UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment
(Amendment No. )
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PRELIMINARY COPY—SUBJECT TO COMPLETION
In accordance with Rule 14a-6(d) under Regulation 14A of the Securities Exchange Act of 1934,
as amended, please be advised that MYR Group Inc. intends to release definitive copies of
the proxy statementthis Proxy Statement to
security holdersshareholders beginning on or about March
15, 2016.![[GRAPHIC MISSING]](https://capedge.com/proxy/PRE 14A/0001144204-16-084620/logo_myr-bk.jpg)
MYR GROUP INC.
1701 GOLF ROAD, SUITE 3-1012
ROLLING MEADOWS, IL 60008
6, 2023
LETTER TO SHAREHOLDERS
March 15, 20166, 2023
Dear Fellow
Stockholder,I amShareholder,
On behalf of the Board of Directors and management, we are pleased to invite you to attend the 20162023 Annual Meeting of StockholdersShareholders of MYR Group Inc., which will be held virtually via live webcast at 9:8:00 a.m. local timeMountain Time on Thursday, April 28, 2016, at the DoubleTree Hotel, 75 West Algonquin Road, Arlington Heights, Illinois 6000520, 2023 (the “Annual“2023 Annual Meeting”). At that time you will be able to attend, participate, and vote your shares electronically, by visiting virtualshareholdermeeting.com/MYRG2023. The virtual meeting facilitiesroom will open to stockholdersshareholders at 8:307:45 a.m. localMountain time.
We have decided to hold the 2023 Annual Meeting virtually again this year because hosting a virtual annual meeting enables greater shareholder attendance and participation from any location around the world, improves meeting efficiency and our ability to communicate effectively with our shareholders. It also reduces the cost and environmental impact of the 2023 Annual Meeting.
At the
2023 Annual Meeting, we will
report on operations and act on the matters described in the Notice of
the 2023 Annual Meeting of
StockholdersShareholders of MYR Group Inc. and the Proxy Statement that follow this letter.
StockholdersShareholders of record at the close of business on
March 1, 2016,February 28, 2023 are entitled to notice of, and to vote at, the
2023 Annual Meeting.
It is important that your shares are represented and voted at the 2023 Annual Meeting regardless of the size of your holdings.Even if you intend to attendplan on attending and participating in the 2023 Annual Meeting, please complete, sign, date and return the accompanying WHITE proxy card in the enclosed postage-paid envelopevote as soon as possible in order to ensure the presence of a quorum. Instructions on how to vote early are included in the Proxy Statement section titled "QUESTIONS AND ANSWERS ABOUT THE 2023 ANNUAL MEETING AND VOTING." If you do not vote promptly, we may incur additional costs in soliciting proxies. Voting by returning your proxy card in advance of the Annual Meeting does not deprive you of your right to attend and vote in person atelectronically during the 2023 Annual Meeting.You should know that Engine Capital, L.P. (“Engine Capital”) has stated that it intends to nominate a slate Our Board of three nominees for election as directors at the Annual Meeting in opposition to the nominees recommended by the board of directors of MYR Group Inc. (the “Board”). The Board does not endorse the election of any of Engine Capital’s nominees.
You may receive solicitation materials from Engine Capital or its affiliates, including a proxy statementDirectors and a [color] proxy card. We are not responsible for the accuracy of any information provided by or relating to Engine Capital or its nominees contained in solicitation materials filed or disseminated by or on behalf of Engine Capital or any other statements of Engine Capital.
The Board unanimously recommends that you voteFOR the election of each of our director nominees on the accompanyingWHITE proxy card. The Board strongly urges you not to sign or return any [color] proxy card sent to you by or on behalf of Engine Capital. If you have already returned a proxy card for Engine Capital, you can revoke that proxy by using the enclosedWHITEproxy card to vote your shares. Only your latest-dated proxy will count. The Board and managementManagement look forward to your participation atin the 2023 Annual Meeting and appreciate your continued support.
Sincerely yours,
![[GRAPHIC MISSING]](https://capedge.com/proxy/PRE 14A/0001144204-16-084620/sig_williama-koertner.jpg)
William A. Koertner
Chairman,
Kenneth M. Hartwick Richard S. Swartz
Chair of the Board of Directors President and Chief Executive Officer
MYR GROUP INC.
12121 Grant Street, Suite 610
Thornton, CO 80241
YOUR VOTE IS IMPORTANT
TABLE OF CONTENTS
MYR GROUP INC.
1701 GOLF ROAD, SUITE 3-1012
ROLLING MEADOWS, IL 60008
NOTICE OF THE 20162023 ANNUAL MEETING OF STOCKHOLDERS
SHAREHOLDERS OF MYR GROUP INC.
MYR Group Inc. will hold its 2023 Annual Meeting of Shareholders on Thursday, April 20, 2023. At the meeting, shareholders will be asked to consider and act upon the following items of business discussed in the attached Proxy Statement. Please note that this Notice of Meeting does not contain all the information you should consider, and you should read the Proxy Statement in its entirety before voting.
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TIME AND DATE: | | 9:WHEN: Thursday, April 20, 2023 at 8:00 a.m. local time on Thursday, April 28, 2016Mountain Time |
PLACE: | | DoubleTree Hotel
75 West Algonquin Road
Arlington Heights, Illinois 60005WHERE: Online at virtualshareholdermeeting.com/MYRG2023 |
ITEMS OF BUSINESS: | | (1)
Election as directors of the three nominees identified in this proxy statement, each to serve a term of three years;
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Advisory resolution to approve the compensation of our named executive officers;
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Ratification of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2016; and
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Consideration of other business properly presented at the meeting.
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BOARD RECOMMENDATION: | | The Board of Directors recommends that you vote, by following the instructions on the enclosedWHITE proxy card,FORthe election of each of the nominees in Item 1 andFORItems 2 and 3. |
| WHO CAN VOTE: | | Stockholders Shareholders of record at the close of business on March 1, 2016February 28, 2023 are entitled to vote at the meeting, or any postponement or adjournment thereof. |
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DATEITEMS OF DISTRIBUTION:BUSINESS | BOARD RECOMMENDATIONS |
Proposal 1. | This Notice |
Election of Meeting,three Class I director nominees for three year terms | FOR Each Director Nominee |
| Proposal 2. | |
Advisory approval of the Proxy Statement,compensation of our named executive officers | FOR |
| Proposal 3. | |
Advisory approval of the accompanyingWHITE proxy card frequency of the advisory approval of the compensation of our named executive officers | FOR EVERY ONE YEAR |
| Proposal 4 | |
| Approval of proposed amendment of Article FIFTH of our Certificate of Incorporation declassifying the Board | FOR |
| Proposal 5. | |
| Ratification of the appointment of our independent registered public accounting firm | FOR |
and our 2015 Annual Report to Stockholders are being distributed to stockholders beginning on or about March 15, 2016.consideration of other business properly presented at the meeting | |
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ATTEND ONLINE: To attend and participate in the meeting, you will need the 16-digit control number included on your proxy card or voting instruction form. You may also ask questions and vote online during the meeting by following the instructions provided at virtualshareholdermeeting.com/MYRG2023. Please see page one of the accompanying Proxy Statement for details regarding the virtual meeting.
In addition, information on how to obtain access to the list of shareholders of record entitled to vote at the 2023 Annual Meeting, during the ten days before the meeting, is available by contacting the corporate secretary at Secretary@MYRgroup.com.
Important Notice Regarding the Availability of Proxy Materials for our
20162023 Annual Meeting of
Stockholders Shareholders to be held
on April
28, 201620, 2023.
This Notice of the Meeting, the Proxy Statement, the accompanying proxy card and the 2015our 2022 Annual Report to Stockholders on Form 10-K arewere first made available to shareholders on our websitehttp://March 6, 2023 at investor.myrgroup.com/annuals.cfmfinancial-information/annual-reports and at proxyvote.com.![[GRAPHIC MISSING]](https://capedge.com/proxy/PRE 14A/0001144204-16-084620/sig_geraldb-engen.jpg)
Gerald B. Engen, Jr.
Senior
William F. Fry
Vice President, Chief Legal Officer and SecretaryMarch 15, 2016
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PROPOSAL4. APPROVAL OF THE AMENDMENT OF ARTICLE FIFTH OF OUR CERTIFICATE OF INCORPORATION DECLASSIFYING THE BOARD | |
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PROXY STATEMENT
We are providing the enclosed proxy materials to you in connection with the solicitation by the board of directors (collectively the “Board��� and each individually, a “Director”) of MYR Group Inc. of proxies to be voted at the Annual Meeting of Shareholders to be held on Thursday, April 20, 2023 (the “2023 Annual Meeting”). We began making these proxy materials available to our shareholders at investor.myrgroup.com/financial-information/annual-reports and at proxyvote.com on or about March 6, 2023.
Throughout this proxy statement, references to “MYR Group,” the “Company,” “we,” “us,” and “our” refer to MYR Group Inc. and its consolidated subsidiaries, except as otherwise indicated or as the context otherwise requires.
i
VIRTUAL MEETING FORMAT
We have decided to hold the 2023 Annual Meeting virtually again this year because hosting a virtual 2023 Annual Meeting enables greater shareholder attendance and participation from any location around the world, improves meeting efficiency and our ability to communicate effectively with our shareholders. It also reduces the costs and environmental impact of the 2023 Annual Meeting. For all of these reasons, there will not be a physical location for the 2023 Annual Meeting and you will not be able to attend in person.
We have designed the virtual 2023 Annual Meeting to provide substantially the same opportunities to participate as you would have at an in-person meeting. Our virtual 2023 Annual Meeting will be conducted on the internet via live webcast. Shareholders will be able to attend and participate online and submit questions during the 2023 Annual Meeting by visiting virtualshareholdermeeting.com/MYRG2023.Shareholders will be able to vote their shares electronically during the 2023 Annual Meeting.
Shareholders who would like to attend and participate in the 2023 Annual Meeting will need the 16-digit control number included on their proxy card or voting instruction form. The 2023 Annual Meeting will begin promptly at 8:00 a.m. Mountain time. We encourage you to access the 2023 Annual Meeting prior to the start time. Online check-in will begin at 7:45 a.m. Mountain time.
Shareholders should confirm that they have a strong internet connection if they intend to attend and participate in the 2023 Annual Meeting. Attendees should allow sufficient time to log in and ensure that they can hear streaming audio prior to the start of the 2023 Annual Meeting.
Questions and Information Accessibility
The virtual 2023 Annual Meeting format allows shareholders to communicate with us during the 2023 Annual Meeting so they can ask questions of our management and Board, as appropriate. If you wish to submit a question during the 2023 Annual Meeting, you may do so by logging into the virtual meeting platform at virtualshareholdermeeting.com/MYRG2023, typing your question into the “Ask a Question” field, and clicking “Submit.” Questions pertinent to the 2023 Annual Meeting that comply with the meeting rules of conduct will be addressed during the 2023 Annual Meeting, subject to time constraints.
Technical Difficulties
If you encounter any difficulties accessing the virtual 2023 Annual Meeting, please call the technical support number that will be posted on the virtual meeting login page for assistance. Technical support will be available beginning approximately 30 minutes prior to the start of the 2023 Annual Meeting and through its conclusion.
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MYR GROUP INC. | 2023 PROXY STATEMENT | 1 |
March 15, 2016
PROXY STATEMENT
FOR THE 2016 ANNUAL MEETING OF STOCKHOLDERS
SUMMARYSUMMARY INFORMATION
This Summary Information section introduces and provides overview information and the recommendations of the Board for each of the proposals to be voted on at the 20162023 Annual Meeting, of Stockholders (the “Annual Meeting”) as well as highlights ofin addition to highlighting our corporate governance, executive compensation and business results in 2015. Weand executive compensation. This overview of voting items does not contain all of the information that you should consider, and we encourage you to review the entire 20162023 proxy statement (the “Proxy Statement”) prior to determining how you wish to vote your shares.
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PROPOSAL 1. ELECTION OF THREE CLASS I DIRECTOR NOMINEES FOR THREE-YEAR TERMS (full proposal begins on page 14) |
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE CLASS I DIRECTOR NOMINEES FOR THREE-YEAR TERMS.
The Board and the Nominating, Environmental, Social and Corporate Governance Committee (the "NESG Committee") believe that the three Class I nominees possess the necessary qualifications, attributes, skills and experiences to provide advice and counsel to the Company’s management and effectively oversee the business and long-term interests of the Company’s shareholders. Further biographical and qualification information for each director nominee can be found in the full proposal.
Our Director Nominees
You are being asked to vote on the election of three Class I directors, each for a term ending in 2026 and for each until a successor has been duly elected and qualified. Directors will be elected by the affirmative vote of a majority of votes cast in this uncontested election.
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| Age | Director
Since | Primary
Occupation | Independent | Other
Public
Boards | Committee
Membership | Board
Recommendation |
| Audit | Comp | NESG |
| Kenneth M. Hartwick | 60 | 2015 | President and Chief Executive Officer Ontario Power Generation | Yes | Via Renewables LP | a | 0 | 0 | For |
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| Jennifer E. Lowry | 54 | 2018 | Retired Finance and Strategy Executive | Yes | Clearway Energy, Inc. | l | 0 | 0 | For |
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| Richard S. Swartz | 59 | 2019 | President and Chief Executive Officer MYR Group | No | None | x | x | x | For |
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aCommittee member
lCommittee Chair
x Not an independent director, therefore does not serve on any committee.
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| 2 | MYR GROUP INC. | 2023 PROXY STATEMENT |
Corporate Governance Highlights
We are holdingcommitted to sound corporate governance practices. We believe that good governance promotes the Annual Meeting on Thursday, April 28, 2016 at 9:00 a.m. local time atlong-term interests of our shareholders and strengthens Board and management accountability.
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| • Separate Chair of the Board and Chief Executive Officer Positions | | • Regular Executive Sessions Without Management Present |
| • Independent Chair of the Board | | • Annual “Say-on-Pay” Shareholder Vote on Executive Compensation |
| • All Independent Directors Except our Current Chief Executive Officer | | • 100% Independent Audit, Compensation and NESG Committees |
| • Majority Voting in Uncontested Elections | | • Annual Engagement of Independent Executive Compensation Consultant |
| • Risk Oversight by Full Board and Committees | | • Engagement Every Three Years of Independent Compensation Consultant for Director Compensation |
| • Balanced Director Ages (5 Under 60) | | • Investor Outreach Program |
| • Annual Board and Committee Self-Evaluations | | • Stock Ownership Guidelines for Named Executive Officers and Directors |
| • Annual Performance Evaluation of Named Executive Officers by Directors | | • Code of Business Conduct and Ethics for Officers and Directors |
| • Periodic Engagement of Independent Executive and Corporate Governance Consultant | | • Director Overboarding Policy |
| • Board Authority to Retain Outside Consultants | | • Board Refreshment Policy With an Expected Director Retirement Age of 72. |
| • Four of Eight Independent Directors are Female or Racially/Ethnically Diverse | | • Board and its Committees Conduct Annual Self-Evaluation Exercises. |
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MYR GROUP INC. | 2023PROXY STATEMENT | 3 |
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PROPOSAL 2. ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (full proposal begins on page 61) |
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
The Board and the
DoubleTree Hotel, 75 West Algonquin Road, Arlington Heights, Illinois 60005.Meeting AgendaCompensation Committee seek a non-binding advisory vote to approve our named executive officers (“NEOs”) compensation as described under the sections entitled “Compensation Discussion and Voting Recommendation
Analysis” and “Executive Compensation Tables.” The Board values shareholders’ opinions, and the Compensation Committee will consider the outcome of the advisory vote when evaluating future executive compensation decisions. | | | | | | |
| Item | | Proposal | | Board Vote
Recommendation | | Page Reference
(for details) |
1.
| | Election as directors of the three nominees identified
in this Proxy Statement and the enclosedWHITE proxy card,
each to serve a term of three years | | FOR EACH
NOMINEE | |
8 |
2.
| | Advisory resolution to approve the compensation of our named
executive officers | | FOR | | 52 |
3.
| | Ratification of the appointment of Ernst & Young
LLP (“EY”) as our independent registered public
accounting firm for the year ending December 31, 2016 | | FOR | | 56 |
2015
(1)Represents net income attributable to MYR Group.
2022 Performance
Our revenues for the year ended December 31, 2022 were $3.01 billion compared to $2.50 billion and $2.25 billion for the years ended December 31, 2021 and 2020, respectively. Our net income attributable to MYR Group for the year ended December 31, 2022 was $83.4 million compared to $85.0 million and $58.8 million for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2022, our backlog was $2.50 billion compared to $1.79 billion and $1.65 billion as of December 31, 2021 and 2020, respectively.
Executive Compensation Highlights
Compensation decisions are based on a number of factors, including peer company data and general market data, Company performance against pre-established goals, relative performance of the Company’s stock compared to a peer group, and the experience and contributions of individual executives. At our 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”), our shareholders voted on an advisory resolution regarding the compensation of our NEOs (the “Say-on-Pay” proposal), which was approved by more than 97% of the votes represented at the 2022 Annual Meeting and entitled to vote. Our executive compensation program seeks to
reward ourattract, motivate and retain executive
officers for their contributions to our short-termtalent and
long-term performance. Most importantly, we seek to link individual pay to Company success, and we work to structure executive officer compensation consistent with this goal. We maintain the following policies and practices, among others, that aim to promote our commitment toemphasizes pay for
performance:We provide ourperformance. Our executive officers with total compensation opportunities at levels that we believe are competitive with our peer companies so that we can retain and motivate our skilled and qualified officers.
We grant equity awardsprogram includes base salary, short-term incentive compensation under our Long-TermManagement Incentive Plan (Amended(amended and Restatedrestated as of May 1, 2014) (the “MIP”), long-term equity compensation under our 2017 Long-Term Incentive Plan (as amended and restated as of April 23, 2020) (the “LTIP”), which include time-based retention awardsa defined-contribution retirement plan, profit sharing, and awards that are tiedvery limited perquisites.
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| 4 | MYR GROUP INC. | 2023 PROXY STATEMENT |
We continue to Company performance goals orstrive to adhere to the performancefollowing best practices in executive compensation:
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| WE DO: | | WE DO NOT: |
| þ | Pay for Performance | X | Allow Hedging of our Stock |
| þ | Hold Annual “Say-on-Pay” Shareholder Vote | X | Allow Pledging of our Stock |
| þ | Require Officers and Directors to Meet Stock Ownership Guidelines | X | Provide Tax Gross-Ups |
| þ | Encourage Shareholder Input | X | Provide Single Trigger Change in Control Provisions |
| þ | Impose Clawback Provisions | X | Allow Short-Selling of our Stock |
| þ | Maintain an Independent Compensation Committee | X | Guarantee Minimum Annual Cash Incentive Payments to our NEOs |
| þ | Conduct Annual Compensation Review and Risk Assessment | X | Provide Dividends or Dividend Equivalents on Unvested Equity |
þ | Provide Incentive Compensation Based Upon Financial and Safety Performance Metrics | X | Allow Repricing of Stock Options Without Shareholder Approval |
| þ | Cap Annual Cash Incentive and Performance Awards | X | Grant Stock Options Below Fair Market Value as of the Grant Date |
| þ | Base Significant Portion of Long-Term Incentive Awards on Relative Total Shareholder Return | | |
| þ | Engage an Independent Compensation Consultant | | |
| þ | Align the Financial Interests of our NEOs with those of Shareholders | | |
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PROPOSAL 3. ADVISORY APPROVAL OF THE FREQUENCY OF THE ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (full proposal begins on page 63) |
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR EVERY ONE YEAR" ON THE ADVISORY APPROVAL OF THE FREQUENCY OF THE ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
The Board and the Compensation Committee seek a non-binding advisory vote to approve the frequency of the Company’s stock. Equity awards underadvisory approval of the LTIPcompensation of our NEOs. Under this proposal, our shareholders may be issued in the form of stock options, stock appreciation rights, restricted stock, performance awards, phantom stock, stock bonuses and dividend equivalents.
We annually put our named executive officer compensationindicate whether they would prefer to have an advisory vote to approve the compensation of our stockholdersNEOs every one year, every two years, or every three years. The Board and received a positive response of over 97%the Compensation Committee value shareholders’ opinions and will take into account the outcome of the vote when considering the frequency of future advisory votes cast on thiscompensation of our NEOs.
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MYR GROUP INC. | 2023PROXY STATEMENT | 5 |
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PROPOSAL 4. APPROVAL OF THE AMENDMENT OF ARTICLE FIFTH OF OUR CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD (full proposal begins on page 66) |
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE AMENDMENT OF ARTICLE FIFTH OF OUR CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD.
The Board has determined that it is in the shareholders’ best interests to amend our Restated Certificate of Incorporation (the “Certificate of Incorporation”) to phase out the classified Board so that the Board is fully declassified from and after the election of directors at our 20152026 Annual Meeting. Accordingly, the Board has adopted proposed amendments to eliminate the classified Board structure and provide for the annual election of directors, to be phased in over the next three years and is recommending that shareholders approve such amendments.
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PROPOSAL 5. RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (full proposal begins on page 70) |
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF CROWE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
The Board and the Audit Committee believe that the appointment of Crowe LLP (“Crowe”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023 is in the best interests of the Company and its shareholders.
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OTHER MATTERS THAT MAY BE PRESENTED AT THE 2023 ANNUAL MEETING (found on page 71) |
We will also act upon any other business as may properly come before the 2023 Annual Meeting of Shareholders and any adjournments or postponements of the 2023 Annual Meeting. The Board or proxy holders will exercise their discretion on any other matters that may arise at the 2023 Annual Meeting.
We include clawback provisions in our LTIP award agreements, which subject all new equity awards under the LTIP to the Company’s right to recover in the event that it is determined that a participant engaged in conduct that contributed to any material restatement of our earnings. | | | | | |
| 6 | MYR GROUP INC. | 2023 PROXY STATEMENT |
We cap annual cash incentive awards that can be earned at 200% of salary for our Chief Executive Officer (“CEO”) and lesser amounts for our other named executive officers. The number of performance shares that can be earned is capped at 200% of target for all named executive officers.
TABLE OF CONTENTSWe have an insider trading policy that prohibits our directors and named executive officers from hedging the economic risk of their stock ownership, holding shares of the Company’s common stock in a margin account or pledging shares as collateral for a loan.
We have stock ownership guidelines, with a stock retention feature, for our directors and named executive officers.
Shareholders and others can access our corporate governance materials, including our Certificate of
Ethics andIncorporation, By-Laws, committee charters, Corporate Governance Principles,
We have a Code of Business Conduct and Ethics (the “Code of Ethics”) applicable to all of our directors, officers and employees. The Code of Ethics promotes honest and ethical conduct, full and accurate public communication and compliance with applicable laws, rules and regulations. We disclose any waiver or amendments to the Code of Ethics as required by the applicable rules of the U.S. Securities and Exchange Commission (“SEC”).
Additionally, the board of directors of MYR Group (the “Board”) has guidelines that provide a framework for MYR Group’s corporate governance (the “Corporate Governance Principles”). The Corporate Governance Principles assist the Board in the exercise of its responsibilities to help ensure compliance with governing law and our policies.
Stockholders and others can access our corporate governance materials, including the Certificate of Incorporation, Amended and Restated By-Laws (the “By-Laws”), Board committee charters, our Corporate Governance Principles, our Code of Ethics and other corporate governance related materials on our website atwww.myrgroup.com. investor.myrgroup.com/corporate-governance/governance-documents. Copies of these materials are also available free of charge to any stockholdershareholder who sends a written request to our Secretary at MYR Group Inc., 1701 Golf Road,12121 Grant Street, Suite 3-1012, Rolling Meadows, Illinois 60008.
610, Thornton, CO 80241.
The information on our website is not, and shall not be deemed to be, a part of this Proxy Statement or incorporated into any other filings we make with the
SEC.Director Independence
U.S. Securities and Exchange Commission (“SEC”).
CODE OF ETHICS AND CORPORATE GOVERNANCE PRINCIPLES
Our Code of Ethics policy, which is applicable to all of our directors, officers and employees, promotes honest and ethical conduct, full and accurate public communication and compliance with applicable laws, rules and regulations.
Our Code of Ethics seeks to encourage diversity and social responsibility. We believe a diverse workforce provides a range of perspectives, skills and experiences that will help us meet the challenges and opportunities in our rapidly changing industries.
Our Code of Ethics calls for us to seek to reduce the impact of our operations on the environment and to promote sustainability and environmental awareness at all levels of the Company. Our policy also calls for us to work to prevent pollution and reduce consumption of resources through waste management strategies that promote waste minimization, re-use, recovery and recycling, as appropriate. Additionally, the policy emphasizes the need to incorporate energy efficiency measures into our operations and promote efficient energy use where commercially and economically feasible. Amendments to the Code of Ethics or any grant of a waiver from a provision of the Code of Ethics that applies to our principal executive officer, principal financial officer and principal accounting officer requiring disclosure under applicable SEC and The Nasdaq Stock Market LLC ("Nasdaq") rules will be disclosed on our website.
Additionally, the Board has adopted Corporate Governance Principles that provide a framework for MYR Group’s corporate governance. The Corporate Governance Principles assist the Board in the exercise of its responsibilities to help confirm compliance with governing law and our policies.
DIRECTOR INDEPENDENCE
Our Corporate Governance Principles require that at least a majority of the Board qualify as independent directors under
theNasdaq listing standards
of the NASDAQ Stock Market (“Nasdaq”) and any other requirements of the committees upon which he or she serves. Nasdaq listing standards have both objective tests and a subjective test for determining who is an independent director. The objective tests state, for example, that
an employeea director
who is, or at any time during the past three years was, employed by the Company, is not considered independent. The subjective test requires the Board to affirmatively determine that the director does not have a relationship that would interfere with the director’s exercise of independent judgment in carrying out his or her responsibilities. Members of our Audit Committee and Compensation Committee, respectively, are subject to certain additional
independence criteriaqualification requirements as described below under “Audit Committee Matters” and “Compensation Committee Matters.”
During the Board’s annual review of director independence, the Board also considers transactions, relationships and arrangements between each director or an immediate family member of the director and each of MYR Group and our senior management.
After considering the Nasdaq listing standards and information provided by each director, the Board determined that the following directors are independent: Jack L. Alexander, Larry F. Altenbaumer, Henry W. Fayne,Bradley T. Favreau, Kenneth M. Hartwick, Gary R. Johnson,Ajoy H. Karna, Jennifer E. Lowry, Donald C.I. Lucky, Maurice E. Moore, Shirin O'Connor and William D. Patterson. Richard S. Swartz is currently serving as President and Chief Executive Officer ("CEO") of the Company and therefore is not considered an independent director. In addition, William A. Koertner, iswho served as a director for a portion of 2022, was determined by the Board not consideredto be an independent director due to his prior employment with MYR Group.Executive Sessions of the Board
Group, which ended on March 31, 2018.
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MYR GROUP INC. | 2023PROXY STATEMENT | 7 |
EXECUTIVE SESSIONS OF THE BOARD
In accordance with the Corporate Governance Principles, the independent directors meet at least twice per year in executive
sessions, which are chaired by the Lead Director.sessions. Executive sessions are typically held following Board meetings, without management present.
Meeting Attendance
We expect directors to regularly attend Board meetings and meetings of the committees on which they serve. The Board held twenty-three meetings in 2015, seven of which were briefings by management on project bidding opportunities. For the year ended December 31, 2015, all of our directors attended at least 91% of the aggregate number of meetings of the Board and committees on which they served. All directors are expected to attend the Annual Meeting and all directors serving at the time of the 2015 Annual Meeting, including the director nominees, attended that meeting.
COMMUNICATIONS WITH THE BOARD AND REPORTING OF CONCERNS
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Communications with the Board and Reporting of Concerns
The Board values and encourages constructive dialogue with stockholdersshareholders and other interested parties on topics such as compensation and other important governance topics. StockholdersShareholders and other interested parties can communicate with the directors, individually or as a group, by writing to our Secretary at MYR Group Inc., 1701 Golf Road,12121 Grant Street, Suite 3-1012, Rolling Meadows, Illinois 60008610, Thornton, CO 80241 or by completing and submitting an e-mail tothe “Information Request” form on our corporate website athttp://investor.myrgroup.com/contactBoard.cfm.
www.myrgroup.com under the “Investor Resources” tab of the “Investors” section.
The Secretary forwards communications relating to matters within the Board’s purview to the appropriate directors, communications relating to matters within a Board committee’s area of responsibility to the chairChair of the appropriate committee and communications relating to ordinary business matters such as suggestions, inquiries and consumer complaints to the appropriate MYR GroupCompany officer. The Secretary generally does not forward complaints about service, new services suggestions, resumes and other forms of job inquiries, surveys, business solicitations, or advertisements or inappropriate communications. Anyone who has a concern about the Company’s conduct, accounting, financial reporting, internal controls, or auditing matters may submit that concern anonymously or confidentially to the Company’s Anonymous Incident Reporting System, — MySafeWorkplace, — at 800-461-9330 orwww.mysafeworkplace.com.
BOARD LEADERSHIP STRUCTURE
The Board
Leadership StructureOurdoes not require the separation of the offices of the Chair of the Board ("Board Chair") and the CEO, and our Corporate Governance Principles provide that the Board has the discretionis free to choose its board leadership structure and ChairmanBoard Chair in any way that it deems best for MYR Group and our stockholders.the company at any given point in time. When determining the leadership structure that allows the Board to effectively carry out its responsibilities and represent our stockholders’shareholders' interests, the Board considers various factors, including our specific business needs, our industry’sindustry's demands, our operating and financial performance, the economic and regulatory environment, Boardthe Board's self-evaluations, alternative leadership structures and our corporate governance policies and practices. William A. Koertner currently serves as both Chairman of the Board and our CEO. He has held both of those positions since 2007.
The Board believes that combining the Chairmanseparate Board Chair and CEO positions together withprovide strong leadership for our Company. By separating these positions, our CEO is able to focus on managing the Company’s daily operations and our Board Chair can devote his time and attention to matters of Board oversight and governance.
The Corporate Governance Principles provide that if the Board Chair is not an independent Lead Director,director, the Board will appoint an independent director to serve as lead director. As the Board Chair is appropriate at this time because it effectively utilizes Mr. Koertner’s extensive experience and knowledgecurrently an independent director, the Board does not have a separate lead independent director.
All of our industrycommittee members and Companyour committee chairs are independent.
The NESG Committee and provides for efficient leadership of our Board and Company. In making this determination, the Board has taken into considerationperiodically review and consider this leadership structure to confirm it remains appropriate for MYR Group’s size, structure and business as well as Mr. Koertner’s knowledge of the industry, successful tenure with MYR Group and his established relationships with our customers. The Board also believes that Mr. Koertner is in the best position to inform our independent directors about our operations, projects and issues important to the Company. Except for Mr. Koertner, the Board is comprised entirely of independent directors and all of the committee members are independent. Group.
BOARD AUTHORITY TO RETAIN OUTSIDE CONSULTANTS
The Board has the necessary power and authority to request and obtain information directly from management, to retain outside consultants and to consult directly with management and employees where it deems appropriate.
In accordance with the Corporate Governance Principles, the independent directors selected Gary R. Johnson to serve as the Board’s Lead Director. As Lead Director, Mr. Johnson The Audit Committee has the sole authority to call meetings ofappoint, compensate, retain and oversee the Company’s independent directorsregistered public accountants. The Compensation Committee has the sole authority to engage, retain, oversee and his duties include, among others, presiding at executive sessions ofterminate compensation advisers for our senior management compensation review and for our directors’ compensation review. The NESG Committee has the independent directors, which are typically held following Board meetings without management present,sole authority to retain and serving as a liaison between the Chairman and the independent directors and, where appropriate, with the stockholders.
Our overall corporate governance policies and practices, combined with the strength of our independent directors, minimize potential conflicts that may result from combined roles of Chairman and CEO. The Nominating and Corporate Governance Committee and the other independent directors periodically review this structureterminate search firms used to ensure it is still appropriate.
Risk Oversight
identify director candidates.
| | | | | |
| 8 | MYR GROUP INC. | 2023 PROXY STATEMENT |
RISK OVERSIGHT
We do not view risk in isolation but consider risk as part of our regular consideration of business strategy and business decisions. Assessing and managing risk is the responsibility of management, which establishes and maintains risk management processes, including action plans and controls, to balance risk mitigation and opportunities to create stockholdershareholder value. It is management’s responsibility to anticipate, identify and communicate risks to the Board and/or its committees.
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The Board has the responsibility to oversee and review certain aspects of our risk management efforts, either directly or through its committees, based upon management’s identification, assessment and mitigation of risk. We approach risk management by integrating strategic planning and operational decision-making with risk oversight by management and the Board. The Board commits extensive time and effort to discussing and establishing the Company’s strategic plan, and it reconsiders key elements of the strategic plan as significant events and opportunities arise during the year. As part of the strategic plan review, the Board and management focus on the primary value drivers for the Company and risks facing the Company.
The Board’s standingCompany, as well as the Company’s sustainability and social responsibilities.
Only independent Directors serve on our committees
are each chaired by an independent director andthat support the Board’s oversight functions by regularly addressing various risks in their respective areas of oversight. Specifically, the Audit Committee assists the Board in fulfilling its risk management oversight responsibilities in the areas of financial reporting, internal controls
(including internal controls over information technology systems and
security), compliance with public reporting
requirements.requirements and cyber security. The Compensation Committee assists the Board in fulfilling its risk management oversight responsibilities associated with risks arising from compensation policies and programs, including the review of incentive compensation to ensure our programs contribute to our success, increase shareholder value and discourage unnecessary and excessive risk taking. The
Nominating and Corporate GovernanceNESG Committee assists the Board in fulfilling its risk management oversight responsibilities associated with risks primarily related to corporate
governance.governance, director succession, the composition of the Board, as well as climate, environmental, and social matters. Each of the
committee chairsChairs reports to the full Board at regular meetings concerning the activities of the committee, the significant issues it has discussed and the actions taken by the committee.
We believe that our leadership structure supports the risk oversight function of the Board. All directors are actively involved in
BOARD AND COMMITTEE SELF-EVALUATIONS
Each year, the risk oversight functionBoard and with our CEO serving as Chairmaneach of the Audit Committee, the Compensation Committee, and the NESG Committee conduct a self-evaluation addressing matters that the Board and committees consider relevant to their performance. These evaluations include an assessment by each director of the performance of the Board he is ableand the committee or committees on which the director sits. The NESG Committee oversees the evaluation process.
The Board periodically retains an independent, third-party executive and corporate governance consultant to
promote open communication between managementfacilitate Board and
directors relating to risk.Committee Membership
committee self-evaluations and individual director performance evaluations.
COMMITTEE MEMBERSHIP AND MEETING ATTENDANCE
Our Board designates the members and
chairsChairs of committees based on the
Nominating and Corporate GovernanceNESG Committee’s recommendations.
Because he is not anThe Board's three standing committees—Audit, Compensation, and NESG—are each composed entirely of independent
director, William A. Koertner doesdirectors. Non-independent directors do not serve on any of the committees.
The Board has three standing committees — Audit, Compensation, and Nominating and Corporate Governance — each comprised entirely of independent directors. Membership of the committees in 2015 was as follows: | | | | | | |
| Name | | Audit | | Compensation | | Nominating and Corporate Governance |
| Jack L. Alexander | | | X | | | | X | | | | — | |
| Larry F. Altenbaumer | | | — | | | | Chair | | | | X | |
| Henry W. Fayne | | | X | | | | X | | | | — | |
| Kenneth M. Hartwick(1) | | | X | | | | — | | | | X | |
| Betty R. Johnson(2) | | | X | | | | — | | | | X | |
| Gary R. Johnson | | | — | | | | X | | | | Chair | |
| Donald C.I. Lucky(1) | | | — | | | | X | | | | X | |
| Maurice E. Moore | | | X | | | | — | | | | X | |
| William D. Patterson | | | Chair | | | | X | | | | — | |
| Number of Meetings in 2015 | | | 6 | | | | 7 | | | | 4 | |
| (1) | Mr. Hartwick’s and Mr. Lucky’s appointments to the Board were effective on July 29, 2015. |
| (2) | Effective October 19, 2015, Ms. Johnson resigned from the Board and was appointed Senior Vice President, Chief Financial Officer and Treasurer. |
Each of the three standing committees has a written charter adopted by the Board. The charters define each committee’s roles and responsibilities. The charters are available on our website atwww.myrgroup.com. investor.myrgroup.com/corporate-governance/corporate-documents. MYR Group will provide copies of these charters free of charge to any stockholdershareholder who sends a written request to our Secretary at MYR Group Inc., 1701 Golf Road,12121 Grant Street, Suite 3-1012, Rolling Meadows, Illinois 60008.
610, Thornton, CO 80241.
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MYR GROUP INC. | 2023PROXY STATEMENT | 9 |
We expect directors to regularly attend Board meetings and meetings of the committees on which they serve. In 2022, the Board held 7 meetings, the Audit Committee held 4 meetings, the Compensation Committee held 4 meetings, and the NESG Committee held 3 meetings. Each of our directors serving during the year ended December 31, 2022 attended at least 75% of the aggregate number of meetings of the Board and committees on which they served (held during the period in which the director served). The overall aggregate director attendance for all Board and committee meetings was 100%. All directors serving at the time of the 2022 Annual Meeting, including the director nominees, attended that meeting. All current directors are expected to attend the 2023 Annual Meeting and each annual meeting of shareholders generally.
Current membership of the standing committees is as follows:
| | | | | | | | | | | |
| Audit | Compensation | NESG |
| Bradley T. Favreau | 0 | a | a |
| Kenneth M. Hartwick | a | 0 | 0 |
| Ajoy H. Karna | a | 0 | 0 |
| Jennifer E. Lowry | l | 0 | 0 |
| Donald C.I. Lucky | 0 | a | l |
| Maurice E. Moore | a | 0 | a |
| Shirin O'Connor | 0 | a | a |
| William D. Patterson | 0 | l | 0 |
| Richard S. Swartz | x | x | x |
x Not an independent director, therefore does not serve on any committee.
lCommittee Chair
aCommittee member
BOARD REFRESHMENT
The Board's Corporate Governance Principles establish the general policies that (i) generally directors will not be nominated for reelection or reappointment to the Board after fifteen years of service as a member of the Board and (ii) directors will not be nominated for reelection or reappointment to the Board after reaching the age of 72. Directors are expected to tender their resignations immediately following the first annual meeting of shareholders following their 72nd birthday. The Board retains its discretion to waive these policies in individual cases. Accordingly, Maurice E. Moore is expected to tender his resignation from the Board following the 2023 Annual Meeting, and the Board will consider accepting his resignation at that time.
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| 10 | MYR GROUP INC. | 2023 PROXY STATEMENT |
NOMINATING,
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE COMMITTEE MATTERS
COMMITTEE INDEPENDENCE AND RESPONSIBILITIES
The Board has determined that all of the Nominating and Corporate GovernanceNESG Committee members are independent under the Nasdaq listing standards. The primary responsibilities of the Nominating and Corporate GovernanceNESG Committee include, (i) among others:
•identifying and recommending to the Board individuals qualified to serve as director, (ii) directors of the Company;
•advising the Board with respect to the Board’s size, composition, procedures and committees, (iii) developing and recommending tocommittees;
•advising the Board theon corporate governance principles applicable tomatters, including the Company, (iv) ongoing review and assessment of the Board's Corporate Governance Principles;
•overseeing the self-evaluation of the Board and Board committeesthe Board's committees;
•assisting the board in identifying, evaluating and (v) providing oversightmonitoring environmental, climate, health, safety, social, and public policy trends, issues and concerns and other corporate responsibility matters ("ESG") that could affect MYR Group's business activities, performance and reputation; and
•assisting the board in determining whether the Company has appropriate policies, management systems, strategies and initiatives in place with respect to corporate governance and ethical conduct.Criteria for Nomination to the Board of Directors and Diversity
ESG.
