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Preliminary Proxy Statement
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(4) Date Filed:
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DATE:
Monday, May 9, 2022
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ITEMS OF BUSINESS:
1. Election of directors:
Holders of Class A Common Stock
to elect six directors.
Holders of Common Stock
to elect two directors.
2. Advisory Vote on Executive Compensation
3. Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for 2022.
4. Transact such other business as may properly come before the annual meeting or any adjournments.
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TIME:
10:00 a.m.
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PLACE:
Marriott SpringHill Suites
120 East Redwood Street
Baltimore, Maryland 21202
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RECORD DATE:
March 11, 2022
If you are a holder of record of Common or Class A Common Stock at the close of business on March 11, 2022, then you are entitled to receive notice of and to vote at the meeting.
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Internet:
Visit - www.proxyvote.com.*
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Telephone
Call - 1-800-690-6903*
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Vote by mail. Sign, date and return your proxy card or voting instruction form.
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*You will need the 11-digit control number included in your proxy card,
voting instructions form or notice.
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Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be held on May 9, 2022.
The proxy statement and Form 10-K for 2021 are available at www.proxyvote.com
and on Havertys’ Investor Relations website at havertys.com under “Investor Information” then “SEC Filings.”
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TABLE OF CONTENTS
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Our Board of Directors
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Proposal 1. Election of Directors
Nominees for Election by Holders of Class A Common Stock
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Nominees for Election by Holders of Common Stock
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Corporate Governance
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Board Leadership
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Committees of the Board
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Board of Directors Oversight Roles
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Governance Guidelines and Policies
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Director Compensation
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Compensation Discussion and Analysis
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Recap of 2021 NEO Compensation Program
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Executive Compensation Components
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Compensation Committee Report
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Executive Compensation
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Summary Compensation Table
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Grants of Plan Based Awards Table
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Outstanding Equity Awards at Fiscal Year-End Table
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Option Exercises and Stock Vested Table
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Non-Qualified Deferred Compensation Plans
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Pension Benefits and Retirement Plans
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2021 Potential Payments upon Termination or Change in Control
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CEO Pay Ratio Information
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Proposal 2: Advisory Vote on Executive Compensation
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Equity Compensation Plan Information
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Audit Committee Report
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Proposal 3: Ratification of the Appointment of our Independent Registered
Public Accounting Firm
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Ownership of Securities
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Ownership by our Principal Stockholders
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Ownership by our Directors and Management
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Information about our Annual Meeting
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Stockholder Proposals for 2023 Meeting
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Available Information
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Other Business
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GAAP to Non-GAAP Reconciliation
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Audit Committee Charter
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What am I voting on?
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✔ Holders of Class A common stock are being asked to elect six directors for a
one-year term.
✔ Holders of common stock are being asked to elect two directors for a one-year
term.
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Voting recommendation:
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✔ Our board of directors recommends a vote “For” each of the director nominees.
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Board Matrix
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Class A Common Stock
Nominees
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Common Stock Nominees
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EXPERIENCE
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Haverty
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Mangum
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Palmer
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Schiller
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Smith
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Trujillo
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Dukes
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Hough
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Current/Former CEO
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✔
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✔
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✔
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✔
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Public Board Experience
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✔
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✔
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✔
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✔
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✔
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✔
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✔
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Finance
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✔
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✔
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✔
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✔
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✔
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✔
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Risk Assessment
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✔
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✔
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✔
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✔
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✔
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✔
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✔
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✔
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Consumer Focused
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✔
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✔
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✔
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✔
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✔
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✔
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✔
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Marketing/Brand Building
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✔
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✔
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✔
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✔
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✔
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Sales
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✔
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✔
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✔
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✔
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✔
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✔
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Independent
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✔
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✔
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✔
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✔
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✔
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✔
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✔
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TENURE/AGE/GENDER/DIVERSITY
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Years on the Board
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30
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23
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20
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2
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33
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18
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6
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4
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Age
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65
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73
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68
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51
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71
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62
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47
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67
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Gender
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M
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F
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F
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M
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M
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M
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F
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M
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Gender/Race/Ethnicity/Nationality
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✔
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✔
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✔
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✔
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Experience and Skills Legend
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Current/Former CEO
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Public Board Experience
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Finance
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Risk
Assessment
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Consumer Focused
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Marketing/
Brand Building
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Sales
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Rawson Haverty, Jr. Management Director since 1992
Age 65
Principal Occupation: Senior Vice President, Real Estate and Development of Havertys since 1998. Over 37 years with Havertys in various positions.
Directorships: Chick-Fil-A Foundation, Akola PBC, Southface Institute, and a member of the Advisory Board of the Center for Ethics at Emory University.
Experience:
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Mylle H. Mangum Independent Director since 1999
Age 73
Principal Occupation: Chief Executive Officer of IBT Holdings, LLC, a provider of design, construction and consultant services for the retail
banking and specialty retail industries, since 2003.
Directorships: Barnes Group, Inc., Express, Inc. and The Shopping Center Group. Former director of PRGX Global, Inc., which merged with Ardian in
March 2021.
Experience:
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Vicki R. Palmer Independent Director since 2001
Age 68
Principal Occupation: Retired, former Executive Vice President, Financial Services and Administration for Coca‑Cola Enterprises Inc. from 2004
until 2009. Senior Vice President, Treasurer and Special Assistant to the CEO of Coca-Cola Enterprises Inc. from 1999 to 2004.
Directorships: First Horizon National Corporation, Finance Chair of the Black Economic Alliance, member of the Buckhead Coalition, and member of
the Governing Board of Woodward Academy.
Experience:
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Proposal 1: Nominees for Election by Holders of Class A Common Stock
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Derek G. Schiller Independent Director since 2020
Age 51
Principal Occupation: President and Chief Executive Officer of the Atlanta Braves, a Major League Baseball Club, since March 2018. President of
Business for the Braves from March 2016 to March 2018; Executive Vice President of Sales and Marketing from August 2007 to March 2016 for the Braves.
Directorships: Board Member of the Metro Atlanta Chamber of Commerce, the Atlanta Convention and Visitors Bureau, the Atlanta Sports Council, and
the Jack and Jill Late-Stage Cancer Foundation.
Experience:
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Clarence H. Smith
Age 71
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Management Director since 1989
Chairman of the board since 2012
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Principal Occupation: Chief Executive Officer of Havertys since 2003. President and Chief Executive Officer from 2003 until March 2021. Over 47
years with Havertys in various positions.
Directorships: Oxford Industries, Inc. and member of the Board of Trustees of Marist School.
Experience:
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Al Trujillo Independent Director since 2003
Age 62
Principal Occupation: President and Chief Operating Officer of the Georgia Tech Foundation since 2013. Investment Funds Advisor from 2007 to
2013. Former President and Chief Executive Officer of Recall Corporation, a global information management company until 2007.
Directorships: Member of the Board of Trustees of Marist School. Former director of SCANA Corporation, which was acquired by Dominion Energy in
2018.
Experience:
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Clarence H. Smith and Rawson Haverty, Jr. are first cousins and officers of Havertys.
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L. Allison Dukes Independent Director since 2016
Age 47
Principal Occupation: Senior Managing Director and Chief Financial Officer, Invesco Ltd. since August 2020. Deputy Chief Financial Officer, Invesco
Ltd. from March 2020 to August 2020. Former Chief Financial Officer for SunTrust Banks, Inc., from March 2018 until December 2019. Head of Commercial Banking for SunTrust Banks, Inc. from 2017 until
2018. President, Chairman and CEO of the Atlanta Division of SunTrust Banks, Inc. from 2015 until 2017.
Directorships: Member of the Board of Trustees of Children’s Healthcare of Atlanta, Emory University, and the Atlanta History Center; past chair
of the board of Junior Achievement of Georgia.
Experience:
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G. Thomas Hough Independent Director since 2018
Age 67 Lead Director
Principal Occupation: Retired, Americas Vice Chair of Ernst & Young LLP (“EY”). Vice Chair of Assurance
Services of EY in New York from 2009 to 2014.
Directorships: Equifax Inc. and a director/trustee of the Federated Hermes Fund Family. Member of the President’s Cabinet of the University of
Alabama. Former director of Publix Super Markets, Inc. from 2015 until 2020.
Experience:
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Name, Meetings and Members
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Principal Functions
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Audit Committee
Meetings: 4
Al Trujillo – Chair
Tom Hough
Vicki Palmer
Each member has been designated as “an audit committee financial expert” as defined by the Securities and Exchange Commission (“SEC”) and meets the independence requirements of the New York Stock Exchange (“NYSE”),
SEC, and our Governance Guidelines as well as the enhanced standards for Audit Committee members in Section 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
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• Provides oversight of the systems and procedures relating to the financial statements, financial reporting
process, systems of internal accounting and financial controls.
• Reviews and discusses with management the company’s risk assessment framework and management policies, including
cybersecurity and the framework with respect to significant financial risk exposures.
• Monitors the qualifications, independence and performance of the company’s internal audit function and independent
auditor and meets periodically with management, internal audit team, and the independent auditor in separate executive sessions.
• Performs other functions as the board deems appropriate.
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CORPORATE GOVERNANCE
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Name, Meetings and Members
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Principal Functions
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NCG Committee
Meetings: 2
Actions by Unanimous Consent: 1
Mylle Mangum – Chair
Allison Dukes
Derek Schiller
Al Trujillo
Each member meets the independence requirements of the NYSE, SEC and our Governance Guidelines as well as the enhanced standards for Compensation Committee members in Rule 16b-3 promulgated under
the Exchange Act.
