UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )__)
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Definitive Proxy Statement |
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Soliciting Material Pursuant to |
H&E EQUIPMENT SERVICES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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March 29, 2019
April 1, 2021
Dear Stockholder:
I am pleased to invite you to our Annual Meeting of Stockholders of H&E Equipment Services, Inc., to be held at the Grand Hyatt DFW Hotel, 2337 South International Parkway, DFW Airport, Texas 75261 on Friday, May 10, 2019,14, 2021, at 7:30 a.m., Central Time. The Annual Meeting will be conducted as a virtual meeting hosted by means of a live webcast. At the meeting, you will be asked to vote for the election of our directors and to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for the year ending December 31, 2019.2021. Additionally, you will be asked to approve Named Executive Officer compensation as disclosed in our Proxy Statement by anon-binding advisory vote.
Pursuant to the U.S. Securities and Exchange Commission rules that authorize companies to furnish their proxy materials over the Internet, on or about March 29, 2019,April 1, 2021, we are mailing a Notice of Internet Availability of Proxy Materials to our stockholders of record and beneficial owners as of March 14, 2019.22, 2021. The notice contains instructions on how to access our Proxy Statement and Annual Report and how to vote on the Internet. As of the date of mailing of the Notice, all stockholders and beneficial owners will have the ability to access all of the proxy materials on a website referred to in the Notice. These proxy materials will be available free of charge.
The Notice of Internet Availability of Proxy Materials contains information on how you may request copies of the proxy materials be sent to you by mail or email. The proxy materials accessible on the Internet or sent to you will include a Proxy Card that will provide you with instructions to cast your vote on the Internet and a telephone number you may call to cast your vote. You may also complete, sign and return the Proxy Card by mail.
You are cordially invited
The Board has again implemented a virtual meeting format this year primarily to attendreflect our and global concerns regarding the spread of COVID-19. Stockholders will be able to listen, vote, and submit questions from their home or any location with internet connectivity. Additional information on how to participate in the 2021 Annual Meeting can be found below and on page 4 of Stockholders in person.the Proxy Materials. Even if you choose to attend in person,though the meeting will be held virtually, you are encouraged to review the proxy materials and vote your shares in advance of the meeting. Your vote is extremely important, and we appreciate you taking the time to vote promptly.
Very truly yours, | |
H&E EQUIPMENT SERVICES, INC. | |
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Bradley W. Barber | |
Chief Executive Officer | |
H&E Equipment Services, Inc. | |
7500 Pecue Lane | |
Baton Rouge, LA 70809 |
Notice of Annual Meeting of Stockholders
To Our Stockholders:
You are invited to virtually attend the H&E Equipment Services, Inc. 20192021 Annual Meeting of Stockholders.
| Date: | May | |
| Time: | 7:30 a.m. Central Time | |
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www.meetingcenter.io/249562634 |
Only stockholders who owned stock of record at the close of business on March 14, 201922, 2021 can vote at this meeting or any adjournments or postponements thereof that may take place.
At the Annual Meeting we will consider and act upon the following matters:
(1) the election of nine directors, each for a term of one year or until their respective successors have been elected and qualified;
(1) | the election of nine directors, each for a term of one year or until their respective successors have been elected and qualified; |
(2) | the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the year ending December 31, 2021; |
(3) | an advisory vote on Named Executive Officer compensation as disclosed in the Proxy Statement; and |
(4) |
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We consider your vote important and encourage you to vote as soon as possible.
By Order of the Board of Directors, |
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Leslie S. Magee | |
Chief Financial Officer and Secretary | |
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FOR ANNUAL MEETING OF STOCKHOLDERS
H&E EQUIPMENT SERVICES, INC.
TO BE HELD MAY 10, 201914, 2021
This Proxy Statement sets forth certain information with respect to the accompanying proxy to be used at the Annual Meeting of Stockholders (the “Annual Meeting”) of H&E Equipment Services, Inc., or at any adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. The Board of Directors has designated the Grand Hyatt DFW Hotel, 2337 South International Parkway, DFW Airport, Texas as theAnnual Meeting to take place of the Annual Meeting.virtually. The Annual Meeting will be called to order at 7:30 a.m., Central Time, on Friday, May 10, 2019. 14, 2021. Only stockholders of record as of the close of business on March 14, 2019,22, 2021, the (“Record Date,Date”), are entitled to vote. The Board of Directors solicits this proxy and encourages you to read this document thoroughly and to take this opportunity to vote on the matters to be decided at the Annual Meeting. Unless the context otherwise indicates, reference to “we,” “us,” “our” or the “Company” in this Proxy Statement means H&E Equipment Services, Inc.
Under rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each stockholder of record or beneficial owner of our common stock, we are furnishing proxy materials, which include our Proxy Statement and Annual Report, to our stockholders over the Internet and providing a Notice of Internet Availability of Proxy Materials by mail.You will not receive a printed copy of the proxy materials unless you request to receive a paper copy or an email copy of these materials in hard copy by following the instructions provided in the Notice of Internet Availability of Proxy Materials. Instead, the Notice of Internet Availability of Proxy Materials will instruct you how you may access and review all of the important information contained in the proxy materials on the Internet. The Notice of Internet Availability of Proxy Materials also instructs you how you may submit your proxy via telephone or the Internet. This proxy procedure enables all holders of common stock, many of whom are unable to attend the Annual Meeting, to vote. If you received a Notice of Internet Availability of Proxy Materials by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice of Internet Availability of Proxy Materials.
We are mailing the Notice of Internet Availability of Proxy Materials on or about March 29, 2019April 1, 2021 to each stockholder at the holder’s address of record. SEC rules permit us to deliver only one copy of the Notice of Internet Availability of Proxy Materials or a single set of proxy materials to multiple stockholders sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 20182020 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice was delivered. Stockholders may notify our Company of their requests by calling or writing our Investor Relations Department, H&E Equipment Services, Inc., 7500 Pecue Lane, Baton Rouge, Louisiana 70809;(225) 298-5200.
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Your vote is very important.Your shares can only be voted at the Annual Meeting if you are present in person or represented by proxy. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote by proxy to ensure that your shares will be represented. Stockholders can choose among the following methods to vote:
Via the Internet—– Stockholders can vote by voting their shares via the Internet as instructed on the website identified in the Notice of Internet Availability of Proxy Materials. The Internet procedures are designed to authenticate a stockholder’s identity to allow stockholders to vote their shares and confirm that their instructions have been properly recorded. Internet voting for stockholders of record is available 24 hours a day and will close at 7:00 p.m., Eastern Time, on May 9, 2019.13, 2021. The Notice instructs you how to access and review all important information in the Proxy Statement and Annual Report. You will then be able to request that copies of proxy materials be emailed to you or you will be directed to select a link where you will be able to vote on the proposals presented here.
By Telephone — – The Notice of Internet Availability of Proxy Materials includes a toll-free number you can call to request printed copies of proxy materials. Telephone voting for stockholders of record is available 24 hours a day and will close at 7:00 p.m., Eastern Time, on May 9, 2019.13, 2021. The printed proxy materials include a different toll-free number that you can call for voting.
By Mail — – Stockholders who receive a paper Proxy Card may elect to vote by mail by completing, signing and dating their Proxy Card and mailing it in thepre-addressed envelope that accompanies the delivery of a paper Proxy Card. Proxy Cards submitted by mail must be received prior to the Annual Meeting in order for your shares to be voted. Stockholders who hold shares beneficially in street name may vote by mail by requesting a paper Proxy Card according to the instructions contained in the Notice of Internet Availability of Proxy Materials, and then completing, signing and dating the Proxy Card provided by the brokers or other agents and mailing it in thepre-addressed envelope provided.
At the Annual Meeting — – H&E Equipment Services’ 2021 annual meeting will be conducted online only, via a live telecast. If you were a holder of record on the close of business on March 22, 2021, you are entitled to participate in the 2021 Annual Meeting on May 14, 2021. Shares held in your name as the stockholder of record may be voted by you in personvirtually at the Annual Meeting.Meeting by following instructions through the virtual meeting portal accessible at www.meetingcenter.io/249562634. Shares held beneficially in street name may be voted by you in person at the Annual Meeting only if you obtain a legal proxy from the broker or other agent that holds your shares giving you the right to vote the shares and you bring such proxy toregistering for the Annual Meeting.Meeting in advance using such proxy.
