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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS |
To the Shareholders of Northwest Pipe Company:
The 2016 Annual Meeting of Shareholders (the “Annual Meeting”) of Northwest Pipe Company will be held on Thursday, June 2, 2016, at 8:00 a.m. Pacific Time at the Hilton Vancouver Hotel, located at 301 West 6th Street, Vancouver, Washington. The purposes of the Annual Meeting will be:
| 1. | To elect twothree directors, eachone to serve for a two-year term, and two to serve for a three-year term; |
| 2. | To hold an advisory vote on the Company’s executive compensation; |
| 3. | To hold an advisory vote on the frequency of shareholder advisory votes on executive compensation; |
| 4. | To ratify the appointment of Moss Adams LLP as the Company'sCompany’s independent registered public accounting firm for the year ending December 31, 2016;2023; and |
| 4.5.
| To transact such other business as may properly come before the meeting or any adjournments or postponements thereof. |
The 2023 Annual Meeting of Shareholders (the “Annual Meeting”) of Northwest Pipe Company will be held via webcast on Thursday, June 22, 2023, at 7:00 a.m. Pacific Time at www.virtualshareholdermeeting.com/NWPX2023. To participate in the Annual Meeting, you will need your unique 16‑digit control number printed in the box and marked by the arrow on your proxy card or on the voting instructions from your stockbroker, bank, or other nominee that accompanied your proxy materials. On the record date, there were 9,998,974 shares of Common Stock then outstanding, with each share of Common Stock being entitled to one vote.
Only shareholders of record at the close of business on April
15, 201613, 2023 are entitled to receive notice of, and to vote at, the Annual Meeting and any adjournments or postponements of the
Meeting.meeting. It is important that your shares be represented and voted at the meeting. Please complete, sign, and return your proxy card, or use the Internet or telephone voting systems.
We are enclosing a copy of
IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS
This Proxy Statement and the 2015Company’s 2022 Annual Report to Shareholders withfor the Annual Meeting to be held on June 22, 2023 are also available at www.proxyvote.com.
| Notice and Proxy Statement | 2023 | |
FORWARD LOOKING STATEMENTS
Certain statements in this NoticeProxy Statement, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), that are based on current expectations, estimates, and projections about Northwest Pipe Company’s business, management’s beliefs, and assumptions made by management. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,” “should,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements as a result of a variety of important factors. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Proxy Statement. If the Company does update or correct one or more forward-looking statements, investors and others should not conclude that it will make additional updates or corrections with respect thereto or with respect to other forward-looking statements.
| Notice and Proxy Statement | 2023 | |
TABLE OF CONTENTS
IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ONJUNE 2, 2016:
ThisProxyStatement and the Company’s 2015 Annual Report to Shareholders are also available at
https://materials.proxyvote.com/667746
|
PROXY STATEMENT FOR THE
2016 ANNUAL MEETING OF SHAREHOLDERS OF
NORTHWEST PIPE COMPANY
TABLE OF CONTENTS
| Notice and Proxy Statement | 2023 | |
CREATING STAKEHOLDER VALUE
‘Creating Stakeholder Value’ Section starts on page 7.
| | | | | | | | |
| 57 | | Years of Quality Manufacturing Data as of 12/31/2022 | | 13 | | Manufacturing Facilities | | 1,312 | | Company Employees | | 4 | | Branded Product Lines | |
Founded in 1966, Northwest Pipe Company is a leading manufacturer of water-related infrastructure products. In addition to being the largest manufacturer of engineered steel water pipeline systems in North America, the Company manufactures stormwater and wastewater technology products; high-quality precast and reinforced concrete products; pump lift stations; steel casing pipe, bar-wrapped concrete cylinder pipe, and one of the largest offerings of pipeline system joints, fittings, and specialized components.
| Notice and Proxy Statement | 2023 | |
NORTHWEST PIPE COMPANY
5721 SE Columbia Way, Suite 200
Vancouver, Washington 98661
(360) 397-6250A combination of new population centers, rising demand on developed water sources, substantial underinvestment in water infrastructure over the past several decades, impacts from climate change, and increasingly stringent regulatory policies are driving demand for water infrastructure projects in the United States. The Company’s core market is the large-diameter, high-pressure portion of a water transmission pipeline which it believes has a total addressable market of approximately $2.0 billion over the next three years.
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 2, 2016
INTRODUCTION
This Proxy StatementWith the Company’s goal of creating growth and the accompanying 2015 Annual Reportprofitability to Shareholders are being furnished to the shareholders ofdrive shareholder value, Northwest Pipe Company an Oregon corporation (the “Company”), as partlooks beyond the engineered welded steel pipeline market to achieve that growth. Currently the Company holds approximately 55% of the solicitationengineered steel pressure pipe addressable market. In addition to maximizing the steel pressure pipe water transmission business by being opportunistic with the limited but identified potential acquisition opportunities, it is essential to look to the precast concrete and engineered solutions market for growth through expansion or acquisition.
| Notice and Proxy Statement | 2023 | |
In 2022, despite a general trend of economic downturn, Northwest Pipe Company outperformed certain peer companies (the “Peer Group”) selected by the Company’s BoardCompany and the Russell 2000 Index of Directors (the “Board of Directors”) for use atsmall-cap companies, which was due, in part, to the Company’s annual meeting of shareholders (the “Annual Meeting”) to be heldexpansion in the precast market. See page 48 for companies included in the Peer Group.
| EARNINGS PER SHARE | | INDEXED RETURNS | |
| Basic net income per share is computed by dividing the net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by giving effect to all potential shares of common stock, including stock options, restricted stock units (“RSUs”), and performance share awards (“PSAs”), to the extent dilutive. The chart below shows diluted net income per share, which was $3.11 in 2022. | | Northwest Pipe Company has outperformed the Peer Group and the common market indexes it compares itself against. The chart below reflects performance compared to the common market indexes identified below and a weighted composite of the Peer Group selected by the Company. The index is based on cumulative returns from an initial $100 invested on December 31, 2017. | |
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CORPORATE GOVERNANCE
‘Corporate Governance’ Section starts on Thursday, June 2, 2016 at 8:00 a.m. Pacific Time at the Hilton Vancouver Hotel, located at 301 West 6th Street, Vancouver, Washington.page 16.
At the Annual Meeting, shareholders will be asked to vote on the following matters:CORPORATE GOVERNANCE HIGHLIGHTS
SHAREHOLDER EMPOWERMENT AND ENGAGEMENT | ✔ | 10% threshold for shareholder to call a special meeting |
✔ | Robust year-round shareholder engagement |
✔ | No poison pill |
SKILLED AND INDEPENDENT BOARD OF DIRECTORS | ✔ | All directors are independent, except the Chief Executive Officer (“CEO”) |
✔ | Range of tenures enables balance between historical experience and fresh perspectives |
✔ | Skills and background aligned to the Company’s strategic direction |
✔ | Director recruitment and selection process that formally prioritizes skills and qualifications and emphasizes leadership traits, work ethic, independence, business experience, and diversity of background |
| 1. ✔ | The election of two directors, each to serve for a three-year term; Diverse experience (industry, profession, public service, geography) |
| Notice and Proxy Statement | 2023 | |
DEFINED BOARD STRUCTURE AND PROCESSES | ✔ | Independent Lead Director elected by independent directors, with expanded responsibilities, including formal responsibilities relative to director candidate selection and the Board of Directors (“Board”) self-evaluation processes |
✔ | Regular executive sessions of independent directors |
✔ | All members of all committees are independent directors |
| ✔ | All members empowered to call special Board meetings at any time for any reason |
| ✔ | Annual self-assessment to enable adequate Board refreshment and appropriate evolution of Board skills, experience, and perspectives; results shared and discussed in executive session of independent directors |
| ✔ | Annual refresh of Corporate Governance Guidelines to ensure alignment with best practices |
2.ROBUST OVERSIGHT OF RISKS AND OPPORTUNITIES | ✔ | An advisory voteBoard responsible for risk oversight, with specific risk areas delegated to relevant Board committees
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✔ | Purposeful inclusion of key risk areas on Board and/or committee agendas |
✔ | Engagement with business leaders to review short-term plans, long-term strategies, and associated risks |
| ✔ | Incentive compensation not overly leveraged and with maximum payout caps and design features intended to balance pay for performance with the Company’s executive compensation;appropriate level of risk-taking |
| ✔ | Robust stock ownership requirements and prohibition from hedging and pledging Company securities |
| ✔ | Equity clawbacks in the event of a significant financial restatement |
COMMITMENT TO SUSTAINABILITY AND CORPORATE RESPONSIBILITY | ✔ | Dedicated adherence to principles of Integrity and Ethics, Inclusion and Diversity, and Workplace Respect, while fostering a performance culture based on Company behaviors |
✔ | No use of corporate funds for political contributions; robust oversight of and transparency into political activities |
PROPOSAL #1: ELECTION OF DIRECTORS
‘Proposal #1: Election of Directors’ Section starts on page 24.
Nominees | Title | Years of Service | Independent | Committee Membership |
Irma Lockridge | Chief People and Systems Officer of CoorsTek | 0 | Yes | Compensation Committee; Nominating and Governance Committee |
Scott Montross | President and Chief Executive Officer of Northwest Pipe Company | 10 | No | None |
John Paschal | Retired President of Temtco Steel Division of Kloeckner Metals Corporation | 4 | Yes | Compensation Committee; Environmental and Social Governance Committee; Nominating and Governance Committee - chairperson |
| 3. YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL. | The ratification of the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2016; and
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| 4.
| Such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
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This Proxy Statement, together with the enclosed proxy card and the 2015 Annual Report to Shareholders, are first being mailed to shareholders of the Company on or about April 29, 2016.
The Board of Directors has fixedunanimously recommends that shareholders vote “FOR” the closeelection of businessits nominees for director. Proxies solicited by the Board will be voted “FOR” the election of the Board’s nominees unless a vote withholding authority is specifically indicated.
| Notice and Proxy Statement | 2023 | |
PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
‘Proposal #2: Advisory Vote on April 15, 2016Executive Compensation’ Section starts on page 33.
EXECUTIVE COMPENSATION
The following table reflects compensation awarded to the Company’s CEO, Chief Financial Officer (“CFO”), and each of the three other most highly compensated executive officers (collectively the “Named Executive Officers”) in 2022. More detailed information regarding Executive Compensation can be found on page 33 under “Executive Compensation Discussion and Analysis” and on page 41 under “Summary Compensation.”
Name | Principal Position | | Salary | | | Stock Awards | | | Non-Equity Incentive Plan Compensation | | | All Other Compensation | | | Total | |
| | | | | | | | | | | | | | | | | | | | | |
Scott Montross | Director, CEO, and President | | $ | 642,675 | | | $ | 977,851 | | | $ | 899,745 | | | $ | 13,748 | | | $ | 2,534,019 | |
Aaron Wilkins | Senior Vice President and CFO | | | 355,000 | | | | 310,237 | | | | 355,000 | | | | 11,259 | | | | 1,031,496 | |
Miles Brittain | Executive Vice President | | | 358,750 | | | | 310,237 | | | | 358,750 | | | | 14,696 | | | | 1,042,433 | |
Eric Stokes | Senior Vice President | | | 322,905 | | | | 278,411 | | | | 322,905 | | | | 12,954 | | | | 937,175 | |
Michael Wray | Senior Vice President | | | 308,275 | | | | 265,803 | | | | 308,275 | | | | 11,676 | | | | 894,029 | |
| YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL. |
The Board of Directors unanimously recommends voting “FOR” the approval of the compensation of the Named Executive Officers (“NEOs”) as disclosed in this proxy statement and as described pursuant to the compensation disclosure rules of the Exchange Act.
PROPOSAL #3: ADVISORY VOTE ON THE FREQUENCY OF SHAREHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION
‘Proposal #3: Advisory Vote on the Frequency of Shareholder Advisory Votes on Executive Compensation’ Section starts on page 51.
The advisory vote on the frequency of shareholder advisory votes on executive compensation is a non-binding vote as to how often the executive compensation advisory vote should occur: every one year, every two years, or every three years. You may either vote for one of these alternative frequencies or, if you desire, abstain from voting on this matter.
| YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE OPTION OF 1 YEAR IN THIS PROPOSAL. |
The Board of Directors unanimously recommends voting “FOR” the option of “1 Year” as the record datefrequency with which shareholders are provided an advisory vote on executive compensation.
| Notice and Proxy Statement | 2023 | |
PROPOSAL #4: RATIFICATION OF THE APPOINTMENT OF MOSS ADAMS LLP
‘Proposal #4: Ratification of the Appointment of Moss Adams LLP’ Section starts on page 52.
Audit fees include fees for the determinationaudit of the shareholders entitledannual financial statements, including required quarterly reviews, the audit of the Company’s internal control over financial reporting, and services in connection with other regulatory filings. Fees for services billed by the Company’s principal accountant, Moss Adams LLP (“Moss Adams”), for the years ended December 31, 2022 and 2021 were as follows:
2022 $1,388,000
2021 $1,232,500
| YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL. |
The Board of Directors unanimously recommends voting “FOR” the ratification of the Audit Committee’s appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023.
ADDITIONAL INFORMATION
‘Additional Information’ Section starts on page 53.
| Notice and Proxy Statement | 2023 | |
| CREATING STAKEHOLDER VALUE |
CREATING STAKEHOLDER VALUE
COMPANY CULTURE
Northwest Pipe Company’s core values are Accountability, Commitment, and Teamwork, or ACT for short, which it seeks to noticedemonstrate in all of its behaviors and daily interactions, both internally and externally, and with all of its stakeholders.
PROFESSIONAL STANDARDS
Northwest Pipe Company takes pride in the high standards of conduct that it identifies with as a Company. The Company has controls in place relating to compliance with its Code of Business Conduct and Ethics (“Code”), including a requirement for employees and the Board of Directors to review and understand the requirements of the Code, as well as an established whistleblower hotline and related procedures.
The Company conducts training on the Code upon hire, and in regular intervals during the employee’s life cycle. The most recent ethics training for all salaried employees was launched in the fourth quarter of 2022.
The Company also conducts anti-trust training annually. The most recent anti-trust training for certain senior management and sales employees was the first quarter of 2023.
In addition, the Company recently conducted its “Respect in the Workplace” training which focused on inclusion, communication, and attentiveness to workplace behaviors and their impact on others.
2022 PERFORMANCE HIGHLIGHTS
In 2022, the Company maintained its high levels of production and strong financial performance amid the ongoing recovery from the global pandemic and prospect of an economic downturn. The sales increase in 2022 is due mainly to the continued integration of the Precast Infrastructure and Engineered Systems (“Precast”) businesses acquired in 2020-2021. A historically strong backlog and order book, along with growing demand in the Precast segment, are the main contributors to the Company’s recent success.
| Notice and Proxy Statement | 2023 | |
| CREATING STAKEHOLDER VALUE |
| REVENUE GROWTH (IN MILLIONS) | | PROFITABILITY | |
| In 2022, net sales revenue increased 37.3% to approximately $458 million from approximately $333 million in 2021. Recent growth can largely be attributed to the Company’s acquisitions of Geneva Pipe and Precast Company (“Geneva”) and Park Environmental Equipment, LLC (“ParkUSA”), which contributed $150 million to the Company’s 2022 net sales. | | Earnings per share (“EPS”) ratio is the percentage of the Company’s net income per share if all profits are distributed to shareholders. The Company’s diluted EPS in 2022 was $3.11, a 168% increase from the $1.16 diluted EPS in 2021. | |
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| SPP BACKLOG INCLUDING CONFIRMED ORDERS (IN MILLIONS) | | PRECAST ORDER BOOK (IN MILLIONS) | |
| As of December 31, 2022, the Company had a backlog(1) of $274 million. The Company evaluates demand for its Engineered Steel Pressure Pipe (“SPP”) segment using backlog including confirmed orders(2), as confirmed orders are generally not canceled and, as such, provides a more holistic measure of demand. As of December 31, 2022, SPP’s backlog including confirmed orders was $372 million, indicating a healthy project load and future revenue. | | As of December 31, 2022, the Company had an order book totaling $64 million in the Precast segment, a 25.5% increase from the prior year. ‘Order book’ includes unfulfilled orders outstanding at the measurement date. | |
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| | (1) | ‘Backlog’ includes the balance of remaining obligations under signed contracts for which revenue is recognized over time. |
| | (2) | ‘Confirmed orders’ includes projects for which the Company has been notified that it is the successful bidder, but a binding agreement has not been executed. |
| Notice and Proxy Statement | 2022 | |
| CREATING STAKEHOLDER VALUE |
GROWTH AND STRATEGIC OPPORTUNITIES
Northwest Pipe Company’s growth strategy is focused on diversifying into a broader water market and capitalizing on the unique attributes of its market position, production capabilities, reputation, and nationwide sales and distribution footprint. The Company’s goal is to create transformational growth and profitability in order to drive shareholder value via a two-pronged strategy: 1) growth in its precast-related market through both organic growth “Product Spread” strategy and acquisitions; and 2) maximize the steel pressure pipe business through cost reduction measures and “Lean Manufacturing” to drive further efficiencies. “Product Spread” is an initiative to add the production of ParkUSA products to pre-existing Northwest Pipe Company facilities, and vice versa in order to expand production and maximize overall efficiencies. “Lean Manufacturing” is a production method aimed primarily at reducing times within the production system as well as response times from suppliers and to votecustomers.
Recent acquisitions present prime opportunities for the Company to expand its reach in the precast market. The Company acquired Geneva on January 31, 2020, a concrete pipe and precast concrete products manufacturer based in Utah. This acquisition expanded the Company’s water infrastructure product capabilities by adding additional reinforced concrete pipe (“RCP”) capacity and a full line of precast concrete products including storm drains, manholes, catch basins, vaults, and curb inlets as well as innovative lined products that extend the life of concrete pipe and manholes for sewer applications. On October 5, 2021, the Company acquired ParkUSA, a technology leader in water infrastructure products that manufactures water, wastewater, and environmental solutions at its three operating facilities in Texas. The ParkUSA products are assembled within concrete vaults or steel fabricated housings that can be delivered direct to the job site, saving valuable installation time for the Company’s customers.
Since 2020, the Company has shown a steady increase in Precast sales through its product diversification strategy. Given the size of the addressable precast market, the Company aspires to grow organically by spreading the manufacturing of ParkUSA’s products to pre-existing Northwest Pipe Company facilities.
| Notice and Proxy Statement | 2023 | |
| CREATING STAKEHOLDER VALUE |
The Company’s strategy to expand production and maximize overall production efficiencies has been split as follows:
| Level 1 (underway) |
| • | Build out capacity utilization at ParkUSA facilities in Texas |
| | – | Expansion will require retrofit of existing facilities |
| • | Begin where the Company already has production facilities; control production, low cost of entry |
| | – | Initial focus on wastewater, stormwater, and water distribution products |
| • | Complete enterprise resource planning system integration for ParkUSA |
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| Level 2 |
| • | Produce and ship ParkUSA products out of legacy Northwest Pipe Company facilities |
| | – | Pre-existing Geneva precast operations to serve as pilot locations in 2023 |
| | – | Establish products at additional legacy Northwest Pipe Company locations once ParkUSA products are established at the Geneva locations |
| • | Emphasize cross-training across facilities |
The Company is solidifying its commitment to the precast market by continuing to invest in its Geneva facilities in Utah. The Company has recently invested in a new batch plant at the Annual Meeting. Accordingly, only holders of record of shares of Common StockSt. George, Utah facility, replaced a concrete mixer and controls in the Salt Lake City, Utah facility, and has ordered a RCP machine with associated concrete batching and mixing equipment, also at the closeSalt Lake City facility. The RCP machine is expected to cost approximately $15 million and will improve efficiency and increase capacity to meet growing market demand for RCP as well as increase production capacity for other concrete products in Utah.
In addition to the focus on growing its business, the Company maintains the current strategic and operational initiatives:
| • | take appropriate precautions to keep the Company’s employees safe; |
| • | integrate ParkUSA acquisition as quickly and as efficiently as possible; |
| • | improve performance through a persistent focus on margin over volume; |
| • | continue to implement cost reductions and efficiencies at all levels of the Company; and |
| • | identify strategic opportunities to grow the Company through expansion or acquisitions. |
TRANSFORMING INITIATIVES
Northwest Pipe Company’s performance culture enables it to be agile in response to the fast-changing needs of its customers and is supported by its three core ACT principles: Accountability, Commitment, and Teamwork. In addition to these key components, core drivers of the manufacturing operations include safety, quality, innovation, Lean Manufacturing, and reducing environmental impact through all phases of the business. This unwavering commitment underlies the principle that good business, economic growth, and social responsibility flourish together.
| Notice and Proxy Statement | 2023 | |
| CREATING STAKEHOLDER VALUE |
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (“ESG”) INITIATIVES
In 2022, the Company committed to implementing an Environmental, Social, and Governance (ESG) program focusing on: 1) maintaining high product output while minimizing environmental impact and combatting the forces of climate change; 2) responding to stakeholder priorities; and 3) meeting future regulatory demands to report greenhouse gas emissions from its manufacturing activities. The Company’s ESG strategy will align with reporting frameworks such as the United Nations Sustainable Development Goals (SDGs), Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on such dateClimate-related Financial Disclosures (TCFD) and others. Oversight of the Company’s ESG program is the responsibility of the Company’s executive management team. Further, the Company’s Board of Directors has created the Environmental and Social Governance Committee to assist with oversight and support of general environmental and social strategies, communication plans with stakeholders, and monitoring trends, recent developments, as well as developing regulations. The breadth of work led to the creation of a Corporate Social Responsibility Manager (CSRM) position, responsible for helping prioritize the Company’s ESG initiatives and driving them forward. Over the next year, the Company will develop and implement an ESG Roadmap to 1) identify and align ESG efforts across the Company; 2) prioritize ESG initiatives that are congruent with the Company’s strategic objectives; and 3) assign roles and responsibilities for executing activities intended to meet ESG goals.
The Company’s ESG Implementation Process
Establish a Baseline
Like many of its peers, the Company is just beginning its ESG journey and much of its work completed in 2022 centered on developing its baseline. The initial phase of the ESG implementation process featured a benchmarking exercise to determine the ESG issues that are important to its business strategy, and how it compares to industry peers. The benchmarking assessment provided a practical starting point, highlighting strengths to build on as well as opportunities to advance the ESG initiative. It also provided a clearer understanding of what shareholders are focused on, emerging topics, future material risks, and how the Company’s material issues are aligned. The Company also underwent a baselining exercise aided by a subscription to the Institutional Shareholder Services Corporate Solutions (ICS) Governance Analytics tool. The Company quickly improved its Social decile score from an ‘8’ to a ‘6’ (‘1’ being the highest rating and ‘5’ the median rating for companies in the 201030 “Construction & Engineering” GICS code) through careful review of its current operational practices and internal controls, as well as the publication and adoption of new policies.
| Notice and Proxy Statement | 2023 | |
| CREATING STAKEHOLDER VALUE |
Materiality Assessment
To further understand the Company’s ESG priorities and objectives, a materiality assessment was conducted in the first quarter of 2023. Led by independent ESG and Sustainability consultants, the three-day workshop featured a series of interviews with a multidisciplinary group of subject matter experts and department leads. The overall goals of the exercise were to identify ESG risks and opportunities, provide data to serve as a tool to further assist in defining overarching strategy, and inform ESG and sustainability reporting and communications content to stakeholders.
Based on discussions and a ranking exercise, 16 key ESG topics were identified for Northwest Pipe Company to consider in its long-term business performance and ongoing ESG strategy. Moving forward, ESG materiality will be entitledperiodically reviewed in an effort to voteensure the topics that are most important to the Company’s business and stakeholders are properly considered. The scatter-plot diagram below illustrates the prioritization ratings of material topics. While all the topics are important, material topics are separated by the level of attention and resources that may be needed to improve performance. Specifically, the Company will continue to maintain and manage performance of the topics identified in the “Continued Best Practices” category; however, these topics do not require the same level of attention and focus as the topics in the “Prioritize” category.
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| This chart represents Northwest Pipe Company’s preliminary results from its first materiality assessment and is intended to represent its identification of ESG topics relative to the Company’s overall strategic objectives and values. Prioritization and performance targets pertaining to ESG activities will be developed in the coming year. | |
Data from the workshop was presented to senior management, and the resulting sustainability framework is being used to develop a comprehensive sustainability strategy that will guide the Company’s ESG efforts in the coming years. The next steps (mid-2023) will be to define roles and responsibilities, establish key ESG goals and key performance indicators that are aligned with the Company’s annual goals and objectives, and eventually publish results.
| Notice and Proxy Statement | 2023 | |
| CREATING STAKEHOLDER VALUE |
Greenhouse Gas (GHG) Emissions Scope 1 and 2
At the time of this Proxy writing, the Company was in the early stages of collecting its Scope 1 (direct emissions) and Scope 2 (emissions from utility consumption) initial data. Scope 1 data collection will rely on information from the Company’s facilities (e.g. fuel consumption), and is expected to be completed in 2023. Like the materiality assessment, results from the Scope 1 and 2 emission calculations will help inform the direction and strategic objectives of the Company’s ESG framework. In partnership with independent ESG and Sustainability consultants, the Company will explore opportunities to implement business practices to reduce energy consumption and emissions, along with the establishment of credible emissions reduction targets.