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• Translates our compensation objectives into a compensation strategy that reinforces alignment of the interests of our
executives with that of our stockholders.
• Approves and evaluates the company’s director and executive officer compensation plans, policies and programs.
• Conducts an annual review and evaluation of the CEO’s performance in light of the company’s goals and objectives.
• Reviews and makes recommendations for composition and structure of the board and policies relating to the recruitment
of new board members and nomination and reelection of existing board members.
• Oversees the compliance structure and programs with
annual reviews of Havertys’ corporate governance documents.
• Oversees the company’s ESG-related initiatives.
• Reviews and approves related person transactions in accordance with board practices.
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Executive Committee
Meetings: 0
Actions by Unanimous Consent: 1
Independent Members:
Tom Hough - Chair
Mylle Mangum
Al Trujillo
Management Member:
Clarence Smith
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• In accordance with our bylaws, acts with the power and authority of the board in the management of our business and
affairs in the interim period between meetings of the board.
• Generally, holds meetings to approve specific terms of financings or other transactions after these items have
previously been presented to the board.
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CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE
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Annual Equity Retainer
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$
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50,000
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Cash Retainer
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$
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50,000
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Independent Lead Director Cash Retainer
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$
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12,000
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Audit and NCG Chairman Cash Retainer
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$
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10,000
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Annual Stock Grant
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$
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20,000
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CORPORATE GOVERNANCE
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Director
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Fees Earned or Paid in Cash ($)(1)
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Stock Awards
($)(1)(2)
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Total ($)
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Allison Dukes
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$
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33,333
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$
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80,333
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$
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113,667
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Tom Hough
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50,333
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71,333
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121,667
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Mylle Mangum
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52,333
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71,333
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123,667
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Vicki Palmer
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52,333
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71,333
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113,667
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Derek Schiller
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42,333
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71,333
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113,667
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Al Trujillo
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42,333
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71,333
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123,667
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John Glover(3)
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13,000
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24,667
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37,667
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(1)
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The board fees were increased for the board year beginning May 2021. The cash retainer was $27,000 and the equity
retainer was $54,000 for the board year beginning May 2020. The table reflects the amounts earned for the 2021 calendar year based on the fees for the respective periods.
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(2)
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Represents the aggregate grant date total fair value of stock awards determined in accordance with FASB ASC Topic
718. The award reflected in this column consists of a fully-vested award granted to non-employee directors on May 14, 2021 as the annual grant made on the first day of the new board year. The grant date fair value was $46.63, which was the
closing price of the company’s common stock on the grant date. Ms. Dukes elected to defer 100% of her annual retainer fee for the board year beginning May 2020 in shares of common stock under the Deferred Plan.
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(3)
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John Glover retired from the board at the end of the board year beginning May 2020.
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NEO Name
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NEO Title
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Clarence H. Smith
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Chief Executive Officer
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Steven G. Burdette
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President
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Richard B. Hare
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Executive Vice President and Chief Financial Officer
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J. Edward Clary
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Executive Vice President and Chief Information Officer
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John L. Gill
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Executive Vice President, Merchandising
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•
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Strong and consistent financial performance despite unprecedented operational challenges for the Company
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•
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Net sales of $1.01B, a 35.4% increase year-over-year
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•
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Cash Returns to stockholders $94.2M up 34% year-over-year
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COMPENSATION DISCUSSION AND ANALYSIS
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Role of the NCG Committee
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✔
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Conducted an annual review of our compensation philosophy to ensure that it remains appropriate given strategic objectives;
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✔
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Reviewed results from an annual review of compensation data related to our peers;
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✔
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Reviewed and approved all compensation components for our chief executive officer, chief financial officer, and other NEOs;
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✔
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Performed an annual evaluation of the execution of our pay-for-performance philosophy, to ensure that the actual award decisions resulted in alignment of relative pay and relative performance compared to the compensation peer group;
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✔
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Scheduled an executive session, without members of management, for the purpose of discussing decisions related to the chief executive officer’s performance, goal-setting, compensation level and other items deemed important by the NCG
Committee; and
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✔
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Reviewed succession planning with the CEO and in executive session of the board.
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COMPENSATION DISCUSSION AND ANALYSIS
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Base Salary
(Fixed Pay)
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Key Features
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• Fixed annual cash amount.
• Base pay increases considered on a calendar year basis or at time of promotion to align with the median range of our peer
group (as described on page 18 of this CD&A). Actual positioning varies to reflect each executive’s skills, experience and contribution to our success.
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Purpose
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• Provide a fixed amount of cash compensation to attract and retain talented executives.
• Differentiate scope and complexity of executives’ positions as well as individual performance over time.
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2021 Actions
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• Mr. Burdette’s base salary was increased 3.1% in January 2021 and then 18.2% in March 2021 in conjunction with his
promotion to President. Mr. Hare’s base salary was increased 7.7% in January 2021 due to additional responsibilities, performance, and to maintain his base salary within the target of the median peer group.
• Base salaries were increased in January 2021 by approximately 3.0% for the other NEOs.
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Cash Awards Under Management Incentive Plans
(Variable “At Risk” Compensation)
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Key Features
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• Individual MIP opportunities are expressed as a percentage of base salary and can vary for executives
based on their positions. Target MIP award opportunities are generally established so that total annual cash compensation (base salary plus target MIPs) approximates the median of our peer group.
• Performance-based cash incentive pay is comprised of two plans: MIP-I is tied to the company achieving
certain pre-tax earnings levels during the year (80% of total target cash incentive pay) and MIP-II is based on successfully meeting individual performance goals (20% of total target cash incentive pay).
• The range of potential payout for actual results relative to these goals is zero to 175% of target for MIP‑1 and zero to 100% of target for MIP-II.
• MIP amounts are earned based on the results achieved as determined by the Committee after evaluating
company and individual performance against pre-established goals.
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Purpose
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• Motivate and reward achieving or exceeding company and individual performance objectives, reinforcing pay-for-performance.
• Align performance measures for NEOs on key business objectives to lead the organization to achieve short-term financial and operational goals.
• Ensure alignment of short-term and long-term strategies of the company.
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2021 Actions
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• 2021 performance resulted in total MIP-I earned at 175% of its target and MIP-II earned at 100% of its
target for the NEOs. The Committee evaluated the impact of the pandemic on our business results and determined that these payouts appropriately reflected our strong performance and financial results achieved during 2021.
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Long-Term Equity Incentive Compensation
(Variable “At Risk” Compensation)
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Key Features
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• Awards granted annually with consideration of competitive market grant levels.
• Awards to NEOs are in the form of performance restricted stock units (PRSU) based on EBITDA and Sales,
each measured over the performance period commencing January 1, 2021 and ending December 31, 2021, and in the form of time-based restricted stock units.
• Vesting: The PRSUs granted in 2021 that are earned will cliff vest in February 2024 and are forfeitable
upon termination of employment, except in the cases of death, disability or normal retirement. The restricted stock units vest in equal increments over a three-year period. These grants are forfeitable upon termination of employment, except
in the cases of death or disability.
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Purpose
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• Stock-based compensation links executive compensation directly to stockholder interests.
• PRSUs provide a direct connection to company performance and executives’ goals.
• Multi-year vesting creates a retention mechanism and provides incentives for long-term creation of stockholder value.
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2021 Actions
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• 80% of our CEO’s and 70% of our other NEO’s equity awards were granted as PRSUs,
with 80% of PRSUs tied to EBITDA and 20% tied to Sales. Award sizes were determined in consideration of market levels, internal equity, and historical practices.
• Mr. Burdette received a special grant of 5,000 time-based restricted stock units upon his election as President.
• 2021 performance-based awards tied to EBITDA were earned at 175% of target and awards tied to Sales were
earned at 125% of target. These earned performance-based awards will vest in February 2024.
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COMPENSATION DISCUSSION AND ANALYSIS
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What We Do:
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✔ Pay-for-performance. A significant percentage of targeted annual compensation is delivered in the form of variable compensation that is connected to actual performance. For 2021, variable compensation
comprised approximately 72% of the targeted annual compensation for the chief executive officer and, on average, 58% of the targeted annual compensation for the other named executive officers.
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✔ Provide competitive target pay opportunities. We annually evaluate our target and actual compensation levels and relative proportions of the types of compensation against our peer group. We use
informed judgment in order to offer the compensation appropriate to motivate and attract highly talented individuals to enable our long-term growth.
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✔ Align performance measures to a mix of key strategic and operating objectives. Performance measures for incentive compensation are linked to both strategic and operating objectives designed to create
long-term stockholder value and to hold executives accountable for their individual performance and the performance of the company.
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✔ Link compensation to future stock performance. In 2021, all of the long-term incentive awards delivered to our named executive officers were in the form of equity-based compensation. For 2021,
long‑term equity compensation comprised approximately 44% of the targeted annual compensation for the chief executive officer and 30% to 33% of the targeted annual compensation for the other named executive officers.
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✔ Retain an outside compensation consultant. The NCG Committee retains an independent compensation consultant to review the company’s executive compensation program and practices.
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✔ Establish maximum payout caps for annual cash incentive compensation and Performance Restricted Stock Units (PRSUs).
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✔ Maintain a “Clawback” Policy. The company may recover incentive compensation paid to an executive officer that was calculated based upon any financial result or performance metric impacted by fraud
or misconduct of the executive officer.
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✔ Require meaningful stock ownership. Per our stock ownership guidelines, our chief executive officer is required to have qualified holdings equal to the lesser of a multiple of six times his base
salary or 135,000 shares. Our CEO’s qualified holdings were approximately 262,000 shares at March 11, 2022. The other named executive officers are also subject to ownership guidelines. Their holdings ranged from approximately 40,000 to
71,000 shares at March 11, 2022. New officers have five years to meet required ownership guidelines.