If you vote via the Internet, by telephone or by mailing a Proxy Card, we will vote your shares as you direct. For the election of directors (Item 1), you can specify whether your shares should be voted for all, some or none of the nominees for director listed. For the ratification of our Audit Committee’s appointment of BDO USA, LLP as our independent registered public accounting firm (Item 2), you may vote “for” or “against” the ratification, or you may abstain from voting on the ratification. For the proposal regarding an advisory vote on Named Executive Officer compensation (Item 3), you may vote “for” or “against” the proposal, or you may abstain from voting.
You may revoke or change a previously delivered proxy at any time before the Annual Meeting by delivering another proxy with a later date, by voting again via the Internet or by telephone, or by delivering written notice of revocation of your proxy to the corporate Secretary of the Company at the Company’s principal executive offices before the beginning of the Annual Meeting. You may also revoke your proxy by attending the Annual Meeting and voting in person,virtually, although attendance at the Annual Meeting will not, in and of itself, revoke a valid proxy that was previously delivered. If you hold shares through a bank or brokerage firm, you must contact that bank or brokerage firm to revoke any prior voting instructions. You may also vote in personvirtually at the Annual Meeting if you obtain a legal proxy as described above. Unless properly revoked, properly executed and delivered proxies that are received before the Annual Meeting’s adjournment will be voted in accordance with the directions provided and if no directions are provided on such properly executed and delivered proxy, those shares will be voted by one of the individuals named on your proxy card as recommended by the Board of Directors, as stated in this Proxy Statement and in the Notice of Internet Availability of Proxy
Materials,
specifically (1) in favor of our nominees for directors; (2) in favor of the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the year ending December 31, 2019;2021; and (3) in favor of Named Executive Officer compensation as disclosed in this Proxy Statement. If you wish to give a proxy to someone other than those named on the proxy card, you should cross out those names and insert the name(s) of not more than three people, to whom you wish to give your proxy.
Who can vote? Only stockholders of record as of the close of business on March 14, 2019, the (“Record Date”),Date, are entitled to vote. On that day,the Record Date, approximately 35,779,10536,126,191 shares of common stock were outstanding and eligible to vote, and there were 7367 record holders. Each share is entitled to one vote on each matter presented at the Annual Meeting. A list of stockholders eligible to vote will be available at the offices of H&E Equipment Services, Inc., 7500 Pecue Lane, Baton Rouge, Louisiana 70809 beginning April 30, 2019.2021. Stockholders may examine this list during normal business hours for any purpose relating to the Annual Meeting by contacting the Secretary of the Company.
How can I view and participate in the 2021 Annual Meeting? To participate, visit www.meetingcenter.io/249562634 and login with the control number included in your proxy materials and the password, which is HEES2021. Stockholders will be able to view a limited number of company prepared slides and hear audio of the meeting, and they will be able to submit questions for Q&A at designated times via a chat function within the platform. If you are the stockholder of record, with regard to shares you own or control, you do not need to register in advance. If you hold your shares through an intermediary, such as a bank or broker, then you are a beneficial owner, and must register in advance through the following steps.
How do I register to attend the 2021 Annual Meeting? To register to attend the 2021 Annual Meeting you must submit proof of your proxy power (legal proxy) reflecting your holdings to our transfer agent, Computershare Trust Company, N.A. (“Computershare”), along with your name and email address. Registration requests must be in writing and be mailed to:
Computershare Investor Services
462 South 4th Street, Suite 1600
Louisville, KY 40202
Requests for registration must be labeled “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 3, 2021. You will receive an email from Computershare acknowledging your registration along with a control number.
How does the Board recommend I vote? The Board recommends the following votes:
FOR each of the Board’s nominees for election (Item 1);
FOR the ratification of the Audit Committee’s appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 20192021 (Item 2); and
FOR approval of the compensation of the Company’s Named Executive Officers as disclosed in this Proxy Statement (Item 3).
How are votes counted? The Annual Meeting will be held if a quorum, consisting of a majority of the outstanding shares of common stock entitled to vote, is represented at the Annual Meeting in personvirtually or by proxy. If you are a stockholder whose shares are not registered in your name and you do not vote, then your bank, broker or other holder of record may still represent your shares at the Annual Meeting for purposes of obtaining a quorum.
In the absence of your voting instructions, your bank, broker or other holder of record may not be able to vote your shares in its discretion depending on the proposal before the Annual Meeting. Your broker cannot vote your shares in its discretion in the election of directors; therefore, you must vote your shares if you want them to be counted in the election of directors. In addition, your broker is not permitted to vote your shares in its discretion regarding matters related to executive compensation, including the advisory vote on executive compensation, and such brokernon-votes will not be counted as shares present and entitled to be voted with respect to this proposal. However, your broker may vote your shares in its discretion on routine matters such as the ratification of the Company’s independent registered public accounting firm.
Because each director nominee (Item 1) is elected by the affirmative vote of the holders of a plurality of the shares of common stock voted, abstentions will have no effect on the election of director nominees. The ratification of the appointment of BDO USA, LLP (Item 2) and the approval of the compensation of the Company’s Named Executive Officers as disclosed in this Proxy Statement (Item 3) each require the affirmative vote of a majority of the shares present in personvirtually or by proxy and entitled to vote at the Annual Meeting.Meeting. Because abstentions will be included in tabulations of the votes entitled to vote for purposes of determining whether Item 2 and Item 3 have been approved, for those proposals abstentions have the same effect as negative votes. Because your vote on Item 3 is advisory, such vote will not be binding on the Board or the Company. However, the Board will review the voting results and as further described herein, may take them into consideration when making future decisions regarding executive compensation.
Who will count the vote? The votes will be tabulated by the Company’s SEC Reporting & Compliance Director, W. Scott Bozzell, the inspector of elections appointed by the Board of Directors for the Annual Meeting.
Where can I find the results of the Annual Meeting? We intend to announce preliminary voting results at the Annual Meeting and publish final results in a Current Report on Form8-K within four business days following the Annual Meeting.
Who is soliciting this proxy? Solicitation of proxies is made on behalf of the Board of Directors of the Company. The cost of soliciting proxies, including preparing, assembling and mailing the Notice of Internet Availability of Proxy Materials, Proxy Statement, form of proxy and other soliciting materials, as well as the cost of forwarding such material to the beneficial owners of stock, will be paid by us, except for some costs associated with individual stockholders’ use of the Internet or telephone. In addition to solicitation bye-proxy and/or by mail, directors, officers, regular employees and others may also, but without compensation other than their regular compensation, solicit proxies personally or by telephone or other means of electronic communication. We may reimburse brokers and others holding stock in their names or in the names of nominees for their reasonableout-of-pocket expenses in sending proxy materials to principals and beneficial owners.
What if I can’t attend the Annual Meeting? If you are unable to attend the Annual Meeting in personvirtually and you intend to vote, you may vote your shares by proxy, via the Internet, by telephone or by mail by the applicable deadline.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder
Meeting to be Held on May 10, 2019.14, 2021.
The Proxy Statement and the 20182020 Annual Report are both available free of charge atwww.he-equipment.com.www.he-equipment.com. We will provide without charge to each person to whom this Proxy Statement has been delivered (whether by mail or through the Internet), on the request of any such person, up to two additional copies per request of the 20182020 Annual Report, including the consolidated financial statements and financial statement schedule. Requests should be directed to our investor relations department as described below:
H&E Equipment Services, Inc.
7500 Pecue Lane
Baton Rouge, Louisiana 70809
Attention: Investor Relations
Telephone: (225)298-5200
We make available free of charge through our Internet website (www.he-equipment.com) our Annual Reports on Form10-K, Quarterly Reports on Form10-Q, Current Reports on Form8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), as well as reports on Forms 3, 4 and 5 filed pursuant to Section 16 of the Exchange Act, as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the SEC. The information on our website is not, and shall not be deemed to be, a part of this Proxy Statement or incorporated into any other filings we make with the SEC.