CRITERIA FOR NOMINATION TO THE BOARD OF DIRECTORS
The Board is responsible for nominating directors for election to the Board. The Nominating and Corporate GovernanceNESG Committee is responsible for identifying, screening, and recommending candidates to the Board for Board membership in accordance with the committee’s charter, our Certificate of Incorporation, our By-Laws, our Corporate Governance Principles and additional criteria that may be considered by the Board regarding director candidate qualifications. The Nominating and Corporate GovernanceCandidates for nomination to the Board may be suggested by current directors, management, shareholders, or a third-party search firm engaged to assist with director recruitment. When a third-party search firm is engaged, the NESG Committee also evaluatesgenerally provides the firm with guidance as to the qualifications, qualities, and skills that the NESG Committee is seeking in potential candidates, and the search firm identifies candidates for the NESG Committee's consideration.
Shareholder recommendations for Board candidates should be submitted in writing to our Secretary at MYR Group Inc. 12121 Grant Street, Suite 610, Thornton, CO 80241. For information regarding how shareholders may nominate director candidates to the Board, see "2024 Annual Meeting of Shareholders - Shareholder Proposals and Nominations for the 2024 Annual Meeting" in this Proxy Statement.
In evaluating potential candidates for Board membership, the NESG Committee will make a preliminary review of a prospective candidate’s background, career experience and qualifications based on available information. If a consensus is reached by the NESG Committee that a particular candidate would likely contribute positively to the Board’s mix of skills and experiences, the NESG Committee will conduct interviews with the candidate and may invite other Board members or Company executives to interview the candidate to assess the candidate’s overall qualifications. The NESG Committee will consider the candidate against the criteria described below in the context of the Board’s then current composition and the needs of the Board and its committees and make a recommendation to the Board as to whether the candidate should be nominated for election. This evaluation process is the same of all candidates,
properly nominatedincluding any director candidates identified by
stockholders — in the same manner and using the same criteria.shareholders.
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MYR GROUP INC. | 2023PROXY STATEMENT | 11 |
Since the identification and selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors, and will beis significantly influenced by the particular needs of the Board from time to time, there is not a specific set of qualifications, qualities or skills that are necessary for a nominee to possess, other than those that are necessary to meet legal requirements, the Nasdaq listing standards and the provisions of our Certificate of Incorporation, By-Laws, Corporate Governance Principles and charters of the Board’s committees. When considering nominees, the Nominating and Corporate GovernanceNESG Committee maywill take into consideration many factors including, but not limited to, a candidate’s:
•record of accomplishment in his or her chosen field;
•ability to make a meaningful contribution to the Board's oversight of the business and affairs of the Company;
•depth and breadth of experience at an executive, policy-making level in business, financial services, academia, law, government, technology or other areas relevant to the Company’s activities;
•personal and professional ethics, integrity and values;
•commitment to enhancing stockholdershareholder value;
•ability to exercise good judgment and provide practical insights and diverse perspectives;
•knowledge of the Company’s industry, markets and customers;
•vision, leadership and individual talents;
•absence of real and perceived conflicts of interest;
•ability and willingness to devote sufficient time to become knowledgeable about the Company and to effectively carry out the duties and responsibilities of service;
•ability to attend Board and committee meetings in person;
•ability to develop a good working relationship with other members of the Board; and
•ability to contribute to the Board’s working relationship with senior management.
When considering nominees, the Nominating and Corporate GovernanceNESG Committee may also consider whether the candidate possesses the qualifications, experience, attributes and skills, taken as a whole, it considers appropriate in the context of the Board’s overall composition and needs. In addition,
The Board is responsible for nominating directors for election to the Board. When considering whether our Corporate Governance Principles specify thatdirectors, including the Nominatingnominees, have the experience, qualifications, attributes and Corporate Governance Committee should consider the value of diversityskills to serve on the Board, in the director nominee identificationBoard considers the NESG Committee’s recommendations and nomination process. Accordingly, while the Company does not have a specific policy regarding diversity, the Nominatingindividual’s breadth of knowledge of our industry and Corporate Governance Committee’s evaluation of director nominees includes consideration of their ability to contributecustomers, integrity, particular experiences, talents, business judgment, vision, leadership skills and what each individual would bring to the diversity of personal and professional experiences, opinions, perspectives and backgrounds onBoard as a whole, including the Board. Nominees are not discriminated against on the basis of race, color, religion, sex, ancestry, national origin, sexual orientation, disability or any other basis proscribed by law. The Nominating and Corporate Governance Committee will
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assess the effectiveness of this approach as part of its reviewinformation discussed in each of the Board’s compositiondirector’s individual biographies. Additionally, the Board considers and values a director’s or director nominee’s extensive experience as well asa business leader and strong understanding of business operations in the course of the Board’s and Nominating and Corporate Governance Committee’s self-evaluation process.
general.
Under the heading “Proposal No. 1. Election of Directors,”Three Class I Director Nominees for Three-Year Terms” we provide an overview of each nominee’s principal occupation, business experience and other directorships of publicly traded companies, together with the nominee's qualifications, experience, key attributes and skills that the Nominating and Corporate GovernanceNESG Committee and the Board believe will best serve the interests of the Board, the Company and our stockholders.
shareholders.
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| 12 | MYR GROUP INC. | 2023 PROXY STATEMENT |
DIVERSITY
MYR Group's Board
and Committee Self-Evaluationsbelieves diversity on the Board is critical to the Company’s ability to create long-term value for its shareholders. The Board has and eachwill continue to make diversity, including gender, race/ethnicity, national origin, career experience, and diversity of mind, key factors when considering director candidates. The Board believes that a diverse board strengthens Board performance and better positions the Board to make thoughtful decisions. Diverse backgrounds are key for our Board to provide effective governance, advice on the Company’s operations, and to assess risk and opportunities for the Company’s business. Our Corporate Governance Principles specify that the NESG Committee should consider the value of diversity on the Board in the director-nominee identification and nomination process. To this end, the NESG Committee recommends various measures to confirm the Board reflects an appropriate balance of diversity and will continually assess the effectiveness of this approach as part of its review of the Audit, Compensation,Board’s composition and Nominating and Corporate Governance committees conduct an annual self-evaluation addressing matters the Board and committees consider relevant to their performance. These evaluations include both a qualitative and quantitative assessment by each directoras part of the performanceBoard’s and the Committee’s self-evaluation process.
In recent years our board composition has shifted and reduced its average tenure. Specifically, five new directors have joined our Board since 2016 and the average tenure of our current directors is 7.22 years.
BOARD DIVERSITY MATRIX
The following matrix discloses the gender and demographic backgrounds of our Board as self-identified by its members in accordance with Nasdaq Listing Rule 5606. Two of our directors identify as women, one as African American, one as White/Middle Eastern, one as Asian, and two as non US-citizens. Additionally, under the definition utilized by Institutional Shareholder Services (ISS), one director identifies as having two races/ethnicities.
| | | | | | | | | | | | | | |
| Board Diversity Matrix (As of February 23, 2023) |
| Total Number of Directors: | 9 |
|
| Female | Male | Non-Binary | Did Not Disclose Gender |
| | | | |
| Part I: Gender Identity |
| Directors | 2 | 7 | | |
| Part II: Demographic Background |
| African American or Black | | 1 | | |
| Alaskan Native or Native American | | | | |
| Asian | | 1 | | |
| Hispanic or Latinx | | | | |
| Native Hawaiian or Pacific Islander | | | | |
| White (other than Middle Eastern) | 2 | 5 | | |
| Middle Eastern | 1 | | | |
| Two or More Races or Ethnicities | 1 | | |
|
| LGBTQ+ | | | | |
| Did Not Disclose Demographic Background | | | | |
DIRECTOR SUCCESSION PLANNING
The NESG Committee regularly reviews the size and composition of the Board, which includes identifying measures to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity, and recommends opportunities for adding diversity to the Board. While the NESG Committee performs the initial review of the succession plans and makes recommendations to the Board as necessary, the entire Board has the primary responsibility for Board and committee or committees on which the director sits. The Nominatingsuccession planning and Corporate Governance Committee oversees the evaluation process.has developed both long-term and contingency plans.
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MYR GROUP INC. | 2023PROXY STATEMENT | 13 |
PROPOSAL
NO. 1. ELECTION OF
DIRECTORSTHREE CLASS I DIRECTOR NOMINEES FOR THREE-YEAR TERMS.
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE THREE CLASS I DIRECTOR NOMINEES FOR THREE-YEAR TERMS.
The Board currently consists of nine directors. The directors are divided into three classes, designated as Class I, Class II and Class III. The term for each class expires at the conclusion of a three-year
term.period. At the
20162023 Annual Meeting, the Class
IIII directors are standing for
election.election along with a single member of Class III.
The
Nominating and Corporate GovernanceNESG Committee recommended to the Board, and the Board approved, the
nominationnominations of
Larry F. Altenbaumer, William A. KoertnerKenneth M. Hartwick, Jennifer E. Lowry and
William D. Patterson as directors (the “MYR Group Nominees”),Richard S. Swartz, each for a term ending at the
20192026 Annual Meeting of
StockholdersShareholders or until his
or her successor has been chosen and qualified.
Each of the
MYR Group Nomineesnominees was chosen by the Board to
beserve as a director because the Board and the
Nominating and Corporate GovernanceNESG Committee believe that
histheir qualifications, experience, background and skills,
(summarized below under the subheading “Director Qualifications”), taken together, demonstrate
histheir capacity to make a continuing meaningful contribution to the Board’s oversight of the business and affairs of the Company. Accordingly, the Board believes that the continued service of each of the
MYR Group Nomineesnominees on the Board will serve the best interests of the Company and all of its
stockholders.THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE ON THE
WHITE PROXY CARDFORTHE ELECTION OF LARRY F. ALTENBAUMER, WILLIAM A.
KOERTNER AND WILLIAM D. PATTERSON.
If you return aWHITE proxy card without giving specific voting instructions, then your shares will be votedFOR the election of the MYR Group Nominees.
shareholders.
If any nominee should be unavailable to serve due to an unanticipated event, the Board may designate another person as a substitute nominee or, in accordance with our By-Laws, act to reduce the
total number of
directors.directors on the Board. If the Board substitutes another nominee, the shares represented by your
WHITEproxy
card will be voted for the substitute nominee.
THE BOARD RECOMMENDS A VOTEFORTHE ELECTION OF EACH OF THE NOMINEES.
Vote Required
On December 21, 2015, our By-laws were amended None of the nominees are related to provide for a majority standard in uncontestedone another or to any other director elections. As amended, the By-lawsor executive officer of MYR Group or its subsidiaries by blood, marriage or adoption.
VOTE REQUIRED
Our By-Laws provide that a director nominee in an uncontested election will be elected if the number of shares voted
“for”FOR the director’s election exceeds 50% of the number of votes cast on the issue of that director’s election (including votes FOR,
AGAINST and
WITHHOLD,votes AGAINST, but excluding any votes to ABSTAIN or broker non-votes). If a director in an uncontested election fails to receive the required number of votes for re-election,
in an uncontested election, the director is expected to tender his or her resignation
effective upon the Board’s acceptance of such resignation. The Nominating and Corporate Governance Committee will act on an expedited basis to determine whether to accept the director’s resignation and will submit such recommendation for prompt consideration by the Board. A director whose resignation is under consideration is expected to abstain from participating in any decision regarding that resignation. The
Nominating and Corporate GovernanceNESG Committee and the Board may consider any factors they deem relevant in deciding whether to accept or reject a director’s resignation.
However, in
In a contested election, where the number of director nominees exceeds the number of directors to be elected, a plurality vote standard will apply, and the three directorsdirector nominees who receive the most FOR votes will be elected. Because Engine Capital L.P., a Delaware limited partnership (together with its affiliates “Engine Capital”), has stated that it intends to nominate three alternative director nominees, assuming such nominees are in fact proposed for
In this election, at the Annual Meeting,because the number of director nominees willdoes not exceed the number of directors to be elected. Consequently, a plurality vote standard will apply toelected, the election of directors at the 2023 Annual Meeting.
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Director Qualifications
When considering whether our directors, including the nominees, should serve asMeeting will not be a director and have the experience, qualifications, attributes and skills, taken ascontested election. As a whole, to enable the Board to satisfy its responsibilities effectively in light of our businesses and structure, the Nominating and Corporate Governance Committee and the Board considered their wealth of knowledge of our industry and customers, integrity, their particular experiences, individual talents, business judgment and vision, leadership skills and what each individual would bring to the Board as a whole, including the information discussed inresult, each of the director’s individual biographies set forth innominees will be elected if the tables below. Additionally,number of shares voted FOR such nominee’s election exceeds 50% of the Board considerednumber of votes cast on the issue of such nominee’s election (including votes FOR and valued that eachvotes AGAINST, but excluding any votes to ABSTAIN or broker non-votes).
If you return a proxy card without giving specific voting instructions, then your shares will be voted FOR the election of
our directors has extensive experience as a business leader and has a strong understanding of business operations in general. In particular, the Board considered that each of the
directors has a strong background in the utilities sector, and the Board believes that such relevant experience is important in evaluating and overseeing our business development and strategies.nominees.
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| 14 | MYR GROUP INC. | 2023 PROXY STATEMENT |
2023 DIRECTOR NOMINEES - CLASS I
The following is information as of
[ ], 2016,February 23, 2023, regarding each director who is up for election at the
2023 Annual
Meeting:Meeting.Nominees for Election as Class I Directors
| | | | | |
Larry F. Altenbaumer
Age: 67
| Kenneth M. Hartwick
Age: 60 Director Since: 2006
2015 Independent: Yes Nominated for Class: I Committee Membership: Audit ☒ Compensation ☐ NESG ☐ Meeting Attendance: 100% Other Public Directorships:Via Renewables LP
Mr. Hartwick has served as President and CEO for Ontario Power Generation, an owner of power generation in Canada and United States, since 2019. Mr. Hartwick is also a Director Class: Class IIIat Ontario Power Generation. Previously, Mr. Hartwick served as Senior Vice President of Finance, Strategy, Risk & Chief Financial Officer for Ontario Power Generation from 2016 to 2019. From 2015 to 2016, Mr. Hartwick served as the Chief Financial Officer of Wellspring Financial Corporation, a Canadian sales financing company. Prior to joining Wellspring Financial Corporation, Mr. Hartwick served for ten years as Director, President and CEO of Just Energy Group Inc., an integrated retailer of commodity products. At Just Energy Group, Inc., his role included putting in place a broad set of financing arrangements for growth in North America and the United Kingdom and the expansion of the sales organization across these locations. Prior to that, Mr. Hartwick held a variety of senior executive roles, gaining an extensive financial background in the energy, consumer products and capital markets areas, including the positions of CEO and Chief Financial Officer at Just Energy Group, Inc., Chief Financial Officer at Hydro One, Inc. and a partner at Ernst & Young LLP. In each of these roles, Mr. Hartwick participated in the expansion and growth of the businesses and the establishment of financial platforms to support that growth. Mr. Hartwick currently serves on the Board of Directors of Via Renewables LP, a publicly-traded retail energy services company. From 2004 to 2016, Mr. Hartwick served on the Board of Directors of Atlantic Power Corporation, a publicly-traded power generation company in the United States and Canada. From 2014 through 2016, Mr. Hartwick served on the Board of Governors for Trent University, his alma mater. Mr. Hartwick earned his Honors of Business Administration Degree from Trent University, Peterborough, Ontario and is a Certified Public Accountant.
Qualifications, Experience, Key Attributes and Skills:
Mr. Hartwick’s experience in senior executive positions, including the roles of chief executive officer and chief financial officer, brings leadership, risk management, and strategic planning experience to the Board and Audit Committee. Mr. Hartwick’s in-depth knowledge of financing initiatives as a senior executive in North American markets provides the Board with proficiencies to support business development, growth strategies and expenditure plans. Mr. Hartwick’s experience as a director of other publicly-traded companies enables him to provide insights into a variety of strategic planning, risk management, compensation, finance and governance practices. The culmination of Mr. Hartwick’s leadership in the energy industry and financial sector make him a valued advisor and highly qualified to serve as Board Chair and as a member of our Audit Committee. |
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MYR GROUP INC. | 2023PROXY STATEMENT | 15 |
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| Jennifer E. Lowry
Age: 54 Director Since: 2018 Independent: Yes Nominated for Class: I Committee Membership: Audit ☒ (Chair) Compensation ☐ NESG ☐ Meeting Attendance: 100% Other Public Directorships: Clearway Energy, Inc.
Ms. Lowry is a retired finance and strategy executive. Ms. Lowry served as Vice President of Risk, Treasury and Corporate Finance for McCormick & Company, Inc., a global food company, from 2016 until her retirement in 2021. From 2012 to 2016, Ms. Lowry held senior management roles with Exelon Corporation (“Exelon”), a U.S. power generator, and Constellation Energy Group, Inc. (“Constellation”), an energy company which merged with Exelon. With Constellation she served as Treasurer and Vice President, and while at Exelon she was Senior Vice President, Generation Company Strategy. Prior to that, she held executive positions at companies within the electric power industry including Cogentrix Energy Group, Inc. and The AES Corporation, where she worked in Treasury, Corporate Finance and Project Development Groups.
Since February 2022, Ms. Lowry has served on the board of Clearway Energy, Inc., where she currently is the chair of the Energy Risk Management Committee. Ms. Lowry also has served on numerous governing committees within Constellation and Exelon and previously served as Chair of the Maryland Zoo Board of Trustees. She attended Dartmouth College, where she earned a Bachelor of Arts degree and Bachelor of Engineering degree with a focus on electrical engineering, and she earned a Masters in Management from the Northwestern University Kellogg School of Management.
Qualifications, Experience, Key Attributes and Skills:
Ms. Lowry’s experience in senior executive positions, in several industries, including the electric power industry with several major utilities, brings industry knowledge and expertise, strong leadership qualities and a diverse set of finance, strategy, risk management, and governance skills to our Board. Her financial and strategic transactional experience with both national and global organizations offers unique perspectives to our Board. Ms. Lowry’s collective leadership, experience and skillset makes her a valuable asset and highly qualified to serve on our Board and as the Chair of our Audit Committee. |
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| 16 | MYR GROUP INC. | 2023 PROXY STATEMENT |
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| Richard S. Swartz
Age: 59 Director Since: 2019 Independent: No Nominated for Class: I Committee Membership: Audit ☐ Compensation ☐ NESG ☐ Meeting Attendance: 100% Other Public Directorships: None
Mr. AltenbaumerSwartz was appointed President and CEO of MYR Group in 2017. Mr. Swartz also chairs the Company’s internal executive committee. Mr. Swartz has overmore than 40 years of industry experience. He began his career in field operations, and subsequently served in a variety of senior management positions including as the Vice President of our subsidiary Sturgeon Electric Company, Inc. (“Sturgeon Electric”) C&I division, Vice President of Sturgeon Electric’s T&D—Midwest division, Group Vice President C&I and T&D—West, and MYR Group’s Executive Vice President and Chief Operating Officer for six years, preceding his CEO appointment. Mr. Swartz was instrumental in the development and inception of project management and productivity improvement programs as well as in the formulation of several corporate safety initiatives. He spearheaded Sturgeon Electric’s participation in OSHA's Voluntary Protection Program (“VPP”) for the Mobile Workforce Demonstration Program, for which Sturgeon Electric has achieved and maintained STAR status since 2008.
Qualifications, Experience, Key Attributes and Skills:
Mr. Swartz’s 40 years of experience with the Company’s operations brings leadership, risk management, technical and strategic planning experience to the Board. His extensive knowledge of the Company’s personnel and capabilities provides valuable insight to the Board. |
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MYR GROUP INC. | 2023PROXY STATEMENT | 17 |
CLASS II AND REMAINING CLASS III DIRECTORS
The following is information as of February 23, 2023 regarding Class II and Class III directors.
CLASS II DIRECTORS | | | | | |
| Donald C.I. Lucky
Age: 60 Director Since: 2015 Independent: Yes Class: II Committee Membership: Audit ☐ Compensation ☒ NESG ☒ (Chair) Meeting Attendance: 100% Other Public Directorships: None
Mr. Lucky is a construction attorney and the Construction Practice Leader at the century-old Alberta-based law firm of Reynolds Mirth Richards & Farmer LLP, where he has practiced since 1988 and previously served as Managing Partner. He has advised contractors and owners in major power projects, including oil and gas, solar, wind and carbon capture, engineer procurement and construction mega projects and more than 100 public-private finance infrastructure projects (hospitals, penitentiaries, water treatment and transportation) throughout Canada, the United States and Australia. Mr. Lucky has appeared as counsel at all levels of the Courts of Alberta and the Northwest Territories and in mediations and arbitrations as counsel and adjudicator. In addition to his practice of law, he taught Construction Law at the University of Alberta from 2002 to 2015 and has received numerous industry awards and recognitions in the energy industry. He spent nearly 34 years at Illinois Power Company (“Illinois Power”), an electricarea of construction law and natural gas utility. He served as Presidentotherwise, including being inducted into the Canadian College of Illinois Power from 1999 untilConstruction Lawyers in 2009. Mr. Lucky earned his retirement in 2004,Bachelor of Commerce and served in various financial leadership positions before that, including Treasurer, Controller and Chief Financial Officer. During his tenure with Illinois Power, Mr. Altenbaumer also served as executive Vice President for Regulated Delivery for Dynegy, Inc. (“Dynegy”), a wholesale power, capacity and ancillary service provider. Illinois Power became a subsidiaryBachelor of Dynegy in 2000 in a transaction led by Mr. Altenbaumer for Illinois Power. Since 2004, Mr. Altenbaumer has served as an independent consultant, providing services to organizations both inside and outside of the energy industry. Since 2005, he has served as an independent director for the Southwest Power Pool, a FERC-approved regional transmission organization covering portions of fourteen states. Since 2014, he has served as a director for Summit Utilities, a privately-held holding company that owns and operates natural gas distribution companies in Colorado, Missouri and Maine. From 2005 to 2014, he served as an advisor to ArcLight Capital Partners, a private equity firm that has invested approximately $15.3 billion in the energy sector. He is also currently serving as the executive director of the Midwest Inland Port, a regional economic development initiative based in Decatur, Illinois and is a member of the Board of Decatur Memorial Hospital. Mr. Altenbaumer received a Bachelor’s Degree in electrical engineering and computer scienceLaw degrees from the University of Illinois.
Alberta, and his Master of Law degree from the University of Cambridge.
Qualifications, Experience, Key Attributes and Skills:
Throughout his career as an attorney in the construction industry, Mr. Altenbaumer serves as the chairLucky has demonstrated a detailed understanding of the Compensation committee, serveslegal issues and risks of our current and expanding markets. Mr. Lucky’s perspective as an academic and his involvement in various energy projects in multiple countries provides the Board with valuable new ideas and perspectives. Mr. Lucky’s experience in the construction industry, along with the wealth of knowledge he has gained through advocating for contractors, gives the Board significant insight for our strategic planning as well as an understanding and awareness of the Company’s opportunities and challenges, all of which makes him highly qualified to serve as Chair of the NESG Committee and as a member on the Nominating and Corporate Governance Committee and has a 97% attendance record for all 2015 Board and committee meetings on which he serves.Compensation Committee. |
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| 18 | MYR GROUP INC. | 2023 PROXY STATEMENT |
Qualifications, Experience, Key Attributes and Skills:
Mr. Altenbaumer’s long record of achievement in various leadership positions at Illinois Power, including President, enables him to provide valuable insight into key aspects of successfully managing our day-to-day business and management operations. This experience and his current position as a director of the Southwest Power Pool and a member of its Human Resources Committee and Finance Committee support his role as Chairman of the Compensation Committee. His executive management roles, knowledge of our customers and competitors and range of consulting experience both inside and outside of the energy industry strengthen Mr. Altenbaumer’s ability to provide strategic leadership to help us better position ourselves for future growth
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and success. In addition, Mr. Altenbaumer’s board service for the Southwest Power Pool along with the nature of his activity in support of several ArcLight portfolio companies provide him with relevant expertise in areas related to corporate governance issues affecting U.S. publicly traded companies and arm him with a wide base of knowledge related to his membership on the Nominating and Corporate Governance Committee.
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William A. Koertner
| Maurice E. Moore
Age: 66
72 Director Since: 2007
2010 Independent: Yes Class: II Committee Membership: Audit ☒ Compensation ☐ NESG ☒ Meeting Attendance: 100% Other Public Directorships: None
Mr. Moore has over 30 years of experience in banking, leasing and project financing, and in providing financial advisory services to the electric utility and renewable energy industries. Since 2009, Mr. Moore has served as Managing Director Class: Class III | | of Primus Financial Group, LLC, a company that he founded, which provides asset and lease financial advisory services to major U.S. commercial banks and companies engaged in the renewable energy business. From 2006 to 2009, Mr. Koertner joined MYR GroupMoore served in 1998 as Senior Vice President, Treasurersenior leadership roles with Chase Equipment Leasing, Inc., a division of JP Morgan Chase, offering a variety of financing and Chief Financial Officer, responsiblelease solutions to help businesses acquire the equipment needed for all financial functionsdaily operations. From 1986 to 2005, Mr. Moore served in various roles, including accounting, treasury, risk managementsenior leadership roles, with JP Morgan Capital Corporation and MIS operations. He was promoted to President and CEO in December 2003.its predecessor companies. Prior to joining MYR Group,serving on the Board, Mr. KoertnerMoore served as Chief Financial Officeron the boards for CentralWest Suburban Medical Center and Community Chest of Oak Park & River Forest, Illinois, Public Service Company from 1995 to 1998 and President and Chief Executive Officer of CIPSCO Investment Company (“CIPSCO”) from 1995 to 1998 as well. CIPSCO manages nonutility investments and provides investment management serviceswas formerly Finance Advisory Committee Chairman for affiliates.Oak Park & River Forest High School in Illinois. Mr. Koertner holdsMoore earned a Bachelor of Science degree in financecivil engineering from Northern IllinoisBrown University and a MastersMaster of Business Administration degree from Harvard Business School.
Qualifications, Experience, Key Attributes and Skills:
Mr. Moore has substantial leadership, financial services and capital expenditures experience, and has advised a variety of clients engaged in energy and renewable energy markets. His skills in originating, negotiating and financing large capital projects serve as a guiding force concerning our capital investment and expenditure plans. In addition, his financial advisory involvement in the renewable energy space provides a diverse range of insight that contributes to the Board’s understanding of the markets in which we operate. Mr. Moore’s business acumen and experience in both financial services and capital expenditure experience broadens our Board’s experience and understanding of successful financial practices and growth strategies and makes Mr. Moore highly qualified to serve as a member of both the Audit Committee and the NESG Committee. |
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MYR GROUP INC. | 2023PROXY STATEMENT | 19 |
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| Shirin O'Connor
Age: 59 Director Since: 2020 Independent: Yes Class: II Committee Membership: Audit ☐ Compensation ☒ NESG ☒ Meeting Attendance: 100% Other Public Directorships: None Ms. O’Connor has served as Vice President, Global Engineering, Global Procurement, and Quality/Continuous Improvement at Air Products and Chemicals, Inc. an industrial gases company, since 2020. In 2020, Ms. O’Connor previously served as Vice President, Project Director for Fluor Corporation’s (an engineering and construction firm) Energy and Chemicals Business Line. She has over 28 years of experience executing and leading large and mega capital projects for a wide range of industries including Energy and Chemicals, Advanced Technologies and Life Sciences, and Mining and Metals both domestically and internationally. Ms. O’Connor also previously served as Fluor’s Director of Engineering for Americas from 2018 to 2020 providing leadership oversight of engineering resources and execution in South America, US, and Canada. Prior to this role, Ms. O'Connor served as a Project Director for Fluor Corporation from 2005 to 2018. Ms. O’Connor earned a Bachelor of Science degree in electrical engineering from Clemson University and a Master of Science degree in electrical engineering from the University of Illinois.
South Carolina. Ms. O’Connor is also a registered professional engineer.
Qualifications, Experience, Key Attributes and Skills:
Ms. O’Connor has substantial project management, leadership, and engineering experience, including leading mega projects and support groups in the engineering construction sector. Her skills of oversight, management, and estimating of large-scale engineering, procurement and construction projects provide the Board and management with valuable insight; and contributes to the Board’s understanding of the work routinely performed by the Company. Ms. O’Connor’s ability to quickly understand large project opportunities broadens our Board’s experience and understanding of our work and the accompanying risk. Her experiences, including leading groups in sophisticated multinational organizations, make Ms. O’Connor well qualified to serve on the Board, the Compensation Committee and the NESG Committee. |
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| 20 | MYR GROUP INC. | 2023 PROXY STATEMENT |
CLASS III DIRECTORS | | | | | |
| Bradley T. Favreau
Age: 39 Director Since: 2016 Independent: Yes Class: III Committee Membership: Audit ☐ Compensation ☒ NESG ☒ Meeting Attendance: 100% Other Public Directorships: American Outdoor Brands, Inc.
Mr. KoertnerFavreau currently serves as Partner at Engine Capital Management, LLC (“Engine Capital Management”), which serves as the Chairmaninvestment manager to value-oriented special situations funds that invest both actively and passively in companies undergoing change. Mr. Favreau has been at Engine Capital Management since 2013. His responsibilities include sourcing and evaluating investment opportunities as well as monitoring portfolio risk and position sizing. Beginning in 2022, Mr. Favreau has served as a director and member of the Compensation Committee at American Outdoor Brands, Inc., a leading provider of outdoor lifestyle products and accessories. From 2015 to 2017, Mr. Favreau served as a director and a member of the Audit Committee of RDM Corporation, a provider of solutions for the electronic commerce and payment processing industries. Prior to Engine Capital Management, in 2011, Mr. Favreau served as a consultant at HUSCO International, a global leader in the development and manufacture of hydraulic and electro-hydraulic controls for off-highway applications. At HUSCO International, his duties included identifying and initiating supply chain improvement initiatives. Mr. Favreau has also worked as an investment professional at Apax Partners, an international private equity investment group, and in the mergers and acquisition group at UBS AG. Mr. Favreau received a Master of Business Administration from Columbia Business School and a Bachelor of Science degree from the Kelley School of Business at Indiana University.
Qualifications, Experience, Key Attributes and Skills:
Mr. Favreau’s experience at an investment firm with investments in a broad range of industries provides the Board with additional financial and operational expertise. Such knowledge helps our Company to position itself for future growth and allocate capital effectively. Mr. Favreau’s experiences as a director and member of the Audit Committee of RDM Corporation and as a consultant at HUSCO International offer the Board additional awareness and perspectives for the Company’s oversight and risk management functions. Mr. Favreau, with his financial background and experience serving on another board of directors, has proven to be a valuable asset to the Board, the Compensation Committee and the NESG Committee. |
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MYR GROUP INC. | 2023PROXY STATEMENT | 21 |
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| Ajoy H. Karna
Age: 56 Director Since: 2022 Independent: Yes Class: III Committee Membership: Audit ☒ Compensation ☐ NESG ☐ Meeting Attendance: 100% Other Public Directorships: None
Mr. Karna has served as Executive Vice President and Chief Financial Officer of Covetrus, Inc., a global animal-health technology and services company, since 2022. From 2012 through 2022, Mr. Karna held senior management roles with Sysco Corporation, a wholesale restaurant food distributor, including Senior Vice President, Treasury, M&A & Corporate Finance; Senior Vice President, Finance; Senior Vice President & CEO, Foodservice Europe; and Senior Vice President, Strategy and CFO International. Prior to Sysco, Mr. Karna served in various senior roles for PepsiCo, Inc. and its subsidiaries including Senior Vice President, Merger and Acquisitions. Prior to PepsiCo, Inc. Mr. Karna served in various finance roles of increasing responsibility for the Quaker Oats Company. Mr. Karna holds an undergraduate degree in finance from Georgetown University and a Master of Business Administration degree from Northwestern University.
Qualifications, Experience, Key Attributes and Skills:
Mr. Karna's more than 33 years of experience in finance, strategy, and management provide the Board with added insight into financial, business, and strategic matters. Additionally, Mr. Karna’s international business, treasury, supply chain, and mergers & acquisitions experience provide value to the Board. His time with large multi-national corporations such as Sysco Corporation, and PepsiCo, Inc., as well as other companies, allow him to provide a unique perspective and serve as a valuable asset to the Board and has a 100% attendance record for all 2015 Board meetings.as an important member of our Audit Committee
|
Qualifications, Experience, Key Attributes and Skills:
Through Mr. Koertner’s tenure as both President and CEO and Chief Financial Officer of MYR Group, he has gained an in-depth understanding of our day-to-day operations and has helped to develop and set our short and long-term growth strategies. He has been an instrumental force in building and maintaining key customer, vendor and investor relationships that have played an integral role in helping to further understand our business goals, the markets in which we operate and our competitive climate, all of which have contributed greatly to the success of the Company. Mr. Koertner also brings a wealth of financial expertise and utility background to his role and possesses an expert understanding of accounting and treasury practices, risk management and MIS operations, which allows him to provide sound guidance to the Board regarding our strategies and management.
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| 22 | MYR GROUP INC. | 2023 PROXY STATEMENT |
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| William D. Patterson
Age: 61
68 Director Since: 2007
Director Independent: Yes Class: Class III | | Since 2010, Committee Membership: Audit ☐ Compensation (Chair) ☒ NESG ☐ Meeting Attendance: 100% Other Public Directorships: None
Mr. Patterson has been the President ofis a retired water utility executive who is currently engaged in not-for-profit and philanthropic activities. From 2010 through 2016, Mr. Patterson provided advisory and consulting services to utilities through EnSTAR Management Corporation, a company that he founded to provide advisoryfounded. In 2010, Mr. Patterson retired from American Water Works Company Inc. (“American Water Works”), the largest investor-owned U.S. water and consulting services to utilities.wastewater utility company. From 2009 tountil his retirement in 2010, Mr. Patterson served as Senior Vice President of Corporate and Business Development for American Water Works Company, Inc., the largest investor-owned U.S. water and wastewater utility company.Works. From 2005 to 2008, Mr. Patterson served as Senior Vice President and Chief Financial Officer of Pennichuck Corporation, an investor-owned water utility holding company. From 2003 to 2005, he served as an executive advisor to Concentric Energy Advisors, a private firm located in Marlborough, Massachusetts, providing financial advisory and consulting services for utilities. His experience also includes nearly 20 years of work within the investment banking industry, serving in senior positions at E.F. Hutton, Shearson Lehman and Smith Barney, where he was managing director and co-head of the corporate finance department’s regulated utilities practice. Mr. Patterson earned his Bachelor of Science degree in civil engineering from Princeton University, graduating summa cum laude. He earned his MastersMaster of Business Administration degree in finance and accounting from the University of Chicago Booth School of Business.
Qualifications, Experience, Key Attributes and Skills:
Mr. Patterson servesis a financial executive and expert with 30 years of experience primarily serving the regulated utility and energy/utility infrastructure markets. Mr. Patterson brings a broad-based track record of success as a banker, investor and advisor and has held senior management and independent director positions for both public and private companies. His service as a senior executive for various companies in the chairutility industry provides him with an unparalleled understanding and awareness of our markets and a valuable perspective that make Mr. Patterson highly qualified to serve as Chair of the Audit Committee, serves on the Compensation Committee and has a 100% attendance record for all 2015 Board and committee meetings on which he serves.Committee. |
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MYR GROUP INC. | 2023PROXY STATEMENT | 23 |
NON-EMPLOYEE DIRECTOR COMPENSATION
We use a combination of cash and
SkillsMr. Patterson is a financialequity-based compensation to attract and retain directors and to compensate directors for their service on the Board in amounts that are commensurate with their Board and committee responsibilities. The Compensation Committee reviews director compensation periodically and recommends changes to the Board when it deems them appropriate. The Compensation Committee and the Board consider analyses prepared by the Compensation Committee’s independent executive and expertdirector compensation consultant, Mercer, a wholly-owned subsidiary of March & McLennan Companies, Inc. ("Mercer") of reported director compensation practices at our peer companies. The Compensation Committee generally seeks to target our directors’ total compensation (defined as total cash compensation and total equity compensation) at or near the median total compensation of the directors of our peers.
In February 2022, at the request of our Compensation Committee, Mercer performed and presented to the Compensation Committee a study of reported non-employee director compensation practices (the “2022 Mercer Non-Employee Director Compensation Study”). The 2022 Mercer Non-Employee Director Compensation Study included comparisons of our non-employee director compensation to a peer group of companies, which assisted the Compensation Committee with 30 yearsdesigning our non-employee director compensation program to be competitive with the peer group and other companies in our markets.
According to the 2022 Mercer Non-Employee Director Compensation Study, total cash compensation compared to a group of experience primarily servingour peers was below the regulated utility50th percentile and energy/utility infrastructure markets. As Chairmanannual equity compensation was near the 50th percentile, which resulted in total direct compensation below the 50th percentile. Based on the 2022 Mercer Non-Employee Director Compensation Study, the Compensation Committee approved the following non-director compensation arrangements for 2022 in April 2022:
•Annual retainer of $80,000 (including seven in-person Board meetings and up to ten telephonic Board meetings) (no change from 2021);
•Additional cash compensation of $2,000 for attendance in-person and $1,000 for attendance telephonically for each additional meeting above the number of Board meetings included in the annual retainer (no change for 2021);
•Annual retainer of $50,000 annually for the Board Chair (increase from $37,500 in 2021);
•Annual retainer of $20,000 for the Chair of the Audit Committee and a member(increase from $12,500 in 2021);
•Annual retainer of $15,000 for the Chair of the Compensation Committee Mr. Patterson brings a broad-based track record(increase from $12,500 in 2021);
•Annual retainer of success as a banker, investor and advisor and has held senior management and independent director positions$12,500 for both public and private companies. His service as a senior executive for various companiesthe Chair of the NESG Committee (increase from $5,000 in 2021);
•Annual equity award of $110,000 in the utility industry provides himform of time-based restricted stock units ("Restricted Stock Units") (an increase from $75,000 in 2021); and
•Additional annual equity award of $50,000 for the Board Chair in the form of Restricted Sock Units (increase from $37,500 in 2021).
•reimbursement for reasonable costs and expenses incurred in connection with an unparalleled understandingattendance at Board and awarenesscommittee meetings.
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| 24 | MYR GROUP INC. | 2023 PROXY STATEMENT |
Director Compensation Table
The following table sets forth the compensation received by each of our
markets and a valuable perspectivenon-employee directors in the
review and analysis of financial statements and results.The following is information regarding Class I and Class II directors serving as of [ ], 2016:
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Henry W. Fayne
Age: 69
Director Since: 2007
Director Class: Class I
Expiration of Term: 2017 | | Mr. Fayne has more than 30 years of experience with American Electric Power (“AEP”), an electric utility company servicing five million customers in 11 states. During his tenure from 1974 to 2004, he held senior positions in both finance and operations. Most recently, he served as Executive Vice President of Energy Services and was responsible for transmission, distribution and customer relations operations for the AEP system, which employed approximately 15,000 line workers. He also served as Chief Financial Officer and Executive Vice President — Financial Services and was responsible for financial planning and budgeting, risk management, internal audits, accounting and treasury functions. After retiring from AEP in 2004, Mr. Fayne began providing advisory and consulting services to various companies, including Century Aluminum Company. In addition to serving on our Board, Mr. Fayne currently serves as chairman of the board of directors for Southwest Generation, LLC, a privately held gas-fired generating company; director and chairman of the audit committee of the board of directors for Murray Energy Corporation, a privately held coal mining company; sits on the board of directors of Youth and Families, a non-profit organization serving at-risk children in Franklin County, Ohio; and serves as a director of Summit Utilities Inc., a privately held gas distribution company. Mr. Fayne holds a Bachelor of Arts degree in economics from Columbia College of Columbia University and a Masters of Business Administration degree from the Columbia Business School.