Water Security
As a manufacturer of water-related infrastructure products, the Company is committed to providing water to communities with the intent of improving environmental and public health outcomes. With climate change disrupting weather patterns and causing long-term drought in regions where water has previously been more available, responsible resource management and reliable water transmission solutions are becoming even more crucial. The Company’s quality and long-lasting engineered steel pipe products support critical modernization projects that replace or rehabilitate crumbling, aging infrastructure, reducing water loss and saving millions of gallons of water a year. Some examples of the projects the Company is proud to be involved with include:
| • | The Pure Water San Diego Program, which will use proven water purification technology to clean recycled water to produce safe, high-quality drinking water. The Program offers a cost-effective investment for San Diego’s water needs and will provide a reliable, sustainable water supply. Pure Water San Diego is the City of San Diego’s phased, multi-year program that will provide nearly half of San Diego’s water supply locally by the end of 2035. |
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| • | The Navajo-Gallup Water Supply Project in northwest New Mexico, which will provide a sustainable water supply for approximately 250,000 people by conveying water from the San Juan River to the eastern section of the Navajo Nation, the southwestern portion of the Jicarilla Apache Nation, and the City of Gallup, New Mexico. |
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| • | The Lake Powell Pipeline (LPP), a long-term water supply plan for southern Utah that includes new resource development and increased water conservation. The LPP will transport water from Lake Powell through an approximately 140-mile buried pipeline to Washington County, Utah. Southern Utah’s population is projected to exceed 500,000 people by 2065. Meeting the community’s water needs will require ongoing conservation, water development projects and agricultural water transfers. |
PRIORITIZING HEALTH AND SAFETY
Northwest Pipe Company’s goal is to send each employee home safe at the Annual Meeting, with eachend of the day. As such, share entitling its owner to one vote on all matters properly presentedsafety is at the Annual Meeting. Oncentral core of the record date, there were 9,573,371 sharesCompany’s culture, and is infused at every level of Common Stock then outstanding,its organization. More than just policy and procedure, the Company’s safety program gives equal focus to the human side of safety, integrating coaching and mentoring efforts with each share of Common Stock being entitledcompliance-driven approaches. By instilling a deep commitment to one vote.
Ifsafety that reaches from the enclosed form of proxy is properly executedCompany’s CEO to its general laborers, the Company has achieved industry-leading safety performance. Over the last four years, the Company’s average total recordable incident rate was 2.35 and returned in time to be voted at the Annual Meeting, the shares represented thereby will be votedits average days away rate was 0.51, calculated in accordance with the instructions marked thereon.Executed but unmarked proxies will be voted in accordance with the recommendationsOccupational Safety and Health Administration’s (“OSHA”) record keeping requirements.
| Notice and Proxy Statement | 2023 | |
| CREATING STAKEHOLDER VALUE |
The Company’s recordable incident and days away rates are significantly lower than comparable industry averages. Industry average rates are recorded to OSHA per 100 full-time workers for SIC code 33121 (Iron and steel pipe and tube manufacturing from purchased steel). 2022 industry rates are not yet available as of the Boarddate of Directors.this Proxy.
Shareholders who execute proxies retain
To align the rightCompany’s commitment to revoke them at any time prior tosafety with its incentive compensation plans, in 2023 the exerciseexecutive officers and certain members of the powers conferred thereby by filing a written noticesenior management team who have direct responsibility for the Company’s safety program will have 10% of revocation with, or by delivering a duly executed proxy bearing a later datetheir short-term incentive plan tied to the Company’s Corporate Secretary,recordable incident rate, with a target of 2.8.
DIVERSITY AND INCLUSION
Diversity and inclusion are integral to Northwest Pipe Company’s employee experience, and the Company is proud of its diverse workforce. Companies that are diverse in age, gender identity, race, sexual orientation, physical or mental ability, ethnicity, and perspective are shown to be more resilient. Northwest Pipe Company 5721 SE Columbia Way, Suite 200, Vancouver, Washington 98661,values differences as strengths and believes the Company’s success and achievements as a company culminate from each individual’s unique background, perspective, talents, and skillset. A diverse workforce and inclusive working environment are the foundation for building the most effective, high-performing teams within the Company’s ACT culture.
The Company’s Affirmative Action Program (“AAP”) strives to hire, recruit, train, and promote employees without regard to race, age, religion, color, sex, national origin, physical or mental disability, marital or veteran status, sexual orientation, gender identity, or any other classification protected by attendinglaw. Northwest Pipe Company only hires employees who meet the Annual Meetingnecessary education, training, skills and/or experience requirements to perform their job, and votingwho can provide required documentation pertaining to legal eligibility and age requirements. To support these efforts, the AAP for the Company’s facilities in person. All valid, unrevoked proxies will be voted at the Annual Meeting.United States is reviewed annually by a third-party consultant, establishing annual hiring goals for women, minorities, veterans, and individuals with disabilities.
| Notice and Proxy Statement | 2023 | |
| CREATING STAKEHOLDER VALUE |
DEMOGRAPHIC DATA (as of December 31, 2022)
The charts below show self-identified ethnicity and gender within three working groups of Northwest Pipe Company employees: all team members (1,172 employees U.S. only), managers (140 employees U.S. only), and executive leadership (20 employees U.S. only).
Ethnicity
| Notice and Proxy Statement | 2023 | |
CORPORATE GOVERNANCE
OurNorthwest Pipe Company’s Board of Directors and management have committed themselves to establishing a strong corporate governance environment and to adopting the best practices to meet the needs and goals of the Company. As part of that commitment, we havethe Company has adopted Corporate Governance Principles, which cover such topics as qualifications and independence of Board members, the selection, orientation, and continuing education of Board members, as well as other topics designed to promote effective governance by the Board of Directors. We haveBoard. The Company has also adopted a Code of Business Conduct and Ethics, which applies to all employees, officers, and directors of the Company andCompany. It sets forth guidance to help in recognizing and dealing with ethical issues, to provide mechanisms for reporting unethical conduct, and to promote a culture of honesty and accountability, and a Code of Ethics for Senior Financial Officers, which applies to our senior financial officers and sets forth guidance to deter wrongdoing, and promote honest and ethical conduct, and to promote a culture of integrity and fairness. Copies of ourthe Corporate Governance Principles, Code of Business Conduct and Ethics, and Code of Ethics for Senior Financial Officers are available on the Company’s website atwww.nwpipe.com under “Investor Relations” -“Investors” — “Corporate Governance”,Governance,” or by writing to the Company’s Corporate Secretary, Northwest Pipe Company, 5721 SE Columbia Way,201 NE Park Plaza Drive, Suite 200,100, Vancouver, Washington 98661.98684.
WeThe Company has also adopted a Policy for Reporting Financial Irregularities (“Whistleblower Policy”), which is intended to create a workplace environment that encourages the highest standards of ethical, moral, and legal business conduct. The Whistleblower Policy establishes procedures for any person to confidentially and anonymously report violations, by us or any of ourthe Company’s personnel, of ourthe Code of Business Conduct and Ethics or any laws, rules, or regulations without fear of retaliation. The Whistleblower Policy also contains procedures for submission of complaints involving ourthe Company’s accounting practices and financial internal accounting controls.
Director ElectionsDIRECTOR ELECTIONS
While directors are elected by a plurality of votes cast, ourthe Company’s Corporate Governance Principles include a director resignation policy, requiring a director who receives more votes “withheld” than in favor of election in an uncontested election to tender an offer of his or her resignationsubmit to the Board of Directors a letter of resignation for consideration.consideration by the Nominating and Governance Committee. The Nominating and Governance Committee shall recommend to the Board the action to be taken with respect to such offer of resignation, and the Board shall promptly determine whether to accept such resignation, and shall publicly disclose its decision and rationale.rationale within 90 days following certification of the shareholder vote.
Director IndependenceIn accordance with this policy and in connection with the 2022 Annual Meeting of Shareholders, Michael Franson tendered his resignation from the Board to the Company, conditional upon the Board accepting such resignation. The Company believes that the large number of “withhold” votes received by Mr. Franson was primarily a result of a report issued by ISS Proxy Advisory Services Committee (“ISS”) in which ISS recommended votes be “withheld” for Mr. Franson because of the lack of racial or ethnic diversity on the Board. The Board, in consideration of, among other attributes, Mr. Franson’s valuable contributions to the Board and the Company as a whole, as well as the important role he is expected to fulfill for the future of the Board of Directors, determined not to accept Mr. Franson’s resignation. The events surrounding last year’s election are discussed in greater detail in the Company’s Current Reports on Form 8‑K filed on June 23, 2022 and June 29, 2022.
DIRECTOR INDEPENDENCE
The current Board of Directors consists of sixseven directors, twoone of whom areis currently employed by the Company (Messrs. Montross and Roman)(Mr. Montross). The Board of Directors has affirmatively determined that all of the non-employeeother directors (Ms. Applebaum(Mss. Julian and Lockridge and Messrs. Declusin, Demorest,Franson, Larson, Paschal, and Larson)Roman) are “independent” in accordance with the standards of the Nasdaq Stock Market, including standards related to independence for service on the committees on which they serve, and as defined by the director independence guidelines included in ourthe Company’s Corporate Governance Principles.
| Notice and Proxy Statement | 2023 | |
Criteria for Director Independence
For a director to be considered independent, the director must not have any material relationships with Northwest Pipe Company, either directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company, other than as a director or shareholder. Material relationships can include vendor, supplier, consulting, legal, banking, accounting, charitable, and family relationships, among others. The Board Leadership Structureof Directors considered all relevant facts and Risk Oversightcircumstances in making its determination of independence, including the following:
| ✔ | An independent director or nominee may not have been employed by Northwest Pipe Company or any of its subsidiaries or affiliates in the past three years. |
| ✔ | An independent director or nominee may not receive in excess of $120,000 from Northwest Pipe Company during any period of twelve consecutive months within the past three years other than (i) compensation for board or board member service, (ii) compensation paid to a family member who is an employee (other than an executive officer) of the Company, or (iii) benefits under tax-qualified retirement plan or non-discretionary compensation. |
| ✔ | An independent director or nominee may not have a family member who is, or at any time during the past three years was, employed by Northwest Pipe Company as an executive officer. |
| ✔ | An independent director or nominee may not be, or have a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which Northwest Pipe Company made, or from which the Northwest Pipe Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than payments arising solely from the investments in the Company’s securities or payments under non-discretionary charitable contribution matching programs. |
| ✔ | An independent director or nominee may not be an executive officer of another entity where a Northwest Pipe Company executive officer serves, or has served during the past three years, on the compensation committee of such entity. |
| ✔ | An independent director or nominee may not be, or have a family member who is, a current partner of Northwest Pipe Company’s outside auditor, or was a partner or employee of the outside auditor who worked on the Company’s audit at any time during the past three years. |
BOARD LEADERSHIP STRUCTURE AND RISK OVERSIGHT
The Company’s Corporate Governance Principles provide that the independent members of the Board of Directors will select a lead director from among the independent directors if the positions of ChairmanChairperson of the Board and Chief Executive Officer (“CEO”)CEO are held by the same person or if the ChairmanChairperson of the Board is not an independent director. The responsibilities of the ChairmanChairperson of the Board include the following: set Board meeting agendas in collaboration with the CEO; preside at Board meetings and the annual shareholders’ meeting; assign tasks to the appropriate committees;committees in accordance with their respective charters; serve as an ex-officio member of each Board committee; and ensure that information flows openly between management and the Board. The responsibilities of the lead director include the following: coordinate the activities of the independent directors; make recommendations to the CEO in setting Board meeting agendas on matters concerning the independent directors; prepare the agenda for executive sessions of the independent directors, chair those sessions, and be primarily responsible for communications between the independent directors and the CEO. RichardCEO; evaluate, along with the members of the Compensation Committee, the performance of the CEO; assist the Nominating and Governance Committee in the annual self-evaluation of the Board; recommend to the Chairperson of the Board the retention of consultants, as necessary or appropriate, who report directly to the Board; advise the Chairperson of the Board as to the quality, quantity, and timeliness of information sent to the Board; consult with other members of the Board as to recommendations for Board and committee membership and chairpersons of the Board committees, and interview Board candidates; and perform such other duties as the Board may from time to time designate.
| Notice and Proxy Statement | 2023 | |
Mr. Roman, who has served as the ChairmanChairperson of ourthe Board of Directors, issince January 2013, was not “independent” within the meaning of the applicable rules of the Nasdaq Stock Market. Accordingly, in December 2010,Market until October 1, 2021 because of his previous employment with the remaining directorsCompany. Mr. Franson was appointed James Declusin as the Board’s Lead Director.Director in August 2016 while Mr. Roman was not considered “independent” within the meaning of the applicable rules of the Nasdaq Stock Market. Despite Mr. Roman now meeting the definition of “independent,” the Board has determined to retain Mr. Franson’s Lead Director designation, as a reflection of the Board’s commitment to principles of independence.
Board’s Role in Risk Oversight
The Board of Directors oversees management’s Company-wide risk management activities. Management’s risk management activities which include assessing and taking actions necessary to manage risks incurred in connection with the long-term strategic direction of the Company and the operation of ourits business. The Board of Directors uses its committees to assist in its risk oversight function.
While senior management has primary responsibility for managing risk, the Board of Directors has responsibility for risk oversight with specific risk areas delegated to relevant Board Committees who report on their deliberations to the Board. The Compensation Committeespecific risk areas of focus for the Board and each of its Committees are summarized below. The Board relies on senior management to keep it informed with respect to the nature of risks facing the Company and how the Company is responsible for oversightmanaging those risks.
Board/Committee | | Primary Areas of Risk Oversight |
Full Board | ✔ | Safety and employee welfare |
| ✔ | Risk governance framework, including an enterprise-wide culture that supports appropriate risk awareness and the identification, escalation, and appropriate management of risk |
| ✔ | Integrity, ethics, and compliance with its Code of Business Conduct |
| ✔ | General strategic, commercial, operational, and economic risks |
| ✔ | Financial projections including liquidity management |
| ✔ | Strategic acquisition transactions, including execution and integration, and the competitive landscape for such acquisitions |
| | Legal risks such as those arising from litigation, environmental, and intellectual property matters |
| ✔ | Review of any other material transactions such as agreements involving corporate indebtedness, legal settlements or structure, commitments, or partnerships |
Audit Committee | ✔ | Risk management practices, including data protection and cybersecurity |
| ✔ | Compliance with regulatory requirements |
| ✔ | Ensure the mitigation of certain financial risks |
| ✔ | Review the external auditor’s qualifications and independence |
| ✔ | Treatment of any complaints regarding accounting, internal control, or auditing matters through the anonymous submission process, when applicable |
| ✔ | Accounting compliance oversite including the Company’s integrity over financial internal controls systems and disclosures |
| ✔ | Review of material findings of any examinations conducted by federal, state, or other agencies |
| ✔ | Review of transactions with related persons |
Compensation Committee | ✔ | Human capital management matters |
✔ | Compensation plans, programs, and arrangements and other employment practices and policies |
| ✔ | Recruitment and retention of key talent |
| ✔ | Labor compliance |
| ✔ | Executive compensation |
| ✔ | Maintaining remuneration framework |
| Notice and Proxy Statement | 2023 | |
Board/Committee | | Primary Areas of Risk Oversight |
Environmental | | |
| Environmental stewardship |
| Social responsibility and sustainability |
| Corporate philanthropic activities |
Nominating and Governance Committee | ✔ | Identification of qualified candidates for membership on the Board of Directors |
✔ | Review of corporate governance developments for the purpose of recommending to the Board of Directors corporate governance practices, including revisions to the Company’s Corporate Governance Principles |
✔ | Board training and onboarding |
| ✔ | Recommending committee membership to the Company’s Board of Directors |
| ✔ | Succession planning |
| ✔ | Executive share ownership requirements and insider training compliance |
Cyber-related Risks
The Board of Directors acknowledges the Company operates in a business environment encumbered by the increased risk associated with our compensation plans. The Nominating and Governance Committee is responsible for oversight of board processes and corporate governance-related risk.cyberattacks. The Audit Committee is responsible for oversight of our financial reporting process, financial internal controlsthe Company’s cybersecurity program and compliance activities,discusses the qualification, independencetopic quarterly. The Audit Committee is involved with the review of management’s policies and performance of our independent auditors,procedures to prevent, detect, and compliance with applicable legal and regulatory compliance requirements. The Board of Directors maintains overall responsibility for oversight of the work of its various committees by having regular reports from the chairman of each Committee with respect to the work performed by his respective Committee. In addition, discussions withextent it could become applicable in the Board aboutfuture, mitigate the effects of a discovered breach. The Audit Committee believes that the Company’s strategic plan,efforts require continuous review due to the speed in which these types of criminal behaviors evolve, and due to the inherent risk with cybersecurity, that maintaining an insurance policy is necessary to help protect the operational and financial results, capital structure, merger and acquisition related activity and other business generally include discussion of the risks associated with the matters under consideration.involved.
Board of Directors MeetingsBOARD OF DIRECTORS MEETINGS
Regular attendance at the Company’s Board of Directors meetings and the Annual Meeting is requiredexpected of each director. The Board of Directors held five meetings during 2015.2022, in addition to adopting unanimous written consents in lieu of a meeting. Each of the directors attended more than 75% of the total number of Board and applicable Committee meetings during their tenure in 2015.2022. In addition, all of the directors serving at that time attended the Company’s 20152022 Annual Meeting of Shareholders.
Board | Notice and Proxy Statement | 2023 | |
BOARD OF DIRECTORS COMMITTEES
The Board of Directors has an Audit Committee, a Compensation Committee, an Environmental and Social Governance Committee, and a Nominating and Governance Committee. Each of the Committees consists of independent directors and each of the Committees has adopted a written charter which is available on the Company’s website atwww.nwpipe.comwww.nwpipe.comunder “Investor Relations” -“Investors” — “Corporate Governance”, or by writing to the Company’s Corporate Secretary, Northwest Pipe Company, 5721 SE Columbia Way, Suite 200, Vancouver, Washington 98661.
Governance.” The table below lists the current membership of each Committee.
Board Member | Audit Committee | Compensation Committee | Environmental and Social Governance Committee (1) | Nominating and Governance Committee | Michael Franson | ✔ | | ✔ | + | | | Amanda Julian | | | ✔ | + | ✔ | | Keith Larson | ✔ | + | ✔ | | ✔ | | | Irma Lockridge | | ✔ | (2) | | ✔ | (2) | John Paschal | | ✔ | | ✔ | | ✔ | + | Richard Roman | ✔ | (3) | | | |
| Audit
Committee
| | Compensation
Committee+
| Committee chair |
| Nominating (1)
| The Environmental and Social Governance Committee was established in April 2022. |
Name:
| (2) | Irma Lockridge was appointed to the Compensation Committee and the Nominating and Governance Committee in April 2023. |
| (3) | | | Richard Roman was appointed to the Audit Committee in April 2022. |
Michelle Applebaum
| X
| | X
| | |
James Declusin
| | | X
| | X*
|
Harry Demorest
| X*
| | | | X
|
Keith Larson
| X
| | X*
| | |
____________
Audit Committee.
The Audit Committee of the Board of Directors is responsible for the oversight and monitoring of: the integrity of the Company’s financial reporting process, financial internal control systems, accounting and legal compliance, and the integrity of the financial reporting; the qualifications, independence, and performance of ourthe independent auditors; ourthe Company’s compliance with applicable legal and regulatory requirements; oversight of risk management practices, including data protection and cybersecurity; and the maintenance of open and private, if necessary, communication among the independent auditors, management, legal counsel, and the Board. The Audit Committee met 11eight times in 2015.2022. Each member of the Audit Committee is “independent” as defined by applicable U.S. Securities and Exchange Commission (“SEC”) and Nasdaq Stock Market rules. The Board of Directors has determined that Messrs. Demorest and Larson and Ms. Applebaum each member of the Audit Committee qualifies as an “audit committee financial expert” as defined by the rules of the SEC.
As a result of the resignation of Mr. Yearsley from the Company’s Board of Directors and its Audit Committee in February 2022, the Company was not in compliance with Nasdaq Listing Rule 5605, which requires that the Company’s Audit Committee be comprised of at least three directors, all of whom are independent pursuant to Nasdaq Stock Market rules and applicable law. Pursuant to Nasdaq Listing Rule 5605(c)(4), the Company was entitled to a cure period to regain compliance with Nasdaq Listing Rule 5605. On April 7, 2022, the Board appointed Mr. Roman, a current independent member of the Board, to the Audit Committee. With the appointment, the Company is now in compliance with Nasdaq Listing Rule 5605.
| Notice and Proxy Statement | 2023 | |
Compensation Committee.
The Compensation Committee of the Board of Directors is responsible for the oversight and determination of executive compensation by reviewing, recommending, and approving salaries and other compensation of the Company’s executive officers, and administering the Company’s equity incentive and compensation plans, including reviewing, recommending, and approving stock option and other equity incentive and compensation awards to executive officers. In addition, the Compensation Committee is responsible for recommending to the Board the level and form of compensation and benefits for directors,all nonemployee directors; oversight of the Company’s human capital management matters; and reviewing, recommending, and taking action upon any other compensation practices or policies of the Company as the Board of Directors may request or the Committee may determine to be appropriate. The Compensation Committee has sole authority to retain and terminate a compensation consultant to assist in the evaluation of executive compensation. The Compensation Committee met sixfour times in 2015.2022. Each member of the Compensation Committee is “independent” as defined by applicable Nasdaq Stock Market rules.
Environmental and Social Governance Committee
In April 2022, the Board established the Environmental and Social Governance (ESG) Committee of the Board of Directors, and appointed Ms. Julian as Chairperson and Messrs. Larson and Paschal as committee members. The ESG Committee is responsible for providing oversight and support of the Company’s environmental, health, diversity, and safety compliance policies, programs, and initiatives, and its commitment to environmental, health, diversity, and safety, corporate social responsibility, social governance, sustainability, and other related public policy matters (collectively, “ESG Matters”) relevant to the Company. The ESG Committee monitors the Company’s general strategy relating to ESG Matters, the Company’s communication plans with employees, investors, and other stakeholders of the Company with respect to ESG Matters, the Company’s developments relating to, and improving its understanding of, ESG Matters, and the Company’s compliance with certain ESG Matter-related legal and regulatory requirements. The ESG Committee met three times in 2022, and its first meeting was held in June 2022. Each member of the ESG Committee is “independent” as defined by applicable Nasdaq Stock Market rules.
Nominating and Governance Committee.
The Nominating and Governance Committee of the Board of Directors recommends to the Board of Directors corporate governance principles for the Company, identifies qualified candidates for membership on the Board of Directors, and proposes to the Board of Directors for its approval nominees for election as directors. The Nominating and Governance Committee met fourfive times in 2015.2022. Each member of the Nominating and Governance Committee is “independent” as defined by applicable Nasdaq Stock Market rules.
Communications with DirectorsCOMMUNICATIONS WITH DIRECTORS
Any shareholder who wants to communicate with members of the Board of Directors, individually or as a group, may do so by writing to the intended member or members of the Board, of Directors, c/o ChairmanChairperson of the Board, Northwest Pipe Company, 5721 SE Columbia Way,201 NE Park Plaza Drive, Suite 200,100, Vancouver, Washington 98661.98684. Communications should be sent by overnight or certified mail, return receipt requested. All communications will be submitted to the Boardintended member(s) of Directorsthe Board in a timely manner.
Nominations by Shareholders
In identifying qualified candidates for the Board of Directors, the Nominating and Governance Committee will consider recommendations by shareholders. Shareholder recommendations as to candidates for election to the Board of Directors may be submitted to the Company’s Corporate Secretary, Northwest Pipe Company, 5721 SE Columbia Way,201 NE Park Plaza Drive, Suite 200,100, Vancouver, Washington 98661.98684. The Nominating and Governance Committee will evaluate potential nominees, including candidates recommended by shareholders, by reviewing qualifications, considering references, and reviewing and considering such other information as the members of the Nominating and Governance Committee deem relevant.
| Notice and Proxy Statement | 2023 | |
The Company’s Bylaws permit shareholders to make nominations for the election of directors, if such nominations are made pursuant to timely notice in writing to the Company’s Secretary. To be timely, in accordance with the Company’s Bylaws as amended effective December 6, 2022, notice must be delivered to, or mailed to and received at, the principal executive offices of the Company not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. If the date of the annual meeting for the current year has been changed by more than thirty (30) days from the first anniversary of the preceding year’s annual meeting, then for notice by the shareholder to be timely, the notice must be received not less than 90 days nor more than 120 days prior to the day of such annual meeting or, if the first public announcement of the date of such annual meeting is less than one hundred (100) days prior to the date of such annual meeting, the tenth (10th) day following the day on which public announcement of the date of the annual meeting was first made by the Company. Prior to the Company’s most recent Bylaws amendment, notice of nominations had to be given not less than 60 days nor more than 90 days prior to the date of the meeting. In the event that the number of directors to be elected is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increase at least ten (10) days before the last day that a shareholder may deliver a notice of nomination pursuant to the foregoing provisions, then a shareholder’s notice will also be considered timely, but only with respect to any nominees for any new positions created by such increase, if it shall be received by the Secretary at the principal executive offices of the corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Company. Any nominations for the 2024 Annual Meeting of Shareholders must be received by the Company not later than March 24, 2024.