In accordance with the Delaware General Corporation Law and the Company’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, the Company’s business, property and affairs are managed under the direction of the Board of Directors. Although the Company’snon-management directors are not involved in theday-to-day operating details, they are kept informed of the Company’s business through reports and materials provided to them regularly, as well as by operating, financial and other reports presented by the officers of the Company at meetings of the Board of Directors and committees of the Board of Directors.
Board Leadership Structure.Structure.On January 1, 2019, John M. Engquist was named Executive Chairman of the Board upon the appointment of Bradley W. Barber as Chief Executive Officer, President and Director. The
Board of Directors retains the flexibility to determine whether the positions of Chief Executive Officer and Chairman of the Board should be combined or separated. This flexibility permits the Board to organize its functions and conduct its business in a manner it deems most effective. By having Mr. Engquist serve as Executive Chairman, he acts as a bridge between the Board and the operating organization and provides critical leadership for future strategic initiatives and challenges.challenges and the capitalization of the Company. Mr. Engquist’s previous experience as Chief Executive Officer of the Company enables him to provide unique insight into the Company. This Board structure enables the Chief Executive Officer, Mr. Barber, to focus on running the Company’s business. Mr. Barber provides veryhands-on leadership running the business on aday-to-day basis, and the Corporate Governance and Nominating Committee believes that currently it is most effective to keep the principal executive officer and Board chair positions separate. The Board believes that given the proven leadership capabilities, breadth of industry experience and business success of both Mr. Engquist and Mr. Barber, the Company and its stockholders are best served by this leadership structure.
The Board’s Role in Risk Oversight. The Board as a whole has responsibility for the general oversight of risk, and the Board’sBoard's committees address and report to the Board on any individual risk areas within their purview. Risk and risk management is a recurring agenda item at regular Board and Board Committee meetings, and the Board also discusses any specific risk topics as applicable. The Company’sCompany's senior management makes presentations to the full Board as to the areas of principal risk, as well as on the processes that the Company has in place to identify, assess and report such risks.
The Board committees report to the Board on their consideration of any risks within their respective areas of focus. The Audit Committee primarily oversees risks relating to or arising from financial and disclosure controls and procedures, and accounting and other financial matters. The Company’sCompany's Chief Financial Officer reports to the Audit Committee on such risks and related risk management, and the Company’sCompany's internal auditors, compliance manager, and independent auditors each regularly provide reports at Audit Committee meetings. The Compensation Committee has considered whether the Company’sCompany's compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company’s business or operations. The Corporate Governance and Nominating Committee and the Finance Committee review any risks that come within their respective areas of responsibility (e.g., governance in the case of the Corporate Governance and Nominating Committee, and in the case of the Finance Committee, any extraordinary corporate transactions that such committee may consider).
Independence. Independence.The Board has determined that seven of the Company’s nine directors are “independent” as defined in the applicable listing standards of the Nasdaq Stock Market LLC, including that each such director is free of any relationship that the Board believes would interfere with his individual exercise of independent judgment. The following directors were determined to be independent: Paul N. Arnold, Gary W. Bagley, Bruce C. Bruckmann, Patrick L. Edsell, Thomas J. Galligan III, Lawrence C. Karlson and John T. Sawyer. Mr. Bagley serves as a manager of our wholly-owned subsidiary, H&E Equipment Services (California), LLC, but is not an employee of the Company or any of its subsidiaries.
In making its determinations regarding director independence, the Board considered, among other things:
any material relationships with the Company, its subsidiaries or its management, aside from such director’s service as a director;
transactions between the Company, on the one hand, and the directors and their respective affiliates, on the other hand;
transactions outside the ordinary course of business between the Company and companies at which some of its directors are or have been executive officers or significant stakeholders, and the amount of any such transactions with these companies; and
relationships among the directors with respect to common involvement withfor-profit andnon-profit organizations.
Conflicts of Interest and Corporate Governance Matters.Under our Code of Conduct and Ethics for Employees, Officers and Directors of H&E Equipment Services, Inc. (“Code of Conduct”), no employee or officer may serve as a director of any outside business concern, other than on behalf of the Company, without the written approval of the President or the Chief Financial Officer of the Company. The Charter of the Corporate Governance and Nominating Committee empowers the Corporate Governance and Nominating Committee to at least once a year review the independence of the members of the Board of Directors and consider questions of conflicts of interest. The Corporate Governance and Nominating Committee will identify, analyze, and, if possible, resolve any actual and potential conflicts of interest a Board member has or may have. In connection with an actual or potential conflict of interest, the Corporate Governance and Nominating Committee may issue to such member instructions concerning the manner in which he should conduct himself, as applicable. There are nopre-determined limitations on the number of other boards of directors on which the directors of the Company may serve; however, the Board expects individual directors to use judgment in accepting other directorships and to allow sufficient time and attention to Company matters. There are no set term limits for directors; however as long as the Board is not classified, the Corporate Governance and Nominating Committee will review each director’s continuation on the Board annually.
Code of Conduct.The Company is committed to ethical business practices. We have a corporate Code of Conduct and a corporate Insider Trading Policy that appliesapply to all of the Company’s employees and directors and includesinclude policies prohibiting the hedging or pledging of the Company’s stock and a code of ethics for the Company’s principal executive officer, principal financial officer and principal accounting officer within the meaning of the SEC regulations adopted under the Sarbanes-Oxley Act of 2002, as amended. The Company’s corporate Code of Conduct can be found on the Company’s Internet website atwww.he-equipment.com under the heading “Code of Conduct and Ethics.”“Our Company/Investor Relations/Corporate Governance/Governance Documents”, or by clicking here. Please note that none of the information on the Company’s website is incorporated by reference in this Proxy Statement.
Communications with the Board of Directors.If you would like to communicate with the Company’s directors, please send a letter to the following address: H&E Equipment Services, Inc., Attention: Board of Directors, c/o corporate Secretary, 7500 Pecue Lane, Baton Rouge, Louisiana 70809. The Company’s corporate Secretary will review each such communication and forward a copy to the Board of Directors.
Meetings of the Board of Directors and Stockholders.It is the policy of the Board to meet at least quarterly. The Board of Directors held sixtwelve meetings in 2018.2020. In 2018,2020, the Board also held regular executive sessions wherenon-management directors met without management participation.
Each incumbent director attended at least 75% of the meetings of the Board and the committees on which he or she served in 2018.2020. Directors are encouraged to attend the Annual Meeting of Stockholders. All directors attended the 20182020 Annual Meeting of Stockholders.
Committees of the Board of Directors.The Board of Directors currently has four standing committees: Audit Committee, Compensation Committee, Corporate Governance and Nominating Committee and Finance Committee. Charters for the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee can be found on the Company’s website atwww.he-equipment.com under the heading “Our Company/Investor Relations/Corporate Governance/Governance Documents.”Documents”, or by clicking
here. The Audit Committee —is responsible for reviewing and managing the Company’s cybersecurity and data privacy risks.
Audit Committee—The Audit Committee operates under a written charter adopted by the Board of Directors, which is available on the Company’s Internet website. The Audit Committee provides assistance to the Board in fulfilling its oversight responsibility to the stockholders, potential stockholders, the investment community, and others relating to (i) the integrity of the Company’s financial statements and financial reporting processes; (ii) the Company’s systems of internal accounting and financial controls, including internal controls over financial reporting; (iii) performance of the Company’s internal auditors and independent registered public accounting firm; (iv) the independent registered public accounting firm’s qualifications and independence; (v) the annual independent
audit of the Company’s consolidated financial statements; and (vi) the Company’s compliance with ethics policies, legal policies and regulatory requirements, as applicable. In so doing, it is the
responsibility of the Audit Committee to maintain free and open communication among the Audit Committee, the independent registered public accounting firm, the internal auditors and Company management. In discharging its oversight role, the Audit Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Company and the power to retain at the expense of the Company independent outside counsel or other experts or advisers as it deems necessary to carry out its duties. A detailed list of the Audit Committee’s functions is included in its charter, a copy of which can be found on the Company’s Internet website. The Company maintains a policy that the Audit Committee review transactions in which the Company and its directors, executive officers or their immediate family members are participants to determine whether a related person has a direct or indirect material interest. The Audit Committee is responsible for reviewing and, if appropriate, approving or ratifying any such related party transaction. This policy has been communicated orally by the Board. See the “Certain Relationships and Related Transactions —– Related Party Transactions” section of this Proxy Statement.