Mr. Fayne serves on the Audit and Compensation committees and has a 91% attendance record for all 2015 Board and committee meetings on which he serves. |
Qualifications, Experience, Key Attributes and Skills:
With over 35 years of total industry experience, Mr. Fayne’s extensive background in financial planning, budgeting, risk management and operational experience with AEP combine to provide extremely relevant insight and guidance related to our primary operations. His substantial executive leadership expertise and consulting experience are directly relevant to our operations and activities as well as to his service on our Audit and Compensation Committees, and help aid the Board’s strategic and high-level planning as well as the Board’s understanding of our customers and competitors. Mr. Fayne’s participation on a variety of other boards provides him with a well-rounded perspective to further enhance the Board’s understanding of the industry.
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Kenneth M. Hartwick
Age: 53
Director Since: 2015
Director Class: Class I
Expiration of Term: 2017 | | In February 2015, Mr. Hartwick was named Chief Financial Officer of Wellspring Financial Corporation, a Canadian sales financing company. Prior to joining Wellspring, Mr. Hartwick served for ten years as Director, President and Chief Executive Officer of Just Energy Group Inc., an integrated retailer of commodity products. At Just Energy Group, Inc., his role included putting in place a broad set of financing arrangements for growth in North America and the United Kingdom and the expansion of the sales organization across these locations. Prior to that, Mr. Hartwick held a variety of senior executive roles, gaining an extensive financial background in the energy, consumer products and capital markets areas, including the positions of Chief Executive Officer and Chief Financial Officer at Just Energy Group, Inc., Chief Financial Officer at Hydro One, Inc. and a partner at Ernst & Young, LLP. In each of these roles, Mr. Hartwick participated in the expansion and growth of the businesses and the establishment of financial platforms to support that growth. Mr. Hartwick also serves on the Board of Directors of Atlantic Power Corporation and Spark Energy, Inc., as well as the Board of Governors for Trent University, his alma mater. Mr. Hartwick earned his Honors of Business Administration Degree from Trent University, Peterborough, Ontario and is a certified public accountant.
Mr. Hartwick serves on the Audit and Nominating and Corporate Governance committees. Since his appointment in July of 2015, he has a 100% attendance record for all Board and committee meetings on which he serves. |
Qualifications, Experience, Key Attributes and Skills:
Through Mr. Hartwick’s senior executive positions, including the roles of chief executive officer and chief financial officer, he brings leadership, risk management, and strategic planning experience to the Board. Mr. Hartwick’s in-depth knowledge of financing initiatives as a senior executive in North American markets provides the Board with proficiencies to support business development, growth strategies and expenditure plans. Mr. Hartwick’s experience as a director of other publicly-traded companies enables him to provide insights into a variety of strategic planning, risk management, compensation, finance and governance practices. Mr. Hartwick’s leadership in the energy industry and financial sector make him a valued advisor and highly qualified to serve as a key member of the Board, Audit Committee, and Nominating and Corporate Governance Committee.
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Gary R. Johnson
Age: 69
Director Since: 2007
Director Class: Class I
Expiration of Term: 2017 | | Most recently, Mr. Johnson was Vice President and General Counsel of Xcel Energy and its wholly-owned subsidiary, Northern States Power Company. Xcel Energy, through its subsidiaries, is a leading electric and natural gas utility company offering a comprehensive portfolio of energy-related products and services to customers throughout the western and midwestern United States. Mr. Johnson occupied this position from 2000 until his retirement in 2007. From 1989 to 2000, Mr. Johnson was Vice President and General Counsel of Northern States Power Company, the predecessor to Xcel Energy. He holds a bachelor’s degree in history from the University of Minnesota and a Masters in Public Administration degree from the Ohio State University. Mr. Johnson is a graduate of the University of Minnesota Law School.
Mr. Johnson is the Board’s Lead Director. He serves on the Compensation and Nominating and Corporate Governance committees and has a 100% attendance record for all 2015 Board and committee meetings on which he serves. |
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Qualifications, Experience, Key Attributes and Skills:
Through his distinguished career as an executive officer and general counsel at Xcel Energy and Northern States Power Company, Mr. Johnson gained a broad understanding of the business, industry, legal issues and regulatory landscape of the electrical utility industry. Serving as Lead Director on the Board and the Chairman of the Nominating and Corporate Governance Committee, Mr. Johnson uses his vast knowledge to provide a valuable perspective that assists the Board in its understanding of current legal and regulatory issues facing us and the industry.
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Jack L. Alexander
Age: 68
Director Since: 2007
Director Class: Class II
Expiration of Term: 2018 | | Mr. Alexander retired from MidAmerican Energy Company (“MidAmerican”) in 2005 and provided advisory and consulting services to MidAmerican until 2007. Prior to his retirement, Mr. Alexander spent 32 years serving in various roles with MidAmerican from 1973 to 2005. He was Senior Vice President of Supply and Marketing from 2002 to 2005 and was responsible for electric generation, energy trading, marketing and sales, risk management and legislation and regulation. Prior to this, Mr. Alexander held roles in engineering, corporate planning, human resources and energy delivery. He has over 13 years of experience leading MidAmerican’s human resources function, with responsibility for labor relations, contract negotiations, compensation and benefits, employment and employee development and training. Mr. Alexander holds a Bachelor of Science degree in business administration and economics from Morningside College.
Mr. Alexander serves on the Audit and Compensation committees and has a 100% attendance record for all 2015 Board and committee meetings on which he serves. |
Qualifications, Experience, Key Attributes and Skills:
Mr. Alexander’s background as a senior executive at MidAmerican and varied industry experience in transmission and distribution, electric generation, energy trading, marketing and sales, risk management, legislation and regulation, engineering, corporate planning and human resources provide him with an extremely broad and fundamental understanding related to our operations and organizational structure, our utility customers and our transmission and distribution business sector. He also has extensive experience with mergers and acquisitions including asset valuations and due diligence on a number of utility acquisitions. His knowledge and experience is extremely relevant to Mr. Alexander’s role as a member on the Audit Committee. While at MidAmerican, Mr. Alexander was responsible for the construction of over $2.0 billion of new electric generation in the state of Iowa including one of the world’s largest land-based wind energy projects. He also has experience serving as MidAmerican’s chief company spokesperson on a number of IBEW labor contract negotiations. His human resources leadership and experience in labor relations, contract negotiations, compensation and benefits, employment and employee development and training provide a unique and thorough perspective that is of great value in Mr. Alexander’s role on our Compensation Committee.
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| | |
Donald C.I. Lucky
Age: 53
Director Since: 2015
Director Class: Class II
Expiration of Term: 2018 | | Mr. Lucky is a construction attorney and managing partner at the century-old Alberta-based law firm of Reynolds Mirth Richards & Farmer LLP, where he has practiced since 1988. He has advised contractors and owners in major power projects, including oil and gas, solar, wind and carbon capture, EPC mega projects and more than 80 public-private finance infrastructure projects (hospitals, penitentiaries, water treatment and transportation) throughout Canada, the United States and Australia. Mr. Lucky has appeared as counsel at all levels of the Courts of Alberta and the Northwest Territories and in mediations and arbitrations as counsel and adjudicator. He also teaches Construction Law at the University of Alberta and has received numerous industry awards and recognitions in the area of construction law and otherwise, including being inducted in 2009 into the Canadian College of Construction Lawyers. Mr. Lucky obtained his Bachelor of Commerce and Bachelor of Law degrees from the University of Alberta, and his Masters of Law degree from the University of Cambridge.
Mr. Lucky serves on the Compensation and Nominating and Corporate Governance committees. Since his appointment in July of 2015, he has a 100% attendance record for all Board and committee meetings on which he serves. |
Qualifications, Experience, Key Attributes and Skills:
Throughout his career as an attorney in the construction industry, Mr. Lucky has a detailed understanding of the legal issues and risks of our current and expanding markets. Mr. Lucky’s perspective as an academic and his involvement in various energy projects in multiple countries provides the Board with valuable new ideas and perspectives. Mr. Lucky’s experience in the construction industry with the wealth of knowledge he has gained advocating for contractors gives the Board significant insight for our strategic planning while presenting the Board an understanding and awareness of the opportunities and challenges that present the Company.
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Maurice E. Moore
Age: 65
Director Since: 2010
Director Class: Class II
Expiration of Term: 2018 | | Since 2009, Mr. Moore has been Managing Director and sole proprietor of Primus Financial Group, LLC, a firm providing leasing and project finance advisory services to companies engaged in the renewable energy business. With more than 25 years of professional financial experience, Mr. Moore has an extensive background in originating, negotiating, syndicating and financing large capital projects in various business segments, including the electric utility and renewable energy industries. Prior to his position at Primus Financial Group, Mr. Moore served in senior leadership roles with Chase Equipment Leasing, Inc. from 2006 to 2009, a division of JP Morgan Chase offering a variety of financing and lease solutions to help businesses acquire the equipment needed for daily operations; and JP Morgan Capital Corporation, and its predecessor companies, from 1986 to 2005. Prior to serving on the Board, Mr. Moore served on the boards for West Suburban Medical Center and Community Chest of Oak Park & River Forest, Illinois, and was formerly Finance Advisory Committee Chairman for Oak Park & River Forest High School in Illinois. Mr. Moore earned a Bachelor of Science degree in civil engineering from Brown University and a Masters of Business Administration degree from Harvard Business School.
Mr. Moore serves on the Audit and Nominating and Corporate Governance committees and has a 96% attendance record for all 2015 Board and committee meetings on which he serves. |
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Qualifications, Experience, Key Attributes and Skills:
Mr. Moore has substantial leadership, financial services and capital expenditures experience, and has advised a variety of clients engaged in energy and renewable energy markets. His skills in originating, negotiating and financing large capital projects in both similar and varying environments serve as a guiding force concerning our capital investment and expenditure plans. In addition, his financial advisory involvement in the renewable energy space provides a diverse range of insight that contributes to the Board’s understanding of the markets in which we operate. Mr. Moore’s business acumen and participation on the Audit and Nominating and Corporate Governance Committees help to broaden our exposure and understanding of successful financial practices and growth strategies.
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BACKGROUND OF SOLICITATION
On November 20, 2015, Arnaud Ajdler, Managing Partner of Engine Capital, spoke with William A. Koertner, the Company’s Chairman, President and CEO, and Richard S. Swartz, Jr., the Company’s Senior Vice President and Chief Operating Officer, by phone. Messrs. Koertner and Swartz believed this call to be a typical investor call with an institutional shareholder. As part of the discussion, Mr. Ajdler asked general questions about the Company’s business and industry outlook. The discussion then turned to the Company’s stock performance, and Mr. Ajdler inquired about why the Company was not returning capital to stockholders or considering selling itself. As Messrs. Koertner and Swartz discussed these issues with Mr. Ajdler, they developed the sense, based on Mr. Ajdler’s responses and reactions, that Mr. Ajdler was not interested in a dialogue on these issues, but rather advocating for these actions. Messrs. Koertner and Swartz also noted that Mr. Ajdler did not assign any risk to the disruptive effect that a price discovery process could potentially have on the Company, nor did he see any merit in waiting for any market recovery before initiating a price discovery process. During this conversation, Mr. Arnaud made no mention of communicatingyear ended December 31, 2022. Beginning with the Board ormeeting in April 2022 our non-employee directors received one-quarter of any intention to nominate directors.
On December 8, 2015, the Board received a letter from Engine Capital (the “December 8 Letter”) recommending thatannual cash retainer and one-quarter of the Company take certain corporate actions including, among other things, undertaking an evaluationadditional cash compensation for serving as the Chair of a saleboard committee or as Board Chair at each quarterly board meeting:
| | | | | | | | | | | |
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2)(3) ($) | Total
($) |
| Bradley T. Favreau | 80,000 | | 109,952 | | 189,952 | |
Kenneth M. Hartwick(4) | 126,875 | | 159,913 | | 286,788 | |
| Ajoy H. Karna | 60,000 | | 109,953 | | 169,953 | |
| William A. Koertner | 20,000 | | — | | 20,000 | |
| Jennifer E. Lowry | 80,000 | | 109,952 | | 189,952 | |
Donald C.I. Lucky(5) | 90,625 | | 109,952 | | 200,577 | |
Maurice E. Moore(6) | 98,125 | | 109,952 | | 208,077 | |
| Shirin O'Connor | 80,000 | | 109,952 | | 189,952 | |
William D. Patterson(7) | 94,375 | | 109,952 | | 204,327 | |
(1)This column reflects the cash fees earned by directors in 2022, including fees that were paid in the form of common stock. Our non-employee directors have the option of receiving between 10% and 60% of their annual cash retainer in the form of our common stock. In addition to fees received, the amounts in this column include the cash equivalent of the Company orstock received by a levered recapitalizationdirector making this election. In 2022, none of our directors elected to received shares of stock as a portion of their annual retainer.
(2)Messrs. Favreau, Lucky, Moore and Patterson, and Mses. Lowry and O'Connor were each awarded 1,195 Restricted Stock Units and Mr. Hartwick was awarded 1,738 Restricted Stock Units, on April 21, 2022. Mr. Karna was awarded 1,425 Restricted Stock Units, on May 2, 2022. The amounts in this column represent the Company,aggregate grant date fair value of those awards in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Compensation-Stock Compensation Topic 718, excluding the proceeds used to fund a one-time large special dividend to shareholders or a large tender offer, and a change in future capital allocation. The December 8 Letter also notified the Board that Engine Capital planned to nominate directorseffect of estimated forfeitures. These awards vest at the Annual Meeting prior toend of a one-year period. These amounts are based upon the nomination deadline. Engine Capital filed the December 8 Letter with the SECclosing stock price on December 9, 2015.After receipt of the December 8 Letter, the Company engaged an investment banking firm to assist the Company and the Board in the evaluation of strategic alternatives, which included the suggestions included in the December 8 Letter.
On December 15, 2015, Mr. Koertner received an e-mail from Mr. Ajdler (the “December 15 E-Mail”), in which Mr. Ajdler claimed to have communicated with many of the Company’s stockholders about the Company’s performance and the December 8 Letter. The e-mail also indicated that Engine Capital is “aware of strategic buyers as well as private equity firms that have an interest in [MYR Group] but don’t want to do the first move and are waiting for the company to start a process,” though the e-mail failed to identify specifically any parties who had purportedly expressed such interest. The e-mail also reiterated Engine Capital’s intent to nominate directors to the Board once the nomination window opened.
On January 5, 2016, the Company published investor presentation materials on its website and filed the investor presentation materials with the SEC.
On January 6, 2016, at the beginning of the nomination window specified in the Company’s By-Laws, the Company received a letter from Engine Capital notifying the Company of Engine Capital’s intention to nominate Mr. Ajdler, Grant C. McCullagh and John P. Schauerman for election to the Board at the Annual Meeting. The letter also indicated that, as of the date of the letter, Engine Capital beneficially ownedgrant for these awards and may not correspond to the actual value that may be recognized. Assumptions used in the aggregate 956,690 sharescalculation of the Company’s common stock. Exhibit Athese amounts are included in footnote 15 to the letter, which lists Engine Capital’s transactions in the Company’s securities during the last two years, indicates that Engine Capital acquired these shares between the months of November and December, 2015.
On January 7, 2016, Mr. Koertner received an e-mail from Mr. Ajdler, in which Mr. Ajdler, among other things, reiterated his views from the December 15 E-Mail, and notified Mr. Koertner of Engine Capital’s plan to issue a press release announcing Mr. Ajdler, Mr. McCullagh and Mr. Schauerman as Engine Capital’s slate of director nominees. Later that same day, Engine Capital issued the press release and filed it with the SEC.
On January 16, 2016, representatives of the Company sent the Company’s D&O Questionnaire, which is required to be completed by all members of the Board and nominees to the Board, to Engine Capital’s representatives, so that Engine Capital’s proposed director nominees could complete the questionnaire and be evaluated by the Board in the same manner that the Board evaluates its own nominees in accordance with the Board’s Corporate Governance Principles. In e-mail communications exchanged between representatives of Engine Capital and representatives of the Company between January 19, 2016 and January 29, 2016,
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representatives of Engine Capital responded that, because there is no express requirement in the Company’s By-Laws, Engine Capital’s nominees would not complete the D&O Questionnaire, despite the Board’s practices and express policies to evaluate all nominees in the same manner.
On January 20, 2016, Mr. Koertner and Kenneth M. Hartwick, an independent director of the Board and member of the Board’s Nominating and Corporate Governance Committee, met with Mr. Ajdler. The purpose of the meeting was to listen to Engine Capital’s views raised in its prior communications to the Company. As part of the discussion, Messrs. Koertner and Hartwick requested additional information to better understand the basis of Engine Capital’s claim that the Company “could easily carry leverage up to 3x EBITDA and still have plenty of bonding capacity,” but Mr. Ajdler refused to provide any information to support this claim. In addition, Messrs. Koertner and Hartwick discussed with Mr. Ajdler Engine Capital’s views on running a price discovery processour audited consolidated financial statements for the Company. Mr. Ajdler expressed the view that there would be zero downside to running a price-discovery process. Messrs. Koertner and Hartwick also requested information about the companies or private equity firms that Engine Capital claimed had contacted it to express an interest in acquiring the Company. Again, Mr. Ajdler would not identify any company or private equity fund that had purportedly communicated any such interest.
On January 20, 2016, the Board held a special meeting via teleconference with management and Company advisors to discuss the meeting between Messrs. Koertner and Hartwick with Mr. Ajdler earlier the same day.
On January 25, 2016, Mr. Ajdler sent an e-mail to Mr. Hartwick, in which he continued to advocate for a sale of the Company.
On February 4, 2016, the Board convened a regularly scheduled meeting. At the meeting, the Board discussed the Company’s forecast update and capital budget and reviewed the Company’s capital structure and certain strategic alternatives with management and Company legal and financial advisors. Following these discussions, the Board determined that it would be in the best interests of the Company and its shareholders to authorize a $75 million increase to the Company’s existing $67.5 million share repurchase program, as well as to approve new financing strategies to support the Company’s future equipment needs. In addition, the Board reviewed Engine Capital’s statements and requests and explored options in order to reach an agreement with Engine Capital without the distraction and expense of a proxy contest. The Board authorized Company management to contact representatives of Engine Capital in order to propose a solution that provided Engine Capital the right to designate a nominee for election to the Board.
On February 5, 2016, representatives of the Company contacted representatives of Engine Capital by telephone to discuss entering into a mutual confidentiality agreement so that the Company and Engine Capital could discuss a settlement and avoid a costly proxy contest. Shortly thereafter, representatives of the Company sent a confidentiality agreement to representatives of Engine Capital. Other than a query on February 5, 2016, to clarify a term in the confidentiality agreement, Engine Capital and its representatives did not respond to the proposed confidentiality agreement until February 8, 2016, when Engine Capital’s representatives proposed certain minor revisions to the confidentiality agreement, which the Company agreed to accept.
On February 8, 2016, Engine Capital and the Company entered into a confidentiality agreement so that they could begin discussing settlement terms. Shortly thereafter, Company representatives had a call with representatives of Engine Capital to discuss the Company’s offer to enter into an agreement that would include the addition of one of Engine Capital’s director nominees or one mutually agreed independent nominee should customary screening by the Board’s Nominating and Corporate Governance Committee determine that the Engine Capital nominees did not satisfy the criteria for service on the Board. Engine Capital rejected the Company’s offer and demanded that the Company appoint two of Engine Capital’s nominees to the Board and that the Company publicly announce a price discovery process for the potential sale of the Company.
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On February 9, 2016, the Company issued a press release announcing the $75 million increase to its existing share repurchase program and the Company’s new financing strategies. In addition, the Company disclosed Engine Capital’s rejection of the Company’s offer.
On February 16, 2016, Engine Capital issued a press release expressing its views regarding the Company’s announced expansion of its share repurchase program and its new financing strategies. In addition, Engine Capital continued to advocate for a sale of the Company.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers, directors and persons who own more than 10% of our common stock to report their ownership of our common stock and changes in that ownership.
We reviewed copies of reports filed pursuant to Section 16(a) of the Exchange Act and written representations from reporting persons that all reportable transactions were reported. Based solely on that review, we believe that during the fiscal year ended December 31, 2015, all filings required2022 included in our 2022 Annual Report on Form 10-K (the "2022 Form 10-K").
(3)As of December 31, 2022, Messrs. Favreau, Lucky, Moore and Patterson and Mses. Lowry and O'Connor each held 1,195 unvested Restricted Stock Units, Mr. Hartwick held 1,738 unvested Restricted Stock Units; and Mr. Karna held 1,425 unvested Restricted Stock Units.
(4)Includes cash compensation of $46,875 for Mr. Hartwick's service as Board Chair.
(5)Includes cash compensation of $10,625 for Mr. Lucky's services as the Chair of the NESG Committee.
(6)Includes cash compensation of $18,125 for Mr. Moore's service as the Chair of the Audit Committee.
(7)Includes cash compensation of $14,375 for Mr. Patterson's service as the Chair of the Compensation Committee.
Director Stock Ownership
The Board has established stock ownership guidelines for our non-employee directors to reinforce the importance of aligning the interests of our executive officersdirectors and shareholders. The guidelines for non-employee directors generally require directors to meet an equity ownership level with a value equal to or greater than four times the annual cash retainer within five years from the date the director was appointed to the Board. A non-employee director has three years to meet an incremental increase in the minimum stock ownership level caused by an increase in the annual retainer. We have adopted retention requirements with respect to these stock ownership guidelines whereby directors are expected to retain shares received through the vesting of Restricted Stock Units if they have not satisfied the required equity ownership level.
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MYR GROUP INC. | 2023PROXY STATEMENT | 25 |
The following table sets forth each non-employee director’s ownership as of February 23, 2023 for stock ownership guidelines purposes:
| | | | | | | | | | | | | | | | | |
| Name | Share Ownership(1) (#) | Value Of Share Ownership(2) ($) | Ownership
Guideline | Current
Ownership
Multiple |
| Bradley T. Favreau | 14,270 | | 1,599,810 | | 4.0 × | 20.0 | | x |
| Kenneth M. Hartwick | 20,780 | | 2,329,646 | | 4.0 × | 29.1 | | x |
Ajoy H. Karna (3) | 1,425 | | 159,757 | | 4.0 × | 2.0 | | x |
| Jennifer E. Lowry | 11,114 | | 1,245,991 | | 4.0 × | 15.6 | | x |
| Donald C.I. Lucky | 17,506 | | 1,962,598 | | 4.0 × | 24.5 | | x |
| Maurice E. Moore | 31,186 | | 3,496,262 | | 4.0 × | 43.7 | | x |
| Shirin O'Connor | 4,515 | | 506,177 | | 4.0 × | 6.3 | | x |
| William D. Patterson | 31,750 | | 3,559,493 | | 4.0 × | 44.5 | | x |
(1)The numbers of equivalent shares in this column were timely madecalculated in accordance with the Exchange Act.stock ownership guidelines and may differ from owned shares for SEC reporting purposes and from the Ownership of Equity Securities Table.
(2)The amounts in this column were calculated in accordance with the stock ownership guidelines by multiplying the holdings in the Share Ownership column by either the value of the stock on the date of grant or the highest reported share price for the year ended December 31, 2022 of $112.11, whichever is higher.
(3)Mr. Karna's appointment to the Board was effective on May 2, 2022.
Trading Restrictions
Our insider trading policy, among other things, prohibits our directors from hedging the economic risk of their stock ownership by purchasing or using, directly or indirectly, through family members or other persons or entities, financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), holding shares of the Company’s common stock in a margin account, pledging shares as collateral for a loan or short-selling the Company’s securities. The policy also prohibits trading in our securities outside of specified window periods and without pre-clearance.
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| 26 | MYR GROUP INC. | 2023 PROXY STATEMENT |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Review, Approval and Ratification of Transactions with Related Persons
We have a written policy and procedures for the review, approval and ratification of transactions with related persons, which have been adopted by the Board. Under our policy, the definition of related persons includes, among others, any person who is or was, during the last fiscal year, an executive officer, director or nominee for director of the Company, any shareholder owning more than 5% of any class of our voting securities, or an immediate family member of any such person.
It is the policy of the Company to prohibit related person transactions unless the Company’s Audit Committee has determined in advance of the Company or a subsidiary entering into the transaction that it will be conducted on terms that are fair to the Company or the subsidiary and the transaction is in the best interests of the Company or the subsidiary.
Pursuant to our policy and the SEC and Nasdaq reporting rules, there were no reported transactions in 20152022 that qualified as a related person transaction. As a result, no reported transaction was referred to the Audit Committee or any other committee of the Board for review and no related person transaction was required to be disclosed in the Company’s filings.
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MYR GROUP INC. | 2023PROXY STATEMENT | 27 |
COMPENSATION COMMITTEE MATTERS
COMMITTEE INDEPENDENCE AND RESPONSIBILITIES
The Board established the standing Compensation Committee in accordance with our By-Laws. The Board has determined that each member of the Compensation Committee qualifies as an “independent” director as defined under the Nasdaq rules
and, as a “non-employee director” as defined in Rule 16b-3(b)(3) under the Exchange
Act and as an “outside director” within the meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the “IRS Code”).Act.
The Compensation Committee firmly believes that the compensation of our executive officers should emphasize paying for performance that contributes to our success while encouraging behavior that is in our stockholders’shareholders’ long-term best interests. The Compensation Committee is responsible for assisting the Board in overseeing the Company’s compensation and employee benefit plans and practices, including its executive compensation plans and its incentive-compensation and equity-based plans. To represent and assist the Board in its oversight of the Company’s compensation practices and under its charter, the Compensation Committee performs, among others, the following tasks:
•reviews and recommends changes to the Company’s executive compensation philosophy, general compensation programs and executive benefit plans, including incentive-compensation programs and equity-based plans;
•reviews and recommends any changes to the goals and objectives of the Company’s executive compensation plans;
•annually evaluates annually the performance of named executive officers in light of the goals and objectives of the Company’s executive compensation plans, and determines and approves, or recommends to the Board for its approval, the compensation levels of named executive officers based on this evaluation;
•evaluates the appropriate level of compensation for Board and committee service by non-employee members of theon our Board and determines and approves, or recommends to the Board for its approval, the level of compensation for such service;
•establishes and reviews stock ownership guidelines for directors and officers;
•oversees management succession, in accordance with the Board’s Corporate Governance Principles; and
•reviews and recommends to the Board the frequency with which the Company will conduct Say-on-Pay Votes and reviews and approves proposals regarding the Say-on-Pay Vote and the frequency of the Say-on-Pay Vote to be included in the Company’s proxy statement.
The Compensation Committee does not generally delegate any of its authority to other persons, although it has the power to delegate authority to subcommittees as it deems appropriate.
The “Compensation Discussion and
Analysis,Analysis” included in this Proxy Statement goes into further detail about the Compensation Committee’s processes for determining the appropriate levels of compensation for
executive officersNEOs and directors.
Compensation Consultants
COMPENSATION CONSULTANTS
In order to fulfill its duties, the Compensation Committee has the authority to retain, at the Company’s expense, its own advisors and compensation consultants and to approve their compensation. These external compensation consultants provide the Compensation Committee with guidance on compensation trends, program designs and market research and advice and recommendations on both executive and director compensation. They also help evaluate the competitive position of
named executive officers’ and directors’ compensation and provide advice on incentive award programs. Their findings are discussed in more detail in
the Compensation“Compensation Discussion and Analysis.
”
Compensation consultants are engaged by and report directly to the Compensation Committee on executive compensation matters and meet separately with the Compensation Committee outside the presence of management. Interaction between the compensation consultants and management is generally limited to providing necessary information and data.
The
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| 28 | MYR GROUP INC. | 2023 PROXY STATEMENT |
As it has in prior years, the Compensation Committee hasdirectly retained Mercer to serve as its executive and director compensation consultant. The Compensation Committee has reviewed the independence of Mercer’s advisory role relative to the six consultant independence factors adopted by the SEC to guide listed companies in determining the independence of their compensation consultants, legal counsel and other advisers. Following its review, the
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Compensation Committee concluded that Mercer hashad no conflicts of interest and providescould provide the Compensation Committee with objective and independent executive and director compensation advisory services.
advice. Mercer did not provide any services to the Company during 2022 other than those matters for which it was engaged by the Compensation Risk Assessment
Committee.
MANAGEMENT SUCCESSION PLANNING AND DIVERSITY
The Compensation Committee regularly reviews and provides input on management’s succession planning and talent management. This review includes an ongoing evaluation of management’s talent and leadership at both the workforce and senior management levels as well as an endorsement of extensive training and professional development programs for all employees. The Compensation Committee believes that a diverse workforce strengthens the Company and, accordingly, considers the importance of diversity in its review of management’s succession planning and talent management.
COMPENSATION RISK ASSESSMENT
In reviewing and approving compensation programs, the Compensation Committee considers whether the programs are likely to promote risk-taking behavior that could adversely affect the Company. The Compensation Committee has designed the Company’s compensation programs, including the Company’s incentive compensation plans, with specific features to address potential risks while rewarding employees for achieving long-term financial and strategic objectives through prudent business judgment and appropriate risk taking. The following elements have been incorporated into our programs available for our executive officers:
| • | A Balanced Mix of Compensation Components — The target compensation mix for the Company’s executive officers is composed of salary, annual cash incentives and long-term equity incentives, representing a mix that is not overly weighted toward short-term cash incentives. |
| • | Multiple Performance Factors — The Company’s incentive compensation plans use multiple Company-wide metrics, which encourage retention of executives and focus on the achievement of objectives for the overall benefit of the Company. The incentive compensation granted under the plans in 2015 included: |
•A Balanced Mix of Compensation Components — The target compensation mix for the Company’s executive officers is composed of base salary, annual cash incentives and long-term equity incentives, representing a mix that is not overly weighted toward short-term cash incentives.
•Multiple Performance Metrics — The Company’s incentive compensation plans use multiple Company-wide metrics, which encourage retention of executives and focus on the achievement of objectives for the overall benefit of the Company. The incentive compensation granted under the plans in 2022 included:
◦Annual cash incentive compensation under the MIP that was dependent on multiple performance metrics, including pretaxpre-tax income and safety performance.
Forty percent◦40% of the long-term incentive compensation granted under the LTIP in the form of time-based restricted stockRestricted Stock Units with three-year ratable vesting.
Sixty percent◦60% of the long-term incentive compensation granted under the LTIP in the form of performance sharesawards that will cliff-vest, if earned, on December 30, 2024. The amount of the grant was allocated evenly, based on their grant date fair value, between twoawards that will pay out based on the performance measures of return on invested capital (“ROIC”) and relative total shareholder return (“TSR”), as compared to a group of peer companies, overcompanies.
•Capped Incentive Awards — Annual cash incentive awards are capped at 200% of salary for our CEO and lesser amounts for our other executive officers. The number of performance shares that can be earned is capped at 200% of target for all executive officers.
•Clawback Provisions — Long-term incentive award agreements contain clawback provisions, which make all such equity awards subject to the Company’s right to recover the award in the event that it is determined that a three-yearparticipant has engaged in conduct that contributed to any material restatement of our earnings.
•Stock Ownership Guidelines — Stock ownership guidelines call for significant share ownership for our executive officers.
•Stock Retention Policy — Executive officers are expected to retain the net shares received through the vesting of Restricted Stock Units and performance period.shares if they have not reached the applicable stock ownership guidelines.
| • | Capped Incentive Awards — Annual cash incentive awards are capped at 200% of salary for our CEO and lesser amounts for our other named executive officers. The number of performance shares that can be earned is capped at 200% of target for all named executive officers. | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 29 |
| • | Clawback Provisions — LTIP award agreements contain a clawback provision, which makes all LTIP awards subject to the Company’s right to recover the award in the event that it is determined that a participant engaged in conduct that contributed to any material restatement of our earnings. |
| • | Stock Ownership Guidelines — Stock ownership guidelines call for significant share ownership for our named executive officers. |
| • | Stock Retention Policy — Executive officers are expected to retain the net shares received through an exercise of stock options and the vesting of restricted stock and performance shares if they have not reached the applicable stock ownership guidelines. |
| • | Anti-hedging and Pledging Policy — Executive officers are expected to comply with our insider trading policy that prohibits our named executive officers from hedging the economic risk of their stock ownership and holding shares of the Company’s common stock in a margin account or pledging shares as collateral for a loan. |
•Anti-Hedging and Pledging Policy — Executive officers are expected to comply with our insider trading policy that prohibits our executive officers from hedging the economic risk of their stock ownership and holding shares of the Company’s common stock in a margin account or pledging shares as collateral for a loan.
The Compensation Committee annually performs an assessment of compensation-related risks for all of our compensation policies and programs. These assessments include a review of multiple factors including, but not limited to, the design of compensation policies and programs, controls and approval processes and the discretion provided in the oversight of these programs. Periodically, the Compensation Committee retains outside consultants to assist in these assessments.
In 2022, the Compensation Committee retained Mercer to conduct an independent assessment of compensation-related risks for all of our policies and programs. Mercer’s assessment included a review of multiple factors including, but not limited to, the design of compensation policies and programs, controls and approval processes and the negative discretion provided in the oversight of these programs. Periodically,Based on Mercer’s assessment and the Compensation Committee retains outside consultants to assist in these assessments. In 2015,Committee’s independent assessment of compensation related risks, the Compensation Committee concluded that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company. In the event that the Company’s risk profile was to change, the Compensation Committee would consider appropriate adjustments in policies and practices.
COMPENSATION COMMITTEE REPORT
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Compensation Committee Report for the Year Ended December 31, 2015
The Compensation Committee oversees our compensation program on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation“Compensation Discussion and AnalysisAnalysis” included in this Proxy Statement.
In reliance on the review and discussion referred to above, the Compensation Committee recommended to the Board that the Compensation“Compensation Discussion and AnalysisAnalysis” be included in our Proxy Statement to be filed with the SEC in connection with our 2023 Annual Meeting and incorporated by reference in ourthe Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed2022.
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| Compensation Committee: | William D. Patterson, Chair
Bradley T. Favreau
Donald C.I. Lucky
Shirin O'Connor |
The information contained in the above Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC,
(“2015 Form 10-K”nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “Securities Act”)
., or the Exchange Act, as amended, except to the extent that MYR Group specifically incorporates it by reference in such filing. | | |
| | |
Compensation Committee:30 | | Larry F. Altenbaumer, Chair |
| | Jack L. Alexander |
| | Henry W. Fayne |
| | Donald C.I. Lucky |
| | Gary R. Johnson |
| | William D. PattersonMYR GROUP INC. | 2023 PROXY STATEMENT |
COMPENSATION
We use COMMITTEE LETTER
Dear Fellow Shareholder,
2022 saw the company build on its efforts to grow responsibly while maintaining a combination of cashfocus on safety and equity-based compensation to attractfostering lasting relationships.
Continuing that growth in the future requires attracting, retaining and retain non-employee directors and to compensate such directors for their service on the Board in amounts that are commensurate with their Board and committee responsibilities.incentivizing quality talent. The Compensation Committee reviews directorbelieves that the design of its compensation periodicallyprograms helps accomplish that and recommends changesis an important driver of shareholder value creation. Our programs reward success when management team’s efforts build shareholder value and limit compensation when our performance expectations are not met. We have designed our compensation programs to incentivize employees at all levels within the Board when it deemsorganization and to specifically reward our key leaders for their contributions to both our short-term and long-term performance.
We believe that the pay of our executive officers should be linked to our long-term performance. For this reason our compensation programs are designed to reward strong financial performance and safe operations. We also recognize the importance of acquiring and retaining the very best employees, and we regularly review our compensation programs to ensure we are competitive with the market for quality talent. In addition, we offer extensive training and professional development programs for all employees to provide them appropriate. with opportunities for meaningful career paths.
The Compensation Committee
annually reviews the performance metrics and the
Board consider analyses prepared by Mercerequity compensation vehicles used in our long-term equity compensation program to confirm they are aligned with the goals we believe will drive shareholder value. Following our analysis for 2022, we concluded that the financial performance metric of
reported non-employee directorreturn on invested capital and the market-based metric of relative total shareholder return continued to be appropriate. We believe these metrics align the long-term equity compensation
practices at our peer companies and generally seek to target our non-employee directors’ total compensation (defined as total cash compensation and total equity compensation) at or near the median total compensation of the non-employee directorsopportunities of our
peers.executive officers with shareholder value creation. In Octoberaddition to this focus on long-term value, we also provide short-term incentives to employees for both financial and safety performance.
In addition to our annual “Say-on-Pay” proposal, we invite our shareholders to provide feedback on our executive compensation programs, as we believe these conversations have improved and will continue to improve our programs. With the positive responses to our “Say-on-Pay” votes over recent years and based on our annual review of 2013, atbest practices with our independent compensation consultant, we have maintained our fundamental compensation programs and structures. Through these review processes and shareholder feedback, we continue to endeavor to improve these programs with the requestobjective of our Compensation Committee, Mercer performed and presented toimproving shareholder value.
On behalf of the Compensation Committee, a study
William D. Patterson
Chair of
reported non-employee director compensation practices (the “2013 Mercer Non-Employee Director Compensation Study”). In 2014, the Compensation Committee
considered this study and recommended to the Board, and the Board approved, an increase in cash compensation for our non-employee directors. The 2013 Mercer Non-Employee Director Compensation Study also recommended an increase in equity awards (from $60,000 to $75,000), and in 2015, the Compensation Committee recommended to the Board, and the Board approved, an increase in equity awards as well as an increase in the number of meetings that are included in the annual cash retainer. Compensation for our non-employee directors for service on the Board and Board committees for 2015 was as follows:annual cash retainer of $57,000 for each U.S. non-employee member of the Board, with such amount to include seven in-person Board meetings and ten telephonic Board meetings;
a cash retainer of $42,750 for each Canadian non-employee member of the Board, which reflects the pro-rated portion of the annual cash retainer of $57,000 for their length of service from the date of their appointment, with such amount to include the pro-rated portion of in-person and telephonic Board meetings; | | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 31 |
for attendance above the number of meetings included in the cash retainer, cash compensation of $2,000 for each meeting of the Board attended in person and $1,000 for each meeting attended telephonically;cash compensation of $1,000 for attendance at each meeting of any committee (including any subcommittee), whether in person or by telephone;
additional $10,000 annually for each chairperson of the Audit and Compensation Committees, and an additional $5,000 annually for the chairperson of the Nominating and Corporate Governance Committee;
for U.S. directors, equity compensation in the form of time-based restricted stock grants with a value of approximately $75,000. Each grant vests ratably over a three-year period. Vesting of these time-based restricted stock grants may be accelerated upon a change in control, as defined in the LTIP, and will be accelerated should a non-employee director resign from the Board during the vesting period, provided that such resignation is not due to the director’s breach of his or her fiduciary duty;
for Canadian directors, equity compensation in the form of time-based phantom stock unit grants with tandem dividend equivalents with a value of approximately $56,250, which reflects the pro-rated portion of an annual grant amount of $75,000 for their length of service from the date of their appointment. Each grant is to vest ratably over a three-year period. Vesting of these time-based phantom stock unit grants may be accelerated upon a change in control, as defined in the LTIP, and will be accelerated should a non-employee director resign from the Board during the vesting period, provided that such resignation is not due to the director’s breach of his or her fiduciary duty; and
reimbursement for reasonable costs and expenses incurred in connection with attendance at Board and committee meetings.
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Director Stock Ownership
In 2011, the Board established stock ownership guidelines for our non-employee directors to reinforce the importance of aligning the interests of the members of the Board with the interests of our stockholders. The guidelines require non-employee directors to meet an equity ownership level with a value equal to or greater than four times the annual retainer within five years from the later of the enactment of the guidelines (March 31, 2011) and the date the non-employee director was appointed to the Board. The non-employee director has three years to meet the incremental increase in the new stock ownership level caused by an increase in the annual retainer. We have adopted retention requirements with respect to these stock ownership guidelines whereby non-employee directors are expected to retain net shares received through an exercise of stock options or the vesting of restricted stock or phantom stock units if they have not satisfied the required equity ownership level.