Any nominations by shareholders must also comply with the timing, disclosure, procedural and other requirements as set forth in the Company’s Bylaws, as well as any other requirements set forth in Exchange Act Rule 14a‑19, including that the nominating shareholder actually solicit holders of shares representing at least 67% of the voting power of the shares entitled to vote in the Company’s election of directors. A shareholder’s notice of nomination must set forth certain information specified in the Company’s Bylaws concerning each person the shareholder proposes to nominate for election and the nominating shareholder and the shareholder and its nominee must undertake to provide supplemental information, agreements and questionnaires, as described in greater details in the Company’s Bylaws. The Company’s Bylaws, as amended effective December 6, 2022, expanded these notice and information requirements.
AUDIT COMMITTEE REPORT
The Audit Committee reports to and acts on behalf of the Board of Directors and is comprised solely of directors who satisfy the independence, financial literacy, and other requirements set forth in the listing rules of the Nasdaq Stock Market and applicable securities laws. In addition, each member of the Audit Committee qualifies as an “audit committee financial expert” as defined by the rules of the SEC.
The Audit Committee operates under a written charter, approved and adopted by the Board of Directors, which sets forth its duties and responsibilities. This charter, which is available in full on the Company’s website at www.nwpipe.com under “Investors” — “Corporate Governance”, is reviewed annually and updated, as appropriate, to address changes in regulatory requirements, authoritative guidance, evolving oversight practices, and investor feedback.
The Audit Committee’s primary duties and responsibilities are the oversight and monitoring of:
| • | the integrity of the Company’s financial reporting process, financial internal control systems, accounting and legal compliance, and the integrity of the financial reporting of the Company; |
| • | the qualifications, independence, and performance of the Company’s independent auditors; |
| • | the compliance by the Company with applicable legal and regulatory requirements; |
| • | oversight of risk management practices, including the Company’s data protection practices and cybersecurity program; and |
| • | the maintenance of an open and private, if necessary, communication among the independent auditors, management, legal counsel, and the Board of Directors. |
| Notice and Proxy Statement | 2023 | |
Management is responsible for preparing the Company’s financial statements and maintaining effective internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s financial statements in accordance with applicable auditing standards and issuing a report thereon, and for performing an independent audit of the effectiveness of the Company’s internal controls over financial reporting. In this context, the Audit Committee performed the following:
| • | met with Moss Adams, who has served as the Company’s independent registered public accountants since 2016, with and without management present, to review and discuss the Company’s audited financial statements and assessment of the Company’s internal control over financial reporting, as well as the critical audit matters addressed during the audit; |
| • | asked management and Moss Adams questions relating to such matters and discussed with Moss Adams the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”), including Auditing Standard No. 1301, “Communications with Audit Committees”; |
| • | reviewed the terms of the audit engagement, the overall audit strategy, timing of the audit, and significant risks identified; and |
| • | reviewed the critical accounting policies and practices applied by the Company in preparation of its financial statements, and critical accounting estimates and significant unusual transactions affecting the Company’s financial statements. |
Based on the reviews and discussions described in this report, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2022 for filing with the SEC.
The Audit Committee’s responsibilities also include monitoring the qualifications, independence, and performance of the Company’s independent auditors. In reviewing the auditor’s performance, the Audit Committee considers the quality and efficiency of the services provided by the audit team, and reviews and discusses the auditor’s most recent PCAOB inspection report and its system of quality control. The Committee also reviews and discusses proposed staffing levels and the selection of the lead engagement partner from the independent registered public accounting firm. Further, the Audit Committee recognizes the importance of maintaining the independence of the Company’s auditor, both in fact and in appearance. For 2022, the Audit Committee received and reviewed the written disclosures and letter provided by Moss Adams as required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and the Audit Committee discussed with the independent accountants that firm’s independence. The Audit Committee concurs with Moss Adams’ conclusion that they are independent from the Company and its management.
Respectfully submitted by the Audit Committee of the Board of Directors.
AUDIT COMMITTEE
Keith Larson, Chairperson
Michael Franson
Richard Roman
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #1: ELECTION OF DIRECTORS |
PROPOSAL #1: ELECTION OF DIRECTORS
| YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL. |
At the Annual Meeting, three directors will be elected, one to serve for a two-year term and two to serve for a three-year term. Unless otherwise specified on the proxy, it is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy for the election of the nominees named below. The Board of Directors believes that the nominees will stand for election and will serve if elected as a director. However, if the person nominated by the Board fails to stand for election or is unable to accept election, the proxies will be voted for the election of such other person as the Board may recommend.
The Company’s Articles of Incorporation and Bylaws provide that the Board of Directors shall be composed of not less than six and not more than nine directors. The size of the Board is currently fixed at seven directors. Under the Company’s Articles of Incorporation and Bylaws, the Company’s directors are divided into three classes, with each class to be as nearly equal in number as possible. The term of office of only one class of directors expires each year, and their successors are generally elected for terms of three years, and until their successors are elected and qualified. The term of a director elected by the Board to fill a vacancy expires at the next annual shareholders’ meeting. As such, the term of Ms. Lockridge, who was appointed by the Board in February 2023, expires at the 2023 Annual Meeting. Ms. Lockridge has been nominated for a two-year term in order to make the classes more equal in number. There is no cumulative voting for election of directors.
The Nominating and Governance Committee has responsibility for identifying director nominees who collectively have the complementary experience, qualifications, skills, and attributes to guide the Company and function effectively as a Board. The Nominating and Governance Committee believes that the nominees presented in this proxy have the key personal attributes that are important to an effective Board of Directors: integrity, candor, analytical skills, willingness to engage management and each other in a constructive and collaborative fashion, and ability and commitment to devote significant time and energy to serve on the Board and its committees. The Company considers the following specific experiences, qualifications, and skills to be critical in light of its strategic priorities, business objectives, operations, and structure.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #1: ELECTION OF DIRECTORS |
DIRECTOR SKILLS AND QUALIFICATIONS
STRATEGIC SKILLS
Industries, End Markets, and Growth Areas. Experience in industries, end markets, and growth areas that the Company serves enables a better understanding of the issues facing these businesses.
Manufacturing Experience. Growing sales outside of the engineered steel pressure pipe water transmission market, particularly in the precast concrete and engineered solutions market, is one of the Company’s long-term growth strategies. Hence, exposure to manufacturing economies is an important qualification for Company directors.
Regulated Industries/Government Experience. The Company’s customers and project stakeholders are subject to a broad array of government regulations, and demand for products and services can be impacted by changes in law or regulation in areas such as safety, environmental, and energy efficiency. It is important to have directors with experience in government and regulated industries that provide insight and perspective in working constructively and proactively with governments and municipalities.
Innovation and Technology. The Company strives to lead the industry in water transmission and infrastructure innovation. Expertise in physical product development, testing, and introduction is critical to continuing new growth paths for the Company’s business.
Human Capital. The Company is committed to developing its human capital, including culture, health and safety, and diversity and inclusion. Experience managing a large workforce brings understanding to the oversight of one of the Company’s key resources.
Marketing. Driving growth in existing and new markets is critical for Company growth. The Company’s directors who have that expertise and a much-desired perspective in marketing will aid in delivery of the Company’s products and services.
CORE COMPETENCIES
Senior Leadership Experience. Experience serving as CEO or a senior executive as well as hands-on leadership experience in core management areas – such as strategic and operational planning, financial reporting, compliance, risk management, and leadership development – provide a practical understanding of complex organizations.
Risk Management. In light of the Board of Directors’ role in risk, the Company seeks directors who can help identify, manage, and mitigate key risks, including cybersecurity, regulatory compliance, competition, brand integrity, human capital, climate change, and intellectual property.
Financial Expertise. The Company believes an understanding of finance and financial reporting processes is important for its directors to enable them to monitor and assess the Company’s operating and strategic performance and to ensure accurate financial reporting and robust controls. Northwest Pipe Company seeks directors with background and experience in capital markets, corporate finance, mergers and acquisitions, accounting, and financial reporting.
Cybersecurity. Experience in cybersecurity, intelligence, and data protection, including U.S. cybersecurity policy and the U.S. Government’s cybersecurity efforts and cybersecurity threats, contribute to the Board’s oversight of cybersecurity risks.
Public Company Board Experience. Service on the boards and board committees of other public companies provides an understanding of corporate governance practices and trends and insights into board management, relations between the board, the CEO, and senior management, agenda setting, and succession planning.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #1: ELECTION OF DIRECTORS |
BOARD SKILLSET MATRIX
| Scott Montross (CEO) | Michael Franson (Lead Director) | Amanda Julian | Keith Larson | Irma Lockridge | John Paschal | Richard Roman (Chairperson) |
Strategic Skills | | | | | | | |
Industries, End Markets, and Growth Areas | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Manufacturing Experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Regulated Industries/Government Experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Innovation and Technology | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Human Capital | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Marketing | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Core Competencies | | | | | | | |
Senior Leadership Experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Risk Management | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Financial Expertise | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Cybersecurity | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
Public Company Board Experience (current | past) | ■ | ■ | ■ | ■ | ■ | ■ | ■ |
■ | Technical Expertise (direct hands-on experience or subject-matter expert during his/her career) |
■ | Managerial Expertise (expertise derived through direct managerial experience) |
■ | Working Knowledge (experience derived through serving as a member of a relevant board committee or serving as an executive officer or on the board of a public company in the relevant industry) |
NOMINEES AND CONTINUING DIRECTORS
The following table sets forth the names of and certain information about the Board of Directors’ nominees for election as a director and those directors who will continue to serve after the Annual Meeting.
Nominees | Age | Director Since | Expiration of Current Term | Expiration of Nominated Term |
Irma Lockridge | 50 | 2023 | 2023 | 2025 |
Scott Montross | 58 | 2013 | 2023 | 2026 |
John Paschal | 64 | 2019 | 2023 | 2026 |
Continuing Directors | | | | |
Michael Franson | 68 | 2016 | 2025 | |
Amanda Julian | 47 | 2020 | 2024 | |
Keith Larson | 65 | 2007 | 2024 | |
Richard Roman | 71 | 2003 | 2024 | |
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #1: ELECTION OF DIRECTORS |
NOMINEES FOR DIRECTOR
• Nominating and Governance Committee Other directorships: Trinity Capital (NASDAQ: TRIN) | | Specific Experience, Qualifications, Attributes, and Skills: |
| | Extensive experience in human resources, talent management, organizational design, and executive compensation |
| | Strong experience in strategy development, systems, and corporate communication |
| | Deep expertise in leadership development, succession planning, fostering corporate culture, and diversity, equity, and inclusion |
| | Broad experience in financial management, information technology systems, cybersecurity, and manufacturing processes |
Board of Director Tenure: |
Irma Lockridge has been a director of the Company since February 2023. |
|
Ms. Lockridge is currently the Chief People and Systems Officer at CoorsTek, a global engineered ceramics manufacturer. Ms. Lockridge’s responsibilities include leading the human resources function, corporate communications, and information systems. Prior to CoorsTek, Ms. Lockridge served as senior vice president of human resources in several businesses including Newell Brands, Western Union, TeleTech, and Colorado Casualty/Liberty Mutual Insurance. Ms. Lockridge has previous experience on both publicly traded and private company boards, and currently serves on the Board of Directors of Trinity Capital. |
|
Ms. Lockridge holds a BA in Management from the Wharton Business School at the University of Pennsylvania and has attended several leadership academies at the Harvard Business School. |
SCOTT MONTROSS
Other directorships: None | | Specific Experience, Qualifications, Attributes, and Skills: |
| | Extensive commercial and operational experience in the steel industry through various executive positions and his current tenure as the Company’s President and CEO |
| | In-depth understanding of industry manufacturing, critical infrastructure, product design and development, and supply chain logistics |
| | Significant management and finance experience including corporate reporting, accounting, controls, and mergers and acquisitions |
Board of Director Tenure: |
Scott Montross has been a director of the Company since January 2013. |
|
Mr. Montross has served as President and CEO of the Company since January 2013. Mr. Montross joined the Company in May 2011 and served as the Company’s Executive Vice President and Chief Operating Officer until December 2012. Prior to joining the Company, Mr. Montross spent a total of 24 years in the steel industry. Mr. Montross served as Executive Vice President, Flat Products Group for EVRAZ North America’s Oregon Steel Division from 2010 to 2011, as Vice President and General Manager of EVRAZ North America from 2007 to 2010, as Vice President of Marketing and Sales for Oregon Steel Mills, Inc. from 2003 to 2007, and as Vice President of Marketing and Sales for National Steel Corporation from 2002 to 2003. |
|
Mr. Montross holds a BA in Liberal Arts from Colgate University. |
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #1: ELECTION OF DIRECTORS |
Years of Service: 4 Age: 64 Committees: • Compensation Committee • Environmental and Social Governance Committee • Nominating and Governance Committee - Chair Independent: Yes Other directorships: None | | Specific Experience, Qualifications, Attributes, and Skills: |
| | Extensive understanding of the steel manufacturing industry |
| | Broad experience with human capital, operations, and governance issues gained through hands-on leadership |
| | Significant expertise in manufacturing, product design and development, supply chain, and logistics |
Board of Director Tenure: |
John Paschal has been a director of the Company since August 2019. |
|
Mr. Paschal was the President of the Temtco Steel Division of Kloeckner Metals Corporation until his retirement in December 2020. Mr. Paschal and his late uncle, Bill Taylor of Taylor Machine Works, co-founded Temtco Steel in 1979 with an emphasis on high-strength steel and value-added services. Temtco Steel was sold to Kloeckner Metals in 2008. |
|
Mr. Paschal holds a BS in Business Administration from Mississippi State University. |
CONTINUING DIRECTORS
MICHAEL FRANSON
Years of Service: 18 Age: 68 Committees: • Audit Committee • Compensation Committee - Chair Independent: Yes Other directorships: None LEAD DIRECTOR | | Specific Experience, Qualifications, Attributes, and Skills: |
| | Significant management and finance experience gained through senior leadership positions |
| | Extensive experience with merger and acquisition transactions |
| | Information technology and cyber expertise |
| | Deep understanding of corporate finance including investment banking, financial analysis, capital fundraising, and financial advisory services |
Board of Director Tenure: |
Michael Franson has been a director of the Company since August 2016. Mr. Franson previously served on the Board from 2001 until 2005, and again from 2007 until 2014. |
|
In July 2016, Mr. Franson retired from KPMG Corporate Finance LLC as Managing Director and Global Head of Technology M&A after serving in that role from 2014 to 2016. From 2005 to 2014, Mr. Franson was a co-founder and President of St. Charles Capital LLC, an investment banking firm focused on mergers and acquisitions, raising private capital, and providing financial advisory services for middle-market companies across the United States. From 2000 to 2005, Mr. Franson was a Managing Director at the Wallach Company, which was subsequently sold to KeyCorp, the parent of KeyBanc Capital Markets. |
|
Mr. Franson holds a BS in Marketing from California State University at Chico and a MBA in Finance from the University of Oregon, Charles H. Lundquist College of Business. |
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #1: ELECTION OF DIRECTORS |
Committees: • Environmental and Social Governance Committee - Chair • Nominating and Governance Committee Independent: Yes Other directorships: None | | Specific Experience, Qualifications, Attributes, and Skills: |
| | Extensive experience with organizational development and strategic human capital |
| | Deep experience in strategic planning, communications, leadership management, and finance gained through senior leadership positions |
| | Broad experience with corporate governance issues |
Board of Director Tenure: |
Amanda Julian has been a director of the Company since July 2020. |
|
Ms. Julian is a senior partner of NeoPsy Systems, a firm specializing in management and organizational psychology. Ms. Julian has over 19 years of experience working with investors and top-level senior executives in building great companies. Ms. Julian provides investor and management teams with an understanding of how to maximize leadership effectiveness and build value creation through long-term strategic planning. Specifically, Ms. Julian specializes in applied research to assist in executive selection, executive development, organizational assessment, and strategic planning. |
|
Ms. Julian holds a PhD and MA in Industrial Psychology from Bowling Green State University and obtained her undergraduate degree from the University of Colorado Boulder. |
Committees: • Audit Committee - Chair • Compensation Committee • Environmental and Social Governance Committee Independent: Yes Other directorships: Rogers Corporation (NYSE:ROG) | | Specific Experience, Qualifications, Attributes, and Skills: |
| | Extensive management, operational, technology, networking, and cybersecurity experience as well as corporate governance for a multinational public company |
| | Deep understanding of public policy and global economic indicators, risk assessment, and financial administration gained through leadership positions in Asia and western Europe |
| | Significant expertise in manufacturing, product design, and supply chain management |
Board of Director Tenure: |
Keith Larson has been a director of the Company since May 2007. |
|
Mr. Larson is on the board of directors of Rogers Corporation, a publicly-held company, and is an advisor to other privately-held companies. Mr. Larson was a Vice President of Intel Corporation and Senior Managing Director of Intel Capital, until his retirement in April 2019, where he was a voting member of the investment committee and managed the Financial Investments Portfolio. Mr. Larson served as a Managing Director of Intel Capital from 2004 to 2018, managing a team of investment professionals focused on identifying, making, and managing strategic investments in the manufacturing, memory and programmable solutions, and Sports and Bioinformatics vertical sectors. Mr. Larson formerly served on the board of regents of a university and on a state government council, which oversaw approximately $80 billion in investments of various Oregon State agencies and funds. |
|
Mr. Larson attended UCLA and holds a BS in Business Administration, Accounting (Cum Laude) from the University of Southern California. |
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #1: ELECTION OF DIRECTORS |
RICHARD ROMAN
Independent: Yes Other directorships: None CHAIRPERSON | | Specific Experience, Qualifications, Attributes, and Skills: |
| | Extensive understanding of Company organization through previous tenure as the Company’s President and CEO |
| | Deep experience in corporate finance, insurance and risk management, mergers and acquisitions, capital markets, government regulations, and employee benefits |
| | Significant expertise in manufacturing operations, budgeting, planning, strategy, communications, and regulatory issues |
Board of Director Tenure: |
Richard Roman has been a director of the Company since January 2003 and the Chairperson of the Board since January 2013. |
|
Mr. Roman served as the Company’s CEO from March 2010 until December 2012 and as the Company’s President from October 2010 until December 2012. Previously, Mr. Roman was the President of Columbia Ventures Corporation, a private investment company which historically has focused principally on the international metals and telecommunications industries. Prior to joining Columbia Ventures Corporation in 1992, Mr. Roman was a partner at Coopers & Lybrand, an independent public accounting firm. |
|
Mr. Roman holds a BA in History and Economics from Grinnell College and a MBA from the University of Chicago. |
BOARD COMPOSITION
The Company’s Corporate Governance Principles specify that the criteria used by the Nominating and Governance Committee in the selection, review, and evaluation of possible candidates for vacancies on the Board of Directors should include factors relating to whether the candidate would meet the definition of “independent” as well as skills, occupation, and experience in the context of the needs of the Board. All candidates for election to the Board of Directors must be individuals of character, integrity, and honesty. The Company does not have a formal policy with respect to the consideration of diversity in identifying director candidates; however, the Nominating and Governance Committee Charter includes diversity as one of several criteria in recommending and reviewing a director nominee candidate. From time to time, the Nominating and Governance Committee has employed a third party to help identify or screen prospective directors, and may continue to do so at theirits discretion.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #1: ELECTION OF DIRECTORS |
The Company’s Bylaws permit shareholders to make nominations for the election of directors, if such nominations are made pursuant to timely notice in writing to the Company’s Secretary. To be timely, notice must be delivered to, or mailed to and received at, the principal executive offices of the Company not less than 60 days nor more than 90 days prior to the date of the meeting, provided that at least 60 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders. If less than 60 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be received by the Company not later than the close of business on the tenth day following the date on which such notice of the date of the meeting was mailed or such public disclosure was made. A shareholder’s notice of nomination must also set forth certain information specified in the Company’s Bylaws concerning each person the shareholder proposes to nominate for election and the nominating shareholder.
ELECTION OF DIRECTORS
(Proposal No. 1)
At the Annual Meeting, two directors will be elected for three-year terms. Unless otherwise specified on the proxy, it is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy for the election of the nominees named below. The Board of Directors believes that, the nominees will stand for electionin addition to diversity of personal characteristics and will serve if elected as directors. However, if anyexperiences, diversity of the persons nominated byservice tenures on the Board of Directors failalso facilitates effective Board oversight. Directors with many years of service to standNorthwest Pipe Company provide the Board with a deep knowledge of the Company, while newer directors lend fresh perspectives.
Board Diversity Matrix
As of April 27, 2023
Board Size | | |
Total Number of Directors | 7 |
| Female | Male |
Gender Identity | | |
Directors | 2 | 5 |
Demographic Background | | |
Hispanic or Latinx | 1 | - |
White | 1 | 5 |
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #1: ELECTION OF DIRECTORS |
DIRECTOR COMPENSATION
The Compensation Committee is responsible for election or is unablerecommending to accept election, the proxies will be voted for the election of such other person as the Board of Directors may recommend.the level and form of compensation and benefits for directors. Mr. Montross, as a member of the Board who is also an employee, does not receive additional compensation for serving as director. In June 2022, the Compensation Committee, with the assistance of management, considered broad market-based survey data and recommended that certain nonemployee director compensation elements be increased.
For nonemployee directors, the Compensation Committee has approved the following director compensation:
| | Effective Prior to June 2022 | | | Effective June 2022 | |
Chairperson of the Board annual retainer | | $ | 115,000 | | | $ | 120,000 | |
Annual retainer, except for Chairperson of the Board | | | 45,000 | | | | 50,000 | |
Lead Director | | | 20,000 | | | | 25,000 | |
Audit Committee Chairperson | | | 17,000 | | | | 17,000 | |
Audit Committee non-chair member | | | 6,000 | | | | 6,000 | |
Compensation Committee Chairperson | | | 10,000 | | | | 10,000 | |
Compensation Committee non-chair member | | | 3,600 | | | | 3,600 | |
Environmental and Social Governance Committee Chairperson | | | - | | | | 10,000 | |
Environmental and Social Governance Committee non-chair member | | | - | | | | 3,000 | |
Nominating and Governance Committee Chairperson | | | 9,250 | | | | 10,000 | |
Nominating and Governance Committee non-chair member | | | 3,000 | | | | 3,000 | |
In addition, each nonemployee director receives an annual award of $70,000 payable solely in shares of the Company’s Common Stock pursuant to the Company’s equity incentive plan. The Company’s Articlesmembers of Incorporation provide that the Board of Directors shall be composed of not less than sixare also reimbursed for travel expenses incurred in attending board meetings and not more than nine directors. The size of the Board is currently fixed at six directors. The Company’s directors are divided into three classes. The term of office of only one class of directors expires each year, and their successors are generally elected for terms of three years, and until their successors are elected and qualified. There is no cumulative voting for election of directors.out-of-pocket expenses related to board education.
Information as to Nominees and Continuing DirectorsDIRECTOR COMPENSATION TABLE
The following table sets forthreflects compensation earned by the namesdirectors for the year ended December 31, 2022, with the exception of and certain information about the Board of Directors’ nominees for election as a director and those directors who will continue to serve after the Annual Meeting.
| Age | Director Since | Expiration of Current Term | | Expiration of Term for Which Nominated |
Nominees: | | | | | |
James Declusin | 73 | 2010 | 2016 | | 2019 |
Harry Demorest | 74 | 2013 | 2016 | | 2019 |
| | | | | |
Continuing Directors: | | | | | |
Michelle Applebaum | 59 | 2014 | 2017 | | |
Keith Larson | 58 | 2007 | 2018 | | |
Scott Montross | 51 | 2013 | 2017 | | |
Richard Roman | 64 | 2003 | 2018 | | |
Nominees for Director
James Declusinhas been a director of the Company since August 2010. Mr. Declusin served as President andMontross, CEO, of Evraz Inc. NA until February 2010 and as President and CEO of Oregon Steel Mills, Inc. from August 2003 until Oregon Steel Mills was acquired by Evraz Group SA in January 2007. He served as a director of Oregon Steel Mills and, subsequently, Evraz Inc. NA from 2000 until 2010. Mr. Declusin spent 16 years with California Steel Industries, most recently serving as Senior Executive Vice President and Chief Operating Officer, retiring in October 2000. Prior to that time, he spent 17 years in various management positionswhose compensation is included in the commercial area of Kaiser Steel Corporation. Currently, he is the Board’s Lead Director, Chairman of our NominatingSummary Compensation table on page 41, and Governance Committee, and a member of our Compensation Committee. Mr. Declusin bringsMs. Lockridge, who was elected to the Board over 40 years of experience in the steel industry, including, most recently, as president and chief executive officer of a large publicly-held steel manufacturing company.February 2023.