The current members of the Audit Committee are currently Messrs. Edsell, Galligan Karlson and Sawyer andSawyer. Mr. Edsell is the Chair of this committee. The Board has determined in its business judgment that each member of the Audit Committee is financially literate and that Messrs. Edsell, Galligan Karlson and Sawyer are “independent” as defined in the applicable NASDAQ listing standards and the applicable rules under the Exchange Act. In addition, the Board has determined that Messrs. Edsell and Galligan are “audit committee financial experts” as that term is defined in Item 407(d)(5) of RegulationS-K of the Exchange Act. The Audit Committee held sixnine meetings in 2018.2020.
Compensation Committee —Committee—The Compensation Committee operates under a written charter adopted by the Board of Directors, a copy of which is availablecan be found on the Company’s Internet website atwww.he-equipment.com.website. The Compensation Committee discharges the Board’s responsibilities relating to the compensation of the Company’s Chief Executive Officer, the Company’s other executive officers and its directors. The Compensation Committee has overall responsibility for evaluating and approving executive officer and director compensation plans, policies and programs of the Company, as well as all equity-based compensation plans and policies, including the Company’s 2016 Stock-Based Incentive Compensation Plan (the “2016 Incentive Plan”).
On an annual basis, the Compensation Committee reviews and sets the compensation of the Chief Executive Officer taking into account a variety of factors, as more fully described in the “Compensation Discussion & Analysis” section of this Proxy Statement. The Compensation Committee also sets compensation for certain other executive officers after considering recommendations provided by the Chief Executive Officer and a variety of other factors, as more fully described in the “Compensation Discussion &and Analysis” section of this Proxy Statement.
On anas-needed basis, the Compensation Committee may retain independent compensation consultants to assist the Compensation Committee in evaluating and structuring our executive compensation programs and making compensation decisions. Pearl Meyer & Partners LLC (“Pearl Meyer”) served as a consultant to the Compensation Committee during fiscal year 2018.2020.
The Compensation Committee is authorized to delegate any of its responsibilities to subcommittees, as the Compensation Committee deems appropriate. To date, the Compensation Committee has not exercised this right. For additional description of the Compensation Committee’s processes and procedures for consideration and determination of executive officer and director compensation, see the “Compensation Discussion &and Analysis” section of this Proxy Statement.
The current members of the Compensation Committee are Messrs. Arnold, Edsell, Galligan and Karlson, and Mr. Arnold is the Chair of this committee. The Board has determined in its business judgment that Messrs. Arnold, Edsell, Galligan and Karlson are “independent” as defined in the applicable NASDAQ listing standards. The members of the Compensation Committee are alsonon-employee directors under SEC Rule16b-3 and outside directors under Section 162(m) of the Internal Revenue Code of 1986, as amended. The
Compensation Committee met foursix times in 2018.2020. For additional information on the Compensation Committee, see the “Compensation Discussion and Analysis” beginning on page 21.19.
Corporate Governance and Nominating Committee —Committee—The Corporate Governance and Nominating Committee operates under a written charter adopted by the Board of Directors, a copy of which is availablecan be found on the Company’s Internet website atwww.he-equipment.com.website. The primary functions of the Corporate Governance and Nominating Committee are (i) to assist the Board by identifying individuals qualified to become Board members and members of Board committees, to recommend to the Board the director nominees for the next annual
meeting of stockholders, and to recommend to the Board nominees for each committee of the Board; (ii) to lead the Board in its annual review of the Board’s, its committees’ and management’s performance; and (iii) to review, as appropriate, the Company’s corporate governance structure and recommend any proposed changes to the Board. The Corporate Governance and Nominating Committee identifies individuals, including those properly submitted and recommended by stockholders, believed to be qualified as candidates for Board membership. The Corporate Governance and Nominating Committee has the authority to retain search firms to assist it in identifying candidates to serve as directors. In addition to any other qualifications the Corporate Governance and Nominating Committee may in its discretion deem appropriate, all director candidates should possess high personal and professional ethics, integrity and values, and should have sufficient time available to devote to service on the Board and Board committees. A majority of the Board must be comprised of independent directors. Neither the Corporate Governance and Nominating Committee nor the Board has a policy regarding consideration of diversity in selecting director candidates. In identifying and recommending director candidates, the Corporate Governance and Nominating Committee considers each individual’s specific experience and qualifications to determine that individual’sindividual's desirability and suitability for service on the Company’s Board, and also considers the qualifications and composition of the Board as a whole.
The Corporate Governance and Nominating Committee considers stockholder nominees for directors in the same manner as nominees for director from other sources. Stockholder suggestions for nominees for director should be submitted to the Company’s corporate Secretary no later than the date by which stockholder proposals for action must be submitted (see “Submission of Stockholder Proposals and Director Nominations” below) and should include the following information: (a) the recommending stockholder’s name, address, telephone number and the number of shares of the Company’s common stock held by such individual or entity and (b) the recommended candidate’s biographical data, statement of qualification and written consent to nomination and to serving as a director, if elected.
The current members of the Corporate Governance and Nominating Committee are Messrs. Bruckmann, Karlson and Sawyer, and Mr. Karlson is the Chair of this committee. The Board has determined in its business judgment that Messrs. Bruckmann, Karlson and Sawyer are “independent”, as defined in the applicable NASDAQ listing standards. The Corporate Governance and Nominating Committee held twofour meetings during 2018.2020.
Finance Committee —Committee—The Finance Committee was established by the Board of Directors and operates under a written charter. The Finance Committee oversees and reviews any significant financial affairs and policies of the Company and oversees and monitors all material potential business and financial transactions, as well as any other duties assigned to it by the Board of Directors. The current members of the Finance Committee are Messrs. Bagley, Bruckmann and Engquist, and Mr. Bruckmann is the Chair of this committee. The Finance Committee met sixtwelve times in 2018.2020.
SUBMISSION OF STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Under the rules of the SEC, stockholders wishing to have a proposal included in the Company’s Proxy Statement for the Annual Meeting of Stockholders to be held in 20192022 must submit the proposal so that the corporate Secretary of the Company receives it no later than November 30, 2019.TheDecember 2, 2021. The SEC rules set forth
standards as to what stockholder proposals are required to be included in a proxy statement. Under the Company’s Amended and Restated Bylaws, certain procedures must be followed for a stockholder to nominate persons as directors or to introduce a proposal at an annual meeting of stockholders. A stockholder wishing to make a nomination for election to the Board of Directors or to have a proposal presented at an annual meeting of stockholders must submit written notice of such nomination or proposal so that the corporate Secretary of the Company receives it not less than that date which is 120 days prior to the one year anniversary of the date the Company’s proxy statement was released to stockholders in connection with the preceding year’s annual meeting of stockholders; provided, however, that in the event that the Company did not hold an annual meeting of stockholders the preceding year or if the date of the annual meeting of stockholders is changed by more than 30 days from the date of the preceding year’s annual meeting of stockholders, notice by the stockholder must be delivered within a reasonable time before the Company prints and mails its proxy materials (or makes them available on the Internet) in connection with the annual meeting of stockholders. The Company’s Amended and Restated Bylaws also set forth certain informational requirements for stockholders’ nominations of directors and proposals.
ITEM 1 —- ELECTION OF DIRECTORS
The Company’s Amended and Restated Bylaws provide that the Company’s business shall be managed by a Board of Directors ranging from five to nineten members. The number of directors may be increased or decreased from time to time by resolution of the Board of Directors. Directors shall be elected at the annual meeting of the stockholders and each director elected shall hold office until a successor is duly elected and qualified or until his or her death, resignation or removal.