The following table sets forth each non-employee director’s ownership as of February 24, 2016 for stock ownership guidelines purposes:
| | | | | | | | |
| Name | | Share
Ownership(1) | | Market Value
($)(2) | | Ownership
Guideline | | Current
Ownership
Multiple |
| Jack L. Alexander | | | 14,024 | | | | 452,140 | | | | 4.0x | | | | 7.9x | |
| Larry F. Altenbaumer | | | 16,161 | | | | 521,037 | | | | 4.0x | | | | 9.1x | |
| Henry W. Fayne | | | 13,741 | | | | 443,016 | | | | 4.0x | | | | 7.8x | |
| Kenneth M. Hartwick(3) | | | — | | | | — | | | | 4.0x | | | | 0.0x | |
| Gary R. Johnson | | | 17,334 | | | | 558,854 | | | | 4.0x | | | | 9.8x | |
| Donald C.I. Lucky(3) | | | — | | | | — | | | | 4.0x | | | | 0.0x | |
| Maurice E. Moore | | | 11,848 | | | | 381,980 | | | | 4.0x | | | | 6.7x | |
| William D. Patterson | | | 13,455 | | | | 433,795 | | | | 4.0x | | | | 7.6x | |
| (1) | The amounts in this column were calculated in accordance with the stock ownership guidelines and include vested but unexercised stock options and exclude unvested restricted stock and phantom stock units. |
| (2) | The amounts in this column were calculated in accordance with the stock ownership guidelines based on the highest reported share price for the year ended December 31, 2015 of $32.24. |
| (3) | Mr. Hartwick’s and Mr. Lucky’s appointments to the Board were effective on July 29, 2015. Mr. Hartwick and Mr. Lucky were each granted 1,902 shares of phantom stock units on July 30, 2015, which vest ratably over the next three years. |
Insider Trading Policy
Our insider trading policy, among other things, prohibits our directors from hedging the economic risk of their stock ownership, holding shares of the Company’s common stock in a margin account or pledging shares as collateral for a loan. The policy also prohibits trading in our securities outside of specified window periods and without pre-clearance. The policy also prohibits short-selling of the Company’s securities.
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2015 DIRECTOR COMPENSATION TABLE
The following table sets forth the compensation earned by each of our non-employee directors for the fiscal year ended December 31, 2015:
| | | | | | |
| Name | | Fees Earned or
Paid in Cash
($)(1) | | Stock
Awards
($)(2) | | Total
($)(3) |
| Jack L. Alexander | | | 84,000 | | | | 74,971 | | | | 158,971 | |
| Larry F. Altenbaumer | | | 93,000 | | | | 74,971 | | | | 167,971 | |
| Henry W. Fayne | | | 81,000 | | | | 74,971 | | | | 155,971 | |
| Kenneth M. Hartwick(4) | | | 44,750 | | | | 56,242 | | | | 100,992 | |
| Gary R. Johnson | | | 88,000 | | | | 74,971 | | | | 162,971 | |
| Betty R. Johnson(5) | | | 81,000 | | | | 74,971 | | | | 155,971 | |
| Donald C.I. Lucky(4) | | | 44,750 | | | | 56,242 | | | | 100,992 | |
| Maurice E. Moore | | | 83,000 | | | | 74,971 | | | | 157,971 | |
| William D. Patterson | | | 94,000 | | | | 74,971 | | | | 168,971 | |
| (1) | Our non-employee directors have the option of receiving between 10% and 60% of their annual retainer in the form of our common stock. The amounts in this column include the cash equivalent of the stock received by a director making this election. In 2015, Mr. Johnson received 972 shares as a portion of his annual retainer. |
| (2) | Messrs. Alexander, Altenbaumer, Fayne, Johnson, Moore and Patterson and Ms. Johnson were each awarded 2,557 shares of restricted stock on April 30, 2015. Mr. Hartwick and Mr. Lucky were each awarded 1,902 phantom stock units on July 30, 2015. The amounts in this column represent the aggregate grant date fair value of those awards in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The awards vest ratably over three years. These amounts reflect our accounting expense for these awards and may not correspond to the actual value that may be recognized by the non-employee directors. Assumptions used in the calculation of these amounts are included in footnote 12 to our audited consolidated financial statements for the fiscal year ended December 31, 2015 included in our 2015 Form 10-K. |
| (3) | We ceased granting stock options to non-employee directors after 2007. Messrs. Alexander, Altenbaumer, Fayne, Johnson and Patterson and Ms. Johnson each held 8,000 stock options as of December 31, 2015. Messrs. Alexander, Altenbaumer, Fayne, Johnson, Moore and Patterson each held 5,068 shares of restricted stock and Mr. Hartwick and Mr. Lucky each held 1,902 shares of phantom stock units as of December 31, 2015. |
| (4) | Mr. Hartwick’s and Mr. Lucky’s appointments to the Board were effective on July 29, 2015 and they received fees and phantom stock units which were pro-rated for their length of service. |
| (5) | Effective October 19, 2015, Ms. Johnson resigned from the Board and was appointed Senior Vice President, Chief Financial Officer and Treasurer. |
INTRODUCTION
This Compensation Discussion and Analysis (the “CD&A”) describes the objectives, principles and material components of our executive officer compensation program for the following current and former officers who are named in theour NEOs.
Named Executive Compensation Tables below and who are referred to as our “named executive officers.” Officers
Our named executive officersNEOs for 20152022 were as follows:
William A. Koertner, Chairman, President and Chief Executive Officer;
| • | | | | |
| Name | Title |
| Richard S. Swartz | President and Chief Executive Officer |
Betty R. Johnson(1) | Senior Vice President and Chief Financial Officer |
| Tod M. Cooper | Senior Vice President and Treasurer(1);Chief Operating Officer–Transmission & Distribution |
| William F. Fry | Vice President, Chief Legal Officer and Secretary |
| Jeffrey J. Waneka | Senior Vice President and Chief Operating Officer–Commercial & Industrial |
Tod M. Cooper, Senior Vice President;
Gerald B. Engen, Jr.,(1)Ms. Johnson retired from her role as Chief Financial Officer, on February 24, 2023. On that same day, Senior Vice President Kelly Huntington was named Chief LegalFinancial Officer and Secretary;of MYR Group.
| • | Paul J. Evans, former Vice President, Chief Financial Officer, and Treasurer(2); and |
Richard S. Swartz, Jr., Senior Vice President and Chief Operating Officer.
| (1) | Ms. Johnson was appointed Senior Vice President, Chief Financial Officer and Treasurer effective October 19, 2015. |
| (2) | Mr. Evans served as our Vice President, Chief Financial Officer and Treasurer until October 19, 2015. |
Executive Summary
20152022 Company Performance
MYR Group is a leadingholding company of specialty contractor servingelectrical construction service providers that was established in 1995 through the electricalmerger of long-standing specialty contractors. Through our subsidiaries, we serve the electric utility infrastructure, market throughoutcommercial and industrial construction markets in the United States and Canada withand have the experience and expertise to complete electrical installations of any type and size. Our Transmission and Distribution (“T&D”) segment provides a broad range of comprehensive services on electric transmission, and distribution (“T&D”) networks, and substation facilities and clean energy projects include design, engineering, procurement, construction, upgrade, maintenance and repair services. Our transmission and distributionT&D customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors. We also provide commercial and industrial (“Our Commercial & Industrial ("C&I”&I") electrical contractingsegment provides a broad range of services such aswhich include the design, installation, maintenance and repair of commercial and industrial wiring installation of traffic networksgenerally for airports, hospitals, data centers, hotels, stadiums, commercial and the installation of bridge,industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, intelligent transportation systems, roadway lighting and tunnel lighting forsignalization. Our C&I customers include general contractors, commercial and industrial facility owners, local governmentsgovernment agencies and developers throughoutdevelopers.
Our noteworthy 2022 highlights included the
western and northeastern United States.Our Company had the following significant achievements in fiscal year 2015:
following: We had •record revenues of approximately $1.062$3.01 billion, an increase of 12.5% from 2014.20.4% over 2021;
Our•record backlog of $2.50 billion compared to $1.79 billion at December 31, 2015the end of 2021; and
•net income attributable to MYR Group Inc. was $450.9$83.4 million an increase of 4.0% over our backlog on December 31, 2014.compared to $85.0 million in 2021.
We acquired E.S. Boulos Company, one of New England’s largest and most experienced electrical contractors, which expanded our T&D presence and established a C&I presence in the northeast United States.
We repurchased a total of 1,183,862 shares under our share repurchase program, returning approximately $27.0 million to stockholders.
| • | Engineering News-Record recognized us as one of the nation’s top five specialty electrical contractors for the 21st consecutive year. |
We have designed our compensation programs to reward our key executive officers for their contributions to our short-termshort- and long-term performance and to be competitive with programs offered by companies with which we compete for executive officer talent. We believe that the pay of our named executive officersNEOs should be directly linked to performance; thus, our compensation programs are designed to reward strong financial performance and safe operations.
| | | | | |
| 32 | MYR GROUP INC. | 2023 PROXY STATEMENT |
In fiscal 2015,2022, we did not meetexceeded our targetpretax financial performance goalsgoal resulting in maximum annual cash incentive payouts for financial performance under the MIP. Additionally, we exceeded our targets for safety performance goals, resulting in below-targetabove target annual cash incentive payouts under the MIP for our total case incident rate safety performance goal and maximum annual cash incentive payouts under the MIP for our lost time incident rate safety performance share payouts to our executive officers.2015 Target Performance-Based Compensation
We endeavor to maintain strong compensation practices, which requires effective governance standards with respect togoal.
The aggregate ROIC performance for the oversight of our executive compensation policiesthree years ended December 31, 2022, 2021 and practices. Although we do not use a specific formula to determine the mix of performance-based and fixed compensation paid to our named executive officers, our emphasis on pay-for-performance2020 resulted in performance-based compensation (which we define asa payout of 200.0%, which was at the maximum for ROIC grants made in 2020. For the 2020 TSR performance share awardsshares, TSR performance ranked at the 79th percentile which was above maximum and, cash awards tied to performance) representing a significant part of our named executive officers’ target compensation in 2015. In 2015, performance-based compensation represented approximately 58%therefore, 200.0% of the target Total Direct Compensation for our CEO and an averagenumber of approximately 50% for our other named executive officers, as shown in the charts below:![[GRAPHIC MISSING]](https://capedge.com/proxy/PRE 14A/0001144204-16-084620/v432770_chrt-2circles.jpg)
As shown below for 2015, the target Total Direct Compensation for our CEO and named executive officers compared favorably with the Peer Group (as discussed below under “Use of Compensation Consultants and Peer Groups”):
| | | | |
| | 2015 Target
Total Direct
Compensation
($ in 000s)(1) | | Median Peer Group
Total Direct
Compensation
Based on Mercer’s
2014 Report
($ in 000s) |
| Chief Executive Officer | | $ | 2,456 | | | $ | 2,354 | |
| Other named executive officers (average) | | $ | 969 | | | $ | 973 | |
| (1) | 2015 target total direct compensation includes base salary, target bonus under our Senior Management Incentive Plan (the “SMIP”) and target equity awards under our LTIP, which are valued in accordance with FASB ASC Topic 718. Assumptions used in the calculation of the fair value of equity awards and vesting details are included in footnote 12 to our audited consolidated financial statements for the fiscal year ended December 31, 2015 included in our 2015 Form 10-K. |
TSR performance shares were earned.
OBJECTIVES OF OUR COMPENSATION PROGRAM
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Key Features of Our Compensation Practices and Philosophy
We adhere to executive compensation best practices
| þ | Competitive Pay. We provide our executive officers with total compensation opportunities at levels that are competitive with our peer companies, and we reward outstanding performance and the achievement of strategic goals; |
| þ | Capped Incentive Awards. Annual cash incentive awards are capped at 200% of target for our CEO and lesser amounts for our other named executive officers and the number of performance shares that can be earned is capped at 200% of target for all named executive officers; |
| þ | Independent Compensation Consultant. Our Compensation Committee has engaged its own independent compensation consultant, which performs an annual comprehensive market analysis of our executive compensation programs and pay levels; |
| þ | Peer Companies. We conduct a rigorous peer group assessment and maintain a peer group that provides a valuable comparison for compensation decisions; |
| þ | Clawback Policy. We include clawback provisions in our LTIP award agreements, which subject all equity awards under the LTIP to the Company’s right to recover awards in the event that it is determined that a participant has engaged in conduct that contributed to any material restatement of our earnings; and |
| þ | Risk Assessment. The Compensation Committee performed a risk assessment and determined that no element of our compensation programs was reasonably likely to have a material adverse effect on our Company. |
| | |
What we do to align executive compensation with
the interests of our shareholders
| |
What we don’t do |
þ
Pay for Performance. We granted equity awards under our LTIP that provide a mix of retention-based awards and awards that will reward our executives for the achievement of long-term performance goals that are intended to maximize stockholder value;
| | ⊗
No Hedging and Pledging. We have an insider trading policy that prohibits our named executive officers from hedging the economic risk of their stock ownership and holding shares of the Company’s common stock in a margin account or pledging shares as collateral for a loan;
|
þ
Say on Pay. We annually put our named executive officer compensation to an advisory vote of our stockholders and received a positive response of over 97% of the votes cast on this proposal at our 2015 Annual Meeting;
| | ⊗
No Gross-ups Going Forward. Since 2011, we have maintained a policy that does not include gross-up payments for excise taxes in new employment agreements; and
|
þ
Stock Ownership Guidelines. We have stock ownership guidelines, with a stock retention feature, for our named executive officers; and
| | ⊗
No Single Trigger. Our employment agreements with our named executive officers provide for additional severance payments and benefits only on a so-called “double trigger” basis, for termination without cause or for good reason following a change of control.
|
þ
Stockholder Input. We encourage open dialogue with stockholders to solicit input and feedback on our compensation practices and policies.
|
Objectives of our Compensation Programs
We seek to maintain the competitiveness of our executive compensation program with those of our peers and competitors. Adjustments to both overall compensation and the individual components of compensation are based on various factors, including results of compensation benchmarking studies, general economic conditions, the effects of inflation or other economic forces, changes in our business operations and the related
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financial results, results fromof our stockholdershareholder vote on our Say-on-Pay proposal and changes in the compensation practices of our competitors. We also take into account each executive officer’s individual performance when making compensation adjustments.
The primary objectives of our executive compensation program are to:
•attract, motivate and retain the most talented and dedicated executivesexecutive officers possible;
•reward accountability and performance by linking compensation to the achievement of financial and safety performance goals;
•motivate executive leadership and promote behavior that aligns our executive officers’ interests with those of our stockholders;shareholders;
•encourage our executivesexecutive officers to develop business and build a backlog of profitable business to ensurefacilitate our long-term success;
•encourage our executivesexecutive officers to develop business models and systems that seek out strategic opportunities, which benefit usthe Company and our stockholders;shareholders;
•encourage our executivesexecutive officers to develop and maintain an understanding of our industry’s competitive environment and position ourselves as a leader within our industry; and
•encourage our executivesexecutive officers to implement a culture of legal and regulatory compliance and a commitment to operating our business with the highest standards of professional conduct, ethics and compliance.
Management’s Role
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 33 |
KEY FEATURES OF OUR COMPENSATION
| | | | | |
| We adhere to executive compensation best practices |
| þ | Competitive Pay. We provide our executive officers with total compensation opportunities at levels that are competitive with our peer companies, and we reward outstanding performance and the achievement of strategic goals. |
| þ | Capped Incentive Awards. Annual cash incentive awards are capped at 200% of target for our CEO and lesser amounts for our other NEOs, and the number of performance shares that can be earned is capped at 200% of target for all NEOs. |
| þ | Independent Compensation Consultant. Our Compensation Committee has engaged its own independent compensation consultant, which performs an annual comprehensive market analysis of our executive compensation programs and pay levels. |
| þ | Peer Companies. We conduct a rigorous peer group assessment and maintain a peer group that provides a valuable comparison for compensation decisions. |
| þ | Clawback Policy. Long-term incentive award agreements contain clawback provisions that make all such equity awards subject to the Company’s right to recover the award in the event that it is determined that a participant has engaged in conduct that contributed to any material restatement of our earnings. |
| þ | Risk Assessment. The Compensation Committee performed a risk assessment and determined that no element of our compensation program was reasonably likely to have a material adverse effect on our Company. |
| | | | | | | | | | | |
| What we do to align executive compensation with the interests of our shareholders | | What we don’t do |
| þ | Pay for Performance. We grant equity awards that provide a mix of retention-based awards and awards that will reward our executives for the achievement of long-term performance goals that are intended to maximize shareholder value. | ⊗ | No Hedging or Pledging. We have an insider trading policy that prohibits our NEOs and employees from hedging the economic risk of their stock ownership and holding shares of the Company’s common stock in a margin account or pledging shares as collateral for a loan. |
| þ | “Say-on-Pay.” We annually put our NEO compensation to an advisory vote of our shareholders and received a positive response of over 97% of the votes represented and entitled to vote on this proposal at the 2022 Annual Meeting. | ⊗ | No Gross-ups. We do not include gross-up payments for excise taxes in our employment agreements. |
| þ | Stock Ownership Guidelines. We have stock ownership guidelines, with a stock retention feature, for our NEOs. | ⊗ | No Single Trigger. Our employment agreements with our NEOs provide for additional severance payments and benefits only on a so-called “double trigger” basis, for termination without cause or for good reason following a change of control. |
| þ | Shareholder Input. We encourage open dialogue with shareholders to solicit input and feedback on our compensation practices and policies. | | |
| | | | | |
| 34 | MYR GROUP INC. | 2023 PROXY STATEMENT |
COMPONENTS OF OUR COMPENSATION
| | | | | | | | |
| Pay Component | Objective | Key Features |
| Base Salary | To provide a fixed level of cash compensation to reward demonstrated experience, skills and competencies relative to the market value of the job. | Varies based on skills, experience, level of responsibility and other factors. Adjustments are considered annually based on individual performance, level of pay relative to the market and internal pay equity. |
| Short-Term Incentives | To reward for annual corporate performance under the MIP. To align NEOs’ interests with those of our shareholders by linking part of their compensation with annually established financial and safety performance goals. To retain NEOs by providing market-competitive compensation. | Annual incentive payments are cash awards based on financial, safety and individual performance objectives. Annual cash incentive awards are capped at 200% of salary for our CEO and lower percentages for our other NEOs. |
| Long-Term Incentives | To reward long-term corporate performance under the LTIP. To align NEOs’ interests with long-term shareholder interests by linking part of NEO compensation with long-term corporate performance. To provide opportunities for wealth creation and stock ownership, which promote retention and enable us to attract talent and motivate our NEOs. To retain NEOs by providing multi-year vesting of equity grants and multi-year performance periods. | Targeted at levels that will provide total direct compensation (salary plus short-term incentive plus long-term equity awards) competitive with our Peer Group’s (as defined below) total direct compensation. Balances multiple objectives using different equity types, including Restricted Stock Units and performance shares to balance multiple objectives. Restricted Stock Units vest ratably over three-year periods. Performance shares granted in 2022 will cliff-vest, if earned, on December 31, 2024 and the number of shares that can be earned is capped at 200% of target. |
Profit Sharing Contributions to Diversified Holdings Savings Plan | To reward annual corporate performance for our employees, including our NEOs. | Contribute up to 10% of salary depending on the profitability of the Company, up to the maximum allowed by the plan. |
401(k) Matching Contributions to Diversified Holdings Savings Plan | To provide certain retirement income for our employees, including our NEOs. | Provide a match of 100% of an employee’s contributions up to the first 6% of the employee’s salary, up to the maximum allowed by the plan. |
| Executive Perquisites | To attract and retain NEOs. | Limited programs offering perquisites such as a company vehicle or car allowance, financial planning services and relocation expenses. |
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 35 |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
At our 2022 Annual Meeting, more than 97% of the votes represented at the 2022 Annual Meeting and entitled to vote on the Say-on-Pay proposal voted in support of an advisory resolution regarding the compensation of our NEOs. These results demonstrated strong shareholder support for our overall executive compensation program. The Compensation Committee considered this favorable vote and determined that our current practices and processes did not require any significant modifications to address shareholder concerns. The Compensation Committee will continue to consider the outcome of these annual advisory votes when considering future executive compensation arrangements.
In addition to our annual Say-on-Pay proposal, shareholders are encouraged to provide feedback on our corporate governance policies and our executive compensation programs, including their various components. Management reports to the Compensation Committee on issues or concerns our shareholders raise with respect to our executive compensation programs. We encourage shareholders to reach out to the Board or the Compensation Committee with any feedback on our executive compensation programs. For more information on providing feedback and the related procedures, please see “Corporate Governance—Communications with the Board and Reporting of Concerns” in this Proxy Statement.
| | | | | |
| 36 | MYR GROUP INC. | 2023 PROXY STATEMENT |
2022 TARGET COMPENSATION
We endeavor to maintain strong compensation practices, which requires effective governance standards with respect to the oversight of our executive compensation policies and practices. Although we do not use a specific formula to determine the mix of at-risk pay that is performance-based and fixed compensation paid to our NEOs, our emphasis on pay-for-performance results in at-risk performance-based compensation (which we define as performance share awards and cash awards tied to performance) representing a significant part of our NEOs’ target compensation. In 2022, at-risk performance-based compensation represented approximately 56% of the target total direct compensation for our CEO and an average of approximately 49% of the target total direct compensation for our other NEOs, as shown in the charts below:
2022 TARGET COMPENSATION
As shown below for 2022, the target total direct compensation for our CEO and other NEOs was generally close to the peer group median (as discussed below under “Peer Groups, Pay Mix and Use of Compensation Consultants”):
| | | | | | | | |
| 2022 Target Total Direct Compensation ($ in 000s)(1) | Median Peer Group Total Direct Compensation Based on Mercer’s 2021 Report ($ in 000s) |
| Chief Executive Officer | $3,919 | $3,513 |
Other NEOs(2) | $1,387 | $1,167 |
(1)2022 target total direct compensation includes base salary, target annual cash incentive awards under our MIP and target equity awards under our LTIP, which are valued in accordance with FASB ASC Topic 718. Assumptions used in the calculation of the fair value of equity awards and vesting details are included in footnote 15 to our audited consolidated financial statements 2022 Form 10-K.
(2)Represents the average total direct compensation of Ms. Johnson and Messrs. Cooper, Fry and Waneka.
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 37 |
MANAGEMENT’S ROLE IN DETERMINING COMPENSATION
The Compensation Committee oversees the executive compensation program for our
named executive officers,NEOs, as discussed under “Compensation Committee Matters.” Our management also plays an important role in setting the compensation of our
named executive officersNEOs by initially recommending various aspects of incentive compensation, including financial performance goals, safety performance goals and strategic goals relating to each
named executive officer.NEO. Management also makes recommendations regarding the salary,
short-term cash
bonusincentive awards and equity awards for our
named executive officersNEOs (other than with respect to our CEO). While our management makes recommendations as to the goals and awards for
named executive officers’NEOs’ incentive compensation (other than with respect to our CEO), the Compensation Committee has final authority and complete discretion to ultimately set the compensation of our
named executive officers.NEOs.
At the request of the Compensation Committee, our CEO presents to the Compensation Committee his evaluation of the performance of our other
named executive officersNEOs and his recommendations regarding their compensation. The Compensation Committee considers these evaluations and recommendations in determining our
named executive officers’NEOs’ salaries and the amounts that may be paid under our incentive plans.
To assist the Compensation Committee, management also prepares information “tally sheets.” The purpose of the tally sheets, is towhich provide the Compensation Committee the information on key elements of actual realized compensation and potential realizable compensation for our named executive officersNEOs so that the Compensation Committee may fully evaluate our total compensation packages. Further, the Compensation Committee discusses compensation decisions with Mercer, its independent compensation consultant, and deliberates on such decisions without management present.
Use of Compensation Consultants and Peer Groups
PEER GROUPS, PAY MIX AND USE OF COMPENSATION CONSULTANTS
The Compensation Committee believes that it is appropriate to utilize compensation benchmarking studies of our peer and competitor companies to establish initial compensation targets because the competitiveness of our compensation practices greatly influences our ability to attract, motivate and retain top executive officer talent, which is an important determinant of our business success. However, the Compensation Committee believes compensation benchmarking studies should be considered only as a point of reference for measurement and not as the determinative factor for our named executive officers’NEOs’ compensation. The results of the studies do not supplant the significance of the individual performance of our named executive officersNEOs that the Compensation Committee considers when making compensation decisions.
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Because the information provided by compensation benchmark studies is just one of the pieces of information that is used in setting executive compensation, the Compensation Committee has discretion in determining the nature and extent of theirits use. Further, the Compensation Committee has discretion to determine the frequency of performing benchmarking and other studies.
We annually compare our compensation program with those companies in a peer group that the Compensation Committee evaluates together with Mercer (the “Peer Group”). The companies selected for inclusion in the Peer Group, which are listed below, were selected on the basis of a number of factors, including similar industry characteristics, organization size
and financial characteristics such as revenues,
total assets and market capitalization, as well as companies we compete
againstwith for talent. At the time of selection, all of the companies were publicly traded U.S. companies in the construction, engineering and commercial services industries with annual revenue between approximately
one-thirdone-half and
threetwo times our annual revenue.
During our 2014 review of the makeup of our Peer Group, we removed Michael Baker Corporation, as it was no longer publicly traded and executive compensation data was no longer available and replaced it with Furmanite Corporation given its industry characteristics and revenue.
| | | | | |
| 38 | MYR GROUP INC. | 2023 PROXY STATEMENT |
The companies included in the Peer Group for the evaluation of
20152022 executive compensation
levels were:are as follows:EXECUTIVE COMPENSATION PEER GROUP FOR 2022
| | | | | |
Peer Group• Ameresco, Inc. | • IES Holdings, Inc. |
Aegion• APi Group Corporation
Ameresco, | • Infrastructure and Energy Alternatives, Inc.
|
| • Aracosa, Inc. | • Matrix Service Company |
• Astec Industries, Inc.
Cal Dive | • Oceaneering International, Inc.
|
| • Clean Harbors, Inc. | • Primoris Services Corporation |
• Comfort Systems USA, Inc.
| • Sterling Construction Company, Inc. |
• Dycom Industries, Inc.
Furmanite Corporation
| • Team, Inc. |
• Granite Construction Incorporated
| • Tetra Tech, Inc. |
• Great Lakes Dredge & Dock Co.
Integrated Electrical Services,Corporation | • Tutor Perini Corporation(1) |
| • Harsco Corporation | • Valmont Industries, Inc.
Layne Christensen Company
| | Matrix Service Company
Newpark Resources, Inc.
Orion Marine Group, Inc.
Pike Corporation
Primoris Services Corporation
Sterling Construction Company Inc.
Team, Inc.
Tetra Tech, Inc.
TRC Companies, Inc.
Willbros Group Inc. |
(1) The chief executive officer of Tutor Perini Corporation is a significant shareholder of that company and as a result, Mr. Perini can significantly influence operations and governance of the company. Therefore, in consultation with Mercer, Tutor Perini Corporation was excluded from Rick Swartz's compensation analysis.
The Compensation Committee used the 2021 Mercer Executive Compensation Review (as defined below) to develop the 2022 executive compensation. In October 2014,2021 Mercer performed and presented to the Compensation Committee an executive compensation study (the “Mercer“2021 Mercer Executive Compensation Review”). The 2021 Mercer Executive Compensation Review included comparisons of our executive compensation programs to the Peer Group, which assisted the Compensation Committee with designing ourour executive compensation program for 20152022 to be competitive with the groupPeer Group and our markets. According to the 2021 Mercer Executive Compensation Review, MYR Group was positioned atover the 54thPeer Group median of annual revenue and 47th percentile in revenuebelow the Peer Group median of total assets and market capitalization, respectively, ofas indicated in the Peer Group. chart below:
2021 MERCER EXECUTIVE COMPENSATION REVIEW OF
MYR GROUP AMONG ITS PEER GROUP(1)
(1) All data in graph was taken from the 2021 Mercer Executive Compensation Review.
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 39 |
The Compensation Committee generally
seeks to target total executive compensation at or nearconsiders the median total compensation of the
Peer Grouppeer group in determining total executive compensation and allows business and individual performance to determine whether actual pay is above or below the median. The Compensation Committee believes that this review of
Peer Grouppeer group programs provides valuable information during the Compensation Committee’s review and design of both the
named executive officers’NEOs’ overall compensation levels and individual components of compensation, including the allocation of compensation between long-term and short-term compensation and cash and non-cash compensation.
Communications with Stockholders on Executive Compensation
At our 2015 Annual Meeting, our stockholders voted on an advisory resolution regarding the compensation of our named executive officers, which was approved by more than 97% of the votes cast on the proposal (the “Say-on-Pay proposal”). These results demonstrated strong stockholder support for our overall executive compensation program. The Compensation Committee considered this favorable vote and determined that our current practices and processes did not require any significant modifications to address stockholder concerns. The Compensation Committee will continue to consider the outcome of these annual advisory votes when considering future executive compensation arrangements.
In addition to our annual Say-on-Pay proposal, stockholders are encouraged to provide feedback on our corporate governance policies and our executive compensation programs, including its various components.
ANALYSIS OF 2022 COMPENSATION DECISIONS AND ACTIONS
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From time to time, we have reached out to and engaged in conversations with some of our larger stockholders regarding our compensation programs and philosophy and have generally received positive feedback on our practices. We believe that these conversations have and will better situate our Company to modify our compensation programs to address stockholder concerns on an ongoing basis. Management reports to the Compensation Committee on issues or concerns our stockholders provide with respect to our executive compensation programs. We encourage stockholders to reach out to the Board or the Compensation Committee with any feedback on our executive compensation programs. For more information on providing feedback and the related procedures, please see “Corporate Governance — Communications with the Board” in this Proxy Statement.
Summary of Key 2015 Compensation Elements
This table summarizes the material elements of our 2015 compensation program for our named executive officers.
| | | | |
Compensation Element | | Objectives | | Key Features |
| 2022 Base Salary | | To provide a fixed level of cash compensation to reward demonstrated experience, skills and competencies relative to the market value of the job. | | Varies based on skills, experience, level of responsibility and other factors. |
| Adjustments are considered annually based on individual performance, level of pay relative to the market and internal pay equity. |
Senior Management Incentive Plan Awards | | To reward annual corporate performance. | | Annual incentive payments are cash awards based on financial and safety performance objectives. |
| | To align interests of our named executive officers with those of our stockholders by linking compensation with financial and safety performance. | | Annual cash incentive awards are capped at 200% of salary for our CEO and lesser amounts for our other named executive officers. |
| | To retain named executive officers by providing market-competitive compensation. |
Long-Term Incentive Plan (Equity) Awards | | To align named executive officers’ interests with long-term stockholder interests by linking part of each named executive officer’s compensation to long-term corporate performance. | | Targeted at levels that will provide total direct compensation (salary plus annual incentive plus equity awards) competitive with our Peer Group’s total direct compensation. |
| | To provide opportunities for wealth creation and stock ownership, which promotes retention and enables us to attract and motivate our named executive officers. | | Utilizes different equity types, including restricted stock and performance shares to balance the multiple objectives. |
| | To retain named executive officers through multi-year vesting of equity grants and multi-year performance periods. | | Restricted stock awards generally vest over three-year periods. Performance shares are earned over a three-year performance period and the number of shares that can be earned is capped at 200% of target. |
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| | | | |
Compensation Element | | Objectives | | Key Features |
Profit Sharing Contributions to Diversified Holdings Savings Plan | | To reward annual corporate performance for our employees, including our named executive officers. | | Contribute up to 10% of salary depending on the profitability of the Company. |
401(k) Matching Contributions to Diversified Holdings Savings Plan | | To provide certain retirement income for our employees, including our named executive officers. | | Provide a match of 100% of an employee’s contributions up to the first 6% of such employee’s salary, up to the maximum allowed by the plan. |
|
Financial Planning Services | | To attract and retain named executive officers. | | Use of a financial planning service. |
Executive Perquisites | | To attract and retain named executive officers. | | Use of a Company vehicle or a car allowance. |
Analysis of 2015 Compensation Decisions and Actions
Salary
Salary is a critical element of our named executive officers’NEOs’ compensation because it provides them with a base level of guaranteed monthly income as compensation for services provided to us.
the Company. The Compensation Committee generally reviews the salaries of the named executive officersNEOs annually. To assist with that review, the Compensation Committee often will refer to the salaries in effect for comparable officers at companies in the Peer Group. The Compensation Committee has typically considered such review, as well as internal comparables,also considers individual performance and level of responsibility, economic conditions, and the Company’s financial performance, and internal comparables in reviewing salary levels. When market or merit increases are warranted, changes in salary are generally made effective during our second quarter.
When setting salaries for our named executive officersNEOs for 2015,2022, the Compensation Committee considered the 2021 Mercer Executive Compensation Review, as well as certain other factors, including those specified above. As a result, the Compensation Committee made market-based salary increasesthe following decisions related to base salaries for certain named executive officers as outlinedour NEOs in 2022:
| | | | | | | | | | | |
| Name | 2022 Base Salary | 2021 Base Salary | Percentage
Increase |
| Richard S. Swartz | $ | 825,000 | | $ | 775,000 | | 6.5 | % |
| Betty R. Johnson | $ | 495,000 | | $ | 475,000 | | 4.2 | % |
| Tod M. Cooper | $ | 540,000 | | $ | 500,000 | | 8.0 | % |
| William F. Fry | $ | 415,000 | | $ | 400,000 | | 3.8 | % |
| Jeffrey J. Waneka | $ | 430,000 | | $ | 420,000 | | 2.4 | % |
2022 Short-Term Incentive Compensation
Awards granted under the
table below: | | | | | | |
| Named Executive Officer | | 2014 Base
Salary | | 2015 Base
Salary | | Percentage
Increase |
| Mr. Koertner | | $ | 600,000 | | | $ | 615,000 | | | | 2.5 | % |
| Ms. Johnson(1) | | | — | | | $ | 350,000 | | | | — | |
| Mr. Cooper | | $ | 315,000 | | | $ | 330,750 | | | | 5.0 | % |
| Mr. Engen | | $ | 344,000 | | | $ | 354,000 | | | | 2.9 | % |
| Mr. Evans(2) | | $ | 331,000 | | | $ | 341,000 | | | | 3.0 | % |
| Mr. Swartz | | $ | 380,000 | | | $ | 392,000 | | | | 3.2 | % |
| (1) | Effective October 19, 2015, Ms. Johnson resigned from the Board and was appointed Senior Vice President, Chief Financial Officer and Treasurer. |
| (2) | Mr. Evans served as our Vice President, Chief Financial Officer and Treasurer until October 19, 2015. |
Senior Management Incentive Plan Awards
The SMIP isMIP are designed to provide our named executive officersNEOs with annual cash performance awards payable annually to reward the achievement of certain financial and safety performance goals established annually by the Compensation Committee that we believe are strongly linked to stockholdershareholder value creation. An important factor in our decision to pay our SMIPMIP awards in cash rather than in equity has been to ensurehelp confirm that our compensation program remains competitive with the compensation programs of our direct competitors, which include private companies that primarily pay their executives with cash. Our SMIPcompetitors. The Compensation Committee established performance targets are measured againstbased on financial performance and safety performance goals that are established annually by the Compensation Committee and that encourageencouraged our named executive officersNEOs to increase stockholdershareholder value by focusing on growth in revenue and earnings, and to maintain and improve safety performance in operations.
These performance goals were the basis for awards under the MIP for 2022.
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The amount of the payout of awards for each named executive officerNEO under the SMIP is dependentMIP for 2022 depended on athe percentage of each named executive officer’sNEO’s salary that the Compensation Committee determinesdetermined to be subject to the plan andaward, our performance measured against the financial and safety performance goals established by the Compensation Committee pursuant toand an assessment of the SMIP. NEO’s individual performance.
The basic formula for calculating the 2022 MIP payout is as follows:
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| 40 | MYR GROUP INC. | 2023 PROXY STATEMENT |
The Compensation Committee
determinesdetermined the percentage of each
named executive officer’sNEO’s salary to be subject to an award under the plan based on position, market pay levels and our overall compensation philosophy, which emphasizes performance-based compensation.
In connection with its reviewNo payouts under the 2022 MIP awards would be made unless the threshold levels for performance goals were achieved. Achievement of the
percentage of each named executive officer’s salary that should be subject to an awardperformance goals above the maximum level would not result in any additional payments above the maximum payout level. Any payouts under the
plan2022 MIP awards would be calculated by the straight-line mathematical interpolation between (i) threshold and target performance for
2015 and taking into account the Mercer Executive Compensation Review, the Compensation Committee maintained the sameperformance lower than target but greater than threshold
or (ii) target and maximum
payable awards as in 2014 for
all named executive officers, as these levels were determinedperformance greater than or equal to
be comparabletarget but less than or equal to
the Peer Group.Each named executive officer’s 2015 incentivemaximum.
In 2022, each NEO’s award opportunity
under the SMIP is provided in the table below: | | | | | | |
| | Performance Rating(1) |
| Named Executive Officer(2) | | 75% of Goals
(Threshold) | | 100% of Goals
(Target) | | 150% of Goals
(Maximum) |
| | | (incentive opportunity as a percentage of salary) |
| Mr. Koertner | | | 42.5 | % | | | 102.5 | % | | | 200.0 | % |
| Messrs. Cooper and Engen | | | 35.0 | % | | | 71.0 | % | | | 125.0 | % |
| Mr. Swartz | | | 36.0 | % | | | 76.0 | % | | | 135.0 | % |
| Mr. Evans | | | 33.5 | % | | | 65.0 | % | | | 110.0 | % |
| (1) | There is no payout under the SMIP as to each performance goal unless 75% of the performance goal is achieved. The SMIP provides for a range of payouts based upon the achievement of our performance goals determined by linear interpolation between achievement levels. |
| (2) | Ms. Johnson was not eligible to participate in the program for 2015, but will participate in the SMIP in 2016. |
Each named executive officer’s 2015 award pursuant to the SMIP was based on pretaxthe Company's (i) pre-tax income as the financial performance goal and (ii) total case incident rate and lost time caseincident rate and the avoidance of a catastrophic accident resulting in a fatality as the safety performance goals. We chose these particular metrics because we believe they are strongly correlated with our success which isand are consistent with our compensation objectivephilosophy of linking named executive officers’NEO's compensation with Company performance. The financial and safety performance goals are intended to be challenging and ambitious but also realistic enough to be reasonably attainable given a concerted effort by our named executive officersNEO's in consideration of current market and competitive conditions and trends.
