that if the per share exercise or purchase price (or base value) of an Award is equal to or greater than the Fair Market Value of a share of Stock, the Award may be cancelled with no payment due hereunder or otherwise in respect of such Award.
(3)Acceleration of Certain Awards.Subject to Section 7(a)(5) below, the Administrator may provide that any Award requiring exercise will become exercisable, in full or in part, and/or that the delivery of any shares of Stock remaining deliverable under any outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated, in full or in part, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the shares of Stock, as the case may be, to participate as a shareholder in the Covered Transaction.
(4)Termination of Awards upon Consummation of Covered Transaction.Except as the Administrator may otherwise determine in any case, each Award will automatically terminate (and in the case of outstanding shares of Restricted Stock, will automatically be forfeited) immediately upon consummation of the Covered Transaction, other than (i) any Award that is assumed or substituted pursuant to Section 7(a)(1) above and (ii) any Award that by its terms, or as a result of action taken by the Administrator, continues following the Covered Transaction.
(5)Additional Limitations. Any share of Stock and any cash or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction. For purposes of the immediately preceding sentence, acash-out under Section 7(a)(2) above or an acceleration under Section 7(a)(3) above will not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition. In the case of Restricted Stock that does not vest and is not forfeited in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such share in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.
(6)Uniform Treatment. For the avoidance of doubt, the Administrator need not treat Participants or Awards (or portions thereof) in a uniform manner, and may treat different Participants and/or Awards differently, in each case, in connection with a Covered Transaction.
(b)Changes in and Distributions With Respect to Stock.
(1)Basic Adjustment Provisions. In the event of a stock dividend, stock split or combination of shares (including a reverse share split), recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of the Accounting Rules, the Administrator shall make appropriate adjustments to the maximum number of shares of Stock specified in Section 4(a) that may be issued under the Plan, and shall make appropriate adjustments to the number and kind of shares or securities underlying Awards then outstanding or subsequently granted, any exercise or purchase prices (or base values) relating to Awards and any other provision of Awards affected by such change.
(2)Certain Other Adjustments. The Administrator may also make adjustments of the type described in Section 7(b)(1) above to take into account distributions to shareholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan, having due regard for the qualification of ISOs under Section 422 and the requirements of Section 409A, to the extent applicable.
(3)Continuing Application of Plan Terms. References in the Plan to shares of Stock will be construed to include any shares or securities resulting from an adjustment pursuant to this Section 7.
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The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if the outstanding shares of Stock are at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived. The Company may require, as a condition to the exercise of an Award or the delivery of shares under an Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violationsection 27A of the Securities Act of 1933, as amended, or any applicable state ornon-U.S. securities law. Any shares of Stock required to be issued to Participants under the Plan will be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration or delivery of share certificates. In the event that the Administrator determines that share certificates will be issued to Participants under the Plan, the Administrator may require that certificates evidencing shares of Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such shares, and the Company may hold the certificates pending lapsesection 21E of the applicable restrictions.
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The Administrator may at any time or times amend the Plan or any outstanding Award for any purposeExchange Act of 1934. Words such as “may”, “will”, “should”, “likely”, “expects”, “intends”, “believes”, “estimates”, “positioned”, “continues”, “maintain”, “remain”, “recurring”, “target”, and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and are based on certain assumptions and expectations which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards;provided,however, that except as otherwise expressly provided in the Plan the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time the Award was granted. Any amendments to the Plan will be conditioned upon shareholder approval only to the extent, if any, such approval is required by law (including the Code) or applicable stock exchange requirements, as determined by the Administrator.
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The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to award a person bonuses or other compensation in addition to Awards under the Plan.
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(a)Waiver of Jury Trial. By accepting or being deemed to have accepted an Award under the Plan, to the maximum extent permitted by law, each Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim will be tried before a court and not before a jury. By accepting or being deemed to have accepted an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers. Notwithstanding anything to the contrary in the Plan, nothing herein is to be construed as limiting the ability of the Company and a Participant to agree to submit disputes arising under the terms of the Plan or any Award made hereunder to binding arbitration or as limiting the ability of the Company to require any eligible individual to agree to submit such disputes to binding arbitration as a condition of receiving an Award hereunder.