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✔ Mitigate undue risk-taking in compensation programs. Our compensation programs for our executive officers contain features that are designed to mitigate undue risk-taking by our executives.
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✔ Require a “double trigger” for change-in-control severance benefits to be payable.
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What We Don’t Do:
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× No repricing or buyout of underwater stock options. Our equity plan does not permit the repricing or buyout of underwater stock options or stock appreciation rights without stockholder approval,
except in connection with certain corporate transactions involving the company.
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× Prohibition against margin loans, pledging, and hedging or similar transactions of company securities by senior executives and directors.
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× No dividends or dividend equivalents are accrued or paid on unvested and/or unexercised awards.
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× No change-in-control tax gross ups. We do not provide change-in-control tax gross ups.
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× No significant perquisites. We do not provide our employees, including our NEOs, with significant perquisites.
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COMPENSATION DISCUSSION AND ANALYSIS
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COMPENSATION DISCUSSION AND ANALYSIS
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MIP-I Goal and Earned
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||||||||||||||||||||||||
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(in millions)
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Q1
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Q2
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Q3
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Q4
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Annual
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Total
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||||||||||||||||||
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MIP-I Weighting
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10
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%
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11
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%
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10
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%
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9
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%
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60
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%
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100
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%
|
||||||||||||
|
MIP-I Pre-Tax Earnings Goal
|
$
|
14.8
|
$
|
17.4
|
$
|
16.1
|
$
|
13.6
|
$
|
61.9
|
||||||||||||||
|
2021 Pre-Tax Earnings
|
$
|
25.4
|
$
|
29.2
|
$
|
31.9
|
$
|
32.1
|
$
|
118.5
|
||||||||||||||
|
% of Goal Achieved
|
172
|
%
|
168
|
%
|
198
|
%
|
236
|
%
|
191
|
%
|
||||||||||||||
|
Target % Achieved
|
175
|
%
|
175
|
%
|
175
|
%
|
175
|
%
|
175
|
%
|
||||||||||||||
|
% of MIP-I Earned
|
18
|
%
|
19
|
%
|
18
|
%
|
15
|
%
|
105
|
%
|
175
|
%
|
||||||||||||
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
How We Make Compensation Decisions
|
|
PEER GROUP
|
|||||
|
American Woodmark Corporation
|
Ethan Allen Interiors Inc.
|
La-Z-Boy Incorporated
|
|||
|
At Home Group Inc.
|
Flexsteel Industries, Inc.
|
Oxford Industries, Inc.
|
|||
|
Bassett Furniture Industries Inc.
|
Hibbett Sports, Inc.
|
Sleep Number Corporation
|
|||
|
Big 5 Sporting Goods Corporation
|
Hooker Furnishings Corporation
|
Vera Bradley, Inc.
|
|||
|
Conn’s, Inc.
|
Kimball International, Inc.
|
||||
|
Culp, Inc.
|
Knoll, Inc.
|
||||
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
Stock Ownership Guidelines
|
|
Position
|
Guidelines
|
|
Chief Executive Officer
|
6.0x salary or 135,000 shares
|
|
President
|
4.0x or 65,000 shares
|
|
Executive Vice President
|
3.0x salary or 40,000 shares
|
|
Senior Vice President
|
2.0x salary or 25,000 shares
|
|
Pension Benefits and Retirement Plans
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
Tax Deductibility of Compensation
|
|
Consideration of Last Year’s Advisory Stockholder Vote on Executive Compensation
|
 |
At the 2021 Annual Meeting of Stockholders held on May 10, 2021, approximately 90% of our eligible common shares were present and 98.1% of the votes were cast in support of the compensation of the company’s NEOs, as discussed and
disclosed in the 2021 Proxy Statement.
The Committee considered the strong stockholder support of the compensation paid to our NEOs evidenced by the results of this advisory vote, and together with its analysis, did not make any specific changes
to our executive compensation program for 2022 in response. Future annual advisory votes on executive compensation will serve as an additional tool to guide the committee in evaluating the alignment of the company’s executive compensation
program with the interests of the company and its stockholders.
|
|
The NCG Committee oversees Havertys’ compensation program on behalf of the board and operates under a written charter adopted by the board.
The NCG Committee, the members of which are listed below, is responsible for establishing and administering the executive compensation programs of Havertys. The NCG Committee has reviewed and
discussed the Compensation Discussion and Analysis with management and based on such review and discussions, the NCG Committee recommended to the board that the Compensation Discussion and Analysis be included in this proxy statement.
The Nominating, Compensation and Governance Committee
Mylle H. Mangum, Chair
Allison Dukes
Derek G. Schiller
Al Trujillo
|
|
Name and Principal Position
|
Year
|
Salary
|
Non-Equity Incentive Plan Compensation
(1)
|
Stock
Awards
(2)
|
Change in Pension Value (3)
|
All Other Compensation
(4)
|
Total
|
|||||||||||||||||||
|
Clarence H. Smith
|
2021
|
$
|
690,000
|
$
|
1,104,000
|
$
|
1,092,213
|
$
|
202,381
|
$
|
73,238
|
$
|
3,161,832
|
|||||||||||||
|
CEO(a)
|
2020
|
601,938
|
954,737
|
816,800
|
17,567
|
45,966
|
2,437,008
|
|||||||||||||||||||
|
|
2019
|
660,000
|
311,568
|
590,730
|
26,964
|
50,738
|
1,640,000
|
|||||||||||||||||||
|
Steven G. Burdette
|
2021
|
462,833
|
494,000
|
510,738
|
—
|
45,110
|
1,512,681
|
|||||||||||||||||||
|
President(a)
|
2020
|
365,165
|
341,247
|
278,733
|
56,387
|
29,634
|
1,071,166
|
|||||||||||||||||||
|
|
2019
|
380,000
|
118,711
|
270,921
|
63,542
|
31,385
|
864,559
|
|||||||||||||||||||
|
Richard B. Hare
|
2021
|
420,000
|
436,800
|
343,875
|
—
|
27,537
|
1,228,212
|
|||||||||||||||||||
|
EVP and CFO
|
2020
|
365,165
|
341,247
|
278,733
|
—
|
24,228
|
1,009,373
|
|||||||||||||||||||
|
|
2019
|
380,000
|
119,081
|
270,921
|
—
|
24,449
|
794,451
|
|||||||||||||||||||
|
J. Edward Clary
|
2021
|
387,000
|
371,520
|
274,609
|
—
|
28,284
|
1,061,413
|
|||||||||||||||||||
|
EVP and CIO
|
2020
|
351,088
|
328,122
|
229,725
|
84,039
|
21,955
|
1,014,929
|
|||||||||||||||||||
|
|
2019
|
365,000
|
121,680
|
234,255
|
90,142
|
33,737
|
844,814
|
|||||||||||||||||||
|
John L. Gill
|
2021
|
387,000
|
371,520
|
274,609
|
—
|
25,067
|
1,058,196
|
|||||||||||||||||||
|
EVP, Merchandising
|
2020
|
351,088
|
328,122
|
229,725
|
28,502
|
21,692
|
959,129
|
|||||||||||||||||||
|
|
2019
|
331,666
|
84,037
|
173,145
|
30,065
|
21,278
|
640,191
|
|||||||||||||||||||
|
(a)
|
Mr. Smith served as President and CEO and Mr. Burdette served as EVP, Operations during 2020. Mr. Burdette was promoted to President on March 1, 2021, and
his 2021 base salary was increased from $402,000 to $475,000.
|
|
(b)
|
Mr. Smith’s salary was reduced 40% and the salaries of the other NEOs were reduced 25% on April 1, 2020 as part of the company’s business continuity plan. The salaries were
reinstated on July 1, 2020 based on the company’s performance upon reopening of stores in May 2020.
|
|
Summary Compensation Table Footnotes
|
|
(1)
|
Non-Equity Incentive Plan Compensation: Amounts for the cash earned under the annual incentive plans. For a description of
the plans see “Compensation Discussion and Analysis.” The aggregate awards earned for 2021 were 160% of each NEO’s combined MIP target levels. The table below includes the amount of the total award to each named executive officer and the
portion of the award attributable to each component.
|
|
|
Corporate Performance ($)
|
Individual Performance ($)
|
Total Annual
Incentive Award ($)
|
||||||||||
|
Smith
|
$
|
966,000
|
$
|
138,000
|
$
|
1,104,000
|
|||||||
|
Burdette
|
432,250
|
61,750
|
494,000
|
||||||||||
|
Hare
|
382,200
|
54,600
|
436,800
|
||||||||||
|
Clary
|
325,080
|
46,440
|
371,520
|
||||||||||
|
Gill
|
325,080
|
46,440
|
371,520
|
||||||||||
|
EXECUTIVE COMPENSATION
|
|
(2)
|
Stock Awards: These amounts are the full value of the grants on the date the grants were made, as determined in accordance with ASC Topic 718. The full grant date value is calculated using the
number of awards multiplied by the closing price of our stock on the date of grant. All the grants were made on January 21, 2020, except for 5,000 of time-based restricted units granted to Mr. Burdette on March 1, 2021. Awards containing a
performance-based vesting condition are included based on achieving target performance. The amounts reported for these awards may not represent the amounts the individuals will actually realize, as the number of shares earned, if any, will
depend on actual performance versus goals and the change in our stock price over time.