The
In connection with its review of the percentage of each NEO’s salary that should be subject to an award under the MIP in 2022 and considering the 2021 Mercer Executive Compensation Review, the Compensation Committee set the following threshold, target and maximum award opportunities based on the achievement of financial and safety performance goals, subject to the weighting percentages set forth below:
| | | | | | | | | | | | | | | | | | | | | | | |
| 2022 MIP Opportunity | |
| (Percent of Base Salary)(1) | |
| Name | Pre-tax
Income
Target | Total Case
Rate
Target | Lost Time
Incident
Rate
Target | Total
Payout at
Threshold | Total
Payout at
Target | Total
Payout at
Maximum | |
| Mr. Swartz | 70.0% | 15.0% | 15.0% | 50.0% | 100.0% | 200.0% | |
| Mr. Cooper | 52.5% | 11.3% | 11.3% | 37.5% | 75.0% | 150.0% | |
Ms. Johnson and
Messrs. Fry and Waneka | 49.0% | 10.5% | 10.5% | 35.0% | 70.0% | 140.0% | |
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The following table shows the weighting of the performance goals based on each individual named executive officer’s level of responsibility within the Company, that were applied to that named executive officer’s salary to determinedetermined by linear interpolation between achievement levels. There is no payout for awards under the SMIP in 2015:
MIP unless threshold performance is achieved. Payout maximum is achieved at maximum performance. | | | | | | | | | | | | | | | | | | | | | | |
| | Pretax Income
(% of Salary) | | Total Case Rate
(% of Salary) | | Lost Time Case Rate
(% of Salary) | | Catastrophic
Accident(1)
(% of Salary) |
| Named Executive Officer(2) | | Thres. | | Target | | Max | | Thres. | | Target | | Max | | Thres. | | Target | | Max | | Event(1) | | No Event |
| Mr. Koertner | | | 17.5 | | | | 64.5 | | | | 140.0 | | | | 2.5 | | | | 9.0 | | | | 20.0 | | | | 2.5 | | | | 9.0 | | | | 20.0 | | | | 0 | | | | 20.0 | |
| Mr. Cooper | | | 17.5 | | | | 45.5 | | | | 87.5 | | | | 2.5 | | | | 6.5 | | | | 12.5 | | | | 2.5 | | | | 6.5 | | | | 12.5 | | | | 0 | | | | 12.5 | |
| Mr. Engen | | | 17.5 | | | | 45.5 | | | | 87.5 | | | | 2.5 | | | | 6.5 | | | | 12.5 | | | | 2.5 | | | | 6.5 | | | | 12.5 | | | | 0 | | | | 12.5 | |
| Mr. Evans | | | 17.5 | | | | 42.0 | | | | 77.0 | | | | 2.5 | | | | 6.0 | | | | 11.0 | | | | 2.5 | | | | 6.0 | | | | 11.0 | | | | 0 | | | | 11.0 | |
| Mr. Swartz | | | 17.5 | | | | 48.5 | | | | 94.5 | | | | 2.5 | | | | 7.0 | | | | 13.5 | | | | 2.5 | | | | 7.0 | | | | 13.5 | | | | 0 | | | | 13.5 | |
| (1) | If any catastrophic accident resulting in a fatality occurs, there is no award for this criterion; however, if no such event occurs, payout will be made at the “No Event” percentage of salary. |
| (2) | Ms. Johnson was not eligible to participate in the program for 2015, but will participate in the SMIP in 2016. |
The table below sets forth for SMIP plan year 2015For 2022, the annual incentive opportunities forlevels of threshold, target and maximum performance, levels, as well asand the Company’s actual award amount earned for 2015. performance are shown in the following table:
| | | | | | | | | | | | | | |
| Threshold | Target | Maximum | 2022 Results |
| Pre-tax Income ($000) | 69,531 | | 98,650 | | 111,948 | | 114,204 |
| Total Case Incident Rate | 1.59 | | 1.19 | | 0.79 | | 1.14 | |
| Lost Time Incident Rate | 0.23 | | 0.17 | | 0.11 | | 0.09 | |
The
actual payout amounts are computedCompensation Committee has discretion to reduce individual payouts by up to 20% or increase them by up to 15% based on
actual 2015an assessment of each NEO’s individual performance
as outlined above.throughout the year, including consideration of talent development and successor preparation, contributions toward strategic initiatives, internal controls, business development, acquisition integration and information technology initiatives. At the beginning of 2022, the Compensation Committee conducted a review of each NEOs’ performance, with input from the human resources department and other applicable departments, and, based on its qualitative assessment of each NEOs' performance, determined not to decrease or increase the MIP payout awards to any of the NEOs. | | | | | | | | | | | | |
| Named Executive Officer(1) | | 2015 Salary
($) | | Threshold
Award
($) | | Target
Award
($) | | Maximum
Award
($) | | 2015 Actual
Award
($) | | 2015 Actual
(% Salary) |
| Mr. Koertner | | | 611,250 | | | | 259,781 | | | | 626,531 | | | | 1,222,500 | | | | 494,729 | | | | 80.9 | % |
| Mr. Cooper | | | 326,813 | | | | 114,384 | | | | 232,037 | | | | 408,516 | | | | 189,108 | | | | 57.9 | % |
| Mr. Engen | | | 351,500 | | | | 123,025 | | | | 249,565 | | | | 439,375 | | | | 203,393 | | | | 57.9 | % |
| Mr. Evans(2) | | | 341,000 | | | | 114,235 | | | | 221,650 | | | | 375,100 | | | | 0 | | | | 0.0 | % |
| Mr. Swartz | | | 389,000 | | | | 140,040 | | | | 295,640 | | | | 525,150 | | | | 238,776 | | | | 61.4 | % |
| (1) | Ms. Johnson was not eligible to participate in the program for 2015, but will participate in the SMIP in 2016. | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 41 |
| (2) | As part of Mr. Evans’ separation with the Company, he received a payout in accordance with the termination provisions in his employment agreement and did not receive a payout under the SMIP. For Mr. Evans, the salary displayed is his base salary. |
See “Executive Compensation Tables—2022 Summary Compensation Table” for the 2022 MIP payouts to the NEOs.
2022 Long-Term Incentive Compensation
We believe that long-term performance is achieved through an ownership culture that rewards and encourages our named executive officersNEOs to foster our long-term success. We believe that an effective method to reward and encourage such success is through the use of stock-basedequity compensation awards. The purposes of the LTIPour long-term incentive plan are to attract, motivate and retain our key employees and non-employee directors upon whose judgment, initiative and efforts the financial success and growth of our business largely depends, to provide additional incentiveincentives to our employees and directors through stock ownership and other rights that promote and recognize our financial success and growth, and to align management’s interests with those of our stockholders. As partshareholders.
All long-term equity awards granted to NEOs in 2022 were made under the LTIP. The LTIP succeeded the 2007 Long-Term Incentive Plan (Amended and Restated as of May 1, 2014) (the “2007 LTIP”) in its entirety. Equity grants before March 31, 2017 were made under the LTIP, we include a “change in control” provision that more closely aligns our interests with those of2007 LTIP; all subsequent grants were made under the named executive officers in the event of a change in control by allowing the Compensation Committee to adjust the LTIP awards to maintain and protect the rights of the participants in the LTIP in case of a change in control. Under the terms of the LTIP, theLTIP.
The Compensation Committee has the authority to determine who will receive awards under the LTIP, the amounts of thelong-term equity awards and the nature, amounts and limitations on those awards.
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For 2015, the Compensation Committee considered the market data with respect to each named executive officer in the Mercer Executive Compensation Review, compensation levels of our Peer Group, compensation objectives of retention and stockholder value creation and individual and corporate performance. As a result of this review, the Compensation Committee approved equity award compensation under our LTIP in 2015 and allocated forty percent of the compensation to time-based restricted stock, thirty percent to ROIC-based performance shares and thirty percent to TSR-based performance shares. The Compensation Committee elected this mix of equity awards because it represented an appropriate balance of the incentives provided with the different types of equity instruments. For example, restricted stock provides a benefit by helping to retain key employees and performance shares are designed to vary the level of rewards a named executive officer receives dependent upon actual corporate performance and market results that are critical to stockholders.
The forty percent of the equity compensation award granted as time-based restricted stock will vest evenly over a three-year period beginning on the first anniversary of the grant. The number of shares of restricted stock was determined by dividing the amount of the equity compensation award allocated to restricted stock by the closing price of our common stock on the date of the grant.
The thirty percent of the equity compensation award granted as ROIC-based performance shares can be earned based on the average ROIC over a three-year performance period. We define ROIC as net income, less any dividends, divided by stockholders’ equity plus net debt (total debt less cash and marketable securities) at the beginning of the performance period. The number of ROIC-based performance shares earned can vary from zero to 200% of the target number of performance shares. The target number of ROIC-based performance shares was determined by dividing the amount of the equity compensation award allocated to ROIC performance by the closing price of the Company’s common stock on the date of grant. The potential award levels are as follows:
| | |
ROIC Performance | | Performance
Shares Earned
(% of Target) |
Equal to or Above the Maximum | | | 200 | % |
Equal to the Target | | | 100 | % |
Equal to the Threshold | | | 50 | % |
Below the Threshold | | | 0 | % |
The thirty percent of the equity compensation award granted as TSR-based performance shares can be earned based on the TSR of the Company’s stock compared to the TSR of a peer group over a three-year performance period. We define TSR as the change in the fair market value, adjusted for dividends, of the Company’s common stock. The number of TSR-based performance shares earned can vary from zero to 200% of the target number of performance shares. The target number of TSR-based performance shares was determined by dividing the amount of the equity compensation award allocated to TSR performance by the closing price of the Company’s common stock on the date of grant. The potential award levels are as follows:
| | |
TSR Performance | | Performance
Shares Earned
(% of Target) |
75th Percentile or Higher | | | 200 | % |
50th Percentile | | | 100 | % |
25th Percentile | | | 25 | % |
Less than 25th Percentile | | | 0 | % |
The Compensation Committee selected the TSR peer group based on criteria that included each company’s industry and operational comparability. The 2015 TSR peer group includes all companies that are in either the peer group used in the Performance Graph in our 2014 Annual Report on Form 10-K or the Peer Group used to set 2015 executive compensation. The 2014 TSR peer group included Argan, Inc., URS Corp. and Tutor Perini Corp., and those companies were removed from the TSR peer group because they did not appear in either the 2014 Annual Report on Form 10-K or the 2015 executive compensation Peer Group. Furmanite Corporation was added to the 2015 executive compensation Peer Group, therefore it was included in the 2015 TSR peer group. In order to be counted in the final TSR calculations, a company must remain
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publicly traded during the entire performance period. The peer group of companies used for evaluating the Company’s relative TSR performance for the 2015 grant of TSR-based performance shares was as follows:
| | |
TSR Peer Group |
Aegion Corporation
Ameresco, Inc.
Astec Industries, Inc.
Cal Dive International, Inc.
Comfort Systems USA, Inc.
Dycom Industries, Inc.
Emcor Group
Furmanite Corporation(1)
Granite Construction Incorporated
Great Lakes Dredge & Dock Co.
Integrated Electrical Services, Inc.
Layne Christensen Company | | Mastec, Inc.
Matrix Services Company
Newpark Resources, Inc.
Orion Marine Group, Inc.
Primoris Services Corporation
Quanta Services, Inc.
Sterling Construction Company Inc.
Team, Inc.
Tetra Tech, Inc.
TRC Companies, Inc.
Willbros Group Inc.
|
| (1) | Team, Inc. acquired all of the outstanding shares of Furmanite Corporation in 2015. As a result, Furmanite is no longer publicly traded and will be excluded from the final TSR calculation. |
In 2015, the Compensation Committee approved equity award grants to our named executive officers in the following amounts based on grant-date fair value, consistent with the presentation in the 2015 Summary Compensation Table:
| | | | | | | | |
| | Value of 2015 Equity Grants by Grant Type |
| Named Executive Officer | | Nominal Value
of Equity
Awards
($) | | Value of
Restricted
Stock
($) | | Value of ROIC
Performance
Shares
($)(1) | | Value of TSR
Performance
Shares
($)(1) |
| William A. Koertner(2) | | | 1,210,809 | | | | 413,976 | | | | 310,497 | | | | 486,336 | |
| Betty R. Johnson(3) | | | 199,993 | | | | 199,993 | | | | — | | | | — | |
| Tod M. Cooper(2) | | | 380,147 | | | | 129,990 | | | | 97,477 | | | | 152,680 | |
| Gerald B. Engen(2) | | | 398,848 | | | | 136,384 | | | | 102,273 | | | | 160,191 | |
| Paul J. Evans(4) | | | 350,937 | | | | 119,976 | | | | 89,997 | | | | 140,964 | |
| Richard S. Swartz, Jr.(2) | | | 501,846 | | | | 171,580 | | | | 128,693 | | | | 201,573 | |
| (1) | The ROIC-based and TSR-based performance shares are earned over a performance period of three years and vest on December 31, 2017. The values of the performance shares have been calculated taking into consideration the probable outcome of the respective performance conditions as of the grant date. The ROIC-based performance shares are valued at the closing price of our common stock on the grant date. Because TSR is a market-based performance metric, the Company used a Monte Carlo simulation model to calculate the fair value of the grant of TSR-based performance shares in accordance with FASB ASC Topic 718, which resulted in a fair value of $47.24 per share. |
| (2) | The restricted stock granted to Messrs. Koertner, Cooper, Engen and Swartz vest ratably over a three-year period. |
| (3) | The restricted stock granted to Ms. Johnson upon her appointment as Senior Vice President, Chief Financial Officer and Treasurer will cliff vest on October 19, 2020. |
| (4) | Mr. Evans’ restricted stock vested on October 19, 2015, the date of his termination, per the terms of his restricted stock award agreement. At the end of the performance period, he will receive a pro-rata share of the performance shares earned based on the number of whole months he was employed during the performance period, per the terms of his performance shares award agreement. |
The Compensation Committee made performance share awards in 2013 for the performance period running from January 1, 2013 through December 31, 2015 (the “2013 Performance Period”). The performance shares granted in 2013 were earned based on the relative achievement of the target level of return on equity (“ROE”) set at the beginning of the 2013 Performance Period. We define ROE as net income divided by total shareholders’ equity at the beginning of the period. The number of performance shares earned
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from this award was dependent on the actual level of ROE achieved for the 2013 Performance Period, and the number of earned shares could have varied between 0% (for performance below threshold; 50% for performance at threshold) and 200% of the target number. However, in no case could the earned number of shares have exceeded 200% of the target number. The ROE target for the 2013 Performance Period was 12.0%. Based on the three-year average ROE of 11.5% for the 2013 Performance Period, 91.4% of the target performance shares awarded were earned. The chart below shows the performance share payouts for each of our named executive officers that were awarded performance shares in 2013:
| | | | | | |
| Named Executive Officer | | Target Award
(Shares) | | Earned Award
(Shares) | | Award Value at
Vesting(1)
($) |
| William A. Koertner | | | 16,207 | | | | 14,815 | | | | 305,633 | |
| Tod M. Cooper | | | 1,012 | | | | 925 | | | | 19,083 | |
| Gerald B. Engen, Jr. | | | 4,051 | | | | 3,703 | | | | 76,393 | |
| Paul J. Evans(2) | | | 4,051 | | | | 3,394 | | | | 70,018 | |
| Richard S. Swartz, Jr. | | | 4,727 | | | | 4,321 | | | | 89,142 | |
| (1) | Award value was based on the closing stock price of $20.63 on February 18, 2016, the vesting date. |
| (2) | Mr. Evans’ earned award represents a pro-rata share of the granted award based on the number of whole months served during the performance period, per the terms of his performance shares award agreement. |
The Compensation Committee also awarded performance shares in 2014 for the performance period running from January 1, 2014 through December 31, 2016. These performance shares will be earned based on the achievement of the target level of ROIC and relative TSR for the performance period and otherwise contain terms consistent with the performance shares granted in 2015 described above.
We do not publicly disclose future target levels of ROIC for the performance shares granted because that information constitutes confidential commercial or financial information, the disclosure of which could cause us competitive harm with regard to short-term strategies and goals. We intend to disclose this information after the conclusion of the applicable performance period. A named executive officer may earn a pro-rata share of performance shares in the event of his death, disability, retirement after reaching normal retirement age (as such is defined in the Social Security Act of 1935, as amended) or termination without “cause” or for “good reason.” The vesting of performance shares may be accelerated in the event of a named executive officer’s termination without “cause” or for “good reason” following a “change in control.” Additional information regarding these awards may be found in the 2015 Summary Compensation Table, the 2015 Grants of Plan-Based Awards Table and under “Potential Payments Upon Termination or Change in Control.”
Other Compensation
At its discretion, the Compensation Committee may authorize profit sharing contributions to the Diversified Holdings Savings Plan (our 401(k) plan) accounts of our employees, including our named executive officers, subject to applicable limitations. For 2015, we paid 2% of salary in profit sharing contributions.
Additionally, our employees, including our named executive officers, receive matching contributions under our 401(k) plan. We match 100% of an employee’s contributions up to the first 6% of such employee’s salary, up to the maximum allowed by the plan.
Each named executive officer is eligible to utilize the financial planning service offered by the Company as a perquisite. In 2015, only Mr. Engen elected to use this service.
Each named executive officer is also eligible to participate in all other benefit plans and programs that are or in the future may be available to our other executive employees, including any health insurance or health care plan, life insurance, disability insurance, retirement plan, vacation and sick leave plan and other similar plans. In addition, each named executive officer is eligible for certain other benefits that are generally available to our employees, including reimbursement of business and entertainment expenses, reimbursement
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of relocation expenses and perquisites, including the choice of a car allowance or the use of a company car with a gas card. The Board may revise, amend or add to the executive officer’s benefits and perquisites as it deems advisable.
The benefits described in this section are paid to remain competitive in the marketplace. Amounts relating to certain of these benefits may be found in the “All Other Compensation” column of the 2015 Summary Compensation Table.
Exercise of Discretion in Executive Compensation Decisions
The Compensation Committee has complete discretion to withhold payment of an award under our SMIP regardless of whether we or our named executive officers have successfully met the goals set under the SMIP. For 2015, the Compensation Committee did not exercise such discretion in the payment or non-payment of SMIP awards to our named executive officers.
The Compensation Committee has the authority and discretion to determine who receives and the nature of equity compensation grants under our LTIP. The Compensation Committee also has the authority to cancel outstanding grants and substitute new grants of the same or different number of shares of stock and having exercise prices that may be the same or different than the exercise price of the cancelled grants, or amend the terms of outstanding grants, provided that such amendment does not impair the rights of the grantee without the grantee’s consent. The LTIP prohibitsOur long-term incentive plans prohibit the repricing of outstanding stock options or SARsstock appreciation rights without stockholdershareholder approval.
For 2022, the Compensation Committee considered the market data with respect to each NEO in the 2021 Mercer Executive Compensation Review, compensation levels of executive officers of our peer group, and compensation objectives of retention, shareholder value creation and individual and corporate performance. As a result of this review, in February 2022, the Compensation Committee approved the following mix of equity compensation awards for our NEOs:
The Compensation Committee elected this mix of equity awards because it represented an appropriate balance of the types of incentives provided by the different types of equity instruments. For example, Restricted Stock Units help to retain key employees and performance shares are designed to vary the level of rewards an NEO receives dependent upon actual corporate performance and market results that are critical to shareholders.
| | | | | |
| 42 | MYR GROUP INC. | 2023 PROXY STATEMENT |
Time-Based Restricted Stock Units
The 40% of the equity compensation award granted to our NEOs as Restricted Stock Units will vest ratably over a three-year period beginning on the first anniversary of the grant date. The number of Restricted Stock Units was determined by dividing the amount of equity compensation allocated to Restricted Stock Units by the closing price per share of our common stock on the date of the grant.
ROIC Performance Shares
The 30% of the equity compensation award granted to our NEOs as ROIC-based performance shares can be earned based on the achievement of aggregate ROIC performance over the three-year performance period that started on January 1, 2022 and ends on December 31, 2024 compared to a target level of average ROIC. For purposes of the ROIC-based performance shares granted in 2022, ROIC, which is a non-GAAP measure that we define as return divided by average invested capital, where return (net income plus interest, net of taxes, plus amortization, net of taxes, less dividends) is divided by the average of invested capital (funded debt less cash and marketable securities plus total shareholders’ equity) at the beginning and end of each calendar year in the performance period (the “2022 ROIC”), computed as follows:
| | | | | | | | |
| 2022 ROIC = | | Net Income + ((Interest + Amortization) x (1–Tax Rate))–Dividends |
| Average of (Funded Debt – Cash and Marketable Securities + Total Shareholder’ Equity) at the beginning and the end of each performance year in the period |
The target number of ROIC-based performance shares was determined by dividing the dollar-amount of the equity compensation award allocated to ROIC performance by the 2022 grant price of $99.22. The fair value of the shares granted were based on the closing price of our common stock on the date of the grant.
The calculation of the 2022 ROIC grant is assessed annually and the achievement in the following reporting periods are computed, if earned, based on the metrics detailed below:
•20% for the twelve-month period ended December 31, 2022;
•20% for the twelve-month period ending December 31, 2023;
•20% for the twelve-month period ending December 31, 2024; and
•40% for the average of the three annual periods above.
The ROIC performance in each of these reporting periods will be accumulated to determine the performance at the end of the performance period, subject to approval by the Compensation Committee.
The number of ROIC-based performance shares earned can vary from zero to 200% of the target number of performance shares granted. The Compensation Committee approved an ROIC target for the 2022 ROIC-based performance shares that it believed to be challenging, but achievable. See "Forward-Looking Target Performance Grants" below for additional information. The potential award levels are calculated as the straight-line mathematical interpolation between threshold and target or between target and maximum levels:
| | | | | |
| 2022 ROIC Performance | Performance Shares Earned
(% of Target) |
| Equal to or Above the Maximum | 200% |
| Equal to the Target | 100% |
| Equal to the Threshold | 50% |
| Below the Threshold | 0% |
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 43 |
TSR Performance Shares
The 30% of the equity compensation award granted to our NEOs as TSR-based performance shares can be earned based on the TSR of the Company’s stock compared to the TSR of a peer group over the performance period of the equity award grant date, March 23, 2022, to December 30, 2024. We define relative TSR as the change in the fair market value, adjusted for dividends, of the Company’s common stock compared to the change in the fair market value, adjusted for dividends, of a peer group. The measurement of change in fair market value over the performance period is based on the average closing price per share of common stock for the 20 trading days preceding the grant date, March 23, 2022, and the 20 trading days preceding December 30, 2024. The target number of TSR-based performance shares was determined by dividing the amount of the equity compensation award allocated to TSR performance by the fair value of the grant, which was based on a market-based metric and, therefore, is calculated utilizing a Monte Carlo simulation. The number of TSR-based performance shares earned can vary from zero to 200% of the target number of performance shares granted. The potential award levels are calculated as the straight-line mathematical interpolation between the 25th percentile and the 50th percentile or between the 50th percentile and the 75th percentile:
| | | | | |
| Relative TSR Performance | Performance Shares Earned
(% of Target) |
| 75th Percentile or Higher | 200% |
| 50th Percentile | 100% |
| 25th Percentile | 25% |
| Less than 25th Percentile | 0% |
The Compensation Committee selected the TSR peer group based on each company’s industry and operational comparability. The 2022 TSR peer group was comprised of companies that are in either the peer group used in the stock performance graph in 2022 Form 10-K, the peer group used to set 2022 executive compensation or certain industry peers recommended by Mercer. In order to be counted in the final TSR calculations, a company must remain publicly traded during the entire performance period.
The peer group of companies used for evaluating the Company’s relative TSR performance for the 2022 grant of TSR-based performance shares is as follows:
TSR PEER GROUP FOR 2022
| | | | | |
| • Ameresco, Inc. | • Infrastructure and Energy Alternatives, Inc. |
| • Aracosa, Inc. | • Mastec, Inc. |
| • Astec Industries, Inc. | • Matrix Service Company |
| • Comfort Systems USA, Inc. | • Primoris Services Corporation |
| • Dycom Industries, Inc. | • Quanta Services, Inc. |
| • EMCOR Group, Inc. | • Sterling Construction Company, Inc. |
| • Granite Construction Incorporated | • Team, Inc. |
| • Great Lakes Dredge & Dock Corporation | • Tetra Tech, Inc. |
| • IES Holdings, Inc. | • Tutor Perini Corporation |
| | | | | |
| 44 | MYR GROUP INC. | 2023 PROXY STATEMENT |
2022 Grants of Equity Awards
With respect to each NEO, the Compensation Committee considered the 2021 Mercer Executive Compensation Review, compensation levels of executive officers of our peer group, compensation objectives of retention and shareholder value creation and individual and corporate performance, and approved equity award grants to our NEOs in the following amounts based on grant-date fair value, consistent with the presentation in the 2022 Summary Compensation Table:
| | | | | | | | | | | | | | |
| Named Executive Officer | Value of 2022 Equity Grants by Grant Type |
Value of
Restricted Stock
Units
($) | Value of ROIC Based Performance Shares(1) ($) | Value of TSR Based Performance Shares(1) ($) | Total Value
of Equity
Awards
($) |
| Richard S. Swartz | 907,565 | | 680,649 | | 680,668 | | 2,268,882 | |
| Betty R. Johnson | 269,978 | | 202,409 | | 202,453 | | 674,840 | |
| Tod M. Cooper | 279,999 | | 209,950 | | 209,858 | | 699,807 | |
| William F. Fry | 179,985 | | 134,939 | | 134,919 | | 449,843 | |
| Jeffrey J. Waneka | 199,928 | | 149,921 | | 149,877 | | 499,726 | |
(1)Target awards are shown. The performance shares may be earned over a performance period ending December 30, 2024. The values of the performance shares have been calculated taking into consideration the probable outcome of the respective performance conditions as of the grant date. The ROIC-based performance shares are valued at the closing price per share of our common stock on the grant date. Because TSR is a market-based performance metric, the Company used a Monte Carlo simulation model to calculate the fair value of the grant of TSR-based performance shares in accordance with FASB ASC Topic 718, which resulted in a fair value of $148.10 per share.
2020 Performance Shares Vesting in 2022
The Compensation Committee granted performance share awards in 2020 under the LTIP, that could be earned based on achievement compared to a target level of ROIC, a non-GAAP measure, where return is defined as net income plus interest net of taxes (interest less (interest times the effective tax rate) less dividends divided by; invested capital (total debt less cash and marketable securities plus total shareholders’ equity) (the “2020 ROIC”). Performance is measured as the aggregate of the 2020 ROIC calculated for the years ended December 31, 2022, 2021 and 2020, respectively, and the average of the three years. The TSR of the Company’s stock compared to the TSR of a peer group over a performance period that started on March 23, 2020 and ended on December 31, 2022 and otherwise contained terms consistent with the performance shares granted in 2022 under the LTIP described above.
The 2020 ROIC threshold, target and maximum goals were 6.10%, 10.20% and 12.75%, respectively. The 2020 performance was calculated annually based in the ROIC achieved in each year of the three-year vest period for the years ended December 31, 2022, 2021 and 2020, each of which was weighted at 20% and the three year average, which was weighted at 40%. The computation of the ROIC performance shares awarded was as follows:
| | | | | | | | | | | | | | | | | | | | |
| Performance Period | ROIC Achieved | Incentive | Weight | Performance | Achievement |
| 2020 | ROIC | 13.6% | 200.0% | 20.0% | 40.0% | Above Maximum |
| 2021 | ROIC | 20.0% | 200.0% | 20.0% | 40.0% | Above Maximum |
| 2022 | ROIC | 18.6% | 200.0% | 20.0% | 40.0% | Above Maximum |
| 3 year average ROIC | 17.4% | 200.0% | 40.0% | 80.0% | Above Maximum |
| Total Achievement | 200.0% | At Maximum |
For the 2020 performance share awards based on TSR, the TSR of the Company’s stock ranked at the 79th percentile of the TSR peer group, which was above maximum and, consequently, 200.0% of the target TSR performance shares were earned.
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 45 |
The chart below shows the performance share payouts in 2022 for each of our NEOs that were awarded performance shares in 2020:
| | | | | | | | | | | | | | |
| Named Executive Officer | Award
Type | Target Award
(Shares) | Earned Award
(Shares) | Award Value at End of Performance Period(1) ($) |
| Richard S. Swartz | ROIC | 13,403 | | 26,806 | | 2,674,435 | |
| TSR | 10,306 | | 20,612 | | 2,056,459 | |
| Betty R. Johnson | ROIC | 5,361 | | 10,722 | | 1,069,734 | |
| TSR | 4,122 | | 8,244 | | 822,504 | |
| Tod M. Cooper | ROIC | 5,361 | | 10,722 | | 1,069,734 | |
| TSR | 4,122 | | 8,244 | | 822,504 | |
| William F. Fry | ROIC | 3,797 | | 7,594 | | 757,653 | |
| TSR | 2,920 | | 5,840 | | 582,657 | |
| Jeffrey J. Waneka | ROIC | 4,467 | | 8,934 | | 891,345 | |
| TSR | 3,435 | | 6,870 | | 685,420 | |
(1)The vesting date was December 31, 2022, subject to the certification of the results. The award value was based on the closing stock price of $99.77 on February 15, 2023, the date the results were approved and shares were released.
2022 Performance Shares Vesting in 2024
The Compensation Committee also awarded performance shares in 2022 under the LTIP that can be earned based on achievement compared to a target level of 2022 ROIC as defined in the Compensation Discussion and Analysis section of the 2022 Proxy Statement calculated for the years ended December 31, 2024, 2023 and 2022, respectively and TSR of the Company’s stock compared to the TSR of a peer group over a performance period that started on April 27, 2020 and will end on December 31, 2024 and otherwise contain terms consistent with the performance shares granted in 2022 under the LTIP described above.
Forward-Looking Target Performance Grants
We do not publicly disclose specific, forward-looking target levels of ROIC for outstanding performance share awards because these target levels relate to executive compensation to be earned and/or paid in future years, do not reflect a fair understanding of the NEOs’ compensation for 2022 and constitute confidential commercial or financial information, the disclosure of which could cause us competitive harm with regard to short-term strategies and goals. We intend to disclose this information after the conclusion of the applicable performance period. When establishing the applicable target levels for the ROIC performance measure, we specifically considered how likely it will be for us to achieve the target levels. We believe that the threshold level will be appropriately difficult to attain, and that the target level will require considerable and increasing collective effort on the part of our employees, including our NEOs, to achieve. Achievement of the maximum level is considered to be a stretch goal given current market conditions. We cannot forecast the results of our TSR grants because it is dependent on the stock price per share in the last 20 trading days before the vest date.
Pro-Rata Earning of Shares and Acceleration of Vesting
Under the terms of the grant agreements, a NEO may earn a pro-rata share of performance shares in the event of his or her death, disability, retirement after reaching normal retirement age (as such is defined in the Social Security Act of 1935, as amended) or termination without “cause” or for “good reason.” The vesting of performance shares may be accelerated in the event of a NEO’s termination without “cause” or for “good reason” following a “change in control.” Additional information regarding these awards may be found in the 2022 Summary Compensation Table, the 2022 Grants of Plan-Based Awards Table and under “Potential Payments Upon Termination or Change in Control.”
| | | | | |
| 46 | MYR GROUP INC. | 2023 PROXY STATEMENT |
Change in Control
As part of our long-term incentive plan, we include a “change in control” provision that more closely aligns our interests with those of the NEOs in the event of a change in control by allowing the Compensation Committee to adjust long-term incentive equity awards to maintain and protect the rights of the participants in the event of a change in control.
Other Compensation
At its discretion, the Compensation Committee may authorize profit sharing contributions to the Diversified Holdings Savings Plan (our 401(“k”) plan) accounts of our employees, including our NEOs, subject to applicable limitations. For 2022, the NEOs were awarded 7% of their eligible salary in profit sharing contributions.
Additionally, our employees, including our NEOs, receive matching contributions under our 401(k) plan. We match 100% of an employee’s contributions up to the first 6% of such employee’s salary, up to the maximum allowed by the plan.
Each NEO is eligible to utilize the financial planning service paid by the Company.
Each NEO is also eligible to participate in all other benefit plans and programs that are or in the future may be available to our other executive employees, including any health insurance or health care plan, life insurance, disability insurance, retirement plan, vacation and sick leave plan and other similar plans. In addition, each NEO is eligible for certain other benefits that are generally available to our employees, including reimbursement of business and entertainment expenses, reimbursement of relocation expenses and perquisites, including the choice of a car allowance or the use of a company car with a gas card. The Board may revise, amend or add to the executive officer’s benefits and perquisites as it deems advisable.
The benefits described in this section are paid to remain competitive in the marketplace. Amounts relating to certain of these benefits may be found in the “All Other Compensation” column of the “Executive Compensation Tables—2022 Summary Compensation Table.”
Employment Agreements, Severance Benefits and Change in Control Provisions
In
Mr. Swartz entered into an employment agreement in connection with our private placement in
2007, we entered into2007. Mr. Swartz’s employment agreement was amended and restated in April 2017 to replace the excise tax gross-up provisions in favor of a modified cut-back approach, which is consistent with the provisions that the Company has included in new employment agreements
with each of the individuals serving as named executive officers at the time. These employment agreements (the “Legacy Employment Agreements”) remain in place with Messrs. Koertner, Engen and Swartz.since 2011. Ms. Johnson entered into an employment agreement
(the “Johnson Employment Agreement”) in connection with her appointment as Senior Vice President, Chief Financial Officer and Treasurer in October 2015. Mr. Cooper entered into an employment agreement
(the “Cooper Employment Agreement”) in
April 2015 in connection with his appointment as a Senior Vice President. Mr.
Evans is no longer employed by the Company. The Legacy Employment Agreements, Johnson Employment AgreementWaneka entered into an employment agreement in connection with his appointment as Senior Vice President and
Cooper Employment Agreement (collectively,Chief Operating Officer C&I in December 2017. Mr. Fry entered into an employment agreement in connection with his appointment as Vice President and Chief Legal Officer and Secretary in January 2019. These employment agreements (each an “Employment Agreement” and collectively, the “Employment Agreements”) provide for severance payments and benefits upon a termination of
a named executive’san NEO’s employment without “cause” or
resignation for “good reason,” as further described below under “Executive Compensation
Tables — Tables—Employment Agreements.” We compete for executive talent in a highly competitive market in which companies routinely offer similar benefits to
named executive officers.NEOs. We view the cash severance and continuation of health and welfare benefits
provided by these agreements as appropriate for the
named executive officersNEOs who may not be in a position to readily obtain comparable employment within a reasonable period of time due to the restrictive covenants, including a one-year non-compete covenant, in the Employment Agreements.
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 47 |
In addition, the Employment Agreements provide for additional severance payments and benefits upon a termination of a named executive’sNEO’s employment without “cause” or resignation for “good reason” within one year following a change in control (in other words, only on a so-called “double trigger” basis). We believe that providing change in control benefits reduces the potential reluctance of our named executive officersNEOs to pursue potential change in control transactions that may be in our best interest while simultaneously preserving neutrality in negotiating and executing transactions that are favorable to us. Since 2011, theThe Compensation Committee has maintainedmaintains a policy that it will not include gross-up payments for excise taxes as a result of a change in control pursuant to any new employment agreement. Accordingly, the Johnson Employment Agreement and Cooper Employment AgreementAgreements do not include any provisions to provide gross-up payments for excise taxes as a result of a change in control. Details regarding severance payments and benefits payable upon a termination of a named executive officer’sNEO’s employment following a change in control are described under “Executive Compensation Tables — Tables—Employment Agreements” and “— Potential Payments Upon Termination or Change in Control.”
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Deductibility of Executive Compensation
In developing the compensation packages for the named executive officers, the Compensation Committee considered the deductibility of executive compensation under Section 162(m) of the IRS Code. Section 162(m) generally disallows a tax deduction for compensation that we pay to our CEO or any of the next three most highly compensated executive officers (other than our Chief Financial Officer) to the extent that the compensation for any such individual exceeds $1,000,000 in any taxable year. However, this deduction limitation does not apply to compensation that qualifies as “performance-based” under Section 162(m). In order to maintain flexibility in making compensation decisions, the Compensation Committee has not adopted a policy requiring all compensation to be deductible under Section 162(m) of the IRS Code. Portions of the compensation we pay to certain of the named executive officers may not be deductible due to the application of Section 162(m) of the IRS Code and the Committee may from time to time approve compensation that is not deductible under Section 162(m) if it determines that it is in our best interest to do so.
Stock Ownership Guidelines and Retention
In order to align the interests of our executives with those of our
stockholders, we requireshareholders, our
named executive officersNEOs are expected to attain levels of beneficial stock ownership measured based on a multiple of his or her annual base salary, as set forth below:
| | | | | |
| Position | | Stock
Ownership
Guideline |
| Chief Executive Officer | | | 5× base salary | |
| All Other Named Executive Officers | | | 3× base salary | |
The
Under our stock ownership guidelines,
require named executive officersour NEOs are expected to attain levels of beneficial stock ownership within five years from the later of
March 31, 2011 and the date of the
named executive officer’sNEO’s appointment to a position subject to the guidelines and three years from the effective date of an increase in compensation. We have adopted retention requirements with respect to these stock ownership guidelines whereby
named executive officersNEOs are expected to retain the net shares received through
an exercise of stock options and the vesting of restricted stock,
Restricted Stock Units and performance shares if they have not reached the applicable stock ownership guidelines.
The following table sets forth each
named executive officer’sNEO’s ownership
value as of February
24, 2016: | | | | | | | | |
| Name | | Share
Ownership(1) | | Market Value
($)(2) | | Ownership
Guideline | | Current
Ownership
Multiple |
| William A. Koertner | | | 346,044 | | | | 11,156,459 | | | | 5.0x | | | | 18.1x | |
| Betty R. Johnson(3) | | | 17,156 | | | | 553,116 | | | | 3.0x | | | | 1.6x | |
| Tod M. Cooper(4) | | | 14,146 | | | | 456,067 | | | | 3.0x | | | | 1.4x | |
| Gerald B. Engen, Jr. | | | 84,477 | | | | 2,723,539 | | | | 3.0x | | | | 7.7x | |
| Richard S. Swartz, Jr. | | | 64,166 | | | | 2,068,712 | | | | 3.0x | | | | 5.3x | |
| (1) | The amounts in this column were calculated in accordance with the stock ownership guidelines and include vested but unexercised stock options and exclude unvested restricted stock and unvested performance shares. |
| (2) | The amounts in this column were calculated in accordance with the stock ownership guidelines based on the highest reported share price for the year ended December 31, 2015 of $32.24. |
| (3) | Effective October 19, 2015, Ms. Johnson resigned from the Board and was appointed Senior Vice President, Chief Financial Officer and Treasurer. |
| (4) | Mr. Cooper became subject to the stock ownership guidelines in 2015. |
23, 2023: | | | | | | | | | | | | | | | | | |
| Name | Share Ownership (#)(1) | Value Of Share Ownership ($)(2) | Ownership
Guideline | Current Ownership Multiple |
| Richard S. Swartz | 168,994 | | 18,945,917 | | 5.0 x | 23.0 | x |
| Betty R. Johnson | 53,038 | | 5,946,090 | | 3.0 x | 12.0 | x |
| Tod M. Cooper | 48,028 | | 5,384,419 | | 3.0 x | 10.0 | x |
| William F. Fry | 25,193 | | 2,824,387 | | 3.0 x | 6.8 | x |
| Jeffrey J. Waneka | 45,085 | | 5,054,479 | | 3.0 x | 11.8 | x |
(1)The amounts of equivalent shares in this column were calculated in accordance with the stock ownership guidelines and may differ from owned shares for SEC reporting purpose and from the Ownership of Equity Securities Table.
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(2)The amounts in this column were calculated in accordance with the stock ownership guidelines by multiplying the holdings in the Share Ownership column by either the value of the stock on the date of grant or the highest reported share price for the year ended December 31, 2022 of $112.11, whichever is higher.
We also have an insider trading policy which, among other things, prohibits named executive officersNEOs from hedging the economic risk of their stock ownership by purchasing or using directly or indirectly through family members or other persons or entities, financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), holding shares of the Company’s common stock in a margin account, or pledging shares as collateral for a loan.loan or short-selling the Company’s securities. Among other restrictions, the policy also prohibits trading in our securities outside of specific window periods and without pre-clearance. The policy also prohibits short-selling of the Company’s securities.
| | | | | |
| 48 | MYR GROUP INC. | 2023 PROXY STATEMENT |
Each of the agreements underlying equity awards granted to our named executive officersNEOs under ourthe LTIP and its predecessor, the 2007 LTIP, as applicable, permits the Compensation Committee to cause us to recover shares of common stock or cash paid to the named executive officerNEO with respect to the applicable award if:
•we restate any part of our financial statements for any fiscal year or years covered by the respective award due to a material noncompliance with any applicable financial reporting requirement; and
•the Compensation Committee determines that the respective named executive officerNEO is personally responsible for causing the restatement as a result of his or her personal misconduct or any fraudulent activity on the part of the named executive officer.NEO.