(b)Limitation of Liability. Notwithstanding anything to the contrary in the Plan, neither the Company, nor any of its subsidiaries, nor the Administrator, nor any person acting on behalf of the Company, any of its subsidiaries, or the Administrator, will be liable to any Participant, to any permitted transferee, to the estate or beneficiary of any Participant or any permitted transferee, or to any other person by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code, or otherwise with respect to the Award.
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The Administrator may from time to time establish one or moresub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Administrator will establish suchsub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Administrator’s discretion under the Plan as it deems necessary or desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as it deems necessary or desirable. All supplements so established will be deemed to be part of the Plan, but each supplement will apply only to Participants within the affected jurisdiction (as determined by the Administrator).
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(a)Certain Requirements of Corporate Law. Awards will be granted and administered consistent with the requirements of applicable Indiana law relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case as determined by the Administrator.
(b)Other Matters. Except as otherwise provided by the express terms of an Award agreement, under asub-plan described in Section 12 or as provided in Section 13(a) above, the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of or based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof will be governed by and construed in accordance with the domestic substantive laws of the State of Indiana without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.
(c)Jurisdiction. By accepting or being deemed to have accepted an Award, each Participant will be deemed to (a) have submitted irrevocably and unconditionally to the jurisdiction of the federal and state courts located within the geographic boundaries of the United States District Court for the Northern District of Indiana for the purpose of any suit, action or other proceeding arising out of or based upon the Plan or any Award; (b) agree not to commence any suit, action or other proceeding arising out of or based upon the Plan or an Award, except in
the federal and state courts located within the geographic boundaries of the United States District Court for the Northern District of Indiana; and (c) waive, and agree not to assert, by way of motion as a defense or otherwise, in any such suit, action or proceeding, any claim that he or she is not subject personally to the jurisdiction of the above-named courts that his or her property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that the Plan or an Award or the subject matter thereof may not be enforcedrealized. For a more detailed discussion of these factors, see the information in or by such court.
EXHIBIT A
Definition of Terms
The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:
“Accounting Rules”:Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor provision.
“Administrator”: The Compensation Committee, except with respect to such matters that are not delegated to the Compensation Committee by the Board (whether pursuant to committee charter or otherwise). The Compensation Committee (or the Board, with respect to such matters over which it retains authority under the Plan or otherwise) may delegate (i) to one or more of its members (or one or more other members of the Board (including the full Board)) such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the power to grant Awards to the extent permitted by applicable law; and (iii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, the term “Administrator” will include the person or persons so delegated to the extent of such delegation.
“Award”: Any or a combination of the following:
(i) Stock Options.
(ii) SARs.
(iii) Restricted Stock.
(iv) Unrestricted Stock.
(v) Stock Units, including Restricted Stock Units.
(vi) Performance Awards.
(viii) Awards (other than Awards described in (i) through (vi) above) that are convertible into or otherwise based on Stock.
“Board”: The Board of Directors of the Company.
“Cause”: In the case of any Participant who is party to an offer letter or employment or severance-benefit agreement that contains a definition of “Cause,” the definition set forth in such letter or agreement applies with respect to such Participant for purposes of the Plan for so long as such letter or agreement is in effect. In every other case, “Cause” means, as determined by the Administrator, (i) refusal or failure to perform (other than by reason of disability), or material negligence in the performance of, the Participant’s duties and responsibilities to the Company or its subsidiaries, which refusal or failure to perform or material negligence is not cured within 30 days after written notice from the Company or such subsidiaries; (ii) the Participant’s commission of, indictment for, conviction of or plea of guilty or nolo contendere to a felony or any crime involving moral turpitude, fraud, embezzlement or theft; (iii) breach of fiduciary duties (including a violation of the Company’s or any of its subsidiary’s code of ethics) on the part of the Participant; (iv) the Participant’s gross negligence or willful misconduct in the performance of employment, which negligence or misconduct is not cured within 30 days after written notice from the Company, and which willful act or misconduct could reasonably be expected to be injurious to the financial condition or business reputation of the Company or any of its subsidiaries; (v) the
material breach by the Participant of any provision of any agreement to which such Participant and the Company or any or its subsidiaries are party; or (vi) breach by the Participant of the terms of aour most recent Formnon-competition,non-solicitation,10-K confidentiality or other restrictive covenant by which he or she is bound.