The table below sets forth the details of the components that make up the 2021 equity awards. The value of the performance shares shown as earned was calculated using the number of shares earned under the EBITDA grant multiplied by the
share price on the date of grant. The EBITDA and Sales performance grants were earned at the maximum thresholds.
|
|
Components of Annual Stock Awards
|
Additional Information
|
|||||||||||||||||||||||
|
Value of
Time-based shares ($)
|
Value of Performance Shares - Target ($)
|
Total
|
Value of Performance Shares – at Maximum and Earned($)
|
|||||||||||||||||||||
|
EBITDA
|
Sales
|
EBITDA
|
Sales
|
|||||||||||||||||||||
|
Smith
|
$
|
218,443
|
$
|
699,016
|
$
|
174,754
|
1,092,213
|
$
|
1,223.278
|
$
|
218,443
|
|||||||||||||
|
Burdette
|
280,341
|
184,317
|
46,079
|
510,738
|
322,555
|
57,599
|
||||||||||||||||||
|
Hare
|
103,163
|
192,570
|
48,143
|
343,875
|
336,998
|
60,178
|
||||||||||||||||||
|
Clary
|
82,366
|
153,794
|
38,449
|
274,609
|
269,140
|
48,061
|
||||||||||||||||||
|
Gill
|
82,366
|
153,794
|
38,449
|
274,609
|
269,140
|
48,061
|
||||||||||||||||||
|
(3)
|
Change in Pension Value: Represents the aggregate change in the actuarial present value of accumulated benefits under the SERP for the applicable year. These amounts were determined using interest
rate and mortality rate assumptions consistent with those used in Note 10 Benefit Plans to our 2021 consolidated financial statements, which are included in our Form 10-K for the year ended December 31, 2021. Year-over-year changes in
pension value for the SERP generally are driven due to changes in actuarial pension assumptions as benefit amounts under the SERP were frozen when the pension plan was terminated in 2014. The SERP monthly benefits are actuarially increased
if commencement of such benefits begins after normal retirement age if elected by the participant prior to the SERP being frozen. For 2021, the change in pension value includes the impact of the late retirement factors under the SERP which
increased the present values and higher discount rates which decreased present values. The methodology used to calculate the actuarial present value of the accumulated benefits under the SERP as of December 31, 2020 and December 31, 2019,
did not include the impact of the late retirement factors. The amounts reported for 2021 were calculated using the late retirement factors, which resulted in part, in the increase in the benefit for 2021 as compared to 2020 and 2019 for
affected participants. The change in pension value for Mr. Smith was substantially higher than 2020 and 2019 primarily due to the impact of the late retirement factors under the SERP due to commencement of his SERP benefits after normal
retirement age. For the following NEOs, the higher discount rates resulted in a total decrease in their pension values as follows: Mr. Burdette - $12,241, Mr. Clary - $17,397, and Mr. Gill - $7,037. Mr. Hare joined the company in 2017 and
has no benefits under the SERP.
|
|
(4)
|
All Other Compensation: These amounts for 2021 are comprised of items as noted in the following table:
|
|
401(k)
Plan Match(a)
|
Deferred Compensation Plan Contribution(b)
|
Other(c)
|
Total
|
|||||||||||||
|
Smith
|
$
|
11,600
|
$
|
40,642
|
$
|
20,996
|
$
|
73,238
|
||||||||
|
Burdette
|
11,600
|
15,422
|
18,088
|
45,110
|
||||||||||||
|
Hare
|
11,600
|
—
|
15,937
|
27,537
|
||||||||||||
|
Clary
|
11,600
|
—
|
16,684
|
28,284
|
||||||||||||
|
Gill
|
11,600
|
—
|
13,467
|
25,067
|
||||||||||||
|
(a) The maximum 401(k) match for calendar year 2021 was
$11,600.
(b) Company contributions to the Deferred Compensation
Plan are based on participants’ compensation and contributions.
(c) Includes: premium costs for covering a portion of
medical insurance coverage, additional life insurance, long-term disability coverage and health examinations.
|
|
EXECUTIVE COMPENSATION
|
|
Name
|
Award Type(1)
|
Grant and NCG Committee Approval Date
|
Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards ($)(2)
|
Estimated Possible Payouts
Under Equity
Incentive Plan Awards (#)(3)(4)
|
All Other Stock
Awards:
Number of
Shares of
Stock
(#)
|
Exercise
or
Base Price of Awards
$/Share(5)
|
Grant Date
Fair
Value of
Stock
Award
$(6)
|
|||||||||||
|
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
|||||||||||||
|
Smith
|
ACMIP-I
|
1/21/2021
|
19,872
|
552,000
|
966,000
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
ACMIP-II
|
1/21/2021
|
—
|
138,000
|
138,000
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
PRSU
|
1/21/2021
|
—
|
—
|
—
|
8,538
|
21,344
|
37,352
|
—
|
$32.75
|
$699,016
|
||||||||
|
PRSU.1
|
1/21/2021
|
—
|
—
|
—
|
2,134
|
5,336
|
6,670
|
—
|
32.75
|
174,754
|
||||||||
|
RSU
|
1/21/2021
|
—
|
—
|
—
|
—
|
—
|
—
|
6,670
|
32.75
|
218,443
|
||||||||
|
Burdette
|
ACMIP-I
|
1/21/2021
|
8,892
|
247,000
|
432,250
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
ACMIP-II
|
1/21/2021
|
—
|
61,750
|
61,750
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
PRSU
|
1/21/2021
|
—
|
—
|
—
|
2,251
|
5,628
|
9,849
|
—
|
32.75
|
184,317
|
||||||||
|
PRSU.1
|
1/21/2021
|
—
|
—
|
—
|
563
|
1,407
|
1,759
|
—
|
32.75
|
46,079
|
||||||||
|
RSU
|
1/21/2021
|
—
|
—
|
—
|
—
|
—
|
—
|
3,015
|
32.75
|
98,742
|
||||||||
|
RSU
|
3/01/2021
|
—
|
—
|
—
|
—
|
—
|
—
|
5,000
|
36.32
|
181,600
|
||||||||
|
Hare
|
ACMIP-I
|
1/21/2021
|
7,862
|
218,400
|
382,200
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
ACMIP-II
|
1/21/2021
|
—
|
54,600
|
54,600
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
PRSU
|
1/21/2021
|
—
|
—
|
—
|
2,352
|
5,880
|
10,290
|
—
|
32.75
|
192,570
|
||||||||
|
PRSU.1
|
1/21/2021
|
—
|
—
|
—
|
588
|
1,470
|
1,838
|
—
|
32.75
|
48,143
|
||||||||
|
RSU
|
1/21/2021
|
—
|
—
|
—
|
—
|
—
|
—
|
3,150
|
32.75
|
103,162
|
||||||||
|
Clary
|
ACMIP-I
|
1/21/2021
|
6,687
|
185,760
|
325,080
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
ACMIP-II
|
1/21/2021
|
—
|
46,440
|
46,440
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
PRSU
|
1/21/2021
|
—
|
—
|
—
|
1,878
|
4,696
|
8,218
|
—
|
32.75
|
153,794
|
||||||||
|
PRSU.1
|
1/21/2021
|
—
|
—
|
—
|
470
|
1,174
|
1,468
|
—
|
32.75
|
38,449
|
||||||||
|
RSU
|
1/21/2021
|
—
|
—
|
—
|
—
|
—
|
—
|
2,515
|
32.75
|
82,366
|
||||||||
|
Gill
|
ACMIP-I
|
1/21/2021
|
6,687
|
185,760
|
325,080
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
ACMIP-II
|
1/21/2021
|
—
|
46,440
|
46,440
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
PRSU
|
1/21/2021
|
—
|
—
|
—
|
1,878
|
4,696
|
8,218
|
—
|
32.75
|
153,794
|
||||||||
|
PRSU.1
|
1/21/2021
|
—
|
—
|
—
|
470
|
1,174
|
1,468
|
—
|
32.75
|
38,449
|
||||||||
|
RSU
|
1/21/2021
|
—
|
—
|
—
|
—
|
—
|
—
|
2,515
|
32.75
|
82,366
|
||||||||
|
(1)
|
Award Type:
|
ACMIP-I = Annual Cash Management Incentive Plan Compensation based on company performance
ACMIP-II = Annual Cash Management Incentive Plan Compensation based on individual performance
PRSU = Performance Restricted Stock Units contingent - EBITDA
PRSU.1 = Performance Restricted Stock Units contingent - Sales
RSU = Restricted Stock Unit
|
|
(2)
|
The 2021 Non-Equity Incentive Plans as discussed above provided for a target payout for 100% attainment of the goals and decreased to the payout threshold and increased to the maximum payout noted above.
|
|
|
(3)
|
The PRSU grant is based on 2021 adjusted EBITDA as discussed above. The number of shares actually achieved were 175% of the target and are shown as outstanding awards on page 28.
|
|
|
(4)
|
The PRSU.1 grant is based on a sales target for 2021. The number of shares actually achieved were 125% of the target and are shown as outstanding awards on page 28.
|
|
|
(5)
|
The base price for the PRSUs and RSUs is the closing price of our stock on the date of grant.
|
|
|
(6)
|
The fair value for the PRSUs and RSUs was determined using the target number of shares granted multiplied by the closing stock price on the grant date, in accordance with ASC Topic 718.