For grants of restricted stock and
phantom stock units,Restricted Stock Units, we may recover any shares that vested within the period of 18 months prior to the restatement or the net proceeds of any sales of such shares. With respect to performance shares, the amount of any cash or shares recoverable is limited to the amount by which the payments exceeded the amount that would have been paid to the
named executive officerNEO had our financial statements for the applicable restated fiscal year or years been initially filed as restated, as reasonably determined by the Compensation Committee. In the case of stock options, to the extent an applicable
named executive officerNEO exercises a stock option within a period of 18 months prior to the restatement, we may recover from the
named executive officerNEO any equity acquired by the
named executive officerNEO or any net proceeds of any exercises and sales.
Conclusion
CONCLUSION OF THE CD&A
We have designed and administer our compensation programs in a manner that emphasizes the retention of our named executive officersNEOs and rewards them appropriately for positive results. We monitor the programs in recognition of the dynamic marketplace in which we compete for talent and will continue to emphasize pay-for-performance and equity-based incentive plans that reward our named executive officersNEOs for results aligned with the interests of our stockholders.shareholders.
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 49 |
EXECUTIVE COMPENSATION TABLES
2015 Summary Compensation Table
2022 SUMMARY COMPENSATION TABLE
The following table shows the compensation earned by our
named executive officersNEOs for the fiscal years ended December 31,
2015, 2014, 2013: | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Salary
($) | | Bonus(1)
($) | | Stock
Awards(2)
($) | | Option
Awards(2)
($) | | Non-Equity
Incentive
Plan
Comp(3)
($) | | All Other
Comp(4)
($) | | Total
($) |
William A. Koertner
Chairman, President and
Chief Executive Officer | | | 2015 | | | | 611,250 | | | | — | | | | 1,210,809 | | | | — | | | | 494,729 | | | | 36,825 | | | | 2,353,613 | |
| | | 2014 | | | | 600,000 | | | | — | | | | 1,109,590 | | | | — | | | | 866,337 | | | | 41,100 | | | | 2,617,027 | |
| | | 2013 | | | | 592,500 | | | | — | | | | 799,978 | | | | 399,996 | | | | 710,763 | | | | 37,200 | | | | 2,540,437 | |
Betty R Johnson
Senior Vice President, Chief Financial Officer and Treasurer | | | 2015 | | | | 67,308 | | | | 101,826 | | | | 199,993 | | | | — | | | | — | | | | 8,650 | | | | 377,777 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tod M. Cooper
Senior Vice President | | | 2015 | | | | 326,813 | | | | — | | | | 380,147 | | | | — | | | | 189,108 | | | | 24,536 | | | | 920,604 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gerald B. Engen, Jr.
Senior Vice President, Chief Legal Officer and Secretary | | | 2015 | | | | 351,500 | | | | — | | | | 398,848 | | | | — | | | | 203,393 | | | | 32,530 | | | | 986,271 | |
| | | 2014 | | | | 341,500 | | | | — | | | | 365,553 | | | | — | | | | 316,669 | | | | 38,750 | | | | 1,062,472 | |
| | | 2013 | | | | 330,780 | | | | — | | | | 199,958 | | | | 99,996 | | | | 282,064 | | | | 30,600 | | | | 943,398 | |
Paul J. Evans(5)
Former Vice President, Chief Financial Officer and Treasurer | | | 2015 | | | | 280,854 | | | | — | | | | 350,937 | | | | — | | | | — | | | | 1,192,911 | | | | 1,824,702 | |
| | | 2014 | | | | 328,500 | | | | — | | | | 321,584 | | | | — | | | | 271,091 | | | | 39,092 | | | | 960,267 | |
| | | 2013 | | | | 315,750 | | | | — | | | | 199,958 | | | | 99,996 | | | | 242,812 | | | | 37,200 | | | | 895,716 | |
Richard S. Swartz, Jr.
Senior Vice President and Chief Operating Officer | | | 2015 | | | | 389,000 | | | | — | | | | 501,846 | | | | — | | | | 238,776 | | | | 28,699 | | | | 1,158,321 | |
| | | 2014 | | | | 376,500 | | | | — | | | | 459,903 | | | | — | | | | 376,007 | | | | 37,500 | | | | 1,249,910 | |
| | | 2013 | | | | 361,000 | | | | — | | | | 233,324 | | | | 116,658 | | | | 330,532 | | | | 30,600 | | | | 1,072,114 | |
| (1) | Represents the $100,000 sign-on cash bonus Ms. Johnson received upon her appointment on October 19, 2015 and amounts reimbursed to Ms. Johnson for COBRA payments. |
| (2) | Represents the aggregate grant date fair value of stock awards, including restricted stock and performance shares (Stock Awards column), and stock option awards (Option Awards column) granted under the LTIP during the applicable period in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts and vesting details are included in footnote 12 to our audited consolidated financial statements for the fiscal year ended December 31, 2015 included in our 2015 Form 10-K. The values of the performance shares have been calculated taking into consideration the probable outcome of the respective performance conditions as of the grant date. These amounts reflect our accounting expense for these awards and do not correspond to the actual value that may be recognized by the officers. Below is a breakout of the 2015 performance share grant date fair values assuming probable performance and maximum performance (in the case of maximum, based on the maximum number of shares multiplied by the fair value on the grant date): |
| | | | |
| Named Executive Officer | | Probable
Performance
($) | | Maximum
Performance
($) |
| William A. Koertner | | | 796,833 | | | | 1,593,666 | |
| Tod M. Cooper | | | 250,157 | | | | 500,314 | |
| Gerald B. Engen, Jr. | | | 262,464 | | | | 524,928 | |
| Paul J. Evans | | | 230,961 | | | | 461,922 | |
| Richard S. Swartz, Jr. | | | 330,266 | | | | 660,532 | |
| (3) | Represents the dollar value of the cash awards earned under our SMIP for fiscal 2015, 2014 and 2013 for Messrs. Koertner, Cooper, Engen and Swartz. Ms. Johnson was not eligible to participate in the program for 2015, but will participate in the SMIP in 2016. For further details regarding the SMIP, see |
2022, 2021 and 2020: | | | | | | | | | | | | | | | | | | | | | | |
Name and
Principal Position | | Year | Salary
($) | | Stock Awards(1) ($) | Non-Equity Incentive Plan Comp(2) ($) | All Other Compensation(3) ($) | Total
($) |
Richard S. Swartz
President and Chief Executive Officer | | 2022 | 812,500 | | | 2,268,882 | 1,127,768 | | 39,245 | | 4,248,395 | |
| 2021 | 768,750 | | | 1,899,867 | | 1,427,162 | | 41,548 | | 4,137,327 | |
| 2020 | 716,539 | | | 1,286,539 | | 1,229,754 | | 49,807 | | 3,282,639 | |
Betty R. Johnson
Senior Vice President, Chief Financial Officer | | 2022 | 490,000 | | | 674,840 | | 476,092 | | 59,300 | | 1,700,232 | |
| 2021 | 468,750 | | | 649,832 | | 609,154 | | 56,500 | | 1,784,236 | |
| 2020 | 436,058 | | | 514,583 | | 523,867 | | 64,600 | | 1,539,108 | |
Tod M. Cooper
Senior Vice President, Chief Operating Officer T&D | | 2022 | 530,000 | | | 699,807 | | 551,739 | | 53,300 | | 1,834,846 | |
| 2021 | 493,750 | | | 674,830 | | 641,643 | | 45,955 | | 1,856,178 | |
| 2020 | 447,923 | | | 514,583 | | 538,121 | | 46,053 | | 1,546,680 | |
William F. Fry
Vice President, Chief Legal Officer and Secretary | | 2022 | 411,250 | | | 449,843 | 399,577 | | 41,358 | | 1,302,028 | |
| 2021 | 395,000 | | | 449,843 | | 513,314 | | 38,928 | | 1,397,085 | |
| 2020 | 349,327 | | | 364,492 | | 389,694 | | 52,972 | | 1,156,485 | |
Jeffrey J. Waneka
Senior Vice President, Chief Operating Officer C&I | | 2022 | 427,500 | | | 499,726 | | 415,366 | | 42,899 | | 1,385,491 | |
| 2021 | 418,750 | | | 499,874 | | 544,178 | | 43,486 | | 1,506,288 | |
| 2020 | 403,846 | | | 428,814 | | 485,168 | | 50,736 | | 1,368,564 | |
(1)Represents the aggregate grant date fair value of stock awards, including Restricted Stock Units and performance shares granted under the LTIP during the applicable period in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts and vesting details are included in footnote 15 to our 2022 Form 10-K. The values of the performance shares have been calculated taking into consideration the probable outcome of the respective performance conditions as of the grant date (target performance). These amounts reflect our accounting expense for these awards and do not correspond to the actual value that may be recognized by the officers. Below is a breakout of the 2022 performance for the share grant date fair values assuming probable performance and maximum performance (in the case of maximum, based on the maximum number of shares multiplied by the fair value on the grant date):
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| | | | | | | | |
| Named Executive Officer | Probable
Performance (Target)
($) | Maximum
Performance
($) |
| Richard S. Swartz | 1,361,317 | | 2,722,634 | |
| Betty R. Johnson | 404,862 | | 809,724 | |
| Tod M. Cooper | 419,808 | | 839,616 | |
| William F. Fry | 269,858 | | 539,716 | |
| Jeffrey J. Waneka | 299,798 | | 599,596 | |
(2)Represents the dollar value of the cash awards earned under our MIP by the NEOs for fiscal 2022, 2021 and 2020. For further details regarding the MIP, see “Compensation Discussion and Analysis—Analysis of 2022 Compensation Decisions and Actions—2022 Short-Term Incentive Compensation” above.
(3)The following supplemental table describes the items of compensation reported in this column for 2022:
| | “Compensation Discussion and Analysis — Analysis of 2015 Compensation Decisions and Actions — Senior Management Incentive Plan Awards” above. |
| (4) | The following supplemental table describes the items of compensation reported in this column for fiscal 2015: |
| | | | | | | | | | |
| Name | | 401(k)
Matching
Contribution
($) | | Profit
Sharing
Contribution
($) | | Automobile
and Other
Travel
Expenses
($)(A) | | Financial
Planning
Services
($) | | Termination
Payment
($)(B) |
| William A. Koertner | | | 18,000 | | | | 12,225 | | | | 6,600 | | | | — | | | | — | |
| Betty R Johnson | | | 5,654 | | | | 1,346 | | | | 1,650 | | | | — | | | | — | |
| Tod M. Cooper | | | 18,000 | | | | 6,536 | | | | — | | | | — | | | | — | |
| Gerald B. Engen, Jr. | | | 18,000 | | | | 7,030 | | | | — | | | | 7,500 | | | | — | |
| Paul J. Evans | | | 16,851 | | | | — | | | | — | | | | — | | | | 1,176,060 | |
| Richard S. Swartz, Jr. | | | 18,000 | | | | 7,780 | | | | 2,919 | | | | — | | | | — | |
| 50 | (A) | Represents the named executive officer’s personal use of a company automobile or automobile and fuel allowance and related expenses and reimbursement for certain personal travel-related expenses. |
| (B) | As part of Mr. Evans’ separation from the Company, he received a payout in accordance with the termination provisions in his employment agreement. |
| (5) | The nominal value of Mr. Evans’ 2015 stock awards in the 2015 Summary Compensation Table includes the value of his restricted stock award and performance shares award, assuming probable performance. At the end of the performance period, Mr. Evans will receive a pro-rated portion of the performance shares earned, based on his employment for 9 full months of the 36 month performance period, per the terms of his performance shares award agreement. The value of his pro-rated performance shares award, assuming probable performance to targets, was $57,740 and at maximum performance would be $115,480.MYR GROUP INC. | 2023 PROXY STATEMENT |
| | | | | | | | | | | | | | |
| Name | 401(k)
Matching
Contribution
($) | Profit
Sharing
Contribution
($) | Automobile and Other Travel Expenses(a) ($) | Financial
Planning
Services
($) |
| Richard S. Swartz | 17,400 | | 21,100 | | 745 | | |
| Betty R. Johnson | 17,400 | | 21,100 | | 10,800 | | 10,000 | |
| Tod M. Cooper | 17,400 | | 21,100 | | 4,800 | | 10,000 | |
| William F. Fry | 17,400 | | 21,100 | | 2,858 | | |
| Jeffrey J. Waneka | 17,400 | | 25,045 | | 454 | | |
a.Represents the NEO’s personal use of Plan-Based Awardsa company automobile or automobile and fuel allowance and related expenses and reimbursements for certain personal travel-related expenses.
2022 GRANTS OF PLAN-BASED AWARDS
The following table sets forth the estimated future payouts for grants of awards made to each of the
named executive officersNEOs under the
SMIPMIP and LTIP for
2015: | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Grant
Date | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1) | | Estimated Future Payouts
Under Equity Incentive
Plan Awards(2) | | All Other
Stock
Awards(3)
(#) | | All Other
Option
Awards(4)
(#) | | Exercise
or Base
Price of
Option
Awards(4)
($/sh) | | Grant Date
Fair Value
of Stock
and Option
Awards(5)
($) |
| | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) |
| William A. Koertner | | | | | | | 259,781 | | | | 626,531 | | | | 1,222,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | 10,295 | | | | 20,590 | | | | 41,180 | | | | | | | | | | | | | | | | 796,833 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,726 | | | | — | | | | — | | | | 413,976 | |
| Betty R. Johnson | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,861 | | | | | | | | | | | | 199,993 | |
Tod M.
Cooper | | | | | | | 114,384 | | | | 232,037 | | | | 408,516 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | 3,232 | | | | 6,464 | | | | 12,928 | | | | | | | | | | | | | | | | 250,157 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,310 | | | | — | | | | — | | | | 129,990 | |
| Gerald B. Engen, Jr. | | | | | | | 123,025 | | | | 249,565 | | | | 439,375 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | 3,391 | | | | 6,782 | | | | 13,564 | | | | | | | | | | | | | | | | 262,464 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,522 | | | | — | | | | — | | | | 136,384 | |
| Paul J. Evans | | | | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | 2,984 | | | | 5,968 | | | | 11,936 | | | | | | | | | | | | | | | | 230,961 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,978 | | | | — | | | | — | | | | 119,976 | |
| Richard S. Swartz, Jr. | | | | | | | 140,040 | | | | 295,640 | | | | 525,150 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | 4,267 | | | | 8,534 | | | | 17,068 | | | | | | | | | | | | | | | | 330,266 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,689 | | | | — | | | | — | | | | 171,580 | |
| (1) | The target amounts represent the potential cash payout if performance is at target levels under the SMIP. For further details regarding the SMIP, see “Compensation Discussion and Analysis — Analysis of 2015 Compensation Decisions and Actions — Senior Management Incentive Plan Awards” above. Actual amounts awarded under the SMIP were paid in 2016 and are disclosed in the 2015 Summary Compensation Table. Mr. Evans will not receive a payout under the non-equity incentive plan based on the terms of his separation agreement. |
| (2) | These columns contain the performance-based awards only and are split evenly between ROIC-based performance shares and TSR-based performance share awards. The “Target” column represents the number of shares payable if the target ROIC and TSR levels are met. The “Threshold” column represents the number of shares payable if the minimum performance target is met. The “Maximum” column represents the maximum number of shares payable if the maximum performance target is exceeded. The performance period for these shares is January 1, 2015 through December 31, 2017. At the end of the performance period, Mr. Evans will receive a pro-rated portion of the performance shares earned, based on his employment for 9 full months of the 36 month performance period, per the terms of his performance shares award agreement. |
| (3) | All restricted stock awards were granted under the LTIP. The restricted stock awards granted on March 24, 2015 to Messrs. Koertner, Cooper, Engen and Swartz will vest ratably over a three-year period. The restricted stock awarded to Ms. Johnson will cliff vest on October 19, 2020. Mr. Evans’ restricted stock, which was granted on March 24, 2015, vested on October 19, 2015, the date of his termination, per the terms of his restricted stock award agreement. |
| (4) | No stock options were awarded in 2015. |
| (5) | Represents the aggregate grant date fair value of restricted stock and performance shares granted under the LTIP during the fiscal year ended December 31, 2015 in accordance with FASB ASC Topic 718. The values of the performance shares have been calculated taking into consideration the probable outcome of the respective performance conditions as of the grant date. The fair value per share of the restricted stock and ROIC-based performance awards granted on March 24, 2015 was $30.16. The fair value per share of |
2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Grant
Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or or Units(3) (#) | Grant Date Fair Value of Stock and Option Awards(4) ($) |
Threshold
($) | Target
($) | Maximum
($) | Performance
Metric | Threshold
(#) | Target
(#) | Maximum
(#) |
| Richard S. Swartz | | 412,500 | 825,000 | 1,650,000 | | | | | | |
| 3/23/2022 | | | | TSR | 1,149 | 4,596 | 9,192 | | 680,668 |
| 3/23/2022 | | | | ROIC | 3,430 | 6,860 | 13,720 | | 680,649 |
| 3/23/2022 | | | | | | | | 9,147 | 907,565 |
| Betty R. Johnson | | 173,250 | 346,500 | 693,000 | | | | | | |
| 3/23/2022 | | | | TSR | 341 | 1,367 | 2,734 | | 202,453 |
| 3/23/2022 | | | | ROIC | 1,020 | 2,040 | 4,080 | | 202,409 |
| 3/23/2022 | | | | | | | | 2,721 | 269,978 |
| Tod M. Cooper | | 202,500 | 405,000 | 810,000 | | | | | | |
| 3/23/2022 | | | | TSR | 354 | 1,417 | 2,834 | | 209,858 |
| 3/23/2022 | | | | ROIC | 1,058 | 2,116 | 4,232 | | 209,950 |
| 3/23/2022 | | | | | | | | 2,822 | 279,999 |
| William F. Fry | | 145,250 | 290,500 | 581,000 | | | | | | |
| 3/23/2022 | | | | TSR | 227 | 911 | 1,822 | | 134,919 |
| 3/23/2022 | | | | ROIC | 680 | 1,360 | 2,720 | | 134,939 |
| 3/23/2022 | | | | | | | | 1,814 | 179,985 |
| Jeffrey J. Waneka | | 150,500 | 301,000 | 602,000 | | | | | | |
| 3/23/2022 | | | | TSR | 253 | 1,012 | 2,024 | | 149,877 |
| 3/23/2022 | | | | ROIC | 755 | 1,511 | 3,022 | | 149,921 |
| 3/23/2022 | | | | | | | | 2,015 | 199,928 |
(1)These amounts reflect the threshold, target and maximum annual cash incentive compensation amounts that could have been earned by each NEO during 2022 based on the achievement of annual performance goals under the MIP. For further details regarding the MIP, see “Compensation Discussion and Analysis—Analysis of 2022 Compensation Decisions and Actions—2022 Short-Term Incentive Compensation” above. Actual amounts awarded under the MIP that were earned in 2022 are disclosed in the “Executive Compensation Tables—2022 Summary Compensation Table.”
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(2)These amounts reflect the threshold, target and maximum number of ROIC-based performance shares and TSR-based performance shares granted on March 23, 2022 under the LTIP. The ROIC-based performance shares will ultimately vest, if earned, upon the achievement of performance goals over the January 1, 2022-December 31, 2024 performance period. The TSR-based performance shares will ultimately vest, if earned, upon the achievement of performance goals over the March 23, 2022-December 31, 2024 performance period.(3)This column contains the Restricted Stock Unit awards only. The Restricted Stock Unit awards granted on March 23, 2022 under the LTIP to the NEOs will vest ratably over a three-year period beginning on the first anniversary of the grant date.
| | the TSR-based performance awards granted on March 24, 2015, which are based on a market-based measure, was $47.24 which was determined using a Monte Carlo simulation. Assumptions used in the calculation of these amounts and vesting details are included in footnote 12 to our audited consolidated financial statements for the fiscal year ended December 31, 2015 included in our 2015 Form 10-K. These amounts reflect our accounting expense for these awards and may not correspond to the actual value that may be recognized by the officers. | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 51 |
Employment Agreements
(4)Represents the aggregate grant date fair value of Restricted Stock Units and performance shares granted under the LTIP during the fiscal year ended December 31, 2022 in accordance with FASB ASC Topic 718. The values of the performance shares have been calculated taking into consideration the probable outcome of the respective performance conditions as of the grant date (target performance). The fair value per share of the Restricted Stock Units and ROIC-based performance awards granted on March 23, 2022 was the grant date share price of $99.22. The fair value per share of the TSR-based performance awards granted on March 23, 2022, which are based on a market-based performance measure was $148.10, as determined using a Monte Carlo simulation. Assumptions used in the calculation of these amounts and vesting details are included in footnote 15 to our audited consolidated financial statements in our 2022 Form 10-K. These amounts reflect our accounting expense for these awards and may not correspond to the actual value that may be recognized by the officers.
EMPLOYMENT AGREEMENTS
Under each Employment Agreement, the
officerNEO is eligible to receive salary, an annual
target bonus,cash incentive award, as defined under the
SMIP,MIP, severance pay under certain conditions, use of a company car and gas card or a car allowance in accordance with the Company’s policy, and is eligible to participate in all incentive, 401(k), profit sharing, health and welfare benefit plans, policies and arrangements applicable generally to our other similarly-situated executive officers. Subject to prior notice, each Employment Agreement automatically renews annually for an additional one-year term.
Each Employment Agreement contains non-competition covenants restricting the ability of the
named executive officerNEO to compete with us, to solicit our clients or to recruit our employees during the term of his
or her employment and for a period of one year thereafter and prohibiting him
or her from disclosing confidential information and trade secrets at any time during or after his
or her employment.
Each Employment Agreement generally terminates upon the
named executive officer’s:death;NEO’s:
disability;•death;
•disability;
•termination for “cause”cause by the Company or for “good reason”without good reason by the employee (as both are defined in the Employment Agreements and generally described below);employee;
•termination without cause or for good reason; or
•termination without cause or for good reason following a “Change in Control” (as defined in each Employment Agreement and generally described below).
If termination results from any of the foregoing, each
named executive officer would beNEO is entitled to all compensation earned and all benefits and reimbursements due through the date of termination. Additionally, if termination results from any of the reasons below, the
named executive officerNEO would be entitled to the following additional payments and/or benefits:
| | | | | |
| Reason for Termination | | Potential Payment(s) |
| Disability | | •
Long-term disability benefits pursuant to the terms of any long-term disability policy provided to similarly-situatedsimilarly situated employees of the Company in which the named executive officerNEO participates. |
WithoutTermination by the Company without cause or resignation by the employee for good reason | | •
Lump-sum payment of twice the named executive officer’sNEO’s base salary and target annual incentive. |
| | •
Company-funded benefit continuation coverage for the named executive officerNEO and eligible dependents for a period of two years, subject to forfeiture in the event the named executive officerNEO breaches the restrictive covenants or becomes reemployed in the two-year period following his or her termination.
|
|
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| | |
Reason for Termination | | Potential Payment(s) |
Without by the Company without cause or resignation by the employee for good reason within 12 months following a change in control, a so-called “double trigger” provision | | •
Lump-sum payment of three times the named executive officer’sNEO’s base salary and target annual incentive. |
| •
Company-funded benefit continuation coverage for the named executive officerNEO and eligible dependents for a period of two years, subject to forfeiture in the event the named executive officerNEO becomes reemployed in the two-year period following his or her termination.
|
| | | | | |
| 52 | | •
Gross-up payments for excise taxes, under the Legacy Employment Agreements (the Company does not include such payments in new employment agreements for named executive officers).
MYR GROUP INC. | 2023 PROXY STATEMENT |
Each Employment Agreement for the named executive officers generally defines “cause” as a named executive officer’s:an NEO’s:
•material breach of the non-competition provisions of the named executive officer’sNEO’s Employment Agreement;
•commission of a criminal act by the named executive officerNEO against the Company, including but not limited to fraud, embezzlement or theft;
•conviction or plea of no contest or nolo contendre to a felony or any crime involving moral turpitude; or
•failure or refusal to carry out, or comply with, in any material respect, any lawful directive of the Board that is not cured within 30 days after the receipt of written notice from the Company.
“Good reason”
for a NEO’s resignation exists under each Employment Agreement if, among other things,
such named executive officer’sthe NEO’s base salary and/or annual target
bonusincentive opportunity is reduced, his or her duties are materially reduced, he or she is required to relocate to a work site more than 50 miles from his or her current work site or if the Company materially breaches a material provision of the
named executive officer’sNEO’s Employment Agreement and fails to cure such breach within 30 days of the receipt of written notice of the breach.
Each Employment Agreement for the named executive officers generally defines a “change in control” as the occurrence of a “change in the ownership of the Company,” a “change in the effective control of the Company” or a “change in the ownership of a substantial portion of the Company’s assets” as defined in Treasury Regulation §§1.409A-3(i)(5)(v), (vi) and (vii), respectively. As described above, if a named executive officerNEO is terminated without cause or resigns for good reason within 12 months following a “change in control,” the named executive officerNEO would be entitled to all compensation earned and all benefits and reimbursements due through the date of termination, as well as toa lump-sum payment ofequal to three times the named executive officer’sNEO’s base salary, three times target annual incentive and company-funded benefit continuation coverage for the named executive officerNEO and eligible dependents for a period of two years, subject to forfeiture in the event the named executive officerNEO becomes reemployed in the two-year period following his termination and, underor her termination.
The foregoing descriptions of the Legacyterms of the Employment Agreements only, gross-up payments for any excise taxes incurred under Sections 280G.are qualified in their entirety by reference to the terms and conditions of such agreements that the Company has filed with the SEC.
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“Change in control” is similarly defined in the LTIP and its predecessor, the 2007 LTIP. Under the terms of the LTIPlong-term incentive plans, award agreements may provide for the effect of a change in control, which may include any one or more of the following:
following effects in connection with a change in control:•the acceleration or extension of time periods for purposes of exercising, vesting in or realizing gain from any award granted under the LTIP and its predecessor, the 2007 LTIP;
•the waiver or modification of performance or other conditions related to the payment or other rights under an award;
•provision for the cash settlement of an award for an equivalent cash value, as determined by the Compensation Committee; or
•other modifications or adjustments to an award as the Compensation Committee deems appropriate to maintain and protect the rights and interests of plan participants upon or following a change in control.
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 53 |
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Outstanding Equity Awards at 2015 Fiscal Year End
The following table sets forth for each named executive officer outstanding equity awards as of the end of the 2015 fiscal year:
| | | | | | | | | | | | | | | | | | |
Name
(a) | | | | OPTION AWARDS | | STOCK AWARDS |
| | Grant
Date | | Number of
Securities
Underlying
Unexercised
Options
(# Exercisable)
(b)(1) | | Number of
Securities
Underlying
Unexercised
Options
(# Unexercisable)
(c) | | Option
Exercise
Price
($) (d) | | Option
Expiration
Date
(e) | | Number of
Shares of
Stock That
Have Not
Vested
(#) (f) | | Market
Value of
Shares of
Stock That
Have Not
Vested
($) (g)(2) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares That
Have Not
Vested
(#) (h) | | Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares That
Have Not
Vested
($) (i)(2) |
| William A. Koertner | | | 12/20/07 | | | | 110,000 | | | | | | | | 13.00 | | | | 12/20/17 | | | | | | | | | | | | | | | | | |
| | | | 3/24/10 | | | | 28,679 | | | | | | | | 17.18 | | | | 3/24/20 | | | | | | | | | | | | | | | | | |
| | | | 3/24/11 | | | | 25,258 | | | | | | | | 24.18 | | | | 3/24/21 | | | | | | | | | | | | | | | | | |
| | | | 3/23/12 | | | | 35,635 | | | | | | | | 17.48 | | | | 3/23/22 | | | | | | | | | | | | | | | | | |
| | | | 3/25/13 | | | | 22,710 | | | | 11,355 | | | | 24.68 | | | | 3/25/23 | | | | | | | | | | | | | | | | | |
| | | | 3/24/11 | | | | | | | | | | | | | | | | | | | | 2,481 | (3) | | | 51,133 | | | | | | | | | |
| | | | 3/23/12 | | | | | | | | | | | | | | | | | | | | 6,864 | (3) | | | 141,467 | | | | | | | | | |
| | | | 3/25/13 | | | | | | | | | | | | | | | | | | | | 9,724 | (3) | | | 200,412 | | | | | | | | | |
| | | | 3/24/14 | | | | | | | | | | | | | | | | | | | | 11,165 | (3) | | | 230,111 | | | | | | | | | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | 13,726 | (3) | | | 282,893 | | | | | | | | | |
| | | | 3/24/14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 25,120 | (4) | | | 517,723 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,590 | (5) | | | 424,360 | |
Betty R.
Johnson | | | 12/20/07 | | | | 8,000 | | | | | | | | 13.00 | | | | 12/20/17 | | | | | | | | | | | | | | | | | |
| | | | 10/19/15 | | | | | | | | | | | | | | | | | | | | 8,861 | (7) | | | 182,625 | | | | | | | | | |
| Tod M. Cooper | | | 12/20/07 | | | | 9,212 | | | | | | | | 13.00 | | | | 12/20/17 | | | | | | | | | | | | | | | | | |
| | | | 3/24/10 | | | | 1,911 | | | | | | | | 17.18 | | | | 3/24/20 | | | | | | | | | | | | | | | | | |
| | | | 3/24/11 | | | | 1,403 | | | | | | | | 24.18 | | | | 3/24/21 | | | | | | | | | | | | | | | | | |
| | | | 3/23/12 | | | | 2,969 | | | | | | | | 17.48 | | | | 3/23/22 | | | | | | | | | | | | | | | | | |
| | | | 3/25/13 | | | | 1,419 | | | | 710 | | | | 24.68 | | | | 3/25/23 | | | | | | | | | | | | | | | | | |
| | | | 3/24/11 | | | | | | | | | | | | | | | | | | | | 137 | (3) | | | 2,824 | | | | | | | | | |
| | | | 3/23/12 | | | | | | | | | | | | | | | | | | | | 572 | (3) | | | 11,789 | | | | | | | | | |
| | | | 3/25/13 | | | | | | | | | | | | | | | | | | | | 607 | (3) | | | 12,510 | | | | | | | | | |
| | | | 8/12/13 | | | | | | | | | | | | | | | | | | | | 6,708 | (8) | | | 138,252 | | | | | | | | | |
| | | | 3/24/14 | | | | | | | | | | | | | | | | | | | | 2,427 | (3) | | | 50,020 | | | | | | | | | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | 4,310 | (3) | | | 88,829 | | | | | | | | | |
| | | | 3/24/14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,460 | (4) | | | 112,531 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,464 | (5) | | | 133,223 | |
Gerald B.