Name | | Fees Earned or Paid in Cash | | | Stock Awards (1) | | | Total | |
Michael Franson | | $ | 86,000 | | | $ | 70,000 | | | $ | 156,000 | |
Amanda Julian | | | 58,000 | | | | 70,000 | | | | 128,000 | |
Keith Larson | | | 70,350 | | | | 70,000 | | | | 140,350 | |
John Paschal | | | 62,975 | | | | 70,000 | | | | 132,975 | |
Richard Roman | | | 122,000 | | | | 70,000 | | | | 192,000 | |
William Yearsley (2) | | | 13,500 | | | | - | | | | 13,500 | |
| (1) | On June 16, 2022, 2,276 shares of Common Stock were granted to Ms. Julian and Messrs. Franson, Larson, Paschal, and Roman. The amount included in this column represents the amount recognized by the Company in 2022 for financial statement reporting purposes for the fair value of the Common Stock awarded. The assumptions used to calculate the grant date fair value for the stock awards are in Note 14 of the Notes to Consolidated Financial Statements in Part II – Item 8. “Financial Statements and Supplementary Data” of the 2022 Annual Report to Shareholders. |
| (2) | As previously announced, Mr. Yearsley resigned from the Board of Directors in February 2022. |
| Notice and Proxy Statement | 2023 | |
Harry Demoresthas been a director of the Company since February 2013. Mr. Demorest served as CEO of Columbia Forest Products from 1996 until 2007, as President from 1994 until 1996, and as Executive Vice President from 1992 until 1994. Prior to Columbia Forest Products, Mr. Demorest was the Office Managing Partner for Arthur Anderson and Co., an independent public accounting firm, from 1981 to 1991 in Portland, Oregon. Mr. Demorest is a former board member at Columbia Forest Products, serving on its compensation and audit committees, and a former board member and audit committee chairman of Oregon Steel Mills, Inc. Mr. Demorest has also served on the boards of several civic and charitable organizations. Currently, he is the Chairman of our Audit Committee and a member of our Nominating and Governance Committee. Mr. Demorest brings to the Board his extensive financial and managerial experience.
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Continuing Directors
Michelle ApplebaumPROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION has been a director of the Company since September 2014. Ms. Applebaum has over 30 years of experience in capital markets. She joined Salomon Brothers in 1981, became ranked number one in steel equity analysis in 1988 and was promoted to Managing Director in 1994. While at Salomon, Ms. Applebaum was part of a team that built and ran the firm’s steel investment banking practice, which was a top advisor to the sector for nearly a decade. After leaving the firm in 2003, Ms. Applebaum built one of the first and most successful “independent” equity research advisory boutiques. Ms. Applebaum recently retired, and is currently a trustee at Lake Forest College in Chicago and on the advisory board of a financial analytics company. Currently, she is a member of our Audit Committee and Compensation Committee. Ms. Applebaum brings to the Board her relevant industry experience and insight, as well as her extensive financial expertise.
Keith Larson has been a director of the Company since May 2007. Mr. Larson is a Vice President of Intel Corporation and Managing Director of Intel Capital, Intel Corporation’s strategic investment group. Mr. Larson was appointed Vice President in 2006 and has served as a Managing Director of Intel Capital since 2004, managing a team of investment professionals focused on identifying, making, and managing strategic investments in the manufacturing, wearables, programmable solutions, and Intel Labs sectors, as well as the Japan region. Mr. Larson has previously managed Latin America, Taiwan and Korea regions for Intel Capital, and for approximately three months in 2004, Mr. Larson managed the Western Europe and Israel investment team of Intel Capital. From 1999 to 2003, Mr. Larson was a Sector Director managing teams of investment professionals investing in communications, networking, and data storage sectors. Mr. Larson also currently serves on the board of regents of a university, and formerly served on one state government council, which oversaw approximately $80 billion in investments of various Oregon State agencies and funds such as the Oregon Public Employees Retirement Fund. Currently, he is the Chairman of our Compensation Committee and a member of our Audit Committee. Mr. Larson brings to the Board his experience as a senior executive in corporate development in a large multinational public company as well as his experience in corporate governance.
Scott Montross has been a director of the Company since January 2013. Mr. Montross has served as our President and CEO since January 2013, and as our Chief Operating Officer from May 2011 until December 2012. Previously he served as Executive Vice President, Flat Products Group of Evraz, Inc. NA from March 2010 through April 2011. Mr. Montross served as Vice President, General Manager, Evraz Oregon Steel from February 2007 through February 2010. Prior to his General Manager role, Mr. Montross served as Vice President of Sales at Oregon Steel Mills, Inc. from June 2003 through February 2007. From 2002 to 2003, Mr. Montross was a Vice President of Sales for National Steel Corporation. Mr. Montross brings to the Board his extensive commercial and operational experience in the steel industry.
Richard Romanhas been a director of the Company since 2003. Effective January 1, 2013, Mr. Roman became the Chairman of the Board of Directors. Mr. Roman has also served as our CEO from March 2010 until December 2012, and as President from October 2010 until December 2012. Previously, Mr. Roman was the President of Columbia Ventures Corporation, a private investment company which historically has focused principally on the international metals and telecommunications industries. Prior to joining Columbia Ventures Corporation in 1992, Mr. Roman was a partner at Coopers & Lybrand, an independent public accounting firm. Mr. Roman also serves on the Board of Directors of one privately held manufacturing company. Mr. Roman brings to the Company his knowledge and experience as a partner at a large national independent public accounting firm as well as his more recent management experience as an executive officer of a private investment company.
THE
| YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF ITS NOMINEES FOR DIRECTOR. PROXIES SOLICITED BY THE BOARD WILL BE VOTED “FOR” THE ELECTION OF THE BOARD’S NOMINEES UNLESS A VOTE WITHHOLDING AUTHORITY IS SPECIFICALLY INDICATED.FOR THIS PROPOSAL. |
EXECUTIVE COMPENSATIONIn accordance with Section 14A of the Exchange Act, the Board of Directors is asking shareholders to approve an advisory resolution on executive compensation. The advisory vote is a non-binding vote on the compensation of the Named Executive Officers. The vote is not intended to address any specific item of compensation, but rather the overall compensation of the Named Executive Officers and the philosophy, policies, and practices described in this Proxy Statement. The text of the resolution is as follows:
“RESOLVED, that the shareholders of Northwest Pipe Company approve, on an advisory basis, the compensation paid to the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2023 Annual Meeting of Shareholders pursuant to the executive compensation disclosure rules of the SEC, including the Executive Compensation Discussion and Analysis, compensation tables, and narrative disclosure.”
The Company urges you to read the disclosure under “Executive Compensation Discussion and Analysis” below which discusses how the Company’s compensation policies and procedures implement its compensation philosophy. You should also read the Summary Compensation table and other related compensation tables and narrative disclosure which provide additional details about the compensation of the Named Executive Officers for 2022. The Company has designed its executive compensation structure to attract, retain, and motivate executives who can accomplish the Company’s business strategy, and whose interests are aligned with those of the Company’s shareholders. The Company believes that its executive compensation program does not encourage excessive and unnecessary risk-taking by the executives but, rather, encourages the executives to remain focused on both the short-term and long-term operational and financial goals of the Company.
While the Company intends to carefully consider the voting results of this proposal, the final vote is advisory in nature and therefore not binding on the Company, its Board of Directors, or the Compensation Committee.
The Company currently holds its advisory vote on executive compensation annually. Accordingly, the next advisory vote on executive compensation will be held at the 2024 Annual Meeting of Shareholders.
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
This compensation discussion and analysis provides information about ourthe Company’s compensation program for our 2015its Named Executive Officers:
| ●•
| Scott Montross, President and Chief Executive Officer;Officer |
| ●•
| Robin Gantt,Aaron Wilkins, Senior Vice President, Chief Financial Officer, and Corporate Secretary (1)
|
| • | Miles Brittain, Executive Vice President (2) |
| • | Eric Stokes, Senior Vice President and Chief Financial Officer;General Manager of Engineered Steel Pressure Pipe (3) |
| • | Michael Wray, Senior Vice President and General Manager of Precast Infrastructure and Engineered Systems (4) |
| ●(1)
| Martin Dana,Mr. Wilkins was appointed CFO on April 1, 2020, upon the former CFO’s retirement.
|
| (2) | Mr. Brittain was promoted to Senior Vice President of Operations in February 2020 and to Executive Vice President Sales;in May 2021. |
| ●(3)
| William Smith, ExecutiveMr. Stokes was promoted to Senior Vice President Operations;of Sales and Marketing, Water Transmission in February 2020 and to Senior Vice President and General Manager of Engineered Steel Pressure Pipe in May 2021.
|
| (4) | Mr. Wray was promoted to Vice President and General Manager of Geneva Pipe in February 2020 and to Senior Vice President and General Manager of Precast Infrastructure and Engineered Systems in November 2021. |
| Notice and Proxy Statement | 2023 | |
●
| Vicki Taylor, Vice President Human Resources. PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Further information about each of ourthe executive officers is available in Part III – Item 1010. “Directors, Executive Officers and Corporate Governance” of our 2015the 2022 Annual Report on Form 10-K.to Shareholders.
Compensation Philosophy and Objectives.EXECUTIVE COMPENSATION OVERVIEW
| WHAT THE COMPANY DOES | | WHAT THE COMPANY DOESN’T DO |
✔ | Pay for Performance. The Company closely aligns pay and performance, with a significant portion of target total direct compensation at-risk. The Compensation Committee validates this alignment annually and ensures performance-based compensation represents a significant portion of executive compensation. | ✘ | No Guaranteed Annual Salary Increases or Bonuses. Annual salary increases are based on evaluations of individual performance and the competitive market. In addition, the Company does not provide guarantees on cash bonus or incentive stock awards. |
✔ | Robust Performance Goals. The Company establishes clear and measurable goals and targets and holds its executives accountable for achieving specified targets to earn a payout under the incentive plans. The Company uses operational metrics for incentive compensation plans and performance-based long-term incentives to drive top- and bottom-line growth over multiple time frames. | ✘ | No Excessive Perks. The Company does not provide perquisites except in cases where there is a compelling business or security reason. |
✔ | Claw Back Practices. Allow for recoupment of stock incentive compensation for a significant financial restatement. | ✘ | No Excessive Risks. Compensation practices are appropriately structured and avoid incentivizing employees to engage in excessive risk-taking. |
✔ | Maximum Payout Caps for Incentive Plans. Annual cash incentive compensation plan and performance plan payouts are capped. | ✘ | No Incentivizing of Short-Term Results to the Detriment of Long-Term Goals and Results. Pay mix is heavily weighted toward long-term incentives aligned with shareholder interests. |
✔ | Robust Stock Ownership Requirements. The Company requires executive officers to hold meaningful amounts of stock in multiple(s) of annual salary. | ✘ | No Hedging or Pledging. The Company does not allow directors, officers, or employees to hedge its stock. |
✔ | Double Trigger in the Event of a Change in Control (“CIC”). The Company has double trigger vesting on equity and severance for CIC; executives will not receive cash severance nor will equity vest in the event of a CIC unless accompanied by qualifying termination of employment. | ✘ | No Excise Tax Gross-Ups and No Accelerated Bonus Payments Upon CIC. Excise tax gross-ups are not provided for any executive officers. Plans provide that stock awards outstanding upon a CIC would be paid based on time/performance through the CIC dates. |
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Board of Directors and executive management at the Company believe that the performance and contribution of ourtheir executive officers are critical to ourthe Company’s overall success. To attract, retain, and motivate the executives to accomplish ourthe Company’s business strategy, the Compensation Committee establishes executive compensation policies and oversees executive compensation practices at the Company.
The Compensation Committee believes that the most effective executive compensation program is one that is designed to reward the achievement of ourthe Company’s specific annual and long-term goals, and which aligns executives’ interests with those of the shareholders by rewarding performance that exceeds established goals, with the ultimate objective of improving shareholder value.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
The Compensation Committee also evaluates compensation programs to ensure that we maintain ourthe Company maintains its ability to attract, retain, and motivate superior employees in key positions and that compensation provided to key employees remains competitive when compared with other employment opportunities. The Compensation Committee believes ourthe Company’s executive compensation packages should include both cash and share-based compensation that reward performance as measured against established goals and market performance.
goals.
In 2011, the Compensation Committee engaged Mercer LLC (“Mercer”) to conduct an overall review of our executive compensation program, and to advise the Compensation Committee on the levels of base salary as well as on the design of the Company’s performance-based cash incentive program and long-term equity incentive program. To that end, Mercer developed a competitive peer group and performed benchmarking analysis of the levels and mix of compensation. The Compensation Committee used the results from this peer group and benchmarking analysis as reference data in making judgments regarding executive compensation without the implementation of a formal policy. The following peer companies were included in the analysis:
| ● | Aegion Corp. | | ● | Ampco-Pittsburgh Corp.
|
| | | | | |
| ● | Circor Intl Inc.
| | ● | Flow Intl Corp.
|
| | | | | |
| ● | Foster (LB) Co.
| | ● | Lindsay Corp.
|
| | | | | |
| ● | Lufkin Industries Inc.
| | ● | MFRI Inc.
|
| | | | | |
| ● | Mueller Water Products Inc.
| | ● | Synalloy Corp.
|
| | | | | |
| ● | Valmont Industries, Inc.
| | | |
Process for Setting Executive Compensation.Compensation
The Compensation Committee reviews and approves the salaries and other discretionary compensation of the Company’s executive officers, and administers the Company’s equity incentive and compensation plans, including reviewing and approving equity incentive and discretionary compensation awards to executives. The Compensation Committee annually reviews and approves compensation levels and pay mix for ourthe executives.
| • | The Compensation Committee exercises business judgment in determining the appropriate level and mix of executive compensation; cash compensation is used to provide a base salary, and to incentivize and reward our executives based on their contributions to the Company, and equity-based compensation is used to tie the interests of the executives to the interests of ourthe Company’s shareholders. There is no pre-established policy or target for the allocation between either cash and non-cashnoncash or short-term and long-term incentive compensation, which enables the Compensation Committee the flexibility to adjust allocations dynamically as business conditions warrant. |
| | |
| • | The Compensation Committee uses qualitative individual performance objectives as a factor in making its decisions. The Compensation Committee and the CEO annually review the performance of each executive officer (other than the CEO whose performance is reviewed by the Compensation Committee after an evaluation from the Chairman)Chairperson). Based on these reviews, the Compensation Committee makes compensation decisions, including salary adjustments and annual bonusdiscretionary incentive compensation awards, for the executive officers. |
| | |
| • | The Compensation Committee evaluates and considers the Company'sCompany’s annual performance within the context of its long-term strategic plan, identifying areas in which expectations were exceeded, achieved, or fell below stated goals. The structure of all incentive compensation plans is reviewed periodically to assure their linkage to the current objectives, strategies, and performance goals. Compensation practices are appropriately structured and avoid incentivizing employees to engage in excessive risk-taking. |
| • | The Compensation Committee evaluates and considers a variety of growth and profitability measures relative to historical performance and internal plans for awarding performance-based cash incentive compensation. |
| | |
| • | The Compensation Committee evaluates and considers Total Shareholder Return, defined as the total increase in share price plus dividends, relative to peer performance and other performance criteria for awarding long-term equity incentive awards. For the first time since 2010, due to continuing challenging economic conditions, no grants were awarded under our long-term equity incentive program in 2015. |
| | |
| • | The Compensation Committee generally does not utilize specific benchmark levels. Rather, the Compensation Committee considers broad, market basedmarket-based survey data of comparable companies, such as that provided by Mercer LLC, Equilar, CompAnalyst, Willis Towers Watson, andWorldatWork.org,, when assessing the competitiveness of compensation levels and pay mix for the CEO, Chief Financial Officer (“CFO”)CFO, and other executives. |
| | |
| • | From time to time, the Compensation Committee has retained Mercerindependent consultants to advise the Committee on executive or director compensation matters, to assess total compensation program levels and program elements for executive officers or directors, and to evaluate marketplace trends in executive or director compensation. In so doing, the Compensation Committee has considered all relevant factors that could give rise to a potential conflict of interest with Mercer, and has determined that none exist. In 2015, theThe Compensation Committee retained Merceran independent consultant in 2022 to perform a limitedmarket review of executive compensation programs for various employee groups. No changes were made during the year to executive or director compensation as a result of their review.and incentive plans. |
Advisory Vote on Executive Compensation.
Each year the Compensation Committee submits to shareholders an advisory resolution on executive compensation, and carefully considers the voting results of this proposal, though the final vote is advisory in nature and therefore not binding on the Company. OurThe Company’s shareholders expressed strong support for ourthe executive compensation program in the advisory vote at our 2015the 2022 Annual Meeting of Shareholders. Based upon these results, the Compensation Committee has determined to follow the shareholders’ recommendation by continuing ourits present compensation policies and practices.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
ELEMENTS OF COMPENSATION
Elements of Compensation.For the year ended December 31, 2015, theThe principal targeted components of compensation for executive officers were:for the year ended December 31, 2022:
| •
| base salary;
|
| | |
| •
| performance-based cash incentive compensation;
|
| | |
| •
| long-term equity incentive awards (restricted stock units (“RSUs”) and PSAs);
|
| | |
| •
| retirement benefits; and
|
| | |
| •
| perquisites and other personal benefits.
|
The target weighting of each of the components of compensation reflected in the Summary Compensation table on page 41 for the CEO and other Named Executive OfficersNEOs was as follows for the year ended December 31, 2015:2022:
Realized Pay vs. Reported Pay. In the following table, Reported Pay is compensation reflected in the Summary of Cash and Certain Other Compensation table on page 17. Realized Pay is compensation actually received by the Named Executive Officer during the year, including salary, performance-based and discretionary cash incentive compensation, market values at vesting of previously granted RSUs and PSAs, and All Other Compensation amounts received during the year. Realized Pay was greater than Reported Pay in 2015 for all Named Executive Officers other than Ms. Taylor due to the fact that no Long-Term Equity Incentive Awards were issued in 2015, yet certain Long-Term Equity Incentive Awards issued in prior years vested in 2015.Base Salary
| | 2015 | | | 2014 | | | 2013 | |
| | Realized Pay | | | Reported Pay | | | Realized Pay | | | Reported Pay | | | Realized Pay | | | Reported Pay | |
Scott Montross | | $ | 925,636 | | | $ | 630,134 | | | $ | 1,188,227 | | | $ | 1,394,848 | | | $ | 935,163 | | | $ | 1,599,883 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Robin Gantt | | | 494,318 | | | | 355,306 | | | | 607,637 | | | | 596,803 | | | | 492,106 | | | | 650,917 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Martin Dana | | | 438,744 | | | | 364,817 | | | | 488,258 | | | | 638,411 | | | | 399,199 | | | | 446,888 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
William Smith | | | 452,073 | | | | 377,705 | | | | 651,800 | | | | 747,214 | | | | 469,649 | | | | 522,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Vicki Taylor | | | 206,012 | | | | 206,012 | | | | 22,157 | | | | 22,157 | | | | - | | | | - | |
Base Salary.We provideNorthwest Pipe Company provides executive officers and other employees with a base salary to compensate them for services rendered during the fiscal year. Base salaries are determined for each executive based on his or hertheir experience, position, and responsibilities, and take in tointo consideration market data and conditions. In addition, we considerthe Company considers the individual performance of each executive, and conductconducts internal reviews of each executive’s compensation, to ensure equity among executive officers. Salary levels are typically reviewed annually as part of ourthe Company’s performance review process as well as upon a promotion or other change in job responsibility. Merit basedMerit-based increases to salaries are based on the Compensation Committee’s assessment of the individual executive’s performance in conjunction with recommendations provided by the CEO.
Base salary is reflected in the ‘Salary’ column in the Summary of Cash and Certain Other Compensation table on page 17.41.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Performance-Based Cash Incentive Compensation.We provide executive officers and other employees with
Northwest Pipe Company provides, from time to time, incentive compensation to retain, incentivize, and reward thememployees for high performance and achievement of corporate goals. The incentive compensation program provides for an award of cash incentive compensation to executive officers and others as a reward for ourthe Company’s growth and profitability, and places a significant percentage of each executive officer’s compensation at risk. Awards are based on ourthe Company’s achievement of certain financial performance measures each year.measures.
The performance measureIn 2022, each Named Executive Officer was awarded a short-term incentive plan providing for 2015cash payments for the Named Executive Officers wasachievement of certain levels of adjusted income before income taxes for the 2022 fiscal year. Adjusted Incomeincome before Income Taxes, for which the Compensation Committee established a target level of $30.0 million. Adjusted Income before Income Taxesincome taxes is calculated by adjusting ourthe Company’s income before income taxes as reported in ourits audited financial statements for certain events that occur during the year, such as the acquisitionsacquisition of businesses, the sales of significant capital assets, or other extraordinary or unusual developments. For 2015, Adjusted Income2022, there were no adjustments to the Company’s income before Income Taxes excludes the impairment of our Water Transmission goodwill.income taxes.
The Compensation Committee also establishedfollowing scale shows the payout as a payout range for the awards for each executive officer based on the levelpercentage of achievement of the performance measure. For Mr. Montross, the target payout for 2015 was seventy percent of 2015 annual base salary upon achievement of one hundred percent of the performance target, with the payout range extending from $0 at or below fifty percent of target performance to one hundred and forty percent of 2015 base salary at or above one hundred and thirty percent of target performance. For the other Named Executive Officers, the target payout for 2015 was fifty percent (thirty percent in the case of Ms. Taylor) of 2015 annual base salary upon achievement of one hundred percent of performance target, with the payout range extending from $0 at or below fifty percent of target performance to one hundred percent (sixty percent in the case of Ms. Taylor) of 2015 annual base salary at or above one hundred and thirty percent of target performance.that may be awarded. Payouts for performance withinbetween the range will berankings are interpolated on a straight line basis. Even if the performance measures are met, the Compensation Committee retains the right to adjust the actual amounts of the award to each individual at its discretion. Such adjustments may be based on individual performance, as well as external factors affecting us or the occurrence of unusual or infrequent events; in 2013, Mr. Montross’s award was reduced by five percent for adjustments based on individual performance. The following table reflects, for each of the Named Executive Officers, the applicable performance target, actual performance and amount of award: straight-line basis:
Name | | 2015 Performance Target (million $) | | | 2015 Actual Performance (million $) | | | 2015 Target Award ($) | | | 2015 Actual Award ($) | |
| | | | | | | | | | | | | | | | |
Scott Montross | | $ | 30.0 | | | $ | (36.1 | ) | | $ | 371,000 | | | $ | - | |
Robin Gantt | | | 30.0 | | | | (36.1 | ) | | | 151,867 | | | | - | |
Martin Dana | | | 30.0 | | | | (36.1 | ) | | | 154,020 | | | | - | |
William Smith | | | 30.0 | | | | (36.1 | ) | | | 154,020 | | | | - | |
Vicki Taylor | | | 30.0 | | | | (36.1 | ) | | | 61,146 | | | | - | |
Adjusted Income before Income Taxes Performance in 2022 | | Payout as a Percentage of Base Salary for Mr. Montross | | Payout as a Percentage of Base Salary for the other Named Executive Officers |
> $40,680,000 | | | 140% | | | 100% | |
$27,120,000 | | | 70% | | | 50% | |
$13,560,000 | | | 35% | | | 25% | |
< $13,560,000 | | | 0% | | | 0% | |
Cash payments under this short-term incentive plan were made in March 2023, and were determined by multiplying base salary times the payout percentage of 140% for Mr. Montross and 100% for Messrs. Wilkins, Brittain, Stokes, and Wray.
Performance-based cash incentive compensation if awarded, is reflected in the ‘Non-Equity Incentive Plan Compensation’ column in the Summary of Cash and Certain Other Compensation table on page 17.41.
Discretionary Incentive Compensation.We provide,Compensation
Northwest Pipe Company provides, from time to time, additional discretionary incentive compensation in recognition of an executive officer'sofficer’s or other employee'semployee’s success in attaining results that delivered value to the Company, but were not captured in the performance-based cash incentive compensation, or for other reasons as determined appropriate by the Compensation Committee.
In 2022, no discretionary cash incentive compensation was awarded.
Discretionary incentive compensation if awarded, is reflected in the ‘Bonus’ column in the Summary of Cash and Certain Other Compensation table on page 17. There has been no discretionary incentive compensation awarded in 2015, 2014 or 2013.41.