“Code”: The U.S. Internal Revenue Code of 1986, as from time to time amended and in effect, or any successor statute as from time to time in effect.
“Compensation Committee”: The Compensation Committee of the Board.
“Company”: Skyline Champion Corporation.
“Covered Transaction”: Any of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company. Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer.
“Date of Adoption”: The earlier of the date the Plan was approved by the Company’s shareholders or adopted by the Board, as determined by the Committee.
“Director”: A member of the Board who is not an Employee.
“Disability”: In the case of any Participant who is a party to an employment or severance-benefit agreement that contains a definition of “Disability,” the definition set forth in such agreement shall apply with respect to such Participant under the Plan for so long as such agreement is in effect. In the case of any other Participant, “Disability” shall mean a disability that would entitle a Participant to long-term disability benefits under the Company’s long-term disability plan to which the Participant participates.
“Employee”: Any person who is employed by the Company or any of its subsidiaries.
“Employment”: A Participant’s employment or other service relationshipfiled with the Company or any of its subsidiaries. Employment will be deemed to continue, unless the Administrator otherwise determines, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to, the Company or any of its subsidiaries. If a Participant’s employment or other service relationship is with any subsidiary of the Company and that entity ceases to be a subsidiary of the Company, the Participant’s Employment will be deemed to have terminated when the entity ceases to be a subsidiary of the Company unless the Participant transfers Employment to the Company or one of its remaining subsidiaries. Notwithstanding the foregoing, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms will be construed to require a “separation from service” (as that term is defined inSection 1.409A-1(h) of the Treasury Regulations, after giving effect to the presumptions contained therein) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company underSection 1.409A-1(h)(3) of the Treasury Regulations. The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed inSection 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred. Any such written election will be deemed a part of the Plan.
“Fair Market Value”: As of a particular date, (i) the closing price for a share of Stock reported on the New York Stock Exchange (or any other national securities exchange on which the Stock is then listed) on that date
or, if no closing price is reported for that date, the closing price on the immediately preceding date on which a closing price was reported or (ii) in the event that the Stock is not traded on a national securities exchange, the fair market value of a share of Stock determined by the Administrator consistent with the rules of Section 422 and Section 409A to the extent applicable.
“ISO”: A Stock Option intended to be an “incentive stock option” within the meaning of Section 422. Each Stock Option granted pursuant to the Plan will be treated as providing by its terms that it is to be an NSO unless,SEC. Our forward-looking statements speak only as of the date of grant, it is expressly designatedthis proxy statement or as an ISO.
“NSO”: A Stock Option that is not intended to be an “incentive stock option” within the meaning of Section 422.
“Participant”: A person who is granted an Award under the Plan.
“Performance Award”: An Award subject to performance vesting conditions, including based on Performance Criteria.
“Performance Criteria”: Specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. A Performance Criterion and any targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss and may be applied to the Participant individually, or to a business unit or division of the Company as a wholedate they are made, and may relatewe undertake no obligation to any or any combination of the following or any other criterion or criteria determined by the Administrator (measured either absolutely or comparatively (including, without limitation, by reference to an index or indices or the performance of one or more companies) and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof and subject to such adjustments, if any, as the Administrator specifies): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on anupdate them.