Engen, Jr. | | | 12/20/07 | | | | 32,000 | | | | | | | | 13.00 | | | | 12/20/17 | | | | | | | | | | | | | | | | | |
| | | | 3/24/10 | | | | 9,559 | | | | | | | | 17.18 | | | | 3/24/20 | | | | | | | | | | | | | | | | | |
| | | | 3/24/11 | | | | 7,296 | | | | | | | | 24.18 | | | | 3/24/21 | | | | | | | | | | | | | | | | | |
| | | | 3/23/12 | | | | 10,294 | | | | | | | | 17.48 | | | | 3/23/22 | | | | | | | | | | | | | | | | | |
| | | | 3/25/13 | | | | 5,677 | | | | 2,839 | | | | 24.68 | | | | 3/25/23 | | | | | | | | | | | | | | | | | |
| | | | 3/24/11 | | | | | | | | | | | | | | | | | | | | 716 | (3) | | | 14,757 | | | | | | | | | |
| | | | 3/23/12 | | | | | | | | | | | | | | | | | | | | 1,983 | (3) | | | 40,870 | | | | | | | | | |
| | | | 3/25/13 | | | | | | | | | | | | | | | | | | | | 2,431 | (3) | | | 50,103 | | | | | | | | | |
| | | | 3/24/14 | | | | | | | | | | | | | | | | | | | | 3,678 | (3) | | | 75,804 | | | | | | | | | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | 4,522 | (3) | | | 93,198 | | | | | | | | | |
| | | | 3/24/14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,276 | (4) | | | 170,568 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,782 | (5) | | | 139,777 | |
(continued on next page)
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
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| | | | | | | | | | | | | | | | | | |
Name
(a) | | | | OPTION AWARDS | | STOCK AWARDS |
| | Grant
Date | | Number of
Securities
Underlying
Unexercised
Options
(# Exercisable)
(b)(1) | | Number of
Securities
Underlying
Unexercised
Options
(# Unexercisable)
(c) | | Option
Exercise
Price
($) (d) | | Option
Expiration
Date
(e) | | Number of
Shares of
Stock That
Have Not
Vested
(#) (f) | | Market
Value of
Shares of
Stock That
Have Not
Vested
($) (g)(2) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares That
Have Not
Vested
(#) (h) | | Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares That
Have Not
Vested
($) (i)(2) |
| Paul J. Evans(6) | | | 1/3/12 | | | | 23,734 | | | | | | | | 19.46 | | | | 1/17/16 | | | | | | | | | | | | | | | | | |
| | | | 3/25/13 | | | | 8,516 | | | | | | | | 24.68 | | | | 1/17/16 | | | | | | | | | | | | | | | | | |
| | | | 3/24/14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,246 | (4) | | | 87,510 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,492 | (5) | | | 30,750 | |
| Richard S. Swartz, Jr. | | | 12/20/07 | | | | 32,000 | | | | | | | | 13.00 | | | | 12/20/17 | | | | | | | | | | | | | | | | | |
| | | | 3/24/10 | | | | 9,559 | | | | | | | | 17.18 | | | | 3/24/20 | | | | | | | | | | | | | | | | | |
| | | | 3/24/11 | | | | 8,419 | | | | | | | | 24.18 | | | | 3/24/21 | | | | | | | | | | | | | | | | | |
| | | | 3/23/12 | | | | 11,878 | | | | | | | | 17.48 | | | | 3/23/22 | | | | | | | | | | | | | | | | | |
| | | | 3/25/13 | | | | 6,623 | | | | 3,312 | | | | 24.68 | | | | 3/25/23 | | | | | | | | | | | | | | | | | |
| | | | 3/24/11 | | | | | | | | | | | | | | | | | | | | 827 | (3) | | | 17,044 | | | | | | | | | |
| | | | 5/12/11 | | | | | | | | | | | | | | | | | | | | 6,688 | (9) | | | 137,840 | | | | | | | | | |
| | | | 3/23/12 | | | | | | | | | | | | | | | | | | | | 2,288 | (3) | | | 47,156 | | | | | | | | | |
| | | | 3/25/13 | | | | | | | | | | | | | | | | | | | | 2,836 | (3) | | | 58,450 | | | | | | | | | |
| | | | 3/24/14 | | | | | | | | | | | | | | | | | | | | 4,627 | (3) | | | 95,362 | | | | | | | | | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | 5,689 | (3) | | | 117,250 | | | | | | | | | |
| | | | 3/24/14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,412 | (4) | | | 214,591 | |
| | | | 3/24/15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,534 | (5) | | | 175,886 | |
| (1) | The options in column (b) with an option expiration date of December 20, 2017 were granted under the stockholder-approved LTIP and vested ratably over a four-year period. The options with an expiration date of January 17, 2016 were granted under the stockholder-approved LTIP and vested upon the executive’s termination, as per the terms of his stock option agreement. All other options were granted under the stockholder-approved LTIP and vest or vested ratably over a three-year period. |
| (2) | The closing price of $20.61 of the Company’s shares on December 31, 2015 was used to determine the market values shown in columns (g) and (i). |
| (3) | The restricted stock awards granted on March 24, 2010, March 24, 2011, March 23, 2012 and March 25, 2013 vest ratably over a five-year period while the restricted stock awards granted on March 24, 2014 and March 24, 2015 vest ratably over a three-year period. These restricted stock awards are subject to certain clawback provisions. |
| (4) | These performance share awards will cliff vest on December 31, 2016, and are split evenly between the achievement of certain specified levels of the Company’s ROIC over a performance measurement period from January 1, 2014 to December 31, 2016 and the Company’s relative TSR compared to a peer group of companies from January 1, 2014 to December 31, 2016. These performance stock awards are subject to certain clawback provisions. Target award shown: ROIC-based award may be earned between threshold (50% of target) and maximum (200% of target) and TSR-based award may be earned between threshold (25% of target) and maximum (200% of target), although the minimum payout for either award is zero. |
| (5) | These performance share awards will cliff vest on December 31, 2017, and are split evenly between the achievement of certain specified levels of the Company’s ROIC over a performance measurement period from January 1, 2015 to December 31, 2017 and the Company’s relative TSR compared to a peer group of companies from January 1, 2015 to December 31, 2017. These performance stock awards are subject to certain clawback provisions. Target award shown: ROIC-based award may be earned between threshold (50% of target) and maximum (200% of target) and TSR-based award may be earned between threshold (25% of target) and maximum (200% of target), although the minimum payout for either award is zero. |
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| (6) | Upon Mr. Evans’ separation from the Company, pursuant to his stock option award agreements, all of his unvested stock options immediately vested. His stock options were exercisable over the 90 day period after his separation, which ended on January 17, 2016. He is entitled to a pro-rated payout of his performance share awards based on the number of the full months of his employment during the measurement period, as specified in his performance shares award agreement. |
| (7) | This restricted stock award was granted to Ms. Johnson upon her appointment as Senior Vice President, Chief Financial Officer and Treasurer. The award will cliff vest on October 19, 2020. This restricted stock award is subject to certain clawback provisions. |
| (8) | This restricted stock award was granted to Mr. Cooper upon his appointment as Senior Vice President. The award will cliff vest on August 12, 2018. This restricted stock award is subject to certain clawback provisions. |
| (9) | This restricted stock award was granted to Mr. Swartz upon his promotion to Chief Operating Officer. The award will cliff vest on May 12, 2016. This restricted stock award is subject to certain clawback provisions. |
2015 Option Exercises and Stock Vested
The following table sets forth for each named executive officer the activity for stock option exercises and vesting of stock awards during the year ended December 31, 2015:
| | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number of
Shares Acquired
Upon Exercise
(#) | | Value Realized
Upon Exercise
($)(1) | | Number of
Shares Acquired
Upon Vesting
(#)(2) | | Value Realized
Upon Vesting
($)(3) |
| William A. Koertner | | | 69,632 | | | | 1,861,448 | | | | 32,463 | | | | 842,875 | |
| Tod M. Cooper | | | — | | | | — | | | | 2,958 | | | | 80,728 | |
| Gerald B. Engen, Jr. | | | 10,894 | | | | 171,601 | | | | 9,030 | | | | 238,334 | |
| Paul J. Evans | | | — | | | | — | | | | 22,404 | | | | 528,141 | |
| Richard S. Swartz, Jr. | | | 11,577 | | | | 284,139 | | | | 10,522 | | | | 277,654 | |
| (1) | Amounts reflect the difference between the exercise price of the option and the market price of our common stock at the time of exercise. |
| (2) | The amounts shown include restricted stock that vested on March 23, March 24 and March 25, 2015 and performance shares awarded under our LTIP for the 2013 Performance Period which ended on December 31, 2015. For Mr. Evans, the amount shown also includes restricted stock that vested on January 3, 2015 and October 19, 2015. |
| (3) | The amounts shown are calculated based on the closing market price of our common stock on the date of vesting. |
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Potential Payments Upon Termination or Change in Control
As described above under “Employment Agreements,” our named executive officersNEOs have severance and change in control clauses in their Employment Agreements. The following table summarizes and quantifies the compensation that would have become payable to each current executive officerNEO upon termination or a change in control (and qualifying termination) on December 31, 2015,2022, given the named executive officers’NEO’s compensation and service levels as of such date:
| | | | | | | | |
| Name | | Benefit | | Termination
due to
Disability(1) | | Termination
without Cause
or for Good
Reason(2) | | Termination
without Cause or
for Good Reason
within 12 months
following a
Change in
Control(3) |
| William A. Koertner | | | Severance pay(5)
| | | | 269,654 | | | | 2,490,750 | | | | 3,736,125 | |
| | | | Welfare benefits | | | | 22,806 | | | | 105,240 | | | | 105,240 | |
| | | | Accelerated equity(6)
| | | | 1,355,305 | | | | 1,355,305 | | | | 1,848,099 | |
| | | | Total(4)
| | | | 1,647,765 | | | | 3,951,295 | | | | 5,689,464 | |
| Betty R. Johnson(7) | | | Severance pay(5)
| | | | 145,385 | | | | 700,000 | | | | 1,050,000 | |
| | | | Welfare benefits | | | | — | | | | — | | | | — | |
| | | | Accelerated equity(6)
| | | | 182,625 | | | | 182,625 | | | | 182,625 | |
| | | | Total(4)
| | | | 328,010 | | | | 882,625 | | | | 1,232,625 | |
| Tod M. Cooper | | | Severance pay(5)
| | | | 145,021 | | | | 1,131,165 | | | | 1,696,748 | |
| | | | Welfare benefits | | | | 12,384 | | | | 57,144 | | | | 57,144 | |
| | | | Accelerated equity(6)
| | | | 413,319 | | | | 413,319 | | | | 549,978 | |
| | | | Total(4)
| | | | 570,724 | | | | 1,601,628 | | | | 2,303,870 | |
| Gerald B. Engen, Jr. | | | Severance pay(5)
| | | | 155,215 | | | | 1,210,680 | | | | 1,816,020 | |
| | | | Welfare benefits | | | | 23,184 | | | | 115,656 | | | | 115,656 | |
| | | | Accelerated equity(6)
| | | | 422,745 | | | | 422,745 | | | | 585,077 | |
| | | | Total(4)
| | | | 601,144 | | | | 1,749,081 | | | | 2,516,753 | |
| Richard S. Swartz, Jr. | | | Severance pay(5)
| | | | 171,877 | | | | 1,379,840 | | | | 2,069,760 | |
| | | | Welfare benefits | | | | 23,184 | | | | 117,408 | | | | 117,408 | |
| | | | Accelerated equity(6)
| | | | 659,325 | | | | 659,325 | | | | 863,579 | |
| | | | Total(4)
| | | | 854,386 | | | | 2,156,573 | | | | 3,050,747 | |
| | | | | | | | | | | | | | | |
| | | Termination due to Disability(1) | Termination without Cause or for Good Reason(2) | Termination without Cause or for Good Reason within 12 months following a Change in Control(3) |
| Name | | Benefit | $ | $ | $ |
| Richard S. Swartz | | Severance pay(4) | 361,731 | | 3,300,000 | | 4,950,000 | |
| Welfare benefits | 11,082 | | 44,328 | | 44,328 | |
| Accelerated equity(5) | 4,017,292 | | 4,017,292 | | 4,458,213 | |
| Total | 4,390,105 | | 7,361,620 | | 9,452,541 | |
| Betty R. Johnson | | Severance pay(4) | 217,038 | | 1,683,000 | | 2,524,500 | |
| Welfare benefits | 11,208 | | 44,832 | | 44,832 | |
| Accelerated equity(5) | 1,344,369 | | 1,344,369 | | 1,472,107 | |
| Total | 1,572,615 | | 3,072,201 | | 4,041,439 | |
| Tod M. Cooper | | Severance pay(4) | 236,769 | | 1,890,000 | | 2,835,000 | |
| Welfare benefits | 8,514 | | 34,008 | | 34,008 | |
| Accelerated equity(5) | 1,387,036 | | 1,387,036 | | 1,519,432 | |
| Total | 1,632,319 | | 3,311,044 | | 4,388,440 | |
| William F. Fry | | Severance pay(4) | 177,971 | | 1,411,000 | | 2,116,500 | |
| Welfare benefits | 8,514 | | 34,056 | | 34,056 | |
| Accelerated equity(5) | 923,598 | | 923,598 | | 1,008,074 | |
| Total | 1,110,083 | | 2,368,654 | | 3,158,630 | |
| Jeffrey J. Waneka | | Severance pay(4) | 188,538 | | 1,462,000 | | 2,193,000 | |
| Welfare benefits | 8,502 | | 34,008 | | 34,008 | |
| Accelerated equity(5) | 1,036,392 | | 1,036,392 | | 1,130,252 | |
| Total | 1,233,432 | | 2,532,400 | | 3,357,260 | |
| (1) | Represents the amount of salary continuation and other benefits to which the named executive officer(1)Represents the amount of salary continuation and other benefits to which the NEO is entitled under the terms of our long-term disability policy for a period of 180 days from the date of termination due to long-term disability. After six months of salary continuation, as provided by us, the named executive officer will be eligible for benefits under the terms of our long-term disability insurance plan, which provides a benefit equal to 60% of the named executive officer’s monthly base salary (up to a maximum monthly benefit of $10,000) until age 65 or older, as defined in the plan. |
| (2) | Represents the sum of (a) twice the sum of the named executive officer’s base salary and target annual incentive (for 2015, the target annual incentive was 102.5% of annual salary for Mr. Koertner, 76.0% of annual salary for Mr. Swartz and 71.0% of annual salary for Messrs. Cooper and Engen) and (b) company-funded benefit continuation coverage for the named executive officer and eligible dependents under our welfare benefit plans in which the named executive officer is a participant for a period of two years. |
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| (3) | Represents the sum of (a) three times the sum of the named executive officer’s base salary and target annual incentive (for 2015, the target annual incentive was 102.5% of annual salary for Mr. Koertner, 76.0% of annual salary for Mr. Swartz and 71.0% of annual salary for Messrs. Cooper and Engen) and (b) company-funded benefit continuation coverage for the named executive officer and eligible dependents under our welfare benefit plans in which the named executive officer is a participant for a period of two years. |
| (4) | The amounts shown above do not include any gross-up payment which may be due with respect to the excise tax imposed pursuant to Section 4999 of the IRS Code. Based on the following assumptions: a termination of employment without cause (or for good reason) on December 31, 2015 and a per share value on that date of $20.61 would have entitled these named executive officers to the following gross-up payments: $983,504 (Mr. Engen) and $1,057,889 (Mr. Swartz). Ms. Johnson and Mr. Cooper are not eligible to receive such gross-up. The foregoing does not take into account any values that could be attributed to a covenant not to compete. A covenant not to compete would reduce the amounts subject to an excise tax (and therefore potentially any amount necessary to gross up the executive in respect of such excise tax). Each of our executives is subject to a one-year non-compete. |
| (5) | Severance pay includes the named executive officer’s base salary and target annual incentive applicable to the type of severance or change in control payment shown. |
| (6) | Accelerated equity reflects the amount of compensation that each named executive officer would receive upon the accelerated vesting of any outstanding unvested stock-based awards as of the date of termination. The compensation amount shown is based upon (a) the amount of unvested stock options and unvested restricted shares outstanding as of December 31, 2015, (b) the amount of performance shares outstanding as of December 31, 2015 that are expected to be earned prorated for the length of service completed as of December 31, 2015 for termination without cause or for good reason or all performance shares outstanding for termination without cause or for good reason within 12 months following a change of control and (c) the closing market price of a share of our common stock as reported on the NASDAQ Global Market on December 31, 2015, which was $20.61 per share. The compensation amount for the unvested stock options is calculated by multiplying the amount of unvested stock options outstanding times the difference between the closing market price and the exercise or strike price of the option. The compensation amount for the unvested restricted stock is calculated by multiplying the number of shares of unvested restricted stock times the closing market price. The compensation amount for the unvested performance shares for termination without cause or for good reason is calculated by multiplying the unvested performance shares by the closing price and then multiplying that amount by the percentage earned (number of months the executive worked from date of grant to date of termination divided by the number of months in the vesting period for the performance shares). The compensation amount for unvested performance shares for termination without cause or for good reason within 12 months following a change of control is calculated by multiplying the unvested performance shares by the market closing price on the date of termination. |
| (7) | On December 31, 2015, Ms. Johnson was not yet eligible to participate in the SMIP and was not eligible to receive the health insurance portion of welfare benefits. |
Mr. Evans left the Company on October 19, 2015. His employment agreement provided for severance benefits consisting of an aggregate cash payment of $1,176,060, representing severance and health insurance. In addition, the vestings of 14,270 shares of restricted stock and 8,772 non-qualified stock options held by Mr. Evans were accelerated in connection with his termination, per the terms of hisour long-term disability policy for a period of 180 days from the date of termination due to long-term disability. After six months of salary continuation, as provided by us, the NEO will be eligible for benefits under the terms of our long-term disability insurance plan, which provides a benefit equal to 60% of the NEO’s monthly base salary (up to a maximum monthly benefit of $10,000 until age 65 or older, as defined in the plan). Also includes the value of accelerated equity.
(2)Represents the sum of (a) twice the sum of the NEO’s base salary and target annual incentive (for 2022, the target annual incentive was 100% of annual salary for Mr. Swartz, 75% of the salary fir Mr. Cooper, and, 70% of annual salary for Ms. Johnson and Messrs., Fry and Waneka, (b) the estimated cost of two years of company-funded benefit continuation coverage for the NEO and eligible dependents under our welfare benefit plans in which the NEO is a participant and (c) the value of accelerated equity.
(3)Represents the sum of (a) three times the sum of the NEO’s base salary and target annual incentive (for 2022, the target annual incentive was 100% of annual salary for Mr. Swartz, 75% of the salary fir Mr. Cooper, and, 70% of annual salary for Ms. Johnson and Messrs. Fry and Waneka), (b) the estimated cost of two years of company-funded benefit continuation coverage for the NEO and eligible dependents under our welfare benefit plans in which the NEO is a participant and (c) the value of accelerated equity.
(4)Severance pay includes the NEO’s base salary and target annual incentive applicable to the type of severance or change in control payment shown.
| | | | | |
| 54 | MYR GROUP INC. | 2023 PROXY STATEMENT |
(5)Accelerated equity reflects the amount of compensation that each NEO would receive upon the accelerated vesting of any outstanding unvested stock-based awards as of the date of termination. Equity award agreements. Mr. Evansagreements between the Company and a person who was a NEO at the time of the award contain an accelerated vesting clause. Equity awards made before an officer becomes a NEO are not subject to a similar accelerated vesting clause and will also receivebe forfeited upon termination. The compensation amount shown is based upon (a) the number of unvested Restricted Stock Units outstanding as of December 31, 2022, (b) the number of performance shares outstanding as of December 31, 2022 that are expected to be earned prorated for the length of service completed as of December 31, 2022 for termination without cause or resignation for good reason or all performance shares outstanding (at target) for termination without cause or resignation for good reason within 12 months following a pro-ratachange of control and (c) the closing market price per share of anyour common stock as reported on the Nasdaq on December 30, 2022, which was $92.07 per share. The compensation amounts for unvested Restricted Stock Units are calculated by multiplying the number of shares of unvested Restricted Stock Units times the closing market price. The compensation amount for the unvested performance shares for termination without cause or resignation for good reason is calculated by multiplying the number of unvested performance shares by the closing price and then multiplying that amount by the percentage earned (number of months the executive worked from date of grant to date of termination divided by the number of months in the vesting period for the performance shares). The compensation amount for unvested performance shares for termination without cause or resignation for good reason within 12 months following a change of control is calculated by multiplying the number of unvested performance shares at target by the market closing price on the date of termination.
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MYR GROUP INC. | 2023PROXY STATEMENT | 55 |
OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR END
The following table sets forth for each NEO outstanding equity awards as of the end of the 2022 fiscal year:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| Name | | Grant Date | | | | | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or units of Stock That Have Not Vested(1) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Performance Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) |
| Richard S. Swartz | | 04/27/20 | | | | | 5,957 | (2) | 548,461 | | | |
| 03/23/21 | | | | | 7,633 | (3) | 702,770 | | | |
| 03/23/22 | | | | | 9,147 | (3) | 842,164 | | | |
| 03/23/21 | | | | | | | | 14,229 | (4) | 1,310,064 |
| 03/23/22 | | | | | | | | 11,456 | (5) | 1,054,754 |
| Betty R. Johnson | | 04/27/20 | | | | | 2,383 | (2) | 219,403 | | | |
| 03/23/21 | | | | | 2,611 | (3) | 240,395 | | | |
| 03/23/22 | | | | | 2,721 | (3) | 250,522 | | | |
| 03/23/21 | | | | | | | | 4,867 | (4) | 448,105 |
| 03/23/22 | | | | | | | | 3,407 | (5) | 313,682 |
| Tod M. Cooper | | 04/27/20 | | | | | 2,383 | (2) | 219,403 | | | |
| 03/23/21 | | | | | 2,711 | (3) | 249,602 | | | |
| 03/23/22 | | | | | 2,822 | (3) | 259,822 | | | |
| 03/23/21 | | | | | | | | 5,054 | (4) | 465,322 |
| 03/23/22 | | | | | | | | 3,533 | (5) | 325,283 |
| William F. Fry | | 04/27/20 | | | | | 1,688 | (2) | 155,414 | | | |
| 03/23/21 | | | | | 1,807 | (3) | 166,370 | | | |
| 03/23/22 | | | | | 1,814 | (3) | 167,015 | | | |
| 03/23/21 | | | | | | | | 3,369 | (4) | 310,184 |
| 03/23/22 | | | | | | | | 2,271 | (5) | 209,091 |
| Jeffrey J. Waneka | | 04/27/20 | | | | | 1,986 | (2) | 182,851 | | | |
| 03/23/21 | | | | | 2,008 | (3) | 184,877 | | | |
| 03/23/22 | | | | | 2,015 | (3) | 185,521 | | | |
| 03/23/21 | | | | | | | | 3,744 | (4) | 344,710 |
| 03/23/22 | | | | | | | | 2,523 | (5) | 232,293 |
1.The closing price per share of the Company’s common stock of $92.07 on December 30, 2022 was used to determine the market values shown in this column.
2.The restricted stock unit awards granted on April 27, 2020 vest ratably on April 27, 2021, March 23, 2022 and March 23, 2023. These awards are subject to certain clawback provisions.
3.The restricted stock unit awards granted on March 23, 2021, and March 23, 2022 vest ratably over a three-year period beginning on the first anniversary of the grant date. These awards are subject to certain clawback provisions.
4.These performance periods,share awards will cliff vest in the first quarter of 2024 on the date the Compensation Committee determines the level if achievement of the performance goals. These awards are split between the achievement of certain specified levels of the Company’s ROIC as defined in the applicable award agreement and the Company’s TSR compared to the TSR of a peer group of companies. (Target award shown:) ROIC-based awards may be earned between threshold (50% of target) and maximum (200% of target) and TSR-based award may be earned between threshold (25% of target) and maximum (200% of target), although the minimum payout for either award is zero. These awards are subject to certain clawback provisions.
5.These performance share awards will cliff vest on December 31, 2024 and are split between the achievement of certain specified levels of the Company’s ROIC as defined in the grant and the Company’s TSR compared to the TSR of a peer group of companies. Target award shown: ROIC-based awards may be earned between threshold (50% of target) and maximum (200% of target) and TSR-based award may be earned between threshold (25% of target) and maximum (200% of target), although the minimum payout for either award is zero. These awards are subject to certain clawback provisions.
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| 56 | MYR GROUP INC. | 2023 PROXY STATEMENT |
2022 OPTION EXERCISES AND STOCK VESTED
The following table sets forth for each NEO the activity for stock option exercises and vesting of stock awards during the year ended December 31, 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) ($) |
| Richard S. Swartz | — | — | 61,745 | 6,163,713 |
| Betty R. Johnson | — | — | 24,831 | 2,479,565 |
| Tod M. Cooper | — | — | 24,882 | 2,484,625 |
| William F. Fry | — | — | 17,609 | 1,758,482 |
| Jeffrey J. Waneka | — | — | 20,773 | 2,074,700 |
(1)The amounts shown include Restricted Stock Units that vested on March 22, 2022 and March 23, 2022 and performance shares awarded in 2020 that vested on December 31, 2022. For the performance shares, final certification of results and distribution of shares occurred on February 15, 2023.
(2)The amounts shown are calculated based on the numberclosing market price per share of wholeour common stock on the date the shares were received.
2022 PAY RATIO
We believe our compensation programs should be consistent and internally equitable. The following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee.
For our 2022 pay ratio disclosure we updated our analysis of our employee population from 2021 and identified a new median employee using the same methodology employed in the 2018 through 2022 proxies. We calculated the salary or wages of each full-time, part-time, seasonal and temporary employee paid in 2022 through December 31, 2022 (the determination date) which was within the last three months heof our 2022 fiscal year. We then ranked the salary or wages of all employees (excluding the CEO) from lowest to highest. We applied a Canadian to U.S. dollar exchange rate to the compensation elements paid in Canadian currency for our Canadian employees.
The ratio between the pay of our CEO to the pay of our median employee is 41:1. The annual total compensation for our median employee for 2022 was employed during$104,587. The annual total compensation of our CEO was $4,271,357. The difference between this annual total compensation and the performance periods, per his performance shares award agreements.annual total compensation found in “Executive Compensation Tables—2022 Summary Compensation Table” is due to the inclusion of nondiscriminatory health and welfare benefit plans that are not required to be included in the 2022 Summary Compensation Table.
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MYR GROUP INC. | 2023PROXY STATEMENT | 57 |
2022 PAY VERSUS PERFORMANCE DISCLOSURE
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| YEAR (a) | Summary Compensation Table Total for PEO(1) (b) | Compensation Actually Paid to PEO(1)(2)(3) (c) | Average Summary Compensation Table Total for Non-PEO NEOs(1) (d) | Average Compensation Actually Paid to Non-PEO NEOs(1)(2) (e) | Value of Initial Fixed $100 Investment Based On: | Net Income ($000) (h) | Pretax Income ($000) (i) |
Total Shareholder Return(3) (f) | Peer Group Total Shareholder Return
(g) |
| 2022 | $4,248,395 | $2,318,204 | $1,555,649 | $866,918 | $282.51 | $197.73 | $83,381 | $114,204 |
| 2021 | 4,137,327 | 11,951,446 | 1,635,947 | 4,436,667 | 339.21 | 187.69 | 85,010 | 116,306 |
| 2020 | 3,282,639 | 8,024,727 | 1,402,709 | 3,176,951 | 184.41 | 130.49 | 58,759 | 81,385 |
(1)Mr. Swartz served as our principal executive officer ("PEO") for the full year for each of 2022, 2021 and 2020. For each of 2022, 2021 and 2020 our non-PEO NEOs included Ms. Johnson and Messrs. Cooper, Fry and Waneka.
(2)For each of 2022, 2021, and 2020, the values included in this column for the compensation actually paid to our PEO and the average compensation actually paid to our non-PEO NEOs reflected the following adjustments to the values included in column (b) and column (d), respectively:
| | | | | | | | | | | |
| Richard S. Swartz | 2022 | 2021 | 2020 |
| Summary Compensation Table ("SCT") Total for PEO (b) | $4,248,395 | $4,137,327 | $3,282,639 |
| - SCT “Stock Awards” column value | (2,268,882) | (1,899,867) | (1,286,539) |
+ year-end fair value of equity awards granted in the covered year that are outstanding and unvested as of the covered year-end
| 2,209,840 | 4,290,165 | 3,629,664 |
[+/-] year-over-year change in fair value of equity awards granted in prior years that are outstanding and unvested as of the covered year-end
| (843,833) | 3,513,544 | 1,487,742 |
[+/-] year-over-year change in fair value of equity awards granted in prior years that vested in the covered year
| (1,027,316) | 1,910,277 | 911,221 |
| Compensation Actually Paid to PEO (c) | 2,318,204 | 11,951,446 | 8,024,727 |
| | | | | | | | | | | |
| Average For Non-PEO NEOs (d) | 2022 | 2021 | 2020 |
| Average SCT Total for Non-PEO NEOs (c) | $1,555,649 | $1,635,947 | $1,402,709 |
| - SCT “Stock Awards” column value | (581,054) | (568,595) | (455,618) |
| + year-end fair value of equity awards granted in the covered year that are outstanding and unvested as of the covered year-end | 565,901 | 1,283,965 | 1,285,391 |
| [+/-] year-over-year change in fair value of equity awards granted in prior years that are outstanding and unvested as of the covered year-end | (308,884) | 1,262,819 | 635,868 |
| [+/-] year-over-year change in fair value of equity awards granted in prior years that vested in the covered year | (364,694) | 822,531 | 308,601 |
| Average Compensation Actually Paid to Non-PEO NEOs (e) | 866,918 | 4,436,667 | 3,176,951 |
(3)For each of 2022, 2021 and 2020, total shareholder return for the Company and the peer group was calculated as the yearly percentage change in cumulative total shareholder return based on a deemed fixed investment of $100 at market close on December 31, 2019. The yearly percentage change in cumulative total shareholder return was measured as the quotient of (a) the sum of (i) the cumulative amount of dividends for the period from December 31, 2019 through and including the last day of the covered fiscal year (the “Measurement Period”), assuming dividend reinvestment, plus (ii) the difference between stock price per share at the end and the beginning of the Measurement Period, divided by (b) stock price per share at the beginning of the Measurement Period. For purposes of this pay versus performance disclosure, our peer group consists of eleven companies which are: Astec Industries Inc, Comfort Systems USA Inc, Dycom Industries Inc, EMCOR Group Inc, Granite Construction Incorporated, IES Holdings Inc, MasTec Inc, Matrix Service Company, Primoris Services Corp, Quanta Services Inc and Tetra Tech Inc (the “Peer Group”). This Peer Group is consistent with the peer group used in Item 5 of our 2022 Form 10-K. For purposes of calculating the Peer Group total shareholder return, the returns of each component issuer of the group were weighted according to the respective issuers’ stock market capitalization at the beginning of the Measurement Period Because fiscal years are presented in the table in reverse chronical order (from top to bottom), the table should be read from bottom to top for purposes of understanding cumulative returns over time.
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| 58 | MYR GROUP INC. | 2023 PROXY STATEMENT |
Pay Versus Performance Relationship Descriptions
The following graphical comparisons provide descriptions of the relationships between certain figures included in the Pay Versus Performance table for each of 2022, 2021, and 2020, including: (a) comparisons between (i) the compensation actually paid to the PEO and the average compensation actually paid to our non-PEO NEOs and (ii) each of Total Shareholder Return, Net Income and Pretax Income; and (b) a comparison between our cumulative total shareholder return and the total shareholder return of the Peer Group.
Relationship Between Compensation Actually Paid and Total Shareholder Return
Relationship Between Compensation Actually Paid and Net Income
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MYR GROUP INC. | 2023PROXY STATEMENT | 59 |
Relationship Between Compensation Actually Paid and Pretax Income
The following table lists the three financial and two non-financial performance measures that we believe represent the most important performance measures used to link compensation actually paid to our PEO and non-PEO NEOs for 2022 to our performance:
| | |
| Pretax Income |
| Total Case Incident Rate |
| Lost Time Incident Rate |
| Return On Invested Capital |
| Total Shareholder Return |
| | | | | |
| 60 | MYR GROUP INC. | 2023 PROXY STATEMENT |
PROPOSAL
NO. 2. ADVISORY
RESOLUTION TO APPROVEAPPROVAL OF THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
As required under Section 14A of the Exchange Act, we are asking stockholdersshareholders to approve an advisory resolution on the compensation of our named executive officersNEOs as reported in this Proxy Statement. At our 2017 Annual meeting, shareholders voted to hold an advisory vote on executive compensation on an annual basis and we have submitted an advisory vote regarding the compensation of our NEOs to our shareholders at each annual meeting since that time. Subject to this year's advisory approval of the frequency of the advisory approval of the compensation of our NEOs (Proposal 3), we anticipate continuing to hold an advisory vote on executive compensation on an annual basis (with the next one occurring in 2024).
As described in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Compensation Committee has designed our executive compensation program to align each
named executive officer’sNEO’s compensation with our short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain the
named executive officersNEOs who are crucial to our success. We urge
stockholdersshareholders to read the “Compensation Discussion and Analysis” and the related tables and narratives, which describe in more detail how our
named executive officerNEO compensation policies and procedures operate and how they achieve our compensation objectives. All of this information provides detailed discussion and analysis of the compensation of our
named executive officersNEOs including the following:
| • | We pay for performance. We align executive compensation with short-term and long-term Company-wide, business unit and individual performance. Generally, we target about half of our named executive officer compensation as performance-based compensation. In fiscal 2015, we did not meet our target performance goals for financial performance, resulting in below-target cash incentive and performance share payouts to our executive officers. |
| • | We have compensation practices that ensure leadership, decision-making and actions that are aligned with our short- and long-term goals without taking inappropriate or unnecessary risks. The practices are discussed in detail in the “Compensation Discussion and Analysis” and include: |
•We pay for performance. We align executive compensation with short- and long-term Company-wide, business unit and individual performance. Generally, we target about half of our NEO compensation as performance-based compensation. In 2022, we exceeded our pretax financial performance goal resulting in annual cash incentive payouts at above target for financial performance under the MIP. Additionally, we exceeded our targets for safety performance goals, resulting in above target annual cash incentive payouts under the MIP for our total case incident rate safety performance goal and maximum annual cash incentive payouts under the MIP for our lost time incident rate safety performance goal. The aggregate ROIC performance for the three years ended December 31, 2022, 2021 and 2020 resulted in a payout of 200.0%, which was at the maximum for ROIC grants made in 2020. The three-year 2020 TSR performance ranked at the 79th percentile, which was above maximum, therefore 200.0% of the target number of TSR performance shares were earned for grants made in 2020.
•We have compensation practices that encourage leadership, decision-making and actions that are aligned with our short- and long-term goals without taking inappropriate or unnecessary risks. The practices are discussed in detail in the “Compensation Discussion and Analysis” and include:
◦stock ownership guidelines for directors and executive officers;
We have ◦a long-standing insider trading policy, which prohibits, among other activities, the pledging of and hedging transactions with respect to our common stock;
We offer◦a practice of offering limited executive officer perquisites; and
We periodically◦regular review of the risk profile of our compensation programs and havethe inclusion of significant risk mitigators in those programs, such as limits on incentive awards, stock holding requirements, clawback provisions and clawback provisions.caps on incentive awards.
•The Compensation Committee acts prudently in making decisions. All members of the Compensation Committee are independent directors. The Compensation Committee has established a thorough process for the review and approval of compensation program design, practices and amounts awarded to our executive officers. The Compensation Committee engaged and received advice from an independent, third-party compensation consultant, and, using that advice, selected a peer group of companies to compare to our NEOs’ compensation.
| • | The Compensation Committee acts prudently in making decisions. All members of the Compensation Committee are independent directors. The Compensation Committee has established a thorough process for the review and approval of compensation program design, practices and amounts awarded to our executive officers. The Compensation Committee engaged and received advice from an independent, third-party compensation consultant, and, using that advice, selected a peer group of companies to compare to our named executive officers’ compensation. | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 61 |
We ask our
stockholdersshareholders to participate annually in this review and indicate their support for our
named executive officerNEO compensation set forth in this Proxy Statement. This proposal, commonly known as a “Say-on-Pay” proposal, gives our
stockholdersshareholders the opportunity to express their views on our
named executive officers’NEOs’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our
named executive officersNEOs and the philosophy, policies and practices described in this Proxy Statement. We are asking our
stockholdersshareholders to vote “FOR” the following resolution at the
2023 Annual Meeting:
“RESOLVED, that the Company’s stockholdersshareholders approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Company’s Proxy Statement for the 20162023 Annual Meeting of StockholdersShareholders pursuant to the compensation disclosure rules of the SEC, including the “Compensation Discussion and Analysis,” the 2022 Summary Compensation Table and the other related tables and disclosures.”
The Say-on-Pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board. The Board and the Compensation Committee value the opinions of our shareholders and to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, we expect to consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
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| 62 | MYR GROUP INC. | 2023 PROXY STATEMENT |
PROPOSAL 3. ADVISORY APPROVAL OF THE FREQUENCY OF THE ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR "EVERY ONE YEAR" ON THE ADVISORY APPROVAL OF THE FREQUENCY OF THE ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
In addition to providing shareholders with the opportunity to cast an advisory vote on the compensation of our NEOs, we are also providing our shareholders with the opportunity to indicate how frequently we should seek advisory approval of the compensation of our NEOs in the future, as required by Section 14A of the Exchange Act. This non-binding advisory vote, which must be held at least once every six years, is commonly referred to as a “Say-on-Frequency” vote. Under this proposal, our shareholders may indicate whether they would prefer to have an advisory vote to approve the compensation of our NEOs “EVERY ONE YEAR,” “EVERY TWO YEARS,” or “EVERY THREE YEARS.”
The Company’s last Say-on-Frequency vote occurred at our 2017 Annual Meeting. At that meeting, our shareholders voted in favor of holding advisory votes to approve the Company’s NEO compensation every one year, and we have held an advisory vote on an annual basis since that time. It is expected that the next Say-on-Frequency vote will occur at our 2029 Annual Meeting.
The Compensation Committee and the Board continue to believe that the advisory vote to approve the Company’s NEO compensation should be conducted every one year because they believe this frequency will allow our shareholders to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year. Additionally, while our executive compensation programs are designed to promote a long-term connection between pay and performance, the Compensation Committee and the Board currently believe that an annual advisory vote on executive compensation is consistent with seeking input from, and engaging in discussions with, our shareholders on corporate governance matters. For these reasons, we are asking our shareholders to vote for a frequency of “EVERY ONE YEAR.”
Shareholders are not voting to approve or disapprove the Board’s recommendation. Instead, you may cast your vote on your preferred voting frequency by choosing any of the following four options with respect to this proposal: “EVERY ONE YEAR,” “EVERY TWO YEARS,” “EVERY THREE YEARS,” or “ABSTAIN.”
The Say-on-Frequency vote is advisory; therefore, the result will not be binding on the Company, the Board, or the Compensation Committee. The Compensation Committee will, however, take into account the outcome of the vote when considering the frequency of future advisory votes on compensation of our NEOs, and expects to be guided by the voting option that receives the greatest number of votes, even if that alternative does not receive a majority vote.
The Board recommends that the shareholders approve the following resolution:
“RESOLVED, that the advisory vote relating to compensation paid to the Company’s NEOs, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the 2015 Summary Compensation Tableexecutive compensation tables and the other related tables and disclosures.narrative discussion, shall be conducted EVERY ONE YEAR.”
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 63 |
TABLE OF CONTENTSThe Say-on-Pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board. Our Board and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we expect to consider our stockholders’ concerns and the Compensation Committee will evaluate whether any compensation actions are necessary to address those concerns.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTEFORTHE APPROVAL OF THE
ADVISORY RESOLUTION REGARDING THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE
COMPENSATION DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION
COMMITTEE INDEPENDENCE AND RESPONSIBILITIES
The Board established the standing Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The Board has determined that
alleach member of the Audit Committee
members are independentis financially literate and that each of Messrs. Hartwick, Karna and Moore and Ms. Lowry qualifies as an “audit committee financial expert” within the meaning of
SEC regulations and is independent as required by the Nasdaq’s listing standards and Rule 10A-3 of the Exchange Act.
The Board has also determined that all committee members are financially literate within the meaning of the Nasdaq rules and that Mr. Patterson is an “audit committee financial expert” within the meaning of SEC regulations. None of the Audit Committee members have participated in the preparation of our financial statements during the past three years.
Effective on February 16, 2023, Jennifer E. Lowry was appointed by the Board as the Chair of the Audit Committee in advance of Maurice E. Moore's anticipated retirement from the Board following the 2023 Annual Meeting.
The Board values the integrity of MYR Group’s financial statements and internal controls. The Audit Committee is responsible for assisting the Board in monitoring the integrity of MYR Group’s financial statements, MYR Group’s compliance with legal and regulatory requirements and the independence and performance of MYR Group’s internal and external auditors. ToPursuant to its charter, the Audit Committee performs, among other tasks, the following duties to represent and assist the Board in its oversight of the Company’s financial statements and under our charter the Audit Committee performs, among other tasks, the following duties:statements:
review of•reviews the audit plans and findings of our independent registered public accounting firm and our internal audit staff, as well as the results of regulatory examinations and trackingreviewing management’s corrective action plans where necessary;
review of•reviews our financial statements, including any significant financial items, discussions on key estimates within our financial statements and/or changes in accounting policies, with our senior management and independent registered public accounting firm;
review of•reviews our financial risk and control procedures, compliance programs and significant tax, legal and regulatory matters; and
annual appointment of•appoints annually our independent registered public accounting firm, evaluation ofevaluate its independence and performance and settingsets clear hiring policies for employees or former employees of the independent registered public accounting firm.firm;
•reviews periodic reports from management on cyber security measures, security controls, data privacy and security initiatives; and
•meets with the Company’s internal audit department on a quarterly basis. The Company’s internal audit department reports directly to the Audit Committee and assesses and enforces the Company’s internal accounting control structure and policies to ensure that the Company’s financial condition and results are accurately reported in the Company’s public financial statements.
The Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company. The Audit Committee encourages employees and outsiders to report concerns about our accounting controls, auditing matters or anything else that appears to involve financial or other wrongdoing. To report such matters, you should call the Company’s fraud hotline numberAnonymous Incident Reporting System, MySafeWorkplace, at 1-800-461-9330. All complaints received are confidential and anonymous and will be retained for the Company’s records. At least annually, the Audit Committee reviews the Company’s disclosure controls and procedures and its charter. During this review, the Audit Committee is able to analyzeanalyzes its responsibilities and progress as well as ensureensuring that these documents comply with current regulatory requirements.Pre-Approval Policies
PRE-APPROVAL POLICIES
Consistent with the requirements of the SEC and the U.S. Public Company Accounting Oversight Board (“PCAOB”) regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation
for and overseeing the work of the independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established procedures to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm.
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| 64 | MYR GROUP INC. | 2023 PROXY STATEMENT |
During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before we engage the independent registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decision to the Audit Committee at its next scheduled meeting.
All services provided by our independent registered public accounting firm for fiscal 2022, as described below, were approved by the Audit Committee in accordance with the foregoing pre-approval policies and procedures.
INDEPENDENT AUDITOR’S FEES
TABLE OF CONTENTS
Independent Auditors’ Fees
MYR Group’s financial statements for the year ended December 31, 20152022 were audited by EY,Crowe, an independent registered public accounting firm. Aggregate fees paid for professional services rendered by our independent auditors, EY,Crowe, for 20152022 and 2014,2021, were as follows:
| | | | | | | | | | | | |
| | 2015 | | 2014 | | 2022 | 2021 |
| Audit Fees | | $ | 724,947 | | | $ | 737,574 | | Audit Fees | $ | 1,065,237 | | $ | 761,204 | |
| Audit-Related Fees | | | — | | | | — | | Audit-Related Fees | — | | — | |
| Tax Fees | | | 60,000 | | | | 55,000 | | Tax Fees | — | | — | |
| All Other Fees | | | — | | | | — | | All Other Fees | — | | — | |
| Total | | $ | 784,947 | | | $ | 792,574 | | Total | $ | 1,065,237 | | $ | 761,204 | |
In the above table, in accordance with the SEC rules, “Audit Fees” are fees that we paid
to EY for the audit of our annual financial statements included in the
20152022 Form 10-K, review of financial statements included in Quarterly Reports on Form 10-Q and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements.
“Audit-Related Fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and internal control over financial reporting. “Tax Fees” are fees for tax compliance, tax advice and tax planning.
Audit Committee Report for the Year Ended December
AUDIT COMMITTEE REPORT FOR THE YEAR ENDED DECEMBER 31,
2015 to our Stockholders:2022
As part of our activities, we reviewed and discussed MYR Group’s audited financial statements with management. Additionally, we received EY’sCrowe’s written disclosures and a letter dated March 3, 2016,February 22, 2023, as required by the applicable requirements of the PCAOB, regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and have discussed with EY itsCrowe their independence. We also reviewed and discussed with EYCrowe the matters required to be discussed underStatement on Auditing Standards No. 61 (Communications with Audit Committees), as adopted by the applicable requirements of the PCAOB in Rule 3200T.and the SEC. Based upon this review and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in our 20152022 Annual Report on Form 10-K.
| | | | | |
| Audit Committee: | William D. Patterson,Jennifer E. Lowry, Chair
Jack L. Alexander
Henry W. Fayne
Kenneth M. Hartwick
Ajoy H. Karna
Maurice E. Moore |
The information contained in the above Audit Committee Report for the Year Ended December 31, 2022 shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act, of 1933, as amended, or the Exchange Act, as amended, except to the extent that MYR Group specifically incorporates it by reference in such filing.
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MYR GROUP INC. | 2023PROXY STATEMENT | 65 |
PROPOSAL NO. 3.4. APPROVAL OF THE AMENDMENT OF ARTICLE FIFTH OF OUR CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE AMENDMENT OF ARTICLE FIFTH OF OUR CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD.
SUMMARY
Our Certificate of Incorporation divides our Board into three classes, designated as Class I, Class II, and Class III. One class is elected at each annual meeting for a term expiring at the annual meeting held in the third year following the year of their election. After careful consideration of a variety of factors, including corporate governance trends and balancing the competing interests discussed below under “Purpose of the Proposed Amendments,” the Board has determined that it is in the shareholders’ best interests to amend our Certificate of Incorporation to phase out the classified Board so that the Board is fully declassified from and after the election of directors at our 2026 Annual Meeting of Shareholders (the “2026 Annual Meeting"). Accordingly, the Board has adopted proposed amendments to eliminate the classified Board structure and provide for the annual election of directors, to be phased in over the next three years (the “Proposed Amendments”), and is recommending that shareholders approve the Proposed Amendments.
SUMMARY OF THE PROPOSED AMENDMENTS
Currently, our Certificate of Incorporation provides that members of our Board are elected for staggered terms of three years. If the Proposed Amendments are approved by shareholders, the declassification of our Board will be phased in as follows (assuming all director nominees are elected each year):
•the directors who are elected pursuant to Proposal 1 of this proxy statement (Class I directors) will be elected for a three-year term that expires at the 2026 Annual Meeting;
•at our 2024 Annual Meeting of Shareholders (the “2024 Annual Meeting”), the directors whose terms expire at that meeting (Class II directors) will be elected for a two-year term that expires at our 2026 Annual Meeting;
•at the 2025 Annual Meeting of Shareholders (the “2025 Annual Meeting”), the directors whose terms expire at that meeting (Class III directors) will be elected for a one-year term that expires at the 2026 Annual Meeting; and
•at the 2026 Annual Meeting, all directors (Class I, Class II, and Class III) will have expiring terms and all directors will be elected for a one-year term that expires at the 2027 Annual Meeting of Shareholders (the “2027 Annual Meeting”).
Beginning with the 2026 Annual Meeting, each director will stand for election at each annual meeting for a one-year term expiring at the next annual meeting and until such director’s successor has been duly elected and qualified or until his or her earlier death, resignation, retirement, disqualification, or removal. The phasing in of annual elections of directors over this period is designed so that the term of any incumbent director will not be shortened, and to allow for a smooth transition to a system of annual elections of all directors.