Long-Term Equity Incentive Awards. We provide long-termAwards
Northwest Pipe Company provides equity incentive awards to executive officers and certain designated key employees. The long-term equity incentive awards are designed to ensure that ourthe executive officers and key employees have a continuing stake in our long-termthe Company’s success. In addition, the awards emphasize pay-for-performance. Terms and conditions of the awards are determined on an annual basis by the Compensation Committee. Due to continuing challenging economic conditions, no Long-Term Equity Incentive Awards were granted in 2015.
When granted, RSUs are service-based and entitle the holder to receive Common Stock at the end of the vesting period (generally over approximatelyperiods up to three years), subject to continued employment. RSUs are designed to attract and retain executive officers and others by providing them with the benefits associated with the increase in the value of the Common Stock during the vesting period, while incentivizing them to remain with usthe Company long-term.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
When granted, PSAs are service-based awards with a market-basedperformance-based vesting condition. PSAs serve several purposes. They have value to the holder only if the goals are achieved during their performance measurement period, and they serve as a retention tool because the performance measurement periods generally extend over approximately three years.one year. Additionally, the holders benefit further if they are successful in increasing the value of ourthe Company’s Common Stock. PriorWhen PSAs wereare granted, with a market-basedthey typically include vesting conditionconditions that entitlesentitle the holder to receive between zero and two hundred200 percent of the target award. Payouts for performance between the rankings will be interpolated on a straight-line basis.
In 2022, each Named Executive Officer received an award of PSAs and RSUs valued at an amount equal to a specific percentage of their respective annual base salary, with 75 percent of each award represented by PSAs and 25 percent of each award represented by RSUs.
The PSAs awarded in 2022 will vest based on our Total Shareholder Return compared to our PSA peer group.the Company’s Earnings before Interest Expense, Income Taxes, Depreciation, and Amortization Margin before extraordinary or unusual items (“EBITDA Margin Performance”) over the measurement period. The following scale shows the adjustment to the number of PSAs that may be awarded following the measurement period:
Total Shareholder Return
vs. Peer Group
| Payout as a Percentage of Target Award
|
| |
85th percentile or higher
| 200%
|
| |
50th percentile
| 100%
|
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25th percentile
| 25%
|
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Less than 25th percentile
| 0%
|
EBITDA Margin Performance | | Payout as a Percentage of Target Award |
>16.9% | | | 200% | |
12.0% | | | 100% | |
7.5% | | | 50% | |
<7.5% | | | 0% | |
PayoutsOne-third of the PSAs awarded in 2022 vested on March 31, 2023 based on EBITDA Margin Performance for performance between the rankings2022 fiscal year; the actual number of shares of Common Stock that were issued was determined by multiplying the PSAs by a payout percentage of 132%. One-third of the PSAs will vest on April 1, 2024 based on EBITDA Margin Performance for the 2022-2023 fiscal years and one-third of the PSAs will vest on March 31, 2025 based on EBITDA Margin Performance for the 2022-2024 fiscal years. In the event a “change in control” of the Company (as defined in the Performance Share Unit Agreement) occurs at any time prior to March 31, 2025, the PSAs will become immediately vested and the number of shares awarded will be interpolatedbased on a straight line basis.the results obtained through the change in control date, unless provisions were made for the substitution, assumption, exchange, or other continuation or settlement of the PSAs, or if the Performance Share Unit Agreement would otherwise continue in accordance with its terms in the circumstances.
Long-term equityOne-third of the RSUs awarded in 2022 vested on January 16, 2023, and one-third of the RSUs will vest on January 15, 2024 and January 15, 2025, based upon continued service with the Company on that date. In the event a “change in control” of the Company (as defined in the RSU agreement) occurs at any time prior to January 15, 2025, a pro-rata number of RSUs will be calculated based on time elapsed as of the date of the change in control, and those RSUs will be immediately vested, unless provisions were made for the substitution, assumption, exchange, or other continuation or settlement of the RSUs, or if the Restricted Stock Unit Agreement would otherwise continue in accordance with its terms in the circumstances.
Equity incentive awards are reflected in the ‘Stock Awards’ column in the Summary of Cash and Certain Other Compensation table on page 17.41. These amounts represent the target value of the award issued, but not what was actually received by the Named Executive Officer. Over the 2012 – 2014 performance period corresponding with our 2012 performance grants, when the award vested in 2015 our Total Shareholder Return was 26%, resulting in a ranking in the 36% percentile, and a payout of 59% of the target award.
Retirement Benefits
Retirement Benefits. In order to provide competitive total compensation, we offer our executive officers and certain designated key employees a nonqualified retirement savings plan (the “Deferred Compensation Plan”), which provides executive officers and others with the opportunity to defer salary and bonus compensation for a period of years or until termination of employment. Executive officers who defer salary or bonus under the Deferred Compensation Plan are credited with market-based returns. We may make a discretionary matching contribution based on deferrals made by each participant. In addition, we will make a contribution based on a target benefit projected for each participant. The target benefit projected is 1% of base salary in the year before attaining normal retirement age per year of employment (up to 35 years) with us. For 2015,Northwest Pipe Company contributions to the Deferred Compensation Plan accounted for between zero and eleven percent of the total compensation for each of the Named Executive Officers.
We also offeroffers a qualified 401(k) defined contribution plan. The ability of executive officers to participate fully in this plan is limited under IRS and ERISA requirements. The 401(k) plan encourages employees to save for retirement by investing on a regular basis through payroll deductions. The retirement benefits include Company contributions to a qualified 401(k) defined contribution plan.
Retirement benefits are reflected in the ‘All Other Compensation’ column in the Summary of Cash and Certain Other Compensation table on page 17.41.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Perquisites and Other Personal Benefits. We provideBenefits
Northwest Pipe Company provides executive officers with limited perquisites and other personal benefits that weit and the Compensation Committee believe are reasonable and consistent with ourthe Company’s overall compensation program to better enable usit to attract, retain, and motivate employees for key positions. We areThe Company is selective in ourits use of perquisites, utilizing perquisites that are commonly provided, the value of which is generally modest. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to executive officers. The primary perquisites are car allowances and life insurance premiums.premiums and phone allowance.
Perquisites and other personal benefits are reflected in the ‘All Other Compensation’ column in the Summary of Cash and Certain Other Compensation table on page 17.41.
Executive Compensation and Risk. Although a substantial portion of the compensation paid to our executive officers is performance-based, we believe ourEXECUTIVE COMPENSATION AND RISK
Northwest Pipe Company believes its executive compensation programs do not encourage excessive and unnecessary risk-taking by ourthe executive officers because theseits programs are designed to encourage ourthe executive officers to remain focused on both the short-term and long-term operational and financial goals of the Company. We achieveThe Company achieves this balance through a combination of elements in ourits overall compensation plans, including: elements that reward different aspects of short-term and long-term performance; incentive compensation that rewards performance on a variety of different measures; awards that are paid based on results averaged out over several years; and awards paid in cash and awards paid in shares of the Company’s stock, to encourage better alignment with the interests of shareholders. Additionally, annual compensation decisions for executive officers are influenced by the review of the performance of each executive officer by the Compensation Committee, including an evaluation of the officers’ commitment to promoting effective internal controls and legal and regulatory compliance. We believeThe Company believes this helps to ensure “the tone at the top” deters unnecessary risk-taking.
Clawback Provisions. OurProvisions
Northwest Pipe Company’s performance-based cashequity incentive compensation program containsawards contain a provision that allows the Company to recapture amounts paid to the Named Executive Officers under certain circumstances. If the Company’s financial statements are the subject of a restatement due to misconduct, to the extent permitted by governing law, in all appropriate cases, the Company will seek reimbursement of excess incentive cashshare compensation paidgranted under the programagreements for the relevant years. For purposes of this provision, excess incentive cashshare compensation means the positive difference, if any, between (i) the award paid to the Named Executive Officer and (ii) the award that would have been madepaid to the Named Executive Officer not including the effect of any discretionary reductions made by the Committee, had the target award been calculated based on the Company’s financial statements as restated.
In addition, in February 2023, pursuant to mandates set forth in Rule 10D‑1 of the Exchange Act, Nasdaq proposed a new listing standard that would require issuers to adopt and comply with written clawback policies subjecting any incentive compensation (including both cash and equity compensation) paid to any current or former executive officer to recoupment if the incentive compensation was calculated based on financial statements that were required to be restated due to material noncompliance with financial reporting requirements, without regard to any fault or misconduct. The Company intends to adopt new clawback policies consistent with the Nasdaq listing standards as adopted.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Stock Ownership and Anti-Hedging/Pledging Policy.Policy
The Nominating and Governance Committee of the Board of Directors has adopted a stock ownership policy because it believes it is in the best interests of the Company and its shareholders to align the financial interests of ourthe executive officers and directors with those of the Company’s shareholders. Under the policy, the directors are expected to accumulate and own shares having a market value equal to three times their annual cash retainer; the CEO is expected to accumulate and own shares having a market value equal to three times his base salary; and each of the other Named Executive Officers is expected to accumulate and own shares having a market value equal to either one or two times his or hertheir base salary, depending on his or hertheir position with the Company. Each executive officer or director has five years to accumulate the expected ownership level beginning from the later of September 2011 or their date of hire or promotion. Until such ownership is achieved, each executive officer or director is required to retain 100% of net after-tax shares issued upon vesting of equity incentive awards. In addition, executive officers and directors are expressly prohibited from engaging in hedging transactions related to the Company’s stock, including trading in publicly-traded options, puts, calls, or other derivative instruments related to the Company’s stock, and from pledging the Company’s stock as collateral for a loan.
| Notice and Proxy Statement | 2023 | |
Summary
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
SUMMARY COMPENSATION
The following table reflects compensation earned by our CEO, our CFO, and each offor the three other most highly compensated executive officers,Named Executive Officers for the years ended December 31, 2015, 20142022, 2021, and 2013 (the “Named2020. The SEC’s calculation of total compensation, as shown in the Summary Compensation table set forth below, includes several items that are driven by accounting and actuarial assumptions, which are not necessarily reflective of compensation actually realized by the Named Executive Officers”).Officers in a particular year.
Summary Compensation Table
Name and Principal Position | | Year | | | Salary(1) | | | Bonus | | Stock Awards(2) | | Non-Equity Incentive Plan Compensation | | All Other Compensation | | | | Total ($) |
| | | | | | | | | | | | | | | | | | | | | |
Scott Montross | | 2015 | | $ | 530,000 | | | - | | | - | | | - | | $ | 100,134 | (3) | | $ | 630,134 |
Director, Chief Executive | | 2014 | | | 500,000 | | | - | | $ | 869,988 | | | - | | | 24,860 | (3) | | | 1,394,848 |
Officer and President | | 2013 | | | 500,000 | | | - | | | 933,963 | | $ | 112,970 | | | 52,950 | (3) | | | 1,599,883 |
| | | | | | | | | | | | | | | | | | | | | |
Robin Gantt | | 2015 | | | 303,735 | | | - | | | - | | | - | | | 51,571 | (4) | | | 355,306 |
Senior Vice President, Chief | | 2014 | | | 288,685 | | | - | | | 288,100 | | | - | | | 20,018 | (4) | | | 596,803 |
Financial Officer | | 2013 | | | 274,938 | | | - | | | 294,536 | | | 46,706 | | | 34,737 | (4) | | | 650,917 |
| | | | | | | | | | | | | | | | | | | | | |
Martin Dana | | 2015 | | | 308,040 | | | - | | | - | | | - | | | 56,777 | (5) | | | 364,817 |
Executive Vice President | | 2014 | | | 308,040 | | | - | | | 303,722 | | | - | | | 26,649 | (5) | | | 638,411 |
| | 2013 | | | 258,710 | | | - | | | 143,265 | | | 20,876 | | | 24,037 | (5) | | | 446,888 |
| | | | | | | | | | | | | | | | | | | | | |
William Smith | | 2015 | | | 308,040 | | | - | | | - | | | - | | | 69,666 | (6) | | | 377,706 |
Executive Vice President | | 2014 | | | 308,040 | | | - | | | 303,722 | | | - | | | 135,452 | (6) | | | 747,214 |
| | 2013 | | | 261,348 | | | - | | | 155,653 | | | 75,077 | | | 30,172 | (6) | | | 522,250 |
| | | | | | | | | | | | | | | | | | | | | |
Vicki Taylor(7) | | 2015 | | | 203,821 | | | - | | | - | | | - | | | 2,191 | (8) | | | 206,012 |
Vice President | | 2014 | | | 22,056 | | | - | | | - | | | - | | | 101 | (8) | | | 22,157 |
| | 2013 | | | - | | | - | | | - | | | - | | | - | (8) | | | - |
___
Name and Principal Position | Year | | Salary | | | Bonus | | | Stock Awards (1) | | | Non-Equity Incentive Plan Compensation | | | All Other Compensation | | | Total ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Scott Montross | 2022 | | $ | 642,675 | | | $ | - | | | $ | 977,851 | | | $ | 899,745 | | | $ | 13,748 | (2) | | $ | 2,534,019 | |
Director, CEO, and President | 2021 | | | 607,331 | | | | - | | | | 876,489 | | | | 446,907 | | | | 13,148 | (2) | | | 1,943,875 | |
2020 | | | 577,368 | | | | 60,000 | | | | 876,492 | | | | 435,658 | | | | 12,755 | (2) | | | 1,962,273 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Aaron Wilkins | 2022 | | | 355,000 | | | | - | | | | 310,237 | | | | 355,000 | | | | 11,259 | (3) | | | 1,031,496 | |
Senior Vice President and CFO | 2021 | | | 320,000 | | | | - | | | | 259,241 | | | | 168,195 | | | | 10,717 | (3) | | | 758,153 | |
2020 | | | 305,000 | | | | 38,000 | | | | 259,251 | | | | 164,386 | | | | 12,293 | (3) | | | 778,930 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Miles Brittain | 2022 | | | 358,750 | | | | - | | | | 310,237 | | | | 358,750 | | | | 14,696 | (3) | | | 1,042,433 | |
Executive Vice President | 2021 | | | 327,417 | | | | - | | | | 255,012 | | | | 172,093 | | | | 13,981 | (3) | | | 768,503 | |
2020 | | | 297,709 | | | | 8,000 | | | | 254,987 | | | | 160,456 | | | | 13,521 | (3) | | | 734,673 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Eric Stokes | 2022 | | | 322,905 | | | | - | | | | 278,411 | | | | 322,905 | | | | 12,954 | (2) | | | 937,175 | |
Senior Vice President of SPP | 2021 | | | 297,515 | | | | - | | | | 231,635 | | | | 156,377 | | | | 12,277 | (2) | | | 697,804 | |
2020 | | | 266,250 | | | | 7,000 | | | | 231,615 | | | | 143,501 | | | | 14,239 | (4) | | | 662,605 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Michael Wray | 2022 | | | 308,275 | | | | - | | | | 265,803 | | | | 308,275 | | | | 11,676 | (3) | | | 894,029 | |
Senior Vice President of Precast | 2021 | | | 263,333 | | | | - | | | | 125,009 | | | | 138,411 | | | | 11,096 | (3) | | | 537,849 | |
2020 | | | 247,000 | | | | 25,000 | | | | 99,991 | | | | 133,126 | | | | 11,060 | (3) | | | 516,177 | |
(1)
| Includes amounts earned in each of the respective years, even if deferred.
|
| |
(2)(1)
| The amounts included in this column represent the aggregate grant date fair value of RSUs and PSAs granted during the years reported in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The assumptions used to calculate the grant date fair value for the stock awards are in Note 14 of the Notes to the Consolidated Financial Statements included in Part II – Item 8. “Financial Statements and Supplementary Data” of the 2022 Annual Report to Shareholders. These amounts do not correspond to the actual value that will be recognized by the Named Executive Officers. |
| (2) | Includes amounts paid by the Company for contributions to the qualified 401(k) defined contribution plan and life insurance premiums. |
| (3) | Includes amounts paid by the Company for contributions to the qualified 401(k) defined contribution plan, life insurance premiums, and a monthly phone allowance. |
| (4) | Includes amounts paid by the Company for contributions to the qualified 401(k) defined contribution plan, life insurance premiums, and a monthly auto allowance until his promotion in February 2020. |
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
2022 GRANTS OF PLAN-BASED AWARDS
The following table sets forth, for each of the Named Executive Officers, the performance-based incentive awards granted for the year ended December 31, 2022.
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | Grant Date Fair Value of Stock Awards (4) | |
Name | Grant Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | | | |
Scott Montross | Non-Equity Award | | $ | - | | | $ | 449,873 | | | $ | 899,745 | | | | | | | | | | | | | | | | | | | | | |
6/16/2022 | (2) | | | | | | | | | | | | | | - | | | | 23,850 | | | | 47,700 | | | | | | | $ | 733,388 | |
| 6/16/2022 | (3) | | | | | | | | | | | | | | | | | | | | | | | | | | 7,950 | | | | 244,463 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Aaron Wilkins | Non-Equity Award | | | - | | | | 177,500 | | | | 355,000 | | | | | | | | | | | | | | | | | | | | | |
6/16/2022 | (2) | | | | | | | | | | | | | | - | | | | 7,567 | | | | 15,134 | | | | | | | | 232,685 | |
| 6/16/2022 | (3) | | | | | | | | | | | | | | | | | | | | | | | | | | 2,522 | | | | 77,552 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Miles Brittain | Non-Equity Award | | | - | | | | 179,375 | | | | 358,750 | | | | | | | | | | | | | | | | | | | | | |
6/16/2022 | (2) | | | | | | | | | | | | | | - | | | | 7,567 | | | | 15,134 | | | | | | | | 232,685 | |
| 6/16/2022 | (3) | | | | | | | | | | | | | | | | | | | | | | | | | | 2,522 | | | | 77,552 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Eric Stokes | Non-Equity Award | | | - | | | | 161,453 | | | | 322,905 | | | | | | | | | | | | | | | | | | | | | |
6/16/2022 | (2) | | | | | | | | | | | | | | - | | | | 6,790 | | | | 13,580 | | | | | | | | 208,793 | |
| 6/16/2022 | (3) | | | | | | | | | | | | | | | | | | | | | | | | | | 2,264 | | | | 69,618 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Michael Wray | Non-Equity Award | | | - | | | | 154,138 | | | | 308,275 | | | | | | | | | | | | | | | | | | | | | |
6/16/2022 | (2) | | | | | | | | | | | | | | - | | | | 6,483 | | | | 12,966 | | | | | | | | 199,352 | |
| 6/16/2022 | (3) | | | | | | | | | | | | | | | | | | | | | | | | | | 2,161 | | | | 66,451 | |
| (1) | These columns show the possible payouts for each Named Executive Officer under the short-term incentive plans based on the goals set in December 2022. Additional information is included in the Executive Compensation Discussion and Analysis, and detail regarding actual awards under the short-term incentive plan is reported in the Summary Compensation table on page 41. |
| (2) | Awards represent the PSAs granted under the equity incentive plan. The methodology applied in determining these awards and how they are earned is discussed under “Equity Incentive Awards” above. |
| (3) | Awards represent the RSUs granted under the equity incentive plan. The methodology applied in determining these awards and how they are earned is discussed under “Equity Incentive Awards” above. |
| (4) | The amount included in this column represents the aggregate grant date fair value of awards granted in accordance with FASB ASC Topic 718. The assumptions used to calculate the grant date fair value for the stock awards are in Note 1114 to the Consolidated Financial Statements included in Part II – Item 8, “Financial Statements and Supplementary Data” of our 2015the 2022 Annual Report on Form 10-K. These amounts do not correspond to the actual value that will be recognized by the named executives.Shareholders. |
| Notice and Proxy Statement | 2023 | |
(3)
| Amount includes $71,897 and $28,055 in 2015 and 2013, respectively, contributed by us to Mr. Montross’s nonqualified retirement savings plan, and amounts paid by us for contributions to Mr. Montross’s qualified 401(k) defined contribution plan, life insurance premiums and annual automobile allowance. PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
| |
(4)
| Amount includes $31,427 and $12,692 in 2015 and 2013, respectively, contributed by us to Ms. Gantt’s nonqualified retirement savings plan, and amounts paid by us for contributions to Ms. Gantt’s qualified 401(k) defined contribution plan, life insurance premiums, annual automobile allowance, and a monthly phone allowance.
|
| |
(5)
| Amount includes $30,741 in 2015 contributed by us to Mr. Dana’s nonqualified retirement savings plan, and amounts paid by us for contributions to Mr. Dana’s qualified 401(k) defined contribution plan, life insurance premiums, annual automobile allowance and a monthly phone allowance.
|
| |
(6)
| Amount includes $31,145 in 2015 contributed by us to Mr. Smith’s nonqualified retirement savings plan, $12,302 and $110,088 in 2015 and 2014, respectively, paid by us for relocation expenses, and amounts paid by us for contributions to Mr. Smith’s qualified 401(k) defined contribution plan, annual automobile allowance and life insurance premiums.
|
| |
(7)
| Ms. Taylor was hired as Vice President of Human Resources in November 2014.
|
| |
(8)
| Amount includes payments by us for contributions to Ms. Taylor’s qualified 401(k) defined contribution plan, life insurance premiums, and a monthly phone allowance.
|
2015 Grants of Plan-Based Awards
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of | | | Grant Date | |
Name | | Grant Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | Stock or Units (#) | | | Fair Value of Stock Awards | |
Scott Montross | | Non-Equity Award | | | - | | | $ | 371,000 | | | $ | 742,000 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robin Gantt | | Non-Equity Award | | | - | | | | 151,867 | | | | 303,735 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Martin Dana | | Non-Equity Award | | | - | | | | 154,020 | | | | 308,040 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
William Smith | | Non-Equity Award | | | - | | | | 154,020 | | | | 308,040 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Vicki Taylor | | Non-Equity Award | | | - | | | | 61,146 | | | | 122,292 | | | | - | | | | - | | | | - | | | | - | | | | - | |
(1)
| These columns show the possible payouts for each named executive officer under the Incentive Plan for 2015 based on the goals set in January 2015. Additional information is included in the Compensation Discussion and Analysis, and detail regarding actual awards under the Incentive Plan is reported in the Summary Compensation Table.
|
Outstanding Equity Awards at 2015 Fiscal Year EndOUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR END
The following table sets forth, for each of the Named Executive Officers, the equity awards made to each such Named Executive Officer that were outstanding atas of December 31, 2015. 2022.