A COPY OF THE COMPANY’S ANNUAL REPORT ON FORMafter-tax10-K basis; net income; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs,FOR THE YEAR ENDED MARCH 30, 2019 WILL BE SENT WITHOUT CHARGE TO ANY SHAREHOLDER REQUESTING IT IN WRITING FROM: SKYLINE CHAMPION CORPORATION, P.O. BOX 743, 2520split-upsBY-PASS and the like; reorganizations; center openings (including openings in new markets); new service or product lines; or recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings. The Administrator may provide in the case of any Performance Award that one or more of the Performance Criteria applicable to such Award will be adjusted to reflect events (for example, but without limitation, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, and other unusual or infrequently occurring items, and the cumulative effects of tax or accounting changes) occurring during the performance period that affect the applicable Performance Criterion or Criteria.ROAD, ELKHART, INDIANA 46515, ATTN: INVESTOR RELATIONS.
“Plan”: Skyline Champion Corporation 2018 Equity Incentive Plan, as from time to time amended and in effect.
“Restricted Stock”: Stock subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified time or performance or other vesting conditions are not satisfied.
“Restricted Stock Unit”: A Stock Unit that is, or as to which the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified time or performance or other vesting conditions.2019 Proxy Statement | SKYLINE CHAMPION 47
“SAR”: A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value) equal to the excess of the Fair Market Value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured.
“Section 409A”: Section 409A of the Code.
“Section 422”: Section 422 of the Code.
“Stock”: Common stock of the Company, par value $0.0277 per share.
“Stock Option”: An option entitling the holder to acquire shares of Stock upon payment of the exercise price.
“Stock Unit”: An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future.
“Substitute Award”: An Award issued under the Plan in substitution for one or more equity awards of an acquired company that are converted, replaced, or adjusted in connection with the acquisition.
“Unrestricted Stock”: Stock not subject to any restrictions under the terms of the Award.
ANNUAL MEETING OF SKYLINE CHAMPION CORPORATION
 | July 30, 2019 | |||
| Time: | 9:00 A.M. (Eastern Time) | |||
| Place: | Hilton Garden Inn, 200 Wilshire Drive, Troy, MI 48084 |
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Please make your marks like this: ☒ Use dark black pencil or pen only
Board of Directors Recommends a VoteFOR proposals 1, 2, and 3.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on September 26, 2018.
Vote by Internet
• Go towww.investorvote.com/SKY
• Or scan the QR code with your smartphone
• Follow the steps outlined on the secure website
Vote by telephone
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
• Follow the instructions provided by the recorded message
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q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
| 1: | To elect seven members of the Board of Directors, each to serve until the next annual meeting of shareholders or until a successor has been duly elected and qualified. | |||||||||
| For | Withhold | Directors Recommend
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| 01 Keith Anderson | ☐ | ☐ | For | |||||||
| 02 Timothy Bernlohr | ☐ | ☐ | For | |||||||
| 03 Michael Berman | ☐ | ☐ | For | |||||||
| 04 John C. Firth | ☐ | ☐ | For | |||||||
| 05 Michael Kaufman | ☐ | ☐ | For | |||||||
| 06 Gary E. Robinette | ☐ | ☐ | For | |||||||
| 07 Mark Yost | ☐ | ☐ | For | |||||||
For | Against | Abstain | ||||||||
| 2: | To ratify the appointment of Ernst & Young LLP as Skyline Champion’s independent registered public accounting firm. | ☐ | ☐ | ☐ | For | |||||
| 3: | To consider a non-binding advisory vote on fiscal 2019 compensation paid to SkylineChampion’s named executive officers. | ☐ | ☐ | ☐ | For | |||||
| Authorized Signatures - This section must be completed for your Instructions to be executed. | ||||||||||
| Please Sign Here | Please Date Above | |
| Please Sign Here | Please Date Above | |
Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.
Annual Meeting of Skyline Champion Corporation
to be held on Tuesday, July 30, 2019
for Holders as of June 5, 2019
This proxy is being solicited on behalf of the Board of Directors
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| For | Against | Abstain | For | Against | Abstain | |||||||||||||||
| 2. | ADVISORY VOTE ON EXECUTIVE COMPENSATION RESOLVED, the shareholders approve the compensation awarded to Skyline Champion’s named executive officers for fiscal year 2018 as disclosed in the Executive Compensation discussion included in the Proxy Statement. | ☐ | ☐ | ☐ | 3. | APPROVAL OF 2018 EQUITY INCENTIVE PLAN | ☐ | ☐ | ☐ | |||||||||||
| For | Against | Abstain | ||||||||||||||||||
| 4. | RATIFICATION OF ERNST & YOUNG LLP’S APPOINTMENT AS INDEPENDENT AUDITOR FOR FISCAL YEAR 2019 | ☐ | ☐ | ☐ | 5. | At his or her discretion, the proxy is authorized to vote upon such other business as may properly come before the meeting. | ||||||||||||||
| Go To | ||||||
 INTERNET |
Call |
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Please sign exactly as name appears hereon. Where shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.