|
|
|
EXECUTIVE COMPENSATION
|
|
Stock Awards
|
||||||
|
Name
|
Date Awarded
|
Number of Shares of Stock That Have Not Vested(#)
|
Market Value of Shares of Stock that Have Not Vested ($)
|
Equity Incentive Plan Awards:
Number of Unearned Shares That Have Not Vested(#)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested($)
|
|
|
Smith
|
1/30/18(1)
|
645
|
19,718
|
|||
|
1/30/19(3)
|
8,477
|
259,142
|
||||
|
1/30/19(1)
|
1,450
|
44,327
|
||||
|
1/23/20(4)
|
44,800
|
1,369,536
|
||||
|
1/23/20(5)
|
7,680
|
234,778
|
||||
|
1/23/20(2)
|
5,280
|
161,410
|
||||
|
1/21/21(2)
|
6,670
|
203,902
|
||||
|
1/21/21(6)
|
37,352
|
1,141,851
|
||||
|
1/21/21(7)
|
6,670
|
203,902
|
||||
|
Burdette
|
1/30/18(1)
|
847
|
25,893
|
|||
|
1/31/19(3)
|
3,024
|
92,444
|
||||
|
1/31/19(1)
|
1,995
|
60,987
|
||||
|
1/23/20(4)
|
13,377
|
408,935
|
||||
|
1/23/20(5)
|
2,293
|
70,097
|
||||
|
1/23/20(2)
|
2,703
|
82,631
|
||||
|
1/21/21(2)
|
3,015
|
92,169
|
||||
|
1/21/21(6)
|
9,849
|
301,084
|
||||
|
1/21/21(7)
|
1,759
|
53,773
|
||||
|
5/01/21(2)
|
5,000
|
152,850
|
||||
|
Hare
|
1/30/18(1)
|
847
|
25,893
|
|||
|
1/31/19(3)
|
3,024
|
92,444
|
||||
|
1/31/19(1)
|
1,995
|
60,987
|
||||
|
1/23/20(4)
|
13,377
|
408,935
|
||||
|
1/23/20(5)
|
2,293
|
70,097
|
||||
|
1/23/20(2)
|
2,703
|
82,631
|
||||
|
1/23/21(2)
|
3,150
|
96,296
|
||||
|
1/21/21(6)
|
10,290
|
314,565
|
||||
|
1/21/21(7)
|
1,838
|
56,188
|
||||
|
Clary
|
1/30/18(1)
|
765
|
23,386
|
|||
|
1/31/19(3)
|
2,615
|
79,941
|
||||
|
1/31/19(1)
|
1,725
|
52,733
|
||||
|
1/23/20(4)
|
11,025
|
337,034
|
||||
|
1/23/20(5)
|
1,890
|
57,777
|
||||
|
1/23/20(2)
|
2,227
|
68,079
|
||||
|
1/21/21(2)
|
2,515
|
76,884
|
||||
|
1/21/21(6)
|
8,218
|
251,224
|
||||
|
1/21/21(7)
|
1,468
|
44,877
|
||||
|
Gill
|
1/30/18(1)
|
500
|
15,285
|
|||
|
1/31/19(3)
|
1,656
|
50,624
|
||||
|
1/31/19(1)
|
1,700
|
51,969
|
||||
|
1/23/20(4)
|
11,025
|
337,034
|
||||
|
1/23/20(5)
|
1,890
|
57,777
|
||||
|
1/23/20(2)
|
2,227
|
68,079
|
||||
|
1/21/21(2)
|
2,515
|
76,884
|
||||
|
1/21/21(6)
|
8,218
|
251,224
|
||||
|
1/21/21(7)
|
1,468
|
44,877
|
||||
|
EXECUTIVE COMPENSATION
|
|
Award Information
|
Vesting Rate
|
Vesting Dates
|
Conditions
|
|
|
(1)
|
Restricted Stock Units
|
25% per year
|
May 8 each year beginning year following grant date
|
Continued employment through vesting date.
|
|
(2)
|
Restricted Stock Units
|
one-third per year
|
May 8 each year beginning year following grant date
|
Continued employment through vesting date.
|
|
(3)
|
Performance Restricted Stock Units
|
100%
|
February 28, 2022
|
Based on 2019 EBITDA, shares achieved at
46.4% of target.
|
|
(4)
|
Performance Restricted Stock Units
|
100%
|
February 28, 2023
|
Based on 2020 EBITDA, shares achieved at 175% of target.
|
|
(5)
|
Performance Restricted Stock Units
|
100%
|
February 28, 2023
|
Based on 2020 comparable store sales, shares achieved at 120% of target.
|
|
(6)
|
Performance Restricted Stock Units
|
100%
|
February 28, 2024
|
Based on 2021 EBITDA, shares achieved at 175% of target.
|
|
(7)
|
Performance Restricted Stock Units
|
100%
|
February 28, 2024
|
Based on 2021 consolidated sales, shares achieved at 125% of target.
|
|
|
Option and SSARs Awards
|
Stock Awards
|
||||||||||||||
|
Name
|
Number of Shares Acquired on Exercise (#)(1)
|
Value Realized on Exercise ($)(2)
|
Number of Shares
Acquired
on Vesting (#)(1)
|
Value
Realized on
Vesting ($)(2)
|
||||||||||||
|
Clarence Smith
|
—
|
—
|
18,442
|
$
|
709,829
|
|||||||||||
|
Steve Burdette
|
—
|
—
|
9,438
|
388,955
|
||||||||||||
|
Richard Hare
|
—
|
—
|
9,225
|
379,023
|
||||||||||||
|
Ed Clary
|
—
|
—
|
8,438
|
347,304
|
||||||||||||
|
John Gill
|
—
|
—
|
4,852
|
206,856
|
||||||||||||
|
Name
|
Net Shares Received (#)
|
|||
|
Smith
|
10,077
|
|||
|
Burdette
|
5,344
|
|||
|
Hare
|
5,038
|
|||
|
Clary
|
1,838
|
|||
|
Gill
|
2,758
|
|||
|
EXECUTIVE COMPENSATION
|
|
Name
|
Aggregate
Earnings (Loss)
in 2021 ($)
|
Aggregate Withdrawals/Distributions in 2021 ($)
|
Aggregate
Balance at Last
FYE ($)
|
|||||||||
|
Clarence Smith
|
$
|
289,646
|
$
|
607,596
|
$
|
403,370
|
||||||
|
Ed Clary
|
143,192
|
—
|
626,277
|
|||||||||
|
Name
|
Executive Contributions in 2021 ($)(1)
|
Company Contributions
for 2021 ($)(2)
|
Aggregate Earnings (Loss) in 2021 ($)(3)
|
Aggregate
Withdrawals/
Distributions
in 2021 ($)
|
Aggregate Balance at Last FYE ($)(4)
|
|||||||||||||||
|
Clarence Smith
|
$
|
353,050
|
$
|
40,642
|
$
|
544,389
|
—
|
$
|
4,470,071
|
|||||||||||
|
Steve Burdette
|
169,429
|
15,422
|
49,534
|
$
|
62,443
|
359,174
|
||||||||||||||
|
Richard Hare
|
—
|
—
|
28,552
|
—
|
255,530
|
|||||||||||||||
|
Ed Clary
|
313
|
—
|
152,853
|
—
|
672,529
|
|||||||||||||||
|
(1) Amounts included in this column have been included for the applicable year in the “Salary” and “Non-Equity Incentive Plan
Compensation” columns in the Summary Compensation Table.
|
|
(2) Amounts included in this column have been reported for the applicable year in the “All Other Compensation” column of the Summary
Compensation Table.
|
|
(3) Amounts included in this column do not constitute above-market or preferential earnings and accordingly such amounts are not reported
in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table.
|
|
(4) All amounts included in this column have been reported in the current or prior years as either salary, non-equity incentive
compensation or all other compensation in the summary compensation tables or as earnings or withdrawals in the deferred compensation tables.
|
|
EXECUTIVE COMPENSATION
|
|
Name
|
Plan Name
|
Number of Years
Credited
Service (#)
|
Present Value
of Accumulated
Benefit ($)
|
Payments during last fiscal year ($)
|
|||||||||
|
Clarence Smith
|
SERP
|
40
|
$
|
701,291
|
—
|
||||||||
|
Steve Burdette
|
SERP
|
32
|
356,565
|
—
|
|||||||||
|
Ed Clary
|
SERP
|
25
|
550,690
|
—
|
|||||||||
|
John Gill
|
SERP
|
15
|
160,765
|
—
|
|||||||||
|
EXECUTIVE COMPENSATION
|
|
•
|
Severance payments – calculated as equal to two times the sum of: (1) the higher of the individual’s annual base salary or the average annual base salary for the three years immediately prior to the event upon
which the notice of termination is based and (2) the higher of the amount paid as annual non-equity incentive compensation or the average amount paid in the three years preceding that in which the date of termination occurs.
|
|
•
|
Final year bonus – a pro-rata amount for the annual incentive plan performance period in which the date of termination occurs, the calculation and payment of which depend on when the date of termination occurs.
|
|
•
|
Reimbursement for medical and life insurance premiums – payments for a period of 24 months after the date of termination.
|
|
•
|
Acceleration of vesting on then-outstanding stock options and restricted stock awards; then‑outstanding performance shares would be governed by the plan under which they were awarded. See “Accelerated Vesting of
Long-Term Incentives” below for additional details on the outstanding awards.