The Company’s Board of Directors is currently comprised of nine members. The Corporate Governance and Nominating Committee identifies and recommends director candidates to serve on the Board. Director candidates are then nominated for election by the Board of Directors. Stockholders are also entitled to nominate director candidates for election in accordance with the procedures set forth in the Company’s Amended and Restated Bylaws (see “Corporate Governance — Committees of the Board of Directors — Corporate Governance and Nominating Committee” and “Submission of Stockholder Proposals and Director Nominations” above).
In identifying and recommending director candidates to serve on the Board, the Corporate Governance and Nominating Committee considers the qualifications and composition of the Board as a whole, taking into account the totality of experience, skills and other qualifications or attributes that the individual nominees collectively bring to the Board. The Committee also considers each individual’sindividual's experience, skills and other qualifications and attributes to determine that individual’s suitability and desirability for service on the Company’s Board. All director candidates should possess high personal and professional ethics, integrity and values, and should have sufficient time available to devote to service on the Board and Board committees. In addition, a majority of the Board must be comprised of independent directors. The experience, skills and attributes which the Corporate Governance and Nominating Committee considers include, but are not limited to, the individual’s: (i) experience serving on the board of directors of a publicly traded company, (ii) independence; (iii) financial and/or audit committee experience; (iv) compensation committee experience; (v) experience with corporate transactions, such as capital-raising and other corporate finance transactions and acquisitions; (vi) experience in the Company’s industry; and (vii) demonstration of overall responsibility for a company’s performance, such as managing or operating a company.
At the Annual Meeting, nine directors are to be elected. All nine nominees have been recommended for election by the Corporate Governance and Nominating Committee. All nominees have consented to being named as nominees for directors of the Company and have agreed to serve if elected. If some or all of the nominees should become unavailable to serve at the time of the Annual Meeting, the shares represented by proxy will be voted for any remaining nominee(s) and any substitute nominee(s) designated by the Board of Directors. In no event, however, will the shares represented by proxy be voted for more than nine nominees. Director elections
are determined by a plurality of the votes cast; however, in accordance with the Company’s director resignation policy, a director who received more “withheld” votes than “for” votes in any uncontested election of directors is required to submit his or her resignation to the Board, and the Board, in consultation with the Corporate Governance and Nominating Committee, may accept the resignation or other alternative action as they deem appropriate. If the resignation is rejected, the Board will disclose the reasons for doing so in a report filed with the SEC within 90 days of the certification of the election results.
Set forth below is information regarding each nominee for director, including the specific experience, qualifications, skills or attributes that led to the conclusion that such nominee should serve as a director of the Company.
Nominees for Directors
John M. Engquistwas appointed Executive Chairman of the BoardonBoard on January 1, 2019. Previously, Mr. Engquist served as Chief Executive Officer and Director of the Company since its formation in September 2005. Mr. Engquist served as President of the Company since its formation in September 2005 until November 2, 2012. He had served as President, Chief Executive Officer and Director of H&E LLC from its formation in June 2002 until its merger with and into the Company in February 2006. He served as President and Chief Executive Officer of Head & Engquist Equipment, LLC (“Head and Engquist”) from 1990 and director of Gulf Wide Industries, LLC (“Gulf Wide”) from 1995, both predecessor companies of H&E LLC. From 1975 to 1990, he held various operational positions at Head & Engquist, starting as a mechanic’s helper. Mr. Engquist serves as a director on the boards of a number of private companies. He is a director and serves on several committees for the LSU Foundation Board of Directors. Mr. Engquist also serves on the Board of Directors and Finance Committee of Our Lady of the Lake Regional Medical Center, based in Baton
Rouge, Louisiana. In addition, he serves on the Leadership Council of St. Jude Children’s Research Hospital in Memphis, Tennessee. Mr. Engquist also serves on the Board of Directors of Our Lady of Lake Regional Medical Center,Mohawk Industries, Inc., a public company based in Baton Rouge, Louisiana. Mr. Engquist owns 75% of the membership interest in Old Towne Development Group, L.L.C. and serves as the Chairman of the Board of Managers. Mr. Engquist is a former board member of Baton Rouge Business Bank and Cajun Constructors, Inc.Calhoun, Georgia.
As Executive Chairman of the Board, Mr. Engquist leads the Company in its strategic planning, oversees merger and acquisition opportunities on a full-time basis, and works with the Company’s Chief Financial Officer to ensure an appropriate capital structure to support the Company’s growth plans while maintaining the financial health of the Company. Mr. Engquist’s long history with the Company and its predecessors dating back to 1975 provides him with unparalleled experience with the Company’s operations, industry and corporate transactions. He currently serves as a member of the Company’s Finance Committee.
Paul N. Arnoldhas been a Director of the Company since November 2006. Mr. Arnold served as a director of Town Sports International Holdings, Inc. from April 1997 through March 2015 and served as thenon-executive Chairman of the Board of Directors from May 2006 until February 2009. Mr. Arnold served as Chief Executive Officer of CORT Business Services, Inc., acquired by Berkshire Hathaway in 2000, from 1992 until June 2012. From 1992 to 2000, Mr. Arnold also served as President and as a director of CORT Business Services. Prior to 1992, Mr. Arnold held various positions over a twenty-four year period within CORT Furniture Rental, a division of Mohasco Industries, Inc.
Mr. Arnold has experience leading a company with branch operations and also has extensive experience in the rental business and with corporate transactions. As a director of other public companies, Mr. Arnold has experience with corporate governance, compensation and audit committee matters. He currently serves as Chairman of the Company’s Compensation Committee. Mr. Arnold is an independent director.
Gary W. Bagleyhas served as a Director of the Company since the formation of the Company in September 2005. From September 2005 to December 31, 2018, Mr. Bagley served as Chairman of the Board of the Company. He had served as Chairman and Director of H&E Equipment Services LLC (“H&E LLC”), the predecessor to the Company, from its formation in 2002 until its merger with and into the Company in February 2006. Mr. Bagley served as President of ICM Equipment Company L.L.C. (“ICM”) since 1996 and Chief
Executive Officer from 1998 until ICM merged with and into H&E LLC in June 2002, when he became executive Chairman of H&E LLC. He retired as an executive of H&E LLC in 2004. Prior to 1996, he held various positions at ICM, including Salesman, Sales Manager and General Manager. Mr. Bagley also served as Vice President of Wheeler Machinery Co. Since our acquisition of Eagle High Reach Equipment, LLC and Eagle High Reach Equipment, Inc. in February 2006, Mr. Bagley has served as a manager and director, respectively, of Eagle High Reach Equipment, LLC (now H&E Equipment Services (California), LLC) and Eagle High Reach Equipment, Inc. (now H&E California Holding, Inc.). Previously, Mr. Bagley served as interim Chief Executive Officer and as a director of Eagle High Reach Equipment, Inc. from February 2004 to February 2006 and as Chief Executive Officer and as a director of Eagle High Reach Equipment, LLC from December 2004 to February 2006. Mr. Bagley has served in the past on a number of dealer advisory boards and industry association boards. Mr. Bagley currently serves as owner and manager of Bagley Family Investments, DBA Cougar Ridge Lodge, located in Torrey, Utah.
Mr. Bagley has extensive experience both with the Company and in the construction equipment industry. He also had overall responsibility as chief executive officer of the equipment company which merged with and into our Company’s predecessor in 2002. He currently serves as a member of the Company’s Finance Committee. Mr. Bagley is an independent director.
Bradley W. Barberwas appointedChiefappointed Chief Executive Officer, President and Director of the Company on January 1, 2019. Mr. Barber resigned as President of the Company effective January 1, 2021 as the Board approved the promotion of Mr. John McDowell Engquist to President and Chief Operating Officer, effective as of such date. From November 2012 to December 31, 2018, Mr. Barber was President and Chief Operating Officer of the Company, from June 2008 to November 2012 Mr. Barber was Executive Vice President and Chief Operating Officer of the Company, and from November 2005 to May 2008, he was Executive Vice President and General Manager of the Company. Mr. Barber served as Vice President, Rental Operations of H&E LLC from February 2003 to November 2005 and as Director of Rental Operations for H&E LLC and its predecessor company, Head & Engquist. Prior to joining Head & Engquist in March 1998, Mr. Barber worked in both outside sales and branch management for a regional equipment company.