| | Option Awards | | | Stock Awards | |
| | Number of Securities Underlying Unexercised Options (#) | | | Option Exercise | | | Option Expiration | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not | | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not | |
Name | | Exercisable | | | Unexercisable | | | Price ($) | | | Date | | | Vested (#) | | | | Vested ($)(1) | |
Scott Montross | | | - | | | | - | | | | - | | | | - | | | | 2,273 | | (2) | | $ | 25,435 | |
| | | - | | | | - | | | | - | | | | - | | | | 20,462 | | (3) | | | | | 228,970 | |
| | | - | | | | - | | | | - | | | | - | | | | 3,472 | | (4) | | | | | 38,852 | |
| | | - | | | | - | | | | - | | | | - | | | | 15,625 | | (5) | | | | | 174,844 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robin Gantt | | | - | | | | - | | | | - | | | | - | | | | 717 | | (2) | | | | | 8,023 | |
| | | - | | | | - | | | | - | | | | - | | | | 6,453 | | (3) | | | | | 72,209 | |
| | | - | | | | - | | | | - | | | | - | | | | 1,150 | | (4) | | | | | 12,869 | |
| | | - | | | | - | | | | - | | | | - | | | | 5,174 | | (5) | | | | | 57,897 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Martin Dana | | | - | | | | - | | | | - | | | | - | | | | 348 | | (2) | | | | | 3,894 | |
| | | - | | | | - | | | | - | | | | - | | | | 3,139 | | (3) | | | | | 35,125 | |
| | | - | | | | - | | | | - | | | | - | | | | 1,212 | | (4) | | | | | 13,562 | |
| | | - | | | | - | | | | - | | | | - | | | | 5,455 | | (5) | | | | | 61,041 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
William Smith | | | - | | | | - | | | | - | | | | - | | | | 379 | | (2) | | | | | 4,241 | |
| | | - | | | | - | | | | - | | | | - | | | | 3,410 | | (3) | | | | | 38,158 | |
| | | - | | | | - | | | | - | | | | - | | | | 1,212 | | (4) | | | | | 13,562 | |
| | | - | | | | - | | | | - | | | | - | | | | 5,455 | | (5) | | | | | 61,041 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Vicki Taylor | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | - | |
| | Stock Awards | |
Name | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(1) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | |
Scott Montross | | | 60,313 | | | $ | 2,032,548 | |
Aaron Wilkins | | | 18,521 | | | | 624,158 | |
Miles Brittain | | | 18,385 | | | | 619,574 | |
Eric Stokes | | | 16,588 | | | | 559,016 | |
Michael Wray | | | 12,397 | | | | 417,779 | |
___
(1) | The following table sets forth, for each of the Named Executive Officers, the number of shares outstanding as of December 31, 2022 for each of the equity incentive plan awards granted. |
| | PSAs granted March 26, 2020 (a) | | RSUs granted March 26, 2020 (b) | | PSAs granted March 18, 2021 (c) | | RSUs granted March 18, 2021 (d) | | PSAs granted June 16, 2022 (e) | | RSUs granted June 16, 2022 (f) | |
Scott Montross | | 8,225 | | 2,740 | | 13,161 | | 4,387 | | 23,850 | | 7,950 | |
Aaron Wilkins | | 2,432 | | 810 | | 3,893 | | 1,297 | | 7,567 | | 2,522 | |
Miles Brittain | | 2,392 | | 798 | | 3,829 | | 1,277 | | 7,567 | | 2,522 | |
Eric Stokes | | 2,172 | | 725 | | 3,478 | | 1,159 | | 6,790 | | 2,264 | |
Michael Wray | | 938 | | 312 | | 1,877 | | 626 | | 6,483 | | 2,161 | |
| (a) | These PSAs were granted on March 26, 2020 and vest based on the Company’s EBITDA Margin Performance over the measurement period. These PSAs vested on March 31, 2023, based on EBITDA Margin Performance for the 2020-2022 fiscal years; the actual number of shares of Common Stock that were issued was determined by multiplying the PSAs by a payout percentage of 159%. |
| (b) | These RSUs were granted on March 26, 2020 and vested on January 16, 2023. |
| (c) | These PSAs were granted on March 18, 2021 and vest based on the Company’s EBITDA Margin Performance over the measurement period. One-half of these PSAs vested on March 31, 2023 based on EBITDA Margin Performance for the 2021-2022 fiscal years; the actual number of shares of Common Stock that were issued was determined by multiplying the PSAs by a payout percentage of 126%. One-half of these PSAs will vest on April 1, 2024, based on EBITDA Margin Performance for the 2021-2023 fiscal years. |
| (d) | These RSUs were granted on March 18, 2021. One-half of these RSUs vested on January 16, 2023, and subject to continued employment, one-half of these RSUs will vest on January 15, 2024. |
| (e) | These PSAs were granted on June 16, 2022 and vest based on the Company’s EBITDA Margin Performance over the measurement period. One-third of these PSAs vested on March 31, 2023 based on EBITDA Margin Performance for the 2022 fiscal year; the actual number of shares of Common Stock that were issued was determined by multiplying the PSAs by a payout percentage of 132%. One-third of these PSAs will vest on April 1, 2024, based on EBITDA Margin Performance for the 2022-2023 fiscal years and one-third of these PSAs will vest on March 31, 2025, based on EBITDA Margin Performance for the 2022-2024 fiscal years. |
| (f) | These RSUs were granted on June 16, 2022. One-third of these RSUs vested on January 16, 2023, and subject to continued employment, one-third of these RSUs will vest on January 15, 2024 and January 15, 2025. |
(2) | Market value is based on the closing market price of $11.19$33.70 of our common stockthe Company’s Common Stock on December 31, 2015.2022. |
| Notice and Proxy Statement | 2023 | |
(2)
| These RSUs were granted on May 31, 2013 and vested on January 15, 2016.
|
(3)
| These PSAs were granted on May 31, 2013 and 0% vested on January 15, 2016, based upon performance of our Total Shareholder Return from January 1, 2013 through December 31, 2015. PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
| |
(4)
| These RSUs were granted on May 29, 2014 and vest as follows: 50% on January 15, 2016 and 50% on January 15, 2017.
|
| |
(5) | These PSAs were granted on May 29, 2014 and will vest on January 15, 2017, dependent upon performance of our Total Shareholder Return from January 1, 2014 through December 31, 2016. |
2015 Option Exercises and Stock Vesting2022 OPTION EXERCISES AND STOCK VESTED
The following table sets forth, for each of the Named Executive Officer,Officers, the number of shares acquired upon option exercises and vesting of stock awards during 2015,2022 and the related value realized upon such exercises and vesting. There were no issued, vested, or outstanding stock options during 2022.
| | Option Awards | | | Stock Awards | |
Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#)(1) | | | Value Realized on Vesting ($)(2) | |
Scott Montross | | | - | | | | - | | | | 10,800 | | | $ | 295,502 | |
Robin Gantt | | | - | | | | - | | | | 4,934 | | | | 139,013 | |
Martin Dana | | | - | | | | - | | | | 2,690 | | | | 73,927 | |
William Smith | | | - | | | | - | | | | 2,712 | | | | 74,367 | |
Vicki Taylor | | | - | | | | - | | | | - | | | | - | |
| | Stock Awards | |
Name | | Number of Shares Acquired on Vesting (#)(1) | | | Value Realized on Vesting ($)(2) | |
Scott Montross | | | 25,457 | | | $ | 688,160 | |
Aaron Wilkins | | | 6,982 | | | | 186,755 | |
Miles Brittain | | | 6,975 | | | | 186,988 | |
Eric Stokes | | | 6,319 | | | | 169,336 | |
Michael Wray | | | 2,998 | | | | 80,475 | |
___
| (1) | This column shows the number of shares acquired on vesting in 20152022 by the Named Executive Officers. The actual number of shares received by these individuals from shares vested in 20152022 (net of shares used to cover the applicable income taxes, if so elected) was as follows: Mr. Montross – 6,544, Ms. Gantt15,212, Mr. Wilkins – 4,934,3,587, Mr. DanaBrittain – 1,5714,137, Mr. Stokes – 3,875, and Mr. SmithWray – 1,829.1,943. |
| |
(2) | The value realized on vesting is based on the closing market price multiplied by the number of shares of stock vested on the closing market price multiplied by the number of shares of stock vested on the applicable vesting date. |
2015 Nonqualified Deferred Compensation2022 NONQUALIFIED DEFERRED COMPENSATION
The following table sets forth, for each of the Named Executive Officer under our Deferred Compensation Plan, the amounts of the contributions made by each executive, the contributions made by us,Officers, the earnings generated by the investments within the Deferred Compensation Plan, which was frozen in 2016, and the balance of each Named Executive Officer’s account under the Deferred Compensation Plan for the year ended December 31, 2015.2022.
Name | | Executive Contributions in Last Fiscal Year | | | Company Contributions in Last Fiscal Year(1) | | | Aggregate Earnings (Loss) in Last Fiscal Year ($) | | | Aggregate Balance at Last Fiscal Year-End(2) | |
Scott Montross | | | - | | | $ | 71,897 | | | $ | (510 | ) | | $ | 103,063 | |
Robin Gantt | | | - | | | | 31,427 | | | | 854 | | | | 64,364 | |
Martin Dana | | | - | | | | 30,741 | | | | (2,133 | ) | | | 213,653 | |
William Smith | | | - | | | | 31,145 | | | | (893 | ) | | | 30,252 | |
Vicki Taylor | | | - | | | | - | | | | - | | | | - | |
__
(1)
| These contributions are also included in the amounts reported in the All Other Compensation Column of the Summary Compensation Table.
|
| |
(2)
| The following portion of the amounts in the Aggregate Balance at Last Fiscal Year-End column were reported in the Summary Compensation Table of previous years in the Salary column (in the case of executive contributions) or in the All Other Compensation column (in the case of Company contributions), respectively: Mr. Montross - $0 and $0, respectively in 2014 and $0 and $28,055, respectively in 2013; Ms. Gantt - $0 and $0, respectively in 2014 and $0 and $12,692, respectively in 2013.
|
Name | | Aggregate Earnings in Last Fiscal Year | | | Aggregate Withdrawals/ Distributions | | | Aggregate Balance at Last Fiscal Year-End | |
Scott Montross | | $ | (20,450 | ) | | $ | - | | | $ | 151,916 | |
Aaron Wilkins | | | - | | | | - | | | | - | |
Miles Brittain | | | (11,679 | ) | | | - | | | | 52,164 | |
Eric Stokes | | | - | | | | - | | | | - | |
Michael Wray | | | (5,585 | ) | | | - | | | | 21,324 | |
EMPLOYMENT AGREEMENTS
Employment Agreements
We have notWilliam Smith. On April 8, 2022, the Company entered into a Separation Agreement (the “Agreement”), with Mr. Smith who served as the Company’s Executive Vice President of Water Transmission Engineered Systems until April 15, 2022, pursuant to which Mr. Smith will continue to be employed by the Company as a Consultant from April 16, 2022 to April 15, 2025. The Agreement provides for an annual base salary of $150,000 paid in equal installments in accordance with the Company’s regular payroll cycles, and coverage under the Company’s employee benefit plans. Pursuant to the Agreement, the Company affirmed the terms of Mr. Smith’s unvested RSUs to allow the 1,579 RSUs scheduled to vest on January 16, 2023 to vest as scheduled. In addition, the vesting of the 702 RSUs scheduled to vest on January 15, 2024 were accelerated to also vest on January 16, 2023. The Agreement provides for the forfeiture by Mr. Smith of any PSAs that were unvested at the time of his resignation as Executive Vice President. Pursuant to the Agreement, Mr. Smith is required to comply with certain confidentiality requirements. Mr. Smith did not previously have an employment agreementsagreement with our Named Executive Officers.
the Company, other than a Change in Control AgreementsAgreement.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
CHANGE IN CONTROL AGREEMENTS
We haveNorthwest Pipe Company has entered into change in control agreements (the “Agreements”) with certain of our executive officers. The Agreements for each of the Named Executive Officers is for a term ending as indicated below,July 31, 2023, provided that on each respective dateJuly 31, 2023 and each anniversary thereafter, the term of the Agreement will be automatically extended by one year unless either party gives 90 days prior written notice that the term of an agreement shall not be so extended. If a “Change in Control” (as defined in the Agreements and described below) occurs during the term of the Agreements, the Agreements will continue in effect until two years after the Change in Control.
| Term Ending:
|
Scott Montross
| July 19, 2016
|
Robin Gantt
| April 21, 2016
|
Martin Dana
| October 15, 2016
|
William Smith
| October 15, 2016
|
Vicki Taylor
| October 14, 2016
|
If an executive officer’s employment is terminated within two years after a Change in Control either by usthe Company without “Cause” (as defined in the Agreements and described below) or by the executive officer for “Good Reason” (as defined in the Agreements and described below), the executive officer will be entitled to receive his or hertheir full base salary through the date of termination and any benefits or awards (both cash and stock) that have been earned or are payable through the date of termination plus (i) a lump sum payment equal to two years’ base salary (three years’ base salary in the case of Mr. Montross and one year’s base salary in the case of Ms. Taylor)Messrs. Stokes and Wray) and (ii) an amount equal to two times the average cash bonuses paid to the executive officer during the previous three years (one(three times the average cash bonuses during the previous three years in the case of Ms. Taylor)Mr. Montross and one times the average cash bonuses during the previous three years in the case of Messrs. Stokes and Wray). In addition, the executive officer would be entitled to the continuation of health and insurance benefits for certain periods and all outstanding unvested stock optionsequity compensation awards would immediately become fully vested.vested, unless the award provides different vesting terms on a change in control of the Company. In the event that the payments made to an executive officer would be deemed to be a “parachute payment” under the Internal Revenue Code of 1986, an executive officer may choose to accept payment of a reduced amount that would not be deemed to be a “parachute payment.” If the payment made to an executive officer is deemed to be a “parachute payment”, the executive officer is responsible for the payment of any resulting taxes.
If an executive officer’s employment is terminated within two years after a Change in Control either by usthe Company for Cause or as a result of the executive officer’s disability or death, the executive officer will be entitled to receive his or hertheir full base salary through the date of termination plus any benefits or awards (both cash and stock) that have been earned or are payable through the date of termination.
For purposes of the Agreements, a “Change in Control” includes (i) any merger or consolidation transaction in which we are notinvolving the surviving corporation,Company, unless ourthe shareholders immediately before such transaction have more than 50% of the same proportionate ownershipcombined voting power of common stockthe outstanding voting securities of the surviving corporation inimmediately after the transaction, (ii) the acquisition by any person of 30 percent20% or more of ourthe total combined voting power, (iii) the liquidation or the sale or other transfer of substantially all of ourthe Company’s assets, and (iv) a change in the composition of the Board of Directors during any two-year period such that the directors in office at the beginning of the period and/or their successors who were elected by or on the recommendation of two-thirds of the directors in office at the beginning of the period do not constitute at least a majority of the Board of Directors.Board. For purposes of the Agreements, “Good Reason” includes, but is not limited to, (i) an adverse change in the executive officer’s status, title, position(s), or responsibilities or the assignment to the executive of duties or responsibilities which are inconsistent with the executive officer’s status, title, or position, (ii) a reduction in the executive officer’s base salary or the failure to pay compensation otherwise due to the executive officer, (iii) a requirement that the executive officer be based anywhere other than within ten25 miles of his or hertheir job location before the Change in Control, (iv) ourthe Company’s failure to continue any compensation or employee benefit plan or program in effect before the Change in Control or any act or omission that would adversely affect the executive officer’s continued participation in any such plan or program or materially reduce the benefits under such plan or program, and (v) ourthe Company’s failure to require any of ourits successors to assume ourits obligations under the Agreements within 30 days after a Change in Control.Control, and (vi) any material breach of the Agreements by the Company. For purposes of the Agreements, “Cause” means the willful and continued failure to satisfactorily perform the duties assigned to the executive officer within a certain period after notice of such failure is given and commission of certain illegal conduct.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following table shows estimates of the potential payments to Named Executive Officers upon terminationif employment is terminated after a Change in Control either by the Company without Cause or by the executive officer for the reasons described below.Good Reason. The amounts shown assume that the employment of each executive was terminated effective as of December 31, 2015. 2022. The table does not quantify benefits under plans that are generally available to salaried employees and do not discriminate in favor of Named Executive Officers, including the payment of accrued but unpaid salary, accrued but unused vacation pay, and benefits accrued under the qualified 401(k) defined contribution plan payable upon termination.
Executive Benefits and Payments Upon Termination | | Termination Without Cause or Voluntary Termination for Good Reason | | | Termination Without Cause or Voluntary Termination for Good Reason, after a Change in Control | | | Termination For Cause or Voluntary Termination Without Good Reason | | | Termination as a Result of Disability or Death | |
Scott Montross | | | | | | | | | | | | | | | | |
Base Salary | | | - | | | $ | 1,590,000 | | | | - | | | | - | |
Bonus | | | - | | | | 75,313 | | | | - | | | | - | |
Health and Insurance Benefits | | | - | | | | 50,000 | | | | - | | | | - | |
Earned Vacation | | $ | 60,000 | | | | 60,000 | | | $ | 60,000 | | | $ | 60,000 | |
| | | | | | | | | | | | | | | | |
Robin Gantt | | | | | | | | | | | | | | | | |
Base Salary | | | - | | | | 624,000 | | | | - | | | | - | |
Bonus | | | - | | | | 31,137 | | | | - | | | | - | |
Health and Insurance Benefits | | | - | | | | 32,000 | | | | - | | | | - | |
Earned Vacation | | | 33,000 | | | | 33,000 | | | | 33,000 | | | | 33,000 | |
| | | | | | | | | | | | | | | | |
Martin Dana | | | | | | | | | | | | | | | | |
Base Salary | | | - | | | | 616,080 | | | | - | | | | - | |
Bonus | | | - | | | | 13,917 | | | | - | | | | - | |
Health and Insurance Benefits | | | - | | | | 50,000 | | | | - | | | | - | |
Earned Vacation | | | 32,000 | | | | 32,000 | | | | 32,000 | | | | 32,000 | |
| | | | | | | | | | | | | | | | |
William Smith | | | | | | | | | | | | | | | | |
Base Salary | | | - | | | | 616,080 | | | | - | | | | - | |
Bonus | | | - | | | | 50,051 | | | | - | | | | - | |
Health and Insurance Benefits | | | - | | | | 31,000 | | | | - | | | | - | |
Earned Vacation | | | 35,000 | | | | 35,000 | | | | 35,000 | | | | 35,000 | |
| | | | | | | | | | | | | | | | |
Vicki Taylor | | | | | | | | | | | | | | | | |
Base Salary | | | - | | | | 222,000 | | | | - | | | | - | |
Bonus | | | - | | | | - | | | | - | | | | - | |
Health and Insurance Benefits | | | - | | | | 3,000 | | | | - | | | | - | |
Earned Vacation | | | 19,000 | | | | 19,000 | | | | 19,000 | | | | 19,000 | |
Name | | Base Salary | | | Bonus | | | Equity Incentive Plan Awards (1) | | | Health and Insurance Benefits | |
Scott Montross | | $ | 1,955,700 | | | $ | 1,519,934 | | | $ | 2,402,271 | | | $ | 116,000 | |
Aaron Wilkins | | | 730,000 | | | | 366,221 | | | | 736,077 | | | | 54,000 | |
Miles Brittain | | | 730,000 | | | | 367,370 | | | | 730,314 | | | | 50,000 | |
Eric Stokes | | | 327,540 | | | | 162,805 | | | | 660,452 | | | | 38,000 | |
Michael Wray | | | 312,700 | | | | 135,683 | | | | 481,541 | | | | 75,000 | |
| (1) | The PSAs and RSUs outstanding as of December 31, 2022 were granted on March 26, 2020, March 18, 2021, and June 16, 2022. For the PSAs that vested on March 31, 2023, the actual number of shares of Common Stock that were issued was determined by multiplying the PSAs by a payout percentage of 159%, 126%, and 132% for the PSAs granted in 2020, 2021, and 2022, respectively. For the PSAs that will vest on April 1, 2024 and March 31, 2025, the estimated number of shares of Common Stock that would be issued was determined by multiplying the PSAs by a payout percentage of 126% and 132% for the PSAs granted in 2021 and 2022, respectively. Amounts are calculated based on the price of $33.70, the closing market price for the Company’s Common Stock on December 31, 2022. |
PAY RATIO DISCLOSURE
Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S‑K, a public company is required to disclose the median of the annual total compensation of all employees of a registrant (excluding the CEO), the annual total compensation of that registrant’s CEO, and the ratio of the median of the annual total compensation of all employees to the annual total compensation of the CEO.
In determining the median employee, a listing was prepared of the total annual cash compensation of each individual who was employed by the Company, other than the CEO, on December 31, 2022, the last day of the Company’s payroll year (whether employed on a full-time, part-time, or seasonal basis). The Company did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and it did not annualize the compensation for any full-time employees that were not employed by the Company for all of 2022. After identifying the median employee, the Company calculated annual total compensation for such employee using the same methodology used for the Named Executive Officers as set forth in the Summary Compensation table on page 41.
The annual total compensation for 2022 for the CEO was $2,534,019, and for the median employee was $63,910. The resulting ratio of the CEO’s annual total compensation to the median employee’s annual total compensation was 40 to 1.
The SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and various assumptions and, as a result, the pay ratio reported by the Company may not be comparable to the pay ratio reported by other companies.
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
PAY VERSUS PERFORMANCE
As required by Section 953(a) of the Dodd-Frank Act and Item 402(v) of Regulation S‑K, the Company is providing the following pay versus performance table and related information which sets forth information concerning the compensation of the Company’s principal executive officer (“PEO”), Scott Montross, the President and CEO, and other NEOs for each of the years ended December 31, 2022, 2021, and 2020. The Company’s Compensation Committee Interlocksdoes not directly use the information in this table or the related disclosures when making compensation decisions. For information regarding the Company’s pay-for-performance philosophy and Insider Participationhow the Compensation Committee makes its decisions about NEO pay each year, refer to “Executive Compensation Discussion and Analysis” on page 33.
| | | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | | | |
Year | Summary Compensation Table Total for PEO (b) | | Compensation Actually Paid to PEO (1) | | Average Summary Compensation Table Total for Non-PEO NEOs (2) | | Average Compensation Actually Paid to Non-PEO NEOs (1)(2) | | Total Shareholder Return (3) | | Peer Group Total Shareholder Return (3)(4) | | Net Income (in thousands) | | NIBT (in thousands) | | EBITDA Margin (5) | |
2022 | $ | 2,534,019 | | $ | 3,018,741 | | $ | 976,283 | | $ | 1,114,471 | | $ | 101.17 | | $ | 110.23 | | $ | 31,149 | | $ | 41,350 | | | 13.6 | % |
2021 | | 1,943,875 | | | 1,852,570 | | | 758,955 | | | 723,332 | | | 95.47 | | | 126.18 | | | 11,523 | | | 15,158 | | | 9.5 | |
2020 | | 1,962,273 | | | 2,352,277 | | | 675,609 | | | 757,896 | | | 84.96 | | | 113.43 | | | 19,050 | | | 25,634 | | | 14.4 | |
| (1) | SEC rules require certain adjustments be made to the Summary Compensation table totals to determine “compensation actually paid” as reported in the Pay versus Performance Table. “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. In general, “compensation actually paid” is calculated as Summary Compensation table total compensation adjusted to include the fair market value of equity awards as of December 31 of the applicable year or, if earlier, the vesting date (rather than the grant date). NEOs do not participate in a defined benefit plan so no adjustment for pension benefits is included in the table below. The following table details these adjustments: |
| | Scott Montross (PEO) | | 2022 | | 2021 | | 2020 | |
| | Summary Compensation table total for PEO (column (b)) | | $ | 2,534,019 | | $ | 1,943,875 | | $ | 1,962,273 | |
| | | Subtract equity awards included in Summary Compensation table total | | | (977,851 | ) | | (876,489 | ) | | (876,492 | ) |
| | | Add year-end value of equity awards granted in the covered year that remain outstanding and unvested as of year-end | | | 1,328,858 | | | 793,064 | | | 1,628,835 | |
| | | Change in value of equity awards granted in prior years that remain outstanding and unvested as of year-end | | | 255,088 | | | (164,412 | ) | | (109,520 | ) |
| | | Change in value of equity awards vested in the covered year | | | (121,373 | ) | | 156,532 | | | (252,819 | ) |
| | Compensation Actually Paid to PEO (column (c)) | | $ | 3,018,741 | | $ | 1,852,570 | | $ | 2,352,277 | |
| | Average for Non-PEO NEOs | | | 2022 | | | 2021 | | | 2020 | |
| | Average Summary Compensation table total for Non-PEO NEOs (column (d)) | | $ | 976,283 | | $ | 758,955 | | $ | 675,609 | |
| | | Subtract equity awards included in Summary Compensation table total | | | (291,172 | ) | | (256,594 | ) | | (205,269 | ) |
| | | Add year-end value of equity awards granted in the covered year that remain outstanding and unvested as of year-end | | | 395,691 | | | 232,171 | | | 381,461 | |
| | | Change in value of equity awards granted in prior years that remain outstanding and unvested as of year-end | | | 62,807 | | | (49,317 | ) | | (16,895 | ) |
| | | Change in value of equity awards vested in the covered year | | | (29,138 | ) | | 38,117 | | | (51,514 | ) |
| | | Subtract prior year-end value of equity awards deemed to fail to meet vesting conditions | | | - | | | - | | | (25,496 | ) |
| | Compensation Actually Paid to Non-PEO NEOs (column (e)) | | $ | 1,114,471 | | $ | 723,332 | | $ | 757,896 | |
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
| (2) | The NEOs whose compensation amounts are included for each year are as follows: |
| | • | 2022: | Aaron Wilkins, Miles Brittain, Eric Stokes, and Michael Wray |
| | • | 2021: | Aaron Wilkins, William Smith, Miles Brittain, and Eric Stokes |
| | • | 2020: | Aaron Wilkins, William Smith, Miles Brittain, Eric Stokes, and Robin Gantt. In 2020, Robin Gantt retired as Chief Financial Officer, and Aaron Wilkins was appointed to that position, resulting in five NEOs included in average compensation. |
| (3) | The Company’s total shareholder return (“TSR”) and the peer group TSR for each applicable year is calculated based on a fixed investment of $100 on December 31, 2019 on the same cumulative basis as is used in Item 201(e) of Regulation S‑K. |
| (4) | Peer group TSR is weighted according to the respective companies’ stock market capitalization at the beginning of the measurement period, which is December 31, 2019 for each year in the table. The Peer Group reflected in this table, which is used in the Company’s stock performance chart in Part II, Item 5 of its 2022 Annual Report to Shareholders, includes: Ampco-Pittsburgh Corporation, Badger Meter, Inc., Circor International, Inc., DMC Global Inc., L.B. Foster Company, Insteel Industries, Inc., Lindsay Corporation, Luxfer Holdings, PLC, Mueller Water Products, Inc., and Orion Group Holdings, Inc. In 2021 and 2020, the Company’s stock performance chart in Part II, Item 5 of the Company’s respective annual reports to shareholders disclosed the Russell 2000 Index and the S&P 600 Construction Machinery and Heavy Trucks Index. The TSR for these indices were as follows: |
| | • | Russell 2000 Index: $119.96 in 2020, $137.74 in 2021, and $109.59 in 2022 |
| | • | S&P 600 Construction Machinery and Heavy Trucks Index: $112.99 in 2020, $129.13 in 2021, and $137.42 in 2022 |
| (5) | Earnings Before Interest, Income Taxes, Depreciation, and Amortization (“EBITDA”) Margin is supplemental to this disclosure and represents EBITDA as a percentage of total net sales. The Company’s method for calculating EBITDA is to deduct depreciation, amortization, and interest income and expense from the Company’s reported income before income taxes. From that, adjustments to EBITDA are occasionally necessary to consider unusual events or other timing differences. These items typically align with the types of adjustments provided for in the Reconciliation of Non-GAAP Measures which can be found in the Company’s quarterly earnings releases. When the Company adjusts financial measures such as EBITDA, those are considered equally for bonus programs affecting all employees, and as they relate to the compensation of the PEO and NEOs, require the explicit approval of the Company’s Compensation Committee. |
RELATIONSHIP BETWEEN COMPENSATION ACTUALLY PAID AND FINANCIAL PERFORMANCE
Compensation Actually Paid and Total Shareholder Return
| | Compensation actually paid in 2020 was elevated slightly by meeting maximum vesting levels for performance-based equity awards due largely to the addition of Geneva in January 2020. Subsequent to that award and with additional investment in the Precast segment, the Company elected to increase the EBITDA Margin required to be achieved to realize a maximum payout in order to better reflect the higher profit potential for the broader Company. |
Compensation Actually Paid, Net Income, and Net Income Before Income Tax (“NIBT”)
| | Compensation actually paid moved in relation with the Company’s profitability, as expected, considering the design of the Company’s bonus programs are heavily weighted toward obtaining threshold, target, and maximum NIBT levels for the cash-based incentive compensation plan. |
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Compensation Actually Paid and EBITDA Margin
| | Compensation actually paid moved in relation with the Company’s profitability, as expected, considering the designs of the Company’s bonus programs are heavily weighted toward obtaining threshold, target, and maximum level EBITDA Margins for the equity-based incentive compensation plan. As mentioned above, the Company increased its EBITDA Margin target starting in 2021 to account for the greater potential brought on by the larger and more diversified business the addition of Precast provides. |
RELATIONSHIP BETWEEN TOTAL SHAREHOLDER RETURN OF THE COMPANY AND THE PEER GROUP
| | The Company chose its 2022 Peer Group based on relative size as well as industries it serves. Due to the acquisition of ParkUSA, the Company has included digital water companies that tend to earn a higher trading valuation. The Company believes this is representative based on the intended strategic transformation that the Company intends to realize from recent and future acquisitions coupled with organic growth of the ParkUSA products. The Peer Group TSR is calculated after considering the relative size of the peers based on market capitalization. Evaluated with the eleven companies in the Peer Group, Northwest Pipe Company ranked fourth over the three years presented, third over the previous two years, and second for the single year ended December 31, 2022. |
| | |
| | This graph supplements the graph above and reflects the 2022 Peer Group TSR based on a simple average, rather than weighted for market capitalization. The Company’s 2022 TSR was just slightly better than where it started in 2019, a near record year for SPP, despite growing consolidated annual gross profit 82% between 2019 and 2022. |
| Notice and Proxy Statement | 2023 | |
| PROPOSAL #2: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
TABULAR LIST OF THE MOST IMPORTANT MEASURES
The only performance measures used by the Company to link executive compensation actually paid to Company performance during the year ended December 31, 2022, in no particular order, are:
| • | Net Income Before Income Tax |
| • | Earnings Before Interest, Income Taxes, Depreciation, and Amortization Margin (EBITDA Margin) |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Declusin andFranson, Larson, and Ms. ApplebaumPaschal served on the Compensation Committee in 2015.2022. All members of the Committee were independent directors, and no member has ever been an officer or employee of the Company. During 2015,2022, none of ourthe executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on ourthe Company’s Compensation Committee.