|
|
EXECUTIVE COMPENSATION
|
|
Name
|
Voluntary
|
Involuntary
Not for Cause
|
For
Cause
|
Change in Control
No
Termination
|
Involuntary
for Good Reason/Not for Cause (CIC)
|
Death
|
Disability
|
||||||||
|
Clarence Smith
|
|||||||||||||||
|
Severance
|
—
|
—
|
—
|
—
|
$3,588,000
|
—
|
—
|
||||||||
|
Healthcare and Other
|
—
|
—
|
—
|
—
|
37,071
|
—
|
—
|
||||||||
|
Long-Term Incentive
|
—
|
(2)
|
—
|
—
|
$3,638,564
|
3,638,564
|
$3,638,564
|
(3)
|
$3,638,564
|
(3)
|
|||||
|
Retirement Plans(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
Steve Burdette
|
|||||||||||||||
|
Severance
|
—
|
—
|
—
|
—
|
1,938,000
|
—
|
—
|
||||||||
|
Healthcare and Other
|
—
|
—
|
—
|
—
|
37,071
|
—
|
—
|
||||||||
|
Long-Term Incentive
|
—
|
—
|
—
|
1,340,861
|
1,340,861
|
1,340,861
|
(3)
|
1,340,861
|
(3)
|
||||||
|
Retirement Plans(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
Richard Hare
|
|||||||||||||||
|
Severance
|
—
|
—
|
—
|
—
|
1,713,600
|
—
|
—
|
||||||||
|
Healthcare and Other
|
—
|
—
|
—
|
—
|
56,532
|
—
|
—
|
||||||||
|
Long-Term Incentive
|
—
|
—
|
—
|
1,208,035
|
1,208,035
|
1,208,035
|
(3)
|
1,208,035
|
(3)
|
||||||
|
Retirement Plans(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
Ed Clary
|
|||||||||||||||
|
Severance
|
—
|
—
|
—
|
—
|
1,517,040
|
—
|
—
|
||||||||
|
Healthcare and Other
|
—
|
—
|
—
|
—
|
37,071
|
—
|
—
|
||||||||
|
Long-Term Incentive
|
—
|
—
|
—
|
991,935
|
991,935
|
991,935
|
(3)
|
991,935
|
(3)
|
||||||
|
Retirement Plans(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
John Gill
|
|||||||||||||||
|
Severance
|
—
|
—
|
—
|
—
|
1,517,040
|
—
|
—
|
||||||||
|
Healthcare and Other
|
—
|
—
|
—
|
—
|
56,823
|
—
|
—
|
||||||||
|
Long-Term Incentive
|
—
|
—
|
—
|
953,753
|
953,753
|
953,753
|
(3)
|
953,753
|
(3)
|
||||||
|
Retirement Plans(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
EXECUTIVE COMPENSATION
|
|
What am I voting on?
|
✔ Advisory vote to approve named executive officers’ compensation
(“say-on-pay-vote”).
|
|
Voting recommendation:
|
✔ Our board of directors recommends a vote “For” approval,
on a non-binding, advisory basis, of the compensation paid to our named executive officers.
|
|
Plan Category
|
Number of Securities
To be issued upon
exercise of outstanding
equity awards
(a)
|
Weighted-average
exercise price of
outstanding options and stock-settled stock appreciation rights (SSARs)
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in Column (a))
(c)
|
|||||||||
|
Equity compensation plans
approved by stockholders:
|
||||||||||||
|
Long-Term Incentive Plans(1)
|
606,898
|
(2)
|
1,499,700
|
(3)
|
||||||||
|
Director Compensation Plan
|
123,679
|
(4)
|
—
|
97,128
|
(5)
|
|||||||
|
Equity compensation plans not
approved by stockholders
|
—
|
—
|
—
|
|||||||||
|
Total
|
730,577
|
—
|
1,596,828
|
|||||||||
|
(1)
|
Shares issuable pursuant to outstanding equity awards under our 2014 LTIP and 2021 LTIP.
|
|
(2)
|
This number is comprised entirely of full value restricted stock units including shares issued pursuant to outstanding performance-based restricted
stock units. Upon vesting shares of common stock are issued for each restricted unit on a 1‑for‑1 basis.
|
|
(3)
|
Any shares from the 2014 LTIP which are forfeited, expired, or cancelled are not made available for use under the 2021 LTIP. Any shares from the 2021
LTIP which are forfeited, expired, or cancelled are made available for use under the 2021 LTIP.
|
|
(4)
|
Shares deferred under the Directors’ Deferred Compensation Plan. Shares are issued from those held in the company’s treasury.
|
|
(5)
|
Shares remaining under the Directors Compensation Plan. Shares are issued from those held in the company’s treasury.
|
|
The Audit Committee oversees Havertys’ financial reporting process on behalf of the board. Havertys’ management has the primary responsibility for the financial statements, for maintaining
effective internal control over financial reporting, and for assessing the effectiveness of internal control over financial reporting. Havertys’ independent registered public accounting firm, or “independent accountants,” is responsible for
auditing its consolidated financial statements and providing an opinion as to their conformity with accounting principles generally accepted in the United States as well as attesting and reporting on the effectiveness of its internal controls
over financial reporting.
The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews or
procedures. Consequently, in carrying out its oversight responsibilities, it shall not be charged with, and is not providing, any expert or special assurance as to Havertys’ financial statements, or any professional certification as to the
independent accountants’ work. In addition, the Audit Committee has relied on management’s representation that the financial statements have been prepared with integrity and objectively in conformity with accounting principles generally
accepted in the United States and on the representations of an independent registered public accounting firm included in its report on Havertys’ financial statements.
The Audit Committee is comprised entirely of three independent directors as defined by the NYSE listing standards and Rule 10A-3 of the Securities Exchange Act of 1934. The Audit
Committee is governed by a charter that enumerates its purpose and responsibilities, a copy of which is available on Havertys’ website at https://www.havertys.com/furniture/board-committees#.
The Audit Committee met four times during 2021 and schedules its meetings to ensure enough time is available to devote attention to its tasks. In carrying out its responsibilities, the
Audit Committee among other things:
• meets with management and the independent registered
public accounting firm, Grant Thornton LLP (“Grant Thornton”) to review and discuss Havertys’ accounting policies and significant estimates;
• discusses with Havertys’ internal auditors and Grant
Thornton the overall scope and plans for their respective audits;
• meets with both the internal auditors and Grant
Thornton, with and without management present, to discuss the results of their examinations;
• reviews and discusses quarterly and annual financial reports
prior to filing with the SEC and quarterly earnings press releases;
• supervises the relationship between Havertys and Grant
Thornton, including having direct responsibility for Grant Thornton’s appointment, compensation, retention, and oversight; reviewing the scope of their audit services; approving audit and non-audit services; and confirming Grant Thornton’s
independence;
• reviews with senior management significant risks and the
processes by which risk is identified, assessed, and mitigated; and
• selects for the stockholders’ ratification, the independent
registered public accounting firm for 2022.
|
|
AUDIT COMMITTEE REPORT (continued)
|
|
The Audit Committee further discussed with representatives of Grant Thornton the matters required to be discussed with audit committees by the applicable requirements of the Public Company
Accounting Oversight Board's standards and the SEC. The Committee also received the written disclosures and the letter from Grant Thornton required by the applicable requirements of the Public Company Accounting Oversight Board regarding
Grant Thornton’s communications with the Committee concerning independence and discussed with representatives of Grant Thornton the independence of that firm.
The Audit Committee also reviewed and discussed together with management and Grant Thornton, Havertys’ audited financial statements for the year ended December 31, 2021, and the results of
management's assessments of the effectiveness of the company’s internal control over financial reporting and Grant Thornton’s audit of internal control over financial reporting.
Based on these reviews and discussions, the Audit Committee recommended to the board that the audited financial statements be included in Havertys’ Annual Report on Form 10‑K for the year
ended December 31, 2021.
The Audit Committee
Al Trujillo, Chair
G. Thomas Hough
Vicki R. Palmer
This report shall not be deemed to be “soliciting material” or to be “filed” with the SEC nor shall this report be incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such acts.
|
|
AUDIT MATTERS
|
|
Item
|
|
2021
|
|
|
|
2020
|
|
||
|
Audit Fees (a)
|
|
$
|
659.0
|
|
|
|
$
|
655.1
|
|
|
Audit–Related Fees (b)
|
|
|
0.0
|
|
|
|
|
0.0
|
|
|
Tax Fees (c)
|
|
|
21.2
|
|
|
|
|
0.0
|
|
|
All Other Fees (d)
|
|
|
117.7
|
|
|
|
|
0.0
|
|
|
What am I voting on?
|
✔ Ratification of the appointment of our independent registered public accounting
firm for 2022.
|
|
Voting recommendation:
|
✔ Our board of directors recommends a vote “For” the
appointment of Grant Thornton LLP as our independent registered public accounting firm for 2022.
|
|
Common Stock
|
Class A Common Stock
|
||||||||
|
Name and address of Beneficial Holder
|
Amount and Nature of Beneficial Ownership
|
Percent
of Class(1)
|
Amount and Nature of Beneficial Ownership
|
Percent
of Class(2)
|
|||||
|
BlackRock, Inc.
55 East 52nd Street, New York, NY
|
2,731,609
|
(3)
|
17.2
|
%
|
—
|
—
|
|||
|
The Burton Partnership, LP
614 W. Bay Street, Tampa, FL
|
1,228,255
|
(4)
|
7.7
|
%
|
—
|
—
|
|||
|
Dimensional Fund Advisors LP
6300 Bee Cave Road, Building One, Austin, TX
|
1,171,580
|
(5)
|
7.4
|
%
|
—
|
—
|
|||
|
Renaissance Technologies LLC
800 Third Avenue, New York, NY
|
1,154,706
|
(6)
|
7.3
|
%
|
—
|
—
|
|||
|
The Vanguard Group
100 Vanguard Blvd., Malvern, PA
|
1,124,820
|
(7)
|
7.1
|
%
|
—
|
—
|
|||
|
Villa Clare Partners, L.P.