Bruce C. Bruckmannhas been a Director of the Company since its formation in September 2005. He had served as a Director of H&E LLC from its formation in June 2002 until its merger with and into the Company in February 2006. Mr. Bruckmann had served as a director of both of the Company’s predecessor companies, Head & Engquist and ICM. Mr. Bruckmann is a founder and has been a Managing Director of Bruckmann, Rosser, Sherrill & Co., Inc. since its formation in 1995. He served as an officer of Citicorp
Venture Capital Ltd. from 1983 through 1994. Prior to joining Citicorp Venture Capital, Mr. Bruckmann was an associate at the New York law firm of Patterson, Belknap, Webb & Tyler. Mr. Bruckmann served as a director of MWI Veterinary Supply, Inc. from 2002 to February 2015 and as a director of TownSports International, Inc. from 1996 to April 2015. Mr. Bruckmann has served as a director of Mohawk Industries, Inc. since 1992 and a director of Heritage-Crystal Clean, Inc. since 2004. Mr. Bruckmann previously served as a director of Ameri-Source,AmerisourceBergen, California Pizza Kitchen, Chromcraft Revington and Cort Business Services. Mr. Bruckmann also currently serves as a director of threea private companies.company.
Mr. Bruckmann has extensive experience with corporate transactions, such as financings and acquisitions, as well as experience as a board member of numerous public companies, including service on audit, compensation, executive, finance and nominating and corporate governance committees. He also has significant experience with the Company’s business and operations and served as a director of both of the Company’s predecessor companies. He currently serves as the Chairman of the Company’s Finance Committee and as a member of the Company’s Corporate Governance and Nominating Committee. Mr. Bruckmann is an independent director.
Patrick L. Edsell has served as a Director of the Company since May 2011. Mr. Edsell has over 2025 years of executive experience and over 20 years of board experience. He previously served as acting Chief Financial Officer, on a part-time basis, for SpectraSensors, Inc. from 2008 to 2010 and as Senior Vice President and General Manager of Avanex Corporation from 2007 to 2008. He was Chief Executive Officer of NP Photonics, Inc. from 2004 to 2007 and Gigabit Optics Corporation from 2002 to 2004. Prior to that, he was Chairman,
President and Chief Executive Officer of Spectra Physics, Inc. from 1997 to 2002 and President of Spectra-Physics Lasers and Optics Group from 1990 to 1997. Mr. Edsell was Chief Financial Officer of Pharos AB from 1984 to 1991 and Vice President, Finance of GP Technologies from 1982 to 1984. He was a director and Chairman of the Audit Committee of Captiva Software Systems from 2001 to 2005 and Chairman from 2004 to 2005. Prior to that, he was a director of FLIR Systems, Inc. in 1998 and 1999. He currently serves as a director of a private company.
Mr. Edsell is experienced in leading other companies and is also experienced with corporate transactions, such as financings and acquisitions. As a director of other public and private companies, Mr. Edsell has experience with audit, corporate governance and compensation committee matters. Mr. Edsell currently serves as Chairman of the Company’s Audit Committee and is a member of the Compensation Committee. Mr. Edsell also serves the Board as an “audit committee financial expert” as defined under SEC rules and is an independent director.
Thomas J. Galligan III has served as a Director since May 2011. Mr. Galligan served as Executive Chairman and a member of the board of directors of Papa Gino’s Holdings Corp. (“Papa Gino’s”) from MarchApril 2009 until his retirement in February 2014. From October 2008 until March 2009 Mr. Galligan was Chairman and Chief Executive Officer of Papa Gino’s and from May 1996 until October 2008 Mr. Galligan served as Chairman, President and Chief Executive Officer. Prior to joining Papa Gino’s in March 1995 as Executive Vice President, Mr. Galligan held executive positions at Morse Shoe, Inc. and PepsiCo, Inc. Mr. Galligan is currently serves as a director of Town Sports International Holdings, Inc., and serves on the boards of severala private companies.company.
Mr. Galligan has experience leading a company with branch operations and has extensive experience with corporate transactions. As a director of other public and private companies, Mr. Galligan has experience with corporate governance, compensation and audit committee matters. Mr. Galligan is a member of the Company’s Audit Committee and Compensation Committee. Mr. Galligan also serves the Board as an “audit committee financial expert” as defined under SEC rules and is an independent director.
Lawrence C. Karlson has been a Director of the Company since its formation in September 2005. He had served as a Director of H&E LLC from its formation in June 2002 until its merger with and into the Company in February 2006. He previously served as Chairman and CEO of Berwind Financial Corporation from 2001 to 2004. Mr. Karlson also previously served as Chairman of Spectra-Physics AB and President and CEO of Pharos AB. He served as a director of CDI Corporation from 1989 to September 2017. Previously he was Chairman and a director of Mikron Infrared, Inc. and served as a director of the Campbell Soup Company from 2009 to November 2015. Mr. Karlson currently serves a board member of several private companies. Mr. Karlson is the author ofCorporate Value Creation, published by John Wiley & Sons.
Mr. Karlson is experienced in leading other companies and is also experienced with corporate transactions. As a director of other public companies, Mr. Karlson has experience with corporate governance, compensation and audit committee matters. He currently serves as Chairman of the Company’s Corporate Governance and Nominating Committee and as a member of the Company’s Audit
Compensation Committee and Compensationfrom 2005 through February 2020, Mr. Karlson also served as a member of the Company’s Audit Committee. Mr. Karlson is an independent director.
John T. Sawyerhas been a Director of the Company since its formation in September 2005. He had served as a Director of H&E LLC from its formation in June 2002 until its merger with and into the Company in February 2006. Mr. Sawyer served as President of Penhall Company (“Penhall”) from 1989 until his retirement in 2008. He joined Penhall in 1978 as the Estimating Manager of the Anaheim Division, was appointed Manager of Penhall’s National Contracting Division in 1980, and in 1984, assumed the position of Vice President and became responsible for managing all construction services divisions.
Mr. Sawyer has experience leading a company with branch operations in the construction industry and is also experienced with corporate transactions. With prior experience as a director of other public companies,
Mr. Sawyer has experience with audit committee matters. He currently is a member of the Company’s Audit Committee and a member of the Corporate Governance and Nominating Committee. Mr. Sawyer is an independent director.
The Board of Directors recommends a vote FOR each of the listed nominees.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names, ages and titles of each person who is a current director or executive officer orand who served in such capacity during 2018.2020.
Name | Age | Title | ||||||||
John M. Engquist | 67 | Executive Chairman of the Board | ||||||||
Bradley W. Barber | 48 | Chief Executive Officer, President and Director | ||||||||
Leslie S. Magee | 52 | Chief Financial Officer and Secretary | ||||||||
Paul N. Arnold | 74 | Director | ||||||||
Gary W. Bagley | 74 | Director | ||||||||
Bruce C. Bruckmann | 67 | Director | ||||||||
Patrick L. Edsell | 72 | Director | ||||||||
Thomas J. Galligan III | 76 | Director | ||||||||
Lawrence C. Karlson | 78 | Director | ||||||||
John T. Sawyer | 76 | Director |
John M. Engquist is described as a director nominee above.
Bradley W. Barberis described as a director nominee above.
Leslie S. Magee has served as Chief Financial Officer and Secretary of the Company since its formation in September 2005. Ms. Magee served as acting Chief Financial Officer of H&E LLC from December 2004 through August 2005, at which time she was appointed Chief Financial Officer and Secretary. She continued as Chief Financial Officer and Secretary until H&E LLC’s merger with and into the Company in February 2006. Previously, Ms. Magee served as Corporate Controller for H&E LLC and Head & Engquist. Prior to joining Head & Engquist in 1995, Ms. Magee spent five years working for Hawthorn, Waymouth & Carroll, L.L.P, an accounting firm based in Baton Rouge, Louisiana. Ms. Magee is a Certified Public Accountant and is a member of the American Institute of Certified Public Accountants and the Louisiana Society of Certified Public Accountants.