Compensation Committee ReportCOMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the foregoing Executive Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee has recommended to the full Board of Directors that the Executive Compensation Discussion and Analysis be included in the proxy statementthis Proxy Statement for filing with the SEC.
COMPENSATION COMMITTEE Michael Franson, Chairperson Keith Larson Irma Lockridge John Paschal | | COMPENSATION COMMITTEE
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| | | |
| | Keith Larson, Chairman
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| | Michelle Applebaum | Notice and Proxy Statement | 2023 | |
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| | James Declusin
| PROPOSAL #3: ADVISORY VOTE ON THE FREQUENCY OF SHAREHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION |
PROPOSAL #3: ADVISORY VOTE ON THE FREQUENCY OF SHAREHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION
(Proposal No. 2)
| YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE OPTION OF 1 YEAR IN THIS PROPOSAL. |
In accordance with Section 14A of the Securities Exchange Act, of 1934, the Board of Directors is asking shareholders to approve an advisory resolution on the frequency with which the advisory vote on executive compensation. compensation set forth above will be held.
The advisory vote on the frequency of the advisory vote on executive compensation is a non-binding vote as to how often the executive compensation advisory vote should occur: every one year, every two years, or every three years. You may either vote for one of these alternative frequencies or, if you desire, abstain from voting on the compensation of our Named Executive Officers. The vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this proxy statement.matter. The text of the resolution to be voted upon is as follows:
| “RESOLVED, that the shareholders of Northwest Pipe Company approve, on an advisory basis, having the shareholder vote on the compensation of the Company’s Named Executive Officers listed in the annual proxy statement occur with the frequency (i.e., every one year, every two years, or every three years) for which the highest number of votes are cast at the 2023 Annual Meeting of Shareholders.” |
After considering the shareholdersbenefits and consequences of Northwest Pipe Company approve, on an advisory basis, the compensation paid to the Named Executive Officers, as disclosed in the Company’s Proxy Statementeach option for the 2016 Annual Meetingfrequency of Shareholders pursuantthe say-on-pay advisory vote, the Board of Directors has determined that an annual advisory vote on executive compensation is the most appropriate alternative for the Company. Therefore, the Board recommends that you vote for conducting the advisory vote on executive compensation every year.
The Board believes that an annual advisory vote on executive compensation provides the highest level of accountability and communication. An annual vote will allow shareholders to provide the Company with direct input on the executive compensation disclosure rulesinformation presented in the proxy statement each year. Additionally, an annual advisory vote is consistent with the Company’s policy of the SEC, including the Compensation Discussionengaging in discussions with shareholders on corporate governance and Analysis, compensation tables and narrative disclosure."matters.
The Company urges youoption of every one year, every two years, or every three years that receives the highest number of votes cast by shareholders will be deemed to readbe the disclosure under “Compensation Discussion and Analysis,” which beginsfrequency for the advisory vote on page 9 and discusses how our compensation policies and procedures implement our compensation philosophy. You should also read the Summary Compensation Table and other related compensation tables and narrative disclosure which provide additional details about the compensation of our CEO, our CFO and our three other most highly-compensated executive officers for 2015. We have designed our executive compensation structure to attract, retain and motivate executives who can accomplish our business strategy, and whose interests are aligned with those of ourthat has been selected by shareholders. We believe that our executive compensation program does not encourage excessive and unnecessary risk-taking by our executives but, rather, encourages our executives to remain focused on both the short-term and long-term operational and financial goals of the Company.
While we intend to carefully consider the voting results of this proposal,However, because the final vote is advisory in nature and therefore not binding on the Company, ourthe Board orof Directors may decide that it is in the Compensation Committee.
We currentlybest interests of the shareholders and the Company to hold ourthe advisory vote on executive compensation annually. Accordingly,more or less frequently than the next advisory vote on executive compensation will be held at our 2017 Annual Meeting of Shareholders.option approved by shareholders.
| Notice and Proxy Statement | 2023
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| PROPOSAL #4: RATIFICATION OF THE APPOINTMENT OF MOSS ADAMS LLP |
PROPOSAL #4: RATIFICATION OF THE APPOINTMENT OF MOSS ADAMSLLP
| YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING “FOR”A VOTE the approval of the compensation of the Named Executive Officers as disclosed in this proxy statement and as described above pursuant to the compensation disclosure rules of the Exchange Act. |
Director Compensation
The Compensation Committee is responsible for recommending to the Board the level and form of compensation and benefits for directors. In 2012, Mercer was engaged to conduct a review of our director compensation program. Members of the Board of Directors who are also our employees do not receive additional compensation for serving as directors. Each nonemployee director receives a $30,000 annual retainer, $2,000 for each Board meeting attended and $500 for each meeting of a committee of the Board attended. The Lead Director receives an additional retainer of $18,000. The Audit Committee Chairman receives an additional annual retainer of $7,500, and the Compensation Committee Chairman and Nominating and Governance Committee Chairman each receive an additional annual retainer of $5,000. In addition, each nonemployee director receives an annual award of $55,000, which has historically been payable in cash, shares of the Company’s Common Stock, or a combination thereof, at each director’s election. In 2015, the award was payable solely in shares of the Company’s Common Stock. The members of our Board of Directors are also reimbursed for travel expenses incurred in attending board meetings.
Mr. Roman serves as the Company’s Chairman of the Board of Directors pursuant to an Executive Employment Agreement, dated effective as of January 1, 2013 (the “Roman Executive Employment Agreement”). The Roman Executive Employment Agreement, as amended effective January 1, 2014, provides that Mr. Roman’s annual base salary will be $150,000, and that he will no longer continue to vest in any bonus or incentive awards made to him before January 1, 2013, with the exception of the awards which vested on January 1, 2014. Mr. Roman also will not be eligible to participate in any of the other employee benefit plans that are generally available to the Company’s employees, with the exception of the medical and dental plans. The Roman Executive Employment Agreement may be terminated by either Mr. Roman or the Company upon sixty days written notice. The Roman Executive Employment Agreement will also terminate in the event of Mr. Roman’s death or disability. Upon termination of the Roman Executive Employment Agreement for any reason, the Company will be required to pay Mr. Roman’s base salary through the date of termination. The Roman Executive Employment Agreement also includes standard confidentiality, non-solicitation and nondisclosure provisions.
Director Compensation Table.The following table reflects compensation earned by the directors for the year ended December 31, 2015, with the exception of Mr. Montross, whose compensation is included in the Summary of Cash and Certain Other Compensation table above.
Name(1) | | Fees Earned or Paid in Cash | | | Stock Awards(2) | | | All Other Compensation | | | Total | |
Michelle Applebaum | | $ | 48,500 | | | $ | 55,000 | | | | - | | | $ | 103,500 | |
James Declusin | | | 68,000 | | | | 55,000 | | | | - | | | | 123,000 | |
Harry Demorest | | | 55,000 | | | | 55,000 | | | | - | | | | 110,000 | |
Keith Larson | | | 53,500 | | | | 55,000 | | | | - | | | | 108,500 | |
Richard Roman | | | 150,000 | | | | - | | | $ | 792 | (3) | | | 150,792 | |
(1)
| As of December 31, 2015, each director had the following number of options outstanding: Ms. Applebaum – 0; Mr. Declusin – 0; Mr. Demorest – 0; Mr. Larson – 0; Mr. Roman –28,000. FOR THIS PROPOSAL. |
| |
(2)
| On June 4, 2015, 2,616 shares of Common Stock were granted to Ms. Applebaum and Messrs. Declusin, Demorest, and Larson. The amount included in this column represents the amount recognized by us in 2015 for financial statement reporting purposes for the fair value of the common stock awarded. The assumptions used to calculate the grant date fair value for the stock awards are in Note 11 to the Consolidated Financial Statements included in Part II – Item 8, “Financial Statements and Supplementary Data” of our 2015 Report on Form 10-K.
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(3)
| Amount includes payments by us for Mr. Roman’s life insurance premiums.
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Audit Committee Report
The Audit Committee reports to and acts on behalf of the Board of Directors and is comprised solely of directors who satisfy the independence, financial literacy and other requirements set forth in the listing rules of the Nasdaq Stock Market and applicable securities laws. In addition, each of the three current members of the Audit Committee is an “audit committee financial expert” as defined by the rules of the SEC.
The Audit Committee operates under a written charter, approved and adopted by the Board of Directors, which sets forth its duties and responsibilities. This charter, which is available in full on the Company’s website atwww.nwpipe.com under “Investor Relations” - “Corporate Governance”, is reviewed annually and updated, as appropriate, to address changes in regulatory requirements, authoritative guidance, evolving oversight practices and investor feedback.
The Audit Committee's primary duties and responsibilities are the oversight and monitoring of:
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| The integrity of the Company's financial reporting process, financial internal control systems, accounting and legal compliance and financial reporting of the Company.
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| The qualifications, independence and performance of the Company's independent auditors.
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| The compliance by the Company with applicable legal and regulatory requirements.
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| The maintenance of an open and private, if necessary, communication among the independent auditors, management, legal counsel and the Board.
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Management is responsible for preparing the Company’s financial statements and maintaining effective internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s financial statements in accordance with generally accepted auditing standards and issuing a report thereon, and for performing an independent audit of the effectiveness of the Company’s internal controls over financial reporting. In this context, the Audit Committee performed the following:
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| met with PricewaterhouseCoopers LLP (“PwC”), who has served as our independent registered public accountants since 2012, with and without management present, to review and discuss the Company’s audited financial statements and assessment of the Company’s internal control over financial reporting;
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| asked management and PwC questions relating to such matters and discussed with PwC the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”), including Statement on Auditing Standard No. 16, “Communications with Audit Committees”;
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| reviewed the terms of the audit engagement, the overall audit strategy, timing of the audit and significant risks identified; and
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| reviewed the critical accounting policies and practices applied by the Company in preparation of its financial statements, and critical accounting estimates and significant unusual transactions affecting the Company’s financial statements.
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Based on the reviews and discussions described in this report, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the SEC.
The Audit Committee’s responsibilities also include monitoring the qualifications, independence and performance of the Company's independent auditors. In reviewing the auditor’s performance, the Audit Committee considers the quality and efficiency of the services provided by the audit team, and reviews and discusses the auditor’s most recent PCAOB inspection report and its system of quality control. The Committee also reviews and discusses proposed staffing levels and the selection of the lead engagement partner from the independent registered public accounting firm. Further, the Audit Committee recognizes the importance of maintaining the independence of the Company’s auditor, both in fact and in appearance. In 2015, the Audit Committee received and reviewed the written disclosures and letter provided by PwC as required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and the Audit Committee discussed with the independent accountants that firm’s independence. The Audit Committee concurs with PwC’s conclusion that they are independent from the Company and its management.
Respectfully submitted by the Audit Committee of the Board of Directors.
| | AUDIT COMMITTEE
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| | Harry Demorest, Chairman
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| | Michelle Applebaum | |
| | Keith Larson
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Disclosure of Fees Paid to Independent Registered Public Accounting Firm
Fees for services billed by the Company’s principal accountant, PricewaterhouseCoopers LLP, for the years ended December 31, 2015 and 2014 were as follows:
| | 2015 | | | 2014 | |
| | | | | | | | |
Audit fees(1) | | $ | 1,000,200 | | | $ | 1,325,500 | |
Audit-related fees | | | - | | | | - | |
Tax fees(2) | | | 12,100 | | | | 20,400 | |
All Other fees | | | - | | | | - | |
| | | | | | | | |
Total fees | | $ | 1,012,300 | | | $ | 1,345,900 | |
| (1)
| Audit fees include fees for audits of the annual financial statements, including required quarterly reviews and the audit of the Company’s internal control over financial reporting. In addition, we reimbursed PwC $33,000 and $37,000 for out-of-pocket expenses incurred in the performance of their services for the years ended December 31, 2015 and 2014, respectively.
|
| (2)
| Tax fees represent fees for assistance with international income tax compliance and advice.
|
Pre-approval Process
To help assure independence of the independent auditors, the Audit Committee has established a process for the pre-approval of all audit and permissible non-audit services provided by the independent auditor; provided, however, that de minimis services may instead be approved by the CEO or the CFO. One hundred percent of the fees shown in the principal accountant fees schedule for 2015 and 2014 were approved by the Audit Committee.
RATIFICATION OF THE APPOINTMENT OF
MOSS ADAMS LLP
(Proposal No. 3)
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit ourthe Company’s financial statements (taking into account the vote on shareholder ratification).statements. While we areNorthwest Pipe Company is not required by ourits bylaws or other governing documents or law to seek shareholder ratification of the appointment of Moss Adams LLP (“Moss Adams”) as ourits independent registered public accounting firm, we areit is doing so as a matter of good corporate governance. If the shareholders do not ratify the selection, the Audit Committee will take the vote into consideration when determining whether or not to retain Moss Adams. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and ourits shareholders.
On December 11, 2015, the Audit Committee dismissed PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm effective upon the issuance by PwC of its reports on the Company's consolidated financial statements for the fiscal year ended December 31, 2015 and the effectiveness of internal control over financial reporting as of December 31, 2015 to be included in the Company's Annual Report on Form 10-K for that fiscal year, and appointed Moss Adams as the Company’s independent registered public accountants for the year ending December 31, 2016.
PwC’s audit reports on the Company's consolidated financial statements as of and for the fiscal years ended December 31, 2015 and December 31, 2014 did not contain any adverse opinions or disclaimers of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle. During the fiscal years ended December 31, 2015 and December 31, 2014 and during the subsequent interim period through March 4, 2016, there were no disagreements between the Company and PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused PwC to make reference to the subject matter of the disagreements in their reports on the Company's consolidated financial statements for such years. During the fiscal years ended December 31, 2015 and December 31, 2014 and during the subsequent interim period through March 4, 2016 there were no "reportable events" as that term is defined in Item 304(a)(1)(v) of Regulation S-K that occurred or were identified, except as follows: As previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, management identified a control deficiency that constituted a material weakness in the Company’s internal control over financial reporting as of December 31, 2014. Specifically, the Company did not design and maintain effective controls over the impairment assessment of goodwill. The Company did not design and maintain effective controls related to the critical review of assumptions, data inputs and results of the goodwill impairment analysis, and the identification of changes in events and circumstances that indicate it is more likely than not that a goodwill impairment has occurred between annual impairment tests. The material weakness was remediated during the quarter ended September 30, 2015.
The Audit Committee and management discussed the material weakness in internal control described above with PwC and authorized PwC to respond fully to any inquiries about the Company’s material weakness over financial reporting as may be made by the Company’s successor independent registered public accounting firm. On December 16, 2015, the Company filed a Current Report on Form 8-K (the “Form 8-K”) with the SEC reporting the dismissal of PwC. The Company provided PwC with a copy of the Form 8-K and requested that PwC furnish the Company with a letter addressed to the SEC stating whether or not PwC agreed with the statements made in the Form 8-K. A copy of PwC’s letter dated December 16, 2015 was filed with the SEC as an exhibit to the Form 8-K.
During the fiscal years ended December 31, 2015 and December 31, 2014, respectively, and the subsequent interim period through March 4, 2016, neither the Company nor anyone acting on its behalf has consulted with Moss Adams on any of the matters or events set forth in Item 304(a)(2)(i) or 304(a)(2)(ii) of Regulation SK.
In selecting Moss Adams as the Company’s independent registered public accountants for 2016, the Audit Committee considered a number of factors, including:
| ●
| the professional qualifications of Moss Adams and its employees,
|
| ●
| the independence of Moss Adams, and its processes for maintaining independence,
|
| ●
| the expertise and capabilities of Moss Adams in handling the Company’s audit, and
|
| ●
| the appropriateness of Moss Adams’s fees (on both an absolute basis and as compared to its peer firms).
|
The Audit Committee believes that the continued retention of Moss Adams as ourNorthwest Pipe Company’s independent registered public accountants is in the best interests of ourits shareholders.
Representatives of Moss Adams are expected to be present at the Annual Meeting and will be given an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
DISCLOSURE OF FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees for services billed by the Company’s principal accountant, Moss Adams LLP, for the years ended December 31, 2022 and 2021 were as follows:
Principal Accountant Service Fees | | 2022 | | | 2021 | |
Audit fees (1) | | $ | 1,388,000 | | | $ | 1,232,500 | |
Audit-related fees | | | - | | | | - | |
Tax fees | | | - | | | | - | |
All Other fees | | | - | | | | - | |
| | | | | | | | |
Total fees | | $ | 1,388,000 | | | $ | 1,232,500 | |
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING “FOR” THE RATIFICATION OF THE AUDIT COMMITTEE’S APPOINTMENT OF MOSS ADAMSLLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEARENDING DECEMBER(1)
| Audit fees include fees for the audit of the annual financial statements, including required quarterly reviews, the audit of the Company’s internal control over financial reporting, and services in connection with other regulatory filings. In addition, the Company reimbursed out-of-pocket expenses incurred in the performance of their services of approximately $6,500 and $10,200 to Moss Adams for the years ended December 31, 2016.2022 and 2021, respectively. |
PRE-APPROVAL PROCESS
To help assure independence of the independent auditors, the Audit Committee has established a process for the pre-approval of all audit and permissible non-audit services provided by the independent auditor; provided, however, that de minimis services may instead be approved by the CEO or the CFO. All of the fees shown in the principal accountant fees schedule for 2022 and 2021 were approved in accordance with this policy.
| Notice and Proxy Statement | 2023 | |
ADDITIONAL INFORMATION
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2015, the Company engaged Raymond James & Associates, an affiliate of Eagle Asset Management, to provide investment banking services related to a possible disposition of the Company’s Tubular Products business. Eagle Asset Management was a substantial stockholder of the Company (owning more than ten percent of the Company’s common stock) until September 30, 2015, when Eagle Asset Management reported that it then owned less than 5 percent of the Company’s common stock. A nominal amount of reimbursable expenses were incurred by Raymond James during 2015. Professional fees payable to Raymond James will be contingent upon completion of a future transaction, which may or may not occur.
The Audit Committee is responsible for the review and approval of all related party transactions. Although the Audit Committee does not have written policies and procedures with respect to the review ofAll potential related party transactions we intend that any such transactions willmust be reviewedreported to the Corporate Secretary and, if determined by the Corporate Secretary to constitute a related party transaction, referred for prior approval and oversight by the Audit Committee in accordance with the Company’s Related Party Transactions Policy, which was adopted in October 2022. In determining whether to approve a related party transaction, the Audit Committee will consider allthe following factors, among others, to the extent relevant facts and circumstances and will take in to account, among other factors:the related party transaction:
| ●•
| whether the terms of the related party transaction isare fair to the Company and would apply on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances;basis if the transaction did not involve a related party; |
| ●•
| whether there are any compelling business reasons for the Company to enter into the related party transaction and the nature of alternative transactions, if any; |
| • | whether the related party transaction would impair the independence of an outsideotherwise independent director or nominee for director; and |
| ● • | whether the transaction was undertaken in the ordinary course of business of the Company; |
| • | whether the related party transaction would present an improper conflict of interest for any director, nominee for director, or executive officer of the Company.Company, taking into account the size of the transaction, the overall financial position of the director, nominee for director, executive officer, or other related party, the direct or indirect nature of the director’s, nominee’s, executive officer’s, or other related party’s interest in the transaction and the ongoing nature of any proposed relationship; and |
| • | any other factors the Audit Committee deems relevant. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)Since January 1, 2022, there has not been any transaction or series of transactions to which Northwest Pipe Company was or is to be a party in which the amount involved exceeds $120,000 and in which any director, executive officer, or holder of more than 5% of the Securities Exchange ActCompany’s Common Stock, or members of 1934, as amended requiresany such person’s immediate family, had or will have a direct or indirect material interest, other than compensation arrangements with the Company’s directors and executive officers and persons who own more than ten percentdirectors, all on terms described under “Executive Compensation and Risk” above.
| Notice and Proxy Statement | 2023 | |
Table of a registered class of the Company’s equity securities, to file initial reports of ownership and reports of changes in ownership of shares with the SEC. Such persons also are required to furnish the Company with copies of all Section 16(a) reports they file.Based solely on its review of the copies of such reports received by us with respect to 2015, or written representations from certain reporting persons, we believe that all filing requirements applicable to our directors, officers and persons who own more than ten percent of a registered class of the Company’s equity securities have been complied with for 2015, with the exception of the following; (i) untimely Form 4s were filed for Messrs. Baum, Dana, Mahoney, Montross, and Smith and Ms. Gantt on January 20, 2015, which should have been filed on January 5, 2015, each with respect to the vesting of RSUs and PSAs and the withholding of a portion of the shares to cover the applicable income taxes, and (ii) an untimely Form 4 was filed for Mr. Demorest on November 12, 2015, which amended the number of shares acquired and beneficially owned following a transaction on May 26, 2015.
STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The table below sets forth certain information, as of April 18, 2016,13, 2023 except as otherwise noted, regarding the beneficial ownership of the Common Stock by: (i) each person known by the Company to be the beneficial owner of 5% or more of its outstanding Common Stock, (ii) each of the Named Executive Officers, (iii) each of the Company’s directors and the director nominees, and (iv) all directors, director nominees, and executive officers as a group. The address of each of the Named Executive Officers and directors is c/o Northwest Pipe Company, 5721 SE Columbia Way,201 NE Park Plaza Drive, Suite 200,100, Vancouver, Washington 98661. 98684.
| | Shares Beneficially Owned(1) | |
| | Shares | | | Percent | |
Certain Beneficial Owners: | | | | | | | | |
Royce & Associates LLC(2) | | | 1,221,467 | | | | 12.8 | % |
745 Fifth Avenue | | | | | | | | |
New York, NY 10151 | | | | | | | | |
Dimensional Fund Advisors LP(3) | | | 690,812 | | | | 7.2 | % |
Building One | | | | | | | | |
6300 Bee Cave Road | | | | | | | | |
Austin, TX 78746 | | | | | | | | |
William Blair Investment Management, LLC(4) | | | 663,004 | | | | 6.9 | % |
222 W. Adams St. | | | | | | | | |
Chicago, IL 60606 | | | | | | | | |
BlackRock, Inc.(5) | | | 580,408 | | | | 6.1 | % |
55 East 52nd Street | | | | | | | | |
New York, NY 10022 | | | | | | | | |
Directors and Nominees: | | | | | | | | |
Michelle Applebaum | | | 4,126 | | | | * | |
James Declusin | | | 11,384 | | | | * | |
Harry Demorest | | | 16,826 | | | | * | |
Keith Larson | | | 9,037 | | | | * | |
Richard Roman | | | 72,646 | | | | * | |
Named Executive Officers: | | | | | | | | |
Scott Montross | | | 26,254 | | | | * | |
Robin Gantt | | | 18,622 | | | | * | |
Martin Dana | | | 8,689 | | | | * | |
William Smith | | | 6,843 | | | | * | |
Vicki Taylor | | | - | | | | * | |
All directors and executive officers as a group (10 persons): | | | 174,427 | | | | 1.8 | % |
| | Shares Beneficially Owned (1) | |
| | Shares | | | Percent | |
Certain Beneficial Owners: | | | | | | | | |
BlackRock, Inc. (2) | | | 967,934 | | | | 9.8 | % |
55 East 52nd Street | | | | | | | | |
New York, NY 10055 | | | | | | | | |
Royce & Associates, LP (3) | | | 925,799 | | | | 9.3 | % |
745 Fifth Avenue | | | | | | | | |
New York, NY 10151 | | | | | | | | |
Dimensional Fund Advisors LP (4) | | | 753,286 | | | | 7.6 | % |
6300 Bee Cave Road, Building One | | | | | | | | |
Austin, TX 78746 | | | | | | | | |
Directors and Nominees: | | | | | | | | |
Michael Franson | | | 16,924 | | | | * | |
Amanda Julian | | | 6,783 | | | | * | |
Keith Larson | | | 14,377 | | | | * | |
Irma Lockridge | | | 682 | | | | * | |
John Paschal | | | 9,092 | | | | * | |
Richard Roman | | | 26,334 | | | | * | |
Named Executive Officers: | | | | | | | | |
Scott Montross | | | 112,409 | | | | 1.1 | % |
Aaron Wilkins | | | 19,149 | | | | * | |
Miles Brittain | | | 24,141 | | | | * | |
Eric Stokes | | | 17,879 | | | | * | |
Michael Wray | | | 10,253 | | | | * | |
All directors and executive officers as a group (12 persons): | | | 266,617 | | | | 2.7 | % |
| (*) | Represents beneficial ownership of less than one percent of the outstanding Common Stock. |
| |
(1) | Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting power and investment power with respect to shares. Shares issuable upon the exercise of outstanding stock options that are currently exercisable or become exercisable within 60 days from April 18, 2016 are considered outstanding for the purpose of calculating each person’s percentage of Common Stock owned, but not for the purpose of calculating the percentage of Common Stock owned by any other person. The number of stock options that are exercisable within 60 days of April 18, 2016 is as follows: Ms. Applebaum – 0; Mr. Dana – 0; Mr. Declusin – 0; Mr. Demorest – 0; Ms. Gantt – 0; Mr. Montross – 0; Mr. Larson – 0; Mr. Roman – 28,000; Mr. Smith – 0; Ms. Taylor – 0; and all directors and executive officers as a group – 28,000. |
| (2) | The information as to beneficial ownership is based on a Schedule 13G/A filed with the SEC by BlackRock, Inc. on January 24, 2023, reflecting its beneficial ownership of Common Stock as of December 31, 2022. The Schedule 13G/A states BlackRock, Inc. has sole voting power with respect to 956,029 shares of Common Stock and sole dispositive power with respect to 967,934 shares of Common Stock. |
| (2)(3)
| The information as to beneficial ownership is based on a Schedule 13G/A filed with the SEC by Royce & Associates, LLCLP on January 20, 2016,24, 2023, reflecting its beneficial ownership of Common Stock as of December 31, 2015.2022. The Schedule 13G/A states Royce & Associates, LLCLP has sole voting and dispositive power with respect to 1,221,467925,799 shares of Common Stock. |
| |
(3)(4)
| The information as to beneficial ownership is based on a Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP on February 9, 2016,10, 2023, reflecting its beneficial ownership of Common Stock as of December 31, 2015.30, 2022. The Schedule 13G/A states Dimensional Fund Advisors LP has sole voting power with respect to 663,150739,405 shares of Common Stock and sole dispositive power with respect to 690,812753,286 shares of Common Stock. |
| Notice and Proxy Statement | 2023 | |
(4)
| The information as to beneficial ownership is based on a Schedule 13G filed with the SEC by William Blair Investment Management, LLC on February 9, 2016, reflecting its beneficial ownership of Common Stock as of December 31, 2015. The Schedule 13G states William Blair Investment Management, LLC has sole voting power with respect to 564,450 shares of Common Stock and sole dispositive power with respect to 663,004 shares of Common Stock.
|
| |
(5)
| The information as to beneficial ownership is based on a Schedule 13G/A filed with the SEC by BlackRock, Inc. on January 27, 2016, reflecting its beneficial ownership of Common Stock as of December 31, 2015. The Schedule 13G/A states BlackRock, Inc. has sole voting power with respect to 566,680 shares of Common Stock and sole dispositive power with respect to 580,408 shares of Common Stock.
|
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-814a‑8 under the Securities Exchange Act, of 1934, some shareholder proposals may be eligible for inclusion in the Company’s 20162023 proxy statement. Any such proposal must be received by the Company not later than December 30, 2016.January 6, 2024 for the 2024 Annual Meeting of Shareholders. Shareholders interested in submitting such a proposal are advised to contact knowledgeable counsel with regard to the detailed requirements of the applicable securities law. The submission of a shareholder proposal does not guarantee that it will be included in the Company’s proxy statement. Alternatively, under the Company’s bylaws, a proposal or nomination that a shareholder does not seek to include in the Company’s proxy statement pursuant to Rule 14a-814a‑8 may be delivered to the Secretary of the Company not less than 60 days nor more than 90 days prior to the datefirst anniversary of anthe preceding year’s annual meeting of shareholders as first specified in the Company’s notice of such annual meeting, unless notice or public disclosure of the date of the meeting occurs less than 60 days prior to the date of such meeting, in which event, shareholders may deliver such notice not later than the 10thtenth day following the day on which notice of the date of the meeting was mailed or public disclosure thereof was made. A shareholder’s submission must include certain specified information concerning the proposal or nominee, as the case may be, and information as to the shareholder’s ownership of Common Stock of the Company. Proposals or nominations not meeting these requirements will not be entertained at the annual meeting. If the shareholder does not also comply with the requirements of Rule 14a-4(c)14a‑4(c)(2) under the Securities Exchange Act, of 1934, the Company may exercise discretionary voting authority under proxies it solicits to vote in accordance with its best judgment on any such proposal or nomination submitted by a shareholder.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know of any other matters to be presented for action by the shareholders at the 2016 Annual Meeting. If, however, any other matters not now known are properly brought before the meeting, the persons named in the accompanying proxy will vote such proxy in accordance with the determination of a majority of the Board of Directors. Board.
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING
Although we encouragethe Company encourages you to read this Proxy Statement in its entirety, we include this question and answer section is included to provide some background information and brief answers to several questions you might have about the Annual Meeting.
Q: | Why is the Company providing these materials? |
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A: | The Company’s Board of Directors is providing these proxy materials to you in connection with the Company’s Annual Meeting of Shareholders, which will take place virtually via webcast on Thursday, June 2, 2016,22, 2023, at 8:7:00 a.m. (local time) at the Hilton Vancouver Hotel, located at 301 West 6th Street, Vancouver, Washington.Pacific Time. Shareholders are invited to attend the Annual Meeting and are requested to vote on the proposals described in this Proxy Statement. |
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Q: | Where will the Annual Meeting be held and how can I attend? |
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A: | The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. While there will be no physical location, shareholders may participate by visiting www.virtualshareholdermeeting.com/NWPX2023. To participate in the Annual Meeting, you will need your unique 16‑digit control number printed in the box and marked by the arrow on your proxy card or on the voting instructions from your stockbroker, bank, or other nominee that accompanied your proxy materials. If you lose your unique 16‑digit control number in advance of the Annual Meeting, you may join the Annual Meeting as a “Guest”, even without your 16‑digit control number, by visiting www.virtualshareholdermeeting.com/NWPX2023, but you will not be able to vote or ask questions. Attendees will be required to comply with meeting guidelines and procedures available at www.virtualshareholdermeeting.com/NWPX2023. |
| Notice and Proxy Statement | 2023 | |
| Access to the webcast will open approximately fifteen minutes prior to the start of the Annual Meeting to allow time for you to log in and test your computer audio system. The virtual meeting platform is fully supported across browsers (Microsoft Edge, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting, and are encouraged to access the meeting prior to the start time. |
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| Assistance with questions regarding how to attend and participate via the Internet will be provided at www.virtualshareholdermeeting.com/NWPX2023 on the day of the Annual Meeting. Webcast replay of the Annual Meeting will be available shortly after the meeting at www.nwpipe.com. |
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Q: | Why hold a virtual meeting? |
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A: | As part of the Company’s efforts to encourage broader participation in the Annual Meeting, the Company believes that hosting a virtual meeting is in the best interest of the Company and its shareholders. Virtual attendance at the Annual Meeting constitutes presence in person under the Company’s Bylaws. |
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Q: | Will you hold the Annual Meeting of Shareholders virtually next year? |
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A: | The Company will decide whether to hold the 2024 Annual Meeting of Shareholders virtually, in person, or a combination of both once it weighs the benefits and detriments of virtual and in-person meetings following this year’s Annual Meeting. |
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Q: | What information is contained in these materials? |
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A: | The information included in this Proxy Statement relates to the proposals to be voted on at the Annual Meeting, the voting process, the compensation of directors and ourthe Company’s most highly paid officers, and other required information. |
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Q: | What proposals will be voted on at the Annual Meeting? |
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A: | There are threefour proposals scheduled to be voted on at the Annual Meeting: |
| ●•
| the election of twothree members of the Board of Directors (Proposal No. 1)#1); |
| ● • | the advisory vote on executive compensation (Proposal No. 2)#2); and |
| ● • | the advisory vote on the frequency of shareholder advisory votes on executive compensation (Proposal #3); and |
| • | the ratification of the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for the year ending December 31, 20162023 (Proposal No. 3)#4). |
| We |
| The Company will also consider other business that properly comes before the Annual Meeting. |
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Q: | How does the Board of Directors recommend that I vote? |
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A: | The Board of Directors recommends that you vote your shares “FOR” the election of the Board’s nominees for election to the Board of Directors, “FOR” the advisory vote on executive compensation, for the “1 YEAR” option for the advisory vote on the frequency of shareholder advisory votes on executive compensation, and “FOR” the ratification of the appointment of Moss Adams LLP. |
| Notice and Proxy Statement | 2023 | |
Q: | What shares owned by me can be voted? |
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A: | All shares of the Company’s Common Stock owned by you as of the close of business on April 15, 201613, 2023 (the “Record Date”) may be voted by you. You may cast one vote per share of Common Stock that you held on the Record Date. These shares include shares that are: (i) held directly in your name as the shareholder of record, and (ii) held for you as the beneficial owner through a stockbroker, bank, or other nominee. |
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Q: | What is the difference between holding shares as a shareholder of record and as a beneficial owner? |
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A: | Most of the Company’s shareholders hold their shares through a stockbroker, bank, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. |
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| Shareholder of Record |
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| If your shares are registered directly in your name with the Company’s transfer agent, Computershare, you are considered the shareholder of record of those shares and these proxy materials are being sent directly to you by the Company. As the shareholder of record, you have the right to grant your voting proxy directly to the Company or to vote in person at the Annual Meeting. You may also vote your shares as described below under “How can I vote my shares without attending the Annual Meeting?” You are also entitled to attend the Annual Meeting and to vote electronically, as described below under “How can I vote my shares at the Annual Meeting?” |
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| Beneficial Owner |
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| If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered the shareholder of record of those shares. As the beneficial owner, you have the right to direct your broker on how to vote and are also invited to attend the Annual Meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a legal proxy from your broker or other nominee authorizing you to vote your shares at the Annual Meeting.vote. Your broker or nominee has sent you instructions fora voting instruction form, instead of a proxy card, that describes how you can direct the broker or nominee to vote your shares. You may submit voting instructions by Internet or telephone, or you may complete and mail a voting instruction form in the enclosed prepaid and addressed envelope. You may also attend the Annual Meeting and vote electronically, as described below under “How can I vote my shares at the Annual Meeting?” |
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Q: | How can I vote my shares in person at the Annual Meeting? |
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A: | Shares held directly inYou may vote your name as the shareholder of record may be voted in person atshares online during the Annual Meeting. IfTo vote, you choose to do so, please bringwill need your unique 16‑digit control number printed in the box and marked by the arrow on your proxy card or proof of identification. on the voting instructions from your stockbroker, bank, or other nominee that accompanied your proxy materials. Instructions on how to vote while participating at the meeting live via the Internet are posted at www.virtualshareholdermeeting.com/NWPX2023. Virtual attendance at the Annual Meeting constitutes presence in person under the Company’s Bylaws.
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| Even if you plan to attend the Annual Meeting, the Company recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Annual Meeting. |
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Q: | Shares held in street nameWhat if during the check-in time or during the Annual Meeting I have technical difficulties or trouble accessing the virtual meeting website? |
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A: | The Company will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting webcast. If you encounter any difficulties accessing the virtual meeting webcast during the check-in or meeting time, please call the technical support number that will be voted in person by you only if you obtain a legal proxy fromposted on the record holder (your broker, bank or other nominee) giving you the right to vote the shares.Annual Meeting login page. |
| Notice and Proxy Statement | 2023 | |
Q: | How can I vote my shares without attending the Annual Meeting? |
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A: | To vote shares held directly in your name as the shareholder of record, without attending the meeting, please sign, date, and return the enclosed proxy card, or follow the instructions for Internet or telephone voting on the enclosed proxy card. This way your shares will be represented whether or not you are able to attend the meeting. |
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| To vote shares held in street name, without attending the meeting, please follow the instructions provided by your broker. |
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A: | You may change your proxy instructions at any time prior to the vote at the Annual Meeting. You may accomplish this by entering a new vote by Internet, by telephone, by delivering a written notice of revocation to the Company’s Corporate Secretary, by granting a new proxy card or new voting instruction card bearing a later date (which automatically revokes the earlier proxy instructions), or by attending the Annual Meeting and voting in person.electronically live via the Internet. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically so request. If your shares are held in a stock brokerage account or by a bank or other nominee, you must obtain a legal proxy from your broker or other nominee authorizing you to vote your shares at the Annual Meeting.meeting. |
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A: | In the election of directors, you may vote “FOR” or “WITHHOLD AUTHORITY” from voting for each of the director nominees. If you vote your shares without providing specific instructions, your shares will be voted “FOR” the nominees for election to the Board of Directors. If you vote to “WITHHOLD AUTHORITY” to vote for a nominee for election as a director, the shares represented will be counted as present for the purpose of determining a quorum, but they will not be counted and will have no effect in determining whether the nominee is elected (though it may influence whether such nominee is asked to resign in accordance with ourthe Company’s Corporate Governance Principles). |
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| With respect to the proposals for the advisory vote on executive compensation and the ratification of the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm, you may vote “FOR” or “AGAINST” or “ABSTAIN.” With respect to the advisory vote on the frequency of holding an advisory vote on executive compensation, you may vote “1 YEAR” or “2 YEARS” or “3 YEARS” or “ABSTAIN.” If you vote your shares without providing specific instructions, your shares will be voted in accordance with the recommendations of the Board.Board of Directors. If you vote to “ABSTAIN”,“ABSTAIN,” the shares represented will be counted as present for the purpose of determining a quorum, but with respect to any proposal on which there was a vote to “ABSTAIN” they will not be counted and will have no effect in determining whether the proposal is approved. |
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| If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute “broker non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes occur on a matter when a broker isare not permittedconsidered entitled to vote or votes cast on that matter without instructions from the beneficial owner and instructions are not given. In tabulating the voting result for any particular proposal, shares that constituteproposal. Thus, broker non-votes are not considered entitled to vote or votes cast on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the meeting, assuming that a quorum is obtained. |
| Notice and Proxy Statement | 2023 | |
| Under the rules that govern brokers who have record ownership of shares that are held in street name for their clients, brokers have discretion to vote these shares on routine matters but not on non-routine matters. Thus, if you do not otherwise instruct your broker, the broker may turn in a proxy card voting your shares “FOR” routine matters but expressly instructing that the broker is not voting on non-routine matters. A broker non-vote occurs when a broker expressly instructs on a proxy card that the broker is not voting on a matter, whether routine or non-routine. Proposal No. 34 (ratification of Moss Adams LLP) is considered a routine matter, so unless you have provided otherwise, your broker will have discretionary authority to vote your shares on this proposal. Proposals No. 1 (election of directors) and, No. 2 (advisory vote on executive compensation), and No. 3 (advisory vote on the frequency of shareholder advisory votes on executive compensation) are considered non-routine matters, so unless you have provided instructions to your broker with respect to Proposals No. 1, 2, and 2,3 your broker will not have authority to vote your shares on any of those proposals and your shares will constitute broker non-votes. Broker non-votes are counted for the purpose of determining the presence or absence of a quorum but are not counted for determining the number of shares entitled to vote or votes cast for or against a proposal. |
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Q: | What is the quorum requirement for the Annual Meeting? |
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A: | The quorum requirement for holding the Annual Meeting and transacting business is a majority of the outstanding shares entitled to be voted. The shares may be present in person or represented by proxy at the Annual Meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. Virtual attendance at the Annual Meeting constitutes presence in person for quorum purposes at the meeting. |
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Q: | What is the voting requirement to approve the proposals? |
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A: | Proposal No. 1:The proposal for the election of the director nominees requires the affirmative “FOR” vote of a plurality of the votes cast in the election. |
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| Proposal No. 2: The proposal for the advisory vote on executive compensation requires the affirmative “FOR” vote of a majority of the votes cast on the proposal. |
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| Proposal No. 3: The proposal for the advisory vote on the frequency of shareholder advisory votes on executive compensation requires the option that receives the highest number of votes cast by shareholders will be the frequency selected by shareholders. |
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| Proposal No. 4: The proposal for the ratification of the appointment of Moss Adams LLP for the year ending December 31, 20162023 requires the affirmative “FOR” vote of a majority of the votes cast on the proposal. |
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Q: | Who are the proxyholders and what do they do? |
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A: | The two personspeople named as proxyholders on the proxy card, Scott Montross, our President and CEO, and Richard Roman, our ChairmanChairperson of the Board, were designated by the Board of Directors. The proxyholders will vote all properly tendered proxies (except to the extent that authority to vote has been withheld) and where a choice has been specified by you as provided in the proxy card, it will be voted in accordance with the instructions you indicate on the proxy card. If you vote your shares without providing specific instructions regarding each of the proposals, your shares will be voted on each proposal as recommended by the Board of Directors.Board. |
| Notice and Proxy Statement | 2023 | |
Q: | What does it mean if I receive more than one set of proxy materials? |
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A: | You may receive more than one set of proxy materials. For example, if you hold your shares in more than one brokerage account, you may receive a separate set of proxy materials for each brokerage account in which you hold shares. If you are a shareholder of record and your shares are registered in more than one name, you will receive more than one set of proxy materials. Please vote your shares for each set of proxy materials that you receive by following the instructions on the enclosed proxy card. |
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Q: | How may I request multiple sets of proxy materials if two or more shareholders reside in my household? |
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A: | To minimize our expenses, one proxy statement and one annual report to shareholders may be delivered to two or more shareholders who share an address unless we havethe Company has received contrary instructions from one or more of the shareholders. WeThe Company will deliver promptly upon written or oral request a separate copy of the proxy statement and annual report to a shareholder at a shared address to which a single copy of the proxy statement and annual report was delivered. Requests for additional copies of the proxy statement and annual report, and requests that in the future separate documents be sent to shareholders who share an address, should be directed by writing to the Company’s Corporate Secretary, Northwest Pipe Company, 5721 SE Columbia Way,201 NE Park Plaza Drive, Suite 200,100, Vancouver, Washington 9866198684 or by phone at (360) 397-6250.360‑397‑6250. |
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Q: | How can I revoke my proxy? |
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| You may revoke your proxy at any time before it is voted at the Annual Meeting. In order to do this, you may do any of the following:
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| You may revoke your proxy at any time before it is voted at the Annual Meeting. In order to do this, you may do any of the following: |
| • | sign and return another proxy card bearing a later date; |
| ● • | enter a new vote by Internet or by telephone following the instructions on the proxy card; |
| ● • | provide written notice of the revocation to the Company’s Corporate Secretary, Northwest Pipe Company, 5721 SE Columbia Way,201 NE Park Plaza Drive, Suite 200,100, Vancouver, Washington 98661,98684, prior to the vote at the Annual Meeting; or |
| • | attend the virtual meeting and electronically vote live via the Internet. |
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●Q:
| attend the meeting and vote in person. If your shares are held in a stock brokerage account or by a bank or other nominee, you must obtain a legal proxy from your broker or other nominee authorizing you to vote your shares at the Annual Meeting.
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| Where can I find the voting results of the Annual Meeting? |
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A: | WeThe Company will announce preliminary voting results at the Annual Meeting and publish final results in the Company’s Current Report on Form 8-K8‑K filed by the Company within four business days after the Annual Meeting.
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Q. | What happens if additional proposals are presented at the Annual Meeting? |
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A: | Other than the proposals described in this Proxy Statement, the Company does not expect any additional matters to be presented for a vote at the Annual Meeting. If you grant a proxy, the persons named as proxy holders, Scott Montross, the Company’s President and CEO, and Richard Roman, the Company’s ChairmanChairperson of the Board, will vote your shares on any additional matters properly presented for a vote at the Annual Meeting in a manner directed by a majority of the Board of Directors. |
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Q: | Who will count the vote? |
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A: | Computershare, the Company’s transfer agent, has been appointed to act as the inspector of election andBroadridge Financial Solutions, Inc. will tabulate the votes. Invotes and certify the event Computershare is unable to do so, a representative of the Company’s outside legal counsel, Ater Wynne LLP, will act in this role.results.
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| Notice and Proxy Statement | 2023 | |
Q: | Is my vote confidential? |
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A: | Proxy cards, instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties except (1)(i) as necessary to meet applicable legal requirements, (2)(ii) to allow for the tabulation of votes and certification of the vote, or (3)(iii) to facilitate a successful proxy solicitation by the Board of Directors. Occasionally, shareholders provide written comments on their proxy card, which are then forwarded to the Company’s management. |
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Q: | Who will bear the cost of soliciting proxies for the Annual Meeting? |
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A: | The Company will pay the entire cost of preparing, assembling, printing, mailing, and distributing these proxy materials. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone, or by electronic communication by the Company’s directors, officers, and employees, who will not receive any additional compensation for such solicitation activities. The Company may also engage a proxy solicitation firm or other professional advisors to assist in the solicitation of proxies or votes may be made in person, by telephone or by electronic communication byand provide related advice and support. In addition, the Company’s directors, officers, and employees, who will not receive any additional compensation for such solicitation activities. The Company may also engage a proxy solicitation firm or other professional advisors to assist in the solicitation of proxies and provide related advice and support. In addition, the Company may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. |
| Notice and Proxy Statement | 2023 | |
ADDITIONAL INFORMATION
2022 ANNUAL REPORT
A copy of the Company’s Form 10-K for the year ended December 31, 20152022 Annual Report to Shareholders accompanies this Proxy Statement. The Company will provide, without charge, on the written request of any beneficial owner of shares of the Company’s Common Stock entitled to vote at the Annual Meeting, additional copies of the Company’s Annual Report. Written requests should be mailed to the Company’s Corporate Secretary, Northwest Pipe Company, 5721 SE Columbia Way,201 NE Park Plaza Drive, Suite 200,100, Vancouver, Washington 98661.98684.
| | By Order of the Board of Directors, |
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| Scott Montross | |
| | President and Chief Executive Officer Vancouver, Washington April 17, 2023 | |
| | | Notice and Proxy Statement | 2023 | |
Vancouver, Washington | | | Notice and Proxy Statement | 2023 | |
April 18, 2016 | Notice and Proxy Statement | 2023 | | | |
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