158 West Wesley Road, Atlanta, GA
|
—
|
*
|
603,497
|
(8)
|
46.9
|
%
|
|||
|
Rawson Haverty, Jr.
780 Johnson Ferry Road, NE, Atlanta, GA
|
29,710
|
(10)
|
*
|
186,959
|
(9)(10)
|
14.5
|
%
|
||
|
Clarence H. Smith
780 Johnson Ferry Road, NE, Atlanta, GA
|
69,989
|
(11)(12)
|
*
|
113,986
|
(13)
|
8.9
|
%
|
||
|
(1)
|
Based on 15,854,476 shares of our common stock outstanding on March 11, 2022.
|
|
(2)
|
Based on 1,287,142 shares of our Class A common stock outstanding on March 11, 2022.
|
|
(3)
|
According to a Schedule 13G filed on January 27, 2022, BlackRock, Inc. holds sole voting power over 2,692,926 shares and sole dispositive power over 2,731,609 shares of common stock.
|
|
(4)
|
According to a Schedule 13G filed on June 1, 2016, The Burton Partnership, LP, The Burton Partnership (QP), LP and
Donald W. Burton, General Partner, hold sole voting and dispositive power over 1,228,255 shares of common stock.
|
|
(5)
|
According to a Schedule 13G/A filed on February 8, 2022, Dimensional Fund Advisors LP (“Dimensional”) holds sole voting power over 1,147,677 shares and sole dispositive power over 1,71,500 shares of common stock.
Dimensional is an investment advisor registered under Section 203 of the Investment Advisors Act of 1940 and furnishes investment advice to four investment companies registered under the Investment Company Act of 1940 and serves as
investment manager or sub-advisor to certain other commingled funds, group trusts and separate accounts (the “Funds”). The shares reported above are owned by the Funds. Dimensional possesses investment and/or voting power over the shares
held by the Funds. Dimensional disclaims beneficial ownership of these securities.
|
|
(6)
|
According to a Schedule 13G/A filed on February 11, 2022, Renaissance Technologies LLC holds sole voting power over 1,061,364 shares of common stock, and sole dispositive power over 1,154,706 shares of common
stock.
|
|
(7)
|
According to a Schedule 13G/A filed on February 10, 2022, The Vanguard Group holds shared voting power over 27,655 shares and sole dispositive power over 1, 087,552 shares and shared dispositive power over 37,268
shares of common stock.
|
|
(8)
|
According to a Schedule 13D/A filed on January 3, 2018, Villa Clare Partners, L.P. holds shared voting and dispositive power over 603,497 shares of Class A common stock. Clarence H. Smith is the manager of the
Partnership’s general partner, West Wesley Associates, LLC. Mr. Smith disclaims beneficial ownership of these shares except to the extent of his partnership interest.
|
|
(9)
|
Mr. Haverty has direct ownership of 84,074 shares of Class A common stock and sole dispositive and voting power over 65,140 shares of Class A common stock held by a limited liability company for which Mr. Haverty
is the manager. The beneficial ownership disclosed also includes 8,728 shares of Class A common stock held in trust for the benefit of Mr. Haverty’s child, for which he is co‑trustee, as to which he disclaims beneficial ownership.
|
|
(10)
|
The Mary E. Haverty Foundation is a charitable organization, for which Mr. Haverty has sole voting power through a revocable proxy granted to him by the Foundation. Mr. Haverty has no pecuniary interest in the
shares of the Foundation and disclaims any beneficial ownership in the Foundation’s shares. The amounts shown include 15,000 shares of common stock and 29,017 shares of Class A common stock, respectively.
|
|
(11)
|
Mr. Smith has direct ownership of 27,449 shares of common stock. The beneficial ownership disclosed includes 29,689 shares of common stock held by Mr. Smith’s wife, as to which he disclaims beneficial ownership.
Mr. Smith also has 5,001 shares beneficially owned under Havertys’ directors’ Deferred Plan.
|
|
(12)
|
This amount includes 7,850 shares of common stock held by a Georgia limited partnership in which Mr. Smith is a partner. Mr. Smith disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest in the partnership.
|
|
(13)
|
Mr. Smith has direct ownership of 112,036 shares of Class A common stock. The beneficial ownership disclosed includes 1,950 shares of Class A common stock held by Mr. Smith’s wife, as to which he disclaims
beneficial ownership.
|
|
Common Stock
|
Class A Common Stock
|
|||||||||
|
Amount and Nature of Beneficial Ownership (1)
|
Percent
of Class(2)
|
Shares
Beneficially
Owned
|
Percent of
Class(3)
|
|||||||
|
Steven G. Burdette
|
11,593
|
*
|
28,530
|
2.2%
|
||||||
|
J. Edward Clary
|
29,135
|
*
|
—
|
—
|
||||||
|
L. Allison Dukes
|
16,505
|
*
|
—
|
—
|
||||||
|
John L. Gill
|
12,765
|
*
|
7,500
|
*
|
||||||
|
Richard B. Hare
|
12,085
|
*
|
—
|
—
|
||||||
|
Rawson Haverty, Jr.
|
29,710
|
(4)
|
*
|
186,959
|
(4)5)
|
14.5%
|
||||
|
G. Thomas Hough
|
21,289
|
*
|
—
|
—
|
||||||
|
Mylle H. Mangum
|
55,469
|
*
|
—
|
—
|
||||||
|
Vicki R. Palmer
|
51,488
|
*
|
—
|
—
|
||||||
|
Derek G. Schiller
|
3,430
|
*
|
—
|
—
|
||||||
|
Clarence H. Smith
|
69,989
|
(6)(7)
|
*
|
717,483
|
(8)(9)
|
55.7%
|
||||
|
Al Trujillo
|
50,723
|
*
|
—
|
—
|
||||||
|
Directors and Executive Officers as a group (16 persons)
|
439,026
|
2.8%
|
940,472
|
73.1%
|
||||||
|
(1)
|
This column also includes shares of common stock beneficially owned under our directors’ Deferred Plan for the following individuals: Ms. Dukes – 16,505; Mr. Hough – 9,143; Ms. Mangum – 53,541; Mr. Smith – 5,001;
and Mr. Trujillo – 39,489.
|
|
(2)
|
Based on 15,854,476 shares of our common stock outstanding on March 11, 2022.
|
|
(3)
|
Based on 1,287,142 shares of our Class A common stock outstanding on March 11, 2022.
|
|
(4)
|
The Mary E. Haverty Foundation is a charitable organization, for which Mr. Haverty has sole voting power through a revocable proxy granted to him by the Foundation. Mr. Haverty has no pecuniary interest in the
shares of the Foundation and disclaims any beneficial ownership in the Foundation’s shares. The amounts shown include 15,000 shares of common stock and 29,017 shares of Class A common stock, respectively.
|
|
(5)
|
Mr. Haverty has direct ownership of 84,074 shares of Class A common stock. The beneficial ownership disclosed also includes 65,140 shares of Class A common stock held by a limited liability company for which Mr.
Haverty is the manager and 8,728 shares of Class A common stock held in trust for the benefit of Mr. Haverty’s child, for which he is co-trustee, as to which he disclaims beneficial ownership.
|
|
(6)
|
Mr. Smith has direct ownership of 27,449 shares of common stock. The beneficial ownership disclosed includes 29,689 shares of common stock held by Mr. Smith’s wife, as to which he disclaims beneficial ownership.
|
|
(7)
|
This amount includes 7,850 shares of common stock held by a Georgia limited partnership in which Mr. Smith is a partner. Mr. Smith disclaims beneficial ownership of these shares except to the extent of his pecuniary
interest in the partnership.
|
|
(8)
|
Mr. Smith has direct ownership of 112,036 shares of Class A common stock. The beneficial ownership disclosed includes 1,950 shares of Class A common stock held by Mr. Smith’s wife, as to which he disclaims
beneficial ownership.
|
|
(9)
|
The amount also includes shares held by a partnership. According to a Schedule 13D filed on January 3, 2018, Villa Clare Partners, L.P. holds shared voting and dispositive power over 603,497 shares of Class A common
stock. Mr. Smith is the manager of the Partnership’s general partner, West Wesley Associates, LLC. Mr. Smith disclaims beneficial ownership of these shares except to the extent of his partnership interest.
|
|
INFORMATION ABOUT OUR ANNUAL MEETING
|
|
Proposals
|
Board Voting Recommendation
|
Votes Required
For Approval
|
Abstentions
|
Broker non-votes
|
||
|
Election of Directors –
Class A Common Stockholders
Common Stockholders
|
FOR
FOR
|
Plurality of votes cast in person or by proxy – the most affirmative votes
|
No effect
|
No effect
|
||
|
Advisory Vote on Executive Compensation
|
FOR
|
Combined majority of votes cast in person or by proxy
|
No effect
|
No effect
|
||
|
Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for 2021
|
FOR
|
Combined majority of votes cast in person or by proxy
|
No effect
|
No effect
Discretionary voting by broker permitted
|
|
INFORMATION ABOUT OUR ANNUAL MEETING
|
|
Stockholders Sharing the Same Address
|
|
APPENDIX A — GAAP TO NON-GAAP RECONCILIATION
|
|
Reconciliation of EBITDA
|
|
(in thousands)
|
Year Ended
December 30, 2021
|
|||
|
Income before income taxes, as reported(1)
|
$
|
118,535
|
||
|
Interest income, net(1)
|
(231
|
)
|
||
|
Depreciation(1)
|
16,304
|
|||
|
EBITDA
|
$
|
134,608
|
||
|
(1)
|
These amounts are included in our Form 10-K for the year ended December 31, 2021.
|
|
1.