Paul N. Arnold is described as a director nominee above.
Gary W. Bagley is described as a director nominee above.
Bruce C. Bruckmann is described as a director nominee above.
Patrick L. Edsellis described as a director nominee above.
Thomas J. Galligan IIIis described as a director nominee above.
Lawrence C. Karlson is described as a director nominee above.
John T. Sawyer is described as a director nominee above.
20182020 DIRECTOR COMPENSATION
The elements of the Company’s compensation program fornon-employee directors are as follows:
Annual retainers of $100,000 fornon-employee directors other than the then-Chairman of the Board of Directors (the “Chairman”) and $170,000 for the Chairman; directors;
Annual stock awards with a grant date fair market value of $80,000 for allnon-employee directors (including the Chairman); directors; and
Committee chair annual retainers of $10,000 for the chairs of the Finance Committee and the Corporate Governance and Nominating Committee and $15,000 for the chairs of the Audit Committee and the Compensation Committee.
On February 1, 2019,2021, in accordance with the abovenon-employee director compensation program, Messrs. Arnold, Bagley, Bruckmann, Edsell, Galligan, Karlson and Sawyer each received grants of 2,9892,912 shares of fully vested common stock under the Company’s 2016 Incentive Plan. Ms. Mary Pat Thompson, who resigned from the Board on March 25, 2021, also received a grant of 2,912 shares of fully vested common stock under the Company’s 2016 Incentive Plan on February 1, 2021, in connection with her service as a director. The determination of the number of shares of common stock to be issued to eachnon-employee director was based on the Company’s closing stock price on January 31, 201929, 2021, the last trading day preceding the grant date, on the NASDAQ, or $26.77$27.48 per share. The grants made tonon-employee directors in 20182020 are described in more detail in the table and footnotes below.
The table below summarizes the compensation paid by the Company to eachnon-employee director for the year ended December 31, 2018.2020.
DirectorFor the compensation of our employee directors during 2020 (Messrs. Barber and Engquist) see “Summary Compensation TableTable”.
Director Compensation Tables | Director Compensation Tables |
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Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) |
| Fees Earned or Paid in Cash ($) (1) |
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| Stock Awards ($) (2) |
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| All Other Compensation ($) |
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| Total ($) |
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Paul N. Arnold | 115,000 | 80,020 | — | 195,020 |
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| 115,000 |
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| 80,002 |
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| — |
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| 195,002 |
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Gary W. Bagley | 170,000 | 80,020 | — | 250,020 |
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| 100,000 |
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| 80,002 |
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| — |
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| 180,002 |
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Bruce C. Bruckmann | 110,000 | 80,020 | — | 190,020 |
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| 110,000 |
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| 80,002 |
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| — |
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| 190,002 |
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Patrick L. Edsell | 115,000 | 80,020 | — | 195,020 |
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| 115,000 |
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| 80,002 |
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| 195,002 |
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Thomas J. Galligan III | 100,000 | 80,020 | — | 180,020 |
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| 100,000 |
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| 80,002 |
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| — |
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| 180,002 |
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Lawrence C. Karlson | 110,000 | 80,020 | — | 190,020 |
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| 110,000 |
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| 80,002 |
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| 190,002 |
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John T. Sawyer | 100,000 | 80,020 | — | 180,020 |
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| 100,000 |
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| 80,002 |
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| 180,002 |
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Mary P. Thompson (3) |
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| 100,000 |
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| 80,002 |
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| — |
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| 180,002 |
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_________
(1) | This column reflects fees paid to directors who served as directors in |
(2) | Amounts shown represent the grant date fair value of restricted common stock granted on February 1, |
(3) | Ms. Mary Pat Thompson resigned from the Board, the Audit Committee and the Corporate Governance and Nominating Committee on March 25, 2021. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND DIRECTORS, DIRECTOR NOMINEES AND OFFICERS
The following table sets forth certain information with respect to beneficial ownership of the Company’s common stock as of March 14, 2019,22, 2021, the Annual Meeting Record Date, by (i) each person, or group of affiliated persons who is known by the Company to own more than 5% of its common stock, (ii) each of the Company’s directors and executive officers and (iii) all directors and executives of the Company as a group. The information provided in the table is based on our records, information filed with the SEC and information provided to the Company.
Beneficial ownership is determined in accordance with the rules of the SEC. To our knowledge, except as set forth in the footnotes to the following table and subject to appropriate community property laws, the persons in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them.
Unless otherwise noted, the address of each person listed below is c/o H&E Equipment Services, Inc., 7500 Pecue Lane, Baton Rouge, Louisiana 70809.
Amount and Nature of Beneficial Ownership |
| Amount and Nature of Beneficial Ownership |
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Shares | Percentage |
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Stockholders of 5% or more (excludes Directors and Executive Officers) |
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The Vanguard Group (1) | 3,045,002 | 8.5 | % |
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| 2,963,385 |
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BlackRock, Inc. (2) | 2,582,093 | 7.2 | % |
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| 2,925,515 |
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Clearbridge Investments LLC (3) | 2,220,423 | 6.2 | % |
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| 2,470,168 |
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| 6.8 | % | |||||
Directors (except Messrs. Barber and Engquist) |
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Bruce C. Bruckmann (4) | 1,054,955 | 2.9 | % |
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| 1,041,818 |
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| 2.9 | % | |||||
Gary W. Bagley (5) | 137,732 | * |
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| 143,595 |
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| * |
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Lawrence C. Karlson (5) | 45,063 | * | ||||||||||||||
John T. Sawyer (6) | 59,470 | * | ||||||||||||||
Lawrence C. Karlson (6) |
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| 53,801 |
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| * |
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John T. Sawyer (7) |
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| 69,333 |
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| * |
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Paul N. Arnold (5) | 58,248 | * |
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| 63,651 |
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| * |
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Patrick L. Edsell (5) | 24,543 | * | ||||||||||||||
Patrick L. Edsell (8) |
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| 30,706 |
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| * |
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Thomas J. Galligan III (5) | 24,543 | * |
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| 30,406 |
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| * |
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Executive Officers |
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John M. Engquist (7) | 2,530,579 | 7.1 | % | |||||||||||||
John M. Engquist (9) |
|
| 2,593,001 |
|
|
| 7.2 | % | ||||||||
Bradley W. Barber (9) |
|
| 131,484 |
|
| * |
| |||||||||
Leslie S. Magee | 76,754 | * |
|
| 97,183 |
|
| * |
| |||||||
Bradley W. Barber (7) | 107,150 | * | ||||||||||||||
All executive officers and directors as a group (10 persons) | 4,119,037 | 11.5 | % |
|
| 4,254,978 |
|
|
| 11.8 | % |
_____________
* Less than 1%.
|
The shares reported herein are beneficially owned by The Vanguard Group (“Vanguard”). Shares beneficially owned is based solely on the Schedule 13G amendment filed with the SEC on February |
(2) | The shares reported herein are beneficially owned by BlackRock, Inc. (“BlackRock”). Shares beneficially owned is based solely on the Schedule 13G filed with the SEC on |
(3) | The shares reported herein are beneficially owned by Clearbridge Investments, LLC (“Clearbridge”). Shares beneficially owned is based solely on the Schedule 13G filed with the SEC on February |
(4) | Includes the February 1, |
| Includes the February 1, |
(6) | Includes the February 1, |
(7) | Includes the February 1, 2021 restricted stock grant of 2,912 shares, which vested immediately upon issuance. Also includes 30,805 shares held in a trust for the benefit of Mr. Sawyer’s family. |
(8) | Includes the February 1, 2021 restricted stock grant of 2,912 shares, which vested immediately upon issuance. Also includes 300 shares held by Mr. Edsell’s domestic partner. |
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
The rules of the SEC require the Company to disclose late filings of stock transaction reports by its executive officers and directors and by certain beneficial owners of the Company’s common stock. Based on our records and other information, we believe that each of our executive officers, directors and certain beneficial owners of the Company’s common stock complied with all Section 16(a) filing requirements applicable to them during 20182020 on a timely basis, except as noted below:
Mr. Bruckmann’sEdsell’s Form 4, filed November 20, 2018,August 5, 2020, reporting his purchasedomestic partner’s purchases of 5,000100 shares of the Company’s common stock on OctoberNovember 29, 2018 and 200 shares of the Company’s stock on May 12, 2020 was not timely filed.