Following the effectiveness of the Proposed Amendments and prior to the election of directors at the 2026 Annual Meeting, any director appointed to fill a vacancy in the Board will hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until such director’s successor has been duly elected and qualified or until his or her earlier death, resignation, retirement, disqualification, or removal. Following the effectiveness of the Proposed Amendments and from and after the election of directors at the 2026 Annual Meeting, any director appointed to fill a vacancy in the Board will hold office until the next annual meeting and until such director’s successor has been duly elected and qualified or until his or her earlier death, resignation, retirement, disqualification, or removal.
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| 66 | MYR GROUP INC. | 2023 PROXY STATEMENT |
Our current Certificate of Incorporation provides that our directors may be removed by shareholders only for cause. However, for a Board that is not classified, Delaware law provides that shareholders may remove directors with or without cause. As a result, the Proposed Amendments would permit shareholders to remove directors elected for one-year terms with or without cause. Directors who are serving out the remainder of a three-year term or a two-year term would continue to be removable by shareholders only for cause.
For a description of the number of votes that are required to approve this proposal, see “Questions and Answers About the 2023 Annual Meeting and Voting—What Vote is Required For Each Proposal?” in this Proxy Statement.
The descriptions of the Proposed Amendments set forth in this Proposal 4 are qualified in their entirety by reference to the full text of the proposed Certificate of Amendment containing the Proposed Amendments, which is attached as Appendix A to this Proxy Statement.
PURPOSE OF THE PROPOSED AMENDMENTS
The Board regularly evaluates the Company’s corporate governance measures. In connection with such practice, the Board has evaluated the Company’s classified Board structure in the past and has historically preferred the retention of such structure because it provides long-term focus, stability, continuity, experience, takeover protection and enhanced director independence, all of which have contributed to the success of the Company. The Board believes that the benefits of a classified Board structure do not come at the expense of director accountability. Nevertheless, the Board recognizes that many investors and others now view the classified Board structure as unduly limiting the Board’s accountability to shareholders and shareholder participation in the Company’s corporate governance.
After considering shareholder input and consulting with management and outside advisors, the Board believes that eliminating the classified Board structure through the adoption of the Proposed Amendments is in the best interests of the Company and our shareholders.
RELATED CHANGES TO THE BY-LAWS
In connection with the Proposed Amendments, the Board has approved conforming amendments to the By-Laws, contingent upon shareholder approval of, and implementation of, the Proposed Amendments presented in this proposal.
EFFECTIVENESS
If this proposal is approved, the Company intends to file a Certificate of Amendment containing the Proposed Amendments that have been approved with the Secretary of State of the State of Delaware, which will become effective at the time of that filing. The conforming By-Law amendments will also become effective at such time.
If this proposal is not approved by the requisite vote, then a Certificate of Amendment will not be filed with the Secretary of State of the State of Delaware, the corresponding By-Law amendments will not become effective, and the Board will remain classified.
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MYR GROUP INC. | 2023PROXY STATEMENT | 67 |
TEXT OF THE PROPOSED AMENDMENTS
The Board proposes to replace existing Sections (c) and (e) of Article FIFTH of the Certificate of Incorporation with the proposed Sections (c) and (e) of Article FIFTH shown in the tables below. The tables also contain a comparison of the proposed Sections (c) and (e) of Article FIFTH to the existing Sections (c) and (e) of Article FIFTH showing the proposed changes (additions are indicated by blue text and underlining and deletions are indicated by red strike-through text):
| | | | | | | | |
| Existing Article FIFTH, Section (c) | Proposed Article FIFTH, Section (c) | Comparison |
| (c) The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The initial division of the Board of Directors into classes shall be made by the decision of the affirmative vote of a majority of the entire Board of Directors. The term of the initial Class I directors shall terminate on the date of the 2008 annual meeting; the term of the initial Class II directors shall terminate on the date of the 2009 annual meeting; and the term of the initial Class III directors shall terminate on the date of the 2010 annual meeting. At each succeeding annual meeting of stockholders beginning in 2011, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. | (c) Until the election of directors at the 2026 annual meeting, the directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. Any director elected prior to the 2024 annual meeting will be elected for a three-year term. Each director elected at the 2024 annual meeting will be elected for a two-year term expiring at the 2026 annual meeting. Each director elected at the 2025 annual meeting will be elected for a one-year term expiring at the 2026 annual meeting. At the 2026 annual meeting and at each annual meeting thereafter, all directors will be elected for a one-year term expiring at the next annual meeting. For as long as the Board of Directors continues to be classified, if the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class or from the removal from office, death, disability, resignation or disqualification of a director or other cause shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors have the effect of removing or shortening the term of any incumbent director.
| (c) Until the election of directors at the 2026 annual meeting, tThe directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The initial division of the Board of Directors into classes shall be made by the decision of the affirmative vote of a majority of the entire Board of Directors. The term of the initial Class I directors shall terminate on the date of the 2008 annual meeting; the term of the initial Class II directors shall terminate on the date of the 2009 annual meeting; and the term of the initial Class III directors shall terminate on the date of the 2010 annual meeting. At each succeeding annual meeting of stockholders beginning in 2011, successors to the class of directors whose term expires at that annual meeting shallAny director elected prior to the 2024 annual meeting will be elected for a three-year term. Each director elected at the 2024 annual meeting will be elected for a two-year term expiring at the 2026 annual meeting. Each director elected at the 2025 annual meeting will be elected for a one-year term expiring at the 2026 annual meeting. At the 2026 annual meeting and at each annual meeting thereafter, all directors will be elected for a one-year term expiring at the next annual meeting. For as long as the Board of Directors continues to be classified, iIf the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such classor from the removal from office, death, disability, resignation or disqualification of a director or other causeshall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors have the effect of removing or shortening the term of any incumbent director.
|
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| 68 | MYR GROUP INC. | 2023 PROXY STATEMENT |
| | | | | | | | |
| Existing Article FIFTH, Section (e) | Proposed Article FIFTH, Section (e) | Comparison |
| (e) Subject to the terms of any one or more classes or series of Preferred Stock, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring on the Board of Directors may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Any director of any class elected to fill a vacancy resulting from an increase in the number of directors of such class shall hold office for a term that shall coincide with the remaining term of that class. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of the Corporation may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least a majority of the voting power of the Corporation's then outstanding capital stock entitled to vote generally in the election of directors. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Restated Certificate of Incorporation applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article FIFTH unless expressly provided by such terms. | (e) Subject to the terms of any one or more classes or series of Preferred Stock, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring on the Board of Directors may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Prior to the election of directors at the 2026 annual meeting, any director of any class elected to fill a vacancy resulting from an increase in the number of directors of such class shall hold office for a term that shall coincide with the remaining term of that class. From and after the election of directors at the 2026 annual meeting, any director elected to fill a vacancy resulting from an increase in the number of directors shall hold office until the next annual meeting. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of the Corporation may be removed from office at any time, (i) with or without cause (except that any director who is serving a three-year term or a two-year term prior to the 2026 annual meeting may be removed only for cause) and (ii) only by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding capital stock of the Corporation entitled to vote in the election of directors. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Restated Certificate of Incorporation applicable thereto. | (e) Subject to the terms of any one or more classes or series of Preferred Stock, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring on the Board of Directors may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Prior to the election of directors at the 2026 annual meeting, aAny director of any class elected to fill a vacancy resulting from an increase in the number of directors of such class shall hold office for a term that shall coincide with the remaining term of that class. From and after the election of directors at the 2026 annual meeting, any director elected to fill a vacancy resulting from an increase in the number of directors shall hold office until the next annual meeting. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of the Corporation may be removed from office at any time,(i) with or withoutbut only forcause(except that any director who is serving a three-year term or a two-year term prior to the 2026 annual meeting may be removed only for cause) and (ii) only by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding capital stock of the CorporationCorporation's then outstanding capital stock entitled to vote generally in the election of directors. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Restated Certificate of Incorporation applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article FIFTH unless expressly provided by such terms.
|
If the Proposed Amendments become effective, our classified Board will be phased out and the Board will be fully declassified from and after the election of directors at the 2026 Annual Meeting.
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MYR GROUP INC. | 2023PROXY STATEMENT | 69 |
PROPOSAL 5. RATIFICATION OF THE APPOINTMENT OF
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF CROWE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
The Audit Committee is responsible for the selection, retention, termination and oversight of our independent auditors.
EY, an independent registered public accounting firm, has served as our independent auditors since 2010.The Audit Committee appointed
EYCrowe as our independent auditors for the fiscal year ending December 31,
2016.2023. The Audit Committee and the Board are requesting, as a matter of policy, that
stockholdersshareholders ratify the appointment of
EYCrowe as our independent auditors. The Board and the Audit Committee are not required to take any action as a result of the outcome of the vote on this proposal. However, if the
stockholdersshareholders do not ratify the appointment, the Audit Committee may investigate the reasons for such rejection. Even if the appointment is ratified, the Audit Committee may direct the appointment of a different independent auditor at any time.
We expect that representatives of
EYCrowe will be present at the
2023 Annual
MeetingMeeting. They will have the opportunity to make a statement if they desire to do so and
that they will
have an opportunitybe available to respond to appropriate questions from
stockholders.THE BOARD UNANIMOUSLY RECOMMENDS A VOTEFORTHE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
shareholders. | | | | | |
| 70 | MYR GROUP INC. | 2023 PROXY STATEMENT |
OTHER MATTERS THAT MAY BE PRESENTED AT THE
2023 ANNUAL MEETING
Neither the Board nor management knows of any business, other than that described in this Proxy Statement, that may be presented for action at the 2023 Annual Meeting. If any other matters properly come before the meeting, your proxy authorizes the persons named as proxies to vote on such matters in accordance with the Board’s recommendation or, if no recommendation is given, in accordance with the proxies’ best judgment.
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MYR GROUP INC. | 2023PROXY STATEMENT | 71 |
OWNERSHIP OF EQUITY SECURITIES
The following table shows the number of shares of MYR Group common stock beneficially owned (as defined in accordance with Rule 13d-3 under the Exchange Act) as of February
24, 201623, 2023 by each director and
executive officerNEO named in the Summary Compensation Table, as well as the number of shares beneficially owned by all of our directors and executive officers as a group. None of the common stock owned by these individuals is subject to any pledge. Unless otherwise indicated, each of the named individuals has sole voting and investment power with respect to the shares shown.
| | | | | | | | | | | | | | | | | | | | | | | | |
| Name of Beneficial Owner | | Common
Stock | | Restricted
Stock(1) | | Options and
Phantom
Stock(2) | | Total
Beneficial
Ownership | | Percentage | Name of Beneficial Owner | Common
Stock | Restricted Stock Units(1) | Total
Beneficial
Ownership | Percentage(2) |
Named Executive Officers and Directors
| | | | | | | | | | | | | | | | | | | | | Named Executive Officers and Directors | | |
| William A. Koertner | | | 239,048 | | | | 43,960 | | | | 233,637 | | | | 516,645 | | | | 2.7 | % | |
| Richard S. Swartz | | Richard S. Swartz | 157,624 | | 22,737 | | 180,361 | | 1.1 | % |
| Betty R. Johnson | | | 12,382 | | | | 8,861 | | | | 8,000 | | | | 29,243 | | | | | * | Betty R. Johnson | 49,179 | | 7,715 | | 56,894 | | * |
| Tod M. Cooper | | | 5,713 | | | | 14,761 | | | | 17,624 | | | | 38,098 | | | | | * | Tod M. Cooper | 44,069 | | 7,916 | | 51,985 | | * |
| Gerald B. Engen, Jr. | | | 53,047 | | | | 13,330 | | | | 67,665 | | | | 134,042 | | | | | * | |
| Richard S. Swartz, Jr. | | | 31,508 | | | | 22,955 | | | | 71,791 | | | | 126,254 | | | | | * | |
| Jack L. Alexander | | | 9,250 | | | | 5,068 | | | | 8,000 | | | | 22,318 | | | | | * | |
| Larry F. Altenbaumer | | | 11,387 | | | | 5,068 | | | | 8,000 | | | | 24,455 | | | | | * | |
| Henry W. Fayne | | | 8,967 | | | | 5,068 | | | | 8,000 | | | | 22,035 | | | | | * | |
| William F. Fry | | William F. Fry | 22,538 | | 5,309 | | 27,847 | | * |
| Jeffrey J. Waneka | | Jeffrey J. Waneka | 42,080 | | 6,009 | | 48,089 | | * |
| Bradley T. Favreau | | Bradley T. Favreau | 13,075 | | 1,195 | | 14,270 | | * |
| Kenneth M. Hartwick | | | — | | | | — | | | | 1,902 | | | | 1,902 | | | | | * | Kenneth M. Hartwick | 19,911 | | 1,738 | | 21,649 | | * |
| Gary R. Johnson | | | 12,560 | | | | 5,068 | | | | 8,000 | | | | 25,628 | | | | | * | |
| Ajoy H. Karna | | Ajoy H. Karna | — | | 1,425 | | 1,425 | | * |
| Jennifer E. Lowry | | Jennifer E. Lowry | 9,919 | | 1,195 | | 11,114 | | * |
| Donald C.I. Lucky | | | — | | | | — | | | | 1,902 | | | | 1,902 | | | | | * | Donald C.I. Lucky | 16,908 | | 1,195 | | 18,103 | | * |
| Maurice E. Moore | | | 11,848 | | | | 5,068 | | | | — | | | | 16,916 | | | | | * | Maurice E. Moore | 29,991 | | 1,195 | | 31,186 | | * |
| Shirin S. O'Connor | | Shirin S. O'Connor | 3,320 | | 1,195 | | 4,515 | | * |
William D. Patterson(3) | | | 9,067 | | | | 5,068 | | | | 8,000 | | | | 22,135 | | | | | * | 30,555 | | 1,195 | | 31,750 | | * |
| All executive officers and directors as a group (13 persons) | | | 408,581 | | | | 145,051 | | | | 498,884 | | | | 1,052,516 | | | | 5.4 | % | |
| All executive officers and directors as a group (13 persons). | | All executive officers and directors as a group (13 persons). | 439,169 | | 60,019 | | 499,188 | | 3.0 | % |
* Percentage less than 1% of outstanding common stock.
(1)This column reflects shares of common stock that could be acquired by the vesting of Restricted Stock Units held by the NEOs and Directors within 60 days of February 23, 2023.
(2)Based on 16,665,262 shares of common stock of MYR Group issued and outstanding as of February 23, 2023.
| * | Percentage less than 1% of outstanding common stock. |
| (1) | The shares of restricted stock belonging to William A. Koertner, Betty R. Johnson, Tod M. Cooper, Gerald B. Engen, Jr. and Richard S. Swartz, Jr. vest as disclosed in the “Outstanding Equity Awards at 2015 Fiscal Year End” table. The shares of restricted stock belonging to Jack L. Alexander, Larry F. Altenbaumer, Henry W. Fayne, Gary R. Johnson, Maurice E. Moore and William D. Patterson vest ratably over a three-year period from the date of grant and, for restricted stock that was granted in 2014 and 2015, vesting is accelerated when the director leaves the Board. |
| (2) |
| 72 | This column reflects shares of common stock that may be acquired within 60 days of February 24, 2016 by the exercise of stock options held by the executive officer or director and the vesting of phantom stock units held by Mr. Hartwick and Mr. Lucky. Mr. Hartwick and Mr. Lucky’s phantom stock units vest ratably over a three-year period from the date of grant or when the director leaves the Board. |
| (3) | Common stock includes 386 shares in a trust in which Mr. Patterson is a beneficiary.MYR GROUP INC. | 2023 PROXY STATEMENT |
The following table displays information about persons we knowknown to us to be the beneficial owners of 5% or more of our issued and outstanding common stock as of February 23, 2023.
| | | | | | | | | | | |
| Name and Address of Beneficial Owner | Amount and Nature of
Beneficial Ownership | | Percent of Common Stock(1) |
BlackRock, Inc.
•55 East 52nd Street New York, NY 10055 | 2,968,756 | (2) | 17.8 | % |
Dimensional Fund Advisors LP
•6300 Bee Cave Road Building One Austin, Texas, 78746 | 1,103,678 | (3) | 6.6 | % |
The Vanguard Group
•100 Vanguard Blvd. Malvern, PA 19355 | 1,238,381 | (4) | 7.4 | % |
(1)The percent of common stock is calculated by dividing the amount of beneficial ownership by 16,665,262 shares of common stock of MYR Group issued and outstanding as of February 23, 2023.
(2)Based on the Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 23, 2023, BlackRock, Inc. stated that, of the 2,968,756 shares beneficially owned as of December 31, 2015:2022, it had sole voting power with respect to 2,931,293 shares, sole dispositive power with respect to 2,968,756 shares and shared voting and dispositive power with respect to none of the shares. | | | | |
| Name and Address of Beneficial Owner | | Amount and
Nature of
Beneficial
Ownership | | Percent of
Stock |
BlackRock, Inc.
55 East 52nd St.
New York, NY 10022
| | | 2,156,648 | (1) | | | 10.4 | % |
Royce & Associates, LLC
745 Fifth Avenue
New York, NY 10151
| | | 1,654,992 | (2) | | | 8.0 | % |
Dimensional Fund Advisors LP
Building One
6300 Bee Cave Road
Austin, Texas 78746
| | | 1,435,280 | (3) | | | 6.9 | % |
(4)Based on the Schedule 13G/A filed by The Vanguard Group with the SEC on February 9, 2023, The Vanguard Group stated that, of the 1,238,381 shares beneficially owned as of December 31, 2022, it had shared voting power with respect to 27,938 shares, sole dispositive power with respect to 1,196,209 shares and shared dispositive power with respect to 42,172 shares.
| (1) | Based on the Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 8, 2016. BlackRock stated in its 13G/A filing that, of the 2,156,648 shares beneficially owned as of December 31, 2015, it has sole voting power with respect to 2,100,292 shares and sole dispositive power with respect to 2,156,648 shares. |
| (2) | Based on the Schedule 13G/A filed by Royce & Associates, LLC with the SEC on January 19, 2016. Royce & Associates stated in its 13G/A filing that it had sole power to vote and dispose of all the reported shares. |
| (3) |
MYR GROUP INC. | 2023PROXY STATEMENT | Based on the Schedule 13G filed by Dimensional Fund Advisors LP with the SEC on February 9, 2016. Dimensional Fund Advisors LP stated in its 13G filing that it furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Issuer that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of the Issuer held by the Funds. Dimensional has sole voting power as to 1,376,085 shares and sole dispositive power as to 1,435,280 shares. Dimensional disclaims beneficial ownership of all such shares.73 |
QUESTIONS AND ANSWERS ABOUT THE 2023 ANNUAL MEETING AND VOTING
Why am
WHY AM I
receiving these proxy solicitation materials?RECEIVING THESE PROXY SOLICITATION MATERIALS?
We are providing you these materials in connection with the Board’s solicitation of proxies to be voted at our
20162023 Annual Meeting. These materials provide information regarding the voting procedures and the matters to be voted on at the
2023 Annual Meeting. We began
distributingmaking these materials
available on or around March
15, 2016,6, 2023, to all
stockholdersshareholders entitled to vote at the
2023 Annual Meeting.
These materials are also available on our website atwww.myrgroup.com.In addition, copies of the
2015 Annual Report to Stockholders or2022 Form 10-K and this Proxy Statement will be sent free of charge to any
stockholdershareholder who sends a written request to Secretary at MYR Group Inc.,
1701 Golf Road,12121 Grant Street, Suite
3-1012, Rolling Meadows, Illinois 60008610, Thornton, CO 80241 or by calling
303-853-7621.Who is entitled to vote at the Annual Meeting?
303-286-8000.
WHO IS ENTITLED TO VOTE AT THE 2023 ANNUAL MEETING?
The Board established March 1, 2016,February 28, 2023 as the record date (the “Record Date”) for the 2023 Annual Meeting. StockholdersShareholders owning our common stock at the close of business on the Record Date are entitled to receive notice of the 2023 Annual Meeting and vote their shares at the 2023 Annual Meeting. At the close of business on the Record Date, [ ][16,665,262] shares of our common stock were outstanding and entitled to vote. Each share is entitled to one vote on each matter to be voted upon at the 2023 Annual Meeting.
Has the Company been notified that a stockholder intends
WHAT VOTE IS REQUIRED FOR EACH PROPOSAL?
With respect to
propose its own director nominees at the meeting in opposition to the Board’s nominees?Yes. Engine Capital has notified MYR Group that it intends to nominate three nominees for election as directors at the Annual Meeting in opposition to the Board’s recommended nominees. The Board does not endorse the election of any of Engine Capital’s nominees.
You may receive solicitation materials from Engine Capital or its affiliates, including a proxy statement and a [color] proxy card. We are not responsible for the accuracy of any information provided by or related to Engine Capital or the nominees contained in solicitation materials filed or disseminated by or on behalf of Engine Capital or any other statements of Engine Capital. The Board strongly urges you not to sign or return any proxy card sent to you by or on behalf of Engine Capital.
The Board unanimously recommends that you voteFOR the election of each of our director nominees on the enclosedWHITE proxy card.
What should I do if I receive a [color] proxy card from Engine Capital?
The Board urges you NOT to sign or return any [color] proxy card sent to you by or on behalf of Engine Capital. Voting against Engine Capital’s nominees on its proxy card is not the same as voting for the Board’s nominees, because a subsequent vote against Engine Capital’s nominees on its [color] proxy card will revoke any previous proxy card submitted by you.
If you have previously voted using the [color] proxy card sent to you by or on behalf of Engine Capital, you can change your vote by executing and returning the enclosedWHITE proxy card. Only the latest dated proxy you submit will be counted. If you have any questions or need assistance voting, please contact our proxy solicitor, Morrow & Co., LLC, toll free at 1-800-662-5200 or by email at myrteam@morrowco.com.
What vote is required to approve each proposal?
As a result of Engine Capital’s intention to nominate three alternative director nominees at the Annual Meeting, assuming such nominees are in fact proposed for election at the Annual Meeting, the number of director nominees will exceed the number of directors, to be elected. Accordingly, directors will be elected on a plurality basis, and you may vote FOR, vote AGAINST or WITHHOLDvote to ABSTAIN with respect to each of the nominees. Our By-Laws provide for a majority vote standard in uncontested director nominees. The three director nominees with the most FOR voteselections as will be elected.
held at the 2023 Annual Meeting. The By-Laws provide that a director nominee in an uncontested election will be elected if the number of shares voted FOR the director’s election exceeds 50% of the number of votes cast on the issue of that director’s election (including votes FOR or votes AGAINST but excluding any votes to ABSTAIN or broker non-votes). If a director in an uncontested election fails to receive the required number of votes for re-election in an uncontested election, the director is expected to tender his or her resignation for prompt consideration by the Board. A director whose resignation is under consideration is expected to abstain from participating in any decision regarding that resignation. The NESG Committee and the Board may consider any factors they deem relevant in deciding whether to accept or reject a director’s resignation.
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You may vote FOR, vote AGAINST or vote to ABSTAIN with respect to the advisory resolution to approveapproval of the compensation of the Company’s named executive officersCompany's NEOs and the ratification of the appointment of our independent registered public accounting firm. In order to be approved, each of these two proposals requiresrequire the affirmative FOR vote of a majority of those shares present (either in person or represented by proxy) and entitled to vote on those proposals. Any ABSTAIN vote will have the same effect as a vote AGAINST a matter.
What effect do broker non-votes have
You may vote FOR, AGAINST, or ABSTAIN with respect to the approval of the amendment of Article FIFTH of our Certificate of Incorporation. In order to be approved, this proposal requires the affirmative FOR vote of a majority of all shares entitled to vote on the
proposals?proposal. Any ABSTAIN vote will have the same effect as a vote AGAINST a matter.
You may vote for EVERY ONE YEAR, EVERY TWO YEARS, EVERY THREE YEARS, or vote to ABSTAIN with respect to the advisory approval of the frequency of the advisory approval of the compensation of our NEOs. The affirmative vote of a majority of those shares present (either in person or represented by proxy) and entitled to vote on those proposals is the applicable vote standard for this proposal. However, the Board expects to be guided by the voting option that receives the greatest number of votes, even if that alternative does not receive a majority vote. Any ABSTAIN vote will have no effect.
| | | | | |
| 74 | MYR GROUP INC. | 2023 PROXY STATEMENT |
WHAT EFFECT DO BROKER NON-VOTES HAVE ON THE PROPOSALS?
A broker is entitled to vote shares held for a beneficial holder on “routine” matters without instructions from the beneficial holder of those shares. On the other hand, absent instructions from the beneficial holders of such shares, a broker will not be entitled to vote shares held for a beneficial holder on “non-routine”
proposals.proposals, such as the election of directors. This would be a “broker non-vote” and these shares will not be counted as having been voted on the applicable proposal.
AsConsequently, if your shares are held by a
result of Engine Capital’s stated intention to nominate director nomineesbroker on your behalf (that is, in
opposition to the Board’s director nominees, all proposals at the Annual Meeting are considered “non-routine”“street name”), and
therefore, if you do not instruct your broker as to how to vote on
a proposal,Proposals 1, 2, 3, and 4, the broker may not exercise discretion to vote
forFOR or
againstAGAINST such
proposal. With respect to Proposal 5, the broker may exercise its discretion to vote FOR or AGAINST that proposal
. in the absence of your instruction. We strongly encourage you to instruct your bank or broker on how you would like to vote so your vote can be counted on all proposals.How will my shares be voted?
proposals.
HOW WILL MY SHARES BE VOTED?
Your shares will be voted as you direct if you vote by signing and returning the enclosed
WHITE proxy card. If you sign and return the enclosed
WHITE proxy card but do not specify how you would like your shares voted, they will be voted in accordance with the Board’s recommendations on all matters or, if no recommendation is given, in accordance with the proxies’ best judgment.
What is the quorum requirement?
WHAT IS THE QUORUM REQUIREMENT?
A quorum of stockholdersshareholders is necessary to validly hold the 2023 Annual Meeting. A quorum will be present if at least a majority of our shares that are issued and outstanding sharesand entitled to vote on the Record Date are represented at the 2023 Annual Meeting, either in person or by proxy. Abstentions and broker non-votes (i.e.(i.e., when a stockholdershareholder does not provide voting instructions to their broker or nominee) will count for purposes of determining whether a quorum exists.
Can
HOW DO I
change my vote?VOTE?
Voting Before the 2023 Annual Meeting
If you hold shares of the Company’s common stock in your own name (known as ownership “of record”) on the books of our transfer agent, you are a registered shareholder. If a broker, bank or other nominee holds your shares (also known as ownership in “street name”), you are a beneficial owner. Registered shareholders and beneficial owners may vote their shares in advance of the 2023 Annual Meeting using one of the following methods:
•By Mail: Complete, sign, date and return (in the postage-paid envelope provided) your proxy card or voting instruction form;
•By Internet: Go to www.proxyvote.com and follow the instructions – you will need the 16-digit control number included on your proxy card or voting instruction form; or
•By Telephone: Call (800) 690-6903 and following the recorded instructions – you will need the 16-digit control number included on your proxy card or voting instruction form.
Voting During the 2023 Annual Meeting
Registered shareholders and beneficial owners may also vote online during the 2023 Annual Meeting. You will need the 16-digit control number included on your proxy card or voting instruction form to log in to the virtual meeting platform at virtualshareholdermeeting.com/MYRG2023. Voting electronically online during the 2023 Annual Meeting will replace any previous votes with respect to the shares voted during the 2023 Annual Meeting.
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 75 |
CAN I CHANGE MY VOTE?
If you would like to change your vote after submitting your proxy and prior to the 2023 Annual Meeting, you can revoke your proxy and change your proxy instructions by (a) signing and submitting another proxy card with a later date, or (b) voting atonline during the 2023 Annual Meeting.Meeting, or (c) entering a new vote on the internet or by telephone. Alternatively, you may provide a written statement of your intention to revoke your proxy to our Secretary prior to the 2023 Annual Meeting at MYR Group Inc., 1701 Golf Road,12121 Grant Street, Suite 3-1012, Rolling Meadows, Illinois 60008.610, Thornton, CO 80241. If your shares are held in street name (i.e.(i.e., your shares are held in an account through your broker), you should contact your bank or broker for specific instructions on how to change your vote.
What if
WHAT IF I wishWISH TO ATTEND THE 2023 ANNUAL MEETING?
You are entitled to attend and participate virtually in the 2023 Annual Meeting?AttendanceMeeting only if you were a shareholder on the Record Date. To attend and participate in the 2023 Annual Meeting on April 20, 2023, visit
virtualshareholdermeeting.com/MYRG2023 and enter the 16-digit control number included on your proxy card or voting instruction form. The 2023 Annual Meeting will begin promptly at 8:00 a.m. Mountain time. We encourage you to access the meeting is limited2023 Annual Meeting prior to the Company’s stockholders and its invited guests. If you hold shares in your name, please be prepared to provide proper identification, such as a driver’s license. If you hold your shares through a bank or broker (i.e., in “street-name”), youstart time. Online check-in will
need proof of ownership, such as a recent account statement or letter from your bank or broker, along with proper identification.begin at 7:45 a.m. Mountain time. Even if you wish to attend and participate in the 2023 Annual Meeting, we urge you to cast your vote using the enclosedWHITE proxy card as soon as possible.possible using one of the methods outlined in this Proxy Statement. If you choose to vote in person atonline during the 2023 Annual Meeting, it will revoke any previous proxy submitted. If you hold youror vote submitted with respect to the shares in street-name and wish to vote in person atvoted during the meeting, you must provide a legal proxy obtained from your bank or broker.
Who will bear the cost of soliciting votes for the2023 Annual Meeting?
Meeting.
WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE 2023 ANNUAL MEETING?
MYR Group bears the cost of soliciting your vote. In addition to mailing these proxy materials, our directors, officers or employees may solicit proxies or votes in person, by telephone or by electronic communication. They will not receive any additional compensation for these solicitation activities. We may
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enlist the help of banks and brokerage houses in soliciting proxies from their customers and reimburse the banks and brokerage houses for related out-of-pocket expenses. As a result of the proxy contest conducted by Engine Capital, MYR Group hasWe retained Morrow & Co.,Sodali LLC (“Morrow”) at an estimated cost not to exceed $[ ], plus customary costs and expenses, to aid in the solicitation of proxiessoliciting votes for the 2023 Annual Meeting. We expect that Morrow will engage approximately [ ] employees to assist us in connection with soliciting proxies. Also as a result of the proxy contest conducted by Engine Capital, MYR Group’s aggregate expenses related to the solicitation of shareholders (including expenses relating to the retention of Morrow, but excluding the amount normally expendedMeeting for a solicitation for an electiontotal fee of directors in the absence of a contest and salaries and wages of regular employees and officers) are expected to be approximately $[ ], of which approximately $[ ] has been incurred to date.
$7,500 plus reasonable expenses.
I
received only one set of proxy materials. Is it possible to obtain duplicates?RECEIVED ONLY ONE SET OF PROXY MATERIALS. IS IT POSSIBLE TO OBTAIN DUPLICATES?
Unless you advised otherwise, if you hold your shares in street name and you and other residents at your mailing address share the same last name and also own shares of our common stock in an account at the same broker, bank or other nominee, we delivered a single Notice of Meeting or set of proxy materials to your address. This method of delivery is known as householding. Householding reduces the number of mailings you receive, saves on printing and postage costs and helps the environment.
StockholdersShareholders who participate in householding will continue to receive separate voting instruction forms. We will deliver promptly, upon written or oral request, a separate copy of the Notice of Meeting or set of proxy materials to a
stockholdershareholder at a shared address to which a single copy of the materials was delivered. A
stockholdershareholder who wishes to receive a separate copy of the Notice
of Meeting or proxy materials for the
2023 Annual Meeting
or for future meetings should submit this request by contacting Morrow
& Co.,Sodali, LLC,
our proxy solicitor for the 2023 Annual Meeting, by email at
myrteam@morrowco.com,myrteam@morrowsodali.com, in writing at 470 West Avenue,
3rd Floor,Suite 3000, Stamford, CT 06902 or by calling 1-800-662-5200. If you would like to opt out of householding, please contact your broker, bank or other nominee. Beneficial owners sharing an address who are receiving multiple copies of the proxy materials and who wish to receive a single copy of these materials in the future will need to contact their broker, bank or other nominee to request that only a single copy of each document be mailed to all
stockholdersshareholders at the shared address in the future.
If you are a registered
stockholder,shareholder, we sent you and each registered
stockholdershareholder at your address
a separate
NoticesNotice of Meeting or
setsset of proxy materials.
Who counts the vote?
| | | | | |
| 76 | MYR GROUP INC. | 2023 PROXY STATEMENT |
WHO COUNTS THE VOTE?
As the appointed independent tabulator, IVS Associates,Broadridge Financial Solutions, Inc. will receive the proxies and tabulate the votes cast. IVS Associates,Broadridge Financial Solutions, Inc. will act as the independent inspector of election and will certify the results. Your vote will not be disclosed to our directors, officers or employees, except (a) as necessary to meet legal requirements and to assert or defend claims for or against us; (b) in the case of a contested proxy solicitation; (c) if you provide a comment with your proxy or otherwise communicate your vote to us or (d) as necessary to allow the independent inspector of election to certify the results.
How do
HOW DO I
find out the voting results?FIND OUT THE VOTING RESULTS?
Voting results will be included in a currentCurrent Report on Form 8-K to be filed with the SEC after the 20162023 Annual Meeting. This Form 8-K will also be available on our website atwww.myrgroup.com.May I ask questions at the Annual Meeting?
Yes. As a stockholder, during the voting, you may, in accordance with the rules, regulations and procedures prescribed by the Chairman of the Annual Meeting for the conduct of the Annual Meeting, ask questions and make remarks related to the matters being voted on. The Chairman of the Annual Meeting will entertain stockholders’ questions and comments of a general nature following the voting that are submitted in accordance with the rules, regulations and procedures prescribed by the Chairman of the Annual Meeting for the conduct of the Annual Meeting.
| | | | | |
MYR GROUP INC. | 2023PROXY STATEMENT | 77 |
2024 ANNUAL MEETING OF
STOCKHOLDERSStockholder Proposals and Nominations for the 2017 Annual Meeting
SHAREHOLDERS
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR THE 2024 ANNUAL MEETING
Under our By-Laws, a stockholdershareholder may nominate a candidate for election as a director or propose business for consideration at an annual meeting of stockholdersshareholders by delivering written notice that contains certain required information to our Corporate Secretary. We must receive this written notice not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders.shareholders. However, if the annual meeting is called for a date that is not within 30 days of such anniversary, we must receive stockholdershareholder proposal submissions no later than the close of business on the 10th day following the earlier of the day on which notice of the date of the meeting was mailed or other public disclosure was made.made, whichever occurs first. Accordingly, to be considered at the 20172024 Annual Meeting of Stockholders,Shareholders, we must receive a stockholder’sshareholder’s written notice of nomination or proposal on or after December 29, 201622, 2023 and not later than January 28, 2017.21, 2024.
In addition to satisfying the requirements under our By-Laws, to comply with the universal proxy rules shareholders who intend to solicit proxies in support of director nominees other than MYR Group’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act (including a statement that such shareholder intends to solicit the holders of shares representing at least 67% of the voting power of the Company’s shares entitled to vote on the election of directors in support of director nominees other than MYR Group’s nominees), which notice must be postmarked or transmitted electronically to us at our principal executive office no later than 60 calendar days prior to the anniversary date of the immediately preceding annual meeting of shareholders (for the 2024 Annual Meeting, no later than February 20, 2024). However, if the date of the 2024 Annual Meeting is changed by more than 30 calendar days from such anniversary, then notice must be provided by the later of 60 calendar days prior to the date of the 2024 Annual Meeting or the 10th calendar day following the day on which public announcement of the date of the 2024 Annual Meeting is first made.
Under SEC Rule 14a-8, a
stockholdershareholder may submit a proposal for possible inclusion in a proxy statement for an annual meeting of
stockholdersshareholders by submitting the proposal and other required information to our principal executive offices. We must receive the proposal no later than 120 calendar days before the one-year anniversary date of our proxy statement
being released to shareholders for the previous year’s annual meeting. If we change the date of an annual meeting by more than 30 days from the date of the previous year’s annual meeting, then the deadline is a reasonable time before we print and send our proxy materials for the annual meeting. Accordingly, to be considered for inclusion in our
20172024 proxy statement, we must receive a
stockholder’sshareholder’s submission of a proposal on or before November
15, 2016.Stockholder7, 2023.
Shareholder proposals must be sent to our Corporate Secretary at MYR Group Inc., 1701 Golf Road,12121 Grant Street, Suite 3-1012, Rolling Meadows, Illinois 60008.610, Thornton, CO 80241. For additional information about the stockholdershareholder proposal submission process, please see our By-Laws which are available on the Investor RelationsInvestors page of our website atwww.myrgroup.com, under “Corporate Governance.”2015 Annual Report and
2022 ANNUAL REPORT AND SEC
FilingsFILINGS
Our financial statements for the fiscal year ended December 31, 20152022 are included in our 20152022 Form 10-K, which we will make available to stockholders at the same time as this Proxy Statement.10-K. Our Annual Report2022 Form 10-K and this Proxy Statement are posted on our website atwww.myrgroup.com, and are available from the SEC at its website atwww.sec.gov. If you do not have access to the Internet or have not received a copy of our Annual Report,2022 Form 10-K, you may request a copy of it without charge by writing to our Corporate Secretary, at MYR Group Inc., 1701 Golf Road,12121 Grant Street, Suite 3-1012, Rolling Meadows, Illinois 60008.610, Thornton, CO 80241.
| | | | | |
| | By Order of the Board of Directors
|
| |
March 15, 20166, 2023 | |
| Gerald B. Engen, Jr.
Senior William F. Fry |
| Vice President, |
| Chief Legal Officer and Secretary |
| | | | | |
| 78 | MYR GROUP INC. | 2023 PROXY STATEMENT |
APPENDIX A
CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF MYR GROUP INC.
MYR Group Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), hereby certifies that the following amendments to the Restated Certificate of Incorporation of the Corporation, dated May 1, 2014 (the “Restated Certificate”), have been approved and adopted by the Corporation’s Board of Directors and have been duly adopted by a vote of the shareholders of the Corporation, at a meeting duly called, in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware and the Restated Certificate:
•Article FIFTH, Section (c) of the Restated Certificate is hereby amended to read in its entirety as follows:
“Until the election of directors at the 2026 annual meeting, the directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. Any director elected prior to the 2024 annual meeting will be elected for a three-year term. Each director elected at the 2024 annual meeting will be elected for a two-year term expiring at the 2026 annual meeting. Each director elected at the 2025 annual meeting will be elected for a one-year term expiring at the 2026 annual meeting. At the 2026 annual meeting and at each annual meeting thereafter, all directors will be elected for a one-year term expiring at the next annual meeting. For as long as the Board of Directors continues to be classified, if the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class or from the removal from office, death, disability, resignation or disqualification of a director or other cause shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors have the effect of removing or shortening the term of any incumbent director.”
•Article FIFTH, Section (e) of the Restated Certificate is hereby amended to read in its entirety as follows:
“Subject to the terms of any one or more classes or series of Preferred Stock, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring on the Board of Directors may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Prior to the election of directors at the 2026 annual meeting, any director of any class elected to fill a vacancy resulting from an increase in the number of directors of such class shall hold office for a term that shall coincide with the remaining term of that class. From and after the election of directors at the 2026 annual meeting, any director elected to fill a vacancy resulting from an increase in the number of directors shall hold office until the next annual meeting. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of the Corporation may be removed from office at any time, (i) with or without cause (except that any director who is serving a three-year term or a two-year term prior to the 2026 annual meeting may be removed only for cause) and (ii) only by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding capital stock of the Corporation entitled to vote in the election of directors. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of shareholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Restated Certificate of Incorporation applicable thereto.”
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MYR GROUP INC. | 2023PROXY STATEMENT | 79 |
APPENDIX B
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| 80 | MYR GROUP INC. | 2023 PROXY STATEMENT |
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