www.proxypush.com/SKY • Cast your vote online. • View Meeting Documents. | ||||||||||
IF VOTING BY MAIL, YOUMUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
| • • • |
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Keith Anderson and Laurie Hough as proxies, each with the power to appoint a substitute, and hereby authorizes them, or either of them, to appear and to vote as designated below, all the shares of common stock held of record by the undersigned on September 4, 2018, at the Annual Meeting of Shareholders of Skyline Champion Corporation, to be held at the Hilton Garden Inn, 200 Wilshire Drive, Troy, Michigan 48084 on Wednesday, September 26, 2018, at 9:00 a.m., Eastern Time, and at any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR: (1) THE NOMINEES FOR DIRECTOR; (2) APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS FOR FISCAL YEAR 2018; (3) APPROVAL OF THE SKYLINE CHAMPION 2018 EQUITY INCENTIVE PLAN; (4) THE RATIFICATION OF ERNST & YOUNG LLP AS SKYLINE CHAMPION’S INDEPENDENT AUDITORS FOR FISCAL YEAR 2019 AND (5) AT THE DISCRETION OF THE APPOINTED PROXY ON ALL OTHER BUSINESS PROPERLY BEFORE THE MEETING.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held On September 26, 2018. Skyline Champion’s Annual Report to Shareholders, Proxy Statement, and Proxy are available on the Internet at www.skylinechampion.com.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and the Proxy Statement furnished therewith, both of which are dated September 5, 2018.
(Continued and to be signed on other side)
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Change of Address — Please print new address below.
OR | • | Mark, sign and date your Proxy Card/Voting Instruction Form. | ||||
• | Detach your Proxy Card/Voting Instruction Form. | |||||
• | Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided. |
The undersigned hereby appoints Laurie Hough and Roger Scholten, and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Skyline Champion Corporation which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN ITEM 1 APPOINT THE AUDITORS IN ITEM 2 AND CONSIDER A NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION IN ITEM 3 AND AUTHORITY WILL BE DEEMED GRANTED FOR MATTERS AS DESCRIBED ABOVE.
PROXY TABULATOR FOR SKYLINE CHAMPION CORPORATION P.O. BOX 8016 | ||||||
CARY, NC 27512-9903 |
| Proxy — Skyline Champion Corporation Annual Meeting of Stockholders July 30, 2019, 9:00 a.m. (Eastern Time) This Proxy is Solicited on Behalf of the Board of Directors The undersigned appoints Laurie Hough and Roger Scholten (the “Named Proxies”) and each of them as proxies for the undersigned, with full power of substitution, to vote the shares of common stock of Skyline Champion Corporation, an Indiana corporation (“the Company”), the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held at the Hilton Garden Inn, 200 Wilshire Drive, Troy, MI 48084, on Tuesday, July 30, 2019, at 9:00 a.m. (EDT) and all adjournments thereof. The purpose of the Annual Meeting is to take action on the following: 1. Elect the Directors; 2. Appoint the auditors and consider a non-binding advisory vote on executive compensation; and 3. Transact such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting. The seven directors up for re-election are: Keith Anderson, Timothy Bernlohr, Michael Berman, John C. Firth, Michael Kaufman, Gary E. Robinette, and Mark Yost. The Board of Directors of the Company recommends a vote “FOR” all nominees for director and “FOR” each proposal. This proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be voted “FOR” all nominees for director and “FOR” each proposal. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the Annual Meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign and return this card. To attend the meeting and vote your shares ☐ in person, please mark this box. | |