The reports (Forms 3, 4 and 5) filed under Section 16(a) of the Exchange Act reflecting transactions in Company securities are posted on our Internet website by the end of the business day after the report’s filing.
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended, or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filings, except to the extent that the Company specifically incorporates it by reference.
The Audit Committee assists the Board in meeting its oversight responsibility to stockholders, potential stockholders, the investment community and others. The Audit Committee’s function is one of oversight, recognizing that management is responsible for preparing the Company’s financial statements, and the independent registered public accounting firm is responsible for auditing those statements. Management of the Company is responsible for (1) the preparation, presentation, and integrity of the Company’s financial statements; (2) the appropriateness of the accounting principles and reporting policies that are used by the Company;
(3) establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act; and (4) maintaining adequate disclosure controls and procedures, as such term is defined by the Exchange Act. The Company’s independent registered public accounting firm is responsible for (1) auditing the Company’s annual consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight
Board (United States) and expressing an opinion on the conformity of those consolidated financial statements with accounting principles generally accepted in the United States of America (“GAAP”); (2) auditing and attesting to the Company’s internal control over financial reporting based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”); and (3) reviewing the Company’s unaudited interim condensed consolidated financial statements. The Audit Committee’s primary responsibility is to oversee the Company’s financial reporting process on behalf of the Board and report the results of its activities to the Board. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews or procedures. In performing its oversight function, the Audit Committee relies, without independent verification, on the information provided to it and on the representations made by management and the Company’s independent registered public accounting firm. The Audit Committee will however take the appropriate actions to set the overall corporate “tone” for quality financial reporting, sound business risk practices, and ethical behavior.
The Audit Committee is directly responsible for the selection of the independent registered public accounting firm to be retained to audit the Company’s consolidated financial statements and internal control over financial reporting, and once retained, the independent registered public accounting firm reports directly to the Audit Committee. The independent registered public accounting firm is ultimately accountable to the Audit Committee and the Board. In connection with the decision regarding whether tore-appoint the independent auditor each year (subject to stockholder ratification), the Audit Committee conducts an annual assessment of the independent auditor’s performance, including with respect to the independent auditor’s qualifications and experience, the communication and interactions with the auditor over the course of the previous year and the auditor’s independence, objectivity and professional skepticism. The Audit Committee consults with and reviews recommendations made by the independent registered public accounting firm with respect to the Company’s consolidated financial statements and related disclosures and internal control over financial reporting of the Company and makes recommendations to the Board as it deems appropriate from time to time. The Audit Committee is responsible for approving both audit andnon-audit services to be provided by the independent registered public accounting firm. The Audit Committee is currently composed of four directors, all four of whom the Board has determined to be independent as that term is defined by applicable NASDAQ listing standards and SEC rules. The Board has determined, in accordance with applicable NASDAQ listing standards, that Messrs. Edsell and Galligan are audit committee financial experts, as defined in Item 407(d)(5) of RegulationS-K of the Exchange Act. The Audit Committee operates under a written charter adopted by the Board, which is available on the Company’s Internet website atwww.he-equipment.com, or by clicking here. The Audit Committee charter is reviewed on an annual basis by the Audit Committee and is subject to amendment from time to time.
The Audit Committee meets with management periodically to consider the adequacy of the Company’s internal controls, and discusses these matters with the Company’s independent registered public accounting firm. The Audit Committee also discusses with senior management the Company’s disclosure controls and procedures. The Audit Committee’s oversight of the independent registered public accounting firm includes resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the Company’s quarterly earnings releases, Quarterly Reports on Form10-Q for the periods ended March 31, 2018,2020, June 30, 20182020 and September 30, 2018,2020, and the audited consolidated financial statements in the Annual Report onForm 10-K for the year ended December 31, 20182020 with management and the Company’s independent registered public accounting firm, which included a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the consolidated financial statements.
The Audit Committee also discussed with management and the independent registered public accounting firm the Company’s internal control over financial reporting. The Audit Committee has also received from, and discussed with, the Company’s independent registered public accounting firm the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16 (Communications with
Audit Committees). The Audit Committee received the written disclosures and the letter from the Company’s independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. In addition, the Audit Committee discussed with the independent registered public accounting
firm its independence, including the compatibility of anynon-audit services with the independent registered public accounting firm’s independence.
The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and plans for its 20182020 audit. The Audit Committee met with the independent registered public accounting firm, with and without management present, to discuss the year 20182020 results of its consolidated financial statement audit, its audit of the Company’s internal controls over financial reporting and the overall quality of the Company’s financial reporting. Both the Director of Internal Audit and the independent registered public accounting firm have direct access to the Audit Committee at any time on any issue of their choosing, and the Audit Committee has the same direct access to the Director of Internal Audit and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements for the year ended December 31, 20182020 be included in the 20182020 Annual Report onForm 10-K for filing with the SEC.
The Audit Committee has appointed the firm of BDO USA, LLP as independent registered public accounting firm to audit and report upon the Company’s consolidated financial statements and internal control over financial reporting for the year ending December 31, 2019.2021. In making this selection, the Audit Committee has considered whether BDO USA, LLP’s provision of services other than audit services is compatible with maintaining their independence.
AUDIT COMMITTEE Patrick L. Edsell, Chairman Thomas J. Galligan III John T. Sawyer
|
ITEM 2 —- RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed BDO USA, LLP as the independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ending December 31, 20192021 and internal control over financial reporting. Although action by the stockholders on this matter is not required under Delaware law or the Sarbanes-Oxley Act of 2002, as amended, or the rules of the SEC promulgated thereunder, the Audit Committee and the Board of Directors believe it is appropriate to seek stockholder ratification of this appointment in light of the role played by the independent registered public accounting firm in reporting on the Company’s consolidated financial statements. Ratification requires the affirmative vote of a majority of eligible shares present at the Annual Meeting, in personvirtually or by proxy, and voting thereon. If this appointment is not ratified by the stockholders, the Audit Committee may reconsider its appointment. One or more representatives of BDO USA, LLP are expected to attend the 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 questions.
The Board of Directors recommends a vote FOR ratification of the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019.
Principal Accountant Fees and Services
The aggregate fees billed by our independent registered public accounting firm for professional services rendered in connection with (i) the audit of our consolidated financial statements as set forth in our Annual Report on Form10-K for the years ended December 31, 20182020 and 2017,2019, (ii) the review of our quarterly consolidated financial statements as set forth in our Quarterly Reports on Form10-Q for each of our quarters during 20182020 and 2017,2019, and (iii) the 20182020 and 20172019 audit of our internal control over financial reporting with the objective of obtaining reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects, as well as any fees paid to our independent registered public accounting firm for audit-related
work, tax compliance, tax planning and other consulting services are set forth in the table below:
2018 | 2017 |
| 2020 |
|
| 2019 |
| |||||||||
Audit Fees (1) | $ | 710,000 | $ | 765,000 |
| $ | 840,597 |
|
| $ | 717,200 |
| ||||
Audit-Related Fees (2) | 223,619 | 209,843 |
|
| 111,925 |
|
|
| 137,552 |
| ||||||
Tax Fees | — | — |
|
| — |
|
|
| — |
| ||||||
All Other Fees | — | — |
|
| — |
|
|
| — |
| ||||||
|
|
| $ | 952,522 |
|
| $ | 854,752 |
| |||||||
$ | 933,619 | $ | 974,843 | |||||||||||||
|
|
____________
(1) | Represents audit fees and expenses for professional services provided in connection with the annual audit of our consolidated financial statements and the effectiveness of internal control over financial reporting, the review of our quarterly consolidated financial statements and audit services provided in connection with other regulatory filings. |