|
The Committee will consist of three or more directors as determined and appointed by the Board. Each of these directors shall be independent in accordance with New York Stock Exchange rules (“NYSE Rules”), the
Company’s corporate governance guidelines and applicable Securities and Exchange Commission rules (“SEC Rules”) applicable to audit committee members.
|
|
2.
|
No Committee member may receive any compensation from the Company other than compensation as a director except as permitted by the NYSE Rules and SEC Rules.
|
|
3.
|
All Committee members must be financially literate as required by the NYSE Rules or become financially literate within a reasonable period of time after his or her appointment to the Committee. At least one
member of the Committee must have accounting or related financial management expertise as required by the NYSE Rules and as such qualification is interpreted by the Board in its business judgment. In addition, at least one member of the
Committee must be an “audit committee financial expert” as defined in the SEC Rules.
|
|
4.
|
Committee members shall not simultaneously serve on the audit committees of more than two other public companies. If any Committee member simultaneously serves on the audit committee of more than three public
companies (including the Committee), the Board must determine that such simultaneous service will not impair the ability of such member to serve effectively on the Committee
|
|
5.
|
Committee members may be removed by a majority of the board at any time, with or without cause.
|
|
1.
|
The Committee will meet at least quarterly and at such other times as determined by the Chair of the Committee or a majority of the Committee members.
|
|
2.
|
The Board may appoint a Chair of the Committee. The Chair will preside, when present, at all meetings of the Committee. A majority of the members shall constitute a quorum for the transaction of business. A
majority of the members present at any meeting at which a quorum is present may act on behalf of the Committee. The Committee may meet by audio or videoconference and may take action by written consent.
|
|
3.
|
As part of its responsibility to foster open and candid communications the Committee will meet with management, the director of the internal audit department and the independent auditors in separate executive
sessions.
|
|
4.
|
The Committee will report its activities and findings to the Board on a regular basis.
|
|
A.
|
Financial Statement and Disclosure Matters
|
|
1.
|
Review and discuss the annual audited financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” with management and
the independent auditors prior to filing or distribution of the Company’s Annual Report on Form 10-K (or the annual report to shareholders if distributed prior to the filing of Form 10-K). Recommend to the full Board whether such financial
statements should be included in the Company’s Annual Report on Form 10-K.
|
|
2.
|
Annually obtain from the independent auditors and review a report that sets forth: (i) all critical accounting policies and practices used by the Company; (ii) analysis setting forth significant financial
reporting issues and judgments made in connection with the preparation of the financial statements, including all alternative accounting treatments of financial information within generally accepted accounting principles (“GAAP”) related to
material items that have been discussed with management, including the ramifications of using such alternative treatments and disclosures and the treatment preferred by the independent auditor; and (iii) major issues as to the adequacy of the
Company’s internal controls and any specific remedial actions adopted in light of material control deficiencies and (iv) other material written communication between the independent auditor and management.
|
|
3.
|
Meet quarterly with management and the independent auditors to discuss audited financial statements, including footnotes, the unaudited quarterly financial results, and the quarterly financial statements prior to
filing or distribution, including in each case a review of the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
|
|
4.
|
Discuss with the Chief Financial Officer or other appropriate officer as to any unusual deviations from prior practice that were included in the preparation of the annual or quarterly financial results.
|
|
5.
|
Review and discuss (i) the type and presentation of information to be included in press releases of unaudited interim and annual financial results, including the use of “pro forma” or “adjusted” non-GAAP
information, before their release to the public, and (ii) financial information and earnings guidance provided to analysts and ratings agencies.
|
|
6.
|
Review and discuss (i) any major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles
and (ii) the effects of significant regulatory, accounting and auditing initiatives, including new pronouncements, as well as off-balance sheet structures on the Company’s financial statements.
|
|
7.
|
Discuss policies with respect to risk assessment and risk management, including the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures.
|
|
8.
|
In addition to the foregoing meetings, meet separately, periodically, with management, with internal auditors and with the independent auditors.
|
|
9.
|
After the close of each fiscal year but prior to the Company’s annual meeting of shareholders, as well as on any other occasion where the Committee deems it advisable or prudent, report to and review with the
full Board any issues that arise with respect to the quality or integrity of the Company’s publicly reported financial statements, the Company’s compliance with legal and regulatory requirements, the performance and independence of the
independent auditors, the performance of the internal audit function, or such other information as it deems appropriate to report concerning the Committee’s activities.
|
|
B.
|
Independent Auditors
|
|
1.
|
Be directly responsible for the appointment, approving the compensation, retention, and termination of the independent auditor.
|
|
2.
|
Review and approve the terms of the engagement of the independent auditor, including the scope of their audit, proposed fees and personnel qualifications.
|
|
3.
|
Be directly responsible for the oversight of the work of the independent auditor, including resolution of disagreements between management and the auditor regarding financial reporting.
|
|
4.
|
Approve in advance any permissible audit and non-audit services and fees provided by the independent auditor and shall not engage the independent auditor to perform the specific non-audit services proscribed by
law or regulation. The Committee may delegate pre‑approval authority to the chairman of the Committee. The decisions of the chairman to whom pre-approval authority is delegated must be presented to the Committee at its next scheduled
meeting.
|
|
5.
|
Periodically review information from the independent auditor regarding the independent auditor’s qualifications, independence and performance.
|
|
a.
|
receive from the independent auditors annually, a formal written statement delineating the relationships between the auditors and the Company consistent with Public Company Accounting Oversight Board (“PCAOB”) Rules;
|
|
b.
|
discuss with the independent auditors the scope of any such disclosed relationships and their impact or potential impact on the independent auditors’ independence and objectivity; and;
|
|
c.
|
recommend that the board take appropriate action in response to the independent auditors’ report to satisfy itself of the auditor’s independence.
|
|
6.
|
Require the rotation of the lead audit partner of the independent audit firm every five years, with a two-year timeout provision. The Committee shall establish when the five‑year limit will be reached for the
current lead audit partner. At least one year prior to that time, the Committee shall discuss transition plans for the new lead audit partner. The five-year limit will be reviewed annually with the independent auditor.
|
|
7.
|
Set clear hiring policies for employees or former employees of the independent auditor that meets the SEC regulations and stock exchange listing standards.
|
|
8.
|
Receive and review required communications from the independent auditor, including the independent auditor’s report concerning:
|
|
a.
|
critical accounting policies and practices to be used;
|
|
b.
|
all alternative treatments of financial information within GAAP for policies and practices related to material items that have been discussed with management, including ramifications of the use of such alternative disclosures
and treatments and the treatment preferred by the independent auditor, and
|
|
c.
|
other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.
|
|
9.
|
At least annually, receive and review the independent auditor’s report on:
|
|
a.
|
the independent auditor’s internal quality control procedures.
|
|
b.
|
any material issues raised by the most recent internal quality control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues.
|
|
C.
|
Internal Audit
|
|
1.
|
Review the objectivity, organization structure, staff qualifications and responsibilities of the internal audit department.
|
|
2.
|
Approve the Internal Audit Charter, which defines the purpose, authority and responsibilities of the Company's internal audit function.
|
|
3.
|
Review the objectives, activities, organizational structure, qualifications, staffing and budget of the internal audit department.
|
|
4.
|
Review the significant reported issues to management prepared by the internal audit function and the management responses to such issues/recommendations.
|
|
5.
|
Review and approve the annual Internal Audit Risk Assessment and Audit Plan and any subsequent changes.
|
|
6.
|
Review and concur in the appointment and replacement of the head of internal audit.
|
|
D.
|
Risk Management and Oversight
|
|
1.
|
Review, at least annually, the Company’s risk assessment and risk management policies and procedures, including its major financial risk exposures and the steps management has taken to monitor and control such
exposures.
|
|
2.
|
Review and discuss, at least annually, the company’s information security and technology risks, including the company’s information security and cybersecurity and risk management programs related to information
security and cybersecurity.
|
|
E.
|
Compliance and Legal Matters
|
|
1.
|
Review with the appropriate members of management the Company’s compliance program, material litigation and other legal matters as appropriate.
|
|
2.
|
Review at least annually the Company’s Code of Conduct to ensure that it is adequate and up to date as it relates to financial responsibility.
|
|
3.
|
Establish and review periodically procedures for:
|
|
a.
|
receipt, retention and treatment of complaints regarding the Company’s accounting, internal accounting controls and auditing matters
|
|
b.
|
employees to submit confidentially and anonymously concerns regarding questionable accounting and auditing matters.
|
|
4.
|
Discuss with management and the independent auditor any correspondence from or with regulators or governmental agencies, any employee complaints and any published reports that raise material issues regarding the Company’s financial
statements, internal control over financial reporting, accounting policies or internal audit function.
|
|
1.
|
The Committee shall be empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and have the authority to engage independent
counsel and other advisers as it determines necessary to carry out its duties.
|
|
2.
|
The Committee shall receive appropriate funding from the Company, as determined by the Committee, for payment of compensation to any such counsel and advisor.
|
|
3.
|
The Committee may exercise such additional powers and duties as may be reasonable, necessary or desirable, in the Board’s or the Committee’s discretion, to fulfill its duties under this Charter and applicable
law. For example, the Committee may conduct or authorize, if it considers appropriate, special reviews and investigations into any matters within the scope of its responsibilities.
|
|
4.
|
The Committee shall conduct an annual performance assessment on the Committee in conjunction with the NCG Committee, the results of which shall be reported to the full board by the NCG Committee.
|
|
5.
|
The Committee shall review and reassess its charter in conjunction with the NCG Committee and recommend any proposed changes to the full board for approval.
|
